Trading Update

RNS Number : 6446Z

Velocity Composites PLC

04 September 2018

 

4 September 2018

 

VELOCITY COMPOSITES plc

("Velocity" or the "Company")

Trading Update

Velocity Composites plc, the leading supplier of advanced composite material kits which provides engineering value-solutions for the global aerospace industry updates the market with its trading position ahead of its year end at 31 October 2018.

The Company continues to make progress towards its year end targets. However, a number of factors, which are set out below, mean that revenue in the year is now likely to be lower than current market expectations with a consequent impact on profitability at the EBITDA level. The adverse factors include longer lead times in customers finalising the contractual position, delays in the placing of production orders where contractual terms have been agreed, delays following requests for configuration changes by contracted customers, and in one case the loss of a programme by a customer.

Consequently, full year revenues for the current financial year are now expected to be approximately £24 million representing year on year growth of 16 per cent.

Much of the reduction in expected revenue levels is related to timing (in relation to both the finalisation of new contract wins and the time it has taken to onboard some of the new programmes into production) and as such the Company has continued to incur costs both in the preparation for the onboarding of new programmes and in relation to securing additional mandates.

Gross margins in the second half of FY18 have now recovered to over 19% on a monthly basis from the previously announced lower than expected levels in the first half year. Given the continued investment in sales and business development, including on-going work in relation to opening a new European facility, partly offset by the recovery in gross margins, the Company now expects to report a low single digit EBITDA margin (%) loss for the year ended 31 October 2018.

The Company currently has a net cash position of approximately £4.0 million and has access to a pre-agreed debt facility of approximately £5.0 million when needed, of which a maximum of £1.0 million has been utilised at any one point in time over recent months.

For both FY19 and FY20, the Company has visibility of revenues of £23 million per annum from contractual relationships already in place, subject to customer demand fluctuations. The Company's pipeline of live opportunities continues to grow, and the Board remains confident that it will secure the future revenue growth from both new customers and new business wins from existing customers that it has set out to achieve.

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CONTACT DETAILS:

Velocity Jon Bridges, CEO Alan Kershaw, CFO	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) Georgia Edmonds / Owen Roberts / 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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