Trading and Operations Update

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Surface Transforms plc

("Surface Transforms" or the "Company")

Trading & Operational Update

Surface Transforms (AIM: SCE) provides the following trading update for the six months to 30 November 2017.

The Company is pleased to report that revenues and cash are in line with management expectations. Revenues for the period will be in excess of £575k (2016: £327k). The cash balance will be in excess of £2.5m (2016: £2.7m) to which can be added an expected R&D tax credit in excess of £500k, expected to be received in December 2017.

The Company expects to report its interim results for the six months ended 30 November in February 2017.

Progress with Potential OEM Customers

The Company continues to test products with customers as described in recent announcements. Discussions with OEMs on model introduction dates continue; overall progress is in line with management expectation. OEM3 has again postponed the date for the VDA 6.3 audit as we understand they would prefer to conduct the VDA 6.3 audit coterminous or shortly after the conclusion of all product tests. OEM3 still has time to undertake the audit before the nomination date for the target model. It now seems likely that the Company will be audited in early 2018. Management are optimistic they will meet the VDA 6.3 standards when audited by OEM3 next year.

Progress with New Capital Equipment

The Knowsley factory is operating satisfactorily. The first new major furnace is being commissioned on-site with final sign off expected (after a number of production runs) in Q1 2018. The second major furnace has been fully tested at the supplier's premises, witnessed by the Company's engineers, and following a final commissioning run it will then be dismantled for shipment to Knowsley. The delivery and rebuild is expected to be completed in Q1 2018. These two furnaces are the most significant items in the capital expenditure programme. All other items are repeat purchase and installation of existing processes and equipment.

Short Term Outlook

The Company continues to expect revenues, margins and cash balances for the remainder of the 2017-18 financial year to be in line with market expectations.

For enquiries, please contact:

Surface Transforms plc

Kevin Johnson, CEO +44 151 356 2141

David Bundred, Chairman

Cantor Fitzgerald Europe (Nomad & Joint-Broker) +44 20 7894 7000

David Foreman / Callum Butterfield (Corporate Finance)

Alex Pollen (Sales)

finnCap Ltd (Joint-Broker) +44 20 7220 0500

Ed Frisby / Giles Rolls (Corporate Finance)

Stephen Norcross / Richard Chambers (Corporate Broking)

For further Company details, visit www.surfacetransforms.com