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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Strat Aero | LSE:AERO | London | Ordinary Share | GB00BFX0ZN92 | ORD 0.2P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.15 | 1.05 | 1.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMAERO
RNS Number : 5115Q
Strat Aero PLC
06 June 2018
Strat Aero plc / Index: AIM / TIDM: AERO / Sector: Support Services
6 June 2018
Strat Aero plc ("Strat Aero," the "Company" or the "Group")
Final Results for the Year to 31 December 2017
Financial Overview
The Group recorded revenues of US$1,011,682 during the year ended 31 December 2017 (2016: US$862,988) generating a gross profit of US$896,548 (2016: US$593,079). Cost of sales expenses in the previous year included $105k relating to Aero Kinetics LLC (a subsidiary company) which were not incurred in 2017, this improved the gross profit margin in 2017. Administrative costs in 2017 were reduced from 2016 with the majority of savings made by cutting staff and consultancy costs in non-value-added business areas. The loss for the year to 31 December 2017 after taxation was US$2,513,293 (2016: US$3,524,476).
Consolidated net assets at 31 December 2017 amounted to US$992,389 (2016: net liabilities of US$43,517). Cash balances at the year-end amounted to US$668,183 (2016: US$3,918). Cash balances at the date of this report were approximately GBP550,000 (US$730,000).
Considerable efforts were made to reduce the Company's debt including the settlement of all outstanding debts totalling US$387,000 with Mr Russell Peck, a former Director of the Company and its US subsidiary Strat Aero Inc. and one of its largest creditors and a renegotiation of the Farina loan. Post year end the Farina loan was settled in its entirety.
During 2017, the Company attracted aggregate investment of US$2.86 million to implement the Group's operational plans. US$0.487 million (before expenses) was raised in January 2017 and US$1.09 million (before expenses) was raised in February 2017.
During the second half of 2017 it became clear that a fundamental change in the cost base and business model of the Group was required. As a result, in December 2017 a total of US$1.283 million (before expenses) was raised through a Placing and Open Offer. As the Open Offer closed on 29 December, the US$0.527 million raised (before expenses) and the issue of new shares for the Open Offer to existing shareholders took place on 5 January 2018 and therefore are not included in the 2017 accounts.
In parallel with the Placing and Open Offer, Board changes were initiated in December 2017, with further Board changes and the closure of the training business being implemented in January 2018.
Further progress has been made since, including the Geocurve survey and inspection business winning a significant GBP1.1m contract in February 2018 and the acquisition of 37% of Gyrometric Systems Limited ("Gyrometric") in April 2018 for a cash consideration of $0.32 million.
Outlook
Geocurve's focus on, and continued success in, providing survey and inspection services using a diverse range of technologies including UAVs, as well as ground- and water-based survey equipment, puts it in a strong position entering 2018 as it continues its focus on long term high value blue chip clients. Geocurve's differentiated capabilities in the survey industry deliver exactly the analysis that its clients require to maximise the productivity of their teams and minimise asset downtime.
The initial investment in Gyrometric provides our shareholders with a stake in a new and unique technology with promising prospects. The Gyrometric technology uses proprietary software and Artificial Intelligence techniques to analyse remotely critical drive shaft performance to diagnose and predict drive system maintenance needs before catastrophic damage occurs. We will continue to develop our investment in Gyrometric through close operational support and involvement and believe that it will be an important component of growth and shareholder value in the months and years ahead.
The restructured and reinvigorated Board, comprising Directors who are all significant shareholders in your Company, has made it a key objective that cash costs are covered by income. We are determined to continue to deliver value to shareholders. The Board strongly believes that funds raised from our shareholders should be utilised for investment wherever possible rather than to finance a gap between income and expenditure. Fixed costs have now been substantially reduced from those prevailing in 2017, and income at Geocurve and Gyrometric is on an upward trajectory. We are continuing to cut costs wherever possible. Strong new business prospects at Geocurve and Gyrometric allow all stakeholders to look to the future with renewed optimism.
The Board continues to examine opportunities to grow both organically and through acquisition of complementary businesses and technologies which can enhance growth in shareholder value.
Annual Report
The Annual Report and Accounts for the year ended 31 December 2017 ("Annual Report") will be sent to shareholders today and will also be available on the website at www.strat-aero.com.
Acknowledgments
On behalf of the Board, I would like to thank our business partners, customers, employees and valued shareholders for their continued support.
Nigel Burton
Chairman and Non-Executive Director
6 June 2018
-S -
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.
For further information please visit www.strat-aero.com or contact:
Strat Aero plc
Trevor Brown (Executive Director) +41 7941 55384
Nigel Burton (Non-Executive Director) +44 7785 234447
SP Angel Corporate Finance LLP +44 20 3470 0470
Stuart Gledhill
Jeff Keating
Caroline Rowe
Peterhouse Corporate Finance +44 20 7469 0930
Lucy Williams
Fungai Ndoro
Notes
Strat Aero plc is focused on the continued development of the Company's 'Survey & Inspection' business, in addition to implementing an enhanced growth strategy via the appraisal of complementary acquisition or investment opportunities, and recently acquired a 37% stake in Gyrometric Systems. This is in line with the Company's stated objective to achieve improved financial performance in the near term.
CHAIRMAN'S STATEMENT
During the second half of 2017 it became clear that a fundamental change in the cost base and business model of the Group was required. As a result, in December 2017 funds were raised through a Placing and Open Offer and Board changes were initiated, with further Board changes and the closure of the training business being implemented in January 2018. Further progress has been made since, including the Geocurve survey and inspection business winning a significant GBP1.1m contract in February and the acquisition of 37% of Gyrometric Systems Limited in April. The Board continues to examine opportunities to grow both organically and through acquisition of complementary businesses and technologies which can enhance growth in shareholder value.
Review of 2017
During 2017 the Group sought to grow both its Survey & Inspection and Training & Education businesses.
1. Survey & Inspection
In 2017 Geocurve, our wholly owned Survey & Inspection services business continued to develop organically through existing contracts with major blue-chip companies and government agencies. Geocurve continued to deliver on its CH2M contract to work on the Thames 2100 Flood Defence Project on behalf of the Environment Agency. Geocurve is a specialist in providing survey and inspection services using a diverse range of technologies including 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.
The CH2M contract, awarded in September 2016 after a rigorous competitive tender process, 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 (a geometrically corrected series of aerial photos stitched together to create an accurate map or image), 3D model and survey products. Work on this material contract continued successfully throughout 2017. This is a prestigious project to be involved with - and one which has enormous benefits for a large number of people as the Thames 2100 Flood Defence Project is aiming to reduce the risk of tidal flooding for 1.25 million people and GBP200 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. Strat Aero is delighted to be involved with such highly esteemed partners on this project.
Also in 2017, Geocurve secured a contract with ACAD Design and Surveys Ltd, a leading industrial and architectural design and survey company with a blue-chip client base including the Post Office, to provide a UAV survey in Aberdeen, Scotland. Geocurve was awarded this contract to survey a large area of land utilising its Extended Visual Line of Sight (EVLOS) permission from the Civil Aviation Authority. Geocurve applied its extensive survey experience to capture all necessary data, 3D data and UAV imagery, to enable the design phase of a new multi million pound development.
Geocurve was also selected in 2017 as a specialist surveying partner by Integrated Water Services Ltd ('IWS'), a leading services provider to the UK water sector. Geocurve will provide UAV, bathymetric and conventional surveying services for a number of Monitoring & Evaluation projects which IWS carries out each year as part of its 5+5 Framework Contract with Northumbrian Water worth circa GBP8-10m per year to IWS.
Geocurve's focus on, and continued success in, showing differentiated and unique capabilities in the survey industry puts it in a strong position entering 2018 as it continues its focus on long term high value blue chip clients.
2. Aviation Training, Education and Software Services
Strat Aero's Training business was recognised by the UK's Civil Aviation Authority (CAA) as a National Qualified Entity for UAV training design and delivery, and in 2017 developed a range of professional training solutions for both commercial and public-sector clients including the Advanced Unmanned Technical Qualification (AUTQ). Following a thorough market review the Board concluded that the small volume but potentially high value market for training UAV professionals, principally in international public sector security and military contracts, required substantially more investment than could be justified given the risks involved. Therefore, in early 2018 the Group discontinued this loss-making business.
Operational events since the year end
In January 2018 Geocurve was awarded a contract to provide an innovative technology-based 3D and Virtual Reality survey service for the Environment Agency's Thames Estuary Asset Management 2100 (TEAM2100) programme, which initially provides a fixed revenue of GBP1.1m over three years, followed by being selected as a specialist 'UAV Survey and Inspection' partner by Aviva plc, the multinational insurance company headquartered in the United Kingdom. This reflects Geocurve's continuing transition to becoming:
1. A leading technology-based UK provider of data rich surveying services including multi-sensors and data analytics to create 3D mapping and Virtual Reality (VR) imaging. Many of our existing clients are already showing a huge interest in VR applications, which are at the forefront of the survey industry's innovation drive and form a powerful addition to our market leading data capture and processing capabilities.
2. A leading provider of UAV ("drone") data collection and monitoring services specialising in over-flying sensitive and secure installations where sophisticated piloting skills are required and equally capable on land, in water or in the air.
Financial Overview
The Group recorded revenues of US$1,011,682 during the year ended 31 December 2017 (2016: US$862,988) generating a gross profit of US$896,548 (2016: US$593,079). Cost of sales expenses in the previous year included $105k relating to Aero Kinetics LLC (a subsidiary company) which were not incurred in 2017, this improved the gross profit margin in 2017. Administrative costs in 2017 were reduced from 2016 with the majority of savings made by cutting staff and consultancy costs in non-value-added business areas (see note 6).
This cost base continues to be rationalised in line with the new management's strategic priorities and administrative costs for 2018 are expected to be significantly lower.
The loss for the year to 31 December 2017 after taxation was US$2,513,293 (2016: US$3,524,476).
Consolidated net assets at 31 December 2017 amounted to US$992,389 (2016: net liabilities of US$43,517). Cash balances at the year-end amounted to US$668,183 (2016: US$3,918). Cash balances at the date of this report were approximately GBP550,000 (US$730,000).
Considerable efforts were made to reduce the Company's debt including the settlement of all outstanding debts totalling US$387,000 with Mr Russell Peck, a former Director of the Company and its US subsidiary Strat Aero Inc. and one of its largest creditors and a renegotiation of the Farina loan. Post year end the Farina loan was settled in its entirety.
During 2017, the Company attracted aggregate investment of US$2.86 million to implement the Group's operational plans. US$0.487 million (before expenses) was raised in January 2017 and US$1.09 million (before expenses) was raised in February 2017. In December 2017 a total of US$1.283 million (before expenses) was raised through a Placing and Open Offer to support a fundamental change in the cost base and business model of the Group, which has included significant board changes and the closure of the training business. As the Open Offer closed on 29 December, the US$0.527 million raised (before expenses) and the issue of new shares for the Open Offer to existing shareholders took place on 5 January 2018 and therefore are not included in the 2017 accounts.
Outlook
In April 2018 the Company announced the acquisition of 37% of the enlarged share capital of Gyrometric Systems Limited ("Gyrometric") for a cash consideration of $0.32 million. The Gyrometric technology uses proprietary software and Artificial Intelligence techniques to analyse remotely critical drive shaft performance to diagnose and predict drive system maintenance needs before catastrophic damage occurs.
The initial investment in Gyrometric provides our shareholders with a stake in a new and unique technology with promising prospects. We will continue to develop our investment in Gyrometric through close operational support and involvement and believe that it will be an important component of growth and shareholder value in the months and years ahead.
