Surface Transforms Signs Cooperative Agreement with METEK

02 July 2004

Surface Transforms plc has signed a two-year Cooperative Agreement with German automotive parts supplier METEK.

The agreement with METEK, one of Europe's leading suppliers of braking systems to the automotive industry and owner of Advanced Materials Lanxide LLC of the USA, is for the design, development and supply of carbon ceramic brake discs and pads to the European automotive industry.

Under the terms of the agreement, the Company expects to generate revenues of Euro 60,000 during the initial testing and development phase of the cooperation. During later phases of the contract, further income will be derived from road car model specific licence and supply agreements.

Over the past twelve months Surface Transforms and METEK have completed an initial period of evaluation and road car testing of carbon ceramic brake discs and pads. The tests, undertaken at METEK, show that CFRC materials give a significant improvement in performance over traditional steel brake discs and organic pads. A 60% reduction in weight and a 50% improvement on stopping force has been achieved. The three-dimensional structure of the carbon ceramic discs contributes to very good wear characteristics whilst retaining significant disc integrity when compared to the competition. These properties have also been demonstrated in the wear and integrity tests undertaken on Surface Transforms' aircraft brake discs.

The European steel brake disc and pad market is currently estimated to be 360 million units per annum at a supplier market value of Euro 3.5 billion per annum. The directors of Surface Transforms estimate that once carbon ceramic brake technology is accepted by the automotive majors initially up to 1-3% of the market (principally a proportion of the executive and luxury segments of the road car market) will adopt the new technology brakes with their superior braking, handling and environmental performances.

The main points of the Cooperation Agreement, which is in three phases, are:
Phase 1: model specific road car development and testing
Phase 2: extensive model testing of the carbon ceramic braking system and finalisation of production disc and pad specifications
Phase 3: design, construction and commission of a carbon ceramic production plant at METEK, subsequent supply of brake discs by METEK to the automotive industry under licence agreement with Surface Transforms

Commenting on today's announcement, Managing Director of Surface Transforms, Julio Faria, said that “this is tremendous news. It has long been the Company's stated objective to supply parts to the automotive industry for high-performance vehicles. This first fully-commercial contract to provide METEK with brake discs and pads represents an important landmark for Surface Transforms, and is especially good news following on so recently from our prestigious contract with the UK Ministry of Defence to supply CFRC material for both body and vehicle armour.""

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