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RNS Number : 5111V
Surface Transforms PLC
14 December 2021
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domestic law by virtue of the European Union (Withdrawal) Act 2018.
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14 December 2021
Surface Transforms plc
("Surface Transforms" or the "Company")
Trading and operations update
Surface Transforms (AIM:SCE), manufacturers of carbon fibre
reinforced brake discs, announces the below trading and operations
update and progress with OEM 8.
Trading and operations update
The Board of Surface Transforms is disappointed to advise that
despite considerable growth against prior year, revenue for the
year ending 31 December 2021 will be below GBP3m, significantly
short of market expectations. The shortfall has mainly been as a
result of delays in the final commissioning of the upscaled
production capacity at Knowsley (in relation to OEM Production Cell
One) and the associated start of the anticipated upscaling of
commercial revenues expected from December.
Whilst this capacity programme progressed considerably during
the year, a series of minor startup challenges has caused output
delay, resulted in Q4 output missing target. By December, these
issues have been narrowed down to an issue with one particularly
complex furnace, which the Board believe will be fully resolved
imminently. Given December is a short month, the Company is
unlikely now to recover the sales gap in this financial year.
It is important to note that these sales have not been lost, the
key OEM customers have not seen any impact and the revenue gap,
whilst proportionately large in 2021, is small in relation to
overall 2022 volumes and is expected to be recovered progressively
through Q1 and Q2 2022.
The Board recognise that the short-term effect of this is
disappointing, but as noted above, believe these operational issues
will all be satisfactorily resolved in short order. Accordingly,
the Board intend to provide a further operations update in January
2022 and also to provide quarterly updates for a period of time to
reassure the market in respect of revenue performance alignment
with future market expectations.
Progress on OEM 8
As previously notified, the Company won a lifetime GBP27.5m
sales contract with an expected maturity level of GBP8m sales per
year, commencing, (later than planned) in 2022, with a customer
described as OEM 8. Again, as previously announced, the order
intake for this car has greatly exceeded the customers original
volume expectations and they have been in discussions with all the
supply chain to explore the capacity availability for significant
volume increases. These discussions are being finalised with all
suppliers, with updated contract volumes expected early in the new
year.
Production of parts on this contract has commenced at Knowsley
in line with current OEM 8 contractual requirements and we make no
change to guidance in 2022. Our 2022 capacity investment plan can
support the customer's future increased volume requirements,
although delays from the wider supply chain remain a risk.
Further contact awards
The Company is pleased to report continuing progress being made
on further contract awards and expects to make a further
announcement in the near future.
David Bundred, Chairman, said:
" This announcement summarises the broad position of Surface
Transforms over the last three months of 2021. Excellent progress
continues to be made on the strategic plan but with work still to
do on getting the new Knowsley manufacturing plant to the required
daily volume all day, every day. It has been a tough period for all
the team, but they have progressively dealt with every issue with
their usually tenacity and commitment. We are confident that we are
almost through this transformational period and, underpinned by the
encouraging news from OEM 8, and other expected contract awards,
are looking forward to 2022 with real confidence."
For enquiries, please contact:
Surface Transforms plc +44 151 356 2141
David Bundred, Chairman
Kevin Johnson, CEO
Michael Cunningham CFO
Zeus Capital Limited (Nominated Advisor and Joint Broker) +44
203 829 5000
David Foreman / Dan Bate / Jordan Warburton (Corporate
Finance)
Dominic King (Corporate Broking)
finnCap Ltd (Joint Broker) +44 20 7220 0500
Ed Frisby / Abigail Kelly (Corporate Finance)
Richard Chambers / Barney Hayward (ECM)
About Surface Transforms
Surface Transforms plc. (AIM:SCE) develop and produce 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 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.
For additional information please visit
www.surfacetransforms.com
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END
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