Final Results for the year ended 31 December 2023

LifeSafe Holdings plc

('LifeSafe', the 'Group' or the 'Company')

Final Results for the year ended 31 December 2023

Strong growth and strategic progress

LifeSafe (AIM:LIFS), a fire safety technology business with innovative fire extinguishing fluids and fire safety products, reports its audited Final Results for the year ended 31 December 2023 ('FY23').

Financial highlights

Operational highlights

Post period highlights

¹ Underlying LBITDA represents loss for the year before finance expense, tax, depreciation and amortisation, and non-underlying items (which comprise share-based payment charges and other non-underlying items).

Commenting on the Final Results, Dominic Berger, Chairman of LifeSafe, said: "Our Digital First strategy has successfully built brand awareness and recently unlocked wholesale and industrial channels with agreements signed for the development and distribution of our new fluids.

We now have the opportunity to continue to grow consumer awareness across existing and new territories, which, together with the evolution of the Group's B2C strategy towards a B2B2C model, should see the Group reach profitability at lower volumes than under a direct-to-consumer model, as we focus on increasing profitability and cash generation.

Although testing and commercialisation of our fluids with large industry leaders takes time and investment, I believe these partnerships represent the start of the journey to deliver significant value for our shareholders."

Investor presentation

A Teams meeting for sell-side analysts will be held at 10.00am (BST) today.  Please contact [email protected] if you wish to join the meeting.

The Company will also be hosting a presentation for retail investors to discuss the announcement on 27 June 2024 at 5.00pm (BST).  Please email [email protected] to register your interest.

For further enquiries:

Notes to Editors

LifeSafe is a fire safety technology business that develops eco-friendly, novel and innovative fire extinguishing and prevention fluids and life-saving fire safety products.  LifeSafe has developed a market disrupting range of eco-friendly fire safety protection products; a new patent-pending Thermal Runaway Fluid to combat lithium battery fires by permanently extinguishing and preventing re-ignition, and the StaySafe All-in-1, a handheld eco-friendly and fully recyclable extinguisher which is verified to extinguish ten different types of fire and the number one selling fire extinguisher on Amazon UK.  LifeSafe is successfully creating new markets for the Group in fire safety through its innovative technologies, products, digital marketing and multi-channel sales; and is continuing to develop new fluid derivations for applications in various industrial market sectors.

LifeSafe was admitted to trading on AIM in July 2022 with the ticker LIFS.

For further information please visit: https://www.lifesafeholdingsplc.com.

LinkedIn: https://www.linkedin.com/company/lifesafe-technologies

Twitter: https://twitter.com/LifesafeT

Chairman's Statement

Overview

The Group achieved extraordinary sales growth in 2023, with revenue reaching nearly £6 million, almost exclusively through digital consumer channels in the UK and US.  This is an excellent endorsement of the appeal of the StaySafe 5-in-1 and its successor, the StaySafe All-in-1, launched from April 2023, and highlights the traction the LifeSafe brand has achieved in the fire safety market since launching on Amazon Prime in the UK in August 2021.  At the same time, the Group made excellent operational and strategic progress, completing the development of a number of new innovative fluids and securing strategic industrial development and distribution partners, in line with the Board's long-term strategy to save lives by driving innovation and sales of its products globally.

As the Group scaled at pace in 2023, it faced a number of cost pressures.  The costs of logistics and warehousing inevitably increased in line with the volume of activity, particularly in addressing demand in the US market.  However, the most significant cost challenges were seen with digital marketing, which increased significantly in 2023.  These cost increases, combined with the underperformance of a digital marketing partner in Q4, held back expected sales growth and led to an operating loss significantly higher than that originally expected by the Board.

We acted quickly to address this through a programme of overhead and supply chain cost reductions, including a comprehensive review of our US digital sales channels.  Consequently, the Group pivoted its US sales model from a pure B2C to a B2B2C model, partnering with wholesalers to improve both gross and net margins of the Group due to the direct costs of fulfilment and commission being avoided, as well as the significant digital advertising overhead of selling directly through digital channels.  It is expected that these savings will more than outweigh the reduced revenue the Group will receive through the new B2B2C model and help to ensure that digital channel profitability is achieved at a lower volume point for the Group.

Going forward, the Group also expects to improve margins through increased mix of wholesale and industrial sales, which add to revenue without the level of marketing investment or logistics costs inherent with the direct-to-consumer channel.

