AIM-listed automotive parts supplier Surface Transforms (SCE) suffered the loss of its biggest customer this week. The company announced the news yesterday, sending its shares down 95% to 0.095p, although they have rebounded slightly today.
GM slams on the brakes
Surface Transforms makes carbon-ceramic brake discs and is one of only two mainstream companies in this field alongside Italy’s Brembo. Its products are stronger and more durable than most of its competitors’ with improved heat conductivity.
The firm revealed yesterday afternoon that General Motors (GM), its largest customer, was terminating its contract as of 31 March. GM represented 84% of the company’s revenue and 85% of unit sales last year.
Additionally, since November 2024 GM has provided operational and financial support including advance payments of £14.4 million. The loss of the contract and financial support ‘has a material impact on the company’s ability to trade’, the firm said.
The directors have contacted restructuring advisors to protect stakeholders’ interests, but the market reaction suggests it may be game over.
Presumably Surface Transforms’ exposure to a single customer was well flagged in its results and in the ‘risks and uncertainties’ section of its annual report. In which case investors should have been aware of the risks if GM pulled the plug on its contract.
Surface Transforms has spent a great deal on new equipment and automation so hopefully someone – maybe even Brembo – will step in and buy it. Either way, it’s an ignominious end for an innovative high-tech UK small-cap.
Read the press release here: https://www.surfacetransforms.com/investors/
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