TIDMVELO
RNS Number : 0000T
Velosi Limited
21 September 2010
VELOSI Limited
("VELOSI", "the Company" or "the Group")
Interim Results
For the six months ended 30 June 2010
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 interim results for the six months ended 30 June 2010.
Highlights
* Turnover increased by 6.0% to US$94.5 million (2009: US$ 89.2 million)
*
* 38% and 24% growth in Australasian and European revenues respectively
* Middle East maintained position as the Groups largest market
* Africa on track with planned recovery
·Profit before tax reduced slightly to US$7.4 million (2009: US$7.9 million)
reflecting
increased investment in new offices and personnel and changes in business
mix
·Acquired the VELOSI trading name in Malaysia
·The Groups overall financial position is strong with a net cash position of
US$ 18.4 million as at 30 June 2010
·Visibility on future revenues remains good and we are positioned to continue to
gain market share
John Hogan, Chairman, commented:
"The business has continued to grow, by increasing revenues through new contract
wins and the extension of existing contracts. At the same time VELOSI is
investing in developing its presence in key markets, opening offices in three
new countries during the period and in hiring personnel to expand our presence
in existing markets. Demand for our services remains robust in terms of
supporting current infrastructure projects, as safety concerns across the
industry remain paramount. However while we have increased our revenues there
are fewer higher margin specialist inspection contracts coming up for tender as
the major oil and gas corporations remain cautious."
For further information, please contact:
+------------------+------------------+------------------+
| VELOSI | Dr Nabil Abdul | 020 7930 0777 |
| | Jalil | |
| | Dan Ooi | |
+------------------+------------------+------------------+
| Strand Hanson | James Harris | 020 7409 3494 |
| | Richard Tulloch | |
+------------------+------------------+------------------+
| Charles Stanley | Mark Taylor | 020 7149 6000 |
+------------------+------------------+------------------+
| Cardew Group | Tim Robertson | 020 7930 0777 |
| | Catherine | |
| | Maitland | |
+------------------+------------------+------------------+
CHAIRMAN'S STATEMENT
I am pleased to report on a good performance by the business. In the first six
months of 2010 the Company increased revenues by 6.0% as we gained market share
across a number of key markets.
We continue to hold a strong market position across the Middle East and we have
focused on key areas of activity such as Australia, Kazakhstan and Nigeria where
we have seen good progress. Our trading performance was boosted by new contract
wins, although we would have liked to have seen more higher margin contracts.
Oil and gas multinationals have continued to adopt a cautious approach towards
investing in new projects, and levels of investment remain relatively subdued.
However, the recent oil spillage in the Gulf of Mexico has reinforced the need
to ensure the highest of safety standards across all new and existing projects,
which remains a core driver for the business. Overall, the Board believes VELOSI
remains very well placed to further build on its position as a global provider
of Testing, Inspection and Certification services to major national and
multinational oil and gas companies.
Financial Performance
Turnover increased by 6.0% during the period, to US$94.5 million (2009: US$89.2
million), reflecting our ability to retain and extend existing contracts, and
win new work. Profit from ordinary activities before tax for the period was
US$7.4 million (2009: US$7.9 million), as we continued to win new work, albeit
at tighter margins than historically and also reflecting the costs of our
investment in new offices and personnel. Profit after tax was US$6.3 million
(2009: US$6.4 million).
The effective tax rate for the Group for the half year was 14.6% (2009: 19.2%).
The effective tax rate for the Group reflects the contributions from the
different regions and their varying tax rates.
Profits attributable to minority interests for the period were US$1.6 million
(2009: US$1.3 million).
Basic earnings per share after minority interests were 9.8 cents (2009: 11.2
cents) and fully diluted earnings per share after minority interests were 9.1
cents (2009: 11.0 cents).
VELOSI's cash position remains strong. At 30 June 2010, net cash was US$18.4
million (2009; US$19.7 million). Gearing levels remain low with short term bank
borrowings amounting to US$3.3 million (2009: US$2.3 million) and long-term bank
borrowings amounting to US$2.2 million (2009: US$0.4 million).
Dividend
As in the past, the Board does not propose to pay an interim dividend. However,
subject to the availability of distributable reserves and a satisfactory
performance in the second half of the year, the Board does intend to recommend a
final dividend to shareholders in respect of the financial year ending 31
December 2010.
Operational Review
VELOSI's focus is to continue to exploit its position as a global one stop shop
for the major oil and gas companies across its chosen geographies and a presence
in local markets is key in allowing us to deliver the level of service our
customers expect.
Accordingly, VELOSI has focused on maintaining a strong cash position to invest
in developing the business to drive future revenue growth through new office
openings, and during 2010 opened new offices in Papua New Guinea, Malaysia,
Thailand, Pakistan and Poland. In addition, in anticipation of a pickup in
market activity, we have added staff to expand our service offering. These
investments in developing the business have added to the Group's cost base in
the short term, after which we expect these new regions to contribute to growing
the Group's revenue and profitability, in addition to diversifying the Group's
geographical offering.
Looking ahead, we will seek suitable acquisition opportunities, which complement
our existing offering in terms of geography and services. Our strategy remains
to overlay our core inspection work with higher margin services such as asset
integrity management consultancy services, albeit many of the oil and gas majors
are currently deferring higher margin work.
As announced in February 2010, VELOSI acquired the VELOSI trading name in
Malaysia for a consideration of up to RM23.3m (GBP4.34m) (the "Trade
Agreement"), to be satisfied by the issue of up to 4.76m new ordinary shares of
US$0.02 each based on the weighted average closing middle market price of 91.25
pence per share for the three business days prior to date of the Trade
Agreement. At the same time, the Company entered into a licensing agreement with
VELOSI (M) Sdn. Bhd. ("VELOSI Malaysia") under which the Group licensed, on an
ongoing basis, the VELOSI trade name in Malaysia and intellectual property of
the Group to VELOSI Malaysia, in return for VELOSI Malaysia paying an annual
licensing fee to the Group.
Europe
Turnover net of intra group sales: US$22.9 million (2009: US$18.5 million),
Contribution to Group Sales: 24% (2009: 21%)
Operations across Europe delivered a good performance with a strong contribution
from BP Norge. Total E&P UK has awarded VELOSI a three year Inspection &
Expediting Services contract for its Laggan Tormore project, situated offshore
to the north-west of the Shetland Islands. The project commenced in June 2010.
Australasia
Turnover net of intra group sales: US$18.6 million (2009: US$13.5 million),
Contribution to Group Sales: 20% (2009: 15%)
Revenues from Asia and Australasia rose sharply reflecting the significant
increase in activity on the west coast of Australia. Our 51% subsidiary QAM, had
a strong first half with increased activity from the Gorgon Projects. K2, our
Singapore based subsidiary, maintained its revenue base and has increased its
investment in key personnel with an aim of increasing its share of higher margin
specialist contracts across South East Asia.
