Restore is in a sweet spot as prices go up and it gains scale

Document management and office removals firm trades on a significant discount to its main rival
Thursday 29 Mar 2018 Author: Daniel Coatsworth

Document management and office removals expert Restore (RST:AIM) has made its biggest acquisition to date, paying £88m for TNT’s UK records management operations.

Chief executive Charles Skinner hopes that TNT’s prestigious client base including the Ministry of Defence, the Land Registry and several big hospitals will enhance Restore’s quest to convince more public sector organisations to outsource their records management.

Stockbroker Cenkos has increased its 2019 pre-tax profit forecast for Restore by 11% to £46.3m on the back of the TNT deal.

The acquisition comes at an important point in Restore’s career. Skinner says prices in the records management industry are going up for the first time in more than a decade.

He also believes Restore stands to pick up extra work from new data regulation called GDPR which comes into force in May. Companies and organisations have to comply with strict rules or face significant fines.


Restore looks after more than 15m boxes of information. Customers pay for storage and an additional fee each time they want to retrieve information from a stored box.

Skinner believes GDPR will encourage customers to check what information they’ve already got in storage, as well as increase demand for Restore’s scanning and shredding services.

Organic growth in records management has run at 5% to 6% over the last 15 to 20 years. Acquisitions have provided an additional earnings growth driver.

The business has been very resilient in the face of growth in digital data storage. Although some sectors have reduced paper usage including accountants, other sectors still rely heavily on paper storage such as law firms.


TNT’s UK records management business is currently operating close to capacity, so Restore is looking at the opportunity to build more storage space on two freehold sites worth £23m inherited in the acquisition.

Skinner says he expects to undertake a sale and leaseback of the freehold sites once expansion is completed, potentially in three to five years’ time.

The other main parts of Restore’s business are office removals and IT recycling. The CEO says the UK saw 2,800 major offices moves last year and this should rise to 3,300 this year. Some of Restore’s removal projects are one-off; others involve constant work for clients.

The shares are trading on 16.6 times forecast earnings for 2019 which will be the first full year of owning TNT UK. That is a significant discount to Iron Mountain’s 30.9-times ratio, being the UK market leader with 39% market share. Restore is the second biggest player in the UK with 21%. (DC)


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