TIDMSCE
RNS Number : 0568H
Surface Transforms PLC
04 April 2022
Surface Transforms plc
("Surface Transforms" or the "Company")
Preliminary Results and
Notice of Annual General Meeting
Surface Transforms (AIM:SCE) is pleased to announce its
preliminary results for the year ended 31 December 2021. The
Company's Annual Report and Accounts for the year ended 31 December
2021, together with a notice convening the Company's Annual General
Meeting ("AGM") are expected to be posted to shareholders in early
May 2022 from which time they will also be available on the
Company's website www.surfacetransforms.com . The AGM will be held
at the offices of finnCap at 1 Bartholomew Close, London, EC1A 7BL
on Thursday 30 June at 10.00 a.m.
Financial highlights
-- Revenues improved 21% to GBP2.4m (2020: GBP2.0m)
-- Gross margin was 65% (2020: 67%)
-- Net research costs of GBP3.4m (2020: GBP2.5m) after
capitalising GBP0.3m (2020: GBP0.1m) of gross expenditure
-- Other administrative expenses increased by GBP0.5m to GBP2.4m (2020: GBP1.9m)
-- Loss before taxation was GBP4.6m (2020: GBP2.9m)
-- Research costs partially offset by accrued R&D tax credit of GBP0.7m (2020: GBP0.6m)
-- Loss per share of 2.08p (2020: 1.54p)
-- Cash used in operating activities increased by GBP2.7m to GBP3.7m (2020: GBP1.0m)
-- Cash at 31 December 2021 was GBP13.0m (2020: GBP1.1m). Of
this, GBP3.0m was in the form of an irrevocable letter of credit
for furnaces, giving an available cash balance of GBP10.0m
-- Capital expenditure in the year was GBP3.9m (2020: GBP0.6m)
-- Cash tax credits of GBP0.6m received in the period against an accrual of GBP0.6m
-- During the year the Company successfully raised GBP19.1m net
of fees in a significantly over-subscribed placing, subscription,
and open offer. In addition, the Company received a GBP1m loan from
the Combined Local Authorities and CBILS support in the form of
asset finance totalling GBP0.3m
Customer and Operational highlights
-- Increased order book by GBP70m (lifetime value) to GBP115m at end of the year
-- Added a new major customer - US based OEM 10 - to growing portfolio of customers
-- Post balance sheet date, significantly increased the order
book to over GBP180m (lifetime value) following extended GBP70m
order with existing customer OEM 8
-- Demonstrated the ability to win "carry over" business with existing customers OEM 6 and OEM 5
-- Progressively implemented new production capacity to reach
current revenue capacity of GBP20m p.a.
-- Adopted new manufacturing strategy that will provide more
capacity than originally planned at less cost, in a shorter time,
and having a lower carbon footprint
-- Procured new capital equipment for installation in early 2023
to increase revenue capacity to GBP50m p.a.
Board Changes
-- Strengthened the Board with the appointments of Matthew
Taylor and Julia Woodhouse as new independent non-executive
directors with substantial experience in the global automotive
industry
-- After 17 years on the Board, Kevin D'Silva retired with effect from 12 April 2021
Chairman's Statement
The twelve months to December 2021 saw continuing game-changing
market success. The Company won GBP70m (lifetime value) of new
orders in the year, added one of the largest car companies in the
world (OEM 10) to its customer portfolio and demonstrated its
ability to win additional contracts with existing customers; OEM 6
(GBP35m lifetime value order) and OEM 5 (GBP5m lifetime value
order). Post the year end, the Company added more than GBP70m to
the order book on existing programmes with OEM 8.
The task in 2022 is to turn these game-changing orders into
profitable sales. Consequently, the other major focus in 2021 was
the installation and commissioning of the multiple furnaces and
machine tools delivered in 2020 - originally described as OEM
production cell one - to provide sales capacity of GBP20m p.a..
This task was not without its difficulties, leading to production
issues towards the year end that have been resolved in the new
year.
To fund further additional capacity, the Company raised GBP19.1m
(net of expenses) in the year to build what was originally
described as OEM production cell 2, raising total site capacity to
GBP35m p.a.. However, as the speed of our commercial success
accelerated, the Company fundamentally revised its manufacturing
strategy and as described in detail below was able to order
equipment that would provide capacity for GBP50m p.a. sales when
commissioned in 2023, at no extra cost and with a lower carbon
footprint. The site currently has sufficient space to accommodate
further equipment, that will be ordered in due course, to bring
overall sales potential to GBP75m p.a..
Throughout the year our environmental, social and governance
obligations were at the forefront of our thinking. We are proud
that our products assist in reducing both engine emissions (from
lower weight) and brake pad dust emissions, that we received the
highest grade possible in a recent Environmental Agency review and
- consistent with our desire to be "best-in-class" employer -
reached the target of three years without a reportable
accident.
Progress on Customers :
OEM 8: The Company won its original order on a variant of a key
model in the customer's range in September 2020. The start of
production (SOP) of the car has been delayed, originally planned
for mid-2021 it is now forecast for spring 2022. Nonetheless the
market response to this car has exceeded all order expectations.
This inevitably stressed the capacity of all the supply chain and
extensive discussions took place in the year between the customer
and all relevant suppliers to find a collective response. The
result has been a revised production plan and new contracts which
means that we have now agreed to commit capacity of GBP20m p.a. -
compared with the original requirement of GBP9m p.a. in 2024. The
ramp up to these higher numbers will occur through 2023.
Inevitably, as we must provide the infrastructure for this higher
demand, this has had the paradox of increasing costs in 2022 in
exchange for higher profits thereafter.
Given the customer focus on and resource allocation to this
model, little work has been done on the follow-on models described
during the fundraising. This does not however mean that these
opportunities no longer exist.
OEM 6: This UK customer was one of the first mainstream
contracts won by the Company in 2017 for a hyper performance car.
The development of this car has been problematic with extensive
delays. However, it is encouraging to report that the car entered
production in late 2021 and deliveries continue to be made in 2022.
