ANNUAL
REPORT
2024
& Financial Statements for the year ended 31.10.24
Contents
Contents
1. Strategic Report
Highlights ............................................................................................... 4
Chairman’s Report ................................................................................. 6
Chief Executive Officer’s Report ............................................................ 8
Business Strategy and Update ............................................................ 10
Financial Review .................................................................................. 12
Principal Risks & Uncertainties ............................................................. 15
Sustainability Report ............................................................................. 21
2. Governance
Statement of Corporate Governance .................................................... 25
Board of Directors and Senior Management ......................................... 30
Directors’ Report .................................................................................. 36
Directors’ Remuneration Report ........................................................... 40
3. Financial Statements
Independent Auditor’s Report ............................................................... 43
Consolidated Statement of Total Comprehensive Income...................... 49
Consolidated and Company Statement of Financial Position ................ 50
Consolidated and Company Statement of Changes in Equity ............... 51
Consolidated and Company Statement of Cash Flows ......................... 53
Notes to Financial Statements .............................................................. 54
4. Shareholder Information
Advisers ................................................................................................ 85
Notice of General Meeting .................................................................... 86
Notes to Notice of General Meeting ...................................................... 89
3
Highlights
£23m
Revenue
25.9%
Gross Margin %
£0.4m
Adjusted EBITDA 1
£(0.9)m
Operating Loss
£1.7m
Cash at Bank
1 Earnings before interest, tax, depreciation, amortisation, exceptional items and adjusted for 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. Share based payments are added back to make the share-based payment charge clear to stakeholders. Workings are provided on p12 of the
2024 Annual Report and Financial Statements.
4
FY23 £16.4m
FY23 £(1.6)m
FY23 18.8%
FY23 £3.2m
FY23 £(2.8)m
Revolutionising aerospace composites manufacturing
Velocity Composites is the leading supplier of advanced composite material kits to the aerospace market
Our highly efficient nests reduce material waste & save money
Creating a lean and scalable supply chain in a more-for-less era
5
6
Strategic Report | Chairman’s Report
Introduction
Velocity has achieved another
year of exceptional growth.
Revenue increased 40% to £23
million, up from £16.4 million in
FY23, which itself represented
a 37% rise on the prior year.
Notably, the business achieved
adjusted EBITDA profitability for
the full year and became cash
positive in the second half. We are
firmly on course to achieve our
objective of long-term profitability
and strong cash flow generation.
The 40% revenue growth was
a remarkable achievement,
when you consider short-term
production rates for OEMs in the
civil aircraft industry remained flat
or declined in some areas during
the year.
The growth underscores the
considerable potential within
Velocity’s current contracts,
which will see further progress
as the anticipated increases in
build rates materialise over the
coming years. Our engineering
and business development teams
are pursuing a broad range of
new opportunities with current
and potential new customers. The
well documented disruptions at
Boeing evidently impacted the
underlying supply chain which
prompted us to pause several
advanced opportunities in the
US and refocus on alternative
markets. This has included
the defence sector, as NATO
countries are expected to
increase spending. The five-
year breakthrough contract we
agreed in December 2022 with
a leading US manufacturer, has
strengthened our presence in the
defence market.
Environmental
Velocity is committed to
supporting the aerospace
industry’s environmental
objectives, including reducing
emissions and waste, and
promoting efficient resource use.
Carbon fibre, as a key material,
offers significant potential to
lower environmental impact, the
unit cost and oil-based inputs
make waste reduction essential.
Velocity’s services focus on
minimising material waste,
contributing to a net positive
environmental outcome.
We are equally proud of fostering
a safe and secure manufacturing
environment, maintaining world-
class employee safety standards.
Innovation
Our proprietary Velocity Resource
Planning (VRP) technology
continues to deliver operational
excellence. This year, VRP
was fully implemented at our
new US facility, transforming
it into a world-class advanced
manufacturing site. This
innovation enhances efficiency
and raises service levels for
our customers, reinforcing our
leadership in advanced material
resource planning.
People
Our lean, technology-enabled
back-office structure is a
key advantage for Velocity.
Centralised teams in the UK
support multiple factories across
R&D, Engineering, Sales, and
Finance, enabling scalability
and cost-efficiency. To support
Chairman’s Report
“Revenue increased 40% to £23 million,
up from £16.4 million in FY2023,
which itself represented a 37% rise
on the prior year.”
by Andy Beaden | Chairman
our expected growth, we have
invested in hiring and training
a significant number of new
employees during the year,
incurring upfront costs that will
deliver long-term commercial
benefits. Alongside this
investment in our operational
and engineering teams, we
strengthened our senior
management team, adding
expertise in Finance, Operations,
and the US market.
Board
I would like to extend my gratitude
to Andrew Hebb for his invaluable
contributions during his second
tenure as Interim CFO and
Company Secretary. Andrew
stepped down in the summer
of 2024, and we were delighted
to welcome Rob Smith as our
new permanent CFO, Company
Secretary and Board Director.
The Board’s extensive industry
expertise, combined with a highly
capable executive management
team, is one of the reasons
Velocity is outperforming industry
growth rates.
Outlook
Looking ahead, the Board is
confident of delivering another
strong year of growth in FY25,
underpinned by our contractual
business base. In response to
recent inflationary pressures,
which affected short-term
margins, we successfully
negotiated price increases with
all key customers. While market
uncertainties persist, Velocity’s
consistent growth record provides
confidence that we are at a
turning point and expect to move
towards sustained profitability and
cash generation.
On behalf of the Board, I
extend my heartfelt thanks to
all stakeholders, especially our
investors, for their continued
support.
Andrew Beaden
Chairman
28 January 2025
7
Strategic Report | Chairman’s Report
8
Overview
This has been another year
of double-digit growth for
Velocity. We have weathered the
production challenges facing the
global aerospace industry, and
we are entering 2025 in a healthy
position to support customers as
they look to ramp up production.
The migration to composite
materials in newer aircraft models
continues, as OEM’s focus on
improved sustainability, as well as
an expected increase in Western
defence expenditure, will continue
to result in more opportunities for
Velocity.
Revenue was up 40% to £23.0m
(FY23: £16.4m), driven by growing
US sales, and we had a positive
adjusted EBITDA of £0.4m, the
first time since the Covid-19
pandemic (FY23: loss £1.6m).
The Group has maintained a
healthy cash and liquidity position
with cash-inflows from operating
activities of £0.4m (FY23: outflows
of £1.8m). We anticipate further
growth in FY25 and beyond,
as higher monthly production
rates are expected in the global
aerospace industry.
US Contract
Sales in the US quadrupled to
£7.9m (FY23: £2.0m) following
the onboarding work from a
leading US manufacturer at our
site in Alabama. This is part of the
five-year contract, announced in
December 2022, with expected
total revenue of £79m ($100m) as
announced at the time.
At the half year, we had
successfully completed the
First Article Inspection (FAI)
requirements needed from our
customer and were awaiting
completion of the FAI process
between our customer and the
OEM. Whilst we experienced
delays in FY24, we have been
working directly with our US
customer and the OEM to
complete the necessary work in
Q1 FY25, allowing the US site
to fully discharge the existing
contracted business, with sales
increasing further as a result.
Customers
During FY24, we renewed a
number of long-term, existing
contracts with customers, which
included price increases that
factored in the increased costs
of labour, energy and finance
that occurred since they were
last renewed. We have agreed
with all key customers that while
contracts are typically rolling three
to five-year agreements, inflation
costs will be reviewed annually
based on pre-agreed indices to
ensure that any price changes are
proportionate and accounted for
in their annual budgeting.
Operational Development
We are rolling out our Odoo-
based Velocity Resource
Planning (VRP) system into our
UK sites, following the successful
implementation in the US. VRP
provides better controls, more
efficient operational scenarios
and full traceability from long-term
demand or order management
to the delivery of composite
kits to customers. The system
Chief Executive
Officer’s Report
“The migration to composite materials in
newer aircraft models continues, as OEM’s
focus on improved sustainability, as
well as an expected increase in Western
defence expenditure, will continue to
result in more opportunities for Velocity.”
by Jon Bridges | Chief Executive Officer
Strategic Report | Chief Executive Officer’s Report
9
brings all the bespoke data
processing, batch traceability
and life managements used
to date into one system that
includes the more “normal” and
transactional process such as
finance and order processing.
This enables uniform and real
time management of the entire
business across all manufacturing
and forward stock location sites
without local variations to the
system architecture, bringing
immediate improvements to the
resolution of system data along
with a standard platform for new
sites. This improvement helps
our sustainability reporting as
we measure, track and improve
our carbon footprint across all
aspects of our business.
Market and Business
Development
At the start of FY24, existing
customers in key programmes
(particularly A350) and bid
customers in other programmes
(B737, B787) were forecasting
significant build rate increases
as the industry started to return
to pre-pandemic production
levels. In our trading update in
September 2024, the Company
highlighted delays to planned
production rate increases across
the global aerospace industry, in
part due to the well-publicised
issues facing Boeing, which had a
short-term impact on the Group’s
expected growth in FY24.
Since then, the two largest civil
aircraft manufacturers have
reported record order backlogs
and positive book to bill ratios
in 2024. We have noted that the
manufacturers are forecasting
increased aircraft deliveries in
2025, in an expected return to
more predictable and higher
monthly production rates. This
will in turn flow down to Velocity’s
order books. For example, A350
production is planned to double
by 2028, the largest programme
in the UK to which Velocity is a
supplier.
However, to ensure Velocity
has a broader range of
relationships, and to hedge
against future problems in
the civil aircraft market, our
business development teams
are building on our relationships
and developing our business
case with defence OEMs in
Europe and the US. Global
defence expenditure is expected
to continue to rise in response
to continuing Geo-Political
uncertainties. Our services are
identical for defence customers
who share similar issues to civil
aircraft manufacturers in terms
of the need to improve fuel and
operating efficiencies.
This is progressing along the
expected long-term timelines
for opportunities of this scale,
and complexity. Among other
things, we are working to fulfil the
requirements for export controls
and accreditations around
protected data needed to work
closely with this sector.
Outlook
The Board expects further
revenue growth in FY25 and
beyond, while the Company
retains a focus on investing in
operating efficiency and service
delivery excellence on behalf of all
of our key customers.
The long-term outlook for
the industry is strong and
shareholders will benefit as
production rates increase for both
existing and new business. We
are confident that our services
and business model will deliver
the expected growth.
Jonathan Bridges
Chief Executive Officer
28 January 2025
Strategic Report | Chief Executive Officer’s Report
Business Locations
Velocity Composites plc currently
operates internationally over three
sites.
Burnley, Lancashire
- UK North and HQ
The Burnley facility is co-located
with the company’s HQ and
serves our customers in the
North of the UK and Northern
Ireland, along with any specialist
manufacturing needed to support
the other sites. The Burnley facility
is AS9100, AS9120 and NADCAP
approved, along with any specific
OEM approvals needed by our
customer base.
It also includes a separate
technical centre enabling the
Company to design, engineer
and test new products and
technologies without impacting
production capacity.
Fareham, Hampshire
– UK South
The Fareham facility was
launched in September 2016
to service additional customers
within the Southern portion of the
UK and also to offer its services
to mainland northern Europe,
given its proximity to the ports of
Portsmouth and Southampton.
The Fareham facility is a full
manufacturing plant, that benefits
from the central support of the
HQ in Burnley.
Tallassee, Alabama – USA
The Tallassee facility was fully
refurbished and opened in 2023
to support a new business
contract with a key customer
announced in December 2022.
This facility is a mirror of Velocity’s
other UK based manufacturing
plants and is also served by the
central HQ teams in Burnley,
UK. All equipment, infrastructure
and processes are identical
to the proven technology and
techniques used in the UK.
Malaysia
We have three engineers based
in Malaysia who support the
UK sites allowing services to be
provided to UK customers over
a longer working day due to time
differences.
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 2024,
they acted in good faith and have
upheld their ‘duty to promote
the success of the Group’ to the
benefit of its stakeholder groups.
The 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 which 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 25 onwards in the
Statement on Corporate
Governance.
Strategic Report | Business Strategy and Update
Business Strategy and Update
10
11
24,260
2023
Source: Airbus, Global Market Forecast 2024 (pg15)
(https://www.airbus.com/en/products-services/commercial-aircraft/global-market-forecast)
* Passenger aircraft above 100 seats & freighters with a payload above 10t
Demand for 42,430 new aircraft between 2024 and 2043
Both Airbus & Boeing predict 40,000+ aircraft by 2043
Airbus: 42,430 Boeing: 43,975
Source: Commercial Market Outlook 2024-2043 (www.cmo.boeing.com)
and Airbus, Global Market Forecast 2024 (www.airbus.com/en/products-services/commercial-aircraft/market/global-market-forecast)
23,970
18,460
5,800
STAY
GROW
REPLACE
42,430
NEW
DELIVERIES
2043
Deliveries (2024 - 2043)
48,230
11
Strategic Report | Datasheet
New Generation (High Composite Content)
1st 2nd & Previous generation
2000
2005
2010
2015
2019
2023
2026
2031
2036
2041
30%
13%
>95%
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Source: Airbus, Global Market Forecast ‘22 (www.airbus.com/sites/g/files/jlcbta136/files/2022-07/GMF-Presentation-2022-2041.pdf)
2023 figure: Airbus, Global Market Forecast ‘24 (pg 26) (www.airbus.com/sites/g/files/jlcbta136/files/2024-07/GMF%202024-2043%20Presentation_4DTS.pdf)
No of passenger aircraft in service*
1 * Western built passenger aircraft above 100 seats – pax aircraft only
2 1st generation: A300, DC 9, DC10, 707, 727, 737, 747.
2nd generation: A310, MD11, MD80, MD90,737, 747, 757, 767, F100. Previous generation: A320 Fam., A330, A340, 717,737NG, 747, 777
3 New generation: A220, A320neo Fam., A330neo, A350, A380, 737Max, 777X, 787 & new programs
Sustainability driving growth - new generation aircraft
By 2041, new
generation
passenger
aircraft will
represent >95%
of the fleet
12
Statement of
Comprehensive Income
Group revenue for FY24 increased
40.2% to £23.0m (FY23: £16.4m)
as sales from our US site ramped
through the year.
Gross profit improved to £6.0m
(FY23: £3.1m) as a result of the
increased sales revenue and
higher gross margin percentage
of 25.9% (FY23: 18.8%) that was
achieved through a better sales
mix, inflation adjustments and
improved operational efficiencies
delivered in FY24 that are
expected to flow through to future
years.
Administrative expenses in
FY24 were £7.0m (FY23: £5.8m,
excluding exceptional items),
an increase of 20.7%. The main
driver for the higher expenditure
was incremental costs associated
with the US operations. The US
specific administrative expenses,
before Group recharges, were
£1.6m in FY24 (FY23: £1.2m)
as we continue to invest in our
capability in the US. The increase
in volume was therefore partially
offset by overheads associated
with growing the US operation
and resulted in an adjusted
EBITDA profit of £0.4m (FY23:
EBITDA loss of £1.6m).
The ramp-up in the new US
facility has continued at pace
with additional cutting and freezer
storage capacity being added as
well as on-going investment in
people to improve our capabilities.
Two work packages are now
fully transferred and running in
line with end customer demand.
A third work package, that was
expected to transfer during FY24,
has been subject to additional
approvals from the end customer,
this process is being finalised
in the first half of FY25 with
full production volumes now
anticipated in the second half of
FY25. The third work package will
not require significant incremental
overheads and will utilise existing
capacity.
There is considerable further
potential growth through OEM
production rate increases on
existing programmes as well
as opportunities on other
programmes with new and
existing customers. Velocity has
built an excellent capability to
deliver this growth without a linear
increase to its overhead base or
installed manufacturing capacity.
Losses after tax for the year for
the Group amounted to £0.8m
(FY23: £3.1m). The reduced
loss was a direct result of the
increased revenue.
31 October
2024
31 October
2023
Reconciliation from operating loss
£’000
£’000
Operating loss
(931)
(2,817)
Add back:
Share-based payments
143
206
Depreciation and amortisation
622
413
Depreciation on right of use assets under
IFRS 16
Exceptional Administrative costs
540
-
472
120
Adjusted EBITDA
374
(1,606)
Strategic Report | Financial Review
Financial Review
by Rob Smith | Chief Financial Officer
Cashflow and
Capital Investment
The cash and cash equivalents
balance as at 31 October 2024
was £1.7m (FY23: £3.2m).
Operating cash inflow before
working capital movements for
FY24 was £0.3m (FY23: £1.7m
outflow), this being attributable
to increased revenue during the
year. The movements in working
capital netted to a £0.4m outflow
in FY24 (FY23: £0.1m outflow),
and after other adjustments for
taxation received, the final cash
inflow from operations was £0.4m
(FY23: £1.8m outflow).
Working capital movements can
be further analysed as follows:
There was a negative working
capital movement through a
£0.4m decrease in trade and
other payables from suppliers
(FY23: increase of £2.4m).
Inventory decreased by a £0.2m
(FY23: increase of £1.3m),
largely due to improvements in
operational efficiencies. Trade
receivables increased by £0.2m
(FY23: £1.1m) driven by the
increased turnover offset by
utilisation of supplier finance
arrangements provided by our
lead US customer. Overall trade
receivable days were 53 days,
compared to 71 days at the end
of FY23.
Cash outflow from investment
activities was £0.6m (FY23:
£2.1m). The reduction in
investment activities was a
result of a return to normal
levels following the investment in
commencement of operation at
our Tallassee facility in FY23.
Financing activities cash outflow
was £1.4m in the year (FY23:
£4.8m generation including
£6.6m proceeds from issue of
ordinary shares). The outflow can
be further analysed as: - finance
costs paid £0.4m (FY23: £0.3m),
repayment of loans £0.5m (FY23:
£0.5m) and repayment of finance
lease capital £0.5m (FY23:
£0.5m).
The Company was in a Net Cash
position at the end of the year,
of £0.7m (FY23: £1.6m). This
includes Cash at Bank, offset by
the outstanding CBILS balance
and invoice discounting facility.
31 October
2024
£’000
31 October
2023
£’000
Cash
1,663
3,178
CBILS loan
(971)
(1,473)
Invoice discounting facility
-
(68)
Net cash
692
1,637
13
Strategic Report | Financial Review
Going Concern
The financial statements have
been prepared on a going
concern basis as the directors
believe that the Group has access
to sufficient resources to continue
in business for the foreseeable
future. This is discussed more fully
in the Directors’ Report on pages
36 to 39.
