Light Science Technologies Holdings Plc (LST.L) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Light Science Technologies Holdings plc Investor Presentation. [Operator Instructions] The company may not be in a position to answer every questions received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And now I'd like to hand over to Simon Deacon, CEO. Good afternoon, sir.

Thank you very much, and good afternoon, everybody, and welcome to Light Science Technologies Holdings Final Results for year-end 30th of November 2024. Just to go over, we have 3 divisions within our group. We have our AgTech division, which you'll see top right of the presentation there. We have our Passive Fire Protection, which you see in the middle there of the building going up on the right-hand side and we have our CEM, Contract Electronics Manufacturing, business also, and we provide technology in all 3 divisions. We've got a slide of disclaimers, which is obviously good reading when you've got time to read through it in your own time. Just to introduce who's presenting today, we've got Andrew Hempsall, Chief Operating Officer, highly experienced in his industry. I've worked with Andrew for over 30 years, and we have a really good partnership to expand the business; there's Jim Snooks, CFO and Company Secretary, experienced FD through multimillion pound companies and a broad range of industry sectors; and myself, Simon Deacon, Chief Executive Officer. I've been an entrepreneur for over 30 years, heading up acquisitions and growing businesses over those 30 years. I'm just going to play you a short video just so you can get an understanding of how all 3 divisions come together. [Presentation]

