Surface Transforms Share Discussion Threads

[quemaster] 27/3/2024 17:41

Harrogate, the last time I remember them talking about the price of discs was around ten years ago when turnover was less than £2m PA. The price then was about £1000 per disc but they were aiming to half the cost of this as they scaled up.

[groggle] 27/3/2024 17:38

For those that are old enough could this be another Ratners opportunity?

[amanitaangelicus] 27/3/2024 15:07

Nobody is interested sadly. The boys at the top are just not trusted to deliver. If they do, we.ll be fly me to the moon time.

[bones] 27/3/2024 14:05

Damay, so would I. Borderline but it would have to be accompanied by assurances that the production line was now more resilient.

[damayhill] 27/3/2024 14:00

bones, I wouldn't disagree with any of that, I'm probably just slightly more sanguine on £3.7M-£3.8M! Put it this way, if you offered me £3.8M now, I'd take it!

[damayhill] 27/3/2024 13:46

gripfit, that they have upped production is a non-negotiable. If they haven't, then a further raise is a near certainty. It's a question of the degree to which they have upped production. There are several scenarios that are OK in terms of progress but don't make it any clearer about whether a further raise is coming, which in turn would see less share price action. Unfortunately, those scenarios (steady as she goes) are the most likely.

[bones] 27/3/2024 13:44

Damay, as I said before, I think the Q4/23 numbers were probably around:

Oct 23 : £1.0M (we were told that in an update in Q4/23)
Nov 23 : Est £1.1M
Dec 23 : Est £0.9M

The reason December would be down is that 22/12 was the last working day before the Xmas break. I doubt a lot got done before New Year after that date.

Those numbers give us the £3.0M they actually achieved which was £0.3M short of the expectation. Maybe Christmas was boozier than they thought!

Anyway, if January onwards was not producing at £1.2M per month on a growing scale, I would be disappointed. I concur with Harrogate that this should project through to a quarterly figure close to £4M. Anything below £3.8M would be poor I think as it would demonstrate that they are still not on top of things.

I do agree though that the acceleration in production should intensify as the year progresses. The first six months to June will be far more instructive than the first three months to March. They stated last time that they are sticking with "mid-year 2024" as the time when they hope to have £50M capacity in place. That would be transformational but they have it all to prove!

[gripfit] 27/3/2024 13:30

Not much buying going on IF they have upped production etc

[harrogate] 27/3/2024 13:27

I agree that your focus on the sales number is key and personally if they are going to start getting ahead of the game I would like to see close to £4mOut of interest what do we think is the sales price of a set of brakes? Nice to understand unit volumes are going through. Thanks

[damayhill] 27/3/2024 12:40

The TU could come as early at Tuesday, although I think the following week is more likely. When it does come, the number one thing to look out for, I would suggest, is the Q1 revenue as this is the best indicator of production ramp-up. Without wishing to trivialise it, there are also probably ten realistic revenue points, a little bit like a Richter Scale!

Given that Q4 revenue was £3m (average £1m per month), I hope it's inconceivable that Q1 would be anything less than £1.1m average per month (10% increase) and I also think it's highly unlikely it would be anything north of £1.4m average per month (40% increase) - that therefore gives us a range of 10 £100k increments - tiny amounts of money but crucially indicative at this stage. For reference, the quarter on quarter increases we need this year, in order to achieve the £23M, are about 27-28% per quarter.

I've offered my sentiment for each of those increments below:

£3.3M, £3.4M, £3.5M - unacceptable ramp-up progress, increases likelihood of a further raise. Would want to see accompanying narrative around realism of £9M H1 and revised cash forecasting. Reservation rolled forward to Q2 but likelihood of further raise heightened
£3.6M, £3.7M - acceptable progress but below the rate required. I would be pretty indifferent and reservation rolled forward to Q2.
£3.8M, £3.9M - these would constitute strong progress in line with what is required, the latter being the ideal outcome and probably the last of the realistic figures, bang on ramp-and would give me cautious but decent levels of confidence in diminishing likelihood of further raise
£4M, £4.1M, £4.2M - very positive and a psychological boost if it begins with a '4'. Makes the £9M H1 look very achievable and further decreases the likelihood of a further raise.