The restructured and reinvigorated Board, comprising Directors who are all significant shareholders in your Company, has made it a key objective that cash costs are covered by income. We are determined to continue to deliver value to shareholders. The Board strongly believes that funds raised from our shareholders should be utilised for investment wherever possible rather than to finance a gap between income and expenditure. Fixed costs have now been substantially reduced from those prevailing in 2017, and income at Geocurve and Gyrometric is on an upward trajectory. We are continuing to cut costs wherever possible. Strong new business prospects at Geocurve and Gyrometric allow all stakeholders to look to the future with renewed optimism.
Acknowledgments
On behalf of the Board, I would like to thank our business partners, customers, associates and valued shareholders for their continued support.
Nigel Burton
Chairman and Non-Executive Director
6 June 2018
STRATEGIC REPORT
The Directors present their Strategic Report on the Group for the year ended 31 December 2017.
Principal activities and business review
The principal activity of Strat Aero plc (the "Company") and its subsidiaries (together the "Group") is the provision of survey & inspections and data management & analytics.
The year under review represents the fourth year of trading for the Group. During 2017 the Group sought to consolidate its operations and established a revised strategy shortly after the 31 December 2017 year-end to move away from growth via acquisition to growth via existing business development. The Group's focus is now centred on growing the Geocurve business and investing in and providing world leading technological services with the potential through data and analysis to revolutionise monitoring and inspection services in high value and mission critical environments. This will provide the foundation for subsequent years, the details of which are outlined in the Chairman's Statement.
Financial review
The Group recorded revenues of US$1,011,682 (31 December 2016: US$862,988) generating a gross profit of US$896,548 (31 December 2016: US$593,079). The loss for the year to 31 December 2017, the fourth year of trading, after taxation was US$2,513,293 (31 December 2016: US$3,524,476).
Revenues for the year of US$1,011,682 were derived primarily from the Geocurve business (31 December 2016: US$862,988). Administrative expenses amounted to US$3,516,289 (31 December 2016: US$4,189,598); a large portion of these costs comprised of wages and salaries, consultancy and professional fees and travelling expenses.
Consolidated net assets at 31 December 2017 amounted to US$992,389 (31 December 2016: net liabilities US$43,517). Cash balances at the year-end amounted to US$668,183 (31 December 2016: US$3,918).
Following the year end, the Group has secured additional finance to facilitate its development; see Chairman's Statement for more details. Further details can also be found in Note 27 of the Financial Statements.
Key performance indicators
Hot Features
Premium
Year ended Year ended
31 December 31 December
2017 2016
US$ US$
Revenue 1,011,682 862,988
Gross profit 896,548 593,079
============================= ============ ============
Gross margin 88.6% 68.7%
============================= ============ ============
Administrative expenses 3,516,289 4,189,598
============================= ============ ============
Loss after tax for the year 2,513,293 3,524,476
============================= ============ ============
Earnings per share (cents) (0.13) (1.38)
============================= ============ ============
Net assets/(liabilities) 992,389 (43,517)
============================= ============ ============
Cash and cash equivalents 668,183 3,918
============================= ============ ============
Cost of sales expenses in the previous year included $105k relating to Aero Kinetics LLC (a subsidiary company) which were not incurred in 2017. This has improved the gross profit margin in 2017.
Administrative costs in 2017 were reduced from 2016 with the majority of savings made by cutting staff and consultancy costs in non-value-added business areas (see note 6).
Current trading and future developments
The Group continues to make progress across all elements of its business with new commercial opportunities opening up for Geocurve. Geocurve, which won a significant GBP1.1m contract in February 2018, is expected to be self-financing in 2018. In April 2018 the Group announced the acquisition of 37% of Gyrometric, which has developed a unique system for reliably collecting, analysing and monitoring digital data from rotating shafts over a wide range of speeds and shaft sizes. The Group continues to review opportunities for complementary acquisitions involving data collection and analysis using the latest available technology including artificial intelligence and real time reporting using the internet of things.
Principal risks and uncertainties
There are risks associated with the Group's business. The Board regularly reviews the risks to which the Group is exposed and has in place a strategy to mitigate these risks as far as possible. The following summary, which is not exhaustive, outlines some of the key risks and uncertainties facing the Group at its present stage of development:
Operating risks
The responsibility of overseeing the day-to-day operations and the strategic management of the Group depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Group if one or more of these employees cease their employment.
The Group's business planning is carried out on the basis of expected future work. The Group is reliant upon securing new contracts. There is a risk that expected contracts will not be won. The directors mitigate this risk by monitoring the pipeline of future contracts.
The operations of the Group may be affected by various factors, including operational and technical difficulties; difficulties in commissioning and operating plant and equipment; equipment failure or breakdown and adverse weather conditions which may impact surveying operations.
Financial risk factors
The Group's activities expose it to a variety of financial risks: credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
Credit risk
Credit risk arises from outstanding receivables. Management does not expect any losses from non- performance of these receivables.
Liquidity risk
In keeping with similar sized companies, the Group's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital. The Directors are confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed.
Capital risk management
The Group's objectives when managing capital are to safeguard the Group's and Company's ability to continue as a going concern, in order to enable the Group and Company to continue its activities and bring its products to market. The Company defines capital based on the total equity of the Company. The Company monitors its level of cash resources available against future planned activities and may issue new shares in order to raise further funds from time to time.
This Strategic Report was approved by the Board of Directors and authorised for issue on 6 June 2018 by:
Nigel Burton
Chairman and Non-Executive Director
DIRECTORS' REPORT
The Directors present their Report together with the audited Financial Statements for the year ended 31 December 2017.
General information
The principal activity of Strat Aero plc (the "Company") and its subsidiaries (together the "Group") is the provision of survey & inspections and data management & analytics.
Dividends
The Directors do not recommend payment of a dividend (31 December 2016: $nil).
Directors' indemnities
The Group has made qualifying third-party indemnity provisions for the benefit of its Directors which were made during the year and remain in force at the date of this report.
Directors' interests
The Directors who held office in the year up to the date of approval of these Financial Statements and their beneficial interests in the Company's issued share capital at the beginning and end of the accounting year were:
Ordinary Ordinary
Shares Shares Warrants Warrants
Interest at Interest at Interest at Interest
31 December 31 December 31 December at 31 December
2017 2016 2017 2016
No. No. No. No.
Graham Peck (1) 6,669,551 6,669,551 - -
Iain McLure (2) 142,857,143 - 100,000,000 -
Gerard Dempsey (3) 25,560,000 560,000 25,000,000 -
Paul Ryan (4) 152,857,143 400,000 110,000,000 -
Trevor Brown(5) 857,142,857 - 428,571,429 -
Nigel Burton(6) - - - -
1. Includes 1,000,000 shares held by the wife of Graham Peck. Resigned 29 January 2018.
2. Includes 42,857,143 ordinary shares held by Scotnl Consulting B.V., a company controlled by Mr McLure. Appointed on 1 April 2016 and resigned 29 January 2018.
3. Resigned 12 January 2018 4. Shares held by Warande1970 BVBA, a company controlled by Mr Ryan 5. Appointed 20 December 2017 6. Appointed 12 January 2018. Held 71,428,571 warrants at 31 December 2017
Major shareholdings
The closing mid-market price of the Company's Ordinary 0.01p Shares at 31 December 2017 was 0.04p. Shareholders holding more than 3% of the Company's shares at the date of this report were:
Ordinary shares %
-------------------------------- ---------------- -------
Trevor Brown 1,457,142,857 23.60
Interactive Investor Services 779,716,580 12.63
Nominees Limited
Hargreaves Lansdown (Nominees) 438,514,397 7.10
Limited
HDSL Nominees Limited 365,089,812 5.91
Warande 1970 BVBA (controlled 339,267,770 5.50
by Paul Ryan)
Pershing Nominees Limited 338,571,474 5.48
Nigel Burton 214,285,714 3.47
Capital structure
Details of the issued share capital, together with details of the movements in the Company's issued share capital during the year, are shown in note 18. Since 31 December 2017 the Company has raised additional capital as set out below. Further information is set out in note 27 to the Financial Statements.
The holders of Ordinary Shares are entitled to receive notice of, and to attend and vote at, any General Meeting of the Company. Every member present at such a meeting shall, upon a show of hands, have one vote. Upon a poll, holders of all shares shall have one vote for every share held. All Ordinary Shares are entitled to participate in any distributions of the Company's profits or assets. There are no restrictions on the transfer of the Company's Ordinary Shares. Strat Aero plc's ordinary 0.01p shares are traded solely on the AIM market.
The Company also has Deferred Shares in issue, the holders of which are not entitled to vote at General Meetings and have no entitlement to distributions.
Going concern
The Financial Statements have been prepared assuming the Group and Company will continue as a going concern. This assessment has been made based on the Group's economic prospects in the financial forecasts. In assessing whether the going concern assumption is appropriate, the Directors have taken into account all available information for the foreseeable future; in particular for the twelve months from the date of approval of the Financial Statements. This included the nature of the business in which Strat Aero plc operates, the expected contracts to be awarded, the expectation that if required, cost cutting measures can be implemented and if required additional funds can be raised on the open market.
The operational requirements of the Group comprise of maintaining a Head Office in the UK alongside its UK operations together with running its US operations from its US subsidiary. The Directors have reviewed the Group's working capital forecasts. They believe that the funds raised recently, including new equity funds of GBP0.688m in aggregate raised between the Statement of Financial Position date and the date of approval of these Financial Statements, taken in conjunction with the current level of cash balances and expected revenues, will be sufficient for the operational requirements of the Group for a period of at least 12 months from the date of approval of the financial statements.
However, if the Group's revenues fall short of expectations in terms of quantum or timing then the Group will put in place cost cutting measures or will seek to raise the appropriate funds to meet its working capital requirements.
As disclosed in Note 2(b), after making enquiries, the Directors have a reasonable expectation that the Group will have adequate resources through its cash balances to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Financial Statements.
Matters covered in the Strategic Report
The Business Review, results, review of KPIs and details of future developments are included in the Strategic Report and Chairman's Statement.
Events after the reporting year
On 5 January 2018 the Company issued 1,173,624,395 new ordinary shares of 0.01p each at a price of 0.035p per share raising GBP410,768. 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 10 January 2018 the Company issued 135,714,286 new ordinary shares of 0.01p at a price of 0.035p per share in consideration for outstanding fees payable by the Company to an adviser.
On 16 January 2018 the Company issued 85,714,286 new ordinary shares of 0.01p at a price of 0.035p per share as a result of an exercise of warrants.
On 24 January 2018 the Company issued 35,714,286 new ordinary shares of 0.01p at a price of 0.035p per share as a result of an exercise of warrants.
On 31 January 2018 the Company issued 114,285,714 new ordinary shares of 0.01p at a price of 0.035p per share as a result of an exercise of warrants.
On 21 April 2018 the Company issued 557,142,857 new ordinary shares of 0.01p at a price of 0.035p per share as a result of an exercise of warrants. These warrants were exercised by directors and are listed in the directors' transactions below.
In January 2018, the Training and Education segment of the business was ceased. Following a thorough market review the Board concluded that the small volume but potentially high value market for training UAV professionals, principally in international public sector security and military contracts, required substantially more investment than could be justified given the risks involved. Therefore, in early 2018 the Company discontinued this loss-making business.
On 9 April 2018 the Company announced the acquisition of 37% of the enlarged share capital of Gyrometric Systems Limited ("Gyrometric") for a cash consideration of $0.32m.
On 5 June 2018 the Company issued 218,571,428 new ordinary shares of 0.01p at a price of 0.035p per share as a result of an exercise of warrants.
