The near doubling of pre-tax profit in Restore's (RST) reported half-year numbers is somewhat misleading: strip out one-off costs, which were much higher last year, and earnings were up by a more modest fifth. But the office services provider is still growing fast, thanks largely to its core records management operation.
Chief executive Charles Skinner told us this business was benefitting from acquiring and integrating smaller rivals as part of the group’s long-term strategy to consolidate the UK records management sector. The document management division, which contains the core records business, is remarkably profitable, posting adjusted operating profit of £5.3m on sales of £16m for the half.
These figures were also boosted by the group’s shredding company, Restore Shred, and its game-changing acquisition of Cannon Confidential in May. Mr Skinner said the deal had expanded Restore's customer base, operating capacity and geographic coverage in what has developed into a massive growth sector.
Acquisitions remain central to Restore's business model, accounting for half its top-line growth during the first half. To fund them, the group signed a new finance arrangement in March with Barclays, involving a single £30m revolving credit facility with the potential for a further £7.5m.
Broker N+1 Singer expects adjusted pre-tax profits of £11.5m for the full year, giving EPS of 11.9p – up from £9.5m and 9.5p last year.
RESTORE (RST) | ||||
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ORD PRICE: | 228p | MARKET VALUE: | £171m | |
TOUCH: | 227-229p | 12-MONTH HIGH: | 229p | LOW: 128p |
DIVIDEND YIELD: | 0.9% | PE RATIO: | 31 | |
NET ASSET VALUE: | 66p* | NET DEBT: | 45% |
Half-year to 30 June 2014 | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2013 | 24.6 | 1.8 | 2.0 | 0.6 |
2014 | 30.6 | 3.3 | 3.5 | 0.8 |
% change | +24 | +83 | +75 | +33 |
Ex-div: 16 Oct Payment: 14 Nov *Includes intangibles of £47.8m or 64p per share |