RNS Number:2800E
Velosi Limited
24 September 2007
Velosi Limited ("Velosi" or "the Group")
Interim Results
For the six month period ended 30 June 2007
HIGHLIGHTS
Velosi, a provider of asset integrity and HSE services to a number of major
national and multinational oil and gas companies, is pleased to announce its
interim results for the six months ended 30 June 2007.
* Turnover increased 68% to US$48.4 million (2006: US$28.8 million)
* Profit before tax up 53% to US$5.5 million (2006: US$3.6 million)
* Basic earnings per share of 9.3 cents
* Completion of two acquisitions, expanded the service offering and
geographic reach of the Group
* Growth in turnover experienced across all geographic regions
* Significant contract wins since the year end
John Hogan, Chairman, commented:
"I am pleased to report another excellent set of results by the Group, with
turnover and profit before tax increasing 68% and 53% respectively. Operations
in Africa and Australasia primarily drove this growth. During the period under
review we won several significant contracts as a result of the continued
expansion of our service offering and increased the Group's geographical spread.
These contracts have helped to build and develop the Group's relationships with
a number of key clients. Continuing to implement the Group's expansion strategy,
and with a number of new contracts having been signed since the period end, the
outlook for the remainder of the year and going forward looks positive."
For further information, please contact:
Velosi Dr Nabil Abdul Jalil 020 7930 0777
Joe Vincent
Strand Partners James Harris 020 7409 3494
Warren Pearce
Charles Stanley Securities Mark Taylor 020 7149 6000
Freddy Crossley
Cardew Group Tim Robertson 020 7930 0777 / 07900 927 650
Emma Consett 020 7930 0777 / 07971 468 308
CHAIRMAN'S STATEMENT
It has now been a full year since our listing on AIM in August 2006 and I am
delighted to announce another excellent set of interim results for the Group for
the six months ended 30 June 2007.
During the period under review, investment in long-term global oil and gas
infrastructure remained at the high levels experienced during 2006.
Additionally, the continued strength of the oil price and the high profile
equipment and infrastructure failures during 2006 have continued to drive demand
for the Group's services. Consequently, the Group has experienced another strong
period of growth in all its key markets.
Financial Review
Overview
The Group's financial statements for the period ended 30 June 2007 have been
prepared under International Financial Reporting Standards (IFRS).
These results demonstrate another strong performance by the Group. Turnover
increased 68% to US$48.4 million (2006: US$28.8 million). Profit from ordinary
activities before tax for the period was up 53% from US$3.6 million in 2006 to
US$5.5 million, and we recorded an increase of 51% in profit after tax. This
growth in turnover and profit was principally driven by operations in Africa,
and Australasia where we had previously invested in marketing and operational
infrastructure.
The effective tax rate for the Group for the half year was 16% (2006: 15%) and
the tax charge was US$0.9 million (2006: US$0.6 million). The effective tax rate
for the Group is directly correlated with the contributions from the different
regions and their varying tax rates.
Profits attributable to minority interests for the period were US$1.0m (2006:
US$0.3m). This increase was attributable to the increased profit from Velosi
Certification W.L.L, Qatar and Velosi Superintendend Nigeria Ltd as well as the
profit from Steel Test (Pty) Ltd ("Steel Test"), a new subsidiary.
For the six months ended 30 June 2007, basic earnings per share after minority
interests were 9.3 cents and fully diluted earnings per share after minority
interests were 8.7 cents.
At 30 June 2007, cash and cash equivalents for the Group were US$8.2 million
(2006: US$1.2 million) and we had long-term bank borrowings of US$0.8 million
(2006: Nil), which included a term loan to finance an office purchased by Velosi
Europe in Reading, UK.
In March 2007, we completed the acquisitions of Steel Test and Plant Design
Engineers Sdn Bhd ("PDE"), which were announced to shareholders on 15 December
2006. Cash outflow for the Group from investing activities, for the six months
ended 30 June 2007, was US$2.7 million (2006: Cash inflow US$0.4 million).
Additionally on 3 April 2007, a total of 117,683 and 74,752 new ordinary shares
were issued in lieu of part payment for the acquisition of 51% of PDE and 51% of
Steel Test respectively.
Dividend
The Board does not propose to pay an interim dividend, however, the Board does
intend, subject to the availability of distributable reserves, to recommend a
final dividend to shareholders in respect of the financial year ending 31
December 2007.
