surface transforms plc
registered number 3769702
annual report and
financial statements
for the year ended 31 may 2008 annual report and financial statements 
for the year ended 31 may 2008
2 highlights
3 chairman’s statement
5 chief executive’s report
7 directors’ report
11 report on directors’ remuneration
13 statement of directors’ responsibilities
14 independent auditors’ report
15 income statement
16 statement of changes in equity
17 balance sheet
18 cash flow statement
19 notes to the financial statements
34 company information and advisers
35 notice of annual general meeting
surface transforms plc
n n n n n n n n n n
1
contents highlights
for the year ended 31 may 2008
l revenue increased by 90 to £508111 2007 £266789
l losses after taxation improved by 8 to £594065 2007 £646422
l cash position as at 31 may 2008 of £1112719 2007 £878971
l order book of £302124 as at 31 may 2008
l receipt of a 4 year £300000 to £400000 per annum initial contract with a leading
global brake systems group for the supply of carbon fibre brake discs
l mov’it has signed a further supply agreement with the company to purchase between
£300000 to £400000 of brake discs per annum
l award of a £150000 3 year development contract with mbda a world leading missile
manufacturer jointly owned by bae systems eads and finmeccanica
l unit costs of ceramic brake discs are now 20 lower than levels in may 2007
l the commencement of a development contract with a new us based aircraft brake
system supplier which currently supplies both commercial and defence aircraft
l fundraising amounting to £897000 net of expenses by the issue of new ordinary shares
at 20 pence per share as announced in july 2007
surface transforms plc
n n n n n n n n n n
2 chairman’s statement
for the year ended 31 may 2008
in the 12 months to 31 may 2008 the company has achieved its financial targets for the year and has also met
a number of the strategic and operating milestones that the management had set themselves
the company started the 200809 financial year with a record order book four automotive brake systems clients
that are ordering brake discs on a regular basis and improved prospects for further growth in the business the
key achievements for the period under review were
l receipt of a 4 year £300000 to £400000 pa initial contract with a leading global brake systems group
for the supply of carbon fibre brake discs 
l award of a £150000 3 year development contract with mbda a world leading missile manufacturer jointly
owned by bae systems eads and finmeccanica
l unit costs of ceramic brake discs are now 20 lower than levels in may 2007
l the commencement of a development contract with a new us based aircraft brake system supplier which
currently supplies both commercial and defence aircraft
l fundraising amounting to £897000 net of expenses by the issue of new ordinary shares at 20 pence per
share as announced in july 2007 
financial review
in the 12 months to 31 may 2008 revenue was £508111 2007 £266789 this represents a 90 increase on
the same period in 2007 increased automotive brake disc revenues account for most of the increase and now
represents over 80 of the company’s revenue
at 31 may 2008 the outstanding order book was £302124 2007 £126097
losses after taxation for the 12 months period were £594065 2007 £646422 
earnings per share was a loss of 333 pence per share 2007 461pence per share
during the year the company raised £897000 by way of an issue of ordinary shares at 20 pence per share
shareholder funds at 31 may 2008 were £1722839 2007 £1413058 and this included cash deposits of
£1112719 2007 £878971
capital expenditure during the year amounted to £142599 2007 £193382
the company has no borrowings
developments
at present the company is currently in advanced discussions regarding a supply contract with a leading
european supplier of braking systems to the aftermarket industry a further announcement regarding this will be
made in due course
in addition in april 2008 the company signed a four year supply agreement to supply carbon fibre brake discs
to a global automotive brake system supplier
the directors believe based on forecasts prepared by the brakes system supplier that this contract could generate
additional revenues of approximately £300000 to £400000 per annum over the life of the agreement and that
the company has sufficient manufacturing capacity to meet this demand this agreement demonstrates that
surface transforms has the expertise in advanced carbon fibres and industrial fabrics which can provide a
competitive edge in composite brake technology and takes the company’s leadingedge products into the
forefront of the international automotive performance brake market 
surface transforms plc
n n n n n n n n n n
3 chairman’s statement
continued
people
the board would like to thank management and staff who have all contributed to the progress the company has
made during the year we continue to incentivise executives with share options as we wish to align their rewards
with those of shareholders
outlook
we envisage further progress during the coming year
the board believes that surface transforms has established itself as an industry operator with world class
technology the commercial and development contracts which have been signed in the past year underline this
reputation
in spite of the widely reported slowdown in world consumer and industrial markets the company continues to
improve its order book the board anticipates that the revenue growth experienced in 200708 will continue
kevin d’silva
chairman
16 september 2008
surface transforms plc
n n n n n n n n n n
4 chief executive’s report
for the year ended 31 may 2008
the company has completed its first year of operations at the new ellesmere port site and the relocation which
consolidated the activities of two previous sites has delivered measurable improvements in productivity and
management team coordination
over the year the business has gained more stability in its revenues and over 80 of revenues derived from
automotive applications in addition 69 of the revenue produced in the year has arisen from continental
european markets
the business in 2008 had 11 oem and after market automotives clients 3 in aircraft brake systems and 3 in
rocket components
automotive brake systems
the company’s systemst brake disc product is now on 28 car platforms to date and such cars are typically
priced in excess of —90000 the main car platforms using systemst in 2008 were
koenigsegg automotive www koenigseggsw
systemst brake discs are now on over 40 supercars and current production is between 2430 cars per year
mov’it gmbh wwwmovitde
mov’it is a leading european after market brake system supplier sales of systemst have exceeded expectations
this year on 22 september 2008 mov’it signed a further supply agreement with the company to purchase a
minimum of £300000 to £400000 brake discs per annum
weber sport wwwwebersw
weber now has an established distributor network and will commence production this autumn targeting to
build between five and eight of the —1000000 price tagged supercars in the first year
tramontana www tramontanasp 
tramontana the spanish supercar manufacturer build just 12 cars per annum and purchased six ceramic brake
car systems last year
mm industries avocet 
the mmi avocet is a newly built british sports car launched to great interest on the st stand at autosport 2008
at the nec birmingham in january the 225hp spyder version will be fitted with systemst as standard final
production volume forecasts have not yet been released by mmi
in april 2008 the company signed a four year supply agreement to supply carbon fibre brake discs to a global
automotive brake system supplier
the directors believe based on forecasts prepared by the brakes system supplier that this contract could generate
additional revenues of approximately £300000 to £400000 per annum over the life of the agreement and that
the company has sufficient manufacturing capacity to meet this demand this agreement demonstrates that
surface transforms has the expertise in advanced carbon fibres and industrial fabrics which can provide a
competitive edge in composite brake technology and takes the company’s leadingedge products into the
forefront of the international automotive performance brake market 
on 22 september 2008 mov’it gmbh already an established customer of the company signed a new supply
and purchase contract to purchase annually ceramic brake discs at a much higher level of volumes than had
been experienced in the previous year the board believes that this will amount to revenues in excess of between
£300000 and £400000 per annum
surface transforms plc
n n n n n n n n n n
5 chief executive’s report
continued
aerospace
aircraft brake systems
revenues from aircraft brake systems are principally from paid development contracts revenues in 2008 in this
area have reduced in value from the previous year one of our clients dunlop braking systems a subsidiary of
meggitt plc has now merged with a key us competitor and the combined operations now trade under meggitt
aircraft braking systems mabs
mabs has been and remains a key partner of the £134 million three year collaborative rd project funded by
the uk technology strategy board formerly the dti this project is being led by surface transforms
in recent months development work has commenced with a second us brake system supplier that supplies both
commercial and military aircraft principally in us markets 
rocket components
