Windar Photo Regulatory News (WPHO)

25 November 2022

Windar Photonics plc

("Windar" or the "Company")

Final Results and Notice of General Meeting

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 2021 ("FY21").

Notice of Annual General Meeting

The Company is please to confirm that its Annual General Meeting (the "AGM") will be held at the offices of West Hill Corporate Finance Ltd, 85 Gresham Street, London, EC2V 7NQ at 1.00 p.m. on 21 December 2022.

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 2021 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 FY21 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:

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 entering 2021 with a substantial order backlog and a positive outlook regarding potential new orders on the back of the very positive results realized in our test projects in North America during 2020, the ongoing COVID-19 pandemic unfortunately continued to have a significant impact on the ability of the Company to deliver orders during the year. Consequently, the Company generated revenue of €0.6 million, a decrease of 59% compared to 2020 (€1.3 million). Gross profit for the year amounted to €0.4 million, a decrease of 36% compared to 2020 (€0.7 million).

During the year the Company reduced the operational expenses by 16% compared to 2020, which despite the substantially lower revenue level meant the net loss for the year was reduced by 19% to €1.1 million (2020: loss of €1.3 million).

At the onset of the COVID-19 pandemic the Company's revenue base was dominated by reliance on China, which accounted for approximately 80% of total revenue in the years 31 December 2019 and 31 December 2020. One of the main targets for the Company since early 2020 has been to reach a greater degree of balance between revenue in China and the rest of the world. A key achievement in 2021 was the generation of the first two major volume orders from North America through our distribution partnership with Vestas Service. This meant that the majority of the order backlog of €2.6 million at 31 December 2021 (2020; €1.6 million) were orders to the rest of the world.

The product offering behind the above-mentioned orders is our WindEye™ LiDAR product including the integrated WindTimizer functionality. Today, the Company is the only LiDAR manufacture world-wide that has such a Plug'n'play turbine integration module, whereby the WindTimizer functionality enables a simple turbine integration without any need for changes to the existing wind turbine controller. This capability means that once installed, the Average Energy Production (AEP) has been shown to be increased by 3% but on top of this the WindTimizer functionality includes additional programable offset features, whereby the wind turbine loads and more importantly turbine alarms/stops can be reduced when operating about rated power. This all means that the current product offerings not only include precise and robust remote wind measurements but also an extension to the existing wind turbine controller for further optimization of the individual wind turbine without making any changes to the turbine controller software- or hardware.

During the year to 31 December 2021, the Company has continued its wind analytic development projects like Wake and Turbulence detection, all developments to date are being fully integrated in the above mentioned WindTimizer functionality, as these data points are essential for achieving the optimal optimization of the individual wind turbine. Further, in 2021 the Company completed a development project whereby the WindTimizer functionality can now also interface with analogue wind sensors and thereby increase the overall market potential for this product offering. Ongoing development projects include wind gust integration for further enhancing the WindTimizer functionality in respect of further potential wind turbine load reductions, customisation project of our WindVision™ system in partnership with one of the leading wind turbine manufactures in Europe and finally a drone based gas emission detection product for cost efficiently being able to detect gas emissions like Co2 etc. All of these projects are expected to be finalized within the coming two years.

Financial Overview

Revenue during the year decreased 59% to €0.6 million (2020: €1.3 million). Gross profit was down 36% (2020: 28%) to €0.4 million (2020: €0.7 million).

Net loss for the year before taxes decreased to €1.4 million from €1.6 million in 2020, which included depreciation, amortisation and warrant costs of €0.3 million (2020: €0.3 million) in aggregate.

The Group held cash balances at the end of the year of €0.04 million (2020: €0.63 million).

Trade receivables were €1.0 million (2020: €0.4 million), reflecting that trade receivables at the end of the year included a substantial outstanding in respect of prepayment on orders received then in hand.

The Group has capitalised its continued cost of investment in technology during the year of €0.7 million in 2021 (2020: €0.5 million) before grants of €0.4 million (2020: €0.2 million).

Outlook 

Entering 2022 the company had a strong order backlog of €2.6 million predominately driven by initial volume orders received through our partnership with Vestas Service. Further orders included in the backlog were received for new test projects in North America and Japan. Similarly, the Company has received new orders from the Chinese market in 2022, and total order intake in 2022 has exceeded more than €3.0 million so far. In general, the Company has noticed an increased interest in its general product offerings due to the general increase in the global energy prices, and the Board expects to receive additional substantial orders within the near future.

Despite the very positive market situation, the Company endured severe delays and closures during the first half of 2022 due to COVID-19 lock downs, affecting deliveries of certain mechanical and electronic components.

Consequently, realized revenue and deliveries were substantially below expectations during that period though still above revenue realized in the same period of 2021. Even though challenges still exist for the sourcing of certain components, the Company has in the second half of 2022 already noted a substantial improved development in relation to all important key performance indicators.

