REG - Restore PLC - Half year 2025 results
Tue 07:00
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RNS Number : 8665S Restore PLC 29 July 2025
29 July 2025
Restore plc
("Restore" or the "Group" or the "Company")
Half year 2025 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 half year ended 30 June 2025.
SUMMARY OF RESULTS H1 2025 H1 2024 Change
Revenue (£m) 160.1 139.4 15%
Adjusted operating profit(1) (£m) 25.5 23.6 8%
Adjusted operating margin(2) (%) 17.7% 16.9% 80bps
Adjusted profit before tax(3) (£m) 18.0 16.3 10%
Statutory profit before tax (£m) 5.5 8.6 (36%)
Net debt(4) (£m) 120.1 93.5 (28%)
Leverage(5) 1.9x 1.7x n/a
Adjusted basic earnings per share(6) (pence) 10.0p 9.0p 11%
Adjusted diluted earnings per share(7) (pence) 9.8p 8.9p 10%
Statutory basic earnings per share (pence) 2.4p 4.7p (49%)
Statutory diluted earnings per share (pence) 2.4p 4.7p (49%)
Dividend per share (pence) 2.2p 2.0p 10%
FINANCIAL HIGHLIGHTS
· Group revenue of £160.1m, up 15%, principally attributable to
acquisitions made during the period, with the high proportion of recurring
storage income in Information Management continuing to support overall
revenue.
· Adjusted operating margin increased 80bps to 17.7% (H1 2024: 16.9%),
reflecting actions to improve profitability and continued progress towards 20%
medium-term target.
· Adjusted profit before tax increased 10% to £18.0m (H1 2024:
£16.3m), with adjusted basic EPS up 11% to 10.0p (H1 2024: 9.0p).
· Free cashflow(8) of £22.3m (H1 2024: £14.9m), with cash
conversion(9) of 117% (H1 2024: 84%). Leverage at 1.9x following
acquisition-related increase in net debt.
· Interim dividend increased 10% to 2.2 pence (H1 2024: 2.0 pence).
STRATEGIC HIGHLIGHTS
· Information Management property consolidation programme is now c50%
complete with two million boxes moved.
· Whilst Digital activities, primarily scanning, continued to undergo
significant change, integration related cost savings now in excess of £5m on
an annualised basis (versus £3m original estimate). The business has recently
been awarded a multi-million pound medical record scanning contract with
Oxford University Hospitals which will start in 2026.
· Datashred and Technology continue to improve performance.
· Net Zero targets approved by Science Based Targets initiative (SBTi).
· Acquisition of Synertec provides a new, high growth business stream.
· Four further bolt-on acquisitions completed in shredding and document
storage.
Charles Skinner, CEO, commented:
"The Group made good progress during the first half, continuing to deliver on
its strategic priorities and reporting a robust financial performance that
reflects the strength of its market positions and recurring revenues.
Recent acquisitions, including Synertec, which offers significant growth
potential, are trading as anticipated and we continue to pursue further growth
opportunities through additional bolt-on acquisitions.
Our full year expectations are unchanged and we remain confident that the
Group will achieve its medium-term target of adjusted operating margins of 20%
and deliver further value to shareholders."
1) Calculated as statutory operating profit before adjusting items
(reconciled below the Condensed consolidated statement of comprehensive
income)
2) Calculated as adjusted operating profit divided by revenue,
excluding Synertec postage costs (reconciled in note 2)
3) Calculated as statutory profit before tax and adjusting items
(reconciled below the Condensed consolidated statement of comprehensive
income)
4) Calculated as external borrowings less cash, excluding the effects
of lease obligations under IFRS16 (reconciled in note 10)
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 adjusted profit before tax with a standard tax charge
applied, divided by the weighted average fully diluted number of shares in
issue (reconciled in note 5)
8) Calculated as cash generated from operations less income taxes
paid, capital expenditure and principal lease repayments, but before the cash
impact of adjusting items (reconciled below the Condensed consolidated
statement of cash flows)
9) Calculated as free cashflow divided by net operating profit after
tax(10) (reconciled below the Condensed consolidated statement of cash flows)
10) Calculated as adjusted operating profit with a standard tax charge
applied (reconciled below the Condensed 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.
Half year results presentation
Restore will host a presentation for analysts and investors at 9.30am today
which can be accessed via the details below:
https://www.investis-live.com/restoreplc/68502caad645df000ef7632c/gbefg
(https://www.investis-live.com/restoreplc/68502caad645df000ef7632c/gbefg)
Conference call:
United Kingdom (Local): +44 20 3936 2999
United Kingdom (Toll-Free): +44 808 189 0158
Global Dial-In Numbers
(https://www.netroadshow.com/conferencing/global-numbers?confId=84333)
Access Code: 358019
A recording will be available after the event.
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
BUSINESS PERFORMANCE
Overview
Revenue for H1 2025 was £160.1m (H1 2024: £139.4m), an increase of 15%,
principally attributable to acquisitions made during the period.
Our largest division, Information Management, now including Synertec, acquired
in March 2025, recorded a 22% increase in revenue to £106.5m (H1 2024:
£87.5m). Datashred increased revenue by 15% to £20.2m (H1 2024: £17.5m).
Technology increased revenue by 4% to £17.7m (H1 2024: £17.0m). Harrow Green
continued to experience very challenging market conditions with revenue
falling to £15.7m (H1 2024: £17.4m).
Adjusted operating profit was £25.5m (H1 2024: £23.6m), reflecting increased
profit in each of the Group's divisions with the exception of Harrow Green, a
positive contribution from in-period acquisitions and the impact of increased
NIC contributions. As previously indicated, the acquisition of Synertec
structurally reduces Group operating margins as more than half of its revenues
are derived from postal charges which are passed on to customers. Accordingly,
in reporting the Group's performance in the period and going forward, we are
excluding these postal charges from the calculation of adjusted operating
margin. Adjusted operating margin has improved to 17.7%, representing an 80
basis point increase compared to the prior period.
Central costs remained steady at £3.6m. Interest costs from bank borrowing
were also broadly flat at £4.3m with tailwinds from lower interest rates and
improved cash generation being offset by additional interest incurred on debt
drawn to fund the acquisitions in the period. Cash generation remained strong
with cash conversion of 117% (H1 2024: 84%). Net debt at the end of the period
increased to £120.1m (H1 2024: £93.5m), with leverage of 1.9x (H1 2024:
1.7x), reflecting the acquisitions made in the period.
