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

Good afternoon, and welcome to the Life Science Technologies Holdings plc Interim Results 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 would like to submit the following poll. And I would now like to hand you over to CEO, Simon Deacon. Good afternoon.

Good afternoon, everybody, and welcome. Thank you for attending Life Science Technology Holdings Interim Results for 2025. A short disclaimer. When you get sent the presentation, please have a read of the disclaimer. Presenting today on my left-hand side is Jim Snooks, Chief Financial Officer and Company Secretary. On my right is Andrew Hempsall, who will be supporting us with the questions and is COO of the business; and myself, Simon Deacon, CEO of the business. There's a short video we're going to play now just to show you the different divisions and markets that we're in. [Presentation]

That's great. So just going through the group highlights for the half year. Revenue was GBP 5.1 million against GBP 5.2 million in H -- half year 2024. So about GBP 100,000 difference between the 2 half years. Margin more importantly, increased. Gross profit margin was 36.3%, and that was a difference between 2024 of 26.6%. So a really good strong increase of over 36% overall for gross margin. So really pleased with that. Group current quoted pipeline is circa GBP 58 million. So we've got a strong visibility of quoted orders, which is really important. And I would highlight here that we've seen CEA sit around GBP 34 million, but now we're seeing passive fire increase, and it's about GBP 24 million of our quoted pipeline. So we're starting to see a leveling up in our quoted pipeline as well as our revenue. Looking at EBITDA, we've gone from GBP 28,000 EBITDA in 2024 half year to GBP 279,000 in this half year. And that's a 10% tenfold increase. So that's really pleased to see that increase. And that's really reflecting on that gross profit margin increase. The loss for the half year was GBP 163,000, and that's down from GBP 335,000 in 2024. So we're pleased with progress moving forward, and you can see the EBITDA strength and the margin coming through. Cash and undrawn facilities availability to us is circa GBP 1.8 million. So we've got good visibility moving forward. So let's see what's actually driving the global trends for us for a group. And what we're seeing here is food security, food security and ag tech and climate change and really population growth. But we're all seeing certainly in the U.K. at the moment and fires in different places around the world, we're seeing drought. And so we're really seeing the effect of climate change and extreme weather. And this is having an impact on our food security, where it's grown, how it's grown, if it be outdoors or in. In manufacturing, we're really seeing an onshoring, especially in the defense sector, and we'll come on to defense because that's something we're focusing on our manufacturing facility at U.K. circuits. Really, technology throughout our product range as a technology company, we're really seeing advances in technology coming through, and that's really supporting manufacturing in many divisions and many markets. And from a fire protection basis, Passive Fire Protection, we're really seeing government legislation coming through, and that's really driving the market and our strong pipeline of GBP 24 million. So how big is the market? It's quite large. GBP 83.7 billion globally. And we've broken that down to AgTech global market to GBP 12.7 billion. And we're seeing double-digit growth here in the ag tech sector. And for us, we're focusing on LED grow light, but also agricultural sensors and control systems. In Passive Fire Protection market, it's a GBP 50 billion market here only in the U.K. And of that, there's around GBP 16 billion, which is for the domestic market. So as you can imagine, that's a huge market to go at, and there's around 20 years' worth of work. In Contract Electronics Manufacturing market and where we sit, there's around GBP 21 billion. It's a big market. Technology is advancing quickly, and the technology and components of electronic boards are going in all sorts of products now. So let's have a look at what we're doing in the AgTech and a commercial update. Global partnership. This is something as a management team, we've really focused on. We announced more recently and signed a partnership with Agrolux in the Netherlands. And this was a really key part of our partnership because they're part of U.S.-listed Scotts Miracle-Gro, a really important group and a worldwide group, and they're listed on the American Stock Exchange. So this is really an exclusive deal for us to be distributing their LED lighting, but also be able to put up our lighting stroke our sensors and control systems. And we're seeing a really good return from this partnership. Our focus on partnerships is Americas, Middle East, South Africa and Europe. And we've seen a lot of traction more recently in Europe. To give you an idea of the scale of this, we're also doing partnerships with the Richel Group, which is a French glasshouse manufacturer, and they're GBP 108 million revenue business. and they're really starting to supply us with some really good opportunities for us to fit lighting into glasshouses. And so we'll see a lot more of this turnkey solution that we can provide in sensors and control systems. Orders and prospects that we secured. The partnership with Agrolux, as I mentioned, secured a supply of 400 lights for a glasshouse in Poland. And we're really seeing that expand from Poland, Germany, France. We're really starting to get that traction through. So that's really important. Most of our revenue currently in AgTech comes from the U.K. As you know, we do between GBP 800 and GBP 1 million in revenue, and we've done many glasshouse refurbishments more recently. We've completed our first European nurturGROW LED project with Richel, GBP 123,000 in revenue, supplying lights for aerponics and glasshouses. And that was a really good case study for us to do and really set the scene for that particular client for other projects. Phase 1 of a commercial rollout for sensorGROW has also taken place. We've mentioned sensorGROW throughout our presentations and a lot of the times, they're on trials. And some of those trials have now ended, and I'll come on to those. And now we're seeing some traction with orders with a company called Haygrove, who are the largest independent polytunnel provider. This has really come on because it's capturing air-zone capacity for the environment within a polytunnel. So we're really adapting from broad acres to enclosed environment across the markets. We've also, as I mentioned, completed 8 U.K. glasshouse refurbishments, and that's putting in irrigation, control systems, ventilation systems. So there's a lot that we do is providing a turnkey solution for our AgTech clients. Moving on an update on our grants and trials. As you know, we're heavily involved in grants and R&D, and this helps support us develop our product, if it be lighting, if it be sensors or control systems. But we've completed UKRI grant funded project to develop and launch our sensor root zone capabilities, measuring soil moisture, soil