- Surface Transforms has booked an H1 pretax loss of GBP0.43m, from a year-ago loss of GBP0.47m. Turnover rose to GBP0.78m, from GBP0.62m. Directors expect the H2 revenue performance to be comparable to that achieved in H1.

"The increased revenue [in H1] was attributable to a catch up in sales delayed in the previous year following the furnace break down in May 2015 including approximately £107k from increased aircraft customer revenues," the company said in a trading update.

"Within the core automotive customer base, it is encouraging to note that there was a 60% increase in retrofit car sales and a 20% increase in near OEM car sales, equivalent to an increase of approximately £100k in aggregate between the comparable half year periods.

"The increase in retrofit car sales reflects new customers, while the increase in near OEM car sales is due to sales to existing customers.

"The increase in sales resulted in increased gross profit of £447k (2014: £293k), an increase reflecting both volume and improved percentage margins, being 57% in the period (2014: 47%).

"However, as signaled in previous announcements, and in line with budget, R & D costs increased to £590k (2014: £427k) as a result of increased activity on the game changing contracts.

"Nonetheless, the company was able to substantively offset this cost increase by both grant income of £61k (2014: £9k) and an increase in the R&D tax credit to £306k (2014: £217k). This all contributed to the reduction in EBITDA loss to a near break-even loss of £27k (2014: loss £165k).

"Cash was £525k at the half-year end (2014: £132k and £829k at the year ended 31 May 2015). However, net current assets excluding cash increased by £203k in the period and will convert to cash over the next few months, demonstrating the business being close to operating cash break-even in the first half.

"Without the R& D tax credit, the Company will use cash in the second half, including capital expenditure of £168k on furnace modifications."

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