8th Feb 07 ARMSHARE update :Link Back to Page 6 Here


Information Archive Folder : http://www.esnips.com/web/SurfaceTransformsInfo/


Main Web Site : http://www.surface-transforms.com/

March 2008 Presentation : Presentation Link


Commerical Overview

Surface Transform plcs core activity is exploiting proprietary technologies to create innovative, lightweight, high energy dissipating braking system materials, which can be commercialised for high-performance applications.

Surface Transforms plc has worked on technology programmes in collaboration with major companies such as AlliedSignal Inc, BAE Systems/Roxel, Dunlop Aerospace and Faiveley

Today, Surface Transforms is commercialising its products for an increasing range of high-performance applications. These include automotive, motorsport and aircraft brakes, for which the company has developed Ceramic brakes with improved friction properties, enhanced lifetime and lower production costs. Other growth areas include aerospace components (principally rocket motors) and anti-ballistic armour.

Key milestones have included:

-A new aircraft brakes development contract (Jan 2004) with a leading US based aircraft brakes maker
-A licensing contract (September 2003) with Dunlop Aerospace to develop and supply CFRC brakes;
-A contract with the UK Ministry of Defence to supply innovative materials that will increase protection against high-power rifle and cannon fire;
-A contract with the United States Airforce Research Laboratory for the supply of prototype CFRC materials for military applications.
-First commercial sales of carbon-ceramic brake discs for installation on the KOENIGSEGG Swedish supercar
-First commercial sales of Carbon Ceramic road car discs to StopTech the California based brake system upgrade specialists.
-First commercial sales of Carbon Ceramic road car discs to MOVIT one of the leading brake after-market upgrade kit suppliers based in Germany.


Not expecting anything over night here but to me it is now at the stage of becoming a good play with potential rewards in 2010 onwards on success.

It is. And a very strong "I am confident" signal.

Expect some more contract news in the coming 2 or 3 months I think.

I hold tis stock but am not convinced by events these last two days:
Yesterday a director bought shares off an ex-director at 27p (nearly twice market) and gave them to his son. (see RNS).......that sent the sp up 15% I think......yet as far as I can see this wasn't a trade in the market as such.....AND today we have Sells 10x Buys (very thin trade)....... whilst the MM's have upped the price 6%. This looks like shaking the tree/ stirring the pot -

This is close to a flash in the pan, IMHO - although welcome, I am not convinced the price will hold, esp as the Market trading is quite small.........yes, I know this can make prices fluctuate, but we mustn't buy everything that spikes, otherwise you have precious little safety-margin for the weeks ahead.

Hangon, I haven't looked into this as closely as you did, but I think your instinct is correct about not panic-buying this stock. Small caps like this are likely to lie low for so long due to their tiny market cap and limited interest from larger investors.

However, the director purchase is a good show of confidence. I have a feeling that are good reasons why it didn't go over the market; something tells me they managed a transfer behind the scenes but don't ask me quite how . . .

hangon, SCE remains an investment stock, simply because the timescales of success are unknown and cannot be charted out, therefore it might take a 6 months, it might take 3 more years. There is no point in trading it, and therefore its all about adding at the most opportune moment.

I would envisage either small OEM car braking news, or aircraft deal moving to the next stage news, sometime in the months ahead, this would and could be why the directors have shown their "confidence".

So, with timescales impossible to call, its just one to keep building your holding in, as and when you can, if you so wish.

With CVIST going ahead I would expect therefore losses for the year to be around 700K then.

Considering the weakness of the SP, and a 50K sell would be like 10p paid for it, it would appear someone purchased 150K today so far. The initial 50K buy being under the mid price, which given weakness is not a surprise.

50K at 15p
50K at 16p
50K at 16.15p

Interesting.

The problem I have with this technology stock is "What will send it back(up)?"
Airbus has continued to disappoint and isn't ready to specify our high-performance brakes, although there are other aero-buyers - this is news that we could do without.
The Sports-car market is fairly minor, although welcome it is hardly likely to be a major profit centre due to the high cost/performance ratio. Therefore I am still waiting for the company to find alternative uses for their products (please not rocket-cowls; this is a very minor application already).
All companies need a simple "bread and butter" product-line, which pays the wages and keeps the factory profitable even if not exciting. I don't see that here and I don't see any diversification, rather my perception is that they are hoping for something to turn up (by way of orders for existing product areas). Unfortunately, if their customers don't order soon, there is no alternative but closing the operation. The sp is not just tracking the Lack of Orders - it could be tracking the probabliity of a cash-call, or failure. Either way existing shareholders will feel some pain.
This company needs to use it brains to develop some profitable products and from where I sit, it may be that these should not use their core-technology.
Can anyone really argue the Market has it wrong?..........er, based on what that "we " don't know?

