Velocity Composites Plc
AMS Technology Park
Billington Road
Burnley
Lancashire
BB11 5UB
www.velocity-composites.com
Registered No: 06389233
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Contents
1. Strategic Report
Highlights .................................................................................. 4
Page
Chairman’s Report .................................................................... 5
Outlook ..................................................................................... 8
CEO Report ............................................................................. 10
Financial Review ....................................................................... 13
Principal Risks & Uncertainties .................................................. 17
2. Governance
Statement of Corporate Governance ........................................ 24
Board of Directors and Senior Management ........................... 31
Directors’ Report ...................................................................... 34
Director’s Remuneration Report .............................................. 37
3. Financial Statements
Independent Auditor’s Report .................................................. 39
Consolidated Statement of Total Comprehensive Income ........ 52
Consolidated and Company Statement of Financial Position .... 53
Consolidated and Company Statement of Changes in Equity .. 54
Consolidated and Company Statement of Cash Flows ............ 56
Notes to the Financial Statements ............................................ 57
4. Shareholder Information
Advisors ................................................................................... 84
Notice of General Meeting ....................................................... 85
Notes to Notice of General Meeting .......................................... 89
Strategic Report Highlights
Our Mission
To revolutionise aerospace composites manufacturing
by enabling our customers to reduce waste/costs
whilst meeting increased global demand by creating a
lean and scalable supply chain in a more-for-less era,
delivering real value for all stakeholders.
Financial Highlights and Group Key Performance Indicators
Revenue
Gross Margin %
£9.8m
26%
Adjusted EBITDA 1
Cash at Bank
Operating
Profit / Loss
£(0.5m)
£3.5m
£(1.4)m
1 Earnings before Interest, Tax, Depreciation, Amortisation, Impairment, adjusted for exceptional administrative costs
and share based payments. The business uses this Alternative Performance Measure to appropriately measure the
underlying business performance, as such it excludes costs associated with non core activity. Workings are provided
in Note 29 of the financial statements. Share based payments are added back to make the share based payment
charge clear to stakeholders.
4
Strategic Report Chairman’s Report
Chairman’s Report
Andy Beaden Executive Chairman
“
The need to improve fuel
efficiency is one aspect which
opens the door for even
greater use of composites as
manufacturers look to reduce
the weight of various machines.
”
Overview
In the global storm of the
pandemic, our innovative
technology and engineering skills
have shone through and our
competitive edge remains solid.
As a digitally enabled business,
we have invested throughout
this period to develop what we
believe are the most advanced
integrated solutions for front end
composite material preparation
for manufacturing in the world.
Over the last twelve months, the
team has worked tirelessly with
all our major customers to renew
and extend our valuable long-
term contracts, building deeper
technical relationships with new
and existing clients. This has
laid the foundations for both our
recovery and future growth.
Financial Performance
While we have a positive view
of the future because of the
team’s hard work over the last
twelve months, the challenging
environment has meant tough
decisions had to be taken to
protect the Company’s financial
position.
Revenue for the year was £9.8m
(2020: £13.6m), reflecting the
nadir of suppressed civil aircraft
OEM volume productions. Sadly,
this meant we had to take the
difficult decision to reduce our
workforce from approximately
122 to 75, enabling us to break-
even at an adjusted EBITDA
level from the second half of
FY21. As a result, the full year
adjusted EBITDA is in-line with
our expectations announced
at H1 FY21, at £0.5m loss. This
represents an operating loss of
£1.4m reflecting the very difficult
start to the year.
We have benefited from our
supply chain management
team’s ability to reduce our
inventory levels, protecting
our cash position and that of
our customers. This has not
been easy given the limited
life of most materials we use
due to expiration dates of the
material. We are grateful to our
suppliers and customers for their
collaboration. Inventory levels
reduced by £1.0m in the financial
year. As at 31 October 2021,
the Company had gross cash
balances of £3.5m and £1.0m of
net cash.
Improved Customer
Proposition
Although sales volumes were
lower during the period, we
have continued to invest in
and develop our customer
proposition. The pandemic and
the pressures it has placed on
the end industries the Company
serves has reinforced the ability
of the Company to add value to
our customers. Our technology
and services have served us
well in navigating recent global
supply chain issues. They offer
real benefits to our customers
and their respective industries,
reducing material wastage to
minimal levels, which reduces
costs and makes composite
technology more commercially
viable, as well as having a major
environmental benefit. Our
systems reduce labour time and
provide greater efficiency and
faster outputs, hence our name
Velocity Composites.
Over the last twelve months,
we have integrated our services
into one key package, called
Velocity Resource Planning
(“VRP”). VRP can be provided
via a traditional fully outsourced
model of manufacturing kits
for the customer, onsite, or as
5
a managed serviced model
adopted by the customer. We
can tailor each solution to the
customers manufacturing facility
needs. Through this innovation,
Velocity is better positioned to
expand into new markets and
territories and maximise the
return on capital for both Velocity
and the customer.
By adopting VRP, customers
and suppliers can quickly
transform a relatively inefficient
element of the front-end material
management process into a
digitally enhanced modern
process. Smart technology
reduces waste and provides the
right data to manage the supply
chain effectively. This technology
is transferable into other sectors,
especially as advanced material-
based industries, like automotive
OEMs, are looking to find
smarter ways to manufacture,
reduce waste, and digitise their
production processes.
Market Recovery and
Sustainability
As the effects of the pandemic
have become clear, the core
aerospace industry has stabilised
and pressures to retire older
environmentally unfriendly
aircraft remain. The industry’s
recovery will be marked by the
ever-increasing use of lightweight
carbon fibre materials. This
trend means the opportunities for
Velocity Composites are better
than ever.
We believe it will take time for
civil aircraft build rates to recover
fully, potentially three to four
years, before we return to, or
exceed, the long-term growth
trends. However, new aircraft
as they are built, (including
those designed to be electrically
powered) will be more composite
intensive. Velocity’s growth
will come from new business
and the recovery in our current
contracted business volumes.
That recovery will start in 2022
and we expect it to accelerate
into 2023.
Furthermore, it is clear that
governments and businesses
worldwide are becoming ever
more focused on sustainability.
The recent COP26 conference
has put in place different
strategies and targets to help
limit the impact of climate
change. The need to improve
fuel efficiency is one aspect
that opens the door for even
greater use of composites as
manufacturers look to reduce
the weight of various machines.
Also, the shift to electric power
means the need to make lighter
vehicles and to maximise range,
is expected to further increase
the demand for composites in
other sectors. We are already in
discussions with a variety of new
potential customers outside of
aerospace, creating long-term
opportunities for the Company.
Strategic Report Chairman’s Report
Board
On behalf of the Board, I would
like to thank Dr Margaret Amos
for being our Audit Chair over the
last twelve months and we wish
her well in her new endeavours.
To replace Margaret in the
coming year, we will be seeking a
new Non-Executive Director who
has the financial and governance
experience to support the
Company.
Outlook
We enter 2022 in positive spirits.
Having been able to maintain
investment in the Company’s
technology and engineering
capabilities in the last year, the
Board feel confident in Velocity’s
ability to capture future growth
opportunities, as we monitor the
implications of the pandemic.
I would like to thank all our staff
from the shop floor to board
for their tireless work in the
last twelve months, along with
our shareholders, customers,
and suppliers for their support.
Everyone at Velocity Composites
is focused on the exciting
opportunities ahead.
Andy Beaden
Chairman
23 January 2022
Burnley HQ Production Complex
6
Strategic Review Chairman’s Report Our highly efficient nests help reduce waste & save money
Sustainable waste management processes
Velocity HQ’s solar panels
Reducing material waste entering landfill
Recycling practices
7
7
Strategic Review Chairman’s Report Strategic Report Market Outlook
Market Outlook
Historically, the civil aerospace
industry has been resilient to
global shocks and has seen
the air travel market double
every 10 years or so, with even
the previous largest shock (the
travel reductions caused by the
tragic events of 9/11) leading to
a two year flattening of growth
before the upwards curve
resumed.
With With the impacts of
COVID-19 however, the outcomes
were more severe in that air travel
reduced by 90% almost overnight
in early 2020 and only recovered
to some 50% of pre-pandemic
levels by the end of 2021. With the
high levels of airline and industry
uncertainty seen in early 2020,
both Airbus and Boeing took
the action of reducing aircraft
production levels to what, in
effect are the minimum levels
to keep the complex and global
supply chains sustained. This in
turn meant that the customers of
Velocity had to restructure their
operations and staff levels and
for Velocity, that demand for our
products and services reduced
accordingly, by over 50%, through
2020 and 2021.
Looking ahead, the data
shows how both Boeing and
Airbus see the production rate
recovery corridor and also the
longer-term demand for aircraft
driven by some key industry
dynamics, mainly the push for
the sustainability of airlines who
have retired their older aircraft
and less efficient four engine
fleet. As the recovery takes
hold, airlines will look to replace
capacity with newer, more
efficient aircraft, each containing
a high percentage of composites
in their structure than the previous
generation to meet the global
sustainability agenda. As new
technology looks to accelerate
this, the uses of alternative
power sources (sustainable fuel,
hydrogen and electrification)
requires a high performance,
lightweight structure for which
composites are a critical part.
As Velocity’s customers also look
to replace lost capacity in order
Passenger Aircraft Fleet Renewal - Transition to ‘Net Zero’
New Generation Aircraft - 25% lower carbon footprint *
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History Outlook
Only 13% of 2019 fleet
in service were new
generation aircraft
13%
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
2000
2005
2010
2015
2019
2025
2030
2035
2040
Source: Cirium, Airbus (www.airbus.com/en/products-services/commercial-aircraft/market/
global-market-forecast - * page 13 & 21) ** Western built passenger aircraft above 100 seats -
pax aircraft only.
1st GENERATION AIRCRAFT
Airbus: A300, DC9, DC10, 707,
727, 737, 747
2nd GENERATION AIRCRAFT
A310, MD11, MD80, MD90, 737,
747, 757, 767, F100
PREVIOUS GENERATION AIRCRAFT
A320 Fam., A330, A340, 717,
737NG, 747, 777
1ST + 2ND + PREVIOUS
GENERATION** AIRCRAFT
8
NEW GENERATION** AIRCRAFT
AIRBUS: A220, A320neo, A330neo,
A350, A380,
BOEING: 737max, 777x, 787,
& other new programmes
CURRENT VELOCITY PROGRAMMES
Velocity HQ, Burnley, Lancashire, UK
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Strategic Report Market Outlook
Air Traffic Recovery
140
120
100
80
60
40
20
Airbus expects a full recovery of air traffic between 2023 & 2025
RPKs = Revenue Passenger Kilometers
Recovery corrider: expected timeline
to reach 2019 traffic level
2019 level
IATA Actuals
Source: Airbus (www.airbus.com/en/products-servic-
es/commercial-aircraft/market/global-market-forecast)
OAG, FR24, SABRE, IATA, IHS, Markit, OWID
2020
2021
2022
2023
2024
2025
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to meet the increasing production
rates, we are confident that our
technology-focused approach to
long term, sustainable composite
raw material supply allows the
wider industry to build back
better and be more efficient
in delivering, both a financial
and environmental advantage
to composites structures in
transport. Both Airbus and Boeing
produce regular and detailed
market forecast documents which
are available to download from
their websites and key data is
sourced from;
www.boeing.com/commercial/
market/commercial-market-outlook
and www.airbus.com/en/products-
services/commercial-aircraft/
market/global-market-forecast
Both Airbus & Boeing both predict circa 40,000 aircraft by 2040
Boeing: 43,610 Airbus: 39,020
Source: www.boeing.com/commercial/market/commercial-market-outlook
and www.airbus.com/en/products-services/commercial-aircraft/market/global-market-forecast
Demand for 39,020 aircraft over the next 20 years
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50
45
40
35
30
25
20
15
10
5
Passenger aircraft (>100 seats) &
Freight (>10ft) | Rounded figures to
nearest 10
22,950
Beginning 2020
46,720
NEW DELIVERIES
23,770
GROW
60% of deliveries
39,020
15,250
REPLACE
40% of deliveries
stay
34% of 2020 fleet
7,700
2040
2021 - 2040
New Deliveries
Source: Airbus (www.airbus.com/en/products-services/commercial-aircraft/market/global-market-forecast)
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CEO Report
Strategic Report CEO Report
Jon Bridges Chief Executive
“
Airbus and Boeing predict
over 40,000 aircraft deliveries
are to be expected in the
next 20 years, as the industry
adapts and develops to meet
‘net zero’ targets
”
Overview
Looking back on another
unprecedented year for our
industry, it is in many ways
difficult to believe that in late
2021 and early 2022, we are
still dealing with impacts of the
global pandemic, including travel
restrictions and reduced aircraft
production rates. Thankfully,
vaccines, new treatments and
testing have begun to show a
way out of the situation.
However, despite civil aircraft
production rates projected to
increase starting in 2022, market
indications are that recovery to
pre-pandemic levels will take
two to four years dependent
on whether the platform is
twin-aisle or single-aisle. The
pandemic has accelerated
industry acknowledgement of
the utilisation of our existing
technology to drive internal
efficiency and cost improvement
and the need for further process
and technology development
to prepare the business for
recovery and beyond. As a
result, we secured multi-year
contractual renewals with all our
major customers and have a
strong platform for stable growth
as recovery begins.
The impact of the pandemic is
not just lower aircraft production
rates but also delays caused by
customers reorganising staff and
operations as they adapt to lower
volumes. While this might impede
new business discussions
with aircraft manufacturers in
the short term, we expect to
see a positive approach in the
future as they adapt to the new
environment.
The Recovery
For this reason, we expect our
recovery to include growth from
rising production rates and
new business opportunities.
These opportunities will come
as customers use Velocity’s
services to restore capacity
without growing their fixed costs.
This is particularly applicable
around parts of their businesses
they no longer consider core,
such as composite material
management and kitting.
Therefore, we have continued to
invest in our digital technology
and customer service model
as we improve the efficiency
and detail of our customer
proposals. We now offer
customers greater flexibility in
terms of how our services can be
deployed to support their global
manufacturing programmes.
This, combined with our retained
presence in the UK, North
America and Asia throughout
the pandemic, offers us the
flexibility to offer two key
customer service models. First,
full outsourcing of the process
to a Velocity facility; or second,
a Velocity managed service with
kit manufacture taking place on
the customer’s site. Both models
utilise our digital technology and
hardware to manage the end-to-
end process, including demand
management, raw material
procurement and management,
material nesting, production
planning, kit manufacture, quality
control and product traceability.
We see no detriment to the
customer selecting either option.
10
Strategic Report CEO Report
Development of our innovative visual inspection system
Employees
Despite the disruption and
challenges faced by the team
over the period, I am pleased
to report that staff turnover has
remained low. After necessary
headcount reductions were
made in response to the
pandemic and the anticipated
ending of government support,
our focus was on training and
provide developments to
our core teams. This
enables us to deliver
our customers’
existing
requirements,
provide
As we enter the recovery in FY22
we will pilot the managed service
model with existing customers
where new projects fall outside
the area of an existing Velocity
facility. We will provide an update
at the half-year.
Operational Progress
The financial year has been
focused on cost management
to support the adjusted EBITDA
breakeven position in H2 FY21
and the integration of new
proprietary digital technology to
aid the delivery of future growth.
Key highlights have been the
enhancements to our nesting and
traceability production system to
permit larger, multi raw material
batch nests containing more kits
to improve material efficiency.
The system now incorporates
an optical inspection system to
confirm individual piece level kit
and material batch traceability.
This system provides benefits
for existing business, and future
managed services.
To deliver this we have developed
our production into a “digital cell”
based structure where the entire
kit manufacturing software and
hardware is contained within
identical modules. These can be
deployed internally at Velocity, or
remotely at a customer site. All
this work has been developed
at our Advanced Technology
Development Centre, at our site
in Burnley, UK.
These digital manufacturing
cells can be replicated in a
standardised format and brings
a level of automation and central
control that allows customer
employees to operate. The cells
enable remote deployment as
our services are increasingly
located further afield at customer
sites. The hardware and software
are fully integrated with our
VRP system allowing real-time
process management, part level
efficiency and traceability and
real-time analysis of planned
versus actual performance
to deliver continuous
improvement.
11
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Strategic Report CEO Report
improvements to our cost targets
and maintain sufficient capability
to prepare for future recovery
and growth.
Part of this focus was our
participation in the ADS SC21
Competitiveness and Growth
scheme. We utilised matched
funding to deliver over 2400
hours of external training
focused on policy deployment,
leadership development and
meeting a nationally recognised
training standard. We are proud
of developing our internal talent,
giving our staff more career
development while maintaining
skills within the business.
Outlook
Looking ahead, I can see that
the developments in our digital
technology, service model,
staff training, coupled with
detailed cost control and margin
improvement activities, have
prepared the business well.
Not only for the production rate
recovery
but also the expected market
opportunity as the wider
customer base recovers and
returns to growth. As you can
see from the 2021 market data
from Airbus and Boeing, there
are over 40,000 aircraft deliveries
are expected in the next 20
years while the industry adapts
and develops to meet net zero
targets, such as in the IATA
“waypoint 2050” sustainability
strategy.
Key to this is the adoption of
new fuels, propulsion sources
and aerodynamic developments
to allow aircraft to travel further
and more efficient. The need
for stronger, lighter and more
blended airframes utilising
the advantages of composite
materials will be critical. I
look forward to updating all
stakeholders on what we believe
will be a transformational year
for our industry and Velocity
Composites PLC.
Section 172 Statement
In accordance with section 172
of the Companies Act 2006,
the Directors, collectively and
individually, confirm that during
the year ended 31 October 2021,
they acted in good faith and have
upheld their ‘duty to promote
the success of the Group’ to
the benefit of its Stakeholder
Groups.
Directors acknowledge the
importance of forming and
retaining a constructive
relationship with all stakeholder
groups. Effective engagement
with stakeholders enables the
Board to ensure stakeholder
interests are considered when
making decisions and is crucial
for achieving the long-term
success of the Group. The
main mechanisms for wider
stakeholder engagement and
feedback can be found on page
24 onwards in the corporate
governance section.
Jonathan Bridges
Chief Executive Officer
23 January 2022
One of Velocity’s advanced cleanroom manfacturing areas
12
Strategic Review Chairman’s Report Strategic Report Financial Review
Financial Review
Statement of
Comprehensive Income
Revenue for FY21 has seen the
first full 12 months of COVID-19
impacted demand. Although
we have been operational
throughout the period, with the
occasional customer shutdown
and the latest demand from
contracted programmes, we
finished the period with sales
28% lower year-on-year at
£9.8m (FY20: £13.6m).
Whilst H2 FY21 has shown
a reassuring stabilisation of
underlying sales, the market
outlook is one of static aircraft
production rates until end
FY22, early FY23. In addition,
the business continues to seek
out new contracts to deliver
some of the identified pipeline
opportunities and has seen
increased activity around these
in recent months. The Company
has made strong progress
in improving gross margin
throughout the year, increasing
by 8.9 ppts from 17.1% in FY20
to 26.0% in FY21. Although this
was partly driven by benefits
related to proactive management
of previously written down
stock, focused investment in
Velocity’s nesting technology has
supported an underlying margin
improvement of 6.7 ppts to
23.8% in the period.
As reported last year, the full
year effects of the Company’s
right-sizing efforts have mostly
been realised in FY21, with
administrative expenses including
exceptional costs decreasing
£1.6m from £5.5m to £3.9m.
There were no exceptional costs
in FY21. The lower overhead
base, combined with a strong
pipeline of potential sales and
Velocity’s maintained technology
and engineering capabilities,
will enable Velocity to positively
leverage its high operational
gearing as growth is expected to
resume in FY22 and FY23.
The government continued to
support the Company over the
period with income from furlough
of £0.2m (FY20: £0.4m) and
a non-repayable Coronavirus
support grant of £0.1m. Alongside
the existing £2.0m Coronavirus
Business Interruption Loan
(“CBIL”), an additional asset-
backed loan and further CBIL
was obtained in June 2021
through Close Brothers totalling
£0.9m.
The successful reduction in
overheads combined with gross
margin growth has driven the
delivery of the previously stated
goal of achieving adjusted
EBITDA breakeven in H2 FY21
adjusted EBITDA (FY20: £(1.6)
m), albeit supported by one-off
benefits related to COVID-19
support and utilisation of
previously written down inventory
Velocity board and management team
13
Strategic Report Financial Review
materials. On a consistent basis
with last year, adjusted EBITDA
has improved year-on-year by
£1.4m to a £(0.5)m adjusted
EBITDA loss for the year (FY20:
£(1.9)m loss) excluding share-
based payments and exceptional
administrative costs of £nil in
FY21 (FY20: £0.3m). Over the
coming FY22 and FY23 periods,
the Company will continue to
carefully balance cost reductions
with investment for growth to
enable a full recovery and a
sustainably profitable position.
The Company continues to
benefit from being 70% naturally
hedged from both US Dollar
and Euro foreign exchange
movements, with both revenues
and direct material purchases
being aligned contractually
into the same currency where
applicable.
Adjusted EBITDA 1
31 October
2021
31 October
2020
Reconciliation from Operating Loss
£’000
£’000
Operating Loss
Add back:
Share-based payments
Depreciation & Amortisation
Impairment of Intangible assets
Depreciation on Right of Use assets under
IFRS 16
Exceptional Administrative costs
Adjusted EBITDA 1
(1,364)
(3,149)
90
305
-
421
-
(548)
120
341
72
350
341
(1,925)
Adjusted EBITDA1 defined as earnings before finance charges, tax, amortisation, depreciation,
impairment, share based payments, exceptional restructuring costs. Share-based payments are
included highlight the movement year on year. Share based payments are added back to make
the share based payment charge clear to stakeholders.
14
The Close Brothers borrowings
of £0.9m is made up of a £0.45m
CBIL loan and a £0.45m loan to
settle remaining lease liabilities,
of this £0.18m was received as
cash once the finance liability on
the financed assets had been
settled. The Invoice Discounting
facility was not being utilised at
31 October 2021.
The cash balance at 31 October
2021 of £3.5m includes £2.3m
CBIL proceeds and £0.7m of
remaining EIS funds to be utilised
in international growth and
Strategic Report Financial Review
establishing production facilities
abroad.
Despite the loss in the year, the
business remains in a net cash
position at year end, with £1.0m
net cash (FY20: £1.3m). This
includes Cash at bank, EIS cash
balances and CBIL proceeds
offset by the outstanding CBIL
balance and hire purchase
liabilities.
Year ended
31 October
2021
£’000
Year ended
31 October
2020
£’000
Cash
3,476
3,268
Cash Loans (excluding right to use assets)
CBIL Loan
Invoice discount Facility
(2,516)
2
(2,000)
2
Net Cash/(Debt) (Note 1)
962
1270
Note 1: The net cash/(debt) calculation is designed to explain the level of financial debt,
net of cash at bank.
Cashflow and
Capital Investment
The year end cash and cash
equivalents increased by
£0.2m to £3.5m (FY20: £3.3m).
Cash generated/(utilised) from
operations of £0.3m (FY20:
£(0.8)m) in the year was driven
by £0.9m cash generated from
working capital movements,
as the business focused on
inventory reduction throughout
the period, partly offset by the
£(0.5)m adjusted EBITDA trading
loss.
Cash used in Investing Activities
of £(0.1)m (FY20: £(0.8)m)
primarily related to the Purchase
of Non-current assets.
Financing activities generated
£(0.1)m over the period (FY20:
£1.5m) as the net proceeds
of the additional CBILS and
asset finance facility with Close
Brothers (£0.9m) was offset by
the first few repayments of the
existing £2.0m, 5-year CBIL with
NatWest, starting July 2021.
Working Capital
Ongoing Inventory management
efforts successfully decreased
Inventory to £0.9m (FY20: £1.9m)
at year end, generating £1.0m
cash during the period and
bringing the Company’s Inventory
levels in-line with current levels of
demand.
Trade and other receivables
decreased during the year by
£0.3m to £2.2m as a result of
the increased credit terms and
continuing robust controls around
debt collection. Receivable days
have increased to 76 days (FY20:
44 days) due to revised credit
period terms with two major
customers as part of renewal
negotiations in H1 FY21.
Trade and other payables also
reduced during the year by
£0.4m to £1.1m (FY20: £1.5m) as
utilisation of existing stock and
reduction in demand drove fewer
material purchases.
15
Strategic Report Financial Review
Going Concern
Management continues to
undertake a significant level of
cash flow forecasting, in-line
with prior year and best practice
over the pandemic period. This
is now an ongoing process
within the Company through
Integrated Business Planning
(IBP) which regularly stress-tests
the forecasting assumptions
against the continuously evolving
circumstances, such as the latest
COVID variant or government
outlook. It was this work that also
supported the application for
additional CBILS support and its
associated asset-financing with
Close Brothers. Detailed financial
projections for the following 24
month rolling period to 31 October
2023 were prepared and a number
of sensitivities were run to stress
test the forecasts and understand
the cash flow impact of various
scenarios. Even in the most severe
down-side scenario modelled the
business had sufficient liquidity
to continue trading as a going
concern
Our forecasts indicate the group’s
Invoice Discounting Facility,
secured against Trade Debtors,
will be utilised during certain
months within the going concern
period. Whilst this facility is
designed to be short-term and can
be withdrawn, the latest annual
review in December reflected
the banks’ support for Velocity’s
growth strategy and extended the
commitment of both parties to a
minimum 3 months’ notice and
as such we expect this facility
will remain available throughout
the going concern period. Should
alternative financing be required
the Group would preserve cash
through slowing investment in
growth until longer-term funding
could be implemented, such as
asset-based financing against new
capex or equity funding.
The cash flow forecasts are
reviewed monthly through
Management’s IBP process and
the forecasting assumptions are
updated for any new knowledge
to ensure there is no change in the
Company’s liquidity outlook. This
is linked in with the Management’s
monthly risk review and should
the outlook change significantly
with no mitigating actions the
Company’s liquidity risk rating on
the risk register will be adjusted
to reflect this and subsequently
discussed at Board through the
Audit Committee’s quarterly risk
register review.
The aerospace sector lends itself
to this kind of long-term planning
due to the nature and length of
customer programmes, typically
a minimum of 3 years, but often 5
years or more. This has enabled
the business to fully model the
period to 31 October 2023 and
undertake more strategic, longer-
term planning for growth and
full recovery emerging from the
pandemic.
Although work is still needed to
improve underlying performance,
recent H2 FY21 results has
shown that adjusted EBITDA
breakeven is achievable for
Velocity. Future recovery will
be made possible through a
combination of existing contracts
recovering to pre-COVID-19
run rates over the 3-to-5-year
period, as well as new contracts
being won from the significant
pipeline of opportunities and
targeted investment being made
to support this. Cost improvement
programmes and efficiency drives
also continue on an ongoing basis
through the Budgeting process.
Should the current strategy prove
ineffective or insufficient to recover
the performance of the business,
Management have contingency
plans ready to implement should
this become clear.
Alongside the forecasting
and governance process, the
Company has demonstrated
robust cash flow management
over the FY21 period through
successfully reducing Inventory
levels by £1m and navigating
through right-sizing efforts to
deliver a £1.6m reduction in
administrative overheads.
Having due regard for these recent
deliverables and latest projections,
with available cash at 31 October
2021 of £3.5m, an undrawn invoice
discount facility where we can
borrow up to £3m dependent on
debtor levels, access to an invoice
discounting facility with one of our
major customers, and continued
confidence from our banks and
shareholders in our strategy, it is
the opinion of the Board that the
Group has adequate resources
to continue to trade as a going
concern.
