React Group Expecting Difficulties To Continue After Tough Year

27th Mar 2018 13:14

LONDON (Alliance News) - Shares in React Group PLC fell Tuesday as the firm said it had had a difficult recent financial year in terms of profitability, though a new strategy is starting to boost performance.

React's shares were trading at 0.45 pence each on Tuesday, down 14%.

React's pretax loss widened to GBP393,000 in the 12 months to September after a loss of GBP147,000 in the same period a year earlier. Revenue from continuing operations increased, however, by 8.8% year-on-year to GBP2.6 million.

The rapid response deep cleaning and emergency decontamination firm said it had been a tough year as the industry consolidated and budget constraints hit public sector customers. Profit margins were thus squeezed, it said, particularly regarding larger customers.

React's gross margin fell to 31.4% from 41.7% due to an increase in larger public sector business, which it said offers a more secure revenue stream, though at a lower entry level margin as the company has to provide an all-day, every-day service guarantee.

At the end of 2016 Reach closed its EPUK environmental remediation business to focus on its core cleaning business, and its new strategy is to target higher value contracts, which React said is now paying dividends.

Looking ahead, 2018 is still expected to be difficult, but React is broadening its customer base and is optimistic changes made will soon start to bring benefits.

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