Successful streamlining of the business resulted in external revenue increase of 60% in 2022

Today, LED iBond International’s (LED iBond) Board of Directors approved the full year report for 2022 to be submitted for approval at the annual general meeting on 24th April 2023. Martin Løbel, CEO of LED iBond international comments:

“We are pleased to see that total revenue increased 23% from Q3 2022 to Q4 2022, hereby marking the third consecutive quarter in a row with growth. Looking at revenue from external customers specifically, and disregarding revenue from LED iBond’s Spin-off companies, revenue increased 60% compared to the year before – from DKK 2.4 million in 2021 to DKK 3.9 million in 2022.  

We are also delighted that LED iBond in 2022 succeeded in raising DKK 8 million despite difficult financial markets. The progress in Q4 underlines the importance of the strategic initiatives in refocusing our smart building sales activities, where TRACY®’s design and form-factor are unique selling points, and secondly to develop vertical farming solutions for the longer term. We continue to see increased lead generation from our focused sales & marketing activities.

Acceleration of top-line growth remains our number one priority, but at the same time, tight cost control, burn rate deduction, and streamline of our operation, have also been key objectives since I joined the company in May 2022.  It is therefore with great satisfaction that we observe that our cash flow (burn) from operation and investments in Q4 2022 has been reduced with more than 50% compared to the average level of cash burn for the full year 2021.

To continue 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 will also in 2023 search and assess all relevant opportunities for raising capital to support the business going forward.

So, while we can be pleased with many things, it is, however, somewhat disappointing that the larger scale commercial break-through driven especially by vertical farming is yet to fully materialize. While the pipeline of leads and potential orders is promising, customer decision making processes for large projects are simply longer than initially expected, not least given macroeconomic uncertainties.

In light of present level of revenue and for prudency reasons, we have decided not to include tax assets in the full year account but rather keep tax loss carry forwards off balance sheet to be used against future taxable income generated from future growth.”

Financial key figures

TDKK	Q4 2022	Q4 2021	Change	Full Year 2022	Full Year 2021	Change
Profit & Loss
Revenue	1,233	372	231%	3,958	5,380	-26%
Revenue from external customers	1,233	367	236%	3,889	2,435	60%
Revenue from spin-offs	0	5		69	2,945
Grants	2,450	-3,073	-	2,535	0	-
EBITDA	-4,882	-8,469	42%	-15,500	-14,189	-9%
EBIT	-14,006	-11,297	-24%	-31,341	-26,094	-20%
Net financial expenses	-723	-114		-1,846	-1,163
Profit before tax	-14,505	-12,063	-20%	-32,963	-27,909	-18%
Net profit	-33,152	-8,708	-281%	-47,549	-21,066	-126%
Balance Sheet
Total assets				46,958	94,927
Total equity				30,721	71,090
Net working capital				6,754	36,683
Net interest-bearing debt				7,529	9,199
Cash				9,025	25,734
Cash flow statement
Cash flow from operations	-4,007	-4,659	14%	-17,300	-12,670	-37%
Cash flow from investments	2,282	-2,316	-	-4,441	-14,448	69%
Cash flow from financing	6,582	625	953%	5,032	42,992	-88%
Cash flow for the period	4,858	-6,350	-	-16,709	15,873	-

Business development

• Smart Building: For Q4, the smart building market once again contributed with the larger part of reported revenue, driven by steady sales of TRACY® for the kitchen segment and Canopy panels for industrial use. Furthermore, TRACY® was introduce in black colour and sold into a large indoor interior lighting project in South Korea.
  
   

As announced in company announcement no. 70 26th January 2023, orders were received for TRACY® INDUSTRY lighting panels for two solar carport projects (Germany and Netherlands) and an indoor parking facility (Denmark) with a combined Q4 2022 order value of approximately DKK 400K, set for delivery during 2023.

Customers have widely recognized the uniqueness of the flagship product TRACY® - both in terms of design, slim form-factor, ease-of-installation and energy efficiency - which positions the company for strong growth in the market for solar carport and parking garage lighting in particular.

LED IBond has more than 10 installations currently in place across Europe and the Middle East. More recently commercial interest has started to spread across other parts of Europe as well as the US with sample kits ordered and delivered for testing. The pipeline currently includes several larger sales opportunities in Europe.

• Vertical Farming: The expected long-term growth in vertical farming remains widely recognised and LED iBond is positioned well to capitalise as the market gains more momentum. LED iBond has established clear proof of product and superior qualities against many comparable products, as a result of which the company received several orders for smaller pilot projects in 2022. The large sales opportunities in the pipeline, which represent anywhere from DKK 2-8 million individually, are yet to materialise during 2023 and beyond.
  
