14th Sep 2020 10:49
(Alliance News) - Surface Transforms PLC shares leapt on Monday following expectations of growth in annual revenue and a new GBP27.5 million contract win.
Shares in the Liverpool-based carbon fibre ceramic brake discs manufacturer were 84% higher at 45.00 pence on Monday in London.
Due to increased retrofit and OEM sales in spite of Covid-19, Surface Transforms expects revenue for the year to be GBP2.0 million, GBP400,000 ahead of market expectations.
In August 2019, the had company changed its financial year-end to December 31 from May 31.
The rise in revenue is expected to mitigate the working capital effect from additional overheads in the year following Surface Transforms's decision to invest more in its headcount.
The company also said it has signed a contract with an unnamed vehicle manufacturer - designated as OEM 8 - to become the tier one supplier of a carbon ceramic brake disc.
The contract will commence in the summer of 2021 and has an estimated lifetime revenue to be around GBP27.5 million. Forecast production volumes in the contract show a ramp up to full series volume starting in 2021, with annual revenue being around GBP8 million per annum for the next three years.
The contract covers production to 2024 but it may potentially be extended.
"This, truly game changing, award builds upon the recent trend of significant contract wins with mainstream automotive manufacturers. The award, which on its own, doubles previous revenue projections for FY22 and accelerates Surface Transforms' transition into profitability and operational cash generation," said Chief Executive Officer Kevin Johnson.
"This is a very good day for Surface Transforms and we look forward to further extending our relationship with this major new customer and making further contract announcements with both OEM 8 and other existing and new customers," Johnson added.
By Dayo Laniyan; [email protected]
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