Surface Transforms Regulatory News (SCE)

18 February 2016

Surface Transforms Plc

("Surface Transforms" or the "Company")

Announcement of grant income of £600,000 and new factory

Surface Transforms, (AIM: SCE) manufacturers of carbon fibre reinforced ceramic (CFRC) materials, announces that it has accepted an offer of financial support from Liverpool City Region Oganisations and has subsequently signed heads of terms for a lease on a new factory.

Surface Transforms has been offered and accepted an offer from Merseyside Special Investment Fund of a combined package of £500,000 financial support via the Regional Growth Fund comprising £200,000 grant and a zero interest loan of £300,000. The loan is repayable in accelerating amounts from May 2019 to May 2022. In addition, Knowsley Council has also offered financial support to establish the new factory.

A condition of the grant is that the planned factory expansion is in the Liverpool City Region. The Company is therefore pleased to announce that it has signed heads of terms with the owners of an existing building on the Knowsley Business Park . The agreement covers a site of 2.1 acres with total building footprint of 55,000 ft2, which the Company will occupy in two phases, 30,000 ft2 from September 2016 and the remaining 25,000 ft2 from September 2019. The current site in Ellesmere Port of 12,000 ft2 will be vacated when the lease expires in early 2017.

The planned expansion is the footprint required for the capacity increase to deliver on the Company's sales pipeline.

Kevin Johnson, Chief Executive Officer said: "These announcements are a significant milestone in the development of the Company. The recent half year statement included details of one aerospace and five automotive "game changing" contracts which, if all were successfully concluded, would in total, build up to £15m p.a. of sales in the period 2018 to 2020. Our current site is insufficient for a Company of that size and we have therefore been searching for a new site which can both cope with this "pilot plant" demand level as well as providing further space for target sales beyond £15m p.a. in subsequent years. It is pleasing that we can provide this update to both prospective customers and shareholders."

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For further Company details, visit www.surfacetransforms.com