Velocity Composites PlcLSE: VEL

H1 2025 Interim Presentation

Jun 24, 2025 at 10:00 PM UTC · MarketScreener

Watch Velocity Composites explain itVELOCITY COMPOSITES PLC (VEL) — Interim Results · Replay · Jun 25

INVESTOR PRESENTATION

Interim Results

For the Half Year Ended 30 April 2025

Presentation Team

Andy Beaden

Non-Executive Chairman

Andy has over 30 years' experience in finance, technology and manufacturing. A Chartered Accountant and economist by training, originally with KPMG and also having worked for two FTSE 100 companies, he is also a Fellow of the RSA (Royal Society for the encouragement of the Arts, Manufactures and Commerce). He was the CFO of the multi-sector material science business Luxfer, leading a secondary buyout in 2007 and then listing it on the NYSE in 2012.

He also co-founded and is Chairman of IN4.0 Group, a digital technology consultancy and training business and largest provider of AWS training bootcamps in the UK.

Jon Bridges

CEO

Jon co-founded Velocity Composites in 2007. Jonathan has over 32 years' experience within the advanced composites industry and is an experienced composite engineer. Previously, Jon was an Aerospace and Lean Solutions Specialist at Cytec Process Materials where he was responsible for direct sales support of UK and European based clients.

From 2003 to 2005 Jon was a Manufacturing Engineer for Safran Nacelles where he was responsible for the manufacturing function for a growing, highly loaded aerospace unit supplying multiple assembly lines. Jon has a BSc in Materials Science from Coventry University and is a Director of the North West Aerospace Alliance.

Rob Smith

CFO

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.

FY25 Financial Highlights

Revenue	Gross Margin %	Adjusted EBITDA*
£10.4m	29.0%	£0.3m
FY24 H1: £10.7m	FY24 H1: 22.5%	FY24 H1: £(0.2)m
Cash at Bank		Operating Loss
£1.2m		£(0.4)m
FY24 H1: £1.8m		FY24 H1: £(0.9)m

* Earnings before interest, tax, depreciation,

amortisation and adjusted for share-based payments. 4

Aerospace Industry | H1 2025 Review - 2025/6 Expectations

H1 2025 Outlook for 2025/26

Civil aircraft production rates still below pre-pandemic levels
The separation by customer plants, and sale of Spirit Aerosystems to Boeing and Airbus is expected to complete in H2 2025
This disruptive process added additional pressures to the civil supply chain for Boeing, Airbus and their suppliers. Completion will bring clarity to future opportunities
Wider (non-composite) supply chain issues in civil aerospace still impacting the ability of OEM's to ramp up key programmes, with Velocity's
customers not seeing any significant ramp-up in CY 2025
Limited direct impact from tariffs as all Company sales are made in the country of manufacture
The Company is working on securing additional contracts and has focussed efforts on the defence sector
The expected ramp ups on key civil programmes should materialise in FY2026 if OEMs are to achieve the forecasted delivery rates of new aircraft
© Velocity Composites plc - 2025 | https://www.velocity-composites.com
Civil ramp ups, along with increased defence spending, should increase customer need to outsource and reduce costs
Live bids with existing and new customers in the US and Europe
Greater engagement with potential customers in the defence sector to identify and submit proposals into key programmes and opportunities
Smaller programme wins with existing civil customers offsetting natural decline in legacy programmes
5

Business Progress
US OPERATIONS
- Good, planned, progress at Alabama facility. Focus on qualification of aero-engine parts delayed from 2024. Expecting sustained production H2 FY25
- New permanent freezer installed increasing capacity and improving efficiency
- Quality and delivery improvements made in FY24 sustained; Benefiting from a stable, balanced workforce enabling further operational efficiencies
- New business development continuing and expected to be supported by:
  - Improved global supply chain stability
  - Increase in global defence spending
  - Engaged with new potential customers in both civil and defence sectors

EUROPEAN OPERATIONS

Benefiting from pricing agreements implemented in H2 FY24, contributing to margin recovery in
H1 FY25
Implementation of Odoo-based VRP update completing in 2025
Ramp up of A350 programme (particularly -1000 variant) delayed in 2025 due to supply chain issues. No growth expected from this programme in 2025
New business activities focused on existing customers in both UK and mainland Europe

Summary Income Statement

* Earnings before interest, tax, depreciation, amortisation and adjusted for share-based payments.

