Final Results

RNS Number : 6929H

Windar Photonics PLC

25 November 2022

 

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:

Windar Photonics plc		Tel: [phone]
Jørgen Korsgaard Jensen, CEO
Cenkos Securities plc (Nomad & Broker)
Neil McDonald / Pete Lynch		Tel: [phone]

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

	Year ended 31 December 2021	Year ended 31 December 2020
	€	€
Revenue from contracts with customers	551,535	1,333,956
Cost of goods sold	(105,322)	(632,586)
Gross profit	446,213	701,370
Administrative expenses	(1,882,094)	(2,183,141)
Other operating income	32,271	32,196
Loss from operations	(1,403,610)	(1,449,575)
Finance income/(expense)	25,520	(143,110)
Loss before taxation	(1,378,090)	(1,592,685)
Taxation	248,913	252,517
Loss for the year attributable to the ordinary equity holders of Windar Photonics Plc	(1,129,177)	(1,340,168)
Other comprehensive income
Items that will or may be reclassified to profit or loss:
Exchange gains/(losses) arising on translation of foreign  operations	(92,348)	22,585
Total comprehensive loss for the year attributable to the ordinary equity holders of Windar Photonics Plc	(1,221,525)	(1,317,583)
Loss per share attributable to the ordinary equity holders of Windar Photonics Plc
Basic and diluted, cents per share	(2.1)	(2.7)

All activities relate to continuing operations.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2021

	31 December 2021	31 December 2020
Assets
Non-current assets
Intangible assets	1,195,267	1,205,243
Property, plant & equipment	2,423	27,698
Deposits	26,398	25,382
Total non-current assets	1,224,088	1,258,323
Current assets
Inventory	694,969	636,785
Trade receivables	991,734	429,241
Other receivables  Tax credit receivables	157,919 265,620	220,047 253,030
Prepayments	33,954	14,195
Cash and cash equivalents	40,548	626,361
Total current assets	2,184,744	2,179,659
Total assets	3,408,832	3,437,982
Equity
Share capital	675,664	675,664
Share premium	14,502,837	14,502,837
Merger reserve	2,910,866	2,910,866
Foreign currency reserve	(88,394)	3,955
Retained earnings	(18,758,348)	(17,651,945)
Total equity	(757,375)	441,377
Non-current liabilities
Warranty provisions	36,150	38,493
Holiday Allowance provisions	131,877	129,879
Loans	1,371,076	1,719,825
Total non-current liabilities	1,539,103	1,888,197
Current liabilities
Trade payables	544,330	640,899
Other payables and accruals	758,234	229,431
Contract liabilities	951,606	215,905
Loans	372,934	22,173
Total current liabilities	2,627,104	1,108,408
Total liabilities	4,166,207	2,996,605
Total equity and liabilities	3,408,832	3,437,982

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

	31 December	31 December
	2021	2020
		€
Assets
Non-current assets
Investments in subsidiaries	-	142,497
Total non-current assets	-	142,497
Current assets
Other receivables	12,898	11,295
Intragroup receivables	88,373	2,074
Cash and cash equivalents	4,454	543,247
Total current assets	105,725	556,616
Total assets	105,725	699,113
Equity
Share capital	675,664	675,664
Share premium	14,502,837	14,502,837
Merger reserve	658,279	658,279
Foreign exchange reserve	(7,746)	(7,746)
Retained earnings	(16,088,210)	(15,387,653)
Total equity	(259,176)	441,381
Current liabilities
Trade payables	186,271	167,952
Other payables and accruals	178,630	89,780
Total liabilities	364,901	257,732
Total equity and liabilities	105,725	699,113

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

	Year ended 31 December 2021	Year ended 31 December 2020
Loss for the period before taxation	(1,378,090)	(1,592,685)
Adjustments for:
Finance (income)/expense	(25,520)	143,110
Amortisation	254,339	286,903
Depreciation	25,115	38,752
Received tax credit	213,362	212,864
Foreign exchange (gain)/losses	(92,348)	22,691
Share option and warrant costs	22,773	27,020
	(980,369)	(861,345)
Movements in working capital
Changes in inventory	(58,183)	382,779
Changes in receivables	(500,363)	(453,281)
Changes in prepayments	(19,760)	30,683
Changes in deposits	(1,017)	(401)
Changes in trade payables	(96,569)	(319,788)
Changes in contract liabilities	735,700	145,951
Changes in warranty provisions	(2,343)	(22,677)
Changes in other payables and provisions	528,803	62,301
Cash flow from operations	(394,101)	(1,035,778)
Investing activities
Payments for intangible assets	(652,264)	(469,362)
Payments for tangible assets	-	(4,449)
Grants received	408,354	174,713
Cash flow from investing activities	(243,910)	(299,098)
Financing activities
Proceeds from issue of share capital	-	975,214
Costs associated with the issue of share capital	-	(97,521)
Proceeds from new long-term loans	-	402,447
Reduction from invoice discounting	-	(1,992)
Repayment of loans	(22,180)	(5,171)
Interest paid	51,006	(74,357)
Cash flow from financing activities	28,826	1,198,620
Net increase/(decrease) in cash and cash equivalents	(609,185)	(136,256)
Exchange differences	23,372	(407)
Cash and cash equivalents at the beginning of the year	626,361	763,024
Cash and cash equivalents at the end of the year	40,548	626,361

