We could not find any results for:
Make sure your spelling is correct or try broadening your search.
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 |
TIDMAERO
RNS Number : 1547J
Strat Aero PLC
26 June 2017
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.
Strat Aero plc / Index: AIM / TIDM: AERO / Sector: Support Services
26 June 2017
Strat Aero plc ("Strat Aero", the "Company" or the "Group")
Final Results
Strat Aero Plc, the AIM quoted international aerospace company focused on the Unmanned Aerial Vehicle ("UAV") sector, is pleased to present its audited final results for the year ended 31 December 2016.
The Annual Report & Accounts for the year ended 31 December 2016 ("Annual Report") will be sent to shareholders today together with a notice convening a General Meeting ("GM"). The Annual Report and the notice of GM are available on the Company's website at www.strat-aero.com.
The GM will be held at the offices of Hill Dickinson, 8th Floor, The Broadgate Tower, 20 Primrose Street, London EC2A 2EW on 28 July 2017 at 11:00 a.m.
OVERVIEW
-- Strategy to focus on core business divisions - Training & Education and Survey & Inspection, beginning to yield results for the Group
-- 99% increase in full year revenue to US$862,988 (2015: US$433,001) primarily due to the full year impact of the acquisition of Geocurve, a specialist in the provision of UAV operated surveys and inspection services to a blue-chip customer base
-- 72% increase in gross profit to US$593,079 (2015: US$345,747) -- 41% reduction in loss after taxation to US$3,524,476 (2015: US$5,931,933)
-- US$1.58 million raised pre-expenses in share placings post period end to strengthen balance sheet
Iain McLure, CEO of Strat Aero plc, commented, "Following my appointment as CEO part-way through the financial year, Strat Aero implemented a revised strategy for the Company designed to maximise our key strengths, skills and revenue opportunities whilst simultaneously diverting from non-core activities and reducing Strat Aero's overall cost base. Progress has been made in this regard over the course of 2016, however this strategy is expected to have maximum impact for the Group in 2017 and in line with this, operations and performance in recent months have been encouraging. I view this as testament to the professionalism and quality of our people, a successful turnaround strategy and also a line under the disappointing performance of the previous two years during which Strat Aero was subject to an acquisition policy which overstretched the Company's balance sheet and management resources.
"I am confident that by focussing on Strat Aero's two highly complementary business divisions: Training & Education and Survey & Inspection, we have a robust business model capable of providing investors with exposure to the exceptional growth potential of UAVs and the ability to deliver meaningful shareholder value. I look forward to providing further updates throughout the year as we continue to deliver on this strategy."
CHAIRMAN'S STATEMENT
Looking back on 2016, it seems that the papers were peppered with news relating to 'drones', or as they are more widely referred to in the business, 'Unmanned Aerial Vehicles ("UAVs")'. Aside from the obvious military uses, UAVs are increasingly becoming part of our everyday lives, most famously illustrated by Amazon and the launch of its widely publicised 'Amazon Prime Air' service in December 2016. We note that most recently, UAVs have been used to deliver defibrillators to people suffering cardiac arrest - where every minute which passes between onset of attack and defibrillation reduces survival rates by 10%. The need for an immediate response therefore, which UAVs can provide, is clearly evident.
However, the uptake in UAV use has also created some unique challenges - for instance, in 2016 it was reported that there were over 70 near-misses between UAVs and passenger aircraft near Heathrow alone. These reports clearly highlight the critical requirement for more widely-adopted regulations, permitting, understanding and most significantly professional training when it comes to UAV usage, as it is a common belief that UAVs will increasingly become part of the fabric of day to day life across the globe.
So where does Strat Aero fit in to this mix? Between Amazon and recreational UAV users, there are a whole host of commercial applications for UAVs and this is the market we are targeting. We have a dual approach for maximising market penetration which is as follows:
1. Training & Education
As UAV technology matures and devices become both more cost-effective and more capable, individual users and organisations are looking for training solutions that enable them to operate UAVs in a broad range of settings. Recognised by the UK's Civil Aviation Authority as a National Qualified Entity for UAV training design and delivery, we have developed a range of professional training solutions for both commercial and public-sector clients.
2. Survey & Inspection
Strat Aero, through its wholly owned subsidiary Geocurve, is a specialist in providing survey and inspection services using UAVs, as well as using ground- and water-based survey equipment. Our goal is to deliver exactly the analysis that our clients require to maximise the productivity of their teams and minimise asset downtime.
Looking specifically at the progress made in the two areas highlighted above in 2016 and in recent months, the key development in the Training & Education business was the formal grant of National Qualified Entity ('NQE') status by the UK's Civil Aviation Authority ('CAA'). This was a pivotal development in the commercialisation of our training programmes as in order to apply for a UAV pilot's licence, individuals need to show that they trained at an NQE certified centre. We saw this recognition of our services by the CAA as an endorsement of our training programmes and independent confirmation of the quality of our suite of commercial teaching courseware.
The grant of NQE status coincided with the launch of several new training initiatives including the Applied Unmanned Technology Qualification ('AUTQ'), a course for professional trainers and pilots. It is unique in its comprehensive focus on safety, industrial applications and real flying skills. Unlike many training organisations, Strat Aero flies its own commercial UAV fleet to deliver inspection and survey services to clients - which means that real-world learnings can be embedded directly into our training materials. The driving factor behind the development of Strat Aero's AUTQ programme has been the need for high level training for operators providing professional services to commercial clients. Strat Aero's training has an emphasis on hands-on flight training and a unique focus on training operators for their chosen commercial application.
Having already developed our proprietary commercial UAV training application, we are busy rolling-out our offering via a capital light strategy, centred on adopting a franchise model with suitable partners. We have now demonstrated the success of this model through our agreement with Hong Kong based I-Coach to roll-out our training programmes in Hong Kong, and the Taiwanese Republic of China. Our parallel agreement with the Lim Kok Wing University of Creative Technology is running slower than planned and we anticipate running the first "train the trainer" course in Kuala Lumpur in July 2017. Whilst disappointing, this delay is not expected to have an impact on full year 2017 projections.
Post period end, our first formal AUTQ course in Taiwan was successfully completed. The course ran for two weeks and was managed and taught by Mark Wharry, our Director of Training, who is a leading instructor in the UAV industry. In association with the Taiwanese Unmanned Aerial Systems Development Association, Mark successfully trained 24 candidates in a 'train the trainer' style course. These candidates have since graduated at a formal ceremony in Taipei, attended by many local businesses and government dignitaries. We are proud to be able to bring our skills and expertise to Taiwan, to work with the TWUAS Development Association and be at the forefront of creating a new and exciting industry in the country.
Looking now to our Survey & Inspection services offering, this is conducted through our subsidiary Geocurve. Growth on this side of the business continues to develop organically through existing contracts with major blue-chip companies and government agencies. The most significant recent contract win was the CH2M contract to work on the Thames 2100 Flood Defence Project on behalf of the Environment Agency. The contract was awarded in September 2016 after a rigorous competitive tender process and followed the successful completion of the Isle of Grain survey project where Geocurve combined multiple UAV flights, land-based surveys and bathymetric surveys to deliver a suite of video, orthomosaic photo, 3D model and survey products.
This is an ambitious project to be involved with - and one with enormous benefits for a large number of people as Thames 2100 Flood Defence Project is aiming to reduce the risk of tidal flooding for 1.25 million people and 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 and Strat Aero is delighted to be involved with such highly esteemed partners on this project.
Financial Overview
The Group recorded revenues of US$862,988 during the year ended 31 December 2016 (2015: US$433,001) generating a gross profit of US$593,079 (2015: US$345,747). This significant increase is primarily due to the full year impact of the acquisition of Geocurve. Costs in 2016 were inflated due to the one-off costs of US$314,567 arising from the legal action referred to below.
The loss for the year to 31 December 2016 after taxation was US$3,524,476 (2015: US$5,931,933).
Following the acquisition of Aero Kinetics in December 2015, the Company filed a legal action on 1 April 2016 in Texas, USA against Mr W. Hulsey Smith ("Mr. Smith"), the vendor of Aero Kinetics on counts of fraud and breach of contract arising from misrepresentations made by Mr. Smith upon which the Company relied and were material in the Company's decision to acquire Aero Kinetics. Strat Aero also terminated the services of Mr. Smith in relation to Aero Kinetics. On 6 April 2016, the Company and its directors received a defence and counterclaim from Mr. Smith. In September 2016, the Company settled all litigation and claims arising from its dispute with Mr. Smith. Under the terms of the settlement, Strat Aero disclaimed any allegations of fraud against Mr. Smith and issued Mr. Smith 44,750,645 new Ordinary Shares, representing at the time approximately 11.75% of the Company's enlarged issued share capital then in issue. Strat Aero also made a US$75,000 cash payment to Mr. Smith.
As a result of the settlement, both Strat Aero and Mr Smith are released from all current and future claims relating to the Company's acquisition of Aero Kinetics and all debt and loan obligations relating to the Company's acquisition of Aero Kinetics are deemed to have either been satisfied or written off. Both parties agreed to dismiss all pending litigation between them. A net gain of US$129,476 was realised in 2016 following the successful settlement of this litigation. The Board took the prudent action to fully impair the investment in Aero Kinetics as at 31 December 2015 which amounted to an impairment charge of US$2,028,235 during the prior year.
