React Group (LSE:REAT) — AGM Proceedings 2022

0:00 Good afternoon, ladies and gentlemen, and welcome to the REACT GROUP PLC Annual General Meeting. Throughout this meeting, the attendees online will be in listen only mode. Questions are encouraged. They can be submitted at any time using the Q and A tab situated on the right hand corner of your

0:17 call The company may not be in a position to answer every question received during today's meeting. However, we review your questions and publish responses where it's appropriate to do so. I'd now like to hand over to Chairman, Mark Braun. Good good afternoon. Thank you, Mark. Good yeah. It is afternoon, midday. Hello, everybody. As we have done before, AGM is very much a a a statement. You'll have experienced if you've watched us before that we're very free form in terms of our normal presentations and q and a. Today, unfortunately, I have to read. So it's gonna be a little bit monotone. Apologies for that. I should also mention that this is a physical meeting as well, and I'm pleased to say we've got six other attendees. We have three shareholders four shareholders in the room, which is nice.

1:05 Nice to nice to see him. Maybe, hopefully, next year, we'll have a few more. So I'm gonna begin the reading. I say apologies that it's a little bit monotone, but but forgive me. That's the process. Okay. Ladies and gentlemen, I'd like to welcome you to to you today to the company's annual general meeting. I'm Mark Braun, your company's chairman, and I'll 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 03/01/2022, and 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 company platform. But as set 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.

1:57 There's also a number of people, as I mentioned earlier, attending this general general meeting in person who are not members of the company. There are two here, including certain of our advisers. They're both from our advisers, actually. Unless anyone has any objections to the attendance of such nonmembers, I shall continue the formal opening of the meeting.

2:19 You're okay. You're safe. No objections yet. Right. 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 a quorum is present, and I further declare the meeting open. Voting. Before proceeding to the business of the meeting, I'd like to remind you that methods of voting at this meeting. Resolutions will be decided on a show of hands unless a poll is demanded in accordance with the articles of association of the company before or on the declaration of the result of the vote on a show of hands. On a show of hands, every member of or corporate representative who is present either in person or by proxy has has one vote. And on a poll, every member or corporate representative present in person or by proxy has one vote for every share of which he or she is the holder.

3:12 A poll may be demanded by me as the chairman or by at least five members or their proxies having the right to vote at the meeting or by any members present in person or by proxy and representing at in aggregate not less than 10% of the voting rights of all members having the right to vote at the 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 the 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. With your permission, I propose that we take notice convening take the notice convening the meeting as having been read. Is that agreed? Yep. Everybody's agreed.

4:01 Questions. By by way of a reminder, questions can be submitted at any time during the annual general meeting via the ask a question function on the investor meet dashboard, but I won't come to answer or or begin answering any of them until after I finish the complete statement.

4:19 I'd now like to introduce the board. You have Sean Doak who sat to my left. He is the CEO of the company. We have Andrea Pankhurst who, due to a COVID positive test result in the last day or two, is sat at home but is on screen. Hopefully, you can all see her apart from people in the room. And, we also have Rob Gilbert here, in person who is one of our nonexecutive directors, and Michael Joyce is joining us via, the IMC platform as well. He is the other nonexecutive director. Before starting the formal proceedings, I'd like to read out a statement on the trading, the year that was released to the market via our regulatory information service this morning.

5:08 Statement read thank you, Mark. In the company's results for the year ended 09/30/2021, published on 01/31/2022, the the company noted that it had entered the 2022 financial year with a positive outlook following a number of contract wins during the first half of the year, some being material with long term contracted revenue further strengthening the company's business model. Company expects to see the benefit from these awarded contracts materialize as they continue to be mobilized during the second half of this financial year. In addition to the contracts announced post year end, the company expects to continue the progress and con and contract win momentum and has a strong growing pipeline of opportunities with both existing and new customers. The board is confident that the near term and sorry. The near and long term outlook for the group remains positive.

6:04 Okay. So back to the proceedings. I would now like to start the formal proceedings of this annual general meeting so that we will proceed to vote on the resolutions which I formally proposed 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. Okay. If you don't mind making a note of who not the who, but the number of. Resolutions to receive and adopt the accounts. The first resolution is to receive and adopt the company accounts for the financial year ended 09/30/2021 together with the director's report and auditor's report thereon.

6:49 Are there any questions? I now propose resolution one, the text of which has been set out on in the notice convening the meeting as an ordinary resolution. All those in favor, please raise their hands. We have 123456 here, Andrea seven, and Michael eight. And there's no nobody voting against. I hold eight 83,346,911 proxy votes in favor. There are no votes for the chairman's discretion. There are 623,190, votes against and none withheld. I therefore declare the resolution has been passed.

