Final Results

RNS Number : 1547J

Strat Aero PLC

26 June 2017

 

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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: [phone]
Graham Peck (Chairman)
SP Angel Corporate Finance LLP	Tel: [phone]
Nominated Adviser and Joint Broker
Stuart Gledhill Jeff Keating
Beaufort Securities Limited	Tel: [phone]
Joint Broker
Elliot Hance
Cornhill Capital Ltd
Joint Broker
Colin Rowbury	Tel: [phone]
St Brides Partners Ltd	Tel: [phone]
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 £
At 1 January	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**

 

END

 

 

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