Restore plc ($RST)

I think that's 9:30. Is it 9:30, Dan? It is 9:30. So we'll kick off, and welcome, everybody, to -- the last couple of presentations we've done, Investec's offices were under reconstruction, and they are palatial now. So welcome to where we are, and thanks, Investec, for hosting us. A small bit of admin for the questions, please wait for the microphone to arrive. Apparently that helps for all the online -- for the offline question for the stream. So that's admin. Yes, so these are the full year results for '25. I think we're really pleased, and we're really pleased not just about what we've achieved, but where the business is in terms of going forward. As people realize, Dan and I sort of came in the last quarter of '23, and the first thing to do was work out what the hell have gone wrong, what was happening. And there were a few simple things like taking head office down from 55 people to 10. But that was working out. And then, '24 was really about sorting it out. And then -- and 1 or 2 things, we were slow off the mark with our digital business to realize the depth of the problems there. We didn't really get on to those until about May '24. So '24 was about sorting things out. And then, '25 was very much about getting it all working right. And I think these results suggest we have got it working right exactly where we want it. And actually, what's really exciting now is that '26 and hence forth is actually about taking what is quite a well-oiled machine -- like, business is never straightforward. There's always something goes wrong. But generally, we're in pretty good -- we're in very good nick and looking at where we take this business now as a high margin -- we've got so many attractive elements to our business, high margins, wonderful cash flow, great opportunities for growth, really stable recurring revenues. So we're very excited about the future. So I'll do the high-level numbers on the next page, and then Dan can get into the detail. Yes. So it's good. Revenue up. I'll show the charts and adjusted operating profit, all of the stuff, adjusted EPS. Our adjustments are really -- are quite fiddly. Dan will explain to everybody, but things like the earn-out on Synertec goes through our P&L. I mean, don't even ask me how all of that works. I did complain to our auditors a couple of days ago going, any normal punter looking at our results and look at -- saying, I want to see the statutory numbers, hasn't got a hope, hasn't got a hope to understand why if you've got to pay GBP 50 million in 2 years' time, why that goes through today's P&L, but there you go. So we're very comfortable that we're not -- the adjusted EPS is genuine. That's where it is. We're not sort of doing some -- any tricks here. It's really straightforward, and you can judge our performance by the adjusted EPS. We've said back in back end of '23 that our goal was to achieve 20% operating margins. I love high operating margin businesses. That's where you -- that's where you establish real quality. And yes, 1 or 2 people say, well, that's a bit of a fudge because you just offloaded Harrow Green, which is a low-margin business. But I think what you'll see is, firstly, the trend in the margins has been exactly what we've been trying to achieve. And secondly, even with that -- if Harrow Green had been performing normally, we probably would have been pretty close to 20%. As it happens, we are at 20.8%, and hopefully, there's a bit more to come over the time. The next slide will show how everything is doing better. Seven deals, so we weren't -- we didn't do any -- just as we didn't do any media for the first 6 or 9 months, we didn't do any deals in '24. This -- some of our businesses are ideal for bolt-ons and some -- and also where we're positioned, we've got certain gaps. And so, in '25, the Synertec deal, there was a gap, which I'm not sure it was Dan who recognized it. I'm not sure I'd recognize that gap, but there was a gap. We saw the opportunity, and the Synertec deal is really, really exciting and has been a gap, which we filled in our armory. And the bolt-on acquisitions, we've done another couple this year. There are more of those to come. We're not short of opportunities. It's about getting the right sort of returns on them. I mean, interestingly, in the box business, we could buy more business -- buy more box businesses, but the vendors want too much money where we can't get our ROI. We don't need them strategically. So I think I had someone a couple of days ago saying you've shown a bias. And I said, well, we made you an offer last year. You said it wasn't good enough. And unless something has changed on your side, we don't want to buy you. So we're in pretty good shape. As I'd say, acquisition of Synertec, which is really -- Dan and Nigel are really helping run that. A very strong team there, and that's a really exciting space. So being able to do outbound mail alongside our inbound and where that business goes is really, really exciting. Harrow Green, we said a couple of years ago that if it didn't fit, we weren't going to keep it. And Harrow Green didn't -- it was unfortunate that trading was bloody awful, but also it was just low-margin nonrecurring revenues. We'd acquired it 15 years ago or so, primarily for its box business. It had done a really nice job for us, but the market had changed, and actually, it's far better off being owned by Pickfords, being off the market. It's a fiddly thing. So, that was -- and I think we got there -- we got the reason -- we gave it a really -- we really liked the team, really liked the people, and we gave a really good run, and then we just went -- I think it was about May last year, [indiscernible] just said, what's the point here? Really sorry, but this doesn't make any sense. And Dan will talk about it more. We generate a lot of cash out of this business, and we can deploy it in acquisitions, but we make sufficient -- a surplus over and beyond that, certainly in the short term. So we'll spend GBP 20 million over the next year buying in our shares, which -- I won't tell you what I think about our share price, but that's life. If nobody wants to buy the shares, they don't, we'll buy them. They're cheap. So moving on, here are some sort of charts which the CEO and the CFO would love presenting, up, up, up. So operating profit, 18%, very good. Anybody -- we have quite a few scientists in our teams. So the adjusted operating margin, that's good stuff. That's exactly what we're about, 16.8% to 20.8%. EPS, 23% CAGR. And we really think we can keep moving up -- moving those numbers up in a similar way. Free cash flow, we've generated over GBP 120 million in the last 3 years. And then, if I look at the -- the share buyback will not dent us too much in terms of that. And all of the businesses which we've got, Information Management, what's going on there is, the box business is a wonderful business. I wouldn't underestimate how well we've done with that business. We've been whacked with a lot of rent reviews going through recently. We've been whacked with extra business rates. It's -- we've got quite a lot of people in that business, the minimum wage shooting up, the NI, and to maintain or marginally increase our margins in that business has been -- hasn't been easy. That's really good. At the same time, sorting out our digital business, which was a real mess, and that now is a huge opportunity for us. So, that has