React Group (LSE:REAT) — Interim results

0:01 Good afternoon, and welcome to the REACT GROUP PLC interim results investor presentation. Throughout this recorded presentation, investors are being in listen only mode. Questions are encouraged, can be submitted at any time via the q and a tab situated in the right hand corner of your screen. Just click q and a, scroll to the bottom, type your question, and press send. Company may not be in a position to answer every question received during the meeting itself. Have the company review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Mark Braun, Chairman Sean Doak, CEO and Andrea Pankhurst, CFO. Good afternoon. Thank you, Paul, welcome to everyone who's joined us today. Welcome back to those people who've who've seen us before, and welcome to those people who haven't seen us. So, yeah, Paul, if we can just dive straight and see the first slide, please, just give an introduction.

0:48 So my name is Sean Burke. I'm the Chief Executive Officer of the group. I joined the business back in March 2019 as managing director of REACT Specialist Cleaning. And then eleven months later, I was appointed CEO to the PLC. I've got a track record of growing businesses

1:04 in the specialist cleaning, the facilities management and the HVAC service sectors, and my background is is business management. Over to you, Andrea. Thanks, Sean. Yeah. I'm Andrea Pankhurst. I'm a chartered accountant. For most of my career, I've worked with in the SME sector, and I particularly specialize in improving processes and controls, making systems work more effectively, and hopefully getting some meaningful reporting out for those companies.

1:36 Over to you, Mark. Thank you. I'm Mark Braun. I'm the chairman. I got involved with the business back at the very end of 2018 when it was a completely different looking business to what it is right now. It was very much having a number of problems. Fantastic service offering at the core. Customers loved what we did,

1:58 but the business was unable to make that profitable and its customer relationship management was poor. So we hired Sean and Andrea to basically rebuild the business from the inside out, which they did remarkably well and remarkably quickly. By the end of the first year, we appointed them to the Board as CEO respectively. They've done a fantastic job. And what you're about to hear now is sort of three years in and the next stage. So back to you, Sean, to begin the story. Yes. Thanks, Mark. Okay. So we'll start off by giving a little overview of the REACT Group.

2:35 We carry out specialist contract cleaning across UK. And I say UK, not Mainland UK because through the Ladder is Free proposition, we now go into Northern Ireland and Ireland. We operate three sixty five days a year, twenty fourseven, and we operate both clean and unhygiene maintenance and specialist call out work. If you've seen the message before, we're very our strategy is very much aligned to our previous message, and that is to build out the long term contracted business, go through the organic growth and also some carefully selected M and A. And clearly, the recurring nature of this work will lead to a more predictable business moving forwards and take away that reliance on the reactive work, which sometimes can ebb and flow. On the backdrop of COVID, cleanliness and hygiene is clearly ranked much higher in social conscience, and our clients are now looking for a more consistent and reliable solution capable of a company delivering anywhere in The UK.

3:34 So in summary, we believe there's still significant scope for continued expansion in what is a sizable and fragmented specialist cleaning market.

3:44 Looking at our customers, we've got a number of blue chip Tier one customers, some large facilities management companies as well. So that's not changed. We still operate across a diverse range of market sectors, and these range from education and rail all the way through to healthcare and industry. Typically, the markets or the sectors that we operate within are very resilient and the requirement for our non discretionary services. You'll see a number of logos there. Just gives you an idea and a little bit of flavor of some of the customers that we now work with. Move on, please, Paul. I'm gonna pass you over to Andrew now. She'll give you an overview of the performance highlights from h one and post period.

4:31 Thanks, Sean. So you can see from the figures that REACT has made significant progress since last since FY twenty one first half. We've more than doubled the revenue, and that is that change is obviously due to the impact of Fidelis now being included in these figures, and it wasn't last year because of the timing of the acquisition. But there has been organic growth in both companies during the during the f y twenty two. The margins are now showing the impact of the much higher proportion of contract maintenance work that that Fidelis brings to to the group. That's one of the reasons why Fidelis was an attractive target company for us because of its high level of recurring revenue.

