7 November 2023

Kinovo plc

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

First Half Trading Update

Notice of Results

Strong H1 Performance and Ongoing Execution of Strategic Initiatives

Kinovo Plc (AIM: KINO), the specialist property services Group that delivers compliance and sustainability solutions, is pleased to provide a trading update for the six months ending 30 September 2023 (the "Period") ahead of its interim results which are expected to be released on Tuesday 28 November 2023. All figures are unaudited.

Continuing Operations

The continuing operations of the Group have performed strongly in the first half of the year, further benefiting from the strategic repositioning to focus on its three key pillars of Regulation, Regeneration and Renewables.

Legislative drivers including the Building Safety Act, Fire Safety Act and changes to the Electrical Wiring Legislation have increased the proportion of Electrical workstreams in the first half, delivering a higher margin, with an uplift in gross margins to 27.7% (H1 2023: 25.9%). With a number of planned works being delayed due to clients' administrative bottlenecks and only commencing in the latter part of the first half, the Board expects to report a revenue increase of 2% to £30.34 million (H1 2023: £29.76 million) with a 9% increase in gross profit to £8.40 million (H1 2023: £7.71 million).  As the planned works progress and new contract wins are fully mobilised, revenues are expected to pick up further in the second half of the year, albeit at more normalised margins, as part of the Group's traditional second half weighting.

The Board expects to report adjusted EBITDA growth of 21% to £2.91 million (H1 2023: £2.40 million) and Operating Profit growth of 46% to £2.75 million (H1 2023: £1.87 million) driven by a favourable work mix, enhanced by the Group's operational efficiencies and lower non-underlying costs.

The Company ended the six months ending 30 September 2023 with a cash balance of £1.16 million and a net cash position of £1.04 million (30 September 2023: gross cash of £1.72million and net debt of £0.06 million).

During the Period, the Group secured several important contracts with both new and existing clients including the introduction of additional workstreams. These successes have continued post-period with further contract wins and extensions, including:

·   a direct award by the London and Quadrant Housing Trust for legal disrepair and void works with a total value of £1.0 million across a two-year period;  

·    a Home Upgrade Grant funded retrofit insulation works for Broadland District Council for £0.5 million over two years with the option of five additional one-year extensions; and

·   a two-year extension until September 2025 to its contract with Haringey Council for gas maintenance works, with a historical value of approximately £3.0 million per annum.

This positive momentum of contract wins and renewals represent key organic growth drivers and facilitated further strategic investments within the Business Development Team, including hiring an additional Bid Manager and an Estimator which will further benefit the Group.

Under the Renewables pillar, Sustainability continues to be a key component of Kinovo's strategy, and the Company is beginning to see the combined benefits of its robust accreditation profile and high-ranking framework placings, with several direct awards being granted during the Period and post-Period end.  Additional investment has been made to strengthen the Group's position, including the provision of carbon literacy training to the management teams, the recruitment of a Retrofit Team comprising of a Lead Assessor, Technical Coordinator and Resident Liaison Officer, whilst also releasing a year two Net Zero report in October 2023 and a maiden ESG Impact report, which we expect will be ready for release in November 2023.

Discontinued Operations

The Company is progressing the legacy construction projects associated with DCB Kent ("DCB"), Kinovo's former construction division, and continues to expect seven of the nine projects to be completed during the current financial year, with five of these expected to complete by early December 2023.  Further developments have also been made and negotiations continue with the remaining two projects.

The current overall pre-tax cost to complete estimate for the projects within DCB are estimated to increase by £0.46 million from £5.26 million, as reported at 31 March 2023, to £5.72 million. The cost estimate will be updated in conjunction with Kinovo's final account reconciliations and additional detail on all related matters will be provided in the forthcoming interim results.

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

"The first half was another important period of progress and growth for Kinovo, underpinned by the clear benefits associated with our strategic repositioning, the ongoing effects of legislative drivers and our selective investments.

We have also made significant progress regarding DCB. We remain on target to complete seven of the nine projects this financial year and I look forward to updating our shareholders with further detail in the interim results.

Looking ahead, I am confident that our strategic investments will generate further value for the Group, creating opportunities to continue our momentum, including additional contract wins and renewals across our divisions. At this stage of the Group's financial year, the Board is confident of achieving full year results in line with its expectations."

Enquiries

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.