Brakes specialist targeting 2022 for profit and cash generation
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Brakes specialist Surface Transforms published annual results to December 31, 2020, today, which showed revenues and losses remained fairly static throughout the year – but said it is poised to move into profit by 2022.
The Knowsley firm, which manufacturers brake systems for high performance cars and aircraft, achieved turnover of £1.952m, compared with £1.938m in its unaudited results for the previous year. The pre-tax loss of £2.917m compared with a pre-tax loss of £2.982m in 2019.
Today’s figures also revealed that net research costs were also relatively stable at £2,468, against £2,437 the previous year.
Cash at December 31, 2020 was £1.058m, compared with £770,000 in the prior year.
Post balance sheet date, the company successfully raised £19m net of fees in a significantly over-subscribed placing, subscription and open offer.
In addition to this, the company agreed a £1m low interest loan with the local authority in March.
During the reporting period, Surface Transforms secured a £27.5m contract over four years from a global automotive client, (OEM 8) with start of production in the second half of 2021. Discussions continue regarding follow on business.
It also secured a contract in excess of £5m over five years on the Koenigsegg Gemera with start of production mid-2022 – the third contract award from this customer.
The company said the impact of Brexit has not been dramatic. As previously reported only about 15% of revenues up to 2024 are into the EU zone and as such it is not a central issue in its planning.
It also revealed that it learned during the year that a significant proportion of one client’s car production on models involving Surface Transforms is to be manufactured in South Africa, not Germany.
Nonetheless supply disruption has been seen in the early post- Brexit days, it revealed.
Chairman, David Bundred, said: “The company’s attitude has been pragmatic; if it now takes weeks to do what used to be done in days, we simply have to accept that reality and plan accordingly.
“The medium term response will be a warehouse, or some assembly, on the continent when we reach mature volumes on more than one EU based OEM (original equipment manufacturer).”
He added: “The twelve months to December 2020, covered in this report, in combination with recent events in 2021 mark the ‘coming of age’ for Surface Transforms plc.
“In this period the company has increased its order book to £43m with multi-year contracts, some of which extend to 2027; has virtually completed the installation of capacity for £20m p.a. sales; has raised the capital required to fund a further expansion to £35m p.a. sales, as yet uncontracted but realistically anticipated; and significantly strengthened the board.
“The company is now poised to move into profit and cash generation, initially on a monthly basis as OEM 8 and Aston Martin Valkyrie enter production in the second half of 2021, and then looking forward to reporting full year profits and cash generation in 2022.”