Final Results

MEDILINK-GLOBAL UK LIMITED

("Medilink" or the "Group")

FINAL RESULTS

Medilink-Global UK Limited (AIM: MEDI), the electronic health card network service provider, is pleased to announce its final results for the year ended 31 December 2011. A copy of the annual report and accounts and notice of the Company's annual general meeting, to be held at 4th Floor, Office Tower, Syed Kechik Foundation Building, Jalan Kapas, 59100 Kuala Lumpur, Malaysia on 15 October 2012at 10.30 am (Malaysian time) has been posted to shareholders today and will be available shortly from the Company's website, www.medilink-global.com.

OPERATIONAL HIGHLIGHTS

·; Renewal of Third Party Administrator ("TPA") contract and new TPA contracts secured in China including.

o On 7 Nov 2011, the Company entered into a one year contract with Now Health International (Asia Pacific) Limited.

o On 20 Dec 2011, the Company entered into a one year contract with China Life GZ.

o On 1 Jan 2012, the Company renewed the contract with CITIC Prudential for one year.

o On 30 April 2012, the Company entered into a one year contract with Aetna International Inc.

o On 1 July 2012, the Company entered into a one year contract with Liberty Insurance.

o On 1 Aug 2012, the Company renewed the contract with Generali China Life Insurance Co. Ltd for three years.

·; On 1 March 2011, Datalink Technologies Sdn Bhd ( a wholly owned subsidiary of the Company), renewed the Managed Care System maintenance contract with Great Eastern Life Assurance Berhad for one year and it will be automatically renewable for another year upon its expiry on February 29, 2012.

·; On 1 October 2011, Datalink Healthcard Network Sdn Bhd ("Datalink Healthcard") (a wholly owned subsidiary of the Company) renewed the contract with ING Insurance Berhad ("ING") for a further three year period up to 30 September 2014; and automatically renewable for another period of two years (01 October 2014 to 30 September 2016) based on terms that shall be mutually agreed upon. With this renewal, it brings a total of 15 years long standing business relationship between the Company and ING. The estimated value of the 3 year + 2 years option renewal is RM6 million (approximately £1.2 million).

·; On 1 October 2011, Datalink Healthcard renewed the contract with AXA Affin General Insurance Berhad ("AXA") for one year. This renewal signifies 9 years of strong business relationship between the Company and AXA.

·; On 2 January 2012, AXA Affin Life Insurance Berhad ("AXA-Life") launched its health insurance product and appointed Datalink Healthcard as the Third Party Administrator in administering and processing the medical claims for this business portfolio. An addendum to the existing service agreement between AXA Affin General Insurance Berhad and the Company was concluded on April 20, 2012.

·; On 1 December 2011, Datalink Healthcard entered into a 3 years + 2 years Call Centre, System and Electronic Healthcard Network Infrastructure service contract with ING PUBLIC Takaful Ehsan Berhad (IPTE"), a 60% owned subsidiary of ING Management Holdings (Malaysia) Sendirian Berhad ("ING"). The company was formed through the strategic alliance between ING, Public Bank Berhad ("PBB") and Public Islamic Bank Berhad ("PIBB"), a wholly owned subsidiary of PBB. IPTE aims to drive growth and increase Family Takaful penetration both in Malaysia and the Asia market; through the bancatakaful and agency distribution channels.

·; Datalink Healthcard had signed up 29 new self-insured corporate clients in year 2011 to July 2012, the estimated annual value of these contracts is RM425,000 (approximately £85,000). Among all, Bank Muamalat Malaysia Berhad with a total enrolled membership of 6,285, contributed significantly to this annual contract.

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CHAIRMAN'S STATEMENT

Medilink-Global UK Limited is pleased to present the Group's results for the year ended 31 December 2011.