Hopefully, that gave you a really good understanding of how the different divisions come together and what they're about. Just to take you through group highlights. For this financial year of 2024, revenue was up to GBP 12 million just over at 29.5% on the previous year. So really good growth for the group. More importantly, one of our key strategies was gross profit margin, and we've seen that move up from 23.4% to 30.3%. So that's really good gross margin improvement for the group. And we'll talk about that a bit further because that's really helped us become cash generative in H2 of last year. We did 36 RNSs published last year also. So we're really publishing the results of what we're doing, if it be orders coming through, but really getting the information out there to investors to see the activity that we're doing. We've got a strong forward order book of over GBP 3 million, and that continues to grow off the back of our GBP 50 million quoted group pipeline. The AgTech division grew by 250%. So it's really pleasing to see that division now starting to create good revenue and especially bringing in the new acquisition from the other year, Tomtech. We've got cash and undrawn funds availability, a circa of GBP 1.9 million. So we're improving the cash position. And we virtually broke even just a GBP 30,000 loss -- net loss for the year. But as I mentioned, we were profitable in H2 of last year, and we're nearly a breakeven point for the year of last year. So really good improving results for that whole year. Looking at the global trends and driving our markets, we're in 3 key divisions of markets and that being Passive Fire Protection, Contract Electronics Manufacturing and the AgTech market. And what's driving those markets is -- in the Contract Electronics is British manufacturing. It's about returning and onshoring back to the U.K. There's an awful lot of uncertainty in the world. And more recently, there's more budget in military and hardware. And we see an awful lot more work and activity happening for the Contract Electronics side due to this. in the AgTech sector, it's all about food security globally. And the reason for this is extreme weather patterns. Some points, we've got droughts, other parts, we've got flash floods. So we're seeing extreme weather patterns globally. And so we see more growing actually indoors in a controlled environment. But also we've got a growing population and how are we going to feed that population as it grows up to 2050. So this is really important. More recently in the news, there's been about water shortages and building our reservoirs up in the U.K. But this is a global problem. It's not just a U.K. problem. So for us in selling our product, that's very much a global opportunity. In Passive Fire Protection, it's really driven by the government. Since the awful tragedy of Grenfell, what we're finding is the Fire Safety Act and the Building Safety Act, that legislation coming through to make these buildings good. I'll talk about the numbers in a bit, but there's thousands and thousands of buildings across the U.K., which need remedial work doing to them. And this is really creating our market sector for us. All 3 divisions, all 3 market sectors are growing in a really strong position. So let's have a look at that combined market opportunity. It's GBP 120 billion, and that's for the U.K., but also globally in the AgTech sector and through in U.K. Electronics and the CEM sector that is through Europe. So let's break that down. We've got GBP 47 billion in the AgTech division that we're looking at. And that's got a compound growth rate of just over 11.3% up to 2033. So as you can see, there's a really good opportunity to sell our products, which I'll come on to throughout the presentation in this sector. We've broken it down into LED grow lights, which is at GBP 9.6 billion and growing at 28.2%, and that's creating a recipe of light and an artificial light in these environments and also the agricultural sensors, which is our product that we've been developing over the last few years, and that's worth GBP 3.74 billion and growing at 11.3% up to 2032. So a really strong market in the AgTech sector as we move forward. In the Passive Fire Protection market, it's GBP 50 billion, and this is in the U.K. alone. We're only looking currently at U.K. market. There's a big enough market. And you'll see there's around 20 years' worth of work to remedy all this safety issues, fire safety issues within the property sector. And at U.K. Circuits, the electronics side, it's GBP 22 billion. It's growing at 8.8% up to 2030. So as you can see, it's a really strong market. It's growing at a good rate, and we're in the right sector moving forward. So let's start with the AgTech division. First of all, we had a name change in the AgTech division. We were originally called controlled environment of agriculture, the CEA. And you would have seen in a recent announcement on our Capital Markets Day in London, we announced that we were changing the name to AgTech. And the reason for this is that our products now are broadening. The technology products that we have are not just now used in the controlled environment of agriculture indoors for horticulture, but also in broad acres and open agriculture. So we've changed the name to it being more suitable for AgTech AGT. The year-on-year revenue is up approximately 250%, just under GBP 1 million worth of revenue, and that continues to grow. We've got a strong quoted pipeline in this sector of just over circa GBP 42 million, and that is being converted. And what we saw and we delivered more recently was for the Richel Group, one of our lighting products, and this was for a glass house. This is a French company, Richel, but for a glass house, which was being built in Germany. And this is key really for our AgTech sector is partnering with companies like Richel, who provide 12,000 hectares of growing space in the controlled environment of agricultural every year. They've completed 500 projects per year across 95 countries. We don't just see our AgTech sector being in the U.K. It's very much global, and we're doing that through partnerships. Our sensorGROW now is in broad acres. We've been trialing the sensor, which you see here with Dyson Farming over the last couple of months and last year. And this has really taken off. Dyson Farming and Sir James Dyson has invested heavily in technology and in agriculture. And we're part of that development moving forward with grants and developing the product. Nitrous oxide sensor N20 emissions to help farmers reduce waste and cost. One of our products being that sensor you see on the right-hand side is all about managing carbon dioxide, what's going into the soil, the nutrients and also it's managing the waste. It's not just about telling you what you need to put on, but everything becomes expensive. So it's about making the grower, the farmer, more profitable while reducing the waste and putting the right amount of inputs that it requires to increase the yields and get better crops. At the moment, you will see that 60% of the land in open agriculture we