Interim Results for the Six Months Ended 31 May 2023

Zenova Group PLC (AIM: ZED), a provider of proprietary fire safety and heat management solutions with applications across housing, industrial, and commercial sectors, today announces its interim results for the six months ended 31 May 2023.

Significant progress made in the period:

• Financial highlights:
  • Revenue generation from previously announced international sales contracts, has commenced.
  • Sales for the six months to 31 May 2023 of £108k (2022: £75k).
  • Gross margin for the six months to 31 May 2023 of 52% (2023:49%).
  • Operating loss for the period of £709k (2022: £1,038k) driven by increased R&D, testing, and marketing.

• Contracts signed:
  • Clastrom - distributor for Spain and Germany placed an initial order for the FX500® aerosol fire extinguisher for 40,000 units.
  • Omnis LLC - distributor for USA placed an initial order for 7,500 units of the FX500 mini fire extinguisher.
  • Zensafe Ltd - distributors in the UK placed an initial order for 10,000 units of the FX500 aerosol fire extinguisher for Zensafe's account with Amazon.  
  • Rawlins Paints a UK paint provider has become a Zenova distribution partner.
  • Viridis Group Ltd appointed as distributor for Poland

• New clients:
  • Housing Association Limited selected its innovative Zenova IP thermal insulation paint coating for a pilot project.
  • Melin Homes an established Housing association based in Southeast Wales providing over 4,500 affordable properties across five local authorities.

• R&D, testing and certification:
  • John Moores Liverpool University evaluated the performance of Zenova IP for use in retrofit applications.The results were outstanding;
    • 35% reduction to the buildings U-Value.
    • 25% reduction to the buildings heating energy consumption.
    • 19% reduction to the buildings CO2 carbon emissions.
    • Improvement of the buildings SAP score of 24 points.
    • EPC properties rating improved from E to D.The EPC rating change solution with Zenova IP will open up large markets for energy efficiency, energy savings, cost savings and reduced carbon footprint for any building.
• Scalable manufacturing is in place in three separate jurisdictions (Europe, UK and Canada) to  ensure the supply of all Zenova products to satisfy the expected growth in demand across multiple geographies while minimizing shipping costs.

Post period end highlights

• Organizational refocus:
  • Shift from R&D, testing and certification to focus on sales growth and customer delivery.
  • Fiona Rodford appointed as Executive Vice Chairperson.
  • Tony Crawley, previous CEO, assuming the role of Sales Project Director.
  • Thomas Melchior, previous CFO, appointed as interim Chief Executive Officer.
• Key R&D milestones achieved:
  • All major R&D, testing and certification milestones achieved to open UK and European markets for Zenova Products
  • Passing of certification test results for the 6L & 9L FX fire extinguishers by MPA Dresden Fire in Germany confirming Class A, B, E and F classification to the latest EN3 standard.
  • Passing of certification test results for the FX500 aerosol fire extinguisher by CNBOP an international testing house confirming Class A,B, E and F classification to the BS 6515 standard.
  • BRE steel tests on Zenova FP (intumescent or thermofoaming paint)
• Significant sales progress:
  • First deliveries 2,160 units of FX500 to UK, Zensafe Amazon account
  • First deliveries of 7,500 units of FX500 to Germany, Clastrom
• Investor updates
  • Directors of the Company entered into a working capital loan with the Company to make available up to £350,000 of cash resources should it be required.
  • Zenova raised gross proceeds of £500,000 by way of a placing of 12,500,000 ordinary shares at four pence (4p). The proceeds were to provide general working capital as the Company continues to implement its growth strategy.

Outlook

Zenova is looking forward to a promising next half year where the Directors anticipate large orders from new key customers as well as increased uptake from existing customers and distributors. Executing on new and existing contracts should result in stronger top-line performance and the Directors are confident that this  will allow Zenova to show stronger results in the near future.

Thomas Melchior, Interim Chief Executive of Zenova Group PLC commented:

"Zenova has made significant progress in completing key product development, testing and certification milestones as well as building up global production and manufacturing capabilities whilst expanding the distribution network. As a result of achieving these milestones, the Group is now in a position to transition from R&D, testing and certification into leveraging the distribution channels to accelerate sales revenues and customer deliveries. We are looking forward to developing our business globally during our next stage of growth, and anticipate announcing further positive news flow in the coming months."

‍

Chairman's Statement

Zenova has made encouraging progress in this interim period. Strategic R&D, testing and development milestones over the last six months have laid the foundation for significant growth in the future. The company is now transitioning into a sales and customer solution driven organization backed by an expanded distribution channel and a resilient global supply chain. The company remains in good financial health, underpinned by rigorous cost control and is focusing on growing the business in a managed and sustained manner.

Since our last report, the focus has been on product development, testing and certification to ensure that Zenova meets the most recent fire safety regulations implemented in the UK, which are amongst the most stringent in the world today. We remain committed to developing and supplying innovative fire safety and heat management solutions both to the UK and internationally where global market opportunities clearly exist.

We believe our products are best in class, and communicating this message to our customers and the wider industry is one of our key focus points. We are beginning to see progress being made, and Zenova's reputation is growing as evidenced by our growing customer base, whether in the housing, industrial or commercial sectors. We have engaged in a number of initiatives to develop and enhance our brand recognition which will help boost future sales growth.