electro conductivity and the soil temperature. And this is really important for our client base. When we survey our clients to what their needs are, we're providing those and those trials have taken place. We're in the final year of a 3-year trial with UKRI grant-funded TRIP project with Dyson Farming Research. And we've been working for Dyson with them for some time as a partner. But also other partners in that research are Emerald Research, Bangor University to name a few. And it's important to bring these partners together to grow together to make sure that we're getting the project and the scope and the validity of reducing nitrogen oxide in the growing of potatoes. So using sensorGROW, especially measuring the soilborne N2O emissions in this. And this will then develop even further and help us with our sales of sensorGROW. Ongoing field trials are also in broad acre for sensorGROW underway with Agri, a leading agglomerate service provider. And this is one way we see of growing and selling our products through agronomists who are working for farmers across the country in Europe as well as the U.K. And Dyson Farming sensorGROW trials are exploring potential sensor solutions to cultivation legumes, which is a pea or bean type crop. And this is really important, and we've seen a small order come through of GBP 5,000 for this. So you can see that our products for different types of food and growing, if it be sampling trees or if it be for food is quite broad. Moving on to commercial strategy and potential product development. One of the key things with our products that we do is a lot of it is project based. And it's really important that we move forward and change this because we want to split our revenue so that we're not completely project-driven. And to do this, we're going to brown box some of our product range. And why we're doing this is because we -- to be able to grow across the globe and through Europe, we need to do this through partners. We're a small company expanding with global products. So by partnering with these people and brown boxing with our clients and our partners, we're making it easier for the sale to go through and for our clients to use our products. So we're bundling the sensorGROW all in one bundle, so the sensor product, so it's ready to use off-the-shelf kit, seamlessly integrated and rapid installation. So it can be installed by the client, doesn't have to be installed by ourselves. And we're providing that software, so you're getting live captured data to your mobile phone device or computer to capture the data of a live working environment. So you know what's going on in your environment and how to change things. Ready-to-use off-the-shelf lighting products as well rather than bespoke. We will continue to do this bespoke, but it's also important to make sure we can standardize some of our products. And ready-to-use controller systems. We've been providing control systems in glasshouses and polytunnels for over 30 years. And so modern technology is now -- we're adapting those control systems to be able to talk to more devices and also be easier to install. The consumer market, I think it's really important to see what other markets when you've developed a product we can go into and providing a mini version of sensorGROW and control system for the consumer market, people who have got greenhouses, for example. And tapping into that market worldwide could be something of really importance to us. So we're looking at that market and adapting our product to it. Other sensorGROW potential development is environmental. We see a lot of pollution in water as an example, and measuring that water and that -- where that water and how polluted E. coli what might be in that water. Having that live data is really important, so providing that. Measuring methane, CH4, ammonia, NH3 is also really important from soil emissions and providing holistic overview of greenhouse gas emissions. So we're doing all of these things. We continue to develop the sensor as it becomes an environment sensor as well as an AgTech sensor. And so it's really important. We expect to see real good strong growth medium term and long term. And we continue to further partner globally with clients like Agrolux, who are one of the world's leading artificial lighting suppliers. Moving on to -- looking at a case study for our 30-year-old business in Tomtech in the AgTech division. This really gives you an example of what we're doing every day. And sometimes investors don't get to see this. But this is a case study that we did in the south of England, 2 sites faced out of date ventilation system required constant manual operation, which uses a lot of labor up and isn't efficient in today's world. So we looked at the climate control. We looked at the ventilation system, the control system. And we installed and refurbished 2 glasshouses at a garden center to provide that ventilation system on both sites, replacing existing motors and modern energy units and installing our T100 climate control computer with its software as well and integrating temperature humidity sensors throughout the area. So this is areas where we're looking at commercial growers, but also greenhouses at garden centers as an example. We also installed a weather station, enabled wind, rain and protection and automation. So that means ventilation coming on, heating coming on, all automated throughout the greenhouse. The outcome is improving efficiency and automation. And that was a really important case study for us. And at the bottom there, you'll see some of the names that you might recognize like Dyson Farming, who we work with. Berry Gardens, a GBP 300 million revenue business cooperatives in fruit. [indiscernible] tree, the jams, pots of jams you might see in hotels. We work with them also Haygrove, one of the largest independent polytunnel providers. Richel, I mentioned earlier, with a glasshouse manufacturer globally based in France and Bridge Farms. So that gives you an idea and a flavor of the case studies we do in AgTech. Moving on to our manufacturing facility in Contract Electronics Manufacturing. We've seen lower revenue in this division, which was expected by the management in the contract electronics. We knew that pest control was slowly coming end of the life products with that. We still expect it to be one of our largest clients next year. But we've then looked at how we're going to replace that revenue. And that's really important because there's a long-term objective, but also a short term. And the new product development progress is we've won 6 new clients in this half year. Audio, we won 2 clients, marine, electronic solutions and components, moisture systems and fiber network solutions. So as you can see, there's really a whole different market there that we can tap into and sell electronics into, which is really pushing and will increase our revenue moving forward. We're also progressing and repositioning the CEM division, which is really important. And why are we doing this? As you can see by our results, our margins are increasing throughout all divisions, which is great, but we want to continue that success. It takes time to do. So we're targeting higher margin and growing market sector and defense and health care, we can see that's where it's coming from. So we're restructuring, making sure we've got our processes in place, that we've got our facility organized in place and then also getting the right accreditations to move into defense and health care. So we continue to do that, which will obviously help us keep the efficiency of the manufacturing facility, but also increase our margins. So looking at what we're doing here -- sorry about that the lights have gone off that better. Looking at the commercial strategy for progress of defense and health care and the right accreditation, which is really important. 