work on is unhealthy and yields are reducing. And that's because it's been used and rotated far too often, and we're losing that nutrients in the ground. And that makes our food less tasty and less healthier as well. The Tomtech acquisition is now successfully integrated into the division. And this is really pushing up our margins in the AgTech, which is over 50% gross margin, I'm pleased to say. Moving on, and you'll see all the way through the presentation, partnerships are a big part of what we do, if it be in Passive Fire Protection or it be in the AgTech or in the Contract Electronics side of our business. It's really important that we partner with the right people so we can expand and increase our revenue and margins. So we signed AgriLogiq in South Africa. It's about choosing the right partner who's already within the industry. We are providing products to substitute some of their own products and so that they can expand in their own market. They're local, they're on the ground. They've got a customer base. And this is where we see in the AgTech sector where we can really expand by selling our lighting, our sensors, our software platform, our irrigation and our control systems. We really do have a turnkey solution for our products in this space. Agrolux was a more recent partnership. They are part of a huge organization of Miracle-Gro, who are listed on the New York Exchange, a value of around GBP 3 billion. And Agrolux are one of the leading horticultural providers of lighting. We've done around GBP 10 million worth of quoted business for them here in the U.K. and Europe, so split between U.K. and Europe. And this is a really strong partnership where we see that we can expand and sell our products into. They provide lighting and so do we, but it doesn't mean that we can't also sell our sensors and our control systems and irrigation systems off the back of it. So this is a really strong partnership, and we're really pleased that we've managed to achieve that more recently. So having a look at the AgTech division, intelligent software provides live data, and this is the key for a successful growing environment. We need to provide a product to the growers, which is really useful for them to spend the money in this technology. And this is giving them live data so they can put the right inputs if it be in controlled environment in enclosed vertical farm, polytunnel or glass house or if it's in open agriculture. We're seeing a lot more technology. As you know, tractors now can operate 24 hours without any driver within them and plowing the field, setting the seed. So technology is out there, but we're part of that movement moving forward to make all the growers more profitable. Monitoring in real time allows decisions to be made for optimum growth, predicting the weather and when crops will be at the ultimate for harvest is really important. So we believe technology is really the key to driving the future in open agriculture as well as enclosed. As I mentioned, we're working with Dyson Farming on the nitrous oxide project as part of a grant process, developing the sensor. And this is really taking us to the next level in our sensor technology and control systems so that we're looking at carbon dioxide and the inputs and how much different plants can capture carbon and put it back into the ground. And this will have a real effect on carbon credits as an example, if you get the right plant, which is growing to capture carbon and put it back into the ground. And carbon credits can have different grades of carbon credits, and this is real-time information. As normally with carbon credits, it's all about historic data. This is live data. Methane is the other direction that we're going is looking at methane and capturing that data also. So as you can see, we're starting to become not just in AgTech, it will also evolve into more environmental sensor as well, which is really important. And it will be a managed to manage water pollution as well as many other things as we move forward. I would say that some of the sensors that we applied in carbon dioxide and N2O, these are stronger than ozone-depleting substances. So over 100 years, that's more than 300x more powerful. So it's really important that we've got the right product at the right time. It's a subscription-based model taking shape of our monitoring software solution. So it will be sold on a subscription basis with 3- to 5-year contracts, so giving that really recurring revenue stream. We've got a good quoted pipeline in the AgTech sector of GBP 42 million. Moving on to Contract Electronics Manufacturing division, market size of GBP 22 billion, revenue circa 5% up to GBP 9.5 million. So a really strong result. And there, again, a real management team focus on that gross margin. It's up from 22.6% to 24.3%. So really strong margins. We continue to get those efficiencies within the factory so that we can increase those margins. We've entered into new markets within this sector. As you appreciate, we don't just do AgTech and manufacture our own products, but we do pest control, sports entertainment, lighting, audio, gas and fire in the industries as well. And we're looking at seeing what industries and markets we need to be in to get that better margin. And we've taken on 10 new clients in that time as well. So it's a really growing industry, more efficient, and we're in control of our own design and manufacture for the group, which is really important. The market opportunity and the return to U.K. manufacturing we're seeing from the Far East a lot of uncertainty in the world. A lot of now even in Europe, paper, which has to change hands and red tape. And we're really seeing people who are English companies wanting to return back to the U.K. because of those costs, if it be transport and administration of goods. We're also seeing more recently tariffs being imposed to certain countries from America. And this is also seeing reshoring back to the U.K., which is great to see. I'm really pleased to see that in the Plimsoll summary of analyst report for Jan 2025, we were positioned ninth overall out of 24 of the best CEM trading partner in the U.K. And we also achieved the top 50 in the CEM U.K. market share. So it just shows that management is driving this business in the right direction and we're starting to get our name heard more and more. This is a business that has been going over 25 years. So it really is well established and continues to grow. The facility increased its profitability on the products manufactured within the divisions for the group. We really took when we bought Tomtech to see how we could integrate and they were manufacturing their own control systems and how could we actually make that product more efficient. So we moved it to our contract electronics side, assembly plant, manufacturing site up in Manchester, and that's really brought the efficiencies for the AgTech side, making more margin, but also for the Contract Electronics. We continue with the group and grow further in different sectors. And this really gives us the flexibility to design and manufacture things a lot