Velocys Investors - VLS

Velocys Investors - VLS

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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Velocys Plc VLS London Ordinary Share GB00B11SZ269 ORD 1P
  Price Change Price Change % Stock Price Last Trade
0.00 0.0% 6.20 16:35:22
Open Price Low Price High Price Close Price Previous Close
6.47 6.15 6.55 6.20 6.20
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Industry Sector
ALTERNATIVE ENERGY

Top Investor Posts

DateSubject
20/1/2021
23:01
mcmather: Interesting post on l s e which copied a response from Radnor Capital, Velocys' retained outside investor relations advisor, and which concluded: "Given the broader macro picture on the need to reduce aviation emissions, the outlook for Velocys remains positive despite yesterday's news. Yours sincerely"
18/1/2021
12:34
volsung: I wouldn't get involved in shorting if you don't already know how to do it. The best way for the retail investor is to open a spreadbet account
28/8/2020
08:09
cato the elder: Nice to know they are still thinking of us: "Finally, just a reminder that last week I published your August recommendation, Velocys (LSE:VLS). If by chance you’ve not seen the report, make sure you do. I set a wide buy-up-to price on the stock and on the Friday in trading ranged between 6.7p and 7.9p closing well under my buy-up-to price of 7.5p. That means there was ample opportunity throughout the Friday to find an entry to the stock under the buy-up-to price. This week it’s been up and over and back under the buy-up-to price, but continued to present multiple opportunities to enter the stock, which means we’re about on target with our buy-up-to price. I’ve used the open price of 6.78p for track record purposes, albeit I’m well aware everyone will have a different entry point within the buy-up-to range. And just one final thing, as to why I release the recommendations after the market close. I get a few emails (not loads, but a few) lambasting me for sending the recommendations after the market close. I do this because of the thousands of subscribers I have here at Frontier Tech Investor and I don’t expect that every single person will be refreshing their email at every minute of the day when we’re scheduled to release a new recommendation. If I were to send out a recommendation at 2pm, for example, then a bunch of subscribers might catch it right away, read it, and make their trades in the market. But there might be another batch that doesn’t get it until 4pm and then by the time they’ve had a chance to review it, the volatility has already kicked in. Perhaps you’re one of the people that gets to it hours after others have. The question is how would you feel if others had a chance to make a move on a recommendation hours before you did in the market? That’s why I release after market. I’ve decided that’s the fairest way to give everyone a chance to read the report in full, digest the information and then place a trade into the market at a price they’re comfortable with within our buy-up-to range. I know it’s not a perfect system, but it’s better and more fair than random releases of new recommendations during the market trading hours. Not everyone will agree with me on this process, but that’s the way it’s going to remain."
18/8/2020
08:54
cato the elder: Velocys plc (LSE:VLS) is your latest Frontier Tech Investor recommendation. Velocys is a technology company that has developed processing technology that’s able to turn waste into sustainable fuels for heavy goods transportation and aviation industries. It is listed on the London Stock Exchange with offices in Oxford, and Ohio and Houston over in the US. The stock is currently trading at a price of around 6.12p with a market capitalisation of around £65 million. Velocys has been in the news of late and has seen wild volatility in its stock because of its involvement in developing new sustainable fuels for aviation. However, it was an announcement on 12 June by the UK government which really sent a rocket up the backside of this small-cap star. ? During the Covid-19 daily briefing on 12 June, Grant Shapps, secretary of state for transport, announced a new “Jet Zero Council”. The Jet Zero Council will try to figure out how to, … decarbonise the aviation sector while supporting its growth and strengthening the UK’s position as a world leader in the sector. The members will look at how to work across their sectors to achieve these goals, including through brand new aircraft and engine technologies. These could include using new synthetic and sustainable aviation fuels as a clean substitute for fossil jet fuel, and eventually the development of electric planes. It was in the 12 June briefing however that Shapps said, “Our goal – within a generation – will be to demonstrate flight across the Atlantic, without harm to the environment. “And today we’re backing a company called Velocys who are building a plant for aviation biofuels in Lincolnshire.” This sent the Velocys stock price into overdrive. It went from around 5p to a high of 16.64p in a matter of days. Thankfully for us, in the weeks since, the stock price has wound off a lot of that excitement and the stock has now achieved a level where we’re ready to bring it into the portfolio for the huge potential its technology holds long term. As mentioned earlier, the airline industry isn’t going to pack up and go home. It’s here to stay and is a fundamental part of the fabric of modern society. However, it needs to undertake significant change to be sustainable, viable and “green” long term. The measures that are being put into place by global governments like the UK are a key step in making that happen. But it’s also companies like Velocys that will deliver it. Velocys use a process known as the Fischer-Tropsch process in their reactors to turn synthesis gas into liquid transport fuels. It describes the whole process as, “an integrated end-to-end process that converts solid wastes, first to synthesis gas and then to liquid transport fuels.” This isn’t some overnight success. The company was founded in 2001 and its first pilot plant in Australia was launched in 2010. Furthermore, the plans for a proposed waste-to-jet fuel plant in North East Lincolnshire were only submitted in August 2019. The good news, however, is that on ... it was an announcement on 12 June by the UK government which really sent a rocket up the backside of this small-cap star. ISSUE NO. 52 AUGUST 2020 4 20 May approval was given and then on 12 June, in conjunction with the statement from Shapps, the company also announced the following formal notice: … formal notice of the decision to grant planning permission for the Altalto Immingham plant has now been issued by North East Lincolnshire Council (NELC). That means its full steam ahead to develop this pioneering plant. The plant itself isn’t solely on the shoulders of Velocys either. It’s a Joint Development Agreement project with British Airways and Shell. This small-cap £65 million company working on a pioneering waste-to-jet fuel plant in North East Lincolnshire with £94 billion giant Shell and the UK’s major airline (owned by £4 billion giant IAG) British Airways. It’s a huge project, which I believe will be the catalyst for bigger things to come long term for Velocys. What’s important here is that we