REG - Velocity Composites - Unaudited Half Year Results
29/06/2022 07:00
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RNS Number : 5474Q Velocity Composites PLC 29 June 2022
29 June 2022
VELOCITY COMPOSITES PLC
("Velocity", the "Company", the "Group")
UNAUDITED HALF YEAR RESULTS
For the six months ended 30 April 2022
Velocity Composites plc (AIM: VEL), the leading supplier of advanced composite
material kits to aerospace and high-performance manufacturers, is pleased to
announce the Company's unaudited results for the six months to 30 April 2022.
Financial Highlights:
· Revenue of £5.9m (2021: £4.4m) as aerospace sales volumes stabilised post
Covid-19.
· Gross margin of 23.5% (2021: 25.1%) - reflecting some contractual margin
squeeze and short term labour inefficiencies as the Group begins to increase
staffing following recovery.
· Adjusted EBITDA(1) loss reduced to £0.2m (2021: loss of £0.6m).
· Loss before tax reduced to £0.7m (2021: loss of £1.1m).
· Cash at bank as at 30 April 2022 of £2.0m (30 April 2021: £3.5m). To support
growth, additional £2.5m available through Invoice Discounting Facilities.
(1) Adjusted EBITDA defined as earnings before interest, tax, depreciation,
amortisation, impairment, adjusted for exceptional administrative costs and
share based payments. The business uses this Alternative Performance Measure
to appropriately measure the underlying business performance, as such it
excludes costs associated with non-core activities.
Operating Highlights:
· Strong pipeline of new business, especially in North America. The Group has
invested in people resource with a renewed focussed on growth.
· Contracted sales encouraging with signs of recovery as confidence in the
aviation sector improves.
· Work continues on internal process technology to improve labour productivity
and material utilisation in the second half, as higher production rates enable
greater efficiencies through 2023 and 2024.
· Continued investment and development of the Company's technology - with
roll-out of new "Digital Manufacturing Cell" expected in second half to
underpin margin delivery.
Andy Beaden, Chairman of Velocity said: "Over the last six months, we have
seen signs of recovery in the global aerospace industry, which is starting to
reflect in our manufacturing sales volumes. Further growth is expected over
the next 12-18 months.
"Our technology innovation is aimed at providing both material and labour
efficiencies, which in turn benefits both our customers and our own margins.
Though there has been some small margin squeeze with labour inflation and
customer pricing pressures, we believe our innovations should ensure we
maintain our long term margin and profit objectives. These steps include the
internal deployment of a new "Digital Manufacturing Cell" later this year that
utilises Industry 4.0 technology to increase the size and efficiency of our
production batches while digitising and standardising production processes in
real-time to improve labour productivity.
"Despite the challenges we have faced due to the pandemic, we have sustained
investment in R&D and business development as the aviation sector
recovers. We have continued our expansion efforts in Europe and North America
and expect to see progress in H2 2022 through rolling out our solutions to
support more customer facilities. We have had some initial success with
customers outside the aerospace industry, including automotive. Increased use
of composites will be key to delivering net zero in many industries. We will
continue to work with our customers and partners to investigate revenue
streams where our technology can drive operational efficiency and margins for
the company."
Certain of 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 now considered to be in the public domain.
Enquiries:
Velocity +44 (0) 1282 577577
Jon Bridges, Chief Executive Officer
Andy Beaden, Chairman
Chris Williams, Finance Director
Cenkos (Nominated Adviser and Broker) +44 (0) 2073 978900
Ben Jeynes
Katy Birkin
George Lawson
SEC Newgate (Financial Communications) +44 (0) 7540 106366
Robin Tozer
Richard Bicknell
velocitycomposites@secnewgate.co.uk
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, 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.
