REG - Restore PLC - Full year 2024 results
13/03/2025 07:15
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250313:nRSM4539Aa&default-theme=true
RNS Number : 4539A Restore PLC 13 March 2025
13 March 2025
Restore plc
("Restore" or the "Group" or the "Company")
Full year 2024 results
Restore plc (AIM:RST), the UK's leading provider of secure and sustainable
business services for data, information, communications and assets, today
announces its results for the year ended 31 December 2024.
SUMMARY OF RESULTS
2024 2023 Change
Revenue (£m) 275.3 277.1 (1%)
Adjusted operating profit(1) (£m) 48.8 44.3 10%
Adjusted operating margin(2) (%) 17.7% 16.0% 170bps
Adjusted profit before tax(3) (£m) 34.4 30.3 14%
Statutory profit/(loss) before tax (£m) 17.9 (29.0) 162%
Net debt(4) (£m) 89.0 97.8 9%
Leverage(5) 1.6x 1.9x 16%
Adjusted basic earnings per share(6) (pence) 19.0p 17.0p 12%
Statutory basic earnings/(loss) per share (pence) 9.1p (22.5p) 140%
Dividend per share (pence) 5.8p 5.2p 12%
FINANCIAL HIGHLIGHTS
· Group revenue was £275.3m, broadly flat on prior year (2023:
£277.1m), with the high proportion of recurring storage income in Information
Management continuing to support overall revenue, offset by a slow relocations
market for Harrow Green, weak operational delivery in our former Digital
business, and reduced paper prices in Datashred during H1.
· Adjusted operating margin increased by 170bps to 17.7% (2023: 16.0%),
reflecting our actions to improve profitability and progressing towards our
medium-term target of 20%.
· Adjusted profit before tax increased by 14% to £34.4m (2023:
£30.3m), with adjusted EPS up 12% to 19.0p (2023: 17.0p).
· Free cashflow(7) of £39.1m (2023: £37.3m), with cash conversion(8)
of 107% (FY23: 110%). Leverage reduced to 1.6x from 1.9x at 31 December 2023.
· Final dividend of 3.8 pence is proposed (2023: 3.35 pence), leading
to a total dividend for the year of 5.8 pence (2023: 5.2 pence), an increase
of 12%.
STRATEGIC HIGHLIGHTS
· Good progress on our 2024 priorities of improving operating margin,
maintaining high cash conversion and cash generation and unleashing the
potential of the business units.
· Integration of Digital and Records Management now largely complete,
to form our new Information Management division, enhancing our customer
offering, reducing cost and adding focus to our scanning activities.
· Continued progress on our property consolidation programme, with the
opening of two new box storage facilities (Markham Vale and Durham) set to
replace 10 existing facilities.
· Significant contract awards in the year including for the Department
of Work and Pensions mailroom, one of the largest in the UK and complementary
to our current mailroom contract with HMRC.
· Fixed offtake price agreement with a large UK paper mill for
approximately half of our recycled paper volume during 2025, the first such
contract of significance within Datashred, which will significantly mitigate
the impact of potential future volatility in paper prices.
· Significant progress made against the Group's "Restoring our world"
ESG strategy with our first Net Zero Transition Plan published today.
· The Group is well positioned to deliver both organic and inorganic
growth and to accelerate its growth strategy. As part of this, we have
announced today the acquisition of Synertec (Holdings) Ltd ("Synertec"), a
leading document management business for outbound communications, in
particular for the public sector, for an initial cash consideration of £22m.
CHARLES SKINNER, CEO, commented:
"We have delivered on our priorities for 2024 with an improvement in adjusted
operating margin and continued strong cash generation despite some specific
headwinds during the year. There are strong grounds for optimism across all of
our divisions and we remain committed to our medium-term target of driving
adjusted operating margin to 20%.
Trading since the start of the year has been good, with all divisions expected
to deliver an increase in adjusted operating profit for the full year. We
are also pleased to announce today the acquisition of Synertec, which is
highly complementary to the Group's activities and offers significant growth
potential. We are well positioned to deliver both organic and inorganic growth
and remain confident in increasing the scale of the Group and delivering
further value to shareholders."
1) Calculated as statutory operating profit before adjusting items
(reconciled below Consolidated statement of comprehensive income)
2) Calculated as adjusted operating profit divided by revenue
3) Calculated as statutory profit before tax and adjusting items
(reconciled below Consolidated statement of comprehensive income)
4) Calculated as external borrowings less cash, excluding the effects
of lease obligations under IFRS 16 (reconciled in note 9)
5) Calculated as adjusted EBITDA (defined in Note 3) divided by net
debt, including a pro-forma adjustment to EBITDA for acquisitions in line with
financial debt covenants
6) Calculated as adjusted profit before tax with a standard tax charge
applied, divided by the weighted average number of shares in issue (reconciled
in note 5)
7) Calculated as cash generated from operations less income taxes
paid, capital expenditure and lease payments, but before the cash impact of
adjusting items (reconciled below Consolidated statement of cash flows)
8) Calculated as free cashflow divided by net operating profit after
tax(9) (reconciled below Consolidated statement of cash flows)
9) Calculated as adjusted operating profit with a standard tax charge
applied (reconciled below Consolidated statement of comprehensive income)
Cautionary Statement: This announcement contains certain statements,
statistics and projections that are or may be forward-looking. The accuracy
and completeness of all such statements, including, without limitation,
statements regarding the future financial position, strategy, projected costs,
plans and objectives for the management of future operations of Restore and
its subsidiaries is not warranted or guaranteed. These statements typically
contain words such as 'intends', 'expects', 'anticipated', 'estimates' and
words of similar import. By their nature, forward-looking statements involve
risk and uncertainty because they relate to events and depend on circumstances
that will occur in the future. Although Restore believes that the
expectations will prove to be correct. There are a number of factors, many of
which are beyond the control of Restore, which could cause actual results and
developments to differ materially from those expressed or implied by such
forward-looking statements.
For further information please contact:
Restore plc www.restoreplc.com (http://www.restoreplc.com)
Charles Skinner, CEO +44 (0) 207 409 2420
Dan Baker, CFO
Chris Fussell, Company Secretary
Investec (Nominated Adviser and Joint Broker) www.investec.com
Carlton Nelson +44 (0) 207 597 5970
James Rudd
Canaccord Genuity (Joint Broker) www.canaccordgenuity.com (http://www.canaccordgenuity.com)
Max Hartley +44 (0) 207 523 8000
Alex Aylen
FTI Consulting (PR Enquiries) www.fticonsulting.com/uk (http://www.fticonsulting.com/uk)
Nick Hasell +44 (0) 203 727 1340
Alex Le May
CHAIR'S INTRODUCTION
I am pleased to report on a year of solid progress in my second statement as
Chair. Having welcomed the return of Charles Skinner as CEO in Autumn 2023,
the focus of Charles and his management team during 2024 has been to drive
adjusted operating margin towards our medium-term target of 20%.
In order to achieve this, a large number of measures have been implemented:
revitalisation of the businesses through decentralisation; right sizing our
head office including the support functions; active treasury management;
linking pricing to RPI/CPI as well as the property consolidation programme
within Records Management; the integration of Digital and Records Management
into our newly formed Information Management division; refocusing our
Technology business onto higher quality customers and those outsourcing their
IT lifecycle services; focusing on operational efficiencies and regaining
market share within Datashred; and within Harrow Green focusing on the
specialist areas of life sciences and heritage.
Whilst work on those measures will continue into 2025 and beyond, in
particular the integration of our Digital and Records Management businesses
and the property consolidation programme, many are already delivering both
operational and financial improvements across the Group. Accordingly, the
Board remains confident in the Group's ability to continue to deliver further
progress.
2024 performance
Not everything went to plan in 2024. The Group encountered some specific
headwinds which impacted profits, particularly the slow relocation market for
Harrow Green together with weaker sales and operational delivery within our
former Digital business. Despite these, the Group's fundamentals remain strong
and solid progress was made on our margin improvement plan, with the Group
delivering double digit increases in adjusted operating profit and adjusted
profit before tax, slightly ahead of the Board's expectations.
Our highly contracted and recurring income streams enabled the Group to
deliver revenue of £275.3m, broadly flat on 2023. Adjusted operating margin
improved 170 basis points to 17.7% (2023: 16.0%), resulting in adjusted
operating profit of £48.8m (2023: £44.3m). Adjusted profit before tax
increased by 14% to £34.4m (2023: £30.3m). This improvement in profitability
reflects solid execution of our margin-enhancing initiatives by the management
team.
As a result, adjusted basic earnings per share increased to 19.0 pence per
share, an increase of 12% compared to the 17.0 pence achieved in 2023.
Cash generation continued to be strong, with cash conversion of 107% and a
reduction in net debt to £89.0m (2023: £97.8m), with leverage reduced to
1.6x from 1.9x last year.
Board composition
I was delighted to welcome Patrick Butcher to the Board in October 2024 as a
Non-Executive Director. Patrick is a seasoned CFO and we believe his deep
experience in financial and operational leadership, particularly in
organisations providing essential services to the public sector, will bring
significant value to the Group.
Our colleagues
Following the poor trading result in 2023 and the implementation of the
measures noted above, our workforce has reduced by around 500 over the past
two years to approximately 2,400 people. I appreciate that this has not been
easy for our people and they have had to say goodbye to many colleagues. I
would like to take this opportunity to thank both our current and former
colleagues for their professionalism throughout this process. However, I am
confident that we have the right structure in place to move into 2025 and
beyond, and are in a position where we can offer further opportunities for
development as we move towards the next stage of our growth strategy.
During the autumn we ran an all-staff survey, in which over 75% of our people
gave their views on how they thought we were doing. I am pleased to say that
against a backdrop of change, overall employee satisfaction improved to 7.3
(out of 10), an improvement on the last survey ran in 2022 where the score was
7.1, and slightly ahead of the industry benchmark of 7.2. The survey has also
given us sight of a number of areas where we can improve over the coming year.
Health and safety
Health and safety has remained at the top of our Board agenda and is the first
matter we discuss at each of our meetings. The Health and Safety Non-executive
committee has been further enhanced during 2024 with the appointment of a
Group head who co-ordinates the work across our four divisions and reports to
the committee. They have also led the work on culture and training across all
our people, including the roll-out of a new system to deliver our training,
which all of our people (including the Non-Executive Directors) have had to
complete.
