TIDMRST
RNS Number : 4712J
Restore PLC
12 September 2016
12 September 2016
RESTORE PLC
Half Year Results 2016
Restore plc ("Restore" or "the Company"), the UK office services
provider, announces its unaudited half year results for the six
month period ended 30 June 2016.
ADJUSTED RESULTS - Continuing HY 2016 HY 2015 % Change
operations
------------------------------- -------- -------- ---------
Revenue (GBPm) 55.4 43.9 +26
EBITDA (GBPm)* 12.3 9.0 +37
Operating profit (GBPm)* 10.5 7.7 +36
Profit before tax (GBPm)
* 9.6 7.1 +35
EPS (p) ** 7.9 6.8 +16
Dividend per share (p) 1.33 1.00 +33
Net debt (GBPm) 29.3 30.4
* Before amortisation of intangible assets, exceptional items,
share based payments charge and other finance costs
** Calculated based on the weighted average shares in issue and
a standard tax charge
STATUTORY RESULTS - Continuing HY 2016 HY 2015
operations
-------------------------------- -------- --------
Operating profit (GBPm) 4.5 3.5
Profit before tax (GBPm) 3.7 2.9
Basic earnings per share
(p) 3.8 2.9
Summary
-- Group revenue up 26% to GBP55.4m
-- Document Management revenue up 34%; adjusted operating profit up 31%
-- Relocation revenue up 12%; adjusted operating profit up 42%
-- Group adjusted profit before tax up 35% to GBP9.6m
-- Adjusted earnings per share up 16% to 7.9p
-- Interim dividend per share up 33% to 1.33p
-- Wincanton Records Management integration proceeding to plan
-- Acquisition of PHS Data Solutions post period-end which:
o significantly expands document shredding business to become
second largest provider in the UK
o further extends the Group's position in records management
Commenting on the results Charles Skinner, Chief Executive,
said:
"We continued to make good operational and financial progress in
the first half, in particular in integrating the Wincanton Records
Management business acquired at the end of 2015 and in delivering
an improved performance in document scanning.
Following the end of the period, we announced the acquisition of
PHS Data Solutions, which transforms our sub-scale document
shredding activities to make Restore the second largest operator in
an attractive market and additionally provides scope to realise
synergies in records management and document scanning.
Together, the addition of the Wincanton and PHS businesses have
significantly enhanced our platform for growth.
The second half of the year has started well and we remain
confident of making progress in the remainder of 2016 to deliver a
full year performance in line with current market
expectations."
For further information please contact:
Restore plc
Charles Skinner, Chief
Executive 07966 234 075
Adam Councell, Group
Finance Director 07860 402 434
Cenkos Securities 020 7397 8900
Nicholas Wells
Elizabeth Bowman
FTI Consulting 020 3727 1340
Nick Hasell
Alex Le May
CHIEF EXECUTIVE'S REVIEW
SUMMARY
Restore delivered another period of strong growth in turnover
and profit in the first half of 2016. Revenues from continuing
operations were GBP55.4m, an increase of 26%, the majority of which
derived from acquisitions made in 2015, most notably Wincanton
Records Management ("WRM"). Adjusted profit before tax grew 35% to
GBP9.6m and adjusted earnings per share increased 16% to 7.9p.
These figures exclude the Irish business of WRM which was sold in
March this year.
During the period, our Document Management division traded well,
with adjusted operating profit increasing to GBP9.7m (2015:
GBP7.4m) on turnover of GBP37.2m (2015: GBP27.7m). The core records
management business accounted for the majority of this and it
remains the key driver of Group profits with secure revenues, good
margins and steady growth. Net box growth in the core business
remained strong and in line with expectations, although overall net
box growth was below our usual rate of increase, reflecting the
exit of a major WRM customer as anticipated at the time of the WRM
acquisition. The integration of WRM was a major focus area during
the period, and this continued to proceed to plan. We continue to
expect margins in records management to improve as acquisition
synergies are realised.
Restore Shred's revenues were broadly flat year-on-year and it
recorded a small loss. Shredding is a route-based business where
economies of scale are significant and it had become increasingly
clear that Restore Shred lacked the critical mass to compete with
the two major UK shredding operators. The acquisition in August
2016 of PHS Data Solutions, the UK's second largest shredding
operator, is therefore transformational for the Group's shredding
activities. Restore Scan increased both revenues and profits
year-on-year. This partly reflected contributions from recent
acquisitions but also the successful execution of its major
seasonal contract.
Our Relocation division also traded in line with expectations in
the first half and enters the second half of the year with a strong
order book. The division's revenue in the period was GBP18.2m
(2015: GBP16.2m) and adjusted operating profit was GBP1.7m (2015:
GBP1.2m) in what is its seasonally weaker half. Harrow Green, which
comprises the majority of the division's activities, traded ahead
of the previous year, despite a quiet May and June. Relocom was
slightly weaker year-on-year, while IT Efficient showed a good
year-on-year improvement. ITP, the toner cartridge recycler
acquired in July 2015, operated profitably but experienced weaker
trading conditions during the period, reflecting a recent softening
in global demand for its product.