Chris Williams
Chief Financial Officer
23 January 2022
Financial Highlights
Revenue
Cash at Bank
Gross Margin %
Operating Profit / (Loss)
Adjusted EBITDA1
£9.8m
£3.5m
26.0%
£(1.4m)
£(0.5m)
1Earnings before Interest, Tax, Depreciation, Amortisation, Impairment, adjusted for exceptional administrative costs and share based
payments. Workings are provided in Note 29 of the financial statements. Share based payments are added back to make the share based
payment charge clear to stakeholders.
16
Strategic Report Principal Risks and Uncertainties
Principal Risks and Uncertainties
The Board is committed to
operating to high standards
of corporate governance,
as we believe doing so will
contribute to the delivery of
long-term shareholder value.
The aerospace market also
requires the Group to operate
on a Right First Time Every
Time basis and the Company’s
listed status has solidified our
commitment to governance,
quality and transparency
and as importantly, further
improved the perception of
Velocity in our customers’ and
potential customers’ eyes.
With the COVID-19 pandemic
there has clearly been an
unprecedented impact on the
aviation industry in the UK. As
the pandemic has unfolded, its
impact on the business in the
immediate and longer-term has
become clearer. In the shorter-
term, Velocity has had to manage
a significant drop in sales within
existing customer contracts
through right sizing the cost
base and working closely with
our customers to understand
ongoing demand. Whilst in the
longer-term, Management have
been focused on managing cash
flow and reviewing the need for
investment in the coming years to
support the Company’s growth
strategy and offering to the
market.
In addition, the Group has
undertaken various risk
mitigation activities which
include planning ahead to help
mitigate current supply chain
disruption; undertaking other
capacity planning assessments
with customers and suppliers;
ensuring any tariff and tax
changes are fully covered in
our contracts; and liaising with
Government bodies to prepare
for the different outcomes which
may come to pass. Supplier risks
are detailed on the following
pages.
17
17
The Board is also conscious
of the risk, now more than
ever, of exclusively operating
in the aerospace sector and
is comfortable that the risk is
mitigated by the strength of the
longer-term outlook from the
aircraft manufacturers and are
reassured by past precedents of
crisis in the industry that have not
stopped the underlying trends of
growth in the market. In addition,
the Company continues to look
at opportunities to diversify into
other markets, particularly where
composite material has been
adopted, and has had some
successes in FY21.
The Group’s principal risks and
our actions to mitigate these risks
are set out in the table below.
These are the risks that we feel
are most material to the business
and which might prevent us from
achieving the Group’s strategic
objectives.
Strategic Report Principal Risks and Uncertainties
Principal Risks and Uncertainties
PRINCIPAL RISK
MANAGEMENT
PRIORITY
IMPACT
MITIGATION
Strategic Risks
Loss of Key
Contracts
Medium
International
Expansion
High
The aerospace sector
has a concentration
of very large primary
aircraft manufacturers
and Tier 1 suppliers.
These form the core
of the Company’s
customer base.
Therefore, the loss of
any of the Company’s
major contracts
with these large
customers may have
a material impact
on the Company’s
business, prospects,
financial condition,
or operations.
Management have
been particularly
wary of this during
the current period of
significant upheaval in
the aerospace sector.
Our strategy is
to expand our
production facilities
into new markets
that cannot be
serviced from our UK
production facilities.
We have started
planning to open
a new production
unit in the SE USA,
travel permitting.
The successful
implementation could
lead to 5 or 6 such
plants servicing the
We nurture relationships with all our
customers in order to understand
their business and identify further
opportunities to support them
and win new business. We work
very hard to deliver excellent
customer service levels. We are
actively developing our business
development pipeline to secure
new contracts. Aircrafts are
increasingly being manufactured
using composite material, a trend
that is continuing despite the
COVID-19 pandemic. We operate
through Long Term Contracts and
when an initial contractual period
comes to an end, unless the
customer invokes the termination
clause, the supply of product
continues on the basis of 4-week
firm demand commitment and
12-month forward demand forecast
against which the Company places
orders on material suppliers with
purchase order cover. Customers
are contractually committed to
any material orders within lead
time placed on their behalf.
The Company’s three biggest
customers were successfully
renewed during FY2021, each for
a minimum of 3 years. As such the
risk has been downgraded from
High in FY2020.
Although impacted by international
travel restrictions during the year,
as flights resume, we have seen
customers actively engage with
us again to develop international
sites/propositions. As a result,
we have increased this risk from
Medium to High. We are taking a
measured approach by investing
in our first production facility to
support customers in the Southeast
USA region. Expansion into other
markets i.e., Europe will be timed to
manage the risks around cash flow,
management time and bandwidth.
In addition, any site development
(Cont)
(Cont)
18
Strategic Report Principal Risks and Uncertainties
Principal Risks and Uncertainties
PRINCIPAL RISK
MANAGEMENT
PRIORITY
IMPACT
MITIGATION
Strategic Risks
International
Expansion
Winning a Large
Customer
Contract
Medium
Sustainability
Credentials
Low
(Cont)
(Cont)
will be supported with contractual
commitments from customers
prior to any significant financial
commitment by Velocity.
We will aim to optimise the
performance of our production
units by working on efficiency
improvements, using our space
more effectively and scheduling
the work in the most efficient way.
Technology investments will also
make a difference. We currently
have capacity in our UK plants
and a good structure of Executive
and second line management
to support additional demand.
Management is actively planning
for such a scenario in the next
24 months, as this has increased
from Low in FY20 as economies
begin to become active again.
Management believe this a
low risk to the Company, with
Velocity’s offering naturally
supporting an increasingly green
agenda. The Company minimises
waste of composite material
throughout the supply chain
and recycles that which cannot
be utilised: often something
customers are unable to focus
on. In addition, operating in
the composite sector naturally
supports many green or
alternative energy sectors, such
geographical clusters
across the USA with
opportunities in
Canada and Mexico. In
addition, new business
development in Europe
could offer up the need
for a production unit.
International expansion
has inherent risks,
along with potential
delays in setting up
new facilities.
The winning of a large
customer contract in
the UK could absorb
the capacity headroom
and lead to supply
issues if not closely
managed. It could also
be a distraction to
management.
Sustainability
credentials and
reporting are becoming
increasingly necessary
in trading as a
socially responsible
business, as well as
increasing importance
for all stakeholders -
customers, suppliers,
investors, government
bodies and employees
19
Strategic Report Principal Risks and Uncertainties
Principal Risks and Uncertainties
PRINCIPAL RISK
MANAGEMENT
PRIORITY
IMPACT
MITIGATION
(Cont)
(Cont)
Sustainability
credentials
Low
as electric vehicles, wind power
and hydrogen cell production. The
Company also has adopted a new
EV car scheme in FY21 and offers
on-site charging at its Burnley
facilities for employees, supported
by green energy generated
through its on-premises solar
panels. Whilst currently flagged
as low, sustainability is of ever-
increasing importance in today’s
society and Management
regularly review the relevance of
obtaining formal credentials to
support the Company’s efforts.
Research and
Development
Low
The Company invests
in R&D projects in order
to develop innovative
new products.
R&D projects are reviewed by
the Board and development
opportunities are carefully
reviewed by management at
various stages to minimise any
potential losses.
Exclusively
Operating in the
Aerospace Sector
Medium
Not sufficient demand
in the sector and
particularly in the civil
aerospace sector due
to COVID-19 or similar
disruption.
Risk is mitigated by the strength of
the longer-term outlook of aircraft
manufacturers and proven by past
crisis that have failed to stop the
underlying growth trends in the
aerospace market. Longer term
we plan to diversify away from this
sector through partnerships with
our major suppliers and customers
and have had some success in
this in FY21. The Company has
also started to develop more of
its customer base around military
aerospace which has been more
robust in the last year.
20
Strategic Report Principal Risks and Uncertainties
Principal Risks and Uncertainties
PRINCIPAL RISK
MANAGEMENT
PRIORITY
IMPACT
MITIGATION
Operational Risks
Dependence on
Third Party Supply
Low
Cyber Security
Medium
The Group’s business
depends on products
and services provided
by third parties. Any
interruption to the
supply of products
or services by third
parties, problems
maintaining quality
standards and
delivering product
to specification, or
problems in upgrading
such products
or services, the
Company’s business
will be adversely
affected. Appropriate
stock levels
maintained to meet
customer contractual
requirements.
The Group manages its
relationships with suppliers through
the commercial and operational
teams. Many products are single
sourced for Airplane frames, the
product type being defined by
Airbus/Boeing. We place orders
according to the supplier delivery
schedule, pay on time and maintain
contractual buffer stocks to ensure
that we do not run out of stock.
Our rigorous forecasting processes
and technology allow us to identify
shortages in supply early. Where
lead times are extended beyond
our control, three-way discussions
are actively sought out early
between Velocity, the end customer
and the material supplier to resolve.
This has held us in good stead
throughout the recent global supply
chain issues.
With an ever-increasing
number of reported data
leaks and ransomware
events, there is a
growing risk of cyber
attack in today’s society.
With the sensitive data
used by Velocity and
the growth strategy
projected this will
become increasingly
prominent.
Management regularly reviews the
strength of the IT infrastructure
within the business and undertake
third party audits to reinforce
this. Through a combination of
encryption, regular backups,
firewalls and limited third party
access points the current setup is
deemed secure, however work is
ongoing to formalise this through
recognised accreditations.
21
Strategic Report Principal Risks and Uncertainties
Principal Risks and Uncertainties
PRINCIPAL RISK
MANAGEMENT
PRIORITY
IMPACT
MITIGATION
Reliance on
Key Individuals
Medium
The success of the
Group will depend
largely upon the
expertise and
relationships of the
Board and other senior
employees. The loss
of any of the key
individuals could impact
the Group’s ability to
deliver its strategic
goals.
Salary and benefit levels are
competitive and reviewed on a
regular basis. In addition, the
business has bonus and equity
schemes to reward longer term
performance. The Company has
a clear set of values which it
promotes. We have invested in a
strong second tier management
team. Annual performance reviews
and development plans take place.
Operational staff are benchmarked
regularly to ensure Velocity remains
an attractive place to work and
compensation is reflective of a
high-value manufacturer.
Material Price
Low
Material price changes
are flowed through to
customers
Ensure any material price changes
are flowed through from supplier to
customer through contract.
Financial and
Compliance Risks
Treasury and
Foreign Exchange
Risk
Low
Monitor short term purchase
forecasts and debtor levels and
sell surplus currency according to
a Board agreed Treasury policy.
Match revenue and purchases
with all new contracts wherever
possible.
Despite the challenges of
COVID-19 and Brexit, this risk has
not been as high risk as expected
in the past and so is currently
considered a lower risk to the
Company.
The Company has an
approved Treasury
policy which is managed
and monitored by the
CFO. As the Company
purchases and sells
products on a global
basis, it is exposed to
foreign exchange gains
and losses linked to US$
and Euros. Group policy
is to naturally hedge
wherever possible and
approximately 70% of
our activity is naturally
hedged. Cash deposits
are maintained within
the policy limits.
22
Strategic Report Principal Risks and Uncertainties
Principal Risks and Uncertainties
PRINCIPAL RISK
MANAGEMENT
PRIORITY
IMPACT
MITIGATION
The Company seeks to manage
this risk by ensuring sufficient
liquidity is available to meet
foreseeable needs, by the use of
cash forecasts, invoice discounting,
loans and other bank facilities.
These activities have been
undertaken extensively throughout
FY2021, with longer-term scenario
testing being done regularly as
new data has come to light. This
has been done in conjunction
with utilising government offered
support through CBILS and
furlough schemes, and right-sizing
the cost-base in line with latest
demand outlook. The challenges to
cash flow in future will be around
recovery and growth of sales
demand/new sites. Considering the
risk after all internal mitigations, the
Company believes the risk would
be low.
The Company’s trade receivables
relate to amounts owed by
aerospace supply chain companies
who by their nature are large. Given
the size and stability of its core
receivables, the Directors do not
believe that the credit risk to the
Company is significant. Overdue
debts are monitored on a weekly
basis and action taken to resolve
any issues.
The Company seeks to manage its
interest rate risk through minimising
exposure wherever possible and
regularly reviewing interest rates
available in the marketplace.
Liquidity Risk
Medium
Insufficient cash to
meet the needs of the
business in near or
long term
Credit Risk
Low
Unable to collect
due receivables from
customers
Interest Rate Risk
Low
Ability to minimise
exposure
23
Governance Statement of Corporate Governance
Statement of Corporate Governance
All members of the Board
believe strongly in the value
and importance of good
corporate governance and
in our accountability to all
of Velocity’s stakeholders,
including investors, staff,
customers and suppliers.
The Board has adopted the
Quoted Companies Alliance
(QCA) Corporate Governance
Code. The Board believes
that the QCA Code is most
appropriate for the size, risks,
complexity and operations of
the Company and is reflective
of the Group’s values. Details
of the Group’s compliance with
the ten principles of the Code
are set out below:
manufacturers can also reduce
costs and 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 and electric
vehicles, where the demand for
composites is expected to grow.
Our core focus has
predominantly been in the
aerospace industry and our
customer arrangements are
almost exclusively based on
long-term contracts, typically
for a 3-to-5-year period. Our
business strategy and business
model are included in the
strategic report section of our
Annual Report, along with key
performance indicators set out in
the Financial Review to measure
growth and profitability around
our business model.
1. Establish a strategy
and business model which
promotes long-term value
for the shareholders
Velocity’s strategy is to be the
leading supplier of composite
material kits to aerospace
and other high-performance
manufacturers, that reduce costs
and improve sustainability.
Velocity manufactures advanced
composite material kits for use
in the production of carbon fibre
composite parts for aerospace
and other high-performance
manufacturers, such as
automotive OEM’s, and pioneers
of renewable energy applications.
There has been a step-change
in the use of carbon fibre in
aircraft as manufacturers have
to reduce aircraft weight and
improve their efficiency to deliver
greater sustainability. By using
Velocity’s proprietary technology,
24
Governance Statement of Corporate Governance
reassignment, marriage and
civil partnership and pregnancy
and maternity. With our staff
we have implemented firm wide
half yearly briefings following
our results announcements,
monthly departmental staff
briefings, a quarterly all staff
briefing, weekly brief updates
as well as completing an annual
engagement survey.
Industry Bodies
We are members of industry
bodies such as Northwest
Aerospace Alliance (‘NWAA’)
and the National Aerospace and
Defence Contractors (‘NADCAP’)
who are influential in how the
Group is perceived by clients.
Community
We actively participate
in the community and in
apprenticeships and other
schemes to provide opportunities
for young people, such as
T-Levels for BTEC Engineering
students and Work Experience
opportunities. We are firm
believers in supporting the
local economies in which we
operate and therefore always
look to employ local people,
having recently been awarded
membership to the Lancashire
Skills and Employment Hub as a
business dedicated to supporting
local skills and development.
Velocity also operates within
the Enterprise Advisor Network,
supporting the development
of the future generation of
employees to ensure we are an
employer of choice for the future,
we also engage local trades
where possible.
2. Seek to understand and
meet shareholder needs and
expectations
Under the current Board
structure, Velocity is seeking
to engage in regular dialogue
with its shareholders through
a structured Investor Relations
programme. The Company
seeks to provide effective
communications through the
Interim and Annual reports,
as well as regular trading
updates through Regulatory
News Service announcements.
Information is also made
available to shareholders through
the Company’s website (www.
velocity-composites.com).
We offer to meet with those
institutional and major private
investors that wish to do so at
least twice a year in the results
period. These meetings include a
presentation of the latest financial
performance, a wider business
update and discussion of the
longer-term plan. These meetings
are normally attended by the
Chairman, Chief Executive Officer
and Chief Financial Officer. The
presentation given at these
meetings is also made available
on the Company’s website.
We welcome engagement with
our other key shareholders.
The Directors and other
executives meet both private and
institutional shareholders from
time to time. The Annual General
Meeting presents a further
opportunity for all shareholders
to meet the Board and other
senior managers from across the
business.
3. Take into account wider
stakeholder and social
responsibilities and their
implications for long-term
success
The Board and senior
management seek to engage
with all stakeholders including
our employees, customers,
suppliers, shareholders, industry
bodies and local communities in
a way to promote the longer-term
success of the business.
The main mechanisms for wider
stakeholder engagement and
feedback can be summarised as
follows:
Customers
We have dedicated staff in the
businesses that are responsible
for customer relationships. In
addition, the technical support
and development teams will
regularly engage with customers
as a fundamental part of
delivering ongoing services.
Through these well-established
channels, Velocity seeks to
ensure that the needs of our
customers are fully understood.
We are then well positioned to
initiate appropriate actions in
response.
Suppliers
The third-party supply base can
be the key to the success of
the Velocity business. As such,
there are processes in place
within the business to actively
manage supplier relationships in
the normal course of business,
taking appropriate feedback and
developing actions as necessary.
Employees
We are an equal opportunity
employer regardless of race,
religion, gender, age, disability,
sexual orientation, gender
25
Governance Statement of Corporate Governance
4. Embed effective risk
management, considering
both opportunities and threats,
throughout the organisation
The Board has overall
responsibility for the Group’s
system of internal control and
recognises that it has overall
responsibility for ensuring
the Group maintains proper
accounting records and a system
of internal control to provide
it with reasonable assurance
regarding effective and efficient
operations, internal financial
control and compliance with laws
and regulations. The system of
internal control is designed to
manage rather than eliminate the
risk of failure to achieve business
objectives. In pursuing these
objectives, internal controls can
only provide reasonable and
not absolute assurance against
material misstatement or loss. As
expected, a key control during
the period was the day-to-day
supervision of the business by
the Executive Directors and
regular oversight by the Non-
Executive Directors.
The Board performs a regular
review of the effectiveness of
the system of internal control
and takes action as necessary
to remedy any significant failings
or weaknesses identified in the
review. The processes used
by the Board to review the
effectiveness of the system
of internal control include the
following:
• An ongoing process of risk
assessment to identify,
evaluate and manage business
risks;
• Management structure with
clearly defined responsibilities
and authority limits;
• A comprehensive system of
reporting financial results to
the Board;
• The Audit Committee reviews
the effectiveness of the
Group’s risk management
process and significant risk
issues are referred to the
Board for consideration;
26
26
• Appraisal and authorisation
of general and capital
expenditure as well as
research and development
projects;
• Dual signatories on all bank
accounts.
5. Maintain the board as a
well-functioning, balanced
team led by the chair
We will be seeking a new Non-
Executive Director to replace
Margaret in the coming year, who
has the financial and governance
experience to support the
Company. Currently Andy
Beaden is acting Interim Audit
Committee Chair.
At the date of this report
the Board comprises of the
Chairman, Chief Executive
Officer, Chief Financial Officer,
Deputy Company Secretary
and a Non-Executive Director.
During the year Margaret Amos
resigned from her Non-Executive
Director role to pursue other
opportunities and we will be
Governance Statement of Corporate Governance
seeking a new Non- Executive
Director in the coming year who
has the financial and governance
experience to support the
Company. Group Financial
Officer Chris Williams, our
Finance Director was appointed
Company Secretary in June 2021,
replacing Adam Newton who left
the Board to focus on his role
as Group Financial Controller.
Supporting Chris in his Company
Secretary role is Kelly McGrath,
HR Business Partner and Deputy
Company Secretary.
The Chairman has overall
responsibility for corporate
governance and in promoting
high standards throughout the
Group. He leads and chairs
the Board, ensuring that the
committees are properly
structured and reviewed on
a regular basis, leads in the
development of strategy and
setting objectives, and oversees
communication between the
Group and its shareholders.
The Board meets on a regular
(usually monthly) basis to deal
with matters reserved for its
decision. These include agreeing
and monitoring strategic
plans and financial targets,
major decisions on resource,
overseeing management of the
Group and ensuring processes
are in place to manage major
risks, treasury matters, changes
in accounting policy, corporate
governance issues, litigation and
reporting to shareholders.
The monthly Board meetings
have a regular agenda with
standing items of Health and
Safety, HR and People update,
Chief Commercial & Supply
Chain Officer report, Chief
Programmes Officer report,
Chief Financial Officer report
and management accounts.
The Board also receives
committee updates on a
regular basis. To enable the
Board to discharge its duties all
Directors receive appropriate
and timely information. Briefing
papers are distributed by the
Deputy Company Secretary to
all Directors in advance of the
meetings.
There are two formal Board
committees that meet
independently of Board meetings
and one additional Executive
management committee:
Audit Committee
The Audit Committee currently
has two members, Andy
Beaden (Interim Chair) and
Rob Soen. The Chief Financial
Officer and external auditors
attend by invitation. The Audit
Committee responsibilities
include the review of the scope,
results and effectiveness of the
external audit, the review of the
Interim and Annual accounts,
and the review of the Group’s
risk management and internal
control systems. The Audit
Committee advises the Board on
the appointment of the external
auditors and monitors their
performance.
Remuneration Committee
The Remuneration Committee
has two members, Rob Soen
(Chair) and Andy Beaden. The
Committee is responsible
for setting the remuneration
arrangements, short term bonus
and long-term incentives for the
Executive Directors and senior
management. In addition, the
committee oversees the creation
and implementation of all
employee share plans.
Nomination Committee
The Nomination Committee has
two members, Andy Beaden
(Chair) and Rob Soen. The
Nomination Committee meets
as required and is responsible
for proposing candidates for
appointment to the Board and
the structure and composition
of the Board as a whole, as well
as succession planning. The
Committee’s responsibilities were
discussed as a part of the Board
meetings during the year.
Executive Committee
The Executive Committee
handles the implementation of
the Group strategy on behalf
of the Board. The Committee
comprises of four members, two
of which are Executive Directors.
It focuses on the long-term vision
and strategy for the Group.
Primary responsibilities include
the oversight of the development,
maintenance and implementation
of the strategy, management
of the overall financial results
for the Group, directing
operational management and
managing shareholder, corporate
governance and growth.
27
Governance Statement of Corporate Governance
A summary of the attendance at board and committee meetings by the directors who served during the
year is set out below.
No Meetings in Year
Andrew Beaden
Robert Soen
Jon Bridges
Margaret Amos*
Chris Williams
Board
Meetings
Audit
Committee
Remuneration
Committee
Nomination
Committee
10
10
10
10
8
10
4
4
4
n/a
3
4
2
2
2
n/a
2
n/a
2
2
2
n/a
2
n/a
*Resigned as Director 15 September 2021
n/a - indicates that a Director was not a member of a particular committee
Andrew
Beaden
Rob
Soen
Jon
Bridges
Margaret
Amos
Chris
Williams
Audit Committee (AC)
Member/Chair
Member
Remuneration Committee
Member
Chair
Nominations Committee
Chair
Member
n/a
n/a
n/a
Chair
Member
Member
n/a
n/a
n/a
Non-members are invited to attend committees as appropriate
6. Ensure that between
them the directors
have the necessary up-
to-date experience,
skills and capabilities
Details on each of the directors,
and their respective roles within
the Company, are set out on
page 31 of this report.
7. Evaluate board performance
based upon clear and
relevant objectives, seeking
continuous improvement
particularly focussed around
cash flows and the ongoing
health of Velocity.
Now that business has a
semblance of steady-state, the
Board will continue to improve
these working practices in-line
with the business need in the
months to come.
Whilst the Board have continually
looked to refine and improve
working practices throughout the
year, the COVID-19 pandemic
continued to challenge the Board
which led to some short-term
crisis management processes
being required. As a testament
to the previous years’ focus
on Board governance these
were implemented swiftly
and decisively. These were
28
Governance Statement of Corporate Governance
responsibilities and agendas
and three sub-committees;
in addition, strong informal
relations are maintained between
Executive and Non-executive
Directors.
Non-executive Directors meet
with other senior managers
and give advice and assistance
between meetings.
The Chairman, Chief Executive
Officer and the Chief Financial
Officer make presentations to
institutional shareholders and
analysts each year immediately
following the release of interim
and full year results. They
also attend retail shareholder
events. The slides used for such
presentations are made available
on the Group’s website under
the Annual Reports section.
They also meet regularly with
the Group’s Nomad/broker
and discuss any shareholder
feedback, the Board is briefed
accordingly.
All Directors attend the Annual
General Meeting and engage
both formally and informally with
shareholders during and after
the meeting. The results of voting
at the AGM is communicated to
shareholders via RNS and on the
Group’s website.
Andy Beaden
Chairman
23 January 2022
8. Promote a culture
that is based on ethical
values and behaviour
Our long-term growth is
underpinned by our seven core
values:
i) We place our staff first, putting
ourselves in their shoes to
understand the current and future
needs of those who work with us.
ii) We value our customers
determining how to anticipate
their current and future needs
and how to exceed their
expectations.
iii) We place importance on
our suppliers and pay invoices
promptly, are clear in negotiations
and have an ongoing dialogue.
iv) We communicate with our
shareholders and explain
our strategy clearly and the
challenges Velocity faces.
v) We are team players who
recognise that Velocity is a
Company worth much more than
the sum of its parts and we are
committed to learning from one
another.
vi) We are committed to
innovation in what we do and
how we do it, and to working
smarter rather than harder
to reduce costs, increase
efficiency and help aircraft parts’
manufacturers to increase build
rates.
vii) We respect one another
and are courteous, honest
and straightforward in all our
dealings, we honour diversity,
individuality and personal
differences, and are committed
to conducting our business with
the highest personal, professional
and ethical standards.
The culture of the Group is
characterised by these values
which are communicated
regularly to staff through internal
communications and forums. The
core values are communicated
to prospective employees in the
Group’s recruitment programmes
and are considered as part of the
selection process.
The Board believes that a culture
based on the seven core values
is a competitive advantage and
consistent with fulfilment of the
Group’s mission and execution of
its strategy. It is the responsibility
of the Executive Management
Committee to evaluate how the
Company might better achieve
these objectives, and report to
the Board on a regular basis.
9. Maintain governance
structures and processes
that are fit for purpose and
support good decision-
making by the board
Details of the governance
structures and processes
adopted by the Company are
set out on the Company website
(www.velocity-composites.com).
10. Communicate how the
Company is governed and is
performing by maintaining a
dialogue with shareholders and
other relevant stakeholders
The Board believes that
corporate governance is more
than just a set of guidelines;
rather it is a framework which
underpins the core values for
running the business in which we
all believe. The Board has formal
29
3030
Strategic Review Chairman’s Report Governance Board of Directors
Board of Directors
(l-r) Company Secretary Kelly McGrath, Chris Williams,
Andy Beadon, Rob Soen & Jon Bridges
Andy Beaden Chairman
Andy Andy was appointed Non-
Executive Chairman of Velocity in
July 2019. From 2011 to 2017, Mr
Beaden served as Group Finance
Director and a member of the
Board of Luxfer Holding plc, a
developer and producer of highly
engineered advanced materials,
having joined its predecessor
British Aluminium in 1997. Luxfer
(LXFR) is listed on the New York
Stock Exchange. Mr Beaden is
a co-founder and Chairman of
IN4.0 Group Limited, a Company
encouraging growth through the
use of Industry 4.0 technologies.
Mr Beaden is a Chartered
Accountant, having trained
with KPMG, holds a degree in
economics and econometrics
from Nottingham University and is
a Fellow of the RSA (Royal Society
for the Encouragement of the Arts,
Manufactures and Commerce).
Mr Beaden is the current Chair of
the Audit Committee.
Jonathan Bridges
Jon co-founded Velocity
Composites in October 2007. Jon
has over 25 years’ experience
within the advanced composites
industry and is an experienced
composite engineer. Previously,
Jon was an Aerospace and Lean
Solutions Specialist at Cytec
Process Materials where he
was responsible for direct sales
support of UK and European
based clients.
