This information communicated within
this announcement is deemed to constitute inside information as
stipulated under the Market Abuse Regulations (EU) No. 596/2014 as
it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR. Upon the
publication of this announcement, this inside information is now
considered to be in the public domain.
9 April
2024
Surface Transforms plc
("Surface Transforms" or "the
Company")
Q1 2024 sales and operations
update
Surface Transforms (AIM:SCE) manufacturer of
carbon fibre reinforced ceramic disc brake materials provides the
following sales update for the three months to 31 March 2024 and
reconfirms unchanged sales guidance of £23m for the 2024 financial
year.
Sales in the first quarter were £3.0m. The
sales trend for the last five quarters have therefore been 2023 Q1
£1.4m, Q2 £1.9m, Q3 £2.0m and Q4 £3.0m followed by Q1 £3.0m in
2024. Accepting that £3m maintains our run rate rather than
increases it in Q1 2024 and was lower than our internal target,
sales in March 2024 were £1.5m. Furthermore, significant
improvements in the underlying operational performance led by
Stephen Easton, Chief Operations Officer, have also been achieved.
The single point of failure capacity constraints have now, almost
all, been resolved, the revised maintenance procedures and
continuing operator training have significantly improved plant
availability, and performance.
The prime remaining operational challenge
relates to continuing high levels of scrap from processes that are
not yet fully capable. Again we regard these issues as a learning
curve and note, that considerable success has been achieved in
recent weeks in reducing scrap. We expect to continue these
improvements over the coming months unlocking further
capacity.
The Company has now agreed revised 2024
delivery schedules with all customers that progressively pull back
arrears. We are broadly keeping to these schedules and the customer
situation is stable.
Progress on
installing new capacity
The programme is proceeding to plan. We expect
all but one of the furnaces for our £50m sales p.a to be on site by
mid-year. The issue with the last furnace relates to our site
expansion rather than the machine itself. The protracted
negotiations regarding the site expansion have now been concluded
enabling the last furnace to progress.
Our customers have taken great comfort that the
financing for our capital expenditure programmes in 2024 and 2025
has been secured and ring fenced by the terms of our local
authority loan.
Capacity increases can also be achieved by
internal work on already installed furnaces which over time can be
substantial. The Company has a number of these projects underway;
they are progressing well and form part of 2024 capacity
contingency plans.
Forthcoming
results announcement and further updates
Our 2023 audit is ongoing, and we expect to
announce our preliminary results in late May, at which point a
further update on trading will be provided.
Outlook
We are maintaining sales guidance of £23m for
the year ending 31 December 2024. However the scrap problems in
particular have absorbed a sizeable amount of working capital and
cash. The Board are assessing options to address this short term
issue.
Board
changes
David Bundred, Chairman has confirmed that
after 12 years on the Board, he intends to retire from this role in
2024. A search process has now started led by Julia Woodhouse who
has taken over Chair of the Remuneration and Nominations Committee.
Further updates will be provided in due course.
Kevin Johnson, CEO said: "Our priority in Q1 was a combination of
fixing the underlying fundamentals and continuing to improve
customer relationships. Our customers have been kept fully
informed of progress and remain committed. The team has also
made significant progress on the key challenges of building
capacity and reducing scrap which is critical to continuing our
ramp up and driving revenue growth during 2024 and 2025.
Our commitment to building up
production capacity, this year and beyond remains
absolute."
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