The Group made excellent progress along its innovation roadmap during the year.  In January 2023, we introduced our lithium Thermal Runaway Fluid ('TRF') at Intersec, the world's leading event for emergency services, security and safety.  We launched the StaySafe All-in-1 fire extinguisher in the UK in April 2023 and in the US in July 2023.  In December 2023, we launched our unique Pre-Trauma Fluid ('PTF') and Wildfire Pro Fluid, detailed further below.

The Group also established a number of significant partnerships during the year.  In September 2023, we were appointed to QBE Insurance Group's Solutions Panel as the best-in-class supplier for their global client network.  In the same month, we announced our first industrial partnership with Wormald Fire & Safety, a leading fire safety and protection business in Australia, to distribute our TRF throughout Australia and New Zealand.  This was shortly followed in December 2023 with the announcement of industrial partnership and collaboration agreements with Reacton and Xerotech for the supply of our TRF and PTF in various fire and battery safety application systems.

Despite short-term cost headwinds, the Group has taken action to improve profitability and remains on track in executing its strategy to build a multi-product, multi-channel, international business capable of delivering significant long-term value for our shareholders.

Results

For the year to 31 December 2023, the Group's revenue increased significantly to £5.9 million (2022: £4.0 million), as the Group successfully continued the commercialisation of its market-disrupting, eco-friendly fire extinguishing fluid.

Gross profit increased significantly to £3.4 million (2022: £2.3 million) and the gross margin improved to 57.6% (2022: 57.0%).

The Group made an underlying loss before tax¹ of £1.6 million (2022: £1.4 million).  After charging £0.6 million in non-underlying costs largely in relation to share-based payment charges (2022: £1.6 million in relation to IPO costs, share-based payment charges and convertible loan note interest), Group loss before tax for the year was £2.2 million (2022: £3.0 million).  Underlying LBITDA² was £1.4 million (2022: £1.3 million).

¹ Underlying loss before tax of £1.6 million is before non-underlying items of £0.6 million (2022: underlying loss before tax of £1.4 million is before non-underlying items of £1.6 million).

² Underlying LBITDA of £1.4 million is loss before tax, before finance expense of £0.1 million, depreciation and amortisation of £0.1 million, and non-underlying items of £0.6 million (2022: underlying LBITDA of £1.3 million is loss before tax, before finance expense of £0.2 million, depreciation and amortisation of £0.1 million, and non-underlying items of £1.4 million).

Net debt at 31 December 2023 was £171,000 (31 December 2022: net cash of £1.1 million) as working capital facilities were utilised to increase stock to meet expected demand, particularly in Q4 2023.

Placing and share subscription - August and December 2023

During 2023, the Company successfully completed equity placings and subscriptions raising, in aggregate, gross proceeds of £1.6 million.

Post balance sheet placing, share subscription and retail offer of shares - May 2024

In May 2024, the Company successfully completed an equity placing, subscription and retail offer raising gross proceeds of £2.0 million.

We are grateful for the support of both new and existing shareholders, whose investment will be used to maximise the business opportunity in front of us.

People

The pace of our commercial and operational growth could not have been achieved without the commitment and resilience of our people and I would like to extend my sincere thanks to them for their hard work and commitment.

Research and development, technology and intellectual property

The Group accelerated its development programme over the year in response to growing industry demand for its unique, environmentally friendly solutions.  We launched the StaySafe All-in-1 fire extinguisher in the UK in April 2023, in the US in July 2023, and in key European territories in March 2024.

We are significantly ahead of our strategic plan in the development, testing and pipeline of next generation fluids for wholesale and industrial sectors.  In January 2023, we launched our lithium TRF, specifically designed to address the escalating issue of thermal runaway in lithium batteries by permanently extinguishing and preventing the re-ignition of lithium fires.

In December 2023, we launched our PTF, a unique, non-conductive coolant fluid designed specifically to prevent thermal runaway in battery packs which can be caused by overheating, overcharging or damage. It is an innovative, patent-pending solution that prevents the threat of thermal runaway by significantly reducing the transfer of heat within a battery pack.  The PTF is non-toxic, non-hazardous and importantly non-corrosive, a significant leap forward in the efforts to better control battery fires in a safe and more sustainable way.