From 2003 to 2005 Jon was
a Manufacturing Engineer for
Safran Nacelles where he was
responsible for the manufacturing
function for a growing, highly
loaded aerospace unit supplying
multiple assembly lines. Jon was
re-appointed to the Board as an
Executive Director in July 2019.
Mr Bridges has a BSc in Materials
Science from Coventry University.
31
31
Rob Soen
Robert joined Velocity in July 2019
as an independent Non-Executive
Director and is Chair of the
remuneration Committee. Rob has
worked extensively in aerospace
and automotive supply chains,
ending his executive career as
Senior Vice President Supply
Chain in GKN Aerospace Services
Limited. Mr Soen is a Fellow of the
Institute of Purchasing and Supply.
Chris Williams
Chris joined Velocity in August
2020 as Chief Financial Officer.
Chris brings with him a wealth of
experience across many sectors,
having previously been Finance
Director for Bettys Tearooms, a
multi-site hospitality business
in Yorkshire, as well as Caparo
Engineering, where he was a
Divisional Finance Director for a
number of Precision Engineering
SMEs based in the Midlands.
Chris is a Chartered Accountant,
having trained with KPMG, and
holds a Master’s degree in physics
from the University of Birmingham.
Governance Senior Management
Senior Management
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Jeff Armitage
Jeff was also Senior Vice President
of the Fokker Acquisition and
Integration/Synergy and spent ten
years as Senior Vice President for
GKN European Composites.
Jeff Armitage joined the Executive
Team as Strategic Operation
Director in November 2021. Jeff
holds a wealth of experience within
the aerospace sector, having held
the position MD/ Vice President of
GKN/Fokker, responsible for the
Aircraft Refurbishment and Spares
Provisioning for the Boeing 737
Airbus A320/330.
Matthew Archer
Matthew joined the Company as
Chief Commercial Officer in February
2017 bringing extensive experience
of the Defence and Aerospace
sectors having worked for several
of the world’s leading companies in
those industries. Matthew previously
worked for GKN Aerospace where
he led the introduction of a global
strategy for composite procurement
across Europe, North America and
Asia. Prior to this Matthew worked at
Defence industry prime contractors
and the UK Ministry of Defence.
In October 2020 Matthew’s role
expanded to that of Commercial and
Supply Chain Director giving Matthew
accountability for the Company’s
Contractual, Supply Chain and
Quality Assurance matters.
James Eastbury
James leads a team of technically
skilled Programme Managers
and New Business Engineers
in developing and executing
comprehensive multi-level plans of
engagement with all of Velocity’s
customers. He is responsible for the
expansion of all of Velocity’s revenue
with existing and new customers
within all territories and future
markets.
James has over 12 years’ experience
in the aerospace sector, previously
with Solvay Composite Materials, the
advanced materials and speciality
chemicals company, where he held a
number of roles. Most notable as Key
Account Manager for Airbus.
Adam Newton
audit background, having worked
for several years in practice with a
diverse client portfolio, from SMEs to
larger PLC businesses.
Adam is a Fellow of the Association of
Chartered Certified Accountants
Adam joined Velocity in January
2017, bringing with him many years
of experience from varied roles in
finance. Adam previously worked
as Divisional Finance Business
Partner at Well Pharmacy (formerly
Co-operative Pharmacy) for 9
years, where he was responsible
for strategy and driving operational
efficiencies. Adam comes from an
32
32
Governance Senior Management
Emil Khan
Emil began a career with Velocity
in 2010 after graduating from the
University of Central Lancashire
with an Engineering Degree. Emil is
the Engineering Lead on many key
internal and external projects.
Responsible for engineer governance
and managing the engineering
team, whilst supporting the team
with individual projects, Emil thrives
on the challenges that Velocity
faces as an upcoming business in
the aerospace industry and looks
forward to future business prospects.
Emil is keen to optimise and grow
the team to ensure standardisation in
multi-site deployment.
Sheldon Atherton
Sheldon has been a member
of the Velocity team since 2008
and has played a significant role
in establishing the production
processes, IT systems and the
Quality Management System.
Sheldon is homegrown through the
Velocity leadership development
programme, developing his skills,
knowledge and experience through
Production, Systems Integration,
Quality and Supply Chain, making
him the ideal choice for Head of
Operations.
Kelly McGrath
Kelly joined Velocity in August
2019 as HR Business Partner and
supports the Board of Directors
as Deputy Company Secretary.
With over 10 years HR experience,
gained from the Manufacturing and
Aerospace Engineering sectors, Kelly
is responsible for the development
and delivery of the People Strategy,
working with the Executive Team to
define and deliver business growth
plans.
Kelly is a qualified Associate Member
of CIPD and is currently in the
process of upgrading to MCIPD.
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33
33
Governance Directors’ Report
Directors’ Report
The directors present their report and the audited financial statements for the
year ended 31 October 2021.
Principal Activities
The Group is a provider of
engineered composite material
kits to the aerospace industry.
Review of Business and
Future Developments
The Board has continued the
development of the business,
as referenced in the Financial
Review on pg 13 to 16 and
is pleased with the progress
made in the past year. Future
developments are covered
within the outlook for the
business as disclosed on pg 8.
Financial Risk Management
Details of the Board’s approach
to financial risk management
can be found in the principle
risks review on page 17.
Capital Structure
Details of the Company’s share
capital, together with details
of the movements, are set out
in Note 22 to the Consolidated
Financial Statements. The
Company has one class of
Ordinary Share which carry no
right to fixed income.
Research and Development
The Group continued to invest
in research and development, in
order to extend its geographical
reach and improve the
effectiveness of its technology.
During the year the Group
capitalised development costs
of £Nil (2020: £0.04m) in-line
with the Group’s accounting
policy.
Basis of Preparation of the
Financial Statements
The financial statements have
been prepared in accordance
with International Accounting
Standards in conformity with the
requirements of the Companies
Act 2006. In accordance
with International Accounting
Standards in conformity with the
requirements of the Companies
Act 2006, the financial
statements reflect the results of
the Group for the year ended 31
October 2021. Further details
are provided in Note 2 to the
financial statements.
34
34
Directors
The Directors who held office at 31 October 2021 and their interest in the
shares of the Company were as follows:
Jonathan Karl Bridges
Andy Beaden
Rob Soen
Margaret Amos (resigned 15 September 2021)
Chris Williams
1 Includes 50,000 shares in the name of Mrs S Beaden
Governance Directors’ Report
At
31 October
2021
%
Shareholding
5,515,929
400,000 1
-
-
-
15.19%
1.10%
-
-
-
Going Concern
The Group has prepared
extensive financial projections
for the next two financial years,
incorporating the impact of
COVID-19 and modelling a
number of ‘stress-testing’
scenarios. The forecasts include
revenue projections based on
current demand plus a weighting
of opportunities in the pipeline,
with an appropriate cost base
reflective of the significant cost
reductions that have already
taken place in the Group and the
investment required to drive and
implement the expected growth.
The projections demonstrate
commercial recovery over the
Substantial Shareholdings
24-month period, even under the
most severe down-side scenario
modelled.
Alongside the robust forecasting
and governance process, the
Company has demonstrated
strong cash flow management
over the FY21 period through
successfully reducing Inventory
levels by £1m and navigating
through right-sizing efforts to
deliver a £1.6m reduction in
administrative overheads.
Having due regard for these
recent deliverables and latest
projections, with available cash
at 31 October 2021 of £3.5m, an
undrawn invoice discount facility
where we can borrow up to £3m
dependent on debtor levels,
access to an invoice discounting
facility with one of our major
customers, and continued
support from our banks and
shareholders, it is the opinion
of the Board that the Group has
adequate resources to continue
to trade as a going concern. A
more extensive disclosure of
going concern can be found in
the financial review on page 16.
Indemnification of Directors
The Group provides Directors
and Officers Insurance cover and
is contractually committed to
provide cover.
At 31 October 2021, notification had been received of the following interests which exceed a 3% interest in the
issued share capital of the Company, in addition to those of the Directors referred to above:
Number of
Ordinary Shares
% of issued
share capital
Gerard Antony Johnson
Christopher Banks
TM Stonehage Fleming AIM Fund
Charles Stanley Clients
Octopus Investments
Braveheart Investment Group
Hargreaves Lansdown Clients
Amati Global Investors
13.23%
13.23%
11.64%
4.80%
4.32%
4.14%
3.99%
3.17%
4,802,693
4,802,693
4,222,753
1,739,638
1,567,058
1,500,615
1,448,560
1,150,294
35
Governance Directors’ Report
• The Directors’ Report
includes a fair review of
the development and
performance of the business
and the position of the Group
and Company, together with
a description of the principal
risks and uncertainties that it
faces.
Disclosure of
Information to Auditor
Each of the persons who are
directors at the time when this
Directors’ report is approved has
confirmed that:
• so far as that director is
aware, there is no relevant
audit information of which the
Group’s auditor is unaware;
and
• that director has taken all the
steps that they ought to have
taken as a director in order
to make themselves aware of
any relevant audit information
and to establish that the
Group’s auditor is aware of that
information.
Auditor
Grant Thornton UK LLP, having
expressed its willingness
to continue in office, will be
proposed for reappointment
for the next financial year at
the Annual General Meeting, in
accordance with section 489 of
the Companies Act 2006.
This report was approved by the
Board of Directors on 23 January
2022 and signed on its behalf by:
Chris Williams
Company Secretary
23 January 2022
Corporate Governance
The Statement of Corporate
Governance on Pages 24 to 29
sets out the Group’s approach to
good corporate governance.
Statement of Directors’
Responsibilities
The directors are responsible
for preparing the Strategic
report, the Directors’ report
and the financial statements in
accordance with applicable law
and regulations.
Company law requires the
directors to prepare financial
statements for each financial
year. Under that law the directors
have prepared the financial
statements in accordance
with International Accounting
Standards in conformity with the
requirements of the Companies
Act 2006. Under Company law
the directors must not approve
the financial statements unless
they are satisfied that they give a
true and fair view of the state of
affairs of the Company and the
profit or loss of the Company for
that period. In preparing these
financial statements, the directors
are required to:
•
select suitable accounting
policies and then apply them
consistently;
• make judgments and
•
accounting estimates that are
reasonable and prudent;
state whether applicable
International Accounting
Standards have been
followed, subject to any
material departures disclosed
and explained in the financial
statements; and
• prepare the financial
statements on the going
concern basis unless it is
inappropriate to presume that
the Group will continue in
business.
The directors are responsible for
keeping adequate accounting
records that are sufficient to
show and explain the Group’s
transactions and disclose with
reasonable accuracy at any
time the financial position of the
Group and enable them to ensure
that the financial statements
comply with the Companies Act
2006. They are also responsible
for safeguarding the assets
of the Group and hence for
taking reasonable steps for the
prevention and detection of fraud
and other irregularities.
The Directors are responsible
for the maintenance and
integrity of the Group’s website.
Legislation in the United Kingdom
governing the preparation
and dissemination of financial
statements may differ from
legislation in other jurisdictions.
The Directors consider that the
Annual Report and Financial
Statements, taken as a
whole, is fair, balanced and
comprehensive and provides
the information necessary for
shareholders to assess the Group
and Company’s performance,
business model and strategy.
Each of the Directors, whose
names and functions are listed in
the Directors Report confirm that
to the best of their knowledge:
• The Group Financial
Statements, which have been
prepared in accordance with
International Accounting
Standards in conformity
with the requirements of the
Companies Act 2006, give
a true and fair view of the
assets, liabilities, financial
position and profit of the
Group; and
36
Governance Directors’ Remuneration Report
Directors’ Remuneration Report
This report covers the financial year ended 31 October 2021.
The Director’s renumeration report sets out the key points of the remuneration process for the Group, as well
as any rational for any decisions made by the remuneration committee during the year. This is intended to help
investors understand the remuneration policy in the light of the strategy for the Group. The report is voluntarily
disclosed.
Responsibilities
Executive Directors
The Remuneration & Nomination
Committee has two members
with Robert Soen (Chairman) and
Andy Beaden. The Committee
is responsible for setting the
remuneration packages for
the Executive team as well as
approving, where appropriate,
the remuneration of senior staff.
The Committee sets incentive
plans for the Executive team
to align their interests with
those of the shareholders and
to encourage the strategic
development of the business.
The Board is committed to
maintaining high standards of
corporate governance and has
taken steps to comply with best
practice in so far as it can be
applied practically given the size
of the Group.
Remuneration Policy
The Board aims to ensure
that the total remuneration
for the Executive Directors
is soundly based, internally
consistent, market competitive
and aligned with the interests
of the shareholders. To design
a balanced package for the
Executive Directors and senior
37
management, the Board
considers the individual’s
experience and the nature and
complexity of their work in order
to pay a competitive salary and
benefits package that attracts
and retains management of
the highest quality. The Board
also considers the link between
the individual’s remuneration
package and the Group’s long-
term performance.
Basic Salary
Salaries are reviewed annually
and are benchmarked against
businesses acting within the
aerospace manufacturing
sector. The review process
is undertaken having regard
to the development of the
Governance Directors’ Remuneration Report
Group and the contribution that
individuals will continue to make
as well as the need to retain
and motivate individuals. The
Executive Directors and Senior
Management are also awarded
other benefits (for example
pension contributions) which are
commensurate with their position
within the Group and with the
competitive marketplace.
Share Options
Share Options are awarded in
order to provide a long-term
incentive to the Executive
Directors and Senior
Management which aligns the
interests of the Group and of
its shareholders, with those
of the individuals tasked with
delivering the Group’s strategic
aims. In October 2020 Options
were issued to members of
the Non-Executive Directors
and members of the Senior
Management team. A total of
0.6m Options were issued. In
April 2021 a further 0.3m Options
were issued.
Non-Executive Directors
The salary of the Chairman is
determined by the Board and
the salaries of the Non-Executive
Directors are determined
by the Board following a
recommendation from the
Chairman. The Chairman and
Non-Executive Directors are
not involved in any discussions
or decisions about their own
remuneration.
Directors’ emoluments for the year ended 31 October 2021 (or period of service) are summarised
below:
Executive
Jonathan Bridges
Chris Williams
Non-Executive
Andy Beaden
Rob Soen
Margaret Amos (resigned 15th
September 2021)
Total
Salary
£’000
Pension
£’000
Benefit
in kind
£’000
Year ended
31 October
2021
£’000
Year ended
31 October
2020
£’000
116
95
64
29
25
329
11
7
2
-
1
21
4
-
-
-
-
4
131
102
66
29
26
157
22
82
35
20
354
316
38
Financial statements Independent Auditor’s Report
Independent Auditor’s Report
to the Members of Velocity Composites Plc
39
Financial statements Independent Auditor’s Report
Independent Auditor’s Report to the
Members of Velocity Composites Plc
OPINION
Our opinion on the financial statements is unmodified
We have audited the financial statements of Velocity Composites Plc (the ‘parent company’)
and its subsidiaries (the ‘group’) for the year ended 31 October 2021, which comprise the
Consolidated statement of total comprehensive income, the Consolidated and Company
statement of financial position, the Consolidated and Company statement of changes in
equity, the Consolidated and Company statement of cash flows and notes to the financial
statements, including a summary of significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and International
Accounting Standards in conformity with the requirements of the Companies Act 2006 and,
as regards the parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the
parent company’s affairs as at 31 October 2021 and of the group’s loss for the year
then ended;
the group financial statements have been properly prepared in accordance with
International Accounting Standards in conformity with the requirements of the
Companies Act 2006;
the parent company financial statements have been properly prepared in accordance
with International Accounting Standards in conformity with the requirements of
the Companies Act 2006 and as applied in accordance with the provisions of the
Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of
the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are further described in
the ‘Auditor’s responsibilities for the audit of the financial statements’ section of our report.
We are independent of the group and the parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
40
Financial statements Independent Auditor’s Report
Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the directors’ use of the going
concern basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the
group’s and the parent company’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify the
auditor’s opinion. Our conclusions are based on the audit evidence obtained up to the date of
our report. However, future events or conditions may cause the group or the parent company
to cease to continue as a going concern.
A description of our evaluation of management’s assessment of the ability to continue to
adopt the going concern basis of accounting, and the key observations arising with respect to
that evaluation is included in the Key Audit Matters section of our report.
Based on the work we have performed, we have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant doubt on
the group’s and the parent company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue. In auditing
the financial statements, we have concluded that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is appropriate. The responsibilities
of the directors with respect to going concern are described in the ‘Responsibilities of
directors for the financial statements’ section of this report.
Our approach to the audit
Materiality
Key audit
matters
Scoping
Overview of our audit approach
Overall materiality:
Group: £150,000 which represents 1.5% of the group’s revenue.
Parent company: £135,000, which represents 1.4% of the
parent company’s revenue.
Key audit matters were identified as:
• The revenue cycle includes fraudulent transactions
(same as previous year); and
• Going concern (same as previous year).
We have performed an audit of the financial information (full
scope audit) using component materiality for the parent
company, Velocity Composites plc. Analytical procedures were
undertaken on components which were considered immaterial
based upon group materiality.
Our audit procedures covered 100% of the Group’s total
revenue, total assets and loss before tax.
There have been no changes to the scope of the audit
performed in the prior year.
41
Financial statements Independent Auditor’s Report
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance
in our audit of the financial statements of the current
period and include the most significant assessed risks
of material misstatement (whether or not due to fraud)
that we identified. These matters included those that
had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters
were addressed in the context of our audit of the
financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate
opinion on these matters.
Description
Audit
response
KAM
Disclosures
Key observation
or our results
In the graph below, we have presented the key audit matters, significant risks and other risks
relevant to the audit.
The revenue
cycle includes
fraudulent
transactions
Inventory
Share
based
payments
Right of
use
assets
42
Financial statements Independent Auditor’s Report
Key Audit Matter - Group
How our scope addressed the matter - Group
The revenue cycle includes
fraudulent transactions
In responding to the key audit matter, we performed the
following audit procedures:
• Assessing accounting policies for both consistency
and appropriateness with financial reporting
framework (IFRS 15 ‘Revenue from Contracts with
Customers’) and in particular that revenue was
recognised at the point when the satisfaction of
performance obligations were fulfilled;
• Obtaining an understanding of the processes
through which the business initiate, record, process
and report revenue transaction;
•
Implementing the use of audit data analytics tools to
identify any revenue transactions which did not fall
into the usual revenue/debtors cycle and vouching
these to supporting documentation;
• Performed substantive testing over a revenue
sample, agreeing each revenue item in the sample
to source documentation including signed delivery
notes in order to verify the sale and the point at
which revenue was recognised;
• Performing cut-off testing to gain assurance that
transactions have been recorded in the correct
period;
•
Inspection and vouching of credit notes raised post
year end to check for overstatement of revenue
during the year; and
• Trend analysis and ratio analysis to identify any
potential unusual movements in revenue. Any
movements outside of our expectations were
investigated with management.
We identified the revenue
cycle including fraudulent
transactions as one of the most
significant assessed risks of
material misstatement due to
fraud.
Revenue is a key performance
indicator for stakeholders.
There is a risk that revenue
has been misstated through
fraudulent entries in order
to inflate the revenue figure
disclosed.
We have identified the risk of
fraudulent journal entries as a
key audit matter specifically
those entries which do not
follow the typical accounting
entries posted within the
revenue cycle, as the risk of
revenue being fraudulently
recorded is higher in these
instances. Therefore, based
on our understanding of the
revenue process, we formed
an expectation of accounting
entries that management would
record when a sale is initiated.
We inspected any entries to
revenue that fell outside of our
expectation.
We therefore identified this
as one of the most significant
assessed risks of material
misstatement.
43
Financial statements Independent Auditor’s Report
Key Audit Matter – Group
How our scope addressed the matter - Group
Relevant disclosures in the
Annual Report and Accounts
2021
The group’s accounting policy
on revenue is shown in note
2 to the financial statements
and related disclosures are
included in note 4.
Going Concern
We have identified going
concern as one of the most
significant assessed risks of
material misstatement due
to fraud and error as a result
of the judgement required to
conclude whether there is a
material uncertainty related
to going concern. Covid-19
is one of the most significant
economic events currently
faced globally and at the date
of this report its effects are
subject to unprecedented
levels of uncertainty. The
pandemic has caused
restrictions in air travel and
impacted build patterns for
future aircraft production. This
event could adversely impact
future trading performance
of the group and the parent
company and, as such,
increases the extent of
judgement and estimation
uncertainty associated with
management’s decision to
adopt the going concern
basis of accounting in the
preparation of the financial
statements. Further, as a
result of these uncertainties
there is a higher risk that the
disclosures are misleading.
Our results
Based on the work we have performed, we are satisfied
that we did not identify any fraudulent transactions
within the revenue cycle.
In responding to the key audit matter, we performed the
following audit procedures:
• Evaluating the directors’ conclusions including
considering the inherent risks associated with the
group and the parent company’s business model
including effects arising from macro-economic
uncertainties such as Brexit and Covid-19. We
assessed and challenged the reasonableness of
estimates made by the directors and the related
disclosures and analysed how those risks might
affect the group’s and the parent company’s
financial resources or ability to continue operations
over the going concern period. In particular, we
challenged management’s assessment of the impact
of the Covid-19 variant, Omicron, on the forecasts
throughout the going concern period;
• Obtaining management’s base case cash flow
forecasts covering the period from 1 November
2021 to 31 October 2023, assessing how these cash
flow forecasts were compiled and assessing their
appropriateness by applying relevant sensitivities to
the underlying assumptions, and challenging those
assumptions. We also undertook stress testing
on the key assumptions within management’s
forecasts;
• Evaluating current funding facilities and headroom
on these facilities throughout the going concern
period, ensuring that these facilities will remain
available and provide sufficient availability to cash
to meet the group’s expected cash flows. Our
procedures included discussions directly with the
group’s invoice discounting facility provider;
• Assessing the accuracy of management’s past
forecasting by comparing management’s forecasts
for the prior year to the actual results for the prior
year and considering the impact on the base case
cash flow forecast;
• Obtaining managements downside scenario
prepared to assess the potential impact of Covid-19
44
Financial statements Independent Auditor’s Report
Key Audit Matter – Group
How our scope addressed the matter - Group
on the business. We evaluated management’s
assumption regarding the impact of a reduction
in recurring revenue. We considered whether the
assumptions are consistent with our understanding
of the business;
• Assessing the impact of the mitigating factors
available to management in respect of the ability to
restrict cash impact, including the level of available
facilities; and
• Challenging and assessing the adequacy of related
disclosures
Our results
Based on the work we have performed, we are
satisfied that the assumptions made in management’s
assessment of the use of the going concern assumption
in preparation of the financial statements were
reasonable.
Further, we have not identified any material uncertainties
relating to events or conditions that, individually or
collectively, may cast significant doubt on the group’s
and the group’s ability to continue as a going concern
for a period of at least twelve months from when the
financial statements are authorised for issue.
Relevant disclosures in the
Annual Report and Accounts
2021
The group’s accounting policy
on going concern is shown
in note 2 to the financial
statements and describes the
assessment and actions the
group has taken to address
the issue.
45
Financial statements Independent Auditor’s Report
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating
the effect of identified misstatements on the audit and of uncorrected misstatements, if any, on
the financial statements and in forming the opinion in the auditor’s report.
Materiality was determined as follows:
Materiality measure
Group
Parent company
Materiality for
financial statements
as a whole
We define materiality as the magnitude of misstatement in the
financial statements that, individually or in the aggregate, could
reasonably be expected to influence the economic decisions
of the users of these financial statements. We use materiality in
determining the nature, timing and extent of our audit work.
Materiality threshold
£150,000, which is 1.5% of the
group’s revenue.
£135,000, which represents 1.4%
of the parent company’s revenue.
Significant judgements
made by auditor
in determining the
materiality
In determining materiality, we
made the following significant
judgements
In determining materiality, we
made the following significant
judgements
• We determined that revenue
was the most appropriate
benchmark for the group
due to it being a key
performance indicator for
the group’s stakeholders and
is less volatile than earnings
for the group following a loss
recorded in the year.
• We determined that revenue
was the most appropriate
benchmark for the group
due to it being a key
performance indicator for
the group’s stakeholders and
is less volatile than earnings
for the group following a loss
recorded in the year.
Materiality for the current year
is lower than the level that we
determined for the year ended
31/10/2020 to reflect the change
in revenue from this year.
Materiality for the current year
is lower than the level that we
determined for the year ended
31/10/2020 to reflect the change
in revenue from this year.
46
Financial statements Independent Auditor’s Report
Materiality measure
Group
Parent company
Performance
materiality used to
drive the extent of our
testing
We set performance materiality at an amount less than materiality
for the financial statements as a whole to reduce to an appropriately
low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the financial
statements as a whole.
Performance
materiality threshold
£112,500, which is 75% of
financial statement materiality.
£101,250, which is 75% of
financial statement materiality.
Significant judgements
made by auditor
in determining the
performance materiality
In determining performance
materiality, we made the
following significant judgements
In determining performance
materiality, we made the
following significant judgements
• Our risk assessment
• Our risk assessment
procedures did not identify
any significant changes or
additional complexity in the
group’s business activities.
In addition, based on our
experience of auditing
the financial statements
of the group, significant
adjustments have not been
made to the group’s financial
statements in prior years.
procedures did not identify
any significant changes or
additional complexity in the
group’s business activities.
In addition, based on our
experience of auditing
the financial statements
of the group, significant
adjustments have not been
made to the group’s financial
statements in prior years.
Specific materiality
We determine specific materiality for one or more particular classes of
transactions, account balances or disclosures for which misstatements
of lesser amounts than materiality for the financial statements as
a whole could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
Specific materiality
We determined a lower level of
specific materiality for Directors’
remuneration.
We determined a lower level of
specific materiality for Directors’
remuneration.
Communication of
misstatements to the
audit committee
Threshold for
communication
We determine a threshold for reporting unadjusted differences to the
audit committee.
£7,500 and misstatements
below that threshold that, in
our view, warrant reporting on
qualitative grounds.
£6,750 and misstatements
below that threshold that, in
our view, warrant reporting on
qualitative grounds.
47
Financial statements Independent Auditor’s Report
The graph below illustrates how performance materiality interacts with our overall materiality and
the tolerance for potential uncorrected misstatements.
OVERALL MATERIALITY - GROUP
OVERALL MATERIALITY - PARENT COMPANY
An overview of the scope of our audit
We performed a risk-based audit that requires an understanding of the group’s and the parent
company’s business and in particular matters related to:
Understanding the group, its components, and their environments, including group-wide controls
• The engagement team obtained an understanding of the group and its environment, including
group-wide controls, and assessed the risks of material misstatement at the group level. We
considered the structure of the group, its processes and controls and the industries in which
the components operate.
Identifying significant components
•
In order to address the risks identified, the engagement team performed and an evaluation
of identified components and to determine the planned audit reponses based on a measure
of materiality, calculated by considering the component’s significance as a percentage of the
group’s total assets, revenue and profit before taxation.
• We have performed a full scope audit for Velocity Composites PLC which represents 100% of
the revenue, total assets and loss after taxation for the group. This testing addressed the key
audit matter relating to the revenue cycle including fraudulent transactions since all revenue for
the group is recognised within this entity. The key audit matter relating to going concern was
tested as part of our group-wide audit procedures.
• Analytical procedures were undertaken on remaining components, using group materiality,
which were not deemed to be material.
There were no changes in scope from the prior year.
•
Performance of our audit
• We undertook the majority of our audit procedures at the group’s head office in Burnley
including an evaluation the group’s internal control environment and its IT systems and controls.
• We tested the consolidation process, including re-performance of management’s calculations.