surface transforms proprietary technology is uniquely positioned to deliver high performance in terms of
extended life time and reduced mass affordable ceramic rocket propulsion components
the award of a £150000 3 year development contract with mbda a world leading missile manufacturer jointly
owned by bae systems eads and finmeccanica recognises the potential for surface transform’s material
technology
in addition interest from other defence contractors has been shown and the board believe progress during this
financial year will lead to further development agreements
production  new technology projects
the development of cvist the carbon vapour infiltration process plant has taken longer than had been
expected technical challenges have arisen with the process plant capabilities and this has prolonged final
commissioning we now believe we are in the final stages of commissioning and expect production parts to be
manufactured during the second half of the current financial year
improved machining and finishing operations in the manufacture of brake discs has contributed to the reduction
in the unit cost of a ceramic brake disc cost levels currently are 20 per cent below levels of may 2007 and the
cvist process will contribute further to lowering unit costs
people
the company has a strong senior management team who have now worked together for over two years 
this year we have taken the opportunity to appoint two new senior engineers geoff whitfield bsc msc and
martin bell beng hons miet to the management organisation 
the blend of skills experience and commitment has allowed the company to build solid foundations and the
team are well equipped to continue the good progress made to date
we have continued to incentivise our management and staff with share options as we wish to align their rewards
with those of shareholders
i would like to thank all my colleagues for their dedication over the past year
dr kevin johnson
chief executive
23 september 2008
surface transforms plc
n n n n n n n n n n
6 directors’ report
for the year ended 31 may 2008
the directors present their annual report and the audited financial statements for the year ended 31 may 2008
principal activity
the principal activity of the company during the year was the development and manufacture of carbon fibre
reinforced ceramic products cfrc for aircraft brake automotive brake and rocket component applications 
business review
a review of the company’s activities during the year is dealt with in the financial review section of the
chairman’s statement 
key risks and uncertainties 
the principal risk faced by the company is unchanged from last year and relates to the speed at which our
customers and potential customers adopt the new ceramic disc technology indications in the automotive area
are that the technology continues to be well received and is being adopted over an increasing number of
vehicles this risk is constantly assessed by monitoring the level of enquiries and orders for both the company
and industry wide
key performance indicators
the directors continue to monitor the business internally with a number of performance indicators order intake
sales output profitability and manufacturing cost of automotive discs the company has met its performance
targets in each of these areas as evidenced below
l turnover £508111 2007 £266789
l losses after taxation £594065 2007 £646422 
l order book of £302124 as at 31 may 2008
l manufacturing cost of automotive discs as at july 2008 20 below levels of may 2007
the company produces an annual business plan and full monthly forecasts detailing sales profitability and cash
flow to help monitor business performance going forward
future developments
the board aims to continue with its corporate strategy which is to exploit its technologies in carbon fibre
reinforced ceramics by
l establishing contract development opportunities and collaborations with national and multinational
customers in the aerospace and automotive industries and 
l expanding commercial sales of cfrc products
research and development
the majority of the company’s staff are employed in research and development activities which are concentrated
on the ongoing development of carbon fibre reinforced ceramic friction and nonfriction materials for new
products and applications
proposed dividend and transfer to reserves
the loss for the year after taxation amounted to £594065 2007 £646422 the directors do not recommend
the payment of a dividend
surface transforms plc
n n n n n n n n n n
7 directors’ report
continued
policy and practice on payment of payables 
it is the company’s policy that payments to suppliers are made in accordance with the terms and conditions
agreed between the company and its suppliers providing that all trading terms and conditions have been
complied with the company does not follow any code or standard on payment practice
at the year end there were 53 days 2007 74 days purchases in trade payables
political and charitable donations
the company made no political or charitable donations during the year 2007 £nil
directors and directors’ interests
the directors who held office during the year were as follows
k d’silva chairman
dr k johnson managing director
jj faria
professor dt clark
dr g gould 
km baker 
denotes nonexecutive director
jj faria resigned as an executive director on 30 november 2007 and was immediately appointed as a non
executive director
the directors retiring by rotation are k d’silva and jj faria who being eligible offer themselves for reelection
the directors who held office at the end of the financial year had the following interests in the ordinary shares
of the company according to the register of directors’ interests
 of issued number of £001 ordinary shares
share capital at interest at interest at
end of year end of year start of year
jj faria 971 1848089 1848089
professor dt clark 515 979661 979661
k d’silva 135 256986 156986
dr k johnson 042 79750 79750
km baker 047 90000 40000
dr g gould 002 4350 4350
according to the register of directors’ interests no rights to subscribe for shares in or debentures of the company
were granted to any of the directors or their immediate families or exercised by them during the financial year
except as disclosed in the report on directors’ remuneration on pages 11 and 12 
the directors benefited from qualifying third party indemnity provisions in place during the financial year and at
the date of this report 
surface transforms plc
n n n n n n n n n n
8 directors’ report
continued
substantial shareholders
in addition to the directors’ interests noted above the directors are aware of the following who were interested
in 3 or more of the company’s equity as of 5 september 2008 
number of  of issued
ordinary share 
registered holding shares capital
jm finn nominees limited 3983860 2093
pershing nominees limited 1675000 880
octopus investments nominees 1006292 529
hsbc global custody nominee ltd 807143 424
sinjul nominees ltd 730000 384
corporate governance
surface transforms plc is committed to maintaining high standards of corporate governance the company
complies with the combined code as modified by the recommendations of the quoted companies alliance to
the extent the directors consider appropriate given the size of the company its current stage of development
and the constitution of the board 
the board has appointed an audit committee whose primary role is to review the company’s interim and annual
financial statements before submission to the board for approval the board has also appointed a remuneration
committee which is responsible for reviewing executive remuneration and performance the remuneration and
audit committees are made up of four nonexecutive directors david clark julio faria kevin d’silva and ken
baker details of the remuneration committee are disclosed in the report on directors’ remuneration on pages
11 and 12
international financial reporting standards ‘ifrs’ as adopted by the eu
the company has successfully applied ifrs as adopted by the eu and a restatement report is included in these
financial statements 
disclosure of information to auditors
the directors who held office at the date of approval of this directors’ report confirm that so far as they are each
aware there is no relevant audit information of which the company’s auditors are unaware and each director
has taken all the steps that he ought to have taken as a director to make himself aware of any relevant audit
information and to establish that the company’s auditors are aware of that information 
auditors
in accordance with section 384 of the companies act 1985 a resolution for the reappointment of kpmg audit
plc as auditors of the company is proposed at the forthcoming annual general meeting
post balance sheet event
on 22 september 2008 mov’it gmbh already an established customer of the company signed a new supply
and purchase contract to purchase annually ceramic brake discs at a much higher level of volumes than had
been experienced in the previous year the board believes that this will amount to revenues in excess of between
£300000 and £400000 per annum
surface transforms plc
n n n n n n n n n n
9 directors’ report
continued
annual general meeting
the notice convening the annual general meeting to be held at 1130am on 28 october 2008 at the offices of
halliwells llp 3 hardman square spinningfields manchester m3 3eb is set out on pages 35 and 36
special business at the annual general meeting
