Good morning everybody and welcome to Restore's half year results. Dan and I will give our presentations and then we'll have questions from the room and then questions online.

Looking at the highlights of this year, just to say, well, you'll see the last point somebody's pointed out to me this is probably my last analyst presentation, but I did say that over 7 years ago. I'm not taking, I am, I'm assuming and very glad that this will be my last presentation given the strength of the management team across the group.

We're very, I think we're very pleased with these results. It's everything that the business is about: recurring revenues, strong cash.

Clearly, the box business, as part of information management, continues to be quite a beast in terms of profitability and cash flow. Also we look at DataShred as really fitting into quite a similar model where, despite the movements in the paper price, actually it is a very, very stable business.

Working on this bedrock, that gives us the flexibility to look at other things both in terms of bolt-on acquisitions, but also value-accretive acquisitions which we've done and looking at how we can achieve significant capital returns. If we if we think about it in terms of the in information management with the box business with DataShred, we've got very strong strong businesses, and that's enabled us and what I think we're very pleased with in these results is that in the digital services space and the outbound communications space, which is our Synertec business, and also in the very strongly performing technology business, we've actually got some real organic growth coming through as as alongside the growth which we've been seeing from acquisitions.

We feel really well set up. It's been quite a major project on the property consolidation, which has cost us more than than slightly more than than we were expecting.

On the other hand, it's made sure we remain incredibly competitive in that in the in in in the box business. That's been I think I tend to sort of forget about it, it's been going on in the background, but actually if you look at Dan will take us through the scale of what's been happening, and moving 4.5 million cardboard boxes is you know as as our people do it, it's just been going on, but it's quite a sort of stressy, major project.

It's been nice that that's the sort of thing which 2 3 years ago we said we have to do this, we've got on with it, we've done it, and we're seeing the benefits of it. Clearly, in particular, the particular benefit is while rents rents and rates have been going up, it's enabled us to keep our costs pretty flat.

Then, so far this year, we've had some bolt-on acquisitions, three of those in DataShred continuing the consolidation of that market, and I think quite excitingly beginning to the Synertec brand, which is becoming Restore Outbound Communications, that doing a bolt-on there suggests we can we can really move that one forward. The share buyback program is underway.

I think we spent four £4.6 million in the first half, and I think you know things are in really good shape. All the divisions are pretty much where we want them to be, and we're very comfortable with the full-year market market expectations.

It's also this the other point is that I came back just sort of about 3 years ago. It's been a really fun time, been really enjoyable, that we've achieved everything that I wanted to achieve, really comfortable with with the senior management team and the management across all of the businesses, and it feels now that we're going to enter a new phase, and so it's about time that we had a sort of changing of the guard.

I'm delighted that, although it's slightly unconventional, the board has asked me to become non-executive chair, making room for for Dan who he and I have worked very closely together over the last 3 years. He's got excellent support in our divisional MDs.

Nigel Dews is a is a force in our business, and Natalie and and Ian are very strong, I feel we've got a really good team. Dan will do a brilliant brilliant job.

Jamie's held the held the reins as chairman for the last 3 years, and he will remain on the board. He's extremely valuable, particularly for his property knowledge.

I feel that we've sort of rejigged things, and it's a really exciting time for the business to be in really good shape, looking at growth, looking at the next phase as to where we go. Very exciting around that, and I think most of you know know know Dan, and he, in conjunction with our our divisional MDs, will be a really powerful force.

Come and it's an exciting time to be involved in this business, and I'm sure that we will be recruiting a very strong CFO to replace to replace Dan. I was I was talking about growth.

The areas where we're really the our Digital Services business, so that used to be called Restore Digital, has been completely changed. Overhead completely different.

We're now winning decent business decent contracts in our bulk scanning. We've got some of We had some very, very difficult contracts in there which we've steadily been you know we had big loss-making contracts which we weren't on top of.

We're in really, really good space here now, a lot of big contracts: DWP, HMRC, the Court of Protection. These aren't easy contracts, and I think if I look around the market and think who else could be doing these, it's a bit like the exam contracts, I can't really see see anybody out there who is who has the scale or the capability that we've got.

We're now really well set up for that, whereas if I look at where we were 2 or 3 years ago after we'd bought EDM, failed to integrate it, costs all over the place, rubbish relationships particularly with some of our big public public sector, that has all changed. Although we haven't really seen the digital activity delivering on the scale that I'd like to see it, we're pretty well poised in a really good place.

Clearly, we're benefiting from the fact that last year we only had a few months of the DWP contract, the DWP contract is of scale and generates a lot of organic growth, but also I think where we're sitting in the in this digital space, there's a lot of talk about access to you know people the sort of concept of a lot of stuff being scanned is very much out there, and we feel that we're the go-to in this space, which could be very exciting. We're not quite sure exactly how it's going to develop, but we're definitely in the right place at the right time with a really good offering.

Again, we've been very pleased with the Synertec acquisition, managed which was put together by by Dan, and he and and Nigel have been managing. They've been letting the bus- It's a It's a very good business, we've letting it go go its its own way, but actually probably now we're we're beginning to say let's go in a certain direction here, we want to see we want to see growth, we want to see the opportunities taken full advantage of.

Clearly, that's the Synertec business is very reliant on the NHS. We still see a lot of opport- huge opportunity there, and also in related areas.

As I said, we're pleased to have made this recent acquisition last week. Then the other area of growth is is the Technology business, so that's the sort of like IT asset lifecycle management, where we've built these stronger relationships with VARs.

This this is really satisfactory. It was a bit of a It was a basket case 2 or 3 years ago, and now we've got a business making double-digit margins, high growth.

As I say, the market is helpful, we've all seen people like Computacenter's results, but it's really about what we've achieved in that business in organizing it, and we feel really comfortable about the next phase of that business. Now it's making really good money, well, it's making decent money, we think that can go a lot further.

It's interesting that as much as we love the box business and we also love the shredding business, I think we'll we'll see that as the other businesses grow, they'll be much more in kilter than they have been historically in terms of our sort of cash cows versus our our our our growth areas. Then I'll just touch on the sort of acquisitions we've made.

We've Information Management, a couple of a couple of box businesses acquired. Digital Services, we bought NEC Software, which has which has been a a decent acquisition.

I I think we prefer looking at physical and outbound communications. Obviously, Synertec's been a really good deal, MPS will be encouraging, and the consolidation within the DataShred within the within within the the shredding business, which is as predicted.

I it's been helpful that we've done those. Dan will touch on the impact of the paper price which we've hedged, but it's been good that the additional acquisitions we've done there have have covered off the short the significant shortfall related to the fall in the paper price, which we'd hedged, which defends which gives us means we know how much money we're going to make.

When you're hedging at £30 a tonne lower than you were the previous year and you're doing six 60,000 tonnes, there is an impact, but that's been offset by the acquisitions. Let me hand hand over to the man who will be CEO at the end of the year, Dan.

Thank you, Charles. That was that was all on scripts.

Right. Another good set of results.

Really pleased with the numbers, as Charles said. Really, really, really positive that revenue is growing and growing thanks to both both organic growth and from acquisition, up up 21%.

Profit following, and it's also really pleasing that the margin is following as well, because if you remember, we did have a margin target of hitting 20%. We said medium-term, we did it a bit earlier than we we thought we might do so last year, and we've held that now, and in fact, up a little up a little bit.

PBT and EPS all all tracking as well, which is really really pleasing. Good cash flow.

We've talked lots about cash flow before. The business does just throw cash off come rain or shine, so that that continues.

Cash flow, free cash flow of just over £21 million and cash conversion of 95%, very pleasing. Despite us doing our share buyback and doing some bolt-ons, leverage has has dropped a little bit to 1.7 times.

That's all really, really pleasing. Then just cantering through the divisions, just a reminder, Information Management has three businesses in it.

It's got the boxes business, which we're now calling Physical, it's got the Digital Services, scanning, and it's got Outbound Communications, otherwise known as Synertec, which we're rebranding, as Charles Charles touched on. Property consolidation, we're now entering the last leg, and there's a there's a slide or two on that later on which I'll talk through in a bit more detail.

We completed 2 weeks ago, I think, a first acquisition in Outbound Communications. We did trail this a little bit, hopefully not not a surprise.

Really excited about this because we think there could be a really good market opportunity for more of these. It's similar in concept to the DataShred acquisitions where you're effectively buying a customer book, but but able to reduce the cost through running on our facilities.

The extra thing about this could be that we can sell in additional services, because there are lots of printing companies out there and they don't have the system that we have, Prism, which can manage the migration from physical to digital. That's really exciting, and pleased we've got that one done.

In DataShred, lower paper price, as Charles touched on, I'll cover it a bit later, but really well-run business. Team are doing a fantastic job.

Laura in the room is standing in as FD at the moment from my team. She's enjoying it, I think.

Team's doing really well. We've talked about industry-leading KPIs before, collections per vehicle per day, it's 12, which is we think is good, and we've got a pretty good view on the market given we buy lots of lots of companies in that space, they're they're doing really well.

Then Tech- Technology, absolutely fantastic first half. We talked about revenue growth previously and moving towards double-digit margins.

They've hit double-digit margins and really, really good revenue growth, pleased about that. There are some market tailwinds, no doubt, chip prices are high, which means the secondary market is good for us.

We're continuing to see people using VARs. Obviously, we've spent quite a long time to try and get that business in in better shape.

It was loss-making when when Charles came back and I joined, so really pleased with Technology. This is a a slide that you're hopefully familiar with now, just walking through how the profit before tax has moved, and this is half on half, last half versus this half.

Getting from 18 to £22.3 million, first box, biggest one on there, is is is growth in Information Management. Now a chunk of that is pricing in boxes.

We've talked about this before, we've we've index-linked almost all the storage to RPI or CPI, so that just comes through 1st of January for the commercial customers and the start of the tax year for the public sector customers, so that's doing well. We've got good growth in digitization helped by the annualization of the DWP contract, and we've got growth in Outbound Communications, so Synertec, that's really pleasing.

Acquisitions, the next bar, that's that's essentially Synertec, so that's the year-on-year acquisition impact on the growth. Then we've got we've got cost inflation.

A chunk of this is people costs. People obviously a very significant cost for us.

Another chunk is the is property. Now net property, we are saving, but we've obviously got business rates coming against us and some some rent increases.

Then on DataShred, talked about the paper price, and I'll cov- cover that in a bit more detail, but effectively the paper price has offset the the benefit from the acquisition, broadly the same the same profit. Then Technology doing really well, and and head office and interest broadly broadly flat.

Then, just walking through division by division, starting with Information Management, the the biggest one. Stable number of boxes, 22 million boxes last year and at the end of the year and and now, and that's just inflation-linked pricing coming through.

Digital business, we've obviously done quite a lot of work there over the last couple of years taking out a lot of cost. It's benefiting from that.

We're starting to win decent-sized contracts. One of them in the year was the MOD scanning.

The interesting thing about that business is we've got so many boxes, and people are increasingly looking to digitize them, just having the boxes in our estate places us well for for if the customer wants some digitizing. Then Synertec, or Outbound Communications, doing well.

Notify, the NHS body, is is providing some revenue there, and there's lots of opportunity still to go for, and we hope that the small acquisition we did brings us into that has that has 16 councils, it does annual council tax billings and sort of bin bin collection, garden bins, that sort of thing. That's a nice sticky revenue and gets us into an adjacent adjacent market.

Then just a couple of slides just on the property consolidation, and that's because it's coming to an end, and I'm conscious we've been talking about it since I joined. I thought we'd just cover cover through what's happened.

We're in the final phase. It's the second biggest cost after after people.

We've filled Markham Vale. Now some of you in the room have been to Markham Vale, so that's just over 100,000 foot, about a million boxes up the M1 near near Sheffield, and we have pretty much filled up the second big warehouse, which is up near Durham.

Last year, or maybe it was the beginning of this year, we entered into new leases for Stroud and Rainham. The Rainham one is round the corner from our our large site in Rainham, and that means we've now got a plan to to complete the program.

Cost to store each box, so that's a really key metric for us, has fallen despite the increase in business rates, I'm really, really glad we we started this. The last bullet, this will be the end of the program when we've when we've finished the things we know about, but as and when smaller properties come up at the end of the lease, we'll obviously keep looking at looking at opportunities to to improve the property portfolio.

Just just on a page, I'm sorry, it's quite a lot of detail, but there's there's, as Charles alluded to, a lot has happened. I just wanted to set out kind of what we've done over over time.

You can see it's a little bit over 4 million boxes how how many have been moved each year. For 2026 and 2027, that's a bit of an estimate, but broadly that will be about right.

Then we've got which properties we've we've come out of. Markham Vale from the Southeast exits in '24, that was largely there, and then the second lot in 2025, that's largely going into into Durham.

Then you can see the costs, just under 12 million we think it will end up being, and the annualized savings, 6 million, about a 2-year payback. I think we said at the beginning it would be 18 months, it has maybe taken us a bit longer and cost us a bit more, but the 2-year payback, we're still really really pleased with that and really pleased and grateful for the team for for doing all of that all of that work.

Then DataShred, so, as I as I said, well-run business, but they have had a tough time in tough time with the paper. The paper is about £40 less this this half versus last half, £40 less on 30,000 tonnes, that's a £1.2 million million headwind.

Now if you look at what the market prices are, our average is about 140 for the first half, the market average is between 100 and 130, we're doing better than the market, and that is largely thanks to both the quality of our paper and the hedging, very glad we did did the hedging, and we anticipate that will get better during the second half of the year. We've had lots of acquisitions in that space, three so far this year, so that's offset the the the paper, broadly flat flat profits.

It's had a tough half, but even in a tough half, it's had double-digit operating margins, so, that shows how resilient, how how dependable that that business is. Then Technology, as I said, re- really pleased.

I hope Ian isn't listening to this too much, otherwise he'll he'll be asking for a bonus, but doing really well. The business is exactly where we want it to be.

More growth to do, but, double-digit this this half, margin into double digits, and that should continue for the for the rest of the year, really pleased with that. That was loss-making not that long ago, done a fantastic job, that team.

Then adjusting items, again a familiar slide, it's the usual suspects in here. Just a couple of things to to point out.

We've obviously got amortization coming through, which is a little bit bigger as as a result of the acquisitions we've done. The Synertec earn-out still frustrates me as a as an accountant the way this is accounted for, but that comes through as as a charge each year, it's classified as remuneration.

Then we've got the property costs coming through as as I just as I just covered. Then cash, really really strong business, throws off cash no matter what.

Again, despite the acquisitions, despite the buyback, deleveraged, and we spent I think we said we'd spend about 5 million a quarter, and this buyback started in towards the end of March, we're tracking there or thereabouts. It might well drag on to possibly March, April next year, but that broadly going as as planned.

We've got lots of headroom in the facilities, and we've got some of our friends from the banks in the room, they'll I'm sure they'll be pleased about the acquisitions we've been we've been doing. Then my last slide, a familiar slide, this hasn't changed, but I wanted to put it up because it it dictates how, how we allocate our capital, I think it's important we're we're grounded by this.

First off, we'll we'll invest for growth, and that's either in our business or value-accretive acquisitions. All the acquisitions we've done are accretive from day one.

We obviously try to kind of make them even more accretive, but they're all accretive from day one. Then second priority, we'll we'll deliver shareholder returns.

Keep going on the dividend with consistent cover, and then then the buyback with with surplus surplus capital. Then maintain, underpinning all of that, maintain the the strong balance sheet with a a target range of leverage net debt to EBITDA of 1.5 to 2 times.

That's my last slide, but before I pass to Charles, I will just digress a second. It was me that said to Charles this was going to be his last presentation, and he said or I asked him if he might be emotional about it.

I won't do my impression because I might go all Hugh Grant, but he said he said, 'No, no, no, I've done 20 of these.' You've actually done 26, Charles, this is your 26th, if I've got my maths right, which I hope.

On behalf of me, the advisers in the room, shareholders listening, I would like to thank you very much for all your contributions to Restore.

Thanks. Oh.

No, thanks, Dan. Wholly unnecessary.

No, it's it's been a lot of we've it's been a lot of fun the last the last 3 years, and it's I think you know our sort of job is to sort of in this context is to tell everybody what we're going to do, do it, then tell them we've done it. I think that's that's been achieved, so that's really good.

Now it's Dan's job to tell us what he what he and the team are going to do, do it, and tell us he tell us he's done it. All good.

This is really just just a a pretty quick summary. As a business, we we really like we're very keen on operating margins.

All of our people think of in terms of how we going to drive the operating margin. I think that's a really key thing.

Working with operating margins of 20% makes everything an awful lot easier, particularly as one can grow the business. Although it it'll be difficult to maintain it up there because the mix will be we will be growing lower-margin activities, that will very much be a key driver of of our business.

As as mentioned, the the Information the what was the Records Management division, that's just it's it's had its day in terms of growth, but that's just a wonderful bedrock from which to spring everything else in so many different ways. It's not just the cash flow, it's actually having the box, that it's been plugged into the information management market.

We see increasingly the the boundaries blurring between information between the sort of boxes and the digital, etc. It's just such a good base from which to work, and the customer list is pretty extraordinary, and the opportunity to leverage it is wonderful.

We're excited about the growth areas, and DataShred, the the I've never nobody's ever seen the paper price as low as it is, the idea that we can continue to make double-digit margins in this environment is is testimony to the team there. Then so the sort of slogan for this year has been it's about growth, and it's also about the opportunity which is available to us.

The you know we're we're very comfortable with how our business is being being managed. We think they're a really good platform for for moving things forward.

It's it's a it's a useful time to be generating cash, debt coming down. We think that there will be opportunities over the next year or two, and we're really well placed both in terms of balance sheet, but just operationally to to to to grab these things.

We've all the key metrics are where we want want them to be: strong financial, operational performance. Operating margins, if we can it it won't be easy, we're not expecting the operating margins overall to to go to go much further up just because of the of the mix of where we see growth.

We've we've it it will always remain a sort of key driver of this business to ensure that operating margins are there. Once you've got those in place, then doing more then it's about doing more business and pushing more through a successful model.

Yes, recurring revenues, strong operating margins, predictable cash generation, this is we hope that we've got a really good platform here moving to go forward. It's all about shareholder value.

We're we're conscious of we need to drive the share price, we've got to create more shareholder value, but we do think we're in the right place to be able to do that. On the back of that, we're we're very comfortable with with where we are in terms of the market expectations for the for the full year.

There's been pretty rapid growth in EPS over the last over the last 3 years, and we can see more of that happening in the current year. Brilliant.

That that's that, and we'll take appendices, we don't really want that, do we? Very good.

Thanks, everybody, and questions. Let's Tom, let's let's start at the front.

Cheers. Tom Callan from Investec.

I've got two. Just on that shred performance, I just wondered is there anything structural here that we need to think about that's impacting the space, and if so, what could that potentially mean for multiples and pricing of further bolt-ons moving forward?

Then just within Technology, I just wondered if you could expand further on what you believe your current market share is within the VAR space specifically, and therefore what that means in terms of future opportunities for growth, inorganic or organic? Thanks.

Dan can pick up the technology point. I think we're seeing it's marginally depressing given the rating of our shares, which obviously impacts on what we can afford to pay for acquisitions.

Having said that, there is a lot of realism out there in terms of pricing expectations, not just in the shredding space. There are a lot of half-decent businesses who are sort of going, 'Do I really want to compete with the likes of Restore?'

I think, yeah, I wish we had a sort of bigger bag of money. We've been selective in terms of what we've done, but I think there is realism in that UK vendors are pretty realistic about their opportunities and their valuations now, which should make for a very interesting market in terms of bolt-ons over the next few years.

As I say, it would be nice to think that our multiple would go up, which would make those deals more earnings-enhancing, and clearly how historically we built the business was on the back of issuing shares to move things forward, and clearly issuing shares at the moment is we're buying them in rather than putting them out. This is where we are.

On the Technology question, Tom, the VARs, value-added resellers, we've done some mapping in this space, and our largest customer is CDW, but we know that CDW is by far and away the largest global VAR, it's not surprising that that's our largest customer. In terms of market share, we're pretty confident we are number one in the UK.

It's a nascent market, though, there's a surprisingly long tail of small operators. What we can be confident of is that people are continuing to outsource to VARs and that we are in the mix with the tenders both with CDW and the other VARs.

There certainly has been and continues to be a market shift towards moving away from in-housing your IT function to using a VAR.

Great. Sorry.

Yes. Sorry, Chris.

Dashed from his lips!

Sam Bland from Stifel. Two questions from me, please.

Firstly, on M&A, with the acquisition of MPS in the outbound communications space, can you give us a sense of how fragmented that market is and are there other opportunities to add sort of customer sets through there? That would be interesting.

Then secondly, obviously a very good organic growth in the first half, could you give a sense of what organic growth this business, Restore overall, could do over the medium term? What sort of a sensible level?

Thank you very much.

Dan, I think there's those for you.

Thank you, Sam. On MPS, MPS is a business, it's based in Bristol, its customers are effectively 16 local authorities.

There is 400, 500 local authorities across the UK. We asked Tom, the MD of the Outbound Communications business, we about a year ago said to him, relatively new into acquiring them, 'We're interested in M&A in this space, can you get us some potential targets?'

He gave us quite a long list quite quickly. We know there's a lot of operators out there.

They tend to be localized, the customers that this company has are all relatively close by geographically. We've taken this one as a trial because we want to make sure we can do it, but there are lots and lots of other operators out there that have got very very similar customer base, the opportunity for future bolt-ons we think could be quite large.

In terms of organic growth, this half 10 or just over 10% organic growth, half the group growth was organic. It's flattered by a little bit by the DWP annualization of that contract.

Even if you strip that out, you've obviously got the bedrock that is the boxes coming through at inflation, and on top of that you've got additional growth from Technology and Outbound Communications and scanning. Mid to high single digits is a longer-term possibility.

Morning. Chris Bamberry, Peel Hunt.

I've got three questions. Obviously a very strong performance in terms of profit from Technology, improving gross margin, maintaining overheads where they were before, flat.

How should we think about both the gross margin and the overhead going forward in that business? Secondly, once the property consolidation program is complete, are there any other further actions you can take to help to deliver efficiencies to partially offset inflation?

Finally, the statement says you've got a healthy M&A pipeline. Could you just give us a bit more flavor on the depth, the pricing, the competition, what you think you might spend this year?

Has there been anything you've looked at and ended up walking away from? Thank you.

Why don't I take the profit in Technology including the gross margin? Dan, are you happy to do the property consolidation and the M&A pipeline?

Yep.

Yes, we've clearly benefited in Technology from the increase in the value of the equipment which we're selling. It's a very curious business to look at to try and find the gross margin.

In fact Ian, who runs it, said to me, 'You know the pass-through that you're doing in the postal charges, why don't you do that for us because you should really be judging us on the margin we make on the kit which we resell.' Anyway, he didn't get very far with that one, but he still mutters about it.

How you look at the gross margin in that business is difficult. What we've done a lot of work on is on the pricing model, and what has been remarkable is that I think we might be the only people in the industry who know how much money we make on individual slugs of We've got 100 of these, how much money did we make on it?

We've done a lot of work on working that out. One of the upsides from that has been to go to certain customers and saying, 'We've been doing this for you for a very long time, we're now putting up our rates.'

The price elasticity in that market is very, very high. The pricing is very opaque.

If I said to you, if you give me 500 old laptops, who pays who? All those sort of questions.

You wouldn't really have a clue. It hasn't been a market which the IT hardware industry has been very slow at really understanding what the recycling stuff is worth.

We think there might be a shift. We think that there may be a shift in people's behaviors that rather than in the old days, it breaks, you replace it, then you move to it's going to break, I'll replace it.

Now we're probably getting more diagnostic tools in this industry where people will be saying, 'Let's,' which I think that's how engineering's always worked, you get to the point where people go, 'How much life is left in this?' and etc.

I think we're really ahead of the curve on this, but we've been incredibly successful in saying to our customers, 'No, sorry, that doesn't work, mate. That's what we're going to charge you to collect this stuff, we're going to charge you to process it.

That's the deal.' People have gone, 'Oh, all right then.'

That's been a real driver of where this is, coupled with the fact that generally the SLAs in this industry haven't really been met. People will say, 'Right, I'm giving you my kit, and it's got to be off your floor within a month.

It's got to be fully repaired and out.' Actually it just wasn't happening.

I know it wasn't happening for us, and I'm pretty sure it wasn't happening for anybody else, whereas I think now we've set up our production, etc. in such a way that when somebody says, 'We want this off the floor in a month or whatever,' we're doing all of that.

