26th April 2021, 6pm – 9.30pm

1.  Are these two recent contract wins in current forecasts or should we expect forecasts to increase?
   As discussed during the Q&A at the tail end of the session, we are leaving the current forecast unchanged at present.

2.  How will you maintain high margin if you now are a facilitator between the large FM company and their 100s of small specialist contractors? Do the small contractors need to cough up margin to you? (£2m pa biz is too big to handle in-house so you’re going to use 3rd party)
FM customers are of great importance to REACT, however they are only part of our portfolio of Customers.
REACT has demonstrated how the evolution of its value proposition, alongside business mix, has provided strong margins overall; these contracts do not compromise this.
The operational gearing available to the REACT as it scales, means much more of the gross margin is converted to operating profit and cash, which thereby improves shareholder value.

We have been planning for these new contracts for several months, putting in place the capacity to take on the incremental workload as it evolves through the transition period.  We also have the additional capacity provided by the acquisition of Fidelis, therefore our use of our business partner community will be measured and in line with the continuous development of the business.

 
Please note: REACT is not operating as a facilitator between the FM firm and incumbent suppliers.  REACT is replacing the incumbent suppliers.

3.  Are you a Covid business? Will growth go into reverse when Covid is largely out of the way?
No REACT is not a COVID-19-only business.
At the height of the pandemic, REACT reported in last year’s numbers that COVID-19 decontaminations accounted for just 10% of REACT’s revenues.  If we removed the revenue and profit associated with COVID-19 decontaminations from the numbers, but accepted the negative impact of lockdown on some sectors of the business, the revenues still grew organically by 26% and profit contribution (gross profit) grew by 41%.  This trend has continued in 2021.
What we have found is that as the lockdown recedes some of the work previously placed on hold is now coming through.  Additionally our relationship and credentials with Customers have improved during the period providing access to many more opportunities for REACT’s specialist cleaning core business, such as the two material contract wins recently announced.

4.  In previous presentation, you focused on managing self-employed people.  How easy is it going to be to find the staff to meet the new business  you have gained.
Apologies if we confused in our previous presentation, however we have not been focused on managing self-employed people.

Our core workforce are all employed by REACT.  We augment this team with specialist business partners, some of whom run small businesses and may be self-employed, however this is a fraction of the business partner network, who in the main are small yet properly managed commercial businesses.
We have not yet experienced insurmountable challenges with hiring new talent into the team, in fact we have a solid wait-list of candidates covering a number of roles.

5.  Is there a risk that if you acquire companies that do what you core customers do, there may be greater difficulty as you may compete with customers for tenders.
REACT is not attempting to be an FM business.  Some of the work REACT carries out may compete with some activities of the FM customers we work with (for example some FM firms have a cleaning division within their business), however most progressive FM firms are seasoned solution providers and have for some time leveraged the skills of competitors, especially smaller specialists like REACT, to deliver the best solution to their end-customers.  This approach is quite mature in a number of other industry sectors  (e.g. IT) and therefore with careful management, we believe it is viable in the specialist cleaning sector for REACT.

6.  Did you consider the Aquis exchange rather than AIM?
REACT was already on AIM when this management team took control of the business.  We are uncertain of the consideration given to AQUIS prior to our involvement.  Certainly we believe AIM is the right market for REACT now.

7.  Is the £m pa business achieved today from one of the big 4/big 5 you mentioned earlier eg Initial, Rentokil?
For commercial confidentiality reasons we are unable to provide details of who the customer is beyond stating that they are one of the world’s leading facilities management companies.

8.  How many shares do you three own?
In total, the three of us (Mark Braund, Chairman, Shaun Doak, CEO and Andrea Pankhurst, CFO) own and have options/warrants over a total of 54,098,164 shares, representing c.10% of the fully diluted share capital.

 It is worth noting that when this management team took control of the business, the share price was just 0.165p, options and warrants were put in place in part as a form of salary sacrifice programme, with a strike price of 0.3p, a significant premium to the share price at the time.  Options and warrants were fully aligned to shareholder interests, awarded based on share price hurdles from 0.5p through to 2.8p; the final hurdle representing a 17-times multiple of the share price when the management team took control.

9.  Isn’t OCS a major competitor?
OCS (Office Cleaning Services) is a large group of cleaning, facilities management and serviced office businesses.  Whilst REACT will compete with a small part of the OCS business, their activities and scale means we really are no competitor of theirs; they would see the likes of Rentokil and PHS as their competitors, not REACT.  Similar to other businesses of their scale and focus, OCS also subcontract work to firms like REACT in the interest of optimising their business and delivering the best solution to their customers.

10. What specialist skills / equipment are required ?
REACT operate a broad range of specialist services, each requiring specialist skill sets and some specialist equipment probably too broad to detail here.  Please visit our website at www.reactsc.co.uk for more information.