5:25 So, typically, the contracts that Fidelis holds are three to five years, and the margins they attract on that work, are in generally in well, they are in double figures. And this actually compares really favorably to other large companies in this industry who will often work at low single digit rates. We've had contract wins during the first half, which Sean will, mention in a little while. And our REACT of work, was a bit soft at the beginning of h one, we're now seeing signs of that returning. A lot of that work is in the police and judiciary sectors, and a lot of their customers' client work is had had moved to online, but we are seeing a return to that sort of reactive call out work.

6:27 During h one and in f y twenty two, we've had some mobilization costs, which relate to some contracts that are going to come online in h two of this

6:40 year. And we've also taken on two senior sales and marketing staff. Again, Sean will give a little bit more detail on those individuals shortly. Post period end, so since h one, obviously, we've had the acquisition of Ladder Free. We raised 5,500,000 in a fundraise to assist with the acquisition of that business, and we've also had a new debt facility in place. So this facility is there to help support our organic growth in h two and beyond as well as navigating the cash flow fluctuations of normal business in the expanded group. Can we move on to the next slide, please, if that's okay? Thank you.

7:29 So I'll just run through what our reporting segments are. We have covered these before, and we've we've they're they're the same as they have been before. So firstly, our contract maintenance segment, as you can see, significant growth there, as I've mentioned, because of Fidelis being included in these figures. In that sec segment, we work in health care industry, education, and the rail sector. So a lot of this work is nondiscretionary in nature. Our contracts are often four to five years, in length, and we employ our workforce who who, staff staff those projects.

8:16 So the margin, is very much now the blended margin between, REACT and Fidelis. And in there, again, in that within that margin are some mobilization costs that relate to the the new contracts that are coming online in h '2. Secondly, our contract reactive segment. This is where we have framework agreements with our customers. Again, a lot of these customers we've we've worked with for quite a few years. We have a defined set of services we provide for them at defined prices. They call us out as and when they need us. So typically for the police, also the rail sector, we might be clearing,

9:02 cleaning a prison van or cleaning up a a fatality on on a a rail an incident that a train's been involved in. So this work, although it's unpredictable, it does recur. The customers do keep calling us out, and we've been working with these customers for quite a few years. In general, we employ our workforce who do this staff, but, occasionally, we use our network of subcontractors to help support us where there's excess demand. And then finally, ad hoc. So these ad hoc jobs are truly one off jobs. They come from either our existing customer base who maybe use us for contract maintenance or contract reactive work already, or it could be brand new customers who contact us and ask us to carry out some work for them. So this time last year, we had a lot of COVID work that was going on during, 2021.

9:59 We knew that that wasn't going to carry on long term, and it hasn't. So we have managed to replace that work partly with some ad hoc work that Fidelis does, and partly with going back to the traditional types of ad hoc work that we've always done within REACT, clearing fly tips and, anything that, our customers may come up with at any time that they that they need sorting out. So this is our highest margin segment, because of the unusual and one off nature of the work. Again, where we can, we use our own workforce, but we're often using our subcontractor network to help us fulfill this work.

10:45 I'll hand back to you, Sean, please. Yeah. Thanks, Andrea. Okay. Just before I move on to and to talk about the the contract wins, it's probably a good place now just to pause and just remember that the group's very different now than what it was last time we presented. So we've got the gas specialist cleaning, which predominantly look after emergency and decontamination work as Andrew has just alluded to. That can many things from a a trade fatality cleanup all the way through to a dirty protest in a cell. It's particularly reactive by nature. On the Fidelis side, we've got more of the hygiene and maintenance work. So it's recurring revenue streams. So typically, it's a three, five or seven year commitment from the customer that gives us, you know, recurring revenue and line of sight moving into the future. And they are very strong in the education, the health care and the industry sectors.

