Restore Plc · LSE:RST
Restore — Investor Day (November 2020)
44 slides from Restore's investor day presentation, Nov 12, 2020
Slide 1: Significant Growth Opportunity
Significant Growth Opportunity 2020 Capital Markets Day 12th November 2020
Slide 2: Chairman – Martin Towers: Welcome
Chairman – Martin Towers Welcome O Restore has a strong platform with scale and capability O Weathering the uncertainty of COVID-19 O Significant opportunity and a clear strategy for growth O A strong executive team 2020 Capital Markets Day Presentation 1
Slide 3: Agenda
Agenda O Introduction O Group Overview O Value Creation Roadmap O Financial Overview O Business Unit Growth Strategy • Restore Records Management • Restore Digital • Restore Technology O Investment Summary 2020 Capital Markets Day Presentation 2
Slide 4: Today's Objective
Todays Objective Significant growth opportunity and cash generation Describe in detail Show our value Demonstrate Detail our key our growth strategy creation roadmap the opportunity organic and of key trends in inorganic growth businesses actions 2020 Capital Markets Day Presentation 3
Slide 5: Introduction
Introduction Martin Towers Charles Bligh Neil Ritchie, FCA Nigel Dews Mark Horrocks Duncan Gooding Non-Executive CEO CFO Managing Director – Managing Director – Digital Managing Director – Datashred Chairman Records Management Martin Towers was appointed Charles Bligh was appointed CEO Neil was appo
Slide 6: We deliver essential services to customers in growing markets
We deliver essential services to customers in growing markets We help business customers manage their Physical & Digital Data and IT Assets. Store Digitise/Process Securely Destroy Move Teams/ Erase Data & Data Data Data IT Assets Recycle IT Assets No.2 No.2 No.2 No.1 No.2 2020 Capital Markets Day P
Slide 7: Why customers choose Restore – 'All about TRUST'
Why customers choose Restore – ‘All about TRUST’ We help business customers manage their Physical & Digital Data and IT Assets. Digitise/Process Securely Destroy Move Teams/ Erase Data & Recycle Store Data Data Data IT Assets IT Assets Scale and offering of the Reputation for always delivering Cost
Slide 8: Market trends last 40 years… and likely the next 30 years
Market trends last 40 years… and likely the next 30 years Major business trends benefit Restore Digitisation & & Flexible working & Security of data Environmental ‘- & +’ in Records: negative ‘- & +’ in Datashred: negative because organic growth because market growth of boxes may slow but may slow b
Slide 9: ESG is at the heart of the Company
ESG is at the heart of the Company World Economic Forum’s “2020 Davos Manifesto” “A company is more than an economic unit generating wealth. Performance must be measured not only on the return to shareholders, but also on how it achieves its environmental, social, and good governance objectives.” En
Slide 10: Significant opportunity to grow in ALL markets
Significant opportunity to grow in ALL markets Market Strong and Position No.2 No.2 No.2 No.1 No.2 improving Market Size £450m £250m-300m £220m £350m £525m £1.9b Market Growth c.1-2% c.3-4% c.0-1% c.0-1% c.5-6% c.3% Market Share 22% 8% 19% 12% 3% c.11% Market Partial Highly Highly Fragmented Extreme
Slide 11: COVID-19 Resilience: A stronger Restore
COVID-19 Resilience: A stronger Restore Customer Demand: Cost Reduction: 1 We have taken share during this period 1 Restructured to be better 2 We have maintained strong customer satisfaction levels 2 Reduced overall staffing 3 Invested in new product/services 3 Continued investment in technology to
Slide 12: Our long term Growth Strategy
Our long term Growth Strategy Disciplined strategy to deliver significant profitable growth and cash generation th w ro Ac ic G Engaged Team 4 of 5 qu Organ markets Customer isitio Excellence Scale High Retention Creating Stakeholder ns Incremental Capability Upsell Value Online Sales & Property Man
Slide 13: Value Creation Roadmap
Value Creation Roadmap Reduce Costs better for less cost £600-700m of revenue to consolidate Margin expansion c.4% Revenue pa Grow faster than market Acquisitions Organic 2019 profit 2020 Capital Markets Day Presentation 12
Slide 14: Organic Growth @ faster than market
Organic Growth @ faster than market Market Growth is c.3% with strong retention we aim to grow faster at c.4%+…(c.£8m+ Revenue pa) Marketing Upsell Single BU sale 1 Increase the first sale: 2 hen drive upsell: cross-selling is all T 3 And drive more leads: about upselling once the initial first •
Slide 15: The Upsell journey favoured by customers
The Upsell journey favoured by customers The first sale Upsell journey Records Management Digital Datashred Relocation Tecnology 2020 Capital Markets Day Presentation 14