under resolution 7 it is proposed in accordance with section 80 of the companies act 1985 to renew the
directors’ authority to allot shares in the company up to a nominal amount of £63436 representing
approximately 33 of the issued share capital of the company
resolution 8 seeks to renew in accordance with section 89 of the companies act 1985 the directors’ authority
to allot further shares for cash without first offering them to existing shareholders under the statutory preemption
procedure this authority is limited to the issue of equity securities in connection with rights issues and otherwise
up to a nominal amount of £19031 representing approximately 10 of the company’s present issued share
capital
the authorities contained in resolutions 7 and 8 will both expire at the conclusion of the annual general meeting
of the company to be held in 2008 or 15 months after the passing of such resolutions whichever is the earlier
the directors consider that it is appropriate for these authorities to be granted it is not the directors’ present
intention to allot any ordinary shares except to satisfy options that may be exercised under the company’s share
option schemes
by order of the board
k d’silva
chairman
23 september 2008
unit 4
olympic park
poole hall road
ellesmere port
cheshire ch66 1st
surface transforms plc
n n n n n n n n n n
10 report on directors’ remuneration
for the year ended 31 may 2008
policy on executive directors’ remuneration
the remuneration committee comprises of kevin d’silva julio faria david clark and ken baker
the remuneration committee is responsible for reviewing and determining the company’s policy on executive
remuneration including the grant of options under the share option scheme and ensuring compliance with and
implementation by the company as far as reasonably practicable the recommendations and guidelines of the
combined code executive remuneration packages are designed to ensure the company’s executive directors
and senior executives are fairly rewarded for their individual contributions to the company
fees for nonexecutive directors
the fees for nonexecutive directors are determined by the board the nonexecutive directors are not involved
in the decisions about their own remuneration
directors’ remuneration
set out below is a summary of the fees and emoluments received by all directors for the year or where
applicable period of office
2008 2007
££
executive directors
dr k johnson 84399 74886
jj faria 30049 57966
dr g gould 53943 52890
168391 185742
nonexecutive directors
k d’silva 18000 18000 
professor dt clark 18253 20854
jj faria 9000 – 
km baker 18000 13500
63253 52354
231644 238096
with the exception of kevin johnson none of the directors received pension contributions in respect of their
office in addition to the emoluments received as stated above kevin johnson received £3898 2007 £3600
in respect of pension contributions 
jj faria resigned as an executive director on 30 november 2007 and was immediately appointed as a nonexecutive director
directors’ interests
details of any contracts in which a director has a material interest are disclosed in note 18
none of the directors received any remuneration or benefits under long term incentive schemes
surface transforms plc
n n n n n n n n n n
11 report on directors’ remuneration
continued
share options
the company operates a share incentive scheme all options are granted at the discretion of the board the
options granted date of grant exercise price and exercise periods under the scheme are set out below no
options were granted during the year 
none of the directors exercised options during the year directors’ options outstanding and the options which
were granted and expired during the year are as follows
enterprise management incentive scheme
number of number of
date of share options share options exercise expiry
director grant granted expired price exercise period date
jj faria 191202 64286 – £070 191205191212 191212
dr g gould 191202 64286 – £070 191205191212 191212
dr g gould 081203 34091 – £088 081206081213 081213
dr g gould 080304 20000 – £0665 080307080314 080314
dr g gould 140905 29000 – £040 140908140915 140915
dr g gould 180407 50000 – £021 180410180417 180417
dr k johnson 040405 50000 – £050 040408040415 040415
dr k johnson 140905 180000 – £040 140908140915 140915
dr k johnson 180407 100000 – £021 180410180417 180417
prof dt clark 180407 15000 – £021 180410180417 180417
ka d’silva 180407 50000 – £021 180410180417 180417
km baker 180407 15000 – £021 180410180417 180417
671663
the market price of the shares at 31 may 2008 was £01475 and during the year varied from £0225 to £0105 
by order of the board
k d’silva
chairman
23 september 2008
unit 4
olympic park
poole hall road
ellesmere port
cheshire ch66 1st
surface transforms plc
n n n n n n n n n n
12 statement of directors’ responsibilities
for the year ended 31 may 2008
the directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations
company law requires the directors to prepare financial statements for each financial year under that law they
have elected to prepare the financial statements in accordance with ifrss as adopted by the eu and applicable
laws
the financial statements are required by law to present fairly the financial position and the performance of the
company the companies act 1985 provides in relation to such financial statements that references in the
relevant part of that act to financial statements giving a true and fair view are references to their achieving a fair
presentation 
in preparing these financial statements the directors are required to
l select suitable accounting policies and then apply them consistently
l make judgments and estimates that are reasonable and prudent
l state whether they have been prepared in accordance with ifrss as adopted by the eu and
l prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
company will continue in business
the directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at
any time the financial position of the company and enable them to ensure that its financial statements comply
with the companies act 1985 they have general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the company and to prevent and detect fraud and other irregularities
the directors are responsible for the maintenance and integrity of the corporate and financial information
included on the company’s website legislation in the uk governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions
surface transforms plc
n n n n n n n n n n
13 independent auditors’ report 
to the members of surface transforms plc
we have audited the financial statements of surface transforms plc for the year ended 31 may 2008 which comprise
the income statement the statement of changes in equity the balance sheet the cash flow statement and the related
notes these financial statements have been prepared under the accounting policies set out therein 
this report is made solely to the company’s members as a body in accordance with section 235 of the companies
act 1985 our audit work has been undertaken so that we might state to the company’s members those matters we
are required to state to them in an auditor’s report and for no other purpose to the fullest extent permitted by law we
do not accept or assume responsibility to anyone other than the company and the company’s members as a body for
our audit work for this report or for the opinions we have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report and the financial statements in accordance with
applicable law and international financial reporting standards ifrss as adopted by the eu are set out in the
statement of directors’ responsibilities on page 13
our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements
and international standards on auditing uk and ireland
we report to you our opinion as to whether the financial statements give a true and fair view and whether the financial
statements have been properly prepared in accordance with the companies act 1985 we also report to you whether
in our opinion the information given in the directors’ report is consistent with the financial statements the
information given in the directors’ report includes that specific information presented in the chairman’s statement
that is cross referred from the business review section of the directors’ report
in addition we report to you if in our opinion the company has not kept proper accounting records if we have not
received all the information and explanations we require for our audit or if information specified by law regarding
directors’ remuneration and other transactions is not disclosed 
we read the other information contained in the annual report and consider whether it is consistent with the audited
financial statements we consider the implications for our report if we become aware of any apparent misstatements
or material inconsistencies with the financial statements our responsibilities do not extend to any other information
basis of audit opinion
we conducted our audit in accordance with international standards on auditing uk and ireland issued by the
auditing practices board an audit includes examination on a test basis of evidence relevant to the amounts and
disclosures in the financial statements it also includes an assessment of the significant estimates and judgments made
by the directors in the preparation of the financial statements and of whether the accounting policies are appropriate
to the company’s circumstances consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the information and explanations which we considered
necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are
free from material misstatement whether caused by fraud or other irregularity or error in forming our opinion we also
evaluated the overall adequacy of the presentation of information in the financial statements
opinion
in our opinion
l the financial statements give a true and fair view in accordance with ifrss as adopted by the eu of the state of
the company’s affairs as at 31 may 2008 and of its loss for the year then ended
l the financial statements have been properly prepared in accordance with the companies act 1985 and 
l the information given in the directors’ report is consistent with the financial statements
kpmg audit plc
chartered accountants 
registered auditor
manchester
23 september 2008
surface transforms plc
n n n n n n n n n n
14 income statement
for the year ended 31 may 2008
2008 2007
note £ £
revenue 2 508111 266789
cost of sales 252874 138955
gross profit 255237 127834
administrative expenses
before research costs 678078 586643
research costs 615617 560005
total administrative expenses 1293695 1146648
other operating income 3 220652 176530
operating loss 817806 842284
financial income 6 67347 59845
loss before tax 750459 782439
taxation 7 156394 136017
loss for the year 15 594065 646422
loss per ordinary share
basic and diluted 19 333p 461p
all amounts relate to continuing activities
surface transforms plc
n n n n n n n n n n
15 statement of changes in equity
at 31 may 2008
share profit
share premium capital and loss
capital account reserve account total
£££ £ £
2007
credit in relation to share based payments – – – 62375 62375
net income recognised directly to equity – – – 62375 62375
loss for the year – – – 646422 646422
total recognised income and expense – – – 584047 584047
opening shareholders funds at 1 june 2006 140308 4902715 463885 3509803 1997105
closing shareholders funds at 31 may 2007 140308 4902715 463885 4093850 1413058
share profit
share premium capital and loss
capital account reserve account total
£££ £ £
2008
credit in relation to share based payments – – – 56609 56609
net income recognised directly to equity – – – 56609 56609
loss for the year – – – 594065 594065
issue of new shares 50000 847237 – – 897237
total recognised income and expense 50000 847237 – 537456 359781
opening shareholders funds at 1 june 2007 140308 4902715 463885 4093850 1413058
closing shareholders funds at 31 may 2008 190308 5749952 463885 4631306 1772839
surface transforms plc
n n n n n n n n n n
16 balance sheet
at 31 may 2008
2008 2007
note £ £ £ £
noncurrent assets
intangible assets 8 – 1886
property plant and equipment 9 382975 289455
382975 291341
current assets
inventories 10 258874 212181
trade and other receivables 11 292923 289576
cash and cash equivalents 1112719 878971
total assets 1664516 1380728
2047491 1672069
current liabilities
trade and other payables 12 274652 259011
total liabilities 274652 259011
net assets 1772839 1413058
equity
share capital 14 190308 140308
share premium 15 5749952 4902715
capital reserve 15 463885 463885
retained earnings 15 4631306 4093850
total equity attributable to equity shareholders 
of the company 1772839 1413058
these financial statements were approved by the board of directors on 23 september 2008 
and were signed on its behalf by
k d’silva
director
dr k johnson
director
surface transforms plc
n n n n n n n n n n
17 cash flow statement
for the year ended 31 may 2008
2008 2007
note £ £
cash flows from operating activities
loss for the year 594065 646422
adjusted for
depreciation charge 49079 74083
amortisation charge 1886 2218
equity settled sharebased payment expenses 56609 62375
financial income 67347 59845
taxation 156394 136017
710232 703608
changes in working capital
increase in inventories 46693 87846
increase in trade and other receivables 3347 205441
increase in trade and other payables 15641 129997
744631 866898
finance income received 17 67347 59845
taxation received 156394 136017
net cash used in operating activities 520890 671036
cash flows from investing activities
acquisition of property plant and equipment 17 142599 193382
net cash used in investing activities 142599 193382
cash flows from financing activities
proceeds from issue of share capital 897237 –
net cash from financing activities 897237 –
net increasedecrease in cash and cash equivalents 233748 864418
cash and cash equivalents at the beginning of the period 878971 1743389
cash and cash equivalents at the end of the period 1112719 878971
surface transforms plc
n n n n n n n n n n
18 notes to the financial statements
for the year ended 31 may 2008
1 accounting policies
surface transforms plc the “company” is a company incorporated and domiciled in the uk
statement of compliance
the financial statements have been prepared in accordance with international financial reporting
standards ‘ifrss’ as adopted by the eu
basis of preparation
the financial statements have been prepared in accordance with applicable accounting standards and
under the historical cost accounting rules modified to include revaluation to fair value of certain financial
instruments described below 
the accounting policies set out below have unless otherwise stated been applied consistently to all
periods presented in these financial statements and in preparing an opening ifrs balance sheet at 1 june
2006 for the purposes of the transition to adopted ifrss 
going concern
the financial statements have been prepared on a going concern basis which the directors believe to be
appropriate the company incurred a net loss of £594065 during the year however the directors are
satisfied based on detailed cash flow projections that sufficient cash is available to meet the company’s
needs as they fall due for at least 12 months from the date of signing the accounts in addition revenues are
expected to continue to increase in the coming years resulting in the company becoming profitable in due
course
transition to adopted ifrss
the company is preparing its financial statements in accordance with adopted ifrs for the first time and
consequently has applied ifrs 1 an explanation of how the transition to adopted ifrss has affected the
reported financial position financial performance and cash flows of the company is provided in note 24
ifrs 1 grants certain exemptions from the full requirements of adopted ifrss in the transition period the
following exemptions have been taken in these financial statements
share based payments – ifrs 2 is being applied to equity instruments that were granted after 7 november
2002 and that had not vested by 1 june 2006
share based payments
the share option programme allows employees to acquire shares of the company the fair value is
measured at grant date and spread over the period during which the employees become unconditionally
entitled to the options the fair value of the options granted is measured using an option pricing model
taking into account the terms and conditions upon which the options were granted the amount recognised
as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is
only due to share prices not achieving the threshold for vesting
intangible assets and amortisation
expenditure on patents is capitalised and amortised to nil by equal annual instalments over the useful
economic life of seven and a half years
property plant and equipment
depreciation is provided to write off the cost less the estimated residual value of property plant and
equipment by equal instalments over their estimated useful economic lives as follows
plant and machinery – 12520 per annum
fixtures and fittings – 25 per annum
motor vehicles – 25 per annum
leasehold improvements – over life of lease
surface transforms plc
n n n n n n n n n n
19 notes to the financial statements
continued
1 accounting policies continued
foreign currencies
transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the
transaction monetary assets and liabilities denominated in foreign currencies are translated to the
functional currency at the foreign exchange rate ruling at the balance sheet date and the gains or losses on
translation are included in the income statement
leases
operating lease rentals are charged to the profit and loss account on a straight line basis over the period of
the lease
government grants
revenue grants are credited to the profit and loss account and included within other operating income so
as to match them with expenditure to which they relate
post retirement benefits
the company does not operate a pension scheme but does contribute to specific employees’ personal
pension schemes the amount charged to the profit and loss account represents the contributions payable
to employees personal pension schemes during the accounting year
research and development expenditure
expenditure on research activities is recognised in the income statement as an expense as incurred
expenditure on development activities is capitalised if the product or process is technically and
commercially feasible and the company intends and has the technical ability and sufficient resources to
complete development future economic benefits are probable and if the company can measure reliably
the expenditure attributable to the intangible asset during its development no research costs met the
criteria for capitalisation in the current or preceding years
inventories 
inventories are stated at the lower of cost and net realisable value in determining the cost of raw materials
