Surface Transforms Share Discussion Threads

[supernumerary] 13/11/2023 23:06

pf - 'You do know these presentations are verified'. So since everything was clear and verified and out in the open, why did everybody, including yourself, get it so badly wrong?

que - yes, it's a language all their own. Clear if you speak it perhaps, but even then there seems to be scope for error.

[quemaster] 13/11/2023 22:44

ST have always used the term "nomination" when winning contracts. These two quotes are from the 16th Oct RNS.........

"Kevin Johnson, CEO commented: "This most welcome nomination, is the Company's largest to date, deepening our relationship with the customer. The selection process was intensely competitive and set against the recent Surface Transforms production ramp-up challenges."

"The vehicle range was part of the Company's substantial prospective contract pipeline which having now converted increases the value of our awarded lifetime contracts to over £390m."

[pinkfoot2] 13/11/2023 22:30

You do know these presentations are verified-the wording may be wooden but the numbers aren’t, nor the reality of the contracts, margin etc

I’m told the asset finance is pretty good too

[amt] 13/11/2023 22:14

I read the 100m as additional to the recent 100m contract award. If not that's misleading.
I shall not take up the offer on the hope that nobody else does and I can buy in at a lower price. Recent experience has been that prices fall below the issue price so I will risk it here. They don't need the cash so why ask for more than they need.

[supernumerary] 13/11/2023 21:54

I'd only had time to skim through the RNS before my last post: having now read it carefully, I'm even more annoyed than I was then. I now think the guys in charge, which means Bundred and Johnson, are both completely out of their depth.

First of all, this RNS is so badly written, it feels like it was handed to an office junior to sort out, while everybody else went off to the pub - Poet's Day?

I'm sick of the talk of revenue and gross margins. Where's the discussion about profit and cash? That's what the business is there for, after all: as far as I'm concerned gross margins are for directors' salaries, while net margins are for shareholder returns. They're living in a world where all that matters is getting OEMs to sign up - everything after that is a nicety.

Ignoring the intro noise, 'Progress with OEM customers' unnerves me. I assumed when I read the last contract award RNS from October, that this was what it said it was - an award. Now it appears it's actually a 'nomination' which may lead to an award. Or of course, may not. Reading it back now, it seems deliberately weaselly - presumably rushed out in haste to boost the share price prior to the funding they must have known was coming. What's the status of this nomination - a contract, an MoU, a slap on the back between old friends? When all trust has been lost 'We have confidence' means nothing.

And then there's the second para of that section where they make it clear that the more orders (revenue!) they book, the lower the market cap. Do they really have a viable business model? It seems so bloody obvious, but their negotiating skills are so feeble I'm forced to wonder what would happen if they ever had a contractual disagreement - can you imagine Elon Musk vs Bundred and Johnson? There could be a whole world of pain lurking in the small print of their contracts.

Then we get on to 'Manufacturing Strategy'. Are we to assume that 'engineering solutions' have resolved all 'technical challenges' and now there will be an easy run to full production levels? Or are we to assume, as I am, that they either don't know the other problems that will come, or they don't want to discuss them in front of the servants?

Which leads to the 'potential single points of failure' gibberish. What's 'potential' about them? I can see failures as potential, but points of failure are hard facts, and it's increasingly clear that they've been hopelessly lax in their planning for this. And 'buffer stocks'? What are these for in this age of JIT manufacturing? It sounds as though the contracts allow the customers to call off pretty much whatever they want, whenever they want? Again I wonder what else is hidden in the small print.

More nonsense about staffing - 'had to increase headcount' so 'reduced efficiency' while new recruits were 'upskilled'. Does nobody speak English any more? One could say: they recruited staff who couldn't do the job, who are now being trained to competence, meanwhile cutting production and thus missing their only real target - revenue.

'upgraded managers', lol - busy upskilling their staff no doubt. And 'Furthermore, Stephen Easton joined...' It would have been a lot better if they'd started this para with his appointment, then given him space and freedom to speak about what he'd found and what his plan of action was. In fact they clearly think he's just a minion, there to do what he's told.

On the leases for an adjacent site, am I to understand that they're now finalising leases for property they won't need until 2027? In the current commercial property market?

And finally the 'Loan Facility'. What will the share price reaction be when the (undoubtedly onerous) terms of this are announced? Worth reading that RNS very closely...

I've wasted too much time on this. It's a dog's dinner and I fear it's going to get worse before it gets better. Good luck to all boot-fillers.

[pinkfoot2] 13/11/2023 21:24

Quazie

I have 35 years experience in this stuff-bought, built and sold many companies,I have seen it all.Made money, lost money-now semi retired.I have a substantial number of shares in this-and boy am I angry.

I can however tell you this is a good company in a fantastic,almost unique position-60pc gross margin in automotive and one competitor-one who has desperately tried to keep SCE out.The dam however is bust.

