Restore Plc · LSE:RST
Restore — Investor Day (November 2019)
53 slides from Restore's investor day presentation, Nov 6, 2019
Slide 1: 2019 Capital Markets Day
2019 Capital Markets Day 6th November 2019
Slide 2: Chairman – Martin Towers
Chairman – Martin Towers OO Welcome OO Seamless transition of the executive team OO Restore has been built into a leading UK office services platform with genuine scale and capability OO We remain on a growth strategy in the UK with significant opportunities OO Illustrating today why you should use
Slide 3: Agenda
Agenda OO Introduction OO Group Overview & Strategy OO Business Unit Strategy OO Financial Overview OO Summary 2019 Capital Markets Day Presentation 2
Slide 4: Today's Objectives
Today’s Objectives Continued profitable growth and cash generation Illustrate the market Show how we Describe the Establish the opportunities intend to take margin expansion future acquisitions market share opportunity rationale and value creation 2019 Capital Markets Day Presentation 3
Slide 5: Introduction
Introduction Martin Towers Charles Bligh Neil Ritchie, FCA Neil Clark Duncan Gooding Mark Horrocks Nigel Dews Non-Executive CEO CFO Managing Director – Managing Director – Managing Director – Managing Director – Chairman Restore Records Restore Datashred Restore Digital Restore Harrow Green Manageme
Slide 6: Very strong financial position and track record
Very strong financial position and track record H1 Share price history (p) 600 H1 2019 % yoy Revenue (£m) £106.2 15% 500 Adjusted PBT (£m) £20.1 17% 400 Margin 21% 60 bps improvement 300 Debt Ratio 1.8x Down 0.3x 200 2016 2017 2018 2019 CEO comment Adjusted earnings per share (p) “We enter this next
Slide 7: Strong national presence with scale in each market
Strong national presence with scale in each market Full National Presence Deep industry expertise Leading our markets OO >100 Sites OO >2,200 employees OO Customer experience OO >500 Trucks/Vans OO Longevity of service OO Breadth of services OO Certifications OO Product innovation Strong UK Market P
Slide 8: Customers are demanding more from us
Customers are demanding more from us Restore has a unique breadth of capability which is key to meeting customers’ evolving needs What customers want? What we deliver? Securely store my past/present & help me transition to digital Secure my data when not needed Help me when my business changes 2019
Slide 9: We have significant opportunity to grow
We have significant opportunity to grow We have an outstanding client list We have enormous room to grow OO #1 or #2 in the markets we serve across multiple OO We participate in markets of £1.8bn in value market segments and overall have 11% share Our customers include FTSE 100 companies 88% Top 50
Slide 10: Our Strategy
Our Strategy Profitable growth and cash generation th w ro Ac ic G Engaged Team 4 of 5 qu markets Organ Customer isitio Excellence Scale High Retention Creating Stakeholder ns Incremental Capability Cross Selling Value Online Sales & Property Manage Service Rationalisation Risk Cash Conversion Ma rg
Slide 11: Restore Records Management
Restore Records Management 2019 Capital Markets Day Presentation 10
Slide 12: What we do in Records Management
What we do in Records Management OO Offering a blend of ‘active’ and ‘deferred’ storage providing a one stop shop for large UK companies OO Secure storage boxes/records £86.5m No 2 >800 c.5.2m 22m Revenue Market position Staff Transactions per Records month OO Secure vaults for magnetic media/record
Slide 13: We have grown consistently, both organically and through acquisition
We have grown consistently, both organically and though acquisition OO 23 acquisitions to date – fully integrated with Number of boxes stored (m) synergies realised 20 20 OO Margin expansion with scale 15 15 OO Organic growth 10 10 OO Fully integrated IT enabled operating platform 5 5 OO Low capital
Slide 14: Records Management market
Records Management market OO The UK vended market place £400-£450m Market Structure OO Unvended (still with customers) market opportunity OO Market growth of 1-2% per annum Restore Others Records OO Competitive but rational market Management OO Transforming to more added value services integrating p
Slide 15: Our customers
Our customers OO c.5,800 Customers Case study: A leading NHS Trust OO Segments: What we do Customer Benefits – 65% corporate OO Store over 1m customer records, OO Significant cost saving – 35% public sector fully indexed OO Release of significant space OO Onsite staff at Hospital - outsourcing OO Se
Slide 16: Strategy & Opportunity
Strategy & Opportunity Growth from existing and new customers OO Development of the Pan Government Records Management Contract OO Maximise opportunity in our market leading position as supplier to the NHS OO Sizeable corporate opportunity Improve margins OO Property rationalisation plan as we grow o
Slide 17: Restore Datashred
Restore Datashred 2019 Capital Markets Day Presentation 16
Slide 18: What we do
