TIDMVELO
RNS Number : 1434K
Velosi Limited
14 April 2010
Velosi Limited
("VELOSI", "the Group" or "the Company")
Preliminary Results
for the year ended 31 December 2009
VELOSI, the AIM quoted provider of Testing, Inspection and Certification
services to major national and multinational oil and gas companies, is pleased
to announce its preliminary unaudited results for the year ended 31 December
2009.
HIGHLIGHTS IN 2009
Strong Financial Performance
· Revenue was steady at US$183.6 million (2008: US$182.1 million).
· Operating profit up 2.7% to US$14.8 million (2008: US$14.4 million)
· Profit on ordinary activities before tax up 13.0% to US$16.8 million
(2008: US$14.9 million)
· Profit after tax and non-controlling interests was US$10.4 million (2008:
US$9.3 million)
· EPS up 5.1% to 22.8 cents per share (2008: 21.7 cents per share)
· Cash flow generated from operations of US$10.7 million (2008: US$13.2
million)
· Net cash reserves of US$19.7 million maintaining a strong financial
position
· Final dividend proposed of 1.5 cents per share (2008: 1.0 cent per share)
Operational Achievements
· Strong forward order book providing excellent visibility on future
revenues
· Controlled investment in the Group's global infrastructure
· Opened new offices in Papua New Guinea, Pakistan, Brazil, Thailand and
China
John Hogan, Chairman, commented:
"To report a 13.0% increase in profitability, during a year when market
conditions have been extremely challenging, is a very creditable performance.
Reported revenue for the Group was stable in 2009 when compared to last year.
However, excluding Nigeria which had to operate under exceptional circumstances,
revenues actually increased by approximately 6.8%. This was achieved in a year
in which oil prices dropped to around US$40 per barrel, resulting in many oil
and gas companies reducing their expenditure.
Looking ahead, we are seeing signs of recovery in activity alongside a higher
and more stable oil price, with specific regions and countries experiencing an
increase in investment in oil and gas infrastructure projects, although the
overall mood in the industry remains cautious. VELOSI has a strong order book
which provides good visibility on future income and while we do not anticipate
significantly improved market conditions, we expect to deliver a positive
performance in 2010."
For further information, please contact:
+--------------+----------------+-------------------------+
| VELOSI | Dr Nabil Abdul | 020 7930 0777 |
| | Jalil | |
| | Dan Ooi | |
+--------------+----------------+-------------------------+
| Strand | James Harris | 020 7409 3494 |
| Hanson | Richard | |
| | Tulloch | |
+--------------+----------------+-------------------------+
| Charles | Mark Taylor | 020 7149 6000 |
| Stanley | | |
+--------------+----------------+-------------------------+
| Cardew Group | Tim Robertson | 020 7930 0777 |
| | Catherine | |
| | Maitland | |
+--------------+----------------+-------------------------+
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report that VELOSI has achieved another good trading
performance. The Group increased profits before tax by 13.0% to US$16.8 million,
continued to expand through new office openings and secured a wide range of new
contracts. This was a particularly creditable performance given the slowdown in
investment by the oil and gas majors during 2009. While across the market
overall expenditure on asset integrity services dipped, our revenue levels
remained constant helped by our investment in new projects in specific 'hot
spots' around the globe and by the industry's need to maintain existing oil and
gas projects. Excluding income from Nigeria, where exceptional circumstances
reduced our operating ability, revenues actually increased by approximately
6.8%.
Over the last 18 months, in anticipation of a more challenging market
environment, we have focused on ensuring the Company operates at maximum
efficiency and has sufficient cash reserves to comfortably support the business.
As a result of actions taken, our operating margin increased to 8.1% (2008:
7.9%), being a key driver behind the increase in Group profitability, and net
cash reserves at the year end were US$19.7 million, placing the Company in a
strong financial position.
With a presence in 36 countries, VELOSI offers a global service to the oil and
gas majors, providing an extensive range of Testing, Inspection and
Certification services. Our current order book provides visibility for
approximately 60% of 2010 consensus forecast revenues, which is a strong
position to be in at this stage of the year.
Financial Performance
VELOSI's global reach ensured the Company was able to offset the challenging
market conditions and generate revenues of US$183.6 million (2008: US$182.1
million). Higher margin contracts and cost saving initiatives enabled the
Company to improve profit margins and deliver a 13.0% increase in profits before
tax to US$16.8 million (2008: US$14.9 million). This was an excellent result in
a difficult market.
Basic earnings per share after minority interests increased by 5.1% to 22.8
cents, compared to 21.7 cents in the previous year, while fully diluted earnings
per share after minority interests based on the weighted average issued share
capital as at 31 December 2009 was 22.3 cents, compared to 19.6 cents in the
previous year.
At 31 December 2009, the Group had net cash reserves of US$19.7 million
inclusive of cash placed as margin for bank guarantees, currently classified as
other debtors (2008: US$17.6 million). Conserving the Group's balance sheet
strength is a key part of our strategy as it provides the flexibility to
comfortably fund the Group's trading activities and take advantage of any
opportunities that may result from the more challenging market environment.
Dividend
The Board has decided to adopt a more progressive dividend policy as a result of
the continued improvement in the trading performance and cash generation of the
Group since its IPO in 2006. The Board is therefore recommending a final
dividend of 1.5 cents per share (2008: 1.0 cent per share), an increase of 50%
over the prior year.Subject to shareholders' approval at the Annual General
Meeting, the dividend will be paid on 30 July 2010 to shareholders on the
register on 2 July 2010.
Strategy
VELOSI currently operates in 36 countries, up from 20 countries in 2006 when the
Company was admitted to AIM. Revenue has also increased substantially in that
period from US$70.2 million in 2006 to US$183.6 million in 2009. We have now
entered a more challenging market environment and we have amended our strategy
to reflect this, whilst not losing sight of our core objective which is to be
the leading provider of Testing, Inspection and Certification services to major
national and multinational oil and gas companies.
In 2008, we restructured the business to accommodate the increased size of the
Group. A new management structure was introduced creating regional manager
roles, reporting directly to the Chief Executive Officer, who respectively
control the Group's principal geographic areas of activity being: Africa,
Australasia, Europe, the Middle East, and America. This had a positive impact in
2009, enhancing our ability to deliver 'one-stop shop' solutions to our
international clients, often under framework agreements. An example would be
Velosi (B) Sdn Bhd in Brunei, where, together with our joint venture partner, we
are contracted to perform QC Surveillance, Specialised Non Destructive Testing,
Asset Integrity, and Corrosion Monitoring and Maintenance Inspection.
During 2009, we continued to expand our global presence opening new offices in
Papua New Guinea, Pakistan, Brazil, Thailand and China. Typically it takes
between 12 to 24 months for new offices to make a positive contribution. Our
strategy for opening new offices is a combination of ensuring that we have a
good geographic coverage of the key areas together with accelerating office
openings in current 'hot spots' or areas of growth. An example of this is the
recent opening of our Kazakhstan office in response to the substantial increase
in oil and gas investment in Kazakhstan during 2009.
During 2009, VELOSI also won a number of important contracts. Of particular note
Velosi Europe Limited ("Velosi Europe") won a significant five-year contract
with Eskom, the South African state-owned electricity provider, and Velosi
America LLC ("Velosi America") won a Global Manpower services contract with a
multi-national oil and gas company, giving VELOSI preferred supplier status,
along with six others.
We will continue to enter new geographic markets, growing market share in
existing markets, and expanding the Group's service offerings. We are at the
same time mindful that the current environment may provide 'value' opportunities
with the potential to generate above average returns, and the Company's strong
financial position should enable it to consider such opportunities. In line with
this strategy, the Company was pleased to announce on 9 February 2010 that it
had acquired from Velosi Malaysia Sdn Bhd the VELOSI trading name in Malaysia.
Appreciation
On behalf of the Board, I wish to extend my thanks to all our employees
worldwide for their commitment, hard work and perseverance throughout 2009,
which enabled us to achieve these creditable results.
Outlook
VELOSI has demonstrated its ability to continue to grow the business despite
facing challenging conditions. We believe this reflects well on the strength of
the Company's reputation for excellence in its fields of expertise and the
foundations it has carefully built to manage a global business.
The market environment remains challenging, with our clients seeking to control
expenditure on new projects and trimming costs on existing projects.
Nonetheless, there are several 'hot spots' of activity in Brazil, Australia,
Kazakhstan, and West Africa where investment in projects remains high and where
we are well positioned to take advantage of this activity.
The Company's strong order book currently accounts for approximately 60% of 2010
consensus forecast revenues representing excellent forward visibility. We have
net cash reserves of US$19.7 million, ensuring we are in a strong financial
position to fund operating activities and, if a suitable opportunity arises, to
fund acquisitions. We will continue to focus on streamlining our operations to
ensure we maximise returns to shareholders, whilst also continuing our policy of
controlled investment in the Group's global infrastructure.
Trading in the first three months of 2010 is in line with management
expectations and we therefore look forward to delivering a positive outcome for
the current year.
