Kinovo makes progress with remaining DCB projects
By Josh White
Date: Friday 08 Mar 2024
(Sharecast News) - Specialist property services group Kinovo reported progress towards concluding the remaining projects associated with DCB Kent, its former construction division, on Friday.
The AIM-traded firm said four additional sites had completed their builds, pending final minor snagging checks.
That meant a total of seven out of nine projects would soon reach completion, expected before the end of Kinovo's financial year.
As the company indicated on 9 February, the penultimate project was slated for completion by the end of May.
Discussions were ongoing regarding the final project, scheduled for completion in 2026.
The board said the timeline for the penultimate project remained subject to recent client instructions to supply and fit the connection of a statutory incoming gas main.
However, the instructions were not expected to impact financial obligations.
Unforeseen and legacy issues, stemming from poor quality workmanship, had affected the nine projects.
Kinovo said most issues became apparent during final commissioning and surveys, necessitating significant remedial action and incurring additional costs.
Project delays were further exacerbated by adverse weather conditions, including one of the wettest winters on record.
The board said it was actively assessing the recovery of costs incurred due to substandard work and intends to pursue these rigorously.
As a result, with the majority of outstanding projects nearing completion, the board had revised the pre-tax net cost to complete all DCB projects up by £2.9m from the £5.72m it reported in its interim results on 28 November.
That figure included a bond valued at £0.9m, for which Kinovo said it had received a formal demand related to the final project.
The bulk of the net costs had already been paid, with the remainder expected to be funded through strong cash generation from underlying operations and existing finance facilities to manage cash flow dynamics.
Kinovo said it still had the support of its banking partner, HSBC UK, in accordance with its financial strategy.
"The company looks forward to bringing these DCB legacy issues to a conclusion whilst the continuing business performs well, demonstrating robustness, resilience and growth," Kinoco said in its statement.
"The continuing business is performing strongly during the peak trading season and the board continues to anticipate the outlook for the full year ending March to be at least in line with that provided on 9 February."
Kinovo said it would be providing a live presentation via the Investors Meet Company platform on 12 March.
At 1000 GMT, shares in Kinovo were down 11.7% at 41.5p.
Reporting by Josh White for Sharecast.com.
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