REG - Zenova Group PLC - Interim results for the 6mths ended 31 May 2023
25/08/2023 07:00
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RNS Number : 3985K Zenova Group PLC 25 August 2023
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25 August 2023
Zenova Group PLC
("Zenova", the "Company" or the "Group")
Interim results for the six months ended 31 May 2023
Zenova Group PLC (AIM: ZED), a provider of proprietary fire safety and heat
management solutions with applications across housing, industrial, and
commercial sectors, today announces its interim results for the six months
ended 31 May 2023.
Significant progress made in the period:
· Financial highlights:
o Revenue generation from previously announced international sales
contracts, has commenced.
o Sales for the six months to 31 May 2023 of £108k (2022: £75k).
o Gross margin for the six months to 31 May 2023 of 52% (2023:49%).
o Operating loss for the period of £709k (2022: £1,038k) driven by
increased R&D, testing, and marketing.
· Contracts signed:
o Clastrom - distributor for Spain and Germany placed an initial order for
the FX500® aerosol fire extinguisher for 40,000 units.
o Omnis LLC (https://omnisusa.com/zenova/) - distributor for USA placed an
initial order for 7,500 units of the FX500 mini fire extinguisher.
o Zensafe Ltd - distributors in the UK placed an initial order for 10,000
units of the FX500 aerosol fire extinguisher for Zensafe's account with
Amazon.
o Rawlins Paints a UK paint provider has become a Zenova distribution
partner.
o Viridis Group Ltd appointed as distributor for Poland
· New clients:
o Housing Association Limited selected its innovative Zenova IP thermal
insulation paint coating for a pilot project.
o Melin Homes an established Housing association based in Southeast Wales
providing over 4,500 affordable properties across five local authorities.
· R&D, testing and certification:
o John Moores Liverpool University
(https://zenovagroup.com/zenova-ip-project-with-liverpool-john-moores-university-resulting-in-lowering-fuel-bills-lower-cost-of-refurbishments-and-improved-environmental-benefits/)
evaluated the performance of Zenova IP for use in retrofit applications. The
results were outstanding;
§ 35% reduction to the buildings U-Value.
§ 25% reduction to the buildings heating energy consumption.
§ 19% reduction to the buildings CO2 carbon emissions.
§ Improvement of the buildings SAP score of 24 points.
§ EPC properties rating improved from E to D.
The EPC rating change solution with Zenova IP will open up large markets for
energy
efficiency, energy savings, cost savings and reduced carbon footprint for any
building.
o Scalable manufacturing is in place in three separate jurisdictions
(Europe, UK and Canada) to ensure the supply of all Zenova products to
satisfy the expected growth in demand across multiple geographies while
minimizing shipping costs.
Post period end highlights
· Organizational refocus:
o Shift from R&D, testing and certification to focus on sales growth and
customer delivery.
o Fiona Rodford appointed as Executive Vice Chairperson.
o Tony Crawley, previous CEO, assuming the role of Sales Project Director.
o Thomas Melchior, previous CFO, appointed as interim Chief Executive
Officer.
· Key R&D milestones achieved:
o All major R&D, testing and certification milestones achieved to open
UK and European markets for Zenova Products
o Passing of certification test results for the 6L & 9L FX fire
extinguishers by MPA Dresden Fire in Germany confirming Class A, B, E and F
classification to the latest EN3 standard.
o Passing of certification test results for the FX500 aerosol fire
extinguisher by CNBOP an international testing house confirming Class A,B, E
and F classification to the BS 6515 standard.
o BRE steel tests on Zenova FP (intumescent or thermofoaming paint)
· Significant sales progress:
o First deliveries 2,160 units of FX500 to UK, Zensafe Amazon account
o First deliveries of 7,500 units of FX500 to Germany, Clastrom
· Investor updates
o Directors of the Company entered into a working capital loan with the
Company to make available up to £350,000 of cash resources should it be
required.
o Zenova raised gross proceeds of £500,000 by way of a placing of
12,500,000 ordinary shares at four pence (4p). The proceeds were to provide
general working capital as the Company continues to implement its growth
strategy.
Outlook
Zenova is looking forward to a promising next half year where the Directors
anticipate large orders from new key customers as well as increased uptake
from existing customers and distributors. Executing on new and existing
contracts should result in stronger top-line performance and the Directors are
confident that this will allow Zenova to show stronger results in the near
future.