John Hogan
Chairman
14 April 2010
OPERATIONAL REVIEW
Operational Highlights
Europe
· BP Norge AS contract, the Group's first contract in Norway, remains the
largest contributor to European revenue
· Substantial five-year contract win with South African state-owned
electricity provider Eskom
· Inspection Consultancy services contract with Saipem expected to
contribute strongly for the duration of the three year contract
Australasia
· Two-year contracts win with Total E&P Indonesia
· Numerous contract wins in India
· Registered and opened first office in China
Middle East
· Largest contributor to Group revenues
· Saudi office won two-year contract from SBG
· Lifting Equipment services established in all offices
· Extension of VELOSI's Worldwide Inspection contracts with Qatar Petroleum,
Ras Gas, and Qatar Gas
· Two-year contract win from STG, the Russian EPC company responsible for
the pipeline project for Dolphin
· Three-year contract win from Abu Dhabi Port Authority for Vendor
Inspection services
Americas
· Significant contract win with a multi-national oil and gas company
· Expansion of ExxonMobil's requirements
· Certification contract win with National Oilwell Varco (NOV) Norway AS
Africa
· Long-term contracts in place with CABGOC in Angola, BOST in Ghana, and
Chevron in Nigeria
· Velosi Nigeria legal proceedings concluded - well placed for significant
growth
· Nigeria and Angola offer strong growth opportunities
Overview
2009 has been a year of growth for VELOSI despite the challenging market
conditions. During 2009, we continued to win a number of significant contracts
and expanded our presence in geographic regions where oil and gas investment has
increased, such as Central Asia, South America, and Africa. Trading for the
first three months of the current financial year has been in line with our
expectations.
Despite the cautious outlook of our major clients, new builds and
project-related services are still taking centre stage in the Group's
activities, which is a reflection of the continuous investment in infrastructure
within the oil and gas industry.
Europe
Revenue: US$52.5 million (2008: US$52.0 million), Contribution to Group
Revenues: 25.0% (2008: 25.7%)
European revenues grew by 192.2% in 2008, and as a result the 2009 performance
is measured against very strong comparables. Nevertheless this was a robust
performance, and the contribution to Group revenues remained broadly level. The
largest contributor was the BP Norge AS contract, the Group's first contract
with BP in Europe and in Norway, which increased its manpower requirements
during the year.
VELOSI was awarded a substantial new five-year Professional Services contract
with Eskom, the South African state-owned electricity provider. The contract was
won by Velosi Europe in a 50:50 partnership with Khum MK Investments to provide
Quality and Inspection services for Eskom's new build power plant program.
Capital spend on this program is expected to be in excess of US$30 billion and
the fees for inspection should be in the region of 3%. The Quality and
Inspection services work will be spread out amongst eight competing inspection
authorities. Eskom provides 95% of South Africa's electricity.
Also of significance, VELOSI was awarded preferred supplier status via UTT
logistics bv to Saipem, a subsidiary of the Italian oil and gas company ENI, and
on Total's OML58 upgrade project, which is expected to contribute significantly
to revenue and profit until 2011. VELOSI was also awarded a one-year rolling
contract with KJVG to provide Inspection services for the downstream EPCM on the
multibillion Gorgon LNG project, and its first Pipemill Surveillance contract in
Kazakhstan for the Uralsk Pipeline with KazStroyService, which strategically
places VELOSI for Pipeline Inspection services in Kazakhstan.
While VELOSI won a number of significant contracts during the period, the
reduction in activity caused by the economic downturn allowed VELOSI to prepare
for a number of major projects expected to receive funding during 2010. As a
result there is an increase in projected work throughout 2010 that VELOSI is
well positioned to take advantage of. A new office was opened in Warsaw, Poland,
in March 2010, and offices located in Dusseldorf, Germany; Prague, Czech
Republic; and Kolnes, Norway are due to be opened in 2010.
Australasia
Revenue: US$34.5 million (2008: US$36.3 million), Contribution to Group
Revenues: 16.5% (2008: 17.9%).
Despite the challenging market environment in 2009, Australasia recorded a
commendable revenue of US$34.5 million, and won a number of new contracts across
the region in the period.
PT Java Velosi Mandiri won two two-year contracts with Total E&P Indonesia for
the provision of Rope Access Inspection, and Engineering Support services
respectively.
In India, Velosi Certification Services (India) Pvt. Ltd. ("Velosi India") was
awarded its first long-term contract with ONGC for Third Party Inspection
services for all surface facilities and pipelines, during all phases of the
project over the next four years. Velosi India was also awarded a contract by
GAIL for Project Management and Consultancy, Construction Supervision and QA/QC
for Phase I and II of the Chainsa Jhajjar Spurlines. In addition, Velosi India
was awarded the Third Party Quality Surveillance contract by HPCL-Mittal
Pipelines for its 1,050 kilometre crude oil Mundra Bhatinda Pipeline Projects.
Post year-end, Velosi India was awarded the Third Party Inspection of MHN-
Process Platform and Living Quarters Project, MHN- Process Gas Compressor
Project of ONGC, and Third Party Inspection ("TPI") and QA for Propane, Butane
and LPG terminals for IPPL (Indian Oil Petronas Private Limited) at Ennore,
Tamil Nadu.
The Pakistan Branch of Velosi Asset Integrity Ltd won milestone contracts in
2009/2010, which included the selection of VELOSI as the TPI agent for over
3,100 CNG stations and more than 1,500 pipelines across Pakistan by the Oil &
Gas Regulatory Authority ("OGRA") of Pakistan; and implementation of a
Maintenance Optimisation Project for ENI Pakistan.
In Brunei, VELOSI, together with its local joint venture partner QAF Oilfields
Services, completed full mobilisation for its three-year contract with Brunei
Shell Petroleum for QC Surveillance, Specialised NDT, Asset Integrity, Corrosion
Monitoring and Maintenance Inspection. A total of 155 personnel were deployed
with two-thirds of the work force being locals, reflecting the success of
VELOSI's training and recruitment of those locals for projects.
QA Management Services Pty Ltd ("QAM-Velosi") increased its revenue by
approximately 7.0% to US$4.25 million. Major contracts awarded with EOS for
inspection of equipment include the Woodside North Rankin 2 Project, PSN for the
Esso Kipper Tuna Projects, Adelaide Desalination Plant, Worley Parsons for the
Karara Iron Ore Project, Apache and Clough for the Devils Creek Project. During
the year QAM-Velosi became one of the two preferred inspection providers for
Chevron and commenced work on the Gorgon Project, estimated to be valued at
US$7.0 million over the next two years.
Velosi Project Management Limited ("VPML"), in conjunction with Velosi Malaysia
Sdn Bhd, completed a US$2.1 million contract with MISC Berhad for the
Pre-Commissioning and Commissioning for a Floating Storage and Offloading
Vessel, and an approximate US$1.1 million Project Management Consultancy
contract with Malaysia Marine Heavy Engineering (MMHE), the largest yard in the
region involving Engineering, Procurement, Pre-Construction, Yard Evaluation,
CAPEX Analyses and Risk Engineering for a prestigious Semi-Submersible Floating
Production System Project. These two contracts mark important milestones for
VPML which was established in 2008.
K2 International Limited, Velosi's 65% owned subsidiary, was awarded a three
year contract with Samsung Heavy Industries Co Ltd ("SHI") estimated to be worth
in excess of USD20 million over three years.
VELOSI registered and opened its first office in China, and commenced operations
in Shanghai in November 2009. New offices have also opened in Papua New Guinea,
Thailand, and Myanmar.
Middle East
Revenue: US$72.9 million (2008: US$63.0 million), Contribution to Group
Revenues: 34.8% (2008: 31.1%).
VELOSI has experienced growth across the Middle East, despite the global market
difficulties, with this region being the largest contributor to Group revenues.
New services, such as Lifting Equipment services and NDT, have been established
across the region and made available to clients. Our Middle Eastern offices have
also developed their training function to offer training to clients, and we have
entered into an agreement with TWI UK to sell their training courses to clients.
The Abu Dhabi office also won contracts from ADCO and GASCO for TPI at site and
worldwide . The Saudi office has been awarded projects for Aramco under their
General Inspection services contract. The Qatar office has also won the
Management Certification contract for Qatar Gas and extended the contract for
Ras Gas and Qatar Gas. The Oman office has seen its PDO contract extended, with
PDO using VELOSI exclusively for their projects.
Americas
Revenue: US$19.2 million (2008: US$22.4 million), Contribution to Group
Revenues: 9.2% (2008: 11.1%)
Velosi America won a significant Global Services contract with a multi-national
oil and gas company in the latter half of 2009. VELOSI was one of seven
qualified global vendors selected in a competitive bid process to provide
manpower services. Our relationship with ExxonMobil also continued to grow with
the assignment of additional VELOSI personnel to their operations in Angola and
Nigeria.
In a competitive environment, VELOSI made good progress in broadening our
visibility with a number of established clients and developed several new
relationships. Highlights include: Chevron, Plus Petrol, Anadarko, Schlumberger,
Tullow Oil, Alstom, TransCanada Pipeline and SOFEC. Several global Master
Service Agreements (MSAs) were renewed, with ConocoPhillips, Zachary
Construction, CB&I, Enersul, J. Ray McDermott and Salym.
