Windar Photo Regulatory News (WPHO)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE UK VERSION OF REGULATION (EU) NO 596/2014 WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

Windar Photonics plc

("Windar" or the "Company")

Final Results and Notice of AGM

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 final audited results for the year ended 31 December 2022 ("FY22").

Notice of Annual General Meeting

The Company is pleased to confirm that its Annual General Meetings ("AGM") will be held at the offices of WH Ireland Limited, 24 Martin Lane, London, EC4R 0DR at 1.00 p.m. on 11 July 2023. 

The Company will include all valid proxy votes (whether submitted electronically or in hard copy form) in its polls at the AGM and the Chair of the meeting will call for a poll on each resolution. The Company accordingly requests that shareholders submit their proxy votes in respect of the resolutions as set out in the Notice of the AGM, electronically or by post in advance, in accordance with the instructions set out in the Notice of the AGM.

Shareholders should submit their votes via proxy as early as possible, and shareholders are requested to appoint the Chairman of the meeting as their proxy. If a shareholder appoints someone else as their proxy, that proxy will not be able to attend the AGM in person or cast the shareholder's vote.

Copies of the Annual Report and Accounts for the year ended 31 December 2022 and the Notice of the Annual General Meeting are available from the Company's website - www.windarphotonics.com

Copies of the Annual Report and Accounts for FY22 and the Notice of the Annual General Meeting will be posted to shareholders today and will be available from the Company's website - www.windarphotonics.com

For further information, please contact: 

Windar Photonics plc Jørgen Korsgaard Jensen, CEO +45 2423 4930 

WH Ireland Limited Chris Fielding, James Bavister (Corporate Finance) +44 20 7220 1666 

The person responsible for arranging the release of this announcement on behalf of the Company is Jørgen Korsgaard Jensen, Chief Executive Officer of the Company.

About Windar:

Windar Photonics is a technology group that develops cost-efficient and innovative Light Detection and Ranging ("LiDAR") optimization 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

Despite a very positive underlying business development in respect of the Group's general product offerings, the year 2022 turned out to be a very challenging year once again, heavily impacted by the general COVID-19 pandemic. During parts of the first half of 2022, the Group's Shanghai based subsidiary handling substantial parts of sourcing and logistic tasks within the Group, was effectively locked down. This consequently had a severely negative impact on production and deliveries from our assembly facility in Denmark in 2022.

Despite being constrained by additional COVID-19 related impacts, in relation to specific electronic component shortages in the market, the Group achieved full year revenue of €1.9 million, an increase of 236% compared to 2021 (€0.6 million). Most of this revenue was earned in the second half. Furthermore, despite the general challenges and continued component shortages continuing during the second half of 2022, the Group moved towards an EBITDA breakeven level in the second half of 2022 (loss of €0.04 million), based on recognized revenues of €1.5 million in the period. 

Gross Profit for the year amounted to €0.9 million, an increase of 112% compared to 2021 (€0.4 million), corresponding to a Gross Margin in 2022 of 51% compared to 81% in 2021. The 2022 Gross Margin was restored to historical levels, whereas the Gross Margin in 2021 was impacted by exceptional items. The underlying Gross Margin in 2022 was achieved despite the Group experiencing substantial cost increases, related to logistical and component costs. The change in the product mix compensated for these cost increases. Overall Costs of Goods Sold (COGS) for 2022 increased by approximately 5%, compared to COGS in 2021.This meant that the substantial cost savings, related to the introduction of our One Unite platform in 2021, were eliminated in 2022. 

Despite the overall challenges in 2022, the year has also shown some very encouraging developments in relation to the fundamentals of the product offerings of the Group. The combined WindEye™ and WindTimizer products provide a unique "Plug and Play" turbine integration solution, focused on increasing electricity generation from existing installed wind turbines. These have become even more valuable, due to the generally increased price levels of energy during the year, and further by the increased focus on the need to move towards more renewable energy sources in general. Due to these developments, the Group's order backlog increased by the end of year to €4.3 million (2021: €2.6 million). The product mix continues to be favourable compared to the order backlog entering 2022.

Overall EBITDA loss for the year was reduced to €0.8 million in 2022 compared to a loss in 2021 of €1.1 million. The EBITDA loss in 2022 was primarily realised during the first half of 2022, whereas the Group progressed toward an EBITDA break-even position during the second half of 2022.

