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
David Bullen, Chief Executive
Officer
|
+44 (0)20 7796 4133
(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
|
|