11:35 And then more recently, through the recent acquisition of Ladders Free, they are one of the largest or leading window cleaning and cladding cleaning companies here in The UK. And again, reoccurring revenue, typically these cleans can be done daily, weekly, monthly, or at worst case, quarterly, but they're part of a bigger contract, they have line of sight of revenue in the future. So, look, basically, I'm getting at since we've completed the Fidelis acquisition early last year and more recently, the Lattice Free acquisition this year, we have a much more credible proposition as a group. It's led to a number of wins in h one. We've got some multiyear deals there, which are predominantly delivered through the Fidelis model. I'm not gonna bore you all and go through every single one of them individually.

12:21 And then we've got some specialist contracts which are typically delivered through the REACT model. Post period, we've got two. We've got two to mention. One is a three year commitment in the education sector but the spend just shy of £250,000 per annum. That's through the Fidelis model. And then we've got a number of smaller wins, which are typically three year commitments and they range from health care, education, and commercial sectors, and they're delivered across the Fidelis and the REACT model. So in summary, what I'm saying is we've continued to take advantage of our growing size. It's allowed us to tender and secure some more material opportunities, and it's allowed us to cross sell constantly across the group, which has been great for the growth. Moving on, please, Paul.

13:11 Thanks very much. So looking at our strategic progress, those who have seen this presentation before, it's very much our ambition to continue scaling through double digit organic growth to become the 800 pound gorilla, the leading specialist in what is a fragmented space.

13:30 Through our m and a strategy, which, you know, Mark is focused on and, you know, he built out a a pipeline of opportunities using a company called BDO who have helped us with that. We've proven that, you know, we've we've got it right with Fidelis earlier last year. I'm sure we've got the the exact exact same mix with Lattice Free. So I'm gonna just leave that there for now. Mark can talk about that with any questions later on. But focusing on the the organic piece, you know, we got a strong record in growing out the business organically. We built up some good momentum in long term contract wins, we've got a constantly growing pipeline. We've just appointed five to six months ago two key senior sales and marketing experts.

14:17 They've joined the business with a wealth of knowledge in this space. First of all, you got Sam Haywards, who's our GROUP head of business development. More recently before joining the REACT GROUP, he was with ENGIE. So he has a wealth of contacts and knowledge within this space, particularly in building out that contract maintenance piece with a little bit of REACT in the mix as well. So, you know, he's already added to to the to the wins, which has been brilliant, and he's really taken hold of the sales team. You know, you have to remember before Sam joined the business, any material deal was really, you know, it it was me out there seeing customers. So Sam's helped out. He's also brought Chris Ryan into the business who now heads up the Fidelis business as sales manager.

15:05 Again, wealth of experience in the space. He more recently, he's been with BICS, which is the British Institute of Cleaning Science, has a very consultative approach to the way that he approaches opportunities with clients. And again, he's materially added to the pipeline and some opportunities that we've announced there in H1.

15:27 So, I guess, in summary, what we're going to do, we're going to apply our successful marketing model to the Lattice free business. We'll constantly cross and upsell across all three elements of the business. And we've demonstrated continued progress putting in some key components to help deliver growth strategy.

15:52 Moving on, please, Paul. Thank you very much. So just looking at the the acquisitions, the a brief recap. This business was founded twenty years ago. It's one of the leading commercial cleaning and cladding cleaning business here in The UK. And as I said earlier, they do operate in Ireland too.

16:14 They are very unique that they built up a highly profitable recurring revenue with low working capital. You know, it's highly cost generative and they built out a very competitive nationwide ecosystem of over 300 local specialist service providers. And when I say specialist providers, they're not threading your shed. You know, they are professional outfits

16:39 and they are trained in order to certify in exactly the same way as they would be if they were employed in other elements of the group. Customers are very sticky, you know, attracted by quality performance, low costs. They're able to deliver multi location to nationwide customers. And if we compare the Ladders free model to someone like perhaps nationwide or Maintee, you know, often with Mighty or Nationwide, it gets they'll they'll they'll secure a piece of work. It gets subcontracted, and then that subcontractor will subcontract it again and so on and so on. With Lattice three, that doesn't happen. We provide a nationwide service, like I said, on a multi location regional model, and that leads to what we believe very sticky customers.

