REACT Group PLC ($REAT)

Good afternoon, and welcome to the REACT Group plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll, which I kindly ask you to submit your responses. I'd now like to hand over to the executive management team. Shaun, good afternoon.

Thank you, Jack. Thanks for everyone taking the time to join us today. I just want to start off by introducing ourselves. So my name is Shaun Doak, and those of you who have been on the presentation before will know who I am. I joined the business originally back in March 2019 and then was appointed to the main Board as Group CEO in February of 2020. I've got a strong track record of growing businesses, both in the specialist cleaning facilities management and HVAC services sectors. My background is very much sales and operations, and I've got a business management degree. Over to you, Spencer.

Thanks, Shaun. So my name is Spencer Dredge. I joined the Board just over 2 years ago as CFO. As you would expect, I'm an accountant, 25 years experience on or supporting plc boards for strategic opportunities as well as doing a 3-year period in corporate finance.

And I'm Mark Braund. I'm the Chair. I've been involved with the business since being asked to come in and look at what was originally a bit of a problem statement back in 2018, 2019. And I've been here ever since.

Thank you very much, Mark. Just turn the page, please, Jack. Okay. So I'll give you a quick overview for those of you who are new to the story. REACT Group, we operate within four separate divisions. First of all, we've got the Commercial Window and cladding [indiscernible] business, which is LaddersFree, which is our second acquisition that we completed here within the group. We operate on a nationwide basis. It is an indirect model. So very low working capital, but we've got the opportunity to flex up as we drive incremental growth and bring on new customers. And we've got a who's who of customers across the nation from large retailers to some large hotel chains and so on and so forth. Second of all, we've got the hygiene and maintenance business, which is Fidelis. That was our maiden acquisition. The customer commitment in that space is typically 3 to 5 years. The revenue is typically recurring by nature, and we also have the opportunity to upsell some of our ad hoc services into the customer set there. Very strong in education, very strong in the NHS and industry as well. Third component is the REACT Specialist Cleaning, which was the core business when we walked through the door here, when Mark and I walked through the door all those years ago. our emergency and decontamination business, typically on-site within 4 hours, everything from the unfortunate event of a fatality on the rail all the way through to some real specialist deep cleans within the NHS Trust, predominantly within and around London. And that's a direct model. And then we've got the Drainage and Plumbing business, which is our most recent acquisition, which was 24hr Aquaflow based in Essex, very strong coverage south of [ Milton Keynes ], but particularly within and around London. Again, very responsive in terms of reactive call-outs to customers. So a very strong proposition there to the customer. And there's a whole host of preplanned maintenance that business carries out for its [ FM ] customers. So in summary, we are a group that provides specialist support services mainly to the facilities management sector here in the U.K. We're focused on markets with typically nondiscretionary requirements, often complex demands and quite often on a nationwide fulfillment basis, as I've just touched on. We continue to increase our valuable proposition in terms of our scale, our range of services and of course, our geographical delivery, especially after our latest acquisition of 24hr Aquaflow. And our strategy remains unchanged. It's building out a business with market-leading performance and the aim of achieving that GBP 5 million worth of [ FCF ] per year within the next 3 years. Just turn the slide, please, and I'll hand over to Spencer.

Thanks, Shaun. So performance summary. You would have heard me obviously present this slide before. I think the history here is relevant. You can see it represented in the graphical graphs below. So we've got a turnaround. It's been very successfully executed. And where we're about now is we're trying to grow the business and scale it. What we have in front of us here is performance for the first half year for the period up to March '26. Diving into the detail, we've got we've recorded revenue of GBP 13.2 million which is 9% up on the same period last year, with strong repeat recurring business of over 85%. Gross profit of GBP 4.3 million, which is over -- which is 10% up on the prior year and slightly increased gross margin at 32.4%. Contributing to EBITDA at GBP 1.5 million, which is 7% up on the same period last year. Free cash flow of GBP 824,000. We see this is a resilient set of results. Business is continuing to grow. It's continuing to generate cash. It's profitable, obviously, and despite challenging market headwinds. So we can turn the slide, please. A little bit more detail around the income statement. We often get questioned by shareholders on this. Our administration expense line was GBP 4.2 million. Within that, we've got some recurring overheads, as you would expect, running the operations within the group of GBP 2.8 million. There's some exceptional items, which are one-off in nature of just over GBP 100,000. We have some IFRS noncash items as well within that GBP 4.2 million number, most notably share-based payments at GBP 67,000 and amortization of intangible fixed assets at just short of GBP 1 million for the first half year. But the key thing here is to appreciate the cash recurring nature of our overheads at GBP 2.8 million. So if we can turn the slide, please.

