REG - Velocity Composites - Trading Update & Notice of Results

Velocity CompositesAnnouncement

20/12/2022 07:15

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RNS Number : 2358K  Velocity Composites PLC  20 December 2022

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK version of the EU
Market Abuse Regulation 596/2014 which is part of UK law by virtue of the
European Union (Withdrawal) Act 2018, as amended and supplemented from time to
time. Upon the publication of this announcement, this inside information is
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20 December 2022

 

VELOCITY COMPOSITES PLC

("Velocity or the "Company")

 

Trading Update & Notice of Results

 

Velocity Composites plc (AIM: VEL), the leading supplier of digital technology
driven composite material kits to aerospace and other high-performance
manufacturers, provides the following trading update for the 12 months to 31
October 2022 ("FY2022"). The Company expects to publish its FY2022 results on
Tuesday 24 January 2023.

 

Financial Performance

 

The Company anticipates that FY2022 sales will be no less than £11.9m
(FY2021: £9.8m). While contracted sales remain significantly below
pre-pandemic levels, there have been encouraging signs of stability and growth
throughout FY2022. This is in line with published OEM forecast production
rates which show continued recovery over the next three years. Velocity
remains well-positioned to benefit from this growth through its long-term
contracts and customer partnerships. Furthermore, the Board expects the
Company's projected EBITDA loss for FY2022 to be £0.5m (FY2021: loss of
£0.5m).  This is in-line with the Company's expectations and planned
investments in R&D and business development activities over the last
12-months.

 

Cash has been invested throughout FY2022 to support the Company's
international growth opportunities and in the development of its digital
manufacturing solutions.  Cash at bank as at 31 October 2022 was £2.3m
(FY2021: £3.4m). The Company has access to an Invoice Discounting Facility
with NatWest and a Supply Chain Finance facility with a key customer. Total
undrawn headroom on both these facilities as of 31 October 2022 was £1.3m.

 

International Expansion into the USA

 

As announced at the half-year, the Company has continued its investment in
international business development using its existing resources. The Company
today announced a major contract success in the USA with GKN (the
"Agreement").  This Agreement will provide the return on the investment made
in the last year in this area and has enabled Velocity to establish a new
digital manufacturing facility in the USA to service the largest composite
aerospace market.

 

In 2022, there has been significant focus and investment in developing
Velocity's advanced manufacturing facility in Tallassee, Alabama. As well as
delivering the GKN contract, there is capacity to target the US composite
materials market which is larger than the market in Europe.  The site is near
completion and has already achieved its AS9100 quality approvals. A transfer
plan leading to volume production will commence in January 2023, with the
first production kits expected to be delivered in March 2023 and the full
transfer completed by August 2023.  The Agreement is expected to be worth in
excess of US$100 million in revenue over five years. The initial revenues for
the Company under the Agreement are expected to commence in Q1 FY2023 and will
continue through to FY2028.

 

In the future, the site will become a launch hub for other customer contracts,
and high-level business development activities are already underway with
several potential large customers.

 

Outlook

 

The long-term trend towards wider adoption of composite material technologies
is expected to accelerate, with light-weighting and composite strength being
critical to all electrification and hydrogen fuel developments, along with
modern aerospace frames increasing composite content.  The industry has a
major focus on sustainability objectives in its supply chains. As a result,
there are high levels of interest in the Velocity offering globally, and the
Company has a healthy pipeline of new business in both the UK and in
particular North America. New business and recovery in aerospace build volumes
offers the opportunity for a significant advancement in the Company's
financial results.

 

Andy Beaden, Chairman, Velocity, said: "The last twelve months has seen real
progress at Velocity.  We continue to benefit from the recovery of the global
aerospace industry after the pandemic. Our strategy of international expansion
and investment in modern digital manufacturing and sustainable supply chain
solutions is now bearing fruit. Our business is now underpinned with some
significant long-term contracts, that should drive growth and suitable
financial returns for the significant investments made to date in the
business. The agreement with GKN in the US not only provides us with
significant long-term revenues, but also enables us to build a base from which
we can target other opportunities in North America, which is the biggest
potential market for Velocity in the world.  Demand for composite material
technologies is growing as more industries wrestle with the challenge of
delivering net zero. We are excited about the long-term prospects of the
Company."

 

Enquiries:

 

 Velocity                               +44 (0) 1282 577577

 Andy Beaden, Chairman

 Jon Bridges, Chief Executive Officer

 Adam Holden, Group Finance Director

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

 Katy Birkin

 Ben Jeynes

 George Lawson

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

 Robin Tozer                            velocity@secnewgate.co.uk

 George Esmond

 

About Velocity Composites

Based in Burnley, UK, Velocity Composites is the leading supplier of
composite material kits to aerospace and other high-performance manufacturers,
that reduce costs and improve sustainability. Customers include Airbus,
Boeing, Safran and GKN.

By using Velocity’s proprietary technology, manufacturers can also free up
internal resources to focus on their core business. Velocity has significant
potential for expansion, both in the UK and abroad, including into new market
areas, such as wind energy, urban air mobility and electric vehicles, where
the demand for composites is expected to grow.

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