During the period, the Group sold WRM's Ireland operations for
GBP27.8m. This recouped a significant part of the GBP57.3m paid for
the overall WRM business in December 2015. There were very few
synergies that the Group could extract from WRM Ireland and the
customer base had very limited overlap with the rest of Restore's
operations. The transaction reflected the Group's firm belief that
its core competence lies in serving the UK market, where we have
deep knowledge and where we can achieve better returns.
Subsequent to the end of the first half, we acquired PHS Data
Solutions for a consideration of GBP83.2m, further consolidating
our position in the UK document management sector. PHS Data
Solutions is the second largest provider of document shredding
services in the UK as well as having a significant records
management business and a presence in document scanning. It is
expected that there will be significant synergy benefits from the
integration of the businesses into Restore through overhead and
operational savings.
RESULTS
Adjusted operating profit for the six months to 30 June 2016
before exceptional items, amortisation and share based payments was
GBP10.5m (2015: GBP7.7m). Adjusted profit before tax before
exceptional items, amortisation, share based payments and other
finance costs was GBP9.6m (2015: GBP7.1m) on sales of GBP55.4m
(2015: GBP43.9m). Adjusted earnings per share for the period were
7.9p (2015: 6.8p).
On an unadjusted basis operating profit was GBP4.5m (2015:
GBP3.5m) and profit before tax was GBP3.7m (2015: GBP2.9m). The WRM
Ireland disposal and operations have been treated as discontinued
and are not included in these figures. Unadjusted earnings per
share including the profit on the disposal of WRM Ireland were
13.4p (2015: 2.9p). Exceptional items in the period were GBP4.9m.
These included restructuring and redundancy costs of GBP2.8m,
primarily related to the WRM acquisition, transaction costs of
GBP0.2m and National Insurance costs related to the exercise of
management share options of GBP1.7m. Details of exceptional items
are set out in Note 2.
DOCUMENT MANAGEMENT
Our Document Management division primarily comprises the Restore
Records Management business. It also offers shredding and scanning
services through Restore Shred and Restore Scan. All three
businesses and the Relocation division share a similar customer
base. A key factor in the development of the Group has been
maintaining the same customer relationship management system for
all of our businesses to ensure that all appropriate services that
we supply are offered to all existing and potential customers
across the Group.
For the period, the division achieved an adjusted operating
profit of GBP9.7m (2015: GBP7.4m) on turnover of GBP37.2m (2015:
GBP27.7m).
Records Management
Our core records management business continued to trade well,
with much of the operational focus being on the integration of
WRM's operations. Excluding the most recent large acquisitions of
Cintas and WRM, net box growth in the core business ran at an
annualised rate of 6%. The overall net box growth was positive but
was held back by limited new box growth in the recently acquired
businesses and a major exit from WRM which had been anticipated at
the point of acquisition.
The WRM integration is now largely complete.
The benefits of scale in the records management sector are
significant and we have consistently improved margins in acquired
businesses. A large part of this is through operational synergies,
particularly in improving capacity utilisation through a
combination of closing unsuitable sites when leases expire and
accommodating volume growth at underutilised sites. On acquisition,
Cintas was operating at 68% of capacity and WRM at 69% of capacity.
At 30 June 2016, our overall capacity utilisation across the
business was slightly under 90%. PHS Data Solutions' records
management business was estimated to be operating at 82% of
capacity at the time of acquisition. In line with our business
model, we expect to increase capacity utilisation across the whole
operation, including the PHS sites, to over 90%.
We continue to develop space at our low-cost underground
freehold site in Wiltshire where the latest, and what we expect to
be the last, sizeable development is planned to come on stream in
2017. We are confident that for the longer term we have scope to
develop other low-cost existing sites to accommodate our
anticipated box growth.
Following the acquisition of significant UK records management
businesses in each of the last three years, we are now firmly
established as the second largest records management business in
the UK with revenues believed to be about three times those of the
next largest operator. Records management is an attractive business
with strong operating margins and earnings visibility, as well as
high barriers to entry and our business continues to represent an
excellent platform for growth. We expect to continue to make a
number of smaller acquisitions in this business to further
consolidate this market where we have consistently achieved
substantial cost synergies.
Shredding
Restore Shred, our secure shredding and recycling business,
continued to lack the critical mass to generate an appropriate
contribution to the Group and made a small loss in the period. In a
route-based business where the key metric is revenue generated per
collection vehicle, it is difficult to compete with far larger
competitors whose vehicles can collect from many more sites in the
same area and can generate sizeable and consistent volumes for
local processing plants. The recent acquisition of PHS Data
Solutions, whose Datashred shredding business is one of the two UK
market leaders, will transform the profitability of this activity.
We expect there to be significant synergy benefits from combining
our existing shredding operations with Datashred. We also expect
this significantly enlarged business to benefit substantially from
access to the wider Restore group customer base and to provide an
excellent platform for the ongoing consolidation of the UK
shredding market.