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

	Year ended 31 December 2021	Year ended 31 December 2020
		€
Loss for the period before taxation	(700,557)	(1,367,934)
Adjustments for:
Finance Income	(20,332)	(16,946)
Write down of investment in subsidiary	559,137	1,116,716
Share option and warrant costs	-	27,020
	(161,752)	(241,144)
Movements in working capital
Changes in receivables	(1,603)	495
Changes in prepayments	-	26,599
Changes in loans to subsidiary entity	(67,728)	61,161
Changes in trade payables	18,320	35,163
Changes in other payables and provisions	88,850	4,084
Cash flow from operations	(123,913)	(113,642)
Investing activities  Loan to subsidiary		-
Additional investment in subsidiary undertaking	(416,640)	(739,317)
Cash flow from investing activities	(416,640)	(739,317)
Financing activities
Proceeds from issue of share capital	-	975,214
Costs associated with the issue of share capital	-	(97,521)
Currency gains during the year	1,760	(3,200)
Cash flow from financing activities	1,760	874,493
Net decrease in cash and cash equivalents	(538,793)	21,534
Cash and cash equivalents at the beginning of the year	543,247	521,713
Cash and cash equivalents at the end of the year	4,454	543,247

CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2021

	Share Capital		Share Premium		Merger reserve		Foreign currency reserve		Accumulated Losses		Total
	€		€		€		€		€		€
Group
At 1 January 2020	608,689		13,692,119		2,910,866		(18,630)		(16,338,796)		854,248
New shares issued	66,975		908,239		-		-		-		975,214
Costs associated with capital raise	-		(97,521)		-		-		-		(97,521)
Share option and warrant costs	-		-		-		-		27,020		27,020
Transaction with owners	66,975		810,718		-		-		27,020		904,713
Loss for the year	-		-		-		-		(1,340,168)		(1,340,168)
Other comprehensive gains	-		-		-		22,584		-		22,584
Total comprehensive loss	-		-		-		22,584		(1,340,168)		(1,317,584)
At 31 December 2020	675,664		14,502,837		2,910,866		3,954		(17,651,944)		441,377
New shares issued	-		-		-		-		-		-
Costs associated with capital raise	-		-		-		-		-		-
Share option and warrant costs	-		-		-		-		22,773		22,773
Transaction with owners	-		-		-		-		22,773		22,773
Loss for the year	-		-		-		-		(1,129,177)		(1,129,177)
Other comprehensive gains/(loss)	-		-		-		(92,348)		-		(92,348)
Total comprehensive loss	-		-		-		(92,348)		(1,129,177)		(1,221,525)
At 31 December 2021	675,664		14,502,837		2,910,866		(88,394)		(18,758,348)		(757,375)
Company
		Share Capital		Share Premium	Merger reserve	Foreign currency reserve		Accumulated Losses		Total
At 1 January 2020	608,689		13,692,119		658,279		(7,746)		(14,046,739)		904,602
New shares issued	66,975		908,239		-		-		-		975,214
Costs associated with capital raise	-		(97,521)		-		-		-		(97,521)
Share option and warrant costs	-		-		-		-		27,020		27,020
Transaction with owners	66,975		810,718		-		-		27,020		904,713
Loss for the year	-		-		-		-		(1,367,934)		(1,367,934)
Total comprehensive loss	-		-		-		-		(1,367,934)		(1,367,934)
At 31 December 2020	675,664		14,502,837		658,279		(7,746)		(15,387,653)		441,381
Loss for the year	-		-		-		-		(700,557)		(700,557)
Total comprehensive loss	-		-		-		-		(700,557)		(700,557)
At 31 December 2021	675,664		14,502,837		658,279		(7,746)		(16,088,210)		(259,176)

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.

Standard or		Effective for annual periods beginning
Interpretation	Title	on or after
IFRS 16	COVID-19-Related Rent Concessions (Amendment to IFRS 16)	1 June 2020
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16	Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)	1 January 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.