17:29 If we look at the national customers there, we've got 21 customers, typically added a customer every single year. It equates to 53% of the Lattice free revenue and more power free, I believe, they've got 0% churn.

17:43 I don't believe that, you know, any competitor in the space could sit here and say that they've got 0% churn from nationals. And I believe, you know, that's a credit to to the work that Jason and Justin, the founders, and the and the team have done over the last twenty years and the way that we deliver our local service nationwide.

18:05 That is why we've grown the business from modest marketing. I don't think the founders would mind me saying that. And we're looking now to apply the sales and marketing strategy that we've utilized in the rest of the group to help drive strong organic growth in what we believe is a unique, high value, high margin, and cash generative business. Moving on, please, Paul.

18:30 Okay. So looking at the outlook. So H2 started well, particularly in the contract maintenance business that's continuing to report record trading months. The long term contracts that were won and mobilized due in H1 are now beginning to deliver revenue in H2 just as expected. We've seen an increase in, reactive works, certainly at the start of H2. Following the increase in the sales and marketing activity that I've just mentioned, our opportunity pipeline is steadily growing. And actually, now, you know, the pipeline is healthier now than it's ever been, you know, in the whole time that Mark, Andrew, and myself have been involved in the business.

19:13 With regard to Lattice Free, we expect it to continue making a material contribution to the group's performance at h two and and well beyond. Integration has gone particularly well. You know, the founders, Jason and Justin, really good guys. Their ethics and their entrepreneurial mindset is very similar to to Andrew and Mark and myself.

19:33 The culture within that team is fantastic. You know, we've got people in that business who have been there for eleven, thirteen years. And I think the we've other than the recent recruit, I think the the shortest tenure is six years. So, you know, they're very, very much aligned to to to what we want to do with the business and, you know, with the with the help of the of the team, I'm sure we'll do that. With regard to revenues in May and June, we've been exceptionally strong.

20:02 And in summary, we're trading in line with management expectations. And as we stand right now, we've got a solid outlook for the remainder of the year and beyond. Moving on, please, Paul.

20:16 Thank you. So in summary, as we said before, it's, you know, our very much our aim to become the leading specialist in what is a valuable and highly fragmented market. Our strategy is focused on building out that long term reoccur revenue stream in nondiscretionary specialist markets. And we've a track record of delivering double digit organic growth alongside some strategically important acquisitions.

20:44 And we believe the recent acquisition of Ladders Free will not just be transformational, but it will be earnings with Hansen, and it allow us to build scale in both market cap and earnings.

20:57 After you, Paul. Fantastic. Sure. Thank you very much indeed and to Andrew and Mark as well. Ladies and gentlemen, do please continue to submit your questions using the Q and A tab situated in the right hand corner of your screen. Just for the team to take a few moments to review those questions submitted today, I'd like to remind you the recording of your presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Before we go on to the live q and a, Mark, if I may, we did have one pre submitted question which reads as follows. Do REACT also provide security services as part of their FM offering?

21:31 I'll I'll take that one. We don't you know, that some of our competitors do, but it's not an an area that we wish to focus on, you know, just yet. We want to concentrate on, you know, what we believe we got right. Our focus is very much, you know, inch inch wide, mile deep. We don't want to be, you know, going off into to areas that, you know, we we don't want to focus on just yet. That's great. Sean, thank you. And Mark, if I may just ask you just to click on that Q and A tab and where appropriate to do so, just read out the question and either take it or pass it to one of the team, that'd be great. And I'll pick up from you at the end. Brilliant. Thank you. Thank you. Okay. So we have several questions actually, so let me get started. William W has asked the first three questions.

