Final Results, Board Changes & Notice of AGM

Light Science Tech. Holdings PLC

03 May 2023

 

Light Science Technologies Holdings plc

("LSTH" or the "Company")

Final Results, Board Changes & Notice of AGM

Light Science Technologies Holdings plc (AIM: LST), the controlled environment agriculture ("CEA") technology and contract electronics manufacturing ("CEM") group, announces its audited results for the year ended 30 November 2022.

The Company will be posting its annual report & accounts, together with notice of AGM, to Shareholders later today, with such document now available on its website.

Operational Highlights

·    Record sales within CEM division

o  Supplier agreement signed with existing major blue chip client

o  Further phased implementations of MRP system, enhancing control and commercial visibility across the CEM division

·    Within the CEA division, further progress  of the UKRI grant-supported advanceGROW rolling cloche, for polytunnels and glasshouses

o  Completion of gateway one of the Zenith Nurseries contract

o  Development and field trials of the advanceGROW solution - enabling extended season growing - early trials saw an increase in yield of up to 40%

·    Expanded CEA product range

o  Launched MVP version of sensorGROW which will provide growers with business intelligence to target  higher yields and reduced energy usage and waste

o  nuturGROW slimline low profile tunable light: designed to maximise growing space in vertical farm applications, and offer ongoing flexibility of the lighting 'recipe'

Financial Highlights

·    Revenue for the period grew by 10.5% to £8.17m (2021: £7.39m)

·    Margins reduced to 17.7% (2021: 22.2%) - reflecting supply chain constraints and inflationary pressures

·    Loss before tax of £2.72m (2021: £2.35m)

Post-Period Highlights

·    Raised £1.59m gross proceeds, via a placing, subscription and retail offer

o  To be utilised for Group working capital purposes and continued product development and intellectual property protection within the CEA division

·    Realignment of the Group's cost base to reflect current market conditions within the CEA division, whilst maintaining the resource to capitalise on CEA market opportunities

·    Operational improvements undertaken to increase margins and streamline workflows within the CEM division

Investor Presentation: 4:00pm, Wednesday 03 May

Management will be providing a presentation and hosting an investor Q&A session on the Company's results and future prospects on Wednesday 03 May at 4:00pm BST. Investors can sign up for free and register to meet LSTH via the following link: https://www.investormeetcompany.com/light-science-technologies-holdings-plc/register-investor

Questions can be submitted pre-event via the platform or by emailing [e-mail], or in real time during the presentation via the "Ask a Question" function.

Simon Deacon, CEO of Light Science Technologies Holdings plc, commented: "There's no doubting that this was a challenging period for the Company. However the progress made during the year, as we expanded our routes to market across both divisions, means that we can look forward with a certain degree of confidence. We have a strong and growing product range providing solutions for a variety of customers and a very healthy pipeline of opportunities. We remain innovative and at the forefront of the sector and are excited about the significant market opportunities.

"We believe that our energy saving products range will drive new business while the continued food shortages will enable us to showcase our solutions, offering extended season growing. Importantly, global trends continue to drive the need to improve food security and, as such, we aim to harness demand and accelerate growth and profitability. Furthermore, as producers seek to navigate the changing landscape, indoor farming is likely to be a key component in tackling ongoing challenges and boosting homegrown food supply.

"We are reassured by the continued support from existing and new shareholders who participated in the post-period fundraise. The funds raised will help us build on the strong momentum in our target markets. We very much look forward to further extending our reach as we invest in the business - and we believe this will result in increased revenue and margin growth.

"We see demand trends as a validation of our vision and very much look forward to working with existing and new clients as we position ourselves at the forefront of Agri-tech solutions."

For further information, please contact:

Light Science Technologies Holdings plc Simon Deacon, Chief Executive Officer Jim Snooks, Chief Financial Officer Andrew Hempsall, Chief Operating Officer	www.lightsciencetechnologiesholdings.com via Walbrook PR
Strand Hanson Limited (Nominated & Financial Adviser) Ritchie Balmer / James Harris / Rob Patrick	Tel: [phone]
Oberon Capital (Joint Broker) Mike Seabrook / Adam Pollock / Nick Lovering	Tel: [phone]
Turner Pope Investments (TPI) Ltd (Joint Broker) James Pope / Andy Thacker	Tel: [phone]
Walbrook PR Ltd (Media & Investor Relations) Nick Rome / Paul McManus	Tel: [phone] [e-mail]

This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. Upon publication of this announcement, this information is now considered to be in the public domain.

