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Posted at 13/9/2023 08:28 by dyor2 With each new contract announcement it’s becoming increasingly evident, surely even to our institutional investors, just how substantially Tim Scott’s 56p “offer” undervalues Kinovo. I estimate that the new contracts announced in the last couple of weeks will add c.£12m p.a. to revenues, which last year were £63m. Yes, Kinovo is now (sensibly) investing in additional personnel and infrastructure to take advantage of the growth opportunities, so perhaps for now one shouldn’t upgrade profit forecasts for the current year too far. But EBITDA of at least £6m looks nailed on, with substantial growth potential thereafter. The 56p bid values Kinovo at £35m, i.e. an EBITDA multiple of only 5.8x. Further, Kinovo turns at least 90% of its EBITDA into cash as its business is inherently capital light. IMV, once the remaining DCB contracts are complete, Kino will be generating £6m p.a. in free cash flow. That’s a 17% p.a. free cash flow return on the bid price, set to increase with each passing year! I can certainly see why Tim Scott wants to own it, but not at this price please. |
Posted at 13/9/2023 07:08 by someuwin Kinovo plc("Kinovo" or the "Company") Decarbonisation Direct Award Kinovo Plc (AIM: KINO), the specialist property services group that delivers compliance and sustainability solutions, is pleased to announce it has received a direct award with an anticipated value of GBP4.8 million over 19 months through The Greener Futures Partnership's ("GFP") Decarbonisation Framework. This is Kinovo's first direct award following the Company's placement on the GFP Framework as announced on 22 May 2023. The framework comprises five housing associations and over 300,000 homes, representing 9% of the total social housing market. Kinovo's two sub-lots cover two of the framework's five geographic regions, namely London and the South and East of England. In March 2023, the GFP was awarded GBP40.4 million from Wave 2.1 of the Government's Social Housing Decarbonisation Fund, which will be match funded by GFP by a minimum of the same value. Total investment value of around GBP95 million nationally is currently anticipated by GFP under this framework between 2023 to 2025. Kinovo's direct award is to undertake whole house retrofit energy efficiency works compliant with PAS 2030:2019 and PAS 2035:2019 for approximately 200 properties. Works are due to start in September 2023 for an initial term of 19 months until March 2025. Following this and other recent direct awards and contract wins, the Company has invested further in its Renewables pillar, strengthening the team with three additional roles; a fully qualified Retrofit Assessor and Co-ordinator as our Retrofit Lead, alongside a Technical Co-ordinator and Retrofit Liaison Officer. These additions will provide further technical expertise and qualifications covering Domestic Retrofit, Domestic Energy Assessment and Green Deal Advisory services. David Bullen, Chief Executive Officer of Kinovo plc, commented: "We are pleased to have won our first direct award under the GFP Decarbonisation Framework, at a value of GBP4.8 million, and the latest in a series of new contracts and direct awards under our Renewables pillar. I believe Kinovo has all the qualifications, skills and experience to act as a "one stop shop" to support housing associations and local councils in meeting the Government's net zero carbon emissions target by 2050, alongside their objective for all social homes to achieve an EPC "C" rating by 2030." |
Posted at 08/9/2023 13:31 by dyor2 Very strange 8.3 disclosure from Jefferies today. They’ve disclosed a long position in Kino of 1,141,484 shares (1.8% of the company) and a derivative short position of exactly the same amount of shares. Jefferies has a specialist derivatives desk, and to me this means they’ve either written (sold) a call option over these shares (i.e. given somebody the right to buy the shares at a fixed price in return for call premium payment to Jefferies), or purchased a put option over the shares (i.e. Jefferies has the right to sell the shares at a fixed price to the counterparty to the put option). It looks to me that this arrangement must have been put in place before the bid announcement, because there haven’t been trades in this amount of shares since then. But if their counterparty is a single entity now holding a call option over 1,141,484 shares (1.8% of Kino) then surely this would have been disclosed under Panel rules? Hmm…..I’ |
Posted at 01/9/2023 13:38 by farnesbarnes Welcome mark,They had a piece last week too on KINO thats worth a read. It is good to have balanced views, but should also question why Small Cap Life don't declare if they have a position or not in any stock they write about. Kinovo (KINO.L) - Potential Offer Kinovo…today announces that it has received a non-binding indicative offer from Rx3 Holdings Limited ("Rx3") which may or may not lead to an offer being made by Rx3 for the entire issued and to be issued share capital of Kinovo at a price of 56 pence per share, payable in cash. Rx3 and Tipacs2 Limited, (which holds c.29.89% of Kinovo's shares), are both ultimately owned by Mr Tim Scott. This is at very little premium to the share price prior to this news. Rx3 are keen to point out that the minimum price they can offer is even lower: Rx3 notes the announcement made yesterday by Kinovo in relation to its possible offer for the Company. It confirms that, ..., if Rx3 makes an offer for Kinovo, Rx3 is required to offer a price of not less than 40 pence per share So they appear to be setting shareholders up for the reality that it may not even bid at 56p. We suspect that the