RNS Number : 5366K
06 May 2022
6 May 2022
("Kinovo" or the "Company")
Year-End Trading Update
Kinovo Plc (AIM: KINO), the specialist property services Group
that delivers compliance and sustainability solutions, provides the
following trading update for the year ending 31 March 2022.
Trading and Financial Position
In the 12 month period to 31 March 2022 the Company performed
well following a year of Covid-related disruption, winning new
contracts and revenue streams under its three strategic pillars of
Regulation, Regeneration and Renewables. This performance has been
achieved despite challenges posed by supply chain disruptions and
labour availability. Kinovo has continued to build on its strong
client relationships, adding new workstreams under existing
contracts due to our track record of delivering excellence in both
quality and service.
Revenues, for Continuing operations, during the period increased
by 36% to GBP53.5 million (2021: GBP39.4 million), while Adjusted
EBITDA (after the effect of a charge for lease payments) rose by
100% to GBP4.2 million (2021: GBP2.1 million).
Net debt fell to GBP0.3 million at 31 March 2022 (31 March 2021:
GBP2.7 million) including cash balances of GBP2.5 million (31 March
2021: GBP1.3 million).
As mentioned above, the Company won a number of new contracts
during the period. The total potential value attributed from new
business won during the year could rise to GBP43.8 million over the
life of these contracts.
Update on the disposal of DCB Kent Limited ("DCB")
On 12 January 2022, Kinovo announced the sale of DCB, the
Company's non-core construction business (the "Disposal") which was
categorised under "Discontinued activities" in the Half Year
Results, as published on 7 December 2021.
The Disposal was undertaken to allow the Company to harmonise
operations and increase the focus on its three strategic pillars:
Regulation, Regeneration and Renewables. These pillars are centred
on compliance driven, regulatory-led specialist services that offer
long-term contracts, recurring revenue streams and strong cash
Consideration to be received by Kinovo from the Disposal was
dependent on the future financial performance of DCB.
Under the terms of the Disposal agreement with the purchasers,
the Company agreed to provide a working capital facility to support
DCB in completing active projects. The Directors assumed at the
time of entering into the Disposal agreement the overall net
outflow of cash to support DCB would be minimal, with the initial
working capital support necessary to optimise the potential
The Company has been notified that DCB has experienced delays in
completing active projects and has not secured new project work to
the levels anticipated at the time of the Disposal and has
therefore had to provide unanticipated working capital support to
date of GBP3.7 million, and the Directors expect this to increase
in the short term, absent any additional investment into DCB.
This additional support was provided due to a lack of new
business receipts, ongoing challenges and delays in the period. As
part of our obligation under the terms of the Disposal, the Company
provided parent company guarantees which run through to practical
completion on each of the construction projects that were in
existence at the time of the Disposal. It was, however, anticipated
that the purchaser would make all reasonable endeavours to transfer
these parent company guarantees post-disposal.
During the year, discontinued activities traded at a loss of
GBP0.5 million. In addition, the pre-tax loss on the disposal of
DCB for the Company is expected to be around GBP5.0 million, which
will be taken as a non-underlying exceptional charge. This includes
an impairment of GBP2.3 million of intangible assets relating to
goodwill and customer relationships.
The Company as at 30 April 2022, had net cash of GBP0.4 million
(30 September 2021: GBP1.7m net debt), which includes the impact of
the working capital support to DCB. The Company has debt facilities
of GBP5.0 million in place with HSBC UK Bank plc. This debt
facility is structured as a GBP2.5 million term loan, repayable by
September 2022, and a GBP2.5 million overdraft facility. The
Company expects to meet financial covenants at the next test, being
the year ended 31 March 2022..
There remains significant uncertainty around the amount of
further support required to be provided to DCB under the parent
company guarantees, and a number of claims and recoveries are being
pursued by Kinovo. The Company is currently reviewing its legal
position in relation to recoverability of funds provided by way of
the working capital support to DCB. A further announcement updating
shareholders will be made as and when appropriate.
David Bullen, Chief Executive Officer of Kinovo plc,
"I am pleased to announce this year-end trading update, with
Kinovo's underlying continuing businesses performing well,
notwithstanding difficult market conditions. Kinovo is winning new
business at a strong rate, and continues to add new revenue streams
from existing clients.
Whilst we have incurred a loss on the disposal of DCB, it
streamlines our operations and allows us to focus on our core
activities of compliance and regulatory work.
Kinovo continues to focus on long-term partnerships and
relationships, and currently over 90% of revenue can be attributed
to recurring contracts."
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
Hudson Sandler (Financial PR) +44 (0)20 7796 4133
Dan de Belder
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May 06, 2022 02:00 ET (06:00 GMT)
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