Thank you very much. So just looking at our customers. Again, those who have seen the presentation before will recognize some of these logos. We have a whole host of blue-chip customers and large facilities management companies dotted around the U.K. As I said, we operate in a very diverse and resilient range of market sectors, and we typically actively hunt our customers who have a bias towards nondiscretionary services. Very low customer concentration. That remains completely unchanged, around about 1,150 customers, 204 of them are material and our top 10 represent around about 42% of our revenue. So no single customer accounts for more than 7.6% of our revenue. You should recognize some of the logos on that slide. Some are new, some are existing, but it gives you an overview of who we serve. Moving on to the next slide, just look at our strategic progress. We've had solid growth, which has been underpinned by strong customer retention. We've got circa GBP 4 million of recurring revenue contracts that have been renewed in the period. As I said, they can be anything from a year that through to 5 years. And we've had a number of small and midsized customer contract wins across the group, which has been very good. We've launched the [ pub ] division within the 24hr Aquaflow business. It's a division that our customers clearly wanted. We've quoted well in excess of GBP 0.5 million worth of opportunities, which are sitting in the pipeline at the moment, and we've had strong conversion with over GBP 150,000 of that turning into revenue so far. And we launched that around about September time. So that's starting to go very well. We're very pleased with that and the upside potential that, that brings for incremental growth within existing customers. And obviously, it's a new service line to sell to new customers alike. Project Sparkle, we touched on this before. It's fully embedded now. It's delivered a step change in operational efficiencies through digitizing the workflows. Those who have seen the story before, this is obviously for LaddersFree business, so for the commercial window cleaner business. It's always been a great business, but we recognize very early on when we acquired the business that there was an upside opportunity to digitize the workflows and to give us the holistic view and the data points that we require to really drive growth. And the customer portal, which is called Project Sparkle gives our customers a real-time operational visibility of point of delivery, when the next clean is scheduled, and we believe that we're the only company out there that are providing our customers with this capability. It's a great [ USP ], a really good opportunity to open up conversations when we're pitching for new business. We've invested ahead of plan on the back of this digitization in two new sales resources for that business of LaddersFree. People who have worked with the leader, [ Terry Otton ] previous, very much heavy hitters always in excess of the targets previous, and they've hit the ground and built out a steady pipeline. And they've also, in a short period of time, added to those small and midsized new customer contracts we [ cured ]. So in summary, we've got steady strategic advantages -- advances sorry, and we've strengthened our capability through the hires and the tech piece and the latest acquisition of Aquaflow and obviously launch in the pump division gives us more resilience and more opportunity to grow. To move on to the summary and outlook on the next slide. So as I said, we've had a robust performance in H1 despite obviously the economic headwinds, which are well documented in the press. We've got continued growth in very high sector margins. We continue to operate in upper quartile margins, which is great to see despite the challenges. 85% of our revenue is recurring, and we've improved the quality of earnings, as I said. We continue to drive performance within the 24-hour Aquaflow business with the investment of the complementary pump division. And we've also continued to develop incremental opportunities with existing customers and bring on new customers within that business, too. As I said, the investment in LaddersFree transitioned us to a tech-enabled services business. So it gives us that real ability to really push that business forward and push the [ USP ] of the digitalization platform in Project Sparkle to give our customers the visibility that they need. And we remain focused on our 3-year goal, which, as I said earlier in the presentation, is that GBP 5 million worth of free cash flow per annum. And that's it for me.

[Operator Instructions] Mark, I'll hand over to you to chair the Q&A, and I'll pick up back from you at the end.