bid, if it comes, will therefore be somewhere between 40p and 56p and will be followed by them asking the board to recommend it. If they don't, then an EGM to remove the board? We expect lots of gnashing of teeth from shareholders who think the offer undervalues the company, and we have some sympathy with that, given the forward P/E is under 8. However, as Best of The Best showed, a 30% holder can easily force the issue if they really want to, and such companies rarely deserve a premium rating. If no offer is forthcoming, it is unlikely to be due to the price, but that Rx3 find something material in their due diligence. Given the issues in the past with DCB Kent, then this can’t be ruled out. As such, shareholders may be better off simply taking the current market bid and re-investing it into other cheap UK small caps, rather than risk a low-ball offer being pushed through, or some more contract issues appearing. |
Posted at 01/9/2023 13:02 by farnesbarnes You lot are just unsavvy, over-exuberant PI's according to the following piece from Small Caps Life (Don't shoot the messenger):Kinovo (KINO.L) - Possible Offer Potential bidder for Kinovo, Rx3, fill shareholders on their thinking about the pricing of any potential offer. On DCB Kent, they say: The exposure is therefore not a contract relating to £4.3 million but contracts equating to £18 million and until these have all been successfully completed and the £14 million expected receipts from DCB's clients actually collected, it will not be known whether the provision of £4.3 million is adequate. Indeed, this figure has already been increased from £4.3 million in the 2022 statutory accounts to £5.3 million in the 2023 statutory accounts, with this figure offset by a yet to be agreed claim against DCB's structural engineers of £1.0 million. On the market value of the shares versus the minimum offer of 40p: Despite Tipacs2's significant support in the placing of Western Selection's holding, Rx3 understands it was a protracted sale process, taking several weeks to place the remaining shares. Tipacs2 was prepared to pay a premium to what it regarded as the real market value at the time in order to maximise its strategic holding at 29.89%. The difficulty that Western Selection had in selling down its c.12.0% stake, even with Tipacs2 taking the maximum amount of the order that it was able to accept, clearly demonstrates that the current share price does not reflect the true market value for a significant seller of the Company's shares. Basically, they are telling other shareholders that they have bid the value of the shares up too high, given the major contract risks that remain, and the illiquidity of the shares. The point they are making is potentially valid: that they chose to overpay for the shares at 40p to obtain control, that no one was particularly keen to take the rest at 40p in July this year, and that the only thing that has changed since then is a certain amount of private investor exuberance for the company developing on Twitter/advfn. For example, there were results in July and a couple of framework announcements, but these didn't really seem to move the price. However, this misses that the overhang itself seemed to cause the drop down to the low 40s, and the share price was approaching the current level prior to that. So, although 40p may be the clearing price for a large stake, the clearing price for the smaller investors that they want to vote for their deal is around 50p. Individual investors like us can often be the least savvy investors, especially when it comes to assessing risks within a business. However, if Rx3 don't want to bear the risks of DCB Kent's contract guarantees, then they don't have to make an offer for the whole company. But likewise, if the largely PI shareholder base is happy bearing these risks, then they don't have to accept the offer. Presumably, the 56p mooted price was calculated as a 40% premium to the 40p price they bought at last month, which may be reduced as they do their due diligence on the current state of the DCB Kent contracts. So despite the partial logic of the Rx3 position, this bid as a scheme of arrangement looks doomed to failure. Rightly or wrongly, smaller investors simply value this company more highly than Rx3 does. Rx3 probably realise by now that they won't get the 75% for a scheme of arrangement too and will have to make a normal offer if they want to proceed as they also said the following in their announcement: Rx3 has not determined whether any offer, if one is made, will be made via a scheme of arrangement or a contractual offer, and Rx3 is considering all options available to it. In the event any offer is made via a contractual offer and is successful, any remaining minority shareholder should be aware of the implications of being a minority shareholder of a company under majority control and the control such a majority shareholder would have. This is obviously the stick part of their attempt to get shareholder compliance. If they get more than 50% either from those accepting the offer or by buying in the market at or below the offer price, then they could make some aggressive moves. The first is probably to remove the board and put in their own representatives. There is no dividend to cancel here, so that is unnecessary. But they could have a large rights issue, thus forcing the holdouts to put in a lot of extra cash so as to not to be diluted out of their position. If they get to 75% acceptance, then they will delist, of course. They will also have to bid without the current board’s consent, as on Friday, the company announced that: The Directors have concluded that if the Possible Offer of 56 pence per share was made by Rx3 they will