With an order book of £180m Liverpool city region supercar brake disc manufacturer Surface Transforms is set to return to profitability after a ‘decade of development’. Tony McDonough reports
A Merseyside firm that makes carbon fibre brake discs for high performance cars is set to finally make a profit in the next 12 months.
In the past year Surface Transforms (ST) has secured contracts with a number of major automotive manufacturers, winning significant new contracts. In March it won its biggest deal to date worth £100m, taking its total order book to £180m.
Knowsley-based ST, which is listed on the stock exchange’s Alternative Investment Market, says the new deal with an unnamed car maker replaces a £27.5m contract with the same customer it won in September 2020.
On Monday, ST published its financial results for the year to December 31, 2021. It showed revenues improved 21% to £2.4m and a pre-tax loss of £4.6m, against £2.3m in 2020. But the company is now ready to move into profitability after a year of investment as production is stepped up.
Its customers are mostly unnamed but have included Porsche, Ferrari and Nissan. It is currently supplying brake discs for the Aston Martin Valkyrie, a limited edition model that will cost buyers almost £3m. Work on that contract was one of the principal drivers of growth during 2021.
In January 2021, ST raised £19.1m in an equity fundraising. The funds were raised to finance the delivery of additional capacity and working capital. It also drew down a loan of £1m from the Liverpool City Region Combined Authority’s Future Growth Fund.
Administrative expenses increased by £500,000 to £2.4m (2020 £1.9m). This increase was almost all in salary costs reflecting extra staffing ahead of the capacity requirement for 2022. More people are expected to join the business in 2022.
Net research expenses were £3.4m an increase of £900,000 on the prior year of £2.5m. This increase was driven by significant material costs utilised in furnace commissioning and product development, in addition much of the recruitment during the year was for engineering roles focused on development in the short term.
During 2021, ST decided to change its original strategy of splitting its factory into several production cells. However, new contract wins and the need to reduce its carbon footprint led the firm to decide to reconfigure to a single production line.
Chairman David Bundred said 2021 was a year of “game-changing market success”. He added: “The Company continues its journey to profitability in 2022 and remains confident that this objective will be achieved.”
He added: “After a decade of commercial and development activity the forthcoming 2022 year will finally see this work turn to profitability. Based solely on orders already awarded, we can be confident of sales growth of more than 20% per annum from 2023 to 2025 and would hope to increase that growth rate as we win further contracts in that period.”