TIDMMEDI
RNS Number : 8272A
Medilink-Global UK Limited
01 October 2015
MEDILINK-GLOBAL UK LIMITED
("Medilink", the "Company" or the "Group")
FINAL RESULTS
Medilink-Global UK Limited (AIM: MEDI), the electronic health
card network service provider, is pleased to announce its audited
results for the year ended 31 December 2014. A copy of the annual
report and accounts and notice of the Company's annual general
meeting, to be held at C-16-3, Level 16, Tower C, Wisma Goshen,
Plaza Pantai, No.5, Persiaran Pantai Baru, 59200, Kuala Lumpur,
Malaysia at 11.00 am (Malaysia time) on 27 October 2015 has been
posted to shareholders today and will be available shortly from the
Company's website, www.medilink-global.com.
FINANCIAL HIGHLIGHTS
-- Total revenue for the year increased by 7% to GBP1,405,000
(FY2013: GBP1,316,000). There were significant increases in revenue
contribution from Singapore to GBP643,000 (FY2013: GBP508,000)
-- Software licensing revenues increased fivefold to GBP109,000
(FY2013: GBP22,000) helped by a contribution from the Great Eastern
Life Assurance Co., Ltd contract of SGD625,600
-- The significant increase in the loss after taxation from
continuing operations of GBP1,931,000 (FY 2013: loss after tax of
GBP509,000) was as a result from a conservative approach taken in
assessing the carrying value of the Group's intangible assets,
including goodwill, which resulted in an impairment provision of
GBP1,700,000 in the period under review. There was a marked
improvement in the underlying trading result with increased
revenues, higher margins, reduced overheads and a significant
improvement in the contribution from Medilink (Beijing) TPA
Services Co Limited.
-- Administrative costs have reduced by 13% to GBP511,000 (FY 2013 : GBP587,000)
-- On 1 August 2014, the Group entered into a sale and purchase
agreement with Selfdoctor (Beijing) Technology Co., Limited to
divest 51% of its interest in Medilink (Beijing) TPA Services Co
Limited. The divestment was deemed to have fully completed on 10
July 2015 when the transfer of ownership took place. With a
strategic local partner in place and with enhanced financial
support it is believed this will add value to the China business
and help expand Medilink China's business activities.
OPERATIONAL HIGHLIGHTS
The business highlights of Medilink-Global UK Limited (the
"Company") in the following regions.
Malaysia and Singapore
Great Eastern Life Assurance Co. Ltd ("GE Singapore")
As previously reported Medilink-Global (Asia) Pte Ltd received
an order from GE Singapore in 2013, to study and outline the user
requirement and system specification and commenced work to develop
and implement its Claims Management System in 2014. The system went
live in September 2015.
AIA Co., Ltd
American International Assurance Berhad (AIA) had renewed its
agreement with Medilink Malaysia for another 2 years. AIA had
contributed more than 100,000 members to the membership growth of
Medilink Malaysia during the period under review.
The Directors of Medilink are confident that there will be a
continuous positive effect for Medilink Malaysia from AIA in the
years to come.
Syarikat Takaful Malaysia Bhd.
Syarikat Takaful Malaysia Bhd is a 30 year old Takaful insurance
company that was incorporated on the recommendation of the "Task
Force on the Study for the Establishment of an Islamic Insurance
Company in Malaysia" (Task Force) and was set up by the Government
of Malaysia in 1981.
Medilink Malaysia entered into a yearly renewal third party
administration (TPA) contract with Syarikat Takaful Malaysia Bhd,
during the period under review.
Medilink Malaysia secured 4 new corporate clients whose group
hospitalisation and surgical insurance are insured by Syarikat
Takaful Malaysia Bhd. It contributed a membership size of 20,000 to
the growth of Medilink Malaysia in the period under review.
The Board of Directors are confident that the collaboration
between the parties will bring a positive and significant increase
in TPA membership levels for the years to come.
Self-funded and Government-Linked Employers market
Medilink Malaysia made little in-roads into the self-funded
employer market and government-linked organisations, which
collectively contributed 17,000 members to the membership growth of
Medilink Malaysia during the period under review.
Licensing of its proprietary Claims Management System
Medilink-Malaysia is currently finalising an 18 months Claims
Management System licensing contract with an established Malaysian
insurance company.
People's Republic of China ("China")
Medilink (Beijing) TPA Co., Ltd ("Medilink China") remains a
subsidiary as at 31 December 2014 and, as such, the financial
statements reflect 100% of the subsidiary's results However it has
been treated as a discontinued operation as the Group has sold a
51% interest in the Company, as announced on 1 August 2014, which
has resulted in a loss of control. It is now a 49% held associate
company of Medilink-Global UK Limited but continues to secure and
renew its Third Party Administration ("TPA") service contracts with
reputable and established insurers in China.
Contract renewals
During the financial year under review, Medilink China renewed
its contract with 7 insurance companies.
New contracts secured
During the financial year under review, Medilink China secured 6
new TPA contracts within the insurance industry; they are,
Manulife-Sinochem, Beijing Hezheng Insurance Broker Co., Ltd, CPIC
Allianz Health Insurance Co., Ltd, Funde Sino Life Insurance Co.,
Ltd Shanghai Branch and Sunshine Life Insurance Co., Ltd.
For further information contact:
MediLink-Global UK Limited Tel: + 603 2296 3028
Shia Kok Fat, Chief Executive
Officer
www.medilink-global.com
Allenby Capital Limited Tel: +44 (0)20 3328 5656
(Nominated Adviser and Broker)
Nick Athanas, James Reeve
CHAIRMAN'S STATEMENT
Medilink-Global UK Limited is pleased to present the Group's
results for the year ended 31 December 2014.
FINANCIAL REVIEW
The Group recorded revenues of GBP1.405 million (FY 2013:
GBP1.316 million) and a loss after taxation of GBP1,992,000 (FY
2013: GBP678,000) for the year ended 31 December 2014.
Despite the increase in revenues which were largely due to good
revenue growth from our Singapore operations, the Group recorded an
increase in the loss after taxation from GBP678,000 to
GBP1,992,000. This was largely due to the goodwill impairment of
GBP1,700,000 reflecting the loss of control of the operating
segment in China as well as the ongoing economic uncertainty impact
on the group's operations.
The underlying trading result itself improved significantly as a
result of increased revenues, higher margins, reduced overheads and
an improved contribution from Medilink (Beijing) TPA Services Co
Limited,
GROUP'S OPERATIONS REVIEW
Malaysia
As previously reported the acquisition of ING Malaysia by AIA is
an important corporate development which we expect will create a
positive impact for Medilink Malaysia in terms of larger business
volumes and enhanced market position. The newly-merged insurance
entity has become the number one insurer in the country in terms of
total premium size and policy holders' base. In this respect our
business with AIA Malaysia, both conventional and Takaful business,
grew by 3% in 2014.
AIA had fully completed its merger exercise to operate under a
single license in Malaysia after acquiring ING Group's local
insurance operations. We have seen an increase of 100,000 members
in the Medilink Malaysia portfolio.
We expect continuing growth in TPA revenue arising from both the
self-insured as well as insured sector in the coming years.
Singapore
Revenues from Singapore increased by 26% to GBP643,000 (FY 2013:
GBP508,000) from the previous year while the number of healthcare
providers in our network remained at 146.
China
Revenues from Medilink-China continued to grow steadily,
achieving a growth rate of 18% in the period under review to
GBP886,000 (FY 2013: GBP753,000) as a result of the growth in
membership enrolment arising from the TPA contracts and healthcare
management service contracts with its portfolio of Insurance
Companies. Membership levels increased by 32% from 19,000 at the
end of 2013 to 25,000 by the end of 2014. At the date of this
report membership levels are standing at approximately 30,000.
Medilink China's operating costs have further stabilised which
resulted in only a marginal increase of 3% over the previous year.
The overall improvement in MCN's performance meant that the Group's
share of the losses incurred were reduced by GBP108,000 year on
year.
The average monthly revenue per employee during the year for our
China operations was GBP1,420, an improvement of approximately 9%
compared to the previous year figure of GBP1,307. We expect the
monthly average revenue per employee for China to continue to
improve as business volumes increase.
To date, we have signed TPA and healthcare management service
contracts with 34 insurance companies in China, of which 6 came on
board during the FY 2014. At the end of 2014, there were 560 (FY
2013: 549) healthcare providers operating throughout our network in
China and Hong Kong.