Dividends
Your Board is recommending a final dividend of 3.8 pence, payable on 18 July
2025 to shareholders on the register at the close of business on 13 June 2025
and will be marked ex on 12 June 2025. This brings the total dividend for the
year to 5.8 pence (2023: 5.2 pence), an increase of 12%.
Strategic progress
The measures we have implemented during the year have delivered an improvement
in margins in 2024, and I am confident that they will continue to deliver in
2025 as we drive towards our medium-term target of 20% adjusted operating
margin. As mentioned, not everything went to plan in 2024 but I am confident
that the right actions are in place to address these challenges and that they
will help to deliver an improved performance in 2025. At Datashred, we have
recently agreed a fixed offtake price with a large UK paper mill for
approximately half of our recycled paper volume during 2025 which will
mitigate the impact of potential future volatility in paper prices. This is
the first hedging contract of significance within Datashred. At Harrow Green,
the confirmed order book includes a significant UK laboratory move in the
current year.
Our leverage has decreased from the top to the bottom of our preferred range
(between 1.5-2x adjusted EBITDA) in twelve months. Having engaged with our
stakeholders it is clear that they, as well as us, want to stay broadly within
this range. Accordingly, this together with the continuing momentum in the
business, provides us with additional opportunities in terms of capital
deployment. We will therefore target value accretive acquisitions in our core
or adjacent business areas, and consider a return of surplus capital to
shareholders in the form of share buybacks.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Introduction
Having returned to Restore as CEO in September 2023, I am mildly disappointed
that adjusted profit before tax only increased by 14% in 2024. Having said
that, the Group experienced some specific headwinds during the year, notably:
· weaker than expected sales and operational delivery in our former
Digital business;
· a low paper price for our Datashred division (particularly in
H1), compounding its recent low margins;
· considerable change needed in our Technology division to recover
from a loss-making prior year; and
· very tough market conditions in the office removals market for
our Harrow Green division.
Notwithstanding these specific headwinds, there are strong grounds for
optimism for all of our divisions, specifically:
· The physical side of what is now Information Management, which is
primarily box storage, continues to generate recurring revenues, now at
increased operating margins.
· The integration of the former Digital operations, primarily our
scanning activities, into Information Management has substantially been
completed. This has sharply improved our offering to our customers who
increasingly view physical and digital storage as two sides of the same coin.
It has also added focus to our scanning activities and will result in
annualised cost savings of approximately £3m to the Group.
· Datashred is performing well and we have hedged our paper sales price
for approximately half of our recycled paper volume in 2025 at a level which
should support the division's adjusted operating margin moving towards 15%.
· Technology's trading has continued to improve dramatically since its
loss-making performance in 2023. Our operations are in good shape with the
recent launch of a new IT system which will drive significant efficiency gains
in 2025 alongside a refocus to higher quality customers. We continue to see
growth in activity with our channel partners, typically value-added resellers
of IT equipment, to whose customers we provide lifecycle services.
· After a tough 2024, Harrow Green has seen some improvement in market
conditions. Our specialist skills in large-scale moves remain strong and we
are growing our market position in the life sciences market, as illustrated by
Harrow Green currently undertaking a significant laboratory move.
Health and safety
Health and safety remains the first priority across the Group. As part of this
focus, we appointed a Group Head of Health and Safety in 2024. She is
responsible for developing, implementing, and overseeing Restore's health,
safety, and wellbeing governance framework, embedding health, safety, and
wellbeing into the DNA of the Group. She reports into the Group Health and
Safety Committee, which includes three Board Directors and meets quarterly. I
am ultimately responsible for health and safety across the Group.
2024 saw a 7% reduction in lost time incidents, including RIDDORs. Collisions
were the biggest contributor to accidents during the year (21% of the total)
which is partially reflective of the heavy focus we have had on improving the
reporting culture across the Group but particularly within fleet and
logistics. Other significant causes of accidents are cuts (16%) and manual
handling (16%). Last year, manual handling was the largest contributor to our
accident statistics (26%), so we are very pleased to have driven down the
number of these incidents, primarily achieved through improved education and
awareness. 840 manual handling awareness courses were delivered in 2024 alone
to support this reduction.
In 2024 we have also focused on ensuring a consistent standard of training
across the Group with Royal Society for the Prevention of Accidents ("ROSPA")
approved training being delivered to our colleagues. I am pleased to say that
c12,000 ROSPA health, safety & wellbeing courses were delivered through
our online learning platform focusing on key areas of risk for the
organisation such as safe movement of vehicles; slips, trips and falls; and
stress awareness.
We are encouraged by an increase in our leading health and safety indicators,
with safety observations and near miss reporting increasing by 62% from 2023,
showing a significant improvement in the vital two-way conversation needed
within our organisation to drive down risk.
Internal and external benchmarking of our performance remains a cornerstone of
our health, safety and wellbeing strategy. To this end, we have actively
continued our partnership with the British Standards Institute ("BSI") and
NatWest Mentor to ensure we receive impartial, competent reviews of our health
and safety practices. The BSI conducted 12 external ISO 45001 certification
audits during the year with NatWest Mentor conducting a further 19 bespoke
audits that aligned with the ISO 45001 framework. This activity has enabled us
to benchmark our health and safety performance against our peer group and I am
very pleased to report that we were generally in the first quartile of this
peer group. Opportunities for improvement include performance monitoring,
standardisation across the divisions and site management health and safety
competence and we have taken steps to address these in our plans for 2025.
Trading performance
Group revenue for 2024 was broadly flat at £275.3m. This primarily reflected
significant declines in revenue in Harrow Green and in our former Digital
business (included within the Information Management division). Within
Information Management, our former Records Management business again achieved
record revenues.
Adjusted profit before tax grew 14% to £34.4m, driven by a clear focus on
operating margins. This reflected a strong performance from the physical
records management side of our Information Management division, offset in part
by a weaker performance in our scanning operations. Both Datashred and
Technology showed improved profitability but Harrow Green's profits were
appreciably down on the prior year.
Divisional performance
For the first time, we are presenting our performance split into four
divisions, rather than as two divisions.
Information Management
This is the combination of what was formerly Records Management and Digital.
It is substantially the largest and most profitable division in the Group.
For 2024, revenue was £167.9m, down 1% on 2023, with adjusted operating
profit up 12% on 2023 at £45.8m. Adjusted operating margin was 27.3% compared
with 24.0% in 2023.
The former Records Management business experienced an increase in revenues
driven by price increases on a broadly flat number of boxes. Service revenues
related to box storage showed some growth, again largely as the result of
higher prices rather than increased activity. Project work on box storage was
satisfactory, although patchier than had been hoped.
We performed well on cost in the box storage business, with significant
improvement in efficiency and tight cost control despite several cost
headwinds. As budgeted, we saw continuing wage inflation. But we also faced
steep increases in transport costs, as the price of vehicles and vehicle
maintenance ran well ahead of inflation. We also witnessed unexpectedly high
rent reviews on our properties, particularly in the South-East of England.
During the year we have embarked on an ambitious programme to minimise our
property costs related to storage. There are two related components of this.
Firstly, property costs in the South-East of England mean that rent makes up a
disproportionate percentage of overall costs in this geography. Secondly, a
number of our sites are too small or inadequately configured to enable
efficient operation. The solution is to consolidate smaller sites into large
sites in locations where rental costs are lower. As part of this strategy,
over the last year we have taken on a c100,000 sq ft building at Markham Vale
near Chesterfield, Derbyshire and more recently an 84,000 sq ft building near
Durham. The former is now fully racked, storing approximately 700,000 boxes
with a further 500,000 box slots expected to be steadily filled over the next
two years. The latter is being racked and will ultimately hold approximately
900,000 boxes. As part of this site consolidation, we have been or will be
able to exit around ten smaller, more expensive sites.
In 2024, we also completed the construction of a new building at our freehold
site in Sittingbourne at a cost of £4m. This facility will hold an additional
250,000 boxes increasing our capacity for customers in the South-East of
England who need a local service. While our business model is capital-light
with few freehold properties, this freehold site partially protects us from
ongoing rental increases in the South-East of England.
The former Digital business experienced a decline in revenues, despite several
major contract wins. This was a result of lower bulk-scanning activity, with
notably few large one-off projects. Over the last eighteen months, we have
significantly reduced the number of scanning locations. We now have two
dedicated scanning facilities in Wolverhampton, one specialising in digital
mailrooms and the other specialising in bulk scanning and will be taking on a
new site to house one of the UK's largest dedicated digital mailrooms for the
Department of Work & Pensions ("DWP"), a contract won in 2024 which will
become fully operational during 2025. We also have two scanning sites inside
box storage facilities.
We provide digital mailroom services to several large clients including HM
Revenue & Customs Service (renewed in 2023), HM Land Registry (awarded in
2023), the Office of the Public Guardian (awarded in 2024) and the Ministry of
Justice (awarded in 2024), in addition to the DWP. We did however lose a
significant public sector bulk scanning contract during the year.
We continue to provide digitisation for a significant part of the UK exam
system, including the International Baccalaureate and a number of professional
qualifications.
As noted above, the integration of the former Records Management and Digital
businesses into the new Information Management division is now effectively
complete. In addition to annualised cost savings of approximately £3m, we are
now able to provide a single operation for customers looking for a service
combining both physical and digital information management. There are
significant barriers to entry into these activities, combined with highly
contracted and recurring revenues.
Datashred
For 2024, revenue was £36.0m, broadly flat on prior year (2023: £35.9m),
with adjusted operating profit up 19.4% on 2023 at £3.7m. Adjusted operating
margin was 10.3% compared with 8.6% in 2023.
In the year, both the number of visits and average collections per vehicle per
day increased. Combined with price increases, our service revenues increased
by 2% to £27.7m. This reflects sharply increased operational efficiency.
In the year, we sold c52,000 tonnes of paper, including c11,000 tonnes
generated from destructions from our own box storage business. Total revenues
from paper sales were £8.3m, a slight decline on the previous year. This
reflected an average selling price in the year of £175/tonne, £10/tonne
lower than in 2023 and significantly lower than in 2022. The paper price
started 2024 at a historically low £141/tonne and ended the year at
£166/tonne. The appreciable swings we have seen in the paper price during and
after COVID have had significant impact on the profitability of Datashred.
Apart from the paper price, Datashred's revenues are stable with strong
recurring revenue. In addition, we have recently agreed a fixed offtake price
with a large UK paper mill for approximately half of our recycled paper volume
during 2025 which will significantly mitigate the impact of potential future
volatility in paper prices. This is the first hedging contract of significance
within Datashred.
Datashred operates from 11 sites across the UK. Five of these are
collection-only sites and two of which operate from our box storage sites.
