TIDMKINO
RNS Number : 8267U
Kinovo PLC
28 November 2023
28 November 2023
Kinovo Plc
("Kinovo" or the "Group")
Interim Results
Strong H1 Performance
Ongoing Execution of Strategic Initiatives
Kinovo plc (AIM:KINO), the specialist property services group
that delivers compliance and sustainability solutions, announces
its unaudited Interim Results for the six months ended 30 September
2023 (the "Period").
Financial highlights (Continuing Operations):
-- Revenue increased by 2% to GBP30.3 million (H1 2023: GBP29.8 million)
-- Gross profit up 9% from GBP7.71 million to GBP8.40 million
-- Gross margin increas ed by 1.8ppt to 27.7% (H1 2023: 25.9%)
-- Adjusted EBITDA up 21% to GBP2.9 million (H1 2023: GBP2.4 million)
-- Operating profit increased by 47% to GBP2.7 million (H1 2023: GBP1.9 million)
-- Basic earnings per share increased 43% to 3.08p from 2.16p in H1 2023
-- Cash conversion of 92% during the period (H1 2023: 130%)
-- Net cash of GBP1.0 million (H1 2023, net debt: GBP56,000)
Operating highlights:
-- A favourable mix of works, operational efficiencies and lower
non-underlying costs delivered increased gross margin
-- Three-year visible revenues increased to GBP157.0 million (FY
2023: GBP146.4 million) with 95% of revenues recurring
-- Regulation attributable revenues increased to 61% of the
Group's total revenues (H1 2023: 54%), due to legislation drivers,
delivering growth of 15% in Regulation revenues
-- Regeneration attributable revenues increase to 26% of the
Group's total revenues (H1 2023: 25%) with growth of 8%
-- Renewables down to GBP3.87 million in the period from GBP6.29
million but is expected to reverse in H2
-- Electrical services leads the Group's service performance,
accounting for 47% of total revenues and delivering 20% growth
-- Numerous successful placements on major frameworks and
subsequent direct awards provide a strong pipeline of
opportunities
-- Further strategic investment in the Business Development and
Renewables teams to accelerate organic growth momentum
-- Satellite office established in Dereham, Norfolk following
the strong interest in our services in the East of England, which
further consolidates our geographic position
-- Our year two Carbon Net Zero Strategic Report has been
released with our maiden ESG Impact Report to be published in
December 2023
Discontinued operations, DCB (Kent) Limited ("DCB"):
-- Work has progressed substantially on seven of the nine
projects; five are on track to be completed in December 2023 with
the other two are expected to be completed by the end of the FY24
financial year
-- On one of the remaining two projects the construction partner
entered into administration in October 2023, leading to a
terminable event for the contract.
-- Constructive negotiations continue with the final project
which is now currently scheduled to complete in early 2026
-- As previously announced, project amendments and additional
remedial costs have together resulted in an additional pre-tax
provision of GBP0.46 million as at the half year. However, these
estimates may change as we move towards completion of the projects
and we will update the market with any further material changes if
or when they may occur
Outlook:
-- The second half has started well, with revenues expected to
pick up further in the second half of the year, albeit at more
normalised margins, as part of the Group's traditional heavier
second half weighting
-- Ongoing execution of strategic initiatives under the three
key pillars of Regulation, Regeneration and Renewables continues to
strengthen our position and create opportunities for all service
divisions
-- At least seven of nine DCB projects expected to be completed
during the current financial year
-- The Group is trading in line with the Board's expectations
for the full year and is well positioned to continue its growth
trajectory
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2023 2022 2023
GBP 000 GBP 000 GBP 000
------------------------------------------- -------------- -------------- -----------
Continuing operations
Income statement
Revenue 30,337 29,761 62,670
Gross profit 8,399 7,711 16,472
Gross margin 27.7% 25.9% 26.3%
EBITDA(1) (excluding effect of lease
payments) 3,199 2,630 6,013
Adjusted EBITDA(2) (including effect
of lease payments) 2,911 2,396 5,474
Operating profit 2,745 1,873 4,809
Underlying operating profit(3) 2,800 2,311 5,297
Underlying profit before taxation(4) 2,633 2,099 4,896
Profit after taxation 1,918 1,344 3,713
Basic earnings per share(5) 3.08 2.16 5.97
Adjusted earnings per share(6) 3.17 2.87 6.76
Cash flow
Net cash generated from operating
activities 2,959 2,466 5,488
Adjusted net cash generated from
operating activities(7) 2,686 3,119 5,865
Adjusted operating cash conversion(8)
(%) 92% 130% 107%
Financial position
Cash and cash equivalents 1,157 1,721 1,322
Term and other loans (114) (1,777) (177)
Net cash/(debt)(9) 1,043 (56) 1,145
Net assets/(liabilities) 1,055 (2,294) (652)
Discontinued operations (see note
11)
Loss on disposal (343) (3,486) (4,261)
Net cash absorbed by operating activities (2,601) (1,652) (2,750)
1. Earnings before interest, taxation, depreciation and
amortisation ("EBITDA") and excluding non-underlying items, as set
out in the financial review.
2. To align with internal reporting, Adjusted EBITDA is stated
after the effect of a charge for lease payments, as set out in the
financial review.
3. Underlying operating profit is stated before charging
non-underlying items as set out in note 4.
4. Underlying profit before taxation is stated after finance
costs and before charging non-underlying items as set out in the
financial review.
5. Basic earnings per share is the profit after tax divided by
the weighted average number of ordinary shares.
6. Adjusted earnings per share is the profit before deducting
non-underlying items after tax divided by the weighted average
number of ordinary shares.
7. Net cash generated from operating activities before tax and
after lease payments in the period ended 30 September 2023. It is
also adjusted to reflect the payment of deferred HMRC payments to
normal terms. Further analysis is set out in the financial
review.
8. Adjusted net cash generated from operating activities divided
by Adjusted EBITDA, as set out in the financial review.
9. Net cash/(debt) includes term and other loans, and cash net
of overdraft, and excludes lease obligations.
David Bullen, Chief Executive Officer of Kinovo, commented:
"I am pleased to report another strong period of growth for
Kinovo, with revenue and profits both increasing during the half
year. The business continues to benefit from our strategic
repositioning, concentrating our service offering, as well as
external legislative drivers, while our framework placings
represent a significant growth opportunity and will enable further
diversification of our services.