Our contract with National Oilwell Varco (NOV) Norway AS is particularly
significant, as it involves a substantial amount of Certification work, a
service which VELOSI has been working hard to develop in this region in 2009. In
addition, we continue to work with NOV elsewhere, supplying comprehensive
certification services for Submersible Mobile Offshore Drilling Rigs being
delivered to Gazflot, a subsidiary of Russia's largest company Gazprom. The
division also signed several new contracts with companies working on Fluor's
Taneco Refinery in Tatarstan, Russia.
Africa
Revenue: US$28.7 million (2008: US$27.4 million), Contribution to Group
Revenues: 13.7% (2008: 13.5%)
In a difficult year globally, Africa's long-term contracts with CABGOC in
Angola, BOST in Ghana, and Chevron in Nigeria helped maintain some momentum and
enhance its prospects for 2010. We expect 2010 to be a very busy year for the
sub-Equatorial African region, on account of both existing work and the
potential for expansion in various countries in the region. Nigeria and Angola
continue to offer the best growth opportunities.
Ghana
The BOST contract in Ghana has continued through the first quarter and progress
has been made at both Accra Plains Depot (APD) and at Akosombo.Elsewhere in
Ghana, the fledgling oil industry is picking up momentum and this offers
potential opportunities with companies such as Tullow Oil, Modec, Technip, Baker
Hughes, Schlumberger and others.
Nigeria
Legal proceedings following the death of our Nigerian partner in September 2007
have hampered VELOSI's ability to conduct business and grow in Nigeria. These
proceedings were satisfactorily settled in 2009 and Velosi Superintendend
Nigeria Limited ("VSNL") is now well positioned to regain its position as one of
the foremost service providers to the oil and gas industry in the country. VSNL
believes 2010 will be a year of growth. VSNL will continue to provide personnel
to the Escravos Project for Chevron, and sees the opportunity to resume working
for both ExxonMobil and Shell.
In addition to the provision of personnel, VSNL intends to offer and sell more
group services into Nigeria during the course of the year. We have received
requests for Rope Access work to be provided by our subsidiary K2; Specialised
NDT in the form of Long Range Ultrasonics (LRUT) to be provided by Steel Test
(Proprietary) Ltd, also a subsidiary; and Tank Floor Testing services for Total
was successfully completed by Kurtec Inspection Services Sdn Bhd.
Angola
The global economic slowdown prompted a reduction in project spending by CABGOC
(a Chevron/Sonangol Joint Venture) in Angola. Velosi Angola LDA has now managed
to return to the levels of activity achieved prior to the reduction due to a
successful Angolanisation programme.
VELOSI also sees opportunities with companies such as BP, Total, ExxonMobil and
others that will be pursued in the course of the year.
Central Asia
Revenue: US$1.8 million (2008: US$1.3 million), Contribution to Group Revenues:
0.8% (2008: 0.7%)
Our Russian & Kazakh Certification services division secured several new
contracts from companies working on Exxon Neftgas Limited's offshore Arktun-Dagi
project near Sakhalin Island during 2009.
FINANCIAL REVIEW
Overview
The Company's consolidated financial statements for the year ended 31 December
2009 have been prepared under International Financial Reporting Standards
(IFRS).
Notwithstanding the challenging market in 2009, the Group's financial condition
remained relatively stable. For the year ended 31 December 2009, the Group's
operating profit was US$14.8 million, an increase of 2.7% from last year (2008:
US$14.4 million). The Group's cash reserves remained strong with cash flow from
operations of US$10.7 million (2008: US$13.2 million). Net cash flow from
operating activities was US$6.9 million (2008: US$9.9 million). Revenue was
US$183.6 million (2008: US$182.1 million). However, factoring out the
significant reduction in revenue contribution from Nigeria of US$2.2 million
(2008: US$12.2 million), the Group's revenue grew to US$181.4 million, an
increase of approximately 6.8% from US$169.9 million in 2008. The growth in
revenue was principally driven by operations in Central Asia and the Middle
East, where revenue increased 31.6% and 15.8% respectively. During the year, the
Middle East was the largest contributing region to Group revenue, contributing
34.8% to total revenues, followed by Europe and Australasia, contributing 25.0%
and 16.5% respectively.
Profit from ordinary activities before tax for the year was up 13.0% from
US$14.9 million in 2008, to US$16.8 million. Again, if factoring out Nigeria's
loss from ordinary activities of US$2.5 million (2008: Profit of US$0.3
million), the Group's profit from ordinary activities before tax would have been
US$19.3 million (2008: US$14.6 million). This reflects an increase of 32.5%. The
Group recorded an increase of 11.1% in profit after tax, and of the US$12.9
million (2008: US$11.7 million), US$2.5 million was attributable to minority
shareholders of the Group (2008: US$2.3 million).
Taxation
The effective tax rate for the Group for the year ended 31 December 2009 was 23%
(2008: 22%) and the tax charge was US$3.8 million (2008: US$3.2 million). The
effective tax rate for the Group is directly correlated with the contributions
from the different countries in which we trade and their varying tax rates.
Share Capital
During the year share capital increased by US$48,000 due to the 2,424,291 new
ordinary shares of US$0.02 each that were issued to the shareholders of K2
Specialist Services Pte Ltd ("K2") on 15 May 2009. This was pursuant to an
agreement dated 19 October 2007 between K2 and Velosi Industries Sdn Bhd
following the satisfaction of the entire profit guarantee of SGD4,000,000
(approximately GBP1.34 million) aggregate profit after tax and minority
interests, set for the stipulated guarantee period and based on achievement of
performance targets by K2 for the financial year ended 31 December 2008.
Cash Flow
Net cash inflow from operating activities was lower at US$6.9 million compared
toUS$9.9 million in 2008. This was mainly due to the reduction in payables which
was partially offset by the improvement in debtors' days.
Cash outflow for the Group from investing activities was US$3.8 million (2008:
Outflow US$3.1 million). A significant portion of the cash outflow was for the
acquisition of shares in Velosi Superintendend Nigeria Limited in concluding the
legal proceedings for the same.
Cash outflow from financing activities was US$3.4 million, compared to a cash
inflow of US$7.7 million in 2008, caused mainly by the increase in the amount
owing by a related party.
Administrative Expenses
Administrative expenses for the year reduced to US$31.3 million (2008: US$32.1
million). This reflected the effectiveness of various streamlining efforts taken
Group-wide to reduce administrative expenses during 2009.
Profit Attributable to Minority Interests
Profits attributable to minority interests were US$2.5 million (2008: US$2.3
million). This was largely attributed to the stronger performance of the
Group's part-owned subsidiaries including PSC Europe SRL and Intec (UK) Limited
in Europe; Velosi Certification W.L.L (Qatar) in the Middle East; Velosi Angola
LDA and Steel Test (Proprietary) Ltd in Africa; and Velosi Project Management
Limited in Australasia.
Earnings Per Share and Dividends
Basic earnings per share after minority interests based on the weighted average
issued share capital as at 31 December 2009 were 22.8 cents (2008: 21.7 cents),
and fully diluted earnings per share after minority interest based on the
weighted average issued share capital as at 31 December 2009 were 22.3 cents
(2008: 19.6 cents). As at 31 December 2009, the Group had net assets of US$1.63
per share.
As stated in the Chairman's Statement, the Board is proposing a final dividend
of 1.5 cents per share (2008: 1.0 cent per share). The dividend will be paid,
subject to shareholder approval at the Annual General Meeting, on Friday 30 July
2010, to shareholders on the register on Friday 2 July 2010, in sterling
converted at the prevailing exchange rate.