As for the FD, I’ve come across her before at Cropper-she is a step above.She won’t take any rubbish from above.

The cashflow from earlier this year was tight and assumed a smooth ramp-it hasn’t happened.They don’t need £10m in my book but she’s decided she needed some insurance/headroom.Good decision.

You can say what you want mate but I was asked to give my view by others on here-I’ve responded.But you won’t shut me up-I will say what I want and you can either read it or discard it.I am not emotionally attached to this company-but I do see enormous upside

[quazie12] 13/11/2023 20:39

Excuse me but why is everyone grovelling to pinkfoot on here. An eternal optimist IMO. Pinkfoot the new CFO has been in post for what, 18 weeks. Personally I would prefer to wait until I make any sweeping judgements. Pray tell how do you ascertain how bloody good he is ? I've seen fellas like you before on BBs. Keep your high and mighty opinions to yourself pls

[amt] 13/11/2023 19:53

Yes it struck me that Kevin is first class but seems to carry a large burden of responsibility compared with others

[amt] 13/11/2023 19:45

I suppose if nobody takes up the 2m open offer then dilution won't be as bad and it seems to me that cash isn't required for everything else to fit into place.

[pinkfoot2] 13/11/2023 19:43

Thanks for this

Standard is 4pc plus legals-in a lean market

Comms could definitely be better.I have to say I would love to get on the Board and shake it up.I like Kevin and would probably move him to a more tech sales role.FD is first class.Not met the Non execs other than DB but I think they really need to step up and get active

[amt] 13/11/2023 19:27

Thanks, I wasn't criticising you Pinkfoot, sorry if it came over like that. I was just meaning that if the trading update had been detailed like the prospectus and a presentation given then maybe the share price wouldn't have collapsed. As you mention you are very confident now and maybe you and the rest of us would also have been confident if they had made a better job of communicating instead of such a vague trading statement. There is nothing new that has happened in a week as far as the prospects for the Company are but somehow reading the prospectus gave a much better feeling about the way forward
500k in expenses is as an absolute shocker for a ten million raise.

[pinkfoot2] 13/11/2023 19:17

I was inside for a week-not sure how I can publicise this on a messageboard-albeit one of the better congregations.

Costs of raise will be c5pc

[amt] 13/11/2023 19:13

I would like to know what the expenses associated with the fund raise amount too. Why don't they tell us.

[amt] 13/11/2023 19:10

Ponkfoot2 thanks for the update. However I feel you could have been given the same level of confidence if they had told us before what they are saying now. Then financing could have been done at say 20p for half the dilution.

[quazie12] 13/11/2023 19:00

Look Pinkfoot what angers us is the over promising by management. How many white RNS in a row have we now had ? The timing of the raise at these levels is an absolute shocker. Johnston has failed end of. I would invest again if he steps down but not before. So what is the real story with the old CFO exactly ? It's not exactly a difficult company to do the accounting on. Again surely abject failure on the CEOs watch.

[amt] 13/11/2023 18:57

If they had published more detail with the trading statement and a likely new award of another hundred million the share price might not have collapsed.
I still think ultimately this will be a one billion market cap company but our returns have all but halved compared to what they could have been. Complete waste of money investing early and taking all the risk when we could have bought shares at 10p or maybe less tomorrow when most of the risk had been eliminated.
I shall not ever again invest in a company at early stage.
On the positive side I think it likely I will at least break even on the my recent 26p investments.

[pinkfoot2] 13/11/2023 18:51

Sorry I forgot to say they raised all they asked for-read into that what you may

[pinkfoot2] 13/11/2023 18:40

All I can say is

-new money from new and existing investors-some VCTs can’t invest as No EIS

-I think there will be changes at BOD level in the short term future but not execs.Same as doesn’t wash

-I sat through the presentation and focussed on three key things-operations and cash and customer support.All ticked for me.I also suggested a non exec shake up.I have invested well into 6 figures.

-the asset finance will be in place in my opinion pre end of calendar year

It’s all to play for and at this level, it’s ridiculously cheap.A £400m order book and 60pc plus GM.

I would say one other thing-if this was a private company, these operational glitches would not be causing the alarm it has on AIM.In the main, it’s a mixture of skill and luck on ramps like this and I think the new FD and COO are spot on.Hence I have dig deep and swallowed the anger I have with the way it’s been handled

[fevertreeman] 13/11/2023 18:24

Which means they are far from certain that the bloody system wont continue to fail again and again and again....shocking

[bagpuss67] 13/11/2023 18:21

Sorry. They said in the trading update there were single points of failure (which were not in themselves insurmountable) ie we have a furter production problem...

The detail or the fund raisd RNS talks about potential single point of failure.

[fevertreeman] 13/11/2023 18:20

Define big slug!