What we do OO National service OO Onsite shredding for regulated industries OO Offsite shredding Hard drive destruction £41.8m >430 c.500k c.100k OO No 2 OO Product destruction Revenue Market position Staff Service visits pa Paper tonnage pa c.14,500 200+ Accreditations 12 4.5 out of 5 CSR Active cu
Slide 19: Significant market position supported by key acquisitions
Significant market position supported by key acquisitions OO Acquired PHS Datashred in 2016 Revenue (£m) 50 OO Five further acquisitions including one in 2018 40 OO Opened a new shredding facility in Crayford serving London in 2018 30 OO Opened a new shredding facility in Newbridge, Scotland in 2018
Slide 20: Secure shredding market
Secure shredding market OO Market size £200-£220m Market Structure OO Market growth of 0-1% per annum OO One of two national operators Restore Datashred OO Rest of the market remains fragmented OO Revenue is a mixture of service and paper sales Others OO Data regulation and financial penalties drivi
Slide 21: Our customers
Our customers OO Direct to customers (SME, corporate, public sector) – 70% OO Sell through (Facilities Management) – 30% OO Margin reflects customer segments OO Key verticals: – Legal – Financial Restore Datashred Customer Portal – Insurance – Health – Public Sector Restore Datashred 2019 Capital Ma
Slide 22: Strategy & Opportunity
Strategy & Opportunity Grow market share organically OO Cross-selling into Records Management, Harrow Green and Technology customers Improve margins OO Available capacity for profitable growth OO Invest in technology to drive productivity and ease of doing business with Significant scope for acquisi
Slide 23: Restore Digital
Restore Digital 2019 Capital Markets Day Presentation 22
Slide 24: What we do
What we do OO Secure, large scale document conversion OO Digital Mailroom £19.3m No 2 >360 c.300m OO Cloud hosted document Revenue Market position Staff Images processed pa management & information processing OO Digital workflow OO Records preservation >700 Certifications 10 c.50m OO Research data c
Slide 25: Significant platform established since 2014
Significant platform established since 2014 OO Consistent organic growth Revenue (£’m) supplemented by bolt-on 20 acquisitions OO Cintas acquisition in 2014/15 15 OO Six further acquisitions 10 OO Recurring revenue (consisting of regular recurring business and long term secured contracts) 5 OO Evolv
Slide 26: The market
The market OO The UK vended market is approximately £250m Market Structure OO Fragmented market Restore Digital OO Further market opportunity with organisations outsourcing in-house activities OO Growth of 3-4% per annum OO Customers are looking for a more consultative led approach Others OO Digitis
Slide 27: Our customers
Our customers OO Direct to customers Case study: Education sector customer OO Sell through key partners (BPO What we do Customer Benefits and ISV’s) OO Examination script scanning OO Significant cost reduction and OO Eight awarding bodies process efficiency OO Utilise public sector frameworks – CCS,
Slide 28: Strategy
Strategy Grow organic share OO Work with existing Records Management customers to deliver a physical/digital solution as appropriate OO Focus on sectors requiring security and scale. Product mix drives margin improvement Selective acquisitions for capability Restore Digital 2019 Capital Markets Day
Slide 29: Restore Harrow Green
Restore Harrow Green 2019 Capital Markets Day Presentation 28
Slide 30: What we do
What we do OO Business relocation OO IT moves and changes OO Furniture storage £37.6m No 1 >360 c.500,000 >1,000 OO Project management Revenue Market position Staff Desks moved Customers every year OO Recycling & reuse OO Specialist Moves – Life Sciences, Heritage OO Transport for the rest of the Gr
Slide 31: Consistent and managed growth
Consistent and managed growth OO Restore acquired Harrow Green Revenue (£m) in 2012 40 OO Three further acquisitions 35 30 OO Secured MoD Contract in 2014 25 OO Strong organic growth 20 15 OO London and Regional presence delivers consistency of growth 10 5 0 2013 2014 2015 2016 2017 2018 Restore Har
Slide 32: The market
The market OO Commercial moving market size £350m Market Structure OO Market growth of 0-1% per annum OO Demand for high level corporate & specialist workplace relocation in the UK continues to remain buoyant Restore Harrow OO High barriers to entry where we operate. Success requires Green sophistic
Slide 33: Our customers
Our customers OO 2/3 of our business direct to customers OO 1/3 through key channels – Facilities Management – Real Estate management – Growing trend of flexible and co-working OO Over half of revenue is driven by repeat customers who have a constant requirement for our services OO We are on all of
Slide 34: Strategy & Opportunity
Strategy & Opportunity Continue to lead market and grow share Drive new opportunities for other business units from our customer base Service mix and productivity focus to maintain margins Restore Harrow Green 2019 Capital Markets Day Presentation 33
Slide 35: Restore Technology
Restore Technology 2019 Capital Markets Day Presentation 34
Slide 36: What we do
