Velocity Composites PLC Trading Statement (5115Z)
24 May 2021 - 4:00PM
UK Regulatory
TIDMVEL
RNS Number : 5115Z
Velocity Composites PLC
24 May 2021
24 May 2021
Velocity Composites plc
("Velocity" or the "Company")
Trading Update and Notice of Results
Velocity Composites plc (AIM: VEL), the leading supplier of
advanced composite material kits to the aerospace sector, is
pleased to provide the following trading update for the six months
to 30 April 2021 ("H1 FY21").
The Board reported at the time of the FY20 full year results in
January that having reduced the Company's operating cost-base
following the adverse impact of the Covid 19 pandemic, Velocity is
well placed to capitalise upon anticipated improving market
conditions. In addition the new partner proposition from the
Company has been well received by both existing and prospective new
customers.
Since the start of the year the Company has made significant
progress, with the announcements of three key contract extensions
during H1 with three of the Company's largest customers, which
represent in total an estimated annual value of over GBP8.1 million
at current impacted build rates. This provides Velocity with a
strong financial base for future growth. Whilst there has been a
continuing reduction in near-term customer demand, as aerospace
industry production is curtailed by COVID-19, progress made by the
Company in the first half of 2021 provides the Board with a high
level of confidence as to the long-term prospects of the business
through continued efforts around prudent financial management and
strategic re-alignment.
Trading update
As announced previously, demand in the current financial year
ending 31 October 2021 ("FY21") remains suppressed due to the
impact of Covid-19, although the Board now views with cautious
optimism, prospects for an improved second half performance in FY21
and into FY22.
Although demand in the first six months has continued at the
levels seen in H2 FY20, sales have stabilised and Management expect
H1 FY21 sales of GBP4.4m (H1 FY20: GBP9.5m), leading to an adjusted
EBITDA loss for H1 FY21 of GBP0.5m (H1 FY20: Loss GBP0.3m). With
the organisational restructuring process completed, the Company's
cost-base is now in line with a target GBP13.5m sales breakeven
position and with further cost reduction activities Velocity is
well placed to return to a positive adjusted EBITDA in H2 FY21 and
FY22, albeit in challenging market conditions.
In addition to the aerospace contracts wins already announced
this year, work has progressed in promoting Velocity technology in
other composite material markets, particularly the defence sector.
Due to restrictions on international travel these initiatives have
been focused primarily in the UK and following a period of
development with a large, multinational defence group the Company
has recently achieved full approval to supply structural material
kits for the F35 fighter, in addition to the process material kits
already provided on this programme. Work is ongoing to establish a
commercial position on this platform to support advancements in
efficiency and digital manufacturing driven by Velocity's
technology offering. The F35 approval will also assist negotiations
with other suppliers into the same programme. These developments
have further strengthened the Board's confidence of an improved
trading position in the second half of the year.
Cash flow and liquidity remain satisfactory. The Company
continues to drive cash flow efficiencies through improved stock
management, reducing stock levels by over GBP1.1m since October
2020, and by the successful tenor extension of the existing GBP2.0m
CBIL facility as previously announced. Cash at bank was GBP3.5m as
at 30 April 2021 (30 April 2020: GBP2.8m) and the business remains
in a net cash positive position, after deducting debt drawing. The
Company continues to have access to its Invoice Discounting
Facility, which was undrawn as at 30 April, but has current
capacity of GBP1.6m based on outstanding receivables.
Notice of Results
The Company expects to announce its half year results for the
six months ending 30 April 2021 on 30 June 2021.
Enquiries:
Velocity Composites plc
Andy Beaden, Chairman
Jon Bridges, Chief Executive Officer
Chris Williams, Finance Director +44 (0)1282 577577
Cenkos Securities
(Nominated Adviser and Broker)
Russell Cook
Ben Jeynes +44 (0)20 7397 8900
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