see this as the first of potentially many plants that Velocys will develop. One of the important pieces of news from Velocys, which has gone largely under the radar, was its attendance in October 2019 at the AIREG Berlin SAF Conference. It was there to discuss the potential for sustainable jet fuel produced from solid and waste biomass residues. CEO Henrik Wareborn noted in the news release that, A key benefit of the Velocys SPK fuel produced is that it meets the ASTM D7566 specification, so it is a “drop-in”; fuel at up to 50% blend into Jet A1 that requires no adaptation by the end user. This ability to “drop in” is key to ensuring that these new synthetic fuels don’t require the complete overhaul of existing aircraft systems. In the earlier mentioned sustainable fuel report from Airlines for America, it identifies the number one “Core Enabler for Airline Deployment of Sustainable Aviation Fuel” as, Equally safe and effective as petroleum-based jet fuels, meeting criteria so it may be “dropped in” to existing aviation fuelling infrastructure and aircraft. This is addressed through jet fuel specification ASTM D7566 and application of ? Source: Velocys ISSUE NO. 52 AUGUST 2020 5 with pioneering technology and early-stage development of the commercial fuel plants, the financials aren’t of the most critical importance right now. Nonetheless, it’s still worth considering to ensure that the company can deliver on this ambitious projects and go from being a small cap to a major player in the UK market. Its most recent numbers are from its 2019 annual report released just this week. And it doesn’t make for the most enticing reading. Revenues of £300,000, operating loss of £9.6 million, cash at end of period (31 December) of £4.8 million. As I say, it’s not a fundamental financial story here. It’s a company that’s going from research and development to tangible projects and development (with global players like Shell and BA). This transition phase isn’t going to necessarily deliver financial riches, but the anticipation is it will, which is why I’m bringing in the stock now. Both BA and Shell are contributing towards the Lincolnshire plant (£2.8 million in 2019 and another £1 million May 2020) and it’s received funding from the Department of Transport via the way of a grant for £500,000. So we’re not anticipating there will be issues in getting this built and operational. At the end of June the company was able to raise £20 million (upped from £10 million due to demand) so is quite heavily funded for what we would anticipate to be around two years considering the £9.8 million operating loss from 2019. From a financial perspective, I’m happy with the current position of the company. However, you should be aware that due to the transition from R&D to a commercially viable company, there still may be a situation where the company looks to the market again for another capital raise. We wouldn’t expect one soon considering one just completed. But it’s possible and as shareholders it has the potential to dilute your holdings should it again issue more stock for a raise. While our view is long term, it’s quite obvious that due to the coverage in June of the stock, it’s now somewhat of a more known stock around the market. This brings volume, which is great to get a position, but also brings the wider market volatility. We would expect that volatility will continue here. Ongoing news flow is important to keep the stock moving along – absence of developments or positive news may see a number of newer procedures to assure fuel quality is maintained. With Velocys able to meet this criteria, it opens the entire global aviation industry for its technology process and sustainable fuels. That’s what gives this small-cap UK pioneer such big long-term potential. It’s at the precipice of disrupting the entire global aviation fuel industry and it’s only just started its run. Financials and risks Now it’s important to recognise this is all pioneering technology and things are only just getting started now. The Lincolnshire plant has only just received approval and will still need to be built and tested before going into actual production. That’s why when commenting about the announcement from the government on 12 June, Wareborn made note the company and the plant, “…could be producing sustainable aviation fuel in commercial scale by the middle of this decade.” We see this as a long-term play but the gear in motion now could lift the company, and the stock price, in further anticipation of what’s coming in the next few years. And should it announce further development of other plants, for example in the US, it could see the stock price lift off (so to speak) again. With this being a long-term play, ? It’s at the precipice of disrupting the entire global aviation fuel industry and it’s only just started its run. ISSUE NO. 52 AUGUST 2020 6 shareholders looking to exit that aren’t taking a long view on this one as we are. Expect volatility and market risk while being in the stock. Still, considering the position of the company, its technology and the current push from industry and from government for a “Green Recovery”, Velocys is primed to ride this opportunity and I think deliver tremendous upside to shareholders. Buying instructions As noted, Velocys plc (LSE:VLS) is listed on the London Stock Exchange. The stock is currently trading at a price of around 6.12p with a market capitalisation of around £65 million. Average volume in the stock is around 16 million – which equates to roughly £1 million traded per day. I wouldn’t say it’s illiquid, but again our recommendation may shift the price of the stock a little higher after recommendation. As a reminder, we recommend sticking within our buy-up-to limits and not over bidding for the stock. Should it trade over the buy-up-to I’d suggest again being patient for an opportunity to enter the stock once the dust settles. I also recommend using a trailing stop-loss order to limit downside risk and to help lock away profits should we get to that point. Buy Velocys plc (LSE:VLS) the stock is currently trading at 6.12p with a market cap of £65 million. Buy up to 7.5p and set a trailing stop-loss order at 50% below entry price. Regards, Sam Volkering Editor, Frontier Tech Investor.
14/8/2020
09:05
wapper: EQT going to deliver a stellar return for investors IMO too but please DYOR.
25/6/2020
15:56
lyndon b: I am new to this game, so I'll openly admit to getting burned by the announcement this morning/late last night. 5p was a kick in the teeth versus where I had bought it and having a stop loss didn't help! In the statement "The company values its retail investor base"....let me mull that one over when it was trading at double the offer. They do have some revenue from selling the FT reactors to Red Rock and are selling their technology to Toyo too.....though I guess they need BA and Shell to commit (more). Fulcrum seem to have got out the blocks much quicker on close to the same technology in the US, but with 80bn gallons of jet fuel to be replaced there is room for competition. Owenski...appreciate your insight, just wish I had read some of your earlier posts!
13/6/2020
05:43
hiddendepths: I suspect the mad horde of green investors will descend on VLS like a pack of locusts at some point soon! Just look at Eqteq (EQT).
