A challenging year but successful transformation with capital increase and launch of new products, leads to growth expectations in 2024

ANNUAL REPORT 2023

COMPANY ANNOUNCEMENT NO. 95

Today, LED iBond International’s (LED iBond) Board of Directors approved the annual report for 2023 to be submitted for approval at the annual general meeting on 24th April 2024. Martin Løbel, CEO of LED iBond international comments:

“2023 has been a transition year for LED iBond where we faced reduction in revenue in non-core segments which were defocused as part of our strategy review, while we refocused resources and development into core segments. Successfully, we have seen increasing demand for our solutions for parking facilities and toplighting for commercial greenhouses, but with orders received later than originally expected, and hence with revenue effect in 2024 rather than 2023.

As a result, the revenue for the full year 2023 ends at DKK 2.6 million and with a decrease of DKK 1.4 million compared to 2022. This decline is a disappointing but on the other hand, we see that we have already won orders of more than DKK 3 million for 2024, and we see strong interest for the newly launched HORTISABER toplighting product, for which we have also received a larger order recently as reported in company announcement #93 on 22 February.  

During 2023, the LED iBond has undergone a successful transformation, where we have succeeded in reducing cash burn as well as increasing gross margins by reducing production costs. In combination, it has improved EBITDA of 31% and cash burn reduced by 12.2 million (73%) compared to 2022.   

In December 2023, LED iBond succeeded in raising DKK 10 million in new capital despite difficult financial markets to extend the company’s runway towards self-sustained operations, and we are pleased with this trust from our shareholders. DKK 4.5 million was injected in December 2023 and the remaining part will be injected as convertible loans in two installments during 2024, based on reaching successful milestones.

Despite the successful steps during 2023, the overall objective is still for us to demonstrate substantial revenue growth, and based on our pipeline and market feedback, we have high expectations for 2024. As stated in company announcement no. 94 26 March 2023, our revenue guidance for 2024 is DKK 10-12 million.”

Financial key figures

TDKK	Q4 2023	Q4 2022	Change	Full Year 2023	Full Year 2022	Change
Profit & Loss
Revenue	881	1,233	-28%	2,597	3,958	-34%
Revenue from external customers	881	1,233	-28%	2,597	3,889	-33%
Revenue from spin-offs	0	0	-	0	69	-
Grants	0	2,450	-100%	0	2,535	-100%
EBITDA	-3,727	-5,068	26%	-10,863	-15,686	31%
EBIT	-5,691	-14,192	60%	-18,172	-31,527	42%
Profit before tax	-9,504	-14,938	36%	-22,443	-33,396	33%
Net profit	-8,922	-32,883	73%	-21,861	-47,280	54%
Balance Sheet
Total assets				33,945	47,336
Total equity				13,350	30,990
Net working capital				-1,186	7,023
Net interest-bearing debt				8,235	7,529
Cash				4,555	9,025
Cash flow statement
Cash flow from operations	-2,146	-4,007	46%	-5,876	-17,300	66%
Cash flow from investments	-694	2,282	-	-3,094	-4,441	30%
Cash flow from financing	4,500	6,582	-32%	4,500	5,032	-11%
Cash flow for the period	1,660	4,858	-66%	-4,470	-16,709	73%

Business development

• Smart Building: For Q4 2023, the smart building market contributed with the larger part of reported revenue, driven by steady sales of TRACY® for the parking segment followed by Canopy panels for service stations.
  
  For the full year 2023, the parking segment contributed approximately 30% of the revenue which in an increase from 2022 (16%).  LED iBond has observed an increasing interest from potential customers and the focused marketing effort have in 2023 resulted in a significant pipeline, and at the same time the size of some of the submitted quotations for parking project has also increased to DKK +1M. As announced in company announcement no. 89 23 January, such a DKK 1M order was won and LED iBond expects a significant growth in sales within the parking segment in 2024 due to several promising sales opportunities in Europe of larger size.
   
• Indoor Farming:  In late 2022, LED iBond started exploring how LED iBond’s Horticulture lighting solutions can be applied in the well-establish greenhouse market as top-lighting and not only in vertical farms.  Due to the high potential in the market and a fit to LED iBond, a new toplighting lamp (marketed as HORTISABER) has been developed in 2023 and was launched in Nov 2023. The lamp has a unique design targeted the established market for toplighting lamps used in modern greenhouse facilities around the world. Benchmarked against other LED toplighting lamps on the market, the technical details of the 6-meter lamp are believed to be unique in several aspects leading to attractive specifications at a competitive cost point.  A patent application has been filed to protect the intellectual properties of the design of the lamp.  Due to the uniqueness, LED iBond expects significant sales of the HORTISABER lamp in 2024 and beyond.
  
  LED iBond continues to serve the vertical farming market with customized solutions but the volume remains in general low. However, the commercial greenhouse industry is expected to move from the typical single layer to multilayer for part of their production and as a consequence LED iBond explores the development of a dedicated lamp for such greenhouse multilayer setup.  
   