Standard or		Effective for annual periods beginning
Interpretation	Title	on or after
IFRS 16	COVID-19-Related Rent Concessions beyond 30 June 2021. (Amendment to IFRS 16)	1 April 2021
IAS 37	Onerous Contracts - Cost of Fulfilling a Contract. (Amendments to IAS 37)	1 January 2022
IAS 16	Property, Plant and Equipment: Proceeds before Intended Use. (Amendments to IAS 16)	1 January 2022
IFRS	Annual Improvements to IFRS Standards 2018-2020	1 January 2022
IFRS 3	Reference to the Conceptual Framework. (Amendments to IFRS 3)	1 January 2022
IAS 1	Classification of Liabilities as Current or Non-current. (Amendments to IAS 1) 2. Adoption of new and revised International Financial Reporting Standards (continued)	1 January 2023
IFRS 17	IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts.	1 January 2023
IAS 1	Disclosure of Accounting Policies. (Amendments to IAS 1 and IFRS Practice Statement 2)	1 January 2023
IAS 12	Deferred Tax related to Assets and Liabilities arising from a Single Transaction. (Amendments to IAS 12)	1 January 2023
IAS 8	Definition of Accounting Estimates. (Amendments to IAS 8)	1 January 2023

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

 

Revenue from contracts with customers:	Year ended 31 December 2021	Year ended 31 December 2020
	€	€
Sale of products and installation	550,558	1,325,951
Rendering of services	977	8,005
Revenue	551,535	1,333,956

Disaggregation of revenue

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

	Year ended 31 December 2021	Year ended 31 December 2020
	€	€
WindEye ™	256,663	770,531
WindVision ™	293,895	555,420
Rendering of services	977	8,005
Revenue	551,535	1,333,956

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

Loss from operations is stated after:
	Year ended 31 December 2021 €		Year ended 31 December 2020 €
Staff costs (note 11)	1,072,454		1,263,759
Expensed research and development costs	328,582		489,375
Amortisation1	254,339		286,903
Depreciation	25,115		38,752
Lease payments	108,589		115,350
Other Operating Income	(32,271)		(32,196)
Remuneration received by the Group's auditor or associates of the Group's auditor:
- Audit of parent company	8,340		5,133
- Additional amounts relating to the prior year group audit charged during the current year	12,774	35,715
- Audit of consolidated financial statements - Taxation compliance services Other auditors:	22,638 953		18,120 830
- Audit of overseas subsidiaries	25,071		18,803

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:

	Year ended 31 December 2021 €	Year ended 31 December 2020 €
Europe	7,519	119,340
Americas	-	54,218
China	544,016	1,128,722
Asia (excluding China)	-	31,676
Revenue	551,535	1,333,956

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.

		As at 31 December 2021	As at 31 December 2020
		€	€
Denmark		1,216,037	1,248,460

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

8.  Directors and employees

	2021		2020
	Average	Year end	Average	Year end
Number of employees excluding directors
Sales and Services	7	5	7	6
Research and development	11	13	10	10
Production	4	4	2	2
Administration	3	3	3	3
	25	25	22	21

Group			2021	2020
			€	€
Staff costs
Wages and salaries			971,863	1,190,757
Social security costs			77,818	45,982
			1,049,681	1,236,739
Warrant and Option costs			22,773	27,020
			1,072,454	1,263,759
Company			2021	2020
			€	€
Staff costs
Wages and fees			13,450	25,760
			13,450	25,760
Warrant and Option costs			-	27,020
			13,450	52,780

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:

		Wages and salaries and fees	Fair value of warrant costs	Pension contributions	Total
		€	€	€	€
Year ended 31 December 2021
Directors		13,450	-	-	13,450
Year ended 31 December 2020
Directors		25,760	-	-	25,760

9.  Finance income/(expense)

			Year ended 31 December 2021 €	Year ended 31 December 2020 €
Foreign exchange gains			143,019		(32,746)
Interest expense on financial liabilities measured at amortised cost			(117,499)		(110,364)
Finance income/(expense)			25,520	(143,110)

 

10.  Income tax

		Year ended 31 December 2021	Year ended 31 December 2020
		€	€
(a)	The tax credit for the year:
	UK Corporation tax	-	-
	Foreign tax credit	(248,913)	(252,517)
(b)	Tax reconciliation
	Loss on ordinary activities before tax	(1,378,090)	(1,592,685)
	Loss on ordinary activities at the UK standard rate of corporation tax 19% (2020: 19%)
		(261,837)	(302,610)
	Effects of:
	Expenses non-deductible for tax purposes	(28,618)	(35,103)
	Adjustment to not recognized deferred taxes in previous periods	23,583	(137,902)
	Unrecognised tax losses	118,873	263,464
	Different tax rates applied in overseas jurisdictions	(47,098)	(54,860)
	Exchange rate differences	(53,816)	14,494
	Tax credit for the year	(248,913)	(252,517)