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

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

Controlled Environment Agriculture

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

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

sensorGROW

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

nurturGROW

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

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

Contract Electronics Manufacturing

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

Chairman's statement

Welcome to our 2022 Annual Report, the story of how our team managed the opportunities and challenges of the year to 30 November 2022.

Results 

A strong forward order book at UK Circuits has continued on from 2021, with FY2022 seeing sales increasing 9.2% on FY2021. Operating margins were, however, under severe pressure, due to the extended timescale of the forward order book. This led to the Company balancing its stock holding against an increased risk of fluctuating outsourced component costs. The operational improvements implemented through the year, such as a new MRP (Material Requirements Planning) system, did enable the Company to reduce stocks and at the same time, improve margins over the final quarter of the year, despite the increase in stocks over the previous year end.

The continued Ukraine conflict and energy crisis have provided a very tough trading environment for Light Science Technologies and the CEA market as a whole. Light Science Technologies focussed its efforts on energy saving devices such as its sensorGROW all in one sensor and the Polytunnel semi-automated solution, advanceGROW.

People  

This year, the continuing COVID-19 pandemic, the war in Ukraine, rising inflation, an energy crisis and  supply chain disruption have combined to produce the most challenging set of global circumstances in recent memory. Managing such tough global challenges requires the whole team and its partners to come together and combine forces to solve these problems. I would like to thank my fellow board members and our employees and partners for their invaluable contribution.

Outlook  

Thankfully, the impact of COVID-19 is diminishing and there are signs that inflation and energy costs will ease during 2023. In the CEM division, at UK Circuits, we anticipate that the latent demand from this crisis will reduce slightly, however this should be compensated by a trend towards 'reshoring' which has arisen due to uncertainty around global, particularly Far East, sourcing. We anticipate that the operational improvements carried out during 2022 will see margins back to their 2021 levels.

In the CEA Division, the energy crisis has led to many projects in the sales pipeline being delayed but not cancelled. There has been much media attention on the empty shelves in UK supermarkets which has driven home the need to grow more locally. We anticipate that whilst conditions in 2023 will continue to be tough, in 2024 we hope to see demand returning.

In light of these market conditions, the Board is taking remedial action in significantly lowering overheads of the Group, including reducing staff headcount.

Lisa Clement and Rory James-Duff have informed the Board of their intention to step down as Directors of the Company immediately following this year's Annual General Meeting ("AGM"). The Board wishes to express its sincere gratitude for the contributions that Lisa and Rory made to the Company, including their oversight of its admission to trading on AIM.

Additionally, we will be reducing the frequency of our Board meetings to six per year.

We will continue to engage with our customers and continue our strategy implementation to enable us to capitalise on the market opportunities.

___________

Myles Halley
Chairman

2 May 2023

Chief Executive's report

UK Circuits CEM division

At the end of a year dominated by extremely tough economic conditions, I am pleased to report that 2022 saw record sales for our CEM division, UK Circuits and Electronics Solutions. This has been driven by increasing our share of business spend with long standing customers including the division's major blue chip client, with whom we signed a supplier agreement in June 2022, and others. This success is testament to the team's transparent approach and management of the global supply chain issues, ensuring that customers are provided with cost effective alternative solutions where shortages occur in the supply chain.

Operations

In some respects, the flexibility provided to customers was at the expense of gross profit margins whilst the business adjusted its systems and processes to adopt new ways of working. The changes implemented really started to provide an increased level of visibility, enabling margins to increase and stock levels to decrease in the last quarter of the year, despite the increase in stocks over the previous year end. We anticipate that stocks and margin will return to normal levels in the first half of 2023 and we certainly feel that not compromising upon customer service was worth this short term pain, as the strong forward order book continues.

