Thanks to strong momentum continuing through the fourth quarter, the firm said its full year performance would be ahead of its previous forecast.
A large part of Restore’s recent growth is due to its acquisition strategy as it looks to gain market share across its businesses, which are typically highly fragmented.
The group made eight acquisitions last year for a total outlay of £86 million and says it ‘continues to appraise a large number of opportunities across all divisions’.
It is one thing to make acquisitions but it is quite another to integrate new businesses successfully, and this is where Restore has excelled. All the businesses acquired last year are contributing financially and are trading either in line with or ahead of expectations.
The firm says organic demand has also been strong with a high degree of customer retention and repeat business thanks to its high service levels.
All told, the annual revenue run rate is now more than £250 million or 18% higher than before the pandemic, while profitability has shown ‘strong progression’ in the second half as a result of the group’s increased scale, efficiency gains and cost synergies.
With a total addressable market of £1.9 billion, Restore has grown to become the number one player in three of its sectors and is second in the other two sectors.
As it adds scale, particularly in more fragmented markets like data shredding and technology recycling, it reduces costs through synergies between businesses which leads to higher margins.
Chief executive Charles Bligh believes the firm can add another £800 million of revenues through consolidating its market position, on top of underlying organic growth of 4% which is slightly ahead of the market.
Commenting on the update, analysts at Investec called the recent weakness in the shares 'a good entry point into a defensible, premium UK support services play'.
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