At £10.3m, half-year operating losses for Velocys (VLS) were 30 per cent wider than last year. But the financial numbers are of secondary importance to events post period-end, which have significantly strengthened the investment case for the gas-to-liquids (GTL) specialist.
The first commercial plant using the group’s proprietary GTL technology has moved into construction phase, while a successful placing in late September has reinforced the balance sheet to the tune of £52m. The funds raised will provide sufficient capital for further commercial roll-out through to first liquid delivery in 2016 at the Oklahoma plant, which is being developed through a joint venture involving Waste Management, NRG Energy and Ventech. The GTL technology will be used to convert a combination of landfill (biomass) and natural gas.
During the period, Velocys also acquired Pinto Energy, a GTL project developer that is working on a 2,800 barrel per day GTL plant in the US. According to chief executive Roy Lipski, Velocys has “the largest patent portfolio of its kind”. The group’s intellectual property received a boost last month when the UK High Court ruled in its favour in a patent infringement case Velocys brought against CompactGTL.
| VELOCYS (VLS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 228p | MARKET VALUE: | £268m | |
| TOUCH: | 227-229p | 12-MONTH HIGH: | 249p | LOW: 124p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 35p* | NET CASH: | £17m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 1.7 | 0.6 | -6.1 | nil |
| 2014 | 1.0 | -0.2 | -8.7 | nil |
| % change | -45 | - | - | - |
*Includes intangible assets of £26.9m, or 23p a share | ||||