Chairman's Statement
Overview
As we emerge from the Covid-19 pandemic, we are pleased to announce an
improvement in revenue, and narrowing of the operating loss as the aerospace
manufacturing sector continues to recover. The well-documented problems in the
global supply chain in terms of sourcing goods, materials and skilled labour
have meant some downward pressures on our gross margin, with the current mix
of sales being weaker in margin than in the prior period. We believe we can
mitigate this, and we are taking new actions to improve labour productivity
and material efficiency, and the roll-out of our new "Digital Manufacturing
Cell" planned for the second half will help underpin improved margin delivery.
Therefore, our longer-term margin targets remain the same.
Aircraft demand across the global industry has stabilised, with more
significant improvement and recovery forecast in 2023 and beyond. As a result,
we are planning to resume expansion in North America and Europe, with progress
expected in H2 2022.
Furthermore, we have had some initial success with non-contracted sales in new
sectors for the Company, including high-performance automotive manufacturing
and urban air mobility. We hope to build on these successes by converting them
into longer-term contracts. We have continued to maintain our new product
engineering capability and plan to further invest in our business development
resource to enable further contract wins in these areas with an element of the
overhead cost base retained to support this ambition.
Some challenges remain regarding the availability of raw materials as the
international supply chain restarts with the recovery. This is inevitably
linked to raw material commodity price, localised Covid-19 lockdowns overseas
and labour challenges at supplier facilities. Part of our service provision is
to work closely with our suppliers and customers to distribute stock
proportionately across global manufacturing sites to maintain a stable supply.
We are also reviewing areas of particular disruption where we may want to
strategically increase stock to avoid any supply volatility to customers in
future.
Financial Performance
Revenue in the period grew 34% to £5.9m (2021: £4.4m) as global production
rates started to recover, compared with the prior period that encompassed
lockdowns and customer site closures. Gross margin has reduced slightly to
23.5% (2021: 25.1%) primarily as a result of certain production inefficiencies
and labour cost pressures, net of £0.2m successful recoveries on historical
inventory write-offs linked to a contract settlement as a result of the
pandemic. The longer-term margin target remains at 25%. The current margin
reduction was also in part a function of onboarding new labour resources and
preparing for higher long-term volumes.
Administrative expenses have mainly remained in line with last year at £2.0m
(H1 FY21: £2.1m) despite investment in new technology to enable future growth
and diversification.
The adjusted EBITDA loss reduced by £0.4m to £0.2m (2021: loss of £0.6m),
resulting from improved contracted demand levels. This can be further analysed
as breaking even at EBITDA operating level while maintaining investment in
business development and R&D of £0.3m. Loss before tax from continuing
operations reduced to £0.7m (2021: loss of £1.1m).
Velocity's cash flow and liquidity are in line with management expectations.
The Company continues to monitor its working capital closely, with robust
controls, ahead of the expected sales recovery to ensure it can deliver growth
in a cash-efficient manner.
Cash at bank as at 30 April 2022 was £2.0m (H1 FY21: £3.5m), including
anticipated movements through underlying business performance and working
capital investment to support recovery and new contract terms with customers.
Since period end, as at 24 June 2022, the Company's cash balance has improved
to £2.7 million, due to cash flow timings and improvements in customer
receivables collections. The Company has access to two invoice discounting
facilities, including a key customer facility, both of which remain undrawn.
At current sales levels, these facilities offer a combined drawdown capacity
of £2.5 million. While inventory levels have increased compared to last
year, this has been lower than our sales growth of over 30% due to continued
robust stock controls, and improved stock turns through the pandemic.
Investment in Growth & Customer Proposition
Velocity continues to maintain the required investment to support its growth
and R&D activities. The Company has been able to self-fund this, despite
the suppressed demand the aerospace manufacturing sector has experienced due
to the pandemic.
In addition, work has been done to develop the Company's customer proposition
through investment in R&D. A new "Digital Manufacturing Cell" that enables
further standardisation and automation of production is expected to be
deployed in the second half of the year. It is likely to improve future gross
margin through material and labour efficiencies. The Digital Cell combines
with our composite tailored material planning technology, Velocity Resource
Planning, or VRP. These technology hardware and software systems enable the
efficiencies in our services to customers, in labour, materials and inventory
levels.
