Source - RNS
RNS Number : 1547J
Strat Aero PLC
26 June 2017
 

Market Abuse Regulation (MAR) Disclosure

 

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 

Strat Aero plc / Index: AIM / TIDM: AERO / Sector: Support Services

26 June 2017

Strat Aero plc ("Strat Aero", the "Company" or the "Group")

Final Results

 

Strat Aero Plc, the AIM quoted international aerospace company focused on the Unmanned Aerial Vehicle ("UAV") sector, is pleased to present its audited final results for the year ended 31 December 2016.

 

The Annual Report & Accounts for the year ended 31 December 2016 ("Annual Report") will be sent to shareholders today together with a notice convening a General Meeting ("GM").  The Annual Report and the notice of GM are available on the Company's website at www.strat-aero.com.

 

The GM will be held at the offices of Hill Dickinson, 8th Floor, The Broadgate Tower, 20 Primrose Street, London EC2A 2EW on 28 July 2017 at 11:00 a.m.

 

OVERVIEW

 

·     Strategy to focus on core business divisions - Training & Education and Survey & Inspection, beginning to yield results for the Group

·     99% increase in full year revenue to US$862,988 (2015: US$433,001) primarily due to the full year impact of the acquisition of Geocurve, a specialist in the provision of UAV operated surveys and inspection services to a blue-chip customer base

·     72% increase in gross profit to US$593,079 (2015: US$345,747)

·     41% reduction in loss after taxation to US$3,524,476 (2015: US$5,931,933)

·     US$1.58 million raised pre-expenses in share placings post period end to strengthen balance sheet

 

Iain McLure, CEO of Strat Aero plc, commented, "Following my appointment as CEO part-way through the financial year, Strat Aero implemented a revised strategy for the Company designed to maximise our key strengths, skills and revenue opportunities whilst simultaneously diverting from non-core activities and reducing Strat Aero's overall cost base.  Progress has been made in this regard over the course of 2016, however this strategy is expected to have maximum impact for the Group in 2017 and in line with this, operations and performance in recent months have been encouraging.  I view this as testament to the professionalism and quality of our people, a successful turnaround strategy and also a line under the disappointing performance of the previous two years during which Strat Aero was subject to an acquisition policy which overstretched the Company's balance sheet and management resources.

 

"I am confident that by focussing on Strat Aero's two highly complementary business divisions: Training & Education and Survey & Inspection, we have a robust business model capable of providing investors with exposure to the exceptional growth potential of UAVs and the ability to deliver meaningful shareholder value.  I look forward to providing further updates throughout the year as we continue to deliver on this strategy."

 

CHAIRMAN'S STATEMENT

 

Looking back on 2016, it seems that the papers were peppered with news relating to 'drones', or as they are more widely referred to in the business, 'Unmanned Aerial Vehicles ("UAVs")'.  Aside from the obvious military uses, UAVs are increasingly becoming part of our everyday lives, most famously illustrated by Amazon and the launch of its widely publicised 'Amazon Prime Air' service in December 2016.   We note that most recently, UAVs have been used to deliver defibrillators to people suffering cardiac arrest - where every minute which passes between onset of attack and defibrillation reduces survival rates by 10%.  The need for an immediate response therefore, which UAVs can provide, is clearly evident. 

 

However, the uptake in UAV use has also created some unique challenges - for instance, in 2016 it was reported that there were over 70 near-misses between UAVs and passenger aircraft near Heathrow alone.  These reports clearly highlight the critical requirement for more widely-adopted regulations, permitting, understanding and most significantly professional training when it comes to UAV usage, as it is a common belief that UAVs will increasingly become part of the fabric of day to day life across the globe.

 

So where does Strat Aero fit in to this mix?  Between Amazon and recreational UAV users, there are a whole host of commercial applications for UAVs and this is the market we are targeting.  We have a dual approach for maximising market penetration which is as follows:

 

1.    Training & Education

As UAV technology matures and devices become both more cost-effective and more capable, individual users and organisations are looking for training solutions that enable them to operate UAVs in a broad range of settings.  Recognised by the UK's Civil Aviation Authority as a National Qualified Entity for UAV training design and delivery, we have developed a range of professional training solutions for both commercial and public-sector clients.

 

2.    Survey & Inspection

Strat Aero, through its wholly owned subsidiary Geocurve, is a specialist in providing survey and inspection services using UAVs, as well as using ground- and water-based survey equipment.  Our goal is to deliver exactly the analysis that our clients require to maximise the productivity of their teams and minimise asset downtime.

 

Looking specifically at the progress made in the two areas highlighted above in 2016 and in recent months, the key development in the Training & Education business was the formal grant of National Qualified Entity ('NQE') status by the UK's Civil Aviation Authority ('CAA').  This was a pivotal development in the commercialisation of our training programmes as in order to apply for a UAV pilot's licence, individuals need to show that they trained at an NQE certified centre.  We saw this recognition of our services by the CAA as an endorsement of our training programmes and independent confirmation of the quality of our suite of commercial teaching courseware.

 

The grant of NQE status coincided with the launch of several new training initiatives including the Applied Unmanned Technology Qualification ('AUTQ'), a course for professional trainers and pilots. It is unique in its comprehensive focus on safety, industrial applications and real flying skills.  Unlike many training organisations, Strat Aero flies its own commercial UAV fleet to deliver inspection and survey services to clients - which means that real-world learnings can be embedded directly into our training materials.  The driving factor behind the development of Strat Aero's AUTQ programme has been the need for high level training for operators providing professional services to commercial clients. Strat Aero's training has an emphasis on hands-on flight training and a unique focus on training operators for their chosen commercial application.

 

Having already developed our proprietary commercial UAV training application, we are busy rolling-out our offering via a capital light strategy, centred on adopting a franchise model with suitable partners.  We have now demonstrated the success of this model through our agreement with Hong Kong based I-Coach to roll-out our training programmes in Hong Kong, and the Taiwanese Republic of China.  Our parallel agreement with the Lim Kok Wing University of Creative Technology is running slower than planned and we anticipate running the first "train the trainer" course in Kuala Lumpur in July 2017.  Whilst disappointing, this delay is not expected to have an impact on full year 2017 projections.  

 

Post period end, our first formal AUTQ course in Taiwan was successfully completed.  The course ran for two weeks and was managed and taught by Mark Wharry, our Director of Training, who is a leading instructor in the UAV industry.  In association with the Taiwanese Unmanned Aerial Systems Development Association, Mark successfully trained 24 candidates in a 'train the trainer' style course.  These candidates have since graduated at a formal ceremony in Taipei, attended by many local businesses and government dignitaries.  We are proud to be able to bring our skills and expertise to Taiwan, to work with the TWUAS Development Association and be at the forefront of creating a new and exciting industry in the country.

 

Looking now to our Survey & Inspection services offering, this is conducted through our subsidiary Geocurve.  Growth on this side of the business continues to develop organically through existing contracts with major blue-chip companies and government agencies.  The most significant recent contract win was the CH2M contract to work on the Thames 2100 Flood Defence Project on behalf of the Environment Agency.  The contract was awarded in September 2016 after a rigorous competitive tender process and followed the successful completion of the Isle of Grain survey project where Geocurve combined multiple UAV flights, land-based surveys and bathymetric surveys to deliver a suite of video, orthomosaic photo, 3D model and survey products.

 

This is an ambitious project to be involved with - and one with enormous benefits for a large number of people as Thames 2100 Flood Defence Project is aiming to reduce the risk of tidal flooding for 1.25 million people and £200 billion worth of property by replacing and refurbishing the tidal flood defences.  TEAM2100 is an integrated and co-located team comprising the Environment Agency, global engineering company CH2M, and key supply chain partners and Strat Aero is delighted to be involved with such highly esteemed partners on this project.

 

Financial Overview

 

The Group recorded revenues of US$862,988 during the year ended 31 December 2016 (2015: US$433,001) generating a gross profit of US$593,079 (2015: US$345,747).  This significant increase is primarily due to the full year impact of the acquisition of Geocurve.  Costs in 2016 were inflated due to the one-off costs of US$314,567 arising from the legal action referred to below.

 

The loss for the year to 31 December 2016 after taxation was US$3,524,476 (2015: US$5,931,933). 

