Report & Financial Statements
For the year ended 31 December 2011
Contents
Two years of transformation
Directors
Financial highlights
Chairman’s statement
Business review
Directors’ report
Corporate governance statement
Remuneration report
Statement of directors’ responsibilities
Independent auditor’s report
Group financial statements
Notes to the financial statements
Company balance sheet
Company accounting policies
Notes to the company financial statements
Trading record
Officers and advisers
Notice of Annual General Meeting
www.liambailey.com
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RESTORE PLC | REPORT & ACCOUNTS
Two years of transformation
Records Management
Office Relocation
Scanning
Shredding
Peter Cox:
Damp Proofing/Timber Treatment
Coverage
Market
Position
March 2012
Coverage
Market
Position
March 2010
3
1
>5
>5
1
Mainland
England
Mainland
Britain
8
Southern
England
n/a
None
Nationwide
>5
Nationwide
Southern
England
n/a
None
Nationwide
1
Nationwide
Turnover
Unadjusted operating profit
Adjusted earnings per share
40
35
30
25
20
15
10
5
0
m
’
£
2009
2010
2011
4
3
2
1
0
-1
-2
-3
-4
m
’
£
2009
2010
2011
8
6
4
2
0
-2
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c
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P
2009
2010
2011
Share price April 2010 to March 2012
)
p
(
e
c
i
r
P
100
90
80
70
60
50
40
30
20
10
0
Apr
Jul
Oct
Jan 11
Apr
Jul
Oct
Jan 12
Mar 12
Source: Digital Look
01
Andrew Wilson, MBA, ACA, CTA
aged 51, Non-Executive Director
Andrew Wilson joined the Board on 8 June 2009 as a
Non-Executive Director. Andrew is a Non-Executive
Director of several listed companies: Impellam Group
plc, GHP AB, Weare2020 plc, Dods plc, Shellproof
Limited and Shellshock Limited. He is also a Non-
Executive Director of a number of private companies,
including Artefact Partners Limited, LTMS Limited, Pluto
Capital Limited, Political Holdings Limited and SUSD
Limited.
Dr John Forrest, CBE
aged 68, Non-Executive Director
Dr John Forrest joined the Board on 8 November 2010
as a Non-Executive Director. He has considerable
public company Board experience and has held posts at
Marconi Defence Systems and the Independent
Broadcasting Authority, where he led their
transformation into the major broadcast and cable
communications company, NTL. He was a main Board
director of 3i Group plc with focus on development of
their international strategy. He has led both UK
government and EU committees and now has a
portfolio of activities as Chairman of Boards of high
growth companies in the technology, renewable energy,
security and IT sectors.
RESTORE PLC | REPORT & ACCOUNTS
Directors
Sir William Wells
aged 72, Non-Executive Chairman
Sir William Wells was appointed Chairman of the Board
on 8 June 2009. His career encompasses senior
positions in public health, commercial property,
insurance and business services. He was Managing
Partner and then Chairman of Chesterton Chartered
Surveyors for 34 years, where he oversaw their transition
from a private partnership to a listed company. His other
experience includes non-executive director roles with
AMP (UK), Henderson Group plc and Exel plc. Sir
William is Chairman of ADL plc, a care home provider,
CMG plc, a specialist in the care of adults with learning
difficulties, and Transform plc, the leading cosmetic
surgery company in the UK. He was the Chairman of
the Department of Health’s Commercial Advisory Board
and the NHS Appointments Commission.
Charles Skinner
aged 51, Chief Executive
Charles Skinner was appointed Chief Executive of the
Group on 8 June 2009. Charles was previously Chief
Executive of Johnson Services Group plc and Brandon
Hire plc for nine years, prior to which he was at SG
Warburg, 3i plc and editor of Management Today.
Charles has considerable business-to-business services
experience.
Harvey Samson, ACA, CTA
aged 54, Group Finance Director
Harvey Samson was appointed Group Finance Director
on 3 May 2011. He is a Chartered Accountant and has
held various CEO and Finance Director positions
including Group Chief Executive of Latium Group, where
he was also Managing Director of Ultraframe Limited. He
was also Finance Director and subsequently Chief
Executive of the Gardiner Group plc, the listed support
services company.
02
RESTORE PLC | REPORT & ACCOUNTS
Financial highlights
Continuing operations
2011
2010
Unadjusted revenue
Adjusted* EBITDA
Adjusted* operating profit
Adjusted* profit before tax
Adjusted* earning per share**
Net debt
*before discontinued operations, exceptional items (including exceptional finance costs),
amortisation and impairment of intangible assets, share based payments charge and
other finance costs as detailed in note 7. The reconciliation of adjusted figures are shown
on page 9.
**calculated based on the shares in issue and a standard tax charge
£34.8m
£5.9m
£5.2m
£4.6m
6.9p
£11.6m
£27.7m
£3.9m
£3.3m
£2.6m
4.4p
£12.3m
UNADJUSTED FINANCIAL HIGHLIGHTS
Operating profit
Profit before tax
Earnings per share
Net debt
£3.1m
£2.0m
4.0p
£11.6m
£1.7m
£0.6m
3.5p
£12.3m
Turnover
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03
RESTORE PLC | REPORT & ACCOUNTS
I am pleased to report a strong
performance by Restore plc in a year in
which it made significant progress in
delivering on its ambitious plans for growth
“
”
04
RESTORE PLC | REPORT & ACCOUNTS
Chairman’s statement
Results
I am pleased to
report a strong
performance by
Restore plc, in a
year in which it
made significant
progress in
delivering on its
ambitious plans for
growth. During
2011, the
Company benefited
from the underlying
Sir William Wells
Chairman
resilience of its core records management business
while making four acquisitions and a joint venture
investment that increased the scale of our operations
and developed Restore plc into a much broader-based
provider of UK office services. For the year to 31
December 2011, adjusted profit before tax (before
exceptional items, amortisation and share-based
payment charges), was £4.6 million, a year-on-year
increase of 77% (2010: £2.6 million). Adjusted operating
profit increased to £5.2 million (2010: £3.3 million) on
turnover which rose to £34.8 million (2010: £27.7
million). Earnings per share on an adjusted basis were
up 57% at 6.9 pence (2010: 4.4 pence). I am also
pleased to announce the Board’s recommendation of a
maiden dividend of 1p per share.
Trading
Restore, our records management business, continued
to trade strongly, with recent acquisitions performing
ahead of expectations. Turnover was £13.8 million
(2010: £10.7 million) and operating profit was £5.4
million (2010: £3.9 million). Organic growth was steady
reflecting the stable demand for our services. The
majority of the increase in profit derived from the six
acquisitions we have made over the last eighteen
months, including the integration of the records
management business of Sargents. We have been very
successful in integrating these acquisitions and sharply
increasing their operating margins.
Sargents, the office relocation business acquired in April,
recorded operating profit of £0.3 million on a turnover of
£3.2 million. Sargents’ core business will benefit
significantly from working with Harrow Green, the UK
leading office relocation business we acquired in
February 2012.
DCS, our scanning business, operated at breakeven
(2010: £0.1 million loss) on turnover which fell to £1.8
million (2010: £2.0 million). Costs continued to be cut to
achieve this result.
Restore Shred, the start-up secure shredding and
recycling business in which we took a 50% interest in
October, recorded a small loss.
Peter Cox, the damp-proofing and timber treatment
business, recorded an operating profit of £0.8 million
(2010: £0.5 million) on turnover of £16.0 million (2010:
£15.0 million). This continued an impressive turnaround,
with changes implemented over the last two years
dramatically improving performance with little help from
external market conditions.
The Business Review which follows gives a fuller
assessment of our businesses’ performance and
prospects.
Corporate transactions
Four acquisitions were made in the year, as well as the
investment in a 50% share of Restore Shred.
- In April, we acquired Sargents, a London-based office
relocations and records management business, from
the receiver for £0.5 million. This took the Group into
the attractive office relocation market as well as adding
additional records management activity to Restore.
- In June, we acquired Management Archives, a Leeds-
based records management business for £0.7 million.
This gave us a records management presence in
Northern England.
- In August, we acquired Paterson Data Management, a
Glasgow-based records management business, for
£0.6 million, giving us a records management
presence in Scotland.
- In October, we acquired a 50% stake in
Thoroughshred, subsequently renamed Restore Shred,
for £0.3 million. This London-based business took us
into the secure shredding and recycling business, a
logical addition to our other office services. We have
an option to acquire the remaining 50% from the other
shareholders in three years’ time.
- In November, we acquired Brunswick Document
Management, a Middlesbrough-based records
management business, for £1.2 million, extending our
coverage to North-East England.
05
RESTORE PLC | REPORT & ACCOUNTS
Chairman’s statement (continued)
These acquisitions provide comprehensive coverage of
mainland Britain for our customers. With Sargents and
Restore Shred, we entered the office relocation and
shredding markets respectively, both of which fit into our
strategy of expanding the office services we provide to
customers. We have proven skills in integrating
businesses and increasing profit margins through
intelligent use of our existing infrastructure, such as
maximising space utilisation across our storage sites.
Board
In May, Harvey Samson joined the Board as Group
Finance Director, a position which had been vacant
since 2009. Harvey had been working with the Group
since April 2010, managing the turnaround at Peter Cox.
His extensive experience as both a Chief Executive and
Finance Director in both quoted and unquoted services
businesses has been hugely valuable in delivering our
growth.
Subsequent to the year-end, we acquired Harrow
Green, a national office relocation business, for £6.3
million and assumed £5.6 million of its net debt. With
the addition of Harrow Green, Restore plc became
comfortably the market leader in office relocation with
coverage of all of mainland Britain. Harrow Green also
has a significant records management business, taking
Restore to number three in the UK records management
market and providing new locations in Birmingham and
Manchester. As part of the transaction, we also acquired
a 50% stake in Relocom, an IT relocation services
business.
Funding
Net debt at the year-end was £11.6 million (2010: £12.3
million). In June, a new facility was arranged with
Barclays providing total debt funding of up to £16.5
million.
In July, an equity placing of £4.5 million (after expenses)
was completed at 65p per share to fund acquisitions
and pay off outstanding loans from Geraldton, our
largest shareholder.
The acquisition of Harrow Green subsequent to the
year-end was funded by an increase in debt facilities
and an equity placing of £8.5 million at 75p per share.
Current debt facilities are c. £21.5 million, enabling
scope for further acquisitions without the need to raise
additional equity.
Dividends
Your Board is recommending a dividend of 1.0p per
share, payable on 31 July 2012. This is the first dividend
the Group has paid and it is the Board’s firm intention to
follow a progressive dividend policy. In October, the
Company obtained permission from the High Court to
undergo a capital reduction to enable a dividend to be
paid. Distributable reserves at the year end were £16.0
million (2010: deficit £38.3 million).
People
Restore’s management philosophy is centred on the
decentralisation and empowerment of our operating
companies. Our strong financial performance and ability
to grow is dependent on the capability, attitude and
enthusiasm of our people at every level of our
operations. Our business has changed rapidly and I am
delighted at the career opportunities this creates,
including for those joining the Group through
acquisitions. I thank all our people for their commitment
over the last year and look forward to them sharing in
the success of the Group.
Strategy
We have spent the last 18 months building our presence
in the office services market. This has taken us from
being a small Southern England-based business,
centred around a profitable records management
business to a national records management company,
which we believe to be the third largest in the UK. We
are also the UK market leader in office relocation with
national coverage, and now offer closely related services
in shredding, scanning and IT relocation. All these
businesses have a similar channel to market, enabling
us to leverage individual business’s customer
relationships across the Group. While the businesses
operate autonomously, our internal systems monitor
customers across the Group to ensure this is more than
an abstract idea.
We continue to look to increase our presence in this
market, growing both organically and by acquisition. We
focus on businesses whose main strength lies in long-
term customer relationships where switching suppliers is
neither desirable nor practical, and aim to provide
exceptional levels of service based around the
determination of our people to excel. Our performance
over the last two years indicates that the services we
supply are constantly required so that our earnings
stream is highly visible and less exposed to demand
06
RESTORE PLC | REPORT & ACCOUNTS
Chairman’s statement (continued)
cycles. We intend to grow our existing businesses and
to look at related markets where these market
characteristics exist.
Outlook
Our businesses continue to trade in line with
expectations and our records management revenues
remain robust. The markets we serve benefit from a
steady demand irrespective of the general economy. We
are confident that office services, particularly in South-
East England, will remain buoyant.
The acquisitions made over the last 18 months continue
to be strongly earnings enhancing and their performance
has generally exceeded our expectations. We are
confident that the acquisition of Harrow Green,
completed subsequent to our year end, will make a
substantial contribution to our current year performance.
Harrow Green’s management is starting to implement
structural changes to the business which we believe will
be highly effective in achieving the levels of profitability
appropriate to a market leader.
We have excellent business visibility and are well
positioned to continue to broaden the scale and scope
of the Group’s activities. The Board remains encouraged
by the trajectory of the Group and looks forward to
another year of strong progress in 2012.
Sir William Wells
Chairman
07
RESTORE PLC | REPORT & ACCOUNTS
“
In line with our stated strategy, Restore is
playing a key role in the consolidation of its
sector and is now believed to be the third
largest records management company in the
UK by sales and the second by profitability
”
08
Business review
The Directors believe that an adjusted measure of profit
before tax, operating profit and earnings per share
provides shareholders with a more appropriate
representation of the underlying earnings derived from
the Restore Group’s business.
The items adjusted for in arriving at that underlying
adjusted profit before tax are and operating profit as
follows:
Continuing operations
Profit before tax
Share based payments charge
Impairment of intangible assets
Exceptional items
Increase in onerous lease provision
Amortisation of intangible assets
Other finance costs
Adjusted profit before tax – continuing operations
RESTORE PLC | REPORT & ACCOUNTS
2011
£’m
2010
£’m
2.0
0.2
–
1.4
–
0.5
0.5
4.6
0.6
0.1
0.4
0.4
0.3
0.4
0.4
2.6
Reconciliation of Reported Operating Profit to Adjusted Operating Profit and Adjusted EBITDA
Operating profit
Share based payments charge
Impairment of intangible assets
Exceptional items
Amortisation of intangible assets
Adjusted operating profit
Depreciation
Adjusted EBITDA
2011
£’m
2010
£’m
3.1
0.2
–
1.4
0.5
5.2
0.7
5.9
1.7
0.1
0.4
0.7
0.4
3.3
0.6
3.9
09
RESTORE PLC | REPORT & ACCOUNTS
Business review (continued)
Earnings per share (Eps)
Basic adjusted earnings per share from continuing operations (pence)
Basic earnings per share from continuing operations (pence)
2011
6.9p
4.0p
2010
4.4p
3.5p
Basic adjusted earnings per share are calculated as adjusted profit for the year less standard tax charge divided by
the weighted average number of shares in issue in the year.
Key Performance Figures
Records Management
Document Scanning
Relocations
Building Repair
Head Office costs
Total
Revenue
2011
Revenue
2010
£’m
13.8
1.8
3.2
16.0
–
34.8
£’m
10.7
2.0
–
15.0
–
27.7
Adjusted Operating
Profit/(loss)
2011*
£’m
Adjusted Operating
Profit/(loss)
2010*
£’m
5.4
0.0
0.3
0.8
(1.3)
5.2
3.9
(0.1)
–
0.5
(1.0)
3.3
*before exceptional items, amortisation and impairment of intangible assets and share based payments charge.
10
RESTORE PLC | REPORT & ACCOUNTS
Business review (continued)
Operations
RECORDS
MANAGEMENT
Our document
storage businesses
trade primarily
under the Restore
brand and as
Datacare in our
specialist medical
and pharmaceutical
activities. The
majority of
Restore’s sales
Charles Skinner
Chief Executive
derive from the storage and retrieval of hard copy
documents, typically stored in cardboard boxes. Restore
also stores and retrieves individual files, magnetic data
(typically for emergency back-up), film and other
materials and offers retrieval of documents by scanning.
It derives additional service income from the
reorganisation of customer documents, document
restoration and the shredding of documents no longer
required by customers. Additional products include file-
tracking services that enable customers to locate
documents within their own buildings. Restore Online,
providing electronic data back-up, was launched
successfully in 2011.
Restore services a broad range of customers across
mainland Britain. Our largest customer segment is law
firms, who are among the most demanding and
sophisticated users of storage services. Our strong
presence in this end-market ensures that Restore
remains at the forefront of developments in physical
document storage and closely monitors advances in
electronic data management. We also have a presence
in most other commercial, industrial and public sector
activities, with particular strengths in financial services,
larger corporates, local authorities and healthcare. These
represent an excellent channel to market for other
services.
Trading at Restore was robust in 2011 with adjusted
operating profits increasing by £1.5 million to £5.4
million. Turnover increased from £10.7 million to £13.8
million. New box sales were broadly in line with
expectations, with new contracts secured from
customers that included Hampshire and Cornwall
County Councils. Organic growth, defined as turnover
growth with existing customers, continued its historic
trend at around 5%. Tight cost control, including the
effective management of property costs and successful
integration of acquisitions, increased operating margins
by 3 percentage points to 39%.
The annualised revenues of acquisitions made during
the year were £3.0 million. These acquisitions have
supplemented our existing storage facilities in Kent,
Surrey, Oxfordshire, Wiltshire and Cornwall with
additional facilities in Birmingham, Manchester, Leeds,
Middlesbrough and Glasgow. All sites are leasehold
apart from our underground facility in Wiltshire, our
largest site, which is freehold. We are currently
developing significant extra capacity there at an
investment cost of £1.5 million. We have spare capacity
at several other locations.
Our recent acquisitions have been successfully
integrated. Most of our national sites now receive
support services from Restore’s head office in Surrey,
which generates economies of scale. The relocation of
boxes acquired through the acquisition of Formsafe in
December 2010 was completed during the year, with
annual rental savings of £0.3 million. The removal of the
Sargents boxes from Belvedere in South-East London to
our expanded Paddock Wood premises in Kent was
completed in February 2012. The net rental saving on
the property costs from this move exceeded £0.4 million
per year.
The acquisition of Harrow Green in February 2012
brings additional turnover of around £4.0 million per
annum to our records management turnover. We intend
to achieve similar operating margins on these sales as
we do across the rest of the records management
division.
In line with our stated strategy, Restore is playing a key
role in the consolidation of its sector and is now believed
to be the third largest records management company in
the UK by sales and the second by profitability. It now
has national coverage, significantly increasing its scope
to win new business and to provide better service to its
customers. It has grown at a time when historically low
property costs can be secured giving it a competitive
advantage in pricing. With efficient operating systems
and a range of highly suitable storage facilities, Restore
continues to provide an excellent platform for growth as
its market continues to consolidate.
