Surface Transforms Share Discussion Threads

[tomtrudgian] 20/6/2025 10:56:02

Agreed bagpuss67, Latent Value did indeed write that profit after tax for FY 26 was ‘calculated217; to be £4.2m and FY 25 to be £2.4m.

No doubt you, he or others can now kindly produce the detail behind these calculations. Ha!

[bagpuss67] 20/6/2025 10:50:15

Nice one Jim

[jim rockford] 20/6/2025 10:26:06

Directors Talk - new positive article 19th June.

The European market for carbon-ceramic braking systems is becoming a meaningful axis of value in performance vehicle engineering. What was once reserved for ultra-rare supercars is now filtering into premium EVs, sport SUVs and high-margin saloons, unlocking a surprisingly durable stream of opportunity for investors. At the heart of this lies a simple equation: less weight, more control, and longer life, all delivered without compromising aesthetics or driver feel.

This isn’t about gimmicks. Carbon-ceramic brakes reduce unsprung mass by as much as 70 per cent compared to iron discs. That reduction significantly sharpens handling, increases efficiency, and allows braking systems to perform with consistent precision under prolonged thermal stress. The result is not just faster lap times, but tangible gains in safety, wear resistance, and ride comfort, qualities increasingly valued as vehicles become heavier and more digitally integrated.

Europe’s positioning here is no accident. Regulatory demands around emissions and road safety are pushing OEMs to extract more performance from less. Braking systems that offer durability, reliability and weight reduction naturally align with these priorities. As electrification accelerates, the weight of battery systems further reinforces the case for lighter components. Carbon-ceramic brakes meet that challenge while also enhancing vehicle dynamics, a win for engineers and a quiet signal to the market.

The engineering edge is reinforced by deep materials science innovation. Manufacturers are evolving beyond standard composites to deploy continuous-fibre ceramic matrices, enhancing thermal conductivity and enabling remanufacturing of worn discs. This not only extends product life but introduces a sustainability narrative that aligns with shifting consumer expectations. For investors, that’s a rare double—environmental logic matched by cost advantages and long-term supply potential.

Technical evolution doesn’t stop at the material level. Embedded sensors are now being integrated directly into braking systems to monitor wear, temperature, and stress in real time. This feeds directly into the connected vehicle ecosystem, where predictive maintenance and lifecycle optimisation are becoming monetisable features. As these systems mature, braking components transform from inert hardware into smart, responsive elements of a broader data-driven vehicle architecture.

Commercially, the shift is already underway. European suppliers are scaling production capacity in anticipation of growing OEM demand across multiple tiers, not only hypercars but also mainstream performance lines where carbon-ceramic adoption is set to expand. What once counted as exotic is becoming a value-adding differentiator in more accessible segments. For component makers, that suggests scale economies and rising contract visibility, even as price points normalise.

You might also enjoy reading Revolutionary brake tech driving performance and investor confidence
There’s also a meaningful aftermarket dynamic at play. As carbon-ceramic systems migrate into more widely sold models, replacement cycles and upgrade paths grow deeper. Luxury owners seeking to refresh performance without replacing their vehicle entirely are turning to upgraded discs and calipers, a trend that quietly bolsters margins for suppliers focused on longevity and precision fitment.

While global demand is rising, Europe retains a strategic advantage. Its density of performance OEMs, regulatory cohesion, and consumer appetite for premium features position it as the natural innovation hub in this space. Investors tracking composite materials, sensor integration, or premium vehicle components would be wise to assess which firms are capturing this migration from high-end option to embedded standard.

The broader implication is that carbon-ceramic braking systems are no longer a statement of excess, they’re becoming a foundational component of modern high-performance mobility. For investors, that signals something more enduring than aesthetic appeal or brand cachet. It points to a convergence of weight reduction, data integration, and regulatory alignment that quietly but significantly underwrites long-term positioning for a small group of high-potential suppliers.

Surface Transforms plc (LON:SCE) are experts in the development and production of carbon-ceramic materials and the UK’s only manufacturer of carbon-ceramic brakes for automotive use.

[bagpuss67] 20/6/2025 09:18:53

From LVs post "Profit after tax for FY26 is calculated to be £4.2m (FY25 £2.4m) "

[tomtrudgian] 20/6/2025 09:13:33

Yes, an excellent post. LV suggests that the LCR/MSIF debt will increase to £12.7m, with a total debt of £21.1m at 31 Dec 25, but where is the word ‘profit’?

Yes Trading losses, not Capital losses or allowances, can be offset against Trading profits for the next year only. So if there are no taxable profits in fiscal 25/26 the 24/25 losses are lost for good. Research and Development costs may still be claimed, and they are substantial at SCE.

However no interest or capital payments at all were made in 23 or 24 to LCR. It seems inconceivable that LCR councillors will want to, or be legally able to, increase their facility. 12.15% interest creates more loss anyway. The waiver of interest and capital repayments may pragmatically continue for a long time until renegotiated.

I agree bagpuss, administration is bad PR and anyway wholly unlikely. No administrator will work pro bono! Unlikely too are any payments to LCR unless the 12.15% interest is slashed. That must and will pragmatically happen.