Scanning
Restore Scan, our document scanning business, achieved operating
margins in excess of 10% during the period, an improvement on the
operating margins it has historically achieved. We executed our
major seasonal contract for scanning exam papers successfully and
profitably in May and June and made a strong start on our long-term
contract with the Nuclear Decommissioning Authority. We have been
working on several major projects with NHS Trusts where we are
typically digitising patient records; this is a complex operation
and is likely to be a very active area over the coming years. Our
business process outsourcing activities, which generally comprise
regular scanning for a broad range of customers, performed
satisfactorily.
We have invested significantly in our scanning business, in
terms of greatly strengthened management, equipment, IT and
strategic acquisitions. We are undertaking a significant rebuild of
our Manchester scanning centre. We believe that this is an
attractive market with considerable demand for major digitisation
projects, particularly within the NHS, as well as regular business
process outsourcing. We are one of very few well-invested
operations with the capacity to service complex customer
requirements in this market.
The scanning division of PHS Data Solutions, acquired in August,
is being integrated into Restore Scan. The acquisition increases
the revenue of the business by 50%, and confirms Restore Scan as
one of the two largest scanning bureau businesses in the UK. It
also brings additional scan-related activities in scanning
consultancy and support, typically helping clients to establish and
manage their own in-house scanning.
RELOCATION
Our Relocation division predominantly comprises Harrow Green,
the UK market leader in office and workplace relocation. Global
Moving Solutions, an international removal service typically
servicing professional staff being relocated internationally, is
part of Harrow Green, and the division also includes: Relocom, the
IT relocation business in which we have an 83% shareholding;
Restore IT Efficient, our IT asset disposal and recycling business;
and ITP Group, the UK's leading empty printing cartridge
collector.
During the period, which is the seasonally weaker half of the
year for Harrow Green, the division recorded an adjusted operating
profit of GBP1.7m (2015: GBP1.2m) on turnover of GBP18.2m (2015:
GBP16.2m).
Harrow Green traded in line with expectations, with a strong
start to the year being offset by a slowdown in activity in May and
June. Operating margins showed improvement, particularly outside
London. The most recent branch, based on the Diamond Relocations
business in Croydon acquired in December 2015, made a small
contribution during the period. There were fewer major projects
overall in the period than usual, but there are several significant
projects scheduled for the second half of the year.
Relocom traded satisfactorily albeit slightly below the prior
year period. IT Efficient performed strongly with an operational
restructuring improving margins and progress being made on selling
services to customers of other parts of the Group. ITP traded
profitably but below expectations following a weakening in global
demand for recycled toner cartridges that adversely impacted sales
volumes and values.
GROUP
Central costs for the period were in line with last year and
represented less than 2% of Group revenues.
BALANCE SHEET
Net bank debt on 30 June 2016 was GBP29.3m (30 June 2015:
GBP30.4m) reflecting a GBP31.3m reduction from the position at 30
December 2015 of GBP60.6m. The movement has been largely driven by
the GBP27.8m proceeds from the sale of WRM's Ireland operations.
This left the Group in a strong positon and with sufficient
leverage headroom to fund GBP48.5m of the acquisition of PHS Data
Solutions through debt. Property, plant and equipment values have
remained steady since year end. Current assets and current
liabilities, excluding cash, financial liabilities and tax, have
both increased driven by the remainder of the working capital
requirement from the WRM acquisition and the seasonal scanning
contract which takes place each year. Current tax liabilities have
been eliminated due to the tax relief on the exercise of share
options, which has offset the tax payable on the profit on the sale
of WRM Ireland.
CASH FLOW
The net cash generated from operations was GBP6.0m (2015:
GBP4.6m). This includes an adverse working capital movement of
GBP1.4m driven by the remainder of the working capital requirement
from the WRM acquisition and the seasonal scanning contract which
has been offset by a strong performance on trade debtor collections
in our core businesses. Capital expenditure totalled GBP1.9m (2015:
GBP2.5m) compared to depreciation of GBP1.8m (2015: GBP1.3m). This
includes GBP1.2m of continued investment in our storage facilities
and GBP0.3m of investment in our scanning business. The Group has
commenced development of the final section in our underground
freehold site in Wiltshire and expect this to come on stream in
2017. Net bank interest paid amounted to GBP1.0m (2015: GBP0.5m)
and tax paid increased to GBP0.9m (2015: GBP0.3m); tax paid in 2015
included utilisation of losses acquired with the Cintas
acquisition. Following the disposal of WRM Ireland the Group repaid
GBP18.5m on its RCF facility. This facility remained in place and
has been utilised as part of the acquisition of PHS Data Solutions
in August 2016.
DIVIDS
The Board has declared an interim dividend of 1.33p per share
(2015: 1.0p). The interim dividend will be paid on 11 November 2016
to shareholders on the register on 14 October 2016. The Company
paid its first interim dividend in 2012 of 0.4p and the increased
interim dividend is in line with the Board's intention to follow a
progressive dividend policy.