and consumables the purchase price is used for work in progress cost is taken as production cost which
includes an appropriate proportion of attributable overheads
taxation
the charge for taxation is based on the loss for the year and takes into account taxation deferred or
accelerated arising from temporary differences between the carrying amounts of certain items for taxation
and for accounting purposes 
deferred taxation is provided for in full at the tax rate which is expected to apply to the period when the
deferred taxation is expected to be realised including on tax losses carried forward 
deferred taxation assets are recognised only to the extent that it is probable that future taxable profits will
be available against which the temporary differences can be utilised 
research and development tax credits are recognised on a cash received basis as a reduction in the current
tax payable as this is when the tax credit is considered recoverable
cash and cash equivalents 
cash and cash equivalents for the purpose of the cash flow statement comprises cash in hand and deposits
repayable on demand
surface transforms plc
n n n n n n n n n n
20 notes to the financial statements
continued
1 accounting policies continued
new standards and interpretations that have been endorsed but which are not yet effective and not early
adopted
a number of new standards amendments to standards and interpretations are not yet effective for the year
ended 31 may 2008 and have not been applied in preparing these financial statements
ifrs 8 ‘operating segments’ introduces the “management approach” to segment reporting ifrs 8 which
becomes mandatory for the company’s 2010 financial statements will require the disclosure of segment
information based on the internal reports regularly reviewed by the company’s chief operating decision
maker in order to assess each segment’s performance and to allocate resources to them currently the
company presents primary segment information in respect of its business segments see note 2
new standards and interpretations that have not yet been endorsed
amendment to ias 1 ‘presentation of financial statements a revised presentation’ if endorsed by the eu
this will be applicable to the company’s 2010 financial statements
amendment to ifrs 2 ‘share based payment vesting conditions and cancellations’ if endorsed by the eu
this will be applicable to the company’s 2010 financial statements
revised ias 23 ‘borrowing costs’ removes the option to expense borrowing costs and requires that an entity
capitalise borrowing costs directly attributable to the acquisition construction or production of a qualifying
asset as part of the cost of that asset if endorsed the revised ias 23 will become mandatory for the
company’s 2010 financial statements and will constitute a change in accounting policy for the company
in accordance with the transitional provisions the company will apply the revised ias 23 to qualifying
assets for which capitalisation of borrowing costs commences on or after the effective date
amendment to ias 32 and ias 1 ‘puttable financial instruments and obligations existing on liquidation’
if endorsed by the eu this will be applicable to the company’s 2010 financial statements
revenue
revenue comprises income derived from research the supply of carbon fibre structures and carbon fibre
reinforced ceramic products revenue is recognised on transfer to the customer of significant risks and
rewards of ownership generally this will be when goods are despatched to the customer turnover excludes
value added taxes
nonderivative financial instruments
nonderivative financial instruments comprise investments in equity and debt securities trade and other
receivables cash and cash equivalents loans and borrowings and trade and other payables
trade and other receivables
trade and other receivables are recognised initially at fair value subsequent to initial recognition they are
measured at amortised cost using the effective interest method less any impairment losses
trade and other payables
trade and other payables are recognised initially at fair value subsequent to initial recognition they are
measured at amortised cost using the effective interest method
interest rate risk
the company finances its operations through cash cash resources are invested to attract the highest rates
for periods that do not limit access to these resources
liquidity risk
with regard to liquidity the company’s policy has throughout the year been to ensure that the company is
able at all times to meet its financial liabilities as and when they fall due
surface transforms plc
n n n n n n n n n n
21 notes to the financial statements
continued
1 accounting policies continued
critical accounting estimates
the preparation of financial statements in conformity with adopted ifrss requires management to make
judgements estimates and assumptions that affect the application of policies and reported amounts of
assets and liabilities income and expenses the estimates and associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under the circumstances
the results of which form the basis of making the judgements about carrying values of assets and liabilities
that are not already apparent from other sources actual results may differ from these estimates the
estimates and assumptions which have a significant risk of causing a material adjustment to carrying
amount of assets and liabilities within the next financial year are discussed below
impairment of property plant and equipment
property plant and equipment are reviewed for impairment if events or changes in circumstances indicate
that the carrying amount of an asset is not recoverable 
provision to write inventories down to net realisable value
the company makes provisions for obsolescence based on historical experiences and management
estimates of future events actual outcome could vary significantly from these estimates
2 analysis of turnover and loss on ordinary activities before taxation
revenue and loss on ordinary activities before taxation is wholly attributable to the principal activity of the
company
primary reporting format – business segments
revenue by business segment is analysed as follows
2008 2007
££
automotive 424413216065
aerospace 83698 50724
508111 266789
all business segments are serviced by a single production facility as such net assets liabilities additions
to property plant and equipment loss before tax and depreciation cannot be attributed to specific business
segments
secondary reporting format – geographical segments
revenue by destination is analysed as follows
2008 2007
££
by geographical market 
united kingdom 138074 93270
rest of europe 353964 129522
united states of america 16073 42897
rest of world – 1100
508111 266789
revenue by origin net assets and profit before interest and tax all relate to the uk
surface transforms plc
n n n n n n n n n n
22 notes to the financial statements
continued
3 expenses and auditors remuneration 2008 2007
££
operating loss before taxation is stated
after charging
depreciation of owned tangible fixed assets 49079 74083
research and development expensed as incurred 615617 560005
amortisation of patents and licences 1886 2218
rents payable under operating leases – land and buildings 50251 36463
exchange losses 2294 412
after crediting
exchange gains 2164 988
government grants 220652 176530
audit of these financial statements
amounts receivable by auditors and their associates in respect of
audit of financial statements pursuant to legislation 17450 18725
other services relating to taxation 7242 7875
government grants
grants received comprise revenue grants from dti and north west development agency
these are subject to making expenditure as stipulated in the grant applications and to audit of the claims
there are no unfulfilled conditions or contingencies associated with government assistance received
north west development agency grants have been received in full
4 remuneration of directors
the company considers key management personnel as defined in ias 24 “related party disclosures” to be
the directors of the company the aggregate amount of emoluments paid to directors in respect of
qualifying services during the year was £231644 2007 £238096 of this £84299 2007 £74886 was
made to the highest paid director and company pension contributions of £3898 2007 £3600 were made
to a money purchase scheme on his behalf
full disclosure of directors’ emoluments share options and directors’ pension entitlements which form part
of the package as well as remuneration and transactions is given in the report on directors’ remuneration
on pages 11 and 12
5 staff numbers and costs
the average number of persons employed by the company including directors during the year analysed
by category was as follows
number of employees
2008 2007
directors 6 6
other employees 14 11
20 17
the aggregate payroll costs of these persons were as follows
2008 2007
££
wages and salaries 624013 492217
social security costs 61685 52334
other pension costs see note 16 19497 12568
705195 557119
surface transforms plc
n n n n n n n n n n
23 notes to the financial statements
continued
6 financial income 2008 2007
££
bank interest receivable 67347 59845
7 taxation
analysis of credit in year
2008 2007
£ £
uk corporation tax
research and development tax repayment 156394 136017
income tax credit 156394 136017
details of the unrecognised deferred tax asset are included in note 13 
factors affecting the tax credit for the current period