In terms of what I think it might be, I think the likeliest range is £3.5M - £3.8M and therefore equivocal with a further three months to wait for further data!

[quemaster] 26/3/2024 17:11

Regarding a comment in Damey's post.....

"they are arguably in a stunning position IF they can deliver sufficient revenue this year"

If ST can deliver this rather than looking back at past mistakes what sort of a company would we be looking forward to?

So far the prospective pipeline has 100% converted to contracted orders, if this continues in about four or five years time we will have £129m turnover. This would come from the contracted pipeline of £390m equating to £79m PA and the prospective pipeline of £300m adding a further £50m giving total turnover of £129m PA on current OEM projects at 20% free cash flow from revenue (Hardman forecast 20% plus)


The previous year had plenty of bad news but there have been no cancellations of contracts and a further award from a customer that was fully aware of what was going on at the production facility. How much of this is down to management and how much is due to the OEMs desire to have the best brakes and not have to redesign parts of the model is not clear but no serious damage appears to have been done with our customers.

[damayhill] 26/3/2024 15:53

Swiss Paul, I'm happy to set out the counter gloom but I must say that I have already set it out numerous times (probably too many for some!), so a good starting point might be to read some of my posts since the new year. I'll try to summarise it here.

I disagree that past performance has not been good. Not sure how well you know your corporate history but Kevin Johnson joined SCE in round about 2006, when I believe turnover was £155k and they secured some small orders from Weber Sportscars and a 12 month contract from Koenigsegg. Bundred became Chairman in 2012, when I believe turnover was £1m and they were providing modest after-sales to a supercar market via third parties.

I won't itemise the list of achievements since then but these include breaking meaningfully into a monopolistic, highly 'moated' but growing market with highly relevant benefits and ESG credentials; developing what is by general consensus a superior product to Brembo's; winning multiple high value Tier 1 contracts with multiple major global OEMs, including winning business from Brembo. This now equates to a c.£400m order book and about the same again in prospective contracts and revenue itself was £8M+ in 2023. That is very good progress by any measure.

Where they have run into some difficulty is in scaling up a complex manufacturing process at sufficient pace - that's not unusual. And to be honest, it wouldn't necessarily matter short to medium term if it weren't for the fact that, like many modest sized businesses, they will run out of cash. The cash position has necessitated two fundraises in a difficult market. September to December last year was not well handled at all and understandably wrong-footed and displeased investors, myself included.

This year's target revenue is £23M (notionally £9M H1 and £14M H2) and that is a level which would begin to generate free-flow cash and therefore avoid a further raise and in theory fund future capital expansion. Despite the impression given by some posters, we currently have no indication of the first milestone along that path (Q1), but we will do in a fortnight or so. We know that Q4 YE22 was £3M revenue. In my books, anything under £3.6m is unacceptable progress, £3.6-3.8M is OK but equivocal, £3.9M+ is positive.

The parts that are typically missing in an enterprise of this scale (order book, prospective order book, capital funding) are in place and with the quality of product and emergent position in a growing market, they are arguably in a stunning position IF they can deliver sufficient revenue this year. Investor sentiment should simply hinge on the increasing or decreasing likelihood of a further raise within the next 12-18 months. It remains a big IF. My plea has been not to deliver the verdict before we have any evidence, which has been the tendency.

[bones] 26/3/2024 15:44

I’ll have a look later but from memory, I think the loan doesn’t start to be repaid for two years, during which the money can be drawn down as and when needed for expenditure on kit. Interest rate, don’t know yet. Will have a look later.

[luzley] 26/3/2024 15:25

Capital expenditure loan - from another board.I'm trying in vain to find the terms of the capital expenditure loan. I know it's not for general working expenditure, just for Capex but what are loan terms?

[glyn10] 26/3/2024 10:58

Damayhill, nice to see some good posts rather than the constant moaning and groaning.

[damayhill] 26/3/2024 10:41

Hi swiss paul, I have no issue with strength and divergence of opinion, what I am bemoaning is the irrationality. I think it's reasonable to expect considered investors to be objective and rational.

In fact I would welcome some counter-arguments that ARE actually founded in rationality. At the moment we effectively have two strands of argument on the negative side of things. 1) Management are useless and Bundred and Johnson must go. 2) We've seen no news or share price action since the January TU and therefore what's about to come must also be bad. I don't follow any logic on either of those arguments.