OVERVIEW

It has been a challenging year in managing the rapid pace of business development activities of our subsidiary in China whilst seeing a hike in operating expenses, particularly due to the planned expansion of our workforce to a right size in order to function effectively. From a strategic perspective, it was an achievement for our subsidiary company in China securing bigger market share and strengthening its leading positioning in the industry. While our overall Group sales increased marginally compared to 2010, the Group's costs were also higher due to an increased headcount, which has impacted on the performance for the year under review.

FINANCIAL REVIEW

The Group recorded revenue of £1.85 million (2010 revenue: £1.79 million) and a loss after taxation of £3.34 million (2010: loss after taxation £0.69 million) for the year ended 31 December 2011. The marginal increase in revenue was largely due to a 30% increase in revenue from the Company's subsidiary in China. However, the revenues from South East Asia declined by 2% compared to 2010, largely as a result of the Singapore operation (decrease of 6%) and the decrease in revenues from system development activities (31%) The core TPA business in Malaysia continues to grow (increase of 8%). The marginal increase in Group revenue was insufficient to cover the increase in operating costs in China and Malaysia.

The administrative costs of £3,964,000 appear to be considerably higher than 2010 (£1,395,000), but these are distorted by the inclusion of a share based payment charge of £845,000 as a result of 16,100,000 shares transferred for no consideration by our Chief Executive Officer, Shia Kok Fat as reward to key employees of the Group in recognition for their direct and strategic contribution to the Company. This is a notional charge based on the market value of the shares with the corresponding credit going to the retained earnings and therefore has no impact on the overall reserves of the Group. In addition there has been an impairment of goodwill of £1.10 million in relation to the goodwill arising from investment in subsidiaries and an impairment loss of £0.48 million in relation to trade and other receivables. As a result, the loss after taxation of £3.34 million for the year under review has materially exceeded the previous year's loss after taxation of £0.69 million.

GROUP'S OPERATIONS REVIEW

China

Revenue from our China operations increased by 30% to £0.405 million (2010 China revenue: £0.301 million) as a result of organic growth in the TPA contracts. However, its operating cost had also increased mainly due to an increase in manpower, as planned. Thus, the Group's China operations recorded a higher loss after tax as compared to 2010.

The average monthly revenue per employee during the year for China operations of £768 was an improvement of 22% compared to the previous year of £627. We expect the monthly average revenue per employee for China will continue to improve as the business matures.

To date we have signed TPA contracts with 20 insurance companies and 1 corporate customer, which represents 6 new customers in 2011 and a further 6 have been signed up to date in 2012. At the end of 2011 there were 270 (2010: 288) healthcare providers operating in our network in China. This number has increased to 294 as at the end of July 2012. 

As previously stated it can take a number of months before newly signed-up insurance companies make an impact on revenue in terms in terms of membership levels. The number of members increased by over 2,500 in 2011. We expect membership levels to accelerate during the coming year.

Malaysia

The Group increased its headcount in Malaysia, in order to improve the quality of services which lead to a lower average monthly revenue per employee during the year of £1,161, as compared to the monthly revenue per employee of £1,410 in 2010.

The Board decided to focus its energies on its TPA business, which lead to an increase in TPA revenue of 8% compared to 2010, with less resources concentrated on system development. As a result the revenue from this segment declined by 30% compared to previous year, although there will still be opportunities for one off deals in the future.

With our expanding portfolio of customers we are hopeful that this will underpin our growth in TPA income.

Singapore

The Group relocated its Singapore operations to Malaysia in the last quarter of 2011, in order to improve the efficiency of the Group and as a cost saving measure, which had effectively reduced operating cost by 57%. Revenue in Singapore decreased by 6% over the previous year and the number of healthcare providers in our network remained at 146. The average monthly gross profit per employee reduced to £1,981 in 2011, compared to £2,211 per employee in the previous year.