+---------------------------+----------+----------+----------+----+-----------+
| GROUP STATEMENT OF COMPREHENSIVE INCOME |
+-----------------------------------------------------------------------------+
| FOR THE YEAR ENDED 31 DECEMBER 2009 |
+-----------------------------------------------------------------------------+
| | | | | | |
+---------------------------+----------+----------+----------+----+-----------+
+---------------------------+---+---+---+---+----+--+-------------+----+---+--------------+----------+
| | | | 2009 | | 2008 |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | Notes | US$000 | | US$000 |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | | (unaudited) | | (audited) |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Continuing operations | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Revenue | | 2 | 183,563 | | 182,072 |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Cost of sales | | | (138,675) | | (136,509) |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | | 44,888 | | 45,563 |
| Gross profit | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Other operating income | | | 1,141 | | 883 |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Administrative expenses | | | (31,250) | | (32,057) |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Operating profit | | | 14,779 | | 14,389 |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Finance costs | | | (291) | | (533) |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Share of profit of | | | 2,308 | | 1,006 |
| associated companies | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | | 16,796 | | 14,862 |
| Profit on ordinary | | | | | |
| activities before tax | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Income tax expense | | 3 | (3,848) | | (3,208) |
| expense | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Profit for the year | | | 12,948 | | 11,654 |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Other comprehensive | | | | | |
| income: | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Exchange differences on translating foreign | 1,298 | | (2,828) | |
| 0peration | | | | |
+---------------------------------------------------+-------------+--------+--------------+----------+
| Other comprehensive income for the year net of | 1,298 | | (2,828) | |
| tax | | | | |
+---------------------------------------------------+-------------+--------+--------------+----------+
| | | | | | | |
| | | | | | | |
+-----------------------------------+------------+--+-------------+--------+--------------+----------+
| Total comprehensive income for | | | 14,246 | | 8,826 | |
| the year | | | | | | |
+-----------------------------------+------------+--+-------------+--------+--------------+----------+
| Profit attributable to: | | | | | |
+---------------------------+---------------+-------+-------------+--------+-------------------------+
| Owners of the parent | | | 10,446 | | 9,306 |
+---------------------------+---------------+-------+-------------+--------+-------------------------+
| Non - controlling | | | 2,502 | | 2,348 |
| interest | | | | | |
+---------------------------+---------------+-------+-------------+--------+-------------------------+
| | | | 12,948 | | 11,654 |
+---------------------------+---------------+-------+-------------+--------+-------------------------+
| Total comprehensive income | | | | | | |
| attributable to: | | | | | | |
| | | | | | | |
+-------------------------------+-------+-----------+-------------+--------+--------------+----------+
| Owners of the parent | | | 11,342 | | 7,205 |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Non - controlling | | | 2,904 | | 1,621 |
| interest | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | | 14,246 | | 8,826 |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| Earnings per ordinary | | | | | |
| share | | | | | |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | | | | |
| Basic earnings per share | | 4 | 22.8c | | 21.7c |
+---------------------------+---------------+-------+-------------+----+-----------------------------+
| | | | | | |
| Diluted earnings per | | 4 | 22.3c | | 19.6c |
| share | | | | | |
| | | | | | |
+---------------------------+---+---+---+---+----+--+-------------+----+---+--------------+----------+
+--+--+------------------+-----------+--------+-------------+---+-----------+
| GROUP STATEMENT OF FINANCIAL POSITION |
+---------------------------------------------------------------------------+
| AS AT 31 DECEMBER 2009 |
+---------------------------------------------------------------------------+
| |
+---------------------------------------------------------------------------+
| | | | | | | | |
+--+--+------------------+-----------+--------+-------------+---+-----------+
| | | | | | 2009 | | 2008 |
+--+--+------------------+-----------+--------+-------------+---+-----------+
| | | | | Notes | US$'000 | | US$'000 |
+--+--+------------------+-----------+--------+-------------+---+-----------+
| | | | | | (unaudited) | | (audited) |
+--+--+------------------+-----------+--------+-------------+---+-----------+
| Assets |
+---------------------------------------------------------------------------+
| | | | | | |
+------------------------+-----------+--------+-------------+---+-----------+
| Non-current assets | | | | | |
+------------------------+-----------+--------+-------------+---+-----------+
| Goodwill | 5 | 8,772 | | 8,307 |
+------------------------------------+--------+-------------+---+-----------+
| Other intangible assets | 5 | 1,470 | | 1,744 |
+------------------------------------+--------+-------------+---+-----------+
| Property, plant and equipment | | 9,565 | | 8,261 |
+------------------------------------+--------+-------------+---+-----------+
| Investment in associated companies | | 2,713 | | 1,338 |
+------------------------------------+--------+-------------+---+-----------+
| Deferred tax assets | 6 | 95 | | 400 |
+------------------------------------+--------+-------------+---+-----------+
| | | 22,615 | | 20,050 |
+------------------------------------+--------+-------------+---+-----------+
| Current assets | | | | |
+------------------------------------+--------+-------------+---+-----------+
| Inventories | | 1,241 | | 2,271 |
+------------------------------------+--------+-------------+---+-----------+
| Trade and other receivables | | 62,528 | | 61,668 |
+------------------------------------+--------+-------------+---+-----------+
| Amount due from a related party | | 2,234 | | 1,057 |
+------------------------------------+--------+-------------+---+-----------+
| Amount due from associated | | 2,205 | | 1,127 |
| companies | | | | |
+------------------------------------+--------+-------------+---+-----------+
| Tax recoverable | | 159 | | 126 |
+------------------------------------+--------+-------------+---+-----------+
| Cash and cash equivalents | | 20,078 | | 20,641 |
+------------------------------------+--------+-------------+---+-----------+
| | | 88,445 | | 86,890 |
+------------------------------------+--------+-------------+---+-----------+
| | | | | |
+------------------------------------+--------+-------------+---+-----------+
| | | | | |
+------------------------------------+--------+-------------+---+-----------+
| Total assets | | 111,060 | | 106,940 |
+------------------------------------+--------+-------------+---+-----------+
| | | | | |
+------------------------------------+--------+-------------+---+-----------+
| Equity and liabilities | | | | |
+------------------------------------+--------+-------------+---+-----------+
| | | | | |
+------------------------------------+--------+-------------+---+-----------+
| Capital and reserves | | | | |
+------------------------------------+--------+-------------+---+-----------+
| Share capital | 7 | 935 | | 887 |
+------------------------------------+--------+-------------+---+-----------+
| Share premium | | 33,790 | | 32,422 |
+------------------------------------+--------+-------------+---+-----------+
| Share based payment reserves | | 1,028 | | 755 |
+------------------------------------+--------+-------------+---+-----------+
| Revaluation reserve | | - | | 287 |
+------------------------------------+--------+-------------+---+-----------+
| Translation reserve | | (1,268) | | (2,164) |
+------------------------------------+--------+-------------+---+-----------+
| Retained earnings | | 32,055 | | 22,875 |
+------------------------------------+--------+-------------+---+-----------+
| Total equity attributable to | | 66,540 | | 55,062 |
| equity holders | | | | |
+------------------------------------+--------+-------------+---+-----------+
| | | | | |
+------------------------------------+--------+-------------+---+-----------+
| Non-controlling interest | | 9,721 | | 7,293 |
+------------------------------------+--------+-------------+---+-----------+
| Total equity | | 76,261 | | 62,355 |
+--+--+------------------+-----------+--------+-------------+---+-----------+
+--------------------------------------+--------+-------------+---+-----+--------+---+------------+
| GROUP STATEMENT OF FINANCIAL POSITION (continued) | | | |
+-----------------------------------------------------------------------+--------+---+------------+
| AS AT 31 DECEMBER 2009 | | | | | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| | | | | | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| | | | | | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| | | 2009 | | 2008 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| | Notes | US$'000 | | US$'000 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| | | (unaudited) | | (audited) | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Current liabilities | | | | | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Trade and other payables | | 25,215 | | 33,447 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Amount due to a related party | | 56 | | 142 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Amount due to associated companies | | 261 | | 16 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Bank and other borrowings | | 2,316 | | 2,923 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Current tax liabilities | | 2,308 | | 2,421 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Hire purchase liabilities | | 661 | | 658 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Deferred consideration | 8 | 1,287 | | 2,673 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| | | 32,104 | | 42,280 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Non-current liabilities | | | | | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Deferred tax liabilities | 6 | 79 | | 37 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Provision for employees end of | | 1,030 | | 818 | |
| service benefits | | | | | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Bank and other borrowings | | 295 | | 343 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Hire purchase liabilities | | 995 | | 933 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Other non-current liabilities | | 296 | | 174 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| | | 2,695 | | 2,305 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| | | | | | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Total liabilities | | 34,799 | | 44,585 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| | | | | | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| Total equity and liabilities | | 111,060 | | 106,940 | |
+--------------------------------------+--------+-------------+---+--------------+----------------+
| | | | | | | | |
+--------------------------------------+--------+-------------+---+-----+--------+---+------------+
+----------+----------------------------------------+---+----+----------+---------+----------+--+----------+--------------+----------+
| | |
| | GROUP STATEMENT OF CASH FLOW |
+----------+-------------------------------------------------------------------------------------------------------------------------+
| | FOR THE YEAR ENDED 31 DECEMBER 2009 |
+----------+-------------------------------------------------------------------------------------------------------------------------+
| | | | | | 2008 |
| | | | 2009 | | US$'000 |
| | | | US$'000 | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | | | (unaudited) | | (audited) |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Cash flows from operating activities | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | | | 16,796 | | 14,862 |
| | Profit on ordinary activities for the year | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Adjustments for: | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Depreciation | | 2,581 | | 1,707 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Loss / (gain) on disposal of property, | | 54 | | (120) |
