PLUS1
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Kinovo Plc | LSE:KINO | London | Ordinary Share | GB00BV9GHQ09 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.0% | 39.00 | 38.00 | 40.00 | 39.00 | 39.00 | 39.00 | 31,477 | 08:00:00 |
| Industry Sector | Turnover (m) | Profit (m) | EPS - Basic | PE Ratio | Market Cap (m) |
|---|---|---|---|---|---|
| Gas Water & Utilities | 53.3 | 2.8 | -17.6 | - | 23 |
Kinovo PLC Half year results
07/12/2021 7:00am
UK Regulatory (RNS & others)
Kinovo (LSE:KINO)
Historical Stock Chart
From Mar 2021 to Mar 2023
TIDMKINO
RNS Number : 7493U
Kinovo PLC
07 December 2021
7 December 2021
Kinovo Plc
("Kinovo" or the "Group")
Half year results for the six months ended 30 September 2021
Kinovo Plc (AIM:KINO), the specialist property services Group that delivers compliance and sustainability solutions, announces its unaudited half year results for the six months ended 30 September 2021 (the "Period").
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 March
2021 2020 2021
GBP 000 GBP 000 GBP 000
--------------------------------------- -------------- -------------- -----------
Continuing operations
Income statement
Revenue 23,760 14,478 39,369
Gross profit 5,861 4,321 9,291
EBITDA(1) (excluding effect of lease
payments) 2,116 1,439 2,777
Adjusted EBITDA(2) (including effect
of lease payments) 1,831 1,038 2,096
Underlying operating profit(3) 1,758 975 2,010
Underlying profit before taxation(4) 1,606 739 1,572
Profit/(loss) after taxation 834 (361) (252)
Basic earnings/(loss) per share(5) 1.36 (0.61) (0.43)
Adjusted earnings per share(6) 2.27 1.30 2.76
Cash flow
Net cash generated from operating
activities 2,540 2,544 5,542
Adjusted net cash generated from
operating activities(8) 2,826 1,439 4,360
Adjusted operating cash conversion(9)
(%) 154% 139% 208%
Financial position and net assets
Net (cash)/overdraft(10) (2,237) (2,465) (1,293)
Term and other loans 3,905 7,325 3,966
Net debt(7) 1,668 4,860 2,673
Net assets 11,250 10,487 10,862
Discontinued operations - business
held for sale (see note 11)
(Loss)/profit after taxation (279) 206 409
Basic (loss)/earnings per share (0.45) 0.35 0.69
--------------------------------------- -------------- -------------- -----------
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 and bank covenant reporting, Adjusted EBITDA is stated after 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 (loss)/earnings per share is the (loss)/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 debt comprises term loans and other loans, and cash net of overdraft, and excludes lease obligations.
8. Net cash generated from operating activities before tax and after lease payments and adding back GBPnil (2020: GBP0.33m) exceptional items in the period ended 30 September 2021. It is also adjusted to reflect the payment of deferred HMRC payments to normal terms. Further analysis is set out in the financial review.
9. Adjusted net cash generated from operating activities divided by Adjusted EBITDA, as set out in the financial review.
10. Including cash classified as held for sale.
Financial Highlights
-- Continuing operations
o Revenues increased 64% to GBP23.76 million (H1 2020: GBP14.48 million)
o Regulation services delivers 60% (GBP14.15 million) of total revenues
o Adjusted EBITDA increased 76% of GBP1.83 million (H1 2020: GBP1.04 million)
o Operating profit GBP1.20 million (H1 2020: loss of GBP0.21 million)
o Basic earnings per share of 1.36 pence (H1 2020: loss of 0.61 pence)
-- Cash flow and net debt
o Strong Adjusted cash generation of GBP2.83 million from continuing operations
o Adjusted operating cash conversion of 154%
o Total net debt reduced further to GBP1.67 million (H1 2020: GBP4.86 million)
o Resumption of full year final dividend
o Covid-19 related deferred VAT liability reduced to GBP0.41 million and will be fully repaid in January 2022.
Operational Highlights
-- Discontinued operations - advanced discussions to sell non-core construction business, DCB (Kent) Ltd
-- Secured new contracts with total multi-year potential value of GBP43.72 million, driven by investment in business development team
-- Three-year visible revenues* for continuing operations have increased by 37% from year end to GBP144 million
-- Over 90% of continuing operations revenues are recurring, underpinning the value of long-term contracts
-- Diversified revenues across Mechanical, Electrical and Building Services divisions; 30%, 36% and 34% respectively
-- Installation of ground source heat pump, photovoltaic panels and EV chargers at Head Office -- IT infrastructure project completed and generating efficient returns
-- Number of apprentices account for 10% of the total workforce in our continuing operations, enhancing our commitment to social value
* Three-year visible revenues represent the minimum identifiable revenues from the 1 April 2021 on a like for like basis excluding DCB; being contracted or anticipated spend, as well as historical run rates.
