"The business has come from nowhere over the last five years," said Restore (RST) chief executive Charles Skinner. Yet the group, which specialises in document storage, is still in a strong growth phase. Last year, cash profit grew by a fifth to £14.8m - and we think there's more to come.
Restore's document management division was the primary growth engine in 2014, with revenues increasing by just over a third to £37.4m and operating profit up 12 per cent to £11.5m. Elsewhere, the relocations division benefited from an upturn in market conditions, enabling it to increase turnover by 16 per cent to £30.1m.
The group made six acquisitions last year, including records management specialist Cintas and shredding business Cannon Confidential. However, operating margins for these businesses were lower than those achieved by the division's existing operations. Mr Skinner said that since most corporate clients rarely switch their records management supplier, growth is primarily driven by acquisition. But the chief executive also said there are significant growth opportunities catering to public sector clients, since only around half currently outsource their document storage. During the year, in a pointer to future growth opportunities, Restore secured a £3m deal to provide storage services for one NHS hospital, in addition to other contracts with NHS trusts.
Broker N+1 Singer expects adjusted EPS of 15.2p this year, up from 10.9p in 2014.
RESTORE (RST) | ||||
|---|---|---|---|---|
| ORD PRICE: | 264p | MARKET VALUE: | £217m | |
| TOUCH: | 261-266p | 12-MONTH HIGH: | 284p | LOW: 171p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 41 | |
| NET ASSET VALUE: | 82p* | NET DEBT: | 46% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 28 | 0.6 | 3.5 | nil |
| 2011 | 19 | 1.2 | 2.6 | 1.0 |
| 2012 | 43 | 1.5 | 2.5 | 1.5 |
| 2013 | 54 | 5.0 | 5.9 | 1.9 |
| 2014 | 68 | 6.1 | 6.4 | 2.4 |
| % change | +26 | +22 | +8 | +26 |
Ex-div: 11 Jun Payment: 9 Jul *Includes intangible assets of £69m, or 84p a share | ||||