Middle East
Turnover net of intra group sales: US$33.1 million (2009: US$33.8 million),
Contribution to Group Sales: 35% (2009: 38%)
The Middle East remains our largest region, where we hold a strong market
position. During the period under review, good progress has been made under the
main Inspection Services Contract with Saudi Aramco, which was won in 2008. In
addition, VELOSI was awarded a three year Quality Management Services project
contract for the Manifa Industrial Support Facilities and Pipielines project in
Manifa, Saudi Arabia, which commenced in June 2010.
VELOSI's worldwide inspection, engineering, expediting and certification
contract with Qatar Petroleum has been extended, following a new tender process,
for a further three years. This is the fourth contract extension that VELOSI has
been awarded by Qatar Petroleum. The contract commenced in August 2010 and is
estimated to be worth US$4.8 million.
VELOSI has been awarded a Third Party Inspection Services contract in Taweelah,
Abu Dhabi with Abu Dhabi Ports Company. The contract is expected to be worth
approximately US$30 million in total, and VELOSI is one of four contractors to
have been awarded the four year contract which commenced in January 2010.
Africa
Turnover net of intra group sales: US$14.3 million (2009: US$15.2 million),
Contribution to Group Sales: 15% (2009: 17%)
Having now settled the legal issues relating to the ownership of the VELOSI
brand in Nigeria, it is pleasing to report that progress in Nigeria is being
made more quickly than anticipated. Consequently, we expect that Nigeria will
contribute positively to the Group's profitability ahead of schedule. The Exxon
manpower contract in Nigeria has been extended for a further year to October
2011 and the VELOSI Nigeria team is also bidding on a number of new contracts.
However, there will be a pause while political discussions on foreign investment
laws continue. VELOSI Angola is also performing well with revenues from its
principal contract increasing by over 20%.
Americas and Former Soviet Union (FSU)
Turnover net of intra group sales: US$5.5 million (2009: US$8.3 million),
Contribution to Group Sales: 6% (2009: 9%)
The US and FSU are relatively small elements of the Group's operations and tend
to focus on vendor inspection and Russian certification. Within the US, the
business had not been performing in line with expectations and as a result a new
management team has been put in place and this change is beginning to generate
results. In the FSU, VELOSI was awarded a five year corrosion monitoring and
maintenace contract with Exxon Neftegaz. The contract began in June 2010, and
the work will take place at the Sakhalin Project in Russia.
Outlook
With new offices opened in three new countries in the period, the Group now
operates from 39 countries, providing a global service with its constantly
expanding range of Testing, Inspection and Certification services, further
assisting VELOSI to continue to grow the business and gain market share.
In the medium term there are some 'hot spots' where new projects are being
initiated, specifically in Australia, Korea, Brazil and Kazakhstan. We have
already put in place resources to position ourselves to support investment in
these areas and will continue to further build our presence. Elsewhere we
expect to maintain our position and build market share although we anticipate
that there will continue to be pressure on margins.
The Board believes that VELOSI is well positioned to compete in the current
environment, and as our client retention track record shows, the Company is
fully focused on providing excellent service and has consistently grown the
business since inception. While we have seen some pressure on operating margins
reflecting our investment in new offices and personnel together with changes in
the business mix including less higher margin work, we have continued to gain
market share through winning new contracts and continued our excellent track
record of retaining existing contracts and thereby growing revenues in the first
half of the year. Since the half-year end, trading has continued to be
positive, with the Group having won further new contracts and retained existing
contracts.
The Board believes VELOSI is well positioned to continue to gain market share,
and with a strong balance sheet, is confident of the future prospects of the
Group.
John Hogan
Chairman
VELOSI LIMITED
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2010
+------------------------------------+------+----------------+----------------+---------------------+
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | 31 |
| | | 30 June | 30 June | December |
| |Note | 2010 | 2009 | 2009 |
| | | US$'000 | US$'000 | US$'000 |
| | | (unaudited) | (unaudited) | (audited) |
+------------------------------------+------+----------------+----------------+---------------------+
| | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| Revenue | 7 | 94,495 | 89,187 | 183,563 |
+------------------------------------+------+----------------+----------------+---------------------+
| Cost of sales | | (73,723) | (67,832) | (138,675) |
+------------------------------------+------+----------------+----------------+---------------------+
| | | -------------- | -------------- | --------------- |
+------------------------------------+------+----------------+----------------+---------------------+
| Gross profit | | 20,772 | 21,355 | 44,888 |
+------------------------------------+------+----------------+----------------+---------------------+
| Other operating income | | 773 | 735 | 1,141 |
+------------------------------------+------+----------------+----------------+---------------------+
| Administrative expenses | | (15,196) | (14,921) | (31,250) |
+------------------------------------+------+----------------+----------------+---------------------+
| | | -------------- | -------------- | --------------- |
+------------------------------------+------+----------------+----------------+---------------------+
| Operating profit | | 6,349 | 7,169 | 14,779 |
+------------------------------------+------+----------------+----------------+---------------------+
| Finance costs | | (157) | (117) | (291) |
+------------------------------------+------+----------------+----------------+---------------------+
| Share of profit of associated | | 1,198 | 865 | 2,308 |
| companies | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| | | -------------- | -------------- | --------------- |
+------------------------------------+------+----------------+----------------+---------------------+
| Profit on ordinary activities | | 7,390 | 7,917 | 16,796 |
| before tax | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| Income tax expense | 3 | (1,079) | (1,520) | (3,848) |
+------------------------------------+------+----------------+----------------+---------------------+
| | | -------------- | -------------- | --------------- |
+------------------------------------+------+----------------+----------------+---------------------+
| Profit for the period | | 6,311 | 6,397 | 12,948 |
+------------------------------------+------+----------------+----------------+---------------------+
| | | -------------- | -------------- | --------------- |
+------------------------------------+------+----------------+----------------+---------------------+
| Other comprehensive income: | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| Exchange differences on | | (602) | 785 | 1,298 |
| translating foreign operation | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| | | -------------- | -------------- | --------------- |
+------------------------------------+------+----------------+----------------+---------------------+
| Other comprehensive income for the | | (602) | 785 | 1,298 |
| period net of tax | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| | | -------------- | -------------- | --------------- |
+------------------------------------+------+----------------+----------------+---------------------+
| | | ________ | ________ | ________ |
+------------------------------------+------+----------------+----------------+---------------------+
| Total comprehensive income for the | | 5,709 | 7,182 | 14,246 |
| period | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| | | ________ | ________ | ________ |
+------------------------------------+------+----------------+----------------+---------------------+
| | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| Profit attributable to: | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| Owners of the parent | | 4,677 | 5,057 | 10,446 |
