17th Nov 2020 12:20
(Alliance News) - Velocity Composites PLC on Tuesday said it expects to post a full-year loss and current activity levels are "challenging".
Shares in Velocity were down 13% at 14.00 pence in London on Tuesday.
The firm, a supplier of composite materials supplier for aerospace sector, said that trading for the first four months of its financial year ended October 31 was in line with management expectations. However, the remainder of the year was "impacted adversely" by the Covid-19 pandemic.
This hit the firm via customer shut-downs and an industry-wide reduction in build-rates. Prospects for the current year remain "subdued", it added.
Velocity anticipates that sales revenue for the recently-ended financial year will be approximately GBP13.6 million, compared to GBP24.2 million the year before.
The company also expects to report an adjusted loss before interest, tax, depreciation and amortisation for the year of approximately GBP1.8 million compared to earnings of GBP600,000 the year prior.
As a result of the reduced level of activity, the company has implemented a "significant" cost reduction programme, including a 40% cut in staffing members and a restructuring of the remaining management and staff. Senior executives and directors also have agreed to a 20% deferment of cash base salaries to be settled by way of the issue of share options of a similar value to the salary.
As a result of its cost cutting programme, Velocity expects that, going forward, the company would be Ebitda breakeven at levels of revenue similar to the 2020 financial year.
The firm said current activity levels are "challenging", but it is "cautiously optimistic" over future growth prospects
Chair Andy Beaden said: "As a board, our pandemic priority has been ensuring that the business has more than adequate liquidity, along with supporting our customers and suppliers. Difficult decisions have had to made, with significant and swift staffing reductions, but the business is now leaner and better focussed to aid the recovery and growth cycle within the industry in 2021, 2022 and beyond. Retaining and winning new business in such a business environment underlines the value-add of the superb Velocity Composites team."
By Zoe Wickens; [email protected]
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