TIDMAERO
RNS Number : 5115Q
Strat Aero PLC
06 June 2018
Strat Aero plc / Index: AIM / TIDM: AERO / Sector: Support
Services
6 June 2018
Strat Aero plc ("Strat Aero," the "Company" or the "Group")
Final Results for the Year to 31 December 2017
Financial Overview
The Group recorded revenues of US$1,011,682 during the year
ended 31 December 2017 (2016: US$862,988) generating a gross profit
of US$896,548 (2016: US$593,079). Cost of sales expenses in the
previous year included $105k relating to Aero Kinetics LLC (a
subsidiary company) which were not incurred in 2017, this improved
the gross profit margin in 2017. Administrative costs in 2017 were
reduced from 2016 with the majority of savings made by cutting
staff and consultancy costs in non-value-added business areas. The
loss for the year to 31 December 2017 after taxation was
US$2,513,293 (2016: US$3,524,476).
Consolidated net assets at 31 December 2017 amounted to
US$992,389 (2016: net liabilities of US$43,517). Cash balances at
the year-end amounted to US$668,183 (2016: US$3,918). Cash balances
at the date of this report were approximately GBP550,000
(US$730,000).
Considerable efforts were made to reduce the Company's debt
including the settlement of all outstanding debts totalling
US$387,000 with Mr Russell Peck, a former Director of the Company
and its US subsidiary Strat Aero Inc. and one of its largest
creditors and a renegotiation of the Farina loan. Post year end the
Farina loan was settled in its entirety.
During 2017, the Company attracted aggregate investment of
US$2.86 million to implement the Group's operational plans.
US$0.487 million (before expenses) was raised in January 2017 and
US$1.09 million (before expenses) was raised in February 2017.
During the second half of 2017 it became clear that a
fundamental change in the cost base and business model of the Group
was required. As a result, in December 2017 a total of US$1.283
million (before expenses) was raised through a Placing and Open
Offer. As the Open Offer closed on 29 December, the US$0.527
million raised (before expenses) and the issue of new shares for
the Open Offer to existing shareholders took place on 5 January
2018 and therefore are not included in the 2017 accounts.
In parallel with the Placing and Open Offer, Board changes were
initiated in December 2017, with further Board changes and the
closure of the training business being implemented in January
2018.
Further progress has been made since, including the Geocurve
survey and inspection business winning a significant GBP1.1m
contract in February 2018 and the acquisition of 37% of Gyrometric
Systems Limited ("Gyrometric") in April 2018 for a cash
consideration of $0.32 million.
Outlook
Geocurve's focus on, and continued success in, providing survey
and inspection services using a diverse range of technologies
including UAVs, as well as ground- and water-based survey
equipment, puts it in a strong position entering 2018 as it
continues its focus on long term high value blue chip clients.
Geocurve's differentiated capabilities in the survey industry
deliver exactly the analysis that its clients require to maximise
the productivity of their teams and minimise asset downtime.
The initial investment in Gyrometric provides our shareholders
with a stake in a new and unique technology with promising
prospects. The Gyrometric technology uses proprietary software and
Artificial Intelligence techniques to analyse remotely critical
drive shaft performance to diagnose and predict drive system
maintenance needs before catastrophic damage occurs. We will
continue to develop our investment in Gyrometric through close
operational support and involvement and believe that it will be an
important component of growth and shareholder value in the months
and years ahead.
The restructured and reinvigorated Board, comprising Directors
who are all significant shareholders in your Company, has made it a
key objective that cash costs are covered by income. We are
determined to continue to deliver value to shareholders. The Board
strongly believes that funds raised from our shareholders should be
utilised for investment wherever possible rather than to finance a
gap between income and expenditure. Fixed costs have now been
substantially reduced from those prevailing in 2017, and income at
Geocurve and Gyrometric is on an upward trajectory. We are
continuing to cut costs wherever possible. Strong new business
prospects at Geocurve and Gyrometric allow all stakeholders to look
to the future with renewed optimism.
The Board continues to examine opportunities to grow both
organically and through acquisition of complementary businesses and
technologies which can enhance growth in shareholder value.
Annual Report
The Annual Report and Accounts for the year ended 31 December
2017 ("Annual Report") will be sent to shareholders today and will
also be available on the website at www.strat-aero.com.
Acknowledgments
On behalf of the Board, I would like to thank our business
partners, customers, employees and valued shareholders for their
continued support.
Nigel Burton
Chairman and Non-Executive Director
6 June 2018
-S -
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
For further information please visit www.strat-aero.com or
contact:
Strat Aero plc
Trevor Brown (Executive Director) +41 7941 55384
Nigel Burton (Non-Executive Director) +44 7785 234447
SP Angel Corporate Finance LLP +44 20 3470 0470
Stuart Gledhill
Jeff Keating
Caroline Rowe
Peterhouse Corporate Finance +44 20 7469 0930
Lucy Williams
Fungai Ndoro
Notes
Strat Aero plc is focused on the continued development of the
Company's 'Survey & Inspection' business, in addition to
implementing an enhanced growth strategy via the appraisal of
complementary acquisition or investment opportunities, and recently
acquired a 37% stake in Gyrometric Systems. This is in line with
the Company's stated objective to achieve improved financial
performance in the near term.
CHAIRMAN'S STATEMENT
During the second half of 2017 it became clear that a
fundamental change in the cost base and business model of the Group
was required. As a result, in December 2017 funds were raised
through a Placing and Open Offer and Board changes were initiated,
with further Board changes and the closure of the training business
being implemented in January 2018. Further progress has been made
since, including the Geocurve survey and inspection business
winning a significant GBP1.1m contract in February and the
acquisition of 37% of Gyrometric Systems Limited in April. The
Board continues to examine opportunities to grow both organically
and through acquisition of complementary businesses and
technologies which can enhance growth in shareholder value.
Review of 2017
During 2017 the Group sought to grow both its Survey &
Inspection and Training & Education businesses.
1. Survey & Inspection
In 2017 Geocurve, our wholly owned Survey & Inspection
services business continued to develop organically through existing
contracts with major blue-chip companies and government agencies.
Geocurve continued to deliver on its CH2M contract to work on the
Thames 2100 Flood Defence Project on behalf of the Environment
Agency. Geocurve is a specialist in providing survey and inspection
services using a diverse range of technologies including UAVs, as
well as using ground- and water-based survey equipment. Our goal is
to deliver exactly the analysis that our clients require to
maximise the productivity of their teams and minimise asset
downtime.
The CH2M contract, awarded in September 2016 after a rigorous
competitive tender process, followed the successful completion of
the Isle of Grain survey project where Geocurve combined multiple
UAV flights, land-based surveys and bathymetric surveys to deliver
a suite of video, orthomosaic photo (a geometrically corrected
series of aerial photos stitched together to create an accurate map
or image), 3D model and survey products. Work on this material
contract continued successfully throughout 2017. This is a
prestigious project to be involved with - and one which has
enormous benefits for a large number of people as the Thames 2100
Flood Defence Project is aiming to reduce the risk of tidal
flooding for 1.25 million people and GBP200 billion worth of
property by replacing and refurbishing the tidal flood defences.
TEAM2100 is an integrated and co-located team comprising the
Environment Agency, global engineering company CH2M, and key supply
chain partners. Strat Aero is delighted to be involved with such
highly esteemed partners on this project.
Also in 2017, Geocurve secured a contract with ACAD Design and
Surveys Ltd, a leading industrial and architectural design and
survey company with a blue-chip client base including the Post
Office, to provide a UAV survey in Aberdeen, Scotland. Geocurve was
awarded this contract to survey a large area of land utilising its
Extended Visual Line of Sight (EVLOS) permission from the Civil
Aviation Authority. Geocurve applied its extensive survey
experience to capture all necessary data, 3D data and UAV imagery,
to enable the design phase of a new multi million pound
development.
Geocurve was also selected in 2017 as a specialist surveying
partner by Integrated Water Services Ltd ('IWS'), a leading
services provider to the UK water sector. Geocurve will provide
UAV, bathymetric and conventional surveying services for a number
of Monitoring & Evaluation projects which IWS carries out each
year as part of its 5+5 Framework Contract with Northumbrian Water
worth circa GBP8-10m per year to IWS.
Geocurve's focus on, and continued success in, showing
differentiated and unique capabilities in the survey industry puts
it in a strong position entering 2018 as it continues its focus on
long term high value blue chip clients.
2. Aviation Training, Education and Software Services
Strat Aero's Training business was recognised by the UK's Civil
Aviation Authority (CAA) as a National Qualified Entity for UAV
training design and delivery, and in 2017 developed a range of
professional training solutions for both commercial and
public-sector clients including the Advanced Unmanned Technical
Qualification (AUTQ). Following a thorough market review the Board
concluded that the small volume but potentially high value market
for training UAV professionals, principally in international public
sector security and military contracts, required substantially more
investment than could be justified given the risks involved.
Therefore, in early 2018 the Group discontinued this loss-making
business.
Operational events since the year end
In January 2018 Geocurve was awarded a contract to provide an
innovative technology-based 3D and Virtual Reality survey service
for the Environment Agency's Thames Estuary Asset Management 2100
(TEAM2100) programme, which initially provides a fixed revenue of
GBP1.1m over three years, followed by being selected as a
specialist 'UAV Survey and Inspection' partner by Aviva plc, the
multinational insurance company headquartered in the United
Kingdom. This reflects Geocurve's continuing transition to
becoming:
1. A leading technology-based UK provider of data rich surveying
services including multi-sensors and data analytics to create 3D
mapping and Virtual Reality (VR) imaging. Many of our existing
clients are already showing a huge interest in VR applications,
which are at the forefront of the survey industry's innovation
drive and form a powerful addition to our market leading data
capture and processing capabilities.
2. A leading provider of UAV ("drone") data collection and
monitoring services specialising in over-flying sensitive and
secure installations where sophisticated piloting skills are
required and equally capable on land, in water or in the air.
Financial Overview
The Group recorded revenues of US$1,011,682 during the year
ended 31 December 2017 (2016: US$862,988) generating a gross profit
of US$896,548 (2016: US$593,079). Cost of sales expenses in the
previous year included $105k relating to Aero Kinetics LLC (a
subsidiary company) which were not incurred in 2017, this improved
the gross profit margin in 2017. Administrative costs in 2017 were
reduced from 2016 with the majority of savings made by cutting
staff and consultancy costs in non-value-added business areas (see
note 6).
This cost base continues to be rationalised in line with the new
management's strategic priorities and administrative costs for 2018
are expected to be significantly lower.
The loss for the year to 31 December 2017 after taxation was
US$2,513,293 (2016: US$3,524,476).
Consolidated net assets at 31 December 2017 amounted to
US$992,389 (2016: net liabilities of US$43,517). Cash balances at
the year-end amounted to US$668,183 (2016: US$3,918). Cash balances
at the date of this report were approximately GBP550,000
(US$730,000).
Considerable efforts were made to reduce the Company's debt
including the settlement of all outstanding debts totalling
US$387,000 with Mr Russell Peck, a former Director of the Company
and its US subsidiary Strat Aero Inc. and one of its largest
creditors and a renegotiation of the Farina loan. Post year end the
Farina loan was settled in its entirety.
During 2017, the Company attracted aggregate investment of
US$2.86 million to implement the Group's operational plans.
US$0.487 million (before expenses) was raised in January 2017 and
US$1.09 million (before expenses) was raised in February 2017. In
December 2017 a total of US$1.283 million (before expenses) was
raised through a Placing and Open Offer to support a fundamental
change in the cost base and business model of the Group, which has
included significant board changes and the closure of the training
business. As the Open Offer closed on 29 December, the US$0.527
million raised (before expenses) and the issue of new shares for
the Open Offer to existing shareholders took place on 5 January
2018 and therefore are not included in the 2017 accounts.
Outlook
In April 2018 the Company announced the acquisition of 37% of
the enlarged share capital of Gyrometric Systems Limited
("Gyrometric") for a cash consideration of $0.32 million. The
Gyrometric technology uses proprietary software and Artificial
Intelligence techniques to analyse remotely critical drive shaft
performance to diagnose and predict drive system maintenance needs
before catastrophic damage occurs.
The initial investment in Gyrometric provides our shareholders
with a stake in a new and unique technology with promising
prospects. We will continue to develop our investment in Gyrometric
through close operational support and involvement and believe that
it will be an important component of growth and shareholder value
in the months and years ahead.
The restructured and reinvigorated Board, comprising Directors
who are all significant shareholders in your Company, has made it a
key objective that cash costs are covered by income. We are
determined to continue to deliver value to shareholders. The Board
strongly believes that funds raised from our shareholders should be
utilised for investment wherever possible rather than to finance a
gap between income and expenditure. Fixed costs have now been
substantially reduced from those prevailing in 2017, and income at
Geocurve and Gyrometric is on an upward trajectory. We are
continuing to cut costs wherever possible. Strong new business
prospects at Geocurve and Gyrometric allow all stakeholders to look
to the future with renewed optimism.
Acknowledgments
On behalf of the Board, I would like to thank our business
partners, customers, associates and valued shareholders for their
continued support.
Nigel Burton
Chairman and Non-Executive Director
6 June 2018
STRATEGIC REPORT
The Directors present their Strategic Report on the Group for
the year ended 31 December 2017.
Principal activities and business review
The principal activity of Strat Aero plc (the "Company") and its
subsidiaries (together the "Group") is the provision of survey
& inspections and data management & analytics.
The year under review represents the fourth year of trading for
the Group. During 2017 the Group sought to consolidate its
operations and established a revised strategy shortly after the 31
December 2017 year-end to move away from growth via acquisition to
growth via existing business development. The Group's focus is now
centred on growing the Geocurve business and investing in and
providing world leading technological services with the potential
through data and analysis to revolutionise monitoring and
inspection services in high value and mission critical
environments. This will provide the foundation for subsequent
years, the details of which are outlined in the Chairman's
Statement.
Financial review
The Group recorded revenues of US$1,011,682 (31 December 2016:
US$862,988) generating a gross profit of US$896,548 (31 December
2016: US$593,079). The loss for the year to 31 December 2017, the
fourth year of trading, after taxation was US$2,513,293 (31
December 2016: US$3,524,476).
Revenues for the year of US$1,011,682 were derived primarily
from the Geocurve business (31 December 2016: US$862,988).
Administrative expenses amounted to US$3,516,289 (31 December 2016:
US$4,189,598); a large portion of these costs comprised of wages
and salaries, consultancy and professional fees and travelling
expenses.
Consolidated net assets at 31 December 2017 amounted to
US$992,389 (31 December 2016: net liabilities US$43,517). Cash
balances at the year-end amounted to US$668,183 (31 December 2016:
US$3,918).
Following the year end, the Group has secured additional finance
to facilitate its development; see Chairman's Statement for more
details. Further details can also be found in Note 27 of the
Financial Statements.