The Board intends to continue paying dividends in the future while maintaining a
suitable level of dividend cover and retaining the majority of earnings to fund
the development of the Group's business.
Operational Review
Velosi continues to pursue its strategy of entering new geographic markets,
growing market share in existing markets and expanding through joint ventures
and acquisitions. The Group now operates through 4 principal offices in the USA,
the UK, Malaysia and the UAE, and has operational or representative offices in a
further 36 countries worldwide.
Over the course of the six months under review our new asset integrity
management service offering was established when Velosi Abu Dhabi secured a
maiden US$1m contract with Takreer Ruwais refinery in Abu Dhabi. We continue to
develop our asset integrity management services globally and our recent contract
win with BP Indonesia is evidence of this.
In March 2007, we completed the acquisitions of PDE and Steel Test which have
both added to our range of services and provided the Group with the opportunity
to enter new markets. It is anticipated that the financial benefits of these
investments will begin to be felt during the second half of the current
financial year.
Growth was experienced across all geographic regions during the period under
review. The most notable growth was in the Australasia region, which saw
turnover increase 212%. Turnover in Africa grew 82%, the Middle East 57%, the US
region 46% and Europe 26%. In terms of turnover Africa remained the largest
contributor accounting for 37.4% of Group revenue. The Middle East contributed
29.5%, the US region 16.3%, Australasia 9.4% and Europe 7.4%.
Africa
Operations in Africa, continue to grow rapidly, primarily driven by additional
demand for our services from Mobil Producing Nigeria as well as from
contributions from a new contract secured with Shell Petroleum Development
Company of Nigeria Ltd ("Shell Nigeria"). This is a six month interim contract,
awarded in March 2007, for quality control and inspection services. Following
the award of a contract by Gulf of Suez Petroleum, a division of BP, in April
2007 we are now acting as a full service supplier in Egypt, for the first time.
In late 2006, Velosi Angola Lda was incorporated and during the period under
review Velosi Ghana Ltd was incorporated in order to further expand operations
in West Africa. In both countries marketing has commenced and bids have been
submitted for potential contracts.
Middle East
The Group continues to diversify its range of services in the Middle East, which
in turn has helped to expand the Group's client base within the region. This
growth was due to contributions from contracts won during 2006 with Kuwait Gulf
Oil and RasGas for a range of project verification services and construction
site inspections respectively.
US
The increased turnover in the US region was largely a result of additional
demand from Chevron for our project verification services. Since the period end,
an ExxonMobil global services contract for manpower supply and inspection
services commenced, and so too a global master services agreement with Conoco
Philips to supply inspection / expediting services and manpower supply to its
operations globally.
UK and Europe
The increase in turnover in the UK and Europe region was mainly driven by
contributions from an exclusive contract with Shell EP Europe, and an increase
in demand for our Certification Services. The Shell EP contract, which was
awarded in January 2007, covers work stemming from all four Shell operations in
Europe for source inspection and expediting of procured products. This contract
is expected to have a significant positive impact on revenue growth in this
region over the next three years.
CONFAPI, the trade association for small and medium-sized businesses in the
industrial sector in Italy, signed an agreement with Velosi International Italy
in March 2007. This agreement presents a unique opportunity for rapid in-depth
penetration of the Italian credit services market and is serving to diversify
Velosi's service offering in Italy.
Since the period end, Thames Water awarded Velosi a European contract covering
the inspection of lifting equipment and pressure vessels, and Technimont, an
international engineering contractor for process and industrial plants, entered
into a master agreement with Velosi International Italy to provide inspection
and expediting services.
Australasia
The significant increase in turnover in the Australasia region from 2006 to 2007
for the six months ended 30 June was largely due to previous investment by the
Group in marketing and operational infrastructure. Notable revenue growth was
achieved particularly in Singapore and Indonesia. Additionally, for the six
months ended 30 June 2007, the acquisition of QAM Australia has had a c
onsiderable positive impact on revenue.
Since the period end, BP Indonesia awarded Velosi a four year technical services
contract for integrity management and documentation for onshore and offshore
assets. This contract follows two earlier awards by BP Indonesia for inspection
services and laser scanning for as-built blueprints, both of which are currently
in progress. The award of the contract followed a competitive tender process and
is worth US$4.7million.