quicker with our own in-house manufacturing. Clients and partnerships, I mentioned partnerships. Having visibility and partnerships really is key. And so we're looking at having contracts with clients over a number of years, so we have better visibility. One of the key things for us is making sure that we look at potential new markets. And more recently, military contracts, IT and traffic communications are what we believe have got higher margins, but also can provide us good revenue and growth. So we're looking at what accreditations we require. We've been in some of these sectors before, where our customers have got the accreditations for military applications, as an example, but we're supplying to our customers then supplying to the military. So we'll continue that. The accreditations we're looking for different -- 2 different types of ISO13485 and ISO45001. Really important to get the great accreditations moving forward so that we can enter these markets. We continue with further increasing automation and investing in equipment in our facility. This increases the margin and lowers the concentration level and derisks our customer base going forward. Moving on to Passive Fire Protection division. The U.K. market size is GBP 50 billion, as I mentioned at the beginning. And this is really being driven by the amount of buildings which need doing. There's over -- 18-meter size height buildings, there's over 11,000 buildings. So there's a lot of buildings which are high risk, which need completing. And buildings between 11 and 18 meters, there's 33,000 buildings. So there's quite a large amount of remedial work which needs doing throughout the U.K. The revenue in this sector is circa GBP 1.8 million, of which GBP 1.5 million was done in H2 of 2024. So they had a really strong second half. It's cash generative and has strong margins. So these margins are above 50%. And this is what we were talking about earlier about leveling up the revenue of the group to push up those strong margins overall, which is really important for us. We did 5 projects in the last 12 months of different sizes and in different parts of the country. We won our Manchester contract in October worth nearly GBP 1.2 million. And our quoted business, our quoted pipeline is GBP 14 million. And I'd like to see that continuing to increase as we get new inquiries on a daily basis. As I mentioned, this is driven by Fire Safety Act of 2021 and the Building Safety Act of 2022. The government really is pushing for these buildings to get the remedial work done. Now this isn't going to happen overnight. We believe there's probably around 20 years' worth of work. I think the government wants it going much faster than that. But realistically, there's a lot of work to be done over a long period of time. They've pledged GBP 6 billion, the government. But what I'm really pleased to see is that not only has it been pledged, but GBP 1.1 billion of it has already been spent to support owners, occupiers of buildings who haven't got the money to repair these buildings and live in apartments, which are over 18 meters tall. So really good to see that. Our product is really cost effective, less waste, more environmentally friendly too as we move forward. And that's really -- you see the speed of the projects coming through, but also it's less mess for any occupiers who might be in it. We're IFC accredited, which is really important to make sure that we're downloading the information. We have live information that we record and putting into the building. So it's all recorded and regulated. And we enable safer evacuation of a building. Our barriers we put into cavities last up to 2 hours so that you can get safer evacuation of these buildings, which is really important. As I mentioned, there's a lot of buildings. There's over 33,000 buildings. There's 20 years' worth of work all over the country. This division is really scalable. It only costs a small amount of money between GBP 30,000 to GBP 40,000 to buy an extra pump or put 5 or 6 people around that pump, which are trained, which create around GBP 1.5 million worth of revenue. So it's really scalable. I mentioned again, partnership. It's really important for us to be partnered with the customers that we have a portfolio of buildings which need doing. Some of our customers have 10 or 15 buildings in their portfolio, which need doing. Some have 300 buildings, which need doing. So the key factor is being partnered to blue-chip companies, but also specified. So we're being specified with the fire offices, the architects across the U.K. as these jobs come through to return into orders. So it's really important. The quoted pipeline is converted but also grows as we move forward. So really exciting division and a rapid growth potential. So our focus is also on new technology. As a group, we sell technology, how can we improve not just putting a barrier into the passive fire and into these buildings, but it's providing technology. And we want to put an early warning system sensor technology into cavities. Why do we think this is important? Well, a lot of fires can be caught inside a cavity, but not actually within the building. So it doesn't mean that certain alarms go off at that stage because the fire hasn't reached internally. So for us to put an early warning system, if you're the 23rd floor up on the west side of the building in an apartment and the fire is going off on the east side on the 11th floor, it would be really good to have an early warning system, which might come up on your phone or actually being connected to the main system and alert everybody all at the same time. So we're developing that as an early warning system. And this will create recurring revenue like the AgTech sector in a subscription-based model. And we also want to get this specified by insurance companies because if it's in buildings, it's better for those insurance companies to endorse the product and technology we're putting in. So we're very excited about developing that as we move forward. Some of the activity we've done for the group. We've tried certainly in the last half of last year to be more active in putting out news. We did 36 RNSs published last year. New communication methods have been very much about video content, audio, so people can visually see and hear short videos that we're doing. In Proactive, we had a total of 15,000 views. We had 742 hours of total watch time of the interviews. Articles, there was over 175,000 views and impressions. So you really get a feel just for one platform, how much work we're doing. And these are going on all sorts, not just from our website, Light Science Technology Holdings, but also on X and other platforms going forward being in the mail or the Times or newspaper articles. And more recently, we had a Capital Markets Day at the London Stock Exchange on the 26th, which was really good. And we had a guest speaker from Dyson Farming. So we're really pushing to have more activity, and you'll hear a lot more about as we go forward and continue this momentum. I'm going to hand you over now to Jim to talk about the financial overview.

