Surface Transforms PLC New OEM 8 Contract for Additional Sales (8341F)
24 March 2022 - 6:00PM
UK Regulatory
TIDMSCE
RNS Number : 8341F
Surface Transforms PLC
24 March 2022
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018.
Upon the publication of this announcement via the Regulatory
Information Service, this inside information is now considered to
be in the public domain.
24 March 2022
Surface Transforms plc
("Surface Transforms" or the "Company")
New OEM 8 contract for additional sales
Surface Transforms plc (AIM:SCE) is pleased to announce that it
has signed a new contract with its existing customer, OEM 8 with a
contract value of approximately GBP100m. This contract replaces the
previously announced contract from September 2020 which was valued
at approximately GBP27.5m. This increased contract value of over
GBP70m is driven by both significantly increased demand for this
particular model of OEM 8 and the contract being extended to
2027.
The contract remains priced in pounds sterling and increases the
Company's sales forecast by GBP4m in 2023, GBP11m in both 2024 and
2025 and by GBP20m in both 2026 and 2027, taking the Company's
overall lifetime order book to over GBP180m.
By way of background, in September 2020 the Company announced
its selection by OEM 8 to be the standard fit, sole supplier of the
carbon ceramic brake disc on both axles of a new model variant. At
that time, the start of production ("SOP") was scheduled for the
summer of 2021 and the contract was for 3 years with an estimated
lifetime value of GBP27.5m. Whilst OEM 8 delayed the SOP (now
scheduled for spring 2022), the market response to the car has
exceeded their order expectations; the customer has therefore been
in discussions with all impacted suppliers to increase capacity and
output.
This new contract clearly has capacity and overhead
implications. In several separate announcements, the Company has
said that by mid 2023 we will have installed capacity for GBP50m
sales p.a. which is enough to accommodate the extra volumes from
this new contract. However, our staffing and infrastructure
overheads are currently in line with the previous forecast of
approximately GBP17m sales for 2023. Accordingly, the Company now
needs to accelerate the recruitment and infrastructure actions
required to support these much higher sales, which the Board
currently estimates will result in current year overheads (mostly
people related) increasing by GBP2.5m.
Kevin Johnson (CEO) said: "This important announcement maintains
the recent momentum of significant commercial success for our brake
discs. This success is of course being accompanied by our parallel
focus on installing and commissioning the new plant to produce this
huge increase in sales, a project that is continuing apace. We look
forward to showing shareholders the progress on both contracts and
production at our Capital Markets Day in April 2022."
For enquiries, please contact:
Surface Transforms plc +44 151 356 2141
David Bundred, Chairman
Kevin Johnson, CEO
Michael Cunningham CFO
Zeus (Nominated Advisor and Joint Broker) +44 203 829 5000
David Foreman / Dan Bate / Jordan Warburton (Investment
Banking)
Dominic King (Corporate Broking)
finnCap Ltd (Joint Broker) +44 20 7220 0500
Ed Frisby/Abigail Kelly (Corporate Finance)
Richard Chambers/Barney Hayward (ECM)
About Surface Transforms
Surface Transforms plc. (AIM:SCE) develop and produce carbon --
ceramic material automotive brake discs. The Company is the UK's
only manufacturer of carbon -- ceramic brake discs, and only one of
two mainstream carbon ceramic brake disc companies in the world,
serving customers that include major OEMs in the global automotive
markets.
The Company utilises its proprietary next generation Carbon
Ceramic Technology to create lightweight brake discs for high --
performance road and track applications for both internal
combustion engine and electric vehicles. While competitor carbon --
ceramic brake discs use discontinuous chopped carbon fibre, Surface
Transforms interweaves continuous carbon fibre to form a 3D matrix,
producing a stronger and more durable product with improved heat
conductivity compared to competitor products; this reduces the
brake system operating temperature, resulting in lighter and longer
life components with superior brake performance. These benefits are
in addition to the benefits of all carbon -- ceramic brake discs
vs. iron brake discs: weight savings of up to 70%, longer product
life, consistent performance, reduced brake pad dust and corrosion
free.
For additional information please visit
www.surfacetransforms.com
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