Source - RNS
RNS Number : 4891J
React Group PLC
29 June 2017
 

 

REACT Group plc

("React" or the "Company")

 

INTERIM RESULTS FOR THE 6 MONTHS ENDED 31 MARCH 2017

 

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

 

REACT Group Plc announces its half year results for the period ended 31 March 2017.

 

This has been a period of consolidation and reassessment of the business, with the closure of EPUK and concentration on improving the core business React Specialist Cleaning Ltd and the other businesses within the group, React Occupational Hygiene Ltd ("ROHSL") and React Environmental Services Ltd ("RES").

 

Financial Results

 

The Group results for the period ending 31 March 2017 are set out in the Consolidated Statement of Comprehensive Income.  Turnover for the period was £1.27m against £1.178m in the previous half year to March 2016. The loss for the 6 months to 31 March 2017 stood at £0.192 million of which £0.028 million was attributable to the closing down costs associated with EPUK The cash balance at 31 March stood at £0.847 million (2016: £1.385m).

 

Strategy

 

Following the disappointing performance of EPUK resulting in its closure, announced in December, the Company is now concentrating on improving the performance of its remaining businesses within the Group.  The Company does not intend making any further acquisitions in the foreseeable future.  As part of the strategy to build on the core business, React Specialist Cleaning, two new salespeople have been recruited to drive for more new sales, but we expect it will take time to see the benefit of that investment.  ROHSL has been restructured and sales are now improving.  The weakest of the three businesses is RES, which despite being awarded a new two year asbestos licence, which is a major win for a new licence holder, continues to perform below expectations and its future within the Group remains under review.

 

Current Trading

 

By concentrating on the three remaining businesses the overall performance of the Group has begun to improve, driven by React Specialist Cleaning Ltd and ROHSL.  In addition to working for longstanding clients React Specialist Cleaning Ltd has, via a major Facilities Management ("FM") company, secured work at a major London hospital to supply labour to clean wards, operating theatres and public areas on a daily/nightly basis, involving approximately 20 members of staff.

 

ROHSL was restructured and sales are now coming through at the level we anticipated and the team has built a relationship with a nationwide dental practice to provide a range of services, which seems to be becoming a good steady flow of sales and profit.

 

Asbestos is proving a difficult business to grow.  Our sales are much slower than we had originally hoped, however the team continue to work at building a sales pipeline.

 

A new administrative computer system is being installed, which will give a higher level of visibility and improve our controls going forward across all the businesses.

 

Outlook

 

Our marketplace is shifting with a number of our customers moving to a more FM managed service.  We have retained most of the business but at a lower margin, and in some cases have increased sales.  The Company has added some prestigious new clients and continues to work to add sales and control costs to enable it to continue to improve its financial performance in the second half of the year.

 

G.M. Leates

Chairman

 

28 June 2017

 

For further information, please contact:

 

REACT Group plc

 

Gill Leates - Chairman

07799 662642

 

 

 

 

SPARK Advisory Partners Limited

 

Neil Baldwin

0113 370 8974

Mark Brady

0113 379 8971

 

 

 

 

Whitman Howard Limited

 

Nick Lovering

0207 659 1224

 

 

 

 

Walbrook PR Ltd

020 7933 8780

Anna Dunphy

Mob: 07876 741 001

 

 

 

 

 

 

 

REACT Group Plc

 

Consolidated Statement of Comprehensive Income

For the six months ended 31 March 2017

 

 

 

 

Note

  6 months ended 31 March 2017

 

 6 months ended 31 March 2016

 

Year to 30 September 2016

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

Continuing Operations

 

 

 

 

 

 

Revenue

 

1,270

 

1,178

 

2,432

 

 

 

 

 

 

 

Cost of Sales

 

(934)

 

(648)

 

(1,419)

 

 

 

 

 

 

 

Gross Profit

 

336

 

530

 

1,013

 

 

 

 

 

 

 

Administrative expenses

 

(500)

 

(560)

 

(1,159)

 

 

 

 

 

 

 

Operating loss

 

(164)

 

(30)

 

(146)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

-

 

-

 

(1)

 

 

 

 

 

 

 

Loss for the period from continuing operations

 

(164)

 

(30)

 

(147)

Loss for the period from discontinued operations

 

(28)

 

-

 

(141)

 

 

 

 

 

 

 

Loss for the period

 

(192)

 

(30)

 

(288)

 

 

 

 

 

 

 

