Audited Final Results to 31 October 2024

Velocity Composites plc (AIM: VEL), the leading supplier of composite material kits to aerospace, is pleased to announce the Company's audited results for the twelve months ended 31 October 2024 ("FY24").

Highlights:

* Adjusted EBITDA is defined as Earnings before interest, tax, depreciation, amortisation, exceptional items and adjusted for share-based payments.

Jon Bridges, CEO. Velocity Composites added: "The Board expects further revenue growth in FY25 and into the future, 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."

Andy Beaden, Chairman, Velocity Composites, said: "The long-term OEM order books and forecasts in both civil and defence aerospace markets remain robust, with major prime manufacturers planning significant increases over the next few years in their production rates. We have positioned our engineering services to aid that challenge in unlocking capacity constraints and delivering efficiencies in the composite supply chain. We believe growth for Velocity is attainable over the longer term, through current contracts and new business opportunities in Europe and the US."

Investor Presentation

Chairman Andy Beaden, Chief Executive Officer Jon Bridges, and Chief Financial Officer Rob Smith will provide a live investor presentation for the Company's results via the Investor Meet Company platform at 09:00am on Thursday 30 January 2025.

The presentation is open to all existing and potential shareholders. Questions can be submitted in advance via the Investor Meet Company dashboard, or at any time during the live presentation. Investors can sign up to Investor Meet Company and add to meet Velocity Composites plc via:

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 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

Chief Executive Officer's Report

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 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 Company expects further revenue growth in FY25 and beyond, while retaining 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

Financial Review

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.

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.

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 of the annual report and accounts.

Rob Smith

Chief Financial Officer

There is no other comprehensive income in the current or prior year.

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:

Rob Smith Director

Co No: 06389233

Notes to Financial Statements

• General information
• Accounting policies

Basis of preparation

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.

Basis of consolidation

Going concern

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.

Revenue recognition

Inventory

Expenditure

Provisions

Retirement benefits: defined contribution schemes

Short-term employee benefits

Research and development expenditure

Foreign currency translation

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 yearend exchange rates are recognised in the consolidated comprehensive statement of income.

Impairment of non-financial assets

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

Bank borrowings

Financial assets

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.

Cash and cash equivalents

Impairment of financial assets

Trade and other payables

Share capital

Share premium

Share-based payment

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

Measurement and recognition (continued)

Current taxation

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

the initial recognition of goodwill;

Operating segments

Critical accounting estimates and judgements

Provisions for inventory

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.

Financial instruments and risk management

For non-current liabilities please see notes 18, 19 & 26.

Financial instruments

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%.

• Credit risk
• Liquidity risk

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%).

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.

Operating loss

The operating loss is stated after charging / (crediting):

The average monthly number of employees including directors, during the year was as follows:

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.

Finance income and expenses

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.

Loss per share

A list of all the investment in subsidiaries is as follows:

Directly owned

Inventories

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.

Trade and other receivables

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 yearend (2023: £Nil).

Trade receivables (Group and Company) held in currencies other than sterling are as follows:

Book values approximate to fair values.

Bank loans

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.

Leases

Right-of-use-assets

Low value leases

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.

Deferred tax

The movement on the deferred tax (asset)/liability is shown below:

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.

• Reconciliation of liabilities arising from financing activities

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

Share premium

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.

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:

The tables below split the Share-based payments according to the terms they have been awarded.

Share options granted under the salary sacrifice scheme.

Share options granted not under the salary sacrifice scheme.

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.

Related party transactions

Balances and transactions between the Company and its subsidiary, which are related parties, have been eliminated on consolidation. However, the key transaction with a related party is 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).

• Ultimate controlling party
• Capital commitments

At 31 October 2024 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.

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).

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.

Adjusted EBITDA