29 January
2025
VELOCITY COMPOSITES
PLC
("Velocity Composites"
or the "Company")
Audited Final Results
for the twelve months ended 31 October 2024
Revenue up 40% with
positive adjusted EBITDA for the year
Velocity Composites
plc (AIM: VEL), the leading supplier of composite material kits to
aerospace, is pleased to announce the Company's audited results for
the twelve months ended 31 October 2024 ("FY24").
Highlights:
|
●
|
Total revenue
increased 40% to £23.0m (FY23: £16.4m)
|
|
●
|
US revenue quadrupled
to £7.9m (FY23: 2.0m) as production ramps up at US
facility
|
|
●
|
Gross margin up 710
bps to 25.9% (FY23: 18.8%) due to a better sales mix, inflation
adjustments and improved operational efficiencies
|
|
●
|
Adjusted EBITDA*
profit of £0.4m (FY23: loss of £1.6m)
|
|
●
|
Net cash position of
£0.7m at 31 October 2024 (FY23: £1.6m); Repaid CBILs Loan and lease
liabilities of £1.0m (FY23: £1.0m). As at 24 January 2025
the Group had a gross cash balance of £1.6m, a CBIL loan balance of
£0.8m and undrawn availability of £1.3m under invoice discounting
facilities.
|
|
●
|
Appointed experienced
CFO and Company Secretary Rob Smith to the Board in June
2024
|
Outlook:
|
●
|
A350 programme
production rates are expected to increase significantly as the OEM
strives to fulfil its order backlog. This is the largest
programme in the UK to which Velocity is a supplier
|
|
●
|
Final contracted
programme from previously announced agreement expected to reach
sustained
production at US site in H1
FY25
|
|
●
|
Additional programmes
at US customer being evaluated
|
|
●
|
Anticipated near-term
growth supports the Board's key targets:
·
25% plus gross
margin
·
10% adjusted EBITDA*
margin
·
25% return on
capital
|
|
●
|
The Board is confident
of delivering another year of strong growth in FY25
|
* Adjusted
EBITDA is defined as Earnings before interest, tax, depreciation,
amortisation, exceptional items and adjusted for share-based
payments.
Jon Bridges,
CEO. Velocity Composites added: "The Board
expects further revenue growth in FY25 and into the future, while
the Company retains a focus on investing in operating efficiency
and service delivery excellence on behalf of all of our key
customers. The long-term outlook for the industry is strong and
shareholders will benefit as production rates increase for both
existing and new business. We are confident that our services and
business model will deliver the expected growth."
Andy Beaden,
Chairman, Velocity Composites, said: "The long-term
OEM order books and forecasts in both civil and defence aerospace
markets remain robust, with major prime manufacturers planning
significant increases over the next few years in their production
rates. We have positioned our engineering services to aid that
challenge in unlocking capacity constraints and delivering
efficiencies in the composite supply chain. We believe growth for
Velocity is attainable over the longer term, through current
contracts and new business opportunities in Europe and the
US."
Investor
Presentation
Chairman Andy Beaden,
Chief Executive Officer Jon Bridges, and Chief Financial Officer
Rob Smith will provide a live investor presentation for the
Company's results via the Investor Meet Company platform at 09:00am
on Thursday 30 January 2025.
The presentation is
open to all existing and potential shareholders. Questions can be
submitted in advance via the Investor Meet Company dashboard, or at
any time during the live presentation. Investors can sign up to
Investor Meet Company and add to meet Velocity Composites plc
via:
https://www.investormeetcompany.com/velocity-composites-plc/register-investor
Enquiries:
|
Velocity
Composites
|
Tel: +44 (0) 1282
577577
|
|
Andy Beaden,
Chairman
Jon Bridges, Chief
Executive Officer
Rob Smith, Chief
Financial Officer
|
|
|
Canaccord
Genuity Limited (Nominated Adviser and
Broker)
|
Tel: +44 (0)20 7523
8000
|
|
Max Hartley
George
Grainger
|
|
|
Dowgate Capital
Limited (Joint
Broker)
|
Tel: +44 (0)20 3903
7715
|
|
Russell
Cook
Nicolas
Chambers
|
|
|
SEC
Newgate (Financial
Communications)
|
Tel: +44 (0)7540 106
366
|
|
Robin Tozer
George
Esmond
Harry
Handyside
|
Email:
velocity@secnewgate.co.uk
|
About Velocity
Composites
Based in Burnley, UK,
Velocity is the leading supplier of composite material kits to
aerospace, that reduce costs and improve sustainability.
Customers include BAE Systems. Hamble Aerostructures, Safran
Nacelles and GKN, who supply to the major OEMs including Airbus,
Boeing, GE, Rolls Royce and Lockheed Martin.
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.
Chairman's
Report
Introduction
Velocity has achieved
another year of exceptional growth. Revenue increased 40% to £23
million, up from £16.4 million in FY23, which itself represented a
37% rise on the prior year. Notably, the business achieved adjusted
EBITDA profitability for the full year and became cash positive in
the second half. We are firmly on course to achieve our objective
of long-term profitability and strong cash flow generation.
The 40% revenue growth was a remarkable achievement, when you
consider short-term production rates for OEMs in the civil aircraft
industry remained flat or declined in some areas during the
year.
The growth underscores
the considerable potential within Velocity's current contracts,
which will see further progress as the anticipated increases in
build rates materialise over the coming years. Our
engineering and business development teams are pursuing a broad
range of new opportunities with current and potential new
customers. The well documented disruptions at Boeing evidently
impacted the underlying supply chain which prompted us to pause
several advanced opportunities in the US and refocus on alternative
markets. This has included the defence sector, as NATO
countries are expected to increase spending. The five-year
breakthrough contract we agreed in December 2022 with a leading US
manufacturer, has strengthened our presence in the defence
market.
Environmental
Velocity is committed
to supporting the aerospace industry's environmental objectives,
including reducing emissions and waste, and promoting efficient
resource use. Carbon fibre, as a key material, offers significant
potential to lower environmental impact, the unit cost and
oil-based inputs make waste reduction essential. Velocity's
services focus on minimising material waste, contributing to a net
positive environmental outcome.
We are equally proud
of fostering a safe and secure manufacturing environment,
maintaining world-class employee safety standards.
Innovation
Our proprietary
Velocity Resource Planning (VRP) technology continues to deliver
operational excellence. This year, VRP was fully implemented at our
new US facility, transforming it into a world-class advanced
manufacturing site. This innovation enhances efficiency and raises
service levels for our customers, reinforcing our leadership in
advanced material resource planning.
People
Our lean,
technology-enabled back-office structure is a key advantage for
Velocity. Centralised teams in the UK support multiple factories
across R&D, Engineering, Sales, and Finance, enabling
scalability and cost-efficiency. To support our expected
growth, we have invested in hiring and training a significant
number of new employees during the year, incurring upfront costs
that will deliver long-term commercial benefits. Alongside this
investment in our operational and engineering teams, we
strengthened our senior management team, adding expertise in
Finance, Operations, and the US market.
Board
I would like to extend
my gratitude to Andrew Hebb for his invaluable contributions during
his second tenure as Interim CFO and Company Secretary. Andrew
stepped down in the summer of 2024, and we were delighted to
welcome Rob Smith as our new permanent CFO, Company Secretary and
Board Director. The Board's extensive industry expertise, combined
with a highly capable executive management team, is one of the
reasons Velocity is outperforming industry growth rates.
Outlook
Looking ahead, the
Board is confident of delivering another strong year of growth in
FY25, underpinned by our contractual business base. In response to
recent inflationary pressures, which affected short-term margins,
we successfully negotiated price increases with all key customers.
While market uncertainties persist, Velocity's consistent growth
record provides confidence that we are at a turning point and
expect to move towards sustained profitability and cash
generation.
On behalf of the
Board, I extend my heartfelt thanks to all stakeholders, especially
our investors, for their continued support.
Andrew
Beaden
Chairman
28 January
2025
Chief Executive
Officer's Report
Overview
This has been another
year of double-digit growth for Velocity. We have weathered the
production challenges facing the global aerospace industry, and we
are entering 2025 in a healthy position to support customers as
they look to ramp up production. The migration to composite
materials in newer aircraft models continues, as OEM's focus on
improved sustainability, as well as an expected increase in Western
defence expenditure, will continue to result in more opportunities
for Velocity.
Revenue was up 40% to
£23.0m (FY23: £16.4m), driven by growing US sales, and we had a
positive adjusted EBITDA of £0.4m, the first time since the
Covid-19 pandemic (FY23: loss £1.6m). The Group has maintained a
healthy cash and liquidity position with cash-inflows from
operating activities of £0.4m (FY23: outflows of £1.8m). We
anticipate further growth in FY25 and beyond, as higher monthly
production rates are expected in the global aerospace
industry.
US
Contract
Sales in the US
quadrupled to £7.9m (FY23: £2.0m) following the onboarding work
from a leading US manufacturer at our site in Alabama. This is part
of the five-year contract, announced in December 2022, with
expected total revenue of £79m ($100m) as announced at the
time.
At the half year, we
had successfully completed the First Article Inspection (FAI)
requirements needed from our customer and were awaiting completion
of the FAI process between our customer and the OEM. Whilst we
experienced delays in FY24, we have been working directly with our
US customer and the OEM to complete the necessary work in Q1 FY25,
allowing the US site to fully discharge the existing contracted
business, with sales increasing further as a result.
Customers
During FY24, we
renewed a number of long-term, existing contracts with customers,
which included price increases that factored in the increased costs
of labour, energy and finance that occurred since they were last
renewed. We have agreed with all key customers that while contracts
are typically rolling three to five-year agreements, inflation
costs will be reviewed annually based on pre-agreed indices to
ensure that any price changes are proportionate and accounted for
in their annual budgeting.
Operational
Development
We are rolling out our
Odoo-based Velocity Resource Planning (VRP) system into our UK
sites, following the successful implementation in the US. VRP
provides better controls, more efficient operational scenarios and
full traceability from long-term demand or order management to the
delivery of composite kits to customers. The system brings
all the bespoke data processing, batch traceability and life
managements used to date into one system that includes the more
"normal" and transactional process such as finance and order
processing. This enables uniform and real time management of the
entire business across all manufacturing and forward stock location
sites without local variations to the system architecture, bringing
immediate improvements to the resolution of system data along with
a standard platform for new sites. This improvement helps our
sustainability reporting as we measure, track and improve our
carbon footprint across all aspects of our business.
Market and
Business Development
At the start of FY24,
existing customers in key programmes (particularly A350) and bid
customers in other programmes (B737, B787) were forecasting
significant build rate increases as the industry started to return
to pre-pandemic production levels. In our trading update in
September 2024, the Company highlighted delays to planned
production rate increases across the global aerospace industry, in
part due to the well-publicised issues facing Boeing, which had a
short-term impact on the Group's expected growth in
FY24.