What we do OO Target is zero landfill OO Asset deployment OO Asset tracking £10.3m No 2 >260 c.600,000 >500 OO IT relocation Revenue Market position Staff Assets processed Customers every year OO IT asset disposal OO Secure destruction OO Hardware remarketing c.15,000 35+ Certifications 4 Technician
Slide 37: Rapid growth with acquisitions
Rapid growth with acquisitions OO Started the business in 2013 with acquisition of Revenue (£m) IT Efficient 12 OO Secured next generation Amazon contract in 2016 10 OO Growth from four acquisitions with a further two this year 8 6 OO The new state of the art 37,000 sq. processing centre in Bedford,
Slide 38: The ITAD market
The ITAD market OO The Market Market Structure (End of Life) – Pre-life and mid-life £200m Restore – End of life £300-£350m Technology OO Focussed on the end of life – market growth of 5-6% per annum OO Established and fragmented market OO Customer switching is low OO Customer data regulation and po
Slide 39: Our customers
Our customers OO Majority of revenue is direct to Case study: Leading Telecommunications Company customers What we do Customer Benefits OO Significant opportunity to grow our OO End of life management of over OO Ease of use channel business 400,000 IT assets OO Fully integrated system OO On and off
Slide 40: Strategy & Opportunity
Strategy & Opportunity OO Significantly increase the channel mix OO Continue to move revenue to a service model OO Margin improvement using existing capacity OO Strong focus on inorganic growth through acquisitions Restore Technology 2019 Capital Markets Day Presentation 39
Slide 41: Financial overview
Financial overview a high quality business
Slide 42: Consistent record of profitable growth
Consistent record of profitable growth OO Consistent organic growth Revenue and profit growth (£m) 200 40% OO Strong margin profile – well managed as mix has evolved 150 30% OO Successful integration of acquired businesses OO Well invested to support future 100 20% growth OO Return on capital well i
Slide 43: High quality and diverse revenue base
High quality and diverse revenue base Revenue Mix OO Broad customer base with low levels of Restore Technology 5.3% concentration OO High level of recurring revenue – both contracted and through repeat business Harrow Green 19.2% Records OO All business units are profitable Management 44.2% Digital
Slide 44: Strong cash generation
Strong cash generation Debt reduction of £20M over past 12 months Net debt @ 30/06/18 Net debt @ 31/12/18 Net debt @ 30/06/19 £115m £111m £95m Leverage 2.3x 2.1x 1.8x Exceptional items reducing Strong cash generation Post acquisition capex falling Sustained deleveraging which accelerates without acq
Slide 45: Shareholder value growth in capital and dividend
Shareholder value growth in capital and dividend Strong share performance Progressive Dividend Policy OO Significant capital growth OO Consistent EPS growth OO Consistent outperformance against key indices OO Strong cover OO Broad shareholder register OO IHT benefits of AIM listing 700 700 30 30 2.0
Slide 46: Investment case
Investment case opportunities to grow
Slide 47: Looking forward: key profit drivers
Looking forward: key profit drivers Operating margin (£m) Absolute margin growth from 40 organic & acquisition 25% Significant optimisation opportunity from property 20% 30 rationalisation Efficiency improvements from 15% greater sharing of resources 20 (fleet, space) 10% Increased performance & yie
Slide 48: Investment needs: relatively low capex
Investment needs: relatively low capex OO Whilst owning some freeholds, Capex (£m) majority of asset base is leased 10 10% OO Historic capex requirements relatively low (4-5% of revenue) 8 8% OO Current business is well invested and assets have long life, e.g. 6 6% racking OO Maintenance capex antic
Slide 49: Capital structure: sensible borrowing
Capital structure: sensible borrowing OO Historic leverage at 1.3x to 3x Net debt (£m) EBITDA 120 3.0x OO Board comfortable at 1.5x to 2.0x 100 EBITDA 2.5x OO Capacity to flex as strategic 80 acquisitions are presented OO Debt/equity ratio c.43% 60 2.0x 40 1.5x 20 0 1.0x H1 2011 2012 2013 2014 2015
Slide 50: Summary: Investment case
Summary: Investment case A high quality business Clear strategy with growth potential OO Predictable, recurring revenue streams OO Organic growth OO Attractive operating margins OO Acquisition potential in 4 of 5 markets OO Strong cash generation OO Margin expansion OO Well invested OO Consistent sh
Slide 51: Notes
Notes 2019 Capital Markets Day Presentation 50
Slide 52: Forward looking statements and disclaimer
Forward looking statements and disclaimer Forward looking statements: Disclaimer: This presentation may include statements that are, or may be deemed to be, This presentation and information communicated verbally to you may contain “forward-looking statements” (including words such as “believe”, “ex
Slide 53: For more information please see www.restoreplc.com
15/19 Cavendish Place London, W1G 0QE T: 020 7409 2420 E: info@restoreplc.com W: www.restoreplc.com For more information please see www.restoreplc.com