Rob Smith
Chief Financial Officer
28 January 2025
Financial Highlights & Group Key Performance Indicators
£23m
Revenue
FY23 £16.4m
25.9%
Gross Margin %
FY23 18.8%
£0.4m
Adjusted EBITDA2
FY23 £(1.6)m
£1.7m
Cash at Bank
FY23 £3.2m
£(0.9)m
Operating Loss
FY23 £(2.8)m
Strategic Report | Financial Review
2 Earnings before interest, tax, depreciation, amortisation, exceptional items and adjusted for 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. Share based payments are added back to make the share-based payment charge clear to stakeholders. Workings are provided on p12 of the
2024 Annual Report and Financial Statements.
14
15
The Board is committed to
managing risk within the
business and maintains a risk
register that is kept up to date
with input from the senior
management team.
In recent years the global
economy has had to deal with
challenges from the Covid-19
pandemic as well as war in
Ukraine and the ongoing conflict
in the Middle East. The aviation
industry was significantly
impacted by the travel restrictions
introduced during the pandemic
and orders for new aircraft were
either postponed or cancelled.
Throughout the aerospace
industry, manufacturing output
and capacity was sharply
reduced during 2020 and 2021.
Demand has returned to the
market; however, industry has
faced a number of challenges in
rebuilding capacity with aircraft
production rates still not reaching
pre-pandemic levels. The well
publicised quality issues at
Boeing and Spirit followed by
industrial action have further
hindered industry recovery with
aircraft output being affected.
These issues have cascaded
down the supply chain and
resulted in short-term demand
fluctuations that Velocity
continues to manage.
The geopolitical and macro-
economic environment
has continued to present
opportunities and challenges.
Inflationary pressures over the
past two years have had a
significant impact throughout
the supply chain and our internal
labour and utility costs have
increased significantly. Velocity
has worked closely with its
customers to pass through these
additional costs during FY24
and has agreed mechanisms
that allow for an automatic
pass through in the future to
avoid the lag that affected our
margins. Whilst the majority of
the programmes that Velocity
supplies to are civil aircraft, the
business is seeing a significant
increase in demand on defence
programmes and is working to
win defence sector opportunities
with existing and potential new
customers.
The Group undertakes various
risk mitigation activities which
included planning ahead to
help mitigate supply chain
disruption; undertaking other
capacity planning assessments
with customers and suppliers;
ensuring any tariff and tax
changes were fully covered
in contracts; and liaising with
Government bodies to prepare for
the different outcomes which may
come to pass.
The expansion into the US
using existing resources meant
that cash flow forecasting and
capacity planning became a key
priority. These disciplines have
been maintained to ensure that
we operate efficiently.
Despite the short-term
uncertainties in the aerospace
sector, the overall industry
forecasts continue to be positive.
The strength of the longer-
term forecast from the aircraft
manufacturers, suggests that
there will be a 10-fold increase
(Source: Airbus and Boeing
Global Market Forecast) in the use
of composites over the next 20
years. The Board is reassured by
past precedents of crises in the
industry that have not curtailed
the underlying trend of growth in
the market.
The Group’s principal risks and
actions to mitigate these risks are
set out in the table below. These
are the risks that Management
believes are the most material to
the business and which might
prevent the Group from achieving
its strategic objectives if not
managed accordingly.
Principal Risks & Uncertainties
Strategic Report | Principal Risks & Uncertainties
16
Loss of
Key Contracts
/ Customer
Concentration
International
Expansion
The Group nurtures relationships with
key customers in order to understand
their business and to identify further
opportunities to support them. In
addition to working tirelessly to deliver
excellent customer service levels for the
existing business, the Group is actively
developing its pipeline with the aim of
securing new contracts. Aircraft are
increasingly being manufactured using
composite material. Key to any mitigation
is that the business operates 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 the lead
time placed on their behalf.
The Group has successfully established
its first overseas operation and has
gained valuable lessons and insights on
this process. Additionally, the Group has
recruited a senior CFO with considerable
international experience.
Further international expansion will be
timed to manage the risks around cash
flow, management time and bandwidth.
In addition, any site development will be
supported with contractual commitments
from customers prior to any significant
financial commitment by Velocity.
The aerospace sector
has a concentration
of very large primary
aircraft manufacturers
and Tier 1 suppliers.
These form the core of
the Group’s customer
base. The loss of any
of the Group’s major
contracts with these
large customers may
have a material impact
on the business,
prospects, financial
condition, or operations.
Management continues
to wary of this risk given
the current dynamics in
the aerospace sector.
The Group’s strategy
is to expand into new
markets that cannot
be serviced from
the Company’s UK
production facilities. The
Group has successfully
opened and operated
a new facility in
Alabama, USA and this
could lead to further
plants servicing the
geographical clusters
across the USA.
New business
development in Europe
could offer up the
need for a production
unit in the mid-term.
International expansion
has inherent risks, along
with potential delays in
setting up new facilities.
Medium
(Unchanged)
Medium
(Reduced)
Principal Risk
Management
Priority
(Change in Year)
Impact
Mitigation
Strategic Risks
Strategic Report | Principal Risks & Uncertainties
17
Winning a Large
Customer Contract
Sustainability
Credentials
Research and
Development
The main focus for business
development continues to be on
customers that can be serviced from the
Group’s three established sites thereby
minimising any capital expenditure
requirement. The business has adopted
discounted cash-flow models to assess
the working capital requirements to
augment its existing gate process.
Technological investments will also
make a difference. The Group currently
has capacity and a good structure of
Executive and second line management
to support additional demand but has
recruited accordingly to ensure the
Work Package Agreement with GKN
Aerospace in the US is a success.
Management believes this a low risk, with
Velocity’s offering naturally supporting an
increasingly green agenda. The Group
minimises waste of composite material
throughout the supply chain and recycles
material 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 as electric vehicles, wind
power and hydrogen cell production.
The Company also has adopted an EV
car scheme and offers on-site charging
at its Burnley facilities for employees,
supported by green energy generated
through its on-premises solar panels.
Further recognising the importance of
operating sustainably, the Board has
introduced a Sustainability Committee,
chaired by a Non-executive Director, to
identify additional methods of promoting
sustainability throughout the business.
R&D projects are reviewed by the Board
and development opportunities are
carefully reviewed by management at
various stages to minimise any potential
losses.
The winning of additional
large customer contracts
could absorb the
capacity headroom
and lead to supply
issues if not closely
managed. It could
also be a distraction to
management.
The Group recognises
the importance of
trading as a sustainable
and socially responsible
organisation and
the impact on the
environment of not
putting in place
measures that will help it
to do so.
The Company invests in
R&D projects in order to
develop innovative new
products.
Medium
(Unchanged)
Medium
(Increased)
Low
(Unchanged)
Principal Risk
Management
Priority
(Change in Year)
Impact
Mitigation
Strategic Report | Principal Risks & Uncertainties
18
Exclusively
operating in the
Aerospace Sector
Dependence on
Third Party Supply
Management increasingly sees our
sector knowledge, experience and
reputation as an opportunity and not a
risk.
Risk is mitigated by the strength of
the longer-term outlook of civil aircraft
manufacturers which forecast that
aircraft numbers will double in the
next 20 years, with new aircraft being
made using a much higher carbon fibre
content.
The Company has also started to
develop more of its customer base
around defence programmes, a sub-set
of the market that is seeing renewed
investment.
Given the strength of the civil and military
aerospace, the Company will diversify
into defence given the substantial
demand in this area before investing in
new sectors at this stage.
The Group manages its relationships
with suppliers through the commercial
and operational teams. Many products
are single sourced for air frames
and engines, the product type being
defined by the customer. Orders are
placed according to the supplier
delivery schedule, paid for on time and
contractual buffer stocks maintained.
During FY24 Velocity signed supply
agreements with its two main raw
material suppliers.
Our rigorous forecasting processes
allow us to identify shortages in
supply early and 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.
Insufficient demand
in the sector and
particularly in the civil
aerospace sector due to
disruption such as the
Covid-19 pandemic.
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 must be
maintained to meet
customer contractual
requirements.
Low
(Reduced)
Low
(Unchanged)
Principal Risk
Management
Priority
(Change in Year)
Impact
Mitigation
Operational Risks
Strategic Report | Principal Risks & Uncertainties
19
Reliance on Key
Individuals
Price Inflation
Salary and benefit levels are competitive
and reviewed on a regular basis, with
bonus and equity schemes to reward
longer term performance. Annual
performance reviews and development
plans are carried out throughout the
organisation whilst operational staff are
also benchmarked regularly to ensure
Velocity remains an attractive place to
work, with compensation reflective of a
high-value manufacturer. During FY24
the company issued share options under
a new Long-term Incentive Plan to senior
managers and Executive employees.
Material price changes are contractually
passed through from the supplier to the
customer. Labour cost inflation has been
added to all new and renewed contracts
as an automatic annual increase. All
other inflation must be considered, and
prices re-negotiated with the customer
where appropriate. Inflation rates have
trended down over the past year, but the
company continues to monitor and react
to changes as appropriate.
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.
Significant levels of
inflation may adversely
impact the performance
of the Group.
Medium
(Unchanged)
Medium
(Reduced)
Principal Risk
Management
Priority
(Change in Year)
Impact
Mitigation
Cyber Security
Management regularly reviews the
strength of the IT infrastructure within
the business and undertakes third
party audits to reinforce this. Through
a combination of encryption, regular
backups, firewalls and limited third party
access points the current structure is
deemed secure.
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.
Medium
(Unchanged)
Strategic Report | Principal Risks & Uncertainties
20
Liquidity Risk
Credit Risk
Interest Rate Risk
Preparation of detailed cash flow
forecasts allow the Group to understand
the financial position both now and, in
the future, and can be used to mitigate
the risk of there being insufficient funds
available. The forecasts are kept up
to date and reflect the latest views on
sales, purchases and facilities available.
Scenario analysis is also carried out to
understand the liquidity implications
should performance be favourable or
adverse to forecast. As the US business
has ramped the business became
EBITDA positive and cash generative in
H2 FY24.
Ultimately the Company has access to
both debt and equity financing and the
listing on the AIM market helps provide
access to equity finance if significant
growth requires further significant
investment.
The Group’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, together with the
procedures in place to follow up any
overdue debts, the Directors do not
believe that the credit risk to the Group
is significant.
The Group seeks to manage its interest
rate risk through minimising exposure
wherever possible and regularly reviewing
interest rates available in the marketplace.
Insufficient cash to
meet the needs of the
business in near or long-
term.
Unable to collect
due receivables from
customers.
Ability to minimise
exposure.
Medium
(Reduced)
Low
Low
Foreign
Exchange Risk
There is an approved Treasury policy
which is managed and monitored by
the Chief Financial Officer. However,
the Group will look to naturally hedge
wherever possible, matching foreign
currency revenue with purchases of the
same currency.
In addition, short-term cash flow
forecasts highlight future surplus
or shortfalls in foreign currency,
allowing funding levels to be managed
accordingly.
As the Group purchases
and sells products
on a global basis, it
is exposed to gains
and losses linked to
movements in the US
dollar and euro foreign
exchange rates. Group
policy is to naturally
hedge wherever
possible. These
exposures will increase
with international
expansion, particularly
with the US dollar to
sterling exchange rate. A
weaker US dollar would
be expected to reduce
profits and cash flows,
and vice-versa for a
weaker pound sterling.
Medium
(Unchanged)
Financial and Compliance Risks
Strategic Report | Principal Risks & Uncertainties
Principal Risk
Management
Priority
(Change in Year)
Impact
Mitigation
21
Our Commitment
From the way we source our
materials to the technology
that provides our data-driven
processes, we are a responsible
organisation committed
to operating in an ethical,
sustainable way.
Velocity’s customers have been
able to benefit by reducing
material waste by up to 20
per cent, while also creating
operational, stock and process
efficiencies in a way which
enables them to be more
sustainable themselves.
These savings not only help
companies to become more
efficient and competitive but
can help mitigate the impact
of rising material costs while
closing the gap on achieving the
very real environmental targets
for the aerospace sector. The
Government has set a legally
binding target for the UK to
reach net zero by 2050 and has
published a Jet Zero Strategy
setting out what will be needed to
ensure that aviation plays its part
in meeting this target.
Environmental, Social and
Corporate Governance
All members of the Board
believe strongly in the value and
importance of Environmental,
Social and Corporate Governance
and in our accountability to all of
Velocity’s stakeholders, including
investors, staff, customers and
suppliers.
Velocity Composites plc has
developed an ESG process to
enhance its risk management and
ensure regulatory compliance. We
believe that our focus on ESG will
benefit investors and customers
who prioritise sustainability and
ethical practices, strengthening
our market position and brand
reputation. Our ESG initiatives
drive operational efficiencies and
innovation, leading to long-term
profitability and resilience.
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 10 principles of the Code
are set out in our Governance
policy on pages 25 to 29.
Addressing the opportunities
and challenges of aerospace
net zero
By the nature of what we do as
composites kitting suppliers,
we sit at the heart of the
issues surrounding the journey
towards net zero and becoming
increasingly sustainable. To
that end, using the principles of
an Environmental, Social and
Governance (ESG) Strategy helps
us to measure our impact on the
environment and society.
We are a data-driven
organisation. Smart technology
and real time data is at our
fingertips and enables ourselves
and our partners to make
informed decisions based on
true information. However, as we
make huge strides in technology,
we are aware that we are part of
the solution and the problem, and
we see it as our responsibility to
address the challenges presented
by the ambitions of the industry
and the journey to net zero.
Sustainability Report
Strategic Report | Sustainability Report
22
We need to continually ask
ourselves; how can we become
more efficient, make composites
easier to manufacture with,
reduce weight further, and create
materials that are even lighter and
stronger to enable aircraft to fly
faster and further whilst using less
fuel? With their characteristics of
strength, durability and lightness,
carbon fibre composites are
being adopted to meet global
net zero strategies across
many industry sectors including
automotive, defence, renewable
energy, and construction.
The optimisation of the use of raw
materials is a significant challenge
for the composites sector. The
increasing need to reduce waste,
make efficiencies through the
manufacturing process and
deliver to the highest quality
standards makes our service
increasingly compelling for our
customers.
However, because of their long
lead times, controlled storage
requirements, shelf life and
batch traceability needs, single
sources and limited raw material
formats (roll widths, roll lengths),
the supply chain needs to be
managed effectively to prevent
over ordering, under ordering,
poor utilisation and loss of
traceability.
Any of this presents a challenge,
but when they and their effects
are added together over extended
lead times, with multiple raw
material streams per individual
kit, the need for real time
management is critical, and this is
before any raw material enters a
production area.
The UK is a world leader
Velocity’s technology and service
model starts with long-term
demand management of our
customers’ kit consumption to
determine our raw material order
book and continues for many
months until the raw material is
delivered, kit manufacturing takes
place, and the kit is delivered into
our customers’ production areas.
Whilst the value of raw materials
is significant, the products they
help create are worth vastly more.
This will only increase as sectors
including renewable energy,
transport, defence, infrastructure
and construction ramp up their
use of composites in line with net
zero goals.
The UK is a world leader
in composite manufacture.
Composites UK has recently
published the size of the UK’s
Composites Sector Revenues
for the last three years and it
has grown from £10.7 billion in
2021 to £13.4 billion in 2023. At
the same time, UK Composites
Sector employment has grown
from 47,500 to 49,843.
Worldwide, the composites
market industry is projected to
grow from £86 billion in 2022
to £167 billion by 2030 with an
annual compound growth rate of
8.63 per cent until 2030.
The future will be defined by
the need to do more, with less,
in the face of ever-increasing
international competition. The UK
cannot meet its net zero targets
without composites. They are
both a strategic asset and key
differentiator for the UK and will
underpin government strategies
around Hydrogen, innovation,
industrial and transport
decarbonisation, exports and net
zero.
The needs of net zero will only
ever become more pressing, so
the long-term business case for
more sustainable composites
looks compelling.
Propel the industry forward
The way this technology, and
the real time data it creates, can
be adapted and exploited to
revolutionise composite supply
chains across all sectors is
helping to propel the aerospace
industry forward.
Against this, there is the rising
demand in the Defence sector
for composite materials on land,
in the air and at sea with various
conflicts around the globe coming
into sharp focus.
In the supply chains, this means
we have opportunities to adapt
our technology and data to meet
these demands, whilst at the
same time considering the needs
of decarbonisation and circularity
of products into other uses.
With a global shortage of carbon
fibre also on the horizon, a truly
‘circular economy’ for composites
makes absolute sense.
To move us further towards
becoming a sustainable business
in the true sense of the word,
we have created our own ESG
Committee at Velocity which
is making progress along the
road to Net zero with individuals
responsible for specialist areas in
finance, operations, projects and
sales.
As a starting point, we looked
to the United Nations and its
Strategic Report | Sustainability Report
23
17 Sustainable Development
Goals (SDGs). Of these, we
have identified our priorities
to benchmark and measure
progress, and this means setting
targets for emissions reductions,
monitoring energy usage and
looking at all operations and
processes.
For the environment part of
ESG, we are looking at reducing
unconsumed raw materials,
re-using offcuts from the
manufacturing process, and
recycling composite materials.
Indeed, Velocity Composites has
always been about more than just
cutting shapes. We have used our
in-house proprietary technology
and data to ensure our customers
get the best value by providing
kits which reduce all forms of
waste from the composites
supply chain.
Our managed service allows
companies to wholly remove
the composite supplier
management out of their supply
chain, outsourcing the whole
process to us where we can
manage every step in real time
within our dedicated teams
and digital processes, whilst
providing full traceability and
creating operational savings and
improvements in cash flow.
The icing on the cake is the
realised material savings from
our demand management and
nesting operations to produce the
kits we supply just-in-time to our
customers.
Reduce material
waste by 20 per cent
Using our processes and
technology, Velocity’s customers
have been able to reduce material
waste by up to 20 per cent, while
also creating operational, stock
and process efficiencies in a
way which supports staff and
manufacturing areas to be more
productive.
A key element of composite
waste, and savings that can be
made in the supply chain, are
related to expired material risk,
and we use our technology and
data to manage and optimise
our raw material order books to
align with our customers demand,
control material life when we
receive it and reduce waste in our
kit manufacturing areas.
With the Velocity technology
and data to manage the entire
supply chain better these ‘famine
and feast’ cycles of available
raw materials are eliminated,
enabling our kit manufacturing to
focus on raw material efficiency
optimisation and on-time
deliveries. This in turn allows
our customers to focus on part
manufacture, defending their
manufacturing plans and internal
continuous improvement activities
to drive their own efficiencies.
