Restore plc (RST) Earnings Call Transcript

Great. Good morning, everybody. Nice to see so many people in the room on, looks quite a busy day for announcement. So thanks very much for making it. This half year results for Restore plc for the half year ending at the end of June. Well done the team for getting the results out so promptly. Just do a quick preamble before going into the slides. I think it's not particularly easy out there for business at the moment. And I'm not talking specifically about our business. There's been quite a few headwinds generally. And like everybody else in response to the NIC and things like this, we've obviously tightened up on all costs and started trying to push through price increases but actually funny enough, a lot of other people are trying to cut costs at the same time. So it hasn't been a particularly easy time. We're fine. But I think generally, these are robust results rather than anything more sensational than that. We've also had a couple of specific headwinds, Harrow Green, I've never seen -- nobody has seen that industry suffering such delays in work which made it very competitive for the work that's going on. And I think it was very well flagged before that we had a major scanning contract, which came to an end at the end of 2024 and hasn't been replaced yet, but it's about to be replaced in terms of more volumes and similar profitability by the Department of Work & Pensions Mailroom, which I visited last week, which is looking really good. Having said all of that, I think I Dan, our senior management team, we're all feeling actually really chipper. There's a lot of good stuff going on in the business. Record's management continues to be very steady. We're getting our property cost savings through. Some of that is being spent in offsetting rent reviews elsewhere. But the margins in that business and what it continues to churn out is still incredibly strong. Digital, which we changed the management about 14 months ago, has had its problems, but we feel where we are now, we're through the [ Nordea ] we're really strongly on the way back. The first half of this year has not been easy for them with the loss of the contracts, ongoing changes. But we're increasingly excited about that business, particularly in what it can do for our operating margins across the group. Elsewhere, it's lovely to see Datashred into double-digit operating margins, and we think there's more to go there, particularly with some of the bolt-on acquisitions we're doing. Our technology division, that's the IT recycling has recovered. It was losing money. It's now -- the margins are only 7% in the first half of this year, but it's really beginning to motor. Synertec has proved to be a very good deal. It's trading well. There's no suggestion that we're going to lose any customers, great management who are taking the odd bit of advice from us, which is nice. And also, what I think is interesting about the current market is if for a market leader like us, it hasn't been particularly easy. It has been really tough for some of the independents. And so we feel that we are actually slightly hedged that we're seeing good quality core acquisition opportunities, some of which we've taken advantage of already. So we view this as a really exciting time for the business. So really solid results, but we feel very optimistic about the future. So I probably covered most of what I was going to say, but let's -- the packs will be available at the end of the meeting. So Dan will take you through the numbers, but revenue up, adjusted operating profit up, adjusted profit before tax up and after tax. The operating margin, as people are aware, when we bought Synertec about 55%, 60% of their revenues are postal pass-throughs, which obviously has an impact on their operating margins. So I don't think we're cheating by when we calculate our operating margin we're taking that out of the topline, which shows that the operating margins moved up to 17.7%. And bearing in mind that we had a really tough time in Harrow Green and that -- the Information Management, the Digital Operations, we're not really firing on all cylinders yet. We're very comfortable with that, and we think that it's an encouraging direction of travel. The Information Management property consolidation, we've now marked unveil, which we took on about 18 months ago in Chesterfield at low rent, that's now pretty much full, and our site in the Northeast is now approaching half full. So that's gone through. We've moved 2 million boxes. There's probably another 2 million to go, and it's really about the jigsaw puzzle as to which -- as where we want to be, what properties are available, et cetera. So that's good. And I wouldn't underestimate the fact that I can stand up and say we've moved 2 million boxes. The impact on the business in terms of not just the exceptional costs relating to the trucks and the racking costs and sorting out the buildings. Actually, there's a lot of boxes whizzing around our estate, and you go around our sites and people are going, well, that's coming from there, that's going out to there. And so I think we're probably carrying a bit more cost just related to that, but that's not exceptional line. So that's just part of the business. Scanning business, how we've -- I'm very pleased with how we've managed that business over the last 14 months. We had significant problems in the business. And over the last 14 months, we worked incredibly hard in lots of ways. And the cost savings, this is a business which turns over GBP 40 million or so. We've taken that GBP 5 million of cost. This is pretty serious stuff. Our SLAs are improving out of all recognition, our productivity has been -- has changed dramatically. There's a lot -- this is a good space, and we weren't doing it well. And now we're beginning to do it really well. I was very pleased that we won a big contract for which won't come through until next year for the Oxford University Hospitals, which it's not huge. It's several millions, but the idea that we're really back in business now. We