Due to the pandemic delays experienced during the first 6 months of 2022, the Board initiated activities for a new capital raise in the second half of 2022. The Board is pleased to announce that subject to readmission of trading on AIM, the Company has successfully raised €2.4 million (before costs) at an issue price of 15p per share. Board member participation in the capital raise is expected to constitute approximately 10% of the total capital raise. The proceeds of the capital raise will be put to use for working capital purposes and ensures the Company has a strong financial position to facilitate the delivery of the order book to customers in timely manner. Further, after the end of the accounting period the Company renegotiated the repayment schedule of the Growth Fund loan, whereby €0.4 million currently recognized as short term debts at the end of the accounting period would have been deemed as long-term debts if new terms applied. Given these actions and combined with the continued progress of the underlying positive development of the general business activities, the board is convinced the Company has sufficient cash flows for operations for the coming 12 months period.

Positively, given the total order inflow in 2021 and so far in 2022, the order backlog currently amounts to approximately €3.8 million. The Board believes the Group will report substantial improvements in revenue and probability in both 2022 and 2023 compared to 2021.

Finally, and despite the very unexpected challenges the COVID-19 pandemic once again brought upon us in both 2021 and so far in 2022, I would like to take the opportunity to thank the management and staff for their efforts and loyalty to the Company in 2021.

BY ORDER OF THE BOARD ON NOVEMBER 25, 2022

Johan Blach Petersen

Chairman

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2021

All activities relate to continuing operations.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2021

The financial statements were approved and authorised for issue by the Board of Directors on November 25 2022 and were signed below on its behalf by:

Jørgen Korsgaard Jensen, Director

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2021

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements. The loss after tax of the parent Company for the year was €700,557 (2020 - loss €1,367,934).

The financial statements were approved and authorised for issue by the Board of Directors on November 25, 2022, and were signed below on its behalf by:

Jørgen Korsgaard Jensen, Director

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2021

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

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

Several amendments and interpretations apply for the first time in 2021.

The above new and amended standards which apply for the first time for these 2021 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 financial statements.

Standards, amendments and interpretations issued and effective in 2021 but not relevant

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

Standards, amendments and interpretations issued but not yet effective in 2021

 There were a number of standards and interpretations which were in issue at 31 December 2021 but not effective for periods commencing 1 January 2021 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 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 will be incorporated in the preparation of the Group 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.

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. The directors are confident that based on the Group's forecasts and the recently announced expected capital raise of approximately €2.4 million (before costs). Further included in the considerations is the negotiated change of the repayment schedule of the Growth Fund loan in 2022, whereby €0.4 million currently recognized as short term debts at the end of the accounting period would have been deemed as long-term debts if new terms applied. Given these actions and combined with the continued progress of the underlying positive development of the general business activities, the board is convinced the Company has sufficient cash flows for operations for the coming 12 months period.

Due to primarily the above stated uncertainties regarding the COVID-19 situation, the Management highlight the very high levels of uncertainties 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.

4. Accounting policies

Basis of preparation

The consolidated financial statements comprise the consolidated financial information of the Group as at 31 December 2021 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"). These are the first financial statements prepared under UK adopted international accounting standards. On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK adopted international accounting standards, with future changes being subject to endorsement by the UK Endorsement Board. Windar Photonics Plc transitioned to UK-adopted International Accounting Standards in its consolidated and parent company financial statements on 1 January 2021. This change constitutes a change in accounting framework. However, there is no change on recognition, measurement or disclosure in the financial year reported as a result of the change in framework.

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.

5. Revenue

Disaggregation of revenue

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

Contract liabilities of €951,606 (2020: €215,905) relates to performance obligation under contracts that have not yet been completed and are expected to be met in 2022.

6. Loss from operations

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

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 2021, two customers accounted for more than 25 per cent of the revenue each (2020: four customers). The total amount of revenue from these customers amounted to €302,199 or 55 per cent of the total revenue (2020: €1,076,841 or 81 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 3 employees (2020: 3), all being the Directors of the Company.

Key management personnel compensation

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. (2020: 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. (2020; 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 €2,948,012 (2020: €2,829,139) 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 €389,814 (2020: €338,140) 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 warrants (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 (2020: €Nil).

13. Investment in Subsidiaries

The subsidiaries of Windar Photonics Plc are included in these financial statements in accordance with the merger accounting as set out in the basis of preparation and basis of consolidation in notes 4, are as follows:

The Company owns 100 per cent. of the issued share capital of Windar Photonics A/S (comprising A Shares of DKK 5,737,800 of 1 DKK each and B Shares of DKK 3,642,592 of 1 DKK each) with CVR number 32157688.

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 the funds received from the share placing into its main trading subsidiary, Windar Photonics A/S, and a total transfer of funds of €484,368 was made during the year. A further waiver of intercompany receivable due from Windar Photonics A/S of €416,640 was made during the year and treated as capital contribution.

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 2021.

14. Intangible assets

The Group has received public Research and Development Grants of €408,354 (2020: €174,713) in respect of the capitalised research and development. At the end of the year 3 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 €402,893 (2020: €669,605, which could be claimed in the following 4 years).

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.

15. Property, plant & equipment

16. Inventory

The cost of inventory sold and recognised as an expense during the year was €107,679 (2020: €655,086).

17. Trade and other receivables

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

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.

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:

The Group has restricted cash balances of €NIL (2020: € 33,672).

19. Notes supporting statement of cash flows

The Company do not have any long- or short-term loans or borrowings.

20. Trade and other payables