Surface Transforms Plc · LSE:SCE
Surface Transforms — Investor Presentation (November 2023)
20 slides from Surface Transforms's investor presentation, November 2023
Slide 1: Project Optimus
GEEZ Evan VO KEVIN JOHNSON, CEO ISABELLE MADDOCK. CFO DAVID BUNDRED, CHAIR NOVEMBET C28
Slide 2: Important notice
The information contained in these slides and any accompanying verbal presentation, any question and answer session and any document or material distributed at or in connection with the verbal presentation (together, the “Presentation”) have not been approved by an authorised person within the meani
Slide 3: Presenter biographies
Kevin has a doctorate in Chemistry from the University of Liverpool and an MBA from Manchester Business School. He has spent six years in product development for the chemical industry and has a broad experience with OEM multinationals in the area of new technology development for automotive and aero
Slide 4: Manufactures carbon-ceramic brake discs for automotive
Manufactures carbon-ceramic brake discs for automotive Automotive brake discs • Brake components installed on all four wheels of the car • Key safety and performance feature of the vehicle • Integrated complex system • Braking achieved by the caliper pressing the brake pads against the brake disc •
Slide 5: Our strategy
Our strategy • Our immediate ambition is to reach £100m sales in the current planning period en-route to reaching £250m sales by 2030 1 Why now? • Driven by recent market success- we need the capacity now 1 Profits build capacity • This fundraising provides working capital cash needed to support sca
Slide 6: Proposed £8m placing + £2m open offer
Proposed £8m placing + £2m open offer • Supports immediate working capital requirements - existing operations and scale up • Profitability achieved in the near term through series production contracts – 5 contracts in multi-year revenue generation phase – Gross margin of 60%1 • Manufacturing capacit
Slide 7: Mitigation
Capacity resilience and process maturity causing delays • Steady ramp up in Q2 into Q3 with resolution of Q1 technical issues • End of Q3 & Q4 ramp up gap – drop-in run rates causing delays to revenue 2023 2024 Key Run rate Run rate actual/revised plan Time Manufacturing resilience Building addition
Slide 8: Sustainable growth with strong order book and PCP
Sustainable growth with strong order book and prospective contract pipeline (PCP) 1 • Strong and growing number of contract awards providing sustainable, high growth over next 5 years • Substantial number of follow on contracts leveraging ST product technology and customer relationships • Increasing
Slide 9: Increasing capacity capability and capacity resilience
Increasing capacity capability and capacity resilience Capacity Revenue Capacity in place – supports ‘in series’ contracts £20m/yr • Installed and in production • Delayed utilisation and ramp up, recovering in Q4 to support 2024 £14m1 investment capacity expansion - fully booked to current contract
Slide 10: Supporting scale up through process improvement
Supporting scale up through process improvement & lessons learnt • New CFO & COO joined in September Production operation now led by 4 upgraded managers People • • Restructure & training program for maintenance team • Training initiatives to support rapidly grown production teams • Improved producti
Slide 11: Placing and capex facility funding
£’m Net cash outflows from operations (Nov 23 – Feb 24) 5.2 Contingency (prior to placing fees) 2.8 Total 8.0 Capex facility Retained profits* Total £’m £’m £’m Phase 2 9 5 14 Phase 3 4 26 30 Total 13 31 44 £’m Week commencing Placing – firm 2 Placing – conditional upon shareholder approval and Cape
Slide 12: Capacity resilience and ramp up gap being addressed
• Capacity resilience and ramp up gap understood and being addressed. • New team has identified causes and mitigation plans to close the gap and meet future levels of production. • Phase 2 manufacturing capacity of £75m/yr booked to existing contracts1 • Lifetime contracts value over £390m2 • Contra
Slide 13: Appendix contents
• Automotive market drivers • Market development • ESG • Proprietary Process • Lead Time with an OEM • Board of Directors
Slide 14: Many OEM customers
Market leading proprietary products & process2 Limitations with iron brake technology Lifetime part with reduced total cost of ownership Extended service life Product compliments EV benefits Electric vehicles (EVs) Successfully Changing providing Many OEM Strong environmental customers solutions to
Slide 15: Navigating challenges, global issues and scale up risks
Navigating challenges, global issues and scale up risks Growing revenues In house technical expertise delivering profitability World class product and Scale up and process technology execution risks Alternative supply routes ST segment prioritised Contracts worth £390m1 Delivering PCP worth £300m2 C
Slide 16: Environment, Social, Governance
Environment: • Product is renowned for reducing brake dust, light weighting and durability • Energy strategy targets carbon reductions through new furnace technology • Green Economy Mark company Social: • We have taken on 3 additional apprentices and 9 graduates. 26% of our workforce are graduates •
Slide 17: Manufacturing process
Ox-Pan Preform Carbonisation Chemical Vapour Infiltration Heat Treatment Carbon- Carbon Machining Melt Infiltration Ceramic Machining Ceramic Friction Layer
Slide 18: OEM contract lifecycle
OEM System Integration IN SERIES PRE- DEVELOPMENT PHASE 1 DEVELOPMENT PHASE 1 Year 2 -3 Years 5 - 7 Years Contract Awarded In Series 7 years in full production with ST supplying the OEM for the lifetime of that model. 1 The Directors confirm, based on their industry knowledge and experience of suppl
Slide 19: Board and management biographies
David Bundred, Non Executive Chair David has industrial experience at senior management levels in the UK, Germany and the US and is now an active investor with “a hands on" focus in a small number of high growth companies. He previously had a 24 year long career until 1999 at Lucas, which included p
Slide 20: Non-executive director biographies
Julia Woodhouse, Independent 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 until recently was
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