Slide 16: Value Creation Roadmap: Acquisitions
Value Creation Roadmap: Acquisitions Reduce Costs better for less cost £600-700m of revenue to consolidate Margin expansion c.4% Revenue pa Grow faster than market Acquisitions Organic Acquisitions O Restore is a scale operator in all markets so we are the natural consolidators O Synergies put us in
Slide 17: Value Creation Roadmap: Margin Expansion
Value Creation Roadmap: Margin Expansion Reduce Costs better for less cost £600-700m of revenue to consolidate Margin expansion c.4% Revenue pa Grow faster than market Margin Expansion Acquisitions O 2019 Operating Margin up 40 bps to 21.5% O Cost conscious culture but Organic only a few costs marke
Slide 18: Fundamentals – reliable, profitable growth
Fundamentals – reliable, profitable growth Revenue and profit growth (£m) 225 20 200 175 150 125 100 75 50 25 0 15 2015 2016 2017 2018 2019 Revenue (£'m) Adjusted profit (pre IFRS16) (£'m) PBT Margin (%) 2020 Capital Markets Day Presentation 17
Slide 19: Fundamentals - balanced portfolio, secure annuity income
Fundamentals - balanced portfolio, secure annuity income Revenue Mix Recurring profit Restore Technology 100% 7% Adhoc 90% Recurring activities 80% Harrow Green 19% 70% Long term contracts 60% Records Management 50% 44% 40% Digital 30% 11% Rental / Fixed Income 20% 10% Datashred 19% 0% 2020 Capital
Slide 20: Fundamentals – highly cash generative, capacity for investment
Fundamentals – highly cash generative, capacity for investment Strong Reliable Cashflow Increasing Scale and Capacity 40 120 100 30 80 20 60 £M £M 40 10 20 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Free cashflow (before dividend and acquisition) Net Debt EBITDA 2020 Capital Markets Day P
Slide 21: Acquisition growth & capital deployment
Acquisition growth & capital deployment Significant financial capacity to build revenue and scale Cash generation Over 5 years Typical acquisitions £25m - £30m/yr* combination of strong cash flow and profitable and rationale pricing at = supportable debt should provide 0.5x to 2.5x revenue £150m ove
Slide 22: Acquisition potential: Market Size £1.9bn
Acquisition potential Market Size £1.9bn Market Acquisition Opportunity £700m Capital Available £200m Potential Acquisition Return (@ typical multiples) Revenue Range £100m to £200m (+5% to +10% market share) 2020 Capital Markets Day Presentation 21
Slide 23: Margin expansion through cost management
Margin expansion through cost management Significant cost opportunities: Cost base O Employee cost potential through scale, digitisation and Other £12m improving operating metrics as we grow Materials £11m O Agency staff opportunity through consolidation of providers Transport O Property consolidati
Slide 24: Fundamentals – Strong shareholder returns
Fundamentals – Strong shareholder returns The Business is showing a strong bounce Earnings per share back from the COVID-19 disruption in Q2 30 We have a clear profit roadmap to enhance earnings through 25 O Organic growth 20 Acquisition growth Pence O 15 O Margin expansion 10 5 0 2015 2016 2017 201
Slide 25: Restore Records Management
Restore Records Management National full service storage business with excellent customer satisfaction that is fully integrated and focusing on growth. 2020 Capital Markets Day Presentation 24
Slide 26: What we do
What we do National full service storage business with excellent customer satisfaction that is fully integrated and focusing on growth £95.9m 55 >750 Accreditations Market Size £450m plus un-vendored c.£100m 2019 Revenue Sites UK wide Staff Cyber Eseentials 4 freehold +(25million boxes) 3 mines ISO9
Slide 27: The Organic Growth Opportunity
The Organic Growth Opportunity th ow Gr Ac ic qu Organ isitio ns What are the key long term trends? Ma rgin E x p a n si on O Digitisation of Businesses: • existing long run trend mainly impacts organic growth (unfolding since 1980’s and 30+ years to run) • we are actively helping customers digitise
Slide 28: The Organic Growth Opportunity
The Organic Growth Opportunity th ow Gr Ac ic qu Organ isitio ns Why will we grow and take share? Ma rgin E x p a n si on Concrete foundations: Organic > Destructions O 55% of records stay in our facility on average for 16 years O 79% of records have no destruction date Dovetail Portal O We have exc
Slide 29: The Acquisition Opportunity
The Acquisition Opportunity th w Ac ro ic G qu isiti Organ ons Market has partially consolidated but still significant opportunity Ma rgin E x p a n si on There is still £100m in companies overall with <c.£10m turnover Market Structure O Why would they sell? 1 limit of capacity and requiring cash in