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:

	Year ended 31 December 2021	Year ended 31 December 2020
	€	€
Loss for the year	( 1,129,177 )	(1,340,168)
Weighted average number of ordinary shares for the purpose of basic earnings per share	54,595,522	49,819,356
Basic loss and diluted, cents per share	(2.1)	(2.7)

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

		€
Company
At 1 January 2021		142,497
Capital contribution in the year Write down investment in subsidiary		416,640 (559,137)
As at 31 December 2021		0

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:

 

Name	Country of incorporation	Ownership	Registered Office	Nature of business
Windar Photonics A/S	Denmark	100%	Helgeshoej  Allé 16-18,2630 Taastrup, Denmark	Develop and commercialise wind turbine technology
Windar Photonics (Shanghai) Co. Ltd.	China	100% indirect	Room 403-03, Building #2, No. 38 Debao Road, Pudong, Shanghai	Commercialise wind turbine technology

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

Group			Development projects €
Cost
At 1 January 2020			3,465,358
Additions - internally developed			469,362
Grants received			(174,713)
Exchange differences			14,759
At 31 December 2020			3,774,766
Additions - internally developed			652,264
Grants received			(408,354)
Exchange differences			1,437
At 31 December 2021			4,020,113
Accumulated amortisation
At 1 January 2020			2,272,751
Charge for the year			286,903
Exchange differences			9,869
At 31 December 2020			2,569,523
Charge for the year			254,339
Exchange differences			984
At 31 December 2021			2,824,846
Net carrying value
At 1 January 2020			1,192,607
At 31 December 2020			1,205,243
At 31 December 2021			1,195,267

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

Group			Plant and equipment €
Cost
At 1 January 2020			221,689
Additions			4,449
Disposed			-
Exchange differences			771
At 31 December 2020			226,909
Additions			-
Disposed			-
Exchange differences			1,313
At 31 December 2021			228,222
Accumulated depreciation
At 1 January 2020			159,889
Charge for the year			38,752
Disposed			-
Exchange differences			570
At 31 December 2020			199,211
Charge for the year			25,111
Disposed			-
Exchange differences			1,477
At 31 December 2021			225,799
Net carrying value
At 1 January 2020			61,800
At 31 December 2020			27,698
At 31 December 2021			2,423

16.  Inventory

	Group
	As at 31 December 2021	As at 31 December 2020
	€	€
Raw material	363,216	16,145
Work in progress	46,879	181,598
Finished goods	284,874	439,042
Inventory	694,969	636,785

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

17.  Trade and other receivables

 

	Group		Company
	As at 31 December 2021 €	As at 31 December 2020 €	As at 31 December 2021 €	As at 31 December 2020 €
Trade receivables	1,865,023	1,301,858	-	-
Less; provision for impairment of trade receivables	(873,289)	(872,617)	-	-
Trade receivables - net	991,734	429,241	-	-
Receivables from related parties	-	-	88,373	2,074
Total financial assets other than cash and cash equivalents classified at amortised costs	991,734	429,241	88,373	2,074
Tax receivables	265,620	253,030	-	-
Other receivables	157,919	220,047	12,898	11,295
Total other receivables	423,539	473,077	12,898	11,295
Total trade and other receivables	1,415,273	902,318	12,898	13,369
Classified as follows:
Current Portion	1,415,273	902,318	101,271	13,369

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

	More than  30 days past due €	More than 60 days  past due €	More than 120 days  past due €	Total   €
Gross carrying amount	-	-	1,015,862	1,015,862
Loss provision	-	-	(873,289)	(873,289)
Net carrying amount	-	-	142,573	142,573

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:

	Group		Company
	As at 31 December 2021 €	As at 31 December 2020 €	As at 31 December 2021 €	As at 31 December 2020 €
Cash at bank	40,548	626,361	4,454	543,247

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

19.  Notes supporting statement of cash flows

	Non-current loans and borrowings €	Current loans and borrowings €	Total €
As at 1 January 2020	5,174	1,267,051	1,272,225
Repayment of loans	-	(5,171)	(5,171)
Repayment of Invoice Discounting	-	(1,992)	(1,992)
Accrued interests on non-current loans	68,753		68,753
Loans and borrowings classified as non-current in previous period becoming current in this period	(22,128)	22,128	-
Loans and borrowings classified as current in previous period becoming non-current in this period	1,262,084	(1,262,084)	-
New long-term borrowings in the period	402,447	-	402,447
Foreign exchange rate differences	3,495	2,241	5,736
As at 31 December 2020	1,719,825	22,173	1,741,998
Repayment of loans	-	(22,180)	(22,180)
Loans and borrowings classified as non-current in previous period becoming current in this period	(372,934)	372,934	-
Accrued interests on non-current loans	23,538	-	23,538
Loans and borrowings classified as current in previous period becoming non-current in this period	-	-	-
New long-term borrowings in the period	-	-	-
Foreign exchange rate differences	647	7	654
As at 31 December 2021	1,371,076	372,934	1,744,010