EMPHASIS OF MATTER
The auditor's report to the financial statements for the year
ended 31 December 2014 includes an emphasis of matter in relation
to the Group's ability to continue as a going concern. The Company
has historically received the support of certain of its key
shareholders and directors. Shia Kok Fat, the Company's Chief
Executive, has indicated that he will be willing to continue to
support the business, should it be required. Notwithstanding this,
the Directors are confident in the Group's ability to continue as a
going concern and consider that the Group is well placed for
revenue growth.
PROSPECTS
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Medilink will continue to provide excellent services to its
customers and with our new initiatives in Malaysia and our
continued membership growth in China we anticipate the Group to
further reduce its losses during 2015 and move towards
profitability in 2016.
We will continue to strengthen all areas of the organisation and
maintain our position as a leading regional TPA in the Asia Pacific
region with a global servicing capacity.
The Company continues to closely monitor its cash position,
which remains constrained. Cost cutting measures implemented during
2013 and 2014 have assisted in this regard. The Directors will
continue to explore options for supplementing the Group's cash
resources, at both the Company and subsidiary level.
ACKNOWLEDGMENTS
On behalf of the board, I would like to extend our thanks to our
business partners, customers, associates, healthcare providers and
valued shareholders for their support throughout the year. We 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
30 September 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
Note Restated
2014 2013
Continuing operations GBP'000 GBP'000
Revenue 3 1,405 1,316
Cost of sales (1,154) (1,227)
---------- ---------
Gross profit 250 89
Other income 68 16
Goodwill impairment (1,700) -
Administrative expenses (511) (587)
Operating loss (1,893) (482)
Finance expenses 7 (38) (23)
---------- ---------
Loss before taxation from continuing
operations (1,931) (505)
Taxation 8 - (4)
---------- ---------
Loss for the year from continuing
operations (1,931) (509)
Discontinued operations
Loss after tax for the year from discontinued
operations 21 (61) (169)
---------- ---------
Loss for the year (1,992) (678)
========== =========
Other comprehensive loss
Items that may be reclassified subsequently
to profit or loss:
---------- ---------
Exchange difference on translation
of foreign subsidiaries (60) 132
---------- ---------
Total comprehensive loss for the year
attributable to equity holders (2,052) (546)
---------- ---------
Loss for the year attributable to:
Owners of the company (1,990) (676)
Non-controlling interest (2) (2)
---------- ---------
(1,992) (678)
Total comprehensive loss attributable
to:
Owners of the company (2,049) (544)
Non-controlling interest (3) (2)
---------- ---------
(2,052) (546)
Loss per ordinary share (pence) 20
Basic and diluted* (1.64) (0.56)
Loss per ordinary share for continuing
operations (pence)
Basic and diluted* (1.59) (0.42)
The notes to the financial statements form an integral part of
these financial statements.
* 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.
COMPANY STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2013
GBP'000 GBP'000
Administrative expenses (266) (231)
Impairment loss (1,550) -
Operating loss (1,816) (231)
Loss before taxation (1,816) (231)
Taxation - -
Loss profit after taxation (1,816) (231)
============== ========
The notes to the financial statements form an integral part of
these financial statements.
All operations of the Company are continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2014
Note 2014 2013
ASSETS GBP'000 GBP'000
Non-current assets
Property, plant and equipment 9 75 163
Intangible assets 10 1,505 3,140
Total non-current assets 1,580 3,303
-------- --------
Current assets
Trade and other receivables 12 1,388 1,107
Cash and cash equivalents 13 254 304
-------- --------
1,642 1,411
Assets held for sale 21 876 -
-------- --------
Total current assets 2,518 1,411
-------- --------
TOTAL ASSETS 4,098 4,714
======== ========
EQUITY
Equity attributable to the equity
holders of the parent:
Share capital 19 6,074 6,045
Share premium 1,507 1,507
Reserves (7,522) (5,473)
-------- --------
Total shareholders' equity 59 2,079
Non-controlling interests (5) (2)
-------- --------
Total equity interest 54 2,077
-------- --------
Current liabilities
Term loan 18 161 -
Trade and other payables 14 2,628 2,115
Hire purchase liabilities 15 3 3
2,792 2,118
Liabilities directly associated with
the assets held for sale 21 1,090 -
-------- --------
Total current liabilities 3,882 2,118
-------- --------
Non-current liabilities
Hire purchase liabilities 15 - 7
Advance from a director 17 118 318
Term loan 18 - 150
Deferred tax 16 44 44
-------- --------
Total non-current liabilities 162 519
-------- --------
TOTAL EQUITY AND LIABILITIES 4,098 4,714
======== ========
The notes to the financial statements form an integral part of
these financial statements.
Approved and authorised by the Board on 30 September 2015 and
signed on its behalf by:
Shia Kok Fat
Director
COMPANY STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2014
Note 2014 2013
GBP'000 GBP'000
ASSETS
Non-current assets
Investment in subsidiaries 11 1,500 3,050
Amount due from subsidiaries and other
investment 12 - 37
-------- --------
Total non-current assets 1,500 3,087
-------- --------
Current assets
Cash and cash equivalents 13 1 -
-------- --------
Total current assets 1 -
-------- --------
TOTAL ASSETS 1,501 3,087
======== ========
EQUITY
Equity attributable to the equity holders
of Medilink-Global UK Ltd:
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Share capital 19 6,074 6,045
Share premium 1,507 1,507
Reserves (7,040) (5,224)
-------- --------
Total equity 541 2,328
-------- --------
Current liabilities
Other payables 14 842 641
-------- --------
Total current liabilities 842 641
-------- --------
Non-current liabilities
Advance from a director 17 118 118
-------- --------
Total non-current liabilities 118 118
-------- --------
TOTAL EQUITY AND LIABILITIES 1,501 3,087
======== ========
The notes to the financial statements form an integral part of
these financial statements.
Approved and authorised for issue by the Board on 30 September
2015 and signed on its behalf by:
Shia Kok Fat
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2013
GBP'000 GBP'000
Cash flows from operating activities
Loss before taxation (1,931) (505)
Loss before taxation for discontinued operation (61) (169)
Adjustments for:
Amortisation of intangible assets 20 52
Depreciation of property, plant and equipment 61 126
Loss / (gain) on disposal of property, plant
& equipment - 1
Disposal of a non controlling interest - 61
Goodwill impairment 1,700 -
Finance costs 20 5
-------- -----------------
Cash from operating activities before changes
in working capital (191) (429)
Decrease /(increase) in inventory (5) -
Decrease /(increase) in trade and other receivables (772) 510
Increase / (decrease) in trade and other
payables 1,012 79
-------- -----------------
Cash flow from operations 44 160
Interest received -* -
-------- -----------------
Net cash flow from operations 45 160
-------- -----------------
Investing activities
Purchase of intangible assets (85) -
Purchase of property, plant and equipment (13) (180)
Cash flow used in investing activities (98) (180)
-------- -----------------
Financing activities
Interest paid (20) (5)
Term loan - 150
Advance from shareholders 27 -
Repayment of hire purchase liabilities (4) (4)
-------- -----------------
Cash flow from financing activities 3 141
-------- -----------------
Net increase/(decrease) in cash and cash
equivalents (50) 121
Effect of exchange rate changes - (13)
Cash and cash equivalents at the beginning
of the year 304 196
-----------------
Cash and cash equivalents at the end of the
year 254 304
======== =================
Detail of the non-cash transaction is disclosed in note 19.
The notes to the financial statements form an integral part of
these financial statements.
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2013
GBP'000 GBP'000
Cash flows from operating activities
Loss before taxation (1,816) (231)
Adjustments for:
Goodwill impairment 1,550 -
Cash from operating activities before changes
in working capital (266) (231)
(Increase) / decrease in trade and other
receivables 37 (1)
Increase in trade and other payables 230 222
-------- --------
Net cash flow from/(used in) operations 1 (10)
-------- --------
Net (decrease) in cash and cash equivalents 1 (10)
Cash and cash equivalents at the beginning
of the period - 10
Cash and cash equivalents at the end of 1 -
the period
======== ========
Detail of the non-cash transaction is disclosed in note 19.