91,000 is really important. 9,100 is really important to get that key accreditation. And we're working towards that, as I mentioned earlier. We've already got the Made in Britain membership signed up and done and also the Make UK Defence membership. The JOSCAR membership is also in place, and we're also looking to go to various live one-to-one procurement meetings so that we can get a good grip of who's in the marketplace, where we're best suited for defense applications and what orders are available through different portals, which is the MOD portal, which is really important, too. So we're working towards that, and that's going extremely well. And so for the medium and long term, we expect the defense really to come through also in health care as well. Looking at a case study, what do we do in contract electronics? There's all sorts of products we make. And you'll notice through all of our divisions, we provide a -- try and provide a turnkey solution. In this case study, as an example, we're working to provide a flame detection and gas monitoring safety system. And this really has the synergy with our Passive Fire Protection business and where we're looking to do the early warning system that we've talked about before. And so we've manufactured single PCBs, assemblies for gas monitoring and service guard products. Of which, we made 1,200 gas monitors and 2,000 service guard specification and to the right standard to the quality of the client was needed. And you can see the picture there on what it looked like. The outcome of this was providing 3,000 products units across both production lines. And so we can scale up as we manufacture these products, but it's providing that turnkey solution, which clients are looking for. And that was a really successful project. And these projects continue in gas, oil and in passive fire. Moving on to our Passive Fire Protection division. We've currently got a sales quoted pipeline of GBP 24 million, which we're really pleased to say. Half year ago, that was sitting at circa sort of GBP 7 million. So that's really risen. We've also now got 50 years on the injector lifespan. So I'm really pleased to see that Injectaclad have managed to pass the rigid test and confirming the 50-year lifespan. And this goes into buildings. And what we're seeing is against other products, traditional products, this is 3 or 4x better lifespan than most other products out in the market. So that's a really good result for us as a business and Injectorlad and the industry. We've completed 9 projects so far across the country. On the left-hand side, that gives you a good example of a typical building that we put Injectorlad and install into. We have seen delays. As you can imagine, we've got a strong pipeline, which we're converting, but the Building Safety Regulator and sign-off of projects has been slower than expected. This is because they've changed -- the government has changed how it's regulated and the system and how it comes about, which has taken longer. So what we're creating is a solid hockey-stick-type growth in this division as that GBP 24 million project gets approved and we continue to build that pipeline. As I mentioned earlier, it's a big area here in the U.K. We're also making sure that we educate the market. This is really important, to educate the market with architects, fire engineers, developers, asset owners we bring them in the room and educate them on what our product does and how it can save them money, how it's more environmentally friendly and how quick it is to install. And being getting specified into the market is really important for us. The government pledged, GBP 6 billion. And of that pledge, GBP 1.1 billion has been spent. So it's really good to see that the government are backing it. They're driving the pledge that they put forward on this remedial work. On the left-hand side, there's another project that we've done over the years. And you can see that more type of buildings, if it be domestic, if it be commercial, there's all sorts of types of buildings which need remedial work. There are over 11,000 to buildings over 18 meters, which need remedial work. And there's 33,000 buildings between 11 and 17 meters. So there's a lot of work there here in the U.K. require that fire safety remedial work. We estimate it's about 20 years' worth of work. It's important for us to partner as we do in all of our divisions, partner with our clients. And this way, we can find a way of growing because a lot of our partners and customers don't have one building which need remedial work, but they actually might have 2, 3, 10, in some cases, over 100 buildings, which need remedial work. And if we partner with them, then we see the visibility moving forward, which is really key to our business. As I mentioned earlier, early warning system we're creating. We've obviously got a good manufacturing base in electronics. We've been supplying electronics for fire protection. And so we're creating that early warning system. part of our technology solution to put into these buildings. We're also investing and scaling up to that GBP 24 million quoted pipeline is really achievable, and we're ready to do it. So we've been making sure that we're ready and we can rapidly scale up to complete and bring that revenue in to convert that GBP 24 million. Quick case study to have a look at. Another building on the left-hand side. I think that one was in Salford project, high-rise buildings that we did a number of buildings on this site. We installed a vertical cavity fire barrier to meet the new standards of Fire Safety 2021. The solution was to open -- was to make in the building, the cavity of each floor. So as you can imagine, each floor slab going up, that building needed protection, so the fire wouldn't spread from one floor to the next. So we injected the building. We open up every 2 meters, put a sock in and fill it with the injected clad material. And what we also do is GPS track it. So we actually record all the data by GPS, photographic evidence, which is live data for the customer to see and measure that cavity so that they know that all the work has been carried out correctly and safely. What we see is when we've done a really good job is then the other work comes. So it's with each client is doing one job first, seeing how well and impressed that they are with our standard of work and that then rolls on for us to creating more work for them and creating that partnership, which is really important to us. And that really, as I mentioned, getting that specification in there and approved supplier into them. I'm going to hand you over to Jim to talk about the financials.

