REG - Velocity Composites - Unaudited Half Year Results
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RNS Number : 2516O Velocity Composites PLC 25 June 2025
25 June 2025
VELOCITY COMPOSITES PLC
("Velocity", the "Company", the "Group")
Unaudited Half Year Results for the six months ended 30 April 2025
On track to achieve profitability and be cash generative in H2 FY25
Velocity Composites plc (AIM: VEL), the leading supplier of composite material
kits to aerospace, is pleased to announce the Company's unaudited results for
the six months ended 30 April 2025.
Financial Highlights: Results confirm prior trading update in May 2025
● Revenue of £10.4m (2024: H1 £10.7m)
● Gross margin of 29.0% (2024: 22.5%)
● Adjusted EBITDA of £0.3m (2024: £0.2m loss)
● Reduced loss before tax of £0.6m (2024: £1.1m loss)
● Cash at bank as at 30 April 2025 of £1.2m (30 April 2024: £1.8m)
● Net cash of £0.4m (H1 FY24: £0.6m)
● UK invoice discounting facility of £3m is undrawn (30 April 2024: undrawn)
Operating Highlights:
● Renewal of contract with leading UK defence contractor
● Sustained margin improvements with tight control of overheads and working
capital
● Oliver (Olly) Smalley appointed as Chief Operations Officer
● Ongoing short-term supply chain disruptions have been closely managed with
customers
Outlook:
● Company expects to achieve positive adjusted EBITDA and be cash generative in
H2 FY25 - in line with current market expectations
● Limited impact from US tariffs, as all sales are made in the country of
manufacture
● The Company is working on securing additional contracts and has focused
efforts on the defence sector
● Separation and sale of Spirit Aerosystems into Airbus and Boeing businesses
expected to complete in H2 FY25. Wider supply chain issues that have impacted
A350 production ramp are expected to ease
● Although market conditions are difficult to forecast, with short-term customer
demand volatility, long-term demand continues to point to significant growth
opportunities
Andy Beaden, Chairman, Velocity, said: "This is a solid set of results, on the
back of significant growth in the past two years and difficult current market
conditions. Operational improvements are enabling the business to move into
profitability and cash generation. The huge potential for future profitable
growth is underpinned by our embedded technologies and published production
ramp up plans from major end market OEMs.
The Board remains confident that Velocity's proposition for its customers will
deliver shareholder value over the medium to long-term."
Enquiries:
Velocity Composites plc +44 (0) 1282 577577
Andy Beaden, Chairman
Jon Bridges, Chief Executive Officer
Rob Smith, Group Chief Financial Officer
Canaccord Genuity Limited +44 (0) 20 7523 8000
Nominated Adviser and Joint Broker
Max Hartley
George Grainger
Dowgate Capital Limited +44 (0) 20 3903 7715
Joint Broker
Russell Cook
Nick Chambers
SEC Newgate +44 (0)7540 106 366
Financial Communications velocity@secnewgate.co.uk
Robin Tozer
George Esmond
Harry Handyside
About Velocity Composites plc
Based in Burnley, UK, Velocity is the leading supplier of composite material
kits to aerospace, 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
In the first half of FY25, Velocity delivered strong operational progress,
despite revenue being slightly down. Encouragingly, our gross profit margin
exceeded our long-term target of 25%, contributing to a positive adjusted
EBITDA, the first for H1 since the pandemic. This performance reflects tighter
cost control and has led to a significantly reduced pre-tax loss.
With a solid cash position and recent contract wins across both defence and
civil aerospace sectors, the Group is well-positioned for future growth. While
short-term delays in the ramp-up of A350 production and at our US operation,
have tempered near-term revenue expectations (as noted in the trading update
of 22 May 2025), the Board remains confident in the long-term outlook for the
aerospace industry. This confidence is underpinned by the plans published by
OEMs to increase their production rates to meet a growing backlog from their
end customers.
Boeing's acquisition of Spirit AeroSystems is on track to complete in 2025
with certain sites transferring to Airbus. This should help resolve supply
chain restrictions and distractions for both OEMs and accelerate the ramp up
of production rates of key programmes to return to pre-pandemic levels. This
will create further opportunities for Velocity, without the need for major new
investment in kit cutting capacity. Boeing and Airbus both have significant
order books now spanning over the next decade and therefore need to increase
production through their supply chains remains compelling.
Financial Review
Revenue for H1 FY25 was £10.4m (H1 FY24: £10.7m), building on the growth
achieved in 2024, but reflecting slower-than-anticipated A350 production
increases and delays in the qualification of our US contract. Despite this,
operational performance improved, driven by enhanced use of data and
technology.