Disclosure of information to auditor
Each of the persons who is a Director at the date of approval of this annual report confirms that:
i) so far as each Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
ii) the Directors have taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Independent auditor
The auditor, PKF Littlejohn LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006 at the annual general meeting.
PKF Littlejohn LLP has expressed a willingness to continue in office as auditor.
By Order of the Board
Nigel Burton
Chairman and Non-Executive Director
6 June 2018
DIRECTORS' RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and Parent Company Financial Statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Parent Company and of the profit or loss of the Group and Parent Company for that year.
In preparing these Financial Statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and
-- prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group and Parent company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Parent company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Parent Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Company is compliant with the AIM Rule 26 regarding the Company's website.
By Order of the Board
Nigel Burton
Chairman and Non-Executive Director
6 June 2018
CORPORATE GOVERNANCE STATEMENT
As at 31 December 2017
From 28th September 2018 as an AIM company, the Company is required to maintain on its website details of a recognised corporate governance code, how the Company complies with this code and an explanation of any departure from the code. The information will need to be reviewed annually and the website should include the date on which the information was last reviewed. This is likely to be reviewed at the same time as the Annual Report and Accounts are prepared. The Directors have sought to address these new requirements in a timely manner and have set out below Strat Aero's Corporate Governance Report.
The Directors recognise the importance of sound corporate governance. As a company whose shares are traded on AIM, the Board has concluded that it will seek to comply with the Quoted Companies Alliance's Corporate Governance Code ("the QCA Code"). In addition, the Directors have adopted a code of conduct for dealings in the shares of the Company by directors and employees and are committed to maintaining the highest standards of corporate governance. Paul Ryan, in his capacity as Non-Executive Director, has assumed responsibility for ensuring that the Company has appropriate corporate governance standards in place and that these requirements are followed and applied within the Company as a whole. The corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers long term value to its shareholders and that shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board. The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board is very aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. A large part of the Company's activities is centred upon what needs to be an open and respectful dialogue with employees, clients and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company successfully to achieve its corporate objectives. The Board places great importance on this aspect of corporate life and seeks to ensure that this flows through all that the Company does.
The key governance related matter that occurred during the financial year ended 31 December 2017 was the appointment of Trevor Brown to the Board. Post year end saw the retirement of Graham Peck, Iain McLure and Gerard Dempsey as directors of the Company and from all their positions within the Company and the appointment of Dr Nigel Burton as Non-Executive Director all in January 2018. The Board successfully implemented this transition and acted effectively in order to ensure continuity.
Corporate Governance Report
The QCA Code sets out 10 principles that should be applied. These are listed below together with a short explanation of how the Company applies each of the principles:
Principle One
Business Model and Strategy
The Board has concluded that the highest medium and long term value can be delivered to its shareholders by the adoption of a single strategy for the Company. The Company's interests in both Geocurve and Gyrometric are active and strategic investments and these are both companies where the Company continues to hold significant stakes, where we remain actively involved with the development of the company with, the Company being represented on the board of the entities and where we believe that the returns that are possible are material. The Company will continue to seek to grow both businesses organically and will seek out further complementary acquisitions that create enhanced value.
Principle Two
Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders. Institutional
shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company's Annual General Meeting. Investors also have access to current information on the Company though its website, www.strat-aero.co.uk, and via Trevor Brown, CEO who is available to answer investor relations enquiries.
Principle Three
Considering wider stakeholder and social responsibilities
The Board recognises that the long term success of the Company is reliant upon the efforts of the employees of the Company and its contractors, suppliers, regulators and other stakeholders. The Board has put in place a range of processes and systems to ensure that there is close oversight and contact with its key resources and relationships. For example, all employees of the Company participate in a structured Company-wide annual assessment process which is designed to ensure that there is an open and confidential dialogue with each person in the Company to help ensure successful two way communication with agreement on goals, targets and aspirations of the employee and the Company. These feedback processes help to ensure that the Company can respond to new issues and opportunities that arise to further the success of employees and the Company. The Company has close ongoing relationships with a broad range of its stakeholders and provides them with the opportunity to raise issues and provide feedback to the Company.
Principle Four
Risk Management
In addition to its other roles and responsibilities, the Audit and Compliance Committee is responsible to the Board for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Company. The risk assessment matrix below sets out those risks, and identifies their ownership and the controls that are in place. This matrix is updated as changes arise in the nature of risks or the controls that are implemented to mitigate them. The Audit and Compliance Committee reviews the risk matrix and the effectiveness of scenario testing on a regular basis. The following principal risks and controls to mitigate them, have been identified:
Activity Risk Impact Control(s)
===================== =========================
Management Recruitment and Reduction in operating Stimulating and
retention of key capability safe working environment
staff Balancing salary
with longer term
incentive plans
=========== ===================== ========================= ==========================
Regulatory Breach of rules Censure or withdrawal Strong compliance
adherence of authorisation regime instilled
at all levels of
the Company
=========== ===================== ========================= ==========================
Strategic Damage to reputation Inability to secure Effective communications
new capital or with shareholders
clients coupled with consistent
messaging to our
Inadequate disaster customers
recovery procedures Loss of key operational Robust compliance
and financial Secure off-site
data storage of data
=========== ===================== ========================= ==========================
Activity Risk Impact Control(s)
========================= ======================
Financial Liquidity, market Inability to continue Robust capital
and credit risk as going concern management policies
Reduction in asset and procedures
Inappropriate values Appropriate authority
controls and accounting Incorrect reporting and investment
policies of assets levels as set by
Treasury and Investment
Policies
Audit and Compliance
Committee
========== ========================= ====================== =========================
The Directors have established procedures, as represented by this statement, for the purpose of providing a system of internal control. An internal audit function is not considered necessary or practical due to the size of the Company and the close day to day control exercised by the executive directors. However, the Board will continue to monitor the need for an internal audit function. The Board works closely with and has regular ongoing dialogue with the Company financial controller and has established appropriate reporting and control mechanisms to ensure the effectiveness of its control systems.
Principle Five
A Well Functioning Board of Directors
As at the date hereof the Board comprised, the CEO Trevor Brown, and two Non-Executive Directors, Dr Nigel Burton and Paul Ryan. Biographical details of the current Directors are set out within Principle Six below. Executive and Non-Executive Directors are subject to re-election at intervals of no more than three years. The letters of appointment of all Directors are available for inspection at the Company's registered office during normal business hours. All the Directors including the Non-Executive Directors are considered to be part time but are expected to provide as much time to the Company as is required. The Board elects a Chairman to chair every meeting.
The Board meets at least eight times per annum. It has established an Audit and Compliance Committee and a Remuneration Committee, particulars of which appear hereafter. The Board has agreed that appointments to the Board are made by the Board as a whole and so has not created a Nominations Committee. Both the CEO and the Non-Executive Directors are considered to be part time but are expected to provide as much time to the Company as is required. The Board considers that this is appropriate given the Company's current stage of operations. It shall continue to monitor the need to match resources to its operational performance and costs and the matter will be kept under review going forward. Paul Ryan is considered to be an Independent Director. The Board notes that the QCA recommends a balance between executive and non-executive Directors and recommends that there be two independent non-executives. The Board shall review further appointments as scale and complexity grows.
Attendance at Board and Committee Meetings
The Company shall report annually on the number of Board and committee meetings held during the year and the attendance record of individual Directors. To date in the current financial year the Directors have a 100% record of attendance at such meetings. In order to be efficient, the Directors meet formally and informally both in person and by telephone. To date there have been at least bi-monthly meetings of the Board, and the volume and frequency of such meetings is expected to continue at this rate.
Principle Six
Appropriate Skills and Experience of the Directors
The Board currently consists of three Directors and, in addition, the Company has employed the outsourced services of MSP Secretaries Limited to act as the Company Secretary. The Company believes that the current balance of skills in the Board as a whole, reflects a very broad range of commercial and professional skills across geographies and industries and each of the Director's has experience in public markets.
The Board recognises that it currently has a limited diversity and this will form a part of any future recruitment consideration if the Board concludes that replacement or additional directors are required.
The Board shall review annually the appropriateness and opportunity for continuing professional development whether formal or informal.
Trevor E Brown MBA
Chief Executive Officer
Trevor has acted as a CEO, executive director and non-executive director for a wide range of companies in a range of sectors over 50 years. This has provided him with a vast amount of experience through the many long term economic and corporate life cycles that mean he is highly qualified to assess the opportunities and risks for both the Company and its portfolio of investee companies. This wide ranging experience is kept up to date through his continued participation in a variety of businesses where the Company has a holding and in other companies that are unconnected to the Company. Trevor is also a member of the Company's Remuneration Committee.
Trevor is also currently a director of Flying Brands plc and a Non-executive Director of Braveheart Investment Company plc. Trevor joined the Board of as an Executive Director in December 2017 and became the Chief Executive in January 2018.
Dr Nigel Burton
Chairman and Non-Executive Director
Dr Nigel Burton has over 25 years' experience in operational and financial management, debt and equity financing, acquisition and integration of businesses, disposals, IPOs and trade sales. Following over 14 years as an investment banker at leading City institutions including UBS Warburg and Deutsche Bank, including as the Managing Director responsible for the energy and utilities industries, Nigel has spent 15 years as Chief Financial Officer of a number of private and public companies, including Navig8 Product Tankers Inc, PetroSaudi Oil Services Limited, Advanced Power AG, and Granby Oil and Gas plc. Nigel is currently Chief Executive Officer of Nu-Oil and Gas plc and Chairman of Polemos plc, both of which are listed on AIM, and until March 2018 was a Non-Executive Director of AIM listed Management Resource Solutions plc. Nigel is a Chartered Electrical Engineer and a Past President of the Institution of Engineering and Technology. He has a B.Sc. (First Class Hons) in Electrical and Electronic Engineering and a Ph.D in Acoustic Imaging from University College London.
Mr Paul Ryan
Independent Non-Executive Director
Mr Ryan has over 20 years' experience at board level largely in the telecoms and ICT sectors. From 2002 to 2013, he held a variety of board positions with leading mobile operator Vodafone and its operating subsidiaries, including Head of Strategy, Regulatory and Political Affairs in Brussels and Director of Strategy and External Affairs for Vodafone Ireland and Vodafone Ghana. Prior to this, he worked as a management consultant in the European telecoms sector, served as a strategic adviser at Ofcom, the UK's communications industry regulator, and was a solicitor at leading international City law firm Ashurst. Mr Ryan acts as an adviser, primarily on strategy, regulation and public policy, to a range of clients including FTSE100 and Fortune 500 companies largely in the ICT space. Mr Ryan has an LLB from Trinity College, Dublin, Ireland and qualified as a solicitor in the UK.
Principle Seven
Evaluation of Board Performance
Internal evaluation of the Board, the Committee and individual Directors is to be undertaken on an annual basis in the form of peer appraisal and discussions to determine the effectiveness and performance in various as well as the Directors' continued independence.
The results and recommendations that come out of the appraisals for the directors shall identify the key corporate and financial targets that are relevant to each Director and their personal targets in terms of career development and training. Progress against previous targets shall also be assessed where relevant.
Principle Eight
Corporate Culture
The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board is very aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. The corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers long term value to its shareholders and that shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board. The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board is very aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. A large part of the Company's activities is centred upon what needs to be an open and respectful dialogue with employees, clients and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives. The Board places great import on this aspect of corporate life and seeks to ensure that this flows through all that the Company does. The directors consider that at present the Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge. The Company has adopted, with effect from the date on which its shares were admitted to AIM, a code for Directors' and employees' dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016.
