Strat Aero PLC (LON:AERO) Chief Executive Officer Tony Dunleavy caught up with DirectorsTalk for an exclusive interview to discuss the significance of Readyjet, the recent Westar announcement and placement plans for the future
Q1: Now you announced Readyjet this morning, why is that significant especially as it’s not really in the UAV space?
A1: Well I think it confirms that the software package we have, DDM, is a valuable package. I don’t think people understand that yet and the fact that we’ve got a big player in the aviation services industry in the US paying us a contract and to use the capabilities and show us what it’s capable of, it was originally designed for the aviation sector and this contract has its origins almost a year ago at this stage. Meanwhile we use DDM to display UAV footage and it’s a unique feature because we know that most of Strat Aeros’ competitors have nothing like it and they have no way of showing in a digital way all the data in a way that DDM can which makes the lives of our clients much easier.
Q2: In your recent results announcement, you mentioned that you were earning revenue from wind in the US and UK, quarries and flood defences also in the UK and education in China. Was last week’s Westar announcement related to that and when can we expect to see more announcements?
A2: Yes, Westar was one of the ones we anticipated having revenue in February for so it was part of that announcement but we are doing similar in the UK, we’re doing more in the US in auto wind operators, we’re doing the quarries, we’re doing the land survey and with China, education. As regards to the next announcement, the complication there is really is to make an RNS we have to have a firm contract and much of the work that we’re doing at the moment whilst we’re generating revenue from it, it doesn’t necessarily immediately lead to firm contracts. So for example, in some of those areas we’ll be presenting that to the client in March and we’re not then in control of when that turns into a contract so it could well be that the clients turns around and say ‘yes, we’re absolutely delighted with this now. We’d like you to convert this into 200 sites, not just 1 site’. Realistically those discussions take time because the clients have to work out how are we going to integrate all this information, we see the value of it but we need to work out how we’re going to integrate it into our own businesses and then that’s going to lead to different types of contract discussions. So we are making really good progress, the reason I can’t be firm on announcement dates is I’ m not in control of the clients’ process, I’m only one part of a two-way equation but definitely, we’re making good progress, we are making a lot of presentations to clients, in fact this month March, and I expect relatively soon thereafter it should turn into contract news but I can’t commit to a date just because I don’t control the process.
Q3: Some shareholders seem to be concerned about an imminent placement, have Strat Aero any firm plans in that regard?
A3: Yes, the placement issue keeps coming up and I can understand why. I’ve said before that there’s a couple of reasons for placements, one reason is to keep the lights on, that’s quite negative and viewed quite negatively, and the other reason is to add value. You’ll have noticed in our RNS in February that effectively our current revenue is 600% of the average of last year so whilst we did some placements last year and did some acquisitions out of that, in fact they’ve been very positive for Strat Aero and I think a very good thing. One of our strategic advantages of long run is going to be global reach, at the moment we have operations going on in Asia, we’ve operations in the UK, we’ve got operations in the US but we’ll probably want to extend our global reach and our global capability. If a good opportunity came along for me to add value to the group then yes, I’d definitely consider a placement so we don’t have any imminent plans at the moment, that’s the real answer, and we’re only going to do it if we think it’s going to add value to the group