Board Changes
We have strengthened the Board with additional non-executive experience in
international aerospace and defence and the expanding use of composite
materials outside these core sectors. This supports our growth strategy and
our technical and commercial profiles with our customers.
In March 2022, we appointed Ms. Annette Rothwell to the Board as an
independent non-executive director. Ms. Rothwell is a seasoned senior level
executive and board member with extensive experience in industries undergoing
transformational change. She is a proven executive leader in General
Management, Procurement and Supply Chain, Operational Excellence (CI) and
Project Management, working with senior stakeholders, including regional and
national government. Through her international executive career, she has
gained extensive aerospace and defence experience, managing the supply chains
of some major Tier 1 and OEMs, and more recently advising SMEs across various
industrial technology sectors.
In June 2022, we appointed Dr David Bailey FRAeS to the Board as an
independent non-executive director. He is currently CEO of Composites UK, the
trade association for the UK composites industry. David is an experienced
executive with extensive management and technical expertise developed across
the aerospace and power generation industries. He is a renowned aerospace
supply chain specialist and has worked with the senior management teams of
over 100 aerospace and defence suppliers. As well as David bringing his
considerable understanding of the aerospace industry supply chain, he has been
working for several years with a large number of world-class companies on the
expansion of composite materials in advanced manufacturing.
We welcome and are delighted to attract such high calibre individuals to join
the Board as we move forward with international and sector expansion,
endorsing the exciting future the Company has.
As announced on 8 June 2022, Chris Williams will step down from his position
as Group Finance Director and leave the Company at the end of December 2022 to
pursue other business and personal interests. The Company has commenced a
process to identify and appoint a new Group Finance Director. Mr Williams
remains committed to the Group until his departure and will provide an orderly
handover to the Company's new Group Finance Director.
Outlook
Continued supply chain disruption and cost inflation make for a challenging
commercial environment, but there are positive signs of market recovery from
FY23 onwards, as projected by the major OEMs. Velocity's contracted sales are
particularly linked to Airbus' outlook and the A350 platform, which is
expected to see a step up in growth in H2 FY23. We believe our services and
technology help and support customers in this changing environment and
objectives around sustainability. Looking beyond aerospace, the need to
deliver net zero means efficient composite material adoption will be central
to many industry sectors. We are prepared and well placed to take advantage of
this and have made successful initial steps into new sectors.
Our sustained investment in R&D and business development, combined with a
good cash position and available drawdown capacity, means we can support the
underlying business recovery and expansion into new geographies and sectors.
The Board looks forward to the rest of the year and beyond with confidence.
Andy Beaden
Non-Executive Chairman
29 June 2022
Condensed consolidated statement of total comprehensive income
For the six months ended 30 April 2022
Half year ended Half year ended Year ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Revenue 3 5,864 4,439 9,767
Cost of sales (4,487) (3,323) (7,228)
Gross profit 1,377 1,116 2,539
Administrative expenses (2,003) (2,110) (3,903)
Operating loss (626) (994) (1,364)
Operating loss analysed as:
Adjusted EBITDA (189) (559) (548)
Depreciation of property plant and equipment* (105) (121) (229)
Amortisation (32) (44) (76)
Depreciation on right to use assets* (215) (210) (421)
Share based payments (85) (60) (90)
Finance income and expense (84) (65) (182)
Loss before tax from continuing operations (710) (1,059) (1,546)
Income tax income / (expense) - - 340
Loss for the period and total comprehensive loss (710) (1,059) (1,206)
Losses per share - Basic (pence per share) from continuing operations 4 (2.0p) (3.0p) (3.0p)
Losses per share - Diluted (pence per share) from continuing operations 4 (2.0p) (3.0p) (3.0p)
* a prior year adjustment has been made between property, plant and equipment
and right-of-use asset please see note 7 for details
The notes below form part of this interim report.