Principle Nine
Maintenance of Governance Structures and Processes
Ultimate authority for all aspects of the Company's activities rests with the Board, the respective responsibilities of the Chairman and Chief Executive Officer arising as a consequence of delegation by the Board. The Board has adopted appropriate delegations of authority which set out matters which are reserved to the Board. The Chairman is responsible for the effectiveness of the Board, while management of the Company's business and primary contact with shareholders has been delegated by the Board to the Chief Executive Officer.
Audit and Compliance Committee
During the financial year ended 31st December 2017 the Audit and Compliance Committee was chaired by Paul Ryan. Since his appointment in January 2018 Dr Nigel Burton joined Mr Ryan on the Committee. This committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported. It receives reports from the executive management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit and Compliance Committee shall meet not less than twice in each financial year and it has unrestricted access to the Company's auditors.
Remuneration Committee
The Remuneration Committee comprises Paul Ryan and Trevor Brown, and Paul Ryan chairs this committee. The Remuneration Committee reviews the performance of the executive directors and employees and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The Remuneration Committee also considers and approves the granting of share options pursuant to the share option plan and the award of shares in lieu of bonuses pursuant to the Company's Remuneration Policy.
Nominations Committee
The Board has agreed that appointments to the Board will be made by the Board as a whole and so has not created a Nominations Committee.
Non-Executive Directors
The Board has adopted guidelines for the appointment of Non-Executive Directors which have been in place and which have been observed throughout the year. These provide for the orderly and constructive succession and rotation of the Chairman and non-executive directors insofar as both the Chairman and non-executive directors will be appointed for an initial term of three years and may, at the Board's discretion believing it to be in the best interests of the Company, be appointed for subsequent terms. The Chairman may serve as a Non-Executive Director before commencing a first term as Chairman.
In accordance with the Companies Act 2006, the Board complies with: a duty to act within their powers; a duty to promote the success of the Company; a duty to exercise independent judgement; a duty to exercise reasonable care, skill and diligence; a duty to avoid conflicts of interest; a duty not to accept benefits from third parties and a duty to declare any interest in a proposed transaction or arrangement.
Principle Ten
Shareholder Communication
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company's Annual General Meeting.
Investors also have access to current information on the Company though its website, www.strat-aero.co.uk, and via Trevor Brown, CEO, who is available to answer investor relations enquiries. The Company proposes in 2018, subject to the necessary formalities, to move to electronic communications with shareholders in order to maximise efficiency.
The Company shall include, when relevant, in its annual report, any matters of note arising from the audit or remuneration committees.
Paul Ryan
Non-Executive Director
6 June 2018
INDEPENT AUDITOR'S REPORT
For the year ended 31 December 2017
Independent Auditor's Report to the Members of Strat Aero plc
Opinion
We have audited the financial statements of Strat Aero Plc (the 'company') and its subsidiaries (the 'Group') for the year ended 31 December 2017 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent Company Statements of Cash Flow, and the related notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion,
-- the financial statements give a true and fair view of the state of the Group's and of the parent company's affairs as at 31 December 2017 and of the Group's and parent company's loss for the year then ended;
-- the Group and parent company's financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
-- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-- the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-- the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. Materiality for the consolidated financial statements was set as $49,000 (2016: $44,000) based upon revenue, profit before tax and gross assets. Materiality for the parent company financial statements was also $49,000 (2016: $44,000) with the same benchmarks being used.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas involving significant accounting estimates and judgement by the Directors and considered future events that are inherently uncertain. As in all our audits, we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud. The Company and Group finance function is based from one location in the United Kingdom. All material subsidiaries were within our audit scope and audited at this location.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter How the scope of our audit responded
to the key audit matter
Revenue Recognition
==================================================================
The Group generates revenue Our work included:
from differing streams being
consultancy and survey, training * Updating our understanding of the internal control
and software services. environment in operation for the significant revenue
There is an inherent risk around streams and undertaking a walk-through to ensure that
the accuracy of revenue due the key controls within these systems have been
to the differing recognition operating in the period under audit;
and performance criteria for
each stream.
* Substantive transactional testing of revenue
recognised in the Financial Statements across the
different streams;
* Reviewing the key contractual terms and terms of
business with customers to identify the material
performance obligations;
* A review of post-year end invoices, credit notes and
cash receipts to ensure completeness of income
recorded in the accounting period; and
* We also considered the application of the Group's
accounting policies and their appropriateness to the
revenues being incurred.
Based on our work, we noted no
significant issues on the accuracy
of revenue recorded in the year.
==================================================================
Key Audit Matter How the scope of our audit responded
to the key audit matter
Impairment of Intangible assets
=============================================================
The Group carries a material Our work included:
amount of intangible assets * Reviewed management's value in use calculations;
($1,080,306) that have arisen
from past business combinations.
There is a risk that the intangible * Considered management's strategy including all
assets are impaired and are notifications made to the market concerning business
therefore overstated in the lines that have been discontinued post year-end;
financial statements.
* Discussed the basis of key assumptions with
management, in particular, regarding revenue, margins
and cashflow forecasts;
* Performed sensitivity analysis on the headroom to
changes in key assumptions;
* Considered internal and external impairment
indicators; and
* Assessed the accuracy of managed budgets and
forecasts used in prior calculations.
The carrying value of intangible
assets of $1,080,306 relates
solely to the Geocurve acquisition.
All other intangible assets have
been fully impaired in the year.
=============================================================
Key Audit Matter How the scope of our audit responded
to the key audit matter
Valuation and impairment of
investments
=============================================================
The carrying value of investments We performed an impairment review
in subsidiaries was ($1,823,198) of the carrying value of the
in the parent company financial Company's investments in its
statements. subsidiaries.
The recoverability value of Our work included:
the investments is reliant * Verification of ownership;
upon the subsidiary undertakings
being able to generate sufficient
returns from their activities * Discussing with management the basis for impairment
to support their carrying value. or non-impairment, including consideration of
business strategy for the subsidiaries, and
challenging any assumptions made thereon;
* Obtaining management prepared net present value
calculations for subsidiaries and assessing the
competency of the preparer, the mathematical accuracy
of the calculations and the reasonableness of all key
inputs used; and
* Reviewing the impairment indicators per IFRS and
assessing how they applied it to the investments
held.
No impairment was made in respect
of the investment held in Geocurve
Limited. Investments held in
Strat Aero International Inc,
Strat Aero International Limited
and Strat Aero Holdings Inc were
impaired to $nil.
=============================================================
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
-- the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
-- the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
-- the parent company financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or -- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Joseph Archer (Senior Statutory Auditor) 1 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
6 June 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year Year
For the year ended 31 December 2017 ended ended
2017 2016
Continuing operations Note US$ US$
----------------------------------------------------- ---- ----------- -----------
Revenue 5 1,011,682 862,988
Cost of sales (115,134) (269,909)
----------------------------------------------------- ---- ----------- -----------
Gross profit 896,548 593,079
Administration expenses 6 (3,516,289) (4,189,598)
Other income 30,136 -
(Loss)/gain on foreign exchange 6 (51,609) 3,292
Impairment 13 (199,838) -
----------------------------------------------------- ---- ----------- -----------
Operating loss (2,841,052) (3,593,227)
Finance costs 10 (99,081) (43,441)
Finance income 15 34
Loss before income tax (2,940,118) (3,636,634)
Income tax credit 11 426,825 112,158
----------------------------------------------------- ---- ----------- -----------
Loss for the year attributable to owners of
the parent (2,513,293) (3,524,476)
----------------------------------------------------- ---- ----------- -----------
Other Comprehensive Income
Items that may be subsequently reclassified
to profit or loss:
Currency translation difference 218,046 53,029
----------------------------------------------------- ---- ----------- -----------
Total comprehensive income for the year attributable
to owners of the parent (2,295,247) (3,471,447)
----------------------------------------------------- ---- ----------- -----------
Earnings per ordinary share attributable to
owners of the parent during the year (expressed
in cents per share)
Basic and diluted 12 (0.13) (1.38)
----------------------------------------------------- ---- ----------- -----------
The notes form part of these Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2017
2017 2016
Note US$ US$
------------------------------------- ---- ------------ ------------
Non-current assets
Intangible assets 13 1,080,306 1,763,384
Property, plant and equipment 14 117,285 179,189
------------------------------------- ---- ------------ ------------
Total non-current assets 1,197,591 1,942,573
------------------------------------- ---- ------------ ------------
Current Assets
Trade and other receivables 16 443,606 210,255
Cash and cash equivalents 17 668,183 3,918
------------------------------------- ---- ------------ ------------
Total current assets 1,111,788 214,173
------------------------------------- ---- ------------ ------------
Total assets 2,309,380 2,156,746
------------------------------------- ---- ------------ ------------
Equity attributable to owners of the
parent
Share capital 18 6,358,586 4,130,803
Share premium 18 8,098,321 7,217,308
Share-based payments 20 (529,129) (751,486)
Translation reserve 235,157 17,111
Retained loss (13,170,546) (10,657,253)
------------------------------------- ---- ------------ ------------ Total equity 992,389 (43,517) ------------------------------------- ---- ------------ ------------ Current liabilities Trade and other payables 21 943,281 1,323,866 Borrowings 22 156,494 98,688 ------------------------------------- ---- ------------ ------------ Total current liabilities 1,099,775 1,422,554 ------------------------------------- ---- ------------ ------------ Non-current liabilities Borrowings 22 - 417,555 Deferred tax liabilities 23 217,216 360,154 ------------------------------------- ---- ------------ ------------ Total non-current liabilities 217,216 777,709 ------------------------------------- ---- ------------ ------------ TOTAL LIABILITIES 1,316,991 2,200,263 ------------------------------------- ---- ------------ ------------ TOTAL EQUITY AND LIABILTIES 2,309,380 2,156,746 ------------------------------------- ---- ------------ ------------
The notes form part of these Financial Statements.
These Financial Statements were approved by the Board of Directors and authorised for issue on 6 June 2018 and were signed on its behalf by:
Nigel Burton
Non-Executive Director
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2017
Company number: 09109008 2017 2016
Note US$ US$
-------------------------------------- ---- ------------ -----------
Non-current assets
Intangible assets 13 - 92,520
Property, plant and equipment 14 2,835 2,575
Investment in subsidiary undertakings 15 1,268,481 1,177,957
Trade and other receivables 16 554,717 1,706,103
-------------------------------------- ---- ------------ -----------
Total non-current assets 1,826,033 2,979,155
-------------------------------------- ---- ------------ -----------
Current Assets
Trade and other receivables 16 201,447 74,928
Cash and cash equivalents 17 639,808 2,065
-------------------------------------- ---- ------------ -----------
Total current assets 841,255 76,993
-------------------------------------- ---- ------------ -----------
TOTAL ASSETS 2,667,288 3,056,148
-------------------------------------- ---- ------------ -----------
Equity attributable to shareholders
Share capital 18 6,358,586 4,130,803
Share premium 18 8,098,321 7,217,308
Other reserves 20 327,969 105,612
Translation reserve (218,009) (627,680)
Retained loss (12,464,308) (8,658,527)
-------------------------------------- ---- ------------ -----------
Total equity 2,102,559 2,167,516
-------------------------------------- ---- ------------ -----------
Current liabilities
Trade and other payables 21 418,605 789,944
Borrowings 22 146,124 98,688
-------------------------------------- ---- ------------ -----------
Total current liabilities 564,729 888,632
-------------------------------------- ---- ------------ -----------
TOTAL LIABILITIES 564,729 888,632
-------------------------------------- ---- ------------ -----------
TOTAL EQUITY AND LIABILITIES 2,667,288 3,056,148
-------------------------------------- ---- ------------ -----------
The notes form part of these Financial Statements.
