Restore confident despite first-half difficulties

16th Aug 2023 09:37

(Sharecast News) - Digital and information management specialist Restore reported a robust first-half revenue performance on Wednesday, driven by strong performances in records management, recurring income streams of the digital division, and Harrow Green.

The AIM-traded firm said the gains, however, were partly offset by challenges in the technology segment due to a decrease in quality IT assets available for resale, and a drop in non-recurring contracts in the digital sector, notably in bulk scanning.

For the six months ended 30 June, the group reported a slight dip in revenue to £139.6m, from £140.3m in the same period a year earlier.

Adjusted EBITDA saw a 5% decline to £38.3m, and after accounting for the increased interest rates on borrowing, adjusted profit before tax came in at £15.1m.

Restore noted the non-cash write-down of £32.5m against its previous investment in Datashred.

It explained that factors such as the escalated cost of capital, anticipated reduction in service activity, and fluctuations in recycled paper pricing were cited for the decision.

The adjustment contributed to the group recording a statutory loss before tax of £25.9m for the first half.

Despite the challenges, the company said it maintained strong cash flow, while net debt narrowed to £97.9m with a leverage ratio of 1.8x, aligning well within its target parameters.

On the management front, Restore announced the appointment of Mike Killick as its interim chief financial officer on Wednesday, effective 21 August.

He would succeed Neil Ritchie, who previously revealed his intention to resign as CFO on 14 June.

Ritchie would, however, continue to ensure a smooth transition until his contractual notice period concludes on 13 December.

The company added that efforts were underway regarding its management succession strategy, adding that it would soon update on the search for a permanent CEO and CFO.

Looking ahead, Restore remained optimistic, noting that its current trading trajectory aligned with its revised expectations, as it anticipated an adjusted profit before tax of £31m for the full year.

"Whilst the first half has been a difficult period, the group remains profitable and cash generative on an adjusted basis and continues to deliver excellent service for our customers," said interim chief executive officer Jamie Hopkins.

"The fundamentals of the business remain highly attractive and our core storage business and recurring service income across the group provide a strong base from which to navigate the current economic challenges and rebuild profitability and shareholder value.

"Good progress is being made with the group's management succession planning and we are delighted to welcome Mike Killick, who will be joining as interim CFO on 21 August."

At 0926 BST, shares in Restore were up 2.34% at 128.95p.

Reporting by Josh White for Sharecast.com.