React Group falls as highers fees wipe away profits

React Group shares dropped on Friday after the company reported a widened loss on the back of one-off restructuring and administrative fees after the business severed administrative ties with its previous owner, Autoclenz.

For the year ended 30 September the AIM-traded extreme cleaning company reported a loss before tax of £1.95m, from a loss of £0.39m the year before, while administrative fees more than doubled as they leapt from £1.22m to £1.64m, including £1.34m of exceptional costs.

These costs helped the company sever ties to Autoclenz and establish its own fit-for-purpose administration and office infrastructure in Swadlincote, Derbyshire, while restructuring efforts simplified its business model from three operating businesses to just one.

Revenue increased by 24.6% to £3.30m but gross profit decreased by 16.5% to £0.69m as cost of sales increased from £1.82m to £2.60m.

At the end of the period the company had cash and cash equivalents of £0.42m, down from £0.63m at the same point the year before.

Gill Leates, executive chairman of React, said: "With a rationalised infrastructure, a fit-for-purpose and well-motivated management team and a competitive service proposition in an area of the market often left well alone by competitors, we have established a solid platform from which we can now grow and begin our return to profit."

React Group's shares were down 13.95% at 0.18p at 0846 GMT.