In December 2021 the Company announced that it had been awarded a
GBP45m lifetime value contract, as tier 1 sole source supplier,
standard fit on both axles of two forthcoming models. We were
particularly pleased that this again demonstrated that we have been
able to win additional business from existing customers on
essentially the same product - known as "carry-over" in the
automotive industry. This ability is crucial to the ongoing
commercial development of Surface Transforms.
OEM 10: This US based customer is one of the largest automotive
manufacturers in the world. In August 2021 the Company announced
that it had been selected to be the tier one sole supplier of the
carbon ceramic brake disc as standard fit on both axles of a new
edition to an existing internal combustion engine car. The previous
model already uses carbon ceramic discs and thus the Company's
brake disc is replacing the existing supplier. The lifetime revenue
on this specific contract is estimated to be approximately GBP20
million commencing mid 2024.
OEM 5: This existing German automotive manufacturer announced
its first contract award to the Company in July 2019. The SOP of
the car has been delayed by Covid disruption but is now expected in
early 2023. In September 2021 the Company won a further carry-over
contract for GBP5m on a facelift to an existing internal combustion
engine model with start of production in Q1 2024; the Company's
brake discs will be fitted as an option to the front axle.
OEM 3: This customer (who is part of a group of OEMs based in
Germany) has been tasked with the development of a second source
carbon ceramic disc supplier. The customer has a unique and
destructive environmental test that has challenged the Company for
the last 5 years. It is encouraging to report that, in the year the
Company believes it has now designed a suitable product which meets
all OEM 3's requirements. The test results have been supplied to
the customer for review and confirmation of product suitability.
With this work complete no further testing is planned. We now bring
OEM 3 in line with the Company policy of capacity planning and
sales guidance based solely on firm programme sourcing activities
and/or nominations. Currently we have no programmes incorporated in
our capacity planning models for OEM 3 and will work with the
customer to understand their future sourcing activities.
OEM 9 : This is a new "disruptor" entrant to the automotive
market. The potential of a contract award with this customer was a
feature of the February 2021 fundraising. The customer's programme
however has been significantly delayed and beset with technical
difficulties, unrelated to our involvement. Albeit delayed, their
programme appears to be back on track and the Company hopes to see
an award in 2022.
Koenigsegg: The Company continues to supply to Koenigsegg on its
Jesko model and expects SOP on the Gemera in 2023. Relationships
are excellent and discussions continue with regard to future
models.
Retrofit and Near OEM: Retrofit describes end use drivers who
swap out either iron discs or competitor products for Surface
Transforms carbon ceramic discs. Near OEM encompasses the large
number of very niche car manufacturers producing between a handful
and 100 cars per year. The retrofit and near OEM customers have
been the bedrock of the Company over the last ten years but will
never be able to match the scale of the mainstream manufactures
described above. The Company had good order intake in the year but
the production difficulties at year-end constrained sales. These
arrears were being progressively reduced in Q1 2022.
Progress on Operations :
Revised Manufacturing Strategy: The Company's original plan to
equip the Knowsley factory was to build a series of 5 modular,
relatively independent but identical production cells being built
at roughly one cell every 18 months. However, the combination of
the pace of our market success, practical constraints on
accelerating this plan and the desire to make a step change in our
carbon footprint led to a significant change in strategy announced
in September 2021. The Company will no longer build separate
production cells but now approaches the site capacity as a plant
wide "single production" line concept. Thus, rather than build the
originally envisaged production cell two the Company split the
equipment purchasing process between furnaces and machine tools and
ordered a smaller number of more efficient larger furnaces. The
effect has been to raise the planned mid 2023 site capacity from
the fundraising projection of GBP35m p.a. to GBP50m p.a. at no
extra cost whilst achieving a major reduction in forecast carbon
emissions.
Plant commissioning: The change in manufacturing strategy has
had little impact on the commissioning of what was originally
described as production cell one, aimed at providing a site revenue
capacity of GBP20m by Q4 2021. All the machines were delivered in
2020 and were progressively commissioned in 2021, leading to the
planned start of volume production in Q4. The task has been complex
and arduous and not without difficulties. To some degree, every
furnace and machine tool had "snagging" problems but, under volume
production stress, there was a particularly problematic furnace
that caused major production disruption in November and December.
However, the issues on this furnace were resolved post balance
sheet date and have not returned. We have cleared all significant
customer arrears by this report date.
We will continue to increase output through the year as our
major customer OEM 8 ramps up production. Continuing production
difficulties are inevitable with this scale of growth but we are
confident that our team has both the skills and scale to deal with
them as they arise.
The Company has the order book to reach profitability in 2022.
Continuing to successfully commission the new plant remains our key
short-term task to achieve our profitability objective.
Cost reduction: The Company continues to see ongoing reduction
in manufacturing costs as a prerequisite for participation in the
automotive industry. The final commissioning of production cell one
concluded the first phase of the plan that has halved production
cost in five years. The Company has now embarked on a second plan
to repeat this success.
Gas and energy costs : The Company has fixed price energy and
gas contracts and thus the major worldwide increase in these costs
had no impact in 2021 and will have minimal impact in 2022 as our
contract completes in May 2023. Without action, a tripling in
energy costs would reduce gross margin percentage by around five
percentage points. Fortunately, by 2023, this is likely to be
offset by a number of energy efficiency projects that are already
underway on the existing furnaces. Additionally, our new furnaces
are significantly more efficient than our existing furnaces which,
combined, will offset the current range of anticipated commodity
increases. Therefore, we are not forecasting gross margin
percentage deterioration in 2023 or beyond from this source.
Covid: Covid has been a constant background presence throughout
the period. However, our staff have been outstanding in the
flexibility they have shown with how they work in this environment,
both working from home together with the discipline they have shown
in maintaining Covid disciplines in the factory. Thus, the Covid
problem has been contained, albeit it did not help with our
production issues at the year end.
Brexit : The major impact of Brexit has been in transport
difficulties between the UK and Continental Europe. What used to
take days can now take weeks. However, as with Covid, our staff
have responded with different working methods even if adding cost
and inventory to our dealings with Continental Europe. Not
unreasonably our customers see these costs and extra inventory as
our problem, but it does not seem to be affecting our ability to
win new business in Germany.
