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Have had a good look at these and would like to pull the trigger. However, this would mean having more shares than the CFO (just £4k), which does not inspire confidence. If a CFO can’t back his own company then why should I? That’s a major red flag for me.
One interesting paragraoh from Allenby Capital's update today is the following - to say "we are aware" that other FM companies are in a similar position to the one in today's RNS suggests to me that REAT have briefed them about the potential for further such wins:
"Supplier consolidation offers the prospect of similar opportunities -
This award is part of the customer’s strategy to consolidate supply chains in this category of work, from several hundred smaller suppliers to just one. We are aware that other large FM companies have similar unwieldy supply chains which could benefit from supplier consolidation and consequently we believe this contract could provide an important reference site."
Excellent news. Moves the dial again on this no longer being a short term play. Got to be a hold for medium term now. Cash is coming in; business is growing; appears to be well run. If only I had taken a bigger 'punt" haha
For the record, Allenby Capital have issued a brief update, but they're extremely prudent given the two recent contract wins and currently leave their forecasts unchanged.
However, they do say:
"we believe forecasts are now comfortably underpinned and capable of being upgraded as we progress through the year. We continue to believe that there is further substantial upside in the share price".....
Http://www.allenbycapital.com/research_1205_120890877.pdf
So contract is worth 50% of all previous year revenue. Just wawww
Wow. That's very material revenues to this still tiny m/cap company - £2m per annum, guaranteed for the next 3 years.....
And that's just the minimum since that number has grown post-COVID and with the FM client itself growing and adding further customers.
As REAT say today, this "highlights the potential for further consolidation" in REAT's specialist cleaning sector. Perhaps investors might now understand exactly what REAT are doing and how they're doing it:
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-3-Year-contract-with-a-leading-FM/84907842
I believe you can, in fact it's probably deserving of a Basil Brush ism!
Going from strength to strength, keep it up chaps, a great endorsement of (not so) little old React!
RNS:Can I say BOOM XX
Just to let shareholders and prospective investors know that React will be presenting at Mello Events’ webinar on Monday 26th April at 6pm-9:30pm! Tickets are still available and if you would like one at half price then enter the code LSE50OFF.
The programme is as follows:
• 6.00 pm Mello welcome and news with David and Karin
• 6.10 pm Ed Croft – First quarter analysis of the Stockopedia competition
• 6.40 pm Company presentation by Belvoir
• 6.50 pm Charity pledge – ****ney Rebel @RebelHQ
• 7.00 pm Company presentation by Trident Royalties
• 7.20 pm Steve Clapham – Specialist Insights and Investor Red Flags by Behind the Balance Sheet
• 7.40 pm Company presentation by React
• 8.00 pm Mello Soap Box with ****ney Rebel – Are you getting the correct share prices?
• 8.10 pm Company presentation by Wentworth Resources
• 8.40 pm Results Round Up with Paul Scott, Gordon Jones (glasshalfull) & Alan Charlton
You can find more information here: Https://melloevents.com/mm-26th-april-2021/
Anyone with a ticket will also automatically be sent a free ticket link to the Results Roadshow event taking place on Tuesday 27th April at 11am-3pm! For more information, click here: Https://melloevents.com/tuesday-27th-april-2021/
REAT have now confirmed they'll present next Monday night at Mello - a nice 70% discount code for shareholders too!
Https://www.investegate.co.uk/react-group-plc--reat-/rns/react-to-present-at-mellomonday-on-26th-april-2021/202104220820442901W/
Nice buy up there 119% and counting xx
React Group PLC - South Derbyshire-based cleaning, hygiene and decontamination - Makes strong progress in six months to March 31, with 19% organic revenue growth to GBP2.5 million and 43% organic growth in gross profit to GBP1.0 million. "Growth was the result of strong underlying performance in the core business alongside some demand for Covid-19 decontaminations. Healthcare, rail and facilities management sectors performed well, augmented by incremental business in other areas such as education and residential care homes," company says. Expects earnings before interest, tax, depreciation and amortisation - before exceptional items relating to the acquisition of Fidelis and some restructuring - to be in excess of GBP350,000, "materially higher" than the GBP85,000 posted a year ago.
Excellent news
Excellent contract win news - £585k over the next year more than doubles the amount of business previously derived from this "prestigious Facility Management customer operating in the national highways sector".
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Contract-Win/84863034
"Shaun Doak, Chief Executive Officer, commented :
"I am delighted this important customer has once again recognised REACT as the best solution provider for its specialist cleaning and pre-planned maintenance work requirements.
