Final Results
Light Science Technologies Holdings plc
("LSTH" or the "Company")
2021 Annual Results
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 2021. The Company will shortly be posting its annual report & accounts to Shareholders, which will also be available on its website.
Operational Highlights
· Successful Admission to Trading on AIM
o Placing raising gross proceeds for the Company of £5.0m
o To accelerate the Group's growth, primarily through development of its CEA operations
· Developed CEA products and pipeline
o Supported by grants from UK Research and Innovation ("UKRI") for our indoor farm sensor product, SensorGROW, and intelligent polytunnel solution
o Received sustainable award for nurturGROW luminaire range
o Commenced a contract potentially worth up to £13.84 million with Zenith Nurseries, a major UK salad grower
o Opened state-of-the-art in-house laboratory onsite in Derbyshire
§ To determine optimal growing formulae to maximise customers' crop growing capability and productivity
§ Enabling the Company to replicate growers' conditions and provide the optimal lighting and environment recipe to help clients grow more with less
· Strong performance at CEM division
o New orders from existing clients during the period - underpinning strong forward order book
o Investment in plant & machinery to improve automation capabilities at factory in Manchester
Financial Highlights
· Group sales grew by 6.6% to £7.39m (FY 20: £6.94m)
o 6.1% sales growth at UK Circuits
· Pre tax losses of £2.35m reflect the cost of the AIM admission process and investment in the CEA division
· Cash and cash equivalents rose to £3.86m at the year end, and net cash was £1.35m
Post Period Highlights
· Strengthened the CEA team to further drive testing and sales capabilities
Analyst Presentation: 11:30am, Tuesday 26 April
Management will be hosting a presentation via web conference on the day of the results at 11:30am BST. Analysts wishing to join should register their interest by emailing lst@walbrookpr.com or by telephoning 020 7933 8780.
Investor Presentation: 4:00pm, Wednesday 27 April
Management will be providing a presentation and hosting an investor Q&A session on the Company's results and future prospects on Wednesday 27 April 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 lst@walbrookpr.com , or in real time during the presentation via the "Ask a Question" function.
Simon Deacon, CEO of Light Science Technologies Holdings plc, commented: "This was a pivotal period for the Company, with the fundraise and admission to AIM providing the foundations for the next stage of our growth trajectory. Having further invested in and developed both operating divisions, we are extremely excited by the opportunities afforded to us.
"Moving forward the Group will focus on further expanding its network of strategic partnerships with both major industry players globally, leading academic institutions and bringing experts into our growing team. In our CEM division, we predict there to be no change in the increased demand for electronics. As a result of this and our forward order book, we have begun a programme of investment to automate further production lines to win larger contracts in sensor and medical markets.
"In the CEA division we will continue to build on our contracts and sales pipeline, and expand into new markets in lighting, sensors and automated crop production and management systems, with an aspiration to enter the European and US market over the medium- to long-term. In doing so, we intend to strategically expand our facilities specifically in laboratory R&D at our new planned premises in 2023."
For further information, please contact:
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Light Science Technologies Holdings plc
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Simon Deacon, Chief Executive Officer Jim Snooks, Chief Financial Officer Andrew Hempsall, Chief Operating Officer |
via Walbrook PR |
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Strand Hanson Limited (Nominated & Financial Adviser)
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Tel: +44 (0) 20 7409 3494 |
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Ritchie Balmer / James Harris / Rob Patrick |
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Turner Pope Investments (TPI) Ltd (Broker) |
Tel: +44 (0) 20 3657 0050 |
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James Pope / Andy Thacker |
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Walbrook PR Ltd (Media & Investor Relations)
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Tel: +44 (0)20 7933 8780 or lst@walbrookpr.com |
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Nick Rome / Paul McManus |
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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.
Contract Electronics Manufacturing
UK Circuits is the Company's CEM focussed division, with strong revenue and cash generation. 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
RESULTS
We are very pleased to report a successful year for UK Circuits, with FY2021 sales increasing 6.1%* on FY2020, despite a tough trading environment. The operational improvements we have made to the business will, we anticipate, provide a platform for growth in the coming years.
With the large part of this financial year being pre-IPO, the main focus for Light Science Technologies was to develop its new market CEA products, IP collateral, and build its brand and a robust sales pipeline. We have been fortunate to have been recognised globally with a sustainable award for our nurturGROW luminaire range. We have received grants from UK Research and Innovation ("UKRI") for our SensorGROW product and our intelligent polytunnel solution.
PEOPLE
It is a privilege for me to work alongside my fellow Board members and founder-led executive management team who have established a strong structure, in a short space of time, confirming my belief that this is a Company set well to succeed in the coming years.
We are fortunate to have assembled a team of talented industry experts who share the vision for future growth and are committed to driving us on. This talent pool is steadily growing as we continue to appoint more staff to further strengthen the team and provide support across different areas of the business.
On behalf of the Board and all our shareholders, I would like to thank them all for their invaluable contribution.
We are delighted to have joined the London Stock Exchange's AIM market in October. The funding raised will allow us to pursue our ambitions, as we approach the cusp of many opportunities in the sector.
OUTLOOK
The current backdrop of global uncertainty with the terrible events in Ukraine, Brexit, high energy costs and global electronic component shortages, continue to present supply chain issues and delays on customer project decisions. However, they also drive the desire to grow more produce locally, sustainably and energy efficiently. We believe that the continued roll-out of our strategy will allow us to be well positioned to play our part in tackling these issues.
While we have much more work to do, I very much relish the prospect of working with my Board colleagues and the wider team to continue to deliver growth.
Myles Halley
Independent Non-Executive Chairman
* Overall Group sales increased by 6.6%.
Chief executive's report
At the end of a year in which we have established the foundations for long term growth, I am pleased to be able to report on a successful year for Light Science Technologies Holdings plc and our companies within the Group, UK Circuits and Light Science Technologies.
In our UK Circuits division, we have grown revenue year on year, despite the backdrop of global supply chain issues. The team's ability to forward plan and work closely with our customers has forged strong long-term relationships and laid the foundations for expansion.
In our Light Science Technologies division, we successfully launched our patent-pending sustainable indoor grow light product range, nurturGROW, which won a global industry award, partnered with UKRI and growers to develop two further products - our all-in-one environment sensor, SensorGROW, and intelligent crop production and management system. We have built the core infrastructure to grow the business by recruiting plant scientists to work in our in-house laboratory, technical product experts, and a sales and marketing team to continue to grow our sales pipeline.
SUCCESSFUL FLOTATION
During unprecedented times and a turbulent global economic climate, 2021 has been a transformational year for the Group. In October, we announced our flotation on the London Stock Exchange AIM market, successfully raising gross proceeds for the Company of £5m. This funding allows us to capitalise on our ambitious growth plans to be a key player in the CEA market over the coming years and bolster the capacity of our CEM division.
The support shown by our investors has proved a tremendous milestone for the Group, as we focus on delivering shareholder value. Over the past year, we have built a team ready for accelerated growth comprising executive, non-executive and business-minded talent, while partnering with world-leading academic institutions and working alongside clients to revolutionise agriculture through ground-breaking innovation.
UK Circuits division
FOUNDATION FOR GROWTH
With many existing and potential customers reshoring supply chains from the Far East and buying British due to Brexit, the Group's CEM division, UK Circuits, has seen positive growth in new business and an increased forward order book.
After a year of global component shortages, which we successfully circumnavigated, sales, operational efficiencies and productivity have created a platform for growth in 2022 and beyond.
This was a result of:
· The agility of our design and manufacturing capability which allows us to 'switch' designs with the components available
· Being able to source from different suppliers
· Establishing more open and collaborative relationships with existing and new customers
LONG TERM CLIENTS
Through our agility and customer centric approach, we have built a strong customer base over the past 20 years and now work with over 70 recurring customers spanning a range of sectors, including audio, automotive, electronics, gas detection, lighting, pest control, and of course, more recently the CEA market.
We have forged strong relationships with clients including Rentokil Initial plc's pest division, our blue-chip client. In 2021, Rentokil made up a significant percentage of the Group's turnover, due to the growth of their Pest Control division, which we expect to continue for the foreseeable future.
INVESTMENT TO DRIVE EXPANSION
To expand into well-established and profitable additional markets such as sensors, medical and defence, we are seeking to be awarded additional quality related accreditations. Utilising part of the net proceeds raised on the Company's flotation on AIM, we are pursuing other areas of investment into UK Circuits' plant, including further automation of two Surface Mount Technology lines, additional quality management control, continually improving the effectiveness and efficiency of our ERP (Enterprise Resource Planning) systems, and an expansion of new business generation capacity.
Light Science Technologies division
ATTRACTIVE GROWING MARKET
The Group's CEA division, Light Science Technologies, provides technology solutions that make year-round growing a reality for growers, in glasshouses, vertical farms, and polytunnels, whilst having a positive impact on global sustainability.
We continue to work with growers to grow more with less waste and expense with our controlled environments recipes and SensorGROW data and insight.
With the need to farm more sustainably, look at alternative solutions to help address climate issues and reduce the reliance on food imports, we have invested, developed and launched a range of patent pending technology products in 2021. This has laid the foundations for growth and places Light Science Technologies in a strong position to capitalise on a market growing at an estimated CAGR of 21%*.
GROWING GLOBAL REPUTATION
Despite its infancy, Light Science Technologies is now recognised as one of the top 500 Foodtech companies in the world, representing glasshouses, vertical farms and polytunnels. In 2021, our UK client base grew with the major highlight being the commencement of a contract potentially worth up to £13.84 million with Zenith Nurseries, a major UK salad grower, with the first gateway nearing completion**.
SCIENCE BACKED INNOVATION
We have continually invested heavily in R&D since Light Science Technologies' inception. In 2021, we opened our state-of-the-art in-house laboratory onsite in Derbyshire to determine optimal growing formulae to maximise customers' crop growing capability and productivity.
Our purpose-built laboratory and our team of highly qualified plant scientists harnesses the science behind growing to give us invaluable insights into plant performance. By using real-time SensorGrow data and monitoring, combined with our light testing, we can replicate growers' conditions and provide the optimal lighting and environment recipe to help them grow more with less.
AWARD-WINNING PRODUCTS
In 2021, we have developed key products which will help shape the future of agriculture through use of innovation-led technology which champions sustainability. Our nurturGROW luminaire product range has a competitive advantage in the CEA market through its modular design, which has been internationally recognised through winning a prestigious global industry award, Best Sustainability Initiative, for its commitment to sustainability.
The design facilitates a recyclable but more importantly reusable product through LED and Printed Circuit Board replacement, whereby 90% of the product is re-used. This offers our clients a long-term solution in maintaining consistency of yields, whist minimising costs and waste. For Light Science Technologies, this long-term partnership creates a recurring revenue model up to 25 years, delivering significant environmental benefits.
* Global Grow Lights Market (2020) report by Mordor Intelligence
** Subject, inter alia, to certain milestones and conditions as more fully described in the Company's announcement on 15 October 2021 and mentioned in the Company's AIM Admission Document
Through R&D and validated by industry peers via UKRI grants, we developed SensorGROW, our indoor farm sensor to prototype stage, enabling growers to monitor and control their environment by measuring key areas - which is expected to be launched in H2 2022. We are working with over 28 growers to beta test the product and help with future developments which will deliver possible benefits such as reduction in water usage, nutrient and energy.