Revenue decrease of 2.8% due to inventory reduction at A350 customer and reduced rate and delay in qualification of certain US programmes

	H1 2025 £000	H1 2024 £000	FY 2024 £000
Revenue	10,442	10,745	23,006
Cost of sales	(7,409)	(8,331)	(17,045)

Gross profit	3,033	2,414	5,961
Administrative costs	(3,430)	(3,325)	(6,978)
Other operating income	-	50	86

Operating loss	(397)	(861)	(931)
Finance expense	(177)	(219)	(413)

Loss before tax	(574)	(1,080)	(1,344)

Improved Gross Margin percentage to 29.0%
(H1 2024: 22.5%) due to effect of catch-up inflation increases and continuous improvement activities in operational efficiency
Administrative costs have increased by £0.1m reflecting a more benign inflation environment and targeted cost reductions

The above has driven an adjusted EBITDA profit of

Adjusted EBITDA*

258

(157)

374

£0.3m (H1 2024: loss £0.2m) and represents the first H1 post Covid profit and the second sequential half of profits

72,08548

Summary Statement of Financial Position

H1 2025

£000

H1 2024

£000

FY 2024

£000

Non-current assets

5,091

4,721

4,667

Inventories	2,374	2,096	2,500
Trade and other receivables	2,719	3,463	3,977
Tax receivable	-	450	-
Cash and cash equivalents	1,165	1,786	1,663

Increase at H1 2025 versus H1 2024 in non-current assets of £0.4m driven by investment in leased freezer; classed as a Right of Use asset replacing temporary freezers on short term rental agreements

Current assets

6,258

7,795

8,140

Inventory management remains a key focus and the £0.1m decrease in the half reflects a focus on improving inventory turns

Loans	503	503	503
Trade and other payables	2,848	3,468	3,933
Obligations under finance leases	705	489	561

Current liabilities	4,056	4,460	4,997

Non current liabilities	1,956	2,044	1,944

Net assets	5,337	6,012	5,866

Trade debtors are tightly controlled resulting in an improvement to debtor days H1 2025: 34.7 days (H1 2024: 46 days)
Payables decrease £0.6m due to reduced material supplier payables in line with demand

Non-current liabilities comprise CBILs £0.2m (H1 2024: £0.7m), dilapidations provisions

£0.3m (H1 2024: £nil) and obligations under finance leases £1.5m (H1 2024: £1.3m)

Summary Statement of Cash Flows

H1 2025

£000

H1 2024

£000

FY 2024

£000

Operating cash flows	275	(207)	345
Movements in working capital	208	(268)	(373)

Cash generated from operating activities in half of £0.6m (H1 2024: £0.5m consumed)

Cashflow from operations	483	(475)	(28)
Tax received	130	-	398

Net decrease in cash £0.6m (H1 2024: £1.4m decrease)

Repayment of CBILs in period of £0.2m (H1 2024: £0.2m)

Cashflow from operating activities	613	(475)	370
Cash used in investing activities	(461)	(189)	(584)
Cash used in financing activities	(736)	(728)	(1,412)

H1 2025

£000

H1 2024

£000

FY 2024

£000

(Decrease)/increase in cash	(584)	(1,392)	(1,626)
Cash at 1 November	1,663	3,178	3,178
Effect of FX rate changes	86	-	111

Cash	1,165	1,786	1,663
CBIL loan	(734)	(1,222)	(971)
IDF	-	-	-

Overall, a net cash position at £0.4m with headroom in the IDF facility:

Closing cash

1,165

1,786

1,663

Net cash

431

564

692

H2 FY25 Outlook

A350 programme production rates expected to be flat in the year. Increased rates now expected in FY26
Final contracted programme from previously announced agreement expected to reach sustained production at US site through H2 FY25. Customer has faced unexpected resource constraints
Business development activities focused on defence sector
The board sees good civil sector opportunities in the US, UK and EU where production rates start to increase
Management looking to enhance its on-boarding process to (1) bring benefits to Velocity and
© Velocity Composites plc - 2025 | https://www.velocity-composites.com
our customers sooner (2) mitigate delays in qualification processes
Anticipated near-term growth supports the Board's key targets:
- 25% plus gross margin
- 10% adjusted EBITDA* margin
- 25% return on capital
The Board expects FY25 to be comparable with FY24 but with higher margins. Revenue growth from new and existing programmes is now projected for FY26
10

Summary
- Sustained revenue expected for FY25 but at improved gross margin
- Remaining aero-engine component approvals in US now expected in H2 FY25
- A350 programme set to significantly increase in FY26 as OEM strives to fulfil backlog
- Executive team strengthened with the addition of an experienced COO in H1
- New business opportunities being developed in the UK, US and Europe with existing and new customers, including in the defence sector
  © Velocity Composites plc - 2025 | https://www.velocity-composites.com
- Sustained profitability and cash generation expected in H2 FY25 based on current contracted business

Appendices

Major Shareholders (as at 30 April 2025)

NAME

Number of Ordinary Shares

% of issued Ordinary Shares

Amati Global Investors Jonathan Bridges Seneca Partners Stonehage Fleming Christopher Banks Gerard Johnson

Rathbones

5,650,294

5,365,929

4,519,236

4,458,956

4,202,693

4,000,000

2,832,257

10.45%

9.93%

8.36%

8.25%

7.77%

7.40%

5.24%

Experienced Board and Senior Management

Andy Beaden

Non-Executive Chairman

Jon Bridges

Chief Executive Officer

Rob Smith

Chief Finance Director

Annette Rothwell

Non-Executive Director

David Bailey

Non-Executive Director

Andy has over 30 years experience in

finance, technology and manufacturing. He is a Chartered Accountant, and worked at Executive Board level for 20 years in a series of advanced material technology businesses, both listed and privately owned.

Jon has 32 years' experience within the advanced composites industry and is an experienced composite engineer. Jon is a founder of Velocity and known for his extensive knowledge around composite process technologies.

Rob has 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. He has a proven track record in advanced manufacturing at both CFO and CEO level.

Annette has extensive experience in industries undergoing

transformational change.

Since 2011, she has served as a director on the board of the Midlands Aerospace Alliance, the regional body for the Aerospace, Defence and Security industry. She has held a number of senior aerospace roles with global responsibility for supply chain management and procurement.

David 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 has a PHD in

aeronautics and an in-depth practical knowledge around operational excellence and sustainability within multiple manufacturing sectors.

Our Approvals

AIRBUS:

ABP-62185, ABP-61289, AIPS03-02-018, AIPS03-02-019, AIPS03-07-007

BOEING:

BCA-65224-0312

+ SBP-65224-0411

NADCAP - AC7118 (KSP)

Merit status (all UK facilities)

Investment Case

VELOCITY COMPOSITES PLC is an established business which delivers real benefits to large aerospace manufacturers by using proprietary digital technology to manage and remove waste from the complex raw material supply chain
FIRST TO MARKET We are the only company to provide a complete outsourced solution to composite aerostructure manufacturers
HUGE MARKET GROWTH Aerospace industry currently spends $6.5bn per annum on composite materials. Projected tenfold increase of composites within aircraft by 2041 to meet net zero
OUR SOLUTIONS ARE NECESSARY TO THE
AEROSPACE INDUSTRY. If the aerospace industry is to meet its projections it needs our solutions to reduce costs and accelerate production rates
SUSTAINED PROFITABILITY AND POSITIVE CASH GENERATION EXPECTED IN H2 FY25 with
© Velocity Composites plc - 2025 | https://www.velocity-composites.com
enough contracted business that at full production rates means in FY25 management expect to achieve improved adjusted EBITDA profitability
DEFENCE INDUSTRY We are focusing our business development efforts on winning more defence sector business to balance out our civil programmes
REVENUE INCREASES set resume in FY26 as programme production rates increase when supply chain issues are overcome and US qualification process completes. FY25 expected to see revenues the same levels as FY24. Broker consensus forecasts FY25 £23m (FY24 actual £23m) and FY26
£27m
5 YEAR REVENUE TARGET OF £100M WITH
10% EBITDA Highly qualified pipeline of $250.0m. Exisiting facilities could support up to £70.0m annually
16