Russia and Other
During the period under review, operations were established in Russia and we
began bidding for contracts in Kazakhstan.
Employees
A distinct problem facing all companies operating in the oil and gas industry is
the shortage of high-calibre individuals. The Group invests heavily in its
people in order to ensure it attracts and retains such individuals, and in order
to provide necessary top-level training. The Group continues to focus on
recruiting local experts who have extensive regional and technical knowledge.
On behalf of the Board, I would like to take this opportunity to thank all of
our employees worldwide for their dedication and continued hard work.
The Board of Velosi is also extremely sad to report that Richard Ogunmakin,
General Manager of Velosi Nigeria was fatally wounded on Monday 10 September
2007. Richard was a highly talented, successful and generous individual who made
many friends throughout the Company. He will be sincerely missed by all his
colleagues and the Board together with all the employees of the Company extend
their deepest sympathies to Richard's family.
Our Regional Marketing Manager, Mr Rankin and Regional Finance Controller Mr
Pillay have assumed responsibility for Velosi Nigeria. The existing contract
negotiations are continuing as planned and we are hopeful of appointing a new
General Manager shortly.
Outlook
Market conditions continue to remain positive for the Group. The continued high
investment in oil and gas infrastructure shows no signs of slowing. Today, there
is heightened awareness amongst the major oil and gas multinationals of the
necessity and importance of investment in safety and maintenance measures in
order to reduce the risk of accidents and leakages, and resulting adverse
publicity.
By adopting the strategy of expanding our service offering and increasing our
global presence, the Group's reputation and ability to deliver globally
continues to develop. During the period under review new offices were
established in Angola, Ghana, Russia and Kazakhstan. With this continued office
expansion, our position to take advantage of the large number of new oil and gas
projects requiring quality assurance and quality control services across the
globe becomes ever more favourable. The Group now operates through 4 principal
offices in the USA, the UK, Malaysia and the UAE, and has operational or
representative offices in a further 36 countries worldwide.
The contribution from the acquisition of QAM Australia has been significant and
we anticipate further contributions to come through from our two latest
acquisitions in Malaysia and South Africa. The Group will continue to grow
organically and through acquisition, looking at opportunities as they present
themselves.
Since the beginning of the current financial year the Group secured a number of
contracts and has significantly expanded its relationships with key
multinationals. The award of two further contracts by Shell in Europe and
Nigeria, and by BP Indonesia, clearly demonstrates the confidence of our clients
in our ability to deliver cost effective solutions on a global basis. We
continue to focus on building and developing client relationships, notably the
key multinationals.
The second half of the year has begun positively with no apparent indication of
a slow down in oil and gas infrastructure investment. Consequently, the Board is
confident the Group will continue to grow and generate excellent returns for
shareholders. This confidence is underpinned by the high number of contract wins
during the period, our increased global presence and the success of our
acquisition strategy and our belief that there are further similar opportunities
available.
John Hogan
Chairman
24 September 2007
The notes to the financial statements form an integral part of these financial
statements.
VELOSI LIMITED
Consolidated Income Statement
For the six months ended 30 June 2007
Six months Six months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
USD'000 USD'000 USD'000
(unaudited) (unaudited) (audited)
Revenue 48,427 28,794 70,209
Cost of sales (36,295) (22,081) (54,227)
________ ________ ________
Gross profit 12,132 6,713 15,982
Other operating income 257 180 591
Administrative expenses (7,234) (3,442) (8,954)
________ ________ ________
Operating profit 5,155 3,451 7,619
Finance costs (26) (120) (141)
Share of profit of associated
companies 333 262 498
________ ________ ________
Profit on ordinary activities
before tax 5,462 3,593 7,976
Income tax expense (888) (554) (1,106)
________ ________ ________
Profit on ordinary activities
after tax 4,574 3,039 6,870
Minority interests (1,014) (304) (900)
________ ________ ________
Profit from continuing operations
and attributable to equity holders 3,560 2,735 5,970
________ ________ ________
Number Number Number
Weighted average number of shares
for the purpose of calculating
basic earnings per share 38,235,053 1,631,580 20,031,708
Weighted average number of shares
for the purpose of calculating
diluted earnings per share 40,779,510 1,631,580 22,145,165
Earnings per ordinary share