PEOPLE
Our Group has continued to increase in scale and, following the
acquisition of PHS Data Solutions, now employs over 1,800 people. I
would like to welcome the PHS Data Solutions team to the Group.
With very strong market positions in our business streams, we
can continue to provide more opportunity and stability for our
workforce. The business has grown rapidly and we expect this to
continue but the structure of our current and future operations is
now clearer and more predictable. This in turn enables us to
provide clearer career development programmes and paths for our
people. I look forward to our people developing themselves and
their careers within the Restore Group.
As ever, our business is predicated on the energy,
professionalism and effectiveness of our people. I thank them for
their hard work in achieving the strong performance these results
reflect.
OUTLOOK
The second half of the year has started well and we remain
confident of making progress in the remainder of 2016 to deliver a
full year performance in line with current market expectations.
Charles Skinner
Chief Executive 12 September 2016
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2016
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Note GBP'm GBP'm GBP'm
---------------------------------- ----- ------------ ------------ -------------
Revenue 2 55.4 43.9 91.9
Cost of sales (35.3) (27.7) (59.0)
Gross profit 20.1 16.2 32.9
Administrative expenses (10.7) (9.8) (18.8)
Exceptional items - operating
costs 2 (4.9) (2.9) (6.4)
Total operating costs (15.6) (12.7) (25.2)
Operating profit 2 4.5 3.5 7.7
Finance costs (0.8) (0.6) (1.6)
Profit before tax 3.7 2.9 6.1
Income tax charge 3 - (0.5) (0.3)
Profit and total comprehensive
income for the period
from continuing operations 3.7 2.4 5.8
Profit from discontinued
operations 2 9.3 - 0.2
Profit attributable to
owners of the parent 13.0 2.4 6.0
================================== ===== ============ ============ =============
Earnings per share attributable
to owners of the parent
(pence)
Total
- Basic 4 13.4p 2.9p 7.2p
- Diluted 4 13.3p 2.7p 6.8p
Continuing operations
- Basic 4 3.8p 2.9p 7.0p
- Diluted 4 3.8p 2.7p 6.6p
Discontinued operations
- Basic 4 9.6p - 0.2p
- Diluted 4 9.5p - 0.2p
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2016
Attributable to owners of the
parent
Share Share Other Retained Total
capital premium reserves earnings equity
GBP'm GBP'm GBP'm GBP'm GBP'm
----------------------------- --------- --------- ---------- ---------- --------
Balance at 1 January
2015 4.1 35.3 3.8 23.8 67.0
Profit for the period - - - 2.4 2.4
----------------------------- --------- --------- ---------- ---------- --------
Total comprehensive
income for the period - - - 2.4 2.4
----------------------------- --------- --------- ---------- ---------- --------
Transactions with
owners
Dividends - - - (1.4) (1.4)
Share-based payments
charge - - 0.2 - 0.2
Deferred tax on share-based
payments - - 0.1 - 0.1
----------------------------- --------- --------- ---------- ---------- --------
Balance at 30 June
2015 (unaudited) 4.1 35.3 4.1 24.8 68.3
============================= ========= ========= ========== ========== ========
Balance at 1 July
2015 4.1 35.3 4.1 24.8 68.3
Profit for the period - - - 3.6 3.6
----------------------------- --------- --------- ---------- ---------- --------
Total comprehensive
income for the period - - - 3.6 3.6
----------------------------- --------- --------- ---------- ---------- --------
Transactions with
owners
Issue of shares during
the period 0.7 33.2 - - 33.9
Issue costs - (1.0) - - (1.0)
Dividends - - - (0.8) (0.8)
Transfers - - (0.1) 0.1 -
Share-based payments
charge - - 0.7 - 0.7
Deferred tax on share-based
payments - - - - -
----------------------------- --------- --------- ---------- ---------- --------
Balance at 31 December
2015 4.8 67.5 4.7 27.7 104.7
============================= ========= ========= ========== ========== ========
Balance at 1 January
2016 4.8 67.5 4.7 27.7 104.7
Profit for the period - - - 13.0 13.0
----------------------------- --------- --------- ---------- ---------- --------
Total comprehensive
income for the period - - - 13.0 13.0
----------------------------- --------- --------- ---------- ---------- --------
Transactions with
owners
Issue of shares during
the period 0.2 - - - 0.2
Dividends - - - (2.2) (2.2)
Transfers - - (0.8) 0.8 -
Share-based payments
charge - - 0.3 - 0.3
Deferred tax on share-based
payments - - (2.5) - (2.5)
----------------------------- --------- --------- ---------- ---------- --------
Balance at 30 June
2016 (unaudited) 5.0 67.5 1.7 39.3 113.5
============================= ========= ========= ========== ========== ========
Condensed Consolidated Statement of Financial Position
At 30 June 2016
Unaudited Unaudited Audited
30 June 30 June 31 December
Note 2016 2015 2015
GBP'm GBP'm GBP'm
------------------------------ ---- --------- --------- ------------
Assets
Non-current assets
Intangible assets 7 117.7 71.0 118.6
Property, plant and
equipment 37.2 31.0 37.4
Deferred tax asset 3 1.9 4.7 4.3
------------------------------ ---- --------- --------- ------------
