News Column

Surface Transforms Eyes "Game Changing" Opportunities As Loss Widens

August 29, 2014

Hana Stewart-Smith

LONDON (Alliance News) - Surface Transforms PLC Friday said it is advancing "game changing opportunities" and expects to see continuing sales growth, even as it posted a widened pretax loss in the half year to end-May.

Surface Transforms manufactures carbon ceramic brakes for vehicles, aerospace and military markets amongst others.

The company posted a pretax loss of GBP842,000, widened slightly from GBP712,000 in the previous year, despite seeing revenue rise to GBP1.3 million from GBP1.1 million, as it increased its investment in engineering and development.

Revenue growth was driven by a rebound in sales to a European brake manufacturer who had weathered supply chain problems in 2013 and a repeat of licence income to a US clutch manufacturer, although this was offset somewhat by reduced sales of its retrofit road car product.

Surface Transforms has switched to a more direct sales approach to address these lower sales after its appointment of three master distributors was unsuccessful, and has appointed additional distributors. This has boosted the summer 2014 sales season, the company said, although still slower than planned.

Gross margin narrowed, hit by the company's sales mix, as higher margin road car sales were substituted with lower margin pre-form sales. The company is seeking to move beyond the retrofit market to winning large contracts with original equipment manufacturers.

Surface Transforms cited several potential OEM contracts, including with an existing aerospace customer, and with two UK car manufacturers currently testing its products.

"Surface Transforms continues to develop and is progressing well its 'game changing' opportunities," Chairman David Bundred said in a statement. "The board expects continuing sales growth and is confident of making further announcements during the year."

Shares in Surface Transforms were trading down 4.5% at 7.40 pence Friday midday.

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Source: Alliance News

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