REG - Light Science Tech. - Acquisition of Tomtech

Light Science Technologies HoldingsAnnouncement

06/09/2023 07:00

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RNS Number : 4810L  Light Science Tech. Holdings PLC  06 September 2023

 

Light Science Technologies Holdings plc

("LSTH", the "Company" or the "Group")

 

Acquisition of Tomtech

 

Earnings enhancing and complementary addition, further strengthening the
Group's product range and market reach

 

Light Science Technologies Holdings plc (AIM: LST), the controlled environment
agriculture ("CEA") technology and contract electronics manufacturing ("CEM")
group, announces the Group earnings enhancing acquisition of Tomtech (UK)
Limited ("Tomtech"), a UK leader in the design, manufacture and installation
of monitoring and control systems for commercial greenhouses and polytunnels,
for a total cash staged consideration of £500,000 (the "Acquisition").

 

The initial cash outlay, payable immediately, is £75,000, with the remaining
payments being staged and deferred over the next 30 months. As at 31 December
2022, Tomtech's balance sheet included cash in excess of £140,000 and is
currently c.£284,000.

 

Highlights

·    Addition of new CEA revenue streams to the Group

·    Well-established business which has been operating for over 35 years
(initially as a sole trader, before incorporating as a limited company in
2011)

·    Complementary product range with Artificial Intelligence ("AI")
opportunities

·    Growing revenues with a proportion of recurring sales on maintenance
contracts

·    Strong commercial and operational synergies with the Group's existing
offering

·    Loyal CEA customer base across the UK and Ireland

·    Immediately Group earnings enhancing in the current reporting period

 

Rationale

Since launching its first products into the CEA market over 35 years ago,
Tomtech has established itself as a UK leader in the design, manufacture and
installation of monitoring and control systems for commercial greenhouses and
polytunnels, helping growers optimise and automate their cultivating
environments, resulting in superior crop growth.

 

Tomtech's product range incorporates control systems and software, irrigation,
lighting, sensors and venting. Its systems can be used across multiple crops
in glasshouses and other horticultural environments. Additional long-term
recurring revenues are generated via maintenance, servicing, and software
contracts.

 

Tomtech's business closely complements LSTH's existing CEA offering and will
sit within the Group's CEA division post-acquisition, further strengthening
its standing within the CEA market place.

 

Tomtech currently has over 160 live customers - including commercial growers
in agriculture, horticulture and floriculture segments as well as universities
and public authorities. It has traded profitably for the last four years. For
the year ended 31 December 2022, Tomtech reported unaudited profits before tax
of c.£79,000 on sales of c.£680,000, of which c.£49,000 was recurring
revenue. As at 31 December 2022, Tomtech had net assets of c.£145,000,
including c.£141,000 in cash.

 

Increased Opportunity

The addition of Tomtech's product range will further enhance the Group's
market reach and cross selling capabilities, creating a more holistic
offering. By utilising the Group's digital platforms, the enlarged business
will be able to take advantage of growing demand for AI in control systems -
supporting precision farming with increased digitisation as growers target
more control over crops to sustain and improve yields and profitability.

 

Rising popularity of the Internet of Things ("IoT") devices and AI solutions
is expected to drive demand with the combined technologies of the enlarged
Group, providing a comprehensive product range and set of solutions for
growers. The enlarged technology platform and integrated offering will enable
the Group to tailor services for existing and new clients. Over 450 clients
have been serviced by Tomtech since the business was incorporated, providing a
significant springboard for the Group to target new business opportunities
both domestically and globally.

 

Terms of the Acquisition

LSTH has entered into a share purchase agreement with Susan Elizabeth
Thompson, under which, the Company has agreed to acquire the entire issued
share capital of Tomtech for consideration of £75,000 in cash immediately and
a further £425,000 in cash of deferred consideration, which is payable in
stages - with equal payments  of £75,000 being paid after 6, 12, 18 and 24
months and a final payment of £125,000 being paid after 30 months of
completion of the Acquisition.

 

The consideration will also include an adjustment (the "Completion
Adjustment"), to reflect Tomtech's final cash balance on completion, once
agreed. If it is below £150,000, the seller shall refund to the Company such
amount below that figure, while if it is above £185,000, the Company shall
pay to the seller additional consideration equal to such amount above that
figure, subject to agreed deductions, totalling c.£25,000. The Completion
Adjustment is expected to be a maximum of £75,000, payable by the Company to
the seller, post-acquisition.

 

All of the Tomtech employees will continue to be employed by the Group
following the Acquisition and appropriate incentivisation arrangements are
intended to be put in place.

