Thursday, September 23, 2021

Delta Drone June 2021 quarterly report

• Receipts from customers for Q2 2021 totalled A$1.332 million, an increase of A$78k on the first quarter
• Year to date (6 months ended 30 June) unaudited revenue of A$2.4 million
• Results driven by contracts with multinational enterprise mining companies, South32 Coal Holdings (Pty) Ltd (now Seriti Power), Anglo-American subsidiary, Kumba Iron Ore Limited, and Perenti subsidiary, AMS African Mining Services
• Appointed two highly experienced board members from Delta Drone International’s
major shareholder, Delta Drone SA and since the reporting period, appointed
Managing Director of LinQ Group in Australia, Mr Clive Donner.

Drone-based data systems provider, Delta Drone International Limited (ASX: DLT)
is pleased to provide the business update for the quarter ending 30 June 2021 (Q2, 2021), along with its Appendix 4C quarterly cash flow report.

Commenting on the Company’s progress during the quarter, Delta Drone International (DLT) CEO Christopher Clark said:

“Delta Drone International has performed strongly in the enterprise mining space this quarter, signing multiple new contracts with both new and long-standing customers. Over the last three months we have signed contracts with some of the world’s leading enterprise mining companies, including South32 Coal Holdings (Pty) Ltd [now Seriti Power], Anglo-American subsidiary, Kumba Iron Ore and Perenti subsidiary, AMS African Mining Services. The faith the enterprise mining sector places in us to deliver the data they need, in real-time to guide decision making is a testament to our unique ‘drones-as-a-service’ model and the value it provides.”

“We continue to expand our footprint in Africa, entering Namibia to provide advanced drone training to the enterprise mining sector. We also held a successful trial day of point-to-point autonomous medical deliveries to showcase our capabilities to deliver medical supplies from two static locations while remaining compliant with African aviation regulations – this technology has the ability to provide much-needed support to hospital systems through much faster medical deliveries across the region’s crowded cities and can ultimately save lives.”

“Our Australian operations is gearing up for a big second half of the year, with the business expanding into Perth and Adelaide to support our operations. We have also been working closely with the Civil Aviation Safety Authority (CASA) and have conducted our first beyond visual line of sight (BVLOS) flight trials.”

“Lastly, we have strengthened our board with two new appointments, Mr Christian Viguié and Mr Nicolas Clerc. As CEO and Group CFO of our majority shareholder, Delta Drone SA, they bring invaluable knowledge of the Delta Drone Group and what is required to build a leading drone services company.

Since the reporting period, we have also welcomed Mr Clive Donner to the Board. Mr Donner is the Founding Managing Director of LinQ Group, bringing over 30 years expertise both in Australia and internationally in equity investment, corporate and project debt financing, capital raising, investment advising and evaluation of resource companies.”

“We look forward to continuing our growth trajectory and expanding our operations to
become a truly international ‘drones-as-a-service’ company.”

COMMERCIAL UPDATE

Delta Drone International continues to sign significant contracts with some of the world’s leading enterprise companies, further strengthening its position as a leading ‘drones-as-a-service provider’. Key contracts during the period include:

Five-year contract extension with South32 Coal Holdings (Pty) Ltd (now Seriti Power)
In June, Delta Drone International commenced a significant five-year contract extension with global mining and metals company South32 Coal Holdings (Ptyd) Ltdy (now Seriti Power) in South Africa.

The renewed agreement will generate A$2.7 million in revenue and was signed after a
successful six years of Delta Drone International providing its drones-as-a-service capabilities across mine surveying and real-time data collection services.

Contract expansion with global mining customer

In April, Delta Drone International expanded its remit with a longstanding mining customer who required a solution to examine mining site expansion options more accurately.

The versatility of DLT’s drones-as-a-service model along with the latest drone technology and knowledge of its specialised mining drone pilots, allowed DLT to deliver a tailored LIDAR solution and keep the work in-house.

The project is a testament to the value our drones-as-service model provides by delivering solutions outside our core remit to assist our customers with daily business challenges.

ParaZero contract with Kumba Iron Ore Limited in South Africa

During May, DLT’s safety specialist brand, ParaZero, signed its first customer contract in South Africa with leading enterprise mining company Anglo American subsidiary, Kumba Iron Ore Limited (Kumba).

Kumba will enhance its safety operations by installing ParaZero’s SafeAir parachute safety system at scale to their on-site drone fleet.

The contract was a result of the synergy benefits of the combined Delta Drone and ParaZero businesses and represents the potential for cross promotion through all Delta Drone International’s specialist brands.

AMS African Mining Services for stockpile measurement

Delta Drone International has been recontracted by Perenti subsidiary, AMS African Mining Services for a three-month stockpile volume measurement project. Delta Drone International will deploy its mining-specific drone fleet once a week to accurately track of on-site stock volumes so AMS can better optimise their supply chain and have better understanding of how much work the site has left on its project.