Administrative expenses during the year amounted to US$4,189,598 (2015: US$4,180,769). A large proportion of these costs comprised of wages and salaries, consultancy and professional fees, and travelling expenses and was attributable to both growth in headcount and business development activities arising from the prior acquisition strategy and also due to the one-off costs of the legal action referred to above. This cost base is being rationalised in line with the new management's strategic priorities and administrative costs for 2017 are expected to be significantly lower than this.
Consolidated net (liabilities)/assets at 31 December 2016 amounted to US$(43,517) (2015: net assets of US$721,546). Cash balances at the year end amounted to US$3,918 (2015: US$1,485,257).
During 2016, the Company attracted aggregate investment of US$2.89 million to implement the Group's operational plans, to settle the final deferred consideration for Geocurve and resolve the Aero Kinetics litigation.
Post year end the Company raised an additional US$1.58 million pre-expenses, through the issue of new shares to investors.
Outlook
The Strat Aero board is keen to draw a line under the performance of the previous two financial years, where, for a number of reasons which have been outlined previously, operational and financial performance was disappointing. We have set ourselves an ambitious target to achieve run rate breakeven by the end of 2017 and therefore it is with careful optimism that we look to build on the encouraging trading outcomes that we have achieved so far in 2017 and advance the robust structure that we now have in place to prudently, efficiently and sustainably grow the Company. We plan to utilise our existing skills and expertise to develop the Strat Aero business as a premium provider of commercial training for commercial UAV pilots and survey and inspection services for corporate and public clients.
Whichever way you look at it - UAVs are likely to become an even more integral part of our lives - and we are determined that Strat Aero will be a significant component in this rapidly growing industry.
Acknowledgments
On behalf of the Board, we would like to extend our thanks to our business partners, customers, associates and valued shareholders for their continued support throughout the period.
Graham Peck
Executive Chairman
26 June 2017
Enquiries:
Strat Aero plc Tel: +44 (0) 1293 804741 Graham Peck (Chairman) SP Angel Corporate Finance LLP Tel: +44 (0) 20 3470 0470 Nominated Adviser and Joint Broker Stuart Gledhill Jeff Keating Beaufort Securities Limited Tel: +44 (0) 20 7382 8300 Joint Broker Elliot Hance Cornhill Capital Ltd Joint Broker Colin Rowbury Tel: +44 (0) 20 7710 9610 St Brides Partners Ltd Tel: +44 (0) 20 7236 1177 Financial PR Susie Geliher Frank Buhagiar
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2016
Year Year ended ended 2016 2015 Continuing operations Note US$ US$ ----------------------------------------- ---- ----------- ----------- Revenue 5 862,988 433,001 Cost of sales 6 (269,909) (87,254) ----------------------------------------- ---- ----------- ----------- Gross profit 593,079 345,747 Administration expenses 6 (4,189,598) (4,180,769) Gain on foreign exchange 6 3,292 130 Impairment 13 - (2,028,235) ----------------------------------------- ---- ----------- ----------- Operating loss (3,593,227) (5,863,127) Finance costs 10 (43,441) (68,812) Finance income 34 6 Loss before income tax (3,636,634) (5,931,933) Income tax expense 11 112,158 - ----------------------------------------- ---- ----------- ----------- Loss for the year attributable to owners of the parent (3,524,476) (5,931,933) ----------------------------------------- ---- ----------- ----------- Other Comprehensive Income Items that may be subsequently reclassified to profit or loss: Currency translation difference 53,029 7,581 ----------------------------------------- ---- ----------- ----------- Total comprehensive income for the year attributable to owners of the parent (3,471,447) (5,924,352) ----------------------------------------- ---- ----------- ----------- Earnings per ordinary share attributable to owners of the parent during the year (expressed in cents per share) Basic and diluted 12 (1.38) (6.31) ----------------------------------------- ---- ----------- -----------
The notes on pages 24 to 51 of the Annual Report form part of these Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2016
2016 2015 Note US$ US$ ------------------------------ ---- ------------ ----------- Non-current assets Intangible assets 13 1,763,384 2,230,833 Property, plant and equipment 14 179,189 372,142 ------------------------------ ---- ------------ ----------- Total non-current assets 1,942,573 2,602,975 ------------------------------ ---- ------------ ----------- Current Assets Inventories 16 - 88,488 Trade and other receivables 17 210,255 462,814 Cash and cash equivalents 18 3,918 1,485,257 Total current assets 214,173 2,036,559 ------------------------------ ---- ------------ ----------- Total assets 2,156,746 4,639,534 ------------------------------ ---- ------------ ----------- Equity attributable to owners of the parent Share capital 19 4,130,803 2,292,836 Share premium 19 7,217,308 6,171,415 Other reserves 21 (751,486) (574,010) Translation reserve 17,111 (35,918) Retained loss (10,657,253) (7,132,777) ------------------------------ ---- ------------ ----------- Total equity (43,517) 721,546 ------------------------------ ---- ------------ ----------- Current liabilities Trade and other payables 22 1,323,866 1,956,798 Borrowings 23 98,688 390,000 ------------------------------ ---- ------------ ----------- Total current liabilities 1,422,5534 2,346,798 ------------------------------ ---- ------------ ----------- Non-current liabilities Borrowings 23 417,555 1,211,036 Deferred tax liabilities 24 360,154 360,154 ------------------------------ ---- ------------ ----------- Total non-current liabilities 777,709 1,571,190 ------------------------------ ---- ------------ ----------- TOTAL LIABILITIES 2,200,263 3,917,988 ------------------------------ ---- ------------ ----------- TOTAL EQUITY AND LIABILTIES 2,156,746 4,639,534 ------------------------------ ---- ------------ -----------
The notes on pages 24 to 51 of the Annual Report form part of these Financial Statements.
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2016
2016 2015 Note US$ US$ ------------------------------------ ---- ----------- ----------- Non-current assets Intangible assets 13 92,520 155,421 Property, plant and equipment 14 2,575 4,172 Investment in subsidiary undertakings 15 1,177,957 1,413,434 Trade and other receivables 17 1,706,103 1,144,620 ------------------------------------ ---- ----------- ----------- Total non-current assets 2,979,155 2,717,647 ------------------------------------ ---- ----------- ----------- Current Assets Trade and other receivables 17 74,928 175,455 Cash and cash equivalents 18 2,065 1,131,304 ------------------------------------ ---- ----------- ----------- Total current assets 76,993 1,306,759 ------------------------------------ ---- ----------- ----------- TOTAL ASSETS 3,056,148 4,024,406 ------------------------------------ ---- ----------- ----------- Equity attributable to shareholders Share capital 19 4,130,803 2,292,836 Share premium 19 7,217,308 6,171,415 Other reserves 21 105,612 283,088 Translation reserve (627,680) (261,437) Retained loss (8,658,527) (6,389,216) ------------------------------------ ---- ----------- ----------- Total equity 2,167,516 2,096,686 ------------------------------------ ---- ----------- ----------- Current liabilities Trade and other payables 22 789,944 1,164,045 Borrowings 23 ----------- 23 98,688 - ------------------------------------ ---- ----------- ----------- Total current liabilities 888,632 1,164,045 ------------------------------------ ---- ----------- ----------- Non-current liabilities Borrowings 23 - 763,675 ------------------------------------ ---- ----------- ----------- Total non-current liabilities - 763,675 ------------------------------------ ---- ----------- ----------- TOTAL LIABILITIES 888,632 1,927,720 ------------------------------------ ---- ----------- ----------- TOTAL EQUITY AND LIABILITIES 3,056,148 4,024,406 ------------------------------------ ---- ----------- -----------
The notes on pages 24 to 51 of the Annual Report form part of these Financial Statements.
