Surface Transforms Regulatory News (SCE)

Surface Transforms Plc ("Surface Transforms" or the "Company")

PRE CLOSE TRADING STATEMENT

Surface Transforms, one of the world's two manufacturers of ceramic brake discs for the aircraft and automotive industries, is pleased to provide a trading update for the financial year ending 31 May 2011.

The Company's turnover is expected to be in excess of £860,000, some 7% higher than last year (2010: £804,800). Nevertheless, turnover was less than originally budgeted, principally due to delays in securing new automotive brake contracts.

We reported in the interim statement that the Company's pre-tax losses for the year are likely to be materially higher than last year due to higher development costs and much lower R&D tax credit receipts. The Board has already taken steps to reduce the Company's cost base from June 2011 and the reduction in overheads of approx £170,000 p.a., together with ongoing improvements to product costs, aim to reduce the turnover levels at which the Company can break even in cash terms.

The order book and contracted sales for the year ending 31 May 2012 currently total £568,000 (31 May 2010: £521,996). The contracted sales, expected to be in excess of £280,000 relate to a three year, forward contractual supply agreement the Company entered into in March 2011 with one of its main clients, Mov'IT International. This contract expires on 31 December 2014. The agreement provides for the sale of ceramic brake discs and has a minimum value of approximately £2.7 million (€3.1 million) over the term.

Management focus in the current year is to deliver improved operating margins on its improving sales to the current customer base and hence drive the business towards cash break-even levels. The Board expects an improvement in the Company's performance over the next 12 months and will update shareholders further when the audited accounts are published.

For further information on the Company visit: www.surface-transforms.com

Kevin D'Silva

Chairman

Enquires:

Dr Kevin Johnson, CEO 0151 356 2141

Geoff Hall, Co. Secretary & Finance Controller 0151 356 2141

Seymour Pierce Ltd 0207 107 8000

Guy Peters/David Foreman - Corporate Finance

Paul Jewell/David Banks - Corporate Broking