156.8 106.7 160.3
------------------------------ ---- --------- --------- ------------
Current assets
Inventories 1.7 0.5 1.7
Trade and other receivables 32.3 29.9 28.8
Cash and cash equivalents 20.4 12.3 8.5
------------------------------ ---- --------- --------- ------------
54.4 42.7 39.0
------------------------------ ---- --------- --------- ------------
Assets held directly
for sale - - 24.2
------------------------------ ---- --------- --------- ------------
Total assets 211.2 149.4 223.5
------------------------------ ---- --------- --------- ------------
Liabilities
Current liabilities
Trade and other payables (28.5) (21.2) (22.4)
Financial liabilities
- borrowings 8 (5.7) (2.9) (3.7)
Other financial liabilities (0.1) (0.1) (0.1)
Current tax liabilities - (0.8) (2.2)
Provisions (0.9) (0.9) (0.8)
------------------------------ ---- --------- --------- ------------
(35.2) (25.9) (29.2)
------------------------------ ---- --------- --------- ------------
Liabilities associated
with assets held for
sale - - (4.6)
------------------------------ ---- --------- --------- ------------
(35.2) (25.9) (33.8)
------------------------------ ---- --------- --------- ------------
Non-current liabilities
Financial liabilities
- borrowings 8 (44.0) (39.8) (65.4)
Other long term liabilities - (0.7) (0.5)
Other financial liabilities (0.2) (0.2) (0.2)
Deferred tax liabilities (12.0) (7.2) (12.0)
Provisions (6.3) (7.3) (6.9)
------------------------------ ---- --------- --------- ------------
(62.5) (55.2) (85.0)
------------------------------ ---- --------- --------- ------------
Total liabilities (97.7) (81.1) (118.8)
------------------------------ ---- --------- --------- ------------
Net assets 113.5 68.3 104.7
============================== ==== ========= ========= ============
Equity
Share capital 5.0 4.1 4.8
Share premium account 67.5 35.3 67.5
Other reserves 1.7 4.1 4.7
Retained earnings 39.3 24.8 27.7
------------------------------ ---- --------- --------- ------------
Equity attributable
to owners of parent 113.5 68.3 104.7
============================== ==== ========= ========= ============
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2016
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Note GBP'm GBP'm GBP'm
----------------------------- ----- ------------ ------------ -------------
Net cash generated from
operations 6 6.0 4.6 11.0
Net finance costs (1.0) (0.5) (1.1)
Income taxes paid (0.9) (0.3) (0.8)
----------------------------- ----- ------------ ------------ -------------
Net cash generated from
operating activities 4.1 3.8 9.1
Cash flows from investing
activities
Purchases of property,
plant and equipment and
applications software 2 (1.9) (2.5) (4.0)
Sale of property 2.4 - -
Purchase of subsidiary
including acquisition
costs,
net of cash acquired (0.7) (0.7) (63.9)
Purchase of trade and
assets - - (2.0)
Sale of subsidiary, net
of cash disposed 2 27.4 - -
----------------------------- ----- ------------ ------------ -------------
Cash flows generated/(used)
in investing activities 27.2 (3.2) (69.9)
Cash flows from financing
activities
Proceeds from share issues - - 32.9
Dividends paid - - (2.2)
Repayment of borrowings (18.5) (1.6) (47.0)
Drawdown of revolving
credit facility - 6.5 28.5
New bank loans raised - - 50.0
Increase in bank overdrafts (0.9) (0.1) 0.2
----------------------------- ----- ------------ ------------ -------------
Net cash (used)/generated
in financing activities (19.4) 4.8 62.4
----------------------------- ----- ------------ ------------ -------------
Net increase in cash
and cash equivalents 11.9 5.4 1.6
Cash and cash equivalents
at start of period 8.5 6.9 6.9
Cash and cash equivalents
at the end of period 20.4 12.3 8.5
============================= ===== ============ ============ =============
Cash and cash equivalents
shown above comprise:
Cash at bank 20.4 12.3 8.5
============================= ===== ============ ============ =============
Notes to the Consolidated Interim report
For the six months ended 30 June 2016
1 Basis of preparation
The condensed consolidated interim financial information for the
half year ended 30 June 2016 was approved by the Board of Directors
and authorised for issue on 12 September 2016. The disclosed
figures are not statutory accounts in terms of Section 435 of the
Companies Act 2006. Statutory accounts for the year ended 31
December 2015, on which the auditors gave an audit report which was
unqualified and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006, have been filed with the Registrar
of Companies. The annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European
Union.
This half-yearly report has been prepared on a basis consistent
with the accounting policies expected to be applied for the year
ended 31 December 2016, and uses the same accounting policies and
methods of computation applied for the year ended 31 December
2015.
There were no new relevant standards or interpretations to be
adopted for the six months ended 30 June 2016.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern
basis of accounting in preparing these half-yearly financial
statements.