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

20.  Trade and other payables

	Group		Company
	As at 31 December 2021 €	As at 31 December 2020 €	As at 31 December 2021 €	As at 31 December 2020 €
Trade payables	544,330	640,899	186,271	167,952
Other payables and accruals	615,932	144,323	36,328	24,084
Payables to Directors	142,302	85,108	142,302	65,696
Current portion of Nordea and Growth Fund loans	372,934	22,173	-	-
Total financial liabilities, excluding 'non-current' loans and borrowings classified as financial liabilities measured at amortised cost	1,675,498	892,503	364,901	257,732
Contract liabilities	951,606	215,905	-	-
Total trade and other payables	2,627,104	1,108,408	364,901	257,732
Classified as follows:
Current Portion	2,627,104	1,108,408	364,901	257,732

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.

Søren Høffer resigned as Director 16 March 2021, only included under Payables to Directors at the end of 2020.

21.  Borrowings

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

	Group Carrying and Fair value
Loans	As at 31 December 2021 €	As at 31 December 2020 €
Growth Fund	1,744,010	1,736,802
Current portion of Growth Fund	(372,934)	(16,977)
Nordea Ejendomme	-	5,196
Current portion of Nordea Loan	-	(5,196)
Total non-current financial liabilities measured at amortised costs	1,371,076	1,719,825

The Growth Fund borrowing from the Danish public institution, Vækstfonden, initially bore interest at a fixed annual rate of 12 per cent with a full bullet repayment in June 2020. As announced in 2020 terms for the borrowing was renewed during the year whereafter the interest rate was reduced to 7 percent p.a. and the loan to be repaid in quarterly instalments over the period from 1 January, 2022 until 1 October, 2026. A new Covid-19 loan was further obtained during 2020 from Vækstfonden which carries an interest rate of CIBOR plus 5 percent p.a. and to be repaid in quarterly instalments over the period from 1 October 2021 until 1 October 2026.

In 2020 relation with the changes to the existing Growth Fund borrowing and the new offered loan, the lender now has security of the assets of Windar Photonics A/S, subsidiary undertaking, to an amount of DKK12.6m. In relation to the additional Covid-19 loan the following terms and conditions are in place:

· There is an early exit fee set at a maximum DKK600k

· No dividends or corporate bond interest will be paid. D ividend distributions from Windar Photonics A/S to Windar Photonics PLC has been restricted until full repayment of the borrowing to the Growth Fund.

· No payment of inter-company debts from Windar Photonics A/S. Windar Photonics PLC has entered into an agreement to resign from repayments of any outstanding amounts owned by Windar Photonics A/S to Windar Photonics PLC until full repayment of the borrowing to the Growth Fund.

· The loan is secured up to a value of DKK12.6m on certain assets of Windar Photonics A/S, subsidiary undertaking.

The loan from Nordea Ejendomme is in respect of amounts included in the fitting out of the offices in Denmark. The loan is repayable over the 6 years and matured in November 2021 and carries a fixed interest rate of 6 per cent.

After end of the accounting period the Company has 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.

Both loans are denominated in Danish Kroner.

The Company had no borrowings.

22.  Share capital

	Authorised 2021		€ 2021	Authorised 2020	€  2020
Shares at beginning of reporting period		54,595,524	675,664	48,584,717	608,689
Issue of share capital		-	-	6,010,807	66,975
Shares at end of reporting period		54,595,524	675,664	54,595,524	675,664

	Number of shares issued and fully paid 2021	€ 2021	Number of shares issued and fully paid 2020	€ 2020
Shares at 1 January 2021	54,595,524	675,664	48,584,717	608,689
Issue of shares for cash	-	-	6,010,807	66,975
Shares at 31 December 2021	54,595,524	675,664	54,595,524	675,664

At 31 December 2021 the share capital comprises 54,595,524 shares of 1 pence each.

Warrants and share options

Warrants and share options are granted to Directors and employees.

During the year a new share option program was granted to employees in the company. In total 475,000 share options were granted at a fixed strike price of 40p per share.