Because of this our own
current level of raw material
operational waste across all of
our programmes stands at a
fraction of one per cent – and
we continually aim to improve
this as our technology, data and
processes improve.
Achieving very real
environmental targets
These savings not only help
companies to become more
efficient and competitive but can
help mitigate the impact of rising
material costs while closing the
gap on achieving the very real
environmental targets for the
aerospace sector which stand at
15 per cent carbon reduction by
2030, 40 per cent by 2040, and
achieving net zero by 2050.
As the industry progresses
along the net zero journey,
improvements become more
marginal, and so the granularity
of the real time data that Velocity
creates and possesses becomes
ever more valuable as we
collectively identify and deliver the
savings needed.
Addressing the social element
of ESG means considering
employees, sharing important
information for their own roles
and in their everyday lives and
encouraging uptake of these
principles in the communities in
which we operate.
The governance of ESG also
plays a key part in how we are
conducting this programme.
Indeed, we are constantly looking
at how we are managed and
how transparent we are to our
employees and shareholders.
ESG investors rightly want to
support companies that make
decisions that are beneficial for
the environment and society.
As we move along the road to
net zero, we are continuing to
establish our ESG framework.
The measures we are setting this
year will set the benchmarks for
the net zero plan next year.
Strategic Report | Sustainability Report
24
With an ambitious programme
to reach net zero by 2050, the
aerospace industry has set itself
a challenge, but along the way
there are also real opportunities
for the supply chain to conduct
increasingly efficient, profitable
business models.
At Velocity, we feel that our
business model, along with the
digital data we generate and
analyse, puts us in a strong
position to play an important part
in helping our suppliers, ourselves
and our customers meet the
needs of the wider industry for
now and the longer term.
Streamlined Energy
and Carbon Reporting
Regulation (SECR) Statement
At Velocity Composites plc, we
are committed to reducing energy
and greenhouse emissions in line
with our corporate targets. During
the year we have implemented
Eco Vardis this will allow Velocity
to gain accreditation on ESG risk
and compliance, meet corporate
sustainability goals, and drive
impact at scale by guiding the
sustainability performance
improvement of Velocity and our
value chain.
For the financial year ending
31 October 2024, we are also
reporting under the Streamlined
Energy and Carbon Reporting
legislation (SECR) for the first
time.
In the reporting year, Velocity
Composites plc Group consumed
1,822,354kWh of energy
associated with Scope 1 and 2
greenhouse gas emissions.
The greenhouse gas emissions
associated with the above
supplies have been calculated to
be 24.09 tonnes (6.5%) of CO2e
‘Scope 1’ and were associated
with natural gas purchases,
diesel fuel and propane. ‘Scope
2’ emissions were 347.13 tonnes
(93.5%) and were associated with
electricity purchases.
A summary of energy and
emissions for 2024 is shown
below, going forward in preceding
years comparative information will
be available.
kWh
Consumption
%
Tonnes
CO2e
%
Scope 1 Energy
Natural Gas consumption
26,297
1.44%
1.11
0.30%
Diesel (fuel for vans)
102,393
5.62%
22.98
6.19%
Scope 2 Energy
Electricity Purchases
1,693,664
92.94%
347.13
93.51%
1,822,354
100%
371.22
100%
Scope 1
128,690
7.06%
24.09
6.49%
Scope 2
1,693,664
92.94%
347.13
93.51%
1,822,354
100%
371.22
100%
Our energy consumption per million pounds gross turnover was 79,212kWh and the CO2 emissions were
16,140kg per million pounds.
Our electricity and gas consumption has been calculated based upon kWh metered and invoiced supplies in all
instances.
VELOCITY COMPOSITES PLC (GROUP)
Strategic Report | Sustainability Report
25
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 Group. Details of the
Group’s compliance with the
ten principles of the Code are
set out below
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 OEMs, and
pioneers of renewable energy
applications. There has been a
step-change in the use of carbon
fibre in aircraft as manufacturers
look to reduce aircraft weight
and improve their efficiency to
deliver greater sustainability.
By using Velocity’s proprietary
technology, 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.
The core focus has predominantly
been in the aerospace industry
and the customer arrangements
are almost exclusively based on
long-term contracts, typically for
a 3-to-5-year period. The Group’s
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.
2. Seek to understand
and meet shareholder
needs and expectations
Under the current Board
structure, Velocity engages
in regular dialogue with its
shareholders through a structured
Investor Relations programme.
The Group 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
Group’s website (www.velocity-
composites.com).
The Board offers to meet with
those institutional and major
Statement of Corporate Governance
Governance | Statement of Corporate Governance
26
private investors that wish to do so
at least twice a year following the
announcement of results. 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.
Engagement with other key
shareholders is also welcomed,
with the Directors and other
executives meeting 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
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:
Dedicated staff in the businesses
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 the needs of its
customers are fully understood so
that the Group is 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
Velocity is an equal opportunity
employer regardless of race,
religion, gender, age, disability,
sexual orientation, gender
reassignment, marriage and civil
partnership and pregnancy and
maternity. Employees are kept
up to date with the performance
of the business through periodic
briefings whilst all members of
staff are encouraged to participate
in the annual engagement survey
and the feedback acted upon.
Industry Bodies
Velocity is a member of industry
bodies such as North West
Aerospace Alliance (‘NWAA’)
and the National Aerospace and
Defence Contractors (‘NADCAP’)
which are influential in how the
Group is perceived by clients.
Community
The Group actively participates
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.
We are firm believers in supporting
the local economies in which we
operate and therefore always look
to employ local people, having
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.
4. Embed effective risk
management, considering
both opportunities and threats,
throughout the organisation
The Board recognises that it has
overall responsibility for ensuring
the Group has in place a system
of internal control that allows
it to manage risk accordingly.
The system does not prevent
the Group from considering
opportunities for growth but
takes a balanced approach,
safeguarding the assets of
the business and providing
reasonable assurance regarding
compliance with laws and
regulations. The system of internal
control is therefore designed to
manage rather than eliminate the
risk and is prevalent across all
areas of the business.
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. Some of the key internal
controls in place include the
following:
Governance | Statement of Corporate Governance
27
• An ongoing assessment to
identify, evaluate and manage
business risks;
• A Management structure with
clearly defined responsibilities
and authority limits;
• A comprehensive process of
reporting financial results to the
Board;
• An Audit Committee that
reviews the effectiveness of
the Group’s risk management
process and recommends
any new significant risks
are referred to the Board for
consideration;
• Full appraisals and appropriate
levels of authorisation of new
contracts entered into, whether
these be sales contracts,
contracts related to research
and development, operating or
capital expenditure;
• Dual signatories on all bank
accounts to safeguard the
assets of the business.
5. Maintain the Board as a
well-functioning, balanced
team led by the chair
At the date of this report the
Board comprises the Chairman,
Chief Executive Officer, Chief
Financial Officer and two Non-
Executive Directors.
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, Chief Commercial
& Supply Chain Officer report,
Chief Programmes Officer report,
Chief Financial Officer report and
the management accounts. This
enables the Board to discharge
its duties with all Directors
receiving appropriate and timely
information and with briefing
papers circulated to all Directors
in advance of the meetings.
There are three formal
Board committees that meet
independently of Board meetings
and one additional Executive
management committee:
Audit Committee
The Audit Committee currently
has three members, Andrew
Beaden (Chair), David Bailey
and Annette Rothwell. The Chief
Financial Officer and external
auditor 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 three members, Annette
Rothwell (Chair), Andrew
Beaden and David Bailey.
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
three members, Andrew Beaden
(Chair), Annette Rothwell and
David Bailey. The Nomination
Committee meets as required
and is responsible for proposing
candidates for appointment to the
Board, as well as advising on the
structure and composition of the
Board and succession planning.
Executive Committee
The Executive Committee
handles the implementation of
the Group strategy on behalf
of the Board. The Committee
comprises of five 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.
Governance | Statement of Corporate Governance
28
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
pages 30 to 31 of this report.
7. Evaluate board performance
based upon clear and
relevant objectives, seeking
continuous improvement
Whilst the restrictions imposed
by the Covid-19 pandemic have
been lifted and the focus of the
Board returns to delivering growth
for Velocity, the Board also
recognises that some of the key
challenges and practices entered
into during the pandemic (for
example, cash flow forecasting)
remain the same. With this in
mind, the new and existing
Board members have been set
objectives that are relevant to
the Group’s current position
and performance against these
objectives will be monitored as
the year progresses.
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
on a timely basis, 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
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
Board
Meetings
Andrew
Beaden
Chair
Member
Chair
Jonathan
Bridges
N/a
N/a
N/a
Rob
Smith
N/a
N/a
N/a
Annette
Rothwell
Member
Chair
Member
David
Bailey
Member
Member
Member
Audit
Committee
Remuneration
Committee
Nomination
Committee
No Meetings in Year
Andrew Beaden
Jonathan Bridges
Rob Smith*
Annette Rothwell
David Bailey
Committee
Audit
Remuneration
Nominations
10
10
10
3
10
9
4
4
N/a
N/a
4
4
2
2
N/a
N/a
2
2
2
2
N/a
N/a
2
2
* appointed 3 June 2024
N/a - indicates that a director was not a member of a particular committee
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.
Non-members are invited to attend committees as appropriate.
29
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 also
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 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 Group are set out
on the 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. The Board has formal
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 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 ‘Reports and
Presentations’ section. They also
meet regularly with the Group’s
Nomad/brokers and discuss any
shareholder feedback, following
which, 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 are communicated to
shareholders via RNS and on the
Group’s website.
Andrew Beaden
Chairman
28 January 2025
Governance | Statement of Corporate Governance
30
Andrew Beaden – Chairman
Andrew was appointed Non-
Executive Chairman of Velocity
in July 2019. From 2011 to 2017,
Andrew 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. Andrew is a co-
founder and Chairman of IN4.0
Group Limited, a digital training
Company, encouraging business
growth and skills development
through the use of Industry 4.0
technologies.
Andrew is a Fellow 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).
Andrew is the current Chair of the
Audit Committee.
Jonathan Bridges –
Chief Executive Officer
Jonathan co-founded Velocity
Composites in October 2007.
Jonathan has over 32 years’
experience within the advanced
composites industry and is
an experienced composite
engineer. Previously, Jonathan
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 Jonathan
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. Jonathan
was re-appointed to the Board
as an Executive Director in July
2019.
Jonathan has a BSc in Materials
Science from Coventry University
and is a Director of the North
West Aerospace Alliance.
(L-R) Jonathan Bridges, Annette Rothwell,
Andrew Beaden, Rob Smith & David Bailey
Board of Directors
Governance | Board of Directors
31
Annette Rothwell –
Independent Non-executive
Director
Annette joined Velocity in March
2022 as a Non-Executive Director
and is Chair of the Remuneration
Committee. Annette has
extensive experience in industries
undergoing transformational
change. Annette is a proven
executive leader in General
Management, Procurement
and Supply Chain, Operational
Excellence (CI) and Project
Management working with senior
stakeholders including regional
and national government.
Since 2006, Annette has served
in executive roles supporting
CEOs within a number of global
companies including FTSE100
listed Aerospace & Defence
companies. Annette has
experience in and around supply
chains and has been responsible
for procurement and supply chain
activity, operational improvement
across multiple companies and
multiple cultures. Since 2011,
Annette has served as a director
on the board of the Midlands
Aerospace Alliance, the regional
body for the Aerospace, Defence
and Security industry.
David Bailey - Independent
Non-executive Director
Joining as a Non-executive
Director in June 2022, David is
an experienced executive with
extensive management and
technical expertise developed
across the aerospace and power
generation industries. He has
contributed to the strategic
direction of the UK’s aerospace
industry and cross-sector
composites sector as a Board
member of the Aerospace Growth
Partnership and Composites
Leadership Forum. He is a
renowned aerospace supply
chain specialist and has worked
with the senior management
teams of over 100 aerospace and
defence suppliers.
Since February 2020, David has
been the CEO of Composites UK,
the trade association for the UK
composites industry with over
360 member companies. David
formed Aerospace Consulting
Limited in February 2020 to
specialise in developing and
delivering high-level consultancy
projects in the aerospace
industry. Prior to establishing
Aerospace Consulting, David
was Chief Executive of the North
West Aerospace Alliance (NWAA),
the regional trade association
for the aerospace and defence
industry in the North West of
England between 2005 and 2020.
The NWAA is one of the largest
aerospace clusters in the world,
representing over 240 aerospace
member companies (including
organisations such as Airbus,
BAE Systems, Brookhouse
Aerospace, MBDA Missile
Systems, Rolls-Royce, Safran,
Senior Aerospace and Teledyne
CML Composites).
David has a PhD in Gas
Turbine Aerodynamics and
an Aeronautical Engineering
degree both from Loughborough
University. David was made a
Fellow of the Royal Aeronautical
Society for services to the North
West’s Aerospace Industry in
2017.
Rob Smith – Chief Financial
Officer and Company
Secretary appointed 3 June
2024
Rob is a chartered management
accountant with significant
experience in leadership roles
in a number of AIM quoted
technology companies, where
he has been instrumental in
leading growth strategies and
improving operational efficiencies.
Rob has a proven track record
in advanced manufacturing
at both CFO and CEO level,
including manufacturing systems
implementation and international
commercial leadership. Most
recently Rob served as Group
CFO at Biome Technologies plc
and prior to that, in the CFO and
CEO roles at Filtronic plc between
2014 and 2020, an electronics
designer and manufacturer of
advanced filters, antennas and
transceivers.
Rob was Finance Director of APC
Technology Group, a specialist
distributor and manufacturer
of electronic components and
semiconductor products with
a focus on green technology
industries between 2010 and
2014.
Governance | Board of Directors
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 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 13 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.
Kevin re-joined the Company
in July 2023. He was previously
the Site Leader for the Velocity
Composites Fareham Facility from
January 2017 to December 2020.
Kevin has over 40 years’
experience in the Aerospace
sector, a degree in Business
Management and held senior
management position within
Operations, Engineering, Quality
and Sourcing. He is currently
responsible for the harmonising
of all our facilities worldwide
ensuring Velocity Composites
maximise their effectiveness in the
supply chain.
Matthew Archer | Chief Commercial and Compliance Officer
James Eastbury | Chief Customer Officer
Kevin Hickey | Chief Operations Officer
Executive Team
32
Governance | Executive Team
Senior Management Team
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.
Lee Joined in December 2023
as Manufacturing Manager and
brings with him over 19 years of
management experience within
the composites industry delivering
strong leadership, process
improvement, high quality, and
operational excellence.
Previous positions have provided
the opportunity to hone skills
in project management; staff
development; training; health
& safety; Quality management
systems; reducing costs; adhering
to procedures; customer service;
problem-solving; relationship
management.
Paul joined the Company in
September 2023. Paul has over 39
years’ experience in the Aerospace
industry. Previously he has been
involved in the manufacturing
process for the following projects
Boeing 737, Dash 8, A350
Wing Panels & Hawk Canopy/
Windscreen.
Paul oversees the Safety,
Quality, Cost, Delivery & People
management system in Fareham,
striving to meet Metric/KPI targets
set.
Amy joined Velocity in October
2022, bringing with her over 7
years’ experience from varied roles
in HR. Amy has previously worked
in many industries including the
Educational, Health and Social
Care and Manufacturing sectors,
responsible for leading and
directing all aspects of the Human
Resource function.
Amy has a CIPD Level 5 Diploma in
HR Management and is a member
of the CIPD association.
Sheldon Atherton | Head of Technology and Quality Systems
Lee Berry | Manufacturing Manager
Paul Britton | Manufacturing Manager (Fareham)
Amy Heap – HR Specialist
33
Governance | Senior Management Team
Katie joined Velocity in August
2020. Katie has 20 years’
experience in Finance beginning
her career at a top 10 international
firm and going on to work in
a number of large retail and
manufacturing businesses, Katie
has previous plc experience.
Katie is responsible for the
management of the finance
team, preparation of the financial
information working alongside the
Chief Financial Officer to complete
the Statutory and regulatory
reporting for the business and
a key contact for internal and
external stakeholders.
Daniel joined Velocity in 2018
and has nearly a decade of
experience operating within
high-level composite supply
chains. Daniel began his career
completing a planning and
supply apprenticeship at Gurit,
a distinguished manufacturer
and global supplier of advanced
composite materials.
Leading the global Planning
and Supply Chain Team, Daniel
is responsible for managing
sustained customer interface and
demand, and the business’s global
supply base, with responsibilities
including both indirect and direct
procurement activities across
all three Velocity sites, ensuring
operational enablement and
adherence to agreed contractual
requirements.
Max joined Velocity in 2021 as
a Customer Project Engineer at
the Fareham facility. Previously
experienced in aircraft fuel
systems, Velocity was his first
exposure to composites.
Max leads the customer projects
half of Velocity’s engineering
function. Responsible for
engineering processes needed to
transfer work into Velocity such
as data handling and FAI. Max
is excited to be part of such a
crucial time for Velocity’s growth
and is keen to put the engineering
department at the leading edge of
this growth.
Shoaib joined Velocity in April
2023, bringing with him years
of experience in finance across
engineering & manufacturing
industries, with a key focus
on commercial development
& implementation. Shoaib
previously worked as the Group
Financial Controller at National
Floorcoverings, where he was
responsible for developing
and executing key business
strategies for both the short
and long term while improving
margin performance across the
group. He is responsible for the
financial planning & analysis to
drive operational efficiencies and
navigate the business through the
growth while achieving forecasted
budgets, in addition to meeting
stakeholder expectations.
Shoaib is a Member of the
Association of Chartered Certified
Accountants (ACCA)
Katie Kininmonth | Finance Manager
Daniel McNamara | Planning & Supply Chain Manager
Max Page | Engineering Manager
Shoaib Tahir | Commercial Finance Manager
Senior Management Team
34
Governance | Senior Management Team
Matthew joined Velocity soon after
its launch back in 2008 and has
been involved extensively in the
creation of the business. Matthew
has an extensive knowledge of
composites and processes, and he
has helped build the engineering
team as well as the R&D strategy for
the business, including the Digital
Manufacturing Cell and associated
software.
Prior to Velocity Matthew worked
for Aerovac as Production
Manager, specialising in the
design, costing and technical
engineering of reusable vacuum
bagging equipment used to
manufacture a myriad of different
composites structures, from F1
chassis structures to A220 Wing
Stringers and Spars. Matthew has
over 26 years’ experience of the
composites Industry and currently
holds the position of Manufacturing
Engineering Manager working
closely with the New Business and
Operations teams to install new
projects and deliver continuous
improvement to both new and
existing programmes.
Byeong joined Velocity in
September 2022 as the first US
subsidiary employee originally as an
Engineer.
