REG - Velocys PLC - Interim results for the 6 months ended 30 June 16 <Origin Href="QuoteRef">VLSV.L</Origin> - Part 2

VelocysAnnouncement

26/09/2016 07:05

- Part 2: For the preceding part double click  ID:nRSZ7407Ka 

Pence       Loss£'000  Number          Pence       
                                                     of shares'000                per share                               of shares'000   per share              of shares'000   per share   
 Basic & fully diluted  (3,894)                      142,748                      (2.73)                       (12,043)   141,910         (8.49)      (20,051)   141,915         (14.13)     
 
 
8.      Foreign currency translation 
 
The foreign currency translation differences included in the Consolidated
statement of 
 
comprehensive income primarily related to differences arising on the
translation into pounds sterling of a) the Company's net investment in
Velocys, Inc. whose assets and liabilities are denominated in US dollars, and
b) goodwill and fair value adjustments arising from the acquisition of
Velocys, Inc. in 2008 which are also denominated in US dollars. 
 
9.    Investments 
 
                       6 months           6 months           Year ended       
                       ended              ended              31 December      
                       30 June 2016       30 June 2015       2015             
                       (unaudited)£'000   (unaudited)£'000   (audited)£'000   
 Investment in ENVIA:                                                         
 At 1 January          3,375              1,711              1,711            
 Investment            1,805              901                1,535            
 Share of loss         (207)              -                  -                
 Negative goodwill     3,431              -                  -                
 Foreign exchange      718                (49)               129              
                       9,122              2,563              3,375            
 
 
Velocys' holding in ENVIA is the one item in Investments. In 2014 the Company
entered into a joint venture with other partners to develop GTL plants using a
combination of renewable biogas (including landfill gas) and natural gas. At
31 December 2015, the investment was recorded at cost, which was also
considered to be fair value. At this date, the investment was considered to be
an investment held for sale. 
 
On 29 January 2016, Velocys entered into an additional financing arrangement
with ENVIA under which the Company committed to provide loan financing. Under
the terms of this arrangement, Velocys was awarded additional voting rights in
ENVIA, which was recognised by an additional allocation of equity capital in
ENVIA to Velocys. As a result of this additional equity, Velocys' share in
ENVIA voting rights exceeded 20% and from this point, the investment has been
recognised as an investment in an associate and accounted for under the equity
method of accounting. The additional equity allocation gave rise to a negative
goodwill balance of £3,431,000, which has been treated as an exceptional item
in the income statement. Velocys share of losses of ENVIA since 29 January
2016 have been reflected in the consolidated income statement. These losses
arise from administration costs incurred by ENVIA ahead of the start-up of its
first GTL plant. The investment is denominated in US dollars. 
 
Under the terms of the loan agreement, Velocys has committed to provide up to
US$9,310,000 to ENVIA through a senior loan note bearing a 10% interest rate
due on 31 December 2019 with an optional extension to 31 December 2020 with
prior notice. As at 30 June 2016, no draw down on this facility had been made
by ENVIA. 
 
10.    Post-financial position events 
 
Significant progress was made on the ENVIA project between the end of H1 2016
and the date of this announcement. Completion of construction of the plant was
announced on 21 September. Readers can refer to the business update of 7 July
2016 for a summary of the status of the ENVIA project (and other projects) at
the end of H1 2016. 
 
Non-executive Director Dr Jan Verloop stepped down from the Board on 20
September 2016. 
 
This information is provided by RNS
The company news service from the London Stock Exchange