The notes to the financial statements form an integral part of
these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
Share Share Exchange Retained Total Non Controlling Total
capital Premium Reserves Earnings Interest
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ---------- ---------- -------- ---------------- --------
Balance at
01 January 2013 6,045 1,507 (127) (4,863) 2,562 - 2,562
Loss for the
year - - - (676) (676) (2) (678)
Other comprehensive
income
Exchange differences - - 132 - 132 - 132
--------- --------- ---------- ---------- -------- ---------------- --------
Total comprehensive
loss for the
year - - 132 (676) (544) (2) (546)
Transactions
with owners in
their capacity
as owners
Disposal of non
controlling interest
without a loss
of control - - - 61 61 - 61
Balance at
31 December 2013 6,045 1,507 5 (5,478) 2,079 (2) 2,077
--------- --------- ---------- ---------- -------- ---------------- --------
Loss for the
year - - - (1,990) (1,990) (2) (1,992)
Other comprehensive
income
--------- --------- ---------- ---------- -------- ---------------- --------
Exchange differences - - (59) - (59) (1) (60)
--------- --------- ---------- ---------- -------- ---------------- --------
Total comprehensive
loss for the
year - - (59) (1,990) (2,049) (3) (2,052)
Transactions
with owners in
their capacity
as owners
Issue of shares 29 - - - 29 - 29
Balance at
31 December 2014 6,074 1,507 (54) (7,468) 59 (5) 54
--------- --------- ---------- ---------- -------- ---------------- --------
The notes to the financial statements form an integral part of
these financial statements
COMPANY STATEMENT OF CHANGES IN EQUITY
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FOR THE YEAR ENDED 31 DECEMBER 2014
Share Share premium Retained Total
capital earnings
GBP'000 GBP'000 GBP'000 GBP'000
As at 1 January 2013 6,045 1,507 (4,993) 2,559
Loss for the year - - (231) (231)
--------- -------------- ---------- --------
Total comprehensive loss
for the year - - (231) (231)
Balance as at 31 December
2013 6,045 1,507 (5,224) 2,328
--------- -------------- ---------- --------
Loss for the year - - (1,816) (1,816)
Total comprehensive loss
for the year - - (1,816) (1,816)
Transactions with owners
in their capacity as owners
Issue of Share 29 - - 29
Balance as at 31 December
2014 6,074 1,507 (7,040) 541
========= ============== ========== ========
The notes to the financial statements form an integral part of
these financial statements.
NOTES TO THE FINANCIAL INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2014
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
("GBP") 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 statements in Pound Sterling due to the international
exposure and shareholders of the entity.
2. Accounting policies
The principal accounting policies adopted by the Group and
Company in the preparation of the financial statements are set out
below.
i. Basis of preparation
The financial statements of the Group and the Company have been
prepared and presented in accordance with International Financial
Reporting Standards as adopted by the European Union and the
historical cost convention as modified by the use of fair values.
The Board had reviewed the accounting policies set out in the
financial statements and consider them to be the most appropriate
to Group's business activities.
New standards, amendments to standards or interpretations
The directors have considered those standards and
interpretations, which have not been applied in the financial
statements but are relevant to the company's operations, that are
in issue but not yet effective and do not consider that any will
have a material impact on the future results of the company.
ii. Basis of consolidation
The consolidated financial statements include the financial
statements of the company and its subsidiaries made up to 31
December. Intra-group sales and profits are eliminated fully on
consolidation. The results of subsidiaries acquired or disposed of
during the period are dealt with in the consolidated income
statement from or up to their effective dates of acquisition or
disposal respectively. Uniform accounting policies are applied
across the group.
Control is achieved where the Company is exposed, or has rights,
to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the
investee.
iii. Business combinations
The consolidated financial statements incorporate the results of
business combinations using the purchase method. In the
consolidated statement of financial position, the acquiree's
identifiable assets and liabilities are initially recognised at
their fair values at the acquisition date except as described below
in (iv). The results of acquired operations are included in the
consolidated statement of comprehensive income from the date on
which control is obtained.
iv. Transactions under common control
The acquisition of Medilink-Global (Asia) Pte. Ltd during the
year ended 31 December 2008 was 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 in respect of the business combination. Management has
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.
v. Going concern
The directors report that after making enquiry, they have a
reasonable expectation that the company and the Group have adequate
resources to continue in operational existence. For this reason,
they continue to adopt the going concern basis in preparing the
financial statements. The Group's ability to continue as a going
concern is reliant upon continuing shareholder and director 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 and directors 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 directors 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.
vi. Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses.
The cost of an item of property, plant and equipment comprises
its purchase price and any directly attributable costs of bringing
the asset to its working condition and location for its intended
use.
Depreciation is provided to write off the cost less accumulated
impairment losses of property, plant and equipment over their
estimated useful lives as set out below from the date on which they
are available for use and after taking into account their estimated
residual values, using the straight-line method. Where parts of an
item of property, plant and equipment have different useful lives,
the cost or valuation of the item is allocated on a reasonable
basis and depreciated separately. The estimated useful lives of
property, plant and equipment are as follows:
Computer equipment 33.3%
EDC terminals 33.3%
Motor vehicles 20%
Furniture, fittings and renovations 33.3%
An impairment review is undertaken where there are indicators of
impairment. Maintenance and repairs are charged to expenses when
incurred.
vii. Inventories
Inventories are valued on a first in, first out basis at the
lower of cost and net realisable value. Cost includes all
expenditure incurred during the normal course of business in
bringing in stocks to their present location and condition,
including in the case of work-in-progress and finished goods an
appropriate proportion of production overheads. Net realisable
value is based on the estimated useful selling price less further
costs expected to be incurred to completion and subsequent
disposal.
viii. Goodwill on consolidation
Goodwill arising on the acquisition of a subsidiary or jointly
controlled entity 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 subsidiary or
jointly controlled entity 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.
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For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash-generating units expected to benefit from
synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually or
more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is
less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the
unit. An impairment loss recognised for goodwill is not reversed in
subsequent periods.
ix. Intangible assets
Acquired intangible assets are valued at cost less accumulated
amortisation. Amortisation is calculated using the straight line
method. The annual rates used for this purpose are as follows:
System software 33.33% per annum
Contracted customers 20% per annum
Trademark Fully impaired as the group does not continue the use
of the acquired trademark
The assets residual value and useful lives are reviewed and
adjusted if appropriate, at each statement of financial position
date. An asset's carrying value is written down immediately to its
recoverable value if the asset's carrying value is greater than its
listed recoverable amount.
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required,
the Group makes an estimate of the asset's recoverable amount. An
asset's recoverable amount is the higher of the asset's or
cash-generating unit's fair value less costs to sell and its value
in use and is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of
those from other assets or groups of assets and the asset's value
in use cannot be estimated to be close to its fair value. In such
cases the asset is tested for impairment as part of the
cash-generating unit to which it belongs. When the carrying amount
of an asset or cash-generating unit exceeds its recoverable amount,
the asset or cash-generating unit is considered impaired and is
written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risk specific to the asset. Impairment losses of continuing
operations are recognised in those expense categories consistent
with the function of the impaired asset unless the asset is carried
at a revalued amount (in which case the impairment is treated as a
revaluation decrease).
An assessment is made at each reporting date as to whether there
is any indication that previously recognised impairment losses may
no longer exist or may have decreased. If such indication exists,
the recoverable amount is estimated, a previously recognised
impairment loss is reversed only if there has been a change in the
estimates used to determine the asset's recoverable amount since
the last impairment loss was recognised. If that is the case, the
carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior periods.
Such reversal is recognised in the statement of comprehensive
income unless the asset is carried at a revalued amount, in which
case the reversal is treated as a revaluation increase. After such
a reversal the depreciation charge is adjusted in future periods to
allocate the asset's revised carrying amount, less any residual
value, on a systematic basis over its remaining useful life.
x. Associated companies
Associated companies are all entities over which the Group has
significant influence but not control, generally accompanying a
shareholding of between 20 % and 50 % of the voting rights.
Investments in associated companies are accounted for using the
equity method of accounting and are initially recognised at cost. A
company's investment in associates includes goodwill identified on
acquisition, net of any accumulated impairment loss.
The Group's share of associates' post-acquisition profits or
losses is recognised in the statement of comprehensive income, and
its share of post-acquisition movements in reserves is recognised
in reserves. The cumulative post-acquisition movements are adjusted
against the carrying amount of the investment. When its share of
losses in an associate equals or exceeds its interest in the
associate, including any other unsecured receivables, a company
does not recognise future losses, unless it has incurred
obligations or made payments on behalf of the associate.
xi. Receivables
Trade and other receivables are recognised initially at fair
value and subsequently measured at amortised cost, less provision
for impairment. A provision for impairment of receivables is
established when there is objective evidence that the Group will
not be able to collect all amounts due according to the original
terms of receivables. The impairment loss is reversed through the
statement of comprehensive income. A reversal of an impairment loss
is measured as the difference between the asset's carrying amount
and its estimated recoverable amount.
