Windar Photonics Plc (LON:WPHO) has recently completed a subscription raising £1.25m (gross) at 82p/share. The funds from the placing will be used to support growth during H217. Our estimates and valuation remain suspended until the interims, when there should be more clarity on test programmes with independent power providers (IPPs) and wind turbine OEMs converting to volume sales.
The subscription is timely, given the strong growth achieved during H117. The recent trading update noted revenue growth of 62% year-on-year to €1.3m, which is higher than the €1.2m revenue reported for the whole of FY16. This revenue growth has been driven by demand from IPPs, including operators in Canada, China, France, India and Mexico. Engagement with IPPs has intensified following management’s decision a year ago to develop its global network of distributors rather than invest in the direct salesforce. Windar now has 14 distributors addressing the IPP retrofit market. The cash raised strengthens the balance sheet ahead of a potential ramp-up in deliveries if some of these retrofit test projects with IPPs convert to volume roll-outs across wind farms and if the ongoing test programmes with wind turbine OEMs complete successfully.
With regard to cash burn, the cost savings made during H216 that were discussed in our June note have helped the company approach EBITDA break-even. EBITDA losses during H117 were cut from €1.4m in H116 to only €0.4m in H117. Assuming minimal working capital and capital expenditure during H117, we estimate that the group now has c €1.6m cash following the subscription.
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