News blog

Regenersis

BY: Andrew Hore |
POSTED: 11/03/2009 |

Regenersis is being hit by the weakening of consumer spending but new facilities in Eastern Europe are helping to offset this.

The electronic goods repairer and recycler reported a fall in revenues from £55m to £49.2m in the six months to December 2008, although the comparative period benefited from a stock clearance in the recycling side of the business. Reported profits improved from £1.6m to £1.69m, but the previous year’s interims included an exceptional finance charge of £406,000.

The latest interims include £900,000 of start-up costs and £300,000 of foreign exchange gains. The repair division has opened new facilities in Sommerda, East Germany, and Bucharest, and is also about to open another facility in Warsaw and a joint venture site in Moscow. The environmental services division has opened its first processing centre outside of the UK in Lille, France.

The fewer mobile phones sold, the fewer repairs are likely to be needed. Most repairs have to be carried out in the first three months after purchase so Regenersis is affected relatively quickly, although there is a short lag.

Regnersis has moved back into a net debt position because of the investments it has made. Net debt was £3.4m at the end of December 2008 and it is forecast to be £5m at the end of June 2009. Regnersis has £15m of borrowing facilities so there is plenty of scope to increase borrowings if the business wins new contracts.

Trading is likely to get tougher and there will be more investment in new facilities. House broker KBC Peel Hunt forecasts a fall in full year profits from £5.1m to £4.6m in 2008-09, with a further decline to £4.4m in 2009-10.

At 60.5p a share, Regenersis is valued at £17.2m. The shares are trading on just over five times 2008-09 forecast earnings.

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