Windar Photonics : Consolidated Financial Statements 20

Company number: 09024532

WINDAR PHOTONICS PLC

Report of the Directors and

Consolidated Financial Statements

For the year ended 31 December 2020

WINDAR PHOTONICS PLC

Contents

Company Information	2
Chairman's Statement	3
Strategic Report	4
Directors' Report	7
Corporate Governance Statement	12
Independent Auditor's Report	20
Consolidated Statement of Comprehensive Income	27
Consolidated Statement of Financial Position	28
Company Statement of Financial Position	29
Consolidated Statement of Cash Flows	30
Company Statement of Cash Flows	31
Consolidated and Company Statements of Changes in Equity	32
Notes to the Financial Statements	34
Notice of Annual General Meeting	57

WINDAR PHOTONICS PLC

COMPANY INFORMATION

Directors	Johan Blach Petersen (Non-executive Chairman)
	Jørgen Korsgaard Jensen (Chief Executive Officer)
	Paul Joseph Hodges (Non-executive Director)
Company Secretary	Edward 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 2020

Despite a positive start the year with the receipt of the first volume order from the OEM market for the Company's LiDAR wind sensor, the onset of the COVID-19 pandemic had a significant impact on the ability of the Company to deliver orders during the year. Notwithstanding the impact of the global pandemic, the Company generated revenue of €1.3 million, an increase of 13% compared to 2019 (€1.2 million). Coupled with the implementation of cost saving initiatives throughout the Company, the EBITDA loss was reduced by 61% to €1.1 million (2019: loss of €2.8 million).

Total orders received and scheduled for delivery in 2020 amounted to €2.9 million. However, primarily due to the impact of the pandemic delivery of orders amounting to €1.6 million were postponed and rescheduled for delivery in 2021.

The retro-fit market operations were particularly adversely impacted by onset of the the pandemic due to project delays and travel restrictions. However important customer trials under our distribution agreement with Vestas were initiated and finalized in 2020 with very encouraging results Management expect to see the first volume orders and deliveries through this channel to be realised in 2021.

Our continued drive to optimize the cost base of our products has resulted in the Company successfully completing our new OneUnit platform which means the complete with electronic box has been eliminated. All optical and electronic parts now fully integrated in our optical head. With this platform now fully developed, our average production costs going into 2021 are estimated to have reduced by close to 21% compared the average costs at the beginning of 2020. Besides the cost saving the new platform enables a substantial simplification of the installation process of our products bringing additional cost savings to our end users.

Within the various other ongoing development projects good progress has been achieved in 2021. In previous years, the Company was focused on expanding our wind measurements data capabilities beyond the measurement of wind speed and wind direction to include wind turbulence and wake data which today are fully integrated in the entire project range. Going forward and based on new software developments the Company will also be integrating rain intensity data in our product range.

Financial Overview

Revenue during the year increased by 13% to €1.3 million (2019: €1.2 million). Gross profit was up 28% (2019:

(47%)) to €0.7 million (2019: €0.5 million).

Net loss for the year before taxes decreased to €1.6 million from €3.3 million in 2019, which included depreciation, amortisation and warrant costs of €0.3 million (2019: €0.3 million).

The Group held cash balances at the end of the year of €0.6 million (2019: €0.8 million).

Trade receivables were €0.4 million (2019: €0.1 million), reflecting that most of the revenue recognized in 2020 was delivered during the last quarter of the year.

The Group has capitalised its continued cost of investment in technology during the year. This amounts to €0.5 million in 2020 (2019: €0.5 million) before grants of €0.2 million (2019: €0.1 million).

During the year, the Group raised €1.0 million before expenses through the issue of share capital.

Outlook

Even though there remain significant project and delivery delays in the first part of 2021 due to aftermath of the global pandemic, the Board expects to see a substantial revenue increase in 2021. This expectation is based on the orderbook at the start of the year which contained a number of orders initially scheduled for delivery in 2020. In addition, the Board expects to receive , new orders and has strong expectations for initial volume orders/deliveries under our distribution agreement with Vestas.