There are some contributors on here who are so downbeat and seem to be certain that more bad news is on the way. In what way is it rational for those people to continue to hold? If they honestly believe that this is heading further south, I would encourage them to sell. It will have negligible if any impact on share price.

[swiss paul] 26/3/2024 09:33

Emotionl wrecks = fellow shareholders / investors who are holding and supporting your share price, Otherwise they would sell and drive down your share price and dilute your wealth.

As my old boss used to say let them complain its a way fo them to let off steam.

Edit - Rotherham is not Liverpool Lord Mayor he covers all of Merseyside - but he is still a a waste of space

[damayhill] 25/3/2024 19:58

bones, you're absolutely right about the echo chamber. The company reports on trading quarterly. We can pretty much pinpoint the dates. Yet there are people on here bemoaning the lack of news and share price action as though there was any reason to expect either. I'm not overjoyed with where the share price is but the share price has been exactly where I (and others should have) expected it to be for the past two and a half months, bouncing around within an established range. Why would it be otherwise?

I would ask some on here, if you are sent an invite for a party to start at 7pm, would you turn up at 3pm, 4pm, 5pm and bemoan the fact that there's no party? Because that's what you're doing. You want there to be news and share price action and you're frustrated there is none. But that doesn't mean you have any right or reason to expect any until the trading update in April and even then you may not see much if the numbers are equivocal. The only other potential news this quarter was a further contract announcement and as I've said before, if it came before the TU, it would likely have no impact either. I'm glad it hasn't come yet.

It's a couple of weeks until the TU and we'll be able to assess progress then. I'm certainly not waiting for a 'flowery, hopeful RNS'. I'm looking for one number - what revenue has been achieved in Q1? Why? Because I'm an investor. I've set out on here more than once some very specific financial ranges and what I believe they would indicate. Why? Because I'm an investor. Once the TU drops, for those who are interested I will set out my objective thoughts on here and will enjoy reading the thoughts of one or two other contributors (yourself included, bones). Why? Because I'm an investor. I'd love to hear from more investors on here and less from the emotional wrecks!

[fevertreeman] 25/3/2024 14:50

Well that's all right then.....Mayor of Liverpool invited for PR opportunity for giving Bundred & Johnson £13m smackers. Has echoes of DeLorean (w/o the theft & corruption). I distinctly recall NI officials being overjoyed , bending over backwards to hand over lots of dosh, have photo-ops with the great man, bang on about hi-tech boom, job creation, NI turning a new leaf etc.. Wonder if the Mayor S Rotheram asked about share price performance, emergency funding, whether they 'd hit 2024 revenue number confidently predicted, how the hunt for Head of Quality was going?

[jerarnie1] 25/3/2024 14:23

Last week, David Bundred, Kevin Johnson, and Kerry Wood welcomed Mayor Steve Rotheram and his colleague James Crombleholme to the site for an introduction and tour.Their visit recognises the pivotal role of the £13.2m loan received in December 2023 from the Mayor's Urban Development Fund, partially funded by the European Regional Development Fund (ERDF), and Liverpool City Region Combined Authority. This support has been instrumental in the capital investment plans, which aim to drive growth and development opportunities in the local area.

[bones] 25/3/2024 14:11

I’m looking forward to seeing the next update, regardless of its contents (naturally hoping it will be relatively positive compared to 2023’s catalogue of accidents). If only to take us from this vacuum where the negativity is pinging around an echo chamber!

I would be concerned if there were no jobs being advertised. The proposed expansion backed by the capital loan is supposed to be creating around 70 new jobs if the blurb is to be believed.

[swiss paul] 25/3/2024 09:54

HA HA. I asked years ago if they had ISO9001 and was fobbed off with a we dont need it as vehicles have other standards, Which they may have but 9K1 demonstrates equivalence to the outside world.

Erm we do have 14k1 - & 27k1?

[amanitaangelicus] 25/3/2024 09:34

Amateurish / cost cutting ...foundations built on sand. Sigma 6 to Epsilon delta 4, there.s a toothbrush stuck in the robot in the canteen, Q Quadrant. Release the Gamma Dogs.