Since then, the two
largest civil aircraft manufacturers have reported record order
backlogs and positive book to bill ratios in 2024. We have noted
that the manufacturers are forecasting increased aircraft
deliveries in 2025, in an expected return to more predictable and
higher monthly production rates. This will in turn flow down to
Velocity's order books. For example, A350 production is planned to
double by 2028, the largest programme in the UK to which Velocity
is a supplier.
However, to ensure
Velocity has a broader range of relationships, and to hedge against
future problems in the civil aircraft market, our business
development teams are building on our relationships and developing
our business case with defence OEMs in Europe and the US. Global
defence expenditure is expected to continue to rise in response to
continuing Geo-Political uncertainties. Our services are identical
for defence customers who share similar issues to civil aircraft
manufacturers in terms of the need to improve fuel and operating
efficiencies.
This is progressing
along the expected long-term timelines for opportunities of this
scale, and complexity. Among other things, we are working to fulfil
the requirements for export controls and accreditations around
protected data needed to work closely with this
sector.
Outlook
The Company expects
further revenue growth in FY25 and beyond, while retaining a focus
on investing in operating efficiency and service delivery
excellence on behalf of all of our key customers. The long-term
outlook for the industry is strong and shareholders will benefit as
production rates increase for both existing and new business. We
are confident that our services and business model will deliver the
expected
growth.
Jonathan
Bridges
Chief Executive
Officer
28 January
2025
Financial
Review
Statement of
Comprehensive Income
Group revenue for FY24
increased 40.2% to £23.0m (FY23: £16.4m) as sales from our US site
ramped through the year.
Gross profit improved
to £6.0m (FY23: £3.1m) as a result of the increased sales revenue
and higher gross margin percentage of 25.9% (FY23: 18.8%) that was
achieved through a better sales mix, inflation adjustments and
improved operational efficiencies delivered in FY24 that are
expected to flow through to future years.
Administrative
expenses in FY24 were £7.0m (FY23: £5.8m, excluding exceptional
items), an increase of 20.7%. The main driver for the higher
expenditure was incremental costs associated with the US
operations. The US specific administrative expenses, before Group
recharges, were £1.6m in FY24 (FY23: £1.2m) as we continue to
invest in our capability in the US. The increase in volume
was therefore partially offset by overheads associated with growing
the US operation and resulted in an adjusted EBITDA profit of £0.4m
(FY23: EBITDA loss of £1.6m).
|
|
31
October
|
31
October
|
|
|
2024
|
2023
|
|
Reconciliation
from operating loss
|
£'000
|
£'000
|
|
|
|
|
|
Operating
loss
|
(931)
|
(2,817)
|
|
Add back:
|
|
|
|
Share-based
payments
|
143
|
206
|
|
Depreciation and
amortisation
|
622
|
413
|
|
Depreciation on right
of use assets under IFRS 16
|
540
|
472
|
|
Exceptional
administrative costs
|
-
|
120
|
|
|
|
|
|
Adjusted
EBITDA
|
374
|
(1,606)
|
The ramp-up in the new
US facility has continued at pace with additional cutting and
freezer storage capacity being added as well as on-going investment
in people to improve our capabilities. Two work packages are now
fully transferred and running in line with end customer demand. A
third work package, that was expected to transfer during FY24, has
been subject to additional approvals from the end customer, this
process is being finalised in the first half of FY25 with full
production volumes now anticipated in the second half of FY25. The
third work package will not require significant incremental
overheads and will utilise existing capacity.
There is considerable
further potential growth through OEM production rate increases on
existing programmes as well as opportunities on other programmes
with new and existing customers. Velocity has built an excellent
capability to deliver this growth without a linear increase to its
overhead base or installed manufacturing capacity.
Losses after tax for
the year for the Group amounted to £0.8m (FY23: £3.1m). The reduced
loss was a direct result of the increased revenue.
Cashflow and
Capital Investment
The cash and cash
equivalents balance as at 31 October 2024 was £1.7m (FY23:
£3.2m).
Operating cash inflow
before working capital movements for FY24 was £0.3m (FY23: £1.7m
outflow), this being attributable to increased revenue during the
year. The movements in working capital netted to a £0.4m outflow in
FY24 (FY23: £0.1m outflow), and after other adjustments for
taxation received, the final cash inflow from operations was £0.4m
(FY23: £1.8m outflow).
Working capital
movements can be further analysed as follows: There was a negative
working capital movement through a £0.4m decrease in trade and
other payables from suppliers (FY23: increase of £2.4m). Inventory
decreased by a £0.2m (FY23: increase of £1.3m), largely due to
improvements in operational efficiencies. Trade receivables
increased by £0.2m (FY23: £1.1m) driven by the increased turnover
offset by utilisation of supplier finance arrangements provided by
our lead US customer. Overall trade receivable days were 53 days,
compared to 71 days at the end of FY23.
Cash outflow from
investment activities was £0.6m (FY23: £2.1m). The reduction in
investment activities was a result of a return to normal levels
following the investment in commencement of operation at our
Tallassee facility in FY23.
Financing activities
cash outflow was £1.4m in the year (FY23: £4.8m generation
including £6.6m proceeds from issue of ordinary shares). The
outflow can be further analysed as: - finance costs paid £0.4m
(FY23: £0.3m), repayment of loans £0.5m (FY23: £0.5m) and repayment
of finance lease capital £0.5m (FY23: £0.5m).
The Company was in a
Net Cash position at the end of the year, of £0.7m (FY23: £1.6m).
This includes Cash at Bank, offset by the outstanding CBILS balance
and invoice discounting facility.
|
|
31
October
|
31
October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Cash
|
1,663
|
3,178
|
|
CBILS loan
|
(971)
|
(1,473)
|
|
Invoice discounting
facility
|
-
|
(68)
|
|
|
|
|
|
Net
cash
|
692
|
1,637
|
Going Concern
The financial statements have been
prepared on a going concern basis as the directors believe that the
Group has access to sufficient resources to continue in business
for the foreseeable future. This is discussed more fully in the
Directors' Report of the annual report and accounts.
Rob
Smith
Chief Financial Officer
28 January 2025
|
Consolidated Statement of Total Comprehensive
Income
|
|
Year ended
|
Year ended
|
|
|
|
31
October
|
31
October
|
|
|
|
2024
|
2023
|
|
|
Note
|
£'000
|
£'000
|
|
|
|
|
|
|
Revenue
|
4
|
23,006
|
16,411
|
|
Cost of sales
|
|
(17,045)
|
(13,325)
|
|
|
|
|
|
|
Gross profit
|
|
5,961
|
3,086
|
|
Administrative expenses
|
|
(6,978)
|
(5,783)
|
|
Exceptional administrative
expenses
|
8
|
-
|
(120)
|
|
Other Operating Income
|
|
86
|
-
|
|
|
|
|
|
|
Operating loss
|
5
|
(931)
|
(2,817)
|
|
Operating loss analysed
as:
|
|
|
|
|
Adjusted EBITDA
profit/(loss)
|
31
|
374
|
(1,606)
|
|
Depreciation of property, plant and
equipment
|
|
(382)
|
(297)
|
|
Amortisation
|
|
(240)
|
(116)
|
|
Depreciation of right-of-use assets
under IFRS 16
|
|
(540)
|
(472)
|
|
Share-based payments
|
|
(143)
|
(206)
|
|
Exceptional administrative
expenses
|
8
|
-
|
(120)
|
|
|
|
|
|
|
Finance income and
expense
|
9
|
(413)
|
(326)
|
|
|
|
|
|
|
Loss before tax from continuing operations
|
|
(1,344)
|
(3,143)
|
|
Corporation tax
recoverable
|
10
|
499
|
-
|
|
|
|
|
|
|
Loss for the year and total comprehensive
loss
|
|
(845)
|
(3,143)
|
|
|
|
|
|
|
Loss per share - basic from continuing
operations
|
11
|
(1.58p)
|
(8.18p)
|
|
|
|
|
|
|
Loss per share - diluted from continuing
operations
|
11
|
(1.58p)
|
(8.18p)
|
|
|
|
|
|
There is no other comprehensive
income in the current or prior year.