Post-period end
-- A further GBP0.5 million of our term loan paid down at the end of November with outstanding balance on the HSBC term now GBP3.03 million
-- An additional GBP0.21 million of our deferred VAT paid down at the end of November 2021 with the remaining GBP0.20 million to be paid by January 2022
Commenting on the results and prospects, David Bullen, Chief Executive Officer, said:
"This has been the first six-month period since we rebranded and repositioned the Group. We are in an excellent position to better meet the needs of our customers, we are embracing our ESG responsibilities and continue to focus on our three strategic pillars of Regulation, Regeneration and Renewables. Revenues have increased 64% year on year and are well diversified across our strategic pillars and service divisions. In addition, we have continued to reduce our net debt and we have reinstated our final dividend payment.
The commitment and dedication of my colleagues as usual deserve recognition, consistently delivering the high expectations of our clients in difficult circumstances. On behalf of the Board, I thank them for their sterling efforts.
With the expected disposal of DCB (Kent), we strengthen our core strategic pillars, enabling the Group to focus our investment for future growth.
We have continued to see challenges presented by the external market relating to supply chain issues and the ongoing Covid-19 pandemic but remain committed to mitigate these risks as much as possible by planning ahead. Notwithstanding these headwinds, we remain confident in our outlook for the full year. The Directors expect the second half of the financial year to be stronger than the first half, in line with historical reporting periods pre-Covid-19."
This announcement contains information which, prior to its disclosure by this announcement, was inside information for the purposes of the Market Abuse Regulation
For further information please contact: Kinovo Plc Sangita Shah, Chair +44 (0)20 7796 4133 David Bullen, Chief Executive (via Hudson Sandler) Officer Canaccord Genuity Limited (Nominated Adviser and Sole Broker) +44 (0)20 7523 8000 Corporate Broking: Andrew Potts Georgina McCooke Sales: Jonathan Barr Hudson Sandler (Financial PR) +44 (0)20 7796 4133 Daniel de Belder Bertie Berger
Notes to Editors:
Kinovo plc ("Kinovo" or "the Group") is a leading UK provider of specialist property services centred on safety and regulatory compliance, home and community regeneration and sustainable living through the installation of efficient and greener energy alternatives.
Its focus on Regulation, Regeneration and Renewables ensures it is well placed to capitalise on both the current and future macro-economic drivers that are underpinned by Government legislation and policy.
There are four subsidiaries within the Kinovo Group:
-- Purdy, an award-winning contractor in electrical, mechanical and property services; -- Spokemead, a specialist in electrical installation, repairs and maintenance services; -- R. Dunham, a provider of electrical installation and maintenance services; and
-- DCB (Kent), a high-quality building, refurbishment and maintenance services provider (non-core discontinued operations classified as held for sale as at 30 September 2021).
Through their collaboration and shared central functions, the Group offers a range of end-to-end specialist services to customers, working in partnership with them to meet their own compliance and sustainability goals.
Kinovo Plc is listed on the AIM market of the London Stock Exchange.
Chair's statement
Kinovo's half year results have been extremely positive, reflecting the solid progress made in the implementation of the strategic plan relating to the pillars of Regulation, Regeneration and Renewables. The performance was delivered despite ongoing labour and supply chain challenges. We continue to win new contracts and deliver high expectations for our customers.
The results, together with the reintroduction of the dividend, clearly underline the successful turnaround of the business executed under the new executive and management team. Under David Bullen's leadership, the management team has collectively instilled a unified purpose and ensured the successful communication of the strategy to all staff.
In line with our strategy around the three strategic pillars of Regulation, Regeneration and Renewables, we are in advanced discussion on the disposal of DCB Kent Limited, the Group's construction arm, which we have deemed to be non-core. The disposal will allow Kinovo to focus on our key strengths: compliance and regulatory work under long-term contracts.
Whilst further market uncertainty remains in light of Covid-19, the Group has already taken measures to ensure that robust progress continues and where possible, built-in resilience to anticipate these potential issues.
The Group is enormously indebted to its people who continue to show an unstinting dedication and commitment. To each of them, I extend my profound gratitude on behalf of the Board. With their considerable effort, the business is now in a strong operational position and solid financial footing for a future that shows promise and continued growth.
Chief Executive Officer's review
Overview
Kinovo has delivered a robust and resilient performance during the first half of the year. We have rebranded and repositioned the Group, significantly increased our revenues and earnings, reinstated our final dividend payment, whilst continuing to reduce our net debt.
We are pleased with the progress made during the period as operations return to some semblance of normality as the challenges of Covid-19 have eased. However, we remain cautious of any new strains of the virus. Revenue during the six-month period increased by 64% year-on-year to GBP23.76 million, excluding our construction division, DCB (Kent) Limited, as we are currently in advanced discussions regarding its sale.
Adjusted EBITDA grew 76% from GBP1.04 million at the end of September 2020 to GBP1.83 million at the end of September 2021, while operating profit increased to GBP1.20 million compared with a loss of GBP0.21 million last year. Since September 2020, net debt has fallen by 66% from GBP4.89 million to GBP1.67 million, reiterating the cash-generative qualities of our underlying business. The Directors are committed to moving the Group into a net cash position.