Key performance indicators
Year ended Year ended
31 December 31 December
2017 2016
US$ US$
Revenue 1,011,682 862,988
Gross profit 896,548 593,079
============================= ============ ============
Gross margin 88.6% 68.7%
============================= ============ ============
Administrative expenses 3,516,289 4,189,598
============================= ============ ============
Loss after tax for the year 2,513,293 3,524,476
============================= ============ ============
Earnings per share (cents) (0.13) (1.38)
============================= ============ ============
Net assets/(liabilities) 992,389 (43,517)
============================= ============ ============
Cash and cash equivalents 668,183 3,918
============================= ============ ============
Cost of sales expenses in the previous year included $105k
relating to Aero Kinetics LLC (a subsidiary company) which were not
incurred in 2017. This has improved the gross profit margin in
2017.
Administrative costs in 2017 were reduced from 2016 with the
majority of savings made by cutting staff and consultancy costs in
non-value-added business areas (see note 6).
Current trading and future developments
The Group continues to make progress across all elements of its
business with new commercial opportunities opening up for Geocurve.
Geocurve, which won a significant GBP1.1m contract in February
2018, is expected to be self-financing in 2018. In April 2018 the
Group announced the acquisition of 37% of Gyrometric, which has
developed a unique system for reliably collecting, analysing and
monitoring digital data from rotating shafts over a wide range of
speeds and shaft sizes. The Group continues to review opportunities
for complementary acquisitions involving data collection and
analysis using the latest available technology including artificial
intelligence and real time reporting using the internet of
things.
Principal risks and uncertainties
There are risks associated with the Group's business. The Board
regularly reviews the risks to which the Group is exposed and has
in place a strategy to mitigate these risks as far as possible. The
following summary, which is not exhaustive, outlines some of the
key risks and uncertainties facing the Group at its present stage
of development:
Operating risks
The responsibility of overseeing the day-to-day operations and
the strategic management of the Group depends substantially on its
senior management and its key personnel. There can be no assurance
given that there will be no detrimental impact on the Group if one
or more of these employees cease their employment.
The Group's business planning is carried out on the basis of
expected future work. The Group is reliant upon securing new
contracts. There is a risk that expected contracts will not be won.
The directors mitigate this risk by monitoring the pipeline of
future contracts.
The operations of the Group may be affected by various factors,
including operational and technical difficulties; difficulties in
commissioning and operating plant and equipment; equipment failure
or breakdown and adverse weather conditions which may impact
surveying operations.
Financial risk factors
The Group's activities expose it to a variety of financial
risks: credit risk and liquidity risk. The Group's overall risk
management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the
Group's financial performance.
Credit risk
Credit risk arises from outstanding receivables. Management does
not expect any losses from non- performance of these
receivables.
Liquidity risk
In keeping with similar sized companies, the Group's continued
future operations depend on the ability to raise sufficient working
capital through the issue of equity share capital. The Directors
are confident that adequate funding will be forthcoming with which
to finance operations. Controls over expenditure are carefully
managed.
Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's and Company's ability to continue as a going concern,
in order to enable the Group and Company to continue its activities
and bring its products to market. The Company defines capital based
on the total equity of the Company. The Company monitors its level
of cash resources available against future planned activities and
may issue new shares in order to raise further funds from time to
time.
This Strategic Report was approved by the Board of Directors and
authorised for issue on 6 June 2018 by:
Nigel Burton
Chairman and Non-Executive Director
DIRECTORS' REPORT
The Directors present their Report together with the audited
Financial Statements for the year ended 31 December 2017.
General information
The principal activity of Strat Aero plc (the "Company") and its
subsidiaries (together the "Group") is the provision of survey
& inspections and data management & analytics.
Dividends
The Directors do not recommend payment of a dividend (31
December 2016: $nil).
Directors' indemnities
The Group has made qualifying third-party indemnity provisions
for the benefit of its Directors which were made during the year
and remain in force at the date of this report.
Directors' interests
The Directors who held office in the year up to the date of
approval of these Financial Statements and their beneficial
interests in the Company's issued share capital at the beginning
and end of the accounting year were:
Ordinary Ordinary
Shares Shares Warrants Warrants
Interest at Interest at Interest at Interest
31 December 31 December 31 December at 31 December
2017 2016 2017 2016
No. No. No. No.
Graham Peck (1) 6,669,551 6,669,551 - -
Iain McLure (2) 142,857,143 - 100,000,000 -
Gerard Dempsey (3) 25,560,000 560,000 25,000,000 -
Paul Ryan (4) 152,857,143 400,000 110,000,000 -
Trevor Brown(5) 857,142,857 - 428,571,429 -
Nigel Burton(6) - - - -
1. Includes 1,000,000 shares held by the wife of Graham Peck. Resigned 29 January 2018.
2. Includes 42,857,143 ordinary shares held by Scotnl Consulting
B.V., a company controlled by Mr McLure. Appointed on 1 April 2016
and resigned 29 January 2018.
3. Resigned 12 January 2018
4. Shares held by Warande1970 BVBA, a company controlled by Mr Ryan
5. Appointed 20 December 2017
6. Appointed 12 January 2018. Held 71,428,571 warrants at 31 December 2017
Major shareholdings
The closing mid-market price of the Company's Ordinary 0.01p
Shares at 31 December 2017 was 0.04p. Shareholders holding more
than 3% of the Company's shares at the date of this report
were:
Ordinary shares %
-------------------------------- ---------------- -------
Trevor Brown 1,457,142,857 23.60
Interactive Investor Services 779,716,580 12.63
Nominees Limited
Hargreaves Lansdown (Nominees) 438,514,397 7.10
Limited
HDSL Nominees Limited 365,089,812 5.91
Warande 1970 BVBA (controlled 339,267,770 5.50
by Paul Ryan)
Pershing Nominees Limited 338,571,474 5.48
Nigel Burton 214,285,714 3.47
Capital structure
Details of the issued share capital, together with details of
the movements in the Company's issued share capital during the
year, are shown in note 18. Since 31 December 2017 the Company has
raised additional capital as set out below. Further information is
set out in note 27 to the Financial Statements.
The holders of Ordinary Shares are entitled to receive notice
of, and to attend and vote at, any General Meeting of the Company.
Every member present at such a meeting shall, upon a show of hands,
have one vote. Upon a poll, holders of all shares shall have one
vote for every share held. All Ordinary Shares are entitled to
participate in any distributions of the Company's profits or
assets. There are no restrictions on the transfer of the Company's
Ordinary Shares. Strat Aero plc's ordinary 0.01p shares are traded
solely on the AIM market.
The Company also has Deferred Shares in issue, the holders of
which are not entitled to vote at General Meetings and have no
entitlement to distributions.
Going concern
The Financial Statements have been prepared assuming the Group
and Company will continue as a going concern. This assessment has
been made based on the Group's economic prospects in the financial
forecasts. In assessing whether the going concern assumption is
appropriate, the Directors have taken into account all available
information for the foreseeable future; in particular for the
twelve months from the date of approval of the Financial
Statements. This included the nature of the business in which Strat
Aero plc operates, the expected contracts to be awarded, the
expectation that if required, cost cutting measures can be
implemented and if required additional funds can be raised on the
open market.
The operational requirements of the Group comprise of
maintaining a Head Office in the UK alongside its UK operations
together with running its US operations from its US subsidiary. The
Directors have reviewed the Group's working capital forecasts. They
believe that the funds raised recently, including new equity funds
of GBP0.688m in aggregate raised between the Statement of Financial
Position date and the date of approval of these Financial
Statements, taken in conjunction with the current level of cash
balances and expected revenues, will be sufficient for the
operational requirements of the Group for a period of at least 12
months from the date of approval of the financial statements.
However, if the Group's revenues fall short of expectations in
terms of quantum or timing then the Group will put in place cost
cutting measures or will seek to raise the appropriate funds to
meet its working capital requirements.
As disclosed in Note 2(b), after making enquiries, the Directors
have a reasonable expectation that the Group will have adequate
resources through its cash balances to continue in operational
existence for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the
Financial Statements.
Matters covered in the Strategic Report
The Business Review, results, review of KPIs and details of
future developments are included in the Strategic Report and
Chairman's Statement.
Events after the reporting year
On 5 January 2018 the Company issued 1,173,624,395 new ordinary
shares of 0.01p each at a price of 0.035p per share raising
GBP410,768. On the same date the Company issued 418,000,000
warrants exercisable for two years from the date of grant at an
exercise price of 0.225p.
On 10 January 2018 the Company issued 135,714,286 new ordinary
shares of 0.01p at a price of 0.035p per share in consideration for
outstanding fees payable by the Company to an adviser.
On 16 January 2018 the Company issued 85,714,286 new ordinary
shares of 0.01p at a price of 0.035p per share as a result of an
exercise of warrants.
On 24 January 2018 the Company issued 35,714,286 new ordinary
shares of 0.01p at a price of 0.035p per share as a result of an
exercise of warrants.
On 31 January 2018 the Company issued 114,285,714 new ordinary
shares of 0.01p at a price of 0.035p per share as a result of an
exercise of warrants.
On 21 April 2018 the Company issued 557,142,857 new ordinary
shares of 0.01p at a price of 0.035p per share as a result of an
exercise of warrants. These warrants were exercised by directors
and are listed in the directors' transactions below.
In January 2018, the Training and Education segment of the
business was ceased. Following a thorough market review the Board
concluded that the small volume but potentially high value market
for training UAV professionals, principally in international public
sector security and military contracts, required substantially more
investment than could be justified given the risks involved.
Therefore, in early 2018 the Company discontinued this loss-making
business.
On 9 April 2018 the Company announced the acquisition of 37% of
the enlarged share capital of Gyrometric Systems Limited
("Gyrometric") for a cash consideration of $0.32m.
On 5 June 2018 the Company issued 218,571,428 new ordinary
shares of 0.01p at a price of 0.035p per share as a result of an
exercise of warrants.
Disclosure of information to auditor
Each of the persons who is a Director at the date of approval of
this annual report confirms that:
i) so far as each Director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
ii) the Directors have taken all the steps that they ought to
have taken as a Director to make themselves aware of any relevant
audit information and to establish that the Company's auditor is
aware of that information.
Independent auditor
The auditor, PKF Littlejohn LLP, will be proposed for
reappointment in accordance with section 485 of the Companies Act
2006 at the annual general meeting.
PKF Littlejohn LLP has expressed a willingness to continue in
office as auditor.
By Order of the Board
Nigel Burton
Chairman and Non-Executive Director
6 June 2018
DIRECTORS' RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group and Parent Company Financial Statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. Under company law the Directors
must not approve the Financial Statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and the Parent Company and of the profit or loss of the Group
and Parent Company for that year.
In preparing these Financial Statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements; and
-- prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Group and Parent
company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Parent company's transactions and disclose with reasonable accuracy
at any time the financial position of the Group and the Parent
Company and enable them to ensure that the Financial Statements
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the company and the group and hence for
taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
The Company is compliant with the AIM Rule 26 regarding the
Company's website.
By Order of the Board
Nigel Burton
Chairman and Non-Executive Director
6 June 2018
CORPORATE GOVERNANCE STATEMENT
As at 31 December 2017
From 28th September 2018 as an AIM company, the Company is
required to maintain on its website details of a recognised
corporate governance code, how the Company complies with this code
and an explanation of any departure from the code. The information
will need to be reviewed annually and the website should include
the date on which the information was last reviewed. This is likely
to be reviewed at the same time as the Annual Report and Accounts
are prepared. The Directors have sought to address these new
requirements in a timely manner and have set out below Strat Aero's
Corporate Governance Report.
The Directors recognise the importance of sound corporate
governance. As a company whose shares are traded on AIM, the Board
has concluded that it will seek to comply with the Quoted Companies
Alliance's Corporate Governance Code ("the QCA Code"). In addition,
the Directors have adopted a code of conduct for dealings in the
shares of the Company by directors and employees and are committed
to maintaining the highest standards of corporate governance. Paul
Ryan, in his capacity as Non-Executive Director, has assumed
responsibility for ensuring that the Company has appropriate
corporate governance standards in place and that these requirements
are followed and applied within the Company as a whole. The
corporate governance arrangements that the Board has adopted are
designed to ensure that the Company delivers long term value to its
shareholders and that shareholders have the opportunity to express
their views and expectations for the Company in a manner that
encourages open dialogue with the Board. The Board recognises that
its decisions regarding strategy and risk will impact the corporate
culture of the Company as a whole and that this will impact the
performance of the Company. The Board is very aware that the tone
and culture set by the Board will greatly impact all aspects of the
Company as a whole and the way that employees behave. A large part
of the Company's activities is centred upon what needs to be an
open and respectful dialogue with employees, clients and other
stakeholders. Therefore, the importance of sound ethical values and
behaviours is crucial to the ability of the Company successfully to
achieve its corporate objectives. The Board places great importance
on this aspect of corporate life and seeks to ensure that this
flows through all that the Company does.
The key governance related matter that occurred during the
financial year ended 31 December 2017 was the appointment of Trevor
Brown to the Board. Post year end saw the retirement of Graham
Peck, Iain McLure and Gerard Dempsey as directors of the Company
and from all their positions within the Company and the appointment
of Dr Nigel Burton as Non-Executive Director all in January 2018.
The Board successfully implemented this transition and acted
effectively in order to ensure continuity.
Corporate Governance Report
The QCA Code sets out 10 principles that should be applied.
These are listed below together with a short explanation of how the
Company applies each of the principles:
Principle One
Business Model and Strategy
The Board has concluded that the highest medium and long term
value can be delivered to its shareholders by the adoption of a
single strategy for the Company. The Company's interests in both
Geocurve and Gyrometric are active and strategic investments and
these are both companies where the Company continues to hold
significant stakes, where we remain actively involved with the
development of the company with, the Company being represented on
the board of the entities and where we believe that the returns
that are possible are material. The Company will continue to seek
to grow both businesses organically and will seek out further
complementary acquisitions that create enhanced value.
Principle Two
Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communication and
having constructive dialogue with its shareholders. The Company has
close ongoing relationships with its private shareholders.
Institutional
shareholders and analysts have the opportunity to discuss issues
and provide feedback at meetings with the Company. In addition, all
shareholders are encouraged to attend the Company's Annual General
Meeting. Investors also have access to current information on the
Company though its website, www.strat-aero.co.uk, and via Trevor
Brown, CEO who is available to answer investor relations
enquiries.
Principle Three
Considering wider stakeholder and social responsibilities
The Board recognises that the long term success of the Company
is reliant upon the efforts of the employees of the Company and its
contractors, suppliers, regulators and other stakeholders. The
Board has put in place a range of processes and systems to ensure
that there is close oversight and contact with its key resources
and relationships. For example, all employees of the Company
participate in a structured Company-wide annual assessment process
which is designed to ensure that there is an open and confidential
dialogue with each person in the Company to help ensure successful
two way communication with agreement on goals, targets and
aspirations of the employee and the Company. These feedback
processes help to ensure that the Company can respond to new issues
and opportunities that arise to further the success of employees
and the Company. The Company has close ongoing relationships with a
broad range of its stakeholders and provides them with the
opportunity to raise issues and provide feedback to the
Company.
