Shares in Velocys (VLS) pulled back after the gas-to-liquids (GTL) specialist reported a widening loss for 2014 and speculated that the fall-away in crude oil prices might cause "a degree of hesitancy" in its target markets. Last year's net loss came in at £22.4m, against £16.9m in 2013.
More important than the numbers, however, is the potential catalyst provided by Velocys' first large-scale commercial plant. The facility in Oklahoma is on track to be commissioned during the first half of next year. Commercial opportunities are also in prospect, thanks to last year's acquisition of fellow GTL developer Pinto Energy. The business - rebranded Velocys Project Solutions - is planning an Ohio-based GTL facility to produce approximately 4,800 barrels of liquids per day. A final investment decision on whether to take the plant forward is expected later this year.
Aside from working on these expansion projects, Velocys managed to shore up its substantial intellectual property portfolio after it successfully brought an infringement claim against Abingdon-based rival CompactGTL.
Numis Securities reduced its discounted cash-flow valuation from 333p to 304p a share. That's because the broker believes that "wider adoption of Velocys' technology is likely to take longer" than previously thought because of the oil price falls.
| VELOCYS (VLS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 137p | MARKET VALUE: | £194m | |
| TOUCH: | 136-140p | 12-MONTH HIGH: | 249p | LOW: 113p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 60p* | NET CASH: | £58.5m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 7.7 | -8.1 | -11.5 | nil |
| 2011 | 4.7 | -10.4 | -11.4 | nil |
| 2012 | 7.6 | -10.8 | -11.5 | nil |
| 2013 | 4.8 | -18.0 | -14.6 | nil |
| 2014 | 1.7 | -23.3 | -17.2 | nil |
| % change | -63 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £28.3m, or 20p a share | ||||
