Velocity Composites has hailed the success of its May initial public offering (IPO) in drumming up interest from new customers around the world as its loss widened in its first full-year results since floating.
The company, which makes composite material kits for the defence and aerospace industries, plans to scale up into a global player.
For the year to the end of October 2017, Velocity said revenue grew 46 per cent to £21.4m, reflecting new contracts and the success of the firm's new Fareham facility.
The company's loss before tax widened to £627,000 compared with £355,000 the previous year due to the investment into the company in preparation for the IPO and the opening of the Fareham site.
Velocity raised net cash of £9.2m in its May IPO, and it put £400,000 towards developing the business in new areas during the period.
Shares in the company dropped 14.27 per cent to 102.88p, however, after its house broker cut its estimates.
Why it's interesting
Velocity has contracts with the likes of BAE Systems, Boeing and Airbus. It sits between the material supplier and the customer, acting as the Ikea to the aerospace industry by creating kits of composite materials, which are used to make aerospace parts.
"The IPO has been great for us," chief executive Jon Bridges told City AM, explaining that the company plans to eventually dominate its sector globally.
Velocity has already received customer requests from the Americas and Asia, and it is now starting the preparatory work to enter those markets.
Bridges said: "We’ve always known this is a global business. It's great to see the model we developed in Europe is just as applicable in North America and Asia."
However, the firm is not taking its eye off of the UK. "Our prime focus is to move into mainland Europe and expand in the UK," Bridges said. The company is in "detailed" planning discussions over its new European facility, which is expected to be announced this year.
David Buxton, analyst at FinnCap, said Velocity's growth trajectory is "robust", but additional development costs have caused it to lower its earnings per share and downgrade its target price to 125p.
"While the reduction in EPS forecasts is a setback, sales growth shows huge momentum. The group has seen acceleration in customer interest and market opportunity since IPO, which bodes well for the longer-term prospects of the group," Buxton said.
What Velocity Composites said
Bridges said the company is looking forward to delivering the same level of growth in 2018.
We look forward to the year ahead and beyond with confidence, underpinned by our strong visibility on revenues and detailed planning discussions with respect to a new facility in Europe.
We look forward to updating investors in respect of our operations and corporate development in the coming months, as we address the global market opportunity available to us.