In addition to the growth in contracts, improved pricing and greater
operational efficiency, we are looking to increase the range of services we
offer. In 2024, we increased our revenues from textile shredding, typically
uniforms, as well as other related services, such as battery disposal. We
expect to continue to grow these recycling services, leveraging the strength
of our customer relationships both within Datashred and across the wider
Group.
Harrow Green
For 2024, revenue was £35.3m, down 11.8% on 2023, with adjusted operating
profit down 57.8% on 2023 at £1.9m. Adjusted operating margin was 5.4%
compared with 11.3% in 2023.
Harrow Green has long been the preeminent office removal firm in the UK. In
profit terms it experienced its worst performance since COVID with levels of
activity well below usual. This reflected a very slow year in the relocations
market as decisions were delayed both ahead of the General Election and while
the Autumn Statement was awaited. Activity in our core London market was
exceptionally slow, while business outside London was better but remained
subdued.
Harrow Green started the year completing the biggest pharmaceutical move in
the UK. While the forward orderbook looked reasonable, a number of major
projects timetabled for 2024 were moved back and, in a few cases, cancelled.
We undertook some cost-cutting at our flagship Silvertown branch during the
year whilst maintaining the capabilities of the operation. Our new branch in
Oxford traded in line with expectations and our branch in Cambridge continued
to grow. Strong performances were seen in Croydon, Bristol and Birmingham.
We continue to focus on building our life sciences activities. We are
undertaking another major laboratory move in 2025 and the biobank constructed
at our Cambridge branch is performing well.
Technology
For 2024, revenue was £36.1m, up 16.1% on 2023, with an adjusted operating
profit of £1.8m compared to an adjusted operating loss in 2023. Adjusted
operating margin was 5.0% compared with (4.5%) in 2023.
The Technology management team has changed markedly since 2023 with positive
results. Apart from significant operational and financial reporting
improvements, we have changed our strategy to focus on blue-chip customers and
on servicing the end-clients of the Value-Added IT Resellers ("VARs"). This
has enabled us to achieve improved pricing for our services such as
collection, wiping and reconfiguration, as well as providing better quality
equipment for resale. Service charges increased by 55.2% year-on-year and
resale values increased by 32.8%.
We have focused our Cardington site principally on servicing "channel"
customers, providing lifecycle services to the end customers of VARs. Our
largest customer for the year was CDW, on whose behalf we handled c145,000
items for a significant public sector entity. Our three other processing sites
in Runcorn, Cannock and Birmingham are now focussed on end-of-life recycling,
predominantly for regular, blue-chip customers, rather than sporadic
collections of low-grade equipment. The expectation is that our Runcorn site
will start offering lifecycle services to ''channel'' partners in 2025, thus
increasing our capacity for growth and reducing any single point failure risk
in this critical area. Our Bristol site specialises in destructions and
continued to trade well.
Over recent months, we have rolled out a new ERP system which has brought many
benefits: the ability to track equipment across the business rather than only
in individual sites, more efficient transport deployment and a clearer
understanding of the profitability of individual products and customers.
Our engineering activities, generally based on relocating IT equipment,
experienced very low levels of activity, reflecting a hiatus in relocation
activity ahead of the General Election and again around the new Government's
Autumn Statement. Ultratec, our hard drive wiping, repairing and trading
business, performed weaker than in the previous year. Ultratest, our hard
drive-processing software business, traded steadily with healthy licensing
revenue and some equipment sales.
The market for IT recycling usually reflects levels of new IT equipment sales.
These are starting to improve globally after a prolonged period of weakness.
While this is becoming a helpful tailwind, I believe that the turnround of
this division is attributable to the hard and thoughtful work of the current
Technology team. We are optimistic that Technology's performance will continue
to improve in what is a fragmented and immature market.
Our People
Since I joined as CEO in September 2023, the number of senior roles has
reduced from 58 to 41. Of these 41 positions, 22 are now filled by different
people, including several internal transfers and promotions. Our overall
workforce has reduced by c500 colleagues over the last two years from c2,900
to c2,400. While this has been painful, I am now confident that we have the
right people in the right roles in the right structure. Our people can now be
confident of future stability in a strong and growing company, with many
opportunities for future development.
As a service business, the key to our success is well-motivated people who
know what they are being asked to do and want to deliver excellently for our
customers. They can expect that their work environment is fulfilling, secure
and hopefully enjoyable. I am pleased to note that, despite recent changes,
our "Your Say" survey, conducted by external consultants the Happiness Index,
showed an improvement in all three key metrics: overall satisfaction, employee
Net Promoter Score and response rate.
I would like to thank all of my colleagues across the company for their energy
and commitment to the Group's success.
ESG
We are determined that Restore operates as a good citizen in all of its
activities. I firmly believe that most businesses are steadily, and often
quietly, moving ahead with environmentally positive change. We are keen to be
in the vanguard of this, while managing the commercial implications smartly.
The largest single initiative to improving the environment that we are
currently undertaking, after considerable investigation, is the conversion of
our diesel vehicles, where appropriate, to Hydrotreated Vegetable Oil ("HVO").
This conversion will take place over the coming years. We have many and an
increasing number of electric vehicles, but the technology is still
inappropriate for much of our fleet, particularly at the larger end. We will
invest c£0.4m per annum in EV infrastructure and storage tanks over the
medium term to enact our strategy and also expect, given the current adverse
discrepancy between the price of conventional fuel and HVO of c15p/litre, that
profit will be adversely affected by c£0.5m, per annum; we believe this is an
acceptable cost. Other ongoing environmental initiatives include the
installation of LED lighting across the majority of our estate at an
investment of c£0.5m per annum over the coming years.
More detail on our ESG progress and priorities appear in our Annual Report on
pages 24 to 45.
Strategy
We remain committed to our medium-term target of driving adjusted operating
margins across the Group to 20%. As previously noted, this will be facilitated
primarily by achieving 15% adjusted operating margins in our scanning (now
part of Information Management), shredding and IT recycling operations. We are
confident that these will continue to move in the right direction during 2025
and beyond and the time is now right to transition to the next stage of the
Group's growth strategy.
We are generating and receiving a range of acquisition opportunities in our
core businesses as well as in closely related areas. In the opening months of
2025, we have completed the acquisition of Synertec in addition to the
acquisition of Bluetex, a small box storage business acquired in 2024. We
expect to make further acquisitions, leveraging our strong market positions
and long-standing capability of integrating acquired companies. We are also
looking at opportunities in closely related areas where we can leverage our
channel-to-market, based on the breadth and depth of our relationships with so
many of the UK's leading companies and public sector entities. We will remain
disciplined in the execution of our acquisition strategy, focused on strategic
and cultural fit as well as attractive financial returns.
The Group is highly cash-generative and we are looking to deploy capital into
opportunities where we can achieve returns comfortably higher than our cost of
capital into activities which we understand. We will therefore target value
accretive acquisitions in our core or adjacent business areas and, where
appropriate, consider the return of surplus capital to shareholders in the
form of share buybacks.
Outlook
Trading since the start of the year has been good, with all divisions expected
to deliver an increase in adjusted operating profit for the full year. We are
well positioned to deliver both organic and inorganic growth and remain
confident in increasing the scale of the Group and delivering further value to
shareholders.
CHIEF FINANCIAL OFFICER'S STATEMENT
Financial highlights
£m 2024 2023 %
Revenue 275.3 277.1 (1%)
Adjusted operating profit 48.8 44.3 10%
Adjusted operating margin (%) 17.7% 16.0% 170bps
Adjusted profit before tax 34.4 30.3 14%
Statutory profit/(loss) before tax 17.9 (29.0) 162%
Adjusted basic earnings per share (pence) 19.0p 17.0p 12%
Free cash flow 39.1 37.3 5%
Cash conversion (%) 107% 110% (3%)
Net debt 89.0 97.8 9%
Leverage 1.6x 1.9x 16%
Overview
Revenue for the year ended 31 December 2024 was broadly flat at £275.3m. The
high proportion of recurring storage income in our Records Management
business, together with highly contracted services in the other businesses,
continued to underpin overall Group revenue. However, we experienced some
headwinds during 2024, including in particular a slow relocations market for
Harrow Green, weaker sales and operational delivery within our Digital
business, and reduced paper prices in Datashred during the first half.
Together, these offset revenue growth elsewhere in the Group.
Our primary focus in 2024 was to increase profitability and we implemented
several measures during the year which are now delivering enhanced margins. As
a result, adjusted operating margin increased by 170 basis points to 17.7%
(2023: 16.0%), and adjusted operating profit grew 10% to £48.8m (2023:
£44.3m). Active treasury management, through reducing excess cash on hand and
unutilised debt facilities, resulted in lower borrowing costs and has driven
adjusted profit before tax growth of 14% to £34.4m (2023: £30.3m).
On a statutory basis, the Group made a profit before tax of £17.9m (2023:
loss before tax of £29.0m). The loss in the prior year was largely driven by
£36.3m of asset impairments, primarily in Datashred (2024: £nil).
Good cash generation endures as a key quality of the Group, with cash
conversion of 107% for 2024 (2023: 110%) and a free cashflow of £39.1m (2023:
£37.3m). As a result, net debt decreased to £89.0m as at 31 December 2024
(2023: £97.8m), and the leverage ratio reduced to 1.6x from 1.9x in 2023,
towards the bottom of our 1.5x - 2.0x target range.
Income statement
During 2024, we reassessed our operating segments and for the first time are
presenting our results as four divisions. This better represents how we now
manage the businesses within the Group, with each division having a dedicated
Managing Director and senior leadership team. The four divisions are:
Information Management (comprising our Records Management and Digital
businesses); Datashred; Harrow Green; and Technology.
2024 2023 Variance
£m £m %
Information Management
Revenue 167.9 170.1
Adjusted operating profit 45.8 40.9
Adjusted operating margin 27.3% 24.0% 330bps
Datashred
Revenue 36.0 35.9
Adjusted operating profit 3.7 3.1
Adjusted operating margin 10.3% 8.6% 170bps
Harrow Green
Revenue 35.3 40.0
Adjusted operating profit 1.9 4.5
Adjusted operating margin 5.4% 11.3% (590bps)
Technology
Revenue 36.1 31.1
Adjusted operating profit/(loss) 1.8 (1.4)
Adjusted operating margin 5.0% (4.5%) 950bps
Group
Revenue 275.3 277.1
Divisional adjusted operating profit 53.2 47.1
Central (4.4) (2.8)
Adjusted operating profit 48.8 44.3
Adjusted operating margin 17.7% 16.0% 170bps
Revenue
Information Management
Our Records Management business has a base of highly recurring revenues,
primarily from blue-chip and Government customers. Inflationary price rises on
a broadly stable number of boxes (22.3 million as of the end of 2024; 2023:
22.5 million) provided good revenue growth in the year.
