Brake maker maintains future EBITDA and profit forecasts
Surface Transforms, the Knowsley-based ceramic brake manufacturer, reported better sales for the half year to November 30, 2019, and an improvement on its losses and said its predictions on eventual profits remain.
The firm, which makes brakes for aircraft and high performance cars, has changed its year-end date to December 31.
It said revenues increased 183% to £1.451m, compared with £512,000 in the seven months to December 31, 2018, while losses before and after tax narrowed, from £1.509m in 2018, to £1.302m.
Cash at December 31, 2019, was £770,000, against £319,000 in December 2018.
During the reporting period the company secured an €11.8m contract over seven years from a major German automotive client with start of production (SOP) in October 2021. Discussions continue regarding follow-on business.
However, there were further SOP delays of contracts with a British automotive customer.
Surface Transforms won, and delivered, a £400,000 contract with another British automotive customer and discussions continue regarding follow on business.
It also received full regulatory approval from the Environmental Agency for its Knowsley site.
Administrative expenses rose by £134,000 to £864,000 – H1-2018: £730,000 – largely driven by above budget plant repair costs of £66,000, certification and consultancy costs of £45,000 to achieve environmental agency approval, together with the introduction of IFRS 16 accountancy standards. The certification costs will not recur.
Chairman, David Bundred, said: “Surface Transforms continues its journey from a development company to a mainstream volume automotive supplier with a site capable of revenues of £50m per year in a market that could ultimately reach £2bn.
“The board maintains previous guidance that, with the recent awards of multi-year, multi-million revenue contracts, the company will reach break-even EBITDA (including the tax credit) in H2 2020, positive EBITDA (including the tax credit) in 2021 and profit before tax in 2022.
“In 2020 we expect to build on this foundation by winning further contracts, completing the system integration of OEM (original equipment manufacturer) Production Cell One and begin delivering both production and development parts on the new contracts.
“Finally, may I conclude by recording the board’s appreciation of the outstanding contribution by all members of staff. Thank you.”