The carrying amount of the asset is reduced through the use of
an allowance amount and the amount of the loss is recognised in the
statement of comprehensive income. If in a subsequent period the
amount of an impairment loss decreases and the decrease can be
linked objectively to an event occurring after the impairment loss
was recognised, the impairment loss is reversed through the
statement of comprehensive income. A reversal of an impairment loss
is limited to the asset's carrying amount that would have been
determined had no impairment loss been recognised in prior
periods.
xii. Hire purchase
Assets financed by hire purchase arrangements which transfer
substantially all the risks and rewards of ownership to the Group
are capitalised as property, plant and equipment, and the
corresponding obligations are treated as liabilities. The assets
capitalised are depreciated in accordance with the accounting
policy on property, plant and equipment. Finance charges are
charged to the aggregated statement of comprehensive income over
the periods of the respective agreements.
xiii. Borrowing costs
Borrowing costs are expensed to the statement of comprehensive
income except where they arise from financing used on qualifying
assets, where they are capitalised.
xiv. Payables
Payables are stated at cost which is the fair value of the
consideration to be paid in the future, whether or not billed to
the Group. Trade payables are subsequently measured at amortised
cost using the effective interest method and are not interest
bearing.
xv. Provisions
Provisions are recognised when the Group has a present
obligation as a result of a past event and it is probable that an
outflow of resources embodying economic benefits will be required
to settle the obligation, and a reliable estimate of the amount can
be made. Provisions are reviewed at each statement of financial
position date and adjusted to reflect the current best estimate.
Provisions have been made in the financial statements for benefits
accruing in respect of sick leave, annual leave and long service
leave.
xvi. Taxation
The tax expense in the statement of comprehensive income
represents the aggregate amount of current tax and deferred tax.
Current tax is the expected amount of income taxes payable in
respect of the taxable profit for the period and is measured using
the tax rates that have been enacted at the statement of financial
position date.
Deferred tax is provided for, using the liability method, on
temporary differences at the statement of financial position date
between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. In principal, deferred tax
liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised for all deductible temporary
differences, unused tax losses and unused tax credits to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences, unused tax losses and
unused tax credits can be utilised.
Deferred tax is measured at the tax rates that are expected to
apply in the period when the asset is realised or the liability is
settled, based on tax rates that have been enacted or substantively
enacted at the statement of financial position date. Deferred tax
is recognised in the statement of comprehensive income, except when
it arises from a transaction which is recognised directly in
equity, in which case the deferred tax is also charged or credited
directly in equity.
xvii. Revenue recognition
Revenue comprises the fair value of the consideration received
or receivable for the sale of goods and provision of services in
the ordinary course of the Group's activities. Revenue is shown net
of service tax, returns and discounts. The Group recognises revenue
when the amount of revenue can be reliably measured and it is
probable that future economic benefits will flow to the entity as
follows:
(i) Revenue arising from third party administration services
charged to insurance companies are billed on a monthly basis so as
to reflect monthly changes in membership of each scheme.
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(ii) Corporate clients and individual policyholders are billed
annually in advance based on membership at the time of renewal.
Amounts billed in advance at each statement of financial position
date are carried forward to future periods as deferred revenue and
recognised as revenue in the period to which the services provided
relate.
(iii) Service and network transaction fees are billed and
recognised as revenue on a monthly basis by reference to the usage
by scheme members of their electronic swipe cards. A membership fee
per member per annum is charged annually in advance. Amounts billed
in advance at each statement of financial position date are carried
forward to future periods as deferred revenue and recognised as
revenue in the period to which the services provided relate.
(iv) Software licence sales are recognised when all contractual
arrangements have been satisfied, typically on completion of user
acceptance testing.
(v) Terminal rentals are billed and recognised on a monthly basis.
xviii. Foreign currency translation
(a) Functional and presentational currency
Items included in the financial statements of each group entity
are presented in the currency of the primary economic environment
in which the entity operates (the "functional currency"). The
functional currency of the entities in the Group is Ringgit
Malaysia ("RM"). For the purpose of the consolidated financial
statements, the results and financial position of each group entity
are expressed in Pounds Sterling ("GBP"), for reporting in the
United Kingdom, which is the company's presentational currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rate prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period
and exchange rates of the monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement
of Comprehensive Income.
The foreign exchange reserve represents the differences arising
translation of foreign operations into the presentational
currency.
(c) Group companies
The results and financial position of all the group entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentational
currency are translated into the presentational currency as
follows:
-- assets and liabilities for each Statement of Financial
Position presented are translated at the closing rate at the date
of that Statement of Financial Position;
-- income and expenses for each Statement of Comprehensive
Income are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transactions dates, in which case
income and expenses are translated at the rate on the dates of the
transactions); and all resulting exchange differences are
recognized as a separate component of equity.
(d) Exchange difference on translation of foreign subsidiaries
The functional currency of the Group's entities is the currency
of their primary economic environment. In individual companies,
transactions in foreign currencies are recorded at the rate of
exchange at the date of the transaction. Monetary assets and
liabilities in foreign currencies are translated at year-end rates.
Any resulting exchange differences are taken to the Income
statement.
On consolidation, assets and liabilities of Group entities
reported in their functional currencies are translated into British
Pound, the Group's presentation currency, at year-end exchange
rate. Income and expense items are translated into British Pound at
the annual weighted average rates of exchange.
Differences arising from the retranslation of opening net assets
of Group entities, together with differences arising from the
restatement of net result for the year of Group entities, are
recognised in other comprehensive income.
xix. Financial assets
Financial assets within the scope of IAS 39 are classified as
either financial assets at fair value through profit and loss,
loans and receivables, held-to-maturity investments, or
available-for-sale financial assets, as appropriate. Financial
assets are recognised in the
statement of financial position when, and only when, the Group
becomes a party to the contractual provisions of the financial
instrument.
Financial assets are initially recognised at fair value, plus
transaction costs for all financial assets not carried at fair
value through profit or loss. The Group determines the
classification of its financial assets after initial recognition
and, where allowed and appropriate, re-evaluates this designation
at each financial year end.
All arms length purchases and sales of financial assets are
recognised on the trade date i.e. the date that the Group commits
to purchase the asset. Such purchases or sales are purchases or
sales of financial assets that require delivery of assets within
the period generally established by regulation or convention in the
market place concerned.
(i) Financial assets at fair value through profit and loss
Financial assets classified as held for trading are included in
the category financial assets at fair value through profit or loss.
Financial assets are classified as held for trading if they are
acquired for the purpose of sale in the short term. Derivative
financial instruments are also classified as held for trading
unless they are designated as effective hedging instruments. Gains
or losses on investments held for trading are recognised in the
statement of comprehensive income.
The Group does not designate any financial assets not held for
trading as financial assets at fair value through profit and
loss.
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable
payments and fixed maturity are classified as held-to-maturity when
the Group has the positive intention and ability to hold the assets
to maturity. Investments intended to be held for an undefined
period are not included in this classification. Other long-term
investments that are intended to be held-to-maturity, such as
bonds, are subsequently measured at amortised cost using the
effective interest method. This cost is computed as the amount
initially recognised minus principal repayments, plus or minus the
cumulative amortisation using the effective interest method of any
difference between the initially recognised amount and the maturity
amount and minus any reduction for impairment or uncollectibility.
This calculation includes all fees and points paid or received
between parties to the contract that are an integral part of the
effective interest rate, transaction costs and all other premiums
and discounts. For investments carried at amortised cost, gains and
losses are recognised in the income statement when the investments
are derecognised or impaired, as well as through the amortisation
process.
(iii) Loans and receivables
Non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market are classified as
loans and receivables. Such assets are carried at amortised cost
using the effective interest method. Gains and losses are
recognised in the income statement when the loans and receivables
are derecognised or impaired, as well as through the amortisation
process.
xix. Financial assets (continued)
(iv) Available-for-sale financial assets
Available-for-sale financial assets are those non-derivative
financial assets that are designated as available-for-sale or are
not classified in any of the three preceding categories. After
initial recognition, available-for-sale financial assets are
measured at fair value with gains or losses being recognised in the
fair value adjustment reserve until the investment is derecognised
or until the investment is determined to be impaired at which time
the cumulate gain or loss previously reported in equity is included
in the statement of comprehensive income.
The fair value of investments that are actively traded in
organised financial markets is determined by reference to the
relevant stock exchange's quoted market bid prices at the close of
business on the statement of financial position date. For
investments where there is no active market, fair value is
determined using valuation techniques. Such techniques include
using recent arm's length market transactions; reference to the
current market value of another instrument, which is substantially
the same; discounted cash flow analysis and option pricing
models.
xx. Derecognition of financial assets and liabilities
i. Financial assets
A financial asset (or, where applicable a part of a financial
asset or part of a group of similar financial assets) is
derecognised where:
The contractual rights to receive cash flows from the asset have
expired;
The Group retains the contractual rights to receive cash flows
from the assets, but has assumed an obligation to pay them in full
without material delay to a third party under a 'pass-through'
arrangement; or
The Group has transferred its rights to receive cash flows from
the asset and either (a) has transferred substantially all the
risks and rewards of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but
has transferred control of the asset.