been a real trial. So I'll stop patting ourselves on the back. But again, Datashred, it a good -- it's a really good business. It chucks off the cash. We've got it right. Operating margins going up. And technology, which was a basket case -- we've got a good team there. We sorted it out. They're very methodical. We've got to the point now. We didn't increase revenues in that business last year, but we got the margins up, and now we've got the scope to have a bit of fun with that business and to grow it, and the focus there -- we sorted out ops. We worked out which market we want to be in. We've understood where the numbers are. We've understood where our customers are. Now, we can grow that business. Now, we can go after the market which we like in that space. We like acquisitions. It's always been part of the Restore model. Historically, it was very much about buying box businesses very cheaply, and we grew it on the back of that. There are still some of those around. Topwood had a box business, an archive warehouse, sort of quite slightly opportunistic, but they know that we're in the market. There is nobody who's got a box business who doesn't get a letter from me at least once a year. So they knew where to come to. That's been good. We're on our toes. This was a very -- NEC, they had an electric mailroom, so a digital mailroom. It wasn't in their sweet space -- sweet spot, very easy for us to help them uplift and move it on somewhere else. Synertec was a strategic deal. We'll always look at things, and we'll discard most of them. But Synertec, as I'll say, Dan [ nuddled ] it very early, convinced me that it was exactly the right thing. Nigel got involved in its operation, and we're really, really pleased with that business. Really, really pleased. I'm very pleased with the structure of the deal. We've been -- we've got -- the owners of -- the previous owners are excellent, and our relationship with them is building in a really, really good way. We're really excited about how that works and how it fits. And we take on some of their IT issues. We talk to Synertec people about what they do. We can bring quite a lot of stuff to them. We're really excited about that. Data Shredding is just a classic for bolt-on acquisitions. Contracts are secure. You pick them up. You put them through your place. It's been a tough market for most shedding owners. The paper price has collapsed. People like us are far more efficient than they are. But customers are sticky, so you can pick up the customers, put them through your machines. The ROI on those deals is great. And I hope, in due course, the way we're going, we should be the biggest. We're currently small than Shred-it, but I suspect that we will be larger than them in due course. And of course, we've got a whole load of great stuff like all the old paper from the box business goes through Datashred. There's so many -- a lot of the Datashred sites are actually on record management sites. So we've got a lot of advantages there. And we bought 3 businesses last year and a couple more so far this year. And obviously, Harrow Green, we disposed of. So, as I said at the top of the show, we were -- we think we've got a really good machine now, and then it's about how do we push more through it. And the -- this first point is really, really interesting. Basically, in the world of digitization, the real problem is where soft beats hard. And all of you will have filled out things for the bank and passports and all the rest of it. But all the problems come from when hard copy meets soft copy. So we've got a big contract we're looking to bid for at the moment. All of the issues around that are around -- if all goes -- if everything is digitized, everything works. You can -- everything goes through. If ever you run into hard copy issues, as you do with HMLR, as you do with HMRC, as you do with DWP, that's where all the problems are. And we are the best people in the U.K. to sort those out. And with AI coming along and everybody going, we need more data, actually, if, for example -- and I always thought it was a joke because we've always said you could digitize all of the NHS records, and actually, we did. I remember -- it's a nameless -- I won't name the hospital because it's a bit of disgrace. Three years we spent with 100 people back scanning all of their old records, which at the time, I thought was completely pointless. There may -- so this is just an illustration. I don't think it's going to happen. There may actually become a time when somebody says, if we had all the NHS historic records and we digitized the whole lot, we would have the best data bank you can ever imagine. So I'm not saying that's going to happen, but it's a sort of world in which we're living. And we are, by far, the biggest digitizer of documents in the space, plus we hold a lot of this stuff. So that's not going to happen, but it's an illustration of where we sit in this market. And I've always liked being at the bottom of the value chain. But actually, we're going to creep up it in this particular space just because you're -- when you've got these really practical problems, it's not the software guys who are going to sort it out. It's not the big 4 accountancy and consultancy firms who sit up there giving a holistic vision. It's people like us who really understand what it's like when HMRC gets sent GBP 13.70 in cash. That's where all the problems are, and that's where we are. So I don't know where this journey is going to take us. All I know is that it's really good news for where we sit. Also, I get into trouble because -- but the new word is HALO, isn't it? Heavy assets, low obsolescence. You aren't going to get AI to pick a box of 14 meters. You're not going to get AI to unpick a posted note from the GP and all the rest of it. The sort of stuff which we do, there is no threat. There is just opportunity. I think Synertec -- I won't -- the NHS failed to send out some [indiscernible] last -- at the back end of last year. The impact was problems for a lot of people. This year, they realized they can't do that again. Who do they go to, to do that? Synertec. How does that fit? We do inbound for everybody. We do the outbound. This is -- as I say, Dan and Nigel are closer to this than I am. This is a really good space to be in. It's exactly where we want to be. And I think thirdly, there's a lot going on in the IT asset life cycle space. People are doing Joiner-Mover-Leavers. So, a lot of people in this room, somebody will need to -- when you spill coffee on your laptop, somebody will need to tidy it up and work out whether chuck it out or not. And that will not be [ Computacenter ] or Becklar or whoever. They're not interested in that. Again, that comes down to us. We think there's a really good space here, and we're really excited about what we've achieved. And again, that business hasn't grown in '25 deliberately, but now we've got the platform from which we can move forward. So I think if I look forward 3 or 4 years, historically, this has been, you buy the stock because actually the box business is worth GBP 500 million move on. Actually, I think where we are now is that box business is really, really solid, but it helps us feed into these other areas, which where we sit as a sort of [ grabby ] business process outsourcer is a real sweet spot going forward. So we're really excited. As usual, I've probably overspoken, Dan, but over to you.