Thank you, Simon. So looking at the P&L and specifically revenue. We've seen a continuance of the rebalancing of the divisional contributions, that sales mix that's coming from the different divisions through the first 6 months of the year. Passive fire has increased its contribution to 8.8% from the same time of the previous year to 5.7% and AgTech from 10.9% from the previous year position of 7.3. Now really, the key with that is that these divisions are contributing significantly higher margins than the historic Contract Electronics Manufacturing division that's traditionally had the majority of the contribution of revenue to the group. Simon touched upon the pest control sector dropping off during the year. We envisaged that at the start of the year and have been preparing for, as you mentioned, shorter-term customer wins. And then in the longer term, higher-margin contracts in defense and health care, and we're progressing towards that market as we speak. So overall, the revenue has dropped off marginally by 2.7%. But what we've seen is a very significant increase in gross margin for the group. We've generated a 36.3% gross margin. That's a year-on-year increase of 36.5%, up from 26.6% for the previous interim period. So that's really that reshaping that's coming from the Passive Fire and the AgTech divisions, but also with the CEM because the efficiencies we've put into that division starting to show through. And also, to a degree, the pest control, the slightly lower margins in the pest control that diluted margin historically, that effect has started to fall away a little bit. So encouraging all around across all 3 divisions, increase and strong margins with the group as a whole 36.5%. Looking at EBITDA and the net loss position for the group. We continue tight overhead control throughout. We've really, over the last couple of years, looked very carefully at our costs throughout all divisions and the holding company and contained those costs in line with activities. And we've continued to do that through the first 6 months. And what that's meant is with those increased margins that have been delivered at the group level, the EBITDA has increased nearly 10x from GBP 28,000 for the prior half year to just under GBP 280,000 for the 6 months of '25. In terms of the net loss, we've reduced that by half with a GBP 160,000 net loss position at the half year point compared to GBP 330,000 position for the prior year. So this really is very much in line with the group's strategy to move to become sustainably profitable. And with increasing those margins significantly, when that pacifier pipeline that's built from GBP 7 million to GBP 24 million starts to convert when the regulator starts to unlock those projects, then we really see the scale start to come with the margin bringing it down to the bottom line. Look at the balance sheet. The significant elements of the balance sheet, we've seen a continued investment, particularly in sensorGROW in the AgTech division. We've invested another GBP 100,000 in development of sensorGROW. Simon has covered off what those developments are. We've stabilized inventories. From those historic levels of several years ago, a couple of years ago up to nearly GBP 2 million. They've now stabilized down to GBP 0.75 million mark, and we see that really going forward at similar sort of levels. Looking at group cash. The position at the end of May was GBP 1.1 million in cash with a further GBP 0.7 million in undrawn debt facilities. And that was against the previous interim year's position of GBP 1 million in cash and 0.75 -- sorry, GBP 0.5 million in undrawn facilities. So with our strategy of moving into sustained profitability, looking at opportunities, both organic within the 3 divisions and any acquisitive opportunities within just those 3 divisions, we do see very good prospects moving forward and particularly the passive fire as that pipeline starts to unlock and convert at those very, very strong margins that we've seen. So if I can hand back to Simon for a summary.