| | plant and equipment | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Property, plant and equipment written off | | 67 | | 37 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Amortisation of intangible assets | | 340 | | 331 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Impairment in other investments | | - | | 9 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Allowance for doubtful debts | | 2,170 | | 3,568 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Allowance for doubtful debts written back | | (210) | | (8) |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Bad debts written off | | 117 | | 211 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Provision for retirement benefit | | 239 | | 744 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Retirement benefit paid | | (27) | | (137) |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Share of profit in associated companies | | (2,308) | | (1,006) |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Interest expense | | 291 | | 533 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Interest income | | (106) | | (244) |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Foreign exchange loss on operating | | 216 | | 485 |
| | activities | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Issue of share options | | 319 | | 330 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Operating cash flows before movements in | | 20,539 | | 21,302 |
| | working capital | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Decrease / (increase) in inventories | | 1,031 | | (1,216) |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Increase in receivables | | (3,153) | | (16,349) |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | (Decrease) / increase in payables | | (7,761) | | 9,494 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Cash generated from operations | | 10,656 | | 13,231 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Interest paid | | (291) | | (533) |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Tax paid | | (3,424) | | (2,770) |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | | | 6,941 | | 9,928 |
| | Net cash from operating activities | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Cash flows from investing activities | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Acquisition of property, plant and | | (3,765) | | (2,687) |
| | equipment | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Receipts from sale of property, plant and | | 1,054 | | 448 |
| | equipment | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Acquisition of new subsidiary companies, | | - | | (1,168) |
| | net of cash | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Acquisition of shares in existing | | (1,086) | | - |
| | subsidiary companies | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Acquisition of new associated companies | | (51) | | - |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Advance to associated companies | | (834) | | (358) |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Dividend income from an associated company | | 777 | | 414 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Interest received | | 106 | | 244 |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | Net cash used in investing activities | | (3,799) | | (3,107) |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| |
+----------+
| | | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| | | | | | |
+----------+--------------------------------------------+---------------+--------------------+-------------+-------------------------+
| GROUP STATEMENT OF CASH FLOW (continued) | |
+-------------------------------------------------------------------------------------------------------------------------+----------+
| FOR THE YEAR ENDED 31 DECEMBER 2009 | |
+-------------------------------------------------------------------------------------------------------------------------+----------+
| | |
+-------------------------------------------------------------------------------------------------------------------------+----------+
| | | | | 2008 | |
| | | 2009 | | US$'000 | |
| | | US$'000 | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| | | (unaudited) | | (audited) | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Cash flows from financing activities | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Proceeds from issue of shares | | - | | 8,660 | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Share issue expenses | | (58) | | (445) | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Repayments of term loans | | (80) | | (132) | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Repayments of hire purchase liabilities | | (754) | | (251) | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| (Repayments to) / advance from a related party | | (1,263) | | 437 | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| (Repayments to) / advance from directors | | (348) | | 109 | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Dividend paid to shareholders of Velosi Limited | | (468) | | (435) | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Dividend paid to minority shareholders of | | (476) | | (208) | |
| subsidiary companies | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Net cash (used in) / from financing activities | | (3,447) | | 7,735 | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Net (decrease) / increase in cash and cash | | (305) | | 14,556 | |
| equivalents | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Foreign exchange translation differences | | 317 | | (876) | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Cash and cash equivalents at the beginning of the | | 17,791 | | 4,111 | |
| year | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| | | 17,803 | | 17,791 | |
| Cash and cash equivalents at the end of the year | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Cash and cash equivalents comprise: | | | | | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Current assets - Cash and cash equivalents | | 20,078 | | 20,641 | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| Current liabilities - Bank overdraft | | (2,275) | | (2,850) | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| | | 17,803 | | 17,791 | |
+---------------------------------------------------+--------+--------------------+-------------+-------------------------+----------+
| | | | | | | | | | | |
+----------+----------------------------------------+---+----+----------+---------+----------+--+----------+--------------+----------+
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY |
+--------------------------------------------------------------------------------------------------------------------------------------------------------+
| FOR THE YEAR ENDED 31 DECEMBER 2009 |
+--------------------------------------------------------------------------------------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------------------------------------------------------------------------------------+
| |
+--------------------------------------------------------------------------------------------------------------------------------------------------------+
| Group | Share | | Share | | Reserves | | Total | | Non | | Total | |
| |Capital | |premium | | US$'000 | | US$'000 | | controlling | | | |
| |US$'000 | |US$'000 | | | | | | interest | |US$'000 | |
| | | | | | | | | | US$'000 | | | |
| | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| (Unaudited) | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| Balance at 1 | 887 | | 32,422 | | 21,753 | | 55,062 | | 7,293 | | 62,355 | |
| January 2009 | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| Exchange | - | | - | | 896 | | 896 | | 402 | | 1,298 | |
| reserve | | | | | | | | | | | | |
| arising on | | | | | | | | | | | | |
| translation | | | | | | | | | | | | |
| of financial | | | | | | | | | | | | |
| statements | | | | | | | | | | | | |
| of overseas | | | | | | | | | | | | |
| subsidiaries | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| Profit for | - | | - | | 10,446 | | 10,446 | | 2,502 | | 12,948 | |
| the year | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| Total | - | | - | | 11,342 | | 11,342 | | 2,904 | | 14,246 | |
| comprehensive | | | | | | | | | | | | |
| income for | | | | | | | | | | | | |
| the year | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| Share | 48 | | 1,379 | | - | | 1,427 | | - | | 1,427 | |
| allotment | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| Share issue | - | | (58) | | - | | (58) | | - | | (58) | |
| costs | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| Acquisition | - | | - | | (1,085) | | (1,085) | | - | | (1,085) | |
| of | | | | | | | | | | | | |
| subsidiary | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| Issue of | - | | - | | 320 | | 320 | | - | | 320 | |
| share | | | | | | | | | | | | |
| options | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| Expiry of | - | | 47 | | (47) | | - | | - | | - | |
| warrants | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| Dividend | - | | - | | (468) | | (468) | | (476) | | (944) | |
| paid (note | | | | | | | | | | | | |
| 11) | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| Balance at | 935 | | 33,790 | | 31,815 | | 66,540 | | 9,721 | | 76,261 | |
| 31 December | | | | | | | | | | | | |
| 2009 | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
| | | | | | | | | | | | | |
+---------------+---------+----------+---------+----------+------------+----------+-----------+----------+---------------+----------+---------+----------+
(Audited)
+---------------+------+----------+--------+----------+---------+----------+---------+----------+-------+----------+---------+
| Balance at 1 | 787 | | 21,310 | | 14,653 | | 36,750 | | 5,729 | | 42,479 |
| January 2008 | | | | | | | | | | | |
+---------------+------+----------+--------+----------+---------+----------+---------+----------+-------+----------+---------+
| Exchange | - | | - | | (2,101) | | (2,101) | | (727) | | (2,828) |
| reserve | | | | | | | | | | | |
| arising on | | | | | | | | | | | |
| translation | | | | | | | | | | | |
| of financial | | | | | | | | | | | |
| statements | | | | | | | | | | | |
| of overseas | | | | | | | | | | | |
| subsidiaries | | | | | | | | | | | |
+---------------+------+----------+--------+----------+---------+----------+---------+----------+-------+----------+---------+
| Profit for | - | | - | | 9,306 | | 9,306 | | 2,348 | | 11,654 |
| the year | | | | | | | | | | | |
+---------------+------+----------+--------+----------+---------+----------+---------+----------+-------+----------+---------+
| Total | - | | - | | 7,205 | | 7,205 | | 1,621 | | 8,826 |
| comprehensive | | | | | | | | | | | |
| income for | | | | | | | | | | | |
| the year | | | | | | | | | | | |
+---------------+------+----------+--------+----------+---------+----------+---------+----------+-------+----------+---------+
| Share | 100 | | 11,112 | | - | | 11,212 | | - | | 11,212 |
| allotment | | | | | | | | | | | |
+---------------+------+----------+--------+----------+---------+----------+---------+----------+-------+----------+---------+
| Acquisition | - | | - | | - | | - | | 151 | | 151 |
| of | | | | | | | | | | | |
| subsidiary | | | | | | | | | | | |
+---------------+------+----------+--------+----------+---------+----------+---------+----------+-------+----------+---------+
| Issue of | - | | - | | 330 | | 330 | | - | | 330 |
| share | | | | | | | | | | | |
| options | | | | | | | | | | | |
+---------------+------+----------+--------+----------+---------+----------+---------+----------+-------+----------+---------+
| Dividend | - | | - | | (435) | | (435) | | (208) | | (643) |
| paid (note | | | | | | | | | | | |
| 11) | | | | | | | | | | | |
+---------------+------+----------+--------+----------+---------+----------+---------+----------+-------+----------+---------+
| | | | | | | | | | | | |
+---------------+------+----------+--------+----------+---------+----------+---------+----------+-------+----------+---------+
| Balance at | 887 | | 32,422 | | 21,753 | | 55,062 | | 7,293 | | 62,355 |
| 31 December | | | | | | | | | | | |
| 2008 | | | | | | | | | | | |
+---------------+------+----------+--------+----------+---------+----------+---------+----------+-------+----------+---------+
| | | | | | | | | | | | |
+---------------+------+----------+--------+----------+---------+----------+---------+----------+-------+----------+---------+
VELOSI LIMITED
PRELIMINARY RESULTS ANNOUNCEMENT
1. Basis of preparation
The financial information set out in this preliminary results announcement does
not constitute the Group's financial statements for the year ended 31 December
2009.
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSand IFRIC interpretations) ("IFRS") and with
effective, or issued and early adopted as at the date of the statement.
Whilst the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
IFRS, it does not include sufficient information to comply with IFRS.
The auditors have yet to sign their report on the 2009 financial statements. The
financial statements for the year ended 31 December 2009 will be finalised on
the basis of the financial information presented by the Directors in this
preliminary announcement, and will be delivered to the Companies Registry
following the Company's Annual General Meeting. Whilst the auditors have not yet
reported on the financial statements for the year ended 31 December 2009, they
anticipate issuing an unqualified report.