Thank you, Jack. Thank you. Okay. I'll read out the questions. I might answer one or two myself, but effectively, Shaun and Spencer to answer. So I'll coordinate. The first one is probably one that I am going to answer myself, which is these are all -- most of these are all pre-submitted. So unfortunately, the name doesn't go with it. So I can't speak personally for the person that submitted it. Out of the decline of the share price, can you give a very good reason to do further investment in your company? That actually has had the name written after it. I think it's [ Ben Nielsen ]. Yes, of course, I can. Yes. I mean it's a great company. It's a fantastic management team. And if you don't mind, I'm just going to move the slides back to this chart, this one and leave that one up. We're a growing business. We've grown organically and inorganically. We've only had one period, 6-month period where we did not grow organically, and that was the first half of last year. And ever since then, all before then and since, we've always grown organically. And we have a great financial model. 85% of our revenue is recurring. You've seen the customer base. We're not consolidated. It's a very strong customer base of blue chips and large [ FM ] customers. We've got industry or sector-leading margins. We sell to quality, not for volume. And we convert a high degree of those -- of that margin, that gross profit into earnings. And we convert a lot of that earnings into cash, especially when we're not doing a deal. So cash generative, 85% gross margins, growing business, capable of growing both organically and inorganically. And let's not forget, every acquisition we've made, and we've made three, we have materially grown since acquiring. So great management team. That's why you should invest. And the share price is not a reflection of the performance or the value of the underlying asset. That's my personal view, but that's why people should invest. Got anything to add to that, Shaun, Spencer?

No, I think you've answered it well. It is frustrating where the share price is. It's something that we all talk about quite often, probably Spencer and I together talk about it more because we speak to each other more than we do you, Mark. But we share the view, but we just got to focus on the day job. And at the end of the day, the team work incredibly hard. From a sales perspective, [ Sam Haywood ] and the two leaders, [ Chris Ryan and Terry Otton ] are doing a fantastic job. And as I said earlier, the founders of Aquaflow remain involved in the business, and that business is trading incredibly strong. So we just need to remain focused on the day job really and hope that people do wake up to the upside opportunity within this business.

Yes. Yes. And we have -- we should also add that we have main shareholders that have not only woken up to it, they've believed in it and backed it. So yes, it's really more of the sort of general buyers of shares that are really impacting where we are today. Okay. So that's that first one answered. Next one, the amount of ad hoc work is up a lot. Is it Project Sparkle effect or just Aquaflow full consolidation?

I'll take this one and then Spencer, you might want to come in over the top. So some of the driver in terms of ad hoc increases is simply down to the way that the guys and the [ RSCs ] that we have leveraged relationships. There's a lot more project work that happens through existing customers. So it's almost incremental opportunities as an add-on to either a framework agreement or a contract piece of work.

Yes, absolutely right, Shaun. I mean, sometimes we got projects in this business and sometimes those of those projects can sit differently in H1 and half 2. But all existing relationships where we continue to get recurring revenue from, which is what we're about as a team and at good margin, which is where we focus.

The next one, for the GBP 5 million free cash flow ambition in 3 years, how much of that will need to come from further acquisitions?

Well, we are acquisitive, and we've never not said we are. And it was always in our mind to continue to buy well and build out the group, as we've said. So yes, I think it was -- acquisitions are very much still in our road map.

Brilliant. Thank you. The next one, I'll cut through a little bit of a very polite preamble. It says it relates to your approach regarding capital allocation. Can you provide a bit more clarity on that? Absent some immediate M&A opportunity and the current investment debt repayments, is there any reason to not return some of that capital to shareholders? So effectively, what's our approach to capital allocation? And do we have any spare cash to return to shareholders?

I'll jump in here. I think, obviously, we're acquisitive. We just discussed that, and we're always looking at new opportunities. So just -- that's ongoing as a matter of course. And I guess we're a growth business. We're looking to deploy capital to create equity value. So perhaps that's where we've always been as a focus. So perhaps the dividend is something that doesn't sit alongside that at this moment in time.

Yes. I think it's important we say at this moment in time. It doesn't mean we won't, and it doesn't mean that we will. But it's just right now, the strategy is what Spencer has just defined. Brilliant. Okay. Thank you. Shaun, please explain your competitive advantage.