The loss for the financial year dealt with in the financial statements of the Parent Company, Strat Aero plc, was US$3,805,781 (2016: loss of US$2,269,311). As permitted by Section 408 of the Companies Act 2006, no separate statement of comprehensive income is presented in respect of the Parent Company.
These Financial Statements were approved by the Board of Directors and authorised for issue on 6 June 2018 and were signed on its behalf by:
Nigel Burton
Non-Executive Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 31 December 2017
Attributable to equity shareholders
---------------------------------------------------------------------------
Share Other Translation Retained
capital Share premium reserves reserve loss Total
US$ US$ US$ US$ US$ US$
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
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(1) 624,082 682,438 - - - 1,306,520
Share Based Payments - Aero
Kinetics(2) - - (120,365) - - (120,365)
Share Based Payments - Other(3) - 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)
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
As at 1 January 2017 4,130,803 7,217,308 (751,486) 17,111 (10,657,253) (43,517)
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
Loss for the year (2,513,293) (2,513,293)
Other comprehensive income
for the year
Currency translation difference - - - 218,046 - 218,046
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
Total comprehensive income
for the year - - - 218,046 (2,513,293) (2,295,247)
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
Proceeds from shares issued
(net of costs) 1,763,146 376,988 - - - 2,140,134
Non cash share issues(1) 464,637 504,025 - - - 968,662
Share Based Payments issued
- Other(4) - - 248,532 - - 248,532
Share Based Payments expired
- Other(5) - - (26,175) - - (26,175)
Transactions with owners,
recognised directly in
equity 2,227,783 881,013 222,357 - - 3,331,153
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
As at 31 December 2017 6,358,586 8,098,321 (529,129) 235,157 (13,170,546) 992,389
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
The notes form part of these Financial Statements.
(1) Issue of shares where no cash consideration was received.
(2) Share Based Payments - Aero Kinetics represents the expiry of warrants that were initially issued on the acquisition of Aero Kinetics by the Strat Aero Group. The warrants expired on settlement of the Aero Kinetics related litigation.
(3) Share Based Payments - Other are warrants that have expired in the previous financial year.
(4) Share Based Payments issued - Other are warrants that have been issued in the current financial year.
(5) Share Based Payments expired - Other are warrants that have expired in the current financial year.
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
As at 31 December 2017
Share Share Other Translation Retained Total
capital premium reserves reserve earnings
US$ US$ US$ US$ US$ US$
-------------------------- --------- --------- ---------- ------------ ------------ -----------
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(1) 624,082 682,438 - - - 1,306,520
Share Based Payments
- Aero Kinetics(2) - -- (120,365) - - (120,365)
Share Based Payments
- Other(3) - 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
-------------------------- --------- --------- ---------- ------------ ------------ -----------
As at 1 January 2017 4,130,803 7,217,308 105,612 (627,680) (8,658,527) 2,167,516
-------------------------- --------- --------- ---------- ------------ ------------ -----------
Loss for the year - --- -- - (3,805,781) (3,805,781)
Other comprehensive
income for the year
Currency translation
difference - -- - 409,671 - 409,671
-------------------------- --------- --------- ---------- ------------ ------------ -----------
Total comprehensive
income for the year - -- - 409,671 (3,805,781) (3,396,110)
-------------------------- --------- --------- ---------- ------------ ------------ -----------
Proceeds from shares
issued
(net of costs) 1,763,146 376,988 -- - - 2,140,134
Non cash share issues(1) 464,637 504,025 -- - - 968,662
Share Based Payments
issued - Other(4) - - 248,532 - - 248,532
Share Based Payments
expired - Other(5) - - (26,175) - - (26,175)
Transactions with owners,
recognised directly
in equity 2,227,783 881,013 222,357 - - 3,331,153
-------------------------- --------- --------- ---------- ------------ ------------ -----------
As at 31 December 2017 6,358,586 8,098,321 327,969 (218,009) (12,464,308) 2,102,559
-------------------------- --------- --------- ---------- ------------ ------------ -----------
The notes form part of these Financial Statements.
(1) Issue of shares where no cash consideration was received.
(2) Share Based Payments - Aero Kinetics represents the expiry of warrants that were initially issued on the acquisition of Aero Kinetics by the Strat Aero Group. The warrants expired on settlement of the Aero Kinetics related litigation.
(3) Share Based Payments - Other are warrants that have expired in the previous financial year.
(4) Share Based Payments issued - Other are warrants that have been issued in the current financial year.
(5) Share Based Payments expired - Other are warrants that have expired in the current financial year.
Company Company
CASH FLOW STATEMENTS Group 2017 Group 2016 2017 2016
As at 31 December 2017 Note US$ US$ US$ US$
-------------------------------------- ---- ----------- ----------- ----------- -----------
Cash Flows from Operating Activities
Loss for the year before tax (2,940,118) (3,636,634) (3,949,901) (2,381,459)
Depreciation of property, plant
and equipment 82,058 176,206 695 992
Amortisation of intangible assets 450,592 425,787 39,852 40,671
Share based payments 248,532 14,889 248,532 14,889
Impairments 199,838 - 2,606,094 1,218,651
Interest income (15) (34) (12) (15)
Finance costs 99,081 43,441 93,062 34,402
Foreign exchange 369,686 71,484 337,965 (15,454)
Taxation 272,688 112,158 144,121 112,148
Decrease/(Increase) in trade
and other receivables (233,350) 252,559 1,024,867 100,527
(Decrease)/Increase in trade
and other payables 10,531 (314,832) (371,339) 129,476
Cash used in operations (1,440,477) (2,854,976) 173,936 (745,172)
Interest expense (99,081) (43,441) 12 (34,402)
-------------------------------------- ---- ----------- ----------- ----------- -----------
Net cash used in operating activities (1,539,558) (2,898,417) 173,948 (799,574)
-------------------------------------- ---- ----------- ----------- ----------- -----------
Cash Flows from Investing Activities
Purchases of intangible assets 13 - (1,086) - -
Purchases of property, plant
and equipment 14 (74,599) - (754) -
Proceeds from sale of property,
plant and equipment 62,289 - - -
Interest income 15 34 12 15
Loans to subsidiary undertakings - - (1,753,132) (1,780,134)
Net cash (used in)/generated
from investing activities (12,295) (1,052) (1,753,874) (1,780,119)
-------------------------------------- ---- ----------- ----------- ----------- -----------
Cash Flows from Financing Activities
Net proceeds from borrowings 22 39,852 98,688 39,852 98,688
Issue of shares, net of issue
costs 2,140,134 1,520,229 2,140,134 1,520,229
-------------------------------------- ---- ----------- ----------- ----------- -----------
Net cash generated from financing
activities 2,179,986 1,618,917 2,179,986 1,618,917
-------------------------------------- ---- ----------- ----------- ----------- -----------
Net (Decrease)/increase in cash
and cash equivalents 628,133 (1,280,552) 600,060 (940,776)
Exchange gains/(losses) on cash
and cash equivalents 36,132 (200,787) 37,683 (188,463)
Cash and cash equivalents at
beginning of year 3,918 1,485,257 2,065 1,131,304
-------------------------------------- ---- ----------- ----------- ----------- -----------
Cash and cash equivalents at
31 December 2017 17 668,183 3,918 639,808 2,065
-------------------------------------- ---- ----------- ----------- ----------- -----------
The notes form part of these Financial Statements.
Shareholder loans totalling $391,115 were settled in share during the year. This is a non-cash movement.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2017
1 General information
Strat Aero plc (the "Company") and its subsidiaries (together the "Group") undertake survey & inspection services, including data management & analytics. During 2017 the Group also provided training and education services, which were discontinued in early 2018. The Company is incorporated and domiciled in the UK and its registered office is Ground Floor, Tintagel House, London Road, Kelvedon, Essex, CO5 9BP.
The Company's shares are quoted on the Alternative Investment Market ("AIM") of the London Stock Exchange plc.
2 Summary of accounting policies
The principal accounting policies applied in the preparation of these Consolidated Financial Statements are set out below. These policies have been consistently applied in the year presented, unless otherwise stated.
(a) Basis of preparation
The Consolidated Financial Statements of Strat Aero plc have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The Consolidated Financial Statements have also been prepared under the historical cost convention.
The Financial Statements are presented in US Dollars (US$) 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 2018-2022, and for managing working capital, in particular for the twelve months from the date of approval of the Financial Statements.
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 24.
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.
(c) New and amended standards
(i) New and amended standards mandatory for the first time for the financial year beginning 1 January 2016
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
There were no IFRSs or IFRIC interpretations that were effective for the first time for the financial year beginning 1 January 2017 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
IFRS 9 Financial Instruments 1 January 2018
IFRS 15 Revenue from Contracts with 1 January 2018
Customers
IFRS 16 Leases 1 January 2019
Annual Improvements 2015 - 2016 Cycle *1 January
2018
IAS 28 (Amendments) Accounting for Investments Postponed
- Applying the Consolidation
Exception
IAS 40 (Amendments) Transfers of Investment Property *1 January
2018
IFRS 10 (Amendments) Consolidated Financial Statements: Postponed
Applying the Consolidation
Exception
IFRS 15 (Clarifications) Revenue from Contracts with *1 January
Customers 2018
IFRIC Interpretation Foreign Currency Transactions *1 January
22 and Advance Consideration 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. Management have reviewed IFRS 15 and IFRS 9 in detail and they do not believe that they will have any material impact on revenue recognition or the classification and measurement of financial instruments in the financial statements.
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.
The Directors concluded that the transaction fell outside the scope of IFRS 3 "Business Combinations" (Revised 2008) since the transaction described above represents a combination of entities under common control. The Directors felt that FRS 6 - Acquisitions and mergers, which does not conflict with IFRS, more accurately reflected 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 income. No fair value adjustments have been made as a result of the combination.
All entities had the same management as well as majority shareholders.
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 has 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, three 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, other than goodwill, 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) Trade and other receivables
Trade receivables are amounts due from customers for 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.
(n) 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.
(o) Share capital and reserves
Equity comprises the following:
-- "Share Capital" represents ordinary shares issued at par value and includes "Deferred Shares" below
-- "Deferred Shares" represents notional shares arising on the redenomination of the nominal share capital from 1p to 0.1p on 11 August 2016 and 0.1p to 0.01p on 17 October 2017. The Deferred Shares form part of the Share Capital balance shown in the Statement of Financial Position.
-- "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. The merger reserve is presented in "other reserves".
-- Share option and warrants 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.
(p) 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.
(q) 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.
(r) 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.
(s) Revenue recognition
During 2017 the Group generated 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 were recognised on these products at the point of sale and when services were 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 Group closed down the consultancy and pilot training divisions shortly after the year end.
(t) Current and deferred income tax
The tax 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.
(u) 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.
The Group test annually whether intangible assets, which have a carrying value as at 31 December 2017 of US$1,080,306, have suffered any impairment, in accordance with the accounting policy. Where applicable, the recoverable amounts of cash generating units have been determined based on value in use calculations. The value in use calculations require the entity to estimate future cash flows expected to arise from the cash generating unit and apply a suitable discount rate in order to calculate present value. These calculations require the use of estimates (Note 13).
5 Segmental analysis
Management considers that during 2017 there were two activities, being the provision survey and inspection services, and aviation training, education and software services in respect of aviation. This segmental analysis is reflected in the Consolidated Group Statements set out herein.
