React Group (REAT ) said it made ‘strong progress’ in the six months ended 31 March 2021 which it attributes to its core business and some demand for COVID-19 decontaminations.
The cleaning, hygiene and decontamination specialist said it had achieved c.19% organic growth in revenue to around £2.5m (six months ended 31 March 2020: £2.1m). and c.43% organic growth in gross profit to around £1m (six months ended 31 March 2020: £0.7m).
In particular, healthcare, rail and facilities management sectors performed well, augmented by incremental business in other areas such as education and residential care homes.
REACT carried out a large proportion of high-margin work in the period helping to drive the gross profit margin to c.40%, around 700-basis points higher from 33.2% in the 2020 period.
The Board expects EBITDA (before exceptional items relating to the acquisition of Fidelis and some restructuring) to be in excess of £0.35m, materially higher than £0.085m in 2020.
The Group said its financial position is robust with underlying cash generation staying strong during the period. Net cash as at 31 March 2021 was £0.771m (31 March 2020: £0.306m).
Shares in React Group have nearly doubled in value since the beginning of 2021. The stock was trading 3.13% higher this morning at 2.475p following the announcement.
React said this figure is after payment of the initial consideration for the Fidelis acquisition (£1.5m in cash) and a proportion of the associated transaction costs, the remainder of which (around £170k including VAT) is payable in the second half of its financial year.
"We are pleased to have delivered another period of progress, with strong organic growth in both revenue and profit,” commented Shaun Doak, Chief Executive of React Group.
“The immediate outlook is positive, although we are mindful of the seemingly ever-changing environment in which we work can bring with it both opportunities and challenges. As a management team we continue to review tactics almost daily to ensure REACT remains an effective solution for our customers, our colleagues remain safe, and the business profitable.
The acquisition of Fidelis at the tail end of the period represents an exciting step forwards for the Group; marrying two strong management teams with well-matched values to provide incremental scale, resilience and capability, underpinning our ambition to rapidly become the leading provider of specialist cleaning, decontamination and hygiene services in the country.
On a final note, and on behalf of the Board, I wish to say 'thank you' for the continued efforts of the terrific team that make up the REACT business,” Doak added.
REACT said it intends to publish its unaudited results for the six months ended 31 March 2021 towards the end of June 2021.
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