Velocity Composites Plc · LSE:VEL
Velocity Composites — H1 2019 Earnings Presentation
33 slides from Velocity Composites's earnings presentation, June 2019
Slide 1: Interim Results Presentation June 2019
VELOCITY COMPOSITES PLC Interim Results Presentation June 2019 © Velocity Composites Plc - June 2019 andrew.hebb@velocity-composites.com
Slide 2: Contents
Contents © Velocity Composites Plc - JUNE 2019 • Introduction • Business Update • Financial Highlights • Business Development • Summary & Outlook 1
Slide 3: Highlights
Highlights Operational Financial © Velocity Composites Plc - JUNE 2019 • Wesco collaboration agreement • Revenue growth (5.3%) announced leading to first operational • Gross margin 20.9% at similar level to site in the USA H2 18 (H1 FY18: 15.2%) • Growing pipeline of opportunities • Adjusted profit
Slide 4: Business Update
Business Update Sales Activity Long term strategic prospects © Velocity Composites Plc - JUNE 2019 • Focus on partnerships to overcome • USA – Wesco partnership in SE USA limitations of company size in market to be “showroom” and first production facility • Pipeline of opportunities strengthening wi
Slide 5: Board Update
Board Update • Board consider position and process publicly • The Founders have stated that they disagree with © Velocity Composites Plc - JUNE 2019 agreed by Company and Founders at AGM the Board approach and instead have proposed an (25 March 2019, RNS that day): alternative approach to re-constit
Slide 6: Financial Highlights
Financial Highlights Financial Highlights • Revenue increased 5.3% 5.3% © Velocity Composites Plc - JUNE 2019 H1 2019 H1 2018 Fy18 • Revenue increased £000 £000 £000 – Safran Commercy/GKN with reduced demand ! Safran Commercy with reduced demand from GE from Kaman Revenue 12,243 11,622 24,478 • Sign
Slide 7: Gross Profit Improvement
Gross Profit Improvement SLIDE 12 FY18 & FY19 Gross Margin © Velocity Composites Plc - JUNE 2019 FY 18 & FY 19 H1 Gross Margin • Gross profit increase for H1 of 45% to £2.6m Y18: 25.0% (FY18: £1.8m) • Gross margin for H1 FY19 of 20.9% compared 20.0% to 18.3% for FY18 o • Similar gross margins in H2
Slide 8: Consolidated statement of financial position
Consolidated statement of financial Consolidated statement of Financial Position position Slide 13 AsAs at at 30 30 AprilApril 20192019 © Velocity Composites Plc - JUNE 2019 H1 2019 H1 2018 31 Oct 18 £000 £000 £000 Non-current assets - Intangible assets 350 355 362 - Property, plant and equipment 1,
Slide 9: Consolidated statement of financial position (continued)
Consolidated statement of financial Consolidated statement of financial position position (continued) 14 AsAs at at 30 April 30 April 2019 2019 © Velocity Composites Plc - JUNE 2019 H1 2019 H1 2018 31 Oct 18 £000 £000 £000 Non current liabilities - Deferred tax - - - - Net obligations under finance le
Slide 10: Working Capital
Working Capital Stock - Nov 17 to Apr 19 4,000,000 nd © Velocity Composites Plc - JUNE 2019 3,500,000 Stock - Nov 17 to Apr 19 3,000,000 4,000,000 • Stock levels closely managed n and 3,500,000 2,500,000 3,000,000 2,000,000 • Designed to protect customer supply chain m 2,500,000 1,500,000 and rapid
Slide 11: Cash Flow
Cash Flow H1 H1 31 Oct Cash Flow 2019 2018 18 Cash Flow Operating loss £000 (380) £000 (919) £000 (1072) • Significant reduction in Operating Loss • Significant reduction in Operating Loss © Velocity Composites Plc - JUNE 2019 Depreciation & Amortisation H1 219 H1 196 31 Oct 413 2019 2018 18 •• Inve
Slide 12: Business Development
Business Development • Customer Engagement Lifecycle © Velocity Composites Plc - JUNE 2019 • Dependencies • Investment in Growth update • USA – Wesco 11
Slide 13: Customer Engagement Lifecycle
Customer Engagement Lifecycle * © Velocity Composites Plc - JUNE 2019 INITIAL CUSTOMER BID RESPONSE ENGAGEMENT plc GATE 1 GATE 2 GATE 3 • Visits Preliminary Bid Bid / No Bid Solution Submission • Presentations Development • Obtain RFQ and data Review 1 to 3 Months 0.5 to 2 Months CUSTOMER RFQ ASSESS
Slide 14: Dependencies
Dependencies • Customers do what they say they are going to do – “subject to customer demand fluctuations” © Velocity Composites Plc - JUNE 2019 • Velocity continues to exploit market opportunities and fill the new business hopper • Velocity convert interest to RFQ’s • Customers are prompt in making
Slide 15: Investment in Growth Update
Investment in Growth Update © Velocity Composites Plc - JUNE 2019 Europe Asia North America • Bid on six key projects • Bid on 1-2 key projects • Targets identified Entry Strategy • Team in place but • Distribution model explored • Distribution model investigated requires building with partners with
Slide 16: USA – Wesco
