REG - Velocity Composites - Trading Update & Notice of Results

Velocity CompositesAnnouncement

01/12/2021 07:00

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RNS Number : 1223U  Velocity Composites PLC  01 December 2021

 

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inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.

1 December 2021

 

VELOCITY COMPOSITES PLC

("Velocity or the "Company")

 

Trading Update & Notice of Results

 

Velocity Composites plc (AIM: VEL), the leading supplier of composite material
kits to aerospace and other high-performance manufacturers, that reduce costs
and improve sustainability, provides the following trading update for the 12
months to 31 October 2021, ahead of the publication of its results on Monday
24 January 2022.

 

The Board is pleased to confirm that trading has continued in line with the
performance reported by the Company in its interim results for the six months
ended 30 April 2021 on 24 May 2021. Furthermore, in line with previous
guidance, the Board expects the Company will achieve its stated target of an
EBITDA breakeven position in the second half of FY2021.  It is therefore
expected Velocity will report an EBITDA loss of £0.5m for the full year
(FY2020: £1.9m), being the loss incurred in the first half of the financial
year.

 

The Company anticipates that sales for the year to 31 October 2021 will be no
less than £9.5m (FY2020: £13.6m). Contracted sales remained suppressed as a
result of the reduced levels of OEM aircraft production rates.   Industry
forecasts show that production rates are expected to pick up in 2022, with
stronger growth expected in 2023.  Importantly, the trend continues to
towards the increasing use of composite materials by global aerospace
manufacturers, in defence and civil sectors, driven by commercial aircraft
requirements to be more fuel efficient through light-weighting, as a key
element of global sustainability policies.  As a result, Velocity is seeing
increased opportunities for new business, as the sector emerges from the
pandemic.

 

The Company has benefited during 2021 from continued Government COVID-19
support and has been able to realise gains during the period from inventories
that were previously expected to become obsolete due to suppressed demand
being utilised.  As a result the Company has been able to maintain ongoing
investment in its technology and engineering capabilities throughout the
year.  Moving into 2022, some additional cost savings and increases in
underlying volumes will replace the support received in 2021.

 

Investment in growth will be central to the Company's strategy in 2022,
especially given the expected opportunities for large increases in industry
volumes from 2023 onwards. The potential for increases in new business wins
over the coming years will be significant.

 

The Company's focus on maintaining robust liquidity during the period means
the Board is confident that Velocity is well placed to invest in and
capitalise on these future opportunities. As at 31 October 2021, cash at bank
was £3.4m (FY2020: £3.3m) with a net cash position of approximately £0.7m
(FY2020: £0.9m), net of £2.3m CBIL liabilities and £0.5m hire purchase
agreement liabilities.  All invoice discounting facilities, of £1.3m based
on outstanding receivables, remain undrawn at year end.

 

Andy Beaden, Velocity Composites Chairman, said: "We renewed all our major
long term contracts during the past year and were able to continue to invest
in our technology and engineering supply chain skills.  This puts the Company
in a stronger position to exploit the large potential gains from an industry
now increasing its production rates once again and increasing its adoption of
composites in Aerospace.  Our smart technology solutions provide the perfect
answer to the need for the industry to reduce material waste and drive forward
the changes needed to meet the global sustainability agenda."

 

 

Enquiries:

 

 Velocity                               +44 (0) 1282 577577

 Andy Beaden, Chairman

 Jon Bridges, Chief Executive Officer

 Chris Williams, Finance Director

 Cenkos (Nominated Adviser and Broker)  +44 (0)20 7397 8900

 Ben Jeynes                             +44 (0)20 7397 1974

 Katy Birkin                            +44 (0)20 7397 1976

 SEC Newgate (Financial PR)             +44 (0)20 3757 6867

 Robin Tozer

 Richard Bicknell

 

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