Thomas Melchior, Interim Chief Executive of Zenova Group PLC
commented: "Zenova has made significant progress in completing key product
development, testing and certification milestones as well as building up
global production and manufacturing capabilities whilst expanding the
distribution network. As a result of achieving these milestones, the Group is
now in a position to transition from R&D, testing and certification into
leveraging the distribution channels to accelerate sales revenues and customer
deliveries. We are looking forward to developing our business globally during
our next stage of growth, and anticipate announcing further positive news flow
in the coming months."
Chairman's Statement
Zenova has made encouraging progress in this interim period. Strategic
R&D, testing and development milestones over the last six months have laid
the foundation for significant growth in the future. The company is now
transitioning into a sales and customer solution driven organization backed by
an expanded distribution channel and a resilient global supply chain. The
company remains in good financial health, underpinned by rigorous cost control
and is focusing on growing the business in a managed and sustained manner.
Since our last report, the focus has been on product development, testing and
certification to ensure that Zenova meets the most recent fire safety
regulations implemented in the UK, which are amongst the most stringent in the
world today. We remain committed to developing and supplying innovative fire
safety and heat management solutions both to the UK and internationally where
global market opportunities clearly exist.
We believe our products are best in class, and communicating this message to
our customers and the wider industry is one of our key focus points. We are
beginning to see progress being made, and Zenova's reputation is growing as
evidenced by our growing customer base, whether in the housing, industrial or
commercial sectors. We have engaged in a number of initiatives to develop and
enhance our brand recognition which will help boost future sales growth.
Zenova is progressing its operational focus from R&D, testing and
certification to sales growth and customer delivery. To support this
transition Zenova has restructured the operating team by appointing Fiona
Rodford as Executive Vice Chairperson, reassigning Tony Crawley (previous CEO)
to Sales Project Director and appointing Thomas Melchior (previous CFO) as
interim CEO. This will free Tony Crawley to focus solely on his growing client
demand and thus will allow Zenova to best realise its revenue growth goals.
Zenova has successfully launched the Zenova FX500 aerosol extinguisher and is
starting to penetrate key markets through online and offline channels. Our
manufacturing capacity is being expanded and the maiden deliveries of the
FX500 to the UK and Germany have already completed.
The recent test results from Liverpool's John Moores University confirmed the
potential of Zenova IP and IR products to conserve energy, reduce heating and
cooling costs as well as reduce carbon footprint. We see strong potential for
market adaptation for EPC and cost-driven applications of our Zenova IP and IR
products. Successful trials of Zenova IP with key customers are expected to
unlock and accelerate market penetration and revenue growth.
Zenova has secured working capital loan from the Directors of the Company up
to £350,000 of cash resources should it be required. Additionally, Zenova
raised gross proceeds of £500,000 by way of a placing of ordinary shares.
This working capital funding will support Zenova during the next stage of
accelerated growth.
I would like to thank all our employees and partners for their hard work
during the period. They have embraced our vision to establish Zenova as a
trusted supplier of effective and commercially viable products that deliver
innovative fire safety and heat management solutions. We are most grateful for
their support and dedication and look forward to announcing further positive
progress in the near future.
Zenova is looking forward to a promising next half year where we expect large
orders from new key customers as well as increased uptake from existing
customers and distributors. Executing on new and existing contracts should
result into stronger top-line performance and this will allow Zenova to show
stronger results in the near future.
Don Nicolson
Non-executive Chairman
Operating Update
TARGET SEGMENTS
The key sectors currently being targeted by the Company's sales and marketing
team are as follows:
· Social Housing Government
· Local Authorities
· Modular Homes
· Construction
· Military
· Transport
· Marine
· Film & TV
· Fire services
· Personal fire protection
KEY CONTRACTS & CLIENTS
The company has secured a number of cornerstone agreements within key sectors
and distributors which will help Zenova expand market penetration in key
areas:
· Clastrom, Germany, Spain Ordered
40,000 units of the FX500 for Germany
·
Zensafe
Ordered 10,000 units of the FX500 for sale through Amazon UK
· Omnis,
USA
Ordered 7,500 units of the FX500 for USA
· Beyond Surface Solutions Ltd
· Bells and Two Tones
· Fire Services Group UK
· Viridis Group, Poland
· Palatine Paints
· Rawlins Paints
· Robert Price
The Zenova FX500 orders are being highlighted because their longer lead times
on deliveries create a significant off balance sheet item of firm orders in
house not yet executed.
KEY PRODUCT CERTIFICATIONS CUSTOMER TRIALS
· Zenova FX 6 litre & Zenova FX 9 litre fire extinguishers by
MPA Dresden Fire in Germany confirming Class A, B, E classification to the
latest EN3 standard.