Investment

There will also be continued investment in UK Circuits during 2023, with a relay and automation of its surface mount technology facility; automation and enhancements in conformal coating; and 3D in-line AOI (automated optical inspection) testing equipment, all of which should provide quality improvements and access to other markets. UK Circuits is also currently implementing the environmental standard, ISO 14001 as well as setting up to become the manufacturing arm of its sister company, Light Science Technologies. The first half of 2023 will see the first production batch of the new sensorGROW product going through the factory.

Light Science Technologies' CEA division

The sector was heavily impacted by the global energy crisis which, from the Company's perspective, halted potential lighting projects from moving through its sales pipeline. Whilst these projects are anticipated to restart as grower's input prices ease, we are focussed on the final stages of development for the air zone element of our sensorGROW product and the completion of gateway 2 on its existing contract with Zenith Nurseries. This saw the implementation of a semi-automatic rolling cloche, advanceGROW, to enable extended season growing in Glasshouses and Polytunnels, and early trials saw an increase in yield of up to 40%. Both of these are energy and / or efficiency saving products which will be a valuable addition to the Light Science Technologies' product portfolio in the current economic climate.

Product Innovation

2023 will see further product development of the sensorGROW product, relating to soil based growing and also moving to outdoor growing with measurement of Nitrous Oxide. The advanceGROW product is in the process of patent drafting and 2023 will see the further development of this product to enable a full market launch.

Award winning company

Our strategy and products have been validated by a number of industry and general business awards received during the past year:

Dec 21 -  "Sustainability Award" with SME Business Awards

Mar 22 - "Placed 69" out of 500 with The Food 500

Jul 22 -   "Lighting System of the Year" with AgTech Breakthrough

Aug 22 - "Small Business of the Year" with Business Masters Awards

Aug 22 - "Most Innovative Business Idea of the Year" with British Business Awards

Aug 22 - "Plant Monitoring System of the Year" with GHP

Sept 22 - "Best Professional Equipment" with Hortiweek

Attractive growing market 

There are many macroeconomic factors that have negatively impacted the CEA market during 2022, issues that the industry participants have been aware of for some time. What this period has done for the market, is to bring these issues to the attention of the general public, via empty supermarket shelves and rising food cost inflation. These are all issues that can be solved by the market by growing more locally, and extending the growing season, in a controlled environment where the effects of weather patterns can be minimised.

The industry still has much to do to make sure that this is done more efficiently and sustainably, we are ready to play our part by continuing to create innovative and efficient products to be sold worldwide.

Financial Review

Income Statement

The CEM division saw revenue growth of 9.2% from £7.36m to £8.04m, however gross margin came under pressure from the persisting supply chain constraints, especially from the global shortage of electronic components, coupled with increasing inflation across the board. It was not always possible to pass these increased costs onto the customer. This led to a reduction in gross margins from 22.2% to 16.7%, and the Board has taken various actions aimed to improve margin generation into the new financial year.

The CEA division saw some initial revenue from trials and particularly the Zenith contract gateway 1 completion totalling £128k, in spite of challenging macro trends leading many potential customers to delay projects.

In line with the revised expectations noted in the Company's trading update of 2 December 2022, the Group's loss before tax for FY2022 was £2.72m, as a result of significant investment in the CEA division into both product research and development, partly offset by £182k of UKRI grant income; and also the costs of marketing the Company's products and services.

Balance Sheet

The Group continued to invest in developing the CEA divisions' core product offering, leading to an increase in the year of £494k in intangible assets. As development of the sensorGROW and advanceGROW products were partly covered by UKRI grants, £45k of grant income has been deferred within the year in relation to these intangible assets, shown separately within other payables.

To help the CEM division mitigate against supply chain risks of the current global electronic components shortages and ensuring fulfilment of the CEM division's forward order book, inventory has risen from £1.19m to £1.51m, and is predominantly allocated to specific customer orders received.

Cash and cash equivalents decreased to £0.59m (2021: £3.86m) at the year end, and net debt increased to £2.35m (2021: net cash of £1.35m). The net proceeds from the equity raise in the prior year provided the growth capital for the Group to continue developing and capitalising on the opportunities within both the Group's divisions.