Condensed consolidated statement of financial position at 30 April 2022
As at As at As at
30 April 30 April 31 October
2022 2021 2022
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Non-current assets
Intangible assets 59 123 91
Property, plant and equipment* 957 1,136 1,051
Right-of-use assets* 1,471 1,424 1,688
Total non-current assets 2,487 2,683 2,830
Current assets
Inventories 948 769 877
Trade and other receivables 3,361 2,477 2,162
Corporation Tax - - 341
Cash and cash equivalents 2,038 3,450 3,476
Total current assets 6,347 6,696 6,856
Total assets 8,834 9,379 9,686
Current liabilities
Loans 530 300 514
Trade and other payables 1,258 1,444 1,058
Obligations under lease liabilities 245 362 309
Total current liabilities 2,033 2,106 1,881
Non-current liabilities
Loans 1,730 1,700 1,998
Obligations under lease liabilities 1,229 890 1,240
Total non-current liabilities 2,859 2,590 3,238
Total liabilities 4,892 4,696 5,119
Net assets 3,942 4,683 4,567
Equity attributable to equity holders of the company
Share capital 5 91 91 91
Share premium 9,727 9,727 9,727
Share-based payments reserve 624 550 539
Retained earnings (6,500) (5,685) (5,790)
Total equity 3,942 4,683 4,567
* a prior year adjustment has been made between property, plant and equipment
and right-of-use asset please see note 7 for details
The notes below form part of this interim report.
The financial statements were approved and authorised for issue by the Board
of Directors on 28 June 2022 and were signed on its behalf by
Chris Williams
Company Secretary Co No: 06389233
Condensed consolidated statement of changes in equity for the six months ended
30 April 2022
Share Share Retained Share-based payments Total
capital premium earnings Reserve equity
Note £'000 £'000 £'000 £'000 £'000
As at 31 October 2020 91 9,727 (4,626) 490 5,682
Loss for the period - - (1,059) - (1,059)
91 9,727 (5,685) 490 4,623
Transactions with shareholders:
Share-based payments - - - 60 60
As at 30 April 2021 91 9,727 (5,685) 550 4,683
Loss for the period - - (146) - (146)
91 9,727 (5,831) 550 4,537
Transactions with shareholders:
Share-based payments - - - 30 30
Vesting of share options - - 41 (41) -
As at 31 October 2021 91 9,727 (5,790) 539 4,567
Loss for the period - - (710) - (710)
91 9,727 (6,500) 539 3,857
Transactions with shareholders:
Share-based payments - - - 85 85
As at 30 April 2022 91 9,727 (6,500) 624 3,942
The notes below form part of this interim report.
Condensed consolidated statement of cash flows
For the six months ended 30 April 2022
Half year ended Half year ended Year ended
30 April 2022 30 April 2021 31 October
(unaudited) (unaudited) 2021
(audited)
£'000 £'000 £'000
Operating activities
Loss for the period (710) (1,059) (1,206)
Taxation - - (341)
(Profit)/ Loss on disposal of assets - (11) (13)
Finance costs 84 65 182
Amortisation of intangible assets 32 44 76
Depreciation of property, plant and equipment* 105 121 229
Depreciation of right to use assets* 215 210 421
Share-based payments 85 60 90
(189) (570) (562)
(Increase)/Decrease in trade and other receivables (1,199) (13) 302
(Increase)/Decrease in inventories (71) 1,139 1,031
Increase/(Decrease) in trade and other payables 200 (60) (446)
Cash generated from operations (1,259) 496 325
Income taxes received 341 - -
Net cash inflow/(outflow) from operating activities (918) 496 325
Investing activities
Purchase of property, plant and equipment (9) (41) (64)
Proceeds from disposal of property, plant and equipment - 10 13
Net cash used in investing activities (9) (31) (51)
Financing activities
Loan received - - 634
Finance costs paid (84) (64) (181)
Loan repayment (252) - (119)
Repayment of lease liabilities capital (175) (219) (400)
Net cash generated from/ (used in) financing activities (511) (283) (66)
Net (decrease)/increase in cash and cash equivalents (1,438) 182 208
Cash and cash equivalents at beginning of period 3,476 3,268 3,268
Cash and cash equivalents at end of period 2,038 3,450 3,476
* a prior year adjustment has been made between property, plant and equipment
and right-of-use asset please see note 7 for details
Notes to Interim Report
1. General information
Velocity Composites plc (the 'Company') is a public limited company
incorporated and domiciled in England and Wales. The registered office of the
company is AMS Technology Park, Billington Road, Burnley, Lancashire, BB11
5UB, United Kingdom. The registered company number is 06389233.