 

Following the acquisition of Aero Kinetics in December 2015, the Company filed a legal action on 1 April 2016 in Texas, USA against Mr W. Hulsey Smith ("Mr. Smith"), the vendor of Aero Kinetics on counts of fraud and breach of contract arising from misrepresentations made by Mr. Smith upon which the Company relied and were material in the Company's decision to acquire Aero Kinetics.  Strat Aero also terminated the services of Mr. Smith in relation to Aero Kinetics.   On 6 April 2016, the Company and its directors received a defence and counterclaim from Mr. Smith.  In September 2016, the Company settled all litigation and claims arising from its dispute with Mr. Smith.  Under the terms of the settlement, Strat Aero disclaimed any allegations of fraud against Mr. Smith and issued Mr. Smith 44,750,645 new Ordinary Shares, representing at the time approximately 11.75% of the Company's enlarged issued share capital then in issue.  Strat Aero also made a US$75,000 cash payment to Mr. Smith.

 

As a result of the settlement, both Strat Aero and Mr Smith are released from all current and future claims relating to the Company's acquisition of Aero Kinetics and all debt and loan obligations relating to the Company's acquisition of Aero Kinetics are deemed to have either been satisfied or written off.  Both parties agreed to dismiss all pending litigation between them. A net gain of US$129,476 was realised in 2016 following the successful settlement of this litigation. The Board took the prudent action to fully impair the investment in Aero Kinetics as at 31 December 2015 which amounted to an impairment charge of US$2,028,235 during the prior year.

 

Administrative expenses during the year amounted to US$4,189,598 (2015: US$4,180,769).  A large proportion of these costs comprised of wages and salaries, consultancy and professional fees, and travelling expenses and was attributable to both growth in headcount and business development activities arising from the prior acquisition strategy and also due to the one-off costs of the legal action referred to above.  This cost base is being rationalised in line with the new management's strategic priorities and administrative costs for 2017 are expected to be significantly lower than this.

 

Consolidated net (liabilities)/assets at 31 December 2016 amounted to US$(43,517) (2015: net assets of US$721,546).  Cash balances at the year end amounted to US$3,918 (2015: US$1,485,257).

 

During 2016, the Company attracted aggregate investment of US$2.89 million to implement the Group's operational plans, to settle the final deferred consideration for Geocurve and resolve the Aero Kinetics litigation.

               

Post year end the Company raised an additional US$1.58 million pre-expenses, through the issue of new shares to investors.

 

Outlook

The Strat Aero board is keen to draw a line under the performance of the previous two financial years, where, for a number of reasons which have been outlined previously, operational and financial performance was disappointing.  We have set ourselves an ambitious target to achieve run rate breakeven by the end of 2017 and therefore it is with careful optimism that we look to build on the encouraging trading outcomes that we have achieved so far in 2017 and advance the robust structure that we now have in place to prudently, efficiently and sustainably grow the Company.  We plan to utilise our existing skills and expertise to develop the Strat Aero business as a premium provider of commercial training for commercial UAV pilots and survey and inspection services for corporate and public clients.

 

Whichever way you look at it - UAVs are likely to become an even more integral part of our lives - and we are determined that Strat Aero will be a significant component in this rapidly growing industry.

 

Acknowledgments

On behalf of the Board, we would like to extend our thanks to our business partners, customers, associates and valued shareholders for their continued support throughout the period. 

 

Graham Peck

Executive Chairman

 

26 June 2017

 

Enquiries:

 

Strat Aero plc

Tel: +44 (0) 1293 804741

Graham Peck (Chairman)


SP Angel Corporate Finance LLP

Tel: +44 (0) 20 3470 0470

Nominated Adviser and Joint Broker


Stuart Gledhill

Jeff Keating


Beaufort Securities Limited

Tel: +44 (0) 20 7382 8300

Joint Broker


Elliot Hance


Cornhill Capital Ltd


Joint Broker


Colin Rowbury

Tel: +44 (0) 20 7710 9610

St Brides Partners Ltd

Tel: +44 (0) 20 7236 1177

Financial PR

Susie Geliher

Frank Buhagiar


 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2016

 

                                                          


Year
ended

2016

Year
ended

2015

Continuing operations

Note

   US$

   US$

Revenue

5

862,988

433,001

Cost of sales

6

(269,909)

(87,254)

Gross profit


593,079

345,747

Administration expenses

6

(4,189,598)

(4,180,769)

Gain on foreign exchange

6

3,292

130

Impairment

13

-

(2,028,235)

Operating loss


(3,593,227)

(5,863,127)

Finance costs

10

(43,441)

(68,812)

Finance income


34

6

Loss before income tax


(3,636,634)

(5,931,933)

Income tax expense

11

112,158

-

Loss for the year attributable to owners of the parent


(3,524,476)

(5,931,933)





Other Comprehensive Income




Items that may be subsequently reclassified to profit or loss:




Currency translation difference


53,029

7,581

Total comprehensive income for the year attributable to owners of the parent


(3,471,447)

(5,924,352)





Earnings per ordinary share attributable to owners of the parent during the year (expressed in cents per share)




Basic and diluted

12

(1.38)

(6.31)





The notes on pages 24 to 51 of the Annual Report form part of these Financial Statements.

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2016

 




 

2016

 

2015


Note


   US$

   US$

Non-current assets





Intangible assets

13


1,763,384

2,230,833

Property, plant and equipment

14


179,189

372,142

Total non-current assets



1,942,573

2,602,975

Current Assets





Inventories

16


-

88,488

Trade and other receivables

17


210,255

462,814

Cash and cash equivalents

18


3,918

1,485,257

Total current assets



214,173

2,036,559

Total assets



2,156,746

4,639,534






Equity attributable to owners of the parent





Share capital

19


4,130,803

2,292,836

Share premium

19


7,217,308

6,171,415

Other reserves

21


(751,486)

(574,010)

Translation reserve



17,111

(35,918)

Retained loss



(10,657,253)

(7,132,777)

Total equity



(43,517)

721,546






Current liabilities





Trade and other payables

22


1,323,866

1,956,798

Borrowings

23


98,688

390,000

Total current liabilities



1,422,5534

2,346,798

Non-current liabilities





Borrowings

23


417,555

1,211,036

Deferred tax liabilities

24


360,154

360,154

Total non-current liabilities



777,709

1,571,190

TOTAL LIABILITIES



2,200,263

3,917,988

TOTAL EQUITY AND LIABILTIES



2,156,746

4,639,534






The notes on pages 24 to 51 of the Annual Report form part of these Financial Statements.

 

PARENT COMPANY STATEMENT OF FINANCIAL POSITION

As at 31 December 2016

 




 

2016

 

2015


Note


   US$

   US$

Non-current assets





Intangible assets

13


92,520

155,421

Property, plant and equipment

14


2,575

4,172

Investment in subsidiary undertakings

15


1,177,957

1,413,434

Trade and other receivables

17


1,706,103

1,144,620

Total non-current assets



2,979,155

2,717,647

Current Assets





Trade and other receivables

17


74,928

175,455

Cash and cash equivalents

18


2,065

1,131,304

Total current assets



76,993

1,306,759

TOTAL ASSETS



3,056,148

4,024,406






Equity attributable to shareholders





Share capital

19


4,130,803

2,292,836

Share premium

19


7,217,308

6,171,415

Other reserves

21


105,612

283,088

Translation reserve



(627,680)

(261,437)

Retained loss



(8,658,527)

(6,389,216)

Total equity



2,167,516

2,096,686






Current liabilities





Trade and other payables

22


789,944

1,164,045

Borrowings

23


23


98,688

-

Total current liabilities



888,632

1,164,045

Non-current liabilities





Borrowings

23


-

763,675

Total non-current liabilities



-

763,675

TOTAL LIABILITIES



888,632

1,927,720

TOTAL EQUITY AND LIABILITIES



3,056,148

4,024,406

 

The notes on pages 24 to 51 of the Annual Report form part of these Financial Statements.

These Financial Statements were approved by the Board of Directors and authorised for issue on 30 June 2017 and were signed on its behalf by:

 

The loss for the financial year dealt with in the financial statements of the Parent Company, Strat Aero Plc, was US$2,269,311 (2015: loss of US$5,991,023). As permitted by Section 408 of the Companies Act 2006, no separate statement of comprehensive income is presented in respect of the Parent Company.

