Trading Update

24 May 2024

Kinovo plc

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

Trading Update

Strong performance driven by growth strategy; Full Year Results anticipated to be ahead of prior expectations

Kinovo plc (AIM: KINO), the specialist property services Group that delivers compliance and sustainability solutions, is pleased to provide a trading update for the year ending 31 March 2024, further to the trading update on 2 May 2024.

Continuing Operations

Kinovo continues to benefit from its strategic repositioning and the implementation of its resulting growth strategy, with a key focus on capitalising on regulatory drivers within compliance and decarbonisation under its three key pillars of Regulation, Regeneration and Renewables works.

As reported on 2 May 2024, subject to audit, the Group expects to report a full year performance ahead of prior expectations. Profit continued to grow during the year, with a diversity in our mix of works along with the robustness of our operational and cost efficiencies enabling gross profits for continuing operations to increase by 15% to £18.9 million (FY23: £16.5 million) underpinned by gross margins strengthening to 29.4% (FY23: 26.3%). EBITDA (adjusted to include lease payments) rose by 23% to £6.7 million (FY23: £5.5 million), ahead of prior expectations of £6.2 million. Adjusted profit before tax grew by 25% to £6.1 million (FY23: £4.9 million). At 31 March 2024, the Group held a cash balance of £0.5 million and had a net cash position of £0.4 million (FY23: £1.1 million).

Revenue grew to £64.1 million (FY23: £62.7 million), with this moderate increase reflecting a different revenue mix of projects contracted in the year and including the strategic exit from a private sector mechanical contract amounting to £3.6 million in revenue due to logistical and administrative complexities.  As previously announced, certain planned workstreams in FY24 had experienced some client related administrative delays but these works are now underway.

Strong progress during the period has been underpinned by the ongoing implementation of our key strategic objectives to accelerate organic growth through our three key pillars as well as investing in our people, leveraging efficiencies through collaborative support functions, and consolidating our geographic position.

During the year, the Group announced numerous direct awards, framework wins and contract extensions across all service divisions, positively increasing our outlook on revenues, with our three-year visible revenues increasing by 11% to £162.2 million (FY23: £146.4 million), and further diversifying our client portfolio with a net increase in our overall client base of 11%.

During the second half of the financial year, the Company established an office in Norfolk which was identified as an organic growth opportunity. This is already delivering, with Kinovo having won several new clients and is generating a number of meaningful opportunities to demonstrate the quality of our works through initial short-term awards, which are in the process of being converted into longer term contract wins. The Company's recognition and reputation is gaining traction in the area, and this positive trajectory provides a firm foundation to capitalise on the potential within the region. 

The Company also set up a Retrofit team, a key part of our Renewables pillar, which will leverage works relating to the Government's "net zero" objectives within local authorities and councils under limited timeframes. The Retrofit team is already generating a return on investment, being fully focused on both supporting the implementation of ongoing projects in hand and generating new business development opportunities. Decarbonisation is, and will be, a growing theme in the sector alongside the ever-increasing regulatory and compliance environment.

The Group's continued investment in our people, our breadth of accreditations and our one-stop-shop offering positions us well to partner and support our clients, delivering operational excellence and a best-in-class service.

Discontinued Operations

The Company reiterates its position, as outlined in the RNS on 2 May 2024, in relation to DCB Kent ("DCB"), Kinovo's former construction subsidiary. A total of seven of the nine projects have either achieved practical completion or have been concluded with the penultimate site due to conclude by early July 2024 and the Company remains in discussions regarding the final project which is currently due to be completed in 2026. The anticipated financial liabilities for DCB currently remain in line with those disclosed on 8 March 2024.

Notice of Results

The Company will announce its results for the year ending 31 March 2024 on Tuesday 9 July 2024. An analyst presentation will be held at the offices of Hudson Sandler that morning, and details regarding an investor presentation will be provided in due course.

David Bullen, Chief Executive Officer of Kinovo plc, commented:

"Following our recent announcement that we have produced a full year performance ahead of expectations, I am delighted to provide more colour on what has been a critical year of strategic progress for Kinovo.

Our strategic repositioning to focus on the three pillars of Regulation, Regeneration and Renewables works continues to yield results, and the investments we have made across the business, in our people and our capabilities, are generating strong returns.

Underpinned by key regulatory and legislative drivers, we remain confident in our growth trajectory as we continue to deliver significant growth. We look forward to providing a further update at our results in July."

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