Sosandar Regulatory News (SOS)

1 Oct 2008 07:00

Embargoed Release: 07:00hrs Wednesday 1 October 2008

MeDaVinci plc ("MeDaVinci" or the "Company") Restatement of Preliminary Statement of Results

MeDaVinci (AIM: MVC.L), the investment company focussed on technologies, products and services in the health and wellness markets, announced its unaudited Preliminary Statement of Results for the year ended 31 March 2008 on 29 September 2008.

Since the announcement of the Preliminary Statement of Results, the Board ofthe Company, having consulted with its auditors, has changed its view regardingthe Company's accounting treatment of a number of items. This change ofaccounting treatment has led to a restatement of the Preliminary Statement ofResults. The audited Report and Financial Statements for the year ended 31March 2008 are set out in full below.In accordance with AIM Rule 20, the Company's Report and Financial Statementshave been made available today on the Company's website (www.medavinciplc.com).The Report and Financial Statements will be sent to Shareholders of the Companylater today.For further information:Peter Teerlink, Chairman Tel: 0031 6204 92566 MeDavinci Plc Adam Reynolds Tel: 020-7245-1100 Hansard Group Hugh Field Tel: 020-7523-8000 Collins Stewart (NOMAD) CONTENTSDirectors and Advisors 2Chairman's Statement 3Directors' Report 5

Statement of Directors' Responsibilities 7

Independent Auditors' Report 8

Consolidated Balance Sheet 10

Consolidated Income Statement 11

Consolidated Statement of Total Recognised Gains and Losses 12

Consolidated Cash Flow Statement 13

Notes to the Consolidated Financial Statements 14-38

Company Balance Sheet 39

Notes to the Company's Financial Statements 40-43

DirectorsG HirschM HoughP TeerlinkR WesterhofA ReynoldsSecretaryA N WhiteleyINDEPENDENT AuditorsBDO Stoy Hayward LLP55 Baker StreetLondon W1U 7EUBankersRoyal Bank of Scotland62/63 Threadneedle StLondon EC2R 8LASolicitorsMemery Crystal44 Southampton BuildingsLondon EC2R 8LANominated AdvisorCollins Stewart Europe Limited88 Wood StreetLondon WC2A 1APBROKERHitchins, Harrison & CoBell Court House11 Blomfield StreetLondonEC2M 1LBRegistered office49 Rodney StreetLiverpoolL1 9EWCHAIRMAN'S STATEMENT

I present the results for the year ended 31 March 2008.

MeDaVinci plc operates as an investor in the international health and wellness markets and we currently have 3 key investments in the following companies:

Demecal Europe B.V. 30% ErgoDynamics 49% Emotion Fitness Kft 47%

On 1 August 2007, the Group completed the acquisition of a 30% interest inDemecal Europe BV ("Denecal") through the issue of 17,500,000 new ordinaryshares of Medavinci plc. The shares received in Demecal as consideration forthe transaction were valued under section 103 of the Companies Act 1985 wereconsidered to be of appropriate value for Medavinci plc shares issued at 12pence per share to be fully paid up. In the Group accounts, the cost of theinvestment in Demecal is measured at the fair value of the consideration issuedand this is measured at the bid market price as at 1 August 2007 being 9 pence.The difference between the fair value of the consideration received for theissue of the shares issued and the fair value of the consideration given isdealt with in Equity.

During the financial year, we issued a further 14.9m shares to Phoenix Foundation raising ‚£969,000 for additional working capital.

Demecal Europe B.V.

Demecal has developed a patented technology for the analysis of blood, which itshares the patents with Leisure Incorporated, a Japanese company. Demecal ownsthe rights exclusively to Europe and jointly to the USA.Demecal's equipment enables on-the-spot plasma production using only one dropof blood, which has multiple benefits. The complete blood testing market inEurope is currently estimated at 3.8bn laboratory tests and 3.9bn self testsper year. Although still in the development stages, we have finalised tests onover 6,500 patients in the Netherlands and believe that the potential forDemecal could be substantial.

ErgoDynamics

ErgoDynamics has developed and is commercialising patented technology for thetreatment and relief of back pain in the work place. As with Demecal, we arestill at the development stage, although we have tested successfully onhundreds of clients and currently have over 2,000 systems in use.

Emotion Fitness Kft

Emotion Fitness has successfully opened what is the prominent health centre in the City of Vezprem in Hungary. This facility serves a model for the future rollout of more clubs in Eastern Europe as and when the economies improve.

Outlook

Despite the current world economic climate we believe that MeDaVinci has threeoutstanding investments which are in very exciting sectors. The limitedavailability of capital to the Company through the financial markets haschallenged our short term growth ambitions and we have been very diligent inour R&D and marketing spend. Over the next two years it is our ambition to beable to capitalise on at least one of these investments.P TeerlinkChairman30 September 2008DIRECTORS' REPORT

The directors present their annual report and the audited financial statements for the year ended 31 March 2008.

Principal activities of the group

The principal activity of the Group during the period under review was that ofan investing group. A review of the development of the business during theperiod is given in the Chairman's statement. This also includes reference tothe Group's future prospects.

Principal risks and uncertainties

The directors consider the main risks to the development of the business to bethe ability to raise funds in the current financial markets and whether thetechnologies can be commercialised to their potential. The directors are takingreasonable steps to minimise the impact of these risks to the business.

Key performance indicators (KPI)

The directors do not assess the performance against any KPIs currently due to the business being in its early stages.

Financial results, dividend and review of the business

The retained loss for the year is ‚£173,000. The directors consider the performance to be in line with expectations.

Directors

The directors who served during the year are as follows:-

Glyn HirschMichael HoughPeter TeerlinkRobert WesterhofAdam Reynolds (appointed 23 July 2008)

All directors are subject to retirement by rotation under the company's articles of association.

The directors retiring by rotation are Peter Teerlink and Robert Westerhof, who offer themselves for re-election at the Annual General Meeting.

Details of the directors' interest in warrants issued by the company are provided in note 14 to the financial statements.

Charitable and political donations in the United Kingdom

No charitable or political donations were made during the year (2007: nil).

Policy and practice on payment to suppliers

The Company's policy is normally to pay suppliers according to agreed terms ofbusiness. These terms are agreed with suppliers upon entering into contracts(usually nett 30 days) and the company's policy is to adhere to the paymentterms providing the supplier meets its obligations. The group's creditor dayswere 61 days (2007: 63 days).

Disclosure of information given to auditors

So far as the directors are aware at the time the report is approved:

* there is no relevant audit information of which the Company's auditors are

unaware, and

* the directors have taken all steps that they ought to have taken to make

themselves aware of any relevant audit information and to establish that

the auditors are aware of that information.

Independent auditors

A resolution to re-appoint BDO Stoy Hayward LLP as auditor to the Company andto authorise the directors to determine their remuneration will be proposed

atthe annual general meeting.Annual general meeting

The annual general meeting of the company is to be held at 30 St James's Square, London SW1Y 4AL on 30 October 2008 at 11.30am.

The notice of meeting appears in the document accompanying the report and accounts.

On behalf of the boardP. TeerlinkDirector30 September 2008

STATEMENT OF DIRECTORS' RESPONSIBILITIES

Directors' responsibilities

The directors are responsible for keeping proper accounting records whichdisclose with reasonable accuracy at any time the financial position of thegroup, for safeguarding the assets of the company, for taking reasonable stepsfor the prevention and detection of fraud and other irregularities and for thepreparation of a Directors' Report which complies with the requirements of theCompanies Act 1985.The directors are responsible for preparing the annual report and the financialstatements in accordance with the Companies Act 1985. The directors are alsorequired to prepare financial statements for the group in accordance withInternational Financial Reporting Standards as adopted by the European Union(IFRSs) and the rules of the London Stock Exchange for companies tradingsecurities on the Alternative Investment Market. The directors have chosen toprepare financial statements for the company in accordance with UK GenerallyAccepted Accounting Practice.Group financial statementsInternational Accounting Standard 1 requires that financial statements presentfairly for each financial year the group's financial position, financialperformance and cash flows. This requires the faithful representation of theeffects of transactions, other events and conditions in accordance with thedefinitions and recognition criteria for assets, liabilities, income andexpenses set out in the International Accounting Standards Board's `Frameworkfor the preparation and presentation of financial statements'. In virtually allcircumstances, a fair presentation will be achieved by compliance with allapplicable IFRSs. A fair presentation also requires the directors to:

* consistently select and apply appropriate accounting policies;

* present information, including accounting policies, in a manner that

provides relevant, reliable, comparable and understandable information; and

* provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance.