However, fewer non-recurring contracts in our Digital business, particularly
in bulk scanning, alongside weaker operational execution resulted in lower
scanning revenue. This was partially offset by recent contract wins with HM
Land Registry and the Office of the Public Guardian for digital mailroom
services, both of which increased activities during 2024, alongside the
existing mailroom contract with HM Revenue & Customs continuing to provide
a solid base of contracted and recurring work. As previously announced, we
also won the mailroom contract for the Department of Work and Pensions, one of
the most significant mailrooms in the UK. This will commence in 2025 and will
largely offset the loss of a significant public sector bulk scanning contract.
Datashred
Datashred service revenues are highly contracted with a good portion of
recurring customers. In the year, both the number of visits and average
collections per vehicle per day increased, leading to a 2% increase in service
revenue. Revenue from paper sales has recently been less predictable; whilst
we consistently collect and shred in excess of 52,000 tonnes, there continues
to be ongoing challenges in recycled paper pricing, with a full year average
selling price in 2024 of £175 per tonne compared to £185 per tonne in 2023.
Prices continued to be depressed in the first half of the year although
normalised in the second half of 2024 towards historical levels. As a result
of these offsetting factors, overall revenue in the division was broadly flat.
Harrow Green
Following a strong 2023, which benefited from the delivery of a significant
contract for a large multinational pharmaceutical firm, Harrow Green had a
tough year in a slow relocations market. We believe that businesses delayed
relocation decisions both ahead of the General Election and while the Autumn
Statement was awaited, and the market continued to be weak through to the end
of the year. As a result, revenue declined £4.7m to £35.3m.
Technology
The global IT sector began to recover in 2024 following a slowdown in 2023 and
the unwinding of a cycle that had been introduced as a result of the COVID
lockdowns and resultant home working. This is now having a knock-on impact of
higher volumes of IT assets for recycling. Technology has also been refocusing
on higher quality customers, which typically have higher quality IT assets,
and the increasing number of customers who are outsourcing their IT lifecycle
services to Value Added Resellers ("VARs"). Technology is partnering with the
leading VARs to provide end of life and mid-life cycle services to a number of
customers including significant Government departments.
Adjusted operating profit
Our primary focus during the year has been on improving margins. In order to
achieve this, we have implemented the following measures:
· revitalisation of the businesses through decentralisation;
· reducing the size of head office, including the support functions;
· within Records Management, linking pricing to RPI/CPI and driving the
ongoing property consolidation programme;
· the integration of Digital and Records Management into our newly
formed Information Management division;
· refocusing our Technology business to higher quality customers and
those outsourcing their IT lifecycle services;
· focusing on operational efficiencies and regaining market share
within Datashred; and
· Harrow Green focusing on the specialist areas of life sciences and
heritage.
Despite revenue in the Group being broadly flat, and some profitability
headwinds as discussed above, these measures started to deliver in the year
and resulted in higher Group profitability overall.
The property consolidation commenced in Spring 2024 with the signing of a
lease for a c100,000 square foot facility in Markham Vale, near Chesterfield,
with a capacity of around 1.2 million boxes. That facility is around half full
as at the end of 2024 having received boxes from sites the Group exited in the
South-East of England, and will continue to be filled over the next two years
as other sites are exited. Towards the end of 2024 we commenced the second
phase of the consolidation and signed a lease on an 84,000 square foot
facility near Durham with a capacity of around 900,000 boxes. This will start
to receive boxes in Spring 2025 from sites we are exiting in the North and
North-East of England during 2025 and 2026. Once both of these two facilities
are full, we will have exited around ten sites in order to fill them and
relocated over two million boxes.
We announced the integration of our Records Management and Digital businesses
into our newly formed Information Management division as part of our interim
results in July 2024. At that time we anticipated that it would cost up to
£3m to complete the integration and would provide the Group with annualised
cost savings of c£3m. I am pleased to report that integration costs are
running slightly under the expected £3m and that as of the end of 2024 we
have been able to implement plans which will achieve the savings anticipated,
some of which we benefited from during 2024. This integration will have been
significantly completed by the end of the first half of 2025.
Central costs represent costs relating to the Board and the head office. We
reduced the size of the head office team at the end of 2023 which has saved
around £1m of annualised costs. However, the inclusion of a charge for
management team bonuses in 2024 (2023: nil) and for share based payments
relating to share schemes in 2024 (which was credit in 2023), resulted in an
overall year on year increase in central costs.
Financing and interest expense
Net debt at 31 December 2024 was £89.0m (2023: £97.8m), with leverage
decreasing from 1.9x to 1.6x.
2021 2022 2023 2024
Net debt (£m) 100.8 103.5 97.8 89.0
Leverage 1.8x 1.7x 1.9x 1.6x
Active treasury management has reduced the interest burden on the Group in the
year. Excess cash on hand has been significantly reduced, and the Group has
established a £10 million overdraft facility to help manage this. In
addition, to save facility fees, £75m of the Rolling Credit Facility ("RCF")
was voluntarily cancelled during the year, decreasing the facility from £200m
to £125m. As a result, and despite some base rate headwinds, interest on
borrowings reduced to £7.9m (2023: £8.9m).
£m 2024 2023
Interest on borrowings 7.9 8.9
Interest on finance lease liabilities(1) 6.2 4.4
Amortisation of deferred finance costs 0.6 0.6
Other finance costs - 0.1
Total finance costs 14.7 14.0
1 Interest on finance lease liabilities increased due to a rise in the
incremental borrowing rates used.
In addition to the RCF, the Group has US Private Placements ("USPP") of £25m
with a fixed term and rate. Total available facilities of £150m is considered
to be ample given the Group's strategy. Should it be needed, the RCF also
includes an accordion which the Group can exercise to increase the facility by
up to a further £25m. The Group has strong relationships with its lenders
should additional facilities be required.
Adjusting items
Due to the nature of certain income or costs, the Directors believe that an
alternative measure of profit before tax and earnings per share provides
readers of the annual report with a useful representation of the Group's
performance that should be considered together with statutory profit and
earnings per share.
The adjusting items in arriving at adjusted profit before tax are as follows:
£m 2024 2023
Asset impairments - 36.3
Amortisation 12.1 12.2
Acquisition transaction costs - 0.2
Restructuring and redundancy 2.1 5.9
Property related costs* 1.5 3.1
Strategic IT organisation 0.8 1.6
Total adjusting items 16.5 59.3
* In 2024 this includes £0.3m presented in finance costs related to dual
running lease liability interest costs
The largest component of adjusting items in 2023 related to asset impairments
of £36.3m. This primarily comprised a £32.5m non-cash impairment of the
goodwill in Datashred following a reassessment of future growth expectations,
and a £3.6m impairment of assets relating to a business exit in the
Technology business. There were no such impairments recorded in 2024.
No material acquisitions were made in 2024 leading to a stable amortisation
charge.
There were significant restructuring costs presented in 2023 which related
primarily to the dual running costs for the changes in Chair, CEO, and CFO,
new management teams in the Technology and Datashred businesses, and a
reduction in the head office team. This restructuring programme was largely
completed in the first quarter of 2024. The bulk of the cost recorded in 2024
relates to the integration of Digital and Records Management into the
Information Management division.
Property related costs in 2024 primarily reflect the cost of relocating boxes
as part of our property consolidation strategy, as well as the dual running
costs incurred whilst we move the boxes. The costs incurred in 2023 related to
the strategic review of the Group's property estate which was conducted in
preparation for the consolidation and primarily related to the crystallisation
of dilapidations provisions on properties that we reassessed as being
non-strategic and therefore likely to exit in the short to medium term.
Investment in the Group's strategic IT programmes relates to a new finance
system implemented in Harrow Green in 2024, and in the former Digital business
and Technology in 2023. These programmes have now been completed.
Following these adjusting items, the Group made a statutory profit before tax
of £17.9m (2023: statutory loss before tax of £29.0m).
Earnings per share
2024 2023
Weighted average number of shares in issues 136,129,425 136,580,425
Weighted average fully diluted number of shares in issue 137,698,973 137,302,753
Adjusted profit before tax (£m) 34.4 30.3
Tax at 25% (2023: 23.5%) (£'m) (8.6) (7.1)
Adjusted profit after tax (£m) 25.8 23.2
Adjusted basic earnings per share 19.0p 17.0p
Adjusted fully diluted earnings per share 18.7p 16.9p
Adjusted basic earnings per share is calculated by reference to the adjusted
profit before tax for the year with a standard tax charge applied, divided by
the weighted average number of shares in issue during the year.
Adjusted fully diluted earnings per share is calculated by reference to the
adjusted profit before tax for the year with a standard tax charge applied,
divided by the weighted average fully diluted number of shares in issue.
The 12% increase in adjusted basic earnings per share to 19.0 pence (2023:
17.0 pence) resulted primarily from a 11% increase in adjusted profit after
tax plus a slight decrease in the weighted average number of shares.
Statutory basic profit and diluted profit per share were 9.1 pence and 9.0
pence respectively.
Taxation
The tax charge for the year is £5.5m (2023: £1.7m).
Cashflow
Cash generation endures as a key quality of Restore and in 2024 the Group
generated free cashflow before financing costs of £39.1m (2023: £37.3m).
Net cash generated from operating activities improved to £58.5m from £47.8m
in 2023, with cash conversion at 107% (2023: 110%).
Capital allocation
The focus during 2024 has been to improve operational performance across the
Group, deleverage the balance sheet and maintain shareholder returns. Whilst
we are yet to achieve our target profitability, margins have improved and
there is momentum in the business for further improvement in 2025 and beyond.
We have previously stated a preferred leverage range of between 1.5x and 2x
adjusted EBITDA; the Group started the year with leverage of 1.9x and finished
the year with 1.6x. We are therefore refining our capital allocation framework
as follows:
1. Invest for growth:
· invest in the business where it accelerates progress and will
deliver attractive returns; and
· target value accretive acquisitions in our core business or
adjacent areas.
2. Deliver shareholder returns:
· maintain a progressive dividend policy, with consistent dividend
cover; and
· consider return of surplus capital to shareholders in the form of
share buybacks.
