Medinova Limited - Limited company accounts 18.2

REGISTERED NUMBER: 04105540 (England and Wales)

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2019

FOR

MEDINOVA LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Income Statement

8

Other Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12

DIRECTORS:

K P Muthalagappan

V Birch

REGISTERED OFFICE:

1110 Elliott Court

Coventry Business Park

Herald Avenue

Coventry

West Midlands

CV5 6UB

BUSINESS ADDRESS:

Friars House

Manor House Drive

Coventry

West Midlands

CV1 2TE

REGISTERED NUMBER:

04105540 (England and Wales)

AUDITORS:

Luckmans Duckett Parker Limited

Chartered Accountants

Statutory Auditors

1110 Elliott Court

Herald Avenue

Coventry Business Park

Coventry

West Midlands

CV5 6UB

The directors present their strategic report for the year ended 31 March 2019.

PRINCIPAL ACTIVITIES

The principal activity of the company is to provide clinical research services to the pharmaceutical industry.

This is primarily done through carrying out clinical trials at our research sites globally.

REVIEW OF BUSINESS

The year on year increase was driven by strong growth in demand for the clinical research services provided

by the company. Through our organic growth, we have undertaken significantly more clinical trials at more

research sites this year. The company now operates through 65 sites in 8 countries and conducts trials in a

greater range of therapeutic areas.

The company follows a growth strategy based on delivering significant patient recruitment targets coupled

with high quality clinical conduct in the trials we participate. Consequently, the company has achieved a

commanding position within the Site Services element of the Pharmaceutical services industry.

The company has distributed a dividend during the year and maintained a strong cash position.

PRINCIPAL RISKS AND UNCERTAINTIES

The company's activities expose to financial and business risks as noted below. The company has in place

risk management policies that seek to limit the adverse effect of these risks on the financial performance of

the company. A description of those risks and the risk management policies are given below.

Credit risk

The company's credit risk is primarily attributable to its trade debtors and unbilled receivables. The amounts

presented in the Statement of Financial Position is net of allowances for doubtful debts, estimated by

management based on prior experience, the current economic environment or specific customer issues. The

company has implemented polices that require appropriate assessments of potential customers and reviews

of existing customer history before a sale is made.

Foreign exchange risk

The company operates internationally and as such not all contracts will be in the company's functional

currency. Contracts usually span a few years and are forecasted to return a certain level of profit. Fluctuations

in currency exchange rates may have an impact on the forecasted profit. Structured billing schedules and the

purchase of forward currency contracts to cover non sterling commitments are undertaken to mitigate these

fluctuations and management consider this to be an acceptable level of risk.

Business risk

There are risks and uncertainties relevant to the company's business, financial condition and the results of

operations which may affect future performance. The factors listed below are amongst those which could

cause its actual results to differ materially from expected or historical results.

Continuation of work undertaken

The company undertakes clinical research activities for the international pharmaceutical industry. These trials

are complex and are required to meet safety and efficacy targets during the trial, these being monitored by

regulatory authorities. If issues emerge during a trial at our client's level, this can have consequences for the

continuation of work undertaken at research sites, which in turn can affect the company. Management

mitigates this risk by spreading work over more clients and more studies at any given time. For substantial

work, upfront payments are included within contracts to mitigate risk.

Regulatory authorities

Our work is subject to inspections from regulatory authorities and we need to ensure that our processes and

work meets the expected standards. Management mitigate this risk by maintaining strong oversight through

regular quality control and quality assurance reviews.

Recruitment of qualified employees

The success of the company's business depends on its ability to attract and retain strong qualified clinical,

professional and administrative staff. The company believes that its reputation, growth prospects, good

compensation and benefits packages, together with the excellent training schemes offered, allows it to offer

broad experience to existing and prospective employees.

Reliance on information technology

The company is reliant on information technology systems. Any disruption to these systems due to internal or

external factors could materially affect the company's operations. Management utilise a number of information

technology security measures to mitigate the threat.

KEY PERFORMANCE INDICATORS

2019

2018

Movement

£

£

%

Turnover

16,022

5,664

183

Operating profit

2,945

515

472

Trade debtors

3,051

1,566

95

Accrued income and retentions

2,529

547

362

Cash at bank

3,044

2,014

51

Average number of employees

100

67

49

ON BEHALF OF THE BOARD:

K P Muthalagappan - Director

29 April 2019

The directors present their report with the financial statements of the company for the year ended 31 March 2019.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of clinical research.

DIVIDENDS

An interim dividend of £994.51 per share was paid on 31 March 2019. The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 31 March 2019 will be £ 905,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 April 2018 to the date of this

report.