Thank you, Simon. So looking at the revenue and gross profit for financial year '24, a very strong continued growth trajectory there, growth of 29.5%, taking us from GBP 9.3 million to GBP 12 million for the group as a whole. And importantly, what we're seeing is a reshaping, a reweighing of the divisional contributions with the newly acquired Passive Fire Protection division at the end of financial year '23 and with Tomtech having been acquired into the AgTech section. So really, FY '24 was the first year of a reshaping. And what we're seeing is that platform business within the CEM, Contract Electronics Manufacturing, division that's always been our platform, we're now leveling up with these 2 new divisions. Revenue growth is organic and acquisitive. The Contract Electronics Manufacturing division is growing in its own right at a rate of 5% last year, but the much bigger pieces here really are from the Passive Fire and the AgTech divisions. Passive Fire grew to GBP 1.8 million through the course of the year, new division. It achieved GBP 300,000 in the first half and GBP 1.5 million in the second half. And AgTech saw a 250% growth from around the GBP 200,000 prior year to near on GBP 800,000 for FY '24. A couple of substantial contracts to highlight. In the Passive Fire, we won GBP 2.7 million worth of contracts through last year with GBP 1.8 million delivered upon, leaving GBP 1 million approximately to take into financial year '25. And in the AgTech division, we had a key order from Richel, as Simon mentioned earlier, for GBP 120,000, and that was delivered successfully in February of this year. Alongside those scaling revenues, really importantly is the gross profit contribution. As you can see from the table down in the bottom right, the AgTech division delivers gross margins of near on 50% and the Passive Fire Protection division in excess of 50%. So we're seeing alongside those scaling revenues driving up of our group margins. And that we've achieved from a margin of 23.4% for FY '23 to 30.3% for FY '24. And as those divisions continue to scale, we see that margin moving further upwards. Looking at EBITDA and net loss -- net profit/loss. Well, we maintain very tight overhead control through the whole business, not just within the sort of holding company, but also within the divisions. And to give an example of that, our administrative expenses for last year only increased by 10.3% despite that growth of 29.5% and integrating those 2 acquisitions into the group. So it's important to us not just to drive revenue and increase margin, but also to control our overheads. And for the first time, we had a near on GBP 1 million positive EBITDA last year. So how does that drop down to the bottom line? Well, the second half, we generated a net profit for the first time of near on GBP 300,000. And for the full year, a near breakeven, it was only a GBP 30,000 loss. That was a reduction of 97.3% from the prior year. Alongside of that improvement in second half of the year profit generation was operational cash generation, and that's improved from a prior year of GBP 180,000 to just over GBP 1.5 million for last year. So driving towards profitability, sustained profitability and with it operational cash generation. Looking at our balance sheet. A key part of our balance sheet is our development assets and that really reflects the developments in the AgTech division. Simon has talked through the sensorGROW product and what we're doing with that and the potential opportunities that that's going to bring. And we've invested a further GBP 300,000 in that product during the course of the year. It's really a key product solution of ours for the future, bringing with it recurring revenues. So we will continue to develop that product, but also to commercialize and start to harness the opportunities from that. In terms of fixed assets, investment in CEM, the Contract Electronics Manufacture, division continued near on GBP 100,000 investment in plant and equipment to continue automating and bringing with further efficiencies and improving our margins within that division. And in the Passive Fire division, we now have 3 Injecta pumps. Each of those cost around GBP 30,000 to GBP 40,000, and they support revenues of about GBP 1.5 million. So we'll continue to keep a close eye on that and invest in further pumps as the business continues to scale upwards. And looking at group cash and banking facilities. At the year-end, we had cash and undrawn facilities of GBP 1.9 million, GBP 1.2 million being cash and the balance being the undrawn facilities, an improvement from the previous year and also from the half year point where we had GBP 1.1 million in cash and GBP 0.5 million in undrawn facilities. So alongside the profitability comes cash generation and that improvement in our cash position. Close Brothers is a key partner for us. We do see them as a key partner into the future in supporting our growth opportunities, organic and acquisitive, and they supported us in the first half of the year with a new facility that was for use throughout the whole of the group. Our net cash and debt or net debt position decreased from GBP 1.4 million from FY '23 to a much lower GBP 0.7 million at the end of FY '24. So Simon has mentioned throughout his presentation, it's all about the 3 growth divisions that we're operating within, scaling revenues within those divisions, improving our margins, our gross margins as the PFP, Passive Fire, and the AgTech division start to level up against the Contract Electronics Manufacturing division, keeping a control on overheads, generating and becoming sustainably profitable and generating operational cash at the other end. So I will hand back to Simon to do a summary.