SensorGROW's analysis of the growing environment will enable customers to collect and monitor plant health and environment data, far beyond traditional observation. Such access to large volumes of real-world farming data is expected to enable the Group to increase the accuracy and precision of its full-service CEA offering. Our sensor offering will operate on a subscription basis which creates a recurring revenue model.
EXPANDING INTO NEW GROWTH MARKETS
To reduce the reliance on food imports, the team have started to develop an intelligent crop production and management system in partnership with a leading UK grower. Funded by a successful UKRI grant of £503,000, this patentable technology gives Light Science Technologies access to a market of 4,000 industrial growers in the UK with over 300- types of field-scale and protected vegetable and salad crops.
Combining both our nurturGROW and SensorGROW technology in this turnkey solution provides us with access to a new global market with immense benefits to growers such as increasing their yields and productivity whilst lowering costs.
TARGETING THE GREEN ECONOMY MARK
As part of our commitment to sustainability, we are targeting eligibility for the Green Economy Mark, authorised by the London Stock Exchange, which is awarded to companies that generate more than 50 per cent of their annual revenue from products that contribute to the global green economy.
As the Group is awarded more contracts, the Group anticipates that it will qualify for the Green Economy Mark as revenues from its CEA products and services increase relative to the total revenues of the Group.
Financial Review
INCOME STATEMENT
Revenue grew by 6.6% from £6.94m to £7.39m, primarily from the CEM division, with gross margin holding steady at 22.2% (2020: 22.3%) despite the headwinds from supply chain constraints, especially the global shortage of electronic components.
In line with expectations, the Group's loss before tax for FY2021 was £2.35m, as a result of exceptional non-recurring costs of £0.51m associated with the Company's admission to trading on AIM*, significant investment in the CEA division into both product research and development and marketing of the Company's products and services. Finance costs include £59k in relation to the issue of convertible loan notes, incurred prior to the Company's admission to AIM in October 2021, which is not an ongoing expense.
BALANCE SHEET
The Group continued to invest in enhancing its state-of-the-art laboratory facilities, as well as plant & machinery to improve automation capabilities at its CEM factory in Manchester. Further investment has also been made in developing the CEA divisions' core product offering, leading to an increase in the year of £137k in intangible assets. As development of the SensorGROW product was partly covered by a UKRI grant, £80k of grant income has been deferred within the year in relation to this intangible asset, shown separately within other payables.
To 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 £0.59m to £1.20m, and is predominantly allocated to specific customer orders received.
Cash and cash equivalents rose to £3.86m at the year end, and net cash was £1.35m. During the year the Company received gross proceeds of £5.0m through the placing of new Ordinary Shares in the Company on its admission to the AIM market. The net proceeds provide the growth capital the Group requires to continue developing and capitalising on the opportunities within both the Group's divisions.
MERGER ACCOUNTING
For the purposes of statutory financial statements, the basis of preparation used within the historical financial information, part 3 of the Company's Admission document, differs. The Group has adopted the predecessor method of merger accounting in accounting for the combination of the UK Circuits and Light Science Technologies entities. This adds together the results and balance sheets of each of the entities with a merger reserve created to reflect the difference between the investment in subsidiaries and the nominal value of share capital of the subsidiaries.
In practice, this means neither goodwill, intangible assets nor any fair value adjustments are accounted for within the Group's consolidated financial statements. This has been adopted as a prudent policy for statutory purposes, and is not an impairment of the goodwill on historic acquisitions in the CEM division noted in the Company's Admission Document, rather the Directors remain confident in the CEM's ongoing value and profitability within the Group.
* This is in addition to £0.67m of share issuance costs offset against share premium account, and £30,000 expensed in the prior year
OUTLOOK
Moving forward, we aim to build on the solid foundations that we have worked hard to establish. The Group will focus on further expanding its network of strategic partnerships with both major industry players globally, leading academic institutions and bringing experts into our growing team.
In our CEM division, UK Circuits, we predict there to be no change in the increased demand for electronics. As a result of this and our forward order book (as detailed in the Company's Admission Document), we have begun a programme of investment to automate further production lines to win larger contracts in sensor and medical markets.
In the CEA division we will continue to build on our contracts and sales pipeline, and expand into new markets in lighting, sensors and automated crop production and management systems, with an aspiration to enter the European and US market over the medium- to long-term. In doing so, we will strategically expand our facilities specifically in laboratory R&D at our new planned premises in 2023.
We are primed for accelerated growth in a disruptive market brought to prominence by Brexit, Covid-19 and the terrible events in Ukraine, driving the need to grow more locally. Also, the trend of rising energy prices offers the Group a unique medium to long-term opportunity to support growers in lowering energy costs and increasing yields as we are already demonstrating with our nurturGROW luminaire range, which provides growers with a compelling, energy efficient solution and recyclable and reusable design. Another factor is the timing of the Farming Transformation Fund grants, which a number of major customers are awaiting approval before confirming orders.
We continue to have good customer engagement and our pipeline remains strong, but in the short term we have seen an elongation of the sales cycle as the aforementioned factors impact decision making with our customer base. Accordingly, there is a level of uncertainty around current year revenues within Light Science Technologies. Revenues in UK Circuits remain strong and are in line with expectations despite the challenges of global component shortages.
Our SensorGROW coming to market will provide a powerful intelligence solution where important, all-encompassing data will be accessible to growers to give them better understanding and control of key growing parameters so they can tangibly grow more with less.
All of these opportunities, I believe, represent a truly unique platform to exploit, and enable us to build on our solid foundations and drive long-term sustainable growth for the business and our shareholders.
Simon Deacon
CEO
Consolidated statement of comprehensive income
For the year ended 30 November 2021
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| 30 November | 30 November |
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| 2021 | 2020 |
| Notes | £ | £ |
Revenue | 5 | 7,393,933 | 6,937,426 |
Cost of sales |
| (5,750,782) | (5,387,739) |
Gross profit |
| 1,643,151 | 1,549,687 |
Administrative expenses |
| (3,265,106) | (1,448,419) |
Non-recurring administrative expenses | 8 | (512,436) | (30,255) |
Other operating income | 9 | 50,203 | 186,616 |
Operating (loss) / profit | 6 | (2,084,188) | 257,629 |
Finance costs | 10 | (262,620) | (109,634) |
(Loss) / profit on ordinary activities before taxation |
| (2,346,808) | 147,995 |
Income tax credit | 13 | 202,423 | 35,709 |
(Loss) / profit for the year and total comprehensive income for the year |
| (2,144,385) | 183,704 |
Attributable to: |
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The owners of the company |
| (2,165,543) | 109,896 |
Non-controlling interests | 27 | 21,158 | 73,808 |
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| (2,144,385) | 183,704 |
(Loss)/earnings per share |
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Basic and diluted (pence) | 29 | (1.98) | 0.18 |
Consolidated balance sheet
Registered Number: 12398098
As at 30 November 2021
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| 30 November | 30 November |
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| 2021 | 2020 |
| Notes | £ | £ |
Assets |
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Non-current assets |
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Property, plant and equipment | 14 | 822,803 | 740,842 |
Intangible assets | 15 | 214,698 | 77,752 |
Right-of-use assets | 22 | 551,532 | 623,298 |
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| 1,589,033 | 1,441,892 |
Current assets |
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Inventories | 17 | 1,199,749 | 589,471 |
Trade and other receivables | 18 | 1,738,330 | 1,254,189 |
Corporation tax receivable |
| 151,090 | - |
Cash and cash equivalents | 19 | 3,860,430 | 41,880 |
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| 6,949,599 | 1,885,540 |
Total assets |
| 8,538,632 | 3,327,432 |
Liabilities |
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Current liabilities |
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Borrowings | 23 | (1,341,925) | (752,361) |
Trade and other payables | 20 | (2,049,089) | (1,376,852) |
Corporation tax payable |
| - | (39,607) |
Lease liabilities | 22 | (226,498) | (162,834) |
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| (3,617,512) | (2,331,654) |
Non-current liabilities |
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Deferred tax | 21 | - | (1,470) |
Borrowings | 23 | (613,889) | (993,440) |
Trade and other payables | 20 | (64,184) | - |
Lease liabilities | 22 | (325,878) | (465,881) |
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| (1,003,951) | (1,460,791) |
Total liabilities |
| (4,621,463) | (3,792,445) |
Net assets |
| 3,917,169 | (465,013) |
Capital and reserves attributable to the owners of the company |
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Share capital | 25 | 1,741,500 | 1,000,000 |
Share premium account | 26 | 5,654,011 | - |
Share allotment reserve | 26 | - | 250,000 |
Merger reserve | 26 | (3,478,435) | (3,479,535) |
Share based payment reserve | 26 | 220,363 | - |
Warrant reserve | 26 | 159,593 | - |
Retained earnings | 26 | (706,733) | 1,458,810 |
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| 3,590,299 | (770,725) |
Non-controlling interests | 27 | 326,870 | 305,712 |
Total equity |
| 3,917,169 | (465,013) |
These financial statements were approved by the board of Directors and authorised for issue on 25 April 2022 and were signed on its behalf by:
Simon Deacon
Chief Executive Officer
25 April 2022
Company balance sheet
As at 30 November 2021
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| 30 November | 30 November |
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| 2021 | 2020 |
| Notes | £ | £ |
Assets |
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Non-current assets |
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Property, plant and equipment | 14 | 8,859 | 4,176 |
Investments in subsidiaries | 16 | 3,101,507 | - |
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| 3,110,366 | 4,176 |
Current assets |
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Trade and other receivables | 18 | 861,198 | 126,271 |
Cash and cash equivalents | 19 | 3,412,666 | - |
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| 4,273,864 | 126,271 |
Total assets |
| 7,384,230 | 130,447 |
Liabilities |
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Current liabilities |
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Bank overdraft | 23 | - | (2,738) |
Trade and other payables | 20 | (296,825) | (106,483) |
Total liabilities |
| (296,825) | (109,221) |
Net assets |
| 7,087,405 | 21,226 |
Capital and reserves attributable to the owners of the company |
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Share capital | 25 | 1,741,500 | 1,000 |
Share premium account | 26 | 5,654,011 | - |
Share allotment reserve | 26 | - | 250,000 |
Share based payment reserve | 26 | 220,363 | - |
Warrant reserve | 26 | 159,593 | - |
Retained earnings | 26 | (688,062) | (229,774) |
Total equity |
| 7,087,405 | 21,226 |
The company has elected to take the exemption under section 408 of the Companies Act 2006 not to present its individual statement of comprehensive income and related notes. The loss for the company for the year was £458,288 (Period from 13 January 2020 to 30 November 2020: £229,774).
