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Can I ask, has anyone had a go at working out the figures for the expected cash raise needed?
My estimate is around 7.8mil further cash needed by 31st December, with poss further 9 mil for 2024 capex if the hoped for 13mil loan doesn't cover that capex ( if that loan is for capex beyond the 2024 expansion - unclear on this RNS said something like 13mil capex loan would release on expansion of capacity in 2024 and 2025, so seems like it may be released at stages of further expansion, rather than to fund the 2024?
Of course that's all just my estimate, and using similar admin costs and R and D costs from the 1st half of 23 to make it. Plus its unclear how much extra cash is required to 'fix' these bottle neck, maintenance etc problems... so I added a guess to that.
Be interested to hear other's workings on this as how much is needed seems a critical question as to how punished the sp may be when imo that placement arises.
All imo etc. Apologies for any typos,
S
Honestly I haven't a clue. We have a situation where the management have burned through working capital that should have taken them comfortably through to situation where revenues were flowing etc..Instead Johnson used it all up trying to sort out the production issues that came out of nowhere (apparently). So perhaps wee should be asking Coco the clown and Bundred?
There has been am announcement just now regarding 10p find riase
Proposed Placing and Subscription to raise approximately £8.0 million (before expenses) via an accelerated bookbuild, and Open Offer to raise up to a further £2.0 million (before expenses)
Surface Transforms (AIM:SCE), manufacturers of carbon fibre reinforced ceramic automotive brake discs, is pleased to announce that it proposes to raise approximately £2.0 million (before expenses) by means of a Firm Placing and Subscription, and a further £6.0 million (before expenses) by means of a Conditional Placing (together, the "Placing and Subscription"), with a total 80,000,000 New Ordinary Shares at 10 pence per New Ordinary Share. In addition to the Placing and Subscription, the Company proposes to raise up to a further £2.0 million (before expenses), subject to the Board's discretion to increase the size of the Open Offer, by way of an Open Offer (together with the Placing and Subscription, the "Fundraise").
The placing and Bookbuild commitments were obviously already recently agreed....and the SP has therefore been adjusting down to meet it , over recent trading days
The loan is quite possibly conditional on the placing ...so ..chances of it going through will be much better, once the placing finalises IMO
Clears the air in terms of the funding needs and gives clear opportunity to then focus on scaling up
BOD buying at 10p when you could argue they have been a key negative contribution to the low placing price ....is a possible contentious issue ....
100M shares is a 40% dilution for existing holders.
The financial benefits of moving away from a batch process are more than lost with this. I know it is easy to view in retrospect and I am sure that they were not expecting so many problems, but if they had stuck to the original plan and settled for a little slower initial growth they would have had the financial resources to move to a production line system at a later date.
"100M shares is a 40% dilution for existing holders. "
Dilution is just the % ownership of the company....and maybe better to own a smaller % of something that could well be bigger, in 2 years time. Most PI % is tiny anyway...
Placing affect on the share price has already happened....too late to avoid that
The Board isnt buying ...no Cleminson and a pathetic contribution from Johnson the architect of this disaster
Even with some small contributions from the BOD ....but...the Institutions probably only agreed to chip in, if indeed each of the BOD threw a minimum in the pot..
And Cleminson?
" And Cleminson?"
well 5 out of 6 was the threshold, to pass !
Ah! My old friend the proposed placing! pull up a chair pal and I'll pour you out a whisky!
Still too many question marks outstanding for me to consider investing, even after the placing. Until they can demonstrate they have a handle on the issues at hand and won't require further capital raises, I will hold off. I have seen too many of these companies burning through cash without a handle on operational management or cashflow
What a bunch of incompetent Directors! £250m turnover by 2030, what a load of candy floss, all anyone and they should be caring about is 2024 to 2026 revenue and EBITDA. Do these clowns have a clue or are they making it up as they go along?
What mumbo jumbo candy floss is this ??!! "Overall, the outlook for 2024 to 2027 continues to remain very positive reflecting contracts in series production and recent new business announcements, with capacity being installed to fulfil these awards." Why not just provide the revenue numbers and EBITDA based upon the production plans and working capital raise. I really despair of this lot and won't be investing another penny.