Yes, great question. I think we had this last time or the time before or a similar version. Our competitive advantage, right? You got to remember we've got four different trading divisions. So the 24-hour Aquaflow and the REACT Special Cleaning has the ability to be on site incredibly quickly to respond to emergency. So that's one that's really powerful. [ RSC ], which is REACT Special Cleaning, obviously has the ability to do on a nationwide scale. As I said earlier in the presentation, 24-hour Aquaflow, particularly or predominantly operate south of [ Mil K ], very strong in and around London. So that's one. The second one I touched on earlier in the presentation or I hope it did, is the digitalization within the LaddersFree business through Project Sparkle gives the customers the ability to view things holistically, POD, which is a Proof of Delivery on clean being done, which to this audience may sound like a basic thing, but believe me, it's something that this market has been growing out for a long time. And it's a great [ USP ] when we're having discussions with new customers. We've seen that in some of the recent wins that we've had. So that's great to see that we've embedded that. We've got the customer portal live and that's going great. And the third one, which is one that happen all the time is we're present with our customers. We're very good at leveraging and opening doors with our customers. Now some of the opening of the doors is the expertise we've got in the business and the fact that our team are well known, but also, as I alluded to earlier, when you react very quickly to a customer, especially a new customer, it allows you to land and expand. And our sales team are incredibly good at doing that. So yes, I hope that answers your question. We're not interested in our sales team in a room, in a dark room focused on tenders. We leave that to the big boys because typically, they're single-digit margins. We're not interested in that rollout given shareholder value here and getting upper quartile margins.

Spencer, you got anything to add to that?

I think being present with customers we're partnering with customers. We're trying to understand their problems and where we can help. Like Shaun says, just sitting in the back office tendering for things along with a whole bunch of other companies is just driving the price down. We're about trying to deliver a value service. So I think that's a key differentiator for me.

Yes, I agree. I mean what I would just stand back from it and say two or three things based on what you both just said. The first one is customers actually believe that we're reliable. They can rely on us to deliver. It goes right back to the very beginning when we used to deliver just reactive services. Customers love what we did. We were just bad at billing and collecting the cash. But they love what we did and we did it really reliably. And that's that reliability of we know we can give a problem to this company and they'll fix it and off we go. And each of the assets that we've acquired came from a similar sort of track record, and we've just built on that. So holistically, customer believes we'll deliver. That's the first thing. The second thing is that they believe we deliver in a way that is better than what we can get elsewhere. If it weren't, two things would not be happening. We wouldn't be retaining our customers, and we wouldn't be enjoying good quality margins for our sector. customers don't mind you making margins if you're delivering value. If you don't deliver any value, you're into a price game. So I think that right now and for the last 5 or 6 years, that's exactly what we do. We differentiate by delivering real value. And then thirdly, I just want to pull up on that sparkle thing because it is easy for people that don't understand the industry to do what you just said, Shaun, which is maybe not understand the value of that. But if you can, as a procurer of things, see in real time what is being delivered and what isn't, that's a real value. Now imagine if you're the person that's running 100 or 200 or 300 coffee shops where actually the cleanliness of the windows is quite important to your brand. And you're probably contracting with 20 or 30 or 40 different window cleaning firms to get that work done. And you think it's being done every week, but you actually have no proof that it has been done. And in fact, the industry is pretty right with sometimes they'll commit to doing it once every week, but actually, they do it once every 2 weeks, who's going to notice. Now you can actually see that in real time, and we can evidence it in a minimum of two out of three ways. One is a GPS based on the phone of the window cleaner being at a particular point in time and at a particular location. So that GPS evidence is one. Second is customer signing that work has been done, but often, we're doing the work at 5:00 a.m. so they're not around. So that's not always the case. And then the third one is picture evidence. So it's a really groundbreaking, seems simple, but groundbreaking piece of digital technology that is differentiating the business.

Yes. I think just one thing to add on that, Mark that I didn't mention is our agility across the group. And unlike the big players, your powerhouses like your CBREs of the world of -- so perhaps to name two, we're much more agile because of our size. So we can operate much quicker and get decisions and secure business quicker than perhaps the large competitors in the market can.

Indeed. Indeed, right. Well, moving on because there's quite a lot of questions. What do you think the market is misunderstanding about your business? Why does the share price not seem to reflect fundamentals I guess I ought to just comment on that. And it's very difficult for us, obviously, to comment credibly because we're on this side of the fence. But at the end of the day, the AI market has had its own challenges. And at the end of the day, I think that people are deciding to take their money to other parts of the market or gilts or the U.S. or at the end of the day, I think there's been that challenge. However, just to be very clear, we have hugely supportive main investors, and they have done nothing but buy. Now are they going to go into the market and buy the odd 100,000, 10,000 shares? Of course, they're not what they do. What drives the price down is that share price activity is taken by people that either day trade, I don't think we've got many of them anymore, or those people that have decided they're going to take the money and put it somewhere else, which we've got to respect, which is at this moment in time, where we are in AIM, the share price does not, in my opinion, truly reflect the value of the business. But we will solder on, we'll keep selling the message, but at the same time, we'll keep driving value actually into the equity of the business. That's all we can do. What does the competitive landscape look like in your market? Where do you see greatest competition and from who we've answered that before, but worth doing again?