Despite this, operational performance improved, driven by enhanced use of data
and technology gross profit margin rose to 29.0% (H1 FY24: 22.5%), benefiting
from inflation-related pricing adjustments implemented in FY24 and improved
operational efficiencies-particularly in the US, where our labour utilisation
strategy is bearing fruit.
These gains enabled the Group to report a positive adjusted EBITDA of £0.3m
(H1 FY24: loss of £0.2m), despite the revenue being broadly flat.
Administrative expenses remained well-controlled at £3.4m (H1 FY24: £3.3m),
aided by a more stable inflationary environment. As a result, the pre-tax loss
narrowed to £0.6m (H1 FY24: £1.1m).
Looking ahead, while A350 production rates are expected to remain flat in H2
FY25, we are actively working to convert a strong pipeline of opportunities.
Airbus plans to double A350 production by 2028, the B737 is expected to clear
regulatory controls and B777x is completing its test programme with first
deliveries expected in 2026. These programmes present significant growth
opportunities, and we are well-prepared to meet this future demand.
Our positive EBITDA and disciplined working capital management have preserved
a healthy cash position. This has translated into operating cash flow being
a positive inflow of £0.6m (HY24 outflow (£0.5)m). The Group also retains
access to a £3m UK invoice discounting facility, which remained unused during
the period.
As of 30 April 2025, cash at bank stood at £1.2m (30 April 2024: £1.8m),
with net cash of £0.4m (H1 FY24: £0.6m). Outstanding CBILS debt has reduced
to £0.7m (H1 FY24: £1.2m), with final repayments due in 2026.
New Contracts
We were pleased to announce the renewal of a long-standing contract with a key
UK defence customer, reinforcing our growing presence in a sector seeing
increased investment across Europe and the US.
We continue to pursue new opportunities, with active bids in progress across
both the US and European markets.
US Operations
The Board is encouraged by the progress at our Alabama facility. We have been
working closely to manage qualification delays with our US customer for
kitting of parts for a major US aero-engine manufacturer. The kits concerned
are for safety critical parts and the qualification process is both detailed
and complex, coupled with some unrelated issues between the OEM and our
customer. Our US team has shown leadership and professionalism in driving the
process forward. Demand for these kits is strong and will help drive sales and
profitability when the process is complete.
Recent US tariffs have not directly impacted Velocity. In fact, our US-based
manufacturing presence may offer strategic advantages as OEMs and Tier 1
suppliers increasingly localise production. Our US kits are supplied
exclusively to US customers, aligning with this trend.
Our growing reputation in the US is opening doors, with OEMs introducing us to
new Tier 1 manufacturers within their supply chains.
Management Changes
In February, we welcomed Oliver (Olly) Smalley as Chief Operations Officer.
Olly brings deep aerospace experience and a strong focus on driving
operational efficiency and continuous improvement.
Outlook
Demand for civil aerospace remains robust, with OEMs forecasting long-term
growth. However, some of the key programmes that we support are still
operating below pre-pandemic levels, and certain anticipated short-term
production increases have been delayed. Despite this, the Company expects to
achieve positive adjusted EBITDA and be cash generative in H2 FY25 - in line
with current market expectations.
The well publicised increased state investment in defence programmes,
particularly in Europe and the US, is generating significant new opportunities
and we are in discussions with a number of contactors, both existing and new
customers, with a growing pipeline of new opportunities.
Despite near-term challenges, the Board remains confident in the Group's
strategic direction and long-term prospects. With a strong operational
foundation, a healthy balance sheet, and growing momentum in both defence and
civil markets, Velocity is well-positioned to capitalise on the recovery and
expansion of the global aerospace industry.
