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Kinovo Forgoes Dividend Amid Profit Surge

Analyst Team trader
Updated 9 Jul 2024

Kinovo PLC shares (LON: KINO) have had a great start to July, delivering 14% of gains through the month to date. The firm announced robust financial growth today, though it did not declare a dividend following last year's suspended payments. The company revealed a notable 37% rise in pre-tax profit, reaching GBP 6.0 million for the fiscal year that concluded on March 31.

This boost in profit comes alongside a revenue increase of 2.3% to GBP 64.1 million. Even more indicative of the company’s cost-effectiveness, Kinovo’s cost of sales marked a downward shift, decreasing by 2.0% to GBP 45.3 million.

Despite these promising financial numbers, the company maintained its decision to suspend dividend payments, continuing a policy adopted since its last dividend of 0.5 pence per share in 2021. This decision does not overshadow the operational achievements of the company under its CEO, David Bullen's leadership. He pinpointed the new strategy focused on Regulation, Regeneration, and Renewables as a factor that has propelled an uptick in profitability, accompanied by the securing of new contracts, attributing to visible growth in revenue.

Notably, Kinovo has secured significant deals that reinforce the firm's revenue pipeline. A £40 million, 8-year contract was secured with The Hyde Group Ltd, while a substantial extension was added to a contract with Haringey Council, valued at approximately £3 million per annum. The company’s revenue visibility over the next three years has notched-up by 11% to £162.6 million, with a reassuring 99% of it being recurrent.


YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.


As part of its future growth strategy, Kinovo accentuates organic growth but remains open to the possibility of acquisitions. Additionally, the reinstatement of dividends appears to be on the horizon, though no specific timeline was provided. Concurrently, Kinovo is managing the disposal of its legacy construction business, DCB Kent Ltd. The conclusion of this unit led to a significant operational and financial impact on the company.

The final settlement associated with the concluding DCB Kent Ltd project is GBP 2.2 million, which is to be paid over the course of eighteen months. The termination of the DCB Kent Ltd’s remaining project is expected to relieve what Bullen referred to as a challenging situation for the company.

Further instilling confidence among investors, Kinovo's shares saw a positive move, climbing by 1.3% to 66.85 pence each in London following the dissemination of these financial results.

Kinovo PLC recounts a year of strategic transformation and strengthening financial positions, with a clear sign of prioritising a consolidation of gains and cautious distribution of resources. The lack of dividend, although notable, points to a prudent approach amid its strategic shift and the resolution of legacy issues.

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YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY

The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.