The second half has started well and we are trading in line with
the Board's expectations for the full year, and remain confident
that we have the right strategy to drive growth and realise
Kinovo's significant potential. I am satisfied with the progress
made on the DCB projects, with seven of the nine due to be
completed this financial year. We continue to prioritise investing
in our people, we have motivated teams and we are confident in our
long-term success."
Enquiries
Kinovo plc
Sangita Shah, Chair +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
Chair's statement
Overview
I am pleased to report a strong first half of the financial year
for Kinovo's continuing business, with revenue and profits
continuing to rise. The business continues to benefit from our
strategic repositioning, as well as key external legislative
drivers providing a significant boost to our three-year visible
revenues. The Regulation and Regeneration pillars grow from
strength to strength, while the Renewables pillar was temporarily
affected by administrative bottlenecks at a number of clients,
causing delays to planned works. These works are expected to
commence during H2.
As a result of a more favourable mix of works, actions taken
internally to boost operational efficiency and lower non-underlying
costs, EBITDA grew by 21% during the half year to GBP2.91 million,
with operating profit increasing by 46% to GBP2.75 million. We have
a healthy balance sheet at period-end and are pleased to be in a
net cash position compared to net debt of GBP0.06 million in the
prior year.
Discontinued Operations
The executive management team have shown a dogged determination
and commitment to resolve the situation regarding DCB Kent ("DCB"),
our former construction division. The team has made significant
progress to the portfolio of projects we are legally obliged to
complete, with five of the nine projects due to be completed during
December 2023, and a further two by the end of this financial year.
The executive team are working diligently to manage the risks
related to these projects and as at the half year, provisioned an
incremental GBP0.46m, as previously announced. As we draw to
practical completion on these projects, the market will, of course,
be updated with any further material increases should they
arise.
Fully resolving the projects relating to DCB's discontinued
operations remains the key priority for the Board which will leave
the Group to focus entirely on growth.
Outlook
In spite of the challenging macroeconomic outlook, I remain
optimistic in terms of Kinovo's prospects and potential for growth.
We have a strong underlying business, with considerable demand
supplemented by internal actions and legislation.
As ever, our people are our key assets and I am pleased to
report that David Bullen has maintained his momentum and commitment
to continue to invest in our people.
The second half has started well and the Group continues to
trade in line with the Board's expectations in terms of the
continuing business and the Board is confident in increasing
shareholder value and delivering the long-term strategy of the
business.
Sangita Shah
Non-Executive Chair
28 November 2023
Chief Executive Officer's review
Overview & Financial performance
The first half marked another important period for Kinovo as we
accelerated organic growth and continued to develop our three key
operational pillars of Regulation, Regeneration and Renewables.
Revenue increased 2% to GBP30.34 million (H1 2023: GBP29.76
million), despite some planned works being delayed and only
commencing in the latter part of H1 due to clients' administrative
bottlenecks, which will play into the traditional heavier second
half weighting.
There was a marked increase in profitability due to a more
favourable mix of higher margin works, as well as continuing
operational efficiencies and lower non-underlying costs. Gross
profits grew 9% to GBP8.40 million (H1 2023: GBP7.71 million) and
gross margins increased to 27.7% (H1 2023: 25.9%). This led to
EBITDA growth of 21% to GBP2.91 million (H1 2023: GBP2.40 million),
while operating profit grew by 46% to GBP2.75 million (H1 2023:
GBP1.87 million). The Group ended the Period with a cash balance of
GBP1.16 million and a net cash position of GBP1.04 million (H1
2023: gross cash of GBP1.72 million and net debt of GBP0.06
million).
Operational Review & Growth Drivers
Our H1 performance benefitted from strategic internal actions
and investments as well as the continued effects of legislative
drivers, namely the Building Safety Act, Fire Safety Act and
changes to the Electrical Wiring Legislation. Our strategic
repositioning, which focuses our range of works around the three
pillars mentioned above, has been a catalyst for accelerating
organic growth. We also continue to invest in our people, and
during the Period have supplemented our Renewables pillar and
expanded the Business Development team.
Within the three pillars, revenue attributable to Regulation
increased to 61% (H1 2023: 54%), growing 15% to GBP18.60 million,
and Regeneration attributable revenues increased to 26% (H1 2023:
25%), growing 8% to GBP7.86 million, both benefitting from the
legislative drivers referenced above. The Renewables pillar
decreased its attributable revenues to GBP3.87 million to 13% in H1
2024 (H1 2023: 21%), due to clients' administrative bottlenecks and
a deliberate run down on the private works stream. Positively, the
Company achieved an uplift in direct awards for the Renewables
pillar of approximately GBP7.5 million granted during the Period
and post-Period end which will start to be realised in H2. The
Renewables pillar represents a significant growth opportunity for
the Group, with Kinovo adding key hires including a Lead Assessor,
Technical Coordinator and Resident Liaison Officer to increase our
capabilities and strengthen the offering to capitalise on this
opportunity.
In revenue terms, Mechanical works generated GBP6.14 million,
representing 20% of total revenue, Electrical works contributed
GBP14.23 million, 47% of total revenue, driven by the legislative
drivers mentioned above and Building Services works were GBP9.96
million, representing 33% of total revenue. The inflow of
workstreams commencing in the latter part of H1 as well as the
mobilisation of new workstreams during the period is expected to
reflect positively across the three pillars as well as the three
service divisions in the full year.
Another considerable growth driver for the Group is our
framework placings, which we are confident will enable us to
further enhance our top line growth, diversify our client base and
broaden our mix of works. During the Period, we announced the award
of additional significant framework wins under the following:
-- Eastern Procurement Limited's Asset Improvement and
Sustainability Framework with a maximum aggregate estimated value
across the relevant contractors of GBP156 million over 4 years;
-- a place on The Greener Futures Partnership's ("GFP")
Decarbonisation Framework with a maximum aggregate value across the
relevant contractors of GBP252 million over 7 years;
-- 3 lots of The Hyde Group's Alternative Heating Servicing and
Maintenance Services and Metering and Billing Services Framework
with a maximum aggregate estimated value across the relevant
contractors of GBP132 million over 4 years; and
-- a place on the National Housing Maintenance Forum Heating
Services Framework for domestic heating appliances and servicing,
maintenance, and installations worth a maximum aggregate value
across the relevant contractors of GBP300 million over 4 years
During the Period and post-period end, the Group has won tenders
as well as demonstrating the value of being placed on frameworks
with direct award wins with a total contract value of GBP56 million
over a maximum of eight years. These wins have broadened our client
range as well as introduce new workstreams, including a number of
direct award wins secured in the East of England. Both of these
achievements are in line with the objectives to deliver our growth
strategy, with wins ranging from a direct award for GBP4.8 million
through The GFP Decarbonisation Framework to retrofit approximately
200 properties over the next 18 months, through to an introductory
direct award from Great Yarmouth Borough Council for GBP0.3 million
for a damp and mould and retrofit works project over 4 months.