Principle Four
Risk Management
In addition to its other roles and responsibilities, the Audit
and Compliance Committee is responsible to the Board for ensuring
that procedures are in place and are being implemented effectively
to identify, evaluate and manage the significant risks faced by the
Company. The risk assessment matrix below sets out those risks, and
identifies their ownership and the controls that are in place. This
matrix is updated as changes arise in the nature of risks or the
controls that are implemented to mitigate them. The Audit and
Compliance Committee reviews the risk matrix and the effectiveness
of scenario testing on a regular basis. The following principal
risks and controls to mitigate them, have been identified:
Activity Risk Impact Control(s)
===================== =========================
Management Recruitment and Reduction in operating Stimulating and
retention of key capability safe working environment
staff Balancing salary
with longer term
incentive plans
=========== ===================== ========================= ==========================
Regulatory Breach of rules Censure or withdrawal Strong compliance
adherence of authorisation regime instilled
at all levels of
the Company
=========== ===================== ========================= ==========================
Strategic Damage to reputation Inability to secure Effective communications
new capital or with shareholders
clients coupled with consistent
messaging to our
Inadequate disaster customers
recovery procedures Loss of key operational Robust compliance
and financial Secure off-site
data storage of data
=========== ===================== ========================= ==========================
Activity Risk Impact Control(s)
========================= ======================
Financial Liquidity, market Inability to continue Robust capital
and credit risk as going concern management policies
Reduction in asset and procedures
Inappropriate values Appropriate authority
controls and accounting Incorrect reporting and investment
policies of assets levels as set by
Treasury and Investment
Policies
Audit and Compliance
Committee
========== ========================= ====================== =========================
The Directors have established procedures, as represented by
this statement, for the purpose of providing a system of internal
control. An internal audit function is not considered necessary or
practical due to the size of the Company and the close day to day
control exercised by the executive directors. However, the Board
will continue to monitor the need for an internal audit function.
The Board works closely with and has regular ongoing dialogue with
the Company financial controller and has established appropriate
reporting and control mechanisms to ensure the effectiveness of its
control systems.
Principle Five
A Well Functioning Board of Directors
As at the date hereof the Board comprised, the CEO Trevor Brown,
and two Non-Executive Directors, Dr Nigel Burton and Paul Ryan.
Biographical details of the current Directors are set out within
Principle Six below. Executive and Non-Executive Directors are
subject to re-election at intervals of no more than three years.
The letters of appointment of all Directors are available for
inspection at the Company's registered office during normal
business hours. All the Directors including the Non-Executive
Directors are considered to be part time but are expected to
provide as much time to the Company as is required. The Board
elects a Chairman to chair every meeting.
The Board meets at least eight times per annum. It has
established an Audit and Compliance Committee and a Remuneration
Committee, particulars of which appear hereafter. The Board has
agreed that appointments to the Board are made by the Board as a
whole and so has not created a Nominations Committee. Both the CEO
and the Non-Executive Directors are considered to be part time but
are expected to provide as much time to the Company as is required.
The Board considers that this is appropriate given the Company's
current stage of operations. It shall continue to monitor the need
to match resources to its operational performance and costs and the
matter will be kept under review going forward. Paul Ryan is
considered to be an Independent Director. The Board notes that the
QCA recommends a balance between executive and non-executive
Directors and recommends that there be two independent
non-executives. The Board shall review further appointments as
scale and complexity grows.
Attendance at Board and Committee Meetings
The Company shall report annually on the number of Board and
committee meetings held during the year and the attendance record
of individual Directors. To date in the current financial year the
Directors have a 100% record of attendance at such meetings. In
order to be efficient, the Directors meet formally and informally
both in person and by telephone. To date there have been at least
bi-monthly meetings of the Board, and the volume and frequency of
such meetings is expected to continue at this rate.
Principle Six
Appropriate Skills and Experience of the Directors
The Board currently consists of three Directors and, in
addition, the Company has employed the outsourced services of MSP
Secretaries Limited to act as the Company Secretary. The Company
believes that the current balance of skills in the Board as a
whole, reflects a very broad range of commercial and professional
skills across geographies and industries and each of the Director's
has experience in public markets.
The Board recognises that it currently has a limited diversity
and this will form a part of any future recruitment consideration
if the Board concludes that replacement or additional directors are
required.
The Board shall review annually the appropriateness and
opportunity for continuing professional development whether formal
or informal.
Trevor E Brown MBA
Chief Executive Officer
Trevor has acted as a CEO, executive director and non-executive
director for a wide range of companies in a range of sectors over
50 years. This has provided him with a vast amount of experience
through the many long term economic and corporate life cycles that
mean he is highly qualified to assess the opportunities and risks
for both the Company and its portfolio of investee companies. This
wide ranging experience is kept up to date through his continued
participation in a variety of businesses where the Company has a
holding and in other companies that are unconnected to the Company.
Trevor is also a member of the Company's Remuneration
Committee.
Trevor is also currently a director of Flying Brands plc and a
Non-executive Director of Braveheart Investment Company plc. Trevor
joined the Board of as an Executive Director in December 2017 and
became the Chief Executive in January 2018.
Dr Nigel Burton
Chairman and Non-Executive Director
Dr Nigel Burton has over 25 years' experience in operational and
financial management, debt and equity financing, acquisition and
integration of businesses, disposals, IPOs and trade sales.
Following over 14 years as an investment banker at leading City
institutions including UBS Warburg and Deutsche Bank, including as
the Managing Director responsible for the energy and utilities
industries, Nigel has spent 15 years as Chief Financial Officer of
a number of private and public companies, including Navig8 Product
Tankers Inc, PetroSaudi Oil Services Limited, Advanced Power AG,
and Granby Oil and Gas plc. Nigel is currently Chief Executive
Officer of Nu-Oil and Gas plc and Chairman of Polemos plc, both of
which are listed on AIM, and until March 2018 was a Non-Executive
Director of AIM listed Management Resource Solutions plc. Nigel is
a Chartered Electrical Engineer and a Past President of the
Institution of Engineering and Technology. He has a B.Sc. (First
Class Hons) in Electrical and Electronic Engineering and a Ph.D in
Acoustic Imaging from University College London.
Mr Paul Ryan
Independent Non-Executive Director
Mr Ryan has over 20 years' experience at board level largely in
the telecoms and ICT sectors. From 2002 to 2013, he held a variety
of board positions with leading mobile operator Vodafone and its
operating subsidiaries, including Head of Strategy, Regulatory and
Political Affairs in Brussels and Director of Strategy and External
Affairs for Vodafone Ireland and Vodafone Ghana. Prior to this, he
worked as a management consultant in the European telecoms sector,
served as a strategic adviser at Ofcom, the UK's communications
industry regulator, and was a solicitor at leading international
City law firm Ashurst. Mr Ryan acts as an adviser, primarily on
strategy, regulation and public policy, to a range of clients
including FTSE100 and Fortune 500 companies largely in the ICT
space. Mr Ryan has an LLB from Trinity College, Dublin, Ireland and
qualified as a solicitor in the UK.
Principle Seven
Evaluation of Board Performance
Internal evaluation of the Board, the Committee and individual
Directors is to be undertaken on an annual basis in the form of
peer appraisal and discussions to determine the effectiveness and
performance in various as well as the Directors' continued
independence.
The results and recommendations that come out of the appraisals
for the directors shall identify the key corporate and financial
targets that are relevant to each Director and their personal
targets in terms of career development and training. Progress
against previous targets shall also be assessed where relevant.
Principle Eight
Corporate Culture
The Board recognises that their decisions regarding strategy and
risk will impact the corporate culture of the Company as a whole
and that this will impact the performance of the Company. The Board
is very aware that the tone and culture set by the Board will
greatly impact all aspects of the Company as a whole and the way
that employees behave. The corporate governance arrangements that
the Board has adopted are designed to ensure that the Company
delivers long term value to its shareholders and that shareholders
have the opportunity to express their views and expectations for
the Company in a manner that encourages open dialogue with the
Board. The Board recognises that their decisions regarding strategy
and risk will impact the corporate culture of the Company as a
whole and that this will impact the performance of the Company. The
Board is very aware that the tone and culture set by the Board will
greatly impact all aspects of the Company as a whole and the way
that employees behave. A large part of the Company's activities is
centred upon what needs to be an open and respectful dialogue with
employees, clients and other stakeholders. Therefore, the
importance of sound ethical values and behaviours is crucial to the
ability of the Company to successfully achieve its corporate
objectives. The Board places great import on this aspect of
corporate life and seeks to ensure that this flows through all that
the Company does. The directors consider that at present the
Company has an open culture facilitating comprehensive dialogue and
feedback and enabling positive and constructive challenge. The
Company has adopted, with effect from the date on which its shares
were admitted to AIM, a code for Directors' and employees' dealings
in securities which is appropriate for a company whose securities
are traded on AIM and is in accordance with the requirements of the
Market Abuse Regulation which came into effect in 2016.
Principle Nine
Maintenance of Governance Structures and Processes
Ultimate authority for all aspects of the Company's activities
rests with the Board, the respective responsibilities of the
Chairman and Chief Executive Officer arising as a consequence of
delegation by the Board. The Board has adopted appropriate
delegations of authority which set out matters which are reserved
to the Board. The Chairman is responsible for the effectiveness of
the Board, while management of the Company's business and primary
contact with shareholders has been delegated by the Board to the
Chief Executive Officer.
Audit and Compliance Committee
During the financial year ended 31st December 2017 the Audit and
Compliance Committee was chaired by Paul Ryan. Since his
appointment in January 2018 Dr Nigel Burton joined Mr Ryan on the
Committee. This committee has primary responsibility for monitoring
the quality of internal controls and ensuring that the financial
performance of the Company is properly measured and reported. It
receives reports from the executive management and auditors
relating to the interim and annual accounts and the accounting and
internal control systems in use throughout the Company. The Audit
and Compliance Committee shall meet not less than twice in each
financial year and it has unrestricted access to the Company's
auditors.
Remuneration Committee
The Remuneration Committee comprises Paul Ryan and Trevor Brown,
and Paul Ryan chairs this committee. The Remuneration Committee
reviews the performance of the executive directors and employees
and makes recommendations to the Board on matters relating to their
remuneration and terms of employment. The Remuneration Committee
also considers and approves the granting of share options pursuant
to the share option plan and the award of shares in lieu of bonuses
pursuant to the Company's Remuneration Policy.
Nominations Committee
The Board has agreed that appointments to the Board will be made
by the Board as a whole and so has not created a Nominations
Committee.
Non-Executive Directors
The Board has adopted guidelines for the appointment of
Non-Executive Directors which have been in place and which have
been observed throughout the year. These provide for the orderly
and constructive succession and rotation of the Chairman and
non-executive directors insofar as both the Chairman and
non-executive directors will be appointed for an initial term of
three years and may, at the Board's discretion believing it to be
in the best interests of the Company, be appointed for subsequent
terms. The Chairman may serve as a Non-Executive Director before
commencing a first term as Chairman.
In accordance with the Companies Act 2006, the Board complies
with: a duty to act within their powers; a duty to promote the
success of the Company; a duty to exercise independent judgement; a
duty to exercise reasonable care, skill and diligence; a duty to
avoid conflicts of interest; a duty not to accept benefits from
third parties and a duty to declare any interest in a proposed
transaction or arrangement.
Principle Ten
Shareholder Communication
The Board is committed to maintaining good communication and
having constructive dialogue with its shareholders. The Company has
close ongoing relationships with its private shareholders.
Institutional shareholders and analysts have the opportunity to
discuss issues and provide feedback at meetings with the Company.
In addition, all shareholders are encouraged to attend the
Company's Annual General Meeting.
Investors also have access to current information on the Company
though its website, www.strat-aero.co.uk, and via Trevor Brown,
CEO, who is available to answer investor relations enquiries. The
Company proposes in 2018, subject to the necessary formalities, to
move to electronic communications with shareholders in order to
maximise efficiency.
The Company shall include, when relevant, in its annual report,
any matters of note arising from the audit or remuneration
committees.
Paul Ryan
Non-Executive Director
6 June 2018
INDEPENT AUDITOR'S REPORT
For the year ended 31 December 2017
Independent Auditor's Report to the Members of Strat Aero
plc
Opinion
We have audited the financial statements of Strat Aero Plc (the
'company') and its subsidiaries (the 'Group') for the year ended 31
December 2017 which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated and Parent Company
Statements of Financial Position, the Consolidated and Parent
Company Statements of Changes in Equity, the Consolidated and
Parent Company Statements of Cash Flow, and the related notes to
the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and as regards the parent company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion,
-- the financial statements give a true and fair view of the
state of the Group's and of the parent company's affairs as at 31
December 2017 and of the Group's and parent company's loss for the
year then ended;
-- the Group and parent company's financial statements have been
properly prepared in accordance with IFRSs as adopted by the
European Union;
-- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies
Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the company's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
Our application of materiality
The scope of our audit was influenced by our application of
materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature, timing
and extent of our audit procedures. Materiality for the
consolidated financial statements was set as $49,000 (2016:
$44,000) based upon revenue, profit before tax and gross assets.
Materiality for the parent company financial statements was also
$49,000 (2016: $44,000) with the same benchmarks being used.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risk of material misstatement in the financial
statements. In particular, we looked at areas involving significant
accounting estimates and judgement by the Directors and considered
future events that are inherently uncertain. As in all our audits,
we also addressed the risk of management override of internal
controls, including evaluating whether there was evidence of bias
by the Directors that represented a risk of material misstatement
due to fraud. The Company and Group finance function is based from
one location in the United Kingdom. All material subsidiaries were
within our audit scope and audited at this location.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter How the scope of our audit responded
to the key audit matter
Revenue Recognition
==================================================================
The Group generates revenue Our work included:
from differing streams being
consultancy and survey, training * Updating our understanding of the internal control
and software services. environment in operation for the significant revenue
There is an inherent risk around streams and undertaking a walk-through to ensure that
the accuracy of revenue due the key controls within these systems have been
to the differing recognition operating in the period under audit;
and performance criteria for
each stream.
* Substantive transactional testing of revenue
recognised in the Financial Statements across the
different streams;
* Reviewing the key contractual terms and terms of
business with customers to identify the material
performance obligations;
* A review of post-year end invoices, credit notes and
cash receipts to ensure completeness of income
recorded in the accounting period; and
* We also considered the application of the Group's
accounting policies and their appropriateness to the
revenues being incurred.
Based on our work, we noted no
significant issues on the accuracy
of revenue recorded in the year.