Thailand

We reduced our stake in our associate company in Thailand from 48% to 19% in the fourth quarter of 2011, as we do not foresee a significant improvement in the results of our Thailand operations in the near future. The reduced shareholding interest in Thailand should allow the Group's manpower and financial resources to be utilized more intensively to develop and grow its business in Malaysia and Singapore where we are better positioned in these market. A further loss of £0.26 million was incurred in 2011 in relation to a provision against loans made to the former Thailand associate company, which became an investment during the course of 2011.

PROSPECTS

Medilink will continue to provide excellent services to its customers and we anticipate the Group will sustain significantly lower losses in 2012. The expected increase in revenues in 2012 is not however expected to be sufficient to cover the overall operating cost.

We will continue to strengthen all areas of the organisation and maintain our position as a leading regional TPA with a global servicing capacity.

ACKNOWLEDGMENTS

On behalf of the board, I would like to extend our heartfelt thanks to our business partners, customers, associates, healthcare providers and valued shareholders for their support throughout the year. We would also wish to thank the management and staff of the entire Medilink-Global Group for their continued loyalty and commitment in discharging their duties.

Norman Lott

Chairman

4 September 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

* In accordance with IAS 33 "Earnings per share" and as the Group has reported a loss for the period the shares are not diluted. The Group has not issued any instruments with dilutive effects.

All operations of the Group are continuing.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

NOTES TO THE FINANCIAL INFORMATION

1. General information

The Company was incorporated in Jersey as a limited liability par value company under the laws of Jersey, with the name Medilink-Global UK Limited and with company number 99680. The Company is governed by its articles of association and the principal statute governing the Company is Jersey law. The liability of the members of the Company is limited. The Company's registered office is Queensway House, Hilgrove Street, St Helier Road, Jersey, JE1 1ES. The Company is domiciled in Jersey. The Company's principal place of business is Asia.

These financial statements are presented in Pound Sterling ("£") and rounded to the nearest thousand ("000"). The functional currency of the entities in the Group is the Malaysian Ringgit as that is the Currency of the primary economic environment in which the Group operates. The directors have chosen to present these financial statement in Pound Sterling due to the international exposure and shareholders of the entity.

2. Basis of preparation

The financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and using accounting policies which are consistent with those adopted in the financial statements, with the following comment in respect of going concern made in note 2(v) to the financial statements:

"The financial statements have been prepared on a going concern basis. The Group's ability to continue as a going concern is reliant upon continuing shareholder support or successfully obtaining alternative means of funding as it moves towards self-sustainability and to finance its on-going expansion. In considering the appropriateness of this basis of preparation, the Directors have reviewed the Company's working capital forecasts and performed sensitivity analysis thereon and the key inputs into these can be found in note 10 in the annual report and accounts. They believe that the increasing revenues from trading activities and the support of key shareholders will be sufficient for the Group's purposes for a minimum of 12 months from the date of the approval of these financial statements. The Directors have considered and assessed the letter of support provided by these key shareholders and are satisfied that they will and can, if required, provide the support for the development of the growth over at least the next twelve months from signing these financial statements. If the Group was unable to secure sufficient funding to enable it to continue on a going concern basis then adjustments would be necessary to write down assets to their recoverable amounts, reclassify fixed assets and long-term liabilities as current and provide for additional liabilities."

The financial information set out in this announcement does not constitute the Group's statutory financial statements for the year ended 31 December 2010, but was derived from those financial statements. The auditors have reported on the statutory financial statements for the year ended 31 December 2011; this report was unqualified but included the following emphasis of matter:

"In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 2 (v) to the financial statements concerning the company's ability to continue as a going concern. The financial statements have been prepared on the going concern basis, which depends on the continued shareholder support and the generation of increased revenues. These conditions, along with the other matters explained in note 2 (v) to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern."

The financial information set out in this announcement was approved by the board on 4 September 2012.

The directors do not recommend the payment of a dividend.