This momentum demonstrates the resilience and robustness of
visible earnings outlook with three-year visible revenues
increasing from GBP146.4 million to GBP157.0 million, with 95%
recurring. GBP66 million of the visible revenue is expected to be
recognised in FY24.
The Group is making positive progress, and to accelerate our
organic growth, we have invested further in our Business
Development Team with a new Bid Manager and Estimator.
In line with our objective to consolidate our geographic
position, the strong interest in our services in the East of
England has resulted in a number of direct awards through
frameworks, facilitating the establishment of a satellite office in
Dereham, Norfolk, to enable us to service the area more effectively
and efficiently. Our newly recruited Renewables team will be based
in Dereham, whilst offering support to the rest of the Group.
ESG & Social Value
Sustainability and driving social value are integral to our
corporate identity and embedded in our culture, underpinning each
of our three pillars. We continue to invest in our sustainability
offering as a business and, during the Period, we have been
developing our maiden ESG Impact Report, which will be released
next month. We also published our year-two Net Zero Report earlier
this month, which provides our pathway to reach an 81% reduction in
Scope 1, 2 and 3 emissions and our commitment to become Net Zero by
2040. We have offset all Scope 1 and 2 emissions since 2022 in
pursuit of being carbon neutral within our own operational
boundary, and we commit to maintaining this by offsetting all
future emissions.
Developing our people, offering career progression and
apprenticeship opportunities is extremely important to us, with
apprentices representing 14% of our total employees. Training
apprentices is a fundamental part of our professional development
programme, enabling us to upskill young and local people while also
mitigating the potential impacts of supply issues within our
subcontractor base as we grow.
We have continued to develop our people, providing 1,781 hours
of in-house training, including Carbon Literacy training to our
Management Team. We have introduced an Employee Assistance
Programme offering specialist help, support, and advice to all our
staff around their wellbeing and general health. We also introduced
a "volunteer day" programme across the Group, where employees are
encouraged to participate in community initiatives, providing a
dual benefit of contributing to personal development, whilst
cultivating a culture of giving back.
Our social value proposition has also been developed in
collaboration with clients and we focus our initiatives on the
needs within local areas. We encourage those who face barriers to
employment to join us and have visited local prisons to offer
advice on getting back to work and sharing opportunities available
within the Group. We have also signed up to the Armed Forces
Covenant Pledge to acknowledge and understand the needs of the
Armed Forces community.
Discontinued Operations
We continue to progress the legacy projects relating to our
former construction division, DCB. We expect seven of the nine
total projects to be completed during the current financial year,
five of which we remain confident of being completed in December.
The expected costs to complete these seven projects have increased
by GBP0.20 million and will be updated with the final account
reconciliations as the projects draw to a close.
Of the two remaining projects, one had been delayed due to
ongoing negotiations with the construction partner, a UK
housebuilder. The construction partner has fallen into
administration just after the period end which has led to a
terminable event for the contract between DCB's administrators and
the construction partner and a resulting cessation of discussions
with Kinovo. The Group is awaiting the next steps from the
administrators to clarify and confirm the Group's position. In
these interim results, and as previously announced, additional
associated costs on this project, including legal fees, amounting
to GBP0.26 million has been provided. Additional costs of GBP0.2
million on the seven projects and the project in administration
together comprise the GBP0.46 million increase in the total costs
to complete which has been provided at 30 September 2023. The total
net pre-tax cost to complete the DCB projects is now estimated to
be GBP5.72 million.
We remain in an active dialogue with the client regarding the
final project, which is now currently scheduled to complete in
early 2026 and we will update the market in due course on all
material matters relating to the DCB projects if or when they may
occur.
Outlook
We are optimistic regarding Kinovo's growth potential, believing
that there are significant opportunities for top and bottom-line
growth resulting from the ongoing effects of our strategic
repositioning and the external legislative drivers which will
continue to increase demand for our works. The framework placings
will also continue to broaden out our client base as we diversify
our range of works.
We continue to prioritise internal initiatives that will further
drive this growth, namely investments in our employees, teams and
capabilities. Our people are our greatest asset, and we will
continue to invest in their professional development as a matter of
priority.
I am satisfied with how the DCB projects are progressing and
look forward to putting the majority behind us this calendar year.
The team has worked tirelessly in dealing with this difficult
situation for Kinovo, and I wish to thank them for their roles in
allowing us to begin to put the issue behind us.
The second half has started well and the Group is trading in
line with the Board's expectations for the full year and is well
positioned to continue its exciting growth trajectory. We have an
excellent business with talented and motivated teams, and a market
proposition that will enable us to continue strengthening our
position in our existing geographies.
David Bullen
Chief Executive Officer
28 November 2023
Financial review
Trading review
In the six-month period to 30 September 2023, Kinovo has
continued to deliver a strong trading result and cash generation
from its continuing operations.
Adjusted EBITDA (after the effect of a charge for lease
payments) increased by 21% to GBP2.91 million (H1 2023: GBP2.40
million) with operating profit from continuing operations
delivering GBP2.75 million (H1 2023: GBP1.87 million), an increase
of 47%.
Profit before taxation for continuing operations was GBP2.58
million (H1 2023: GBP1.66 million), an increase of 55% and basic
earnings per share were up 43% to 3.08p (H1 2023: 2.16p).
A number of expected planned works were delayed in the first
half due to our clients' administrative bottlenecks with revenues
increasing 2% to GBP30.34 million (2023: GBP29.76 million) whilst
increased margins delivered an increase in gross profit of 9% to
GBP8.40 million (2023: GBP7.71 million). As the planned works
progress and our new contract wins are fully mobilised, revenues
are expected to pick up in the second half of the year, albeit at
more normalised margins, strengthening the traditional second half
weighting.
Underlying Administrative expenses of GBP5.6 million in the
Period have increased GBP0.2 million (4%) compared to GBP5.40
million in the prior Period.