==================================================================
Key Audit Matter How the scope of our audit responded
to the key audit matter
Impairment of Intangible assets
=============================================================
The Group carries a material Our work included:
amount of intangible assets * Reviewed management's value in use calculations;
($1,080,306) that have arisen
from past business combinations.
There is a risk that the intangible * Considered management's strategy including all
assets are impaired and are notifications made to the market concerning business
therefore overstated in the lines that have been discontinued post year-end;
financial statements.
* Discussed the basis of key assumptions with
management, in particular, regarding revenue, margins
and cashflow forecasts;
* Performed sensitivity analysis on the headroom to
changes in key assumptions;
* Considered internal and external impairment
indicators; and
* Assessed the accuracy of managed budgets and
forecasts used in prior calculations.
The carrying value of intangible
assets of $1,080,306 relates
solely to the Geocurve acquisition.
All other intangible assets have
been fully impaired in the year.
=============================================================
Key Audit Matter How the scope of our audit responded
to the key audit matter
Valuation and impairment of
investments
=============================================================
The carrying value of investments We performed an impairment review
in subsidiaries was ($1,823,198) of the carrying value of the
in the parent company financial Company's investments in its
statements. subsidiaries.
The recoverability value of Our work included:
the investments is reliant * Verification of ownership;
upon the subsidiary undertakings
being able to generate sufficient
returns from their activities * Discussing with management the basis for impairment
to support their carrying value. or non-impairment, including consideration of
business strategy for the subsidiaries, and
challenging any assumptions made thereon;
* Obtaining management prepared net present value
calculations for subsidiaries and assessing the
competency of the preparer, the mathematical accuracy
of the calculations and the reasonableness of all key
inputs used; and
* Reviewing the impairment indicators per IFRS and
assessing how they applied it to the investments
held.
No impairment was made in respect
of the investment held in Geocurve
Limited. Investments held in
Strat Aero International Inc,
Strat Aero International Limited
and Strat Aero Holdings Inc were
impaired to $nil.
=============================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon. In connection with our audit of the
financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone, other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Joseph Archer (Senior Statutory Auditor) 1 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
6 June 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year Year
For the year ended 31 December 2017 ended ended
2017 2016
Continuing operations Note US$ US$
----------------------------------------------------- ---- ----------- -----------
Revenue 5 1,011,682 862,988
Cost of sales (115,134) (269,909)
----------------------------------------------------- ---- ----------- -----------
Gross profit 896,548 593,079
Administration expenses 6 (3,516,289) (4,189,598)
Other income 30,136 -
(Loss)/gain on foreign exchange 6 (51,609) 3,292
Impairment 13 (199,838) -
----------------------------------------------------- ---- ----------- -----------
Operating loss (2,841,052) (3,593,227)
Finance costs 10 (99,081) (43,441)
Finance income 15 34
Loss before income tax (2,940,118) (3,636,634)
Income tax credit 11 426,825 112,158
----------------------------------------------------- ---- ----------- -----------
Loss for the year attributable to owners of
the parent (2,513,293) (3,524,476)
----------------------------------------------------- ---- ----------- -----------
Other Comprehensive Income
Items that may be subsequently reclassified
to profit or loss:
Currency translation difference 218,046 53,029
----------------------------------------------------- ---- ----------- -----------
Total comprehensive income for the year attributable
to owners of the parent (2,295,247) (3,471,447)
----------------------------------------------------- ---- ----------- -----------
Earnings per ordinary share attributable to
owners of the parent during the year (expressed
in cents per share)
Basic and diluted 12 (0.13) (1.38)
----------------------------------------------------- ---- ----------- -----------
The notes form part of these Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2017
2017 2016
Note US$ US$
------------------------------------- ---- ------------ ------------
Non-current assets
Intangible assets 13 1,080,306 1,763,384
Property, plant and equipment 14 117,285 179,189
------------------------------------- ---- ------------ ------------
Total non-current assets 1,197,591 1,942,573
------------------------------------- ---- ------------ ------------
Current Assets
Trade and other receivables 16 443,606 210,255
Cash and cash equivalents 17 668,183 3,918
------------------------------------- ---- ------------ ------------
Total current assets 1,111,788 214,173
------------------------------------- ---- ------------ ------------
Total assets 2,309,380 2,156,746
------------------------------------- ---- ------------ ------------
Equity attributable to owners of the
parent
Share capital 18 6,358,586 4,130,803
Share premium 18 8,098,321 7,217,308
Share-based payments 20 (529,129) (751,486)
Translation reserve 235,157 17,111
Retained loss (13,170,546) (10,657,253)
------------------------------------- ---- ------------ ------------
Total equity 992,389 (43,517)
------------------------------------- ---- ------------ ------------
Current liabilities
Trade and other payables 21 943,281 1,323,866
Borrowings 22 156,494 98,688
------------------------------------- ---- ------------ ------------
Total current liabilities 1,099,775 1,422,554
------------------------------------- ---- ------------ ------------
Non-current liabilities
Borrowings 22 - 417,555
Deferred tax liabilities 23 217,216 360,154
------------------------------------- ---- ------------ ------------
Total non-current liabilities 217,216 777,709
------------------------------------- ---- ------------ ------------
TOTAL LIABILITIES 1,316,991 2,200,263
------------------------------------- ---- ------------ ------------
TOTAL EQUITY AND LIABILTIES 2,309,380 2,156,746
------------------------------------- ---- ------------ ------------
The notes form part of these Financial Statements.
These Financial Statements were approved by the Board of
Directors and authorised for issue on 6 June 2018 and were signed
on its behalf by:
Nigel Burton
Non-Executive Director
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2017
Company number: 09109008 2017 2016
Note US$ US$
-------------------------------------- ---- ------------ -----------
Non-current assets
Intangible assets 13 - 92,520
Property, plant and equipment 14 2,835 2,575
Investment in subsidiary undertakings 15 1,268,481 1,177,957
Trade and other receivables 16 554,717 1,706,103
-------------------------------------- ---- ------------ -----------
Total non-current assets 1,826,033 2,979,155
-------------------------------------- ---- ------------ -----------
Current Assets
Trade and other receivables 16 201,447 74,928
Cash and cash equivalents 17 639,808 2,065
-------------------------------------- ---- ------------ -----------
Total current assets 841,255 76,993
-------------------------------------- ---- ------------ -----------
TOTAL ASSETS 2,667,288 3,056,148
-------------------------------------- ---- ------------ -----------
Equity attributable to shareholders
Share capital 18 6,358,586 4,130,803
Share premium 18 8,098,321 7,217,308
Other reserves 20 327,969 105,612
Translation reserve (218,009) (627,680)
Retained loss (12,464,308) (8,658,527)
-------------------------------------- ---- ------------ -----------
Total equity 2,102,559 2,167,516
-------------------------------------- ---- ------------ -----------
Current liabilities
Trade and other payables 21 418,605 789,944
Borrowings 22 146,124 98,688
-------------------------------------- ---- ------------ -----------
Total current liabilities 564,729 888,632
-------------------------------------- ---- ------------ -----------
TOTAL LIABILITIES 564,729 888,632
-------------------------------------- ---- ------------ -----------
TOTAL EQUITY AND LIABILITIES 2,667,288 3,056,148
-------------------------------------- ---- ------------ -----------
The notes form part of these Financial Statements.
The loss for the financial year dealt with in the financial
statements of the Parent Company, Strat Aero plc, was US$3,805,781
(2016: loss of US$2,269,311). As permitted by Section 408 of the
Companies Act 2006, no separate statement of comprehensive income
is presented in respect of the Parent Company.
These Financial Statements were approved by the Board of
Directors and authorised for issue on 6 June 2018 and were signed
on its behalf by:
Nigel Burton
Non-Executive Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 31 December 2017
Attributable to equity shareholders
---------------------------------------------------------------------------
Share Other Translation Retained
capital Share premium reserves reserve loss Total
US$ US$ US$ US$ US$ US$
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
As at 1 January 2016 2,292,836 6,171,415 (574,010) (35,918) (7,132,777) 721,546
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
Loss for the year - - - - (3,524,476) (3,524,476)
Other comprehensive income
for the year
Currency translation difference - - - 53,029 - 53,029
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
Total comprehensive income
for the year - - - 53,029 (3,524,476) (3,471,447)
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
Proceeds from shares issued
(net of costs) 1,213,885 222,953 83,391 - - 1,520,229
Non cash share issues(1) 624,082 682,438 - - - 1,306,520
Share Based Payments - Aero
Kinetics(2) - - (120,365) - - (120,365)
Share Based Payments - Other(3) - 140,502 (140,502) - - -
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
Transactions with owners,
recognised directly in equity 1,837,967 1,045,893 (177,476) - - 2,706,384
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
As at 31 December 2016 4,130,803 7,217,308 (751,486) 17,111 (10,657,253) (43,517)
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
As at 1 January 2017 4,130,803 7,217,308 (751,486) 17,111 (10,657,253) (43,517)
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
Loss for the year (2,513,293) (2,513,293)
Other comprehensive income
for the year
Currency translation difference - - - 218,046 - 218,046
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
Total comprehensive income
for the year - - - 218,046 (2,513,293) (2,295,247)
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
Proceeds from shares issued
(net of costs) 1,763,146 376,988 - - - 2,140,134
Non cash share issues(1) 464,637 504,025 - - - 968,662
Share Based Payments issued
- Other(4) - - 248,532 - - 248,532
Share Based Payments expired
- Other(5) - - (26,175) - - (26,175)
Transactions with owners,
recognised directly in
equity 2,227,783 881,013 222,357 - - 3,331,153
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
As at 31 December 2017 6,358,586 8,098,321 (529,129) 235,157 (13,170,546) 992,389
-------------------------------- --------- ------------- --------- ----------- ------------ -----------
The notes form part of these Financial Statements.
(1) Issue of shares where no cash consideration was
received.
(2) Share Based Payments - Aero Kinetics represents the expiry
of warrants that were initially issued on the acquisition of Aero
Kinetics by the Strat Aero Group. The warrants expired on
settlement of the Aero Kinetics related litigation.
(3) Share Based Payments - Other are warrants that have expired
in the previous financial year.
(4) Share Based Payments issued - Other are warrants that have
been issued in the current financial year.
(5) Share Based Payments expired - Other are warrants that have
expired in the current financial year.
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
As at 31 December 2017
Share Share Other Translation Retained Total
capital premium reserves reserve earnings
US$ US$ US$ US$ US$ US$
-------------------------- --------- --------- ---------- ------------ ------------ -----------
As at 1 January 2016 2,292,836 6,171,415 283,088 (261,437) (6,389,216) 2,096,686
-------------------------- --------- --------- ---------- ------------ ------------ -----------
Loss for the year - -- - - (2,269,311) (2,269,311)
Other comprehensive
income for the year
Currency translation
difference - -- - (366,243) - (366,243)
-------------------------- --------- --------- ---------- ------------ ------------ -----------
Total comprehensive
income for the year - -- - (366,243) (2,269,311) (2,635,554)
-------------------------- --------- --------- ---------- ------------ ------------ -----------
Proceeds from shares
issued
(net of costs) 1,213,885 222,953 83,391 - - 1,520,229
Non cash share issues(1) 624,082 682,438 - - - 1,306,520
Share Based Payments
- Aero Kinetics(2) - -- (120,365) - - (120,365)
Share Based Payments
- Other(3) - 140,502 (140,502) - - -
-------------------------- --------- --------- ---------- ------------ ------------ -----------
Transactions with owners,
recognised directly
in equity 1,837,967 1,045,893 (177,476) - - 2,706,384
-------------------------- --------- --------- ---------- ------------ ------------ -----------
As at 31 December 2016 4,130,803 7,217,308 105,612 (627,680) (8,658,527) 2,167,516
-------------------------- --------- --------- ---------- ------------ ------------ -----------
As at 1 January 2017 4,130,803 7,217,308 105,612 (627,680) (8,658,527) 2,167,516
-------------------------- --------- --------- ---------- ------------ ------------ -----------
Loss for the year - --- -- - (3,805,781) (3,805,781)
Other comprehensive
income for the year
Currency translation
difference - -- - 409,671 - 409,671
-------------------------- --------- --------- ---------- ------------ ------------ -----------
Total comprehensive
income for the year - -- - 409,671 (3,805,781) (3,396,110)
-------------------------- --------- --------- ---------- ------------ ------------ -----------
Proceeds from shares
issued
(net of costs) 1,763,146 376,988 -- - - 2,140,134
Non cash share issues(1) 464,637 504,025 -- - - 968,662
Share Based Payments
issued - Other(4) - - 248,532 - - 248,532
Share Based Payments
expired - Other(5) - - (26,175) - - (26,175)
Transactions with owners,
recognised directly
in equity 2,227,783 881,013 222,357 - - 3,331,153
-------------------------- --------- --------- ---------- ------------ ------------ -----------
As at 31 December 2017 6,358,586 8,098,321 327,969 (218,009) (12,464,308) 2,102,559
-------------------------- --------- --------- ---------- ------------ ------------ -----------
The notes form part of these Financial Statements.
(1) Issue of shares where no cash consideration was
received.
(2) Share Based Payments - Aero Kinetics represents the expiry
of warrants that were initially issued on the acquisition of Aero
Kinetics by the Strat Aero Group. The warrants expired on
settlement of the Aero Kinetics related litigation.
(3) Share Based Payments - Other are warrants that have expired
in the previous financial year.
(4) Share Based Payments issued - Other are warrants that have
been issued in the current financial year.
(5) Share Based Payments expired - Other are warrants that have
expired in the current financial year.
Company Company
CASH FLOW STATEMENTS Group 2017 Group 2016 2017 2016
As at 31 December 2017 Note US$ US$ US$ US$
-------------------------------------- ---- ----------- ----------- ----------- -----------
Cash Flows from Operating Activities
Loss for the year before tax (2,940,118) (3,636,634) (3,949,901) (2,381,459)
Depreciation of property, plant
and equipment 82,058 176,206 695 992
Amortisation of intangible assets 450,592 425,787 39,852 40,671
Share based payments 248,532 14,889 248,532 14,889
Impairments 199,838 - 2,606,094 1,218,651
Interest income (15) (34) (12) (15)
Finance costs 99,081 43,441 93,062 34,402
Foreign exchange 369,686 71,484 337,965 (15,454)
Taxation 272,688 112,158 144,121 112,148
Decrease/(Increase) in trade
and other receivables (233,350) 252,559 1,024,867 100,527
(Decrease)/Increase in trade
and other payables 10,531 (314,832) (371,339) 129,476
Cash used in operations (1,440,477) (2,854,976) 173,936 (745,172)
Interest expense (99,081) (43,441) 12 (34,402)
-------------------------------------- ---- ----------- ----------- ----------- -----------
Net cash used in operating activities (1,539,558) (2,898,417) 173,948 (799,574)
-------------------------------------- ---- ----------- ----------- ----------- -----------
Cash Flows from Investing Activities
Purchases of intangible assets 13 - (1,086) - -
Purchases of property, plant
and equipment 14 (74,599) - (754) -
Proceeds from sale of property,
plant and equipment 62,289 - - -
Interest income 15 34 12 15
Loans to subsidiary undertakings - - (1,753,132) (1,780,134)
Net cash (used in)/generated
from investing activities (12,295) (1,052) (1,753,874) (1,780,119)
-------------------------------------- ---- ----------- ----------- ----------- -----------
Cash Flows from Financing Activities
Net proceeds from borrowings 22 39,852 98,688 39,852 98,688
Issue of shares, net of issue
costs 2,140,134 1,520,229 2,140,134 1,520,229
-------------------------------------- ---- ----------- ----------- ----------- -----------
Net cash generated from financing
activities 2,179,986 1,618,917 2,179,986 1,618,917
-------------------------------------- ---- ----------- ----------- ----------- -----------
Net (Decrease)/increase in cash
and cash equivalents 628,133 (1,280,552) 600,060 (940,776)
Exchange gains/(losses) on cash
and cash equivalents 36,132 (200,787) 37,683 (188,463)
Cash and cash equivalents at
beginning of year 3,918 1,485,257 2,065 1,131,304
-------------------------------------- ---- ----------- ----------- ----------- -----------
Cash and cash equivalents at
31 December 2017 17 668,183 3,918 639,808 2,065
-------------------------------------- ---- ----------- ----------- ----------- -----------
The notes form part of these Financial Statements.
