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Tuesday, 10 March 2015

Strat Aero PLC Speculative Buy

The Drones are Coming Everything is set for take-off in the UAV world. With the US administration taking its first steps toward an opening of US airspace for Unmanned Aerial Vehicles (‘UAV’), the Federal Aviation Administration has suggested this could eventually create a new market worth as much as US$100bn for the country. But while the technology is taking giant leaps forward, the regulatory framework has found itself left behind. A first set of sweeping new guidelines to ensure the regime that oversees both military and civilian operations keeps pace, however, have been outlined in the last couple of weeks. Above all, the emphasis is on strictly enforced controls and regulation, rather the ‘free for all’ envisioned by the media, with a focus on licensing, ongoing training requirements and liability insurance. This, of course, significantly magnifies the long-term opportunity for authorised UAS training establishments, as the North American model becomes adopted internationally. Being the first major player to recognise this, Strat Aero achieved its quotation on AIM back in November 2014 and has now raised additional funding to support its expansion. These include a new technological partnership, a ‘reputation-building’ European training contract and the acquisition of a sales and marketing company. Considering Strat Aero’s prospective market opportunity and near term earnings visibility, a market capitalisation of £8.8m (suggesting earnings multiples of 8.6x and 4.6x for 2015E and 2016E) appears to over-discount the Group’s admittedly short operational history. Beaufort raises its price target for Strat Aero to 16.0p/share (from 14.0p previously).

Placing Price: 9.0p Target: 16.0p/share EPIC: AERO.L (FTSE AIM All Share) Sector: Support Services

Share Chart – Since IPO

Source: London Stock Exchange

Key Data Total Shares o/s: Mid-Price Market Cap: ISIN: SEDOL: TIDM: Website:

84,301,771 9.75p £8.2 million GB00BQQPLG38 BQQPLG3 AERO strat-aero.com

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This note should be read in conjunction with Beaufort’s Initiation Research on th Strat Aero plc released on 20  November 2014

Analyst Barry Gibb (t) +44 (0) 207 382 8422 (e) [email protected]

P&L y/e December $m’s Group revenue Gross margin EBIT Profit before Tax Tax Net profit Net profit** £m

As far as drones are concerned, there are two certainties for the coming decade. Firstly, a dramatic and unsated international proliferation across a broad range of different systems – both for military and commercial roles and; Secondly, in tandem with a partial opening of national and international skyways to such unmanned aerial vehicles, the imposition of a new and strictly enforced Code of Conduct on all operators by aviation authorities and homeland security departments. Somewhat reminiscent of the early days of the motor car, the exceptional number of expensive UAV crashes and hazardous incidents being incurred can largely be put down to pilot error, rather than equipment failure. Training and licensing, using both computer simulation and hands-on tuition, will become mandatory requirements. th

New Funding: On 10 March 2015 Strat Aero plc, announced it has raised £660k before expenses, through the issue of 7,333,334 new ordinary shares at 9p per share. Whilst opportunity to move Group operations rapidly toward positive cashflow suggested that management would not seek new equity funding in the foreseeable future, in the event it has identified various exceptional project opportunities, within what is clearly going to become a new and giant global business sector, that were considered too significant not to address. It cites the new funding will “continue to realise its strategy of capitalising on commercial opportunities across the rapidly growing Unmanned Aerial Vehicle sector.” The new Ordinary shares will rank pari passu with existing equity. 2014E* 0.3 (1.60) (1.60) (1.60) (1.00)

P/E x *Period 1st July to 31st December **Assumes GBP=US$1.60

1H’2015E 3.1 57.3% 0.73 0.73 24% 0.54 0.34

2H’2015E 5.5 64.0% 1.77 1.67 24% 1.25 0.76

2015E 8.6 61.0% 2.50 2.40 24% 1.60 1.00

2016E 11.2 65.5% 4.60 4.50 25% 3.30 2.06

8.6

4.5 Source: Beaufort Estimates

THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is also not subject to any prohibition on dealing ahead of the dissemination of investment research, although as a matter of policy Beaufort Securities Ltd requires its employees not to deal ahead of the dissemination of the report.