+------------------------------------+------+----------------+----------------+---------------------+
| Non - controlling interest | | 1,634 | 1,340 | 2,502 |
+------------------------------------+------+----------------+----------------+---------------------+
| | | ________ | ________ | ________ |
+------------------------------------+------+----------------+----------------+---------------------+
| | | | | |
| | | 6,311 | 6,397 | 12,948 |
+------------------------------------+------+----------------+----------------+---------------------+
| | | ________ | ________ | ________ |
+------------------------------------+------+----------------+----------------+---------------------+
| | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| Total comprehensive income | | | | |
| attributable to: | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| Owners of the parent | | 4,226 | 5,537 | 11,342 |
+------------------------------------+------+----------------+----------------+---------------------+
| Non - controlling interest | | 1,483 | 1,645 | 2,904 |
+------------------------------------+------+----------------+----------------+---------------------+
| | | ________ | ________ | ________ |
+------------------------------------+------+----------------+----------------+---------------------+
| | | | | |
| | | 5,709 | 7,182 | 14,246 |
+------------------------------------+------+----------------+----------------+---------------------+
| | | ________ | ________ | ________ |
+------------------------------------+------+----------------+----------------+---------------------+
| | | | | |
+------------------------------------+------+----------------+----------------+---------------------+
| Basic earnings per share | 5 | | 11.2 | 22.8 |
| | | 9.8 | cents | cents |
| | | cents | | |
+------------------------------------+------+----------------+----------------+---------------------+
| Diluted earnings per share | 5 | 9.1 | 11.0 | 22.3 |
| | | cents | cents | cents |
+------------------------------------+------+----------------+----------------+---------------------+
VELOSI LIMITED
Condensed Consolidated Statement of Financial Position
As at 30 June 2010
+------------------------------+--------+----------------+----------------+-----------------+
| | | 30 June | 30 June | 31 |
| | | 2010 | 2009 | December |
| | | | | 2009 |
| | Note | US$'000 | US$'000 | US$'000 |
| | | (unaudited) | (unaudited) | (audited) |
+------------------------------+--------+----------------+----------------+-----------------+
| | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Assets | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Non-current assets | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Property, plant and | 11 | 10,050 | 9,314 | 9,565 |
| equipment | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Goodwill | | 8,490 | 8,646 | 8,772 |
+------------------------------+--------+----------------+----------------+-----------------+
| Other intangible assets | 8 | 8,208 | 1,598 | 1,470 |
+------------------------------+--------+----------------+----------------+-----------------+
| Investment in associated | 12 | 3,664 | 1,364 | 2,713 |
| companies | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Deferred tax assets | | 443 | 450 | 95 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
| | | 30,855 | 21,372 | 22,615 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
| Current assets | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Inventories | | 951 | 4,080 | 1,241 |
+------------------------------+--------+----------------+----------------+-----------------+
| Trade and other | | 71,563 | 60,322 | 66,967 |
| receivables | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Tax recoverable | | 486 | 85 | 159 |
+------------------------------+--------+----------------+----------------+-----------------+
| Cash and cash equivalents | | 20,810 | 22,445 | 20,078 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
| | | 93,810 | 86,932 | 88,445 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
| | | ________ | ________ | ________ |
+------------------------------+--------+----------------+----------------+-----------------+
| Total assets | | 124,665 | 108,304 | 111,060 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | ________ | ________ | ________ |
+------------------------------+--------+----------------+----------------+-----------------+
| | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Equity and liabilities | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Capital and reserves | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Share capital | | 968 | 935 | 935 |
+------------------------------+--------+----------------+----------------+-----------------+
| Share premium | | 35,977 | 33,801 | 33,790 |
+------------------------------+--------+----------------+----------------+-----------------+
| Translation reserve | | (1,719) | (1,684) | (1,268) |
+------------------------------+--------+----------------+----------------+-----------------+
| Retained earnings | | 37,895 | 29,134 | 33,083 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
| Total equity attributable to | | 73,121 | 62,186 | 66,540 |
| owners of the parent | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Non - controlling interest | | 11,152 | 8,803 | 9,721 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
| Total equity | | 84,273 | 70,989 | 76,261 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
VELOSI LIMITED
Condensed Consolidated Statement of Financial Position
As at 30 June 2010
+------------------------------+--------+----------------+----------------+-----------------+
| | | 30 June | 30 June | 31 |
| | | 2010 | 2009 | December |
| | | | | 2009 |
| | Note | US$'000 | US$'000 | US$'000 |
| | | (unaudited) | (unaudited) | (audited) |
+------------------------------+--------+----------------+----------------+-----------------+
| | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Current liabilities | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Trade and other payables | | 23,792 | 28,166 | 25,532 |
+------------------------------+--------+----------------+----------------+-----------------+
| Bank and other borrowings | 14 | 3,942 | 2,824 | 2,977 |
+------------------------------+--------+----------------+----------------+-----------------+
| Current tax liabilities | | 2,269 | 2,493 | 2,308 |
+------------------------------+--------+----------------+----------------+-----------------+
| Deferred consideration | 9 | 1,098 | 1,260 | 1,287 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
| | | 31,101 | 34,743 | 32,104 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
| Non-current liabilities | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Bank and other borrowings | 14 | 2,897 | 1,531 | 1,290 |
+------------------------------+--------+----------------+----------------+-----------------+
| Other non-current | | 1,645 | 1,005 | 1,326 |
| liabilities | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| Deferred tax liabilities | | 11 | 36 | 79 |
+------------------------------+--------+----------------+----------------+-----------------+
| Deferred consideration | 9 | 4,738 | - | - |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
| | | 9,291 | 2,572 | 2,695 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
| | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
| Total liabilities | | 40,392 | 37,315 | 34,799 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | -------------- | -------------- | --------------- |
+------------------------------+--------+----------------+----------------+-----------------+
| | | ________ | ________ | _______ |
+------------------------------+--------+----------------+----------------+-----------------+
| Total equity and liabilities | | 124,665 | 108,304 | 111,060 |
+------------------------------+--------+----------------+----------------+-----------------+
| | | ________ | ________ | ________ |
+------------------------------+--------+----------------+----------------+-----------------+
| | | | | |
+------------------------------+--------+----------------+----------------+-----------------+
VELOSI LIMITED
Condensed Consolidated Statement of Cash Flow
For the six months ended 30 June 2010
+----------------------------------------+-------------+-------------+-----------+
| | Six | Six | Year |
| | months | months | ended |
| Note | ended | ended | 31 |
| | 30 June | 30 June | December |
| | 2010 | 2009 | 2009 |
| | US$'000 | US$'000 | US$'000 |
| | (unaudited) | (unaudited) | (audited) |
+----------------------------------------+-------------+-------------+-----------+