Byeong has been awarded the US
Site Lead position through strong
mentorship and dedication. He is
currently working alongside the
Chief Operations Officer to establish
a strong team and build out the
facility.
Matthew Fisher | Manufacturing Engineering Manager
Byeong Kim | US Subsidiary Site Lead
Senior Management Team
35
Governance | Senior Management Team
36
The directors present their
report and the audited financial
statements for the year ended
31 October 2024.
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 pages 12 to 14 and is pleased
with the progress made in the
past year.
Financial risk management
Details of the Board’s approach to
financial risk management can be
found in the principal risks review
on pages 15 to 20.
Capital structure
Details of the Company’s share
capital, together with details of the
movements, are set out in note
23 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
£372,000 (2023: £833,000) in-
line with the Group’s accounting
policy.
Dividends
There were no dividends
proposed or paid in the year
(2023: £Nil).
Political donations
No political donations were made
during the year (2023: £Nil).
Basis of preparation of the
financial statements
The consolidated financial
statements of Velocity
Composites plc have been
prepared in accordance with UK-
adopted international accounting
standards and International
Financial Reporting Interpretations
Committee (IFRIC). Further details
are provided in note 2 to the
financial statements.
Directors’ Report
Governance | Directors’ Report
37
Going concern
The financial statements have
been prepared on a going
concern basis as the directors
believe that the Group has access
to sufficient resources to continue
in business for the foreseeable
future.
The key business risks and
conditions that may impact
the Group’s ability to continue
as a going concern are the
utilisation of existing resources to
finance growth, investment and
expenditure; the rates of growth
and cash generated by Group
revenues, the timing of breakeven
and positive cashflow generation
and the ability to secure additional
debt or equity financing in future
if this became necessary. The
primary area of judgement that
the Board considered, in the
going concern assessment,
related to revenue expectations
and visibility.
The Board was mindful of the
guidance surrounding a severe
but plausible assessment and,
accordingly, considered a
number of scenarios in revenue
reduction against the original
plans. A reverse stress test was
constructed to identify at which
point the Group might run out
of its available cash. The test
was designed specifically to
understand how far revenue
would need to fall short of the
base case forecast and does
not represent the directors
view on current and projected
trading. The test was modelled
over an 18-month period from
the date of signing the accounts
and was based on budgeted
trading that took into account
contracted orderbook and
existing revenue streams from
current and contracted customer
programmes.
The sales revenue in the
budgeted model was reduced
evenly across the Group to the
point where the projected month-
end cash was equal to zero at
any point during test period. In
the model, zero month-end cash
was reached in March 2026
when projected sales revenue
was reduced to 80.6% of budget.
For the reverse stress test, the
Board specifically excluded
any significant upsides to this
scenario. This is despite strong
incremental demand potential at
both existing and new customers.
This most severe scenario also
excludes any mitigating reduction
in the cost base that the Board
would clearly undertake in this
event.
In all scenarios modelled,
including the reverse stress
test, the Group has sufficient
resources to operate and meet
its liabilities throughout the going
concern review period without
the inclusion of the impact of
mitigating actions.
%
Shareholding
At
31 October
2024
Directors
The Directors who held office during the year and up to the date of this
report, along with their direct interest in the shares of the Company at 31
October 2024 were as follows:
Jonathan Karl Bridges
Andrew Beaden
Annette Rothwell
David Bailey
Rob Smith
5,515,929 3
680,975 4
-
-
40,000
3 Includes 1,500,000 shares in the name of Mrs E Bridges
4 Includes 50,000 shares in the name of Mrs S Beaden
10.31%
1.27%
-
-
0.07%
The table above does not include shares held under options, via the Company’s employee share option arrangements,
which include share options under a salary sacrifice plan, were Director’s and senior management swap part of their
base salaries for an equity interest in the Company.
Total shares held under these plans for Directors was 421,443 shares as at 31 October 2024.
Governance | Directors’ Report
38
At 31 October 2024, the Group
had a gross cash balance of
£1.7m, a CBIL loan balance of
£1.0m and undrawn availability of
£1.5m under invoice discounting
facilities of £3.0m. As at 24
January 2025 had a gross cash
balance of £1.6m, a CBIL loan
balance of £0.8m and undrawn
availability of £1.3m under invoice
discounting facilities of £3.0m. On
a base case scenario adopted
for their assessment, the Board
is comfortable that the Group
can continue its operations for at
least a 12-month period following
the approval of these financial
statements.
As a result of this review, which
incorporated sensitivities and risk
analysis, the Directors believe
that the Group has sufficient
resources and working capital
to meet their present and
foreseeable obligations for a
period of at least 12 months from
the approval of these financial
statements.
Indemnification of Directors
The Group provides Directors
and Officers Insurance cover and
is contractually committed to
provide cover.
Corporate governance
The Statement of Corporate
Governance on pages 25 to 29
sets out the Group’s approach to
good corporate governance.
Number of
Ordinary
Shares
% of Issued
Share Capital
Amati Global Investors
5,650,294
10.56%
Seneca Partners
4,519,236
8.45%
Stonehage Fleming
4,458,956
8.33%
Christopher Banks
4,252,693
7.95%
Gerry Johnson
4,200,000
7.85%
Rathbones
2,915,341
5.45%
Substantial shareholdings
At 31 October 2024, 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:
Governance | Directors’ Report
39
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 Group
and parent Company financial
statements for each financial
year. Under that law the directors
have prepared the financial
statements in accordance with
International Financial Reporting
Standards (“IFRS”) as adopted by
the UK (UK-adopted international
accounting standards) and
applicable law. 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 Group
and parent Company and of
their profit or loss for that year.
In preparing each of the group
and parent company financial
statements, the directors are
required to:
• select suitable accounting
policies and then apply them
consistently;
• make judgements and
accounting estimates that are
reasonable and prudent;
• state whether applicable
accounting standards have
been followed, subject to any
material departures disclosed
and explained in the Group
and parent Company financial
statements; and
• prepare the financial
statements on the going
concern basis unless it is
inappropriate to presume
that the group and parent
company will continue in
business.
The directors are responsible for
keeping adequate accounting
records that are sufficient to show
and explain the parent company’s
transactions and disclose with
reasonable accuracy at any
time the financial position of the
parent Company and enable
them to ensure that the financial
statements and the Director’s
Remuneration Report comply
with the Companies Act 2006.
The directors are also responsible
for safeguarding the assets of the
Group and parent Company and
hence for taking reasonable steps
for the prevention and detection
of fraud and other irregularities.
The Directors are responsible
for ensuring the Annual Report
and the Financial Statements
are made available on a website.
Financial statements are
published on the Company’s
website in accordance with
legislation in the United Kingdom
governing the preparation
and dissemination of financial
statements, which may vary from
legislation in other jurisdictions.
The maintenance and integrity
of the Company’s website is the
responsibility of the Directors.
The Directors’ responsibility also
extends to the ongoing integrity of
the financial statements contained
therein.
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
Cooper Parry Group Limited,
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 28 January
2025 and signed on its behalf by:
Rob Smith
Company Secretary
28 January 2025
Governance | Directors’ Report
40
This report covers the financial
year ended 31 October 2024.
The Director’s remuneration
report sets out the key points
of the remuneration process
for the Group, as well as any
rationale 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
The Remuneration Committee
has three members, Annette
Rothwell (Chair), Andrew Beaden
and David Bailey. 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.
Executive Directors
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 shareholders.
To design a balanced package
for the Executive Directors
and senior 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. Incentivisation
through equity ownership is
encouraged to further align
Directors to shareholders and the
success of the Company.
Directors’ Remuneration Report
Governance | Directors’ Remuneration Report
41
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 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.
Basic salary can be paid in cash
and equity instruments equal at
the start of a year to the cash
equivalent.
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 with
shareholders, with those of the
individuals tasked with delivering
the Group’s strategic aims. These
include financial targets around
profitability, and strategic targets
around profitable growth and
business development.
Share options are also used
where Directors and Executive
Members have agreed to take
part of their basic salary in equity.
For several years qualifying staff
have taken 20% of their basic
salary in equity alternatives. In
January and March 2022, options
were granted to certain Non-
Executive Directors and members
of the Senior Management team.
A total of 0.5m options were
issued. In March 2023 0.8m
options were granted. In January
2024 a further 0.4m options were
granted.
Non-executive Directors
The salary of the Chairman is
determined by the Board and
the fees 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. 20% of the Non-
Executive Directors pay has been
in the form of equity instruments
since 2020.
Year ended
30 October
2023
£’000
Year ended
31 October
2024
£’000
Benefit
in kind
£’000
Pension
£’000
Cash paid
salary 5
£’000
Executive
Jonathan Bridges 6
Rob Smith (appointed 3 Jun 2024)
Chris Williams (resigned 7 Dec 2022)
Adam Holden (resigned 23 Aug 2023)
Non-Executive
Andrew Beaden
Annette Rothwell
David Bailey
Total
215
73
-
-
68
29
29
414
-
4
-
-
-
-
-
4
19
6
-
-
2
-
-
27
196
63
-
-
66
29
29
383
202
-
65
101
101
28
29
526
Directors’ emoluments
Directors’ emoluments for the year ended 31 October 2024 (or period of service) are summarised below:
5 Non executive cash paid salaries above represent 80% of each individuals’ basic salary for the year. the additional 20% was serviced through
equity awards, via share options valued at the start of each year or on appointment and to be of equivalent value to the 20% cash amounts
sacrificed.
6 Jonathan Bridges’ salary includes £65,000 payment of deferred salary from prior years.
Governance | Directors’ Remuneration Report
42
Adam
Holden
No.
Annette
Rothwell
No.
David
Bailey
No.
Jonathan
Bridges
No.
Andrew
Beaden
No.
Chris
Williams
No
At 31 October 2022
Issued
Exercised
Lapsed
At 31 October 2023
Issued
Exercised
At 31 October 2024
Comprising shares that have:
Vested
Not vested
20,940
37,867
-
-
58,807
37,867
-
96,674
58,807
37,867
96,674
-
107,733
-
(107,733)
-
-
-
-
-
-
-
76,235
86,400
-
-
162,635
86,400
-
249,035
162,635
86,400
249,035
375,797
-
(250,797)
(125,000)
-
-
-
-
-
-
-
-
37,867
-
-
37,867
37,867
-
75,734
37,867
37,867
75,734
-
-
-
-
-
200,000
-
200,000
-
200,000
200,000
Share options
The following table sets out the share option movements for each of the current Directors during the two years
ended 31 October 2024. The 162,134 options issued in FY 2024 and again in FY 2023, relate to the Company’s
salary sacrifice plan, where senior staff can swap up to 20% of their base salary for a similar valued equity
interest in the Company, these options have any further performance conditions attached and vest subject to
continued employment.
The 200,000 options issues in 2024 these options have attached performance conditions linked to profit after
tax. They vest after two years, or earlier if a vesting event occurs in the rules of the Scheme.
Governance | Directors’ Remuneration Report
Financial Statements | Independent Auditor’s Report
Independent Auditor’s Report
to the Members of Velocity Composites plc
43
44
Financial Statements | Independent Auditor’s Report
Opinion
We have audited the financial
statements of Velocity
Composites plc (the ‘parent
Company’) and its subsidiaries
(the ‘Group’) for the year ended
31 October 2024 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
the related notes to the financial
statements, including a summary
of significant accounting policies.
The financial reporting framework
that has been applied in the
preparation of the group and
parent financial statements is
applicable law and UK adopted
international accounting
standards.
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 2024 and of the
group’s loss for the year then
ended;
•
have been properly prepared
in accordance with UK
adopted international
accounting standards;
•
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 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.
Our approach to the audit
We adopted a risk-based audit
approach. We gained a detailed
understanding of the Group’s
business, the environment it
operates in and the risks it faces.
The key elements of our audit
approach were as follows:
In order to assess the risks
identified, the engagement
team performed an evaluation
of identified components and
to determine the planned audit
responses based on a measure
of materiality, calculated by
considering the significance of
components as a percentage of
the group’s total revenue and loss
before taxation and group’s total
assets.
Independent Auditor’s Report
45
Financial Statements | Independent Auditor’s Report
From this, we determined the
significance of each component
to the group as a whole and
devised our planned audit
response. In order to address
the audit risks described in
the Key audit matters section
which were identified during our
planning process, we performed
a full-scope audit of the financial
statements of the parent
company, Velocity Composites
plc and Velocity Composites
Aerospace Inc. The operations
that were subject to full-scope
audit procedures made up 100%
of consolidated revenues and
100% of consolidated loss before
tax.
Analytical procedures were
undertaken on the remaining
component, using group
materiality.
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 year and include the
most significant assessed risks of
material misstatement (whether
or not due to fraud) we identified,
including those which 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
Risk of fraud in revenue
recognition
Matter
Under International Standard
on Auditing (UK) 240 there is
a presumed risk that revenue
is misstated due to fraud. The
Group recognises revenue to
the extent that it is probable
that economic benefits will flow
to the Group and the revenue
can be reliably measured. There
is relatively little judgement
involved in determining the
timing and value of the amount
to be recognised. We therefore
assess the significant risk to be
specifically with respect to manual
journals posted to revenue.
Response
Our procedures in response to
the risk included:
•
We assessed accounting
policies for consistency and
appropriateness with the
applicable financial reporting
framework and in particular
that revenue was recognised
when performance
obligations were fulfilled. In
addition, we reviewed for the
consistency of application of
the accounting policies
•
We obtained an
understanding of the
processes through which the
business initiates, records,
processes and reports
revenue transactions;
•
We performed walkthroughs
of the processes as set
out by management, to
ensure controls appropriate
to the size and nature of
operations were designed
and implemented correctly
throughout the transaction
cycle;
•
We obtained a complete
listing of journals posted
to revenue nominal codes
and reviewed the listing for
any unexpected entries.
These were then tested to
supporting evidence;
•
We performed cut-
off procedures to test
transactions around the year
end and verified a sample
of revenue to originating
documentation to provide
evidence that transactions
were recorded in the correct
year;
•
We performed transactional
revenue testing to confirm the
completeness of revenue and
to confirm revenue has been
recognised in accordance
with the accounting policies
and performance obligations
have been met;
•
We reviewed a listing of
post year end credit notes
to verify that revenue has
been recorded in the correct
accounting year.
Our procedures did not identify
any material misstatements in the
revenue recognised during the
year.
Our application of materiality
We apply the concept of
materiality in planning and
performing our audit, in
determining the nature, timing and
extent of our audit procedures,
in evaluating the effect of any
identified misstatements, and in
forming our audit opinion.
The materiality for the group
financial statements as a whole
was set at £345,000. This has
46
Financial Statements | Independent Auditor’s Report
been determined with reference
to the benchmark of the group’s
revenue which we consider to
be an appropriate measure for
a group of companies such as
these. Materiality represents 1.5%
of group revenue. Performance
materiality has been set at 80% of
group materiality.
The materiality for the parent
company financial statements
as a whole was set at £226,000.
This has been determined with
reference to the benchmark of the
parent company’s revenue which
we consider to be an appropriate
measure for a parent company
such as this. Materiality has
been capped to 90% of group
materiality.
Conclusions relating to going
concern
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.
Our evaluation of the directors’
assessment of the entity’s ability
to continue to adopt the going
concern basis of accounting
included:
•
Reviewing management’s
cash flow forecasts for a
period of at least 12 months
from the date of approval of
these financial statements;
•
Challenging management on
key assumptions included in
their forecast scenarios;
•
Considering the potential
impact of various scenarios
on the forecasts;
•
Reviewing results post year
end to the date of approval
of these financial statements
and assessing them against
original budgets;
•
Reviewing management’s
forecasting accuracy through
reviewing the prior year
budgets compared to actuals;
and
•
Reviewing management’s
disclosures in the financial
statements.
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 ability to continue as a
going concern for a period of at
least twelve months from when
the financial statements are
authorised for issue.
Our responsibilities and the
responsibilities of the directors
with respect to going concern are
described in the relevant sections
of this report.
Other information
The other information comprises
the information included in the
annual report, other than the
financial statements and our
auditor’s report thereon. The
directors are responsible for the
other information included in the
annual report. 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. 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.
Opinions on other matters
prescribed by the Companies
Act 2006
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.
47
Financial Statements | Independent Auditor’s Report
Matters on which we
are required to report by
exception
In the light of the knowledge and
understanding of the group and
the parent company and their
environment obtained in the
course of the audit, we have not
identified material misstatements
in the strategic report or the
directors’ report.
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, 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.
Responsibilities of directors
As explained more fully in
the directors’ responsibilities
statement set out on page 39,
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.
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. The extent to which our
procedures are capable of
detecting irregularities, including
fraud is detailed below:
Our assessment focused on
key laws and regulations the
company has to comply with
and areas of the financial
statements we assessed as
being more susceptible to
misstatement. These key laws
and regulations included but were
not limited to compliance with
the Companies Act 2006, UK
adopted international accounting
standards and relevant tax
legislation.
We are not responsible for
preventing irregularities and
cannot be expected to detect
non-compliance with all laws
and regulations. Our approach to
detecting irregularities included,
but was not limited to, the
following:
•
Obtaining an understanding
of the legal and regulatory
framework applicable to
the entity and how the
entity is complying with that
framework;
•
Obtaining an understanding
of the entity’s policies and
procedures and how the
entity has complied with
these, through discussions;
•
Obtaining an understanding
of the entity’s risk assessment
process, including the risk of
fraud;
•
Designing our audit
procedures to respond to our
risk assessment; and
48
Financial Statements | Independent Auditor’s Report
•
Performing audit testing
over the risk of management
override of controls, including
testing of journal entries
and other adjustments for
appropriateness, evaluating
the business rationale of
significant transactions
outside the normal course
of business and reviewing
accounting estimates for
bias specifically in relation to
inventory provisions.
Whilst considering how our audit
work addressed the detection of
irregularities, we also consider
the likelihood of detection based
on our approach. Irregularities
arising from fraud are inherently
more difficult to detect than those
arising from error.
Because of the inherent
limitations of an audit, there is
a risk that we will not detect all
irregularities, including those
leading to a material misstatement
in the financial statements or
non-compliance with regulation.
This risk increases the more that
compliance with law or regulation
is removed from the events and
transactions reflected in the
financial statements, as we will
be less likely to become aware of
non-compliance. The risk is also
greater regarding irregularities
occurring due to fraud rather than
error, as fraud involves intentional
concealment, forgery, collusion,
omission or misrepresentation.
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.
Use of our report
This report is made solely to the
parent 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 parent
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 parent company and
the parent company’s members
as a body, for our audit work, for
this report, or for the opinions we
have formed.
