REG - Restore PLC - Trading Update

RestoreAnnouncement

21/11/2024 07:00

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RNS Number : 0257N  Restore PLC  21 November 2024

 

21 November 2024

 

Restore plc

("Restore" or the "Group")

 

Trading Update

 

Restore plc (AIM: RST), the UK's leading provider of information management
and secure lifecycle services, today issues the following trading update for
the 10 months ended 31 October 2024 (the "Period").

 

Information Management

Box storage revenue continued to benefit from index-linked pricing on broadly
unchanged box numbers.  Scanning revenue was lower year-on-year, reflecting a
slower period of public sector activity linked to the change in Government and
subsequent uncertainty around the Autumn Budget.

The property consolidation programme remains on track, with the new 100,000 sq
ft warehouse in Markham Vale now approximately half full with around 700,000
boxes following the relocation from the properties in Redhill and Paddock
Wood, both of which are on track to be substantially exited by the end of this
year.

We have now moved to the next phase of the property consolidation programme
and have agreed contract heads of terms for a c85,000 sq ft warehouse located
in North East England which has a capacity of 1 million boxes. The warehouse
will be racked out in early 2025 with boxes starting to move in shortly
thereafter.

Tight cost control and early benefits from the integration of the scanning
business is driving improved operating margins within Information
Management.  Most of the cost saving actions in connection with the
integration will be complete by the end of 2024 and we continue to expect
annualised savings of £3 million, with costs now expected to be less than the
£3 million originally anticipated.

Technology

The Technology business saw good revenue growth, in particular through value
added IT resellers and lifecycle management as companies returned to a
normalised hardware refresh cycle and outsourced more IT services to value
added resellers.  Whilst profitability in the Period remained substantially
below our medium term target of 15% adjusted operating margin, it is now
improving, and we expect the business's increasingly fit-for-purpose operating
model and focus on a blue-chip customer base to deliver continued momentum in
its performance.

Datashred

Service visit numbers were up year-on-year which, together with a now largely
stabilised paper price, resulted in good revenue growth in the Period.  We
expect improved profitability in the second half of the year, driven by
increased half-on-half revenues and tight cost control.

Harrow Green

As previously reported, trading in the first half of the year was weak and,
although we saw an improvement in the weeks immediately following the UK
General Election, trading slowed ahead of the Autumn Budget. Accordingly, we
expect that revenue in the Harrow Green business will be lower in FY24
compared to FY23.

Full year outlook

As a result of slower activity, largely reflecting market uncertainly ahead of
the Autumn Budget, FY24 revenue is expected to be broadly flat year-on-year.
However, our actions to improve margins are progressing well, and as a result
the Group remains on track to deliver adjusted profit before tax and adjusted
earnings per share for FY24 in line with market expectations(1).

Cash generation remains strong with conversion in excess of 80% during the
Period and year-end net debt is also expected to be in line with expectations.

Impact of the Autumn Budget

Given the nature of the Group's workforce and the high proportion of costs
that relate to payroll, Restore will face a significant headwind when the
increased employer National Insurance Contributions ("NICs") and National
Minimum Wage ("NMW") rates take effect in April 2025. The total annualised
impact of these is estimated to be in the region of £3 million for the Group,
of which £2.5 million relates to NICs (or around £1,000 per employee).

As the actions taken by management to improve margins are progressing well,
the Group expects this momentum in the business, along with appropriate price
rises, where possible, to mitigate the impact of NICs and NMW. Accordingly,
our expectations for FY25 are unchanged.

 

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 (http://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

 

(1) The latest Group compiled consensus is available on our website at:
https://www.restoreplc.com/for-investors/#analysts-consensus
(https://www.restoreplc.com/for-investors/#analysts-consensus)

 

 

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