Fundraising

In April 2023, we raised £1.59m at £0.01 per share, being a significant discount to both the prevailing share price and the flotation share price in October 2021. This discount reflects subdued equity market conditions, but also investor sentiment due to the delays we have experienced in the execution of our strategy in the CEA division. As noted above, the Group is realigning its cost base to reflect current market conditions, but we do not perceive this will hamper the Group's ability to realise the market opportunities. In respect of the CEA division, significant product development and IP costs have already been incurred over the past three years and we stand ready to service clients with our award winning nurturGROW lighting range, as energy prices ease and growers recommence growing.

Outlook  

Moving forward, the strong order book is continuing in the CEM division with orders into 2024. The planned programme of capital investment is expected to continue to deliver enhanced levels of automation, increasing capacities and gross profit margins. The division also continues to seek and strengthen customer relationships, including establishing a new relationship with a blue chip client, recently.

There is still material uncertainty over the level and timing of revenue in the CEA division due in part to the Ukraine conflict and high energy prices. This has led to planned project delays rather than cancellations, however a key strategic focus for this year is on energy saving devices such as the sensorGROW and advanceGROW products, both backed by UKRI and endorsed by industry experts, alongside creating partnerships worldwide to increase our reach into the global market.

To this end, we continue to work towards our FY2023 market expectations, with achievement being subject to a number of factors. Our reduced cost base allows us to be patient should demand be slower to return than expected.

___________

Simon Deacon   
Chief Executive Officer

2 May 2023 

Consolidated Statement of Comprehensive Income

For the year ended 30 November 2022

		2022	2021
	Notes	£	£
Revenue	3	8,166,769	7,393,933
Cost of sales		(6,723,400)	(5,750,782)
Gross profit		1,443,369	1,643,151
Administrative expenses		(4,263,454)	(3,265,106)
Non-recurring administrative expenses		-	(512,436)
Other operating income		209,786	50,203
Operating loss	4	(2,610,299)	(2,084,188)
Finance costs		(112,167)	(262,620)
Loss on ordinary activities before taxation		(2,722,466)	(2,346,808)
Income tax credit	5	235,147	202,423
Loss for the year and total comprehensive income for the year		(2,487,319)	(2,144,385)
Attributable to: The owners of the company		(2,502,748)	(2,165,543)
Non-controlling interests		15,429	21,158
		(2,487,319)	(2,144,385)
Loss per share
Basic and diluted (pence)	6	(1.51)	(2.00)

Consolidated Balance Sheet

Registered Number: 12398098

As at 30 November 2022

	30 November 2022	30 November 2021
	£	£
Assets Non-current assets Property, plant and equipment	777,919	822,803
Intangible assets	708,343	214,698
Right-of-use assets	658,680	551,532
	2,144,942	1,589,033
Current assets Inventories	1,583,349	1,199,749
Trade and other receivables	2,569,651	1,738,330
Corporation tax receivable	177,795	151,090
Cash and cash equivalents	590,673	3,860,430
	4,921,468	6,949,599
Total assets	7,066,410	8,538,632
Liabilities Current liabilities Borrowings Trade and other payables	(2,007,947) (2,079,134)	(1,341,925) (2,049,089)
Lease liabilities	(221,773)	(226,498)
	(4,308,854)	(3,617,512)
Non-current liabilities
Borrowings	(397,222)	(613,889)
Trade and other payables	(111,787)	(64,184)
Lease liabilities	(313,060)	(325,878)
	(822,069)	(1,003,951)
Total liabilities	(5,130,923)	(4,621,463)
Net assets	1,935,487	3,917,169
Capital and reserves attributable to the owners of the company Share capital Share premium account Merger reserve Share based payment reserve	1,741,500 5,654,011 (3,478,435) 726,000	1,741,500 5,654,011 (3,478,435) 220,363
Warrant reserve	159,593	159,593
Retained earnings	(3,209,481)	(706,733)
	1,593,188	3,590,299
Non-controlling interests	342,299	326,870
Total equity	1,935,487	3,917,169

These financial statements were approved by the Board of Directors and authorised for issue on 2 May 2023 and were signed on its behalf by:

___________

Simon Deacon

Chief Executive Officer

2 May 2023

 