These financial statements were approved by the board of Directors and authorised for issue on 25 April 2022 and were signed on its behalf by:
Simon Deacon
Chief Executive Officer
25 April 2022
Statements of changes in equity
For the year ended 30 November 2021
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| Share premium | Share allotment |
| Share capital | account | reserve |
Consolidated | £ | £ | £ |
At 30 November 2020 | 1,000,000 | - | 250,000 |
Transactions with shareholders |
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Combinations under common control | - | - | - |
Advance share subscription | - | - | 750,000 |
Shares and related warrants issued in the year | 741,500 | 5,654,011 | (1,000,000) |
Share based payment | - | - | - |
Total transactions with shareholders | 741,500 | 5,654,011 | (250,000) |
Comprehensive income |
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Loss for the year | - | - | - |
Total comprehensive income | - | - | - |
At 30 November 2021 | 1,741,500 | 5,654,011 | - |
| Share based payment reserve | Warrant reserve | Merger reserve | Retained earnings | Non- controlling interests | Total equity |
Consolidated | £ | £ | £ | £ | £ | £ |
At 30 November 2020 | - | - | (3,479,535) | 1,458,810 | 305,712 | (465,013) |
Transactions with shareholders |
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Combinations under common control | - | - | 1,100 | - | - | 1,100 |
Advance share subscription | - | - | - | - | - | 750,000 |
Shares and related warrants issued in the year | - | 159,593 | - | - | - | 5,555,104 |
Share based payment | 220,363 | - | - | - | - | 220,363 |
Total transactions with shareholders | 220,363 | 159,593 | 1,100 | - | - | 6,526,567 |
Comprehensive income |
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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 | 220,363 | 159,593 | (3,478,435) | (706,733) | 326,870 | 3,917,169 |
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| Share premium | Share allotment |
| Share capital | account | reserve |
Consolidated | £ | £ | £ |
At 30 November 2019 | 1,000,000 | - | - |
Transactions with shareholders |
|
|
|
Advance share subscription | - | - | 250,000 |
Total transactions with shareholders | - | - | 250,000 |
Comprehensive income |
|
|
|
Loss for the year | - | - | - |
Total comprehensive income | - | - | - |
At 30 November 2020 | 1,000,000 | - | 250,000 |
| Share based payment reserve | Warrant reserve | Merger reserve | Retained earnings | Non- controlling interests | Total equity |
Consolidated | £ | £ | £ | £ | £ | £ |
At 30 November 2019 | - | - | (3,479,535) | 1,348,914 | 231,904 | (898,717) |
Transactions with shareholders |
|
|
|
|
|
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Advance share subscription | - | - | - | - | - | 250,000 |
Total transactions with shareholders | - | - | - | - | - | 250,000 |
Comprehensive income |
|
|
|
|
|
|
Loss for the year | - | - | - | 109,896 | 73,808 | 183,704 |
Total comprehensive income | - | - | - | 109,896 | 73,808 | 183,704 |
At 30 November 2020 | - | - | (3,479,535) | 1,458,810 | 305,712 | (465,013) |
| Share capital | Share premium account | Share allotment reserve | Share based payment reserve |
Company | £ | £ | £ | £ |
At 1 December 2020 | 1,000 | - | 250,000 | - |
Transactions with shareholders |
|
| - | - |
Combinations under common control | 999,000 | - | 750,000 | - |
Advance share subscription | - | - | (1,000,000) | - |
Shares and related warrants issued during the year | 741,500 | 5,654,011 | - | 220,363 |
Share based payments | - | - |
|
|
Total transactions with shareholders | 1,740,500 | 5,654,011 | (250,000) | 220,363 |
Comprehensive income |
|
| - | - |
Loss for the year | - | - |
|
|
Total comprehensive income for the year | - | - | - | - |
At 30 November 2021 | 1,741,500 | 5,654,011 | - | 220,363 |
|
| Retained |
|
| Warrant reserve | earnings | Total equity |
Company | £ | £ | £ |
At 1 December 2020 | - | (229,774) | 21,226 |
Transactions with shareholders | - | - | 999,000 |
Combinations under common control | - | - | 750,000 |
Advance share subscription | 159,593 | - | 5,555,104 |
Shares and related warrants issued during the year | - | - | 220,363 |
Share based payments |
|
|
|
Total transactions with shareholders | 159,593 | - | 7,524,467 |
Comprehensive income |
|
|
|
Loss for the year | - | (458,288) | (458,288) |
Total comprehensive income for the year | - | (458,288) | (458,288) |
At 30 November 2021 | 159,593 | (688,062) | 7,087,405 |
| Share capital | Share premium account | Share allotment reserve | Retained earnings | Total equity |
Company | £ | £ | £ | £ | £ |
At 13 January 2020 | - | - | - | - | - |
Transactions with shareholders |
|
|
|
|
|
Shares issued during the period | 1,000 | - | - | - | 1,000 |
Advance share subscription | - | - | 250,000 | - | 250,000 |
Total transactions with shareholders | 1,000 | - | 250,000 | - | 251,000 |
Comprehensive income for the period |
|
|
|
|
|
Loss for the period | - | - | - | (229,774) | (229,774) |
Total comprehensive income for the period | - | - | - | (229,774) | (229,774) |
At 30 November 2020 | 1,000 | - | 250,000 | (229,774) | 21,226 |
Consolidated cash flow statement
For the year ended 30 November 2021
|
| 30 November | 30 November |
|
| 2021 | 2020 |
| Notes | £ | £ |
Cash flows from operating activities (Loss) / profit after tax |
| (2,144,385) | 183,704 |
Adjustments for: |
|
|
|
Depreciation of tangible assets | 14 | 86,145 | 43,568 |
Depreciation of right-of-use assets | 22 | 145,552 | 127,019 |
Loss on disposal of fixed assets |
| - | 2,403 |
Interest payable | 10 | 262,620 | 109,634 |
Taxation and RDEC credit | 9,13 | (214,882) | (35,706) |
Share based payment | 24 | 220,363 | - |
Changes in working capital: |
|
|
|
(Increase)/decrease in inventory | 17 | (610,278) | 59,012 |
(Increase) in trade and other receivables | 18 | (484,141) | (18,077) |
Increase / (decrease) in trade and other payables | 20 | 732,269 | (87,179) |
Cash (used in) / generated from operations |
| (2,006,737) | 384,378 |
Tax received | 13 | 22,715 | 102,007 |
Net cash (outflow) / inflow from operating activities |
| (1,984,022) | 486,385 |
Cash flows from investing activities |
|
|
|
Purchase of property, plant and equipment | 14 | (168,106) | (67,194) |
Purchase of intangible fixed assets | 15 | (136,946) | (77,752) |
Purchase of right-of-use-assets | 22 | - | (329,171) |
Consideration paid for the acquisition of subsidiaries |
| - | (500,590) |
Net cash outflow from investing activities |
| (305,052) | (974,707) |
Cash flows from financing activities |
|
|
|
Capital issued (net of issue costs) | 25 | 4,431,204 | 1,000 |
Advance share subscriptions | 25 | 750,000 | 250,000 |
Proceeds from new loans | 32 | 310,000 | 975,000 |
Proceeds from new convertible loans | 32 | 1,125,000 | - |
Repayment of loans | 23,32 | (679,805) | (548,473) |
Asset financing | 22 | - | 250,413 |
Lease payments | 22 | (165,125) | (89,247) |
Interest paid on leases | 22 | (25,991) | (27,147) |
Net drawdown on invoice discounting facility | 23 | 520,742 | (75,000) |
Interest paid on loans and borrowings | 10 | (155,663) | (83,708) |
Net cash inflow from financing activities |
| 6,110,362 | 652,838 |
Increase in cash and cash equivalents |
| 3,821,288 | 164,516 |
Cash and cash equivalents including overdrafts at the start of the period |
| 39,142 | (125,374) |
Cash and cash equivalents including overdrafts at the end of the period | 19 | 3,860,430 | 39,142 |
Company cash flow statement
For the year ended 30 November 2021
|
| 30 November | 30 November |
|
| 2021 | 2020 |
| Notes | £ | £ |
Cash flows from operating activities |
|
|
|
Loss for the period |
| (458,288) | (229,774) |
Adjustments for: |
|
|
|
Depreciation of tangible assets | 14 | 3,703 | 246 |
Interest payable |
| 61,197 | - |
Share based payment |
| 140,363 | - |
Changes in working capital: |
|
|
|
(Increase) in trade and other receivables | 18 | (73,406) | (12,078) |
(Increase) in amounts owed by group undertakings |
| (661,521) | (114,193) |
Increase in trade payables and other payables |
| 189,242 | 106,483 |
Net cash (outflow) from operating activities |
| (798,710) | (249,316) |
Cash flows from investing activities |
|
|
|
Purchase of property, plant and equipment | 14 | (8,386) | (4,422) |
Capital contribution and investments in subsidiaries | 16 | (2,022,507) | - |
Net cash outflow from investing activities |
| (2,030,893) | (4,422) |
Cash flows from financing activities |
|
|
|
Capital issued (net of issue costs) | 25 | 4,431,204 | 1,000 |
Advance share subscriptions | 25 | 750,000 | 250,000 |
Proceeds from new loans | 32 | 310,000 | - |
Proceeds from new convertible loans | 32 | 1,125,000 | - |
Repayment of loans | 32 | (310,000) | - |
Interest paid on loans and borrowings |
| (61,197) | - |
Net cash inflow from financing activities |
| 6,245,007 | 251,000 |
Increase/(decrease) in cash and cash equivalents |
| 3,415,404 | (2,738) |
Cash and cash equivalents including overdrafts at the start of the period |
| (2,738) | - |
Cash and cash equivalents including overdrafts at the end of the period | 19 | 3,412,666 | (2,738) |
Notes to the financial statements
1. General Information
Light Science Technologies Holdings plc was incorporated in England on 13 January 2020 as a private company limited by shares. On 8 July 2021, the Company re-registered as a public limited company.
The address of its registered office is 1 Lowman Way, Hilton, Derby, England, DE65 5LJ.
The principal activity of the Group is the development and manufacturing of electronic boards and the development and manufacturing of lighting and technology products for the Controlled Environment Agriculture ("CEA") sector.
2. Basis of preparation
1. STATEMENT OF COMPLIANCE
The group and company financial statements have been prepared and approved by the Directors in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 ("IFRS"). Both the company and group have reported those parts of the Companies Act 2006 that are relevant to companies preparing accounts under IFRS. On publishing the parent company financial statements here together with the group financial statements, the company is taking advantage of the exemption in s408 of the Companies Act 2006 to not present its individual statements of comprehensive income and related notes that form a part of these approved financial statements.
2. BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of the company and entities controlled either directly or indirectly by the company.
The consolidated financial statements have been prepared in accordance with uniform accounting principles for similar transactions for the companies included in the consolidated accounts and are prepared based on the same accounting period as used for the parent company. All intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated when preparing the consolidated financial statements.
The introduction of the holding company to form a legal group constitutes a group reconstruction and has been accounted for as above using merger accounting principles. Therefore, although the group reconstruction did not become effective until June 2021, the consolidated financial statements of Light Science Technologies Holdings plc are presented as if they and the subsidiaries has always been part of the same group. Accordingly, the results of the subsidiaries for the entire year ended 30 November 2021 are shown in the consolidated income statement and comparative figures for the year ended 30 November 2020.
Given all companies were under common control, the Group has adopted the predecessor method of merger accounting in accounting for the combination of all subsidiaries presented in these financial statements. This adds together the results and balance sheets of each of the entities for both years presented. A merger reserve is created to reflect the difference between the cost of the investment in subsidiaries and the nominal value of share capital of the subsidiaries.
The non-controlling interest is measured as a proportionate share of the book values of the related assets and liabilities.
3. BASIS OF MEASUREMENT
The financial statements have been prepared on a going concern basis, under the historical cost convention. No new standards, amendments or interpretations have been adopted in the year which have a material impact on the group or company.
Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the group's accounting years beginning on or after 1 December 2022 or later years and which the group has decided not to adopt early. The group has considered the impact of these new standards and interpretations in future years on profit, earnings per share and net assets. None of these new standards or interpretations is expected to have a material impact.
4. GOING CONCERN
Working capital forecasts have been prepared for the period to 30 November 2024. Based on the forecasts, the Directors are satisfied that the Group can meet its day-to-day cash flow requirements and operate within all the terms of its borrowing facilities.