Recruitment: In preparation for the significant 2022 sales
increase, the Company virtually doubled its workforce in the year
and is continuing to heavily recruit in 2022. Whilst there are
always issues in recruiting very specific skills, the programme has
been a success and we are pleased both with the quality of
applicants and the skills and enthusiasm of our new colleagues.
Russia: The Company can advise that it has no sales activity in
Russia, no obvious Russian shareholders and no subsidiaries or
associates in the country. However our fixed price gas contract is
with a Russian company. Against the current political and economic
background, the Company has been exploring its options and has
concluded that it cannot escape the contract. Nonetheless the
Company has however served notice to its supplier, ensuring that no
automatic renewals can occur. In the meantime, the contract will
remain in place until it ends in May 2023.
Environment, Social and Governance:
Environment: The Company continues to prioritise the actions
required to further extend our ESG investment credentials. Our
products reduce carbon emissions on internal combustion engine
vehicles through reduced vehicle weight; a benefit that is needed
even more on heavier, faster accelerating electric vehicles and
thus our technology is particularly assisting the transition to
electric vehicles. Our products also reduce emissions by
significantly extending product life, contrasted with its iron
alternative. Additionally, carbon ceramic brake discs significantly
reduce brake pad particles being released into the atmosphere and
watercourses. Finally, our end-of-life disc product acts as a
carbon sink as the aluminium bell can be recycled and carbon and
silicon are almost the only remaining elements at the end of the
product's life.
Our task however is to ensure that these environmental benefits
are not lost in the manufacturing process, including our supply
chain through excessive energy usage. Our environmental focus is
therefore in this area. In the year the Company restarted the
previously halted Combined Heat and Power Plant (CHP) project,
albeit progress was slower than planned as resource was more
focussed on plant commissioning. The task is to both recirculate
the wasted heat and use the waste gases from our furnaces to
generate our own power. During the year we also installed extensive
energy monitoring equipment on all furnaces and machines and will
be reporting the summary total carbon footprint data in future
reports.
Whilst our focus is on energy consumption however, this is not
our sole environmental action area. For example, as part of our
determination to be a good neighbour we are going beyond
Environmental Agency (EA) requirements on emissions reduction,
containment, and monitoring. We are pleased that the EA recognised
our work in this area by giving the Company an "A" grade score in
the recent EA review of the Knowsley site.
Social: We believe that our prime social goal is the provision
of well-paid employment in one of the most disadvantaged areas in
the country. For example, the Company has adopted the policy of
exceeding the living wage for all employees and there are few
companies now doubling employment on the Knowsley Industrial Park.
Within this overall objective we are additionally delighted to be
part of the local apprenticeship scheme and starting our own
graduate training scheme in 2022.
The Company sets high standards for the health and safety of its
employees and in January 2022 reached three years without a single
reportable accident - a most gratifying achievement given the
dangerous processes and cutting machines in the factory.
Our suppliers are primarily based in the UK and EEC area which
provides some comfort on our expectations of their compliance with
the social aspect of our ESG policy. Nonetheless we have started a
programme of checking the work they are doing on both environmental
and social activities.
Finally, combining both environmental and social goals, the
Company sought the award of ISO 45001 in the year, the
international standard for health and safety, which was awarded in
March 2021.
Governance: The Company adheres to the QCA corporate governance code and in the year completed a self-assessment on compliance. The self-assessment saw the Company broadly compliant with the code except for the need to improve independence and diversity of non-executive directors. This issue was addressed by the recruitment of two new independent non-executive directors; the Company now believes itself to be fully compliant.
Summary:
The Company continues its journey to profitability in 2022 and
remains confident that this objective will be achieved whilst
maintaining our commitment to our environmental and social goals.
The year, and indeed the months since balance sheet date have been
a period of considerable market success with several significant
contract wins. We want the coming year to match that sales success
with operational success and remain confident in our ability to
achieve both.
David Bundred
Chairman
1 April 2022
S trategic Report
Operational review and principal activity
Surface Transforms develops and produces 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 original equipment
manufacturers (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%, extending product
and service life, consistent performance, environmentally friendly
through reducing both CO2 emissions and brake pad dust, reducing
the total cost of ownership, corrosion free and are highly
desirable.
Our strategy is to be a profitable, series production supplier
of carbon ceramic brake discs to the large volume OEM automotive
market. To achieve this, we work directly with OEMs and closely
with Tier One suppliers to meet the customers' requirements on
product, price, quality, capacity and security of supply.
In addition, we supply carbon ceramic brake discs to small
volume vehicle manufacturing and retrofit high performance kits for
performance cars.
The key features of our business model are as follows:
-- Support our customer across key geographical markets,
achieving contract awards to multiple OEMs with products for
multiple models with multiyear supply agreements
-- Engineer market leading carbon ceramic brake products, which
deliver best in class performance for the luxury and performance
brakes markets, which we estimate to be a circa GBP2 billion
market
-- Build manufacturing capacity revenue of circa GBP50m p.a.,
with the footprint available to reach circa GBP75m capacity revenue
p.a. with future investment
-- Operate lean manufacturing processes, enabling the Company to
produce products that are competitively priced with good
margins
-- Be a 'Quality Company' with a culture that lives and breathes
its world-class business processes and management systems. We
surpass the automotive quality standards (IATF16949), and thus,
have the confidence that we are able to pass all customer audits,
as evidenced by recent contract wins
-- Protect the environment by minimising the environmental
impacts arising from our activities, products and services and be
committed to continuous improvement of our environmental
performance
-- Support and manage our supply chain which can deliver to our
customers' requirements on product, price, quality, capacity and
security of supply
Succeeding in these activities generates highly desirable,
environmentally friendly, world leading quality products, which are
price competitive and profitable to the business.
Furthermore, our products and processes are protected by a high
level of intellectual property through deep, complex process
knowhow and a product which cannot be reverse engineered.
Delivering our objectives:
Automotive OEMs
The continued progress on building capacity for our game
changing contracts provides a clear path to achieving its strategic
objective of profitability and cash generation. Coupled with this,
the continued success of winning additional 'carry over' contracts
and new major OEM customer contracts has significantly strengthened
the revenue growth curve for the Company over the coming years.
The Company also continues its successful engineering
development objectives in anticipation of further contract awards
for both 'carry over' customer contracts and new customer contracts
during 2022 and beyond.