The investment made to strengthen our business development team and drive organic growth is already demonstrating its value. During the first half of the year, several new contracts were secured with a total multi-year potential value of GBP43.6 million, most of which will commence in the second half of the current financial year.
These wins have increased the three-year visible revenues for our continuing operations since the year-end substantially by 37% to GBP144 million and include significant contracts with Sanctuary Housing, the London Boroughs of Waltham Forest and Wandsworth, ranging across our core services from electrical installation and fixed appliance testing, commercial boiler rooms, kitchens and bathroom replacements through to installing air source heat pumps and photovoltaic units.
Repositioning
Following the Group's change of name to Kinovo earlier this year, we re-defined our business model and investment case to concentrate on three strategic pillars as our key areas for the business moving forward: Regulation, Regeneration and Renewables. These pillars are centred on compliance-driven, regulatory-led specialist services that offer long-term contracts, recurring revenue streams and strong cash generation. Regulation is the foundation of our business and has been demonstrated by delivering 60% of our total revenues in the period.
Kinovo has concluded that its construction division, DCB (Kent) Limited, is non-core to our proposition. This is aligned to the Group's clearer focus and strategic pillars. During the period, DCB's revenue delivered GBP11.42 million with a loss before tax of GBP0.28 million. The Group is in advanced discussions with various parties for the disposal of DCB and an update will be made when appropriate.
The disposal will allow Kinovo to prioritise our core business, broadening and deepening our expertise in these areas through organic growth and strategic acquisitions, as and when a suitable fit arises.
Over the period, we have seen increases in the amount of work in our continuing operations under each of the three strategic pillars, with Regulation revenues rising by 55%, Regeneration revenues by 64% and Renewables revenues by 94%, reiterating the strength of our strategy.
People and Culture
We have built up our Human Resources department further in order to prioritise recruitment and training, aligned to our commitment to attract and retain talent as an employer of choice. To support a consistent and cohesive culture that embeds our purpose and values, we have rolled out a leadership and management training programme across the Group's management, which has been very well received by the participants. We intend to broaden this further across the employee base.
The Group has also been scaling up our apprenticeship scheme to secure a pipeline of capable and skilled employees for the future and now account for 10% of the total workforce in our continuing operations, enhancing our social value commitment. In addition, our drive to facilitate personal and professional development within the Group has seen several opportunities for internal promotion fulfilled, demonstrating the benefits our growth potential brings to our people.
Following our first employee engagement survey, we have listened, acted and made great strides addressing areas for improvement as a Group. We intend to initiate another survey over the coming months to gain feedback on our progress to date and identify additional areas on which to focus moving forward.
External factors
Our positive results for the first half of the year belie the headwinds of the significant market challenges that we have faced, notably supply chain cost inflation, labour and material availability.
These challenges persist post-period end, but we have continued to mitigate these risks as much as possible by broadening our procurement process, increasing our stockholding where feasible, and further diversifying our sub-contractor base.
Covid-19 has also continued to affect the business, albeit less so than last year. Whilst the UK was not in lockdown, as a people facing business, we have nevertheless experienced disruption to staffing during the period. We remain vigilant of the implications of potential surges, particularly as we move into the busiest period of the year. However, as we have previously demonstrated, the non-discretionary nature of most of our work positions us well, giving us a strong degree of comfort regarding our outlook.
Outlook
Our strategy and repositioning of the business is already proving itself. Our commitment to ESG being at the heart of everything we do is increasingly evident, and we are continuing to see positive momentum across all areas of the Group.
While the Board remains very mindful of the continuing challenges in the external environment, the strength and resilience of our first half performance means we are confident in our outlook for the full year and with our new contract wins, we expect a return to our historical heavier weighting in our second half performance.
Financial review
Trading review
In the six-month period to 30 September 2021, Kinovo has continued to demonstrate resilient progress, delivering strong growth in revenues, earnings and cash generation from its continuing operations, as Covid-19 restrictions eased, despite the market challenges of supply chain inflation and material and labour availability.
Comparative revenues for continuing operations during the period grew 64% to GBP23.76 million (2020: GBP14.48 million), Adjusted EBITDA (after the effect of a charge for lease payments) increased by 76% to GBP1.83 million (2020: GBP1.04 million) with operating profit from continuing operations delivering GBP1.20 million (2020: loss GBP0.21 million).
Profit before taxation for continuing operations was GBP1.05 million (2020: loss GBP0.45 million). Total profit for the period was GBP0.56 million (2020: loss GBP0.16 million).
The Adjusted EBITDA on continuing operations of GBP1.83 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. It is also the measure for the covenants under our banking arrangements.