LV1991
You despair for no reason...they are never going to publish such numbers in detail ..and nor would anyone else....as what happens between now and then are somewhat unpredictable .....to be held accountable for ..now.....so
( besides it is commercially sensitive information in its detail, at this stage )...
It is for you to get your Excel sheet out and do it yourself...create your own estimations....what do you think the analysts do ?
..even analysts dont get totally spoon fed..even they have to do some number crunching based on estimates ....
I get what you are saying Pokerchips, but when they can't forecast 3 months ahead, have run out of cash and then get the begging bowl out, I can't figure out what the hell the future might look like / and as they can't forecast 3 months ahead, I have no confidence in the current Board and therefore won't invest anything further. I don't think the current capital raise is enough and I think they have been told they won't get any more till they prove they are not as incompetent as they have come across in the last 3 to 6 months
Worth reminding listeners that 2 out for the three characters wholly responsible for this shambles still have their jobs (Bundred & Johnson) whilst the third (Cunningham) slipped out the door before it shut firmly on his CFO prospects elsewhere. Great that Maddoxks & Easton have come on board but only highlights the previous shambolic state of affairs that led to Friday’s mess.
Like a lot of investors here, the equity raise prospectus fails to answer the most critical question about management. Why would anyone trust Bundred and Johnson with yet more cash given their hopeless track record? And why should the architects remain as Chair & CEO given that they have had something like 70-100m of support over the company’s history and the result is we’re back close to the level of the EIS subscription? On and they have also burned thro the last cash we raised at 40p
!
We had some thin lines about more training and upskilling factory floor managers, but that doesn’t answer the management question. The lack of humility shown by both Bundred and Johnson is staggering - just look at Johnson’s comments around the problems. Absolutely no mea culpa, no apologies, no taking of responsibility. Until the Board and management issue is settled there is no point in investing if the same actors hold the powerful positions in the company. Until change at top is initiated O am sitting on sidelines
LV1991
Yes..I accept issues happen when trying to scale up... but without a COO in place they laid themselves open to missing key issues that then bit them hard in the ass..... over ambitious sales figures on top.... and fighting problems rather than foreseeing them
They certainly need the new CFO and COO ...
The burning of cash to get things sorted meant they "probably" couldn't get the loan without having the fund raise
i think works hard but was probably involved in too many things and it became inevitable something would break
Next 3-6 months are key ...if done right...and the learning curve becomes an experienced curve.....then a recovering share price will follow
* i think Johnson works hard
I don't think that's the issue.....no doubt he does work hard, but he still ended us up in an almighty mess, and its not as Friday was the first time its happened....
But is he the RIGHT MAN to lead the company from scale up through to the sunny uplands of ever growing sales? Very different skill sets needed to run a growing international business than what he has to do to date.
To a certain extent it depends what advisors he has (internally and externally) ..and who he turns to help manage his role
They seemed to realise too late that they needed new help brought in ...
The next 3-6 months now that there is some new blood will test how well he "manages" the operation and uses
I would be more inclined to support Johnson and change the Chairman
For me, it's perhaps less about Johnson and Bundred's ability and experience to lead SCE (take it as a given that they haven't done so) and more about the tone-deafness and apparent lack of appreciation about how crucially important their credibility is. Without getting personal, in past Q&As, I have always found Johnson to be very measured and an excellent communicator, whereas Bundred tends to brush some very sensible shareholder questions aside with almost irritation. The timing of reassuring trading updates followed in very short order by a fundraise at 10p has done possibly the most damage to credibility and integrity. I realise it's a fairly standard convention of announcements but even beginning with '...is PLEASED to announce' gives further impression of tone-deafness. I'd personally be in favour of Bundred stepping aside once the ship is steadied a little, hopefully next Spring/Summer, but I suspect there is too much arrogance there. Cunningham making an odd-looking lateral move was the warning sign, I guess.