REACT Group (REAT) , a specialist cleaning and soft facilities management company, announced its unaudited interim results for the 6 months to March 31, 2024 (H1 2024).
REACT reported a 13% increase in revenues to £10.57m from £9.32m LY, with repeat/recurring revenues over 85% of total. Gross profit increased by 15% to £2.87m and gross profit margin strengthened by 40 basis points to 27.1% from last year's 26.7%.
Adjusted EBITDA also increased by 35% to £1.28m from £951k LY, and free cashflow rose by 35% to £923k. Basic EPS was 0.41p from a loss of 0.41p a year ago, with an adjusted EBITDA EPS of 6.02p, from 4.51p LY. Cash jumped to £1.49m on March 31, 2024 compared to £650k a year ago.
REACT also noted significant operational progress during the period. The group secured 3 significant contracts valued at £1.3m annually, and renewed a 3-year contract with a large university, doubling its size to £1.3m/year. Additionally, REACT renewed 3 specialist cleaning contracts in the healthcare sector, collectively valued at £0.5m/year.
The group's LaddersFree digitalisation project is also advancing. User acceptance testing will take place over the summer, with system go live expected later in the year. LaddersFree is REACT's commercial window cleaning businesses.
Shaun Doak, CEO, commenting: "We are delighted with the Group's performance, particularly in a year characterised by significant investments. Despite the challenges, we have maintained strong sales momentum and secured higher margin business, which is a testament to our strategic efforts and operational efficiencies."
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REACT reports record revenue and profit growth in H1, with improved margins and a doubled cash position. Recurring revenues now represent 85% of the total, underpinning good visibility. Momentum is strong post-period with a robust sales pipeline, increasing investor and management confidence in meeting full-year market expectations.
As mentioned, the group secured a number of significant contracts in H1, adding momentum to recurring revenues. Additionally, a large number of small and medium-sized contract wins made for consistent and smooth sales growth, underscoring the quality of REACT's value proposition, marketing investments, and selling/cross-selling strategy.
Overall, trading in H2 carried the strong momentum from H1 as the group continued to shift away from lower-margin opportunities. The pivot to higher-margin segments should yield higher returns and sustainable sales growth, as it allows REACT to leverage its existing advantages in marketing/cross-selling and renewing existing contracts.
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