the current tax credit for the year is lower 2007 lower than the standard rate of corporation tax in the uk
of 28 2007 30 the differences are explained below
2008 2007
reconciliation of effective tax rate £ £
loss for the year 594065 646422
total income tax credit 156394 136017
loss excluding income tax 750459 782439
current tax at average rate of 2967 2007 30 222661 234732
effects of
nondeductible expenses 632 3118
reduction in tax rate 38861 –
change in unrecognised timing differences 4976 41302
current year losses for which no deferred tax recognised 178192 272916
tax incentives 156394 136017
income tax credit see above 156394 136017
the corporation tax rate applicable to the company has changed from 30 to 28 with effect from 1 april
2008
factors that may affect future tax charges 
the effective tax rate in future years is expected to be below the standard rate of corporation tax in the uk
due principally to historical losses which have been carried forward
surface transforms plc
n n n n n n n n n n
24 notes to the financial statements
continued
8 intangible assets patents and
licences
£
cost
at 1 june 2006 31 may 2007 and 31 may 2008 16637
amortisation
at 1 june 2006 12533
charge for year 2218
at 31 may 2007 14751
charge for year 1886
at 31 may 2008 16637
net book value
at 1 june 2006 4104
at 31 may 2007 1886
at 31 may 2008 –
9 property plant and equipment
assets in the
course of leasehold plant and fixtures and motor
construction improvements machinery fittings vehicles total
£££ ££ £
cost
at 1 june 2006 44216 – 320966 10470 28660 404312
additions – 47315 127092 18975 – 193382
at 31 may 2007 44216 47315 448058 29445 28660 597694
additions – 16453 118687 7459 – 142599
disposals and write offs – – 203290 7335 – 210625
at 31 may 2008 44216 63768 363455 29569 28660 529668
depreciation 
at 1 june 2006 – – 215386 9452 9318 234156
charge for year 44216 1454 18198 3050 7165 74083
at 31 may 2007 44216 1454 233584 12502 16483 308239
disposals and write offs – – 203290 7335 – 210625
charge for year – 5557 31582 4775 7165 49079
at 31 may 2008 44216 7011 61876 9942 23648 146693
net book value
at 1 june 2006 44216 – 105580 1018 19342 170156
at 31 may 2007 – 45861 214474 16943 12177 289455
at 31 may 2008 – 56757 301579 19627 5012 382975
surface transforms plc
n n n n n n n n n n
25 notes to the financial statements
continued
10 inventories 2008 2007
££
raw materials and consumables 28059 96838
work in progress 230815 115343
258874 212181
raw materials consumables and changes in finished goods and work in progress recognised as cost of sales
in the year amounted to £252874 2007 £138955
11 trade and other receivables 2008 2007
££
trade receivables 160954 114706
other receivables 86475 129786
prepayments and accrued income 45494 45084
292923 289576
all receivables fall due within one year
12 trade and other payables amounts falling due within one year
2008 2007
£ £
trade payables 171620 200495
taxation and social security 19723 17575
accruals and deferred income 83309 40941
274652 259011
13 deferred tax
the elements of deferred taxation are as follows
2008 2007
££
difference between accumulated depreciation and 
amortisation and capital allowances 17810 5866
other short term timing differences 2572 1296
tax losses 566180 538737
unrecognised deferred tax asset 550942 545899
the company has an unrecognised deferred tax asset at 31 may 2008 of £550942 2007 £545899
relating principally to tax losses which the company can offset against future taxable profits from the same
trade
the deferred tax asset has not been recognised in the accounts because it is not possible to assess whether
there will be suitable taxable profits from which the future reversal of the underlying temporary differences
can be deducted
surface transforms plc
n n n n n n n n n n
26 notes to the financial statements
continued
14 called up share capital 2008 2007
££
authorised
20000000 ordinary shares of £001 each 200000 200000
allotted called up and fully paid
19030748 shares 2007 14030748 of £001 each 190308 140308
enterprise management incentive scheme
the company operates a share incentive scheme for the benefit of the directors and certain employees all
options are granted at the discretion of the board the scheme grants options to purchase ordinary shares
of £001 each no options were exercised in the period
the options granted to directors date of grant and exercise price and exercise periods under the scheme
are set out in the report on directors’ remuneration on pages 11 and 12 in addition to the directors’ share
options certain employees have been granted the following options
number of
unexpired share
date of grant options at year end exercise price exercise period
191202 30301 £070 191205191212
080304 40000 £0665 080307080314
040405 35000 £050 040408040415
140905 215000 £040 140908140915
180407 195000 £021 180410180417
there are a total of 515301 unexpired options held by employees and a total of 671663 unexpired options
held by directors
15 share premium and reserves share premium capital profit and
account reserve loss account
££ £
at 1 june 2006 4902715 463885 3509803
retained loss for the year – – 646422
reversal of charge in relation to share based payments – – 62375
at beginning of year 4902715 463885 4093850
retained loss for the year – – 594065
share issue 847237 – –
reversal of charge in relation to share based payments – – 56609
at end of year 5749952 463885 4631306
surface transforms plc
n n n n n n n n n n
27 notes to the financial statements
continued
16 pension scheme
the company contributes to specific employees’ personal pension schemes the pension cost charge 
for the year represents contributions payable by the company to the scheme and amounted to £19497
2007 £12568
there were outstanding contributions of £nil 2007 £nil at the end of the financial year
17 analysis of cash flows 2008 2007
££
returns on investments and servicing of finance
interest received 67347 59845
capital expenditure and financial investment
purchase of tangible fixed assets 142599 193382
18 related party disclosures
the results of the company include the following transactions with related parties
2008 2007
companyentity relationship purchase £ £
april training executive ltd jj faria is a director and administrative services – 1174
has a controlling interest
all purchases from related parties are conducted on an arms length basis under normal commercial trading
terms
19 loss on ordinary shares
the calculation of basic loss per ordinary share is based on the loss for the financial year divided by the
weighted average number of shares in issue during the year
losses and number of shares used in the calculations of loss per ordinary share are set out below
basic
2008 2007
££
loss after tax 594065 646422
weighted average number of shares 17828562 14030748
loss per share 333p 461p
the calculation of diluted loss per ordinary share is identical to that used for the basic loss per ordinary
share this is because the exercise of options would have the effect of reducing the loss per ordinary share
from continuing operations and is therefore not dilutive under the terms of ias33
surface transforms plc
n n n n n n n n n n
28 notes to the financial statements
continued
20 derivatives and other financial instruments
the company’s policies with regard to financial instruments are set out within the accounting policies note
the risks arising from the company’s financial assets and liabilities are set out below with the policies for
their respective management
currency risk
the company transacts business in foreign currencies and therefore incurs some transaction risk
the company had no open foreign exchange contracts at the balance sheet date
the company’s exposure to foreign currency risk was as follows this is based on the carrying amount for
monetary financial instruments
31 may 2008 31 may 2007
us dollar euro sterling us dollar euro sterling
£££ ££ £
cash and cash equivalents – – 1112719 – – 878971
trade receivables – 56803 104151 13407 3698 97601
trade payables 19531 – 152089 3365 4686 192444
net exposure 19531 56803 1064781 10042 988 784128
average rate reporting date spot rate
2008 2007 2008 2007
us dollar 2006 1921 1976 1978
euro 1385 1479 1273 1472
sensitivity analysis
a one percent strengthening of the pound against the us dollar and the euro at 31 may 2008 would have
decreasedincreased profit by the amounts below this analysis assumes that all other variables in
particular interest rates remain constant the analysis is performed on the same basis for 2007
us dollar euro
££
31 may 2008 178 516
31 may 2007 91 9
a one percent weakening of the pound against the us dollar and the euro at 31st may 2008 would have
an equal and opposite effect to the amounts shown above on the basis all other variables remain constant 
price risk
the company aims to minimise its exposure to supplier price increases and customer price decreases by
offsetting reciprocal supplier and customer arrangements
surface transforms plc
n n n n n n n n n n
29 notes to the financial statements
continued
20 derivatives and other financial instruments continued
credit risk
the company operates a closely monitored collection policy
the ageing of trade receivables at the reporting date was
31 may 2008 31 may 2007
gross impairment net net impairment net
£££ ££ £
not past due 151381 – 151381 99532 – 99532
past due 0 to 30 days 9264 – 9264 12219 – 12219
past due 31 to 90 days 5105 4796 309 12454 9499 2955
165750 4796 160954 124205 9499 114706
