RMS.L Regulatory News (RMS)

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

11 February 2016

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

Trading Update

Strat Aero plc, the AIM quoted international aerospace company focused on the Unmanned Aerial Vehicle ('UAV') sector, announces a trading update ahead of its full year results for the year ending 31 December 2015 ('FY15').

The Company expects to report revenues of approximately US$430,000 for FY15 and a loss, before and after taxation of approximately US$3.9 million based on current unaudited management accounts. The Company had a cash balance of US$1.13 million as at 31 December 2015.

As noted in the Group's interims, H1 results were impacted by shifting market dynamics and a lack of contract conversion. Thanks to work carried out in the first half and subsequently, including the acquisitions of Geocurve and Aero Kinetics, it is pleasing to note that revenues for the second half of 2015, covering the six months to 31 December 2015, have shown a significant improvement on the first half and are expected to total approximately US$380,000. Furthermore, the Company is confident that the upward trajectory in revenue generation seen in H2 2015 will be maintained in 2016 and as a result, the Company's forward prospects have significantly improved.

With this in mind, February's revenues alone are currently anticipated to be in the region of US$200,000, which includes revenues generated from orders in wind in both the US and UK and also from paid trials. The Directors are extremely encouraged by the securing of its first orders in the wind sector and also by the willingness of clients across its targeted areas of flood defences & quarries (UK), wind turbines (US & UK), cell towers (Ireland) and education (China) to pay for trials, which if successful, are expected to lead to much larger and longer term revenue streams later in 2016. It should be noted that it can take the Company up to six months to prove its capability and secure these large contracts.

The Board believes this improving trading performance reflects the new management team's strategy to rapidly build a vertically integrated UAV offering, covering all aspects of the value chain including software, hardware and services. This strategy was put in place in Q3 2015 and since then the Company has announced two major acquisitions: Geocurve Holdings Limited, a specialist in the provision of UAV operated topographical surveys and inspection services to blue chip customers, including the UK's Environment Agency, EDF Energy, Carillion, and the RSPB; and Aero Kinetics, a specialist in the provision of advanced UAV technology solutions, such as high-end UAVs, associated communications and software capability, to a blue chip customer base, including Fortune 100 clients.

Tony Dunleavy, CEO of Strat Aero, said: "While reported revenues in 2015 are expected to be relatively modest these do not reflect our new full service provider business model, which was adopted in Q3 2015, to position Strat Aero as the go-to provider for all things to do with UAVs. We anticipate that 2016 will be a year of incremental orders and contracts as we seek to demonstrate the value add of drone technology in a number of specific client sectors, which we are confident will lead to larger contracts and revenues materialising towards the latter part of the year. Already considerable progress is being made with anticipated February revenue expected to include initial revenues in targeted areas such as flood defences & quarries (UK), wind turbines (US & UK), cell towers (Ireland) & education (China). Given that our new strategy is only months old, we are pleased with the early momentum we have established and expect this will continue to build in the months ahead."

- ENDS -

Enquiries:

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. 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.