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Windar Photonics PLC - Issue of Equity

RNS Number : 4425J
Windar Photonics PLC
22 December 2020
 

22 December 2020

 

Windar Photonics plc

 

("Windar" or the "Company")

 

Further Issue of Equity

 

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, announces that, further to the announcement on 21 December 2020, it has raised a further £50,000 (before expenses) (the "Subscription") through the issue of 444,444 ordinary shares of 1 pence each in the Company ("Subscription Shares") to an existing shareholder at 11.25 pence per share (the "Issue Price") to satisfy additional, late demand, taking the total amount raised to £545,000 (before expenses).

 

The Issue Price represents the mid-market closing price of 11.25 pence on 18 December 2020. The Subscription is not being underwritten and is conditional only on admission of the Subscription Shares to trading on AIM. 

 

Application has been made to the London Stock Exchange for the Subscription Shares to be admitted to trading on AIM and it is expected that such Admission will occur at 8.00 a.m. on Tuesday, 29 December 2020. The Subscription Shares will be issued and credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of 1 pence each of the Company ("Ordinary Shares").

 

Following Admission, the Company will therefore have 54,595,524 Ordinary Shares in issue, none of which will be held in treasury. This number may be used by shareholders in Windar as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of Windar under the FCA's Disclosure Guidance and Transparency Rules.

 

For further information, please contact:

 

Windar Photonics plc

Jørgen Korsgaard Jensen, CEO

Tel:  +45 21689476

 

 

Cenkos Securities plc (Nomad & Broker)

Neil McDonald / Pete Lynch

Tel:  0131 220 6939

 

 

Notes to Editors:

 

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

 

As outlined in the June trading update, 2019 was a difficult year for Windar and the Company generated revenue of €1.2 million, a reduction of 66% compared to 2018 (€3.5 million). This decline is mostly attributable to operations in the retro-fit market whilst, more positively, sales in the OEM market were relatively flat year-on-year. In particular, revenues were impacted in 2019 as a result of delays and postponements of projects into 2020, leading to an increased EBITDA loss of €2.8 million (2018: loss of €0.4 million).

 

However, the management team is confident that the order book, whilst delayed in delivery, will support the business going forward and there are encouraging signs that the OEM market is now starting to adopt integration of Lidar systems for control purposes, illustrated with the recently obtained OEM orders received in 2020 and ongoing test projects.

 

The retro-fit market operations were expected to develop through 2019 with the end user projects in the Asian region and the growth outside this region as a result of our distribution agreement with Vestas. Unfortunately, delays and postponements within the Asian region impacted our development and this has been compounded by a slower than anticipated build up in activity through the Vestas distribution agreement.

The Company continues to focus on becoming the world's leading LiDAR group for wind optimisation. Part of this strategy is a continued effort to optimise the product suite, whilst continuing our efforts to maintain cost leadership within the industry. In 2019 we were able to reduce our average production costs by around 15% and we expect to see a continued cost reduction in 2020.

In addition to the continued cost optimisation programme, the Company did enter two major development projects, partly funded by Eurostar, the Energy Technology Development and Demonstration Program. The two projects are focused on further enhancing our WindVision products for which OEMs form the target market. Alongside the involvement of Windar and the Danish Technical University, these projects include several of the major European and Asian wind turbine manufactures.

Whilst we continue to believe that our WindVision™ product offering to the OEM market will contribute substantial growth in the coming years, the Company has evaluated the product offerings to the retro-fit markets with the view of establishing a more streamlined future growth path within these markets. Based on these evaluations, the Company has decided to launch a new service offering - Lidar as a Service ("LaaS") - to the retro-fit markets generating more predictable recurring revenues rather than one-off sales. This will be a cloud-based pay per use service, sold by distributors such as larger wind turbine service companies. For this new business, Windar has developed a new self-contained Lidar unit connected to our central analysing control centre in Copenhagen. The LaaS business unit is expected to generate first revenue in 2020 and initial indications of interest provide the board with confidence that this could provide a step change in Windar's financial performance.

 

Financial Overview

Revenue during the year declined 66% to €1.2 million (2018: €3.5 million). Gross profit was down 47% (2018: 50%) to €0.5 million (2018: €1.8 million).

Net loss for the year before taxes increased to €3.3 million from €0.9 million, which included depreciation, amortisation and warrant costs of €0.3 million (2018: €0.3 million). Among other reasons, but also due to the Covid-19 situation, the Company has experienced problems collecting outstanding receivables in Asia and due to the ongoing uncertainties, the board has decided that it is prudent to make a 100% provision for these outstanding receivables at the end of 2019 of €0.8 million. However, the board considers this an absolutely worst-case outcome and do expect to recover at least some of these receivables.

The Group held cash balances at the end of the year of €0.8 million (2018: €1.7 million) excluding restricted cash balances of €Nil (2018: €0.5 million).

Trade receivables were €0.1 million (2018: €0.6 million), reflecting the impact of the abovementioned provision.

The Group has capitalised its continued cost of investment in technology during the year. This amounts to €0.5 million in 2019 (2018: €0.4 million) before grants of €0.1 million (2018: €0.1 million).

During the year, the Group raised €1.6 million before expenses through the issue of share capital.

 

Outlook 

 

After many years of test projects, it has been encouraging that, for the first year ever in our history, in 2020 the OEM market segment has now overtaken orders and revenue streams from the retro-fit market in both units and value. However, following the disappointing results in 2019, the Company has proactively changed the distribution network set-up in Asia in 2020, putting agreements in place that we believe could bring significant additional growth to the future orders and revenue streams.