Slide 30: The Margin Growth Opportunity
The Margin Growth Opportunity th w ro Ac ic G qu Organ isitio ns Our margin expansion strategy is clear M ar gin E x p a n sio n O 10 Year Property Rationalisation: 78% of the total property costs in Records Management (£22m pa) • Buildings reduce by 50% – move 5.8m boxes •D ensity improves 25% •R e
Slide 31: Restore Digital
Restore Digital National digital transformation business focused on business critical document and information management services. 2020 Capital Markets Day Presentation 30
Slide 32: What we do
What we do National digital transformation business focused on business critical document and information management services. £22.6m 7 >300 c.50m Market Size £250-350m 2019 Revenue processing Staff Cloud hosted sites documents 1 Scale Digitisation/Preservation O Large, complex and often time critic
Slide 33: The Organic Growth Opportunity
The Organic Growth Opportunity What are the key long term trends? Why will we grow and take share? O Strong recent sales wins in the Digitisation NHS sector Digitisation to understand and unlock record archive content. O Transformation sales to Records Management customers Transformation Strategies
Slide 34: The Acquisition Opportunity
The Acquisition Opportunity th w Ac ro ic G qu isiti Organ ons Market highly fragmented, we are No.2 with 3-4% share… Ma rgin E x p a n si on many small bolt on opportunities Market Structure There are two acquisition focus areas with a core theme around physical to digital services 1 Improve scale
Slide 35: The Margin Growth Opportunity
The Margin Growth Opportunity th w ro Ac ic G qu Organ isitio ns Our margin expansion strategy is clear M ar gin E x p a n sio n O Changing the service mix O Consolidation of sites to reduce cost O Strategic Operational Management •S tandardisation & Automation • Investment in staff to deliver right
Slide 36: Restore Technology
Restore Technology National full service IT Recycling business or ITAD. 2020 Capital Markets Day Presentation 35
Slide 37: What we do
What we do National full service IT Recycling business or ITAD*. Market Size £525m and growing strongly 5-6% £14.6m 5 >200 Accreditations 2019 Revenue Sites Staff ADISA Certified Market size: £1bn+ ISO 9001, 14001, 2700, 45001 High level security List X Security cleared National Police clearance Mul
Slide 38: The Organic Growth Opportunity
The Organic Growth Opportunity th w Ac ro ic G qu isiti Organ ons What are the key long term trends? Ma rgin E x p a n si on O Increasing use of technology everywhere O Security of Data Collect Assets from Customers • Certified wipe and destruction of all data on devices O Environment • Re-use respo
Slide 39: The Acquisition Opportunity
The Acquisition Opportunity th w Ac ro ic G qu isiti Organ ons Market extremely fragmented BUT it has been in existence for 40 years Ma rgin E x p a n si on With increasing regulation on customers driving more compliance and cost then Market Structure scale is important Customers pushing to consolid
Slide 40: The Margin Growth Opportunity
The Margin Growth Opportunity th w ro Ac ic G qu Organ isitio ns Our margin expansion strategy is clear M ar gin E x p a n sio n O Use existing processing capacity O Additional regional density to “locally serve” customers O Further drive scale and unit cost in: –p rocessing sites – t ruck/van fleet
Slide 41: Strong Growth Opportunity (Datashred)
Strong Growth Opportunity National full service security shredding/ destruction business Market Size £220m £41.0m 11 >345 4.6 out of 5 2019 Revenue Destruction Staff Trustpilot O National Service centres O Onsite shredding for regulated industries O Offsite shredding Paper Recycling Business of the
Slide 42: Growing Industry Leader (Harrow Green)
Growing Industry Leader National full service commercial relocation business. Growth of 10% in 2019 and the industry leader in a market size of £350m. £41.5m 9 >360 Accreditations O Business relocation 2019 Revenue sites Staff BS 8572 CSE Certified O Furniture and long term office storage ISO 9001,
Slide 43: Summary: Investment Case
Summary: Investment Case A high growth strategy in growing and fragmented markets with long term competitive advantage driven by scale economics A high quality business With a disciplined growth strategy O Predictable, recurring revenue streams O Excellent customer delivery delivering strong retenti
Slide 44: For more information please visit
For more information please visit: Click for videos 15/19 Cavendish Place London, W1G 0QE T: 020 7409 2420 E: info@restoreplc.com W: www.restoreplc.com