In the same month, we launched our Wildfire Pro fluid ('WF-P'), a non-toxic and fluorine-free wildfire fluid engineered to suppress, extinguish and prevent the spread of devastating wildfires.  Unlike current fluorine-based fluid solutions, WF-P's non-toxic and fluorine-free properties pose no chemical threat to wildlife or natural ecosystems.  WF-P controls wildfires through LifeSafe's patent-pending fluid, incorporating the Group's EndoShield and ExoSuppression technologies, which first absorbs the energy and heat from the fire, and then prevents re-ignition by stopping any further oxygen from fuelling embers. Through lengthy testing and development, it was identified that the fluid can be used as a retardant when used as a pre-treatment, presenting a truly complete solution when tackling deadly forest fires. The spraying of the fluid onto land creates a barrier to fire from which the applied area will simply not ignite.

All LifeSafe's fire extinguishing and coolant fluids are fluorine-free, non-toxic, and non-hazardous, and are specifically designed to meet the requirements of the individual application and address new fire challenges posed by new technology (lithium-ion batteries), legislative change and environmental concerns.

LifeSafe's intellectual property is protected through the grant of one patent and patent applications for eight further fluid derivations across the UK and internationally.  The Board recognises the importance of protecting its intellectual property and rigorously guards its innovation.  The Group employs an intellectual property attorney to protect its interests and has intellectual property defence and pursuit insurance to protect its investments.

Strategic partnerships

During 2023, the Group announced the significant strategic milestone of signing its first industrial partnership agreement with Wormald Fire & Security.  Under the strategic partnership agreement, LifeSafe will supply its new fluorine-free, lithium TRF fire extinguishing fluid exclusively in Australia to Wormald for use in their range of fire safety equipment.  In addition to the expected revenue benefits from the distribution of the Group's fluids, Wormald has provided LifeSafe with crucial introductions and expertise in helping to access other geographies and market sectors.

In September 2023, LifeSafe was appointed to QBE Insurance Group's Solutions Panel.  The appointment represents the culmination of 14 months assessment and testing of the Group's range of fire extinguishing fluids and products.  As well as generating revenue directly from recommendations to its customer base, QBE's powerful endorsement of the Group's fluids will be invaluable in building trust and credibility in the conversion of LifeSafe's growing industrial sales pipeline.

In December 2023, we announced a potentially transformative development partnership and collaboration agreement with Xerotech Limited, one of the fastest growing battery manufacturers in Europe.   Xerotech specialises in the manufacture of high performance, high voltage batteries and battery packs across multiple sectors including, but not limited to, heavy machinery, defence, rail and energy. The partnership agreement will support the development and application methods for the deployment of LifeSafe's PTF and TRF to tackle battery overheating and support the cooling systems.

In the same month, we announced a partnership agreement with global fire suppression manufacturer Reacton Fire Suppression Limited, which specialises in the manufacture of automatic fire suppression systems for an extensive range of assets and industries.  Following extensive testing and development, the partnership will enable Reacton to sell the innovative PTF and TRF as part of its global fire safety solutions.

Post the year-end, in January 2024, we announced the signing of a distribution agreement for the supply of our TRF to Lingjack Fire and Life Saving PTY ('Lingjack'), a substantial Asian fire safety business located in Singapore.  The distribution agreement represents a major growth opportunity for LifeSafe, providing a new and incremental revenue opportunity, as well as expansion into a significant territory.  The initial stages of the exclusive agreement will see LifeSafe's TRF solution added to Lingjack's range of fire extinguishers and fixed suppression systems across Singapore, China, Malaysia, Thailand and Indonesia.

In addition, in May 2024, we announced the signing of a contract for the supply of our new range of fire extinguishers and Multi-Purpose Fluid with Trinity Fire Safety & Security, a business with annual turnover exceeding £60 million with over 2,000 customers, providing fire safety equipment and services across multiple sectors to customers including the Ministry of Defence, NHS, IKEA, Mitie, CBRE, John Lewis, Selfridges and Heathrow Airport.

Outlook

The Group's Digital First strategy has been instrumental in building brand awareness and unlocking wholesale and industrial channels.  The Board believes the evolution of the Group's B2C strategy towards a B2B2C model should see the Group reach profitability at lower volumes than under a direct-to-consumer model.

The addressable market for the StaySafe All-in-1 is substantial, with multiple uses in and outside of the home.  We will continue to grow consumer awareness across existing and new territories, helping save lives, property and the environment.  We  will continue to evolve our consumer proposition extending the number of channels to market complementary to digital as we focus on increasing profitability and cash generation.  We believe every home should have a StaySafe All-in-1.