Total revenue comprises:
Revenue from external customers: 2017 2016
US$ US$
-------------------------------------------------- --------- -------
Survey & Inspection 818,618 839,271
Aviation Training, Education & Software Services 193,064 23,717
1,011,682 862,988
-------------------------------------------------- --------- -------
2017 2016
US$ US$
Revenues are generated in a number of countries
analysed as to:
-------------------------------------------------- --------- -------
United Kingdom 816,795 681,474
Europe 21,254 -
United States of America 107,052 157,797
South East Asia 66,581 23,717
-------------------------------------------------- --------- -------
1,011,682 862,988
-------------------------------------------------- --------- -------
2017 2016
US$ US$
The following customers generated more than 10%
of the Group's revenue:
-------------------------------------------------- ------- -------
Customer 1 303,783 150,796
Customer 2 161,932 130,337
Customer 3 79,561 88,681
Customer 4 78,675 60,577
Customer 5 51,280 -
-------------------------------------------------- ------- -------
675,231 430,391
-------------------------------------------------- ------- -------
Carrying amount of assets
2017 2016
US$ US$
------------------------- --------- ---------
United Kingdom 2,258,416 1,762,982
United States of America 50,964 393,764
------------------------- --------- ---------
2,309,380 2,156,746
------------------------- --------- ---------
Carrying amount of liabilities
2017 2016
US$ US$
------------------------- --------- ---------
United Kingdom 1,005,344 1,461,083
United States of America 311,647 739,180
------------------------- --------- ---------
1,316,991 2,200,263
------------------------- --------- ---------
6 Operating expenses by nature
2017 2016
US$ US$
----------------------------------------------- --------- ---------
PR, marketing and advertising 45,899 139,747
Wages, salaries and other staff costs (note 7) 1,366,639 1,764,831
Depreciation 82,058 176,206
Amortisation 450,592 425,787
Operating lease expenses 117,745 161,708
Professional and consultancy fees 588,092 1,007,779
Audit fees (note 9) 43,698 59,719
Share option expense 248,532 -
Aero Kinetic litigation net settlement (gain) - (129,477)
Net foreign exchange (gains) 51,609 (3,292)
Impairment 199,838 -
Other expenses 573,034 583,298
----------------------------------------------- --------- ---------
3,767,736 4,186,306
----------------------------------------------- --------- ---------
7 Staff costs
The average number of employees, including Directors, employed was:
2017 (Group) 2017 (Parent) 2016 (Group) 2016 (Parent)
No. No. No. No.
--------------- ------------ ------------- ------------ -------------
Directors 4 4 5 5
Development 12 - 18 -
Administration 5 - 8 -
--------------- ------------ ------------- ------------ -------------
21 4 31 5
--------------- ------------ ------------- ------------ -------------
Employees', including Directors', costs comprise:
2017 2016
US$ US$
-------------------------------------- --------- ---------
Wages, salaries and other staff costs 1,276,936 1,638,477
Social security costs 89,703 126,354
-------------------------------------- --------- ---------
1,366,639 1,764,831
-------------------------------------- --------- ---------
8 Directors
Key management are considered to be Directors.
2017 2016
Group Short term Short term
employee employee
benefits Other Total benefits Other Total
US$ US$ US$ US$ US$ US$
--------------- ---------- ------ ------- ---------- ----- -------
Graham Peck - - - 20,336 - 20,336
Iain McLure 178,883 8,166 187,049 122,013 - 122,013
Gerard Dempsey 61,569 2,042 63,611 27,114 - 27,114
Paul Ryan 236,042 8,983 245,025 27,114 - 27,114
Gary Nel 115,334 - 115,334 - - -
Trevor Brown - 47,591 47,591 - - -
591,828 66,782 658,610 196,577 - 196,577
--------------- ---------- ------ ------- ---------- ----- -------
Iain McClure was paid short term employee benefits of $51,308 through a service company, ScotNL Consulting B.V, in 2017. Gerard Dempsey was paid short term employee benefits of $61,569 through a service company in 2017. Paul Ryan was paid short term employee benefits of $236,042 through a service company, Warande1970 BVBA, in 2017.
Gary Nel was considered key management in the Group in 2017 only.
9 Auditors remuneration
2017 2016
US$ US$
---------------------------------------------------- ------ ------
Fees payable to the Company's auditor for the
audit of the Group and Parent Company's Financial
Statements 36,000 10,000
Fees payable to the Company's auditor for other
services:
Audit of the accounts of subsidiaries - 43,541
Taxation - compliance 7,698 6,250
43,698 59,791
--------------------------------------------------- ------ ------
10 Finance costs
2017 2016
US$ US$
----------------------------------------- ------ ------
Interest payable and other finance costs 99,081 43,441
----------------------------------------- ------ ------
99,081 43,441
----------------------------------------- ------ ------
11 Tax
No income tax charge was recognised in the profit or loss due to losses incurred.
Group 2017 2016 Income tax US$ US$ -------------------------- --------- --------- Current tax UK Corporation tax credit (272,688) (112,158) -------------------------- --------- --------- Deferred tax Current year (154,137) - -------------------------- --------- --------- Tax credit (426,825) (112,158) -------------------------- --------- ---------
The tax on the Group's loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the profits/(losses) of the consolidated entities as follows:
2017 2016
Group US$ US$
-------------------------------------------------- ----------- -----------
Loss before tax (2,897,335) (3,636,634)
-------------------------------------------------- ----------- -----------
Tax at the applicable rate of 21.74% (31 December
2016: 24.38%): (629,980) (886,514)
Effect of:
Expenses not deductible for tax purposes 7,517 27,015
Depreciation in excess of capital allowances 120,111 146,750
R&D tax credit (280,043) (112,158)
Fixed asset timing differences (154,137) -
Net tax effect of losses carried forward 509,707 712,749
-------------------------------------------------- ----------- -----------
Tax credit for the year (426,825) (112,158)
-------------------------------------------------- ----------- -----------
The tax rate used is a combination of 20% to March 2017 and 19% thereafter; the standard rate of corporation tax in the UK and US tax rate of 35% to give an applicable rate of 21.74%.
The Group has tax losses of approximately US$2,605,839 (31 December 2016: US$2,104,132) available to carry forward against future taxable profits. No deferred tax asset has been recognised in view of the uncertainty over the timing of future taxable profits against which the losses may be offset.
12 Earnings per share
Basic earnings per share has been calculated by dividing the loss attributable to equity holders of the Company after taxation by the weighted average number of shares in issue during the year. There is no difference between the basic and diluted loss per share as the effect on the exercise of options and warrants would be to decrease the earnings per share.
Since the year end, warrants have been exercised which may result in the dilution of the earnings per share in the future. Details of share options and warrants that were anti-dilutive but may be dilutive in the future are set out in note 19.
2017 2016
Basic and Diluted US$ US$
----------------------------------- ---------------- ------------
Loss after taxation (2,513,293) (3,524,476)
----------------------------------- ---------------- ------------
Weighted average number of shares 1,935,475,795 255,104,361
----------------------------------- ---------------- ------------
Earnings per share (cents) (0.13) (1.38)
----------------------------------- ---------------- ------------
13 Intangible assets
2017 2016
Goodwill - Cost and Net Book Value US$ US$
-------------------------------------------------------- ------------ ----------
At 1 January 14,557 14,557
At 31 December 14,557 14,557
-------------------------------------------------------- ------------ ----------
Customer Intellectual Development
Lists Property Costs Total
Other intangibles - Group US$ US$ US$ US$
------------------------------ --------- ------------- ------------ ------------
Cost
At 1 January 2016 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
------------------------------ --------- ------------- ------------ ------------
Impairment - (199,260) (466,867) (666,127)
Foreign exchange differences 3,169 3,613 6,505 13,287
------------------------------ --------- ------------- ------------ ------------
At 31 December 2017 537,347 612,599 636,146 1,786,092
------------------------------ --------- ------------- ------------ ------------
Accumulated amortisation
At 1 January 2016 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
------------------------------ --------- ------------- ------------ ------------
Charge for the year 107,469 122,520 220,603 450,592
Impairment - (139,482) (326,807) (466,289)
Foreign exchange differences 9,454 8,844 27,637 45,935
------------------------------ --------- ------------- ------------ ------------
At 31 December 2017 224,969 210,456 284,918 720,343
------------------------------ --------- ------------- ------------ ------------
Net book value
At 31 December 2016 426,132 589,672 733,023 1,748,827
------------------------------ --------- ------------- ------------ ------------
At 31 December 2017 312,378 402,143 351,228 1,065,749
------------------------------ --------- ------------- ------------ ------------
Intellectual
Property
Other intangibles - Company US$
------------------------------ -------------
Cost
At 1 January 2016 222,030
Foreign exchange differences (36,990)
-------------------------------- -------------
At 31 December 2016 185,040
-------------------------------- -------------
Foreign exchange differences 14,220
Impairment (199,260)
-------------------------------- ------------- At 31 December 2017 - ------------------------------ ------------- Accumulated amortisation At 1 January 2016 66,519 Charge for the year 40,671 Foreign exchange differences (14,670) -------------------------------- ------------- At 31 December 2016 92,520 -------------------------------- ------------- Charge for the year 39,852 Impairment (139,482) Foreign exchange differences 7,110 -------------------------------- ------------- At 31 December 2017 - ------------------------------ ------------- Net book value At 31 December 2016 92,520 -------------------------------- ------------- At 31 December 2017 - -------------------------------- -------------
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 2017 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 & Motor Vehicles
equipment Total
Group US$ US$ US$
------------------------------------------------- ----------- --------------- ----------
Cost
At 1 January 2016 518,078 119,549 637,627
Foreign exchange differences (58,350) (13,465) (71,815)
------------------------------------------------- ----------- --------------- ----------
At 31 December 2016 459,728 106,084 565,812
------------------------------------------------- ----------- --------------- ----------
Additions 63,972 10,627 74,599
Disposals (173,900) (32,446) (206,346)
Foreign exchange differences & reclassification 33,307 (32,138) 1,170
------------------------------------------------- ----------- --------------- ----------
At 31 December 2017 383,107 52,127 435,235
------------------------------------------------- ----------- --------------- ----------
Accumulated depreciation
At 1 January 2016 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
------------------------------------------------- ----------- --------------- ----------
Charge for the year 71,609 10,449 82,058
Disposals (117,637) (26,420) (144,057)
Foreign exchange differences & reclassification 6,049 (12,725) (6,676)
------------------------------------------------- ----------- --------------- ----------
At 31 December 2017 285,343 32,606 317,949
------------------------------------------------- ----------- --------------- ----------
Net book value at 31 December 2016 134,407 44,782 179,189
------------------------------------------------- ----------- --------------- ----------
Net book value at 31 December 2017 97,764 19,521 117,285
------------------------------------------------- ----------- --------------- ----------
Plant & Motor Vehicles
equipment Total
Company US$ US$ US$
------------------------------------ ----------- --------------- --------
Cost
At 1 January 2016 5,415 - 5,415
Foreign exchange differences (901) - (901)
------------------------------------ ----------- --------------- --------
At 31 December 2016 4,514 - 4,514
------------------------------------ ----------- --------------- --------
Additions 754 - 754
Foreign exchange differences 346 - 346
------------------------------------ ----------- --------------- --------
At 31 December 2017 5,614 5,614
------------------------------------ ----------- --------------- --------
Accumulated depreciation
At 1 January 2016 1,243 - 1,243
Charge for the period 992 - 992
Foreign exchange differences (296) - (296)
------------------------------------ ----------- --------------- --------
At 31 December 2016 1,939 - 1,939
------------------------------------ ----------- --------------- --------
Charge for the year 695 - 695
Foreign exchange differences 145 145
------------------------------------ ----------- --------------- --------
At 31 December 2017 2,779 2,779
------------------------------------ ----------- --------------- --------
Net book value at 31 December 2016 2,575 - 2,575
------------------------------------ ----------- --------------- --------
Net book value at 31 December 2017 2,835 - 2,835
------------------------------------ ----------- --------------- --------
15 Investment in subsidiary undertakings
2017 2016
Company US$ US$
---------------------------------------- ------------- ------------
As at 1 January 1,177,957 1,413,434
Foreign exchange differences 90,524 (235,477)
Cost at 31 December 1,268,481 1,177,957
---------------------------------------- ------------- ------------
A projected cashflow period of five years was used to assess the
value in use for investments in subsidiary undertakings.