Kinovo continues to progress the fulfilment of its commitments
on the DCB construction projects as set out in the Chief Executive
Officer review and below. Discontinued operations include a full
provision for the estimated costs to complete the projects which,
before tax, has increased by GBP0.46 million in the period.
As a result of the discontinued operations provision, the Group
has reported a total profit for the period of GBP1.56 million (H1
2023: loss GBP2.14 million).
The Adjusted EBITDA on continuing operations of GBP2.91 million
(H1 2023: GBP2.40 million) in the period is considered by the Board
to be a key Alternative Performance Measure ("APM") as it is the
basis upon which the underlying management information is prepared
and the performance of the business assessed by the Board.
Adjusted EBITDA is calculated as earnings before interest,
taxation, depreciation and amortisation, excluding non-underlying
items and is stated after the effect of a charge for lease
payments.
A reconciliation of EBITDA (excluding lease payments) and
Adjusted EBITDA (including a charge for lease payments) for
continuing operations is set out below:
Unaudited Unaudited Audited
6 months ended 6 months ended year
30 September 2023 30 September 2022 ended
31 March
2023
Continuing operations GBP'000 GBP'000 GBP'000
Profit before tax 2,578 1,661 4,408
Add back: non-underlying items 55 438 488
Underlying profit before tax 2,633 2,099 4,896
Adjustments for items not included
in EBITDA:
Finance costs 167 212 401
Depreciation of property, plant and
equipment 69 64 131
Depreciation of right-of-use assets 274 222 513
Amortisation of software costs 56 33 72
EBITDA (excluding a charge for lease
payments) 3,199 2,630 6,013
Adjustment for lease payments (288) (234) (539)
------- ------------------ ---------
Adjusted EBITDA 2,911 2,396 5,474
------- ------------------ ---------
Non-underlying items
Non-underlying items are considered by the Board to be either
exceptional in size, one-off in nature or non-trading related items
and are represented by the following, and as set out in note 4.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP'000 GBP'000 GBP'000
Continuing activities
Amortisation of customer relationships - 383 385
Share based payment charge 55 55 103
Total 55 438 488
------------- ------------- ---------
Customer relationship intangible fixed asset was fully amortised
at 30 September 2022.
Cash flow performance
Adjusted net cash generated from continuing operating activities
in the period was GBP2.68 million (H1 2023: GBP3.12 million)
delivering an Adjusted operating cash conversion of 92% (H1 2023:
130%).
Adjusted operating cash conversion is calculated as cash
generated from continuing operations (after lease payments) of
GBP2.69 million (H1 2023: GBP2.23 million), adjusted for the
effects of deferred HMRC repayments of GBPnil (H1 2023: GBP0.89
million), in the period; divided by Adjusted EBITDA of GBP2.91
million (H1 2023: GBP2.40 million), as set out below;
Continuing operations Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
per condensed consolidated statement
of cash flows 358 814 2,738
Adjustment for cash absorbed by discontinued
operations 2,601 1,652 2,750
------------- ------------- ---------
Net cash generated from continuing
operating activities 2,959 2,466 5,488
Less operating lease payments (273) (234) (510)
Net cash generated from continuing
activities (after lease payments) 2,686 2,232 4,978
Adjustment for deferred HMRC payments - 887 887
------------- ------------- ---------
Adjusted net cash generated from
continuing operating activities 2,686 3,119 5,865
------------- ------------- ---------
Adjusted EBITDA (as above) 2,911 2,396 5,474
------------- ------------- ---------
Adjusted operating cash conversion 92% 130% 107%
------------- ------------- ---------
In the year ended 31 March 2023, the Group received accelerated
receipts of GBP0.40 million relating to future periods which
improved cash conversion in FY23. If the receipts were allocated to
the correct periods cash conversion in FY23 and for the 6-month
period to 30 September 2023 would be 100% and 106%
respectively.
By arrangement with HMRC, VAT liabilities of GBP887,000 were
deferred at 31 March 2022 and were fully repaid by 1 September
2022.
Discontinued operations
Following its rebranding and strategic review, Kinovo determined
that DCB Kent Limited (DCB), the Company's construction business
was non-core and initiated a process to dispose of the business
which was completed in January 2022.
The terms of the disposal included certain working capital
commitments. The business entered administration in May 2022 and
Kinovo retained commitments under parent company guarantees, signed
prior to the disposal of DCB, to complete its' construction
projects.
The total net cost of the commitment to complete the DCB
construction projects was estimated to be GBP5.3 million at 31
March 2023, which was provided in full at that date.
In the 6-month period to 30 September 2023 the Group has
continued to fulfil its commitments on seven of the nine projects
which are expected to be completed during the current financial
year. Two projects were in ongoing discussions at the time of the
publication of the Group Report and Accounts in July 2023. The
client on one of these projects subsequently entered into
administration in October 2023 which led to a terminable event.
Discussions continue on the further final project to conclude a
mutually acceptable solution for all parties. As a consequence of
the administration of the client on one of the projects and
additional costs to complete forecast on other projects, an
additional provision of GBP457,000 (post tax GBP343,000) has been
booked at 30 September 2023. Total pre-tax net costs to complete
are now expected to be GBP5.72 million.
The outstanding provision for the completion costs of the
projects amounts to GBP1.33 million at 30 September 2023. The
provision for the net costs to complete the DCB projects have been
presented as discontinued operations.
Cash outflow in the 6-month period to 30 September 2023 relating
to the discontinued operations amounted to GBP2.60 million (H1 FY
23: GBP1.65 million including GBP1.23 million in respect of working
capital contributions made to DCB prior to it entering
administration and accrued at 31 March 2022). In the year ended 31
March 2023 cash outflow relating to the discontinued operations
amounted to GBP2.75 million including the working capital
contributions referenced above.
Net debt
There has been a continuing focus on cash management in the
period. In the six-month period to 30 September 2023, the Group
held a net cash balance of GBP1.04 million compared to net debt of
GBP56,000 at 30 September 2022. The net cash position is comparable
to the year end and is after the absorption of GBP2.60 million cash
relating to the fulfilment of legacy DCB project commitments.
