RNS Number : 9177D
Velosi Limited
22 September 2008
Velosi Limited ("Velosi", "the Company" or "the Group")
Interim Results
For the six month period ended 30 June 2008
Velosi, the AIM listed provider of asset integrity and HSE services to major national and multinational oil and gas companies, is
pleased to announce its interim results for the six months ended 30 June 2008.
Highlights
* Turnover increased 60% to US$77.3 million (2007: US$48.4 million)
* Operating profit increased by 36% to US$7.02 million (2007: US$5.16million)
* Profit before tax up 31% to US$7.2 million (2007: US$5.5 million)
* Basic earnings per share of 10.4 cents (2007: 9.3 cents)
* Successful Placing in March 2008 raising gross proceeds of �4.42 million (US$8.7 million)
* Focus on expansion within new regions of operation and consolidation of acquisitions
* Major contract wins since the interim period end
John Hogan, Chairman, commented:
"I am pleased to announce another good set of results for the Group, with strong growth performance in turnover and profit. We continue
to win new contracts, in both geographically and strategically important areas, from existing and new clients, demonstrating the quality of
Velosi's services offering. Trading since the period end has continued well and is in line with market expectations. Looking ahead, I am
confident Velosi will continue to provide value and growth for shareholders."
For further information, please contact:
Velosi Dr Nabil Abdul Jalil 020 7930 0777
Dan Ooi
Strand Partners James Harris 020 7409 3494
Charles Stanley Securities Mark Taylor 020 7149 6000
Freddy Crossley
Cardew Group Tim Robertson 020 7930 0777
Shan Shan
Willenbrock
Catherine Maitland
CHAIRMAN'S STATEMENT
I am very pleased to announce another strong set of interim results for the Group for the six months ended 30 June 2008. The results
show substantial increases in both revenues and profits reflecting the Group's success in developing its geographic presence so that it can
deliver a "Global Reach, Local Service" to the major national and multinational oil and gas corporations. New contract wins and the renewal
of existing contracts have driven revenue growth, with the Group benefiting from being able to offer an expanded range of services to meet
the diverse requirements of its clients.
Market conditions remain favourable, with continued high levels of investment in the oil and gas sector underpinning the growth in
demand for Velosi's services. The issue of safety remains paramount across the oil and gas sector and as a result the Group has benefited in
particular from strong demand for its asset integrity management and health, safety, and environment (HSE) services, which covers quality
assurance and quality control services.
Also during the period, the Group was focused on the consolidation and integration of recent acquisitions and the new offices opened
over the last 12 months. In part, this involved ensuring that the expertise and client relationships held regionally are shared across the
Group's operations, the importance of which has been reflected in the efficient and effective establishment of recently opened offices.
Financial Performance
The successful execution of the Group's strategy led to turnover increasing by 60% to US$77.3 million (2007: US$48.4m). Profit from
ordinary activities before tax for the period was up 31% to US$7.2 million (2007: US$5.5m), and profit after tax also increased, from US$4.6
million in 2007 to US$6.0 million. The growth in turnover and profit was driven by the Group's expansion into new regions, such as Angola,
Ghana, Vietnam and Indonesia, alongside the continued new contract wins from both new and existing clients.
The effective tax rate for the Group for the half year was 16% (2007: 16%) and the tax charge was US$1.2 million (2007: US$0.9m). 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 (2007: US$1.0m). Basic earnings per share after minority
interests were 10.4 cents and fully diluted earnings per share after minority interests were 9.4 cents.
Velosi's cash position is strong. At 30 June 2008, cash and cash equivalents for the Group were US$10.7 million (2007: US$8.2m) and we
had long-term bank borrowings of US$1.5 million (2007: US$0.8m). There was a small operating cash outflow of US$0.5 million (2007: US$1.1
million) reflecting the strong growth profile as well as the timing of certain receipts around the period end. Significant payments were
also received in relation to operations in the Middle East in the subsequent months of July and August.