weren't the cheapest, we competed for the work. We won it at decent margins. There's a lot of good stuff going on. And also some of our tougher mailroom contracts, we're really working through those, and our customers appreciate what we're doing and there is scope to where we've got 1 particularly difficult contract, we think our customer understands how hard we work to put it right and that it is underpriced. But what you do is you get it right, then you go to the customer and say, look, we're doing this at subcost. So really, really pleased with that business. Datashred and Technology, these are nice businesses in the right slot, which were driving harder and harder. Datashred obviously will be benefit from some bolt-ons. But IT recycling, we're really cracking into the value-added resellers. We did a very big job for 1 customer, and I think we've got 3 more big jobs coming up on the back of that. We're not SBTi. This is not just greenwashing or anything. It's really important to us. Dan and I incentivized in terms of what we do on our ESG targets. We believe wholeheartedly a business, particularly like ours, which is focused on the U.K. has a lot of social obligations around this. And we're not going to be the super best, but we want to be in the top decile in terms of our responsibility. And I'll talk -- so Synertec really pleased with that. That's an adjacent area. It's got decent growth prospects. It's trading well, young management team who know what they're doing. And occasionally, they'll take advice from old great bids like kind of Dan and Nigel. So that's good. And we've -- and other bolt-ons have come through, which I'll just touch on briefly. Divisional performance, the information management, physical storage activity box is broadly stable. As people know, it's a very good business. We run it very well. We're continuing to look for cost savings there wherever we go. And there are -- there's a better pipeline than we've seen for a while, but it tends to take quite a while for the pipeline to convert. Digital, I've probably loaded that one enough, as we say, there was a very decent contract, which finished in December 2024. And we're beginning to -- we should be fully operational on the DWP mailroom, which up there the other day, it was described to me by our person there as probably the biggest mailroom in Europe. And you're very well. It's quite impressive, and we're taking that on and doing it very well. Datashred a 15% increase in revenues converted to approaching doubling profits, great KPIs, the number of visits. We've looked at some of our competitors, particularly when we've been looking at buying them and our number of visits and average collections per vehicle per day are well ahead of the norm. And this is a great area. I've always stressed historically about when we first bought Datashred and even before then, I thought this was a market which should be consolidated 1 day. It's taken a while for vendors expectations to match the returns on investment that we need. But the Venn diagrams between those 2 are now overlapping strongly. Harrow Green, it's been tough. A lot of major projects have been postponed. We've got a lot of work for high-profile names coming out of Canary Wharf, legal firms moving. They're not happening this year. And you'll see Dan will do his great bridge, and we'll see that the revenue and adjusted operating profit have gone down. And technology really coming on, this is an interesting business. I've described it before as a sort of cottage industry. And we believe we are professionalizing the business there and that there is good market opportunity. Just touching on the acquisitions completed so far in 2025. Synertec we've discussed that was completed in March. We bought one of my favorite deals, small trading business in Gravesend in Kent from a couple of bookies who'd set it up to shred their betting tickets very small, but it was a classic example of -- we paid GBP 300,000 for it. We had GBP 300,000 of revenue. The revenue was stuck, and we probably need just about 1 block and 1 track to do that work. So it's not going to make us all rich. But if you look at the ROI on something like that, you can work out just go straight into our Crawford site, we probably -- there's 1 block 1 truck and GBP 300,000 of revenue coming in. Shred-on-Site was one of the biggest independents in the U.K. It does what it says on the tin Shred-on-Site. So it's mainly on-site shredding. Again, with that, we had 3 sites we've closed, Berry, we've closed Vista, and we've got a big site in Camberley and the synergies coming out of that haven't started to see them yet as we've -- because it's all about sorting out the routing, but we're nearly there on that. And again, the sort of ROIs on that, it looks like a high multiple of their current earnings, but the synergies are really incredibly obvious in terms of what -- how we -- it's really just about bolting on their customers onto our routes. So that's very good. [indiscernible] in [ Rexam ] earlier this month, that was -- they actually had store scan and Shred, but that was -- they've got a decent site there, which gives us a bit more facility in Wales and also we could uplift -- we've uplifted the shredding revenues and put it into our Manchester site. So it's not particularly complicated we're going. And Data Shredding Services was another tiny business but they're out there. They've got regular customers. There's very low churn in these types of business on acquisition. So that's there. And I think, generally, I think I touched on it earlier. It's for a lot of independents, I wouldn't want to be competing against us in this type of market. People are facing higher rents. They're facing more taxes. It's just so -- and it is -- if I look at historically what one used to buy those sort of businesses for when I specialize normally sort of 7x or 8x earnings. It's nowhere like near that today. And I feel very sorry for a lot of great small entrepreneurs in the current climate, and I'm afraid that it's to our benefit. Dan, tell us about the numbers.