The following are the principal subsidiaries of the Company at 31 December 2017 and at the date of these Financial Statements.
Parent Class Share capital
Name of company Registered Address company of shares held Nature of business
----------------------- -------------------- -------------------- ------------ ------------- --------------------
Strat Aero 19500 State Highway Strat Ordinary 100% Provider of
International, 249, Suite 655, Aero plc aviation software,
Inc. Houston, Texas products and
77070, USA services, dormant
after 31 December
2017.
Strat Aero The Beehive, Strat Ordinary 100% Aviation management
International City Place, Gatwick Aero plc and consultancy
Limited Airport, West services, dormant
Sussex, RH6 0PA, after 31 December
UK 2017.
Strat Aero 19500 State Highway Strat N/A 100% Dormant company
International 249, Suite 655, Aero International,
Consultancy Houston, Texas Inc
Group, LLC 77070, USA
Strat Aero Holdings, 19500 State Highway Strat Ordinary 100% Holding company
Inc 249, Suite 655, Aero plc
Houston, Texas
77070, USA
Aero Kinetics 19500 State Highway Strat N/A 100% Provider of
Labs, LLC 249, Suite 655, Aero Holdings, aviation software,
Houston, Texas Inc products and
77070, USA services, dormant
after 31 December
2017.
Aero Kinetics, 19500 State Highway Strat N/A 100% Provider of
LLC 249, Suite 655, Aero Holdings, aviation software,
Houston, Texas Inc products and
77070, USA services, dormant
after 31 December
2017.
Parent Class Share capital
Name of company Registered Address company of shares held Nature of business
----------------- ---------------------- --------------- ------------ ------------- -------------------
Nephos Services, 19500 State Highway Strat N/A 100% Dormant company
LLC 249, Suite 655, Aero Holdings,
Houston, Texas Inc
77070, USA
Aero Kinetics 19500 State Highway Aero Kinetics, N/A 100% Dormant company
UAS TC001, LLC 249, Suite 655, LLC
Houston, Texas
77070, USA
Geocurve Ltd Tintagel House Strat Ordinary 100% Surveying and
London Road, Aero plc mapping
Kelvedon, Colchester,
Essex, CO5 9BP,
UK
GN Site Engineers Tintagel House Geocurve Ordinary 100% Dormant company
Ltd London Road, Ltd
Kelvedon, Colchester,
Essex, CO5 9BP,
UK
UKAeroVision Tintagel House Geocurve Ordinary 100% Dormant company
Limited London Road, Ltd
Kelvedon, Colchester,
Essex, CO5 9BP,
UK
16 Trade and other receivables
2017 2016
Group Company Group Company
US$ US$ US$ US$
------------------------------------- -------- ---------- -------- ------------
Amounts due from group undertakings - 554,717 - 1,706,103
Trade receivables 114,937 - 127,639 -
VAT receivable 33,193 29,599 - 22,708
Other receivables 40,472 11,557 494 11,421
Corporation tax 194,407 149,256 - -
Prepayments 60,597 11,035 82,122 40,799
------------------------------------- -------- ---------- -------- ------------
At 31 December 443,606 756,164 210,255 1,781,031
------------------------------------- -------- ---------- -------- ------------
Less: non-current portion - (554,717) - (1,706,103)
------------------------------------- -------- ---------- -------- ------------
Current portion 443,606 201,447 210,255 74,928
------------------------------------- -------- ---------- -------- ------------
The fair value of all receivables is the same as their carrying values stated above.
Group loans of $2,546,316 have been impaired at 31 December 2017.
Ageing of past due trade receivables - Group: 2017 2016
US$ US$
---------------------------------------------- ------- -------
Current 64,632 -
0 - 15 days - -
16 - 30 days 13,445 76,418
Over 30 days 36,860 51,221
---------------------------------------------- ------- -------
114,937 127,639
---------------------------------------------- ------- -------
The carrying amount of the Group's trade receivables are denominated in the following currencies:
2017 2016
US$ US$
----------- ------- -------
US Dollars 9,540 23,286
UK Pounds 105,397 104,353
----------- ------- -------
114,937 127,639
----------- ------- -------
The maximum exposure to credit risk at the reporting date is the carrying value reported above. The Group does not hold collateral as security. Provisions totalling $112,496 (2016: $nil) have been made at the year-end in respect of trade receivables.
17 Cash and cash equivalents
2017 2016
Group Company Group Company
US$ US$ US$ US$
-------------------------------------------------------- ------------------------ ----------------------- ------ --------
Cash at bank and in hand 668,183 639,808 3,918 2,065
668,183 639,808 3,918 2,065
-------------------------------------------------------- ------------------------ ----------------------- ------ --------
Cash at bank is held with credit institutions with an A credit rating.
The carrying amount of the Group's cash and cash equivalents are denominated in the following currencies:
2017 2016
Group Company Group Company
US$ US$ US$ US$
---------------------------------- --------------------------------- ------------------------------------ ------ --------
US Dollars 754 - 4,109 -
UK Pounds 667,429 639,808 (191) 2,065
---------------------------------- --------------------------------- ------------------------------------ ------ --------
668,183 639,808 3,918 2,065
---------------------------------- --------------------------------- ------------------------------------ ------ --------
18 Share capital
2017 2016
Issued equity share capital Number US$ Number US$
Issued and fully paid
Ordinary shares of 0.01p
(2016:0.1p) each 3,852,760,457 507,627 384,285,262 556,767
Deferred shares of 0.01p 2,358,954,414 3,574,036 2,358,954,414 3,574,036
A Deferred shares of 0.01p 17,678,567,358 2,276,923 - -
----------------- ---------------
6,358,586 4,130,803
----------------- ----------- --------------- -----------
Group and Company Ordinary
Number of shares Share premium Total
shares US$ US$ US$
------------------------------------ -------------- ---------- -------------- ------------
Issued and fully paid
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
2016 35,555,556 506,082 63,260 569,342
Issue of new shares - 20 April
2016 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
2016 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 ------------------------------------ -------------- ---------- -------------- ------------ As at 1 January 2017 ------------------------------------ -------------- ---------- -------------- ------------ Issue of new shares - 24 January 2017 380,000,000 472,790 - 472,790 Issue of new shares - 14 February 2017 1,150,000,000 1,438,201 - 1,438,201 Issue of new shares - 1 March 2017 50,000,000 62,157 - 62,157 Issue of new shares - 4 December 2017 1,771,428,572 238,898 597,245 836,143 Issue of new shares - 5 December 2017 74,189,480 9,996 464,803 474,799 Issue of new shares - 28 December 2017 42,857,143 5,741 14,354 20,095 Share issue costs - - (195,389) (195,389) ------------------------------------ -------------- ---------- -------------- ------------ As at 31 December 2017 3,852,760,457 6,358,586 8,098,321 14,456,907 ------------------------------------ -------------- ---------- -------------- ------------
On 24 January 2017 the Company issued 380,000,000 new ordinary shares of 0.1p each at a price of 0.1p per share raising GBP380,000. 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 14 February 2017 the Company issued 850,000,000 new ordinary shares of 0.1p each at a price of 0.1p per share raising GBP850,000. On the same date certain directors and a director of a subsidiary company subscribed to 250,000,000 new ordinary shares of 0.1p in settlement of outstanding compensation and expenses accrued since 2015. In addition, 25,000,000 new ordinary shares of 0.1p were issued to settle outstanding creditor balances and 25,000,000 new ordinary shares of 0.1p were issued as bonuses to employees of the group. On the same date the Company also issued 1,170,000,000 warrants exercisable for two years from the date of grant at an exercise price of 0.225p.
On 1 March 2017 the Company issued 50,000,000 new ordinary shares of 0.1p each at a price of 0.1p per share in exchange for agreeing new terms of an existing loan facility and in consideration of interest accrued to 1 March 2017.
On 4 December 2017 the Company issued 1,685,714,286 new ordinary shares of 0.01p at a price of 0.035p per share raising GBP590,000. On the same date the Company issued 1,011,428,571 warrants exercisable for six months from the date of grant at an exercise price of 0.035p. In addition, certain directors subscribed to 85,714,286 new ordinary shares of 0.01p at a price of 0.035p per share in settlement of outstanding compensation and expenses.
On 5 December 2017 the Company issued 74,189,480 new ordinary shares of 0.01p to a director of a subsidiary company in consideration for settlement of $387,000 owed to the director by the Group.
On 28 December 2017 the Company issued 42,857,143 new ordinary shares of 0.01p at a price of 0.035p per share in consideration for outstanding fees payable by the Company to an adviser.
19 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:
2017 2016
Weighted Weighted
average average
price No. of price
No. of warrants GBP warrants GBP
---------------------------- ------------------------------ --------- ------------- ---------
At 1 January 21,090,622 0.01 36,139,368 0.08
Granted during the year 2,599,428,571 0.002 19,642,222 0.01
Expired during the year - - (34,690,968) 0.08
---------------------------- ------------------------------ --------- ------------- ---------
Outstanding at 31 December 2,620,519,193 0.002 21,090,622 0.01
---------------------------- -------------- ------------------------- ------------- ---------
Exercisable at 31 December 2,620,519,193 0.002 21,090,622 0.01
---------------------------- -------------- ------------------------- ------------- ---------
The warrants outstanding at 31 December 2017 had a weighted average remaining contractual life of 1.5 years (31 December 2016: 2.5 years).
GBP 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 2017 was determined using the Black Scholes valuation model. The assumptions used in applying the Black Scholes pricing model were as follows:
Granted on: 22 Feb 2017 22 Jun 2017 20 Dec 2017 Share price at the date of grant 0.105p 0.07p 0.05p Exercise price 0.225p 0.23p 0.04p Expected volatility 49.08% 53.38% 22.62% Expected warrant life 2 years 2 years 0.5 years Risk free rate 1.79% 1.79% 1.79%
The volatility was determined by examining the monthly share price.
On 22 February 2017 the Company granted 1,558,000,000 warrants to subscribe for new ordinary shares at an exercise price of 0.225 pence per share exercisable for a period of 2 years.
On 22 June 2017 the Company granted 30,000,000 warrants to subscribe for new ordinary shares at an exercise price of 0.225 pence per share exercisable for a period of 2 years.
The share option expensed recognised in the year was $248,532 (2016 - $Nil).
On 20 December 2017 the Company granted 1,011,428,571 warrants to subscribe for new ordinary shares at an exercise price of 0.035 pence per share exercisable for a period of 6 months.
