REG - Surface Transforms - Pre-Close Trading and Operational Update

Surface TransformsAnnouncement

08/01/2024 07:00

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RNS Number : 8688Y  Surface Transforms PLC  08 January 2024

 

 

8 January 2024

 

Surface Transforms plc

("Surface Transforms" or "the Company")

 

Pre-Close trading and operational update

 

Surface Transforms (AIM:SCE), manufacturers of carbon fibre reinforced
ceramic automotive brake discs, is pleased to provide the following pre-close
trading and operations update for the year to 31 December 2023 ("FY23").

 

Trading update

 

Subject to audit, revenue for FY23 grew 63% to £8.3m (2022: £5.1m). Gross
cash at 31 December 2023 was £6.1m, including the cash received from the
December 2023 equity fundraising. Additionally as announced on 11 December
2023, the Company has completed a £13.2m loan agreement solely for use
against capital expenditure, none of which had been drawn down at the year
end. Capital expenditure in 2023 was, as forecast, approximately £9m.

 

The Company expects to report its audited results for FY23 in mid-April 2024.

 

Operational update

 

Sales for the fourth quarter were £3.0m, compared to £2.0m, £1.9m and
£1.4m respectively in the previous three quarters. No new technical problems
have arisen in recent months. Accordingly, focus remains on delivering further
operational improvements, capacity installation to remove potential single
points of failure, upgrading internal manufacturing processes and further
strengthening operational management and supervision.

 

The Company continues to expect to complete the installation of £50m p.a.
sales capacity by mid-year 2024 and £75m p.a. sales capacity by the end of
2025, to support existing contracts, expected growth and to build
manufacturing resilience.

 

The successful equity fundraise, and new capital expenditure facility secured
in December 2023 has given the Company the ability to accelerate orders of new
capital equipment, and, to this end, discussions are underway with our
equipment suppliers.

 

Outlook

 

The Company is maintaining its revenue guidance for 2024 at £23m. Overall,
the outlook for 2024 to 2027 continues to remain very positive reflecting
contracts in series production and recent new business announcements, with
capacity being installed to fulfil these awards.

 

The Company expects to announce further new contract awards in H1 2024.

 

Kevin Johnson (CEO) said "After a very difficult 18 months, and whilst the
need to build our resilience continues, we now believe that the worst of our
growing pains are behind us. This view is shared by our customers who have
agreed their schedules for 2024 which match our assessments of production
capability and capacity.

 

We continue to be capacity constrained not demand constrained, so our factory
expansion remains a crucial task in positioning the Company for the future. It
is therefore pleasing that the recent debt facility provides the foundation
for the programme to continue apace. At the same time we are continuously
improving operations to enhance productivity, thereby driving increased output
in 2024, with the new senior leadership team in place to deliver these ongoing
improvements in a timely manner. We want to thank the entire team throughout
the business whose tireless efforts and skills have fuelled recent progress.".

For enquiries, please contact:

 Surface Transforms plc                                           +44 151 356 2141
 David Bundred, Chairman
 Kevin Johnson CEO

 Isabelle Maddock CFO
 Zeus (Nominated Adviser and Joint Broker)                        +44 203 829 5000
 David Foreman / Dan Bate / James Edis (Investment Banking)
 Dominic King (Corporate Broking)
 Cavendish Capital Markets Ltd (Joint Broker)                     +44 20 7220 0500
 Ed Frisby / Abigail Kelly (Corporate Finance)

 Andrew Burdis / Harriet Ward (ECM)

About Surface Transforms

Surface Transforms plc. (AIM:SCE) develops and produces carbon‐ceramic
material automotive brake discs. The Company is the UK's only manufacturer
of carbon‐ceramic brake discs, and only one of two mainstream carbon ceramic
brake disc companies in the world, serving customers that include major OEMs
in the global automotive markets.

The Company utilises its proprietary next generation Carbon Ceramic Technology
to create lightweight brake discs for high‐performance road and track
applications for both internal combustion engine cars and electric vehicles.
While competitor carbon‐ceramic brake discs use discontinuous chopped carbon
fibre, Surface Transforms interweaves continuous carbon fibre to form a 3D
matrix, producing a stronger and more durable product with improved heat
conductivity compared to competitor products; this reduces the brake system
operating temperature, resulting in lighter and longer life components with
superior brake performance. These benefits are in addition to the benefits of
all carbon‐ceramic brake discs vs. iron brake discs: weight savings of up to
70%, longer product life, consistent performance, reduced brake pad dust and
corrosion free.

The Company holds the London Stock Exchange's Green Economy Mark.

For additional information please visit www.surfacetransforms.com
(http://www.surfacetransforms.com)

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