What we do know is that, over the last 12 months, shareholders have lost half their investment......just what is about to change this trend?......no, I don't see it...

24 November 2006
SURFACE TRANSFORMS PLC
('the Company')
Director's shareholding

The Company has been notified that Kevin Johnson, Managing Director, yesterday
acquired 22,500 ordinary shares of 1p each at 14.5p per share, equivalent to
0.16 per cent. of the entire issued share capital of the Company. Mr Johnson
now beneficially holds 79,750 ordinary shares, equivalent to 0.57 per cent. of
the entire issued share capital of the Company.

3 January 2007

Surface Transforms plc

("Surface Transforms" or "the Group")

Holding in Company

The Company was notified earlier today that Advance AIM Value Realisation
Company Limited has acquired 595,000 ordinary shares in Surface Transforms,
equivalent to 4.24 per cent. of the issued share capital of the Company.

The Company has also been notified that the shares are registered in the name
of Nortrust Nominees Limited.

Seems stronger of late, I wonder if some news is possibly in the pipeline ?

Well its soon to be interim reporting on the 8th of Feb.

I would guess at around a 350K to 400K loss for the first half (as CVIST is being done now) and around 600K to 650K in the bank at the interim stage.

A lot has changed since the original prospectus, and at least they are now focussed with finite objectives.

Historic figures are always going to look bad at the moment and this year (being 06/07) is going to be the worst of the coming five for SCE I would guess.

They should end it with around 300K in the bank, but with enough deals in place and potential deals to happen, that 07/08 (next financial year) they can break even.

08/09 and 09/10, all being well, will see major contributions from Roxel and Aircraft braking, so the focus is all on car braking for the moment, they need to complete this financial year and have around 300K left in the bank but with CVIST in place and operational, this positions them for a break even year 07/08 with increasing levels of car braking contracts/sales.

Key news will be progress on deals and dvelopment contracts. Provided all is progressing well with Roxel and also Aircraft systems (all four of them) that will be good. Car braking well we know there are ongoing tests and trials with around 3 or 4 companies, and these do take time, but an update would be good to say all is progressing well.

All guesswork and IMO.

Why are they walking the price up ?

L2 now 2 v 1 @ 16/19

Are they suspecting some good news in the results ? or are they walking it up to then drop it back hard on results day and flush out some sells ? All very strange.

And even stranger.....

Lets see whats in the results statement then tomorrow morning, must be something exciting contained within to justify the walk up in the price this week...................

Much better than I thought they would be, in all ways, and perhaps some light at the end of the tunnel. Looking forward to further progress and news !!!

http://www.investegate.co.uk/Article.aspx?id=20070208070000P1202

.

Some interesting banter on the AFN thread, which I'll copy here for anyone interested.



PapalPower - 8 Feb'07 - 07:06 - 286 of 329
Much better than I thought they would be, in all ways, and perhaps some light at the end of the tunnel. Looking forward to further progress and news !!!
http://www.investegate.co.uk/Article.aspx?id=20070208070000P1202


mjcrockett - 8 Feb'07 - 07:16 - 287 of 329 (premium)
Excellent RNS. I had expected a retrace today, but we could just see a nice move up.
MJ


stu31 - 8 Feb'07 - 07:26 - 288 of 329
They actually cut their admin expenses (on the 6 months from 2005). Well done to them for that. No placing, bit of a pleasant shock!



PapalPower - 8 Feb'07 - 07:36 - 289 of 329
With around 1.5m in cash, and with car braking revenues increasing there should be no need for a placing as it stands.
Aircraft development contract revenues should now increase in 07 and more so 08, leading to the bigger payments 09 onwards.
09 should also see the Roxel rocket agreement putting considerable revenue on to the bottom line for the first time.
Therefore, provided the car braking progress continues and more revenue is generated, with the associated fall in cash burn, things are looking much much better that they should not need to raise any more funds.
And with CVIST done, and the lower production costs, and with SGL Carbon presently struggling to please Audi with lower production costs (SGL having nothing like CVIST, they are trying to reduce cost by simply having continuos production runs), never say never to a major OEM at some stage coming in in the years ahead, especially if CVIST does deliver the benefits it should do.
SCE also have MIST up the sleeves after CVIST, although MIST will only be introduced should orders for braking systems get higher and higher, its a lot of money to put in place, however MIST would also deliver more benefits, just like CVIST should do.


