25 June 2025

VELOCITY COMPOSITES PLC

("Velocity", the "Company", the "Group")

Unaudited Half Year Results for the six months ended 30 April 2025

On track to achieve profitability and be cash generative in H2 FY25

Velocity Composites plc (AIM: VEL), the leading supplier of composite material kits to aerospace, is pleased to announce the Company's unaudited results for the six months ended 30 April 2025.

Financial Highlights: Results confirm prior trading update in May 2025

Operating Highlights:

Outlook:

Andy Beaden, Chairman, Velocity, said: "This is a solid set of results, on the back of significant growth in the past two years and difficult current market conditions.  Operational improvements are enabling the business to move into profitability and cash generation.  The huge potential for future profitable growth is underpinned by our embedded technologies and published production ramp up plans from major end market OEMs.

The Board remains confident that Velocity's proposition for its customers will deliver shareholder value over the medium to long-term."

Enquiries:

About Velocity Composites plc

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

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

Chairman's Statement

Overview

In the first half of FY25, Velocity delivered strong operational progress, despite revenue being slightly down. Encouragingly, our gross profit margin exceeded our long-term target of 25%, contributing to a positive adjusted EBITDA, the first for H1 since the pandemic. This performance reflects tighter cost control and has led to a significantly reduced pre-tax loss.

With a solid cash position and recent contract wins across both defence and civil aerospace sectors, the Group is well-positioned for future growth. While short-term delays in the ramp-up of A350 production and at our US operation, have tempered near-term revenue expectations (as noted in the trading update of 22 May 2025), the Board remains confident in the long-term outlook for the aerospace industry.  This confidence is underpinned by the plans published by OEMs to increase their production rates to meet a growing backlog from their end customers. 

Boeing's acquisition of Spirit AeroSystems is on track to complete in 2025 with certain sites transferring to Airbus. This should help resolve supply chain restrictions and distractions for both OEMs and accelerate the ramp up of production rates of key programmes to return to pre-pandemic levels. This will create further opportunities for Velocity, without the need for major new investment in kit cutting capacity.  Boeing and Airbus both have significant order books now spanning over the next decade and therefore need to increase production through their supply chains remains compelling.

Financial Review

Revenue for H1 FY25 was £10.4m (H1 FY24: £10.7m), building on the growth achieved in 2024, but reflecting slower-than-anticipated A350 production increases and delays in the qualification of our US contract. Despite this, operational performance improved, driven by enhanced use of data and technology.

Despite this, operational performance improved, driven by enhanced use of data and technology gross profit margin rose to 29.0% (H1 FY24: 22.5%), benefiting from inflation-related pricing adjustments implemented in FY24 and improved operational efficiencies-particularly in the US, where our labour utilisation strategy is bearing fruit.

These gains enabled the Group to report a positive adjusted EBITDA of £0.3m (H1 FY24: loss of £0.2m), despite the revenue being broadly flat. Administrative expenses remained well-controlled at £3.4m (H1 FY24: £3.3m), aided by a more stable inflationary environment. As a result, the pre-tax loss narrowed to £0.6m (H1 FY24: £1.1m).

Looking ahead, while A350 production rates are expected to remain flat in H2 FY25, we are actively working to convert a strong pipeline of opportunities. Airbus plans to double A350 production by 2028, the B737 is expected to clear regulatory controls and B777x is completing its test programme with first deliveries expected in 2026. These programmes present significant growth opportunities, and we are well-prepared to meet this future demand.

Our positive EBITDA and disciplined working capital management have preserved a healthy cash position.  This has translated into operating cash flow being a positive inflow of £0.6m (HY24 outflow (£0.5)m).  The Group also retains access to a £3m UK invoice discounting facility, which remained unused during the period.

As of 30 April 2025, cash at bank stood at £1.2m (30 April 2024: £1.8m), with net cash of £0.4m (H1 FY24: £0.6m). Outstanding CBILS debt has reduced to £0.7m (H1 FY24: £1.2m), with final repayments due in 2026.

New Contracts

We were pleased to announce the renewal of a long-standing contract with a key UK defence customer, reinforcing our growing presence in a sector seeing increased investment across Europe and the US.

We continue to pursue new opportunities, with active bids in progress across both the US and European markets.

US Operations

The Board is encouraged by the progress at our Alabama facility. We have been working closely to manage qualification delays with our US customer for kitting of parts for a major US aero-engine manufacturer. The kits concerned are for safety critical parts and the qualification process is both detailed and complex, coupled with some unrelated issues between the OEM and our customer. Our US team has shown leadership and professionalism in driving the process forward. Demand for these kits is strong and will help drive sales and profitability when the process is complete.

Recent US tariffs have not directly impacted Velocity. In fact, our US-based manufacturing presence may offer strategic advantages as OEMs and Tier 1 suppliers increasingly localise production. Our US kits are supplied exclusively to US customers, aligning with this trend.

Our growing reputation in the US is opening doors, with OEMs introducing us to new Tier 1 manufacturers within their supply chains.

Management Changes

In February, we welcomed Oliver (Olly) Smalley as Chief Operations Officer. Olly brings deep aerospace experience and a strong focus on driving operational efficiency and continuous improvement.

Outlook

Demand for civil aerospace remains robust, with OEMs forecasting long-term growth.  However, some of the key programmes that we support are still operating below pre-pandemic levels, and certain anticipated short-term production increases have been delayed. Despite this, the Company expects to achieve positive adjusted EBITDA and be cash generative in H2 FY25 - in line with current market expectations.

The well publicised increased state investment in defence programmes, particularly in Europe and the US, is generating significant new opportunities and we are in discussions with a number of contactors, both existing and new customers, with a growing pipeline of new opportunities.

Despite near-term challenges, the Board remains confident in the Group's strategic direction and long-term prospects. With a strong operational foundation, a healthy balance sheet, and growing momentum in both defence and civil markets, Velocity is well-positioned to capitalise on the recovery and expansion of the global aerospace industry.

Andy Beaden

Non-Executive Chairman

25 June 2025

Condensed consolidated statement of financial position at 30 April 2025

The financial statements were approved and authorised for issue by the Board of Directors on 25 June 2025 and were signed on its behalf by:

Rob Smith

Company Secretary   Company Number: 06389233