React Group Regulatory News (REAT)

23 March 2016

REACT Group plc

(the "Company or the Group")

Financial Report and Posting of Report & Accounts

Period June 24 2015 to September 30 2015

REACT Group plc (AIM: REAT), the specialist provider of rapid response deep cleaning and emergency decontamination services, announces its financial results for the period from June 24 2015 to September 30 2015.

Financial Highlights

· Turnover for the period of £704,000

· Gross profit for the period of £358,000

· Loss excluding one-off items £55,000

· Loss for the period of £1.2million

· Cash position remains strong with £1.8million, at the date of the financial statements and £1.3million as at today's date.

Operational Highlights

· The Company announced the raising of £2.0 million (before expenses), the acquisition of REACT SC Holdings Ltd and the readmission of its shares to trading on AIM on 14 August 2015

· The Company reports a successful start to the current trading period

Post Period End

· Two wholly owned subsidiaries created to reflect business

· Environmental Services granted a Full Asbestos Removal Licence

· New client business gained

Grahame Rummery, Chief Executive of REACT Group plc, commented: "Since we recommenced trading on June 24 2015, we have been able to continue to generate revenues from our existing customer base and new clients. Following the re-admission to AIM and the acquisition of the two new subsidiaries, we are now working with a number of new clients that will be generating the growth in sales for all businesses in the Group going forward."

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Chairman's and Chief Executive Statement

We are pleased to announce the financial results for REACT Group PLC's (formerly Verdes Management PLC) annual report for the period ended 30 September 2015.

The Company was admitted to trading on AIM in August 2015 following the successful acquisition of REACT SC Holdings Ltd. and was renamed REACT Group PLC. REACT traded successfully for many years as a division of Autoclenz Holdings Ltd. In June 2015 the REACT business was transferred to a newly-formed limited company, REACT Specialist Cleaning Limited, which, following a re-organisation of the Autoclenz group, became a subsidiary of REACT SC Holdings Limited.

On 17 August 2015, REACT Group Plc acquired the entire share capital of REACT SC Holdings Limited and its subsidiary by way of a share for share exchange. As a result, the former shareholders of REACT SC Holding Limited obtained control of REACT Group Plc. Reverse acquisition accounting has been adopted as a result, the report and accounts reflect the trading activity of REACT Specialist Cleaning Limited from 24 June 2015 together with the results of REACT Group Plc from 17 August 2015.

It should be noted that REACT SC Holdings Limited and REACT Specialist Cleaning Limited were dormant from incorporation up to 24 June 2015 until REACT Specialist Cleaning Limited acquired the business and fixed assets of the REACT division from Autoclenz.

One-off expenditure included within the Consolidated Statement of Comprehensive Income were a shared based payment charge recognised for the reverse acquisition of £754,000 with the group also incurring £400,000 of acquisition and admission costs.

STRATEGY

REACT's long term strategy is twofold:

1. To build on existing long term relationships and to grow the business organically; and

2. Growth by acquisition - REACT operates in a sector which contains many small specialist companies that provide opportunities to consolidate selected quality operations under the REACT umbrella and offer a much broader range of specialist services.

In the many years that REACT has operated in the extreme specialist cleaning area, it has built up an in depth knowledge of the niche areas that require expertise that it would find complimentary to the skill sets that it currently offers.

As a result, post the reporting period and with a substantially stronger balance sheet the enlarged group has made two small acquisitions which we believe by the year end these acquisitions will have a positive contribution. We will continue to look for more strategic bolt on businesses that will only enhance our service offering.