3. Business segments

The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. Per IFRS 8 operating segments are based on internal reports about components of the group, which are regularly reviewed and used by the Board of Directors being the Chief Operating Decision Maker ("CODM") for strategic decision making and resource allocation, in order to allocate resources to the segment and to assess its performance. The Group's reportable operating segments are as follows:

i) Third party administrator

ii) Software licensing

The CODM monitors the operating results of each segment for the purpose of performance assessments and making decisions on resource allocation. The management has organised the entity based on differences in products and services. Third party administrator segment is derived from aggregating China, Malaysia and Singapore entity while Software licensing segment represent a single entity from Malaysia. Performance is based on external and internal revenue generations and profit before tax, which the CODM believes are the most relevant in evaluating the results relative to other entities in the industry. Segment assets and liabilities are presented inclusive of inter segment balances, as inter-segment pricing. Information regarding each of the operations of each reportable segment is included below.

(i) The assets of third party administrator are including the goodwill on consolidation of £3,038,000 (2010: £4,138,000)

Revenues from two customers amounted to £506,000 : ING Insurance Bhd £310,000 and AXA Insurance Bhd £196,000 (2010: £450,000: ING Insurance Bhd £296,000 and AXA Insurance Bhd £154,000), arising from sales by third party administrator segment.

(i) The assets of third party administrator are including the goodwill on consolidation of £4,138,000.

The geographical split of revenue and non-current assets arises as follows:

Loss from operation has been arrived at after charging/(crediting):

5. Directors emoluments

All the executive directors have a fixed base fee or salary and participate in discretionary bonus arrangement, according to the performance as determined by the Remuneration Committee.

Details of the directors' emoluments are set out below.

The shares issued to directors as payment of bonus is disclosed under Note 17.

.

6. Staff costs

7. Finance expenses

8. Taxation

The applicable tax of the Group is derived from the consolidation of all Group companies applicable tax band on their domestic tax rates.

9. Property, plant and equipment

GROUP 2011

Motor vehicle with the carrying amount of £1,000 (2010: £18,000) were acquired by hire purchase and are pledged as securities for liabilities.

GROUP 2010

Motor vehicle with the carrying amount of £18,000 (2009: £7,000) were acquired by hire purchase and are pledged as securities for liabilities.

10. Intangible assets

The amortisation recognised in respect of intellectual property has been included in the line item, administrative expenses in the consolidate statement of income.

Description of intangible assets

Goodwill arising on the acquisition of the subsidiaries represents the excess of the cost of acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiaries recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. The carrying value of goodwill is allocated to the respective segments as follows: -

System software comprises Electronics Claims Clearance System and Loyalty Programme software. The system software is initially recognised based on the cost that would be incurred in re-creating the asset and is subsequently amortised based on straight-line method over a period of three years. Contracted customers are the existing customers of the acquired subsidiaries. The contracted customers are initially recognised based on the estimated net present value of the service contracts entered into between the customers and subsidiaries acquired and is subsequently amortised based on straight-line method over a period of five years. The recoverable amount of cash generating unit is determined based on value in use calculation as set out below.

The goodwill and other intangible assets are reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the assets might be impaired. The 2011 review was undertaken in the first quarter of year 2012 and the impairments of goodwill amounting to £1,100,000(2010: Nil) is recognised in the income statement.

Management have approved the forecast for 2012 and have prepared additional projection based on the 2011 numbers for the next four years. This was used as the basis for determining the recoverable amount of each CGU.

In conducting the review we used a growth rate 10% to 50% and a market beta of 4.

Management are satisfied that there are no reasonably possible changes in key assumptions, which would cause the recoverable amount of any of our GGUs to be below their carrying amount.

The key assumptions used in the forecast are as follows:

Sensitivity analysis

A sensitivity analysis has been carried out for each CGU. The results of the analysis can be summarises as follow:

If the estimated growth rate to forecast the revenue had been 10 percent point lower than the basis assumption, total recoverable amount would be 12 percent lower.

If the estimated discount rate used for the Group's discount cash flow had been one percentage point higher than the starting assumption of 25%, total recoverable amount would be 3%lower.

