(MEDI) Medilink-Global UK

28 September 2011

MediLink-Global UK Limited

("MediLink" or "the Company")

HALF-YEARLY REPORT for the six months to 30 june 2011

MediLink, the provider of electronic healthcard network services to insurance companies and corporate organisations to help them facilitate the administration of medical claims and healthcare data management, announces its interim results for the six months ended 30 June 2011.

Financial highlights

·      Revenue increased by 13% to £871,000 (H1 2010: £769,000);

·      Revenue contribution from Singapore operations was £296,000 (H1 2009: £264,000); and

·      Operating loss of £622,000 (H1 2010: £330,000 operating loss), mainly attributable to costs of expansion in China and slower than anticipated enrolment of new members in China.

Operational highlights

o  On 1 January 2011, the Company renewed the contract with ING Employee Benefits Sdn Bhd ("INGEB") for a further five year period up to 31 December 2015. Estimated value of the renewal is RM5 million (approximately £1 million).

o  On 14 February 2011, the Company entered into a three year contract with Ping An Health Insurance Company Ltd.

o  The Company launched a new service offering Medical Tourism programs in Malaysia.

Enquiries: 

CHAIRMAN'S STATEMENT

Medilink is pleased to present the Group's unaudited results for the six month period ended 30 June 2011.

FINANCIAL REVIEW

The Group recorded revenues of £871,000 (H1 2010: £769,000) and a loss after tax of £622,000 (H1 2010: £334,000) for the six months ended 30 June 2011. Revenues have increased by 13% over the same period last year mainly due to the overall growth of the Group's operations. Revenue from China, Malaysia and Singapore increased by 18%, 6%and 14% respectively. The Malaysian operating entities continued to make the largest contribution of 45% (H1 2010: 46%) of the Group revenue's for the period under review, whilst China and Singapore contributed 20% (H1 2010: 20%) and 35% (H1 2010: 34%) respectively. The operating loss for the period was higher compared to the same period last year as a result of the increase in manpower cost in China and Malaysia, which is in line with the expansion plan put in place. The loss for the period under review was exacerbated by an unrealised foreign exchange loss for of £89,000 (H1 2010: Nil).

PERIOD IN FOCUS

For the first half of 2011, member enrollment in China had increased but was lower than expected which led to a modest increase in revenue of 18% over the same period last year, from £151,000 to £175,000. However, the China operation suffered a higher loss compared to the same period last year due to an increase in manpower cost in the first half of 2011. Medilink China signed up agreements with a further two insurance companies during the six months to June 2011 and are now contracted to serve 15 prominent insurance companies and 1 corporate client in the region compared with 11 insurance companies at the same stage last year. The management is anticipating higher revenue growth and no significant increase in operating cost in the second half of 2011.

The increase in revenue from Malaysia and Singapore operations compared with the same period of last year was due to the continuous growth in member enrollment. However, a higher loss was recorded as the result of the increase in manpower cost in Malaysia.

PROSPECTS

The Directors remain cautiously optimistic about the Group's prospects in the second half of 2011 and are pleased with the growth experienced in Malaysia and Singapore.  However, as a result of the slower than anticipated enrollment of new members in China the Directors' current expectation is that the financial performance for the full year may fall materially behind their previous expectations. 

The lower than expected revenues in the first half has led to a reduction in cash and working capital resources and the Company is currently in discussions with key shareholders regarding access to new funding.

Norman Lott

Chairman

Consolidated Statement of Comprehensive Income

Period ended 30 June 2011

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

Consolidated Statement of Financial Position

As at 30 June 2011

Consolidated Statement of Cash Flows

Six months ended 30 June 2011

Consolidated Statement of Changes in Shareholder' Equity

Notes to the Interim Financial Information

Period ended 30 June 2011

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 those the group expects to apply in its financial statements for the year ending 31 December 2011 and are unchanged from those disclosed in the group's Report and Financial Statements for the year ended 31 December 2010.

The interim results have not been reviewed nor audited by the Company's auditors. The comparatives for the period ended 31 December 2010 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 auditors' 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 financial information set out in this announcement was approved by the board on 27 September 2010.

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 diluted

3     Dividend

The Directors do not propose a dividend in the period.

4      Taxation

The interim tax credit reflects an estimate of the likely effective tax rate for the period.

5      Turnover and segmental analysis

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 £4,138,000.

Revenues from two customers amounted to £244,000 : ING Insurance Bhd £158,000 and AXA Insurance Bhd £86,000 (1H 2010: £184,000: ING Insurance Bhd £113,000 and AXA Insurance Bhd £71,000), 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.

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

Revenues from two customers amounted to £349,000 : ING Insurance Bhd £204,000 and AXA Insurance Bhd £145,000, 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  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 31 Pier Road, St. Helier, Jersey, JE4 8PW.

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