Velocity Composites PLC AGM statement and trading update (9852F)
27 February 2018 - 6:01PM
UK Regulatory
TIDMVEL
RNS Number : 9852F
Velocity Composites PLC
27 February 2018
27(th) February 2018
Velocity Composites plc
("Velocity" or "the Company")
AGM statement and trading update
Velocity Composites plc, the provider of highly engineered kits
for the aerospace industry, is today holding its first Annual
General Meeting as a quoted company at which Mark Mills, Chairman,
will make the following remarks:
"2017 was a transformational year for the Company, in which
Velocity was admitted to AIM and the strength of the Velocity
proposition, built up over the last 10 years, and the business
model was further proven by strong levels of industry take up,
including several new customers. These customers rightly seek to
reduce costs and increase their own manufacturing capacity by
outsourcing the non-core aspects of their operations and using
Velocity's model of highly engineered composite and consumable kits
being delivered just in time, line side, in the form of use.
The amount of revenue contracted for the current financial year
ended October 2018 is also significant (provided there are no
fluctuations in demand signals from customers) and is currently
circa GBP23.0m. In addition, the Company has agreed in principle a
further GBP4.5m of revenue which is expected to be contracted
imminently. In some cases, the Company has already started work on
this business and projects. Together this equates to circa GBP27.5m
of contracted or agreed in principle revenue which represents 79%
of current market expectations for the full year.
Progress on new business continues to be made and encouragingly,
the amount of work, to discharge over the remainder of FY18 through
to FY20, without any new business wins, already exceeds GBP50m (and
at suitable gross margins) and will increase further upon agreement
to new contracts. In recent months there have been some demand
reductions with some platforms (e.g. A330, A380 and A400M)
decelerating faster than anticipated. The Board has also identified
a potential contract which was initially determined to be
profitable, on the basis of a stable rate of build. However, the
customer recently advised a rate reduction and, as such, Velocity
has declined the contract on the basis of significantly reduced
profitability. These two developments have had an impact of
approximately GBP2m on the visibility of this year's revenue
outturn, but management is confident that further work can be won
to replace the above and bridge the gap in order to meet market
expectations for the year ended October 2018, if market conditions
and customer demand remain stable.
Work has been undertaken to rectify some of the contract
structuring to prevent the Company from suffering from a gross
margin perspective should demand volumes from customers be lower
than forecast. Even though the first three months of the financial
year are the quietest for the Company, gross margins have increased
over the period and the Company aims to return to gross margins
more reflective of historic levels.
Board changes
Peter Turner has indicated to the Board that he would like to
retire as he approaches his 70(th) birthday. Peter has agreed to
stay on the Board until one or more suitable replacements as
non-executives have been found and, in particular, a replacement as
head of the audit committee. A search has already started for two
new non-executives and a further announcement will be made when
appropriate. Following consultation with key shareholders, the
intention is to appoint one non-executive Director with an audit
and finance background alongside another one with manufacturing and
public company experience.
Outlook
Since IPO, the Company has won significant new business and
momentum remains firmly with the Company as they are approached by
more and more potential customers looking for significant savings
versus their existing processes. Velocity has started to benefit
from economies of scale and this will drive further cost savings,
both for the Company and its customers.
The Board remains excited about the prospects for the Company
and this has been reinforced by recent additional industry
accreditations that provide the Company with access to new
platforms and programmes.
In addition to the above, we continue to expand the customer
base, including for programmes to be delivered to customers in
Europe and beyond. The scale of composite production in these
locations dwarfs the UK market and progression of these
opportunities remains the correct strategy. As indicated with the
full year results, we continue to make significant progress with
respect to opening a new facility and expect to complete this
during the current calendar year.
The Board continues to look forward to the future with
confidence as the Company reinforces its position with customers
and suppliers, enabling rapid, profitable growth this year and
beyond."
CONTACT DETAILS:
Velocity c/o Camarco
Jon Bridges, CEO Tel: 020 3757
Alan Kershaw, CFO 4980
finnCap (Nominated Adviser and Tel: 020 7220
Broker) 0500
Adrian Hargrave / Scott Mathieson
/ Kate Bannatyne (Corporate Finance)
Tim Redfern / Sultan Awan (Corporate
Broking)
Camarco (Financial PR) Tel: 020 3757
Georgia Edmonds / Owen Roberts 4980
/ James Crothers
About Velocity Composites
Velocity Composites is a manufacturer of advanced composite
material kits for the aerospace industry, delivering 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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