Velocity Composites PLC Trading Update and Directorate Change (3507F)

TIDMVEL

RNS Number : 3507F

Velocity Composites PLC

26 October 2018

VELOCITY COMPOSITES plc

("Velocity" or the "Company")

YEAR END TRADING UPDATE AND DIRECTORATE CHANGE

Velocity, the leading supplier of advanced composite material kits, providing engineering value-solutions for the global aerospace industry, today provides an update on trading ahead of its financial year end of 31 October 2018 and provides an update on Directorate change.

Results reflect continued progress

The Company has seen continued growth at both its Burnley site, and its second site in Fareham, Hampshire.

Revenue for the year ending 31 October 2018 will be slightly above GBP24 million and the net cash position (excludes finance lease obligations) is forecast to be in the region of GBP3.6 million at the year end. The Company also has access to a pre-agreed invoice discounting facility of up to approximately GBP5.0 million (of which GBP1.0 million is expected to be drawn at year end).

Gross margins in the second half of FY18 have stabilised to 19% and above on a monthly basis and the Directors and senior management are working hard on initiatives to increase this.

Intention to open new sites

The Directors remain committed to the opening of new sites, upon significant customer contract awards, in new territories using the remaining c.GBP4 million of EIS/VCT cash raised at the time of the IPO and ahead of the timetable for this cash to be employed of 18 May 2019 when the EIS/VCT tax reliefs may then be affected (in the absence of any other EIS/VCT qualifying expenditure). Under current legislation, EIS/VCT cash can be considered to be employed in advance of the date of actual cash expenditure.

The Company has continued its investment in sales and business development, including on-going work in relation to opening a new European facility and this, and the date when the remaining EIS/VCT funds are employed, is dependent upon the company securing a significant customer contract.

Revenue visibility

As previously reported, for both FY19 and FY20, the Company continues to have visibility of revenues of GBP23 million per annum from contractual relationships already in place, subject to customer demand fluctuations. The Company's pipeline of live opportunities continues to grow steadily and the Board remains confident that it will secure future revenue growth from both new customers and from new business wins with existing customers.

Mark Mills, Executive Chairman commented:

"We will finish this financial year in line with the previously announced revised expectations. The Company faces challenges in terms of timely new customer acquisition and onboarding. The Company now needs to build momentum with increased focus on winning additional work from existing customers and those close to the UK to drive more rapid revenue growth and then build out from there in terms of new territories."

Directorate change

Following the trading update issued on 4 September 2018 and subsequent Directorate changes announced on 5 September 2018, Jon Bridges will no longer serve on the Board of the Company with immediate effect. Mark Mills will continue in his role as Executive Chairman on an interim basis whilst the search for a new CEO is accelerated with a view to seeking an external candidate.

Progress is being made with regard to the search for a new CFO and the Company expects to be in a position to update on progress on this search in early 2019 as well as updating on the progress of the search for a new CEO thereafter.

The Company expects to publish its Final Results for the year ended 31 October 2018 on 22 January 2019.

Ends

CONTACT DETAILS:

 
 Velocity                                        c/o Camarco 
  Mark Mills, Executive Chairman                  Tel: [phone] 
                                                  4980 
 
   finnCap (Nominated Adviser and Broker)         Tel: [phone] 
   Ed Frisby / Scott Mathieson / Hannah Boros     0500 
   (Corporate Finance) 
   Tim Redfern (ECM) 
 
   Camarco (Financial PR)                         Tel: [phone] 
   Ed Gascoigne Pees, Georgia Edmonds             4980 
 

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via a regulatory news service this inside information will be considered to be in the public domain.

About Velocity Composites

Velocity Composites is a manufacturer of advanced composite material kits for the aerospace industry disrupting the composites supply chain to deliver engineered waste reduction solutions for its customers to build aircraft components using less time and material. The Company's customers include multi-national manufacturers of composite parts and assemblies, who in turn deliver to the world's leading civil and military aircraft manufacturers. The Airbus A320, A330, A350, A380, Eurofighter Typhoon, F35 Joint Strike Fighter and Boeing 737, 787 and V22 Osprey are all constructed using parts manufactured from Velocity's kits. The Company's business model reduces the operating costs of preparing composite materials ahead of their usage in the construction of an aircraft part and as such, its offering is disposed to being self-financing for aircraft parts' manufacturers. Velocity's services are seeing increased demand as the global aircraft industry enters a more-for-less era. Velocity currently has customers in the UK and Continental Europe.

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October 26, 2018 08:00 ET (12:00 GMT)