| | | | |
+----------------------------------------+-------------+-------------+-----------+
| Net cash (used in) / from operating | (56) | 4,538 | 6,941 |
| activities | | | |
+----------------------------------------+-------------+-------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------+-----------+
| | | | |
+----------------------------------------+-------------+-------------+-----------+
| Cash flows from investing activities | | | |
+----------------------------------------+-------------+-------------+-----------+
| Acquisition of property, plant and | (1,997) | (1,338) | (3,765) |
| equipment | | | |
+----------------------------------------+-------------+-------------+-----------+
| Receipts from sale of property, plant | 25 | 11 | 1,054 |
| and equipment | | | |
+----------------------------------------+-------------+-------------+-----------+
| Acquisition of shares in existing | 87 | - | (1,086) |
| subsidiary companies, net of cash | | | |
+----------------------------------------+-------------+-------------+-----------+
| Acquisition of new associated | - | - | (51) |
| companies | | | |
+----------------------------------------+-------------+-------------+-----------+
| Repayment from / (Advance to) | 74 | (738) | (834) |
| associated companies | | | |
+----------------------------------------+-------------+-------------+-----------+
| Dividend income from an associated | - | 777 | 777 |
| company | | | |
+----------------------------------------+-------------+-------------+-----------+
| Interest received | 18 | 31 | 106 |
+----------------------------------------+-------------+-------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------+-----------+
| Net cash used in investing activities | (1,793) | (1,257) | (3,799) |
+----------------------------------------+-------------+-------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------+-----------+
| | | | |
+----------------------------------------+-------------+-------------+-----------+
| Cash flows from financing activities | | | |
+----------------------------------------+-------------+-------------+-----------+
| Share issue expenses | - | - | (58) |
+----------------------------------------+-------------+-------------+-----------+
| Net borrowings | 2,293 | (374) | (834) |
+----------------------------------------+-------------+-------------+-----------+
| Advance from / (Repayment to) related | 564 | (101) | (1,263) |
| party | | | |
+----------------------------------------+-------------+-------------+-----------+
| Advance from / (Repayment to) | 91 | (367) | (348) |
| directors | | | |
+----------------------------------------+-------------+-------------+-----------+
| Dividend paid to shareholders | - | - | (468) |
+----------------------------------------+-------------+-------------+-----------+
| Dividend paid to minority shareholders | (190) | (135) | (476) |
| of subsidiary companies | | | |
+----------------------------------------+-------------+-------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------+-----------+
| Net cash from / (used in) financing | 2,758 | (977) | (3,447) |
| activities | | | |
+----------------------------------------+-------------+-------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------+-----------+
| | | | |
+----------------------------------------+-------------+-------------+-----------+
| Net increase / (decrease) in cash and | 909 | 2,304 | (305) |
| cash equivalents | | | |
+----------------------------------------+-------------+-------------+-----------+
| Foreign exchange translation | (456) | 50 | 317 |
| differences | | | |
+----------------------------------------+-------------+-------------+-----------+
| Cash and cash equivalents at the | 17,803 | 17,791 | 17,791 |
| beginning of the period | | | |
+----------------------------------------+-------------+-------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------+-----------+
| Cash and cash equivalents at the end | 18,256 | 20,145 | 17,803 |
| of the period | | | |
+----------------------------------------+-------------+-------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------+-----------+
| | | | |
+----------------------------------------+-------------+-------------+-----------+
| Cash and cash equivalents comprise: | | | |
+----------------------------------------+-------------+-------------+-----------+
| Current assets - Cash and cash | 20,810 | 22,445 | 20,078 |
| equivalents | | | |
+----------------------------------------+-------------+-------------+-----------+
| Current liabilities - Bank overdraft | (2,554) | (2,300) | (2,275) |
+----------------------------------------+-------------+-------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------+-----------+
| | 18,256 | 20,145 | 17,803 |
+----------------------------------------+-------------+-------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------+-----------+
| Reconciliation to net cash: | | | |
| 15 | | | |
+----------------------------------------+-------------+-------------+-----------+
| Cash and cash equivalents | 18,256 | 20,145 | 17,803 |
+----------------------------------------+-------------+-------------+-----------+
| Other bank facilities | (2,981) | (432) | (336) |
+----------------------------------------+-------------+-------------+-----------+
| Cash margin - Bank guarantees | 3,122 | - | 2,198 |
+----------------------------------------+-------------+-------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------+-----------+
| | 18,397 | 19,713 | 19,665 |
+----------------------------------------+-------------+-------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------+-----------+
VELOSI LIMITED
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2010
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Unaudited | Share | Share | Share | | | Retained | Total | Non | Total |
| | capital | premium | based | Revaluation | Translation | earnings | US$'000 | - | equity |
| | US$'000 | US$'000 | payment | reserve | reserve | US$'000 | | controlling | US$'000 |
| | | | reserves | US$'000 | US$'000 | | | interest | |
| | | | US$'000 | | | | | US$'000 | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Balance at 1 | 887 | 32,422 | 755 | 287 | (2,164) | 22,875 | 55,062 | 7,293 | 62,355 |
| January 2009 | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Exchange | - | - | - | - | 480 | - | 480 | 305 | 785 |
| reserve | | | | | | | | | |
| arising on | | | | | | | | | |
| translation | | | | | | | | | |
| of financial | | | | | | | | | |
| statements | | | | | | | | | |
| of overseas | | | | | | | | | |
| subsidiaries | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Profit for | - | - | - | - | - | 5,057 | 5,057 | 1,340 | 6,397 |
| the period | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| | ________ | ________ | ________ | _______ | ______ | ________ | _______ | _______ | ________ |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Total | - | - | - | - | 480 | 5,057 | 5,537 | 1,645 | 7,182 |
| comprehensive | | | | | | | | | |
| income for | | | | | | | | | |
| the period | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Share | 48 | 1,379 | - | - | - | - | 1,427 | - | 1,427 |
| allotment | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Issue of | - | - | 160 | - | - | - | 160 | | 160 |
| share | | | | | | | | - | |
| options | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Dividend | - | - | - | - | - | - | - | (135) | (135) |
| paid | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| | ________ | ________ | ________ | _______ | ______ | ________ | _______ | _______ | ________ |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Balance at | 935 | 33,801 | 915 | 287 | (1,684) | 27,932 | 62,186 | 8,803 | 70,989 |
| 30 June 2009 | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| | ________ | ________ | ________ | _______ | ______ | ________ | _______ | _______ | ________ |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Balance at 1 | 935 | 33,801 | 915 | 287 | (1,684) | 27,932 | 62,186 | 8,803 | 70,989 |
| July 2009 | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Exchange | - | - | - | - | 416 | - | 416 | 97 | 513 |
| reserve | | | | | | | | | |
| arising on | | | | | | | | | |
| translation | | | | | | | | | |
| of financial | | | | | | | | | |
| statements | | | | | | | | | |
| of overseas | | | | | | | | | |
| subsidiaries | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Profit for | - | - | - | - | - | 5,389 | 5,389 | 1,162 | 6,551 |
