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Document storage services provider Restore has recovered strongly in 2010 thanks to a good performance from the core business and the return to profit of Peter Cox.
Restore, previously known as Mavinwood, reported a small increase in revenues from continuing operations from £27m to £27.7m. There was a dip in revenue from the small document scanning business, which slumped into loss. Elsewhere, revenues edged ahead.
An underlying group pre-tax loss of around £100,000 in 2009 was turned into a £2.7m profit in 2010.
Most of the growth in revenues from the document storage business came from two recent acquisitions but the sharp jump in operating profit from £2.8m to £3.9m was mainly down to cost savings from the integration of past acquisitions.
Datacare, acquired in September, contributed around £500,000 to revenues and £180,000 to operating profit. Formsafe was acquired too late in the year to make a significant contribution. Cost savings should help Datacare to contribute operating profit of more than £500,000 this year and Formsafe, which cost £720,000, to make more than £300,000 operating profit. Those two acquisitions underpin nearly half of Restore’s profit improvement expected by house broker Cenkos in 2011.
The scanning business has started 2011 more strongly and should return to profit this year.
Building maintenance business Peter Cox has started a solar installation business and this should help it to build on its revenue and profit.
Cenkos forecasts a profit of £4.1m for 2011.
At 36.5p a share, up 4.25p on the day, Restore is valued at £16.8m. The shares are trading on eight times 2010 earnings, falling to less than six for 2011.
Restore is keen to make more add-on acquisitions. The strategy is to buy more document storage operations plus other products that can be sold to the existing customer base. The products and services could be bundled and sold as one package. A joint venture may be a way of gaining access to one new market.
Geraldton, which is owned by Lord Ashcroft, holds 58% of Restore but acquisitions should dilute this. Geraldton also has a £2.4m loan due for repayment, including interest, in 2012.
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