A range of sensitivities have been run on the working capital model, and the directors consider a scenario in which the business will face liquidity issues or breach covenant conditions is remote. As part of the sensitivity analysis the directors have considered the impact of a reduction in turnover from their principal customer and the impact on working capital and are satisfied that in such a scenario the Group has sufficient liquid resources to restructure and continue as a going concern servicing the remaining customer base. The projections at the date of preparing these financial statements show that the Group has sufficient cash resources for the foreseeable future.
On that basis, the Directors therefore believe there is a reasonable expectation that the Group can continue as a going concern for at least the 12 months from the date of approval of the financial statements and have prepared the financial statements on a going concern basis.
5. FUNCTIONAL AND PRESENTATIONAL CURRENCY
The financial statements are presented in pounds sterling, rounded to the nearest £, which is the Group's functional currency.
3. Use of estimates and judgements
The preparation of financial statements requires management to make estimates and judgements that affect the amounts reported for assets and liabilities as at the reporting date and the amounts reported for revenues and expenses during the period. The nature of estimation means that actual amounts could differ from those estimates. Estimates and judgements used in the preparation of the consolidated financial statements are regularly reviewed and revised as necessary. While every effort is made to ensure that such estimates and judgements are reasonable, by their nature they are uncertain and, as such, changes in estimates and judgements may have a material impact on the consolidated financial statements.
The key sources of judgement and estimation uncertainty that have a significant effect on the amounts recognised in the financial statements are discussed below:
1. DEPRECIATION, AMORTISATION AND RESIDUAL VALUES
The assessment of the useful economic lives, residual values and the method of depreciating or amortising tangible and intangible fixed assets requires judgement. Depreciation and amortisation are charged to profit or loss based on the useful economic life selected, which requires an estimation of the year and profile over which the Group expects to consume the future economic benefits embodied in the assets.
Useful economic lives and residual values are re-assessed, and amended as necessary, when changes in their circumstances are identified. The carrying value of tangible assets at the year-end is £822,803 (2020: £740,842). The carrying value of intangible assets at the year-end is £214,698 (2019: £77,752). There was depreciation in the year of £86,145 (2020: £43,568) and amortisation in the year of £nil (2020: £nil).
2. IMPAIRMENT OF ASSETS
The Directors review the carrying value of assets for indications of impairment at each period end. If indicators of impairment exist, the carrying value of the asset is subject to further testing to determine whether its carrying value exceeds it recoverable amount. This process will usually involve the estimation of future cash flows which are likely to be generated by the asset. Cash flow and growth rate assumptions are in relation to periods covered by Board approved plans. Other key assumptions are the discount rate, where the group uses its corporate weighted average cost of capital, of 12%. There have been no provisions against assets including investments and intercompany debtors in the year (2020: £nil).
3. DEVELOPMENT COSTS
Distinguishing the research and development phases of new products and determining whether the recognition requirements for the capitalisation of development costs are met and their subsequent amortisation period requires judgement.
Management judgement is required to determine the appropriate value and timing of recognising development costs incurred on projects as an asset. Recognition of capitalised development costs is dependent on assumption of generating future economic benefits. Actual outcomes may differ. The value of the development costs capitalised at 30 November 2021 was £214,698 (2020: £77,752).
4. LEASES
In respect of right-of-use leased assets key estimates are a combination of the incremental borrowing rate used to discount the total cash flows and the term of the leases where breaks or extensions fall within the group's control. These are used to derive both the opening asset value and lease liability as well as the consequential depreciation and financing charges. The Directors have determined the incremental borrowing rate to be 4.3% for all lease arrangements. The value of right-of-use assets at 30 November 2021 was £551,532 (2020:£623,298). The value of lease liabilities at 30 November 2021 was £552,376 (2020:£628,714).
5. TAXATION
Certain elements of development expenditure undertaken by the group are eligible for enhanced research and development tax relief which generally relates to salary costs of technical staff. The group takes professional advice on its tax affairs and recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due.
6. CARRYING VALUE OF INVENTORIES
Management reviews the market value of and demand for the group's inventories on a regular basis to ensure inventories are recorded in the financial statements at the lower of cost and net realisable value. Any provision for impairment is recorded against the carrying value of inventories. Management uses its knowledge of market conditions, historical experience and estimates of future events to assess future demand for the group's products and achievable selling prices. The carrying value of inventories at 30 November 2021 was £1,199,749 (2020:£589,741) with no provision held at either year end.
4. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented.
1. FOREIGN CURRENCY TRANSACTIONS
Transactions in currencies other than the functional currency (foreign currency) are initially recorded at the exchange rate prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies are translated at the rate ruling at the date of the transaction, or, if the asset or liability is measured at fair value, the rate when that fair value was determined.
All translation differences are taken to profit or loss, except to the extent that they relate to gains or losses on non-monetary items recognised in other comprehensive income, when the related translation gain or loss is also recognised in other comprehensive income.
2. REVENUE
Revenue comprises revenue recognised by the Group in respect of goods and services supplied during the year, based on the consideration specified in a contract, excluding value added tax and other sales taxes. IFRS 15 establishes a comprehensive model for determining whether, how much, and when revenue is recognised. The Group follows the five-step model according to IFRS 15. The process separates the following steps: Identification of the customer contract, identification of the individual performance obligations, determination of the transaction price, allocation of the transaction price to the individual contractual obligations and the determination of the timing of revenue recognition.
Disaggregation of revenue into the two major operating segments are shown in note 5 Segmental reporting. The Group has two operating segments, the development and sale of contract electronics boards, and the development and sale of lighting and technology products for the Controlled Environment Agriculture (CEA) sector, with associated provision of scientific services to the CEA sector. Both revenue streams include the sale of hardware which is accounted for as a distinct performance obligation. Additionally, the scientific services are recognised on satisfactory completion of agreed gateways with the client.
Revenue from contracts with customers is recognised when performance obligations are satisfied and which is at a point in time the goods or services transfer, either at customer collection, despatch or signing off completion of project gateway. The transaction price reported for all contracts is the price agreed in the contract and there are no material elements of variable consideration, financing or non-cash consideration.
Arrangements are in place for certain customers, whereby the customer is also a supplier to the business. The customer supplies a distinct good or service to the business, and as such the purchase of that good or service is accounted for in the same way that it the Group accounts for other purchases from suppliers. The amount of consideration payable to the customer does not exceed the fair value of the distinct good or service that the Group receives from the customer.
3. GOVERNMENT GRANTS
Grants of a revenue nature are recognised in the consolidated statement of comprehensive income in the same period as the related expenditure, and are accrued or deferred when related expenditure has not been incurred in the period.
Grants of a capital nature are recognised in the consolidated balance sheet as deferred grant income and released to match the amortisation of intangible development assets to which they relate.
Grants relating to the Coronavirus Job Retention Scheme are recognised when the requirements are met and recognised in the consolidated statement of comprehensive income within other operating income in the period to which they relate.
Support provided under the Coronavirus Business Interruption Loan Scheme (CBILS) by way of the Business Interruption Payment (BIP) grant, is recognised when the requirements are met and recognised in the consolidated statement of comprehensive income within other operating income. The related liability has been initially measured at the discounted present value of future payments within the combined statement of comprehensive income when the relevant requirements are met, such that interest is charged during the duration of the CBILS loan whether or not covered by the BIP grant.
4. LEASES
The Group has applied IFRS 16 (leases) using the fully retrospective approach, under which the initial application was recognised at 1 December 2017. The Group leases assets under short term leaseholds and plant and machinery.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the consolidated statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight line basis.
Assets and liabilities arising from a lease are measured on a present value basis, discounted using the interest rate implicit in the lease, if that rate can be determined, or the Group's incremental borrowing rate. Lease liabilities include the net present value of the following lease payments:
· Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
· Lease payments to be made under reasonably certain extension options.
Right-of-use assets are measured at cost comprising the following:
· The amount of the initial measurement of lease liability;
· Adjustments for any payments made at or before the commencement date;
· Adjustments for any initial direct costs incurred less lease incentives received;
· Any restoration costs expected.
The Group has elected not to recognise right-of-use assets and lease liabilities for lease of low-value assets and short-term leases. Payments associated with short term leases and leases of low value assets are recognised on a straight line basis as an expense in the consolidated statement of comprehensive income. Short-term leases are leases with a lease term of 12 months or less. Low value assets comprise of office equipment.
Assets held by the Group under leases which had previously been classified as being held under finance leases and hire purchase contracts had been capitalised as property, plant and equipment and depreciated over the shorter of the lease term and their useful lives. Obligations under such arrangements were included in creditors net of the finance charge allocated to future periods. These leases now presented within the right-of-use asset and liability under IFRS16.
5. FINANCE COSTS
Finance costs are charged to the consolidated statement of comprehensive income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount.
6. INCOME TAX
Current tax represents the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and taking into account any adjustments in respect of prior years.
Deferred tax is calculated using the balance sheet liability method on temporary differences and provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor the initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. Deferred tax is measured at the tax rates that are expected to apply when the temporary differences reverse, based on the tax laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that future taxable income will be available against which the temporary difference can be utilised or offset against deferred tax liabilities.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are recognised in other comprehensive income or charged or credited directly to equity in which case the related deferred tax is also recognised in other comprehensive income or charged or credited directly to equity respectively.
Research and development ("R&D") tax credits are accounted for under the accruals model, unless the receipt of monies cannot be foreseen with reasonable certainty. R&D tax credits are recognised within the statement of comprehensive income, where the receipt can be foreseen with reasonable certainty, in order to match income with related expenditure. The amounts are either recognised within operating costs or as a reduction in the tax charge, dependent upon the nature of the claims made.
7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost or deemed cost, net of depreciation and any provision for impairment. Depreciation is calculated to write down the cost or valuation, less estimated residual value, of all property, plant and equipment, other than freehold land, by equal annual instalments over their estimated useful economic lives, on a straight line basis. The rates generally applicable are:
· Long-term leasehold property - 2% straight line
· Leasehold improvements - over the period of the lease
· Plant and machinery - 20% straight line
· Fixtures and fittings - 20% straight line
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a Significant change since the last reporting date. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the consolidated statement of comprehensive income.
8. RESEARCH AND DEVELOPMENT EXPENDITURE
Research expenditure is expensed in the income statement as incurred. Development expenditure on a project is written off as incurred unless it can be demonstrated that the following conditions for capitalisation, in accordance with IAS38 Intangible Assets, are met:
· the intention is to complete the development of the intangible asset and use or sell it;
· the development costs are separately identifiable and can be measured reliably;
· management are satisfied as to the ultimate technical and commercial viability of the project; so that it will be feasible to complete and be available for use or sale;
· management are satisfied with the availability of technical, financial and other resources to complete the development and use or sell the intangible asset; and
· it is probable that the asset will generate future economic benefit.
Any subsequent development costs are capitalised and are amortised, within cost of sales, from the date the product or process is available for use, on a straight-line basis over its estimated useful life. The useful life for the development costs capitalised at the current year-end is up to 5 years.
9. IMPAIRMENT OF ASSETS
At each reporting year end date, the Group and Company reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating unit ("CGU") to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Comprehensive Income.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or CGU in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
10. INVENTORIES
Inventories are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads. At each consolidated statement of financial position date, inventories are assessed for impairment. If inventories are impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the consolidated statement of comprehensive income.
11. CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash in hand, deposits held at call with banks, and other short‑term highly liquid investments with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purposes of the cash flow statement. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
12. FINANCIAL ASSETS AND LIABILITIES
Financial assets and liabilities are recognised when the Group becomes party to the contracts that give rise to them and are classified as financial assets and liabilities at fair value through the consolidated statement of comprehensive income. The Group determines the classification of its financial assets and liabilities at initial recognition and re- evaluates this designation at each financial year end.