  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. Based on initial feedback from potential customers in Denmark and other parts of Europe, LED iBond believes that the company’s technology represents a competitive alternative also in top-lighting solutions. As such, new prototypes are expected to be available for customer engagement during Q2 and Q3 2023.
   
• UV Disinfection: As announced in company announcement no. 57 13th July 2022, LED iBond is looking into the possibility of supplying UV disinfection modules to third-party manufacturers of disinfection equipment. It is the expectation that the market for UV solutions will gradually shift to LED technology, rather than traditional Hg-based mercury lamps which EU has banned from March 2027. LED iBond therefore continues with limited resources to monitor and investigate UV opportunities even if it may not materialize short term in volume.

Operation

• The new management team (CEO, CTO, CFO) was set in 2022, with a view to further sharpen the strategy to accelerate sales and streamline operations. The revised strategy includes stronger cost control, a focused market approach with fewer customer segments, a targeted product portfolio with precise product/market fit, and a much stronger and aligned execution of sales processes throughout the entire organization to support the growth phase during 2023 and beyond.

The cost structure of the company’s product portfolio has historically been too high to ensure acceptable margins, and significant efforts and development has therefore been completed during 2022 to reduce production cost and streamline manufacturing processes. As a result, the production cost has for some products been reduced with as much as 30% resulting in potentially significantly more competitive pricing to customers and better margins for LED iBond. Furthermore, the Operation and Finance functions have been digitalised with an ERP system that has further successfully resulted in headcount saving.

LED iBond is ready for growth and has an automated production line in Farum (800 m2) with capacity for 200,000+ meters of TRACY pa. Currently, ~10,000 meters are produced per year, hereby utilizing less than 5% of the full capacity. As such, revenue growth can accelerate significantly without driving the need for incremental investment into this production line.

• Acceleration of top-line growth remains the number one priority. As a result, the company will in the short term continue to focus sales and marketing efforts on selected smart building market segments to boost short-term revenue growth and on vertical farming projects for longer-term growth. In addition, the company continues to operate with tight cost control.  Cost reduction initiatives have been initiated throughout second half of 2022, with effects materializing fully in 2023. The head count by the end of 2022 was down ~50% compared to 2021. Consequently, the burn rate level at end of 2022 has been reduced with ~40% compared to 12-months earlier.

• During 2022, new and focused sales & marketing efforts (direct and digital) have been implemented including a new CRM system. During Q3+Q4, efforts resulted in an increased pipeline of new customer prospects (contact with ~1,100 new companies) and several sales opportunities (pipeline of ~50M total and ~8M weighted).

Financial Development

• In Q4 2022, LED iBond generated total reported revenues of TDKK 1,233, an increase of TDKK 861 (231%) relative to the same quarter last year. Compared to Q3 2022 revenue was up by TDKK 232 (23%). Total reported revenue decreased from TDKK 5,380 in 2021 to TDKK 3,958 in 2022 due to mentionable sales (TDKK 2,945) to spin-off companies in 2021. Importantly, and more reflective of the real commercial momentum, revenue from external customers increased 60% in 2022 - from TDKK 2,435 in 2021 to TDKK 3,889 in 2022.
   
• In Q4 the company completed an EU project. The deferred income from the project was DKK 2.5 million. In total revenue from sales and the completed EU project amounted to an income of DKK 6.5 million.

• EBITDA for Q4 amounted to a loss of TDKK 4,882 an improvement of 42% relative to the previous Q4. For 2022, EBITDA decreased by TDKK 1,311 primarily due to lower capitalisation of development costs and revenue. Further, stock related costs have been reclassified from financial costs to administration costs. The same explanation applies to the development in EBIT.
   
• Net profit decreased TDKK 26,483 due to reduction of the company’s deferred tax asset (tax losses carried forward).  From a perspective of prudency, the company has chosen to reduce 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 2022 amounts to appx. MDKK 115 and represents a value of more than MDKK 25 (at 22% company tax rate) of which none is reported on the balance sheet per 31 December 2022.
   
• Total cash flow for Q4 shows an inflow of TDKK 4,858 against an outflow of TDKK 6,350 in Q4 2021. The increased cash inflow in Q4 is primary explained by the capital increase in November 2022 and reduced labor cost due to decreased head count compared to 2021. Not taking the capital increase into account, the average cash outflow in Q4 was TDKK ~850 per month. A significant reduction in cash burn rate from a monthly average of more than MDKK 2.7 in 2021 (also without taking the capital increase in 2021 into account).
   