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. Comparative figures have been represented to split out the results relating to operations that have now been discontinued:
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2021 2020 2021
Continuing operations GBP'000 GBP'000 GBP'000
Profit/(loss) before tax 1,046 (449) (371)
Add back: non-underlying items 560 1,188 1,943
Underlying profit before tax 1,606 739 1,572
Adjustments for items not included
in EBITDA:
Finance costs 152 236 438
Depreciation of property, plant and
equipment 65 45 82
Depreciation of right-of-use assets 280 411 668
Amortisation of software costs 13 8 17
EBITDA (excluding a charge for lease
payments) 2,116 1,439 2,777
Adjustment for lease payments (285) (401) (681)
------------ ------------- ---------
Adjusted EBITDA 1,831 1,038 2,096
------------ ------------- ---------
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 3.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Continuing activities
Amortisation of customer relationships 517 847 1,582
Share based payment charge 43 15 27
Restructuring costs - 326 334
Total 560 1,188 1,943
------------- ------------- ---------
Cash flow performance
Adjusted net cash generated from continuing operating activities in the Period was GBP2.82 million (2020: GBP1.44 million) delivering an Adjusted operating cash conversion of 154% (2020: 139%).
Adjusted operating cash conversion is calculated as cash generated from continuing operations (after lease payments) of GBP2.26 million (2020: GBP2.16 million), after adding back exceptional cash payments of GBPnil (2020: GBP0.33 million) and adjusted for the effects of deferred HMRC repayments of GBP0.57 million (2020: net deferred GBP1.04 million), in the Period; divided by Adjusted EBITDA of GBP1.83 million (2020: GBP1.44 million), as set out below;
Continuing operations Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Net cash generated from operating activities
per condensed consolidated statement of
cash flows 1,926 3,004 5,814
Adjustment for cash absorbed/(generated)
from discontinued operations 614 (460) (272)
------------ -------------- ---------
Net cash generated from continuing operating
activities 2,540 2,544 5,542
Less lease payments (284) (389) (667)
Less corporation tax received - - (163)
2,256 2,155 4,712
Add back exceptional payments - 326 334
Adjustment for deferred HMRC payments 570 (1,042) (686)
------------ -------------- ---------
Adjusted net cash generated from continuing
operating activities 2,826 1,439 4,360
------------ -------------- ---------
Adjusted EBITDA (as above) 1,831 1,038 2,096
------------ -------------- ---------
Adjusted operating cash conversion 154% 139% 208%
------------ -------------- ---------
Total HMRC VAT liabilities of GBP1.02 million were deferred at 31 March 2021 and during the Period GBP0.61 million was repaid in line with HMRC guidance. The remaining deferred VAT will be fully repaid by end January 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. See note 11 for additional details.
The activities of DCB have been presented as discontinued operations in the 6-month period ended 30 September 2021 and the comparatives of the Condensed Consolidated Statement of Comprehensive Income have been represented for the 6-month period ended 30 September 2020 and the year ended 31 March 2021.
Loss after tax for the discontinued activities for the 6-month period ended 30 September 2021 was GBP0.28 million (2020: profit GBP0.21 million).
The disposal of DCB will allow the Company to harmonise its operations and increase the focus on its three strategic workflow pillars; Regulation, Regeneration and Renewables. These pillars are centred on compliance driven, regulatory led specialist services that offer long-term contracts, recurring revenue streams and strong cash generation.
Net debt
There has been a continuing priority on cash management and reduction in net debt. In the six-month period to 30 September 2021, net debt reduced by GBP1.00 million (37%) to GBP1.67 million compared to net debt of GBP2.67 million at 31 March 2021 including cash balances that rose from GBP1.29 million at 31 March 2021 to GBP2.24 million at 30 September 2021.
Net debt has reduced GBP3.19 million (66%) from GBP4.86 million at 30 September 2020 to GBP1.67 million at 30 September 2021.
During the six-month period, the Company reinstated its final dividend (0.50 pence per ordinary share) and paid GBP0.29 million.
In addition, deferred VAT totalling GBP0.61 million was paid, strengthening the Company's financial position further following the effects of the pandemic. Outstanding deferred VAT was GBP0.41 million at 30 September 2021 and will be fully repaid by January 2022.
Set out below is an analysis of net debt:
Unaudited Unaudited Audited
at 30 September at 30 at 31
2021 September March
2020 2021
GBP'000 GBP'000 GBP'000
Net (cash)/overdraft (including
cash held for sale) (2,237) (2,465) (1,293)
HSBC term loan 3,533 6,833 3,533
HSBC Mortgage 224 285 257
Other term loan 148 207 176
---------------- ---------- -------
Net debt 1,668 4,860 2,673
---------------- ---------- -------
On 22 May 2020 the Group secured the restructuring of GBP9.83 million debt facilities with HSBC UK Bank plc. The Group's previous debt facility was in the form of a GBP3.33 million term loan and a GBP6.50 million overdraft facility. This debt facility has been restructured to represent a GBP7.33 million term loan facility and a GBP2.50 million overdraft facility.
The Group drew down fully on this increased additional term loan facility to increase cash balances by GBP4.0 million. The term loan expires in September 2022 and there are GBP0.5 million quarterly repayments which started in August 2020.