not be recommending it to shareholders. The Directors have undertaken a process of consultation with certain key shareholders and considered direct shareholder feedback in reaching this conclusion. Larger shareholders that can easily put in a few million pounds more to back their position, and are willing and able to hold a delisted stock for as long as it takes, may then be able to find out whether their assertion that this is worth much more than the mooted offer price is correct. Everyone else may just end up capitulating to a hostile offer eventually. The other thing to consider is what Rx3 may do if they don’t choose to bid or a bid fails to get 50%. They may just keep holding, but with the price still above what they consider fair value for a non-strategic stake, they may just flip the shares they bought at 40p for a nice turn. Especially since their DD on DCB appears to have yielded a worse situation than they initially thought. If they choose that route, it is unlikely that the non-institutional shareholder base could absorb all the selling and still see the price rise, and with the share price becalmed in the 40s for a couple of years, most will have got bored and moved on. They may even be able to buy back more sub-40p at various points when equity markets are weak. Come 2025, the risks of DCB Kent's contracts will have been resolved, and they may be able to make the offer again at the same price with lower risk. All in all, this doesn’t seem to be a great situation for anyone. |
Posted at 30/8/2023 09:40 by dyor2 Following up on my last post, I think it must be embarrassing for Kino that Mr Scott appears to have access to non public information about the company, which he’s now selectively using to give a slanted impression of Kino’s worth. I don’t see how the Kino Board can possibly allow him to carry out due diligence if he’s going to use anything he finds in this way? Also, why hasn’t Kino made any announcement about their recent contract wins? |
Posted at 24/8/2023 14:10 by dyor2 My initial impression: I agree that 56p obviously (and substantially) undervalues this business. It values Kino at £35m. Kino is on target to make £6m+ this year, is generating c.£6m p.a. in cash and has strong growth prospects. A bidder could in theory fund the entire £35m bid price via debt at a 10% coupon and have a £2.5m p.a., and growing, surplus cash flow. And that’s before allowing for the £1m+ of public company costs which would be saved! It seems very clear to me that a private equity bidder, never mind a competitor, could bid substantially more than 56p.The key question is obviously the intention of the bidder, Tipacs 2. They already hold 30%, and do they really want 100% of the business or are they trying to put Kino “in play” to maximise the value of their 30%? I don’t know, but I suspect it’s the latter, because they surely can’t realistically expect to succeed with such a low bid? I hope I’m right, because if so I think we could see an alternative bidder coming in at 70p or more. Anyway, I note that the Kino Board has not yet recommended this potential offer and that the offer is conditional on their recommendation, and they have a fiduciary duty to maximise the value for all shareholders. So all to play for! Interesting times…… |
Posted at 22/5/2023 07:11 by someuwin 22 May 2023Kinovo plc ("Kinovo", the "Group" or the "Company") Additional Framework and Contracts Wins Kinovo Plc (AIM: KINO), the specialist property services Group that delivers compliance and sustainability solutions, is pleased to announce the following contract wins. As announced on 22 February 2023, the Company was awarded a new contract worth GBP12 million over five years by The Hyde Group ("Hyde") comprising electrical testing and associated works for both Hyde's domestic and communal properties. This contract now offers the potential to deliver GBP40 million over the next eight years, having been upgraded to GBP5 million per annum over five years with an option for Hyde to extend for three additional years. Kinovo has also been awarded two further contracts with existing clients; one with the London Borough of Barnet to undertake mechanical work to replace a district heating system with a value of GBP1 million over seven months and the other for the Royal Borough of Greenwich, with a value of GBP1 million over a year, relating to the provision of building services for occupied repairs and void remedial works. In addition to these, the Company has been awarded a place on The Greener Future Partnership's ("GFP") Decarbonisation Framework. GFP comprises five housing associations, totalling over 300,000 homes, representing 9% of the total social housing market. The Framework consists of five geographic regions and the Group is included within two regions: London, and South and East England. The Framework is for an initial term of four years with the option for GFP to extend for three additional years. Following a successful award to GFP from Wave 2.1 of the Social Housing Decarbonisation Fund for the value of GBP40.4 million, GFP will be match funding this to the same value, providing a total value of GBP80.8 million nationally, across the relevant contractors, for the Framework between 2023 to 2025. These wins, and the considerable pipeline of upcoming new business opportunities, are testament to the strategic repositioning, targeted investment and strengthening recognition and reputation of the Group in the sector. David Bullen, Chief Executive Officer of Kinovo plc, commented: "I am delighted that our positive momentum of contract wins has extended into the new financial year. We continue to submit and win high quality bids in specialist areas that underpin our organic growth plan and our FY24 expectations. With a strong pipeline of opportunities, I am confident we will maintain this momentum not only this year but over the medium to long term." |
