Last checked at 25 Sep 2007 12:50
For immediate release: Tuesday 25th September 2007
MeDaVinci plc ("MeDaVinci" or the "Company") Final Results For the Twelve Month Period Ended 31 March 2007
Chairman's Statement
I present the results for the year ended 31 March 2007, a year in which the Company was largely inactive and, for part of it, held only one investment.
As I reported in March 2006, your company acquired a 19.2% stake in Ergodynamics Applications BV ("Ergo"), through an acquisition of 25.6% of the issued share capital of HLJ Participations BV, and a 5% holding in Medavinci Developments BV as the first part in its development to make your company into an active investment company focussed on innovative technologies, products and services in the Health and Wellness markets.
At last year's Annual General Meeting your company changed its name from HHK plc to Medavinci plc.
In December 2006 the company appointed Mr Rob Westerhof as Chief Executive. Mr Westerhof, a former senior executive of the Philips organisation has great experience in a long and successful career with Philips and at Medavinci he leads a team of experienced executive directors in identifying and assembling a group of portfolio companies in the Health and Wellness sector.
At the time of Mr Westerhof's appointment the Company completed a placing of 24,010,448 new ordinary shares raising gross funds of ‚£1,740,757. Of this ‚£1 million was subscribed by Westlake Investments BV, a company controlled by our newly appointed Chief Executive, Mr Westerhof.
In January 2007 the Company acquired a 47% stake in Emotion Fitness Mag. Kft ("Emotion Fitness"), a company based in Hungary that is seeking to establish fitness centres in the emerging markets of Central and Eastern Europe, both in provincial and mid-size towns. Emotion Fitness intends to roll out its fitness centres, initially in Hungary and Romania where the take up of membership of fitness centres is currently only about 10% of the membership levels of fitness centres in the more developed markets of Western Europe and the United States of America. Medavinci will continue to provide advice and assistance in Emotion Fitness' development.
Just before the Company's year end in March 2007, the Company increased its equity stake in Ergodynamics to 32% (via an increase in its shareholding in HLJ Participations BV) and provided a loan facility of 750,000 Euros, to enable Ergodynamics to accelerate its marketing and research and development plans.
Since the year end the company has acquired a 30% interest in Demecal Europe BV ("Demecal") at a cost of ‚£2.1 million which was satisfied by an issue of 17.5 million shares in Medavinci plc. Demecal has developed, with Erasmus Medical Centre in Rotterdam, a patented technology for the analysis of blood. It shares patents with a Japanese company.
The principal risks facing the Group relate to any change in the economic and political stability in Eastern Europe and a risk of the new technologies not reaching the market.
Your board believes that your company is well placed to continue with its objectives, with adequate financial resources, and that the investments made to date will prove successful.
P TeerlinkChairman24th September 2007
For further information please contact:
Rob Westerhof, Chief Executive
Peter Teerlink, ChairmanTel +31 (0) 10 288 43 43Ben SimonsHansard GroupTel +44 (0) 207 245 1100Hugh FieldCollins StewartTel +44 (0) 20 7523 8000
Consolidated Profit and Loss account
Notes Year ended 31 Period from 2 March 2007 March 2005 to 31 March 2006 ‚£'000 ‚£'000 Revenue - - Cost of sales - - ___________ ___________ Gross profit - - Administrative expenses (150) (340) ___________ ___________ Operating loss 2 (150) (340) Interest receivable 5 20 14 ___________ ___________ Loss on ordinary activities before (130) (326)taxation Tax 6 (6) (-) ___________ ___________ Loss for the financial period (136) (326) ___________ ___________ Loss per share (pence) Basic and diluted 7 (0.66) (4.1) ___________ __________
All amounts relate to continuing activities.