DOCUMENT SCANNING
DCS is our Peterborough-based scanning business. Its
main function is the conversion of hard-copy documents
into electronic data. As part of this service, it organises
and indexes the electronic versions, enabling its
11
RESTORE PLC | REPORT & ACCOUNTS
Business review (continued)
customers to identify and locate their data more
efficiently. DCS’s origins lie in the engineering sector
where it has many specialist products such as
Pipetracker, its own technology for tracking materials
used in the construction of oil pipelines. A large
percentage of its customers are in the infrastructure
sector, including Network Rail and the Highways Agency.
has been appointed and its sales and marketing
activities have been overhauled. The acquisition of
Harrow Green following the year-end will further
transform Sargents through its merger with EMS,
Harrow Green’s secondary relocation brand. This will
enable both businesses to achieve lower overheads as a
percentage of turnover.
DCS had another difficult trading year. Several of its core
customers delayed major expenditure and demand from
new customers was lower than expected, prompting us
to implement further cost-saving measures. Following
these actions, DCS broke even in 2011 on revenues of
£1.8 million (2010: loss of £0.1 million on revenue of
£2.0 million) on an adjusted operating profit basis.
SECURE SHREDDING AND RECYCLING
We entered the secure shredding and recycling market
in October, through the acquisition of a 50% stake in
Thoroughshred, now renamed Restore Shred. It has a
state-of-the-art facility in South-East London, currently
operating below capacity, where we intend to increase
volumes there through leveraging our Group-wide
customer base. Revenue in the two months under our
ownership was £0.1 million and a small loss was
recorded.
OFFICE RELOCATION
We entered the office relocation market in April 2011
through the acquisition of Sargents, based in South-East
London, from the receiver. Sargents had struggled with
high rents and the loss of two major contracts. Its main
activities comprise office removal and move
management in London and the South East. It also
offers ancillary services, such as furniture and general
storage, waste management and furniture recycling, as
well as furniture and equipment hire. Turnover in the
current year, which included a four months’ contribution
from its record management operations, now transferred
to Restore Ltd, was £3.2 million, with adjusted operating
profit of £0.3 million.
We have made significant changes at Sargents since its
acquisition. The records management business has
been transferred to Restore Ltd and all boxes previously
stored at Sargents have been moved from Belvedere to
newly-leased space at our Kent storage location,
representing a significant saving on rent. Sargents has
moved from its primary site to its smaller secondary site
on the same industrial site. A new Managing Director
We are confident that Harrow Green’s strong market
position will enable us to achieve market-leading
margins in this steady market.
BUILDING REPAIR
Peter Cox is the UK’s leading provider of damp control,
timber preservation and masonry services to private,
public sector and commercial property, principally
housing. It operates from 12 branches across the UK.
Unlike our document management activities, over a third
of Peter Cox’s business is outside the business-to-
business service sector. Indeed, it is probably best-
known for its services to home-owners for the last 50
years as the leading supplier of damp-proofing and
timber preservation services, often used at the time of
purchasing a new home. However, the bulk of its work
is providing services to local authorities (often as a
subcontractor to facilities managers who rely on Peter
Cox for its specialist skills) and commercial developers.
Peter Cox had an excellent trading year, building on last
year’s return to profitability. Sales increased to £16.0
million (2010: £15.0 million) and profit rose to £0.8
million (2010: £0.5 million). The restructured
management team has driven efficiencies through the
business and a more robust pricing model has improved
gross margins. Peter Cox can be expected to continue
to build on this strong performance in 2012.
INTEREST
Net finance costs amounted to £1.1 million (2010: £1.1
million). Included within finance cost is £0.3 million
(2010: £0.4 million) representing interest on the loan
from Geraldton Services Inc. and the revaluation of the
interest rate collar.
TAXATION
UK Corporation Tax is calculated at 26% (2010: 28%) of
the estimated assessable profit/(loss) for the year. The
UK Corporation Tax rate will reduce on 1 April 2012;
accordingly this rate reduction has been reflected in the
12
Business review (continued)
deferred tax balance which forms part of the statement
of financial position.
PROFIT BEFORE TAX
Profit before tax for the year ended 31 December 2011
for continuing operations was £2.0 million (2010: £0.6
million).
STATEMENT OF FINANCIAL POSITION
Net assets increased to £23.3 million (2010: £16.7
million) mainly as a result of the conversion of the
subordinated debt. Goodwill and intangibles at 31
December 2011 were £22.1 million (2010: £19.8 million).
Property, plant and equipment totalled £13.6 million
(2010: £12.3 million) principally comprising the freehold
underground storage facilities at Restore, but also
computer systems, storage racking and vehicles.
CASH FLOW
The net cash generated from continuing operations was
£1.9 million (2010: £1.6 million). Capital expenditure on
the continuing business totalled £1.5 million (2010: £1.3
million) compared to depreciation of £0.7 million (2010:
£0.6 million). Significant expenditure comprised the
fitting out of empty space in the underground storage
areas and installing new racking.
CUSTOMER RELATIONSHIPS
The Group has commercial relationships with over 3,000
business customers. Attrition rates are low and
relationships are strong. The largest of these accounts
for less than 5% of Group revenue.
Charles Skinner
Chief Executive
RESTORE PLC | REPORT & ACCOUNTS
13
RESTORE PLC | REPORT & ACCOUNTS
“
During 2011, Restore plc benefited from
the underlying resilience of its core records
management business while making four acquisitions
that increased the scale of our operations and
developed Restore plc into a much broader-based
provider of UK office services
14
”
RESTORE PLC | REPORT & ACCOUNTS
Liquidity risk
The year end net debt was £11.6 million (2010:
£12.3m), which consisted of £14.5 million of interest
bearing loans and borrowings less £2.9 million of cash
and short term deposits (2010: £14.9 million of
interest–bearing loans and borrowings less £2.6 million
of cash and short term deposits). Net debt is monitored
on a daily basis.
Finance cost risk
The Group pays finance costs on its bank facilities. The
bank facilities finance cost is a variable cost linked to
LIBOR plus a margin. Interest rates are managed
through an interest rate collar. The average finance cost
on bank facilities for the Group in 2011 was 3.5% (2010:
4.5%).
Management
It is likely that changes to members of the senior
management team might impact on the Group’s ability
to perform to the expectations within its strategy. The
Board ensures that the management team is
appropriately rewarded for its efforts and that
succession planning is considered.
Legislative
The Group has systems and procedures in place to
ensure compliance with, and to manage the impact of
changes in, Government legislation such as agency
worker regulations, vehicle operating procedures and
environmental requirements.
Directors’ report
The directors submit their report and the financial
statements of Restore plc for the year ended 31
December 2011.
Restore plc is a public limited company quoted on AIM,
incorporated and domiciled in England and has no
branches outside the UK.
RESULTS
The profit before tax from continuing operations for the
year ended 31 December 2011 was £2.0 million (2010:
£0.6 million).
DIVIDENDS
The directors recommend a maiden dividend for the
year of 1p per share payable on 31 July 2012 (2010:
£Nil).
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were
that of Records Management, Document Scanning,
Office Relocations and Building Repair.
BUSINESS REVIEW AND FUTURE
DEVELOPMENTS
This is dealt with in the Chairman’s statement and in the
Business Review on pages 5 to 13.
PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of
the Group’s strategies are subject to a number of risks.
The key business risks affecting the Group are:
Risk Management
The significant financial risks the Group faces have been
considered and policies have been implemented to best
deal with each risk. The three most significant risks are
considered to be liquidity risk, finance cost risk and
customer relationship risk. The Group is wholly based in
the United Kingdom so the direct exposure to exchange
risk is considered to be small.
15
RESTORE PLC | REPORT & ACCOUNTS
Directors’ report (continued)
KEY PERFORMANCE INDICATORS (‘KPIs’)
The Group uses many different KPIs at an operational
level which are specific to the business and provide
information to management. At an executive level, a
selection of operational KPIs, which allow a relevant and
robust review of operational performance with
operational management on a monthly basis. The board
also relies on KPIs that focus on the financial
performance of the Group.
The table below shows the main KPIs used to manage
the Group’s performance during the year.
Key Performance Indicator
2011
£’m
2010
£’m
Analysis
Group revenues
34.8
27.7
Adjusted operating profit
5.2
3.3
Operating cash flow generated
before financing costs and tax
1.9
1.6
Bank interest cost
0.6
0.7
Net debt
11.6
12.3
Year-on-year change in revenues analysed by
segment (see page 42)
Year-on-year change in adjusted operating profit
by segment (see page 9)
Generation of operating cash flow, in 2011
debtor days reduced although operating cash
flow was worse than operating profits due to the
exceptional items incurred.
Year-on-year change in cost of Group finance.
Finance costs reduced as a result of an
improvement in the average interest rate
following the refinancing in the year.
Year-on-year change in bank debt, management
continues to focus on control of working capital,
and draw on its facilities when required to fund
acquisitions.
The non-financial indicators that are regularly monitored
are customer satisfaction and retention and staff
turnover ratios. Customer attrition rates are very low, as
the business has strong and long-term relationships
and a high level of customer satisfaction. The Group has
a strong team of experienced and dedicated staff and
staff turnover rates are low.
16
RESTORE PLC | REPORT & ACCOUNTS
Directors’ report (continued)
DIRECTORS
The following directors have held office during the year:
The Company maintains liability insurance for its Directors
and Officers.
Sir William Wells (Chairman)
Charles Skinner (Chief Executive)
Andrew Wilson (Non-Executive Director)
Dr John Forrest (Non-Executive Director)
On 3 May 2011 the following director was appointed to
the Board:
Harvey Samson (Group Finance Director)
Information on directors’ remuneration, share options,
long-term incentive plans, pension contributions and
benefits is set out in the Remuneration Report on pages
21 to 23.
SHARE CAPITAL
Full details of the authorised and issued share capital of
the Company are set out in note 23 to the financial
statements.
SUBSTANTIAL SHAREHOLDINGS
At 2 April 2012 the Company had been notified of the
following interests amounting to 3% or more of the
Company’s issued share capital:
Geraldton Services Inc
Legal & General
Hargreave Hale Limited
Cazenove
Number of
0.1p ordinary shares
Percentage of issued
share capital
32,630,904
10,139,448
4,525,402
2,411,670
50.6
15.7
7.0
3.7
PROPERTY VALUES
The Directors are aware that a significant difference may
exist between market and book values, as shown in the
Consolidated Statement of Financial Position at 31
December 2011, for a number of the Group’s freehold
properties, all of which have a market value in excess of
the book value recorded. The Directors believe that this
excess is in the region of £7.4 million.
EMPLOYEES
The Group’s people are its most important asset. Our
policy is to employ the best people irrespective of race,
gender, nationality, disability or sexual orientation.
Consultation with employees or their representatives
occurs at all levels, with the aim of ensuring their views
are taken into account when decisions are made that
are likely to affect their interests.
regard to their particular aptitudes and abilities. In the
event of an employee becoming disabled, every effort is
made to retain them in order that their employment with
the Group may continue. It is the policy of the Group
that training, career development and promotion
opportunities should be available to all employees.
ENVIRONMENTAL POLICY
Maintaining and improving the quality of the environment
in which we live is an important concern for the Group,
our staff, customers, suppliers, sub-contractors and
communities in which we operate. We have adopted
high standards of environmental practices and aim to
minimise our impact on the environment wherever this is
practical. In particular, we comply with, and endeavour
to exceed the requirements of all laws and regulations
relating to the environment.
DISABLED EMPLOYEES
Applications for employment by disabled persons are
given full and fair consideration for all vacancies, having
HEALTH AND SAFETY
The Group recognises the importance of maintaining
high standards of health and safety for everyone working
17
RESTORE PLC | REPORT & ACCOUNTS
Directors’ report (continued)
within our business and also for anyone who may be
affected by our business. Health and safety is a
particular concern to our customers. Consequently,
each of our business segments has appointed Health
and Safety Officers who report to their respective
managing directors.
The Group’s operational report to the board on a
monthly basis includes a section on all health and safety
matters.
FINANCIAL RISK MANAGEMENT
Information in respect of the financial risk management
objectives and policies of the Group, including the policy
for hedging each major type of forecasted transaction
for which hedge accounting is used and the exposure of
the Group to market risk, credit risk, liquidity risk and
cash flow risk is contained in note 3.
PAYABLES PAYMENT POLICY
The Group policy for payment to suppliers is to delegate
to individual business units the responsibility for agreeing
the terms and conditions under which they conduct
transactions with their suppliers. The creditor days were
38 at 31 December 2011 (2010: 57 days).
POLITICAL AND CHARITABLE DONATIONS
Donations made by the Group for charitable purposes
amounted to £nil (2010: £nil). The Group does not make
political donations.
POST BALANCE SHEET EVENTS
On 29 February 2012, the Company acquired Harrow
Green Group Limited (“Harrow Green”) for an initial
consideration of £6.3 million, as detailed in note 35.
STATEMENT AS TO DISCLOSURE OF
INFORMATION TO AUDITORS
The Directors in office on 10 April 2012 have confirmed
that, as far as they are aware, there is no relevant audit
information of which the auditor is unaware. Each of the
Directors have confirmed that they have taken all steps
that they ought to have taken as Directors in order to
make themselves aware of any relevant audit information
and to establish that it has been communicated to the
auditor.
ANNUAL GENERAL MEETING
The notice of the Annual General Meeting to be held on
21 May 2012 is set out on pages 86 to 87.
Sarah Waudby
Company Secretary
10 April 2012
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RESTORE PLC | REPORT & ACCOUNTS
Corporate governance statement
The policy of the Board is to manage the affairs of the
Company having regard to the terms of the UK
Corporate Governance Code. The Directors support the
principles underlying these requirements insofar as is
appropriate for a Group of the size of Restore plc.
All directors participate in the key areas of decision-
making, including the appointment of new directors.
There is no separate Nomination Committee due to the
current size of the Board. The Board receives timely
information on all material aspects of the Group to
enable it to discharge its duties.
THE BOARD OF DIRECTORS
The Group is led and controlled by a Board comprising
two Executive Directors and three Non-Executive Directors.
All directors submit themselves for re-election at the
Annual General Meeting at regular intervals. The
following were Directors during the year:
Board meetings are held on a regular basis and no
significant decision is made other than by the directors.
Number of Board
meetings attended during
the year ended
31 December 2011
Total 10
Number of Audit Committee
meetings attended during
the year ended
31 December 2011
Total 2
Number of Remuneration
Committee meetings attended
during the year ended
31 December 2011
Total 1
Executive Directors
Charles Skinner
Harvey Samson*
Non-Executive Directors
Sir William Wells
Andy Wilson
Dr John Forrest
* Appointed 3 May 2011
10
7
10
10
10
2
1
2
2
2
1
1
1
1
1
DIRECTORS’ REMUNERATION
The Company has an established Remuneration
Committee.
Details of the remuneration of each director are set out
in the Remuneration Report on page 21.
RELATIONS WITH SHAREHOLDERS
The Chief Executive and the Group Finance Director are
the Company’s principal contact for investors, fund
managers, the press and other interested parties. At the
Annual General Meeting, investors are given the
opportunity to question the entire Board.
ACCOUNTABILITY AND AUDIT
The Company has established an Audit Committee
comprising the Chairman and Non-Executive Directors
who are responsible for reviewing the scope and results
of the audit, its cost effectiveness and the independence
and objectivity of the auditors.
INTERNAL CONTROL
The Board acknowledges its responsibility for
establishing and monitoring the Group’s systems of
internal control. Although no system of internal control
can provide absolute assurance against material
19
RESTORE PLC | REPORT & ACCOUNTS
Corporate governance statement (continued)
misstatement or loss, the Group’s systems are designed
to provide the directors with reasonable assurance that
problems are identified on a timely basis and dealt with
appropriately.
The key procedures that have been established and
which are designed to provide effective control are as
follows:
Management structure – The Board meets regularly to
discuss all issues affecting the Group.
Investment appraisal – The Group has a clearly defined
framework for investment appraisal and approval is
required by the Board where appropriate.
The Board regularly reviews the effectiveness of the
systems of internal control and considers the major
business risks and the control environment. No
significant control deficiencies have come to light during
the year and no weakness in internal financial control
has resulted in any material losses, contingencies or
uncertainties which would require disclosure as
recommended by the Turnball guidance for directors on
reporting on internal financial control.
The Board considers that in light of the control
environment described above, there is no current
requirement for a separate internal audit function. The
Board will continue to review the need to put in place an
internal audit function.
GOING CONCERN
As more fully explained in note 2, having made
appropriate enquiries and having examined the major
areas which could affect the Group’s financial position,
the directors are satisfied that the Group has adequate
resources to continue in operation for the foreseeable
future.
20
RESTORE PLC | REPORT & ACCOUNTS
Remuneration report
REMUNERATION COMMITTEE
The Company has an established remuneration
committee consisting of the Chairman and the Non-
Executive Directors. The Chairman and Non-Executive
Directors are responsible for the consideration and
approval of the terms of service, remuneration, bonuses,
share options and other benefits of the other directors.
All decisions made are after giving due consideration to
the size and nature of the business and the importance
of retaining and motivating management. The committee
will meet at least once a year and at other times as
appropriate.
DIRECTORS’ CONTRACTS AND LETTERS OF
APPOINTMENT
The Company’s policy on Executive Directors’ service
contracts is that, in line with the best practice provisions
of the Combined Code, they are to be terminable by the
Company on one year’s notice.
The Non-Executive Directors do not have service
contracts but have letters of appointment for an initial
period of one year, which may be renewed by mutual
agreement.
Executive Directors
Date of contract
Notice period
Charles Skinner
Harvey Samson
8 June 2009
3 May 2011
12 months
6 months
Non–Executive Directors
Date of Letter
Notice period
Sir William Wells
Andrew Wilson
Dr John Forrest
8 June 2009
8 June 2009
8 November 2010
3 months
3 months
3 months
DIRECTORS’ EMOLUMENTS (AUDITED)
The aggregate emoluments of the directors of the
Company were:
£’000
Salary
and fees
Benefits
Total
2011
2010
(ex. pension)
Pension
costs
Total
2010
Executive Directors
Charles Skinner
Harvey Samson*
Non–Executive Directors
Sir William Wells
Andrew Wilson
Dr John Forrest
* Appointed 3 May 2011
320
120
55
33
27
555
4
–
–
–
–
4
324
120
55
33
27
559
320
–
50
30
3
403
2
–
–
–
–
2
322
–
50
30
3
405
21
RESTORE PLC | REPORT & ACCOUNTS
Remuneration report (continued)
DIRECTORS’ INTERESTS IN SHARES AND
OPTIONS
The beneficial interests of the Directors who were in
office at 31 December 2011 in the shares of the
Company, including family interests were as follows:
Number of 5p ordinary
shares
31 December 2011
Number of 5p ordinary shares
31 December 2010 (or date of
appointment if later)
511,415
15,385
352,553
46,461
7,692
511,415
–
318,307
46,461
–
Charles Skinner
Harvey Samson
Sir William Wells
Andrew Wilson
Dr John Forrest
As at 10 April 2012 there has been no change in any of
the above holdings.