A financial asset or liability is generally de-recognised when the contract that gives rise to it is settled, sold, cancelled or expires.
Financial assets, including trade and other receivables, cash and cash equivalent balances are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Such assets are subsequently carried at amortised cost using the effective interest method. The Group has applied the simplified approach to measuring expected credit losses on trade receivables, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Cash and cash equivalents comprise cash held at bank which is available on demand.
Financial liabilities, including trade and other payables, lease liabilities, bank borrowings and convertible debt are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. Convertible debt has no equity component due to the nature of the agreement, whereby the debt is converted into a known value of shares and repayment of the original principal is required in full at the stop date.
13. SHARE BASED PAYMENTS
The cost of share-based employee compensation arrangements, whereby employees receive remuneration in the form of share options, is recognised as an employee benefit expense in the income statement, with a corresponding credit to the share-based payment reserve.
The total expense to be apportioned over the vesting year of the benefit is determined by reference to the fair value of the share options awarded (at the date of grant) and the number of options that are expected to vest. The Group has adopted the Black-Scholes model for the purposes of computing the fair value of options. At each balance sheet date, the Group revises its estimates of the number of options that are expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share based payment reserve.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and the share premium account when the options are exercised.
Where the company grants options over its own shares to the employees of its subsidiaries it recognises, in its individual financial statements, an increase in the cost of investment in its subsidiaries equivalent to the equity-settled share-based payment charge recognised in its consolidated financial statements with the corresponding credit being recognised directly in equity.
14. DEFINED CONTRIBUTION PENSION SCHEME
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payments obligations.
The contributions are recognised as an expense in the consolidated statement of comprehensive income when they fall due.
Amounts not paid are shown in accruals as a liability in the statement of financial position.
15. NON-RECURRING COSTS
The Group presents as non-recurring costs on the face of the statement of comprehensive income those material items of income and expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to better understand the elements of financial performance in the year, so as to facilitate comparison with prior years.
16. EMPLOYEE BENEFIT TRUST
LSTH Trustee Limited, the corporate trustee of an employee benefit trust and subsidiary of the Company was incorporated on 30 July 2021 for the benefit of the Executive Directors and senior management. Where the Group has de facto control of the assets and liabilities of the trust, they are accounted for as assets and liabilities of the group until the earlier of the date that allocation of the trust funds to employees in respect of past services is declared and the date that the assets of the trust vest in identified individuals.
17. INVESTMENT IN SUBSIDIARIES
Investments in subsidiaries are recorded at cost less any impairment provisions in the Balance Sheet. They are tested for impairment when there is objective evidence of impairment. Any impairment losses are recognised in profit or loss in the period they occur.
5. 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 is 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. 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 2021 one customer represented 61.3% of total revenue (2020: 63.3%).
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.
| Contract | Controlled |
|
| electronics | environment |
|
| manufacture | agriculture |
|
30 November 2021 | £ | £ | 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) |
| Contract | Controlled |
|
| electronics | environment |
|
| manufacture | agriculture |
|
30 November 2020 | £ | £ | Total |
Revenue | 6,937,426 | - | 6,937,426 |
Depreciation | (169,894) | (693) | (170,587) |
Operating profit/(loss) | 779,765 | (522,136) | 257,629 |
Segment assets | 3,152,314 | 175,118 | 3,327,432 |
Segment liabilities | (3,379,090) | (413,355) | (3,792,445) |
6. Operating (loss)/profit
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Operating (loss)/profit is stated after charging: |
|
|
Depreciation on property, plant and equipment | 86,145 | 43,568 |
Depreciation on right-of-use assets | 145,552 | 127,019 |
Research and development expenses | 451,321 | 586,143 |
Inventory expensed | 5,217,468 | 4,269,526 |
Short term low value lease expenses | 8,644 | 6,803 |
Share based payments | 220,363 | - |
7 Auditor's remuneration
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Auditors' remuneration of group | 80,000 | - |
Non-statutory audit of Company as part of the re-registration as a plc | 15,000 | - |
Non-audit services in relation to the Admission to AIM | 185,000 | 30,255 |
8 Non-recurring expenses
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Non-recurring costs | 512,436 | 30,255 |
Non-recurring costs relate to professional and other costs directly attributable to preparing the Company for admission to the AIM market of the London Stock Exchange.
As note 25, £669,049 of IPO costs have also been offset against the share premium account. These relate to costs directly attributable to the issue of new shares along with a proportion of other costs incurred, allocated between the statement of comprehensive income and share premium account on ratio of existing shares and new shares issued.
9 Other operating income
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Government grants | 37,744 | 186,616 |
RDEC tax credit | 12,459 | - |
| 50,203 | 186,616 |
Within government grants receivable, an amount of £8,622 (2020: £87,610) was received in respect of employees placed on "furlough" during the year, as part of the UK Government's Coronavirus Job Retention Scheme. Government support was also received in relation to interest payments and arrangement fees under the Coronavirus Business Interruption Loan Scheme, for an amount of £5,602 (2020: £93,216).
The remainder of government grants related to government funded development projects. An amount of £57,816 has also been deferred in relation to government funded development projects.
10. Finance income and expense
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Bank and loan interest payable | 148,012 | 82,487 |
Interest on convertible loan notes | 58,985 | - |
Interest expenses on lease liabilities | 55,623 | 27,147 |
| 262,620 | 109,634 |
Of these finance costs an amount of £91,446 (2020: £1,779) was covered by the Government's Business Interruption Payment to the lender and as such was not a cash cost to the Group, of which £61,814 (2020: £1,779) relates to loan interest payable, including £10,480 (2020: £282) relating to the invoice discounting facility, and £29,632 relates to interest expenses on lease liabilities.
11. Staff numbers and costs
| Group | Group | Company | Company |
| 30 November | 30 November | 30 November | 30 November |
| 2021 | 2020 | 2021 | 2020 |
| £ | £ | £ | £ |
Wages and salaries | 2,637,682 | 1,600,185 | 862,638 | 161,800 |
Social security costs | 271,235 | 142,865 | 111,394 | 19,500 |
Pension contributions | 37,810 | 27,699 | 6,797 | 1,244 |
Short-term employee benefits | 10,904 | 4,329 | 6,747 | 1,562 |
Share based payments | 220,363 | - | 140,363 | - |
| 3,177,994 | 1,775,077 | 1,127,939 | 184,106 |
Key management personnel remuneration comprises:
| Group | Group |
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Emoluments for qualifying services | 1,116,815 | 359,788 |
Employers' national insurance | 144,586 | 44,249 |
Pension contributions | 8,570 | 3,581 |
Short-term employee benefits | 6,997 | 3,448 |
Share based payments | 186,586 | - |
| 1,463,554 | 411,066 |
Key management personnel is defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including any Directors (whether Executive, Non-executive and Non-statutory) of the Company. Key management personnel are considered to be the Executive, Non-Executive and Non-statutory Directors.
The average number of employees during the year (including Directors), was as follows:
| Group | Group | Company | Company |
| 30 November | 30 November | 30 November | 30 November |
| 2021 | 2020 | 2021 | 2020 |
Directors | 8 | 4 | 4 | 1 |
Admin | 15 | 8 | 3 | 1 |
Sales | 3 | 2 | - | - |
Production | 51 | 50 | - | - |
| 77 | 64 | 7 | 2 |
12. Directors' remuneration
For further details of the Director's Remuneration please refer to the Remuneration Committee report, which is included in the Annual Report.
The highest paid director received remuneration of £291,821 (2020: £60,436). The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £1,209 (2020: £nil).
During the year retirement benefits were accruing to 2 directors (2020:1) in respect of defined contribution pension schemes.
13. Taxation
The tax credit is made up as follows:
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Current tax expense |
|
|
UK corporation tax for the year | (109,285) | (19,401) |
Adjustment in respect of prior year | (91,668) | 65,450 |
Total current income tax | (200,953) | 46,049 |
Deferred tax(see note 21) |
|
|
Origination and reversal of timing difference | (1,470) | (81,758) |
| (202,423) | (35,709) |
RECONCILIATION OF EFFECTIVE TAX RATE
The tax assessed for the year varies from the standard rate of corporation as explained below:
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
(Loss)/profit on ordinary activities before taxation | (2,346,808) | 147,995 |
UK tax credit at standard rate of 19% | (445,894) | 28,119 |
Fixed asset differences | (1,900) | 2,119 |
Expenses not deductible for tax | 75,149 | 1,684 |
Adjustment to corporation tax in respect of prior period | (91,668) | 65,450 |
Adjustment for R&D tax credit including SME2021 claim | (246,061) | - |
Surrender of tax losses for R&D tax credit refund | 172,781 | - |
Movement in deferred tax not recognised | 335,170 | (133,081) |
Tax credit in statement of comprehensive income | (202,423) | (35,709) |
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 2021 have been calculated using a rate of 25% (2020: 19%) based on the enacted rates that are expected to apply when these are unwound.
14. Property, plant and equipment
GROUP
|
|
|
| Computer |
|
|
|
|
| equipment, |
|
| Long-term | Leasehold | Plant and | fixtures and |
|
| leasehold | improvements | equipment | fittings | Total |
| £ | £ | £ | £ | £ |
Cost |
|
|
|
|
|
At 30 November |
|
|
|
|
|
2020 | 622,000 | 86,747 | 135,797 | 19,955 | 864,499 |
Additions | - | - | 138,411 | 29,695 | 168,106 |
Disposals | - | - | - | (4,865) | (4,865) |
At 30 November |
|
|
|
|
|
2021 | 622,000 | 86,747 | 274,208 | 44,785 | 1,027,740 |
Depreciation |
|
|
|
|
|
At 30 November |
|
|
|
|
|
2020 | 51,832 | 31,544 | 40,035 | 246 | 123,657 |
Provided during the |
|
|
|
|
|
year | 12,984 | 7,981 | 49,849 | 15,331 | 86,145 |
Eliminated on |
|
|
|
|
|
disposal | - | - | - | (4,865) | (4,865) |
At 30 November |
|
|
|
|
|
2021 | 64,816 | 39,525 | 89,884 | 10,712 | 204,937 |
Net book value |
|
|
|
|
|
At 30 November 2021 | 557,184 | 47,222 | 184,324 | 34,073 | 822,803 |
|
|
|
| Computer |
|
|
|
|
| equipment, |
|
| Long-term | Leasehold | Plant and | fixtures and |
|
| leasehold | improvements | equipment | fittings | Total |
| £ | £ | £ | £ | £ |
Cost |
|
|
|
|
|
At 30 November |
|
|
|
|
|
2019 | 622,000 | 86,747 | 85,636 | 22,421 | 816,804 |
Additions | - | - | 52,299 | 14,895 | 67,194 |
Disposals |
|
| (2,138) | (17,361) | (19,499) |
At 30 November |
|
|
|
|
|
2020 | 622,000 | 86,747 | 135,797 | 19,955 | 864,499 |
Depreciation |
|
|
|
|
|
At 30 November |
|
|
|
|
|
2019 | 38,874 | 23,658 | 23,495 | 11,158 | 97,185 |
Provided during the |
|
|
|
|
|
year | 12,958 | 7,886 | 16,540 | 6,184 | 43,568 |
Eliminated on |
|
|
|
|
|
disposal | - | - | - | (17,096) | (17,096) |
At 30 November |
|
|
|
|
|
2020 | 51,832 | 31,544 | 40,035 | 246 | 123,657 |
Net book value |
|
|
|
|
|
At 30 November |
|
|
|
|
|
2020 | 570,168 | 55,203 | 95,762 | 19,709 | 740,842 |
At 30 November |
|
|
|
|
|
2019 | 583,126 | 63,089 | 62,142 | 11,263 | 719,619 |
Long term leasehold property represents property purchased and occupied by the Group on a 2,000 year lease. The property is held as security against interest-bearing loans. Depreciation is charged to administrative expenses in the consolidated statement of comprehensive income.