Strat Aero Plc 10th March 2015 - Page 2

Opportunities in the Unmanned Aerial Vehicle Sector Proceeds from the £660,000 (gross) fund raising announced on 10th March 2015 will be used to progress the Group’s three primary divisions: o o o

Unmanned Aerial Systems (‘UAS’) Pilot Training and Services; Aviation Management and Consultancy Services; and Aviation Software, Products and Services.

UAS Pilot Training and Services     

Initial training of United States Air Force (‘USAF’) instructors at the fully functional and multi-faceted UAS Training Centre in Roswell, New Mexico, to commence in Q1 2015 Discussions at an advanced stage with the Government of the Netherlands to establish a multi-rotor and fixed wing UAV training centre at the former Valkenburg Air Base in the Netherlands Negotiations at an advanced stage to secure multi-year contract with the Army Research Laboratory (‘ARL’), a US Department which specialises in developing commercial applications from military hardware Direct contract with ARL would be independent of agreement signed in February 2015 with 4D Tech Solutions, Inc ('4D'), an established software provider to ARL, for the provision of services under an existing budget of up to US$4 million over the next 12 months Advanced discussions with four major wind farm operators in the US to provide UAV turbine and blade inspection services across their respective wind farm sites – one potential customer operates 3,000 turbines

Aviation Software, Products and Services 

Pipeline of contracts with leading services providers for proprietary Aerospace Information Manager Software (‘AIMS’)

Aviation Management and Consultancy Services   

Contracted work for the Cyprus Aviation Authority with respect to the provision of regulation guidance and the development of training manuals is proceeding on schedule Consulting services to a number of national aviation authorities in the Middle East and Africa is ongoing Work continuing on project managing the establishment of a new low cost airline in the Middle East – current focus on initiative to accelerate development and reduce costs

Capt. Russell Peck, CEO of Strat Aero, said: “We have made a great start but we have merely scratched the surface in terms of the enormous emerging commercial and military UAV market. We have formal relationships with high end participants across the value chain, including major customers such as the US Government, equipment suppliers including a leading US defence contractor, and research hubs such as the National Renewable Energy Laboratory, a division of the US Department of Energy. Combined with our unique UAS training Facility in Roswell, New Mexico, where training is due to commence in the coming months, and our proven expertise in navigating the evolving regulatory landscape, Strat Aero has an established platform in place from which we can roll out our full UAS service offering and capitalise on the multiple opportunities we are seeing. We look forward to providing further updates to the market as we progress the numerous opportunities available to us.” THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is also not subject to any prohibition on dealing ahead of the dissemination of investment research, although as a matter of policy Beaufort Securities Ltd requires its employees not to deal ahead of the dissemination of the report.

Strat Aero Plc 10th March 2015 - Page 3

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The global Unmanned Aerial Systems (‘UAS’) market is now set for take-off. Development and commercialisation over the coming decade will be dominated by North America, after which the rest of the world will rapidly play catch-up.

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Astonishingly high numbers of operational accidents/crashes involving the US military’s existing but rapidly expanding fleet of Unmanned Aerial Vehicles (‘UAV’), highlight the US Department of Defence’s urgent calls for the introduction of mandatory licensing, together with rigorous and on-going pilot training. National emergency services are also recognising the potential cost and safety advantages of operating their own fleets of UAVs for enforcement, recovery and monitoring. Safe low level operation above densely populated areas, however, calls for an exceptional level of pilot competence/qualification.

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But military UAVs are only half the story! In 2012, US Congress tasked the FAA with determining how to integrate UAS into the National Airspace System, imposing an end-September 2015 deadline. On 15 February, it outlined the first of a set of sweeping new guidelines, this time covering the licensed operation daytime-only operation of small UAVs; a significantly more rigorous set of rules is expected to be outlined for large, commercial AUSs that hope to occupy the skies alongside piloted civilian and military jets. These will likely also be adopted as founding regulation for other western territories that are now beginning to face up to the same challenges and opportunities.

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This all means that Strat Aero now finds itself on the cusp of a major global market development. Technology and deregulation are creating a new opportunity whose military, emergency service and commercial application will know few bounds. In less than a decade, daily sighting of UAV will likely become commonplace. Quite uniquely, the Group has created a facility through which to service this opportunity; its UAS competence, training, facilities and technological collaborations comprise a very timely package. Right now the Group is finding a major stream of potential new and long-term business opportunities. These are coming both from government, military, security and inspection bodies; in the not too distant future they will likely be matched by a multitude of additional commercial and leisure applications.