Thank you, Charles. It never gets any easier following you, but there you go. So good morning to you all. Thanks so much for coming. In a world where you can't predict what's going to happen, I am pleased to have quite a predictable set of results for you. So usual set of slides, plus an extra one just going through the buyback. So, a bit like Charles' first slide, this is quite an easy one for a CFO to present. So everything is going in the right direction. So revenue is up 27%, GBP 304 million. Most of that is down to the acquisitions we made in the year, but really solid result. Operating profit up 18%. Margin up, and we've hit that target we set ourselves 3 years ago of 20%, so 20.8% this year. There's a little bit of structural help from Harrow Green, but that absolutely doesn't change the year-on-year momentum. And I should say that all the little text at the bottom that you may not be able to read, all these results are excluding Harrow Green. EPS up 23%. Dividend is tracking that. And cash flow -- we'll come back to cash flow later in the slides, but another strong year of cash flow, good cash conversion, and leverage within our preferred range. So just going through the 3 divisions. Within Information Management, we've got the boxes business, a broadly stable number of boxes, and we've now got all of the contracts inflation linked, so RPI or CPI. The property consolidation strategy is now in the final phase. So just a reminder, we said we'd move about 4 million boxes. That's easier to say than it is to do. And they are -- they have been busy and they will be busy, but that's all going really well. So when we look at the site numbers, we've exited probably 6 or so sites over the last 12 months. Digital, as Charles mentioned, we kind of got to that in about May-June 2024. That's now completed. We've got GBP 5 million annualized savings, of which about GBP 4 million are in this year. That's more than we thought. It's actually a little bit more than we hoped. So really pleased with how that's gone. And then, we've got Synertec that Charles touched on, and that just provides a really compelling end-to-end offering around communications, both the mail-in through the mailrooms that we already have and now mail-out through Synertec. And then, in Datashred, really good performance, highly recurring revenues. That did have a bit of a bad reputation, and I think we didn't explain it well enough. 75% of the revenues there are recurring revenues, the service fees, and the remaining 25%, the remaining quarter is paper. We'll touch on paper, but we've hedged 2/3 of the paper for this year that we're in now, 2026. 2025, we hedged about 50%. So I slightly won the arm wrestle by hedging more this year. So really stable business, very happy with that. It has really good KPIs. So if you compare our visits per day and paper collected, they're really strong. And I'm really pleased to say that they haven't deteriorated despite acquiring businesses. And just to scale up for you, our trucks do around 12 visits a day across the U.K. Some of the businesses we're doing have some geography involved but do about 6. So the fact that we bought businesses in the period and still got those KPIs is really pleasing. So Natalie and team have done a fantastic job there. And as Charles touched on, 2 further bolt-ons so far this year, and I've got plenty of SPAs on my desk back in the office of future stuff, so could really a pipeline. In Technology, really good operational progress. So we just do things a lot better there. Some of you have been on the site visit that we did at Cardington. Some of you in the room have been -- seen Cardington evolve. It's a really well-run machine now, and we're increasingly getting into VARs, value-added resellers. So the market trend we are -- have seen and are continuing to trend -- see is that companies are outsourcing their IT provision to VARs, and then VARs outsource the provision of the life cycle management to people like us. So really good opportunity for growth. Next slide, I think, is the one that I've convinced Charles the merit of waterfalls. So just going through the 3 businesses. First one, Information Management, so pricing is the first block. It's what I touched on a second ago. So that's basically the boxes with inflation-linked pricing. Digital integration, this is the amount of savings in year. If you roll back and you look at forward -- look at this deck, last year, there was about GBP 1 million in there, so GBP 5 million annualized savings. We then got contribution from the acquisitions. Almost all of that is Synertec. So Synertec, we acquired almost a year ago exactly. So there's 9.5 months' worth of contribution in 2025. The property consolidation, that's effectively us moving out the smaller properties into the larger ones, more efficient, both in terms of the rent per square foot, but also -- those of you who have been to one of our sites, the [indiscernible] are higher. You can get more boxes per square foot of space. So it's a win-win for us. Then, a couple of headwinds. Cost inflation, the largest one of those is what we talked about in October 2024. So following on from that budget, NI was a big hit. So NI and the national minimum wage, we said was about GBP 3 million annualized for the group. So that's the amount last year that hits Information Management. And then activity, that last block in Information Management, we've talked about this before. It's the loss of a big contract towards the end of 2024. We've replaced it with DWP. DWP was at full running capacity in Q4 2025. And so, as we look into this year, it will -- you'll see that come back on the other way. And we're really pleased with the way that DWP is running. It's we think the largest mailroom in Europe -- in the U.K., and it's running really well. Then just on Datashred, we've got contribution from acquisitions, and we've also got net paper movement. It's around about GBP 170 a tonne last year, which is broadly similar to the year before that. And then Technology, that's effectively us running it better. So it's cost savings. Head office, Charles -- just fuel benefit. That does include some share-based payments. I know you'll tell me if I didn't mention that. So there is a noncash charge within head office year-on-year. So just in a little bit more detail, Information Management, you've got the key metrics there. And just to make it easier for the analysts, we present the margins excluding the postage costs. So we just put that box around so you can figure out it's GBP 38 million or so of post. Boxes under management, consistent year-on-year. And we have talked before, what we're seeing there is broadly the similar number of boxes for the group. A change in mix very slightly. So public sector are creating more boxes than they're destroying. Corporates are destroying more than they're creating. But net-net, that means we've pretty much the same number of boxes, which makes life easier when you're trying to move 4 million of them as part of the property consolidation. Scanned image volume up very slightly. They're just gearing up for the exam season. My daughter is about to [indiscernible]. So we're starting to gear up for the exam season. And outbound communication volumes, that's new this year, that's Synertec, so GBP 111 million of communications sent in that 9.5 months. That's a combination of physical letters and e-mails and text messages. Staff up slightly. Most of that is Synertec. And then sites, sites up 2, but actually, that's a story of Synertec 4 in, and we've exited 6 within the boxes business, so up very slightly year-on-year. Datashred, so just a reminder, 3/4 of revenue is service revenue, 1/4 is paper. We've hedged 3/4 of the paper volume. Paper tonnes are up year-on-year. So it's now about 60,000 tonnes in 2025. Annualized, it's a bit more than that. And so, we're there or thereabouts market leading. And we've had some really strong acquisitions there. And those acquisitions have done really well. The key worry for us on those acquisitions is that you lose the customers. That hasn't happened. We kept the customers. The other worry is, can you get the cost synergies? And yes, we absolutely have. So we're happy with that. And as Charles mentioned, more to come. And then, Technology. So we have had a conscious mix change where we've come out of lower-value contracts, and we've gone into higher-value contracts. So the assets processed, kind of you've got a mix there of us coming out of some smaller contracts and into new ones. We are continuing to see VAR growth. Within that year, it's really a story of the smaller customers decreasing and the VARs increasing, and that's the trend that we think we'll continue to see, and we're confident about that growth going forward in the top line. And the cost base has benefited from operational improvement. So Iain, the MD, has done a really good job of making that business run much, much better. Adjusting items: so the new entry or maybe a reentry, I should better say, is acquisition costs. Most of that GBP 13 million is the Synertec earn-out that Charles did a bit of an accounting fashing about earlier. GBP 10 million of that is that, and there's a bit of interest attributed. So if you take that out -- and that will continue. It's a 4-year earn-out, so that will continue for the next couple of years. If you take that out, there's about GBP 2-or-so million of normal acquisition costs, which is fees and integration costs. Then we have some of the restructuring. That's the completion of the Digital integration, which is now done. So, that will drop off. And then property costs, and that's a combination of double running, so rent and also logistics cost of moving the boxes around. Cash generation: so it continues to be strong. So good cash flow. As Charles mentioned, 3-year cash flow of over GBP 120 million; GBP 43 million last year. Consistently high cash conversion. We spent some of that money in 2025 on acquisitions. So you've got -- Synertec is the biggest one. That had some borrowings with it as well of GBP 11 million. You've got Shred on Site, which is the next biggest, and then the rest of the bolt-ons. We disposed of Harrow Green in December 2025. There's a deferred consideration due in a year's time for that, so GBP 2 million in the year. Finance costs, most of that is the bank loan. We've got some of the bankers here in the room, who, I'm sure, are happy to see about the share buyback. And then, we had some treasury share purchase as well, and that's to satisfy the own share schemes. Leverage ended the year at 1.9x. That's EBITDA to net debt, and that's well within our target range. We refinanced in October, and we've got plenty of headroom in the facility, and we've got an accordion on top of that. So thank you for all the banking friends in the room for helping with that. Capital allocation. So this is a familiar slide, had it a few years now. The slight tweak is we've changed the tense on the share buybacks that we've announced one this morning. So just a reminder, invest for growth, number one, and we'll always do that first. So we'll always do M&A first or invest in ourselves. And the buyback, just for clarity, is not an instead of. It's an as well as. So we'll keep doing that. And the buyback doesn't hinder our ability to keep doing that. And then, secondly, deliver shareholder returns. And all that's within the underpin of maintaining a strong balance sheet and a leverage range of 1.5x to 2x. And then, my final slide is the buyback program. So, as we've talked about a few times now, highly cash generative GBP 43 million of cash flow in the year. Most of that went to acquisitions. We've got a healthy pipeline of more acquisitions, but what we've decided to do now, especially in the context of the share price, is return excess to cash holders where we can. So therefore, we're saying GBP 20 million buyback over the next 12 months. Some of that may run into Q1 next year. We'll see how we go. And we're maintaining the dividend and think about how we track whether we do more buybacks in the future. That's it from me. Back to you, Charles.