Other Comprehensive Income

 

-

 

-

 

-

 

 

 

 

 

 

 

Loss for the financial period attributable to equity holders of the company

 


(192)

 


(30)

 

(288)

 

 

 

 

 

 

 

Loss per share for loss attributable to the equity holders of the company (pence) on continuing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per ordinary share

 

 

 

 

 

 

From continuing operations

 

(0.06p)

 

(0.01p)

 

(0.05p)

From discontinuing operations

4

(0.01p)

 

-

 

(0.05p)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REACT Group Plc

 

Consolidated Statement of Financial Position

As at 31 March 2017

 

 

 

Note

As at 
31 March 2017

 

As at 
31 March 2016

 

As at 
30 September 2016

Assets

 

£'000

 

£'000

 

£'000

Non-current assets

 

 

 

 

 

 

Intangibles

 

1,444

 

1,466

 

1,444

Property, plant and equipment

 

173

 

237

 

252

 

 

1,617

 

1,703

 

1,696

Current assets

 

 

 

 

 

 

Trade and other receivables

 

1,069

 

624

 

788

Cash and cash equivalents

 

847

 

1,385

 

931

 

 

 

 

 

 

 

 

 

1,916

 

2,009

 

1,719

 

 

 

 

 

 

 

Total assets

 

3,533

 

3,712

 

3,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

Called-up equity share capital

5

689

 

689

 

689

Share premium account

 

4,889

 

4,889

 

4,889

Reverse acquisition reserve

 

(5,726)

 

(5,726)

 

(5,726)

Capital redemption reserve

 

3,337

 

3,337

 

3,337

Merger relief reserve

 

1,328

 

1,328

 

1,328

Share based payments

 

30

 

5

 

22

Accumulated losses

 

(1,689)

 

(1,239)

 

(1,497)

 

 

 

 

 

 

 

Total Equity

 

2,858

 

3,283

 

3,042

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

654

 

409

 

352

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Deferred tax liability

 

21

 

20

 

21

 

 

 

 

 

 

 

Total liabilities

 

675

 

429

 

373

 

 

 

 

 

 

 

Total Liabilities and Equity

 

3,533

 

3,712

 

3,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REACT Group Plc

 

Consolidated Statement of Cash Flows 

For the six months ended 31 March 2017

 

 

Note

6 months ended 31 March 2017

 

6 months ended 31 March 2016

 

Year to 30 September 2016

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

Net cash used in operating activities

 

(78)

 

(317)

 

(698)

 

 

 

 

 

 

 

Net cash from investing activities

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(6)

 

(137)

 

(210)

 

 

 

 

 

 

 

Net cash outflow from investing activities

 

(6)

 

(137)

 

(210)

 

 

 

 

 

 

 

Net cash from financing activities

 

 

 

 

 

 

Net proceeds from issue of equity shares

 

-

 

-

 

-

 

 

 

 

 

 

 

Net increase in cash, cash equivalents and overdrafts

 


(84)

 


(454)

 

(908)

 

 

 

 

 

 

 

Cash, cash equivalents and overdrafts at beginning of period

 


931

 


1,839

 

1,839

 

 

 

 

 

 

 

Cash, cash equivalents and overdrafts at end of period

 


847

 


1,385

 

931

 

 

 

 

 

 

 

Reconciliation of operating loss to net cash outflow from operating activities

 

6 months ended 31 March 2017

 

6 months ended 31 March 2016

 

Year to 30 September 2016

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

Operating loss from continuing activities

 

(192)

 

(30)

 

(288)

Depreciation and amortisation

 

90

 

86

 

163

Share based payments

 

8

 

5

 

22

 

 

 

 

 

 

 

Operating cash flows before movements in working capital

 


(94)

 


61

 

(103)

 

 

 

 

 

 

 

(Increase)/decrease in receivables

 

(281)

 

140

 

(24)

Increase/(decrease) in payables

 

297

 

(518)

 

(571)

Net movement in working capital

 

16

 

(378)

 

(595)

Net cash outflow from operating activities

 


(78)

 


(317)

 

(698)

 

 

 

 

 

REACT Group Plc

 

Consolidated Statement of Changes in Equity

 Six months ended 31 March 2017

 

 

 

Share Capital

Share Premium

Merger Relief

Reserve

Capital Redemption

Reserve

Accumulated Deficit

Reverse Acquisition

Reserve

Share Based Payments

Reserve

Total Equity

 

