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.

A photo of the new Aston Martin Rapide, no idea on the brakes though.





But they do look ceramic do they not, now the question is who else are Surface Transforms working with ? We know about TVR.........but there are a number of other OEM's also working with Surface Transforms, just no details released about who they are.

Something must be up, either a T trade buy to come through, or some news will be released in the coming weeks.

I now have some informal and indicative pricing information on Ceramic Braking Systems (prices for reference only) , which shows the present advantages of SystemST over OEM :


To convert an existing Porsche with standard braking to ceramic braking ;

Official Porsche Kit (EXCluding fitting) 11,415 (inc VAT / inc calipers etc.)

System ST Kit 4 disc (INCluding fitting) 8,132 (inc VAT / inc calipers etc.)

Therefore if you add the labour prices (and they are not cheap per hour) to fit the offical Porsche Kit, you could well be looking at the Porsche kit being at least 50% more expensive, maybe morem than the System ST Kit.


Taking this down to a base level cost for the ceramic disc only, then ;

Replacement Porsche Disc approx 3,000 (inc VAT)

System ST disc approx 1,469 (inc VAT)

Very well played by Surface Transforms, we know from the trading statement what is the state of play, we know its going to be around a 650K loss, we have been through that already, so the pending results hold no negative surprises, which is good :)


Surface Transforms plc
('Surface Transforms' or 'the Company')
Notice of results

Surface Transforms plc, manufacturer of high technology carbon ceramic
materials for braking systems, will announce its interim results for the six
months ended 30 November 2005 on Tuesday, 28 February 2006. A trading statement on the first six months of the 2005/6 financial year was released on 14
December 2005 and can be viewed on the Company's website

For those wanting to buy into the story and preparted to hold for a couple of years, a good buying opportunity should be coming, and that is results day, 28th Feb. We all know in advance what they contain in terms of losses (650K approx) so if the MM's drop the price on results, will be a decent buying op I think.
SCE remains a buy and hold for 2008/9 for me.

http://www.companyannouncements.net/cgi-bin/articles/20060228070000P6B76.html

The results reads fine, all good going forward, and the plans remain in place with progress going towards the goals.

With some smaller OEM's due to sign up in 2006, time to buy some more now in April for me.

I think they are slowely getting there, and this is what I expected, 07/08/09 will be, as I said in 05, the big years, each one bigger than the last is my opinion.

Latest update at www.armshare.com


"The interim results to November 2005 showed sales of 68,000 (2004: 208,000) and pre-tax loss of 479,000 (2004: 239,000) - the explanation for these results was given in the December 2005 announcement (see above). The company reported that it maintains brake development programmes with three global suppliers of aircraft brakes, two European and one US - there has been extensive development work with the latter, with Phase 1 (measurement of wear and friction) nearing completion and the expectation that development work will continue for the next year; regarding automotive, a Swedish supercar fitted with SystemST is on display at the 2006 Geneva Motor Show - sales via METEK into the German aftermarket have been disappointing, resulting in the arrangement being terminated and a replacement being sought - in the short to medium term the board expects the first commercial success to come from one of the smaller high performance car OEMs; cash at November 2005 was 2.1 million (representing c15p per share).
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 November 2005 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 to fully understand and be able to control the entire process for delivering merchantable brakes, it was very difficult to hold serious discussions with OEMs because it 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 - this position will be enhanced by the significant cost reduction which ST expects to derive from the new plant due to be completed in the course of 2006.

With cash at bank at November 2005 equivalent to 15p per share, a share price of 17p at 28th February, a team which has strengthened considerably over the last two years and much greater knowledge/control re the delivery of merchantable solutions, ST is now a very attractively valued concept stock."

Papal Power, you may be right about a buying op - with the cash supporting the sp (does it still?) - I hold from higher prices.
But the problem I have with this business is that their selling-prices are so very high. Compared with the Porche price, it's a bargain, but unless your car is fairly new this level of investment is likely to raise the value of the car.
Furthermore, I suspect it will increase your insurance "risk" and premium and dissapating extra heat will lower your MPG. For most drivers it adds little benefit at huge cost.
/
In practical terms it wold be better applied to 4x4's where weight stores much energy to be dissapated (esp at Motorway speeds) and therefore there could be a safety benefit......so that 4x4's could brake in about the same distance as saloons.
I'm sure the same goes for Lorries......
/
So SCE needs to address cost, hold-back on racing, ...look at the wider market. Since they are making both disc and caliper, it should be possible to have a smaller range of discs to suit more vehicles....since any up-grade will be a safety bonus.
/
I don't believe safety issues really affect Porches, since at normal UK-speeds their brakes are superb. I accept the New Plant may address these issues, but there needs to be a sea-change by management, looking at less-glam sectors and I don't get that impression from what is becomming a very silent company.
Regards