Thank you, Jim. So really, the key here for us has been focusing on rebalancing the division and the sales mix. As you know, that's really helped us create a higher gross profit margin and achieve increase year-on-year over 36% increase in that half year. And we continue to look at how we can make improvements and to grow that revenue. But the quickest way for us to grow that revenue is through the AgTech and the PFP divisions to grow that revenue, but also grow that gross margin. Year-on-year interim EBITDA has grown nearly tenfold. So we're really pleased with that outcome. The quoted group pipeline is now GBP 58 million. And as I mentioned earlier, GBP 24 million of that is now in passive fire. 2.6 million current group forward orders. So we've got visibility. And on top of that, we've got the cash to be able to provide the service that we need to do, circa GBP 1.8 million of cash and undrawn facility. We've also received the sensorGROW Patent Award, which is really important to us to take our product globally. As a small company, it's important that we package it up in the right way and protect the designs that we've done, and we've been awarded that patent. 3 divisions de-risking the market investment. We see that really important, especially in today's climate globally, a lot of things change very quickly and de-risking that is really important to be in 3 different markets and growing markets. Low-risk, low-cost expansion model is really important, too. We're making sure that to be able to expand, especially in PFP at this time, that it's a low-cost expansion model. Creating those distribution partnerships to take us global as we've done with Agrolux is really making the difference, and you can see that coming through on revenue and margin. Becoming specified with architects and fire engineers in the PFP, really important to grow those partnerships and be able to see the portfolio of buildings that our clients may have to give us the visibility moving forward. And you can see how big that market is. We've also got a recurring revenue model in the AgTech, and we will see this grow in the medium and long term as we're getting more sensors out into the market with our software and hardware. And we're progressing positioning with the CEM division, targeting higher-margin growth markets in defense and health care, getting those accreditations and also towards the end of this year, sorting out the facility, so we've got the right facility and the right equipment to do those markets. And as Jim mentioned earlier, we continue to explore and identify not only just organic growth as we've been doing, but acquisitions within the 3 divisions in passive fire, Contract Electronics and the AgTech market. I open the floor to questions. Thank you very much.