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Recent news from the Group includes the signing of a MOU with 4D, an established software provider, to assist with the delivery of contracted services to the US Government. Having multiple contracts already in place with the Army research laboratory, this will be seen to broaden Strat Aero’s offering, thereby increasing the range of contracts it can deliver, as well as near-term revenue opportunities through participation in certain of 4D’s existing contracts.

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On the contract front, Strat Aero has also disclosed a letter of Intent signed with the Government of the Netherlands to advance Northern Europe’s first UAV pilot training base. This potential opportunity could create a renewable revenue opportunity amount to over €3m/year. This is clearly a mark of the Group’s high standing and reputation within the Continent’s rapidly developing UAV industry. It offers the opportunity to both secure long-term, high visibility, high margin business while opening in new territory as the ‘go-to’ player.

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On the acquisition from, the Group has signed an Option Agreement to acquire 70% of the issued share capital of New Amsterdam Global Solutions LLC (‘New Amsterdam’), an independent marketing and sales company. In addition the Company has signed a Marketing and Sales Agreement (‘MSA’) with New Amsterdam to immediately engage the sales and marketing team. These agreements are in line with Strat Aero’s strategy to become a leading provider of UAV solutions to the commercial sector, capitalising on its established position in training and services. The Group’s extensive network of contacts in the US industrial and energy sectors have the potential to fast track its entry into the rapidly emerging commercial space. The widespread adoption of UAVs is set to revolutionise the way companies operating in a diverse range of sectors complete countless tasks, particularly those that are time consuming, potentially dangerous and costly. Within the industrial and energy sectors these include the regular monitoring of wind turbines, power transmission lines and oil and gas fields.

Business Opportunity

Corporate Structure

THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is also not subject to any prohibition on dealing ahead of the dissemination of investment research, although as a matter of policy Beaufort Securities Ltd requires its employees not to deal ahead of the dissemination of the report.

Strat Aero Plc 10th March 2015 - Page 4

The Strat Aero Business Strat Aero’s stated mission is to ‘capitalise market opportunities resulting from the strong growth forecast in the airline industry and rapid growth forecast in the emerging UAV industry over the coming decade.”

Source: Strat Aero

Strat Aero is a leading specialist in delivering turnkey UAV solutions, aviation software and consultancy services to the commercial, education, military and law enforcement sectors. The Group has established revenue generative business with exposure to the projected exponential growth in the use of UAVs. It has a uniquely qualified board encompassing pre-eminent aviation expects and highly experienced corporate/financial specialists. It is positioned to execute rapid growth across numerous jurisdictions and has a news flow pipeline that includes possible contract wins/JVs with civil and military bodies and new product. The Group boasts an international footprint, including offices in Seattle, Denver, Houston, New York, London and Singapore, as well as a training footprint in Roswell, New Mexico plus one in development in Valkenburg, in the Netherlands. These facilities are being used to both train and educate with respect to the operation and capability of UAVs. As a development tool they hold the potential to transform military, commercial and emergency services applications. Accordingly, the Group is now leveraging its established position within the aviation sector to expand existing consultancy and development agreements. The Rise of the UAV UAVs will likely remain the most dynamic growth segment of the world aerospace industry for the coming decade according to the Teal Group 2014 report. Significant recent technical advances have permitted UAV operations to become considerably more flexible, reliable and available. They introduce obvious cost and safety advantages, being cheaper to buy and operate than traditional aircraft, while eliminating hazard potential for pilot and/or flight crew. They are more operationally productive, being easy to deploy, capable of remaining aloft for extended durations without external support, while offering sophisticated surveillance technology (including 360-degree view with infrared as well as ‘cloud’ based data storage and retrieval). According to the Association for Unmanned Vehicle Systems International (‘AUVSI’) Economic report (2013), the US economic impact is seen to grow to US$82.1bn over the decade to 2025, with an estimated 103,776 new jobs being created. More immediately, its primary forecast is that the UAS market as supplied by North American vendors will reach $1.14bn in the first year after the FAA issues favourable regulations and that the precision agriculture market will ‘dwarf all others.’ It sees applications stretch far beyond the most obviously cited military and commercial transportation uses, to include search & rescue, law enforcement, critical infrastructure security, mineral exploration, farming etc., amongst numerous others. As at April 2012, the US Army owned 5,866 UASs. While US detailed military expenditure on UAV technology and equipment itself remains classified, fledging non-direct military industry spending, nevertheless more than doubled last year to US$108m across 29 ‘drone industry’ deals.

THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is also not subject to any prohibition on dealing ahead of the dissemination of investment research, although as a matter of policy Beaufort Securities Ltd requires its employees not to deal ahead of the dissemination of the report.

Strat Aero Plc 10th March 2015 - Page 5

US UAV Regulations Despite significantly leading the technological development of UAVs, US airspace restrictions have meant that non-defence applications in the country have so far been extremely limited. In February 2015, the FAA provided an outline of new regulations which should open the commercial sector for the adoption of UAVs. Continuing Expert consultation, however, is still required to outline the pathway to regulation and more detail is expected to be provided in 2015. Strat Aero has created a solution through which to meet this opportunity and develop long term customised solutions and relationships UAS Pilot Training Strat Aero is uniquely positioned to capitalise on significant projected US Air Force UAS training demand. The market potential is quite huge. Just one branch of the US military, for example, has already cited a need for 750 pilots to be trained each year going forward. Realistically, given the anticipated general adoption of UAVs, this number could very possibly multiply by a factor of ten before the end of this decade. With most other western governments now waking up to this new reality, it is realistic to project a true international need for several times this in years to come. A formal opening of airspace to emergency services and commercial applications, of course, has the potential to employ many times as many pilots and support staff as that of the military. To this extent, Strat Aero appears to have identified what is set to become a boom industry for formal UAV training and licensing. Considering military training alone, charges presently amount to US$12,750 for each pilot course. Strat Aero’s initial capacity is for just 32 individuals/month, although this will be multiplied as new facilities are created. Strat Aero has signed a co-operation agreement with a major US defence contractor, to provide facilities and manpower to train military pilots transitioning from basic pilot training to flying fixed wing UAVs. It will be providing equipment including up to three fixed wing training unmanned aerial vehicles. With UAV use being expanded for military tactical missions, an acute need for training has been identified. Annual losses of Predator and Reaper aircraft from crashes in the take-off and landing phase currently amount to several millions of dollars. Training will take place in Roswell, New Mexico (U.S.) – personnel and full facilities including new UAV runways, accommodation, training vehicles and software are ready to commence operations. A second UAV training facility is planned at Valkenburg following a Letter of Intent being signed with the Netherlands Government. UAS Services The Army Research Laboratory (‘ARL’) is now seeking to spin out a number of its UAS technologies and develop commercial applications from military hardware. Strat Aero intends to manage a programme to undertake the UAS technology evaluation work. A proposal has been submitted by Strat Aero, the work programme has been defined, and submitted to the ARL contracts office Advanced negotiations are now underway with ARL, with a view to securing a multi-year contract with both fee and profit share revenue components. A MOU has also been signed with 4D Tech Solutions, Inc. a wellestablished engineering services provider to the US Government, to leverage existing contracts and relationships to pursue and grow the US$6m UAV initiative with ARL. Strat Aero is also targeting law enforcement agencies – Federal, State and Local for opportunities with fixed wing and in particular multi-rotor UAVs – driven by inherent flexibility, cost savings, safety and minimal disruption to the public compared with current helicopter based operations. The opportunity size is very significant, with 254 sheriff departments in Texas alone, and another 100 in New Mexico and Colorado. A Los Alamos research laboratory demonstration proved technical feasibility for Law Enforcement Agency requirements and the first turnkey demonstration/rental multi-rotor UAV already operational. Strat Aero’s objective is to sell nationally as a part of its commercialisation plan for law enforcement. It has a strong sales pipeline with several potential clients.

THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is also not subject to any prohibition on dealing ahead of the dissemination of investment research, although as a matter of policy Beaufort Securities Ltd requires its employees not to deal ahead of the dissemination of the report.