| Computer |
| equipment |
Company | £ |
Cost |
|
At 30 November 2020 | 4,422 |
Additions | 8,386 |
At 30 November 2021 | 12,808 |
Depreciation |
|
At 30 November 2020 | 246 |
Charge during the year | 3,703 |
At 30 November 2021 | 3,949 |
Net book value |
|
At 30 November 2021 | 8,859 |
At 30 November 2020 | 4,176 |
| Computer |
| equipment |
Company | £ |
Cost |
|
At 13 January 2020 | - |
Additions | 4,422 |
At 30 November 2020 | 4,422 |
Depreciation |
|
At 13 January 2020 | - |
Charge during the year | 246 |
At 30 November 2020 | 246 |
Net book value |
|
At 30 November 2020 | 4,176 |
15. Intangible assets
| Development |
| costs |
Group | £ |
Cost |
|
At 30 November 2020 | 77,752 |
Additions | 136,946 |
At 30 November 2021 | 214,698 |
Amortisation |
|
At 30 November 2020 | - |
Charge for the year | - |
At 30 November 2021 | - |
Net book value |
|
At 30 November 2021 | 214,698 |
| Development |
| costs |
Group | £ |
Cost |
|
At 30 November 2019 | - |
Additions | 77,752 |
At 30 November 2020 | 77,752 |
Amortisation |
|
At 30 November 2019 | - |
Charge for the year | - |
At 30 November 2020 | - |
Net book value |
|
At 30 November 2020 | 77,752 |
At 30 November 2019 | - |
The company holds no intangible fixed assets
16. Investments in subsidiaries
| Shares |
| in group |
| undertakings |
Company | £ |
Cost |
|
At 1 December 2020 | - |
Additions - corporate restructuring | 999,000 |
Additions - investment in LSTH Trustee Limited | 10 |
Capital contributions | 2,022,497 |
Share based payments | 80,000 |
At 30 November 2021 | 3,101,507 |
Impairment |
|
As at 1 December 2020 and 30 November 2021 | - |
| 3,101,507 |
On 23 June 2021, a corporate restructuring took place where the entire share capital of UK Circuits and Electronics Solutions Holdings Limited was purchased in consideration for the issue of 599,400 Ordinary shares with a nominal value of £1.00 each, on the same date the entire share capital of Light Science Technologies Ltd was purchased in consideration for the issue of 399,600 Ordinary shares with a nominal value of £1.00 each. Capital contributions of £2,022,497 were provided to Light Science Technologies Limited on 30 November 2021.
The Company's subsidiaries are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares, and the proportion of ownership interests held equals the voting rights held by the existing Company's shareholders. The registered offices of all companies is the same as the parent company listed on the company information page, being 1 Lowman Way, Hilton Business Park, Hilton Derbyshire, DE65 5LJ.
Subsidiary | Country of | Principal | Class of | Ownership | |
undertakings | Incorporation | activity | shares held | ||
|
|
|
| 2021 | 2020 |
Light Science Technologies | England | Manufacturing | Ordinary | 100% | 100% |
Limited* |
| of lighting and |
|
|
|
|
| technology |
|
|
|
|
| products |
|
|
|
UK Circuits and Electronics | England | Holding | Ordinary | 100% | 100% |
Solutions Holdings |
| company |
|
|
|
Limited* |
|
|
|
|
|
UK Circuits and Electronics | England | Manufacture | Ordinary | 90% | 90% |
Solutions Limited |
| electronic |
|
|
|
|
| boards |
|
|
|
On-time Communications | England | Dormant | Ordinary | - | 100% |
Limited** |
|
|
|
|
|
LSTH Trustee Limited* | England | Employee | Ordinary | 100% | - |
|
| benefit trust |
|
|
|
* Directly held by the parent company, all others indirectly held.
**On-time Communications Limited was dissolved on 25 May 2021.
17. Inventories
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Raw materials | 5,201 | - |
Purchased components | 926,180 | 466,927 |
Work in progress | 268,368 | 122,544 |
| 1,199,749 | 589,471 |
Inventories recognised as an expense in cost of sales totals £5,217,468 (2020: £4,269,526). The company holds no inventory. During the year, an impairment loss against inventory was recognised of £104,010 (2020: £52,000).
18. Trade and other receivables
| Group | Group | Company | Company |
| 30 November | 30 November | 30 November | 30 November |
| 2021 | 2020 | 2021 | 2020 |
| £ | £ | £ | £ |
Trade receivables | 1,544,259 | 1,176,630 | - | - |
Amounts owed by group | - | - | 775,714 | 114,193 |
Prepayments | 42,455 | 24,135 | 36,403 | - |
Other receivables | 126,600 | 53,424 | 49,081 | 12,078 |
Grant receivable | 25,016 | - | - | - |
| 1,738,330 | 1,254,189 | 861,198 | 126,271 |
The ageing of past due trade receivables according to their original due date is detailed below:
| Group | Group | Company | Company |
| 30 November | 30 November | 30 November | 30 November |
| 2021 | 2020 | 2021 | 2020 |
| £ | £ | £ | £ |
0 - 60 days | 1,403,039 | 566,854 | - | - |
60 - 120 days | 6,045 | 450,318 | - | - |
121+ days | 135,165 | 159,458 | - | - |
| 1,544,249 | 1,176,630 | - | - |
Trade receivables, including amounts owed by group undertakings, are non-interest bearing and are generally due and paid within 30 days. The Directors consider that the carrying amount of trade and other receivables approximates to their fair value and that no impairment is required at the reporting dates. Trade and other receivables represent financial assets and are assessed for impairment on an expected credit loss model. Therefore, there is no expected credit loss provision for impairment at 30 November 2021 (30 November 2020: £Nil).
Included in trade receivables is £1,396,403 (2020: £1,017,610) relating to a debt factoring arrangement, with recourse. Associated liabilities and accrued interest are within borrowings. The net asset position of the debt factoring arrangement is £271,145 (2020: £413,574).
19. Cash and cash equivalents
| Group | Group | Company | Company |
| 30 November | 30 November | 30 November | 30 November |
| 2021 | 2020 | 2021 | 2020 |
| £ | £ | £ | £ |
Cash and cash equivalents | 3,860,430 | 41,880 | 3,412,666 | - |
Overdraft (note 23) | - | (2,738) | - | (2,738) |
Cash and cash equivalents | 3,860,430 | 39,142 | 3,412,666 | (2,738) |
20. Trade and other payables
| Group | Group | Company | Company |
| 30 November | 30 November | 30 November | 30 November |
| 2021 | 2020 | 2021 | 2020 |
| £ | £ | £ | £ |
Current |
|
|
|
|
Trade payables | 1,390,882 | 962,983 | 20,603 | 43,637 |
Other tax and social security | 294,783 | 316,374 | 170,558 | - |
Accruals | 347,378 | 97,495 | 105,664 | 62,846 |
Deferred grant income | 16,046 | - | - | - |
| 2,049,089 | 1,376,852 | 296,825 | 106,483 |
Non-current |
|
|
|
|
Deferred grant income | 64,184 | - | - | - |
| 2,113,273 | 1,376,852 | 296,825 | 106,483 |
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
21. Deferred tax
| Group | Group |
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Deferred tax: |
|
|
At beginning of the year | 1,470 | 83,228 |
(Credited) to the statement of comprehensive income | (1,470) | (81,758) |
At end of period | - | 1,470 |
The provision for deferred tax is made up as follows:
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Accelerated capital allowances | 226,234 | 112,781 |
Development assets | 5,866 | - |
Share based payments | (41,869) | - |
Trading losses | (190,231) | (111,311) |
| - | 1,470 |
Deferred tax assets of £220,388 (2020: £47,455) have not been recognised in respect of tax losses due to uncertainty over their offset against future taxable profit and therefore their recoverability.
| 30 November | 30 November |
| 2021 | 2020 |
Company | £ | £ |
Accelerated capital allowances | 2,215 | 701 |
Trading losses | (2,215) | (701) |
| - | - |
Deferred tax assets of £41,869 (2020: £nil) have not been recognised in respects of share based payments and £293,834 (2020: £43,657) have not been recognised in respect of tax losses due to uncertainty over their offset against future taxable profit and therefore their recoverability.
22. Lease liabilities
Right-of-use assets and lease liabilities are recognised as follows:
| 30 November | 30 November |
| 2021 | 2020 |
Right-of-use asset (property) | £ | £ |
Cost |
|
|
At 1 December | 343,581 | 343,581 |
Additions | 73,787 | - |
At 30 November | 417,368 | 343,581 |
Depreciation |
|
|
At 1 December | 95,586 | 63,724 |
Charge for the year | 56,816 | 31,862 |
At 30 November | 152,402 | 95,586 |
Net book value at 30 November | 264,966 | 247,995 |
| 30 November | 30 November |
| 2021 | 2020 |
Right-of-use asset (plant and equipment) | £ | £ |
Cost |
|
|
At 1 December | 1,358,299 | 1,029,128 |
Additions | - | 329,171 |
At 30 November | 1,358,299 | 1,358,299 |
Depreciation |
|
|
At 1 December | 982,997 | 887,840 |
Charge for the year | 88,736 | 95,157 |
At 30 November | 1,071,733 | 982,997 |
Net book value at 30 November | 286,566 | 375,302 |
Total right-of-use assets | 551,532 | 623,298 |
| 30 November | 30 November |
| 2021 | 2020 |
Lease liability (property) | £ | £ |
At 1 December | 282,477 | 311,130 |
Finance costs on lease liabilities | 13,026 | 13,347 |
Repayment of lease liabilities | (67,160) | (42,000) |
Additions | 88,787 | - |
At 30 November | 317,130 | 282,477 |
| 30 November | 30 November |
| 2021 | 2020 |
Lease liability (plant and equipment) | £ | £ |
At 1 December | 346,237 | 156,418 |
Finance costs on lease liabilities | 42,597 | 13,800 |
Repayments of lease liabilities | (153,588) | (74,394) |
Additions - asset financing | - | 250,413 |
At 30 November | 235,246 | 346,237 |
Total right-of-use liabilities | 552,376 | 628,714 |
Total lease liabilities have been analysed between current and non-current as follows:
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Due within one year | 226,498 | 162,834 |
Due within 2 - 5 years | 325,878 | 465,881 |
| 552,376 | 628,715 |
The amounts recognised in the consolidated statement of comprehensive income include:
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Depreciation expense on right-of-use assets | 145,552 | 127,018 |
Interest expense on lease liabilities | 55,623 | 27,147 |
Short term low value leases | 8,644 | 6,803 |
| 209,819 | 160,969 |
The total cash outflow for leases to 30 November 2021 amounted to £191,116, due to the business interruption payment in relation to leases of £29,632 (2020: £116,394).
