Declining revenue but positive market indications, growing pipeline, and reduced burn rate
COMPANY ANNOUNCEMENT NO. 77
Interim financial report for Q2 and H1 2023
Today, LED iBond International’s (LED iBond) Board of Directors approved the interim report for the second quarter (Q2) and first half (H1) of 2023. Martin Løbel, CEO of LED iBond International, comments:
“The difficult market conditions continued in Q2 2023 with a declining revenue because several customer projects have been delayed or pushed out in time. Furthermore, many interesting customer opportunities have long timelines for decisions and potential orders which makes it challenging to drive revenue up short term. However, the pipeline of opportunities still grows due to our focused sales and marketing activities, and we still expect a stronger Q3 and Q4 revenue wise.
I’m pleased to see that we in H1 2023 improved EBITDA by 2.4 million (31%) and reduced the cash burn by 7.7 million (54%) compared to H1 2022. The management and Board of directors are currently evaluating opportunities for raising capital to support the business going forward.”
Financial key figures
| TDKK | Q2 2023 |
Q2 2022 |
Change | H1 2023 |
H1 2022 |
Change |
| Profit & Loss | ||||||
| Revenue | 488 | 910 | -46% | 1,363 | 1,724 | -21% |
| Revenue from external customers | 488 | 910 | -46% | 1,363 | 1,655 | -18% |
| Revenue from spin-offs | 0 | 0 | 0 | 69 | -100% | |
| EBITDA | -2,952 | -4,452 | 34% | -5,440 | -7,847 | 31% |
| EBIT | -4,745 | -6,693 | 29% | -8,991 | -12,323 | 27% |
| Profit before tax | -4,988 | -6,996 | 29% | -9,441 | -13,139 | 28% |
| Net Profit | -4,988 | -5,457 | 9% | -9,441 | -10,248 | 8% |
| Balance Sheet | ||||||
| Total assets | 36,774 | 83,826 | ||||
| Total equity | 21,548 | 60,842 | ||||
| Net working capital | -92 | 25,338 | ||||
| Net interest-bearing debt | 7,894 | 8,540 | ||||
| Cash | 2,389 | 11,392 |
| Cash flow statement | ||||||
| Cash flow from operations | -1,773 | -3,345 | 47% | -5,041 | -8,397 | 40% |
| Cash flow from investments | -775 | -2,310 | 66% | -1,595 | -4,901 | 67% |
| Cash flow from financing | 0 | -516 | 100% | 0 | -1,044 | 100% |
| Cash flow for the period | -2,548 | -6,171 | 59% | -6,636 | -14,342 | 54% |
Business development
- Smart Building Market
In the smart building market potential customers have widely recognized the uniqueness of the flagship product TRACY® for solar carport and parking garage lighting. LED iBond continues to experience a strong interest and request for quotations from potential customers and partners across Europe, Middle East, and North America.
Some of the marketing and sales efforts in the last 12 months, have in H1 2023 resulted in engagement with three US based partners – who are manufacturers of smaller type of solar carports. So far, these partners have installed TRACY® in 10+ smaller solar projects, which emphasises the attractiveness and potential of TRACY® for the carports segment. - Indoor farming
As announced in company announcement no. 75, 25 May 2023, LED iBond has initiated the design and development of a new unique top-lighting solution for greenhouses. The first prototypes are to be delivered in Q3.
During Q2, LED iBond have worked closely with few selected potential customers on detailed specifications and requirements for installation and received positive feedback on the new solution. All the potential customers have expressed interest in testing the solution due to its promising performance, e.g., in terms of energy efficiency and leading light homogeny. The broader market introduction is expected in later 2023, and the first prototypes are expected to be installed end of 2023. - Top-line growth remains the number one priority and the company continues to focus sales and marketing resources to boost short-term revenue but also build the pipeline with large scale opportunities despite the long sales cycles.
Due to the long sales cycles in construction of new parking facilities and solar carports, the company will in Q3+Q4, increase its focus on the new top-lighting solution on indoor farming retrofit projects for short-term growth. In addition, the company continues to operate with tight cost control.