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2016

 


Attributable to owners of the parent


Share

capital

Share premium

Other reserves

Translation reserve

Retained

loss

Total


US$

US$

US$

US$

US$

US$

As at 1 January 2015

1,301,737

1,642,449

(856,384)

(68,582)

(1,200,844)

818,376

Loss for the year

-

-

-

-

(5,931,933)

(5,931,933)

Other comprehensive income for the year







Currency translation difference

-

-

-

32,664

-

32,664

Total comprehensive income for the year

-

-

-

32,664

(5,931,933)

(5,899,269)

Proceeds from shares issued

(net of costs)

911,625

4,067,429

-

-

-

4,979,054

Non cash share issues

79,474

461,537

283,730

-

-

824,741

Warrants exercised

-

-

(1,356)

-

-

(1,356)

Transactions with owners, recognised directly in equity

991,099

4,528,966

282,374

-

-

5,802,439

As at 31 December 2015

2,292,836

6,171,415

(574,010)

(35,918)

(7,132,777)

721,546








As at 1 January 2016

2,292,836

6,171,415

(574,010)

(35,918)

(7,132,777)

721,546

Loss for the year

-

-

-

-

(3,524,476)

(3,524,476)

Other comprehensive income for the year







Currency translation difference

-

-

-

53,029

-

53,029

Total comprehensive income for the year

-

-

-

53,029

(3,524,476)

(3,471,447)

Proceeds from shares issued

(net of costs)

1,213,885

222,953

83,391

-

-

1,520,229

Non cash share issues*

624,082

682,438

-

-

-

1,306,520

Warrants expired - Aero Kinetics**

-

-

(120,365)

-

-

(120,365)

Warrants expired - Other***

-

140,502

(140,502)

--

-

-

Transactions with owners, recognised directly in equity

1,837,967

1,045,893

(177,476)

-

-

2,706,384

As at 31 December 2016

4,130,803

7,217,308

(751,486)

17,111

(10,657,253)

(43,517)

 

The notes on pages 24 to 51 of the Annual Report form part of these Financial Statements.

 

* Non cash share issues comprise of issue of shares where no cash consideration was received.

** 'Warrants expired - Aero Kinetics' represents the expiry of warrants that were initially issued in the acquisition of Aero Kinetics by the Strat Aero Group. The warrants have expired on settlement of the Aero Kinetics related litigation.

*** Warrants expired - other' are warrants that have expired in the current financial year.

 


Attributable to equity shareholders


Share

capital

Share

 premium

Other

reserves

Translation

reserve

Retained

earnings

Total


US$

US$

US$

US$

US$

US$

As at 1 January 2015

1,301,737

1,642,449

714

(77,896)

(398,193)

2,469,811

Loss for the year

-

-

-

-

(5,991,023)

(5,991,023)

Other comprehensive income for the period


 

Currency translation difference

-

-

-

(183,541)

-

(183,541)

Total comprehensive income for the period

-

-

-

(183,541)

(5,991,023)

(6,174,564)

Proceeds from shares issued

(net of costs)

911,625

4,067,429

-

-

-

4,979,054

Non cash share issues

79,474

461,537

283,730

-

-

824,741

Warrants exercised

-

-

(1,356)

-

-

(1,356)

Transactions with owners, recognised directly in equity

991,099

4,258,966

282,374

-

-

5,802,439

As at 31 December 2015

2,292,836

6,171,415

283,088

(261,437)

(6,389,216)

2,096,686








As at 1 January 2016

2,292,836

6,171,415

283,088

(261,437)

(6,389,216)

2,096,686

Loss for the year

-

-

-

-

(2,269,311)

(2,269,311)

Other comprehensive income for the year







Currency translation difference

-

-

-

(366,243)

-

(366,243)

Total comprehensive income for the year

-

-

-

(366,243)

(2,269,311)

(2,635,554)

Proceeds from shares issued

(net of costs)

1,213,885

222,953

83,391

-

-

1,520,229

Non cash share issues

624,082

682,438


-

-

1,306,520

Warrants expired - Aero Kinetics††

-

-

(120,365)

-

-

(120,365)

Warrants expired - Other†††

-

140,502

(140,502)

-

-

-

Transactions with owners, recognised directly in equity

1,837,967

1,045,893

(177,476)

-

-

2,706,384

As at 31 December 2016

4,130,803

7,217,308

105,612

(627,680)

(8,658,527)

2,167,516

 

The notes on pages 24 to 51 of the Annual Report form part of these Financial Statements.

 

Non cash share issues comprise of issue of shares where no cash consideration was received.

†† 'Warrants expired - Aero Kinetics' represents the expiry of warrants that were initially issued at the acquisition of Aero Kinetics by the Strat Aero Group. The warrants have expired on settlement of the Aero kinetics related litigation.

††† Warrants expired - other' are warrants that have expired in the current financial year.

 

 


Note

Group 2016

US$

Group

2015

US$

Company 2016

US$

Company 2015

US$

Cash Flows from Operating Activities






Loss for the year before tax


(3,636,634)

(5,931,933)

(2,381,459)

(5,991,023)

Depreciation of property, plant and equipment


176,206

83,860

992

1,125

Amortisation of intangible assets


425,787

211,503

40,671

45,849

Share based payments


14,889

194,760

14,889

194,760

Impairments


-

2,028,235

1,218,651

4,477,659

Interest income


(34)

(6)

(15)

-

Finance costs


43,441

68,812

34,402

-

Foreign exchange on operating activities


71,484

173,467

(15,454)

59,886

Taxation


112,158

-

112,148

-

Decrease/(Increase) in inventories


-

(88,488)

-

-

Decrease/(Increase) in trade and other receivables


252,559

(139,144)

100,527

13,466

(Decrease)/Increase in trade and other payables


(314,832)

473,685

129,476

264,327

Cash used in operations


(2,854,976)

(2,925,249)

(745,172)

(933,951)

Interest expense

10

(43,441)

(68,812)

(34,402)

-

Net cash used in operating activities


(2,898,417)

(2,994,061)

(799,574)

(933,951)







Cash Flows used in Investing Activities






Purchases of intangible assets

13

(1,086)

-

-

-

Purchases of property, plant and equipment

14

-

(64,471)

-

(4,425)

Purchase of subsidiaries (net of cash acquired in the Group)


-

(970,177)

-

(980,643)

Interest income


34

6

15

-

Loans to subsidiary undertakings


-

-

(1,780,134)

(2,115,606)

Net cash used in investing activities


(1,052)

(1,034,642)

(1,780,119)

(3,100,674)







Cash Flows from Financing Activities






Net proceeds from borrowings


   98,688

244,881

98,688

-

Issue of shares, net of issue costs


1,520,229

5,165,927

1,520,229

5,165,927

Net cash generated from financing activities


1,618,917

5,410,808

1,618,917

5,165,927

Net (Decrease)/increase in cash and cash equivalents


(1,280,552)

1,382,105

(940,776)

1,131,302

Exchange losses on cash and cash equivalents


(200,787)

(3,665)

(188,463)

-

Cash and cash equivalents at beginning of year


1,485,257

106,817

1,131,304

2

Cash and cash equivalents at 31 December 2016


3,918

1,485,257

2,065

1,131,304







Major non-cash transactions

 

On 17 March 2016 the Company issued 4,575,209 new ordinary shares of 1p each as consideration for the conversion of US$390,000 of convertible loan notes.

 

On 13 July 2016 the Company issued 37,489,288 new ordinary shares of 1p each at a price of 1p, settling the outstanding balance due of £374,893 representing the final instalment in the acquisition of Geocurve.

 

On 29 September 2016 the Company issued 44,750,645 new ordinary shares of 0.1p each at a price of 0.7p in settlement of all litigation and claims arising from the AK dispute with Mr W. Hulsey Smith, the Chief Executive Officer of Aero Kinetics Holdings LLC.

 

On 28 November 2016 the Company issued 3,428,571 new ordinary shares of 0.1p each at a price of 0.35p in settlement of consulting fees liabilities amounting to £12,000.

 

 

The notes on pages 24 to 51 of the Annual Report form part of these Financial Statements.

 

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2016

 

1             General information

 

Strat Aero Plc (the "Company") and its subsidiaries (together the "Group") undertake the development, marketing and selling of training programmes and software in the aviation industry.  The Company is incorporated and domiciled in the UK and its registered office is The Beehive, City Place, Gatwick Airport, West Sussex, RH6 0PA.

 

The Company's shares are quoted on the AIM market of the London Stock Exchange plc.

 

2             Summary of accounting policies

 

The principal accounting policies applied in the preparation of these Consolidated Financial Statements are set out below. These policies have been consistently applied in the year presented, unless otherwise stated.

 

(a)         Basis of preparation

 

The Consolidated Financial Statements of Strat Aero Plc have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRIC) interpretations as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The Consolidated Financial Statements have also been prepared under the historical cost convention.