| the period | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| | ________ | ________ | ________ | _______ | ______ | ________ | _______ | _______ | ________ |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Total | | | - | - | 416 | 5,389 | 5,805 | 1,259 | 7,064 |
| comprehensive | - | - | | | | | | | |
| income for | | | | | | | | | |
| the period | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Share issue | - | (58) | - | - | - | - | (58) | | (58) |
| costs | | | | | | | | - | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Acquisition | | | | | | (1,085) | (1,085) | | (1,085) |
| of | - | - | - | - | - | | | - | |
| subsidiaries | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Disposal of | - | - | - | (287) | - | 287 | - | - | - |
| asset | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Issue of | | | 160 | - | - | - | 160 | | 160 |
| share | - | - | | | | | | - | |
| options | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Expiry of | - | 47 | (47) | - | - | - | - | - | - |
| warrants | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Dividend | - | - | - | - | - | (468) | (468) | (341) | (809) |
| paid | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| | ________ | ________ | ________ | _______ | ______ | ________ | _______ | _______ | ________ |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| Balance at | 935 | 33,790 | 1,028 | - | (1,268) | 32,055 | 66,540 | 9,721 | 76,261 |
| 31 December | | | | | | | | | |
| 2009 | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| | ________ | ________ | ________ | _______ | ______ | ________ | _______ | _______ | ________ |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
| | | | | | | | | | |
+---------------+--------------+-------------+----------+-------------+-------------+--------------+-------------+-------------+-------------+
VELOSI LIMITED
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2010
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+-------------+----------+----------+
| Unaudited | Share | Share | Share | | | Retained | Total | Non - | Total equity |
| | capital | premium | based | Revaluation | Translation | earnings | US$'000 | controlling | US$'000 |
| | US$'000 | US$'000 | payment | reserve | reserve | US$'000 | | interest | |
| | | | reserves | US$'000 | US$'000 | | | US$'000 | |
| | | | US$'000 | | | | | | |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+-------------+---------------------+
| Balance at 1 | 935 | 33,790 | 1,028 | - | (1,268) | 32,055 | 66,540 | 9,721 | 76,261 |
| January 2010 | | | | | | | | | |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+------------------------+----------+
| Exchange | - | - | - | - | (451) | - | (451) | (151) | (602) |
| reserve | | | | | | | | | |
| arising on | | | | | | | | | |
| translation | | | | | | | | | |
| of financial | | | | | | | | | |
| statements | | | | | | | | | |
| of overseas | | | | | | | | | |
| subsidiaries | | | | | | | | | |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+------------------------+----------+
| Profit for | - | - | - | - | - | 4,677 | 4,677 | 1,634 | 6,311 |
| the period | | | | | | | | | |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+------------------------+----------+
| | ________ | ________ | ________ | ______ | ______ | ________ | ______ | _______ | ________ |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+------------------------+----------+
| Total | - | - | - | - | (451) | 4,677 | 4,226 | 1,483 | 5,709 |
| comprehensive | | | | | | | | | |
| income for | | | | | | | | | |
| the period | | | | | | | | | |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+------------------------+----------+
| Share | 33 | 2,187 | - | - | - | - | 2,220 | - | 2,220 |
| allotment | | | | | | | | | |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+------------------------+----------+
| Acquisition | - | - | - | - | - | - | - | 138 | 138 |
| of | | | | | | | | | |
| subsidiaries | | | | | | | | | |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+------------------------+----------+
| Issue of | - | - | 135 | - | - | - | 135 | - | 135 |
| share | | | | | | | | | |
| options | | | | | | | | | |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+------------------------+----------+
| Dividend | - | - | - | - | - | - | - | (190) | (190) |
| paid | | | | | | | | | |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+------------------------+----------+
| | ________ | ________ | ________ | ______ | ______ | ________ | ______ | _______ | ________ |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+------------------------+----------+
| Balance at | 968 | 35,977 | 1,163 | - | (1,719) | 36,732 | 73,121 | 11,152 | 84,273 |
| 30 June 2010 | | | | | | | | | |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+------------------------+----------+
| | ________ | ________ | ________ | ______ | ______ | ________ | ______ | _______ | ________ |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+------------------------+----------+
| | | | | | | | | | | |
+---------------+-------------+-------------+----------+-------------+-------------+----------+----------+-------------+----------+----------+
VELOSI LIMITED
1. General information
VELOSI Limited was incorporated in Jersey on 28 March 2006. The
principal activity of the Company is investment holding. The principal
activities of the Group are provision of asset integrity management and health,
safety and environment (HSE) services, which cover quality assurance and quality
control services. This includes certification, project verification, quality
enhancement and engineering support services.
2. Basis of preparation and significant accounting policies
The interim condensed consolidated financial statements are unaudited and do not
constitute statutory financial statements. The interim condensed consolidated
financial statements incorporate the results of the VELOSI Group for the period
from 1 January 2010 to 30 June 2010. The results for the year ended 31 December
2009 have been extracted from the statutory financial statements for VELOSI
Limited for the year ended 31 December 2009 which are prepared under
International Financial Reporting Standards ("IFRS"). The interim results
should be read in conjunction with the annual financial statement for the year
ended 31 December 2009.
The accounting policies, presentation and methods of computation have been
followed in these condensed financial statements as were applied in the
preparation of the Group's annual financial statements for the year ended 31
December 2009.
The condensed consolidated financial statements are presented in US Dollars
("US$") and all values are rounded to the nearest US$ '000 except where
otherwise indicated.
The interim condensed consolidated financial statements for the six months ended
30 June 2010 were approved by the Directors on 20 September 2010.
3. Income tax expense
+-----------------------------+-------------+-------------+------------------+
| | Six | Six | Year |
| | months | months | ended |
| | ended | ended | 31 |
| | 30 June | 30 June | December |
| | 2010 | 2009 | 2009 |
| | US$'000 | US$'000 | US$'000 |
+-----------------------------+-------------+-------------+------------------+
| | (unaudited) | (unaudited) | (audited) |
| | | | |
+-----------------------------+-------------+-------------+------------------+
| | | | |
+-----------------------------+-------------+-------------+------------------+
| Foreign tax: | | | |
+-----------------------------+-------------+-------------+------------------+
| Overseas tax payable | 1,358 | 1,499 | 3,240 |
+-----------------------------+-------------+-------------+------------------+
| Total current tax | 1,358 | 1,499 | 3,240 |
+-----------------------------+-------------+-------------+------------------+
| | | | |
+-----------------------------+-------------+-------------+------------------+
| Deferred tax: | | | |
+-----------------------------+-------------+-------------+------------------+
| Movement in deferred tax | (416) | (51) | 384 |
| position | | | |
+-----------------------------+-------------+-------------+------------------+
| Taxation on profit from | 942 | 1,448 | 3,624 |
| ordinary activities | | | |
+-----------------------------+-------------+-------------+------------------+
| Add: Share of taxation of | | | 224 |
| associated companies | 137 | 72 | |
+-----------------------------+-------------+-------------+------------------+
| | 1,079 | 1,520 | 3,848 |
+-----------------------------+-------------+-------------+------------------+
Interim period income tax is accrued based on the estimated average annual
effective income tax rate of 14.6% (Interim period 2009: 19.2%).
