REG - Kinovo PLC - Trading Update

KinovoAnnouncement

09/02/2024 07:00

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RNS Number : 5649C  Kinovo PLC  09 February 2024

9 February 2024

 

Kinovo plc

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

 

Trading Update

 

Kinovo plc (AIM:KINO), the specialist property services Group that delivers
compliance and sustainability solutions, provides the following trading
update. The continuing business continues to perform well with particularly
strong margins reflecting the mix of works and continued effects of
management's implementation of the strategic repositioning.

 

The Group continues to make progress in East Anglia having opened a new office
in December 2023, and has secured eight contracts with new clients via the
Eastern Procurement Asset Improvement framework. Six of these are for a term
of between one and three years, amounting to a total expected value of
approximately £4.2 million. The remaining contracts are initially for a
shorter term, although the expectation is that they hold the potential for
longer term contracts to be agreed in the new financial year. The Company
remains in conversations with several other potential clients in East Anglia
and continues to invest to further its growth in the region.

 

The Group continues its strong trajectory of new client acquisition and
extensions with existing customers. It has secured a contract extension with
Sanctuary Group for compliance-related works for FY25, with a potential to
extend this contract for a further year. The Group continues to diversify its
client base, winning short-term direct awards with Newlon Housing Trust and
Qualis Property Solutions, initially for compliance works but with scope for a
wider offering in the future. Furthermore, under the Greener Future
Partnership framework, Kinovo has been awarded a further 109 surveys after the
successful completion of the first wave of surveys for Hyde Housing's retrofit
program.

 

Discontinued Operations

 

Three of the legacy projects relating to Kinovo's former construction
division, DCB Kent ("DCB"), have concluded. A further four projects have been
delayed by extreme weather and unforeseen inherited remedial works and are now
expected to be completed by the end of Kinovo's financial year. The
penultimate project is in progress and is expected to complete by the end of
May 2024, and the Group remains in discussions with the client regarding the
final project (due to complete in 2026).

 

As a result of these delays, the total net costs incurred have increased to
£7.1 million as at 31 December 2023 including additional procurement,
warranty and remedial costs. Kinovo are seeking to recover some of the
additional costs incurred through claims and recoveries, but the total pre-tax
net cost to complete is therefore expected to be a material increase from the
previous estimate of £5.72 million. We will update the market in due course
on all material matters relating to the DCB projects if or when they may
occur.

 

Outlook

 

Without accounting for additional works crystalising from Kinovo's pipeline as
the Group enters its peak trading season, revenues for the year ending 31
March 2024 for continuing operations are expected to be approximately £65
million (FY23: £62.7 million), reflecting a different revenue mix of projects
contracted to date, with electrical services continuing to perform strongly.
Adjusted EBITDA is expected to be significantly ahead of last year (FY23:
£5.5 million) and not less than £6.2 million, being in line with management
expectations. This demonstrates the Board's continued confidence in the
strength and resilience of the continuing business and its significant growth
potential. Cash balances will reflect the aforementioned costs incurred and
the outcome of any potential recoveries from the DCB projects, supplemented by
cash generation from the continuing business.

 

 

 

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. With the publication
of this announcement, this information is now considered to be in the public
domain.

 

 

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 Sole 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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