Surface Transforms Share Discussion Threads

[amanitaangelicus] 15/11/2023 15:10

Faith ...good show by the ii.s...or someone entity is looking to take out!

[amt] 15/11/2023 15:06

Shows what a farce this is. Share price now 12.5p. I might be forced to take up the offer at 10p per share at this rate.
How long have we got until the offer closes ?

[cheese666] 15/11/2023 14:14

I'd be very happy to eat my hat about the placing. I'll eat everyone's hat infact if we are well past 10p at the time.

[skyracer] 15/11/2023 13:41

Tell you something, there are not going to be many shares available beyond the paltry basic entitlement in the open offer. The excess will be heavily oversubscribed !

[volsung] 15/11/2023 12:13

That's a hopeful sign pinkfoot

[pinkfoot2] 15/11/2023 11:52

I disagree-the asset finance market is very soft at the moment.There are ag least 85 providers in the U.K. alone and the going rate is around 8.5pc.How do I know?Ive just tested the market on another company I’m involved in and it was easy

[volsung] 15/11/2023 11:23

Well we'll just have to wait to see if the £13 million loan is agreed and on what terms. I imagine it will be ok but lenders can name their prices in this market.
Heck of a lot of dilution.
But hopefully its turned a corner
Nice to see my 11p shares are breaking even at least

[rivaldo] 15/11/2023 10:48

I haven't posted since the last update and the financing. It's all tremendously disappointing of course.

The current management have done an incredible job in taking SCE from nowhere to where they are today, given the barriers to entry and the absolutely massive contract and order pipeline.

But they've failed in getting a commercial operation up to speed quickly from scratch. Which is a difficult task in any circumstances, especially during and following a pandemic, but not one which was insurmountable with depth and quality in the management team.

The finance team in particular should have been pushing to raise larger amounts at much higher share prices to cater for any eventuality. There must have been plenty of opportunities to do so (although no doubt there would have been grumbles from many here at the dilution!).

IMO the likes of DB and KJ have likely built up such tight relationships with the top 12 or whatever OEMs - with more OEMs apparently in the pipeline - and have such intimate knowledge of the product and the manufacturing process, which is vital, that they should stay. In what capacity I don't know. The new CFO and other appointments using the new funds should support a smoother production scale-up from here.

I'll probably top up in the placing on the view that the upside here remains a multibagger given the pre-money £26m m/cap.

[pinkfoot2] 15/11/2023 10:41

I’m relaxed-this fundraise was essential and it’s done.Time to swing the bat

[fft] 15/11/2023 09:53

Amt, think you are being optimistic. When they say 50/yr by the end of 2024, I think what they mean is that the run rate is then 50m/year. I would expect prodn to be just short of 2m a month in April (giving a 20m/year run rate at that point), then increase gradually to 35m a year by say July/August and then 50m/year (4m a month) by December 2023.The same for 2025. An increase over the year of 2m per month, giving a year end run rate of 75m/year. And that would be the max output. Hopefully, they can, money permitting (!), install extra furnaces for when maintenance is required. I have no idea what the planned downtime of each furnace is but suspect it will be more than an old British steel one ! And regular servicing will pay dividends in the end.I might be wrong with the above, or maybe they can get it going quicker than that. I would be very happy, but this kind of kit just doesnt turn on and go from stop to full speed in an instant. Unfortunately .

[amanitaangelicus] 15/11/2023 09:20

Proof of the pudding will be in the eating ...need the shoddy management team a chance to prove they.ve got some operational savvy. Monthly production updates reqd. Mkt will tell you. Until then , enjoy the fun ...

[amt] 15/11/2023 09:00

Thanks for your detailed post Bones.
On a different point, its interesting that they stated that they need to and have already started to organise 150m capacity, so they will need to finance that sooner rather than later. So I expect another loan at some stage, perhaps mid year, once the production issues are settled.
If they can't reach 3m per month by middle of next year with a capacity of 50m in place in Q1 I would be seriously worried. When they state 50m capacity that should mean they can produce that number including glitches.

[toffeeman] 15/11/2023 08:48

I see the OO as an acknowledgement that long suffering shareholder should be able to invest at 10p (unlike previous raises) - If you disagree with the strategy and the price is above 10p when they are issued - then just seel the additional shares.

[amanitaangelicus] 15/11/2023 08:42

Funny as ...will need more raises ...always will. Not many aim companies can reach such figs without perpetual raises. You.re going against Aim history/ stats. This has a chance, but only if they can sort the manufacturing stuff out. Clearly gonna be some juicy downtime while new stuff is installed etc. Management here is very weak. Typical Aim. Raise great news though.

[bones] 15/11/2023 08:01

Amt, for sure that is the ultimate ambition. I think your £2M and £3M per month by mid-2024 is too hopeful but it sounds like they have guided the brokers down to £25M revenues in 2024 so that monthly rate of £2M-£3M could be with us by later in 2024.