Good morning all. Good to see so many of you, still reading [indiscernible], Charles, but we'll pick that later. Right. So look, as Charles said, really feeling quite chipper despite the U.K. environment. So pleased to talk through a good set of numbers, good solid set of numbers. So revenue is up 15%. Most of that is thanks to the acquisitions, in particular, Synertec. Adjusted operating profit, up 8%, margin up 80 bps to 17.7%. As Charles said, we have amended the way that we calculate the operating margin to exclude the pass-through costs from Synertec, and there's a rack at the back of the slides to work that out, but it's GBP 15.9 million of revenue that we've taken out. Adjusted PBT, up 10%. EPS, up 11% and the interim dividend up 10%. So a good solid set of numbers and good cash conversion as well. The famous margin bridge. So it's back for a second occasion having good feedback last time. So just taking you through this left to right, it essentially goes through the 4 businesses and then a little bit of head office. Charles has covered most of this already, but just on the starting left to right. So Information Management, you've got stable boxes, and then we've got inflationary price rises on the boxes. So that's feeding its way directly into margin. Then you've got the digital integration. So this is the combination of the digital business and the physical business. We said a year ago which is when this was announced, it would cost us about GBP 3 million and save about GBP 3 million. We've pretty much spent the GBP 3 million of costs, but we're getting more savings out than we thought. So this is the in-period benefit, so GBP 2.5 million, in other words, GBP 5 million on an annualized basis. So pleased with the cost savings there. The acquisition at Synertec feeding through into margin and then the property consolidation. So this is the Markham Vale. So some of you have been to Markham Vale, it's a society in Chesterfield [indiscernible] towards Sheffield. I was there last week. It's pretty much full now. So it's got just about 1 million boxes in it. And then next year, we'll get the benefit of the Durham one. And enough we're looking -- as Charles said, we're looking for the third site. I haven't found it quite yet, but we said we would move 4 million boxes. We've moved about 2 million so broadly about halfway through. And then cost inflation coming off. So this predominantly is NIC and National Minimum Wage of that 1 million, about GBP 750,000, is that effect so that comes off the margin. And then the last block on there, the big red block. Much of that is -- well, all of it is digital. Much of it is the contract loss that we flagged before, so that ended at the end of December last year. DWP is the contract that will replace that on an annualized basis, but DWP, Charles has been there, I've been there. They're only just starting to come on stream, so that will be second half weighted. There is a little bit of loss in bulk scanning mainly NHS work. The good news there is that because we've sorted the business out large and taken a lot of the cost out, we can now picture a much more attractive price. So as Charles alluded to, we are confident that will improve in the future. Then Shreds really well run, very pleased with that business. We've got a little bit of benefit from acquisitions and then paper price. Paper price is really a weaker comparator. The paper price this year has pretty much stable. So long-term prices on paper about GBP 160 to GBP 190 a tonne. It's been in that zone all the way through until today this year. Harrow Green, we have made cost savings where we can. It's a well-run business. So it's not at all the management team. It's the market they're in, but we are seeing the drop in revenue flow through into profit. So that's the 1.3 block there. Technology, we've been taking costs out. It's run a lot better now. It's got a new system in place. We are processing better quality kit from better quality customers. So when we get to that slide, you'll see we're actually processing less volume, but the volume that we are processing is worth more. So that's the margin to get to our 10% increase. And then just a slide on each of the 4 divisions. So starting with Information Management. We've got the box on the table, so that just shows how we've adjusted for the postage cost. Strong performance in physical records, stable number of boxes, price rises dropping all the way through to revenue and to margin. Consolidation halfway through as said. And then you've got Synertec coming through there. You have got the offset there from digital, which is the red block on the margin slide. Synertec is doing really well, pleased with it, in line with expectations, but it's got some really good growth prospects for the future. Shreds. So again, really pleased with this. Paper price has come up, and you'll see the volumes of paper recycled that ticked up a little bit. It's got really strong KPIs. So number of visits per day, we think is industry leading. The distance in between each visit is we think is industry leading. So very, very pleased with that, and it's being run really well at that business. The hedging on the paper price although it probably hasn't made that much difference in the numbers, it has improved the quality of earnings in that business. So we've only got half the volume, which is floating the market. So again, very pleased with the shredding business, and we've got some bolt-ons there, and we'll continue to look at bolt-ons in that space. Harrow Green, obviously, we present all the numbers of the 4 divisions separately. So very transparent. You can see what's going on there. We are looking at cost savings where we can and to reduce the lower revenue. There are some green shoots. I'm conscious I have said this previously, but there are some green shoots that things will move. There is a good pipeline of moves for 2026 and some of them will happen second half of this year. So we hope it will get better. Technology. So you can see the KPI, as I mentioned earlier, so half the number of assets processed versus last year. What we've done during this period is process about 35,000 laptops for the Department of Work & Pensions. There are some customers like that coming down the pipeline. So we're doing less of the schools and the hospitals. We're doing more of the blue chips who have newer quality kit that they replaced more frequently. They're more worried about data security and therefore, happier to pay a reasonable price to get that work done. So still a work in progress in technology, but we're absolutely moving in the right direction and progress is encouraging. Cash generation. So better than I thought actually in this period. So a good cash conversion. A little bit of that is that we had a good long hard look at our working capital, in particular, supply payments. No window dressing. It was effectively just paying people when they were due. So we've got a little bit of a bounce. It's probably a one-off bounce in the performance in the period. Otherwise, as you would expect, we bought some treasury shares in the first half of the year to satisfy share option schemes. We also got some acquisition costs, which is new since I've been in this chair, and we ended the period on just over GBP 120 million of net debt and leverage was 1.9x. And then my last slide, so the things that you are used to in here. So we've got the restructuring costs, so GBP 1.4 million in the period. That's all digital. Cumulatively, we've pretty much spent the GBP 3 million now that we said we would. We then got the property costs, and that is double rent and also the cost of moving the boxes. They're both cash costs at GBP 1.4 billion and the GBP 1.1 billion. We've also got some cash costs within the acquisition related costs. The little nuance, just to highlight to you is in the acquisition costs, we've included the earnout, GBP 2.1 million related to the earnout. As we mentioned in March, we've entered into an earn-out arrangement with the management team because we wanted to make sure that, that business was handed over and stable. That earnout the way the accounting works means it will run through the P&L for the next few years. So it's a noncash item for the moment. It will translate into cash in the future, but just to highlight that, that is different and slightly new. Otherwise, that's it from me. So I'll pass it back to Charles.