The Company holds shares in a wholly owned subsidiary company, Velocity
Composites Sendirian Berhad, which is domiciled in Malaysia. During this
financial period, the company has provided engineering services to the Group.
The Company also wholly owns Velocity Composites Aerospace Inc. to prepare for
future expansion in the United States of America. These subsidiaries together
with Velocity Composites plc, now forms the Velocity Composites Group ('the
Group').
The Group's principal activity is that of the sale of kits of composite
material and related products to the aerospace industry.
The condensed consolidated interim financial statements are unaudited and do
not constitute statutory financial statements within the meaning of Section
435 of the Companies Act 2006. The review report on these interim financial
statements is set out on page 2 The financial information for the year ended
31 October 2021 has been derived from the published statutory financial
statements for the Company. A copy of the full accounts for that period, on
which the auditor issued an unmodified report that did not contain statements
under Section 498(2) or 498(3) of the Companies Act 2006, has been delivered
to the Registrar of Companies.
These interim financial statements will be posted to the Company's
shareholders and are available from the Company's registered office at AMS
Technology Park, Billington Road, Burnley, Lancashire, BB11 5UB or from our
website at www.velocity-composites.com.
2. Accounting policies
Basis of preparation
These condensed consolidated interim financial statements are for the six
months ended 30 April 2022. This interim financial report has been prepared
in accordance with International Accounting Standard 34, 'Interim Financial
Reporting', in accordance with UK-adopted international accounting standards,
and has been prepared using consistent accounting policies as applied in the
Company's full year accounts to 31 October 2021 and as expected to be applied
in the full year accounts to 31 October 2022. They have therefore been
prepared in compliance with the measurement and recognition criteria of
UK-adopted international accounting standards.
These financial statements have been prepared on a going concern basis and
using the historical cost convention, as stated in the accounting policies.
These policies have been consistently applied to all periods presented, unless
otherwise stated.
The financial statements are presented in sterling and have been rounded to
the nearest thousand (£'000) except where otherwise indicated.
No new standards have been adopted for the first time in the current financial
year.
2. Accounting policies (Cont.)
Going concern
The current climate continues to present challenges and impact the business
significantly through suppressed sales demand. As a result, Management have
continued the longer-term financial planning announced in the FY21 Annual
Report to ensure liquidity is robust and any future cash flow requirements are
identified as early as possible. This involves a 24-month rolling forecast
which is reviewed monthly through best practice Integrated Business Planning
("IBP) processes and extended a further 5 years at a high level. This is
linked in with the Management's monthly risk review and should the outlook
change significantly with no mitigating actions the Company's liquidity risk
rating on the risk register will be adjusted to reflect this and subsequently
discussed at Board through the Audit Committee's quarterly risk register
review. The Aerospace sector lends itself to this kind of long-term planning
and risk assessment due to the nature and length of customer programmes and
contracts, typically a minimum of 3 years, but often 5 years or more.
