Restore’s (RST) chief executive, Charles Bligh, says that when he joined the group in March 2019, shareholders were looking for a demonstration of the strength of the underlying business aside from its ability to boost growth through acquisitions. Following the £88m purchase of TNT Business Solutions in 2018, last year was therefore “a deliberately lighter year of acquisitions”. The group achieved 5 per cent organic revenue growth on the back of expanding its customer portfolio, selective price increases and productivity improvements.
‘Records management’ accounts for over two-fifths of total sales and is underpinned by recurring revenue from 20m boxes and 2.7m data tapes. Revenue from this division rose 11 per cent to £96m with 1.5 per cent net box growth. The Rainham storage facility remains on track to take in new boxes in the first quarter of this year and will provide an additional 0.75m box slots. It will also enable the group to close less efficient sites and eke out further margin improvements. Better property management and synergies from the TNT acquisition drove a 0.4 percentage point expansion in the group’s adjusted operating profit margin to 21.5 per cent last year.
The ‘Datashred’ business continued to see headwinds from low recycled paper prices pushing revenue here down by £0.8m to £41m. But the group sees opportunities to increase its share in a fragmented market and believes paper pricing pressure could drive consolidation as competitors struggle.
Free cash flow more than doubled during the year to £56.9m, and, excluding £134m in lease liabilities, net debt came down a fifth to £88.5m. Net debt is now equivalent to 1.6 times adjusted cash profits (Ebitda) versus 2.1 times a year earlier.
Berenberg is assuming a “2020 blip in the growth story” on the back of Covid-19, incorporating a 20 per cent profit decline across the shredding, scanning and relocation divisions into its forecasts. It forecasts adjusted pre-tax profit of £34m and EPS of 22.4p in 2020, down from £36m and 23.2p in 2019.
| RESTORE (RST) | ||||
| ORD PRICE: | 386p | MARKET VALUE: | £481m | |
| TOUCH: | 385-387p | 12-MONTH HIGH: | 560p | LOW: 291p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 28 | |
| NET ASSET VALUE: | 175p* | NET DEBT: | 102%** | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 91.9 | 6.10 | 7.20 | 3.2 |
| 2016 | 129 | 7.50 | 17.8 | 4.0 |
| 2017 | 172 | 9.90 | 7.10 | 5.0 |
| 2018 | 196 | 21.0 | 15.3 | 6.0 |
| 2019 | 216 | 24.8 | 13.6 | 7.2 |
| % change | +10 | +18 | -11 | +20 |
| Ex-div: | 28 May | |||
| Payment: | 3 Jul | |||
| *Includes intangible assets of £258m, or 207p a share, **Includes lease liabilities of £134m | ||||