Thanks, Dan. So the business outlook, I'll do the business outlook and the group outlook. The business outlook, the physical records business continues to underpin group profits and cash flow. It's, I think, a very strong business. We're continually improving it. We're looking to grow it and it's all about tweaking the dials, improving the operating margins over the next year or 2. I referred earlier to the cost cutting, which we've undertaken in the Information Management, the digital business and we're beginning to win business. I -- when this was a separate division, I said I thought this was a 15% plus margin business. And looking through the overall Information Management business, I can see this heading towards 15%. Obviously, won't be obvious within the numbers. But -- and it is much more integrated -- and it is pretty much fully integrated same management team for the whole businesses, et cetera. But this is a real opportunity to drive profits forward over the next couple of years. We're very pleased with Synertec. Revenue is very stable. We haven't won any major contracts. We've had some extra work coming through, but this is -- we are very pleased with that business. It fits very well with what we do. It takes us into a very logical position, and it's got genuine growth prospects, which -- I mean, it's CAGR over the last 7 or 8 years has been well over double digits. So we expect that to continue given the quality of the management team and our support of it. Datashred is trading well. And I've sort of highlighted the advantage of these bolt-on acquisitions where you're effectively buying customers and customers tend to be very sticky in this business, which means one doesn't just like the box business, customers don't leave you because there's a person wearing -- the same person is wearing a different shirt and the opportunities we've got on routing will come through and you can do your own fag packet on what we actually need compared to what we need compared to what an independent needs in terms of sites, vehicles, overhead, et cetera. Well, if you can't do that, I can help you at a later date. But I think you all can. Technology now profitable lots of scope to improve performance. And it's -- it will still be quite a whole, but we're still targeting mid-teen operating margins for that business in due course, which we have a combination of improved efficiency. We've got a very, very good IT system, which has been going in -- over the last year, and now it's there. That will generate considerable savings. We're winning business, and we're leaner. So that's good. And Harrow Green, the outlook is improving, as Dan referred to quite a lot of it. It keeps on moving right. We're doing everything we can in terms of cost cutting in that business. And we just need some sniff of the market improving for that to start turning around and delivering properly. So then coming on to the group outlook. Yes, there was a lot of stuff which has gone on over the last year, and it hasn't necessarily manifested itself in the numbers just yet. This is a robust performance, and we're pretty -- we feel I don't want to offer too many hostages to fortune in what is quite an uncertain world at the moment. But we can see from what we've been doing, there is more good stuff to come. We'll continue to focus on this mantra, people in the business is understanding it's all about operating margins. Obviously, revenue is important as well, but revenue helps the operating margins, we've set the long-term -- the long-term goal of 20% adjusted operating margins, that is now -- let's call it a medium-term goal. We can see that day coming closer. Strong cash generation, lots of opportunities for value-accretive acquisitions, which I've touched on before. We're good at this stuff. We've got very solid businesses, which you can bolt other businesses into very easily, and we're looking to take advantage of that capability. And I think that before -- when Dan and I first came in, we said the initial job is to get these businesses to work as well as they can. And I think we're getting there. I think we're pretty close to the point when we can go -- stand back and go, these are properly run businesses now where do we go next. And both in terms of organic growth, that's there. And we also see -- I don't like the word inorganic growth. And acquisitions, I think is what we're talking about. We see lots of scope for those. And looking at where we are, there's no need for anybody to move the numbers. We're very comfortable with where they are. Brilliant. That's that. It's now -- we're about on time, Dan. So how long have we got for questions?