 

Despite these encouraging developments, 2020 has also seen continued disruptions and delivery postponements, primarily due to the ongoing Covid-19 situation and the Company has also had difficulties in collecting certain outstanding receivables in Asia. Due to various quarantine rules and traveling restrictions, our installation process for products in the field has been particularly affected. As a consequence, parts of order intakes initially planned for delivery in 2020 are now expected to be delivered in 2021. Despite these challenges we still expect to see revenue in 2020 marginally increase compared to the disappointing result in 2019.

 

The factors outlined above have meant that the Company's cash flow situation has been negatively impacted and cash management is a critical consideration for the management team and is under active review. The Company was able to continue the production and the assembly line in Copenhagen throughout most of the first half of 2020, notwithstanding the impact of Covid-19. This has resulted in the Company being well positioned to satisfy the revised order delivery schedules but has also resulted in the cash flow position being under stress until payment for these deliveries is received. However, management believe that there are a number of actions available to them in order to manage the cash position even considering the current Covid-19 situation.

 

The Board is actively considering the alternative financing arrangements available to the Company, both to address the short-term working capital issues as a result of the various factors outlined above and to provide the longer-term liquidity required to allow the Company to adjust to longer order and delivery cycles. To this end, I am pleased to confirm that the company has agreed for a Covid-19 loan of €0.4 million from, Vækstfonden, the Danish Growth Fund and the postponement of repayments totalling €0.15 million due in 2021 in respect of the existing Growth Fund loan until the second part of 2025.

 

Despite the various challenges the Company is facing, our R&D activities remain an important part of our business and the next generation of both the WindVision™ and WindEye™ products are expected to be released at the end of 2020. Besides many new advanced functionalities, an important feature is to drive the unit costs down by approximately 25% compared to current systems.

 

Overall, our business strategy for the remainder of 2020 and 2021 is based on additional and substantial cost reduction of our products, reduction of staff and the development of the LaaS business model, which we expect will pave the way for a substantially improved financial performance. We believe that the implementation of this strategy will position the Company to take advantage of opportunities arising in the future. In particular, the establishment of the LaaS recurring revenue model will provide further stability to the financial performance of the business going forward and position the Company to take advantage of opportunities available in the market.

 

Positively, the total order inflow in 2020 has been encouraging at €2.9 million contractually for delivery in 2020. However, due to the ongoing Covid-19 pandemic, the Board expects only to convert approximately €1.3 million of these orders into realised revenue in 2020 with the remaining €1.6 million of the order back-log to be carried into 2021. The Board believe that this order book and outstanding project and customer pipeline stands the Company in a good position moving forward.

In these challenging times I would like to take the opportunity to thank the management and staff for their efforts in 2019.

 

BY ORDER OF THE BOARD ON November 13, 2020

Johan Blach Petersen

Chairman

 


 

 

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 

 

Year ended

31 December 2019

Year ended

31 December 2018

 

 

 

 Note

 

 

 Revenue from contracts with customers

4

1,177,897

3,499,867

Cost of goods sold

 

(629,560)

(1,744,571)

 Gross profit

 

548,337 

1,755,296

 

 

 

 

Administrative expenses

 

(3,680,990)

(2,391,798)

Impairment loss

 

-

(39,182)

 Other operating income

 

32,145

32,201

 Loss from operations

 

(3,100,508)

(643,483)

 

 

 

 

Finance expenses

6

(190,889)

(269,925)

 Loss before taxation

 

(3,291,397)

(913,408)

 

 

 

 

 Taxation

7

212,488 

                  120,436

 Loss for the year attributable to the ordinary equity holders of Windar Photonics Plc

 

(3,078,909)

(792,972)

 

 

 

 

 Other comprehensive income

 

 

 

 Items that will or may be reclassified to profit or loss:

 

 

 

 Exchange gains/(losses) arising on translation of foreign operations

 

3,085 

(2,125) 

Total comprehensive loss for the year attributable to the ordinary equity holders of Windar Photonics Plc

 

(3,075,824)

(795,097)

 

 

 

 

Loss per share attributable to the ordinary equity holders of Windar Photonics Plc 

 

 

 

 Basic and diluted, cents per share

8

(6.7)

(1.8)

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019

 

 

 

 

 

 

 

 

31 December 2019

31 December 2018

 

 

 €

 €

 

 Note

 

 

Assets

 

 

 

Non-current assets

 

 

 

Intangible assets

10

1,192,607

982,888

Property, plant & equipment

11

61,800

110,788

Deposits

 

24,980

46,285

Total non-current assets

 

1,279,387

1,139,961

 

 

 

 

 Current assets

 

 

 

 Inventory

12

1,019,564

726,999

 Trade receivables

13

111,703

638,138

 Other receivables

 Tax credit receivables

13

13

84,305

212,428

166,264

120,209

 Prepayments

 

44,857

83,763

 Restricted cash and cash equivalents

14

-

518,138

 Cash and cash equivalents

14

763,024

1,721,803

 Total current assets

 

2,235,881

3,975,314

 

 

 

 

 Total assets

 

3,515,268

5,115,275

 

 

 

 

 Equity 

 

 

 

 Share capital

18

608,689

560,859

 Share premium

18

13,692,119

12,558,434

 Merger reserve

18

2,910,866

2,910,866

 Foreign currency reserve

18

(18,630)

(21,715)

 Retained earnings

18

(16,338,796)

(13,287,757)

 Total equity

 

854,248

2,720,687

 

 

 

 

 Non-current liabilities

 

 

 

