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.

The other good news was the recent share options for the new people were done at nearly a 50% premium to present price, which I find encouraging in their faith that the price will be much higher in the mid to long term.

Surface Transforms PLC
15 September 2005
Surface Transforms plc
('Surface Transforms' or 'the Company')

Issue of Share Options

As part of Surface Transforms' long term incentive plan for management, the
Company announces that it has granted, in aggregate, 504,000 options over
ordinary shares to certain executive directors and senior management of the
Company . Options granted to executive directors are as follows:

Dr Kevin Johnson, Managing Director 180,000 options
Dr Geoff Gould, Sales and Marketing Director 29,000 options

The options have been granted under the Company's Enterprise Management
Incentive Scheme at an exercise price of 40 pence per share, representing a
premium of 45.5 per cent. over the closing middle market price of 27.5 pence on
14 September, 2005, and are exercisable at any time between 15 September, 2008
and 15 September, 2015.

For enquiries:

Surface Transforms plc
Kevin D'Silva Johannah Stretton 07802 306956
01928 735868
John East & Partners Limited

Simon Clements 020 7628 2200

A valid point that has been raised is the trend in rising oil prices may be a benefit for Surface Transforms as the ceramic brake is lighter in both automotive and aerospace applications. With a drive to reduce fuel consumption in cars and also planes this could bring an industry emphasis back to ways to not only improve performance but to reduce fuel consumption by reducing weight. We will have to wait and see if things now get fast tracked by industry requirements.

10/10 for plugging the company but this stock isn't going anywhere fast until it gets a half-decent contract that's anything other than just research 'cos there's been sweet diddly for the last five years and there's nothing likely for at least another three. - don't forget there's a lot of other companies already doing the business out there. At the moment all this stock is worth is the cash in the bank.

This company has problems. Firstly, I don't know how old your info is on largest shareholders but David Levis holding 5.8% looks high to me and I think you should put a date beside that list, since my understanding is Mr Levis sold at least the majority, if not his total, holding a couple of years back. Mr Levis isn't some irrelevance. He was their former, full-time Finance Director and you have to be concerned when a professionally competent Finance Director leaves and wasn't replaced. Why would he walk away from a potentially lucrative share option scheme?

OK, they now have a part-time stand-in, namely Johannah but how many days a month does she work for the company?

Secondly, there is a problem with visibility of earnings going forward, and thirdly, Armshare is a service using information put out by the directors on research the company itself paid for. That is not independent research in my opinion.

And just how many shares did Kevin d'Silva pay for in the open market? He doesn't feature in the major shareholders, does he? Does he not have enough faith in the company to buy a decent tranche of shares himself? If not, why not?

I could go on but anybody thinking this is the bargain of the century should very, very wary. Just look at the price ordinary shareholders paid in Rights Issues etc. 1.15 and 90p respectively. So have they made or lost money on their investments?

Thanks for the comments, the more the better to understand.

Priscilla, the list is the latest on Hemscott. It does show differences to the list in the annual report in May 2005, I take this as D Levis holding is held in the JM Finn Nominees holding as the annual report has JM Finn Nominee as having 1,530,110 holdings but Hemscott has them as 604,002. I will send an email off to Hemscott to ask them to check and clarify that the list they show as latest is the latest as per the figures in the header here.

The other director holdings are;

Peter Holland 170,515 1.203%
Kevin Alphonso D'Silva 156,986 1.107%
Geoffrey Gould 4,350 0.031%

With regards to a Finance Director that would appear to be a luxury when there has not been any significant turnover or revenue in past years. A part time one until such time as revenue bearing contracts do come in appears a sensible move (you would not have a Sales Director of a cash shell would you, so what point is a full time Finance Director when presently you have little revenue).

I certainly have not taken the view its a short term play, for me it will be a two to three year one, my view is that news will come through 2006 with a final confirmation of the ability to start getting revenue and then building those revenue levels. I know there will be a lot of aggrieved ex holders who paid much higher prices for these and have sold out on the way down to 26p but the picture I see from now and then is that now is much better placed that its been in the past to finally start putting some real contracts into effect, the first sign would be a smaller OEM like Lotus signing up for brakes as standard on certain new models some time in 2006.

papal, thanks for the quick response and I'm not trying to rubbish the company, but as you say ...'there has not been any significant turnover or revenue in past years'. The company seems to be increasing costs whilst not landing the crucial sales. Could you post up the cash burn rate per month and how long the cash raised will last, given those projections? I think that could be a key element given the recent turnover, don't you?

Priscilla I took the statements from the latest webcast as below, let me check later.

http://www.surface-transforms.com/siteengine/128/Web_Casts.stm

I know you are were a close follower of SCE in the past as I remember reading your posts on them elsewhere some time ago, so I am interested in your opinions and comments, do you still follow them closely as I have not seen you post on them for some time now I think ?