I also agree SS, that SCE discs are superior to Brembo’s. They could be profitable if with 100% yield, and in one of the countries, eg USA, with one third of the UK’s electricity costs.

Possibly for aircraft braking generally, or for landing on carriers without arrestor wires (like the two new UK carriers), and of course for motor racing.

[smart solution] 19/6/2025 15:18:40

Excellent post just got on LSE now form Latent Value.

Screaming but at this level!

RE: Base Case ScenarioToday 14:54
Sorry for the delay to your request Bagpuss , but I've got a business to run which takes priority...

Piecing together the base case scenario from the annual report is a bit like Sudoku. For example base case sales in FY26 assume 232% growth on 2024 sales over 2 year period, so sales would rise from c. £8m to £27m. But what about FY25 sales? A clue here is that they expect revenue capacity of £30m for FY25 and this only grows modestly to £33m in FY26, so one could deduce that FY26 sales are therefore going to be 10% higher than FY25 ie FY25 sales per the base case would therefore be c. £24.5m.

Applying this type of logic and other info provided, my personal analysis yielded the following for FY26:

EBITDA - £7.6m (the operational gearing means a 10% increase in sales has a favourably disproportionate increase in EBITDA).

Projected debt at end of FY26 would be £14.5m (FY25 £21.1m):

LCR/MSIF - £11.7m (FY25 £12.7m)

OEM - £2.8m (FY25 - £8.4m being the £11.9m advanced less the £3.5m being repaid in FY25H2)

Profit after tax for FY26 is calculated to be £4.2m (FY25 £2.4m). Note, they have £40m of tax losses c/f and will still be getting tax credits for R&D, which have been assumed to drop off in FY26 as this year is only an extra £3m of revenue capacity being integrated in.

Clearly if the above was delivered then the current valuation of equity looks very undervalued, but we need to see sustained progress come 22nd July and quarterly thereafter.

We should also keep in mind that the OEM that advanced them £10m of cash only was sold £3m worth of discs in FY24 (see the AR). Commercially the OEM is clearly well and truly imbedded in the SCE project, and will no doubt use this support to leverage being at the front of the queue for discs, which helps their competitive advantage vs their competitive set.

[smart solution] 19/6/2025 12:54:21

Excellent review - he also said they arr better than Brembo.

GM are big backers of ST.

[bdaonion] 19/6/2025 12:46:55

Corvette review. Starting at 4.20 the brakes are discussed, and the discs are named as ST discs.

[smart solution] 19/6/2025 11:03:50

Nice - can see a bounce from here as now consolidated.

[cahus] 19/6/2025 11:01:17

645,600 and 1,000,450 shares

[cahus] 19/6/2025 10:45:20

Two big buys should show up anytime.

[parsons4] 19/6/2025 08:06:47

Two of the Director buys were very reasonable, that is what has got me to get back in. The possibility of a large raise to sort out all the problems, now that the management seem to be performing is very much on the cards imho. It's not often that you see customers really helping out so the product must be really outstanding !!

[bagpuss67] 19/6/2025 07:49:51

Yep Jim. Still a 10x possible from here in 2-3 years.

[jim rockford] 19/6/2025 07:46:19

What got me to buy is the huge upside that this turnaround will deliver.

[volsung] 19/6/2025 07:27:06

What got me to sell up was the term ‘material uncertainty’ in the update

[bagpuss67] 19/6/2025 07:19:06

I am too. But I think it's more that people don't trust management and even if they were too there is still major risk. I don't believe a raise is being planned. I now have a considerable number of shares and I know others with large holdings. I have not been approached about a raise and as far as I'm aware others haven't been either.

[parsons4] 19/6/2025 06:50:39

I am surprised that the rally has run out of steam compared with the previous one !! We have also had a good report and Director buying so what is going on ??? The only thing I am thinking is that an issue at 1p is on the cards !! any views on that ?

[bagpuss67] 18/6/2025 16:13:10

Thnaks could just be chatGPT going off piste

[123sce001] 18/6/2025 16:10:49

I'm under the impression that it is the same deal as the Aston Martin Valkyrie - whereby ST supply the disc and Alcon supply the Callipers

[bagpuss67] 18/6/2025 13:58:04

Is it an Alcon rotor on this 2026 car... Can anyone else verify this? If true what are the implications?

[bagpuss67] 18/6/2025 12:25:59

"To rein in the thrust, the ZR1X does introduce standard carbon-ceramic brakes that are the largest in GM history, including 16.5-inch front rotors clamped by 10-piston calipers. For 2026, that “J59” brake package will become an option on the ZR1. These bros love to share."

[toffeeman] 17/6/2025 09:13:36

I sold some yesterday and some this morning having bought some last week at 0.8845 so made 20% which is the first time I have made anything on SCE!

[bagpuss67] 17/6/2025 09:05:16

Tom. That note is by Latent Value. As far as the council go, they are prepared to continue to waive the breach. I don't see them wanting the PR of appointing administrators. Would look awful. Anyway as you will see from.the analysis which is derived from the accounts ST is expected to be able to reduce supplier support exposure by £3.5m by the year end. If it achieved the base case I believe it will be able to recommence debt service on the Liverpool loan in FY26