KEY ACHIEVEMENTS

- The Company announced the raising of £2.0 million (before expenses), the acquisition of REACT SC Holdings Ltd and the readmission of its shares to trading on AIM on 14 August 2015

- A successful start to the current trading period

POST BALANCE SHEET EVENTS

In November 2015 we were delighted to announce that within REACT we had created two new wholly owned subsidiaries: REACT Environmental Services Ltd (''RES''), and REACT Occupational Hygiene Services Ltd (''ROHSL''), which will be able to offer a wider and complimentary range of managed services to our growing client portfolio. REACT acquired certain capital equipment, for a small sum, from two separate businesses which had previously operated in these fields, and recruited a specialist in each area. Therefore, these businesses have been set up very cost effectively, without paying substantial amounts of goodwill, which should prove beneficial for our shareholders.

Subsequently on 26 January 2016 REACT Environmental Services was granted a Full Asbestos Removal Licence. This means that in asbestos RES can offer the following asbestos related services.

Asbestos

- Full Asbestos Removal - Licensed and Non-licensed

- Asbestos surveys

- Soil contamination

- Full reinstatement after removal

The other subsidiary ROHSL, can offer the following services:

- Indoor air quality testing

- Occupational exposure monitoring

- Acoustic surveys

- Biological contaminates

- Hazard surveys

- Mould detection

RESULTS

The Group's results for the period ended 30 September 2015 are set out in the Consolidated Statement of Comprehensive Income. It shows an operating loss of £35,000 but this is only for a short period just after the transaction. Administrative expenses were £393,000 reflecting the costs of operating both companies for the period as detailed above.

The Group's current cash position remains strong at £1.3m at today's date post the setting up of the two subsidiaries RES and ROHSL, and is sufficient to fund more add-on acquisitions and services.

OUTLOOK

Since the year end the Company has traded very well, consolidating and growing the original business and absorbing the start-up costs of the two new acquisitions. Long standing clients continue to remain an important part of the business, but new clients continue to add a strong pipeline of contracts in both the public and private sectors. What we are delighted with is the number and increasing value of new tenders we are being approached on and the success with winning these.

We look forward with confidence as we have a well-funded business, with substantial organic growth and additional opportunities to acquire niche businesses that add a further offering to our ever expanding client base. At present the market capitalisation of REACT Group Plc is small but I believe that if we deliver upon the opportunities forwarded to us this will change very rapidly

Strategic Report

REVIEW OF BUSINESS

A review of the business of the group, together with comments on future developments is given in the Chairman's Statement on pages 2 to 4.

PRINCIPAL RISKS AND UNCERTAINTIES FACING THE GROUP

Attraction and retention of key management and employees

The successful operation of the group will depend partly upon the performance and expertise of its current and future management and employees, and in particular Chris Taylor the managing director of REACT Specialist Cleaning Limited, and Grahame Rummery, the Chief Executive. The loss of the services of certain of these members of the group's key management or employees, or the inability to identify, attract and retain a sufficient number of suitably skilled and qualified employees may have a material adverse effect on the group. Expansion of the group may require considerable management time which may in turn inhibit management's ability to conduct the day to day business of the Company.

Dependence on key customers

REACT generates a significant proportion of its revenues from a limited number of customers. It may prove difficult to gain new business and to achieve turnover growth from such customers. The group are aiming to mitigate this risk by growing the business through acquisition of smaller business in related fields and also attracting larger corporate customers from the private sector.

FINANCIAL AND CAPITAL RISK MANAGEMENT

The directors constantly monitor the financial risks and uncertainties facing the group with particular reference to the exposure of credit risk and liquidity risk. They are confident that suitable policies are in place and that all material financial risks have been considered. The financial risk management objectives and policies can be found within note 21 of the financial information.

KEY PERFORMANCE INDICATORS (KPIs)

Financial

*One-off items included within the Consolidated Statement of Comprehensive Income were the service costs of AIM listing of £754,000, and £400,000 of acquisition and admission costs.

For the period from 24 June 2015 to 30 September 2015 the company has successfully consolidated the REACT division within the group and achieved revenues of £704,000. In this period the company has incurred costs in growing the original business and absorbed costs in relation to the integration of the REACT business. At the period end the group had a cash balance of £1,839,000 and is well positioned to build on existing long term relationships and to grow the business organically and by acquisition.