07/10/2019
14:08
spurious: Found this on my travels A welcome change and definitely a positive as PR has been dire. Surprised no announcement I suggest a visit to Radnor capital partners website as I see they are getting involved with bio industry as clients as well September 2019 Radnor Capital Partners Ltd. Radnor Capital Partners is pleased to announce that it will be working with Velocys plc. Velocys is a sustainable fuels company listed on the AIM market (LSE: VLS), developed from technology spin-outs of Oxford University (UK) and the Pacific Northwest National Laboratory (USA). The companyï¿;½s proven and proprietary technology solutions (based on the Fischer-Tropsch process) allow the production of advanced biofuels from sustainable carbon sources. Velocys is developing Europe�s first commercial waste to fuels plant, with British Airways and Shell as co-investors. ______________________________________________________ �Velocys is a global leader in providing tested technology solutions for sustainable fuels production from a variety of waste materials. The technology has been demonstrated and has been chosen for third party projects, in addition to the US and UK projects led by Velocys. We are excited to work with the team as the company moves into the next phase of commercialisation. We will be working closely with Velocys on their equity story and investor engagement to ensure the right message is being delivered to the most relevant investor audience. Radnor will act as the companyï¿;½s fully outsourced IR function. We believe Velocysï¿;½ model can be a game changer for aviation.� Joshua Cryer, Managing Partner Radnor Capital Partners Ltd ____________________________________________________ �We are delighted to be working with the Radnor team on our Investor Relations efforts. As we move into the next phase of commercialisation, delivering the next generation of sustainable fuels, we believe there is an exciting story for investors. We are uniquely well positioned to take advantage of the macro-trend of decarbonisation of fuels for aviation and heavy goods transport. The support from new and existing shareholders in July has put the Company on a firm footing, with �7m of equity raised and a further �2.8m of project funding committed from Shell and British Airways. We therefore look to the future with confidence.� Henrik Wareborn, CEO Velocys plc
24/9/2019
15:28
gac141: Velocys PLC Turner Pope investor evening 24/09/2019 3:24pm RNS Non-Regulatory TIDMVLS Velocys PLC 24 September 2019 News release (RNS Reach) Velocys plc ("Velocys" or "the Company") 24 September 2019 Turner Pope investor evening Velocys plc (AIM: VLS.L), is pleased to announce that Henrik Wareborn, the company's CEO, will be presenting his views on Velocys' role in the sustainable fuels industry, at an investor evening hosted by Turner Pope Investments (TPI) Ltd, on Monday 30(th) September 2019. The event will be held in London, EC2 and will commence at 5pm. To register their interest, investors are kindly requested to visit hxxps://www.turnerpope.com/contact/ and complete the registration form. For further information, please contact:
18/9/2019
07:11
kirk 6: Velocys PLC Interim resultsSource: UK Regulatory (RNS & others)TIDMVLSRNS Number : 6669MVelocys PLC18 September 2019News releaseVelocys plc("Velocys" or "the Company")18 September 2019Interim results for the six months ended 30 June 2019Velocys plc (VLS.L), the sustainable fuels technology company, is pleased to announce its interim results for the six months ended 30 June 2019.Henrik Wareborn, CEO of Velocys, said:"2019 has been a positive year for the Company. The demand for our Fischer Tropsch technology is growing on both sides of the Atlantic, which is why we have concentrated our efforts on project development and reactor manufacturing. These last six months have seen Velocys accelerate the move from concept to commercialisation - transitioning from research, development and testing, to focusing on commercial scale client delivery and operational excellence.We have delivered our first reactor and all catalyst charges to our client in Oregon (Red Rock Biofuels) and the manufacturing of the remaining reactors is advancing. We are now focusing all our efforts on commercial delivery - for our client in Oregon and for our two projects in Mississippi, USA (Bayou Fuels) and Immingham, UK (Altalto).None of this would have been possible without the recent support of our shareholders new and old along with the hard work and dedication that all our staff have put in to achieve the Company's goals. I would like to make a personal thanks to Dr Pierre Jungels for his guidance of the Company over the years that he has been Chairman and wish him well for the future."Operational Highlights: -- Good progress has been made in delivering the sustainable fuels strategy. -- The Bayou Fuels Mississippi project has been transformed during the period by changing the power source to solar and including CO2 capture, which has reduced the project's carbon intensity score, improving project returns significantly, creating an attractive differentiator for investment into this project.-- The Immingham UK project has completed all pre-FEED work (Front End Engineering and Design) and has submitted its planning application. Additional funding from our partners in the project, received post period end, has ensured that we can reach the FEED stage in the next few months.-- Delivery of one reactor and all the catalyst to our client Red Rock Biofuels in the period. Manufacture of the remaining reactors is underway.Financial Highlights:-- The commercial scale FT reactor demonstration in Oklahoma was safely and comprehensively concluded with complete decommissioning of the site, return of the two FT reactors to Velocys and sale of certain assets and return of the site to one of our JV partners for a total of 3.3m, which is now fully paid, with GBP1.7m paid during the period and GBP1.6m post period end. -- Revenue of GBP22,000 (H1 2018: GBP392,000). -- Operating loss of GBP5.2m, exceptional items of credit of GBP0.6m (H1 2018: GBP11.0m before exceptional items of GBP14.3m). -- Cash* at period end GBP1.3m (31 December 2018: GBP7.0m). -- H1 2019 cash outflow GBP5.1m (H1 2018: cash inflow GBP8.9m). -- Fund raise of approximately GBP7m (before expenses) in July 2019 (post-period end). -- Complementing commitments received by the Company from the Altalto Immingham waste-to-sustainable-fuels project's strategic partners, British Airways and Shell, of GBP2.8 million in total in July 2019 (post-period end).* Defined as cash, cash equivalents and short-term investments.Outlook-- The revised, truly renewable focused profile of the Bayou Fuels Mississippi project is aiding discussions with partners and investors to progress to the next stage of development.-- Advancing the Immingham UK project into FEED with industry partners Shell and British Airways and towards financial close in 2021 is a key objective. -- Delivery of the remaining reactors in 2019 to our client Red Rock Biofuels is underway. For further information, please contact: Velocys +44 1235 838 Henrik Wareborn, CEO 621 Numis Securities (Nomad and joint broker) Alex Ham Stuart Skinner Tom Ballard +44 20 7260 1000 Canaccord Genuity (Joint broker) Henry Fitzgerald-O'Connor James Asensio +44 20 7523 8000 Camarco (Financial communications & PR) Billy Clegg Tom Huddart +44 20 3757 4983 Field Consulting (General PR) +44 20 7096 Robert Jeffery 7730 Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) prior to its release as part of this announcement.www.velocys.comChairman's statementPierre Jungels, CBEThe new Executive team has re-positioned the Company to take advantage of the macro-trend of decarbonisation of fuels for heavy transport, for which we are uniquely well positioned. Velocys' two principal waste-to-fuels projects, our Altalto Immingham facility in the UK and our Bayou Fuels Mississippi facility in the US have taken crucial steps forward, gaining support from our industrial partners as well as support from new and existing shareholders.The Altalto project will be Europe's first commercial scale waste-to-fuels plant and will take household waste as feedstock to produce sustainable fuel for aircraft, whereas the Bayou Fuels project will produce sustainable fuels for heavy duty trucks and aviation from waste woody biomass.The