TIDMRST
RNS Number : 2687N
Restore PLC
29 January 2021
29 January 2021
("Restore" or the "Group" or "Company")
Full Year 2020 Trading Update
'Strong recovery and significant acquisition opportunity'
Restore plc (AIM: RST), the UK market leading Document
Management, Commercial Relocation and IT Recycling business, is
pleased to provide the following trading update for the year ending
31 December 2020, ahead of the publication of Group's full year
results on 18 March 2021.
FULL YEAR TRADING UPDATE
The improvement in customer activity levels continued and
accelerated during the second half and combined with the actions
taken to manage cost and increase operational flexibility we
delivered a strong recovery across the Group. As a result, the
Group expects to report underlying profit for 2020 in line with
current market expectations. Cash generation also continued to be
strong, with year-end net debt reduced accordingly and exceeding
market expectations. During Q4 we resumed our acquisition strategy
with the acquisition of Euro Recycling in October 2020 and recently
acquired Computer Disposals Ltd in January 2021 which will be
integrated into Restore Technology during 2021.
- Notwithstanding the imposition of additional lockdown
restrictions from early November, overall activity levels in Q4
increased to 87% of pre COVID-19 levels, with Records Management at
95%.
- H2 profit increased over H1 in line with the Board's
expectations, with the Group's underlying operating margin
improving towards pre COVID-19 levels during Q4.
- Year-end net debt of GBP61.9m (pre acquisition) was
comfortably ahead of consensus expectations of GBP68.5m and company
guidance of GBP65-69m. Including acquisitions, net debt was
GBP66.1m (2019: GBP88.5m).
- Net box growth in Records Management stepped up appreciably in
H2, with overall growth for the full year of +0.9% (H1: flat).
Organic box intake was greater than destructions, demonstrating the
strength of the business despite significant remote working.
- Substantial cost reduction actions were taken including the
consolidation of three operational sites and further restructuring
resulting in a reduction in headcount of c.250 in H2. Restore will
not be using the Governments Job Retention Scheme in 2021.
- The resilient performance has provided confidence to focus on
the delivery of key strategic objectives. Two acquisitions were
completed in our Digital and Technology business units during the
year. In addition, we acquired Computer Disposals Ltd (CDL),
completing after the period end in January 2021. We enter 2021 with
a substantial pipeline of opportunity as outlined in the November
2020 Capital Markets presentation.
Whilst the COVID-19 pandemic continues to present uncertainty,
both Restore and our customers have been able to operate more
effectively through the current restrictions than was the case in
the first lockdown, as evidenced by the resilient levels of
activity seen in Q4.
We believe that our market positions and customer standing have
strengthened further through 2020, which has supported the second
half recovery alongside the continued growth in demand in areas
like technology recycling and the digitisation of records.
Furthermore, we have taken action to structurally reduce the cost
base and improve our flexibility, which strongly positions Restore
as activity levels are expected to recover further through
2021.
DELIVERING THE GROWTH STRATEGY
Restore has significant growth opportunity to substantially
increase profits above pre COVID-19 levels which was outlined in
the November 2020 Capital Markets presentation. With customer
activity returning (in some cases near pre COVID-19 levels) and
strong structural growth drivers in our key markets, we are
confidently driving the bounceback across the three strategic focus
areas:
1) Organic Growth across all business units and therefore taking market share
2) Acquisition Growth across 4 of the 5 business units
3) Margin Expansion with cost efficiencies from the increased scale of the Group.
Restore is now the number one provider in the IT Recycling and
Relocation markets and a strong number two in the Records
Management, Digital and Datashred markets. With the fragmentation
in our markets, our relatively low market share and strong
liquidity, we are well placed to capitalise on the significant
opportunities in the medium term.
Charles Bligh, CEO, commented:
"We started 2020 very strongly and after COVID-19 impacted
activity, we quickly shifted the business to focus on three
priorities - Customers, Staff and The Bounceback. The entire team
worked incredibly hard and I am delighted that over the year
customer satisfaction increased across all business units based on
surveys and direct customer feedback. As a result, we believe
customer churn will be very low and loyalty driving new business
will be strong. Staff wellbeing and safety was a top priority and
based on the annual employee survey in November we experienced a
significant 10% increase in staff engagement. Throughout the year
we continued to prioritise decisions based on ensuring that we
recover strongly, and we can see these strong green shoots in the
H2 results which underpin our confidence for 2021.
We achieved a very strong financial result, in line and in some
cases above market expectations, and I am especially pleased that
we continued to improve the financial strength of the company with
lower net debt over the year. With this strength and our
disciplined growth strategy we will remain at the forefront of
shaping our markets in the coming years and will deliver a
substantial increase in profits and shareholder value."
Restore plc www.restoreplc.com
Charles Bligh, CEO 020 7409 2420
Neil Ritchie, CFO
Peel Hunt LLP www.peelhunt.com
Mike Bell 020 7418 8900
Ed Allsopp
Buchanan Communications www.buchanan.uk.com
Charles Ryland 020 7466 5000
Stephanie Watson
Tilly Abraham
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END
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