During 2022 the Group continued its strong development effort, both related to expanding current product offerings and new deployment of our general Lidar technology. In the short term, one of the most important developments was related to our WindTimizer products, which now also cover an analogue interface for turbine integrations. This expands the potential total market for our plug and play integration solution within the Retro-fit market segment. Our participation in the drone-based CO2 emissions project Khaosguard is progressing well and initial milestones such as preliminary in field CO2 measurements have successfully been demonstrated.

Financial Overview

Revenue during the year increased 236% to €1.9 million (2021: €0.6 million). Gross profit was up 112% (2021: (36%) to €0.9 million (2021: €0.4 million).

During the year, administrative expenses excluding depreciation amortisation and warrant cost increased to €1.76 million compared to €1.58 million in 2021, relating to development projects, following the increased revenues.

Net loss for the year before taxes and exceptional expenses, decreased to €1.2 million from €1.4 million in 2021, which included depreciation, amortisation, and warranty costs of €0.2 million (2021: €0.3 million) in aggregate.

The Group held cash balances at the end of the year of €1.4 million (2021: €0.04 million) and trade receivables at the end of the year amounted to €0.4 million (2021: €1.0 million). During the year the Company raised €2.4 million before expenses through the issue of share capital.

The Group has capitalised its continued cost of investment in technology during the year of €0.3 million in 2022 (2021: €0.7 million) before grants of €0.1 million (2021: €0.4 million).

Outlook 

Entering 2023 the Group had a strong order backlog of €4.3 million scheduled for delivery in 2023. In 2023 the Group has received additional orders scheduled for delivery in 2023 and further additional significant orders are currently being negotiated. Based on these developments the Group expects to realise a substantial revenue growth in 2023 compared to 2022.

In 2023 the Group expects to see a reduction of the average COGS compared to costs in 2022 supporting an expected modest Gross Margin increase in 2023.

Entering 2023, the production capacity of the Group was fully booked by customer orders for deliveries in the first half of 2023. Currently, the Group is focused on increasing capacity by at least 100% to be implemented mid-year 2023 and planning for a further doubling of capacity when entering year 2024.

In particular, considering the very unexpected challenges the COVID-19 pandemic brought upon us in the past two years, I would like to take the opportunity to thank our employees, partners and management in Denmark, China and UK for their efforts and loyalty to the Group in 2022.

BY ORDER OF THE BOARD ON JUNE 12, 2023

Johan Blach Petersen

Chairman

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2021

All activities relate to continuing operations.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022

COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022

COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022

CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

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 through the issue of Ordinary Shares.

2. Adoption of new and revised International Financial Reporting Standards

New and amended standards adopted by the Group and Company.

Several amendments and interpretations apply for the first time in 2022.

The above new and amended standards which apply for the first time for these 2022 financial statements have been assessed by the Directors and to the extent that they may be applicable, the Directors have concluded that none of these have had a material impact to the Group's and Company's financial statements.

Standards, amendments and interpretations issued and effective in 2022 but not relevant

There are no IFRSs or IFRIC interpretations that are effective and not relevant to the Group and Company's.

Standards, amendments and interpretations issued but not yet effective in 2022

There were a number of standards and interpretations which were in issue at 31 December 2022 but not effective for periods commencing 1 January 2022 and have not been adopted for these financial statements. The Directors have assessed the full impact of these accounting changes on the Company. To the extent that they may be applicable, the Directors have concluded that none of these pronouncements will cause material adjustments to the Group's and Company's financial statements. They may result in consequential changes to the accounting policies and other note disclosures. The new standards will not be early adopted by the Group and Company and will be incorporated in the preparation of the Group and Company financial statements from the effective dates noted below.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group and Company.

3. 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 on which basis the board is convinced the Company has sufficient cash flows for operations for the coming 12 months period.

However, as the Company foresee and plan for substantial growth in both 2023 and 2024 the cash flow projections rely on the precise execution of logistical plans within the entire supply chain. During the period, difficulty in obtaining supplies has had an impact on the group's ability to deliver on contracts or the Group has experienced delays in the start of assignments, which has had an impact on cashflows and could still impact future cashflows. It remains difficult to assess reliably whether there will be any further material disruption in the future which could adversely impact the group's forecast.