[Operator Instructions] While the company take a few moments to review those questions submitted today, I would like to remind you that recording of this presentation along with a copy of the slides and the published Q&A can be accessed dashboard. And Simon, Andrew, as you can see, we have received a number of questions throughout today's presentation. And Andrew, if I may now hand back to you to chair the Q&A, and I'll pick up from you at the end. Thank you.

Thank you very much, Alex. I'll try and give Simon and Jim rest as possible. We'll take a few start with. Are you seeing specification by architects and engineers translating into tenders contracts that we are. We've got our sales force divided into 5 sections. So you kind of initial inquiry where they're just scoping do they use Injectaclad or is it not really a solution? It's just very much out budgets and things like that all the way through to kind of waiting BSR approval or we're engaging on timing plans and drawings and things like that right through to contracting, which can take 2 or 3 weeks, in some cases with the sort of JCT contracts and things like that. So if we get specified by an architect and that goes into a BSR approval document, that's very difficult to change supplier. They've kind of got to go with you at that stage. So it's very important to get that sort of specification. It's also worth saying that we're in very early stages of this, but the feedback we're kind of getting is that a lot of projects don't need to go through BSR at all because they're class as repair works. So what they would need to go through a change in use of the building, which we've done a couple or so might be changing it from a 90-minute 60-minute. So you're making the building technically less safe than it was originally. So you would have to get approval for that. But if it's a replacement of ineffective cavity barriers repair works and that could commence on building notice. So that would be quite a quick process, and we're just waiting to confirmation back on that, but that could be a game changer really in terms of speed of sort of getting some of these projects moving. So sort of advanced on the Building Safety regulator site as well. So is it reasonable to expect PFP's annual sales to double in the next couple of years? Yes, I think absolutely. We've had a real sort of period of at least 12 or so months where lots and lots of projects are stuck in the government's gateway to approval process which means once you've achieved that you can then start works. You know it's been in the national press. They just moved the Building Safety Regulator from the health and safety executives command into a separate government department and we kind of need to see how that translates as well. But it's not always about the BSR approval. It's the uncertainty around the BSR that creates the delay rather than the physical application and approval process in a lot of cases. Let's see if we can find any more PFP-themed ones while we're at it. How quickly can PFP scale capacity the backup clears faster than expected? We've got a number of pumps in stock already and we can we've effectively developed like a framework and an onboarding process to get people teams established in about a 1-week period. At the moment, there's plentiful supply. I mean if we put our advert in for a position we've probably got between 70 and 80 applicants within one evening. So we tend to close off the applications the following day and then filter through and kind of select your candidates. And we have up -- we go quite strict in terms of what we'll accept you know we want qualifications in Passive Fire Protection for example rather than just general buildings so we are at the moment able to cherry pick and that's been like that for at least a couple of years now so ye, that's on those. One for Jim I think here are your inventory and data collection patterns now normalized and is room for further improvement?

Yes. So I touched upon inventory levels stabilizing off in my finance piece, and that is expected to continue. In terms of the different divisions, sort of working capital debtor, creditor, CEM is very well established. So yes, that has been established a pattern there for quite some years. Passive fire, that has become established in our model of requiring deposits to cover material costs and to get the kickstart on the working capital for the labor that we put on to the sites. And those parameters can change within themselves. But overall, they achieved the same result. So again, that is established and working very well within Passive. And then within AgTech, similarly, we hedge off particularly on bigger contracts, bigger project contracts, we hedge off payments that are required out to suppliers with payments in stages in from customers. So yes, from a working capital cycle point of view across all 3 divisions, it's a model that's working and that is established now.