2 Segmental information
The Group is organised into two main operating segments,
Document Management and Relocation, and operates one service per
segment as described in the Chief Executive's review. The vast
majority of trading of the Group is undertaken within the United
Kingdom. Segment assets include intangibles, property, plant and
equipment, inventories, receivables and operating cash. Central
assets include deferred tax and head office assets. Segment
liabilities comprise operating liabilities. Central liabilities
include income tax and deferred tax, corporate borrowings and head
office liabilities. Capital expenditure comprises additions to
computer software, property, plant and equipment and includes
additions resulting from acquisitions through business
combinations. Segment assets and liabilities are allocated between
segments on an actual basis.
REVENUE
The revenue from external customers was derived from the Group's
principal activities in the UK (the Company is domiciled in
England) as follows:
Unaudited six months ended 30 June 2016
Document Head
Management Relocation Office Total
GBP'm GBP'm GBP'm GBP'm
------------------------- ----------- ---------- ------- ------
Revenue 37.2 18.2 - 55.4
------------------------- ----------- ---------- ------- ------
Segment adjusted
operating profit/(loss) 9.7 1.7 (0.9) 10.5
------------------------- ----------- ---------- ------- ------
Exceptional items (4.9)
Share-based payments
charge (0.3)
Amortisation of
intangible assets (0.8)
------------------------- ----------- ---------- ------- ------
Operating profit 4.5
Finance costs (0.8)
------------------------- ----------- ---------- ------- ------
Profit before tax 3.7
------------------------- ----------- ---------- ------- ------
Tax charge (0.7)
------------------------- ----------- ---------- ------- ------
Profit after tax 3.0
------------------------- ----------- ---------- ------- ------
Segment assets 183.1 24.5 3.6 211.2
Segment liabilities 23.7 10.9 63.1 97.7
Capital expenditure 1.8 0.1 - 1.9
Depreciation and
amortisation 2.3 0.3 - 2.6
------------------------- ----------- ---------- ------- ------
Unaudited six months ended 30 June 2015
Document Head
Management Relocation Office Total
GBP'm GBP'm GBP'm GBP'm
------------------------- ----------- ---------- ------- ------
Revenue 27.7 16.2 - 43.9
------------------------- ----------- ---------- ------- ------
Segment adjusted
operating profit/(loss) 7.4 1.2 (0.9) 7.7
------------------------- ----------- ---------- ------- ------
Exceptional items (2.9)
Share-based payments
charge (0.2)
Amortisation of
intangible assets (1.1)
------------------------- ----------- ---------- ------- ------
Operating profit 3.5
Finance costs (0.6)
------------------------- ----------- ---------- ------- ------
Profit before tax 2.9
------------------------- ----------- ---------- ------- ------
Tax charge (0.5)
------------------------- ----------- ---------- ------- ------
Profit after tax 2.4
------------------------- ----------- ---------- ------- ------
Segment assets 118.0 18.4 13.0 149.4
Segment liabilities 23.6 5.5 52.0 81.1
Capital expenditure 2.5 - - 2.5
Depreciation and
amortisation 2.1 0.3 - 2.4
------------------------- ----------- ---------- ------- ------
Audited Year ended 31 December 2015
Document Head
Management Relocation Office Total
GBP'm GBP'm GBP'm GBP'm
------------------------- ----------- ------------ ------- ------
Revenue 54.7 37.2 - 91.9
------------------------- ----------- ------------ ------- ------
Segment adjusted
operating profit/(loss) 15.1 4.1 (1.6) 17.6
------------------------- ----------- ------------ ------- ------
Exceptional items (6.4)
Share-based payments
charge (0.9)
Amortisation of
intangible assets (2.6)
Operating profit 7.7
Finance costs (1.6)
------------------------- ----------- ------------ ------- ------
Profit before tax 6.1
------------------------- ----------- ------------ ------- ------
Tax charge (0.3)
------------------------- ----------- ------------ ------- ------
Profit after tax 5.8
------------------------- ----------- ------------ ------- ------
Segment assets 183.5 39.7 0.3 223.5
Segment liabilities 41.0 7.8 70.0 118.8
Capital expenditure 3.8 0.2 - 4.0
Depreciation and
amortisation 4.6 0.8 - 5.4
------------------------- ----------- ------------ ------- ------
For the six months ended 30 June 2016, exceptional costs were
GBP4.9m including restructuring and redundancy costs in Document
Management of GBP2.7m and GBP0.1m in Relocation, GBP0.2m of
acquisition transaction costs, GBP0.1m of box relocation and
transport costs, GBP1.7m of National Insurance costs of exercised
options and other exceptional costs of GBP0.1m (2015: exceptional
costs were GBP2.9m including restructuring and redundancy costs in
Document Management of GBP1.8m and GBP0.1m in Relocation, GBP0.1m
of acquisition transaction costs, GBP0.1m of box relocation and
transport costs and other exceptional costs of GBP0.8m).
