REG - Light Science Tech. - Trading Update

Light Science Technologies HoldingsAnnouncement

04/07/2024 07:00

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RNS Number : 0678V  Light Science Tech. Holdings PLC  04 July 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU) 596 / 2014 WHICH FORMS PART OF UNITED KINGDOM LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO
BE IN THE PUBLIC DOMAIN.

 

 

Light Science Technologies Holdings plc

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

 

Trading Update

 

Light Science Technologies Holdings plc (AIM: LST), comprising three
divisions: controlled environment agriculture ("CEA"); contract electronics
manufacturing ("CEM") and passive fire protection ("PFP"), is pleased to
provide a trading update for the six months ended 31 May 2024 (the "Period").

 

Financial Highlights

Revenue for the Period is expected to be c.£5.2m (H1 2023: £4.4m), up by
approximately 19.3% year-on-year, with consistent growth through all divisions
of the business.

 

Year-on-year Group gross margins are expected to grow significantly to c.26.5%
(H1 2023: 20.9%), up by approximately 27.0%. This represents a gross margin
growth of approximately 13.5% from the full prior year of 23.4% (FY 2023).

 

Trading is expected to be reported as EBITDA positive during the Period (H1
2023: £494,000 EBITDA loss)*, with comparative Group net losses for the
Period more than halved to c.£334,000 (H1 2023: loss of £809,000), resulting
from the increasingly strong-margin sales mix.

 

Furthermore, the Group's working capital position is benefiting from increased
gross profit generation, coupled with a continuing drive for overhead cost
control throughout the Group. In May 2024, the Group completed an enhancement
of its debt facilities with Close Brothers, its long standing lender,
extending to group-wide financing, underpinned by an additional £850,000
facility, resulting in an increase to the Group's financial resilience.

 

As expected, the relative performances of the CEA and PFP divisions were
strong (albeit from relatively low comparative bases) following the respective
acquisitions of Tomtech and Injecta Fire Barrier's trade and assets in the
second half of the previous financial year.

 

Operational Highlights

Focus during the Period was on continuing the solid momentum achieved during
FY 2023, with new orders secured across all three divisions and the Group's
commercial development and pipeline progressing strongly. The Group's total
quoted sales pipeline currently amounts to over £47m, with a committed
orderbook currently worth nearly £5m, per the summary below.

 

 

 

                                                    Point in time   CEM        CEA      PFP      Total

 Expected Recognised Revenue (approximately) (£)    For the Period  4,525,000  375,000  300,000  5,200,000

 Committed Forward Order Book (approximately) (£)   Today           3,600,000  160,000  935,000  4,695,000

 

 

LSTH has positioned itself for further growth, recently restructuring its
Board and adding further industry, commercial and operational expertise - with
the appointment of a new Business Development Manager for the CEM division and
the post-Period addition of a Managing Director for the PFP division.

 

CEM Division

Key contracts won during the period included a new client in the sports
entertainment segment, initially valued at £130,000, with significant
potential for follow-on revenue in this new sector. Sales for the Period are
expected to total c.£4.5m - an increase of c.4% compared to H1 2023
(c.£4.3m), with a committed order book currently valued at c.£3.6m.

 

CEA Division

Significant strides have been made within the CEA division. The exclusive
distribution agreement with AgriLogiq in South Africa further enhanced the
Company's global reach, with the Company focusing on low cost and low risk
entry into expected high-growth markets with established partners. This
strategy is proving fruitful - with the Company already quoting for a
significant sized project in South Africa.

 

Commercial sales within the division (enhanced by cross-selling opportunities
between Light Science Technologies and Tomtech) were supplemented by further
grant funding - with the award of a grant worth £188k, funded by the
Department for Environment, Food and Rural Affairs (Defra). CEA sales for the
Period are expected to total c.£375,000, highlighting the benefits of the
Tomtech acquisition and the improving conditions within the sector. The
current committed order book is valued at c.£160,000.