Gelp - 8 Feb'07 - 09:39 - 293 of 329
blimee - Xmas has come early! very tidy.
Far better visible prospects than we could have dreamed about today - attractive to larger predator?


PapalPower - 8 Feb'07 - 10:13 - 295 of 329
jimbo, if all goes to plan then by 2009 or 2010 the SP should be around 200p to 300p levels, maybe a lot more than that if aircraft brakes comes in commercially.
However, its early days, and so at this time the SP will react to news, as news comes.
They need to be selling around 2000 discs a year (car braking alone) to break even, although I do not know how many they need to sell to break even when taking into account the other revenues they have from development contracts.
If they sign up a larger one of the smaller OEM's, then certainly 50p would be an easy short term target.
However, this is one to tuck away imo, keep a decent holding for 3 years, and you might be very pleased, or not.
With only 14m shares in issue, if SCE does get good success, you'll see the SP fly upwards, but that is later perhaps, and not just yet.



yump - 8 Feb'07 - 10:20 - 299 of 329
As I'm heavily involved in motorsport I have had a passing interest in this company for a while.
Can someone explain to me why its suddenly so exciting when turnover has been doubling and halving again for the last x years. Also according to the evidence of actual sales, you can count the number of customers on one hand. The value of sales is actually at a level where I don't understand why its listed at all.
So presumably these ceramic products have a multitude of research reports by different independent bodies on their effectiveness; you know - best of breed and such like. Passed various aircraft builders tests etc. etc. ?
Plus they still seem to be working on improving production.
Is this yet another company where investors are funding research ?


PapalPower - 8 Feb'07 - 10:46 - 300 of 329
It has been in the past yump, but now they are turning things around and this the first time they have got the hang of sales. Your reference to past revenues is pure reference to development contracts and never to actual sales. So therefore, this is the first time they are generating sales, and it falls into line with the plan.
There are going to be a lot of grumpy ex-holders around, who sold out at less than 20p, some even selling at 12p.........but thats life. Those with the patience to hold on, should, in the end, get rewarded for it.
Let me point you to the http://www.armshare.com write up, the last one being from Nov 2006........and a new one should be due soon, which when it is done I will post up.
Nov 2006
"The October AGM update reported that installation of the carbon densification process has begun, with completion scheduled for Q4 2006/7 - the cost, net of a 95,000 grant, will be c.155,000 - the expected benefits are faster process times and lower manufacturing costs; since May 2006, deliveries to Koenigsegg (see March 2006) have been running at c. 2 car sets per month; a small order has recently been taken from a US automotive brake system supplier which will have a system on display at the SEMA convention in Las Vegas later in October.
On 23rd November, the CEO purchased 22,500 shares at 14.5p per share, taking his holding to 0.57% of the issued share capital.
Research Standing
The market invariably canes a company's share price where there is a setback such as occurred in Autumn 2004 on the aircraft brake project with Dunlop. This provides opportunities for the more dispassionate and longer term investor. ArmShare is an advocate of constructing portfolios comprising at least 80% invested in established businesses combining growth and value and up to 20% in a portfolio of earlier stage higher risk businesses considered to have the potential to develop into the former - Surface Transforms is an obvious candidate for the '20%' category of such a portfolio.
Whilst the financial results to May 2006 scarcely hit the radar screen, they mask the fact that the company has made very significant progress in strengthening its position for negotiating with channel partners, particularly in automotive. Until it started both to fully understand and also take control of the entire process for delivering merchantable brakes, it was very difficult to hold serious discussions with automotive OEMs because the company could not deliver a turnkey solution - automotive OEMs are different from aicraft brake OEMs because the latter already use the processes which accompany ST's core process and therefore do not require a turnkey solution - this negotiating position will be enhanced by the significant cost reduction which ST expects to derive from the new plant scheduled to be completed in the course of 2006/7.
The March 2006 supply agreement with specialist automotive OEM Koenigsegg is a seminal event because an answer can now be given to the all important question when negotiating with other OEMs "who else is using the system?".
With cash at bank at May 2006 equivalent to 12.4p per share, a share price of 14.5p at 15th September, a team which has strengthened considerably over the last two years and much greater knowledge/control re the delivery of merchantable solutions, ST is an attractively valued concept stock.
COMPANY MEETING
On 19th October 2006, ArmShare attended the AGM - a copy of the presentation made at the AGM can be accessed by clicking on Company Website above, Investor & Media Relations and Investor Presentations. Further information emerging from the Q&A was:
a) at the beginning of 2006, product development in the automotive division resulted in significantly improved wear characteristics. This development also applies to aircraft braking systems. It is likely to assist in developing attractive value propositions for both markets - see b).
b) feedback from Koenigsegg customers and the test driver is that SystemST improves the controllability of these very powerful cars. Data is being collected re stopping distances, wear rates and the benefits of reduced unsprung weight in order to develop a quantified value proposition - it seems likely that this will be based on reduced life time cost.
c) for the aircraft market, the development projects are expected to take 3 to 4 years, with revenues to ST being modest to start with and growing significantly in the later stages of the programme. ST is c.18 months into its leading aircraft brake programme.


