React Group PLC Trading Update (8172I)
06 April 2020 - 4:00PM
UK Regulatory
TIDMREAT
RNS Number : 8172I
React Group PLC
06 April 2020
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
REACT Group PLC
("REACT" or the "Company")
REACT Group Plc., (AIM: REAT.L) the leading specialist cleaning
and decontamination company, provides the following market
update.
The REACT business is experiencing high demand to provide
decontamination and infection control services, including the
thorough deep cleaning of premises thought be harbouring
SARS-CoV-2, the virus responsible for CV-19 (2019 novel
coronavirus/COVID-19).
REACT provides a rapid response to the threat posed by CV-19,
applying high standards of deep cleaning and testing to enable
Customers to return potentially infected properties to safe
operational use, alongside providing reassurance to the people that
use or pass through them.
Making use of some proprietary components our methodology
eliminates all traces of the virus, applies onsite ATP testing to
confirm and certify a site is clear and equips our specialist
cleaning operators beyond recommended standards to ensure their
health and safety.
REACT has expanded capacity to support demand by cross training
our experienced operators and through partnerships and
sub-contracting with smaller specialist cleaning operators.
REACT has entered into a number of agreements with Tier 1
Customers to provide a 'first-response' service to support multiple
premises in England and Wales. Although we anticipate the rate of
demand softening over the next few weeks as the impact of the
lock-down reduces incidents requiring remedial action, we believe
demand for deep cleaning and decontamination will increase again as
the country returns, albeit in stages, to some form of
normality.
The REACT business is divided into two-parts of approximately
equal size of revenues; reactive cleaning services - which is
supporting the deep cleaning requirements; and regular maintenance
services. The regular maintenance business largely operates in the
Healthcare, Road and Rail sectors, all of which have yet to see
material changes to operations. Whilst at present we anticipate any
reduction in activity in one sector will be counter-balanced by
demand in another, it is too early to reliably forecast the impact
of any sustained period of economic disruption on our underlying
business.
At the start of the financial year, which runs to 30 September
2020, management expectations had been for the business to move
into profitability after reporting annual losses for the last
four-years. Recent trading, notably in March, has been ahead of
management expectations and as result the Group is likely to have
delivered a small operating profit in the six months to 31 March
2020, which puts the Group in a good position to meet or exceed
management expectations for the full year.
The health and welfare of all our colleagues is paramount; for
those not in front-line services, such as sales and administration,
we took the early decision to put in place policies and procedures
to enable remote working in early March 2020.
Management are using all tools at its disposal to preserve cash,
focusing on secure revenue streams with high quality Customers,
deferring non-critical capital expenses and using government-backed
support initiatives where appropriate.
The (unaudited) cash balances at 31 March 2020 amounted to
c.GBP306,000. This includes only one week's worth of payments from
the c. GBP0.5 million Tier 1 Customer contract announced via RNS on
23 January 2020, and which has until this point consumed cash. The
cashflow remittances from this Contract, which is continuing to
perform very well, are weekly from this point onwards and will
contribute positively to the Company's cash position. In addition,
REACT has negotiated with a bank an initial line of credit of
GBP225,000 on favourable terms secured through invoice discounting.
We therefore believe we are in a strong position to support growth
in key areas of the business.
In summary, the Company is facing opportunities and challenges,
the scale and nature of which is constantly changing and, as yet,
we have no clear visibility of its likely duration. We will further
update the market once we have the information to credibly do so,
in the meantime m anagement continues to closely monitor the
situation regarding CV-19 and remains confident in the continued
performance and flexibility of the Group to deliver for its
Clients.
The Company expects to publish its half year report for the six
months ended 31 March 2020 in June 2020.
REACT Group PLC
Shaun Doak - Chief Executive
Officer 0772 500 3662
SPARK Advisory Partners Limited
Neil Baldwin / Henry Todd 0113 370 8974
Peterhouse Capital (Broker)
Duncan Vasey/Martin Lampshire 0207 459 0930
Note to Editors:
The official names for the virus responsible for COVID-19
(previously known as '2019 novel coronavirus') and the disease it
causes are:
Disease:
Coronavirus disease (COVID-19)
Virus:
SARS-CoV-2
ATP testing is the process of rapidly measuring actively growing
micro-organisms through detection of adenosine triphosphate - REACT
use ATP testing to confirm swabbed areas have been cleared of
pathogens, i.e. decontamination has removed the presence of
SARS-CoV-2.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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