RMS.L Regulatory News (RMS)

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

3 April 2017

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

Trading Update

Strat Aero plc, an international aerospace company focused on the rapidly emerging Unmanned Aerial Vehicle ("UAV") sector, announces a trading update ahead of its full year results for the year ended 31 December 2016.

Overview

· Significant increase in full year revenue to approximately US$810,000 (2015: US$433,001) primarily due to the full year impact of the acquisition of Geocurve, a specialist in the provision of UAV operated surveys and inspection services to a blue-chip customer base

· Strong progress on cost reduction across the Group during H2 2016 - the Company anticipates a substantive impact to be visible in FY 2017

· FY 2016 financial performance significantly affected by the Aero Kinetics acquisition and reported litigation with an anticipated loss before and after taxation of approximately US$3.5 million (2015 loss before and after taxation: US$5.9 million) - a Rule 11 settlement agreement was entered into in Q4 2016

· Cash position strengthened in Q1 2017 by successful completion of two placings totalling US$1.23 million (cash balance at 31 December 2016: US$ nil approx. with an unutilised borrowing facility of about US$270,000)

Iain McLure, CEO of Strat Aero plc, said "Since joining in April 2016, working closely with the board, we have revised and implemented a sound commercial strategy including an aggressive cost reduction programme. These actions have enabled us to rationalise our business model and focus on our key strengths and skills. It is with this strategy, to focus on key areas in Training & Education and Survey & Inspection, that we have started 2017 with a rationalised business model, providing exposure to the exceptional growth potential of UAVs, and the ability to materially improve financial performance.

"By focusing on Strat Aero's key areas of expertise, driving continued growth from the Group's Survey & Inspection activities and through the growth of its Training & Education business in Asia and other areas, it is my intention to achieve breakeven at the operating profit level in the near term."

Strategic Focus

The Company's strategic focus in 2017 will remained centered on Training & Education following the recently completed and launched Strat Aero AutQ course, which was awarded NQE status by the UK Civil Aviation Authority in the UK during 2016. Strat Aero has appointed a new Director of Training and the AutQ course is being rolled out via the Company's franchise partners in China and in Malaysia.

In Survey & Inspection, Geocurve continued to grow organically from existing contracts and significantly was awarded the CH2M contract to work on the Thames 2100 Flood Defence Project on behalf of the Environment Agency. This is a significant contract which has involved innovative solutions being developed and implemented by Geocurve. A structural review in Geocurve also lead to significant cost reduction and management changes from which the Company is starting to see real benefits.

Geocurve will continue to be at the forefront of innovation and technology based solutions for its major clients and the Board will seek to grow Geocurve's major client base as it continues to become established and acknowledged experts in this field.

2017 is intended to be a year of consolidation and steady growth as the Group builds upon its existing skills and expertise developing the Strat Aero business as the premium provider of commercial training and association for commercial UAV pilots in Asia. In tandem with this, through Geocurve, the Company will continue to be a worldwide leader in UAV and innovative technology solutions in the Survey & Inspection business. The Board is confident that the platform that has been established in H2 2016 and the improving operational performance is delivering a strong foundation for future growth within the business.

- ENDS -

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

Notes

Strat Aero plc is a multi-divisional international aerospace services company, focused 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. Commercial 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.