3. Maintain a strong balance sheet with target leverage ratio over the
medium term of 1.5 - 2.0 x net debt to adjusted EBITDA.
Statement of Financial Position
The Group remains in a strong financial position. Working capital management
continues to be a strength of the business, with debt ageing broadly
consistent at 53 days and total equity increasing to £233.8m (2023 restated:
£229.9m). Whilst we manage our cash balances on a Group basis, we have
separately presented our cash and overdraft balances on the Statement of
Financial Position to align with recent FRC guidance.
The strength of the Statement of Financial Position is indicative of the
overall good health of the business and provides substantial capacity to
support future growth and investment requirements.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group considers the following risks to be their principal risks; each are
aligned to its strategy. They are regularly reviewed and mitigated through
targeted investment, proactive actions, and continuous improvement.
Risk Mitigation
Organic growth · Integration of the former Records Management and Digital
businesses into the Information Management division, improving the Group's
offering to its customers and adding enhanced focus to its scanning
activities.
Failure of the business to grow in line with forecasts and investor
expectations, particularly in the scanning and relocations businesses which · New management team in Technology with a revised operating model
have had a challenging 2024. that is fit for purpose and a strategy that has markedly improved
profitability.
· Focus on driving growth and improving operational efficiency and
profitability in Datashred, including expanding into adjacent service
offerings and innovative strategies to mitigate the negative impact of a
lower-than-expected paper price.
· Successful execution of margin enhancement strategies, including
right sizing the Group's cost base, implementing supportable price increases
and the ongoing property consolidation programme. These strategies will also
allow the Group to somewhat mitigate the significant impact of the National
Insurance increases delivered in the Autumn Statement going forward.
· Monthly re-forecasting of profit and cash across all businesses
to ensure performance is regularly tracked against investor expectations and
market consensus.
Systems, technology, data and cyber defence failure · A Group IT strategy is in place with appropriate investment plans
to mitigate material operational and cyber risk. This includes a focus on the
protection of the Group's systems against unauthorised access, viruses,
malware, and spyware.
Failure or loss of systems, operational technology or cyber defence results in
business interruption for Restore, loss of service and potential data · Enhancement of training across the Group to increase awareness of
breaches, impacting customers as well as revenues and business reputation for the key risks, this has also included using realistic phishing simulations to
Restore. identify vulnerabilities in the Group.
· The Group IT strategy is in line with the National Cyber Security
Centre ("NCSC") cyber security guidelines with Cyber Essential Plus
certifications achieved across all businesses.
· Disaster recovery and business continuity plans are in place and
tested for each site and as required for the Group's IT platforms.
· There is now comprehensive cyber and professional indemnity
insurance in place across the entire Group.
· Detailed data protection policies and procedures are in place to
mitigate the risk of significant data incidents in the Group alongside
enhanced levels of training and awareness across the Group.
Workforce health, safety and wellbeing · There are clear policies in place across the Group covering a
wide range of key health, safety, and wellbeing risks: health and safety, fire
prevention, wellbeing, stress, safe driving, drugs, and alcohol.
Any loss of life, injury, mental health issues, are all of serious concern to · Governance of the risk has been strengthened with the appointment
Restore and will impact Restore's reputation, workforce morale and financial of a Group Head of Health and Safety during the year whose role is to drive
consistency and best practice across the Group.
performance.
· There continues to be a holistic approach to driver and vehicle
risk management. There is a well-maintained fleet that is fit for purpose,
with driving risk management systems conducting licence checks and driver
assessments alongside extensive telematic data.
· The Group has committed to a new health and safety system that
will be fully implemented in 2025. This system will significantly improve
incident reporting, allowing extensive root cause analysis and benchmarking of
performance across the Group.
Property - extent, complexity, and suitability of the Group's property · There is an acute focus and strong governance surrounding the
portfolio Group's property risk with a regular Property Committee meeting in place with
the Chair (who has real estate expertise), CEO, CFO, MD of the Information
Management division, and the Group Property Director.
Property is the Group's second largest cost, and the property network is a key · There has been strategic consideration and progress with the
enabler of business efficiency. Damage to property or inefficient utilisation execution of site consolidation opportunities to support the Group's strategy
of margin optimisation (to counter cost headwinds) and expansion strategies.
impacts customer service, whilst headwinds of unforeseen dilapidation, rents
and rates increase costs. · The management-led Property Working forum, chaired by the Group
Property Director and sponsored by the CFO, also continues with representation
from operations, facilities, finance and health and safety.
Staff recruitment and retention resulting in insufficient resources to meet · A decentralisation of the people team has led to further
objectives empowerment and collaboration and has given the people leaders the ability to
manage business specific issues more directly.
· The "Your Say" survey has provided valuable data and insight into
Potential difficulties in expansion of resources or the views of the people within the Group. Each business is preparing a
specific action plan to address the points raised and any improvements that
loss of operational staff and management makes it harder to deliver an are required.
effective and efficient
· The people leadership programme is on-going to further augment
business customer service experience. leadership talent and support succession planning.
· The Group has improved access to support benefits following a
benefits platform review, focusing on those benefits that people need and
want.
Environment - impact of climate-related matters · The net zero commitments made by the Group are subject to annual
review by the ESG Committee. Changes will be made, if required, in line with
the SBTi Corporate Net Zero standard, to ensure the Group's journey to meet
net zero is credible.
The Group's climate-related commitments are challenging and will require the
appropriate · Each business has developed a comprehensive fleet decarbonisation
roadmap, employing strategic levers including both the electrification of the
decarbonisation of its fleet and the ability to work with its value chain to fleet where possible and the use of alternative fuels where this is not yet
reduce emissions both upstream and downstream. There is a reputational, and possible.
potentially commercial, risk to the Group from not meeting these commitments. · Electricity at 93% of the Group's sites is now backed by a REGO
contract, with all directly procured electricity now renewable.
· The Group now has a fully quantified carbon footprint which
allows us to understand the full scope of its emissions and the levers in
place with which to manage this.
Financial · The Group's RCF is provided by a broad and supportive banking
syndicate with a credit facility of up to £125m in place until April 2027.
· There is also a portion of fixed rate debt in the Group's debt
Ongoing macro-economic instability could lead to pressure on the Group's profile with £25m of US private placement debt in place until 2028 at a fixed
financial covenants through volatile interest rates, increasing level of term and rate.
inflationary costs, restricted access to future liquidity and enhanced credit
risk as customers face their own · The Group operates well within borrowing covenants with monthly
reviews of cashflow forecasts and forecast covenant compliance.
challenges to the instability.
· Credit risk is assessed by the businesses at the time of
onboarding customers and then subsequently on a monthly basis.
Consolidated statement of comprehensive income
For the year ended 31 December 2024
Year ended Year ended
31 December 31 December
2024 2023
Note £'m £'m
Revenue - continuing operations 2 275.3 277.1
Cost of sales 2 (152.8) (160.7)
Gross profit 2 122.5 116.4
Administrative expenses (89.8) (94.4)
Movement in trade receivables loss allowance (0.1) (0.7)
Impairment of non-current assets - (36.3)
Operating profit/(loss) 32.6 (15.0)
Finance costs (14.7) (14.0)
Profit/(loss) before tax 17.9 (29.0)
Taxation 4 (5.5) (1.7)
Profit/(loss) after tax 12.4 (30.7)
Other comprehensive income/(loss) 0.1 (0.1)
Total comprehensive income/(loss) for the year from continuing operations and 12.5 (30.8)
profit/(loss) attributable to owners of the parent
Earnings/(loss) per share attributable to owners of the parent (pence) 5
Total - basic 9.1p (22.5)p
Total - diluted 9.0p (22.5)p
The reconciliation between the statutory results shown above and the non-GAAP
adjusted measures are shown below:
Year ended Year ended
31 December 31 December
2024 2023
Note £'m £'m
Operating profit/(loss) 32.6 (15.0)
Adjusting items - administrative expenses 3 4.1 10.8
Adjusting items - amortisation of intangible assets 3 12.1 12.2
Adjusting items - impairment 3 - 36.3
Total adjusting items 16.2 59.3
Adjusted operating profit 48.8 44.3
48.8 44.3
Adjusted operating profit
Tax at 25% (2023: 23.5%) (12.2) (10.4)
NOPAT (Net operating profit after tax) 36.6 33.9
17.9 (29.0)
Profit/(loss) before tax
Adjusting items - operating costs (as stated above) 16.2 59.3
Adjusting items - finance costs 3 0.3 -
Adjusted profit before tax 34.4 30.3
Consolidated statement of financial position
At 31 December 2024
Company registered no. 05169780
31 December 31 December 31 December
2024 2023 2022
Restated* Restated*
£'m £'m £'m
Note
ASSETS
Non-current assets
Intangible assets 7 274.4 284.7 331.9
Property, plant and equipment 83.1 79.4 79.7
Right of use assets 125.6 112.2 113.7
Other receivables 4.6 5.2 5.1
487.7 481.5 530.4
Current assets
Inventories 1.3 1.5 2.0
Trade and other receivables 56.5 63.1 64.9
Cash and cash equivalents 8.0 22.7 30.2
Current tax assets 0.2 1.2 -
66.0 88.5 97.1
Total assets 553.7 570.0 627.5
LIABILITIES
Current liabilities
Trade and other payables (40.5) (44.9) (49.1)
Financial liabilities - borrowings 9 (3.2) - -
Financial liabilities - lease liabilities (19.3) (20.6) (18.9)
Current tax liabilities - - (1.6)
Derivative liability - (0.1) -
Provisions 10 (3.9) (4.4) (1.7)
(66.9) (70.0) (71.3)
Non-current liabilities
Financial liabilities - borrowings 9 (93.8) (120.5) (133.7)
Financial liabilities - lease liabilities (120.7) (105.7) (105.1)
Deferred tax liability (28.7) (29.3) (30.9)
Provisions 10 (9.6) (14.2) (15.4)
Other payables (0.2) (0.4) (0.1)
(253.0) (270.1) (285.2)
Total liabilities (319.9) (340.1) (356.5)
Net assets 233.8 229.9 271.0
EQUITY
Share capital 6.8 6.8 6.8
Share premium 187.9 187.9 187.9
Other reserves (0.5) 3.7 6.9
Retained earnings 39.6 31.5 69.4
Total equity 233.8 229.9 271.0
*Refer to Note 1 for details of the restatement
Consolidated statement of changes in equity
For the year ended 31 December 2024
Attributable to owners of the parent
Share Share premium Other reserves Retained Total
capital £'m £'m earnings equity
£'m £'m £'m
Balance at 1 January 2023 (as previously stated) 6.8 187.9 6.9 71.6 273.2
Restatement (refer to note 1) - - - (2.2) (2.2)
Balance at 1 January 2023 (restated) 6.8 187.9 6.9 69.4 271.0
Loss for the year - - - (30.7) (30.7)
Other comprehensive loss for the year - - (0.1) - (0.1)
Total comprehensive loss for the year - - (0.1) (30.7) (30.8)
Transactions with owners:
Dividends - - - (9.1) (9.1)
Share-based payments - - (0.5) - (0.5)
Deferred tax on share-based payments - - (0.2) - (0.2)
Transfer* - - (3.3) 3.3 -
Purchase of treasury shares - - (0.6) - (0.6)
Disposal of treasury shares - - 1.5 (1.4) 0.1
Balance at 31 December 2023 (restated) 6.8 187.9 3.7 31.5 229.9
Balance at 1 January 2024 6.8 187.9 3.7 31.5 229.9
Profit for the year - - - 12.4 12.4
Other comprehensive income for the year - - 0.1 - 0.1
Total comprehensive income for the year - - 0.1 12.4 12.5
Transactions with owners:
Dividends - - - (7.3) (7.3)
Share-based payments - - 1.3 - 1.3
Transfer* - - (3.2) 3.2 -
Purchase of treasury shares - - (2.6) - (2.6)
Disposal of treasury shares - - 0.2 (0.2) -
Balance at 31 December 2024 6.8 187.9 (0.5) 39.6 233.8
* In 2024 a net amount of £3.2m (2023: £3.3m) was reclassified from the
share-based payments reserve to retained earnings in respect of lapsed and
exercised options.