Adjusted profit before tax was £18.0m (H1 2024: £16.3m), an increase of 10%.
Information Management
Information Management recorded revenue of £106.5m (H1 2024: £87.5m) and
adjusted operating profit of £25.5m (H1 2024: £24.6m). Adjusted operating
margin was flat at 28%.
The core records management activities, predominantly document storage,
continued to perform strongly with a broadly stable number of boxes stored.
Whilst the market remains generally mature, we are targeting a number of NHS
Trusts which continue to store patient records on-site where we see
significant opportunities for the NHS to save money and for us to increase our
box numbers. Our property consolidation programme has progressed as expected:
our Markham Vale site in Chesterfield is approaching capacity, and our Connect
84 site in Durham is approximately half-full. At the end of the first half,
our overall project to relocate four million boxes was about half-way
complete. We expect to identify a third new site within the next year to
complete the property consolidation programme.
The division's digital activities, predominantly scanning, continued to
undergo significant change. Revenue was weak, accentuated by the previously
highlighted termination of a major contract at the end of 2024. This revenue
is starting to be replaced by the major contract win of the Department of Work
& Pensions' digital mailroom, which is expected to come fully on-stream
during the second half of the year. As previously announced, we have been
addressing the unsustainably high overheads in this business and have now
achieved annualised cost savings in excess of £5m, significantly more than
the £3m originally targeted. Improved productivity has resulted in a more
competitive offering as evidenced by recent contract wins, such as a
multi-million pound medical records scanning contract with Oxford University
Hospitals which will start in 2026. We are optimistic that our digital
activities will soon deliver a significant improvement in operating margins
and remain confident that the business is well placed to capture the many
opportunities for further organic growth that we foresee.
The acquisition of Synertec in March 2025 broadened our service offering,
taking us into the outbound communications market, in post, email and texts.
The business predominantly serves the NHS where there is considerable scope to
continue to expand its activities and cross sell its services where the Group
holds strong customer relationships. Since acquisition, Synertec has traded in
line with our expectations and we are starting to see some cost synergies
deriving from being part of the Group.
We continue to focus on growth via accretive acquisitions and, since the
period end, have acquired Topwood Limited, a bolt-on records management and
shredding business in Wrexham, which will generate additional revenue and
profit for both Information Management and Datashred.
Datashred
Datashred improved its adjusted operating profit to £2.1m (H1 2024: £1.2m)
from a 15% increase in revenue to £20.2m (H1 2024: £17.5m). Adjusted
operating margin increased to 10% (H1 2024: 7%).
We are achieving industry-leading KPIs, notably on visits per vehicle per day
and miles travelled per collection. The previously announced hedging of the
paper price for 50% of our resold paper has sharply increased the quality of
earnings in what is a very steady business, where profitability was previously
subject to wide variation according to the prevailing paper price. We have
also introduced Restore Recycle, which broadens the range of material to be
recycled and now offer this service for dry mixed recycling, batteries, old IT
equipment, textiles, and food waste, amongst other materials.
Datashred has significant competitive advantages based on its scale as one of
the two major operators in the UK. It also benefits from being part of the
Group: 20% of its paper volumes are derived from Information Management, and
it shares a number of sites with our document storage business which typically
have far larger yards than required for their own activities.
The UK shredding market remains highly fragmented and there are a number of
attractive acquisition opportunities, with vendors' pricing expectations now
at a level where we can deliver attractive returns on invested capital.
Accordingly in April 2025 we acquired Shred-on-Site, a c£5m revenue shredding
business based in Camberley, Surrey. Integration is underway with two
Shred-on-Site regional operating sites in the process of closing. We also
acquired two small shredding businesses: Shred First, in Gravesend, Kent in
April 2025 and Data Shredding services in West Sussex in July 2025.
Additionally, the acquisition of Topwood in July (referred to above) brings in
additional shredding revenues and will be serviced from Datashred's Manchester
site.
Harrow Green
Harrow Green's revenue fell to £15.7m (H1 2024: £17.4m) and adjusted
operating profit fell by £0.9m to £0.3m (H1 2024: £1.2m). Adjusted
operating margin was 2% (H1 2024: 7%).
Harrow Green's primary market is for complex office moves. This market remains
exceptionally tough, particularly outside the South-East of England. Several
major moves have been postponed both for us and our competitors, which has
increased pricing pressure on the few moves which remain on track. We have
controlled costs sensibly and continue to look at ways to further reduce
overheads.
We continue to work closely with many of the major professional firms and
banks in the City of London, where we have many very long-established
relationships, although activity levels remain low. We also remain focused on
niche markets. We have successfully completed the local move for the Cavendish
Laboratory to the Ray Dolby Centre in Cambridge, underlining our leading
position in the life sciences sector. Trading at our Oxford branch, opened
last year, has been encouraging. Our heritage business, which has a strong
long-term storage element, remains steady.
There are some signs that the market is picking up, and many deferred moves
are expected to be reactivated over the next two years. We expect that a major
telecoms business will restart its site closure programme, and that our
largest regional customer, recently affected by tariff uncertainty, will
resume its programme of regularly updating its sites. Given this, and that the
second half of the year is traditionally stronger, we are hopeful that the
business will deliver an improved full year performance compared with last
year.
Technology
Technology turned a break-even position in H1 2024 into a £1.2m adjusted
operating profit in H1 2025 from a 4% increase in revenue to £17.7m (H1 2024:
£17.0m). Adjusted operating margin for the period was 7% (H1 2024: 0%).
Technology's turnaround reflects a change in management approach to its market
and operations. We have moved out of low-quality IT recycling to focus on
customers who value service levels, blue-chip standards of erasing data and
zero-to-landfill recycling. We have focused on operational efficiency and
those activities capable of generating sustainable and attractive margins. We
have completed the installation of a new operational IT system to enable all
our recycling sites to operate on one system, generating significant
improvements at all levels of operation, and enabling us to close our facility
at Cannock.