Non-financial

The board recognises the importance of KPIs in driving appropriate behaviour and enabling of Group performance. For the period to 30 September 2015 the primary KPI's were the establishment of the REACT business as a separate entity and subsequent admission to trading on the AIM market. During the period the company was admitted to AIM on 17 August 2015. The group intends to review the following non-financial KPIs going forward:

1. Customer relationships

2. Service quality and brand awareness

3. Attraction, motivation and retention of employees

DIVIDENDS

No dividends will be distributed for the period ended 30 September 2015.

FUTURE DEVELOPMENTS

The Chairman's Statement on pages 2 to 4 gives information on the future outlook of the group.

Consolidated Statement of Comprehensive Income

For the period ended 30 September 2015

Consolidated Statement of Financial Position

As at 30 September 2015

Consolidated Statement of Changes in Equity

For the period ended 30 September 2015

Share capital is the amount subscribed for shares at nominal value. Share premium represents amounts subscribed for share capital in excess of nominal value.

Merger relief reserve arises from the 100% acquisition of REACT SC Holdings Limited and REACT Specialist Cleaning Limited in August 2015 whereby the excess of the fair value of the issued ordinary share capital issued over the nominal value of these shares is transferred to this reserve in accordance with section 612 of the Companies Act 2006.

Accumulated deficit represents the cumulative losses of the group attributable to the owners of the company.

Reverse acquisition reserve is the effect on equity of the reverse acquisition of REACT Specialist Cleaning Limited.

The capital redemption reserve represents the value of deferred shares cancelled as a result of a share buyback.

Consolidated Statement of Cash Flows

For the period ended 30 September 2015

Notes to the Consolidated Statement of Cash Flows

For the period ended 30 September 2015

1. Reconciliation of loss before income tax to cash outflow from operations

2. Cash and Cash Equivalents

3. Non-cash transactions

On 17 August 2015 a significant non-cash transaction took place in respect of the reverse acquisition, more information on this has been disclosed within note 12. The group also acquired intangible assets as detailed in note 11 in as a result of the purchase of trade and assets from Autoclenz Limited in respect of an unincorporated division.

Company Statement of Financial Position

As at 30 September 2015

The financial statements were approved and authorised for issue by the Board of Directors on 22 March 2016.

Company Statement of Changes in Equity

For the year ended 30 September 2015

Share capital is the amount subscribed for shares at nominal value. Share premium represents amounts subscribed for share capital in excess of nominal value.

Merger relief reserve arises from the 100% acquisition of REACT SC Holdings Limited and REACT Specialist Cleaning Limited in August 2015 whereby the excess of the fair value of the issued ordinary share capital issued over the nominal value of these shares is transferred to this reserve in accordance with section 612 of the Companies Act 2006.

Accumulated deficit represents the cumulative losses of the company attributable to the owners of the company.

The capital redemption reserve represents the value of deferred shares cancelled as a result of a share buyback.

Company Statement of Cash Flows

For the year ended 30 September 2015

Notes to the Company Statement of Cash Flows

For the period ended 30 September 2015

1. Reconciliation of loss before income tax to cash generated from operations

2. Cash and Cash Equivalents

3. Non-cash transactions

During the period, the company issued £1,560,000 of ordinary shares to acquire a subsidiary and £275,000 of ordinary shares were issued to extinguish convertible loan notes in non-cash transactions. Refer to Notes 12 and 15 for further details.

Notes to the Financial Information

For the period ended 30 September 2015

1. General Information

Basis of preparation and consolidation

REACT Group Plc was readmitted to the AIM - London Stock Exchange on 17 August 2015, a company incorporated and domiciled in England and Wales. Details of the registered office, the officers and advisers to the company are presented on the company information page at the start of this report. The principal activity of the group for the period is that of a specialist cleaning and decontamination service to the public sector. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union.

