Half Yearly Report

19 September 2014

MediLink-Global UK Limited

("MediLink" or the "Company" or the "Group")

HALF-YEARLY REPORT for the six months to 30 june 2014

MediLink, the provider of electronic health-card network services to insurance companies and corporate organisations to facilitate administration of medical claims and healthcare data-management, announces its interim results for the six months ended 30 June 2014.

Financial highlights

· Operating loss reduced by 20% to £188,000 (H1 2013: £235,000);

· Revenue has decreased marginally by 2.84% to £1,062,000 (H1 2013: £1,093,000);

· Revenue from the Group's Singapore and China operations increased by 6.52% to £294,000 (H1 2013: £276,000) and 15.43% to £374,000 (H1 2013: £324,000), respectively; and

· Improvement in operating performance was attributable to revenue growth in both China and Singapore as well as continued cost-saving measures in the Group's operations in Malaysia.

Operational highlights

Malaysia and Singapore

On 1 March 2014, MedilinkGlobal (M) Sdn Bhd ("Medilink Malaysia") renewed its Managed Care System maintenance contract with Great Eastern Life Assurance Berhad for one year. It will be renewed automatically for another year upon its expiry on 29 February 2015.

AIA Co., Ltd

- American International Assurance Berhad ("AIA") has operated under a single license in Malaysia since June 2013, after acquiring ING Group's local insurance operations.

- Malaysia's leading life-insurer AIA has successfully integrated its Takaful companies AIA AFG Takaful Bhd. and AIA PUBLIC Takaful Bhd. (formerly known as ING PUBLIC Takaful Ehsan Berhad). Since 1 March 2014, the businesses have operated under a single licence and brand, AIA PUBLIC Takaful Bhd ("AIA PUBLIC"). AIA PUBLIC is jointly-owned by AIA Co. Ltd. (AIA), Public Bank Berhad and Public Islamic Bank Berhad.

- The Directors of MediLink are confident that there will be a significant positive effect for Medilink Malaysia following the integration of AIA and ING Group's local insurance operators, both in the areas of the Group's Third Party Administration ("TPA") services as well as system development and enhancement. This is reflected by the significant increase of 57,649 members since the close of December 2013.

Self-funded and government-linked employers markets

Medilink Malaysia continues its efforts in making inroads into the self-funded and government-linked employers markets . During the period under review, the Company secured a strategic corporate account, The Royal Malaysian Police Cooperative Limited, which has contributed a further 17,600 members to Medilink Malaysia's business.

Great Eastern Life Assurance Co. Ltd ("GE Singapore")

Medilink-Global (Asia) Pte Ltd has completed the six-month user-requirement and system-specification studies to the satisfaction of GE Singapore The Company has received a letter of intent to proceed with the second phase of a system-licensing project designed to enhance, develop, customise and license the Managed Care System it has written for GE Singapore. The expected timing of project completion and system deployment is early July 2015.

The Directors are confident and strongly believe that there is market demand for the Company's Managed Care System.

MedilinkGlobal (M) Sdn Bhd reaches ISO 9001:2008 Certification

The Directors of MediLink are proud to announce that Medilink Malaysia has achieved ISO 9001:2008 certification through the International Certification Services. This achievement is an important milestone for the Group, bringing us a step closer to our corporate goals. Through a process of continuous improvement, we aim to deliver high-quality products and services to our clients. The certification is being renewed for another year to 9 May 2015.

People's Republic of China ("China")

Medilink (Beijing) TPA Co., Ltd ("Medilink China"), a wholly-owned subsidiary of MediLink, during the six-month period, continues to secure and renew TPA service contracts with reputable and established insurers in China.

- During the period under review, Medilink China renewed its contract with Ping An Annuity Insurance Company Limited, Guangzhu Branch; for a three year period to 18 April 2017. The contract will be renewed automatically for another three years upon expiry.