Great. I haven't really got much more to say which I haven't said already. So business outlook: we're very focused on the operating margin, and that will continue to be the case. Things like -- as I said -- I said earlier, things like the box business maintaining and possibly increasing its margins. We've done a lot of work on this, moving 4 million boxes around and things like that. We've been very smart. The people have been brilliant. And continuing to drive margins in that business has been a real feat, and it applies across all of the group. Everybody knows we've got to keep the operating margin up. And when we do that, then you put through more volume and really great things happen. The box business is a marvelous business. Now, it's working with our digital stuff. That is perfect. We have the same sales team. They're so melded these days, particularly with the AI implications, particularly with people trying to access this data. That's a really, really powerful combination. And we're really cracking in particularly into the public sector in this space, really, really exciting. And also, the other thing about -- in the digital business, we're actually winning quite a lot of bulk scanning work, whereas previously, we weren't at the races. We need to tweak -- make sure we keep the margins in the right place on that because some -- it's an area which we're very focused on. This is all going well. The Notify contract, which has started to kick off, will be very helpful for Synertec. That's from the NHS. And if I look at the other people who they're able to use under the Notify contract, they're not at the races compared to us. Datashred, good business. It works very well. Again, classic business. How are you going to get AI to come to the seventh floor of Investec and pick up their shredding bins and tip them in, et cetera. This is a good business, and it's absolutely winner-take-all territory. And Technology, we're really pleased with how the management team there has taken a really difficult business with a huge opportunity. They sorted out, they made it a really good business, and it's still got that huge opportunity. So that's really good. And so, yes, we're doing things right, growing all the metrics, above inflationary growth, operating margins. It hasn't been -- in the larger scheme of things, the last couple of years has not been the easiest time to be running businesses in the U.K. But our businesses are sufficiently robust, and our people get what they're being asked to do and do it so well that this is -- we haven't had any -- we've had the odd tailwind, not much. We've had a few headwinds. And we've -- so good start to the year. And I think Dan nudged the numbers up in December or whatever, and now we're nudging them a bit more. Great. So, that is -- we don't want appendices. We'll go back to the starting line. And so, just remember the thing about -- Nick is our man with a mic. And so, if you wait until it turns up, Dan will point to people to ask them -- to let them know who is speaking next. Dan, you can...