This new agreement is testament to the excellent work performed by our specialist operatives and in particular, the way our Operations Manager has been able to guide and support the programme of works over the last year, ensuring our customer remained compliant during the COVID-19 pandemic.
With this latest contract win, we highlight REACT's ability to secure long-term specialist contracts, helping to consolidate our customers' spend in these areas with one high-performing, efficient and cost effective provider.
REACT will continue to provide customers with class leading guidance, specialist cleaning standards and pre-planned maintenance, specifically tailored to the needs of the customer."
Good to see REAT are presenting online at Mello next Monday 26th April - they get quite sizeable audienes now:
Https://melloevents.com/mm-26th-april-2021/
Very positive stuff. I really like the way this management team have shaken up the business and have a clear strategy.
Good to see them emphasise the figures for the combined business going forward per the new Allenby note of £10m forecast revenues and £1.15m EBITDA on an annualised run-rate, though as I suggested in post 1658 above I suspect the EBITDA figure is somewhat conservative (and rightly so).
Highlights from the presentation:
- 80% of revenues are recurring, comprise half contract maintenance work and half reactive, with the other 20% being project work
- the overhead base is largely fixed so increased scale bringsincreased margins and bottom line
- Fidelis are "one of the best operators in contract maintenance". Theirs is recurring revenue from 3-5 year contracts, 40% from education
- Fidelis invoice in advance, so they have very positive debtor profiles and cash flows
- Fidelis are complementary in their activities and customers, so there's no overlap and lots of opportunity for cross-selling
- more acquisitions are possible from existing cash or utilising loan or invoice discounting facilities. And of course now that the share price is more respectable I would be happy to see more equity issued as part-cosideration.
A reminder!
Https://www.investormeetcompany.com/react-group-plc/register-investor
And strong buying in to close
REAT are looking rather good value.
Allenby have retained their prior forecasts of £850k EBITDA, almost £0.8m PBT and 0.14p EPS - though of course a full year's inclusion of the Fidelis acquisition takes the run-rate to 0.17p EPS.
Their forecast now seems rather conservative. With a stated MINIMUM of £350k EBITDA in H1, one might expect - with a little growth in H2, especially given the lockdown easing - a conservative £400k in H2. In addition, Allenby incorporate £295k EBITDA from Fidelis in H2 in their forecast (call it a round £300k).
That makes a total of £1.05m EBITDA, against Allenby's £850k forecast.
On an annualised basis, with a full year of Fidelis contributing £600k EBITDA, that's a run-rate of £1.35m EBITDA against a £12.4m m/cap......
Yup, impressive numbers. This is a very promising small company flying below the radar .
Great stuff:
- 43% organic gross profit growth to £1m
- EBITDA of £350k, up from £85k last year
- £0.8m net cash - after paying £1.5m for Fidelis and associated acquisition costs
- gross profit margins up to 40% from 33%
- positive outlook
- and stating clearly how high REAT is aiming:
"our ambition to rapidly become the leading provider of specialist cleaning, decontamination and hygiene services in the country"
Https://uk.advfn.com/stock-market/london/react-REAT/share-news/React-Group-PLC-Trading-update-and-Investor-Presen/84829403
Just announced this morning - Fidelis have won a £700,000 cleaning contract tender for Tewekesbury School:
Https://bidstats.uk/tenders/2021/W15/748683303
This is until March 2027, so it's £100k per annum for the next 7 years. A very nice annual sum, but most importantly lovely recurring income for the long-term as per Fidelis' other contract wins over the last couple of years.
Not quite as good as you on the entry price pumpky (1.28p), but still very good. The next company update is going to be very interesting to find out more about what is happening generally / revenues / growth / targets etc. As i mentioned before this has gone from becoming a short term 'punt' to possibly something a bit longer and fruitful.
I expect REAT will get a one-off boost from the great re-opening, as (1) call-out work from the likes of courtrooms and housing associations returns to normal, and (2) various premises require COVID decontamination.
The main driver of REAT's recent success - via the excellent new management - has been the growth in its core business. Whilst COVID has been a useful addition in compensating for the loss of some call-out work, it provided only £444k of revenues last year, so the return of REAT's regular work should more than outweigh the steady decline in COVID revenues which is likely, especially as fears over transmission via surfaces are diminishing - unless there's a further lockdown and another more transmissible variant comes along.