 

The Financial Statements are presented in US Dollars (US$) rounded to the nearest dollar.

 

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in Note 4.

 

(b)         Going concern basis

 

The Financial Statements have been prepared assuming the Group and Company will continue as a going concern.  Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations.

 

The assessment has been made based on the Group's economic prospects which have been included in the financial budget for the years 2017-2019, and for managing working capital, in particular for the twelve months from the date of approval of the Financial Statements.  Consideration has also been given in respect of the Group's past losses and its net current liability position at the year end.

 

The nature of the business in which Strat Aero operates creates a degree of uncertainty as to the timing of acquisition and value of contracts due to the relative revenues of the UAV market.  The Directors are in discussions with various parties in relation to numerous potential contracts which are expected to contribute positively to cash flow in the short term and in preparing the financial budgets consider the opportunities currently open and their ability to convert them. 

 

The Directors have also considered the ability of the Group to raise funds on the open market and has demonstrated the ability to do so through share issues during the year and after the reporting date although the Directors note that this is not necessarily indicative of their ability to raise future funds.  The Group's business activities together with the factors likely to affect its future development, performance and position are set out in the Strategic Report.  The Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and its exposure to credit and liquidity risk can be found in the Strategic Report and in Note 25.

 

Based in these assumptions, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future and therefore have adopted the going concern basis of preparation in these Financial Statements.

 

The Financial Statements do not include any adjustment that may be required should the Group and Company be unable to continue as a going concern.  Going concern is referred to in the Independent Auditor's Report as an emphasis of matter.

 

(c)         New and amended standards

(i)  New and amended standards mandatory for the first time for the financial year beginning 1 January 2016

There were no IFRSs or IFRIC interpretations that were effective for the first time for the financial year beginning 1 January 2016 that had a material impact on the Group or Company.

(ii)          New standards, amendments and Interpretations in issue but not yet effective or not yet endorsed and not early adopted

The standards and interpretations that are relevant to the Group or Company, issued, but not yet effective, up to the date of issuance of the Financial Statements are listed below. The Company and Group intend to adopt these standards, if applicable, when they become effective.

 

Standard

Impact on initial application

Effective date

IAS 7 (Amendments)

Disclosure Initiative

*1 January 2017

IAS 12 (Amendments)

Recognition of Deferred Tax

*1 January 2017

IAS 38 (Amendments)

Clarification of Acceptable Methods of Amortisation

1 January 2016

IFRS 9

Financial Instruments

1 January 2018

IFRS 15

Revenue from Contracts with Customers

1 January 2018

IFRS 16

Leases

1 January 2019

Annual Improvements

2015 - 2016 Cycle

*1 January 2018

 

* Subject to EU endorsement



 

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

 

The Group is evaluating the impact of the new or amended standards above. The new or amended standards are not expected to have a material impact on the Group's results or shareholders' funds.



 

(d)         Basis of consolidation

 

Acquisition of Strat Aero International Inc and Strat Aero International Limited by Strat Aero Plc

 

The Company was incorporated on 1 July 2014 and entered into an agreement to acquire the entire issued and to be issued share capital of Strat Aero International Inc and Strat Aero International Limited on 16 July 2014. The acquisition was effected by way of issue of shares. Both of the Group's trading subsidiaries, Strat Aero International Inc and Strat Aero International Limited were incorporated on 12 December 2013 respectively and had commenced operational activities on 1 January 2014.

 

In determining the appropriate accounting treatment for this transaction, the Directors considered IFRS 3 "Business Combinations" (Revised 2008). However, they concluded that this transaction fell outside the scope of IFRS 3 (revised 2008) since the transaction described above represents a combination of entities under common control.

 

In accordance with IAS 8 "Accounting Policies, changes in accounting estimates and errors", in developing an appropriate accounting policy, the Directors have considered the pronouncements of other standard setting bodies and specifically looked to accounting principles generally accepted in the United Kingdom ("UK GAAP") for guidance (FRS 6 - Acquisitions and mergers) which does not conflict with IFRS and reflects the economic substance of the transaction.

 

Under UK GAAP, the assets and liabilities of both entities are recorded at book value, not fair value (although adjustments are made to achieve uniform accounting policies), intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the legal acquirer in accordance within applicable IFRS, no goodwill is recognised, any expenses of the combination are written off immediately to the statement of comprehensive and comparative amounts, if applicable, are restated as if the combination had taken place at the beginning of the earliest accounting year presented.

 

Therefore, although the Group reconstruction did not become unconditional until 21 August 2014, these Consolidated Financial Statements are presented as if the Group structure has always been in place, including the activity from incorporation of the group's principal subsidiary. All entities had the same management as well as majority shareholders.

 

As Strat Aero Plc was incorporated on 1 July 2014, while the enlarged group began trading on 16 July 2014, the comparative information in the Statement of Comprehensive Income and Consolidated Statement of Changes in Equity and Consolidated Cash Flow Statements are presented as though the Group was in existence for the whole prior year, being that commencing on 12 December 2013 and ending on 31 December 2014.

 

On this basis, the Directors have decided that it is appropriate to reflect the combination using merger accounting principles as a group reconstruction under FRS 6 - Acquisitions and mergers in order to give a true and fair view. No fair value adjustments have been made as a result of the combination.

 

Subsidiaries

 

Except for the transactions described above, the Consolidated Financial Statements include the Financial Statements of the Company and its subsidiaries made up to 31 December each year.

 

Subsidiaries are all entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. 

 

When necessary, adjustments are made to the Financial Statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

 

(e)         Business combinations

 

Aside from the initial establishment of the Group as described in 2(d) the acquisition of other subsidiaries have been accounted for using the acquisition method of accounting.

 

The consideration transferred for the acquisition is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquire and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets.

 

Acquisition related costs are expensed as incurred.

 

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39, either in the Income Statement or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

 

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the identifiable net assets acquired and liabilities assumed.

 

(f)          Segmental reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker ("CODM"). The CODM is deemed to be the Chief Executive Officer and the Chief Financial Officer.

 

Operating segments are identified on the basis of internal reports that are regularly reviewed by the CODM to allocate resources and to assess performance. Using the Group's internal management reporting as a starting point, two reporting segments set out in note 5 have been identified.

 

(g)         Foreign currencies

 

Functional and presentation currency

 

The individual financial statements of each Group company are measured in the currency of the primary economic environment in which it operates (its functional currency) being US Dollar or Pounds Sterling. For the purpose of the Group Financial Statements, the results and financial position are expressed in US Dollars, which is the presentation currency for the Group and company.

 

Transactions and balances

 

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At the Statement of Financial Position date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing on the Statement of Financial Position date. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items at the Statement of Financial Position date, are included in the Statement of Comprehensive Income for the year.

 

Group companies

 

The results and financial position of the Group companies (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

·     assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that Statement of Financial Position;

·     income and expenses for each Statement of Comprehensive Income presented are translated at average exchange rates unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions; and

·     all resulting exchange differences are recognised as a separate component of equity.

 

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders' equity.  When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in Statement of Comprehensive Income as part of the gain or loss on sale.

 

(h)         Intangible assets

 

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the Statement of Comprehensive Income.

 

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

 

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

 

Customer lists and intellectual property rights are shown at historic costs, less amortisation. Costs associated with maintaining intellectual property rights are recognised as an expense as incurred. Costs incurred in development have been capitalised, on the basis that the Company will have access to future economic benefits deriving from ownership of this new technology.

 

Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognised as intangible assets when the following criteria are met:

 

·     it is technically feasible to complete the software product so that it will be available for use;

·     management intends to complete the software product and use or sell it;

·     there is an ability to use or sell the software product;

·     it can be demonstrated how the software product will generate probable future economic benefits;

·     adequate technical, financial and other resources to complete the development and use or sell the software product are available; and

·     the expenditure attributable to the software product during its development can be reliably measured.

The Group's Intangible assets are amortised at 20% per annum on a straight line basis.

 

At each year end date, the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

Recoverable amount is the higher of fair value, less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

 

(i)          Property, plant and equipment

 

All property, plant and equipment are shown at cost less subsequent depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of items.

 

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the Income Statement during the financial year in which they are incurred.

 

Depreciation is charged so as to write off the cost of assets over their useful economic lives, using the straight-line method, which is considered to be as follows:

 

·     Plant and equipment - 5 years

·     Motor Vehicles          - 3 to 5 years

The assets' residual values and useful lives are reviewed, and, if appropriate, asset values are written down to their estimated recoverable amounts, at each Statement of Financial Position date.

