Member Info for 30silver

Just spotted that Kave Sigaroudinia has gone over 5%, following the purchase of around £186k worth of shares today (over 11m shares), moving from 4.15% up to 5.02%. Surely this has to be a good sign?

@User84 you're either being deliberately obtuse, or you're just dense - the cash burn is the rate of cash outflow on a regular basis, and it's used to calculate the runway that a company has based on the reserves that it has.

Yes scrap rates are a factor, but it's also possible to be cash positive with some scrap rates, it's just harder with higher rates (and there'll be a rate where it drives the gross margin so low that it's not possible to get to break even levels).

We'll have to wait and see how they get on, but having run a business that had a break even level of activity to get to, until you've got the production / service capacity to get there, everything else pales into insignificance, this is a business that simply must grow to be viable, and I believe that they are within weeks of making an announcement that will show their clear roadmap to that growth.

@Gordon - I asked for specific data, and given that you couldn't provide it (high school kids wouldn't even fall for the old "it's obvious for all to see" BS you pulled) I'm assuming that the specific information I was after has not been disclosed.

We'll have to wait for the H1 trading update to see how the cash position is faring and what the outlook for H2 is (beyond the £17.5m revenue figure, which is likely to include c.£1.7m of "Engineering Sales" which likely are a book reversal of the accounting estimate issue from prior years, so won't help cash).

I'm certainly not oblivious to the issues with the management historically, however having met the new COO on numerous occasions I can say with certainty that he's got the skills to sort this mess out, so long as the CEO (with whom I have not met) allows him the freedom to do what is necessary. I am also aware of one key element that has been holding back production (and I'm 100% certain you are not aware of ) which is now in the final stages of being rectified. One the new furnace is online, production levels will increase significantly, and so long as the lessons have been learned from previous ramp ups, profitability and cash flow generation are assured.

My order filled this morning, between two pots I'm now in for a little over 3.5m shares and that's my limit for the time being. As ever GLA and DYOR.

@Adastra Were you at the AGM? I'm looking through the update and the presentation but I can't see anything on there about cash burn during H1, or for the expectation of cash burn / generation in H2 (I'd wager that they need additional capacity installed to get to generation, however some of the working capital issues could reverse in H2 and provide a boost).

Either way, my buy order is in, let's see how much of it I can pick up before the price goes above my limit.

I am a little surprised that it's come as far off - I wonder if there was something in the presentation after the AGM that has the II's a little spooked. I still can't see the presentation on the ST website, I'm waiting to review that before I push the button on topping up, so the slide since Friday is actually quite welcome! With £40k going in I may now be looking at picking up an additional 500,000 shares over what I could have picked up late last week.

That was a useful update, but it was from back in May. I’m guessing the slides from today will be uploaded overnight. I’ll keep an eye out and post the link if I see it pop up.

Scrappage is a problem, however doubling production at the same scrap rates would only mean higher losses if the units are being produced at a marginal loss due to the scrap cost, which I don't believe is the issue here (at least it'd be an accounting aberration to put production scrap costs below the line). As such doubling of production, even if scrap rates remain constant should move the business towards break even and cash flow generation, reducing scrap rates would increase that rate and lower the level of production required.

The one from today? I looked not long ago and couldn't see it. The latest one I can see is Project Bumblebee. Can you post a link to where the most recent presentation from today is posted?

@Flogit - that's from the announcement last week (Friday 19th) for some reason it didn't come through the RNS which is why you may have missed it. From what we're told that's the bulk of the information that's going to be discussed by the CEO and COO following the vote at the AGM today - then slides will then be uploaded to the Surface Transforms Website, hopefully not too long after it's been presented though, there might be some information in there that could be price sensitive.

When is he officially due to step down? It's got to be soon hasn't it? I agree that he's a liability, and his performance on the last webinar (to the point where comments he made on the live stream were edited out of the version now on the website) just showed that he's completely unfit for that position. Also where the hell are the NED's in all of this? Are they just stealing a living too?

I think we can assume that the update is almost entirely going to be about production levels and quality, seeing as they're leaving out the CFO - I wouldn't expect much in the way of additional information over and above the Trading and Operations update from last week - I'm glad I decided against paying £300 to get the train down to London this morning for no new information.

I'm fairly sure that the 52p price was before at least one, or probably both the last two raises, given that it would represent a £650m+ market cap based on the 1.3Bn shares in issue. I'd say that 5p by this time next year would be good going, I'm waiting for some funds to hit by SIPP then I'm coming in for a hefty top up.

@Jrlomax it's possible, although most EV's coming out don't yet have the CC discs fitted, perhaps the regenerative braking takes some of the strain off the discs? Hopefully more top end EV's will start having CC discs fitted, perhaps even as standard then this stock will really fly.

@Apple - I agree that it's good they seem to have solved *some* of the production issues, it certainly looks as though the scrap problem and perhaps even the underperforming furnace have been dealt with. There's a gap in the explanation for 2025 revenues however, and that's the installation of the new furnace, still no update on this since April. This is the missing piece of the pie to get to £28m in 2025, and I expect if we don't get an update on this at the AGM we should prepare for a 2025 revenue miss.

@Guitar - I'm with you on the credibility piece, for me though it's a mostly new team of Easton and to some extent Maddocks who have had to deal with the issues left by he previous senior team. Easton in particular seems to have a solid grip on things now, and if they can sort out this next phase of expansion (better than the last one) then we should see EBITDA positive, and most importantly operational cash generation. Only then will we be comfortable that they don't need to raise again. So long as they only use debt facilities for Capex projects and they don't tie up working capital for too long they *should* have the headroom to get through.