The financial information for the year ended 31 December 2008 is derived from
the financial statements for that year. The auditors have reported on the 2008
financial statements, their report was unqualified.
The financial information set out in this announcement was approved by the board
on 14 April 2010.
2. Segmental reporting
The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009.
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision maker as defined in IFRS 8, in order to allocate resources to
the segment and to assess its performance. In contrast, the predecessor Standard
(IAS 14 Segment Reporting) required an entity to identify two sets of segments
(business and geographical), using a risks and rewards approach, with the
entity's "system of internal financial reporting to key management personnel"
serving only as the starting point for the identification of such segments.
The business of Velosi consists of one business area, provision of Testing,
Inspection and Certification services to major national and multinational oil
and gas companies. Since 2008, the business of Velosi has been re-restructured
to accommodate the increased size of the Group. A new management structure was
introduced creating regional manager roles, reporting directly to the Chief
Executive Officer, who respectively control the Group's principal geographic
areas of activity. The Group's business activities are split into six regions -
Europe, Middle East, Americas, Africa, Australasia and Central Asia. These
regions are the basis on which information is reported to the Group Board. The
segment result is the measure used for the purposes of resource allocation,
assessment of performance and decision making.
All other segments primarily comprise income and expenses relating to the
Group's administrative functions. Interest income and interest expense are not
allocated to segments, as this type of activity is driven by the central
treasury function, which manages the cash position of the Group. Accordingly,
this information is not separately reported to the Board for each reportable
segment.
The adoption of IFRS 8 has not changed the analysis of the Group's results and
performance significantly. Comparative information has been presented in order
to comply with the requirement of this standard. The accounting policies applied
in preparing the management information for each of the reportable segments are
the same as the Group's accounting policies described in note 2. Inter-company
balances and transactions between the reportable segments are eliminated to
arrive at the figures in the consolidated accounts.
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| | Europe | Middle | Americas | Africa | Australasia | Central | Others | Adjustments | Consolidated |
| | US$000 | East | US$000 | US$000 | US$000 | Asia | US$000 | US$000 | US$000 |
| | | US$000 | | | | US$000 | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| 2009 - | | | | | | | | | |
| (unaudited) | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| Turnover | 52,486 | 72,901 | 19,233 | 28,694 | 34,503 | 1,750 | - | (26,004) | 183,563 |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| Gross | 7,486 | 14,159 | 3,770 | 5,406 | 11,424 | 1,271 | - | 1,372 | 44,888 |
| profit | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| Profit | 2,204 | 6,254 | 323 | 653 | 3,970 | 793 | 1,649 | 950 | 16,796 |
| before | | | | | | | | | |
| tax | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| Share | | | | | | | | 2,084 | |
| of | | | | | | | | | |
| profit | | | | | | | | | |
| of | | | | | | | | | |
| associates | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| Segment | 23,789 | 47,944 | 10,100 | 18,076 | 36,475 | 1,140 | 38,261 | (64,725) | 111,060 |
| assets | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| Segment | 20,271 | 26,403 | 8,964 | 16,208 | 23,040 | 677 | 2,037 | (62,801) | 34,799 |
| liabilities | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| 2008 - | | | | | | | | | |
| (audited) | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| Turnover | 51,959 | 62,961 | 22,403 | 27,415 | 36,329 | 1,330 | - | (20,325) | 182,072 |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| Gross | 8,902 | 11,792 | 4,047 | 5,404 | 12,419 | 634 | - | 2,365 | 45,563 |
| profit | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| Profit | 1,745 | 5,346 | 159 | 583 | 5,439 | 291 | (176) | 1,475 | 14,862 |
| / | | | | | | | | | |
| (loss) | | | | | | | | | |
| before | | | | | | | | | |
| tax | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| Share | | | | | | | | 892 | |
| of | | | | | | | | | |
| profit | | | | | | | | | |
| of | | | | | | | | | |
| associates | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| Segment | 20,189 | 40,459 | 12,634 | 23,567 | 32,003 | 1,218 | 34,740 | (57,870) | 106,940 |
| assets | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
| Segment | 18,208 | 23,819 | 11,684 | 20,652 | 22,305 | 1,257 | 1,380 | (54,720) | 44,585 |
| liabilities | | | | | | | | | |
+-------------+---------+---------+----------+----------+-------------+---------+---------+-------------+--------------+
3. Income tax expense
+----------------------------------+-------+-------------+-----------+
| | | Group | Group |
| | | 2009 | 2008 |
+----------------------------------+-------+-------------+-----------+
| | | | |
| | | US$'000 | US$'000 |
+----------------------------------+-------+-------------+-----------+
| | | (unaudited) | (audited) |
+----------------------------------+-------+-------------+-----------+
| Foreign tax | | | |
+----------------------------------+-------+-------------+-----------+
| Overseas tax payable | | 3,240 | 3,446 |
+----------------------------------+-------+-------------+-----------+
| Total current tax | | 3,240 | 3,446 |
+----------------------------------+-------+-------------+-----------+
| | | | |
+----------------------------------+-------+-------------+-----------+
| Deferred tax | | | |
+----------------------------------+-------+-------------+-----------+
| Movement in deferred tax | | 384 | (352) |
| position | | | |
+----------------------------------+-------+-------------+-----------+
| Taxation on profit from ordinary | | 3,624 | 3,094 |
| activities | | | |
+----------------------------------+-------+-------------+-----------+
| Add: Share of taxation of | | 224 | 114 |
| associated companies | | | |
+----------------------------------+-------+-------------+-----------+
| | | 3,848 | 3,208 |
+----------------------------------+-------+-------------+-----------+
The tax on the Group's profit before tax differs from the theoretical amount
that would arise using the weighted average tax rate applicable to profits for
the consolidated entities as follows:
+----------------------------------+-----+-------------+-----------+
| | | Group | Group |
| | | 2009 | 2008 |
+----------------------------------+-----+-------------+-----------+
| | | | |
| | | US$'000 | US$'000 |
+----------------------------------+-----+-------------+-----------+
| | | (unaudited) | (audited) |
+----------------------------------+-----+-------------+-----------+
| Profit on ordinary activities | | 16,796 | 14,862 |
| before taxation (excluding share | | | |
| of results of associated | | | |
| companies) | | | |
+----------------------------------+-----+-------------+-----------+
| | | | |
+----------------------------------+-----+-------------+-----------+
| Profit on ordinary activities at | | 2,299 | 2,122 |
| 13.69% (2008: 14.28%) | | | |
+----------------------------------+-----+-------------+-----------+
| Tax effects of: | | | |
+----------------------------------+-----+-------------+-----------+
| Difference in tax rates of | | 547 | 1,045 |
| foreign countries | | | |
+----------------------------------+-----+-------------+-----------+
| Effect of reduction in tax rate | | 4 | 6 |
+----------------------------------+-----+-------------+-----------+
| Expenses not deductible for tax | | 309 | 76 |
| purposes | | | |
+----------------------------------+-----+-------------+-----------+
| Tax redemption and rebates | | (234) | (39) |
+----------------------------------+-----+-------------+-----------+
| Utilisation of tax losses | | - | 12 |
+----------------------------------+-----+-------------+-----------+
| Utilisation of capital allowance | | (5) | (60) |
+----------------------------------+-----+-------------+-----------+
| Deferred tax assets not | | 257 | 103 |
| recognised | | | |
+----------------------------------+-----+-------------+-----------+
| Non-taxable income | | (87) | (25) |
+----------------------------------+-----+-------------+-----------+
| Adjustment on prior year current | | 582 | 12 |
| and deferred tax | | | |
+----------------------------------+-----+-------------+-----------+
| Others | | 268 | (14) |
+----------------------------------+-----+-------------+-----------+
| Effect of taxation of associated | | (92) | (30) |
| companies | | | |
+----------------------------------+-----+-------------+-----------+
| | | 3,848 | 3,208 |
+----------------------------------+-----+-------------+-----------+
The applicable tax expense of the Group is derived from the consolidation of all
Group companies' applicable tax based on their respective domestic tax rates.
The applicable tax rate of the Group has decreased from 14.28% to 13.69% mainly
due to the higher proportion of income contributed by the lower tax jurisdiction
countries.