Our primary sales target has been major Value-Added Re-sellers ("VARs"). The
VARs' customers want their assets to be actively managed during their
lifecycle and look to subcontractors such as Restore for this. We believe that
we are now the largest partner for VARs in the UK and recently completed a
major project for a Government department supplying us with 35,000 end-of-life
tablets which had been replaced by their VAR. We also continue to be active in
processing old IT equipment for many well-known companies.
Our Bristol operation, which specialises in equipment destruction (some
generated from our recycling processes), has continued to trade well. Our
engineering division, which specialises in moving our customer's IT equipment,
has been impacted by the slow level of relocations (as witnessed by Harrow
Green) but there are signs that its market is improving. Ultratech, our
hard-drive restoration and trading operation, delivered a stable performance.
Ultratest, which has developed two systems for repurposing hard drives, has
continued to generate healthy licensing revenues.
Whilst there is more to do to achieve mid-teen operating margins within
Technology, we are encouraged by its recent progress.
Outlook
The Group made good progress during the first half, continuing to deliver on
its strategic priorities and reporting a robust financial performance that
reflects the strength of its market positions and recurring revenues.
Recent acquisitions, including Synertec, which offers significant growth
potential, are trading as anticipated and we continue to pursue further growth
opportunities through additional bolt-on acquisitions.
Our full year expectations are unchanged and we remain confident that the
Group will achieve its medium-term target of adjusted operating margins of 20%
and deliver further value to shareholders.
FINANCIAL PERFORMANCE
Overview
Revenue for the period ended 30 June 2025 increased by 15% to £160.1m (H1
2024: £139.4m), principally due to the contributions from acquisitions,
notably Synertec. Adjusted profit before tax was £18.0m (H1 2024: £16.3m).
On a statutory basis, the Group made a profit before tax of £5.5m (H1 2024:
£8.6m). Good cash generation endures as a key strength of the Group with cash
conversion of 117% (H1 2024: 84%).
Revenue
£m H1 2025 H1 2024 Change
Information Management 106.5 87.5 22%
Datashred 20.2 17.5 15%
Harrow Green 15.7 17.4 (10%)
Technology 17.7 17.0 4%
Total 160.1 139.4 15%
Adjusted profit
Adjusted operating profit was up 8% at £25.5m (H1 2024: £23.6m) reflecting
increased profits in each of the Group's divisions with the exception of
Harrow Green, a positive contribution from in-period acquisitions and the
impact of increased NIC contributions. Bank interest costs were broadly flat
at £4.3m (H1 2024: £4.6m). Consequently, the Group's adjusted profit before
tax was £18.0m (H1 2024: £16.3m).
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 these results 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 H1 2025 H1 2024
Amortisation of intangible assets 6.8 6.0
Acquisition and related costs 3.2 -
Restructuring and redundancy costs 1.4 0.7
Property related costs 1.1 0.4
Strategic IT reorganisation - 0.6
Total 12.5 7.7
Adjusting items - operating costs 12.1 7.6
Adjusting items - finance costs 0.4 0.1
Total adjusting items 12.5 7.7
Amortisation of intangible assets increased to £6.8m from £6.0m due to the
additional intangible assets recognised as part of the acquisitions of
Synertec and Shred-on-Site. Acquisition and related costs includes £2.1m
related to the H1 2025 portion of the Synertec earn-out consideration which
will be recognised as remuneration and will be expensed over the earn-out
period, £0.8m of third-party advisory fees and £0.3m relating to the unwind
of the discount on the Synertec contingent consideration liability.
Restructuring and redundancy costs of £1.4m relate to the ongoing integration
of the Group's Digital business into the Information Management segment.
Property costs primarily reflect the ongoing property consolidation with
incremental box move and dual-running costs.
Following these adjusting items, the Group made a statutory profit before tax
of £5.5m (H1 2024: £8.6m).
Net debt and leverage
Net debt as at 30 June 2025 was £120.1m (H1 2024: £93.5m), with leverage
increasing from 1.7x to 1.9x, principally due to the acquisitions made in the
first half.
Cashflow
The Group generated free cashflow of £22.3m (H1 2024: £14.9m). Net cash
generated from operating activities was £28.1m (H1 2024: £21.6m). Enhanced
working capital and cash conversion of 117% were achieved through improved
supplier management (H1 2024: 84%)
CONDENSED INTERIM FINANCIAL STATEMENTS
Condensed consolidated statement of comprehensive income
For the half year ended 30 June 2025
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2025 30 June 2024 31 December 2024
£m £m £m
Note
Revenue - continuing operations 2 160.1 139.4 275.3
Cost of sales 2 (93.3) (77.5) (152.8)
Gross profit 2 66.8 61.9 122.5
Administrative expenses (53.7) (45.8) (89.8)
Movement in trade receivables loss allowance 0.3 (0.1) (0.1)
Operating profit 13.4 16.0 32.6
Finance costs (7.9) (7.4) (14.7)
Profit before tax 5.5 8.6 17.9
Taxation 4 (2.2) (2.2) (5.5)
Profit after tax 3.3 6.4 12.4
Other comprehensive income - 0.1 0.1
Total comprehensive income for the period from continuing operations and 3.3 6.5 12.5
profit attributable to owners of the parent
Earnings per share attributable to owners of the parent (pence) 5
Total - basic 2.4p 4.7p 9.1p
Total - diluted 2.4p 4.7p 9.0p
The reconciliation between the statutory results shown above and the non-GAAP
adjusted measures are shown below:
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2025 30 June 2024 31 December 2024
Note £m £m £m
Operating profit 13.4 16.0 32.6
Adjusting items - administrative expenses 3 5.3 1.6 4.1
Adjusting items - amortisation of intangible assets 3 6.8 6.0 12.1
