Restore Plc · LSE:RST
Restore — FY2023 Earnings Presentation
27 slides from Restore's earnings presentation, Mar 13, 2024
Slide 1: 2023 Full year results
2023 Full year results Simple but not easy
Slide 2: Overview Restore
Overview Restore Strategy Operational changes Key priorities Structural changes * Focus on operating margin * New Chair, CEO and CFO * Importance of cash generation + New management in two BUs * Business units to unleash potential * Most central departments rationalised Utilising the strength of our
Slide 3: Financial overview
Financial overview
Slide 4: Financial overview Restore
Financial overview Restore Solid revenues of £277.1m Statutory loss before tax of £29.0m * Broadly flat with FY22 + Non-cash impairments relating to Datashred (£32.5m), a site closure in Digital and a business exit in Technology (£3.8m) + Strong performance in Records Management, supported by price
Slide 5: Revenues Restore
Revenues Restore Digital & Secure Information .Zo74 Lifecycle Management Services Revenue Digital & Information Management Secure Lifecycle Services Records Management Digital Technology Datashred Harrow Green Storage Income Boxes, online hosting and pallets v v v ; ‘Multi-year service outsourcing a
Slide 6: FY23 revenue bridge
FY23 revenue bridge Restore 10.4 FY23 revenue broadly flat * Strong performance in Records Management, principally from improved pricing * Non-recurring contracts in Digital and lower bulk scanning activity * Lower recycled asset sales affecting Technology (8.5) * Reduced paper price, partially offs
Slide 7: FY23 adjusted PBT bridge
FY23 adjusted PBT bridge Restore £10.7m decrease in Adjusted PBT 13.1 * Improved pricing, principally from Records Management (£9.2m) * Cost inflation of £12.8m primarily across people (c.£4.0m), property (c.£5.0m) and energy (c.£1.0m) * Lower paper pricing in Datashred, with an average paper price
Slide 8: Divisions — Digital & Information Management
Divisions — Digital & Information Management Restore Revenue 2023 2022 Change Records Management (£’m) 124.1 113.7 9% Digital (£’m) 46.0 54.5 (16%) 170.1 168.2 1% Margin Adjusting operating profit* (£’m) 40.9 45.2 (10%) Adjusted operating margin* % 24.0% 26.9% (290bps) * Records Management storage r
Slide 9: Divisions — Secure Lifecycle Services
Divisions — Secure Lifecycle Services Revenue 2023 2022 Change Technology (£'m) 311 35.8 (13%) Datashred (£'m) 35.9 374 (4%) Harrow Green (£'m) 40.0 376 6% 107.0 110.8 (3%) Margin Adjusting operating profit* (£’m) 6.2 10.9 (43%) Adjusted operating margin* % 5.8% 9.9% (410bps) * In Technology, the IT
Slide 10: Cashflow
Cashflow 2023 2022 Change (£'m) (£'m) Adjusted EBITDA* 771 815 (5%) Adjusting items (excluding amortisation) (10.8) (5.6) 93% Share-based payments - 19 (100%) Working capital and other movements 0.6 (12.6) (105%) Cash generated from operations 66.9 65.2 3% Income taxes (6.3) (6.0) 5% Capital expendi
Slide 11: Balance sheet
Balance sheet 2023 2022* (Em) (E’m) Non-current assets 460.9 523.5 . . . - + Non-cash impairment to Datashred goodwill of £32.5m Inventories 15 2.0 reflects an increase in cost of capital and re-assessment of the Trade and other receivables 63.4 64.9 long-term paper tonnage, paper pricing and servic
Slide 12: Adjusting items
Adjusting items 2023 2022 (£'m) (£'m) Asset impairments 36.3 - Amortisation of intangible assets 12.2 12.1 Acquisition related transaction/advisory costs 0.2 14 Restructuring and redundancy 5.9 26 Property related costs 3.1 09 Strategic IT reorganisation 16 0.7 Total adjusting items 59.3 177 Cash ad
Slide 13: Capital allocation framework
Capital allocation framework Restore Targeted investments, with emphasis on organic growth Pay down debt, decreasing leverage whilst keeping the range 1.5-2x adjusted EBITDA Maintain dividends, increasing relative to our profits albeit at a measured and sustainable rate Limited share purchases, prin
Slide 14: FY24 modelling assumptions
FY24 modelling assumptions Restore Income statement Cashflow Adjusting items Inflation headwinds from an increase in the national minimum wage to £11.44 per hour affecting 45% of our workforce, and a minimum of a c.7% increase in business rates impacting our property cost Finance costs based on assu
Slide 15: Business and Group outlook
Business and Group outlook )
Slide 16: Business outlook
Business outlook Restore * Recurring revenue streams supplemented by pricing, particularly in Records Management where price increases are CPI/RPI linked across the majority of customers with increases mostly applied in January 2024 and the remainder throughout the year (on contract anniversary date
Slide 17: Group outlook
Group outlook Restore * Trading since the start of the year has been in line with the Board's expectations, and we anticipate all of our businesses, with the possible exception of Harrow Green, to deliver an improvement in adjusted operating margins in the current year * Leading market position and
Slide 18: Appendix — Investment case
Appendix — Investment case )
Slide 19: Core elements of Restore
Core elements of Restore Predictable and persistent demand + Vital services that cannot be performed in-house + Predictable, highly contracted revenue * Long-term demand for services is stable and evident Leadership in markets where scale is highly beneficial + Scale provides operational efficiency
Slide 20: Opportunities for growth
Opportunities for growth Digital & Information Management Records Management Organic revenue growth from pricing, additional services/projects and unvended new business Improve margins through cost optimisation, with lower storage costs per box Bolt-on acquisitions from exiting competitors Digital G
Slide 21: Opportunities for growth
Opportunities for growth Restore Secure Lifecycle Services Harrow Green + Maintain market pre-eminence and price premium based on reputation Technology * Continue to leverage specialist skills particularly in life sciences and + Focus on customers who prioritise security and responsible behaviour he
Slide 22: Opportunities for growth
Opportunities for growth Restore Central + Focus on cost optimisation and efficiencies + Add value to operations through high-level analysis and benchmarking + Reduce finance costs through rationalising surplus borrowing capability and proactive short-term cash management
Slide 23: Appendix — Net debt bridge
Appendix — Net debt bridge
Slide 24: FY23 net debt bridge
FY23 net debt bridge Restore 03 17 9.1 as FY22 Free cash flow Capital Finance Dividends Acquisitions Cash effect Other FY23 Net (before capital expenditure costs paid (net of cash of Adjusting Net debt expenditure) acquired) items debt 24
Slide 25: Appendix — Glossary
Appendix — Glossary
Slide 26: Glossary
Glossary Term Definition & calculation Adjusted profit before tax Calculated as statutory profit before tax stated before adjusting items (Adjusted PBT’) Adjusted operating profit Calculated as statutory operating profit before adjusting items Adjusted operating margin Calculated as adjusted operati
Slide 27: For more information please visit:
For more information please visit: www.restoreplc.com 7-10 Chandos Street, London, W1G 9DQ T: 020 7409 2420 E: info@restoreplc.com 27