Consolidated Balance Sheet Notes 31 March 31 March 2007 ‚£'000 2006 ‚£'000 FIXED ASSETS Tangible assets 1 - Investments 8 1,396 597 Loans to undertakings in which the 9 391 -company has a participating interest Other loans 10 170 - ________ ________ 1,958 597 CURRENT ASSETS Debtors 11 108 - Cash at bank and in hand 892 334 ________ ________ 1,000 334 CREDITORS: Amounts falling due within one 12 (152) (100)year ________ ________ NET CURRENT ASSETS 848 234 ________ ________ NET ASSETS 2,806 831 ________ CAPITAL AND RESERVES Called up share capital 13 412 136 Share premium account 14 2,570 743 Warrant reserve 14 278 278 Profit and loss account 14 (454) (326) ________ ________ SHAREHOLDERS FUNDS 15 2,806 831 ________
Consolidated Statement of Total Recognised Gains and Losses
Notes Year ended 31 Period ended March 2007 2 March 2005 to 31 March ‚£'000 2006 ‚£'000 Loss for the period (136) (326) Net exchange differences on translating 14 8 -foreign operations __________ __________ Total recognised loss for the period (128) (326) __________ __________
Consolidated Cash Flow Statement
Year ended Period from 2 Notes 31 March March 2005 to 2007 31 March 2006 ‚£'000 ‚£'000 Cash (outflow)/ inflow from operating 16 (204) 38activities ___ ___ Returns on investment and servicing of finance Interest received 20 14 _________ _________ 20 14 _________ _________ Taxation Taxation paid - - _________ _________ Capital expenditure and financial investment Payments to acquire tangible fixed assets (1) - Payments to acquire investments (370) (57) _________ _________ (371) (57) _________ _________ Net cash outflow before financing (555) (5) _________ _________ Financing Proceeds from the issue of shares 1,741 410 Costs of issue (67) (71) Loan to participating interest (391) - Other loan (170) - _________ _________ 1,113 339 _________ _________ Increase in cash 16 558 334 --------- ---------
Notes to the consolidated financial statements
1. Accounting policies
Basis of preparation
The financial statements are prepared under the historic cost convention and in accordance with applicable accounting standards.
Basis of consolidation
The group financial statements consolidate the financial information of the company and of its subsidiaries to 31 March 2007. No profit and loss account is presented for Medavinci Plc as permitted by Section 230 of the Companies Acts 1985. The loss of Medavinci plc for the year ended 31 March 2007 is ‚£160,000 (31 March 2006: loss ‚£326,000).
Investments
Investments are held as part of an investment portfolio in the companies in which the group renders advice on sourcing and development of new technologies. These are stated at cost less provision for permanent diminution in value.
Certain investments have not been accounted for as associates in the financial statements as the Group does not exert significant influence as defined by FRS 9 "Associates and Joint Ventures".
Foreign currencies
Assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Exchange differences are taken to the profit and loss account.
For consolidation purposes, the assets and liabilities of overseas subsidiary undertakings are translated at the closing exchange rates. Profit and loss accounts of such undertakings are consolidated at the average rates of exchange during the year. Exchange differences arising on these translations are taken to reserves, net of exchange differences arising on related foreign currency borrowings.
Taxation
Current tax is the expected tax payable or receivable on taxable profit or loss for the period, using relevant tax rates and any adjustment to tax payable in respect of previous years.
Deferred taxation
Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and laws. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.
Share based payments
FRS20 requires that the fair value of equity settled share based payments, such as share option awards, is determined at the date of grant and is expensed on a straight line basis over the vesting period based on the Company's estimate of the options that will eventually vest. In the case of warrants, fair value is measured by a Black Scholes pricing model.
2. Operating Loss
The operating loss is stated after charging:
2007 2006 ‚£'000 ‚£'000 Services provided by the group's auditors Group audit fees and expenses - statutory audit 16 12 - overseas audit of subsidiary 2 - Other services (valuation report) 3 3 Equity settled share warrant charge (note 3) - 278 National insurance on share warrants - 28 _________ ________3. Share Warrants
At 31 March 2007 the following warrants were in issue:
No. of ordinary Exercise period Warrant price shares of 1p each per share Glyn Hirsch 2,000,000 24 Mar 2005 - 23 Mar 2015 5p Michael Hough 2,000,000 24 Mar 2005 - 23 Mar 2015 5p Other non 1,000,000 24 Mar 2005 - 23 Mar 2015 5pdirectors 2007 2006 2007 2006 Weighted Weighted Number Number average average Exercise Exercise price price (pence) (pence) Outstanding at the beginning of 5.56 - 5,000,000 -year Granted during the year - 5.56 - 5,000,000 -------- -------- -------- --------
Outstanding at the end of the 5.56 5.56 5,000,000 5,000,000 year
-------- -------- -------- --------
The following information was relevant in the determination of the fair value of warrants granted during the prior year.
Warrant pricing model used: Black-Scholes
Weighted average share price at date of grant (pence): 9.75
Exercise price (pence): 5.00Contractual life (years): 4Expected volatility: 14%Risk free interest rate: 4%
The volatility assumption is based on statistical analysis of share prices.
All warrants are exercisable at the year end.
Share warrant charge in the prior year is shown in note 2 above.
4. Employees 2007 2006 number number Number of employees Average number of employees (all directors) 3 2 __________ _________ Directors 2007 2006 ‚£'000 ‚£'000 Aggregate emoluments and total staff costs 23 - __________ __________
During the year ‚£11,021 (2006: nil) and ‚£11,750 (2006: nil) was paid to HHSS LLP and Emisan Limited respectively for the services of a director.
5. Interest receivable 2007 2006 ‚£'000 ‚£'000 Bank and other short term deposits 20 14 _________ _________ 6. Taxation 2007 2006 ‚£'000 ‚£'000 Current tax charge on profits for the year 6 - _________ _________ Taxation on profit on ordinary activities 6 - _________ _________
Factors affecting the tax charge for the year
2007 2006 ‚£'000 ‚£'000 Group loss on ordinary activities before taxation (130) (326) --------------- -------------- Corporation tax at 30% (2006 - 30%) (39) (98) Overseas taxation 6 - Current tax losses not utilised 39 98 --------------- -------------- Total current tax charge 6 - --------------- --------------
Deferred tax assets are recognised when it is more likely than not that they will be recovered.
7. Loss per ordinary share
The calculation of the basic and diluted loss per share is based on the net loss after tax attributable to the ordinary shareholders for the period of ‚£ 136,000 (2006:‚£326,000) and a weighted average number of shares in issue for the year ended 31 March 2007 of 20,585,945 (2006: 7,891,623).
2007 2006 No. No.
Weighted average ordinary shares in issue 20,585,945 7,891,623 during the year
--------- --------
The effect of all potential ordinary shares under warrant is anti-dilutive. The number of shares held under warrant amounts to 5,000,000.
8. Fixed asset investments 2007 2006 ‚£000 ‚£000 At 1 April 2006 597 - Additions - Medavinci Development BV - 40 - HLJ Participations BV 429 557 - Emotion Fitness Mag. Kft 370 - ---------- ---------- At 31 March 2007 1,396 597 ---------- ---------- No. of ordinary % Cost Nature of business shares Held ‚£ Medavinci Development BV 25 5 39,900 Development of innovative products in the medical industry HLJ Participations BV 89 49 986,382 Holding company for investment in Ergodynamics Applications BV Emotion Fitness Mag Kft 2,700 47 369,813 Fitness centres
HLJ Participations BV and Emotion Fitness Mag Kft (which is held by a subsidiary - Medavinci Healthcare Services BV) have not been included as associates in the financial statements as the directors consider that neither Medavinci Plc nor its subsidiary exert significant influence as defined by FRS9 `Associates and Joint Ventures'.
The investments are unlisted. The directors consider there to be no difference between the book value and the fair value of these investments.
The following wholly owned subsidiary undertaking has been included in the consolidated financial statements:
Medavinci Healthcare Services BV - holding company for the investment in Emotion Fitness Mag. Kft.
9. Loans to undertakings in which the company has participating interest
2007 2006 ‚£000 ‚£000 Loan to HLJ Participations BV 391 - ----------- -----------
Interest accrues on the amount outstanding at a rate of 6% per annum. Interest accrues on a day to day basis and is due for repayment on final repayment date. The final repayment date is 17 March 2011.
10. Other loans 2007 2006 ‚£000 ‚£000 Loan to Emotion Fitness Mag Kft 170 - ----------- -----------
This is a convertible loan that has a repayment date of 30 January 2011. There is no interest due on the principal amount outstanding. This loan can be converted on a pro rata percentage (based on draw down) at any time into Ordinary Shares such that total conversion of the principal amount will lead to 68.68% of the outstanding share capital post conversion.
The directors consider that there is no significant difference between the fair value and the book value of the loans in note 9 and 10.
11. Debtors 2007 2006 ‚£000 ‚£000 VAT recoverable 1 - Other debtors 107 - ----------- ----------- 108 ----------- -----------
12. Creditors: amounts falling due within one year
2007 2006 ‚£000 ‚£000 Trade creditors 99 59 Accruals and deferred income 47 41 Corporation tax payable 6 - ----------- ----------- 152 100 ----------- -----------13. Share capitalOrdinary shares of 1p each No. 2007 No. 2006 ‚£000 ‚£000 Authorised 100,000,000 1,000 100,000,000 1,000 --------- -------- --------- -------- Issued, called up and fully 41,187,817 412 13,599,000 136paid --------- -------- --------- --------
On 15 December 2006, the Directors allotted a total of 17,586,207 ordinary shares for cash at 7.25p per ordinary share. The total consideration amounted to ‚£1,275,000, a premium of ‚£1,099,138.
On 22 December 2006, the Directors allotted a total of 6,424,241 ordinary shares for cash at 7.25p per ordinary share. The total consideration amounted to ‚£465,757, a premium of ‚£401,515.
On 17 March 2007, the Directors allotted a total of 3,578,369 ordinary shares by way of consideration for investments purchased; the consideration valued the shares issued at 12p per ordinary share. The total consideration amounted to ‚£ 429,404, a premium of ‚£393,620.
Share warrants are disclosed in note 3.
13. Reserves Warrant Profit and Share Reserve loss Premium account Account ‚£'000 ‚£'000 ‚£'000 At 1 April 2006 278 (326) 743 Premium on shares issued during the year - - 1,894 Issue costs charged to the share premium - - (67)account Loss for the year - (136) - Exchange rate variance on translation of - 8 -foreign subsidiary ------ ------ ------- At 31 March 2007 278 (454) 2,570 ------- ------- -------
15. Reconciliation of movements in shareholders' funds
2007 2006 ‚£000 ‚£000 At 1 April 2006 831 - Loss for the year (136) (326) Exchange rate variance on translation of foreign 8 -subsidiary Share warrant charge - 278 Issue of ordinary shares 276 136 Share Premium (net of share issue expenses) 1,827 743 ----------- ---------- Shareholders' funds at 31 March 2007 2,806 831 ----------- ----------
16. Notes to the consolidated cash flow statement
(a)Reconciliation of operating loss to net cash (outflow)/ inflow fromoperating activities 2007 2006 ‚£000 ‚£000 Operating loss (150) (340) Exchange rate variance 8 - Increase in creditors 46 100 Increase in debtors (108) - Increase in equity - share warrant charge - 278 ---------- -------- Net cash (outflow)/ inflow from operating (204) 38activities ---------- --------
(b)Reconciliation of net cash inflow to movement in net debt
2007 2006 ‚£000 ‚£000 Net cash at 1 April 2006 334 - Increase in cash in the year 558 334 ----------- ---------- Net cash at 31 March 2007 892 334 ----------- ----------(c)Analysis of net cash At Cash flow At 1 April 31 March 2006 2007 ‚£000 ‚£000 ‚£000 Cash at bank 334 558 892 ----------- ----------- ----------
17. Financial risk management
The Group's financial instruments comprise of cash and deposits and investments in unlisted companies that arise directly from its operations. It is not the Group's policy to trade in financial instruments. There is no material difference between book value and fair value of financial instruments.
Currency risk
The Group incurs currency risk as a result of transactions that are denominated in a currency other than British pounds. The Group does not enter into any forward exchange contracts in order to hedge its exposure to such risk.
Liquidity risk
The Group's earnings may be affected by changes in interest rates available on its cash deposits. The company aims to maximise returns from funds held on deposit.
Credit risk
The main credit risk is in relation to cash. This is managed by holding deposits with banks with an excellent credit rating.
18. Post balance sheet events
Since the year end the company has acquired a 30% interest in Demecal Europe BV ("Demecal") at a cost of ‚£2.1 million which was satisfied by an issue of 17.5 million shares in Medavinci plc. Demecal has developed, with Erasmus Medical Centre in Rotterdam, a patented technology for the analysis of blood. It shares patents with a Japanese company.
19. Related parties
During the year ‚£11,021 (2006: nil) was paid to HHSS LLP for the services of a director, a company in which Mr Hough is also a director. The amount outstanding at the balance sheet date was ‚£2,938.
A further ‚£11,750 (2006: nil) was paid to Emisan Limited for the services of a director, a company in which Mr Hirsch is a director. The amount outstanding at the balance sheet date was ‚£11,750.
Loans to related companies are disclosed in notes 9 and 10.
Company Balance Sheet: 31 March 2007 31 March 2006 ‚£'000 ‚£000 FIXED ASSETS Investments in subsidiary undertakings 1,161 - Investments in participating interests 1,027 597 ___________ ___________ 2,188 597 CURRENT ASSETS Cash at bank and in hand 726 334 ___________ ___________ 726 334 CREDITORS: amounts falling due within one (140) (100)year ___________ ___________ NET CURRENT ASSETS 586 234 ___________ ___________ NET ASSETS 2,774 831 ___________ ___________ CAPITAL AND RESERVES Called up share capital 412 136 Share premium account 2,570 743 Warrant reserve 278 278 Profit and loss account (486) (326) ___________ ___________ SHAREHOLDERS' FUNDS 2,774 831 ___________ ___________
The parent company financial statements were approved and authorised for issue by the board on 24th September 2007 and signed on behalf of the board of directors.
P Teerlink
Director
MEDAVINCI PLC