These calculations are hypothetical and should not be viewed as an indication that these figures are any more or less likely to be changed. The sensitivity analysis should therefore be interpreted with caution.

11. Investments

Details of the subsidiaries:

* During the prior year the Group formed Medilink-Global (HK) Limited with 10,000 shares of no par stock issued on 24 May 2010 to Medilink-Global (Asia) Pte Ltd, the sole shareholder.

Medilink-Global UK Limited is the ultimate parent of the Group.

Disposal of investments in associates

On 27 December 2011, the Company's investment in Medilink (Thailand) Co Ltd ("MTH") was decreased from 48% to 19% as a result of the sales of shares to Heah Zhong Tak for a total cash consideration of 40 pence. Subsequent to the disposal, the Company has no significant influence over MTH and hence the investment and its net carrying amount are reclassified as available for sale financial assets.

The forecast assumptions and sensitivity analysis for the impairment review are included in Note 10.

12. Trade and other receivables

Group

As at 31 December the following trade receivables were past their due date (of 0 to 3 months) but not impaired. It is management's belief that these debts will be fully repaid by reference to no default experience to date. In determining the recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivables from the date credit was initially granted up to the reporting date.

Ageing of past due but not impaired

The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:

Financial Asset

The Group's financial assets by each financial instrument category are as follows:-

13. Cash and cash equivalents

Group

Company

14. Trade and other payables

Group

Company

The carrying amount of trade and other payables approximates to their fair value.

It is the Group's policy to pay suppliers in accordance with the terms of business agreed with them. The number of days of trade purchases outstanding for the Group at the year end was 91 days (2010: 71 days).

The carrying amounts of the Group's trade and other payables are denominated in the following currencies:

Financial Liabilities

The Group's financial liabilities by each financial instrument category are as follows:-

Gross maturity analysis of the financial liabilities is as follows:

15. Hire Purchase

16. Deferred taxation

Movements in deferred taxation for the Group during the year are as follows:

Deferred tax asset of £138,000 (2010: £138,000) arising from the unused tax losses has not been recognised and there is no expiry period for the said deferred tax assets.

17. Share Capital

The Company has one class of ordinary share capital which carries no rights to fixed income, any preferences or restrictions.

On 3 November 2011, 1,988,828 ordinary shares of 5p each were issued at £0.0525 to various employees and certain directors of Medilink-Global UK Ltd for £Nil consideration. The Employee Shares have been issued in lieu of certain salary and bonus payments due for year ended 31 December 2009.

The Employee Shares issued to Directors of Medilink-Global UK Ltd are as follow:-

On 3 November 2011, 10,000,000 ordinary shares of 5p each were transferred at £0.0525 to various employees and a director of Medilink-Global UK Ltd for £Nil consideration. The Employee Shares have been issued in lieu of certain salary and bonus payments due for year ended 31 December 2009.

The Employee Shares issued to the Director of Medilink-Global UK Ltd is as follow:-

18. Loss Per Share

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period. In accordance with IAS 33, and as the Group has reported a loss for the year, the shares are not diluted.

19. Financial instruments

Capital Management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain optimal capital structure to reduce the cost of capital. Management considers, as part of its capital, the financial sources of funding from shareholders and third parties. Our key process for managing capital is regular Board reviews of our capital structure and needs.

The Group's financial instruments, which are recognised in the statement of financial position, comprise cash and cash equivalents, receivables and payables and ordinary shares. The accounting policies and methods adopted, including the basis of measurement applied are disclosed above, where relevant. The information about the extent and nature of these recognised financial instruments, including significant terms and conditions that may affect the amount, timing and certainty of future cash flows are disclosed in the respective notes above, where applicable.

The Group does not generally enter into derivative transactions (such as interest rate swaps and forward foreign currency contracts) and it is, and has been throughout the year, the Group's policy that no trading in financial instruments shall be undertaken.