22:17 The first one is, in May 2022, the company forecast an adjusted EBITDA for the year ending $39.22 of approximately $1,300,000 Does that view still hold? Well, I'm going to take that one and ask the guys if they want to add anything to it. It wasn't our forecast. It was, of course, Singers, our house broker. I know that's being pedantic, but that is the way in which we have to present it. It is their forecast. If anything changes, obviously, we operate within a rule set where we have to make that announcement. But as you heard from Sean and Andrea, but Sean in particular, he said that we're currently well on track for expectations that the management team have set.

23:04 I think we're in good shape. Does anybody want to add anything to that? No. Nothing for me. I think I covered it in the slide anyway. Yeah. I think I agree. Covered it, I think.

23:14 Okay. Alright. Well, William, hopefully, that answers that question. The next question from you says, can you please this is there's some very, very well put questions, actually. It starts to get them not quite as bland as sometimes they are. So William has said, can you please convince me that a maximum total purchase price of $8,500,000 for Lattice Free is good value? That's, I think, going to come back to me to answer as well, although Sean and Andrew, I'm sure, can comment further. As you've seen through the presentation, what you have here is a high quality business. It's got a unique offering. It's got a that offering is actually compelling. The financials are hugely attractive.

23:59 You hopefully would have seen the detail on that. I'm not going to try to repeat them, but you've got a business that over twenty years has grown pretty consistently and has not lost customers. It's won customers and kept them, It is a compelling proposition, as I've just said. The financials generate a very solid margin and a very solid EBITDA. It also requires very little working capital and it generates cash. At about 5.7 times earnings, we think it represents good value, very, very good value to the shareholders. I'd like to add that through our presentations leading up you know, the acquisition, you know, we we had to talk in a little bit of code around, you know, the company. We weren't able to declare who it was, but very much the business model, we we believe, is is akin to a very similar model that you see current operating at Pimaco plumbers.

25:01 And for those of you that followed the Pimaco plumbers story, you'll understand just how valuable that business was when when the owners exited, you know, a couple of years ago. So from from our point of view, we think that the the money we've paid is great value. And I should also add, I I think that the the the the two previous owners, Justin and Jason, also believe in the value of bringing the company together so much so that they have they have rolled a significant part of their, you know, of their stake back into the enlarged group. So, yeah, I think we all believe it's good value. Andrea, Sean, anything to add to that? No. No. I think you've answered it well. Yeah. I, Mike. I think you have anything else to add, Mark. You've been very thorough.

25:49 Thank you. Final question at the moment from William is for the contract maintenance work, what gross margin percentage are you aiming at? Andrew? Okay. I'll Or Sean? Yeah. Either one. I'll do that. Yeah. I think it depends on the business mix. So certainly between 2030%. I think our current goal is between 2530% unless you unless you tell me otherwise, Andrew. No. The only thing I would add is ladders free work is contract maintenance. So the next time we report, ladders free will also be in the mix. They have got they they work at a a high margin.

26:35 So that that margin is gonna change again. That blend is gonna change again. Yep. So, yeah, it's a difficult one to keep splitting out in lots of ways, but, yeah, that that's going to evolve, that one. I think it's important for us to to repeat a message we've been saying all along, and that is that we offer a valuable service, quite a unique proposition, and that we do sell on value. We don't sell on price. And sometimes we have to compromise where we're looking at very long contracts and very large deals, but that is something that's more the exception than the rule. We very much sell on value. I think it's also important to mention Sean's done a great job in terms of making sure the sales team are aligned that way. They don't get paid commission on revenue, they get paid commission on the margin value.

27:21 So they too are driven on selling the value and us as a company receiving that value by way of a margin. So hopefully that answers the question for you, William. I'm moving on now to Paul. Paul L, who I think is one of our regular contributors here and one of our investors. How do you make contract reactive? So this is where we have a contract where we're one of one responding to emergency callouts. How do we make the operating margin positive? And he's asking beyond that, do we scale it or do the costs rise concurrent? And is this an area of business to restructure or close down?