Statements of Changes in Equity

For the year ended 30 November 2022 Consolidated	Share capital £	Share premium account	Share allotment reserve	Share based payment reserve	Warrant reserve	Merger reserve	Retained earnings	Non- controlling interests	Total equity
	£		£	£	£	£	£	£	£
At 30 November 2021	1,741,500	5,654,011	-	220,363	159,593	(3,478,435)	(706,733)	326,870	3,917,169
Transactions with shareholders
Share based payments	-	-	-	505,637	-	-	-	-	505,637
Total transactions with shareholders	-	-	-	505,637	-	-	-	-	505,637
Comprehensive income
Loss for the year	-	-	-	-	-	-	(2,502,748)	15,429	(2,487,319)
Total comprehensive income	-	-	-	-	-	-	(2,502,748)	15,429	(2,487,319)
At 30 November 2022	1,741,500	5,654,011	-	726,000	159,593	(3,478,435)	(3,209,481)	342,299	1,935,487
	Share capital	Share premium account	Share allotment reserve	Share based payment reserve	Warrant reserve	Merger reserve	Retained earnings	Non- controlling interests	Total equity
	£	£	£	£	£	£	£	£	£
At 30 November 2020	1,000,000	-	250,000	-	-	(3,479,535)	1,458,810	305,712	(465,013)
Transactions with shareholders
Combinations under common control	-	-	-	-	-	1,100	-	-	1,100
Advance share subscription	-	-	750,000	-	-	-	-	-	750,000
Shares and related warrants issued in the year	741,500	5,654,011	(1,000,000)	-	159,593	-	-	-	5,555,104
Share based payments	-	-	-	220,363	-	-	-	-	220,363
Total transactions with shareholders	741,500	5,654,011	(250,000)	220,363	159,593	1,100	-	-	6,526,567
Comprehensive income
Loss for the year	-	-	-	-	-	-	(2,165,543)	21,158	(2,144,385)
Total comprehensive income	-	-	-	-	-	-	(2,165,543)	21,158	(2,144,385)
At 30 November 2021	1,741,500	5,654,011	-	220,363	159,593	(3,478,435)	(706,733)	326,870	3,917,169

Consolidated Cash Flow Statement

For the year ended 30 November 2022

		30 November  2022	30 November  2021
	Notes	£	£
Cash flows from operating activities Loss after tax		(2,487,319)	(2,144,385)
Adjustments for: Depreciation of tangible assets		172,804	86,145
Depreciation of right-of-use assets		144,850	145,552
Interest payable and foreign exchange loss		112,167	262,620
Taxation and RDEC credit	5	(205,511)	(214,882)
Share based payment		505,637	220,363
Changes in working capital: (Increase) in inventory		(383,600)	(610,278)
(Increase) in trade and other receivables		(808,365)	(484,141)
Increase in trade payables and other payables		40,691	730,109
Cash outflow from operations		(2,908,646)	(2,008,897)
Tax received	5	155,849	22,715
Net cash outflow from operating activities		(2,752,797)	(1,986,182)
Cash flows from investing activities Purchase of property, plant and equipment		(127,920)	(168,106)
Purchase of intangible fixed assets		(493,645)	(136,946)
Purchase of right-of-use-assets		(5,804)	-
Net cash outflow from investing activities		(627,369)	(305,052)
Cash flows from financing activities
Capital issued (net of issue costs)		-	4,431,204
Advance share subscription		-	750,000
Proceeds from new loans		-	310,000
Proceeds from new convertible loans		-	1,125,000
Repayment of loans		(216,667)	(679,805)
Lease payments		(248,738)	(165,125)
Interest paid on leases		(37,769)	(25,991)
Net drawdown on invoice discounting facility		666,022	520,742
Interest paid on loans and borrowings		(52,439)	(153,503)
Net cash inflow from financing activities		110,409	6,112,522
(Decrease)/increase in cash and cash equivalents		(3,269,757)	3,821,288
Cash and cash equivalents including overdrafts at the start of the period		3,860,430	39,142
Cash and cash equivalents including overdrafts at the end of the period		590,673	3,860,430

Notes to the financial statements

1          General Information     

In accordance with Section 435 of the Companies Act 2006, the Group confirms that the financial information for the years ended 30 November 2022 and 2021 are derived from the Group's audited financial statements and that these are not statutory accounts and, as such, do not contain all information required to be disclosed in the financial statements prepared in accordance with UK-adopted International Accounting Standards. The statutory accounts for the year ended 30 November 2021 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 November 2022 have been audited and approved but have not yet been filed. The Group's audited financial statements for the year ended 30 November 2022 received an unqualified audit opinion and the auditor's report contained no statement under section 498(2) or 498(3) of the Companies Act 2006.