Parent company financial statements

Company law requires the directors to prepare financial statements for eachfinancial year which give a true and fair view of the state of affairs of thecompany and of the profit or loss of the company for that period. In preparingthese financial statements, the directors are required to: * select suitable accounting policies and then apply them consistently;

* prepare the financial statements on the going concern basis unless it is

inappropriate to presume that the company will continue in business. * make judgements and estimates that are reasonable and prudent; and

* state whether applicable accounting standards have been followed, subject

to any material departures disclosed and explained in the financial

statements.

Financial statements are published on the group's website in accordance withlegislation in the United Kingdom governing the preparation and disseminationof financial statements, which may vary from legislation in otherjurisdictions. The maintenance and integrity of the group's website is theresponsibility of the directors. The directors' responsibility also extends tothe ongoing integrity of the financial statements contained therein.

Independent auditor's report to the shareholders of Medavinci PLC

We have audited the group and parent company financial statements (the ''financial statements'') of Medavinci PLC for the year ended 31 March 2008 which comprise the consolidated income statement, the consolidated and company balance sheets, the consolidated cash flow statement, the consolidated statement of changes in equity and the related notes. These financial statements have been prepared under the accounting policies set out therein.

Respective responsibilities of directors and auditors

The directors' responsibilities for preparing the group financial statements inaccordance with applicable law and International Financial Reporting Standards(IFRSs) as adopted by the European Union and for preparing the parent companyfinancial statements in accordance with applicable law and United KingdomAccounting Standards (United Kingdom Generally Accepted Accounting Practice)are set out in the statement of directors' responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a trueand fair view and have been properly prepared in accordance with the CompaniesAct 1985 and whether the information given in the directors' report isconsistent with those financial statements. We also report to you if, in ouropinion, the company has not kept proper accounting records, if we have notreceived all the information and explanations we require for our audit, or ifinformation specified by law regarding directors' remuneration and othertransactions is not disclosed.We read other information contained in the annual report, and consider whetherit is consistent with the audited financial statements. This other informationcomprises only the directors' report and the chairman's statement. We considerthe implications for our report if we become aware of any apparentmisstatements or material inconsistencies with the financial statements. Ourresponsibilities do not extend to any other information.Our report has been prepared pursuant to the requirements of the Companies Act1985 and for no other purpose. No person is entitled to rely on this reportunless such a person is a person entitled to rely upon this report by virtue ofand for the purpose of the Companies Act 1985 or has been expressly authorisedto do so by our prior written consent. Save as above, we do not acceptresponsibility for this report to any other person or for any other purpose andwe hereby expressly disclaim any and all such liability.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing(UK and Ireland) issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the financial statements. It also includes an assessment of thesignificant estimates and judgments made by the directors in the preparation ofthe financial statements, and of whether the accounting policies areappropriate to the group's and company's circumstances, consistently appliedand adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:

¢â‚¬¢ the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the group's affairs as at 31 March 2008 and of its loss for the year then ended;

¢â‚¬¢ the parent company financial statements give a true and fair view, inaccordance with United Kingdom Generally Accepted Accounting Practice, of thestate of the parent company's affairs as at 31 March 2008;

¢â‚¬¢ the financial statements have been properly prepared in accordance with the Companies Act 1985; and

¢â‚¬¢ the information given in the directors' report is consistent with the financial statements.

BDO Stoy Hayward LLPChartered Accountants and Registered AuditorsLondon30 September 2008CONSOLIDATED BALANCE SHEET

FOR THE YEAR ENDED 31 MARCH 2008

Notes 2008 2007 ‚£'000 ‚£'000 Assets Non-current assets Property, plant and equipment 1 8 1 Investments in associates 2 3,306 1,364

Available for sale financial assets 3 40

- Loans to associates 4 1,209 334

Derivative financial instruments- Conversion 5 509

227rights ___________ __________ 5,072 1,926 ___________ __________ Current assets Trade and other receivables 6 106 108 Cash and cash equivalents 7 730 892 ___________ __________ 836 1,000 ___________ __________ Total assets 5,908 2,926 ___________ __________ EQUITY AND LIABILITIES

Equity attributable to equity holders of the

parent Share capital 9 736 412 Other reserves 9 5,471 2,580 Retained earnings 9 (444) (218) ___________ __________ Total equity 5,763 2,774 ___________ __________ Current liabilities Trade and other payables 10 135 146 Current tax payable 10 6 ___________ __________ Total liabilities 145 152 ___________ __________ Total equity and liabilities 5,908 2,926 ___________ __________

The financial statements were approved and authorised for issue by the board on 30 September 2008 and were signed on its behalf by:-

P TeerlinkDirectorCONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2008

Notes Year ended Year ended 31 March 2008 31 March 2007 ‚£'000 ‚£'000 Revenue - - Cost of sales - - ___________ ___________ Gross profit - - Administrative expenses (257) (150) Finance income- bank interest 22 16

- interest on loan to associates 58

4

- Change in fair value of derivatives 161

-

Share of post tax loss of associates 2 (155)

(32) ___________ ___________ Loss before taxation 11 (171) (162) Income tax expense 12 (2) (6) ___________ ___________ Loss for the year 9 (173) (168) ___________ ___________ Earnings per share Basic and diluted 13 (0.3) (0.8) ___________ __________

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

FOR THE YEAR ENDED 31 MARCH 2008

Notes Year ended Year ended 31 March 31 March 2008 2007 ‚£'000 ‚£'000 Loss for the year (173) (168)

Net exchange differences on translating 9 584

10foreign operations __________ __________ Total recognised income and expense for the 411 (158)year __________ __________ Attributable to equity holders of the parent 411 (158) __________ __________

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2008

Notes 2008 2007 ‚£'000 ‚£'000

Cash flows from operating activities Cash generated from operations 15 (82) (200) Interest received 22 16 __________ __________ Net cash flow from operating activities (60) (184) __________ __________

Cash flows from investing activities

Acquisition of investments (106) (370)

Purchase of property, plant and equipment 16 (8)

(1)

Increase in loans to associates (957) (391) __________ __________ Net cash flow from investing activities (1,071) (762) __________ __________

Cash flows from financing activities Proceeds from issue of equity instruments 969

1,741

Costs relating to issue of equity - (67)instruments Other loans - (170) __________ __________ Net cash flow from financing activities 969 1,504 __________ __________

Net (decrease)/increase in cash and cash (162)

558equivalents

Cash and cash equivalents at beginning of 892

334the year __________ __________

Cash and cash equivalents at end of the year 7 730

892 __________ __________ PRINCIPAL ACCOUNTING POLICIESMeDaVinci plc. is a public limited liability company governed by UK law,established in the UK and listed on the Alternative Investment Market (AIM).The company's registered office is in the UK. Its office address is 49 RodneyStreet, Liverpool L1 9EW.

The principal accounting policies adopted in the preparation of these financial statements are set out below.

These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

The Group previously prepared its annual financial statements in accordancewith United Kingdom Accounting Standards (UK GAAP). These financial statementshave been prepared in accordance with International Financial ReportingStandards (IFRS) and IFRIC interpretations endorsed by the European Union (EU)and with those parts of the Companies Act 1985 applicable to companiesreporting under IFRS. The Group's transition date for IFRS is 1 April 2006, andthe disclosures required by IFRS 1 concerning the transition from UK AccountingStandards to IFRS are given in note 21.The consolidated financial statements have been prepared under the historicalcost convention, as modified by the measurement at fair value ofavailable-for-sale financial assets, and financial assets and financialliabilities (including derivative instruments) at fair value through profit

orloss.First - time adoption of IFRS

The Group's transition date for IFRS is 1 April 2006. Comparative data for 2007has been restated to conform to the new accounting policies set out below. Thenew policies reflect exemptions from restating certain financial information aspermitted under IFRS 1 "First - time Adoption of International FinancialReporting Standards". The exemptions taken by the Group are stated below:

* IFRS 3 "Business Combinations" has been applied prospectively from 1 April

2006 and consequently acquisitions prior to the date of transition to IFRS

have not been restated.

