KNOWSLEY, U.K. – Surface Transforms, the U.K. manufacturer of carbon brake discs, just released information on the year ending Dec. 31, which discussed revenue below £3 million. The following is from the report released Dec. 14; the entirety of which can be viewed by clicking HERE.
Surface Transforms (AIM:SCE), manufacturers of carbon fiber reinforced brake discs, announces the below trading and operations update and progress with OEM 8.
Trading Revenue Below Expectations for Surface Transforms and operations update
The Board of Surface Transforms is disappointed to advise that despite considerable growth against prior year, revenue for the year ending 31 December 2021 will be below £3m, significantly short of market expectations. The shortfall has mainly been as a result of delays in the final commissioning of the upscaled production capacity at Knowsley (in relation to OEM Production Cell One) and the associated start of the anticipated upscaling of commercial revenues expected from December.
Whilst this capacity program progressed considerably during the year, a series of minor startup challenges has caused output delay, resulted in Q4 output missing target. By December, these issues have been narrowed down to an issue with one particularly complex furnace, which the Board believe will be fully resolved imminently. Given December is a short month, the Company is unlikely now to recover the sales gap in this financial year.
It is important to note that these sales have not been lost, the key OEM customers have not seen any impact and the revenue gap, whilst proportionately large in 2021, is small in relation to overall 2022 volumes and is expected to be recovered progressively through Q1 and Q2 2022.
The Board recognize that the short-term effect of this is disappointing, but as noted above, believe these operational issues will all be satisfactorily resolved in short order. Accordingly, the Board intend to provide a further operations update in January 2022 and also to provide quarterly updates for a period of time to reassure the market in respect of revenue performance alignment with future market expectations.
Progress on OEM 8
As previously notified, the Company won a lifetime £27.5m sales contract with an expected maturity level of £8m sales per year, commencing, (later than planned) in 2022, with a customer described as OEM 8. Again, as previously announced, the order intake for this car has greatly exceeded the customers original volume expectations and they have been in discussions with all the supply chain to explore the capacity availability for significant volume increases.
Further contact awards
The Company is pleased to report continuing progress being made on further contract awards and expects to make a further announcement in the near future.
To view the entire announcement, including a comment by the Chairman, click HERE.