Financial Development
- Revenue from external customers amounted to TDKK 488 in Q2 2023, a decrease of TDKK 422 (-46%) relative to the same quarter last year. For H1 the decrease was TDKK 361 (-21%).
- Other external costs, including Cost of Sales and Other External Expenses, amounted to TDKK 1,125 in Q2 2023, a decrease of TDKK 687 (38%) compared to Q2 2022 and for H1 2023 the decrease was TDKK 1,191K (36%) compared to H1 2022. The decrease is primarily due to focus and optimisation of sales, marketing, and admin costs.
- In Q2 2023, staff costs amounted to TDKK 2,585, a decrease of TDKK 1,888 (42%) compared to Q2 2022. For H1 2023 the decrease was TDKK 3,047 (38%) compared to H1 2022. The decrease is due to a reduction in number of FTEs. As of 30 June 2023, the number of FTEs was 11.
- Despite the decrease in revenue, the operational cost improvement resulted in an improvement in EBITDA of TDKK 1,500 (34%) in Q2 compared to the same quarter last year and for the half year the improvement was TDKK 2,407 (31%).
- Profit before tax improved by TDKK 2,008 (29%) compared to the same quarter last year and for the half year the improvement was TDKK 3,698 (28%).
- Net cash outflows in Q2 2023 amounted to TDKK 2,548 compared to TDKK 6,171 in the year-ago quarter, which is a cash improvement of TDKK 3,623 (59%). For the half year net cash outflows amounted to TDKK 6,636 compared to TDKK 14,342, a cash improvement of TDKK 7,706 (54%). The cash burn rate was reduced due to the improved EBITDA, working capital optimisation and a more focused investment strategy in development projects.
- At the end of H1 2023, total equity amounted to TDKK 21,548 (corresponding to a solvency ratio of 59%) compared to TDKK 30,990 (corresponding to a solvency ratio of 65%) on 31 December 2022.
- The cash balance stood at TDKK 2,389 at the end of H1 2023, as compared to TDKK 9,025 at the end of 2022 and 4,937 at the beginning of the quarter.
- To stimulate growth through investment in sales and marketing activities, product development, and to extend the Company’s runway towards self-sustained operations, the management and Board of directors are currently evaluating relevant opportunities for raising capital to support the business going forward.
Grants
- In Q2, LED iBond completed an ELFORSK funded project involving LED based UV light sources. The project has been a partnership with DTU/Risø. The project has resulted in valuable learnings regarding the performance of LED based UV light sources benchmarked against traditional lead-based UV light sources that are expected to be banned in a few years. The completion of the project lead to the last milestone payment in Q3 of DKK 0.1M.
- In Q2, LED iBond completed important milestones of its EUDP project regarding development of new technology with energy optimisation, sensor managed lighting solutions, camera technology and data collection for optimising yields for indoor farming. During H1, the project has involved a master project (title: Sensor Data Capturing For Yield Optimization) with DTU on data collection in indoor farming.
The successful completion of the milestones during Q2 will lead to a milestone payment in Q3 of DKK 2.6M.
Both grants will have cash effect in Q3 2023 strengthening the company’s cash position for 2023.
Patents and IPR update
- LED iBond’s Family Fam4B patent (application No. EP 3553375) has been registered in the Register for unitary patent protection under the European patent office.
Number of shares
On 30 June 2023, the number of outstanding shares in LED iBond International A/S was 25,850,871, unchanged from 31 December 2022 and the beginning of the quarter.
Outlook
The financial outlook for 2023 and 2024 is:
- Revenue of DKK 3.0 – 5.0 million for 2023
- Positive cash flow from operations during 2024
Financial calendar
- Interim financial report Q3 2023 29 November 2023
- Q4 2023 results and Annual report 2023 26 March 2024
- Annual General Meeting 24 April 2024
The full interim financial report for the second quarter and first half of 2023 is available here: https://ledibond.com/financial-reports