Sam Dindol from Stifel, please. Just 2 questions from me. Firstly, on the bolt-on M&A, can you give a sense of what you'd expect that level to be going forward? Is that sort of GBP 5 million to GBP 10 million or anything like that? And then, secondly, on Synertec, in terms of the medium-term growth opportunities, I think in the statement, you highlighted sort of trying to win more public and private sector work on top of the NHS. Can you just talk about how you're going to go about that and the opportunity there?

Yes. Great. I'll let Dan deal with Synertec because it's really his and Nigel's baby rather than mine. On the M&A, there are still quite a few independent trading businesses out there. It's really tough for them. The paper price is low. They're up against us with national coverage and the fact that we've got this captive market from our box business, the fact we can share sites. So we expect to continue to add these on, and the ROI is pretty good on those. So they, as independents, may not be making -- they might be turning over GBP 2 million. They're not making any money. If we turn up and pay them, for sake of argument, GBP 2 million, we can pick that up, put it through our system. And sometimes, it's never quite perfect, but there might be GBP 1 million of cost, which we don't need. So, that will continue. There are a few struggling box companies which are around. So those are real sort of slam dunks. And I wouldn't expect us to spend more than GBP 10 million or GBP 15 million on those this year. And I'll say, everybody in those -- we know the universe of people. They all know us. When -- it will be a question of who wants to buy their kids a house rather than keep going, running their own business. So that's the bolt-on M&A. We don't -- I'm not mad on bolt-ons in the digital space because it's so much more about relationships. I think there are bolt-ons probably in Synertec's market where there are independent printers, who are doing exactly what we're doing. So we see synergies around that, which will be an interesting space. IT recycling, there are 1 or 2 companies which are struggling there, but generally, that's about relationships rather than contracts. So if -- in my head, I've sort of got GBP 10 million or GBP 15 million to be spent this year on those types of things. And then, you don't -- if something comes along for GBP 30 million, GBP 40 million, we'll have an interesting discussion. I'm sure our lovely bankers in the room would love us to borrow the money off them. And then, it will be a question of how long it would take us to get back below 2x gearing if we do them. So that's M&A.

Thanks, Charles. And then, Sam, on Synertec, so there are 2 parts to that really. One is around relationships and the other is around offering. And on the relationships part, 85% of Synertec's revenues are with the NHS. They're weaker on corporates. And if you look at our business, we're strong on both. And then, on the offering, the really lovely thing about it is it enables you to look at communications end-to-end. So if you take a practical example, the motor finance redress scheme, that needs somebody that can look at the -- some of the information is stored in boxes. So if you're a car OEM, car company or a bank that provided the finance, some of that information in the boxes, you need to get that information. You need to communicate out to your customers, and then your customers need to come back to you. Well, how many people in the market can do that? We can. So there are 2 elements. And we're not there yet because motor finance is down the track, but we see a lot of opportunity there.

James Bayliss from Berenberg. Two, if I may. On the Datashred M&A strategy, you talked about winner-takes-all as the market dynamic. Is there any steer on whether the game for you is broaden your national coverage versus prioritizing kind of infill and route density to conquer local markets first? And then, my second one, NHS Notify, sorry, if I'm right, would be at the kind of the top level of the NHS. Does that then open up opportunity for you to go out and engage with the local trusts more for their regular mail communications?

Great. Again, I'll let Dan deal with Synertec. Yes, on Datashred, possibly one of my biggest concerns is, we've got a really good team there, and in about 18 months' time, they're going to be really bored because it will -- it fits in very well, but it will be a cash cow. That market is -- there will continue to be demand for build or shred stuff. I don't know about you, but even at home now, I don't put -- at home, I don't put my bank statements in the bin. I bring them into the office to be shredded. So, that market is not going away. We've probably got the sort of most of the national coverage that we want. And there are just a few more -- we will stop buying businesses in this space in the next year or 18 months because we won't want anything else. And it will be a cash cow, and we will run it really, really well. We're doing a lot more in that space on Restore Recycle. So we're collecting more textiles, batteries, all the rest of that. So that's where we take that business. It's a really good management team. And as I say, I think in a year, 18 months, we're going to have to focus on Restore Recycle. The only other thing about -- which I know about life is, sometimes, I don't like necessarily disposing of businesses because you've got to sort of ticket into the game. And just as with our digital business, which is now in a really great sweet spot, which I wouldn't have recognized 10 years ago when we were going, do we really want to do scanning. Quite often, if you're just being somewhere and doing it right, it gives you the opportunity to move into something else. And I think the team at Datashred think that there are some quite interesting areas which we can edge our way into. Dan, Notify.

Yes. Thanks, Charles. Thanks, James, for the question. So NHS Notify, they sort of sit parallel to NHS England, but they'll continue. So they're nationwide. What they've been tasked with is effectively, one, aligning communications across the trust, and two, over time, moving digital -- towards digital. So if you look at what they have on their to-do list, they've got vaccination, so COVID, flu. They've got screening across all the types of cancers and other things, and they've got local trust hospital appointments. And if you look across those different elements, some of them are trust specific. So that's a long-winded way of answering your question. Yes, it does open up opportunities in trusts. So we're still at the phase where they are allocating out the work. We're doing pretty well out of that. And some of that is with trusts where we didn't previously have a relationship with.

Dan, you told me something this morning, which I was unaware of, how do I know whether I had a letter from Synertec in my endless hospital appointments?