support from shareholders enabled Velocys to carry out a successful fundraising of GBP7 million in July, underpinned by a further GBP2.8 million from Shell and International Airlines Group, the owner of British Airways.If we are to limit damaging global temperature rises and reach net zero emissions by the middle of the century, innovative and scalable solutions are urgently required. The recent fundraise was evidence of the growing appetite to invest in solutions that seek to overcome this challenge, by curbing carbon and particulate emissions in hard-to-decarbonise sectors.I am proud that Velocys has developed a proven, scalable technology for producing substantially lower-carbon and lower-emission heavy transportation fuels after recently completing commercial scale demonstrations in the US. Our facilities will take solid feedstocks - either waste woody biomass in the US or household and commercial waste in the UK - and convert it into sustainable fuel that can be used without adaptation in conventional combustion engines. Unlike agricultural plant based feedstocks, this will not require land use change. Indeed, the UK facility will divert waste from landfills so will have wider environmental benefits.As indicated at the Annual General Meeting, after thirteen years as Chairman and Director of Velocys, I will be retiring in December of this year. After proper due diligence we have decided to appoint Phil Holland, at present our Senior Independent Director (SID), as Chairman of the Board when I step down. Phil brings with him to the Chairman's position 40 years of experience in managing the front-end development, design/construction and start-up of major capital projects worldwide ensuring Velocys remains focused on capital discipline, and successful delivery of its US and UK projects. Darran Messem will become Chair of the Audit and Risk Committee with immediate effect, and Sandy Shaw will return to Chair the Remuneration Committee and, in December, also become the SID when Phil Holland becomes Chairman.Having been Chairman for the past thirteen years, I have seen Velocys develop, refine and demonstrate a technology solution that society will not be able to do without in a net zero world. We are now ready for full-scale commercialisation and production at a time when demand for our solution, from Government, industry and the wider public, is growing.I wish all of the Executives and you as the shareholders all the very best in these exciting times and would like to thank you for your support over the years.Dr Pierre JungelsChairmanChief Executive's ReportHenrik Wareborn2019 has been a positive year for Velocys. The demand for our Fischer Tropsch technology is growing on both sides of the Atlantic, which is why we have concentrated our efforts on project development and reactor manufacturing. These last six months have seen Velocys accelerate the move from concept to commercialisation - transitioning from research, development and testing and on to commercial scale client delivery and operational excellence.We have achieved this with zero hours lost due to Health, Safety, Social and Environmental (HSSE) issues. This is of paramount importance to me, which is why I have overseen a review and renewal of all our safety procedures as well as ensuring full Board disclosure of even the slightest near-miss incidents.Looking at client service, in Oregon, USA we have delivered our first reactor and all catalyst charges to our client Red Rock Biofuels (RRB) and the manufacturing of the remaining reactors is advancing. We are now focusing all our efforts on commercial delivery - for our client in Oregon and for our two projects in Mississippi, USA and Immingham, UK.In Mississippi, we have concentrated our efforts on driving down the carbon intensity of the project while significantly improving the expected returns. The facility will be supplied by 100% fossil-free feedstock in the form of waste woody biomass, the power supply will be 100% renewable, and the CO2 emissions from our conversion process will be captured and sequestered.The pre-Front End Engineering Design (FEED) learnings from this project were applied to the Altalto Immingham waste-to-fuels project, which significantly reduced the time and cost of the pre-FEED work, culminating in a validated planning application announced on 20 August. We expect to move into the FEED stage of the project in the next few months, subject to planning approval and funding commitments.None of this would have been possible without the dedicated support from our shareholders. As noted by the Chairman, we were delighted by the strong demand for our recent Placing on the London AIM market, in which existing and new shareholders participated extensively. In particular, we were pleased to invite major Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) investors in this round.We have completely re-designed our website, have decided to relocate our UK headquarters back to Oxford (in the Oxford Science Park) later this year and significantly upgraded our investor and public relations functions. Thanks to this, the announcement on the Immingham planning application attracted global media attention from the Sydney Morning Herald, to The New York Times, to Forbes in prominent editorial coverage.Given the transition we have made from concept to commercialisation, and the expenditure this has entailed, we are naturally not cash-flow positive. However, cash-inflows from operations and the recent successful Placing have been significant. In addition, our Administrative Expenses have reduced by more than half compared with H1 2018. For more detail on this, please see the Finance report below.I continue to be impressed on a daily basis by the dedication and ingenuity of the transatlantic Velocys team, formed from two research organisations in the USA and UK over ten years ago.There are undoubtedly challenges ahead but I am confident that activity so far this year has laid the firm foundations which will enable Velocys to become a global leader in delivering technology solutions for the next generation of sustainable transport fuels.Financial reviewRevenuesThe company recognised revenue of GBP22,000 (H1 2018: GBP392,000). The revenue was primarily from the provision of engineering services and Catalyst lease revenue related to the ENVIA agreement.On 1 January 2018, the Company adopted IFRS 15. In accordance with guidance in IFRS 15, most of the revenues of RRB will be recognised in future periods, as discussed in notes 5 and 12 to the accounts.Operating losses were GBP5.2m before exceptional items of credit of GBP0.6m (H1 2018: GBP11.0m before exceptional items of GBP14.3m). The decrease in operating loss is principally the result of a decrease in administrative expenses period over period.Expenses and incomeAdministrative expenses before exceptional items reduced to GBP5.2m before exceptional items of credit GBP0.6m (H1 2018: GBP11.2m before and GBP25.5m after exceptional items). The reduction is principally the result of reduced spending on overhead, consulting costs and the development of the Mississippi Biorefinery Project.Other expenses were (GBP29k) (H1 2018: income GBP75k). This was principally the net result of a sale of equipment of GBP82k from the Oklahoma Project and lease interest expense (GBP111k) associated with IFRS 16.Assets and cashThe net assets of the Company were GBP628,000 at 30 June 2019 (31 December 2018: GBP5.4m). The decrease was principally the result of cash spent on the development of the Immingham UK waste-to-sustainable-fuels project; testing and analysis work on the Fischer-Tropsch reactors and the catalyst from the recently completed full-scale demonstration run in Oklahoma; completing the development capital fund-raising and initial stages of development of the Front End Engineering Design (FEED) for the Mississippi Biorefinery Project.The Company used GBP5.8m cash in operations (H1 2018: GBP6.0m) principally in the pursuit of the commercial projects as set out above, which has driven the net loss of the Group. The Company had a GBP295,000 increase in deferred revenue (H1 2018: GBP3.8m) principally as a result of the delivery of catalyst and a reactor in accordance with the agreements with Red Rock Biofuels LLC. The Company continues to carefully manage its underlying cost base and spend prudently on the implementation of its strategic projects.The company incurs much of its expenses in US dollar and has exposure to the US dollar exchange rate. This is hedged to the extent possible by holding cash reserves in US dollars. In addition, the majority of the Company's income is invoiced in US dollars.ImpairmentNo impairment was recorded as of 30 June 2019. In June 2018, the Company recorded an impairment of GBP14.3m with respect to the loan to ENVIA and GBP0.9m with respect to the investment into ENVIA.Fundraises -- No fund raises were completed during the period to 30 June 2019. -- In July 2019 Velocys raised a total of GBP7.0m (before expenses). We have received strong support from existing and new institutional investors.