 Warranty provisions

20

61,170

78,422

 Loans

17

5,174

1,135,744

 Total non-current liabilities

 

66,344

1,214,166

 

 

 

 

 Current liabilities

 

 

 

 Trade payables

16

1,045,792

492,822

 Other payables and accruals

16

211,879

588,456

 Contract liabilities

16

69,954

83,169

 Invoice discounting

16

1,992

10,735

 Loans

16

1,265,059

5,240

 Total current liabilities

 

2,594,676

1,180,422

 

 

 

 

 Total liabilities

 

2,661,020

2,394,588

 

 

 

 

 Total equity and liabilities

 

3,515,268

5,115,275

 

 

COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019

 

 

 

 

 

 

 

 

31 December

31 December

 

 

2019

2018

 

 

 €

 

Note

 

 

 Assets

 

 

 

Non-current assets

 

 

 

Investments in subsidiaries

 

519,897

10,733,683

 Total non-current assets

 

519,897

10,733,683

 

 

 

 

 Current assets

 

 

 

 Other receivables

13

11,790

12,703

 Prepayments

 

26,599

23,857

 Intragroup receivables

13

43,088

974,624

 Cash and cash equivalents

14

521,713

221,540

 Total current assets

 

603,190

1,232,724

 

 

 

 

 Total assets

 

1,123,087

11,966,407

 

 

 

 

 

 

 

 

 Equity 

 

 

 

 Share capital

18

608,689

560,859   

 Share premium

18

13,692,119

12,558,434

 Merger reserve

18

658,279

658,279

 Foreign currency reserve

18

(7,746)

(7,746)

 Retained earnings

18

(14,046,739)

(1,891,110)

 Total equity

 

904,602

11,878,716

 

 

 

 

 

 

 

 

 Current liabilities

 

 

 

 Trade payables

16

198,485

67,691

 Other payables and accruals

16

20,000

20,000

 Total liabilities

 

218,485

87,691

 

 

 

 

 Total equity and liabilities

 

1,123,087

11,966,407

 

 

 

 

 

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2019

 

 

 

 

 

 

 

Year ended

31 December 2019

Year ended

31 December 2018

 

Notes

 €

 €

 

 

 

 

 Loss for the period before taxation

 

(3,291,397)

(913,408)

 

 

 

 

 Adjustments for:

 

 

 

 Finance expenses

6

190,889

269,925

 Amortisation

 

267,317

189,557

 Depreciation

 

52,411

64,078

 Received tax credit

 

120,186

66,095

 Foreign exchange losses

 

3,085

(84,759)

 Share option and warrant costs

 

27,868

26,443

 

 

(2,629,641)

(382,069)

 

 

 

 

 Movements in working capital

 

 

 

 Changes in inventory

 

(292,565)

12,611

 Changes in receivables

 

144,164

(285,731)

 Changes in prepayments

 

38,905

-

 Changes in deposits

 

21,305

-

 Changes in trade payables

 

552,426

(552,147)

 Changes in deferred revenue

 

(13,214)

76,453

 Changes in warranty provisions

20

(17,252)

6,218

 Changes in other payables and provisions

 

447,972

263,442

 Cash flow from operations

 

(1,747,900)

(861,223)

 

 

 

 

 Investing activities

 

 

 

 Payments for intangible assets

10

(528,278)

(415,456)

 Payments for tangible assets

11

(3,427)

(68,125)

 Grants received

10

50,824

108,779

  Cash flow from investing activities

 

(480,881)

(374,802)

 

 

 

 

 Financing activities

 

 

 

 Proceeds from issue of share capital

 

1,315,342

2,500,877

 Costs associated with the issue of share capital

 

(133,827)

(193,199)

 Reduction from invoice discounting

 

(8,743)

(110,474)

 (Decrease)/Increase in restricted cash balances

 

158,138

(283,446)

 Repayment of loans

 

(5,240)

(4,579)

 Interest paid

 

(55,878)

(66,537)

 Cash flow from financing activities

 

1,269,792

1,842,642

 

 

 

 

 Net increase/(decrease) in cash and cash equivalents

 

(958,989)

606,617

 Exchange differences

 

210

(1,317)

Cash and cash equivalents at the beginning of the year

 

 

1,721,803

1,116,503

 

 

 

 

 Cash and cash equivalents at the end of the year

 

14

763,024

1,721,803

 

 

 

 

 

 

 

 

 

COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2019

 

 

 

 

 

Notes

Year ended

31 December 2019

Year ended

31 December 2018

 

 

 €

 

 

 

 

 Loss for the period before taxation

 

(12,183,497)

(284,906)

 

 

 

 

 Adjustments for:

 

 

 

 Finance Income

 

(30,953)

(18,065)

 Write down of investment in subsidiary

 

11,887,213

-

 Share option and warrant costs

 

27,868

26,443

 

 

(299,369)

(276,528)

 

 

 

 

 Movements in working capital

 

 

 

 Changes in receivables

 

913

(523)

 Changes in prepayments

 

(2,743)

647

 Changes in loans to subsidiary entity

 

962,489

(680,259)

 Changes in trade payables

 

130,795

28,970

 Changes in other payables and provisions

 

-

-

 Cash flow from operations

 

792,085

(927,693)

 

 

 

 

Investing activities

 

 

 

 Additional investment in subsidiary undertaking

 

(1,673,427)

(1,339,172)

 Cash flow from investing activities

 

(1,673,427)

(1,339,172)

 

 

 

 

 Financing activities

 

 

 

 Proceeds from issue of share capital

 

1,315,342

2,500,877

 Costs associated with the issue of share capital

 

