LONDON (Alliance News) - Velocity Composites PLC on Friday said it expects to finish the year in line with its revised guidance and said its chief technology officer has stepped down from the board with immediate effect.
The composite material kits supplier said that revenue for its financial year ended October 31 is to be "slightly above" GBP24 million.
At the start of September, Velocity Composites issued a profit warning due to delays in both finalising customer contracts and placing production orders. On that date, Velocity Composites forecast revenue of GBP24 million, 16% above its prior year revenue but below market expectations.
The new announcement places Velocity Composites in line with this figure. The supplier also said its net cash position, excluding finance lease obligations, is to be around GBP3.6 million on October 31.
Furthermore, it was also announced that Jonathan Bridges, chief technology officer and former chief executive officer at Velocity Composites, will step down with immediate effect. Bridges moved from CEO to chief technology officer on September 5 but will no longer serve on the board.
Executive Chairman Mark Mills is to continue as interim executive chairman while the hunt for a new CEO is "accelerated" with a focus on appointing an external candidates.
It was additionally announced that the company is likely to provide an update on its search for a new chief financial officer in early 2019, with an update on the CEO appointment to follow.
Velocity Composites also said it remains committed to opening new sites in new territories, using the approximately GBP4 million raised from its initial public offering, ahead of its May 2019 deadline.
After May 18, tax reliefs on this enterprise investment scheme/venture capital trust cash may be affected. The date on which the funds are deployed, however, is dependent upon the securing a "significant customer contract".
Velocity Composites said it has continued to invest in sales and business development, including that which relates to the potential opening of a new facility in Europe. As with the cash deployment, this new facility is also contract-dependent.
The supplier also has access to an invoice discounting facility of approximately GBP5.0 million, with GBP1.0 million of this to be drawn by the end of October.
Gross margins in the second half of its year have "stabilised" at 19% and above on a monthly basis.
In its 2019 and 2020 financial years, Velocity Composites has revenue visibility of GBP23 million per year from existing contractual relationships.
"We will finish this financial year in line with the previously announced revised expectations. The company faces challenges in terms of timely new customer acquisition and onboarding. The company now needs to build momentum with increased focus on winning additional work from existing customers and those close to the UK to drive more rapid revenue growth and then build out from there in terms of new territories," said Mills.
Shares in Velocity Composites were flat at 30.00 pence on Friday afternoon.
Velocity Comp (VEL)