Total adjusting items - operating costs 12.1 7.6 16.2
Adjusted operating profit 25.5 23.6 48.8
25.5 23.6 48.8
Adjusted operating profit
Tax at 25% (2024: 25%) (6.4) (5.9) (12.2)
NOPAT (Net operating profit after tax) 19.1 17.7 36.6
5.5 8.6 17.9
Profit before tax
Adjusting items - operating costs (as stated above) 12.1 7.6 16.2
Adjusting items - finance costs 3 0.4 0.1 0.3
Adjusted profit before tax 18.0 16.3 34.4
Condensed consolidated statement of financial position
At 30 June 2025
Company registered no. 05169780
Unaudited 30 June 2025 Unaudited 30 June 2024 Audited 31 December 2024
£m £m £m
Note
ASSETS
Non-current assets
Intangible assets 7 314.1 279.9 274.4
Property, plant and equipment 87.6 79.6 83.1
Right of use assets 136.2 114.8 125.6
Other receivables 4.0 4.7 4.6
541.9 479.0 487.7
Current assets
Inventories 3.4 1.5 1.3
Trade and other receivables 68.9 65.4 56.5
Cash and cash equivalents 12.8 10.0 8.0
Current tax assets - - 0.2
85.1 76.9 66.0
Total assets 627.0 555.9 553.7
LIABILITIES
Current liabilities
Trade and other payables (63.4) (46.2) (40.5)
Financial liabilities - borrowings 10 (7.9) - (3.2)
Financial liabilities - lease liabilities (21.9) (20.2) (19.3)
Current tax liabilities (0.7) (0.1) -
Provisions 11 (3.9) (5.3) (3.9)
(97.8) (71.8) (66.9)
Non-current liabilities
Financial liabilities - borrowings 10 (125.0) (103.5) (93.8)
Financial liabilities - lease liabilities (128.2) (108.8) (120.7)
Deferred tax liability (34.1) (27.4) (28.7)
Provisions 11 (9.4) (12.5) (9.6)
Other payables (0.4) (0.2) (0.2)
(297.1) (252.4) (253.0)
Total liabilities (394.9) (324.2) (319.9)
Net assets 232.1 231.7 233.8
EQUITY
Share capital 6.8 6.8 6.8
Share premium 187.9 187.9 187.9
Other reserves (1.7) 1.4 (0.5)
Retained earnings 39.1 35.6 39.6
Total equity 232.1 231.7 233.8
Condensed consolidated statement of changes in equity
For the half year ended 30 June 2025
Attributable to owners of the parent
Share Share Other Retained Total
capital premium reserves earnings equity
£m £m £m £m £m
Balance at 1 January 2024 6.8 187.9 3.7 31.5 229.9
Profit for the period - - - 6.4 6.4
Other comprehensive income - - 0.1 - 0.1
Total comprehensive income for the period - - 0.1 6.4 6.5
Transactions with owners:
Dividends - - - (4.6) (4.6)
Share-based payments charge - - 0.7 - 0.7
Transfer* - - (2.4) 2.4 -
Purchase of treasury shares - - (0.8) - (0.8)
Disposal of treasury shares - - 0.1 (0.1) -
Balance at 30 June 2024 (unaudited) 6.8 187.9 1.4 35.6 231.7
Balance at 1 July 2024 6.8 187.9 1.4 35.6 231.7
Profit for the period - - - 6.0 6.0
Total comprehensive income for the period - - - 6.0 6.0
Transactions with owners:
Dividends - - - (2.7) (2.7)
Share-based payments charge - - 0.6 - 0.6
Transfer* - - (0.8) 0.8 -
Purchase of treasury shares - - (1.8) - (1.8)
Disposal of treasury shares - - 0.1 (0.1) -
Balance at 31 December 2024 (audited) 6.8 187.9 (0.5) 39.6 233.8
Balance at 1 January 2025 6.8 187.9 (0.5) 39.6 233.8
Profit for the period - - - 3.3 3.3
Total comprehensive income for the period - - - 3.3 3.3
Transactions with owners:
Dividends - - - (5.1) (5.1)
Share-based payments charge - - 1.1 - 1.1
Transfer* - - (1.3) 1.3 -
Purchase of treasury shares - - (1.0) - (1.0)
Balance at 30 June 2025 (unaudited) 6.8 187.9 (1.7) 39.1 232.1
*In the period ended 30 June 2025 a net amount of £1.3m was reclassified from
the share-based payment reserve to retained earnings in respect of lapsed and
exercised options (H1 2024: £2.4m, year to 31 December 2024: £3.2m).
Condensed consolidated statement of cash flows
For the half year ended 30 June 2025
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2025 30 June 2024 31 December 2024
Note £m £m £m
Cash generated from operating activities 9 39.8 31.9 78.1
Net finance costs (7.7) (7.6) (14.5)
Income taxes paid (4.0) (2.7) (5.1)
Net cash generated from operating activities 28.1 21.6 58.5
Cash flows from investing activities
Purchase of property, plant and equipment and applications software IT (5.7) (5.7) (15.2)
Proceeds from sale of property, plant and equipment 0.2 - 0.1
Purchase of subsidiary undertakings, net of cash acquired 8 (29.4) - -
Purchase of trade and assets 7 (0.3) (0.6) (0.5)
Net cash used in investing activities (35.2) (6.3) (15.6)
Cash flows from financing activities
Dividends paid - - (7.3)
Purchase of treasury shares (1.0) (0.8) (2.6)
Drawdown of invoice credit facility, net 1.1 - -
Repayment of revolving credit facility (1.5) (17.0) (27.0)
Drawdown of revolving credit facility 28.0 - -
Lease principal repayments (11.5) (10.2) (23.9)
Net cash generated/(used) in financing activities 15.1 (28.0) (60.8)
Net increase/(decrease) in cash and cash equivalents 8.0 (12.7) (17.9)
Cash and cash equivalents at start of period* 4.8 22.7 22.7
Cash and cash equivalents at end of period* 12.8 10.0 4.8
*Cash and cash equivalents as at 31 December 2024 included overdraft of £3.2m
(note 10).
A reconciliation between the statutory results above and the non-GAAP cashflow
measures is shown below:
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2025 30 June 2024 31 December 2024
£m £m £m
Cash generated from operating activities 39.8 31.9 78.1
Income taxes paid (4.0) (2.7) (5.1)
Purchase of property, plant and equipment and applications software IT (5.7) (5.7) (15.2)
Lease principal repayments (11.5) (10.2) (23.9)
Add back: Cash impact of adjusting items - administrative expenses 3.7 1.6 5.2
Free cashflow 22.3 14.9 39.1
NOPAT (Net operating profit after tax) 19.1 17.7 36.6
Cash conversion 117% 84% 107%
Notes to the condensed interim financial statements
For the half year ended 30 June 2025
1. Basis of preparation
The condensed interim financial statements have been prepared in accordance
with IAS 34, Interim Financial Reporting, adopting accounting policies that
are consistent with those of the previous financial year and corresponding
half year reporting period. The condensed interim financial statements do not
constitute statutory accounts as defined in Section 434 of the Companies Act
2006.
