Velocys PLC – Interim Results

Velocys PLC – Interim Results

Velocys plc (VLS.L), the renewable fuels company, is pleased to announce its interim results for the six months ended 30 June 2018.

Highlights

  • Excellent progress made delivering Velocys’ renewable fuels strategy
  • Mississippi (Bayou Fuels) biorefinery:
    –   Significant environmental milestone reached, with the USDA issuing of a Finding of No Significant Impact on the environmental assessment report.
    –   Competitive process underway to introduce one or more strategic partners to assist with funding c. $60m of development capital necessary to FID.
  • UK waste-to-sustainable jet fuel project:
    –   Partner funding of £4.5m secured for next stage of development.
    –   Project awarded £434k from the UK Department for Transport under the Future Fuels for Flight and Freight Competition (F4C).
  • Red Rock Biofuels: Biorefinery commenced construction. Notice to proceed issued to Velocys.  £4.5 million out of a total £11.4 million has been received.
  • ENVIA:
    –   Significant commercial value extracted.
    –   Generation of Renewable Identification Numbers (RINs) announced in January 2018, with RINs verified in March 2018.
    –   Reactor leak detected in May 2018. It has been independently verified that the ancillary coolant system was its root cause and that it was not a result of any flaw in the core Velocys technology.
    –   ENVIA Board voted September 2018 to suspend operations and to undertake a review of strategic alternatives in order to preserve the value inherent in the facility.
  • PQ Corporation announced as Velocys’ partner for the supply of commercial quantities of the Company’s proprietary catalyst for multiple biorefineries.
  • Revenue of £0.4m (H1 2017: £0.2m).
  • Operating loss of £11.0m, before exceptional items of £14.3m (H1 2017: £9.4m before exceptional items of £0.7m).
  • Cash* at period end £8.7m (31 December 2017: £2.1m).
  • H1 2018 cash inflow/outflow +£8.9m (H1 2017: -£5.1m).
  • Fundraises of approximately £18.4m (before expenses) in January 2018 and £6m (before expenses) in July 2018 (post-period end).
  • Impairments of the remaining book value of £15.1m of the ENVIA investment in associate and loan note.
  • As required via recent changes to AIM Rule 26, the Company confirms that it has adopted the QCA Corporate Governance Code, which highlights its continued focus on good governance and maintaining a high degree of trust and transparency with its shareholders and other stakeholders.

* Defined as cash, cash equivalents and short-term investments.

Outlook

  • Detailed due diligence engagement has commenced with a number of highly attractive relevant strategic investors for the Mississippi biorefinery.
  • Detailed pre-FEED (Front End Engineering and Design) engineering study and site permitting activities ongoing at the UK waste-to-sustainable jet fuel project, with next stage to be developed by Velocys and industry partners Shell and British Airways.

David Pummell, CEO of Velocys, said: In the first half, Velocys continued to make excellent progress against its renewable fuels strategic plan. We continue to drive forward our two main projects to develop biorefineries in the US and UK and implement the supply chain that will deliver our reactors and catalyst to the Red Rock Biofuels facility now under construction.  ENVIA successfully delivered Velocys’ central objective: the demonstration of its technology at commercial scale.  The Company fully supports the decision by the ENVIA Board to suspend plant operations and review all strategic options.

“We are driven to unlock and deliver great value from renewable fuels for our customers, our partners, our investors, our employees and the communities in which we operate. To that end, over the coming months we remain focused on securing strategic investors into our Mississippi project and driving forward our UK waste-to-sustainable jet fuel project with our industrial partners Shell and British Airways.”

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