Please explain in more detail your brown boxing branding strategy for AgTech non-U.K. businesses and gross margins? Okay. So when you think about at the moment, we project things like control systems and sensors and lighting, and we connect them together and integrate them and design solutions for glasshouse areas. We don't exactly those same products and be able to sell them the distributors in other countries and also other people. We don't have to install this stuff. So it should increase the volumes. And also, the margins as well. We're actually looking at on a new version of the next generation of the control systems with things like more wireless connectivity and things like that and integrating those with the kind of the app that we've got for the sensor and the sensor itself and things like that. So yes, it's been able to sell those in bigger volumes, which will then give us better scale to be even more competitive on the project side as well almost give us a steady level of revenue really month-on-month where obviously projects can be quite lumpy. So you plan to monetize the IP and what recurring revenue potential do you see from sensors?

Environmental sensing is a global opportunity. We're seeing an awful lot of climate change and extreme weather. So be able to brown box our sensors, create distributors partners globally and sell those means that we can get a recurring revenue model selling the hard asset as well as the software and technology. And we see this really ramping up, as I mentioned earlier, with an awful lot of trials going through. We continue those to grow the product and scale it up in environment as well. We talk about tempts water and pollution as one of these things where there's a lot of polluted water around the country. How do we measure that and have live data and measure E. coli as an example. All of these things can be done and we've got products that we are either developing or have developed, which we can sell now. So I expect this to be a medium to long-term part of our plan for AgTech as we build the revenue, but also the margins.

One for Jim here for 2 really one. Does the group remain seasonal with a stronger second half revenue expected versus the first half? And again, similar question on gross margins as well in second half?

Yes. So it's not seasonal per se, but the second half has always been traditionally stronger than the first half. And that's mainly to do with sort of Christmas New Year shutdowns. We lose sort of 2 to 3 weeks' worth of output typically during that period. So when you look back through the history of the business, that has always been the case. But that isn't seasonal in any other term for that. In terms of sort of gross revenues, passive fire, we're really looking at sort of 50% plus revenues. That's certainly the target. We achieved 64% during the first half. That's probably higher than what we would expect as an ongoing, but still very strong at the 50% target. AgTech, typically 40% to 50%. That's the range that we expect to operate in. Some of the lighting side can be slightly lower margin, whereas the sensors and some of the kind of higher level, more unique stuff is definitely the higher end of that scale. And in terms of CEM over the years, that's operated sort of between the 23%, 24% on the whole. So what we're looking to do really is elevate those margins as we move into these higher-margin sectors like defense and health care.

Thank you, Jim. For a GBP 12 million revenue business, does it make sense to have 3 different business divisions? Do we need to focus son one? So yes, good point. I think the idea is earlier is to de-risk the group we have had one division. AgTech, for example in U.K. was started. That must be [indiscernible] because CEM business. So it kept helps on [indiscernible]. But we do take on Board what you're talking about. So there's a real synergy thread running through all three divisions where for example LST limited do all the development for U.K. circuits and helping with new product introductions and things like that. UK circuits do all the manufacturing for LST and the Tomtech side of things and also the distribution for the passive fire side as well. So there is and they are a kind of a thread of integrated technology. So we do try to make sure that anything else that we're doing is that's that thing run through it kind of integrated technologies if you like. So you know we are quite a small team but we are working across all three sometimes at the same time. So it's not maybe as distinct as you would think. So I hope that one answers that one. One for Simon, what do you mean by quite a sales pipeline? And from past experience what percentages of this pipeline should you actually win?

So we've got a GBP 58 million group quoted pipeline. What does that mean? It means something different in each division. In contract electronics, the turn from doing a quote, which means getting the detail through, making sure the parts are available to order is anywhere between 6 and 8 weeks. So it's really fast, so fast turnaround. And the hit rate there is well over 60% of quote. So it's a very strong rate. In looking at Passive Fire Protection, it's very different. We have some jobs that we get a phone call and want us to go and visit. So generally, we either get the drawings through, we mark and do measurements from the drawings. And then if they're serious, we look to go on site, see the building and if they've had an inspection, which means opening up the building to see the depth of the cavity, we then do a quote from that. Generally, it works out who's paying for it, who's the contractor doing the work? Are you dealing direct. And so they can be different. The one we did in Nottingham as an example, we got very quickly within sort of an 8-week period. But some of the projects we're working on, we know will be over 12 months before they turn into orders. So it does really differ in passive fire. And especially if it's over a certain height, they obviously need to get them approved. So that also by the building regulator. In AgTech, we sell product every day, creating revenue and manufacturing product every day as we do in contract electronics. I would say the larger quotes take between 6 and 7 months, but the revenue that we're doing constantly in that division, probably the same as the CEM's around 10 weeks, 8 to 10 weeks there, and it's also a very strong conversion rate. And I think that's due to being a 30-year-old business and a customer base that we know extremely well.