• UV Disinfection: During 2023, LED iBond fabricated TRACY® with 3. Party Far UVC LEDs and confirmed that Far UVC light emission was achieved with good performance and low optical losses which proves the advantages of TRACY as a platform for modules hosting UVC LEDs. LED iBond therefore now has a roadmap to a breakthrough for a disinfection product based on TRACY® which would be the first ever Far UVC LED product and system with a slim formfactor and advanced features such a replaceable LED capability and longer lifetime. LED iBond therefore continues to see a great potential in the market for Far UVC technology and solutions but the company’s current capitalization limits its possibilities to boost the R&D activities short term for the development of products and/or modules for the UVC market.
   
• Operation The cost structure of the company’s product portfolio has historically been too high to ensure acceptable margins, and significant efforts with new suppliers and development has therefore been conducted during 2023 to reduce production cost. As a result, the production cost has for some products has been reduced with as much as 40%. The Development of the HORTISABER lamp has from start been designed for low production cost but still highest performance and the production in Farum is in the process of preparing for ramp up of volume during 2024.

• Acceleration of top-line growth remains the number one priority. As a result, the company hired a CSO and will continue to focus sales and marketing efforts on selected smart building market segments and greenhouse industry to boost short-term revenue growth. In addition, the company continues to operate with tight cost control. 

• During 2023, the new and focused sales & marketing efforts (direct and digital) have been resulted in an increased pipeline of new customer prospects several sales opportunities.

Financial Development

• In Q4 2023, LED iBond generated revenues of TDKK 881, a decrease of TDKK 352 (-28%) relative to the same quarter last year. For the full year revenue decreased from TDKK 3,958 in 2022 to TDKK 2,597 in 2023 (-34%).
   
• EBITDA for Q4 amounted to a loss of TDKK 3,727 an improvement of 26% relative to the previous Q4. For 2023, EBITDA decreased by TDKK 4,823 due to improved gross margin on sold products and reductions in staff and administration costs. EBIT was improved by TDKK 13,355 for the year because of no write-downs on assets exceeding normal write-downs.
   
• Net profit improved by TDKK 23,961 for Q4 2023 versus the same quarter last year and TDKK 25,419 for the full year 2023. The improvement is due to last year’s reduction of the company’s deferred tax asset (tax losses carried forward).  From a perspective of prudency, the company has chosen to continue to maintain its deferred tax asset to zero. As revenue and profit growth start to materialise in scale, the company will be able to rebuild the deferred tax asset recorded on the balance sheet. Total tax losses carried forward per 31 December 2023 amounts to appx. MDKK 122 and represents a value of more than MDKK 27 (at 22% company tax rate) of which none is reported on the balance sheet per 31 December 2023.
   
• Total cash flow for Q4 2023 shows an inflow of TDKK 1,660 against an inflow of TDKK 4,858 in Q4 2022. The decline in cash flow can primarily be explained by, that the capitalization of development costs in Q4 2022 was reversed by TDKK 2,282, why the change in cash flow from investments was TDKK 2,976. Further, the capital increase in December 2023 was less than the capital increase last year in November 2022. In Q4 2022 cash flow from operations was improved by TDKK 1,861.
   
• For the year 2023, the company reduced cash flow from operations by TDKK 11,424 (66%) and from TDKK 17,300 to 5,876. The improvement was due to an improved gross margin, reductions in staff and administration costs. Investments was reduced from TDKK 4,441 to 3,094 a reduction of TDKK 1,347 (30%) due to optimisation and focus on fewer and larger development projects. The total cash flow for 2023 shows an outflow of TDKK 4,470 against an outflow of TDKK 16,709 in 2022. An improvement of TDKK 12,239 (73%) for the year and a reduction in the monthly cash burn from 1.4 million to 0.4 million.

• The cash balance on 31 December 2023 amounted to TDKK 4,555 compared to TDKK 9,025 on 31 December 2022.
   
• On 31 December 2023, the company’s equity amounted to TDKK 13,350 against TDKK 30,990 on 31 December 2022.

• Baldr Light ApS (CVR. 42193208) is owned jointly by LED iBond International A/S and the US based company Solar-Tectic LLC. Originally the ownership was 50/50 but due to a capital increase in 2023, LED International A/S now holds 92.9% of the shares.

Financial outlook 2024 & 2025

Based on current orders and pipeline, the board of directors and the executive management announce the financial outlook for 2024 and 2025 as the following and as stated in company announcement 94 26 March 2024:

• Revenue of DKK 10 – 12 million for 2024
• Positive cash flow from operations during 2025

Patents and IPR update

• On 31 October 2023, a patent application with the title Elongated Lamp was filed with the Danish patented office. The patent application is intended to protect the unique design aspects of the Hortisaber lamp. The patent application can also be filed as a PCT application within the next year which is the plan.
• On 23 February 2024, the patent no. 500011 (TRACY – Fam. 4) with title Construction Element With At least One Electronic Component and Associated, was confirm and granted for the following country: India.

• On January 16, 2024, the European patent 3809830 with the title A UV Lamp, regarding a Teat Cup Steriliser apparatus incorporating UV disinfection, was confirm and granted for the following member states: AL AT BE BG CH CY CZ DE DK EE ES FI FR GB GR HR HU IE IS IT LI LT LU LV MC MK MT NL NO PL PT RO RS SE SI SK SM TR.   

The audited annual report for 2023 is attached to this company announcement and is available here: https://ledibond.com/financial-reports/