Costs associated with Restore's (RST) executive incentive plan and the restructuring of PHS Data Solutions – the company it acquired in August last year – wiped out the office services provider's statutory profits at the interim stage. On an adjusted basis performance looks a good deal better, with operating profit up 57 per cent to £16.5m. Much of the top-line growth (see table) came via that acquisition, but organic revenue growth was also respectable at 7.7 per cent.
Buying PHS gave the company control of Datashred, a shredding business much larger than Restore’s existing capability. The combined division is now one of the two largest operators in the UK. This is expected to benefit further from the introduction of general data protection regulation in May next year, as should the group’s wider records management and scanning activities.
The office services group has been sticking to its well worn approach of frequent acquisitions, buying up seven businesses so far this year, including shredding business Lombard, announced on results day. These cost just less than £10m in aggregate, and chief executive Charles Skinner expects a similar level of spend in the second half: that is, “unless there’s a big one”. Restore agreed new banking facilities in the period, extending the existing facility out to November 2022 and providing an extra £20m of committed funds and £30m in an uncommitted accordion facility.
Analysts at Cenkos are forecasting adjusted pre tax profit of £31.2m, giving EPS of 22.4p for 2017 (up from£23m and 17.9p in 2016).
| RESTORE (RST) | ||||
| ORD PRICE: | 527p | MARKET VALUE: | £594m | |
| TOUCH: | 523-530p | 12-MONTH HIGH: | 530p | LOW: 325.5p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 81 | |
| NET ASSET VALUE: | 132p* | NET DEBT: | 52% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 55.4 | 3.7 | 3.80 | 1.33 |
| 2017 | 86.9 | 0.1 | nil | 1.67 |
| % change | +57 | -97 | - | +26 |
| Ex-div: | 12 Oct | |||
| Payment: | 10 Nov | |||
| *Includes intangible assets of £191m, or 169p a share | ||||