Consolidated statement of cash flows
For the year ended 31 December 2024
Year ended Year ended
31 December 31 December
2024 2023
Note £'m £'m
Cash generated from operating activities 8 78.1 66.9
Net finance costs (14.5) (12.8)
Income taxes paid (5.1) (6.3)
Net cash generated from operating activities 58.5 47.8
Cash flows used in investing activities
Purchase of property, plant and equipment and applications software IT (15.2) (10.3)
Proceeds from sale of property, plant and equipment 0.1 -
Purchase of subsidiary undertakings, net of cash acquired - (1.3)
Purchase of trade and assets 7 (0.5) (0.4)
Net cash used in investing activities (15.6) (12.0)
Cash flows used in financing activities
Dividends paid (7.3) (9.1)
Purchase of treasury shares (2.6) (0.6)
Proceeds from disposal of treasury shares - 0.1
Repayment of revolving credit facility (27.0) (48.0)
Drawdown of revolving credit facility - 10.0
Drawdown of US Private Placement notes facility - 25.0
Lease principal repayments (23.9) (20.7)
Net cash used in financing activities (60.8) (43.3)
Net decrease in cash and cash equivalents (17.9) (7.5)
Cash and cash equivalents at start of year 22.7 30.2
Cash and cash equivalents at end of year* 4.8 22.7
* Cash and cash equivalents at end of year include overdraft of £3.2m
(2023: nil) (refer to note 9).
A reconciliation between the statutory results above and the non-GAAP cashflow
measures is shown below:
Year ended Year ended
31 December 31 December
2024 2023
£'m £'m
Cash generated from operating activities 78.1 66.9
Income taxes paid (5.1) (6.3)
Purchase of property, plant and equipment and applications software IT (15.2) (10.3)
Lease principal repayments (23.9) (20.7)
Add back: Cash impact of adjusting items - administrative expenses 5.2 7.7
Free cashflow 39.1 37.3
NOPAT (Net operating profit after tax) 36.6 33.9
Cash conversion 107% 110%
Notes to the preliminary financial information
For the year ended 31 December 2024
1. General information
Basis of preparation
The financial information in this preliminary announcement has been extracted
from the audited consolidated financial statements for the year ended 31
December 2024 and does not constitute the Group's statutory accounts for the
years ended 31 December 2024 or 2023 within the meaning of s435 of the
Companies Act 2006.
The Group's statutory accounts for the year ended 31 December 2023 have been
filed with the Registrar of Companies, and those for 2024 will be delivered
following the Company's Annual General Meeting. The Auditor has reported on
the statutory accounts for 2024 and 2023. Their report for 2024 and 2023 was
(i) unqualified, (ii) included no matters to which the auditor drew attention
by way of emphasis and (iii) did not contain statements under Sections 498 (2)
or 498 (3) of the Companies Act 2006 in relation to the financial statements.
The consolidated financial statements of the Group have been prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006.
The consolidated financial statements have been prepared on a historical cost
basis, except for certain financial assets and liabilities and share options
which are held at fair value. The accounting policies have been consistently
applied, other than where new policies have been adopted. The preparation of
financial statements in conformity with IFRS requires the use of certain
accounting estimates. It also requires management to exercise its judgement in
the process of applying the Group's accounting policies. The consolidated
financial statements are presented in pounds sterling and, unless stated
otherwise, shown in pounds million to one decimal place.
Going concern
The Group meets its day-to-day working capital requirements through its
financing facilities and the cash generated through its earnings. Details of
the Group's borrowing facilities are given in note 9. The Directors have a
reasonable expectation that the Group has adequate resources to continue in
operational existence for a period of at least 12 months from the approval
date of the consolidated financial statements. Thus, they continue to adopt
the going concern basis of accounting in preparing the consolidated financial
statements.
In making this assessment, the Directors have considered the financing
arrangements available to the Group and the Group's cashflow forecasts through
to 30 June 2026, taking into account severe but plausible downside trading
scenarios involving a reduction to non-recurring income streams. The
Directors' assessment includes reviewing the level of liquidity headroom and
financial covenant compliance headroom over the period in review, including in
the downside scenarios modelled. The Group's budget for 2025 and forecasts for
2026 show that the Group is expected to operate within the level of its
current facilities under the base case and severe but plausible downside
trading scenarios during the going concern period.
Prior year restatement
In 2024 it was noted that a small number of leases had not been appropriately
recorded in prior periods. The right of use assets and lease liabilities have
therefore been restated as at 31 December 2023 to appropriately record these
transactions. There is no profit impact to the reported 2023 numbers as the
adjustments relate to preceding periods.
As reported Impact of restatement Restated
31 December 31 December 31 December
2023 2023 2023
£m £m £m
Non-current assets
Right of use assets 91.6 20.6 112.2
Current liabilities
Lease liabilities (18.6) (2.0) (20.6)
Non-current liabilities
Lease liabilities (84.9) (20.8) (105.7)
Equity
Retained earnings 33.7 (2.2) 31.5
The restatement did not result in any change to reported profit, earnings per
share or cash flows reported in 2023.
The impact on the opening Consolidated statement of financial position as at 1
January 2023 has been restated as follows:
As reported Impact of restatement Restated
31 December 31 December 31 December
2022 2022 2022
£m £m £m
Non-current assets
Right of use assets 106.8 6.9 113.7
Current liabilities
Lease liabilities (19.2) 0.3 (18.9)
Non-current liabilities
Lease liabilities (95.7) (9.4) (105.1)
Equity
Retained earnings 71.6 (2.2) 69.4
Adoption of new and revised standards
The following new standards and amendments to standards were effective for the
first time during the financial year: Classification of Liabilities as Current
or Non-Current (Amendments to IAS 1), Lease Liability in a Sale and Leaseback
(Amendments to IFRS 16), Non-Current Liabilities with Covenants (Amendments to
IAS 1), Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7). These
new standards and amendments to standards did not have a material effect on
the financial statements.
2. Segmental analysis
Following the integration of the Digital and Records Management businesses
into the Information Management division the Group has the following four
segments: Information Management; Datashred; Harrow Green; and Technology. The
vast majority of the trading of the Group is undertaken within the United
Kingdom. Segment assets include intangible assets, property, plant and
equipment, right of use assets, inventories, receivables and operating cash.
Central assets include deferred tax and head office assets. Segment
liabilities comprise operating liabilities. Central liabilities include income
tax and deferred tax, corporate borrowings and head office liabilities.
Capital expenditure comprises additions to computer software, property, plant
and equipment and includes additions resulting from acquisitions through
business combinations. Segment assets and liabilities are allocated between
segments on an actual basis.
Revenue and segmental information
The revenue from external customers was derived from the Group's principal
activities primarily in the UK (where the Company is domiciled) as follows:
Revenue - continuing operations 2024 2023
£'m £'m
Information Management 167.9 170.1
Datashred 36.0 35.9
Harrow Green 35.3 40.0
Technology 36.1 31.1
Total revenue 275.3 277.1
For the year ended 31 December 2024 no customers individually accounted for
more than 3% (2023: 3%) of the Group's total revenue.
The Group had sales of goods of £31.6m (2023: £27.4m) relating to the sale
of recycled paper and recycled IT assets. The remainder of revenue relates
to the sales of services.
Segmental information
2024 Datashred Harrow Green Technology 31 December
£'m £'m £'m 2024
Information Total
Management Central £'m
£'m £'m
Revenue 167.9 36.0 35.3 36.1 - 275.3
Cost of sales (84.0) (21.1) (24.5) (23.2) - (152.8)
Gross profit 83.9 14.9 10.8 12.9 - 122.5
Adjusted operating profit/(loss) 45.8 3.7 1.9 1.8 (4.4) 48.8
Adjusted operating margin 27.3% 10.3% 5.4% 5.0% - 17.7%
Adjusting items (4.2) (0.3) (0.1) (0.3) (11.3) (16.2)
Operating profit/(loss) 41.6 3.4 1.8 1.5 (15.7) 32.6
Finance costs (14.7)
Profit before tax 17.9
2023 (restated) Datashred Harrow Green Technology 31 December
£'m £'m £'m 2023
Information Total
Management Central £'m
£'m £'m
Revenue 170.1 35.9 40.0 31.1 - 277.1
Cost of sales (91.1) (21.8) (26.6) (21.2) - (160.7)
Gross profit 79.0 14.1 13.4 9.9 - 116.4
Adjusted operating profit/(loss) 40.9 3.1 4.5 (1.4) (2.8) 44.3
Adjusted operating margin 24.0% 8.6% 11.3% (4.5%) - 16.0%
Adjusting items (5.7) (0.6) (0.2) (0.4) (52.4) (59.3)
Operating profit/(loss) 35.2 2.5 4.3 (1.8) (55.2) (15.0)
Finance costs (14.0)
Profit before tax (29.0)
The prior year balances in the segmental information table above have been
restated to ensure consistent presentation with the disclosures in 2024.