Shareholder loans totalling $391,115 were settled in share
during the year. This is a non-cash movement.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2017
1 General information
Strat Aero plc (the "Company") and its subsidiaries (together
the "Group") undertake survey & inspection services, including
data management & analytics. During 2017 the Group also
provided training and education services, which were discontinued
in early 2018. The Company is incorporated and domiciled in the UK
and its registered office is Ground Floor, Tintagel House, London
Road, Kelvedon, Essex, CO5 9BP.
The Company's shares are quoted on the Alternative Investment
Market ("AIM") of the London Stock Exchange plc.
2 Summary of accounting policies
The principal accounting policies applied in the preparation of
these Consolidated Financial Statements are set out below. These
policies have been consistently applied in the year presented,
unless otherwise stated.
(a) Basis of preparation
The Consolidated Financial Statements of Strat Aero plc have
been prepared in accordance with International Financial Reporting
Standards (IFRS) and IFRS Interpretations Committee (IFRS IC)
interpretations as adopted by the European Union and the Companies
Act 2006 applicable to companies reporting under IFRS. The
Consolidated Financial Statements have also been prepared under the
historical cost convention.
The Financial Statements are presented in US Dollars (US$)
rounded to the nearest dollar.
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's Accounting Policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Financial
Statements are disclosed in Note 4.
(b) Going concern basis
The Financial Statements have been prepared assuming the Group
and Company will continue as a going concern. Under the going
concern assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the intention nor
the necessity of liquidation, ceasing trading or seeking protection
from creditors pursuant to laws or regulations.
The assessment has been made based on the Group's economic
prospects which have been included in the financial budget for the
years 2018-2022, and for managing working capital, in particular
for the twelve months from the date of approval of the Financial
Statements.
The Directors have also considered the ability of the Group to
raise funds on the open market and has demonstrated the ability to
do so through share issues during the year and after the reporting
date although the Directors note that this is not necessarily
indicative of their ability to raise future funds. The Group's
business activities together with the factors likely to affect its
future development, performance and position are set out in the
Strategic Report. The Group's objectives, policies and processes
for managing its capital, its financial risk management objectives,
details of its financial instruments and its exposure to credit and
liquidity risk can be found in the Strategic Report and in Note
24.
Based in these assumptions, the Directors have a reasonable
expectation that the Group and Company have adequate resources to
continue in operational existence for the foreseeable future and
therefore have adopted the going concern basis of preparation in
these Financial Statements.
The Financial Statements do not include any adjustment that may
be required should the Group and Company be unable to continue as a
going concern.
(c) New and amended standards
(i) New and amended standards mandatory for the first time for
the financial year beginning 1 January 2016
Standard Impact on initial application Effective date
IAS 7 (Amendments) Disclosure Initiative *1 January
2017
IAS 12 (Amendments) Recognition of Deferred Tax *1 January
2017
There were no IFRSs or IFRIC interpretations that were effective
for the first time for the financial year beginning 1 January 2017
that had a material impact on the Group or Company.
(ii) New standards, amendments and Interpretations in issue but
not yet effective or not yet endorsed and not early adopted
The standards and interpretations that are relevant to the Group
or Company, issued, but not yet effective, up to the date of
issuance of the Financial Statements are listed below. The Company
and Group intend to adopt these standards, if applicable, when they
become effective.
Standard Impact on initial application Effective date
IFRS 9 Financial Instruments 1 January 2018
IFRS 15 Revenue from Contracts with 1 January 2018
Customers
IFRS 16 Leases 1 January 2019
Annual Improvements 2015 - 2016 Cycle *1 January
2018
IAS 28 (Amendments) Accounting for Investments Postponed
- Applying the Consolidation
Exception
IAS 40 (Amendments) Transfers of Investment Property *1 January
2018
IFRS 10 (Amendments) Consolidated Financial Statements: Postponed
Applying the Consolidation
Exception
IFRS 15 (Clarifications) Revenue from Contracts with *1 January
Customers 2018
IFRIC Interpretation Foreign Currency Transactions *1 January
22 and Advance Consideration 2018
* Subject to EU endorsement
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
The Group is evaluating the impact of the new or amended
standards above. Management have reviewed IFRS 15 and IFRS 9 in
detail and they do not believe that they will have any material
impact on revenue recognition or the classification and measurement
of financial instruments in the financial statements.
The new or amended standards are not expected to have a material
impact on the Group's results or shareholders' funds.
(d) Basis of consolidation
Acquisition of Strat Aero International Inc and Strat Aero
International Limited by Strat Aero plc
The Company was incorporated on 1 July 2014 and entered into an
agreement to acquire the entire issued and to be issued share
capital of Strat Aero International Inc and Strat Aero
International Limited on 16 July 2014. The acquisition was effected
by way of issue of shares. Both of the Group's trading
subsidiaries, Strat Aero International Inc and Strat Aero
International Limited were incorporated on 12 December 2013
respectively and had commenced operational activities on 1 January
2014.
The Directors concluded that the transaction fell outside the
scope of IFRS 3 "Business Combinations" (Revised 2008) since the
transaction described above represents a combination of entities
under common control. The Directors felt that FRS 6 - Acquisitions
and mergers, which does not conflict with IFRS, more accurately
reflected the economic substance of the transaction.
Under UK GAAP, the assets and liabilities of both entities are
recorded at book value, not fair value (although adjustments are
made to achieve uniform accounting policies), intangible assets and
contingent liabilities are recognised only to the extent that they
were recognised by the legal acquirer in accordance within
applicable IFRS, no goodwill is recognised, any expenses of the
combination are written off immediately to the statement of
comprehensive income. No fair value adjustments have been made as a
result of the combination.
All entities had the same management as well as majority
shareholders.
No fair value adjustments have been made as a result of the
combination.
Subsidiaries
Except for the transactions described above, the Consolidated
Financial Statements include the Financial Statements of the
Company and its subsidiaries made up to 31 December each year.
Subsidiaries are all entities over which the Group has control.
Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the
investee. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group.
When necessary, adjustments are made to the Financial Statements
of subsidiaries to bring their accounting policies into line with
the Group's accounting policies. All intra-group assets and
liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on
consolidation.
(e) Business combinations
Aside from the initial establishment of the Group as described
in 2(d) the acquisition of other subsidiaries has been accounted
for using the acquisition method of accounting.
The consideration transferred for the acquisition is the fair
value of the assets transferred, the liabilities incurred to the
former owners of the acquire and the equity interests issued by the
Group. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date.
The Group recognises any non-controlling interest in the acquiree
at the non-controlling interest's proportionate share of the
recognised amounts of the acquiree's identifiable net assets.
Acquisition related costs are expensed as incurred.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39, either in the Income Statement or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured, and its subsequent settlement is
accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the identifiable net assets acquired and liabilities
assumed.
(f) Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
("CODM"). The CODM is deemed to be the Chief Executive Officer and
the Chief Financial Officer.
Operating segments are identified on the basis of internal
reports that are regularly reviewed by the CODM to allocate
resources and to assess performance. Using the Group's internal
management reporting as a starting point, three reporting segments
set out in note 5 have been identified.
(g) Foreign currencies
Functional and presentation currency
The individual financial statements of each Group company are
measured in the currency of the primary economic environment in
which it operates (its functional currency) being US Dollar or
Pounds Sterling. For the purpose of the Group Financial Statements,
the results and financial position are expressed in US Dollars,
which is the presentation currency for the Group and company.
Transactions and balances
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At the
Statement of Financial Position date, monetary assets and
liabilities that are denominated in foreign currencies are
translated at the rates prevailing on the Statement of Financial
Position date. Exchange differences arising on the settlement of
monetary items, and on the translation of monetary items at the
Statement of Financial Position date, are included in the Statement
of Comprehensive Income for the year.
Group companies
The results and financial position of the Group companies (none
of which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
-- assets and liabilities for each Statement of Financial
Position presented are translated at the closing rate at the date
of that Statement of Financial Position;
-- income and expenses for each Statement of Comprehensive
Income presented are translated at average exchange rates unless
this average is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the rate on the dates of
the transactions; and
-- all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations are taken
to shareholders' equity. When a foreign operation is partially
disposed of or sold, exchange differences that were recorded in
equity are recognised in Statement of Comprehensive Income as part
of the gain or loss on sale.
(h) Intangible assets
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred, the amount
of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the
acquiree over the fair value of the identifiable net assets
acquired. If the total of consideration transferred,
non-controlling interest recognised and previously held interest
measured at fair value is less than the fair value of the net
assets of the subsidiary acquired, in the case of a bargain
purchase, the difference is recognised directly in the Statement of
Comprehensive Income.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to each of the CGUs, or groups of
CGUs, that is expected to benefit from the synergies of the
combination. Each unit or group of units to which the goodwill is
allocated represents the lowest level within the entity at which
the goodwill is monitored for internal management purposes.
Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of the CGU containing the
goodwill is compared to the recoverable amount, which is the higher
of value in use and the fair value less costs of disposal. Any
impairment is recognised immediately as an expense and is not
subsequently reversed.
Customer lists and intellectual property rights are shown at
historic costs, less amortisation. Costs associated with
maintaining intellectual property rights are recognised as an
expense as incurred. Costs incurred in development have been
capitalised, on the basis that the Company will have access to
future economic benefits deriving from ownership of this new
technology.
Development costs that are directly attributable to the design
and testing of identifiable and unique software products controlled
by the Company are recognised as intangible assets when the
following criteria are met:
-- it is technically feasible to complete the software product
so that it will be available for use;
-- management intends to complete the software product and use or sell it;
-- there is an ability to use or sell the software product;
-- it can be demonstrated how the software product will generate
probable future economic benefits;
-- adequate technical, financial and other resources to complete
the development and use or sell the software product are available;
and
-- the expenditure attributable to the software product during
its development can be reliably measured.
The Group's Intangible assets, other than goodwill, are
amortised at 20% per annum on a straight line basis.
At each year end date, the Group reviews the carrying amounts of
its intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are independent
from other assets, the Group estimates the recoverable amount of
the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value, less costs to
sell, and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value, using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately.
(i) Property, plant and equipment
All property, plant and equipment are shown at cost less
subsequent depreciation and impairment. Cost includes expenditure
that is directly attributable to the acquisition of items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are charged to the Income
Statement during the financial year in which they are incurred.
Depreciation is charged so as to write off the cost of assets
over their useful economic lives, using the straight-line method,
which is considered to be as follows:
-- Plant and equipment - 5 years
-- Motor Vehicles - 3 to 5 years
The assets' residual values and useful lives are reviewed, and,
if appropriate, asset values are written down to their estimated
recoverable amounts, at each Statement of Financial Position
date.
Gains and losses on disposals are determined by comparing
proceeds with the carrying amounts and are included in Statement of
Comprehensive Income.
(j) Impairment of non-financial assets
Intangible assets that have an indefinite useful life or
intangible assets not ready to use are not subject to amortisation
and are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs of disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are largely independent cash inflows (cash-generating units). Prior
impairments of non-financial assets (other than goodwill) are
reviewed for possible reversal at each reporting date.
(k) Financial assets
The Group and Company has classified all of its financial assets
as loans and receivables. The classification depends on the purpose
for which the financial assets were acquired. Management determines
the classification of its financial assets at initial
recognition.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets. The Group's loans and
receivables comprise trade and other receivables and cash and cash
equivalents in the Statement of Financial Position.
Loans and receivables are initially recognised at fair value
plus transaction costs and are subsequently carried at amortised
cost using the effective interest method, less provision for
impairment.
(l) Impairment of financial assets
The Group and Company assesses at the end of each reporting year
whether there is objective evidence that a financial asset, or a
group of financial assets, is impaired. A financial asset, or a
group of financial assets, is impaired, and impairment losses are
incurred, only if there is objective evidence of impairment as a
result of one or more events that occurred after the initial
recognition of the asset (a "loss event"), and that loss event (or
events) has an impact on the estimated future cash flows of the
financial asset, or group of financial assets, that can be reliably
estimated.
The criteria that the Group and Company uses to determine that
there is objective evidence of an impairment loss include:
-- significant financial difficulty of the issuer or obligor;
-- a breach of contract, such as a default or delinquency in interest or principal repayments.
The amount of the loss is measured as the difference between the
asset's carrying amount and the present value of estimated future
cash flows (excluding future credit losses that have not been
incurred), discounted at the financial asset's original effective
interest rate. The asset's carrying amount is reduced, and the loss
is recognised in the profit or loss.
If, in a subsequent year, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as an
improvement in the trade and other receivables credit rating), the
reversal of the previously recognised impairment loss is recognised
in the Statement of Comprehensive Income.
(m) Trade and other receivables
Trade receivables are amounts due from customers for services
performed in the ordinary course of business. If collection is
expected in one year or less (or in the normal operating cycle of
the business if longer), they are classified as current assets. If
not, they are presented as non-current assets.
(n) Cash and cash equivalents
In the Statement of Cash Flows, cash and cash equivalents
comprise cash in hand and deposits held at call with banks.
(o) Share capital and reserves
Equity comprises the following:
-- "Share Capital" represents ordinary shares issued at par
value and includes "Deferred Shares" below
-- "Deferred Shares" represents notional shares arising on the
redenomination of the nominal share capital from 1p to 0.1p on 11
August 2016 and 0.1p to 0.01p on 17 October 2017. The Deferred
Shares form part of the Share Capital balance shown in the
Statement of Financial Position.
-- "Share Premium" represents the premium paid on shares issued above par value; and
-- "Retained earnings" represents retained losses.
