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REG - Velocity Composites - Trading Update & Notice of Results

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RNS Number : 3747P  Velocity Composites PLC  22 May 2024

22 May 2024

 

 

Velocity Composites plc

("Velocity" or the "Company")

 

Trading Update & Notice of Results

 

Velocity Composites plc (AIM: VEL.L), the leading supplier of advanced
composite material kits to the aerospace market, is pleased to announce the
following trading update for the six months ended 30 April 2024 ("H1 FY24").
The Company expects to publish its H1 FY24 results on 9 July 2024.

 

The Board is pleased to confirm that trading in H1 FY24 has continued to be
strong, and in line with management forecasts. The Company expects to report
H1 FY24 revenue of £10.7m (H1 23: £7.0m) and an EBITDA loss of £0.2m (H1
FY23: loss of £0.9m). Cash at bank as at 30 April 2024 was £1.8m (H1 FY23:
£1.2m) and net cash of £0.6m (H1 FY23: net debt of £1.8m).

 

The Group guidance for FY24 remains unchanged with H2 revenue growing through
inflationary price rises for existing contracts taking effect and production
rates increasing on the Company's initial major US contract (the "US
Contract"). As previously stated, the Company expects to be profitable and
cash generative in H2 FY24.

 

In line with the Company's announcement on 20 December 2022, the US Contract
is worth £79m in revenue over the next five years since its commencement on 1
January 2024.  Since completing the construction of the Company's new
US-facility in Alabama in 2023, Velocity has been undertaking the extensive
onboarding of new business for the US Contract. This lengthy process requires
a detailed qualification procedure known as First Article Inspection ("FAI").

 

As announced on 11 March 2024, the Company received OEM approval for phase 4
of the FAI process. As at 22 May 2024, Velocity has completed FAIs which
enable the Company to satisfy 90% of FY24 US revenue and 77% of FY25 US
revenue, with the remainder expected to be completed in FY24.

 

Across the global aerospace industry, production rates continue to recover.
Airbus has announced a doubling of A350 production rates through to 2027. The
Company is continuing to work on securing additional contracts and has live
bids in with customers in the US and in Europe.

 

Although progress has slowed in some cases in the US due to the well
publicised issues with Boeing, these issues have no impact on the Company's
contracted revenues for FY24 or FY25. Confidence remains high that once the
current regulatory issues are cleared, Boeing will recommence with previously
planned rate increases in key programmes including the B737, B777x and B787.
Velocity has a balanced pipeline of current and prospective contracts and is
focusing on non-Boeing customer engagement in the short term.

 

Jon Bridges, CEO, Velocity, said: "The first half has been one of progress,
especially in the US. We are on track to deliver FY24 expectations and ongoing
growth in the coming years as aircraft production rates continue to recover.
Velocity is capitalising on the growing use of composites within aerospace as
manufacturers look to reduce carbon emissions and costs by outsourcing
non-core processes. These trends have led to our current qualified pipeline of
£200m. We are well placed to deliver future growth in this highly regulated
and rapidly growing sector."

 

Enquiries:

 

 Velocity Composites plc                        +44 (0) 1282 577577

 Andy Beaden, Chairman

 Jon Bridges, Chief Executive Officer

 Andrew Hebb, Interim Chief Financial Officer

 Canaccord Genuity Limited                      +44 (0) 20 7523 8000

 Nominated Adviser and Joint Broker

 Max Hartley

 George Grainger

 Dowgate Capital Limited                        +44 (0) 20 3903 7715

 Joint Broker

 Russell Cook

 Nick Chambers

 SEC Newgate                                    +44 (0)7540 106 366

 Financial Communications                       velocity@secnewgate.co.uk

 Robin Tozer

 George Esmond

 Harry Handyside

 

About Velocity Composites plc

Based in Burnley, UK, Velocity is the leading supplier of composite material
kits to aerospace and other high-performance manufacturers, that reduce costs
and improve sustainability.  Customers include Airbus, Boeing, and GKN.

 

By using Velocity's proprietary technology, manufacturers can also free up
internal resources to focus on their core business.  Velocity has significant
potential for expansion, both in the UK and abroad, including into new market
areas, such as wind energy, urban air mobility and electric vehicles, where
the demand for composites is expected to grow.

 

 

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