Velocity Composites PLC – Final Results for the year ended 31 October 2018

Velocity Composites PLC – Final Results for the year ended 31 October 2018

Velocity Composites plc, the leading supplier of advanced composite material kits, providing engineering value-solutions for the global aerospace industry, is pleased to announce its results for the year ended 31 October 2018.

Highlights

  • Year on year revenue growth from new and existing customers of 14% to £24.5m (FY17: £21.4m)
  • Gross margin of 18% for FY18 (FY17: 18%) with an increased second half margin of 21% following recovery from lower first half margins arising from unforeseen customer changes and onboarding multiple programmes
  • Operating loss for FY18 of £1.1m (FY17: £0.5m), with an operating profit of £0.1m in second half FY18 (before exceptional costs of £0.3m) arising from the continued investment in growth and the above improvements to gross margin in H2 FY18
  • Net cash at 31st October 2018 of £4.1m (FY17: £4.3m) (after invoice discounting) including £3.8m of EIS funds
  • The Group is no longer able to employ the EIS funds by the May 2019 deadline
  • Contracted business of over £67m for the FY19-FY21 period, subject to customer demand fluctuations (including £17m of contract renewals)
  • International NADCAP accreditation awarded for kitting service provider to all aerospace primes
  • Award of three-year contract to supply complex design consumable kits to Boeing 737 Max programme (£3m)
  • Award from a new customer in continental Europe to supply composite material kits for a two-year period for the component parts for the Leading Edge Aviation Propulsion (“LEAP”) engines used on the Airbus A320 NEO and Boeing 737 Max ($6m)
  • Twelve month contract extension awarded providing composite material kits across the Airbus range of aircraft and regional business jets (£10m)
  • Appointment of two new Independent Non-Executive Directors, Meera Parmar and Brian Tenner
  • The Board expects the revenue and gross margin ratio to be at similar levels in FY19

Mark Mills, Executive Chairman of Velocity said:

“I am pleased to report that our results for the year ended 31st October 2018 showed a revenue growth of 14% to £24.5m and a net cash balance of £4.1m which whilst pleasing for the growth and underlying profitability was disappointing compared to our plans for the year.”

“Velocity has continued its strategy of disrupting the composites supply chain and targeting customers where savings can be generated in material and labour costs alongside other tangible benefits to aerospace parts’ manufacturers. During the year the Group was awarded a contract to supply complex designed consumable kits for the Boeing 737 Max programme (£3m), a tactical project supplying structural material kitting for an Airbus A320 aircraft engine (£0.7m), a package from a new continental European customer who is a Tier 1 manufacturer of component parts for the Leading Edge Aviation Propulsion (“LEAP”) engines used on the Airbus A320 NEO and Boeing 737 Max ($6m), and an extension to a Long Term Agreement with an existing UK customer manufacturing component parts across the Airbus fleet and on regional business jets (£10m).”

“The Board is confident that once the current dialogue with the founding shareholders has been concluded, the Group will be able to refocus on its long-term strategic growth, which is to deliver cost savings for our customers in the aerospace manufacturing supply chain in a profitable way for the Group, and in the short-term performance of the Group where it has the resources and skills available, both business and financial, to enable it to continue to deliver the services it has built its reputation on in a way which provides a profitable return to the Group.”

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