In the year ended 31 December 2015, GBP6.4m of exceptional items
were incurred (acquisition transaction costs, GBP0.4m, box
relocation and associated costs, GBP0.1m, restructuring and
redundancy costs, GBP5.1m, other GBP0.8m).
Discontinued operations
On 10 March 2016, the Group disposed of Restore Document
Management Ireland Limited for a total cash consideration of
EUR36.0m.
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP'm GBP'm GBP'm
------------------------------- ------------ ------------ -------------
RESULTS
Revenue 1.7 - 0.6
------------------------------- ------------ ------------ -------------
Operating profit - - 0.2
------------------------------- ------------ ------------ -------------
Profit before tax - - 0.2
------------------------------- ------------ ------------ -------------
Tax charge - - -
------------------------------- ------------ ------------ -------------
Profit for the period
from discontinued operations - - 0.2
------------------------------- ------------ ------------ -------------
Profit on disposal 9.3 - -
------------------------------- ------------ ------------ -------------
Total profit from discontinued
operations 9.3 - 0.2
=============================== ============ ============ =============
3 Tax
The underlying tax charge is based on the expected effective tax
rate for the full year to 31 December 2016. It is anticipated that
the tax charge in the period will be GBPnil due to the tax relief
available as a result of the exercise of management share options.
The deferred tax asset related to the share-based payment for these
options has been reversed in the period and debited to equity
reserves.
4 Earnings per ordinary share
Basic earnings per share have been calculated on the profit
after tax for the period and the weighted average number of
ordinary shares in issue during the period.
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
----------------------------- ----------- ----------- ------------
Weighted average number
of shares in issue 97,040,947 82,381,789 83,442,266
----------------------------- ----------- ----------- ------------
Total profit after tax GBP13.0m GBP2.4m GBP6.0m
for the period
----------------------------- ----------- ----------- ------------
Total basic earnings
per ordinary share (pence) 13.4p 2.9p 7.2p
----------------------------- ----------- ----------- ------------
Weighted average number
of shares in issue 97,040,947 82,381,789 83,442,266
Share options 422,558 4,451,326 4,430,077
Executive incentive plan 280,566 471,657 373,579
----------------------------- ----------- ----------- ------------
Weighted average fully
diluted number of shares
in issue 97,744,071 87,304,772 88,245,922
----------------------------- ----------- ----------- ------------
Total fully diluted earnings
per share (pence) 13.3p 2.7p 6.8p
----------------------------- ----------- ----------- ------------
Continuing profit for GBP3.7m GBP2.4m GBP5.8m
the year
----------------------------- ----------- ----------- ------------
Continuing basic earnings
per share (pence) 3.8p 2.9p 7.0p
----------------------------- ----------- ----------- ------------
Continuing fully diluted
earnings per share (pence) 3.8p 2.7p 6.6p
----------------------------- ----------- ----------- ------------
Discontinued profit for GBP9.3m - GBP0.2m
the year
----------------------------- ----------- ----------- ------------
Discontinued basic earnings
per share (pence) 9.6p - 0.2p
----------------------------- ----------- ----------- ------------
Discontinued fully diluted
earnings per share (pence) 9.5p - 0.2p
============================= =========== =========== ============
The Directors believe that adjusted basic earnings per share
provide a more appropriate representation of the underlying
earnings derived from the Group's business. The adjusting items are
shown in the table below:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP'm GBP'm GBP'm
--------------------------- ----------- ----------- ------------
Profit before tax for
the period 3.7 2.9 6.1
Adjustments:
Amortisation of intangible
assets 0.8 1.1 2.6
Exceptional items 4.9 2.9 6.4
Share-based payments
charge 0.3 0.2 0.9
Other finance costs (0.1) - 0.3
--------------------------- ----------- ----------- ------------
Adjusted profit for
the period 9.6 7.1 16.3
=========================== =========== =========== ============
The additional adjusted earnings per share, based on weighted
average number of shares in issue during the period, 97.0m (2015:
83.4m, 83.4m) is calculated below:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Adjusted profit before
tax (GBP'm) 9.6 7.1 16.3
Tax at 20.0% / 20.5%
/ 20.25% (GBP'm) (1.9) (1.5) (3.3)
---------------------------- ----------- ----------- ------------
Adjusted profit after
taxation (GBP'm) 7.7 5.6 13.0
---------------------------- ----------- ----------- ------------
Adjusted basic earnings
per share (pence) 7.9p 6.8p 15.6p
---------------------------- ----------- ----------- ------------
Adjusted fully diluted
earnings per share (pence) 7.9p 6.4p 14.7p
============================ =========== =========== ============
5 Dividends
In respect of the current period, the Directors propose an
interim dividend of 1.33p per share (2015: 1.00p) to be paid to
shareholders on 11 November 2016. The proposed interim dividend is
payable to all shareholders on the Register of Members on 14
October 2016. The estimated dividend to be paid is GBP1.5m (2015:
GBP0.8m).