Where the Group has transferred its rights to receive cash flows
from an asset and has neither transferred nor retained
substantially all the risks and rewards of the asset nor
transferred control of the asset, the asset is recognised to the
extent of the Group's continuing involvement in the asset.
Continuing involvement that takes the form of a guarantee over the
transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that
the Group could be required to repay.
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Where continuing involvement takes the form of a written and/or
purchased option on the transferred asset, the extent of the
Group's continuing involvement is the amount of the transferred
asset that the Group may repurchase, except that in the case of a
written put option on an asset measured at fair value, the extent
of the Group's continuing involvement is limited to the lower of
the fair value of the transferred asset and the option exercise
price.
On derecognition of a financial asset in its entirety, the
difference between the carrying amount and the sum of (a) the
consideration received (including any new asset obtained less any
new liability assumed) and (b) any cumulative gain or loss that has
been recognised directly in equity is recognised in the statement
of comprehensive income.
xx. Derecognition of financial assets and liabilities (continued)
ii. Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into and the definitions of a financial liability and an equity
instrument under IFRS. An equity instrument is any contract that
evidences a residual interest in the assets of the Group after
deducting all of its liabilities. The accounting policies adopted
for specific financial liabilities and equity instruments are set
out below.
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.
Where an existing financial liability is replaced by another
from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such as
exchange or modification, is treated as a derecognition of the
original liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognised in the
statement of comprehensive income.
Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred, and subsequently measured at amortised
cost using the effective interest method. Borrowings are classified
as current liabilities unless the Group has an unconditional right
to defer settlement of the liability for at least 12 months after
the statement of financial position date.
Trade and other payables
Trade and other payables are stated initially at their fair
value and subsequently measured at amortised cost using the
effective interest method unless the effect of discounting would be
immaterial, in which case they are stated at cost.
Equity instruments
Equity instruments issued by the Group are recorded at the
proceeds received, net of direct issue costs.
xxi. Impairment of assets
(i) Financial assets
A financial asset is assessed at each reporting date to
determine whether there is any objective evidence that it is
impaired. A financial asset is considered to be impaired if
objective evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that
asset.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount, and present value of the estimated future cash flows
discounted at the original effective interest rate. An impairment
loss in respect of an available-for-sale financial asset is
calculated by reference to its fair value.
Individually significant financial assets are tested for
impairment on an individual basis. The remaining financial assets
are assessed collectively in groups that share similar credit risk
characteristics.
xxi. Impairment of assets (continued)
An impairment loss is recognised in the statement of
comprehensive income. Any cumulative loss in respect of an
available-for-sale financial asset recognised previously in equity
is transferred to the statement of comprehensive income.
An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was
recognised. For financial assets measured at amortised cost and
available-for-sale financial assets that are debt securities, the
reversal is recognised in the statement of comprehensive income.
For available-for-sale financial assets that are equity securities,
the reversal is recognised directly in equity.
(ii) Non-financial assets
The carrying amounts of the Group's non-financial assets, other
than deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any
such indication exists, then the asset's recoverable amount is
estimated. For assets that have indefinite lives, the recoverable
amount is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and risk specific to the asset. For the purpose of impairment
testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups
of assets (the "cash generating unit"). The goodwill acquired in a
business combination, for the purpose of impairment testing, is
allocated to cash-generating units that are expected to benefit
from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an
asset or its cash generating unit exceeds its estimated recoverable
amount. Impairment losses are recognised in the statement of
comprehensive income. Impairment losses recognised in respect of
cash generating units are allocated first to reduce the carrying
amount of any goodwill allocated to the units and then to reduce
the carrying amount of the other assets in the unit (or group of
units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
xxii. Cash and cash equivalents
For the purpose of the statements of cash flows, cash and cash
equivalents include cash in hand, deposits, bank balances, demand
deposits and other short term, highly liquid investments that are
readily convertible to known amounts of cash and which are
subjected to an insignificant risk of change in value.
xxiii. Share capital
Ordinary shares are recorded at nominal value and proceeds
received in excess of nominal value of shares issued, if any, are
accounted for as share premium. Both ordinary shares and share
premium are classified as equity. Costs incurred directly to the
issue of shares are accounted for as a deduction from share
premium, otherwise they are charged to the statement of
comprehensive income.
xxiv. Events after the balance sheet date
Post period-end events that provide additional information about
the Group's position are reflected in the financial statements.
Post period-end events that are not adjusting events are disclosed
in the notes when material.
xxv. Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from
past events and whose existence will only be confirmed by the
occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Group. It can also be a
present obligation arising from past events that is not recognised
because it is not probable that outflow of economic resources will
be required or the amount of obligation cannot be measured
reliably.
A contingent liability is not recognised but is disclosed in the
notes to the accounts. When a change in the probability of an
outflow occurs so that the outflow is probable, it will then be
recognised as a provision. A contingent asset is a possible asset
that arises from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain
events not wholly within the control of the Group. Contingent
assets are not recognised but are disclosed in the notes to the
accounts when an inflow of economic benefits is probable. When
inflow is virtually certain, an asset is recognised.
xxvi. Pensions
The Group makes no other contributions to individual pension
schemes except for the contributions to defined contribution plans,
including the Employees' Provident Fund, the national defined
contribution plan in Malaysia, the Central Provident Fund in
Singapore and basic pension insurance in China for all the
employees in the respective countries.
xxvii. Leased assets
Operating lease
Operating lease rentals are included in the determination of the
operating profit or loss for the period in accordance with the
contracted lease payment agreement.
xxviii. Discontinued operation
A discontinued operation is a component of the Group's business
that represents a separate major line of business or geographical
area of operation, which has been disposed of or is held for sale,
or is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs upon disposal or
when the operation meets the criteria to be classified as held for
sale, if earlier. When an operation is classified as a discontinued
operation, the comparative statement of comprehensive income is
re-presented as if the operation had been discontinued from the
start of the comparative period.
xxix. Assets held for sale
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Non-current assets, or disposal groups comprising assets and
liabilities, are classified as held-for-sale if it is highly
probable that they will be recovered primarily through sale rather
than through continuing use.
Such assets, or disposal groups, are generally measured at the
lower of their carrying amount and fair value less costs to sell.
Any impairment loss on disposal group is allocated first to
goodwill, and then to the remaining assets and liabilities on a pro
rata basis, except that no loss is allocated to inventories,
financial assets or deferred tax assets, which continue to be
measured in accordance with the Group's other accounting policies.
Impairment losses on initial classification held-for-sale and
subsequent gains and losses on re-measurement are recognized in
profit or loss.
Once classified as held for sale, intangible assets and
property, plant and machinery are no longer amortised or
depreciated, and any equity accounted investee is no longer equity
accounted.
xxx. Employee benefits
(i) Short term employee benefits
Wages, salaries, annual leave and sick leave, social security
contributions, bonuses and non-monetary benefits are accrued in the
period in which the associated services are rendered by the
employees.
(ii) Post-employment benefits
Contributions to defined contribution plans, including the
Employees' Provident Fund, the national defined contribution plan
in Malaysia, the Central Provident Fund in Singapore and basic
pension insurance in China are charged to the statement of
comprehensive income in the period to which they are related. A
defined contribution plan is a pension plan under which the Group
pays fixed contributions and will have no legal or constructive
obligations to pay further contributions if the fund does not hold
sufficient assets to pay all employee benefits relating to employee
service in the current or prior financial periods. Once the
contributions have been paid, the Group has no further payment
obligations.
xxxi. Significant accounting estimates and judgements
Estimates, assumptions and judgements concerning the future are
made in the preparation of the financial statements. They affect
the application of the Group's accounting policies, reported
amounts of assets, liabilities, income and expenses and disclosures
made. They are assessed on an ongoing basis and are based on
experience and relevant factors, including expectations of future
events that are believed to be reasonable under the
circumstances.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the statement of financial position
date, that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next
financial period are as stated below:
(i) Carrying value of goodwill - Group
The Group follows the guidance of IAS 36 in determining whether
goodwill is impaired. This determination requires the assumption
made regarding the duration and extent to which the fair value of
the goodwill is less than its costs and the financial health of and
near-term business outlook for the goodwill.
Management's assessment for impairment of goodwill is based on
the estimation of value in use of the cash-generating unit ("CGU")
by forecasting the expected future cash flows for a period of up to
five years, using a suitable discount rate in order to calculate
the present value of those cash flows.