We have made excellent progress in entering into industrial and wholesale agreements for the development and distribution of our new fluids.  Whilst the testing and commercialisation of our fluids with large industry leaders takes time and investment, I believe these partnerships represent the start of the journey to deliver significant value for our shareholders in line with the diversification strategy put in place at the IPO in 2022.

Dominic Berger

Executive Chairman

26 June 2024

Consolidated statement of comprehensive income

For the year ended 31 December 2023

All amounts relate to continuing activities.

Consolidated statement of financial position

As at 31 December 2023

Consolidated statement of changes in equity

For the year ended 31 December 2023

Consolidated statement of cash flows

For the year ended 31 December 2023

Notes

1.    General information

These consolidated financial statements were approved by the Board of Directors on 25 June 2024.

2.    Basis of preparation

The auditors have issued an unqualified opinion on the full financial statements for the year ended 31 December 2023 which will be made available for shareholders and delivered to the Registrar of Companies in due course.  The financial information in this announcement for the years ended 31 December 2023 and 2022 does not constitute statutory financial statements within the meaning of Section 434 of the Companies Act 2006.  The information contained within this announcement for the year ended 31 December 2023 has been extracted from the audited financial statements which have been prepared in accordance with International Financial Reporting Standards ('IFRS') as endorsed by the United Kingdom ('adopted IFRS'), and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.  They have been prepared using the historical cost convention except where the measurement of balances at fair value is required.  The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 December 2023 and, as such, does not contain all the information required to be disclosed in the financial statements prepared in accordance with IFRS.

3.    Revenue from contract customers

No one customer made up more than 10% or more of revenue in the year ending 31 December 2023 (2022: none).  Management considers revenue derives from one business stream being the sale of fire extinguishing and related products.

4.    Non-underlying items

IPO costs

On Admission to AIM on 6 July 2022, the Company issued 4,000,000 new ordinary shares and 2,716,550 ordinary shares to the providers of convertible loans, taking the number of ordinary shares in issue to 22,108,050.  The total gross proceeds amounted to £3,000,000.  The costs of issue amounted to £1,095,000 of which £727,000 was recognised as a non-underlying expense in the consolidated statement of comprehensive income for 2022 and £368,000 was allocated to the share premium account in the consolidated statement of financial position.

Other non-underlying costs

Other non-underlying costs of £92,000 have been provided in the year in relation to employment termination costs.

Convertible loan note interest

The total charge recognised in 2022 in relation to convertible loan note interest amounted to £187,000.

Share-based payment charges

The total charge recognised for the year in relation to share-based payments amounted to £503,000 (2022: £630,000).

The Group operates equity-settled share-based remuneration schemes for employees.  The terms and conditions of the grants are detailed below:

¹ The number of share options granted, and the corresponding exercise price, are shown after the Company's 49 for 1 bonus issue of shares on 9 May 2022.

Details of the number of share options granted, exercised, lapsed and outstanding at the end of each year, as well as the weighted average exercise prices in £ ('WAEP'), are as follows:

5.    Finance expense

6.    Taxation

A net tax charge of £7,000 (2022: tax credit £173,000) has been recognised arising from the surrender of taxable losses for a research and development tax credit in the year, more than offset by the adjustment of the previous year's estimate of the research and development tax credit for that year to the actual credit received.

7.    Loss per share

Loss per share is calculated as follows:

The calculation of the basic loss per share is based on the results attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.

The weighted average number of shares in issue is used as the denominator in the calculating basic loss per share.  As the Group is loss making the effect of instruments that convert into ordinary shares is considered anti-dilutive, hence there is no difference between the diluted and non-diluted loss per share.

8.    Trade and other receivables

Other receivables at 31 December 2023 included £375,000 in respect of monies due from shareholders in relation to the placing and subscription of shares in December 2023, the majority of which had been received by the Company's Broker and Nominated Advisor but not yet transferred to the Company at the year end.  These funds were received in January 2024.

9.    Cash and cash equivalents

10.  Trade and other payables

11.  Borrowings

A maturity analysis of the Group's borrowings is shown below:

Bank loans comprise a Coronavirus Bounce Back Loan Scheme loan provided by HSBC.  The loan was taken out in May 2020 and matures five years after this date.  The loan incurs interest of 2.5%.

