Records management, technology and office relocation services provider Restore (LON: RST) has plenty of acquisition opportunities, but in the short-term it is likely to focus on organic growth. Acquisitions will still enhance longer-term growth.
In 2022, revenues were 19% higher at £279m, which includes organic growth of 11%. Underlying pre-tax profit improved by 8% to £41m because it was held back by higher interest charges. The total dividend of 7.4p a share is covered 3.2 times by earnings.
Improved efficiency and price rises helped to offset inflation, although there was a lag so profit was slightly lower than it would have been.
Records management remains the largest division and it is growing faster than the market. Contract wins from the BBC and Department of Work and Pensions provides further growth this year and beyond. Occupancy rates are up to 97%.
The digital business is growing rapidly with organic growth of 25% as physical records are transferred to digital. Contract wins are increasing scale and improving margins. The profit growth came from records management and digital.
The technology division, which focuses on end of life technology services, had a tougher year as spending on new equipment dipped – partly due to component supply. It still grew, though. The longer-term outlook is better.
Datashred grew strongly. The relocation business reported flat revenues, but it will be helping with the new BBC contract.
A full year pre-tax profit of £45m is forecast for this year and net debt is expected to fall from £104m to £91m.
At 320p, the shares are trading on 13 times prospective 2023 earnings. The increase in corporation tax rates means earnings will be flat but in the future, there should be double digit growth.
Earnings enhancing acquisitions could make the shares appear even more attractive.