Melanie Hopwell (Senior
Statutory Auditor)
For and on behalf of Cooper
Parry Group Limited
Statutory Auditor
Sky View
Argosy Road
East Midlands Airport
Caste Donington
Derby
DE74 2SA
Date: 28 January 2025
48
49
Financial Statements | Consolidated Statement of Total Comprehensive Income
Consolidated Statement of
Total Comprehensive Income
Year ended
Year ended
31 October
31 October
2024
2023
Note
£’000
£’000
Revenue
4
23,006
16,411
Cost of sales
(17,045)
(13,325)
Gross profit
5,961
3,086
Administrative expenses
(6,978)
(5,783)
Exceptional administrative expenses
8
-
(120)
Other Operating Income
86
-
Operating loss
5
(931)
(2,817)
Operating loss analysed as:
Adjusted EBITDA profit/(loss)
31
374
(1,606)
Depreciation of property, plant and equipment
(382)
(297)
Amortisation
(240)
(116)
Depreciation of right-of-use assets under IFRS 16
(540)
(472)
Share-based payments
(143)
(206)
Exceptional administrative expenses
8
-
(120)
Finance income and expense
9
(413)
(326)
Loss before tax from continuing operations
(1,344)
(3,143)
Corporation tax recoverable
10
499
-
Loss for the year and total comprehensive loss
(845)
(3,143)
Loss per share – basic from continuing operations
11
(1.58p)
(8.18p)
Loss per share - diluted from continuing operations
11
(1.58p)
(8.18p)
The notes on pages 50 to 80 form part of these financial statements.
There is no other comprehensive income in the current or prior year.
The notes on pages 54 - 84 form part of these financial statements.
50
Consolidated and Company
Statement of Financial Position
Group
Group
Company
Company
31 October
31 October
31 October
31 October
2024
2023
2024
2023
Note
£’000
£’000
£’000
£’000
Non-current assets
Intangible assets
12
987
890
340
232
Property, plant and equipment
13
1,854
2,095
551
734
Right-of-use assets
20
1,826
2,129
1,123
1,521
Total non-current assets
4,667
5,114
2,014
2,487
Current assets
Inventories
15
2,500
2,743
1,769
1,493
Trade and other receivables
16
3,977
3,667
6,613
5,913
Cash and cash equivalents
17
1,663
3,178
1,115
3,131
Total current assets
8,140
9,588
9,497
10,537
Total assets
12,807
14,702
11,511
13,024
Current liabilities
Loans
19
503
503
503
503
Trade and other payables
18
3,933
4,587
1,877
1,921
Obligations under lease liabilities
20
561
487
367
344
Total current liabilities
4,997
5,577
2,747
2,768
Non-current liabilities
Loans
19
468
970
468
970
Obligations under lease liabilities
20
1,258
1,587
829
1,196
Provisions
26
218
-
218
-
Total non-current liabilities
1,944
2,557
1,515
2,166
Total liabilities
6,941
8,134
4,262
4,934
Net assets
5,866
6,568
7,249
8,090
Equity attributable to equity holders of the company
Share capital
23
134
133
134
133
Share premium account
24
4,870
4,870
4,870
4,870
Share-based payments reserve
25
517
478
517
478
Retained earnings
345
1,087
1,728
2,609
Total equity
5,866
6,568
7,249
8,090
The notes on pages 50 to 80 form part of these financial statements. The Company has taken advantage of the
exemption allowed under section 408 of the Companies Act 2006 and not presented its own statement of profit and
loss in these financial statements. The loss for the year was £984,000. The financial statements were approved and
authorised for issue by the Board of Directors on 28 January 2025 and were signed on its behalf by:
The notes on pages 54 - 84 form part of these financial statements.
Financial Statements | Consolidated and Company Statement of Financial Position
Rob Smith
Director
Co No: 06389233
51
Consolidated and Company
Statement of Changes in Equity
Share
Share
premium
Retained
Share-
based
payments
Total
capital
account
earnings
reserve
equity
£’000
£’000
£’000
£’000
£’000
As at 31 October 2022
91
9,727
(7,102)
684
3,400
Loss for the year
-
-
(3,143)
-
(3,143)
91
9,727
(10,245)
684
257
Transactions with shareholders:
Share-based payments (note 25)
-
-
-
206
206
Transfer of share option reserve on
vesting of options and issue of equity
-
-
412
(412)
-
Issue of new shares net of
transaction costs
42
6,063
-
-
6,105
Reduction of Share Premium
Account
-
(10,920)
10,920
-
-
As at 31 October 2023
133
4,870
1,087
478
6,568
Share
Share
premium
Retained
Share-
based
payments
Total
capital
account
earnings
reserve
equity
£’000
£’000
£’000
£’000
£’000
As at 31 October 2023
133
4,870
1,087
478
6,568
Loss for the year
-
-
(845)
-
(845)
133
4,870
242
478
5,723
Transactions with shareholders:
Share-based payments (note 25)
-
-
-
143
143
Transfer of share option reserve on
vesting of options and issue of equity
1
-
103
(104)
-
As at 31 October 2024
134
4,870
345
517
5,866
The notes on pages 50 to 80 form part of these financial statements.
The notes on pages 54 - 84 form part of these financial statements.
Financial Statements | Consolidated and Company Statement of Changes in Equity
52
Consolidated and Company
Statement of Changes in Equity
Share
Share
premium
Retained
Share-
based
payments
Total
capital
account
earnings
reserve
equity
£’000
£’000
£’000
£’000
£’000
As at 31 October 2022
91
9,727
(7,076)
684
3,426
Loss for the year
-
-
(1,647)
-
(1,647)
91
9,727
(8,723)
684
1,779
Transactions with shareholders:
Share-based payments (note 25)
-
-
-
206
206
Transfer of share option reserve on
vesting of options and issue of equity
-
-
412
(412)
-
Issue of new shares net of
transaction costs
42
6,063
-
-
6,105
Reduction of Share Premium
Account
-
(10,920)
10,920
-
-
As at 31 October 2023
133
4,870
2,609
478
8,090
Share
Share
premium
Retained
Share-
based
payments
Total
capital
account
earnings
reserve
equity
£’000
£’000
£’000
£’000
£’000
As at 31 October 2023
133
4,870
2,609
478
8,090
Loss for the year
-
-
(984)
-
(984)
133
4,870
1,625
478
7,106
Transactions with shareholders:
Share-based payments (note 25)
-
-
-
143
143
Transfer of share option reserve on
vesting of options and issue of equity
1
-
103
(104)
-
As at 31 October 2024
134
4,870
1,728
517
7,249
The notes on pages 50 to 80 form part of these financial statements.
The notes on pages 54 - 84 form part of these financial statements.
Financial Statements | Consolidated and Company Statement of Changes in Equity
53
Consolidated and Company
Statement of Cash Flows
Group
Group
Company
Company
Year
ended
Year
ended
Year
ended
Year
ended
31 October
31 October
31 October
31 October
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Operating activities
Loss for the year
(845)
(3,143)
(984)
(1,647)
Taxation
(528)
-
(528)
-
Profit on sale of assets
-
(4)
-
(4)
Finance costs
413
326
222
299
Amortisation of intangible assets
240
116
69
53
Depreciation of property, plant and equipment
382
297
192
210
Depreciation of right-of-use assets
540
472
397
391
Share-based payments
143
206
143
206
Operating cash flows before movements in
working capital
345
(1,730)
(489)
(492)
Increase in trade and other receivables
(180)
(1,146)
(570)
(3,344)
Decrease/(Increase) in inventories
243
(1,336)
(276)
(86)
(Decrease)/Increase in trade and other payables
(654)
2,380
(44)
(286)
Increase/(Decrease) in provisions
218
-
218
-
Cash (outflow)/inflow from operations
(28)
(1,832)
(1,161)
(4,208)
Tax received
398
-
398
-
Net cash inflow/(outflow) from operating
activities
370
(1,832)
(763)
(4,208)
Investing activities
Purchase of property, plant and equipment net of
intercompany transfers
(212)
(1,293)
(11)
155
Purchase of development expenditure
(372)
(833)
(177)
(112)
Proceeds from the sale of property, plant and
equipment
-
4
-
4
Net cash used in investing activities
(584)
(2,122)
(188)
47
Financing activities
Proceeds from issue of ordinary shares
-
6,590
-
6,590
Share issue transaction costs
-
(485)
-
(485)
Finance costs paid
(413)
(326)
(218)
(294)
Loan repayment
(502)
(536)
(502)
(536)
Repayment of lease liabilities capital
(497)
(455)
(345)
(320)
Net cash generate in financing activities
(1,412)
4,788
(1,065)
4,955
Net /(Decrease)/Increase in cash and cash
equivalents
(1,626)
834
(2,016)
794
Cash and cash equivalents at 01 November
3,178
2,344
3,131
2,337
Effect of foreign exchange rate changes
111
-
-
-
Cash and cash equivalents at 31 October
1,663
3,178
1,115
3,131
The notes on pages 50 to 80 form part of these financial statements.
The notes on pages 54 - 84 form part of these financial statements.
Financial Statements | Consolidated and Company Statement of Cash Flows
54
Financial Statements | Notes to the Financial Statements
Notes to the Financial Statements
1.
General information
Velocity Composites plc (the ‘Company’) is a public limited company incorporated and domiciled in England
and Wales. The registered office of the Company is AMS Technology Park, Billington Road, Burnley,
Lancashire, BB11 5UB, United Kingdom. The registered company number is 06389233.
In order to prepare for future expansion in the Asia region, the Company established a wholly owned
subsidiary company, Velocity Composites Sendirian Berhad, which is domiciled in Malaysia. The subsidiary
company commenced trading on 18 April 2018. The Company also established a wholly owned subsidiary
company, Velocity Composites Aerospace Inc. to prepare for future expansion in the United States of
America. These subsidiaries, together with Velocity Composites plc, now form the Velocity Composites
Group (‘the Group’).
The Group’s principal activity is that of the sale of kits of composite material and related products to the
aerospace industry.
2.
Accounting policies
Basis of preparation
The consolidated financial statements of Velocity Composites plc have been prepared in accordance with
UK-adopted international accounting standards and International Financial Reporting Interpretations
Committee (IFRIC) interpretations.
These financial statements have been prepared on a going concern basis and using the historical cost
convention, as modified by the revaluation of certain items, as stated in the accounting policies. These
policies have been consistently applied to all years presented, unless otherwise stated. The financial
statements are presented in sterling and have been rounded to the nearest thousand (£’000). References
to “FY24” refer to the year ended 31 October 2024, whilst references to “FY23” are in respect of the year
ended 31 October 2023.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act
2006 and not presented its own statement of profit and loss in these financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its
subsidiary undertakings and are made up to 31 October 2024. Subsidiaries are consolidated from the date
of acquisition, using the purchase method.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting
policies used into line with those used by the Group. The Group’s subsidiaries have prepared their statutory
financial statements in accordance with IFRS standards.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. In assessing control, the Group takes into consideration potential voting
rights. The acquisition date is the date on which control is transferred to the acquirer. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that control
commences until the date that control ceases.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated. Unrealised losses are eliminated in the same way as unrealised gains, but
only to the extent that there is no evidence of impairment.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all years
presented in the consolidated financial statements.
There are no new accounting standards or interpretations that are not yet fully effective that could be
expected to have a material impact on the Group.
55
Financial Statements | Notes to the Financial Statements
2.
Accounting policies (continued)
Going concern
The financial statements have been prepared on a going concern basis as the directors believe that the
Group has access to sufficient resources to continue in business for the foreseeable future.
The key business risks and conditions that may impact the Group’s ability to continue as a going concern
are the utilisation of existing resources to finance growth, investment and expenditure; the rates of growth
and cash generated by Group revenues, the timing of breakeven and positive cashflow generation and the
ability to secure additional debt or equity financing in future if this became necessary. The primary area of
judgement that the Board considered, in the going concern assessment, related to revenue expectations
and visibility.
The Board was mindful of the guidance surrounding a severe but plausible assessment and, accordingly,
considered a number of scenarios in revenue reduction against the original plans. A reverse stress test
was constructed to identify at which point the Group might run out of its available cash. The test was
designed specifically to understand how far revenue would need to fall short of the base case forecast and
does not represent the directors view on current and projected trading. The test was modelled over an 18-
month period from the date of signing the accounts and was based on budgeted trading that took into
account contracted orderbook and existing revenue streams from current and contracted customer
programmes.
The sales revenue in the budgeted model was reduced evenly across the Group to the point where the
projected month-end cash was equal to zero at any point during test period. In the model, zero month-end
cash was reached in March 2026 when projected sales revenue was reduced to 80.6% of budget. For the
reverse stress test, the Board specifically excluded any significant upsides to this scenario. This is despite
strong incremental demand potential at both existing and new customers. This most severe scenario also
excludes any mitigating reduction in the cost base that the Board would clearly undertake in this event.
In all scenarios modelled, including the reverse stress test, the Group has sufficient resources to operate
and meet its liabilities throughout the going concern review period without the inclusion of the impact of
mitigating actions.
At 31 October 2024, the Group had a gross cash balance of £1.7m, a CBIL loan balance of £1.0m and
undrawn availability of £1.5m under invoice discounting facilities of £3.0m. As at 24 January 2025 had a
gross cash balance of £1.6m, a CBIL loan balance of £0.8m and undrawn availability of £1.3m under
invoice discounting facilities of £3.0m. On a base case scenario adopted for their assessment, the Board
is comfortable that the Group can continue its operations for at least a 12-month period following the
approval of these financial statements.
As a result of this review, which incorporated sensitivities and risk analysis, the Directors believe that the
Group has sufficient resources and working capital to meet their present and foreseeable obligations for a
period of at least 12 months from the approval of these financial statements.
56
Financial Statements | Notes to the Financial Statements
2.
Accounting policies (continued)
Revenue recognition
Revenue is recognised as performance obligations are satisfied as control of the goods and services are
transferred to the customer. Contracts are satisfied over a period of time, with the dispatch of goods at a
point in time. Revenue is therefore recognised when control is transferred to the customer, which is usually
when legal title passes to the customer and the business has the right to payment, for example, on delivery.
The Group generates revenue from the sale of structural and consumable materials for use within the
aerospace industry. This is the sole revenue stream of the Group.
At contract inception (which is upon receipt of a purchase order from a customer), an assessment is
completed to identify the performance obligations in each contract. Performance obligations in a contract
are the goods that are distinct.
At contract inception, the transaction price is determined, being the amount that the Group expects to
receive for transferring the promised goods – this is a fixed price with no variable consideration. The
transaction price is allocated to the performance obligations in the contract based on their relative
standalone selling prices – this reflects the agreed price as per purchase order for each product. The Group
has determined that the contractually stated price represents the standalone selling price for each
performance obligation.
Revenue from sale of goods and services is recognised when a performance obligation has been satisfied
by transferring the promised product to the customer at a point in time, usually when legal title passes to
the customer and the business has the right to payment, for example, on delivery. Standard payment terms
are in place for each customer.
Inventory
Inventory is stated at the lower of costs incurred in bringing each product to its present location and
condition compared to net realisable value as follows:
Raw materials, consumables and goods for resale – purchase cost on a first-in/first-out basis.
Work in progress and finished goods – costs of direct materials and labour plus attributable
overheads based on a normal level of activity.
Net realisable value is based on an estimated selling price less any further costs expected to be incurred
for completion and disposal.
Expenditure
Expenditure is recognised in respect of goods and services received when supplied in accordance with
contractual terms. Goods or services supplied in a foreign currency are recognised at the exchange rate
ruling at the time of accounting for this expenditure.
Provisions
A provision is made when an obligation exists for a future liability relating to a past event and where the
amount of the obligation can be reliably estimated.
Retirement benefits: defined contribution schemes
Contributions to defined contribution pension schemes are charged to the statement of comprehensive
income in the year to which they relate.
Short-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave
and sick leave in the year the related service is rendered at the undiscounted amount of the benefits
expected to be paid in exchange for that service.
57
Financial Statements | Notes to the Financial Statements
2.
Accounting policies (continued)
Research and development expenditure
Research expenditure - expenditure on research activities is recognised as an expense in the year in which
it is incurred.
Development expenditure - An internally generated intangible asset arising from the Group’s own
development activity is recognised only if all of the following conditions are met:
an asset is created that can be identified and is technically and commercially feasible;
it is probable that the asset created will generate future economic benefits and the Group has
available sufficient resources to complete the development and to subsequently sell and/or use the
asset created; and
the development cost of the asset can be measured reliably.
The amount recognised for development expenditure is the sum of all incurred expenditure from the date
when the intangible asset first meets the recognition criteria listed above. This occurs when future sales
are expected to flow from the work performed. Incurred expenditure largely relates to internal staff costs
incurred by the Group.
Subsequent to initial recognition, internally generated intangible assets are reported at cost less
accumulated amortisation and impairment.
Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using
the straight-line method over their estimated useful lives and is generally recognised in the statement of
total comprehensive income. The estimated useful lives are based on the average life of a project as
follows:
Development costs
5 years
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost
includes directly attributable costs.
Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value
over the expected useful economic lives. It is provided at the following methods and rates:
Land and buildings (right-of-use)
Over the term of the lease
Plant and machinery
15% straight line
Motor vehicles
25% straight line
Fixtures and fittings
15% straight line
Leasehold improvements
Over the term of the lease
Foreign currency translation
Items included in the financial statements of each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity operates (‘its functional currency’). The
consolidated financial statements are presented in sterling, which is Velocity Composites plc’s functional
and presentation currency.
58
Financial Statements | Notes to the Financial Statements
2.
Accounting policies (continued)
Foreign currency translation (continued)
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 statement of financial position presented are translated at the closing
rate at the date of the statement of financial position;
income and expenses for each statement of profit or loss and statement of comprehensive income
are translated at average exchange rates; and
all resulting exchange differences are recognised immediately in the Consolidated comprehensive
statement of income.
Impairment of non-financial assets
The carrying values of non-financial assets are reviewed for impairment when there is an indication that
assets might be impaired, and at the end of each reporting year. When the carrying value of an asset
exceeds its recoverable amount, the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is
carried out on the asset’s cash generating unit (i.e. the smallest grouping of assets in which the asset
belongs for which there are separately identifiable cash flows).
Impairment charges are included in the income statement, except to the extent they reverse previous gains
recognised in the statement of comprehensive income.
Financial instruments
All funding requirements and financial risks are managed based on policies and procedures adopted by
the Board of Directors encapsulating the normal day to day trading of the Group. The Group does not use
derivative financial instruments such as forward currency contracts, or similar instruments. The Group does
not issue or use financial instruments of a speculative nature.