Basic earnings per share 9.3 cents 167.6 cents 29.8 cents
Diluted earnings per share 8.7 cents 167.6 cents 27.0 cents
VELOSI LIMITED
Consolidated Balance Sheet
As at 30 June 2007
30 June 30 June 31 December
2007 2006 2006
USD'000 USD'000 USD'000
(unaudited) (unaudited) (audited)
Assets
Non-Current Assets
Goodwill on acquisition 3,729 960 2,114
Property, plant and equipment 5,284 1,816 3,187
Investment in associated companies 1,033 881 732
Deferred tax assets 76 - 76
________ ________ ________
10,122 3,657 6,109
________ ________ ________
Current Assets
Cash and cash equivalents 8,200 2,040 12,170
Inventories 2,755 2,604 999
Trade and other receivables 33,523 17,241 26,084
Tax recoverable 50 - 14
________ ________ ________
44,528 21,885 39,267
________ ________ _______
________ ________ _______
Total Assets 54,650 25,542 45,376
________ ________ ________
Equity and Liabilities
Current Liabilities
Trade and other payables 18,172 16,935 14,840
Bank and other borrowings 148 828 343
Current tax liabilities 1,673 - 1,106
________ ________ ________
19,993 17,763 16,289
________ ________ _______
Non-Current Liabilities
Deferred tax liabilities 11 - 93
Bank and other borrowings 804 - 81
Other non-current liabilities 187 2,703 149
________ ________ ________
1,002 2,703 323
________ ________ _______
________ ________ ________
Total Liabilities 20,995 20,466 16,612
________ ________ ________
VELOSI LIMITED
Consolidated Balance Sheet
As at 30 June 2007
30 June 30 June 31 December
2007 2006 2006
USD'000 USD'000 USD'000
(unaudited) (unaudited) (audited)
Capital and Reserves
Share capital 767 100 763
Share premium 18,499 - 18,128
Share option 212 - 89
Share warrants 47 - 47
Reserves 412 290 412
Retained profit 9,995 3,611 6,818
________ ________ ________
29,932 4,001 26,257
Minority Interests 3,723 1,075 2,507
________ ________ ________
Total equity attributable to equity
holders 33,655 5,076 28,764
________ ________ ________
________ ________ ________
Total equity and liabilities 54,650 25,542 45,376
________ ________ ________
VELOSI LIMITED
Consolidated Cash Flow Statement
For the six months ended 30 June 2007
Six months Six months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
USD'000 USD'000 USD'000
(unaudited) (unaudited) (audited)
Net cash (used in) / from
operating activities (1,058) (540) 574
Cash flows from investing activities
Acquisition of property, plant and
equipment (1,835) (508) (817)
Receipts from sale of property,
plant and equipment 13 - 42
Acquisition of new subsidiary
companies, net of cash (943) (13) (1,755)
Acquisition of new associated
companies, net of cash - - (10)
Incorporation of new subsidiary
companies (1) - (10)
Proceeds from proposed issue of
shares to minority shareholders - 840 -
(Advance to) / Repayment from
associated company (93) 30 125
Dividend income from associated company - - 194
Interest received 116 1 119
________ ________ ________
Net cash (used in) / from
investing activities (2,743) 350 (2,112)
________ ________ ________
VELOSI LIMITED
Consolidated Cash Flow Statement
For the six months ended 30 June 2007
Six months Six months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
USD'000 USD'000 USD'000
(unaudited) (unaudited) (audited)
Cash flows from financing activities
Proceeds from issue of shares 499 - 20,102
Share issue costs - - (1,164)
Proceeds from issue of share
options - - 89
Net borrowings 297 - (70)
Repayment to related parties (643) (180) (6,762)
Advance from / (Repayment to)
directors 313 348 (98)
Dividend paid to shareholders (383) - -
________ ________ ________
Net cash from financing
activities 83 168 12,097
________ ________ ________
Net (decrease) / increase in cash
and cash equivalents (3,718) (22) 10,559
Foreign exchange translation
differences - - 125
Cash and cash equivalents at the
beginning of the period / year 11,918 1,234 1,234
________ ________ ________
Cash and cash equivalents at the
end of the period / year 8,200 1,212 11,918
________ ________ ________
Cash and cash equivalents comprise:
Current assets - Cash and cash
equivalents 8,200 2,040 12,170
Current liabilities - Bank
overdraft - (828) (252)
________ ________ ________
8,200 1,212 11,918
________ ________ ________
VELOSI LIMITED
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2007
30 June 30 June 31 December
2007 2006 2006
USD'000 USD'000 USD'000
(unaudited) (unaudited) (audited)
Opening shareholders' equity 26,257 1,249 1,249
Exchange reserve arising on
translation of financial statements
of overseas subsidiaries - (83) 11
Share allotment 4 100 18,891
Profit for the period 4,574 3,039 6,870
Issue of share options 123 - 89
Issue of warrants - - 47
Share premium 371 - -
Minority interest (1,014) (304) (900)
Dividend paid (383) - -
________ ________ ________
Closing shareholders' equity 29,932 4,001 26,257
________ ________ ________
VELOSI LIMITED
INTERIM ANNOUNCEMENT - NOTES
1. Business of Velosi Limited
Velosi Limited was incorporated in Jersey on 28 March 2006. The principal
activity of the Group is the provision of asset integrity and HSE services to
the oil and gas industry.