(133,827)

(193,199)

 Cash flow from financing activities

 

1,181,515

2,307,678

 

 

 

 

Net decrease in cash and cash equivalents

 

300,173

40,813

Cash and cash equivalents at the beginning of the year

 

221,540

180,727

 

 

 

 

 Cash and cash equivalents at the end of the year

14

521,713

221,540

 

 

 

 

 

 

 

 

 

CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2019

 

Share
Capital

Share
Premium

Merger reserve

Foreign currency reserve

Accumulated Losses

Total

 

Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

     530,543

10,281,073

2,910,866

(19,590)

(12,521,228)

1,181,664

 

 

 

 

 

 

 

New shares issued

30,316 

2,470,560

-

-

-

2,500,876

Costs associated with capital raise

 

-

 

(193,199)

 

-

 

-

 

-

 

(193,199)

Share option and warrant costs

-

-

-

-

26,443

26,443

Transaction with owners

30,316

2,277,361

-

-

26,443

2,334,120

Loss for the year

 

-

 

-

 

-

 

-

 

(792,972)

 

(792,972)

Other comprehensive gains

-

-

-

(2,125)

-

(2,125)

Total comprehensive loss

-

-

-

(2,125)

(792,972)

(795,097)

 

 

 

 

 

 

 

At 31 December 2018

560,859

12,558,434

2,910,866

(21,715)

(13,287,757)

2,720,687

 

 

 

 

 

 

 

New shares issued

47,830 

1,267,512

-

-

-

1,315,342

Costs associated with capital raise

-

 (133,827)

-

-

-

 (133,827)

Share option and warrant costs

-

-

-

-

27,870

27,870

Transaction with owners

47,830

1,133,685

-

-

27,870

1,209,385

 

 

 

 

 

 

 

Loss for the year

-

                  -

-

-

(3,078,909)

(3,078,909)

Other comprehensive gains/(loss)

-

-

-

3,085

-

3,085

Total comprehensive loss

-

-

-

3,085

(3,078,909)

(3,075,824)

At 31 December 2019

608,689

13,692,119

2,910,866

(18,630)

(16,338,796)

854,248

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

530,543

10,281,073

658,279

(7,746)

(1,632,648)

9,829,501

 

 

 

 

 

 

 

New shares issued

30,316 

2,470,560

-

-

-

2,500,876

Costs associated with capital raise

 

-

 

(193,199)

 

-

 

-

 

-

 

(193,199)

Share option and warrant costs

-

-

-

-

26,443

26,443

Transaction with owners

30,316

2,277,361

-

-

26,443

2,334,120

Loss for the year

 

-

 

-

 

-

 

-

 

(284,905)

 

(284,905)

Total comprehensive loss

-

-

-

-

(284,905)

(284,905)

 

 

 

 

 

 

 

At 31 December 2018

560,859

12,558,434

658,279

(7,746)

(1,891,110)

11,878,716

 

 

 

 

 

 

 

New shares issued

47,830 

1,267,512

-

-

-

1,315,342

Costs associated with capital raise

 

-

 

(133,827)

 

-

 

-

 

-

 

(133,827)

Share option and warrant costs

-

-

-

-

27,868

27,868

Transaction with owners

47,830

1,133,685

-

-

27,868

1,209,383

 

 

 

 

 

 

 

Loss for the year

-

                  -

-

-

(12,183,497)

(12,183,497)

Total comprehensive loss

-

-

-

-

(12,183,497)

(12,183,497)

 

At 31 December 2019

608,689

13,692,119

658,279

(7,746)

(14,046,739)

904,602

 

 

 

 

 

 

 

                           

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018

 

1. General information

The Company is a public limited company domiciled in the United Kingdom and incorporated under registered number 09024532 in England and Wales. The Company's registered office is 3 More London Riverside, London, SE1 2AQ.

The Group was formed when the Company acquired on 29 August 2014 the entire share capital of Windar Photonics A/S, a company registered in Denmark though the issue of Ordinary Shares.

The financial information set out below does not constitute the company's statutory accounts for 2019 or 2018. Statutory accounts for the years ended 31 December 2019 and 31 December 2018 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for the years ended 31 December 2019 and 31 December 2018 were unqualified, drew attention to a material uncertainty related to going concern by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Statutory accounts for the year ended 31 December 2018 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2019 will be delivered to the Registrar in due course.

 

2. Going Concern

        

The consolidated financial statements have been prepared assuming the Group will continue as a going concern. Under the going concern assumption, an entity is anticipated to continue in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations.

 

Based on the Group's latest trading expectations and associated cash flow forecasts, the directors have considered the cash requirements of the Group. The directors are confident that based on the Group's forecasts and projections, taking account of possible changes in trading performance, the €0.4m Covid loan approved post year end and the post year end share placing which is in progress. it is appropriate to continue to adopt the going concern basis of accounting in preparing these financial statements.

 

However, Management has noticed non-payments of customer receivables in 2020 primarily from customers in the Asian region due to what Management expect also to be related to the Covid-19 situation and project delays at our customer's end-user level. Combined with the general consequences described above such eventual non-payments illustrates the current uncertainties when projecting a 12 months outlook.

 

The current cash flow estimate for the coming 12 months does include the following important assumptions:

 

        No cash in-flow from any of receivables written off in the 2019 accounts

        Only revenue and payments from customers based upon confirmed written contracts and agreements

        Unchanged operation cost base

 

However, Management highlight the risk that the non-payment by customers can have a severely negative impact both long term but also short term.