Thank you, Jim. The next 5 years and the vision, the group is currently turning over the circa GBP 12 million for 2024 and a really strong growth rate. We want to drive this business for revenue of GBP 50 million over the next 5 years. And this is in the AgTech division, CEM and the Passive Fire, selling our hardware and software solutions, which provide recurring revenue. I'd like to see at least 20% of the revenue in AgTech being recurring and a small proportion also in the Passive Fire Protection business as we grow the revenue in these divisions. It's really important that we continue to build the operational cash generation within the group. And that means, as Jim mentioned, that leveling up of revenue. What we're seeing is the leveling up with the CEM side of the business, in Passive Fire and the AgTech, which has got those real stronger margins, moving those margin up for the group, which is now over 30% and that key cash generation. Creating partnerships is a really strong point and being specified for jobs. This is how we are -- our strategy is how we're going to be a global player with people in the market within their own countries and supplying our product. So it really is a key part of us being a global company and supplying our global products, especially in the AgTech division. Using our current technology model to expand the digital monitoring system for greenhouse gases. We've branched out into broad acres. And I see that with our sensor product, we can broaden that further and monitoring greenhouse gases and under environmental sensoring products that we require for water courses and so forth, which are really important to be measured, especially with the current climate change that we're in. So we really see a drive in different market sectors within the division and then that growing strongly globally. So looking forward for the next 12 months and beyond, really building a brighter, better technology group, having that global presence, having a real sensible approach to a clear strategy and a solid team to deliver our ambitions and to lead to a prosperous group. Sustainable -- we are an undervalued group. We're pushing hard to be noticeable. We've got a market cap of GBP 10 million, but we've really got 3 divisions in GBP 120 billion market, and we're growing. We're growing at a good rate and generating now that cash, which is required. So we've got GBP 10 million market cap with one division being worth that. So you can see there's really good potential to get behind us and support us in our growth. I'd just like to say thank you to everybody who has invested in us and come along for the journey, and we continue to expand and grow as a group and thank the staff as well. And I really open the floor to any questions that you might have.