These Financial Statements were approved by the Board of Directors and authorised for issue on 30 June 2017 and were signed on its behalf by:
The loss for the financial year dealt with in the financial statements of the Parent Company, Strat Aero Plc, was US$2,269,311 (2015: loss of US$5,991,023). As permitted by Section 408 of the Companies Act 2006, no separate statement of comprehensive income is presented in respect of the Parent Company.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2016
Attributable to owners of the parent ----------------------------------------------------------------------- Share Share Other Translation Retained capital premium reserves reserve loss Total US$ US$ US$ US$ US$ US$ ----------------------- --------- --------- --------- ----------- ------------ ----------- As at 1 January 2015 1,301,737 1,642,449 (856,384) (68,582) (1,200,844) 818,376 ----------------------- --------- --------- --------- ----------- ------------ ----------- Loss for the year - - - - (5,931,933) (5,931,933) Other comprehensive income for the year Currency translation difference - - - 32,664 - 32,664 ----------------------- --------- --------- --------- ----------- ------------ ----------- Total comprehensive income for the year - - - 32,664 (5,931,933) (5,899,269) ----------------------- --------- --------- --------- ----------- ------------ ----------- Proceeds from shares issued (net of costs) 911,625 4,067,429 - - - 4,979,054 Non cash share issues 79,474 461,537 283,730 - - 824,741 Warrants exercised ------------------ - - (1,356) - - (1,356) ----------------------- --------- --------- --------- ----------- ------------ ----------- Transactions with owners, recognised directly in equity 991,099 4,528,966 282,374 - - 5,802,439 ----------------------- --------- --------- --------- ----------- ------------ ----------- As at 31 December 2015 2,292,836 6,171,415 (574,010) (35,918) (7,132,777) 721,546 ----------------------- --------- --------- --------- ----------- ------------ ----------- As at 1 January 2016 2,292,836 6,171,415 (574,010) (35,918) (7,132,777) 721,546 ----------------------- --------- --------- --------- ----------- ------------ ----------- Loss for the year - - - - (3,524,476) (3,524,476) ----------------------- --------- --------- --------- ----------- ------------ ----------- Other comprehensive income for the year Currency translation difference - - - 53,029 - 53,029 ----------------------- --------- --------- --------- ----------- ------------ ----------- Total comprehensive income for the year - - - 53,029 (3,524,476) (3,471,447) ----------------------- --------- --------- --------- ----------- ------------ ----------- Proceeds from shares issued (net of costs) 1,213,885 222,953 83,391 - - 1,520,229 Non cash share issues* 624,082 682,438 - - - 1,306,520 Warrants expired - Aero Kinetics** - - (120,365) - - (120,365) Warrants expired - Other*** - 140,502 (140,502) -- - - Transactions with owners, recognised directly in equity 1,837,967 1,045,893 (177,476) - - 2,706,384 ----------------------- --------- --------- --------- ----------- ------------ ----------- As at 31 December 2016 4,130,803 7,217,308 (751,486) 17,111 (10,657,253) (43,517) ----------------------- --------- --------- --------- ----------- ------------ -----------
The notes on pages 24 to 51 of the Annual Report form part of these Financial Statements.
* Non cash share issues comprise of issue of shares where no cash consideration was received.
** 'Warrants expired - Aero Kinetics' represents the expiry of warrants that were initially issued in the acquisition of Aero Kinetics by the Strat Aero Group. The warrants have expired on settlement of the Aero Kinetics related litigation.
*** Warrants expired - other' are warrants that have expired in the current financial year.
Attributable to equity shareholders Share Share Other Translation Retained Total capital premium reserves reserve earnings US$ US$ US$ US$ US$ US$ ----------------------- --------- --------- ---------- ------------ ----------- ----------- As at 1 January 2015 1,301,737 1,642,449 714 (77,896) (398,193) 2,469,811 ----------------------- --------- --------- ---------- ------------ ----------- ----------- Loss for the year - - - - (5,991,023) (5,991,023) Other comprehensive income for the period Currency translation difference - - - (183,541) - (183,541) ----------------------- --------- --------- ---------- ------------ ----------- ----------- Total comprehensive income for the period - - - (183,541) (5,991,023) (6,174,564) ----------------------- --------- --------- ---------- ------------ ----------- ----------- Proceeds from shares issued (net of costs) 911,625 4,067,429 - - - 4,979,054 Non cash share issues 79,474 461,537 283,730 - - 824,741 Warrants exercised - - (1,356) - - (1,356) ----------------------- --------- --------- ---------- ------------ ----------- ----------- Transactions with owners, recognised directly in equity 991,099 4,258,966 282,374 - - 5,802,439 ----------------------- --------- --------- ---------- ------------ ----------- ----------- As at 31 December 2015 2,292,836 6,171,415 283,088 (261,437) (6,389,216) 2,096,686 ----------------------- --------- --------- ---------- ------------ ----------- ----------- As at 1 January
2016 2,292,836 6,171,415 283,088 (261,437) (6,389,216) 2,096,686 ----------------------- --------- --------- ---------- ------------ ----------- ----------- Loss for the year - - - - (2,269,311) (2,269,311) ----------------------- --------- --------- ---------- ------------ ----------- ----------- Other comprehensive income for the year Currency translation difference - - - (366,243) - (366,243) ----------------------- --------- --------- ---------- ------------ ----------- ----------- Total comprehensive income for the year - - - (366,243) (2,269,311) (2,635,554) ----------------------- --------- --------- ---------- ------------ ----------- ----------- Proceeds from shares issued (net of costs) 1,213,885 222,953 83,391 - - 1,520,229 Non cash share issues 624,082 682,438 - - 1,306,520 Warrants expired - Aero Kinetics - - (120,365) - - (120,365) Warrants expired - Other - 140,502 (140,502) - - - Transactions with owners, recognised directly in equity 1,837,967 1,045,893 (177,476) - - 2,706,384 ----------------------- --------- --------- ---------- ------------ ----------- ----------- As at 31 December 2016 4,130,803 7,217,308 105,612 (627,680) (8,658,527) 2,167,516 ----------------------- --------- --------- ---------- ------------ ----------- -----------
The notes on pages 24 to 51 of the Annual Report form part of these Financial Statements.
Non cash share issues comprise of issue of shares where no cash consideration was received.
'Warrants expired - Aero Kinetics' represents the expiry of warrants that were initially issued at the acquisition of Aero Kinetics by the Strat Aero Group. The warrants have expired on settlement of the Aero kinetics related litigation.
Warrants expired - other' are warrants that have expired in the current financial year.
Group Group Company Company 2016 2015 2016 2015 Note US$ US$ US$ US$ --------------------------------- ---- ----------- ----------- ----------- ----------- Cash Flows from Operating Activities Loss for the year before tax (3,636,634) (5,931,933) (2,381,459) (5,991,023) Depreciation of property, plant and equipment 176,206 83,860 992 1,125 Amortisation of intangible assets 425,787 211,503 40,671 45,849 Share based payments 14,889 194,760 14,889 194,760 Impairments - 2,028,235 1,218,651 4,477,659 Interest income (34) (6) (15) - Finance costs 43,441 68,812 34,402 - Foreign exchange on operating activities 71,484 173,467 (15,454) 59,886 Taxation 112,158 - 112,148 - Decrease/(Increase) in inventories - (88,488) - - Decrease/(Increase) in trade and other receivables 252,559 (139,144) 100,527 13,466 (Decrease)/Increase in trade and other payables (314,832) 473,685 129,476 264,327 Cash used in operations (2,854,976) (2,925,249) (745,172) (933,951) Interest expense 10 (43,441) (68,812) (34,402) - --------------------------------- ---- ----------- ----------- ----------- ----------- Net cash used in operating activities (2,898,417) (2,994,061) (799,574) (933,951) --------------------------------- ---- ----------- ----------- ----------- ----------- Cash Flows used in Investing Activities Purchases of intangible assets 13 (1,086) - - - Purchases of property, plant and equipment 14 - (64,471) - (4,425) Purchase of subsidiaries (net of cash acquired in the Group) - (970,177) - (980,643) Interest income 34 6 15 - Loans to subsidiary undertakings - - (1,780,134) (2,115,606) Net cash used in investing activities (1,052) (1,034,642) (1,780,119) (3,100,674) --------------------------------- ---- ----------- ----------- ----------- ----------- Cash Flows from Financing Activities Net proceeds from borrowings 98,688 244,881 98,688 - Issue of shares, net of issue costs 1,520,229 5,165,927 1,520,229 5,165,927 --------------------------------- ---- ----------- ----------- ----------- ----------- Net cash generated from financing activities 1,618,917 5,410,808 1,618,917 5,165,927 --------------------------------- ---- ----------- ----------- ----------- ----------- Net (Decrease)/increase in cash and cash equivalents (1,280,552) 1,382,105 (940,776) 1,131,302 Exchange losses on cash and cash equivalents (200,787) (3,665) (188,463) - Cash and cash equivalents at beginning of year 1,485,257 106,817 1,131,304 2 --------------------------------- ---- ----------- ----------- ----------- ----------- Cash and cash equivalents at 31 December 2016 3,918 1,485,257 2,065 1,131,304 --------------------------------- ---- ----------- ----------- ----------- -----------
Major non-cash transactions
On 17 March 2016 the Company issued 4,575,209 new ordinary shares of 1p each as consideration for the conversion of US$390,000 of convertible loan notes.
On 13 July 2016 the Company issued 37,489,288 new ordinary shares of 1p each at a price of 1p, settling the outstanding balance due of GBP374,893 representing the final instalment in the acquisition of Geocurve.
On 29 September 2016 the Company issued 44,750,645 new ordinary shares of 0.1p each at a price of 0.7p in settlement of all litigation and claims arising from the AK dispute with Mr W. Hulsey Smith, the Chief Executive Officer of Aero Kinetics Holdings LLC.
On 28 November 2016 the Company issued 3,428,571 new ordinary shares of 0.1p each at a price of 0.35p in settlement of consulting fees liabilities amounting to GBP12,000.
The notes on pages 24 to 51 of the Annual Report form part of these Financial Statements.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2016
1 General information
Strat Aero Plc (the "Company") and its subsidiaries (together the "Group") undertake the development, marketing and selling of training programmes and software in the aviation industry. The Company is incorporated and domiciled in the UK and its registered office is The Beehive, City Place, Gatwick Airport, West Sussex, RH6 0PA.
