REACT Group FY25: double‑digit growth, fatter margins, and a bigger toolkit
REACT Group has delivered a solid set of final results for the year to 30 September 2025, coming in slightly ahead of market expectations for both revenue and profit quality. Revenue rose 20% to £24.9m, gross margin expanded by 450 basis points to 32.1%, and Adjusted EBITDA increased 27% to £3.1m. The flip side: statutory earnings slipped into a small loss and net debt stepped up after the Aquaflow acquisition.
In short, the business looks stronger under the bonnet, with higher recurring revenue, better mix, and new capabilities that should support future growth. Let’s unpack the moving parts.
Headline numbers investors should know
| Metric | FY25 | FY24 |
|---|---|---|
| Revenue | £24.9m | £20.7m |
| Recurring revenue | 93% | 87% |
| Gross profit | £8.0m | £5.7m |
| Gross margin | 32.1% | 27.6% |
| Adjusted EBITDA | £3.1m | £2.4m |
| Operating profit | £0.2m | £0.3m |
| (Loss)/profit after tax | £(0.34)m | £0.02m |
| Cash | £1.2m | £1.8m |
| Net (debt)/cash | £(2.9)m | £1.0m |
| Adjusted EBITDA per share | 13.02p | 11.18p |
| Basic EPS | (1.45p) | 0.08p |
Adjusted EBITDA is a profit measure before interest, tax, depreciation, amortisation, share-based payments and one-off costs. It helps compare the underlying performance of the business.
Quality of earnings stepped up: 93% recurring revenue and a richer mix
The real story this year is mix and visibility. Recurring revenue climbed to 93%, up from 87%, and gross margin moved from 27.6% to 32.1% – a chunky 450 basis point improvement (a basis point is one hundredth of a percent). That shows disciplined execution and a tilt toward higher value specialist work.
Management also explained that a COVID-era, high-profile rail cleaning contract has now wound down, as expected. Stripping that out clarifies the ongoing run-rate: underlying revenue looks stable to growing, with better margins.
Strategic expansion: Aquaflow lifts capability and margins
REACT bought 24hr Aquaflow on 25 October 2024 for an initial £5.1m (cash, shares and deferred), with up to £2.0m more contingent on earn-out, capped at £7.1m in total. Aquaflow operates at close to 50% gross margin, which has clearly helped the Group’s margin profile. Post year end, REACT launched a Pump Division within Aquaflow – broadening specialist technical services and creating more cross-sell opportunities.
The integration is reported to be on track and the business is performing in line with expectations. That said, the deal was part-funded by a new £3.5m HSBC term loan (base rate + 3.0%), which increases financial leverage and brings banking covenants into scope. Sensible if earnings grow and cash generation normalises, but it is a watch item.
Digital rollout: Project Sparkle makes window cleaning scalable
Project Sparkle – the new digital job management platform inside LaddersFree – is now fully embedded. It gives real-time operational visibility and reduces manual admin, effectively letting the division scale without adding back-office cost. Investment totalled £359,000. A seasoned commercial leader has also been hired to drive growth.
New wins underline execution: national accounts at The Works, BP Forecourts and H&M; multi-year industrial contracts with Danatrol, Flexi Coventry and Haldex; plus infrastructure and public sector clients such as Homes England and Smart Managed Solutions. Across the Group, REACT also renewed with NHS Trusts and construction partners, keeping the pipeline healthy.
Segment view: maintenance leads, projects supplement margins
REACT reports three service lines: Contract Maintenance, Contract Reactive and Ad Hoc (project) work.
- Contract Maintenance delivered £16.5m revenue and £2.9m of Adjusted EBITDA – the dependable engine of the Group.
- Contract Reactive contributed £3.4m revenue and £0.5m of Adjusted EBITDA – the 24/7 response capability that keeps clients loyal.
- Ad Hoc projects added £5.1m revenue and £0.9m of Adjusted EBITDA – higher margin but inherently less predictable, so management is rightly cautious.
This balance – predictable maintenance plus selective higher margin projects – is sensible for cash generation and margin resilience over the cycle.
Cash flow and balance sheet: an investment year with tighter liquidity
Operating cash inflow reduced to £0.8m (2024: £2.8m), mostly due to working capital movements, VAT timing and higher corporation tax payments (£842,000, including prior year items). Free cash flow was negative £155,000, as REACT also invested £505,000 in capex and £3.9m net in the Aquaflow acquisition.
Cash ended at £1.2m and net debt at £2.9m (vs net cash of £1.0m last year), reflecting the new bank loan and higher lease liabilities. Net assets increased to £10.0m, driven by the acquisition and investment in capability. The company points out that deleveraging should follow through scheduled loan repayments, but the near-term focus will be on cash discipline.
H1 wobble, H2 rebound, FY26 start encouraging
H1 was softer, with clients delaying decisions around the late-October 2024 Budget and some scaling back of service frequencies. REACT flexed supportively to protect relationships and margin. As conditions stabilised in H2, volumes recovered and some clients moved back towards prior schedules.
Early trading in FY26 is described as encouraging despite the usual festive slowdown, with demand for reactive and planned services holding up. Management remains cautious on discretionary project work and is actively managing cost pressures such as National Insurance and National Living Wage changes.
Slight beat vs expectations: why it matters
REACT says it came in slightly ahead of market expectations of £24.5m revenue and £2.75m Adjusted EBITDA. Delivering £24.9m and £3.1m respectively signals good execution and rising earnings quality. It also supports the consolidation strategy: stronger margins, high recurring revenue, and digital leverage make future bolt-ons easier to absorb.
My take: strengths, watch items, and what could move the dial
Positives
- Mix upgrade: 32.1% gross margin and 93% recurring revenue improve resilience and visibility.
- Strategic delivery: Aquaflow integration on track; Pump Division adds higher value capability; Sparkle enables scalable growth.
- Commercial momentum: national accounts and multi-year wins across retail, industry and public sector.
- Slight beat to expectations: helpful for credibility and potential re-rating if sustained.
Negatives and risks
- Statutory loss: a small loss after tax, with amortisation and finance costs weighing on reported EPS.
- Leverage up: net debt of £2.9m and covenanted bank facilities require tight cash control while investing.
- Cash conversion dipped: operating cash flow down due to VAT and tax timing; free cash flow negative in an investment-heavy year.
- Project work caution: sensible, but it limits upside in the short term if discretionary spend remains patchy.
Potential catalysts
- Further margin gains from Aquaflow and the Pump Division, plus Sparkle-driven efficiency.
- Cross-sell and upsell across the enlarged client base.
- Deleveraging through steady cash generation and scheduled loan repayments.
- Execution on national accounts and public sector frameworks to underpin growth.
Final word
This is a quietly confident set of results from REACT. The business is bigger, margins are better, and earnings are more predictable. The trade-off is higher leverage and a dip in cash flow during an investment year. If management keeps converting the pipeline, beds in Aquaflow, and controls costs, FY26 could show the benefits of operating leverage and a healthier balance sheet trajectory.
Dividend policy: not disclosed. Formal guidance for FY26: not disclosed. The tone is “measured confidence” – appropriate given the macro, but the operational groundwork looks sound.