As announced on 21 April 2008, Velosi successfully raised �4.42 million (US$8.7 million) through the issue of 3,842,000 new ordinary
shares at a placing price of 115 pence (215 cents) per share to institutional investors, to augment existing working capital facilities and
for the development of the Group's business.
Dividend
As previously stated the Board does not propose to pay an interim dividend. The Board does however intend, subject to the availability
of distributable reserves and a satisfactory performance in the second half of the year, to recommend a final dividend to shareholders in
respect of the financial year ending 31 December 2008.
Operational Review
2008 has seen a continuation in demand for Velosi's services from the major oil and gas and petrochemical companies driven by the
ongoing high levels of investment in infrastructure projects combined with a heightened focus on safety issues across the industry. The
Group also benefited from its expansion into new regions such as Angola, Ghana, Vietnam, The Netherlands, Russia and Indonesia together with
the expansion of its diverse range of services to include Asset Integrity Management Services.
A key focus during the period was developing and expanding Velosi's position within the new regions of operation, as well as
consolidating the acquisitions of K2 Specialist Services Pte Ltd ("K2") and Intec UK Limited ("Intec") announced in 2007. The growing
synergies and cross referrals across the Group's strategic business units ("SBUs"), is enhancing the performance of the Group's 47
companies, 3 branches and 7 representative offices. SBUs are the Group's subsidiaries, providing specialised services within our core
activities.
Asia & Australasia
Turnover: US$13.9 million (2007: US$4.5 million), Contribution to Group Sales: 18% (2007: 9%)
Asia and Australasia again saw a substantial increase in revenues driven by strong contributions from its new offices in Vietnam and
Indonesia together with further progress from the recent acquisition of K2 in Singapore and QAM, the quality assurance and inspection
company based in Australia.
Vietnam continued to benefit from its manpower contract with Truong Son JOC awarded in June last year worth US$1.3million per annum,
together with a new inspection services contract in March awarded this year with Technip worth at least US$1.5 million which was extended to
the end of October 2008). Indonesia benefited from winning an important new vendor and expediting contract with Conoco Indonesia worth
US$7.8 million over three years beginning from May 2008.
K2, acquired by the Group in October 2007, continued to make excellent progress providing inspection, testing and engineering support
services in remote and extreme environments to the oil and gas industry. Recently K2 announced it had been awarded two new contracts - the
first with PPL Shipyard, Singapore, worth $2.75 million for the assembly and installation of five new build jackup derricks which is
expected to be completed in June 2009. The second contract was with COSCO shipyard, Nantong, China, for the supply of specialist equipment,
manpower and technical know-how to carry out the assembly and installation of the drilling package on the semi-submersible Sevan 650
drilling rig. The contract is worth $1.22 million and is expected to be completed in the current financial year.
Europe
Turnover: US$19.6 million (2007: US$3.6 million), Contribution to Group Sales: 25% (2007: 7%)
Europe delivered the Group's largest rise in revenues for the period. This substantial increase came primarily from the successful
integration of Intec, acquired in October 2007, through which the Group is running a number of European contracts, the continuation of the
Shell EP Europe contract awarded in January 2007 which runs to December 2009, and the recent landmark contract with BP Norway.
Intec is becoming increasingly involved in new contracts brought in from different European countries providing additional expertise and
acting as a key European centre.
The Group made a significant step forward in establishing a strong presence in Scandinavia with its first contract with BP Norge AS
which commenced in March 2008. Under this contract Velosi will provide Quality Assurance and Control for BP, including verification,
certification and enhancement services at fabrication sites in Norway and the rest of Europe.
Middle East
Turnover: US$26.8 million (2007: US$14.3 million), Contribution to Group Sales: 35% (2007: 29%)
Building on a good result in 2007, the Middle Eastern region demonstrated another strong performance during the period, with revenues
almost doubling against the comparative period last year. Demand was strong across the region, with the Qatari and Kuwaiti operations
performing particularly well, benefiting from an increase in maintenance contracts with clients such as RasGas and Qatar Gas.