 

In the event, for the reasons stated above the timing of the forecast revenue and customer payments were not to be achieved in the periods expected, the Group may need to seek additional funding to cover those periods where there might be a potential shortfall.

Management has to highlight the very high levels of uncertainties given the various circumstances, which indicates the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.  The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern. 

Post year end, Management has actively sought alternative financing arrangements due primarily to the Covid pandemic situation, both to address the potential short-term working capital issues and to provide the longer-term liquidity required to allow the Company to adjust to longer order and delivery cycles. Consequently, the Company has been approved for a Covid-19 loan from the Danish Growth Fund for the amount of €0.4 million and postponements of repayments on the existing Growth Fund loan in 2021 of €0.15 million where repayments will now commence from January 2022. Management has further initiated a process of undertaking a share placing of £0.4m (before expenses) which is subject to shareholder approval and certain events or conditions.

 

         3. Basis of preparation

 

The consolidated financial statements comprise the consolidated financial information of the Group as at 31 December 2019 and are prepared under the historic cost convention, except for the following:

·      share based payments and share option and warrant costs

The principal accounting policies adopted in the preparation of the financial information are set out below.

 

The financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively "IFRSs") issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs").

 

The acquisition of the subsidiary in 2014 was deemed to be a business combination under common control as the ultimate control before and after the acquisition was the same. As a result, the transaction is outside the scope of IFRS 3 and has been included under the principles of merger accounting by reference to UK GAAP.

         

 

4. Revenue

Revenue from contracts with customers:

 

Year ended
31 December 2019

Year ended
31 December 2018

 

Sale of product and installation

1,129,255

3,492,775

Rendering of services

48,642

7,092

 

 

 

Revenue

1,177,897

3,499,867

 

Disaggregation of revenue

 

The disaggregation of revenue from contracts with customers is as follows:

 

 

Year ended
31 December 2019

Year ended
31 December 2018

 

WindEye™

1,070,231

 

3,272,525

WindVision™

 

59,018

220,250

Rendering of services

48,648

7,092

 

 

 

Revenue

1,177,897

3,499,867

 

 

Deferred revenue of €69,954 (2018: €83,169) relates to performance obligation under contracts that have not yet been completed and are expected to be met in 2020.

 

 

5.Segment information

 

          Operation segments are reported as reported to the chief operation decision maker.

 

The Group has one reportable segment being the sale of LiDAR Wind Measurement and therefore segmental results and assets are disclosed in the consolidated income statement and consolidated statement of financial position.

 

In 2019, three customers accounted for more than 10 per cent of the revenue each (2018: two customers). The total amount of revenue from these customers amounted to €1,028,380, 88 per cent of the total revenue (2018: €3,145,168 or 90 per cent of the revenue)

          Revenue by geographical location of customer:

 

 

Year
ended
31 December 2019

Year
ended
31 December 2018

Europe

256,501

                   91,891

Americas

-

85,437

China

919,658

3,293,434

Asia (excluding China)

1,738

29,105

Revenue

1,177,897

3,499,867

 

Geographical information

The parent company is based in the United Kingdom. The information for the geographical area of non-current assets is presented for the most significant area where the Group has operations being Denmark.

 

 

As at 31 December 2019

As at 31 December 2018

 

 

 

 

 

 

Denmark

 

1,270,753

1,170,617

 

 

1,270,753

1,170,617

 

 

 

 

Non-current assets for this purpose consist of property, plant and equipment and intangible assets.

 

 

6. Finance income and expense

 

 

 

Finance expense

 

 

 

 Year
ended
31 December 2019

 Year
ended
31 December 2018

Foreign exchange losses

 

 

(39,124)

(82,634)

 

Interest expense on financial liabilities measured at amortised cost

(151,765)

(187,291)

Finance expense

(190,889)

(269,925)

             

 

 

7. Income tax

 

 

Year ended
31 December 2019

Year ended
31 December 2018

 

 

 

(a)

The tax credit for the year:

 

 

 

 

UK Corporation tax

-

-

 

 

Foreign tax credit

(212,531)

(120,436)

 

 

Paid tax

43

-

 

 

 

(212,488)

(120,436)

 

 

 

 

 

 

(b)

Tax reconciliation

 

 

 

 

Loss on ordinary activities before tax

(3,291,397)

(913,408)

 

 

Loss on ordinary activities at the UK standard rate of corporation tax 19% (2018: 19%)

 

 

 

 

(625,365)

(173,548)

 

 

Effects of:

 

 

 

 

Expenses non-deductible for tax purposes

3,108

14,141

 

 

Depreciation for the year (less than)/in excess of capital allowances

-

(20,386)

 

 

Unrecognised tax losses

533,772

95,367

 

 

Different tax rates applied in overseas jurisdictions

(125,599)

(36,010)

 

 

Exchange rate differences

1,596

-

 

 

Tax credit for the year

(212,488)

(120,436)

 

 

 

 

 

 

 

The tax credit is recognised as 22 per cent. (2018: 22 per cent) of the company's deficit that relates to research and development costs. Companies in Denmark, who conduct research and development and accordingly experience deficits can apply to the Danish tax authorities for a payment equal to 22 per cent. (2018; 22 per cent) of deficits relating to research and development costs up to DKK 25 million.

 

(c) Deferred tax - Group

In view of the tax losses carried forward and other timing differences there is a deferred tax asset of approximately €2,549,025 (2018: €2,100,238) which has not been recognised in these Financial Statements, given uncertainty around timing and availability of sufficient taxable profits in the relevant Company.

