Velocity Composites plc (AIM: VEL), the leading supplier of advanced composite material kits to the Aerospace sector, is pleased to announce its unaudited half-year results for the six months ended 30 April 2021 (the “Period” or “H1 FY21”).

Financial Highlights:

• Sales volumes stabilised following impact of Covid-19 on Aerospace sector, with revenue for six months to 30 April 2021 of £4.4m (H1 FY20: £9.5m)
• Successful drive for technological, operational and cash flow efficiencies have been successful, with improved gross margin of 25.1% (H1 FY20: 20.5%)
• Adjusted EBITDA1 loss for H1 FY21 of £0.6m (H1 FY20: loss £0.3m)
• Operating loss before tax for H1 FY21 of £1.1m (H1 FY20: loss £0.6m)
• Cash at Bank as at 30 April 2021 of £3.5m including £0.7m of EIS funds2 (30 April 2020: £2.8m and including £1.2m of EIS funds)
• Since the period end Velocity has been successful in partnering with Close Brothers to secure an additional £0.6m net cash inflow through a Top-up CBILS and asset financing facility
• Velocity remains on track to move back into positive EBITDA during H2 2021

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.
2. EIS funds earmarked for EIS/VCT qualifying expenditure and is deemed to be ‘employed’ for those purposes in accordance with the relevant regulations.

Operating highlights

• The new Velocity partnership proposition has been utilised by both existing and prospective new customers, allowing the wider value of the Velocity service to be highlighted and recognised, particularly through the disruption of 2020-2021.
• Developments in the Company’s core technology, particularly around real time supply chain/demand management, material efficiency and operational performance has driven improved service offerings to customers and internal margins.
• Following a period of development with a large, multinational defence group the Company achieved full approval to supply structural material kits for the F35 joint strike fighter programme.
• Strong pipeline of new business remains notwithstanding continued disruption for civil aviation customers and restrictions on the Company’s ability to travel to international customer locations.

Current trading and outlook

Since period end significant progress has been made with three of the Company’s largest customers, with whom contract extensions entered into during H1 FY21 secured future annual revenues of £8.1m at what are currently suppressed build rates. The Board remains confident in the long-term prospects of the Company, with Velocity well placed to capitalise on the underlying recovery of the Aerospace sector and to benefit from new customer acquisition as industry priorities refocus on supply chain efficiencies as the wider industry builds back from the impact of Covid-19. With the pipeline expected to continue to improve as travel restrictions are eased, the Board is now cautiously optimistic as to the prospects for an improved second half performance in FY21 and into FY22.

Read the full report in our Reports & Presentations section.

Full RNS can be viewed here Half-year Report