The Company's internal activities are therefore focused on
supporting series supply for these contracts and on Company-wide
continuous improvement objectives across all functions.
-- Health and Safety - maintain and improve our health and
safety record. We have an excellent health and safety record which
we will continue to maintain
-- Quality - continue to have excellent in-service quality.
Improving quality is a never-ending process, therefore our
primarily focus is on continuous improvement and reducing the
internal cost of quality
-- Environmental - protect and improve our environment. Our
products make a fantastic contribution to reducing CO2 emissions in
use, significantly reducing brake dust pollution, and over the
lifetime of the car reducing the carbon footprint. Our internal
goals are aimed on reducing our manufacturing environmental
footprint
-- Customer supply performance - maintaining our performance as
a good supplier. As we enter series supply with our OEM customers a
key objective is to deliver good supplier performance
-- Capacity improvements - ensure we have the manufacturing
capacity and manufacturing resilience in line with our customer
requirements. We have a manufacturing strategy which will deliver
GBP50m of capacity revenue during 2022 and 2023
-- Productivity and cost reduction - perpetual improvement of
our productivity through cost reduction. We have halved the cost to
manufacture over the last five years and have a programme to repeat
this success going forward to maintain good margins and support our
customers to achieve their pricing goals
-- Supply chain performance - improve the resilience and
productivity of our supply chain. As with any manufacturing process
we are only as good as our supply chain. We have improvement plans
with our existing suppliers and are adding new suppliers to our
approved supplier list
Section 172 statement
In accordance with the requirements of section 172 of the
Companies Act. The board believes that during the year it has acted
in a way that they consider, in good faith, would most likely lead
to the success of the Company in the long term and to the benefit
of all stakeholder groups. During the year, Surface Transforms
successfully raised funds to support the Company's current and
future growth strategy and to meet contracted and expected
orders.
The board believes that governance of Surface Transforms is best
achieved by delegation of its authority of the executive management
of Surface Transforms to the CEO. The board regularly monitors the
delegation of authority, updating regularly whilst retaining
responsibility.
The board has identified 6 key stakeholder groups and engages
with them to foster strong relations and to act fairly between
them:
-- Customers: Surface Transforms engages with customers
throughout the development process, building strong collaborative
environments for long term mutual benefit. This is highlighted by
carry over contract awards from existing customers and meets the
Company's strategic aims of growing our customer base;
-- Employees: Our employees are critical to the success of
Surface Transforms, and we engage through an environment of
openness and inclusivity and trying to create a sense of ownership.
All employees receive some share options after a qualifying period
of employment. The Company has recently commenced employee surveys
to monitor employee sentiment and along with the appointment of our
new HR executive are placing a higher focus on employee recruitment
and retention. In addition, with the current stresses on the
workforce the Company has made available counselling services for
employees. These actions align with the Company's aim to be an
employer of choice within the Knowsley area;
-- Government and regulators: The Company is committed to
engaging with all relevant government organisations and ensuring
adherence to all statutory requirements. The Company has a strong
working relationship with the environmental agency and regularly
enters dialogue as to the fulfilment of our responsibilities;
-- Investors and shareholders: The board gives opportunities for
both institutional and retail investors to meet with the Company
and to see the progress of the Company. During the year the Company
has held a number of webcasts allowing investors to question the
board on progress and on our strategy. The Company has engaged one
to one with advisors and investors on environmental, social and
governance (ESG) issues with a view to improving the Company's
performance in this area and the Company has invited shareholders
and other interested stakeholders to visit the site at Capital
Markets Days in April and July 2022;
-- Partners and suppliers: The Company engages collaboratively
with its partners and behaves in a responsible manner and expects
partners to act ethically and in a responsible manner. The Company
aims to build long term collaborative relationships and has signed
long term contracts with suppliers for material supply, giving
certainty to their businesses; and
-- Society: The Company engages on social media and welcomes
engagement with the wider public. In addition, the Company is
conscious of its position as a growing employer within the Knowsley
area, an area of recognised social disadvantage. To this end the
Company has maintained an apprentice scheme and will be starting
its own graduate apprentice scheme in September 2022.
The board considers these stakeholders within its strategy
discussions, the performance of the Company, the workforce and in
its governance.
Financial Review
Revenue increased in the year to GBP2.4m against GBP2.0m in
2020, an increase of 23%. This growth has been driven by delivery
of OEM parts for the Valkyrie which entered production in the year
and the delivery of increased volumes of development parts to our
existing contracts.
Gross profit margin dropped slightly in the year to 65% from 67%
in 2020. This deterioration has been caused by sales mix due to
development work but also reflects the reduction in unit sales
price that comes with series production and larger contracts.
Retrofit and Near OEM sales were broadly flat in the year.
During the year the Company made minimal use of the government
furlough scheme with claims only being made for vulnerable
employees having to self-isolate for medical reasons. The Company
did however utilise the Coronavirus Business Interruption Loans
Scheme (CBILS) to fund capital equipment purchases. This loan is at
a lower rate than that usually available to the Company for
borrowings.
Other borrowings actioned during the year were the drawdown from
the Combined Local Authorities Future Growth Fund of GBP1m. This
loan is again at a rate that would be unavailable to the Company
without the support of the Liverpool City Region Authority.
The Company's shareholders again supported the Company with an
equity fundraising in January 2021 which raised GBP19.1m after
fees. The funds were raised to finance the delivery of additional
capacity and working capital.
Administrative expenses increased by GBP0.5m to GBP2.4m ( 2020
GBP1.9m). This increase was almost all in salary costs reflecting
extra staffing ahead of the capacity requirement for 2022.
Net research expenses were GBP3.4m an increase of GBP0.9m on the
prior year of GBP2.5m. These costs were net of capitalisation of
GBP0.3m in the year ( 2020: GBP0.1m). This increase was driven by
significant material costs utilised in furnace commissioning and
product development, in addition much of the recruitment during the
year was for engineering roles focussed on development in the short
term. Given the size and likelihood of near-term commercial
revenues being generated, these costs meet the definition of an
asset and for the future economic benefits of such assets to be
amortised over the perceived useful economic lives of the asset,
namely on a straight-line basis over the life of the contract to
which they relate.