4. Earnings per share
The basic and diluted earnings per share is calculated by reference to
the earnings attributable to ordinary shareholders divided by the number of
shares in issue as at 31 December, as follows:
+------------------------------------+-------------+---------------+
| | Year | Year |
| | ended | ended |
| | 31 | 31 |
| | December | December |
| | 2009 | 2008 |
| | US$'000 | US$'000 |
| | (unaudited) | (audited) |
+------------------------------------+-------------+---------------+
| | | |
| Profit after taxation and minority | 10,446 | 9,306 |
| interest | | |
+------------------------------------+-------------+---------------+
| | | |
| | Number | Number |
| Weighted average number of shares | | |
| for the purpose of calculating | 45,875,857 | 42,809,629 |
| basic earnings per share | | |
| | | |
| Effect of dilutive potential | | |
| ordinary shares | 963,612 | 4,463,847 |
| | | |
| Deferred consideration | | |
+------------------------------------+-------------+---------------+
| | | |
| Weighted average number of shares | | |
| for the purpose of calculating | 46,839,469 | 47,273,476 |
| diluted earnings per share | | |
+------------------------------------+-------------+---------------+
| | | |
+------------------------------------+-------------+---------------+
| Basic earnings per share based on | | |
| the weighted average issued share | 22.8c | 21.7c |
| capital as at 31 December | | |
| | | |
+------------------------------------+-------------+---------------+
| Diluted earnings per share based | | |
| on the weighted average issued | 22.3c | 19.6c |
| share capital as at 31 December | | |
| | | |
+------------------------------------+-------------+---------------+
| | | |
+------------------------------------+-------------+---------------+
5. Goodwill and other intangible assets
+--------------------------------+-------------+----------+---------+----------+---------+----------+---------+----------+
| | Goodwill | Other intangible | Total | Total | |
| | | assets - customer | 2009 | 2008 | |
| | | lists | | | |
+--------------------------------+-------------+--------------------+--------------------+--------------------+----------+
| | US$'000 | US$'000 | US$'000 | US$'000 | |
+--------------------------------+-------------+--------------------+--------------------+--------------------+----------+
| | (unaudited) | (audited) | (unaudited) | (audited) | |
+--------------------------------+-------------+--------------------+--------------------+--------------------+----------+
| At 1 January | 8,307 | 1,744 | 10,051 | 9,003 |
+--------------------------------+------------------------+--------------------+--------------------+--------------------+
| Foreign exchange translation | 465 | 66 | 531 | (1,136) |
| difference | | | | |
+--------------------------------+------------------------+--------------------+--------------------+--------------------+
| Acquisition of subsidiary | - | - | - | 2,515 |
| companies | | | | |
+--------------------------------+------------------------+--------------------+--------------------+--------------------+
| Amortisation | - | (340) | (340) | (331) |
+--------------------------------+------------------------+--------------------+--------------------+--------------------+
| | | | | |
+--------------------------------+------------------------+--------------------+--------------------+--------------------+
| At 31 December | 8,772 | 1,470 | 10,242 | 10,051 |
+--------------------------------+------------------------+--------------------+--------------------+--------------------+
| | | | | | | | | |
+--------------------------------+-------------+----------+---------+----------+---------+----------+---------+----------+
+--------------------------------+-----------+------------+-----------+-----------+
| | Goodwill | Other | Total | Total |
| | | intangible | 2008 | 2007 |
| | | assets - | | |
| | | customer | | |
| | | lists | | |
+--------------------------------+-----------+------------+-----------+-----------+
| | US$'000 | US$'000 | US$'000 | US$'000 |
+--------------------------------+-----------+------------+-----------+-----------+
| | (audited) | (audited) | (audited) | (audited) |
+--------------------------------+-----------+------------+-----------+-----------+
| At 1 January | 7,341 | 1,662 | 9,003 | 2,114 |
+--------------------------------+-----------+------------+-----------+-----------+
| Foreign exchange translation | (1,012) | (124) | (1,136) | 157 |
| difference | | | | |
+--------------------------------+-----------+------------+-----------+-----------+
| Acquisition of subsidiary | 1,978 | 537 | 2,515 | 6,812 |
| companies | | | | |
+--------------------------------+-----------+------------+-----------+-----------+
| Realisation on disposal of | - | - | - | (5) |
| shares in subsidiary company | | | | |
+--------------------------------+-----------+------------+-----------+-----------+
| Amortisation | - | (331) | (331) | (75) |
+--------------------------------+-----------+------------+-----------+-----------+
| | | | | |
+--------------------------------+-----------+------------+-----------+-----------+
| At 31 December | 8,307 | 1,744 | 10,051 | 9,003 |
+--------------------------------+-----------+------------+-----------+-----------+
6. Deferred tax assets
+-------------------------------+------+-------+-------------+-----------+
| | | | Group | Group |
| | | | 2009 | 2008 |
+-------------------------------+------+-------+-------------+-----------+
| | | | US$'000 | |
| | | | | US$'000 |
+-------------------------------+------+-------+-------------+-----------+
| | | | (unaudited) | (audited) |
+-------------------------------+------+-------+-------------+-----------+
| Unutilised tax losses | | | 29 | 26 |
+-------------------------------+------+-------+-------------+-----------+
| Accelerated capital | | | (29) | 21 |
| allowances | | | | |
+-------------------------------+------+-------+-------------+-----------+
| Provision for impairment | | | 4 | 317 |
+-------------------------------+------+-------+-------------+-----------+
| Others | | | 12 | (1) |
+-------------------------------+------+-------+-------------+-----------+
| Deferred tax assets | | | 16 | 363 |
+-------------------------------+------+-------+-------------+-----------+
| | | | | |
+-------------------------------+------+-------+-------------+-----------+
| Deferred taxation movements | | | | |
| are: | | | | |
+-------------------------------+------+-------+-------------+-----------+
| Opening balance | | | 363 | 64 |
+-------------------------------+------+-------+-------------+-----------+
| Foreign exchange translation | | | 37 | (53) |
| difference | | | | |
+-------------------------------+------+-------+-------------+-----------+
| Transfer from income | | | (384) | 352 |
| statements | | | | |
+-------------------------------+------+-------+-------------+-----------+
| Closing balance | | | 16 | 363 |
+-------------------------------+------+-------+-------------+-----------+
7. Share capital
(a) Share capital
+--------------------------------+------+------+-------------+-----------+
| | | | 2009 | 2008 |
| | | | US$'000 | US$'000 |
| | | | (unaudited) | (audited) |
+--------------------------------+------+------+-------------+-----------+
| Authorised: | | | | |
+--------------------------------+------+------+-------------+-----------+
| 4,400,000,000 (2008: | | | 88,000 | 88,000 |
| 4,400,000,000) Ordinary shares | | | | |
| of US$0.02 each | | | | |
+--------------------------------+------+------+-------------+-----------+
| | | | | |
+--------------------------------+------+------+-------------+-----------+
| Issued: | | | | |
+--------------------------------+------+------+-------------+-----------+
| 46,765,871 (2008: 44,341,580) | | | 935 | 887 |
| Ordinary shares of US$0.02 | | | | |
| each | | | | |
+--------------------------------+------+------+-------------+-----------+
(b) Share issued during the year
+--------------+------+------+------------+--------------+---------+---------+
| |Note | Issue | Shares | Share | Share |
| | | value per | | capital | premium |
| | | share | | | |
+--------------+------+-------------------+--------------+---------+---------+
| | | GBP | US$ | | US$'000 | US$'000 |
| | | | | | | |
+--------------+------+------+------------+--------------+---------+---------+
| At 1 January | | | | 44,341,580 | 887 | 32,422 |
| 2009 | | | | | | |
+--------------+------+------+------------+--------------+---------+---------+
| Share issued | (i) | 0.39 | 0.59 | 2,424,291 | 48 | 1,379 |
| on 15 May | | | | | | |
| 2009 | | | | | | |
+--------------+------+------+------------+--------------+---------+---------+
| Share issue | | | | - | - | (58) |
| costs | | | | | | |
+--------------+------+------+------------+--------------+---------+---------+
| Expiry of | | | | - | - | 47 |
| warrant | | | | | | |
+--------------+------+------+------------+--------------+---------+---------+
| | | | | 46,765,871 | 935 | 33,790 |
| | | | | | | |
+--------------+------+------+------------+--------------+---------+---------+
(i) On 15 May 2009, 2,424,291 new ordinary shares were issued to the former
shareholders of K2 Specialist Services Pte Ltd ("K2"), pursuant to an agreement
dated 19 October 2007 between K2 and Velosi Industries Sdn Bhd, following the
satisfaction of the entire profit guarantee of SGD4,000,000 (approximately
GBP1.34 million) aggregate profit after tax and minority interests, set for the
stipulated guarantee period and based on achievement of performance targets by
K2 for the financial year ended 31 December 2008.
+----------+---------------------------------+----+------------+----------+----------+----------+-------------+
| (c) Share options | | | | | | |
+--------------------------------------------+----+------------+----------+----------+----------+-------------+
| | | | | | Weighted | | Weighted |
| | | | | | average | | average |
| | | | | | exercise | | remaining |
| | | | Number | | price | | contractual |
| | | | of | | per | | life |
| | | | shares | | share | | (years) |
+----------+---------------------------------+----+------------+----------+----------+----------+-------------+
| | | | | | | | |
+----------+---------------------------------+----+------------+----------+----------+----------+-------------+
| | Balance at 1 January 2009 - | | 2,067,708 | | 103p | | 1.816 |
| | exercisable | | | | | | |
+----------+---------------------------------+----+------------+----------+----------+----------+-------------+
| | Options granted in the year- | | 1,360,000 | | 65.5p | | 2.42 |
| | exercisable | | | | | | |
+----------+---------------------------------+----+------------+----------+----------+----------+-------------+
| | | | | | | | |
+----------+---------------------------------+----+------------+----------+----------+----------+-------------+
| | Balance at 31 December 2009 - | | 3,427,708 | | 87.92p | | 2.06 |
| | exercisable (unaudited) | | | | | | |
+----------+---------------------------------+----+------------+----------+----------+----------+-------------+
| | | | | | | | |
+----------+---------------------------------+----+------------+----------+----------+----------+-------------+
| | Balance at 31 December 2008 - | | 2,067,708 | | 103p | | 1.816 |
| | exercisable | | | | | | |
+----------+---------------------------------+----+------------+----------+----------+----------+-------------+
| | | | | | | | |
+----------+---------------------------------+----+------------+----------+----------+----------+-------------+
The fair value of the share options granted has been calculated using the
Black-Scholes option-pricing model individually applied to each option granted.
