25 September 2023

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Windar Photonics plc

("Windar", the "Company" or the "Group")

Unaudited interim report for the six months ended 30 June 2023

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, announces its unaudited interim results for the six months ended 30 June 2023.

Financial highlights

·      revenue increased by 220% to €1.3 million (H1 2022: €0.4 million)

·      gross profit increased by 290% to €0.74 million (H1 2022: €0.19 million)

·      EBITDA loss reduced to €0.27 million (H1 2022: €0.74 million)

Operational highlights

·      overall production capacity increased to 80-100 systems per month, despite supply chain challenges

·      new COO appointed in March to further strengthen the Company's production and logistics functions

·      relocated its China operations to a new facility in Shanghai

·      completed the test project on a GE 1.6MW platform in North America, demonstrating a potential increase of 3.2% in its annual energy production

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Notes to Editors:

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

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

CHAIRMAN'S STATEMENT

The Board is delighted to report that revenue for the first half year of 2023 increased by 220% to €1.3 million (H1 2022: €0.4 million).

This was achieved despite revenue in the first 3 months of the year being negatively impacted by component shortages following the COVID pandemic and subsequent supply chain issues.

Besides navigating these component shortages during the first half year, the Company has been focused on increasing the overall production capacity, both internally and within our supply chain, and is pleased to announce that overall production capacity when entering the second half of 2023 has been doubled, since 2022, to approximately 80-100 systems per month.

The Gross profit for the period amounted to €0.74 million (H1 2022: €0.19 million), representing a Gross margin of 54.9% compared to a gross margin in the first half of 2022 of 46.3%. The increase was predominantly due to a more favorable product and customer mix, which are expected to continue going forward.

Due to the increased activity level, operational expenses, excluding amortisation, depreciation and warrant costs, increased by 7.2% to €1.02 million (H1 2022: €.96 million), as a result of which the Company reported a reduced EBITDA loss of €0.27 million (H1 2022: €0.74 million).

During the first half of 2023 the Board made some strategic decisions affecting the operational expenses. Firstly, it hired in March a new COO to further strengthen the performance of the Company's production and logistics functions. Secondly, in February the Company relocated its China operations to a new facility in Shanghai, as a result of which, the Company is better positioned to serve the growing demand from Chinese customers and in due course to have the flexibility to establish local assembly facilities.   

Project wise the Company completed the previously announced test project on a GE 1.6MW platform in North America. Overall the test demonstrated a potential increase of 3.2% in Annual Energy Production (AEP). Part of the improvement was due to identification of non-optimal turbine settings. This is an important result for the Company since it demonstrates the efficacy of our product in respect of an additional operating platform. The Board estimates that approximately 15,000 turbines of this type are currently installed globally.

The Company is currently discussing with this particular client a roll-out of our Lidar as a Service (LaaS) concept, whereby the revenue stream from this project will be more consultancy oriented. This consultancy service does require accurate Lidar-based data, as the existing wind turbine data was insufficiently accurate.      

Financial Overview

Overall, the Group reported increased revenues of €1.3 million (H1 2022: €0.4 million) and a reduced net loss of €0.37 million for the period (H1 2022: loss of €0.76 million) after depreciation, amortisation and warrant costs of €0.13 million (H1 2022: €0.09 million).

Due to primarily the depreciation of the Chinese currency of 6% against the euro during the first half of 2023, other comprehensive income amounted to €0.09 million (H1 2022: (€0.04 million)). Net equity at the end of the period amounted to €0.06 million (H1 2022: ((€1.54 million)).

Cash flow from operations produced a net outflow of €1.1 million for the period, compared to a net inflow of €0.1 million in H1 2022. Movements in working capital items amounted to a net outflow of €0.6 million for the period compared to a net inflow of €1.2 million in H1 2022.

Outlook

At the start of the second half, the Company had an order backlog of €3.8 million for delivery during the year. However, current customer delivery schedules for the second half now amount to approximately €5.2 million, of which €2.2 million has already been delivered .

In addition, at the end of August the Company had outstanding quotations with customers amounting to approximately €6.0 million, the vast majority of which are expected to be rolled over into 2024 in light of the timing of the final order and assembly capacity.

Regarding the above-mentioned US GE 1.6MW project, this project was initially planned for a full roll-out in 2023. However, this is now expected to be transformed into a consultancy contract with revenue in the order of €0.8-1.0 million primarily spread over 2024.

Given the above the Company expects to meet the current market expectations for 2023 including net revenue of approximately €6.5 million - an increase of approximately 260% compared to 2022 (2022: €1.8 million), and an EBITDA result of approximately €1.5-1.6 million compared to an EBITDA loss of €1.1 million realised in 2022. This would represent a record-breaking revenue for the Company and its maiden profit.

As the Company expects to see continued growth in China in 2024 a main focus for the second half of 2023 is to increase production capacity further to approximately 150 systems per month by the end of the year.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2023

1. BASIS OF PREPARATION

The financial information for the six months ended 30 June 2023 and 30 June 2022 does not constitute the Groups statutory financial statements for those periods with the meaning of Section 434(3) of the Companies Act 2006 and has neither been audited or reviewed pursuant to guidance issued by the Auditing Practices Board. The annual financial statements of Windar Photonics plc are prepared in accordance with International Financial Reporting Standards. The principal accounting policies used in preparing the Interim financial statements are those that the Group expects to apply in its financial statements for the year ended 31 December 2023 and are unchanged from those disclosed in the Group's Annual Report for the year ended 31 December 2022. The comparative financial information for the year ended 31 December 2022 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2022 have been filed with the Registrar of Companies. The Independent Auditor's Report on the Annual Report and Financial Statements for 2022 was unqualified but included a reference to the material uncertainty related to going concern in respect of the timing of future revenues without qualifying their report and did not contain a statement under section 498(2)-498(3) of the Companies Act 2006. After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue operating for the next 12 months. Accordingly, they continue to adopt the going concern basis in preparing the half yearly condensed consolidated financial statements. This interim report was approved by the directors.

2.     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 as the dilution would reduce the loss per share.

3.     Inventory

4.     Trade and other receivables

5.     Share capital

At 30 June 2023, the share capital comprises 55,963,110 shares of 1 pence each.

6.     Borrowings

The carrying value and fair value of Group's borrowings are as follows:

The Growth Fund Loans include two separate loans. All conditions for the loans are unchanged to the position at the end of year 2022.

All loans are denominated in Danish Kroner.

7.     Trade and other payables

There is no material difference between the net book value and the fair values of current trade and other payables due to their short-term nature.

8.     Availability of Interim Report

Copies of the Interim Report will not be sent to shareholders but will be available from the Group's website www.investor.windarphotonics.com.