Koenigsegg Automotive of Sweden are showing their new model the CCX, which is fitted with SystemST brakes at the Geneva Motor Show March 2nd to 12th 2006

http://www.koenigsegg.com/thecars/ccx.asp?ccx=2

Picking up on the comments, it fits in with everything, especially the initial production facilities, 2000 brakes is break even, 3000 would be a profit, and of course any large OEM deal would be them making the brakes, not SCE making them, with SCE getting royalties for the technology.



Mr D'Silva said: "Despite the lower sales and financial performance in the period under review, the board believes it has made material progress in both reducing the business risk in the company and in improving the capability of successfully implementing its business strategy.
"This is already reflected in the quality of discussions we are having with potentially important commercial partners."
In November, the company announced it had received a 200,000 grant from the Northwest Development Agency (NWDA) towards a new production facility.
The new plant will have the capacity to produce up to 3,000 discs a year, significantly reducing costs.
In the UK, the firm's SystemST brake product has initially targeted owners of Ferraris and Porsches.
It has also received orders from Weber Sportcars, in Switzerland, which is building a new 300,000-plus supercar for launch later in the year.

http://iccheshireonline.icnetwork.co.uk

Surface Transforms plc

('Surface Transforms' or 'the Company')

Supply Agreement with Koenigsegg Automotive AB

Surface Transforms plc, the manufacturer of carbon fibre reinforced ceramic
(CFRC) materials, is pleased to announce the signing of an agreement to supply
high performance, carbon ceramic automotive brake discs and components to
Koenigsegg Automotive AB ('Koenigsegg') of Sweden.

Based in Angelholm, Koenigsegg is an established European manufacturer with a
ten year history of producing high performance supercars. Koenigsegg has a
number of models in its product range with the most recent being the CCX, which
it launched at the 2006 Geneva Motor Show earlier this month. The list prices
of the cars are high, with the CCX typically selling for over 450,000 each -
the unique Koenigsegg engine produces over 800bhp with a 0-100 kph acceleration
of 3.2 seconds. The CCX can be fitted with SystemST ceramic brakes as an option
but Koenigsegg are of the view that most of its buyers will choose the new
ceramic brake system.

This supply agreement is for an initial term of 12 months with a 3 month notice
clause, and it has an annual value of up to 131,000. Ceramic brakes are also
being offered as an upgrade option to all pre-CCX model owners of Koenigsegg's
cars.

The Company's strategy is to be a pre eminent supplier of carbon ceramic disc
brakes to the leading manufacturers of high performance cars. SystemST has been
under development for over five years and the technical results show that these
ceramic carbon brakes have superior braking, wear and surface corrosion
characteristics when compared to `old' cast iron technology. SystemST typically
reduces the unsprung weight of car by approximately 20 kgs when compared to its
iron equivalent. This can lead to an improvement in fuel economy and a life
span five times longer than iron disc brakes.

Technical data and car case histories are available and user enquiries managed
on www.systemST.co.uk.

Dr.Kevin Johnson, Managing Director of Surface Transforms plc, said:

'This agreement represents a very welcome certification of SystemST carbon
ceramic brakes from a formidable designer and manufacturer of some of Europe's
most exciting supercars.'

Christian Koenigsegg, founder and Managing Director of Koenigsegg AB, said:

`We have worked closely with the Surface Transforms` teams to produce an
exceptional ceramic brake system which further enhances our car's performance.'

For enquiries, please contact:

Surface Transforms plc 0151 3737130

Dr. Kevin Johnson

Mr. Antoni Sznerch

John East & Partners Ltd (Nomad) 0207 628 2200

Simon Clements, Johnny Townsend

Teather & Greenwood (Broker) 0207 426 9000

Mark Dickenson, Sindre Ottesen

Details of the Company's business and financial performance and its share price
can be found on www.armshare.com, which is accessed from the Armshare icon on
www.surface-transforms.com. A webcast of the 2005 results is also available on
www.surface-transforms.com/Investor and Media relations.

