React Group (LSE:REAT) — AGM 2023

0:00 Good afternoon, and welcome to the REACT GROUP PLC twenty twenty three AGM Proceedings. Company The may not be in a position to answer every question received during the meeting today. Have all questions will be reviewed and the response to the publishing of the Investor Meet company platform where appropriate to do so. I'd now like to hand you over to Marlborough, Chairman. Good afternoon. Thank you, Paul. Good afternoon and welcome to

0:31 everybody. As you probably well know, this is a script, we have to read the script or I will be reading the script, so excuse the rather stilted approach. But I will press on. So ladies and gentlemen, I'd like to welcome you today to the company's Annual General Meeting. I'm Mark Braun, your company's Chairman, and I will be chairing this meeting today. Thank you very much indeed for making the effort to attend today's meeting. The notice of Annual General Meeting was issued on the 02/24/2023, and due notice of the meeting has accordingly been issued to the company's members. We have a number of other shareholders in attendance at this meeting via the investor meet platform. But as said out in the letter from the chairman of the company, which accompanied the notice of the annual general meeting, None of them will be able to vote on the matters to be considered at this general meeting.

1:25 There are also a number of people attending this annual general meeting in person who are not members of the company, including certain of our advisors. Unless anyone has any objections to the attendance of such nonmembers, I should continue by formally opening the meeting. No objections? Brilliant. We'll move on. Quorum. The quorum for this meeting is two members present in person or by proxy. Having checked the number of such persons present, I declare that the quorum is present, and I further declare the meeting open. Excuse me. Voting, before proceeding to the business of the meeting, I'd like to remind you of the methods of voting at the meeting. Resolutions will be decided on a show of hands unless a poll is demanded in accordance with the articles association of the company before or on the declaration of the result of a report of a vote on a show of hands.

2:18 On a show of hands, every member or corporate representative who is present either in person or by proxy has one vote. And on a poll, every member or corporate representative present present in person or by proxy has one vote for every share of which he or she is the holder. A poll may be demanded by me as chairman, or at least five members or their proxies having the right to vote at the meeting. Any members or members present in person by proxy and sorry, in person and or by proxy representing in aggregate not less than 10% of the voting rights total voting rights of members having the right to vote at a meeting or a member or members present in person or by proxy holding shares in the company conferring a right to vote at the meeting, being shares on which an aggregate sum has been paid up equal to not less than 10% of the total sum paid up on all the shares conferring that right.

3:17 With your permission, I propose that we take the notice convening the meeting as having been read. Is this agreed? Yeah. Brilliant. Okay. Questions. By way of a reminder, questions can be submitted at any time during the Amazon meeting via the ask question function on the Investor Meet company dashboard and by anybody present in the room at the end of the session. I'd now like to briefly introduce the board. We have to my left, Sean Doth, the CEO to my right, Andrea Pankhurst, CFO. We also have in the room, you can't see him on camera, I'm afraid, Rob Gilbert, who's one of our non executive directors, an independent non executive director. And Michael Joyce, unfortunately, sent his apologies, but he's joining by the Investor Meets platform.

4:07 Before starting formal proceedings, I'd like to read you a statement on trading during the year that was released to the market via our registered information service this morning. So I'll read that now. Excuse me. When we announced the group's results for the year ending 09/30/2022 in February, the board noted the new financial year had started positively with the first quarter delivering a record performance. Notably, the group has benefited from its ability to cross sell other business services into existing and new customers. Evidence of this is the recent contract win with an estimated value of £800,000 in the current financial year, to provide services through a coordinated program from all three segments of the business to a large fast service food restaurant across all its sites in The UK.

5:00 This positive contract win momentum has continued with good sales growth in all three divisions of the business. Ladder's free, one of the largest window cleaning sorry, one of the largest commercial window cleaning businesses in The UK continues to have strong sales performance with recent notable contract wins, including a prestigious nationwide furniture retailer and another restaurant group with some of The UK's best known brands. Latters Free is benefiting from a mix of national and local customers, enabling it to deliver material growth for the group. Fidelis experienced a slightly slower start to the year, but has since won some significant new contract awards. A 500,000 eighteen month contract with a sizable Midland based school has been agreed alongside numerous contract renewals, which include another school worth around £540,000 over three years, and an annual contract with NHS trust worth almost £200,000 The REACT business, which provides a solution to often urgent one off situations, has had a steady period in which it has won new contracts to carry out high level cleaning projects for established facility management businesses, schools and universities.

