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Annual Report 2017
The UK leader in
Document Management
and Business
Relocation services
For more information please see
www.restoreplc.com
Other information
Notice of Annual
General Meeting
Officers and advisers
Trading record
Financial calendar
91
97
97
97
Overview
Highlights
At a glance
Governance
Board of Directors
Directors’ report
01
02
Chairman’s Introduction 04
Investor proposition
04
Corporate governance
statement
Directors’ remuneration
report
Statement of Directors’
responsibilities
Independent auditor’s
report
Strategic report
Our markets
Our business model
and strategy
Chief Executive’s
statement
Group Finance Director’s
statement
Risk management
Principal risks and
uncertainties
Corporate responsibility
statement
08
10
12
16
19
20
22
26
28
30
32
34
35
Financial statements
Consolidated statement
of comprehensive income
Consolidated statement
of financial position
Consolidated statement
of changes in equity
Consolidated statement
of cash flows
40
41
42
43
Notes to the Group financial
statements
44
Company statement
of financial position
Company statement
of changes in equity
Company statement of
cash flows
Company accounting
policies
Notes to the Company
financial statements
76
77
78
79
80
Overview
Highlights
Revenue (£’m)
£176.2m
Adjusted profit before tax* (£’m)
£31.2m
Adjusted basic earnings per share* (p)
22.4p
Dividend per share (p)
5.0p
2017
2016
2017
2016
2017
2016
2017
2016
01
£176.2m
+36%
£129.4m
£31.2m
+36%
£23.0m
22.4p
+25%
5.0p
+25%
17.9p
4.0p
* Before amortisation of intangible assets, exceptional items and share-based payment charge.
Operational highlights
Financial highlights
Successful integration of PHS Data Solutions
Group revenue up 36% to £176.2m
Capacity utilisation at Restore Records
Management c.93%
Restore Digital continues to improve
Group adjusted profit before tax up 36% to £31.2m
Adjusted earnings per share up 25% to 22.4p
Document Management revenue up 41%: adjusted
Restore Datashred moved onto new operating systems
operating profit up 41%
Restore Harrow Green continues to benefit from
robust market
Relocation revenue up 25%: adjusted operating
profit up 16%
IT recycling operations doubled by The ITAD Works
Total dividend up 25% to 5.0p
acquisition
Seven add-on acquisitions completed
Significant property upgrades and rationalisation
underway
Groupwide rebranding underway
Strategic ReportGovernanceFinancial Statements 02
RESTORE plc Annual Report and Accounts 2017
527
1,893
Total employees
1,366
75
Total Sites
12
Document Management
Relocation Division
63
Restore plc has two divisions:
Document Management and
Relocation.
At a glance
We provide safe and secure
services in:
• document storage
• document shredding
•
•
•
scanning
commercial and
workplace relocation
IT equipment and
consumables reuse
and recycling
All of our businesses have a
similar channel to market and
operate on the same Customer
Relationship Management
system, which further binds
our businesses together.
Our Sectors
Document Management
Operating margin (%)
Revenue (£’m)
Operating profit (£’m)
24%
2017
2016
£126.9m
£90.1m
2017
2016
£31.0m
£22.0m
+41%
+41%
Restore Records Management
Restore Datashred
Restore Digital
Primary Activity:
Storage and retrieval of
hard copy documents
Primary Activity:
Secure shredding and recycling
Primary Activity:
Document digitisation
UK Market Position
No.2
UK Market Position
No.2
UK Market Position
No.2
Overview
Strategic Report
Governance
Financial Statements
03
03
All of our businesses cover
all of the UK market.
Head Office
Records Management
Restore Datashred
Restore Digital
Restore Harrow Green
Restore Technology
Relocation Division
Relocation Division
Operating margin (%)
Revenue (£’m)
Operating profit (£’m)
11%
2017
2016
£49.3m
£39.3m
2017
2016
£5.2m
£4.5m
+25%
+16%
Restore Harrow Green
Restore Technology
Primary Activity:
Workplace relocation
Primary Activities:
Secure data destruction,
IT hardware recycling, IT relocation
and Printer cartridge recycling
UK Market Position
No.1
UK Market Position
Top Ten
04
Chairman’s Introduction
In my first Chairman’s Statement since taking on the role at
the beginning of this year, I am pleased to report another year
of strong progress by your Company.
Overview
The results speak for themselves.
Restore continues to extend its
position as an important operator
in the UK office services market. It
remains focused on activities where
it can generate excellent returns
with strong visibility. It is a leader in
its primary activities and it has an
impressive track record of continually
strengthening its market positions.