K P Muthalagappan

V Birch

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial

statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law

the directors have elected to prepare the financial statements in accordance with United Kingdom Generally

Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company

law the directors must not approve the financial statements unless they are satisfied that they give a true and

fair view of the state of affairs of the company and of the profit or loss of the company for that period. In

preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain

the company's transactions and disclose with reasonable accuracy at any time the financial position of the

company and enable them to ensure that the financial statements comply with the Companies Act 2006. They

are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for

the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the

Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps

that he ought to have taken as a director in order to make himself aware of any relevant audit information and

to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Luckmans Duckett Parker Limited, will be proposed for re-appointment at the forthcoming

Annual General Meeting.

ON BEHALF OF THE BOARD:

K P Muthalagappan - Director

29 April 2019

Opinion

We have audited the financial statements of Medinova Limited (the 'company') for the year ended

31 March 2019 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet,

Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant

accounting policies. The financial reporting framework that has been applied in their preparation is applicable

law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial

Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted

Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 March 2019 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and

applicable law. Our responsibilities under those standards are further described in the Auditors'

responsibilities for the audit of the financial statements section of our report. We are independent of the

company in accordance with the ethical requirements that are relevant to our audit of the financial statements

in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in

accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to

report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the

Strategic Report and the Report of the Directors, but does not include the financial statements and our Report

of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent

otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and,

in doing so, consider whether the other information is materially inconsistent with the financial statements or

our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such

material inconsistencies or apparent material misstatements, we are required to determine whether there is a

material misstatement in the financial statements or a material misstatement of the other information. If,

based on the work we have performed, we conclude that there is a material misstatement of this other

information, we are required to report that fact. We have nothing to report in this regard.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of

the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to

report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, the directors are

responsible for the preparation of the financial statements and for being satisfied that they give a true and fair

view, and for such internal control as the directors determine necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the directors either intend to liquidate the company or to cease

operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes

our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of these

financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial

Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our

Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's

members those matters we are required to state to them in a Report of the Auditors and for no other purpose.

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the

company and the company's members as a body, for our audit work, for this report, or for the opinions we

have formed.

Mark Spafford FCCA ACA (Senior Statutory Auditor)

for and on behalf of Luckmans Duckett Parker Limited

Chartered Accountants

Statutory Auditors

1110 Elliott Court

Herald Avenue

Coventry Business Park

Coventry

West Midlands

CV5 6UB

29 April 2019

TURNOVER

3

16,022,043

5,663,644

Other operating income

(32,332

)

60,248

15,989,711

5,723,892

Purchases

8,107,889

1,827,568

7,881,822

3,896,324

Staff costs

4

4,194,291

2,748,748

Depreciation

118,381

99,691

Other operating expenses

623,725

532,627

4,936,397

3,381,066

OPERATING PROFIT

5

2,945,425

515,258

Interest receivable and similar income

59,752

37

3,005,177

515,295

Interest payable and similar expenses

6

54,737

71,530

PROFIT BEFORE TAXATION

2,950,440

443,765

Tax on profit

7

552,300

79,048

PROFIT FOR THE FINANCIAL YEAR

2,398,140

364,717

PROFIT FOR THE YEAR

2,398,140

364,717

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

2,398,140

364,717

FIXED ASSETS

Tangible assets

9

459,787

312,853

Investments

10

2,707

2,604

462,494

315,457

CURRENT ASSETS

Debtors

11

6,466,366

3,096,768

Cash at bank and in hand

3,044,362

2,014,229

9,510,728

5,110,997

CREDITORS

Amounts falling due within one year

12

4,114,011

1,491,549

NET CURRENT ASSETS

5,396,717

3,619,448

TOTAL ASSETS LESS CURRENT LIABILITIES

5,859,211

3,934,905

CREDITORS

Amounts falling due after more than one year

13

-

(161,444

)

PROVISIONS FOR LIABILITIES

17

(67,466

)

(51,878

)

ACCRUALS AND DEFERRED INCOME

18

(3,959,457

)

(3,382,435

)

NET ASSETS

1,832,288

339,148

CAPITAL AND RESERVES

Called up share capital

19

910

910

Capital redemption reserve

20

90

90

Retained earnings

20

1,831,288

338,148

SHAREHOLDERS' FUNDS

1,832,288

339,148

The financial statements were approved by the Board of Directors on 29 April 2019 and were signed on its behalf by:

K P Muthalagappan - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 April 2017

910

203,431

90

204,431

Changes in equity

Total comprehensive income

-

364,717

-

364,717

Dividends

-

(230,000

)

-

(230,000

)

Balance at 31 March 2018

910

338,148

90

339,148

Changes in equity

Total comprehensive income

-

2,398,140

-

2,398,140

Dividends

-

(905,000

)

-

(905,000

)

Balance at 31 March 2019

910

1,831,288

90

1,832,288

1.	STATUTORY INFORMATION

Medinova Limited is a private company, limited by shares , registered in England and Wales. The

company's registered number and registered office address can be found on the Company Information

page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemption in preparing these financial

statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and

Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows.