I think we're in a really good space. That's where the margin's going to come through, and that'll be driven, and just understanding that we don't get out of bed for gross margins of less than 45%.

If people are on 15%, give them the choice. Us, you know it's all sorted.

Sorry, that's what it's going to be. Whilst there's clearly a following wind in terms of what we're selling the kit for, and quite often we share that with the customer, but it's higher, really I think the real driver is being really good at what we do and understanding where we're making our money and not being afraid to say to the customer, 'Sorry, we were mugs a few years ago.

We're not anymore. That's what it is.'

People sort of go, 'Okay, fine.' Sorry, Dan, is that giving you enough time to...

Absolutely. On the property, Chris, there's still about maybe just under a million boxes to move on the program that we've got.

In that business, we try to match people costs to the cost of servicing the client. You've got storage revenue and service revenue, and people broadly matches to service revenue.

If a lease comes up, we'll still look to do something about it, but once we've done that property consolidation, that's the big bang stuff done, and then hopefully structurally we've got that business in such a position that you've got revenues that are inflation-linked, costs matched to your service, your people costs matched to your service, and then property also tends to be inflation-linked, but obviously proportionally lower, we should protect the margins in that way. Then in terms of the third question on M&A pricing and have we walked away, I wouldn't say we'd walked away, but we are on hold with some people, and that's because we're very rigid about the returns that we have to have.

We have done some post-acquisition reviews, quite a lot of post-acquisition reviews on the things we've done, and I'm happy to say that they all meet our return criteria, but where the seller's expectations and our expectations differ, then we're just on hold. We've obviously done quite a lot, but we're determined not to overpay, sometimes it might be a bit of a waiting game, and that's true certainly in the boxes business and in shredding.

Outbound Communications, we're still on a bit of a discovery, but kind of I'm happy with the MPS structure, let's see how that goes.

Hi. I just wanted to unpack the organic growth in Outbound Comms, please.

I think the volume growth in that business kind of looks like it's kind of up 13%, 14% half on half, if I've got my maths right. You kind of flagged NHS Notify as being a big driver of volume in that business this year.

I just kind of wondered what percentage of the organic growth is coming through from Notify, and how much is left to come through in the second half? Then in terms of just the broader pipeline in Outbound Comms, what is that looking like in the existing Synertec business outside of the NHS?

Do you want me to take that one, Charles?

Yep.

In terms of unpacking that growth, a decent chunk is coming from Notify, there was a Notify program in March, April this year that wasn't done last year, probably about half of the growth is coming from that. Just as a reminder, we work with 75% of the NHS Trusts.

In terms of NHS volume, they've only outsourced 25%. A lot of our customers are a department within a Trust.

The easiest win for us there and where we're getting the most traction is you're already in Trust A, but you're only in Departments 1 and 2, can we sell into Departments 3, 4, 5? There's lots to go after.

They're doing well there. What we're not doing as well is overlaying our physical customers to the outbound communications customers, and that's one of the reasons why we've accelerated the rebranding to get us going to market as one more.

We're doing well, but we want to do even better. More to come.

Pipeline outside of NHS?

That's why we're excited about MPS, because that's in public sector, but a different part of public sector. We think there's more opportunity for this sort of thing in public sector than in corporates, because public sector still like sending a lot of letters.

Let's see how MPS goes. That gets us into a space that we're not really in at the moment, there may be M&A, there may be organic there, perhaps a bit of both.

Great. Greg, thanks.

Thanks. Greg Poulton from Singer Capital Markets.

Could you just talk a bit about the DataShred hedging dynamics? Obviously the base market price now is a bit lower than it was at the start of the year.

Just thinking about next year and how you're hedging the price, when is that hedge set and would you hedge at the current price or would you hold off on that?

Yes, how it works is that last year we hedged 50% of our sales with a couple of mills, and we were hedged at, I think it was 185 or 180...

185, I think.

185. The market price throughout the year was about 1 the average market price was 165, 160.

That was very helpful, and the mill knew that we had top-quality bales, they were happy to pay that. This year we've hedged at 145, and we hedged more of it, we hedged about 70% of our output.

The market price has been as low as 100 quid, and I won't get into the detail as to why it is, whether it's freight rates, whether it's there are a couple of mills which have been closed, etc., but it's very curious because the price always used to be between £160 and £190 a tonne. Those are meaningful movements, and the sort of bottom fell out of the market.

Now it was reasonably a bit painful for us. For our competitors, it's been a killer.

They've had a terrible time. There's a part of me which doesn't mind the price being low because it drives competition out of the market and should lead to higher rates.

The position now is the price is beginning to move up again. We're sort of not quite at our hedged price, but we're within 15 quid of it, one would expect we'll start the negotiations in the next 2 or 3 months, but I would guess that the price will be above this year's price at which we've hedged, hopefully that'll be helpful.

There's always you think, 'Oh god, the bad news is the paper price is really low. The good news is it's going to be higher next year,' and that's the sort of you get the switchback ride which will be favorable.

I would expect, everything suggests that one or two mills are coming back on stream, the Far East market is open, but it depends on crazy things like what the Houthis are doing and things like that. Generally, I think we will see a period of paper prices stabilizing and being back where they were historically.

Great. James.

James Tetley, Equity Development. Three from me, please.

Just a follow-up on MPS and local authorities, Dan, you talked about an M&A opportunity there if this works, there might be other bolt-ons you can buy. Could you also comment on the sort of in-house versus outsourced opportunity in local authorities?

Presumably they're doing most of this themselves still. Secondly, on Synertec, has that introduced any additional seasonality into the group?

Obviously you've got a strong first half, it'd be interesting to hear about seasonality. Then finally, there's a comment in the RNS about Ultratest, Ultratec doing well in the period.

What's driving that? How big are those businesses?

Is there more you can do with those, too? Thank you.

Do you want me to take the first two?

Yeah.

MPS and local authorities in-house versus outhouse. What MPS do is they do the physical printing.

What they don't do is the electronic communications. What we don't know this for certain, but we think is the case, most authorities are doing the triaging between electronic comms and physical themselves, but are getting a printer to do usually a local printer to do the printing.

Our basic MO is we take that printing, but do it in our own facilities, and we get close to those local authorities and we talk to them about how we can help them on the move to digitization, which we are really well placed to do. In the NHS, there's a lot of in-house production, and you'll alarmingly, in my mind anyway, get a number of Trusts that have a small printing facility in the hospital, in a city center, in the basement somewhere.

They'll have their own people printing, stuffing envelopes, and their own team managing the email triage. Weirdly, you've got within Trusts a mix of that going on and also some outsourcing to us.

There is more to do there, and there's lots of foibles around the NHS, that is one of them. In terms of the seasonality, yes, there is a little bit depending on the Notify campaigns, that's broadly the driver of seasonality, Notify.

If you look at the other NHS work, that tends to be appointment-based or screening, which is pretty stable throughout the year. Clearly the NHS sometimes have campaigns where they're going after this or that indication, but broadly other than Notify, it's not that seasonal.

Great, James. Yes, the Ultratec business is the primary function is really trading hard drives and repairing them.

We buy second-hand hard drives which have got something wrong with them, we repair them, and we sell them out. Clearly in this world of increasing data centers, the recycled hard drives is quite a good space.

The values are up, and there is more interest in what happens to these hard drives. An Ultratec is very well established in that market, and so the market is strong and we're doing well within it.

It's a good business to be in. We've also got in Ultratest, it's predominantly an IP offering whereby we have the Genesis machine, the Genesis machine in particular, I'll talk about that, which is really these machines take knackered drives and makes them viable again.

A bit like IT recycling. The drives get graded according to where things are, and what our piece of kit in Ultratest can do is actually you put the hard drives in and they come out refreshed.

They're not completely new, you've just rewritten over the stuff which has gone wrong in them. That's quite an interesting space.

We've actually put another couple of sales people into that space. It ties in with our IT recycling, but as I say, with this sort of market with the data centers booming is going to get more and more.

It's quite a nice sector to be involved in. I think that's all the sort of analyst questions in the room.

Have we got do you think we've got any questions online at all? No?

Okay. Thanks, everybody, for coming.

We're a very well covered business in terms of the analysts, which we're very grateful for, and we're really pleased and excited about the future. That's probably the key message.

Okay. Anyway, thanks, everybody.

Thank you. Thanks.