The information for the year ended 31 December 2024 is based on audited
statutory accounts which have been filed with the Registrar of Companies.
The Auditor's report for 2024 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 six-month period to 30 June 2025 and
30 June 2024 was unaudited.
The condensed interim 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
condensed interim financial statements are presented in pounds sterling and,
unless stated otherwise, shown in pounds million to one decimal place. The
principal risks impacting the Group during the period remain unchanged from
those disclosed in the 31 December 2024 Annual Report.
The Directors are satisfied that climate change does not have a material
impact on either individual assets or cash-generating units in the condensed
interim financial statements.
The Group's operations are not normally affected by significant seasonal
variations between the first and second halves of the calendar year.
The condensed interim financial statements were approved by the Board of
Directors on 28 July 2025.
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 10. 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 condensed interim financial statements. Thus, they continue to
adopt the going concern basis of accounting in preparing the condensed interim
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 31 December 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 latest
outlook for H2 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 scenarios during the going concern period.
New standards, interpretations and amendments adopted by the Group
The following amendment to standards was effective for the first time from 1
January 2025:
· Lack of Exchangeability - Amendment to IAS 21
This amendment is not considered to have a material impact on the condensed
interim financial statements.
2. Segmental analysis
Management has identified that the Board is the Chief Operating Decision Maker
("CODM") in accordance with the requirements of IFRS 8 "Operating Segments"
and has based their assessment of the relevant operating segments on the
information the Board uses to assess both the performance of the business and
allocation of resources within the Group.
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
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 Six months ended Six months ended Year ended
30 June 2025 30 June 2024 31 December 2024
£m £m £m
Information Management 106.5 87.5 167.9
Datashred 20.2 17.5 36.0
Harrow Green 15.7 17.4 35.3
Technology 17.7 17.0 36.1
Total revenue 160.1 139.4 275.3
For the period ended 30 June 2025 no customers individually accounted for more
than 3% of the Group's total revenue (H1 2024: 3%; year to 31 December 2024:
3%).
The Group had sales of goods of £16.0m relating to the sale of recycled paper
and recycled IT assets (H1 2024: £14.0m; year to 31 December 2024: £31.6m)
and sales of furniture of £0.2m (H1 2024: £0.4m; year to 31 December 2024:
£0.9m). The remainder of revenue relates to the sales of services.
Segmental information
30 June 2025 Information Management Datashred Harrow Green Technology Central Total
£m £m £m £m £m £m
Revenue 106.5 20.2 15.7 17.7 - 160.1
Cost of sales (58.6) (12.3) (11.0) (11.4) - (93.3)
Gross profit 47.9 7.9 4.7 6.3 - 66.8
Adjusted operating profit/(loss) 25.5 2.1 0.3 1.2 (3.6) 25.5
Revenue 90.6 20.2 15.7 17.7 - 144.2
(excluding postage costs)
Adjusted operating margin 28.1% 10.4% 1.9% 6.8% - 17.7%
Adjusting items (2.8) (0.2) (0.1) (0.1) (8.9) (12.1)
Operating profit/(loss) 22.7 1.9 0.2 1.1 (12.5) 13.4
Finance costs (7.9)
Profit before tax 5.5
30 June 2024 Harrow Green Technology
£m £m
Datashred
£m
Central
Information £m
Management
£m Total
£m
Revenue 87.5 17.5 17.4 17.0 - 139.4
Cost of sales (43.8) (10.8) (11.6) (11.3) - (77.5)
Gross profit 43.7 6.7 5.8 5.7 - 61.9
Adjusted operating profit/(loss) 24.6 1.2 1.2 - (3.4) 23.6
Adjusted operating margin 28.1% 6.9% 6.9% 0.0% - 16.9%
Adjusting items (1.2) (0.1) - (0.3) (6.0) (7.6)
Operating profit/(loss) 23.4 1.1 1.2 (0.3) (9.4) 16.0
Finance costs (7.4)
Profit before tax 8.6
31 December 2024 Datashred Harrow Green Technology Total
£m £m £m £m
Central
Information £m
Management
£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
The amortisation of acquired intangible assets has been recorded centrally.
30 June 2025 Information Management Datashred Harrow Green Total
£m
£m
£m
£m
Technology Central
£m £m
Segment assets 490.4 49.9 31.6 44.0 11.1 627.0
Segment liabilities 168.5 28.0 25.9 12.2 160.3 394.9
Capital expenditure 5.1 0.4 - 0.2 - 5.7
Depreciation and amortisation 12.1 2.6 1.5 0.9 6.3 23.4
30 June 2024 Information Management Datashred Harrow Green Total
£m
£m
£m
£m
Technology Central
£m £m
Segment assets 432.2 34.2 34.5 57.5 (2.5) 555.9
Segment liabilities 131.4 7.3 20.0 23.3 142.2 324.2
Capital expenditure 4.6 0.2 0.3 0.5 0.1 5.7
Depreciation and amortisation 15.8 2.6 1.1 1.5 0.3 21.3
31 December 2024 Information Management Datashred Harrow Green Total
£m
£m
£m
£m
Technology Central
£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
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:
Six months ended Six months ended 30 June 2024 Year ended
30 June 2025 £m 31 December 2024
£m £m
Amortisation 6.8 6.0 12.1
Acquisition and related costs(1) 3.2 - -
Restructuring and redundancy 1.4 0.7 2.1
Property related costs(2) 1.1 0.4 1.5
Strategic IT reorganisation - 0.6 0.8
Total 12.5 7.7 16.5
1. Adjusting items - finance costs of £0.3m related to the unwind of the
discount on the contingent consideration liability are includes in acquisition
and related costs (H1 2024: nil, year to 31 December 2024: nil)
2. Adjusting items - finance costs of £0.1m related to dual running lease
liability interest costs are included in property related costs (H1 2024:
£0.1m, year to 31 December 2024: £0.3m)
Amortisation
The amortisation charge primarily relates to acquired intangible assets
arising from business combinations. 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
profit generated from its business combinations in its alternative profit
measures.