The first covenant test for the Group was achieved, being a minimum EBITDA of GBP1.1 million for the year ended 31 March 2021.
On 26 March 2021 the Group agreed amendments to the facility agreement to enable accelerated repayment of the term loan, amended covenant measures and changes to the basis of interest calculation effective from 1 October 2021, in advance of the LIBOR transition deadline.
On 31 March 2021, the Group repaid an additional amount of GBP2.3 million of the HSBC term loan, of which GBP1.0 million relates to advance payment of the first two quarterly repayments for the year ending 31 March 2022.
As term loan repayments were accelerated, it was agreed with HSBC there is no requirement to measure covenants for the first half of the year ending 31 March 2022.
The covenants for the quarter to 31 December 2021 and beyond will be tested quarterly and they are:
(i) achievement of minimum levels of Adjusted EBITDA; (ii) debt service cover; and (iii) interest cover.
Dividends
A final dividend for the year ended 31 March 2021 of 0.5 pence per ordinary share and totalling GBP0.29 million (2020: GBPnil) was paid in the Period. No interim dividend is currently recommended for the year ending 31 March 2022 as the Group continues to prioritise the reduction of net debt.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six month period ended 30 September 2021
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 March
30 September 30 September 2021
2021 2020
GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 23,760 14,478 39,369
Cost of sales (17,899) (10,157) (30,078)
Gross Profit 5,861 4,321 9,291
Underlying administrative expenses (4,103) (3,346) (7,281)
------------- ------------- -------------
Operating profit before non-underlying
items 1,758 975 2,010
Non-underlying administrative expenses
Amortisation of customer relationships (517) (847) (1,582)
Share based payment charge (43) (15) (27)
Restructuring costs - (326) (334)
Total non-underlying administrative
expenses (note 4) (560) (1,188) (1,943)
Operating profit 1,198 (213) 67
Finance costs (152) (236) (438)
Profit/(loss) before taxation 1,046 (449) (371)
Income tax expense (note 10) (212) 88 119
------------- ------------- -------------
Total profit/(loss) from continuing
operations for the period 834 (361) (252)
Discontinued operations
(Loss)/profit for the period (note
11) (279) 206 409
Total comprehensive income/(loss)
for the period attributable to the
equity holders of the parent company 555 (155) 157
============= ============= =============
Earnings/(loss) per share from continuing
operations (note 6)
Basic (pence) 1.36 (0.61) (0.43)
Diluted (pence) 1.30 (0.61) (0.43)
Earnings/(loss) per share (note 6)
Basic (pence) 0.90 (0.26) 0.27
Diluted (pence) 0.87 (0.26) 0.27
There are no items of other comprehensive income for the period.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 September 2021
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Intangible fixed assets 5,212 8,984 8,209
Property plant and equipment 1,005 1,326 1,307
Right-of-use-assets 1,420 1,684 1,688
------------- ------------- -----------
Total non-current assets 7,637 11,994 11,204
------------- ------------- -----------
Current assets
Inventories 2,547 4,386 2,467
Trade and other receivables 11,775 15,481 16,726
Cash and cash equivalents 2,031 2,465 1,293
------------- ------------- -----------
Total current assets 16,353 22,332 20,486
------------- ------------- -----------
Assets classified as held for sale
(note 11) 9,920 - -
Total assets 33,910 34,326 31,690
============= ============= ===========
Issued share capital and reserves
Share capital (note 8) 6,214 5,872 6,121
Own shares (850) - (850)
Share premium 9,244 8,609 9,210
Share based payment reserve 30 630 30
Merger reserve (248) (248) (248)
Retained earnings (3,140) (4,376) (3,401)
Total equity attributable to the equity
of the group 11,250 10,487 10,862
------------- ------------- -----------
Non-current liabilities
Borrowings (note 7) 1,781 5,206 2,842
Lease liabilities 995 1,133 1,183
Deferred tax liabilities 753 759 699
3,529 7,098 4,724
------------- ------------- -----------
Current liabilities
Overdraft (note 7) - - -
Borrowings (note 7) 2,125 2,119 1,124
Lease liabilities 440 610 552
Current income tax liabilities 29 - -
Trade and other payables 10,259 14,012 14,428
12,853 16,741 16,104
------------- ------------- -----------
Liabilities classified as held for
sale (note 11) 6,278 - -
Total equity and liabilities 33,910 34,326 31,690
============= ============= ===========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six month period ended 30 September 2021
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 March
30 September 30 September 2021
2021 2020
GBP'000 GBP'000 GBP'000
Net cash generated from operating
activities (note 5) 1,926 3,004 5,814
------------- ------------- -------------
Cash flow from investing activities
Purchases of property, plant and equipment (82) (22) (87)
Purchase of intangible assets (117) (13) (115)
Proceeds on disposal of property,
plant and equipment - 2 20
------------- ------------- -------------
Net cash used in investing activities (199) (33) (182)
------------- ------------- -------------
Cash flow from financing activities
Proceeds from borrowings - 7,333 7,333
Issue of new share capital (net of
share issue costs) - - 850
Purchase of own shares for JSOP* - - (850)
Repayment of borrowings (61) (3,890) (7,249)
Interest paid (158) (248) (461)
Principal payments of leases (270) (369) (630)
Dividends paid (294) - -
Net cash (used)/generated in financing
activities (783) 2,826 (1,007)
------------- ------------- -------------
Net increase in cash and cash equivalents 944 5,797 4,625
Cash and cash equivalents at beginning
of period/year 1,293 (3,332) (3,332)
Cash and cash equivalents at end of
period/year 2,237 2,465 1,293
============= ============= =============
The condensed consolidated statement
of cash flows includes all activities
of the Group. Cash flows from discontinued
operations are set out in note 11.
