StockMarketWire.com - Brake technology group Surface Transforms said it had been selected as a tier-one supplier of a carbon ceramic brake disc on a vehicle by a global vehicle manufacturer.

Surface Transforms also upgraded its annual revenue guidance.

The company said it had signed a contract with the manufacturer, which it didn't name, specifying detailed pricing, volume, payment terms and other generic supply terms.

The lifetime revenue on that specific vehicle model contract, commencing in the summer of 2021, was estimated to be about £27.5m.

Forecast production volumes in the contract showed a ramp up to full series volume commencing in 2021, with annual revenue being about £8m per annum for the following three years.

The contract currently covered series production to 2024 but may potentially be extended.

Surface Transforms also said that it would up its manufacturing support headcount, adding approximately £0.5m, £1.3m and £2.0m in costs per year in 2020, 2021 and 2022, respectively.

'This additional headcount will provide the necessary support infrastructure for all contracted sales and further prospective - but as yet uncontracted - sales pipeline,' it said.

In a trading update, the company said some sales had continued to grow, despite Covid-19.

'The board now anticipate current 2020 financial year revenues will be approximately £400k higher than market expectations with group revenue for the year expected to increase to approximately £2.0m,' it said.

'This increased revenue will mitigate the working capital impact of additional overhead in the 2020 financial year following the board's decision to invest in the company's headcount.'




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