23. Borrowings
| Group | Group | Company | Company |
| 30 November | 30 November | 30 November | 30 November |
| 2021 | 2020 | 2021 | 2020 |
| £ | £ | £ | £ |
Current |
|
|
|
|
Bank overdraft | - | 2,738 | - | 2,738 |
Interest bearing loans | 216,667 | 145,587 | - | - |
Invoice discounting facility | 1,125,258 | 604,036 | - | - |
| 1,341,925 | 752,361 | - | 2,738 |
Repayable between one |
|
|
|
|
Interest-bearing loans | 613,889 | 993,440 | - | - |
| 613,889 | 993,440 | - | - |
In October 2020, the Group entered into a term loan with a principal of £975,000 payable in 54 equal instalments of £18,056 and interest payable at 5.5% plus base rate with the first six months payment free. The loan was provided by Close Brothers under the Government backed Coronavirus Business Interruption Loan Scheme (CBILS). As such, the first 12 months of interest are covered by the Government's business interruption payment grant paid directly to the lender. The loan with Close Brothers is secured by fixed and floating charges over the Group, including all freehold property, goodwill and intellectual property. This is linked to the Group's invoice discounting facility noted below. The balance for the CBILS term loan at 30 November 2021 was £830,556 (2020: £923,667).
The Group also entered into invoice discounting facility arrangements provided by Close Brothers, for an initial term of 3 years. Interest is payable on the invoice discounting facility at 2% plus base rate. This facility was also provided under the CBILS scheme, as such the first 12 months of interest is partly covered by the Government's business interruption payment grant paid directly to the lender. The invoice discounting facility with Close Brothers is secured by fixed and floating charges over the Group, including all freehold property, goodwill and intellectual property, as well as the trade receivables of the subsidiary, UK Circuits and Electronics Solutions Limited. There are typical banking covenants attached to the Close Brothers agreements, in Quarter 1 2021 due to the end of Brexit transition and the beginnings of supply chain shortages, UK Circuits and Electronics Solutions Ltd breached those covenants due to short-term supply side constraints. Close Brothers subsequently waived the breach and the covenants were reset to a more appropriate measure for the Group. The balance for the invoice discounting facility at 30 November 2021 was £1,125,258 (2020: £594,036).
A Director has also given a personal guarantee on the Close Brothers facilities totalling £250,000.
Included in interest bearing loans in the prior year is a £260,000 loan with Funding Circle which commenced in September 2017, repayable over 60 months in equal monthly instalments of £5,982.56 with an effective fixed interest rate of 13.5%. The loan was repaid early in November 2021 and the balance at the year end is £nil (2020: £116,019).
Included in interest bearing loans in the prior year is a £150,000 loan with Newable which commenced in August 2018, repayable over 60 months in equal monthly instalments with an effective fixed interest rate of 15.7% over base rate. The loan was repaid early in January 2021 and the balance at the year end is £nil (2020: £99,341).
Included in interest bearing loans in the prior year is a £10,000 loan from a shareholder with no specified terms and non-interest bearing. The loan was repaid in July 2021 and the balance at the year end is £nil (2020: £10,000).
24. Share options
The Group has established a management share option plan ("MSOP") with effect from 15 October 2021, being the Company's admission to AIM. It is administered by the Remuneration Committee and during the year has granted 8,900,000 enterprise management incentive ("EMI") share options to key management personnel of the Company and other Group companies.
The EMI options were granted with a nil exercise price and not subject to performance conditions. The EMI options may first be exercised on the first anniversary of the date of grant up to the tenth anniversary. The company issued 8,900,000 options. There are no cash settlement alternatives for the employees. The scheme was amended subsequently to include one further employee prior to Admission to AIM. The number of share options issued remains unchanged.
The fair value of share options granted is estimated at the date of grant. The grant date for accounting purposes is 2 July 2021, as this is when a shared understanding of the terms and conditions of the arrangements was achieved between the various parties. As this was prior to Admission to AIM a non‑marketability discount of 20% was applied when assessing the fair value at grant date.
The fair value of share options granted is estimated at the date of grant using a Black-Scholes model
The Company established an LSTH Employee Benefit Trust ("EBT"), having LSTH Trustee Ltd, a member of the Group, as its corporate trustee. This EBT received 8,900,000 shares in Light Science Technologies Holdings plc prior to listing by way of an outright gift from Simon Deacon on the 8 October 2021, in order for the EBT to satisfy the aforementioned EMI options.
The share options, which all relate to the same "MSOP" plan were issued in 2 tranches on 2 July 2021 and 15 October 2021 of 8,200,000 and 700,000 options respectively. The assumptions, terms and conditions are the same for both tranches of the options issue.
MOVEMENTS DURING THE YEAR
The following table illustrates the number and weighted average exercise price (WAEP) of, and movements in, share options during the year.
| Number | WAEP |
| 30 November | 30 November |
| 2021 | 2021 |
| £ | £ |
Outstanding at 1 December 2020 | - | - |
Granted during the year | 8,900,000 | - |
Outstanding at 30 November | 8,900,000 | - |
Exercisable at 30 November | - | - |
The following table lists the inputs to the models used for the year ended 30 November 2021 (as no plans in place in the comparative period).
| 30 November |
| 2021 |
Fair value at the grant measurement date per share (£) | 0.08 |
Dividend yield (%) | 0 |
Risk-free interest rate (%) | 0.75 |
Volatility (%) | 30 |
Expected life of share options (years) | 4 |
The expected life of the share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.
25 Issued equity capital
|
| Total no. of |
|
| Nominal | Ordinary | Total |
Company | value | shares | £ |
At 1 December 2020 | £1.00 | 1,000 | 1,000 |
Corporate restructure | £1.00 | 999,000 | 999,000 |
| £1.00 | 1,000,000 | 1,000,000 |
Sub-division of each £1.00 share into 100 | (£0.99) | 99,000,000 | - |
£0.01 shares |
|
|
|
Share issue | £0.01 | 74,150,000 | 741,500 |
| £0.01 | 174,150,000 | 1,741,500 |
For the purposes of the consolidated accounts, because the predecessor value method has been used to account for this corporate restructuring, the share capital issued for the purposes of the business combination have been shown as at the previous reporting date as if they had always been outstanding.
On 23 June 2021, a corporate restructuring took place where the entire share capital of UK Circuits and Electronics Solutions Holdings Ltd and Light Science Technologies Ltd were purchased in consideration for the issue of 999,000 shares at nominal value of £1.00, attracting no premium. Thereafter, the entire ordinary share capital was subdivided, with each £1.00 ordinary share divided into 100 £0.01 shares.
On 15 October 2021, 74,150,000 shares were issued as follows:
· 12,500,000 shares at nominal value of £0.01 were issued pursuant to the conversion of convertible loan note agreements attracting a premium of £0.07.
· 1,250,000 shares at nominal value of £0.01 were issued pursuant to the conversion of convertible loan note agreements attracting a premium of £0.09.
· 10,000,000 shares at nominal value of £0.01 were issued pursuant to the conversion of advance subscription agreements attracting a premium of £0.09 less costs of related warrants issued, utilising the share allotment reserves.
· 400,000 shares at nominal value of £0.01 were issued as part of the Company's admission to AIM process in lieu of fees attracting a premium of £0.09.
· 50,000,000 shares at nominal value of £0.01 were issued pursuant to the placing of shares on the Company's admission to AIM attracting a premium of £0.09.
The share premium account is shown net of £669,049 of share issuance costs.
WARRANTS
On IPO, the Company has executed a warrant instrument creating warrants to subscribe for, in aggregate, 2,391,000 Ordinary Shares at an exercise price of £0.10 per share ("TP Warrants"). Under the terms of the warrant instrument the Warrants become exercisable on the first anniversary of Admission and, subject to certain limited exemptions, shall lapse on the fourth anniversary of Admission. The warrants are classified as equity instruments. The fair value on issue was £59,153, determined using a Black Scholes model with assumptions in line with those disclosed for share options.
On IPO, the Company has executed a warrant instrument to an individual allowing them to subscribe for up to 6,000,000 Ordinary Shares at a price of 12.5 pence per Ordinary Share. Under the terms of the warrant instrument the Warrants become exercisable on the first anniversary of the Company's admission to AIM and shall lapse on the fourth anniversary. The warrants are classified as equity instruments. The fair value on issue was £100,440, determined using a Black Scholes model with assumptions in line with those disclosed for share options.
26. Reserves
SHARE CAPITAL
Share capital represents the value of all called up, allotted and fully paid shares of the parent company.
SHARE PREMIUM ACCOUNT
The share premium account represents amounts received in excess of the nominal value of shares on the issue of new shares, net of any direct costs of any shares issued.
SHARE ALLOTMENT RESERVE
This reserve is used to recognised contributions to equity not yet allotted.
MERGER RESERVE
This reserve comprises of results of combinations under common control; being the difference on the investment in its subsidiaries and the nominal value of the share capital of its subsidiaries.
SHARE BASED PAYMENTS RESERVE
The share based payment reserve represents the accumulated balance of share based payment charges recognised in respect of share options granted by the Company less transfers to retained earnings in respect of share options exercised, cancelled or lapsed.
WARRANT RESERVE
The warrant reserve represents the accumulated balance of charges recognised in respect of warrants issued by the Company less transfers to retained earnings in respect of warrants exercised, cancelled or lapsed.
RETAINED EARNINGS
This reserve relates to the cumulative net gains and losses recognised in the statement of comprehensive income.
27. Non-controlling interests
| Non-controlling interests |
| £ |
At 30 November 2019 | 231,904 |
Minority interests' share of the profit for the period | 73,808 |
At 30 November 2020 | 305,712 |
Minority interests' share of the profit for the period | 21,158 |
At 30 November 2021 | 326,870 |
The balance classified as non-controlling interests represents the cumulative profits attributable to the ongoing non-controlling interests in UK Circuits and Electronics Solutions Limited. Summarised financial information for UK Circuits and Electronics Solutions Limited is included within the segmental analysis note (see note 5). The proportion of ownership interest and voting rights held by the NCI equal 10% of the UK Circuits and Electronics Solutions Limited subsidiary only.
28. Financial risk management
OVERVIEW
This note presents information about the Group's exposure to various kinds of financial risks, the Group's objectives, policies and processes for measuring and managing risk, and the Group's management of capital.
The board has overall responsibility for the establishment and oversight of the Group's risk management framework. The Directors report regularly to the board on the Group's risk management.
CAPITAL RISK MANAGEMENT
The Group reviews its forecast capital requirements regularly to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders.
The capital structure of the Company consists of equity attributable to equity holders of the Company, comprising issued share capital, non-controlling interests and retained earnings as disclosed in note 24 and note 27 and in the consolidated statement of changes in equity.
The Group is not subject to externally imposed capital requirements.
In terms of gearing, as a calculation of borrowings over total equity at 30 November 2021 the Group's gearing ratio is 52%, which is within the target gearing ratio of 60% set by management.
LIQUIDITY RISK
The Group's approach to managing liquidity is to ensure that, as far as possible, it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.
The Group manages all of its external bank relationships centrally. Any change to the Group's principal banking facility requires board approval.