• As announced in company announcement no. 66 29th November 2022, reported investments in IPR were TDKK 6,667 for the period Q1-Q3 2022, primarily capitalization of labor cost used for product development. However, as part of finalizing results for the year, the detailed review concluded that the capitalization of development costs during Q1-Q3 2022 was overstated, resulting in a Q4 2022 reversal of TDKK 2,282 to end at the 2022 full year investments in IPR of TDKK 4,441.  

• The total cash flow for 2022 shows an outflow of TDKK 16,709 against an inflow of TDKK 15,873 in 2021 where the company raised MDKK 48 in new capital. The cash balance on 31 December 2022 amounted to TDKK 9,025 compared to TDKK 25,734 on 31 December 2021.
   
• On 31 December 2022, the company’s equity amounted to TDKK 30,721 against TDKK 71,090 on 31 December 2021.
   

Financial outlook 2023

As announced in company announcement no. 70 26 January 2023, the board of directors and the executive management announced the financial outlook for 2023 and 2024:

• Revenue of DKK 6 – 12 million for 2023
• Positive cash flow from operations during 2024

Patents and IPR update

• Patent application for an LED plug (WO2023041136), referred to as Fam 9, has been publish on 23 March 2023. The application covers a replaceable LED plug which is useful in a component fitting system. Link to the application: https://patentscope.wipo.int/search/en/detail.jsf?docId=WO2023041136

• Patent application for an electrical supply module, referred to as Fam7 in LED iBond’s 2021 prospectus (https://ledibond.com/wp-content/uploads/2021/10/LED-iBond-International-Prospectus-rights-issue-1.pdf ), has been withdrawn due to the filing of patent application Fam 9 which is covering the invention broader and better.
• As announced in company announcement no. 66 29 November 2022, validation of European patent 3532772 (Electricity Supply System - Fam. 6, Tracy) was confirmed for the following four countries on 27 September 2022: Denmark, Germany, France, and Great Britain.

• As announced in company announcement no. 66 29 November 2022, LED iBond has acquired full ownership of several patent applications from LED Livestock ApS regarding a Teat Cup Steriliser apparatus incorporating UV disinfection. The applications are the following: Danish patent application no. PA 2018 70421 (21 June 2018), International patent application no. PCT/EP2019/066552 (21 June 2019), and all national patent applications from the international patent application (Chinese patent application 201980041488.3; European patent application 19734021.9; Indian patent application 202127002474; Russian patent application 2021101018; US patent application 17/257,368). The European patent application is far in the process and has been approved for ratification.
• As announced in company announcement no. 66 29 November 2022; Baldr Light ApS (CVR. 42193208) is owned jointly by LED iBond International A/S (50%) and the US based company Solar-Tectic LLC (50%). The purpose of Baldr light ApS is to develop and apply for a patent for a new lighting technology capable of generating FAR UV lightning for disinfection purposes. On 15. Sep 2022, the international patent application for such a UV lighting technology (WO2022188937) was published under the patent cooperation treaty (PCT).  Link to the application: https://patentscope.wipo.int/search/en/detail.jsf?docId=WO2022188937

Full year report for 2022 is attached to this company announcement and is also available here: https://ledibond.com/financial-reports/

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Further Information

Martin Løbel, CEO
Mobile: +45 2722 6237
Email: [email protected]

Company contact
LED iBond International A/S
Agern Allé 5A
2970 Hørsholm
Denmark

CVR 36041609

+45 7070 7855
[email protected]
www.ledibond.com

Certified advisor

Västra Hamnen Corporate Finance
Jungmansgatan 12
211 19 Malmö
Sweden

Telephone: +46 40 200 250
Email: [email protected]

About LED iBond International A/S

Founded in 2014, LED iBond International offers innovative lighting solutions, based on years of development and deep knowledge of modern LED technology combined with advanced packaging and assembly technology. Our patented technology platform includes a very thin form-factor of only 6 mm for the light panels, offering a unique value proposition based on high design flexibility, robustness, IoT integration, and low total costs of ownership due to market leading energy efficiency and superior cooling properties. The technology platform also reduces the installation cost due a modular design with a limited need for traditional electrical wiring.    

LED iBond’s technology has been installed in many projects, ranging from intelligent shelf lighting to numerous large scale illumination projects such as various parking facilities and as the indoor installation of 3.2 kilometres of TRACY®, the company’s innovative flagship product, at the Technical University of Denmark.

LED iBond is focusing on three key business lines: Smart Building (Industry & Home), Vertical Farming, and UV Disinfection, all projected to show significant growth in the years to come. For Vertical Farming LED iBond’s roadmap includes lighting solutions which incorporate advanced IT management with monitoring using sensors, cameras, and plant analysis. Manufacturing takes place in Denmark in LED iBond’s own production facility with highly automated assembly lines.