The Company's shares are quoted on the AIM market of the London Stock Exchange plc.
2 Summary of accounting policies
The principal accounting policies applied in the preparation of these Consolidated Financial Statements are set out below. These policies have been consistently applied in the year presented, unless otherwise stated.
(a) Basis of preparation
The Consolidated Financial Statements of Strat Aero Plc have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRIC) interpretations as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The Consolidated Financial Statements have also been prepared under the historical cost convention.
The Financial Statements are presented in US Dollars (US$) rounded to the nearest dollar.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in Note 4.
(b) Going concern basis
The Financial Statements have been prepared assuming the Group and Company will continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations.
The assessment has been made based on the Group's economic prospects which have been included in the financial budget for the years 2017-2019, and for managing working capital, in particular for the twelve months from the date of approval of the Financial Statements. Consideration has also been given in respect of the Group's past losses and its net current liability position at the year end.
The nature of the business in which Strat Aero operates creates a degree of uncertainty as to the timing of acquisition and value of contracts due to the relative revenues of the UAV market. The Directors are in discussions with various parties in relation to numerous potential contracts which are expected to contribute positively to cash flow in the short term and in preparing the financial budgets consider the opportunities currently open and their ability to convert them.
The Directors have also considered the ability of the Group to raise funds on the open market and has demonstrated the ability to do so through share issues during the year and after the reporting date although the Directors note that this is not necessarily indicative of their ability to raise future funds. The Group's business activities together with the factors likely to affect its future development, performance and position are set out in the Strategic Report. The Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and its exposure to credit and liquidity risk can be found in the Strategic Report and in Note 25.
Based in these assumptions, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future and therefore have adopted the going concern basis of preparation in these Financial Statements.
The Financial Statements do not include any adjustment that may be required should the Group and Company be unable to continue as a going concern. Going concern is referred to in the Independent Auditor's Report as an emphasis of matter.
(c) New and amended standards
(i) New and amended standards mandatory for the first time for the financial year beginning 1 January 2016
There were no IFRSs or IFRIC interpretations that were effective for the first time for the financial year beginning 1 January 2016 that had a material impact on the Group or Company.
(ii) New standards, amendments and Interpretations in issue but not yet effective or not yet endorsed and not early adopted
The standards and interpretations that are relevant to the Group or Company, issued, but not yet effective, up to the date of issuance of the Financial Statements are listed below. The Company and Group intend to adopt these standards, if applicable, when they become effective.
Effective Standard Impact on initial application date IAS 7 (Amendments) Disclosure Initiative *1 January 2017 IAS 12 (Amendments) Recognition of Deferred *1 January Tax 2017 IAS 38 (Amendments) Clarification of Acceptable 1 January Methods of Amortisation 2016 IFRS 9 Financial Instruments 1 January 2018 IFRS 15 Revenue from Contracts 1 January with Customers 2018 IFRS 16 Leases 1 January 2019 Annual Improvements 2015 - 2016 Cycle *1 January 2018 * Subject to EU endorsement
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.
The Group is evaluating the impact of the new or amended standards above. The new or amended standards are not expected to have a material impact on the Group's results or shareholders' funds.
(d) Basis of consolidation
Acquisition of Strat Aero International Inc and Strat Aero International Limited by Strat Aero Plc
The Company was incorporated on 1 July 2014 and entered into an agreement to acquire the entire issued and to be issued share capital of Strat Aero International Inc and Strat Aero International Limited on 16 July 2014. The acquisition was effected by way of issue of shares. Both of the Group's trading subsidiaries, Strat Aero International Inc and Strat Aero International Limited were incorporated on 12 December 2013 respectively and had commenced operational activities on 1 January 2014.
In determining the appropriate accounting treatment for this transaction, the Directors considered IFRS 3 "Business Combinations" (Revised 2008). However, they concluded that this transaction fell outside the scope of IFRS 3 (revised 2008) since the transaction described above represents a combination of entities under common control.
In accordance with IAS 8 "Accounting Policies, changes in accounting estimates and errors", in developing an appropriate accounting policy, the Directors have considered the pronouncements of other standard setting bodies and specifically looked to accounting principles generally accepted in the United Kingdom ("UK GAAP") for guidance (FRS 6 - Acquisitions and mergers) which does not conflict with IFRS and reflects the economic substance of the transaction.
Under UK GAAP, the assets and liabilities of both entities are recorded at book value, not fair value (although adjustments are made to achieve uniform accounting policies), intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the legal acquirer in accordance within applicable IFRS, no goodwill is recognised, any expenses of the combination are written off immediately to the statement of comprehensive and comparative amounts, if applicable, are restated as if the combination had taken place at the beginning of the earliest accounting year presented.
Therefore, although the Group reconstruction did not become unconditional until 21 August 2014, these Consolidated Financial Statements are presented as if the Group structure has always been in place, including the activity from incorporation of the group's principal subsidiary. All entities had the same management as well as majority shareholders.
As Strat Aero Plc was incorporated on 1 July 2014, while the enlarged group began trading on 16 July 2014, the comparative information in the Statement of Comprehensive Income and Consolidated Statement of Changes in Equity and Consolidated Cash Flow Statements are presented as though the Group was in existence for the whole prior year, being that commencing on 12 December 2013 and ending on 31 December 2014.
On this basis, the Directors have decided that it is appropriate to reflect the combination using merger accounting principles as a group reconstruction under FRS 6 - Acquisitions and mergers in order to give a true and fair view. No fair value adjustments have been made as a result of the combination.
Subsidiaries
Except for the transactions described above, the Consolidated Financial Statements include the Financial Statements of the Company and its subsidiaries made up to 31 December each year.
Subsidiaries are all entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
When necessary, adjustments are made to the Financial Statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
(e) Business combinations
Aside from the initial establishment of the Group as described in 2(d) the acquisition of other subsidiaries have been accounted for using the acquisition method of accounting.
The consideration transferred for the acquisition is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquire and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets.
Acquisition related costs are expensed as incurred.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39, either in the Income Statement or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the identifiable net assets acquired and liabilities assumed.
(f) Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker ("CODM"). The CODM is deemed to be the Chief Executive Officer and the Chief Financial Officer.
Operating segments are identified on the basis of internal reports that are regularly reviewed by the CODM to allocate resources and to assess performance. Using the Group's internal management reporting as a starting point, two reporting segments set out in note 5 have been identified.
(g) Foreign currencies
Functional and presentation currency
The individual financial statements of each Group company are measured in the currency of the primary economic environment in which it operates (its functional currency) being US Dollar or Pounds Sterling. For the purpose of the Group Financial Statements, the results and financial position are expressed in US Dollars, which is the presentation currency for the Group and company.
Transactions and balances
In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At the Statement of Financial Position date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing on the Statement of Financial Position date. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items at the Statement of Financial Position date, are included in the Statement of Comprehensive Income for the year.
Group companies
The results and financial position of the Group companies (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
-- assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that Statement of Financial Position;
-- income and expenses for each Statement of Comprehensive Income presented are translated at average exchange rates unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions; and
-- all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders' equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in Statement of Comprehensive Income as part of the gain or loss on sale.
(h) Intangible assets
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the Statement of Comprehensive Income.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Customer lists and intellectual property rights are shown at historic costs, less amortisation. Costs associated with maintaining intellectual property rights are recognised as an expense as incurred. Costs incurred in development have been capitalised, on the basis that the Company will have access to future economic benefits deriving from ownership of this new technology.
Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognised as intangible assets when the following criteria are met:
-- it is technically feasible to complete the software product so that it will be available for use;
-- management intends to complete the software product and use or sell it; -- there is an ability to use or sell the software product;
-- it can be demonstrated how the software product will generate probable future economic benefits;
-- adequate technical, financial and other resources to complete the development and use or sell the software product are available; and
-- the expenditure attributable to the software product during its development can be reliably measured.
The Group's Intangible assets are amortised at 20% per annum on a straight line basis.
At each year end date, the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value, less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
(i) Property, plant and equipment
All property, plant and equipment are shown at cost less subsequent depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the Income Statement during the financial year in which they are incurred.
Depreciation is charged so as to write off the cost of assets over their useful economic lives, using the straight-line method, which is considered to be as follows:
-- Plant and equipment - 5 years -- Motor Vehicles - 3 to 5 years
The assets' residual values and useful lives are reviewed, and, if appropriate, asset values are written down to their estimated recoverable amounts, at each Statement of Financial Position date.
Gains and losses on disposals are determined by comparing proceeds with the carrying amounts, and are included in Statement of Comprehensive Income.
(j) Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.
(k) Financial assets
The Group and Company has classified all of its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of Financial Position.
Loans and receivables are initially recognised at fair value plus transaction costs and are subsequently carried at amortised cost using the effective interest method, less provision for impairment.
(l) Impairment of financial assets
The Group and Company assesses at the end of each reporting year whether there is objective evidence that a financial asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired, and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event"), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated.
The criteria that the Group and Company uses to determine that there is objective evidence of an impairment loss include:
-- significant financial difficulty of the issuer or obligor; -- a breach of contract, such as a default or delinquency in interest or principal repayments.