* Joint Share Ownership Plan. Full
details of the scheme is given in
the annual report.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six month period ended 30 September 2021 (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
2021 6,121 9,210 (850) 30 (248) (3,401) 10,862
Profit and total comprehensive
income for the period - - - - - 555 555
Issue of share capital 93 34 - (46) - - 81
Share-based payment
charge - - - 46 - - 46
Dividends paid - - - - - (294) (294)
Balance at 30 September
2021 6,214 9,244 (850) 30 (248) (3,140) 11,250
======== ======== ========== =========== ======== ========= =======
For the six month period ended 30 September 2020 (unaudited)
Balance at 1 April
2020 5,872 8,609 - 612 (248) (4,221) 10,624
Loss and total comprehensive
income for the period - - - - - (155) (155)
Share-based payment
charge - - - 18 - - 18
Balance at 30 September
2020 5,872 8,609 - 630 (248) (4,376) 10,487
For the year ended 31 March 2021
Balance at 1 April
2020 5,872 8,609 - 612 (248) (4,221) 10,624
Profit and total comprehensive
income for the period - - - - - 157 157
Issue of share capital 249 601 (850) - - - -
Share-based payment
charge - - - 30 - - 30
Deferred tax on share
option 51 51
Transfer to retained
earnings for share
options cancelled - - - (612) - 612 -
Balance at 31 March
2021 6,121 9,210 (850) 30 (248) (3,401) 10,862
======== ======== ========== =========== ======== ========= =======
NOTES TO THE INTERIM STATEMENT
1. Basis of preparation
Kinovo Plc and its subsidiaries (together "the Group") operate in the gas heating, 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.
These interim financial statements of the Group have been prepared on a going concern basis under the historical cost convention, and in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the United Kingdom, 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 2021.
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 2021, which have been prepared in accordance with IFRS as adopted by the United Kingdom.
The interim financial information for the six months ended 30 September 2021 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 2022.
Going concern
The Directors have prepared financial forecasts and cash flows looking beyond twelve months from the date of these consolidated financial statements. In developing these forecasts the Directors have made assumptions based upon their view of the current and future economic conditions that will prevail over the forecast period, together with the expected ongoing effect of Covid-19.
The businesses have delivered a robust and resilient performance in the last six months; profitability has increased significantly, new contract wins have been achieved and visible revenues increased. The Board also review the Group's sources of available funds and the level of headroom against its committed borrowing facilities and associated covenants. The Group reduced its net debt by GBP3.19 million in the last 12 months.
After taking into account the above factors and taking into account possible sensitivities in trading performance, the Board have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Board continues to adopt the going concern basis in the preparation of these financial statements.
Publication of non-statutory financial statements
The results for the six months ended 30 September 2021 and 30 September 2020 are unaudited and have not been reviewed by the auditor. Statutory accounts for the year ended 31 March 2021 were filed with the Registrar of Companies in September 2021.
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 2021. 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 2021 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 2021 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 2021.
3. Segmental analysis
The Board of Directors has determined an operating management structure aligned around the three core activities of the Group, being Gas maintenance, 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:
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2021 2020 2021
Continuing operations GBP'000 GBP'000 GBP'000
Gas maintenance 7,100 4,072 12,262
Building services 7,999 4,350 13,185
Electrical services 8,661 6,056 13,922
Total revenue 23,760 14,478 39,369
------------ ------------- ---------
Reconciliation of operating profit before non-underlying items to profit before taxation.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Continuing operations
Gas maintenance 884 646 1,406
Building services 713 137 270
Electrical services 793 704 1,723
Unallocated central costs (632) (512) (1,389)
Operating profit before non-underlying
items 1,758 975 2,010
Amortisation of acquisition intangibles (517) (847) (1,582)
Share-based payment charge (43) (15) (27)
Restructuring costs - (326) (334)
Operating profit 1,198 (213) 67
Finance costs (152) (236) (438)
------------ ------------- ---------
Profit before tax 1,046 (449) (371)
Income tax expense (212) 88 119
------------ ------------- ---------
Total profit/(loss) for the period
from continuing operations 834 (361) (252)
(Loss)/profit from discontinued operations (279) 206 409
Total comprehensive income/(loss) for
the period attributable to the equity
holders of the parent company 555 (155) 157
------------ ------------- ---------
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 2021
2021 2020
GBP'000 GBP'000 GBP'000
Amortisation of customer relationships (a) 517 847 1,582
Share based payment charge (b) 43 15 27
Restructuring costs (c) - 326 334
------------- ------------- -----------
560 1,188 1,943
------------- ------------- -----------
All non-underlying items have been charged to other operating expenses.