2024 Information Management Datashred Harrow Green 31 December
£'m
£'m
£'m
2024
Total
Technology Central
£'m
£'m £'m
Segment assets 429.1 37.9 31.8 43.5 11.4 553.7
Segment liabilities 135.9 23.7 19.0 11.2 130.1 319.9
Capital expenditure 12.6 0.7 0.7 1.2 - 15.2
Depreciation and amortisation 25.4 4.6 3.0 1.7 11.0 45.7
Impairment - - - - - -
Information Management Datashred Harrow Green 31 December
£'m
£'m
£'m
2023
Total
Technology Central
£'m
£'m £'m
2023 (restated)
Segment assets 433.1 34.1 36.9 46.2 19.7 570.0
Segment liabilities 126.0 19.5 22.8 11.7 160.1 340.1
Capital expenditure 8.4 0.8 0.6 0.4 0.1 10.3
Depreciation and amortisation 24.8 4.2 2.7 1.9 11.4 45.0
Impairment 0.1 - - 0.1 36.1 36.3
The prior year balances in the segmental information table above have been
restated to ensure consistent presentation with the disclosures in 2024 and to
take into account the relevant adjustments in note 1.
The impairment of goodwill and customer relationships and the amortisation of
acquired intangible assets have been recorded centrally.
3. Adjusting items
Management believe it is useful to provide readers of the financial statements
with alternative performance measures ("APMs") that describe the performance
of the Group before the effects of significant costs or income that are
considered to be distorting due to their nature or size, and non-cash
amortisation primarily arising from acquired intangible assets.
Adjustments made from statutory measures to adjusted measures are referred to
as adjusting items within the financial statements and include impairments,
amortisation, expenses associated with acquisitions and subsequent integration
costs, costs associated with major restructuring programmes, and other
significant costs and credits that are considered to be distorting due to
their nature when assessing the performance of the business. The Group's
adjusting items are set out below:
2024 2023
£'m £'m
Amortisation 12.1 12.2
Restructuring and redundancy 2.1 5.9
Property related costs(1) 1.5 3.1
Strategic IT reorganisation 0.8 1.6
Impairments - 36.3
Acquisition transaction costs - 0.2
Total adjusting items 16.5 59.3
1 'Adjusting items - finance costs' of £0.3m related to dual running lease
liability interest costs are included in property related costs.
Amortisation
The amortisation charge primarily relates to acquired intangible assets
arising from business combinations in prior years alongside a charge relating
to the amortisation of software. Given the overall quantum of the amortisation
charge and its non-cash nature, this cost is adjusted for in deriving the
Group's alternative performance measures. For transparency, we note that the
Group does not similarly adjust for the related revenue and profits generated
from its business combinations in its alternative profit measures.
Restructuring and redundancy
The restructuring and redundancy costs relate primarily to the actions
implemented to improve the operational efficiency and profitability of the
Digital business, including the restructure of two sites and the integration
of Digital and Records Management into the Information Management division
(£1.4m), and the finalisation of the Group-wide organisational restructuring
and "right-sizing" programme, which was ongoing across the Group throughout
2023 and continued into 2024 (£0.7m) (2023: £4.7m). The restructuring of the
Digital business will continue into 2025. In 2023, £1.2m also related to the
incremental costs that were incurred from the senior management changes during
the year. Future cost savings are expected from some of the restructuring
activity during the year, however, for transparency we note that these cost
savings will not be adjusted for in deriving the Group's alternative
performance measures.
Property related costs
A strategic consolidation of the Group's property estate is ongoing. During
2024, £2.6m has been incurred in relation to the cost of relocating boxes as
part of this property consolidation programme, as well as the dual running
costs incurred whilst we move the boxes. These costs are partially offset by a
£1.1m release of dilapidation provisions following a change in the nature of
some of the sites assessed under the strategic review conducted in 2023. In
2023, incremental dilapidation costs of £3.1m were recognised reflecting
costs that were expected to crystalise in the future following the strategic
review of the Group's property portfolio.
Strategic IT reorganisation
In 2024 the Group completed it multi-year programme to deliver cloud-based
strategic IT programmes, particularly in relation to its financial systems.
The implementation costs associated with these system transformations were
expensed to the income statement as incurred, with the in-year cost of these
programmes being £0.8m for 2024 (2023: £1.6m). Future cost savings are
expected from these systems implementations, however, for transparency we note
that these cost savings will not be adjusted for in deriving the Group's
alternative performance measures.
Impairment
There are no impairment charges recorded in 2024. The non-cash impairment
charge in 2023 related primarily to an impairment of goodwill in the Datashred
CGU (£32.5m) resulting from reduced expectations on service activity, paper
volumes and recycled paper pricing. In addition to this, there was a £3.6m
million impairment in the Technology CGU following a business exit, this
comprised the impairment of customer relationship related intangible assets
(£3.4m) and right-of-use assets (£0.2m).
The Group's APMs are summarised below:
APMs Description
Adjusted operating profit Calculated as statutory operating profit before adjusting items.
Net operating profit after tax ('NOPAT') Calculated as adjusted operating profit with a standard tax charge applied.
APM used for calculation of cash conversion.
Adjusted EBITDA Calculated as EBITDA before IFRS 16 and share-based payments. APM used for
calculation of leverage, in line with the calculation of financial debt
covenants.
Adjusted profit before tax Calculated as statutory profit before tax and adjusting items.
Adjusted basic earnings per share Calculated as adjusted profit before tax with a standard tax charge applied,
divided by the weighted average number of shares in issue.
Adjusted fully diluted earnings per share Calculated as adjusted profit before tax with a standard tax charge applied,
divided by the weighted average fully diluted number of shares in issue.
Net debt Calculated as external borrowings less cash, excluding the effects of lease
obligations under IFRS 16.
Leverage Calculated as adjusted EBITDA divided by net debt, including a pro-forma
adjustment to EBITDA for acquisitions in line with financial debt covenants.
Free cashflow Calculated as cash generated from operations less income taxes paid, capital
expenditure and lease payments, but before the cash impact of adjusting items
Cash conversion Calculated as free cashflow divided by NOPAT
The Group's APMs should be considered as supplementary to statutory measures
and readers of the accounts should note the limitations of the measures and
that they are not comparable across companies.
4. Taxation
2024 2023
£'m £'m
Current tax:
UK corporation tax on profit/(loss) for the year 6.4 3.7
Adjustment in respect of previous years (0.3) (0.2)
Total current tax 6.1 3.5
Deferred tax:
Current year decrease in deferred tax - (1.7)
Adjustment in respect of previous years (0.6) (0.1)
Total deferred tax (0.6) (1.8)
Total tax charge 5.5 1.7
The charge for the year can be reconciled to the profit/(loss) in the
Consolidated statement of comprehensive income as follows:
2024 2023
£'m £'m
Profit/(loss) before tax 17.9 (29.0)
Profit/(loss) before tax multiplied by the rate of corporation tax of 25% (6.8)
(2023: 23.5%)
4.5
Effects of:
Expenses not deductible 1.4 0.4
Adjustment in respect of previous years (0.9) (0.3)
Goodwill impairment - 7.7
Share-based payments 0.2 0.7
Other differences 0.3 -
Tax charge 5.5 1.7
5. Earnings/(loss) per share attributable to owners of the parent
Basic earnings/(loss) per share have been calculated on the profit/(loss) for
the year after taxation and the weighted average number of ordinary shares in
issue during the year.
2024 2023
Total profit/(loss) for the year (£m) 12.4 (30.7)
Total basic earnings/(loss) per share (pence) 9.1 (22.5)
Weighted average number of shares in issue 136,129,425 136,580,425
Dilutive options (number) 1,569,548 722,328
Weighted average fully diluted number of shares in issue 137,698,973 137,302,753
Total fully diluted earnings/(loss) per share (pence) 9.0 (22.5)
Adjusted earnings per share
The Directors believe that adjusted earnings per share provides a more
appropriate representation of the underlying earnings derived from the Group's
business. The adjusting items are shown in the table below:
2024 2023
£'m £'m
Profit/(loss) before tax 17.9 (29.0)
Adjusting items - amortisation of intangible assets 12.1 12.2
Adjusting items - administrative expenses 4.1 10.8
Adjusting items - impairment - 36.3
Adjusting items - finance costs 0.3 -
Adjusted profit before tax 34.4 30.3
The adjusted earnings per share and adjusted fully diluted earnings per share,
based on the weighted average number of shares in issue during the year of
136.1m (2023: 136.6m) and weighted average fully diluted number of shares in
issue during the year of 137.7m (2023: 137.3m) respectively, are calculated
below using a standard tax charge:
2024 2023
Adjusted profit before tax (£'m) 34.4 30.3
Tax at 25% (2023: 23.5%) (£'m) (8.6) (7.1)
Adjusted profit after tax (£'m) 25.8 23.2
Adjusted basic earnings per share (pence) 19.0 17.0
Adjusted fully diluted earnings per share (pence) 18.7 16.9
6. Dividends
The Directors recommend a final dividend of 3.8p per share for the year ended
31 December 2024 (2023: 3.35p per share) to give a full year dividend of 5.8p
per share (2023: 5.2p). The aggregate amount of the proposed dividend expected
to be paid on 18 July 2025 out of retained earnings at 31 December 2024, but
not recognised as a liability at year end is £5.2m. An interim dividend of
2.0p was paid during the year (2023: 1.85p).
7. Intangible Assets
Goodwill Customer relationships Trade Applications software IT Total
£'m
£'m
names
£'m
£'m
£'m
Cost
1 January 2023 219.1 177.9 4.3 10.7 412.0
Additions - 0.4 - 0.6 1.0
Disposals - - - (0.2) (0.2)
31 December 2023 219.1 178.3 4.3 11.1 412.8
Additions - 0.5 - 1.3 1.8
31 December 2024 219.1 178.8 4.3 12.4 414.6
Accumulation amortisation and impairment
1 January 2023 17.6 53.0 3.0 6.5 80.1
Charge for the year - 10.8 0.2 1.2 12.2
Disposals - - - (0.2) (0.2)
Impairment 32.5 3.5 - - 36.0
31 December 2023 50.1 67.3 3.2 7.5 128.1
Charge for the year - 10.2 0.1 1.8 12.1
31 December 2024 50.1 77.5 3.3 9.3 140.2
Carrying amount
31 December 2024 169.0 101.3 1.0 3.1 274.4
31 December 2023 169.0 111.0 1.1 3.6 284.7
Annual test for impairment
Goodwill is tested annually for impairment, or more frequently if there are
indicators that an impairment may be required. For the purposes of impairment
testing, goodwill, other intangible assets, property, plant and equipment and
right of use assets are allocated to cash-generating units ("CGUs") which
represent the smallest identifiable group of assets that generates cash
inflows from continuing use. Despite the integration of the Digital and
Records Management businesses into the Information Management division in
2024, they remain separate CGUs at 31 December 2024 since they still represent
the smallest identifiable groups of assets that generate largely independent
cash inflows. The recoverable amount of each CGU is determined from
value-in-use calculations. The calculations use pre-tax cash flow projections
based on financial budgets and forecasts approved by the Directors.