 

Gains and losses on disposals are determined by comparing proceeds with the carrying amounts, and are included in Statement of Comprehensive Income.

 

(j)          Impairment of non-financial assets

 

Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.

 

(k)         Financial assets

 

The Group and Company has classified all of its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

 

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of Financial Position.

 

Loans and receivables are initially recognised at fair value plus transaction costs and are subsequently carried at amortised cost using the effective interest method, less provision for impairment.

 

(l)          Impairment of financial assets

 

The Group and Company assesses at the end of each reporting year whether there is objective evidence that a financial asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired, and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event"), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated.

 

The criteria that the Group and Company uses to determine that there is objective evidence of an impairment loss include:

·     significant financial difficulty of the issuer or obligor;

·     a breach of contract, such as a default or delinquency in interest or principal repayments.

The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset's original effective interest rate. The asset's carrying amount is reduced, and the loss is recognised in the profit or loss.

 

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the trade and other receivables credit rating), the reversal of the previously recognised impairment loss is recognised in the Statement of Comprehensive Income.

 

(m)        Inventories

 

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. The cost of finished goods and work in progress comprises design costs, raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity).

 

Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Costs of inventories include the transfer from equity of any gains/losses on qualifying cash flow hedges for purchases of raw materials.

 

(n)         Trade and other receivables

 

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

 

(o)         Cash and cash equivalents

 

In the Statement of Cash Flows, cash and cash equivalents comprise cash in hand and deposits held at call with banks.

 

(p)         Share capital and reserves

 

Equity comprises the following:

 

·     "Share Capital" represents ordinary shares issued at par value

·     "Deferred Shares" represents notional shares arising on the redenomination of the nominal share capital from 1p to 0.1p on August 12 2016.

·     "Share Premium" represents the premium paid on shares issued above par value; and

·     "Retained earnings" represents retained losses.

·     "Merger reserve" - The merger arose from the difference between the carrying value of the investment and the nominal value of the shares of subsidiaries upon consolidation under merger accounting.

·     Share option reserve - represents the fair value of unexpired warrants at the issue date.

 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

 

 

(q)         Share-based payments

 

The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives goods or services from employees or third party suppliers as consideration for equity instruments of the Company. The fair value of the equity-settled share based payments are recognised as an expense in the Statement of Comprehensive Income or charged to equity depending on the nature of the services provided or instruments issued.

 

(r)          Trade and other payables

 

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.

 

(s)          Borrowings

 

Borrowings are recognised initially at fair value, net of transaction costs incurred.  Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the Income Statement over the year of the borrowings using the effective interest method.

 

(t)          Compound financial instruments

 

Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder. The number of shares to be issued does not vary with changes in their fair value.

 

The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

 

Subsequent to their initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition, except on conversion or expiry.

 

(u)         Revenue recognition

 

The Group generates its revenue from the provision of consultancy and survey services performed on a 'time and materials' basis and the delivery of commercial pilot training solutions. Revenues are recognised on these products at the point of sale and when services are rendered to clients as per the terms of specific contracts. In the case of fixed price contracts, revenues are recognised on a percentage of completion basis. Turnover is stated net of value added tax in respect of continuing activities. The third revenue stream, the Unmanned Aerial Systems ("UAS") Pilot Training and Services division, has generated only initial revenue during the year under review.

 

(v)         Current and deferred income tax

 

The tax charge/(credit) represents tax currently payable less a credit for deferred tax.  The tax currently payable is based on taxable profit for the year. Taxable profit differs from the loss for the year as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position date.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting loss.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

 

Deferred tax is calculated at the tax rates that are expected to apply in the relevant jurisdiction in the year when the liability is settled or the asset is realised. Deferred tax is charged or credited to the Consolidated Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax is not discounted.

 

Deferred tax assets and liabilities are offset where there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

 

(w)        Leases

 

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.  Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of Comprehensive Income on a straight-line basis over the year of the lease.

 

3             Financial risk management

 

i)            Group financial risk factors

 

The Group's activities expose it to a variety of financial risks. The Group's finance function monitors and manages the financial risks relating to the operations of the Group. The Group is exposed to market risks (including foreign exchange risk and price risk) and credit risk and to a very limited amount interest rate risk and liquidity risk.

 

Risk management is carried out by the Board of Directors.  The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk and credit risk, to mitigate financial risk exposures.

 

 

Market risk

 

(a)          Foreign exchange risk

Foreign exchange risk arises because the Group has operations located in various parts of the world whose functional currency is not the same as the functional currency (GBP Sterling) in which other Group companies are operating. The Group's net assets arising from such overseas operations are exposed to currency risk resulting in gains and losses on retranslation into US Dollar. Only in exceptional circumstances will the Group consider hedging its net investments in non-US Dollar operations as generally it does not consider that the reduction in foreign currency exposure warrants the cash flow risk created from such hedging techniques. It is the Group's policy to hold surplus funds over and above working capital requirements in the Parent Company. The Group considers this policy minimises any unnecessary foreign exchange exposure.

 

In order to monitor the continuing effectiveness of this policy the Board through their approval of both corporate and capital expenditure budgets, and review of the currency profile of cash balances and management accounts, considers the effectiveness of the policy on an ongoing basis.

 

(b)          Price risk

The Group is not exposed to commodity price risk as a result of its operations. The Directors will revisit the appropriateness of this policy should the Group's operations change in size or nature.  The Group has no exposure to equity securities price risk, as it has no listed equity investments.

 

Credit risk

 

Credit risk arises from the Group's trade receivables. Where no independent rating of customers is available, credit control assesses the quality of customers by reference to their financial position, past experience and any other relevant factors.

 

Interest rate risk management

 

The Group is not exposed to interest rate risk on financial liabilities.

 

Liquidity risk management

 

The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group seeks to manage financial risk, to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.

 

ii)           Capital risk management

 

The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders. The Group's capital structure primarily consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained losses.

 

4             Critical accounting estimates and judgements

 

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

The Group makes estimates and judgements concerning the future. The resulting accounting estimates and judgements will, by definition, seldom equal the related actual results. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are addressed below:

 

Intangible assets

 

Intangible assets comprise of development costs, customer lists and Intellectual Property and are amortised accordingly:

 

Development costs          5 years

Customer lists                   5 years

Intellectual Property      5 years

 

Useful lives are based on management's estimates of the period that the assets will generate revenues with such records being periodically reviewed for continual appropriation.

 

 

5             Segmental analysis

 

Management considers there to be two activities, being the provision of consultancy and survey services to the international aviation and industrial markets and training services in respect of aviation. Accordingly, segmental analysis is reflected in the Consolidated Group Statements set out herein.

 

Total revenue comprises:



Revenue from external customers:

2016

US$

2015

US$

Consultancy and survey

839,271

433,001

Training

23,717

-


862,988

433,001

 

 

Revenues are generated in a number of countries analysed as to:

 

2016

US$

2015

US$

United Kingdom

681,474

320,842

United State of America

157,797

112,159

South East Asia

23,717

-


862,988

433,001

 

 

 

The following customers generated more than 10% of the Group's revenue:

 

2016

US$

2015

US$

Customer 1

150,796

-

Customer 2

130,337

-

Customer 3

88,681

-

Customer 4

60,577

81,231

Customer 5

-

157,583


430,391

238,814

 

 

Carrying amount of assets


2016

US$

2015

US$

United Kingdom

1,762,982

3,881,985

United States of America

393,764

757,549


2,156,746

4,639,534

 

Carrying amount of liabilities


2016

US$

2015

US$

United Kingdom

1,461,083

2,508,073

United States of America

739,180

1,409,915


2,200,263

3,917,988

 

6             Operating expenses by nature


2016

2015


US$

US$

Cost of sales

269,909

87,254

PR, marketing and advertising

139,747

283,882

Wages, salaries and other staff costs (note 7)

1,764,831

1,150,244

Depreciation

176,206

83,860

Amortisation

425,787

211,503

Operating lease expenses

161,708

130,265

Professional and consultancy fees

1,007,779

1,495,121

Audit fees (note 9)

59,719

59,208

Acquisition related expenses

-

130,335

Aero Kinetic litigation net settlement (gain)

(129,477)

-

Net foreign exchange (gains)

(3,292)

(130)

Other expenses

583,298

636,351


4,456,215

4,267,893

 

 

7             Staff costs

 

The average number of employees, including Directors, employed by the Group was:

 


2016

2015


No.