Share options issued in 2017 and 2019 are valued using the Black-Scholes pricing model and no performance conditions are included in the fair value calculations. The options were issued at a strike price of £1 a third vesting on each anniversary for the first three years whereafter the options have a 10-year life. The price of the share at the time of issue was £0.88. The risk-free rate was 1.15%. The expected volatility is based on historical volatility of the AIM market over the last two years and is estimated to be 40%.

The average share price during the year was 21.14 pence (2020: 22.42 pence). At the year end the Company had the following warrants and options outstanding:

				Number of warrants and options
	At 31 December				At  31 December		Exercise price
	2020	Granted	Lapsed		2021		(£ pence)	Exercise date
Warrants	1,520,956	-	(1,520,956)		-		-	-
Options	557,500	475,000	-		1,032,500		72.40	16/11/18 to 01/04/35
	2,078,456	475,000	(1,520,956)		1,032,500
The number of options and warrants exercisable at 31 December 2021 is warrants NILL (2020: 1,520,956) and options 589,583 (2020: 460,000). The weighted average remaining contractual life for the options outstanding as at 31 December 2021 is 10.37 years (2020: 9.76 years). No remaining life of warrants at the end of the year (2020: 1 year).

23. Reserves

The following describes the nature and purpose of each reserve within equity

Reserve	Description and purpose
Share premium	Amount subscribed for share capital in excess of nominal value.
Merger reserve - Group	Represents the difference between the consideration paid for the acquisition of Windar Photonics A/S by the Company and the net book value of the assets and liabilities acquired.
Merger reserve - Company	Represents the difference between the fair value and the nominal value of the shares issued for the acquisition of Windar Photonics A/S.
Foreign currency reserve	Gains and losses on the retranslating the net assets from the functional currencies to the reporting currency of €.
Retained earnings	All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

24. Short term leases

The total future value of the minimum lease payment is due as follows:

			2021	2020
			€	€
Not later than one year			-	41,879
Later than one year and not later than five years			-	-
			-	41,879

All leasing commitments are in respect of property and cars leased by the Group. The terms of property leases vary from country to country, although they all tend to be tenant repairing with rent reviews once a year. The Company has not entered any leases in 2021 with maturity longer than 6 months.

25. Warranty provision

			2021	2020
			€	€
Provision at the beginning of reporting period			38,493	61,170
Provision charged to the profit and loss account			(2,358)	(22,500)
Utilised in year			-	-
Foreign exchange rate movements			15	(177)
			36,150	38,493

The Group typically provides a two-year warranty period to customers on products sold. Warranty expenses/(income) charged to the Statement of Comprehensive Income amounted to ( €2,358) (2020: (€22,500)) corresponding to a warranty cost percentage of Nil % (2020: Nil%) relative to the prior two years revenue. However, d ue to the early business stage of the Group and the uncertainty following this the Group has adopted a policy to accrue a 4% provision based on the prior two years deliveries calculated with the cost of goods sold at the end of the period. 

26. Holiday allowance provision

			2021	2020
			€	€
Provision at the beginning of reporting period			129,879	58,848
Increase holiday allowance provision in year			-	70,790
Accrued interests			1,949	-
Foreign exchange rate movements			49	241
			131,877	129,879

Provision for non-current holiday allowance has been reclassified in respect of the amounts stated above in relation to the 2020 accounts. In the 2020 accounts the provision end of 2020 was classified as Other payables and accruals.

27. Related Party Transactions

Jørgen Korsgaard Jensen and Johan Blach Petersen are directors and shareholders of Wavetouch Denmark A/S (Wavetouch) and OPDI Technologies A/S (OPDI). Wavetouch has during the year rented office space from Windar Photonics A/S, the amount payable during the year to Windar was €32,273 (2020: €32,196). There were amounts outstanding at the year end to Wavetouch €(193,173) (2020: €23,630). At the end of the year there were amounts outstanding to OPDI of € Nil (2020: € nil). At the end of the year there were amounts outstanding to Jorgen Korsgaard Jensen € 77,280 (2020: € nil), Johan Blach Petersen € 65,022 (2020: € 51,572) and Søren Høffer € 33,536 (2020: € 33,536).

Intercompany transactions

At 31 December 2021 there exist an intercompany loan between Windar Photonics PLC and its subsidiary Windar Photonics A/S. Windar Photonics PLC has a receivable at € 88,373 (2020: €2,074). Interest added during 2021 amounts to €11,054 (2020: €20,147). The interest rate for 2021 is Bank of England base rate + 2.5% p.a. (2020: Base rate + 2.5% p.a.).

28. Controlling Parties

There is no ultimate controlling party of the Company.