Strat Aero Plc 10th March 2015 - Page 6

The Group also spots a major potential in the large scale, renewable energy industry. In the US, there are presently some 49,000 operational wind turbines that required detailed annual inspection. By using specialist UAS, this can be completed in just one hour, compared with, typically, half a day to undertake manually. As a result, a Technical Services Agreement (TSA) was signed in June 2014 with the National Renewable Energy Laboratory (NREL), a division of the U.S. Department of Energy, to conduct research and development programmes to inspect and analyse wind turbine performance and reliability. This includes the development of effective tools in preventing shut-downs and disasters for wind-farm operators, by using a combination of UAVs and the most recent development in technologies such as HD video, metadata collection, thermal imaging and LIDAR. The Group targets new markets and an acceleration of market penetration through its recently acquired option to take a 70% controlling interest in New Amsterdam Global Solutions LLC, an independent industrial and energy sales and marketing business. The New Amsterdam team has worked with a number of major clients including, TD Westinghouse, General Electric, Dewind and T. Boone Pickens. Other related commercial opportunities also include the monitoring of oil industry structures and power transmission lines. Aviation Software Products & Services Strat Aero develops Proprietary advanced aerospace management system providing management solutions for a diverse range of aerospace requirements delivered on a range of platforms including smart phone and tablets. All IP remains wholly owned by the Group. The US has some 1,200 airports, of which around 60% have fixed base operation (‘FBO’). It comprises a complete low cost intuitive cloud-based programme designed to assist companies that manage multiple assets such as aircraft, personnel, scheduling etc. – targeting fixed base operators, member associations and service providers. Functionality includes: Learning Management System, customisation for FBO Business Management, delivery & tracking of eLearning, Safety Management System (SMS) mandated by many countries, delivery & tracking of specific safety and workplace training and construction of ad hoc workgroups to track effectiveness. Separately, revenue generated via contract with an aircraft cleaning company with over 800 employees – this established software will be offered to similar service companies across the industry. Consultancy Services Strat Aero offers a full service consultancy to the aviation and aerospace sector. It is currently engaged on: 

A contract for the project management for the establishment of a new low cost airline in the Middle East – initial processes underway and completion expected in 2015 – services provided by Strat Aero range from leasing aircraft to staff training;

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Contract with the Civil Aviation Authority of a European country for the supply of Flight Operations Inspectors for the purpose of approving and recommending Air Operator Certificate (AOC) applications in respect of helicopter operations related to the oil industry;

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Authoring of EASA (European Aviation Safety Agency) compliant Technical Publications for Regulatory Authorities – currently contracted by EU nation; and

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It also has a MOU pending with a European Airline for the provision of consulting services designed to identify growth opportunities and increase operational and financial efficiencies. Initial talks are also underway for the provision of a range of consulting services to a Government agency on the African Continent.

THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is also not subject to any prohibition on dealing ahead of the dissemination of investment research, although as a matter of policy Beaufort Securities Ltd requires its employees not to deal ahead of the dissemination of the report.

Strat Aero Plc 10th March 2015 - Page 7

SkyRanger

SandStorm

Small short range multi-rotor commercial UAV for surveillance, law enforcement and inspection

Medium “Intelligent” fixed wing UAV – low cost training solution for UAVs using computer emulation

Predator/Reaper

Large long-range fixed wing military UAV for surveillance and tactical weapons delivery

Strat Aero plc Strengths and Weaknesses Strengths  Highly experienced management, with ideal skill set ranging through aviation to finance, ideally positioned to capture business from anticipated exponential growth in both military and wider commercial UAV markets. 

US military’s increasing reliance on UAVs and inadequate training of personnel identifies significant near term opportunity.

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First mover advantage expected to secure good commercial terms for extended, reputation-building, contract with a major defense contractor.

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Commercial opportunity extends across numerous aviation jurisdictions, to include software, consultancy and ISR services.

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Expected to be cash flow positive before for full year 2015 and self-financing thereafter.

Weaknesses  Commercial terms with a major defense contractor and US Army Research Laboratory work contracts have not yet been finalized – delays or more competitive terms could significantly impact Beaufort’s forecast model. 

Other than the Air Fajaiah consultancy contract, Strat Aero’s other commercial opportunities and/or product developments remain at an early stage.