(a) Amortisation of customer relationships
Amortisation of acquisition intangibles was GBP0.52 million for the period (H1 2020: GBP0.85 million) and relates to amortisation of the customer relationships identified by the Directors on the acquisition of Purdy, Spokemead and R. Dunham. Amortisation relating to DCB is presented in discontinued operations as set out in note 11.
(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 582,494 (2020: None) Ordinary shares. The share based payment charge has been separately identified as it is a non-cash expense. The share based payment charge relating DCB is presented in discontinued operations as set out in note 11.
(c) Restructuring costs
Comprise redundancy and associated costs and costs of the rationalisation of the property portfolio resulting from the restructure of the Group operations and were one off and non-recurring. There were GBPnil restructuring costs in the period to 30 September 2021 (2020: GBP0.33 million). Restructuring costs relating DCB are presented in discontinued operations as set out in note 11.
5. Cash flows from operating activities
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 March
30 September 30 September 2021
2021 2020
GBP'000 GBP'000 GBP'000
Profit/(loss) before income tax 696 (192) 140
Adjusted for:
Finance costs 157 248 461
Loss/(profit) on disposal of property,
plant and equipment 1 (2) (2)
Depreciation 384 505 847
Amortisation of intangible assets 652 976 1,843
Share based payments 46 18 30
Movement in receivables (1,640) 3,826 2,580
Movement in payables 1,969 (1,770) (1,561)
Movement in inventories (384) (605) 1,313
Tax reclaimed 45 - 163
------------- ------------- -----------
Net cash from operating activities* 1,926 3,004 5,814
------------- ------------- -----------
* 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. For the year end 31 March 2021 none of the options were dilutive as the exercise price on the schemes were below the average share price for the year.
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 2021
2021 2020
GBP'000 GBP'000 GBP'000
Profit/(loss) used in calculating
basic and diluted earnings
per share
Continuing operations 834 (361) (252)
Discontinued activities (279) 206 409
------------- ------------- -----------
Total operations 555 (155) 157
------------- ------------- -----------
Weighted average number of shares
for the purpose of basic earnings
per share 61,376,111 58,721,845 58,956,248 Weighted average number of shares for the purpose of diluted earnings per share 64,116,798 58,721,845 58,956,248 Continuing operations Basic earnings/(loss) per share (pence) 1.36 (0.61) (0.43) Diluted earnings/(loss) per share (pence) 1.30 (0.61) (0.43) Discontinued activities Basic (loss)/earnings per share (pence) (0.45) 0.35 0.69 Diluted (loss)/earnings per share (pence) (0.43) 0.35 0.69 Total operations Basic earnings/(loss) per share (pence) 0.90 (0.26) 0.27 Diluted earnings/(loss) per share (pence) 0.87 (0.26) 0.27
Adjusted earnings per share
Profit after tax is stated after deducting non-underlying items totalling GBP0.68 million (2020: GBP1.35 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 2021
2021 2020
GBP'000 GBP'000 GBP'000
Continuing activities
Profit/(loss) after tax 834 (361) (252)
Add back:
Amortisation of acquisition intangible
assets 517 847 1,582
Share based payment charge 43 15 27
Restructuring costs - 326 334
Impact of above adjustments on corporation
tax - (62) (63)
------------- ------------------ ---------------------
1,394 765 1,628
------------- ------------------ ---------------------
Discontinued operations
(Loss)/profit after tax (279) 206 409
Add back:
Amortisation of acquisition intangible
assets 115 116 232
Share based payment charge 3 3 3
Restructuring costs - 45 45
Impact of above adjustments on corporation
tax - (9) (9)
------------- ------------------ ---------------------
(161) 361 680
------------- ------------------ ---------------------
Total activities
Profit/(loss) after tax 555 (155) 157
Add back:
Amortisation of acquisition intangible
assets 632 963 1,814
Share based payment charge 46 18 30
Restructuring costs - 371 379
Impact of above adjustments on corporation
tax - (70) (72)
------------- ------------------ ---------------------
1,233 1,127 2,308
------------- ------------------ ---------------------
Weighted average number of shares
for the purpose of basic adjusted
earnings per share 61,376,111 58,721,845 58,956,248
Weighted average number of shares
for the purpose of diluted adjusted
earnings per share 64,116,798 58,721,845 58,956,248
Continuing operations
Basic adjusted earnings per share
(pence) 2.27 1.30 2.76
Diluted adjusted earnings per share
(pence) 2.17 1.30 2.76
Discontinued activities
Basic adjusted (loss)/earnings per
share (pence) (0.26) 0.61 1.15
Diluted adjusted (loss)/earnings per
share (pence) (0.25) 0.61 1.15
Total activities
Basic adjusted earnings per share
(pence) 2.01 1.92 3.91
Diluted adjusted earnings per share
(pence) 1.92 1.92 3.91
7. Borrowings
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Non-current borrowings