-- This complements the commitments by Shell and British Airways to co-fund the remaining pre-FEED project work to bring the Immingham UK waste-to-sustainable-fuels project to the same state of pre-FEED completion as our Mississippi Biorefinery Project.Net proceeds of the capital raising are being used to:-- Complete the development capital fund raising and preparation of the FEED for the Mississippi Biorefinery Project; -- Strengthen and extend the Company's intellectual property portfolio; -- Analyse and test catalyst and Fischer-Tropsch reactors from the recently completed full-scale demonstration in Oklahoma; and -- Fund the Company's working capital and central operating costs. Future funding requirementsAs discussed in note 1 below, the Company has prepared these statements on a going-concern basis although its forecasts show that the Company requires additional external funding within the 12-month forecast period to be able to continue as a going concern.Henrik WarebornChief Executive OfficerConsolidated income statementfor the six months ended 30 June 2019 6 months 6 months 6 months 6 months 6 months 6 months ended ended ended ended ended ended 30 June 30 June 30 June 30 June 30 June 30 June 2019 2019 2019 2018 2018 2018 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Before Exceptional Before Exceptional exceptional items exceptional items Note items (note 3) Total items (note 3) Total --------------------- ----- ------------- ------------- ------------- ------------- ------------- ------------- Revenue 5 22 - 22 392 - 392 Cost of sales (8) - (8) (281) - (281) --------------------- ----- ------------- ------------- ------------- ------------- ------------- ------------- Gross profit 14 - 14 111 - 111 Administrative expenses (5,203) 577 (4,626) (11,191) (14,281) (25,472) Other (expense)/income (29) - (29) 75 - 75 --------------------- ----- ------------- ------------- ------------- ------------- ------------- ------------- Operating loss (5,218) 577 (4,641) (11,005) (14,281) (25,286) Share of loss of investments accounted for using the equity method - - - (1,674) (861) (2,535) --------------------- ----- ------------- ------------- ------------- ------------- ------------- ------------- Loss before net finance (costs)/income (5,218) - (4,641) (12,679) (15,142) (27,821) Finance income 6 20 - 20 2,792 - 2,792 Finance costs - - - (7) - (7) --------------------- ----- ------------- ------------- ------------- ------------- ------------- ------------- Net finance income 20 - 20 2,785 - 2,785 --------------------- ----- ------------- ------------- ------------- ------------- ------------- ------------- Loss before income tax (5,198) 577 (4,621) (9,894) (15,142) (25,036) Income tax credit 286 - 286 170 - 170 --------------------- ----- ------------- ------------- ------------- ------------- ------------- ------------- Loss for the financial year attributable to the owners of Velocys plc (4,912) 577 (4,335) (9,724) (15,142) (24,866) --------------------- ----- ------------- ------------- ------------- ------------- ------------- ------------- Loss per share attributable to the owners of Velocys plc Basic and diluted loss per share (pence) 7 (1.20) (1.06) (2.94) (7.53) --------------------- ----- ------------- ------------- ------------- ------------- ------------- ------------- Consolidated statement of comprehensive incomefor the six month ended 30 June 2019 6 months 6 months 6 months 6 months 6 months 6 months ended ended ended ended ended ended 30 June 30 June 30 June 30 June 30 June 30 June 2019 2019 2019 2018 2018 2018 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 -------------- ------------- ------------- ------------- ------------- ------------- Before Exceptional Before Exceptional exceptional items exceptional items (note items 3) Total items (note 3) Total --------------------------- -------------- ------------- ------------- ------------- ------------- ------------- Loss for the year (4,912) 577 (4,335) (9,724) (15,142) (24,866) --------------------------- -------------- ------------- ------------- ------------- ------------- ------------- Other comprehensive (expense)/income Items that may be reclassified to the income statement in subsequent periods Foreign currency translation differences (475) - (475) (1,695) - (1,695) --------------------------- -------------- ------------- ------------- ------------- ------------- ------------- Total comprehensive (expense)/income for the year attributable to the owners of Velocys plc (5,387) 577 (4,810) (11,419) (15,142) (26,561) --------------------------- -------------- ------------- ------------- ------------- ------------- ------------- Consolidated statement of financial positionas at 30 June 2019 30 June 2019 31 December 2018 (unaudited) (audited) Note GBP'000 GBP'000 -------------------------------------- ---- ----- -------------- ------------ Assets Non-current assets Intangible assets 8 499 357 Property, plant and equipment 2,940 1,819 Trade and other receivables 9 - 281 3,439 2,457 ------------------------------------------- ----- -------------- ------------ Current assets Inventories 10 2,842 1,438 Trade and other receivables 9 3,119 4,404 VAT tax asset 160 862 Cash and cash equivalents 1,278 6,964 -------------------------------------------- ----- -------------- ------------ 7,399 13,668 ------------------------------------------- ----- -------------- ------------ Total assets 10,838 16,125 -------------------------------------------- ----- -------------- ------------ Liabilities Current liabilities Trade and other payables (765) (3,018) Borrowings (145) (289) Other liabilities 11 (3,283) (2,092) Deferred revenue 12 (4,554) (579) -------------------------------------------- ----- -------------- ------------ (8,747) (5,978) ------------------------------------------- ----- -------------- ------------ Non-current liabilities Lease liability 14 (509) (90) Deferred revenue 12 (954) (4,634) -------------------------------------------- ----- -------------- ------------ (1,463) (4,724) ------------------------------------------- ----- -------------- ------------ Total liabilities (10,210) (10,702) -------------------------------------------- ----- -------------- ------------ Net assets 628 5,423 -------------------------------------------- ----- -------------- ------------ Capital and reserves attributable to owners of Velocys plc Called up share capital 1,913 1,913 Share premium account 182,208 182,208 Merger reserve 369 369 Share-based payments reserve 16,158 16,143 Foreign exchange reserve 3,076 3,551 Accumulated losses (203,096) (198,761) -------------------------------------------- ----- -------------- ------------ Total equity 628 5,423 -------------------------------------------- ----- -------------- ------------ The financial statements were approved by the Board of directors and authorised for issue on 18 September 2019. They were signed on its behalf by:Henrik WarebornChief Executive OfficerCompany number 05712187Consolidated statement of changes in equityfor the six months ended 30 June 2019 Called Share Convertible Share-based Foreign up share premium Merger loan/'other' payment exchange Accumulated Total capital account reserve reserve reserve reserve losses equity GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 --------------- ---------- --------- --------- ------------- ------------ ---------- ------------ --------- Balance at 1 January 2018 1,468 149,964 369 9,421 16,085 2,654 (167,550) 12,411 ---------------- ---------- --------- --------- ------------- ------------ ---------- ------------ --------- Loss for the year - - - - - - (30,583) (30,583) Other comprehensive expense Foreign currency translation