|
|
|
|
|
|
Consolidated Statement of Financial Position
|
|
31 October
|
31 October
|
|
|
|
2024
|
2023
|
|
|
Note
|
£'000
|
£'000
|
|
Non-current assets
|
|
|
|
|
Intangible assets
|
12
|
987
|
890
|
|
Property, plant and
equipment
|
13
|
1,854
|
2,095
|
|
Right-of-use assets
|
20
|
1,826
|
2,129
|
|
Total non-current assets
|
|
4,667
|
5,114
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventories
|
15
|
2,500
|
2,743
|
|
Trade and other
receivables
|
16
|
3,977
|
3,667
|
|
Cash and cash equivalents
|
17
|
1,663
|
3,178
|
|
Total current assets
|
|
8,140
|
9,588
|
|
|
|
|
|
|
Total assets
|
|
12,807
|
14,702
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Loans
|
19
|
503
|
503
|
|
Trade and other payables
|
18
|
3,933
|
4,587
|
|
Obligations under lease
liabilities
|
20
|
561
|
487
|
|
Total current liabilities
|
|
4,997
|
5,577
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Loans
|
19
|
468
|
970
|
|
Obligations under lease
liabilities
|
20
|
1,258
|
1,587
|
|
Provisions
|
26
|
218
|
-
|
|
Total non-current liabilities
|
|
1,944
|
2,557
|
|
|
|
|
|
|
Total liabilities
|
|
6,941
|
8,134
|
|
|
|
|
|
|
Net
assets
|
|
5,866
|
6,568
|
|
|
|
|
|
|
Equity attributable to equity holders of the
company
|
|
Share capital
|
23
|
134
|
133
|
|
Share premium account
|
24
|
4,870
|
4,870
|
|
Share-based payments
reserve
|
25
|
517
|
478
|
|
Retained earnings
|
|
345
|
1,087
|
|
|
|
|
|
|
Total equity
|
|
5,866
|
6,568
|
The Company has taken advantage of
the exemption allowed under section 408 of the Companies Act 2006
and not presented its own statement of profit and loss in these
financial statements. The loss for the year was £984,000. The
financial statements were approved and authorised for issue by the
Board of Directors on 28 January 2025 and were signed on its behalf
by:
Rob
Smith Director
Co No: 06389233
|
Consolidated statement of changes in equity
|
Share
|
Share
premium
|
Retained
|
Share-
based
payments
|
Total
|
|
|
capital
|
account
|
earnings
|
reserve
|
equity
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
As
at 31 October 2022
|
91
|
9,727
|
(7,102)
|
684
|
3,400
|
|
Loss for the year
|
-
|
-
|
(3,143)
|
-
|
(3,143)
|
|
|
|
|
|
|
|
|
|
91
|
9,727
|
(10,245)
|
684
|
257
|
|
|
|
|
|
|
|
|
Transactions with shareholders:
|
|
|
|
|
|
|
Share-based payments (note
25)
|
-
|
-
|
-
|
206
|
206
|
|
Transfer of share option reserve on
vesting of options and issue of equity
|
-
|
-
|
412
|
(412)
|
-
|
|
Issue of new shares net of
transaction costs
|
42
|
6,063
|
-
|
-
|
6,105
|
|
Reduction of Share Premium
Account
|
-
|
(10,920)
|
10,920
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
at 31 October 2023
|
133
|
4,870
|
1,087
|
478
|
6,568
|
|
|
|
|
|
|
|
|
|
Share
|
Share
premium
|
Retained
|
Share-
based
payments
|
Total
|
|
|
capital
|
account
|
earnings
|
reserve
|
equity
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
As
at 31 October 2023
|
133
|
4,870
|
1,087
|
478
|
6,568
|
|
Loss for the year
|
-
|
-
|
(845)
|
-
|
(845)
|
|
|
|
|
|
|
|
|
|
133
|
4,870
|
242
|
478
|
5,723
|
|
|
|
|
|
|
|
|
Transactions with shareholders:
|
|
|
|
|
|
|
Share-based payments (note
25)
|
-
|
-
|
-
|
143
|
143
|
|
Transfer of share option reserve on
vesting of options and issue of equity
|
1
|
-
|
103
|
(104)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
at 31 October 2024
|
134
|
4,870
|
345
|
517
|
5,866
|
Consolidated Statement of Cash Flows
|
|
Year
ended
|
Year
ended
|
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Operating activities
|
|
|
|
Loss for the year
|
(845)
|
(3,143)
|
|
Taxation
|
(528)
|
-
|
|
Profit on sale of assets
|
-
|
(4)
|
|
Finance costs
|
413
|
326
|
|
Amortisation of intangible
assets
|
240
|
116
|
|
Depreciation of property, plant and equipment
|
382
|
297
|
|
Depreciation of right-of-use
assets
|
540
|
472
|
|
Share-based payments
|
143
|
206
|
|
|
|
|
|
Operating cash flows before movements in working
capital
|
345
|
(1,730)
|
|
|
|
|
|
Increase in trade and other
receivables
|
(180)
|
(1,146)
|
|
Decrease/(Increase) in
inventories
|
243
|
(1,336)
|
|
(Decrease)/Increase in trade and
other payables
|
(654)
|
2,380
|
|
Increase/(Decrease) in
provisions
|
218
|
-
|
|
|
|
|
|
Cash (outflow)/inflow from operations
|
(28)
|
(1,832)
|
|
Tax received
|
398
|
-
|
|
|
|
|
|
Net
cash inflow/(outflow) from operating activities
|
370
|
(1,832)
|
|
|
|
|
|
Investing activities
|
|
|
|
Purchase of property, plant and
equipment net of intercompany transfers
|
(212)
|
(1,293)
|
|
Purchase of development
expenditure
|
(372)
|
(833)
|
|
Proceeds
from the sale of property, plant and equipment
|
-
|
4
|
|
|
|
|
|
Net
cash used in investing activities
|
(584)
|
(2,122)
|
|
|
|
|
|
Financing activities
|
|
|
|
Proceeds from issue of ordinary
shares
|
-
|
6,590
|
|
Share issue transaction
costs
|
-
|
(485)
|
|
Finance costs paid
|
(413)
|
(326)
|
|
Loan repayment
|
(502)
|
(536)
|
|
Repayment of lease liabilities
capital
|
(497)
|
(455)
|
|
|
|
|
|
Net
cash generate in financing activities
|
(1,412)
|
4,788
|
|
Net
/(Decrease)/Increase in cash and cash
equivalents
|
(1,626)
|
834
|
|
Cash and cash equivalents at 01
November
|
3,178
|
2,344
|
|
Effect of foreign exchange rate
changes
|
111
|
-
|
|
Cash and cash equivalents at 31 October
|
1,663
|
3,178
|
Notes to Financial Statements
1. General
information
Velocity Composites plc (the
'Company') is a public limited company incorporated and domiciled
in England and Wales. The registered office of the Company is AMS
Technology Park, Billington Road, Burnley, Lancashire, BB11 5UB,
United Kingdom. The registered company number is
06389233.
In order to prepare for future
expansion in the Asia region, the Company established a wholly
owned subsidiary company, Velocity Composites Sendirian Berhad,
which is domiciled in Malaysia. The subsidiary company commenced
trading on 18 April 2018. The Company also established a wholly
owned subsidiary company, Velocity Composites Aerospace Inc. to
prepare for future expansion in the United States of America. These
subsidiaries, together with Velocity Composites plc, now form the
Velocity Composites Group ('the Group').
The Group's principal activity is
that of the sale of kits of composite material and related products
to the aerospace industry.
2. Accounting
policies
Basis of
preparation
The consolidated financial
statements of Velocity Composites plc have been prepared in
accordance with UK-adopted international accounting standards and
International Financial Reporting Interpretations Committee (IFRIC)
interpretations.
These financial statements have been
prepared on a going concern basis and using the historical cost
convention, as modified by the revaluation of certain items, as
stated in the accounting policies. These policies have been
consistently applied to all years presented, unless otherwise
stated. The financial statements are presented in sterling and have
been rounded to the nearest thousand (£'000). References to
"FY24" refer to the year ended 31 October 2024, whilst references
to "FY23" are in respect of the year ended 31 October
2023.
The Company has taken advantage of
the exemption allowed under section 408 of the Companies Act 2006
and not presented its own statement of profit and loss in these
financial statements.
Basis of
consolidation
The consolidated financial
statements incorporate the financial statements of the Company and
its subsidiary undertakings and are made up to 31 October 2024.
Subsidiaries are consolidated from the date of acquisition, using
the purchase method.
Where necessary, adjustments are
made to the financial statements of subsidiaries to bring the
accounting policies used into line with those used by the Group.
The Group's subsidiaries have prepared their statutory financial
statements in accordance with IFRS standards.
Subsidiaries are entities controlled
by the Group. The Group controls an entity when it is exposed to,
or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its
power over the entity. In assessing control, the Group takes into
consideration potential voting rights. The acquisition date is the
date on which control is transferred to the acquirer. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the
date that control ceases.
Intra-group balances and
transactions, and any unrealised income and expenses arising from
intra-group transactions, are eliminated. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
The accounting policies set out
below have, unless otherwise stated, been applied consistently to
all years presented in the consolidated financial
statements.
There are no new accounting
standards or interpretations that are not yet fully effective that
could be expected to have a material impact on the
Group.
Going
concern
The financial statements have been
prepared on a going concern basis as the directors believe that the
Group has access to sufficient resources to continue in business
for the foreseeable future.
The key business risks and
conditions that may impact the Group's ability to continue as a
going concern are the utilisation of existing resources to finance
growth, investment and expenditure; the rates of growth and cash
generated by Group revenues, the timing of breakeven and positive
cashflow generation and the ability to secure additional debt or
equity financing in future if this became necessary. The primary
area of judgement that the Board considered, in the going concern
assessment, related to revenue expectations and
visibility.
The Board was mindful of the
guidance surrounding a severe but plausible assessment and,
accordingly, considered a number of scenarios in revenue reduction
against the original plans. A reverse stress test was constructed
to identify at which point the Group might run out of its available
cash. The test was designed specifically to understand how
far revenue would need to fall short of the base case forecast and
does not represent the directors view on current and projected
trading. The test was modelled over an 18-month period from the
date of signing the accounts and was based on budgeted trading that
took into account contracted orderbook and existing revenue streams
from current and contracted customer programmes. The sales revenue
in the budgeted model was reduced evenly across the Group to the
point where the projected month-end cash was equal to zero at any
point during test period. In the model, zero month-end cash was
reached in March 2026 when projected sales revenue was reduced to
80.6% of budget. For the reverse stress test, the Board
specifically excluded any significant upsides to this scenario.
This is despite strong incremental demand potential at both
existing and new customers. This most severe scenario also excludes
any mitigating reduction in the cost base that the Board would
clearly undertake in this event. In all scenarios modelled,
including the reverse stress test, the Group has sufficient
resources to operate and meet its liabilities throughout the going
concern review period without the inclusion of the impact of
mitigating actions.
At 31 October 2024, the Group had a
gross cash balance of £1.7m, a CBIL loan balance of £1.0m and
undrawn availability of £1.5m under invoice discounting facilities
of £3.0m. As at 24 January 2025 had a gross cash balance of £1.6m,
a CBIL loan balance of £0.8m and undrawn availability of £1.3m
under invoice discounting facilities of £3.0m. On a base case
scenario adopted for their assessment, the Board is comfortable
that the Group can continue its operations for at least a 12-month
period following the approval of these financial
statements.
As a result of this review, which
incorporated sensitivities and risk analysis, the Directors believe
that the Group has sufficient resources and working capital to meet
their present and foreseeable obligations for a period of at least
12 months from the approval of these financial
statements.
Revenue
recognition
Revenue is recognised as performance
obligations are satisfied as control of the goods and services are
transferred to the customer. Contracts are satisfied over a period
of time, with the dispatch of goods at a point in time. Revenue is
therefore recognised when control is transferred to the customer,
which is usually when legal title passes to the customer and the
business has the right to payment, for example, on
delivery.
The Group generates revenue from the
sale of structural and consumable materials for use within the
aerospace industry. This is the sole revenue stream of the
Group.
At contract inception (which is upon
receipt of a purchase order from a customer), an assessment is
completed to identify the performance obligations in each contract.
Performance obligations in a contract are the goods that are
distinct.
At contract inception, the
transaction price is determined, being the amount that the Group
expects to receive for transferring the promised goods - this is a
fixed price with no variable consideration. The transaction price
is allocated to the performance obligations in the contract based
on their relative standalone selling prices - this reflects the
agreed price as per purchase order for each product. The Group has
determined that the contractually stated price represents the
standalone selling price for each performance
obligation.
Revenue from sale of goods and
services is recognised when a performance obligation has been
satisfied by transferring the promised product to the customer at a
point in time, usually when legal title passes to the customer and
the business has the right to payment, for example, on delivery.
Standard payment terms are in place for each customer.
Inventory
Inventory is stated at the lower of
costs incurred in bringing each product to its present location and
condition compared to net realisable value as follows:
|
·
|
Raw materials, consumables and goods
for resale - purchase cost on a first-in/first-out
basis.
|
|
·
|
Work in progress and finished goods
- costs of direct materials and labour plus attributable overheads
based on a normal level of activity.
|
Net realisable value is based on an
estimated selling price less any further costs expected to be
incurred for completion and disposal.
Expenditure
Expenditure is recognised in respect
of goods and services received when supplied in accordance with
contractual terms. Goods or services supplied in a foreign
currency are recognised at the exchange rate ruling at the time of
accounting for this expenditure.
Provisions
A provision is made when an
obligation exists for a future liability relating to a past event
and where the amount of the obligation can be reliably
estimated.
Retirement benefits: defined
contribution schemes
Contributions to defined
contribution pension schemes are charged to the statement of
comprehensive income in the year to which they relate.