Acquisition costs
· £2.1m relates to the current period portion of the fair value of
the Synertec earn-out consideration that is treated as remuneration. Given the
overall quantum of the earn-out remuneration expense and the fact that the
earn-out remuneration expense is acquisition-related, this cost is adjusted
for in deriving the Group's alternative performance measures. Any changes to
the fair value of the earn-out remuneration in future periods will also be
recognised in adjusting items.
· £0.8m primarily relates to legal, due diligence and other
advisory costs incurred in association with business acquisition activity.
· £0.3m relates to the unwind of the discounting of the contingent
consideration liability on the balance sheet.
For transparency, we note that the Group does not similarly adjust for the
related revenue and profit generated from its acquisitions in its alternative
profit measures.
Restructuring and redundancy costs
The restructuring and redundancy costs relate primarily to the actions
implemented to improve the operational efficiency and profitability of the
Digital business, including the integration of Digital and Records Management
into the Information Management division, which was ongoing throughout 2024
and continued into 2025. 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
Property related costs of £1.1m relate primarily to the ongoing property
consolidation. Incremental box move costs and dual-running costs of £1.8m
have been partially offset by the release of dilapidation provisions of
£0.8m. Future cost savings are expected from the site consolidation 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.
Strategic IT reorganisation costs
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 £0.6m for H1 2024.
The Group's APMs are summarised below:
APMs Description
Adjusted operating profit Calculated as statutory operating profit before adjusting items.
Adjusted operating margin Calculated as adjusted operating profit divided by revenue, excluding Synertec
postage costs.
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 IFRS16 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 before 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 IFRS16.
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 principal lease repayments, 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
The income tax expense comprises:
Six months ended Six months ended Year ended
30 June 2025 30 June 2024 31 December 2024
£m £m £m
Current tax expense 4.4 4.1 6.1
Deferred tax credit (2.2) (1.9) (0.6)
Total tax expense 2.2 2.2 5.5
Tax for the six months ended 30 June 2025 is determined based on applying an
estimate of the annual effective tax rate expected for the full financial
year. The estimated annual effective tax rate used for the six months ended to
30 June 2025 is 39% (30 June 2024: 25%; 31 December 2024: 25%). An increase in
the annual effective tax rate is mainly driven by non-deductible expenses of
£3.2m related to the acquisitions made in the period.
5. Earnings per share attributable to owners of the parent
Basic earnings per share have been calculated on the profit for the period
after taxation and the weighted average number of ordinary shares in issue
during the period.
Six months ended Year ended
Six months ended 30 June 2024 31 December 2024
30 June 2025 £m £m
£m
Total profit for the period (£m) 3.3 6.4 12.4
Total basic earnings per share (pence) 2.4 4.7 9.1
Weighted average number of shares in issue 135,521,991 136,312,349 136,129,425
Dilutive options (number) 1,892,686 1,446,316 1,569,548
Weighted average fully diluted number of shares in issue 137,414,677 137,758,665 137,698,973
Total fully diluted earnings per share (pence) 2.4 4.7 9.0
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:
Six months ended Six months ended Year ended
30 June 2025 30 June 2024 31 December 2024
£m £m £m
Profit before tax 5.5 8.6 17.9
Adjusting items - administrative expenses 5.3 1.6 4.1
Adjusting items - amortisation of intangible assets 6.8 6.0 12.1
Adjusting items - finance costs 0.4 0.1 0.3
Adjusted profit before tax 18.0 16.3 34.4
The adjusted earnings per share and adjusted fully diluted earnings per share
is based on the weighted average number of shares in issue during the year of
135.5m (June 2024: 136.3m; December 2024: 136.1m) and the weighted average
fully diluted number of shares in issue during the year of 137.4m (June 2024:
137.8m; December 2024 137.7m) respectively, and are calculated below using a
standard tax charge:
Six months ended Six months ended Year ended
30 June 2025 30 June 2024 31 December 2024
£m £m £m
Adjusted profit before tax (£m) 18.0 16.3 34.4
Tax at 25% (2024: 25%) (£m) (4.5) (4.1) (8.6)
Adjusted profit after tax (£m) 13.5 12.2 25.8
Adjusted basic earnings per share (pence) 10.0 9.0 19.0
Adjusted fully diluted earnings per share (pence) 9.8 8.9 18.7
6. Dividends
In respect of the current period, the Directors declare an interim dividend of
2.2p per share (H1 2024: 2.0p). The estimated dividend to be paid is £3.0m
(H1 2024: £2.8m) and will be paid on 22 October 2025 to shareholders on the
register on 19 September 2025.
7. Intangible assets
Goodwill Customer relationships Technology Trade Applications software IT Total
£m £m
names £m £m
£m £m
Cost
1 January 2024 219.1 178.3 - 4.3 11.1 412.8
Additions - 0.6 - - 0.6 1.2
Disposals - - - - - -
30 June 2024 219.1 178.9 - 4.3 11.7 414.0
Additions - - - - 0.7 0.7
Disposals - (0.1) - - - (0.1)
31 December 2024 219.1 178.8 - 4.3 12.4 414.6
Additions - 0.3(1) - - 1.0 1.3
Acquired through business combinations (note 8) 16.0 12.6 15.4 1.2 - 45.2
Disposals - - - - (0.2) (0.2)
30 June 2025 235.1 191.7 15.4 5.5 13.2 460.9
Accumulated amortisation and impairment
1 January 2024 50.1 67.3 - 3.2 7.5 128.1
Charge for the period - 5.0 - - 1.0 6.0
Disposals - - - - - -
30 June 2024 50.1 72.3 - 3.2 8.5 134.1
Charge for the period - 5.2 - 0.1 0.8 6.1
Disposals - - - - - -
31 December 2024 50.1 77.5 - 3.3 9.3 140.2
Charge for the period - 5.4 0.7 0.1 0.6 6.8
Disposals - - - - (0.2) (0.2)
30 June 2025 50.1 82.9 0.7 3.4 9.7 146.8
Carrying amount
30 June 2025 185.0 108.8 14.7 2.1 3.5 314.1
31 December 2024 169.0 101.3 - 1.0 3.1 274.4
30 June 2024 169.0 106.6 - 1.1 3.2 279.9
1 The Group acquired a portfolio of Shred First customer contracts for a
consideration of £0.3m.