Bank borrowings
Interest-bearing loans are recorded initially at their fair value, net of direct transaction costs. Such
instruments are subsequently carried at their amortised cost and finance charges are recognised in the
statement of comprehensive income over the term of the instrument using an effective rate of interest.
Finance charges are accounted for on an accrual’s basis to the statement of comprehensive income.
The Group has current borrowings of CBIL loans and can utilise its invoice discounting facility in support of
its working capital requirements.
Financial assets
The Group classifies its financial assets into the categories discussed below and based upon the purpose
for which the asset was acquired. The Group has not classified any of its financial assets as held to maturity.
Trade and other receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They arise principally through the provision of services to customers (e.g. trade
receivables), but also incorporate other types of contractual monetary asset. They are initially recognised
at fair value plus transactions costs that are directly attributable to their acquisition or issue and are
subsequently carried at amortised cost using the effective interest method, less provision for impairment.
The Group’s loans and receivables comprise trade and other receivables included within the statement of
financial position.
59
Financial Statements | Notes to the Financial Statements
2.
Accounting policies (continued)
Financial assets (continued)
Cash and cash equivalents
Cash and cash equivalents include cash held at bank, bank overdrafts and marketable securities of very
short-term maturity (typically three months or less) which are not expected to deteriorate significantly in
value until maturity. Bank overdrafts are shown within loans and borrowings in current liabilities in the
statement of financial position.
Impairment of financial assets
Impairment provisions are recognised through the expected credit losses model (ECL). IFRS 9’s
impairment requirements use forward-looking information to recognise expected credit losses – the
‘expected credit loss (ECL) model’.
The Group considers a broader range of information when assessing credit risk and measuring expected
credit losses, including past events, current conditions, reasonable and supportable forecasts that affect
the expected collectability of the future cash flows of the instrument.
Trade and other payables
The Group classifies its financial liabilities as comprising trade payables and other short-term monetary
liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the
effective interest method.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet
the definition of a financial liability. The Group’s ordinary shares are classified as equity instruments.
Share premium
Share premium represents the excess of the issue price over the par value on shares issued less costs
relating to the capital transaction arising on the issue.
Share-based payment
The Group operates an equity-settled share-based compensation plan in which the Group receives
services from Directors and certain employees as consideration for share options. The fair value of the
services is recognised as an expense over the vesting period, determined by reference to the fair value of
the options granted.
Leased assets
Leases
The Group makes the use of leasing arrangements principally for the buildings and motor vehicles. The
rental contracts for offices are typically negotiated for terms of 5 and 10 years and some of these have
extension terms. The Group does not enter into sale and leaseback arrangements. All the leases are
negotiated on an individual basis and contain a wide variety of different terms and conditions.
The Group assesses whether a contract is or contains a lease at inception of the contract. A lease conveys
the right to direct the use and obtain substantially all of the economic benefits of an identified asset for a
period of time in exchange for consideration.
Measurement and recognition
At lease commencement date, the Group recognises a right-of-use asset and a lease liability in its
consolidated statement of financial position. The right-of-use asset is measured at cost, which is made up
of the initial measurement of the lease liability, any initial direct costs incurred by the Group, and any lease
payments made in advance of the lease commencement date.
The Group depreciates the right-of-use asset on a straight-line basis from the lease commencement date
to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group
also assesses the right-of-use asset for impairment when such indicators exist.
60
Financial Statements | Notes to the Financial Statements
2.
Accounting policies (continued)
Leased assets (continued)
Measurement and recognition (continued)
At the commencement date, the Group measures the lease liability at the present value of the lease
payments unpaid at that date, discounted using the Group’s incremental borrowing rate because as the
lease contracts are negotiated with third parties it is not possible to determine the interest rate that is implicit
in the lease.
The incremental borrowing rate is the estimated rate that the Group would have to pay to borrow the same
amount over a similar term, and with similar security to obtain an asset of equivalent value. This rate is
adjusted should the lessee entity have a different risk profile to that of the Group.
Subsequent to initial measurement, the liability will be reduced by lease payments that are allocated
between repayments of principal and finance costs. The finance cost is the amount that produces a
constant periodic rate of interest on the remaining balance of the lease liability.
The lease liability is reassessed when there is a change in the lease payments. Changes in lease payments
arising from a change in the lease term or a change in the assessment of an option to purchase a leased
asset. The revised lease payments are discounted using the Group’s incremental borrowing rate at the
date of reassessment when the rate implicit in the lease cannot be readily determined. The amount of the
remeasurement of the lease liability is reflected as an adjustment to the carrying amount of the right-of-use
asset. The exception being when the carrying amount of the right-of-use asset has been reduced to zero
then any excess is recognised in profit or loss.
Payments under leases can also change when there is either a change in the amounts expected to be paid
under residual value guarantees or when future payments change through an index or a rate used to
determine those payments, including changes in market rental rates following a market rent review. The
lease liability is remeasured only when the adjustment to lease payments takes effect and the revised
contractual payments for the remainder of the lease term are discounted using an unchanged discount
rate. Except for where the change in lease payments results from a change in floating interest rates, in
which case the discount rate is amended to reflect the change in interest rates.
The remeasurement of the lease liability is dealt with by a reduction in the carrying amount of the right-of-
use asset to reflect the full or partial termination of the lease for lease modifications that reduce the scope
of the lease. Any gain or loss relating to the partial or full termination of the lease is recognised in profit or
loss. The right-of-use asset is adjusted for all other lease modifications.
The Group has elected to account for short-term leases and leases of low-value assets using the practical
expedients. These leases relate to property security. Instead of recognising a right-of-use asset and lease
liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line
basis over the lease term.
See the accounting policy on Property plant and equipment for the depreciation methods and useful lives
for assets held under lease.
Current taxation
The tax currently payable is based on the taxable profit of the year. Taxable profit differs from profit as
reported in the Consolidated statement of comprehensive income because it excludes items of income and
expense that are taxable or deductible in other years and it further excludes items that are never taxable
or deductible. The Group’s liability for current tax is calculated using rates that have been enacted or
substantively enacted by the statement of financial position date.
61
Financial Statements | Notes to the Financial Statements
2.
Accounting policies (continued)
R&D tax credit
R&D tax credits are recognised at the point when claims have been quantified relating to expenditure within
current or previous years and recovery of the asset is virtually certain, these tax credits relating to R&D are
recognised within the tax on profit line of the income statement.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the
statement of financial position differs from its tax base, except for differences arising on:
the initial recognition of goodwill;
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit
will be available against which the difference can be utilised. The amount of the asset or liability is
determined using tax rates that have been enacted or substantially enacted by the balance sheet date and
are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax
balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current
tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax
authority on either the same taxable Company; or different Company entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred tax assets and liabilities are
expected to be settled or recovered.
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the
executive directors. The Chief Operating Decision Makers have been identified as the Chief Executive
Officer and the Chief Financial Officer. The Group supplies a single type of product into a single industry
and so has a single operating segment. Additional information is given regarding the revenue receivable
based on geographical location of the customer.
No differences exist between the basis of preparation of the performance measures used by management
and the figures in the Group financial information.
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are
continually evaluated based on historical experience and other factors, including the expectations of future
events that are believed to be reasonable under the circumstances. In the future, actual experience may
differ from these estimates and assumptions. The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
Provisions for inventory
Provisions are made for obsolete, out of life and slow-moving stock items. In estimating the provisions, the
group makes use of key management experience, precedents and specific contract and customer issues
to assess the likelihood and quantity. Stock is accounted for on a first in, first out basis.
The provision percentage is applied to various aging categories dependent on stock type, this is a key
estimate made by management based on judgement and if change is applied to the percentage for the
aged stock, then the outcome of the value of the provision would differ.
Sensitivity analysis
A 5% increase in the levels of the current stock provision would lead to and finance impact of an increase
in stock provision of £13k.
62
Financial Statements | Notes to the Financial Statements
3.
Financial instruments and risk management
The Board has overall responsibility for the determination of the Group’s risk management objectives and
policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible
without unduly affecting the Group’s competitiveness and flexibility. The Group reports in Sterling. All
funding requirements and financial risks are managed based on policies and procedures adopted by the
Board of Directors. The Group does not use derivative financial instruments such as forward currency
contracts, or similar instruments. The Group does not currently issue or use financial instruments of a
speculative nature but as described in the strategic report, management may consider the potential
utilisation of such instruments in the future. The Group utilises an invoice discounting facility with its bankers
to assist in its cash flow management. In accordance with the terms of the current facility (which is available
on demand) the risk and management of trade debtors is retained by the Group.
For non-current liabilities please see notes 18, 19 & 26.
Risk management
The Group’s activities expose it to a variety of financial risks: market risk (primarily foreign exchange risk
and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
Group’s financial performance. Risk management is carried out by the Board and their policies are outlined
below.
a)
Market risk
Foreign exchange risk
The Group is exposed to transaction foreign exchange risk in its operations both within the UK and
overseas. Transactions are denominated in Sterling, US Dollars and Euros. The Group has commercial
agreements in place which allow it to transact with its customers in the currency of the material purchase,
thereby allowing a large element of the transactional currency risk to pass through the Group.
The Group is also exposed to translation foreign exchange risk on consolidation of US operations, which
are translated into Sterling from US dollars. This can impact the consolidated income statement and also
create a movement in reserves from movements in the US balance sheet items.
Financial instruments
Group
Group
Company
Company
31 October
31 October
31 October
31 October
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Current assets
Trade and other receivables
3,447
3,282
2,889
2,532
Trade and other receivables –
prepayments
400
385
318
291
Amounts due from subsidiary
undertakings
-
-
3,276
3,090
3,847
3,667
6,483
5,913
Cash and cash equivalents – loans and
receivables
1,663
3,178
1,115
3,131
Total loans and receivables
5,510
6,845
7,598
9,044
Current liabilities
Trade and other payables
3,567
4,053
1,680
1,587
Trade and other payables – accruals
366
534
197
334
3,933
4,587
1,877
1,921
Loans
503
503
503
503
Obligations under lease liabilities
561
487
367
344
Total current liabilities
4,997
5,577
2,747
2,768
63
Financial Statements | Notes to the Financial Statements
3.
Financial instruments and risk management (continued)
a)
Market risk (continued)
The carrying value of the Group’s foreign currency denominated assets and liabilities comprise the trade
receivables in note 16, cash in note 17 and trade payables in note 18.
Foreign exchange risk (continued)
The Group’s financial assets are held in both Sterling and US dollars, the assets are converted to the
presentation currency Sterling assets held in US dollars are in relation to the US subsidiary, movements in
the exchange rate of the US Dollar or Euro against Sterling do have an impact on both the result for the
year and equity. The Group’s assets and liabilities that are held in US Dollar or Euro are held in those
currencies for normal trading activity in order to recover funds from customers or to pay funds to suppliers.
The Group’s exposure to foreign currency risk is as follows. This is based on the carrying amount of
monetary financial instruments.
As at 31 October 2024
US Dollar
Euro
Total
£’000
£’000
£’000
Trade debtors
2,763
235
2,998
Cash and cash equivalents
1,097
256
1,353
Trade payables
(2,759)
(20)
(2,779)
Balance sheet exposure
1,101
471
1,572
As at 31 October 2023
US Dollar
Euro
Total
£’000
£’000
£’000
Trade debtors
2,685
75
2,760
Cash and cash equivalents
204
118
322
Trade payables
(3,328)
(31)
(3,359)
Balance sheet exposure
(439)
162
(277)
Sensitivity analysis
A 5% strengthening of the following currencies against the pound sterling at the balance sheet date would
have reduced the loss by the amounts shown below. This calculation assumes that the change occurred
at the balance sheet date and had to be applied to risk exposures existing at that date.
31 October
31 October
2024
2023
£’000
£’000
US dollar
(57)
28
Euro
(24)
(8)
This analysis assumes that all other variables, in particular other exchange rates and interest rates remain
constant. A 5% weakening of the above currencies against pound sterling in any year would have had the
equal but opposite effect to the amounts shown above. Included in the US dollar value is £39,000 relating
to the US Subsidiary (2023: £78,000).
Interest rate risk
The Group carries borrowings from leases and CBILS loans. Lease borrowings are at a fixed rate of interest
whilst the interest on the CBILS loans is a combination of fixed rate and Bank of England base rate plus
3.96%. The Directors do not consider there to be a significant interest rate risk on the element of loans
linked to movements in the Bank of England base rate. The Group also has access to an invoicing
discounting facility that carries a fixed monthly charge plus interest at a fixed rate of 4.75%.
64
Financial Statements | Notes to the Financial Statements
3.
Financial instruments and risk management (continued)
b)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Group. In order to minimise this risk, the Group endeavours only to deal with companies which
are demonstrably creditworthy and this, together with the aggregate financial exposure, is continuously
monitored. The maximum exposure to credit risk is the value of the outstanding amount.
Supply of products by the Group results in trade receivables which the management consider to be of low
risk, other receivables are likewise considered to be low risk. However, four of the customers comprise in
excess of 10% of the revenue earned by the Group (see note 4). Credit risk on cash and cash equivalents
is considered to be small as the counterparties are all substantial banks with high credit ratings. The
maximum exposure is the amount of the deposit.
c)
Liquidity risk
The Group currently holds cash balances in Sterling, US Dollars and Euros to provide funding for normal
trading activity. Trade and other payables are monitored as part of normal management routine. The Group
also has access to banking facilities including invoice finance which it utilises when needed in order to
manage its liquidity risk.
As at 31 October 2024
Within 1
year
One to two
years
Two to
five years
Over five
years
£’000
£’000
£’000
£’000
Loan
503
468
-
-
Obligations under lease liabilities
561
575
683
-
Provisions
-
-
218
-
Trade payables
3,251
-
-
-
Accruals
584
-
-
-
As at 31 October 2023
Within 1
year
One to two
years
Two to
five years
Over five
years
£’000
£’000
£’000
£’000
Loan
503
503
467
-
Obligations under lease liabilities
487
508
1,079
-
Trade payables
3,786
-
-
-
Accruals
534
-
-
-
Other payables
15
-
-
-
Invoice discounting facility
68
-
-
-
d)
Capital risk management
For the purpose of the Group’s capital management, capital includes issued capital, and all other equity
reserves attributable to the equity holders of the Group. The Group’s objectives when managing capital
are to safeguard the Group’s ability to continue as a going concern in order to provide returns for
shareholders and benefits for other members. The Group will also seek to minimise the cost of capital and
attempt to optimise the capital structure.
65
Financial Statements | Notes to the Financial Statements
4.
Segmental analysis
The Group supplies a single type of product into a single industry and so has a single reportable segment.
Additional information is given regarding the revenue receivable based on geographical location of the
customer. An analysis of revenue by geographical market is given below:
Year ended
Year ended
31 October
31 October
2024
2023
£’000
£’000
Revenue
United Kingdom
15,058
14,350
Europe
6
41
US Subsidiary
7,915
1,967
Rest of the World
27
53
23,006
16,411
During the year four customers accounted for 92.75% (2023: 91.9%) of the Group’s total revenue for the
year ended 31 October 2024. This was split as follows; Customer A – 25.52% (2023: 34.5%), Customer B
– 26.77% (2023: 34.9%), Customer C – 6.06% (2023: 10.49%) and the fourth customer a customer of
Velocity Composite Aerospace Inc 34.40% (2023: 11.99%).
The majority of revenue arises from the sale of goods. Where engineering services form a part of revenue
it is only in support of the development or sale of the goods.
During the current and previous year, the Group operated in Asia. No revenue was generated in Asia during
the year ended 31 October 2024 and year ended 31 October 2023 as the site operates as an Engineering
Support Office for the Group. The US subsidiary started to trade in April 2023, revenue of £7,915k (2023:
£1,967k) has been generated since the US subsidiary was incorporated.
5.
Operating loss
The operating loss is stated after charging / (crediting):
Year ended
Year ended
31 October
31 October
2024
2023
£’000
£’000
Staff costs (see note 6)
4,664
3,700
Cost of inventories
14,966
11,687
Foreign exchange loss
165
57
Amortisation of development costs
240
116
Depreciation:
Owned assets
382
297
Property, plant and equipment under right-of-use assets
540
472
Profit on disposal of assets
-
(5)
Auditor’s remuneration:
Audit of the accounts of the Group
85
75
Other audit related services (relating to interim review)
16
12
66
Financial Statements | Notes to the Financial Statements
6.
Staff costs
Year ended
Year ended
31 October
31 October
2024
2023
£’000
£’000
Wages, salaries and bonuses
4,019
3,049
Social security costs
406
348
Defined contribution pension costs
96
97
Share-based payments
143
206
4,664
3,700
The average monthly number of employees including directors, during the year was as follows:
Year ended
Year ended
31 October
31 October
2024
2023
Head count
Head count
Manufacturing
53
55
Administration
49
47
102
102
7.
Directors’ costs
Year ended
Year ended
31 October
31 October
2024
2023
£’000
£’000
Directors’ remuneration included in staff costs:
Wages, salaries and bonuses
387
505
Defined contribution pension costs
27
21
414
526
Remuneration of the highest paid director(s):
Wages, salaries and bonuses or fees
196
190
Defined contribution pension costs
19
12
215
202
67
Financial Statements | Notes to the Financial Statements
8.
Exceptional administrative expenses
Year ended
Year ended
31 October
31 October
2024
2023
£’000
£’000
Fees associated with newly issued shares
-
120
-
120
Exceptional expenses incurred during the previous year were in relation to the costs associated with the
cash fundraise through the placing and subscription of the New Ordinary Shares. Total costs incurred were
£120,000 and £485,000 charged to the share premium as being directly related to newly issued shares.
No exceptional costs were recognised in the current year.
9.
Finance income and expenses
Year ended
Year ended
31 October
31 October
2024
2023
£’000
£’000
Finance expense
Finance charge from lease liabilities
108
120
Other interest and invoice discounting charges
305
206
413
326
10.
Income tax
Company
Year ended
Year ended
31 October
31 October
2024
2023
£’000
£’000
Current tax income
UK corporation tax adjustment in respect of R&D
101
-
UK corporation tax adjustment in respect of prior years – R&D
398
-
Total tax income
499
-
68
Financial Statements | Notes to the Financial Statements
10.