Other loans comprise monies to fund certain of the Group's annual insurance premia and a supplier invoice finance facility.  The annual insurance premium loans are repayable in equal monthly instalments to 24 June 2024 at an interest rate of 7%.  The supplier invoice finance facility is repayable in equal monthly instalments to 28 March 2024 together with a borrowing fee of £19,375 repayable in equal monthly instalments to 27 February 2024.

12.  Share capital and share premium account

At 31 December 2023, total consideration due on 645,125 shares committed to be issued by the Company amounted to £103,220.

Called up share capital

Called up share capital represents the nominal value of shares that have been issued.

All classes of shares have full voting, dividends, and capital distribution rights.

Year ending 31 December 2023

On 3 August 2023, the Company announced a proposed placing and share subscription at £0.37 per share to raise approximately £0.94 million and £0.14 million respectively, and up to £0.25 million through a retail offer.

The proposed placing was conducted in two tranches and resulted in the issue of 1,637,565 shares on 9 August 2023 and 936,900 on 22 August 2023, raising gross proceeds of £0.95 million.  The share subscription resulted in the issue of 378,378 shares on 9 August 2023 raising gross proceeds of £0.14 million.  The retail offer resulted in the issue of 315,090 shares on 25 August 2023 raising gross proceeds of £0.12 million.

In total 3,267,933 shares were issued through the placing, share subscription and retail offer, raising gross proceeds of £1.21 million and taking the number of shares in issue to 25,375,983.  The costs of issue amounted to £0.13 million.

On 21 December 2023, the Company announced a proposed placing and share subscription at £0.16 per share to raise approximately £0.37 million and £0.03 million respectively.

The proposed placing was conducted in two tranches and resulted in the issue of 1,729,875 shares on 29 December 2023 and 582,625 on 16 January 2024, raising gross proceeds of £0.37 million.  The share subscription resulted in the issue of 125,000 shares on 29 December 2023 and 62,500 shares on 3 January 2024, raising gross proceeds of £0.03 million.  At 31 December 2023 the Company's Broker and Nominated Advisor held irrevocable placing and subscription letters covering the entire raise.

At 31 December 2023, the Company was owed £375,000 in respect of monies due from shareholders in relation to the placing and subscription, the majority of which had been received by the Company's Broker and Nominated Advisor but not yet transferred to the Company at the year end.  The Company was committed to issuing 645,125 shares for consideration of £103,220.

In total 2,500,000 shares were issued through the placing and share subscription, raising gross proceeds of £0.4 million and taking the number of shares in issue to 27,230,858 at 31 December 2023 and 27,875,983 in total.  The costs of issue amounted to £0.13 million.

Year ending 31 December 2022

On 14 January 2022, the Company issued 2,561 new ordinary shares for cash, increasing the number of shares in issue to 307,830.

On 9 May 2022, a bonus issue of shares was made for the shareholders of all 307,830 shares already in issue at that date.  The bonus issue offered 49 ordinary shares for every 1 ordinary share in issue, with a nominal value of £0.01 per share.  This increased the number of ordinary shares in issue by 15,083,670 to 15,391,500.

On 6 July 2022, the Company issued 4,000,000 new ordinary shares and 2,716,550 ordinary shares to the providers of convertible loans, increasing the number of ordinary shares in issue to 22,108,050.

13.  Post balance sheet events

On 14 May 2024, the Company announced a proposed placing and share subscription at £0.10 per share to raise approximately £1.6 million and £0.1 million respectively, and up to £0.3 million through a retail offer.  The proposed placing resulted in the issue of 16,050,000 shares on 31 May 2024, raising gross proceeds of £1.6 million.  The share subscription resulted in the issue of 950,000 shares on 31 May 2024, raising gross proceeds of £0.1 million.  The retail offer resulted in the issue of 3,000,000 shares on 31 May 2024, raising gross proceeds of £0.3 million.

In total 20,000,000 shares were issued through the placing, share subscription and retail offer, raising gross proceeds of £2.0 million and taking the number of shares in issue to 45,375,983.  The costs of issue amounted to £0.2 million.

On 30 May 2024, a General Meeting of the Company was held in which the Directors obtained authority to allot the placing, subscription and retail offer shares and the disapplication of pre-emption rights in this respect.

14.  Full financial statements

The auditors have issued an unqualified opinion on the full financial statements for the year ended 31 December 2023 which will be made available for shareholders and delivered to the Registrar of Companies in due course.  Further copies of these results, and the full financial statements when published, will be available on the LifeSafe Holdings plc investor relations website, www.lifesafeholdingsplc.com.

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