Impairment testing inherently involved a number of judgmental
areas: the preparation of cash flow forecasts for periods that are
beyond the normal requirements of management reporting; the
assessment of the discount rate appropriate to the business;
estimation of the fair value of cash-generating units; and the
valuation of the separable assets of each business whose goodwill
is being reviewed.
The methods, assumptions, sensitivity and possible outcomes in
relation to the calculation of the estimates are detailed in note
10.
(ii) Carrying value of investment and long term loan in subsidiaries - Company
The Company follows the guidance of IAS 36 in determining
whether investment in and long term loans to subsidiaries are
impaired. This determination requires the assumption made regarding
the duration and extent to which the fair value of an investment or
a financial asset is less than its costs and the financial health
of and near-term business outlook for the investment or financial
asset. The Company has a sole direct investment in Medilink-Global
(Asia) Pte Ltd, who then owns the other entities in the group.
Management's assessment for impairment of investment and long
term loans in subsidiaries is based on the estimation of value in
use of the cash-generating unit ("CGU") by forecasting the expected
future cash flows for a period of up to five years, using a
suitable discount rate in order to calculate the present value of
those cash flows.
Impairment testing inherently involved a number of judgmental
areas: the preparation of cash flow forecasts for periods that are
beyond the normal requirements of management reporting; the
assessment of the discount rate appropriate to the business;
estimation of the fair value of cash-generating units; and the
valuation of the separable assets of each business in the
sub-group.
As Medilink-Global (Asia) Pte Ltd forms an individual sub-group,
the Company has assessed the recoverability of the investment and
long term loans on the underlying value of this sub-group. In this
respect, the methods, assumptions, sensitivity and possible
outcomes in relation to the calculation of the estimates are
detailed in note 10 as they are the same as those used on the
impairment review of the carrying value of goodwill.
Key sources of estimation uncertainty (continued)
(iii) Discontinued operations and assets held for sale
On 1 August 2014, the Group entered into a Sale and Purchase
Agreement (the "divestment") with Selfdoctor (Beijing) Technology
Co., Limited ("Selfdoctor") to divest 51% of interest in Medilink
(Beijing) TPA Services Co Limited ("Medilink China"). The directors
are of the opinion that the divestment was fully completed on
10(th) July 2015 (the "completion date") when the transfer of
ownership took place.
The Group follows the guidance of IFRS 5 to specify the
accounting for assets held for sales and the presentation and
disclosure of discontinued operation. In considering whether
discontinued activity meet these criteria which require significant
judgement is applied by the directors apply those judgements. The
directors consider that the divestment did not become unconditional
until the completion date. The operations of Medilink China are
therefore classified as a disposal group held for sale. The
directors also considered this divestment to represent the entirety
of the Group's operating segment in China. Accordingly, the Group
has presented these results within discontinued operations in the
statement of comprehensive income.
For more details on the discontinued operation refer to note
21.
3. Business segments
The Group applies IFRS 8 Operating Segments. 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 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.
Third party Software Consolidation Total
2014 administrator licensing
GBP'000 GBP'000 GBP'000 GBP'000
External revenue 1,296 109 - 1,405
Internal revenue 133 90 (223) -
---------------- ---------------- -------------- --------
Total revenue 1,429 199 (223) 1,405
---------------- ---------------- -------------- --------
Interest expenses 38 - - 38
Depreciation and
amortisation 80 1 - 81
Impairment loss (1,700) - - (1,700)
Earnings before
tax (EBT) (2,097) (8) 174 (1,931)
Assets 4,654 185 (741) 4,098
Liabilities (6,810) (326) 3,092 (4,044)
---------------- ---------------- -------------- --------
(i) The assets of third party administrator are including the
goodwill on consolidation of GBP1,338,000 (2013: GBP3,038,000)
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Revenues from customers amounted to GBP263,249: AIA Bhd
(Previously known as ING Insurance Bhd) compared with year 2013:
GBP243,685: AIA Bhd, arising from sales by third party
administrator segment.
Third party Software Consolidation Total
2013 administrator licensing
GBP'000 GBP'000 GBP'000 GBP'000
External revenue 1,294 22 - 1,316
Internal revenue 30 109 (139) -
---------------- ----------- ----------------- --------
Total revenue (restated) 1,324 131 (139) 1,316
---------------- ----------- ----------------- --------
Interest expenses
(restated) 23 - - 23
Depreciation and
amortisation 177 1 - 178
Earnings before tax
(EBT) (573) 2 66 (505)
Assets 5,764 190 (1,240) 4,714
Liabilities (5,534) (323) 3,220 (2,637)
---------------- ----------- ----------------- --------
The geographical split of revenue and non-current assets arises
as follows:
2014 Jersey Singapore Malaysia Discontinued Total
Operation
(China)
----------------------- -------- ------------ ----------- --------------- -----------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- ------------ ----------- --------------- -----------
Revenue - 643 762 - 1,405
----------------------- -------- ------------ ----------- --------------- -----------
Intangible assets - - 167 - 167
----------------------- -------- ------------ ----------- --------------- -----------
Goodwill 1,338 - - - 1,338
-----------------------
PPE - - 75 - 75
----------------------- --------------- -----------
2013 Jersey Singapore Malaysia Discontinued Total
Operation
(China)
------------------------ -------- ------------ ----------- --------------- -------- ------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- ------------ ----------- --------------- -------- ------------
Revenue (restated) - 508 808 - 1,316
------------------------ -------- ------------ ----------- --------------- -------- ------------
Intangible assets - - 102 - 102
------------------------ -------- ------------ ----------- --------------- -------- ------------
Goodwill 3,038 - - - 3,038
------------------------
PPE - - 123 40 163
------------------------ -------- ------------ ----------- --------------- --------
The geographical split of revenue reflects the continuing
operation same as its comparative period. The non-current assets of
the discontinued operation are classified as held for sale but no
restatement is required for its comparative period.
4. Loss from operations
Loss from operation has been arrived at after charging:
2014 2013
GBP'000 GBP'000
Unrealised loss/(gain) on exchange
difference 65 2
Depreciation 61 126
Amortisation of intangible assets 20 52
Auditor remuneration - audit of the
company accounts 25 19
Impairment of goodwill 1,700 -
Operating lease payment 184 157
5. Directors emoluments
2014 2013
GBP'000 GBP'000
Directors' remuneration 30 34
Directors' fees 28 29
-------- --------
58 63
-------- --------
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.
2014 2013
GBP'000 GBP'000
Executive
Shia Kok Fat 46 47
Non-executive
Norman Lott 12 12
Chen Shien Yee - 4
Total 58 63
-------- --------
6. Staff costs
2014 2013
GBP'000 GBP'000
Wages and salaries 686 699
Defined contribution plans 140 153
-------- --------
826 852
-------- --------
7. Finance expenses
2014 2013
GBP'000 GBP'000
Finance cost bank borrowing and hire
purchase 20 5
Other interest 18 18
-------- --------
38 23
-------- --------
8. Taxation
2014 2013
GBP'000 GBP'000
Current tax charge - 4
Deferred tax - -
- 4
Factors affecting tax charge:
Loss before tax (2,031) (505)
Tax at the corporate rate 23.5%
(2013:23.5%) (477) (119)
Tax effects of:
423 -
* Non deductible expenses
- Tax loss not recognised 54 119
* Difference in overseas tax rate - 4
- 4
========== ========
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 2014
Computer, Furniture,
office equipment EDC terminals fitting Motor Total
& renovation vehicles
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
As at 1 January
2014 434 440 93 33 1,000
Exchange differences - - - - -
Additions 12 1 - - 13
Assets held for
sale (144) (89) (17) (16) (266)
Disposal - - - - -
------------------ ---------------- -------------- ---------------- --------
As at 31 December
2014 302 352 76 17 747
------------------ ---------------- -------------- ---------------- --------
Accumulated depreciation
As at 1 January
2014 320 404 91 22 837
Exchange differences - - - - -
Depreciation 49 4 4 4 61
Assets held for
sale (124) (67) (19) (16) (226)
Disposal - - - - -
------------------ ---------------- -------------- ---------------- --------
As at 31 December
2014 245 341 76 10 672
------------------ ---------------- -------------- ---------------- --------
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Net book value 57 11 - 7 75
------------------ ---------------- -------------- ---------------- --------
A motor vehicle with the carrying amount of GBP7,000 (2013:
GBP11,000) was acquired by hire purchase and is pledged as security
for liabilities.
