NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION.

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE UK CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. ACCORDINGLY, KINOVO PLC SHAREHOLDERS ARE ADVISED THAT THERE CAN BE NO CERTAINTY THAT ANY FORMAL OFFER FOR THE COMPANY WILL BE MADE UNDER RULE 2.7 OF THE CODE.

For Immediate Release

30 August 2023

Rx3 Holdings Limited ("Rx3")

Possible offer for Kinovo plc ("Kinovo" or the "Company")

Further to Rx3's announcement on 25 August titled "Minimum price of a possible offer for Kinovo plc", Rx3 would like to provide background to the possible offer to assist shareholders during this period when the Company is proactively consulting with them:

·      Tim Scott, the ultimate owner of Rx3 and Tipacs2 Limited ("Tipacs2"), the holder of 29.89% of the issued share capital of Kinovo, is an experienced entrepreneur and has built a number of successful businesses which have operated within similar sectors, and provided services to similar clients, to that of Kinovo.

·      The gross values to be spent and recovered on DCB Kent Limited ("DCB") remain uncertain. Rx3 acknowledges the progress made by the Board of Kinovo plc (the "Kinovo Board") and the Company to date, including agreeing a way forward on seven out of nine contracts. The Company has reported the DCB exposure position to be £4.3 million, which the Company originally provided for. However, there remains significant and inherent risks with the wind out of DCB that could impact Kinovo's forecast net liability under the novated contracts and ongoing parental guarantees. These contracts are for a total contracted value of £18 million, of which Kinovo hopes to receive from their clients £14 million, the £4 million difference plus professional fees equating to the £4.3 million provision. 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. It is also worthy of note that despite 20 months passing since the sale of DCB, the Kinovo Board doesn't expect that the DCB contracts will be completed until the end of 2025. Both the estimated quantum and timing of completion of the contracts contain significant assumptions especially with regard to the two projects where agreements have yet to be put in place. Clearly this makes the estimation of the final outcome inherently difficult especially given the gross value of the work that remains to be contracted, completed and paid for by DCB's clients. The ultimate exposure relating to DCB therefore remains highly uncertain, something which has also been expressed by the Company's auditors.

·      The Company's auditors continue to question the ability of the Company to continue as a going concern given the uncertainties noted above around DCB and how the Company would fund the working capital position on the ongoing projects, any issues with regard to performance bonds and any variation in the outturn of those contracts.

·      Rx3 commends the Kinovo Board on achieving the growth in underlying EBITDA given the distractions caused by DCB, however, Rx3 understands that in order to continue and sustain this level of growth, the Company will require further investment in staff at all levels as well as improved infrastructure which may impinge on short term profitability.

·      The Company has noted that the top four clients represented c.44.0% of turnover in 2023. Contracts with two of these significant customers are due for renewal in 2024. There can be no guarantee that these contracts will be renewed on the same terms or renewed at all.

·      Western Selection, previously the Company's second largest shareholder after Tipacs2, sold down its position during June and July 2023 with Tipacs2 acquiring a significant proportion of Western Selection's holding at a price of 40 pence per share. 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. Tipacs2, and any party in concert with Tipacs2, are now restricted in their ability to purchase further shares in Kinovo under the Takeover Code and, therefore, are unable to continue as a supportive buyer of the Company's shares, thus reducing liquidity even further.  

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 announcement does not amount to a firm intention to make an offer under Rule 2.7 of the Code and there can be no certainty that a formal offer for Kinovo will be made.

This announcement has been made without the consent of Kinovo.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Rule 26.1 disclosure

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available on Rx3's website at http://Rx3holdings.co.uk no later than 12 noon (London time) on 31 August 2023.

The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Further Information

Zeus Capital Limited ("Zeus"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser for Rx3 and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than Rx3 for providing the protections afforded to clients of Zeus, nor for providing advice in relation to any matter referred to herein.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of any offer to buy, sell or subscribe for any securities or the solicitation of any vote in any jurisdiction.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.