The Directors believe that the success of the Group will
depend to a high degree on the future performance of
the management team. The Company has established
incentive arrangements which will reward the Directors
when shareholder value is created, thereby aligning the
interests of management directly with those of the
shareholders.
RESTORE SHARE OPTION SCHEME – 2011
GRANTS
Employee Share Options
The following options have been granted to employees
within the Group.
Date of grant
Granted
Number of
ordinary shares of
5p each 31
December 2011
Exercise price
Date from which
exercisable
Expiry date
3 May 2011
1,160,000
1,160,000
50p
3 May 2013
3 May 2021
30 July 2011
400,000
400,000
69.9p
30 July 2013
30 July 2021
22
RESTORE PLC | REPORT & ACCOUNTS
Remuneration report (continued)
The share options granted have no performance
conditions see note 29 for details of the grant.
The closing price for Restore shares at 31 December
2011 was 75.5 pence. During the year the market price
of the Company’s ordinary shares ranged between 31.5
pence and 78.9 pence.
The directors’ interests in the share option schemes are
as follows:
Number of ordinary
shares of 5p each
31 December 2011
Number of ordinary
shares of 5p each
31 December 2010
1,411,200
537,600
1,250,000
1,411,200
537,600
–
Charles Skinner
Sir William Wells
Harvey Samson
By order of the board
Sir William Wells
Chairman of the Remuneration Committee
23
RESTORE PLC | REPORT & ACCOUNTS
Statement of directors’ responsibilities
explain the group’s and the company’s transactions and
disclose with reasonable accuracy at any time the
financial position of the group and the company and
enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the group and
the company and hence for taking reasonable steps for
the prevention and detection of fraud and other
irregularities.
The directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Restore plc website.
Legislation in the United Kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The directors are responsible for preparing the Directors’
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare group
and company financial statements for each financial
year. The directors are required by the AIM Rules of the
London Stock Exchange to prepare group financial
statements in accordance with International Financial
Reporting Standards (“IFRS”) as adopted by the
European Union (“EU”) and have elected under
company law to prepare the company financial
statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law).
The Group financial statements are required by law and
IFRS adopted by the EU to present fairly the financial
position and performance of the group; the Companies
Act 2006 provides in relation to such financial
statements that references in the relevant part of that
Act to financial statements giving a true and fair view are
references to their achieving a fair presentation.
Under company law the directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the
group and the company and of the profit or loss of the
Group for that period.
In preparing each of the group and company financial
statements, the directors are required to:
a. select suitable accounting policies and then apply
them consistently;
b. make judgements and accounting estimates that are
reasonable and prudent;
c. for the group financial statements, state whether they
have been prepared in accordance with IFRSs
adopted by the EU and for the company financial
statements state whether applicable UK accounting
standards have been followed, subject to any material
departures disclosed and explained in the company
financial statements;
d. prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
group and the company will continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
24
RESTORE PLC | REPORT & ACCOUNTS
Independent auditor’s report to the members of
Restore Plc
For the year ended 31 December 2011
We have audited the group and parent company
financial statements (“the financial statements”) on
pages 26 to 82. The financial reporting framework that
has been applied in the preparation of the group
financial statements is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the
European Union. The financial reporting framework that
has been applied in the preparation of the parent
company financial statements is applicable law and
United Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice).
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company
and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and
auditor
As more fully explained in the Statement of Directors’
Responsibilities set out on page 24, the directors are
responsible for the preparation of the financial
statements and for being satisfied that they give a true
and fair view. Our responsibility is to audit and express
an opinion on the financial statements in accordance
with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us
to comply with the Auditing Practices Board’s (APB’s)
Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial
statements is provided on the APB’s website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the
state of the group’s and of the parent company’s
affairs as at 31 December 2011 and of the group’s
profit for the year then ended;
• the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
• the parent company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion the information given in the Directors’
Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
• the parent company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and
explanations we require for our audit.
DAVID CLARK (Senior Statutory Auditor)
For and on behalf of BAKER TILLY UK AUDIT LLP,
Statutory Auditor
Chartered Accountants
25 Farringdon Street
London EC4A 4AB
10 April 2012
25
RESTORE PLC | REPORT & ACCOUNTS
Consolidated statement of comprehensive
income
For the year ended 31 December 2011
Year ended 31 December 2011
Year ended 31 December 2010
Note
Before
exceptional
items
£’m
Exceptional
Items
(note 5)
£’m
After
exceptional
items
£’m
Before
exceptional
items
£’m
Restated
Exceptional
Items
(note 5)
£’m
Restated
After
exceptional
items
£’m
REVENUE
Cost of sales
Gross profit
Administrative expenses
Amortisation of intangible assets
Impairment of intangible assets
OPERATING PROFIT/(LOSS)
Finance costs
PROFIT/(LOSS) BEFORE TAX
Income tax (charge)/credit
4
4
12
12
6
7
8
PROFIT/(LOSS) FOR THE YEAR
FROM CONTINUING OPERATIONS
Loss from discontinued operations
4
Profit/(loss) for the year attributable
to owners of the parent
Other comprehensive income for
the year net of tax
Total comprehensive income for
the year attributable to owners
of the parent
Earnings /(loss) per share (pence)
9
-
-
Basic
Diluted
Earnings/(loss) per share from
continuing operations (pence)
-
-
Basic
Diluted
Loss per share from
discontinued operations
-
-
Basic
Diluted
9
9
34.8
(17.4)
17.4
(12.4)
(0.5)
–
4.5
(0.9)
3.6
(1.1)
2.5
–
2.5
–
–
–
–
(1.4)
–
–
(1.4)
(0.2)
(1.6)
1.1
(0.5)
–
(0.5)
–
34.8
(17.4)
17.4
(13.8)
(0.5)
–
3.1
(1.1)
2.0
–
2.0
–
2.0
–
27.7
(14.1)
13.6
(10.4)
(0.4)
–
2.8
(1.1)
1.7
–
1.7
(0.1)
–
–
–
(0.7)
–
(0.4)
(1.1)
–
(1.1)
0.3
(0.8)
–
1.6
(0.8)
–
–
27.7
(14.1)
13.6
(11.1)
(0.4)
(0.4)
1.7
(1.1)
0.6
0.3
0.9
(0.1)
0.8
–
2.5
(0.5)
2.0
1.6
(0.8)
0.8
5.0p
4.8p
5.0p
4.8p
–
–
(1.0)p
(1.0)p
(1.0)p
(1.0)p
4.0p
3.8p
4.0p
3.8p
6.2p
6.2p
6.6p
6.6p
(3.1)p
(3.1)p
(3.1)p
(3.1)p
3.1p
3.1p
3.5p
3.5p
–
–
–
–
(0.4)p
(0.4)p
–
–
(0.4)p
(0.4)p
26
RESTORE PLC | REPORT & ACCOUNTS
Consolidated statement of changes in equity
For the year ended 31 December 2011
Attributable to owners of the parent
Share
capital
Share
premium
Balance at 1 January 2010
Profit for the year
Total comprehensive income for the year
Transactions with owners
Issues of shares during the year
Issue costs
Share based payments charge
Balance at 31 December 2010
Balance at 1 January 2011
Profit for the year
Total comprehensive income for the year
Transactions with owners
Issues of shares during the year
Issue costs
Capital Reduction
Share based payments charge
Balance at 31 December 2011
£’m
0.5
–
–
1.8
–
1.8
–
2.3
2.3
–
–
0.4
–
–
0.4
–
2.7
Share based
payments
reserve
£’m
Retained
earnings/
(deficit)
£’m
0.2
(39.1)
–
–
–
–
–
0.1
0.3
0.8
0.8
–
–
–
–
(38.3)
£’m
42.4
–
–
10.2
(0.2)
10.0
–
52.4
52.4
0.3
(38.3)
–
–
4.2
(0.2)
(52.3)
(48.3)
–
4.1
–
–
–
–
–
–
0.2
0.5
2.0
2.0
–
–
52.3
52.3
–
16.0
Total
equity
£’m
4.0
0.8
0.8
12.0
(0.2)
11.8
0.1
16.7
16.7
2.0
2.0
4.6
(0.2)
–
4.4
0.2
23.3
27
RESTORE PLC | REPORT & ACCOUNTS
Consolidated statement of financial position
As at 31 December 2011 Company registered no. 05169780
Note
31 December 2011
£’m
31 December 2010
£’m
ASSETS
NON–CURRENT ASSETS
Intangible assets
Property, plant and equipment
Investment in joint venture
Deferred tax asset
CURRENT ASSETS
Inventories
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Financial liabilities - borrowings
Other financial liabilities
Current tax liabilities
Provisions
NON–CURRENT LIABILITIES
Financial liabilities – borrowings
Deferred tax liability
Provisions
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Share premium account
Share based payments reserve
Retained earnings/(deficit)
EQUITY ATTRIBUTABLE
TO THE OWNERS OF THE PARENT
12
13
14
22
15
16
20
17
18
19
21
18
22
21
23
24
25
26
22.1
13.6
0.3
1.0
37.0
0.2
10.9
3.5
14.6
51.6
(8.3)
(4.4)
(0.1)
(0.5)
(0.2)
(13.5)
(10.1)
(3.6)
(1.1)
(14.8)
(28.3)
23.3
2.7
4.1
0.5
16.0
23.3
19.8
12.3
–
0.5
32.6
0.1
7.6
2.6
10.3
42.9
(6.0)
(10.6)
–
(0.2)
(0.3)
(17.1)
(4.3)
(3.5)
(1.3)
(9.1)
(26.2)
16.7
2.3
52.4
0.3
(38.3)
16.7
These financial statements were approved by the Board of directors and authorised for issue on 10 April 2012 and
were signed on its behalf by:
Sir William Wells
Chairman
Charles Skinner
Chief Executive
28
RESTORE PLC | REPORT & ACCOUNTS
Consolidated statement of cashflows
For the year ended 31 December 2011
Note
Year ended
31 December 2011
£’m
Year ended
31 December 2010
£’m
NET CASH GENERATED FROM OPERATIONS
27
Net finance costs
Income taxes paid
NET CASH GENERATED FROM
OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment
Purchases of applications software
Purchase of subsidiary undertakings including
acquisition costs, net of cash acquired
Investment in Joint Venture
11
14
CASH FLOWS USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issues
Repayment of bank borrowings
Drawdown of indebtedness
New bank loans raised
Increase in bank overdrafts
Repayment of other loans
NET CASH GENERATED FROM FINANCING
ACTIVITIES
NET INCREASE / (DECREASE) IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS
AT START OF YEAR
CASH AND CASH EQUIVALENTS
AT END OF YEAR
20
CASH AND CASH EQUIVALENTS
SHOWN ABOVE COMPRISE:
Cash at bank
Balance on invoice discounting facility
1.9
(0.7)
(0.5)
0.7
(1.4)
(0.1)
(2.7)
(0.3)
(4.5)
4.5
(12.0)
1.6
11.0
1.3
(2.3)
4.1
0.3
2.6
2.9
3.5
(0.6)
2.9
1.6
(0.7)
–
0.9
(1.0)
(0.3)
(1.8)
–
(3.1)
3.8
(4.0)
–
–
0.4
–
0.2
(2.0)
4.6
2.6
2.6
–
2.6
29
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements
For the year ended 31 December 2011
1 GENERAL INFORMATION
Restore plc and its subsidiaries specifically focus on Records Management, Document Scanning, Building Repair,
Relocations and Building Services. The Group operates in the UK. The Company is a public limited company
incorporated and domiciled in the United Kingdom. The address of its registered office is Unit 5, Redhill Distribution
Centre, Salbrook Road, Redhill, Surrey RH1 5DY.
The Company is listed on the AIM market.
These Group consolidated financial statements were authorised for issue by the board of directors on 10 April 2012.
2 SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The consolidated financial statements of Restore plc have been prepared in accordance with EU endorsed
International Financial Reporting Standards (IFRS), IFRIC interpretations and the Companies Act 2006 applicable to
companies reporting under IFRS.
The financial statements have been prepared on a historical cost basis although derivatives are reflected at their fair
value. The preparation of financial statements in conformity with IFRS requires the use of certain accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the consolidated financial statements, are disclosed later in this note.
The consolidated financial statements are presented in pounds sterling and, unless stated otherwise, shown in
pounds million to one decimal place.
GOING CONCERN
The Group’s business activities, together with the factors likely to affect its future development, performance,
financial position, its cash flows, and liquidity position are set out in the Business Review on pages 9 to 13. In
addition, the Directors report details the principal risks and uncertainties affecting the business and note 3 to the
financial statements includes the company’s objectives, policies and processes for managing its capital; its financial
risk management objectives; and its exposures to credit risk and liquidity risk.
The Group meets its day-to-day working capital requirements through its financing facilities which are due to expire
between June 2014 and June 2016. Details of the Group’s borrowing facilities are given in note 20 of the financial
statements.
The Group’s budgets for 2012 and forecasts for 2013, taking account of reasonably possible changes in trading
performance, show that the Group should be able to operate within the level of its current facility.
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
the annual financial statements.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by
the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the
power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Statement of
Comprehensive Income from the effective date of acquisition or up to the effective date of disposal, as appropriate.
30
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies
used into line with those used by the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost
of an acquisition is measured as the fair value of the assets given, equity instruments issued, contingent
consideration and liabilities incurred or assumed at the date of exchange. Costs directly attributable to the
acquisition are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in
a business combination are initially measured at fair value at the acquisition date.
Provisional fair values are adjusted against goodwill if additional information is obtained within one year of the
acquisition date, about facts or circumstances existing at the acquisition date. Other changes in provisional fair
values are recognised through profit or loss.
Changes in contingent consideration arising from additional information, obtained within one year of the acquisition
date, about facts or circumstances that existed at the acquisition date are recognised as an adjustment to goodwill.
Other changes in contingent consideration are recognised through profit or loss, unless the contingent consideration
is classified as equity. In such circumstances, changes are recognised within equity.
SEGMENTAL REPORTING
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker.
In the opinion of the Directors, the chief operating decision maker is the Board of Restore plc and there are four
segments, Records Management, Document Scanning, Building Repair and Relocations, whose reports are
reviewed by the Board in order to allocate resources and assess performance. Segment revenue comprises sales to
external customers all of whom are located in the UK. Services are provided from the UK.
REVENUE RECOGNITION
Revenue is measured as the fair value of the consideration received or receivable and represents amounts receivable
for goods and services provided in the normal course of business, net of discounts, VAT, returns, rebates and after
eliminating intra-group sales.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future
economic benefits will flow to the entity and when specific criteria have been met for each of the Group’s activities
as described below.
Sale of services – Records Management
Revenue from Records Management represents amounts billed or due for the storage and retrieval of customers’
files and boxes. Revenue is recognised on retrieval of documents or time-apportioned for the period for which the
documents are stored.
Sale of services – Document Scanning
The Group sells scanning and IT services which are provided on a time basis or as a fixed price contract with
contract terms ranging up to three years, in which case revenue is recognised based upon the value of work
31
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
completed, or revenue may be received on a contractual basis, either as a fixed proportion of managed costs or
other fee mechanism, in which case revenue is recognised once those contractual conditions have been satisfied,
either based on managed costs incurred, on a time basis, or other appropriate contractual measurement.
Sale of services – Building Repair
Revenue represents amounts in respect of the handling of insurance claims together with ancillary services including
specialist training, subcontracting services, surveying and other services. Revenue is recognised when work has
been carried out. Work completed but not yet invoiced is recognised as accrued income.
Sale of services – Relocations
Revenue represents amounts in respect of relocations and furniture storage. Revenue is recognised when a removal
has been completed, and storage revenue is recognised on a per day basis for the furniture stored on behalf of its
customers.
Interest income
Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount.
Dividend income
Dividend income is recognised when the right to receive payment is established.
DISCONTINUED OPERATIONS
Discontinued operations represent cash generating units or groups of cash generating units that have either been
disposed of or classified as held for sale, and represent a separate major line of business or are part of a single co-
ordinated plan to dispose of a separate major line of business. Cash generating units forming part of a single co-
ordinated plan to dispose of a separate major line of business are classified within continuing operations until they
meet the criteria to be held for sale.
The post–tax profit or loss of the discontinued operation is classified as a single line on the face of the Consolidated
Statement of Comprehensive Income, together with any post-tax gain or loss recognised on the re-measurement of
non–current assets or disposal groups on classification as held for sale to the lower of carrying amount and fair
value less costs to sell or on the disposal of the assets or disposal group constituting the discontinued operation.
On changes to the composition of groups of units comprising discontinued operations, the presentation of
discontinued operations within prior periods is restated to reflect consistent classification of discontinued operations
across all periods presented.
EXCEPTIONAL ITEMS
Exceptional items are those significant items which are separately disclosed by virtue of their size or incidence to
enable a full understanding of the group’s financial performance. Transactions which may give rise to exceptional
items are principally gains or losses on disposal of investments and subsidiaries, redundancy and other restructuring
costs, provisions made in respect of onerous leases and acquisition costs relating to business combinations.
32
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
GOODWILL
Goodwill arising on consolidation represents the excess of the costs of acquisition over the Group’s interest in the
fair value of identifiable assets and liabilities of a subsidiary, at the date of acquisition. Goodwill is initially recognised
as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which
is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in
profit or loss and is not subsequently reversed.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected
to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the
recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the
unit pro–rata on the basis of the carrying amount of each asset in the unit.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.
INTANGIBLE ASSETS
Intangible assets are recognised when they are controlled through contractual or other legal rights, or are separable
from the rest of the business, and their fair value can be reliably measured.
Intangible assets that are regarded as having indefinite useful lives are not amortised. Intangible assets that are
regarded as having limited useful lives are amortised on a straight-line basis over those lives. Assets with indefinite
lives are reviewed for impairment annually and other assets are reviewed for impairment whenever events or
circumstances indicate that the carrying amount may not be recoverable. The recoverable amount is the higher of
value in use or fair value less cost to sell. Amortisation and any impairment write downs are recognised immediately
in profit or loss.
Customer relationships
Acquired customer relationships are identified as a separate intangible asset as they are separable and can be
reliably measured by valuation of future cash flows. This valuation also assesses the life of the particular relationship.
