Light Science Regulatory News (LST)

Light Science Technologies Holdings plc

("LSTH", 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 12 months ended 30 November 2023 (the "Period").

Financial Highlights (Unaudited, subject to confirmation through 2023 audit)

During the Period, the Group saw revenue increase by approximately 13% to c.£9.25m (2022: £8.17m), driven by growth across each of the trading divisions, as LSTH made solid organic and acquisitive progress.

Overhead cost reductions during the Period resulted in c.20% cost savings, while gross margins grew by approximately 27% to c.22.5% (2022: 17.7%). As a result, the Group expects to report an unaudited loss before tax of c.£1.3m (2022 loss: £2.72m) - down approximately 50% year-on-year.

During the Period, LSTH focused on selected strategic expansion in order to progress towards becoming an operationally self-funded group that is positioned to take advantage of the clear opportunities across all of its target sectors.

Operational Highlights

Contract Electronics Manufacturing

The Group's CEM division - UK Circuits and Electronics Solutions Limited ("UK Circuits") - targeting a market worth £2.3 billion** in the UK, had its best year on record during the Period, with sales rising by c.13%. The focus during the Period was on increasing margins, which was successfully achieved.

Further investment in staff training and modern equipment has enabled production lines to become more automated, whereby UK Circuits will be positioned to handle larger volume projects and take advantage of wider market trends and the move away from Far East manufacturing and increased demand for products to be manufactured more locally in UK. 

Controlled Environment Agriculture 

The CEA division - Tomtech (UK) Limited ("Tomtech") and Light Science Technologies Ltd ("LST") - which is targeting a market forecasted to be worth nearly £30 billion by 2030*, grew acquisitively during the Period, with completion of the Tomtech acquisition in September 2023.

The focus now is on integrating LST's and Tomtech's technology platforms and taking advantage of commercial and operational synergies with a view to increasing sales in the UK and major global markets, by setting up distributor networks. This will be aided by the agreement with Arkif Limited ("Arkif") to scope and implement global partnerships to sell the Group's NurturGROW lights, SensorGROW sensors and Tomtech's software and control systems.

Passive Fire Protection

The PFP division, which was established following the Group's acquisition of Injecta Fire Barrier trade and assets in November 2023, provides the Group with exposure to a growing market, potentially worth £50 billion*** in the UK. The Group acquired assets with a proven track record in the passive fire protection market with a strong pipeline of sales opportunities in place. A formal agreement with Injectaclad Ltd was signed at completion to retrofit its industry disrupting fire resistant graphite barrier system ("Injectaclad"). As a high-margin and anticipated near-term cash-generative trade, it is expected to strengthen the wider Group's balance sheet in 2024.

Looking ahead, the Group will explore further technology advances in this sector along with the potential to coordinate its sensor technology across the divisions.

Outlook 

The core focus for the Group remains on growing revenue and margin, controlling overhead costs and ultimately becoming operationally cash self-funded. LSTH has a group of businesses that is targeting large growth markets and offers near to medium and long-term opportunities.

The CEM division is seeing forward orders and stock levels return towards pre-pandemic levels, as electronic components become more readily available in the marketplace and accordingly customers reduce their purchase fulfilment timescales and stockholdings. UK Circuits has a strong forward order book, with visibility for H1, and continues to work with both existing and perspective customers to build out H2 demand. Historically the CEM division has been the predominant revenue generator for the Group, but expectations are that the opportunities within the CEA and PFP divisions will rebalance the position during the course of FY24.

The CEA division, having acquired Tomtech and progressed integration with LST, is expecting to capitalise on the commercial and operational synergies with a stronger portfolio of products and solutions and increasing sales through the UK and via global distribution channels.

The PFP division received its first project orders, worth approximately £600,000, just before the Period end, with work commencing shortly after. With the cost-effective, regulatory compliant Injectaclad offering, underpinned by the requirements of the Fire Safety Act 2021, it is well positioned for anticipated further growth through conversion of its strong pipeline of quoted work, currently valued at £8 million.

*Report - Smart Agriculture Market Size & Share report (2030)

**Report - Plimsoll Report (2021) and LSTH's AIM Admission Document - Top 197 participants within the CEM market had a combined turnover of £2.3 billion in 2020

***Estimators price cladding replacement at 10 times government budget (theconstructionindex.co.uk) 2021

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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)

Light Science Technologies Holdings plc, comprising three divisions: controlled environment agriculture ("CEA"); contract electronics manufacturing ("CEM") and passive fire protection ("PFP"), encompasses design, manufacture and installation of products and bespoke solutions across a varied spread of industry sectors, including commercial horticulture, pest control, lighting, audio, gas detection and fire protection.

The Group focuses on providing solutions to a number of global issues, in food security, climate change, and fire protection and continues to build a strong set of solutions in these key growing market sectors.

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

Controlled Environment Agriculture

The Group's bespoke solutions provide control systems, grow lights, sensor technology, venting and irrigation systems to UK and global customers - with key targets including indoor, vertical, glasshouses, polytunnels and medicinal farming markets. 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. Key markets include the Americas, Australasia and specific locations in the Middle East.

Its sensorGROW technology enables farmers to monitor key air zone growing factors in real-time: carbon dioxide, air humidity, air pressure, air temperature and light - and in development, the potential to monitor: soil temperature, soil moisture and soil electroconductivity (EC). 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. https://lightsciencetech.com/sensorgrow/

nurturGROW is a sustainable grow lighting product range, covering greenhouses, vertical farming, polytunnels and medicinal plants. The Group's total addressable market is experiencing strong compound annual growth and is expected to be worth in excess of US$6.5 billion, globally, by 2026. https://lightsciencetech.com/solutions/greenhouse/

Through Tomtech the Group is a UK leader in 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 and can be used across multiple crops, improving yields and profitability. https://www.tomtech.co.uk/

Contract Electronics Manufacturing

UK Circuits is the Group'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. https://www.ukcircuits.co.uk/

Passive Fire Protection

LSTH IFB offers a functional, cost and time effective solution to remediate public and private residential, commercial, and industrial buildings that fail to comply with fire safety regulations; an issue for which the UK government has already allocated £5.1 billion. LSTH IFB is the UK's first independent approved installer of the industry disrupting Injectaclad fire resistant graphite barrier system, retrospectively installed within building cavities to reinstate fire resistant performance, containing the spread of fire and smoke, in accordance with fire safety regulation requirements. This unique solution offers a very attractive alternative to the more expensive, time-consuming and disruptive method of removing external building facades and installing traditional fire barrier systems.  https://injectafirebarrier.com/

LSTH IFB has a proven track record in the passive fire protection market and a strong sales pipeline in place. It is targeting a UK market that is potentially worth up to £50 billion.