6 Cash inflow from operations
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP'm GBP'm GBP'm
============================= =========== =========== ============
Profit before tax 3.7 2.9 6.1
Depreciation of property,
plant and equipment 1.8 1.3 2.8
Amortisation of intangible
assets 0.8 1.1 2.6
Net finance costs 0.8 0.6 1.6
Share-based payments
charge 0.3 0.2 0.9
Decrease/(increase)
in inventories - 0.1 (0.5)
Increase in trade and
other receivables (3.4) (5.2) (1.5)
Increase/(decrease)
in trade and other payables 2.0 3.6 (1.0)
----------------------------- ----------- ----------- ------------
Net cash generated from
operations 6.0 4.6 11.0
============================= =========== =========== ============
7 Intangible assets
Applications
Customer Trade software
Goodwill relationships names & IT Total
GBP'm GBP'm GBP'm GBP'm GBP'm
Cost
1 January 2015 58.5 22.1 2.0 3.8 86.4
Acquired with subsidiary (1.7) 4.3 - 0.3 2.9
Arising on acquisition
of subsidiary - - - 0.3 0.3
Disposals - - - (0.1) (0.1)
------------------------- -------- -------------- ------ ------------ ------
30 June 2015 56.8 26.4 2.0 4.3 89.5
------------------------- -------- -------------- ------ ------------ ------
Cost
30 June 2015 56.8 26.4 2.0 4.3 89.5
Additions - external - - - 0.2 0.2
Arising on acquisition
of subsidiary 23.3 43.9 - (0.3) 66.9
Disposals - - - (1.5) (1.5)
Transferred to assets
held for sale (4.8) (13.0) - - (17.8)
------------------------- -------- -------------- ------ ------------ ------
31 December 2015 75.3 57.3 2.0 2.7 137.3
------------------------- -------- -------------- ------ ------------ ------
Cost
1 January 2016 75.3 57.3 2.0 2.7 137.3
Acquired with subsidiary (0.3) - - - (0.3)
Additions - external - - - 0.2 0.2
30 June 2016 75.0 57.3 2.0 2.9 137.2
------------------------- -------- -------------- ------ ------------ ------
Accumulated amortisation
and impairment
1 January 2015 10.6 3.9 0.9 2.1 17.5
Charge for the period - 0.7 0.1 0.3 1.1
Disposals - - - (0.1) (0.1)
------------------------- -------- -------------- ------ ------------ ------
30 June 2015 10.6 4.6 1.0 2.3 18.5
------------------------- -------- -------------- ------ ------------ ------
Accumulated amortisation
and impairment
30 June 2015 10.6 4.6 1.0 2.3 18.5
Charge for the period - 1.2 0.1 0.2 1.5
Disposals - - - (1.2) (1.2)
Transferred to asset
held for sale - (0.1) - - (0.1)
------------------------- -------- -------------- ------ ------------ ------
31 December 2015 10.6 5.7 1.1 1.3 18.7
------------------------- -------- -------------- ------ ------------ ------
Accumulated amortisation
and impairment
1 January 2016 10.6 5.7 1.1 1.3 18.7
Charge for the period - 0.4 0.1 0.3 0.8
30 June 2016 10.6 6.1 1.2 1.6 19.5
------------------------- -------- -------------- ------ ------------ ------
Carrying amount
30 June 2016 - Unaudited 64.4 51.2 0.8 1.3 117.7
------------------------- -------- -------------- ------ ------------ ------
31 December 2015
- Audited 64.7 51.6 0.9 1.4 118.6
------------------------- -------- -------------- ------ ------------ ------
30 June 2015 - Unaudited 46.2 21.8 1.0 2.0 71.0
========================= ======== ============== ====== ============ ======
8 Financial liabilities
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
GBP'm GBP'm GBP'm
Current
Bank loans and overdrafts
due within one year
Overdrafts on demand 0.4 1.1 1.4
Bank loans - secured 5.5 1.9 2.5
Deferred financing costs (0.2) (0.1) (0.2)
-------------------------- --------- --------- ------------
5.7 2.9 3.7
-------------------------- --------- --------- ------------
Non-current
Bank loans - secured 44.5 40.0 66.0
Deferred financing costs (0.5) (0.2) (0.6)
-------------------------- --------- --------- ------------
44.0 39.8 65.4
========================== ========= ========= ============
Analysis of net debt
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
GBP'm GBP'm GBP'm
Cash at bank and in
hand 20.4 12.3 8.5
Bank loans and overdrafts
due within one year (5.7) (2.9) (3.7)
Bank loans due after
one year (44.0) (39.8) (65.4)
-------------------------- --------- --------- ------------
(29.3) (30.4) (60.6)
========================== ========= ========= ============
9 Post balance sheet events
On 26 August 2016, the Company acquired PHS Data Solutions,
which is the second largest provider of document shredding services
in the UK, as well as having a significant records management
business and a presence in document scanning, for a total
consideration of GBP83.2m.
The Group is still in the process of establishing the fair
values of the assets and liabilities acquired in these
transactions.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MMGGLDLFGVZM
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September 12, 2016 02:00 ET (06:00 GMT)
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