Cash at 31 December 2021 was GBP13.0m (2020: GBP1.1m). Of this,
GBP3.1m was held as an irrevocable letter of credit in favour of a
furnace supplier and covered by delivery milestones. In addition,
the Company expects the receipt of an R&D tax credit totalling
GBP0.7m during the coming year (2020: GBP0.6m).
Loss before taxation was GBP4.6m (2020: GBP2.3m) which led to a
loss per share of 2.08p (2020: 1.54p)
Key performance indicators
The Directors continue to monitor the business internally with
several performance indicators: order intake, sales output, gross
margins, profitability, supply chain capacity, health and safety,
quality and manufacturing cost of automotive discs. A set of
business milestones has been agreed and are discussed as part of
the monthly board meeting. The board has assessed the results
against these KPI's and believe that solid progress has been made
against the Company's targets.
During the year the Company has performed well against KPI's
relating to Health and Safety with no reportable accidents during
the year and in excess of 1,000 days since the last lost time
incident. In addition, the Company measures its environmental
impact through its Environmental management framework and through
Performance in Environment Agency audits which have resulted in an
A grade score during the year.
The Company produces an annual business plan and full monthly
forecasts detailing sales, profitability and cash flow to help
monitor business performance going forward.
Management meetings are held on a weekly basis, all senior
managers attend and discuss production, engineering, financial and
quality issues.
Risks and uncertainties
The Company has embedded risk management activities and
maintains through regular reviews throughout the year an effective
risk register of the issues that may affect the strategy of the
Company or the delivery of its aims.
The principal short-term risk is the execution risks associated
with bringing the newly purchased furnaces into production. This is
being managed by both a project team that has the experience and
skills to deliver this type of project as well as pre-delivery
testing at the supplier's premises. Regular weekly and monthly
reviews are held, and the project's progress is communicated across
the Company on a regular basis.
There is also a risk to customer Start of Production (SOP) dates
and the speed at which the customers move from initial to mature
build rates. It is also normal in the automotive industry that
customers do not contract minimum build rates. These risks are
managed by continuing dialogue with the customers to ensure early
notification of possible changes.
As in previous years another major risk faced by the Company is
considered to be the speed at which our customers and potential
customers adopt the new carbon ceramic product technology. The
contract awards in the period indicate the strengthening desire
from a number of volume automotive OEMs to incorporate the
Company's product in their respective platforms. This risk is
constantly assessed by regular customer review meetings but is now
clearly much reduced.
There is a risk of delay on customer production due to hang
overs from Covid-19. However, as at the date of publication of this
report all of our customers have returned to production and there
is a customer focus on short term revenue generation. This leads
the directors to believe that this risk is currently low unless a
further shutdown should occur. Moreover, the business performance
in 2021 demonstrates that the Company has robust procedures in
place to continue operations throughout the most severe periods of
another Covid-19 outbreak.
Brexit is currently causing delivery delays as a result of
paperwork issues, however these issues are only affecting retrofit
sales at present. Should the delays not improve before the start of
production with OEM 5 then it has always been the Company's
intention to expand our German facilities to include a warehouse to
hold buffer stock for this contract. This risk is ameliorated by
the fact that looking forward to 2024, only 15% of total sales are
forecast to be within the EU and, indeed OEM 5 has recently
informed us that a portion of their production will be outside the
EU.
The Company has an exposure to exchange risk however this is
partially mitigated through natural hedging activities. The
contracts for OEM 6, 7, 8 and 10 have been negotiated in sterling
to mitigate any exchange risk and this is the Company's policy
where possible.
In terms of uncertainties, product sales are still expected to
grow with future OEM projections now supported by contracts. The
Board expects continuing growth with Near OEM customers, but sales
growth is expected to be modest in the retrofit market. This
uncertainty is constantly assessed by regular customer meetings and
monitoring the level of enquiries and orders for both the Company's
products and industry wide.
In summary, the Company has made satisfactory progress in its
automotive projects and is progressing well with its expansion
plans. Please refer to note 21 for information on financial risk
management and exposure.
Events after the reporting period
The Company announced the extension of its contract with OEM 8
from a previously reported GBP27m to GBP100m.
Directors and staff
Directors: In March 2021, the Company strengthened the Board by
the appointment of two new independent non-executive directors,
Matthew Taylor and Julia Woodhouse.
Matthew Taylor joins the Board after retiring from his role as
CEO of Bekaert SA in 2020. Bekaert SA is a EUR5billion, 30,000
employees global steel cord business headquartered in Belgium with
45% of its business in automotive. Prior to this role Matthew was
CEO of Edwards Vacuum, CEO of JC Bamford, and Global MD of Land
Rover following his early career in sales and marketing roles with
Ford after a short spell in the Royal Navy.
Julia Woodhouse also joins the Board as non-executive director.
Julia spent her executive career with Ford Motor Company where her
roles included Director, Global Power Train Purchasing, based in
USA and Director, Global Chassis Purchasing, based in Germany. She
retired from Ford in 2018 and is currently a non-executive director
of Outokumpu a leading global stainless-steel manufacturer based in
Helsinki. Julia is also a member of the RICS Standards and
Regulations Board.
Following these appointments, after 17 years on the Board Kevin
D'Silva retired. The Board wants to thank Kevin for his major role
in the very existence of the Company, without his contribution over
these years the Company may not even exist and would certainly not
be in the shape that it is today.
Management Team: The Company continued its policy of
strengthening management as the Company matures and the managerial
needs evolve.
Managerial roles as Managerial roles as
at 31 December 2021 at 31 December 2020
Male Female Male Female
Directors 5 1 5 -
Senior managers 3 2 3 2
----- ---------------- ---------- -------------
8 3 8 2
The focus in 2021 continued the task of strengthening the second
line management functions and to this end many of the Company's
appointments have joined from middle management roles within tier 1
automotive suppliers.
Outlook
After a decade of commercial and development activity the
forthcoming 2022 year will finally see this work turn to
profitability.
Thereafter and, based solely on orders already awarded, we can
be confident of sales growth of more than 20% p.a. from 2023 to
2025 and would hope to increase that growth rate as we win further
contracts in that period.
