Restore plc Reports 21% Revenue Surge in H1 2026 with Adjusted EPS Rising 24%, Confident in Meeting Full-Year Targets

Restore plc’s Diverse Service Portfolio and Market Leadership

Operating through three main divisions, Restore plc serves interconnected markets within information management and asset services. The largest division, Information Management, includes Physical Services (mainly document storage), Digital Services, and Outbound Communications, generating a3133.9 million in H1 2026, accounting for 76% of group revenue. Physical Services manages approximately 4 million document boxes across warehouses. Digital Services cover digital mailrooms, scanning, online hosting, and document management, while Outbound Communications (formerly Synertec) provides postal, email, and text services primarily to the UK National Health Service.

Datashred, the second division, specialises in confidential document destruction and secure shredding across the UK, with H1 2026 revenue of a320.8 million. It has expanded beyond paper shredding to commercial recycling of dry mixed recyclables, batteries, IT equipment, textiles, and food waste via Restore Recycle. The Technology division, the smallest at a320.7 million revenue in H1 2026, focuses on IT hardware sales, recycling, and value-added services like hard-drive restoration and repurposing systems. This broad portfolio underscores Restore’s role as an integrated solutions provider for managing sensitive information and corporate assets across physical, digital, and technological domains.

Revenue Growth Fueled by Balanced Organic Expansion and Strategic Acquisitions

Restore’s 21% revenue increase to a3175.4 million in H1 2026 was driven equally by organic growth and acquisitions. Information Management revenue rose 26% to a3133.9 million, propelled by strong Digital Services and Outbound Communications performance alongside acquisition contributions. Physical Services maintained a stable box count with storage revenues rising in line with inflation. Notably, a new scanning contract with the Ministry of Defence was secured during the period. Technology division revenue grew 17% to a320.7 million, benefiting from global IT hardware demand and focused recycling market strategies. Datashred’s revenue increased modestly by 3% to a320.8 million amid a 22% decline in UK paper prices, averaging a3145 per tonne in H1 2026 versus a3186 per tonne in H1 2025.

On the acquisition front, Restore completed four bolt-on deals in H1 2026 totaling a36 million—three in Datashred (RDS Confidential Shredding, Russell Richardson, Paper Shredding Services) and one in Information Management (MPS Marketing Services). These acquisitions, alongside seven from 2025, have been successfully integrated, delivering attractive returns despite paper price challenges.

Profitability and Margin Improvements Across Operations

Adjusted operating profit rose 19% to a329.9 million in H1 2026, with operating margin expanding 50 basis points to 20.1%, reflecting pricing strength and operational leverage. Information Management contributed a328.2 million to adjusted operating profit. Technology division’s operating profit doubled to a32.4 million, showcasing strong recovery and execution. Datashred’s adjusted operating profit held steady at a32.2 million, maintaining a 10.6% margin despite lower paper prices.

Adjusted profit before tax increased 23% to a322.3 million, supported by stable bank interest costs of a34.3 million. Statutory profit before tax rose 28% to a37.4 million, with adjusting items totaling a314.9 million including amortisation, acquisition costs, and property consolidation expenses. Adjusted basic EPS grew 24% to 12.4 pence; statutory basic EPS increased 38% to 3.6 pence.

Information Management Division Advances Consolidation and Digital Services Growth

Information Management, representing 76% of group revenue, delivered a3133.9 million in revenue and a328.2 million in adjusted operating profit. The Physical Services segment maintained a stable box count with inflation-aligned storage revenue growth. The property consolidation program—relocating over 4 million boxes, closing 20 warehouses, and opening 5 new facilities—is nearing completion, expected by H1 2027, enabling flat storage costs amid rising UK property expenses.

Digital Services benefited from restructuring over two years, lowering overheads and enhancing competitiveness. Labour costs as a revenue percentage are declining due to process improvements and increased scanning project volumes. The largest digital mailroom for the Department of Work & Pensions, launched end-2025, contributed significantly to organic growth. Outbound Communications (formerly Synertec) performed as expected, mainly serving the NHS with strong revenue from NHS Notify appointment services, with further expansion opportunities identified in NHS Trusts and private sectors.

