Windar Photo Regulatory News (WPHO)

30 September 2019

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Windar Photonics plc

("Windar", the "Company" or the "Group")

Unaudited interim report for the six months ended 30 June 2019

Windar Photonics plc (AIM:WPHO), the technology group that has developed a cost efficient and innovative LiDAR wind sensor for use on electricity generating wind turbines, is pleased to announce its unaudited interim results for the six months ended 30 June 2019.

Highlights for the first six months of 2019:

·; Revenue of €0.7 million (H1 2018: €1.7 million) due to the rescheduling of customer orders from H1 to H2 and decision to terminate the Company's relationship with a Chinese distributer, better positioning Windar for future OEM contracts

·; OEM discussions are progressing positively and Windar anticipates receiving first orders for LiDAR roll-out within the strategically important OEM market in the near future

·; Gross profit of €0.4 million (H1 2018: €0.8 million)

·; Gross margin for the period was consistent with prior period at 49.2% (H1 2018: 49.1%)

·; Operating costs increased to €1.5 million including depreciation, amortisation and warrant costs (H1 2018: €1.1 million)

·; Net loss of €1.0 million (H1 2018: €0.3 million)

·; Cash held at the end of the period amounted to €0.3 million (H1 2018: 0.3 million). In addition, the Company had restricted cash of €0.4 million (H1 2018: €0.3 million)

Jørgen Korsgaard Jensen, Chief Executive Officer of the Company, commented: "Although our results for the period have been affected by some customer rescheduling and a decision to position ourselves more strongly for OEM contracts currently under negotiation, we currently expect to achieve a revenue for the full year 2019 equal to or better than 2018. The traction we are experiencing with customers is pleasing and we look forward to updating the market regarding progress being made in relation to our OEM and IPP strategies in the coming months."

For further information:

The person responsible for arranging the release of this announcement on behalf of Windar is Jørgen Korsgaard Jensen. 

About Windar:

Windar Photonics is a technology group that develops cost-efficient and innovative Light Detection and Ranging ("LiDAR") optimisation systems for use on electricity generating wind turbines. LiDAR wind sensors in general are designed to remotely measure wind speed and direction.

http://investor.windarphotonics.com 

CHAIRMAN'S STATEMENT

The results for the first six months of 2019 were impacted by two factors. Firstly, in relation to our retro-fit product, WindEYE, we saw a number of contracted orders in Asia re-scheduled for delivery in the second half of the financial year instead of the first half of 2019. Secondly, the Company decided to terminate one of its distributor relationships in China in order to better position itself strategically in this world leading OEM market. Certain provisions in the agreement with that distributer had the potential to compromise major OEM agreements that the Group is currently advancing. 

While the results for the first half of 2019 appear disappointing, these do not reflect the progress Windar is making in terms of securing volume sales in the OEM market. Pleasingly, the Company has expanded the number of OEM test projects underway and has achieved final approvals from some major OEMs. We expect to reach the important milestone of receiving first orders for LiDAR roll-out within the strategically important OEM market in the near future.

R&D remains an important part of our business and in the first half of 2019 two major projects were completed. New technology has been installed into our product offerings, enhancing our value proposition for customers. Accordingly, both our future OEM and retro-fit customers can now benefit from our wake technology, which both detects wake scenarios and demonstrates strategies for turbine optimisation in these scenarios. We have also expanded our WindTimizer retro-fit plug'n'play solution for yaw optimisation so that it handles analogue sensor interfaces. This will significantly expand the market opportunities for our retro-fit product in Asia and beyond.

Importantly, and whilst it has taken longer than the Board originally envisaged, we also expect to see deliveries through our distribution agreement with Vestas in H2 2019. These deliveries will strengthen the Group's revenue from the IPP retrofit market.

Financial Overview

Overall, the Group realised a net loss of €1.0 million for the period (H1 2018: €0.3 million loss) after depreciation, amortisation and warrant costs of €0.14 million (H1 2018: €0.17 million).

Cash flow from operations produced a net outflow of €1.7 million for the period compared to a net outflow of €0.8 million in H1 2018. The increased outflow during the period was primarily driven by the operational results combined with an increase in inventory of €0.4 million during the period, in anticipation of an increase in orders for our retro-fit WindEYE product.

Trade receivables (net of impairment provision) increased to €788k during the period, principally due to the timing of several deliveries in the second quarter.

Outlook

Based upon current traction with our customers and our increased product offering, the Directors believe the Group is well positioned for substantial growth in the future. With our knowledge at present, we expect to recoup the ground lost in the first half and generate revenue for the full year 2019 equal to or better than 2018. Consequently, the net result in the second half of 2019 is expected to show a substantial improvement to our H1 performance and combined with an anticipated reduction of the inventory as at 30 June 2019, the Board are expect the Group will generate positive operating cash flows in the second half of 2019 and an increase in net cash available at the full financial year end.

Johan Blach Petersen

Chairman

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS

ENDED 30 JUNE 2019

1. BASIS OF PREPARATION

The financial information for the six months ended 30 June 2019 and 30 June 2018 does not constitute the Groups 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 2019 and are unchanged from those disclosed in the Group's Annual Report for the year ended 31 December 2018, except for the adoption of IFRS 16. The comparative financial information for the year ended 31 December 2018 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2018 have been filed with the Registrar of Companies. The Independent Auditor's Report on the Annual Report and Financial Statements for 2018 was unqualified, but included a reference to the material uncertainty related to going concern in respect of the timing of future revenues 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 reduce the loss per share.

3. Inventory

4. Trade and other receivables

5. Share capital

Number of shares €

At 30 June 2019, the share capital comprises 44,508,369 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 Ejendomme is in respect of amounts included in the fitting out of the offices in Denmark. The loan is repayable over the 6 years and matures I November 2021 and carries a fixed interest rate of 6 per cent.

Both loans are denominated in Danish Kroner.

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.