Set out below is an analysis of net debt:
Unaudited Unaudited Audited
at 30 September at 30 at 31
2023 September March
2022 2023
GBP'000 GBP'000 GBP'000
Net debt/(cash) (1,157) (1,721) (1,322)
HSBC term loan - 1,534 -
HSBC mortgage 114 171 143
Other term loan - 72 34
---------------- ---------- -------
Net debt/(cash) (1,043) 56 (1,145)
---------------- ---------- -------
During the period the Group repaid GBP63,000 (H1 FY23: GBP1.07
million) of borrowings being, GBP29,000 (H1 FY23: GBP28,000) on the
HSBC mortgage and GBP34,000 (H1 FY23: GBP37,000) on the legacy
Funding Circle Term loan, which was fully repaid in September 2023.
GBP1.00 million was repaid on the HSBC Term loan in the six-month
period to 30 September 2022. The Term loan was fully repaid at 31
March 2023.
The Group also has an on-demand overdraft facility of GBP2.50
million which was undrawn at 30 September 2023. The facility was
renewed in September 2023 and interest is charged at 3% above Bank
of England Base rate. At the same time the Group also renewed a
purchasing card facility of GBP6.0 million with HSBC which is
reported within trade creditors. Both facilities expire at 31 May
2024 to enable the further ordinary course renewal of these
facilities to be completed prior to approval of the financial
statements for the year ending 31 March 2024.
Due to increases in the Bank of England Base Rate, HSBC have
amended their standard terms on their purchasing card product,
reducing credit terms by 30 days. In alignment with the renewal of
our facilities a payment will be made to reflect the new terms in
May 2024. The payment will be dependent on the phasing of spend on
the purchasing card but this is expected to be approximately GBP1.4
million and the facility (currently GBP6.0 million) will reduce by
a commensurate amount at the same time.
Dividends
No final dividend was paid for the year ended 31 March 2023 and
no interim dividend is currently recommended for the year ending 31
March 2024. It remains the Board's priority to fulfil the
completion of the DCB projects and strengthen the balance sheet and
to resume the payment of a dividend as soon as financial conditions
allow.
Clive Lovett
Group Finance Director
28 November 2023
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six-month period ended 30 September 2023 (unaudited)
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 March
30 September 30 September 2023
2023 2022
GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 30,337 29,761 62,670
Cost of sales (21,938) (22,050) (46,198)
Gross Profit 8,399 7,711 16,472
Underlying administrative expenses (5,599) (5,400) (11,175)
------------- ------------- -----------
Operating profit before non-underlying
items 2,800 2,311 5,297
Non-underlying administrative expenses
Amortisation of customer relationships - (383) (385)
Share based payment charge (55) (55) (103)
Total non-underlying administrative
expenses (note 4) (55) (438) (488)
Operating profit 2,745 1,873 4,809
Finance cost (167) (212) (401)
Profit before tax 2,578 1,661 4,408
Income tax expense (note 10) (660) (317) (695)
------------- ------------- -----------
Total profit from continuing operations
for the period 1,918 1,344 3,713
Discontinued operations
Loss for the period (note 11) (343) (3,486) (4,261)
Total comprehensive income/(loss)
for the period attributable to the
equity holders of the parent company 1,575 (2,142) (548)
============= ============= ===========
Earnings per share from continuing
operations (note 6)
Basic (pence) 3.08 2.16 5.97
Diluted (pence) 3.05 2.16 5.92
Earnings/(loss) per share (note 6)
Basic (pence) 2.53 (3.45) (0.88)
Diluted (pence) 2.50 (3.43) (0.88)
There are no items of other comprehensive income for the
period.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 September 2023 (unaudited)
Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Intangible fixed assets 4,478 4,393 4,511
Property plant and equipment 1,066 1,069 1,062
Right-of-use-assets 875 696 929
------------- ------------- ---------
Total non-current assets 6,419 6,158 6,502
------------- ------------- ---------
Current assets
Inventories 2,823 3,528 2,438
Deferred tax asset 64 783 610
Trade and other receivables 11,807 11,988 11,087
Cash and cash equivalents 1,157 1,721 1,322
------------- ------------- ---------
Total current assets 15,851 18,020 15,457
------------- ------------- ---------
Total assets 22,270 24,178 21,959
============= ============= =========
Equity and liabilities attributable
to equity holders of the parent company
Issued share capital and reserves
Share capital (note 8) 6,278 6,213 6,213
Own shares (850) (850) (850)
Share premium 9,289 9,245 9,245
Share based payment reserve 136 65 113
Merger reserve (248) (248) (248)
Retained earnings (13,550) (16,719) (15,125)
Total equity 1,055 (2,294) (652)
------------- ------------- ---------
Non-current liabilities
Borrowings (note 7) 57 114 86
Lease liabilities 457 384 491
514 498 577
------------- ------------- ---------
Current liabilities
Borrowings (note 7) 57 1,663 91
Lease liabilities 433 324 452
Trade and other payables 18,877 19,987 18,013
Provisions (note 11) 1,334 4,000 3,478
20,701 25,974 22,034
------------- ------------- ---------
Total equity and liabilities 22,270 24,178 21,959
============= ============= =========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six-month period ended 30 September 2023 (unaudited)
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 March
30 September 30 September 2023
2023 2022
GBP'000 GBP'000 GBP'000
Net cash generated from operating
activities (note 5) 358 814 2,738
------------- ------------- -----------
Cash flow from investing activities
Purchase of property, plant and equipment (75) (27) (90)
Purchase of intangible assets (22) (8) (188)
Net cash used in investing activities (97) (35) (278)
------------- ------------- -----------
Cash flow from financing activities
Issue of new share capital for SIP 77 - -
Repurchase of own shares for SIP - (64) (64)
Repayment of borrowings (63) (1,065) (2,666)
Interest paid (167) (212) (401)
Principal payments of leases (273) (221) (511)
Net cash used in financing activities (426) (1,562) (3,642)
------------- ------------- -----------
Net decrease in cash and cash equivalents (165) (783) (1,182)
Cash and cash equivalents at beginning
of period/year 1,322 2,504 2,504
Cash and cash equivalents at end
of period/year 1,157 1,721 1,322
============= ============= ===========
The condensed consolidated statement
of cash flows includes all activities
of the Group. Cash flows from discontinued
operations are set out in note 11.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six-month period ended 30 September 2023 (unaudited)
Issued Share Own shares Share based Merger Retained Total
share premium payment reserve earnings equity
capital reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April
2023 6,213 9,245 (850) 113 (248) (15,125) (652)
Profit and total comprehensive
income for the period - - - - - 1,575 1,575
Issue of share capital
for SIP 65 44 - (32) - - 77
Share based payment
charge - - - 55 - - 55
Balance at 30 September
2023 6,278 9,289 (850) 136 (248) (13,550) 1,055
======== ======== ========== =========== ======== ========= =======
For the six-month period ended 30 September 2022 (unaudited)
Balance at 1 April
2022 6,213 9,245 (850) 74 (248) (14,577) (143)
Loss and total comprehensive
loss for the period - - - - - (2,142) (2,142)
Share based payment
charge - - - 55 - - 55
Purchase of own shares
for SIP - - - (64) - - (64)
Balance at 30 September
2022 6,213 9,245 (850) 65 (248) (16,719) (2,294)
For the year ended 31 March 2023
Balance at 1 April
2022 6,213 9,245 (850) 74 (248) (14,577) (143)
Loss and total comprehensive
loss for the year - - - - - (548) (548)
Share based payment
charge - - - 103 - - 103
Purchase of own shares
for SIP - - - (64) - - (64)
Balance at 31 March
2023 6,213 9,245 (850) 113 (248) (15,125) (652)
======== ======== ========== =========== ======== ========= =======
NOTES TO THE INTERIM STATEMENT
1. Basis of preparation
Kinovo Plc and its subsidiaries (together "the Group") operate
in the mechanical, electrical and general building services
industries. The Group is a public company operating on the AIM
market of the London Stock Exchange (AIM) and is incorporated and
domiciled in England and Wales (registered number 09095860). The
address of its registered office is 201 Temple Chambers, 3-7 Temple
Avenue, London EC4Y 0DT. The Company was incorporated on 20 June
2014.