On 17 August 2015, REACT Group Plc acquired the entire share capital of REACT SC Holdings Limited and its subsidiary by way of a share for share exchange. As a result, the former shareholders of REACT SC Holding Limited obtained control of REACT Group Plc.

REACT Group Plc was a non-operating entity, and thus did not qualify as a business combination and is therefore outside the scope of IFRS 3 'Business Combinations'. In accordance with guidance given by the International Interpretations Committee, the transaction is accounted for as a share-based payment in accordance with IFRS 2 'share-based payment'.

The legal subsidiary, REACT SC Holdings Limited, was treated as the accounting acquirer and the legal Parent Company, REACT Group Plc, was treated as the accounting subsidiary. The difference in the fair value of the shares deemed to have been issued by REACT SC Holdings Limited and the fair value of REACT Group Plc identifiable net assets represents a payment for a service of a stock exchange listing for its shares and has been charged to the Statement of Comprehensive Income.

Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

The consolidated financial statements present the results of the company and its subsidiaries ('the group') as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated results for the period ended 30 September 2015 comprise the results of REACT SC Limited and its subsidiary REACT Specialist Cleaning Limited for the period ended 30 September 2015, consolidated with those of REACT Group Plc from 17 August 2015.

The assets and liabilities of the legal subsidiary, REACT Specialist Cleaning Limited are recognised and measured in the group financial statements at the pre-combination carrying amounts, without restatement of fair value. The results of the period from 24 June 2015 to 30 September 2015 are those of REACT Specialist Cleaning Limited.

The equity structure appearing in the group financial statements reflects the equity structure of the legal parent, REACT Group plc, including the equity instruments issued in order to effect reverse acquisition accounting.

Basis of preparation and consolidation

There are no comparatives numbers presented in the financial statements as the acquirer was incorporated in May 2015.

The comparative results of the REACT Specialist Cleaning Services business have been disclosed in the notes to the financial statements for the period to 24 June 2015 and the years to 31 December 2014 and 31 December 2013.

2. Accounting Policies

Statement of compliance

The consolidated financial statements of REACT Group Plc have been prepared in accordance with International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs) and International Financial Reporting Interpretations Committee (IFRIC) interpretations (collectively 'IFRSs') as adopted for use in the European Union and as issued by the International Accounting Standards Board and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

Basis of preparation

The financial statements have been prepared under the historical cost convention.

The principal accounting policies are summarised below. They have all been applied consistently throughout the period under review.

Going concern

Following its review of the group's financial plans, the board has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future.

The financial statements do not include the adjustments that would result if the group was unable to continue as a going concern.

New and amended standards adopted by the group

There are no IFRSs or IFRIC interpretations that are effective for the first time in this financial period that would be expected to have a material impact on the group.

New Standards, amendments and interpretations issued but not effective

The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the group. The group does not intend to apply any of these pronouncements early.

Merger relief reserve

The reserve represents a premium on the issue of the ordinary shares for the acquisition of subsidiary undertakings. The relief is only available to the issuing company securing at least a 90% equity holding in the acquired undertaking in pursuance of an arrangement providing for the allotment of equity shares in the issuing company on terms that the consideration for the shares allotted is to be provided by the issue of equity shares in the other company.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

(i) Current tax

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules using tax rates enacted or substantially enacted by the statement of financial position date.

Income tax is recognised in the income statement or in equity if it relates to items that are recognised in the same or a different period, directly in equity.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities.

(ii) Deferred tax

Deferred tax is provided, using the liability method, on temporary differences at the statement of financial position date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differenced, and the carrying forward or unused tax assets and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilised. Conversely, previously unrecognised deferred tax assets are recognised to the extent that it is probable that sufficient taxable profit that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.

Investments

Investments in subsidiaries are held at cost less any impairment.

Financial instruments

Financial assets and financial liabilities are recognised when the group becomes a party to the contractual provisions of the instrument.

Trade and other receivables

Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to the initial recognition, trade and receivables are measured at amortised cost less impairment losses for bad and doubtful debts, except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less impairment losses for bad and doubtful debts.

