The company still uses drone technology but these days, the bulk of its “survey and inspection” activities are carried out by some land-based high-tech kit it imported into the country.
Time was when the company was routinely referred to by journalists (albeit maybe not in print) as a basket case but as we’ve said, times have changed.
The company has a “restructured and reinvigorated board” comprised of directors who are all significant shareholders in the company.
A company that was once severely under-capitalised and bleeding cash now has a decent amount of cash - £550,000 in early June 2018 – and the fixed costs have been substantially reduced.
In the words of the company chairman, Nigel Burton, it should no longer need to raise cash “to keep the lights on”.
“The board strongly believes that funds raised from our shareholders should be utilised for investment wherever possible rather than to finance a gap between income and expenditure,” the company said in its full-year results statement covering 2017.
Happily, the gap between income and expenditure is narrowing as management presses down on costs and income from its two main assets heads higher.
2017 was about getting a grip on costs; 2018 will be about growth
The group recorded revenues of US$1.01mln during 2017, up from US$862,988 in 2016, generating a gross profit of US$896,548, up from US$593,079 the year before.
Administrative costs in 2017 were reduced from 2016, with the majority of savings made by cutting staff and consultancy costs in non-value-added business areas, Strat Aero said.
“We reviewed the costs; we reviewed the business and made some really quite significant cost-cutting changes,” Burton told Proactive Investors.
“We shut down the training business, which although it had a lot of potential, it was going to take far too much time and too much money for us to continue investing in that,” Burton added.
That left the company’s focus on the Geocurve high-tech surveying business, although that was subsequently augmented by an investment in Gyrometric.
Twin propellers: Geocurve and Gyrometric
Strat Aero's Geocurve subsidiary is a specialist surveying business that combines traditional survey techniques with innovative technologies including unmanned aircraft systems (UAS) or unmanned aerial vehicles (UAVs), geographic information system (GIS) databases, 3D modelling, laser and light detection and ranging (Lidar) scanning and hydrographic modelling.
The company says that the use of new technologies delivers high-efficiency data capture, improved operational safety and significant cost savings, across industrial and governmental sectors.
The shift away from using drones has also increased the barrier to entry into Strat Aero’s market. While the typical top-quality drone might cost £10k or £20k, the land-based kit Strat Aero has invested in costs half a million or so.
“It’s not just the money, it’s knowing how to use it,” Burton explained, referring to the data analysis that follows on from the data capture process.
In April, Strat Aero acquired a 37% stake in Gyrometric Systems for roughly £250,000.
Gyrometric had developed a unique system for reliably collecting, analysing and monitoring digital data from rotating shafts over a wide range of speeds and shaft sizes.
It measures in real-time how far off-centre the shaft is, which can make a really dramatic difference to efficiency.
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.
“The equipment can pay for itself in a day,” Burton reckons, while conceding that, as with any new technology, people are reluctant to put it into a production environment until a decent amount of testing has been done.
Burton reckons there is a good chance of the Gyrometric business winning some “real contracts” this year.
Management has committed to developing the investment in Gyrometric through close operational support and involvement and believes it will be an important component of growth and shareholder value in the months and years ahead.
“There’s definitely room for organic growth and that’s what we’re concentrating on but because it’s a fragmented market, there’s definitely lots of opportunity for … aggregating the sector,” Burton believes.
Burton, as an engineer himself, is acutely conscious of the propensity of engineers to get carried away with what the technology can do; the policy of the reborn Strat Aero will be to listen to what the customer wants and respond accordingly.