React Group Regulatory News (REAT)

REACT Group plc

("React" or the "Company")

INTERIM RESULTS FOR THE 6 MONTHS ENDED 31 MARCH 2017

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

REACT Group Plc announces its half year results for the period ended 31 March 2017.

This has been a period of consolidation and reassessment of the business, with the closure of EPUK and concentration on improving the core business React Specialist Cleaning Ltd and the other businesses within the group, React Occupational Hygiene Ltd ("ROHSL") and React Environmental Services Ltd ("RES").

Financial Results

The Group results for the period ending 31 March 2017 are set out in the Consolidated Statement of Comprehensive Income. Turnover for the period was £1.27m against £1.178m in the previous half year to March 2016. The loss for the 6 months to 31 March 2017 stood at £0.192 million of which £0.028 million was attributable to the closing down costs associated with EPUK.  The cash balance at 31 March stood at £0.847 million (2016: £1.385m).

Strategy

Following the disappointing performance of EPUK resulting in its closure, announced in December, the Company is now concentrating on improving the performance of its remaining businesses within the Group. The Company does not intend making any further acquisitions in the foreseeable future. As part of the strategy to build on the core business, React Specialist Cleaning, two new salespeople have been recruited to drive for more new sales, but we expect it will take time to see the benefit of that investment. ROHSL has been restructured and sales are now improving. The weakest of the three businesses is RES, which despite being awarded a new two year asbestos licence, which is a major win for a new licence holder, continues to perform below expectations and its future within the Group remains under review.

Current Trading

By concentrating on the three remaining businesses the overall performance of the Group has begun to improve, driven by React Specialist Cleaning Ltd and ROHSL. In addition to working for longstanding clients React Specialist Cleaning Ltd has, via a major Facilities Management ("FM") company, secured work at a major London hospital to supply labour to clean wards, operating theatres and public areas on a daily/nightly basis, involving approximately 20 members of staff.

ROHSL was restructured and sales are now coming through at the level we anticipated and the team has built a relationship with a nationwide dental practice to provide a range of services, which seems to be becoming a good steady flow of sales and profit.

Asbestos is proving a difficult business to grow. Our sales are much slower than we had originally hoped, however the team continue to work at building a sales pipeline.

A new administrative computer system is being installed, which will give a higher level of visibility and improve our controls going forward across all the businesses.

Outlook

Our marketplace is shifting with a number of our customers moving to a more FM managed service. We have retained most of the business but at a lower margin, and in some cases have increased sales. The Company has added some prestigious new clients and continues to work to add sales and control costs to enable it to continue to improve its financial performance in the second half of the year.

G.M. Leates

Chairman

28 June 2017

For further information, please contact:

REACT Group Plc

Consolidated Statement of Comprehensive Income

For the six months ended 31 March 2017

REACT Group Plc

Consolidated Statement of Financial Position

As at 31 March 2017

REACT Group Plc

Consolidated Statement of Cash Flows 

For the six months ended 31 March 2017

REACT Group Plc

Consolidated Statement of Changes in Equity

 Six months ended 31 March 2017

REACT Group Plc

Notes to the interim financial statements

1. Basis of preparation

These consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and on a historical basis, using the accounting policies which are consistent with those set out in the Group's annual report and accounts for the period ended 30 September 2016. The interim financial information for the six months to 31 March 2017, which complies with IAS 34 'Interim Financial Reporting' has been approved by the Board of Directors on 28 June 2017.

The unaudited interim financial information for the period ended 31 March 2017 does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the period ended 30 September 2016 are extracted from the statutory financial statements which have been filed with the Registrar of Companies and contain an unqualified audit report and did not contain statements under Section 498 to 502 of the Companies Act 2006.

2. Principal Accounting Policies

The principal accounting policies adopted are consistent with those of the annual financial statements for the period ended 30 September 2016 and are those expected to be applied for the year ending 30 September 2017.

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.

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. Loss per Share

The loss per ordinary share has been calculated on the loss on ordinary activities after taxation of £192,000 (30 September 2016: £288,000; 31 March 2016 £30,000) using the weighted average number of ordinary shares in issue during the period being 275,407,753 (30 September 2016: 275,407,753; 31 March 2016: 275,407,753).

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 31 March 2017 there were 19,104,464 (30 September 2016: 19,104,464; 31 March 2016: 19,104,464) outstanding share warrants and options which are potentially dilutive.

5. Called up Share Capital

The issued share capital as at 31 March 2017 was 257,407,753 Ordinary Shares of 0.25 pence per share (30 September 2016: 257,407,753 Ordinary Shares of 0.25 pence per share as per the audited accounts; 31 March 2016: 257,407,753).

There were no share issues during the interim period or the comparative periods.

6. Share Options

On 30 November 2015, the Company issued EMI options for 16,524,464 new ordinary shares in the Company exercisable at a price of 1.68p per £0.025 ordinary share, exercisable after 3 years. The options have a 10 year exercise period ending on 29 November 2025.

No options were exercised in the period.

The fair value of the share options issued in the current period on 20 November 2015 with an exercise price of 1.68p is 0.38p and was derived using the Black Scholes model. The following assumptions were used in the calculations:

Expected volatility is based on a conservative estimate for the Company. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

£8,000 (March 2016: £5,000) has been recognised during the period for the share based payments over the vesting period.

7. Post balance sheet events

There were no post balance sheet events.

8. Availability

Copies of this Interim Report are available from the Company Secretary, Finsgate 5-7 Cranwood Street, London, EC1V 9EE, and on the Company's website www.reactplc.co.uk