7:39 Number two, resolution to reappoint auditors and to determine their remuneration. The second resolution relates to the reappointment of Dane's 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 at which the accounts are laid before the company and gives the directors authority to determine their remuneration. Are there any questions?

8:04 I now propose resolution two, the text of which has been set out in the note as convening the meeting as an ordinary resolution. All those in favor, please raise raise their hands. Yep. Same number eight, assuming you're raising your hand. Yeah. Yeah. Good. Thank you. I declare that the resolution has been passed.

8:25 Resolution number three is to elect, to reelect a director. The third resolution relates to the reelection of Rob Gilbert, Robert Gilbert, 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 Rob Robert Gilbert be reelected as a director. Any questions? Okay. I now propose resolution three for the election of Robert Gilbert, 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. And that's obviously, Rob's not voting for himself. So that was seven.

9:06 All those against? There are none here. So I hold $83,000,303,145,268 proxy votes in favor. No chairman's discretion votes. 624,833 against and none withheld. I therefore declare resolution has been passed. Resolution number four, to authorize allotment of shares. We now come to resolution four, 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 £254,003.0125 being approximately 20% of the nominal value of the company's issued ordinary share capital, excluding treasury shares as at 02/28/2022.

10:09 The authority would expire at close of business on the day falling eighteen months after the date of the passing of this resolution, if earlier, at the end of the next general next year's annual general meeting. Any questions? Nope. I now propose resolution four, the text of which has been set out in the notes convening the meeting as an ordinary resolution. All those in favor, please raise their hands. That is eight again, and therefore, are no votes against. I hold 83,000 oh, sorry. 83,340,991 proxy votes in favor. No chairman's discretion votes. There are 623,190 against and 5,920 withheld.

10:56 I therefore declare this resolution as having been passed.

11:01 Number five, resolution to disapply pre preemption provisions. 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 shall be limited to, number one, the allotment of equity securities in connection with the rights issue or other preemptive offer, or secondly, otherwise, the allotment of equity securities or or sale of treasury shares to any person up to an aggregated nominal value of £127,001.505, representing approximately 10% of the nominal value of the company's issued ordinary share capital, excluding treasury shares as at 02/28/2022.

11:51 The authority would expire at the close of business on the date falling eighteen months after the date of the passing of the resolution or, if earlier, at the end of the next of next year's annual general meeting. Any questions? I now propose to I now propose resolution five, the text of which has been set out in the notice convening the meeting as a special resolution. All those in favor, please raise their hands. And that is carried by all eight people again, so no votes.

12:25 That concludes so I declare that resolution passed. Yeah. That concludes the formal proceedings of the meeting. And, accordingly, I now declare this annual general meeting annual general meeting of the company closed. The results of the meeting will be announced to the markets through our regulatory information service and posted on our website as soon as practical. Thank you very much for attending. So that's the the formal business.

12:51 Let me quickly pause for a second. There are some questions appearing. And what we'll do is as we have on this platform when we presented before, I'll coordinate the questions, and we'll try and answer all those that we're able to under the watchful eye of our nomad. So we make sure we do it properly. Not that we never not that we ever never do. But so so I'm I'm gonna take questions from the audience on the investor meet platform first, and then we'll take some questions in the room if there are any. The first question up is from Dave R, and we've actually got five questions from you, Dave.

13:37 We'll we'll I'm gonna read them first so everybody can know what the questions are. In the April 2021 announcement, the contract with a major FM company, you indicated it would take time to mature. How much of the work is now in place, and when do you envision it will be fully implemented? So that question relates to the very large contract that we signed, which we have indicated will take time to mature. And we are making progress, but we are still nowhere near full implementation. The the it's got logistical challenges for the customer, and they are trying desperately to consolidate. We, you know, we we know that they had 600 suppliers supporting two and a half thousand sites, and they've been trying to move to just one supplier, which is REACT.

14:31 And, you know, the the, you know, the great news for us was that we won in open and competitive tender having got to know the company and having them got to know us through some of the special skills that we deliver. But then when it came to them managing that that community of managers, which I think there are about 350 downstream managers, that it's it's proven very difficult for them to move on from localized relationships. Making progress nowhere near where we want it to be, but it's still there. It's a three year contract, and the management at the company has changed. And the new management that's come in has an even greater commitment to trying to make this work. It's just logistically a challenge for them, and we're working with them. We've invested a lot of time, effort, and resource in helping them. We have an online an on-site portal for their managers. We've done absolutely everything. We're we're engaged locally and trying to, you know, move it along as quickly as we can. But it's you know, the fact of the matter is, like, you know, we're not anywhere near the £2,000,000 that we had anticipated, and we're holding, you know, the customer to account for that.