Thank you, Simon. In the CEM division, Jim, what impact will the end of life for the pest control product line have on the revenues at the second half?

Well, you can see from the numbers in the first half primarily the reduction in revenue is down to the pest control side. So that's circa GBP 1 million. We see the runoff of the end of life product, we've got some -- we didn't have a great deal of visibility at the start of the year on that. But we indicated to the market that it was likely to happen. We've got more visibility on it and it's looking like over the next sort of 9 months that end of life cycle will pass through and then what is left of the pest control business which still will be significant will be business as usual.

And yes, there's another question about has the CEM sales bottom? So no low patent. We've been working very hard to fill the void you know we've known about this for 2, 3 years as the rental product lines. So we've been working very much on that. And yes, we have earned revenues in the defense sector already not directly because you need the accreditations but through a third party tenant release. Also, doing those accreditations isn't necessarily just about winning defense and healthcare work. It's kind of how it enhances your credentials to do all the work in other areas. So some customers will think well if you can do work in those areas you can certainly do work in my sector. So it's it enhances the whole package. And a lot of the work we've been doing it's almost like creating a platform for growth, and that is behind some of the margin improvements that we've seen as well in the first half. So you know that work's kind of paying off. So it's a viable project. Jim is the business now operationally cash flow positive. Will we see positive operational cash flow for the second half of 2025?

The business was operationally cash flow positive for the first half. Yes, absolutely just under GBP 0.75 million. And PFP is certainly a big part of -- as we made sort of very clear throughout the presentation, a big part of the profit-making cash generation of the business. So with a very big pipeline that's on the cusp of converting as that regulator blocks, we really see that delivering down to the bottom line.

Thanks, Jim. I think one final one perhaps most of the questions what your long-term ambitions over, say, 5 years and how you drive value for shareholders?

I think it's really important to have a strong vision and a way forward of achieving that. we would like to do GBP 40 million to GBP 50 million circa of revenue across the 3 divisions. And we see that in the short term in passive fire protection being around GBP 15 million, AgTech being GBP 20 million and Contractor Electronics being GBP 15 million. Now that's not all going to be organic growth. It's going to be through acquisition as well as we've done in the past and building the divisions up, which is also having a good impact on the margins. So we have a strong ambition. It's over 5 years, but we've got an approach, a sensible approach as a small company of how we're going to sell our products globally in the AgTech division. And there's a big requirement now, as we mentioned with the markets with food security and how we're going to grow our food. And in the passive fire, the problem is now. It needs resolving now. The government has got massive ambitions to resolve this in only a few years. But the reality is there's 20 years' worth of work, and it's going to take some time. So I can see a big future there for us in the future in passive fire. And the contract electronics is where we're manufacturing for many other clients and providing that turnkey solution and gives us that strong manufacturing capability to turn things around quickly and cost effectively.

Okay. Thank you. Any closing comments, Simon?

So from the closing comments, we are well positioned moving forward. As we mentioned earlier, we've got GBP 1.8 million of undrawn facility and cash available to us. We've got a GBP 58 million quoted pipeline, which we're converting. We see Passive Fire Protection increasing in growth in revenue very quickly as we see the backlog of jobs being released, which is really important. And through that, we're seeing the margin increase. The products that we've developed in AgTech are really starting to make a difference, and we'll create that recurring revenue model that we've been looking for. So lighting, sensors and control systems as well as our other product range in that space are really taking a pace and especially in Europe now as well as the U.K. So we're really pleased with progress, and we expect this to continue.

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

Thank you very much.

Thank you much. Good afternoon.