Interim Management Statement

26 July 2012

("Torotrak" or the "Company")

Annual General Meeting and Interim Management Statement

for the first quarter ended 30 June 2012

Torotrak today publishes its Interim Management Statement for the first quarter of its financial year, which includes the trading update to be delivered today at the Company's Annual General Meeting.

Since reporting final results for the year to 31 March 2012, progress has been encouraging, with advances in prospects across our three key focus areas:

Main drive transmissions for Commercial Vehicles

We are delighted to announce that Allison Transmission Inc. ("Allison") has agreed an advance commitment of £2.5 million against its final £10.62 million option, which will be paid in early August 2012. The final option, exercisable in 2013, would secure its exclusivity rights for main drive transmission applications in commercial vehicles (such rights to co-exist with our other two commercial vehicle licensees, Tata Motors and the European Truck and Bus Manufacturer ("ETBM"). We have also agreed that up to £1.25 million of engineering support will be included within these licence payments, so that Torotrak will play an active and supportive role in Allison's route to production.

This arrangement highlights the close and constructive working relationship that we have developed with Allison, as well as its confidence in a successful outcome towards full commercialisation.

Regarding our European Truck and Bus Customer ("ETBM") programme, the "further testing" that we reported previously has concluded, with very positive results. These show that the fuel economy benefits from Torotrak's technology extend further into their vehicle range, to those vehicles designed for longer haul cycles. This presents a stronger opportunity than previously thought.

V-Charge - variable single solution to provide boost for smaller engines

We have undertaken further vehicle demonstrations with some notable international vehicle manufacturers, as well as potential Tier 1 and Tier 2 manufacturing and supply chain partners. The response from these drive events has been encouraging. The V-Charge unit clearly delivers the prized rapid vehicle response time that vehicle manufacturers require for downsized engines, which are crucial to meeting industry CO2 targets. Through these drives and presentations, we have confirmed that the unit is attractive in terms of its cost, benefits and low noise relative to other solutions. We see significant strengthening of interest in this application.

M-KERS - affordable mechanical hybrids

Results from recent testing on the "Flybus" M-KERS equipped city bus are currently being evaluated. Although we are not yet presenting a headline fuel economy result, it is clear from the development work on this early version hardware that M-KERS can deliver material fuel savings with a fully configured system. Our priority now is on next stage hardware with representative flywheel and variator components, and progressing to fleet trials with bus operators. We will report further on this on or before our half year results in November.

Other

We continue to strengthen the supply base for components, fluids and sub systems for Torotrak licensees.

At the Annual General Meeting, Dick Elsy and Jeremy Deering will give presentations on the Company and copies will be available on the Company's web site (www.torotrak.com) later today. No new material information is contained in the presentations.

Dick Elsy, Torotrak's CEO, said:

"We are making good progress in our key programmes, with strong interest being shown in our new products, which are capable of providing additional routes to market outside main drive transmissions."

Jeremy Deering, Torotrak's Director responsible for commercial development said:

"Our prospects in the Commercial Vehicle market continue to grow, bolstered by this latest sign of confidence from our major licensee, Allison Transmission Inc, which has today committed a further £2.5 million in licence and engineering fees. This is an advance against a final £10.62 million option to secure exclusivity in its licensed field of commercial vehicle main drive transmissions, co-existing with our other two licensees in this area.

"Fuel economy testing on both of our commercial vehicle main drive transmission programmes shows strong benefits, even in some of the longer haul cycles, which opens up wider market opportunities than previously thought."

For more information, please visit www.torotrak.com or contact:

Notes to Editors

Torotrak is the global innovator in gearless traction drive technology to reduce CO2 emissions in vehicles. Our technology substantially improves fuel economy in vehicles, harnesses the power of supercharging to reduce engine size and enables waste energy to be recovered efficiently through flywheels.

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