Posted at 27/5/2022 11:24 by dyor2 I agree that the administrators can’t unilaterally release Kino from the PGs, and also that Kino’s least worst option now is to work with the administrators and the end clients to get the building projects back up and running and completed. It’s not just a question of the legalities, it’s also a reputational issue - the end clients are Housing Associations who are also clients of Kino’s core maintenance business. The end clients may or may not have already given Kino notice under the PGs (it depends on the definition of insolvency in the building contracts), but I doubt they will have yet decided to appoint alternative contractors to complete the projects, because it will be difficult for them to seize the building sites, work in progress and records whilst the administrators are in charge. So I think intense discussions will be underway between Kino, the administrators and the end clients with a view to getting the projects back under way and completed. I agree that the administrators sole interest is to protect DCB creditors, not to protect Kino or the end clients, but it’s complicated because Kino is probably also the largest DCB creditor (to the tune of £3.7m). I think it’s helpful that DCB is (for now) in administration rather than insolvent liquidation because that facilitates discussions and negotiations to find a way forward. But they haven’t got long, because the projects are on hold and the administrators can’t pay DCB staff or subcontractors without agreeing a way forward. If they can’t come to such a deal, the administrators will put DCB into insolvent liquidation, which would be worse for Kino. So it’s strongly in Kino’s interests to try and reach a deal. That would certainly involve Kino providing further funding to get the projects completed. The question is, how much? One possible way of getting the contracts back up and running would be for Kino to provide a working capital facility to the administrators (as they did with the original DCB disposal, the difference this time being that with the administrators in charge they would have more confidence in the proper use of the facility). Or Kino could take back control and ownership of the DCB business and complete the contracts itself. Either way, they’ll look incredibly stupid, but the immediate cash funding requirements to get the projects back under way would probably be manageable. So, If I were in Kino’s place I’d bite the bullet, take back control of DCB, and fund the projects to completion. If that requires a fund raising to give their bankers and auditors comfort, I’d use the convertible preference share mechanism I suggested in an earlier post. But I’m just speculating from the outside! |
Posted at 16/5/2022 16:38 by tomboyb Kinovo PLC Update re DCB Kent Limited ("DCB")16/05/2022 4:33pm UK Regulatory (RNS & others) Kinovo (LSE:KINO) Intraday Stock Chart Monday 16 May 2022 Click Here for more Kinovo Charts. TIDMKINO RNS Number : 6689L Kinovo PLC 16 May 2022 16 May 2022 Kinovo plc ("Kinovo" or the "Company") Update re DCB Kent Limited ("DCB") Kinovo Plc (AIM: KINO), the specialist property services Group that delivers compliance and sustainability solutions, provides the following update on developments in the financial position of DCB, its former subsidiary, since the release by Kinovo, on 6 May 2022, of its trading update for the year ended 31 March 2022 (the "6 May Announcement"). Kinovo has today been informed that two partners of CFS Restructuring LLP have been appointed as joint administrators of DCB (the "Joint Administrators"). As referred to in the 6 May Announcement, since the completion of its disposal of DCB, Kinovo has provided working capital support to DCB in the amount of GBP3.7 million in aggregate, to facilitate the completion by DCB of active projects. Prior to the disposal, as also referred to in the 6 May Announcement, Kinovo provided certain parent company guarantees relating to construction projects in existence at the time of the disposal, which were expected to be released by the purchaser of DCB following completion of the disposal. Kinovo is currently establishing the impact of an administration of DCB on the monies it has advanced DCB to support its working capital, which remain at GBP3.7 million, as well as on the parent company guarantees it has provided. The deferred purchase price for the disposal of DCB was based on the successful completion of active projects, upon trade settlements relating to those projects, and on profits for financial years ending March 2023 and 2024, respectively. In consequence of an administration of DCB, Kinovo's directors expect that any deferred consideration it may receive would only likely now arise from trade settlements and retentions related to contracts; this would be linked directly to the administration process and completion of the relevant construction projects. A further announcement will be made to shareholders as and when appropriate. Sangita Shah, Chairman of Kinovo plc, commented: "We are very disappointed to be informed of the appointment by DCB of the Joint Administrators. We are actively engaged with our legal advisors in establishing Kinovo's position in consequence of an administration of DCB, and we are also in direct discussions with the Joint Administrators." Enquiries Kinovo plc 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 Andrew Potts Bobbie Hilliam Hudson Sandler (Financial PR) +44 (0)20 7796 4133 Dan de Belder Harry Griffiths |
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