The life of the relationship is assessed annually. Customer relationship assets are being written off on a straight line
basis over a remaining life of 6 to 11.5 years, except where the relationships have been assessed as having an
indefinite life. These relationships are considered indefinite due to the business having a strong relationship and low
attrition rates with its customers. The customer lists are considered annually to ensure that this classification is still
appropriate.
Trade names
Acquired trade names are identified as a separate intangible asset and valued by a third party valuer. The life of the
trade name is assessed annually. Trade names are being written off on a straight line basis over 10 years, except
where the trade names are assessed as having an indefinite life due to the history of trading and the Group being a
market leader in the services provided.
Application software and IT
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use
the specific software. These costs are amortised on a straight line basis over their estimated useful lives (three to five
years).
33
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Costs associated with developing or maintaining computer software programmes are recognised as an expense as
incurred. Costs that are directly associated with the development of identifiable and unique software products
controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are
recognised as intangible assets.
Computer software development costs recognised as assets are amortised on a straight line basis over their
estimated useful lives (expected to be up to five years). Residual values and useful lives are reviewed each year.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at historical cost, less accumulated depreciation and accumulated
impairment losses. Depreciation is provided on a straight line basis on all property, plant and equipment, except
freehold land.
Freehold and long leasehold buildings
2–5%
% per annum
Long leasehold land
Leasehold improvements
Plant and machinery
Racking
Office equipment, fixtures and fittings
Motor vehicles
LEASED ASSETS
over the remaining life of the lease
over the life of the lease
5–50%
12.5%
10–40%
20–25%
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are
charged to profit or loss on a straight-line basis over the period of the lease.
Where property lease contracts contain guaranteed minimum incremental rental payments, the total committed cost
is determined and is amortised on a straight-line basis over the life of the lease.
Leases of property, plant and equipment which transfer substantially all the risks and rewards of ownership to the
Group are classified as finance leases. Finance leases are classified as a financial liability and measured at amortised
cost. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property,
plant and equipment and the present value of the minimum lease payments and depreciated over the period of the
lease. The resulting lease obligations are included in liabilities. Lease payments are apportioned between finance
charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance
of the liability.
INVESTMENTS
Loan notes are loans and receivables and measured at amortised cost. Impairment losses are recognised in profit or
loss when there is evidence of impairment. Available for sale investments are non–derivative assets and are initially
recognised at fair value net of any transaction costs and are subsequently carried at fair value. Fair value gains and
losses are recognised in other comprehensive income and are recycled to profit or loss on disposal of the
investment. If a fair value for an investment cannot be reliably measured, due to the variability in the range of
reasonable fair value estimates being significant, or the probabilities of the various estimates within the range not
being able to be reasonably assessed, that investment will be carried at cost. An impairment test is performed
annually on the carrying value of the investment. An impairment loss is recognised for the amount by which the
34
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
asset’s carrying value exceeds its recoverable amount, when there is objective evidence for impairment including
significant or prolonged decline in fair value below cost.
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Investments which are held for the long term, and in which the Group has a participating interest and exercises joint
control with one or more other parties under a contractual arrangement, are treated as joint ventures and accounted
for by the equity method. The Group’s share of the results of investments is included in the Consolidated Income
Statement and the Group’s share of net assets is included in investments in the Statement of Financial Position.
INVENTORIES
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a first in first out basis. Net
realisable value is the price at which inventories can be sold in the normal course of business. Provision is made
where necessary for obsolete, slow moving and defective inventories.
TRADE AND OTHER RECEIVABLES
Trade receivables, classified as loans and receivables in accordance with IAS 39 ‘Financial Instruments: Recognition
and Measurement’, are recorded initially at fair value and subsequently measured at amortised cost. A provision for
impairment of trade receivables is established when there is evidence that the Group will not be able to collect all
amounts due according to the original terms. The amount of the provision is the difference between the assets’
carrying amount and the present value of future cash flows discounted at the effective interest rate. The movement
in the provision is recognised in profit or loss. Any other receivables are recognised at their initial fair value less an
allowance for any doubtful amounts. An allowance is made when collection of the full amount is no longer
considered probable.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents as defined for the Consolidated Statement of Cash flows comprise cash in hand, cash
held at bank with immediate access, other short-term investments and bank deposits with maturities of three
months or less from the date of inception.
ASSETS HELD FOR SALE
Assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than continuing use. This condition is regarded as met only when a sale is highly
probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must
be committed to the sale which should be expected to qualify for recognition as a completed sale within one year
from the date of classification. If this condition is no longer met and the assets and disposal groups are held for
continuing use they are transferred out of assets held for sale in the current year. Disposal groups are groups of
assets, and liabilities directly associated with those assets, that are to be disposed of together as a group in a single
transaction.
Non–current assets and disposal groups classified as held for sale are initially measured at the lower of carrying
value and fair value less costs to sell. At subsequent reporting dates non-current assets (and disposal groups) are
measured to the latest estimate of fair value less costs to sell. As a result of this measurement any impairment is
recognised by charging to profit or loss.
35
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
TRADE PAYABLES
Trade payables, classified as other liabilities in accordance with IAS 39, are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method. Other payables are stated at
amortised cost.
BORROWINGS
Borrowings are classified as other liabilities in accordance with IAS 39 and are recorded at the fair value of the
consideration received, net of direct transaction costs. Finance charges are accounted for in profit or loss over the
term of the instrument using the effective interest rate method.
TAXATION
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from accounting profit as
reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expense
that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the
reporting date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit
and accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are recognised to the extent it is probable that taxable profits
will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profits
nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset is realised based upon tax rates that have been enacted or substantively enacted at the reporting date.
Deferred tax is charged or credited in profit or loss, except when it relates to items charged or credited directly to
other comprehensive income and equity, in which case the deferred tax is also dealt with in other comprehensive
income and equity.
PROVISIONS
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it
is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount
can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at an
appropriate pre-tax discount rate.
36
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
PENSIONS
The Group operates a number of defined contribution pension schemes. Contributions are charged to profit or loss
as incurred.
EQUITY INSTRUMENTS
Equity instruments issued by the Company are recorded at fair value net of transaction costs.
SHARE OPTION SCHEMES
The Group has applied the requirements of IFRS 2 Share-based Payment. In accordance with the transitional
provisions, IFRS 2 has been applied to all grants of equity instruments on or after 7 November 2002 that were
unvested as of 1 January 2006.
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments
are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-
based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of
shares that will eventually vest. Fair value is measured by use of a stochastic pricing model. Where employees’
contracts are terminated the options are treated as having been forfeited and accordingly previous charges are
credited back to profit or loss or retained earnings if the option has vested.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised on the Group’s Statement of Financial Position when the
Group has become party to the contractual provisions of the instrument. The Group uses derivative financial
instruments such as interest rate caps to hedge its risks associated with interest rates. Such derivative financial
instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are
subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as
liabilities when the fair value is negative.
Any gains or losses arising from changes in fair value on derivatives during the year that do not qualify for hedge
accounting are taken directly to profit or loss.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Group’s financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result
in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the
future.
Judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, apart
from those involving estimates, which have the most significant effect on the amounts recognised in the financial
statements.
37
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes
The Group is subject to income taxes in the UK. Judgement is required in determining the provision for income
taxes. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will
be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such
differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
Deferred tax is measured on a non-discounted basis at tax rates that are expected to apply in the periods in which
the temporary differences reverse based on tax rates in place at the Balance Sheet date. Deferred tax assets are
recognised where their recovery is considered more likely than not in the expectation that there will be suitable
taxable profits from which the future reversal of underlying temporary differences can be deducted. This assessment
is inherently judgemental. Details of the amounts of deferred tax assets recognised and not recognised are given in
note 22.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Impairment of non-financial assets
The Group assesses whether there are any indicators of impairment for all non–financial assets at each reporting
date. Goodwill and other indefinite life intangibles are tested for impairment annually and at other times when such
indicators exist. Other non-financial assets are tested for impairment when there are indicators that the carrying
amounts may not be recoverable.
When value in use calculations are undertaken, management must estimate the expected future cash flows from the
asset or cash generating unit and choose a suitable discount rate in order to calculate the present value of those
cash flows. Further details are given in note 12.
Valuation of seperable intangibles on acquisition
When valuing the intangibles acquired in a business combination, management estimate the expected future cash
flows from the asset and choose a suitable discount rate in order to calculate the present value of those cash flows
separable intangibles valued on acquisitions made in the year were £1.1m (2010: £1.2m) as detailed further in notes
11 and 12.
Share-based payments
The Group measures the cost of equity–settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. Estimating fair value requires determining the most
appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the
grant. This also requires determining the most appropriate inputs to the valuation model including the expected life
of the option, volatility and dividend yield and making assumptions about them. The assumptions and models used
are disclosed in note 29.
38
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue
Revenue recognised on partially completed projects is calculated by estimating the percentage of completion.
Provisions
In the building repair business, provision is made for the cost of remedial works necessitated by customer claims for
further or corrective work to be carried out without further charge under the company’s terms of business. This
provision is calculated based on historical data over the period of the guarantees issued by the company.
Other provisions for onerous leases/dilapidations are made when the Group has a present legal or constructive
obligation and based on the directors’ best estimate of the amount and timing of future cash flows. Details of the
provisions made are given in note 21.
ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (‘IFRS’)
(a) New and amended standards adopted by the Group
The following new standards and amendments to standards are mandatory for the first time for the financial year
beginning 1 January 2011.
• IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments” is effective after the first annual reporting
period beginning on or after 1 July 2010.
• IAS 24 “Related Party Disclosures (revised)” is effective after the first annual reporting period beginning on or
after 1 January 2011.
• “Annual Improvements to IFRS”
(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1
January 2011 and not early adopted.
• IAS 8 Accounting Policies
• IFRS 9 Financial Instruments
• IFRS 10 Consolidated Financial Statements
• IFRS 11 Joint Arrangements
• IFRS 12 Disclosure of Interests in Other Entities
• IFRS 13 Fair Value Measurement
3 FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk (including fair value interest rate risk and
cash flow interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial
performance. The Group uses derivative financial instruments to hedge certain risk exposures.
Risk management is carried out centrally under policies approved by the Board of directors. The Group evaluates
and hedges financial risks. The Board provides written principles for overall risk management.
39
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
3 FINANCIAL RISK MANAGEMENT (continued)
(a) Market risk
(i)
Foreign exchange risk:
The Group operates in the UK and is not exposed to foreign exchange risk.
(ii) Cash flow and fair value interest rate risk:
The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose
the Group to cash flow interest rate risk. During 2011 and 2010, the Group’s borrowings at variable rates
were denominated in the UK pound. The Group analyses its interest rate exposure using financial modelling.
Based on the various scenarios, the Group manages its cash flow interest rate risk by using interest rate
collars. Such interest rate collars have the economic effect of converting borrowings from floating rates to
fixed rates at a certain level. The interest rate collar is an agreement with other parties at quarterly intervals,
to exchange the difference between fixed and floating rate calculated by reference to the notional principal
amount as shown in note 20.
(b) Credit risk
Credit risk is managed on a Group basis, except for credit risk relating to accounts receivable balances. Each local
entity is responsible for managing and analysing the credit risk for each of their new clients before standard payment
and delivery terms and conditions are offered. Credit risk arises from cash and cash equivalents, derivative financial
instruments and deposits with banks and financial institutions, as well as credit exposures to retail customers,
including outstanding receivables and committed transactions. The Group’s exposure to bad debts is not
significant. The maximum exposure is the carrying amount as disclosed in note 16. With respect to credit risk arising
from the other financial assets of the Group, which comprise cash and cash equivalents, the Group’s exposure to
credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these
instruments as also shown in note 16.
(c) Liquidity risk
The Group monitors its risk to a shortage of funds using a forecasting model. This model considers the maturity of
both its financial assets and financial liabilities (e.g. accounts receivables, other financial assets) and projected cash
flows from operations. The Group’s objective is to maintain a balance between continuity of funding and flexibility
through the use of bank overdrafts, bank loans and finance in order to ensure that there is sufficient cash or working
capital facilities to meet the requirements of the Group for its current business plan. A detailed analysis of the
Group’s debt facilities is given in note 20.
Capital risk management
The Group’s main objective when managing capital is to protect returns to shareholders by ensuring the Group will
trade profitably in the foreseeable future. The Group also aims to maximise its capital structure of debt and equity so
as to minimise its cost of capital.
The Group manages its capital with regard to the risks inherent in the business and the sector within which it
operates by monitoring its gearing ratio on a regular basis. The Group considers its capital to include share capital,
share premium, retained earnings and net debt as noted below. Net debt includes short and long term borrowings
(including overdrafts and lease obligations) net of cash and cash equivalents.
No changes were made in the objectives, policies or processes during the years ending 31 December 2011 and 31
December 2010.
The Group’s strategy is to strengthen its capital base in order to sustain the future development of the business.
40
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
3 FINANCIAL RISK MANAGEMENT (continued)
Debt to Capital Ratio
Total debt
Less cash and cash equivalents (note 20)
Net debt
Total equity
Debt to capital ratio
2011
£’m
14.5
(2.9)
11.6
23.7
0.5
2010
£’m
14.9
(2.6)
12.3
16.7
0.7
The decrease is gearing during 2011 resulted primarily from the conversion of the suborinated debt (note 34).
The Group does not have any externally imposed capital requirements.
Fair value estimation
The fair value of financial instruments is market value.
4 SEGMENTAL ANALYSIS
The Group is organised into four main operating segments, Records Management, Document Scanning,
Relocations and Building Repair, and operates one service per segment as described in the business review. All
trading of the Group is undertaken within the United Kingdom and the Company has no foreign operations.
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.
41
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
4 SEGMENTAL ANALYSIS (continued)
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:
2011
£’m
Records
Management
Document
Scanning
Building
Repair
Relocations
13.8
5.4
1.8
–
16.0
0.8
3.2
0.3
37.1
5.4
1.4
0.9
4.1
1.0
–
0.1
6.9
3.8
0.1
0.2
2.3
2.4
–
–
2010
£’m
Records
Management
Document
Scanning
Building
Repair
Relocations
10.7
2.0
3.9
(0.1)
15.0
0.5
31.7
5.2
1.2
0.6
4.8
1.3
–
0.2
6.2
3.4
0.1
0.2
–
–
–
–
–
–
Head
Office
–
(1.3)
0.6
15.1
–
–
Head
Office
–
(1.1)
0.2
16.3
–
–
Total
34.8
5.2
(1.4)
(0.2)
(0.5)
3.1
(1.1)
2.0
–
2.0
51.0
27.7
1.5
1.2
Total
27.7
3.2
(0.4)
(0.7)
(0.4)
1.7
(1.1)
0.6
0.3
0.9
42.9
26.2
1.3
1.0
Sales of services
Segment operating profit
Exceptional items
Share based payments charge
Amortisation of intangible assets
Operating profit
Finance costs
Profit before tax
Tax credit
Profit after tax
Segment assets
Segment liabilities
Capital expenditure
Depreciation and amortisation
Sales of services
Segment operating profit
Impairment of intangible fixed assets
Exceptional items
Amortisation of intangible assets
Operating profit
Net Finance costs
Profit before tax
Tax credit
Profit after tax
Segment assets
Segment liabilities
Capital expenditure
Depreciation and amortisation
42
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
4 SEGMENTAL ANALYSIS (continued)
MAJOR CUSTOMERS
MAJOR CUSTOMERS
For the years ended 31 December 2011 and 2010 no customers accounted for more than 10% of the Group’s total
For the years ended 31 December 2011 and 2010 no customers accounted for more than 10% of the Group’s total
revenue.
revenue.
Discontinued Operations
RESULTS
Operating loss
Net finance expense
Loss before tax
Income tax credit
Loss for the year from discontinued operations
Year ended
31 December 2011
£’m
Year ended
31 December 2010
£’m
–
–
–
–
–
(0.1)
(0.1)
(0.2)
0.1
(0.1)
The insurance-related operations of Ansa Building Services Limited (ABS) were terminated on 31 December 2009.
The loss before tax in 2010 related to the run off costs of the ABS operations. Cash flows arising from discontinued
operations are given in note 27.
5 EXCEPTIONAL ITEMS – CONTINUING OPERATIONS
Exceptional items – continuing operations
Relocation costs of integration
Incremental costs of integration
Redundancy costs
Acquisition costs
Provision for onerous leases
Total exceptional items
Year ended
31 December 2011
£’m
Year ended
31 December 2010
£’m
Restated
0.5
0.3
0.3
0.3
–
1.4
0.2
–
0.2
–
0.3
0.7
The costs associated with integrating the Records Management business of the newly acquired entities with the
existing business include costs of uplifting boxes to the existing facilities and comprise site, transport and labour
costs.
The incremental costs include duplicated costs of our existing Records Management cost base as a result of the
integration described above, and have also been shown as exceptional costs as they are not expected to recur.
Redundancy costs incurred in reducing the cost base in the scanning business are shown as exceptional (2010:
redundancy costs in Records Management following the acquisition of Datacare and Formsafe).
Acquisition costs of £0.2m relate to the acquisitions made in the year and £0.1m in respect of Harrow Green.
The figures for the year ended 31 December 2010 have been restated for £0.1m credit to onerous leases which
were previously classified in administration expenses. There was no overall impact on the profit for the year.
43
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
6 OPERATING PROFIT/(LOSS)
Year ended
31 December 2011
£’m
Year ended
31 December 2010
£’m
The following items have been included
in arriving at operating profit/(loss):
Amortisation of intangible assets
Depreciation of property, plant and equipment
Impairment of intangible assets
Share based payments charge
Operating leases – plant and machinery
Operating leases – land and buildings
Auditor’s remuneration:
– Parent and consolidated financial statements
– Audit of company’s subsidiaries pursuant to legislation
Tax services
Expenses by function:
Staff costs (note 30)
Depreciation, amortisation and impairment
Premises costs
Materials
Subcontractors
Selling and distribution expenses
Computer costs
Audit, other and tax services
Legal and professional
Telecommunication costs
Exceptional items
Other expenses
0.5
0.7
–
0.2
0.7
0.7
–
0.1
0.1
0.4
0.6
0.4
0.1
0.9
1.6
–
0.1
0.1
14.6
11.8
1.2
4.2
2.2
2.7
1.1
0.3
0.2
0.3
0.3
1.4
3.2
1.4
2.9
1.8
2.0
1.0
0.3
0.1
0.3
0.3
0.7
3.4
Total cost of sales and administrative expenses
31.7
26.0
44
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
7 FINANCE COSTS
Interest on bank loans and overdrafts
Interest on loan from ultimate parent company
Interest rate collar
Exceptional finance costs
Total
Year ended
31 December 2011
£’m
Year ended
31 December 2010
£’m
0.6
0.1
0.2
0.9
0.2
1.1
0.7
0.4
–
1.1
–
1.1
The exceptional costs shown above relate to costs associated with the change in borrowing facilities.