Simon, Jim, thank you very much for your presentation this afternoon. [Operator Instructions] I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q&A can be accessed via investor dashboard. As you can see, we have received a number of questions throughout today's presentation. And Andrew, if I could just hand over to you to chair the Q&A with the team, and I'll pick up from you at the end.

Yes. Thanks very much. So the first one we'll take is one you answered very well about the disconnect between the share price and the underlying value. But how do you plan to increase the share price? I think if you can take it, Simon?

We plan to increase our share price. It's important that we make sure that we get new investors. We've seen more this year that we've got more publicity out there. I talked about the 36 RNSs that we did last year. We very much continue to do the same development going forward of pushing the information out there, doing short videos. And what this has done and having the Capital Markets Day and doing retail events, it's pushed new investors who are coming on board and taking quite large stakes in the business, if it be institutions or if it be private investors. And we continue to do this as we broaden and open more doors across the scope. And so we continue to do that as we go forward to hopefully, which will push the share price up as we go forward.

Okay. Thanks, Simon. Another one that's share price related. At what point do you anticipate declaring a dividend? I think Simon can say that we are definitely a growth share. Any profits that the company makes will be reinvested in the company to make the company grow and therefore, grow the share price. That's kind of our strategy there. It's going to -- it's -- we go back to Simon again. It's been a year of progress for Light Science. Can you talk us through the change the company has seen?

The company is constantly evolving, but we successfully integrated Tomtech and Injecta Fire Barrier in the last 12 months. and that's really pushed those profit margins up. It's really important that we -- I mentioned those 3 growth divisions, we continue to invest in them so that we can continue that growth. But really, the Tomtech and Injecta Fire Barrier, integrating that into the group was really key to our progress and the margin and the cash generation of last year.

I think one for Jim here on margin growth. Margin growth has been impressive. Where do you think margins could reach?

Yes. So in my section, I talked about the different divisions' gross margin contribution. CEM, Contract Electronics Manufacturing, typically 23%, 24%, whereas AgTech, Passive Fire around the 50% mark. We do see within Contract Electronics Manufacturing that there's avenues to push that margin further. We are investing in plants and equipment to automate and make more sophisticated. So we have already achieved efficiencies and margin improvements through that route. But also as we move into new sectors that we're currently targeting like health care, defense, then inherently, those sections -- those sectors rather, bring with them higher margins. So we think the Contract Electronics Manufacturing division has opportunities. In terms of AgTech, really the sensorGROW product is unique there. And when we get to the point of the subscription model embedding and those recurring revenues starting to flow significantly from that, that will be at a higher margin against, say, the lighting products that tend to be slightly lower than sensorGROW, maybe in the 30s. And then finally, Passive Fire Protection, we see maintaining those margins, but we're also, as Simon said, trying to get partnerships with businesses that we've done jobs, their portfolio of properties. So with it, there might be obviously some benefit to the client there. But as a whole, we see those -- the AgTech and the Passive Fire as those revenues start pushing through, bringing that margin up as the CEM division becomes kind of less concentrated as a mix towards the group. And definitely, that 30.3% margin, we anticipate pushing up higher.

Thank you, Jim. Another one here more on products. With the backdrop of worsening global drivers, population growth, water supply and current weather patterns, et cetera, what could this mean for the U.K. and how are your products evolving to meet these challenges? Well, I think obviously, public [indiscernible] nation and international impacts of issues with [indiscernible] extreme heat followed by lots of rain that [indiscernible] losing about 60% of their yields [indiscernible]. And I think the controlled environment is a way to counter that, put more [indiscernible] But as Simon talked about, the sensors [indiscernible] greenhouse gases as well. So kind of expanding our product portfolio to sort of match what's happening in the environment. [indiscernible] GBP 10 million overall for this year we're looking at. One for Simon. Are you seeing third parties with interesting technologies to which LST could be an attractive channel to market and be suitable for CEM?

In the Contract Electronics side, there's always partnerships. I'd like to see partnerships throughout all divisions. We currently partner with companies in pest control as an example and have done for over 10 years. So there's certainly scope to partner and also to partner with companies on a more global side on the contract electronics side. So we continue to look and continue to grow as you see and to move into different markets. I mentioned traffic communications is one of them and also military applications, which we've done in the past for customers who have got the right accreditations. And we see that as a big growth and higher-margin sector for us as well. Okay. Thank you.

One for Jim. Are you happy with your corporate structure? [indiscernible]

So yes, I mean, last year, we reshaped the Board. Graham Cooley, Dr. Graham Cooley came on to be Non-Executive Chairman. He's got very extensive experience in the market, having been CEO for ITM Power for 10 years, very valuable input to the Board. We've got Richard Mills, who is an expert in the AgTech market being Managing Director of the largest independent polytunnels provider. So that was a really good sort of reshaping of the Board. And we continue to monitor Board composition as we grow bigger and scale, and we will obviously bring the right expertise in to assist there. And then in terms of how that flows down, the divisions in their own right have their own divisional MDs and we support from a group level into those divisions. And when they need to recruit, we do that. So I think the structure works well. We keep it under review, and we will take any actions as and when the right time comes.