I note in the raise documents that they expect eventually to be meeting the bulk of the phase 3 and 4 capital expenditures (taking capacity up to £75M and £150M) out of cash flows two or three years down the line and not from further external financing. Wouldn’t that be a joy.

But there’s a lot of jeopardy before that stage is reached so, for me, the more cash on hand now the better, not least for the reasons fft laid out.

[amanitaangelicus] 15/11/2023 07:36

The raise is mint news. Now lets see if they dont puke it all over the sides. Major production machinery upgrades for me.

[amt] 15/11/2023 07:03

Bear in mind Bones that once they get to 1.5M turnover per month they will be generating enough cash to cover expenses and start to put that towards working capital. They should already be running at 2m per month and 3m by mid 2024.
If they need further cash then do it when the model is proven and the share price is 30p.

[fft] 15/11/2023 01:33

AIM companies can never have too much cash. 1. It sends a great signal to suppliers that there is no danger of not being paid and also may lead to obtaining better payment terms. 2. It provides a better/longer buffer against any future problems. And these will occur. With cutting edge technology comes cutting edge problems. If a lack of cash leads to a month long delay (due to trying a patch instead of a permanent fix) that is a false economy.3. When all is proven, the extra 2m will allow a faster ramp up, or enable optimization, or potentially an earlier start to the next expansion phase.But all the above depends on having the right mgmt in place. I assume that Richard Sneller (who already owns 14%) having committed 2m of the fund raise will have had some very interesting meetings with all levels of mgmt/workforce at SCE .

[bones] 14/11/2023 22:09

We will have to agree to disagree, Amt. You say the money is not needed but they will always need a cash cushion for the undoubted number of “rainy days” that might occur in the ramp up critical phases. If this cushion is increased by £2M, then they could possibly increase the pace of production with more employees and still have the cushion they would have had without the extra £2M.

I fear we are going in circles so I’ll leave it there. It’s ultimately a debate about whether the company will use the money well. I trust they will as lessons have surely been learned.

[amt] 14/11/2023 21:57

I don't agree with you Bones. The 2M is just an insurance and not required. If they need it then things will have gone from bad to worse and not much chance of success. If the future goes as they describe it the 2m will be sitting in the bank doing nothing. It's adding unnecessarily to dilution by 6%
If the next few months go much better then they certainly won't need it.
I shall If I do buy, do so in the market. I do think things will come good but still a part of me thinks this could still go wrong given the last 18 months performance and then it would be throwing even more money down the drain.
So if this becomes a billion pound cap company down the road that £2,000 investment at 10p would be worth £ 60,000 or £54,000 if bought in the placing, a £6,000 difference.

[pinkfoot2] 14/11/2023 21:50

An excellent post from the voice of reason Bones-100pc agree.

[bones] 14/11/2023 20:36

The loan won’t be finally passed through until all the resolutions get passed in mid December clearing the conditional raise element of £6M and open offer of £2M (or more). The loan is not needed or applicable until 2024 onward.

On the question of whether investors should buy in the market or take the open offer, I cannot agree on not taking the offer. Take it to the logical extreme, with everyone who might want the open offer but doesn’t want to further “dilute” themselves. If no one took up the OO, the company would have £2M less in cash than if everyone took it. That £2M could fund the wages of maybe 10 engineers for five years, which would make a huge difference for SCE. I would argue that those additional employees would add a lot more value to the company than the £2M cash spent on them.

By ensuring the company doesn’t issue an extra 20M shares by a total boycott of the OO, what will you save yourself in the share price in so-called dilution?

If open offer fully taken up, 340M shares x 10p = £34M market cap.

If you assume same market cap but no open offer take up, your share price might then be £34M / 320M (no open offer shares issued), giving you a share price of 10.625p.

I would say that halfpenny or so is little reward for sacrificing the possibilities for SCE to use the additional £2M and the added value that £2M could generate in faster output. In turn, that would boost the company valuation.

Hopefully they will raise more than the £2M, but that depends on how many investors don’t look at the longer picture.

Just my opinion though…..

[amt] 14/11/2023 19:47

Presumably the loan has been agreed providing the placing went through as it has.

[pinkfoot2] 14/11/2023 19:22

My understanding is the capex loan will be £13m with a 5 year term-it should be a walk in the park to secure with the cash reserves we now have.Drawdown over 18 months to cover phase 3 (£75m pa t/o) and the initial move into phase 4 which is the ramp to £150m t/o pa.

There is plenty headroom on working capital with the current raise-a key point

[quemaster] 14/11/2023 18:35

alfriston although working with the technology for many years much the scale up equipment is new, the furnaces for example due to ESG and the need to reduce gas usage are very different to the originals.