28:07 And I think the key here is that we see this as a part of our business that's the sharp end of the spear. It's the business that really does cause customers pain and it gets us an intro and an engagement that puts us well above the rest. We punch well above our weight in terms of the kind of companies we work with and at what level we do, but do we have an answer? How do we actually get it to being a positive operating margin rather than just a almost it's not a loss leader, actually, because we have made profit on this before. But do you have a view, either of you, on Paul's question? I would just add, you know, we're constantly trying to make sure we work in the most efficient way possible with that team using our own staff, always monitoring where in the country we need those staff.

29:04 So, you know, trying to reduce the travel element. We've also just we we haven't actually put our prices up for that work in a in a in a little while. So we've been implementing some price increases with the customers, and all the customers are accepting those price increases. So that's probably been a little bit overdue, and that that will definitely help the profitability as well. Anything else to add on that, Sean? Yeah. Just that actually, this has been a a little area of focus for the for this new sales team as well just to reengage with these clients to see what cross selling opportunities there are there and what we may perhaps have missed.

29:52 Because obviously when we all came into the business, we had lots of things to to fix as Mark said earlier on in the presentation. So we have had some opportunities that have come out of this contract REACTIS space as well. Brilliant. Okay. Well, thank you both, for adding to that. The next question is from Matthew R. Now this is more than one question, and we could probably spend a good five or ten minutes giving very precise answer to this. But hopefully, we'll give you a summary that will give a flavor to what the answers are. Matthew, you've said, can you expand on the margin target between the different business groups and the sales process to scale these further? What is the target recurring revenue percentage of sales?

30:40 That last sentence, I think deserves a separate answer. Why don't we start there? I think strategically, and again, my two colleagues can comment here, but strategically, we are pushing towards trying to make as much of our business as recurring as possible. And you can see that through the organic growth strategy that we've been deploying and obviously through the acquisition strategy. Now, we do think that the project related and the contract based REACT GROUP PLC is important for us to break ground with new customers. But the reality is the financial model needs to revolve around a transparent and predictable financial model. And that's what we get with the recurring revenue. So recurring revenue objectives, we start off with it being greater than 80%.

31:37 I think it very much comes down to how the business evolves and blends going forward as to whether it gets to 90% or 95% stays at that 80%, but we certainly want to be in a position where more than 80% of our business can be relied on year on year on year. In terms of that particular part of the question, that's the strategy we're setting. Do you want to add anything to that, Sean and Andrew? Just on the sales process, I mean part of the question is the sales process to scale these further. So I mentioned it earlier, we've got Sam and Chris in the business now, both very well connected and and well versed in the space. You you need to remember that if you look at this before, we're not looking to compete with an OCS or a mighty or an ISS where, we might be looking at low single digit margins. That's not where we are.

32:34 So we are very deliberate in the opportunities that we go after. Generally, where the specification is higher and it's more specialists. And although there will be an element there of traditional tender where we have to follow that process, we we aim to return that sales and marketing activities into that consultative approach so we get opportunities. So actually, we may just be, you know, pricing it. We might just be the only person pricing. We might be they might put out to mini tender. That's better for us than, you know, than putting out twenty, twenty five people on a traditional tender where we know it's a rest of the bottom and margins are going be single digit. Just not an area we want to focus on. It's just going to be a waste of time. I'll answer your question, Matthew. Sean. Excellent.