-- "Merger reserve" - The merger arose from the difference
between the carrying value of the investment and the nominal value
of the shares of subsidiaries upon consolidation under merger
accounting. The merger reserve is presented in "other
reserves".
-- Share option and warrants reserve - represents the fair value
of unexpired warrants at the issue date.
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
(p) Share-based payments
The Group operates a number of equity-settled, share-based
compensation plans, under which the entity receives goods or
services from employees or third party suppliers as consideration
for equity instruments of the Company. The fair value of the
equity-settled share based payments are recognised as an expense in
the Statement of Comprehensive Income or charged to equity
depending on the nature of the services provided or instruments
issued.
(q) Trade and other payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities. Trade payables are recognised
initially at fair value, and subsequently measured at amortised
cost using the effective interest method.
(r) Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
Income Statement over the year of the borrowings using the
effective interest method.
(s) Revenue recognition
During 2017 the Group generated its revenue from the provision
of consultancy and survey services performed on a 'time and
materials' basis and the delivery of commercial pilot training
solutions. Revenues were recognised on these products at the point
of sale and when services were rendered to clients as per the terms
of specific contracts. In the case of fixed price contracts,
revenues are recognised on a percentage of completion basis.
Turnover is stated net of value added tax in respect of continuing
activities. The Group closed down the consultancy and pilot
training divisions shortly after the year end.
(t) Current and deferred income tax
The tax credit represents tax currently payable less a credit
for deferred tax. The tax currently payable is based on taxable
profit for the year. Taxable profit differs from the loss for the
year as reported in the Consolidated Statement of Comprehensive
Income because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Group's liability for
current tax is calculated using tax rates that have been enacted or
substantively enacted by the Statement of Financial Position
date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
liability method. Deferred tax liabilities are generally recognised
for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting loss.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where
the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to
apply in the relevant jurisdiction in the year when the liability
is settled or the asset is realised. Deferred tax is charged or
credited to the Consolidated Statement of Comprehensive Income,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity. Deferred tax is not discounted.
Deferred tax assets and liabilities are offset where there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
(u) Leases
Leases in which a significant portion of the risks and rewards
of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives
received from the lessor) are charged to the Statement of
Comprehensive Income on a straight-line basis over the year of the
lease.
3 Financial risk management
i) Group financial risk factors
The Group's activities expose it to a variety of financial
risks. The Group's finance function monitors and manages the
financial risks relating to the operations of the Group. The Group
is exposed to market risks (including foreign exchange risk and
price risk) and credit risk and to a very limited amount interest
rate risk and liquidity risk.
Risk management is carried out by the Board of Directors. The
Board provides written principles for overall risk management, as
well as written policies covering specific areas, such as foreign
exchange risk, interest rate risk and credit risk, to mitigate
financial risk exposures.
Market risk
(a) Foreign exchange risk
Foreign exchange risk arises because the Group has operations
located in various parts of the world whose functional currency is
not the same as the functional currency (GBP Sterling) in which
other Group companies are operating. The Group's net assets arising
from such overseas operations are exposed to currency risk
resulting in gains and losses on retranslation into US Dollar. Only
in exceptional circumstances will the Group consider hedging its
net investments in non-US Dollar operations as generally it does
not consider that the reduction in foreign currency exposure
warrants the cash flow risk created from such hedging techniques.
It is the Group's policy to hold surplus funds over and above
working capital requirements in the Parent Company. The Group
considers this policy minimises any unnecessary foreign exchange
exposure.
In order to monitor the continuing effectiveness of this policy
the Board through their approval of both corporate and capital
expenditure budgets, and review of the currency profile of cash
balances and management accounts, considers the effectiveness of
the policy on an ongoing basis.
(b) Price risk
The Group is not exposed to commodity price risk as a result of
its operations. The Directors will revisit the appropriateness of
this policy should the Group's operations change in size or nature.
The Group has no exposure to equity securities price risk, as it
has no listed equity investments.
Credit risk
Credit risk arises from the Group's trade receivables. Where no
independent rating of customers is available, credit control
assesses the quality of customers by reference to their financial
position, past experience and any other relevant factors.
Interest rate risk management
The Group is not exposed to interest rate risk on financial
liabilities.
Liquidity risk management
The Group manages liquidity risk by maintaining adequate
reserves and by continuously monitoring forecast and actual cash
flows and matching the maturity profiles of financial assets and
liabilities. The Group seeks to manage financial risk, to ensure
sufficient liquidity is available to meet foreseeable needs and to
invest cash assets safely and profitably.
ii) Capital risk management
The Group manages its capital to ensure that it will be able to
continue as a going concern while maximising the return to
stakeholders. The Group's capital structure primarily consists of
equity attributable to equity holders of the parent, comprising
issued capital, reserves and retained losses.
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
The Group makes estimates and judgements concerning the future.
The resulting accounting estimates and judgements will, by
definition, seldom equal the related actual results. The estimates
and judgements that have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities within
the next financial year are addressed below:
Intangible assets
Intangible assets comprise of development costs, customer lists
and Intellectual Property and are amortised accordingly:
Development costs 5 years
Customer lists 5 years
Intellectual Property 5 years
Useful lives are based on management's estimates of the period
that the assets will generate revenues with such records being
periodically reviewed for continual appropriation.
The Group test annually whether intangible assets, which have a
carrying value as at 31 December 2017 of US$1,080,306, have
suffered any impairment, in accordance with the accounting policy.
Where applicable, the recoverable amounts of cash generating units
have been determined based on value in use calculations. The value
in use calculations require the entity to estimate future cash
flows expected to arise from the cash generating unit and apply a
suitable discount rate in order to calculate present value. These
calculations require the use of estimates (Note 13).
5 Segmental analysis
Management considers that during 2017 there were two activities,
being the provision survey and inspection services, and aviation
training, education and software services in respect of aviation.
This segmental analysis is reflected in the Consolidated Group
Statements set out herein.
Total revenue comprises:
Revenue from external customers: 2017 2016
US$ US$
-------------------------------------------------- --------- -------
Survey & Inspection 818,618 839,271
Aviation Training, Education & Software Services 193,064 23,717
1,011,682 862,988
-------------------------------------------------- --------- -------
2017 2016
US$ US$
Revenues are generated in a number of countries
analysed as to:
-------------------------------------------------- --------- -------
United Kingdom 816,795 681,474
Europe 21,254 -
United States of America 107,052 157,797
South East Asia 66,581 23,717
-------------------------------------------------- --------- -------
1,011,682 862,988
-------------------------------------------------- --------- -------
2017 2016
US$ US$
The following customers generated more than 10%
of the Group's revenue:
-------------------------------------------------- ------- -------
Customer 1 303,783 150,796
Customer 2 161,932 130,337
Customer 3 79,561 88,681
Customer 4 78,675 60,577
Customer 5 51,280 -
-------------------------------------------------- ------- -------
675,231 430,391
-------------------------------------------------- ------- -------
Carrying amount of assets
2017 2016
US$ US$
------------------------- --------- ---------
United Kingdom 2,258,416 1,762,982
United States of America 50,964 393,764
------------------------- --------- ---------
2,309,380 2,156,746
------------------------- --------- ---------
Carrying amount of liabilities
2017 2016
US$ US$
------------------------- --------- ---------
United Kingdom 1,005,344 1,461,083
United States of America 311,647 739,180
------------------------- --------- ---------
1,316,991 2,200,263
------------------------- --------- ---------
6 Operating expenses by nature
2017 2016
US$ US$
----------------------------------------------- --------- ---------
PR, marketing and advertising 45,899 139,747
Wages, salaries and other staff costs (note 7) 1,366,639 1,764,831
Depreciation 82,058 176,206
Amortisation 450,592 425,787
Operating lease expenses 117,745 161,708
Professional and consultancy fees 588,092 1,007,779
Audit fees (note 9) 43,698 59,719
Share option expense 248,532 -
Aero Kinetic litigation net settlement (gain) - (129,477)
Net foreign exchange (gains) 51,609 (3,292)
Impairment 199,838 -
Other expenses 573,034 583,298
----------------------------------------------- --------- ---------
3,767,736 4,186,306
----------------------------------------------- --------- ---------
7 Staff costs
The average number of employees, including Directors, employed
was:
2017 (Group) 2017 (Parent) 2016 (Group) 2016 (Parent)
No. No. No. No.
--------------- ------------ ------------- ------------ -------------
Directors 4 4 5 5
Development 12 - 18 -
Administration 5 - 8 -
--------------- ------------ ------------- ------------ -------------
21 4 31 5
--------------- ------------ ------------- ------------ -------------
Employees', including Directors', costs comprise:
2017 2016
US$ US$
-------------------------------------- --------- ---------
Wages, salaries and other staff costs 1,276,936 1,638,477
Social security costs 89,703 126,354
-------------------------------------- --------- ---------
1,366,639 1,764,831
-------------------------------------- --------- ---------
8 Directors
Key management are considered to be Directors.
2017 2016
Group Short term Short term
employee employee
benefits Other Total benefits Other Total
US$ US$ US$ US$ US$ US$
--------------- ---------- ------ ------- ---------- ----- -------
Graham Peck - - - 20,336 - 20,336
Iain McLure 178,883 8,166 187,049 122,013 - 122,013
Gerard Dempsey 61,569 2,042 63,611 27,114 - 27,114
Paul Ryan 236,042 8,983 245,025 27,114 - 27,114
Gary Nel 115,334 - 115,334 - - -
Trevor Brown - 47,591 47,591 - - -
591,828 66,782 658,610 196,577 - 196,577
--------------- ---------- ------ ------- ---------- ----- -------
Iain McClure was paid short term employee benefits of $51,308
through a service company, ScotNL Consulting B.V, in 2017. Gerard
Dempsey was paid short term employee benefits of $61,569 through a
service company in 2017. Paul Ryan was paid short term employee
benefits of $236,042 through a service company, Warande1970 BVBA,
in 2017.
Gary Nel was considered key management in the Group in 2017
only.
9 Auditors remuneration
2017 2016
US$ US$
---------------------------------------------------- ------ ------
Fees payable to the Company's auditor for the
audit of the Group and Parent Company's Financial
Statements 36,000 10,000
Fees payable to the Company's auditor for other
services:
Audit of the accounts of subsidiaries - 43,541
Taxation - compliance 7,698 6,250
43,698 59,791
--------------------------------------------------- ------ ------
10 Finance costs
2017 2016
US$ US$
----------------------------------------- ------ ------
Interest payable and other finance costs 99,081 43,441
----------------------------------------- ------ ------
99,081 43,441
----------------------------------------- ------ ------
11 Tax
No income tax charge was recognised in the profit or loss due to
losses incurred.
Group 2017 2016
Income tax US$ US$
-------------------------- --------- ---------
Current tax
UK Corporation tax credit (272,688) (112,158)
-------------------------- --------- ---------
Deferred tax
Current year (154,137) -
-------------------------- --------- ---------
Tax credit (426,825) (112,158)
-------------------------- --------- ---------
The tax on the Group's loss before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to the profits/(losses) of the consolidated
entities as follows:
2017 2016
Group US$ US$
-------------------------------------------------- ----------- -----------
Loss before tax (2,897,335) (3,636,634)
-------------------------------------------------- ----------- -----------
Tax at the applicable rate of 21.74% (31 December
2016: 24.38%): (629,980) (886,514)
Effect of:
Expenses not deductible for tax purposes 7,517 27,015
Depreciation in excess of capital allowances 120,111 146,750
R&D tax credit (280,043) (112,158)
Fixed asset timing differences (154,137) -
Net tax effect of losses carried forward 509,707 712,749
-------------------------------------------------- ----------- -----------
Tax credit for the year (426,825) (112,158)
-------------------------------------------------- ----------- -----------
The tax rate used is a combination of 20% to March 2017 and 19%
thereafter; the standard rate of corporation tax in the UK and US
tax rate of 35% to give an applicable rate of 21.74%.
The Group has tax losses of approximately US$2,605,839 (31
December 2016: US$2,104,132) available to carry forward against
future taxable profits. No deferred tax asset has been recognised
in view of the uncertainty over the timing of future taxable
profits against which the losses may be offset.
12 Earnings per share
Basic earnings per share has been calculated by dividing the
loss attributable to equity holders of the Company after taxation
by the weighted average number of shares in issue during the year.
There is no difference between the basic and diluted loss per share
as the effect on the exercise of options and warrants would be to
decrease the earnings per share.
Since the year end, warrants have been exercised which may
result in the dilution of the earnings per share in the future.
Details of share options and warrants that were anti-dilutive but
may be dilutive in the future are set out in note 19.
2017 2016
Basic and Diluted US$ US$
----------------------------------- ---------------- ------------
Loss after taxation (2,513,293) (3,524,476)
----------------------------------- ---------------- ------------
Weighted average number of shares 1,935,475,795 255,104,361
----------------------------------- ---------------- ------------
Earnings per share (cents) (0.13) (1.38)
----------------------------------- ---------------- ------------
13 Intangible assets
2017 2016
Goodwill - Cost and Net Book Value US$ US$
-------------------------------------------------------- ------------ ----------
At 1 January 14,557 14,557
At 31 December 14,557 14,557
-------------------------------------------------------- ------------ ----------
Customer Intellectual Development
Lists Property Costs Total
Other intangibles - Group US$ US$ US$ US$
------------------------------ --------- ------------- ------------ ------------
Cost
At 1 January 2016 540,232 852,299 1,102,922 2,495,453
Additions - - 1,086 1,086
Foreign exchange differences (6,054) (44,053) (7,500) (57,607)
------------------------------ --------- ------------- ------------ ------------
At 31 December 2016 534,178 808,246 1,096,508 2,438,932
------------------------------ --------- ------------- ------------ ------------
Impairment - (199,260) (466,867) (666,127)
Foreign exchange differences 3,169 3,613 6,505 13,287
------------------------------ --------- ------------- ------------ ------------
At 31 December 2017 537,347 612,599 636,146 1,786,092
------------------------------ --------- ------------- ------------ ------------
Accumulated amortisation
At 1 January 2016 27,012 80,114 172,051 279,177
Charge for the year 86,437 141,514 197,836 425,787
Foreign exchange differences (5,403) (3,054) (6,402) (14,859)
------------------------------ --------- ------------- ------------ ------------
At 31 December 2016 108,046 218,574 363,485 690,105
------------------------------ --------- ------------- ------------ ------------
Charge for the year 107,469 122,520 220,603 450,592
Impairment - (139,482) (326,807) (466,289)
Foreign exchange differences 9,454 8,844 27,637 45,935
------------------------------ --------- ------------- ------------ ------------
At 31 December 2017 224,969 210,456 284,918 720,343
------------------------------ --------- ------------- ------------ ------------
Net book value
At 31 December 2016 426,132 589,672 733,023 1,748,827
------------------------------ --------- ------------- ------------ ------------
At 31 December 2017 312,378 402,143 351,228 1,065,749
------------------------------ --------- ------------- ------------ ------------
Intellectual
Property
Other intangibles - Company US$
------------------------------ -------------
Cost
At 1 January 2016 222,030
Foreign exchange differences (36,990)
-------------------------------- -------------
At 31 December 2016 185,040
-------------------------------- -------------
Foreign exchange differences 14,220
Impairment (199,260)
-------------------------------- -------------
At 31 December 2017 -
------------------------------ -------------
Accumulated amortisation
At 1 January 2016 66,519
Charge for the year 40,671
Foreign exchange differences (14,670)
-------------------------------- -------------
At 31 December 2016 92,520
-------------------------------- -------------
Charge for the year 39,852
Impairment (139,482)
Foreign exchange differences 7,110
-------------------------------- -------------
At 31 December 2017 -
------------------------------ -------------
Net book value
At 31 December 2016 92,520
-------------------------------- -------------
At 31 December 2017 -
-------------------------------- -------------
The above intangible assets comprise the Intellectual Property
acquired on 16 July 2014 and 30 September 2015. All research and
development costs not eligible for capitalisation have been
expensed.
