UPDATE: Velosi 2008 Profit +30%; Plans Central Asia, Brazil Push

Oil and gas services company Velosi Ltd. (VELO.LN) Monday reported a 30% rise in full-year pretax profit, and said it plans to expand into central Asia and Brazil.

Velosi, which provides quality assurance and health and safety services to oil and gas majors, said 2008 pretax profit advanced to $14.9 million from $11.4 million a year earlier, on revenue up 56% at $182.1 million, ahead of expectations of $156 million.

At 0954 GMT, shares in Velosi were up 14.5 pence, or 29%, at 64.5 pence, outperforming a higher Alternative Investment Market, up 0.18%.

Chief Executive Officer Nabil Abdul Jalil told Dow Jones Newswires the company won major contracts in Africa, the Middle East, Europe and Australasia during the year, with customers including ConocoPhilips (COP) and BP PLC (BP.LN). Earnings were also helped by the acquisition of PSC Europe SRL, which added $9.1 million in revenue and brought Velosi another blue chip client - Italy's Eni SPA (ENI.MI). The company opened new offices in Angola, Ghana, Vietnam, Saudi Arabia and Korea in 2008, and now plans to establish operations in central Asia and Brazil, where it sees big potential for its services. Jalil said Velosi expects to start winning contracts by late 2009 or early 2010, probably with existing customers.

Still, Velosi said some customers have deferred projects because of the low oil price, while others are pushing for discounts. However, the firm has secured contracts that cover most of its forecast 2009 revenue, and it is confident of meeting expectations, Jalil said.

Analyst Ben Archer at Charles Stanley said he expects the company to report a 2009 pretax profit of $17.1 million on revenue of $195.9 million. Archer, who rates the stock "buy", said Velosi operates in an attractive niche and he expects demand for its services to remain resilient.

Finncap analyst David Buxton, who also rates the stock "buy", said Velosi's positive outlook sets it apart from its peers.

Company Web site: www.velosi.com

-By Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; [e-mail]