the movement in the allowance for impairment in respect of trade receivables was as follows
impairment
allowance
£
balance 1 june 2006 12439
impairment loss recognised 10428
increase in impairment allowance 7488
balance 31 may 2007 9499
impairment loss recognised 4703
balance 31 may 2008 4796
liquidity risk
the company’s objective is to maintain a balance between continuity and flexibility of funding through the
use of short term deposits
interest rate risk
the company has cash deposits of £1039603 2007 £750000these funds are placed on deposit at rates
which track and exceed bank base rate these deposits are reviewed at least every 30 days these funds are
available on demand at the year end the weighted average interest rate for the floating rate cash deposits
was the hbos base rate of 549 2007 490 barclays 
the company has no borrowings at 31 may 2008 2007 £nil the company does not undertake hedging
of interest rates
financial assets
the company has £1112719 2007 £878971 held in cash and deposits as financial assets as well as
short term debtors these cash deposits are placed on the money market and are available on demand 
financial liabilities
the company has no financial liabilities except for short term creditors
surface transforms plc
n n n n n n n n n n
30 notes to the financial statements
continued
20 derivatives and other financial instruments continued
fair values of the company’s financial assets and liabilities
the fair value of financial assets and liabilities together with the carrying amounts shown in the balance
sheet are as follows
2008 2007
carrying fair carrying fair
value value value value
££ £ £
financial assets
cash and cash equivalents 1112719 1112719 878971 878971
loans and receivables
trade receivables 160954 160954 114706 114706
total financial assets 1273673 1273673 993677 993677
financial liabilities at amortised cost
trade payables 171620 171620 200495 200495
other payables current 19723 19723 17575 17575
accruals 83309 83309 40941 40941
total financial liabilities 274652 274652 259011 259011
21 commitments
total future minimum commitments under noncancellable operating leases are as follows
land and land and
buildings buildings
2008 2007
££
operating leases which expire
within one year – –
in the second to fifth years inclusive 183509 233557
183509 233557
surface transforms plc
n n n n n n n n n n
31 notes to the financial statements
continued
22 share based payments
share options
the number of options outstanding under the company’s share option scheme is as follows
number of share options – ordinary shares at 1p
date from
at 31 at 31 exercise which expiry 
note may 2007 granted exercised lapsed may 2008 price exercisable date
a 171016 – – 12143 158873 70p 19122005 19122012
a 34091 – – – 34091 88p 08122006 08122013
a 80000 – – 20000 60000 665p 08032007 08032014
a 85000 – – – 85000 50p 04042008 04042015
a 444000 – – 20000 424000 40p 14092008 14092015
a 334125 – – 20000 314125 21p 18042010 18042017
b 110875 – – – 110875 21p 18042010 18042017
1259107 – – 72143 1186964
a these options have been granted under the emi approved scheme there have been no variations to
the terms and conditions or performance criteria attached to these share options during the financial
year there are no performance conditions attached to these shares other than continued employment
by the company
b these options have been granted under the unapproved scheme there have been no variations to the
terms and conditions or performance criteria attached to these share options during the financial year
there are no performance conditions attached to these shares other than continued employment by
the company
there was no cost payable by the employees on the grant of any of the above options
the option holder may only exercise his options during employment with the company
the movements of the emi and unapproved share options outstanding are shown below
emi scheme unapproved scheme
weighted weighted 
average average 
number exercise number exercise
of awards price of awards price
£ £
outstanding at 1 june 2005 445965 066 – –
granted 504000 040 – –
forfeited 55858 058 – –
outstanding at 31 may 2006 894107 052 – –
granted 334125 021 110875 021
forfeited 80000 053 – –
outstanding at 31 may 2007 1148232 043 110875 021
forfeited 72143 047 – –
outstanding at 31 may 2008 1076089 041 110875 021
exercisable at 31 may 2008 337964 066 – –
range of exercise prices 021 to 088 021
weighted average remaining contractual life 7 years 3 months 8 years 11 months
surface transforms plc
n n n n n n n n n n
32 notes to the financial statements
continued
22 share based payments continued
included within the emi share options balance are options over 205107 2007 205107 shares that have
not been recognised in accordance with ifrs2 because either they were granted on or before 7 november
2002 or that they had vested prior to the effective date on 1 june 2006 these options have not been
subsequently modified and therefore do not need to be accounted for in accordance with ifrs 2
there were no share options exercised during the year 2007 nil
a charge of £56609 2007 £62375 has been made in the profit and loss account to spread the fair value
of the options over the 3 year service obligations of those incentives
assumptions used in the valuation of share based options
in calculating the fair value of the share based payment arrangements the company has used the black
scholes method the fair value of the share options granted in 2007 and the assumptions used of their fair
value on the date of grant were as follows
weighted average assumptions 2008 2007
fair value per share option na 159p
share price on date of grant na 20p
exercise price na 21p
share options granted in the year emi na 334125
share options granted in the year unapproved na 110875
expected volatility na 100
exercise pattern years na 310 years uniformly
expected dividend yields na 0
risk free rate of return na 450
no share options were granted in the year to 31 may 2008
the fair value of the share options is applied to the number of options that are expected to vest which takes
into account the expected and actual forfeitures over the vesting period as a result of cessation of
employment
expected volatility was determined by assessing the company’s historic data and the market the company
operates in
23 capital management
the board’s policy is to maintain a strong capital base so as to maintain investor creditor and market
confidence and to sustain future development of the business the board of directors monitors the return
on capital defined as net operating income divided by total shareholders’ equity
at present employees and directors hold 21 of the share capital assuming all outstanding share options
are exercised
shares issued in the year totalled £897237 there were no changes in the company’s approach to capital
management in the year
24 ifrs restatement information
the company’s financial statements for the year ended 31 may 2008 are the company’s first annual
statements in compliance with adopted ifrss 
there are no material differences between the figures previously presented under uk gaap and their
restatement to adopted ifrss
surface transforms plc
n n n n n n n n n n
33 company information and advisers
for the year ended 31 may 2008
websites wwwsurfacetransformscom and wwwsystemsstcom 
registered number 03769702
directors kevin d’silva nonexecutive chairman
dr kevin johnson managing director
julio joseph faria nonexecutive director
geoffrey gould sales and marketing director
professor david thomas clark nonexecutive director
kenneth michael baker nonexecutive director
address unit 4
olympic park
poole hall road
ellesmere port
cheshire ch66 1st
tel 0151 356 2141
nominated adviser john east  partners limited
10 finsbury square
london ec2a 1ad
brokers john east  partners limited
10 finsbury square
london ec2a 1ad
redmayne bentley 
1 skipton road
ilkley ls29 9eh
auditors kpmg audit plc
st james’ square
manchester m2 6ds
solicitors to the company halliwells llp
3 hardman square
spinningfields
manchester m3 3eb
bankers barclays bank plc
125 main street
frodsham
cheshire wa6 7ad
bank of scotland plc
the mound
edinburgh eh1 1yz
registrars capita registrars
northern house
woodsome park
fenay bridge
huddersfield hd8 0ga
wwwcapitaregistrarscom
surface transforms plc
n n n n n n n n n n
34 notice of annual general meeting
for the year ended 31 may 2008
notice is hereby given that the annual general meeting of the company will be held at the offices of
halliwells llp 3 hardman square spinningfields manchester m3 3eb on 28 october 2008 at 1130am the
business of the meeting will be
ordinary business
1 to receive consider and adopt the audited accounts for the year ended 31 may 2008 and the reports of the
directors and auditors thereon
2 to reelect julio faria who is retiring by rotation in accordance with article 113 as a director of the
company
3 to reelect kevin d’silva who is retiring by rotation in accordance with article 113 as a director of the
company
4 to reappoint kpmg audit plc as auditors of the company and to authorise the directors to fix their
remuneration
5 to approve the directors’ remuneration report
special business
to consider and if though fit to pass the following resolutions which will be proposed as to resolution 6 as an
ordinary resolution and as to resolution 7 as a special resolution
6 that in substitution for all existing and unexercised authorities and powers the directors of the company
be and they are hereby generally and unconditionally authorised for the purpose of section 80 of the