· FX500 aerosol fire extinguisher passed certification test result
by CNBOP an international testing house confirming Class A,B, E and F
classification to the BS 6515 standard.
· Zenova completed successful pilot project with Together Housing
to assess Zenova IP thermal insulation paint's ability to insulate properties
that are difficult to insulate using traditional methods of insulation.
· Zenova IP Project With Liverpool John Moores University Resulting
In Lowering Fuel Bills, Lower Cost Of Refurbishments And Improved
Environmental Benefits
(https://zenovagroup.com/zenova-ip-project-with-liverpool-john-moores-university-resulting-in-lowering-fuel-bills-lower-cost-of-refurbishments-and-improved-environmental-benefits/)
. The results were extraordinary;
§ A 35% reduction to the buildings U-Value.
§ A 25% reduction to the buildings heating energy consumption.
§ A 19% reduction to the buildings CO2 carbon emissions.
§ An improvement of the buildings SAP score of 24 points.
§ The properties EPC rating improved from E to D.
The EPC rating change solution with Zenova IP will open up large markets for
energy
efficiency, energy savings, cost savings and reduced carbon footprint for any
building.
MANUFACTURING
Zenova has expanded scalable manufacturing partners to help ensure the supply
of all Zenova products an satisfy the expected growth in demand for products
across multiple geographies. First deliveries for FX500 have been shipped.
INVESTOR UPDATES
· As announced on 31(st) of May 2023, Don Nicolson, Thomas
Melchior, Etrur Albani and Fiona Rodford, all being Directors of the Company,
have entered into a working capital loan with the Company to make available up
to £350,000 of cash resources should it be required (the "Working Capital
Loan"). None of the Working Capital Loan has been drawn down.
· Also as announced on 31(st) of May 2023 Zenova raised gross
proceeds of £500,000 by way of a placing of 12,500,000 ordinary shares at
four pence (4p).
· Post period update. A Zenova warrant holder exercised warrants in
respect of 466,920 ordinary shares in the Company.
Note
This announcement contains inside information of the purposes of Regulation 11
of the Market Abuse (amendment) (EU exit) Regulations 2019/310. The Directors
of the Company are responsible for the release of this announcement.
For further information please contact:
Zenova Group PLC
Thomas Melchior, Chief Executive Officer Via Orana Corporate LLP:
Anthony Eastman
Fiona Rodford, Executive Vice Chairperson
Tel: +44 20 3475 6834
SPARK Advisory Partners Limited (Nominated Adviser)
Matt Davis / Adam Dawes Tel: +44 20 3368 3550
SI Capital Limited (Broker)
Nick Emerson Tel: +44 1483 413 500
Notes to Editors
The Group, through Zenova Ltd, is the holder of intellectual property that
underpins a suite of fire safety and temperature management products and
technology. The product range is applicable to industrial, commercial, and
residential markets. The Group's products include fire retardant paints,
insulating paints and render, fire extinguishing fluid and fire extinguishers.
Through innovative development, and a refined formulation and development
process, Zenova provides industry leading solutions across a range of fire
protection and temperature management problems, comprising:
Zenova FP, fire protection paint
A water based, fire protection paint (also known as a 'thermofoaming' or
'intumescent' paint), which can be used on any surface and colour matched to
any colour. When exposed to heat or flames, the paint expands and creates a
solid foam-like crust which will not burn and insulates the surface it is
painted on. This prevents surfaces from catching fire and stops fire
spreading. It has been tested by global fire industry experts and complies
with UK building regulations and the latest UK and European fire safety
standards.
Zenova IP, thermal insulation paint
A thermal insulation paint embeds the most modern insulating technology in a
thermos-like ultra-thin layer. It saves energy by increasing the thermal
insulation level in commercial and residential buildings. Solar heat can
increase the temperature within a building by 75% to 90%. Zenova IP has been
independently tested and validated to deflect, absorb and dissipate up to 75%
of this heat, thereby reducing the inside temperature by up to 45%. Suitable
for both exterior and interior, on any type of surface
Zenova IR, thermal insulation render
Zenova IR is a ready mixed insulation render that can be applied to internal
and external walls in commercial and residential buildings to provide
immediate insulation benefits and can be colour matched to any colour.
Zenova FX, fire extinguishers
A fire extinguisher like no other. It puts out class A, B, F, E fires fully
tested against European EN3 as well as British standards. Available in 6 and 9
litre sizes.
