Improved EBITDA and reduced cash burn rate. Growing pipeline, albeit revenue impacted by delays in certain projects.

COMPANY ANNOUNCEMENT NO. 83

Interim financial report for Q3 2023

Today, LED iBond International’s (LED iBond) Board of Directors approved the interim report for the third quarter (Q3) and the first nine months of 2023. Martin Løbel, CEO of LED iBond International, comments:

“The difficult market conditions continued in Q3 2023 with a declining revenue because a few but large customer projects have been delayed until 2024. 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 combined with our stronger product offering. The pipeline is currently at DKK 75M covering 100+ opportunities.

The first test installations of our new lamp HORTISABER has recently been completed at two commercial greenhouses and the initial results are very encouraging. We have high expectations for this product in 2024. I’m pleased to see that we in Q3 2023 improved EBITDA by 1.0m (39%) and reduced the cash burn by 15.4m (72%) compared to same period in 2022.”

Financial key figures

TDKK	Q3 2023	Q3 2022	Change	Q1-Q3 2023	Q1-Q3 2022	Change
Profit & Loss
Revenue	353	1,001	-65%	1,716	2,725	-37%
Revenue from external customers	353	1,001	-65%	1,716	2,656	-35%
Revenue from spin-offs	0	0		0	69	-100%
EBITDA	-1,697	-2,771	39%	-7,136	-10,618	33%
EBIT	-3,490	-5,012	30%	-12,481	-17,335	28%
Profit before tax	-3,497	-5,319	34%	-12,939	-18,458	30%
Net Profit	-3,497	-4,149	16%	-12,939	-14,397	10%
Balance Sheet
Total assets				36,384	77,426
Total equity				18,051	56,693
Net working capital				-2,666	23,126
Net interest-bearing debt				8,068	8,212
Cash				2,895	4,168
Cash flow statement
Cash flow from operations	1,311	-4,894	-	-3,730	-13,293	72%
Cash flow from investments	-805	-1,821	56%	-2,400	-6,723	64%
Cash flow from financing	0	-506	100%	0	-1,550	100%
Cash flow for the period	506	-7,222	-	-6,130	-21,566	72%

Business development
 

• Smart Building Market
  During 2023, LED iBond has developed two light management solutions targeted at parking facilities, solar carports and indoor parking garages. The two solutions differ in complexity and supported functionality and are marketed as Smart Light Control and Advanced Light Management, respectively.  The solutions strengthen LED iBond’s complete product offering together with the patented flagship product TRACY® and most customer opportunities show interest in the solutions, and as announced in company announcement no. 79, 27 Oct 2023, LED iBond has already received the first orders for such solutions.

• Indoor farming
  As announced in company announcement no. 80, 1 Nov 2023, LED iBond has developed a new toplighting lamp (marketed as HORTISABER) with a unique design targeted the established market for toplighting lamps used in modern greenhouse facilities around the world.  The lamp is specifically designed for the indoor farming industry producing both crops and various type of plants, and has a power of up to 1000W, a length of 6 meters, and a very competitive performance especially in terms of energy efficiency, light homogeneity, spectral compositions, thermal properties, as well as low installation cost due to smart mounting design.

The first test installation of the new lamp HORTISABER has recently been completed at two of Denmark’s largest greenhouses and the initial results are promising. Many Greenhouse operators in Denmark show great interest in HORTISABER and orders for the first pilot projects are expected by end of 2023 for delivery in 2024.   
 

• UV disinfection
  The market for UV LED technology for disinfection applications continues to mature and several potential customers show interest in LED iBond’s assembly and mounting technology and products. An Australian company has placed an order for ten samples of TRACY® with FAR UV LEDs. The samples are prepared with LED iBond patented replaceable bulb allowing replacement of the LEDs when the LEDs reach end of life. LED iBond continues to monitor opportunities within UV disinfection but with limited resources as current focus is primary on indoor farming and parking facilities.

Financial Development

• Revenue from external customers amounted to TDKK 353 in Q3 2023, a decrease of TDKK 648 (-65%) relative to the same quarter last year. For Q1-Q3 revenue amounted to TDKK 1,716.
• Other external costs, including cost of sales and other external expenses, amounted to only TDKK 147 in Q3 2023, due to reimbursement of COVID-19 compensation of TDKK 996. A decrease of TDKK 928 (86%) compared to Q3 2022. For Q1-Q3 2023 the decrease was TDKK 2,119K (48%) compared to Q1-Q3 2022. In addition to the reimbursement, the decrease is also due to focus and optimisation of sales, marketing, and admin costs.   
• In Q3 2023, staff costs amounted to TDKK 2,125, a decrease of TDKK 953 (31%) compared to Q3 2022. For Q1-Q3 2023 the decrease was TDKK 4,001 (36%) compared to Q1-Q3 2022. The decrease is due to a reduction in number of FTEs. As of 30 September 2023, the number of FTEs was 11.
• Despite the decrease in revenue, the operational cost improvement resulted in an improvement in EBITDA of TDKK 1,074 (39%) in Q3 compared to the same quarter last year and for the first nine months the improvement was TDKK 3,482 (33%).
• Profit before tax improved by TDKK 1,822 (34%) compared to the same quarter last year and for the first nine months the improvement was TDKK 5,519 (30%).
• In Q3 there was a net cash inflow of TDKK 506 compared to a cash outflow of TDKK 7,222 in the same quarter last year, which is a cash improvement of 7.7m. The improvement is primarily related to the milestone payment from the EUDP project of DKK 2.7m and the COVID-19 compensation. For the first nine months of 2023 net cash outflows amounted to TDKK 6,130 compared to TDKK 21,566 during the first nine months of 2022, a cash flow improvement of TDKK 15,436 (72%). The cash burn rate was primarily reduced due to the improved EBITDA, working capital optimization, a more focused investment strategy in development projects.
• At the end of Q3 2023, total equity amounted to TDKK 18,051 (corresponding to a solvency ratio of 50%) compared to TDKK 30,990 (corresponding to a solvency ratio of 65%) on 31 December 2022.
• The cash balance improved during Q3 2023 – from TDKK 2,389 at the end of Q2 2023 to TDKK 2,895 at the end of Q3 2023. This compares to a cash balance of TDKK 9,025 at the end of 2022, following a successful right issue in September 2022.

Grants

• In Q3, LED iBond continued the completion of 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. The project will be finally completed mid-November and is expected to lead to the last milestone payment in Q4 of DKK 1.1m.

Patents and IPR update  

• As announced 1 Nov in announcement no 80, a patent application was filed to protect the intellectual properties of the design of the HORTISABER lamp for indoor farming.

Number of shares
On 30 September 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 is as follows:

• Revenue of DKK 2.6 – 2.8 million for 2023
• Positive cash flow from operations during 2025

Financial calendar

• Q4 2023 results and Annual report 2023      26 March 2024
• Annual General Meeting                               24 April 2024
• Interim financial report Q1 204                     21 May 2024

The full interim financial report for Q3 and the first nine months of 2023 is available here: https://ledibond.com/financial-reports