Windar Photo Regulatory News (WPHO)

15 September 2016

Windar Photonics plc("Windar Photonics" or the "Group")

Unaudited interim report for the six months ended 30 June 2016

Windar Photonics PLC (AIM:WPHO), the technology group that has developed cost efficient and innovative LiDAR wind sensors for use on electricity generating wind turbines announces its unaudited interim results for the six months ended 30 June 2016.

Chairman's Statement

I am pleased to report that the first half of the year has been one of further progress for Windar Photonics across a number of fields. We have continued to make good progress with a number of customer orders announced during the period, including from two large scale utilities in North America, and were able to initiate and complete a number of trials internationally with OEMs and asset owners. OEMs, which supply new turbines into the market, represent an excellent opportunity for the Group to gain significant market traction with the support of globally recognised and widely adopted turbine manufacturers. Asset owners are attracted to the operational and financial benefits of installing Windar Photonics' proprietary LiDAR technologies on their turbines. 

At the corporate level, we also welcomed new investors to our share register with the completion of a cash subscription raising approximately £1.0 million after costs and agreed a factoring facility with Nordea Bank Denmark AS ("Nordea") of up to €400,000 in May 2016. Together, this funding has provided the Group with additional resources to capitalise upon the traction we have witnessed in our target markets.

Revenue for the period amounted to €0.8 million compared to the full year revenue in 2015 of €0.9 million (€0.1 million in the first half year of 2015). Gross profit for the period amounted to €0.4 million, which is greater than the full year result for 2015 of €0.3 million, and first half year 2015 of €0.1 million. In the period the Group incurred a loss before tax of €1.83 million (six months ended 30 June 2015: €1.56 million) including a non-cash warrant cost of €154,415 (2015: €103,107) as it invested in building the sales pipeline and technical engagement with customers.

Despite the strong growth in both revenue and gross profit compared to last year, the revenue growth is lower than previously expected due to delays of planned installations within the retro-fit segment in the US and Europe. A number of tests and trial orders, which have been successfully completed, have not yet resulted in the follow-on orders that would be expected and remain under negotiation.

The Group continues to work with selected OEMs and Wind Turbine Control Manufacturers to facilitate LiDAR integration for deployment within the retro-fit market, which resulted in the launch of a new direct turbine integration of the WindEye™ LiDAR post the period end. This initial product offering is focused on four specific turbine models with four OEMs and Wind Turbine Control Manufacturers and a potential installed base of around 11,000 turbines internationally. LiDAR integration is of great benefit to the retro-fit end user, taking advantage of optimised wind turbine yaw control and also the ability to utilise wind speed and gust detection with a controller software upgrade package. The OEMs and Wind Turbine Control Manufacturers choosing to integrate Windar Photonics' LiDAR data have also invested in adapting their operating software to allow the Windar Photonics devices to be retrofitted on 4 specific wind turbine models. The Board expects this offering to be a substantial driver for sales to the retro-fit market segments in the years to come, with first orders expected imminently.

The Group continued to work with several major OEMs on the direct integration of its LiDAR devices into OEM wind turbines. These discussions and trials, which are in the final stages of turbine control integrations after very extensive tests of the Group's products, have already resulted in the Group being selected as the preferred LiDAR system supplier to the brand new Eleon 3.4M-118 Wind Turbine. Based on current OEM activities, the Group expects to see further traction with OEM implementation in the foreseeable future.

The Directors believe that orders will continue to be forthcoming as the Group progresses its detailed discussions with these commercial parties and, furthermore, believe that the Group may meet or exceed the level of orders required to meet anticipated 2016 revenues during the remainder of the current year. However, lead times and delivery schedules associated with LiDAR units mean some of the revenue associated with such orders will not be fully recognised in the current year. As such, while the Directors believe that the Group will show strong revenue growth year on year, results for the full year are likely to be below current market expectations. One of the order delays relates to a contract announced in September 2015 with an US utility company for approximately US$900k originally expected to be delivered in the second half of 2016. The controller manufacturer involved with that project has withdrawn from the market, and the US utility company is working with Windar Photonics to find an alternative solution to facilitate delivery.