Demonstrating the demand for Velosi's newly established asset integrity services, Al Khafji Joint Operations ("KJO"), a joint venture
between Aramco Gulf Operations and Kuwait Gulf Oil Company, awarded a $2.2 million, two year contract to Velosi effective from April 2008.
Most recently, and after the period end, the newly established Saudi Arabian unit won a major five year General Inspection Services
Contract with Saudi Aramco effective from July 2008 until the second quarter of 2013. This is an important breakthrough win for a new region
and one which also represents a significant increase in the scope of work with Aramco, one of the world's leading producers of oil and gas.
There is also an option for the contract to be extended for a further three years.
Africa
Turnover: US$8.7 million (2007: US$18.1 million), Contribution to Group Sales: 11% (2007: 37%)
Turnover in the first half has been impacted by the ongoing negotiations with Richard Ogunmakin's estate regarding the future ownership
and operation of Velosi Nigeria. While there is no certainty that the outcome of these negotiations will be favourable to the Group, the
trading performance from other regions in the division, particularly from Angola and Ghana, is expected to produce a significant increase in
revenues for the second half of the financial year. Looking further ahead, the Group expects Africa will again be one of the largest
contributors to Group revenues.
Velosi won one of its largest contracts to date with Chevron Angola to provide Construction Management and Inspection Services personnel
to Chevron's oil and gas operations in Cabinda, Angola.
Ghana has had a successful beginning to 2008, winning a contract with BOST which began in February 2008 and is worth approximately
US$2.5 million over the next two years.
Americas and Former Soviet Union (FSU)
Turnover: US$8.1 million (2007: US$7.9 million), Contribution to Group Sales: 10% (2007 16%)
Americas and FSU generated a satisfactory performance for the first half of 2008 and is expected to benefit in the second half from the
5 year contract with Exxon Neftegas worth up to US$6 million which commenced in May 2008. Won by the new office in Sakhalin, it is a
significant step in establishing Velosi's presence in this region which continues to trade in line with expectations.
Employees
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. Due to the scarcity of high quality candidates recruitment remains an industry wide issue. As a result, the Group has implemented
a 'localisation policy' whereby each office is encouraged to recruit local employees. This policy has been successful, substantially
increasing the number of employees recruited locally which in turn has reduced the costs of recruitment, increased the effectiveness of
internal training programmes and developed an expanding pool of future local and regional managers.
Outlook
Since the IPO in 2006, the Group has expanded rapidly through a selective mix of acquisitions and the opening of new offices. These
actions mean that Velosi is now able to service its clients from a much broader geographic base and provide a wider range of complementary
services. This has enabled the Group to meet the strong demand for its services stemming from the continued investment in infrastructure
projects and consequent increase in demand for maintenance services to ensure the continuity of the operations over the long-term.
Although some way off the all time highs of earlier in the year oil and gas prices still remain relatively high - a key factor in the
recent growth of the oil and gas sector. The Group is also working to diversify its activities into other areas which require similar
services and technical expertise such as nuclear power and mining industries.
Velosi has delivered an excellent performance for the first 6 months which has created a strong platform on which to deliver a positive
outcome for the full year. The Board confirms that trading is in line with expectations and looks forward to the business continuing to
expand both organically and through acquisition.