You can add this one as well, Jim. [indiscernible] there are no research currently. Is it fine to get research?

We do have research, broker-led research. We haven't got expectations in the market currently. We're reviewing that what we wanted to do, particularly last year was actually follow through what we set out, which was to become profitable. And we need to sustain that. That's a key strategy of the group. And when the time comes as appropriate, we will put expectations out in the marketplace. But we went through -- post IPO, we went through times where the energy crisis, Ukraine war. And I guess we're quite prudent on that, but we have every intent to put those expectations out when the Board feels the full visibility is there to stand behind them.

Simon, the company constantly talks about GBP 40 million pipeline. When will this pipeline get connected?

I'm pleased to say that it's no longer GBP 40 million for the group. It's over GBP 50 million for the group. And as you could expect, having 3 divisions that continue to grow, it's important that we have a strong quoted pipeline for us to convert to keep that growth of nearly 30%, which we've achieved last year. And so it is being converted. I think you will see more being converted in the AgTech space this year and the Passive Fire Protection space this year. As Jim mentioned, that leveling up with the Contract Electronics. So there's a big push to level that up because it brings larger margins to the group. So yes, I expect to see it being converted, but also built up on that quoted pipeline of GBP 50 million now.

Do you have any exposure to defense? Are you seeing inquiries or growing demand? I mean, yes, Simon talked about in his presentation, we are definitely targeting defense market. We do some work as well at the moment sometimes through third parties because we don't have those accreditations [indiscernible] platform to sort of enter that market [indiscernible] as well. Simon, can you outline the group strategy and let us know what investors might expect from the coming years?

Well, as I mentioned towards the end, we want to drive the revenue to GBP 50 million. We sit just above GBP 12 million now. So continue that growth in the 3 divisions that we've got. It's got good market value and it's growing at the right growth rate in those market sectors. So to do that, we'll do that organically, but also through acquisitions as and when we see that they come up within the divisions. And we can see, as I mentioned, we want to make sure that the platform that we have in software and the subscription model that we have for the sensor, we get that recurring revenue in the AgTech division for broad acres and controlled environment, where we're getting around 20% of recurring revenue within that division. And as we bring in the early warning system into the Passive Fire Protection, I can see that being also having a recurring revenue model also. So I think there's great potential as we expand within those divisions with the product range. And we've really got a turnkey solution in what we sell and also ask for higher margins because it's unique, which I think is really important. So over the next 5 years, there will be a continuous push for growth, but also that margin to increase overall, which will help us develop products as we move forward.

And then lastly, how do we deal with thought leadership within each of AgTech and PFP? I mean I think with PFP [indiscernible] putting out a lot of different media channels that sort of gets out there actually using our PLC status for the PFP is really -- very much about governance in the construction industry. So that really helps us. I don't think we're trying to be thought leaders on PFP, to be honest. I think there's lots of bioengineers and people like that, that are way more qualified than we are. It's about engaging with them, understanding we really want to understand what their problems are and sort of where we come in, if you like, and we have to be very careful as we step into the line becoming designers and things like that. So very much sticking to our knitting in that respect. And I think on ad tech, the way when we first started that we felt that we were doing it was by creating the laboratory. So we have the science lab with 2 scientists in it, doing trials and things like that. And it allows you to talk with authority because you've got that unfortunately, I think what was clear is that yes, everybody wants free research, but nobody wants to pay for it. So really at the end of the day, we're not adopting that approach either. It's about doing lots of media, lots of different channels and getting the name out there, if you like, but not necessarily being the thought leaders. I think that covers all the questions.

Guys, thank you for answering all those questions that came from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Simon, can I please just ask you for a few closing comments?

Thank you. Yes. We see the business is really going in the right direction. We're really pleased with the growth that we've had and the margin increase and the cash generation that it's starting to provide. That's really been one of the key strategies of the management. The teams in the different companies and divisions are working hard. There's great opportunity out there across the board. And we're very excited about the future moving forward to continue that growth and expansion plan. So I'd just like to say thank you very much for the current investors, and I hope that the people who are looking at us will come on board soon.

Simon, Jim, Andrew, thank you for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Light Science Technologies Holdings plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.

Thank you.

Thank you very much.