Our guidance gross margin is relatively stable in the planning
period as our pricing structure is broadly agreed and as explained
above, our exchange rate risks are modest and we will address gas
cost increases through more efficient furnace processes.
As with all growing companies our cost base necessarily
increases ahead of sales and thus, for example, we are investing
GBP2.5m to our 2022 infrastructure costs in anticipation of the
next step change in production in 2023 and beyond. As a result, our
forecasts are limited to single digit percentage return on sales
(ROS) for operating profit for the next few years but we believe
that we could reach 20% ROS by 2024 and 2025.
The operational execution risk of this rate of growth over the
period is ever present but the board is fully engaged with
management on both the risks and their mitigation - of which
keeping both physical capacity and staffing levels ahead of current
sales demand, even at the expense of short-term cost increases, is
the over-arching priority.
The medium-term outlook is therefore for a Company growing
revenue by at least 20% p.a. and achieving 20% ROS.
On behalf of the board
David Bundred Dr Kevin Johnson
Chairman Chief Executive
Statement of Total Comprehensive Income
For the year ended 31 December 2021
12m to 31 December 12m to 31 December
2021 2020
Note GBP'000 GBP'000
------------------- -------------------
Revenue 3 2,369 1,952
Cost of Sales (821) (642)
--------------------------------------------------------- ------ ------------------- -------------------
Gross Profit 1,548 1,310
65% 67%
Other Income 24 240
Administrative Expenses:
Before research and development costs (2,432) (1,888)
Research and development costs (3,405) (2,468)
--------------------------------------------------------- ------ ------------------- -------------------
Total administrative expenses (5,837) (4,356)
--------------------------------------------------------- ------ ------------------- -------------------
Operating loss before non recurring items 4 (4,265) (2,805)
Non-recurring items (180) -
--------------------------------------------------------- ------ ------------------- -------------------
Operating loss after non recurring items (4,445) (2,805)
Financial Income 6 - -
Financial Expenses 7 (134) (111)
--------------------------------------------------------- ------ ------------------- -------------------
Loss before tax (4,579) (2,915)
Taxation 8 627 614
--------------------------------------------------------- ------ ------------------- -------------------
Loss for the year after tax 17 (3,952) (2,301)
Other comprehensive income
--------------------------------------------------------- ------ ------------------- -------------------
Total comprehensive loss for the year attributable to members (3,952) (2,301)
----------------------------------------------------------------- ------------------- -------------------
Loss per ordinary share
Basic and diluted 25 (2.08)p (1.54)p
--------------------------------------------------------- ------ ------------------- -------------------
Statement of Financial Position
03769702
at 31 December 2021
As At 31 December As At 31 December
2021 2021 2020 2020
Note GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------------------- ------ --------- --------- --------- ---------
Non-current Assets
Property, plant and equipment 10 9,403 5,626
Intangibles 11 577 278
----------------------------------------------------------------- ------ --------- --------- --------- ---------
9,980 5,904
Current assets
Inventories 12 1,338 575
Trade and other receivables 13 376 219
Other Receivables 13 1,714 859
Cash and cash equivalents 12,966 1,058
----------------------------------------------------------------- ------ --------- --------- --------- ---------
16,394 2,711
----------------------------------------------------------------- ------ --------- --------- --------- ---------
Total assets 26,374 8,615
Current liabilities
Other interest-bearing loans and borrowings 14 (325) (75)
Lease Liabilities 14 (279) (224)
Trade and other payables 15 (1,990) (920)
----------------------------------------------------------------- ------ --------- --------- --------- ---------
(2,594) (1,219)
Non-current liabilities
Government Grants 25 (200) (200)
Lease Liabilities 14 (1,449) (1,147)
Other interest-bearing loans and borrowings 14 (1,239) (371)
----------------------------------------------------------------- ------ --------- ---------
Total liabilities (5,482) (2,937)
----------------------------------------------------------------- ------ --------- --------- --------- ---------
Net assets 20,892 5,678
----------------------------------------------------------------- ------ --------- --------- --------- ---------
Equity
Share capital 17 1,952 1,549
Share premium 41,446 22,779
Capital reserve 464 464
Retained loss (22,970) (19,114)
----------------------------------------------------------------- ------ --------- ---------
Total equity attributable to equity shareholders of the company 20,892 5,678
----------------------------------------------------------------- ------ --------- --------- --------- ---------
Statement of Changes in Equity
For the year ended 31 December 2021
Share capital Share premium account Capital reserve Retained Loss Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------------- ---------------------- ------------------------- -------------- --------
Balance as at 31
December 2020 1,549 22,779 464 (19,114) 5,678
Comprehensive income for
the year
Loss for the period - - - (3,952) (3,952)
------------------------- -------------- ---------------------- ------------------------- --------------
Total comprehensive
income for the year - - - (3,952) (3,952)
------------------------- -------------- ---------------------- ------------------------- -------------- --------
Transactions with
owners, recorded
directly to equity
Shares issued in the
period 400 19,600 - - 20,000
Share options exercised 3 38 - - 41
Cost of issue to share
premium - (971) - - (971)
Equity settled share
based payment
transactions - - - 96 96
------------------------- -------------- ---------------------- ------------------------- -------------- --------
Total contributions by
and distributions to
the owners 403 18,667 - 96 19,166
------------------------- -------------- ---------------------- ------------------------- -------------- --------
Balance at 31 December
2021 1,952 41,446 464 (22,970) 20,892
------------------------- -------------- ---------------------- ------------------------- -------------- --------
For the year ended 31 December 2020
Share premium
Share capital account Capital reserve Retained Loss Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------------- ------------------- ------------------------- -------------- ---------
Balance as at 31
December 2019 1,361 20,712 464 (16,917) 5,620
Comprehensive
income for the
year
Loss for the year - - - (2,303) (2,303)
------------------- -------------- ------------------- ------------------------- -------------- ---------
Total
comprehensive
income for the
year - - - (2,303) (2,303)
------------------- -------------- ------------------- ------------------------- -------------- ---------