companies act 1985 the “act” to exercise all or any of the powers of the company to allot relevant
securities within the meaning of section 802 of the act up to a maximum nominal amount of £63436
to such persons at such times and generally on such terms and conditions as the directors may determine
subject always to the articles of association of the company provided that this authority and power shall
unless previously renewed varied or revoked by the company in general meeting expire at the conclusion
of the next annual general meeting or 15 months after the passing of this resolution if earlier and provided
further that the directors of the company may before the expiry of such period make an offer or agreement
which would or might require relevant securities to be allotted after the expiry of such period and the
directors of the company may allot relevant securities in pursuance of such offer or agreement as if the
authority conferred hereby had not expired
7 that subject to and conditional upon the passing of resolution 6 and in substitution for all existing and
unexercised authorities and powers the directors of the company be and are hereby empowered pursuant
to section 95 of the act to allot equity securities as defined in section 94 of the act pursuant to the
authority conferred upon them by resolution 6 as if section 891 of the act did not apply to any such
allotment provided that this authority and power shall be limited to
a the allotment of equity securities in connection with a rights issue or similar offer in favour of ordinary
shareholders where the equity securities respectively attributable to the interest of all ordinary
shareholders are proportionate as nearly as may be to the respective numbers of ordinary shares held
by them subject only to such exclusions or other arrangements as the directors of the company may
consider appropriate to deal with fractional entitlements or legal and practical difficulties under the
laws of or the requirements of any recognised regulatory body in any territory and
surface transforms plc
n n n n n n n n n n
35 notice of annual general meeting
continued
b to the allotment otherwise than pursuant to subparagraph a above of equity securities up to an
aggregate nominal amount of £19031 representing approximately 10 of the current issued share
capital of the company
and shall expire on the date of the next annual general meeting of the company or if earlier 15 months
from the date of the passing of this resolution save that the company may before such expiry make an offer
or agreement which would or might require equity securities to be allotted after such expiry and the
directors of the company may allot equity securities in pursuance of such offer or agreement as if the
power conferred hereby had not expired
by order of the board
g v hall
company secretary
dated 23 september 2008
registered office
unit 4
olympic park
poole hall road
ellesmere port
cheshire ch66 1st
notes
1 a person entitled to attend and vote at this meeting is entitled to appoint one or more proxies to attend and on a poll
vote in hisher stead a proxy need not be a member of the company appointment of proxies does not preclude
members from attending and voting at the meeting should they wish to do so
2 to be valid the instrument appointing a proxy must be deposited at the office of the company’s registrars capita
registrars proxy department the registry 34 beckenham street beckenham kent br3 4tu not less than 48 hours
before the time of the meeting
3 copies of the directors’ contracts of service with the company will be available for inspection during normal business
hours on any week day at the registered office of the company from the date of this notice until the annual general
meeting and on the day of the annual general meeting at the place of the meeting from 15 minutes prior to its
commencement until its conclusion
4 as permitted by regulation 41 of the uncertificated securities regulations 2001 the company specifies that only those
shareholders of the company on the register at close of business on 26 october 2008 shall be entitled to attend or vote
at the meeting in respect of the number of shares registered in their name at the time changes to the register of
members after 26 october 2008 shall be disregarded in determining the rights of any person to attend or vote at the
meeting
5 crest members who wish to appoint a proxy or proxies by utilising the crest electronic proxy appointment service
may do so by utilising the procedures described in the crest manual crest personal members or other crest
sponsored members and those crest members who have appointed a voting service providers should refer to their
crest sponsor or voting service providers who will be able to take the appropriate action on their behalf
in order for a proxy appointment made by means of crest to be valid the appropriate crest message must be
transmitted so as to be received by the company’s agent capita registrars whose crest id is ra10 by the specified
latest times for receipt of proxy appointments for this purpose the time of receipt will be taken to be the time as
determined by the timestamp applied to the message by the crest applications host from which the company’s agent
is able to retrieve the message by enquiry to crest in the manner prescribed
the company may treat as invalid a crest proxy instruction in the circumstances set out in regulation 355a of the
uncertificated securities regulations 2001
surface transforms plc
n n n n n n n n n n
36 printed by michael searle  son limited


Summary:
 chairman’s statement
for the year ended 31 may 2008
in the 12 months to 31 may 2008 the company has achieved its financial targets for the year and has also met
a number of the strategic and operating milestones that the management had set themselves
the company started the 200809 financial year with a record order book four automotive brake systems clients
that are ordering brake discs on a regular basis and improved prospects for further growth in the business the
key achievements for the period under review were
l receipt of a 4 year £300000 to £400000 pa initial contract with a leading global brake systems group
for the supply of carbon fibre brake discs 
l award of a £150000 3 year development contract with mbda a world leading missile manufacturer jointly
owned by bae systems eads and finmeccanica
l unit costs of ceramic brake discs are now 20 lower than levels in may 2007
l the commencement of a development contract with a new us based aircraft brake system supplier which
currently supplies both commercial and defence aircraft
l fundraising amounting to £897000 net of expenses by the issue of new ordinary shares at 20 pence per
share as announced in july 2007 
financial review
in the 12 months to 31 may 2008 revenue was £508111 2007 £266789 this represents a 90 increase on
the same period in 2007 increased automotive brake disc revenues account for most of the increase and now
represents over 80 of the company’s revenue
at 31 may 2008 the outstanding order book was £302124 2007 £126097
losses after taxation for the 12 months period were £594065 2007 £646422 
earnings per share was a loss of 333 pence per share 2007 461pence per share
during the year the company raised £897000 by way of an issue of ordinary shares at 20 pence per share
shareholder funds at 31 may 2008 were £1722839 2007 £1413058 and this included cash deposits of
£1112719 2007 £878971
capital expenditure during the year amounted to £142599 2007 £193382
the company has no borrowings
developments
at present the company is currently in advanced discussions regarding a supply contract with a leading
european supplier of braking systems to the aftermarket industry a further announcement regarding this will be
made in due course
in addition in april 2008 the company signed a four year supply agreement to supply carbon fibre brake discs
to a global automotive brake system supplier
the directors believe based on forecasts prepared by the brakes system supplier that this contract could generate
additional revenues of approximately £300000 to £400000 per annum over the life of the agreement and that
the company has sufficient manufacturing capacity to meet this demand this agreement demonstrates that
surface transforms has the expertise in advanced carbon fibres and industrial fabrics which can provide a
competitive edge in composite brake technology and takes the company’s leadingedge products into the
forefront of the international automotive performance brake market 
surface transforms plc
n n n n n n n n n n
3 chairman’s statement
continued
people
the board would like to thank management and staff who have all contributed to the progress the company has
made during the year we continue to incentivise executives with share options as we wish to align their rewards
with those of shareholders
outlook
we envisage further progress during the coming year
the board believes that surface transforms has established itself as an industry operator with world class
technology the commercial and development contracts which have been signed in the past year underline this
reputation
in spite of the widely reported slowdown in world consumer and industrial markets the company continues to
improve its order book the board anticipates that the revenue growth experienced in 200708 will continue
kevin d’silva
chairman
16 september 2008
surface transforms plc
n n n n n n n n n n
4