Andy Beaden
Non-Executive Chairman
25 June 2025
Condensed consolidated statement of total comprehensive income
for the 6 months ended 30 April 2025
6 months ended 6 months ended 12 months
30 April 30 April ended
2025 2024 31 October
(unaudited) (unaudited) 2024
(audited)
Note £'000 £'000 £'000
Revenue 3 10,442 10,745 23,006
Cost of sales (7,409) (8,331) (17,045)
Gross profit 3,033 2,414 5,961
Administrative expenses (3,430) (3,325) (6,978)
Other operating income - 50 86
Operating loss (397) (861) (931)
Operating loss analysed as:
Adjusted EBITDA profit/(loss) 258 (157) 374
Depreciation of property, plant and equipment (201) (192) (382)
Amortisation (140) (120) (240)
Depreciation of right-of-use assets under IFRS 16 (271) (269) (540)
Share-based payments (43) (123) (143)
Finance income and expense (177) (219) (413)
Loss before tax (574) (1,080) (1,344)
Corporation tax recoverable - 400 499
Loss for the period and total comprehensive loss (574) (680) (845)
Loss per share - Basic (pence per share) 4 (1.06p) (1.27p) (1.58p)
Loss per share - Diluted (pence per share) 4 (1.06p) (1.27p) (1.58p)
Condensed consolidated statement of financial position at 30 April 2025
As at As at As at
30 April 30 April 31 October
2025 2024 2024
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Non-current assets
Intangible assets 1,082 953 987
Property, plant and equipment 1,811 1,935 1,854
Right-of-use assets 2,198 1,833 1,826
Total non-current assets 5,091 4,721 4,667
Current assets
Inventories 2,374 2,096 2,500
Trade and other receivables 2,719 3,463 3,977
Corporation tax recoverable - 450 -
Cash and cash equivalents 1,165 1,786 1,663
Total current assets 6,258 7,795 8,140
Total assets 11,349 12,516 12,807
Current liabilities
Loans 503 503 503
Trade and other payables 2,848 3,468 3,933
Obligations under lease liabilities 705 489 561
Total current liabilities 4,056 4,460 4,997
Non-current liabilities
Loans 231 719 468
Obligations under lease liabilities 1,469 1,325 1,258
Provisions 256 - 218
Total non-current liabilities 1,956 2,044 1,944
Total liabilities 6,012 6,504 6,941
Net assets 5,337 6,012 5,866
Equity attributable to equity holders of the
company
Share capital 5 135 134 134
Share premium 4,870 4,870 4,870
Share-based payments reserve 560 601 517
Retained earnings (228) 407 345
Total equity 5,337 6,012 5,866
The financial statements were approved and authorised for issue by the Board
of Directors on 25 June 2025 and were signed on its behalf by:
Rob Smith
Company Secretary Company Number: 06389233
Condensed consolidated statement of changes in equity for the 6 months ended
30 April 2025
Share Share Retained Share-based payments Total
capital premium earnings reserve equity
£'000 £'000 £'000 £'000 £'000
As at 31 October 2023 133 4,870 1,087 478 6,568
Loss for the period - - (680) - (680)
133 4,870 407 478 5,888
Transactions with shareholders:
Share-based payments 1 - - 123 124
As at 30 April 2024 134 4,870 407 601 6,012
- - (166) - (166)
Loss for the period
134 4,870 241 601 5,846
Transactions with shareholders:
Share-based payments - - - 20 20
Vesting of share options - - 104 (104) -
As at 31 October 2024 134 4,870 345 517 5,866
Loss for the period - - (573) - (573)
134 4,870 (228) 517 5,293
Transactions with shareholders:
Share-based payments 1 - - 43 44
As at 30 April 2025 135 4,870 (228) 560 5,337
The notes below form part of this interim report.
Condensed consolidated statement of cash flows
for the 6 months ended 30 April 2025
6 months 12 months ended
ended 6 months 31 October
30 April ended 2024
2025
30 April (audited)
(unaudited)
2024
(unaudited)
£'000 £'000 £'000
Operating activities
Loss for the period (573) (680) (845)
Taxation - (450) (528)
Loss on disposal of assets 16 - -
Finance costs 177 219 413
Amortisation of intangible assets 140 120 240
Depreciation of property, plant and equipment 201 192 382
Depreciation of right-to-use assets 271 269 540
Share-based payments 43 123 143
275 (207) 345
Operating cash flows before movements in working capital
Decrease/(Increase) in trade and other receivables 1,128 204 (180)
Decrease/(Increase) in inventories 126 647 243
(Decrease)/Increase in trade and other payables (1,084) (1,119) (654)
Increase/(Decrease) in Provisions 38 - 218
Cash (outflow)/inflow from operations 483 (475) (28)
Tax received 130 - 398
Net cash inflow from operating activities 613 (475) 370
Investing activities
Purchase of property, plant and equipment net of intercompany transfers (206) (6) (212)
Purchase of development expenditure (255) (183) (372)
Net cash used in investing activities (461) (189) (584)
Financing activities
Finance costs paid (177) (219) (413)
Loan repayment (237) (248) (502)
Repayment of lease liabilities capital (322) (261) (497)
Net cash used in financing activities (736) (728) (1,412)
Net Decrease in cash and cash equivalents (584) (1,392) (1,626)
Cash and cash equivalents at beginning of period/year 1,663 3,178 3,178
Effect of foreign exchange rate changes 86 - 111
Cash and cash equivalents at end of period/year 1,165 1,786 1,663
The notes below form part of this interim report.
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.