Transactions with
owners, recorded
directly to equity
Shares issued in
the year 185 2,220 - - 2,405
Share options
exercised 3 24 - - 28
Cost of issue to
share premium - (177) - - (177)
Equity settled
share based
payment
transactions - - - 106 104
------------------- -------------- ------------------- ------------------------- -------------- ---------
Total
contributions by
and distributions
to the owners 188 2,067 - 106 2,361
------------------- -------------- ------------------- ------------------------- -------------- ---------
Balance at 31
December 2020 1,549 22,779 464 (19,114) 5,678
------------------- -------------- ------------------- ------------------------- -------------- ---------
Statement of Cash Flows
For the year ended 31 December 2021
12m to 31 December 12m to 31 December
2021 2020
GBP'000 GBP'000
--------------------------------------------------------- ------------------- --------------------------------------
Cash flow from operating activities
Loss after tax for the year (3,952) (2,303)
Adjusted for:
Depreciation and amortisation charge 671 494
Disposal of Fixed assets 6 -
Equity settled share-based payment expenses 96 106
Foreign Exchange Losses 24 18
Financial expense 134 111
Taxation (627) (614)
--------------------------------------------------------- ------------------- --------------------------------------
(3,648) (2,188)
Changes in working capital
(Increase)/decrease in inventories (763) 431
(Increase)/decrease in trade and other receivables (962) 520
Increase/(decrease) in trade and other payables 1,070 (109)
--------------------------------------------------------- ------------------- --------------------------------------
(4,303) (1,346)
Taxation received 577 334
--------------------------------------------------------- ------------------- --------------------------------------
Net cash used in operating activities (3,726) (1,012)
--------------------------------------------------------- ------------------- --------------------------------------
Cash flows from investing activities
Acquisition of tangible and intangible assets (3,949) (643)
Proceeds from disposal of property, plant and equipment 2 -
Net cash used in investing activities (3,947) (643)
--------------------------------------------------------- ------------------- --------------------------------------
Cash flows from financing activities
Proceeds from issue of share capital, net of expenses 20,041 2,432
Costs for issue of share capital (971) (176)
Payment of finance lease liabilities (156) (56)
Proceeds from long term loans 1,000 -
Payments of long term loans (175) (128)
Interest paid (134) (111)
--------------------------------------------------------- ------------------- --------------------------------------
Net cash generated from financing activities 19,605 1,961
--------------------------------------------------------- ------------------- --------------------------------------
Net Increase in cash and cash equivalents 11,932 306
Foreign Exchange Losses (24) (18)
Cash and cash equivalents at the beginning of the period 1,058 770
--------------------------------------------------------- ------------------- --------------------------------------
Cash and cash equivalents at the end of the period 12,966 1,058
--------------------------------------------------------- ------------------- --------------------------------------
Notes to the financial statements
1. Basis of preparation and general information
The financial information set out herein does not constitute
statutory accounts as defined in Section 434 of the Companies Act
2006.
The financial information for the year ended 31 December 2021
has been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 1 April 2022 and
which, if adopted by the members at the Annual General Meeting,
will be delivered to the Registrar of Companies for England and
Wales.
The reports of the auditor on these financial statements were
unqualified, did not include any references to any matters to which
the auditors drew attention by way of emphasis without qualifying
their report and did not contain a statement under Section 498(2)
or Section 498(3) of the Companies Act 2006.
The information included in this preliminary announcement has
been prepared on a going concern basis under the historical cost
convention, and in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the UK and the
International Financial Reporting Committee (IFRIC) interpretations
issued by the International Accounting Standards Board (IASB) that
are effective or issued and early adopted as at the date of these
financial statements and in accordance with the provisions of the
Companies Act 2006.
The Company is a public limited company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by the London Stock Exchange. The principal
activity of the Company is the development and manufacture of
carbon ceramic products for the automotive and aerospace brakes
markets. The registered office is Image Business Park, Acornfield
Road, Knowsley Industrial Estate, Liverpool, L33 7UF.
2. Going concern
The financial statements have been prepared on a going concern
basis which the Directors believe to be appropriate. The Company
incurred a net loss of GBP3,952k during the period however the
Directors are satisfied, based on detailed cash flow projections
and after the consideration of reasonable sensitivities, that
sufficient cash is available to meet the Company's needs as they
fall due for the foreseeable future and at least 12 months from the
date of signing the accounts. The detailed cash flow assumptions
are based on the company's annual budget, prepared and approved by
the Board, which reflects a number of key assumptions including
revenue growth, underpinned by current pipeline; customer
compliance with payment terms; other receipts of a value and timing
consistent with previous years. These forecasts also include the
impacts of the Covid situation and the significant post year end
fund raise which has increased cash balances.
3. Segmental reporting
Due to the nature of the business the Company is currently
focussed on building revenue streams from a variety of different
markets. As there is only one manufacturing facility, and as this
has capacity above and beyond the current levels of trade, there is
no requirement to allocate resources to or discriminate between
specific markets or products. As a result, the Company's chief
operating decision maker, the Chief Executive, reviews performance
information for the Company as a whole and does not allocate
resources based on products or markets. In addition, all products
manufactured by the Company are produced using similar processes.
Having considered this information in conjunction with the
requirements of IFRS 8, as at the reporting date the board of
Directors have concluded that the Company has only one reportable
segment that being the manufacture and sale of carbon fibre
materials and the development of technologies associated with
this.
The Company considers it offers product technology namely carbon
fibre re-enforced ceramic material, which is machined into
differing shapes depending on the intended purpose of the end
user.