4. Share capital
(a) Share capital (unaudited)
+-------------------------------------------+----------+---------+
| | 2010 | 2009 |
| | US$'000 | US$'000 |
+-------------------------------------------+----------+---------+
| | | |
+-------------------------------------------+----------+---------+
| Authorised: | | |
+-------------------------------------------+----------+---------+
| 4,400,000,000 (2009: 4,400,000,000) | 88,000 | 88,000 |
| Ordinary shares of US$0.02 each | | |
+-------------------------------------------+----------+---------+
| | | |
+-------------------------------------------+----------+---------+
| Issued: | | |
+-------------------------------------------+----------+---------+
| 48,384,548 (2009: 46,765,871) Ordinary | | |
| shares of US$0.02 each | 968 | 935 |
+-------------------------------------------+----------+---------+
(b) Share issued during the period (unaudited)
+---------------+-----+------+------+------------+---------+---------+
| | |Issue value | Shares | Share | Share |
| | | per share | | capital | premium |
+---------------+-----+-------------+------------+---------+---------+
| | | GBP | US$ | | US$'000 | US$'000 |
+---------------+-----+------+------+------------+---------+---------+
| | | | | | | |
+---------------+-----+------+------+------------+---------+---------+
| At 1 January | | | | 46,765,871 | 935 | 33,790 |
| 2010 | | | | | | |
+---------------+-----+------+------+------------+---------+---------+
| Share issued | | | 1.37 | | | |
| on 3 March | | 0.92 | | 1,618,677 | 33 | 2,187 |
| 2010 | | | | | | |
+---------------+-----+------+------+------------+---------+---------+
| | | | | 48,384,548 | 968 | 35,977 |
+---------------+-----+------+------+------------+---------+---------+
On 3 March 2010, 1,618,677 new ordinary shares were issued to Mohamed Ashari Bin
Abas and Mohd Jai Bin Suboh as part payment for the acquisition of the 'VELOSI'
trading name in Malaysia, pursuant to an agreement dated 9 February 2010 between
VELOSI Limited, Mohamed Ashari Bin Abas and Mohd Jai Bin Suboh.
5. Earnings per share
The basic and diluted earnings per share are calculated by reference to
the earnings attributable to ordinary shareholders divided by the weighted
average number of shares for the period from 1 January 2010 to 30 June 2010, as
follows:
+-----------------------------+-------------+-------------+------------+
| | Six | Six | Year |
| | months | months | ended |
| | ended | ended | 31 |
| | 30 June | 30 June | December |
| | 2010 | 2009 | 2009 |
| | US$'000 | US$'000 | US$'000 |
+-----------------------------+-------------+-------------+------------+
| | (unaudited) | (unaudited) | (audited) |
| | | | |
+-----------------------------+-------------+-------------+------------+
| | | | |
+-----------------------------+-------------+-------------+------------+
| Profit after taxation and | 4,677 | 5,057 | 10,446 |
| non - controlling interest | | | |
+-----------------------------+-------------+-------------+------------+
| | | | |
+-----------------------------+-------------+-------------+------------+
| | Number | Number | Number |
+-----------------------------+-------------+-------------+------------+
| | | | |
+-----------------------------+-------------+-------------+------------+
| Weighted average number of | | | |
| shares for the purpose of | | | |
| calculating basic earnings | 47,839,027 | 44,971,092 | 45,875,857 |
| per share | | | |
+-----------------------------+-------------+-------------+------------+
| | | | |
+-----------------------------+-------------+-------------+------------+
| Effect of dilutive | | | |
| potential ordinary shares: | | | |
+-----------------------------+-------------+-------------+------------+
| | | | |
+-----------------------------+-------------+-------------+------------+
| | | | |
+-----------------------------+-------------+-------------+------------+
| Deferred consideration | 3,562,402 | 834,575 | 963,612 |
+-----------------------------+-------------+-------------+------------+
| Weighted average number of | | | |
| shares for the purpose of | | | |
| calculating diluted | 51,401,429 | 45,805,667 | 46,839,469 |
| earnings per share | | | |
+-----------------------------+-------------+-------------+------------+
| | | | |
+-----------------------------+-------------+-------------+------------+
| Earnings per ordinary share | | | |
+-----------------------------+-------------+-------------+------------+
| Basic earnings per | 9.8 | 11.2 | 22.8 |
| share | cents | cents | cents |
+-----------------------------+-------------+-------------+------------+
| Diluted earnings per | 9.1 | 11.0 | 22.3 |
| share | cents | cents | cents |
+-----------------------------+-------------+-------------+------------+
6. Dividends
A final dividend of US$730,000 (representing 1.5 cents per share) in respect of
the financial year ended 31 December 2009 was paid on 30 July 2010.
The Directors do not propose to pay an interim dividend. The Directors do
intend, subject to the availability of distributable reserves, to recommend a
final dividend to shareholders in respect of the financial year ending 31
December 2010.
7. Segmental reporting
The Group has adopted IFRS 8 Operating Segments, which requires operating
segments to be identified on the basis of internal reports about components of
the Group that are regularly reviewed by the chief operating decision maker as
defined in IFRS 8, in order to allocate resources to the segment and to assess
its performance.
The Group's business activities are split into six regions - Europe, the Middle
East, Americas, Africa, Australasia, and Central Asia. These regions are the
basis on which information is reported to the Group Board. The segment result is
the measure used for the purposes of resource allocation, assessment of
performance and decision making.
All other segments primarily comprise income and expenses relating to the
Group's administrative functions. Interest income and interest expense are not
allocated to segments, as this type of activity is driven by the central
treasury function, which manages the cash position of the Group. Accordingly,
this information is not separately reported to the Board for each reportable
segment.
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| | Europe | Middle | Americas | Africa | Australasia | Central | Others | Adjustment | Consolidated |
| | | East | | | | Asia | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
| | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| 2010 | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Turnover | 33,210 | 36,051 | 6,228 | 14,390 | 20,147 | 102 | | (15,633) | 94,495 |
| | | | | | | | - | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Gross | 3,664 | 7,623 | 1,268 | 2,542 | 5,303 | 43 | (90) | 419 | 20,772 |
| profit | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Interest | 1 | - | - | 6 | 22 | - | 82 | (93) | 18 |
| income | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Interest | (82) | (17) | (82) | (4) | (54) | - | (10) | 92 | (157) |
| expense | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Depreciation | (60) | (544) | - | (310) | (568) | (3) | (1) | (164) | (1,650) |
| and | | | | | | | | | |
| amortisation | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Profit | 978 | 4,344 | (129) | 464 | 531 | 25 | (989) | 2,166 | 7,390 |
| / | | | | | | | | | |
| (loss) | | | | | | | | | |
| before | | | | | | | | | |
| tax | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Adjustments listed above relate to the following: |
+--------------------------------------------------------------------------------------------------------------------------------------------------------+
| Share of | | | | | | | 1,061 | |
| profit of | | | | | | | | |
| associates, | | | | | | | | |
| net of | | | | | | | | |
| taxation | | | | | | | | |
+--------------------------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Segment | 24,640 | 49,512 | 7,520 | 18,455 | 43,933 | 885 | 46,544 | (66,824) | 124,665 |
| assets | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Segment | 21,171 | 23,865 | 6,566 | 16,538 | 28,962 | 418 | 8,750 | (65,878) | 40,392 |
| liabilities | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| 2009 | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Turnover | 23,666 | 35,749 | 9,663 | 15,086 | 14,105 | 487 | | (9,569) | 89,187 |
| | | | | | | | - | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Gross | 3,796 | 7,197 | 1,734 | 1,430 | 4,689 | 292 | | 2,217 | 21,355 |
| profit | | | | | | | - | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Interest | 12 | 25 | - | 2 | 16 | - | 262 | (286) | 31 |
| income | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Interest | (61) | (20) | (228) | (27) | (65) | - | - | 284 | (117) |
| expense | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Depreciation | (62) | (295) | - | (243) | (426) | (1) | (1) | (163) | (1,191) |
| and | | | | | | | | | |
| amortisation | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Profit | 1,036 | 4,489 | 145 | (552) | 1,276 | 75 | (600) | 2,048 | 7,917 |
| / | | | | | | | | | |
| (loss) | | | | | | | | | |
| before | | | | | | | | | |
| tax | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Adjustments listed above relate to the following: |
+--------------------------------------------------------------------------------------------------------------------------------------------------------+
| Share of | | | | | | | 793 | |
| profit of | | | | | | | | |
| associates, | | | | | | | | |
| net of | | | | | | | | |
| taxation | | | | | | | | |
+--------------------------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Segment | 24,062 | 42,500 | 11,914 | 20,718 | 31,861 | 552 | 36,684 | (59,987) | 108,304 |
| assets | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
| Segment | 21,082 | 21,426 | 10,869 | 18,240 | 21,011 | 560 | 2,338 | (58,211) | 37,315 |
| liabilities | | | | | | | | | |
+--------------+-----------+----------+--------------+-----------+-----------------+-------------+-------------+---------------------+-------------------+
8. Other intangible assets
+------------------------------+-------------+-------------+-----------+
| | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | | | 2009 |
| | US$'000 | US$'000 | US$'000 |
+------------------------------+-------------+-------------+-----------+
| | (unaudited) | (unaudited) | (audited) |
| | | | |
+------------------------------+-------------+-------------+-----------+
| | | | |
+------------------------------+-------------+-------------+-----------+
| Finite intangible assets: | | | |
+------------------------------+-------------+-------------+-----------+
| At 1 January | 1,470 | 1,744 | 1,744 |
+------------------------------+-------------+-------------+-----------+
| Foreign exchange translation | (51) | 23 | 66 |
| difference | | | |
+------------------------------+-------------+-------------+-----------+
| Acquisition | - | - | - |
+------------------------------+-------------+-------------+-----------+
| Amortisation | (168) | (169) | (340) |
+------------------------------+-------------+-------------+-----------+
| | 1,251 | 1,598 | 1,470 |
+------------------------------+-------------+-------------+-----------+
| Indefinite intangible | | | |
| assets: | | | |
+------------------------------+-------------+-------------+-----------+
| At 1 January | - | - | - |
+------------------------------+-------------+-------------+-----------+
| Acquisition | 6,957 | - | - |
+------------------------------+-------------+-------------+-----------+
| | 6,957 | - | - |
+------------------------------+-------------+-------------+-----------+
| | | | |
+------------------------------+-------------+-------------+-----------+
| | 8,208 | 1,598 | 1,470 |
+------------------------------+-------------+-------------+-----------+
Acquired finite intangible assets which consist of customer lists acquired are
valued at cost less accumulated amortisation. Amortisation is calculated using
the straight line method over the expected useful life ranging from 5 and 10
years.
Acquired indefinite intangible assets are valued at cost and relate to an
agreement with VELOSI (M) Sdn Bhd ("VMSB") for the use of trade name in return
VMSB agrees to pay the Company an agreed fee.
9. Deferred consideration
+------------------------------+-------------+-------------+-----------+
| | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | | | 2009 |
| | US$'000 | US$'000 | US$'000 |
+------------------------------+-------------+-------------+-----------+
| | (unaudited) | (unaudited) | (audited) |
| | | | |
+------------------------------+-------------+-------------+-----------+
| | | | |
+------------------------------+-------------+-------------+-----------+
| Current liability: | | | |
+------------------------------+-------------+-------------+-----------+
| At 1 January | 1,287 | 2,673 | 2,673 |
+------------------------------+-------------+-------------+-----------+
| Foreign exchange translation | (189) | 15 | 42 |
| difference | | | |
+------------------------------+-------------+-------------+-----------+
| Consideration settled | - | (1,428) | (1,428) |
+------------------------------+-------------+-------------+-----------+
| | 1,098 | 1,260 | 1,287 |
+------------------------------+-------------+-------------+-----------+
| | | | |
+------------------------------+-------------+-------------+-----------+
| Non-current liability: | | | |
+------------------------------+-------------+-------------+-----------+
| At 1 January | - | - | - |
+------------------------------+-------------+-------------+-----------+
| Acquisition | 4,738 | - | - |
+------------------------------+-------------+-------------+-----------+
| | 4,738 | - | - |
+------------------------------+-------------+-------------+-----------+
| | | | |
+------------------------------+-------------+-------------+-----------+
| | 5,836 | 1,260 | 1,287 |
+------------------------------+-------------+-------------+-----------+
The provisional deferred consideration consists of cash and shares.
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) which was settled
by the issue of 1,618,677 consideration shares on 3 March 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.
10. Seasonality
The Group's business operations are not seasonal.