Short-term employee
benefits
A liability is recognised for
benefits accruing to employees in respect of wages and salaries,
annual leave and sick leave in the year the related service is
rendered at the undiscounted amount of the benefits expected to be
paid in exchange for that service.
Research and development
expenditure
Research expenditure - expenditure
on research activities is recognised as an expense in the year in
which it is incurred.
Development expenditure - An
internally generated intangible asset arising from the Group's own
development activity is recognised only if all of the following
conditions are met:
|
·
|
an asset is created that can be
identified and is technically and commercially feasible;
|
|
·
|
it is probable that the asset
created will generate future economic benefits and the Group has
available sufficient resources to complete the development and to
subsequently sell and/or use the asset created; and
|
|
·
|
the development cost of the asset
can be measured reliably.
|
The amount recognised for
development expenditure is the sum of all incurred expenditure from
the date when the intangible asset first meets the recognition
criteria listed above. This occurs when future sales are expected
to flow from the work performed. Incurred expenditure largely
relates to internal staff costs incurred by the Group.
Subsequent to initial recognition,
internally generated intangible assets are reported at cost less
accumulated amortisation and impairment.
Amortisation
Amortisation is calculated to write
off the cost of intangible assets less their estimated residual
values using the straight-line method over their estimated useful
lives and is generally recognised in the statement of total
comprehensive income. The estimated useful lives are based on the
average life of a project as follows:
|
Development costs
|
|
5 years
|
Property, plant and
equipment
Items of property, plant and
equipment are initially recognised at cost. As well as the purchase
price, cost includes directly attributable costs.
Depreciation is provided on all
items of property, plant and equipment so as to write off their
carrying value over the expected useful economic lives. It is
provided at the following methods and rates:
|
Land and buildings
(right-of-use)
|
|
Over the term of the
lease
|
|
Plant and machinery
|
|
15% straight line
|
|
Motor vehicles
|
|
25% straight line
|
|
Fixtures and fittings
|
|
15% straight line
|
|
Leasehold improvements
|
|
Over the term of the
lease
|
Foreign currency
translation
Items included in the financial
statements of each of the Group's entities are measured using the
currency of the primary economic environment in which the entity
operates ('its functional currency'). The consolidated financial
statements are presented in sterling, which is Velocity Composites
plc's functional and presentation currency.
Foreign currency transactions are
translated into the functional currency using the exchange rates at
the dates the transactions occur. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in
foreign currencies at yearend exchange rates are recognised in the
consolidated comprehensive statement of income.
The results and financial position
of foreign operations that have a functional currency different
from the presentation currency are translated into the presentation
currency, on consolidation, as follows:
|
·
|
assets and liabilities for each
statement of financial position presented are translated at the
closing rate at the date of the statement of financial
position;
|
|
·
|
income and expenses for each
statement of profit or loss and statement of comprehensive income
are translated at average exchange rates; and
|
|
·
|
all resulting exchange differences
are recognised immediately in the Consolidated comprehensive
statement of income.
|
Impairment of non-financial
assets
The carrying values of non-financial
assets are reviewed for impairment when there is an indication that
assets might be impaired, and at the end of each reporting year.
When the carrying value of an asset exceeds its recoverable amount,
the asset is written down accordingly.
Where it is not possible to estimate
the recoverable amount of an individual asset, the impairment test
is carried out on the asset's cash generating unit (i.e. the
smallest grouping of assets in which the asset belongs for which
there are separately identifiable cash flows).
Impairment charges are included in
the income statement, except to the extent they reverse previous
gains recognised in the statement of comprehensive
income.
Financial
instruments
All funding requirements and
financial risks are managed based on policies and procedures
adopted by the Board of Directors encapsulating the normal day to
day trading of the Group. The Group does not use derivative
financial instruments such as forward currency contracts, or
similar instruments. The Group does not issue or use financial
instruments of a speculative nature.
Bank
borrowings
Interest-bearing loans are recorded
initially at their fair value, net of direct transaction costs.
Such instruments are subsequently carried at their amortised cost
and finance charges are recognised in the statement of
comprehensive income over the term of the instrument using an
effective rate of interest. Finance charges are accounted for on an
accrual's basis to the statement of comprehensive
income.
The Group has current borrowings of
CBIL loans and can utilise its invoice discounting facility in
support of its working capital requirements.
Financial
assets
The Group classifies its financial
assets into the categories discussed below and based upon the
purpose for which the asset was acquired. The Group has not
classified any of its financial assets as held to
maturity.
Trade and other receivables
These assets are non-derivative
financial assets with fixed or determinable payments that are not
quoted in an active market. They arise principally through the
provision of services to customers (e.g. trade receivables), but
also incorporate other types of contractual monetary asset.
They are initially recognised at fair value plus transactions costs
that are directly attributable to their acquisition or issue and
are subsequently carried at amortised cost using the effective
interest method, less provision for impairment.
The Group's loans and receivables
comprise trade and other receivables included within the statement
of financial position.
Cash and cash equivalents
Cash and cash equivalents include
cash held at bank, bank overdrafts and marketable securities of
very short-term maturity (typically three months or less) which are
not expected to deteriorate significantly in value until maturity.
Bank overdrafts are shown within loans and borrowings in current
liabilities in the statement of financial position.
Impairment of financial assets
Impairment provisions are recognised
through the expected credit losses model (ECL). IFRS 9's impairment
requirements use forward-looking information to recognise expected
credit losses - the 'expected credit loss (ECL) model'.
The Group considers a broader range
of information when assessing credit risk and measuring expected
credit losses, including past events, current conditions,
reasonable and supportable forecasts that affect the expected
collectability of the future cash flows of the
instrument.
Trade and other payables
The Group classifies its financial
liabilities as comprising trade payables and other short-term
monetary liabilities, which are initially recognised at fair value
and subsequently carried at amortised cost using the effective
interest method.
Share
capital
Financial instruments issued by the
Group are treated as equity only to the extent that they do not
meet the definition of a financial liability. The Group's ordinary
shares are classified as equity instruments.
Share
premium
Share premium represents the excess
of the issue price over the par value on shares issued less costs
relating to the capital transaction arising on the
issue.
Share-based
payment
The Group operates an equity-settled
share-based compensation plan in which the Group receives services
from Directors and certain employees as consideration for share
options. The fair value of the services is recognised as an expense
over the vesting period, determined by reference to the fair value
of the options granted.
Leased
assets
Leases
The Group makes the use of leasing
arrangements principally for the buildings and motor vehicles. The
rental contracts for offices are typically negotiated for terms of
5 and 10 years and some of these have extension terms. The Group
does not enter into sale and leaseback arrangements. All the leases
are negotiated on an individual basis and contain a wide variety of
different terms and conditions.
The Group assesses whether a
contract is or contains a lease at inception of the contract. A
lease conveys the right to direct the use and obtain substantially
all of the economic benefits of an identified asset for a period of
time in exchange for consideration.
Measurement and recognition
At lease commencement date, the
Group recognises a right-of-use asset and a lease liability in its
consolidated statement of financial position. The right-of-use
asset is measured at cost, which is made up of the initial
measurement of the lease liability, any initial direct costs
incurred by the Group, and any lease payments made in advance of
the lease commencement date.
The Group depreciates the
right-of-use asset on a straight-line basis from the lease
commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term. The Group also
assesses the right-of-use asset for impairment when such indicators
exist.
Measurement and recognition (continued)
At the commencement date, the Group
measures the lease liability at the present value of the lease
payments unpaid at that date, discounted using the Group's
incremental borrowing rate because as the lease contracts are
negotiated with third parties it is not possible to determine the
interest rate that is implicit in the lease.
The incremental borrowing rate is
the estimated rate that the Group would have to pay to borrow the
same amount over a similar term, and with similar security to
obtain an asset of equivalent value. This rate is adjusted should
the lessee entity have a different risk profile to that of the
Group.
Subsequent to initial measurement,
the liability will be reduced by lease payments that are allocated
between repayments of principal and finance costs. The finance cost
is the amount that produces a constant periodic rate of interest on
the remaining balance of the lease liability.
The lease liability is reassessed
when there is a change in the lease payments. Changes in lease
payments arising from a change in the lease term or a change in the
assessment of an option to purchase a leased asset. The revised
lease payments are discounted using the Group's incremental
borrowing rate at the date of reassessment when the rate implicit
in the lease cannot be readily determined. The amount of the
remeasurement of the lease liability is reflected as an adjustment
to the carrying amount of the right-of-use asset. The exception
being when the carrying amount of the right-of-use asset has been
reduced to zero then any excess is recognised in profit or
loss.
Payments under leases can also
change when there is either a change in the amounts expected to be
paid under residual value guarantees or when future payments change
through an index or a rate used to determine those payments,
including changes in market rental rates following a market rent
review. The lease liability is remeasured only when the adjustment
to lease payments takes effect and the revised contractual payments
for the remainder of the lease term are discounted using an
unchanged discount rate. Except for where the change in lease
payments results from a change in floating interest rates, in which
case the discount rate is amended to reflect the change in interest
rates.
The remeasurement of the lease
liability is dealt with by a reduction in the carrying amount of
the right-of-use asset to reflect the full or partial termination
of the lease for lease modifications that reduce the scope of the
lease. Any gain or loss relating to the partial or full termination
of the lease is recognised in profit or loss. The right-of-use
asset is adjusted for all other lease modifications.
The Group has elected to account for
short-term leases and leases of low-value assets using the
practical expedients. These leases relate to property security.
Instead of recognising a right-of-use asset and lease liability,
the payments in relation to these are recognised as an expense in
profit or loss on a straight-line basis over the lease
term.
See the accounting policy on
Property plant and equipment for the depreciation methods and
useful lives for assets held under lease.
Current
taxation
The tax currently payable is based
on the taxable profit of the year. Taxable profit differs from
profit as reported in the Consolidated statement of comprehensive
income because it excludes items of income and expense that are
taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Group's liability for
current tax is calculated using rates that have been enacted or
substantively enacted by the statement of financial position
date.
R&D tax
credit
R&D tax credits are recognised
at the point when claims have been quantified relating to
expenditure within current or previous years and recovery of the
asset is virtually certain, these tax credits relating to R&D
are recognised within the tax on profit line of the income
statement.
Deferred
taxation
Deferred tax assets and liabilities
are recognised where the carrying amount of an asset or liability
in the statement of financial position differs from its tax base,
except for differences arising on:
·
the initial recognition of goodwill;
Recognition of deferred tax assets
is restricted to those instances where it is probable that taxable
profit will be available against which the difference can be
utilised. The amount of the asset or liability is determined using
tax rates that have been enacted or substantially enacted by the
balance sheet date and are expected to apply when the deferred tax
liabilities or assets are settled or recovered. Deferred tax
balances are not discounted.
