React Group upbeat after half-year of growth

Cleaning, hygiene and decontamination provider React Group said it had continued to make “strong progress” in a trading update on Thursday, achieving year-on-year organic revenue growth of around 19% for the six months ended 31 March, to £2.5m.

The AIM-traded firm achieved 43% unaudited organic growth in gross profit to £1m for the period.

It said the growth came on the back of strong underlying performance in its core business, along with some demand for Covid-19 decontaminations.

Healthcare, rail and facilities management sectors performed well, augmented by incremental business in other areas such as education and residential care homes.

React said it carried out a large proportion of high-margin work in the period, helping to drive its gross profit margin to 40% - 700 basis points higher than the same period in the prior year.

“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 the same period last year,” the directors said in their statement.

Those numbers did not include any contribution from the recent acquisition of Fidelis Contract Services.

“The group's financial position is robust, and underlying cash generation remained strong during the period.”

Net cash as at 31 March totalled £0.77m, up from £0.31m a year earlier, after payment of the initial consideration for Fidelis of £1.5m cash, and a proportion of the associated transaction costs.

The rest of those costs, totalling £0.17m including VAT, would be payable in the second half of the company's financial year.

At 1609 BST, shares in React Group were up 4.5% at 2.51p.