The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset's original effective interest rate. The asset's carrying amount is reduced, and the loss is recognised in the profit or loss.
If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the trade and other receivables credit rating), the reversal of the previously recognised impairment loss is recognised in the Statement of Comprehensive Income.
(m) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. The cost of finished goods and work in progress comprises design costs, raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity).
Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Costs of inventories include the transfer from equity of any gains/losses on qualifying cash flow hedges for purchases of raw materials.
(n) Trade and other receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.
(o) Cash and cash equivalents
In the Statement of Cash Flows, cash and cash equivalents comprise cash in hand and deposits held at call with banks.
(p) Share capital and reserves
Equity comprises the following:
-- "Share Capital" represents ordinary shares issued at par value
-- "Deferred Shares" represents notional shares arising on the redenomination of the nominal share capital from 1p to 0.1p on August 12 2016.
-- "Share Premium" represents the premium paid on shares issued above par value; and -- "Retained earnings" represents retained losses.
-- "Merger reserve" - The merger arose from the difference between the carrying value of the investment and the nominal value of the shares of subsidiaries upon consolidation under merger accounting.
-- Share option reserve - represents the fair value of unexpired warrants at the issue date.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(q) Share-based payments
The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives goods or services from employees or third party suppliers as consideration for equity instruments of the Company. The fair value of the equity-settled share based payments are recognised as an expense in the Statement of Comprehensive Income or charged to equity depending on the nature of the services provided or instruments issued.
(r) Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.
(s) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the Income Statement over the year of the borrowings using the effective interest method.
(t) Compound financial instruments
Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder. The number of shares to be issued does not vary with changes in their fair value.
The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to their initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition, except on conversion or expiry.
(u) Revenue recognition
The Group generates its revenue from the provision of consultancy and survey services performed on a 'time and materials' basis and the delivery of commercial pilot training solutions. Revenues are recognised on these products at the point of sale and when services are rendered to clients as per the terms of specific contracts. In the case of fixed price contracts, revenues are recognised on a percentage of completion basis. Turnover is stated net of value added tax in respect of continuing activities. The third revenue stream, the Unmanned Aerial Systems ("UAS") Pilot Training and Services division, has generated only initial revenue during the year under review.
(v) Current and deferred income tax
The tax charge/(credit) represents tax currently payable less a credit for deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from the loss for the year as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting loss.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply in the relevant jurisdiction in the year when the liability is settled or the asset is realised. Deferred tax is charged or credited to the Consolidated Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax is not discounted.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
(w) Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of Comprehensive Income on a straight-line basis over the year of the lease.
3 Financial risk management i) Group financial risk factors
The Group's activities expose it to a variety of financial risks. The Group's finance function monitors and manages the financial risks relating to the operations of the Group. The Group is exposed to market risks (including foreign exchange risk and price risk) and credit risk and to a very limited amount interest rate risk and liquidity risk.
Risk management is carried out by the Board of Directors. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk and credit risk, to mitigate financial risk exposures.
Market risk
(a) Foreign exchange risk
Foreign exchange risk arises because the Group has operations located in various parts of the world whose functional currency is not the same as the functional currency (GBP Sterling) in which other Group companies are operating. The Group's net assets arising from such overseas operations are exposed to currency risk resulting in gains and losses on retranslation into US Dollar. Only in exceptional circumstances will the Group consider hedging its net investments in non-US Dollar operations as generally it does not consider that the reduction in foreign currency exposure warrants the cash flow risk created from such hedging techniques. It is the Group's policy to hold surplus funds over and above working capital requirements in the Parent Company. The Group considers this policy minimises any unnecessary foreign exchange exposure.
In order to monitor the continuing effectiveness of this policy the Board through their approval of both corporate and capital expenditure budgets, and review of the currency profile of cash balances and management accounts, considers the effectiveness of the policy on an ongoing basis.
(b) Price risk
The Group is not exposed to commodity price risk as a result of its operations. The Directors will revisit the appropriateness of this policy should the Group's operations change in size or nature. The Group has no exposure to equity securities price risk, as it has no listed equity investments.
Credit risk
Credit risk arises from the Group's trade receivables. Where no independent rating of customers is available, credit control assesses the quality of customers by reference to their financial position, past experience and any other relevant factors.
Interest rate risk management
The Group is not exposed to interest rate risk on financial liabilities.
Liquidity risk management
The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group seeks to manage financial risk, to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.
ii) Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders. The Group's capital structure primarily consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained losses.
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and judgements concerning the future. The resulting accounting estimates and judgements will, by definition, seldom equal the related actual results. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are addressed below:
Intangible assets
Intangible assets comprise of development costs, customer lists and Intellectual Property and are amortised accordingly:
Development costs 5 years Customer lists 5 years Intellectual Property 5 years
Useful lives are based on management's estimates of the period that the assets will generate revenues with such records being periodically reviewed for continual appropriation.
5 Segmental analysis
Management considers there to be two activities, being the provision of consultancy and survey services to the international aviation and industrial markets and training services in respect of aviation. Accordingly, segmental analysis is reflected in the Consolidated Group Statements set out herein.
Total revenue comprises: Revenue from external customers: 2016 2015 US$ US$ ------------------------------------- ------- ------- Consultancy and survey 839,271 433,001 Training 23,717 - ------------------------------------- ------- ------- 862,988 433,001 ------------------------------------- ------- ------- 2016 2015 US$ US$ Revenues are generated in a number of countries analysed as to: United Kingdom 681,474 320,842 United State of America 157,797 112,159 South East Asia 23,717 - ------------------------------------- ------- ------- 862,988 433,001 ------------------------------------- ------- ------- 2016 2015 US$ US$ The following customers generated more than 10% of the Group's revenue: Customer 1 150,796 - Customer 2 130,337 - Customer 3 88,681 - Customer 4 60,577 81,231 Customer 5 - 157,583 ---------------------------------------- ------- ------- 430,391 238,814 ---------------------------------------- ------- -------
Carrying amount of assets
2016 2015 US$ US$ ------------------------- --------- --------- United Kingdom 1,762,982 3,881,985 United States of America 393,764 757,549 ------------------------- --------- --------- 2,156,746 4,639,534 ------------------------- --------- ---------
Carrying amount of liabilities
2016 2015 US$ US$ ------------------------- --------- --------- United Kingdom 1,461,083 2,508,073 United States of America 739,180 1,409,915 ------------------------- --------- --------- 2,200,263 3,917,988 ------------------------- --------- --------- 6 Operating expenses by nature 2016 2015 US$ US$ --------------------------------------- --------- --------- Cost of sales 269,909 87,254 PR, marketing and advertising 139,747 283,882 Wages, salaries and other staff costs (note 7) 1,764,831 1,150,244 Depreciation 176,206 83,860 Amortisation 425,787 211,503 Operating lease expenses 161,708 130,265 Professional and consultancy fees 1,007,779 1,495,121 Audit fees (note 9) 59,719 59,208 Acquisition related expenses - 130,335 Aero Kinetic litigation net settlement (gain) (129,477) - Net foreign exchange (gains) (3,292) (130) Other expenses 583,298 636,351 --------------------------------------- --------- --------- 4,456,215 4,267,893 --------------------------------------- --------- --------- 7 Staff costs
The average number of employees, including Directors, employed by the Group was:
2016 2015 No. No. --------------- ---- ---- Directors 5 4 Development 18 8 Administration 8 4 --------------- ---- ---- 31 16 --------------- ---- ----
Employees', including Directors', costs comprise:
2016 2015 US$ US$ -------------------------------------- --------- --------- Wages, salaries and other staff costs 1,638,477 1,129,441 Social security costs 126,354 20,803 -------------------------------------- --------- --------- 1,764,831 1,150,244 -------------------------------------- --------- --------- 8 Directors
Key management are considered to be Directors.
2016 2015 Group Short Short term term employee employee benefits Other Total benefits Other Total US$ US$ US$ US$ US$ US$ ---------------- --------- ----- ------- --------- ------ ------- Graham Peck 20,336 - 20,336 34,387 5,525 39,912 Iain McLure 122,013 - 122,013 - - - Gerard Dempsey 27,114 - 27,114 10,189 2,762 12,951 Paul Ryan 27,114 - 27,114 10,189 2,762 12,951 Russell Peck - - - 27,878 4,976 32,854 Robert Salluzzo - - - 27,878 4,193 32,071 Tony Dunleavy - - - 7,642 6,906 14,548 Greg Kuenzel - - - 18,340 - 18,340 196,577 196,577 136,503 27,124 163,627 ---------------- --------- ----- ------- --------- ------ ------- 9 Auditors remuneration 2016 2015 US$ US$ --------------------------------------------------- ------ ------ Fees payable to the Company's auditor for the audit of the Group and Parent Company's Financial Statements 10,000 10,000 Fees payable to the Company's auditor for other services: Audit of the accounts of subsidiaries 43,541 49,208 Taxation - compliance 6,250 14,432 59,791 73,640 -------------------------------------------------- ------ ------ 10 Finance costs 2016 2015 US$ US$ ----------------------------------- ------ ------ Interest payable and other finance costs 43,441 68,812 ----------------------------------- ------ ------ 43,441 68,812 ----------------------------------- ------ ------ 11 Tax
No income tax charge was recognised in the Statement of Comprehensive due to losses incurred.