Deferred tax assets and liabilities
are offset when the Group has a legally enforceable right to offset
current tax assets and liabilities and the deferred tax assets and
liabilities relate to taxes levied by the same tax authority on
either the same taxable Company; or different Company entities
which intend either to settle current tax assets and liabilities on
a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts
of deferred tax assets and liabilities are expected to be settled
or recovered.
Operating
segments
Operating segments are reported in a
manner consistent with the internal reporting provided to the
executive directors. The Chief Operating Decision Makers have been
identified as the Chief Executive Officer and the Chief Financial
Officer. The Group supplies a single type of product into a single
industry and so has a single operating segment. Additional
information is given regarding the revenue receivable based on
geographical location of the customer.
No differences exist between the
basis of preparation of the performance measures used by management
and the figures in the Group financial information.
Critical accounting estimates
and judgements
The Group makes certain estimates
and assumptions regarding the future. Estimates and judgements are
continually evaluated based on historical experience and other
factors, including the expectations of future events that are
believed to be reasonable under the circumstances. In the future,
actual experience may differ from these estimates and assumptions.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed
below.
Provisions for inventory
Provisions are made for obsolete,
out of life and slow-moving stock items. In estimating the
provisions, the group makes use of key management experience,
precedents and specific contract and customer issues to assess the
likelihood and quantity. Stock is accounted for on a first in,
first out basis.
The provision percentage is applied
to various aging categories dependent on stock type, this is a key
estimate made by management based on judgement and if change is
applied to the percentage for the aged stock, then the outcome of
the value of the provision would differ.
Sensitivity analysis
A 5% increase in the levels of the
current stock provision would lead to and finance impact of an
increase in stock provision of £13k.
3.
Financial instruments
and risk management
The Board has overall responsibility
for the determination of the Group's risk management objectives and
policies. The overall objective of the Board is to set policies
that seek to reduce risk as far as possible without unduly
affecting the Group's competitiveness and flexibility. The Group
reports in Sterling. All funding requirements and financial risks
are managed based on policies and procedures adopted by the Board
of Directors. The Group does not use derivative financial
instruments such as forward currency contracts, or similar
instruments. The Group does not currently issue or use financial
instruments of a speculative nature but as described in the
strategic report, management may consider the potential utilisation
of such instruments in the future. The Group utilises an invoice
discounting facility with its bankers to assist in its cash flow
management. In accordance with the terms of the current facility
(which is available on demand) the risk and management of trade
debtors is retained by the Group.
For non-current liabilities please
see notes 18, 19 & 26.
|
Financial
instruments
|
|
|
|
|
31
October
|
31
October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Current assets
|
|
|
|
Trade and other
receivables
|
3,447
|
3,282
|
|
Trade and other receivables -
prepayments
|
400
|
385
|
|
Amounts due from subsidiary
undertakings
|
-
|
-
|
|
|
3,847
|
3,667
|
|
Cash and cash equivalents - loans
and receivables
|
1,663
|
3,178
|
|
|
|
|
|
Total loans and
receivables
|
5,510
|
6,845
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
3,567
|
4,053
|
|
Trade and other payables -
accruals
|
366
|
534
|
|
|
3,933
|
4,587
|
|
Loans
|
503
|
503
|
|
Obligations under lease
liabilities
|
561
|
487
|
|
|
|
|
|
Total current liabilities
|
4,997
|
5,577
|
Risk
management
The Group's activities expose it to
a variety of financial risks: market risk (primarily foreign
exchange risk and interest rate risk), credit risk and liquidity
risk. The Group's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
Risk management is carried out by the Board and their policies are
outlined below.
a) Market
risk
Foreign exchange risk
The Group is exposed to transaction
foreign exchange risk in its operations both within the UK and
overseas. Transactions are denominated in Sterling, US Dollars and
Euros. The Group has commercial agreements in place which allow it
to transact with its customers in the currency of the material
purchase, thereby allowing a large element of the transactional
currency risk to pass through the Group.
The Group is also exposed to
translation foreign exchange risk on consolidation of US
operations, which are translated into Sterling from US
dollars. This can impact the consolidated income statement
and also create a movement in reserves from movements in the US
balance sheet items.
The carrying value of the
Group's foreign currency denominated assets and liabilities
comprise the trade receivables in note 16, cash in note 17 and
trade payables in note 18.
The Group's financial assets are
held in both Sterling and US dollars, the assets are converted to
the presentation currency Sterling assets held in US dollars are in
relation to the US subsidiary, movements in the exchange rate of
the US Dollar or Euro against Sterling do have an impact on both
the result for the year and equity. The Group's assets and
liabilities that are held in US Dollar or Euro are held in those
currencies for normal trading activity in order to recover funds
from customers or to pay funds to suppliers.
The Group's exposure to foreign
currency risk is as follows. This is based on the carrying amount
of monetary financial instruments.
|
As
at 31 October 2024
|
US Dollar
|
Euro
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
|
Trade debtors
|
2,763
|
235
|
2,998
|
|
Cash and cash equivalents
|
1,097
|
256
|
1,353
|
|
Trade payables
|
(2,759)
|
(20)
|
(2,779)
|
|
|
|
|
|
|
Balance sheet exposure
|
1,101
|
471
|
1,572
|
|
As
at 31 October 2023
|
US Dollar
|
Euro
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
|
Trade debtors
|
2,685
|
75
|
2,760
|
|
Cash and cash equivalents
|
204
|
118
|
322
|
|
Trade payables
|
(3,328)
|
(31)
|
(3,359)
|
|
|
|
|
|
|
Balance sheet exposure
|
(439)
|
162
|
(277)
|
Sensitivity
analysis
A 5% strengthening of the following
currencies against the pound sterling at the balance sheet date
would have reduced the loss by the amounts shown below. This
calculation assumes that the change occurred at the balance sheet
date and had to be applied to risk exposures existing at that
date.
|
|
|
31 October
|
31 October
|
|
|
|
2024
|
2023
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
US dollar
|
|
(57)
|
28
|
|
Euro
|
|
(24)
|
(8)
|
This analysis assumes that all
other variables, in particular other exchange rates and interest
rates remain constant. A 5% weakening of the above currencies
against pound sterling in any year would have had the equal but
opposite effect to the amounts shown above. Included in the US
dollar value is £39,000 relating to the US Subsidiary (2023:
£78,000).
Interest rate risk
The Group carries borrowings from
leases and CBILS loans. Lease borrowings are at a fixed rate of
interest whilst the interest on the CBILS loans is a combination of
fixed rate and Bank of England base rate plus 3.96%. The Directors
do not consider there to be a significant interest rate risk on the
element of loans linked to movements in the Bank of England base
rate. The Group also has access to an invoicing discounting
facility that carries a fixed monthly charge plus interest at a
fixed rate of 4.75%.
b) Credit
risk
Credit risk refers to the risk that
a counterparty will default on its contractual obligations
resulting in financial loss to the Group. In order to minimise this
risk, the Group endeavours only to deal with companies which are
demonstrably creditworthy and this, together with the aggregate
financial exposure, is continuously monitored. The maximum exposure
to credit risk is the value of the outstanding amount.
Supply of products by the Group
results in trade receivables which the management consider to be of
low risk, other receivables are likewise considered to be low risk.
However, four of the customers comprise in excess of 10% of the
revenue earned by the Group (see note 4). Credit risk on cash and
cash equivalents is considered to be small as the counterparties
are all substantial banks with high credit ratings. The maximum
exposure is the amount of the deposit.
c) Liquidity
risk
The Group currently holds cash
balances in Sterling, US Dollars and Euros to provide funding for
normal trading activity. Trade and other payables are monitored as
part of normal management routine. The Group also has access to
banking facilities including invoice finance which it utilises when
needed in order to manage its liquidity risk.
|
As at 31 October 2024
|
Within 1
year
|
One to two
years
|
Two to five
years
|
Over five
years
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Loan
|
503
|
468
|
-
|
-
|
|
Obligations under lease
liabilities
|
561
|
575
|
683
|
-
|
|
Provisions
|
-
|
-
|
218
|
-
|
|
Trade payables
|
3,251
|
-
|
-
|
-
|
|
Accruals
|
584
|
-
|
-
|
-
|
|
|
|
|
|
|
|
As
at 31 October 2023
|
Within 1
year
|
One to two
years
|
Two to five
years
|
Over five
years
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Loan
|
503
|
503
|
467
|
-
|
|
Obligations under lease
liabilities
|
487
|
508
|
1,079
|
-
|
|
Trade payables
|
3,786
|
-
|
-
|
-
|
|
Accruals
|
534
|
-
|
-
|
-
|
|
Other payables
|
15
|
-
|
-
|
-
|
|
Invoice discounting
facility
|
68
|
-
|
-
|
-
|
|
|
|
|
|
|
d) Capital
risk management
For the purpose of the Group's
capital management, capital includes issued capital, and all other
equity reserves attributable to the equity holders of the
Group. The Group's objectives when managing capital are to
safeguard the Group's ability to continue as a going concern in
order to provide returns for shareholders and benefits for other
members. The Group will also seek to minimise the cost of capital
and attempt to optimise the capital structure.
4. Segmental
analysis
The Group supplies a single type of
product into a single industry and so has a single reportable
segment. Additional information is given regarding the revenue
receivable based on geographical location of the customer. An
analysis of revenue by geographical market is given
below:
|
|
Year ended
|
Year ended
|
|
|
31
October
|
31
October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Revenue
|
|
|
|
United Kingdom
|
15,058
|
14,350
|
|
Europe
|
6
|
41
|
|
US Subsidiary
|
7,915
|
1,967
|
|
Rest of the World
|
27
|
53
|
|
|
|
|
|
|
23,006
|
16,411
|
During the year four customers
accounted for 92.75% (2023: 91.9%) of the Group's total revenue for
the year ended 31 October 2024. This was split as follows; Customer
A - 25.52% (2023: 34.5%), Customer B - 26.77% (2023: 34.9%),
Customer C - 6.06% (2023: 10.49%) and the fourth customer a
customer of Velocity Composite Aerospace Inc 34.40% (2023:
11.99%).
The majority of revenue arises from
the sale of goods. Where engineering services form a part of
revenue it is only in support of the development or sale of the
goods.
During the current and previous
year, the Group operated in Asia. No revenue was generated in Asia
during the year ended 31 October 2024 and year ended 31 October
2023 as the site operates as an Engineering Support Office for the
Group. The US subsidiary started to trade in April 2023, revenue of
£7,915k (2023: £1,967k) has been generated since the US subsidiary
was incorporated.
5.