The financial information contained within this full year results statement was approved and authorised for issue by the Board on 2 May 2023. The 2022 accounts, together with notice of the Annual General Meeting, are expected to be posted to shareholders on 3 May 2023 and will be available from the Light Science Technologies Holdings plc website (www.lightsciencetechnologiesholdings.com) from the 3 May 2023. They will also be available from the Chief Financial Officer, Light Science Technologies Holdings plc, 1 Lowman Way, Hilton Business Park, Derby, DE65 5LJ.

The Group financial statements have been prepared under the historical cost convention and under the basis of going concern. The principal accounting policies adopted are consistent with those disclosed in the financial statements for the year ended 30 November 2021.

2          Going concern

Working capital forecasts have been prepared for the period to 30 November 2024. Based on the forecasts, the Group can meet its day-to-day cash flow requirements and operate within all the terms of its borrowing facilities.

The Directors are satisfied that the Group has sufficient financing in place to continue to meet its liabilities as they fall due for a period of at least 12 months from the date of approval of this report, the 2 May 2023, and hence have prepared the financial statements on a going concern basis.

The Directors acknowledge that the current economic environment creates material uncertainty over the level of future revenues and there would be a probable need to raise additional funding to support Group requirements in the second half of 2024, should the Group's expectations for revenue generation over the coming 12 months not materialise as expected. The Directors note that this material uncertainty may cast significant doubt on the group's ability to continue as a going concern.

In response to these matters, and as detailed in the Circular issued on 5 April 2023, the Group is implementing a variety of actions to manage cash flows and discretionary spending, including a reduction in the costs of the Board and related salaries, offsetting purchasing cycles with customers deposits and reducing other costs within the business.

The financial statements do not include any adjustments that would result if the company were unable to continue as a going concern.

3          Revenue and segmental reporting

The total revenue of the Group for the period has been derived from its principal activity wholly undertaken in the United Kingdom.

Revenue in respect of supply of hardware and is recognised at a point in time at the point of customer collection or dispatch. Revenue in respect of laboratory services is recognised at a point in time when project gateways are completed, the level of revenue is immaterial so has not been separately disclosed. As new products and services are launched within the Controlled Environment Agriculture segment, the revenue accounting policy and point of recognition will develop.

During the year to 30 November 2022 one customer represented 54.3% of total revenue (2021: 61.3%).

The Group has two operating segments 'Contract electronics manufacture' relating to the development and manufacturing of electronic boards; and 'Controlled environment agriculture' relating to the development and manufacturing of lighting and technology products for the Controlled Environment Agriculture (CEA) sector. The Chief Operating Decision Maker (CODM) has been determined to be the Board. The performance of the two reportable segments is based upon a review of profits and segmental assets/liabilities.

30 November 2022	Contract electronics manufacture	Controlled environment agriculture	Total
	£	£	£
Revenue	8,038,645	128,124	8,166,769
Depreciation	(172,357)	(145,297)	(317,654)
Operating profit/(loss)	269,381	(2,879,680)	(2,610,299)
Segment assets	5,287,275	1,779,135	7,066,410
Segment liabilities	(4,550,498)	(580,425)	(5,130,923)
30 November 2021	Contract electronics manufacture	Controlled environment agriculture	Total
	£	£	£
Revenue	7,361,303	32,630	7,393,933
Depreciation	(174,086)	(57,611)	(231,697)
Operating profit/(loss)	485,527	(2,569,715)	(2,084,188)
Segment assets	4,426,947	4,111,685	8,538,632
Segment liabilities	(4,153,852)	(467,611)	(4,621,463)