The inputs into the model were as follows:
+------------------------+-------------+-------------+-------------+
| | | | Issued on |
| | | | 19 May 2009 |
+------------------------+-------------+-------------+-------------+
| Share price | | | 66.5p |
| | | | |
+------------------------+-------------+-------------+-------------+
| Exercise price | | | 65.5p |
| | | | |
+------------------------+-------------+-------------+-------------+
| Expected volatility | | | 58.2% |
+------------------------+-------------+-------------+-------------+
| Expected life | | | 3 years |
| | | | |
+------------------------+-------------+-------------+-------------+
| Risk free rate | | | 5% |
| | | | |
+------------------------+-------------+-------------+-------------+
The expected volatility represents management's best estimate of volatility
given the lack of historical information available regarding share price
volatility.
+------------------------------+----+-------+----------+-----------+----------+----------+
| (d) Warrants | | | | | | |
+------------------------------+----+-------+----------+-----------+----------+----------+
| | | | | | | Weighted |
| | | | | | | average |
| | | | | | | exercise |
| | | | | Number | | price |
| | | | | of | | per |
| | | | | shares | | share |
+------------------------------+----+-------+----------+-----------+----------+----------+
| | | | | | | |
+------------------------------+----+-------+----------+-----------+----------+----------+
| Balance at 1 January 2009- | | | | 476,749 | | 90p |
| exercisable | | | | | | |
+------------------------------+----+-------+----------+-----------+----------+----------+
| Warrants granted in the | | | | - | | |
| year- exercisable | | | | | | |
+------------------------------+----+-------+----------+-----------+----------+----------+
| Warrants expired in the year | | | | (476,749) | | |
+------------------------------+----+-------+----------+-----------+----------+----------+
| | | | | | | |
+------------------------------+----+-------+----------+-----------+----------+----------+
| Balance at 31 December 2009 | | | | - | | - |
| (unaudited) | | | | | | |
+------------------------------+----+-------+----------+-----------+----------+----------+
| | | | | | | |
+------------------------------+----+-------+----------+-----------+----------+----------+
| Balance at 31 December 2008 | | | | 476,749 | | 90p |
| - exercisable | | | | | | |
+------------------------------+----+-------+----------+-----------+----------+----------+
The fair value of the warrants granted was calculated using the Black-Scholes
option-pricing model individually applied to each warrant granted. The inputs
into the model were as follows:
+------------------------+-------------+-------------+------------+
| | | | Issued on |
| | | | 21 October |
| | | | 2006 |
+------------------------+-------------+-------------+------------+
| Share price | | | 128p |
| | | | |
+------------------------+-------------+-------------+------------+
| Exercise price | | | 150p |
| | | | |
+------------------------+-------------+-------------+------------+
| Expected volatility | | | 35% |
+------------------------+-------------+-------------+------------+
| Expected life | | | 0 years |
| | | | |
+------------------------+-------------+-------------+------------+
| Risk free rate | | | 5% |
| | | | |
+------------------------+-------------+-------------+------------+
8. Deferred consideration
+-----------------------------------+-----------------------------------+---------+---------+
| | PSC | K2 | Total |
| | Italy | | |
+ +-----------------------------------+---------+---------+
| | US$'000 | US$'000 | US$'000 |
+-----------------------------------+-----------------------------------+---------+---------+
| | | | |
+-----------------------------------+-----------------------------------+---------+---------+
| Deferred contingent consideration | | | |
+-----------------------------------+-----------------------------------+---------+---------+
| Outstanding as at 1 January 2009 | 1,269 | 1,404 | 2,673 |
+-----------------------------------+-----------------------------------+---------+---------+
| Foreign exchange translation | 18 | 24 | 42 |
| difference | | | |
+-----------------------------------+-----------------------------------+---------+---------+
| Consideration settled in the year | - | (1,428) | (1,428) |
+-----------------------------------+-----------------------------------+---------+---------+
| | | | |
+-----------------------------------+-----------------------------------+---------+---------+
| | | | |
+-----------------------------------+-----------------------------------+---------+---------+
| Outstanding as at 31 December | 1,287 | - | 1,287 |
| 2009 (unaudited) | | | |
+-----------------------------------+-----------------------------------+---------+---------+
The provisional deferred consideration consists of cash and shares.
On 15 May 2009, 2,424,291 new ordinary shares were issued to shareholders of K2
Specialist Services Pte Ltd ("K2"), pursuant to an agreement dated 19 October
2007 between K2 and Velosi Industries Sdn Bhd, following the satisfaction of the
entire profit guarantee of SGD4,000,000 (approximately GBP1.34 million)
aggregate profit after tax and minority interests, set for the stipulated
guarantee period and based on achievement of performance targets by K2 for the
financial year ended 31 December 2008.
9. Commitments under operating leases
The following are the annual commitments under non-cancellable operating leases:
+-------------------------------------+--+-------------+--+-+--------------+----------+----------+
| | 2009 | 2008 | |
+-------------------------------------+-------------------+---------------------------+----------+
| | | Land and | | Land and buildings |
| | | buildings | | |
+-------------------------------------+--+-------------+----+-------------------------+
| | | | | US$'000 |
| | | US$'000 | | |
+-------------------------------------+--+-------------+----+-------------------------+
| | | (unaudited) | | (audited) |
+-------------------------------------+--+-------------+----+-------------------------+
| Operating leases which expire: | | | | |
+-------------------------------------+--+-------------+----+-------------------------+
| Within one year | | 472 | | 600 |
+-------------------------------------+--+-------------+----+-------------------------+
| In two to five years | | 125 | | 439 |
+-------------------------------------+--+-------------+----+-------------------------+
| Over five years | | 127 | | - |
+-------------------------------------+--+-------------+----+-------------------------+
| | | | | |
+-------------------------------------+--+-------------+----+-------------------------+
| | | 724 | | 1,039 |
+-------------------------------------+--+-------------+----+-------------------------+
| | | | | |
+-------------------------------------+--+-------------+----+-------------------------+
| | | | | | | |
+-------------------------------------+--+-------------+--+-+--------------+----------+----------+
The contingent rent payable is determined by multiplying the monthly charge by
the number of months left until the maturity of the service / lease agreement.
For one of the tenancies, there is an option for the subsidiary to extend the
term of the agreement on a yearly basis, by giving at least 2 months notice and
to enjoy the same rate unless the owner of the land increases the rate. However,
if notice is given, the landlord may increase the monthly rate by 10% after the
two years term has expired.
For another tenancy, there is an option for the subsidiary to renew the term of
the agreement for another 3 years. The monthly rental is subject to revision
from time to time in accordance with the rental rate imposed by Housing
Development Board of the landlord. There are no restrictions imposed by lease
arrangements such as those concerning dividends, additional debt, and further
leasing.
10. Contingent liabilities
+-------------------------------+------+---+-------------+-----------+
| | | | Group | Group |
| | | | 2009 | 2008 |
+-------------------------------+------+---+-------------+-----------+
| | | | US$'000 | US$'000 |
+-------------------------------+------+---+-------------+-----------+
| | | | (unaudited) | (audited) |
+-------------------------------+------+---+-------------+-----------+
| Letter of guarantee | | | - | 819 |
+-------------------------------+------+---+-------------+-----------+
| Performance bond guarantee | | | 2,285 | 107 |
+-------------------------------+------+---+-------------+-----------+
11. Dividends
The Directors propose a final dividend of US$0.015 per ordinary share to
shareholders in respect of the financial year ended 31 December 2009 (2008:
US$0.01).
12. Post balance sheet events
Pursuant to an agreement dated 9 February 2010, Velosi Limited acquired the
Velosi trading name in Malaysia for a purchase consideration of up to
RM23,333,333 (approximately US$6.803 million). This amount is to be paid by way
of issuance of new Velosi shares to be issued in three tranches with the initial
consideration of RM7,933,333 (approximately US$2.313 million) to be settled by
the issue of 1,618,677 consideration shares on 15 February 2010. Subject to the
achievement of certain performance criteria towards end of 3rd quarter of 2011,
a further RM7,933,333 (approximately US$2.313 million) consideration shares will
be issued. In addition, the remaining balance will be issued upon achievement of
the guaranteed income by end of 30 June 2012.
13. Nature of financial information
These preliminary results will be available on the Company's website
www.velosi.com. Further copies can be obtained from the registered office at
28-34 Hill Street, St Helier, Jersey, JE4 5TF.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GMGMDNFVGGZM
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