There were no financial instruments not recognised in the statement of financial position.

The Group's activities expose it to a variety of financial risks: currency risk, credit risk, liquidity risk and cash flow interest-rate risk. These risks are limited by the Group's financial management policies and practices as described below:

(a) Credit risks

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers and investment securities.

The Group has credit risk management policies in place and exposure to credit risk is monitored on an ongoing basis. Management generally adopts conservative strategies and tight control on credit policy. The Group has limited the amount of credit exposure to customers.

The average credit period on sales of services is 120 days. No interest is charged on the trade receivables.

Before accepting any new customer, the Group will check the credit worthiness of any new customers.

The credit risk on cash and cash equivalent is limited because the counterparties are banks with high credit ratings recognised by international credit rating agencies.

The maximum exposure to credit risk at the reporting date is the fair value of trade receivables of £677,000 (2010: £717,000) and other receivables of £172,000 (2010: £429,000). The Group does not hold any collateral as security.

(a) Liquidity risks

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

To ensure liquidity, the Group maintains sufficient cash and cash equivalents on demand to meet its obligations as and when they fall due.

(c) Foreign currency exchange risks

The Group does not hedge its foreign currencies. Transactions with customers and vendors are mainly denominated in Malaysia Ringgit, Singapore Dollars, US Dollars and Chinese Yuan Renminbi. The Group has bank accounts in Malaysia Ringgit, Singapore Dollar, US Dollars and Chinese Yuan Renminbi to mitigate against exchange risks.

The sensitivity analyses in the table below details the impact of changes in foreign exchange rates on the group's post-tax profit for the year ended 31 December 2011 and 31 December 2010.

In each case, it is assumed that the named currency is strengthening or weakening against all other currencies, while all the other currencies remain constant. Results are shown for all currencies where the impact on group post tax profit would be more than 5%. If the GBP weakened or strengthen by 10% against the Chinese Yuan Renminbi, with all other variables in each case remaining constant, then:

 (d) Cash flow and fair value interest rate risks

The Group's primary interest rate risk relates to interest bearing debts. Investments in financial assets are mainly short term in nature and are not held for speculative purposes but are placed in fixed deposits.

The Group manages its interest rate exposure by maintaining a fixed rate borrowing to mitigate the risk associated to interest rate fluctuation.

At the reporting date the interest rate profile of the Group's interest-bearing financial instruments were as follows:

Hire purchase interest at 4.87% per annum

20. Related party transactions

Related party transactions during the year were as follow:

The term of the loan from a shareholder is interest free and with no fixed term of repayment.

The loan is secured against the corporate guarantee issued by the Company.

Details of Directors' remunerations (who are considered to be the key management of the Group) are as follows:

21. Control

The controlling parties of the Grou as at 31 December 2011 were Mr. Shia Kok Fat and Asdion Digital Advance System Sdn Bhd. Mr. Shia Kok Fat is a Malaysian and a significant shareholder and director of the Company. Asdion Digital Advance System Sdn Bhd, a company incorporated in Malaysia, is also a significant shareholder of the Company.

22. Commitments

There are no other significant capital commitments contracted for but not provided.

Operating Leases

The Group's future minimum lease payments under non-cancellable operating leases are as follows:

As at 31 December 2011

As at 31 December 2010

23. Subsequent events

On 19 March 2012, Asdion Digital Advance System Sdn Bhd and Mr Heah Theare Haw have sold 8,000,000 and 22,000,000 ordinary shares of 5p each in the Company respectively to Ms Lei Nga Wan at 2.2 pence per ordinary shares.

On 18 June 2012, shareholders of Asdion Digital Advance System Sdn Bhd during the Extraordinary General Meeting of Asdion Berhad approved the proposal to dispose of 22,000,000 ordinary shares of 5p each in the Company to Mr Law Chee Kheong for total consideration of £484,000.

There were no other subsequent events that require adjustment to or disclosure in the financial statements.