Impairment losses for bad and doubtful debts are measured as the difference between the carrying amount of financial asset and the estimated future cash flows, discounted where the effect of discounting is material.

Cash and cash equivalents

Cash and cash equivalents comprised of cash at bank and in hand.

Fair values

The carrying amounts of the financial assets and liabilities such as cash and cash equivalents, receivables and payables of the company at the statement of financial position date approximated their fair values, due to relatively short term nature of these financial instruments

Trade and other payables

Trade and other payables are initially recognised at fair value and thereafter stated in amortised cost, except where the payables are interest free loans made by related parties without any fixed repayment terms or the effect of discounting would be immaterial, in which case they are stated at cost.

Impairment of non-financial assets

At each statement of financial position date, the group reviews the carrying amounts of its investments to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a re-valued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior periods. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Capital management

Capital is made up of stated capital, premium and retained earnings. The objective of the group's capital management is to ensure that it maintains strong credit ratings and capital ratios. This will ensure that the business is correctly supported and shareholder value is maximised.

The group manages its capital structure through adjustments that are dependent on economic conditions. In order to maintain or adjust the capital structure, the company may choose to change or amend dividend payments to shareholders or issue new share capital to shareholders. There were no changes to the objectives, policies or processes during the period ended 30 September 2015.

Equity instruments

Equity instruments issued by the company are recorded at the proceeds received. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against share capital.

Share-based compensation

The fair value of the employee and suppliers services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each statement of financial position date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

The fair value of share-based payments recognised in the income statement is measured by use of the Black Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted; based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour and is selected based on past experience, future expectations and benchmarked against peer companies in the industry.

Property, plant and equipment

Property, plant and equipment are stated at historical cost less subsequent accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation on property, plant and equipment is calculated using the straight-line method to write off their cost over their estimated useful lives at the following annual rates:

Useful lives and depreciation method are reviewed and adjusted if appropriate, at the end of each reporting period.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the relevant asset, and is recognised in profit or loss in the period in which the asset is derecognised.

Intangibles

Purchased goodwill represents the excess of the cost of acquisition over the company's interest in the fair value of the identifiable assets and liabilities of a business acquired at the date of acquisition.

Purchased goodwill is recognized as an asset, reviewed for impairment at least annually and carried at cost less accumulated impairment losses. Any impairment is recognised immediately in profit or loss and is not subsequently reversed. Purchased goodwill is deemed to have an indefinite useful life due to the expectation of the acquired business to operate in perpetuity, so is not amortised.

Customer list represents the value placed on the retained customer list at the acquisition date. The value recognises that customers, although contracted to the company are not under an obligation to use the company services.

The customer list will be amortised over a period of 5 years. An impairment review will be conducted each year and will look at significant changes in the turnover received from major customers.

Critical accounting judgments and key sources of estimation uncertainty

The preparation of the financial statements requires management to make estimates and assumptions concerning the future that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

The resulting accounting estimates will, by definition, differ from the related actual results.

· Share based payments

The fair value of share based payments recognised in the income statement is measured by use of the Black Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted; based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour and is selected based on past experience, future expectations and benchmarked against peer companies in the industry.

· Amortisation

Management have estimated that the useful life of the fair value of the customer lists acquired on the acquisition to be 5 years. Although customers generally are on rolling annual contracts or projects management believe that a useful life of 5 years is a fairer representation based on the historical trading of the REACT division with its customers. The estimate will be reviewed annually and revised if the useful life is deemed to be lower or higher than 5 years based on the customer trading of existing clients of REACT division

· Customer list valuation

Management undertook a fair value exercise on the business combination when the REACT division was purchased from Autoclenz Limited. Management identified that the customer list of the REACT business should be recognised separately and a fair value of £220,000 was determined. When assigning a fair value to the customer list management made significant judgements and at the time of the fair value exercise it is noted that alternative judgements could have been made leading to a differing fair value of the customer list.