John Hogan
Chairman
22 September 2008
VELOSI LIMITED
Consolidated Income Statement
For the six months ended 30 June 2008
Six months ended Six months ended Year ended
30 June 2008 30 June 2007 31
US$'000 US$'000 December
(unaudited) (unaudited) 2007
US$'000
(audited)
Note
Revenue 7 77,306 48,427 116,997
Cost of sales (58,232) (36,295) (89,152)
________ ________ ________
Gross profit 19,074 12,132 27,845
Other operating income 28 257 1,435
Administrative expenses (12,083) (7,234) (18,121)
________ ________ ________
Operating profit 7,019 5,155 11,159
Finance costs (269) (26) (253)
Share of profit of associated 418 333 520
companies
________ ________ ________
Profit on ordinary activities 7,168 5,462 11,426
before tax
Income tax expense 3 (1,160) (888) (1,670)
________ ________ ________
Profit on ordinary activities 6,008 4,574 9,756
after tax
Minority interests (1,598) (1,014) (2,301)
________ ________ ________
Profit from continuing
operations and attributable to 4,410 3,560 7,455
equity holders
________ ________ ________
Earnings per ordinary share
Basic earnings per share 5 10.4 cents 9.3 cents 19.4 cents
Diluted earnings per share 5 9.4 cents 8.7 cents 18.2 cents
VELOSI LIMITED
Consolidated Balance Sheet
As at 30 June 2008
30 June 2008 30 June 2007 31 December
2007
US$'000
US$'000 US$'000 (audited)
(unaudited) (unaudited)
Note
Assets
Non-Current Assets
Goodwill on acquisition 7,341 3,729 7,341
Intangible assets 8 1,549 - 1,662
Property, plant and 11 7,325 5,284 6,920
equipment
Investment in associated 12 1,247 1,033 869
companies
Other investments 9 - 9
Deferred tax assets 42 76 88
________ ________ ________
17,513 10,122 16,889
________ ________ ________
Current Assets
Cash and cash equivalents 15,881 8,200 7,967
Inventories 4,610 2,755 1,056
Trade and other receivables 54,626 33,523 48,737
Tax recoverable 450 50 90
________ ________ ________
75,567 44,528 57,850
________ ________ _______
Non-current asset held for 900 - 900
sale
________ ________ _______
Total Assets 93,980 54,650 75,639
________ ________ ________
Equity and Liabilities
Capital and Reserves
Share capital 4 869 767 787
Share premium 4 30,226 18,499 21,310
Share based payment reserves 590 260 425
Revaluation reserve 287 287 287
Translation reserve (63) 11 (63)
Retained profit 18,414 10,108 14,004
________ ________ ________
Total equity attributable to 50,323 29,932 36,750
equity holders
Minority Interests 7,241 3,723 5,729
________ ________ ________
Total Equity 57,564 33,655 42,479
________ ________ ________
VELOSI LIMITED
Consolidated Balance Sheet
As at 30 June 2008
30 June 2008 30 June 2007 31 December
2007
US$'000
US$'000 US$'000 (audited)
(unaudited) (unaudited)
Note
Current Liabilities
Trade and other payables 22,359 18,172 21,091
Bank and other borrowings 14 5,577 148 4,075
Current tax liabilities 2,592 1,673 1,761
Deferred consideration 9 3,984 - 4,477
________ ________ ________
34,512 19,993 31,404
________ ________ _______
Non-Current Liabilities
Deferred tax liabilities 20 11 24
Bank and other borrowings 14 1,549 804 1,499
Other non-current 335 187 233
liabilities
________ ________ ________
1,904 1,002 1,756
________ ________ _______
________ ________ ________
Total Liabilities 36,416 20,995 33,160
________ ________ _______
Total Equity and Liabilities 93,980 54,650 75,639
________ ________ ________
VELOSI LIMITED
Consolidated Cash Flow Statement
For the six months ended 30 June 2008
Six months ended Six months ended Year ended
30 June 2008 30 June 2007 31
US$'000 US$'000 December
(unaudited) (unaudited) 2007
US$'000
(audited)
Net cash used in operating (513) (1,058) (740)
activities
Cash flows from investing
activities
Acquisition of property, plant (1,310) (1,835) (3,376)
and equipment
Receipts from sale of 128 13 172
property, plant and equipment
Acquisition of new subsidiary - (943) (6,415)
companies, net of cash
Incorporation of new - (1) -
subsidiary companies
Purchase of unquoted shares - - (9)
Repayment from / (advance to) 228 (93) (598)
associated company
Dividend income from - - 324