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 ("CGU's") which represent the smallest identifiable
group of assets that generate cash inflows from continuing use. As a result of
two business combinations in H1 2025 (refer to note 8), the Group comprises
seven CGUs as at 30 June 2025 being Records Management, Digital, Datashred,
Harrow Green, Technology, Synertec and Shred-on-Site. 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.
Goodwill is tested annually for impairment, or more frequently if there are
indicators that an impairment may be required; the Group conducts the annual
assessment in line with our full year reporting at 31 December. At June
2025, we have therefore reviewed whether there are any indicators of
impairment present at the CGU level. Our conclusion is that there are only
indicators present in the Harrow Green CGU, where trading headwinds have led
to a challenging first six months. The other CGUs have performed broadly in
line with expectations and there are no other external or market factors that
would indicate an impairment.
An impairment review was therefore conducted over the carrying values of the
Harrow Green CGU. The model utilised forecasts based upon the CGU's outlook
for the remainder of 2025 and the five-year plan through to HY30. Terminal
cash flows are based on the CGU's HY30 projections and are assumed to grow
perpetually at 2%. In accordance with IAS 36, the growth rate for beyond the
initially forecast years does not exceed the long-term average growth rate for
the industry. The forecasts have been discounted using a pre-tax discount rate
specific to Harrow Green, being 12.1%.
Within the Harrow Green CGU, no impairment is shown when considering the base
case scenario however there are considered to be some reasonably possible
downside scenarios which could result in an impairment.
A summary of the management's base case value-in-use calculation, including
key assumptions, is set out below:
FY25 to FY30 revenue compound annual growth rate (%) FY25 to FY30 FY25 to FY30 Discount rate (%) Carrying value of assets (£m) Headroom (£m) Headroom as % of asset carrying value (%) NPV terminal year cashflows into perpetuity as % of value-in-use calculation
(%)
EBIT compound annual growth rate (%) EBIT margin growth (bps)
Harrow Green 2.6% 44.7% 540 12.1% 23.2 8.1 34.7% 48%
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. Therefore,
there are no overriding changes to key assumptions built into the forecasts
and no specific sensitivities relating to climate change are considered
necessary.
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.
Revenue reduction assuming gross margin in line with plan (%) FY25 to FY30 revenue Headroom/ Headroom/
compound (impairment) (£m) (impairment) as % of asset carrying value (%)
annual growth rate (%)
Harrow Green (6%) 1.1% 1.7 7.2%
(7%) 0.9% 0.6 2.6%
(8%) 0.7% (0.5) (2.0%)
EBIT reduction (%) FY25 to FY30 EBIT margin growth (bps) Headroom/ Headroom/
(impairment) (£m) (impairment) as % of asset carrying value (%)
Harrow Green (35%) (80) 0.9 4.1%
(40%) (110) (0.1) (0.3%)
(45%) (150) (1.1) (4.7%)
Discount rate Headroom/ Headroom/
(impairment) (£m) (impairment) as % of asset carrying value (%)
Harrow Green 4% 0.9 3.9%
5% (0.4) (1.7%)
6% (1.5) (6.5%)
Harrow Green have continued to experience very difficult market conditions in
the first half of 2025, leading to a reduction in both revenue and profit.
Given the largely non-recurring nature of Harrow Green's revenue base, 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 8% in each of the forecast years dropping down to profit with
gross margin in line with the plan would trigger an impairment of £0.5m. A
40% reduction to EBIT in each of the forecast years would drive an impairment
of £0.1m. A 5% increase in a pre-tax discount rate would drive an impairment
of £0.4m.
8. Business combinations
Synertec (Holdings) Limited and Synertec Limited ("Synertec")
On 13 March 2025, the Group acquired the entire issued share capital of
Synertec (Holdings) Limited and Synertec Limited, a UK based leading document
management business, for an initial consideration of £22.0m. Synertec's
business is a highly complementary addition to the Group and supports the
Group's growth strategy in broadening its offering to existing customers and
facilitating the cross-selling of existing services to Synertec customers.
A provisional purchase price allocation exercise for the Synertec acquisition,
which will be finalised in the second half of the year, has been completed
which identified £10.6m of acquired intangible assets relating to customer
relationships, £15.4m of acquired intangible assets relating to technology
and £1.2m of acquired intangible assets relating to brand, which are
identifiable and separable, and will be amortised between five and eleven
years.
The discount rate applied to the forecast cash flows from the acquired
customer relationships and brand is 29%. The discount rate applied to the
forecast cash flows from the technology is 19%. £10.9m of goodwill has arisen
on the acquisition and is primarily attributable to the deferred tax liability
related to the acquired intangible assets of £6.4m and assembled workforce of
£1.6m.
From the 13 March 2025, the date of the acquisition, Synertec contributed
£24.6m of revenue and £1.3m of adjusted operating profit to the Group's
performance for the period. If the acquisition had taken place at the
beginning of the year, Synertec would have contributed £38.6m of revenue and
£2.5m of adjusted operating profit to the Group's performance for the period.
Mass Holdings and Investments Limited and Shred-on-Site Limited
("Shred-on-Site")
On 4 April 2025, the Group acquired the entire issued share capital of Mass
Holdings and Investments Limited and Shred-on-Site Limited, a UK based
shredding business, for an initial consideration of £7.9m. Shred-on-site is
expected to be an accretive acquisition which will deliver growth in our core
business activities.
A provisional purchase price allocation exercise for the Shred-on-Site
acquisition, which will be finalised in the second half of the year, has been
completed which identified £2.0m of acquired intangible assets relating to
customer relationships, which are identifiable and separable, and will be
amortised over ten years.
The discount rate applied to the forecast cash flows from the acquired
customer relationships is 12%. £5.1m of goodwill has arisen on the
acquisition of Shred-on-Site and is primarily attributable to anticipated
synergies.
From the 4 April 2025, the date of the acquisition, Shred-on-Site contributed
£1.3m of revenue and £0.1m of adjusted operating profit to the Group's
performance for the period. If the acquisition had taken place at the
beginning of the year, Shred-on-Site would have contributed £2.7m of revenue
and £0.2m of adjusted operating profit to the Group's performance for the
period.