29. Post balance sheet events and outstanding lawsuits

In November 2022 the Company renegotiated the repayment schedule regarding the Growth Fund loan further detailed in note 21. Further the Board decided to initiate a capital raise of approximately €2.3 million (before costs) in the second half of 2022, which is expected to complete at the end of November 2022

NOTICE OF GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting (the "AGM") of Windar Photonics Plc (the "Company") 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 for the purpose of considering and, if thought fit, passing the resolutions below.

Resolution 6 will be proposed as a special resolution. All other resolutions will be proposed as ordinary resolutions.

As Ordinary Resolutions:

1.  To receive and adopt the Company's annual accounts for the financial year ended 31 December 2021 together with the Directors' report and the auditors' report on those accounts.

2.  To re-elect J K Jensen, who retires by rotation pursuant to the articles of association of the Company and who, being eligible, offers himself for re-election as a Director

3.  To re-elect J B Petersen, who retires by rotation pursuant to the articles of association of the Company and who, being eligible, offers himself for re-election as a Director

4.  To re-appoint Jeffreys Henry LLP as auditors of the Company to hold office from the conclusion of this meeting until the conclusion of the next general meeting at which the accounts are laid before the meeting.

5.  To authorise the Directors to fix the remuneration of the auditors.

5..  That, in substitution for all subsisting authorities to the extent unused, the Directors be generally and unconditionally authorised for the purpose of section 551 of the Companies Act 2006 to exercise all the powers of the Company to allot ordinary shares in the Company and grant rights to subscribe for, or to convert any security into such ordinary shares (such ordinary shares and rights to subscribe for or to convert any security into ordinary shares being relevant securities) up to an aggregate nominal amount of £245,700, with such authorisation to expire upon the earlier of the conclusion of the next annual general meeting and 30 June 2023 (unless renewed, varied or revoked by the Company prior to or on that date) after the date of this resolution (save that the Company may before such expiry make an offer or agreement which would or might require relevant securities allotted, or rights to be granted, after such expiry and the directors may allot relevant securities, in pursuance of such offer or agreement as if the authorisation conferred hereby had not expired).

As a Special Resolution

6..  That, subject to the passing of resolution 5 above and in substitution for all subsisting authorities to the extent unused, the Directors be generally empowered pursuant to sections 570 and 573 of the Companies Act 2006 (the 'CA 2006') to allot equity securities (as defined in section 560 CA 2006) pursuant to the authority referred to in resolution 5, as if section 561(1) CA 2006 did not apply to any such allotment, provided that the power was:

1.  limited to the allotment of equity securities in connection with an offer of equity securities:

a.  to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and

b.  to holders of other equity securities as required by the rights of those securities or as the directors otherwise consider necessary.

2.  limited to the allotment of equity securities up to an aggregate nominal amount of £245,700,

and shall expire on the earlier of the conclusion of the next annual general meeting and 30 June 2023 (unless renewed, varied or revoked by the Company prior to or on that date), save that the Company, may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such offer or agreement as if the power hereby conferred had not expired.

Dated November 25, 2022

By Order of the Board

Jørgen Korsgaard Jensen 

Director

Registered Address: 3 More London Riverside, London SE1 2AQ  Registered Number: 09024532

Explanatory Notes to the Notice of Annual General Meeting ("AGM")

The notes on the following pages give an explanation of the proposed resolutions. Resolutions 1 to 4 are proposed as ordinary resolutions. This means that for each of those resolutions to be passed, more than half of the votes cast must be in favour of the resolution. Resolution 6 is proposed as a special resolution. This means that for this resolution to be passed, at least three-quarters of the votes cast must be in favour of the resolution.

Resolution 1: Approval of the annual report and accounts

The Company is required to present its report and accounts to shareholders at its AGM. This provides an opportunity to discuss the performance of the Company during the year, its management and prospects for the future.

Resolutions 2: Re-election of directors

The Company's articles one third of the Directors to retire by rotation at each AGM and at the first AGM following their appointment. The board proposes them for re-election as Directors of the Company. Biographical details of all directors can be found on page 9 of the 2021 annual report.

Resolutions 3 and 4: Auditors reappointment and remuneration

It is a requirement that the Company's auditor must be reappointed at each general meeting at which financial statements are laid, in effect, at each AGM. After considering relevant information, the Audit Committee recommended to the Board the reappointment of Jeffreys Henry LLP . Resolution 3 proposes Jeffreys Henry LLP's reappointment and Resolution 4 authorises the Directors to determine their remuneration.

Resolution 5: Directors' power to allot relevant securities

Under section 551 of the Companies Act 2006, relevant securities may only be issued with the consent of the shareholders, unless the shareholders pass a resolution generally authorising the Directors to issue shares without further reference to the shareholders.  This resolution authorises the general issue of shares up to an aggregate nominal value of £245,700, which is equal to 45% of the nominal value of the current issued share capital of the Company.  Such authority will expire at the conclusion of the next AGM of the Company or six months after the Company's accounting reference date, being 30 June 2023 (whichever is the earlier).