Zenova FX500, aerosol fire extinguisher
The Zenova FX500 is a high performance handheld fire extinguisher that is
tested by independent experts and adheres to the highest industry
standards. Safe for use on any type of fire the Zenova FX500 reduces the
risk of reignition. The Zenova FX 500 is quick, easy and safe to operated and
has been tested to BS6165 standard.
Zenova WB, wildfire barrier
A wildfire barrier fluid (applied via spray wands or aerial drops), which
provides a virtual barrier where fire simply will not burn. Repeated tests on
a variety of extremely dry wildfire fuels (grasses, hays, brush) demonstrates
the incredible fire resistance Zenova WB provides, while remaining viable
after application for30+ days in dry conditions.
Zenova CS, ceiling sprinkler
Blending the best features of both detectors and extinguishers while avoiding
the drawbacks of each. It senses heat rather than smoke, resulting in less
false alarms, and it's an automatic system that doesn't require a battery or a
person to operate it. The modular Zenova CS unit expels 2.4 - 4.8 L of
proprietary Zenova FX suppression fluid at high-pressure to suppress the
source of a fire, yet maintains visibility that allows occupants to evacuate
quickly.
Unaudited Consolidated Statement of Comprehensive Income
Note Six months ended 31 May 2023 Six months ended 31 May 2022 For the year ended 30 November 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Continuing operations
Revenue 108 75 175
Cost of sales -52 -38 -67
Gross profit 56 37 108
Administrative expenses -765 -1075 -2130
Operating loss -709 -1038 -2022
Loss before taxation -709 -1038 -2022
Taxation - 0 -10
Loss after taxation -709 -1038 -2032
Basic loss per share 4 (0.76p) (1.11p) (2.18p)
Diluted loss per share 4 (0.76p) (1.11p) (2.18p)
Consolidated Statement of Financial Position
Note As at 31 May 2023 As at 31 May 2022 As at 30 November 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Goodwill 6 2346 2346 2346
Property, plant & equipment 8 13 9
Right of use asset 119 133 119
Deferred tax - - -
TOTAL NON-CURRENT ASSETS 2474 2492 2474
CURRENT ASSETS
Inventory 51 39 51
Trade and other receivables 113 289 292
Cash and cash equivalents 312 1700 782
TOTAL CURRENT ASSETS 476 2028 1125
TOTAL ASSETS 2950 4520 3599
LIABILITIES
NON-CURRENT LIABILITIES
Payables 71 45 39
Lease Liability 121 134 121
TOTAL NON-CURRENT LIABILITIES 192 179 160
CURRENT LIABILTIES
Payables: Amounts falling due within one year 171 100 194
TOTAL LIABILITIES 363 279 354
NET ASSETS 2587 4241 3245
EQUITY
Share capital 7 94 94 94
Share premium 7 6310 6310 6310
Other reserves -18 -68 -68
Share based payment reserve 161 161 161
Retained earnings -3960 -2256 -3252
TOTAL EQUITY 2587 4241 3245
Consolidated Statement of Cash Flows
Six months ended 31 May 2023 Six months ended 31 May 2022 Year ended 30 November 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
CASH FLOWS USED IN OPERATING ACTIVITIES
Loss for the period -709 -1038 -2032
Adjustment for:
Finance cost 10
Deprecation 34
Adjustments to cash flows from non-cash items
Income tax expense - - 0
Share based payment charge - - 0
Adjustments for changes in working capital
Inventory 0 -39 -51
Trade and other receivables 179 -116 -119
Rights of use asset 0 16 30
Trade and other payables 32 -35 -51
Lease Liability 0 -14 27
Payables: Amounts falling due within one year -23 0 0
NET CASH FLOW USED IN OPERATING ACTIVITIES -520 -1226 -2152
CASH FLOW USED IN INVESTING ACTIVITIES
Expenditure on property plant and equipment -1 -5 -1
NET CASH FLOW USED IN INVESTING ACTIVITIES -1 -5 -1
CASH FLOW FROM FINANCING ACTIVITIES
Other reservces 50 - 0
Bank loan 0 -5 0
NET CASH FLOW FROM FINANCING ACTIVITIES 50 -5 0
NET INCREASE IN CASH AND CASH EQUIVALENTS -471 -1236 -2153
CASH AND CASH EQUIVALENTS AT THE START OF THE PERIOD 782 2936 2936
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 312 1700 782
Consolidated Statement of Changes in Equity
Share Capital Share Premium Share based payment reserve Other Reserve Accumulated losses Total equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 May 2022 94 6310 161 -68 -2256 4241
Loss and total comprehensive loss for the period -994
Balance at 30 November 2022 94 6310 161 -68 -3252 3245
Loss and total comprehensive loss for the period -709
Balance at 31 May 2023 94 6310 161 -18 -3960 2587
Notes to consolidated and parent company financial statements for 6 months to
31 May 23
1. General Information
The principal activity of Zenova Group plc and its subsidiary and associate
companies (collectively "Zenova Group" or "Group") is development, manufacture
and sale of fire-retardant and heat management solutions and systems.