As at 31 December 2024, an impairment review was conducted over the carrying
values of each the CGUs including downside scenario modelling, which indicated
that no impairment was required. The model utilised forecasts based upon the
Group's FY25 budget and 5 year-plan through to FY29. Terminal cash flows are
based on the Group's FY29 projections assumed to grow perpetually at 2%. In
accordance with IAS 36, the growth rates for beyond the initially forecast
years do not exceed the long-term average growth rate for the industry. The
forecasts have been discounted using a pre-tax discount rate specific to each
CGU ranging from 11.9%-12.5% (2023: 11.9%-12.5%).
A summary of the management's base case value-in-use calculation, including
key assumptions, is set out below:
Base case value in use calculation summary
NPV of
terminal
FY24 to FY29 year
FY24 to FY29 EBIT FY24 to FY29 cashflows
revenue compound EBIT margin into
compound annual growth (bps) Headroom perpetuity
annual growth Carrying as % as % of
growth rate rate value of of asset value-in-use
(%) (%) Discount assets Headroom carrying calculation
rate (%) (£'m) (£'m) value (%) (%)
Records Management 2.8% 3.3% 80 11.9% 340.9 204.5 60.0% 57.0%
Digital 2.0% 20.4% 860 12.1% 53.9 6.0 11.1% 67.2%
Datashred 4.0% 8.8% 230 12.4% 30.0 22.5 75.0% 48.7%
Harrow Green 4.6% 25.2% 590 12.1% 22.2 22.7 102.3% 53.0%
Technology 6.8% 34.2% 890 12.5% 36.1 15.0 41.4% 66.6%
Climate related matters
The Group monitors climate-related risks and opportunities and has considered
the potential impact of climate change on the impairment review conducted.
Based on our assessment of climate-related risks likely to emerge, we do not
expect these risks to drive a significant downturn in cashflows across the
Group. Therefore, there are no overriding changes to key assumptions built
into the forecasts and no specific sensitivities relating to climate change
are considered necessary over and above the sensitivities performed below.
Sensitivity
A number of sensitivities have been modelled to highlight the way in which
changes in trading and/or market conditions affect the value-in-use
calculations. The table below highlights the sensitivity of the value-in-use
calculations to changes in forecast cashflows and the discount rate.
In the Records Management, Harrow Green and Datashred CGUs, the Group have not
identified any reasonably possible changes that would result in an impairment.
Across the remaining CGUs, there are considered to be some reasonably possible
scenarios which could result in an impairment. A summary of the sensitivity
analysis performed covering Digital and Technology is summarised below:
Headroom/
Revenue (Impairment)
reduction FY24 to FY29 as % of
assuming revenue carrying
gross margin compound Headroom/ value
in line with annual growth (impairment) (%)
plan (%) rate (%) (£'m)
Digital (2%) 1.6% 2.1 4.0%
(3%) 1.4% 0.2 0.3%
(4%) 1.2% (1.8) (3.3%)
Technology (9%) 4.8% 0.4 1.0%
(10%) 4.5% (1.3) (3.5%)
(11%) 4.3% (2.9) (8.0%)
Headroom/
EBIT FY24 to FY29 Headroom/ (impairment)
reduction EBIT margin (impairment) as % of
(%) growth (bps) (£'m) carrying value
(%)
Digital (9%) 720 0.4 0.8%
(10%) 710 (0.2) (0.4%)
(11%) 690 (0.8) (1.6%)
Technology (25%) 570 2.0 5.6%
(30%) 500 (0.5) (1.5%)
(35%) 430 (3.1) (8.7%)
Discount rate Headroom/ Headroom/(impairment)
increase (impairment) as % of carrying value (%)
(£'m)
Digital 1% 0.3 0.5%
2% (4.5) (8.4%)
3% (8.6) (15.9%)
Technology 3% 2.8 7.7%
4% (0.2) (0.4%)
5% (2.7) (7.5%)
Digital
The drop in Digital's revenue and profitability in FY24 was driven by a slower
period of public sector activity linked to the change in Government and
subsequent uncertainty around the Autumn Statement. Given that c30% of
Digital's revenue is non-recurring, there is a reasonably possible scenario in
which non-delivery of revenue and profit in line with the base plan could
result in a potential impairment. A revenue reduction of 4% in each of the
forecast years dropping down to profit with gross margin in line with the plan
would trigger an impairment of £1.8m. A 10% reduction to EBIT in each of the
forecast years would drive an impairment of £0.2m. A 2% increase in a pre-tax
discount rate would drive an impairment of £4.5m.
The Group will incur c£3m of costs as part of this integration, a significant
proportion of which have been incurred in 2024, with the integration resulting
in annualised cost savings of approximately c£3m for the Group. Those cost
savings which were committed to before the end of 2024 have been included in
our impairment assessment. Further cost savings are expected from additional
restructuring activity that was not committed at 31 December 2024, however in
line with IAS 36, these cost savings have not been included in the assessment.
Technology
Given that Technology's revenue is subject to cyclical market dynamics, there
is a reasonably possible scenario in which non-delivery of revenue and profit
in line with the base plan could result in a potential impairment. A revenue
reduction of 10% in in each of the forecast years dropping down to profit with
gross margin in line with the plan would trigger an impairment of £1.3m. A
30% reduction to EBIT in each of the forecast years would drive an impairment
of £0.5m. A 4% increase in a pre-tax discount rate would drive an impairment
of £0.2m.
In 2023, the following impairments were recorded:
· an impairment to goodwill of £32.5m was recognised in Datashred.
This impairment resulted principally from reduced expectations on service
activity, paper volumes and recycled paper pricing, as well as an increase in
the discount rate partly driven by the change in the interest rate.
· an impairment of customer relationship related intangible assets
and right-of-use assets amounting to £3.6m was recognised in the Technology
CGU in relation to a business exit.
8. Cash flow information 2024 2023
£'m
£'m
Cash generated from operations
Profit/(loss) before tax 17.9 (29.0)
Depreciation of property, plant and equipment and right-of-use assets 33.6 32.8
Amortisation of intangible assets 12.1 12.2
Impairment charge - 36.3
Net finance costs 14.7 14.0
Share-based payments charge (including related NI) 1.7 -
Share-based payment settlement (0.2) (0.7)
Loss on sale of fixed assets 0.3 0.2
Decrease in inventories 0.2 0.5
Decrease in trade and other receivables 7.2 1.8
Decrease in trade and other payables (9.4) (1.2)
Cash generated from operating activities 78.1 66.9
9. Financial liabilities - borrowings
2024 2023
£'m
£'m
Current:
Overdraft facility 3.2 -
Non-current:
Bank loans - unsecured 70.0 97.0
Other loans - unsecured 25.0 25.0
Deferred financing costs (1.2) (1.5)
Total non-current borrowings 93.8 120.5
Total borrowings 97.0 120.5
At 31 December 2024 the Group's financing arrangements comprise a £125m RCF
(due 30 April 2027) including a carved out £10m overdraft and £25m of USPP
fixed rate secured notes (due 28 March 2028). The RCF includes an accordion
which the Group can exercise to increase the facility by up to a further
£25m. £70m of drawn RCF debt and £25m of USPP fixed rate secured notes was
outstanding at year end. The Group utilised £3.2m of the overdraft facility
at 31 December 2024. Committed but undrawn borrowings at 31 December 2024
amounted to £51.8m including £6.8m of unutilised overdraft.
The RCF borrowings are subject to a floating interest rate, at SONIA, plus
credit adjusted spread and a margin of 1.80% which can vary depending on the
leverage the Group.
In 2024, the Group has made the following changes to its financing
arrangements. There was no material financial cost involved in executing these
transactions:
· voluntarily cancelled £75m of the RCF, decreasing the RCF from
£200m to £125m;
· extended the RCF to 30 April 2027; and
· entered into a £10m overdraft facility with Barclays Bank plc.
At 31 December 2023 the Group's financing arrangements comprised a £200m RCF
(due 30 April 2026) and £25m of USPP fixed rate secured notes (due 28 March
2028). Committed but undrawn borrowings at 31 December 2023 amounted to
£103m. £1.5m of the overdraft facility was unutilised.
All of the Group's borrowings are currently in sterling.
Analysis of net debt 2024 2023
£'m
£'m
Cash at bank and in hand 8.0 22.7
Borrowings due within one year (3.2) -
Borrowings due after one year (93.8) (120.5)
Net debt (89.0) (97.8)
10. Provisions
2024 2023
£'m
£'m
1 January 18.6 17.1
Additional provision 4.4 6.2
Utilised (2.6) -
Released (6.9) (4.7)
31 December 13.5 18.6
The balance above represents dilapidation provisions which relate to the
future anticipated costs to restore leased properties into their original
state at the end of the lease term. Estimates are stated at nominal value
because the impact of discounting is not material. An increase in costs of 5%
per square foot across the portfolio would result in an increase in the
provision of £0.4m.
11. Post balance sheet events
On 13 March 2025, the Group acquired the entire issued share capital of
Synertec (Holdings) Limited, a UK based leading document management business,
for an initial consideration of £22.0m. The consideration will be fully
satisfied in cash on 13 March 2025. Contingent consideration is due in 2028
and 2029 depending on future performance. Given the proximity of the
transaction to the announcement of the Group's financial statements, a full
purchase price allocation exercise has not yet been completed and the fair
value of the assets and liabilities acquired will be assessed prior to the
next reporting date.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR SFUFAEEISEEDRecent news on Restore
See all newsREG - Restore PLC - Director/PDMR Shareholding
AnnouncementREG - Restore PLC - Holding(s) in Company
AnnouncementREG - Restore PLC - Holding(s) in Company
AnnouncementREG - Restore PLC - Holding(s) in Company
AnnouncementREG - Restore PLC - Director/PDMR Shareholding
Announcement