associated company
Interest received 140 116 210
________ ________ ________
Net cash used in investing (814) (2,743) (9,692)
activities
________ ________ ________
Cash flows from financing
activities
Proceeds from issue of shares 8,660 499 3,275
Share issue costs (391) - (69)
Net borrowings 216 297 (381)
Repayment to related parties (402) (643) (245)
(Repayment to) / advance from (54) 313 722
directors
Dividend paid to shareholders - (383) (383)
Dividend paid to minority (86) - (60)
shareholders of subsidiary
companies
________ ________ ________
Net cash from financing 7,943 83 2,859
activities
________ ________ ________
Net increase / (decrease) in 6,616 (3,718) (7,573)
cash and cash equivalents
Foreign exchange translation - - (234)
differences
Cash and cash equivalents at 4,111 11,918 11,918
the beginning of the period
________ ________ ________
Cash and cash equivalents at 10,727 8,200 4,111
the end of the period
________ ________ ________
VELOSI LIMITED
Consolidated Cash Flow Statement
For the six months ended 30 June 2008
Six months ended Six months ended Year ended
30 June 2008 30 June 2007 31
US$'000 US$'000 December
(unaudited) (unaudited) 2007
US$'000
(audited)
Cash and cash equivalents
comprise:
Current assets - Cash and cash 15,881 8,200 7,967
equivalents
Current liabilities - Bank (5,154) - (3,856)
overdraft
________ ________ ________
10,727 8,200 4,111
________ ________ ________
VELOSI LIMITED
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2008
Share capital Share premium Other reserves Retained earnings Total Minority interest Total equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance as at 1 January 2007 763 18,128 434 6,932 26,257 2,507 28,764
Net proceeds from shares 4 371 - - 375 - 375
issued
Profit for the period - - - 3,560 3,560 1,014 4,574
Acquisition of subsidiaries - - - - - 202 202
Issue of share options - - 123 - 123 - 123
Dividend paid - - - (383) (383) - (383)
________ _______ _______ _______ _______ _______ ________
Balance as at 30 June 2007 767 18,499 557 10,109 29,932 3,723 33,655
________ _______ _______ _______ _______ _______ ________
________ _______ _______ _______ _______ _______ ________
VELOSI LIMITED
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2008
Share capital Share premium Other reserves Retained earnings Total Minority interest Total equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 July 2007 767 18,499 557 10,109 29,932 3,723 33,655
Net proceeds from shares 20 2,811 - - 2,831 - 2,831
issued
Exchange reserve on - - (74) - (74) 183 109
translation of financial
statements of overseas
subsidiaries
Profit for the period - - - 3,895 3,895 1,287 5,182
Acquisition of subsidiaries - - - - - 578 578
Disposal of shares in - - - - - 18 18
subsidiary
Issue of share options - - 166 - 166 - 166
Dividend paid - - - - - (60) (60)
________ _______ _______ _______ _______ _______ ________
Balance as at 31 December 2007 787 21,310 649 14,004 36,750 5,729 42,479
________ _______ _______ _______ _______ _______ ________
Balance as at 1 January 2008 787 21,310 649 14,004 36,750 5,729 42,479
Net proceeds from shares 82 8,916 - - 8,998 - 8,998
issued
Profit for the period - - - 4,410 4,410 1,598 6,008
Issue of share options - - 165 - 165 - 165
Dividend paid - - - - - (86) (86)
________ _______ _______ _______ _______ _______ ________
Balance as at 30 June 2008 869 30,226 814 18,414 50,323 7,241 57,564
________ _______ _______ _______ _______ _______ ________
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 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 Group's interim financial statements comprise of the consolidated balance sheet as of 30 June 2008 and related income
statement, consolidated cash flow statement and related notes for the six months then ended of Velosi Limited. These have been prepared in
accordance with IAS 34 *Interim Financial Statements*. The accounting policies are consistent with those adopted in the Company's annual
financial statements for the year ended 31 December 2007.