- In line with the corporate strategy, as well as to satisfy market demand, Medilink China is now offering healthcare management services to large employers and insurance companies in China. It has secured four healthcare management service contracts with the following customers (listed below), contributing towards a total membership of 6000 as of 30 June 2014.

§ TOTAL Petrochemicals Trade (China) Co., Ltd. Shanghai Branch (1 January 2014 to 31 December 2014)

§ Everbright Bank Credit Card Center (1 January 2014 to 31 December 2014)

§ China United Property Insurance Company, Shanghai Branch (2 December 2013 to 1 December 2014)

§ Generali China Life Insurance Company Limited (1 December 2013 to 31 December 2023)

§ Generali China Life Insurance Company Limited, Shanghai Branch (11 October 2013 to 31 July 2017)

In view of the favourable responses received from existing customers to date, the Directors believe that healthcare management services will increase membership levels in Medilink China.

Enquiries: 

CHAIRMAN'S STATEMENT

The Board of MediLink is pleased to present the Group's unaudited results for the six-month period ended 30 June 2014, which show an encouraging trend of improved operating performance compared with the respective period for the six months ended 30 June 2013.

FINANCIAL REVIEW

The Group recorded marginally reduced revenues of £1,062,000 (H1 2013: £1,093,000) and a reduced loss-after-tax of £200,000 (H1 2013: £237,000) for the six months ended 30 June 2014.

Marginal reduction in Group revenues by 2.84% relative to the same period last year, but revenue growth from Singapore and China of 6.52% and 15.43%, respectively. The Malaysia and China operating entities made the largest contribution to the Group's revenues during the period under review, representing 37.10% (H1 2013: 45%) and 35.21% (H1 2013: 30%) respectively, while Singapore contributed 27.68% (H1 2013: 25%).

The operating loss for the period was lower compared to the same period last year by virtue of revenue growth in Singapore and China and the cost-saving measures taken particularly in relation to operations in Malaysia.

PERIOD IN FOCUS

There was a marginal increase in revenue from China during the six months to 30 June 2014 relative to the same period in 2013, rising from £324,000 in the first half of 2013 to £374,000 in 2014, representing year-on-year growth of 15.43% growth. The number of enrolled members in China as at the end of August 2014 was approximately 21,500 (1 August 2013: 19,500) while the number of contracted insurance companies stands at 30 compared to 29 at the same stage last year. The number of healthcare providers operating in our network in China now stands at 549 (380 at this stage last year). Maintaining overheads at the same levels as the corresponding period last year combined with the growth in membership levels has helped reduce operating loss in China by approximately 46% in the first half of 2014 compared with the first half of 2013. Management does not anticipate a significant increase in operating costs in the second half of 2014.

Medilink Malaysia registered a 29% drop in its TPA revenue as a result of the discontinuation of the TPA contract with AXA Affin Insurance. This loss in revenues is gradually being replaced by new business coming in from self-funded corporates, other insurers and the licensing of MediLink's Claims Management System. Despite the drop in revenue during the year, Medilink Malaysia registered a profit-after-tax of £17,913 (H1 2013: £11,618 loss) due to the significant decrease in costs to £405,257 (H1 2013: £512,198). Management does not anticipate a significant increase in operating costs in the second half of 2014.

Medilink-Global (Asia) Pte Ltd entered into a Share Sale Agreement with SelfDoctor (Beijing) Technology Co., Ltd ("SelfDoctor"), on 31 July 2014 to divest a 51% interest in its subsidiary, Medilink (Beijing) TPA Services Co., Ltd ("Medilink China"). The Company retains a 49% interest in Medilink China.

Medilink China is currently loss making and the Directors of MediLink believe that having a local partner could add strategic value to the business. For the year ended 31 December 2013 Medilink China had a turnover of CNY 7.29 million (c. £700,000) and recorded a net loss of CNY 1.59 million (c. £150,000). Under the terms of the Sale and Purchase Agreement entered into between the Company and SelfDoctor, SelfDoctor has undertaken to provide financial support to Medilink China of an amount not less than US$1,000,000 (c. £613,600) and up to US$2,000,000 (c. £1,227,300). This funding is intended for use as working capital to expand Medilink China's business activities.