Income tax (continued)
The reasons for the difference between the actual tax charge for the year and the standard rate of
corporation tax in the United Kingdom applied to the loss for the year are as follows:
Tax rate
25.00%
22.00%
Loss for the year before tax
(1,344)
(3,143)
Expected tax credit based on corporation tax rate
(336)
(691)
Expenses not deductible for tax purposes
(84)
(17)
Adjustment in respect of prior year – R&D
(398)
-
Adjustment in respect of current year – R&D
(101)
-
Different tax rates in other countries
20
232
Tax losses not recognised
400
476
Total tax income
(499)
-
On 3 March 2021, the Chancellor of the Exchequer announced that the corporation tax rate would increase
to 25% from 1 April 2023. It was substantively enacted on 24 May 2021.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled,
or the asset is realised, based on tax law and the corporation tax rates that have been enacted, or
substantively enacted, at the Statement of Financial Position date. As such, the deferred tax rate applicable
at 31 October 2024 is 25% and deferred tax had been re-measured at this date.
11.
Loss per share
Year ended
Year ended
31 October
31 October
2024
2023
£
£
Loss for the year
(845,000)
(3,143,000)
Shares
Shares
Weighted average number of shares in issue
53,454,166
38,410,094
Weighted average number of share options
1,829,734
1,348,066
Weighted average number of shares (diluted)
55,283,900
39,758,160
Loss per share (basic)
(1.58p)
(8.18p)
Loss per share (diluted)
(1.58p)
(8.18p)
Share options have not been included in the diluted calculation as they would be anti-dilutive with a loss
being recognised.
69
Financial Statements | Notes to the Financial Statements
12.
Intangible assets
Group
Development
costs
Total
£’000
£’000
Cost
At 31 October 2022
575
575
Additions
833
833
At 31 October 2023
1,408
1,408
Additions
372
372
Exchange adjustments
(41)
(41)
At 31 October 2024
1,739
1,739
Amortisation
At 31 October 2022
402
402
Charge for the year
116
116
At 31 October 2023
518
518
Charge for the year
240
240
Exchange adjustments
(6)
(6)
At 31 October 2024
752
752
Net book value
At 31 October 2022
173
173
At 31 October 2023
890
890
At 31 October 2024
987
987
Company
Development
costs
Total
£’000
£’000
Cost
At 31 October 2022
575
575
Additions
112
112
At 31 October 2023
687
687
Additions
177
177
At 31 October 2024
864
864
Amortisation
At 31 October 2022
402
402
Charge for the year
53
53
At 31 October 2023
455
455
Charge for the year
69
69
At 31 October 2024
524
524
Net book value
At 31 October 2022
173
173
At 31 October 2023
232
232
At 31 October 2024
340
340
Impairment
The Group reviews the Development costs at each reporting year for indicators of impairment. An indication
of impairment can be generated from the loss of a customer, or contracted sales. No impairment was
judged to be required for either year.
70
Financial Statements | Notes to the Financial Statements
13.
Property, plant and equipment
Group
Leasehold
improve-
ments
Plant &
machinery
Motor
vehicles
Fixtures
& fittings
Total
£’000
£’000
£’000
£’000
£’000
Cost
At 31 October 2022
628
1,855
23
455
2,961
Additions
367
528
-
398
1,293
At 31 October 2023
995
2,383
23
853
4,254
Additions
48
159
-
5
212
Exchange adjustments
(33)
(26)
-
(22)
(81)
At 31 October 2024
1,010
2,516
23
836
4,385
Depreciation
At 31 October 2022
149
1,382
23
308
1,862
Charge for the year
73
150
-
74
297
At 31 October 2023
222
1,532
23
382
2,159
Charge for the year
105
187
-
90
382
Exchange adjustments
(1)
(7)
-
(2)
(10)
At 31 October 2024
326
1,712
23
470
2,531
Net book value
At 31 October 2022
479
473
-
147
1,099
At 31 October 2023
773
851
-
471
2,095
At 31 October 2024
684
804
-
366
1,854
Company
Leasehold
improve-
ments
Plant &
machinery
Motor
vehicles
Fixtures
& fittings
Total
£’000
£’000
£’000
£’000
£’000
Cost
At 31 October 2022
628
1,855
23
455
2,961
Transferred to subsidiary
(132)
(57)
-
(37)
(226)
Additions
14
57
-
-
71
At 31 October 2023
510
1,855
23
418
2,806
Additions
4
5
-
-
9
At 31 October 2024
514
1,860
23
418
2,815
Depreciation
At 31 October 2022
149
1,382
23
308
1,862
Charge for the year
50
118
-
42
210
At 31 October 2023
199
1,500
23
350
2,072
Charge for the year
50
109
-
33
192
At 31 October 2024
249
1,609
23
383
2,264
Net book value
At 31 October 2022
479
473
-
147
1,099
At 31 October 2023
311
355
-
68
734
At 31 October 2024
265
251
-
35
551
71
Financial Statements | Notes to the Financial Statements
14.
Investment in subsidiaries
Group
Group
Company
Company
31 October
31 October
31 October
31 October
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Subsidiary undertakings
-
-
-
-
-
-
-
-
A list of all the investment in subsidiaries is as follows:
Name of
company
Registered
office
Country of
registration
Type of
shares
Proportion of
shareholding
and voting
rights held
Nature of
business
Directly owned
Velocity
Composites
SDN. BHD
Pentagon Suite,
ES-04, Level 3,
Wisma Suria,
Jalan Teknokrat
6, Cyber 5,
63000,
Cyberjaya,
Selangor
Malaysia
Ordinary
100%
Provider of
engineering
composite
services for
the aerospace
sector non
trading
Velocity
Composites
Aerospace, Inc.
Corporation
Trust Center,
1209 N. Orange
St, Wilmington,
Delaware
19801
United States
of America
Ordinary
100%
Manufacturer
of composite
material
products for
the aerospace
sector
15.
Inventories
Group
Group
Company
Company
31 October
31 October
31 October
31 October
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Raw materials & consumables
1,698
1,830
1,283
1,023
Finished goods
802
913
486
470
2,500
2,743
1,769
1,493
Inventories totalling £2,500,000 (2023: £2,743,000) are valued at the lower of cost and net realisable value.
The Directors consider that this value represents the best estimate of the fair value of those inventories net
of costs to sell. The decrease of inventories provision during the previous year amounted to £55,000
Velocity Composites plc and £47,000 for Velocity Composites Aerospace Inc, in 2023 the increase was
£53,000 for Velocity Composites plc and £113,000 for Velocity Composites Aerospace Inc.
The inventory at 31 October 2024 is after a stock provision of £272,000 (2023: £374,000). The provision
reflects the aged stock profile consistent with FY23, as well as specific provisions related to slow moving
stock as a result of reduced demand.
Inventories recognised as an expense during the year ended 31 October 2024 amounted to £14,966,000
(2023: £11,687,000), and these were included in cost of sales.
72
Financial Statements | Notes to the Financial Statements
16.
Trade and other receivables
Group
Group
Company
Company
31 October
31 October
31 October
31 October
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Trade receivables
3,349
3,187
2,789
2,489
Prepayments
400
385
318
291
Other receivables
98
95
100
43
Tax receivable
130
-
130
-
Amounts due from subsidiary undertakings
-
-
3,276
3,090
3,977
3,667
6,613
5,913
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary
course of business. They are generally due for settlement within an average of 53 days (2023: 71 days)
and therefore are all classified as current. Trade receivables are recognised initially at the amount of
consideration that is unconditional unless they contain significant financing components, when they are
recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual
cash flows and therefore measures them subsequently at amortised cost. Details about the Group’s
impairment policies and credit risk are provided in note 3. £23,000 Trade receivables (Group and Company)
were overdue over three months at the year end (2023: £Nil).
The overall expected credit loss is trivial (2023: trivial). There is no movement in allowance of impairment
of trade receivables during each year.
Trade receivables (Group and Company) held in currencies other than sterling are as follows:
31 October
31 October
2024
2023
£’000
£’000
Euro
235
75
US Dollar
2,763
2,685
2,998
2,760
17.
Cash and cash equivalents
Group
Group
Company
Company
31 October
31 October
31 October
31 October
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Cash at bank
1,663
3,178
1,115
3,131
1,663
3,178
1,115
3,131
73
Financial Statements | Notes to the Financial Statements
18.
Trade and other payables
Group
Group
Company
Company
31 October
31 October
31 October
31 October
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Trade payables
3,251
3,786
1,365
1,322
Accruals and deferred income
366
534
197
334
Other taxes and social security
316
184
315
183
Other payables
-
15
-
14
Invoice discounting facility
-
68
-
68
3,933
4,587
1,877
1,921
Book values approximate to fair values.
19.
Bank loans
Group
Group
Company
Company
31 October
31 October
31 October
31 October
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Not later than one year
503
503
503
503
One to two years
468
503
468
503
Two to five years
-
467
-
467
971
1,473
971
1,473
In FY20 the Company took out a Coronavirus Business Interruption Loan for £2.0m and on 19 January
2021 the term of this loan was extended to 6 years. Repayment by instalment commenced in August 2021,
with the final instalment due in August 2026. The loan was interest free for the initial 12 months, followed
by an interest rate of 3.96% above the Bank of England base rate which was 5.00% as at 31 October 2024.
Therefore, the rate payable at 28 January 2025 is 8.96%.
During FY21, the Company took out a further Coronavirus Business Interruption Loan for £0.45m secured
against owned non-current assets. This is being repaid over 5 years with the first payment made in July
2021 and the final instalment due in June 2026. The loan was interest free for the initial 12 months, followed
by an interest rate of 7.75% per annum.
74
Financial Statements | Notes to the Financial Statements
20.
Leases
Right-of-use-assets
Group
Land &
buildings
Plant &
machinery
Motor
vehicles
Total
£’000
£’000
£’000
£’000
Cost
Balance at 31 October 2022
2,433
561
110
3,104
Additions
232
-
100
332
Disposals
-
-
(5)
(5)
Balance at 31 October 2023
2,665
561
205
3,431
Additions
-
165
107
272
Exchange adjustments
(38)
-
-
(38)
Balance at 31 October 2024
2,627
726
312
3,665
Depreciation
Balance at 31 October 2022
478
294
63
835
Depreciation charge for the year
363
81
28
472
Disposals
-
-
(5)
(5)
Balance at 31 October 2023
841
375
86
1,302
Depreciation charge for the year
413
82
45
540
Exchange adjustments
(3)
-
-
(3)
Balance at 31 October 2024
1,251
457
131
1,839
NBV
At 31 October 2022
1,955
267
47
2,269
At 31 October 2023
1,824
186
119
2,129
At 31 October 2024
1,376
269
181
1,826
The associated right-of-use assets for property leases and other assets were measured at the amount
equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to
that lease recognised in the statement of financial position as at 31 October 2024.
75
Financial Statements | Notes to the Financial Statements
20.
Leases (continued)
Right-of-use-assets (continued)
Company
Land &
buildings
Plant &
machinery
Motor
vehicles
Total
£’000
£’000
£’000
£’000
Cost
Balance at 31 October 2022
1,976
561
110
2,647
Additions
-
-
100
100
Disposals
-
-
(5)
(5)
Balance at 31 October 2023
1,976
561
205
2,742
Additions
-
-
-
-
Disposals
-
-
-
-
Balance at 31 October 2024
1,976
561
205
2,742
Depreciation
Balance at 31 October 2022
478
294
63
835
Depreciation charge for the year
282
81
28
391
Disposals
-
-
(5)
(5)
Balance at 31 October 2023
760
375
86
1,221
Depreciation charge for the year
282
74
42
398
Balance at 31 October 2024
1,042
449
128
1,619
NBV
At 31 October 2022
1,498
267
47
1,812
At 31 October 2023
1,216
186
119
1,521
At 31 October 2024
934
112
77
1,123
The associated right-of-use assets for property leases and other assets were measured at the amount
equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to
that lease recognised in the statement of financial position as at 31 October 2024.
Right-of-use lease liabilities
Group
Company
£’000
£’000
At 31 October 2023
2,074
1,540
Repayment
(598)
(424)
Additions to right-of-use assets in exchange for increased lease liabilities
272
-
Interest and other movements
100
80
Exchange adjustments
(29)
-
At 31 October 2024
1,819
1,196
76
Financial Statements | Notes to the Financial Statements
20.
Leases (continued)
Right-of-use lease liabilities (continued)
Analysis by length of liability
Group
Land &
buildings
Plant &
equipment
Motor
vehicles
Total
£’000
£,000
£’000
£’000
Current
426
75
59
560
Non-current
957
189
142
1,288
Exchange adjustments
(29)
-
-
(29)
1,354
264
201
1,819
Number of right-to-use assets leased
4
2
4
Range of remaining term
1-10 years
1-10 years
1-4 years
Company
Land &
buildings
Plant &
equipment
Motor
vehicles
Total
£’000
£,000
£’000
£’000
Current
292
42
32
366
Non-current
693
70
67
830
985
112
99
1,196
Number of right-to-use assets leased
3
1
3
Range of remaining term
1-10 years
1-10 years
1-4 years
Reconciliation of minimum lease payments to present value
Group
Minimum
lease
payments
Interest
Present
value
£’000
£’000
£’000
31 October 2024
Not later than one year
651
90
561
Later than one year and not later than two years
646
71
575
Later than two years and not later than five years
781
98
683
2,078
259
1,819
31 October 2023
Not later than one year
585
98
487
Later than one year and not later than two years
589
81
508
Later than two years and not later than five years
1,209
130
1,079
2,383
309
2,074
77
Financial Statements | Notes to the Financial Statements
20.
Leases (continued)
Right-of-use lease liabilities (continued)
Reconciliation of minimum lease payments to present value (continued)
Company
Minimum
lease
payments
Interest
Present
value
£’000
£’000
£’000
31 October 2024
Not later than one year
431
64
367
Later than one year and not later than two years
425
45
380
Later than two years and not later than five years
510
61
449
1,366
170
1,196
31 October 2023
Not later than one year
424
80
344
Later than one year and not later than two years
430
64
366
Later than two years and not later than five years
927
97
830
1,781
241
1,540
Low value leases
The Group leases comprise both office and assembly space, under low value leases. The total value of
the minimum lease payments due is payable is £Nil (2023: £Nil).
Low value leases not classed as right-of-use assets due to the minimal value of the lease, relate to a
building security contract, all other prior year operating leases have been classed as right-to-use asset on
transition to IFRS 16. Payments made under such leases are expensed on a straight-line basis.
78
Financial Statements | Notes to the Financial Statements
21.
Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using tax rates
appropriate for the year. The movement on the deferred tax account is as shown below:
The movement on the deferred tax (asset)/liability is shown below:
Company
31 October
31 October
2024
2023
£’000
£’000
Unrecognised deferred tax in respect of losses brought forward
Corporation tax loss adjustments in respect of prior year
(1,630)
120
(1,401)
-
Corporation tax losses arising during the year
(158)
(229)
Unrecognised deferred tax in respect of losses carried forward
(1,668)
(1,630)
The Group has unused tax losses which were incurred by the parent company. A deferred tax asset of
£1,668,000 (2023: £1,630,000) is not recognised in these accounts. Corporation tax losses can be carried
forward indefinitely and can be offset against future profits which are subject to UK corporation tax.
22.
Reconciliation of liabilities arising from financing activities
Group
Lease
liabilities <
one year
Other
short-term
borrowings
Lease
liabilities >
one year
Other
long-term
borrowings
Total
£’000
£’000
£’000
£’000
£’000
At 31 October 2022
405
503
1,792
1,506
4,206
Cash flows
Repayment
(506)
(536)
-
-
(1,042)
Non-cash
Other differences
-
-
332
-
332
Increase to lease liabilities
-
-
51
-
51
Transfer from long-term to
short term borrowings
588
536
(588)
(536)
-
At 31 October 2023
487
503
1,587
970
3,547
Cash flows
Repayment
(597)
(502)
-
-
(1,099)
Non-cash
Other differences
-
-
70
-
70
Increase to lease liabilities
-
-
272
-
272
Transfer from long-term to
short term borrowings
671
502
(671)
(502)
-
As at 31 October 2024
561
503
1,258
468
2,790
79
Financial Statements | Notes to the Financial Statements
22.
Reconciliation of liabilities arising from financing activities (continued)
Company
Lease
liabilities <
one year
Other
short-term
borrowings
Lease
liabilities >
one year
Other
long-term
borrowings
Total
£’000
£’000
£’000
£’000
£’000
At 31 October 2022
313
503
1,442
1,506
3,764
Cash flows
Repayment
(372)
(536)
-
-
(908)
Non-cash
Other differences
-
-
52
-
52
Increase to lease liabilities
-
-
105
-
105
Transfer from long-term to
short term borrowings
403
536
(403)
(536)
-
At 31 October 2023
344
503
1,196
970
3,013
Cash flows
Repayment
(424)
(502)
-
-
(926)
Non-cash
Other differences
-
-
80
-
80
Transfer from long-term to
short term borrowings
447
502
(447)
(502)
-
As at 31 October 2024
367
503
829
468
2,167
23.
Share capital
31 October
31 October
2024
2023
£
£
Share capital issued and fully paid
53,509,706 (2023: 53,393,368) Ordinary shares of £0.0025 each
133,774
133,483
Ordinary shares have a par value of 0.25p. They entitle the holder to participate in dividends, and to share
in the proceeds of winding up the Company in proportion to the number of and amounts paid on the shares
held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled
to one vote, and upon a poll each share is entitled to one vote. The Company does not have a limited
amount of authorised capital.
Movements in share capital
Nominal
value
Number of
shares
£
Ordinary shares of £0.0025 each
At the beginning of the year
133,483
53,393,368
Exercising of share options
291
116,338
Closing share capital at 31 October 2024
133,774
53,509,706
80
Financial Statements | Notes to the Financial Statements
23.
Share capital (continued)
On 24 January 2024, the Company issued 75,000 new ordinary shares of £0.0025 each to satisfy the
exercise of options granted under the Group’s 2023 Share Option Scheme.
On 7 October 2024, the Company issued 41,388 new ordinary shares of £0.0025 each to satisfy the
exercise of options granted under the Group’s 2017 Share Option Scheme.
Options
Information relating to the Velocity Composites plc Employee Option Plan, including details of options
issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting
year, is set out in note 25.
24.
Share premium
31 October
31 October
2024
2023
£’000
£’000
At the beginning of the year
4,870
9,727
Shares issued net of transaction costs
-
6,063
Reduction of Share Premium Account
-
(10,920)
At the end of the year
4,870
4,870
25.
Share-based payments
The Group’s employees are granted option awards under the Velocity Composites Limited Enterprise
Management Incentive and Unapproved Scheme.
The share options dated 13 March & 17 October 2017 have no attached performance conditions and have
vested as a resulted of continued employment. The options may be exercised at any point up to the tenth
anniversary of the grant date.