The interim statements are unaudited and do not constitute statutory financial statements. The results for the year ended 31
December 2007 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 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 Report for the six months ended 30 June 2008 was approved by the Directors on 16 September 2008.
3. Income tax expense
Six months ended Six months ended Year ended
30 June 2008 30 June 2007 31
December
2007
US$'000 US$'000 US$'000
Foreign tax
Overseas tax payable 1,163 938 1,740
Total current tax 1,163 938 1,740
Deferred tax
Movement in deferred tax (42) (82) (133)
position
Taxation on profit from 856 1,607
ordinary activities 1,121
Add: Share of taxation of 32 63
associated companies 39
1,160 888 1,670
Interim period income tax is accrued based on the estimated average annual effective income tax rate
of 16% (Interim period 2007: 16%).
4. Increase in paid up capital
On 11 February 2008, 83,438 new ordinary shares were issued in lieu of payment for the acquisition of 14 per cent of Kurtec Inspection
Services Sdn Bhd.
On 6 March 2008, 214,836 new ordinary shares were issued to shareholders of K2 Specialist Services Pte Ltd (*K2*), pursuant to an agreement
dated 19 October 2007 between K2 and Velosi Industries Sdn Bhd, and based on achievement of performance targets by K2 for the financial year
ending December 31, 2007.
On 27 March 2008, Charles Stanley Securities on behalf of the Company, completed an institutional placing (*the Placing*) of 3,842,000 new
Ordinary Shares which represent 8.8% of the enlarged issued share capital of the Company.
5. Earnings per share
The basic and diluted earnings per share is calculated by reference to the earnings attributable to ordinary shareholders divided
by the number of shares in issue as at 30 June 2008, as follows:
Six months ended Six months ended Year ended
30 June 2008 30 June 2007 31
US$'000 US$'000 December
2007
US$'000
Profit after taxation and 4,410 3,560 7,455
minority interest
Number Number Number
Weighted average number of
shares for the purpose of
calculating basic earnings per
share 42,419,424 38,235,053 38,389,734
Effect of dilutive potential
ordinary shares:
Share Options 2,067,708 2,067,708 1,858,702
Warrants 476,749 476,749 476,749
Deferred consideration 1,853,193 - 332,773
Weighted average number of
shares for the purpose of
calculating diluted earnings
per share 46,817,074 40,779,510 41,057,958
Earnings per ordinary share
Basic earnings per share 10.4 cents 9.3 cents 19.4 cents
Diluted earnings per share 9.4 cents 8.7 cents 18.2 cents
6. Dividends
A final dividend of US$383,000 (representing 1 cent per share) in respect of the financial year ended 31 December 2007 was paid on 25
July 2008.
The Directors do not propose to pay an interim dividend. The Directors do intend, subject to the availability of distributable reserves,
to recommend a final dividend to shareholders in respect of the financial year ending 31 December 2008.
7. Segmental Reporting
A geographical analysis of the turnover and profit before tax in the period is given below:
Six months ended Six months ended Year ended
30 June 2008 30 June 2007 31
December
2007
US$'000 US$'000 US$'000
Turnover
Europe 19,619 3,596 15,174
Middle East 26,788 14,283 34,172
Americas 8,061 7,874 17,464
Africa 8,710 18,130 36,608
Asia 12,224 3,904 12,115
Others 1,904 640 1,464
77,306 48,427 116,997
Gross Profit
Europe 3,327 1,041 2,921
Middle East 6,607 3,799 8,315
Americas 1,918 1,942 4,707
Africa 1,908 3,107 5,804
Asia 4,375 1,994 5,511
Others 939 244 587
19,074 12,127 27,845
Carrying amount of assets
Europe 16,474 9,591 16,106
Middle East 27,178 16,697 19,472
Americas 7,425 5,431 6,897
Africa 16,052 14,048 14,830
Asia 20,088 8,034 17,198
Others 6,763 849 1,136
93,980 54,650 75,639
Liabilities
Europe 12,805 3,134 10,862
Middle East 5,776 4,769 5,403
Americas 2,693 2,213 2,708
Africa 8,024 8,392 8,073
Asia 5,828 2,159 5,762
Others 1,290 328 352
36,416 20,995 33,160
Additions to plant, property
and equipment
Europe 46 868 908
Middle East 217 547 1,349
Americas 21 5 5
Africa 429 519 1,352
Asia 561 261 751
Others 75 5 11
1,349 2,205 4,376
Depreciation
Europe 80 15 86
Middle East 220 123 292
Americas - - 4
Africa 243 113 327
Asia 265 113 330
Others 8 6 17
816 370 1,056
8. Intangible assets
30 June 2008 30 June 2007 31 December
2007
US$'000
US$'000 US$'000
At 1 January 1,662 - -
Acquisition of subsidiary - - 1,737
companies
Amortisation (113) - (75)
1,549 - 1,662
Acquired intangible assets which consist of customer lists acquired are valued at cost less accumulated amortisation. Amortisation is
calculated using the straight line method over the expected useful life of 5 and 10 years.