Yes. Look, the market is incredibly fragmented, right? There's a lot of SMEs operating within this space. I think I just alluded to it in my previous answer. There's a lot of big players in this market or the big 6, big 5, big 6. But at the end of the day, like I said, it's a fragmented market. And as I touched on earlier, there's a lot of positives and benefits to being an SME. Like I said, the ability to be more agile, you're a local provider, you're able to map white space better and you're able to kind of specialize your proposition and leverage that the localized expertise that mega operations don't market size in the U.K. FM is multibillion pound market. There's plenty of work to go around, but there's a lot more smaller players than there is the larger players.

Brilliant. I think we'll leave that there and move on because I say there's a lot of questions. What percentage of your 9% growth is attributable to pure volume expansion versus price increases implemented to offset national living wage inflation?

Well, I'll attempt to answer this. There is some of that 9%. We have increased some of the revenues against the National Living Wage. But the majority of that increase has come through businesses that are growing that we can see are growing. We've -- yes, like I said, we've had a resilient set of results in challenging market, but we do have a growing business, and that's where the growth is coming. Speaker 3 - Mark B.

It's also worth mentioning we only one none out of the four businesses that is susceptible to national minimum wage, yes. And that would be the Fidelis business where we employ part-time workers, cleaning schools and industry units and so on and so forth. And we're not a minimum wage payer. We are a living wage payer, and we have very little churn or turnover in our staff compared to the market. But it is only one part of our business. The other parts of our business, we've got professional engineers in drainage. Our workforce in winter cleaning don't actually work for us. They are our members. They are employed by themselves and by small companies that operate with us. And what have I forgotten? [ RFC ], Typically, our workers in there are highly paid for their sector, specialists that go into some very horrible situations. So they're not minimum wage employees. Okay. Next question, when will you be able to get a new loan? I'm not sure we need one, but...

Well, I would suggest depending on what it's for and the fundamentals of the business, where we need to borrow money to fund it. We've got a very supportive bank in HSBC. And obviously, they cornerstoned the acquisition of 24-hour Aquaflow, and they're a very supportive partner for us. We are acquisitive. We are always looking. But obviously, it will be based on the merit and what the enlarged group combination would look like, its profitability, its ability to withstand a new debt instrument. So there's a whole process to it, a lot of review and careful consideration, but it does depend on the project in hand.

Yes. And we have no desire to be overleveraged.

No.

Okay. Next one is, why are you not buying back shares given the share price?

I don't think we've got the resources necessarily to buy back lots of shares at this moment in time. Obviously, we borrowed some money from the bank. We've done the acquisition with a structured deal. And we -- but I think we all recognize that the share price is very cheap at these rates. And we've discussed that to an extent on this call. But I think our focus at the moment is on driving the growth in the business and deleveraging where we're at, obviously, with one eye on what we do next.

Yes. Good. And of course, if shareholders think that they're cheap, then they're good to buy. Next one, with free cash flow recovering to GBP 824,000, what is your strip net debt-to-EBITDA ceiling if a bolt-on acquisition materializes in H2? You need to be very careful from a -- just from a regulatory point of view, how we answer this one.

Yes. I think, again, I just think that we look at things on merit with taking advice from brokers, speaking obviously, working closely with our banking arrangements and our key shareholders. So I think it comes down to the merit. But again, I'm not going to make any statements here of intent.