* Cumulative translation differences on net investments in foreign

subsidiaries and associates have been set at zero at the date of transition

to IFRS. ConsolidationSubsidiariesSubsidiaries are those entities in which the group has an interest of more thanone half of the voting rights or otherwise has power to govern the financialand operating policies. The existence and effect of potential voting rightsthat are presently exercisable or presently convertible are considered whenassessing whether the group controls another entity.Subsidiaries are consolidated from the date on which control is transferred tothe group and are no longer consolidated from the date that control ceases. Thepurchase method of accounting is used to account for the acquisition ofsubsidiaries. The cost of an acquisition is measured as the fair value of theassets given, equity instruments issued and liabilities incurred or assumed atthe date of exchange plus costs directly attributable to the acquisition.Identifiable assets required and liabilities and contingent liabilities assumedin a business contribution are measured initially at their fair values at theacquisition date. The excess of the cost of the acquisition over the fair valueof the group's share of the identifiable net assets required is recorded asgoodwill. If the cost of acquisition is less than the fair value of the netassets of the subsidiary acquired the difference is recognised directly in theincome statement. Inter company transactions, balances and unrealised gains ontransactions between group companies are eliminated. Unrealised losses are alsoeliminated unless cost cannot be recovered. Where necessary, the accountingpolicies of subsidiaries have been changed in order to ensure consistency withthe policies adopted by the group.

Associates

Associates are all entities over which the group has significant influence butnot control, generally accompanying a shareholding of between 20% and 50% ofthe voting rights. Investments in associates are accounted for using the equitymethod of accounting and are initially recognised at cost. The group'sinvestment in associates includes goodwill identified on acquisition , net ofany accumulated impairment lossThe group's share of its associates' post-acquisition profits or losses isrecognised in the income statement, and its share of post-acquisition movementsin reserves is recognised in reserves. The cumulative post-acquisitionmovements are adjusted against the carrying amount of the investment. When thegroup's share of losses in an associate equals or exceeds its interest in theassociate, including any other unsecured receivables, the group does notrecognise further losses, unless it has incurred obligations or made paymentson behalf of the associate.Unrealised gains on transactions between the group and its associates areeliminated to the -extent of the group's interest in the associates. Unrealisedlosses are also eliminated unless the transaction provides evidence of animpairment of the asset transferred. Accounting policies of associates havebeen changed where necessary to ensure consistency with the policies adopted bythe group.Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board of directors.

Foreign currency translationMeasurement currencyItems included in the financial statements of each entity in the group aremeasured using the currency that best reflects the economic substance of theunderlying events and circumstances relevant to that entity ("the functionalcurrency"). The consolidated financial statements are presented in sterling,which is the functional and presentation currency of the parent.

Transactions and balances

Foreign currency translations are translated into the functional currency usingthe exchange rates prevailing at the dates of the transactions. Foreignexchange gains and losses resulting from the settlement of such transactionsand from the translation of monetary assets and liabilities denominated inforeign currencies are recognised in the income statement.

Group companies

Income statements and cash flow of foreign entities are translated into the group's functional currency at average exchange rates for the year and their balance sheets are translated at the exchange rates ruling at the period end.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Property, plant and equipment

All property, plant and equipment are stated at historical cost less depreciation. Cost includes the original purchase price of the asset and the costs attributable to bringing the assets to its working condition for its intended use. Finance costs are not included. Residual values and estimated useful lives are reviewed on an annual basis.

Depreciation is calculated on the straight-line method to write off the cost of each asset to their residual values over their estimated useful lives as follows.

Computer equipment 25% per annum

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit.

Repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Intangible assets - Goodwill

Goodwill represents the excess of the cost of an acquisition over the fairvalue of the group's share of the net identifiable assets of the acquiredsubsidiary/associate at the date of acquisition. Goodwill on acquisitions ofsubsidiaries is included in `intangible assets'. Goodwill on acquisitions ofassociates is included in `investments in associates' and is tested forimpairment as part of the overall balance. Separately recognised goodwill istested annually for impairment and carried at cost less accumulated impairmentlosses. Impairment losses on goodwill are not reversed. Gains and losses on thedisposal of an entity include the carrying amount of goodwill relating to theentity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

Derivatives

Derivatives are recognised at fair value using generally accepted valuationtechniques. If there is an active market for the derivatives, they arerecognised at the quoted market price. If fair value cannot be determined in areliable manner, derivatives are recognised at cost. Compound derivatives areseparated from the basic contract and recognised at fair value using generallyaccepted valuation techniques. If there is an active market for thederivatives, they are recognised at the quoted market price. If the fair valueof the separated individual derivative financial instrument cannot bedetermined in a reliable manner, the entire compound contract is held as afinancial asset or financial liability for trading purposes.

Impairment of non-financial assets

The Group assesses at each reporting date whether an asset may be impaired. Ifany such indicator exists the Group tests for impairment by estimating therecoverable amount. If the recoverable amount is less than the carrying valueof an asset an impairment loss is required. In addition to this, assets withindefinite lives and goodwill are tested for impairment at least annually.The value in use is calculated as the present value of estimated future cashflows expected to result from the use of assets and their eventual disposalproceeds. In order to calculate the present value of estimated future cashflows the group uses a discount rate based on the group's estimated weightedaverage cost of capital, together with any risk premium determined appropriate.Estimated future cash flows used in the impairment

calculation represents management's best view of the likely future market conditions and current decisions on the use of each asset or asset group.

For the purpose of assessing impairment, assets are grouped at the lowest levels at which there are separately identifiable cash flows.

Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand and deposits held at call with banks.

Employee benefits

Defined contribution schemes

A defined contribution plan is a pension plan under which the group pays fixedcontributions into a separate entity (a fund) and will have no legal orconstructive obligations to pay further contributions if the fund does not holdsufficient assets to pay all employees benefits relating to employee service inthe current and prior periods. Contributions are charged to the profit and lossaccount in the year in which they arise.

Share-based payments

The fair values of employees share option and share performance plans arecalculated using the Black-Scholes model. In accordance with IFRS 2,`Share-based Payments' the resulting cost is charged to the income statementover the vesting period of the options. The value of the charge is adjusted toreflect expected and actual levels of options vesting for changes in non marketvesting criteria.Deferred tax

Deferred tax is provided in full, using the liability method, on temporarydifferences arising between the tax bases of assets and liabilities and theircarrying amounts in the consolidated financial statements. However, thedeferred tax is not accounted for if it arises from initial recognition of anasset or liability in a transaction other than a business combination that atthe time of the transaction affects neither accounting nor taxable profit orloss. Deferred tax is determined using tax rates (and laws) that have beenenacted or substantially enacted by the balance sheet date and are expected toapply when the related deferred tax asset is realised or the deferred incometax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Interest

Interest income is recognised on a time proportion basis, taking account of theprincipal outstanding and the effective rate over the period of maturity, whenit is determined that such income will accrue to the Group.

Financial assets

The Group classifies its financial assets in the following categories: at fairvalue through profit or loss, loans and receivables. The classification dependson the purpose for which the financial assets were acquired.

Management determines the classification of the group's financial assets at initial recognition .

(a) Available for sale financial assets

Available for sale financial assets are non-derivatives that are eitherdesignated in this category or not classified in any of the other categories.They are included in non current assets unless management intends to dispose ofthe investment within 12 months of the balance sheet date.When investments classified as available for sale are sold or impaired, theaccumulated fair value adjustments recognised in equity are included in theincome statement as "gains and losses from investment". Interest on availablefor sale investments calculated using the effective interest method isrecognised in the income statement. Dividends on available for sale investmentsare recognised in the income statement when the Group's right to receivepayments is established.Regular purchases and sales of investments are recognised on the date on whichthe Group commits to purchase or sell the asset. Investments are initiallyrecognised at fair value plus transaction costs for all financial assets notcarried at fair value through profit or loss. Financial assets carried at fairvalue through profit and loss are initially recognised at fair value andtransaction costs are expensed in the income statement. Investments arederecognised when the rights to receive cash flows from the investments haveexpired or have been transferred and the Group has transferred substantiallyall risks and rewards of ownership. Available for sale investments andinvestments held for sale are subsequently carried at fair value.If the market for a financial asset is not active (and for unlistedsecurities), the Group establishes fair value by using valuation techniques.These include the use of recent arm's length transactions, reference to otherinstruments that are substantially the same, discounted cash flow analysis, andthe option pricing models, making maximum use of market inputs and relying aslittle as possible on entity specific inputs. If the fair value of an unquotedequity instrument cannot be measured reliably, it is measured at cost.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed ordeterminable payments that are quoted in an active market. They are included incurrent assets, except for maturities greater than 12 months after the balancesheet date. These are classified as non-current assets. Loans and receivablesare classified as `trade and other receivables' in the balance sheet.

(c) Loan to associates

Convertible loans are compound financial instruments consisting of a loanconstituent and a derivative: the conversion right. The conversion right ispresented separately as a derivative and is classified as held for trading. Theloan constituent is initially recognised at fair value and subsequently atamortised cost using the effective interest method, less impairmentadjustments, such as provisions for bad debts. Impairment adjustments arerecognised based on objective factors and indications. The loan constituent isclassified within loans and receivables and are separately presented on theface of the balance sheet as non current assets.

Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Standards, amendments and interpretations to published standards not yet effective

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the group's accounting periods beginning after 1 April 2008 or later periods and which the group has decided not to adopt early. These are:

- IAS 23, Borrowing Costs (revised) (effective for accounting periods beginningon or after 1 January 2009). The revised IAS 23 is still to be endorsed by theEU. The main change from the previous version is the removal of the option ofimmediately recognising as an expense borrowing costs that relate to qualifyingassets, broadly being assets that take a substantial period of time to getready for use or sale. The Group is currently assessing its impact on thefinancial statements.- Revised IFRS 3,Business Combinations and complementary Amendments to IAS 27,`Consolidated and separate financial statements (both effective for accountingperiods beginning on or after 1 July 2009). The revised IFRS 3 and IAS 27 arestill to be endorsed by the EU. The revised IFRS 3 and amendments to IAS 27arise from a joint project with the Financial Accounting Standards Board(FASB), the US standards setter, and result in IFRS being largely convergedwith the related, recently issued, US requirements. There are certain verysignificant changes to the requirements of IFRS, and options available, ifaccounting for business combinations. Management is currently assessing theimpact of revised IFRS 3 and amendments to IAS 27 on the accounts.-IFRIC 11, IFRS 2 - Group and Treasury Share Transactions (effective foraccounting periods beginning on or after 1 March 2007). IFRIC 11 requiresshare-based payment transactions in which an entity receives services asconsideration for its own equity instruments to be accounted for asequity-settled. This applies regardless of whether the entity chooses or isrequired to buy those equity instruments from another party to satisfy itsobligations to its employees under the share-based payment arrangement. It alsoapplies regardless of whether: (a) the employee's rights to the entity's equityinstruments were granted by the entity itself or by its shareholder(s); or (b)the share-based payment arrangement was settled by the entity itself or by itsshareholder(s). Management is currently assessing the impact of IFRIC 11 on theaccounts.- IFRIC 12, Service Concession Arrangements (effective for accounting periodsbeginning on or after 1 January 2008). IFRIC 12 is still to be endorsed by theEU. IFRIC 12 gives guidance on the accounting by operators forpublic-to-private service concession arrangements. IFRIC 12 is not relevant tothe group's operations due to absence of such arrangements.- IFRIC 13, CustomerLoyalty Programmes (effective for accounting periods beginning on or after1 July 2008). IFRIC 13 is still to be endorsed by the EU. IFRIC 13 addressessales transactions in which the entities grant their customers award creditsthat, subject to meeting any further qualifying conditions, the customers canredeem in future for free or discounted goods or services. This IFRIC is notapplicable to the company as these activities are not part of its operations.- IFRIC 13, Customer Loyalty Programmes (effective for accounting periodsbeginning on or after 1 July 2008). IFRIC 13 is still to be endorsed by the EU.IFRIC 13 addresses sales transactions in which the entities grant theircustomers award credits that, subject to meeting any further qualifyingconditions, the customers can redeem in future for free or discounted goods orservices. Management do not consider that there will be any effect on theGroup's financial statements as the company does not operate such programmes.- IFRIC 14, IAS 19 - The Limit on a Defined Benefit Asset, Minimum FundingRequirements and their Interaction (effective for accounting periods beginningon or after 1 January 2008). IFRIC 14 is still to be endorsed by the EU. IFRIC14 clarifies when refunds or reductions in future contributions should beregarded as available in accordance with paragraph 58 of IAS 19, how a minimumfunding requirement might affect the availability of reductions in futurecontributions and when a minimum funding requirement might give rise to aliability. Management do not consider that there will be any effect on theGroup's financial statements when the IFRIC becomes effective.- IFRIC 15, Agreements for the Construction of Real Estate (effective foraccounting periods beginning on or after 1 January 2009). IFRIC 15 is still tobe endorsed by the EU. IFRIC 15 addresses two issues: (a) whether the agreementis within the scope of IAS 11 or IAS 18; and (b) when the revenue from theconstruction or real estate shall be recognised. This IFRIC is not applicableto the company as it is not operating in real estate sector.- IFRIC 16, Hedges of a Net Investment in a Foreign Operation (effective foraccounting periods beginning on or after 1 October 2008). IFRIC 16 is still tobe endorsed by the EU. IFRIC 16 provides guidance on where, within a group,hedging instruments that are hedges of a net investment in a foreign operationcan be held to qualify for hedge accounting. Management do not consider thatthere will be any effect on the Group's financial statements when the IFRICbecomes effective.

- Amendment to IFRS 2 , Share-based payments: vesting conditions and cancellations (effective for accounting periods beginning on or after 1 January 2009). This amendment is still to be endorsed by the EU.

The Amendment to IFRS 2 is of particular relevance to companies that operateemployee shares save schemes. This is because it results in an immediateacceleration of the IFRS 2 expense that would otherwise have been recognised infuture periods should an employee decide to stop contributing to the savingsplan, as well as a potential revision to the fair value of the awards grantedto factor in the probability of employees withdrawing from such a plan.Management do not consider that there will be any effect on the Group'sfinancial statements when the IFRIC becomes effective.- Amendments to IAS 1 Presentation of Financial Statements: A RevisedPresentation (effective for accounting periods beginning on or after 1 January2009). This amendment is still to be endorsed by the EU. The revised version ofIAS 1 (revised 2007) replaces IAS 1 Presentation of Financial Statements(revised in 2003) as amended in 2005 and key changes include: the requirementto aggregate information in the financial statements on the basis of sharedcharacteristic; changes in the titles of some primary statements (nonmandatory); introducing the possibility of a single Statement of Comprehensiveincome (combining the Income Statement and the Statement of Recognised Incomeand Expense); Only the total of comprehensive income is to be shown in theStatement of Changes in equity. Management is currently assessing the impact ofthe Amendment on the accounts.- Amendments to IAS 32 Financial Instruments: Presentation and IAS 1Presentation of Financial Statements - Puttable Financial Instruments andObligations Arising on Liquidation (effective for accounting periods beginningon or after 1 January 2009). This amendment is still to be endorsed by the EU.The amendments result in certain types of financial instrument that meet thedefinition of a liability, but represent the residual interest in the netassets of the entity, being classified as equity. Management do not considerthat there will be effect on the Group's financial statements when the IFRICbecomes effective.- Amendments to IFRS 1 and IAS 27 Cost of an Investment in a Subsidiary,Jointly-Controlled Entity or Associate (effective for accounting periodsbeginning on or after 1 January 2009). ). These amendments are still to beendorsed by the EU. The amendments permits the entity at its date of transitionto IFRSs in its separate financial statements to use a deemed cost to accountfor its investment in subsidiary, jointly controlled entity or associate. Thedeemed cost of such investment could be either the fair value of the investmentat the date of transition, which would be determined in accordance with IAS 39Financial instruments: Recognition and Measurement or; the carrying amount ofthe investment under previous GAAP at the date of transition. Management do notconsider that there will be any effect on the Group's financial statements whenthe IFRIC becomes effective.- Improvements to IFRS (effective for accounting periods beginning on or after1 July 2009). This improvements project is still to be endorsed by the EU. Theamendments take various forms, including the clarification of the requirementsof IFRS and the elimination of inconsistencies between Standards. Management iscurrently assessing the impact of the Amendment on the accounts.

Critical Judgmentsand Key Sources of Estimation Uncertainty

MeDaVinci makes estimates and assumptions regarding the future. The resultantbudgeted and accounting outcomes will rarely be the same as the actual results.Estimates and assumptions are evaluated on an ongoing basis and are based onexperience and other factors, including expectations of future events that areperceived

as reasonable based on the circumstances. The following estimates and assumptions bear a significant inherent risk, which could result in material adjustments to the carrying amount of assets and liabilities in the coming year:

(a) Impairment of Financial Assets (Non-current)

Where there are indications of impairment and at least once a year, MeDaVincitests financial assets for impairment. The realisable value of financial assetsis determined using generally accepted valuation techniques, includingvalue-in-use calculations. These calculations and valuations require the use ofestimates.Based on these tests, possible impairment must be reported. However, where theactual performance of the underlying activities, businesses and cash-generatingunits is substantially worse, impairment losses could be incurred and/or differfrom the reported impairment losses. These impairment losses could have amaterial impact on the carrying amount of financial assets.

(b)Carrying Value of Deferred Tax Assets and Deferred Tax Liabilities

Assumptions play a major role in the determination of deferred tax assets anddeferred tax liabilities. Many uncertain factors can affect the amount ofcarry-forward tax losses. MeDaVinci values the carrying amounts of deferred taxassets relating to carry-forward tax losses, and the carrying amount ofdeferred tax liabilities relating to carry-back tax losses on the basis of itsbest estimates. Where actual outcomes differ from the original estimates, thedifferences will affect taxes and the income statement, as well as the deferredtax assets and/or deferred tax liabilities in the period in which thesedifferences occur.

(c) Determination of Significant Influence

Where the group holds investments in associates the directors must consider whether a significant influence is held over the ability for the investee company to operate. This consideration determines how the investment is accounted for in the financial statements.

(d) Fair Value of Derivatives

The fair value of financial instruments that are not traded in an active market(for example, over-the-counter derivatives) is determined by using valuationtechniques. The group uses its judgment to select a variety of methods and makeassumptions that are mainly based on market conditions existing at each balancesheet date.

The group has used discounted cash flow analysis for its available-for-sale financial asset as it is not traded in an active market.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2008

1. PROPERTY, PLANT AND EQUIPMENT

Plant, 2008 Plant, 2007 Machinery & Machinery & Total Total Equipment Equipment ‚£'000 ‚£'000 ‚£'000 ‚£'000 Cost At 1 March 1 1 1 1 Additions 8 8 - - ________ ________ ________ ________ 31 March 9 9 1 1 ________ ________ ________ ________ Depreciation At 31 March - - - - Charge for the year 1 1 - - ________ ________ ________ ________ At 31 March 1 1 - - ________ ________ ________ ________ Net book value At 31 March 8 8 1 1 ________ ________ ________ ________ 2. INVESTMENTS IN ASSOCIATES 2008 2007 ‚£'000 ‚£'000 At fair value At 1 April 1,364 597 Additions 1,715 799 Share in the result (155) (32)

Transfer to available for sale financial assets (40)

- Exchange rate movement 422 - __________ __________ At 31 March 3,306 1,364 __________ __________

Included in the cost of associates is goodwill totalling ‚£2,839,000 (2007: ‚£ 1,110,000)

Details of the investments held are as follows:-

No. of % Carrying Nature of Business ordinary Value shares Held ‚£'000 ErgoDynamics 89 49 1,130 Holding company Participations BV for investment in Ergodynamics Applications BV Emotion Fitness Mag Kft 2,700 47 424 Fitness centres

Demecal Europe BV 5,400 30 1,752 Development and Selling of blood tests

The above named companies prepare their financial statements as of 31 Decembereach year. The latest figures were for the year ended 31 December 2007 andthese were used to determine the net equity value at 31 March 2008, allowingfor the effect of significant transactions in the period of 31 December 2007 to31 March 2008.Included in the additions is an amount invested in Demecal Europe BV. Demecalowns a patent that part of the amount invested has been assigned to and sounder IFRS amortisation must be charged. The fair value assigned to the patentat the date of investment was ‚£571K. This has a useful life of ten years sothis has been amortised over this period. A full year's amortisation has notbeen charged due to the investment being made part way through the year.The group's share of the associates' results (after tax and minorities) andequity are as follows: 2008 2007 ‚£'000 ‚£'000 Sales 180 78 Result for the year (510) 150 Total assets 2,781 1,236 Total liabilities and obligations (2,956) (1,292) Total equity (175) (56) __________ __________

3. AVAILABLE FOR SALE FINANCIAL ASSETS

2008 2007 ‚£'000 ‚£'000 At 1 April - -

Transferred from investments in associates 40

- _________ _________ At 31 March 40 - _________ _________ No. of Type of % Cost Nature of business Shares Shares Held ‚£'000 MeDaVinci 25 Ordinary 5% 40 Development of Development BV innovative products in the medical industry

Available for sale financial assets are denominated in Euro.

4. LOANS TO ASSOCIATES 2008 2007 ‚£000 ‚£000

Loan to ErgoDynamics Participations BV 142 209

Loan to Emotion Fitness Mag Kft 318 125Loan to Demecal Europe BV 749 - ----------- ----------- 1,209 334 ------- -------Interest on the loan to ErgoDynamics Participations BV accrues on the amountoutstanding at a rate of 6% per annum. Interest accrues on a day to day basisand is due for payment on final payment date. The final payment date is 17March 2011.No interest accrues on the loan to Emotion Fitness Mag Kft. The loan can beconverted into ordinary shares at any time of whole or part thereof providedthat total conversion will lead to 68.68% of the outstanding share capital postconversion or any pro rata percentage thereof post conversion as a result ofthe partial conversion.Interest on the loan to Demecal Europe BV accrues on the amount outstanding at8% per annum payable at final repayment date. The final repayment date is 1July 2011. The loan can be converted at any time in full or part thereof intoordinary shares providing the total conversion will lead to 8.4% of theoutstanding share capital post conversion or pro rata percentage thereof postconversion as a result of partial conversion.

The directors consider that there is no significant difference between the fair value and the book value of the loans above.

5. CONVERSION RIGHTS - DERIVATIVE FINANCIAL INSTRUMENTS

2008 2007 ‚£'000 ‚£'000 Conversion rights 195 45 Warrants 314 182 __________ __________ 509 227The conversion right is part of a zero interest convertible loan note facilityof ¢â€š¬ 2.500K (‚£1,981K) whereby conversion of the full facility will lead to68.68% of the outstanding share capital post conversion or any pro ratapercentage thereof post conversion as a result of a partial conversion. Atbalance sheet date ¢â€š¬ 535 K (‚£424K) is drawn under the facility so that partialconversion will lead to 14.7% of the outstanding share capital post conversion.This conversion right is valued at the net present value of the difference ininterest between a comparable loan without conversion rights at market rate andthis zero coupon convertible. These conversion rights are derivative financialinstruments.Further MeDaVinci has a convertible loan note with a conversion right onshares in Demecal Europe BV as well as warrant instruments on shares in ErgoDynamics Participations BV. In determining the fair value of both instrumentsthe directors have considered that there is no active market for bothinstruments and therefore the value of these instruments have been assessedusing the Black & Scholes pricing model.

6. TRADE AND OTHER RECEIVABLES

2008 2007 ‚£'000 ‚£'000 Other receivables 4 1

Amounts owed by participating interests 88

107

Prepayments and accrued income 14

- __________ __________ 106 108 __________ __________7. CASH AND CASH EQUIVALENTS 2008 2007 ‚£'000 ‚£'000 Cash at bank and in hand 730 892 __________ _________8. CALLED UP SHARE CAPITAL 2008 2007 Numbers Numbers (`000) (`000)

Ordinary shares of 1pence each

Authorised 500,000 100,000 __________ _________ Issued At beginning of year 41,188 13,599 Issued in year 32,412 27,589 __________ _________ At end of year 73,600 41,188 __________ _________ On 31 July 2007 the company issued 17,500,000 shares of 1 pence each. The totalnon cash consideration received, and valued under section 103 of the CompaniesAct 1985, amounted to ‚£2,100,000. The non cash consideration being for 5,400Demecal Europe BV shares.

On 4 January 2008 the company issued 14,912,000 shares of 1 pence each. The total cash consideration received amounted to ‚£969,280.

On 12 November 2007, a resolution was passed to increase the authorised sharecapital to ‚£5,000,000 by the creation of 400,000,000 new ordinary shares of 1pence each.

9. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

Share Share Retained Foreign Associates Total fair value capital premium earnings Currency reserve ‚£'000 ‚£'000 ‚£'000 ‚£'000 Reserve ‚£'000 ‚£'000 For the year ended 31 March 2008 At 1 April 412 2,570 (218) 10 - 2,774 _______ ______ _______ _______ _________ _______ Profit for the year - - (173) - - (173)attributable to equity shareholders Unrealised exchange - - - 584 - 584movement Fair value adjustment - - - - (481) (481)on investment Issue of shares 324 2,745 - - - 3,069 Transaction costs - (10) - - - (10)deducted from equity _______ _______ _______ _______ __________ _______ Movement in year 324 2,735 (173) 584 (481) 2,989 _______ _______ _______ _______ __________ _______ At 31 March 736 5,305 (391) 584 (481) 5,763 _______ _______ _______ _______ __________ _______ For the year ended 31 March 2007 At 1 April 136 743 (48) - - 831 _______ _______ _______ _______ __________ _______ Loss for the year (168) - - (168)attributable to equity shareholders Unrealised exchange - - 8 - - 8movement Reserve transfer in - - (10) 10 - -terms of IFRS 1 Issue of shares 276 1,894 - - - 2,170 Transaction costs - (67) - - - (67)deducted from equity _______ _______ _______ _______ __________ _______ Movement in year 276 1,827 (170) 10 - 1,943 _______ _______ _______ _______ __________ _______ At 31 March 412 2,570 (218) 10 - 2,774 _______ _______ _______ _______ __________ _______

The authorised, called up and fully paid share capital relates to 73,600,000 shares at a nominal value of 1 pence each.

The share premium reserve relates to the excess of amounts received for sharesissued above the nominal value of the shares less any costs directly relatingto the issue of the shares. During the year the company issued 14.9 millionshares at 6.5 pence each resulting in a premium on issue of ‚£820K. A furthershare issue was made during the year issuing 17.5 million shares at 12 penceeach resulting in a premium on issue of ‚£1,925K. The foreign currency reserveconsists of all the translation differences as from 1 April 2006 resulting fromthe translation of the net investment in activities denominated in a currencyother than UK sterling. These foreign exchange differences are initiallyrecognised in this reserve. In the event of disposing of the foreign netinvestment in question, the related part recognised in the reserve istransferred to the income statement.Shares forming part of the consideration for the acquisition of a subsidiary oran associate undertaking are valued at their fair value for the purposes ofcomputing acquisition cost and goodwill under IFRS 3 - Business Combinationsand IAS 28 - Investments in Associates. By contrast, the value of the sharepremiums arising on the shares issued, for the purposes of section 130 of theCompanies Act 1985, is based on the value to the issuing company of theconsideration it has received. Where these values are different the premiumsare disregarded, the cost of investment in the parent company's books will bedifferent from the cost of acquisition for the purposes of IFRS 3 and IAS 28respectively. As the difference should form a separate element of consolidatedreserves, and does not form part of goodwill it is recognised in the associatesfair value reserve in equity.

The retained earnings reserve relates to the cumulative result since incorporation plus any results of acquisitions from the date of the particular acquisition.

10. TRADE AND OTHER PAYABLES

2008 2007 ‚£'000 ‚£'000 Trade creditors 79 99 Other creditors 1 - Accruals 55 47 __________ __________ 135 146 __________ __________11. LOSS BEFORE TAXATION 2008 2007 ‚£'000 ‚£'000

The following items have been included in arriving at

profit before taxation

Services provided by the Group's auditors Group audit fees and expenses - statutory audit 25

18 Other services 8 3

Foreign exchange gains and losses 110

-12. TAXATION 2008 2007 ‚£'000 ‚£'000 Current tax 2 6 _________ _________ Deferred tax - - _________ _________ Taxation 2 6 _________ _________

Factors affecting the tax charge for the period

2008 2007 ‚£'000 ‚£'000 Loss before tax (171) (167) _________ _________

Profit on ordinary activities multiplied by standard rate (51) (50) of corporation tax in the UK of 30% (2007: 30%)

Effects of: Overseas taxation - 6

Current tax losses not utilised 53

50 _________ _________ Total taxation 2 6 _________ _________ There is a potential deferred tax asset of ‚£99,000 (2007:‚£59,000) relating tothe cumulative tax losses totalling ‚£352,000 (2007:‚£196,000) carried forward.The deferred tax asset is not provided for as the directors are uncertain whenthe group will generate sufficient profits for the losses to be offset against.13. EARNINGS PER SHAREBasic

Basic earnings per share is calculated by dividing the profit attributable toequity shareholders by the weighted average number of ordinary shares in issueduring the year. 2008 2007 ‚£'000 ‚£'000 Loss attributable to equity holders of the company (173) (168) _________ _________ Weighted average number of ordinary shares in issue 56,441 20,586(thousands) _________ _________ Basic earnings per share (pence) (0.3) (0.8) _________ _________ Diluted

The Group had no dilutive potential ordinary shares in either year, which would serve to increase the loss per ordinary share. Therefore, there is no difference between the loss per ordinary share and the diluted loss per ordinary share.

14. SHARE BASED PAYMENTS

At 31 March 2008 the following warrants were in issue:

No. of ordinary Warrant price

shares of 1p each Exercise period 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 directors 1,000,000 24 Mar 2005 - 23 Mar 2015 5p

2008 2007 2008 2007 Weighted Weighted Number Number average e average xercise exercise price price (pence) (pence) Outstanding at the beginning of 5.00 5.00 5,000,000 5,000,000year Granted during the year - - - - -------- -------- -------- -------- Outstanding at the end of the 5.00 5.00 5,000,000 5,000,000year --------- --------- --------- ---------

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 4.4%

The volatility assumption is based on statistical analysis of share prices.

All warrants are exercisable at the year end.

15. CASH FLOW FROM OPERATING ACTIVITIES

2008 2007 ‚£'000 ‚£'000 Loss before taxation (171) (162) Finance income (241) (20)

Share of loss in investments in associates 155

32 _________ _________ (257) (150)

Changes in working capital (excluding effect of

acquisitions and disposals) Decrease/(increase) in trade and other receivables 2

(108)

Increase in trade and other payables 173

58 __________ __________ Cash outflow from operations (82) (200) __________ __________

16. PROPERTY, PLANT AND EQUIPMENT

During the year, the Group acquired property, plant and equipment of ‚£8,000 (2007: ‚£1,000) by means of cash payments.

17. EMPLOYEES AND KEY MANAGEMENT

Number of employees 2008 2007 number number Average number of employees 3 3 __________ _________ Directors 2008 2007 ‚£'000 ‚£'000

Aggregate emoluments and total staff costs 88

23 __________ __________

During the year ‚£11,750 (2007: ‚£11,021) and ‚£11,750 (2007: ‚£11,750) was paid to HHSS LLP and Emisan Limited respectively for the services of a director.

18. RELATED PARTIES

During the year ‚£11,750 (2006: ‚£11,021) 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 ‚£nil.

A further ‚£11,750 (2006: ‚£11,750) 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 ‚£nil.

As detailed in note 4, the group has made loans to associates. The group provides funds to these companies and charges them interest in accordance with the terms set out in note 4.

Balance at Advances Separation Exchange Interest 2008 1 April in the of embedded rate accrued 2007 year derivative variance Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ErgoDynamics 209 - (160) 68 25 142Participations BV Emotion 125 172 - 21 - 318Fitness Mag Kft Demecal Europe - 785 (90) 21 33 749BV __________ __________ __________ __________ __________ __________ TOTAL 334 957 (250) 110 58 1,209 __________ __________ __________ __________ __________ __________The amounts outstanding at 31 March 2008 and 31 March 2007 are split betweenloans to associates, derivatives which relate to the capital element and otherreceivables which relates to the interest accrued to date.

19. FINANCIAL RISK MANAGEMENT

MeDaVinci's risk management consists of the management of its operations andinvestments over the long term and the mitigation of the related business risksto the maximum possible extent. Depending on the nature and the relativesignificance of the risks associated with MeDaVinci's investments the risks arequantified where possible.The Group is exposed to the following risks in relation to the use of financialinstruments:- Credit risk- Liquidity risk- Currency risk- Interest rate risk

These notes provide information about MeDaVinci's exposure to each of the abovementioned risks, the objectives, principles and processes used to control and measure these risks and MeDaVinci's management of its capital.

The goal of MeDaVinci's risk policy is to identify the risks faced by MeDaVinci, analyse them, determine appropriate limits and control measures for them and monitor the risks and compliance with the defined limits. Risk management policies and systems are regularly evaluated and adjusted where necessary to changes in market circumstances and MeDaVinci's activities.

(a) Credit Risk

Credit risk is the risk of financial loss to MeDaVinci in cases where the buyeror counterparty to a financial instrument does not respect the contractualcommitments made. Credit risks primarily result from loans to investments inassociates.MeDaVinci's exposure to credit risk is primarily determined by the individualcharacteristics of individual associates and the countries in which they arevested.

If loans are provided to associates, they are assessed in terms of their creditworthiness and where possible a conversion right is exacted. To the extent possible, an assessment is carried out to determine whether the associate can provide sufficient certainty in the form of a security.

(b) Treasury policy and financial risk

The main financial risk faced by the Group is liquidity risk. The Group controls this risk by aiming to maximise returns from funds held on deposit.

The Group's financial instruments comprise cash and various items such as loansto associates, trade debtors and trade creditors etc. that arise directly fromits operations. It is not Group policy to trade in financial instruments.

There is no material difference between the book value and the fair value of the financial instruments in the current or prior year.

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.

The main credit risk is in relation to its loans to associates. This is managedby monitoring the performance of the associates and considering their abilityto repay these loans.

Categories of financial assets and financial liabilities

Loans and receivables 2008 2007 ‚£000 ‚£000Current financial assetsTrade and other receivables 92 108Cash and cash equivalents 730 892Non-current financial assetsLoans to investments in associates 1,209 334 Financial liabilities Measured at amortised cost 2008 2007 ‚£000 ‚£000

Current financial liabilities

Trade and other payables 135 146 Available-for-sale financial assets 2008 2007 ‚£000 ‚£000

Non-current financial assets

Other financial assets 40 - Held for trading 2008 2007 ‚£000 ‚£000Non-current assetsConversion rights 195 45Warrants 314 182

The terms of the loans granted to associates are illustrated below.

Loans in associates in ‚£ 000's 2008 2007 1 - 2 years - - 2 - 3 years 774 - 3 - 4 years 839 516 4 - 5 years - - Greater than 5 years - - 1,613 516(c)Liquidity RiskThe liquidity risk is the risk that MeDaVinci is not able to meet its financialcommitments at the required point in time. The basic premise of the liquidityrisk management approach is to, as far as possible, maintain sufficient cashand cash equivalents to be able to meet current and future financialcommitments, under normal and difficult circumstances, without incurringunacceptable losses or endangering MeDaVinci's reputation in the process.MeDaVinci monitors its cash flows on a regular basis. A summary of the Group'scash and cash equivalents is produced on a monthly basis. A yearly cash flowforecast is prepared every 6 months. These reports help ensure that MeDaVincihas access to sufficient liquid assets over the short as well as long term inorder to meet its operating and financial commitments. The cash flow reports donot take extreme circumstances into consideration.

(d) Currency Risk

Currency risk is the risk that MeDaVinci's income or the value of assets isadversely affected by fluctuations in exchange rates. The objective of managingcurrency risk is to maintain this risk within acceptable limits with an optimalreturn. MeDaVinci's conduct of business exposes the operation and the reportedfinancial results and cash flows to risks due to fluctuating exchange rates.

MeDaVinci's investments in associates and loans to associates are denominated in Hungarian Forints (HUF) and Euros (EUR).

.To mitigate the impact of currency exchange rate fluctuations, MeDaVincicontinuously assesses its foreign currency exchange rate position. If required,a portion of these risks will be hedged with financial instruments, such asforward exchange transactions and currency options. MeDaVinci did not make useof such instruments at the balance sheet date.

The key exchange rates during the year under review are as follows:

At March 31 Average rate 2008 2007 2008 2007 EUR 0.79240 0.67960 0.70627 0.67820 HUF 0.00309 0.00276 0.00280 0.00258Sensitivity analysisA 10% increase in the GBP in relation to the above currencies at year end wouldhave increased/(decreased) equity and the operating result by the followingamounts. All other variables, in particular the currency exchange rates, arekept constant. A 10% decrease in the GBP in relation to the above currencieswould have produced a similar, albeit opposite, result. 2008 2007 Operating Equity Operating Equity result result EUR -9 125 1 179 HUF -6 32 - 1 36

All other financial assets are denominated in sterling.

(e) Interest Rate Risk

Interest rate risk is the risk that MeDaVinci's income or the value of assetsis adversely affected by fluctuations in interest rates. The objective ofmanaging interest rate risk is to maintain this risk within acceptable limitswith an optimal return. Currently MeDaVinci is not exposed to interest bearingliabilities. Loans granted to associates, where applicable, are subject tofixed interest rates which exposes the group to fair value interest rate risk.

There are no differences between book value (amortised cost) and fair value at both balance sheet dates

An increase or decrease of 100 basis points in the interest rate effective 31 March 2008 and 2007 would not have had a material impact on equity and or operational results.

(f) Management of capital

MeDaVinci's policy is focused on maintaining the strong financial position needed to maintain the confidence of investors, creditors and markets and to safeguard the future development of business operations.

MeDaVinci strives to maintain healthy balance sheet ratios, with a solvency target exceeding 50%. No changes were made to MeDaVinci's approach to managing its capital during the year under review.

20. SEGMENT INFORMATION

The board of directors do not receive management reports that analyses theperformance or financial position of the group by business segment. The mainactivity of the group is that of an investor in the international health andwellness markets and consequently the only items in the income statement thatare attributable to these activities are the share of losses in the associates,the finance income receivable from loans advanced and the change in fair valueof the embedded derivatives separately recognised. All other amounts areunallocated and relate to the operation of the Corporate headquarters.From the perspective of the balance sheet such segment assets would include thecarrying value of the investments in associates, loans advanced and thederivatives. All other assets and liabilities are unallocated and relate to thecorporate activities undertaken.

The group does not have any external revenues. All revenues are earned by associates and are disclosed in note 2 to the financial statements. Materially all of the non current assets are located in the Netherlands.

21. EXPLANATION OF TRANSITION TO IFRS

As stated in the Basis of Preparation, these are the group's first annual consolidated financial statements prepared in accordance with IFRS.

An explanation of how the transition from UK GAAP to IFRS has affected the group's financial position, financial performance and cash flows is set out below.

IFRS 1 permits companies adopting IFRS for the first time to take certain exemptions from the full requirements of IFRS in the transition period. These interim financial statements have been prepared on the basis of taking the following exemption:

* Business combinations prior to 1 November 2005, the group's date of

transition to IFRS, have not been restated to comply with IFRS 3 "Business

Combinations". Goodwill arising from these business combinations has not

been restated.

* IAS 21 The Effects of `Changes in Foreign Exchange Rates' requires annual

translation differences arising on the opening net assets and net profit or

loss of each foreign subsidiary and associate to be treated as a separate

component of shareholders' equity, and the cumulative net surplus/deficit

for each subsidiary carried forward and added to/subtracted from any gains/

losses on the future disposal of that subsidiary or associate. The Group

has taken the option to set these cumulative gains/losses at zero as at the

date of transition to IFRS. Any gains and losses recognised in the income

statement on subsequent disposals of foreign operations will therefore

include only those translation differences arising after 1 April 2006, the

IFRS transition date.

The adoption of IFRS by the group has resulted in some reordering and changesto the presentation of certain balances within both the income statement andthe balance sheet.

Application of IFRS has resulted in reclassification of certain items in the cash flow statement as follows:

i Under UK GAAP, payments to acquire property, plant and equipment were classified as part of "Capital expenditure and financial investment". Under IFRS, payments to acquire property, plant and equipment have been classified as part of "Investing activities".

ii There are no other material differences between the cash flow statementpresented under IFRS and the cash flow presented under UK GAAP. Reconciliationsand descriptions of the effect of the transition from UK GAAP to IFRS on thegroup's net income and equity are set out below:

RECONCILIATION OF EQUITY AT 1 APRIL 2006

There are no differences between UK GAAP and IFRS for total equity at the date of transition to IFRS.

RECONCILIATION OF EQUITY AT 31 MARCH 2007

UK GAAP Note IFRS ‚£'000 A ‚£'000 ‚£'000 Assets Non-current assets

Property, plant and equipment 1 -

1 Investments 1,396 (72) 1,324

Available for sale financial assets - 40

40 Loans to associates 561 (227) 334 Conversion rights - 227 227 ___________ ___________ __________ 1,958 (32) 1,926 ___________ ___________ __________ Current assets

Trade and other receivables 108 -

108 Cash and cash equivalents 892 - 892 __________ ___________ __________ 1,000 - 1,000 __________ ___________ __________ Total assets 2,958 (32) 2,926 __________ ___________ __________ EQUITY AND LIABILITIES

Equity attributable to equity holders of

the parent Share capital 412 - 412 Other reserves 2,848 (268) 2,580 Retained earnings (454) 236 (218) __________ ___________ __________ Total equity 2,806 (32) 2,774 ___________ ___________ __________ Current liabilities Trade and other payables 146 - 146 Current tax payable 6 - 6 _________ ___________ __________ Total liabilities 152 - 152 _________ ___________ __________ Total equity and liabilities 2,958 (32) 2,926 _________ ___________ __________

RECONCILIATION OF CASH FLOW FOR THE YEAR ENDED 31 MARCH 2007

UK GAAP Note IFRS ‚£'000 A ‚£'000 ‚£'000

Cash flows from operating activities Cash generated from operations (204) - (204) Interest received 20 - 20 __________ __________ __________ Net cash flow from operating activities (184) - (184) __________ __________ __________

Cash flows from investing activities

Acquisition of investments (370) - (370)

Purchase of property, plant and equipment (1) -

(1) __________ __________ __________ Net cash flow from investing activities (371) - (371) __________ __________ __________

Cash flows from financing activities Proceeds from issue of equity instruments 1,741 -

1,741

Costs relating to issue of equity (67) - (67)instruments Increase in loans to participating (391) - (391)interests Other loans (170) - (170) ___________ __________ __________ Net cash flow from financing activities 1,113 - 1,113 ___________ __________ __________

Net increase in cash and cash equivalents 558 -

558

Cash and cash equivalents at beginning of 334 -

334the year ___________ __________ __________

Cash and cash equivalents at end of the 892 -

892year ___________ __________ __________ NOTES TO THE RECONCILIATIONSA Under IAS 28, where the group has the power to participate in the financialand operating decisions of the entity the results of the associate areconsolidated using the equity method of accounting. This contrasts with FRS 9which only required equity accounting where significant influence was actuallyexerted. This was not the case and hence the difference in accounting ontransition to IFRS.Also under UK GAAP any foreign currency differences are taken straight to theprofit and loss reserve but under IFRS there is to be a foreign currencyreserve. Therefore the difference in translation has been recognised as at 31March 2007 of ‚£10,000.The loans to associates are compound financial instruments containing anembedded derivative in a debt host contract. Under IAS 39, the instruments havebeen measured and presented separately which was not the case under UK GAAP asthe fair value rules of accounting had not been adopted.

Under UK GAAP there is a need for a share warrant reserve relating to the warrants issued. Under IFRS there is not need for this reserve and so this has been netted off against retained earnings.

COMPANY BALANCE SHEETAT 31 MARCH 2008 Notes 31 March 31 March 2008 2007 ‚£'000 ‚£'000 Fixed assets Investment in subsidiaries 2 3,261 1,161 Investment in participating interests 3 1,027 1,027 ____________ ___________ 4,288 2,188 Current assets Debtors 4 993 - Cash at bank and in hand 473 726 ____________ ___________ 1,466 726 Creditors: amounts falling due within one 5 (109) (140)year ____________ ___________ Net current assets 1,357 586 ____________ ___________ 5,645 2,774 ____________ ___________ Capital and reserves Called up share capital 6 736 412 Share premium reserve 7 5,305 2,570 Warrant reserves 7 278 278 Profit and loss account 7 (674) (486) ____________ ___________ Shareholders' funds 8 5,645 2,774 ____________ ___________

The financial statements were approved and authorised for issue by the board on 30 September 2008 and signed on behalf of the board of directors.

P Teerlink

Director

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2008

1. ACCOUNTING POLICIES

Basis of preparation

The company's balance sheet and notes have been prepared under the historicalcost convention and in accordance with applicable United Kingdom AccountingStandards. They have also been prepared in accordance with the Companies Act1985.The Company has taken advantage of the exemption allowed under section 230 ofthe Companies Act 1985 and has not presented its own profit and loss account inthese financial statements. The loss of MeDaVinci Plc for the year ended 31March 2008 is ‚£188,000 (31 March 2007: ‚£160,000).

Investments in associates

Investments are held as part of an investment portfolio in the companies in which the Company renders advice on sourcing and development of new technologies. These are stated at cost less provision for permanent diminution in value.

Investments in subsidiaries

Investments in subsidiary undertakings are shown at cost less provision for any impairment in value.

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.

Taxation

Current tax is the expected tax payable or receivable on taxable profit or lossfor the period, using tax rates enacted or substantively enacted at the balancesheet date 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 anobligation at the balance sheet date to pay more tax, or a right to pay lesstax, at a future date, at rates expected to apply when they crystallise basedon current tax rates and laws. Timing differences arise from the inclusion ofitems of income and expenditure in taxation computations in periods differentfrom those in which they are included in the financial statements. Deferred taxassets are recognised to the extent that it is regarded as more likely than notthat they will be recovered. Deferred tax assets and liabilities are notdiscounted.

Share based payments

FRS20 requires that the fair value of equity settled share based payments, suchas share option awards, is determined at the date of grant and is expensed on astraight line basis over the vesting period based on the Company's estimate ofthe options that will eventually vest. In the case of warrants, fair value ismeasured by a Black Scholes pricing model.

2. INVESTMENTS IN SUBSIDIARIES

31 March 31 March 2008 2007 ‚£'000 ‚£'000 Cost At 1 April 2007 1,161 - Additions - 1,161 Capital contribution made 2,100 - ___________ ___________ At 31 March 2008 3,261 1,161

Impairment at 1 April 2007 and at 31 March 2008 -

- ___________ ___________ Net book value at 31 March 2008 3,261 1,161 ___________ ___________

Net book value at 31 March 2007 1,161

- ___________ ___________

During the year the company made a capital contribution of ‚£2,100,000 to MeDaVinci Healthcare Services BV representing the company's interests in Demecal Group BV.

No. of ordinary % held Cost Nature of shares Business ‚£'000 MeDaVinci 18,000 100 3,261 Holding company Health Care for investments Services BV in innovative technologies for the healthcare sector 3. INVESTMENT IN ASSOCIATES 31 March 31 March 2008 2007 ‚£'000 ‚£'000 Cost at 1 April 2007 1,027 597 Additions 2,100 430

Capital contribution to subsidiary company (2,100)

- -------------------- ----------------- At 31 March 2008 1,027 1,027 _____________ ___________ No. of % Cost Nature of Ordinary Business Shares Held ‚£'000 MeDaVinci Development BV 25 5 40 Development of innovative products in the medical industry ErgoDynamics 89 49 987 Holding companyParticipations BV for investment in ErgoDynamics Applications BV

The company's share of ErgoDynamics Participations BV results (after tax and minorities) and equity are as follows:

2008 2007 ‚£'000 ‚£'000 Result for the year (105) 236 Net assets (81) 24 __________ __________4. DEBTORS 2008 2007 ‚£'000 ‚£'000

Amounts due from group undertakings 979

-

Other debtors and prepayment 14

- 993 - _________ _________

5. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2008 2007 ‚£'000 ‚£'000

Trade creditors and accruals 109

140 _________ __________ 109 140 _________ __________6. SHARE CAPITAL 2008 2007 Numbers Numbers (`000) (`000)

Ordinary shares of 1p each

Authorised 500,000 100,000 __________ _________ Issued At beginning of year 41,188 13,599 Issued in year 32,412 27,589 __________ _________ At end of year 73,600 41,188 __________ _________

On 31 July 2007 the company issued 17,500,000 shares. The total non cash consideration, which was valued under section 103 of the Companies Act 1985 amounted to ‚£2,100,000. The shares each have a nominal value of 1 pence.

On 4 January 2008 the company issued 14,912,000 shares. The total cash consideration amounted to ‚£969,280. The shares each have a nominal value of 1 pence.

On 12 November 2007 a resolution was passed to increase the authorised sharecapital of ‚£5,000,000 by the creation of 400,000,000 new ordinary shares of 1pence each.7. RESERVES Share Share Profit & loss warrant premium account Reserve ‚£'000 ‚£'000 ‚£'000 As at 1 April 2007 278 2,570 (486) Loss for the year - - (188) On issue of shares - 2,735 - __________ ___________ __________ As at 31 March 2008 278 5,305 (674) __________ ___________ __________

8. RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS

31 March 31 March 2008 2007 ‚£'000 ‚£'000 Loss for the year (188) (160) On issue of shares 3,059 2,103 2,871 1,943 Opening shareholders' funds 2,774 831 Closing shareholders' funds 5,645 2,774 __________ __________

vendor