KeyserSoze - 8 Feb'07 - 13:19 - 304 of 329
Excellent news !!! Nice to see our patience and faith in ST rewarded.


Madmonkflin - 8 Feb'07 - 17:21 - 306 of 329
thank god for the R&D tax credits!


yump - 8 Feb'07 - 17:41 - 307 of 329
PP
My gut feeling says generate shorter-term revenue from automotive, while the development contracts are sought with the airlines. Is that the gist of the strategy ?
Is there a USP for these brakes for the volume vehicle market ?
Again longer term, but is that an aim in any way ?
Getting sales to performance / motorsport isn't the easiest thing to do - its a bit of a closed market ("we already know how to get the best braking from our cars thank you" say the technical guys). However, if they crack it, there's a distinct sheep mentality that can work in favour of any manufacturer.
Any tests been done by the motorsport market that are in the public domain.
I know I'm being a bit lazy - don't have much time, but might be able to sniff out some information in due course.
btw my initial rather critical post was a bit of reaction to the 'share only going in one direction brigade' ;-)


mjcrockett - 8 Feb'07 - 22:44 - 308 of 329

The main news in the RNS was Ascari and Stoptech. There are many AIM companies who would have put out 3 RNS's in these circumstances i.e. Interim results and 2 New Contract announcements. But SCE, are not like that thankfully.
The Stoptech arrangement is most interesting. They say they are forecasting 50 to 100 sets this year. So that's up to 4 times bigger than the Koenigsegg contract, which must be responsible for over half of the turnover in the last year.
With the deals in place today and the liklihood of other OEM's, it seems to me that the risk of SCE being a complete dud is fast receding.
After today's rise SCE is valued at 3.1m. There is 1.4m in cash. So the business - Cars, Aircraft and Rockets is valued at under 2m. This seems a gross undervaluation to me, but when will this change?
MJ


PapalPower - 8 Feb'07 - 23:11 - 309 of 329
yump, yes, there was a setback with the aircraft braking, the original deal with Dunlop for the A380 systems was cancelled after Airbus "bought forward" the delivery of the A380 by 24 months (and we all know now that was a political decision and the delivery has now gone back 24 months - eg back to the original plan).
This setback caused the big sell off in SCE.
Now, they presently have developement contracts with 4 of the worlds largest aircraft braking companies, and so things progress on that route (we are now 24 months into the main one, and these generally have 48 month cycles). Revenue in the first half tend to be small, but when these development contracts move to phase 2, they generate much bigger revenues. The use of the aircraft braking systems this time is not tied to a new aircraft launch, but is for future, and also to retrofit to older aircraft.
So in the interim SCE focussed on 3 shorter term projects in the main.
1/ Car braking.
2/ Rocket components
3/ Military (bullet proofing and armour)
1/ Is ongoing, there are many USP's for the carbon-ceramic systems, however the downside is cost. This is why SCE are working on CVIST. If they can reduce the cost then the uptake on volume production cars will happen.
They need to do 2000 discs a year on car braking along to break even, and as you see this US deal on its could generate 100 x 4 = 400 brake discs....thats exciting.
The USP's are well known, as in disc life, pad life, reduced stopping distance, no fade when hot etc.....
2/ Rockets, this is ongoing with Roxel, and should, all being well, generate decent revenues for SCE come 2009 onwards.
3/ The military have no money to spend, and so the bullet proof vests and armour for tanks and military vehicles which could be saving lives in Iraq etc.... never happened as although the ceramic systems are better, they cost more and the government does not want to spend the money it seems.
There is more than this, but these are the main things. They are also now looking into further uses of their cermaic compounds on aircraft, which should tie in with the now further delayed A350 airbus project.