Zenova is progressing its operational focus from R&D, testing and certification to sales growth and customer delivery. To support this transition Zenova has restructured the operating team by appointing Fiona Rodford as Executive Vice Chairperson, reassigning Tony Crawley (previous CEO) to Sales Project Director and appointing Thomas Melchior (previous CFO) as interim CEO. This will free Tony Crawley to focus solely on his growing client demand and thus will allow Zenova to best realise its revenue growth goals.

Zenova has successfully launched the Zenova FX500 aerosol extinguisher and is starting to penetrate key markets through online and offline channels. Our manufacturing capacity is being expanded and the maiden deliveries of the FX500 to the UK and Germany have already completed.

The recent test results from Liverpool's John Moores University confirmed the potential of Zenova IP and IR products to conserve energy, reduce heating and cooling costs as well as reduce carbon footprint. We see strong potential for market adaptation for EPC and cost-driven applications of our Zenova IP and IR products. Successful trials of Zenova IP with key customers are expected to unlock and accelerate market penetration and revenue growth.

Zenova has secured working capital loan from the Directors of the Company up to £350,000 of cash resources should it be required. Additionally, Zenova raised gross proceeds of £500,000 by way of a placing of ordinary shares. This working capital funding will support Zenova during the next stage of accelerated growth.

I would like to thank all our employees and partners for their hard work during the period. They have embraced our vision to establish Zenova as a trusted supplier of effective and commercially viable products that deliver innovative fire safety and heat management solutions. We are most grateful for their support and dedication and look forward to announcing further positive progress in the near future.

Zenova is looking forward to a promising next half year where we expect large orders from new key customers as well as increased uptake from existing customers and distributors. Executing on new and existing contracts should result into stronger top-line performance and this will allow Zenova to show stronger results in the near future.

Don Nicolson

Non-executive Chairman

‍

Operating Update

TARGET SEGMENTS

‍The key sectors currently being targeted by the Company's sales and marketing team are as follows:

• Social Housing Government
• Local Authorities
• Modular Homes
• Construction
• Military
• Transport
• Marine
• Film & TV
• Fire services
• Personal fire protection

KEY CONTRACTS & CLIENTS

‍The company has secured a number of cornerstone agreements within key sectors and distributors which will help Zenova expand market penetration in key areas:

• Clastrom, Germany, Spain                 Ordered 40,000 units of the FX500 for Germany
• Zensafe                                               Ordered 10,000 units of the FX500 for sale through Amazon UK
• Omnis, USA                                         Ordered   7,500 units of the FX500  for USA
• Beyond Surface Solutions Ltd
• Bells and Two Tones
• Fire Services Group UK
• Viridis Group, Poland
• Palatine Paints
• Rawlins Paints
• Robert Price

The Zenova FX500 orders are being highlighted because their longer lead times on deliveries create a significant off balance sheet item of firm orders in house not yet executed.

‍

KEY PRODUCT CERTIFICATIONS CUSTOMER TRIALS

• Zenova FX 6 litre & Zenova FX 9 litre fire extinguishers by MPA Dresden Fire in Germany confirming Class A, B, E classification to the latest EN3 standard.
• FX500 aerosol fire extinguisher passed certification test result by CNBOP an international testing house confirming Class A,B, E and F classification to the BS 6515 standard.
• Zenova completed successful pilot project with Together Housing to assess Zenova IP thermal insulation paint's ability to insulate properties that are difficult to insulate using traditional methods of insulation.
• Zenova IP Project With Liverpool John Moores University Resulting In Lowering Fuel Bills, Lower Cost Of Refurbishments And Improved Environmental Benefits. The results were extraordinary;
  • A 35% reduction to the buildings U-Value.
  • A 25% reduction to the buildings heating energy consumption.
  • A 19% reduction to the buildings CO2 carbon emissions.
  • An improvement of the buildings SAP score of 24 points.
  • The properties EPC rating improved from E to D.

The EPC rating change solution with Zenova IP will open up large markets for energy efficiency, energy savings, cost savings and reduced carbon footprint for any building.

‍

MANUFACTURING

‍Zenova has expanded scalable manufacturing partners to help ensure the supply of all Zenova products an satisfy the expected growth in demand for products across multiple geographies. First deliveries for FX500 have been shipped.

‍

INVESTOR UPDATES

• As announced on 31^st of May 2023, Don Nicolson, Thomas Melchior, Etrur Albani and Fiona Rodford, all being Directors of the Company, have entered into a working capital loan with the Company to make available up to £350,000 of cash resources should it be required (the "Working Capital Loan"). None of the Working Capital Loan has been drawn down.
• Also as announced on 31^st of May 2023 Zenova raised gross proceeds of £500,000 by way of a placing of 12,500,000 ordinary shares at four pence (4p).
• Post period update. A Zenova warrant holder exercised warrants in respect of 466,920 ordinary shares in the Company.

Note

This announcement contains inside information of the purposes of Regulation 11 of the Market Abuse (amendment) (EU exit) Regulations 2019/310. The Directors of the Company are responsible for the release of this announcement.