Operating
loss
The operating loss is stated after
charging / (crediting):
|
|
Year ended
|
Year ended
|
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Staff costs (see note 6)
|
4,664
|
3,700
|
|
Cost of inventories
|
14,966
|
11,687
|
|
Foreign exchange loss
|
165
|
57
|
|
Amortisation of development
costs
|
240
|
116
|
|
Depreciation:
|
|
|
|
Owned assets
|
382
|
297
|
|
Property, plant and equipment under
right-of-use assets
|
540
|
472
|
|
Profit on disposal of
assets
|
-
|
(5)
|
|
|
|
|
|
Auditor's remuneration:
|
|
|
|
Audit of the accounts of the
Group
|
85
|
75
|
|
Other audit related services
(relating to interim review)
|
16
|
12
|
|
|
|
|
6. Staff
costs
|
|
Year ended
|
Year ended
|
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Wages, salaries and
bonuses
|
4,019
|
3,049
|
|
Social security costs
|
406
|
348
|
|
Defined contribution pension
costs
|
96
|
97
|
|
Share-based payments
|
143
|
206
|
|
|
|
|
|
|
4,664
|
3,700
|
|
|
|
|
The average monthly number of
employees including directors, during the year was as
follows:
|
|
Year ended
|
Year ended
|
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
Head
count
|
Head
count
|
|
|
|
|
|
Manufacturing
|
53
|
55
|
|
Administration
|
49
|
47
|
|
|
|
|
|
|
102
|
102
|
7. Directors'
costs
|
|
Year ended
|
Year ended
|
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Directors' remuneration included in
staff costs:
|
|
|
|
Wages, salaries and
bonuses
|
387
|
505
|
|
Defined contribution pension
costs
|
27
|
21
|
|
|
|
|
|
|
414
|
526
|
|
|
|
|
|
Remuneration of the highest paid
director(s):
|
|
|
|
Wages, salaries and bonuses or
fees
|
196
|
190
|
|
Defined contribution pension
costs
|
19
|
12
|
|
|
|
|
|
|
215
|
202
|
8. Exceptional
administrative expenses
|
|
Year ended
|
Year ended
|
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Fees associated with newly issued
shares
|
-
|
120
|
|
|
|
|
|
|
-
|
120
|
Exceptional expenses incurred during
the previous year were in relation to the costs associated with the
cash fundraise through the placing and subscription of the New
Ordinary Shares. Total costs incurred were £120,000 and £485,000
charged to the share premium as being directly related to newly
issued shares.
No exceptional costs were recognised
in the current year.
9. Finance
income and expenses
|
|
Year ended
|
Year ended
|
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Finance expense
|
|
|
|
Finance charge from lease
liabilities
|
108
|
120
|
|
Other interest and invoice
discounting charges
|
305
|
206
|
|
|
|
|
|
|
413
|
326
|
10. Income
tax
|
Company
|
Year ended
|
Year ended
|
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
Current tax income
|
|
|
|
UK corporation tax adjustment in
respect of R&D
|
101
|
|
|
UK corporation tax adjustment in
respect of prior years - R&D
|
398
|
-
|
|
|
|
|
|
Total tax income
|
499
|
-
|
The reasons for the difference
between the actual tax charge for the year and the standard rate of
corporation tax in the United Kingdom applied to the loss for the
year are as follows:
|
Tax rate
|
25.00%
|
22.00%
|
|
|
|
|
|
Loss for the year before
tax
|
(1,344)
|
(3,143)
|
|
|
|
|
|
Expected tax credit based on
corporation tax rate
|
(336)
|
(691)
|
|
|
|
|
|
Expenses not deductible for tax
purposes
|
(84)
|
(17)
|
|
Adjustment in respect of prior year
- R&D
|
(398)
|
-
|
|
Adjustment in respect of current
year - R&D
|
(101)
|
|
|
Different tax rates in other
countries
|
20
|
232
|
|
Tax losses not recognised
|
400
|
476
|
|
|
|
|
|
Total tax income
|
(499)
|
-
|
|
|
|
|
On 3 March 2021, the Chancellor of
the Exchequer announced that the corporation tax rate would
increase to 25% from 1 April 2023. It was substantively enacted on
24 May 2021.
Deferred tax is calculated at the
tax rates that are expected to apply in the period when the
liability is settled, or the asset is realised, based on tax law
and the corporation tax rates that have been enacted, or
substantively enacted, at the Statement of Financial Position date.
As such, the deferred tax rate applicable at 31 October 2024 is 25%
and deferred tax had been re-measured at this date.
11. Loss per
share
|
|
Year ended
|
Year ended
|
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£
|
£
|
|
|
|
|
|
Loss for the year
|
(845,000)
|
(3,143,000)
|
|
|
|
|
|
|
Shares
|
Shares
|
|
|
|
|
|
Weighted average number of shares in
issue
|
53,454,166
|
38,410,094
|
|
Weighted average number of share
options
|
1,829,734
|
1,348,066
|
|
Weighted average number of shares
(diluted)
|
55,283,900
|
39,758,160
|
|
|
|
|
|
Loss per share (basic)
|
1.58p
|
8.18p
|
|
|
|
|
|
Loss per share (diluted)
|
1.58p
|
8.18p
|
Share options have not been included
in the diluted calculation as they would be anti-dilutive with a
loss being recognised.
12. Intangible
assets
|
Group
|
Development
|
|
|
|
costs
|
Total
|
|
|
£'000
|
£'000
|
|
Cost
|
|
|
|
At 31 October 2022
|
575
|
575
|
|
Additions
|
833
|
833
|
|
At 31 October 2023
|
1,408
|
1,408
|
|
Additions
|
372
|
372
|
|
Exchange adjustments
|
(41)
|
(41)
|
|
At 31 October 2024
|
1,739
|
1,739
|
|
|
|
|
|
Amortisation
|
|
|
|
At 31 October 2022
|
402
|
402
|
|
Charge for the year
|
116
|
116
|
|
At 31 October 2023
|
518
|
518
|
|
Charge for the year
|
240
|
240
|
|
Exchange adjustments
|
(6)
|
(6)
|
|
At 31 October 2024
|
752
|
752
|
|
|
|
|
|
Net
book value
|
|
|
|
At 31 October 2022
|
173
|
173
|
|
At 31 October 2023
|
890
|
890
|
|
At 31 October 2024
|
987
|
987
|
|
|
|
|
Impairment
The Group reviews the Development
costs at each reporting year for indicators of impairment. An
indication of impairment can be generated from the loss of a
customer, or contracted sales. No impairment was judged to be
required for either year.
13. Property, plant and
equipment
|
Group
|
Leasehold
improve-ments
|
Plant &
machinery
|
Motor
vehicles
|
Fixtures
&
fittings
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Cost
|
|
|
|
|
|
|
At 31 October 2022
|
628
|
1,855
|
23
|
455
|
2,961
|
|
Additions
|
367
|
528
|
-
|
398
|
1,293
|
|
At 31 October 2023
|
995
|
2,383
|
23
|
853
|
4,254
|
|
Additions
|
48
|
159
|
-
|
5
|
212
|
|
Exchange adjustments
|
(33)
|
(26)
|
-
|
(22)
|
(81)
|
|
At 31 October 2024
|
1,010
|
2,516
|
23
|
836
|
4,385
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
At 31 October 2022
|
149
|
1,382
|
23
|
308
|
1,862
|
|
Charge for the year
|
73
|
150
|
-
|
74
|
297
|
|
At 31 October 2023
|
222
|
1,532
|
23
|
382
|
2,159
|
|
Charge for the year
|
105
|
187
|
-
|
90
|
382
|
|
Exchange adjustments
|
(1)
|
(7)
|
-
|
(2)
|
(10)
|
|
At 31 October 2024
|
326
|
1,712
|
23
|
470
|
2,531
|
|
|
|
|
|
|
|
|
Net
book value
|
|
|
|
|
|
|
At 31 October 2022
|
479
|
473
|
-
|
147
|
1,099
|
|
At 31 October 2023
|
773
|
851
|
-
|
471
|
2,095
|
|
At 31 October 2024
|
684
|
804
|
-
|
366
|
1,854
|
|
|
|
|
|
|
|
14. Investment in
subsidiaries
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Subsidiary
undertakings
|
-
|
-
|
|
|
|
|
|
|
-
|
-
|
A list of all the investment in
subsidiaries is as follows:
|
Name of company
|
Registered office
|
Country of registration
|
Type of shares
|
Proportion of shareholding and voting rights
held
|
Nature of business
|
|
Directly owned
|
|
|
|
|
|
|
Velocity Composites SDN.
BHD
|
Pentagon Suite, ES-04, Level 3,
Wisma Suria, Jalan Teknokrat 6, Cyber 5, 63000, Cyberjaya,
Selangor
|
Malaysia
|
Ordinary
|
100%
|
Provider of engineering composite
services for the aerospace sector non trading
|
|
Velocity Composites Aerospace,
Inc.
|
Corporation Trust Center, 1209 N.
Orange St, Wilmington, Delaware 19801
|
United States of America
|
Ordinary
|
100%
|
Manufacturer of composite material
products for the aerospace sector
|
15.
Inventories
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Raw
materials & consumables
|
1,698
|
1,830
|
|
Finished
goods
|
802
|
913
|
|
|
|
|
|
|
2,500
|
2,743
|
Inventories totalling £2,500,000
(2023: £2,743,000) are valued at the lower of cost and net
realisable value. The Directors consider that this value represents
the best estimate of the fair value of those inventories net of
costs to sell. The decrease of inventories provision during the
previous year amounted to £55,000 Velocity Composites plc and
£47,000 for Velocity Composites Aerospace Inc, in 2023 the increase
was £53,000 for Velocity Composites plc and £113,000 for Velocity
Composites Aerospace Inc.
The inventory at 31 October 2024 is
after a stock provision of £272,000 (2023: £374,000). The provision
reflects the aged stock profile consistent with FY23, as well as
specific provisions related to slow moving stock as a result of
reduced demand.
Inventories recognised as an expense
during the year ended 31 October 2024 amounted to £14,966,000
(2023: £11,687,000), and these were included in cost of
sales.
16. Trade and other
receivables
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Trade receivables
|
3,349
|
3,187
|
|
Prepayments
|
400
|
385
|
|
Other receivables
|
98
|
95
|
|
Tax receivable
|
130
|
-
|
|
Amounts due from subsidiary
undertakings
|
-
|
-
|
|
|
|
|
|
|
3,977
|
3,667
|
Trade receivables are amounts due
from customers for goods sold or services performed in the ordinary
course of business. They are generally due for settlement within an
average of 53 days (2023: 71 days) and therefore are all classified
as current. Trade receivables are recognised initially at the
amount of consideration that is unconditional unless they contain
significant financing components, when they are recognised at fair
value. The Group holds the trade receivables with the objective to
collect the contractual cash flows and therefore measures them
subsequently at amortised cost. Details about the Group's
impairment policies and credit risk are provided in note 3. £23,000
Trade receivables (Group and Company) were overdue over three
months at the yearend (2023: £Nil).
The overall expected credit loss is
trivial (2023: trivial). There is no movement in allowance of
impairment of trade receivables during each year.