11. Property, plant and equipment
During the period, the Group acquired new plant and machinery at a cost of
US$1,996,000 (2009: US$1,761,000). The Group also disposed of plant and
machinery with net book value of US$15,000 (2009:11,000).
12. Investment in associated companies
Investment in associated companies has increased as a result of the share of net
profit of associated companies and foreign exchange translation difference.
13. Related party transactions
The following table provides the total amount of transactions, which have been
entered into with related parties for the relevant financial year:
+--------------------+------+---------------------+---------------------+
| | | Sales to | Purchases |
| | | related | from |
| | | parties | related |
| | | | parties |
+--------------------+------+---------------------+---------------------+
| | | US$'000 | US$'000 |
| | | | |
+--------------------+------+---------------------+---------------------+
| Related parties | | | |
+--------------------+------+---------------------+---------------------+
| VELOSI (M) Sdn Bhd | 2010 | 1,059 | 193 |
+--------------------+------+---------------------+---------------------+
| | 2009 | 1,349 | 34 |
+--------------------+------+---------------------+---------------------+
| | | | |
+--------------------+------+---------------------+---------------------+
| Associated | | | |
| companies | | | |
+--------------------+------+---------------------+---------------------+
| VELOSI LLC | 2010 | 1,199 | 96 |
+--------------------+------+---------------------+---------------------+
| | 2009 | 819 | 17 |
+--------------------+------+---------------------+---------------------+
Term and conditions of transactions with related parties
The above transactions were entered into in the normal course of business and
were carried out on an arms-length basis.
Amount due from / to a related party
The amount due from / to a related party included under current assets /
liabilities represents unsecured interest free advances repayable on demand. The
related party is VELOSI (M) Sdn Bhd.
14. Bank and other borrowings
+----------------------------+----------------------+---------------------+---------------------+
| | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | US$'000 | US$'000 | 2009 |
| | | | US$'000 |
+----------------------------+----------------------+---------------------+---------------------+
| | (unaudited) | (unaudited) | (audited) |
| | | | |
+----------------------------+----------------------+---------------------+---------------------+
| Current | | | |
+----------------------------+----------------------+---------------------+---------------------+
| Bank overdrafts | 2,554 | 2,300 | 2,275 |
+----------------------------+----------------------+---------------------+---------------------+
| Bank loan | 754 | 76 | 41 |
+----------------------------+----------------------+---------------------+---------------------+
| Hire purchase | 634 | 448 | 661 |
+----------------------------+----------------------+---------------------+---------------------+
| | 3,942 | 2,824 | 2,977 |
+----------------------------+----------------------+---------------------+---------------------+
| | | | |
+----------------------------+----------------------+---------------------+---------------------+
| Non-current | | | |
+----------------------------+----------------------+---------------------+---------------------+
| Bank loan | 2,227 | 356 | 295 |
+----------------------------+----------------------+---------------------+---------------------+
| Hire purchase | 670 | 1,175 | 995 |
+----------------------------+----------------------+---------------------+---------------------+
| | 2,897 | 1,531 | 1,290 |
+----------------------------+----------------------+---------------------+---------------------+
| | | | |
+----------------------------+----------------------+---------------------+---------------------+
| | 6,839 | 4,355 | 4,267 |
+----------------------------+----------------------+---------------------+---------------------+
Included in trade and other receivables is an amount of US$4.229 million (2009:
US$1.247 million) pledged as security for bank overdraft and guarantee
facilities.
15. Reconciliation from profit on ordinary activities before tax to net cash
+----------------------------------------+-------------+-------------------+-----------+
| | Six | Six | Year |
| | months | months | ended |
| | ended | ended | 31 |
| | 30 June | 30 June | December |
| | 2010 | 2009 | 2009 |
| | US$'000 | US$'000 | US$'000 |
| | (unaudited) | (unaudited) | (audited) |
+----------------------------------------+-------------+-------------------+-----------+
| | | | |
+----------------------------------------+-------------+-------------------+-----------+
| Profit on ordinary activities before | 7,390 | 7,917 | 16,796 |
| taxation | | | |
+----------------------------------------+-------------+-------------------+-----------+
| Adjustment for non-cashflow items | 1,257 | 1,414 | 3,743 |
+----------------------------------------+-------------+-------------------+-----------+
| Decrease / (Increase) in inventories | 290 | (1,809) | 1,031 |
+----------------------------------------+-------------+-------------------+-----------+
| (Increase) / Decrease in receivables | (4,797) | 3,722 | (3,153) |
+----------------------------------------+-------------+-------------------+-----------+
| Decrease in payables | (2,309) | (5,203) | (7,761) |
+----------------------------------------+-------------+-------------------+-----------+
| Interest paid | (157) | (117) | (291) |
+----------------------------------------+-------------+-------------------+-----------+
| Tax paid | (1,730) | (1,386) | (3,424) |
+----------------------------------------+-------------+-------------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------------+-----------+
| Net cash (used in) / from operating | (56) | 4,538 | 6,941 |
| activities | | | |
+----------------------------------------+-------------+-------------------+-----------+
| Net cash used in investing activities | (1,793) | (1,257) | (3,799) |
+----------------------------------------+-------------+-------------------+-----------+
| Net cash from / (used in) financing | 2,758 | (977) | (3,447) |
| activities | | | |
+----------------------------------------+-------------+-------------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------------+-----------+
| | | | |
+----------------------------------------+-------------+-------------------+-----------+
| Net increase / (decrease) in cash and | 909 | 2,304 | (305) |
| cash equivalents | | | |
+----------------------------------------+-------------+-------------------+-----------+
| Foreign exchange translation | (456) | 50 | 317 |
| differences | | | |
+----------------------------------------+-------------+-------------------+-----------+
| Cash and cash equivalents at the | 17,803 | 17,791 | 17,791 |
| beginning of the period | | | |
+----------------------------------------+-------------+-------------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------------+-----------+
| Cash and cash equivalents at the end | 18,256 | 20,145 | 17,803 |
| of the period | | | |
+----------------------------------------+-------------+-------------------+-----------+
| Other bank facilities | (2,981) | (432) | (336) |
+----------------------------------------+-------------+-------------------+-----------+
| Cash margin - Bank guarantees | 3,122 | - | 2,198 |
+----------------------------------------+-------------+-------------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------------+-----------+
| Net cash | 18,397 | 19,713 | 19,665 |
+----------------------------------------+-------------+-------------------+-----------+
| | ________ | ________ | ________ |
+----------------------------------------+-------------+-------------------+-----------+
These interim condensed consolidated financial statements will be available on
the Company's website www.VELOSI.com. Further copies can be obtained from the
registered office at Walker House, PO Box 72, 28-34 Hill Street, St Helier,
Jersey JE4 5TF Channel Islands.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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