 

In addition, SensorGrow's first outdoor trials took place in open fields
in partnership with Dyson Farming as part of the Transformative Reduced Input
Potatoes (TRIP) project - providing exposure to the open agriculture sensor
market which is expected to be worth over $3.84 billion by 2028**, while also
providing scope for the Company to grow recurring revenues via hardware and
software sales.

 

PFP Division

Following the acquisition of the trade and assets of Injecta Fire Barrier in
November 2023, as expected, this division has started generating revenues and
is providing good visibility with a strong pipeline.

 

PFP sales for the Period are expected to total c.£300,000, with this division
providing a new strong-margin revenue line for the Company. The division has
received orders worth in excess of £1.35m since being established, and with a
committed order book currently standing at c. £935,000, this division is well
positioned within a growth market. The near-term cash-generative nature of its
operations is expected to underpin further balance sheet strength.

 

Outlook

 

The CEM division continues to generate steady, solid-margin revenues and is
benefiting from recent positioning to handle larger volume projects and take
advantage of wider market trends and the move away from Far East manufacturing
- with the Company expecting to see increased demand for local manufacturing
in the UK.

 

The CEA landscape is materially improved, despite residual headwinds, and the
Board is confident that it remains the most significant long-term growth
opportunity for the Group. The focus is currently on growing the international
reach of the division, selling into the regions in most immediate need of
innovative control systems to combat declining global growing conditions.
Negotiations with targeted global partners are currently in progress and the
Company expects to complete further regional strategic distribution
partnerships in due course.

 

PFP represents the most immediate route to significant revenue growth,
targeting the growing fire safety retrofit market in the UK, which has been
estimated to be valued up to a potential of £50 billion***. Since the
inclusion of the PFP division into the Group in November, it has secured
contracts totaling over £1.35m and has an active quoted sales pipeline in
excess of £8.5m with an opportunity for follow on work with its live
contracts.

 

* EBITDA is not presented within the Company's financial statements but has
been calculated by Company management from disclosures within those reports

**Agriculture Sensor Market Size, Share, Growth And Industry Forecast
2024-2034 (thebusinessresearchcompany.com)
(https://www.thebusinessresearchcompany.com/report/agriculture-sensor-global-market-report)

*** Estimators price cladding replacement at 10 times government budget
(theconstructionindex.co.uk)
(https://www.theconstructionindex.co.uk/news/view/estimators-price-cladding-replacement-at-10-times-government-budget)

 

Simon Deacon, Chief Executive Officer at LSTH, commented: "LSTH entered the
period with a strong platform for growth and a realigned cost base having
successfully navigated considerable global pressures. I am delighted to say
that from that base we have seen significant progress - with strong revenue
growth and a healthy committed order book, which is expected to increase in
the coming months, currently worth nearly £5m, underpinning  our goal of
becoming an operationally self-funded, cash backed, group. As such, we are
delighted to see a further reduction in losses, with the Company expected to
report a positive EBITDA during the Period, for the first time in its history.

 

"The addition of Dr Graham Cooley and Richard Mills to our Board has given us
an enormous pool of experience from which we can draw and has already had an
impact on both our sales pipeline and corporate activity. In conjunction,
we've seen improving performances across our divisions. PFP is now adding
meaningful revenues, CEM has expanded into new markets, and CEA is
strengthening through international partnerships and Tomtech revenues, more of
which will also be recognised in H2.

 

"We aim to continue this trend and build on the strong start we've seen to the
second half of our financial year. The Board expects to see continued momentum
in PFP and CEM, and further international expansion of the CEA division."