Priscilla from the web cast at August results they had cash of 2.728 million, and last year the loss was 617K (but this year already the new aircraft braking deal revenue comes in so should be less this coming year, if not more contracts or deals are announced). So if we say the cash burn rate is 50K per month then with no new contracts or deals then from 2.728 million two or three more years is no major issue in my opinion. Would you agree ?

Papal, one of my concerns is that the directors are directing about 70% of their effort on aircraft brakes and that Dunlop are not only their major partner, they are by far the largest customer. Too much resting on one company?

They do have a good relationship with METEK, which could allow them to elbow into the German market but F1 and high performance cars have been a graveyard for the company before. I'll believe it when I see a major increase in turnover.

Aerospace is hardly mentioned these days and that could be a real earnings provider. Couldn't it?

I'd agree cash burn was around 50k per month (I made it about 52k but thats a minor adjustment if they're making money). But hiring two new directors on generous salaries pushes up costs when visibility of sales is still not available and the annual spend is still over 600k a year. Against income of ?

I can't see the share price justifying a major rise without a good order.

The cash figure of 2.78 looks about right, giving approx a 20p cash cushion on the share price but I can't see any major rise coming unless there is a good order that provides income of serious quantity over a decent period of time. A 'HOLD' at best.

double post

Priscilla from the recent news there was a major aircraft brake deal with a US supplier earlier this year (presently confidential) and a third one announced later this year.

That makes on the aircraft side Dunlop (nothing really happenind) but also 2 new ones, the one announced in January will give additional revenue from this year.

I am in at this stage as I do feel that 2006 will give some real revenue contracts, the start of something good for 2007 and 2008.

This is not a traded share, its one to build a stake in in my opinion, and if news comes then I will be happy to be in now as it will move quick on news. But that is just my opinion.

I really hope you make money on this one, Papal. But bear in mind all those investors who are still holding shares bought around 90p at the last rights issue. They will sell into any decent rise and volume.

Priscilla thanks for the comments and info. I think some will sell on a rise, but again that depends on the news that makes it rise, if we can get a good flow of news in 2006 then there may be more reasons to hold on for those people, going to be a long term play anyway so lets hope its a lucky one.

Someone asked a decent question on the ceramic aircraft brakes so I will put it here with my answer and if anyone can add anything to it please do.

Q. On a technical note for the aircraft brake systems. I know we used to have big problems with the standard braking systems with abborted take offs and prolonged taxing time in hot climates due to heat build up in the wheel hubs and tyre core plugs blowing. Does this new ceramic braking system help this problem or make it worse?

A. The heat build up and time taken to dissipate the heat is one of the delays to quick turnaround of aircraft as they cannot refuel until the heat level reduces to a safe level (so its not the aircraft cleaners who cause those delays in turning a plane around quick like most people think ;) )

With the ceramic system the heat generated is reduced helping with quicker turnaround, and the maintenance is also greatly reduced due to longer life, the other benefit is if course the reduction in weight from the heat pack and all weight savings save fuel.

Surface Transforms PLC
28 September 2005


28 September, 2005

SURFACE TRANSFORMS PLC
('the Company')

Director Shareholding
and Change of registered address

Director Shareholding

The Company has been notified that Kevin Johnson, Managing Director, purchased
22,250 shares on 27 September 2005 at 27 pence, representing 0.16 per cent. of
the issued share capital of the Company.

11,125 of the shares are registered in Mr Johnson's own name and the balance in
his wife's name, Frances Rabbich.

Registered Office

The Company also announces a change in its registered address to Cheshire
Innovation Park, Unit 306, Pool Lane, Ince, Cheshire, CH2 4NU which will take
effect from 3rd October, 2005.

For further enquiries please contact:

Surface Transforms plc Telephone: 0151 472 3733
Kevin D'Silva 07802 306956

Going up today for some reason with a few buys coming through, that would indicate no overhang left and a fair market, which with the tight holdings of large amounts of shares will cause larger swings in price on buys (and sells) as they have to try to get sellers to fill buys, but then again maybe not.

Plenty of steps on the way back up to see if resistance comes in with some sells.

Considering Kevin Johnson just got 29,000 options at 40p its a good sign I think that he purchased with his own money 22,250 at 27p, all goes into the long term aspect of things in a positive way.

Watching trades and trying to remember the MM's have picked up about 12K at 28p and 15K at 27p from recent small sells, this is why they are now offering at 29p for buyers.

Sells update

1,400 @25p, 15,000 @ 27p and 12,000 @28p

A nice drop today presents a good buying opportunity this week, will have a top up later this week for sure.

I was not expecting it to move up so quick, the MM's should have about 20K at 21p to sell off and 20K at about 27p to sell off, so whoever is getting in first gets the best price on the buys, not me at the moment.