Zenova Group plc is the Group's ultimate Parent Company ("the parent
company"). It is incorporated in England and Wales and domiciled in England.
The address of its registered office is 172 Arlington Road London NW1 7HL.
Zenova Group plc shares are admitted to trading on the London Stock
Exchange's AIM market.
2. Basis of Preparation
The results for the six-month period ending 31 May 2023 are unaudited
and have been prepared in accordance with International Accounting Standards
(IFRS) as adopted for use in the United Kingdom (UK IFRS). The interim
consolidated financial information set out in this report does not constitute
statutory accounts as defined by S434 of the Companies Act 2006 and should be
read in conjunction with the annual financial statements for the 2year ended
30 November 2021.
The results for the year ended 30 November 2022 have been extracted from the
statutory financial statements for the year ended 30 November 2022. Statutory
accounts for Zenova Group Plc for the year ended 30 November 2022 were
approved by the Board on 30 May 2023 and have been filed with the Registrar of
Companies. The report of the auditors on those accounts was unqualified and
did not contain a statement under Section 498 (2) or (3) of the Companies Act
2006.
The accounting policies applied in these results are consistent with those
applied in the Group`s Annual Report for the year ending 30 November 2022 and
those expected to be applicable to the financial statements for the year
ending 30 November 2023.
The interim financial information for the six-month period from 1 December
2022 to 31 May 2023 was approved by the Board on 23 August 2023.
3. Going Concern
The Group assesses at each reporting date whether it is a going concern for
the foreseeable future. In making this assessment management considers:
(a) the current working capital position and operational requirements;
(b) the timing of expected sales receipts and completion of existing
orders;
(c) the sensitivities of forecast sales figures over the next 18 months;
(d) the timing and magnitude of planned expenditure; and
(e) the level of indebtedness of the company and timing of when such
liabilities may fall due, and accordingly the working capital position over
the next 18 months.
Management considers in detail the going concern assessment, including the
underlying assumptions, risks and mitigating actions to support the
assessment. The assessment is subject to estimation uncertainty and there is
judgement in determining underlying assumptions.
There are several scenarios which management have considered that could impact
the financial performance of the Group. These include:
(a) Disruption of the supply chain, and any delays in the supply of raw
material that may impact the ability of the Group to produce its products.
(b) Delays in testing and certification required for geographical and
sector specific expansion.
(c) Failure of the sales contracts to be realised and expected sales growth
to fall below expectations.
(d) Changes in legislation that may increase lead times in production or
testing.
(e) Intellectual property on which the company may be reliant to keep its
competitive advantage could be challenged.
If the cash receipts from sales are lower than anticipated the Group has
identified that it has available to it a number of contingent actions, that it
can take to mitigate the impact of potential downside scenarios. These include
seeking additional financing, leveraging existing sale agreements, reviewing
planned expenditure and reducing overheads.
In conclusion having regard to the existing and future working capital
position and projected sales the Directors are of the opinion that the
application of the going concern basis is appropriate.
4. Earnings per share
Basic earnings per share is calculated by dividing the loss attributable to
owners of the Group by the weighted average number or ordinary shares in issue
during the year.
5. Goodwill
The value of the intangible assets relates to the goodwill recognised on the
acquisition of Zenova Distribution Limited. Goodwill arising on the
acquisition of an entity represents the excess of the cost of acquisition over
the Group's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities of the entity recognised at the date of
acquisition.
Goodwill is initially recognised as an asset at cost and is subsequently
measured at cost less any accumulated impairment losses. Goodwill is not
subject to amortisation but is tested for impairment annually or whenever
there is evidence that it may be impaired. Goodwill is denominated in the
currency of the acquired entity and revalued to the closing exchange rate at
each reporting period date. Negative goodwill arising on an acquisition is
recognised directly in the profit or loss statement. On Disposal of a
subsidiary, the attributable amount of goodwill is included in the
determination of the profit or loss recognised in the statement of
comprehensive income on disposal.
6. Share capital
7. Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward looking statements are not
based on historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount,
nature and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.
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