The Directors believe that entering into this strategic partnership with SelfDoctor will give the Company the greatest opportunity to realise value from our China operations. The presence of a local Chinese partner will give Medilink China a strategic advantage in seeking new opportunities in the Chinese market.

PROSPECTS

We believe there will be steady improvement in revenue generated from membership growth in both our Malaysia and China operations, which together with the new revenues derived from the licensing of MediLink's Managed Care System to insurance companies in Malaysia and Singapore will contribute to a significant health insurance portfolio. The Directors believe that these developments can only enhance business prospects and are confident that the Group's financial performance should continue to improve in the second half of 2014 and during the financial years thereafter.

Norman Lott

ChairmanConsolidated Statement of Comprehensive Income

Six-month period ended 30 June 2014

* In accordance with IAS33 "Earnings per share" and where the Group has reported a loss for the period, the potential shares are not dilutive. The Group has not issued any instrument with dilutive effect.

Consolidated Statement of Financial Position

As at 30 June 2014

Consolidated Statement of Cash Flows

Six months ended 30 June 2014

Notes to the interim financial information

Six-month period ended 30 June 2014

1 Basis of preparation

The financial information has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The principal accounting policies used in preparing the interim results are consistent with those the group expects to apply in its financial statements for the year ending 31 December 2014 and are consistent with those disclosed in the group's Report and Financial Statements for the year ended 31 December 2013.

The interim results have not been reviewed nor audited by the Company's auditor. The comparatives for the year ended 31 December 2013 are not the Company's full statutory financial statements for that period. A copy of the statutory financial statements for that period, which were prepared under IFRS, have been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, but included an emphasis of matter in respect of going concern:

"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."

Whilst the financial information included in this Interim Financial information has been prepared in accordance with the recognition and measurement criteria of IFRS, it does not include sufficient information to comply with IFRS.

The interim results announcement was approved by the board on 19 September 2014

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 where the Group has reported a loss for the period, the shares are not dilutive.

3 Dividend

The Directors do not propose a dividend in the period.

4 Taxation

No charge to taxation arises in the six months ended 30 June 2014.

5 Turnover and segmental analysis

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 include the goodwill on consolidation of £3,038,000.

Revenues from major customers amounted to £541,229: AIA Bhd (formerly known as ING Insurance Bhd) and the insured customers of Medilink China (H1 2013: £450,449) and £367,589: self-insured corporate clients (H1 2013: 325,179) arising from sales in the third party administrator segment.

The assets of third party administrator include the goodwill on consolidation of £3,038,000.

The assets of third party administrator are including the goodwill on consolidation of £3,038,000.

Revenues from two customers amounted to £381,790: AIA Bhd (formerly known as ING Insurance Bhd) £282,485 and AXA Insurance Bhd £99,305, arising from sales by third party administrator segment.

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

6 Share capital

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

Authorised share capital (unaudited):

7 Foreign currency exchange rate

The following significant exchange rates applied during the period:

8 Post balance sheet event

The Board of Directors concluded a sale and purchase agreement dated 31 July 2014 to divest a 51% shareholding of Medilink (Beijing) TPA Services Co., Ltd to a local strategic Chinese partner, Selfdoctor (Beijing) Technology Co., Ltd for strategic reasons. Medilink continues to hold 49% of Medilink (Beijing) TPA Services Co., Ltd following the completion of this sale.

With a local strategic participation and active involvement in the company's ownership, the Board of Directors believe that the Company will be able to move forward progressively and effectively

9 Nature of financial information

These interim results will be available shortly on the Company's website, www.medilink-global.com in accordance with the AIM Rules. Further copies can be obtained from the registered office at Queensway House, Hilgrove Street, St Helier, Jersey JE1 1ES.

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