Strat Aero PLC (LON:AERO) has today announced that it has signed a definitive Share Subscription Agreement for the acquisition of 37% of the enlarged share capital of Gyrometric Systems Limited (“Gyrometric”) for a cash consideration of £0.25m (the “Subscription”).
Gyrometric 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. Gyrometric’s systems have operated successfully in service for several years in challenging environments with very high levels of reliability. Current applications include monitoring of marine propulsion systems, machine tools and wind turbines. The technology uses proprietary software and Artificial Intelligence techniques to analyse performance and to diagnose and predict drive system maintenance needs, reporting to commercial operators through a cloud-based Internet of Things platform.
After this investment the Directors believe that given the combination of significantly reduced corporate costs and the outlook for the Geocurve surveying and inspection business, the Company retains sufficient cash resources to fund the company’s operations beyond the end of this calendar year.
Gyrometric was founded in 2007 as a University spin-out company to commercialise a new digital measurement system for rotating shafts. Since then significant development has resulted in systems with proprietary intellectual property including software, relevant patent protection, and proven hardware certified for use in harsh industrial environments. These systems set a new standard of protection that can be used on any rotating shaft from a bench tool spindle to a cruise liner propeller shaft.
Much of industry depends on rotating shafts and the health, or otherwise of these systems is critical. Important sectors for the Gyrometric business to date have been in marine engines, machine tools and wind turbines and it has great potential in sectors such as nuclear and other power stations and within petrochemical plants. Monitoring the condition of rotating shaft mechanisms has traditionally been carried out using vibration sensors. Such sensors measure the frequencies and amplitudes of vibration. The Gyrometric approach is to measure accurately the actual displacements and the frequencies which, coupled with real time monitoring, gives much richer data for assessing performance including wear and load calculations, and to facilitate optimal maintenance and replacement planning.
The Gyrometric system is able to measure the runout (positioning error) of bearings to one tenth of a micron (0.0001 mm) at speeds of up to 20,000 revolutions per minute. The unique ability of the Gyrometric system to do this reliably over a wide range of speeds and shaft sizes makes the system applicable to most industrial applications.
The system uses standard sensor and electronics technology so installation and operating costs are comparable with current technologies, but with significantly enhanced accuracy and diagnostic capabilities which are vital for condition monitoring of capital equipment. Gyrometric data can be used to optimise performance by continually maximising output and planning maintenance to minimise down time. Material operating cost reductions have been achieved using Gyrometric data, providing a substantial competitive advantage for owners.
Gyrometric has developed proprietary software and electronics. For the marine market this equipment has been certified by IACS (International Association of Classification Societies) and American Bureau of Shipping. It has market penetration in large marine drives, having sold 60 marine monitoring systems which are already producing considerable cost savings for their ship owners.
During 2017 Gyrometric entered the rapidly expanding market for wind turbines. A major test programme is currently underway at the UK’s national wind turbine research centre the ORE Catapult in Blyth, where Gyrometric equipment is installed on a 7 MW turbine. The wind turbine installation is designed to monitor the entire drive system, including the main rotor bearing, the gearbox and its bearings, the coupling and the generator input bearing. This array covers all of the major mechanical failure points. When installed across all turbines in a wind farm, the system is capable of monitoring drive train loads to maximise energy take-up without damage.
Unaudited management accounts for Gyrometric indicate an EBITDA loss of £31,000 for the year to 31 December 2017.
Related Party Transaction
Gyrometric’s controlling shareholder, Braveheart Investment Group plc (“Braveheart”), owned 65% in Gyrometric prior to the Subscription. Trevor Brown, Executive Director of Strat Aero, is Chief Executive of Braveheart and currently owns 29.82% of Braveheart’s issued share capital with Braveheart being considered an associate of his under the AIM Rules for Companies. Accordingly, Gyrometric is considered a related party of Strat Aero and the Subscription therefore constitutes a related party transaction in accordance with Rule 13 of the AIM Rules for Companies.
The Directors independent of the Subscription, being Nigel Burton and Paul Ryan, consider, having consulted with the Company’s nominated adviser, SP Angel, that the terms of the Subscription are fair and reasonable insofar as the Company’s shareholders are concerned.
Further details can be found on the Gyrometric website https://gyrometric.systems/
Nigel Burton, Strat Aero Director said: “The acquisition of this initial interest in Gyrometric marks the commencement of our previously announced strategy of investing in world leading technological services that are relevant to existing operational business within Strat Aero, i.e. with the potential through data and analysis to revolutionise monitoring and inspection services in high value and mission critical environments. Strat Aero will be closely involved in the future development of Gyrometric and to this end Nigel Burton will join the Gyrometric board with immediate effect.
Alan Lamb Chairman of Gyrometric, said: “We are pleased to welcome Strat Aero as a shareholder in Gyrometric. Their investment will enable the company to strengthen the management, technical and sales teams. Our targets for 2018 include additional sales in the marine control and monitoring market, roll out of our remote monitoring service and expansion of our presence in the wind turbine market.”
Market Abuse Regulation (MAR) Disclosure
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.