REG - Kinovo PLC - First Half Trading Update

KinovoAnnouncement

07/11/2023 07:00

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RNS Number : 5635S  Kinovo PLC  07 November 2023

7 November 2023

Kinovo plc

("Kinovo", the "Group" or the "Company")

 

First Half Trading Update

Notice of Results

 

Strong H1 Performance and Ongoing Execution of Strategic Initiatives

 

Kinovo Plc (AIM: KINO), the specialist property services Group that delivers
compliance and sustainability solutions, is pleased to provide a trading
update for the six months ending 30 September 2023 (the "Period") ahead of its
interim results which are expected to be released on Tuesday 28 November 2023.
All figures are unaudited.

 

Continuing Operations

 

The continuing operations of the Group have performed strongly in the first
half of the year, further benefiting from the strategic repositioning to focus
on its three key pillars of Regulation, Regeneration and Renewables.

 

Legislative drivers including the Building Safety Act, Fire Safety Act and
changes to the Electrical Wiring Legislation have increased the proportion of
Electrical workstreams in the first half, delivering a higher margin, with an
uplift in gross margins to 27.7% (H1 2023: 25.9%). With a number of planned
works being delayed due to clients' administrative bottlenecks and only
commencing in the latter part of the first half, the Board expects to report a
revenue increase of 2% to £30.34 million (H1 2023: £29.76 million) with a 9%
increase in gross profit to £8.40 million (H1 2023: £7.71 million).  As the
planned works progress and new contract wins are fully mobilised, revenues are
expected to pick up further in the second half of the year, albeit at more
normalised margins, as part of the Group's traditional second half weighting.

 

The Board expects to report adjusted EBITDA growth of 21% to £2.91 million
(H1 2023: £2.40 million) and Operating Profit growth of 46% to £2.75 million
(H1 2023: £1.87 million) driven by a favourable work mix, enhanced by the
Group's operational efficiencies and lower non-underlying costs.

 

The Company ended the six months ending 30 September 2023 with a cash balance
of £1.16 million and a net cash position of £1.04 million (30 September
2023: gross cash of £1.72million and net debt of £0.06 million).

 

During the Period, the Group secured several important contracts with both new
and existing clients including the introduction of additional workstreams.
These successes have continued post-period with further contract wins and
extensions, including:

·   a direct award by the London and Quadrant Housing Trust for legal
disrepair and void works with a total value of £1.0 million across a two-year
period;

·    a Home Upgrade Grant funded retrofit insulation works for Broadland
District Council for £0.5 million over two years with the option of five
additional one-year extensions; and

·   a two-year extension until September 2025 to its contract with Haringey
Council for gas maintenance works, with a historical value of approximately
£3.0 million per annum.

 

This positive momentum of contract wins and renewals represent key organic
growth drivers and facilitated further strategic investments within the
Business Development Team, including hiring an additional Bid Manager and an
Estimator which will further benefit the Group.

 

Under the Renewables pillar, Sustainability continues to be a key component of
Kinovo's strategy, and the Company is beginning to see the combined benefits
of its robust accreditation profile and high-ranking framework placings, with
several direct awards being granted during the Period and post-Period end.
Additional investment has been made to strengthen the Group's position,
including the provision of carbon literacy training to the management teams,
the recruitment of a Retrofit Team comprising of a Lead Assessor, Technical
Coordinator and Resident Liaison Officer, whilst also releasing a year two Net
Zero report in October 2023 and a maiden ESG Impact report, which we expect
will be ready for release in November 2023.

 

Discontinued Operations

 

The Company is progressing the legacy construction projects associated with
DCB Kent ("DCB"), Kinovo's former construction division, and continues to
expect seven of the nine projects to be completed during the current financial
year, with five of these expected to complete by early December 2023.
Further developments have also been made and negotiations continue with the
remaining two projects.

 

The current overall pre-tax cost to complete estimate for the projects within
DCB are estimated to increase by £0.46 million from £5.26 million, as
reported at 31 March 2023, to £5.72 million. The cost estimate will be
updated in conjunction with Kinovo's final account reconciliations and
additional detail on all related matters will be provided in the forthcoming
interim results.

 

David Bullen, Chief Executive Officer of Kinovo plc, commented:

"The first half was another important period of progress and growth for
Kinovo, underpinned by the clear benefits associated with our strategic
repositioning, the ongoing effects of legislative drivers and our selective
investments.

 

We have also made significant progress regarding DCB. We remain on target to
complete seven of the nine projects this financial year and I look forward to
updating our shareholders with further detail in the interim results.

 

Looking ahead, I am confident that our strategic investments will generate
further value for the Group, creating opportunities to continue our momentum,
including additional contract wins and renewals across our divisions. At this
stage of the Group's financial year, the Board is confident of achieving full
year results in line with its expectations."

 

 

Enquiries

 

 Kinovo plc
 Sangita Shah, Chairman                                     +44 (0)20 7796 4133

 David Bullen, Chief Executive Officer                      (via Hudson Sandler)

 Canaccord Genuity Limited (Nominated Adviser and Broker)   +44 (0)20 7523 8000
 Adam James

 Andrew Potts

 Harry Rees

 Hudson Sandler (Financial PR)                              +44 (0)20 7796 4133
 Dan de Belder

 Harry Griffiths

 

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the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication
of this announcement, this information is now considered to be in the public
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