This financial forecasting process continues to support the Board and
Management to balance the extent of cost reductions required to stabilise the
business with the resource requirements needed to support future growth
potential. As such, Velocity now has a reduced cost base that is more in line
with the activity levels being seen in the sector. Management continues to
utilise this tool routinely to undertake sensitivity analysis and 'stress
testing' as part of Velocity's ongoing risk management strategy. Latest
sensitivities included an underlying sales decline of 10%pa until FY24, no new
sales over this period and separately a delay of 6 months to expected new
sales growth.
Only in the latter of these circumstances did the business run out of cash to
support ongoing operations over the next 18 month period assessed to 31
October 2023. Should such an event occur, the IBP process offers Management
clear advance notice of this with pre-prepared mitigating actions as detailed
below. These forecasts indicate the group's Invoice Discounting Facility,
secured against Trade Debtors, will be utilised during certain months within
the going concern period. Whilst this facility is designed to be short-term
and can be withdrawn, the latest review reflected the banks' support for
Velocity's growth strategy and extended the commitment of both parties to a
minimum 3 months' notice and as such we expect this facility will remain
available throughout the going concern period. Should alternative financing be
required the Group would preserve cash through slowing investment in growth
until longer-term funding could be implemented, such as asset-based financing
against new capex or equity funding.
Although work is still needed to improve underlying performance, recent
results and forecasts have shown that adjusted EBITDA breakeven is achievable
for Velocity. Future recovery will be made possible through a combination of
existing contracts recovering to pre-COVID-19 run rates over the 3-to-5-year
period, as well as new contracts being won from the significant pipeline of
opportunities and targeted investment being made to support this. Cost
improvement programmes and efficiency drives also continue on an ongoing basis
through the Budgeting process. Should the current strategy prove ineffective
or insufficient to recover the performance of the business, Management have
contingency plans ready to implement should this be needed.
With due regard for these latest projections, H1 FY22 has seen some reassuring
progress for Velocity, with sales demand seemingly stabilised during the half
year and recovery being forecast by the OEMs, particularly going into FY23.
Whilst there undoubtedly remains uncertainty in the Aerospace industry, with
available cash at 30 April 2021 of £2.0m, an invoice discounting facility of
£2.5m based on debtor levels as yet undrawn and continued support of our bank
and shareholders, it is the opinion of the Board that the Group is in a robust
liquidity position and has adequate resources to continue to trade as a going
concern.
3. Segmental analysis
The Group supplies a single range of kitted products into a single industry
and so has a single segment. Additional information is given below regarding
the revenue receivable based on geographical location of the customer.
Half year ended Half year ended Year ended
30 April 2022 (unaudited) 30 April 2021 31 October
(unaudited) 2021
(audited)
£'000 £'000 £'000
Revenue
United Kingdom 5,813 4,428 9,702
Rest of Europe 20 11 26
Rest of World 31 - 39
5,864 4,439 9,767
Four customers of the Group are responsible for over 90% of the total revenue
in each of the periods presented. The majority of revenue arises from the
sale of goods. Where engineering services form a part of revenue it is only in
support of the development or sale of the goods. During the period, £0.2m of
income relates to successful recoveries on historical inventory write-offs
linked to a contract settlement that arose as a result of the pandemic.
4. Reconciliation of reported earnings per share
Half year ended Half year ended Year ended
30 April 2022 (unaudited) 30 April 2021 (unaudited) 31 October
2021 (audited)
£'000 £'000 £'000
Loss for the period (710) (1,059) (1,206)
Weighted average number of shares Shares Shares Shares
Weighted average number of shares in issue 36,318,130 36,265,983 36,270,917
Weighted average number of share options 2,036,458 2,184,120 1,856,366
Weighted average number of shares (diluted) 38,354,588 38,450,103 38,127,283
Share options have not been included in the Diluted calculation as they would
be anti-dilutive with a loss being recognised.