Complex auditing projects with Interwaste and BDO

In June Delta Drone International was recommissioned by global accounting firm BDO to again provide its tailored drone solution to count more than 25,000 sheep for a client verification audit.

The project was completed in 2.5 hours with 99.9% accuracy – a task that historically would require a team of auditors and days to complete with greatly reduced accuracy.

In addition, Delta Drone International was commissioned by Interwaste on a contract to provide advanced thermal imaging data to assist the organisation create more detailed air quality reports to monitor the environmental conditions of waste and landfill sites in South Africa.

Using thermal imaging technology, DLT was able to capture visual temperature datasets in near real-time, transmit them, through the cloud to the customer so they could be complemented by traditional data sources to create more dynamic air quality reports that more accurately show changes in micro-climate or local environmental conditions.

Speedbird Aero OEM integration deal

ParaZero, will complete an integration deal in Brazil by December 2021 with Latin American drone delivery company, Speedbird Aero, to integrate its patented SafeAir autonomous parachute technology with Speedbird Aero’s fleet of delivery drones.

The multi-phase integration project builds on a three-year partnership between the two companies and will ensure all Speedbird Aero’s drones are fitted with industry-certified drone safety systems to build on the 1,000 plus successful deliveries they have conducted in populated areas in Brazil, such as shopping centres.

OPERATIONAL UPDATE

Delta Drone International continues to cement its position as a leading ‘drones-as-a-service’ provider. This quarter, the Company expanded operations into Namibia, expanded operations in Australia and continued to work with leading regulation authorities to ensure safe drone practices.

Namibia expansion

Drone Safety & Legal (Pty) Ltd. (DSL), an accredited training subsidiary of Delta Drone International expand its training operations into Namibia to deliver advanced drone operations training for enterprise companies.

The courses have been designed specifically for enterprise drone operators with an
intermediate understanding of aerial data capture, to gain deeper insights into the magnitude of ways advanced drone use and its associated services can add value to their operations.

Australian operations update

Delta Drone International’s Australian operations continue to build, with initial Project Engineers hired in Western Australia to support the region’s vast mining sector. The new hires have enabled the South Australian team to build on the agriculture opportunities of the business, with key partnerships established in the state.

DLT is working closely with the Civil Aviation Safety Authority (CASA) and is preparing for its first BVLOS flight trials with the Australian regulator. BVLOS trials are key to the industry’s evolution through demonstrations of the latest technology and safety standards that showcase how drones can safely fly over people and populated areas.
Federal Aviation Administration regulation update

In the U.S, the Federal Aviation Administration (FAA) has commenced its transition to new regulations for Operations of Small Unmanned Aircraft Systems Over People (OOP), with the transition period expected to run until December 2021, in-line with its announcement in December 2020.

While the new regulations have come into effect, the FAA has not yet released a ‘Declaration of Compliance’, which explains how operators can adhere to the new regulations. As a result, in the very near term, compliance in the U.S is ambiguous, with ParaZero safety system orders from some customers on hold while they await confirmation from the regulator.

ParaZero is well-positioned to capitalise on the new regulations once the Declaration of Compliance is released, with ParaZero’s safety systems specifically designed to meet the required kinetic thresholds under the new regulations.

FINANCIAL OVERVIEW

Receipts from customers for Q2, 2021 totalled A$1.332 million, an increase of A$78k on the first quarter

Total cash operating outflows during the quarter totalled A$2.065 million, an increase of A$149k on the first quarter, mainly attributed to the fact the Company paid income taxes of A$49k as opposed to receiving a tax rebate of A$55k which was the case in the first quarter. The major expenses comprised:
● A$341K on product manufacturing and operating costs;
● A$742K on staff costs; and
● A$813K on administration and corporate costs.

Pursuant to ASX Listing Rule 4.7C.2, the Company provides the below table as a comparison of actual expenditure against the “use of funds” table as disclosed in the Prospectus dated 10 November 2020 (“Prospectus”) (ASX announcement of 10 November 2020)

Explanation of material variances in the use of funds:

  1. Expansion of the South African operations has commenced earlier than expected
    which has resulted a material variance in the budgeted expenditure.
    As per line item 6 of the attached Appendix 4C cash flow report for the quarter, payments to related parties and their associates of A$171K comprised of director fees paid to executive and non-executive directors.

WEBINAR DETAILS
An investor webcast will take place on Friday, 30 July 2021 at 2:00pm AEST. Following the briefing, participants will have an opportunity to ask questions via an online facility. Please pre-register for webcast via:

This announcement has been authorised for release by the Board of Delta Drone International
Limited.