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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