48
Financial statements Independent Auditor’s Report
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report, other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in
the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial
year for which the financial statements are prepared is consistent with the financial
statements; and
the strategic report and the directors’ report have been prepared in accordance with
applicable legal requirements.
Matter on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company
and its environment obtained in the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
•
•
adequate accounting records have not been kept by the parent company, or returns
adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting
records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
49
Financial statements Independent Auditor’s Report
Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement, the directors are
responsible for the preparation of the financial statements and for being satisfied that they
give a true and fair view, and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s
and the parent company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located
on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. Owing to the inherent limitations of
an audit, there is an unavoidable risk that material misstatements in the financial statements
may not be detected, even though the audit is properly planned and performed in accordance
with ISAs (UK).
The extent to which our procedures are capable of detecting irregularities, including fraud, is
detailed below:
• We obtained an understanding of the legal and regulatory frameworks applicable to
the group and the industry in which it operates. We determined that the following laws
and regulations were most significant: International Accounting Standards in conformity
with the Companies Act 2006, Companies Act 2006, Quoted Companies Alliance (QCA)
Corporate Governance Code and taxation laws.
• We obtained an understanding of how the parent company and the group are complying
with those legal and regulatory frameworks by making inquiries of management, those
responsible for legal and compliance procedures and the company secretary. We
corroborated our inquiries through our review of the board minutes and papers provided
to the Audit Committee.
50
Financial statements Independent Auditor’s Report
• We assessed the susceptibility of the parent company’s and group’s financial statements
to material misstatement, including how fraud might occur. Audit procedures performed
by the group engagement team included:
- Assessing the design and implementation of controls management has in place to
prevent and detect fraud;
- Obtaining an understanding of how those charged with governance considered and
addressed the potential for override of controls or other inappropriate influence over
the financial reporting process.
- Challenging assumptions and judgements made by management in its significant
accounting estimates
• These audit procedures were designed to provide reasonable assurance that the financial
statements were free from fraud or error. The risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting from error and detecting
irregularities that result from fraud is inherently more difficult than detecting those that
result from error, as fraud may involve collusion, deliberate concealment, forgery or
intentional misrepresentations. Also, the further removed non-compliance with laws and
regulations is from events and transactions reflected in the financial statements, the less
likely we would become aware of it;
• We assessed the appropriateness of the collective competence and capabilities of the
engagement team including consideration of the engagement team’s knowledge of the
industry in which the client operates, and the understanding of, and experience with
audit engagements of a similar nature and complexity through appropriate training and
participation; and
• The engagement team’s discussions in respect of potential non-compliance with laws
and regulations and fraud included in revenue recognition. We identified the revenue cycle
includes fraudulent transactions as a key audit matter. The key audit matters section
of our audit report explains the matter in more detail and also describes the specific
procedures we performed in response to the key audit matter.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we
might state to the company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Michael Lowe
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Manchester
23 January 2022
51
Financial Statements Consolidated Statement of Total Comprehensive Income
VVeelloocciittyy CCoommppoossiitteess ppllcc
Consolidated Statement of Total
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
Comprehensive Income
CCoonnssoolliiddaatteedd ssttaatteemmeenntt ooff ttoottaall ccoommpprreehheennssiivvee
iinnccoommee
4422
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
NNoottee
£’000
£’000
RReevveennuuee
Cost of sales
GGrroossss pprrooffiitt
Administrative expenses excluding exceptional costs
Exceptional administrative expenses
OOppeerraattiinngg lloossss
Operating loss analysed as:
Adjusted EBITDA
Depreciation of Property, plant and equipment*
Amortisation
Impairment of Intangible assets
Depreciation of Right to Use assets under IFRS 16*
Share based payments
Exceptional administrative expenses
Finance income and expense
LLoossss bbeeffoorree ttaaxx ffrroomm ccoonnttiinnuuiinngg ooppeerraattiioonnss
Income tax income
LLoossss ffoorr tthhee ppeerriioodd aanndd ttoottaall ccoommpprreehheennssiivvee lloossss
LLoossss ppeerr sshhaarree -- BBaassiicc ((££)) ffrroomm ccoonnttiinnuuiinngg ooppeerraattiioonnss
LLoossss ppeerr sshhaarree -- DDiilluutteedd ((££)) ffrroomm ccoonnttiinnuuiinngg ooppeerraattiioonnss
4
7
5
29
8
9
10
10
The notes on pages 47 to 73 form part of these financial statements.
The notes on Pages 57 - 84 form part of these financial statements
There were no discontinued operations in the current or prior period.
There is no other comprehensive income.
9,767
(7,228)
2,539
(3,903)
-
13,561
(11,237)
2,324
(5,132)
(341)
(1,364)
(3,149)
(548)
(229)
(76)
-
(421)
(90)
-
(182)
(1,925)
(224)
(117)
(72)
(350)
(120)
(341)
(98)
(1,546)
340
(3,247)
117
(1,206)
(3,130)
(£0.03)
(£0.08)
(£0.03)
(£0.08)
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
52
Financial Statements Consolidated and Company Statement of Financial Position
VVeelloocciittyy CCoommppoossiitteess ppllcc
VVeelloocciittyy CCoommppoossiitteess ppllcc
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
Consolidated and Company
CCoonnssoolliiddaatteedd aanndd CCoommppaannyy ssttaatteemmeenntt ooff
CCoonnssoolliiddaatteedd aanndd CCoommppaannyy ssttaatteemmeenntt ooff
CCoonnssoolliiddaatteedd aanndd CCoommppaannyy ssttaatteemmeenntt ooff
Statement of Financial Position
ffiinnaanncciiaall ppoossiittiioonn
ffiinnaanncciiaall ppoossiittiioonn
ffiinnaanncciiaall ppoossiittiioonn
4433
4433
4433
NNoonn--ccuurrrreenntt aasssseettss
NNoonn--ccuurrrreenntt aasssseettss
NNoonn--ccuurrrreenntt aasssseettss
Intangible assets
Intangible assets
Intangible assets
Property, plant and equipment*
Property, plant and equipment*
Property, plant and equipment*
Right-of-use assets*
Right-of-use assets*
Right-of-use assets*
TToottaall nnoonn--ccuurrrreenntt aasssseettss
TToottaall nnoonn--ccuurrrreenntt aasssseettss
TToottaall nnoonn--ccuurrrreenntt aasssseettss
CCuurrrreenntt aasssseettss
CCuurrrreenntt aasssseettss
CCuurrrreenntt aasssseettss
Inventories
Inventories
Inventories
Trade and other receivables
Trade and other receivables
Trade and other receivables
Corporation tax
Corporation tax
Corporation tax
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
TToottaall ccuurrrreenntt aasssseettss
TToottaall ccuurrrreenntt aasssseettss
TToottaall ccuurrrreenntt aasssseettss
TToottaall aasssseettss
TToottaall aasssseettss
TToottaall aasssseettss
CCuurrrreenntt lliiaabbiilliittiieess
CCuurrrreenntt lliiaabbiilliittiieess
CCuurrrreenntt lliiaabbiilliittiieess
Loans
Loans
Loans
Trade and other payables
Trade and other payables
Trade and other payables
Obligations under lease liabilities
Obligations under lease liabilities
Obligations under lease liabilities
TToottaall ccuurrrreenntt lliiaabbiilliittiieess
TToottaall ccuurrrreenntt lliiaabbiilliittiieess
TToottaall ccuurrrreenntt lliiaabbiilliittiieess
NNoonn--ccuurrrreenntt lliiaabbiilliittiieess
NNoonn--ccuurrrreenntt lliiaabbiilliittiieess
NNoonn--ccuurrrreenntt lliiaabbiilliittiieess
Loans
Loans
Loans
Obligations under lease liabilities
Obligations under lease liabilities
Obligations under lease liabilities
TToottaall nnoonn--ccuurrrreenntt lliiaabbiilliittiieess
TToottaall nnoonn--ccuurrrreenntt lliiaabbiilliittiieess
TToottaall nnoonn--ccuurrrreenntt lliiaabbiilliittiieess
TToottaall lliiaabbiilliittiieess
TToottaall lliiaabbiilliittiieess
TToottaall lliiaabbiilliittiieess
NNeett aasssseettss
NNeett aasssseettss
NNeett aasssseettss
EEqquuiittyy aattttrriibbuuttaabbllee ttoo eeqquuiittyy hhoollddeerrss ooff
EEqquuiittyy aattttrriibbuuttaabbllee ttoo eeqquuiittyy hhoollddeerrss ooff
EEqquuiittyy aattttrriibbuuttaabbllee ttoo eeqquuiittyy hhoollddeerrss ooff
tthhee ccoommppaannyy
tthhee ccoommppaannyy
tthhee ccoommppaannyy
Share capital
Share capital
Share capital
Share premium account
Share premium account
Share premium account
Share-based payments reserve
Share-based payments reserve
Share-based payments reserve
Retained earnings
Retained earnings
Retained earnings
GGrroouupp
GGrroouupp
GGrroouupp
3311 OOccttoobbeerr
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
22002211
£’000
£’000
£’000
GGrroouupp
GGrroouupp
GGrroouupp
3311 OOccttoobbeerr
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002200
22002200
22002200
£’000
£’000
£’000
CCoommppaannyy
CCoommppaannyy
CCoommppaannyy
3311 OOccttoobbeerr
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
22002211
£’000
£’000
£’000
CCoommppaannyy
CCoommppaannyy
CCoommppaannyy
3311 OOccttoobbeerr
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002200
22002200
22002200
£’000
£’000
£’000
Note
Note
Note
11
11
11
12
12
12
19
19
19
14
14
14
15
15
15
16
16
16
17
17
17
17
17
17
19
19
19
17
17
17
19
19
19
22
22
22
22
22
22
91
91
91
1,051
1,051
1,051
1,688
1,688
1,688
2,830
2,830
2,830
877
877
877
2,162
2,162
2,162
341
341
341
3,476
3,476
3,476
6,856
6,856
6,856
9,686
9,686
9,686
514
514
514
1,058
1,058
1,058
309
309
309
1,881
1,881
1,881
1,998
1,998
1,998
1,240
1,240
1,240
3,238
3,238
3,238
5,119
5,119
5,119
4,567
4,567
4,567
167
167
167
1,216
1,216
1,216
1,634
1,634
1,634
3,017
3,017
3,017
1,908
1,908
1,908
2,464
2,464
2,464
-
-
-
3,268
3,268
3,268
7,640
7,640
7,640
10,657
10,657
10,657
500
500
500
1,504
1,504
1,504
411
411
411
2,415
2,415
2,415
1,500
1,500
1,500
1,060
1,060
1,060
2,560
2,560
2,560
4,975
4,975
4,975
5,682
5,682
5,682
91
91
91
1,051
1,051
1,051
1,688
1,688
1,688
2,830
2,830
2,830
877
877
877
2,195
2,195
2,195
341
341
341
3,470
3,470
3,470
6,883
6,883
6,883
9,713
9,713
9,713
514
514
514
1,058
1,058
1,058
309
309
309
1,881
1,881
1,881
1,998
1,998
1,998
1,240
1,240
1,240
3,238
3,238
3,238
5,119
5,119
5,119
4,594
4,594
4,594
91
91
91
9,727
9,727
9,727
539
539
539
(5,790)
(5,790)
(5,790)
91
91
91
9,727
9,727
9,727
490
490
490
(4,626)
(4,626)
(4,626)
91
91
91
9,727
9,727
9,727
539
539
539
(5,763)
(5,763)
(5,763)
167
167
167
1,216
1,216
1,216
1,634
1,634
1,634
3,017
3,017
3,017
1,908
1,908
1,908
2,490
2,490
2,490
-
-
-
3,265
3,265
3,265
7,663
7,663
7,663
10,680
10,680
10,680
500
500
500
1,499
1,499
1,499
411
411
411
2,410
2,410
2,410
1,500
1,500
1,500
1,060
1,060
1,060
2,560
2,560
2,560
4,970
4,970
4,970
5,710
5,710
5,710
91
91
91
9,727
9,727
9,727
490
490
490
(4,598)
(4,598)
(4,598)
4,567
4,567
4,567
TToottaall eeqquuiittyy
TToottaall eeqquuiittyy
TToottaall eeqquuiittyy
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
VVeelloocciittyy CCoommppoossiitteess ppllcc
The notes on Pages 47 to 73 form part of these financial statements.
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
The notes on Pages 47 to 73 form part of these financial statements.
The notes on Pages 57 - 84 form part of these financial statements
The notes on Pages 47 to 73 form part of these financial statements.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and
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
not presented its own statement of profit and loss in these financial statements. The loss for the year was
not presented its own statement of profit and loss in these financial statements. The loss for the year was
(£1,206,000). The financial statements were approved and authorised for issue by the Board of Directors on 23
(£1,206,000). The financial statements were approved and authorised for issue by the Board of Directors on 23
(£1,206,000). The financial statements were approved and authorised for issue by the Board of Directors on 23
January 2022 and were signed on its behalf by;
January 2022 and were signed on its behalf by;
January 2022 and were signed on its behalf by;
CCoonnssoolliiddaatteedd aanndd CCoommppaannyy ssttaatteemmeenntt ooff
ffiinnaanncciiaall ppoossiittiioonn
5,710
5,710
5,710
5,682
5,682
5,682
4,564
4,564
4,564
4444
CChhrriiss WWiilllliiaammss
CChhrriiss WWiilllliiaammss
CChhrriiss WWiilllliiaammss
Director
Co No: 06389233
53
Financial Statements Consolidated and Company Statement of Changes in Equity
VVeelloocciittyy CCoommppoossiitteess ppllcc
Consolidated and Company
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
Statement of Changes in Equity
CCoonnssoolliiddaatteedd aanndd CCoommppaannyy ssttaatteemmeenntt ooff
cchhaannggeess iinn eeqquuiittyy
4455
CCoonnssoolliiddaatteedd ssttaatteemmeenntt ooff cchhaannggeess iinn eeqquuiittyy
SShhaarree
ccaappiittaall
£’000
SShhaarree
pprreemmiiuumm
aaccccoouunntt
£’000
RReettaaiinneedd
eeaarrnniinnggss
£’000
SShhaarree--bbaasseedd
ppaayymmeennttss
rreesseerrvvee
££’’000000
AAss aatt 3311 OOccttoobbeerr 22001199
Loss for the year
TTrraannssaaccttiioonnss wwiitthh sshhaarreehhoollddeerrss::
Share-based payments
Transfer of share option reserve on
vesting of options and issue of
equity
90
-
90
-
1
TToottaall
eeqquuiittyy
£’000
8,691
(3,130)
5,561
9,727
-
(1,663)
(3,130)
9,727
(4,793)
537
-
537
-
-
-
167
120
120
(167)
1
AAss aatt 3311 OOccttoobbeerr 22002200
91
9,727
(4,626)
490
5,682
SShhaarree
ccaappiittaall
£’000
SShhaarree
pprreemmiiuumm
aaccccoouunntt
£’000
RReettaaiinneedd
eeaarrnniinnggss
£’000
SShhaarree--bbaasseedd
ppaayymmeennttss
rreesseerrvvee
££’’000000
91
-
91
-
-
9,727
-
(4,626)
(1,205)
9,727
(5,831)
-
-
-
41
490
-
490
90
(41)
TToottaall
eeqquuiittyy
£’000
5,682
(1,205)
4,477
90
-
AAss aatt 3311 OOccttoobbeerr 22002200
Loss for the year
TTrraannssaaccttiioonnss wwiitthh sshhaarreehhoollddeerrss::
Share-based payments
Transfer of share option reserve on
vesting of options and issue of
equity
AAss aatt 3311 OOccttoobbeerr 22002211
91
9,727
(5,790)
539
4,567
The notes on Pages 47 to 73 form part of these financial statements
The notes on Pages 57 - 84 form part of these financial statements
54
Financial Statements Consolidated and Company Statement of Changes in Equity
Consolidated and Company
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
Statement of Changes in Equity
CCoonnssoolliiddaatteedd aanndd CCoommppaannyy ssttaatteemmeenntt ooff
cchhaannggeess iinn eeqquuiittyy
4466
CCoommppaannyy ssttaatteemmeenntt ooff cchhaannggeess iinn eeqquuiittyy
SShhaarree
ccaappiittaall
£’000
SShhaarree
pprreemmiiuumm
aaccccoouunntt
£’000
RReettaaiinneedd
eeaarrnniinnggss
£’000
SShhaarree--bbaasseedd
ppaayymmeennttss
rreesseerrvvee
££’’000000
AAss aatt 3311 OOccttoobbeerr 22001199
Loss for the year
TTrraannssaaccttiioonnss wwiitthh sshhaarreehhoollddeerrss::
Share-based payments
Transfer of share option reserve on
vesting of options and issue of
equity
90
-
90
-
1
TToottaall
eeqquuiittyy
£’000
8,691
(3,123)
5,589
9,727
-
(1,642)
(3,123)
9,727
(4,765)
537
-
537
-
-
-
167
120
120
(167)
1
AAss aatt 3311 OOccttoobbeerr 22002200
91
9,727
(4,598)
490
5,710
SShhaarree
ccaappiittaall
£’000
SShhaarree
pprreemmiiuumm
aaccccoouunntt
£’000
RReettaaiinneedd
eeaarrnniinnggss
£’000
SShhaarree--bbaasseedd
ppaayymmeennttss
rreesseerrvvee
££’’000000
91
-
91
-
-
9,727
-
(4,598)
(1,206)
9,727
(5,804)
-
-
-
41
490
-
490
90
(41)
TToottaall
eeqquuiittyy
£’000
5,710
(1,206)
4,504
90
-
AAss aatt 3311 OOccttoobbeerr 22002200
Loss for the year
TTrraannssaaccttiioonnss wwiitthh sshhaarreehhoollddeerrss::
Share-based payments
Transfer of share option reserve on
vesting of options and issue of
equity
AAss aatt 3311 OOccttoobbeerr 22002211
91
9,727
(5,763)
539
4,594
The notes on Pages 47 to 73 form part of these financial statements
The notes on Pages 57 - 84 form part of these financial statements
55
Financial Statements Consolidated and Company Statement of Cash Flows
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
Consolidated and Company
CCoonnssoolliiddaatteedd aanndd CCoommppaannyy SSttaatteemmeenntt ooff ccaasshh
Statement of Cash Flows
fflloowwss
4477
OOppeerraattiinngg aaccttiivviittiieess
Loss for the year
Taxation
Profit on sale of assets
Finance costs
Amortisation of intangible assets
Impairment of Intangible assets
Depreciation of property, plant and equipment*
Depreciation of right to use assets*
Share-based payments
OOppeerraattiinngg ccaasshh fflloowwss bbeeffoorree mmoovveemmeennttss iinn
wwoorrkkiinngg ccaappiittaall
Decrease in trade and other receivables
Decrease in inventories
Decrease in trade and other payables
CCaasshh ggeenneerraatteedd ffrroomm ooppeerraattiioonnss
NNeett ccaasshh IInnffllooww//((OOuuttffllooww)) ffrroomm ooppeerraattiinngg
aaccttiivviittiieess
IInnvveessttiinngg aaccttiivviittiieess
Purchase of property, plant and equipment*
Development expenditure capitalised
Proceeds from the sale of property, plant and
equipment
NNeett ccaasshh uusseedd iinn iinnvveessttiinngg aaccttiivviittiieess
FFiinnaanncciinngg aaccttiivviittiieess
Loan received
Finance costs paid
Loan repayment
Repayment of lease liabilities capital
NNeett ccaasshh ggeenneerraatteedd ffrroomm ffiinnaanncciinngg aaccttiivviittiieess
NNeett IInnccrreeaassee//((DDeeccrreeaassee)) iinn ccaasshh aanndd ccaasshh
eeqquuiivvaalleennttss
Cash and cash equivalents at 01 November
GGrroouupp
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£’000
GGrroouupp
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
£’000
CCoommppaannyy
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£’000
CCoommppaannyy
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
£’000
(1,206)
(341)
(13)
182
76
-
229
421
90
(3,130)
(117)
-
98
118
72
223
350
120
(1,206)
(341)
(13)
181
76
-
229
421
90
(3,123)
(117)
-
98
118
72
223
350
120
(562)
(2,266)
(562)
(2,259)
302
1,031
(446)
325
325
(64)
-
13
(51)
634
(181)
(119)
(400)
(66)
1,685
1,269
(1,526)
294
1,031
(441)
1,688
1,269
(1,531)
(838)
322
(833)
(838)
322
(833)
(782)
(39)
3
(818)
2,000
(98)
-
(402)
1,500
(64)
-
13
(51)
634
(181)
(119)
(400)
(782)
(39)
3
(818)
2,000
(98)
-
(404)
(66)
1,500
208
3,268
(156)
3,424
205
3,265
(151)
3,416
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt 3311 OOccttoobbeerr
33,,447766
3,268
3,470
3,265
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
56
Financial Statements Notes to the Financial Statements
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
Notes to the Financial Statements
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
4488
11..
GGeenneerraall iinnffoorrmmaattiioonn
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.
22..
AAccccoouunnttiinngg ppoolliicciieess
BBaassiiss ooff pprreeppaarraattiioonn
The financial statements have been prepared in compliance with the measurement and recognition criteria
of International Accounting Standards in conformity with the requirements of the Companies Act 2006.
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 periods presented, unless otherwise stated. The financial
statements are presented in sterling and have been rounded to the nearest thousand (£’000).
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.
BBaassiiss ooff ccoonnssoolliiddaattiioonn
The consolidated financial statements incorporate the financial statements of the Company and its
subsidiary undertakings made up to 31 October 2021. 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 International Accounting 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
periods presented in the consolidated financial statements.
57
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
4499
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Financial Statements Notes to the Financial Statements
22..
AAccccoouunnttiinngg ppoolliicciieess ((ccoonnttiinnuueedd))
GGooiinngg ccoonncceerrnn
Management continues to undertake a significant level of cash flow forecasting, in-line with prior year and
best practice over the pandemic period. This is now an ongoing process within the Company through
Integrated Business Planning (IBP) which regularly stress-tests the forecasting assumptions against the
continuously evolving circumstances, such as the latest COVID variant or government outlook. It was this
work that also supported the application for additional CBILS support and its associated asset-financing
with Close Brothers. Detailed financial projections for the following 24 month rolling period to 31 October
2023 were prepared and a number of sensitivities were run to stress test the forecasts and understand
the cash flow impact of various scenarios. Even in the most severe down-side scenario modelled the
business had sufficient liquidity to continue trading as a going concern
Our forecasts indicate the group’s Invoice Discounting Facility, secured against Trade Debtors, will be
utilised during certain months within the going concern period. Whilst this facility is designed to be short-
term and can be withdrawn, the latest annual review in December reflected the banks’ support for
Velocity’s growth strategy and extended the commitment of both parties to a minimum 3 months’ notice
and as such we expect this facility will remain available throughout the going concern period. Should
alternative financing be required the Group would preserve cash through slowing investment in growth
until longer-term funding could be implemented, such as asset-based financing against new capex or
equity funding.
The cash flow forecasts are reviewed monthly through Management’s IBP process and the forecasting
assumptions are updated for any new knowledge to ensure there is no change in the Company’s liquidity
outlook. This is linked in with the Management’s monthly risk review and should the outlook change
significantly with no mitigating actions the Company’s liquidity risk rating on the risk register will be
adjusted to reflect this and subsequently discussed at Board through the Audit Committee’s quarterly risk
register review.
The aerospace sector lends itself to this kind of long-term planning due to the nature and length of
customer programmes, typically a minimum of 3 years, but often 5 years or more. This has enabled the
business to fully model the period to 31 October 2023 and undertake more strategic, longer-term planning
for growth and full recovery emerging from the pandemic.
Although work is still needed to improve underlying performance, recent H2 FY21 results has shown that
adjusted EBITDA breakeven is achievable for Velocity. Future recovery will be made possible through a
combination of existing contracts recovering to pre-COVID-19 run rates over the 3-to-5-year period, as
well as new contracts being won from the significant pipeline of opportunities and targeted investment
being made to support this. Cost improvement programmes and efficiency drives also continue on an
ongoing basis through the Budgeting process. Should the current strategy prove ineffective or insufficient
to recover the performance of the business, Management have contingency plans ready to implement
should this become clear.
Alongside the forecasting and governance process, the Company has demonstrated robust cash flow
management over the FY21 period through successfully reducing Inventory levels by £1m and navigating
through right-sizing efforts to deliver a £1.6m reduction in administrative overheads.
Having due regard for these recent deliverables and latest projections, with available cash at 31 October
2021 of £3.5m, an undrawn invoice discount facility where we can borrow up to £3m dependent on debtor
levels, access to an invoice discounting facility with one of our major customers, and continued
confidence from our banks and shareholders in our strategy, it is the opinion of the Board that the Group
has adequate resources to continue to trade as a going concern.
58
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
5500
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Financial Statements Notes to the Financial Statements
22..
AAccccoouunnttiinngg ppoolliicciieess ((ccoonnttiinnuueedd))
There are no other IFRSs or IFRIC interpretations that are not yet fully effective that could be expected to
have a material impact on the Group.
RReevveennuuee RReeccooggnniittiioonn
Revenue is recognised as performance obligations are satisfied as control of the goods and services is
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 generate 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 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.
IInnvveennttoorryy
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.
EExxppeennddiittuurree
Expenditure is recognised in respect of goods and services received when supplied in accordance with
contractual terms. 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. Goods or services supplied in a foreign
currency are recognised at the exchange rate ruling at the time of accounting for this expenditure.
59
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NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Financial Statements Notes to the Financial Statements
22..
AAccccoouunnttiinngg ppoolliicciieess ((ccoonnttiinnuueedd))
RReettiirreemmeenntt BBeenneeffiittss:: DDeeffiinneedd ccoonnttrriibbuuttiioonn sscchheemmeess
Contributions to defined contribution pension schemes are charged to the statement of comprehensive
income in the year to which they relate.
RReesseeaarrcchh aanndd ddeevveellooppmmeenntt eexxppeennddiittuurree
Research expenditure - Expenditure on research activities is recognised as an expense in the period 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.
AAmmoorrttiissaattiioonn
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
PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt
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)
Plant and machinery
Motor vehicles
Fixtures and fittings
Leasehold Improvements
Over the term of the lease
15% straight line
25% straight line
15% straight line
Over the term of the lease
60
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5522
Financial Statements Notes to the Financial Statements
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
EExxcceeppttiioonnaall iitteemmss
Items which are both material and non-recurring are presented as exceptional items within the relevant
income statement category. The separate reporting of exceptional items helps provide a better indication
of the Group’s underlying business performance.
FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn
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 Velocity Composites plc’s functional
and presentation currency.
22..
AAccccoouunnttiinngg ppoolliicciieess ((ccoonnttiinnuueedd))
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 year end 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 balance sheet presented are translated at the closing rate at the
•
date of that balance sheet
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.
IImmppaaiirrmmeenntt ooff nnoonn--ffiinnaanncciiaall aasssseettss
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 period. 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.
FFiinnaanncciiaall IInnssttrruummeennttss
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.
BBaannkk BBoorrrroowwiinnggss
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, however it was not utilised in the year.
FFiinnaanncciiaall aasssseettss
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NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
EExxcceeppttiioonnaall iitteemmss
Items which are both material and non-recurring are presented as exceptional items within the relevant
income statement category. The separate reporting of exceptional items helps provide a better indication
of the Group’s underlying business performance.
FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn
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 Velocity Composites plc’s functional
and presentation currency.
22..
AAccccoouunnttiinngg ppoolliicciieess ((ccoonnttiinnuueedd))
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 year end 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 balance sheet presented are translated at the closing rate at the
date of that balance sheet
•
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.
IImmppaaiirrmmeenntt ooff nnoonn--ffiinnaanncciiaall aasssseettss
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 period. 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.