CATEGORISATION OF FINANCIAL INSTRUMENTS
| Financial | Financial |
|
| assets at | liabilities at |
|
| amortised | amortised |
|
| cost | cost | Total |
Financial assets/(liabilities) | £ | £ | £ |
30 November 2020 |
|
|
|
Trade and other receivables | 1,230,054 | - | 1,230,054 |
Cash and cash equivalents | 39,142 | - | 39,142 |
Trade and other payables | - | (1,060,478) | (1,060,478) |
Invoice discounting facility | - | (594,036) | (594,036) |
Loans | - | (1,149,027) | (1,149,027) |
Lease liabilities | - | (628,715) | (628,715) |
| 1,269,196 | (3,432,256) | (2,163,060) |
| Financial | Financial |
|
| assets at | liabilities at |
|
| amortised | amortised |
|
| cost | cost | Total |
Financial assets/(liabilities) | £ | £ | £ |
30 November 2021 |
|
|
|
Trade and other receivables | 1,569,275 | - | 1,569,275 |
Cash and cash equivalents | 3,860,430 | - | 3,860,430 |
Trade and other payables | - | (1,738,260) | (1,738,260) |
Invoice discounting facility | - | (1,125,258) | (1,125,258) |
Loans | - | (830,556) | (830,556) |
Lease liabilities | - | (552,376) | (552,376) |
| 5,429,705 | (4,246,450) | 1,183,255 |
The values disclosed in the above table are carrying values. The Directors consider that the carrying amount of financial assets and liabilities approximates to their fair value.
The Directors review and agree policies for managing credit risk and foreign currency risk which are summarised below.
CREDIT RISK
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the existing Group and the risk that any debtors of the Group may default on amounts. The Group's principal financial assets are trade receivables, other debtors, and cash and cash equivalents at banks.
The Group has a policy of only dealing with creditworthy counterparties. All trade receivables are ultimately overseen by the director responsible for finance and are managed on a day-to-day basis by the finance team.
Credit limits are set as deemed appropriate for each customer. The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer or counterparty. However, credit risk is also insured within subsidiary UK Circuits and Electronics Solutions Limited, with credit limited and control procedures set in accordance with insurance policies. The maximum exposure to credit risk in relation to trade receivables is 10% of the carrying value of uninsured debtors at the reporting date. The maximum exposure to credit risk in relation to cash and cash equivalents is the carrying value at the reporting date.
FOREIGN CURRENCY RISK
The Group has limited exposure to currency risk on purchases that are denominated in a currency other than the functional currency of the Group. The risk is in respect of Euros and US dollars and transactions in these currencies is limited.
SENSITIVITY ANALYSIS TO MOVEMENT IN EXCHANGE RATES
Given the highly immaterial liability balances denominated in foreign currency, the exposure to a change in exchange rates is negligible.
INTEREST RATE RISK
The Group's external borrowings are directly related to Bank of England base rates; therefore the risk is limited to the changes in the underlying base rate of interest. The impact of a 1% fluctuation in interest rates on external borrowings has been assessed to be an overall impact on reported profits of up to £20,000. The principal impact to the existing Group is the result of interest-bearing cash and cash equivalent balances held as set out below:
| As at 30 November 2021 | As at 30 November 2020 | ||||
| Fixed | Floating | Total | Fixed | Floating | Total |
| £ | £ | £ | £ | £ | £ |
Financial | - | (1,955,814) | (1,955,814) | (116,019) | (1,627,044) | (1,743,063) |
MATURITY PROFILE
Set out below is the maturity profile of the Group's financial liabilities at each year-end based on contractual undiscounted payments including contractual interest.
| Less than 1 year | 1 to 5 years | Total |
| £ | £ | £ |
As at 30 November 2021 |
|
|
|
Financial liabilities |
|
|
|
Trade and other payables | 1,745,605 | - | 1,745,605 |
Loans | 216,667 | 706,883 | 923,550 |
Invoice discounting facility | 1,125,258 | - | 1,125,258 |
Lease liabilities | 240,846 | 359,579 | 600,425 |
| 3,328,376 | 1,066,462 | 4,394,838 |
30 November 2020 |
|
|
|
Financial liabilities |
|
|
|
Trade and other payables | 1,060,478 | - | 1,060,478 |
Loans | 145,587 | 1,195,949 | 1,341,536 |
Invoice discounting facility | 594,036 | - | 594,036 |
Lease liabilities | 176,754 | 512,219 | 688,973 |
| 1,976,855 | 1,708,168 | 3,685,023 |
Trade and other payables are due within three months. The Directors consider that the carrying amount of the financial liabilities approximates to their fair value.
As all financial assets are expected to mature within the next twelve months, an aged analysis of financial assets has not been presented.
29. (Loss)/earnings per share
Basic loss per share is calculation on the loss for the year after taxation attributable to the owners of the parent of £2,144,385 and on 108,052,603 ordinary shares, 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 and 2020, 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 and 2020.
| 30 November 2021 | 30 November 2020 | ||||
|
| Weighted |
|
| Weighted |
|
|
| average | Per share |
| average | Per share |
Basic and | Earnings | number of | amount | Earnings | number of | amount |
Diluted EPS | £ | shares | (pence) | £ | shares | (pence) |
Weighted |
| 109,344,932 |
|
| 100,000,000 |
|
Adjusted for the |
| (1,292,329) |
|
| - |
|
Earnings | (2,144,385) | 108,052,603 | (1.98) | 183,704 | 100,000,000 | 0.18 |
DILUTED EARNINGS PER SHARE
Basic and diluted earnings per share are equal for 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. For 2020, there were no share options and warrants issued, so no dilutive effect.
30. Reconciliation of consolidated changes in net cash/(debt)
| At 1 |
|
|
| At 30 |
| December |
| New | Non-cash | November |
| 2020 | Cashflow | leases | changes | 2021 |
Group | £ | £ | £ | £ | £ |
Cash and cash equivalents | 41,880 | 3,818,550 | - | - | 3,860,430 |
Bank overdraft | (2,738) | 2,738 | - | - | - |
| 39,142 | 3,821,288 | - | - | 3,860,430 |
Invoice discounting | (594,036) | (520,742) | - | (10,480) | (1,125,258) |
Loans due within one year | (155,587) | 369,805 | - | (430,885) | (216,667) |
Loans due after one year | (993,440) | - | - | 379,551 | (613,889) |
Convertible loans | - | (1,125,000) | - | 1,125,000 | - |
Lease liabilities due within |
|
|
|
|
|
one year | (162,834) | 191,116 | (88,787) | (165,993) | (226,498) |
Lease liabilities due within | (465,881) | - | - | 140,003 | (325,878) |
Net cash/(debt) | (2,332,636) | 2,736,467 | (88,787) | 1,037,196 | 1,352,240 |
| At 1 |
|
|
| At 30 |
| December |
| New | Non-cash | November |
| 2019 | Cashflow | leases | changes | 2020 |
| £ | £ | £ | £ | £0 |
Cash and cash equivalents | 4,326 | 37,554 | - | - | 41,880 |
Bank overdraft | (129,700) | 126,962 | - | - | (2,738) |
| (125,374) | 164,516 | - | - | 39,142 |
Invoice discounting | (668,754) | 75,000 | - | (282) | (594,036) |
Loans due within one year | (229,626) | (426,527) | - | 500,566 | (155,587) |
Loans due after one year | (491,377) | - | - | (502,063) | (993,440) |
Lease liabilities due within | (89,230) | 116,394 | - | (189,998) | (162,834) |
Lease liabilities due within | (378,318) | - | (250,413) | 162,850 | (465,881) |
Net cash/(debt) | (1,982,679) | (70,617) | (250,413) | (28,927) | (2,332,636) |
Non-cash changes include interest accrued on borrowings. Adjustment has been made in non-cash changes for £91,446 in 2021 being government support received in relation to interest payments under the Coronavirus Business Interruption Loan Scheme, of which £10,480 relates to the invoice discounting facility, £51,334 relates to loans, and £29,632 relates to leases.
Non-cash changes also include convertible loan notes issued in the period for £1,125,000 which were later converted to equity, see note 32.
The reclassification of amounts due to more than one year for presentation in the financial statements is also reflected in the non-cash changes column.
| At 1 |
|
| At 30 |
| December |
| Non-cash | November |
| 2020 | Cashflow | changes | 2021 |
Company | £ | £ | £ | £ |
Cash and cash equivalents | - | 3,412,666 | - | 3,412,666 |
Bank overdraft | (2,738) | 2,738 | - | - |
Net debt | (2,738) | 3,415,404 | - | 3,412,666 |
| At 1 |
|
| At 30 |
| December |
| Non-cash | November |
| 2019 | Cashflow | changes | 2020 |
Company | £ | £ | £ | £ |
Bank overdraft | - | (2,738) | - | (2,738) |
Net debt | - | (2,738) | - | (2,738) |
31. Contingencies and commitments
At 30 November 2021, the group had capital commitments totalling £Nil in relation to further investment for laboratory equipment (2020: £44,500). The company had no capital commitments (2020: £nil).
The loan with Close Brothers is secured by fixed and floating charges over the Group, including all freehold property, goodwill and intellectual property. The invoice discounting facility with Close Brothers is secured by a fixed and floating charge over the assets of the subsidiary, UK Circuits and Electronics Solutions Limited. Please see note 23 for further details.
32. Related party transactions
The following transactions with shareholders and companies controlled by the Directors were recorded, excluding VAT, during each period:
| 30 November | 30 November |
| 2021 | 2020 |
| £ | £ |
Income received in the year |
|
|
Light Science Technologies Holdings Plc - Income from a | 7,837 | - |
Light Science Technologies Holdings Plc - Income from a | 270,000 | - |
Charges incurred during the year |
|
|
Light Science Technologies Holdings Plc - Consultancy charges | 22,833 | - |
Light Science Technologies Holdings Plc - transactions with | 50,413 | - |
Light Science Technologies Limited - purchases from a company | 9,946 | - |
Light Science Technologies Limited - purchases from a company | 54,157 | 650 |
Balances owing at 30 November |
|
|
UK Circuits and Electronics Solutions Holdings Limited - due from | 3,222,568 | 3,236,469 |
UK Circuits and Electronics Solutions Limited - due from a | 135,165 | 114,193 |
UK Circuits and Electronics Solutions Limited - due to a director | - | 47,218 |
DIRECTORS LOAN ACCOUNTS
During the year ended 30 November 2021, a Director made loans to the Company amounting to £260,000. The loan was unsecured and was to be used by the Company for general working capital purposes. The principal amount of the loan carried interest at the rate of 5.5% per annum accruing daily. The loan was settled on Admission to AIM on 15 October 2021 along with the interest of £1,149.
CONVERTIBLE LOAN ARRANGEMENTS
During the year, there were amounts due to related parties of £1,125,000 of convertible loan notes which have since been settled. Loan notes were issued to certain prospective shareholders and Directors of the Company.
Interest accrued on £1,000,000 of the loan notes received from a shareholder at a rate of 7.25%, and the interest of £56,557 was paid in full in cash on Admission to AIM on 15 October 2021. The loan notes were converted to 12,500,000 Ordinary Shares immediately prior to Admission, at 20% discount.
Interest accrued on £125,000 of convertible loan notes received from directors at a rate of 5.5%. Interest totalling £3,805 was settled in full in cash on Admission. The convertible loan notes were converted to 1,250,000 Ordinary Shares immediately prior to Admission, at no discount.
OTHER ARRANGEMENTS
During June and August 2021, the Company entered into advance subscription agreements totalling £750,000 with a significant shareholder and director of a prospective shareholder. These agreements are in addition to an further advance subscription agreement with the individual dated October 2020 totalling £250,000. The advance subscription funds totalling £1,000,000 automatically converted into 10,000,000 Ordinary Shares on Admission to AIM.
In April 2021 an unsecured personal loan of £50,000 was received from a shareholder, and repaid in June 2021. Interest accrued at 5.5% and was repaid.
Please see note 11 for details on key management personnel.
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