The recoverable amount of the above cash-generating units has
been determined based on value in use calculations. The key
assumptions used for value-in-use calculations in 2017 are as
follows:
Gross margin 20-50%
Growth rate 10-45%
Discount rate 10%
Management determined budgeted gross margin based on past
performance and its expectations of market development. The average
growth rates used are consistent with the forecasts included in
industry reports. The discount rates used are pre-tax, and reflect
specific risks relating to the relevant operating segment.
The recoverable amount calculated based on value in use did not
exceed the carrying value.
14 Property, Plant and Equipment
Plant & Motor Vehicles
equipment Total
Group US$ US$ US$
------------------------------------------------- ----------- --------------- ----------
Cost
At 1 January 2016 518,078 119,549 637,627
Foreign exchange differences (58,350) (13,465) (71,815)
------------------------------------------------- ----------- --------------- ----------
At 31 December 2016 459,728 106,084 565,812
------------------------------------------------- ----------- --------------- ----------
Additions 63,972 10,627 74,599
Disposals (173,900) (32,446) (206,346)
Foreign exchange differences & reclassification 33,307 (32,138) 1,170
------------------------------------------------- ----------- --------------- ----------
At 31 December 2017 383,107 52,127 435,235
------------------------------------------------- ----------- --------------- ----------
Accumulated depreciation
At 1 January 2016 217,827 47,658 265,485
Charge for the year 155,739 20,467 176,206
Foreign exchange differences (48,245) (6,823) (55,068)
------------------------------------------------- ----------- --------------- ----------
At 31 December 2016 325,321 61,302 386,623
------------------------------------------------- ----------- --------------- ----------
Charge for the year 71,609 10,449 82,058
Disposals (117,637) (26,420) (144,057)
Foreign exchange differences & reclassification 6,049 (12,725) (6,676)
------------------------------------------------- ----------- --------------- ----------
At 31 December 2017 285,343 32,606 317,949
------------------------------------------------- ----------- --------------- ----------
Net book value at 31 December 2016 134,407 44,782 179,189
------------------------------------------------- ----------- --------------- ----------
Net book value at 31 December 2017 97,764 19,521 117,285
------------------------------------------------- ----------- --------------- ----------
Plant & Motor Vehicles
equipment Total
Company US$ US$ US$
------------------------------------ ----------- --------------- --------
Cost
At 1 January 2016 5,415 - 5,415
Foreign exchange differences (901) - (901)
------------------------------------ ----------- --------------- --------
At 31 December 2016 4,514 - 4,514
------------------------------------ ----------- --------------- --------
Additions 754 - 754
Foreign exchange differences 346 - 346
------------------------------------ ----------- --------------- --------
At 31 December 2017 5,614 5,614
------------------------------------ ----------- --------------- --------
Accumulated depreciation
At 1 January 2016 1,243 - 1,243
Charge for the period 992 - 992
Foreign exchange differences (296) - (296)
------------------------------------ ----------- --------------- --------
At 31 December 2016 1,939 - 1,939
------------------------------------ ----------- --------------- --------
Charge for the year 695 - 695
Foreign exchange differences 145 145
------------------------------------ ----------- --------------- --------
At 31 December 2017 2,779 2,779
------------------------------------ ----------- --------------- --------
Net book value at 31 December 2016 2,575 - 2,575
------------------------------------ ----------- --------------- --------
Net book value at 31 December 2017 2,835 - 2,835
------------------------------------ ----------- --------------- --------
15 Investment in subsidiary undertakings
2017 2016
Company US$ US$
---------------------------------------- ------------- ------------
As at 1 January 1,177,957 1,413,434
Foreign exchange differences 90,524 (235,477)
Cost at 31 December 1,268,481 1,177,957
---------------------------------------- ------------- ------------
A projected cashflow period of five years was used to assess the
value in use for investments in subsidiary undertakings.
The following are the principal subsidiaries of the Company at
31 December 2017 and at the date of these Financial Statements.
Parent Class Share capital
Name of company Registered Address company of shares held Nature of business
----------------------- -------------------- -------------------- ------------ ------------- --------------------
Strat Aero 19500 State Highway Strat Ordinary 100% Provider of
International, 249, Suite 655, Aero plc aviation software,
Inc. Houston, Texas products and
77070, USA services, dormant
after 31 December
2017.
Strat Aero The Beehive, Strat Ordinary 100% Aviation management
International City Place, Gatwick Aero plc and consultancy
Limited Airport, West services, dormant
Sussex, RH6 0PA, after 31 December
UK 2017.
Strat Aero 19500 State Highway Strat N/A 100% Dormant company
International 249, Suite 655, Aero International,
Consultancy Houston, Texas Inc
Group, LLC 77070, USA
Strat Aero Holdings, 19500 State Highway Strat Ordinary 100% Holding company
Inc 249, Suite 655, Aero plc
Houston, Texas
77070, USA
Aero Kinetics 19500 State Highway Strat N/A 100% Provider of
Labs, LLC 249, Suite 655, Aero Holdings, aviation software,
Houston, Texas Inc products and
77070, USA services, dormant
after 31 December
2017.
Aero Kinetics, 19500 State Highway Strat N/A 100% Provider of
LLC 249, Suite 655, Aero Holdings, aviation software,
Houston, Texas Inc products and
77070, USA services, dormant
after 31 December
2017.
Parent Class Share capital
Name of company Registered Address company of shares held Nature of business
----------------- ---------------------- --------------- ------------ ------------- -------------------
Nephos Services, 19500 State Highway Strat N/A 100% Dormant company
LLC 249, Suite 655, Aero Holdings,
Houston, Texas Inc
77070, USA
Aero Kinetics 19500 State Highway Aero Kinetics, N/A 100% Dormant company
UAS TC001, LLC 249, Suite 655, LLC
Houston, Texas
77070, USA
Geocurve Ltd Tintagel House Strat Ordinary 100% Surveying and
London Road, Aero plc mapping
Kelvedon, Colchester,
Essex, CO5 9BP,
UK
GN Site Engineers Tintagel House Geocurve Ordinary 100% Dormant company
Ltd London Road, Ltd
Kelvedon, Colchester,
Essex, CO5 9BP,
UK
UKAeroVision Tintagel House Geocurve Ordinary 100% Dormant company
Limited London Road, Ltd
Kelvedon, Colchester,
Essex, CO5 9BP,
UK
16 Trade and other receivables
2017 2016
Group Company Group Company
US$ US$ US$ US$
------------------------------------- -------- ---------- -------- ------------
Amounts due from group undertakings - 554,717 - 1,706,103
Trade receivables 114,937 - 127,639 -
VAT receivable 33,193 29,599 - 22,708
Other receivables 40,472 11,557 494 11,421
Corporation tax 194,407 149,256 - -
Prepayments 60,597 11,035 82,122 40,799
------------------------------------- -------- ---------- -------- ------------
At 31 December 443,606 756,164 210,255 1,781,031
------------------------------------- -------- ---------- -------- ------------
Less: non-current portion - (554,717) - (1,706,103)
------------------------------------- -------- ---------- -------- ------------
Current portion 443,606 201,447 210,255 74,928
------------------------------------- -------- ---------- -------- ------------
The fair value of all receivables is the same as their carrying
values stated above.
Group loans of $2,546,316 have been impaired at 31 December
2017.
Ageing of past due trade receivables - Group: 2017 2016
US$ US$
---------------------------------------------- ------- -------
Current 64,632 -
0 - 15 days - -
16 - 30 days 13,445 76,418
Over 30 days 36,860 51,221
---------------------------------------------- ------- -------
114,937 127,639
---------------------------------------------- ------- -------
The carrying amount of the Group's trade receivables are
denominated in the following currencies:
2017 2016
US$ US$
----------- ------- -------
US Dollars 9,540 23,286
UK Pounds 105,397 104,353
----------- ------- -------
114,937 127,639
----------- ------- -------
The maximum exposure to credit risk at the reporting date is the
carrying value reported above. The Group does not hold collateral
as security. Provisions totalling $112,496 (2016: $nil) have been
made at the year-end in respect of trade receivables.
17 Cash and cash equivalents
2017 2016
Group Company Group Company
US$ US$ US$ US$
-------------------------------------------------------- ------------------------ ----------------------- ------ --------
Cash at bank and in hand 668,183 639,808 3,918 2,065
668,183 639,808 3,918 2,065
-------------------------------------------------------- ------------------------ ----------------------- ------ --------
Cash at bank is held with credit institutions with an A credit
rating.
The carrying amount of the Group's cash and cash equivalents are
denominated in the following currencies:
2017 2016
Group Company Group Company
US$ US$ US$ US$
---------------------------------- --------------------------------- ------------------------------------ ------ --------
US Dollars 754 - 4,109 -
UK Pounds 667,429 639,808 (191) 2,065
---------------------------------- --------------------------------- ------------------------------------ ------ --------
668,183 639,808 3,918 2,065
---------------------------------- --------------------------------- ------------------------------------ ------ --------
18 Share capital
2017 2016
Issued equity share capital Number US$ Number US$
Issued and fully paid
Ordinary shares of 0.01p
(2016:0.1p) each 3,852,760,457 507,627 384,285,262 556,767
Deferred shares of 0.01p 2,358,954,414 3,574,036 2,358,954,414 3,574,036
A Deferred shares of 0.01p 17,678,567,358 2,276,923 - -
----------------- ---------------
6,358,586 4,130,803
----------------- ----------- --------------- -----------
Group and Company Ordinary
Number of shares Share premium Total
shares US$ US$ US$
------------------------------------ -------------- ---------- -------------- ------------
Issued and fully paid
As at 1 January 2016 142,063,771 2,292,836 6,171,415 8,464,251
------------------------------------ -------------- ---------- -------------- ------------
Issue of new shares - 17 March
2016 4,575,209 64,476 322,380 386,855
Issue of new shares - 12 April
2016 35,555,556 506,082 63,260 569,342
Issue of new shares - 20 April
2016 42,422,222 610,612 76,326 686,938
Issue of new shares - 13 July
2016 37,489,288 497,145 - 497,145
Issue of new shares - 1 September
2016 74,000,000 97,192 388,766 485,958
Issue of new shares - 29 September
2016 44,750,645 58,207 349,423 407,630
Issue of new shares - 28 November
2016 3,428,571 4,253 10,635 14,889
Share issue costs - - (164,897) (164,897)
As at 31 December 2016 384,285,262 4,130,803 7,217,308 11,348,111
------------------------------------ -------------- ---------- -------------- ------------
As at 1 January 2017
------------------------------------ -------------- ---------- -------------- ------------
Issue of new shares - 24 January
2017 380,000,000 472,790 - 472,790
Issue of new shares - 14 February
2017 1,150,000,000 1,438,201 - 1,438,201
Issue of new shares - 1 March
2017 50,000,000 62,157 - 62,157
Issue of new shares - 4 December
2017 1,771,428,572 238,898 597,245 836,143
Issue of new shares - 5 December
2017 74,189,480 9,996 464,803 474,799
Issue of new shares - 28 December
2017 42,857,143 5,741 14,354 20,095
Share issue costs - - (195,389) (195,389)
------------------------------------ -------------- ---------- -------------- ------------
As at 31 December 2017 3,852,760,457 6,358,586 8,098,321 14,456,907
------------------------------------ -------------- ---------- -------------- ------------
On 24 January 2017 the Company issued 380,000,000 new ordinary
shares of 0.1p each at a price of 0.1p per share raising
GBP380,000. On the same date the Company issued 418,000,000
warrants exercisable for two years from the date of grant at an
exercise price of 0.225p.
On 14 February 2017 the Company issued 850,000,000 new ordinary
shares of 0.1p each at a price of 0.1p per share raising
GBP850,000. On the same date certain directors and a director of a
subsidiary company subscribed to 250,000,000 new ordinary shares of
0.1p in settlement of outstanding compensation and expenses accrued
since 2015. In addition, 25,000,000 new ordinary shares of 0.1p
were issued to settle outstanding creditor balances and 25,000,000
new ordinary shares of 0.1p were issued as bonuses to employees of
the group. On the same date the Company also issued 1,170,000,000
warrants exercisable for two years from the date of grant at an
exercise price of 0.225p.
On 1 March 2017 the Company issued 50,000,000 new ordinary
shares of 0.1p each at a price of 0.1p per share in exchange for
agreeing new terms of an existing loan facility and in
consideration of interest accrued to 1 March 2017.
On 4 December 2017 the Company issued 1,685,714,286 new ordinary
shares of 0.01p at a price of 0.035p per share raising GBP590,000.
On the same date the Company issued 1,011,428,571 warrants
exercisable for six months from the date of grant at an exercise
price of 0.035p. In addition, certain directors subscribed to
85,714,286 new ordinary shares of 0.01p at a price of 0.035p per
share in settlement of outstanding compensation and expenses.
On 5 December 2017 the Company issued 74,189,480 new ordinary
shares of 0.01p to a director of a subsidiary company in
consideration for settlement of $387,000 owed to the director by
the Group.
On 28 December 2017 the Company issued 42,857,143 new ordinary
shares of 0.01p at a price of 0.035p per share in consideration for
outstanding fees payable by the Company to an adviser.
19 Share based payments
Share Options and Warrants
Share Options and Warrants to subscribe for new Ordinary Shares
in the Company were in issue as follows:
2017 2016
Weighted Weighted
average average
price No. of price
No. of warrants GBP warrants GBP
---------------------------- ------------------------------ --------- ------------- ---------
At 1 January 21,090,622 0.01 36,139,368 0.08
Granted during the year 2,599,428,571 0.002 19,642,222 0.01
Expired during the year - - (34,690,968) 0.08
---------------------------- ------------------------------ --------- ------------- ---------
Outstanding at 31 December 2,620,519,193 0.002 21,090,622 0.01
---------------------------- -------------- ------------------------- ------------- ---------
Exercisable at 31 December 2,620,519,193 0.002 21,090,622 0.01
---------------------------- -------------- ------------------------- ------------- ---------
The warrants outstanding at 31 December 2017 had a weighted
average remaining contractual life of 1.5 years (31 December 2016:
2.5 years).
