Surface Transforms plc (LON:SCE), manufacturers of carbon fibre reinforced ceramic automotive brake discs, reminds shareholders of its Annual General Meeting (AGM) to be held today, Tuesday 23 July 2024 at 11:00 a.m. to be held at the offices of Gateley, 1 Paternoster Square, London, EC4M 7DX.
Following the conclusion of the AGM, at approximately 11:15 a.m., Kevin Johnson (CEO), and Stephen Easton (COO), will provide a presentation on both sales and operations progress. The slides from this presentation will be placed on the Company’s website after the meeting www.surfacetransforms.com.
The presentation will cover materially the same information that was disclosed in the announcement of 19 July 2024 titled “Pre-Close Trading and Operations Update”. This announcement was released via EQS as a result of downstream display issues caused by the global IT outage and is available here:
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Surface Transforms plc, manufacturers of carbon fibre reinforced ceramic automotive brake discs, has provided the following pre-close trading and operations update for the six months to 30 June 2024.
Sales
Sales guidance for 2024 remains in line with market estimates – £17.5m – as current output levels are delivering to our revised customer needs.
We are pleased to report that production of discs has doubled in the four weeks ended 12 July 2024 from the average levels achieved over the previous 5 months, and importantly, on a consistent daily basis.
Total sales for H1 24 were £4.6m, including the impact of no pre-production engineering revenues due to the revision to the Company’s revenue recognition policy. We anticipate recognising £1.7m in engineering sales during H2 24.
We will continue to grow, and our planned rate of growth is not without risk, but the Board believes that we also remain on track to deliver market estimates for 2025 including £28.0m sales, positive EBITDA and operational cash generation.
Production
Over the last four weeks, we have consistently been achieving record daily and weekly production levels that enable us to meet our requisite run rates on output to meet full year estimates.
As previously announced, Q2 was impacted by the following production challenges:
- Supply chain difficulties in April and May caused by working capital constraints. These problems were progressively resolved in full during June following the recent fund raising.
- Yields have been lower than expected but have held steady at 75%. We have a clear pathway to further improvements and expect to achieve the previously guided 86% yield in Q4 2024.
Because of these challenges, both tooling and R&D costs were approximately £2m higher in H1 24 than forecast. Whilst tooling costs are now reducing, the cost of improving yields will continue to be higher than previously forecast for the full year.
Cash Position
Cash as at 30 June 2024 was £5.0m. While we expect this to reduce towards the year end, no further funding is required.
Further Updates
Management will present a more detailed update following the AGM on Tuesday 23 July. We expect to publish the interim half year accounts in September 2024.
Kevin Johnson (CEO) said “The recent significant increase in daily output levels, over several weeks, is most encouraging both in terms of its consistency and recent output levels. Capacity constraint is diminishing as a production impediment, thanks to the reduction of the single points of failure problem. We acknowledge that production yields, whilst improving, are still below plan. However the issues are understood, we expect to overcome them, and we are now building these further improvements from this higher baseline
We look forward to meeting shareholders at next week’s AGM to provide a fuller update”