These interim financial statements of the Group have been
prepared on a going concern basis under the historical cost
convention, and in accordance with UK adopted Accounting Standards,
the International Financial Reporting Interpretations Committee
("IFRIC") interpretations issued by the International Accounting
Standards Boards ("IASB") that are effective or issued and early
adopted as at the time of preparing these financial statements and
in accordance with the provisions of the Companies Act 2006. The
Group has adopted all of the new and revised standards and
interpretations issued by the IASB and the International Financial
Reporting Interpretations Committee ("IFRIC") of the IASB, as they
have been adopted by the United Kingdom, that are relevant to its
operations and effective for accounting periods beginning on 1
April 2022.
The interim financial information does not include all the
information and disclosures required in the annual financial
statements and should be read in conjunction with the Group's
annual financial statements, being the statutory financial
statements for Kinovo Plc as at 31 March 2023, which have been
prepared in accordance with IFRIC of the IASB as adopted by the
United Kingdom.
The interim financial information for the six months ended 30
September 2023 do not comprise statutory accounts within the
meaning of Section 434 of the Companies Act 2006. The interim
financial information has not been audited.
Significant accounting policies
The accounting policies adopted in the preparation of the
interim financial information is consistent with those expected to
be adopted in the preparation of the Group's annual financial
statements for the year ending 31 March 2024.
Going concern
The Directors have adopted the going concern basis in preparing
these interim financial statements.
The continuing business traded strongly in the first six months
of the financial year with adjusted EBITDA 21% ahead of the prior
period. The Group has secured a number of new direct awards in the
period, has a robust pipeline of opportunities and is well placed
on several framework agreements to secure additional contracts in
future periods.
At 30 September 2023 the Group had a cash balance of GBP1.16
million and a net cash position of GBP1.04 million, with only
GBP0.12 million of borrowings remaining, relating to a historic
mortgage loan.
In September 2023, the GBP2.5 million overdraft facility, which
is undrawn at 30 September 2023, and the GBP6.0 million purchasing
card facility, which is reported within trade creditors, were
renewed to 31 May 2024. This will enable the further ordinary
course renewal of these facilities to be completed prior to
approval of the financial statements for the year ending 31 March
2024.
During FY22 Kinovo disposed of its non-core construction based
subsidiary DCB (Kent) Limited ("DCB"). On 16 May 2022, DCB filed
for administration and as at the date of the interim financial
statements Kinovo has limited expectation of recovery of amounts
owed under the terms of the disposal of DCB. Kinovo had residual
commitments under various Parent Company Guarantees ("PCG's") for
the DCB construction projects and under the terms of the PCG's,
Kinovo is responsible for the completion of the projects.
There are nine projects in total. Seven projects are expected to
be completed by the end of the financial year, with five of these
expected to be complete in December 2023. The client on one of the
two remaining contracts went into administration in October 2023
which has led to a terminable event. Positive negotiations continue
on the final project.
Three of the nine DCB contracts originally had performance
bonds, which were indemnified by Kinovo plc, totalling GBP2.10
million. Only one bond, amounting to GBP860,000, remains
outstanding to resolve. Discussions continue on the final project
associated with the performance bond with an expectation that a
positive outcome for both parties will be agreed. Kinovo has
engaged with the insurer, underwriter and client and although the
outstanding bond could have been called at any time since DCB
entered into administration, it is recognised by all parties that
positive negotiations are ongoing to identify a satisfactory
solution.
For the year ended 31 March 2023 the Group recognised a pre-tax
loss of GBP5.26 million relating to the expected net cost to
complete the nine projects, with GBP0.96 million of anticipated
recoveries to be recognised, in future periods, when they have been
realised. Additional project liabilities, which have been
recognised in the interim financial statements, have increased the
expected pre-tax net costs to complete the projects by GBP0.46
million to GBP5.72 million.
During the period the Group funded GBP2.60 million net costs on
the projects and at 30 September 2023 the outstanding costs to
complete provision was GBP1.33 million.
In assessing the Group's ability to continue as a going concern,
the Board reviews and approves the 12-month budget and longer-term
strategic plan, including forecasts of cash flows. In building
these budgets and forecasts, the Board has considered the expected
remaining net costs to complete the DCB construction projects and
the market challenges of supply chain inflation and material and
labour availability on the trading of the Group.
The Directors expect that a combination of the cash generated by
the continuing business together with the available cash and bank
facilities will enable Kinovo to fund the remaining costs to
complete the construction projects and continue to drive the growth
of the core operations.
After taking into account the above factors and possible
sensitivities in trading performance, the Board has reasonable
expectation that Kinovo plc and the Group as a whole have adequate
resources to continue in operational existence for the foreseeable
future.
For these reasons, the Board continues to adopt the going
concern basis in preparing the consolidated financial statements.