Despite the widening loss in the first half of the year when compared with 2015, the Group expects a substantially improved result in the second half due to both increased sales and a cost reduction programme. Having maintained inventories of completed devices and long order lead items, the Group expects to be cash flow positive in the second half of the financial year as higher sales activity converts inventory to cash, utilising the Nordea Factoring facility, and with support from the Danish Export Credit Fund. At 30 June 2016, the Group had net cash of €0.25 million, the Nordea Factoring facility of €0.4 million had still not been utilised, and the Group had current assets, excluding cash, of some €2.03 million.

With the groundwork already laid with the success of the trial programmes, the highest priority for the Group is to convert the potential sales into firm orders. Martin Rambusch's greatest strength lies in his sales ability. As a result the Board has asked Martin to step down as CEO and from the Board, and for him to focus full time on driving the sales effort as Chief Commercial Director. Jørgen Korsgaard Jensen, founder and currently part time CTO of the Group, has assumed the role of interim CEO with immediate effect until such time as a new CEO is identified.

Based upon current traction with our customers and a varied product offering, the Directors believe that that the Group is well positioned to show substantial growth and ultimately profitability over the coming years. The Board looks forward to providing further updates in due course.

For further information:

http://investor.windarphotonics.com

The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS

ENDED 30 JUNE 2016

1. BASIS OF PREPARATION

The financial information for the six months ended 30 June 2016 and 30 June 2015 does not constitute the Group's statutory financial statements for those periods with the meaning of Section 434(3) of the Companies Act 2006 and has neither been audited or reviewed pursuant to guidance issued by the Auditing Practices Board. The annual financial statements of Windar Photonics Plc are prepared in accordance with International Financial Reporting Standards as endorsed by the European Union ("IFRS"). The principal accounting policies used in preparing the Interim financial statements are those that the Group expects to apply in its financial statements for the year ended 31 December 2016 and are unchanged from those disclosed in the Group's Annual Report for the year ended 31 December 2015.

The comparative financial information for the year ended 31 December 2015 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2015 have been filed with the Registrar of Companies. The Independent Auditor's Report on the Annual Report and Financial Statements for 2015 was unqualified, did not include references to any matters which the auditors drew attention to by way of emphasis without qualifying their report and did not contain a statement under section 498(2)-498(3) of the Companies Act 2006.

After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue operating for the next 12 months. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly condensed consolidated financial statements.

This interim report was approved by the directors.

2. Loss per share

The loss and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:

There is no dilutive effect of the warrants as the dilution would be negative.

3. Inventory

4. Trade and other receivables

5. Share capital

On 6 May 2016 the Group issued further Ordinary Shares as follows:

800,002 Ordinary Shares in consideration for cash received by the Group; and

85,500 Ordinary Shares in consideration for the satisfaction of fees payable to West Hill Capital LLP.

At 30 June 2016 the share capital comprises 39,051,879 shares of 1 pence each.

6. Borrowings

The carrying value and fair value of Group's borrowings are as follows:

The Growth Fund borrowing from the Danish public institution, Vækstfonden, bears interest at a rate of 12 per cent. The borrowing is a bullet loan with maturity in June 2020. The Group may at any point in time either repay the loan in part or in full or initiate an annuity repayment scheme over four years. If an annuity repayment scheme is initiated, the interest rate will be reduced to 8 per cent in the repayment period.

The loan from Nordea Ejendome is in respect of amounts included in the fitting out of the offices in Denmark. The loan is repayable over the 6 years and carries a fixed interest rate of 6 per cent.

7. Trade and other payables

There is no material difference between the net book value and the fair values of current trade and other payables due to their short term nature.

8. Availability of Interim Report

Copies of the Interim Report will not be sent to shareholders but will be available from the Group's website www.investor.windarphotonics.com.