Regenersis (RGS) has spent the past two years ploughing resources into its small but high-margin software business while cutting costs at its sprawling depot solutions division, which specialises in repairing electronics. Management now intends to go one step further and sell off depot solutions as well as its set-top box diagnostics and smartphone insurance businesses. Chief executive Matthew Peacock says the lion's share of the proceeds will be returned to shareholders, which may explain why the shares rose 7 per cent on the day of the announcement.
The fruits of the shift towards software are borne out in these trading figures for the year to 30 June 2015. Reduced restructuring and acquisition costs inflated pre-tax profit during the period, but even on an adjusted basis profit grew 40 per cent to £15.4m.
Revenue from the software business benefited from a full year's trading from data erasure specialist Blancco, which it acquired in April 2014. As a result, divisional revenues rose more than sixfold to £15m, but even on a pro-forma basis Blancco's sales grew by almost a third. The group has this month further beefed up its data erasure business by buying US-focused group Tabernus to balance the European focus of Blancco.
Broker Peel Hunt is currently pencilling in adjusted EPS of 16.3p for the current year to June 2016, up from 16p for FY2015.
REGENERSIS (RGS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 163p | MARKET VALUE: | £129m | |
| TOUCH: | 144-147p | 12-MONTH HIGH: | 329p | LOW: 138p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 154p* | NET CASH: | £7.8m | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 124 | 0.26 | -1.9 | nil |
| 2012 | 140 | 1.68 | 3.3 | 1.10 |
| 2013 | 180 | 5.67 | 10.5 | 1.83 |
| 2014 | 197 | 2.87 | 5.5 | 4.00 |
| 2015 | 203 | 6.80 | 7.0 | 5.00 |
| % change | +3 | +137 | +28 | +25 |
Ex-div: 5 Nov Payment: 3 Dec *Includes intangible assets of £110m, or 139p a share | ||||