@QD - I'd wager a chunk of those "engineering sales" (if not all of them) are the result of the reversal of the revenue recognition on project tooling that they had to carry out in the FY23 numbers, as such they should be disregarded from 2024 figures as they don't represent actual performance, but an accounting treatment issue. If they hit £17.5 with £1.7m of "borrowed" revenue from prior years, that's a miss for me, the only saving grace is that the CFO can claim the impact of this was known at the time they reaffirmed the revenue forecast, and that they didn't actually disclose the make up of that revenue, therefore the £1.7m was always being counted in the £17m. As a former CFO myself, it's sleight of hand, but well within the rules and whilst it's disingenuous to have a sneaky £1.7m in your back pocket (if they hit £18.7m you can say you hit the £17m without the engineering sales) it makes sense for a business that's disappointed the investors so many times, I'd have done it.

Wow - I heard that they were an expensive option but that's crazy - I'm sure I saw somewhere that they were like £6k a set, but are those the Brembo ones then?

I'd be wary focusing on green hydrogen, as the only way of producing certified green hydrogen is by using excess zero carbon renewables such as wind, tidal, solar or hydro. Waste-based hydrogen (whether produced directly or from electrolysis) could fall into the black / brown classification (due to the fossil nature of the fuel required) or possible into the new Turquoise banding, if a methanation process is run after gasification, and the residual carbon is captured and utilised.

It's all stupidly complicated is you ask me, but green hydrogen is likely to be the only one that will receive the required subsidies to make it financially viable.

50kWh per kg of hydrogen needs to result in a price north of £4 to £5/kg to make the use of power make sense over grid connection, and over £8/kg to make sense over direct private wire sale, the latter is very unlikely to happen any time soon.

I remember that however there's been little update since other than the comment that "it is expected to be installed by the end of 2024". I would infer that there are other issues which have still not been resolved, otherwise we'd have had a "the installation and commissioning of Furnace X is progressing to schedule" update - perhaps with a comment on the stage of the program (I've no idea what's involved, but you get the picture).

We haven't had that, as a result we need something concrete from the board about the installation progress of the furnace, especially given that the last one took a full year longer than expected.

Having clarity of precisely when this furnace will not only be installed, but will be adding to production is absolutely essential if the board wants to build confidence in their investor base that break even, then profitability and finally regular cash generation is coming soon, otherwise the cash in the bank won't last until Christmas and this thing either goes pop, or gets picked up by Brembo for a song.

I not only have a positive case for this share to return to 2p, but to go back to 3p or 4p in relatively short order. We all knew these 2023 numbers were going to be a bit of a horror show (the non-cash impairments aside) given the raise then the panic emergency raise that followed. My case comes from a single paragraph in the update, and it's where I'm pinning my hopes for the future of SCE.

1) The claim that "The Phase 2 £50m sales capacity was progressively installed during the year and into 2024. With one exception, the £50m notional capacity has been achieved in the first half of 2024".

I know that the board will be reading these posts (and I also know their NOMAD / Broker will be telling them not to) and I hope they see this. Please make sure you draw out the production improvements and show them on an ARR basis, smoothed using 2 or 3 month rolling averages if needs be, but SHOW US that you are getting to the £50m capacity, and what proportion of that capacity you're actually able to output. The COO made the case that scrap rates were down significantly in Q2 when they did the webinar on 9th May - I'd implore the board to focus on this, after all there's little point in spending money on investing in capacity if the furnace then either malfunctions and is written down (like the old one) or if scrap rates negate the capacity altogether.

2) The follow up that "The outstanding item from this £50m programme is one furnace that is now expected to be installed at the end of the year."

Time for some clarity as to what the delays are (we've had scant little detail from what I can see) and how they will be overcome, I'd like to hear about exactly what has stopped them installing the last furnace, and how long it's been on site awaiting installation (note there have been no comments about delays to delivery, just installation). It was ordered in 2021, presumably has already been paid for (with interest running on the financing) and as such every additional week that goes by is not only wasted potential, but it's burning cash. I have my own theory as to what has held this up, and if it's not clarified by the AGM, I'll be attending in person to put that theory to them and get an answer there.

We are constantly told that the £50m capacity will be fully installed by the end of 2024, as such all of the blockers to that need to have been cleared before the AGM, or it won't happen in that timeframe.

£50m turnover at consistent 50-55% margin gives £25-27.5m gross profit, overheads in 2023 were £15m even with the massive R&D spend (but excluding the non-cash impairment) which would give £10m+ Operating Profit. From that I'd infer that the Break Even level of production is £30m, so the allowable scrap rate / shortfall allowable is 40%, well above the 25% mentioned in the webinar. I see break even in H2 (depending on the 2024Q2 run rate) and profitability and cash flow generation in 2025 - 4p here we come!

RNS released with the results this morning, I should have had a fiver on it with you Andy! The impairment at £9m was larger than I thought, time for some morning reading over a cup of tea.

As a former auditor I don't see this as a GC risk at all, especially with the potential to raise cash in the market, and also the support from the Liverpool City region - those funds can always be re-focused in an emergency, especially to safeguard existing Capex spend which would otherwise risk being written off. I suspect we'll either get the figures tomorrow, or they'll shorten the year end to buy another 3 months.