 

(d) Deferred tax - Company

In view of the tax losses carried forward and other differences there is a deferred tax asset of approximately €281,199 (2018: €205,968) which has not been recognised in these Financial Statements, given uncertainty around timing and availability of future profit against which the losses will be able to be used.

 

All taxes recognized in the statement of Comprehensive income are denominated in DKK. 

 

 

8. Loss per share


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

 

Year ended
31 December
2019

Year ended
31 December
2018

 

Loss for the year

(3,078,909)

(792,972)

 

 

 

Weighted average number of ordinary shares for the purpose of basic earnings per share

47,614,917

43,002,600

Basic loss and diluted, cents per share

(6.7)

(1.8)

 

          There is no dilutive effect of the warrants (note 18) as the dilution would reduce the loss per share.

 

 

9. Dividends

 

          No dividends were proposed by the Group during the period under review (2018: €Nil).

 

 

10. Intangible assets

Group

 

 

Development projects

Cost

 

 

 

At 1 January 2018

 

 

2,691,069

Additions - internally developed

 

 

415,456

Grants received

 

 

(108,779)

Exchange differences

 

 

(8,651)

At 31 December 2018

 

 

2,989,095

Additions - internally developed

 

 

528,277

Grants received

 

 

(50,824)

Exchange differences

 

 

(1,190)

At 31 December 2019

 

 

3,465,358

Accumulated amortisation

 

 

 

At 1 January 2018

 

 

1,822,475

Charge for the year

 

 

189,557

Exchange differences

 

 

(5,825)

At 31 December 2018

 

 

2,006,207

Charge for the year

 

 

267,317

Exchange differences

 

 

(773)

At 31 December 2019

 

 

2,272,751

Net carrying value

 

 

 

At 1 January 2018

 

 

868,594

At 31 December 2018

 

 

982,888

At 31 December 2019

 

 

1,192,607

 

The Group has received Research and Development Grants from Energiteknologisk Udvikling og Demonstration Projekt of €81,216 (2018: €108,779) in respect of the capitalised research and development. At the end of the year a new EUDP project was granted in the amount of €508,722 which can be claimed in the coming three years (2018: €Nil).

 

The company's development projects relate to the development of improved performance and functionality, improved components etc. in the company's products.

Measurement of the development projects are based on realization of the company's business plan and budgets, particularly realization of expected growth in revenue.

 

11. Property, plant & equipment

Group

 

 

Plant and equipment

Cost

 

 

 

At 1 January 2018

 

 

294,048

Additions

 

 

68,125

Disposed

 

 

(143,069)

Exchange differences

 

 

(763)

At 31 December 2018

 

 

218,341

Additions

 

 

3,427

Disposed

 

 

-

Exchange differences

 

 

(79)

At 31 December 2019

 

 

221,689

Accumulated depreciation

 

 

 

At 1 January 2018

 

 

186,964 

Charge for the year

 

 

64,078

Disposed

 

 

(143,069)

Exchange differences

 

 

(420)

At 31 December 2018

 

 

107,553

Charge for the year

 

 

52,411

Disposed

 

 

-

Exchange differences

 

 

(75)

At 31 December 2019

 

 

159,889

Net carrying value

 

 

 

At 1 January 2018

 

 

107,084

At 31 December 2018

 

 

110,788

At 31 December 2019

 

 

61,800

 

 

12. Inventory

 

Group

 

As at
31 December 2019

As at
31 December 2018

 

Raw material

417,481

364,090

Work in progress

392,374

311,420

Finished goods

209,709

51,489

Inventory

1,019,564

726,999

 

 

 

 

The cost of inventory sold and recognised as an expense during the year was €639,555 (2018: €1,268,040).

 

13. Trade and other receivables

 

 

Group

Company

 

As at
31 December
2019

As at
31 December
2018

As at
31 December
2019

As at
31 December
2018

Trade receivables

623,458

685,679

-

-

Less; provision for impairment of trade receivables

(511,755)

(47,541)

-

-

Trade receivables - net

111,703

638,138

-

-

Receivables from related parties

-

-

43,088

974,624

 

 

 

 

 

Total financial assets other than cash and cash equivalents classified at amortised costs

111,703

638,138

43,088

974,624

 

 

 

 

 

 

 

 

 

 

Tax receivables

212,428

120,209

-

-

 

 

 

 

 

Other receivables

84,305

166,264

11,790

12,703

Total other receivables

296,733

286,473

11,790

12,703   

Total trade and other receivables

408,436

924,611

54,878

987,327

 

 

 

 

 

Classified as follows:

 

 

 

 

Current Portion

408,436

924,611

54,878

  987,327

 

 

 

 

 

At the end of 2019 the group had debtors, primarily in China, where in 2020 there were non-payments from these customers. It has not been possible to obtain clarification of the possibility of collection of these receivables before approving the annual report.

 

Due to the general uncertainties, Management have made the judgement to take a worst case approach and made a full provision with the hope that at least part of the provision can be recovered in the future.

 

The carrying value of trade and other receivables classified at amortised cost approximates fair value.

 

 

 

More than
 30 days
past due

More than
60 days 
past due

More than
120 days 
past due

Total
 

Gross carrying amount                                                                       0                       0             127,320       127,320

Loss provision                                                                                       -                        -             (93,694)       (93,694)

Net carrying amount                                                                          0                       0                33,326         33,326

Trade and other receivables represent financial assets and are considered for impairment on an expected credit loss model. These assets have historically had immaterial levels of bad debt and are with credit worthy customers, and as the Group trades with a concentrated number of customers and utilises export credit facilities the Group has reviewed trade receivables on an individual basis. Additionally, the Group continues to trade with the same customers and therefore the future expected credit losses have been considered in line with the past performance of the customers in the recovery of their receivables. The implementation of IFRS 9 has therefore not resulted in a change to the impairment provision in the current or prior year.