Thank you. With the new major shareholder on board, perhaps -- and this is actually -- I'm very happy to take any question, but it's not the best of best way of wording it, to be brutally honest. And I hope the shareholder isn't insulted by the question. I'm not, but I wouldn't want them to me. With the new major shareholder on board, perhaps you could get some equity from him to buy more Aquaflow type of businesses. Our shareholders, both new and existing, are extremely supportive and always have been whenever we've gone to them with a rock-solid opportunity and proposition. And just to reinforce that point, each time we've raised money, we have been massively oversubscribed. And I think the two points worth making are when we acquired LaddersFree, Russia had invaded Ukraine just 6 weeks earlier. I think our brokers at the time thought it was going to be a very difficult task to go and raise money. And perhaps it should have been, but it wasn't. And our shareholders backed us fully, all of them. And when we acquired 24 Hour, we also raised GBP 1 million on top of the debt we took, and we were massively oversubscribed for that. We have to have a fair allocation amongst the major shareholders when we do these things. So just suffice to say that we don't need to go cap in hand to anybody. What we need to do is have a business proposition that makes a lot of sense one that is an investment that will generate -- genuinely generate the kind of returns that we've been delivering from the acquisitions we've made and go and seek funding and support for that. And so far, our investors have been brilliant at backing this management team to do just that. So yes, hopefully, that answers that question. Next question. You announced a new investment -- sorry, you announced a new investment in a customer portal, which we've been talking about. What's the projected capital investment -- sorry, capital expenditure for this project? And what is the specific return on invested capital hurdle rate you require for internal tech investments? What has been the ROI on Project Sparkle so far? I'm going to let Spencer answer this, but we should be very, very clear. We are not talking about millions of pounds of investment going everywhere on technology investment. This was a very modest proposition that we pulled together. We built it with tech that was well established based on a Microsoft framework, using Azure. And we did it as an MVP, most viable product -- minimum viable product, sorry. We're now beginning to enhance it. So we're not talking about massive investments here like you might see in other organizations. It's meaningful. It's material, but it's not massive. But Spencer, would you like to answer the core of the question?

Yes. I mean you're right. Phase 1 was MVP, minimum viable product, which is live. The portal was always a Phase 2 opportunity. It is a very modest investment. It's an extra feature to what we've already got effectively. It's a window into the data from the customer's point of view. So it's not a big investment, and it was built within a month and tested within a month, and it's live straight away. So that will give you an idea of the fact that it isn't a large investment we've made. But what I would say is I think LaddersFree would have been a very difficult business to scale efficiently without tech. I think we're now in a position to do exactly that. Obviously, Shaun talked earlier in the presentation about some investments we've now made into some sales resources. So you can see the timing of those is on the back of the system being live. Coming back to the portal just briefly, what we're seeing and talking to customers is the proof of delivery, the verification that the work has been done to a satisfactory standard is becoming table stakes in this industry now, whereas perhaps in the past, it was a frustration. The feedback from Sparkle is it gives customers that. The portal gives them a clear window into that so they can go and interrogate that data and those services themselves. So this is a self-search type arrangement. So I think for me, I think this position -- this division is now well placed for growth. I think that would have been challenging before this solution was in place.

Yes. And I would add, I think that when we acquired this, and you can see us online in back copies of this platform or some of you may have recalled seeing us at various events. When we made this acquisition, we were very clear that we're buying what we thought was a fantastic platform, but a platform that hasn't been built from a technology point of view. It was all analog. And therefore, digitization needed to happen. So we went into it with our eyes open. I. Think that had we been in a position where this digital platform was already in [ Battersfree ]. I think we would have ended up paying 3x as much for it, if not more. And we wouldn't have bought it probably. It probably wouldn't have been on our agenda. But the fact we've been able to move to this and create that dynamic, I think, is a really important thing that this management team has done, and we'll see the benefits of it as we move forward. Okay. Moving on because there are still lots of questions, and we do like to answer all the questions we get asked. Chris H, this is a question from this session. Chris H has asked, are you seeing consolidation opportunities in your sector? Of course, we're in a couple of sectors, albeit all within that specialist FM space. Guys, comments, we need to speed it up because I think we are.

Not any more so than we have previously. Obviously, there are some dominant players in this space, as I alluded to earlier in the presentation. They're clearly on the -- actively looking at M&A, but they have been since we got involved in this business, Mark. So I don't see it any more prevalent than it was probably 5, 6 years ago, to honest.

Spencer, anything to add?

I think, yes, we operate in a fragmented sector. I think there's always consolidation. We see that. So I think that's fair to say.