Half an hour.

Right. Okay. Do your best. Who like to go first. I'm going to start there. Can you say, 1, 2, 3, 4, can you say who you are just because we can't afford the video these days. It's just audio.

Okay. Start with me, James Wood from Canaccord. Two questions, if I may. First, on Synertec. Obviously, you've had your arms around that business now for 4 months. Just interested your views on how that business is going in terms of -- is it ahead of where you kind of thought it'd be kind of synergies you're kind of seeing both revenue and cost? And then secondly, on the Technology business, obviously, this business you've realigned with VARs improving the quality and so on. Encouraging commentary, I think, on some of the projects you're seeing come through. But I think 4% probably doesn't reflect fully reflect that, I think, in the first half. Am I guessing what kind of run rate do you really see that kind of business getting to over the next 12 months or so?

Dan did the Synertec deal and is much closer to it than I am. So do you want to pick up on Synertec, and I'll talk about Technology.

Sure. So Synertec broadly in line with expectations kind of the ups and the downs, there are potentially more synergies that we can have sight -- that we got sight of them we were expecting. We've seen some small ones, but there could be some large ones coming down the pipe, and that's both cost and revenue. But we are going very slowly. It's a really well-run business. As Charles said, it's a young management team with good historic growth and good future growth. So we don't want to break it. But there are -- we've got site of synergies, both on cost and revenues. So tracking as expected, but we're kind of excited about the opportunity.

Good. And on technology, we're still not quite clear in our minds what the operating margin should be in this type of business. Everything screams at me double-digit -- comfortably double digit. We've done a lot of work on the cost there. We're becoming much -- we're much more efficient. Our pricing model is -- means that we actually now understand where we make our money. And there are some highly profitable pockets. There's quite a bit of day-to-day boring IT recycling on a random basis, which we're just working out how we can make more money out of that, but it's really about focusing on the sweet spots, which we can drive -- where we can drive up the margins. Everything -- it will be a combination of topline, more thoughtfulness and cost savings. And the team now is determined to get to double digits as soon as possible in terms of operating margins. And the very impressive MD did say, I'll get you to 15% 1 day, Charles. So it's -- we're running it really well, and we -- and it's now about tweaking the dials to drive up those margins. That was slightly roughly, but that's where we are.

Christopher Bamberry. Three questions, if I may. First of all, the M&A pipeline, just the breadth of what you're seeing in pricing in terms of competition for assets? Secondly, in the statement, you mentioned you're hopeful that Harrow Green will deliver better performance year-on-year, that implies a pretty strong performance in the second half. I think in excess of GBP 1.6 million against GBP 0.7 million last year. What gives you that optimism. I mean, perhaps more cost savings coming down in the line whatever it may be. And finally, the 20% medium-term margin target. When do you think you might have visibility on that? Maybe is it 12 months -- I mean, that was not exact size, but when you might think you might position broadly when you might actually say, yes, we can see that coming down the track clearly?