differences - - - - - 897 - 897 ---------------- ---------- --------- --------- ------------- ------------ ---------- ------------ --------- Total comprehensive expense - - - - - 897 (30,583) (29,686) ---------------- ---------- --------- --------- ------------- ------------ ---------- ------------ --------- Transactions with owners Share-based payments - value of employee services - - - - 58 - - 58 Proceeds from share issues 243 22,397 - - - - - 22,640 Convertible loan notes 180 8,820 - (9,000) - - - - Interest on convertible loan note 22 1,027 - (421) - - (628) - ---------------- ---------- --------- --------- ------------- ------------ ---------- ------------ --------- Total transactions with owners 445 32,244 - (9,421) 58 - (628) 22,698 ---------------- ---------- --------- --------- ------------- ------------ ---------- ------------ --------- Balance at 1 January 2019 1,913 182,208 369 - 16,143 3,551 (198,761) 5,423 ---------------- ---------- --------- --------- ------------- ------------ ---------- ------------ --------- Loss for the year - - - - - - (4,335) (4,335) Other comprehensive expense Foreign currency translation differences - - - - - (475) - (475) ---------------- ---------- --------- --------- ------------- ------------ ---------- ------------ --------- Total comprehensive expense 1,913 182,208 369 - 16,143 3,076 (203,096) 613 ---------------- ---------- --------- --------- ------------- ------------ ---------- ------------ --------- Transactions with owners Share-based payments - value of employee services - - - - 15 - - 15 Total transactions with owners - - - - 15 - - 15 ---------------- ---------- --------- --------- ------------- ------------ ---------- ------------ --------- Balance at 30 June 2019 1,913 182,208 369 - 16,158 3,076 (203,096) 628 ---------------- ---------- --------- --------- ------------- ------------ ---------- ------------ --------- Consolidated statement of cash flowsfor the six months ended 30 June 2019 6 months ended 30 June 6 months 2019 ended (unaudited) 30 June 2018 (unaudited) Note GBP'000 GBP'000 ------------------------------------------------------ ----- -------------- -------------- Cash flows from operating activities Operating loss (4,335) (25,036) Depreciation and amortisation 8 344 137 Loss on disposal of intangible assets - 422 Impairment of assets - 15,142 Impairment of loan to associate ENVIA 9 - - Amortisation of leased inventory - 33 Share-based payments 15 15 Changes in working capital (excluding the effects of exchange differences on consolidation) Trade and other receivables (255) (1,511) Trade and other payables (322) 1,125 Altalto Liability 11 (1,143) - Deferred revenue 12 295 3,827 Inventory (693) (310) ------------------------------------------------------ ----- -------------- -------------- Cash consumed by operations (6,094) (6,156) Tax credits received 286 170 ------------------------------------------------------ ----- -------------- -------------- Net cash used in operating activities (5,808) (5,986) ------------------------------------------------------ ----- -------------- -------------- Cash flows from investing activities Purchase of property, plant and equipment (453) (63) Purchase of intangible assets 8 (211) (136) Payment from/(loan to) associate ENVIA 1,681 (3,773) Equity investment in ENVIA 9 - 1,674 Interest received 6 20 - Net generated from/(cash used) in investing activities 1,037 (2,298) ------------------------------------------------------ ----- -------------- -------------- Cash flows from financing activities Proceeds from issues of shares and convertible loan notes - 17,322 Interest paid (101) (5) Principle element of lease payments (124) - Repayment of borrowings (144) (131) ------------------------------------------------------ ----- -------------- -------------- Net cash (used in)/generated from financing activities (369) 17,186 ------------------------------------------------------ ----- -------------- -------------- Net (decrease)/increase in cash and cash equivalents (5,140) 8,902 Cash and cash equivalents at beginning of year 6,964 2,070 Exchange movements on cash and cash equivalents (546) (2,310) ------------------------------------------------------ ----- -------------- -------------- Cash and cash equivalents at end of period 1,278 8,662 ------------------------------------------------------ ----- -------------- -------------- Notes to the unaudited interim financial statementsFor the six months ended 30 June 20191. General information, basis of preparation and accounting policiesVelocys plc operates through a number of subsidiaries in the UK and the US, and collectively they are referred to in these unaudited interim financial statements as the "Company" or "Velocys", with Velocys plc as "Velocys plc" or the "parent company".The unaudited interim financial statements have not been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union (IFRSs as adopted by the EU), IFRS Interpretations Committee Interpretations, or the Companies Act 2006 applicable to companies reporting under IFRS and Article 4 of the IAS Regulation. They do not include all the statements required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Company as at 31 December 2018.Accounting policiesThe unaudited interim financial statements have been prepared using the same accounting policies adopted in the Company's financial statements for the year ended 31 December 2018, except as described below.One new standard has been adopted for the first time for the current period, IFRS 16 "Leases". The Company has updated its accounting policies to reflect the impact of this standard, which has not resulted in a restatement of prior period comparatives.Items included in the unaudited interim financial statements of each of the Company's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in sterling (GBP).Judgements and estimatesIn preparing these unaudited interim financial statements, the significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were as stated within the consolidated financial statements for the year ended 31 December 2018, except for IFRS 16 "Leases". See note 14.Going concernThe unaudited interim financial statements have been prepared on the going concern basis, which assumes that the Company will have sufficient funds available to enable them to continue to trade for the foreseeable future.The Company expects to develop its projects, in particular, progressing the Mississippi biorefinery and the Immingham UK waste-to-renewable jet fuel projects, which will require significant development and capital expenditure.The nature of the Company's strategy means that the timing of milestones and funds generated from developments are difficult to predict. The directors have prepared financial forecasts to estimate the likely cash requirements of the Company over the next 12 months from the date of approval of the financial statements.The forecasts show that the Company requires additional external funding within the 12-month forecast period to be able to continue as a going concern. The directors anticipate that this will come from one, or a combination of, the following three sources, with agreements being actively sought from third parties:-- Strategic investment of development capital into both the Mississippi biorefinery and Immingham UK waste-to-renewable jet fuel projects. -- Placement of Company ordinary shares, which may occur within the next twelve (12) months. -- Additional third-party licence sales, such as the Red Rock Biofuels project. The Directors are confident that the funding required for the Company and Velocys plc to continue as a going concern will be raised and have therefore prepared the financial statements on a going concern basis.However, as at the date of approval of the unaudited interim financial statements no additional funding is committed beyond the GBP2.8m additional investment into the Immingham UK waste-to-renewable jet fuel project by our partners BA and Shell and the GBP7m fundraise announced and received in August 2019. Should additional funding not be secured, the Company would not be a going concern. As such, these conditions indicate the existence of a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern.The unaudited interim financial statements do not include the adjustments that would arise if the Company and Velocys plc were unable to continue as a