Half year ended Half year ended Year ended
30 April 2022 (unaudited) 30 April 2021 (unaudited) 31 October
2021
(audited)
£ £ £
Loss per share
Basic & Diluted (£0.02) (£0.03) (£0.03)
5. Share capital of the Company
Number of shares Share Capital Share Premium
£ £
Share capital issued and fully paid
Ordinary shares of £0.0025 each as at 1 November 2020 36,227,459 90,569 9,727,158
Shares issued to satisfy exercise of share options on 12 February 2021 38,604 97 -
Ordinary shares of £0.0025 each as at 30 April 2020 36,266,063 90,666 9,727,158
Shares issued to satisfy exercise of share options on 28 May 2021 37,001 92 -
Ordinary shares of £0.0025 each as at 31 October 2021 36,303,064 90,758 9,727,158
Shares issued to satisfy exercise of share options on 5 April 2022 108,475 271 -
Ordinary shares of £0.0025 each as at 30 April 2022 36,411.539 91,029 9,727,158
Ordinary shares carry the right to one vote per share at general meetings of
the Company and the rights to share in any distribution of profits or returns
of capital and to share in any residual assets available for distribution in
the event of a winding up.
6. Capital Commitments
At 30 April 2022 the Group had £Nil (2021: £Nil) of capital commitments
relating to the purchase of leasehold improvements, plant and machinery and
fixture and
fittings.
7. Prior Period Adjustment
The prior year HY results as at 30 April 2021 have been amended to reflect the
movement in the group and company reclassified balances relating to leased
assets that were incorrectly presented within property, plant and equipment
rather than right of use assets. This arose due to an oversight and finance
leases were omitted when adopting IFRS 16. The adjustment had no impact on
opening retaining earnings. Details of the adjustment can be found below.
Group and company statement of financial position Original presented Revised presented
Adjustment
£'000 £'000 £'000
Property plant and equipment 1,136 (447)
1,583
Right of use assets 977 1,424 447
2,560 2,560 -
Group and company income statement and cash flow Original presented Revised presented Adjustment
£'000 £'000 £'000
121 (59)
Depreciation of property, plant and equipment 180
Depreciation of Right to Use assets under IFRS 16 151 210 59
331 331 -
Independent Review Report to Velocity Composites plc
Introduction
We have reviewed the condensed set of financial statements in the half-yearly
financial report of Velocity Composites plc (the 'company') for the six months
ended 30 April 2022 which comprises the Condensed consolidated statement of
total comprehensive income, the Condensed consolidated statement of financial
position, the Condensed consolidated statement of changes in equity, the
Condensed consolidated statement of cash flows and the related notes. We have
read the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006. The condensed set of
financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34, 'Interim
Financial Reporting'.
Our responsibility
Our responsibility is to express a conclusion to the company on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'. A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
The Impact of macro-economic uncertainties on our review
Our review of the condensed set of financial statements in the half-yearly
financial report requires us to obtain an understanding of all relevant
uncertainties, including those arising as a consequence of the effects of
macro-economic uncertainties such as Brexit and Covid-19. Such reviews assess
and challenge the reasonableness of estimates made by the directors and the
related disclosures and the appropriateness of the going concern basis of
preparation of the financial statements. All of these depend on assessments of
the future economic environment and the company's future prospects and
performance.
Brexit and Covid-19 are amongst the most significant economic events for the
UK, and at the date of this report its effects are subject to unprecedented
levels of uncertainty, with the full range of possible outcomes and their
impacts unknown. We applied a standardised firm-wide approach in response to
these uncertainties when assessing the group's future prospects and
performance. However, no review of interim financial information should be
expected to predict the unknowable factors or all possible future implications
for a group associated with a course of actions such as Brexit and Covid-19.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 April 2022 is not prepared, in
all material respects, in accordance with International Accounting Standard
34, 'Interim Financial Reporting'.
Use of our report
This report is made solely to the company, as a body, in accordance with
International Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity'. Our review work has been undertaken so that we might state to the
company those matters we are required to state to it in an independent review
report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the company as a
body, for our review work, for this report, or for the conclusion we have
formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Manchester
28 June 2022
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