Group 2016 2015 Income tax expense: US$ US$ -------------------------- --------- ---- Current tax UK Corporation tax credit (112,158) - -------------------------- --------- ---- Deferred tax Current year - - -------------------------- --------- ---- Tax credit (112,158) - -------------------------- --------- ----
The tax on Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the profits of the consolidated entities as follows:
2016 2015 Group US$ US$ ----------------------------------------------- ----------- ----------- Loss before tax (3,636,634) (5,931,933) ----------------------------------------------- ----------- ----------- Tax at the applicable rate of 24.38% (31 December 2015: 23.87%): (886,514) (1,416,040) Effect of: Expenses not deductible for tax purposes 27,015 524,725 Depreciation in excess of capital allowances / (capital allowance in excess of depreciation) 146,750 24,406 R&D tax credit (112,158) - Net tax effect of losses carried forward 712,749 866,909 ----------------------------------------------- ----------- ----------- Tax credit for the year (112,158) - ----------------------------------------------- ----------- -----------
The tax rate used is a combination of 20% standard rate of corporation tax in the UK and US tax rate of 34% to give an applicable rate of 24.38%.
The Group has tax losses of approximately US$8,291,000 (31 December 2015: US$5,368,000) available to carry forward against future taxable profits. No deferred tax asset has been recognised in view of the uncertainty over the timing of future taxable profits against which the losses may be offset.
12 Earnings per share
Basic earnings per share has been calculated by dividing the loss attributable to equity holders of the Company after taxation by the weighted average number of shares in issue during the year. There is no difference between the basic and diluted loss per share as the effect on the exercise of options and warrants would be to decrease the earnings per share.
Since the year end, no warrants have been exercised which may result in the dilution of the earnings per share in the future. Details of share options and warrants that were anti-dilutive but may be dilutive in the future are set out in note 20.
2016 2015 Basic and Diluted US$ US$ ----------------------------------- ---------------------- ------------ Loss after taxation (3,524,476) (5,931,933) ----------------------------------- ---------------------- ------------ Weighted average number of shares 255,104,361 93.993,888 ----------------------------------- ---------------------- ------------ Earnings per share (cents) (1.38) (6.31) ----------------------------------- ---------------------- ------------ 13 Intangible assets 2016 2015 Goodwill - Cost and Net Book Value US$ US$ -------------------------------------------------------- ------------ ------------ At 1 January 14,557 - Acquisition of subsidiaries (at fair value) - 2,042,792 Impairments - (2,028,235) -------------------------------------------------------- ------------ ------------ At 31 December 14,557 14,557 -------------------------------------------------------- ------------ ------------ Customer Intellectual Development Lists Property Costs Total Other intangibles US$ - Group US$ US$ US$ ------------------------------ --------- ------------- ------------ -------------- Cost At 1 January 2015 - 233,265 469,372 702,637 Acquisition of subsidiaries 540,232 630,270 633,670 1,804,172 Foreign exchange differences - (11,236) (120) (11,356) ------------------------------ --------- ------------- ------------ -------------- At 31 December 2015 540,232 852,299 1,102,922 2,495,453 ------------------------------ --------- ------------- ------------ -------------- Additions - - 1,086 1,086 Foreign exchange differences (6,054) (44,053) (7,500) (57,607) ------------------------------ --------- ------------- ------------ -------------- At 31 December 2016 534,178 808,246 1,096,508 2,438,932 ------------------------------ --------- ------------- ------------ -------------- Accumulated amortisation At 1 January 2015 - 23,327 46,937 70,264 Charge for the year 27,012 59,354 125,137 211,503 Foreign exchange differences - (2,567) (23) (2,590) ------------------------------ --------- ------------- ------------ -------------- At 31 December 2015 27,012 80,114 172,051 279,177 ------------------------------ --------- ------------- ------------ -------------- Charge for the year 86,437 141,514 197,836 425,787 Foreign exchange differences (5,403) (3,054) (6,402) (14,859) ------------------------------ --------- ------------- ------------ -------------- At 31 December 2016 108,046 218,574 363,485 690,105 ------------------------------ --------- ------------- ------------ -------------- Net book value At 31 December 2015 513,220 772,185 930,871 2,216,276 ------------------------------ --------- ------------- ------------ -------------- At 31 December 2016 426,132 589,672 733,023 1,748,827 ------------------------------ --------- ------------- ------------ -------------- Intellectual Property Other intangibles - Company US$ ------------------------------ ------------- Cost At 1 January 2015 233,265 Foreign exchange differences (11,235) -------------------------------- ------------- At 31 December 2015 222,030 -------------------------------- ------------- Foreign exchange differences (36,990) -------------------------------- ------------- At 31 December 2016 185,040
-------------------------------- ------------- Accumulated amortisation At 1 January 2015 23,237 Charge for the year 45,849 Foreign exchange differences (2,567) -------------------------------- ------------- At 31 December 2015 66,519 -------------------------------- ------------- Charge for the year 40,671 Foreign exchange differences (14,670) -------------------------------- ------------- At 31 December 2016 92,520 -------------------------------- ------------- Net book value At 31 December 2015 155,421 -------------------------------- ------------- At 31 December 2016 92,520 -------------------------------- -------------
The above intangible assets comprise the Intellectual Property acquired on 16 July 2014 and 30 September 2015. All research and development costs not eligible for capitalisation have been expensed.
The recoverable amount of the above cash-generating units has been determined based on value in use calculations. The key assumptions used for value-in-use calculations in 2016 are as follows:
Gross margin 20-50% Growth rate 10-45% Discount rate 10%
Management determined budgeted gross margin based on past performance and its expectations of market development. The average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax, and reflect specific risks relating to the relevant operating segment.
The recoverable amount calculated based on value in use did not exceed the carrying value.
14 Property, Plant and Equipment Plant Motor & equipment Vehicles Total Group US$ US$ US$ ------------------------------ ------------- ---------- --------- Cost At 1 January 2015 194,288 34,032 228,320 Additions 64,471 - 64,471 Acquisition of subsidiary 258,686 85,517 344,203 Foreign exchange differences 633 - 633 ------------------------------ ------------- ---------- --------- At 31 December 2015 518,078 119,549 637,627 ------------------------------ ------------- ---------- --------- Additions - - - Foreign exchange differences (58,350) (13,465) (71,815) ------------------------------ ------------- ---------- --------- At 31 December 2016 459,728 106,084 565,812 ------------------------------ ------------- ---------- --------- Accumulated depreciation At 1 January 2015 19,429 3,403 22,832 Charge for the year 75,544 8,316 83,860 Acquisition of subsidiary 123,696 35,939 159,635 Foreign exchange differences (842) - (842) ------------------------------ ------------- ---------- --------- At 31 December 2015 217,827 47,658 265,485 ------------------------------ ------------- ---------- --------- Charge for the year 155,739 20,467 176,206 Foreign exchange differences (48,245) (6,823) (55,068) ------------------------------ ------------- ---------- --------- At 31 December 2016 325,321 61,302 386,623 ------------------------------ ------------- ---------- --------- Net book value At 31 December 2015 300,251 71,891 372,142 ------------------------------ ------------- ---------- --------- At 31 December 2016 300,251 44,782 179,189 ------------------------------ ------------- ---------- --------- Plant Motor & equipment Vehicles Total Company US$ US$ US$ ------------------------------- ------------- ---------- -------- Cost At 1 January 2015 1,039 - 1,039 Additions 4,425 - 4,425 Foreign exchange differences (49) - (49) ------------------------------- ------------- ---------- -------- At 31 December 2015 5,415 - 5,415 ------------------------------- ------------- ---------- -------- Additions - - - Foreign exchange differences (901) - (901) ------------------------------- ------------- ---------- -------- At 31 December 2016 4,514 - 4,514 ------------------------------- ------------- ---------- -------- Accumulated depreciation At 1 January 2015 104 - 104 Charge for the period 1,125 - 1,125 Foreign exchange differencies 14 - 14 ------------------------------- ------------- ---------- -------- At 31 December 2015 1,243 - 1,243 ------------------------------- ------------- ---------- -------- Charge for the year 992 - 992 Foreign exchange differences (296) - (296) ------------------------------- ------------- ---------- -------- At 31 December 2016 1,939 - 1,939 ------------------------------- ------------- ---------- -------- Net book value At 31 December 2015 4,172 - 4,172 ------------------------------- ------------- ---------- -------- At 31 December 2016 2,575 - 2,575 ------------------------------- ------------- ---------- -------- 15 Investment in subsidiary undertakings 2016 2015 Company US$ US$ ----------------------------- --------- --------- As at 1 January 1,413,434 857,100 Additions - 1,413,433 Foreign exchange differences (235,477) - Impairments - (857,099) ----------------------------- --------- --------- Cost at 31 December 1,177,957 1,413,434 ----------------------------- --------- ---------
The following are the principal subsidiaries of the Company at 31 December 2016 and at the date of these Financial Statements.