Accordingly, these accounts do not include any adjustments to the
carrying amount or classification of assets and liabilities that
would result if the Group were unable to continue as a going
concern.
Publication of non-statutory financial statements
The results for the six months ended 30 September 2023 and 30
September 2022 are unaudited and have not been reviewed by the
auditor. Statutory accounts for the year ended 31 March 2023 were
filed with the Registrar of Companies in August 2023.
The interim financial information has been prepared on the basis
of the same accounting policies as published in the audited
financial statements for the year ended 31 March 2023. The annual
financial statements of the Group are prepared in accordance with
International Financial Reporting Standards and International
Financial Reporting Interpretations Committee ("IFRIC")
pronouncements as adopted by the United Kingdom. Comparative
figures for the year ended 31 March 2023 have been extracted from
the statutory financial statements for that period.
2. Corporate governance, principal risks and uncertainties
The Corporate Governance Report included with our Annual Report
and Financial Statements for 2023 detailed how we embrace
governance. The Kinovo Board recognise the importance of sound
corporate governance commensurate with the size and nature of the
Company and the interests of its shareholders.
The Quoted Companies Alliance has published a corporate
governance code for small and mid-sized quoted companies, which
includes a standard of minimum best practice for AIM companies, and
recommendations for reporting corporate governance matters (the
"QCA Code"). Kinovo has adopted the QCA Code.
The nature of the principal risks and uncertainties faced by the
Group have not changed significantly from those set out within the
Kinovo Plc annual report and accounts for the year ended 31 March
2023.
3. Segmental analysis
The Board of Directors has determined an operating management
structure aligned around the three core activities of the Group,
being Mechanical services, Building services and Electrical
services. Operating profit before non-underlying items has been
identified as the key performance measure. The following is an
analysis of the performance by segment for continuing
operations:
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
Continuing operations GBP'000 GBP'000 GBP'000
Mechanical services 6,140 7,524 15,022
Building services 9,965 10,389 19,686
Electrical services 14,232 11,848 27,962
Total revenue 30,337 29,761 62,670
Reconciliation of operating profit before non-underlying items
to profit before taxation from continuing operations:
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
GBP'000 GBP'000 GBP'000
Continuing operations
Mechanical services 556 740 1,527
Building services 859 816 1,494
Electrical services 2,340 1,585 4,099
Unallocated central costs (955) (830) (1,823)
Operating profit before non-underlying
items 2,800 2,311 5,297
Amortisation of acquisition intangibles - (383) (385)
Share based payment charge (55) (55) (103)
Operating profit 2,745 1,873 4,809
Finance cost (167) (212) (401)
Profit before tax 2,578 1,661 4,408
Only the Group Consolidated Statement of Comprehensive Income is
regularly reviewed by the chief operating decision maker and
consequently no segment assets or liabilities are disclosed under
IFRS 8.
4. Non-underlying items
Operating profit includes the following items which are
considered by the Board to be exceptional in size, one off in
nature or non-trading related.
Note Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 March
30 September 30 September 2023
2023 2022
GBP'000 GBP'000 GBP'000
Amortisation of customer relationships (a) - 383 385
Share based payment charge (b) 55 55 103
55 438 488
------------- ------------- -----------
All non-underlying items have been charged to other operating
expenses.
(a) Amortisation of customer relationships
Amortisation of acquisition intangibles was nil for the period
(H1 2023: GBP0.38 million) and, in the prior periods related to
amortisation of the customer relationships identified by the
Directors on the acquisition of Purdy.
(b) Share based payment charge
A number of share option schemes are in place and new options
have been granted during the period relating to the Share Incentive
Plan amounting to 290,602 (H1 2023: 289,954) Ordinary shares and
CSOP nil (H1 2023: 50,000). The share based payment charge has been
separately identified as it is a non-cash expense.
5. Cash flows from operating activities
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 March
30 September 30 September 2023
2023 2022
GBP'000 GBP'000 GBP'000
Profit/(loss) before income tax 2,121 (2,643) (852)
Adjusted for:
Net finance cost 167 212 401
Depreciation 344 287 645
Amortisation of intangible assets 56 416 457
Share based payments 55 55 103
Movement in receivables (720) (1,364) (461)
Movement in payables and provisions (1,280) 4,925 2,428
Movement in inventories (385) (1,074) 17
Net cash from operating activities* 358 814 2,738
------------- ------------- -----------
* Includes all activities of the Group.
Cash flows from discontinued operations
are set out in note 11
6. Earnings/(loss) per share
The calculation of basic earnings per share is based on the
result attributable to shareholders divided by the weighted average
number of ordinary shares in issue during the year. Diluted
earnings per share is calculated under the same method adjusted for
the weighted average share options outstanding during the period as
well as ordinary shares in issue.
Basic earnings per share amounts are calculated by dividing net
profit for the year or period attributable to ordinary equity
holders of the parent by the weighted average number of ordinary
shares outstanding during the year.
Basic and diluted earnings per share is calculated as
follows:
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 March
30 September 30 September 2023
2023 2022
GBP'000 GBP'000 GBP'000
Profit/(loss) used in calculating basic
and diluted earnings
per share
Continuing operations 1,918 1,344 3,713
Total operations 1,575 (2,142) (548)
Weighted average number of shares for
the purpose of basic earnings per share 62,269,270 62,137,757 62,137,757
Weighted average number of shares for
the purpose of diluted earnings per
share 62,978,446 62,264,963 62,689,167
Continuing operations
Basic earnings per share (pence) 3.08 2.16 5.97
Diluted earnings per share (pence) 3.05 2.16 5.92
Total operations
Basic earnings/(loss) per share (pence) 2.53 (3.45) (0.88)
Diluted earnings/(loss) per share (pence) 2.50 (3.43) (0.88)
Details of loss per share for discontinued
operations are set out in note 11.
Adjusted earnings per share
Profit after tax is stated after deducting non-underlying items
totalling GBP0.06 million (H1 2023: GBP0.44 million).
Non-underlying items are either exceptional in size, one off in
nature or non-trading related. These are shown separately on the
face of the Consolidated Statement of Comprehensive Income.
The calculation of adjusted basic and adjusted diluted earnings
per share is based on the result attributable to shareholders,
adjusted for non-underlying items, divided by the weighted average
number of ordinary shares in issue during the year.