15:45 You had previously confirmed that under long term contracts, increased labor costs are recoverable. Are increased fuel and other costs recoverable? Andrea, you're on mute at the moment. Any comment to answer that in terms of, you know, increased fuel and other costs recoverable? I know we've taken some action recently, haven't we? Yes. We in the contracts, there's a provision built in for annual increases, not not really specifying if those are labor or other costs. So it's, you know, it's a matter of us reviewing our underlying costs and negotiating with the customer, you know, the exact rate that those are going to be uplifted by in in each circumstance.

16:31 So there's not really a general answer on that one. I think the the only real area where this comes into being an issue is the area we're trying to grow and and are growing, which is the contract maintenance side where we've got, you know, a a a fixed revenue or recurring revenue and, obviously, you know, fixed costs. But those are the very contracts we're talking about that have got these provisions within them. And, also, I know that we have certainly across across the Fidelis contracts recently had an uplift in all contracts for this very reason. You know? So that's that you know, that's the process. It it it and it works. On the on the reactive side of the the original core business, of course, we're pricing per job.

17:19 So, you know, as prices go up, we price more. You know? So it's gotta be factored in. So, you know, the the this is not a big or a material risk issue for us because it's managed in the way we've we've just described, but I I recognize why, you know, the question's relevant. Thanks to the AGM statement. And as you you are are now in the final week of h '1, when do you envisage you'll be in a position to issue more detailed training update? Will there be an update broker note at this time? I think that that's just gonna happen in due course. You know, look at the pattern of things in the past. We've made a statement, and I say we've got Nomad in the room. You know, the advice is that we we we we stay with what we've said, and, hopefully, that you can get comfort from what we've said. You know, we've we've we've also, you you know, know, announced a number of wins, and and and you can see exactly where we are from from that perspective. So I'm I'm not in a position to give you the precise answer you're asking for there. I apologize.

18:17 But that is part of the process of of operating within the regulations. Regarding yesterday's announcement, assuming satisfactory execution, do you envisage this will become a revolving or long term contract? Look. Again, we've gotta be careful how we set expectations here. The answer is that this is a relationship we've had. We have a number of relationships that start off this way where we get involved in, you know, very specialized work, and they open up. And that that example I gave you earlier of the FM company that that that's, you know, signed this £2,000,000 a year, you know, scoped contract, that come as a result of doing this kind of work. So, again, you know, I I can't give you a a commitment commitment or set an expectation, but I can say to you that's how we win our work is by doing a great job, on something that's really quite difficult, and and they have a need on a regular basis. So, obviously, we'll be trying to make sure that we're the ones that are gonna continue with that work.

19:19 Have any contract expiries not been renewed by customers? Again, I know we need to be careful from a regulatory point of If if anything that was material had it done, we would have announced it. We've got lots of tiny contracts as well as big ones. So I don't think we should be answering about the the immaterial tiny ones, but I I think we've got very sticky customers. Certainly, on the maintenance side, you know, that they're they're long term contracts, and they've been sticky. I think that I can't think of anything unless anybody else, unless Andrea, you know, nothing material. You know? So the answer to that question is is no. So, hopefully, Dave, that has that has helped to answer the questions that you've just asked.

20:10 Right. Message from Dion. Oh, sorry. Message or question. When you make announcements about new contracts, seldom clear whether they are altogether new customers or perhaps continuation of contracts. Could you please make could you please in future make it clearer? I don't think we'd of doing that deliberately, Dion, but if that's the impression, I will certainly with you know, we will will certainly with our support of advisers make sure that we are crystal clear moving forward. You know, we we we don't really reannounce things that are just a basic continuation. What I I can can say to you, for example, and and and it's probably relevant here, I hope the wording of the announcement made it clear, but we announced earlier in the year the the the massive new contract that starts next week at at one of our customers, ExtraCare.

21:04 And we said in the contract that this was an existing customer, had been for about ten years of Fidelis. But the new element is that that contract is now, you know, four times larger than it was. So it's incremental. And so, hopefully, we are putting the words out there that makes it clear, and apologies if we haven't, but we'll we'll try harder. So thank you, Dion. Next one is from Mark, Mark g. You've announced eight contract wins in the last year down to a value of a 150 k. Have you lost any existing contracts on that scale over the same period? We answered it just now. The answer is no. So that's all the questions from online. Are there any others in the room? And and and we, of course, will spend some time, you know, with you, obviously, with our Nomad in in in play. But while while I've got anybody online, is there anything you think the rest of the audience would would like to hear?

22:00 Or, you know, can I close the meeting? No questions? Okay. Well, I'm gonna close the meeting. Mark, back to you. I I think that's the end of the annual general meeting, and and we are done. That's great. Thank you very much to Mark and the rest of the Board from REACT for their time this morning and the AGM. Ladies and gentlemen, please do not close this session as we will now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be highly valued and greatly appreciated by the company. On behalf of the board of REACT PLC, we'd like to thank you for attending today's annual general meeting, and good morning to you all. Thank you. Bye bye.