React Group PLC Closure of EPUK Limited and trading update (5438S)
December 22 2016 - 1:00AM
UK Regulatory
TIDMREAT
RNS Number : 5438S
React Group PLC
22 December 2016
22 December 2016
REACT Group plc
(the "Company" or the "Group")
Closure of EPUK Limited and trading update
REACT Group plc (AIM: REAT), the specialist provider of rapid
response deep cleaning and emergency decontamination services,
announces that it has decided to close its subsidiary, EPUK Limited
("EPUK").
EPUK was originally acquired for an initial cash consideration
of GBP10,000 in April 2016; no potential deferred consideration has
been paid to the vendors.
Under the terms of the acquisition agreement, the former owners
were retained as consultants to EPUK to effect an orderly handover
of the business. Despite early promise, this process stagnated and
EPUK has failed to deliver the level of profitable business, or
cross-selling to other Group customers, anticipated by the Group.
Despite efforts made to integrate the business into the Group,
there has been no significant improvement over recent months. The
Board has therefore decided to act promptly and to close this
business. Based on its experience of this activity, the Board now
believes the EPUK business has limited prospects of generating an
acceptable return, given the significant diversion of management
time and the likely costs involved to address the situation. The
two remaining operatives who are employed by EPUK will be retained
elsewhere within the Group.
Based on unaudited management accounts, the Board now expects
that the results for the year ended 30 September 2016 are likely to
show a loss of between GBP250,000 and GBP300,000 (though this is
subject to audit). Of this total the Board believes up to
cGBP180,000 relates to EPUK, representing a combination of
acquisition liabilities and trading losses since acquisition. The
Board expects that no further consideration will fall due under the
original acquisition agreement. The remaining expected Group losses
are primarily due to the costs of integration of the other new
subsidiaries in their first full year of trading. The Company
expects to announce its preliminary results in February 2017.
Grahame Rummery CEO of REACT Group plc commented: "EPUK has been
a very disappointing situation for the Company. By closing the
business the management team is now able to concentrate its
attention and efforts on the rest of the REACT Group to raise sales
and to improve margins for the Group."
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
For further information, please contact:
REACT Group plc
Gill Leates - Chairman 07799 662642
SPARK Advisory Partners
Limited
Neil Baldwin 0113 370 8974
Mark Brady 0113 379 8971
Whitman Howard Limited
Nick Lovering 0207 659 1224
Walbrook PR Ltd 020 7933 8780
Paul McManus Mob: 07980 541 893
This information is provided by RNS
The company news service from the London Stock Exchange
END
UPDDMMZZRMKGVZM
(END) Dow Jones Newswires
December 22, 2016 02:00 ET (07:00 GMT)
React (LSE:REAT)
Historical Stock Chart
From Apr 2024 to May 2024
React (LSE:REAT)
Historical Stock Chart
From May 2023 to May 2024