going concern.Accounting developmentsThe Company has applied IFRS 16 "Leases" for the first time for the annual reporting period commencing 1 January 2019.IFRS 16 was issued in January 2016. It will result in almost all leases being recognized on the balance sheet by lessees, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use leased item) and a financial liability to pay rents are recognised. The only exceptions are short-term and low-value leases. The impact of the adoption of IFRS 16 is further detailed in Note 14.2. Publication of non-statutory accountsThe unaudited interim financial statements presented in this document have not been audited or reviewed and do not constitute Group statutory accounts as defined in section 434 of the Companies Act 2006. Group statutory accounts for the year ended 31 December 2018 were approved by the Board of Directors on 14 May 2019 and delivered to the Registrar of Companies. The comparative figures for the year ended 31 December 2018 have been derived from the statutory accounts for that year. The auditors' report on those accounts, which was not modified, drew attention to the adequacy of the disclosure made in the financial statements concerning Velocys' ability to continue as a going concern, under section 498(2) or (3) of the Companies Act 2006.3. Exceptional itemsItems that are significant by virtue of their size or nature, which are considered non-recurring and which are excluded from the underlying profit measures used by the Board of Directors to monitor and measure the underlying performance of the Company are classified as exceptional operating items. Exceptional operating items are included within the appropriate consolidated income statement category but are highlighted separately in the notes to the financial statements.The following exceptional items have been included in the consolidated income statement. 6 months 6 months ended ended 30 June 30 June 2018 2019 (unaudited) (unaudited) GBP'000 GBP'000 -------------------------------------------------- ---- ------------- ------------- Administrative expenses: ENVIA loan provision - (14,281) Reversal of deferred revenue from ENVIA 577 577 (14,281) Impairment in carrying value of equity accounted associate - (861) 577 (861) ------------------------------------------------------- ------------- ------------- Total 577 (15,142) -------------------------------------------------------- ------------- ------------- 4. Segmental informationBusiness segmentsAt 30 June 2019 the Company is organised as a world-wide business comprising a single segment.Geographic segmentsThe Company's business operates in three main geographical areas. Revenue is allocated based on the country in which the customer is located. 6 months 6 months ended 30 June ended 2019 (unaudited) 30 June 2018 (unaudited) GBP'000 GBP'000 --------------- ---- -------------------- -------------- Europe - 134 Americas 22 247 Asia Pacific - 11 --------------------- -------------------- -------------- Total revenue 22 392 --------------------- -------------------- -------------- Revenue recognised during the six months ended 30 June 2019 is related to catalyst leasing and engineering services.5. RevenueThe Company generates revenue through contracts in which it (i) sells Fischer-Tropsch reactors, (ii) leases or sells Fischer-Tropsch catalyst, (iii) provides license agreements and (iv) performs engineering services. In general, contracts with the Company provide a license agreement for the use of its intellectual property associated with the catalyst, which is used in specifically designed reactors. The majority of the Company's revenue is derived from a small number of significant commercial customers and development partners.Determining whether the services provided are considered distinct performance obligations can require significant judgment. The Company's agreements, in some instances, could have a single performance obligation which would result in the deferral of revenue until the performance obligation is satisfied. This is the case when the entity promises an integrated package of services and where the customer is receiving a combined output (for example, an engineering service that results in operational technology at a particular site). In other instances, there will be no integration service and each good or service will be considered separately.When there are multiple performance obligations, revenue is allocated to the respective performance obligations based on relative transaction prices and is recognised as services are delivered to the customer or in some instance, as when the catalyst is leased, revenue is recognised over the estimated life of the catalyst. Revenue is measured as the amount of consideration expected to be received in exchange for the services delivered.Revenue is recognised when the Company satisfies a performance obligation by transferring promised goods or services to a customer. Otherwise, the sales income related to sales of catalyst will be recognised as the performance obligations are satisfied. Revenue from engineering services is earned on a time and materials basis and is recognised as the work is performed.If the entity is providing a single performance obligation in the form of an integrated set of activities, each contract is assessed to determine if it meets the criteria for recognition over time. This would require the contract to either transfer control of the combined output over time or for the entity to have an enforceable right of payment for the performance completed to date for activities that do not create an asset with alternative use. In 2018, there is one contract that has been assessed as a combined performance obligation and it was determined that none of these criteria are met. As such, all consideration received has been deferred and revenue will be recognised when the final project is completed and control is transferred to the customer.Contract modifications are accounted for prospectively or as a cumulative catch-up adjustment depending on the nature of the change. Revenue from engineering services is recognised as services are delivered to the customer. 6 months 6 months ended ended 30 June 2019 30 June (unaudited) 2018 (unaudited) GBP'000 GBP'000 ---------------------------------- -------------- ------------------ FT reactor, catalyst and licence - 247 Engineering services 22 145 ----------------------------------- -------------- ------------------ Total 22 392 ----------------------------------- -------------- ------------------ 6. Finance income 6 months 6 months ended ended 30 June 2019 30 June 2018 (unaudited) (unaudited) GBP'000 GBP'000 ---------------------------------- ---- -------------- ------------- Interest income on bank deposits 20 23 Interest on loan to associate - 533 Foreign exchange gains - 2,236 ---------------------------------------- -------------- ------------- Total 20 2,792 ---------------------------------------- -------------- ------------- In 2018, the Company stopped recognising interest on loan to associate as a result of the impairment of the investment in ENVIA.7. Loss per shareThe basic loss per share is calculated by dividing the loss attributable to owners of the parent company by the weighted average number of ordinary shares in issue during the year. 6 months 6 months ended ended 30 June 30 June 2019 2018 (unaudited) (unaudited) -------------------------------------------- ---- ------------- ------------- Loss attributable to owners of Velocys plc (GBP'000s) (4,335) (24,866) Weighted average number of ordinary shares in issue ('000) 410,423 330,323 -------------------------------------------------- ------------- ------------- Basic and diluted loss per share (pence) (1.06) (7.53) -------------------------------------------------- ------------- ------------- 8. Intangible assetsPatents, licences and trademarksPatents and trademarks are recorded at cost less accumulated amortisation and impairment losses. Amortisation is charged on a straight-line basis over a period of 20 years, which is their estimated useful economic life. Residual values and useful lives are reviewed annually and adjusted if appropriate. In the period to 30 June 2019, the Company did not abandon any non-core patents (H1 2018: GBP422,000 was recorded as a loss on disposal).SoftwarePurchased software is recorded at cost less accumulated amortisation and