 

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables. The expected loss rates are based on the Group's historical credit losses experienced over the three year period prior to the period end. The historical loss rates are then adjusted for current and forward-looking information on factors affecting the Group's customers including the area of operations of those debtors and the advancing market for wind power and the Group's products. The assessment of the expected credit risk for the year has not increased, when looking at the factors affecting the risk noted above.

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

                                                                                                                                                                                        Other classes of financial assets included within trade and other receivables do not contain impaired assets.

 

Of the net trade receivables €49,750 (2018: €13,096) was pledged as security for the invoice discounting facility. The Group is committed to underwrite any of the debts transferred and therefore continues to recognise the debts sold within trade receivables until the debtors repay or default. Since the trade receivables continue to be recognised, the business model of the Group is not affected. The proceeds from transferring the debts of are included in other financial liabilities until the debts are collected or the Group makes good any losses incurred by the service provider.

 

 

14. Cash and cash equivalents

 

For the purpose of the cash flow statement, cash and cash equivalents comprise the following balances with original maturity less than 90 days:

 

 

 

 

 

 

 

 

Group

Company

 

As at
31 December
2019

As at
31 December
2018

As at
31 December
2019

As at
31 December
2018

 

 

 

 

 

        Cash at bank

763,024

1,721,803

521,713

221,540

 

 

 

 

 

 

                   

 

The Group has restricted cash balances of €360,000 (2018: € 518,138) but a provision of the full amount is made at the end of the year due to no payment from the customer in 2020. The restricted cash balances relate to transactions entered into between the Group and external financial parties. When EKF has credit approved a customer EKF, issues a non-recourse payment guarantee to an external financial party typically of 80% to 90% of the face value of the transaction. Upon shipment of the products the Group then sells the invoice to the external financial party at face value subject to depositing and pledging a cash amount equal to the difference between the face value of the invoice and the EKF guarantee. When the customer pays typically one year later, the full invoice amount to the financial party, the deposit is paid in full to the Group.

 

 

15. Notes supporting statement of cash flows

 

Non-current loans and borrowings

Current loans and borrowings

 

Invoice discounting


Total

As at 1 January 2018

1,023,809

4,579

121,208

1,149,596

Repayment of loans

-

(4,579)

-

(4,579)

Repayment of Invoice Discounting

 

 

(110,473)

(110,473)

Accrued interests on non-current loans

120,754

-

 

120,754

Loans and borrowings classified as non-current in previous period becoming current in this period

(5,250)

5,250

-

-

Foreign exchange rate differences

(3,569)

(10)

-

(3,579)

 

 

As at 31 December 2018

 

 

1,135,744

 

 

5,240

 

 

10,735

 

 

1,151,719

Repayment of loans

-

(5,240)

 

-

(5,240)

Repayment of Invoice Discounting

-

-

 

(8,743)

 

(8,743)

Accrued interests on non-current loans

135,011

-

 

-

135,011

Loans and borrowings classified as non-current in previous period becoming current in this period

(1,265,059)

1,265,059

 

-

-

Foreign exchange rate differences

(522)

-

 

-

(522)

 

 

As at 31 December 2019

 

 

5,174

 

 

1,265,059

 

 

1,992

 

 

1,272,225

 

16. Trade and other payables

 

Group

Company

 

As at
31 December
2019

As at
31 December
2018

As at
31 December
2019

As at
31 December
2018

Invoice discounting

1,992

10,735

-

-

Trade payables

1,045,792

492,822

198,485

67,691

Other payables and accruals

211,879

588,456

20,000

20,000

Current portion of Nordea loan

1,265,059

5,240

-

-

Total financial liabilities, excluding 'non-current' loans and borrowings classified as financial liabilities measured at amortised cost

 

 

2,524,722

 

1,097,253

 

 

218,485

 

 

87,691

Deferred revenue

69,954

83,169

-

-

Total trade and other payables

2,594,676

1,180,422

218,485

87,691

 

 

 

 

 

Classified as follows:

 

 

 

 

Current Portion

2,594,676

1,180,422

218,485

87,691

 

 

 

 

 

          The invoice discounting arrangement is secured upon the trade debtors to which the arrangement relates.

 

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.

 

17.      Borrowings

 

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

 

Group

Carrying and Fair value

Loans

As at
31 December
2019

As at
31 December
2018

Growth Fund

1,259,499

1,124,914

Current portion of Growth Fund

(1,259,499)

-

Nordea Ejendomme

10,734

16,070

Current portion of Nordea Loan

(5,560)

(5,240)

Total non-current financial liabilities measured at amortised costs

5,174

1,135,744

 

The Growth Fund borrowing from the Danish public institution, Vækstfonden, initially bore interest at a fixed annual rate of 12 per cent with a full bullet repayment in June 2020. As announced on June 29, 2020 terms for the borrowing was renewed whereafter the interest rate was reduced to 7 percent p.a. and the loan to be repaid in equal quarterly instalments over the period from 1 July, 2021 until 1 July, 2025. The terms have been further amended in October 2020, whereby the instalments in the second half of 2021 have been extended to the second half of 2025 whereafter the quarterly instalments are due on 1 January 2022 until 1 January 2026.

 

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 in November 2021 and carries a fixed interest rate of 6 per cent.

 

          Both loans are denominated in Danish Kroner.

         

          The Company had no borrowings.