Yes. If you open up the -- it's a useless fact. If you open up the envelope, then there's lots of sort of hashtags in the middle and you can see Synertec written inside the envelope, and now I know that there are...

So next time you get a letter from the NHS, there's a 20% chance that you'll find that and it will be Synertec. And in -- I'm sure in 2 years' time, there will be a 35% chance that it will be Synertec. Sorry. Nick seems to be the person who is making the decision, the man with the mic and the power.

Tom Callan from Investec. Just one, please. What's the current revenue split in terms of public versus private sector? And do you see that materially shifting either way over the course of the next sort of 3 to 5 years?

I can give you the sort of high-level answer, but I think you better get it from Dan, who will probably give you the accurate answer.

Yes. Thanks, Tom. It's under 50%. It's probably about 60%-40%, 40% public sector, 60% corporate. Synertec nudged up a little bit. There's opportunities in both. So I think that sort of works. If you look at the boxes example, you've got that mix where the 2 different types of people are behaving differently. There's a lot of opportunity left in public sector where they haven't yet outsourced it. Synertec, although 85% of their work is with the NHS, that's only 25% of the NHS work. The rest of the 75%, they're still doing effectively in-house. So yes, we're happy with that mix, and there's opportunities in both.

I think it's interesting that there was a sort of government -- I think the government in the financial crisis went, what can we do about this? And one of their targets was to say, let's be more efficient. Let's go for digitization. And much as we all like to beat up the government and the public sector, actually, we've done a pretty good job as a nation on digitization. We're probably in the top 5 nations in terms of our digitization. And this is absolutely critical to government thinking that they've got to get the digitization to work. And we are in a real sweet spot here. I really do. And increasingly, we have these relationships. We're upping -- I'd say, in this particular space, I hate being up the value chain. I love being at the bottom of the value chain. In this particular case, we're being dragged up the value chain because our offering is so important to how things work. So -- but also -- and then, if you're doing all of that work, then it plays into the -- and the private sector still -- everybody has got this issue, but you get into trouble the moment you come across hard copy. And there's a lot of hard copy out there, and it will not be going away. And probably Dan's grandchild will be doing their exam papers in a physical form is my guess. And that's not a bet. I'm saying that the tail on physical is intractable and huge.

Greg Poulton from Singer Capital Markets. Just a couple for me, please. Firstly, on Tech, there's obviously a big growth opportunity in outsourcing there. Could you talk about how you're positioning yourself to win share proactively in that market? And linked to that, what do you see as the margin potential for that business? Because that's the sort of laggard of the group at the moment. And then, lastly, obviously, you had a big contract loss in the period, which you were able to replace with the DWP contract. Are there any big renewals coming up this year that you're sort of looking to?

Okay. So in our IT recycling business, which is called Restore Technology, I did say to them, can you not change your name because I have no idea what Restore Technology does. They said, no, we're a great brand. You can't. We're going to stick with it. But you've got different business streams. So really, the first one is end of life. And your end of life is increasingly -- and so, in end of life, you've really got your direct. So that's where we deal with big accountancy firms, big universities, a lot of people. So they give us their kit at the end of life, and we deal with them directly. The big area which is growing is the value-added resellers. So that is the Becklar, the CDW, et cetera. So they -- and what they want is they want much -- they want us to look after the kit once they've sold it. And that area is growing very dramatically. And we haven't really -- and in terms of particularly the direct stuff, but also the VARs, because we weren't really happy with the offering, we haven't really been targeting that space so much. And now we are. We're also in that business, we're very -- so it's the life. It's the joiners, movers, leavers. And that's beginning to expand. We've also -- we're very good at destruction in this space, and we've just put on another 3 salespeople into destruction, as well as reorganizing our sales force. So having -- the focus now is on growing that business, and we've got it. Interestingly, actually, there's a business which I didn't -- which was bought when I was away, which is basically repairing old hard drives called Ultratec. And funny enough, that's moved -- that's increasingly moved into being a Restore type business because actually, with all the data centers and everybody trying to -- all these hard disk flying around, they break and then you can chuck them out or you can repair them and you can repair them and then you trade them. Actually, that's becoming very much a sort of Restore type business in terms of doing grunt work in data. So, that -- so we think there's a lot of those different business streams, there's growth in them. Possibly the most exciting is really the VARs. And they use -- there's a whole load of people who really shouldn't be doing the job. I wouldn't give my secondhand laptop to some of the people who some very big companies are giving them to. That was -- yes, with that -- that wasn't a very good answer, but [indiscernible]. Yes, I was going to do digital. But after that poor performance, Dan, I'll hand over to you.

So the contract point, Greg, so that was DWP, came in -- and that's the DWP Mailroom -- for Q4 at full run rate. If you look at the ones that we have now, HMRC, DWP, HMLR, RM, who do the exams, Office of the Public Guardian, they've all got quite a long way to run, so not worried about those. If you look at new things, yes, there are 1 or 2 bigger new things out there. There are also quite a number of smaller things. So we've picked out a couple of them in the past. We've got a couple of new ones we haven't necessarily named because we're still in that sort of standstill period. But that digital business is now in a much better shape where it can really compete in the market, and we're seeing increasingly -- they're not individually big, GBP 1 million, GBP 2 million scanning contracts, but there's quite a lot of them, and that adds up quite quickly.

James Tetley, Equity Development. A couple of questions from me. On Information Management, now you've nearly finished the property consolidation. Where is capacity utilization settling out? And is that broadly where you want it to be? And then, secondly, on Synertec, can you remind me of the relationship between the profit performance within Synertec and the ultimate earn-out that you pay? And does that -- sort of big accounting adjustment this year, does that imply that it's on track to -- if it carries on the current trajectory to hit the maximum earn-out?