Yes. agreed. Okay. Thank you, Chris. Chris, you're asking another question, Chris. Have customers become more price sensitive in recent quarters? We've seen that in some sectors, haven't we? I mean, that's certainly where our dip came a little over a year ago. And actually, let me just answer that quickly because it was part of our answering of results over the last 2 periods. When the labor government came in, it created turmoil, and this is not a political statement. It's just a fact amongst our customers. And then when the first budget came about where there was this material increase in employers national insurance, there was an increase in minimum and living wage and the NI bill went up for part-time workers. That was one of the major kickers. That impacted a large proportion of our customers in the -- specifically the window cleaning arena. And it was in that window cleaning arena that we felt that customers were going to start to be challenged. So we were proactive and we had very, very small churn because we spotted it really quickly. The management team did. They did a brilliant job. They spotted it quickly. They could see that customers were starting to find areas that they could take money out of their cost base as quickly as possible. And so we went proactively and went to customers and said, tell you what, you need a good quality service. That's what we deliver. You need to be able to rely on it. Rather than clean your windows every week, and in some cases, you have customers cleaning them twice a week. Why don't you clean them once every 10 days? We'll change in frequency for you, and that will save you a lot of cost. And that proactive approach retained the customers. They were grateful. But what it did almost overnight is halved our revenue in those customers. And because that business is actually very cash generative and quite profitable, it gave us an impact that a hit we took over a year ago. Now I'd like to think that things have started to restabilize and customers come back. And in fact, we've got some customers that have gone back to their original arrangements. But the point is that was the only area where we really saw price sensitivity take hold, and I think we dealt with it well. The other area, I think there is, is in just in generic cleaning. And we do, do a bit of generic cleaning, although we're a specialist. The specialist side doesn't tend to get impacted that much, Shaun, do you think, but I think the more generic stuff does. Yes?

Yes.

So yes, I mean, there is price pressure, but let's not forget, this management team has been involved in this business for 6 years. We've been through a lot of challenges where price has been a big issue, challenges, meaning economic headwinds. Think of Russia, think of cost of living, think of what I just described about the labor or the government changes, think about now. We live and breathe in that environment, and this business has continued to grow because what it does, it delivers quality to those that need it. We don't try and sell quality to those that don't care, I think, is the answer. Okay. If share buybacks would increase EBITDA per share or FCF per share more than acquisition, would you choose buybacks? That's from Gustaf H.

Yes. I think you've got the moment in time versus the future, haven't you? And I think the purpose of buying a business is to generate further growth and value. So I'd have to look at it in that light. You talked a bit about the acquisitions you made here, Mark, and they've all been very successful. You've increased the businesses as they were bought. So you've got to look at what that then does to value creation.

Yes. Yes. And I think one thing I'll say to you is we do not have a monopoly as a management team on the right ideas. We are always very open and consultative with our brokers, with advisers and with shareholders. So you never say never, but I think your answer, Spencer, is the one for now. Thank you, [ Gustaf ]. [ Chud ] [indiscernible], following the capital allocation question, can you expand on your view of dividends versus share repurchases and have -- and if you have a preference? Well, Spencer, I think the same old answer, isn't it? At the moment, neither of these are actually on our agenda because of the phase we're in at the minute. When it does come on our agenda, I think that's the point at which we get the right advice to choose the right answer, yes?

Yes. Absolutely.

Okay. Thank you. [ Frederic J ], I missed the start of the call. Can you explain the growth in ad hoc? Is this substantial -- is this sustainable revenue and profits? Spencer?

Yes. I mean, look, it is from existing customers. It's as the projects have fallen. So it's specific to those that -- those works that were required in the first half year. So -- but it is from customers that we continue to work with, but I can't say what their plans are going to be going forward. It's -- the nature of ad hoc revenue is exactly that.

Yes. No, I agree. And at the end of the day, we should mention that 6 years ago, when we started this, we had a business that customers loved, but we couldn't make any money from. That's what we inherited from the previous management team. And one thing was certain, we needed the regularity and certainty of recurring revenue. And so we moved from pretty much no recurring revenue to the position we're in now. So that ad hoc revenue is still important to us, but it's not the heartbeat of the company as it were. Okay. Last question, really good one, this one. I'm going to let you guys answer it first from [ Shooter T. ]. Apart from the short- to medium-term FCF goal ambition, how do you view the company after 5 to 10 years -- in 5, 10 years' time, I think. Do you see the industry changing much apart from some digitization here and there? Shaun?

