24th Jun 2019 11:17
(Alliance News) - Engineering firm Velocity Composites PLC said Monday it was optimistic of fixing its various issues, with the appointment of a new senior leadership team, amid growth in interim revenue and a narrowing loss.
For the six months ended April, Velocity's pretax loss improved to GBP430,000 from GBP987,000 the year prior. This was after revenue rose 5.2% to GBP12.2 million from GBP11.6 million the year before.
"We are pleased with the performance of the business during a period of uncertainty at board level," Velocity Senior Independent Director Brian Tenner said.
During the year, a tussle between the board and the founding shareholders of the firm - Jonathan Bridges, Christopher Banks and Gerard Johnson - resulted in former executive chair Mark Mills standing down and Bridges - the firm's one-time boss - becoming interim chief executive.
Velocity also began the process of hiring a new chair. Once this was complete, the firm planned to appoint a permanent chief executive and chief financial officer.
Since then, the founders have announced they do not support this process. Instead they requested that two of their nominees join the board before the posts of chair, chief executive and chief financial officer be made.
Velocity is now in talks with the founders to resolve matters. In the meantime, the search for a chair has been put on hold.
"The ongoing discussions with the founders regarding the re-constitution of the board are undoubtedly disappointing following what was thought to be an agreed process at the AGM," Tenner added. "However, as announced today, the board is hopeful of reaching a successful resolution to the dispute with the founders in the short term that will avoid the risk of a disorderly transition.
"Despite the distractions, exciting new investment opportunities are coming to fruition," Tenner continued. "These opportunities will allow the group to build on the current recovery to deliver long term value. If the re-constitution of the board can be agreed and put behind us, this will assist greatly in allowing the business to focus on achieving its true potential based on Velocity's core strengths."
Velocity does not pay a dividend.
Looking forward, Tenner explained the firm "remains confident of meeting its full year expectations for revenue while gross margin will be at the upper end of expectations, subject to customer demand fluctuations".
Velocity explained it expects revenue and gross margin for the second half of the year to be "similar to the first half year". Gross margin stood at 20.9% in the interim period, up from 15.2% the year prior.
Shares in Velocity were 3.0% higher at 22.66 pence in London on Monday
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