AGM Statement

RNS Number : 3916U

Velosi Limited

24 June 2009

 

 24 June 2009

Velosi Limited ('Velosi' or 'the Group')

AGM STATEMENT BY THE CHAIRMAN

John Hogan, Chairman of Velosi, the provider of asset integrity and HSE services to a number of major national and multinational oil and gas companies, will make the following statement at the Company's Annual General Meeting being held today at 11.00am:

'The Group has begun 2009 positively and is trading in line with expectations building on a strong 2008 performance during which we delivered a record set of financial results, with turnover increasing by 56% to US$182.1 million and profit before tax growing by 30% to US$14.9 million. We made substantial operational progress, venturing into new geographic locations, increasing our market share in existing markets, and expanding our service offerings. 

In 2008 revenue growth was driven by our ability to retain or renew all existing contracts and by our success in winning new contracts, particularly in the Middle East and Africa. We therefore started 2009 from a sound position with a high level of the revenues forecast already secured against existing contracts and we have since continued to be successful in winning new contracts, again particularly in the Middle East and Africa.

I am very pleased to announce a substantial new 5 year contract with the South African state owned electricity provider Eskom. The contract has been won by Velosi Europe in a 50:50 partnership with Khum MK Investments to provide Quality and Inspection services for Eskom's new build power plant program. Capital spend on this program is expected to be in excess of US$30 billion and the fees for inspection should be in the region of 3%. The Quality and Inspection services work will be spread out amongst a number of competing inspection authorities and much of the work will take place in Europe. Whilst we are confident of winning our proportion of the work available, there can be no guarantee of the level of fees which Velosi may ultimately achieve over the life of the contract. 

Eskom provides 95% of South Africa's electricity and has embarked on an ambitious new-build program that is expected to run for 17 years. The program has commenced with the construction of the Medupi Power Station in the Northern Province. It will be the world's 4th largest coal fired station when commissioned between 2012 and 2015. Construction of Kusile, the second power station, in Mpumalanga is also underway and will be bigger than Medupi once it is commissioned in 2017. Eskom is also working on pumped storage schemes and a nuclear project to supplement demand.

Velosi will provide Quality and Inspection services on equipment and machinery from the manufacturing phase until shipment to South Africa.

In addition, I am also pleased to announce two further contract wins - with Abu Dhabi Gas Industries Ltd; and PPL Shipyard. The Abu Dhabi contract is for five years providing worldwide vendor inspection and site construction inspection in offshore and onshore sites. The contract commenced on 1 April 2009 and is expected to be worth in excess of  US$ 10 million.  Velosi's 65% owned subsidiary K2 Specialist Services Pte Ltd ('K2') has been awarded an extension to an existing contract with PPL. The extension covers the assembly and installation of five further new build jackup derricks in addition to the five already being assembled. 

While the Group is in a strong position and is continuing to grow revenues and expand geographically, we recognize we are operating in a more challenging market environment and we have adapted the business to reflect this. 

A key focus is ensuring we maintain a strong cash position. Currently the Group has maintained a strong net cash position of approximately US$17 million  and very low gearing levels of 1%, providing a secure financial platform. In addition, we continue to focus on ensuring the business operates on a streamlined cost base. In terms of acquisitions we have adopted a more conservative approach whilst ensuring we do not forego commercial opportunities.

Building on our success in 2008, the current year has started well and as a result we are trading in line with market expectations and are confident of delivering a good performance for 2009'. 

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 For further information, please contact:

Velosi	Dr Nabil Abdul Jalil Joe Vincent	020 7930 0777
Strand Partners	James Harris	020 7409 3494
Charles Stanley Securities	Mark Taylor Freddy Crossley	020 7149 6000
Cardew Group	Tim Robertson Catherine Maitland	020 7930 0777

 

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