20 Share-based payments
Company Group
Share option Share option
and warrants and warrants Merger
reserve Total reserve reserve Total
US$ US$ US$ US$ US$
------------------------------ -------------- ---------- -------------- ---------- ----------
At 1 January 2016 283,088 283,088 283,088 (857,098) (574,010)
Share warrants issued
(note 19) 83,391 83,391 83,391 - 83,391
Share warrants exercised
(note 19) (260,867) (260,867) (260,867) - (260,867)
At 31 December 2016 105,612 105,612 105,612 (857,098) (751,486)
------------------------------ -------------- ---------- -------------- ---------- ----------
At 1 January 2017 105,612 105,612 105,612 (857,098) (751,486)
Foreign exchange differences 8,116 8,116 8,116 - 8,116
Share warrants issued
(note 19) 240,416 240,416 240,416 - 240,416
Share warrants lapsed
(note 19) (26,175) (26,175) (26,175) - (26,175)
------------------------------ -------------- ---------- -------------- ---------- ----------
At 31 December 2017 327,969 327,969 327,969 (857,098) (529,129)
------------------------------ -------------- ---------- -------------- ---------- ----------
21 Trade and other payables
2017 2016
Group Company Group Company
US$ US$ US$ US$
--------------------------------- -------- -------- ---------- --------
Trade payables 399,359 275,768 549,845 374,993
VAT payable 37,993 - 2,535 -
Social security and other taxes 256,189 4,286 219,865 3,706
Corporation Tax 7,395 - - -
Accruals 227,791 138,551 523,154 399,658
Other creditors 14,554 - 28,466 11,587
--------------------------------- -------- -------- ---------- --------
943,281 418,605 1,323,865 789,944
--------------------------------- -------- -------- ---------- --------
22 Borrowings
2017 2016
Group Company Group Company
US$ US$ US$ US$
--------------------------- -------- -------- ---------- -------- Shareholder loans - - 391,115 - Other borrowings 156,494 146,124 125,128 98,688 --------------------------- -------- -------- ---------- -------- At 31 December 156,494 146,124 516,243 98,688 --------------------------- -------- -------- ---------- -------- Less: non-current portion - - (417,555) - --------------------------- -------- -------- ---------- -------- Current portion 156,494 146,124 98,688 98,688 --------------------------- -------- -------- ---------- --------
Reconciliation to cash flows from financing activities:
Group Company
US$ US$
Balance as at 1 Jan 2017 516,243 98,688
Share based payment (391,115) -
Net proceeds from borrowings 23,781 39,852
Foreign exchange movements 7,585 7,584
-------------------------------- ---------- --------
Balance as at 31 December 2017 156,494 146,124
-------------------------------- ---------- --------
Included within other borrowings is $146,124 owed to Farina Investments (UK) Ltd. This facility was paid in full after the year end and the charge over assets was satisfied.
23 Deferred tax
2017 2016
Group Company Group Company
US$ US$ US$ US$
------------------------------ -------- -------- -------- --------
Deferred tax liabilities
Deferred tax liability after
more than 12 months 217,216 - 360,154 -
Deferred tax liabilities 217,216 - 360,154 -
------------------------------ -------- -------- -------- --------
Deferred tax relates to timing differences in respect of the investment in Geocurve Limited and Tangible Fixed Assets.
The movement in the deferred tax account is as follows:
2017 2016
Group Company Group Company
US$ US$ US$ US$
-------------------------------- ---------- -------- -------- --------
At 1 January 360,154 - 360,154 -
Investment in subsidiaries (157,939) - - -
Fixed asset timing differences 15,001 - - -
At 31 December 217,216 - 360,154 -
-------------------------------- ---------- -------- -------- --------
24 Financial instruments
Categories of financial instruments
2017 2017
Group Company
US$ US$
--------------------------------------------------- ---------- ----------
Assets - Loans and receivables
Trade and other receivables (excluding
prepayments) 383,007 745,129
Cash and cash equivalents 668,183 639,808
---------------------------------------------------- ---------- ----------
1,051,190 1,384,937
--------------------------------------------------- ---------- ----------
Liabilities - At amortised cost
Trade and other payables (excluding non-financial
liabilities) 715,489 280,055
Borrowings 156,494 146,124
---------------------------------------------------- ---------- ----------
871,983 426,179
--------------------------------------------------- ---------- ----------
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 516,243 98,688
---------------------------------------------------- ---------- ----------
1,316,954 888,632
--------------------------------------------------- ---------- ----------
25 Financial commitments
Operating leases
At 31 December 2017 the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:
2017 2016
-------
Land and Land and
buildings buildings
2017 US$ US$
Other
US$
------------------------------------- ------- ----------- -----------
No later than one year 781 69,824 124,988
Later than one year but no later
than 5 years 1,172 140,838 126,534
Total future minimum lease payments 1,953 210,662 251,522
------------------------------------- ------- ----------- -----------
26 Related party transactions
Directors' transactions
Russell Peck historically provided Strat Aero International Inc with advances to fund its operations and working capital requirements. The balance outstanding at the year-end was US$nil (31 December 2016: US$398,313). Russell Peck accepted 74,189,480 ordinary shares in December 2017 in consideration for settlement of the outstanding balance due.
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 GBP100,000 -- Gerard Dempsey subscribed for 25,000,000 new ordinary shares of 0.1p each for GBP25,000 -- Paul Ryan subscribed for 110,000,000 new ordinary shares of 0.1p each for GBP110,000 -- Russell Peck subscribed for 15,000,000 new ordinary shares of 0.1p each for GBP15,000
In December 2017 the directors and previous directors of the Company accepted the following shares as consideration for prior year outstanding fees and expenses:
-- Iain McLure 42,857,143 new ordinary shares of 0.01p at a price of 0.035p for GBP15,000. -- Paul Ryan 42,857,143 new ordinary shares of 0.01p at a price of 0.035p for GBP15,000.
Directors remuneration is disclosed in note 8.
Iain McClure is a director of ScotNL Consulting B.V. which the Group pays in relation to Iain's director fee. The payment for these services amounted to $51k in the year to 31 December 2017 (2016 - $37k) and $7k is outstanding and included in trade payables as at this date (2016 - $37k).
Paul Ryan is a director of Warande1970 BVBA which the Group pays in relation to Paul's director fee. The payment for these services amounted to $236k in the year to 31 December 2017 (2016 - $165k) and $57k is outstanding and included in trade payables as at this date (2016 - $165k).
Gerard Dempsey and Graham Peck were previously directors of Truspine Technologies Limited. Payment to this company for services performed amounted to $Nil in the year to 31 December 2017 (2016 - $17k) and $Nil is outstanding and included in trade payables as at this date (2016 - $Nil). As at 31 December 2017 an amount of $17k was included in other receivables. This balance has been fully provided for.
Parent Company transactions with subsidiary companies
During the year the Company received US$85,000 (31 December 2016: US$199,137) management fees from its subsidiaries. At the year-end US$554,717 (31 December 2016: US$1,706,103) was due from the subsidiary companies as follows (note 16).
- Geocurve Ltd US$554,717 (2016: US$486,038) - Strat Aero International Limited US$nil (2016: US$1,220,065) 27 Events after the reporting year
On 5 January 2018 the Company issued 1,173,624,395 new ordinary shares of 0.01p each at a price of 0.035p per share raising GBP410,768. 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 10 January 2018 the Company issued 135,714,286 new ordinary shares of 0.01p at a price of 0.035p per share in consideration for outstanding fees payable by the Company to an adviser.
On 16 January 2018 the Company issued 85,714,286 new ordinary shares of 0.01p at a price of 0.035p per share as a result of an exercise of warrants.
On 24 January 2018 the Company issued 35,714,286 new ordinary shares of 0.01p at a price of 0.035p per share as a result of an exercise of warrants.
On 31 January 2018 the Company issued 114,285,714 new ordinary shares of 0.01p at a price of 0.035p per share as a result of an exercise of warrants.
On 21 April 2018 the Company issued 557,142,857 new ordinary shares of 0.01p at a price of 0.035p per share as a result of an exercise of warrants. These warrants were exercised by directors and are listed in the directors' transactions below.
On 9 April 2018 the Company announced the acquisition of 37% of the enlarged share capital of Gyrometric Systems Limited ("Gyrometric") for a cash consideration of $0.32m.
On 5 June 2018 the Company issued 218,571,428 new ordinary shares of 0.01p at a price of 0.035p per share as a result of an exercise of warrants.
Directors' transactions
The directors and previous directors of the Company who participated in the January 2018 Placing were as follows:
-- Paul Ryan subscribed for 186,010,627 new ordinary shares of 0.01p each at a price of 0.035p for GBP65,104.
The directors of the Company who exercised warrants in April 2018 were as follows:
-- Trevor Brown exercised 485,714,286 warrants at an exercise price of 0.035p for a consideration of GBP170,000.
-- Nigel Burton exercised 71,428,571 warrants at an exercise price of 0.035p for a consideration of GBP25,000.
COMPANY INFORMATION
Directors Trevor Brown (Chief Executive Officer)
Nigel Burton (Non-Executive Chairman)
Paul Ryan (Non-Executive Director)
Website www.strat-aero.com
Registered Office Ground Floor
Tintagel House
London Road
Kelvedon
Essex CO5 9BP
Registered Number 09109008 Nominated Adviser SP Angel Corporate Finance LLP and Joint Broker Prince Frederick House
35-39 Maddox Street
London W1S 2PP
Joint Broker Peterhouse Corporate Finance Limited
New Liverpool House
15 Eldon Street
London EC2M 7LD
Solicitors Edwin Coe
2 Stone Buildings
Lincoln's Inn
London
WC2A 3TH
Independent Auditor PKF Littlejohn LLP
Statutory Auditor
1 Westferry Circus
Canary Wharf
London E14 4HD
Registrars Share Registrars Limited
First Floor
9 Lion and Lamb Yard
Farnham
Surrey GU9 97LL
Details of the Directors and their backgrounds are as follows:
Trevor Brown (aged 71, British)
Chief Executive Officer
Trevor Brown has been a strategic investor in real estate and equities for more than 30 years.
Mr Brown is currently an Executive Director of Flying Brands plc, CEO of Braveheart Investment Group plc and until December 2017 was a Non-Executive Director of Management Resource Solutions plc. He was also a director of AIM listed Feedback plc and of Advanced Oncotherapy plc.
Nigel Burton (aged 60, British)
Non-Executive Chairman
Nigel has over 25 years' experience in operational and financial management, debt and equity financing, acquisition and integration of businesses, disposals, IPOs and trade sales. Following over 14 years as an investment banker at leading City institutions including UBS Warburg and Deutsche Bank, including as the Managing Director responsible for the energy and utilities industries, Nigel spent 15 years as Chief Financial Officer of a number of private and public companies, including Navig8 Product Tankers Inc, PetroSaudi Oil Services Limited, Advanced Power AG, and Granby Oil and Gas plc. Nigel is currently Chief Executive Officer of Nu-Oil and Gas plc and Chairman of Polemos plc, both of which are listed on AIM, and until March was a Non-Executive Director of AIM listed Management Resource Solutions plc.
Nigel is a Chartered Electrical Engineer and a Past President of the IET. He has a B.Sc. (First Class Hons) in Electrical and Electronic Engineering and a Ph.D in Acoustic Imaging from University College London.
Paul Ryan (aged 50, Irish)
Non-Executive Director
Paul has 20 years of transactional, commercial and regulatory experience in the telecommunications and ICT sectors with international blue chip entities, during which he has been involved in transactions with a value in excess of US$10 billion. From 2002 to 2013, he held a variety of board positions with leading mobile operator Vodafone and its operating subsidiaries, including Head of Strategy, Regulatory and Political Affairs in Brussels and Director of Strategy and External Affairs for Vodafone Ireland and Vodafone Ghana. Prior to this, he worked as a management consultant in the European telecoms sector, served as a strategic adviser at Ofcom, the UK's communications industry regulator, and was a solicitor at leading international City law firm Ashurst. He acts as an adviser, primarily on strategy and public policy, to a range of clients including FTSE100 and Fortune 500 companies largely in the ICT space. Paul is a qualified solicitor in the UK and graduated from Trinity College, Dublin, Ireland.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR UNVRRWUANRAR
(END) Dow Jones Newswires
June 06, 2018 07:00 ET (11:00 GMT)
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