Surface Transforms (SCE) H1 2024 earnings summary

Executive summary

• Revenue rose 58% year-over-year to £4.7m in H1 2024, driven by OEM customer sales.

• Gross margin declined to 56% from 61% due to increased outsourcing and product mix.

• Operating loss widened to £7.4m (H1 2023: £5.6m), reflecting higher R&D spend.

• Loss before tax was £7.6m, up from £5.6m in H1 2023.

• No engineering revenue recognized in H1 2024 due to IFRS 15 performance obligation assessments.

Financial highlights

• Cash at 30 June 2024 was £5.0m, up from £4.5m a year earlier.

• £8.9m equity placing and open offer proceeds completed to support working capital.

• R&D expenses increased to £7.2m (H1 2023: £4.1m).

• Planned capital expenditure of £3.4m in H1 2024, mainly for capacity upgrades.

• Net assets at 30 June 2024 were £25.7m (H1 2023: £28.1m).

Outlook and guidance

• Full-year 2024 revenue expected at £11m, significantly below market guidance of £17.5m.

• Q4 revenues forecast at £3.5m, 40% below plan.

• H2 revenues expected to be 40% down on plan, excluding engineering revenues.

• Company is reviewing all funding options to improve cash flow.