Investors

Investment Case

Restore provides specialist solutions to enable organisations to work faster, reducing cost, work more securely and more sustainably. We are the UK’s leading provider in integrated information and data management, business digitisation, secure recycling of paper and technology assets, and commercial relocation solutions.

Restore provides a compelling investment case with high growth potential and strong resilience characteristics. Set out below are highlights of the investment rationale.
Restore has a stable, secure, high-margin Records Management business in its Digital and Information Management division which is consistently cash generative. Our other businesses are in closely related markets serving a similar customer base.

These businesses are at an earlier stage of maturity but have similar strengths of recurring revenues and market leadership. The Group, which underperformed in 2023, has the opportunity to sharply increase adjusted operating margins over the next two years, with further strong opportunities for growth over the medium to long term.

Core elements of Restore

Predictable and and recurring demand
  • Our services are vital to organisations’ day-to-day operations but cannot be performed effectively or effciently in-house.
  • Our services (with the possible exception of Harrow Green) have predictable revenue streams with over 90% of 2024 revenue visible.
  • Long-term demand for our services is stable and evident.
Leadership in markets where scale is highly beneficial
  • All of our operations benefit from scale in terms of operational efficiency.
  • Given the critical nature of our services, customers are reassured by contracting with a market leader.
  • Most of our operations require significant capital support at various stages of their development to ensure they are providing the highest level of service, taking advantage of the latest technological developments.
  • National coverage is necessary for a significant percentage of our larger customers, which very few of our competitors can offer.
  • In most of our markets there are many opportunities for earnings-accretive bolt-on acquisitions.
Markets with high barriers to entry
  • All of our markets require an established operation and customer base to gain a meaningful foothold.
  • Most of our markets increasingly involve significant regulation, requiring companies to hold multiple industry certifications.
  • Establishing a business of scale in our markets requires several years to establish trustworthiness with customers.
  • We have historically grown our businesses through acquisition such that there are few opportunities for a small competitor or new entrant to undertake a similar exercise.
  • Some of our markets have experienced awkward trading conditions post-Covid. The strength of our overall business has enabled us to manage our way through these conditions better than smaller competitors.
Long-established customer relationships
  • Business-to-business services, particularly in business-critical services, are generally based on long-term relationships between individuals at several different touch points between the customer and supplier. These range from original sales contacts, customer service relationships to simple driver-tosite contacts. These establish ties which are not easily broken without creating service and other problems.
  • The average period over which we store a box is in excess of 15 years and overall customer churn is negligible in our Records Management business.
  • Similarly in Datashred, the average customer life is over seven years.
  • In most of our services, we are usually active with a customer on a daily or weekly basis.
  • Given the service delivery complexity, almost all of our customers are unlikely to move absent consistent service failures, significant pricing disparity or supplier consolidation. On the latter, our scale tends to mean we benefit from customers consolidating suppliers.
Appropriate financing structure with strong cash generation
  • The financial strength of our Information Management business ensures a steady stream of cash generation.
  • We have a strong balance sheet and highly supportive lenders.
  • We have a high rate of cash conversion.
  • All of our businesses are well-invested. In the immediate future the largest area of capital investment will be in the regular updating of our vehicle fleet, followed by investment in new Information Management sites where the return on investment from reduced box storage costs will be seen in the medium term.
  • Significant funding is available for acquisitions, share buy-backs or a combination of both.
Experienced management and colleagues
  • The vast majority of our divisional leadership teams are specialists in their individual businesses.
  • Most of the managers across our businesses have joined the industry in an operational capacity.
  • We operate in markets where most of our operatives have worked in their industries for the bulk of their working lives.
  • We believe that our market standing in all of our operations primarily reflects the quality and dedication of our people.

