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[amt] 28/12/2023 09:40

Totally agree Damayhill

[damayhill] 28/12/2023 09:34

amt, I think they will get there too but I think short to medium term that makes a takeover less likely as the management are unlikely to recommend to shareholders for at least as long as they themselves are under water re the share price. I don’t see them signing away more than 20 years of blood, sweat and tears until there is a very serious offer on the table and that’s unlikely to happen for a number of years.

[amt] 28/12/2023 07:00

Its possible but the current team are best placed to mass produce the product and if they can't do it then unlikely that anyone else could.
I think they will get there eventually as they say the problems are not insurmountable.
They might get taken over anyway once its clear that this can be scaled up since longer term the opportunity to take this to a much wider market is there.

[fft] 28/12/2023 06:08

Amt,Not sure about that. If, worst case, mgmt carry on being hopeless and burn through the cash without being able to set up working production lines there would be an argument about putting the company up for sale. That, effectively, would be the existing machinery and the IP. Given the existing contracts and the future desire of EV companies for lighter brakes, I could envisage a bit of a bidding war between certain manufacturers, bremso, Lucas and others who think they have the skills to setup and run a production line properly.

[amt] 27/12/2023 16:14

The IP would be worthless if they can't manufacture on a big scale.

[cyberbub] 27/12/2023 15:06

I would reiterate my point that even in the disaster scenario where the management totally b*llocks-up the production over the next 6-12 months (which doesn't seem likely), and they decide to call it quits, surely the IP and know-how must be worth more than (or at least not much less than) the current market cap of £40M? Obviously they would have to have the company still trading/ticking-over, but I would have thought that an auto industry major (not Brembo) would be very interested in buying the tech and trying to make a better job of it?

[sharesure] 27/12/2023 10:27

Thanks, quemaster. Mine are too.

[damayhill] 26/12/2023 19:31

Yes you're right - apologies - and so it does become a more material ramp up from, say £1.15m to £1.5m. Even so, there's nothing in the Hardman note (not that they haven't been wrong before!) to suggest that their £9m H1 and £14m H2 are run-rate figures, unless I've missed something. In their 22 Nov note, the full-year sales estimates are £8.6m (FY23), £23m (FY24), £40m (FY25). The reality is that they need that degree of ramp-up to meet contractual demand too. I'd absolutely love to be party to the daily/weekly sales reports that Johnson receives between now and end June. They would tell you a great deal about whether 10p is a steal or not!

[robinbell] 26/12/2023 10:26

Just a quick note the sales in the first 10 months were £6.3m so a target of just £2.3m for the last two months. ie £1.15 per month which may or may not be relevant to your calculations.

[damayhill] 25/12/2023 22:59

It's a good question fft. H1 is easier to address because there is precious little distinction in my mind.

Sales to end October were reported as £6.0m (including £1m in October itself) and therefore an aggregate £2.6m were required in Nov and Dec in order to hit the revised guidance of £8.6m, so an average of £1.3m per month. There is a suggestion of this sort of level for November in the Hardman update.

Assuming they have hit this (and I accept it's an assumption), the distinction between £1.3m per month sales at year end and an annualised run rate of £9m (ie £1.5m per month) by mid 2024 is not quite negligible but not hugely material as in theory they are beginning the year with an annualised rate of £7.8m, so to only achieve that would see no further ramp up during H1, which would make little sense. That's a very long-winded but hopefully helpful way of saying yes, I am expecting £9m sales in H1.

H2 is a little harder to answer but if they have achieved £1.5m per month by mid-year and £2m by the final month, yes I'd take an aggregate of say £1.75m per month (ie £10.5m H2 sales), but there's nothing in the Hardman note to suggest their assumptions for 2024 are annualised. I'd expect to see something under £2m monthly sales in the first part of H2 and something over £2m monthly sales by the end of H2. Remember that longer term this has to be a sustained ramp up and that financial years and reporting periods are really just artificial staging posts along the way.

Hope that helps.

[fft] 24/12/2023 08:45

Damay,Just to be clear are you expecting 9m of sales in H1, or are you expecting an annualized run rate of 9m (i.e. they will do 1.5m in the last month of H1) ?I was under the impression that the 24m target for 2024 was not for actual production but that by the end of 2024 they would be doing 2m a month. I would love to see the larger figures, but with SCE over the last 18 months it hasn't paid to be optimistic:-(I think I would be happy with 2m a month at the end of 2024. It would mean production issues have been ironed out and new machines can be added with little risk of problems. The ramp up in production could really start in 2025/26.