33:20 Okay. So then there was the first part of the question, which is where I think we could get lost into a lot of detail, hopefully we can be a bit more high level summary. Can you expand on the market on the main sorry, on the margin target between the different business groups and the sales processes to scale these further. Think you have answered the sales process bit, but margin targets, Andrea, we talked about contract maintenance already, somewhere between twenty and thirty with our ideal area being 25% to 30 That contrasts with a lot of contract maintenance business out there from the likes of those big companies who will be operating in single digits. Hopefully, Sean's qualified that. In terms of contract reactive and the ad hoc project work, what are your comments, both of you, on where our targets are? And you know, I'm very well aware because I see the business operating every day that it will fluctuate depending on business mix. But comments?

34:30 I would just add that. Sorry, Sean. I would just say, you know, we've reported, you know, above 30% on contract reactive for the last two half years. And I would say, you know, between 3040% is definitely where we're aiming in that segment. In terms of the ad hoc, last year, we had a lot of specific COVID nineteen related work, which we said at the time was high margin. And we we commented at the time that that sort of high margin wasn't really sustainable. So I think, you know, for that sort of work, you know, high thirties, low forties are sort of our our general targets for those those segments.

35:17 Yeah. Brilliant. Yeah. It's it's spot on. Yeah. And the the only other thing I'd reiterate is just to say that, you know, we have got several customers, several significant customers that that we have worked across all three segments. So, you know, we're providing that full service for them. So we're providing some work, contract maintenance at a lower margin. And then when they need helping out with some ad hoc work that we haven't got anyone else to turn to, we're there, and we're able to secure higher margins. So it really makes sense for us to be able to provide that entire service to our customers. And I think there is one other factor that can play in each period, and that is the extent to which we use subcontractors support some of that project work.

36:03 Frankly, we've been so busy that maybe we've had to use subcontractors a little bit more than we otherwise would in certain periods, and sometimes we don't. So I think that can have an impact on period on period. Okay. So hopefully that answers your questions, Matthew. Moving on to Alan C. The question is while the Ladder's Free acquisition looks a great purchase, the share price has undeniably suffered as a consequence. How would you be able to make any further acquisitions given the current bombed out valuation of your own shares? That's your comment, not mine, but I have a tendency to agree with you. Look, look, the share price is a factor of a number of different things, and it's not for me to speculate what they are. I think the acquisition has been a brilliant acquisition, and it creates huge amounts of shareholder value and you will see that in the months and years to come.

37:01 I don't think we obviously set the mark because of the rate at which we did fundraise, but I don't think that our share price is where it is primarily because of that. You've got to recognize that we brought on a number of or we've added to a number of institutional shareholders. A company of our size has got an enviable list of institutional shareholders that support us, which is great. And our share price is affected by a small number of trades by private investors, and that will always be the case. So we are where we are. Our view of it doesn't really matter because our view of it says, actually, we believe it should be a higher level, but that doesn't matter. It's what the market does.

37:49 But to go on to the final part of your question there, which is how would we be able to make any further acquisitions given the current share price? Well, right now, whilst we have a pipeline and there are some interesting things in that pipeline, we know, like we did with Fidelis, we've got to demonstrate to everybody that we can actually execute on our plan with having acquired Ladders Free, and we've got off to a great start. It's a great acquisition, and I believe, and so does the team, that we'll be able to do that. With the performance will come the share price, I have absolutely no doubt. And we shouldn't forget the fact that there are external factors. Everything in the AIM market at the moment is suffering and we're suffering alongside some of that as well. It's all about timing.

38:35 It's all about us executing on the business we've got in front of us, which I think is a tremendous opportunity to add value to shareholders and that then being recognized by the share price in due course. When that happens, then then and only then, I think we'll be looking at what's next in front of us in terms of potential acquisition. Either of you got anything to add to that answer? Nothing from me. Mark Jay question. Shareholders have seen their investment decimated with the placing. What are you going to do to try and improve the current share price? Well, I think I kind of started to answer that or hopefully answered that with my last comments, Mark.