9. Deferred consideration
30 June 2008 30 June 2007 31 December
2007
US$'000
US$'000 US$'000
At 1 January 4,477 - -
Acquisition of subsidiary - - 6,603
companies
Cash consideration paid - - (2,126)
Issuance of new Velosi shares (493) - -
3,984 - 4,477
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.
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$1,350,000. The Group also disposed of plant and machinery
with net book value of US$128,000.
12. Investment in associated companies
Investment in associated companies has increased as a result of the share of net profit of associated companies.
13. Related party transactions
The following table provides the total amount of transactions, which have been entered into with related parties for the relevant
financial year:
Rental received and receivable
from related parties
Sales to related Purchases from
parties related parties
Related parties
US$'000 US$'000 US$'000
Velosi (M) SdnBhd 2008 1,477 101 31
2007 984 270 -
Associated companies
Velosi LLC 2008 407 17 -
2007 123 15 -
During the financial year, there were no transactions entered into with key management other than Directors' remuneration as disclosed
in note 5.
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 related parties
The amount due from / to related parties included under current assets / liabilities represents unsecured interest free advances
repayable on demand. The related party is Velosi (M) Sdn Bhd. Included in trade and other receivables is an amount of US$0.391 million
(2007: US$1.089 million) pledged as security for bank guarantee facilities.
14. Bank and other borrowings
30 June 2008 30 June 2007 31 December
2007
USD'000
USD'000 USD'000
Current
Bank overdrafts 5,154 - 3,856
Bank loan 128 - -
Hire purchase 295 148 219
5,577 148 4,075
Non-current
Bank loan 1,069 479 548
Hire purchase 480 325 951
1,549 804 1,499
7,126 952 5,574
Independent review report to Velosi Limited
We have been engaged by Velosi Limited to review the condensed financial information for the six months ended 30 June 2008 which
comprises the unaudited consolidated income statement, the unaudited consolidated balance sheet, the unaudited consolidated cash flow
statement, the unaudited consolidated statement of changes in shareholders' equity and related notes 1 to 14. We have read the other
information contained in the interim half-year report and considered whether it contains any apparent misstatements or material
inconsistencies with the condensed information.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 issued
by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state
to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.
Respective responsibilities of directors and auditors
The interim report, including the condensed financial information contained therein, is the responsibility of, and has been approved by,
the directors. The directors are responsible for preparing the interim report in accordance with the AIM Rules issued by the London Stock
Exchange, which requires that the interim report must be prepared and presented in a form consistent with that which will be adopted in the
Company's annual accounts having regard to the accounting standards applicable to such annual accounts.
Our responsibility is to express to the Company a conclusion on the condensed consolidated financial information in the interim report
based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United
Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial information
in the interim half-yearly report for the six month period ended 30 June 2008 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by European Union and the AIM Rules issued by the London Stock Exchange.
Mazars LLP
Chartered Accountants
London
22 September 2008
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAKNNFALPEFE
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