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29 Jan 2021 | 09:55

Restore activity levels continue improving in second half

(Sharecast News) - Document management, commercial relocation and technology recycling company Restore updated the market on its trading in 2020 on Friday, reporting that the improvement in customer activity levels had continued and accelerated during the second half. The AIM-traded firm said that, combined with the actions it had taken to manage cost and increase operational flexibility, meant a "strong recovery" was seen across the group.

As a result, it expected to report underlying profit for 2020 in line with current market expectations.

Cash generation also continued to be strong, with year-end net debt reduced and exceeding market expectations.

During the fourth quarter, Restore resumed its acquisition strategy with the purchase of Euro Recycling in October, and Computer Disposals in January, which would be integrated into Restore Technology during 2021.

Restore said that, notwithstanding the imposition of additional lockdown restrictions from early November, overall activity levels in the fourth quarter increased to 87% of pre-Covid-19 levels, with records management at 95%.

Second half profit improved over the first half, in line with the board's expectations, with the group's underlying operating margin improving towards pre-Covid-19 levels during the fourth quarter.

Year-end net debt stood at £61.9m, which was "comfortably ahead" of consensus expectations of £68.5m and company guidance of between £65m and £69m.

Including acquisitions, net debt came in at £66.1m, narrowing from £88.5m at the end of 2019.

Net box growth in records management stepped up "appreciably" in the second half, with overall growth for the full year of 0.9%.

Organic box intake was greater than destructions, which the board said demonstrated the strength of the business despite significant remote working.

Substantial cost reduction actions were taken during the year, including the consolidation of three operational sites and further restructuring resulting in a reduction in headcount of about 250 in the second half.

Restore said it would not use the government's Job Retention Scheme in 2021.

"We achieved a very strong financial result, in line and in some cases above market expectations, and I am especially pleased that we continued to improve the financial strength of the company with lower net debt over the year," said chief executive officer Charles Bligh.

"With this strength and our disciplined growth strategy we will remain at the forefront of shaping our markets in the coming years and will deliver a substantial increase in profits and shareholder value."

At 0937 GMT, shares in Restore were down 0.28% at 359p.
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