 

Simon Deacon, Chief Executive Officer of LSTH, commented: "We are delighted to
have completed our first acquisition since joining AIM. Tomtech has an
excellent team and reputation with its clients and we believe their range of
products and technology know-how will further enhance our industry reach and
standing. Bringing Tomtech's 35 years of experience into the Group's
CEA division enables us to provide an important turnkey solution to our
customers, providing the technology they need to control the cost of growing,
increasing yields and growing all year round. Acquiring Tomtech enhances
our ability as a group to take our products worldwide, offering a full range
of products, which sets us apart from our competitors in this very important
time for the CEA market where we are seeing extreme weather patterns
worldwide affecting our food security.

 

"Bringing Tomtech into the Group will further strengthen our position. The
team's added understanding of the requirements of growers in all areas of
the Industry from glasshouses and polytunnels to hybrid
growing environments in vertical growing, will be a big asset to the enlarged
Group. We are looking forward to working with the team to strengthen our
CEA division not just in revenue terms, but also the additional support to
grow our partnerships around the world and to broaden our reach."

 

 

For additional information please contact:

 

 

 Light Science Technologies Holdings plc                    www.lightsciencetechnologiesholdings.com

                                                          (http://www.lightsciencetechnologiesholdings.com/)

 Simon Deacon, Chief Executive Officer                      via Walbrook PR

 Jim Snooks, Chief Financial Officer

 Andrew Hempsall, Chief Operating Officer

 Strand Hanson Limited (Nominated & Financial Adviser)      Tel: +44 (0) 20 7409 3494
 Ritchie Balmer / James Harris / Rob Patrick

 Oberon Capital (Broker)
 Mike Seabrook / Nick Lovering                              Tel: +44 (0) 203 179 5300

 Walbrook PR Ltd (Media & Investor Relations)               Tel: +44 (0)20 7933 8780 or lst@walbrookpr.com (mailto:lst@walbrookpr.com)

 Nick Rome / Paul McManus

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014, as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018, as amended.

 

About Light Science Technologies Holdings plc
(www.lightsciencetechnologiesholdings.com
(http://www.lightsciencetechnologiesholdings.com) )

Light Science Technologies Holdings plc is the holding company of the Group's
controlled environment agriculture ("CEA") division, Light Science
Technologies Ltd ("Light Science Technologies"), and its contract electronics
manufacturing ("CEM") division, UK Circuits and Electronics Solutions Limited
("UK Circuits").

 

Controlled Environment Agriculture

Light Science Technologies was founded in 2019 and is the Company's grow
lights and sensor technology business, providing bespoke recipes and
technologies tailored to customers' needs - with key targets including indoor,
vertical, glasshouses, polytunnels and medicinal farming markets. The
all-in-one CEA solution will include analysing customers' crop growing
requirements to provide bespoke, low-energy and sustainable equipment.

 

Market drivers include food and water shortages in many parts of the world;
growing global population; UK and other government policy encouraging
sustainable and efficient growth methods; increased scrutiny of the effect of
food production on climate change and the continuing transition away from
processed foods.

 

sensorGROW

sensorGROW was launched in June 2022 and its technology will enable farmers to
monitor the following key air zone growing factors in real-time: carbon
dioxide levels, humidity, light, oxygen - and in the future: air speed, plant
disease, soil, temperature and water pH levels. By monitoring these key
growing factors, farmers can save money through better management of
resources: water, nutrients, fertilisers and energy - while increasing yields
and producing healthier crops.

 

nurturGROW

nurturGROW is a sustainable grow lighting product range, offering an
innovative, high-performance and cost-effective solution for indoor farming,
covering greenhouses, vertical farming, polytunnels and medicinal plants.

 

Created with four core component parts, the nurturGROW range is made of high
quality, durable materials to give growers the ideal balance between strength
and optimal performance, minimising the amount of materials needed to
drastically cut down on waste and reduce carbon footprint.

 

Tomtech

Tomtech was established in 1986 as a sole trader and incorporated as Tomtech
(UK) Limited in 2011. Since then, it has become a UK leader in control systems
for commercial greenhouses and polytunnels. Since launching its first product
over 35 years ago, it has been at the forefront of the sector, providing
innovative and effective products and solutions.

 

It now provides comprehensive solutions to customers helping them create,
monitor and maintain an optimised cultivating environment within glasshouses
and other horticultural spaces. Its  sensors monitor temperature, humidity,
light, carbon dioxide, pH, nutrients and more - whilst its intelligent systems
help control irrigation, fertigation, dosing, ventilation, light and more.

 

Its highly adaptive systems are used throughout the UK and Ireland to optimise
growing conditions for multiple types of crops grown within commercial
greenhouses and other horticultural environments.

 

Contract Electronics Manufacturing

UK Circuits is the Company's CEM focussed division, profit making with strong
revenues. The Group designs, procures, and manufactures high-quality CEM
products, specialising in Printed Circuit Boards, which are used in a range of
sectors including audio, automotive, electronics, gas detection, lighting,
pest control, telecommunications and, more recently, the CEA market.

 

 

 

 

 

 

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