stu31 - 8 Feb'07 - 23:27 - 310 of 329
only 3 aircraft brake contracts pp
AIRCRAFT BRAKE SYSTEMSRevenues from the aircraft brake systems market sector are principally from paid development contracts. The Company is engaged with three of the six global suppliers of aircraft brake systems and development work from these contracts has shown encouraging data on reduced wear and improved friction.


PapalPower - 8 Feb'07 - 23:33 - 311 of 329 edit
Sorry, should say 3 of the big 6 plus 1 other, being a total of 4.


yump - 8 Feb'07 - 23:49 - 312 of 329
Thanks for the details guys.
Is their usp to do with the fibre nature of ceramic in the discs, together with the heat control design ? (If I've read that right).
Only you can already buy ceramic based discs from several manufacturers, so the use of ceramics itself isn't novel.
I noticed that they offered shareholders discounted upgrades to their cars and the aftermarket is interesting in that it offers potentially a far quicker return than the other markets. Saving 22kg is very interesting compared to trad. discs, although I've been looking for a comparison between ST and other ceramic based discs as well.


PapalPower - 9 Feb'07 - 00:01 - 313 of 329
These 2 offer some details :
This is "Carbon Cermaic" versus Steel
http://www.systemst.com/flash/Steel-vs-Ceramic.swf
And this one is "Carbon Ceramic" versus Carbon (like F1)
http://www.systemst.com/flash/Carbon-Carbon-vs-Ceramic.swf


PapalPower - 9 Feb'07 - 08:23 - 315 of 329
IJ, given the potential for 100 cars in the US a year from this new contact, and that means 400 discs, and SCE breaks even on just 2000 discs a year (excluding everything else), then certainly the coming year is exciting. I am holding fast and will add on weakness, and will not be selling before 2010, at which time, with luck on the aircraft side, we should be 10 times higher than we are now imo, at least.


PapalPower - 9 Feb'07 - 08:29 - 316 of 329
And if anyone thinks 10 times higher by 2010 is out of the question, simply look at the shares in issue (being just 14 million) and how many are held by directors and institutions.
Now add in car braking covering all overheads and giving break even, then add in Roxel and Aircraft systems (which from 2009 onwards should be generating lots of revenue) and you have a nice equation.
Its not going to happen overnight, but with reference to the thread header, for those with a speculative punt on their mind, its all about building a stake, and then with a bit of luck, that stake being very valuable later.


yump - 9 Feb'07 - 08:39 - 318 of 329
I was asking what the difference is between System ST which is carbon-ceramic and the other manufacturers carbon-ceramic discs. eg. Alcon.
Have also found companies like SAB WABCO in an article from 2001 who were working on carbon ceramic discs for trains.
Its big market, but it appears there are already reasonable sized players in there and have been for quite a while.
So is this one just a play on the company being small and therefore might grow, or is there a unique part to their business that competitors haven't got ?


Investorjon - 9 Feb'07 - 08:45 - 320 of 329
yump Basically they make a better product, even NASA link.


PapalPower - 9 Feb'07 - 08:50 - 321 of 329
Yump, it terms of performance I cannot say, however if you want you can email to the man at SCE, and cc it to the Chairman, they are very happy to hear from investors and will help as best they can with your questions :
Antoni Sznerch as(at)surface-transforms.com for the car brake side.
Kevin DSilva kadsilva(at)kdsassociates.com he is the Chairman.
I've removed the @ so the BOTS do not pick up the email addressed.
Now, whats the big benefits of SCE system. Well, they have lots of patents, and those include patents for the processing, which will make it quicker and cheaper. Quick to Make and Cheap is key to getting more people using these braking systems, and presently SGL are working with Audi to try and get costs down (by moving to continuous production). However, they lack the CVIST and MIST and other patents that SCE has, which are key to why they could become the leader here. Once CVIST is done, you'll see SCE seriously undercutting the prices of the others, whilst offering the same, if not better, performance. And in the car braking market, everyone knows how good the systems are, its price thats preventing more and more adaption, however, this is where the CVIST and other things SCE are doing, could come up trumps.