GROUP 2013
Computer, Furniture,
office equipment EDC terminals fitting Motor Total
& renovation vehicles
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
As at 1 January
2013 323 458 87 20 888
Exchange differences (17) (41) (7) (2) (67)
Additions 129 23 13 15 180
Disposal (1) - - - (1)
------------------ ---------------- -------------- ---------------- --------
As at 31 December
2013 434 440 93 33 1,000
------------------ ---------------- -------------- ---------------- --------
Accumulated depreciation
As at 1 January
2013 262 418 83 9 772
Exchange differences (22) (45) 1 5 (61)
Depreciation 80 31 7 8 126
Disposal - - - - -
------------------ ---------------- -------------- ---------------- --------
As at 31 December
2013 320 404 91 22 837
------------------ ---------------- -------------- ---------------- --------
Net book value 114 36 2 11 163
------------------ ---------------- -------------- ---------------- --------
10. Intangible assets
2014 Intellectual Property
Goodwill Trademark System Contracted Total
software customers
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
As at 1 January
2014 4,138 2 348 213 4,701
Additions 85 85
--------- ---------- ---------- ----------- --------
As at 31 December
2014 4,138 2 433 213 4,786
--------- ---------- ---------- ----------- --------
Amortisation
As at 1 January
2014 1,100 2 246 213 1,561
Amortisation - - 20 - 20
Provision for impairment 1,700 - - - 1,700
--------- ---------- ---------- ----------- --------
As at 31 December
2014 2,800 2 266 213 3,281
--------- ---------- ---------- ----------- --------
Net book value
--------- ---------- ---------- ----------- --------
As at 31 December
2014 1,338 - 167 - 1,505
--------- ---------- ---------- ----------- --------
2013 Intellectual Property
Goodwill Trademark System Contracted Total
software customers
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
As at 1 January
2013 4,138 2 356 213 4,709
Exchange differences - - (8) - (8)
--------- ---------- ---------- ----------- --------
As at 31 December
2013 4,138 2 348 213 4,701
--------- ---------- ---------- ----------- --------
Amortisation
As at 1 January
2013 1,100 2 201 206 1,509
Amortisation - - 45 7 52
--------- ---------- ---------- ----------- --------
As at 31 December
2013 1,100 2 246 213 1,561
--------- ---------- ---------- ----------- --------
Net book value
--------- ---------- ---------- ----------- --------
As at 31 December
2013 3,038 - 102 - 3,140
--------- ---------- ---------- ----------- --------
The amortisation recognised in respect of intellectual property
has been included in the line item, administrative expenses in the
consolidated 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: -
2014 2013
GBP'000 GBP'000
--------- ----------
Third party administrator 1,257 2,957
Software licensing 81 81
--------- ----------
Total carrying value of Goodwill 1,338 3,038
--------- ----------
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 2014
review was undertaken in the first quarter of year 2015 and the
impairment of goodwill amounting to GBP1,700,000 (2013: Nil) is
recognised in the income statement. The impairment provision was to
reflect the loss control of the operating segment in China as well
as the ongoing economic uncertainty impact on the group's
operation.
Management have approved the forecast for 2015 and have prepared
additional projection based on the 2014 numbers for the next five
years. This was used as the basis for determining the recoverable
amount of each CGU. The cash flows beyond five year period are
extrapolated using a 4% growth rate which is consistent to the
industry average.
The key assumptions used in the forecast are as follows:
Assumption
(%)
Growth Rate 10% - 50%
Discount Rate 25%
Discount rates:
Discount rates represent the current market assessment of the
risks specific to the CGU, taking into consideration the time value
of money and individual risks of the underlying assets that have
not been incorporated in the cash flow estimates. The discount rate
calculation is based on the specific circumstances of the Group and
its operating segments and is derived from its WACC, with
appropriate adjustments made to reflect the risks specific to the
CGU and to determine the pre-tax rate. The cost of equity is
derived from the expected return on investment by the Group's
investors. The cost of debt is based on the interest-bearing
borrowings the Group is obliged to service. Segment-specific risk
is incorporated by applying individual beta factors. The beta
factors are evaluated annually based on publicly available market
data.
In conducting the review we used a market beta of 4 and the
discount rate applied had been set at 2%%
Growth rate estimates:
The growth rate ranges from 4% to 108% per year with an average
of 32% with a peak in growth due to new prospect for technologies
and solutions from overseas over the next 2-3 years.
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Management recognises the ongoing economic uncertainty can have
significant impact on the growth rate assumptions, which would
cause the recoverable amount of any of our GGUs to be below their
carrying amount.
Sensitivity analysis
A sensitivity analysis has been carried out for each CGU. The
results of the analysis can be summarised as follow:
If the estimated growth rate to forecast the revenue had been 10
percentage point lower than the basis assumption, total recoverable
amount would be 20 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 2% 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
2014 2013
Company GBP'000 GBP'000
Cost
Balance as at 1 January 4,500 4,500
Additions - -
--------- ---------
Balance as at 31 December 4,500 4,500
========= =========
Impairment
Balance as at 1 January 1,450 1,450
Impairment loss recognised 1,550 -
--------- ---------
Balance as at 31 December 3,000 1,450
--------- ---------
Net book value as at 31 December 1,500 3,050
========= =========
The forecast assumptions and sensitivity analysis for the
impairment review are included in Note 10.
The Company consider the relationship between the value in use
of the underlying cash generating unit ("CGU") and its book value,
among other factors, when reviewing for indicators of impairment.
The directors apply the judgements made in note 2(xxxi) (ii), the
impairment provision made during the year was to reflect the loss
control of the PRC subsidiary company as well as the ongoing
economic uncertainty impact on its other subsidiary
undertakings.
Details of the subsidiaries:
Name of subsidiaries Country of Principal activities 2014 2013
incorporation
% held % held
Medilink-Global Investment holding and
(Asia) Pte provision of third party
Ltd Singapore administrator services 100 100
Medilink (Beijing)
TPA Services People Republic Provision of third party
Co., Ltd of China administrator services 100 100
MedilinkGlobal
(Malaysia)
Sdn Bhd (formerly
known as Datalink
Healthcard
Network Sdn Provision of third party
Bhd) Malaysia administrator services 100 100
Provision of project management,
facilities management
and provision of system
integration services to
Datalink Technologies the third party administration
Sdn Bhd Malaysia and insurance companies 100 100
Medilink-Global Provision of third party
TPA Pte Ltd Singapore administrator services 70 70
Medilink-Global
(HK) Ltd Hong Kong Dormant 100 100
Medilink-Global UK Limited is the ultimate parent of the
Group.
Trade investments
Name of Company Country of Principal activities 2014 2013
incorporation
% held % held
Provision of third
Medilink (Thailand) party administrator
Co Ltd Thailand services 19 19
-------- --------
12. Trade and other receivables
Group
2014 2013
GBP'000 GBP'000
Current assets
Trade and Other receivables 1,388 1,112
Less: Provision of Impairment Loss - (5)
-------- --------
1,388 1,107
-------- --------
Company
2014 2013
GBP'000 GBP'000
Non-Current assets
Other receivables - -
Amount owed by Group Undertakings 2,487 2,487
Less: Provision of amounts owed by Group undertakings (2,487) (2,450)
-------- --------
- 37
-------- --------
As at 31 December 2014, trade and other receivables of
GBP1,388,000 (2013: GBP1,107,000) were past due 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 and other 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.
Gross Impairment Gross Impairment
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
Current 484 - 672 -
60 - 90 days 140 - 150
More than 90 days 764 - 290 (5)
--------- --------------------- --------- -----------
1,388 - 1,112 (5)
========= ===================== ========= ===========
The carrying amounts of the Group's trade and other receivables
are denominated in the following currencies:
2014 2013
GBP'000 GBP'000
Malaysia Ringgit 1,284 561
US Dollar - 3
Chinese Yuan Renminbi - 496
Singapore Dollar 94 46
Great Britain Pound Sterling 10 6
1,388 1,112
======================== ====================
Financial asset
The Group's financial assets by each financial instrument
category are as follows:-
2014 2013
Loan and receivables GBP'000 GBP'000
Trade receivables 1,318 827
Other receivables 70 280
Cash and cash equivalents 254 304
----------------------- --------------------
Total 1,642 1,411
======================= ====================
13. Cash and cash equivalents
Group
2014 2013
GBP'000 GBP'000
Cash and bank balance 254 304
254 304
======== ========
Company
2014 2013
GBP'000 GBP'000
Cash and bank balance 1 -
-------- --------
1 -
======== ========
14. Trade and other payables
Group
2014 2013
GBP'000 GBP'000
Trade payables 1,174 433
Other payables 913 867
Amount owed to a shareholder 501 715
Amount owed to directors 40 100
-------- --------
2,628 2,115
-------- --------
Company
2014 2013
GBP'000 GBP'000
Other payables 842 641
-------- --------
842 641
-------- --------
The carrying amount of trade and other payables approximates to
their fair value.