Share Name of Registered Parent Class capital Nature of company Address company of shares held business --------------- ------------------ -------------------- ------------ -------- ----------------- Strat Aero 19500 State Strat Ordinary 100% Provider International, Highway Aero Plc of aviation Inc. 249, Suite software, 655, Houston, products Texas 77070, and services USA Strat Aero The Beehive, Strat Ordinary 100% Aviation International City Place, Aero Plc management Limited Gatwick and consultancy Airport, services West Sussex, RH6 0PA, UK Strat Aero 19500 State Strat N/A 100% Dormant company International Highway Aero International, Consultancy 249, Suite Inc Group, 655, Houston, LLC Texas 77070, USA Strat Aero 19500 State Strat Ordinary 100% Holding company Holdings, Highway Aero Plc Inc 249, Suite 655, Houston, Texas 77070, USA Aero Kinetics 19500 State Strat N/A 100% Provider Labs, LLC Highway Aero Holdings, of aviation 249, Suite Inc software, 655, Houston, products Texas 77070, and services USA Aero Kinetics, 19500 State Strat N/A 100% Provider LLC Highway Aero Holdings, of aviation 249, Suite Inc software, 655, Houston, products Texas 77070, and services USA Nephos 19500 State Strat N/A 100% Dormant company Services, Highway Aero Holdings, LLC 249, Suite Inc 655, Houston, Texas 77070, USA
Aero Kinetics 19500 State Aero Kinetics, N/A 100% Dormant company UAS TC001, Highway LLC LLC 249, Suite 655, Houston, Texas 77070, USA Geocurve Tintagel Strat Ordinary 100% Aviation Ltd House London Aero Plc surveying Road, Kelvedon, and mapping Colchester, Essex, CO5 9BP, UK GN Site Tintagel Geocurve Ordinary 100% Aviation Engineers House London Ltd surveying Ltd Road, Kelvedon, and mapping Colchester, Essex, CO5 9BP, UK UKAeroVision Tintagel Geocurve Ordinary 100% Aviation Limited House Ltd surveying London and mapping Road, Kelvedon, Colchester, Essex, CO5 9BP, UK 16 Inventories 2016 2015 Group Company Group Company US$ US$ US$ US$ ----------------- ------ -------- ------- -------- Raw materials - - 18,009 - Work in progress - - 70,479 - - - 88,488 - ----------------- ------ -------- ------- -------- 17 Trade and other receivables 2016 2015 Group Company Group Company US$ US$ US$ US$ --------------------------- -------- ------------ -------- ------------ Amounts due from group undertakings - 1,706,103 - 1,144,620 Trade receivables 127,639 - 236,808 - VAT receivable - 22,708 47,760 69,188 Other receivables 494 11,421 58,276 51,498 Prepayments 82,122 40,799 119,970 54,769 --------------------------- -------- ------------ -------- ------------ At 31 December 210,255 1,781,031 462,814 1,320,075 --------------------------- -------- ------------ -------- ------------ Less: non-current portion - (1,706,103) - (1,144,620) --------------------------- -------- ------------ -------- ------------ Current portion 210,255 74,928 462,814 175,455 --------------------------- -------- ------------ -------- ------------
The fair value of all receivables is the same as their carrying values stated above.
Ageing of past due trade receivables 2016 2015 - Group: US$ US$ ------------------------------------- ------- ------- 0 - 15 days - - 16 - 30 days 76,418 11,401 Over 30 days 51,221 225,407 ------------------------------------- ------- ------- 127,639 236,808 ------------------------------------- ------- -------
The carrying amount of the Group's trade receivables are denominated in the following currencies:
2016 2015 US$ US$ ----------- ------- ------- US Dollars 23,286 4,400 UK Pounds 104,353 232,408 ----------- ------- ------- 127,639 236,808 ----------- ------- -------
The maximum exposure to credit risk at the reporting date is the carrying value reported above. The Group does not hold collateral as security. No provision (2015: nil) has been made at the year-end in respect of trade receivables.
18 Cash and cash equivalents 2016 2015 Group Company Group Company US$ US$ US$ US$ ------------------------------------------------------- ---------------------- -------------------------- ---------- ---------- Cash at bank and in hand 3,918 2,065 1,485,257 1,131,304 3,918 2,065 1,485,257 1,131,304 ------------------------------------------------------- ---------------------- -------------------------- ---------- ----------
The carrying amount of the Group's cash and cash equivalents are denominated in the following currencies:
2016 2015 Group Company Group Company US$ US$ US$ US$ --------------------------------- ------------------------------ ---------------------------------------- --------- --------- US Dollars 4,109 - 202,071 - UK Pounds (191) 2,065 1,283,186 1,131,304 --------------------------------- ------------------------------ ---------------------------------------- --------- --------- 3,918 2,065 1,485,257 1,131,304 --------------------------------- ------------------------------ ---------------------------------------- --------- --------- 19 Share capital 2016 2015 Issued equity share capital Number US$ Number US$ Issued and fully paid Ordinary shares of 0.1p (2015:1p) each 384,285,262 556,377 142,063,771 2,292,836 Deferred shares of 0.1p each 2,358,954,414 3,574,036 - - --------------- ------------- 4,130,803 2,292,836 --------------- =========== ------------- =========== Group and Company Ordinary Share Number shares premium Total of shares US$ US$ US$ ------------------------ ------------ ---------- ---------- ------------ Issued and fully paid At 1 January 2015 76,968,437 1,301,737 1,642,449 2,944,186 ------------------------ ------------ ---------- ---------- ------------ Issue of new shares - 10 March 2015 7,333,334 110,631 834,186 944,817 Issue of new shares - 15 October 2015 30,000,000 463,274 1,671,062 2,134,336 Issue of new shares - 15 December 2015 27,562,000 414,229 2,002,965 2,417,194 Issue of new shares - 22 December 2015 200,000 2,965 20,753 23,718 As at 31 December 2015 142,063,771 2,292,836 6,171,415 8,464,251 ------------------------ ------------ ---------- ---------- ------------ As at 1 January 2016 142,063,771 2,292,836 6,171,415 8,464,251 ------------------------ ------------ ---------- ---------- ------------ Issue of new shares - 17 March 2016 4,575,209 64,476 322,380 386,855 Issue of new shares - 12 April 2016(4) 35,555,556 506,082 63,260 569,342 Issue of new shares - 20 April 2016(5) 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(6) 74,000,000 97,192 388,766 485,958 Issue of new shares - 29 September 2016 44,750,645 58,207 349,423 407,630 Issue of new shares - 28 November 2016 3,428,571 4,253 10,635 14,889 Share issue costs - - (164,897) (164,897) ------------------------ ------------ ---------- ---------- ------------ As at 31 December 2016 384,285,262 4,130,803 7,217,308 11,348,111 ------------------------ ------------ ---------- ---------- ------------
On 17 March 2016 the Company issued 4,575,209 new ordinary shares of 1p each as consideration for the conversion of US$390,000 of convertible loan notes.
On 12 April 2016 the Company issued 35,555,556 new ordinary shares of 1p each at a price of 1.125p per share raising GBP400,000. On the same date the Company issued 8,000,000 warrants exercisable for three years from the date of grant at an exercise price of 1.125p.
On 20 April 2016 the Company issued 24,000,000 new ordinary shares of 1p each and committed to issue a further 18,422,222 new ordinary shares of 1p each following approval by shareholders at a general meeting of the Company, raising in aggregate GBP477,250 at a price of 1.125p per share. On the same date the Company issued 4,242,222 warrants exercisable for three years from the date of grant at an exercise price of 1.125p.
On 12 May 2016, following approval from shareholders at a general meeting of the Company, the Company issued the 18,422,222 new ordinary shares of 1p each in connection with the placing on 20 April 2016
On 13 July 2016 the Company issued 37,489,288 new ordinary shares of 1p each at a price of 1p settling the outstanding balance due of GBP374,893 representing the final instalment in the acquisition of Geocurve.
A resolution was passed with effect from 12 August 2016 to subdivide and re-designate the ordinary shares of the Company. Accordingly, each of the 262,106,046 ordinary shares in issue of 1p each in the capital of the Company was subdivided into, and re-designated as, 262,106,046 ordinary shares of 0.1p and 2,358,954,414 deferred shares of 0.1p each.
On 1 September 2016 the Company issued 74,000,000 new ordinary shares of 0.1p each at a price of 0.5p per share raising GBP370,000. On the same date the Company issued 7,400,000 warrants exercisable for three years from the date of grant at an exercise price of 0.5p.
On 29 September 2016 the Company issued 44,750,645 new ordinary shares of 0.1p each at a price of 0.7p as settlement of all litigation and claims arising from the AK dispute with Mr W. Hulsey Smith the Chief Executive Officer of Aero Kinetics Holdings LLC.
On 28 November 2016 the Company issued 3,428,571 new ordinary shares of 0.1p each at a price of 0.35p in settlement of consulting fees accrued amounting to GBP12,000.