39:31 The share price was at 1.675, touching 1.7 at the point that we did the fundraise. We did the fundraise at 1.2, and we have been on record explaining the circumstances and how that came about, but we believe that we did absolutely the right thing for shareholders and for the company by going ahead both with the fundraise and the acquisition at that point in time. I believe that the plans we've set before you today and the conversations we've had and answered the questions will do exactly what you're asking, is what are we going to do to improve the current share price. We're going to perform. Got a great business with great recurring revenue.

40:18 We've got solid track record of organic growth year on year over the last three years, and we'll continue with that. We've now been solidly improving the financial model of the business such that it's going to look quite different than it did a year ago or two years ago when we had the share price up above 3p. And I firmly believe that we will be creating solid value going forward. The share price is a byproduct of current market conditions and people's view of where we are today, but hopefully that will change by the work we're going to do over the next few months and next few years. Again, I don't know if anybody has got anything to add to that, but hopefully, Mark, you feel that's a fairly full answer to your question.

41:06 The final question here oh, no, there's another one popped in. Anyway, me see if we can get through the next two questions and maybe take any final ones because we don't want to drag this out before everybody too long. Paul again, Paul L, talk about how and where underlying operating leverage should develop and then how any growing internally generated funds can be deployed to aid organic growth? I think the core to the answer to this question is the organic growth and where we have operating leverage is very much in and around the contract maintenance business. We don't have to add very much as we've shown in the past. We don't have to add very much to our operating infrastructure in order to grow and generate significant profits.

42:02 You only have to look at the last few periods of results to see that. With a relatively modest 20%, 22% growth in revenue, we see 28% growth in contribution and sort of 80% growth in EBITDA. I think that was the last organic statement in the last period. So I think you'll find that we will see huge leverage from the acquisitions that we've made. You've already begun to see it with Fidelis. We but you'll see that accelerate, I think, now with the acquisition of Ladder's Free. Again, I'm answering this because very much these are sort of the overall strategic questions.

42:50 I don't know whether Sean or Andrew have got anything to add to that. No, nothing for me. And if you understood You've answered it very thoroughly, Mark. Yeah. I I think the only thing I maybe missed on that question was about, you know, how can we use the the funds we've distributed. We have got cash generative businesses, and we will be using the funds they generate to support that organic growth. Yeah. Andrew N, final question. With regards to the share price, what do you think the value inflection points will be? I don't want to I've got to be honest with you, Andrew. I don't think that's something that we can fairly answer at this moment in time. And that's one that I might wanna take away and just think about how we best answer that to you for you. But what I would say to you is what's going to drive the value is continuing organic growth, showing we can drive organic growth from LadderSphere in the same way as we have done Fidelis and to continue to show the growth in recurring revenues and the operating margins that we generate from the combined group. Those are the things that I think are going to be critical to answering that question, but that's one we'll come back on if you're okay. We'll we'll we'll make sure that answer that question gets, you know, a proper answer when we put it on our website.

44:20 That's great. Paul? Yeah. I was gonna say, think talking there, but As always, you've been fantastic. And thank you to to the team for for covering off all the questions that we've had through. Of course, there are any further questions, come back to Mark's point, the team can respond to those on the Investor Week company platform. We'll publish those back out to you. Sean, perhaps, if I may, just before redirecting investors to provide you with their feedback, which I know is important to you and the team, you could just ask a few closing comments, please. Yes. Thank you, Paul. I just wanted to say thank you to everyone that's joined the platform today and taking the time out on the afternoon. I just want to close by saying that the business continues to go from strength to strength following our investment in the sales and marketing team. We're very excited about the growth opportunities that lay ahead with Lattice Free and the cross selling opportunities across the group. So, yes, thanks for joining us, and back to you, Paul. That's great. Sean, Andrea, Mark, thanks indeed for updating attendees today. Could I please ask investors not to close this session as we automatically redirect you to provide your feedback in order the team can better understand your views and expectations?

45:19 This will only take a few moments to complete and is greatly valued by the company. On behalf of the management team of REACT GROUP PLC, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you, and good afternoon to you all.