Windar Photonics : Consolidated Financial Statements 2021

Company number: 09024532

WINDAR PHOTONICS PLC

Report of the Directors and

Consolidated Financial Statements

For the year ended 31 December 2021

WINDAR PHOTONICS PLC

Contents

Company Information	2
Chairman's Statement	3
Strategic Report	5
Directors' Report	8
Corporate Governance Statement	13
Independent Auditor's Report	21
Consolidated Statement of Comprehensive Income	28
Consolidated Statement of Financial Position	29
Company Statement of Financial Position	30
Consolidated Statement of Cash Flows	31
Company Statement of Cash Flows	32
Consolidated and Company Statements of Changes in Equity	33
Notes to the Financial Statements	34
Notice of Annual General Meeting	58

WINDAR PHOTONICS PLC

COMPANY INFORMATION

Directors	Johan Blach Petersen (Non-executive Chairman)
	Jørgen Korsgaard Jensen (Chief Executive Officer)
	Paul Joseph Hodges (Non-executive Director) (appointed 16
	March 2021)
Company Secretary	Edward Indran Ratnam FCA
	23 Chetwynd Park
	Cannock
	Staffordshire WS12 0NZ
Registered Office	3 More London Riverside
	London SE1 2AQ
Registered Number	09024532
Auditor	Jeffreys Henry LLP
	Finsgate 5-7 Cranwood Street
	London EC1V 9EE
Nominated Adviser and Broker	Cenkos Securities plc
	6.7.8 Tokenhouse Yard
	London EC2R 7AS
Registrars	Share Registrars Limited
	The Courtyard
	17 West Street
	Farnham
	Surrey
	GU9 7DR

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WINDAR PHOTONICS PLC

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2021

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.

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WINDAR PHOTONICS PLC

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2021

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

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