8 TAXATION
Current tax:
UK corporation tax on profit for the year
Adjustments in respect of previous periods
Total current tax
Deferred tax: (note 22)
Current year
Adjustments in respect of previous periods
Total deferred tax
Total tax credit
Year ended
31 December 2011
£’m
Year ended
31 December 2010
£’m
0.6
0.1
0.7
(0.9)
0.2
(0.7)
–
0.3
0.1
0.4
(0.3)
(0.4)
(0.7)
(0.3)
45
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
8 TAXATION (continued)
The credit for the year can be reconciled to the profit per the Consolidated Statement of Comprehensive Income as
follows:
Year ended
31 December 2011
£’m
Year ended
31 December 2010
£’m
Profit before tax – continuing operations
Profit before tax multiplied by the rate of
corporation tax of 26% (2010: 28%)
Effects of:
Expenses not deductible for tax purposes
Losses previously not recognised for deferred tax
Tax losses utilised
Effect of change in rate used for deferred tax
Adjustments in respect of current income tax
of previous years
Adjustments in respect of deferred income tax
of previous years
Tax credit
2.0
0.5
0.2
(0.8)
–
(0.2)
0.1
0.2
–
0.6
0.2
0.1
–
(0.1)
(0.1)
0.1
(0.5)
(0.3)
As announced on 21 March 2012, the UK Corporation Tax rate will reduce to 24% on 1 April 2012. This rate
reduction has not been reflected in the deferred tax calculation which forms part of the calculation above. Deferred
tax has been calculated at a rate of 25%, being the rate that was substantively enacted as at 31 December 2011.
The impact of this rate change on the deferred tax as at 31 December 2011 would not have been material.
46
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
9 EARNINGS PER ORDINARY SHARE
Basic earnings per share have been calculated on the profit/(loss) for the year after taxation and the weighted
average number of ordinary shares in issue during the year.
Weighted average number of shares in issue
48,977,496
26,989,490
Year ended
31 December 2011
Year ended
31 December 2010
Profit for the year
Total basic earnings per ordinary share (pence)
Profit for the year – continuing operations
Basic earnings per ordinary share –
continuing operations (pence)
Loss after taxation on ordinary activities –
discontinued operations (£’m)
Basic loss per ordinary share –
discontinued operations (pence)
£2.0m
4.0p
£2.0m
4.0p
–
–
£0.8m
3.1p
£0.9m
3.5p
£(0.1)m
(0.4)p
Weighted average number of shares in issue
Share options
Weighted average fully diluted number of shares in issue
48,977,496
1,596,923
50,574,419
26,989,490
–
26,989,490
Total fully diluted earnings per share (pence)
Fully diluted earnings per share –
continuing operations (pence)
Profit before tax – continuing operations
Adjustments:
Amortisation of intangible assets
Impairment of intangible assets
Exceptional items
Share based payments charge
Other finance costs
Adjusted profit for the year – continuing operations
3.8p
3.8p
£’m
2.0
0.5
–
1.4
0.2
0.5
4.6
3.1p
3.1p
£’m
0.6
0.4
0.4
0.7
0.1
0.4
2.6
The Directors believe that the adjusted basic earnings per share provide a more appropriate representation of the
underlying earnings derived from the Restore Group’s business. The adjusting items are shown in the table above.
47
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
9 EARNINGS PER ORDINARY SHARE (continued)
ADJUSTED EARNINGS PER SHARE
The additional adjusted earnings per share, based on the weighted average number of shares in issue during the
year, 49.0m (2010: 42.4m adjusted for Geraldton placing in 2010) is calculated below.
Adjusted profit before taxation (£’m)
Tax at 26%/28% (£’m)
Adjusted profit after taxation (£’m)
Adjusted basic earnings per share (pence)
2011
4.6
(1.2)
3.4
6.9p
2010
2.6
(0.7)
1.9
4.4p
As disclosed in note 35, on 1 March 2012, 11,333,334 new shares were issued.
10 DIVIDENDS
In respect of the current year, the directors propose, 1 pence per share will be paid to ordinary shareholders on 31
July 2012. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been
included as a liability in these financial statements.
The proposed dividend for 2011 is payable to all shareholders on the Register of Members on 6 July 2012. The total
estimated dividend to be paid is £0.5m.
11 BUSINESS COMBINATIONS
On 8 April 2011, the business and assets of Sargents Logistics Limited and Sargents Archive Limited (together
‘Sargents’), a records management and office relocation business, was acquired for cash of £0.5m.
Book value
at acquisition
£’m
Fair value
adjustment
£’m
Fair value
at acquisition
£’m
Intangible assets
Property, plant and equipment
Trade and other payables
Tax liabilities
Net assets acquired
Goodwill
Consideration
Satisfied by:
Cash to vendors
–
0.1
(0.1)
–
–
0.3
–
–
(0.1)
0.2
0.3
0.1
(0.1)
(0.1)
0.2
0.3
0.5
0.5
The goodwill represents the value attributable to new business and the assembled and trained workforce.
The intangibles capitalised represent £130,000 in respect of customer relationships and £130,000 in respect of the
trade name. Deferred tax at 25% has been provided on the value of intangible assets (note 22). Acquisition costs
of £87,000 were incurred and have been charged to profit or loss.
48
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
11 BUSINESS COMBINATIONS (continued)
On 30 June 2011, the business and assets of Management Archives, a records management business, was
acquired for cash of £0.7m.
Book value
at acquisition
£’m
Fair value
adjustment
£’m
Fair value
at acquisition
£’m
Intangible assets
Property, plant and equipment
Trade and other payables
Tax liabilities
Net assets acquired
Goodwill
Consideration
Satisfied by:
Cash to vendors
–
0.1
(0.1)
–
–
0.2
–
–
(0.1)
0.1
0.2
0.1
(0.1)
(0.1)
0.1
0.6
0.7
0.7
The goodwill represents the value attributable to new business and the assembled and trained workforce.
The intangibles capitalised represent £215,000 in respect of customer relationships and £24,000 in respect of the
trade name. Deferred tax at 25% has been provided on the value of intangible assets (note 22). Acquisition costs
of £47,000 were incurred and have been charged to profit or loss.
On 31 August 2011, the business and assets of Paterson Data Management Limited, a Records Management
business, was acquired for cash of £0.6m and shares with a fair value of £30,000 (note 23).
Book value
at acquisition
£’m
Fair value
adjustment
£’m
Fair value
at acquisition
£’m
Intangible assets
Property, plant and equipment
Trade receivables
Cash
Trade and other payables
Tax liabilities
Net assets acquired
Goodwill
Consideration
Satisfied by: Cash to vendors
–
0.1
0.1
0.2
(0.2)
–
0.2
0.3
–
–
–
–
(0.1)
0.2
The goodwill represents the value attributable to new business and the assembled and trained workforce.
0.3
0.1
0.1
0.2
(0.2)
(0.1)
0.4
0.2
0.6
0.6
49
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
11 BUSINESS COMBINATIONS (continued)
The intangibles capitalised represent £262,000 in respect of customer relationships and £19,000 in respect of the
trade name. Deferred tax at 25% has been provided on the value of intangible assets (note 22). Acquisition costs
of £75,000 were incurred and have been charged to profit or loss.
On 14 November 2011, the business and assets of Brunswick Document Management Limited, a Records
Management business, was acquired for cash of £1.2m.
Book value
at acquisition
£’m
Fair value
adjustment
£’m
Fair value
at acquisition
£’m
Intangible assets
Property, plant and equipment
Trade receivables
Cash
Trade and other payables
Tax liabilities
Net assets acquired
Goodwill
Consideration
Satisfied by:
Cash to vendors
–
0.3
0.2
0.1
(0.1)
–
0.5
0.3
–
–
–
–
(0.1)
0.2
0.3
0.3
0.2
0.1
(0.1)
(0.1)
0.7
0.5
1.2
1.2
The goodwill represents the value attributable to new business and the assembled and trained workforce.
The intangibles capitalised represent £238,000 in respect of customer relationships and £27,000 in respect of the
trade name. Deferred tax at 25% has been provided on the value of intangible assets (note 22). Acquisition costs
of £38,000 were incurred and have been charged to profit or loss.
POST ACQUISITION RESULTS
Revenue
Profit before tax since acquisition
included in the Consolidated Statement
of Comprehensive Income
Sargents
£’m
3.2
0.3
Management
Archive
£’m
Restore Scotland
(Paterson)
£’m
0.4
0.1
0.1
–
Brunswick
£’m
0.2
0.1
If the acquisitions had been completed on the first day of the financial year, Group revenues would have been
£38.3m and Group profit before tax would have been £2.5m.
50
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
11 BUSINESS COMBINATIONS (continued)
In respect of the acquisitions made during the year the following amounts were paid/acquired.
Total consideration paid
Total cash consideration paid
Total cash and cash equivalents acquired
Total assets acquired
Total liabilities acquired
Total acquisition costs included in exceptional administrative expenses
£’m
3.0
3.0
0.3
2.3
0.9
0.2
The amount of goodwill that is expected to be deducted for tax purposes is £0.7m.
The acquisitions of the Records Management businesses were made to provide national coverage and increase the
Group’s market share. The acquisition of Sargents expanded our presence in the UK office services market.
51
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
12 INTANGIBLE ASSETS
Goodwill
Cost
1 January 2010
Additions
Acquired with subsidiary
31 December 2010
Cost
1 January 2011
Additions – external
Arising on acquisition of subsidiary
Adjustments
31 December 2011
Accumulated amortisation and impairment
1 January 2010
Impairment
Charge for the year
Acquired with subsidiary
31 December 2010
Accumulated amortisation and impairment
1 January 2011
Charge for the year
Adjustments
31 December 2011
Carrying amount
31 December 2011
31 December 2010
1 January 2010
£’m
25.2
0.5
–
25.7
25.7
–
1.6
(2.9)
24.4
13.5
–
–
–
13.5
13.5
–
(2.9)
10.6
13.8
12.2
11.7
Customer
relationships
£’m
Trade
names
£’m
Applications
software and IT
£’m
8.6
1.1
–
9.7
9.7
–
0.9
(3.1)
7.5
3.6
0.4
0.2
–
4.2
4.2
0.3
(3.1)
1.4
6.1
5.5
5.0
1.2
0.1
–
1.3
1.3
–
0.2
–
1.5
–
–
–
–
–
–
–
–
–
1.5
1.3
1.2
1.2
0.3
0.1
1.6
1.6
0.1
–
–
1.7
0.5
–
0.2
0.1
0.8
0.8
0.2
–
1.0
0.7
0.8
0.7
Total
£’m
36.2
2.0
0.1
38.3
38.3
0.1
2.7
(6.0)
35.1
17.6
0.4
0.4
0.1
18.5
18.5
0.5
(6.0)
13.0
22.1
19.8
18.6
The adjustments shown above relate to fully amortised intangibles disposed of in previous years but not eliminated.
They have been included in the current year as the directors do not believe that the net impact is material to the
financial statements.
Customer relationships include assets which are considered to have an indefinite life due to the business having a
strong relationship and low attrition rates with its customer groups. The carrying amount of these assets is £2.9m
52
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
12 INTANGIBLE ASSETS (continued)
(2010: £2.9m). The remaining relationships have a remaining life of 6 – 11.5 years. Trade names include assets
considered to have an indefinite life due to the history of trading and the Group being a market leader in the services
provided. The carrying amount of these assets is £1.0m (2010: £1.0m). The remaining trade names are being
written off over 10 years.
The changes to goodwill during the year were as follows:
Cost
1 January 2010
Acquired – Datacare Business Systems Limited
Acquired – Formsafe
31 December 2010 and 1 January 2011
Acquired – Sargents
Acquired – Management Archives
Acquired – Paterson
Acquired – Brunswick
31 December 2011
Accumulated impairment
1 January 2010, 31 December 2010 and 31 December 2011
Carrying amount at 31 December 2011
Carrying amount at 31 December 2010
Carrying amount at 1 January 2010
£’m
25.2
0.1
0.4
25.7
0.3
0.6
0.2
0.5
27.3
13.5
13.8
12.2
11.7
53
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
12 INTANGIBLE ASSETS (continued)
Allocation of goodwill to cash–generating units
Goodwill and indefinite life intangible assets has been allocated for impairment testing purposes to the following
cash–generating units.
The carrying is as follows:
Records Management
Document Scanning
Building Repair
Relocations
Annual test for impairment
Goodwill
2011
£’m
12.5
0.6
0.4
0.3
13.8
2010
£’m
11.2
0.6
0.4
–
12.2
Indefinite life intangibles
2010
2011
£’m
£’m
2.9
0.2
1.0
–
4.1
2.9
0.2
1.0
–
4.1
For the purpose of impairment testing, goodwill and other intangibles are allocated to business segments which
represent the lowest level that those assets are monitored for internal management purposes. The recoverable
amount is determined from value-in-use calculations, which used budgeted cash flows for year one and cash flow
projections for years two and three. Terminal cash flows are based on these 3 year projections, assumed to grow
perpetually at 1%. In accordance with IAS 36, the growth rates for beyond the forecasted three years do not exceed
the long term average growth rate for the industry. The key assumptions forming inputs to the cash flows are in
revenues and margins. Revenues for 2012 have been assessed by reference to existing contracts and market
volumes. Margins have been assumed to increase from those achieved in 2011 due to a reduction in operating
costs as a result of synergies and overhead savings that have been implemented. The forecasts have been
discounted at a pre-tax rate of 8.3% (2010: 8.5%).
In 2010, as a result of the review of the DCS business, the carrying amount of goodwill and other intangibles was
assessed at 31 December 2010 and an impairment of £0.4 million was made to the value of the customer
relationships to reflect the decline in sales to key customers in respect of this business. In 2011, management
considered the further impact, if revenues and margins did not improve from 2011 and an increased discount factor
of up to 10.6% was used and were satisfied that this would not result in a further impairment of goodwill.
54
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
13 PROPERTY, PLANT AND EQUIPMENT
Freehold
and long
leasehold
land &
buildings
£’m
Leasehold
improvements
Racking
plant &
machinery
Office
equipment
fixtures &
fittings
Motor
vehicles
Total
£’m
£’m
£’m
£’m
£’m
9.3
0.5
–
–
–
9.8
9.8
0.6
–
10.4
0.5
0.1
–
–
0.6
0.6
0.1
–
0.7
9.7
9.2
8.8
0.4
–
–
–
–
0.4
0.4
0.1
–
0.5
0.2
–
–
–
0.2
0.2
–
–
0.2
0.3
0.2
0.2
4.4
0.3
–
–
(0.1)
4.6
4.6
0.5
0.1
5.2
2.5
0.3
–
–
2.8
2.8
0.4
–
3.2
2.0
1.8
1.9
1.3
0.1
–
0.4
–
1.8
1.8
0.2
0.4
2.4
1.1
0.1
–
–
1.2
1.2
0.2
–
1.4
1.0
0.6
0.2
0.5
0.1
–
–
0.1
0.7
0.7
–
0.1
0.8
0.1
0.1
–
–
0.2
0.2
–
–
0.2
0.6
0.5
0.4
15.9
1.0
–
0.4
–
17.3
17.3
1.4
0.6
19.3
4.4
0.6
–
–
5.0
5.0
0.7
–
5.7
13.6
12.3
11.5
Cost
1 January 2010
Additions
Disposals
Acquisitions
Reclassification
31 December 2010
At 1 January 2011
Additions
Acquisitions
31 December 2011
Accumulated Depreciation
1 January 2010
Charged in the year
Disposals
Reclassification
31 December 2010
At 1 January 2011
Charged in the year
Acquisitions
31 December 2011
Net book value
31 December 2011
31 December 2010
1 January 2010
Capital expenditure contracted for but not provided in the financial statements is shown in note 32.
Depreciation is charged to profit or loss as an administrative expense.
£67,500 of motor vehicles are held under a finance lease.
55
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
14 JOINT VENTURES
On 10 October 2011, the group invested £0.3m in a 50% interest in Restore Shred Limited, a company set up to
provide secure shredding services. The share of results from this joint venture were £14,000 loss for the year ended
31 December 2011.
Interest in joint ventures
At 31 December
Represented by:
Property, plant and equipment
Current assets
Current liabilities
Share of net assets
15 INVENTORIES
Finished goods and goods for resale
£0.1m (2010:£nil) of inventories were recognised as an expense in cost of sales in the year.
16 TRADE AND OTHER RECEIVABLES
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Other receivables
Prepayments and accrued income
2011
£’m
0.3
0.2
0.2
(0.1)
0.3
2010
£’m
–
–
–
–
–
2011
£’m
2010
£’m
0.2
0.1
2011
£’m
2010
£’m
7.8
(0.1)
7.7
0.5
2.7
10.9
5.7
(0.1)
5.6
0.2
1.8
7.6
The average credit period on sales of services is 67 days (2010: 75 days). No interest is charged on the trade
receivables for the first 30 days from the date of the invoice. Thereafter, interest may be charged at 2% per annum
on the outstanding balance. Trade receivables are provided for based on estimated irrecoverable amounts,
determined by reference to past payment history and the current financial status of the customers.
56
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
16 TRADE AND OTHER RECEIVABLES (continued)
Movement in the allowance for impairment
Balance at beginning of the year
Decrease in amount recognised in profit or loss
Balance at end of year
2011
£’m
0.1
–
0.1
2010
£’m
0.3
(0.2)
0.1
In determining the recoverability of the trade receivables, the Group considers any change in the credit quality of the
trade receivable from the date credit was initially granted up to the reporting date. See note 20 for an analysis of
trade receivables that were past due but not impaired.
17 TRADE AND OTHER PAYABLES
Trade payables
Other taxation and social security
Other payables
Accruals and deferred income
2011
£’m
2010
£’m
3.0
1.7
1.6
2.0
8.3
1.8
1.2
0.8
2.2
6.0
Other payables includes the fair value of the interest rate cap and collar of £244,000 (2010: £90,000), see note 20.
The Group has financial risk management policies in place to ensure that all payables are paid within the credit time
frame. Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs.
The average credit period for trade purchases is 38 days (2010: 57 days).
57
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
18 LOANS AND OVERDRAFTS
Current
Bank loans and overdrafts due within one year
Overdrafts on demand
Bank loans – secured
Non–current
Bank loans – secured
Loan from ultimate parent
2011
£’m
2010
£’m
1.9
2.5
4.4
10.1
–
10.1
1.1
9.5
10.6
2.0
2.3
4.3
The bank debt is due to Barclays bank plc and is secured by a fixed and floating charge over the assets of the
Group. The interest rate profile and an analysis of borrowings is given in note 20.