FFiinnaanncciiaall IInnssttrruummeennttss
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.
BBaannkk BBoorrrroowwiinnggss
5533
Financial Statements Notes to the Financial Statements
Interest-bearing loans are recorded initially at their fair value, net of direct transaction costs. Such
VVeelloocciittyy CCoommppoossiitteess ppllcc
instruments are subsequently carried at their amortised cost and finance charges are recognised in the
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
statement of comprehensive income over the term of the instrument using an effective rate of interest.
VVeelloocciittyy CCoommppoossiitteess ppllcc
Finance charges are accounted for on an accrual’s basis to the statement of comprehensive income.
5533
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
The Group has current borrowings of CBIL loans and can utilise its invoice discounting facility in support
of its working capital requirements, however it was not utilised in the year.
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
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
FFiinnaanncciiaall aasssseettss
maturity.
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
Trade and other receivables
maturity.
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
Trade and other receivables
receivables), but also incorporate other types of contractual monetary asset. They are initially recognised
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted
at fair value plus transactions costs that are directly attributable to their acquisition or issue and are
in an active market. They arise principally through the provision of services to customers (e.g. trade
subsequently carried at amortised cost using the effective interest method, less provision for impairment.
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
The Group’s loans and receivables comprise trade and other receivables included within the statement of
subsequently carried at amortised cost using the effective interest method, less provision for impairment.
financial position.
The Group’s loans and receivables comprise trade and other receivables included within the statement of
financial position.
22..
AAccccoouunnttiinngg ppoolliicciieess ((ccoonnttiinnuueedd))
AAccccoouunnttiinngg ppoolliicciieess ((ccoonnttiinnuueedd))
Cash and cash equivalents include cash held at bank, bank overdrafts and marketable securities of very
22..
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
Cash and cash equivalents include cash held at bank, bank overdrafts and marketable securities of very
statement of financial position.
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
Impairment provisions are recognised through the expected credit losses model (ECL). IFRS 9’s
statement of financial position.
impairment requirements use forward-looking information to recognise expected credit losses – the
‘expected credit loss (ECL) model’.
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
The Group considers a broader range of information when assessing credit risk and measuring expected
‘expected credit loss (ECL) model’.
credit losses, including past events, current conditions, reasonable and supportable forecasts that affect
the expected collectability of the future cash flows of the instrument.
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
TTrraaddee aanndd ootthheerr ppaayyaabblleess
the expected collectability of the future cash flows of the instrument.
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
TTrraaddee aanndd ootthheerr ppaayyaabblleess
effective interest method.
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
SShhaarree CCaappiittaall
effective interest method.
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.
SShhaarree CCaappiittaall
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet
SShhaarree PPrreemmiiuumm
the definition of a financial liability. The Group’s ordinary shares are classified as equity instruments.
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.
SShhaarree PPrreemmiiuumm
Share premium represents the excess of the issue price over the par value on shares issued less costs
SShhaarree--bbaasseedd ppaayymmeenntt
relating to the capital transaction arising on the issue.
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
SShhaarree--bbaasseedd ppaayymmeenntt
services is recognised as an expense over the vesting period, determined by reference to the fair value of
The Group operates an equity-settled share-based compensation plan in which the Group receives
the options granted.
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
LLeeaasseedd AAsssseettss
the options granted.
Leases
The Group makes the use of leasing arrangements principally for the buildings and motor vehicles. The
LLeeaasseedd AAsssseettss
rental contracts for offices are typically negotiated for terms of 5 and 10 years and some of these have
Leases
extension terms. The Group does not enter into sale and leaseback arrangements. All the leases are
The Group makes the use of leasing arrangements principally for the buildings and motor vehicles. The
negotiated on an individual basis and contain a wide variety of different terms and conditions.
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.
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Financial Statements Notes to the Financial Statements
5544
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
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 remove
the asset at the end of the lease, 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.
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.
22..
AAccccoouunnttiinngg ppoolliicciieess ((ccoonnttiinnuueedd))
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 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.
63
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NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Financial Statements Notes to the Financial Statements
5555
5555
GGoovveerrnnmmeenntt GGrraannttss
GGoovveerrnnmmeenntt GGrraannttss
Grants from the government are recognised at their fair value where there is reasonable assurance that
Grants from the government are recognised at their fair value where there is reasonable assurance that
the grant will be received, and the group will comply with all attached conditions. Government grants
the grant will be received, and the group will comply with all attached conditions. Government grants
relating to cost are deferred and recognised in the profit or loss by deducting from the related expense
relating to cost are deferred and recognised in the profit or loss by deducting from the related expense
over the period necessary to match them with the costs that they are intended to compensate. Note, a
over the period necessary to match them with the costs that they are intended to compensate. Note, a
government grant exists on the group’s CBIL loans given they may be below a market interest rate – the
government grant exists on the group’s CBIL loans given they may be below a market interest rate – the
impact of this has not been quantified on the grounds of materiality as there would be an equal and
impact of this has not been quantified on the grounds of materiality as there would be an equal and
opposite finance charge, both recognised within the same financial statement line item.
opposite finance charge, both recognised within the same financial statement line item.
CCuurrrreenntt ttaaxxaattiioonn
CCuurrrreenntt ttaaxxaattiioonn
The tax currently payable is based on the taxable profit of the period. Taxable profit differs from profit as
The tax currently payable is based on the taxable profit of the period. Taxable profit differs from profit as
reported in the Consolidated statement of comprehensive income because it excludes items of income
reported in the Consolidated statement of comprehensive income because it excludes items of income
and expense that are taxable or deductible in other periods and it further excludes items that are never
and expense that are taxable or deductible in other periods 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
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.
or substantively enacted by the statement of financial position date.
R&D tax credit
R&D tax credit
R&D tax credits are recognised at the point when claims have been quantified relating to expenditure
R&D tax credits are recognised at the point when claims have been quantified relating to expenditure
within current or previous periods and recovery of the asset is virtually certain, these tax credits relating
within current or previous periods 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.
to R&D are recognised within the tax on profit line of the income statement.
AAccccoouunnttiinngg ppoolliicciieess ((ccoonnttiinnuueedd))
AAccccoouunnttiinngg ppoolliicciieess ((ccoonnttiinnuueedd))
22..
22..
DDeeffeerrrreedd ttaaxxaattiioonn
DDeeffeerrrreedd ttaaxxaattiioonn
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the
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:
statement of financial position differs from its tax base, except for differences arising on:
- the initial recognition of goodwill;
- the initial recognition of goodwill;
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit
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.
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
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
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.
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
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
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
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
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
simultaneously, in each future period in which significant amounts of deferred tax assets and liabilities are
expected to be settled or recovered.
expected to be settled or recovered.
OOppeerraattiinngg sseeggmmeennttss
OOppeerraattiinngg sseeggmmeennttss
Operating segments are reported in a manner consistent with the internal reporting provided to the
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
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
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
and so has a single operating segment. Additional information is given regarding the revenue receivable
based on geographical location of the customer.
based on geographical location of the customer.
No differences exist between the basis of preparation of the performance measures used by management
No differences exist between the basis of preparation of the performance measures used by management
and the figures in the Group financial information.
and the figures in the Group financial information.
CCrriittiiccaall aaccccoouunnttiinngg eessttiimmaatteess aanndd jjuuddggeemmeennttss
CCrriittiiccaall aaccccoouunnttiinngg eessttiimmaatteess aanndd jjuuddggeemmeennttss
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are
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
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
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
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
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
year are discussed below.
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NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
CCrriittiiccaall aaccccoouunnttiinngg eessttiimmaatteess
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
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.
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Financial Statements Notes to the Financial Statements
5566
The provision percentage is applied to various ageing buckets dependent on stock type, this is a key
CCrriittiiccaall aaccccoouunnttiinngg eessttiimmaatteess
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.
Provisions for inventory
Provisions are made for obsolete, out of life and slow-moving stock items. In estimating the provisions,
Sensitivity analysis
the group makes use of key management experience, precedents and specific contract and customer
A 5% increase in the levels of the current stock provision would lead to a finance impact of an increase in
issues to assess the likelihood and quantity. Stock is accounted for on a first in, first out basis.
stock provision of £17k.
The provision percentage is applied to various ageing buckets 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 a finance impact of an increase in
stock provision of £17k.
33..
FFiinnaanncciiaall iinnssttrruummeennttss && RRiisskk MMaannaaggeemmeenntt
FFiinnaanncciiaall iinnssttrruummeennttss && RRiisskk MMaannaaggeemmeenntt
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
33..
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
The Board has overall responsibility for the determination of the Group’s risk management objectives and
bankers to assist in its cash flow management. In accordance with the terms of the current facility (which
policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible
is available on demand) the risk and management of trade debtors is retained by the Group.
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
FFiinnaanncciiaall iinnssttrruummeennttss
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.
GGrroouupp
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£’000
CCoommppaannyy
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£’000
GGrroouupp
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
£’000
FFiinnaanncciiaall iinnssttrruummeennttss bbyy ccaatteeggoorryy
CCuurrrreenntt aasssseettss
Trade and other receivables
Trade and other receivables – prepayments
FFiinnaanncciiaall iinnssttrruummeennttss
CCoommppaannyy
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
£’000
FFiinnaanncciiaall iinnssttrruummeennttss bbyy ccaatteeggoorryy
Cash and cash equivalents – loans and receivables
Total loans and receivables
CCuurrrreenntt aasssseettss
VVeelloocciittyy CCoommppoossiitteess ppllcc
Trade and other receivables
CCuurrrreenntt lliiaabbiilliittiieess
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
Trade and other receivables – prepayments
Trade and other payables
Trade and other payables – accruals
5,638
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Cash and cash equivalents – loans and receivables
Loans
Total loans and receivables
Obligations under lease liabilities
5,638
309
CCuurrrreenntt lliiaabbiilliittiieess
Total Current liabilities
Trade and other payables
Trade and other payables – accruals
For non-current liabilities please see note 17.
1,902
260
GGrroouupp
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£’000
2,162
3,476
1,902
293
CCoommppaannyy
YYeeaarr eennddeedd
2,195
3311 OOccttoobbeerr
3,470
22002211
£’000
5,665
2,205
259
GGrroouupp
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
£’000
2,464
3,268
5,732
2,205
285
CCoommppaannyy
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
£’000
2,490
3,265
5,755
1,902
260
921
137
2,162
1,058
3,476
514
1,881
921
137
1,058
514
1,902
293
921
137
2,195
1,058
3,470
514
5,665
309
5577
2,205
259
919
585
2,464
1,504
3,268
919
5,732
585
1,881
921
137
1,058
514
3,008
919
585
1,504
919
2,205
285
919
580
2,490
1,499
3,265
919
5,755
585
3,003
919
580
1,499
919
Loans
RRiisskk mmaannaaggeemmeenntt
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.
65
aa))
MMaarrkkeett rriisskk
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, Euros and Ringgits. The Group has
commercial agreements in place which allow it to transact with its customers in the currency of the
material purchase, thereby allowing currency risk to pass through the Group.
The carrying value of the Group’s foreign currency denominated assets and liabilities comprise the trade
receivables in Note 15, cash in Note 16 and trade payables in Note 17.
Whilst the majority of the Group’s financial assets are held in Sterling, movements in the exchange rate of
the US Dollar, Euro or Ringgit against Sterling do have an impact on both the result for the year and equity.
he Group’s assets and liabilities that are held in US Dollar, Euro or Ringgits are held in those currencies
for normal trading activity in order to recover funds from customers or to pay funds to suppliers.
33..
FFiinnaanncciiaall iinnssttrruummeennttss && RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
The Groups exposure to foreign currency risk is as follows. This is based on the carrying amount of
monetary financial instruments.
AAss aatt 3311 OOccttoobbeerr 22002211
Trade debtors
Cash and cash equivalents
Trade payables
BBaallaannccee sshheeeett eexxppoossuurree
AAss aatt 3311 OOccttoobbeerr 22002200
Trade debtors
Cash and cash equivalents
Trade payables
BBaallaannccee sshheeeett eexxppoossuurree
Sensitivity analysis
US dollar
UUSS DDoollllaarr
££’’000000
1,651
993
(408)
22,,223366
££’’000000
1,484
483
(253)
11,,771144
UUSS DDoollllaarr
EEuurroo
££’’000000
194
1,035
(35)
11,,119944
EEuurroo
££’’000000
244
159
14
441177
TToottaall
££’’000000
1,845
2,028
(443)
33,,443300
TToottaall
££’’000000
1,728
641
(239)
22,,113300
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
££’’000000
(112)
22002200
££’’000000
(86)
A 5% strengthening of the following currencies against the pound sterling at the balance sheet date would
have decreased profit of 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.
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
5577
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Obligations under lease liabilities
585
Financial Statements Notes to the Financial Statements
309
309
585
Total Current liabilities
1,881
1,881
3,008
3,003
For non-current liabilities please see note 17.
RRiisskk mmaannaaggeemmeenntt
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.
aa))
MMaarrkkeett rriisskk
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, Euros and Ringgits. The Group has
commercial agreements in place which allow it to transact with its customers in the currency of the
material purchase, thereby allowing currency risk to pass through the Group.
The carrying value of the Group’s foreign currency denominated assets and liabilities comprise the trade
receivables in Note 15, cash in Note 16 and trade payables in Note 17.
Whilst the majority of the Group’s financial assets are held in Sterling, movements in the exchange rate of
the US Dollar, Euro or Ringgit against Sterling do have an impact on both the result for the year and equity.
he Group’s assets and liabilities that are held in US Dollar, Euro or Ringgits are held in those currencies
for normal trading activity in order to recover funds from customers or to pay funds to suppliers.
33..
FFiinnaanncciiaall iinnssttrruummeennttss && RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
The Groups exposure to foreign currency risk is as follows. This is based on the carrying amount of
monetary financial instruments.
AAss aatt 3311 OOccttoobbeerr 22002211
Trade debtors
Cash and cash equivalents
Trade payables
BBaallaannccee sshheeeett eexxppoossuurree
AAss aatt 3311 OOccttoobbeerr 22002200
Trade debtors
Cash and cash equivalents
Trade payables
BBaallaannccee sshheeeett eexxppoossuurree
UUSS DDoollllaarr
££’’000000
1,651
993
(408)
22,,223366
UUSS DDoollllaarr
££’’000000
1,484
483
(253)
11,,771144
EEuurroo
££’’000000
194
1,035
(35)
11,,119944
EEuurroo
££’’000000
244
159
14
441177
TToottaall
££’’000000
1,845
2,028
(443)
33,,443300
TToottaall
££’’000000
1,728
641
(239)
22,,113300
Sensitivity analysis
A 5% strengthening of the following currencies against the pound sterling at the balance sheet date would
have decreased profit of loss by the amounts shown below. This Calculation assumes that the change
VVeelloocciittyy CCoommppoossiitteess ppllcc
occurred at the balance sheet date and had to be applied to risk exposures existing at that date.
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
5588
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
US dollar
Euro
3311 OOccttoobbeerr
22002211
££’’000000
(112)
(60)
3311 OOccttoobbeerr
22002200
££’’000000
(86)
(21)
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 period would have had the equal
but opposite effect to the amounts shown above, on the basis that all other variables remain constant.
Interest rate risk
The Group carries borrowings from leases and CBIL loans. Therefore, with the exception of the invoice
discounting facility which attracts an interest rate of 2.25%, the Directors consider that there is no
significant interest rate risk.
66
bb))
CCrreeddiitt rriisskk
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.
FFiinnaanncciiaall iinnssttrruummeennttss && RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
33..
cc))
LLiiqquuiiddiittyy rriisskk
The Group currently holds cash balances in Sterling, US Dollars, Euros and Ringgits 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.
22002200
Loan
22002211
Lease liability for right of use assets
Trade payables
Accruals
Other payables
Invoice discounting facility
WWiitthhiinn 11
OOnnee ttoo
TTwwoo ttoo
OOvveerr ffiivvee
yyeeaarr
£’000
ttwwoo
yyeeaarrss
£’000
ffiivvee yyeeaarrss
yyeeaarrss
£’000
£’000
500
480
487
585
15
-
1,500
317
-
-
-
-
899
-
-
-
-
-
-
-
-
-
-
-
WWiitthhiinn 11
OOnnee ttoo
TTwwoo ttoo
OOvveerr ffiivvee
yyeeaarr
£’000
ttwwoo
yyeeaarrss
£’000
ffiivvee yyeeaarrss
yyeeaarrss
£’000
£’000
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
5588
Financial Statements Notes to the Financial Statements
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Euro
(60)
(21)
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 period would have had the equal
but opposite effect to the amounts shown above, on the basis that all other variables remain constant.
Interest rate risk
The Group carries borrowings from leases and CBIL loans. Therefore, with the exception of the invoice
discounting facility which attracts an interest rate of 2.25%, the Directors consider that there is no
significant interest rate risk.
CCrreeddiitt rriisskk
bb))
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.
33..
FFiinnaanncciiaall iinnssttrruummeennttss && RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
LLiiqquuiiddiittyy rriisskk
cc))
The Group currently holds cash balances in Sterling, US Dollars, Euros and Ringgits 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.
22002200
Loan
Lease liability for right of use assets
Trade payables
Accruals
Other payables
Invoice discounting facility
22002211
WWiitthhiinn 11
yyeeaarr
£’000
OOnnee ttoo
ttwwoo
yyeeaarrss
£’000
TTwwoo ttoo
ffiivvee yyeeaarrss
OOvveerr ffiivvee
yyeeaarrss
£’000
£’000
500
480
487
585
15
-
1,500
317
-
-
-
-
-
899
-
-
-
-
-
-
-
-
-
-
WWiitthhiinn 11
yyeeaarr
£’000
OOnnee ttoo
ttwwoo
yyeeaarrss
£’000
TTwwoo ttoo
ffiivvee yyeeaarrss
OOvveerr ffiivvee
yyeeaarrss
£’000
£’000
67
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
5588
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
(60)
(21)
This analysis assumes that all other variables, in particular other exchange rates and interest rates remain
A 5% weakening of the above currencies against pound sterling in any period would have had the equal
but opposite effect to the amounts shown above, on the basis that all other variables remain constant.
The Group carries borrowings from leases and CBIL loans. Therefore, with the exception of the invoice
discounting facility which attracts an interest rate of 2.25%, the Directors consider that there is no
Euro
constant.
Interest rate risk
significant interest rate risk.
bb))
CCrreeddiitt rriisskk
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.
FFiinnaanncciiaall iinnssttrruummeennttss && RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
33..
cc))
LLiiqquuiiddiittyy rriisskk
The Group currently holds cash balances in Sterling, US Dollars, Euros and Ringgits 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
VVeelloocciittyy CCoommppoossiitteess ppllcc
order to manage its liquidity risk.
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
5599
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
yyeeaarrss
WWiitthhiinn 11
OOnnee ttoo
TTwwoo ttoo
OOvveerr ffiivvee
yyeeaarr
ttwwoo
ffiivvee yyeeaarrss
yyeeaarrss
£’000
£’000
£’000
£’000
500
541
1,500
536
1,462
-
-
-
22002200
Loan
Loan
Lease liability for right of use assets
Lease liability for right of use assets
Trade payables
Trade payables
Accruals
Accruals
Other payables
Other payables
Invoice discounting facility
Invoice discounting facility
Financial Statements Notes to the Financial Statements
480
378
487
639
585
137
15
14
-
-
317
292
-
-
-
-
-
-
-
-
899
1,181
-
-
-
-
-
-
-
-
22002211
CCaappiittaall rriisskk mmaannaaggeemmeenntt
VVeelloocciittyy CCoommppoossiitteess ppllcc
The lease liability is shown exclusive of interest payments.
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
cc))
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.
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
OOnnee ttoo
ttwwoo
yyeeaarrss
£’000
TTwwoo ttoo
ffiivvee yyeeaarrss
OOvveerr ffiivvee
yyeeaarrss
WWiitthhiinn 11
yyeeaarr
£’000
£’000
£’000
5599
Loan
Lease liability for right of use assets
Trade payables
Accruals
Other payables
Invoice discounting facility
541
378
639
137
14
-
536
292
-
-
-
-
1,462
1,181
-
-
-
-
The lease liability is shown exclusive of interest payments.
CCaappiittaall rriisskk mmaannaaggeemmeenntt
cc))
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.
44..
SSeeggmmeennttaall aannaallyyssiiss
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:
RReevveennuuee
United Kingdom
Europe
Rest of the World
44..
SSeeggmmeennttaall aannaallyyssiiss
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£’000
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
£’000
9,702
26
39
12,337
1,224
-
9,767
13,561
During the year four customers accounted for 95.0% of the Group’s total revenue for the year ended 31
The Group supplies a single type of product into a single industry and so has a single reportable segment.
October 2021. This was split as follows; Customer A – 44.7% (2020: 43.6%), Customer B – 28.5% (2020:
Additional information is given regarding the revenue receivable based on geographical location of the
VVeelloocciittyy CCoommppoossiitteess ppllcc
27.2%), Customer C – 13.4% (2020: 12.9%) and Customer D – 8.51% (2020: 10.3%), please note
customer. An analysis of revenue by geographical market is given below:
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
customer D differs from the previous year customer D.
YYeeaarr eennddeedd
3311 OOccttoobbeerr
The majority of revenue arises from the sale of goods. Where engineering services form a part of revenue
22002200
it is only in support of the development or sale of the goods.
£’000
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£’000
6600
RReevveennuuee
United Kingdom
Europe
Rest of the World
During the current and previous year, the Group operated in Asia. No revenue was generated in Asia
during the year ended 31 October 2021 and year ended 31 October 2020 as the site operates as an
Engineering Support Office for the Group. The US subsidiary is currently dormant, and no revenue has
been generated since the US subsidiary was incorporated.
12,337
1,224
-
9,702
26
39
55..
LLoossss ffrroomm ooppeerraattiioonnss
9,767
13,561
During the year four customers accounted for 95.0% of the Group’s total revenue for the year ended 31
The operating loss is stated after charging / (crediting):
October 2021. This was split as follows; Customer A – 44.7% (2020: 43.6%), Customer B – 28.5% (2020:
YYeeaarr eennddeedd
27.2%), Customer C – 13.4% (2020: 12.9%) and Customer D – 8.51% (2020: 10.3%), please note
3311 OOccttoobbeerr
customer D differs from the previous year customer D.
22002200
£’000
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.
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£’000
68
Staff costs (see Note 6)
Cost of inventories
Foreign exchange loss/(gain)
Amortisation of development costs
Impairment of development costs
Depreciation:
Property, plant and equipment*
Right-of-use assets*
(Profit) on disposal of assets
Auditor’s remuneration:
Audit of the accounts of the Group
Other audit related services (relating to interim review)
Taxation compliance services
Other taxation advisory services
2,854
6,335
4,336
9,745
156
76
-
229
421
(13)
62
12
8
13
(39)
118
72
223
349
-
60
19
5
11
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
66..
GGrroouupp aanndd CCoommppaannyy SSttaaffff ccoossttss
Wages, salaries and bonuses
Social security costs
Pension costs
Share-based payments
During the year the company took advantage of the government furlough scheme, in the year to 31
October 2021 £152k (2020: £445k) was claimed in relation to this scheme, this benefit is not included in
the above totals.
Staff costs net of furlough claims amounted to £2.7m during the financial year.
The average monthly number of employees during the period was as follows:
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
2,435
240
89
90
3,747
346
123
120
2,854
4,336
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002200
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
Financial Statements Notes to the Financial Statements
6600
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
During the current and previous year, the Group operated in Asia. No revenue was generated in Asia
during the year ended 31 October 2021 and year ended 31 October 2020 as the site operates as an
Engineering Support Office for the Group. The US subsidiary is currently dormant, and no revenue has
been generated since the US subsidiary was incorporated.
55..
LLoossss ffrroomm ooppeerraattiioonnss
The operating loss is stated after charging / (crediting):
Staff costs (see Note 6)
Cost of inventories
Foreign exchange loss/(gain)
Amortisation of development costs
Impairment of development costs
Depreciation:
Property, plant and equipment*
Right-of-use assets*
(Profit) on disposal of assets
Auditor’s remuneration:
Audit of the accounts of the Group
Other audit related services (relating to interim review)
Taxation compliance services
Other taxation advisory services
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£’000
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
£’000
2,854
6,335
156
76
-
229
421
(13)
62
12
8
13
4,336
9,745
(39)
118
72
223
349
-
60
19
5
11
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
66..
GGrroouupp aanndd CCoommppaannyy SSttaaffff ccoossttss
Wages, salaries and bonuses
Social security costs
Pension costs
Share-based payments
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£’000
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
£’000
2,435
240
89
90
3,747
346
123
120
2,854
4,336
During the year the company took advantage of the government furlough scheme, in the year to 31
October 2021 £152k (2020: £445k) was claimed in relation to this scheme, this benefit is not included in
the above totals.
Staff costs net of furlough claims amounted to £2.7m during the financial year.
The average monthly number of employees during the period was as follows:
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
69
VVeelloocciittyy CCoommppoossiitteess ppllcc
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
6600
6600
During the current and previous year, the Group operated in Asia. No revenue was generated in Asia
During the current and previous year, the Group operated in Asia. No revenue was generated in Asia
during the year ended 31 October 2021 and year ended 31 October 2020 as the site operates as an
during the year ended 31 October 2021 and year ended 31 October 2020 as the site operates as an
Engineering Support Office for the Group. The US subsidiary is currently dormant, and no revenue has
Engineering Support Office for the Group. The US subsidiary is currently dormant, and no revenue has
been generated since the US subsidiary was incorporated.
been generated since the US subsidiary was incorporated.
55..
55..
LLoossss ffrroomm ooppeerraattiioonnss
LLoossss ffrroomm ooppeerraattiioonnss
The operating loss is stated after charging / (crediting):
The operating loss is stated after charging / (crediting):
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
£’000
£’000
22002200
22002200
£’000
£’000
2,854
2,854
6,335
6,335
156
156
76
76
-
-
229
229
421
421
(13)
(13)
62
62
12
12
8
8
13
13
4,336
4,336
9,745
9,745
(39)
(39)
118
118
72
72
223
223
349
349
-
-
60
60
19
19
5
5
11
11
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
£’000
£’000
22002200
22002200
£’000
£’000
Staff costs (see Note 6)
Staff costs (see Note 6)
Cost of inventories
Cost of inventories
Foreign exchange loss/(gain)
Foreign exchange loss/(gain)
Amortisation of development costs
Amortisation of development costs
Impairment of development costs
Impairment of development costs
Depreciation:
Depreciation:
Property, plant and equipment*
Property, plant and equipment*
Right-of-use assets*
Right-of-use assets*
(Profit) on disposal of assets
(Profit) on disposal of assets
Auditor’s remuneration:
Auditor’s remuneration:
Audit of the accounts of the Group
Audit of the accounts of the Group
Other audit related services (relating to interim review)
Other audit related services (relating to interim review)
Taxation compliance services
Taxation compliance services
Other taxation advisory services
Other taxation advisory services
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
66..
66..
GGrroouupp aanndd CCoommppaannyy SSttaaffff ccoossttss
GGrroouupp aanndd CCoommppaannyy SSttaaffff ccoossttss
Wages, salaries and bonuses
Wages, salaries and bonuses
Social security costs
VVeelloocciittyy CCoommppoossiitteess ppllcc
VVeelloocciittyy CCoommppoossiitteess ppllcc
Social security costs
Pension costs
Pension costs
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
Share-based payments
Share-based payments
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
2,435
2,435
240
240
89
90
89
90
2,854
2,854
3,747
3,747
346
6611
346
6611
123
123
120
120
4,336
4,336
During the year the company took advantage of the government furlough scheme, in the year to 31
During the year the company took advantage of the government furlough scheme, in the year to 31
Head count
Head count
October 2021 £152k (2020: £445k) was claimed in relation to this scheme, this benefit is not included in
October 2021 £152k (2020: £445k) was claimed in relation to this scheme, this benefit is not included in
the above totals.
the above totals.