I'll do IM capacity and Dan will do Synertec. But I'm really pleased with the structure of the earn-out on Synertec, but Dan will explain it in detail. That was my idea to structure the earn-out, by the way. Yes, the IM capacity, we're in a really good space now that we are not -- we do not have to take on another huge building. We're being able -- we're sort of shuffling it around, getting more efficient, et cetera. And in the past, it was always really difficult when both the industry was growing and we were doing a lot of M&A in this space. You buy something and it would be -- we will be overflowing, and then you buy something else and they were half full. So actually, it was historically much more inefficient. Whereas now, when we've got a pretty steady level, I mean, my target to that business is to have at least one more box than we had at the end of the year as we had at the beginning of the year. And I think we're going to achieve that. The market is flat, but that's what we've got to do. What it does mean -- it does mean that in terms of your efficiency gains, you can really work -- you can know that's our space. We don't have to think about whether we take on another 200,000 square foot. So it's really helpful. And we're running -- you want to be at that 96%, and we're pretty close to that at the moment. And we sit around -- we have a quarterly property meeting, which is broadly around working out, yes, we've just taken on a new building in Stroud. What does that mean? Do we need space wherever? And we can slightly feed it into -- I think we might be buying the 300,000-box business in the next 6 months, where would we put them?

I'll do Synertec. And thanks, James, for the question. So I'm an accountant, and this is a slightly embarrassingly complex accounting. So it's a 4-year earn-out. It was -- their year-end was March, and we've pegged it around that. So year 3 is March '28. So that's the first earn-out. And then, year 4 is March '29. You get slightly different accounting treatment, depending on whether the shareholders -- the former shareholders are still there or if they left as part of the transaction. If they're still there, it's treated as remuneration. Most of them are still there, which is why you then see it running through the P&L. The way the earn-out is structured is, it's pound for pound EBITA, so ignoring amortization, but including depreciation they get. So they get year 3 EBITA. There's a threshold to it, and there's a cap and a collar effectively. But if they earn above the threshold, pound for pound, they get that amongst the former shareholders in year 3 and in year 4. And what that means on multiples is that it basically stays between 5x and 6x. Weirdly, the way the maths work, thanks to some thinking from Charles, is actually the more they make, the slightly lower the multiple is. So we're really happy with that deal. And in answer to the question, is it on track? Yes. So 2026 is actually ahead of where we thought it might be. So yes, very happy with that.

And it's one of those ones which the more we pay to them, the business makes GBP 15 million in 2028, '29, and we have to pay them GBP 15 million, happy as Larry. A, it's self-funding; and B, what kind of a business we got there.

And they've never lost a customer. Hopefully, I haven't just jinxed it, but.

We thought they'd lost the customer a month ago, and it was a technical error. We lost a customer. What's going on? No, that wasn't a lost customer. That moved to a different account. Good business, that business.

Chris Bamberry, Peel Hunt. I've three questions, if I may. Firstly, on Technology, what's the current pipeline like for opportunities with VARs? Secondly, you've talked about a 15% margin in the medium term. Just trying to get an understanding of how much operational gearing is in the business, and as a consequence, kind of how big a revenue base needs to be ballpark? And finally, just a general update on the competitive behaviors across your 3 markets, but in particular, shredding, given the ownership of shredding has kind of settled under waste management.

Okay. So with -- so the VARs, we've now got our teams being allocated to individual VARs to generate more business out of them. So we are confident that the way we're selling to the VARs, and it's a slightly fiddly sell because you've got the customers -- so for example, with the DWP, which we're doing through CDW, the DWP had to come around and inspect all our sites at the same time as actually our direct customer is CDW. So it's quite -- and also because it's a sort of thing which people don't think too hard about, what quite often happens is, you go through a long tender process, and all of a sudden, they want it now, or sometimes they sort of go, blimey, what are we going to do with that? We haven't thought about that, right? So the pipeline is good. There's quite a lot of opportunities. There's one very prestigious public sector one, which I was hoping to find out before today, but we still haven't heard about. But there are good opportunities there. And I really -- the team then knows that they've done everything they can on how to get the margins there. And now, it's about volume. And it's also -- the pricing in this space is really opaque because some people are getting -- we sell the kit for them and they get -- they get 60% to 70% of whatever we sell the kit for. Others, we charge them -- others, we don't charge them upfront. We just get most of the money when we sell it. And to me, this is a fiddly business, and it's one where we -- without being disrespectful to our customers or anybody else, we know far more about how this service should be priced than they do. So if I ask anybody in this room, how much should you -- how much would you pay or expect to receive by giving us 100 laptops, you wouldn't have a clue, whereas obviously something like Harrow Green, if I said how much it's going to cost to rejig this room, you'd all be able to go, well, it's got a van and 6 [ plates ]. So it's this area where the pricing is really opaque, and that tends to favor the supplier because we know where we're going to make money, where we're going to lose money. And increasingly, because of our pricing model, we can -- which is pretty sophisticated, a bit of time and motion, but also how fast the truck got to go, all the rest of it. We've now got a pretty sophisticated pricing model. So we can know, okay, we're going to quote you 50% rebate on everything you do and GBP 10,000 for the job. you won't know whether that's a good price or a bad price. If you say I'm not going to pay that, we might go, okay, forget it, you don't understand how it costs. But now, because we've got a handle on the cost, et cetera, that's how it goes. So that's why I think this is -- it's a fiddly business. It's a 15% to 20% margin business because it's just difficult. And it hasn't got the transparency. You hate construction, you hate cleaning and things like that, where everybody knows what a cleaner costs, so you know how much you can get for the contract. This has got the level of opacity which I really like and tends to lead to high margins. I think in the markets generally, in terms of our pricing position in the IT asset recycling, it's -- the margins are all over the place, great. Once we know where we're making our money, we can get to those margins because you just turn down the stuff you don't want to do because people don't want to pay it. And the people who you can make money out of probably don't recognize that you're doing really well out of them. So that's the pricing in that space. The pricing in shredding has historically been quite commoditized. But with the low paper price, it's really difficult for the independents because historically, they've made all their money on the what they sell the paper for, on the service charges. If they're not selling the paper very much, they've got to jack up the service charges. So we see that there's one rogue player in that market who -- the question is, whether they'll go bust or not before they realize that they're not making any money. They're the sort of #3, 4 in it. But ourselves and the market leader, we're plotting along making margins. But we're very -- and we are really well invested. This is a 15% plus margin business, and we're not too worried about that space. The records management, the box business, the pricing is pretty commoditized and things aren't moving around much. We sort of -- we are where we are. In terms of competition in the digital side, clearly, the mailrooms are really, really sticky. The online hosting is really, really sticky. We'll tend to -- you just look at our customer base, particularly in the public sector on the digital mailrooms and you know that this, again, is a difficult space and more people -- so NECs and people, they're coming out of it. It's a difficult space. They're leaving it to the experts, which is us. And we are now -- because we've got our -- we've worked -- we're not an inefficient operator. We're not efficient enough, but now, we can compete for the big bulk scanning contracts. And probably an issue this year is going to -- is doing the time and motion studies, et cetera, to make sure we increase our -- now we've got decent volumes going through this. It's about tweaking the margins on that and getting your labor cost per -- you want to get your labor cost. We need to get our labor costs down a bit in that space, and that's a key focus of this year. And Synertec, as I say, they've never lost a customer, which probably tells you quite a lot about that market.