Revenue by geographical destination
12m to 31 December
2021 2020
GBP'000 GBP'000
-------------------------- ---------- ---------
United Kingdom 894 487
Germany 188 230
Sweden 129 200
Rest of Europe 136 139
United States of America 831 806
Rest of World 191 90
--------------------------
2,369 1,952
-------------------------- ---------- ---------
4. Operating loss and auditors' remuneration
12m to 31 December
2021 2020
GBP'000 GBP'000
--------------------------------------------------------------------- --------- ----------------------------------
Operating loss is stated after charging
Loss on disposal of property plant and equipment 6 -
Depreciation of property plant and equipment 601 433
Amortisation of Intangible assets 70 61
Research costs expensed as incurred 3,405 2,468
Exchange losses 24 18
after crediting
Government grants 12 -
--------------------------------------------------------------------- --------- ----------------------------------
Auditors' remuneration
Amounts receivable by auditors and their associates in respect of:
12m to 31 December
2021 2020
GBP'000 GBP'000
---------------------------------------------------------------------- -------- --------------------------------
Fees payable to the Company auditor for the audit of the financial
statements 60 55
Total 60 55
---------------------------------------------------------------------- -------- --------------------------------
5. Staff numbers and costs
The average number of persons employed by the company (including
Directors) during the year, analysed by category, was as
follows:
12m to 31 December 12m to 31 December
2021 2020
Directors 6 5
Other employees 59 43
----------------- ------------------- -------------------
65 48
----------------- ------------------- -------------------
The aggregate payroll of these persons were as follows:
12m to 31 December 12m to 31 December
2021 2020
GBP'000 GBP'000
-------------------------- ------------------- -------------------
Wages and salaries 2,428 1,764
Social security costs 257 193
Other pension costs 164 123
Share based compensation 96 106
-------------------------- -------------------
2,945 2,186
-------------------------- ------------------- -------------------
6. Taxation
12m to 31 December
2021 2020
GBP'000 GBP'000
----------------------------------------------------------- ---------- ---------
Analysis of credit in year
UK corporation tax
Adjustment in respect of prior years - R&D tax allowances (23) 14
R&D tax allowance for current year 650 600
Total income tax credit 627 614
----------------------------------------------------------- ---------- ---------
12m to 31 December
2021 2020
GBP'000 GBP'000
----------------------------------------------------------- ---------- ---------
Reconciliation of effective tax rate
Loss for year (3,952) (2,303)
Total income tax credit (627) (614)
----------------------------------------------------------- ---------- ---------
Loss excluding income tax (4,579) (2,917)
Current tax at average rate of 19% (870) (554)
Effects of:
Non-deductible expenses 1 1
Current year losses for which no deferred tax recognised 869 553
R&D tax allowance for current year (650) (600)
Adjustment in respect of prior years - R&D tax allowances 23 (14)
----------------------------------------------------------- ---------- ---------
Income tax credit (627) (614)
----------------------------------------------------------- ---------- ---------
In the Spring Budget 2021, the Government announced that from 1
April 2023 the corporation tax rate will increase to 25% for
companies with profits of GBP250,000 or greater. For companies with
profits of GBP50,000 or less the corporation tax rate will remain
at 19%. A tapered rate will be introduced for companies with
profits greater than GBP50,000 and less than GBP250,000. Since the
proposal to increase the corporation tax rates had not been
substantively enacted at the balance sheet date, its effects are
not included in these financial statements. However, it is likely
that the overall effect of the change, had it been substantively
enacted by the balance sheet date, would be immaterial.
Details of the unrecognised deferred tax asset are included in
note 16.
7. Called up share capital
Number GBP'000
Allotted called up and fully paid of GBP0.01 each
At 31 December 2019 136,099,016 1,361
--------------------------------------------------- ------------ --------
Issue of shares 18,819,303 188
At 31 December 2020 154,918,319 1,549
--------------------------------------------------- ------------ --------
Issue of shares 40,270,000 403
At 31 December 2021 195,188,319 1,952
--------------------------------------------------- ------------ --------
During the year 270,000 shares were issued through the exercise
of options.
During the year the Company issued 40,000,000 ordinary shares in
the Company in a placing, subscription and open offer taking the
total issued share capital to 195,188,319 and raising a total of
GBP19.1m after fees.
8. Net Debt
As at 1 Jan 2021 Cash Flow Other non-cash movements 31 December 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ----------------- ---------- ------------------------- -----------------
Lease Liabilities (1,371) 320 (528) (1,579)
Long term loans (446) (862) (404) (1,712)
Liabilities arising from financing
activities (1,817) (542) (932) (3,291)
----------------------------------------- ----------------- ---------- ------------------------- -----------------
Cash 1,058 11,932 (24) 12,966
Total net debt (759) 11,391 (956) 9,675
----------------------------------------- ----------------- ---------- ------------------------- -----------------
As at 1 Jan 2020 Cash Flow Other non-cash movements 31 December 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ----------------- ---------- ------------------------- -----------------
Lease Liabilities (1,345) 56 (82) (1,371)
Long term loans (594) 128 20 (446)
Liabilities arising from financing
activities (1,939) 184 (62) (1,817)
----------------------------------------- ----------------- ---------- ------------------------- -----------------
Cash 770 306 (18) 1,058
Total net debt (1,169) 490 (80) (759)
----------------------------------------- ----------------- ---------- ------------------------- -----------------
9. Ultimate controlling party
The Directors do not consider there to be an ultimate
controlling party due to no individual party owning a majority
share in the Company.
10. Loss per ordinary share
The calculation of basic loss per ordinary share is based on the
loss for the financial year divided by the weighted average number
of shares in issue during the year.
Losses and number of shares used in the calculation of loss per
ordinary share are set out below:
Basic 2021 2020
---------------------------------------------------
Loss after tax (GBP) (3,951,292) (2,301,426)
--------------------------------------------------- ------------ ------------
Weighted average number of shares (No. of shares) 190,215,345 149,013,664
--------------------------------------------------- ------------ ------------
Loss per share (pence) (2.08p) (1.54p)
--------------------------------------------------- ------------ ------------
The calculation of diluted loss per ordinary share is identical
to that used for the basic loss per ordinary share. This is because
the exercise of options would have the effect of reducing the loss
per ordinary share from continuing operations and is therefore
anti-dilutive under the terms of IAS 33.
11. Post reporting date events
After the reporting date the Company announced the extension of
its contract with OEM 8, increasing the contract value from a
previously reported GBP27m to GBP100m.
For enquiries, please contact
Surface Transforms plc
Kevin Johnson, CEO
Michael Cunningham, CFO +44 151 356
David Bundred, Chairman 2141
Zeus (Nomad & Joint Broker)
David Foreman / Dan Bate/ Jordan Warburton
(Investment Banking) +44 203 829
Dominic King (Corporate Broking) 5000
finnCap Ltd (Joint Broker )
Ed Frisby/Abigail Kelly (Corporate Finance) +44 20 7220
Richard Chambers/Barney Hayward (ECM) 0500
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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