Manufacturing
VVeelloocciittyy CCoommppoossiitteess ppllcc
Manufacturing
Staff costs net of furlough claims amounted to £2.7m during the financial year.
Staff costs net of furlough claims amounted to £2.7m during the financial year.
Administration
Administration
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
The average monthly number of employees during the period was as follows:
The average monthly number of employees during the period was as follows:
Financial Statements Notes to the Financial Statements
Head count
Head count
76
76
6611
46
46
45
30
45
30
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
DDiirreeccttoorrss’’ ccoossttss
DDiirreeccttoorrss’’ ccoossttss
75
75
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
YYeeaarr eennddeedd
YYeeaarr eennddeedd
Head count
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
£’000
£’000
45
30
122
122
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002200
22002200
YYeeaarr eennddeedd
YYeeaarr eennddeedd
Head count
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002200
22002200
£’000
£’000
76
46
75
333
333
-
-
21
21
YYeeaarr eennddeedd
3311 OOccttoobbeerr
354
22002211
£’000
354
120
120
333
11
11
-
131
131
21
354
120
11
131
122
297
297
-
-
18
18
YYeeaarr eennddeedd
3311 OOccttoobbeerr
315
22002200
£’000
315
142
142
297
15
15
-
157
157
18
315
142
15
157
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
£’000
£’000
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002200
22002200
£’000
£’000
-
-
-
-
341
341
341
341
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£’000
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
-
22002211
22002211
£’000
£’000
-
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
£’000
6622
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
341
22002200
22002200
£’000
£’000
341
112
70
-
182
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
YYeeaarr eennddeedd
£’000
3311 OOccttoobbeerr
22002211
£’000
63
42
(7)
98
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
YYeeaarr eennddeedd
£’000
3311 OOccttoobbeerr
22002200
£’000
Manufacturing
Administration
Directors’ remuneration included in staff costs:
Directors’ remuneration included in staff costs:
Wages, salaries and bonuses
Compensation for retirement from office
Pension costs
Wages, salaries and bonuses
Compensation for retirement from office
Pension costs
DDiirreeccttoorrss’’ ccoossttss
Remuneration of the highest paid director:
Wages, salaries and bonuses or fees
Pension
Directors’ remuneration included in staff costs:
Remuneration of the highest paid director:
Wages, salaries and bonuses or fees
Wages, salaries and bonuses
Pension
Compensation for retirement from office
Pension costs
None of the share options exercised in the year related to directors.
None of the share options exercised in the year related to directors.
Remuneration of the highest paid director:
Wages, salaries and bonuses or fees
Pension
None of the share options exercised in the year related to directors.
77..
77..
EExxcceeppttiioonnaall aaddmmiinniissttrraattiivvee eexxppeennsseess
EExxcceeppttiioonnaall aaddmmiinniissttrraattiivvee eexxppeennsseess
Restructuring costs
Restructuring costs
EExxcceeppttiioonnaall aaddmmiinniissttrraattiivvee eexxppeennsseess
77..
The exceptional items reported in 2020 £0.3m consist of cost of restructuring and redundancy costs
in the year due to COVID-19.
The exceptional items reported in 2020 £0.3m consist of cost of restructuring and redundancy costs
in the year due to COVID-19.
FFiinnaannccee iinnccoommee aanndd eexxppeennsseess
VVeelloocciittyy CCoommppoossiitteess ppllcc
88..
88..
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
FFiinnaannccee iinnccoommee aanndd eexxppeennsseess
Restructuring costs
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
The exceptional items reported in 2020 £0.3m consist of cost of restructuring and redundancy costs
FFiinnaannccee eexxppeennssee
in the year due to COVID-19.
FFiinnaannccee eexxppeennssee
Finance charge from lease liabilities
Other interest & invoice discounting charges
Finance Income
88..
FFiinnaannccee iinnccoommee aanndd eexxppeennsseess
99..
IInnccoommee ttaaxx
FFiinnaannccee eexxppeennssee
70
CCuurrrreenntt ttaaxx ((iinnccoommee))//eexxppeennssee
UK corporation tax: in respect of prior years
TToottaall ttaaxx ((iinnccoommee))//eexxppeennssee
Tax rate
(Loss) for the year before tax
Expenses not deductible for tax purposes
Adjustment in respect of prior years - R&D credits
Tax losses not recognised
TToottaall ttaaxx ((iinnccoommee))//eexxppeennssee
1100..
LLoossss ppeerr sshhaarree
Loss for the year
Weighted average number of shares in issue
Weighted average number of share options
Weighted average number of shares (diluted)
Loss per share (£) (basic)
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 profit for the year as follows:
Expected tax credit based on corporation tax rate
(294)
(595)
In the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate
will
increase to 25%. This rate was substantively enacted as at the 31 October 2021 Balance Sheet date.
This has had no material impact on the financial statements. The UK corporation tax rate for the year
ended 31 October 2021 is calculated at 19% (2020: 19%).
(340)
(340)
((334400))
(117)
(117)
((111177))
19.00%
19.00%
(1,546)
(3,131)
(12)
(340)
306
595
(51)
-
((334400))
((111177))
YYeeaarr eennddeedd
YYeeaarr eennddeedd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
£
22002200
£
(1,206,000)
(3,130,000)
SShhaarreess
SShhaarreess
36,270,917
1,856,366
38,127,283
35,995,289
2,143,440
38,138,729
(£0.03)
(£0.08)
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
6622
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Finance charge from lease liabilities
Other interest & invoice discounting charges
Finance Income
99..
IInnccoommee ttaaxx
CCuurrrreenntt ttaaxx ((iinnccoommee))//eexxppeennssee
UK corporation tax: in respect of prior years
TToottaall ttaaxx ((iinnccoommee))//eexxppeennssee
Financial Statements Notes to the Financial Statements
112
70
-
182
63
42
(7)
98
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£’000
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
£’000
(340)
(340)
((334400))
(117)
(117)
((111177))
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 profit for the year as follows:
Tax rate
(Loss) for the year before tax
19.00%
19.00%
(1,546)
(3,131)
Expected tax credit based on corporation tax rate
(294)
(595)
Expenses not deductible for tax purposes
Adjustment in respect of prior years - R&D credits
Tax losses not recognised
TToottaall ttaaxx ((iinnccoommee))//eexxppeennssee
(12)
(340)
306
595
(51)
-
((334400))
((111177))
In the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate
will
increase to 25%. This rate was substantively enacted as at the 31 October 2021 Balance Sheet date.
This has had no material impact on the financial statements. The UK corporation tax rate for the year
ended 31 October 2021 is calculated at 19% (2020: 19%).
1100..
LLoossss ppeerr sshhaarree
Loss for the year
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002211
£
YYeeaarr eennddeedd
3311 OOccttoobbeerr
22002200
£
(1,206,000)
(3,130,000)
SShhaarreess
SShhaarreess
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
Weighted average number of shares in issue
Weighted average number of share options
Weighted average number of shares (diluted)
36,270,917
1,856,366
38,127,283
6633
35,995,289
2,143,440
38,138,729
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Loss per share (£) (basic)
Loss per share (£) (diluted)
(£0.03)
(£0.08)
(£0.03)
(£0.08)
Share options have not been included in the diluted calculation as they would be anti-dilutive with a loss
being recognised.
1111..
IInnttaannggiibbllee aasssseettss
GGrroouupp aanndd CCoommppaannyy
71
CCoosstt
At 31 October 2019
Additions
Disposal
Additions
Disposal
At 31 October 2020
At 31 October 2021
AAmmoorrttiissaattiioonn
At 31 October 2019
Charge for the year
Impairment
Disposal
At 31 October 2020
Charge for the year
At 31 October 2021
NNeett bbooookk vvaalluuee
At 31 October 2019
At 31 October 2020
At 31 October 2021
DDeevveellooppmmeenntt
CCoossttss
£’000
GGrroouupp
TToottaall
£’000
599
39
638
-
-
-
638
282
118
72
-
472
76
548
317
167
90
599
39
638
-
-
-
638
282
118
72
-
472
76
548
317
167
90
IImmppaaiirrmmeenntt
The Group reviews the Development costs at each reporting period for indicators of impairment. An
indication of impairment can be generated from the loss of a customer, or contracted sales. The Board
have provided an impairment of £Nil (2020 - £72,000) relating to development costs capitalised but where
no future economic benefits are currently expected to be generated for the Group.
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
6633
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Loss per share (£) (diluted)
Financial Statements Notes to the Financial Statements
(£0.08)
(£0.03)
Share options have not been included in the diluted calculation as they would be anti-dilutive with a loss
being recognised.
1111..
IInnttaannggiibbllee aasssseettss
GGrroouupp aanndd CCoommppaannyy
CCoosstt
At 31 October 2019
Additions
Disposal
At 31 October 2020
Additions
Disposal
At 31 October 2021
AAmmoorrttiissaattiioonn
At 31 October 2019
Charge for the year
Impairment
Disposal
At 31 October 2020
Charge for the year
At 31 October 2021
NNeett bbooookk vvaalluuee
At 31 October 2019
At 31 October 2020
At 31 October 2021
DDeevveellooppmmeenntt
CCoossttss
£’000
GGrroouupp
TToottaall
£’000
599
39
-
638
-
-
638
282
118
72
-
472
76
548
317
167
90
599
39
-
638
-
-
638
282
118
72
-
472
76
548
317
167
90
IImmppaaiirrmmeenntt
The Group reviews the Development costs at each reporting period for indicators of impairment. An
indication of impairment can be generated from the loss of a customer, or contracted sales. The Board
have provided an impairment of £Nil (2020 - £72,000) relating to development costs capitalised but where
no future economic benefits are currently expected to be generated for the Group.
72
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
Financial Statements Notes to the Financial Statements
6644
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
1122..
PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt
GGrroouupp aanndd CCoommppaannyy
CCoosstt
At 31 October 2019
Additions
Disposal
At 31 October 2020
Prior period adjustment
Balance at 31 October 2020
(revised)
Additions
Disposal
At 31 October 2021
DDeepprreecciiaattiioonn
At 31 October 2019
Charge for the year
Disposal
At 31 October 2020
Prior period adjustment
Balance at 31 October 2020
(revised)
Charge for the year
Disposal
At 31 October 2021
NNeett bbooookk vvaalluuee
At 31 October 2019
At 31 October 2020
Prior period adjustment
At 31 October 2020 (revised)
At 31 October 2021
LLeeaasseehhoolldd
PPllaanntt &&
IImmpprroovveemmeennttss mmaacchhiinneerryy
£’000
£’000
FFiixxttuurreess
MMoottoorr
vveehhiicclleess && FFiittttiinnggss
£’000
£’000
GGrroouupp
TToottaall
£’000
198
372
(3)
567
(76)
491
-
-
491
46
33
-
79
(30)
49
50
-
99
97
488
(46)
442
392
1,920
569
-
2,489
(645)
1,844
47
-
1,891
1,233
233
-
1,466
(217)
1,249
136
-
1,385
390
1,023
(428)
595
506
141
-
-
141
(70)
71
-
(48)
23
92
17
-
109
(38)
71
-
(48)
23
-
32
(32)
-
-
349
51
-
400
-
400
17
-
417
176
45
-
221
-
221
43
-
264
173
179
-
179
153
2,608
992
(3)
3,597
(791)
2,806
64
(48)
2,822
1,547
328
-
1,875
(285)
1,590
229
(48)
1,771
660
1,722
(506)
1,216
1,051
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
73
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
6655
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Financial Statements Notes to the Financial Statements
1133..
IInnvveessttmmeenntt iinn ssuubbssiiddiiaarriieess
Subsidiary undertakings
GGrroouupp
CCoommppaannyy
3311 OOccttoobbeerr 3311 OOccttoobbeerr 3311 OOccttoobbeerr 3311 OOccttoobbeerr
CCoommppaannyy
GGrroouupp
22002211
£’000
22002200
£’000
22002211
£’000
22002200
£’000
-
-
-
-
-
-
-
-
A list of all the investment in subsidiaries is as follows:
NNaammee ooff
ccoommppaannyy
RReeggiisstteerreedd
ooffffiiccee
CCoouunnttrryy ooff
rreeggiissttrraattiioonn
TTyyppee ooff
sshhaarreess
PPrrooppoorrttiioonn ooff
sshhaarreehhoollddiinngg
aanndd vvoottiinngg
rriigghhttss hheelldd
NNaattuurree ooff
bbuussiinneessss
DDiirreeccttllyy oowwnneedd
Velocity
Composites
SDN. BHD
Velocity
Composites
Aerospace, Inc.
Pentagon Suite,
ES-04, Level 3,
Wisma Suria,
Jalan Teknokrat
6, Cyber 5,
63000,
Cyberjaya,
Selangor
Corporation Trust
Center, 1209 N.
Orange St,
Wilmington,
Delaware 19801
1144..
IInnvveennttoorriieess
Raw materials & consumables
Finished goods
Malaysia
Ordinary 100%
Manufacturer of
composite material
products for the
aerospace sector
Ordinary 100%
United
States of
America
Manufacturer of
composite material
products for the
aerospace sector
GGrroouupp
3311 OOccttoobbeerr
22002211
£’000
GGrroouupp
3311 OOccttoobbeerr
22002200
£’000
CCoommppaannyy
3311 OOccttoobbeerr
22002211
£’000
CCoommppaannyy
3311 OOccttoobbeerr
22002200
£’000
541
336
877
1,558
350
1,908
541
336
877
1,558
350
1,908
Inventories totalling £877k (2020: £1,908k) 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 release of inventories provision during the year amounted to £593k, in 2020 the release
was not material.
The inventory at 31 October 2021 is after a stock provision of £264k (2020: £857k). The provision reflects
the aged stock profile consistent with FY20, as well as specific provisions related to slow moving stock
as a result of reduced demand.
74
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
6666
Financial Statements Notes to the Financial Statements
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Inventories recognised as an expense during the year ended 31 October 2021 amounted to £6,335k (2020:
£9,745k), and these were included in cost of sales.
1155..
TTrraaddee aanndd ootthheerr rreecceeiivvaabblleess
Trade receivables
Prepayments
Other receivables
Amounts due from subsidiary
undertakings
GGrroouupp
3311 OOccttoobbeerr
22002211
£’000
GGrroouupp
3311 OOccttoobbeerr
22002200
£’000
CCoommppaannyy
3311 OOccttoobbeerr
22002211
£’000
CCoommppaannyy
3311 OOccttoobbeerr
22002200
£’000
1,883
260
19
-
1,954
259
251
-
1,883
259
19
1,954
257
250
34
29
2,162
2,464
2,195
2,490
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 76 days (2020: 45 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.
Trade receivables overdue by:
Not more than 3 months
More than 3 months but not more than 6 months
More than 6 months but not more than 1 year
More than 1 year
3311 OOccttoobbeerr 3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
13
-
-
-
13
249
7
5
-
261
The overall expected credit loss is trivial, (2020: trivial). There is no movement in allowance of
impairment of trade receivables during each year.
Trade receivables held in currencies other than sterling are as follows:
Euro
US Dollar
1166..
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss
3311 OOccttoobbeerr
22002211
£’000
3311 OOccttoobbeerr
22002200
£’000
194
1,651
226
1395
1,845
1,621
GGrroouupp
3311
OOccttoobbeerr
22002200
£’000
CCoommppaannyy
3311
OOccttoobbeerr
22002211
£’000
CCoommppaannyy
3311
OOccttoobbeerr
22002200
£’000
GGrroouupp
3311
OOccttoobbeerr
22002211
£’000
75
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
6666
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Inventories recognised as an expense during the year ended 31 October 2021 amounted to £6,335k (2020:
£9,745k), and these were included in cost of sales.
1155..
TTrraaddee aanndd ootthheerr rreecceeiivvaabblleess
GGrroouupp
GGrroouupp
CCoommppaannyy
CCoommppaannyy
3311 OOccttoobbeerr
3311 OOccttoobbeerr
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
22002211
£’000
Trade receivables
Prepayments
Other receivables
Amounts due from subsidiary
undertakings
1,883
260
19
-
1,954
259
251
-
1,883
259
19
2,162
2,464
2,195
2,490
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 76 days (2020: 45 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.
Trade receivables overdue by:
22002200
£’000
1,954
257
250
34
29
Not more than 3 months
More than 3 months but not more than 6 months
More than 6 months but not more than 1 year
More than 1 year
The overall expected credit loss is trivial, (2020: trivial). There is no movement in allowance of
impairment of trade receivables during each year.
Trade receivables held in currencies other than sterling are as follows:
3311 OOccttoobbeerr 3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
13
-
-
-
13
249
7
5
-
261
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
Euro
US Dollar
Financial Statements Notes to the Financial Statements
194
1,651
226
1395
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss
VVeelloocciittyy CCoommppoossiitteess ppllcc
VVeelloocciittyy CCoommppoossiitteess ppllcc
1166..
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
GGrroouupp
3311
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
OOccttoobbeerr
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
22002200
£’000
GGrroouupp
3311
OOccttoobbeerr
22002211
£’000
1,845
CCoommppaannyy
3311
OOccttoobbeerr
22002211
£’000
1,621
6677
6677
CCoommppaannyy
3311
OOccttoobbeerr
22002200
£’000
Cash at bank
Cash at bank
1177..
1177..
TTrraaddee aanndd ootthheerr ppaayyaabblleess
TTrraaddee aanndd ootthheerr ppaayyaabblleess
CCuurrrreenntt
CCuurrrreenntt
Trade payables
Trade payables
Accruals
Accruals
Other tax and social security
Other tax and social security
Other payables
Other payables
3,476
3,476
3,476
3,476
3,268
3,268
3,268
3,268
3,470
3,470
3,470
3,470
3,265
3,265
3,265
3,265
GGrroouupp
GGrroouupp
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
£’000
£’000
GGrroouupp
GGrroouupp
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002200
22002200
£’000
£’000
CCoommppaannyy
CCoommppaannyy
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
£’000
£’000
CCoommppaannyy
CCoommppaannyy
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002200
22002200
£’000
£’000
639
639
137
137
268
268
14
14
1,058
1,058
487
487
585
585
417
417
15
15
1,504
1,504
639
639
137
137
268
268
14
14
1,058
1,058
486
486
583
583
417
417
13
13
1,499
1,499
Book values approximate to fair values.
Book values approximate to fair values.
BBaannkk LLooaann iinn tthhee ppeerriioodd
BBaannkk LLooaann iinn tthhee ppeerriioodd
Not later than one year
Not later than one year
One to two years
One to two years
Two to five years
Two to five years
GGrroouupp
GGrroouupp
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
£’000
£’000
GGrroouupp
GGrroouupp
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002200
22002200
£’000
£’000
CCoommppaannyy
CCoommppaannyy
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
£’000
£’000
CCoommppaannyy
CCoommppaannyy
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002200
22002200
£’000
£’000
514
514
536
536
1,462
1,462
2,512
2,512
500
500
1,500
1,500
-
-
2,000
2,000
514
514
536
536
1,462
1,462
2,512
2,512
500
500
1,500
1,500
-
-
2,000
2,000
During the year the company took out a further Coronavirus Business Interruption Loan for £0.45m
During the year the company took out a further Coronavirus Business Interruption Loan for £0.45m
secured against owned non-current assets. This is to be paid over 5 years with the first payments due
secured against owned non-current assets. This is to be paid over 5 years with the first payments due
July 2021, the last payment date is June 2026. The loan is at interest free for the initial 12 months, followed
July 2021, the last payment date is June 2026. The loan is at interest free for the initial 12 months, followed
by an interest rate of 11.1% per annum.
by an interest rate of 11.1% per annum.
Another £0.45m loan was took out to settle remaining lease liabilities, of this £0.18m was received as cash
Another £0.45m loan was took out to settle remaining lease liabilities, of this £0.18m was received as cash
once the finance liability on the financed assets had been settled this cash has been classified as a loan.
once the finance liability on the financed assets had been settled this cash has been classified as a loan.
This is to be paid over 5 years with the first payments due July 2021, the last payment date is June 2026.
This is to be paid over 5 years with the first payments due July 2021, the last payment date is June 2026.
The loan is at interest free for the initial 12 months, followed by an interest rate of 11.1% per annum
The loan is at interest free for the initial 12 months, followed by an interest rate of 11.1% per annum
During the previous year the company took out a Coronavirus Business Interruption Loan for £2.0m. On
During the previous year the company took out a Coronavirus Business Interruption Loan for £2.0m. On
the 19 January 2021 the term of this loan was extended to 6 years, the first payments due August 2021,
the 19 January 2021 the term of this loan was extended to 6 years, the first payments due August 2021,
the last payment date is August 2026. The loan is at interest free for the initial 12 months, followed by an
the last payment date is August 2026. The loan is at interest free for the initial 12 months, followed by an
interest rate of 3.96%.
interest rate of 3.96%.
1188..
1188..
GGrraanntt iinnccoommee ddeeffeerrrreedd
GGrraanntt iinnccoommee ddeeffeerrrreedd
76
GGrroouupp
GGrroouupp
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
£’000
£’000
GGrroouupp
GGrroouupp
3311 OOccttoobbeerr
3311 OOccttoobbeerr
CCoommppaannyy
CCoommppaannyy
3311 OOccttoobbeerr
3311 OOccttoobbeerr
CCoommppaannyy
CCoommppaannyy
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002200
22002200
£’000
£’000
22002211
22002211
£’000
£’000
22002200
22002200
£’000
£’000
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
6677
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Cash at bank
3,476
3,268
3,470
3,265
1177..
TTrraaddee aanndd ootthheerr ppaayyaabblleess
CCuurrrreenntt
Trade payables
Accruals
Other tax and social security
Other payables
Book values approximate to fair values.
BBaannkk LLooaann iinn tthhee ppeerriioodd
Not later than one year
One to two years
Two to five years
3,476
3,268
3,470
3,265
GGrroouupp
GGrroouupp
CCoommppaannyy
CCoommppaannyy
3311 OOccttoobbeerr
3311 OOccttoobbeerr
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
22002211
£’000
22002200
£’000
639
137
268
14
487
585
417
15
639
137
268
14
486
583
417
13
1,058
1,504
1,058
1,499
GGrroouupp
GGrroouupp
CCoommppaannyy
CCoommppaannyy
3311 OOccttoobbeerr
3311 OOccttoobbeerr
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
22002211
£’000
22002200
£’000
514
536
1,462
500
1,500
-
514
536
1,462
2,512
2,000
2,512
500
1,500
-
2,000
During the year the company took out a further Coronavirus Business Interruption Loan for £0.45m
secured against owned non-current assets. This is to be paid over 5 years with the first payments due
July 2021, the last payment date is June 2026. The loan is at interest free for the initial 12 months, followed
by an interest rate of 11.1% per annum.
Another £0.45m loan was took out to settle remaining lease liabilities, of this £0.18m was received as cash
once the finance liability on the financed assets had been settled this cash has been classified as a loan.
This is to be paid over 5 years with the first payments due July 2021, the last payment date is June 2026.
The loan is at interest free for the initial 12 months, followed by an interest rate of 11.1% per annum
Financial Statements Notes to the Financial Statements
During the previous year the company took out a Coronavirus Business Interruption Loan for £2.0m. On
the 19 January 2021 the term of this loan was extended to 6 years, the first payments due August 2021,
the last payment date is August 2026. The loan is at interest free for the initial 12 months, followed by an
interest rate of 3.96%.
VVeelloocciittyy CCoommppoossiitteess ppllcc
1188..
GGrraanntt iinnccoommee ddeeffeerrrreedd
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
GGrroouupp
3311 OOccttoobbeerr
22002211
£’000
GGrroouupp
3311 OOccttoobbeerr
22002200
£’000
CCoommppaannyy
3311 OOccttoobbeerr
22002211
£’000
6688
CCoommppaannyy
3311 OOccttoobbeerr
22002200
£’000
Opening balance
Grant income amortisation
Closing balance
-
-
-
-
-
-
-
-
-
-
-
-
1199..
LLeeaasseess
In the previous year, the Company adopted IFRS 16 and applied the modified retrospective approach.
The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in
the opening balance sheet on 1 November 2019.
RRiigghhtt--ooff--uussee--aasssseettss
GGrroouupp aanndd CCoommppaannyy
CCoosstt
Balance as at 1 November 2019
Adjustment on transition to IFRS 16 on 1
November 2019
Additions
Balance at 31 October 2020
Prior period adjustment
Balance at 31 October 2020 (revised)
Additions
Disposal
BBaallaannccee aatt 3311 OOccttoobbeerr 22002211
DDeepprreecciiaattiioonn aanndd aammoorrttiissaattiioonn
Balance as at 1 November 2019
Depreciation charge for the year
Balance at 31 October 2020
Prior period adjustment
Balance at 31 October 2020 (revised)
Depreciation charge for the year
Disposal
BBaallaannccee aatt 3311 OOccttoobbeerr 22002211
At 31 October 2020
At 31 October 2021
LLaanndd aanndd
bbuuiillddiinnggss
£’000
PPllaanntt aanndd
mmaacchhiinneerryy
£’000
MMoottoorr
VVeehhiicclleess
£’000
TToottaall
£’000
-
479
885
1,364
-
1,364
414
(137)
11,,664411
-
238
238
-
238
298
(137)
339999
1,126
1,242
-
-
-
-
561
561
-
-
556611
-
-
-
86
86
104
-
119900
475
371
-
9
-
9
49
58
61
(9)
111100
-
8
8
17
25
19
(9)
3355
33
75
-
488
885
1,373
610
1,983
475
(146)
22,,331122
-
246
246
103
349
421
(146)
662244
1,634
1,688
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
77
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
6699
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Financial Statements Notes to the Financial Statements
1199..
LLeeaasseess ((ccoonnttiinnuueedd))
Upon initial measurement, 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 balance sheet.
RRiigghhtt--ooff--uussee lleeaassee lliiaabbiilliittiieess
At 1 November 2020
Repayment
Additions to right-of-use assets in exchange for increased lease liabilities
Other lease movements
At 31 October 2021
AAnnaallyyssiiss bbyy lleennggtthh ooff lliiaabbiilliittyy
Current
Non-current
TToottaall
Number of right-to-use assets leased
LLaanndd aanndd
bbuuiillddiinnggss
£’000
PPllaanntt aanndd
eeqquuiippmmeenntt
£,000
MMoottoorr
VVeehhiicclleess
£’000
243
1,000
11,,224433
5
50
206
225566
5
16
34
5500
2
Range of remaining term
1-10yrs
1-10 yrs 1-4 yrs
££’’000000
1,471
(401)
475
4
1,549
TToottaall
£’000
309
1,240
11,,554499
LLeeaassee LLiiaabbiilliittiieess
Lease liabilities are presented in the consolidated statement of financial position as follows:
MMiinniimmuumm lleeaassee
ppaayymmeennttss
IInntteerreesstt
PPrreesseenntt vvaalluuee
The Group leases motor vehicles and property, comprising both offices and assembly space, under low
value leases. The total value of minimum lease payments due is payable as follows:
3311 OOccttoobbeerr 22002200
Not later than one year
Later than one year and not later than two years
Later than two years and not later than five years
480
317
899
VVeelloocciittyy CCoommppoossiitteess ppllcc
1,696
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
378
292
1,181
3311 OOccttoobbeerr 22002211
Not later than one year
Later than one year and not later than two years
Later than two years and not later than five years
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
1,851
78
1199..