2. Basis of preparation
The Group's interim financial statements comprise of the consolidated balance
sheet as of 30 June 2007 and related income statement, consolidated cash flow
statement and related notes for the six months then ended of Velosi Limited.
These have been prepared under the historical cost convention, an with
applicable International Financial Reporting Standards (IFRS). The accounting
policies are consistent with those adopted in the Company's annual financial
statements for the period ended 31 December 2006.
The interim statements are unaudited and do not constitute statutory accounts.
The results for the year ended 31 December 2006 do not constitute statutory
accounts and have been extracted from the group's published accounts for that
year, which contain an unqualified Audit Report.
The Group has chosen not to adopt IAS 34, "Interim financial statements", in
preparing its 2007 interim statements.
The consolidated financial statements are presented in US dollars and all values
are rounded to the nearest US$ '000 except where otherwise indicated.
The Interim Report for the six months ended 30 June 2007 was approved by the
Directors on 21 September 2007.
3. Increase in paid up capital
On 3 April 2007, 117,683 and 74,752 new ordinary shares were issued in lieu of
part payment for the acquisition of 51 per cent of Plant Design Engineers Sdn
Bhd and 51 per cent of Steel Test (Pty) Ltd respectively.
As at 27 June 2007, a total of 431,000 share options were issued under an
employee share option scheme.
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 30 June 2007, as follows:
Six months Six months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
USD'000 USD'000 USD'000
Profit after taxation and
minority interest 3,560 2,735 5,970
--------- --------- ------------
Number Number Number
Weighted average number of shares
for the purpose of calculating
basic earnings per share 38,235,053 1,631,580 20,031,708
--------- --------- ------------
Effect of dilutive potential ordinary
shares:
Share Options 2,067,708 - 1,636,708
--------- --------- ------------
Warrants 476,749 - 476,749
--------- --------- ------------
Weighted average number of shares
for the purpose of calculating
diluted earnings per share 40,779,510 1,631,580 22,145,165
--------- --------- ------------
Earnings per ordinary share
Basic earnings per share 9.3 cents 167.6 cents 29.8 cents
--------- --------- ------------
Diluted earnings per share 8.7 cents 167.6 cents 27.0 cents
--------- --------- ------------
5. Dividends
A final dividend of 1 cent per share in respect of the financial year ended 31
December 2006 was paid on 16 July 2007.
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 2007.
6. Segmental Reporting
A geographical analysis of the turnover and profit before tax in the period is
given below:
Six months Six months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
USD'000 USD'000 USD'000
Turnover
Europe 3,596 2,850 5,841
Middle East 14,283 9,124 21,609
United States of America 7,874 5,396 13,772
Africa 18,130 9,967 25,467
Asia 3,904 1,457 3,002
Others 640 - 518
------------ ------------ ------------
48,427 28,794 70,209
============ ============ ============
Gross Profit
Europe 1,041 1,181 1,913
Middle East 3,799 2,398 5,890
United States of America 1,942 1,303 3,244
Africa 3,107 1,121 3,283
Asia 1,994 710 1,452
Others 244 - 200
------------ ------------ ------------
12,127 6,713 15,982
============ ============ ============
These interim results 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 8PN Channel Islands.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAANFALPXEFE
Velosi (LSE:VELO)
Historical Stock Chart
From Dec 2024 to Jan 2025
Velosi (LSE:VELO)
Historical Stock Chart
From Jan 2024 to Jan 2025