Despite the overall encouraging developments, the Group's cash flow position is constantly being monitored with respect to eventual consequences of customer payments and project delays. However, management believe that there are a number of actions available to them in order to manage the cash position if needed.

Positively, the total order inflow in 2020 has been encouraging at €2.9 million which approximately represents the annual break even fix point in the Group. Given the order back-log carried into 2021, orders received and expected new orders the Board believes the Group is in a good position moving forward.

Finally, I would like to take the opportunity to thank the management and staff for their efforts in 2020.

BY ORDER OF THE BOARD ON June 30, 2021

Johan Blach Petersen

Chairman

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WINDAR PHOTONICS PLC

STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2020

The Directors present their Strategic Report and the audited financial statements for the year ended 31 December 2020.

PRINCIPAL ACTIVITIES OF THE GROUP

Windar Photonics is a technology Group that has developed and sells cost efficient and innovative Light Detection and Ranging sensors ('LiDAR') and associated products for use on electricity generating wind turbines. LiDAR wind sensors in general are designed to remotely measure wind speed and direction.

The Group's key products are the WindEYE™ and WindVISION™ sensors which measure the wind speed at different measuring points by scanning a laser beam ahead of the wind turbine. By measuring the wind speed a variety of wind information is derived such as wind direction, turbulence, wind shear, wind gust and wake detection. The products and various algorithms are designed for the general optimisation of wind turbines both in respect of increasing the Annual Energy Production and general load reduction options.

REVIEW OF THE BUSINESS

The Chairman's Statement on page 3 includes a general review of the Group's business for the year.

FUTURE DEVELOPMENTS IN THE BUSINESS

Independent Power Producers (IPPs) and Wind Park Operators are primarily interested in general optimisation of existing wind turbines thereby potentially increasing power output. One method of achieving this is by optimisation of the yaw alignment of the wind turbine which can be obtained by fitting a LiDAR wind sensor such as the WindEYE™ sensor. Despite the slower than expected traction within the scope of the Vestas distribution agreement in previous years, the board do expect to see future growth based on currently ongoing end-user projects.

Original Equipment Turbine Manufacturers (OEMs) are primarily focused on fully integrating LiDAR wind sensor information to address both yaw misalignment and more complex load reduction strategies. OEMs typically have longer design times for product integration compared to the shorter time normally taken to retrofit a sensor on an existing wind turbine. In 2020 the company received the first larger scale order from this segment, which was a major positive break through within this market segment. However, the following Covid-19 situation did unfortunately severely delay the planned installations in 2020, whereby the majority of these orders now are expected to be delivered in 2021.

The Group continues to work with both IPPs and OEMs with on-going trials in both of the Group's key markets.

COVID-19 PANDEMIC

The Covid-19 pandemic had a material impact on the performance of the Group in 2020. Although the pandemic did not heavily impact production and the general head quarter activities, the pandemic had a severe impact on execution of ordered products due to end user project delays. Despite agreed delivery plans, customers typically delayed upfront payments before delivery and as a result our deliveries were delayed. Similarly, the group faced severe logistic challenges for our technical installation team due to various travel restrictions which also had a negative impact on our ability to install sold systems which again resulted in additional project delays.

GROUP RESULTS AND DIVIDENDS

In the year ended 31 December 2020, Windar Photonics achieved revenue of €1.33 million (2019; €1.18 million) from sales of WindEYETM and WindVISIONTM sensors and related services which represent a revenue increase of 13% in 2020. The total gross profit for the year amounted to €0.7 million (2019; €0.5 million) representing an increase of 28%.

The Group loss for the year after taxation decreased to €1.3 million (2019: Loss €3.1 million).

No dividends are payable for the year under review (2019: No dividends payable).

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