- Annual results to miss estimates
- Slow market for higher-value deals
- 24hr Aquaflow Services lifts growth
Shares in React (REAT:AIM) slumped 20% to a two-year low of 57.5p after the support services group warned full-year results would miss market estimates with the rising costs, inflationary pressures and evolving regulations facing facilities management customers causing contract delays.
This disappointing news overshadowed otherwise solid first-half results from the deep cleaning-to-decontamination specialist, whose top-line growth was boosted by the recently-acquired drainage and plumbing business 24hr Aquaflow Services.
React, which providers cleaning services to the leisure and education sectors as well as transport operators, police forces and the prison service, also stressed that deals which experienced delays in the first half were now progressing, ‘supporting re-emerging revenue growth which may benefit the second half of the current financial year’.
Despite this short-term trading setback, the board firmly believes React is well positioned to capitalise on an improvement in the economy.
CAUTIOUS APPROACH
The Birmingham-based company, which owns the UK’s largest commercial window cleaning business, LaddersFree, said full-year 2025 results would be below market expectations with the board adopting ‘a cautious approach to conversion of new business in the second half’.
This caution reflects ‘prevailing sector-specific and global economic pressures extending business decision cycles, particularly for higher value contracts’, explained React, whose portfolio also spans contract cleaner to soft facilities management provider Fidelis and emergency and specialist cleaning solutions specialist REACT.
GO WITH THE FLOW
As chief executive Shaun Doak explained: ‘While economic pressures have materially affected some areas, the successful integration of 24hr Aquaflow Services has been a key growth driver, helping to offset some of the challenges in specialist cleaning.’
Doak continued: ‘Looking ahead, we remain focused on strengthening pipeline momentum and capitalising on mid-market opportunities, where shorter decision cycles are supporting new business wins. Investments in Project Sparkle, customer engagement, and service optimisation continue to enhance efficiency, positioning React well for long-term, sustainable growth despite broader market challenges.’
RECURRING REVENUE STRENGTH
Market headwinds crimped React’s organic growth in the half ended 31 March 2025, although the results were solid enough.
Revenue rose 14% to £12.1 million, driven by the recent acquisition of 24hr Aquaflow Services, while adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) grew 12% to £1.43 million, although React did lurch into the red after said amortisation, depreciation and exceptional costs as well as share-based payments.
Management said the results reflected the strength of React’s recurring revenue base and proactive cost management, while also ‘enhancing our financial and operational infrastructure to support the business’ continued scaling.’