Resolution 6: Disapplication of pre-emption rights on equity issues for cash

Section 561 of the Companies Act 2006 requires that a company issuing shares for cash must first offer them to existing shareholders following a statutory procedure which, in the case of a rights issue, may prove to be both costly and cumbersome.  This resolution excludes that statutory procedure as far as rights issues are concerned.  It also enables the Directors to allot shares up to an aggregate nominal value of £245,700, which will be equal to 45% of the nominal value of the current issued share capital of the Company, assuming resolution 5 being passed. The Directors believe that the powers provided by this resolution will maintain a desirable degree of flexibility.  Unless previously revoked or varied, the disapplication will expire on the conclusion of the next AGM of the Company or six months after the Company's accounting reference date, being 30 June 2023 (whichever is the earlier).

Notes

1.  A member of the Company entitled to vote at the meeting convened by this notice is entitled to appoint one or more proxies to exercise any of his rights to attend, speak and vote at that meeting on his behalf. A proxy need not be a member of the Company but must attend the meeting to represent you.

2.  You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares.  You may not appoint more than one proxy to exercise rights attached to any one share.  To appoint more than one proxy please contact Share Registrars on 01252 821390, overseas callers should call [phone].

3.  A Form of Proxy is enclosed.  To be effective, the Form of Proxy together with any power of attorney or other written authority under which it is signed, or a notarial certified copy or a certified copy in accordance with the Powers of Attorney Act 1971 of such power or written authority must be completed signed and to be valid the proxy must be duly executed and deposited with the Company at the offices of the Company's registrars, Share Registrars Limited, 3 The Millennium Centre, Crosby Way, Farnham, Surrey GU9 7XX , not later than 1 p.m. on 19 December 2022.

4.  Completion and return of a Form of Proxy will not prevent a member from attending and voting in person if he or she so wishes.

5.  Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 to be entitled to attend and vote at the meeting (and for the purposes of the determination by the Company's register of members not less than 48 hours before the time of the meeting or, in the event that the meeting is adjourned, on the Register of Members of the Company not less than 48 hours before the time of any adjourned meeting, and only such members shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time.  Changes to entries on the Register of Members after 1 p.m.  on 19 December 2022 or, in the event that the meeting is adjourned, not less than 48 hours before the time of any adjourned meeting, shall be disregarded in determining the rights of any person to attend and vote at the meeting.

6.  In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of any other joint holders.  For these purposes, seniority shall be determined by the order in which the names stand in the register of members in respect of the joint holding.

7.  In the case of a corporation, the Form of Proxy must be executed under its common seal or signed on its behalf by a duly authorised attorney or duly authorised officer of the corporation.

8.  A vote withheld option is provided on the Form of Proxy to enable you to instruct your proxy not to vote on any particular resolution.  However, it should be noted that a vote withheld in this way is not a "vote' in law and will not be counted in the calculation of the proportion of votes "For" and "Against" a resolution.

9.  To change your proxy instructions simply submit a new proxy appointment using the methods set out above.  Note that the cut-off time for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded.  Where you have appointed a proxy and would like to change the instructions using another hard-copy Form of Proxy, please contact Share Registrars (see note 3 above).  If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.

10.  In order to revoke a proxy in structi on, you will need to inform the Company using one of the following methods:

By sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to Share Registrars Ltd, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR.  In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company.  Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice.

In either case, the revocation notice must be received by Share Registrars no later than 1 p.m. on 19 November 2022.

If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid.

Appointment of a proxy does not preclude you from attending the meeting and voting in person.  If you have appointed a proxy and attend the meeting in person, your proxy appointment will automatically be terminated.

11.  A copy of the proposed draft rules of the EMI and copies of the contracts of service between each executive director and the letters of appointment of the non-executive directors are available for inspection during normal business hours (Saturdays, Sundays and public holidays excepted) at the registered office of the Company. These together with the register of directors' interests in shares, will be available for inspection for at least 15 minutes prior to and during the AGM at the meeting venue.

12.  Except as provided above, members who have general queries about the AGM should write to the Company Secretary, Edward Ratnam, 23 Chetwynd Park, Cannock, Staffordshire WS12 0NZ. You may not use any electronic address provided in either this notice of AGM or any related documents including the Form of Proxy.

As at 5.00 p.m. on the date immediately prior to this notice the Company's issued share capital comprised 54,595,524, ordinary shares of 1 pence each.  Each ordinary share carries the right to one vote at a general meeting of the Company and therefore the total number of voting rights in the Company is 54,595,524.

 

END

 

 

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