Trading Update & Notice of Results
Velocity Composites, the leading supplier of composite material kits to aerospace and other high-performance manufacturers, that reduce costs and improve sustainability, provides the following trading update for the 12 months to 31 October 2021, ahead of the publication of its results on Monday 24 January 2022.
The Board is pleased to confirm that trading has continued in line with the performance reported by the Company in its interim results for the six months ended 30 April 2021 on 24 May 2021. Furthermore, in line with previous guidance, the Board expects the Company will achieve its stated target of an EBITDA breakeven position in the second half of FY2021. It is therefore expected Velocity will report an EBITDA loss of £0.5m for the full year (FY2020: £1.9m), being the loss incurred in the first half of the financial year.
The Company anticipates that sales for the year to 31 October 2021 will be no less than £9.5m (FY2020: £13.6m). Contracted sales remained suppressed as a result of the reduced levels of OEM aircraft production rates. Industry forecasts show that production rates are expected to pick up in 2022, with stronger growth expected in 2023. Importantly, the trend continues to towards the increasing use of composite materials by global aerospace manufacturers, in defence and civil sectors, driven by commercial aircraft requirements to be more fuel efficient through light-weighting, as a key element of global sustainability policies. As a result, Velocity is seeing increased opportunities for new business, as the sector emerges from the pandemic.
The Company has benefited during 2021 from continued Government COVID-19 support and has been able to realise gains during the period from inventories that were previously expected to become obsolete due to suppressed demand being utilised. As a result the Company has been able to maintain ongoing investment in its technology and engineering capabilities throughout the year. Moving into 2022, some additional cost savings and increases in underlying volumes will replace the support received in 2021.
Investment in growth will be central to the Company’s strategy in 2022, especially given the expected opportunities for large increases in industry volumes from 2023 onwards. The potential for increases in new business wins over the coming years will be significant.
The Company’s focus on maintaining robust liquidity during the period means the Board is confident that Velocity is well placed to invest in and capitalise on these future opportunities. As at 31 October 2021, cash at bank was £3.4m (FY2020: £3.3m) with a net cash position of approximately £0.7m (FY2020: £0.9m), net of £2.3m CBIL liabilities and £0.5m hire purchase agreement liabilities. All invoice discounting facilities, of £1.3m based on outstanding receivables, remain undrawn at year end.
Andy Beaden, Velocity Composites Chairman, said: “We renewed all our major long term contracts during the past year and were able to continue to invest in our technology and engineering supply chain skills. This puts the Company in a stronger position to exploit the large potential gains from an industry now increasing its production rates once again and increasing its adoption of composites in Aerospace. Our smart technology solutions provide the perfect answer to the need for the industry to reduce material waste and drive forward the changes needed to meet the global sustainability agenda.”
Velocity +44 (0) 1282 577577 Andy Beaden, Chairman Jon Bridges, Chief Executive Officer Chris Williams, Finance Director
Cenkos (Nominated Adviser and Broker) +44 (0)20 7397 8900 Ben Jeynes +44 (0)20 7397 1974 Katy Birkin +44 (0)20 7397 1976
SEC Newgate (Financial PR) +44 (0)20 3757 6867 Robin Tozer Richard Bicknell