The risk related to the execution of the logistical plans is not only related to COVID-19 developments as seen in 2022 but also to the general performance of single suppliers whereby symmetry of deliveries to the Company has led and could still lead to over stocking and lack of deliveries to the final customers. Management is monitoring the supply chain developments on a daily basis, however any deviations could have a material impact, and as such the Board considers this risk to pose a materially uncertainty in respect of future cash flows in the Company, which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

4. Accounting policies

Basis of preparation

The consolidated financial statements comprise the consolidated financial information of the Group as at 31 December 2022 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 United Kingdom ("adopted IFRSs").

5. Revenue

Revenue from contracts with customers is split of products as follows:

Contract liabilities of €1,205,531 (2021: €951,606) relates to performance obligation under contracts that have not yet been completed and are expected to be met in 2023.

6. Loss from operations

Loss from operations is stated after:

1 Amortisation charges on the Group's intangible assets are recognised in the administrative expenses line item in the consolidated statement of comprehensive income.

Above loss specification excludes exceptional expenses in 2022 of €89,038 relating to solicitor and auditor costs related to the suspension of the Company in 2022.

7. 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 2022, one customer accounted for more than 25 per cent of the revenue (2021: two customers). The total amount of revenue from this customer amounted to €752,893 or 41 per cent of the total revenue (2021: €302,199 or 55 per cent of the revenue)

Revenue by geographical location of customer:

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.

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

8. Directors and employees

The Company has 4 employees (2021: 3), all being the Directors of the Company.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of Group, and are considered to be directors of the company.

The value of all elements of remuneration received by key management in the year was as follows:

9. Finance income/(expense)

10. Income tax

The tax credit is recognised as 22 per cent. (2021: 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. (2021; 22 per cent) of deficits relating to research and development costs up to DKK 25 million.

(a) Deferred tax - Group

In view of the tax losses carried forward and other timing differences there is a deferred tax asset of approximately €3,085,177 (2021: €2,948,012) which has not been recognised in these Financial Statements, given uncertainty around timing and availability of sufficient taxable profits in the relevant Company.

(b) Deferred tax - Company

In view of the tax losses carried forward and other differences there is a deferred tax asset of approximately €409,952 (2021: €389,814) 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. 

11. 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 outstanding share options (note 25) as the dilution would reduce the loss per share.

12. Dividends

No dividends were proposed by the Group during the period under review (2021: €Nil).

13. Investment in Subsidiaries

The subsidiaries of Windar Photonics Plc are as follows:

During the year the Company established Windar Denmark ApS and owns 100 per cent. of the issued share capital of Windar Denmark ApS (comprising shares of DKK 40,000 of 1 DKK each) with CVR number 43615947.

In November 2022 the Company transferred all outstanding shares in Windar Photonics A/S (CVR number 32157688) to Windar Denmark ApS. Following the transaction, the existing share capital in Windar Photonics A/S of DKK 9,380,392 (comprising A Shares of DKK 5,737,800 of 1 DKK each and B Shares of DKK 3,642,592 of 1 DKK each) were reduced to DKK 400,000 without any difference in share classes.

Windar Photonics A/S was incorporated on 28 December 2008 in Denmark and acquired by the Company in August 2014.

During the year the Company invested funds received from the share placing into subsidiaries, and a total transfer of funds of €769,445 was made during the year. A further capital contribution of €672,000 was made to Windar Denmark ApS during the year.

Windar Photonics A/S owns 100 per cent. of the issued common stock of Windar Photonics (Shanghai) Co.Ltd. Windar Photonics (Shanghai) Co. Ltd. was incorporated on 18 May 2016 in China with a registered capital of USD 200,000 of which USD 200,000 is paid in as per 31 December 2022.

14. Intangible assets

The Group has received public Research and Development Grants of €121,019 (2021: €408,354) in respect of the capitalised research and development. At the end of the year 2 development projects are ongoing which are supported by public Research and Development Grants and outstanding grants which can be claimed in the coming two years amount to €209,754 (2021: €402,893) which could be claimed in the following 2 years).

The development projects relate to the development of improved performance and functionality of the Company's product offerings. Measurement of the development projects are based on expected contributions to forward looking business plans and budgets.

15. Property, plant & equipment

The cost of inventory sold and recognised as an expense during the year was €897,017 (2021: €107,679)

17. Trade and other receivables

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

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.

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.

 18. 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:

19. Notes supporting statement of cash flows