The subordinated loan from ultimate parent attracted interest at 10% which is compounded annually. See note 34,
Related Party Transactions for further details.
Analysis of net debt
Cash at bank and in hand
Balance on confidential invoice discounting facility
Bank loans and overdrafts due within one year
Bank loans due after one year
Loan from ultimate parent
19 OTHER FINANCIAL LIABILITIES
Obligations under finance leases
Repayable by instalments:
In less than one year
58
2011
£’m
3.5
(0.6)
(4.4)
(10.1)
–
2010
£’m
2.6
–
(10.6)
(2.0)
(2.3)
(11.6)
(12.3)
2011
£’m
2010
£’m
0.1
0.1
0.1
–
–
–
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
20 FINANCIAL INSTRUMENTS
The Group’s financial instruments comprise cash, bank and various other receivable and payable balances that arise
from its operations. The main purpose of these financial instruments is to finance the Group’s operations.
CASH AND CASH EQUIVALENTS NET OF INVOICE DISCOUNTING
Cash at bank and in hand
Invoice discounting facility
2011
£’m
3.5
(0.6)
2.9
2010
£’m
2.6
–
2.6
As at 31 December 2011 trade receivables of £2.3m (2010: £1.5m) were past due but not impaired. These relate to
a number of independent customers with no recent history of default. The ageing analysis of these trade receivables
is as follows:
60–90 days
Greater than 90 days
2011
£’m
1.1
1.2
2010
£’m
0.7
0.8
The main financial risks arising from the Group’s financial instruments are interest rate risk and liquidity risk. The
directors review and agree policies for managing each of these risks. Interest rates are regularly reviewed to ensure
competitive rates are paid. Detailed cash flows are produced on a regular basis to minimise liquidity risks.
CARRYING VALUE OF FINANCIAL ASSETS AND LIABILITIES EXCLUDING CASH AND BORROWINGS
Loans and receivables
Derivatives used for hedging
Financial liabilities measured at amortised cost
2011
£’m
2010
£’m
8.2
0.2
5.5
5.8
0.1
3.7
CURRENCY AND INTEREST RATE RISK PROFILE OF FINANCIAL LIABILITIES
All bank borrowings are subject to floating interest rates, at LIBOR plus a margin of 2.85% on the term loan, 3.5%
on the RCF and 3.5% on the overdraft.
59
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
20 FINANCIAL INSTRUMENTS (continued)
The interest rate risk profile of the Group’s borrowings for the year was:
Total
£’m
14.5
14.9
Fixed rate
financial
liabilities
£’m
Floating rate
financial
liabilities
£’m
Subject to
interest rate
collar
£’m
Weighted
average
interest rates
%
–
2.3
9.0
6.4
5.5
6.2
3.5
4.5
Currency
Sterling at 31 December 2011
Sterling at 31 December 2010
The exposure of Group borrowings to interest rate changes and contractual pricing dates at the end of the year are
as follows:
6 months or less
INTEREST RATE SENSITIVITY
2011
£’m
2010
£’m
14.5
14.9
At 31 December 2011 if interest rates had been 50 basis points higher and all other variables were held constant, it
is estimated that the Group’s profit before tax would be approximately £36,000 (2010:£42,000) lower. This is mainly
attributable to the Group’s exposure to interest rates on its variable rate borrowings and is based on the change
taking place at the beginning of the financial year and held constant throughout the year.
The Group’s sensitivity to interest rates has reduced during the current year mainly due to the reduction in the
average rate incurred.
Financial assets recognised in the statement of financial position and interest rate profile.
All financial assets are short term receivables and cash in hand. The cash in hand earns interest based on the
variable bank base rate and is held with Barclays Bank plc.
MATURITY OF FINANCIAL LIABILITIES
The maturity profile of the carrying amount of the Group’s financial liabilities (including interest payments), other than
short term trade payables and accruals which are due within one year was as follows:
Bank
debt
£’m
5.1
1.3
10.9
17.3
Other
financial
liabilities
£’m
–
–
–
–
2011
Total
£’m
5.1
1.3
10.9
17.3
Bank
debt
£’m
11.0
2.2
–
13.2
Other
financial
liabilities
£’m
0.4
2.3
–
2.7
2010
Total
£’m
11.4
4.5
–
15.9
Within one year, or on demand
Between one and two years
Between two and five years
60
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
20 FINANCIAL INSTRUMENTS (continued)
BORROWING FACILITIES
On 29 June 2011, the Group entered into a new finance facility with Barclays Bank plc. This new facility comprises a
5 year Term loan of £11 million expiring on 30 June 2016, a 3 year revolving credit facility (RCF) of £3 million, an on
demand overdraft facility of £1.5 million and an invoice discounting facility of £1.0m (2010: a term facility of £6
million and RCF of £6 million expiring on 30 June 2014 and an overdraft of £1.5 million, with Lloyds Bank plc). An
offset facility is in place and as a net basis, £nil of the overdraft was utilised at 31 December 2011. Details of
security are given in note 18. Committed but undrawn borrowing facilities as at 31 December 2011 amounted to
£2.9m.
All of the Group’s borrowings are in Sterling.
FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The Group’s financial assets and liabilities bear floating interest rates and are relatively short term in nature. In the
opinion of the directors the book values of the assets and liabilities equate to their fair value.
INTEREST RATE MANAGEMENT
The Group holds an interest rate collar and an interest rate cap. The Group exchanges the difference between fixed
and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the
Group to mitigate the risk of changing interest rates on the issued variable rate debt held. The fair value of the
interest rate collar at the year end is as follows:
Average contracted
fixed interest rate
Notional principal
amount
Fair value
2011
%
2–4
2–4
2010
%
2–4
–
2011
£’m
4.6
0.9
2010
£’m
6.2
–
2011
£’m
–
(0.2)
2010
£’m
(0.1)
–
1 to 2 years
2 to 5 years
The interest rate collar settles on a quarterly basis. The interest rate cap is for £4.6 million amortising on a straight
line basis to £3.8 million on 30 July 2012. The floor rate is 2% and the cap rate 4% and expires on 30 July 2012.
The interest rate swap of 2.80% was entered into on 13 July 2011, expires on 30 June 2016 and settles on a
quarterly basis. The swap is for £0.9m and increases/decreases on a straight line basis so that the total of the collar
and cap total 50 % of the term loan facility. As the hedge was not designated as effective on inception the
movement in fair value has been taken to profit or loss (see note 7). The valuation of derivatives is within level 2 of
the fair value hierarchy as the significant inputs to the valuation are observable.
61
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
21 PROVISIONS
1 January 2011
Used during the year
31 December 2011
Onerous lease
provision
£’m
Remedial
provision
£’m
1.1
(0.3)
0.8
0.5
–
0.5
Total
£’m
1.6
(0.3)
1.3
The onerous leases provision relates to future payments on onerous leases as required in the lease agreements.
£0.2m of costs are expected to be incurred within one year and the balance over the next 6 years.
The remedial provision relates to 25 year guarantees that Peter Cox has issued to its customers in respect of damp
proofing work. The amount of the provision has been calculated on the level of customer claims made on a historic
basis.
Provisions are analysed as follows:
Current
Non–current
Total
The impact of discounting these provisions is not material.
22 DEFERRED TAX
Summary of balances:
Deferred tax liabilities
Deferred tax asset
Net position at 31 December
The movement in the year in the Group’s net deferred tax position is as follows:
1 January
Credit to profit or loss for the year
Acquisitions
31 December
62
2011
£’m
2010
£’m
0.2
1.1
1.3
0.3
1.3
1.6
2011
£’m
2010
£’m
(3.6)
1.0
(2.6)
(3.5)
0.5
(3.0)
2011
£’m
2010
£’m
(3.0)
0.7
(0.3)
(2.6)
(3.4)
0.7
(0.3)
(3.0)
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
22 DEFERRED TAX (continued)
The following are the major deferred tax liabilities and assets recognised by the Group and the movements thereon
during the year:
DEFERRED TAX LIABILITIES
1 January 2010
Charge to income for the year
Acquisitions
31 December 2010
Charge to income for the year
Acquisitions
31 December 2011
DEFERRED TAX ASSETS
1 January 2010
Credit to income for the year
31 December 2010
Credit/(charge) to income for the year
31 December 2011
Accelerated
capital
allowances
£’m
(0.5)
0.1
–
(0.4)
–
–
(0.4)
Losses
£’m
–
–
–
0.8
0.8
On intangible
assets
Properties
Total
£’m
(1.8)
0.3
(0.3)
(1.8)
0.2
(0.3)
(1.9)
£’m
(1.4)
0.1
–
(1.3)
–
–
(1.3)
Depreciation in
excess of
capital
allowances
£’m
0.3
0.2
0.5
(0.3)
0.2
Temporary
differences
£’m
–
–
–
–
–
£’m
(3.7)
0.5
(0.3)
(3.5)
0.2
(0.3)
(3.6)
Total
£’m
0.3
0.2
0.5
0.5
1.0
A deferred tax asset of £0.8m has been recognised on a proportion of brought forward tax losses due to greater
certainty over recoverability of the asset. No deferred tax asset has been recognised as at 31 December 2011 in
relation to the balance of these losses due to continued uncertainty over when they will be relieved. The
unrecognised deferred tax asset amounts to £0.5m (2010: £1.4m) on tax losses of £1.9m (2010: £5.1m).
63
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
23 CALLED UP SHARE CAPITAL
Authorised:
199,000,000 ordinary shares of 5p each
50,000,000 deferred shares of 0.1p each
Allotted, issued and fully paid:
53,099,791(2010: 46,043,372) ordinary shares of 5p each
50,000,000 (2010: 50,000,000) deferred shares of 0.1p each
The issued ordinary share capital is as follows:
Date
1 January 2011
2011
£’m
2010
£’m
9.9
0.1
10.0
2.7
-
2.7
9.9
0.1
10.0
2.3
-
2.3
Issue price
Number of
ordinary shares
46,043,372
2 August 2011 – equity raised to repay Geraldton subordinated debt
7,010,123
6 September 2011 – equity issue regarding Paterson Data Management Limited
46,296
65.0p
64.0p
Total shares issued in 2011
31 December 2011
24 SHARE PREMIUM ACCOUNT
1 January
Premium on shares issued during the year
Share issue costs
Capital reduction
31 December
7,056,419
53,099,791
2011
£’m
52.4
4.2
(0.2)
(52.3)
4.1
2010
£’m
42.4
10.2
(0.2)
–
52.4
The Company may use the reserve to reduce a deficit in the Profit and Loss account of the Company from time to
time subject to shareholders and court approval; and the Company may release the reserve upon transferring to a
blocked trust bank account a sum equal to the remaining amount outstanding to non-consenting creditors that
existed at the date of the capital reduction.
The company undertook a capital reduction of £52.3m during the year which became effective on 7 October 2011.
64
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
25 SHARE BASED PAYMENTS RESERVE
1 January
Charge for the year
31 December
2011
£’m
2010
£’m
0.3
0.2
0.5
0.2
0.1
0.3
Since 30 June 2005, the share based payments reserve comprises charges made to the income statement in
respect of share-based payments under the Group’s equity compensation scheme.
26 RETAINED EARNINGS/(DEFICIT)
1 January
Profit for the year
Capital reduction
31 December
2011
£’m
2010
£’m
(38.3)
(39.1)
2.0
52.3
16.0
0.8
–
(38.3)
Retained earnings are the balance of income retained by the Group. Retained earnings may be distributed to
shareholders by a dividend payment.
65
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
27 CASH INFLOW FROM OPERATIONS
Year ended
31 December 2011
£’m
Year ended
31 December 2010
£’m
Continuing operations
Profit before tax
Depreciation of property, plant and equipment
Amortisation of intangible assets
Impairment of intangible assets
Net finance costs
Share based payments charge
Exceptional items
Movements in working capital
Increase in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
CASH GENERATED FROM CONTINUING OPERATIONS
Discontinued operations
Loss for the year
Finance costs
Income tax credit
Movements in working capital
Decrease in trade and other receivables
Decrease in trade and other payables
CASH USED IN DISCONTINUED OPERATIONS
NET CASH GENERATED FROM OPERATIONS
28 PENSIONS
2.0
0.7
0.5
–
1.1
0.2
–
(0.1)
(3.0)
0.5
1.9
–
–
–
–
–
–
1.9
0.6
0.6
0.4
0.4
1.1
0.1
0.3
–
0.2
(1.9)
1.8
(0.1)
0.1
(0.1)
0.4
(0.5)
(0.2)
1.6
The Group operates a number of defined contribution schemes for all qualifying employees. The assets of the
schemes are held separately from those of the Group in funds under the control of trustees. The total cost charged
to income of £0.1m (2010: £0.1m) represents contributions payable to these schemes by the Group at rates
specified in the rules of the plan.
29 SHARE BASED PAYMENT
Share option scheme
The Restore share option scheme was introduced in May 2005. Under the scheme the Remuneration Committee
can grant options over shares in the Company to directors and employees of the Group. Options are granted at a
fixed price equal to the market price of the shares under option at the date of grant. The contractual life of the option
is 10 years. Awards under the scheme are generally reserved for employees at senior management level and above.
66
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
29 SHARE BASED PAYMENT (continued)
On 30 July 2011, 3 May 2011 and on 16 April 2010 the Company made a grant of options to senior management
and directors, on which there are no performance conditions and which are exercisable within 2 – 10 years. Prior to
this the Company made five grants. The share options issued prior to 2010 have all been cancelled in 2011.
Options were valued using a stochastic model. The fair value per option granted during 2010 and the assumptions
used in the calculation are as follows:
Grant date
Share price at grant date
Exercise price
Number of employees
Share options granted
Vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
Risk free rate
Expected dividends expressed as a dividend yield
Fair value per option
30 July
2011
3 May
2011
16 April
2010
60.0p
69.5p
1
400,000
2
30%
10
6
4.0%
0%
18.9p
53.0p
50.0p
4
1,160,000
2
30%
10
6
4.0%
0%
21.0p
41.0p
32.5p
7
3,360,000
2
30%
10
6
5.6%
0%
5.0p
The total fair value of options issued in the year was £319,200 (2010: £168,000). The volatility is measured by
calculating the standard deviation of the natural logarithm of share price movements.
A reconciliation of share option movements over the two years to 31 December 2011 is:
Grant date
Number
2011
Weighted average
exercise price
Number
2010
Weighted average
exercise price
Outstanding at 1 January
Granted
Cancelled
3,431,062
1,560,000
(71,062)
834p
55p
849p
82,859
3,360,000
(11,797)
Outstanding at 31 December
4,920,000
40p
3,431,062
Exercisable at 31 December
–
–
27,019
829p
33p
802p
834p
39p
The options outstanding at 31 December 2011 had an exercise price of between 32.5p and 69.5p and a weighted
average remaining contractual life of 8.6 years.
LONG TERM INCENTIVE PLAN
The Restore Long Term Incentive Plan (“LTIP”) was introduced in May 2005. Awards under the LTIP comprise
options to acquire ordinary shares at nominal value which will be subject to performance targets. All existing LTIP
awards have been cancelled in 2011.
67
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
29 SHARE BASED PAYMENT (continued)
A reconciliation of LTIP movements over the two years to 31 December 2011 are:
Number
2011
Weighted average
exercise price
Number
2010
Weighted average
exercise price
1,800
(1,800)
–
–
5p
5p
–
–
1,800
–
1,800
–
5p
5p
5p
–
Outstanding at 1 January
Cancelled
Outstanding at 31 December
Exercisable at 31 December
30 DIRECTORS AND EMPLOYEES
Staff costs during the year were as follows:
Wages and salaries
Social security costs
Pension costs
Share based payments charge
The average monthly number of employees during the year was:
Directors
Administration
Operatives
The total amounts for directors’ remuneration and other benefits was as follows:
Emoluments for directors’ services
Pension Directors’ remuneration shown above included the following amounts
in respect of the highest paid director
Salary
68
2011
£’m
2010
£’m
13.0
10.5
1.3
0.1
0.2
1.1
0.1
0.1
14.6
11.8
Number
Number
5
197
334
536
3
156
288
447
2011
£’m
2010
£’m
0.6
0.4
0.3
0.3
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
30 DIRECTORS AND EMPLOYEES (continued)
Key management compensation
Short–term employment benefits
Termination benefits
Other benefits
Share based payments
2011
£’m
2010
£’m
1.4
0.2
0.1
0.2
1.9
1.2
–
–
0.1
1.3
In addition to the table above, £30,000 (2010: £27,000) was paid to key management in respect of post
employment benefits. The key management of the Group are management attending board meetings within each
division.
31 LEASING COMMITMENTS
The Group leases various premises under non–cancellable operating lease agreements of varying terms. The
majority of the lease agreements are renewable at the end of the lease period at market rate.
The future aggregate minimum lease payments under non–cancellable
operating leases were as follows
Operating leases which expire:
– within one year
– within two to five years
– over five years
32 CAPITAL COMMITMENTS
2011
£’m
2010
£’m
0.3
1.5
11.9
13.7
2.1
5.6
4.8
12.5
2011
£’m
2010
£’m
Capital expenditure
Contracted for but not provided in the financial statements
–
–
69
RESTORE PLC | REPORT & ACCOUNTS
Notes to the financial statements (continued)
For the year ended 31 December 2011
33 CONTINGENT LIABILITIES
The Company has entered into a bank cross guarantee with its subsidiaries. The guarantee amounts to £12.0m at
31 December 2011 (2010: £10.9m). The assets of the Company and its subsidiaries are pledged as security for the
bank borrowings, by way of a fixed and floating charge.
34 RELATED PARTY TRANSACTIONS AND CONTROLLING PARTY
The remuneration of key management personnel and details of the Directors’ emoluments are shown in note 30.
The Directors consider Geraldton Services Inc to be the parent party. Geraldton Services Inc is incorporated in the
British Virgin Islands. On 2 August 2011, the balance of £2.3 million of the loan facility of £10 million provided by
Geraldton in 2009 was converted into equity as detailed in note 23. Interest was charged at 10%, and
compounded on an annual basis. The charge to profit or loss amounted to £0.1m (2010: £0.4m). Lord Ashcroft is
the beneficial owner of Geraldton and the ultimate controlling party.
35 POST BALANCE SHEET EVENTS
On 29 February 2012, the Company acquired 100% of Harrow Green Group Limited (“Harrow Green”) for an initial
cash consideration of £6.3m. The Group will assume Harrow Green’s net debt of £5.6m and pay an additional
amount of up to £1.0m in 2015 depending on Harrow Green’s performance in 2014.
The Company also announced on 29 February 2012, its intention to place 11,333,334 new ordinary shares at 75p
each, raising £8.5m before expenses. These shares were admitted to AIM on 1 March 2012. The placing proceeds
were primarily used to fund the cash consideration.
As part of funding the Harrow Green debt that will be assumed on completion, the Company has put in place a new
£4.5m invoice discounting facility with Barclays Bank plc and increased its existing five year term loan with Barclays
by £1.5m.
The acquisition of Harrow Green will give the Company an unrivalled position in the UK commercial relocations
market and added scale and footprint within records management, with nationwide coverage across both business
lines. Commercial relocation has the same channel to market as records management, and both businesses benefit
from high levels of customer retention and repeat monthly activity.
These characteristics will provide Restore with an expanded base of recurring revenues that it can leverage to deliver
further growth, in addition to accelerating the development of other business units such as shredding and digital
scanning.
Due to the limited time available between the acquisition and the approval of these financial statements, the Group
is still in the process of establishing the fair value of the assets and liabilities acquired but it is anticipated that the fair
value of the consideration paid over the book value of the net assets aquired will comprise customer relationships,
trade names and goodwill representing the value attributable to new business and the assembled and trained
workforce. As of 31 March 2011, Harrow Green had net assets of £2.3m at book value under its previous
accounting policies. For the 12 months to 31 March 2012, Harrow Green is expected to record EBITDA from
continuing operations of £1.4m on a turnover of £29.1m.
70
RESTORE PLC | REPORT & ACCOUNTS
Company balance sheet
At December 2011
Company registered no. 05169780
FIXED ASSETS
Intangible assets
Tangible fixed assets
Investments
CURRENT ASSETS
DEBTORS: Due within one year
DEBTORS: Due after more than one year
Cash at bank
Note
36
37
38
39
39
CREDITORS: Amounts falling due within one year
40
NET CURRENT ASSETS/(LIABILITIES)
TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS: Due after more than one year
PROVISIONS FOR LIABILITIES
NET ASSETS
CAPITAL AND RESERVES
Called up share capital
Share premium account
Share based payments reserve
Profit and loss account
EQUITY SHAREHOLDERS’ FUNDS
41
43
44
45
46
47
48
2011
£’m
11.3
6.3
19.8
37.4
4.6
2.8
1.5
8.9
(7.5)
1.4
38.8
(20.4)
(0.6)
17.8
2.7
4.1
0.5
10.5
17.8
2010
£’m
–
–
30.0
30.0
2.5
–
–
2.5
(14.3)
(11.8)
18.2
(4.3)
(0.7)
13.2
2.3
52.4
0.3
(41.8)
13.2
These financial statements were approved by the board of directors and authorised for issue on 10 April 2012 and
were signed on its behalf by:
Sir William Wells
Chairman
Charles Skinner
Chief Executive
71
RESTORE PLC | REPORT & ACCOUNTS
Company accounting policies
For the year ended 31 December 2011
These Financial Statements for the Company have been prepared under the historical cost convention subject to the
revaluation of certain financial instruments and in accordance with the Companies Act 2006 and applicable
Accounting Standards in the United Kingdom (UK GAAP). The Directors consider that the accounting policies set
out below are suitable, are supported by reasonable judgements and estimates and have been consistently applied
except where stated below. A summary of the more important accounting policies is set out below.
GOING CONCERN
The going concern basis has been applied in these accounts on the basis that funds will be made available from
other group companies.
The going concern position is discussed further in the consolidated financial statements of the Group on page 30
and applies to the Company.
COMPANY PROFIT AND LOSS ACCOUNT
In accordance with section 408 of the Companies Act 2006 the Company is exempt from the requirement to
present its own profit and loss account. The result for the financial year of the Company is disclosed in note 47 to
these Financial Statements.
DIVIDEND INCOME
In the Company’s financial statements, dividends received and receivable are recognised when the right to receive
payment is established.
INVESTMENTS
The Company’s investment in shares in Group companies are stated at cost less provision for impairment plus
capital contributions in respect of share based payments.
TANGIBLE FIXED ASSETS
The costs of tangible fixed assets are stated at their purchase price, together with any incidental expenses of
acquisition. Depreciation is provided on a straight line basis on all property, plant and equipment, except freehold
land.
Freehold and long leasehold buildings
2–5%
% per annum
Long leasehold land
Leasehold improvements
Plant and machinery
Racking
Office equipment, fixtures and fittings
Motor vehicles
over the remaining life of the lease
over the life of the lease
5–50%
12.5%
10–40%
20–25%
72
RESTORE PLC | REPORT & ACCOUNTS
Company accounting policies (continued)
For the year ended 31 December 2011
DEFERRED TAXATION
Deferred taxation is recognised in respect of timing differences which have originated but not reversed at the
balance sheet date based on tax rates enacted or substantively enacted. Deferred tax assets are recognised when
their recovery is assessed as more likely than not. Deferred tax assets and liabilities are not discounted.
BORROWINGS
All borrowings are initially stated at the fair value of the consideration received after deduction of issue costs. Issue
costs together with other finance costs are charged to the profit and loss account over the period of the term of the
borrowings at a constant rate. Accrued finance charges are added to and issue costs are deducted from the
carrying value of those borrowings.
FINANCIAL INSTRUMENTS
The Company has periodically used derivative instruments to manage its interest rate exposure. Derivatives are
initially recognised at fair value on the date a derivative contract is entered into and are subsequently re–measured at
fair value. The resulting gain or loss is recognised in profit or loss.
SHARE OPTION SCHEMES
The fair value of share based payments granted to employees is charged over the vesting period of the related share
options or share allocations. The charge is based on the fair value of the options and shares allocated determined
using a stochastic pricing model, which is appropriate given the vesting and other conditions attached to the
options. The value of the charge is adjusted at each balance sheet date to reflect expected and actual levels of
vesting.
PROVISIONS
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of
the amount can be made. If the effect is material, provisions are determined by discounting the expected future
cash flows at an appropriate pre–tax discount rate.
GOODWILL
Purchased goodwill representing the excess of the fair value of the consideration given over the fair values of the
identifiable net assets acquired, is capitalised and is amortised on a straight line basis over its useful economic life of
10 years.
On 31 December 2011, as a result of a group reorganisation, the trade and assets of certain subsidiary companies
as shown in note 36 were transferred to the company at net asset value. The carrying value of these investments in
the company’s balance sheet prior to the transfers was £10.4m. Following the reorganisation, this carrying value
was impaired and hence a provision would normally have been made in accordance with the Companies Act 2006.
However, the directors consider that such a provision would fail to give a true and fair view and instead have
reallocated the carrying value of £10.4m to goodwill. A further £0.9m of goodwill was transferred to the company as
a result of the hive up of the trade and assets. Further details are set out in note 36.
73
RESTORE PLC | REPORT & ACCOUNTS
Notes to the company financial statements
For the year ended 31 December 2011
36 INTANGIBLE ASSETS
The changes to the goodwill during the year were as follows:
Cost
1 January 2011
Restore (Wansdyke) Ltd
Datacare Business Systems Ltd
Formsafe Ltd
Brunswick Document Management Ltd
Restore (Scotland) Ltd
Goodwill transferred from subsidiary on group reorganisation
31 December 2011
£’m
–
7.6
0.7
0.8
0.8
0.5
10.4
0.9
11.3
On 31 December 2011, as a result of a group reorganisation, the trade and assets of the subsidiary companies
shown in the table above were transferred to the Company at net asset value. The reorganisation was accounted for
in accordance with the accounting policy set out on page 73.
37 TANGIBLE FIXED ASSETS
Freehold
and long
leasehold
and
buildings
£’m
Leasehold
improvements
Racking
plant and
machinery
Office
equipment
fixtures and
fittings
Motor
vehicles
Software
Total
£’m
£’m
£’m
£’m
£’m
£’m
Cost
1 January 2011
–
Transferred from subsidiaries 4.2
31 December 2011
4.2
Accumulated depreciation
1 January 2011
Charged in the year
31 December 2011
Net book value
31 December 2011
31 December 2010
–
–
–
4.2
–
–
0.2
0.2
–
–
–
0.2
–
–
0.5
0.5
–
–
–
0.5
–
–
0.9
0.9
–
–
–
0.9
–
–
0.1
0.1
–
–
–
0.1
–
–
0.4
0.4
–
–
–
0.4
–
–
6.3
6.3
–
–
–
6.3
–
74
RESTORE PLC | REPORT & ACCOUNTS
Notes to the company financial statements
(continued)
For the year ended 31 December 2011
38 INVESTMENTS
Shares in
joint venture
£’m
Shares in subsidiary
undertakings
£’m
1 January 2011
Additions
Restore (Scotland) Ltd
Brunswick Document Management Ltd
Restore Shred Ltd
Transfer to goodwill
31 December 2011
Impairment
1 January 2011
Charged in the year
31 December 2011
Net book value
31 December 2011
31 December 2010
–
–
–
0.3
–
0.3
–
–
–
0.3
–
55.4
0.7
1.2
–
(10.4)
46.9
25.4
2.0
27.4
19.5
30.0
Total
£’m
55.4
0.7
1.2
0.3
(10.4)
47.2
25.4
2.0
27.4
19.8
30.0
On 31 December 2011, the trade and assets of Restore (Wansdyke) Ltd, Datacare Business Systems Ltd, Formsafe
Ltd, Brunswick Document Management Ltd and Restore (Scotland) Ltd were transferred to the Company.
75
RESTORE PLC | REPORT & ACCOUNTS
Notes to the company financial statements
(continued)
For the year ended 31 December 2011
38 INVESTMENTS (continued)
At 31 December 2011 the Company held directly and indirectly equity and voting rights of the following
undertakings:
SUBSIDIARY UNDERTAKINGS
Company
Records Management division
Class of
holding
%
held
Country of
incorporation
Nature of
business
Ordinary
*Restore Group Holdings Limited
Ordinary
*Restore (Wansdyke) Limited
Ordinary
*Restore (Scotland) Limited
*Datacare Business Systems Limited Ordinary
*Formsafe Limited
Ordinary
*Brunswick Document Management
Limited
*Wansdyke Security Limited
Wansdyke 1 Limited
Wansdyke 2 Limited
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
England and Wales
England and Wales
Scotland
England and Wales
England and Wales
Records Management
Records Management
Records Management
Records Management
Records Management
England and Wales
England and Wales
England and Wales
England and Wales
Records Management
Records Management
Dormant
Dormant
Document Storage division
Document Control Services Limited Ordinary
100%
England and Wales
*Stapledon Holdings Limited
Ordinary
100%
England and Wales
Provision of value added
scanning
Holding company
Relocations division
*Sargents Trading Limited
Ordinary
100%
England and Wales
Relocations
Building Services division
*Ansa Building Services Limited
*Peter Cox Limited
*Peter Cox Renewables Limited
Ordinary
Ordinary
Ordinary
100%
100%
51%
England and Wales
England and Wales
England and Wales
Dormant
Building Services
Building Services
Joint Ventures
Shredding
*Restore Shred Limited
Ordinary
50%
England and Wales
Provision of shredding
services
* = Held directly
76
RESTORE PLC | REPORT & ACCOUNTS
Notes to the company financial statements
(continued)
For the year ended 31 December 2011
39 DEBTORS
Trade debtors
Amounts due from Group undertakings
Other debtors
Prepayments and accrued income
Deferred tax asset
Due after more than one year:
Amounts due from Group undertakings
Total
2011
£’m
2010
£’m
0.2
2.3
–
1.3
0.8
4.6
2.8
7.4
–
2.4
0.1
–
–
2.5
–
2.5
A deferred tax asset has been recognised on a proportion of brought forward tax losses (note 22).
40 CREDITORS
Amounts falling due within one year
Bank overdraft
Bank loans
Trade creditors
Amounts due to Group undertakings
Other taxation and social security
Other creditors
Accruals and deferred income
Provisions (note 21)
2011
£’m
2010
£’m
1.2
2.5
1.2
0.2
0.4
0.9
0.9
0.2
7.5
0.6
9.5
0.1
3.1
–
0.3
0.4
0.3
14.3
77
RESTORE PLC | REPORT & ACCOUNTS
Notes to the company financial statements
(continued)
For the year ended 31 December 2011
40 CREDITORS (continued)
Bank overdrafts and loans are classified as follows:
Current
Bank loans and overdrafts due within one year
Overdrafts on demand
Bank loans – secured
Non–current (Note 41)
Bank loans – secured
41 CREDITORS
Amounts falling due after more than one year
Bank loans
Loan from ultimate parent
Amounts due to group undertakings
Amounts falling due:
After one and within two years
Between two years and five years
2011
£’m
2010
£’m
1.2
2.5
3.7
0.6
9.5
10.1
10.1
2.0
2011
£’m
2010
£’m
10.1
–
10.3
20.4
1.2
19.2
20.4
2.0
2.3
–
4.3
2.0
2.3
4.3
The bank debt is due to Barclays bank plc and is secured by a fixed and floating charge over the assets of the
Group. The interest rate applied to the loan was 3.25% above base rate until 27 June 2011, 3.74% to 27
September 2011, 3.86% to 27 December 2011 and 3.99% above base rate therafter. An analysis of borrowings is
given in note 18.
The loan from Geraldton Services Inc. (ultimate parent) attracted interest at 10% which was compounded annually.
The company holds an interest rate collar (see note 20).
78
RESTORE PLC | REPORT & ACCOUNTS
Notes to the company financial statements
(continued)
For the year ended 31 December 2011
42 DEBT
Analysis of net debt
At 1 January 2011
£’m
Cash flow
£’m
At 31 December 2011
£’m
Bank loans and overdrafts due within one year
Bank loans due after one year
Loan from ultimate parent
(10.1)
(2.0)
(2.3)
(14.4)
6.4
(8.1)
2.3
0.6
43 PROVISIONS FOR LIABILITIES
Property provision
£’m
Deferred tax
£’m
1 January 2011
Transfer from profit and loss
Transfer to provision due in less than one year
31 December 2011
0.7
–
(0.2)
0.5
–
0.1
–
0.1
44 SHARE CAPITAL
Authorised:
199,000,000 ordinary shares of 5p each
50,000,000 deferred shares of 0.1p each
Allotted, issued and fully paid:
53,099,791 (2010: 46,043,372) ordinary shares of 5p each
50,000,000 (2010: 50,000,000) deferred shares of 0.1p each
(3.7)
(10.1)
–
(13.8)
Total
£’m
0.7
0.1
(0.2)
0.6
2011
£’m
2010
£’m
9.9
0.1
10.0
2.7
-
2.7
9.9
0.1
10.0
2.3
-
2.3
79
RESTORE PLC | REPORT & ACCOUNTS
Notes to the company financial statements
(continued)
For the year ended 31 December 2011
44 SHARE CAPITAL (continued)
The issued ordinary share capital is as follows:
Date
1 January 2011
2 August 2011 – conversion of Geraldton subordinated debt
6 September 2011 – equity raised re Restore (Scotland) Ltd
Total shares issued in 2011
31 December 2011
45 SHARE PREMIUM ACCOUNT
1 January
Premium on shares issued during the year
Share issue costs
Capital Reduction
31 December
Number of
ordinary shares
Issue price
46,043,372
7,010,123
46,296
7,056,419
53,099,791
65.0p
64.6p
2011
£’m
52.4
4.2
(0.2)
(52.3)
4.1
2010
£’m
42.4
10.2
(0.2)
–
52.4
The company undertook a capital reduction of £52.3m during the year which became effective on 7 October 2011.
46 SHARE BASED PAYMENTS RESERVE
1 January
Charge for the year
31 December
Details of the share options issued are shown in note 29.
2011
£’m
2010
£’m
0.3
0.2
0.5
0.2
0.1
0.3
80
RESTORE PLC | REPORT & ACCOUNTS
Notes to the company financial statements
(continued)
For the year ended 31 December 2011
47 PROFIT AND LOSS ACCOUNT
1 January
Reduction of share capital
Profit/(loss) for the year
31 December
2011
£’m
(41.8)
52.3
–
10.5
2010
£’m
(39.7)
–
(2.1)
(41.8)
The Company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit
and loss account in these financial statements. The Company’s profit for the financial year was £43,500 (2010: loss
£2,089,000).
48 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS
Profit/(loss) for the financial year
Issue of shares
Issue costs
Share based payments charge
Net addition to shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
49 LEASING COMMITMENTS
The annual commitment under non–cancellable operating leases was as follows:
Operating leases which expire:
Within one year
In two to five years
In more than five years
2011
£’m
2010
£’m
–
4.6
(0.2)
0.2
4.6
13.2
17.8
(2.1)
12.0
(0.2)
0.1
9.8
3.4
13.2
2011
£’m
2010
£’m
0.2
0.5
1.3
–
0.2
0.1
81
RESTORE PLC | REPORT & ACCOUNTS
Notes to the company financial statements
(continued)
For the year ended 31 December 2011
50 CONTINGENT LIABILITIES
The Company has entered into a bank cross guarantee with its subsidiaries. The guarantee amounts to
£12,013,000 at 31 December 2011 (2010: £10,860,000). The assets of the Company and its subsidiaries are
pledged as security for the bank borrowings by way of a fixed and floating charge.
51 ULTIMATE PARENT UNDERTAKING & CONTROLLING PARTY
The Directors consider Geraldton Services Inc to be the parent party. Geraldton Services Inc is incorporated in the
British Virgin Islands. On 2 August 2011, the balance of £2.3 million of the loan facility of £10 million provided by
Geraldton in 2009 was converted into equity as detailed in note 23. Interest was charged at 10%, and
compounded on an annual basis. The charge to profit or loss amounted to £0.1m (2010: £0.4m). Lord Ashcroft is
the beneficial owner of Geraldton and the ultimate controlling party.
82
RESTORE PLC | REPORT & ACCOUNTS
Trading record
For the year ended 31 December 2011
Year ended 31 December
Revenue
Adjusted profit/(loss) before taxation*
Profit/(loss) before taxation
Basic earnings/(loss) per share
Net debt
Net assets
2011
£’m
34.8
4.6
2.0
4.0p
(11.6)
23.3
2010
£’m
27.7
2.6
0.6
2009
£’m
27.0
(0.1)
(7.8)
2008
£’m
31.5
0.9
(3.9)
20071
£’m
23.2
3.7
(0.6)
3.5p
(107.6p)
(376.0p)
(15.5p)
(12.3)
16.7
(21.6)
4.0
(35.1)
15.2
(30.9)
50.6
*Before discontinued operations, exceptional items (including exceptional finance costs), amortisation and
impairment of intangible assets, share based payments and other finance costs.