GBP GBP are used in this note as the shares are traded in the UK
and are also issued in GBP currency.
Fair value of warrants
The fair value of the warrants issued during 2017 was determined
using the Black Scholes valuation model. The assumptions used in
applying the Black Scholes pricing model were as follows:
Granted on: 22 Feb 2017 22 Jun 2017 20 Dec 2017
Share price at the date
of grant 0.105p 0.07p 0.05p
Exercise price 0.225p 0.23p 0.04p
Expected volatility 49.08% 53.38% 22.62%
Expected warrant life 2 years 2 years 0.5 years
Risk free rate 1.79% 1.79% 1.79%
The volatility was determined by examining the monthly share
price.
On 22 February 2017 the Company granted 1,558,000,000 warrants
to subscribe for new ordinary shares at an exercise price of 0.225
pence per share exercisable for a period of 2 years.
On 22 June 2017 the Company granted 30,000,000 warrants to
subscribe for new ordinary shares at an exercise price of 0.225
pence per share exercisable for a period of 2 years.
The share option expensed recognised in the year was $248,532
(2016 - $Nil).
On 20 December 2017 the Company granted 1,011,428,571 warrants
to subscribe for new ordinary shares at an exercise price of 0.035
pence per share exercisable for a period of 6 months.
20 Share-based payments
Company Group
Share option Share option
and warrants and warrants Merger
reserve Total reserve reserve Total
US$ US$ US$ US$ US$
------------------------------ -------------- ---------- -------------- ---------- ----------
At 1 January 2016 283,088 283,088 283,088 (857,098) (574,010)
Share warrants issued
(note 19) 83,391 83,391 83,391 - 83,391
Share warrants exercised
(note 19) (260,867) (260,867) (260,867) - (260,867)
At 31 December 2016 105,612 105,612 105,612 (857,098) (751,486)
------------------------------ -------------- ---------- -------------- ---------- ----------
At 1 January 2017 105,612 105,612 105,612 (857,098) (751,486)
Foreign exchange differences 8,116 8,116 8,116 - 8,116
Share warrants issued
(note 19) 240,416 240,416 240,416 - 240,416
Share warrants lapsed
(note 19) (26,175) (26,175) (26,175) - (26,175)
------------------------------ -------------- ---------- -------------- ---------- ----------
At 31 December 2017 327,969 327,969 327,969 (857,098) (529,129)
------------------------------ -------------- ---------- -------------- ---------- ----------
21 Trade and other payables
2017 2016
Group Company Group Company
US$ US$ US$ US$
--------------------------------- -------- -------- ---------- --------
Trade payables 399,359 275,768 549,845 374,993
VAT payable 37,993 - 2,535 -
Social security and other taxes 256,189 4,286 219,865 3,706
Corporation Tax 7,395 - - -
Accruals 227,791 138,551 523,154 399,658
Other creditors 14,554 - 28,466 11,587
--------------------------------- -------- -------- ---------- --------
943,281 418,605 1,323,865 789,944
--------------------------------- -------- -------- ---------- --------
22 Borrowings
2017 2016
Group Company Group Company
US$ US$ US$ US$
--------------------------- -------- -------- ---------- --------
Shareholder loans - - 391,115 -
Other borrowings 156,494 146,124 125,128 98,688
--------------------------- -------- -------- ---------- --------
At 31 December 156,494 146,124 516,243 98,688
--------------------------- -------- -------- ---------- --------
Less: non-current portion - - (417,555) -
--------------------------- -------- -------- ---------- --------
Current portion 156,494 146,124 98,688 98,688
--------------------------- -------- -------- ---------- --------
Reconciliation to cash flows from financing activities:
Group Company
US$ US$
Balance as at 1 Jan 2017 516,243 98,688
Share based payment (391,115) -
Net proceeds from borrowings 23,781 39,852
Foreign exchange movements 7,585 7,584
-------------------------------- ---------- --------
Balance as at 31 December 2017 156,494 146,124
-------------------------------- ---------- --------
Included within other borrowings is $146,124 owed to Farina
Investments (UK) Ltd. This facility was paid in full after the year
end and the charge over assets was satisfied.
23 Deferred tax
2017 2016
Group Company Group Company
US$ US$ US$ US$
------------------------------ -------- -------- -------- --------
Deferred tax liabilities
Deferred tax liability after
more than 12 months 217,216 - 360,154 -
Deferred tax liabilities 217,216 - 360,154 -
------------------------------ -------- -------- -------- --------
Deferred tax relates to timing differences in respect of the
investment in Geocurve Limited and Tangible Fixed Assets.
The movement in the deferred tax account is as follows:
2017 2016
Group Company Group Company
US$ US$ US$ US$
-------------------------------- ---------- -------- -------- --------
At 1 January 360,154 - 360,154 -
Investment in subsidiaries (157,939) - - -
Fixed asset timing differences 15,001 - - -
At 31 December 217,216 - 360,154 -
-------------------------------- ---------- -------- -------- --------
24 Financial instruments
Categories of financial instruments
2017 2017
Group Company
US$ US$
--------------------------------------------------- ---------- ----------
Assets - Loans and receivables
Trade and other receivables (excluding
prepayments) 383,007 745,129
Cash and cash equivalents 668,183 639,808
---------------------------------------------------- ---------- ----------
1,051,190 1,384,937
--------------------------------------------------- ---------- ----------
Liabilities - At amortised cost
Trade and other payables (excluding non-financial
liabilities) 715,489 280,055
Borrowings 156,494 146,124
---------------------------------------------------- ---------- ----------
871,983 426,179
--------------------------------------------------- ---------- ----------
2016 2016
Group Company
US$ US$
--------------------------------------------------- ---------- ----------
Assets - Loans and receivables
Trade and other receivables (excluding
prepayments) 128,133 1,740,232
Cash and cash equivalents 3,918 2,065
---------------------------------------------------- ---------- ----------
132,051 1,742,297
--------------------------------------------------- ---------- ----------
Liabilities - At amortised cost
Trade and other payables (excluding non-financial
liabilities) 800,711 789,944
Borrowings 516,243 98,688
---------------------------------------------------- ---------- ----------
1,316,954 888,632
--------------------------------------------------- ---------- ----------
25 Financial commitments
Operating leases
At 31 December 2017 the Group had outstanding commitments for
future minimum lease payments under non-cancellable operating
leases which fall due as follows:
2017 2016
-------
Land and Land and
buildings buildings
2017 US$ US$
Other
US$
------------------------------------- ------- ----------- -----------
No later than one year 781 69,824 124,988
Later than one year but no later
than 5 years 1,172 140,838 126,534
Total future minimum lease payments 1,953 210,662 251,522
------------------------------------- ------- ----------- -----------
26 Related party transactions
Directors' transactions
Russell Peck historically provided Strat Aero International Inc
with advances to fund its operations and working capital
requirements. The balance outstanding at the year-end was US$nil
(31 December 2016: US$398,313). Russell Peck accepted 74,189,480
ordinary shares in December 2017 in consideration for settlement of
the outstanding balance due.
The directors and previous directors of the Company who
participated in the February 2017 Placing were as follows:
-- Iain McLure subscribed for 100,000,000 new ordinary shares of 0.1p each for GBP100,000
-- Gerard Dempsey subscribed for 25,000,000 new ordinary shares of 0.1p each for GBP25,000
-- Paul Ryan subscribed for 110,000,000 new ordinary shares of 0.1p each for GBP110,000
-- Russell Peck subscribed for 15,000,000 new ordinary shares of 0.1p each for GBP15,000
In December 2017 the directors and previous directors of the
Company accepted the following shares as consideration for prior
year outstanding fees and expenses:
-- Iain McLure 42,857,143 new ordinary shares of 0.01p at a price of 0.035p for GBP15,000.
-- Paul Ryan 42,857,143 new ordinary shares of 0.01p at a price of 0.035p for GBP15,000.
Directors remuneration is disclosed in note 8.
Iain McClure is a director of ScotNL Consulting B.V. which the
Group pays in relation to Iain's director fee. The payment for
these services amounted to $51k in the year to 31 December 2017
(2016 - $37k) and $7k is outstanding and included in trade payables
as at this date (2016 - $37k).
Paul Ryan is a director of Warande1970 BVBA which the Group pays
in relation to Paul's director fee. The payment for these services
amounted to $236k in the year to 31 December 2017 (2016 - $165k)
and $57k is outstanding and included in trade payables as at this
date (2016 - $165k).
Gerard Dempsey and Graham Peck were previously directors of
Truspine Technologies Limited. Payment to this company for services
performed amounted to $Nil in the year to 31 December 2017 (2016 -
$17k) and $Nil is outstanding and included in trade payables as at
this date (2016 - $Nil). As at 31 December 2017 an amount of $17k
was included in other receivables. This balance has been fully
provided for.
Parent Company transactions with subsidiary companies
During the year the Company received US$85,000 (31 December
2016: US$199,137) management fees from its subsidiaries. At the
year-end US$554,717 (31 December 2016: US$1,706,103) was due from
the subsidiary companies as follows (note 16).
- Geocurve Ltd US$554,717 (2016: US$486,038)
- Strat Aero International Limited US$nil (2016: US$1,220,065)
27 Events after the reporting year
On 5 January 2018 the Company issued 1,173,624,395 new ordinary
shares of 0.01p each at a price of 0.035p per share raising
GBP410,768. On the same date the Company issued 418,000,000
warrants exercisable for two years from the date of grant at an
exercise price of 0.225p.
On 10 January 2018 the Company issued 135,714,286 new ordinary
shares of 0.01p at a price of 0.035p per share in consideration for
outstanding fees payable by the Company to an adviser.
On 16 January 2018 the Company issued 85,714,286 new ordinary
shares of 0.01p at a price of 0.035p per share as a result of an
exercise of warrants.
On 24 January 2018 the Company issued 35,714,286 new ordinary
shares of 0.01p at a price of 0.035p per share as a result of an
exercise of warrants.
On 31 January 2018 the Company issued 114,285,714 new ordinary
shares of 0.01p at a price of 0.035p per share as a result of an
exercise of warrants.
On 21 April 2018 the Company issued 557,142,857 new ordinary
shares of 0.01p at a price of 0.035p per share as a result of an
exercise of warrants. These warrants were exercised by directors
and are listed in the directors' transactions below.
On 9 April 2018 the Company announced the acquisition of 37% of
the enlarged share capital of Gyrometric Systems Limited
("Gyrometric") for a cash consideration of $0.32m.
On 5 June 2018 the Company issued 218,571,428 new ordinary
shares of 0.01p at a price of 0.035p per share as a result of an
exercise of warrants.
Directors' transactions
The directors and previous directors of the Company who
participated in the January 2018 Placing were as follows:
-- Paul Ryan subscribed for 186,010,627 new ordinary shares of
0.01p each at a price of 0.035p for GBP65,104.
The directors of the Company who exercised warrants in April
2018 were as follows:
-- Trevor Brown exercised 485,714,286 warrants at an exercise
price of 0.035p for a consideration of GBP170,000.
-- Nigel Burton exercised 71,428,571 warrants at an exercise
price of 0.035p for a consideration of GBP25,000.
COMPANY INFORMATION
Directors Trevor Brown (Chief Executive Officer)
Nigel Burton (Non-Executive Chairman)
Paul Ryan (Non-Executive Director)
Website www.strat-aero.com
Registered Office Ground Floor
Tintagel House
London Road
Kelvedon
Essex CO5 9BP
Registered Number 09109008
Nominated Adviser SP Angel Corporate Finance LLP
and Joint Broker Prince Frederick House
35-39 Maddox Street
London W1S 2PP
Joint Broker Peterhouse Corporate Finance Limited
New Liverpool House
15 Eldon Street
London EC2M 7LD
Solicitors Edwin Coe
2 Stone Buildings
Lincoln's Inn
London
WC2A 3TH
Independent Auditor PKF Littlejohn LLP
Statutory Auditor
1 Westferry Circus
Canary Wharf
London E14 4HD
Registrars Share Registrars Limited
First Floor
9 Lion and Lamb Yard
Farnham
Surrey GU9 97LL
Details of the Directors and their backgrounds are as
follows:
Trevor Brown (aged 71, British)
Chief Executive Officer
Trevor Brown has been a strategic investor in real estate and
equities for more than 30 years.
Mr Brown is currently an Executive Director of Flying Brands
plc, CEO of Braveheart Investment Group plc and until December 2017
was a Non-Executive Director of Management Resource Solutions plc.
He was also a director of AIM listed Feedback plc and of Advanced
Oncotherapy plc.
Nigel Burton (aged 60, British)
Non-Executive Chairman
Nigel has over 25 years' experience in operational and financial
management, debt and equity financing, acquisition and integration
of businesses, disposals, IPOs and trade sales. Following over 14
years as an investment banker at leading City institutions
including UBS Warburg and Deutsche Bank, including as the Managing
Director responsible for the energy and utilities industries, Nigel
spent 15 years as Chief Financial Officer of a number of private
and public companies, including Navig8 Product Tankers Inc,
PetroSaudi Oil Services Limited, Advanced Power AG, and Granby Oil
and Gas plc. Nigel is currently Chief Executive Officer of Nu-Oil
and Gas plc and Chairman of Polemos plc, both of which are listed
on AIM, and until March was a Non-Executive Director of AIM listed
Management Resource Solutions plc.
Nigel is a Chartered Electrical Engineer and a Past President of
the IET. He has a B.Sc. (First Class Hons) in Electrical and
Electronic Engineering and a Ph.D in Acoustic Imaging from
University College London.
Paul Ryan (aged 50, Irish)
Non-Executive Director
Paul has 20 years of transactional, commercial and regulatory
experience in the telecommunications and ICT sectors with
international blue chip entities, during which he has been involved
in transactions with a value in excess of US$10 billion. From 2002
to 2013, he held a variety of board positions with leading mobile
operator Vodafone and its operating subsidiaries, including Head of
Strategy, Regulatory and Political Affairs in Brussels and Director
of Strategy and External Affairs for Vodafone Ireland and Vodafone
Ghana. Prior to this, he worked as a management consultant in the
European telecoms sector, served as a strategic adviser at Ofcom,
the UK's communications industry regulator, and was a solicitor at
leading international City law firm Ashurst. He acts as an adviser,
primarily on strategy and public policy, to a range of clients
including FTSE100 and Fortune 500 companies largely in the ICT
space. Paul is a qualified solicitor in the UK and graduated from
Trinity College, Dublin, Ireland.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UNVRRWUANRAR
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June 06, 2018 07:00 ET (11:00 GMT)
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