Year-End Report January-December 2016 CybAero AB (publ)
Period: January–December 2016
• Net sales: SEK 2.9 million (SEK 4.8 million)
• EBITDA: SEK -75.5 million (SEK -61.1 million)
• Operating loss: SEK -86.8 million (SEK -72.5 million)
• Loss after tax: SEK -91.3 million (SEK -74.0 million)
• Earnings per share: SEK -2.50 (SEK -2.53)
• The Board of Directors proposes that no
dividend be paid.
Period: July–December 2016
• Net sales: SEK 1.9 million (SEK 2.1 million)
• EBITDA: SEK -32.7 million (SEK -36.3 million)
• Operating loss: SEK -39.0 million (SEK -41.9 million)
• Loss after tax: SEK -41.7 million (SEK -43.1 million)
• Earnings per share: SEK -1.57 (SEK -1.80)
Message from the CEO
2016 was an eventful year characterized by major changes and by hard, intensive work on product development, testing activities and deliveries to clients.
I succeeded Mikael Hult as CEO in May 2016, and we shifted CybAero’s focus since then. We want to move from being a development company to an efficient industrial company with the capacity to deliver both products and services that meet the needs of our clients. In an effort to raise our sales efficiency, we hired two highly experienced sales directors: Brian Lawrence, who is responsible for North America, and Stellan Hallberg, who is responsible for the rest of the world. Both have long-standing international sales experience and our outstanding quotes have already increased by approximately SEK 800 million.
In addition, we worked hard to cut costs in order to adapt our workforce to our current needs. As a result, we were able to significantly reduce production lead times even with approximately 10 fewer employees. Mikael Smith, who has solid experience with international operations, was hired as the new CFO during the year.
We strive to create reliable and client-friendly products, which is one reason why we have focused on our ISO work on processes and quality efforts. The entire company is involved, and the staff is highly motivated in this important work.
Our testing activities on rigs, on land, and in the air were expanded during the year, and our own test center has become a valuable resource for these activities. Together, these intensive activities have created a stable and robust aerial platform.
The year's figures reflect a high-tech development company rapidly transforming into a commercial company with broad unmanned flight expertise. The Jolly transaction required significantly more work in terms of development than was foreseen and thus drained substantial resources. The positive news is that this resulted in what is perhaps the world's most advanced vessel-based UAV system.
Demonstration flight with the Swedish Navy and FMV
We conducted extensive testing in collaboration with the Swedish Defence Materiel Administration (FMV) onboard a Visby class corvette outside of Karlskrona, Sweden, in April 2016. The capability to take off and land from a vessel moving at a speed of 25 knots with crosswinds of up to 15 m/s is a testament to the high international standing of our flight control system. FMV’s flights outside of Karlskrona in April also gave us the opportunity to demonstrate our system to representatives from countries such as Poland, Germany and Italy.
Our framework agreement with ACC/AVIC remains in effect. Recently, we suffered a setback when ISP rejected an export inquiry for a system to be used for demo flights in China. However, we have full faith in this agreement and will move forward with new applications in collaboration with our distributor, ACC.
The three systems we sold to Jolly that are planned for use as vessel-based systems by China Customs were delivered in late August. We suffered from completely unforeseen delays on the part of both the Swedish and Chinese customs authorities. The regulatory frameworks in China had been changed as late as in June, and our products were classified as dangerous goods. We were able to begin preparations for the factory acceptance tests (FATs) once the helicopters were cleared at the end of the year.
The regulatory frameworks for our products vary between countries. The market reacted unfavorably when the Supreme Administrative Court issued its ruling on photography from drones on October 21. However, the Ministry of Justice reacted quickly, and a proposal for a new law stipulating a special exemption for drones in the Swedish Camera Monitoring Act has already been put forward. The proposal calls for the removal of the permit requirement and instead aims to protect the personal privacy of individuals with the rules outlined in the Swedish Personal Data Act.
Demonstration flight with Tunisian customs
In November, top officials of the Tunisian customs agency visited CybAero for four days. During this visit, several successful demo flights were conducted in daylight as well as in the dark. Continuing demonstration flights will be conducted in Tunisia in 2017.
At the annual general meeting in June, we reported that we were planning a new business area, Air Services, which will render services where small or large unmanned aircraft are a cost-effective solution for the various needs of many clients.
This service business was initiated back in 2016 and included a project for Linköping University where we took measurements of radioactivity levels in exhaust fumes from chimneys. Another project was performed indoors for a company in the automotive industry. Both these projects used a smaller type of aircraft. This service business gives us the opportunity to utilize our unmanned flight knowledge while building more understanding and knowledge of client needs in this rapidly growing services sector. A number of analyses from various organizations clearly demonstrate the potential of UAVs. We are working on developing the capability to provide services that require UAVs with the capacity of our APID down to smaller, battery-powered aircraft. We expect to have some news to present in this area in late Q2 2017.
In November, we conducted a preferred issue, which was required for the company's continuing growth. The issue was 90% underwritten and the company raised approximately SEK 115 million.
Our partnership with Albright Stonebridge Group (ASG) was strengthened during the year, and we are confident they will be a key partner in our international marketing. ASG is a world leader in government contacts and risk management for international transactions with a broad international network.
Outlook for 2017
The year got off to an intensive start. Our FATs for Jolly in China have been completed in large part for the first of three systems. The delay is primarily because the systems will be used on vessels and thus multiple parties are involved in the process. We will apply for a new license from ISP for the ACC/AVIC transaction as soon as the conditions are right. We enter 2017 with several quotes to potential clients in several countries.
I see great opportunities for our own APID in Air Services in areas such as fire and rescue services. The possibilities are endless.
Linköping, March 17, 2017
For full report see attached pdf or on our website, www.cybaero.se.
Rolf Schytt, CEO CybAero AB, phone: 46 (0)13-465 29 00
Mikael Smith, CFO CybAero AB, phone: 46 (0)13-465 29 00
This information is information that CybAero AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08:30 CET on March 17 2017.
CybAero develops and manufactures Remotely Piloted Aircraft Systems (RPAS) for safer and more effective aerial operations in various environments, including those hazardous in nature. The company has made a great international impact with its APID One helicopter, which can be adapted for both military and civilian applications such as coastal and border surveillance, search and rescue missions, and mapping. CybAero’s head office is located in the Mjärdevi Science Park in Linköping, Sweden. The company has around 50 employees and has been listed on the Nasdaq First North since 2007. FNCA Sweden AB is the company's certified adviser.