A breakdown of a furnace used to coat its high-spec carbon brakes has affected Surface Transforms's (LON:SCE) revenues, though the underlying trading picture was strong.
The furnace problems meant revenues in the year to May were below expectations at £1.1mln (2014: £1.3mln), but chairman David Bundred expects the shortfall to be recovered in the current year.
“The furnace is again operational although not yet operating at full capacity. We are confident the majority of the revenue shortfall will be recovered in the first quarter of the new financial year."
Surface’s brakes have traditionally been used in the most demanding situations such as fighter jets and racing cars, but the group is expanding into more mainstream markets.
Road car sales increased by 52% to £418,000 (2014: £276,000) in the year to May and underlying revenues overall rose by 10% higher than prior year.
The company added that trials with a major brake manufacturer had now been completed, with the results being shared with a UK car manufacturer. A German car group is also to visit shortly as part of its vetting plan for new suppliers.
“The Board of Directors continue to believe that it will be able to make a significant announcement in the near future,” it added.
On the production front, Surface now believes a proposed pilot plant can build 17,000 discs, compared to 10,000 originally estimated, for the same £4mln investment.
Losses for the year will be higher than expected in the just ended due to the furnace issues, but cash at the year-end was £776,000 (2014: £151,000) with a £200,000 R&D tax credit due in the next 4 months.
An upgrade to CVI furnace is expected to cure the problems at a cost of £150,000.