RMS.L Regulatory News (RMS)

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

7 October 2015

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

Joint Venture Agreement with Leading UAV Training Company

Strat Aero plc, an international aerospace company focused on the rapidly emerging Unmanned Aerial Vehicle ("UAV") sector, is pleased to announce that it has reached agreement on a joint venture arrangement (the "Joint Venture") with UAV Airways Limited ("UAVAir") a privately owned company which, as a UK CAA Approved National Qualified Entity ("NQE"), specialises in the provision of UAV training, including qualifying future UAV pilots. The Joint Venture (which will be provisionally known as UAVAir by Strat Aero) will be aimed at establishing future Remotely Piloted Aircraft & Systems ("RPAS") training centres and delivering RPAS training courses in territories overseas. This is part of the Strat Aero's strategy to build rapidly a vertically integrated UAV offering, covering all aspects of the value chain including software, hardware and services and the Joint Venture follows the recent acquisition of Geocurve Holdings Limited, which specialises in the provision of UAV operated topographical surveys and inspection services to a blue chip customer base.

UAVAir has a strategic combination of airline pilots and professional drone operators, who work together to deliver the best commercial UAV course available to candidates aiming to further their professional careers. UAVAir combines;

· A group of manned Airline pilots holding Air Transport Pilot Licenses, with 40 years of flying and over 20,000 hours of commercial aviation experience;

· Representation on committees at the highest levels of decision-making in both Government and Professional Associations, nationally and internationally;

· Over 8 years flying within the civilian drone industry including hundreds of sub-7kg and sub-20kg drone operations; and

· A strong external training team of UAV pilots, the majority of whom have held or are currently in positions of authority within their relevant national trade associations.

UAVAir's directors were amongst the first operators to receive CAA permission to film within a congested area of Central London, recognition of UAVAir's comprehensive mastery of the most complex safety cases and success in integrating fundamental principles from aviation into the UAV community.

The combination of UAVAir and Strat Aero in a joint-venture agreement provides multiple cross-selling and expansion opportunities including;

· The ability to roll out UAVAir capabilities internationally - two initial countries are currently being explored to launch RPAS training programmes;

· Development of trans-national qualifications, enabling operators looking to work flexibly across national boundaries;

· Harmonisation of Strat Aero's long-form training courses being developed with a leading US University with UAVAir's shorter NQE and Pilot Conversion Courses to create a comprehensive portfolio of RPAS training with common standards and methodologies;

· Making full use of UAVAir's experience and knowledge in other areas of Strat Aero's business on a flying, logistics and consultancy basis when required; and

· The creation of a broad pool of qualified UAV operators that will enable Strat Aero to accelerate the delivery of its UAV services.

The general contributions of both parties towards the Joint-Venture are as follows:

· Strat Aero will provide the start-up funding to establish a training centre and under 20 kg civilian RPAS training course. This will cover (but not be limited to) travel, marketing, regulatory fees, materials and other third party costs to setup the course.

· UAVAir will licence the intellectual property of the course material and training material and provide training school setup services until the schools are self-sufficient.

· UAVAir will remain with operational control of the school whilst Strat Aero retains a majority shareholding within the Joint Venture Agreement.

Tony Dunleavy, CEO of Strat Aero, said: "UAVAir is the second of a series of strategic transactions the new management team has been evaluating, all of which have the potential to fast track Strat Aero's transformation into the first fully integrated global solutions provider focused on the rapidly growing UAV market. The combination of Strat Aero's existing training business combined with the UAV technical knowledge and training reputation of UAVAir from its streamlined 3-day integrated course will win over businesses across multiple areas, and we intend to be at the forefront of this rapidly expanding part of the UAV sector.

"Thanks to an established management team of practising airline pilots alongside UAV pilots, plus their authority from the CAA as an Approved National Qualified Entity, UAVAir is well placed to win additional work, not only within the small hobbyist market but also in larger corporate clients, providing a unique training offering unmatched in the UK.

"This transaction allows us to now match our existing military training capability in the civilian market, which we envisage will become a long term education market as worldwide jobs will be created by the advance of UAV and related technologies. We have already found that the aviation credentials of our founders, combined with the prestige of our British PLC listing, has created demand for civilian training services and education across the world, and we are currently in active discussions in many large international markets. By creating this Joint Venture in combination with UAVAir, we can both fast track our progress with these opportunities and add in more practical short term courses as already offered by UAVAIR in the UK. Further, we can quickly move onto other international territories, as shown by the two new countries already targeted by the Joint Venture. In essence, the transaction strengthens our ability to achieve one of our goals to become a leading worldwide provider of UAV training and education solutions, not only in the military market, but also in the civilian and corporate markets."

Paul Rigby, Director of UAVAir said, "I have been very impressed by the vision Strat Aero has for the Joint-Venture agreement, their existing experience in UAV training and the realisation that our combination of manned safety principles, coupled with market-leading RPAS knowledge, is the correct approach to gaining market-share in this expanding industry. We are looking forward to leading Strat Aero's international growth in UAV training across a variety of sectors."

Will Coldwell, Director of UAVAir said, "Leveraging Strat Aero's organisation alongside our proven ability to launch an approved National Aviation Authority course in one country and replicate this abroad multiple times is a challenge we are looking forward to. It is very satisfying that, as partners with Strat Aero, we will now be able to take advantage of the significant growth we envisage in the training sector, both at home in the UK and abroad."

Background to UAVAir:

UAVAir is a subsidiary of ConsortiQ Holdings, which has a combined 8 years of commercial UAV/UAS operations and over 40 years of manned airline experience, distinguishing them from the general UAV market. The 6 directors are comprised of 4 airline pilots and 2 commercial drone pilots. In addition, the UAVAir external training team includes 7 professional drone operators many of whom are involved in the trade associations and hold a variety of H&S certifications. This team is being expanded continuously.

UAVAir currently holds its courses at racecourses across the UK, to leverage quality conferencing facilities alongside the substantial private open spaces required to conduct UAV training and assessment.

As one of the founders of UAVAir, Will Coldwell will become a Director in the Joint Venture as will fellow Director, Paul Rigby. Will is a serving airline pilot who previously read Agriculture Business and Management at Newcastle University. Pauls' background before becoming a commercial drone operator was in Operations and Engineering for the UK National Air Traffic Service (NATS).

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For further information please visit www.strat-aero.com. or contact:

Notes:

Strat Aero plc is a multi-divisional international aerospace services company, focussed primarily on the provision of complete client solutions in the Unmanned Aerial System ('UAS' market), which is predicted to show exponential growth over the coming decade. Civilian, law enforcement and military applications in UASs are expected to be a dynamic growth sector in the aerospace industry over the next 10 years with the UAS market forecast to grow to more than US$82.1 billion between 2015 and 2025 (AUVSI Economic Report 2013) and the global airborne Intelligence, Surveillance and Reconnaissance ('ISR') market estimated to grow to US$19.23 billion by 2023.