Storage in this old ammunition depot? It could earn you a bomb!
IN 1936, when tensions were rising across Europe, the War Office acquired Monkton Farleigh, a disused quarry near Bath. It transformed the mine into the largest underground ammunition depot in the world, keeping thousands of weapons secure and hidden throughout the Second World War.
The mine fell into disrepair, but in 2008 it was acquired by AIM-listed Restore and converted into a vast underground warehouse. It now holds 1.5 million boxes for 1,300 clients in search of exceptionally secure storage.
There is a link to Monkton’s past, because Restore customers include the Ministry of Defence and the Royal Navy, but the company also works with a range of other Government departments and thousands of private firms.
Restore is the second largest data storage firm in Britain and is well positioned in other areas too. A data shredding business makes sure old records are disposed of securely.
A digital division helps organisations to turn paper records into electronic documents. A technology arm takes old IT kit from businesses and recycles, refurbishes or resells it. And then there is Harrow Green, the UK’s biggest office move company.
The coronavirus pandemic has affected each of these divisions for good and for bad. The NHS is a major customer and it has used Restore to help set up the new Nightingale hospitals in London and Birmingham.
The group has also worked with NHS Trusts across the country, reconfiguring space to make room for Covid-19 patients and creating storage for personal protection equipment.
Restore stores and digitises documents for the NHS too, including patient medical records and information on operations and appointments. Some of this activity has fallen off since the health service began to focus all its attention on coronavirus patients, but business should pick up sharply as hospitals begin to perform non-urgent operations again.
Data shredding is another service performed for the health service and many other customers. Classed as essential waste collection, it has continued to operate across the private and public sectors. Volumes have dropped off slightly in recent weeks but when chief executive Charles Bligh shut down the division for just one day because he was worried about staff safety his customers were aghast. Restore swiftly made sure that its employees were observing social distancing and Bligh reopened the business.
The UK lock down has also prompted a surge in revenue from the IT business. Restore Technology sells refurbished computers and other technology on eBay, and demand has soared as people have looked for kit to help them work from home.
The group’s storage division has proved resilient too. Accounting for about two-thirds of group profits, the business makes most of its money from recurring revenues.
These have persisted in recent weeks and are likely to continue in the same vein once the lockdown lifts. Customers include 88 of the FTSE 100 constituents, as well as 81 per cent of NHS Trusts, more than 80 per cent of the UK’s top legal and accountancy firms and numerous local authorities.
Most of these clients are highlyregulated, so they are l egally obliged to store data securely, often for decades. In a trading update last month, Bligh withdrew the final dividend of 4.5p and said that top executives had taken a 20 per cent pay cut.
But he also stressed that Restore’s balance sheet was strong and the group should bounce back with renewed vigour once the coronavirus crisis has passed.
Reassuringly too, Bligh and his finance director spent almost £45,000 of their own money buying shares in the business just last week.
Bligh joined the business a year ago and was hoping to make a number of acquisitions this year. Those plans have been postponed but are likely to be rekindled when the time is right. There may even be more opportunities than before, as smaller competitors struggle to cope with the current economic headwinds and put themselves up for sale.
Brokers predict a strong recovery for 2021, with a dividend of at least 8.5p, rising again in 2022 and beyond.