Surface Transforms restructures for sell-off

SURFACE Transforms, which produces brakes used in jet fighters and supercars, has reported widening losses, despite a 34% increase in turnover, and said it could sell parts of the business in future.

Pre-tax losses widened to £991,585 from £750,459 a year earlier even though turnover increased to £679,284 (2008: £508,111) for the year to the end of May 2009.

The Ellesmere Port-based company’s cash balance stood at around £400,000 with no borrowings, compared to the £1.1m it had a year ago.

At the year end the company’s order book stood at £166,000 but has since increased to £308,000.

Chairman Kevin D’Silva said that despite the recession, the company achieved some milestones through the year, such as winning a multi-year contract with German break aftermarket company Mov’it GmbH, which is forecast to yield revenues of £300,000 to £400,000 a year.

He said: “There were disappointments as well and these resulted from the very sharp decline in business confidence during the final months of 2008 and the first quarter of 2009. In February 2009, we signalled that the company’s revenues for the full year would fall short of the market expectations that were set in August 2008 and that the principal cause of the revenue reduction was a prospective fall in orders from our automotive customers.”

He added that business in the aerospace and defence market sectors was considerably higher than budgeted –it saw an 182% to £236,000 – and added that this area provides the company with a platform for growth despite the continued low levels of business expected from the automotive sector during the remainder of 2009 and most of 2010.

Since the year end the company has created four wholly owned operating subsidiaries, where intellectual property and management is held within the group and the technology is licensed down to each subsidiary.

This means that licensing and commercial supply agreements within each subsidiary are kept separate, and the group can consider the sale of one or more of its subsidiaries “should the opportunity arise”, it said.

The company said it expects to reduce losses over this financial year and work towards breaking even in cash terms.