1 = Not restated for continuing operations
83
RESTORE PLC | REPORT & ACCOUNTS
Officers and advisers
COMPANY SECRETARY
Sarah Waudby
NOMINATED ADVISER & BROKER
Cenkos Securities plc
6–8 Tokenhouse Yard
London
EC2R 7AS
SOLICITORS
Brabners Chaffe Street LLP
55 King Street
Manchester
M2 4LQ
REGISTRARS
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
REGISTERED NUMBER AND OFFICE
05169780
The Databank, Unit 5
Redhill Distribution Centre
Salbrook Road
Redhill
Surrey
RH1 5DY
INDEPENDENT AUDITOR
Baker Tilly UK Audit LLP
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
BANKERS
Barclays Bank plc
1 Churchill Place
London
E14 5HP
84
RESTORE PLC | REPORT & ACCOUNTS
Company information
Websites:
www.restoreplc.com
Restore plc website providing comprehensive Group information, investor
relations information and links to its subsidiaries’ websites which give full details
of services provided.
www.petercox.com
Peter Cox’s website providing details about the company and services offered.
www.restore.co.uk
Restore’s website providing details about the company and services offered.
www.restoreshred.co.uk
Restore Shred’s website providing details about the company and services
offered.
www.documentcontrolservices.co.uk
Document Control Service’s website providing details about the company and
services offered.
www.sargents.co.uk
Sargents’ website providing details about the company and services offered.
www.londonstockexchange.com
The website for the London Stock Exchange. This will provide the latest stock
price and company announcements under the Restore stock code, RST.
85
RESTORE PLC | REPORT & ACCOUNTS
Restore plc
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Restore plc (“the Company”) will be held at First Floor,
Marble Arch Tower, 55 Bryanston Street, London W1H 7AA on 21 May 2012 at 10am for the following purposes:
Ordinary Business
1.
2.
3.
4.
5.
6.
7.
8.
To receive the Company’s annual accounts for the financial year ended 31 December 2011, together with the
directors’ report and the auditors’ report on those accounts.
To re-appoint Baker Tilly UK Audit LLP as auditors to the Company to hold office from the conclusion of the
meeting until the conclusion of the next annual general meeting at which accounts are laid.
To authorise the directors to set the auditors’ remuneration.
To re-appoint Harvey Samson, who has been appointed by the Board since the last Annual General Meeting,
as a director of the Company.
To re-appoint Charles Skinner, who retires by rotation pursuant to the Company’s articles of association, as a
director of the Company.
To re-appoint Sir William Wells, who retires by rotation pursuant to the Company’s articles of association, as a
director of the Company.
To re-appoint Andrew Wilson, who retires by rotation pursuant to the Company’s articles of association, as a
director of the Company.
To declare a final dividend of 1 pence per ordinary share in respect of the year ended 31 December 2011. This
dividend will be paid on 31 July 2012 to the holders of ordinary shares at 6pm on 6 July 2012 (the ex dividend
date being 4 July 2012).
Special Business
As special business, to consider and, if thought fit, to pass the following resolutions which will be proposed as to
resolution 9 as an ordinary resolution and as to resolutions 10, 11 and 12 as special resolutions:
9.
That the directors be and they are hereby generally and unconditionally authorised in substitution for all
existing authorities (but without prejudice to any allotment of shares or grant of rights already made, offered or
agreed to be made pursuant to such authorities) to exercise all the powers of the Company to allot equity
securities (as defined in section 560 of the Companies Act 2006 (the "Act")) up to an aggregate nominal
amount of £1,073,885.40 (being 21,477,708 ordinary shares of 5 pence each) provided that this authority
shall, unless renewed, expire at the conclusion of the next annual general meeting of the Company after the
passing of this resolution or if earlier on the date which is 15 months after the date of this annual general
meeting, except that the Company may before such expiry make offers or agreements which would or might
require equity securities to be allotted after such expiry and the directors may allot equity securities in
pursuance of any such offers agreements as if the authority conferred by this resolution had not expired.
10.
That, subject to the passing of resolution number 9 above, the directors be and they are hereby empowered,
pursuant to section 570 of the Act, to allot equity securities (as defined in section 560 of the Act) for cash
pursuant to the authority conferred by resolution number 9 or by way of a sale of treasury shares as if section
561 of the Act did not apply to any such allotment, provided that this power shall be limited to:
10.1 the allotment of equity securities in connection with a rights issue or other pro rata offer in favour of
holders of equity securities where the equity securities respectively attributable to the interests of all those
persons at such record dates as the directors may determine are proportionate (as nearly as may be) to
the respective numbers of equity securities held by them subject to such exclusions or other
arrangements as the directors may consider necessary or expedient to deal with treasury shares,
fractional entitlements, record dates, practical or legal difficulties under the laws of any territory or the
requirements of any regulatory body or stock exchange or by virtue of equity securities being represented
by depositary receipts or any other matter whatsoever; and
10.2 the allotment (otherwise than pursuant to paragraph 9.1 above) of equity securities up to an aggregate
nominal amount of £322,165.00,
and shall expire upon the expiry of the general authority conferred by resolution 9 above, except that the
Company may before such expiry make offers or agreements which would or might require equity securities to
be allotted and/or shares held by the Company in treasury to be sold or transferred after such expiry and the
directors may allot equity securities and/or sell or transfer shares held by the Company in treasury in
pursuance of such offers or agreements as if the power conferred by this resolution had not expired.
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RESTORE PLC | REPORT & ACCOUNTS
Restore plc
Notice of Annual General Meeting
11.
That the Company be and is hereby generally and unconditionally authorised, in accordance with section 701
of the Act, to make market purchases (within the meaning of section 693(4) of the Act) of ordinary shares of 5
pence each in the capital of the Company ("Ordinary Shares") on such terms and in such manner as the
directors may from time to time determine provided that:
11.1 the maximum number of Ordinary Shares authorised to be purchased is 6,443,300;
11.2 the minimum price which may be paid for each Ordinary Share is 5 pence (exclusive of expenses
payable by the Company);
11.3 the maximum price which may be paid for each Ordinary Share (exclusive of expenses payable by the
Company) cannot be more than 105 per cent. of the average market value of an Ordinary Share for the
five business days prior to the day on which the Ordinary Share is contracted to be purchased;
the authority conferred shall expire at the conclusion of the next annual general meeting of the Company or if earlier
on the date which is 15 months after the date of this annual general meeting except that the Company may before
such expiry make a contract to purchase its own shares which will or may be completed or executed wholly or
partly after such expiry.
12.
That the draft regulations produced to the meeting and, for the purposes of identification, initialled by the
Chairman be adopted as the articles of association of the Company in substitution for, and to the exclusion of,
the existing articles of association.
By order of the Board
Sarah Waudby
Company Secretary
10 April 2012
Registered Office
The Databank
Unit 5, Redhill Distribution Centre
Salbrook Road, Redhill
Surrey RH1 5DY
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RESTORE PLC | REPORT & ACCOUNTS
Restore plc
Notice of Annual General Meeting
Notes: These notes are important and require your immediate attention.
1.
2.
3.
4.
5.
6.
7.
8.
A Shareholder entitled to attend and vote at the Annual General Meeting is entitled to appoint another person of his/her
choice as that Shareholder's proxy to exercise all or any of that Shareholder's rights to attend and to speak and vote at the
meeting on his/her behalf. A Shareholder may appoint more than one proxy in relation to the meeting, provided that each
proxy is appointed to exercise the rights attached to a different share or shares held by that Shareholder. A proxy does not
need to be a shareholder of the Company.
A Form of Proxy for use in connection with the meeting is enclosed with the document of which this notice forms part.
Completion and return of a Form of Proxy will not prevent a Shareholder from attending and voting in person at the meeting.
Addresses (including electronic addresses) in this document are included strictly for the purposes specified and not for any
other purpose.
To appoint a proxy or proxies Shareholders must complete a Form of Proxy, sign it and return it, together with the power of
attorney or, any other authority under which it is signed, or a notarially certified copy of such authority, to the Company's
registrars, Capita Registrars, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU so that it is received no
later than 10am on 19 May 2012.
Only those members entered on the register of members of the Company at 6.00 p.m. on 19 May 2012 or, in the event that
this meeting is adjourned, in the register of members as at 6.00 p.m. on the day two days before the date of any adjourned
meeting, shall be entitled to attend and vote at the meeting in respect of the number of ordinary shares registered in their
names at that time. Changes to the entries on the register of members by the close of business on 19 May 2012 or, in the
event that this meeting is adjourned, in the register of members before the close of business on the day two days before the
date of the adjourned meeting, shall be disregarded in determining the rights of any person to attend or vote at the meeting.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do
so for the Annual General Meeting to be held at 10am on 21 May 2012 and any adjournment(s) thereof by using the
procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those
CREST members who have appointed a voting service provider should refer to their CREST sponsors or voting service
provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a
“CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s
specifications and must contain the information required for such instructions, as described in the CREST Manual. The
message must be transmitted so as to be received by the Company’s agent, Capita Registrars Limited (CREST Participant
ID: RA10), no later than 48 hours before the time appointed for the meeting. For this purpose, the time of receipt will be
taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which
the Company’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.
CREST members and, where applicable, their CREST sponsor or voting service provider should note that Euroclear UK &
Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings
and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has
appointed a voting service provider, to procure that his CREST sponsor or voting service provider takes) such action as shall
be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this
connection, CREST members and, where applicable, their CREST sponsor or voting service provider are referred in
particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. In
the event of a conflict between a blank proxy form and a proxy form which states the number of shares to which it applies,
the specific proxy form shall be counted first, regardless of whether it was sent or received before or after the blank proxy
form, and any remaining shares in respect of which you are the registered holder will be apportioned to the blank proxy
form. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one
proxy, you should contact Capita Registrars, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of
its powers as a member provided that they do not do so in relation to the same shares.
Copies of the following documents will be available for inspection at the Company’s registered office during normal working
hours on any week day (Saturdays, Sundays and public holidays excepted) from the date of this notice until the date of the
Annual General Meeting and at the place of the Annual General Meeting for 15 minutes prior to and during the meeting:
a.
b.
copies of all service agreements or letters of appointment under which the directors of the Company are employed by
the Company; and
articles of association proposed to be adopted by the Company.
9.
Biographical details of each director who is being proposed for re-appointment or re-election by shareholders can be found
by visiting the Company’s website www.restoreplc.com
88
RESTORE PLC | REPORT & ACCOUNTS
Restore plc
Notice of Annual General Meeting
EXPLANATION OF RESOLUTIONS
Resolution 9 – authority to allot shares
At the last AGM of the Company held on 3 May 2011, the directors were given authority to allot ordinary shares in
the capital of the Company up to a maximum nominal amount of £767,389.50 representing approximately one third
of the Company’s then issued ordinary share capital.
The directors consider it appropriate that a further similar authority be granted to allot ordinary shares in the capital
of the Company up to a maximum nominal amount of £1,073,885.40 representing approximately one third of the
Company’s issued ordinary share capital as at 3 April 2012 (the latest practicable date before publication of this
document) during the shorter of the period up to the conclusion of the next annual general meeting in 2012 or 15
months.
As at the date of this notice the Company does not hold any ordinary shares in the capital of the Company in
treasury.
Resolution 10 – disapplication of statutory pre-emption rights
Resolution 10 will empower the directors to allot ordinary shares in the capital of the Company for cash on a non-
pre-emptive basis:
• in connection with a rights issue or other pro-rata offer to existing shareholders; and
• (otherwise than in connection with a rights issue or other pro-rata offer to existing shareholders) up to a maximum
nominal value of £322,165.00, representing approximately 10 per cent of the issued ordinary share capital of the
Company as at 3 April 2012 (the latest practicable date before publication of this document).
Resolution 11 – authority to make market purchases of own shares
Resolution 11 gives the Company authority to buy back its own ordinary shares in the market as permitted by the
Companies Act 2006. The authority limits the number of shares that could be purchased to a maximum of
6,443,300 (representing approximately 10 per cent. of the Company’s issued ordinary share capital as at 3 April
2012 (the latest practicable date before publication of this letter), and sets minimum and maximum prices. This
authority will expire at the conclusion of the next annual general meeting or, if earlier, 15 months after the resolution
is passed.
The directors have no present intention of exercising the authority to purchase the Company’s ordinary shares but
will keep the matter under review, taking into account the financial resources of the Company, the Company’s share
price and future funding opportunities. The authority will be exercised only if the directors believe that to do so would
be in the best interest of shareholders generally.
Companies purchasing their own shares are allowed to hold them in treasury as an alterative to cancelling them. No
dividends are paid on shares whilst held in treasury and no voting rights attach to treasury shares.
Resolution 12 – adopting new articles of association
Resolution 12 adopts new articles of association of the Company. The only changes being made are to:
• remove the references to the A Shares and Deferred Shares that were formerly part of the capital of the Company;
• reflect the share consolidation that took place in 2010; and
• reflect the change of name of the Company that took place in 2010.
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RESTORE PLC | REPORT & ACCOUNTS
Restore plc
NOTES
1.
2.
3.
4.
5.
6.
7.
8.
9.
A member who is entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend, speak and
to vote instead of him/her provided each proxy is appointed to exercise rights in respect of different shares. To appoint more
than one proxy (an) additional proxy form(s) may be obtained by contacting Capita Registrars, PXS, The Registry, 34
Beckenham Road, Beckenham, Kent, BR3 4TU, or you may photocopy this page indicating on each copy the name of the
proxy you wish to appoint and the number of shares in respect of which the proxy is appointed. All forms must be signed
and should be returned to Capita Registrars in the same envelope.
A proxy need not be a member of the Company but must attend the meeting to represent you. To appoint as your proxy a
person other than the Chairman of the meeting, insert their full name in the space provided. If you sign and return this proxy
form with no name inserted as such, the Chairman of the meeting will be deemed to be your proxy. Where you appoint as
your proxy someone other than the Chairman, you are responsible for ensuring that they attend the meeting and are aware
of your voting intentions.
If someone else signed the form on your behalf, you or that person must send the power of attorney or other written
authority under which it is signed to the address overleaf.
In the case of joint holders, the vote of the senior member who tenders a vote, whether in person or by proxy, will be
accepted to the exclusion of the votes of any other of the joint holders. For these purposes, seniority shall be determined by
the order in which the names stand on the register of members.
In the case of a corporation, this Form of Proxy must be executed under its common seal or signed on its behalf by a duly
authorised officer.
To be valid any proxy form or other instrument appointing a proxy must be:
a.
b.
c.
completed and signed;
sent or delivered to Capita Registrars, PXS, The Registry, 34 Beckenham, Kent, BR3 4TU; and
received by Capita Registrars no later than 10am on 19 May 2012
Completion of a Form of Proxy will not affect the right of a member to attend and vote at the Annual General Meeting.
To direct your proxy how to vote on the resolutions mark the appropriate box on your proxy form with an ‘X’. To abstain
from voting on a resolution, select the relevant “Vote withheld” box. A vote withheld is not a vote in law, which means that
the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your
proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks
fit in relation to any other matter which is put before the meeting.
Shares held in uncertificated form (i.e. in CREST) may be voted through the CREST Proxy Voting Service in accordance with
the procedures set out in the CREST Manual. The message must be transmitted so as to be received by the Company’s
agent, Capita Registrars Limited (CREST Participant ID: RA10), no later than 48 hours before the time appointed for the
meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the
message by the CREST Application Host) from which the Company’s agent is able to retrieve the message by enquiry to
CREST in the manner prescribed by CREST.
10.
You may not use any electronic address provided either in this form of proxy or any related documents (including the notice
of meeting) to communicate with the Company for any purposes other than those expressly stated.
90
RESTORE PLC | REPORT & ACCOUNTS
Restore plc
(the “Company”)
(registered in England – No. 5169780)
FORM OF PROXY FOR USE AT THE ANNUAL GENERAL MEETING
TO BE HELD ON 21 MAY 2012 AT 10AM.
I/We
(Name in full in block capitals please)
of
being [a] member[s] of Restore plc appoint the chairman of the meeting or
as my/our proxy to vote for me/us on my/our behalf at the annual general meeting of the Company to be held on 21
May 2012 at 10am and at any adjournment of the meeting, on the resolutions listed below, as indicated by an ‘X’ in
the appropriate box and, on any other resolutions, as he thinks fit.
Please tick here if this proxy appointment is one of multiple appointments being made
For
Against
Vote
Withheld
Resolution
Business
ORDINARY RESOLUTIONS
1.
2.
3.
4.
5.
6.
7.
8.
9.
To receive the Company’s annual accounts for the financial
year ended 31 December 2011 together with the directors’
report and the auditor’s report on those accounts.
To re-appoint Baker Tilly UK Audit LLP as auditors.
To authorise the directors to set the auditors’ remuneration.
To re-appoint Harvey Samson as a director of the Company.
To re-appoint Charles Skinner as a director of the Company.
To re-appoint Sir William Wells as a director of the Company.
To re-appoint Andrew Wilson as a director of the Company.
To declare a dividend of 1 pence per Ordinary Share
To authorise the directors to allot shares pursuant to section
551 Companies Act 2006.
SPECIAL RESOLUTIONS
10.
11.
12.
To disapply section 561 Companies Act 2006.
To authorise the Company to make market purchases of its
own shares.
To adopt new articles of association.
Signature:
Date: 2012
91
Please use the reply paid envelope provided
92
Financial Calendar
www.liambailey.com
Annual General Meeting
Half year results
Financial year end
Full year results
Held in May
September
31 December
March
LOCATIONS
Restore plc
Sixth Floor
Marble Arch Tower
55 Bryanston Street
London
W1H 7AA
T: 020 7868 8950
F: 020 7868 8600
E: info@restoreplc.com
W: www.restoreplc.com
Restore Limited
The Databank
Unit 5
Redhill Distribution Centre
Salbrook Road
Redhill
Surrey
RH1 5DY
T: 01293 446270
F: 01293 446276
E: info@restore.co.uk
W: www.restore.co.uk
Restore Shred Limited
208b Westminster Industrial Estate
Warspite Road
Woolwich
SE18 5NU
T: 0845 603 5616
www.restoreshred.co.uk
Document Control Services Limited
10 Stapleton Road
Orton Southgate
Peterborough
PE2 6TB
T: 01733 366800
F: 01733 366801
E: enquiries@documentcontrolservices.co.uk
W: www.documentcontrolservices.co.uk
Sargents Limited
Fordgate Business Park
Crabtree Manorwaty North
Belvedere
Kent
DA17 6AS
T: 020 8312 4545
F: 020 8312 0486
E: enquiries@sargents.co.uk
W: www.sargents.co.uk
Peter Cox Limited
Aniseed Park
Broadway Business Park
Chadderton
Manchester
OL9 9XA
T: 0845 222 0404
F: 0161 684 8305
E: headoffice@petercox.com
W: www.petercox.com