LLeeaasseess ((ccoonnttiinnuueedd))
Low value leases
GGrroouupp
MMoottoorr vveehhiicclleess
Not later than one year
Later than one year and not later than two years
PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt
Not later than one year
Later than one year and not later than two years
Later than two years and not later than five years
Later than five years
CCoommppaannyy
MMoottoorr vveehhiicclleess
Not later than one year
Later than one year and not later than two years
PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt
Not later than one year
Later than one year and not later than two years
Later than two years and not later than five years
Later than five years
69
51
105
225
69
67
166
302
411
266
794
7700
1,471
309
225
1,015
1,549
3311
3311
OOccttoobbeerr
OOccttoobbeerr
22002211
£’000
22002200
£’000
-
-
-
4
-
-
-
4
-
-
-
4
-
-
-
4
-
-
-
23
4
-
-
27
-
-
-
23
4
-
-
27
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
VVeelloocciittyy CCoommppoossiitteess ppllcc
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
7700
7700
1,851
1,851
302
302
1,549
1,549
Financial Statements Notes to the Financial Statements
1199..
1199..
LLeeaasseess ((ccoonnttiinnuueedd))
LLeeaasseess ((ccoonnttiinnuueedd))
Low value leases
Low value leases
The Group leases motor vehicles and property, comprising both offices and assembly space, under low
The Group leases motor vehicles and property, comprising both offices and assembly space, under low
value leases. The total value of minimum lease payments due is payable as follows:
value leases. The total value of minimum lease payments due is payable as follows:
GGrroouupp
GGrroouupp
MMoottoorr vveehhiicclleess
MMoottoorr vveehhiicclleess
Not later than one year
Not later than one year
Later than one year and not later than two years
Later than one year and not later than two years
PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt
PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt
Not later than one year
Not later than one year
Later than one year and not later than two years
Later than one year and not later than two years
Later than two years and not later than five years
Later than two years and not later than five years
Later than five years
Later than five years
CCoommppaannyy
CCoommppaannyy
MMoottoorr vveehhiicclleess
MMoottoorr vveehhiicclleess
Not later than one year
Not later than one year
Later than one year and not later than two years
Later than one year and not later than two years
PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt
PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt
Not later than one year
Not later than one year
Later than one year and not later than two years
Later than one year and not later than two years
Later than two years and not later than five years
Later than two years and not later than five years
Later than five years
Later than five years
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
3311
3311
OOccttoobbeerr
OOccttoobbeerr
22002211
22002211
£’000
£’000
3311
3311
OOccttoobbeerr
OOccttoobbeerr
22002200
22002200
£’000
£’000
-
-
-
-
-
-
4
4
-
-
-
-
-
-
4
4
-
-
-
-
-
-
23
23
4
4
-
-
-
-
27
27
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
£’000
£’000
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002200
22002200
£’000
£’000
-
-
-
-
-
-
4
4
-
-
-
-
-
-
4
4
-
-
-
-
-
-
23
23
4
4
-
-
7711
-
-
27
27
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.
2200..
DDeeffeerrrreedd TTaaxx
79
Deferred tax is calculated in full on temporary differences under the liability method using tax rates
appropriate for the period. The movement on the deferred tax account is as shown below:
The movement on the unrecognised deferred tax (asset)/liability is shown below:
GGrroouupp aanndd CCoommppaannyy
3311 OOccttoobbeerr 3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
(534)
(306)
(840)
(534)
-
(534)
Corporation tax losses brought forward
Corporation tax losses not recognised in the year
CClloossiinngg ttaaxx nnoott rreeccooggnniisseedd ((aasssseett))
The Group has unused tax losses which were incurred by the holding company. A deferred tax asset of
£840,000 (2020: £534,000 – this figure has been updated following the finalisation of the FY20 corporation
tax computations) 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.
2211..
RReeccoonncciilliiaattiioonn ooff lliiaabbiilliittiieess aarriissiinngg ffrroomm ffiinnaanncciinngg aaccttiivviittiieess
GGrroouupp aanndd CCoommppaannyy
LLoonngg--tteerrmm
SShhoorrtt--tteerrmm
LLoonngg--tteerrmm
TToottaall
bboorrrroowwiinnggss
bboorrrroowwiinnggss
LLeeaassee
£’000
£’000
LLiiaabbiilliittiieess
£’000
£’000
AAtt 3311 OOccttoobbeerr 22001199
CCaasshh fflloowwss
Repayment
Proceeds
NNoonn--ccaasshh
AAtt 3311 OOccttoobbeerr 22002200
CCaasshh fflloowwss
Repayment
Proceeds
Foreign exchange differences
Reclassification Right of Use
Transfer from Long-term to short term
borrowings
-
-
-
-
2,000
(500)
1,500
(119)
634
4
-
-
(4)
-
911
911
-
-
290
294
(402)
-
-
1,583
(411)
(402)
2,000
(4)
1,583
-
1,060
3,471
(400)
-
(519)
634
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
7711
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
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.
Financial Statements Notes to the Financial Statements
2200..
DDeeffeerrrreedd TTaaxx
Deferred tax is calculated in full on temporary differences under the liability method using tax rates
appropriate for the period. The movement on the deferred tax account is as shown below:
The movement on the unrecognised deferred tax (asset)/liability is shown below:
GGrroouupp aanndd CCoommppaannyy
Corporation tax losses brought forward
Corporation tax losses not recognised in the year
CClloossiinngg ttaaxx nnoott rreeccooggnniisseedd ((aasssseett))
3311 OOccttoobbeerr 3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
(534)
(306)
(840)
(534)
-
(534)
The Group has unused tax losses which were incurred by the holding company. A deferred tax asset of
£840,000 (2020: £534,000 – this figure has been updated following the finalisation of the FY20 corporation
tax computations) 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.
2211..
RReeccoonncciilliiaattiioonn ooff lliiaabbiilliittiieess aarriissiinngg ffrroomm ffiinnaanncciinngg aaccttiivviittiieess
GGrroouupp aanndd CCoommppaannyy
AAtt 3311 OOccttoobbeerr 22001199
CCaasshh fflloowwss
Repayment
Proceeds
LLoonngg--tteerrmm
bboorrrroowwiinnggss
SShhoorrtt--tteerrmm
bboorrrroowwiinnggss
£’000
£’000
LLoonngg--tteerrmm
LLeeaassee
LLiiaabbiilliittiieess
£’000
TToottaall
£’000
-
-
2,000
4
-
-
290
294
(402)
-
(402)
2,000
NNoonn--ccaasshh
Foreign exchange differences
VVeelloocciittyy CCoommppoossiitteess ppllcc
Reclassification Right of Use
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
Transfer from Long-term to short term
VVeelloocciittyy CCoommppoossiitteess ppllcc
borrowings
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
AAtt 3311 OOccttoobbeerr 22002200
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
1,500
(500)
-
-
(4)
-
911
911
CCaasshh fflloowwss
Repayment
NNoonn--ccaasshh
Proceeds
Foreign exchange differences
NNoonn--ccaasshh
Additional lease liabilities
Foreign exchange differences
Transfer from Long-term to short term
Additional lease liabilities
borrowings
Transfer from Long-term to short term
borrowings
AAss 3311 OOccttoobbeerr 22002211
AAss 3311 OOccttoobbeerr 22002211
(119)
634
-
-
-
-
-
(17)
(17)
11,,999988
11,,999988
-
(88)
(88)
882233
882233
-
1,583
(411)
(4)
7722
1,583
7722
-
1,060
3,471
(400)
-
-
475
-
475
105
(519)
634
-
475
-
475
-
105
11,,224400
-
44,,006611
11,,224400
44,,006611
We have amended prior year presentation to provide more detailed information. Lease liabilities have
been split from long and short-term borrowings; the overall closing balances have not changed.
We have amended prior year presentation to provide more detailed information. Lease liabilities have
been split from long and short-term borrowings; the overall closing balances have not changed.
2222..
SShhaarree ccaappiittaall
2222..
SShhaarree ccaappiittaall
80
SShhaarree ccaappiittaall iissssuueedd aanndd ffuullllyy ppaaiidd
36,303,064 Ordinary shares of £0.0025 each
SShhaarree ccaappiittaall iissssuueedd aanndd ffuullllyy ppaaiidd
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
3311 OOccttoobbeerr
£
22002211
£
90,758
22002200
3311 OOccttoobbeerr
£
22002200
£
90,569
shares held.
shares held.
36,303,064 Ordinary shares of £0.0025 each
Ordinary shares have a par value of 0.25p . They entitle the holder to participate in dividends, and to share
90,758
90,569
in the proceeds of winding up the Company in proportion to the number of and amounts paid on the
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
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
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled
amount of authorised capital.
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.
OOppttiioonnss
OOppttiioonnss
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
Information relating to the Velocity Composites plc Employee Option Plan, including details of options
period, is set out in note 23.
issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting
period, is set out in note 23.
MMoovveemmeennttss iinn sshhaarree ccaappiittaall
MMoovveemmeennttss iinn sshhaarree ccaappiittaall
OOrrddiinnaarryy sshhaarreess ooff ££00..00002255 eeaacchh
At the beginning of the year
OOrrddiinnaarryy sshhaarreess ooff ££00..00002255 eeaacchh
Exercising of share options
At the beginning of the year
CClloossiinngg sshhaarree ccaappiittaall aatt 3311 OOccttoobbeerr 22002211
Exercising of share options
NNoommiinnaall
vvaalluuee
NNoommiinnaall
££
vvaalluuee
££
90,569
189
90,569
90,758
189
90,758
NNuummbbeerr ooff sshhaarreess
NNuummbbeerr ooff sshhaarreess
36,227,459
75,605
36,227,459
36,303,064
75,605
CClloossiinngg sshhaarree ccaappiittaall aatt 3311 OOccttoobbeerr 22002211
On 12/02/2021, the Company issued 38,605 new ordinary shares of £0.0025 each to satisfy the exercise
36,303,064
of options granted under the Group’s 2017 Share Option Scheme.
On 12/02/2021, the Company issued 38,605 new ordinary shares of £0.0025 each to satisfy the exercise
On the 28/05/2021, the company issued a further 37,000 new ordinary shares of £0.0025 each to satisfy
of options granted under the Group’s 2017 Share Option Scheme.
the exercise of options granted under the Group’s 2017 Share Option Scheme.
On the 28/05/2021, the company issued a further 37,000 new ordinary shares of £0.0025 each to satisfy
the exercise of options granted under the Group’s 2017 Share Option Scheme.
2233..
SShhaarree--bbaasseedd ppaayymmeenntt
2233..
SShhaarree--bbaasseedd ppaayymmeenntt
The Group’s employees are granted option awards under the Velocity Composites Limited Enterprise
Management Incentive and Unapproved Scheme.
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
vest subject only to continued employment. All options under these arrangements were vested during
The share options dated 13 March & 17 October 2017 have no attached performance conditions and
the financial year. The options may be exercised at any point up to the 10th Anniversary of the grant
vest subject only to continued employment. All options under these arrangements were vested during
the financial year. The options may be exercised at any point up to the 10th Anniversary of the grant
date.
date.
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
7722
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
NNoonn--ccaasshh
Foreign exchange differences
Additional lease liabilities
Transfer from Long-term to short term
borrowings
AAss 3311 OOccttoobbeerr 22002211
-
(17)
11,,999988
-
(88)
882233
-
475
-
475
105
-
11,,224400
44,,006611
We have amended prior year presentation to provide more detailed information. Lease liabilities have
been split from long and short-term borrowings; the overall closing balances have not changed.
Financial Statements Notes to the Financial Statements
2222..
SShhaarree ccaappiittaall
SShhaarree ccaappiittaall iissssuueedd aanndd ffuullllyy ppaaiidd
36,303,064 Ordinary shares of £0.0025 each
3311 OOccttoobbeerr
22002211
£
3311 OOccttoobbeerr
22002200
£
90,758
90,569
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.
OOppttiioonnss
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
period, is set out in note 23.
MMoovveemmeennttss iinn sshhaarree ccaappiittaall
OOrrddiinnaarryy sshhaarreess ooff ££00..00002255 eeaacchh
At the beginning of the year
Exercising of share options
CClloossiinngg sshhaarree ccaappiittaall aatt 3311 OOccttoobbeerr 22002211
NNoommiinnaall
vvaalluuee
££
90,569
189
90,758
NNuummbbeerr ooff sshhaarreess
36,227,459
75,605
36,303,064
On 12/02/2021, the Company issued 38,605 new ordinary shares of £0.0025 each to satisfy the exercise
of options granted under the Group’s 2017 Share Option Scheme.
On the 28/05/2021, the company issued a further 37,000 new ordinary shares of £0.0025 each to satisfy
the exercise of options granted under the Group’s 2017 Share Option Scheme.
2233..
SShhaarree--bbaasseedd ppaayymmeenntt
The Group’s employees are granted option awards under the Velocity Composites Limited Enterprise
Management Incentive and Unapproved Scheme.
VVeelloocciittyy CCoommppoossiitteess ppllcc
7733
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
The share options dated 13 March & 17 October 2017 have no attached performance conditions and
vest subject only to continued employment. All options under these arrangements were vested during
the financial year. The options may be exercised at any point up to the 10th Anniversary of the grant
date.
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
The 225,000 share options dated 29 October 2019 have no attached performance conditions and vest
subject only to continued employment. They vest after 3 years, or earlier if a vesting event occurs as
defined in the rules of the Scheme.
The 1,480,000 share options dated 29 October 2019 have attached performance conditions linked to
adjusted EBITDA. They vest after two years, or earlier if a vesting event occurs in the rules of the Scheme.
The options may be exercised at any point up to the 10th Anniversary grant date. During the year 765,000
of these share options lapsed due to people leaving the businesses and the performance criteria not being
met.
The 615,065 shares options dated 30 October 2020 have no attached performance conditions and vest
subject only to continued employment. They vest after 5 years, or earlier if a vesting event occurs as
defined in the rules of the Scheme.
During the year ended 31 October 2021, share options were granted as follows:
81
278,805 shares options dated 01/04/2021 have no attached performance conditions and vest subject only
to continued employment. They vest after 5 years, or earlier if a vesting event occurs as defined in the
rules of the Scheme.
2233..
SShhaarree--bbaasseedd ppaayymmeenntt ((ccoonnttiinnuueedd))
Vesting events are defined within the rules of the Scheme as a reorganisation, takeover, sale, listing
(except on AIM), asset sales or death of the Option holder.
The Group recognised a cost of £90,000 (2020 – £120,000) 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.
There were no cancellations or modifications to the awards in the period.
The following options were outstanding as at 31 October 2021:
SScchheemmee aanndd
ggrraanntt ddaattee
EExxeerrcciissee
pprriiccee ££
VVeessttiinngg
ddaattee
EExxppiirryy ddaattee
VVeesstteedd
NNoott vveesstteedd
TToottaall
13 March 2017
17 October 2017
29 October 2019
29 October 2019
30 October 2020
01 April 2021
01 April 2021
01 April 2021
0.0025 13 Mar 2019
0.6926 17 Oct 2019
0.2065 29 Oct 2022
0.2065 29 Oct 2021
0.2065 01 Nov 2021
0.025 01 Apr 2021
0.13 01 Apr 2021
0.158 01 Apr 2021
13 Mar 2027
17 Oct 2027
29 Oct 2031
29 Oct 2031
1 Nov 2026
01 Apr 2026
01 Apr 2026
01 Apr 2026
507,525
171,281
35,000
225,000
603,201
35,000
225,000
1,480,000 1,480,000
615,065
615,065
28,805 28,805
125,000 125,000
125,000 125,000
-
-
-
-
-
-
-
507,525
2,729,546 3,237,071
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.
MMoovveemmeenntt iinn sshhaarree ooppttiioonnss
SScchheemmee aanndd ggrraanntt
AAss aatt 3300 NNoovv
IIssssuueedd EExxppiirreedd EExxeerrcciisseedd
VVeesstteedd
AAss aatt 3311 OOcctt
ddaattee
22002200
1 January 2017
13 March 2017
264,178
95,889
-
-
-
-
-
-
-
(40,638)
22002211
264,178
55,251
VVeelloocciittyy CCoommppoossiitteess ppllcc
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
7733
7733
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
The 225,000 share options dated 29 October 2019 have no attached performance conditions and vest
The 225,000 share options dated 29 October 2019 have no attached performance conditions and vest
subject only to continued employment. They vest after 3 years, or earlier if a vesting event occurs as
subject only to continued employment. They vest after 3 years, or earlier if a vesting event occurs as
defined in the rules of the Scheme.
defined in the rules of the Scheme.
The 1,480,000 share options dated 29 October 2019 have attached performance conditions linked to
adjusted EBITDA. They vest after two years, or earlier if a vesting event occurs in the rules of the Scheme.
The options may be exercised at any point up to the 10th Anniversary grant date. During the year 765,000
of these share options lapsed due to people leaving the businesses and the performance criteria not being
met.
The 1,480,000 share options dated 29 October 2019 have attached performance conditions linked to
adjusted EBITDA. They vest after two years, or earlier if a vesting event occurs in the rules of the Scheme.
The options may be exercised at any point up to the 10th Anniversary grant date. During the year 765,000
of these share options lapsed due to people leaving the businesses and the performance criteria not being
met.
Financial Statements Notes to the Financial Statements
The 615,065 shares options dated 30 October 2020 have no attached performance conditions and vest
subject only to continued employment. They vest after 5 years, or earlier if a vesting event occurs as
defined in the rules of the Scheme.
The 615,065 shares options dated 30 October 2020 have no attached performance conditions and vest
subject only to continued employment. They vest after 5 years, or earlier if a vesting event occurs as
defined in the rules of the Scheme.
During the year ended 31 October 2021, share options were granted as follows:
278,805 shares options dated 01/04/2021 have no attached performance conditions and vest subject only
to continued employment. They vest after 5 years, or earlier if a vesting event occurs as defined in the
rules of the Scheme.
During the year ended 31 October 2021, share options were granted as follows:
278,805 shares options dated 01/04/2021 have no attached performance conditions and vest subject only
to continued employment. They vest after 5 years, or earlier if a vesting event occurs as defined in the
rules of the Scheme.
2233..
2233..
SShhaarree--bbaasseedd ppaayymmeenntt ((ccoonnttiinnuueedd))
SShhaarree--bbaasseedd ppaayymmeenntt ((ccoonnttiinnuueedd))
Vesting events are defined within the rules of the Scheme as a reorganisation, takeover, sale, listing
(except on AIM), asset sales or death of the Option holder.
Vesting events are defined within the rules of the Scheme as a reorganisation, takeover, sale, listing
(except on AIM), asset sales or death of the Option holder.
The Group recognised a cost of £90,000 (2020 – £120,000) relating to share-based payment transactions
The Group recognised a cost of £90,000 (2020 – £120,000) relating to share-based payment transactions
which are all equity settled, an equivalent amount being transferred to share-based payment reserve. This
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.
reflects the fair value of the options, which has been derived through use of the Black-Scholes model.
There were no cancellations or modifications to the awards in the period.
There were no cancellations or modifications to the awards in the period.
The following options were outstanding as at 31 October 2021:
The following options were outstanding as at 31 October 2021:
SScchheemmee aanndd
SScchheemmee aanndd
ggrraanntt ddaattee
ggrraanntt ddaattee
EExxeerrcciissee
EExxeerrcciissee
pprriiccee ££
pprriiccee ££
VVeessttiinngg
VVeessttiinngg
ddaattee
ddaattee
EExxppiirryy ddaattee
EExxppiirryy ddaattee
VVeesstteedd
VVeesstteedd
NNoott vveesstteedd
NNoott vveesstteedd
TToottaall
TToottaall
13 March 2017
13 March 2017
17 October 2017
17 October 2017
29 October 2019
29 October 2019
29 October 2019
29 October 2019
30 October 2020
30 October 2020
01 April 2021
01 April 2021
01 April 2021
01 April 2021
01 April 2021
01 April 2021
0.0025 13 Mar 2019
0.0025 13 Mar 2019
0.6926 17 Oct 2019
0.6926 17 Oct 2019
0.2065 29 Oct 2022
0.2065 29 Oct 2022
0.2065 29 Oct 2021
0.2065 29 Oct 2021
0.2065 01 Nov 2021
0.2065 01 Nov 2021
0.025 01 Apr 2021
0.025 01 Apr 2021
0.13 01 Apr 2021
0.13 01 Apr 2021
0.158 01 Apr 2021
0.158 01 Apr 2021
13 Mar 2027
13 Mar 2027
17 Oct 2027
17 Oct 2027
29 Oct 2031
29 Oct 2031
29 Oct 2031
29 Oct 2031
1 Nov 2026
1 Nov 2026
01 Apr 2026
01 Apr 2026
01 Apr 2026
01 Apr 2026
01 Apr 2026
01 Apr 2026
507,525
507,525
-
-
-
-
-
-
-
-
-
-
-
-
-
-
171,281
603,201
603,201
171,281
35,000
35,000
35,000
35,000
225,000
225,000
225,000
225,000
1,480,000 1,480,000
1,480,000 1,480,000
615,065
615,065
615,065
615,065
28,805 28,805
28,805 28,805
125,000 125,000
125,000 125,000
125,000 125,000
125,000 125,000
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 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.
507,525
507,525
2,729,546 3,237,071
2,729,546 3,237,071
MMoovveemmeenntt iinn sshhaarree ooppttiioonnss
MMoovveemmeenntt iinn sshhaarree ooppttiioonnss
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
SScchheemmee aanndd ggrraanntt
AAss aatt 3300 NNoovv
AAss aatt 3300 NNoovv
ddaattee
22002200
22002200
SScchheemmee aanndd ggrraanntt
ddaattee
IIssssuueedd EExxppiirreedd EExxeerrcciisseedd
IIssssuueedd EExxppiirreedd EExxeerrcciisseedd
VVeesstteedd
VVeesstteedd
7744
AAss aatt 3311 OOcctt
22002211
AAss aatt 3311 OOcctt
22002211
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
1 January 2017
1 January 2017
13 March 2017
13 March 2017
17 October 2017
29 October 2019
30 October 2020
01 April 2021
01 April 2021
01 April 2021
264,178
264,178
95,889
95,889
21,804
108,000
-
-
-
-
-
-
-
-
-
-
-
2,826
96,651
7,370
6,910
6,910
-
-
-
(30,667)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(40,638)
-
(40,638)
-
-
-
-
-
-
264,178
264,178
55,251
55,251
21,804
80,159
96,651
7,370
6,910
6,910
489,871 120,667
(30,667)
-
(40,638)
539,233
82
2244..
RReellaatteedd ppaarrttyy ttrraannssaaccttiioonnss
Balances and transactions between the Company and its subsidiary, which are related parties, have been
eliminated on consolidation. However, the key transactions with the Company are disclosed as follows:
Compensation of senior management personnel outside of Director’s emoluments paid:
Short term employment benefits
No transactions took place with related parties (purchases or dividends)/sales in the current or prior year.
The Group has previously engaged IN4.0 Access Limited, which provides consulting services. One of the
directors of IN4.0 Access Limited is a director of Velocity Composites Plc. The Group paid £nil (£nil – 2020) to
IN4.0 Access Limited during the year and had £nil outstanding at the year end.
The following balances existed at periods end with related parties (payable)/receivable:
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
-
-
92
92
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
-
-
The Directors do not consider there to be an ultimate controlling party due to no individual party owning a
Related parties
2255..
UUllttiimmaattee ccoonnttrroolllliinngg ppaarrttyy
majority share in the Group.
2266..
CCaappiittaall ccoommmmiittmmeennttss
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
7744
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
17 October 2017
29 October 2019
30 October 2020
01 April 2021
01 April 2021
01 April 2021
21,804
108,000
-
2,826
(30,667)
-
-
-
-
96,651
7,370
6,910
6,910
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,804
80,159
96,651
7,370
6,910
6,910
489,871 120,667
(30,667)
-
(40,638)
539,233
Financial Statements Notes to the Financial Statements
2244..
RReellaatteedd ppaarrttyy ttrraannssaaccttiioonnss
Balances and transactions between the Company and its subsidiary, which are related parties, have been
eliminated on consolidation. However, the key transactions with the Company are disclosed as follows:
Compensation of senior management personnel outside of Director’s emoluments paid:
Short term employment benefits
3311 OOccttoobbeerr
22002211
£’000
3311 OOccttoobbeerr
22002200
£’000
-
-
92
92
No transactions took place with related parties (purchases or dividends)/sales in the current or prior year.
The Group has previously engaged IN4.0 Access Limited, which provides consulting services. One of the
directors of IN4.0 Access Limited is a director of Velocity Composites Plc. The Group paid £nil (£nil – 2020) to
IN4.0 Access Limited during the year and had £nil outstanding at the year end.
The following balances existed at periods end with related parties (payable)/receivable:
Related parties
3311 OOccttoobbeerr
22002211
£’000
3311 OOccttoobbeerr
22002200
£’000
-
-
UUllttiimmaattee ccoonnttrroolllliinngg ppaarrttyy
VVeelloocciittyy CCoommppoossiitteess ppllcc
2255..
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
The Directors do not consider there to be an ultimate controlling party due to no individual party owning a
majority share in the Group.
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
2266..
CCaappiittaall ccoommmmiittmmeennttss
7755
At 31 October 2021 the Group had £nil (2020: £nil) of capital commitments relating to the purchase of
leasehold improvements, plant and machinery and fixture and fittings.
2277..
PPeennssiioonn ccoommmmiittmmeennttss
The Group makes contributions to defined contribution stakeholder pension schemes. The contributions for
the year of £89,337 (2020: £131,761) were charged to the Consolidated Income statement. Contributions
outstanding at 31 October 2021 were £13,557 (2020: £22,142).
2288..
CCoonnttiinnggeenntt lliiaabbiilliittiieess
At 31 October 2021 the Group had in place bank guarantees of £nil (2020: £nil) in respect of supplier trade
accounts.
2299..
AAddjjuusstteedd EEBBIITTDDAA
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, impairment, share-based payments and exceptional restructuring costs. Share
based payments are added back to make the share based payment charge clear to stakeholders.
83
2299..
AAddjjuusstteedd EEBBIITTDDAA ((ccoonnttiinnuueedd))
AAddjjuusstteedd EEBBIITTDDAA
RReeccoonncciilliiaattiioonn ffrroomm OOppeerraattiinngg PPrrooffiitt
Operating Loss
Add back:
Share-based payments
Depreciation of Property, plant and equipment*
Amortisation
Impairment of Intangible assets
Depreciation of Right of Use assets under IFRS 16*
Exceptional Administrative costs
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
£’000
22002200
£’000
(1,364)
(3,149)
90
229
76
421
-
-
120
224
117
72
350
341
(548)
(1,925)
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
3300..
PPrriioorr yyeeaarr aaddjjuussttmmeenntt
During the period the group and company reclassified balances relating to leased assets that were incorrectly
presented within property, plant and equipment rather than right of use assets. This arose due to an oversight
and finance leases were omitted when adopting IFRS 16. The adjustment had no impact on opening retaining
earnings. Details of the adjustment can be found below.
GGrroouupp aanndd ccoommppaannyy ssttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn
OOrriiggiinnaall
pprreesseenntteedd
£’000
RReevviisseedd
pprreesseenntteedd
£’000
AAddjjuussttmmeenntt
£’000
Property plant and equipment
Depreciation of Property, plant and equipment
3,597
(1,875)
2,806
(1,590)
(791)
285
VVeelloocciittyy CCoommppoossiitteess ppllcc
VVeelloocciittyy CCoommppoossiitteess ppllcc
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
7755
7755
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
At 31 October 2021 the Group had £nil (2020: £nil) of capital commitments relating to the purchase of
At 31 October 2021 the Group had £nil (2020: £nil) of capital commitments relating to the purchase of
leasehold improvements, plant and machinery and fixture and fittings.
leasehold improvements, plant and machinery and fixture and fittings.
