Surface Transforms reports 'stable' revenue

Surface Transforms reported “stable” revenue in its preliminary results on Monday, at £1.95m, compared to £1.94m in the prior year.

The AIM-traded firm said its gross margin rose to 67.1% from 59.5% in the 12 months ended 31 December, while its net research costs rose slightly to £2.47m from £2.44m, after capitalising £0.14m of gross expenditure.

Other administrative expenses increased by £0.29m to £1.89m, with the ceramic brake disc manufacturer reporting a loss before tax of £2.92m, narrowing from £2.98m in the prior year.

The board said research costs were partially offset by an accrued research and development tax credit of £0.6m.

Losses per share came in at 1.54p, widening from 1.39p year-on-year, with cash used in operating activities increasing by £0.24m to £1.01m.

Cash at year-end was £1.06m, up from £0.77m.

Capital expenditure in the period totalled £0.64m, rising from £0.38m, while cash tax credits of £0.44m were received in the period, against an accrual of £0.42m.

Post-period end, the company successfully raised £19m net of fees in a “significantly oversubscribed” placing, subscription and open offer.

In addition, it agreed a £1m low-interest loan with its local authority in March.

On the operational front, Surface Transforms secured a £27.5m contract over four years from a global automotive company during the year, with start of production in the second half of 2021.

Discussions were continuing around follow-on business.

It also secured a contract of more than £5m over five years on the Koenigsegg Gemera, with a start of production in mid-2022, marking the third contract award from the customer.

Start of production was delayed on the Aston Martin Valkyrie, while the company continued to install, test and system integrate the new machines in OEM production cell one, adding that it was on target to meet customer starts of production in mid-2021.

Surface Transforms also restarted its combined heat and power project, further enhancing its environmental, social and governance objectives.

“The transformation of our company in 2020 has been quite remarkable, with progress on almost all fronts,” said chairman David Bundred.

“This progress will be demonstrated, financially, when we go into production on OEM 8 and Aston Martin Valkyrie in 2021, at which point we will be profitable and generate cash from operations, before further capital investment.”

At 1410 BST, shares in Surface Transforms were down 5.14% at 69.25p.