4        Operating loss

	2022 £	2021 £
Operating loss is stated after charging:
Depreciation on property, plant and equipment	172,804	86,145
Depreciation on right-of-use assets	144,850	145,552
Research and development expenses	135,821	451,321
Inventory expensed	5,491,423	5,217,468
Short term low value lease expenses	7,942	8,644
Share based payments	505,637	220,363

5          Taxation

The tax credit is made up as follows:

	2022	2021
	£	£
Current tax expense
UK corporation tax for the year	(181,582)	(109,285)
Adjustment in respect of prior year	(53,565)	(91,668)
Total current income tax Deferred tax Origination and reversal of timing difference	(235,147) -	(200,953) (1,470)
	(235,147)	(202,423)

Reconciliation of effective tax rate

The tax assessed for the year varies from the standard rate of corporation as explained below:

	2022	2021
	£	£
Loss on ordinary activities before taxation	(2,722,466)	(2,346,808)
UK tax credit at standard rate of 19% (2021: 19%)	(517,269)	(445,894)
Fixed asset differences	(5,772)	(1,900)
Expenses not deductible for tax	13,780	75,149
Adjustment to corporation tax in respect of prior period	(53,565)	(91,668)
Adjustment for R&D tax credit including SME claims	(376,223)	(246,061)
Surrender of tax losses for R&D tax credit refund	268,015	172,781
Movement in deferred tax not recognised	435,887	335,170
Tax credit in statement of comprehensive income	(235,147)	(202,423)

The applicable UK corporation tax rate is 19% throughout the reporting period.

In May 2021, it was enacted that the rate of corporation tax will increase from 19% to 25% from April 2023. Unrecognised deferred tax balances at 30 November 2022 have been calculated using a rate of 25% (2021: 25%) based on the enacted rates that are expected to apply when these are unwound.

6          Loss per share

             Basic loss per share is calculation on the loss for the year after taxation attributable to the owners of the parent of £2,502,748 (2021: £2,165,543) and on 165,250,000 ordinary shares (2021: 108,052,603), being the weighted number in issue during the year excluding shares held by the Employee Benefit Trust. Unexercised options over the ordinary shares are not included in the calculation of diluted loss per share as they are anti-dilutive.

             For 2021, the share numbers used have been calculated consistently, to take into account the 2021 share reorganisation, i.e. by assuming the various steps of the share reorganisation had been in effect throughout 2021.

	30 November 2022			30 November 2021
	Loss £	Weighted average number of shares (000's)	Per share amount (pence)	Loss £	Weighted average number of shares (000's)	Per share amount (pence)
Basic and Diluted EPS
Weighted average number of ordinary shares		174,150,000			109,344,932
Adjusted for the effect of own shares held by Employee Benefit Trust (EBT)		(8,900,000)			(1,292,329)
Earnings attributable to ordinary shareholders of the Company	(2,502,748)	165,250,000	(1.51)	(2,165,543)	108,052,603	(2.00)

Diluted earnings per share

             Basic and diluted earnings per share are equal for 2022 and 2021, since where a loss is incurred the effect of outstanding share options and warrants is considered anti-dilutive and is ignored for the purpose of the loss per share calculation.

Post-year end Placing, Subscription and WRAP (Winterflood Retail Access Platform)

As detailed in the various RNS announcements in April 2023, an aggregate of 158,855,500 new ordinary shares were issued during April 2023 to new and existing shareholders, which considerably changes the number of shares outstanding at the end of the period. On this basis basic and diluted loss per share would have been 0.77p for 30 November 2022.

7          Annual General Meeting

             The annual general meeting is to be held at 11:00am on Tuesday 30 May 2023 at 1 Lowman Way, Hilton, Derby, England, DE65 5LJ.  Special business includes three resolutions which relate to share capital:  1. an ordinary resolution to renew the authority of the directors to allot shares generally. 2. is a special resolution to give power to the directors to allot equity securities for cash without first offering them to existing shareholders. 3. is a special resolution to permit the Company to make market purchases of its own shares. These resolutions are part of the portfolio of powers commonly granted to directors to ensure flexibility, should appropriate circumstances arise, to either allot shares, or make purchases of the Company's own shares in the best interests of shareholders.  Each authority will run through until the next annual general meeting.

 

END