Bank and other borrowings;
Term loans 1,534 4,833 2.533
Mortgage loan 167 228 200
Other loans 80 145 109
------------- ------------- ---------
Total non-current borrowings 1,781 5,206 2,842
------------- ------------- ---------
Current borrowings;
Bank and other borrowings;
Term loans 2,000 2,000 1,000
Mortgage loans 57 57 57
Other loans 68 62 67
Overdraft - - -
------------- ------------- ---------
Total current borrowings 2,125 2,119 1,124
------------- ------------- ---------
Bank and other borrowings;
Term loans 3,533 6,833 3,533
Mortgage loans 224 285 257
Other loans 148 207 176
Overdraft - - -
------------- ------------- ---------
Total borrowings 3,905 7,325 3,966
------------- ------------- ---------
The fair value of the borrowings outstanding as at 30 September 2021 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
2021 2020 2021
GBP'000 GBP'000 GBP'000
At the beginning of the period 6,121 5,872 5,872
Issued in the period 93* - 249
At the end of the period 6,214 5,872 6,121
------------- ------------- ---------
* Funds received into SIP trust in September 2021 and remitted to Company in October 2021.
Number of shares Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
At the beginning of the period 61,214,703 58,721,845 58,721,845
Issued in the period 923,054 - 2,492,858
At the end of the period 62,137,757 58,721,845 61,214,703
------------- ------------- ----------
9. Dividends
In the period, the Company paid a final dividend for the year ended 31 March 2021 of 0.50 pence per ordinary share totalling GBP0.29 million. The Board do not recommend an interim dividend for the year ending 31 March 2022.
10. Taxation
The income tax charge for the six months ended 30 September 2021 is calculated based upon the effective tax rates expected to apply to the Group for the full year of 19% (2020: 19%). Differences between the estimated effective rate and the statutory rate of 19% are due to non-deductible expenses.
11. Discontinued operations (a) Description
Following its rebranding and strategic review, Kinovo announced that DCB Kent Limited (DCB), the Company's construction business was non-core and held for sale. The proposed disposal of DCB will allow the Company to harmonise its operations and increase the focus on its three strategic workflow pillars; Regulation, Regeneration and Renewables. These pillars are centred on compliance driven, regulatory led specialist services that offer long-term contracts, recurring revenue streams and strong cash generation.
(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 2021
2021 2020
GBP'000 GBP'000 GBP'000
Revenue 11,420 8,954 20,817
Cost of sales (10,011) (7,281) (17,210)
Gross Profit 1,409 1,673 3,607
Underlying administrative expenses (1,635) (1,240) (2,793)
------------- ------------- -----------
Operating (loss)/profit before non-underlying
items (226) 433 814
Non-underlying administrative expenses
Amortisation of customer relationships (115) (116) (232)
Share based payment charge (3) (3) (3)
Restructuring costs - (45) (45)
Total non-underlying administrative
expenses (118) (164) (280)
Operating (loss)/profit (344) 269 534
Finance costs (5) (12) (23)
(Loss)/profit before taxation (349) 257 511
Income tax credit/(expense) 70 (51) (102)
------------- ------------- -----------
(Loss)/profit for the period (279) 206 409
------------- ------------- -----------
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)/earnings per share from discontinued
operations
Basic (pence) (0.45) 0.35 0.69
Diluted (pence) (0.43) 0.35 0.69
Cash flows from discontinued operations
Net cash (outflow)/inflow from operating
activities (614) 460 272
Net cash outflow from investing activities (10) (26) (40)
Net cash outflow from financing activities (18) (25) (44)
------------- ------------- -----------
Net (reduction)/increase in cash generated
by the subsidiary (642) 409 188
------------- ------------- -----------
(c) Assets and liabilities of subsidiary classified as held for sale
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Assets classified as held for
sale
Intangible - Goodwill 1,351 - -
Intangible - Customer relationship 1,048 - -
Intangible - Computer software 73
Property, plant and equipment 268 - -
Inventory 303 - -
Trade and other receivables 6,671 - -
Cash 206 - -
Total assets held for sale 9,920 - -
------------- ------------- ---------
Liabilities directly associated
with assets classified as held
for sale
Trade and other payables 6,105 - -
Finance leases 41 - -
Income tax liabilities 44
Deferred tax 88 - -
Total liabilities classified
as held for sale 6,278 - -
------------- ------------- ---------
The assets and liabilities of DCB (Kent) Limited have been included as held for sale at their carrying value, as the full assessment of the fair value has yet to be completed. A review of the effect of the planned disposal of DCB will be undertaken for the results for the year ending 31 March 2022.
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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