In order to prepare for future expansion in the Asia region, the Company
established a wholly owned subsidiary company, Velocity Composites Sendirian
Berhad, which is domiciled in Malaysia. The subsidiary company commenced
trading on 18 April 2018. The Company also established a wholly owned
subsidiary company, Velocity Composites Aerospace Inc. to prepare for future
expansion in the United States of America. These subsidiaries, together with
Velocity Composites plc, now form 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 below. The financial information for the year ended 31
October 2024 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 available from the Company's
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 2025. This interim financial report has been prepared in
accordance with International Accounting Standard 34, 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 2024 and as expected to be applied in the full year accounts to
31 October 2025. 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.
Going Concern
Management continues to undertake a significant level of cash flow forecasting
and detailed financial projections for the period to 31 October 2026 have been
prepared. A number of sensitivities have been performed to understand the cash
flow impact of various scenarios which continue to show that the business has
sufficient liquidity to continue trading as a going concern.
The aerospace sector lends itself to long-term planning due to the nature and
length of customer programmes, typically a minimum of three years, but often
five years or more. This has enabled the business to fully model the period to
31 October 2026 and incorporate more strategic, longer-term planning for
growth as the industry continues its recovery from the pandemic.
Cash flow forecasts are reviewed monthly through Management's Integrated
Business Planning (IBP) process and the assumptions updated for any new
knowledge to ensure there is no change in the Group's liquidity outlook. This
is linked in with Management's risk review and should the outlook change
significantly with no mitigating actions, the Group's liquidity risk rating on
the risk register will be adjusted to reflect this and subsequently discussed
at Board level.
The latest financial projections incorporate revenue forecasts based on
current contracted demand in both the UK and US. It is important that the
business continues to move towards full rate production in the US in order to
meet this customer demand, generating revenue and cash in the process. The
cost base included in the projections is reflective of the operational
efficiencies that have been achieved by the Group, but also realistic about
the investment required to continue to implement growth.
It is this investment in growth and technological advancements that has
resulted in the forecasts indicating that the Group's Invoice Discounting
Facility, secured against Trade Debtors, will not be utilised during the going
concern period. Whilst this facility is designed to be short-term and can be
withdrawn with 3 months' notice, the latest discussions have reflected the
bank's support for Velocity's growth strategy and as such we expect this
facility will remain available for the foreseeable future. The Group is also
reliant on the supply chain facilities and support offered by the current US
customer as it continues to develop the Tallassee site and move towards full
rate production and again, it is the expectation that this will remain in
place.
Should alternative financing be required, the Group would preserve cash by
delaying further investment activities until longer-term funding could be
implemented, such as asset-based financing against new capital expenditure,
new banking facilities or equity funding.
Having due regard for the latest deliverables and latest projections, together
with the facilities available, it is the opinion of the Board that the Group
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.
12 months
6 months ended 6 months ended ended
30 April 30 April 31 October
2025 (unaudited)
2024
2024
(unaudited)
(audited)
£'000 £'000 £'000
Revenue
United Kingdom 6,878 7,143 15,058
Rest of Europe 14 6 6
US 3,521 3,588 7,915
Rest of World 29 8 27
10,442 10,745 23,006
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.
4. Reconciliation of reported earnings per share
6 months 12 months ended
ended 6 months 31 October
30 April ended 2024
2025
30 April (audited)
(unaudited)
2024
(unaudited)
£'000 £'000 £'000
Loss for the period/year (574) (680) (845)
Weighted average number of shares Shares Shares Shares
Weighted average number of shares in issue 53,865,028 53,433,561 53,454,166
Weighted average number of share options 2,176,044 1,648,430 1,829,734
Weighted average number of shares (diluted) 56,041,072 55,081,991 55,283,900
Share options have not been included in the diluted loss per share calculation
as they would be anti-dilutive with a loss being recognised.
6 months 12 months ended
ended 6 months 31 October
30 April ended 2024
2025
30 April (audited)
(unaudited)
2024
(unaudited)
Loss per share
Basic & Diluted (1.06p) (1.27p) (1.58p)
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 31 October 2023 53,393,368 133,484 4,870,352
Shares issued to satisfy exercise of share options on 6 March 2023 75,000 188 -
Ordinary shares of £0.0025 each as at 30 April 2024 53,468,368 133,672 4,870,352
Ordinary shares issued 7 October 2024 41,338 103 -
Ordinary shares of £0.0025 each as at 31 October 2024 5,509,706 133,775 4,870,352
Ordinary shares issued 24 December 2024 483,660 1,209 -
Ordinary shares of £0.0025 each as at 28 March 2025 17,000 43 -
Ordinary shares of £0.0025 each as at 29 April 2025 37,500 94 -
Ordinary shares of £0.0025 each as at 30 April 2025 54,047,866 135,121 4,870,352
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 2025 the Group had £Nil (2024: £158,000) of capital commitments
relating to the purchase of leasehold improvements, plant and machinery and
fixture and fittings.
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