The introduction of new general data protection regulations (GDPR) earlier this year translated into an administrative headache for many companies, but the need to keep a tighter rein on data boosted Restore’s (RST) records management business. Revenues for the documents management business as a whole – of which records management forms the largest part – were up 8 per cent, while operating profits climbed 11 per cent.
Restore bought TNT Business Solutions in May this year in a move broker Cenkos described as “transformational”. However, the Competition and Markets Authority (CMA) quickly opened an investigation into the deal, which stopped the integration process from progressing until the investigation was closed in August. Since then, Restore has started leveraging TNT’s public sector customer base, including cross-selling shredding services to the Ministry of Defence. Management said it expects to be able to spend around £20m-£30m on acquisitions each year, to further consolidate its markets.
Cash flow improved in the period thanks to a significant reduction in exceptional costs, the most substantial of which was a £7m long-term incentive plan that suppressed statutory profits and EPS last year. Broker Cenkos expects adjusted free cash flow to continue to strengthen, reaching £23.7m in 2018 and then £35.8m in 2019. Pre-tax profit is expected to reach £39.5m, giving EPS of 26.6p in 2018 (from £31.2m and 22.4p in 2017).
| RESTORE (RST) | ||||
| ORD PRICE: | 495p | MARKET VALUE: | £613m | |
| TOUCH: | 490-500p | 12-MONTH HIGH: | 598p | LOW: 472p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 38 | |
| NET ASSET VALUE: | 169p* | NET DEBT: | 55% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 86.9 | 0.1 | nil | 1.67 |
| 2018 | 95.1 | 9.3 | 6.20 | 2.00 |
| % change | +9 | +9,200 | - | +20 |
| Ex-div: | 4 Oct | |||
| Payment: | 9 Nov | |||
| *Includes intangible assets of £258m, or 208p a share | ||||