3. Segmental Reporting

In the opinion of the directors, the group has one class of business, being that of specialist cleaning and decontamination services. The group's primary reporting format is determined by the geographical segment according to the location of its establishments. There is currently only one geographic reporting segment, which is the UK. All costs are derived from the single segment.

4. Employees and Directors

Details of emoluments received by Directors of the group for the period to 30 September 2015 were as follows:

5. Expenses - analysis by nature

Admission costs relate to the admission to AIM in June 2015 and included costs relating to the reverse acquisition.

Included within the admission expenses are one-off non-audit fees of £45,000 in relation to the admission to trading on AIM.

6. Income Tax

Analysis of tax expense:

7. Loss per Share

Basic loss per share is calculated by dividing the earnings attributable shareholders by the weighted average number of ordinary shares outstanding during the period.

Reconciliations are set out below:

Basic and diluted earnings per share are the same, since where a loss is incurred the effect of outstanding share options and warrants is considered anti-dilutive and is ignored for the purpose of the loss per share calculation. As at 30 September 2015 there were 2,580,000 outstanding share warrants which are potentially dilutive.

8. Company's result for the period

The company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent company income statement account. The result for the parent company for the period was a loss of £734,000 (2014: loss of £614,000).

9. Intangible assets

The purchased goodwill relates to intangible assets that do not qualify for separate recognition on the acquisition of the REACT specialist cleaning services business, an unincorporated division of Autoclenz Limited.

The group assesses at each reporting date whether there is an indication that an asset may be impaired, by considering the net present value of discounted cash flow forecasts. Purchased goodwill has been allocated for impairment testing purposes to the individual businesses acquired which are also the cash‐generating units ("CGU") identified. The recoverable amount of a CGU is determined based on value in use calculations using cash flow projections based on financial budgets approved by the Directors covering a two year period. The projections are based on the assumption that the company can realise projected sales. A prudent approach has been applied with no residual value being factored into these calculations. If the projected sales do not materialise there is a risk that the total value of the intangible assets shown above would be impaired. A pre‐tax discount rate of 16.67% per annum will be applied to the cash flow projections, after taking into consideration the group's cost of borrowings, the expected rate of return and various risks relating to the CGU. The group has not assessed the goodwill for impairment in the current period due to the acquisition date being close to the reporting date, the directors do not believe there have been any indicators of impairment between the acquisition date and the reporting date. Going forward goodwill will be assessed annually for impairment. At the year end, based on these assumptions there is no indication of impairment of the value of goodwill.

Purchased goodwill

On 24 June 2015 the company entered in to an Asset Purchase Agreement with Autoclenz Limited pursuant to which the company agreed to acquire the business and fixed assets of the REACT Specialist Cleaning Services Division from Autoclenz Limited for total consideration of £1,650,735. The company settled £1,500,000 of the consideration by the allotment of 1,499,999 ordinary shares of £1 each in its capital to Autoclenz Limited. The balance of £150,735 was settled in cash and has been allocated to the fair value of tangible fixed assets acquired. £220,000 of the consideration has been allocated to the fair value of customer lists acquired with a resulting goodwill of £1,280,000 for intangible assets that do not qualify for separate recognition. The goodwill includes customer loyalty, staff know how, reputation and relationships with contractors and suppliers.

Details of the price and consideration are as set out below:

The consolidated income statement for the period includes the results from 24 June 2015 onwards when the business was acquired. Whilst there are results for REACT specialist cleaning services business for many years of trading; its basis as the accounting acquirer only occurs from the incorporation of REACT Specialist Cleaning Limited as any results previously are reportable under Autoclenz Limited for which the group has no interest in. The results of the division are presented below for 1 Janaury 2015 to 24 June 2015, the year to December 2014 and the year to 31 December 2013. In addition the division's balance sheet at the end of each reporting period is shown.

REACT specialist cleaning services business: