Final Results

11th Jun 2009 07:00

Medilink-Global UK Limited

("Medilink" or "the Group")

Preliminary Results 2008

Medilink-Global UK Limited (AIM: MEDI), the electronic health card network service provider, announces its maiden Preliminary Results, for the period ended 31 December 2008, since admission to the AIM market on 18 November 2008.

Financial highlights

Revenue of £578,000

Loss before tax of £38,000 as a result of increased in operating costs associated with the expansion into China

Malaysian operating entity contributed 95% of the Group revenue and the remainder generated from its Chinese operations

Highlights

Admitted to AIM having raised net £1.3 million net in November 2008 through a placing of new ordinary shares

Successful signing of new Third Party Administrator ("TPA") contracts with two insurance companies in the last quarter of 2008; one with a major Chinese insurance company, PICC Health Insurance ("PICC"), and another with a Gibraltar based insurance company, LAMP Insurance Company Limited ("LAMP")

Commenting on the results, Norman Lott, Chairman of MediLink said:

"The loss we made during this period was as a result of the increase in operating costs but with the positive progress achieved so far in 2009 from our market development activities in China, as well as in Singapore and Thailand, the Group's financial performance for the financial year ending 2009 looks to be very promising."

A copy of the report and accounts to 31 December 2008 was sent to shareholders on 10 June 2009 and a copy is also available on the company's website, www.medilink-global.com.

Enquiries:

MediLink-Global UK Limited Shia Kok Fat, Chief Executive Officer 00 603 2296 3028 www.medilink-global.com	Broker SVS Securities Plc Ian Callaway, Head of Corporate Broking 020 7382 2870
Nominated Adviser  Dowgate Capital Advisers Limited Liam Murray/Jo Turner  020 7492 4777	Financial Public Relations Walbrook PR Ltd. Ben Knowles  020 7933 8780 Mob. 07900 346 978 [email protected]

Chairman's Statement

Medilink-Global UK Limited ("Medilink", "the Company", "the Group") is pleased to present the Group's first Preliminary Results for the period ended 31st December 2008.

OVERVIEW

2008 has been a very significant year for Medilink marked by its admission to the AIM Market of the London Stock Exchange ("AIM") on 18th  November 2008. 

Simultaneous with its admission to AIM the Company raised, through a placing of new ordinary shares, net proceeds of £1.3 million in November 2008, amidst difficult market conditions. The Board intends to utilise these funds in the development and expansion of the Group's business in the Peoples' Republic of China whilst at the same time taking advantage of any profitable investment or acquisition opportunities which may arise.

FINANCIAL REVIEW

The Group recorded revenue of £578,000 for the period ended 31 December 2008. The Malaysian operating entity contributed 95% of the Group revenue and the remainder was generated from its Chinese operations. As a result of the increase in operating costs in tandem with the accelerated pace of expansion in China, the operations in China incurred an operating loss for the period which, coupled with the Group's share of the loss of its associated company in Thailand, has led to the Group reporting a loss after tax of £45,000.

THE YEAR IN FOCUS

The Group continued to expand its regional operations at an accelerated pace. More resources were committed for its expansion in China including, inter-alia, the recruitment of senior executives to head the operations and business development. The immediate effect of such a commitment was the successful signing of new Third Party Administrator ("TPA") contracts with two insurance companies in the last quarter of 2008.

Despite the slump in the global economy, the operations in Malaysia remained robust during the period and the Group invested further in its new associated company in Thailand. The Directors believe this to be an important breakthrough into a market with good potential for further growth.

CORPORATE DEVELOPMENT

The Group's intention has always been to focus on laying the foundations for its overall business expansion in China. 2009 has seen the Company win three additional TPA contracts with major insurance companies, ranked among the top local and foreign joint venture insurance companies operating in China. The operations team is now gearing up to expand the Group's healthcare provider network in China in order to fulfill the service expectations of its growing client base. We have targeted to expand the number of healthcare providers in our network from 164 as at 31 December 2008 to 1,000 by the end of 2009. 

The Group expanded its operations into Singapore in the first quarter of 2009 through the acquisition of Lifeinc Holdings Pte Ltd ("Lifeinc'), a local company with active TPA operations. This acquisition, which was completed in April 2009, spearheaded our operational presence in the Singapore market. Lifeinc has a sizeable client base as well as an established network of healthcare providers.

 

In the first quarter of 2009 our associated company in Thailand secured its maiden TPA contract with Thai Insurance Public Company Limited, a local insurance company. As at today's date, the company is actively deploying the Group's Electronic Data Capture (EDC) Terminals to healthcare providers in various cities throughout the country. By the end of 2009, we believe we will have 500 healthcare providers in our network.

The Group is also actively formalising strategic alliances with established TPAs in other regions and countries such as Europe, USA, Middle East, Africa, India, Indonesia, the Philippines and Vietnam.

CORPORATE EXERCISE

The Company was successfully admitted to AIM of the London Stock Exchange on 18 November 2008 with an authorised share capital of £10 million represented by 200,000,000 ordinary shares of £0.05 each and an issued and paid up share capital of £5,166,531 represented by 103,330,630 ordinary shares of £0.05 each. 

PROSPECTS

With the positive progress achieved from our market development activities in China as well as in Singapore and Thailand, the Group's financial performance for the financial year ending 2009 looks to be very promising.

We shall continue to identify potential targets for acquisition which are considered to be strategically relevant, financially viable and sustainable. However, our primary focus will be to grow our revenue significantly by offering our range of services to healthcare insurance companies and corporate organizations by concentrating on our core competency and competitive advantage through Medilink's bespoke Medical Claim IT System called ECCS (Electronic Claims Clearance System) and our FIRST-AND-ONLY-IN-ASIA MEDILINK EDC (Electronic Data Capture Terminal) healthcare provider network; delivering state-of-the-art services that include cashless hospitalisation, direct-billing medical claim processing, claim review, claim analysis, cost containment, case monitoring, 24 by 7 call centre help-line support, online member portal as well as value added services such as Medical Second Opinion and Medical Emergency Assistance support. 

The Group will continue to position itself strongly as a leading regional TPA with 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

9 June 2009

Consolidated Income Statement

Period ended 31 December 2008

		Period
		Ended 31.12.08
	Note	£'000
Revenue	5	578
Cost of sales		(360)
Gross profit		218
Other income		63
Administrative expenses		(292)
Operating loss		(11)
Share of associated undertakings' losses		(23)
Finance income		(4)
Loss before taxation		(38)
Taxation	4	(7)
Loss after taxation and for the period		(45)
Loss per share (pence)
Basic and diluted*	2	(0.07)

* In accordance with IAS33 "Earnings per share" and as the Group has reported a loss for the period, the shares are not dilutive.  

Consolidated Balance Sheet

As at 31 December 2008

			31.12.08
		Note
			£'000
Non-current assets
Intangible assets		6	4,282
Properties, plant and equipment			223
Investments			20
Total non-current assets			4,525
Current assets
Inventories			51
Trade and other receivables			403
Cash and cash equivalents			1,156
Total current assets			1,610
Current liabilities
Trade and other payables			280
Borrowings			14
Total current liabilities			294
Net current assets			1,316
Non-current liabilities
Borrowings			14
Other payables			12
Deferred tax liabilities		4	49
Total non-current liabilities			75
Net assets			5,766
Equity
Share capital			5,167
Share premium account			678
Retained earnings			(79)
Total equity			5,766

  Consolidated Cash Flow Statement

Period ended 31 December 2008

		£'000
Cash flows from operating activities
Loss before taxation		(38)
Adjustments for:
Amortisation of intangible assets		45
Depreciation of property, plant and equipment		22
Share of loss of associated company		23
Finance costs		4
Cash from operating activities before changes in working capital		56
Increase in inventories		(51)
Decrease in trade and other receivables		62
Decrease in trade and other payables		(38)
Cash flow from operations		29
Tax paid		(32)
Interest paid		(4)
Net cash flow from operations		(7)
Investing activities
Purchase of property, plant and equipment		(193)
Cash & cash equivalents of subsidiaries at the date of acquisition		91
Investment in associated company		(43)
Cash flow used in investing activities		(145)
Financing activities
Proceeds from issue of shares		2,399
Share issue costs		(1,054)
Repayment of bank borrowings		(2)
Repayment of hire purchase liabilities		(1)
Cash flow from financing activities		1,342
Net increase in cash and cash equivalents		1,190
Effect of exchange rate changes		(34)
Cash and cash equivalents at the beginning of the period		-
Cash and cash equivalents at the end of the period		1,156

Consolidated Statement of Changes in Shareholder' Equity
Period ended 31 December 2008
				Share	Share	Foreign exchange		Retained
				Capital	premium	reserve		earnings	Total
				£'000	£'000	£'000		£'000	£'000
As at 1 January 2008				-	-	-		-	-
Share capital issued in the period				5,167	1,732	-		-	6,899
Share issue costs				-	(1,054)	-		-	(1,054)
Exchange differences				-	-	(34)		-	(34)
Loss for the period				-	-	-		(45)	(45)
Balance as at 31 December 2008				5,167	678	(34)		(45)	5,766

  Notes to the Financial Information

Period ended 31 December 2008

1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs and IFRIC interpretations) as adopted by the European Union and using the accounting policies which are consistent with those adopted in the admission document as well as applying the following accounting policy in relation to the acquisition by MGL of MGA:

The acquisition of Medilink-Global UK Limited is outside the scope of IFRS 3 because it is not a business combination (Medilink-Global UK Limited. was a shell company at the time of the transaction) and all parties were under common control before and afterwards.

lAS 8 "Accounting policies, changes in accounting estimates and errors" requires the management to develop a relevant and reliable policy. Management have therefore chosen to apply purchase accounting rules. As a result the consideration given and the assets and liabilities acquired are recorded at their fair value. The excess of nominal value of the shares issued over the fair value of the net assets acquired is recorded as goodwill.

The financial information set out in this announcement does not constitute the Group and Company's statutory financial statements for the period ended 31 December 2008, but is derived from those financial statements. The auditors have reported on the statutory financial statements for the period ended 31 December 2008; their report was unqualified.

The financial information set out in this announcement was approved by the board on 8 June 2009. 

The directors do not recommend the payment of a dividend. 

 

2 Basic and diluted loss per ordinary 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 period the shares are not diluted.

	31.12.08
	£'000
Loss after taxation	(45)
Basic weighted average shares in issue	60,057,432
Basic and diluted loss per share based on issued share capital as at  31 December (pence)	(0.07)

3 Dividend

The Directors do not propose a dividend.

 

4 Taxation

	31.12.08
	£'000
Current tax charge	-
Deferred tax	7
	7
The tax on the Group's loss before taxation differs from the theoretical amount that would arise using the weighted average tax rate applicable for the consolidated entity as follows:
Factors affecting tax charge:
Loss before tax	(38)
Applicable tax at 17%	(6)
Effects of:
- Non taxable income - unrealised foreign exchange gain	(13)
- Non deductible amortisation	8
- Non deductible losses of subsidiaries	6
- Non deductible losses of associates	5
- Deferred tax	(7)
	(7)

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

5 Turnover and segmental analysis 

The directors consider that the Group's activities represent a single class of business. The analysis of the Group's turnover, gross profit, assets, liabilities, additions to plant, property and equipment and depreciation and amortisation by geographical origin of customers is set out below:

		GROUP
		Period ended 31 December 2008
		£'000
Turnover
Malaysia		549
Singapore		-
China		29
		578
Gross profit
Malaysia		201
Singapore		-
China		17
		218
Carrying amount of assets
Jersey		5,376
Malaysia		624
Singapore		48
China		87
		6,135

Liabilities
Jersey		72
Malaysia		256
Singapore		14
China		27
		369
Additions to plant, property and equipment
Malaysia		190
Singapore		-
China		3
		193
Depreciation and amortisation
Malaysia		19
Singapore		-
China		3
		22

6 Intangible assets

	Goodwill £'000	System software £'000	Contracted customers £'000	Total £'000
Cost
As at incorporation	-	-	-	-
Intangibles on consolidation	4,078	138	111	4,327
As at 31 December 2008	4,078	138	111	4,327
Amortisation
As at incorporation	-	-	-	-
Amortisation	-	30	15	45
As at 31 December 2008	-	30	15	45
Net book value
As at 31 December 2008	4,078	108	96	4,282

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.

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 amortized based on the straight-line method over a period of three years.

Contracted customers are the existing customers of the acquired subsidiaries. The contracted customers are initially recognized based on the estimated net present value of the service contracts entered into between the customers and subsidiaries acquired and are subsequently amortized based on the straight-line method over a period of five years.

7 Share capital

MGL have one class of ordinary share capital which carry no rights to fixed income, any preferences or restrictions.

7.1 Authorised share capital

2008

Authorised: £'000

200,000,000 Ordinary shares of 5p each 10,000

Issued:

103,330,630 Ordinary shares of 5p each 5,167

7.2 Share issues during the period

		Shares	Share Capital	Share Premium
	Note		£'000	£'000
Issued on 7 January 2008	i)	2,000	-	-
Issued on 12 May 2008	ii)	90,000,000	4,500	-
Issued on 18 November 2008	iii)	13,328,630	667	1,732
Less: share issue costs		-	-	(1,054)
At 31 December 2008		103,330,630	5,167	678

On 7 January 2008, 2,000 ordinary shares of 5p were issued for cash of 5p per share

On 12 May 2008, 90,000,000 ordinary shares of 5p were issued in respect of the transfer of 100% of the issued shares in the capital of Medilink-Global (Asia) Pte Ltd.

On 18 November 2008, 13,328,630 ordinary shares of 5p were issued for cash of 18p per share, representing a premium of 13p per share.

8 Acquisition of Medilink Global Asia

Goodwill on acquisition	£'000	£'000	£'000
	Book value	Adjustments	Fair value
Cash	-	-	-
Shares	4,500	-	4,500
Total purchase consideration	4,500	-	4,500
Fair value of net assets acquired	(214)	-	(214)
Intangible fixed assets acquired	-	(249)	(249)
Deferred tax liability	-	41	41
Goodwill	4,286	(208)	4,078

  

Acquisition of subsidiaries, net of cash and cash equivalents acquired
	£'000
Property, plant and equipment	52
Trade and other receivables	465
Cash and cash equivalents	91
Inventories	-
Total liabilities	(394)
Net total assets acquired	214
Deferred tax	-
Total consideration	4,500
Payment through shares	4,500
Cash consideration	-
Cash payment made in the previous year	-
Cash consideration paid during the year	-
Cash and cash equivalents acquired	91
Acquisition of subsidiaries, net of cash and cash equivalents acquired	(91)

On 12 May 2008, Medilink Global UK Limited ("MGL") entered into a share swap agreement with the then shareholders of Medilink-Global (Asia) Pte Ltd ("MGA"), pursuant to which, in consideration of the then shareholders of MGA transferring their shares in MGA to MGL, MGL issued to them a corresponding proportion of shares in MGL.

9 Post balance sheet events

On 8 January 2009, the Group had entered into an arrangement to acquire a Third Party Administrator ("TPA") company in Singapore with purchase consideration of SGD500,000. The purchase consideration shall be satisfied as follows: -

SGD50,000 in cash was paid in January 2009

SGD250,000 in cash was paid in April 2009

The Company shall issue 535,217 new shares of £0.05 each at £0.18 per share to vendors as full settlement of the balance purchase consideration of SGD200,000.

Acquisition of Lifeinc Holdings Pte Ltd

On 8 January 2009, the Company entered into an arrangement to acquire 100% of a Third Party Administrator ("TPA") company in Singapore.

Provisional purchase consideration (see below)	SGD
Cash	300,000
Shares	200,000
Total purchase consideration	500,000
Fair value of net assets acquired	(2)
Intangible fixed assets acquired	(236,854)
Deferred tax	-
Goodwill	263,144

Acquisition of subsidiaries, net of cash and cash equivalents acquired	SGD
Property, plant and equipment	-
Trade and other receivables	-
Cash and cash equivalents	2
Inventories	-
Trade and other payables	-
Net total asset acquired	2
Deferred tax	-
Total consideration	500,000
Payment through shares	(200,000)
Cash consideration	300,000
Cash payment made in the previous year	-
Cash consideration paid during the year	300,000
Cash and cash equivalents acquired	(2)
Acquisition of subsidiaries, net of cash and cash equivalents acquired	299,998

10 Nature of financial information

These preliminary results will be available on the Company's website, www.medilink-global.com. Further copies can be obtained from the registered office at 31 Pier Road, St. Helier, Jersey, JE4 8PW.

- Ends -

ENDFR URONRKARNAAR

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