Assets acquired and liabilities assumed
The provisional fair values of the identifiable assets and liabilities of the
acquired entity as at the acquisition date are disclosed below. The fair value
of the identifiable assets and liabilities are estimated by taking into
consideration all available information at the reporting date and are on a
provisional basis due to the timing of the acquisitions.
Synertec Shred-on-Site Total
£m £m £m
Assets
Acquired intangible assets recognised on acquisition 27.2 2.0 29.2
Property, plant and equipment 3.9 1.3 5.2
Right-of use assets 4.1 0.9 5.0
Inventory 1.8 - 1.8
Contract assets 2.4 - 2.4
Trade and other receivables 6.8 0.7 7.5
Cash and cash equivalents - 0.5 0.5
46.2 5.4 51.6
Liabilities
Trade and other payables (8.6) (0.5) (9.1)
Contract liabilities (0.2) - (0.2)
Lease liabilities (3.8) (0.6) (4.4)
Current tax liability (0.5) - (0.5)
Deferred tax liability (net) (6.8) (0.8) (7.6)
Borrowings (11.2) - (11.2)
Provisions (1.8) (0.6) (2.4)
(32.9) (2.5) (35.4)
Total identifiable net assets at fair value 13.3 2.9 16.2
Goodwill arising on acquisition 10.9 5.1 16.0
Fair value of consideration 24.2 8.0 32.2
The acquired lease liabilities were measured using the present value of the
remaining lease payments as at the date of acquisition. The right-of-use
assets were measured at an amount equal to the lease liabilities, less any
acquisition related adjustments.
The fair value of acquired receivables is £7.5 million, which is equivalent
to the gross contractual amount of acquired receivables. The best estimate at
the acquisition date of the contractual cash flows not expected to be
collected is nil.
The net deferred tax liabilities mainly comprise the tax effect of the
accelerated amortisation for tax purposes of the acquired intangible assets
recognised on acquisition.
Purchase consideration
Shred-on-Site
Synertec £m Total
£m £m
Amount settled in cash 22.0 7.9 29.9
Contingent cash consideration 2.2 0.1 2.3
Fair value of consideration 24.2 8.0 32.2
Consideration paid in the period, net of cash acquired, was £29.4 million and
is included in cash flows from investing activities.
The discounted fair value of the contingent consideration payable to the
sellers of Synertec, subject to certain performance targets being achieved,
was £2.2m as at the acquisition date. The unwinding of the discount applied
will be recognised in the statement of comprehensive income over the earn-out
period (refer to note 3). Contingent consideration of £2.5m payable to the
sellers of Synertec is included in trade and other payables as at 30 June
2025.
Earn-out remuneration of £2.1m is the H1 2025 portion of the amount payable
to the sellers of Synertec subject to certain future performance targets being
achieved as well as their continuing services to Synertec (refer to note 3).
This is included in trade and other payables as at 30 June 2025.
Analysis of cash flows on acquisition
Shred-on-Site
Synertec £m Total
£m £m
Consideration paid (included in cash flows from investing activities) 22.0 7.9 29.9
Cash acquired with the subsidiary (included in cash flows from investing - (0.5) (0.5)
activities)
Total net cash flow included in cash flows from investing activities 22.0 7.4 29.4
Transaction costs (included in cash flows from operating activities)* 0.6 0.1 0.7
Net cash flow on acquisition 22.6 7.5 30.1
* Transaction costs are presented within adjusted items set out in note 3.
£0.1m of the costs in Note 3 relate to the acquisition of Topwood which did
not complete until after the period end.
9. Cash generated from operating activities
Six months ended Six months ended Year ended
30 June 2025 30 June 2024 31 December 2024
£m £m £m
Profit before tax 5.5 8.6 17.9
Depreciation of property, plant and equipment and right-of-use assets 16.6 15.3 33.6
Amortisation of intangible assets 6.8 6.0 12.1
Net finance costs 7.9 7.4 14.7
Earn-out remuneration 2.1 - -
Share-based payment charge (including related NI) 1.4 0.9 1.7
Share-based payment settlement - (0.1) (0.2)
(Gain)/loss on sale of fixed assets (0.1) - 0.3
(Increase)/decrease in inventories (0.3) - 0.2
(Increase)/decrease in trade and other receivables (2.0) (1.7) 7.2
Increase/(decrease) in trade and other payables 1.9 (4.5) (9.4)
Cash generated from operating activities 39.8 31.9 78.1
10. Financial liabilities - borrowings
Borrowings Six months ended Six months ended Year ended
30 June 2025 30 June 2024 31 December 2024
£m £m £m
Current:
Overdraft facility - - 3.2
Bank loans 7.9 - -
Non-current:
Bank loans 101.0 80.0 70.0
Other loans (US Private Placement) 25.0 25.0 25.0
Deferred financing costs (1.0) (1.5) (1.2)
Total non-current borrowings 125.0 103.5 93.8
Total borrowings 132.9 103.5 97.0
Analysis of net debt Six months ended Six months ended Year ended
30 June 2025 30 June 2024 31 December 2024
£m £m £m
Cash at bank and in hand 12.8 10.0 8.0
Borrowings due within one year (7.9) - (3.2)
Borrowings due after one year (125.0) (103.5) (93.8)
Net debt (120.1) (93.5) (89.0)
The Group acquired £11.2m of bank loans in H1 2025 (refer to note 8).
11. Provisions
Six months ended Six months ended Year ended
30 June 2025 30 June 2024 31 December 2024
£m £m £m
Opening 13.5 18.6 18.6
Acquired through business combinations (note 8) 2.4 - -
Additional provision 1.4 - 4.4
Utilised (1.8) (0.6) (2.6)
Released (2.2) (0.2) (6.9)
Closing 13.3 17.8 13.5
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 and
therefore 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 £0.3m.
12. Events occurring after the reporting period
On 1 July 2025, the Group acquired the entire share capital of Data Shredding
Services Limited, a shredding business, for a cash consideration of £0.2m.
The consideration was fully satisfied on the 1 July 2025.
On 3 July 2025, the Group acquired the entire issued share capital of Topwood
Limited, a shredding and records management business, for an initial
consideration of £2.8m. The initial consideration was fully satisfied in cash
on 3 July 2025. Contingent consideration of £0.5m is due in 2026 dependant on
the retention of customers.
Given the proximity of these transactions to the announcement of the Group's
condensed interim 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.
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