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The US Congressional end-September 2015 deadline for the FAA Modernization and Reform Act (2012) could be missed and safe UAS integration could be curtail or delayed commercial opportunity for drones.

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Adoption of drones by terrorist factions for western offensive actions could indefinitely close down the civil opportunity UAS.

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A young business with limited history. Source: Beaufort

THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is also not subject to any prohibition on dealing ahead of the dissemination of investment research, although as a matter of policy Beaufort Securities Ltd requires its employees not to deal ahead of the dissemination of the report.

Strat Aero Plc 10th March 2015 - Page 8

Recommendations During the three months to end-February 2015, the number of stocks on which Beaufort Securities has published recommendations was 269, and the recommendations were as follows: Buy - 89; Speculative Buy - 148; Hold - 25; Sell - 7. Full definitions of the recommendations used by Beaufort Securities in its publications and their respective meanings can be found on our website here. This report is published by Beaufort Securities (“Beaufort Securities”). Beaufort Securities is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange. This research is non-independent and is classified as a Marketing Communication under FCA rules. As such it has not been prepared in accordance with legal requirements designed to promote independence of investment research and it is not subject to the prohibition on dealing ahead of the dissemination of investment research in COBS 12.2.5. However Beaufort Securities has adopted internal procedures which prohibit analysts from dealing ahead of non-independent research, except for legitimate market making and fulfilling clients’ unsolicited orders. RELIANCE ON THIS NOTE FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE AN INDIVIDUAL TO A SIGNIFICANT RISK OF LOSING ALL OF THE FUNDS, PROPERTY OR OTHER ASSETS INVESTED OR OF INCURRING ADDITIONAL LIABILITY. By receiving this document, you will not be deemed a client or provided with the protections afforded to clients of Beaufort Securities. When distributing this document, Beaufort Securities is not acting for any recipient of this document and will not be responsible for providing advice to any recipient in relation to this document. Accordingly, Beaufort Securities will not be responsible to any recipient for providing the protections afforded to its clients. 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Such statements, estimates, and projections are based on information that we consider reliable and may reflect various assumptions made concerning anticipated economic developments, which have not been independently verified and may or may not prove correct. No representation or warranty is made as to the accuracy of such statements, estimates, and projections or as to its fitness for the purpose intended and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and may change without notice. Other third parties may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views, and analytical methods of the analysts who prepared them. This report has not been disclosed to any of the companies mentioned herein prior to its publication. The information contained in this document is confidential and is solely for use of those persons to whom it is addressed and may not be reproduced, further distributed to any other person or published, in whole or in part, for any purpose. Other persons who receive this document should not rely on it. Beaufort Securities, its directors, officers and employees may have positions in the securities mentioned herein. © Beaufort Securities Ltd 131 Finsbury Pavement, London EC2A 1NT Company Name Strat Aero PLC 1. 2. 3. 4. 5. 6. 7.

Disclosure 1, 7

In the past 12 months, Beaufort Securities Limited or its affiliates have had corporate finance mandates or managed or co-managed a public offering of the relevant issuer’s securities or received compensation for Corporate Finance services from the relevant issuer. Beaufort Securities Limited expects to receive or intends to seek compensation for Corporate Finance Services from this company in the next six months. The investment analyst or a member of the investment analyst’s household has a long position in the shares or derivatives of the relevant issuer. The investment analyst or a member of the investment analyst’s household has a short position in the shares or derivatives of the relevant issuer. As of the month end immediately preceding the date of publication of this report, or the prior month end if publication is within 10 days following a month end, Beaufort Securities Limited and / or its affiliates beneficially owned 1% or more of any class of common equity securities of the relevant issuer. A senior executive or director of Beaufort Securities Limited or a member of his or her household is an officer, director or advisor, board member of the relevant issuer and / or one of his subsidiaries. Beaufort Securities Limited acts as corporate broker to the relevant issuer.

The investment analyst who is responsible for the preparation of this investment research is employed by Beaufort Securities Limited.

THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is also not subject to any prohibition on dealing ahead of the dissemination of investment research, although as a matter of policy Beaufort Securities Ltd requires its employees not to deal ahead of the dissemination of the report.