James Wood from Canaccord. I've got 2 questions on digital. The first follows on from what you're just saying there, Charles. I'm really kind of interested in what's changed in terms of your commercial approach to start winning those bulk contracts -- bulk scanning contracts again? And then, the second one on margin. I think last year, you kind of did sub-10% on digital. There's kind of a hint in the text that it's going to hit 15% this year. That suggests a favorable run rate year-to-date. But I'm kind of wondering whether that 15% target is now looking light in your eyes? And if so, where could it get to?

Yes. I think on the -- you take GBP 5 million of overhead out of a business, GBP 5 million or GBP 6 million of overhead out of the business, your operating margins swing around pretty damn quick. So yes, we absolutely feel that the 15% is on -- getting there and beyond, it will actually be about how slick we are with our bulk scanning and having been slightly -- having not been in that market in the same way as we have been in digital mailrooms and things, that's where we need to focus. But if we can get -- that is -- bulk scanning operating margins are never going to be as big as they are in electronic mailrooms and online hosting. But that will be what will drive the margins in that business above 15%. And I've written down bulk contracts here, but I can't remember...

So James, thanks for the question. So the approach really stems from 2 things: one, us sorting out the cost base, and that means they can pitch a much more competitive price than they previously could. So if you take the Lloyd Georges, which are those bundles of patient records, the price we're pitching is probably GBP 1 lower than it was before the integration, and that's just a reflection of the cost base. And the other element is the approach to market. When you've got both the physical and digital businesses coming together, rather than -- sometimes in hindsight, they're sort of competing against each other or kind of a little bit kind of I'm not sharing our relationships. It's just chalk and cheese. So it's a combination of both those things, which is why we think we're winning more. We've probably got time for one more.

Sorry, Andy.

Andy Smith from Panmure Liberum. Two questions. One is, for the sake of my spreadsheet, what was the contribution from Synertec last year in order to work out the organic growth rate in IM? And then, just on a wider point, following on from what you just said on the margin, you've targeted 20% margin now for the last, what, 2, 2.5 years. You're at that level. What -- where can the margin go from here? Like is there an aspiration that it can go much higher? Or are we now at a -- that's the run rate we can assume?

Yes. I'll let Dan deal with the technicalities, how much we're making out of synergy and the margins there because that's all around the base price and all the rest of that. Yes, I would hope that we can continue to -- there's a finite amount you can push the margin. So there's always -- there is a model which I set for Nigel when he was running the records management business as to what percentages it should be. There is peak margin, which is still 100-odd basis points, bps, away from. But if every -- I will buy him a glass of shandy, if he ever gets to what is targeted, and he's starting to get that. So there's a bit more to go there, not much. And that will be muddled up now because of the joint sales team, joint processing with the digital side. But the digital side, there's more margin to go for there without a doubt. And I can see -- 15% out of shredding is the right number, and we're only at 12% at the moment. And I think we can get to 15% out of the IT recycling business. So, that overall, if we do all of that, you're looking at sort of 21% to 22%. And then it's about putting more revenue through the business at those margins. And sometimes, we're going to try and put more revenue through to be able to compete to win that stuff. Then we're going to have to accept that we don't -- we just want to be doing GBP 100 million more revenue at these levels. But 21% to 22% feels -- if you get too far above that, it feels that you might be creating an opportunity for somebody else or you might be encouraging your customers to go, are we being too generous here? By its nature, this is a 20% to 22% type of business. We're not SaaS or whatever. We're not going to get to 30-odd percent. So it's about going, we're the market leaders, let's put more volume through. Let's go into related areas where we can achieve these margins.

Thanks, Charles. I think he deserves more than shandy, by the way, if he does that. But Synertec.

Don't tell him that.

Synertec, so in the margin graph, Andy, there's an acquisitions block, which is GBP 4.4 million contribution in the year. Almost all of that is Synertec, and that is 9.5 months' worth if you want to think about sort of run rate going forward.

And then, you've got to take the interest of that to work backwards to work out what's happening in the rest of the business.

Yes. I think that's everyone. If we just go to the lines quickly to see if there is anybody online. No? Great.

Great. Very good. Thanks, everybody. Thanks, as I say, to Investec for inviting us to their palace. Hopefully, we'll be back here in July. Great. Thanks, everybody.

Thank you.

Bye.