PapalPower - 9 Feb'07 - 08:59 - 322 of 329
I have added the link to the 2006 AGM presentation in the header, for anyone wanting some reference info.
http://www.surface-transforms.com/reports/AGM%2006%20Company%20Presentation.pdf


yump - 9 Feb'07 - 09:23 - 325 of 329
PP
Thanks for the links and summary etc.
Off to do a bit of digging and to have a beer with some of my motorsport contacts over the half-term.


tunturiflyer - 9 Feb'07 - 11:49 - 326 of 329
PP,
Impressed by your knowledge. Originally when I floated, I thought the F1 and other motorsport was the obvious initial target market. - they don't really care about cost, and the performance benefits were clear. How come the F1 teams didn't buy this system???


PapalPower - 9 Feb'07 - 11:54 - 327 of 329
They went for Carbon (and not Carbon/Ceramic from SCE).
The all carbon systems offer the best performance (in braking terms), but need to run red hot and burn out very quickly, so not any use for road cars, which is the big market.
As you can see, F1 cars run a single race and the brakes are finished (sometimes even before they finish), thats the downside of all Carbon.
SCE does carbon/ceramic, which offers good performance (much better than steel) , but can work at any temperature and also gives extended life over steel , and is far ligher than steel etc..
Carbon/Ceramic cannot compete with all Carbon (ala F1) in terms of braking performance.


PapalPower - 9 Feb'07 - 11:58 - 328 of 329
I know the company pretty well, and I have a large speculative stake here. The reason its large is I feel, in time, this has the potential to succeed, and if it does then perhaps in 2010 this will be over 200p and not just over 20p.
It remains risky yes, never forget that, and its illiquid..........but its worth it imo.


PapalPower - 9 Feb'07 - 13:29 - 329 of 329
What I would like to see now, in order to really underline where we are, is some decent director buys either this month or next.
That would for sure give out the signal that things are very positive and the turn of fortune is perhaps arriving, albeit slowely :) at first..... ;)

Armshare update for 8th Feb 2007. For the full text and commentary on Surface Transforms please visit :

http://www.armshare.com its free to register and free to use !!


....................In September, a funded development agreement was entered into with a major global supplier of carbon-carbon aircraft brake systems - this means that ST is now collaborating with 3 of the 6 major global suppliers of such systems. The objective is to produce a low wear longer-life silicon carbide carbon-ceramic brake - successful tests on sub-scale aircraft disc brakes were completed in May 2006 and the agreement will now extend that work programme to include full-scale aircraft discs for testing. Development work on the programme is scheduled for completion and review in Q4 2006/7 - if it is successful, the board expects to enter into discussions regarding a more extensive programme of work.

The October AGM update reported that installation of the carbon densification process has begun, with completion scheduled for Q4 2006/7 - the cost, net of a 95,000 grant, will be c.155,000 - the expected benefits are faster process times and lower manufacturing costs; since May 2006, deliveries to Koenigsegg (see March 2006) have been running at c. 2 car sets per month; a small order has recently been taken from a US automotive brake system supplier which will have a system on display at the SEMA convention in Las Vegas later in October.

On 23rd November, the CEO purchased 22,500 shares at 14.5p per share, taking his holding to 0.57% of the issued share capital.

The interim results to November 2006 showed sales of 116,000 (2005: 68,000) and pre-tax loss of 428,000 (2005: 496,000). The company reported that auto sales had risen to over 50% of total sales vs minimal auto sales in H1 2004/5 - Koenigsegg is taking 2 car sets per month - StopTech, a California based leader in Balanced Brake Upgrades for production cars and production-based racecars, has placed its first production order, which is expected to lead to sales of at least 50 car sets in the first year - SystemST has been selected for the new Ascari A10 supercar which retails for 350,000; a key element of the production process (CVIST) (see October and November 2005, and the 2005/6 final results) is being brought in house at a net cost after grants of 25,000 and is due to be operational in Q3 calendar 2007; ST is moving to larger premises in February 2007 (6 miles from the present location), enabling efficiencies to be generated from all processes being housed together; period end cash was 1.5 million.