6:16 These ad hoc contracts can be valuable, but by definition are less dependable. The group continues to benefit from further cross selling opportunities and the pipeline of new business is strong. Whilst we're witnessing good demand for our services, the board is continually mindful of the economic environment, particularly in the retail and hospitality sectors and therefore views the future with cautious optimism. That's the end of the statement. So I'd now like to start the full proceedings of this Annual General Meeting. So we'll proceed to vote on the resolutions, which I will formally propose to the meeting. The full text of each of the resolutions is set out in the notice of the meeting, a copy of which you will have received. So resolution number one is to receive and adopt the accounts.

7:08 The first resolution is to receive and adopt the company's account, sorry, duplication, annual accounts for the financial year ended 09/30/2022 together with the director's report and auditor's report thereon. Are there any questions?

7:25 I now propose resolution one, the text of which has been set out in the notice convening the meeting as an ordinary resolution. All those in favor, please raise your hands. That's five out of five. Thank you very much.

7:42 All those sorry, all those against, there are no there is nobody else to vote. So I hold 22 proxy votes representing 620,476,220 shares in favor of this resolution. There are no votes at the chairman's discretion on this account. And there were two votes against representing 780,000 shares and none are withheld. I therefore declare that this resolution has been passed. Resolution to appoint auditors and to determine their remuneration. The second resolution relates to the appointment of Danes LLP as auditor of the company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting, which accounts are laid before the company and gives the directors authority to determine their remuneration.

8:36 Are there any questions? None? Okay. I now propose resolution two, the text of which has been set out in the notice convening the meeting as an ordinary resolution. All those in favor, please raise their hands. That's five of five. Thank you very much. There are none against in the room. I hold 22 proxy votes, representing 6 and 20,521,220 shares in favor. Again, no shares at the discretion of the Chairman, two share two votes against representing 735,000 shares and none withheld. I therefore declare that this resolution has also been passed. Next resolution is to reelect the director. This relates to the reelection of Michael Joyce, who is retiring in accordance with the Articles Association and being eligible is offering himself a reelection at this annual general meeting. The board is recommending that Michael Joyce be reelected as a director. Are there any questions?

9:37 No. I now propose resolution three for the election of Michael Joyce, the text of which has been set out in the notice convening the meeting as an ordinary resolution. All those in favor, please raise your hands. That's five zero five. There's nobody in the room with a vote left to vote against. I hold 22 proxy votes, to 620,351,220 shares all in favor. No Chairman's discretionary votes, there are two votes against representing 780,000 shares, and one vote representing 125,000 shares, which have been withheld. I therefore declare that this resolution has been passed.

10:26 The fourth resolution, which relates to the authority to allot shares and grant rights to subscribe for or to convert any security into shares of the company. Before the directors are able to issue shares or convert any security into shares, they must first be authorized by shareholders to do so. The maximum number of shares that may be allotted under this authority is limited to an aggregate nominal amount of 264,412 and about 13p, being approximately 10% of the nominal value of the company's issued ordinary share capital excluding treasury shares as at 02/23/2023. The authority will expire a close business on the date falling eighteen months after the date of passing this resolution or if earlier at the end of the next year's Annual General Meeting.

11:17 Are there any questions? Nope. I now propose resolution four, the text of which has been set out in the notice convening the meeting as an ordinary resolution. All those in favor, please raise your hands. That's five of five. All those against, there are there's nobody here to vote against. I hold 21 proxy votes, amounting to 618,727,888 shares in favor. There's one vote at the discretion of the chairman, which is 3,332 shares, which I vote in favor, and four votes amounting to 2,525,000 shares against and none are withheld. I therefore declare that this resolution has been passed.

12:05 The final resolution will give the directors authority to allot equity securities for cash without first offering them to existing shareholders in proportion to their existing holding of shares. This authority should be limited to first, so one, the allotment of equity securities in connection with the rights issue or other preemptive offer or two, otherwise the allotment of equity securities or sale of treasury shares to any person up to an aggregate nominal value of £132,206.06, representing approximately 5% of the nominal value of the company's issued ordinary share capital, excluding treasury shares as at the 02/23/2023.

12:51 The authority will expire at the close of business on the date falling eighteen months after the date of the passing of this resolution or if earlier at the end of next year's Annual General Meeting. Are there any questions? Nope. All those in favor, please raise your hands. That's five of five. Nobody else left in the room to vote against. I hold 20 proxy votes, representing 618,724,888 shares in favor. One chairman's vote, sorry, one chairman's discretion vote at 3,332 shares, which are vote in favor, and four proxy votes representing 2,527,000 shares against and one vote representing 1,000 shares withheld.