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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 90 days
(2013: 90 days).
The carrying amounts of the Group's trade and other payables are
denominated in the following currencies:
2014 2013
GBP'000 GBP'000
Malaysia Ringgit 1,843 881
Chinese Yuan Renminbi - 513
Singapore Dollar 106 79
Great Britain Pound Sterling 678 641
Hong Kong Dollar 1 1
US Dollar - -
-------- --------
2,628 2,115
-------- --------
Financial liabilities
The group's financial liabilities by each financial instrument
category are as follows:-
2014 2013
Amortised cost GBP'000 GBP'000
Trade and other payables 2,087 1,300
Amount owed to director 158 418
Amount owed to a shareholder 501 715
Term loan 161 150
Finance lease 3 10
-------- --------
Total 2,910 2,593
======== ========
Gross maturity analysis of the financial liabilities is as
follows:
2014 2013
Non derivatives GBP'000 GBP'000
Within 1 year 2,631 2,118
Later than 1 year not later than 5
years 279 475
Greater than 5 years - -
-------- --------
Total 2,910 2,593
-------- --------
15. Hire purchase
Group
2014 2013
GBP'000 GBP'000
Minimum hire purchase payments:
- not later than one year 3 3
- later than one year and not later
than five years - 7
- after five years - -
----------- ----------
3 10
Less: future interest charges - -
----------- ----------
3 10
=========== ==========
Represented by:
Current - not later than one year 3 3
Long term - Later than one year and
not later than 5 years - 7
After five years - -
----------- ----------
3 10
=========== ==========
Hire purchase interest at 4.87% per annum
16. Deferred taxation
Movements in deferred tax liability for the Group during the
year are as follows:
2014 2013
GBP'000 GBP'000
Balance as at 1 January 44 44
Movement in deferred tax - -
-------- --------
Balance as at 31 December 44 44
======== ========
The deferred tax liabilities arose on the acquisition of
Medilink-Global (Asia) Pte. Ltd in 2008.
Deferred tax asset of GBP138,000 (2013: GBP138,000) arising from
the unused tax losses has not been recognised and there is no
expiry period for the said unrecognised deferred tax assets.
17. Advance from a director
Group
2014 2013
GBP'000 GBP'000
Advance from a director 158 418
158 418
======== ========
Company
2014 2013
GBP'000 GBP'000
Advance from a director 118 118
118 118
======== ========
In March 2012, Mr Shia Kok Fat, had advanced GBP300,000 to the
Group and the terms and conditions of the advance are as
follows:-
i) It carries interest at 6% per annum;
ii) The repayment of principal amount is deferred to 31 December
2016. The repayment date of the loan will be capable of being
extended beyond 31 December 2016 subject to agreement between the
Company and Shia Kok Fat and conditional on the loan being repaid
at a minimum rate of GBP50,000 per annum thereafter.
As at 31 December 2014, there are approximately GBP200,000
advance loan classified as liabilities directly associated with the
assets held for sale.
18. Term loan
Group
2014 2013
GBP'000 GBP'000
Borrowing from financial institution 161 150
161 150
======== ========
The terms and conditions of term loans are as below:-
(i) It carries interest at 13% per annum;
(ii) The maturity of principal on 15 October 2015. The term loan
shall auto renew for another one (1) year, on similar terms and
conditions as stated herein or shall be mutually agreed in writing
between both parties
19. Share capital
The Company has one class of ordinary share capital which
carries no rights to fixed income, any preferences or
restrictions.
2014 2013
GBP'000 GBP'000
Ordinary shares issued and fully paid
At 1 January 6,045 6,045
Additions 29 -
-------- --------
At 31 December 6,074 6,045
-------- --------
On 9 September 2014, the company issued 582,895 new ordinary
shares at a price of 5p per share in satisfaction of fees due to
one of the Company's professional advisers totalling GBP29,145. As
at 31 December 2014, the total issued share capital were
121,492,003 ordinary shares.
20. 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.
2014 2013
Loss after taxation attributable to owners
of the company (GBP'000)
* Continued operation (1,929) (507)
* Discontinued operation (61) (169)
------------ ------------
(1,990) (676)
------------ ------------
Basic weighted average shares in issue 121,091,163 120,909,108
Basic and diluted loss per share based
on issued share capital as at 31 December
(pence) (1.64) (0.56)
------------ ------------
21. Discontinued operations
On 1 August 2014, the Group publicly announced the divestment of
51% interest in Medilink (Beijing) TPA Services Co Limited
("Medilink China"), a wholly owned subsidiary, to Selfdoctor
(Beijing) Technology Co Limited ("Selfdoctor") for a nominal
consideration of RMB 10.00 (approximately GBP1.00) (the
"Divestment"). The Group retain a 49% interest in Medilink
China.
The completion of the divestment took place on 10 July 2015,
when the transfer of ownership actually took place. At 31 December
2014, Medilink China was classified as a disposal group held for
sale and as discontinued operations.
The business of Medilink China represents the entirety of the
Group's operating segment in China. With Medilink China being
classified as discontinued operations, the China operating segment
is no longer presented as an operating segment. The results of
Medilink China for the year are presented below:
2014 2013
GBP'000 GBP'000
Revenue 886 753
Expenses (944) (919)
Operating income 1 -
Finance costs (4) (3)
-------- --------
Loss before tax from discontinued
operations (61) (169)
Taxation - -
-------- --------
Loss for the year from discontinued
operations (61) (169)
======== ========
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The major classes of assets and liabilities of Medilink China
classified as assets held for sale as at 31 December 2014 are, as
follow:
2014
GBP'000
Property, plant and equipment (note 9) 46
Trade and other receivables 787
Cash and cash equivalents 43
Assets held for sales 876
--------
Trade and other payables 889
HP creditors 1
Loan from a director 200
Liabilities directly associated with assets held for sale 1,090
--------
Net liabilities directly associated with disposal group 214
--------
The net cash flows incurred by Medilink China are, as
follow:
2014
GBP'000
Operating 329
Investing (34)
Financing (256)
Net cash inflow/(outflow) (39)
--------
2014 2013
Loss per share from discontinued operations
Basic and diluted loss per shares
(pence) 0.05 0.14
----- -----
22. 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.
(a) Credit risks (continued)
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 GBP1,318,000 (2013: GBP827,000)
and other receivables of GBP70,000 (2013: GBP280,000). The Group
does not hold any collateral as security.
(b) Liquidity risks
The principal risk to the Group is liquidity, which arises from
the Group's management of working capital. It is a risk that the
Group will encounter difficulty in meeting its financial
obligations as they fall due. This aspect is kept under review by
the directors and in this respect management carries out rolling 12
month cash flow projections on a monthly basis as well as
information regarding cash balances. It is the Group's policy as
regards liquidity to ensure sufficient cash resources are
maintained to meet short-term liabilities. All long term financial
liabilities at the year-end are due in year 2016
(c) Foreign currency exchange risks
Foreign currency risk is the risk that the fair value or future
cash flows of an exposure will fluctuate because of the changes in
foreign exchange rates. The Group's exposure to the risk of changes
in foreign exchange rates relates primarily to the Group's
operating activities (when revenue or expense is denominated in a
foreign currency) and the Group's net investments in foreign
subsidiaries.
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 the
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 2014 and 31 December 2013.
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. If the GBP weakened or
strengthen by 10% against Malaysia Ringgit, with all other
variables in each case remaining constant, then:
Impact on group post-tax
profit - gain/(losses)
Strengthening Weakening
GBP'000 GBP'000
2014
Chinese Yuan Renminbi - -
Malaysia Ringgit 25 (31)
2013
Chinese Yuan Renminbi (34) 34
Malaysia Ringgit 26 (31)
(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 2014 2013
rate profile of the Group's interest-bearing
financial instruments were as follows:
Fixed rate instruments GBP'000 GBP'000
* Hire purchase creditors (note 15) 4 10
* Term loan (note 18) 161 150
* Advance from director (note 17) 300 300
-------- --------
Carrying value 465 460
-------- --------
The Group had no exposure to variable rate borrowings.
23. Related party transactions
Related party transactions during the year were as follow:
2014 2013
GBP'000 GBP'000
Transactions with related party
Adviser fee payable to shareholders 50 50
Interest on advance from a director (note
17) 18 18
Amount due from/ (due to) related party
Loan due from shareholder 501 715
-------- --------
Amount owing to director (note 17) 158 418
-------- --------
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. The shareholder's loan
classified within liabilities directly associated with the assets
held for sale amounting to GBP241,000 was repaid during the
year.
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