Composite Materials
- A combination of a matrix and a reinforcement, which when combined gives properties superior to the properties of the individual components
- In the case of an aerospace composite, the reinforcement is the fibres and the matrix is the thermosetting resin
- Better weight saving, strength, corrosion resistance and fatigue resistance when compared with metals
- Less weight equals less cost for airlines and increased range
- Material has a shelf life until cured

COMPOSITE USE IN AIRCRAFT

COMPOSITES 50%

Sustainability driving growth | New generation aircraft

10x

25%

"Today, around 30% of the world's in service aircraft fleet are of the latest generation. Replacing the remaining 70% of previous generation aircraft, combined with more efficient ways to operate aircraft, SAF, future technologies such as hydrogen and hybridisation are key to Airbus' decarbonisation journey..." (AIRBUS Global Market Forecast 2024)

95%

By 2041, new generation passenger aircraft will represent >95% of the fleet

10x growth in new generation aircraft

The new generation of aircraft will be lighter, stronger, and have a 25% lower carbon footprint

50,000

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

Number of passenger aircraft in service*

13%

30%

>95%

By 2041, new generation passenger aircraft will represent >95% of the fleet

10 x growth in new generation aircraft

777X

737 MAX

787

A220 A320 NEO A350 NEO

A350

Velocity currently provides composites for the following New Generation Aircraft and has the potential to service all new programmes

DEFENCE PROGRAMMES

2000 2005 2010 2015 2019 2023 2026 2031 2036 2041

1st 2nd & Previous generation

New Generation (High composite content)

* Western built passenger aircraft above 100 seats - pax aircraft only
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
18
New generation: A220, A320neo Fam., A330neo, A350, A380, 737Max, 777X, 787 & new programs

Source: Airbus, Global Market Forecast '22 (https://www.airbus.com/sites/g/files/jlcbta136/files/2022-07/GMF-Presentation-2022-2041.pdf)

2023 figure: Airbus, Global Market Forecast '24 (pg 26) (https://www.airbus.com/sites/g/files/jlcbta136/files/2024-07/GMF%202024-2043%20Presentation_4DTS.pdf)

The Velocity Solution

Raw Material

Structural Product

Customer

Vacuum Bag Product

Finished Part (1m diameter)

Aimed at providing at least 10% material cost saving and 20% time cost saving to customers 19

MATERIAL SUPPLIER

EXPECTED STOCK ACTUAL STOCK

CUSTOMER

ERP

DEMAND PLANNING

VC DEMAND

(KIT/Part level)

IBP MONTHLY DEMAND REVIEW

MATERIAL D

ORDER BOOK

12 to 34 Weeks

RAW MATERIAL D

FREEZER

MANAGEMENT

RAW MATERIAL STOCK

(WITH RFID)

2 to 12 Weeks

P.O. COVER

PLANNED Vs ACTUAL

PRODUCTION

MEC

STOCK NEEDED

UNUSED RAW MATERIAL STOCK

DEFROST

LEC

PRODUCTION D

DEFROST

FREEZER

SCHEDULING

PRODUCTION PLAN & NESTS

DIGITAL CELL

(KIT MANUFACTURE)

D DASHBOARD

C of C / DELIVERY NOTE

KIT LOGISTICS

CUSTOMER

MASTER KITS

CLEAN ROOM

Velocity Technology

Where Velocity sits in the global composites industry

VELOCITY TOTAL KIT PROVISION

Inventory Finance
Inventory Management
Global Material Suppliers / Distributors

Demand Aggregation
Goods In
Quality Inspection
Kit Manufacturing
Warehousing
Goods Out / Transportation
Global Primes / Tier 1 Manufacturers
Subcon Integration
On Site Support

Flow Down Material Pricing

Velocity has first mover advantage and is the only company to provide an end-to-end solution for manufacturers.

Revolutionising Composite Cleanrooms 22

Contact us:

https://www.velocity-composites.com

+44 (0)1282 577577

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