 

 

 

 

 

 

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

At 30 September 2015

689

4,889

1,328

3,337

(1,209)

(5,726)

-

3,308

 

 

 

 

 

 

 

 

 

Options issued in the period

-

-


-


-

-


-


5

5

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

(30)

-

-

(30)

 

 

 

 

 

 

 

 

 

At 31 March 2016

689

4,889

1,328

3,337

(1,239)

(5,726)

5

3,283

 

 

 

 

 

 

 

 

 

Options issued in the period

-

-


-


-

-


-


17

17

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

(258)

-

-

(258)

 

 

 

 

 

 

 

 

 

At 30 September 2016

689

4,889

1,328

3,337

(1,497)

(5,726)

22

3,042

 

 

 

 

 

 

 

 

 

Options issued in the period

-

-


-


-

-


-


8

8

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

(192)

-

-

(192)

 

 

 

 

 

 

 

 

 

At 31 March 2017

689

4,889

1,328

3,337

(1,689)

(5,726)

30

2,858

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REACT Group Plc

Notes to the interim financial statements

 

1.  Basis of preparation  

 

These consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and on a historical basis, using the accounting policies which are consistent with those set out in the Group's annual report and accounts for the period ended 30 September 2016. The interim financial information for the six months to 31 March 2017, which complies with IAS 34 'Interim Financial Reporting' has been approved by the Board of Directors on 28 June 2017.

 

The unaudited interim financial information for the period ended 31 March 2017 does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the period ended 30 September 2016 are extracted from the statutory financial statements which have been filed with the Registrar of Companies and contain an unqualified audit report and did not contain statements under Section 498 to 502 of the Companies Act 2006.

 

2.  Principal Accounting Policies

 

The principal accounting policies  adopted  are  consistent  with  those  of  the  annual  financial statements for the period ended 30 September 2016 and are those expected to be applied for the year ending 30 September 2017.

 

New and amended standards adopted by the group

 

There are no IFRSs or IFRIC interpretations that are effective for the first time in this financial period that would be expected to have a material impact on the group.

 

3.  Segmental Reporting

 

In the opinion of the directors, the group has one class of business, being that of specialist cleaning and decontamination services. The group's primary reporting format is determined by the geographical segment according to the location of its establishments. There is currently only one geographic reporting segment, which is the UK. All costs are derived from the single segment.

 

4.  Loss per Share

 

The loss per ordinary share has been calculated on the loss on ordinary activities after taxation of £192,000 (30 September 2016: £288,000; 31 March 2016 £30,000) using the weighted average number of ordinary shares in issue during the period being 275,407,753 (30 September 2016: 275,407,753; 31 March 2016: 275,407,753).

 

Basic and diluted earnings per share are the same, since where a loss is incurred the effect of outstanding share options and warrants is considered anti-dilutive and is ignored for the purpose of the loss per share calculation. As at 31 March 2017 there were 19,104,464 (30 September 2016: 19,104,464; 31 March 2016: 19,104,464) outstanding share warrants and options which are potentially dilutive.

 

5.  Called up Share Capital

 

The issued share capital as at 31 March 2017 was 257,407,753 Ordinary Shares of 0.25 pence per share (30 September 2016: 257,407,753 Ordinary Shares of 0.25 pence per share as per the audited accounts; 31 March 2016: 257,407,753).

 

There were no share issues during the interim period or the comparative periods.

 

6.  Share Options

 

On 30 November 2015, the Company issued EMI options for 16,524,464 new ordinary shares in the Company exercisable at a price of 1.68p per £0.025 ordinary share, exercisable after 3 years. The options have a 10 year exercise period ending on 29 November 2025.

 

No options were exercised in the period.

 

The fair value of the share options issued in the current period on 20 November 2015 with an exercise price of 1.68p is 0.38p and was derived using the Black Scholes model. The following assumptions were used in the calculations:

      

Share price at grant date

1.68p

Risk-free rate

0.25%

Volatility

30%

Expected life

10 years

 

Expected volatility is based on a conservative estimate for the Company. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

 

£8,000 (March 2016: £5,000) has been recognised during the period for the share based payments over the vesting period.

 

7.  Post balance sheet events

 

There were no post balance sheet events.

 

8.  Availability

 

Copies of this Interim Report are available from the Company Secretary, Finsgate 5-7 Cranwood Street, London, EC1V 9EE, and on the Company's website www.reactplc.co.uk

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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