Six Month Trading Update and Notice of Results
Velocity Composites plc (AIM: VEL), the leading supplier of advanced composite material kits to aerospace and high-performance manufacturers, is pleased to provide the following trading update for the six months to 1 May 2022 (“H1 FY22”). The Company expects to announce its H1 FY22 results on 29 June 2022.
The Board is pleased to report that Velocity’s sales for H1 FY22 are in line with management expectations at £5.9 million (H1 FY21: £4.4 million), albeit impacted by sales mix due to extended effects of the pandemic and material supply chain pressures. The Company invested £0.3 million in H1 FY22 to support growth, international business development and R&D in Velocity’s proprietary digital technology. This investment is expected to deliver an adjusted EBITDA loss for H1 FY22 of £0.3 million (H1 FY21: loss £0.5 million), slightly ahead of management expectations.
The Company is seeing progress with international markets re-opening as the pandemic subsides, which has improved the global recovery in aerospace manufacturing. As a result, the Company is planning to resume expansion into North America and Europe. Furthermore, in H1 FY22, there has been initial success in diversifying the focus of Velocity from civil aerospace into other sectors, including high-performance automotive manufacturing and defence. The Company is looking to develop these sectors further with targeted resources and investment.
The Company’s cost base has stabilised, and the Company has successfully sustained investment in growth in H1 FY22. Underlying demand from aerospace manufacturing for the Company’s products and services is returning, with signs of further recovery in FY22, which is expected to be more significant in terms of sales in FY23.
Velocity’s cash flow and liquidity are also in line with management expectations. The Company continues to drive cash flow efficiencies through improved working capital management and is monitoring working capital closely ahead of the expected sales recovery and future growth.
As at 1 May 2022, the Company’s cash at bank was £2.0 million (1 May 2021: £3.5 million), with anticipated key movements through underlying business performance (£0.3 million), debt servicing (£0.5 million), and working capital investment to support recovery (£0.6 million). Post period end, the Company’s cash balance has improved to £2.4 million as at 20 May 2022. The Company has access to two invoice discounting facilities, including a key customer facility, both of which remain undrawn as at 1 May 2022. At current sales levels, these facilities offer a combined drawdown capacity of £2.5 million.
The Board and management look forward to the future with confidence in the long-term prospects of Velocity.
Velocity Composites - +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
SEC Newgate (Financial PR) - +44 (0)7540 106 366
Robin Tozer / Richard Bicknell