USA – Wesco • Wesco identified as strategic partner • 21 customers identified with a total © Velocity Composites Plc - JUNE 2019 in early 2018 (complimentary service spend of $600m offering) • Six customers visited with a combined • Wesco are the world’s leading spend of $150m independent distributo
Slide 17: Summary & Outlook
Summary & Outlook • Growing pipeline of business opportunities • Significant win in creating the collaboration with © Velocity Composites Plc - JUNE 2019 Wesco, initially targeting the US market • Potential to convert pipeline to new contract wins and production in 2020 • EIS/VCT position resolved w
Slide 18: Appendices
© Velocity Composites Plc - JUNE 2019 17 Appendices
Slide 19: Company overview and mission
plc © Velocity Composites Plc - JUNE 2019 • Mission: To revolutionise aerospace and high value composites manufacturing by enabling our customers to reduce waste/costs whilst meeting increased global demand by creating a lean and scalable supply chain in a more-for-less era • Velocity manufactures h
Slide 20: Global Demand Update
Global Demand Update The Macro Aircraft Market Growth © Velocity Composites Plc - JUNE 2019 • Over 41,000 aircraft to be delivered in next two decades • Aircraft fleet growth >90% over next 20 years Aircraft Units • Introduction of new aircraft variants with higher proportions of composite material
Slide 21: Velocity Process
Velocity Process Raw Material © Velocity Composites Plc - JUNE 2019 Structural Kit plc Vacuum Bag Kit plc Finished Part (1m diameter) Saving > 10% material and > 20% time 20
Slide 22: The Composites Manufacturing Process
The Composites Manufacturing Process The Traditional Supply Chain For Manufacturers © Velocity Composites Plc - JUNE 2019 NON-COREVALUE ENGINEERING BUSINESS TO MANUFACTURER Supply Material Clean Room Material Material Material Material Procurement Storage Cutting and Delivery Manufacturing Curing Ma
Slide 23: How Velocity adds value
How Velocity adds value © Velocity Composites Plc - JUNE 2019 Savings made by customers using Velocity •M aterial spend reduced by 10 - 53% due to smarter nesting •M aterial increase in productivity due to reduced production times • Increase in productive cleanroom floorspace by removing associated
Slide 24: Revenue by Customer
Revenue by Customer Revenue by Customer Revenue mix by customer Revenue mix by customer © Velocity Composites Plc - JUNE 2019 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-1
Slide 25: Revenue by Aircraft
Revenue by Aircraft Revenue by Aircraft Revenue mix by aircraft Revenue mix by aircraft © Velocity Composites Plc - JUNE 2019 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-1
Slide 26: Actions being taken to improve new contract acquisition
Appendices Actions being taken to improve new contract acquisition • Improved focus on Pipeline and actions required © Velocity Composites Plc - JUNE 2019 • Business Development process reviewed and focusing on global Tier 1 customers • Selling and Cost prices on plan leading to stable margins • Foc
Slide 27: Brexit Update
Appendices Brexit Update • Supplier Brexit plans from all suppliers reviewed © Velocity Composites Plc - JUNE 2019 • Buffer stock holdings increased across range with plan to de-stock by the end of October (additional c.£0.3m) meeting contracted buffer stock levels (overall holding 2 months stock) •
Slide 28: Consolidated statement of total comprehensive income
Appendices Consolidated statement of total comprehensive income Consolidated statement of total comprehensive income Slide 8 © Velocity Composites Plc - JUNE 2019 H1 2019 H1 2018 31 Oct 18 £000 £000 £000 Revenue 12,243 11,622 24,478 Cost of sales (9,679) (9,856) (19,991) Gross profit 2,564 1,766 4,48
Slide 29: Consolidated and Company statement of cash flows
Appendices Consolidated and Company statement of cash flows onsolidated and Company statement of cash H1 flows © Velocity Composites Plc - JUNE 2019 2019 H1 2018 31 Oct 18 £000 £000 £000 Operating activities - Loss for the period (430) (812) (994) - Taxation - (175) (213) - Loss / (Profit) on disposal
Slide 30: Consolidated and Company statement of cash flows (continued)
Appendices Consolidated and Company statement of cash flows (continued) Consolidated and Company statement of cash flows © Velocity Composites Plc - JUNE 2019 H1 2019 H1 2018 31 Oct 18 £000 £000 £000 Investing activities - Purchase of property, plant and equipment (59) (102) (220) - Development expen
Slide 31: Velocity Disclaimer
Velocity Disclaimer IMPORTANT NOTICE of the Presentation (unless stated otherwise) and is subject to updating, expressly disclaims any intention, to update or revise any such statements, The following presentation, including these slides, other materials distributed completion, revision and further
Slide 32: Revolutionising composite cleanrooms
plc revolutionising composite cleanrooms © Velocity Composites Plc - JUNE 2019 31
Slide 33: plc
velocity