 

 

 

 

 

 

 

 

 

 

18. Share capital

On December 12 2019 the company issued 4,076,348 ordinary shares of 1 pence each for a cash consideration at £0.275 per share. On 12 July 2018 the Company issued 2,700,000 ordinary shares of 1 pence each for cash consideration at £0.82 per share.

 

Authorised

 

2019

 

2019

Authorised

 

2018

 

 2018

 

 

 

 

 

Shares at beginning of reporting period

 44,508,369

 560,859

41,808,369

530,543

Issue of share capital

4,076,348

47,830

2,700,000

30,316

Shares at end of reporting period

48,584,717

608,689

44,508,369

560,859

           

                                                                                                                                                              
On 3 January and 8 January in 2020 the company completed the 12 December, 2019 capital raise by issuing an additional 1,166,363 ordinary shares of 1 pence each for a cash consideration at £0.275 per share. 

 

Number of shares issued and fully paid

2019

2019

Number of shares issued and fully paid

2018

2018

 

 

 

 

 

Shares at 1 January 2019

 44,508,369

 560,859

41,808,369

 530,543

 

 

 

 

 

Issue of shares for cash

4,076,348

47,830

2,700,000

30,316

 

 

 

 

 

Shares at 31 December 2019

48,584,717

44,508,369

560,859

 

          At 31 December 2019 the share capital comprises 49,626,080 shares of 1 pence each.

 

          Warrants and share options

Warrants and share options are granted to Directors and employees.

                                                                                                                                                                                      195,000 new share options or warrants were granted in 2019. The options were issued at a strike price of £1 a third vesting on each anniversary for the first three years. The options have a 10-year life. The price of the share at the time of issue was £0.24. The risk-free rate was 1.15%. The expected volatility is based on historical volatility of the AIM market over the last two years and is estimated to be 40%.

 

The share options issued in 2017 are valued using the Black-Scholes pricing model and no performance conditions are included in the fair value calculations. The options were issued at a strike price of £1 a third vesting on each anniversary for the first three years whereafter, the options have a 10-year life. The price of the share at the time of issue was £0.88. The risk-free rate was 1.15%. The expected volatility is based on historical volatility of the AIM market over the last two years and is estimated to be 40%.

 

The average share price during the year was 50.00 pence (2018: 88.25 pence). At the year end the Company had the following warrants and options outstanding:

 

 

 

 

Number of warrants and options

 

 

 

 

At
31 December

 

 

At
 31 December


Exercise price

 

 

 

2018

Granted

Lapsed

2019

(£ pence)

Exercise date

 

 

 

 

 

 

 

 

 

Warrants

1,520,956

-

-

1,520,956

39.07

31/12/19 to 31/12/21

 

Options

362,500

195,000

-

557,500

100.00

16/11/18 to 01/03/32

 

 

1,883,456

-

-

1,883,456

 

 

 

 

 

 

 

 

 

 

                       

The number of options and warrants exercisable at 31 December 2019 is warrants 1,520,956 (2018: 1,520,956) and options 241,666 (2018: 120,833).

 

The weighted average remaining contractual life for the options outstanding as at 31 December 2019 is 10.76 years (2018: 11.01 years).

The warrants have a remaining life of two years (2018: 1 years).

 

19. Operating Leases

 

The total future value of the minimum lease payment is due as follows:

 

 

 

 

2019

2018

 

 

 

Not later than one year

 

 

75,967

64,485

Later than one year and not later than five years

 

 

-

-

 

 

 

75,967

64,485

 

 

 

 

 

 

All leasing commitments are in respect of property and cars leased by the Group. The terms of property leases vary from country to country, although they all tend to be tenant repairing with rent reviews every 2 to 5 years. The Company has not entered any leases in 2020 with maturity longer than 6 months.

 

 

20. Warranty provision

 

 

 

 

2019

2018

 

 

 

 

 

Provision at the beginning of reporting period

 

 

78,422

72,205

 

Provision charged to the profit and loss account

 

 

(9,995)

9,439

Utilised in year

 

 

(7,240)

(2,991)

Foreign exchange rate movements

 

 

(196)

(231)

 

 

 

61,170

78,422

 

 

The Group typically provides a two-year warranty period to customers on products sold. Warranty expenses/(income) charged to the Statement of Comprehensive Income amounted to €(9,995) (2018: €9,439) corresponding to a warranty cost percentage of (0.4)% (2018: 0.2%) relative to the prior two years revenue. However, due to the early business stage of the Group and the uncertainty following this the Group has adopted a policy to accrue a 4% provision based on the prior two years deliveries calculated with the cost of goods sold at the end of the period. 

 

 

21. Related Party Transactions

 

Jørgen Korsgaard Jensen and Johan Blach Petersen are directors and shareholders of Wavetouch Denmark A/S (Wavetouch) and OPDI Technologies A/S (OPDI). Wavetouch has during the year rented office space from Windar Photonics A/S, the amount payable during the year to Windar was €32,145 (2018: €32,196). There were amounts outstanding at the year end to Wavetouch €167,527 (2018: €72,853). At the end of the year there were amounts outstanding to OPDI of € Nil (2018: € 31,426).

Intercompany transactions

At 31 December 2019 there exist an intercompany loan between Windar Photonics PLC and its subsidiary Windar Photonics A/S.

Windar Photonics PLC has a receivable at 43,088 (2018: €974,624). Interest added during 2019 amounts to €35,396 (2018: €28,512).

The interest rate for 2019 is Libor 0.5% + 2.5% - equal to 3% p.a. (2018: Libor 0.5% + 2.5% - equal to 3% p.a.).

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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