Research Standing

Whilst scarcely visible financially, the company has made very good commercial progress over the last 3 years - further key data for assisting commercialisation should become available during 2007 (see Company Meeting on 8th February 2007 below). ArmShare is an advocate of constructing portfolios comprising at least 80% invested in established businesses combining growth and value and up to 20% in a portfolio of earlier stage higher risk businesses considered to have the potential to develop into the former - Surface Transforms is an obvious candidate for the '20%' category of such a portfolio.

The company's broker note dated 8th February is projecting 2006/7 sales of 300,000 (2005: 155,000).


COMPANY MEETINGS

i) Meeting with Chairman and CEO on 8th February 2007

On 7th February 2007, there was widespread media coverage of the EU's intention to introduce legislation calling for the reduction of car emissions to 130 gms per kilometre - luxury car/supercar emissions are very significantly in excess of this figure. Reducing unsprung weight is considered to be able to make a meaningful contribution to assisting manufacturers towards achieving this target - System ST makes a meaningful contribution to reducing unsprung weight as well as improved braking. The company has a programme under way which is intended to measure a) the impact of reducing unsprung weight on reducing emissions and b) the impact of using System ST on lifetime costs of vehicle ownership - the results are expected to be available by the end of 2007.


ii) Attendance at AGM on 19th October 2006

A copy of the presentation made at the AGM can be accessed by clicking on Company Website above, Investor & Media Relations and Investor Presentations. Further information emerging from the Q&A was:

a) at the beginning of 2006, product development in the automotive division resulted in significantly improved wear characteristics. This development also applies to aircraft braking systems. It is likely to assist in developing attractive value propositions for both markets - see b).

b) feedback from Koenigsegg customers and the test driver is that SystemST improves the controllability of these very powerful cars. Data is being collected re stopping distances, wear rates and the benefits of reduced unsprung weight in order to develop a quantified value proposition - it seems likely that this will be based on reduced life time cost.

c) for the aircraft market, the development projects are expected to take 3 to 4 years, with revenues to ST being modest to start with and growing significantly in the later stages of the programme. ST is c.18 months into its leading aircraft brake programme.

PapalPower - 10 Feb'07 - 05:12 - 333 of 334

Interesting comments on the weight reduction on cars and the savings on emmissions from the interview with the Chairman and CEO yesterday.

We know that the weight saving is a major factor in the consideration for aircrafts, as there is no longer any need for the massive heat dispersion packs. Saying that, there is a saving of quite a few kilo's on a car when using carbon/ceramic over standard systems, I have seen some figures of around 40kg savings. That will obviously help to reduce emissions and increase mpg figures.



"i) Meeting with Chairman and CEO on 8th February 2007

On 7th February 2007, there was widespread media coverage of the EU's intention to introduce legislation calling for the reduction of car emissions to 130 gms per kilometre - luxury car/supercar emissions are very significantly in excess of this figure. Reducing unsprung weight is considered to be able to make a meaningful contribution to assisting manufacturers towards achieving this target - System ST makes a meaningful contribution to reducing unsprung weight as well as improved braking. The company has a programme under way which is intended to measure a) the impact of reducing unsprung weight on reducing emissions and b) the impact of using System ST on lifetime costs of vehicle ownership - the results are expected to be available by the end of 2007. "



PapalPower - 10 Feb'07 - 14:29 - 334 of 334

We all know that a reduction in weight obviously helps with increasing mpg, improving acceleration etc....... but what is special about "unsprung weight"...well here is an idea :


UNSPRUNG WEIGHT

An important concept is "unsprung weight." This is weight that is not supported by the suspension of the car. This usually includes the the weight of the wheels and tires as well as a percentage of the weight of the suspension itself, including control arms, anti-roll bars, shocks, and struts. Reducing unsprung weight is the key to improving handling. The lower the unsprung weight, the less work the shocks and springs have to do to keep the tires in contact with the road over bumpy surfaces. An easy way to reduce unsprung weight and improve traction is to replace stock wheels and tires with special lightweight wheels. Note that as the wheel diameter or width increases, the weight of the overall wheel and tire package increases, thereby increasing unsprung weight

Good posts, PP. You have done well on this share, especally if you topped up at the recent lows.

FWIF see my AXE thread (apologies if I've pumped it enough already!). I feel that this co also has a lot of potential - it will see exponential revenue growth if its big customer, Modec, is successful in attaining its target sales of electric vehicles.

Thanks ST, I'll take a look at AXE.