Yes. Okay. So where do we see it after 5 to 10 years? Well, me personally, I am speaking personally, I'd like to see the business much larger in terms of revenue and EBITDA is what it is now. And that will be twofold, one through organic growth, which we've got a proven track record of and some more acquisitions, which, again, we've got a proven track record of doing well. Do I see it changing much in terms of digitization? I think we'd all be naive a little bit to suggest it wouldn't change due to the pace that AI is developing on a daily basis. And it's something that we've got two eyes firmly planted on, and we are doing bits in the background with our CRM system and our marketing and linking that back to our various systems. So yes, I think that answers the question. And obviously, I've not got a crystal ball. I don't know to what extent AI is going to be used and our customers are going to switch to look at more robotics and perhaps robotics potentially, but I don't think we're really operating in the space and doing the large airports and places where that's going to be prevalent. But who knows? So just always looking at emerging technologies and what the capability looks like.

Just reference what you mean by cobots versus robots?

So robots are full autonomous systems. So they'll replace people doing work, whereas cobotics is you still got the operator or the operative with the aid of cobot.

Okay. Spencer, your view?

I think look, we're focused on -- strategy focus on where we see key value for shareholders. And so very much we'll try and identify that and follow that. 5 to 10 years from here. Look, if we get successful with what we plan to do to grow the business, then there's always a chance it may well find someone else to take it on to the next stage. We are seeing disruption with technology in this space. As Shaun says, we talk about it a lot internally. We're always reviewing it. I do think certain businesses have got less exposure to that than others that we look after. But look, we discuss it internally a lot. Yes.

So my answer is probably along the same line just for what it's worth. So let's talk about the market and let's talk about our business. Our business, continuous growth, very, very fragmented market in the spaces that we operate, huge growth potential, both organic and inorganic. So just as much as your imagination you can imagine, this company can grow because it's a quality business with management team. In terms of the markets we address, we address four markets. So drainage, take that one first, drain and plumbing. We have a country, not unlike many others, where the infrastructure is old and it's underground a lot of time. And buildings have infrastructure put in them that may have been built for 20 years, 30 years, but those buildings are still standing. And therefore, I think that the market is going to continue to grow and perhaps become even bigger than it is today, because that infrastructure will start to crumble. Now in terms of how you address that, cobotics and robotics, maybe part of the answer, but frankly, getting vehicles and those robots or cobots to site, that's a bit of work. And I held from an engineering background originally and trying to get a nut off of an old pipe takes some manual dexterity that I think the robot is going to find difficult to sort out in the next 5 years. But who knows? So I think that there's that -- and we can go through each of the industries where cobots or robots are going to have an impact. But what we essentially are is dealing with things that are requiring manual input, specialist things. You can get a robot possibly to clean the bottom of a train after it's run over somebody or a cat and be respectful with the body parts. But right now, that's not happening. That's our team that does that. And if a robot or a cobot becomes part of that process, we'll either move somewhere else or we'll take it on, who knows. I think where technology will help and which is where we're operating right now is in how you deliver customer service and how you identify where those customers need to operate and be predictive about the requirements and support they need. And that's where we're investing our time and energy. Shaun mentioned about we're using AI. And this is technology that's well tested, but we're trying to push the envelope on to help us in that process, and we're pretty effective at it, and we will continue to work with it. So that's my answer. [ Juda ], thank you very much for the question. That's the last of the questions. I'm going to pass back to Jack.

Brilliant. Thank you, guys, for answering all of those questions. Before we ask investors to share their feedback, which I know is important to you, Shaun, if I could just ask you for a few closing comments to wrap up with, that would be great.

Yes. Thanks, Jack. Yes, look, I just want to take the opportunity again to thank everyone for, one, taking the time, especially on a bank holiday weekend. I'm sure everyone's got some plans to go away for the weekend or do stuff with the family. And for those who have been following the story as shareholders, I just want to thank you for your continued support really and have a great weekend. And any questions that you want to fire out there, please feel free to do that offline. We're very approachable as most of you already know. So yes, feel free to send them across an e-mail, we'll pick them up in due course.

Perfect. Thank you, guys, once again. Ladies and gentlemen, could ask that you don't close the session just yet as you'll now be automatically redirected to a page to give your feedback, which helps the company better understand your views and expectations. On behalf of the management team, we'd like to thank you for attending today's presentation. I wish you all a good afternoon.