Light Science Technologies [LON:LST], the AIM-listed, Derby-based producer of horticulturally-focused lighting and monitoring solutions has continued its positive momentum in 2024 that chief executive, Simon Deacon, highlighted in January.
However, Deacon is still not happy about the current share price and market capitalisation. He said: “I still don’t think that the current share price accurately reflects the work we have done over the last year and the value we’ve added to the company.”
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That said, LST’s share price is well ahead of where it was a year ago. Opening the week (15th April) at 2.505p Light Science’s shares are up 108.75% over one-year, and up 2.2% year-to-date. The company’s shares have ranged between 0.9p and 3.5p over a 52-week period and LST has a market cap of GBP8.5m.
Light Science Technologies acquisitions
However, Deacon was quite philosophical about the current share price, believing that across the market performance has been disappointing, with the economy still anaemic not only in the UK but globally. He said: “You have to put what is going on in the rest of the world to one side, and just focus on what you are doing, and regardless of what is happening in the present, over the medium- to long-term, food security remains a significant global issue.”
As previously reported, LST made two acquisitions in the last year, a GBP0.5m strategic acquisition of Tomtech, a Lincolnshire-based agritech company which designs and manufactures controlled-environment control systems for polytunnels and greenhouses; and Injecta Fire Barrier for around GBP1.75m paid over five years which specialises in fire protection.
Deacon explained that Tomtech’s integration into the LST group has been going well. The Tomtech acquisition was a retirement sale, and Tomtech’s sensor-based technology appends to LST’s existing product lines. In controlled growing environments, traditionally much of the processes such as turning on and off the grow lights, humidifying, opening and closing covers are hardwired and Tomtech allows a more flexible operation.
Tomtech revenue booked in coming year
The CEO said that none of Tomtech’s revenue was recognised in the last year, and all will be booked in the current year, “which should see controlled agriculture be our best-performing division this year,” said Deacon.
Injecta is in another strategic market, and following UK government legislation following the 2017 Grenfell Tower blaze, building managers have to review the safety of their building and where not up to new regulations have to retrofit new safety equipment. “[…] Thousands and thousands of buildings will need retrofitting in the UK with new fire protection equipment […] our products will stop smoke or fire getting out of the cavity where it was fitted long enough for people to leave the building.” The company has quoted for a significant amount of retrofit work in the past year, up to GBP7m.
Following the acquisition, LST established a Fire Protection Division, focusing on creating a near-term revenue and cash generative business, targeting a growing market potentially worth GBP50bn and plans to cross-pollinate its fire protection with technology from its Sensors Division. LST has had previous success in raising grant finance having recently secured a GBP188,251 grant from the Department for Environment, Food and Rural Affairs as part of a 12-month GBP299,748 industrial collaboration project with Bridge Farm and Zenith Nurseries, and other partners.
Deacon remains a champion of food security in the UK but has been fairly unimpressed about government action. “It will mean the government will need to spend money – often when this occurs, governments tend to say a lot, but do little.”
With the agricultural businesses that LST transacts with in the UK, Deacon has seen divergent trends. “The older, smaller, more traditional farmers are not modernising because of the cost and effort, and many are giving up their land and leaving the industry. However, in the middle ground, farmers are investing in modernisation, and putting in controlled environments. But what is needed [for food security] is low-cost infrastructure [greenhouses and polytunnels] and a push to grow vertically, as well as traditionally, using natural daylight when available, but adding artificial lighting to extend the growing season, powered by clean, low-cost energy – solar if available – when needed”, said Deacon.
The company has also been broadening its management structure, strengthening its City and Industry experience, appointing Dr. Graham Cooley, as non-executive chairman. Cooley was formerly CEO of ITM Power [LON:ITM], one of the world’s leading manufacturers of electrolysers and was the first hydrogen related company to be listed on the London Stock Exchange. Cooley joined ITM Power as CEO in 2009 following a career in the power and technology sectors where he developed a number of novel technologies and oversaw several multi-million-pound fundraising rounds, he is also as reported, on the advisory board of Pineapple Power Corporation [LON:PNPL], director of Cadent Gas, the UK’s largest gas distribution company and board member of RenewableUK.
Richard Mills, a chartered management accountant, previously a consultant to LST, and managing director of Haygrove’s growing systems division, where he leads its polytunnel and growing systems business, moved into the position of independent non-executive director.
Positioned to take significant share of the market
Cooley said in a statement: “I’m a huge believer in the Light Science vision and am delighted to be joining the team. I believe that the cost, carbon footprint and security of supply of food will be core global issues in coming years. Light Science has developed the right products at the right time and is well positioned to take significant share of this huge market. I am also very impressed by the recent steps that management have taken to prioritise cash generation to set a strong foundation for the future.”
The prospects for LST’s controlled environment systems are international. Even in war-torn Ukraine Deacon noted that demand for controlled-environment agriculture systems is high, and when the war eventually comes to an end, it expected that there will be a significant uptick in demand for controlled environment systems from ‘The breadbasket of Europe’ (albeit under new ownership).
With all this positive news, expect LST’s share price to eventually start getting a bit of deserved momentum.
