Business
FY23 Audit Update
FY23 Audit Update.
About this update from Surface Transforms Plc
[{"type":"text","content":"\n\n18 June 2024\n \nSurface Transforms plc\n(\"Surface Transforms\" or the \"Company\")\n \nFY23 audit update\n \n \nSurface Transforms (AIM:SCE), manufacturers of carbon fibre reinforced ceramic automotive brake discs, announces that the audit of its statutory accounts for the year ended 31 December 2023 (\"FY23\") is ongoing and the Board of the Company currently anticipate its FY23 final results will be published in late June 2024.\n \nThere are two particular areas that have and are contributing to the extended audit timeline:\n \n(1) Impairments to the carrying value of certain intangible and tangible assets; and\n \n(2) Revenue recognition, namely relating to revenue generated from engineering, testing and tooling services provided to OEM customers during the development phase of the contract.\n \nIt is important to note that none of these matters impact cash, but taking each in turn:\n \n1. Impairments\n \nIntangible assets:\n \nThe Company has applied a significantly higher discount rate in its assessment of its intangible assets and whether there is any indication of impairment. This assessment was performed in order to address the combined challenges of cash flow forecasting risk and the potential gap between implied market value and carrying value and resulted in a recoverable amount lower than the carrying value. Whilst not yet agreed, the Board estimate that £6.2 million of non-cash impairments to intangible assets, specifically, capitalised R&D, software and right of use assets, will be recognised in FY23.\n \nThe Board note however that these assets continue to generate revenue, underpin its £390m order book and the accounting decision has no impact on daily operational performance.\n \nTangible assets:\n \nThe Company's impairment assessment of its tangible assets has identified that a particular furnace was not performing to contracted specification. Furthermore, despite considerable engineering review with the supplier, the Board does not now believe a cost-effective solution to improve the performance of this one particular furnace, can be made. Consequently, and whilst n...