Restore Faces Challenges as Digital Segment Falters

Restore, a records management group, has encountered difficulties with its digital segment, leading to a non-cash impairment of £32.5 million. This impairment contributed to a decline in the company’s stock price 71% over the past year. The decrease in demand for bulk digital scanning services and falling prices for recycled shredded paper have contributed to the struggles faced the group.

In its interim figures, Restore reported a 28% decrease in adjusted profits to £15.1 million. This decline is partially due to increased financing costs and the impairment on the carrying value of the investment in Restore Datashred. The company has focused on cost efficiencies to mitigate the ongoing challenges, implementing changes to organization structures and the property estate to generate cost savings.

The digital segment saw a 17% decline in sales to £25.8 million. The cyclical nature of bulk document scanning and data capture services, combined with customers’ budget rationalization, has contributed to this decline. The current macro environment has also played a role in the segment’s performance.

To restore investor confidence, Restore has made changes to its executive team. Charles Bligh stepped down as chief executive “mutual consent,” and Jamie Hopkins has taken over as the interim chief executive. Additionally, Mike Killick will join the company as the interim chief financial officer.

The company’s executive performance has raised doubts among investors, as reflected in a low forward rating of seven times FactSet consensus earnings. Restore must address these concerns to regain investor trust and improve its stock performance.

Source: N/A