impairment losses. Amortisation is charged on a straight-line basis over its estimated useful life of three years.ImpairmentIntangible assets are reviewed for impairment annually and whenever events or changes in circumstances indicate their carrying value may not be recoverable. To the extent carrying value exceeds recoverable amount, the difference is recognised as an expense in the income statement. The recoverable amount used for impairment testing is the higher of value in use and fair value less costs of disposal. For the purpose of impairment testing, assets are generally tested individually or at a Cash Generating Unit (CGU) level which represents the lowest level for which there are separately identifiable cash inflows that are largely independent of cash inflows from other assets or groups of assets. The Company has one CGU on the basis that the key end-use market is that of synthetic fuels production. At this stage, the synthetic fuels segment represents 100% of the business and therefore represents the only material segment. Based on management's judgement, all products and services offered within the operating segment have similar economic characteristics.An impairment loss in respect of Goodwill is not reversed. An impairment loss in respect of intangible assets (excluding Goodwill) is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the loss was recognised, or if there has been a change in the estimate used to determine the recoverable amount. A loss is reversed only to the extent that the asset's carrying amount does not exceed that which would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.Were the fair value of the business to change in the coming 12 months, due to an increase or further decrease in the market capitalisation of Velocys plc, the impairment disclosed in this note would be reversed or the Company's assets would be further impaired accordingly. The Company did not impair its intangibles for the six months ended 30 June 2019. The table below presents a rollforward of intangible assets. Patents, licence In-process and Goodwill technology trademarks Software Total 6 months ended 30 June 2019 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ----------------------------------------- --------- ----------- ----------- --------- -------- Cost At 1 January 2019 7,398 23,681 1,580 96 32,755 Additions - - 206 - 206 Foreign exchange movement - - 5 - 5 ----------------------------------------- --------- ----------- ----------- --------- -------- At 30 June 2019 7,398 23,681 1,791 96 32,966 ----------------------------------------- --------- ----------- ----------- --------- -------- Accumulated amortisation and impairment At 1 January 2019 7,398 23,681 1,223 96 32,398 Charge for the year - - 67 - 67 Foreign exchange movement - - 2 - 2 ----------------------------------------- --------- ----------- ----------- --------- -------- At 30 June 2019 7,398 23,681 1,292 96 32,467 ----------------------------------------- --------- ----------- ----------- --------- -------- Net book amount At 30 June 2019 - - 499 - 499 ----------------------------------------- --------- ----------- ----------- --------- -------- Patents, licence In-process and Goodwill technology trademarks Software Total 31 December 2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 --------------------------- --------- ----------- ----------- --------- -------- Cost At 1 January 2018 7,398 23,681 2,159 96 33,334 Additions - - 349 - 349 Disposals - - (956) - (956) Foreign exchange movement - - 28 - 28 --------------------------- --------- ----------- ----------- --------- -------- At 31 December 2018 7,398 23,681 1,580 96 32,755 --------------------------- --------- ----------- ----------- --------- -------- Accumulated amortisation and impairment At 1 January 2018 7,398 23,681 1,404 96 32,579 Charge for the year - - 96 - 96 Disposals - - (329) - (329) Foreign exchange movement - - 52 - 52 --------------------------- --------- ----------- ----------- --------- -------- At 31 December 2018 7,398 23,681 1,223 96 32,398 --------------------------- --------- ----------- ----------- --------- -------- Net book amount At 31 December 2018 - - 357 - 357 --------------------------- --------- ----------- ----------- --------- -------- 9. Trade and other receivablesTrade receivables represent assets that are held for collection of contractual cash flows and those cash flows represent solely payments of principal and interest. Other receivables consist of vendor deposits, deferred costs associated with an ongoing project or tax receivables from VAT refunds or R&D Tax credits. Loan receivable represents the outstanding loan and related interest associated with the loan to ENVIA. The interest receivable associated with the ENVIA loan is calculated using the effective interest rate method. The Company's trade receivables and loan receivable are classified and measured at amortised cost. 30 June 31 December 2019 2018 (unaudited) (audited) GBP'000 GBP'000 ------------------------------------------- ---- -------------- ------------- Trade and other receivables - non-current - 281 Trade and other receivables - current 1,326 930 Loan receivable 1,793 3,474 ------------------------------------------------- -------------- ------------- Total 3,119 4,685 ------------------------------------------------- -------------- ------------- The Company applies the IFRS 9 simplified approach to measuring expected credit loss ("ECL"), which uses a lifetime expected loss allowance for trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. As part of the ECL analysis, it was noted that trade receivables are considered to be both short term and low credit risk and as such any provision would be trivial.Under the general approach, the Company recognises a loss allowance on either a 12-month ECL or lifetime ECL. IFRS 9 prescribes three stages related to impairments. In stage 1, a 12 month ECL is recorded as a result of probability of default possible within the next 12 months. In stage 2, a lifetime ECL is recorded if a loan's credit risk has significantly increased since initial recognition and is not considered low. In stage 3, a lifetime ECL is recorded if a loan's credit risk increases to the point where it is considered credit-impaired. The changes in loss allowance balances are recognised in profit and loss as an impairment gain or loss. For credit exposure where there have not been significant increases in credit risk since initial recognition, a 12-month ECL is required. For credit exposure where there have been significant increases in credit risk since initial recognition, a lifetime ECL is required.As required by IFRS 9, the Company determined that the ENVIA receivable at 1 January 2018 was credit-impaired (stage 3) based on management's view of the current and expected circumstances, requiring the Company to calculate a lifetime ECL. Based on the analysis performed, an adjustment of GBP2,274,000 was made to reflect the lifetime expected credit loss against this receivable. At 31 December 2018 a further review of the IFRS 9 ECL analysis for its loan with ENVIA was performed. Based on the 2018 year end ECL analysis, the company recorded an additional impairment on a lifetime ECL basis of GBP10,067,000.Presented below is the loan receivable balance as at 30 June 2019. Amortised Costs (unaudited) GBP'000 -------------------------------- ---------------- 1 January 2019 3,474 Payments received against loan (1,681) 30 June 2019 1,793 Impairment losses are presented in administrative expenses in the consolidated income statement. 10. Inventories Inventories are stated at the lower of cost or net realisable value less provision for impairment. Cost is determined on a first-in, first-out basis and includes transport and handling costs. In the case of manufactured products, cost includes all direct expenditure including production overheads. Where necessary, provision is made for obsolete, slow-moving and defective inventories. Items purchased for use in externally funded research and development projects are expensed to that contract immediately. Items held for the Company's own development are also expensed when acquired. Items purchased for ongoing commercial sale are held in inventory and expensed when used or sold. 30 June 31 December 2019 2018 (unaudited) (audited)
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