The 100,000 share options dated 29 October 2019 have no attached performance conditions and vest
subject only to continued employment. They were awarded in relation to joining senior management,
providing an equity incentive around the performance of the business
The 155,932 remaining shares options dated 30 October 2020 have no attached performance conditions
and have been issued in exchange for qualifying staff agreeing to accept 20% of their basic salary in equity
alternatives.
The 28,805 shares options dated 1 April 2021 have no attached performance conditions and have been
issued in exchange for qualifying staff agreeing to accept 20% of their basic salary in equity alternatives.
The 125,000 shares options dated 1 April 2021 have no attached performance conditions and vest subject
only to continued employment. They were awarded in relation to joining senior management, providing an
equity incentive around the performance of the business.
The 321,411 remaining shares options dated 26 January 2022 have no attached performance conditions
and have been issued in exchange for qualifying staff agreeing to accept 20% of their basic salary in equity
alternatives.
The 20,940 shares options dated 29 March 2022 have no attached performance conditions and have been
issued in exchange for qualifying staff agreeing to accept 20% of their basic salary in equity alternatives.
399,467 shares options dated 28 March 2023. These options have no attached performance conditions
and have been issued in exchange for qualifying staff agreeing to accept 20% of their basic salary in equity
alternatives.
81
Financial Statements | Notes to the Financial Statements
25.
Share-based payments (continued)
150,000 shares options dated 28 March 2023. These options have attached performance conditions linked
to specific contract performance. These options shall only be exercisable to the extent vested upon
satisfaction of the performance targets during the exercise period from the earlier of, the normal vesting
date of one year or on or after the occurrence of an exercise event in accordance with the rules.
During the year ended 31 October 2024, further share options were granted as follows:
282,134 shares options dated 24 January 2024. These options have no attached performance conditions
and have been issued in exchange for qualifying staff agreeing to accept 20% of their basic salary in equity
alternatives.
75,000 shares options dated 24 January 2024 have no attached performance conditions and have vested
as a resulted of continued employment. The options may be exercised at any point up to the tenth
anniversary of the grant date.
400,000 shares options dated 15 July 2023. These options have attached performance conditions linked
to profit after tax. They vest after two years, or earlier if a vesting event occurs in the rules of the Scheme.
Vesting events are defined within the rules of the Scheme as a reorganisation, takeover, sale, listing (except
on AIM), asset sale or death of the Option holder. The options may be exercised at any point up to the
tenth anniversary grant date
There were no cancellations or modifications to the awards in the year.
The following options were outstanding as at 31 October 2024:
Scheme and
grant date
Exercise
price (£)
Vesting
date
Expiry date
Vested Not vested
Total
13 March 2017
0.0025
13 Mar 2019
13 Mar 2027
54,338
-
54,338
17 October 2017
0.6926
17 Oct 2019
17 Oct 2027
25,000
-
25,000
29 October 2019
0.2065
29 Oct 2022
29 Oct 2031
100,000
-
100,000
30 October 2020
0.2065
01 Nov 2021
01 Nov 2026
155,932
-
155,932
01 April 2021
0.0025
01 Apr 2021
01 Apr 2026
28,805
-
28,805
01 April 2021
0.1300
01 Apr 2021
01 Apr 2026
125,000
-
125,000
26 January 2022
0.0025
26 Jan 2023
01 Nov 2027
321,411
-
321,411
29 March 2022
0.0025
29 Mar 2023
01 Nov 2027
20,940
-
20,940
28 March 2023
0.0025
28 Mar 2024
28 Mar 2028
549,467
-
549,467
24 January 2024
0.0025
24 Jan 2026
24 Jan 2029
-
75,000
75,000
24 January 2024
0.0025
24 Jan 2025
24 Jan 2029
-
282,134
282,134
15 July 2024
0.4150
30 Apr 2026
15 July 2034
-
400,000
400,000
1,380,893
757,134
2,138,027
The Group recognised a cost of £143,000 (2023: £206,000) relating to share-based payment transactions
which are all equity settled, an equivalent amount being transferred to share-based payment reserve. This
reflects the fair value of the options, which has been derived through use of the Black-Scholes model.
The cost of share-based payments is included in “Administrative expenses” within the Statement of total
comprehensive income. The share-based payments reserve is used to recognise the grant date fair value
of options issued to employees but not exercised. The table below sets out the movement to the share-
based payment reserves in the year.
82
Financial Statements | Notes to the Financial Statements
25.
Share-based payment (continued)
The tables below split the Share-based payments according to the terms they have been awarded.
Share options granted under the salary sacrifice scheme.
Scheme and
grant date
Exercise
price (£)
Vesting
date
Expiry date
Vested
Not vested
Total
30 October 2020
0.2065
01 Nov 2021
01 Nov 2026
155,932
-
155,932
01 April 2021
0.0025
01 Apr 2021
01 Apr 2026
28,805
-
28,805
26 January 2022
0.0025
26 Jan 2023
01 Nov 2027
321,411
-
321,411
29 March 2022
0.0025
29 Mar 2023
01 Nov 2027
20,940
-
20,940
28 March 2023
0.0025
28 Mar 2024
28 Mar 2028
399,467
-
399,467
24 January 2024
0.0025
24 Jan 2025
24 Jan 2029
-
282,134
282,134
926,555
282,134
1,208,689
Share options granted not under the salary sacrifice scheme.
Scheme and
grant date
Exercise
price (£)
Vesting
date
Expiry date
Vested Not vested
Total
13 March 2017
0.0025
13 Mar 2019
13 Mar 2027
54,338
-
54,338
17 October 2017
0.6926
17 Oct 2019
17 Oct 2027
25,000
-
25,000
29 October 2019
0.2065
29 Oct 2022
29 Oct 2031
100,000
-
100,000
01 April 2021
0.1300
01 Apr 2021
01 Apr 2026
125,000
-
125,000
28 March 2023
0.0025
28 Mar 2024
28 Mar 2028
150,000
-
150,000
24 January 2024
0.0025
24 Jan 2026
24 Jan 2029
-
75,000
75,000
15 July 2024
0.4150
30 Apr 2026
15 July 2034
-
400,000
400,000
454,338
475,000
929,338
Movement in share options
Scheme and
grant date
As at 1
Nov 2023
Issued
Expired
Exercised
Vested
As at 31
Oct 2024
£’000
£’000
£’000
£’000
£’000
£’000
13 March 2017
55
-
-
(24)
-
31
17 October 2017
10
-
-
-
-
10
29 October 2019
16
-
-
-
-
16
30 October 2020
24
-
-
-
-
24
01 April 2021
01 April 2021
14
8
-
-
-
-
-
-
-
-
14
8
26 January 2022
26 January 2022
29 March 2022
47
24
4
-
-
-
-
-
-
-
-
-
(1)
-
-
46
24
4
28 March 2023
276
-
-
(62)
(28)
186
24 January 2024
-
54
-
-
-
54
24 January 2024
-
58
-
-
-
58
15 July 2024
-
42
-
-
-
42
478
154
-
(86)
(29)
517
83
Financial Statements | Notes to the Financial Statements
26.
Provisions
During the year a provision of £218,000 (2023: £Nil) was recognised in relation to dilapidations
As part of the group’s property leasing arrangements there is an obligation to repair damages which incur
during the life of the lease, such as wear and tear. The cost is charged to profit and loss as the obligation
arises. The provision is expected to be utilised between 2026 and 2029 as the leases terminate.
The dilapidations provision is considered a source of significant estimation uncertainty. The provision has
been calculated using one years’ worth of rental over estimated lease termination dates prorated to the
term the lease has been occupied.
27.
Related party transactions
Balances and transactions between the Company and its subsidiary, which are related parties, have been
eliminated on consolidation. However, the key transactions with other related parties are as follows:
During the year the Group engaged North West Aerospace Alliance, which provides membership and
subscription services for the Aerospace Industry. One of the directors of North West Aerospace Alliance
Limited is a director of Velocity Composites plc. The Group paid £809 (2023: £2,009) to North West
Aerospace Alliance during the year and had £Nil outstanding at the year end (2023: £Nil).
28.
Ultimate controlling party
The Directors do not consider there to be an ultimate controlling party due to no individual party owning a
majority share in the Group.
29.
Capital commitments
At 31 October 2023 the Group had £1,164,144 (2023: £Nil) of capital commitments relating to the purchase
of leasehold improvements, plant and machinery and fixture and fittings.
30.
Pension commitments
The Group makes contributions to defined contribution stakeholder pension schemes. The contributions for
the year of £96,034 (2023: £97,191) were charged to the Consolidated Income statement. Contributions
outstanding as at 31 October 2024 were £Nil (2023: £13,595).
31.
Contingent liabilities
As at 31 October 2024 the Group had in place bank guarantees of £Nil (2023: £Nil) in respect of supplier
trade accounts.
As at 31 October 2024, National Westminster Bank plc hold a debenture that provides a fixed and floating
charge on the assets of the Company.
84
Financial Statements | Notes to the Financial Statements
32.
Adjusted EBITDA
EBITDA is considered by the Board to be a useful alternative performance measure reflecting the
operational profitability of the business. Adjusted EBITDA is defined as earnings before finance charges,
taxation, depreciation, amortisation and adjusted for share-based payments. Share-based payments are
added back to make the share-based payment charge clear to stakeholders.
Year ended
Year ended
31 October
31 October
2024
2023
Reconciliation from operating loss
£’000
£’000
Operating loss
(931)
(2,817)
Add back:
Depreciation of property, plant and equipment
382
297
Amortisation
240
116
Depreciation of right-of-use assets under IFRS 16
540
472
Share-based payments
143
206
Exceptional Administration expenses
-
120
Adjusted EBITDA
374
(1,606)
85
Company registration number:
Company Secretary and
Registered office:
Nominated adviser:
Joint brokers:
Bankers:
Legal Advisers
Independent Auditor
Registrars
Financial PR
06389233
Robert Smith (appointed 3 June 2024)
AMS Technology Park
Billington Road
Burnley
Lancashire
BB11 5UB
Canaccord Genuity Limited,
88 Wood Street,
London
EC2V 7QR
Canaccord Genuity Limited,
88 Wood Street,
London
EC2V 7QR
National Westminster Bank
1 Hardman Boulevard
Manchester
M3 3AQ
Royal Bank of Scotland
1 Hardman Boulevard
Manchester
M3 3AQ
Fieldfisher LLP
17th Floor No 1
Spinningfields
1 Hardman Street
Manchester
M3 3EB
Cooper Parry Group Limited
Sky View
Argosy Road
East Midland Airport
Castle Donington
Derby
DE74 2SA
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
SEC Newgate UK Limited
14 Greville Street
London
EC1N 8SB
HSBC Bank USA
452 5th Avenue
New York
NY 10018
Dowgate Capital Limited,
15 Fetter Lane,
London
EC4A 1BW
Advisers
Financial Statements | Advisers
86
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting (Meeting) of Velocity Composites plc (Company) will be held
at the offices of AMS Technology Park, Billington Rd, Burnley BB11 5UB on 11 March 2025 at 10 am to consider,
and if thought fit, pass the following resolutions. Resolutions 1 to 9 (inclusive) will be proposed as ordinary
resolutions and resolutions 10, 11, and 12 will be proposed as special resolutions.
Ordinary Business
Ordinary Resolutions
1.
To receive and adopt the Annual Report and Accounts of the Company for the period ended 31 October
2024 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 2024.
3.
To re-appoint as a non-executive director David Warren Bailey 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 non-executive director Annette Rothwell who retires from office in accordance with the
Company’s Articles of Association and offers herself 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 director Jonathan Karl Bridges who retires from office in accordance with the
Company’s Articles of Association and offers himself for re-appointment.
7.
To elect Robert St. John Smith, as a director, who, having been appointed since the last AGM, offers
himself for election in accordance with the Company’s articles of association.
8.
To re-appoint Cooper Parry Group Limited 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
9.
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:
9.1 up to a maximum nominal amount (within the meaning of Section 551(3) and (6) of the Act) of
£44,591.1422 (such amount to be reduced by the nominal amount allotted or granted under paragraph
9.2 below in excess of such amount); and
9.2 comprising equity securities (as defined in Section 560(1) of the Act) up to an aggregate nominal
amount (within the meaning of Section 551(3) and (6) of the Act) of £89,182.8433 (such amount to
be reduced by any allotments or grants made under paragraph 9.1 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
Shareholder Information | Notice of Annual General Meeting
87
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 11 March 2026), 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 Resolutions
10. To resolve that, subject to the passing of resolution 9 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:
10.1 to the allotment of equity securities for cash in connection with or pursuant to an offer of, or invitation
to acquire, equity securities (but in the case of the authorisation granted under resolution 9.2 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
10.2 to the allotment of equity securities or sale of treasury shares (otherwise than under paragraph 10.1
above) up to an aggregate nominal amount of £13,377.4265
such authority to expire at the conclusion of the next Annual General Meeting of the Company (or, if earlier,
on 11 March 2026), 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).
11. That, subject to the passing of resolution number 10 above, the directors be and they are hereby
empowered, pursuant to section 570 of the Act, to allot equity securities (as defined in section 560 of the
Act) for cash pursuant to the authority conferred by resolution number 10 or by way of a sale of treasury
shares as if section 561 of the Act did not apply to any such allotment, provided that this power shall be
limited to:
11.1 the allotment of equity securities up to an aggregate nominal amount of £ 13,377.4265; and used
for the purposes of financing (or refinancing, if such refinancing occurs within six months of the
original transaction) a transaction which the directors determine to be an acquisition or other capital
investment of a kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights
most recently published by the Pre-Emption Group prior to the date of this notice, and shall expire
upon the expiry of the general authority conferred by resolution 10 above, except that the Company
may before such expiry make offers or agreements which would or might require equity securities to
be allotted and/or shares held by the Company in treasury to be sold or transferred after such expiry
Shareholder Information | Notice of Annual General Meeting
88
and the directors may allot equity securities and/or sell or transfer shares held by the Company in
treasury in pursuance of such offers or agreements as if the power conferred by this resolution had
not expired.
12. 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:
12.1 the maximum aggregate number of shares that may be purchased is 5,350.970;
12.2 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;
12.3 the maximum price (exclusive of expenses) which may be paid for each ordinary share is an amount
equal to the higher of:
12.3.1 105 per cent of the average of the middle market quotations for the 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
12.3.2 the higher of the price of the last independent trade and the highest 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;
12.4 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
12.5 unless previously renewed, revoked or varied, this authority shall expire on 12 March 2026, or if
earlier, at the conclusion of the next Annual General Meeting of the Company.
By order of the Board
Rob Smith
Company Secretary
28 January 2025
Registered Office: AMS Technology Park, Billington Road, Burnley, Lancashire, BB11 5UB
Registered in England and Wales No. 06389233
Shareholder Information | Notice of Annual General Meeting
89
Notes to Notice of Annual General Meeting
Notes to the AGM
1.
Only those shareholders registered in the Company’s register of members at: 6.30pm on 7 March 2025;
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.
2.
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.
3.
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.
4.
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).
5.
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.
6.
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.
Shareholder Information | Notes to Notice of General Meeting
90
7.
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 7 March
2025. 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 7 March 2025. If you attempt to
revoke your proxy appointment but the revocation is received after the time specified, then your proxy
appointment will remain valid.
8.
If you are an institutional investor, you may be able to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the Company and approved by the Registrar. For further
information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 10.00am
on 7 March 2025 in order to be considered valid. Before you can appoint a proxy via this process you will
need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these
carefully as you will be bound by them, and they will govern the electronic appointment of your proxy.
9.
As at 6.30pm on 27 January 2025 (the latest practicable date prior to the printing of this notice) (i) the
Company’s issued share capital consisted of 53,509,706 ordinary shares, carrying one vote each, and (ii)
the total voting rights in the Company were 53,509,706. The Company’s website will include information on
the number of shares and voting rights.
10. 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 7 March 2025 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.
11. 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.
12. 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 7 March 2025 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.
13. 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.
14. 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.
Shareholder Information | Notes to Notice of General Meeting
91
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 2024
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 2024 for approval. This vote is
not mandatory but is considered best practice.
Resolutions 3 to 7 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 8
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 8
proposes that Cooper Parry Group Limited 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 9
General authority to allot new shares
Resolution 9, 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 9.1 would permit allotments of new shares up
to approximately one-third of the current issued share capital. The authority set out in paragraph 9.2 would permit
allotments of new shares up to approximately two-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 11 March 2026.
Shareholder Information | Notes to Notice of General Meeting
92
Resolution 10
General disapplication of pre-emption rights
Resolution 10, which is proposed as a special resolution, will, if passed, give the directors power, pursuant to
the authority to allot granted by resolution 9, 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 £44,591.4217
which represents approximately one-third of the current issued share capital (excluding treasury shares) as at 27
January 2025 (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 £89,182.8433 which represents approximately two thirds of the current
issued share capital (excluding treasury shares) as at 27 January 2025 (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 £13,377.43 which
represents approximately 10 per cent of the Company’s issued ordinary share capital (excluding treasury shares) as
at 27 January 2025 (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 11 March 2026). The directors have no present intention to exercise the authority
conferred by this resolution.
Resolution 11
Disapplication of statutory pre-emption rights to finance an acquisition or other capital investment
In addition to the powers granted by Resolution 10, Resolution 11 will empower the directors to allot ordinary
shares in the capital of the Company for cash on a non-pre-emptive basis:
•
up to a maximum nominal value of £13,377.43, representing approximately 10 per cent of the issued
ordinary share capital of the Company as at 27 January 2025 (the latest practicable date before
publication of this document); and
•
used only for the purposes of financing (or refinancing, if such financing occurs within six months of the
original transaction) a transaction which the directors determine to be an acquisition or other capital
investment of a kind contemplated by the Statement of Principles of Disapplying Pre-Emption Rights most
recently published by the Pre-Emption Group prior to the date of this notice.
The rights of pre-emption disapplication sought pursuant to Resolutions 10 and 11 represent, in aggregate,
approximately 20% of the issued ordinary share capital of the Company as at 27 January 2025.
Resolution 12
Authority to make market purchases of own shares
Resolution 12, 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) as at 27 January 2025, 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.
Shareholder Information | Notes to Notice of General Meeting
Velocity Composites Plc
AMS Technology Park
Billington Road
Burnley
Lancashire
BB11 5UB
www.velocity-composites.com
Registered No: 06389233
Velocity Composites plc
AMS Technology Park
Billington Road
Burnley
Lancashire
BB11 5UB
www.velocity-composites.com