Surface Transforms revenue up by a third in first half

Carbon fibre-reinforced ceramic material technology company Surface Transforms updated the market on its half-year of trading on Thursday, reporting that revenue grew 34% to £1.2m year-on-year, exceeding its original expectation that sales would be “broadly unchanged” from the run rate achieved in the first half of 2020.

The AIM-traded firm said that as it had previously announced, revenues were expected to further increase in the final quarter of 2021, following the start of production on the multi-year original equipment manufacturer (OEM) contracts already awarded to the company.

Cash at period end on 30 June totalled £17.2m, up from £1.1m at the end of December, reflecting the £19m fundraise after fees in February.

A tax credit of £0.6m was expected in August, with the drawdown of the £1m Liverpool City Region Combined Authority loan set for October.

The company reported continuing progress on both customer discussions and product testing, confirming that it was still expecting to announce “significant” further contract wins with both new and existing OEM customers in the current financial year.

OEM production cell one would be ready for the ramp-up in sales forecast for the final quarter, the company added.

Additionally, following the fundraise, the company said it had satisfactorily concluded its discussions with the furnace manufacturers for the next stage of manufacturing expansion, and would be issuing both purchase orders and providing deposits totalling £3m across July and August to the furnace and other equipment suppliers.

“This encouraging sales performance does not yet include the impact of previously-announced contract wins,” said chairman David Bundred.

“As previously reported, we anticipate a ramp-up of revenues from our new OEM contracts in the final quarter of 2021.”

In parallel, Bundred said the firm was “most encouraged” by the strategic progress made on further contract opportunities.

“Similarly, positive progress has been made with regard to equipment installation.

“The combination of these factors enable the company to reiterate that it remains on track to report a profit before tax in 2022, with further significant growth contracted for many years thereafter.”

Surface Transforms said it would report its interim results for the first half in September.

At 1256 BST, shares in Surface Transforms were up 7.34% at 63.33p.