Surface Transforms PLC Contract Awards and Commercial Settlement (7209D)
28 Giugno 2019 - 8:00AM
UK Regulatory
TIDMSCE
RNS Number : 7209D
Surface Transforms PLC
28 June 2019
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
28 June 2019
Surface Transforms plc
("Surface Transforms" or the "Company")
Contract Awards and Commercial Settlement
Surface Transforms (AIM:SCE) is pleased to announce that it has
been selected as the tier two, carbon ceramic brake disc supplier
on a new car to an existing British OEM customer (previously
described as OEM 6). The Company has also concluded a commercial
settlement on the existing contract with OEM 6 in respect to the
delay to start of production (SOP) of the original car in that
contract. Finally, the Company has been nominated by its
long-standing customer Koenigsegg as a tier one supplier on the
Jesko car that will replace the existing Regera car.
OEM 6
The new contract award by OEM 6 is for a limited edition car to
be produced over three years with SOP towards the end of calendar
2021. The car was announced at the 2019 Geneva Motor Show. The
Board estimates the contract will generate lifetime revenues of
GBP6m (excluding spares) to the Company.
Separately, and in recognition of the delays to SOP of the
original car in the first contract, OEM 6 has agreed to pay the
Company circa GBP300k cash relating to the direct costs on discs,
that had been partially completed prior to notification of the
delay in SOP. Whilst this adds GBP300k to near term cash it will
not impact the gross margin quantum expected in FY20; the margin,
which is unchanged over the life of the contract, will be received
in line with recent guidance on the new production delivery
schedule. This existing contract is still expected to generate
revenues to the Company of circa GBP2m over two years starting in
calendar 2020.
These two contracts provide an order book of circa GBP8m with
OEM 6 over the next five years and discussions continue regarding
other future models with significantly higher anticipated
production volumes.
Koenigsegg contract
The second new contract is with Koenigsegg, another existing
Surface Transforms customer, for the Jesko, their new 300 mph
supercar also launched at the recent Geneva Motor Show. The Jesko
replaces the Regera model with an expected SOP in Autumn 2020.
Surface Transforms will be the tier 1 supplier for the carbon
ceramic brake disc with annual revenues of circa GBP300k. Similarly
to OEM 6 discussions regarding future models that will add volume
rather than replace existing revenues, remain ongoing.
OEM 5 update
Discussions with German OEMs continue with positive progress
being made and the Board remain confident of announcing
developments on German OEM 5 in the near future.
Kevin Johnson, CEO commented: "This GBP6m lifetime sales
contract award from OEM 6, is very good news and represents another
crucial step in achieving Surface Transforms' profitability
objectives.
"Arguably of equal importance however, is the strategic
implications of these two contract awards; confirming that once we
have a position with a customer, we can (in the case of OEM 6) grow
from that base and/or (in the case of Koenigsegg) maintain that
position as they change models. This capability, reflecting both
the customer's experience of the product and our supply chain
performance, will be crucial in becoming a significant automotive
supplier as we further develop production relationships with the
mainstream OEMs.
"In the near term we are also delighted that the commercial
settlement on the programme delay has been amicably settled, the
immediate cash injection of approximately GBP300k is a welcome
addition to our cash headroom.
"Moreover we expect this announcement to be the start of further
positive news flow, in the near term, as we look to conclude
current discussions with German OEM 5."
For enquiries, please contact
Surface Transforms plc +44 151 356 2141
Kevin Johnson, CEO
Michael Cunningham, CFO
David Bundred, Chairman
Cantor Fitzgerald Europe (Nomad & Joint Broker) +44 20 7894 7000
David Foreman/ Michael Boot (Corporate Finance)
Caspar Shand Kydd/Gregor Paterson/Maisie Atkinson (Sales)
finnCap Ltd (Joint Broker) +44 20 7220 0500
Ed Frisby/Giles Rolls (Corporate Finance)
Richard Chambers (ECM)
For further Company details, visit www.surfacetransforms.com
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