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 March
30 September 30 September 2023
2023 2022
GBP'000 GBP'000 GBP'000
Continuing operations
Profit after tax 1,918 1,344 3,713
Add back:
Amortisation of acquisition intangible
assets - 383 385
Share based payment charge 55 55 103
1,973 1,782 4,201
------------- ------------------ ---------------------
Weighted average number of shares
for the purpose of basic adjusted
earnings per share 62,269,270 62,137,757 62,137,757
Weighted average number of shares
for the purpose of diluted adjusted
earnings per share 62,978,446 62,264,963 62,689,167
Continuing operations
Basic adjusted earnings per share
(pence) 3.17 2.87 6.76
Diluted adjusted earnings per share
(pence) 3.13 2.86 6.70
7. Borrowings
Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
GBP'000 GBP'000 GBP'000
Non-current borrowings
Bank and other borrowings;
Term loans - - -
Mortgage loan 57 114 86
Other loans - - -
------------- ------------- ---------
Total non-current borrowings 57 114 86
------------- ------------- ---------
Current borrowings;
Bank and other borrowings;
Term loans - 1,534 -
Mortgage loans 57 57 57
Other loans - 72 34
Total current borrowings - 1,663 91
------------- ------------- ---------
Bank and other borrowings;
Term loans - 1,534 -
Mortgage loans 114 171 143
Other loans - 72 34
Total borrowings 114 1,777 177
------------- ------------- ---------
The fair value of the borrowings outstanding as at 30 September
2023 is not materially different to its carrying value since
interest rates applicable on the loans are close to market
rates.
8. Share capital
Ordinary shares of GBP0.10 each Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
GBP'000 GBP'000 GBP'000
At the beginning of the period 6,213 6,213 6,213
Issued in the period 65 - -
At the end of the period 6,278 6,213 6,213
------------- ------------- ---------
Number of shares Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
At the beginning of the period 62,137,757 62,137,757 62,137,757
Issued in the period 650,457 - -
At the end of the period 62,788,214 62,137,757 62,137,757
------------- ------------- ----------
In August 2023 the Company issued 650,457 of shares to allocate
to members of the SIP scheme. 23.5p was paid for 330,753 of these
shares, for a total consideration of GBP77,727. This was allocated
as GBP33,075 of share capital and GBP44,652 of share premium. The
remaining 319,704 were a share based payment for the members of the
scheme, and therefore 10p per share (a total amount of GBP31,970)
was transferred to share capital from the share based payment
reserve as consideration for these. No share capital was issued in
the prior periods.
9. Dividends
The Company did not pay a final dividend for the year ended 31
March 2023 (2022: nil pence). The Board do not recommend an interim
dividend for the year ending 31 March 2024.
10. Taxation
The income tax charge for the six months ended 30 September 2023
is calculated based upon the effective tax rates expected to apply
to the Group for the full year of 25% (2023: 19%). Differences
between the estimated effective rate and the statutory rate of 25%
are due to non-deductible expenses.
11. Discontinued operations
(a) Description
Following the disposal of the non-core DCB Kent Ltd (DCB) in
January 2022, the business subsequently entered administration in
May 2022, as detailed in the Kinovo plc 2023 annual report. Under
parent company guarantees, signed prior to the disposal of DCB,
Kinovo has a commitment to complete the DCB construction projects.
The Kinovo plc 2023 annual report set out the expected net costs to
complete the projects amounting to GBP5.26 million.
Kinovo had residual commitments under various parent company
guarantees for the DCB construction projects and working capital
support. Under the terms of the parent company guarantees, Kinovo
is responsible for the completion of the projects.
The activities of DCB are presented as discontinued
operations.
There are nine projects in total and six are now operating under
new contracts and another is being completed directly by the
client. All these projects are expected to be completed by the end
of the financial year, with five of these expected to be complete
in December 2023. The client on one of the two remaining contracts
went into administration in October 2023 which led to a terminable
event. Positive negotiations continue on the final project.
Three of the nine DCB contracts originally had performance
bonds, which were indemnified by Kinovo plc, totalling GBP2.10
million. Only one bond, amounting to GBP860,000, remains
outstanding to resolve. Discussions continue on the final project
associated with the performance bond with an expectation that a
positive outcome for both parties will be agreed. Kinovo has
engaged with the insurer, underwriter and client and although the
outstanding bond could have been called at any time since DCB
entered into administration, it is recognised by all parties that
positive negotiations are ongoing to identify a satisfactory
solution.
For the year ended 31 March 2023 the Group recognised a pre-tax
loss of GBP5.26 million relating to the expected net cost to
complete the nine projects, with GBP0.96 million of anticipated
recoveries to be recognised, in future periods, when they have been
realised. Additional project liabilities, which have been
recognised in the interim financial statements, have increased the
expected pre-tax net costs to complete the projects by GBP457,000
to GBP5.72 million.
During the period the Group funded GBP2.60 million net costs on
the projects and at 30 September 2023 the outstanding costs to
complete provision was GBP1.33 million.
(b) Financial performance and cash flow information from
discontinued operations
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 March
30 September 30 September 2023
2023 2022
GBP'000 GBP'000 GBP'000
Revenue 2,069 - 532
Cost of sales (2,526) (4,304) (5,792)
Loss before taxation (457) (4,304) (5,260)
Income tax credit 114 818 999
------------- ------------- -----------
Loss for the period/year (343) (3,486) (4,261)
------------- ------------- -----------
Operating profit excludes allocation
of Corporate costs in accordance with
IFRS 5, which states that only costs
clearly identifiable as directly relating
to the discontinued operations can
be included.
Loss per share from discontinued
operations
Basic (pence) (0.55) (5.61) (6.86)
Diluted (pence) (0.55) (5.61) (6.86)
Cash flows from discontinued operations
Net cash outflow from operating activities (2,601) (1,652) (2,750)
Net cash outflow from investing activities - - -
Net cash outflow from financing activities - - -
------------- ------------- -----------
Net reduction in cash generated by
the subsidiary (2,601) (1,652) (2,750)
------------- ------------- -----------
12. Forward-Looking statements
This report contains certain forward-looking statements with
respect to the financial condition of Kinovo Plc. These statements
involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in the future. There could
be a number of factors which influence the actual results and
developments. These could impact on the forward-looking statements
included in this report.
13. Interim Report
Copies of this Interim Report will be available to download from
the investor relations section on the Group's website
www.kinovoplc.com .
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