Brake disc maker offers hope amid ‘uncertainty’
Liverpool city region supercar brake disc maker Surface Transforms doubles production in recent weeks but challenges remain after admitting ‘material uncertainty’ about its future last month. Tony McDonough reports
![Surface Transforms](https://lbndaily.co.uk/wp-content/uploads/2022/11/IMG_5102-e1669282792228.jpg)
Automotive supplier Surface Transforms (ST) has seen a doubling of production weeks after admitting there was “material uncertainty” about its future.
Knowsley-based ST, which is listed on the Alternative Investment Market, manufactures carbon fibre reinforced ceramic automotive brake discs for high performance cars.
Customers of the business include, or have included Porsche, Ferrari, Jaguar Land Rover and Aston Martin. It currently has a forward order book of £390m and says its prospective customer pipeline is worth around £700m.
However, despite the popularity of its products among the world’s automotive giants in 2023 ST experienced what it described as “the most difficult year in the history of the company”.
On June 28 it reported full-year results for the 12 months to December 31, 2023. While they showed an impressive sales performance and an 81% rise in revenues to £7.3m, pre-tax losses hit £20.7m.
The company has been dogged by issues related to the ramping up of production. It identified three areas of concern… inadequate capacity to meet demand, high levels of rejected scrap and staff not ready to “transition from prototype to volume production”.
Chairman David Bundred admitted “overall operational progress simply was not good enough”. Ominously, the annual report said: “The directors acknowledge the existence of a material uncertainty related to the company’s ability to continue as a going concern.”
However, in a trading update in the last few days ST, which employs more than 140 people, has issued a new trading update reporting that production of brake discs had doubled in the four weeks to July 12 from the average levels achieved over the previous five months.
Total sales for the half year to June 30 £4.6m and it expects sales of £17.5m for the whole of 2023. This is lower than the £22m figure it published in April. ST expects annual sales to reach £28m in 2025 and eventually ramp up to £150m annually.
In November 2023 the business raised £11m from its shareholders, as well as a £13m loan from Liverpool City Region Combined Authority. In spring this year it asked its shareholders for a further £9.5m.
![Aston Martin Valkyrie](https://lbndaily.co.uk/wp-content/uploads/2023/07/IMG_8234-scaled-e1690795787399.jpg)
Following the most recent fundraising ST addressed supply chain difficulties in April and May caused by working capital constraints. These problems were “progressively resolved in full” during June.
Chief executive Kevin Johnson said “The recent significant increase in daily output levels, over several weeks, is most encouraging both in terms of its consistency and recent output levels.
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“Capacity constraint is diminishing as a production impediment, thanks to the reduction of the single points of failure problem. We acknowledge that production yields, whilst improving, are still below plan.
“However the issues are understood, we expect to overcome them, and we are now building these further improvements from this higher baseline. We look forward to meeting shareholders at the AGM to provide a fuller update.”