No.

Directors

5

4

Development

18

8

Administration

8

4


31

16

 

Employees', including Directors', costs comprise:


2016

2015


US$

US$

Wages, salaries and other staff costs

1,638,477

1,129,441

Social security costs

126,354

20,803


1,764,831

1,150,244

 

 

8             Directors

 

Key management are considered to be Directors.

 


2016

2015

Group

Short term employee benefits

Other

Total

Short term employee benefits

Other

Total


US$

US$

US$

US$

US$

US$

Graham Peck

20,336

-

20,336

34,387

5,525

39,912

Iain McLure

122,013

-

122,013

-

-

-

Gerard Dempsey

27,114

-

27,114

10,189

2,762

12,951

Paul Ryan

27,114

-

27,114

10,189

2,762

12,951

Russell Peck

-

-

-

27,878

4,976

32,854

Robert Salluzzo

-

-

-

27,878

4,193

32,071

Tony Dunleavy

-

-

-

7,642

6,906

14,548

Greg Kuenzel

-

-

-

18,340

-

18,340


196,577


196,577

136,503

27,124

163,627

 

               

9             Auditors remuneration


2016

2015


US$

US$

Fees payable to the Company's auditor for the audit of the Group and Parent Company's Financial Statements

10,000

10,000

Fees payable to the Company's auditor for other services:



Audit of the accounts of subsidiaries

43,541

49,208

Taxation - compliance

6,250

14,432



59,791

73,640

 

 

10           Finance costs


2016

2015


US$

US$

Interest payable and other finance costs

43,441

68,812


43,441

68,812

 

 

11           Tax

 

No income tax charge was recognised in the Statement of Comprehensive due to losses incurred. 

 

Group

2016

2015

Income tax expense:

US$

US$

Current tax



UK Corporation tax credit

(112,158)

-

Deferred tax           



Current year

-

-

Tax credit

(112,158)

-

 

The tax on Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the profits of the consolidated entities as follows:

 


2016

2015

Group

US$

US$

Loss before tax

(3,636,634)

(5,931,933)

Tax at the applicable rate of 24.38% (31 December 2015: 23.87%):

(886,514)

(1,416,040)

Effect of:



Expenses not deductible for tax purposes

27,015

524,725

Depreciation in excess of capital allowances /

(capital allowance in excess of depreciation)

146,750

24,406

R&D tax credit

(112,158)

-

Net tax effect of losses carried forward

712,749

866,909

Tax credit for the year

(112,158)

-

 

 

The tax rate used is a combination of 20% standard rate of corporation tax in the UK and US tax rate of 34% to give an applicable rate of 24.38%.

 

The Group has tax losses of approximately US$8,291,000 (31 December 2015: US$5,368,000) available to carry forward against future taxable profits.  No deferred tax asset has been recognised in view of the uncertainty over the timing of future taxable profits against which the losses may be offset.

 

 

12           Earnings per share

 

Basic earnings per share has been calculated by dividing the loss attributable to equity holders of the Company after taxation by the weighted average number of shares in issue during the year. There is no difference between the basic and diluted loss per share as the effect on the exercise of options and warrants would be to decrease the earnings per share.

 

Since the year end, no warrants have been exercised which may result in the dilution of the earnings per share in the future. Details of share options and warrants that were anti-dilutive but may be dilutive in the future are set out in note 20.

 

 


 

2016

 

2015

Basic and Diluted

                   US$

US$

Loss after taxation

(3,524,476)

(5,931,933)

Weighted average number of shares

255,104,361

93.993,888

Earnings per share (cents)

(1.38)

(6.31)

 

 

13           Intangible assets


2016

2015

 

Goodwill - Cost and Net Book Value

US$

US$

 

At 1 January

14,557

-

 

Acquisition of subsidiaries (at fair value)

-

2,042,792

 

Impairments

-

(2,028,235)

 

At 31 December

14,557

14,557

 




 

 

 

Customer Lists

Intellectual Property

Development Costs

Total

Other intangibles - Group

US$

US$

US$

US$

Cost





At 1 January 2015

-

233,265

469,372

702,637

Acquisition of subsidiaries

540,232

630,270

633,670

1,804,172

Foreign exchange differences

-

(11,236)

(120)

(11,356)

At 31 December 2015

540,232

852,299

1,102,922

2,495,453

Additions

-

-

1,086

1,086

Foreign exchange differences

(6,054)

(44,053)

(7,500)

(57,607)

At 31 December 2016

534,178

808,246

1,096,508

2,438,932

Accumulated amortisation





At 1 January 2015

-

23,327

46,937

70,264

Charge for the year

27,012

59,354

125,137

211,503

Foreign exchange differences

-

(2,567)

(23)

(2,590)

At 31 December 2015

27,012

80,114

172,051

279,177

Charge for the year

86,437

141,514

197,836

425,787

Foreign exchange differences

(5,403)

(3,054)

(6,402)

(14,859)

At 31 December 2016

108,046

218,574

363,485

690,105

Net book value





At 31 December 2015

513,220

772,185

930,871

2,216,276

At 31 December 2016

426,132

589,672

733,023

1,748,827

 

 

 



Intellectual Property

Other intangibles - Company



US$

Cost




At 1 January 2015



233,265

Foreign exchange differences



(11,235)

At 31 December 2015



222,030

Foreign exchange differences



(36,990)

At 31 December 2016



185,040

Accumulated amortisation




At 1 January 2015



23,237

Charge for the year



45,849

Foreign exchange differences



(2,567)

At 31 December 2015



66,519

Charge for the year



40,671

Foreign exchange differences



(14,670)

At 31 December 2016



92,520

Net book value




At 31 December 2015



155,421

At 31 December 2016



92,520

 

The above intangible assets comprise the Intellectual Property acquired on 16 July 2014 and 30 September 2015. All research and development costs not eligible for capitalisation have been expensed.

 

The recoverable amount of the above cash-generating units has been determined based on value in use calculations.  The key assumptions used for value-in-use calculations in 2016 are as follows:

 

Gross margin

20-50%

Growth rate

10-45%

Discount rate

10%



Management determined budgeted gross margin based on past performance and its expectations of market development. The average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax, and reflect specific risks relating to the relevant operating segment.

 

The recoverable amount calculated based on value in use did not exceed the carrying value.

 

 

14           Property, Plant and Equipment


Plant & equipment

Motor Vehicles

 

Total

Group

US$

US$

US$

Cost




At 1 January 2015

194,288

34,032

228,320

Additions

64,471

-

64,471

Acquisition of subsidiary

258,686

85,517

344,203

Foreign exchange differences

633

-

633

At 31 December 2015

518,078

119,549

637,627

Additions

-

-

-

Foreign exchange differences

(58,350)

(13,465)

(71,815)

At 31 December 2016

459,728

106,084

565,812

Accumulated depreciation




At 1 January 2015

19,429

3,403

22,832

Charge for the year

75,544

8,316

83,860

Acquisition of subsidiary

123,696

35,939

159,635

Foreign exchange differences

(842)

-

(842)

At 31 December 2015

217,827

47,658

265,485

Charge for the year

155,739

20,467

176,206

Foreign exchange differences

(48,245)

(6,823)

(55,068)

At 31 December 2016

325,321

61,302

386,623

Net book value




At 31 December 2015

300,251

71,891

372,142

At 31 December 2016

300,251

44,782

179,189

 


Plant & equipment

Motor Vehicles

 

Total

Company

US$

US$

US$

Cost




At 1 January 2015

1,039

-

1,039

Additions

4,425

-

4,425

Foreign exchange differences

(49)

-

(49)

At 31 December 2015

5,415

-

5,415

Additions

-

-

-

Foreign exchange differences

(901)

-

(901)

At 31 December 2016

4,514

-

4,514

Accumulated depreciation




At 1 January 2015

104

-

104

Charge for the period

1,125

-

1,125

Foreign exchange differencies

14

-

14

At 31 December 2015

1,243

-

1,243

Charge for the year

992

-

992

Foreign exchange differences

(296)

-

(296)

At 31 December 2016

1,939

-

1,939

Net book value




At 31 December 2015

4,172

-

4,172

At 31 December 2016

2,575

-

2,575

 

 

15           Investment in subsidiary undertakings


2016

2015

Company

US$

US$

As at 1 January

1,413,434

857,100

Additions

-

1,413,433

Foreign exchange differences

(235,477)

-

Impairments

-

(857,099)

Cost at 31 December

1,177,957

1,413,434

 

 

The following are the principal subsidiaries of the Company at 31 December 2016 and at the date of these Financial Statements.

