Following the recent announcement of a placing and public offer by Surface Transforms, the management team of David Bundred, chairman, Kevin Johnson, CEO, and Isabelle Maddock, CFO, appeared on Hardman Talks to explain the need for further funding. This will support the expansion in manufacturing capacity, itself driven by strong customer demand.

In this update to investors SCE provides detail on the rollout of its recent production starts on five models and the steps taken on increasing output. SCE currently has financial resources – a debt line is in the last stages of approval – to fund expansion to £150m annual sales capacity by 2027 with the benefit of modelled cash generation to 2027, and then beyond.

The most pressing issue for investors is the delay in achieving the fourfold production rise for which the production line has been expanded. Output in October ran at £1m, which is a rise of twoandahalf times compared with the average rate last year. Debottlenecking is the key, as there are seven 'single points of failure ' in the ca. 30step production process. SCE has already paid for and is installing production equipment to raise capacity further, to £50m p.a. sales. The debottlenecking of processes on the existing enlarged line has driven turnover expectations and estimates for 2024E and the progressive rollout of the £50m capacity impacts in stages through the year, leaving SCE with scope for elimination of the bottlenecks in this next year.

With only one competitor in a large and rapidly growing auto component market with at least three major environmental advantages – weight, particulates and endoflife – the delivery on the £390m order book is the constraint to sales. Demand most certainly is not. The order book is to 12 models, stretching ca. seven years, with five currently live. SCE updated on its strong relationship with its customers, which remains cooperative and good. The next update is anticipated in January 2024.

Read more about the event here: https://hardmanandco.com/hardmantalk...

Important notice:

This content has been prepared purely for information purposes, and should not be construed as an offer, or the solicitation of an offer, to buy or sell any security, product, service or investment. The companies or legal entities covered in this content may or may not pay us a fixed fee for this content to be made available.

Investments in small and midcap corporations and foreign entities are speculative and involve a high degree of risk. An investor could lose all or a substantial amount of his or her investment, and the securities or legal entities mentioned in this content may not be suitable or appropriate for all investors. Each investor’s particular needs, investment objectives and financial situation were not taken into account in the preparation of this content. Each investor must make his or her own independent decisions and obtain their own independent advice regarding any information, projects, securities, tax treatment or financial instruments mentioned herein. The fact that Hardman & Co has made available through this content various information constitutes neither a recommendation to enter into a particular transaction nor a representation that any financial instrument is suitable or appropriate for you. Each investor should consider whether an investment strategy of the purchase or sale of any product or security is appropriate for them in the light of their investment needs, objectives and financial circumstances.

For more information, please read our full disclaimers:

www.hardmanandco.com/researchdisclosures
www.hardmanandco.com/disclaimer