20 Share based payments
Share Options and Warrants
Share Options and Warrants to subscribe for new Ordinary Shares in the Company were in issue as follows:
2016 2015 Weighted Weighted average average No. of price No. of price warrants GBP warrants GBP ------------------------- ------------- --------- ----------- --------- At 1 January 36,139,368 0.08 459,375 0.08 Granted during the year 19,642,222 0.01 35,879,993 0.08 Lapsed/Exercised during the year (34,690,968) 0.08 (200,000) 0.08 ------------------------- ------------- --------- ----------- --------- Outstanding at 31 December 21,090,622 0.01 36,139,368 0.08 ------------------------- ------------- --------- ----------- --------- Exercisable at 31 December 21,090,622 0.01 36,139,368 0.08 ------------------------- ------------- --------- ----------- ---------
The warrants outstanding at 31 December 2016 had a weighted average remaining contractual life of 2.5 years (31 December 2015: 1.96 years).
GBP GBP are used in this note as the shares are traded in the UK and are also issued in GBP currency.
Fair value of warrants
The fair value of the warrants issued during 2016 was determined using the Black Scholes valuation model. The assumptions used in applying the Black Scholes pricing model were as follows:
April April September 2016 A 2016 B 2016 Granted on: 12 Apr 20 Apr 1 Sep 2016 2016 2016 Share price at the date of grant 1.38p 1.23p 0.48p Exercise price 1.125p 1.125p 0.5p Expected volatility 28.59% 32.39% 86.65% Expected warrant life 3 years 3 years 3 years Risk free rate 1.79% 1.79% 1.79%
The volatility was determined by examining the monthly share price.
On 12 April 2016 the Company granted 8,000,000 warrants to subscribe for new ordinary shares at an exercise price of 1.125 pence per share exercisable for a period of 3 years.
On 20 April 2016 the Company granted 4,242,222 warrants to subscribe for new ordinary shares at an exercise price of 1.125 pence per share exercisable for a period of 3 years.
On 1 September 2016 the Company granted 7,400,000 warrants to subscribe for new ordinary shares at an exercise price of 0.5 pence per share exercisable for a period of 3 years.
21 Other reserves Company Group Share Share option option and warrants Total and warrants Merger Total reserve reserve reserve US$ US$ US$ US$ US$ ------------------- -------------- ---------- -------------- ---------- ---------- At 1 January 2015 714 714 714 (857,098) (856,384) Share warrants issued (note 20) 283,730 283,730 283,730 - 283,730 Share warrants exercised (note 20) (1,356) (1,356) (1,356) - (1,356) At 31 December 2015 283,088 283,088 283,088 (857,098) (574,010) ------------------- -------------- ---------- -------------- ---------- ---------- At 1 January 2016 283,088 283,088 283,088 (857,098) (574,010) ------------------- -------------- ---------- -------------- ---------- ---------- Share warrants issued (note 20) 83,391 83,391 83,391 - 83,391 ------------------- -------------- ---------- -------------- ---------- ---------- Share warrants lapsed (note 20) (260,867) (260,867) (260,867) - (260,867) ------------------- -------------- ---------- -------------- ---------- ---------- At 31 December 2016 105,612 105,612 105,612 (857,098) (751,486) ------------------- -------------- ---------- -------------- ---------- ---------- 22 Trade and other payables 2016 2015 Group Company Group Company US$ US$ US$ US$ --------------------------- ---------- -------- ---------- ---------- Trade payables 549,845 374,993 568,330 150,001 VAT payable 2,535 - - - Social security and other taxes 219,865 3,706 116,671 - Deferred consideration payable for business combinations - - 762,145 762,145 Accruals 523,154 399,658 416,945 251,899 Other creditors 28,466 11,587 92,707 - --------------------------- ---------- -------- ---------- ---------- 1,323,865 789,944 1,956,798 1,164,045 --------------------------- ---------- -------- ---------- ---------- 23 Borrowings 2016 2015 Group Company Group Company US$ US$ US$ US$ --------------------------- ---------- -------- ------------ ---------- Convertible loans - - 763,675 763,675 Non-convertible loans - - 381,000 - Shareholder loans 391,115 - 398,313 - Other borrowings 125,128 98,688 58,048 - --------------------------- ---------- -------- ------------ ---------- At 31 December 516,243 98,688 1,601,036 763,675 --------------------------- ---------- -------- ------------ ---------- Less: non-current portion (417,555) - (1,211,036) (763,675) --------------------------- ---------- -------- ------------ ---------- Current portion 98,688 98,688 390,000 - --------------------------- ---------- -------- ------------ ----------
In November 2016, the Company entered into a GBP300,000 six month loan facility with a secured fixed and floating charge with Farina Investments (UK) Ltd over a six month term. This facility was extended for a further twelve months from 1 March 2017.
Shareholder loans are unsecured and accrue no interest.
24 Deferred tax 2016 2015 Group Company Group Company US$ US$ US$ US$ ---------------------------- -------- -------- -------- -------- Deferred tax liabilities Deferred tax liability after more than 12 months 360,154 - 360,154 - Deferred tax liabilities 360,154 - 360,154 - ---------------------------- -------- -------- -------- --------
The movement in the deferred tax account is as follows:
2016 2015 Group Company Group Company US$ US$ US$ US$ --------------------------- -------- -------- -------- -------- At 1 January 360,154 - - - Acquisition of subsidiary - - 360,154 - At 31 December 360,154 - 360,154 - --------------------------- -------- -------- -------- -------- 25 Financial instruments
Categories of financial instruments
2016 2016 Group Company US$ US$ ------------------------------------- ---------- ---------- Assets - Loans and receivables Trade and other receivables (excluding prepayments) 128,133 1,740,232 Cash and cash equivalents 3,918 2,065 -------------------------------------- ---------- ---------- 132,051 1,742,297 ------------------------------------- ---------- ---------- Liabilities - At amortised cost Trade and other payables (excluding non-financial liabilities) 800,711 789,944 Borrowings 417,555 98,688 -------------------------------------- ---------- ---------- 1,218,266 888,632 ------------------------------------- ---------- ---------- 2015 2015 Group Company US$ US$ ------------------------------------- ---------- ---------- Assets - Loans and receivables Trade and other receivables (excluding prepayments) 295,084 1,265,306 Cash and cash equivalents 1,485,257 1,131,304 -------------------------------------- ---------- ---------- 1,780,341 2,396,610 ------------------------------------- ---------- ---------- Liabilities - At amortised cost Trade and other payables (excluding non-financial liabilities) 648,037 1,164,045 Borrowings 1,211,036 763,675 -------------------------------------- ---------- ---------- 1,859,073 1,927,720 ------------------------------------- ---------- ---------- 26 Financial commitments
Operating leases
At 31December 2016 the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:
2016 2015 Land Land and buildings and buildings US$ US$ ------------------------------------- --------------- --------------- No later than one year 124,988 146,520 Later than one year but no later than 5 years 126,534 127,099 Total future minimum lease payments 251,522 273,619 ------------------------------------- --------------- --------------- 27 Related party transactions
Directors' transactions
For Directors' transactions after the year end see note 29
During the year, Russell Peck provided to Strat Aero International Inc advances amounting to US$nil (31 December 2015: US$333,575) to fund its operations and working capital requirements. The balance outstanding at the year-end was US$398,313 (31 December 2015: US$398,313).
Directors remuneration is disclosed in note 8.
Parent Company transactions with subsidiary companies
During the year the Company received US$199,137 (31 December 2015: US$184,194) management fees from its subsidiaries. At the year-end US$1,706,103 was due from the subsidiary companies as follows (note 17).
- Strat Aero International Limited US$1,220,065 (2015: US$736,085) - Strat Aero International Inc US$nil (2015: US$nil)
- Geocurve Ltd US$486,038 (2015: US$408,535)
28 Events after the Reporting Year
On 31 January 2017 the Company issued 380,000,000 new ordinary shares of 0.1p each at a price of 0.1p per share raising 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 21 February 2017, following approval from shareholders at a general meeting of the Company, the Company issued the 850,000,000 new ordinary shares of 0.1p each at a price of 0.1p per share raising GBP850,000 in connection with a placing announced on 14 February 2017. In addition, certain directors and a director of a subsidiary company agreed to subscribe for 250,000,000 Ordinary Shares at the Placing Price in settlement of outstanding compensation and expenses accrued since 2015 in the sum of GBP250,000. On the same date the Company issued 1,170,000,000 warrants exercisable for two years from the date of grant at an exercise price of 0.225p in conjunction with the two placings.
On the same date a further 50,000,000 new ordinary shares of 0.1p each at a price of 0.1p per share were issued to certain professional advisors and service providers of Strat Aero in satisfaction of fees outstanding in the amount of GBP50,000.
On March 1 2017 50,000,000 new ordinary shares in the Company at a price of 0.1p per ordinary share was issued to Farina Investments (UK) Ltd in exchange for agreeing new favourable Loan terms and in consideration of interest accrued to date.
Directors' transactions
The directors and previous directors of the Company who participated in the February 2017 Placing were as follows:
-- Iain McLure subscribed for 100,000,000 new ordinary shares of 0.1p each for 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
** ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KMGZVLVDGNZG
(END) Dow Jones Newswires
June 26, 2017 06:00 ET (10:00 GMT)
1 Year Strat Aero Chart |
1 Month Strat Aero Chart |
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions