Board Update

RNS Number : 2713G

Velocity Composites PLC

05 November 2018

 

VELOCITY COMPOSITES plc

("Velocity" or the "Company")

BOARD UPDATE

Velocity, the leading supplier of advanced composite material kits, providing engineering value-solutions for the global aerospace industry, notifies its shareholders that its Executive Chairman, Mark Mills, received correspondence on Friday 2^nd November 2018 demanding one or more Board Member resignations and proposing the reappointment to the Board of Jonathan (Jon) Karl Bridges who left the Board on 26^th October 2018 and Peter Graham Turner who resigned from the Board on 2^nd August 2018.

Request received

The Company received the correspondence stating that Jon Bridges and co-founders Gerard Johnson and Christopher Banks are acting together and are requesting one or more Board Member resignations by 5.00 p.m. today (5th November 2018) and that Jon Bridges and Peter Turner be reappointed to the Board.  It also states that should some form of resignation not be forthcoming, Jon Bridges, Gerard Johnson and Christopher Banks will requisition a general meeting to effect these changes.

Background and chronology

By way of background, at the time of the flotation in May 2017, Gerard Johnson and Christopher Banks resigned from the Board. At the same time, Christopher Banks moved to a part time role. Peter Turner announced his retirement from the Board on 27^th February 2018 and resigned on 2^nd August 2018.

On 5^th September 2018, following a Trading Update, Jon Bridges resigned from the role of CEO but remained on the Board as Chief Technical Officer (CTO) with responsibility for new customer and contract acquisition. Following Jon Bridges' resignation as CEO, it was agreed that Mark Mills would move from Non-Executive Chairman to the role of Executive Chairman.

On 25^th October 2018, the contracts of employment of Gerard Johnson and Christopher Banks were terminated as part of a restructuring plan agreed by the Board and they left the Company with immediate effect.

Since 5^th September 2018, and as previously announced, progress is being made regarding the search for a new CFO and the Company expects to be in a position to update on further progress on this search in early 2019 as well as updating on the progress of the search for a new CEO.

Once a new CEO is appointed, the role of the Chairman will return to a Non-Executive basis.

Strategy

On 26^th October 2018, the Company announced that revenue for the year ending 31^st October 2018 was likely to be slightly above £24 million and the net cash position (excludes finance lease obligations) was forecast to be in the region of £3.6 million at the year end.

An emerging strategy has been shared with the Company, including all the staff, outlining where the Board believes new contracts can be secured and new sites can be opened, subject to a significant customer contract being secured. Other recent actions to reduce operating costs include the termination of contracts of employment of several highly paid employees.

The strategy includes taking advantage of the reduced operating costs achieved and these savings being deployed to increase the number of customers using Velocity's services. Velocity's Board's focus remains to help manufacturers reduce costs, increase build rates and grow shareholder value.

Summary

The Board is united in its strategy.

Whilst Jon Bridges, Gerard Johnson and Christopher Banks hold approximately 42.95% of the shares in the Company, the Board is focused on all shareholders' interests. The Board does not consider that the appointment of Jon Bridges and Peter Turner would be in the interest of all shareholders.

Indeed, the Board believes that the approach is potentially damaging to the Company, its shareholders, employees, customers and supply chain at the current time when the focus should be on the future and improving business wins and performance.

The demand for resignations contained no outline of any change of strategy nor gave any reason for the proposed resignation or resignations. None of the Directors are currently considering resignation, but, if Jon Bridges and Peter Turner are successfully reappointed to the Board, Mark Mills will resign and independent Non-Executive Directors Brian Tenner and Meera Parmar have indicated that they are minded to resign.

The Board provides the following comment:

"Velocity is a growing business and hard decisions had to be made to reduce costs and develop a team to improve the performance of the business whilst disrupting the aerospace composites' supply chain. The Board's decisions are in the best interests of all shareholders.

"As previously stated, the Company faces challenges in terms of timely new customer acquisition and onboarding. The Company now needs to build momentum with increased focus on winning additional work from existing customers and others close to the UK to drive more rapid revenue growth and then build out from there in terms of new territories.

"The Board will always welcome positive dialogue with shareholders, but this is an ill-conceived and unwelcome distraction and the Board asks the broader shareholder base to reject it out of hand as well as any further attempts to pressurise the Company into adversely affecting the composition of the Board."

The Company expects to publish its Final Results for the year ended 31^st October 2018 on 22^nd January 2019. 

Ends

CONTACT DETAILS:

Velocity Mark Mills, Executive Chairman	c/o Camarco Tel: [phone]
finnCap (Nominated Adviser and Broker) Ed Frisby / Scott Mathieson / Hannah Boros (Corporate Finance) Tim Redfern (ECM)	Tel: [phone]
Camarco (Financial PR) Ed Gascoigne Pees, Georgia Edmonds, James Crothers	Tel: [phone]

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.  Upon the publication of this announcement via a regulatory news service this inside information will be considered to be in the public domain. 

 About Velocity Composites

 Velocity Composites is a manufacturer of advanced composite material kits for the aerospace industry disrupting the composites supply chain to deliver 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. Velocity currently has customers in the UK and Continental Europe.

 

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