Okay. So taking those in order, I think what's interesting about the M&A pipeline is that both is -- particularly in the shredding market, there was -- somebody who paid a lot of money for shredding businesses 15 years ago, and that became the sort of market price and basically very few deals were done in that space. We're probably the only serious buyer in this space. And there are -- the demographic is such that a lot of these people who have been hanging on for the last 10 years. They're running decent businesses. So we see those -- we see further opportunity in that space. I think it's also interesting that 1 or 2 smaller box businesses coming on the market. And probably some of the large independents turning over sort of GBP 5 million or whatever, making -- they're sort of at the point where they just feels a bit more of an inclination to cash in chips at the moment. So we see those as opportunities there. We look all the time both in digital opportunities. Occasionally, we look at technology opportunities. I'm not interested in buying other removal businesses. And then it's really about trying to find these ancillary areas like Synertec. So we've got -- I'm aware after this, I'm on a holiday for a week, and then I'll enjoy pickling around in August, looking at 1 or 2 people who've come along to chat to us. So it's we -- it wouldn't be difficult for Dan and I to bust Dan some gearing guidelines. That's probably the easiest way to put it. Harrow Green, seasonally, the second half is a better time of year. It used to be -- used to get -- and we're seeing a bit of it used to get a lot of school closures. So -- and the H1-H2 split was slightly skewed by first half of '24, we were finishing off the big AstraZeneca activities. So that meant that H1 in '24 was better than H2 in '24. So it does -- the pipeline is stronger. We've got -- there's a -- we do a lot of clearances for a big telecoms business, and that's been quiet, but all the signs are that's going to pick up again are -- one of the big automotive operators, they've been in sort of stuck because the tariff situation trying to work out what they're going to do. They'd be our biggest private sector customer outside. We're hoping they're going to pick up a bit. What we're seeing, which is not easy for us is we're seeing people doing things at very short notice. So people say, right, I was going to do that. I'm not going to do it. And then we can -- sometimes, we start the month with only 35% of bookings in place and we're getting to 85% of budget by the end of the month. So there seems to be people are just not making big decisions, and they're just panicking going let's get on with that send us 50 units tomorrow. So it's really difficult that. And why we're sort of talking in terms of hope for that second half. It seems to be there, but the patterns are just not what we've seen in the past, where you know you're going to move Goldman Sachs in H2, and that's going to be a GBP 3 million job. We're just not -- we've got some like that. Obviously, things moving on from Canary Wharf, those won't happen to next year. So it's just become tougher to predict, which is difficult for us, given how all of our other earnings streams are so regular. And then yes, if you want to push me on the margin, it will be very nice to think that in March '27, we were sitting here going, told you we could.

Samuel from Stifel. 2 for me, please. First on Datashred and the hedging contracts for -- half the volume. Is that something you'll look to repeat next year? And do you think half the volume is the right level? And then second, on M&A or leverage. I appreciate you spoke about that. But given the opportunities out there, the recurring revenue and your cash generation, could you tick up leverage more than 2x given the opportunity out there?

I'll leave Dan to talk about where we are on yes, the Datashred hedging has been a great success. Fun enough, it hasn't really, the paper price has actually been below our fixed rate, but the mill doesn't mind because we're giving them very high-quality stuff. And actually, the price has started to stabilize in a pretty narrow -- in quite a narrow band. Yes, we will do more -- yes, we will -- we're negotiating again for next year. The mill is very happy. Some of the other mills are saying, can they have a bit of it. So we will renew. I still like to have some of it hedged -- unhedged because you don't want the paper price to zoom ahead and then all of our competitors could charge less for their service. So we'd probably stick with it. We might do a bit more, but you want to have some exposure. But it's been a great comfort to us. We don't look at the -- we do look at the paper price on a weekly basis, but not on a daily basis anymore because we know we're in the right space. It was a very good, particularly like -- most of our operations just so on it. We've mentioned vaguely mentioned to the MD of Datashred, it would be very nice if we could hedge this. They got on with it and it happens, makes Dan and my life very easy when you've got great people doing great things like that. I mean, M&A, yes, will continue, but impact on gearing, Dan.

Yes. Thanks for the question, Sam. So leverage is interesting. I mean, we have a tremendously debt-friendly business, I think. The boxes are rock solid. We've got some of our banking friends in the room, and I'm sure they would be happy for us to go up to 3x leverage. But we've got the stated preferred range, 1.5x to 2x. We won't change that. But if something makes absolute sense, and it's in an adjacent or core area and it's accretive to earnings, we're not going to say no to it.