New armshare update : www.armshare.com


The interim results to November 2005 showed sales of 68,000 (2004: 208,000) and pre-tax loss of 479,000 (2004: 239,000) - the explanation for these results was given in the December 2005 announcement (see above). The company reported that it maintains brake development programmes with three global suppliers of aircraft brakes, two European and one US - there has been extensive development work with the latter, with Phase 1 (measurement of wear and friction) nearing completion and the expectation that development work will continue for the next year; regarding automotive, a Swedish supercar fitted with SystemST is on display at the 2006 Geneva Motor Show - sales via METEK into the German aftermarket have been disappointing, resulting in the arrangement being terminated and a replacement being sought - in the short to medium term the board expects the first commercial success to come from one of the smaller high performance car OEMs; cash at November 2005 was 2.1 million (representing c15p per share).

In March 2006, Swedish supercar manufacturer, Koenigsegg Automotive AB, placed a brake supply supply agreement for an initial term of 12 months with a 3 month notice clause, with an annual value of up to 131,000. Koenigsegg has just launched the CCX model (the Geneva Motor Show model referred to in the above para), selling for over 450,000 each and capable of 0-100 kph acceleration in 3.2 seconds - more details can be seen by clicking on Company Website above. The CCX can be fitted with SystemST ceramic brakes as an option but Koenigsegg are of the view that most of its buyers will choose the new ceramic brake system - they will also offer it as an upgrade option to all pre-CCX model owners of Koenigsegg cars.
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 November 2005 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 - 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.

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 November 2005 equivalent to 15p per share, a share price of 16.5p at 16th March, a team which has strengthened considerably over the last two years and much greater knowledge/control re the delivery of merchantable solutions, ST has become an increasingly attractively valued concept stock.

From uk-analyst.com

"Surface Transforms shares rose 0.5p to 17p after it announced an interesting new deal with a supercar manufacturer. Surface Transforms manufactures carbon-fibre reinforced ceramic materials and will supply high performance, carbon ceramic automotive brake discs and components to Swiss group Koenigsegg, an established European manufacturer with a 10-year history of producing high performance supercars. This supply agreement is for an initial term of 12 months with a 3-month notice clause, and it has an annual value of up to 131,000 pounds."

Some front page Yahoo Finance coverage for the Koenigsegg CCX, the worlds fastest car (and one using SystemST braking :) )


http://biz.yahoo.com/weekend/fastest_1.html

Should mark the end of the small sells on SCE now, it was an obvious candidate for many to write off against profits for the year, and now we should start, slowely, the recovery of the price into more good news on deals as the months go by.

The next deal should mark a reversal in trend, so come on SCE, time to deliver the second commercial deal :)

A director buy, small, but a buy all the same :)

PapalPower, I hold these also; but am concerned that the sp graph is falling month-on-month.
The orders are quite small I guess and so the Q has to be: - will the business make money, or are we looking at a cash-call?
The Market is pricing-in something, eh?
I've averaged down a while ago but history is repeating itself and each time it gets lower - I'm sure this is a great technology - but IS the present Management up to the task, .......your thoughts.
PS Do you go to their agm's?
Thanks.

hangon, no have not been been to the AGM, although in contact with them all. Cash call ? Why............they have been clear on the fact they do not need it, and also clear that progress is being made, and the coming (now 4 years) looks fine. They are beginning to generate revenues, this is a process that will take time, and over the coming 18 to 24 months that process should slowley continue. On the car braking front they can break even easily, profit generation requires a major breakthrough (a major or similar to adopt the SCE technique). Aircraft braking is on schedule and things going to plan, but no major details I would say until 24 to 36 months.

All things can happen quicker, who knows, all that is happening with the SP is its being marked down on minimal volume as there is an overhang.......simple supply and demand. If anyone was to buy 100K of SCE today, the price would soon return to nearer the 20p mid price levels I think.

Its a long term and speculative buy, but come late 08 or 09 these could come good, so I am happy to keep holding and building up a larger holding.

Seems to have woken up today for some reason..........

And continues to make a bit of progress here and there :)

Presently on the car braking side, after getting the deal with Koenigsegg (which is going very well according to rumour) they are well underway with trials at 6 other smaller car makers, and news might come along of another deal or two in the second half.