 

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)                                    Tel: +44 (0) 203 179 5300

 Mike Seabrook / Nick Lovering

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

 

Notes to Editors:

 

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

Light Science Technologies Holdings plc operates through three divisions:
controlled environment agriculture ("CEA"); contract electronics manufacturing
("CEM"); and passive fire protection ("PFP"). The company is involved in the
design, manufacturing, and installation of products and customized solutions
spanning various industry sectors, including commercial horticulture, pest
control, lighting, audio, gas detection, and fire protection. With a focus on
addressing global challenges related to food security, climate change, and
fire protection, the Group is committed to developing robust solutions in
these rapidly growing market sectors.

 

LSTH is the holding company for Light Science Technologies Ltd ("Light Science
Technologies") and Tomtech (UK) Limited ("Tomtech") in the CEA division; UK
Circuits and Electronics Solutions Limited ("UK Circuits") in the CEM
division; and LSTH IFB Limited ("LSTH IFB") in the PFP division.

 

Controlled Environment Agriculture

The Group's tailored solutions encompass control systems, grow lights, sensor
technology, venting, and irrigation systems, catering to both UK and global
customers. Key markets include indoor, vertical, glasshouses, polytunnels, and
medicinal farming. Driving factors comprise global food and water shortages, a
growing population, government policies promoting sustainable growth methods,
heightened scrutiny of food production's impact on climate change, and a shift
away from processed foods. Key markets span the Americas, Australasia, and
select locations in the Middle East.

 

The sensorGROW technology enables real-time monitoring of essential air zone
growing factors such as carbon dioxide, air humidity, air pressure, air
temperature, and light. In development, it aims to extend monitoring to soil
temperature, soil moisture, and soil electroconductivity. This empowers
farmers to enhance resource management, saving costs on water, nutrients,
fertilizers, and energy, while simultaneously increasing yields and
cultivating healthier crops. Learn more here
https://lightsciencetech.com/sensorgrow/
(https://lightsciencetech.com/sensorgrow/) . The nurturGROW sustainable grow
lighting product range, applicable to greenhouses, vertical farming,
polytunnels, and medicinal plants, addresses a robust market with an
anticipated global worth exceeding US$6.5 billion by 2026. Explore solutions
here https://lightsciencetech.com/solutions/greenhouse/
(https://lightsciencetech.com/solutions/greenhouse/)

 

Through Tomtech, the Group stands out as a UK leader in control systems for
commercial greenhouses and polytunnels. Tomtech enables growers in optimizing
and automating cultivation environments, leading to superior crop growth. The
product range includes control systems, software, irrigation, lighting,
sensors, and venting, applicable across various crops, ultimately improving
yields and profitability. Discover more here https://www.tomtech.co.uk/
(https://www.tomtech.co.uk/)

 

Contract Electronics Manufacturing (https://www.ukcircuits.co.uk/
(https://www.ukcircuits.co.uk/) )

 

UK Circuits serves as the Group's profitable and revenue-strong CEM-focused
division. It excels in designing, procuring, and manufacturing high-quality
CEM products, with a specialization in Printed Circuit Boards. These products
find application across diverse sectors such as audio, automotive,
electronics, gas detection, lighting, pest control, telecommunications, and,
more recently, in the CEA market.

 

Passive Fire Protection (https://injectafirebarrier.com/
(https://injectafirebarrier.com/) )

 

LSTH IFB offers a practical and cost-effective solution to rectify
non-compliant public and private buildings, spanning residential, commercial,
and industrial sectors, with regard to fire safety regulations-a challenge
addressed by a £5.1 billion allocation from the UK government. Serving as the
UK's premier independent approved installer, LSTH IFB utilizes the
ground-breaking Injectaclad fire-resistant graphite barrier system. This
system is retroactively installed within building cavities, reinstating
fire-resistant performance and containing the spread of fire and smoke
compliant with regulatory requirements. This innovative solution stands out as
an appealing alternative to the more costly and disruptive method of removing
external facades and installing traditional fire barriers. With a proven track
record in the passive fire protection market and a robust sales pipeline, LSTH
IFB targets a UK market potentially valued at up to £50 billion*.

 

 

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