Surface Transforms plc (LON:SCE), manufacturer of carbon fibre reinforced ceramic brake disc materials, has provided the following trading update for the six months to 30 June 2023.
As reported at the Company’s recent AGM, sales for the six months to 30 June 2023 grew to £3.3m (H1 2022: £2.9m) representing an overall increase of 14%. Within this total, the volume of manufactured discs during the period increased by more than 80%, reflecting the improvements made in production during 2023; the remainder of the sales in both periods was pre-production development income.
Gross cash on 30 June 2023 was £4.5m (31 December 2022: £14.9m). Capital expenditure in the six months to 30 June 2023 was £5.4m with the balance of cash movement arising from the the previously announced production issues resulting in delayed sales and non recurring operational costs.
Progress on operations and capacity
The improvement in June output rates, reported in the AGM statement, has continued into July. Customer arrears have been reduced over the past six weeks. Accordingly, the Board maintains its 2023 revenue expectations.
Installation of extra capacity is still on track with a further £3.4m of capital expenditure expected in the second half of this year. This extra capacity will provide resilience during the continuing ramp up in the second half of 2023 and also underpins the projected further near doubling of sales in 2024.
The revenue expectations for 2023 and 2024 are unchanged. The production problems of the last six months have inevitably had cost and cash implications. However, cash has been managed by prudent cash management, the use of some contingencies in the original plan and the phasing of capital expenditure for the next phase of capacity expansion. Reflecting the Board’s expectation of continuing operational performance, gross cash at 31 December 2023 is now expected to be no worse than £1m lower than previous estimates.
The Board still expects the Company to be profitable in the second half of 2023.
The Company is continuing its work with customers on converting its prospective contact pipeline into firm orders with further announcements expected in the current financial year.
The Company will announce its 2023 interim results on 27 September 2023.