Trade receivables (Group and Company)
held in currencies other than sterling are as follows:
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Euro
|
235
|
75
|
|
US Dollar
|
2,763
|
2,685
|
|
|
|
|
|
|
2,998
|
2,760
|
17. Cash and cash
equivalents
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Cash at bank
|
1,663
|
3,178
|
|
|
|
|
|
|
1,663
|
3,178
|
18. Trade and other
payables
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Trade payables
|
3,251
|
3,786
|
|
Accruals and deferred
income
|
366
|
534
|
|
Other taxes and social
security
|
316
|
184
|
|
Other payables
|
-
|
15
|
|
Invoice discounting
facility
|
-
|
68
|
|
|
|
|
|
|
3,933
|
4,587
|
Book values approximate to fair
values.
19. Bank
loans
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Not later than one year
|
503
|
503
|
|
One to two years
|
468
|
503
|
|
Two to five years
|
-
|
467
|
|
|
|
|
|
|
971
|
1,473
|
|
|
|
| |
In FY20 the Company took out a
Coronavirus Business Interruption Loan for £2.0m and on 19 January
2021 the term of this loan was extended to 6 years. Repayment
by instalment commenced in August 2021, with the final instalment
due in August 2026. The loan was interest free for the initial 12
months, followed by an interest rate of 3.96% above the Bank of
England base rate which was 5.00% as at 31 October 2024.
Therefore, the rate payable at 28 January 2025 is 8.96%.
During FY21, the Company took out a
further Coronavirus Business Interruption Loan for £0.45m secured
against owned non-current assets. This is being repaid over 5 years
with the first payment made in July 2021 and the final instalment
due in June 2026. The loan was interest free for the initial
12 months, followed by an interest rate of 7.75% per
annum.
20.
Leases
Right-of-use-assets
|
Group
|
Land &
buildings
|
Plant &
machinery
|
Motor
vehicles
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Cost
|
|
|
|
|
|
Balance at 31 October
2022
|
2,433
|
561
|
110
|
3,104
|
|
Additions
|
232
|
-
|
100
|
332
|
|
Disposals
|
-
|
-
|
(5)
|
(5)
|
|
Balance at 31 October
2023
|
2,665
|
561
|
205
|
3,431
|
|
Additions
|
-
|
165
|
107
|
272
|
|
Exchange adjustments
|
(38)
|
-
|
-
|
(38)
|
|
Balance at 31 October
2024
|
2,627
|
726
|
312
|
3,665
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
Balance at 31 October
2022
|
478
|
294
|
63
|
835
|
|
Depreciation charge for the
year
|
363
|
81
|
28
|
472
|
|
Disposals
|
-
|
-
|
(5)
|
(5)
|
|
Balance at 31 October
2023
|
841
|
375
|
86
|
1,302
|
|
Depreciation charge for the
year
|
413
|
82
|
45
|
540
|
|
Exchange adjustments
|
(3)
|
-
|
-
|
(3)
|
|
Balance at 31 October
2024
|
1,251
|
457
|
131
|
1,839
|
|
|
|
|
|
|
|
NBV
|
|
|
|
|
|
At 31 October 2022
|
1,955
|
267
|
47
|
2,269
|
|
At 31 October 2023
|
1,824
|
186
|
119
|
2,129
|
|
At 31 October 2024
|
1,376
|
269
|
181
|
1,826
|
The associated right-of-use assets
for property leases and other assets were measured at the amount
equal to the lease liability, adjusted by the amount of any prepaid
or accrued lease payments relating to that lease recognised in the
statement of financial position as at 31 October 2024.
Right-of-use lease liabilities
|
|
Group
|
|
|
£'000
|
|
|
|
|
At 31 October 2023
|
2,074
|
|
Repayment
|
(598)
|
|
Additions to right-of-use assets in
exchange for increased lease liabilities
|
272
|
|
Interest and other
movements
|
100
|
|
Exchange adjustments
|
(29)
|
|
|
|
|
At 31 October 2024
|
1,819
|
Analysis by length of
liability
|
Group
|
Land &
buildings
|
Plant &
equipment
|
Motor
vehicles
|
Total
|
|
|
£'000
|
£,000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Current
|
426
|
75
|
59
|
560
|
|
Non-current
|
957
|
189
|
142
|
1,288
|
|
Exchange adjustments
|
(29)
|
-
|
-
|
(29)
|
|
|
|
|
|
|
|
|
1,354
|
264
|
201
|
1,819
|
|
|
|
|
|
|
|
Number of right-to-use assets
leased
|
4
|
2
|
4
|
|
|
Range of remaining term
|
1-10 years
|
1-10 years
|
1-4 years
|
|
Reconciliation of minimum
lease payments to present value
|
Group
|
Minimum
lease
payments
|
Interest
|
Present
value
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
31
October 2024
|
|
|
|
|
Not later than one year
|
651
|
90
|
561
|
|
Later than one year and not later
than two years
|
646
|
71
|
575
|
|
Later than two years and not later
than five years
|
781
|
98
|
683
|
|
|
|
|
|
|
|
2,078
|
259
|
1,819
|
|
|
|
|
|
|
31
October 2023
|
|
|
|
|
Not later than one year
|
585
|
98
|
487
|
|
Later than one year and not later
than two years
|
589
|
81
|
508
|
|
Later than two years and not later
than five years
|
1,209
|
130
|
1,079
|
|
|
|
|
|
|
|
2,383
|
309
|
2,074
|
Low value
leases
The Group leases comprise both
office and assembly space, under low value leases. The total
value of the minimum lease payments due is payable is £Nil (2023:
£Nil).
Low value leases not classed as
right-of-use assets due to the minimal value of the lease, relate
to a building security contract, all other prior year operating
leases have been classed as right-to-use asset on transition to
IFRS 16. Payments made under such leases are expensed on a
straight-line basis.
21. Deferred
tax
Deferred tax is calculated in full
on temporary differences under the liability method using tax rates
appropriate for the year. The movement on the deferred tax account
is as shown below:
The movement on the deferred tax
(asset)/liability is shown below:
|
Company
|
31
October
|
31
October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Unrecognised deferred tax in respect
of losses brought forward
Corporation tax loss adjustments in
respect of prior year
|
(1,630)
120
|
(1,401)
-
|
|
Corporation tax losses arising
during the year
|
(158)
|
(229)
|
|
|
|
|
|
|
|
|
|
Unrecognised deferred tax in respect of losses carried
forward
|
(1,668)
|
(1,630)
|
The Group has unused tax losses
which were incurred by the parent company. A deferred tax asset of
£1,668,000 (2023: £1,630,000) is not recognised in these accounts.
Corporation tax losses can be carried forward indefinitely and can
be offset against future profits which are subject to UK
corporation tax.
22. Reconciliation of
liabilities arising from financing activities
|
Group
|
Lease
liabilities
<
one year
|
Other
short-term
borrowings
|
Lease
liabilities
>
one year
|
Other
long-term
borrowings
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
At 31 October 2022
|
405
|
503
|
1,792
|
1,506
|
4,206
|
|
|
|
|
|
|
|
|
Cash flows
|
|
|
|
|
|
|
Repayment
|
(506)
|
(536)
|
-
|
-
|
(1,042)
|
|
|
|
|
|
|
|
|
Non-cash
|
|
|
|
|
|
|
Other differences
|
-
|
-
|
332
|
-
|
332
|
|
Increase
to lease liabilities
|
-
|
-
|
51
|
-
|
51
|
|
Transfer from long-term to short
term borrowings
|
588
|
536
|
(588)
|
(536)
|
-
|
|
|
|
|
|
|
|
|
At 31 October 2023
|
487
|
503
|
1,587
|
970
|
3,547
|
|
|
|
|
|
|
|
|
Cash flows
|
|
|
|
|
|
|
Repayment
|
(597)
|
(502)
|
-
|
-
|
(1,099)
|
|
|
|
|
|
|
|
|
Non-cash
|
|
|
|
|
|
|
Other differences
|
-
|
-
|
70
|
-
|
70
|
|
Increase to lease
liabilities
|
-
|
-
|
272
|
-
|
272
|
|
Transfer from long-term to short
term borrowings
|
671
|
502
|
(671)
|
(502)
|
-
|
|
|
|
|
|
|
|
|
As at 31 October 2024
|
561
|
503
|
1,258
|
468
|
2,790
|
23. Share
capital
|
|
31
October
|
31
October
|
|
|
2024
|
2023
|
|
|
£
|
£
|
|
Share capital issued and fully paid
|
|
|
|
53,509,706 (2023: 53,393,368)
Ordinary shares of £0.0025 each
|
133,774
|
133,483
|
Ordinary shares have a par value of
0.25p. They entitle the holder to participate in dividends, and to
share in the proceeds of winding up the Company in proportion to
the number of and amounts paid on the shares held.
On a show of hands every holder of
ordinary shares present at a meeting in person or by proxy, is
entitled to one vote, and upon a poll each share is entitled to one
vote. The Company does not have a limited amount of authorised
capital.
|
Movements in share capital
|
Nominal
value
|
Number of
shares
|
|
|
£
|
|
|
Ordinary shares of £0.0025 each
|
|
|
|
At the beginning of the
year
|
133,483
|
53,393,368
|
|
Exercising of share
options
|
291
|
116,338
|
|
|
|
|
|
Closing share capital at 31 October 2024
|
133,774
|
53,509,706
|
On 24 January 2024, the Company
issued 75,000 new ordinary shares of £0.0025 each to satisfy the
exercise of options granted under the Group's 2023 Share Option
Scheme.
On 7 October 2024, the Company
issued 41,388 new ordinary shares of £0.0025 each to satisfy the
exercise of options granted under the Group's 2017 Share Option
Scheme.
Options
Information relating to the Velocity
Composites plc Employee Option Plan, including details of options
issued, exercised and lapsed during the financial year and options
outstanding at the end of the reporting year, is set out in note
25.
24. Share
premium
|
|
31
October
|
31
October
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
|
|
|
|
|
At the beginning of the
year
|
4,870
|
9,727
|
|
Shares issued net of transaction
costs
|
-
|
6,063
|
|
Reduction of Share Premium
Account
|
-
|
(10,920)
|
|
|
|
|
|
At the end of the year
|
4,870
|
4,870
|
|
|
|
|
25. Share-based
payments
The Group's employees are granted
option awards under the Velocity Composites Limited Enterprise
Management Incentive and Unapproved Scheme.
The share options dated 13 March
& 17 October 2017 have no attached performance conditions and
have vested as a resulted of continued employment. The options may
be exercised at any point up to the tenth anniversary of the grant
date.
The 100,000 share options dated 29
October 2019 have no attached performance conditions and vest
subject only to continued employment. They were awarded in relation
to joining senior management, providing an equity incentive around
the performance of the business
The 155,932 remaining shares options
dated 30 October 2020 have no attached performance conditions and
have been issued in exchange for qualifying staff agreeing to
accept 20% of their basic salary in equity alternatives.
The 28,805 shares options dated 1
April 2021 have no attached performance conditions and have been
issued in exchange for qualifying staff agreeing to accept 20% of
their basic salary in equity alternatives.