 

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Opportunities for growth

Information Management
  • The combination of our Records Management and Digital businesses in 2024 enables us to offer an integrated storage/scanning service creating more revenue opportunities
  • We are steadily increasing margins through efficiency improvements, particularly in consolidating expensive storage sites into cheaper, larger facilities.
  • As comfortably the largest scanning operator in the UK, we are well-positioned to continue to win contracts for large-scale digital mailrooms, such as the largest UK digital mailroom contract awarded in 2024
  • There remain many significant public sector bodies, particularly in the NHS, who have yet to outsource their physical data storage and digitise data where appropriate. We expect to accelerate this logical transition through coherent promotion of the obvious benefits.
  • The reduction in our surplus scanning capacity over the last 18 months will drive operating margins in bulk scanning through improved utilisation.
  • Overhead savings deriving from the combination of the two former businesses is reducing central costs as a percentage of revenue.
  • There is considerable opportunity for further bolt-on acquisitions from exiting competitors and in closely related activities.
Technology
  • We expect to continue the significant growth in our IT lifecycle services volumes that we experienced in 2024, particularly working with channel partner IT resellers. Our compliance with agreed service levels continues to attract new customers in this space.
  • Our direct customer base has remained stable for many years. On the back of our improved processes and focus on high quality customers, we are well-positioned to increase the size of this customer base.
  • The sharp increase in productivity we have seen in 2024 can be expected to be maintained. Further consolidation of a new ERP system throughout 2025 will continue to generate significant operational and financial benefits.
  • Improved internal systems have enabled us to understand better the profitability of different processing activities. This enables us to price new business competitively and raise prices on lower margin activities, thus driving up overall operating margins.
  • A significant percentage of our revenues are generated from the sale of recycled IT equipment. We are consolidating this activity from individual sites to a business-wide function. This will improve average selling prices which in turn will deliver higher values both for us and our customers.
  • The UK (and global) IT recycling business has largely been a cottage industry for an exceptionally long time. We are confident that we can lead the UK market in professionalising this important and impactful market.
Datashred
  • The strong performance in 2024, despite a weak paper price in the first half of the year, reflected increased market share, improved pricing and better operational efficiency. We expect these growth elements to continue.
  • We are starting to grow revenues in recycling materials other than paper particularly with existing Datashred and Group customers. Our infrastructure and customer relationships give us a ready-made platform for this diversification.
  • We have successfully increased service charges to our customers to reflect prevailing market pricing, driving up revenues and operating margins.
  • Our drive to establish more collection sites at other Group properties continues to drive down Datashred’s rent costs as a percentage of revenue
  • The recently agreed fixed price on paper sales to a major UK mill enables us to manage volumes and costs efficiently, reducing volatility in profitability.
  • We continue to increase the amount of paper we buy in, enabling us both to profit from additional volume and manage the quality of paper for resale.
  • The UK shredding market remains comparatively unconsolidated. We are well-positioned to drive this consolidation through bolt-on acquisitions, enhancing operating margins and Group earnings.
Harrow Green
  • Very tough market conditions in 2024 led to a steep decline in profitability. Nevertheless, we have retained our market pre-eminence and are expecting an improved performance in 2025 based on the current orderbook and market outlook.
  • We continue to leverage our specialist skills in life sciences, with a suite of bioservice offerings including laboratory relocations, biobanking and disaster recovery alongside storage and distribution.
  • In 2024 we completed the UK’s largest laboratory move and have further significant committed projects in 2025.
  • Our commitment to this sector is reflected in our presence in Cambridge and the new branch opened in Oxford in 2024.
  • Harrow Green has increased their focus on heritage storage and transport activities. There is strong demand in this sector, and we expect this renewed focus will yield strong returns over time
Central

    • Restore has historically benefitted from a skillset in consolidating markets through acquisition. With the operating businesses now generally in good health, we expect to utilise this skillset in making earnings-enhancing acquisitions in our existing and closely related areas of operation.
    • Central costs have reduced over the last year through a concerted effort to right size the head office functions. Borrowing costs also fell, largely from much tighter treasury management.
Contact us

For any enquiries, please get in touch.

Restore plc, 7-10 Chandos Street,
London W1G 9DQ

info@restoreplc.com
0207 409 2420

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