26 September 2016 – interim results
Velocys, which is at the forefront of small scale gas to liquid (GTL) conversion, has announced interim results for the six months to 30 June. Given the early stage of the group’s development, the fact that revenues rose to £0.5m (2015: £0.1m) is largely irrelevant. Of more importance is the fact that the group’s joint venture ENVIA Energy is progressing well with its GTL plant in Oklahoma City, with construction now complete and a highly experienced Velocys commissioning team deployed on site after the period end in July. Operational start up of the plant is now within sight and this will prove to be a significant moment for the company. Other opportunities and projects are also being pursued although the main focus is on the ENVIA project. At the end of June the group had net cash of £24.1m (31 December 2015: £37.7m) although the cash out flow in H2 is expected to be much lower than H1. Despite the fact that oil prices remain low the group continues to make progress although it has instigated a strategic review to identify the best way to capitalise on its world leading technology. Although the shares are not without risk there is serious potential upside and they are therefore a SPECULATIVE BUY.