FY20 Trading Update

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 £61.9m (pre acquisition) was comfortably ahead of consensus expectations of £68.5m and company guidance of £65-69m. Including acquisitions, net debt was £66.1m (2019: £88.5m).

-  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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