Datashred Demonstrates Resilience Amid Paper Price Pressures and Acquisition Growth

Datashred faced a 22% drop in UK paper prices to a3145 per tonne in H1 2026, reflecting sector restructuring and mill closures. Despite this, the division generated a320.8 million revenue and a32.2 million adjusted operating profit, maintaining a 10.6% margin. Approximately 70% of output was hedged, though at lower rates than prior year. Seven acquisitions over 2025-2026, including three in H1 2026, helped offset price headwinds.

Operational efficiency improvements continue, including investment in the South Kirkby facility to consolidate operations and close the Trafford Park site in Manchester by late 2026. Regional service levels will be maintained via a new collection facility at a nearby Information Management site. Restore Recycle expands into new waste streams, including batteries, IT equipment, textiles, and food waste. Management anticipates market consolidation opportunities due to weak paper prices, leveraging Restore’s scale and integration advantages.

Technology Division’s Strong Turnaround and Market Position Strengthening

The Technology division achieved a significant turnaround, moving from losses in 2023 to strong profitability in H1 2026. Revenue rose 17% to a320.7 million, with adjusted operating profit doubling to a32.4 million and margin expanding from 6.8% to 11.6%. Growth was driven by global IT hardware demand and management’s focused initiatives targeting valuable IT recycling segments, system improvements, and value-added services.

Sales efforts emphasize partnerships with value-added resellers and enhanced direct customer offerings, generating positive spillover to engineering and secure asset destruction services. Ultratec (hard-drive restoration) and Ultratest (hard-drive repurposing systems) performed strongly. Management remains optimistic about further revenue and margin growth.

Robust Cash Flow, Leverage Improvement, and Capital Allocation

Restore generated a321.3 million free cash flow in H1 2026, slightly above a320.6 million in H1 2025, with net operating cash inflows of a326.5 million. Cash conversion stood at 95%, down from 109% prior year due to timing but remains strong, supporting investments and shareholder returns. Net debt was a3122.5 million as of 30 June 2026, slightly up from a3120.1 million a year earlier, with leverage improving to 1.7x from 1.9x, within the target 1.5x to 2.0x range.

Capital discipline continued with four acquisitions totaling a36 million and a a320 million share buyback program, of which a34.6 million was repurchased by mid-2026. Bank interest costs remained stable at a34.3 million. The interim dividend rose 18% to 2.6 pence, reflecting confidence in cash generation and shareholder value commitment. Management highlighted recurring revenues and strong cash flow as strategic enablers for further acquisitions, capital returns, and organic growth investments.

Leadership Transition and Strategic Focus on Exceeding 20% Margin Target

Restore announced key board changes with Charles Skinner appointed Non-Executive Chair and Dan Baker as CEO, effective January 2027, marking planned senior leadership succession. Strategically, the company has met its medium-term 20% adjusted operating margin goal and aims to sustain revenue growth while maintaining margins at or above this level. Focus areas include Digital Services, Outbound Communications, and Technology, which contributed strongly to H1 2026 growth.

Management expects these growth segments to surpass physical information management and shredding revenues medium-term, aligning with digitisation trends and expanding into adjacent digital and document management services. Restore’s strong acquisition track record, high customer retention, and earnings quality underpin continued value creation. A robust acquisition pipeline and recurring revenue streams support strategic flexibility.

Confident Full-Year Outlook and Market Alignment

Management remains confident of delivering full-year adjusted profit before tax in line with market expectations. Consensus forecasts for 2026 adjusted profit before tax average a347.2 million, ranging from a344.9 million to a348.2 million. This outlook is supported by strong organic growth, successful acquisition integration, and cost savings from the Information Management property consolidation.

Financial strength, with net debt of a3122.5 million and leverage at 1.7x, provides flexibility for further acquisitions meeting strategic and return criteria. Cash conversion remains robust despite timing effects. The leadership transition scheduled for January 2027 is expected to ensure strategic continuity through 2026 and beyond.