13:41 I therefore declare that the resolution has been passed. That concludes the formal proceedings of the meeting. And I therefore now declare this general meeting of the company closed. We will be answering the questions shortly. The result of the meeting will be announced to the markets through our revenue information service and posted on our website as soon as practical. Thank you very much. So I have two questions online here. The first one is was sent in prior to the meeting. So I don't actually have the name of the person that submitted this one, I'm afraid. The question is, have REACT changed the RNS announcement about new contracts to a higher value before an RNS announcement is qualified. Now, think I know where this is coming from. Basically, in the distant past two years or so ago, we would be announcing deals that were material to us at that time when we were a smaller company, that might be 100 or £200,000 a year in revenue terms, and of course that would have then been material.

14:44 However, based on advice both from AIM in particular, and from our nomad singers, we've taken a more conservative approach towards announcing deals. If they are material, we're talking now in terms of deals that are sort of £500,000 and up, I think, in terms of revenue, unless they are very high margin deals, then they will not be announced on their own. They'll be scooped up and announced every two or three months when we make other announcements to the market and we'll update you in the way we have done the last three or four announcements that have been made by the company. So we will give a general update on a more frequent basis.

15:30 But in terms of specific deal announcements, you should not anticipate those coming through unless they are of genuine material value. And the other comment I'll make, which is something that we discussed at the last investor meeting, which would mean for our results was that the company is still pursuing large deals. But actually, those large deals do come at a price and that is margin. And you'll have seen that we are now attending to improve and increase the margins once again, in the business, as we did sort of three years ago. So there was a lot more activity, sort of the mid sized deals, where the margins are richer. So basically, all that is code for saying, don't expect to see lots of big one off deals.

16:18 Whilst they sometimes do move the dial, what will move the dial equally as much as good momentum across the piece in the way that we've been performing lately with a lot of good mid sized deals, especially where we involve cross selling of higher margin product. Second question is from Adrian G. And I've not pre read any of these. So this says, has the record performance in Q1 continued into Q2? Today's RNS suggests a slight slowdown in Fidelis and REACTIVE, but then in contrast is a statement that positive contract win momentum has continued with good sales growth in all three divisions of the business. Basically, I've got nothing to add to the statement we've made. Q1, obviously, with the addition of Ladder three was clearly a record and everything was pumping on all on all cylinders. Yes, we did have some a bit of a slowdown in Fidelis at the beginning of the year.

17:18 And REACT has been one that has been recovering from a year or so ago. But at the end of the day, what we've said in the statement rings true. The business has got good momentum, there is very good pipeline, isn't there? And that is only set to continue, I think. But we're obviously always mindful of the economic conditions we're working in. The fact is, is that the market we have to the ability to address is so big, that even if there is a turndown, we think there's still plenty of opportunity for us to go after. So hopefully that answers the question, Adrian. David O, are you able to mention the cumulative value of contracts secured year to date?

18:05 No, it's chance. That's going into too much detail, I'm afraid. And there would be no mad sitting here smiling at that question. Sorry to say the answer has to be no. But there will be obviously more information as we come to turn the half year with interims. Same, sorry, another question from you, David. You've mentioned a strong pipeline aided by cross selling of the group services across a broader customer base. Is the pipeline likely to draw of contracts secured years to date? Well, it's all about win rate. And our win rate is actually quite strong, as it has been for a while. I mean, you know, Sean and his team are excellent at getting in front of customers and selling.

18:53 I don't think I can answer that question very accurately. It's just a good solid strong pipeline. We're a bigger company now and I guess the pipeline sort of reflects that. And we know we've got more to do, haven't we? You know, we've got more that we're mobilizing in terms of sales and marketing effort. I genuinely don't think I can be any more specific than that. No. No? No, I think you've covered it all. Okay. The last question. Hopefully that one answers that for you, David. Malcolm, do you have a question? Is there shareholder in the room? No, no questions. So that brings the proceedings to an end. Thank you very much again for your time. I and we appreciate your support. Yeah. Paul, back to you.

19:39 Fantastic, Mark. Thank you and the team for updating attendees today. Can I please ask attendees not to close the session? You should be automatically redirected to provide your feedback in order the board can better understand your views and expectations. This will only take a few moments to complete, and that is greatly valued by the company. On behalf of the board of REACT GROUP PLC, we'd like to thank you for attending today's AGM proceedings. Many thanks indeed.