Preparation of consolidated financial statements

The financial statements contain information about Medinova Limited as an individual company and do

not contain consolidated financial information as the parent of a group. The company is exempt under

Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial

statements as it and its subsidiary undertakings are included by full consolidation in the consolidated

financial statements of its parent, VSK (Kenilworth) Limited, 1110 Elliott Court, Coventry Business

Park, Herald Avenue, Coventry, West Midlands, United Kingdom, CV5 6UB.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102

'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related

party transactions with wholly owned subsidiaries within the group.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts,

rebates, value added tax and other sales taxes.

The contracts entered into by the company with third party customers set out in detail billings for the

clinical research services that we undertake for them. We recognise revenue for services as the

contract activity progresses such as study set up, patient visits, imaging services, study management

and other services carried out in the course of conducting clinical trials. Income derived from variations

on contracts are recognised only when those variations have been accepted by the customer.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Improvements to property

-

Unexpired Term of Lease

Plant and machinery

-

25% on reducing balance

Fixtures and fittings

-

25% on reducing balance

Motor vehicles

-

25% on reducing balance

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost.

Financial instruments

The company has elected to apply the provisions of Section 11 "Basic Financial Instruments" and

Section 12 "Other Financial Instruments Issues" of FRS 102 to all of its financial instruments.

Financial instruments are recognised when the company becomes party to the contractual provisions

of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements,

when there is a legally enforceable right to set off the recognised amounts and there is an intention to

settle on a net basis or to realise the asset and liability and settle simultaneously.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement,

except to the extent that it relates to items recognised in other comprehensive income or directly in

equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been

enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at

the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods

different from those in which they are recognised in financial statements. Deferred tax is measured

using tax rates and laws that have been enacted or substantively enacted by the year end and that are

expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable

that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at

the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of

exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at

the operating result.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the

period of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the

company's pension scheme are charged to profit or loss in the period to which they relate.

3.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

2019

2018

£

£

Clinical research services

16,022,043

5,663,644

16,022,043

5,663,644

An analysis of turnover by geographical market is given below:

2019

2018

£

£

United Kingdom and Europe

15,186,630

4,234,190

United States of America

835,413

1,429,454

16,022,043

5,663,644

4.	EMPLOYEES AND DIRECTORS

2019

2018

£

£

Wages and salaries

3,713,150

2,427,426

Social security costs

383,033

245,981

Other pension costs

98,108

75,341

4,194,291

2,748,748

The average number of employees during the year was as follows:

2019

2018

Directors

1

1

Clinical

36

23

Non-Clinical

63

43

100

67

2019

2018

£

£

Directors' remuneration

116,667

99,500

Directors' pension contributions to money purchase schemes

36,000

36,000

5.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

2019

2018

£

£

Hire of plant and machinery

44,273

48,224

Depreciation - owned assets

118,381

99,691

Auditors' remuneration

19,000

20,950

Foreign exchange differences

32,332

(60,248

)

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2019

2018

£

£

Bank interest

325

6,528

Loan interest

11,934

26,721

Discounting charges

-

11,596

Other interest

33,568

-

Bank Charges

8,910

14,425

Late payment interest

-

12,260

54,737

71,530

7.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2019

2018

£

£

Current tax:

UK corporation tax

536,712

33,101

Deferred tax

15,588

45,947

Tax on profit

552,300

79,048

UK corporation tax has been charged at 19% .

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The

difference is explained below:

2019

2018

£

£

Profit before tax

2,950,440

443,765

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

560,584

84,315

Effects of:

Expenses not deductible for tax purposes

(6,840

)

6,840

Depreciation in excess of capital allowances

1,150

2,839

Group Losses surrendered

-

(17,244

)

Change in rate of taxation

(2,594

)

2,298

Total tax charge

552,300

79,048

8.

DIVIDENDS

2019

2018

£

£

Ordinary shares of £1 each

Interim

905,000

230,000