The 125,000 shares options dated 1
April 2021 have no attached performance conditions and vest subject
only to continued employment. They were
awarded in relation to joining senior management, providing an
equity incentive around the performance of the business.
The 321,411 remaining shares options
dated 26 January 2022 have no attached performance conditions and
have been issued in exchange for qualifying staff agreeing to
accept 20% of their basic salary in equity alternatives.
The 20,940 shares options dated 29
March 2022 have no attached performance conditions and have been
issued in exchange for qualifying staff agreeing to accept 20% of
their basic salary in equity alternatives.
399,467 shares options dated 28
March 2023. These options have no attached performance conditions
and have been issued in exchange for qualifying staff agreeing to
accept 20% of their basic salary in equity alternatives.
150,000 shares options dated 28 March 2023. These options have attached performance conditions linked to
specific contract performance. These options shall only be
exercisable to the extent vested upon satisfaction of the
performance targets during the exercise period from the earlier of,
the normal vesting date of one year or on or after the occurrence
of an exercise event in accordance with the rules.
During the year ended 31 October
2024, further share options were granted as follows:
282,134 shares options dated 24
January 2024. These options have no attached performance conditions
and have been issued in exchange for qualifying staff agreeing to
accept 20% of their basic salary in equity alternatives.
75,000 shares options dated 24
January 2024 have no attached performance
conditions and have vested as a resulted of continued employment.
The options may be exercised at any point up to the tenth
anniversary of the grant date.
400,000 shares options dated 15 July
2023. These options have attached
performance conditions linked to profit after tax. They vest after
two years, or earlier if a vesting event occurs in the rules of the
Scheme.
Vesting events are defined within
the rules of the Scheme as a reorganisation, takeover, sale,
listing (except on AIM), asset sale or death of the Option
holder. The options may be exercised at any
point up to the tenth anniversary grant date
There were no cancellations or
modifications to the awards in the year.
The following options were
outstanding as at 31 October 2024:
|
Scheme and grant date
|
Exercise price
(£)
|
Vesting date
|
Expiry date
|
Vested
|
Not vested
|
Total
|
|
|
|
|
|
|
|
|
|
13 March 2017
|
0.0025
|
13 Mar 2019
|
13 Mar 2027
|
54,338
|
-
|
54,338
|
|
17 October 2017
|
0.6926
|
17 Oct 2019
|
17 Oct 2027
|
25,000
|
-
|
25,000
|
|
29 October 2019
|
0.2065
|
29 Oct 2022
|
29 Oct 2031
|
100,000
|
-
|
100,000
|
|
30 October 2020
|
0.2065
|
01 Nov 2021
|
01 Nov 2026
|
155,932
|
-
|
155,932
|
|
01 April 2021
|
0.0025
|
01 Apr 2021
|
01 Apr 2026
|
28,805
|
-
|
28,805
|
|
01 April 2021
|
0.1300
|
01 Apr 2021
|
01 Apr 2026
|
125,000
|
-
|
125,000
|
|
26 January 2022
|
0.0025
|
26 Jan 2023
|
01 Nov 2027
|
321,411
|
-
|
321,411
|
|
29 March 2022
|
0.0025
|
29 Mar 2023
|
01 Nov 2027
|
20,940
|
-
|
20,940
|
|
28 March 2023
|
0.0025
|
28 Mar 2024
|
28 Mar 2028
|
549,467
|
-
|
549,467
|
|
24 January 2024
|
0.0025
|
24 Jan 2026
|
24 Jan 2029
|
-
|
75,000
|
75,000
|
|
24 January 2024
|
0.0025
|
24 Jan 2025
|
24 Jan 2029
|
-
|
282,134
|
282,134
|
|
15 July 2024
|
0.4150
|
30 Apr 2026
|
15 July 2034
|
-
|
400,000
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,380,893
|
757,134
|
2,138,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group recognised a cost of
£143,000 (2023: £206,000) relating to share-based payment
transactions which are all equity settled, an equivalent amount
being transferred to share-based payment reserve. This reflects the
fair value of the options, which has been derived through use of
the Black-Scholes model.
The cost of share-based payments is
included in "Administrative expenses" within the Statement of total
comprehensive income. The share-based payments reserve is
used to recognise the grant date fair value of options issued to
employees but not exercised. The table
below sets out the movement to the share-based payment reserves in
the year.
The tables below split the
Share-based payments according to the terms they have been
awarded.
Share options granted under the
salary sacrifice scheme.
|
Scheme and grant date
|
Exercise price
(£)
|
Vesting date
|
Expiry date
|
Vested
|
Not vested
|
Total
|
|
|
|
|
|
|
|
|
|
30 October 2020
|
0.2065
|
01 Nov 2021
|
01 Nov 2026
|
155,932
|
-
|
155,932
|
|
01 April 2021
|
0.0025
|
01 Apr 2021
|
01 Apr 2026
|
28,805
|
-
|
28,805
|
|
26 January 2022
|
0.0025
|
26 Jan 2023
|
01 Nov 2027
|
321,411
|
-
|
321,411
|
|
29 March 2022
|
0.0025
|
29 Mar 2023
|
01 Nov 2027
|
20,940
|
-
|
20,940
|
|
28 March 2023
|
0.0025
|
28 Mar 2024
|
28 Mar 2028
|
399,467
|
-
|
399,467
|
|
24 January 2024
|
0.0025
|
24 Jan 2025
|
24 Jan 2029
|
-
|
282,134
|
282,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
926,555
|
282,134
|
1,208,689
|
Share options granted not under the
salary sacrifice scheme.
|
Scheme and grant date
|
Exercise price
(£)
|
Vesting date
|
Expiry date
|
Vested
|
Not vested
|
Total
|
|
|
|
|
|
|
|
|
|
13 March 2017
|
0.0025
|
13 Mar 2019
|
13 Mar 2027
|
54,338
|
-
|
54,338
|
|
17 October 2017
|
0.6926
|
17 Oct 2019
|
17 Oct 2027
|
25,000
|
-
|
25,000
|
|
29 October 2019
|
0.2065
|
29 Oct 2022
|
29 Oct 2031
|
100,000
|
-
|
100,000
|
|
01 April 2021
|
0.1300
|
01 Apr 2021
|
01 Apr 2026
|
125,000
|
-
|
125,000
|
|
28 March 2023
|
0.0025
|
28 Mar 2024
|
28 Mar 2028
|
150,000
|
-
|
150,000
|
|
24 January 2024
|
0.0025
|
24 Jan 2026
|
24 Jan 2029
|
-
|
75,000
|
75,000
|
|
15 July 2024
|
0.4150
|
30 Apr 2026
|
15 July 2034
|
-
|
400,000
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
454,338
|
475,000
|
929,338
|
|
|
|
|
|
|
|
|
Movement in share options
|
Scheme and grant date
|
As at 1 Nov
2023
|
Issued
|
Expired
|
Exercised
|
Vested
|
As at 31 Oct
2024
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
13 March 2017
|
55
|
-
|
-
|
(24)
|
-
|
31
|
|
17 October 2017
|
10
|
-
|
-
|
-
|
-
|
10
|
|
29 October 2019
|
16
|
-
|
-
|
-
|
-
|
16
|
|
30 October 2020
|
24
|
-
|
-
|
-
|
-
|
24
|
|
01 April 2021
01 April 2021
|
14
8
|
-
-
|
-
-
|
-
-
|
-
-
|
14
8
|
|
26 January 2022
26 January 2022
29 March 2022
|
47
24
4
|
-
-
-
|
-
-
-
|
-
-
-
|
(1)
-
-
|
46
24
4
|
|
28 March 2023
|
276
|
-
|
-
|
(62)
|
(28)
|
186
|
|
24 January 2024
|
-
|
54
|
-
|
-
|
-
|
54
|
|
24 January 2024
|
-
|
58
|
-
|
-
|
-
|
58
|
|
15 July 2024
|
-
|
42
|
-
|
-
|
-
|
42
|
|
|
|
|
|
|
|
|
|
|
478
|
154
|
-
|
(86)
|
(29)
|
517
|
|
|
|
|
|
|
|
|
26.
Provisions
During the year a provision of
£218,000 (2023: £Nil) was recognised in relation to
dilapidations
As part of the group's property
leasing arrangements there is an obligation to repair damages which
incur during the life of the lease, such as wear and tear. The cost
is charged to profit and loss as the obligation arises. The
provision is expected to be utilised between 2026 and 2029 as the
leases terminate.
The dilapidations provision is
considered a source of significant estimation uncertainty. The
provision has been calculated using one years' worth of rental over
estimated lease termination dates prorated to the term the lease
has been occupied.
27. Related party
transactions
Balances and transactions between
the Company and its subsidiary, which are related parties, have
been eliminated on consolidation. However, the key transaction with
a related party is as follows:
During the year the Group engaged
North West Aerospace Alliance, which provides membership and
subscription services for the Aerospace Industry. One of the
directors of North West Aerospace Alliance Limited is a director of
Velocity Composites plc. The Group paid
£809 (2023: £2,009) to North West Aerospace
Alliance during the year and had £Nil
outstanding at the year end (2023: £Nil).
28.
Ultimate controlling
party
The Directors do not consider there
to be an ultimate controlling party due to no individual party
owning a majority share in the Group.
29.
Capital
commitments
At 31 October 2024 the Group had
£1,164,144 (2023: £Nil) of capital commitments relating to the
purchase of leasehold improvements, plant and machinery and fixture
and fittings.
30.
Pension
commitments
The Group makes contributions to
defined contribution stakeholder pension schemes. The contributions
for the year of £96,034 (2023: £97,191) were charged to the
Consolidated Income statement. Contributions outstanding as at 31
October 2024 were £Nil (2023: £13,595).
31.
Contingent
liabilities
As at 31 October 2024 the Group had
in place bank guarantees of £Nil (2023: £Nil) in respect of
supplier trade accounts.
As at 31 October 2024, National
Westminster Bank plc hold a debenture that provides a fixed and
floating charge on the assets of the Company.
32. Adjusted
EBITDA
EBITDA is considered by the Board to
be a useful alternative performance measure reflecting the
operational profitability of the business. Adjusted EBITDA is
defined as earnings before finance charges, taxation, depreciation,
amortisation and adjusted for share-based payments. Share-based
payments are added back to make the share-based payment charge
clear to stakeholders.
|
|
Year ended
|
Year ended
|
|
|
31 October
|
31 October
|
|
|
2024
|
2023
|
|
Reconciliation from operating loss
|
£'000
|
£'000
|
|
|
|
|
|
Operating loss
|
(931)
|
(2,817)
|
|
Add back:
|
|
|
|
Depreciation of property, plant and
equipment
|
382
|
297
|
|
Amortisation
|
240
|
116
|
|
Depreciation of right-of-use assets under IFRS 16
|
540
|
472
|
|
Share-based payments
|
143
|
206
|
|
Exceptional Administration expenses
|
-
|
120
|
|
|
|
|
|
Adjusted EBITDA
|
374
|
(1,606)
|
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