2277..
2277..
PPeennssiioonn ccoommmmiittmmeennttss
PPeennssiioonn ccoommmmiittmmeennttss
The Group makes contributions to defined contribution stakeholder pension schemes. The contributions for
The Group makes contributions to defined contribution stakeholder pension schemes. The contributions for
the year of £89,337 (2020: £131,761) were charged to the Consolidated Income statement. Contributions
the year of £89,337 (2020: £131,761) were charged to the Consolidated Income statement. Contributions
outstanding at 31 October 2021 were £13,557 (2020: £22,142).
outstanding at 31 October 2021 were £13,557 (2020: £22,142).
At 31 October 2021 the Group had in place bank guarantees of £nil (2020: £nil) in respect of supplier trade
At 31 October 2021 the Group had in place bank guarantees of £nil (2020: £nil) in respect of supplier trade
2288..
2288..
CCoonnttiinnggeenntt lliiaabbiilliittiieess
CCoonnttiinnggeenntt lliiaabbiilliittiieess
accounts.
accounts.
2299..
2299..
AAddjjuusstteedd EEBBIITTDDAA
AAddjjuusstteedd EEBBIITTDDAA
EBITDA is considered by the Board to be a useful alternative performance measure reflecting the operational
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,
profitability of the business. Adjusted EBITDA is defined as earnings before finance charges, taxation,
depreciation, amortisation, impairment, share-based payments and exceptional restructuring costs. Share
depreciation, amortisation, impairment, share-based payments and exceptional restructuring costs. Share
based payments are added back to make the share based payment charge clear to stakeholders.
based payments are added back to make the share based payment charge clear to stakeholders.
Financial Statements Notes to the Financial Statements
2299..
2299..
AAddjjuusstteedd EEBBIITTDDAA ((ccoonnttiinnuueedd))
AAddjjuusstteedd EEBBIITTDDAA ((ccoonnttiinnuueedd))
AAddjjuusstteedd EEBBIITTDDAA
AAddjjuusstteedd EEBBIITTDDAA
RReeccoonncciilliiaattiioonn ffrroomm OOppeerraattiinngg PPrrooffiitt
RReeccoonncciilliiaattiioonn ffrroomm OOppeerraattiinngg PPrrooffiitt
Operating Loss
Operating Loss
Add back:
Add back:
Share-based payments
Share-based payments
Depreciation of Property, plant and equipment*
Depreciation of Property, plant and equipment*
Amortisation
Amortisation
Impairment of Intangible assets
Impairment of Intangible assets
Depreciation of Right of Use assets under IFRS 16*
Depreciation of Right of Use assets under IFRS 16*
Exceptional Administrative costs
Exceptional Administrative costs
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002211
22002211
£’000
£’000
3311 OOccttoobbeerr
3311 OOccttoobbeerr
22002200
22002200
£’000
£’000
(1,364)
(1,364)
(3,149)
(3,149)
90
90
229
229
76
76
-
-
421
421
-
-
120
120
224
224
117
117
72
72
350
350
341
341
(548)
(548)
(1,925)
(1,925)
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
* a prior year adjustment has been made between property, plant and equipment and right-of-use asset please see note 30 for details.
3300..
3300..
PPrriioorr yyeeaarr aaddjjuussttmmeenntt
PPrriioorr yyeeaarr aaddjjuussttmmeenntt
During the period the group and company reclassified balances relating to leased assets that were incorrectly
During the period the group and company reclassified balances relating to leased assets that were incorrectly
presented within property, plant and equipment rather than right of use assets. This arose due to an oversight
presented within property, plant and equipment rather than right of use assets. This arose due to an oversight
and finance leases were omitted when adopting IFRS 16. The adjustment had no impact on opening retaining
and finance leases were omitted when adopting IFRS 16. The adjustment had no impact on opening retaining
earnings. Details of the adjustment can be found below.
earnings. Details of the adjustment can be found below.
VVeelloocciittyy CCoommppoossiitteess ppllcc
OOrriiggiinnaall
OOrriiggiinnaall
FFiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 OOccttoobbeerr 22002211
GGrroouupp aanndd ccoommppaannyy ssttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn
pprreesseenntteedd
GGrroouupp aanndd ccoommppaannyy ssttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn
pprreesseenntteedd
£’000
£’000
RReevviisseedd
RReevviisseedd
pprreesseenntteedd
pprreesseenntteedd
£’000
£’000
AAddjjuussttmmeenntt
AAddjjuussttmmeenntt
£’000
£’000
7766
NNootteess ttoo tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Property plant and equipment
Property plant and equipment
Depreciation of Property, plant and equipment
Depreciation of Property, plant and equipment
Right of use assets
Depreciation Right of use assets
3,597
3,597
(1,875)
(1,875)
1,373
(246)
2,849
2,806
2,806
(1,590)
(1,590)
1,983
(350)
2,849
(791)
(791)
285
285
610
(104)
-
GGrroouupp aanndd ccoommppaannyy income statement
Depreciation
Depreciation of Right to Use assets under IFRS 16
GGrroouupp aanndd ccoommppaannyy statement of cashflows
Depreciation
Depreciation of Right to Use assets under IFRS 16
Purchase of plant and equipment from investing
activities
Lease liabilities proceeds from financing activities
OOrriiggiinnaall
pprreesseenntteedd
£’000
RReevviisseedd
pprreesseenntteedd
£’000
AAddjjuussttmmeenntt
£’000
327
246
573
OOrriiggiinnaall
pprreesseenntteedd
£’000
327
246
(991)
209
(209)
223
350
573
(104)
104
-
RReevviisseedd
pprreesseenntteedd
£’000
AAddjjuussttmmeenntt
£’000
223
350
(782)
-
(209)
(104)
104
209
(209)
-
The FY20 group and company cash flow statement included a cash inflow and associated cash outflow relating
to the acquisition of leased assets. This was an error as no cash was received as part of these transactions. This
was identified during the current period and has resulted in an adjustment to the prior year cash flow statement
of £209,000 as can be seen above.
84
Shareholder Information Advisors
Advisors
Company registration number:
06389233
Company Secretary and
Registered office:
Chris Williams (appointed 1 June 2021)
AMS Technology Park
Billington Road
Burnley
Lancashire
BB11 5UB
Nominated advisor and broker
Cenkos Securities Plc
6-8 Tokenhouse Yard
London
EC2R 7AS
Bankers:
Legal Advisors
Independent Auditor
Registrars
Financial PR
National Westminster Bank
1 Hardman Boulevard
Manchester
M3 3AQ
Royal Bank of Scotland
1 Hardman Boulevard
Manchester
M3 3AQ
DWF LLP
1 Scott Place
2 Hardman Street
Manchester
M3 3AA
Fieldfisher Manchester
Free Trade Exchange,
Level 5, 37 Peter Street
Manchester
M2 5GB
Grant Thornton UK LLP
Chartered Accountants & Statutory Auditor
St Peter’s Square
1 Oxford Street
Manchester
M1 4PB
Equiniti
Aspect House
Spencer Road
Lancing Business Park
West Sussex
BN99 6DA
SEC Newgate
Sky Light City Tower
50 Basinghall Street
London
EC2V 5DE
85
Shareholder Information Notice of AGM
Notice of AGM
Notice is hereby given that the 2022 Annual General Meeting of Velocity Composites plc (the
“Company”) will be held at the offices of AMS Technology Park, Billington Rd, Burnley BB11 5UB on
1 March 2022 at 10:00am to consider, and if thought fit, pass the following resolutions. Resolutions 1
to 8 (inclusive) will be proposed as ordinary resolutions and resolutions 9 and 10 will be proposed as
special resolutions.
COVID-19 and AGM proceedings
We are very keen to welcome shareholders in person to our 2022 Annual General Meeting this year,
particularly given the constraints we all faced in 2021 due to the COVID-19 pandemic. Therefore,
we will welcome the maximum number of shareholders we are able to within safety constraints
and in accordance with the latest government guidelines. However, it should be noted that given
the constantly evolving nature of the situation we want to ensure that we are able to adapt these
arrangements efficiently to respond to changes in circumstances. On this basis, should the situation
change such that we consider that it is no longer possible for shareholders to attend a face to
face meeting, we will announce any changes to the meeting (such as timing or venue) as soon as
practicably possible. Any changes to the Annual General Meeting will be made available on the
Company’s website at www.velocity-composites.com and by means of the Regulatory Information
Service.
We wish to ensure that we are able to adapt our arrangements appropriately in response to changes
in government guidelines. On this basis, should circumstances change such that we consider that it
is no longer possible for shareholders to attend the meeting, we will hold the Annual General Meeting
with the minimum number of persons in attendance as is legally required to form a quorate meeting
and this will be achieved through the attendance of employee shareholders. No business will be
considered at the Annual General Meeting other than the resolutions dealt with in this Notice.
In light of this uncertainty, we strongly encourage shareholders to submit a proxy vote in advance of
the Annual General Meeting and to appoint the Chairman of the meeting as their proxy, rather than a
named person who may not be able to attend the meeting if circumstances change. Further details on
how to do this are set out on page 90 onwards.
If the chairman of the Annual General Meeting is appointed as proxy, he will vote in accordance with
any instructions given to them. If the chairman of the Annual General Meeting is given discretion as
to how to vote, he or she will vote in favour of each of the resolutions to be proposed at the Annual
General Meeting. We are proposing to put all resolutions at the Annual General Meeting by the way of
a poll rather than a show of hands. This will allow the votes of all shareholders to be counted.
Please note that as there is a possibility shareholders may not be able to attend this year’s Annual
General Meeting, if there is a change in COVID-19 government guidelines, the Company is proposing
to also allow shareholders the opportunity to raise any issues or concerns arising from the business
proposed to be conducted at the meeting. Appropriate questions on the business of the meeting
should be emailed to ir@velocity-composites.com before 6:30pm on 25 February 2022 and responses
will be posted on the Company’s website, www.velocity-composites.com on the morning of the
Annual General Meeting. The Company must answer any such question relating to the business being
dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with
the preparation for the meeting or involve the disclosure of confidential information, (b) the answer has
already been given on a website in the form of an answer to a question, or (c) it is undesirable in the
interests of the Company or the good order of the meeting that the question be answered.
86
Shareholder Information Notice of AGM
In order to ensure a more accurate reflection of the views of shareholders and ensure that your
proxy votes are recognised, voting on all resolutions to be proposed at the Annual General Meeting
will be by way of a poll as permitted by the Company’s Articles of Association. Resolutions 1 to 7
are proposed as ordinary resolutions. An ordinary resolution will be passed on a poll if it is passed
by shareholders representing a simple majority of the total voting rights of shareholders who (being
entitled to do so) vote at the Annual General Meeting. Resolutions 8 and 9 are proposed as special
resolutions. A special resolution will be passed on a poll if it is passed by a majority of shareholders
representing not less than 75% of the total voting rights of shareholders who (being entitled to do so)
vote at the Annual General Meeting.
There will be no form of broadcast, website, videoconference or dial in for the Annual General Meeting
for all shareholders due to complexity and cost.
Ordinary business
Ordinary resolutions
1. To receive and adopt the Annual Report and Accounts of the Company for the period ended
31 October 2021 and the reports of the directors and independent auditors thereon.
2. To approve the Directors’ Remuneration Report contained within the Company’s Annual
Report and Accounts for the period ended 31 October 2021.
3. To re-appoint as a director Christopher Williams who retires from office in accordance with the
Company’s Articles of Association and offers himself for re-appointment.
4. To re-appoint as a director Jonathan Karl Bridges who retires from office in accordance with
the Company’s Articles of Association and offers himself for re-appointment.
5. To re-appoint as a non-executive director Andrew Michael Beaden who retires from office in
accordance with the Company’s Articles of Association and offers himself for re-appointment.
6. To re-appoint as a non-executive director Robert Murray Soen who retires from office in
accordance with the Company’s Articles of Association and offers himself for re-appointment.
7. To re-appoint Grant Thornton UK LLP as independent auditors of the Company, from the
conclusion of this Annual General Meeting until the conclusion of the next general meeting
of the Company at which accounts are laid and to authorise the directors to determine the
auditors’ remuneration.
Special business
Ordinary resolutions
8. To resolve that the directors be and are hereby generally and unconditionally authorised for
the purposes of Section 551 of the Companies Act 2006 (the “Act”), to exercise all the powers
of the Company to allot shares and grant rights to subscribe for, or convert any security into,
shares
up to a maximum nominal amount (within the meaning of Section 551(3) and (6) of the
8.1
Act) of £30,252.55 (such amount to be reduced by the nominal amount allotted or granted
under paragraph 8.2 below in excess of such amount); and
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Shareholder Information Notice of AGM
comprising equity securities (as defined in Section 560(1) of the Act) up to an
8.2
aggregate nominal amount (within the meaning of Section 551(3) and (6) of the Act) of
£60,505.10 (such amount to be reduced by any allotments or grants made under 8.1 above) in
connection with or pursuant to an offer by way of a rights issue in favour of holders of ordinary
shares in proportion (as nearly as practicable) to the respective number of ordinary shares
held by them on the record date for such allotment (and holders of any other class of equity
securities entitled to participate therein or if the directors consider it necessary, as permitted
by the rights of those securities), but subject to such exclusions or other arrangements as the
directors may consider necessary or appropriate to deal with fractional entitlements, treasury
shares, record dates or legal, regulatory or practical difficulties which may arise under the laws
of, or the requirements of any regulatory body or stock exchange in any territory or any other
matter whatsoever,
these authorisations to expire at the conclusion of the next Annual General Meeting of the Company
(or if earlier on 1 June 2023), unless previously revoked or varied by the Company (save that the
Company may before such expiry make any offer or agreement which would or might require shares to
be allotted or rights to be granted after such expiry, and the directors may allot shares, or grant rights
to subscribe for or to convert any security into shares in pursuance of any such offer or agreement as
if the authorisations conferred hereby had not expired).
Special resolution
9. To resolve that, subject to the passing of resolution 8 set out above, the directors be and are
hereby given power pursuant to Sections 570(1) and 573 of the Act to allot equity securities (as
defined in Section 560(1) of the Act) for cash pursuant to the authorisation conferred by that
resolution and/or to sell ordinary shares held by the Company as treasury shares, as if Section
561 of the Act did not apply to any such allotment or sale, provided that such authority be
limited:
to the allotment of equity securities for cash in connection with or pursuant to an
9.1
offer of, or invitation to acquire, equity securities (but in the case of the authorisation granted
under resolution 8.2 above, by way of a rights issue only) in favour of holders of ordinary
shares in proportion (as nearly as practicable) to the respective number of ordinary shares
held by them on the record date for such allotment (and holders of any other class of equity
securities entitled to participate therein or if the directors consider it necessary, as permitted
by the rights of those securities) but subject to such exclusions or other arrangements as
the directors may consider necessary or appropriate to deal with treasury shares, fractional
entitlements, record dates or legal, regulatory or practical difficulties which may arise under
the laws of or the requirements of any regulatory body or stock exchange in any territory or any
other matter whatsoever; and
to the allotment of equity securities or sale of treasury shares (otherwise than under
9.2
paragraph 9.1 above) up to an aggregate nominal amount of £9,757.66,
such authority to expire at the conclusion of the next Annual General Meeting of the Company
(or, if earlier, on 1 June 2023), unless previously revoked or varied by the Company (save that the
Company may before such expiry make any offer or agreement that would or might require equity
securities to be allotted, or treasury shares to be sold, after such expiry and the directors may allot
equity securities, or sell treasury shares in pursuance of any such offer or agreement as if the power
conferred hereby had not expired).
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Shareholder Information Notice of AGM
10. To authorise the Company generally and unconditionally for the purposes of section 701 of
the Act to make market purchases (within the meaning of section 693(4) of the Act) of any of
the ordinary shares in the capital of the Company on such terms and in such manner as the
directors may from time to time determine, such shares to be either held as treasury shares or
cancelled as the board may determine, provided that:
10.1
the maximum aggregate number of shares that may be purchased is 3,630,306;
10.2
10.3
the minimum price that may be paid for each ordinary share is the nominal amount
of such share which amount shall be exclusive of expenses, if any;
the maximum price (exclusive of expenses) which may be paid for each ordinary
share is an amount equal to the higher of:
105 per cent of the average of the middle market quotations for the
10.3.1
ordinary shares of the Company (as derived from the AIM Appendix to the Daily
Official List of London Stock Exchange plc) for the five business days immediately
preceding the day on which such share is contracted to be purchased; and
the higher of the price of the last independent trade and the highest
10.3.2
current independent bid on the London Stock Exchange as stipulated by the
Commission-adopted Regulatory Technical Standards pursuant to article 5(6) of
the Market Abuse Regulation;
10.4
the Company may, before this authority expires, make a contract to purchase
ordinary shares that would or might be executed wholly or partly after the expiry
of this authority, and may make purchases of ordinary shares pursuant to it as if
this authority had not expired; and
10.5
unless previously renewed, revoked or varied, this authority shall expire on 1 June
2023, or if earlier, at the conclusion of the next Annual General Meeting of the
Company.
By order of the Board
Christopher Williams
Company Secretary
23 January 2022
Registered Office: AMS Technology Park, Billington Road, Burnley, Lancashire, BB11 5UB
Registered in England and Wales No. 06389233
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Shareholder Information Notes to the AGM
Notes to the AGM
1.
2.
3.
4.
5.
6.
Only those shareholders registered in the Company’s register of members at: 6.30pm on
Friday 25 February 2022; or if this meeting is adjourned, at 6.30pm on the day two days
prior to the adjourned meeting (excluding non-business days) shall be entitled to vote at the
meeting. Changes to the register of members after the relevant deadline shall be disregarded
in determining the rights of any person to attend and vote at the meeting.
Any member wishing to vote at the meeting without attending in person or (in the case of a
corporation) through its duly appointed representative must appoint a proxy to do so. You
may appoint more than one proxy provided that each proxy is appointed to exercise the
rights attached to different shares. You may not appoint more than one proxy to exercise
rights attached to any one share. A proxy need not be a shareholder of the Company. To
appoint more than one proxy, please return a separate form in relation to each proxy to the
Company’s registrar, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex,
BN99 6DA, clearly indicating next to the name of each proxy the number and class of shares
in respect of which he is appointed. Failure to specify the number of shares to which each
proxy appointment relates or specifying a number in excess of those held by the shareholder
will result in the proxy appointment being invalid. If you submit more than one valid proxy
appointment in respect of the same shares, the appointment received last before the latest time
for the receipt of proxies will take precedence.
A form of proxy accompanies this notice and the notes to the proxy form explain how to direct
your proxy how to vote on each resolution or withhold their vote. You are advised to read the
terms and conditions of use carefully.
In the case of joint holders, where more than one of the joint holders completes a proxy
appointment, only the appointment submitted by the most senior holder will be accepted.
Seniority is determined by the order in which the names of the joint holders appear in the
Company’s register of members in respect of the joint holding (the first named being the most
senior).
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy
appointment service may do so for the meeting (and any adjournment of the meeting) by using
the procedures described in the CREST manual (available from www.euroclear.com/site/public/
EUI). CREST Personal Members or other CREST sponsored members, and those CREST
members who have appointed a service provider(s), should refer to their CREST sponsor or
voting service provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST
message (a CREST Proxy Instruction) must be properly authenticated in accordance with
Euroclear UK & Ireland Limited’s specifications and must contain the information required for
such instructions, as described in the CREST Manual. The message must be transmitted so
as to be received by Equiniti Limited (ID: RA19) not later than 48 hours before the time fixed for
the Annual General Meeting. For this purpose, the time of receipt will be taken to be the time
(as determined by the timestamp applied to the message by the CREST Applications Host) from
which Equiniti is able to retrieve the message by enquiry to CREST. After this time any change
of instructions to proxies appointed through CREST should be communicated to the appointee
through other means. Euroclear UK & Ireland Limited does not make available special
procedures in CREST for any particular messages and normal system timings and limitations
will apply in relation to the input of a CREST Proxy Instruction. It is the responsibility of the
CREST member concerned to take such action as shall be necessary to ensure that a message
is transmitted by means of the CREST system by any particular time. The Company may treat
as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
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Shareholder Information Notes to the AGM
7.
8.
9.
In order to revoke a proxy instruction, you will need to inform the Company by sending a
signed notice clearly stating your intention to revoke your proxy appointment to the Company’s
registrar, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, by
no later than 10.00am on Friday 25 February 2022. In the case of a member that is a company,
the revocation notice must be executed under its common seal or signed on its behalf by an
officer of the Company or a duly appointed attorney for the Company. Any power of attorney or
any other authority under which the revocation notice is signed (or a duly certified copy of such
power or authority) must be included with the revocation notice. The revocation notice must be
received by Equiniti Limited no later than 10.00am on Friday 25 February 2022. If you attempt
to revoke your proxy appointment but the revocation is received after the time specified, then
your proxy appointment will remain valid.
As at 6.30pm on 21 January 2022 (the latest practicable date prior to the printing of this notice)
(i) the Company’s issued share capital consisted of 36,303,064 ordinary shares, carrying one
vote each, and (ii) the total voting rights in the Company were 36,303,064. The Company’s
website will include information on the number of shares and voting rights.
Please note that as shareholders may not be able to attend this year’s Annual General Meeting,
the Company is proposing to allow shareholders the opportunity to raise any issues or
concerns arising from the business proposed to be conducted at the meeting. Appropriate
questions on the business of the meeting should be emailed to ir@velocity-composites.com
before 6.30pm on 25 February 2022 and responses will be posted on the Company’s website,
www.velocity-composites.com on the morning of the Annual General Meeting. The Company
must answer any such question relating to the business being dealt with at the meeting but no
such answer need be given if (a) to do so would interfere unduly with the preparation for the
meeting or involve the disclosure of confidential information, (b) the answer has already been
given on a website in the form of an answer to a question, or (c) it is undesirable in the interests
of the Company or the good order of the meeting that the question be answered.
10. The register of directors’ interests in the shares of the Company and copies of the directors’
service contracts and letters of appointment, other than those expiring or determinable without
payment of compensation within one year, are available for inspection at the registered office
of the Company during the usual business hours on any weekday (Saturdays, Sundays and
public holidays excluded) from the date of this notice until the Annual General Meeting, subject
to restrictions in place for COVID-19 safety in accordance with UK Government guidelines,
and will be available for inspection at the place of the Annual General Meeting for at least 15
minutes prior to and during the meeting, subject to restrictions in place for COVID-19 safety in
accordance with UK Government guidelines.
11. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, only those
shareholders registered in the register of members of the Company by 6.30pm on Friday 25
February 2022 shall be entitled to attend and vote at the Annual General Meeting in respect
of the number of shares registered in their name at that time. Any changes to the register of
members after such time shall be disregarded in determining the rights of any person to attend
or vote at the meeting.
12. You may not use any electronic address (within the meaning of Section 333(4) of the Companies
Act 2006) provided in either this Notice or any related documents (including the form of proxy)
to communicate with the Company for any purposes other than those expressly stated.
13. There are set out below notes to the resolutions to be passed at the Annual General Meeting. If
you require further guidance you should contact your solicitor or financial adviser.
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Shareholder Information Notes to the AGM
Explanatory Notes to the Resolutions to be proposed at the Annual General Meeting
Resolution 1
Report and accounts
The directors will present the audited financial statements of the Company for the period ended
31 October 2021 together with the directors’ report and the auditor’s report on those financial
statements.
Resolution 2
Remuneration report
The directors will present the remuneration report for the period ended 31 October 2021 for approval.
This vote is not mandatory but is considered best practice.
Resolutions 3 to 6 inclusive
Re-election of directors
Under the Articles of Association of the Company, all directors appointed by the Board after the first
annual general meeting shall retire at the annual general meeting following appointment and shall
then be eligible for re-election and at least one third of the total number of directors shall retire at the
annual general meeting and shall then be eligible for re-election. Brief biographical details of each of
the directors can be found in the Annual Report and Accounts and on the Company’s website www.
velocity-composites.com.
Resolution 7
Re-appointment of auditors and fixing of auditors’ remuneration
At every Annual General Meeting at which accounts are laid before shareholders, the Company is
required to appoint an auditor to hold office from the end of the meeting until the next such meeting.
This Resolution 7 proposes that Grant Thornton UK LLP be re-appointed as the Company’s auditors
to hold office until the next Annual General Meeting and that the directors be authorised to set their
remuneration.
Resolution 8
General authority to allot new shares
Resolution 8, if passed, will grant authority for the directors to issue new shares within the best
practice limits set by The Investment Association. The authority set out in paragraph 8.1 would permit
allotments of new shares up to approximately one-third of the current issued share capital. The
authority set out in paragraph 8.2 would permit allotments of new shares up to approximately two-
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Shareholder Information Notes to the AGM
thirds of the current issued share capital but would apply only in the case of an allotment of shares
made pursuant to a rights issue (pre-emptive offer). The power granted by this resolution will expire
on the conclusion of next year’s Annual General Meeting or, if earlier, on 1 June 2023.
Resolution 9
General disapplication of pre-emption rights
Resolution 9, which is proposed as a special resolution, will, if passed, give the directors power,
pursuant to the authority to allot granted by resolution 8, to allot equity securities (as defined
by section 560 of the Act) or sell treasury shares for cash without first offering them to existing
shareholders in proportion to their existing holdings: (a) in relation to pre-emptive offers and offers
to holders of other equity securities if required by the rights of those securities or as the directors
otherwise consider necessary, up to a maximum nominal amount of £30,252.55 which represents
approximately one-third of the current issued share capital (excluding treasury shares) as at 21
January 2022 (being the latest practicable date prior to the publication of this notice) and, in relation to
rights issues only, up to a maximum additional amount of £60,505.1] which represents approximately
two thirds of the current issued share capital (excluding treasury shares) as at 21 January 2022
(being the latest practicable date prior to the publication of this notice); and (b) in any other case,
up to a maximum nominal amount of £9,056.85 which represents approximately 10 per cent of the
Company’s issued ordinary share capital (excluding treasury shares) as at 21 January 2022 (being the
latest practicable date prior to the publication of this notice).
The power granted by this resolution will expire on the conclusion of the next Annual General Meeting
of the Company (or, if earlier, on 1 June 2023). The directors have no present intention to exercise the
authority conferred by this resolution.
Resolution 10
Resolution 10, which is proposed as a special resolution will give the Company authority to purchase
its own shares in the market up to a limit of approximately 10% of its issued ordinary share capital
(excluding treasury shares) at 21 January 2022, being the latest practicable date prior to the
publication of this notice. The maximum and minimum prices are stated in the resolution. Whilst they
do not currently have any intention to utilise this authority the directors believe that it is advantageous
for the Company to have this flexibility to make market purchases of its own shares. The directors will
exercise this authority only if they are satisfied that a purchase would result in an increase in expected
earnings per share and would be in the interests of shareholders generally.
In the event that shares are purchased, they would either be cancelled (and the number of shares in
issue would be reduced accordingly) or, in accordance with the Companies Act 2006, be retained as
treasury shares. The Company may consider holding repurchased shares pursuant to the authority
conferred by this resolution as treasury shares. This gives the Company the ability to transfer
treasury shares quickly and cost effectively and would provide the Company with additional flexibility
in the management of its capital base.
93
Velocity Composites Plc
AMS Technology Park
Billington Road
Burnley
Lancashire
BB11 5UB
www.velocity-composites.com
Registered No: 06389233
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