Name of company

 

Registered Address

Parent company

Class of shares

Share capital held

Nature of business

Strat Aero International, Inc.

19500 State Highway 249, Suite 655, Houston, Texas 77070, USA

Strat Aero Plc

Ordinary

100%

Provider of aviation software, products and services

Strat Aero International Limited

The Beehive, City Place, Gatwick Airport, West Sussex, RH6 0PA, UK

Strat Aero Plc

Ordinary

100%

Aviation management and consultancy services

Strat Aero International Consultancy Group, LLC

19500 State Highway 249, Suite 655, Houston, Texas 77070, USA

Strat Aero International, Inc

N/A

100%

Dormant company

Strat Aero Holdings, Inc

19500 State Highway 249, Suite 655, Houston, Texas 77070, USA

Strat Aero Plc

Ordinary

100%

Holding company

Aero Kinetics Labs, LLC

19500 State Highway 249, Suite 655, Houston, Texas 77070, USA

Strat Aero Holdings, Inc

N/A

100%

Provider of aviation software, products and services

Aero Kinetics, LLC

19500 State Highway 249, Suite 655, Houston, Texas 77070, USA

Strat Aero Holdings, Inc

N/A

100%

Provider of aviation software, products and services

Nephos Services, LLC

19500 State Highway 249, Suite 655, Houston, Texas 77070, USA

Strat Aero Holdings, Inc

N/A

100%

Dormant company

Aero Kinetics UAS TC001, LLC

19500 State Highway 249, Suite 655, Houston, Texas 77070, USA

Aero Kinetics, LLC

N/A

100%

Dormant company

Geocurve Ltd

Tintagel House London Road, Kelvedon, Colchester, Essex, CO5 9BP, UK

Strat Aero Plc

Ordinary

100%

Aviation surveying and mapping

GN Site Engineers Ltd

Tintagel House London Road, Kelvedon, Colchester, Essex, CO5 9BP, UK

Geocurve Ltd

Ordinary

100%

Aviation surveying and mapping

UKAeroVision Limited

Tintagel House London Road, Kelvedon, Colchester, Essex, CO5 9BP, UK

Geocurve Ltd

Ordinary

100%

Aviation surveying and mapping

 

 

16           Inventories


2016

2015


Group

Company

Group

Company


US$

US$

US$

US$

Raw materials

-

-

18,009

-

Work in progress

-

-

70,479

-


-

-

88,488

-

 

 

17           Trade and other receivables


2016

2015


Group

Company

Group

Company


US$

US$

US$

US$

Amounts due from group undertakings

-

1,706,103

-

1,144,620

Trade receivables

127,639

-

236,808

-

VAT receivable

-

22,708

47,760

69,188

Other receivables

494

11,421

58,276

51,498

Prepayments

82,122

40,799

119,970

54,769

At 31 December

210,255

1,781,031

462,814

1,320,075

Less: non-current portion

-

(1,706,103)

-

(1,144,620)

Current portion

210,255

74,928

462,814

175,455

 

The fair value of all receivables is the same as their carrying values stated above.

 

Ageing of past due trade receivables - Group:

2016

2015


US$

US$

0 - 15 days

-

-

16 - 30 days

76,418

11,401

Over 30 days

51,221

225,407


127,639

236,808

 

The carrying amount of the Group's trade receivables are denominated in the following currencies: 

 


2016

2015


US$

US$

US Dollars

23,286

4,400

UK Pounds

104,353

232,408


127,639

236,808

 

The maximum exposure to credit risk at the reporting date is the carrying value reported above. The Group does not hold collateral as security. No provision (2015: nil) has been made at the year-end in respect of trade receivables.

 

 

18           Cash and cash equivalents

 

                                                                                                   2016


2015

 


Group

Company

Group

Company

 


US$

US$

US$

US$

 

Cash at bank and in hand

3,918

2,065

1,485,257

1,131,304

 


3,918

2,065

1,485,257

1,131,304

 

The carrying amount of the Group's cash and cash equivalents are denominated in the following currencies:

 

                                                                                                   2016


2015

 


Group

Company

Group

Company

 


US$

US$

US$

US$

 

US Dollars

4,109

-

202,071

-

 

UK Pounds

(191)

2,065

1,283,186

1,131,304

 


3,918

2,065

1,485,257

1,131,304

 

 

 

19           Share capital


2016

2015

Issued equity share capital

Number

US$

Number

US$

Issued and fully paid

 





Ordinary shares of 0.1p (2015:1p) each

384,285,262

556,377

142,063,771

2,292,836






Deferred shares of 0.1p each

2,358,954,414

3,574,036

-

-



4,130,803


2,292,836

           

Group and Company

 

Number of shares

 

Ordinary shares

US$

Share premium

US$

Total

US$

Issued and fully paid





At 1 January 2015

76,968,437

1,301,737

1,642,449

2,944,186

Issue of new shares - 10 March 2015

7,333,334

110,631

834,186

944,817

Issue of new shares - 15 October 2015

30,000,000

463,274

1,671,062

2,134,336

Issue of new shares - 15 December 2015

27,562,000

414,229

2,002,965

2,417,194

Issue of new shares - 22 December 2015

200,000

2,965

20,753

23,718

As at 31 December 2015

142,063,771

2,292,836

6,171,415

8,464,251






As at 1 January 2016

142,063,771

2,292,836

6,171,415

8,464,251

Issue of new shares - 17 March 2016

4,575,209

64,476

322,380

386,855

Issue of new shares - 12 April 20164

35,555,556

506,082

63,260

569,342

Issue of new shares - 20 April 20165

42,422,222

610,612

76,326

     686,938

Issue of new shares - 13 July 2016

37,489,288

497,145

-

497,145

Issue of new shares - 1 September 20166

74,000,000

97,192

388,766

485,958

Issue of new shares - 29 September 2016

44,750,645

58,207

349,423

407,630

Issue of new shares - 28 November 2016

3,428,571

4,253

10,635

14,889

Share issue costs

-

-

(164,897)

(164,897)

As at 31 December 2016

384,285,262

4,130,803

7,217,308

11,348,111

 

 

On 17 March 2016 the Company issued 4,575,209 new ordinary shares of 1p each as consideration for the conversion of US$390,000 of convertible loan notes.

 

On 12 April 2016 the Company issued 35,555,556 new ordinary shares of 1p each at a price of 1.125p per share raising £400,000. On the same date the Company issued 8,000,000 warrants exercisable for three years from the date of grant at an exercise price of 1.125p.

 

On 20 April 2016 the Company issued 24,000,000 new ordinary shares of 1p each and committed to issue a further 18,422,222 new ordinary shares of 1p each following approval by shareholders at a general meeting of the Company, raising in aggregate £477,250 at a price of 1.125p per share. On the same date the Company issued 4,242,222 warrants exercisable for three years from the date of grant at an exercise price of 1.125p.

 

On 12 May 2016, following approval from shareholders at a general meeting of the Company, the Company issued the 18,422,222 new ordinary shares of 1p each in connection with the placing on 20 April 2016

 

On 13 July 2016 the Company issued 37,489,288 new ordinary shares of 1p each at a price of 1p settling the outstanding balance due of £374,893 representing the final instalment in the acquisition of Geocurve.

 

A resolution was passed with effect from 12 August 2016 to subdivide and re-designate the ordinary shares of the Company.  Accordingly, each of the 262,106,046 ordinary shares in issue of 1p each in the capital of the Company was subdivided into, and re-designated as, 262,106,046 ordinary shares of 0.1p and 2,358,954,414 deferred shares of 0.1p each.

 

On 1 September 2016 the Company issued 74,000,000 new ordinary shares of 0.1p each at a price of 0.5p per share raising £370,000. On the same date the Company issued 7,400,000 warrants exercisable for three years from the date of grant at an exercise price of 0.5p.

 

On 29 September 2016 the Company issued 44,750,645 new ordinary shares of 0.1p each at a price of 0.7p as settlement of all litigation and claims arising from the AK dispute with Mr W. Hulsey Smith the Chief Executive Officer of Aero Kinetics Holdings LLC. 

 

On 28 November 2016 the Company issued 3,428,571 new ordinary shares of 0.1p each at a price of 0.35p in settlement of consulting fees accrued amounting to £12,000.

