Restore is a leading provider of records management (physical document archiving), digitisation (scanning/digital mailroom) and secure recycling of paper and technology assets. In all these areas, it has a strong market position (either number 1 or 2 in the UK) and an excellent reputation across a customer base of blue-chip businesses and government/ public sector organisations. Restore is also the UK market leader in commercial relocations via its Harrow Green business.

21 Nov 2024

Management actions driving profit growth

Restore’s ten-month trading update reiterates profit expectations for both FY24 and FY25. Excellent progress is being made in delivering cost savings and driving profit margins, a clear priority for this management team. This has offset some market softness around the Autumn Budget as well as a £3m headwind for FY25 relating to increases in employer National Insurance Contributions and the National Living Wage. Absent these changes, we believe Restore would have been primed for an earnings upgrade looking into next year.

A recent investor site visit provided a reminder of Restore’s quality, as well as medium term growth ambitions. In our view, this is not yet reflected in an FY25 P/E rating of <14x. We reiterate our 400p Fair Value estimate with confidence in the Group's growth trajectory.

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