[amanitaangelicus] 23/12/2023 17:37

Damayhill. Cheers bud. Sane. No hype, realism.

[bagpuss67] 22/12/2023 15:13

Chased up IG and they added my 10p position now..

[brucie5] 22/12/2023 14:27

Excellent, very useful to know, thanks. Please keep the bb posted with your thoughts, I'm sure I won't be the only one to study them.

[damayhill] 22/12/2023 12:51

Thanks Brucie. I'm afraid I have no more insight into that than you do. If the £1m October sales is correct (and it was RNS'd so it really ought to be) and the £1.25m November sales proves to be correct, with the same again in December, if they are able to deliver three consecutive monthly sales of £1m+, you'd have to think that the recent operational issues are, at least for now, behind them.

There is so much to like here (quality of product, barriers to entry, order book and pipeline, capex expansion plan, ESG credentials) but at the moment it's all about execution of production ramp-up, with the risks being cash and reputation.

In 2024, I'm looking for a January update that confirms sales of £8.6m, which itself means that average sales in Nov and Dec would be £1.3m per month. That will shore up confidence a little and I'd expect to see a bit of a share price bounce then.

Then April update, I'm looking for confirmation of a c.£9m H1 run-rate (ie £1.5m per month), ideally higher but I'd take £9m.

At some stage during 2024, I'd like to see at least one if not two more major contract announcements too.

To answer your question more directly, I'm personally reasonably confident they'll get there but it's a question of whether they can get there before cash runs out again. Another fundraise is unthinkable at this stage.

[brucie5] 22/12/2023 12:22

Damay, goood post. How do you rate the odds of SCE getting back in the driving seat (the big IF) given their recent issues? In other words, chances of success?

I just added to a very modest position with perception (rightly/wrongly) of asymmetric risk. Six months ago I could only have dreamt of buying it at these levels, but clearly confidence has taken a knock.

[damayhill] 22/12/2023 11:40

Hi All, been active over on LSE for a few years but it appears a bit livelier on here.

In terms of production updates, I would expect one a couple of weeks into the new year (11 Jan last year). We know (or at least have been told) that October sales were £1m and the latest Hardman note suggests (by my arithmetic) that November was on track for about £1.25m sales. The market will be disappointed with anything less than the £8.6m full year sales and a clear indication of at least £1.5m per month sales in H12024.

Bones, to your question about contract cancellations, that would be almost impossible. The procurement/selection process is very lengthy and expensive and other parts of the brake system will have been designed to accommodate the SCE product, so it's a long, long way from simple cancelling and going with another product. It's all about working in multiple partnerships with various suppliers. The risk of course is with the follow-on contracts and new customers, if confidence in SCE's production capacity/capability is rocked.

IF (big if) they can demonstrate the £1.5m+ sales per month in H1 and ramping up to £2m sales per month in H2, I have this returning to something like a 26p-28p level in 2024.

[bagpuss67] 22/12/2023 09:37

I agree with Toffee. What would these boards be worth without a range of opinions provided genuine and polite and ideally researched

[bagpuss67] 22/12/2023 09:34

Most of my holding here is in "real" shares but I do currently have a CFD holding with IG. Did anybody else try and take up the offer on their CFDs with IG?

[toffeeman] 22/12/2023 09:34

>> Albert

If I may:

ONly getting positive comments results in huge confirmation bias - the counter view restricts that (a little)

[albert_einstein] 22/12/2023 09:32

Bones698,

You obviously don't rate the Company so why the interest?

I never understand people who spend time on boards posting negative comments.

Wouldn't your time be better spent conversing with people on boards of company's you do rate?

[bones698] 22/12/2023 08:22

Theoldcodger - I also notice the lack of update on production issues and the falling share price so agree with your thoughts . It is also what made me ask the question if sce can't manufacture enough product for its clients Inna timely manner could contracts be cancelled .
So far from what I have read nobody can answer that just comments like it's unlikely etc ,therefore I reckon the contracts will have clauses in to allow OEM's to cancel if sce fail to deliver .
At least they are funded for now but there are a lot of headwinds and concerns growing hence the share price continues to fall

[pinkfoot2] 20/12/2023 18:37

I was told by Zeus that several VCTs couldn’t follow on due to the tax rules and clearly won’t be happy.Entirely technical

[graham1ty] 20/12/2023 17:10

So, Unicorn diluted down to around 5% as they took nothing in the Placing. So, they have supported Placings at higher levels, but not at 10p 🤔. Might be VCT rules that prevented them. But still disappointing