 

20           Share based payments

 

Share Options and Warrants

 

Share Options and Warrants to subscribe for new Ordinary Shares in the Company were in issue as follows:

 


2016

2015


No. of warrants

Weighted average price

£

No. of warrants

Weighted average price

£

36,139,368

0.08

459,375

0.08

Granted during the year

19,642,222

0.01

35,879,993

0.08

Lapsed/Exercised during the year

(34,690,968)

0.08

(200,000)

0.08

Outstanding at 31 December

21,090,622

0.01

36,139,368

0.08

Exercisable at 31 December

21,090,622

0.01

36,139,368

0.08

 

The warrants outstanding at 31 December 2016 had a weighted average remaining contractual life of 2.5 years (31 December 2015: 1.96 years).

 

GBP £ are used in this note as the shares are traded in the UK and are also issued in GBP currency.

 

Fair value of warrants

 

The fair value of the warrants issued during 2016 was determined using the Black Scholes valuation model. The assumptions used in applying the Black Scholes pricing model were as follows:





 


April 2016 A

April 2016 B

September 2016

Granted on:

12 Apr 2016

20 Apr 2016

1 Sep 2016

Share price at the date of grant

1.38p

1.23p

0.48p

Exercise price

1.125p

1.125p

0.5p

Expected volatility

28.59%

       32.39%

86.65%

Expected warrant life

3 years

3 years

3 years

Risk free rate

1.79%

1.79%

1.79%

 

The volatility was determined by examining the monthly share price.

 

On 12 April 2016 the Company granted 8,000,000 warrants to subscribe for new ordinary shares at an exercise price of 1.125 pence per share exercisable for a period of 3 years.

 

 

On 20 April 2016 the Company granted 4,242,222 warrants to subscribe for new ordinary shares at an exercise price of 1.125 pence per share exercisable for a period of 3 years.

 

On 1 September 2016 the Company granted 7,400,000 warrants to subscribe for new ordinary shares at an exercise price of 0.5 pence per share exercisable for a period of 3 years.

 

 

21           Other reserves

 


Company

Group


Share option and warrants reserve

 

 

Total

Share option and warrants reserve

Merger reserve

 

 

Total


US$

US$

US$

US$

US$

At 1 January 2015

714

714

714

(857,098)

(856,384)

Share warrants issued (note 20)

283,730

283,730

283,730

-

283,730

Share warrants exercised (note 20)

(1,356)

(1,356)

(1,356)

-

(1,356)

At 31 December 2015

283,088

283,088

283,088

(857,098)

(574,010)







At 1 January 2016

283,088

283,088

283,088

(857,098)

(574,010)

Share warrants issued (note 20)

83,391

83,391

83,391

-

83,391

Share warrants lapsed (note 20)

(260,867)

(260,867)

(260,867)

-

(260,867)

At 31 December 2016

105,612

105,612

105,612

(857,098)

(751,486)

 

 

22           Trade and other payables


2016

2015


Group

Company

Group

Company


US$

US$

US$

US$

Trade payables

549,845

374,993

568,330

150,001

VAT payable

2,535

-

-

-

Social security and other taxes

219,865

3,706

116,671

-

Deferred consideration payable for business combinations

-

-

762,145

762,145

Accruals

523,154

399,658

416,945

251,899

Other creditors

28,466

11,587

92,707

-


1,323,865

789,944

1,956,798

1,164,045

 



 

 

 

23           Borrowings


2016

2015


Group

Company

Group

Company


US$

US$

US$

US$

Convertible loans

-

-

763,675

763,675

Non-convertible loans

-

-

381,000

-

Shareholder loans

391,115

-

398,313

-

Other borrowings

125,128

98,688

58,048

-

At 31 December

516,243

98,688

1,601,036

763,675

Less: non-current portion

(417,555)

-

(1,211,036)

(763,675)

Current portion

98,688

98,688

390,000

-

 

In November 2016, the Company entered into a £300,000 six month loan facility with a secured fixed and floating charge with Farina Investments (UK) Ltd over a six month term. This facility was extended for a further twelve months from 1 March 2017. 

Shareholder loans are unsecured and accrue no interest.

 

 

24           Deferred tax


2016

2015


Group

Company

Group

Company

 


US$

US$

US$

US$

 

Deferred tax liabilities





 

Deferred tax liability after more than 12 months

360,154

-

360,154

-

 

Deferred tax liabilities

360,154

-

360,154

-

 

 

The movement in the deferred tax account is as follows:

 


2016

2015

 


Group

Company

Group

Company


US$

US$

US$

US$

At 1 January                    

360,154

-

-

-

Acquisition of subsidiary

-

-

360,154

-

At 31 December

360,154

-

360,154

-

 

 

25           Financial instruments

 

Categories of financial instruments

 



2016

2016



Group

Company



US$

US$

Assets - Loans and receivables




   Trade and other receivables (excluding prepayments)


128,133

1,740,232

   Cash and cash equivalents


3,918

2,065



132,051

1,742,297

Liabilities - At amortised cost




Trade and other payables (excluding non-financial liabilities)


800,711

789,944

Borrowings


417,555

98,688



1,218,266

888,632

 

 



          2015              2015



Group

Company



US$

US$

Assets - Loans and receivables




   Trade and other receivables (excluding prepayments)


295,084

1,265,306

   Cash and cash equivalents


1,485,257

1,131,304



1,780,341

2,396,610

Liabilities - At amortised cost




Trade and other payables (excluding non-financial liabilities)


648,037

1,164,045

Borrowings


1,211,036

763,675



1,859,073

1,927,720

 

 

26           Financial commitments

 

Operating leases

 

At 31December 2016 the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:


2016

2015


Land and buildings

Land and buildings


US$

US$

No later than one year

124,988

146,520

Later than one year but no later than 5 years

126,534

127,099

Total future minimum lease payments

251,522

273,619

 

 

27           Related party transactions

 

Directors' transactions

 

For Directors' transactions after the year end see note 29

 

During the year, Russell Peck provided to Strat Aero International Inc advances amounting to US$nil (31 December 2015: US$333,575) to fund its operations and working capital requirements. The balance outstanding at the year-end was US$398,313 (31 December 2015: US$398,313).

 

Directors remuneration is disclosed in note 8.

 

Parent Company transactions with subsidiary companies

 

During the year the Company received US$199,137 (31 December 2015: US$184,194) management fees from its subsidiaries. At the year-end US$1,706,103 was due from the subsidiary companies as follows (note 17).

 

-     Strat Aero International Limited                           US$1,220,065 (2015: US$736,085)

-     Strat Aero International Inc                                     US$nil (2015: US$nil)

-     Geocurve Ltd                                                                  US$486,038 (2015: US$408,535)

 

28           Events after the Reporting Year

 

On 31 January 2017 the Company issued 380,000,000 new ordinary shares of 0.1p each at a price of 0.1p per share raising £380,000. On the same date the Company issued 418,000,000 warrants exercisable for two years from the date of grant at an exercise price of 0.225p.

 

On 21 February 2017, following approval from shareholders at a general meeting of the Company, the Company issued the 850,000,000 new ordinary shares of 0.1p each at a price of 0.1p per share raising £850,000 in connection with a placing announced on 14 February 2017. In addition, certain directors and a director of a subsidiary company agreed to subscribe for 250,000,000 Ordinary Shares at the Placing Price in settlement of outstanding compensation and expenses accrued since 2015 in the sum of £250,000. On the same date the Company issued 1,170,000,000 warrants exercisable for two years from the date of grant at an exercise price of 0.225p in conjunction with the two placings.

 

On the same date a further 50,000,000 new ordinary shares of 0.1p each at a price of 0.1p per share were issued to certain professional advisors and service providers of Strat Aero in satisfaction of fees outstanding in the amount of £50,000.

 

On March 1 2017 50,000,000 new ordinary shares in the Company at a price of 0.1p per ordinary share was issued to Farina Investments (UK) Ltd in exchange for agreeing new favourable Loan terms and in consideration of interest accrued to date.

 

Directors' transactions

 

The directors and previous directors of the Company who participated in the February 2017 Placing were as follows:

 

·     Iain McLure subscribed for 100,000,000 new ordinary shares of 0.1p each for £100,000

·     Gerard Dempsey subscribed for 25,000,000 new ordinary shares of 0.1p each for £25,000

·     Paul Ryan subscribed for 110,000,000 new ordinary shares of 0.1p each for £110,000

·     Russell Peck subscribed for 15,000,000 new ordinary shares of 0.1p each for £15,000

 

 

** ENDS**


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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