REG - React Group PLC - Trading Update

ReactAnnouncement

25/04/2024 07:00

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RNS Number : 9324L  React Group PLC  25 April 2024

25 April 2024

 

REACT Group plc

("REACT", the "Group" or the "Company")

 

Trading Update

 

REACT Group plc (AIM: REAT.L), the leading specialist cleaning, hygiene, and
decontamination company, is pleased to announce a trading update for the six
months ended 31 March 2024.

 

Highlights

 

-      Revenues of £10.6m up 14% (2023: £9.3m)

-      Gross Profit of £2.9m up 15% (2023: £2.5m)

-      Adjusted EBITDA of £1.3m up 38% (2023: £0.9m)

 

Background

 

As announced in its full year results on 6 February 2024, momentum from FY23
had continued into the new financial year and that the first few months of
FY24 had delivered a record trading performance for the Group. The Board is
pleased to report that this trading pattern has continued with good sales
growth across all three divisions of the business. As a result, revenues for
the six-month period are expected to be approximately £10.6m (2023: £9.3m),
achieving a gross profit of approximately £2.9m (2023: £2.5m) and an
Adjusted EBITDA* of approximately £1.3m (2023: £0.9m).

 

As at 31 March 2024, the Group had cash resources (including cash equivalents)
of £1.5m. This was despite outflows during the period in respect of deferred
consideration of just over £1.0m, in connection with the acquisitions of both
Fidelis and LaddersFree.

 

The Group continues to deliver strong recurring revenues in excess of 85% and
the associated margin improvement is reflected in an enhanced revenue mix with
higher margin repeat business and operational synergies across the Group.

 

Contract wins

 

The Company has continued its drive on new business with three recently
announced material contracts totalling over £1.3m annually. The contracts
include a £0.8m three-year renewal and expansion of a Facilities Management
('FM') soft services agreement with an NHS trust in the Midlands, with an
option to extend to five years. The Company has also extended for a further
two years an established Core Vendor agreement with the UK operation of one of
the world's largest FM companies. The Company was also awarded a new £0.5m
agreement with a leading UK FM business to provide a single point of service
delivery for emergency decontamination services to its customers, some of whom
are well known, recognisable brands.

 

Shaun Doak, Chief Executive Officer of REACT, commented: "We are very pleased
with the performance of the Group in a year of considerable investment and
which sees continued sales momentum across a higher margin business. In
addition to the material contracts, the Group continues to be awarded numerous
small and medium sized wins which highlights its cross-selling capability. The
pipeline for the remainder of the year remains robust which provides the Board
with a high degree of confidence in achieving full year market
expectations**."

 

 

*Adjusted EBITDA represents earnings before separately disclosed acquisition
and other restructuring costs (as well as before interest, tax, depreciation
and amortisation).  This is a non-IFRS measure.

 

**Current consensus FY24 Revenue & Adjusted EBITDA market expectations of
£21.25m & £2.5m respectively

 

For more information:

 

 REACT Group                           Tel: +44 (0) 1283 550 503
 Shaun Doak, Chief Executive Officer
 Spencer Dredge, Chief Financial Officer

 Mark Braund, Chairman

 Singer Capital Markets - Nominated Adviser & Joint Broker                           Tel: +44 (0) 207 496 3000
 Philip Davies / Alex Bond / Oliver Platts

 Dowgate Capital - Joint Broker                                                      Tel: +44 (0) 20 3903 7715
 Stephen Norcross / Nicholas Chambers

 IFC Advisory - Financial PR & IR      Tel: +44 (0) 20 3934 6630
 Graham Herring / Zach Cohen

 

 

About Us:

REACT Group plc is the UK's leading specialist and contract cleaning business
and operates with three divisions: LaddersFree, one of the largest commercial
window cleaning businesses in the UK; Fidelis Contract Services ("Fidelis"), a
contract cleaning and facilities maintenance business; and REACT business,
which primarily provides a solution to emergency and specialist cleaning
situations, both through long-term framework agreements and on an ad-hoc
basis.

 

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