Results
For the year ended 31 December 2017,
adjusted profit before tax was £31.2m
on revenues of £176.2m. Both adjusted
profit before tax and revenue were up
36% year-on-year. Adjusted earnings
per share increased by 25% to 22.4p.
These results reflect the successful
integration and full-year contribution
from PHS Data Solutions, acquired in
August 2016, and further good organic
growth across the Group.
Strategy
Restore is one of the two UK market
leaders in each of our four main
activities. These activities all share
certain key characteristics such as
predictable revenues, high customer
retention and a similar channel
to market, and the performing of
complex and often mission-critical
services. All of these activities, and
some of our smaller but fast-growing
activities such as IT recycling, have
been steadily and swiftly built through
acquisition and organic growth, but
never at the expense of compromising
customer service. As a result, we have
a formidable platform from which to
continue to strengthen our position in
the UK office services sector.
People
It is an honour to succeed Sir William
Wells as Chairman. Sir William and our
Chief Executive Charles Skinner took
on what was a small and struggling
enterprise in June 2009 and have
built it into a major company in the
UK support services sector. With his
wealth of experience, Sir William has
guided the business adroitly over the
last nine years, with a judicious blend
of ambition and good sense. We wish
him well in his retirement.
Restore operates a highly decentralised
model where power and responsibility
are locked together and our people
are encouraged to assume as much
responsibility as possible. The success
of the business reflects their abilities
and passion, and I thank them for
what they have achieved. I am pleased
to report that we will be launching a
company-wide Sharesave scheme in
the next few weeks so all of our people
have the opportunity to share in the
success of the Company in line with
our shareholders.
Investor proposition
Strong, predictable,
recurring revenues
with high customer
retention
The vast majority of our sales,
particularly in records management,
derive from services where the
revenue is consistent and customers
find it unnecessary and unattractive
to switch from a competent and
efficient supplier.
Complex and
mission-critical
operational services,
generating attractive
operating margins
Our services are specialist and
capital-intensive. They are important
to our customers’ day-to-day
operations but cannot be performed
cost-effectively in-house. Scale
and efficiency means we can add
significant value to our customers
while generating attractive returns
on investment.
Drive market
consolidation and
operating margins
through add-on
acquisitions
Our buy and build strategy combined
with highly effective post-acquisition
integration produces increased
scale and efficiency. This increases
operating margins and returns on
capital. This in turn builds barriers
to entry as competitors will achieve
lower returns. This is particularly true
in the stable markets in which we
operate.
RESTORE plc Annual Report and Accounts 2017 05
Dividends
Your Board is recommending a final
dividend of 3.33p, payable on 6 July
2018. The total dividend for the year is
5.0p, a 25% year-on-year increase. This
reflects the Board’s firm intention to
follow a progressive dividend policy.
Martin Towers
Chairman
21 March 2018
" Restore is now one of the two UK market leaders in each
of our four main activities. These activities all share
certain key characteristics such as predictable revenues,
high customer retention and a similar channel to market,
performing complex and mission-critical services. We now
have a formidable platform from which to continue to
strengthen our position in the UK office services sector."
Integrate and
improve acquired
businesses
Drive organic
growth through
cross-selling
opportunities
With an established and successful
business model, post-acquisition
management becomes process-
driven. Duplicated costs can be
removed, capacity rebalanced and
investment made as appropriate.
With well over thirty acquisitions
integrated in the last eight years and
strong business models in all our
operations, our acquisitions create
significant value.
With strong market positions, we
know our markets well and can
compete strongly on pricing. Our
huge customer base of UK offices
currently taking services from our
individual businesses within the
group, coupled with our longstanding
group-wide customer relationship
management system, gives our
salesforces a head start in generating
new business from existing group
customers.
Competitive
advantage
through UK
focus and market
knowledge
We believe that the benefits of
scale for our services do not
generally extend beyond a discrete
geographical land mass. We
understand how UK offices work, we
have significant penetration of this
market and we tailor our services to
this specific market.
Strategic ReportGovernanceFinancial StatementsOverview 0606
RESTORE plc Annual Report and Accounts 2017
We understand
what it takes for UK
offices to work well,
and we understand
our customers:
the IT and facilities
managers responsible
for keeping their
offices running
smoothly, efficiently
and securely.
RESTORE plc Annual Report and Accounts 2017 Overview
Strategic Report
Governance
Financial Statements
07
08
Strategic report
Our markets
Our business model
10
and strategy
Chief Executive’s statement
12
Group Finance Director’s statement 16
Risk management
19
Principal risks and
uncertainties
20
Corporate responsibility statement 22
08
RESTORE plc Annual Report and Accounts 2017
Our markets
The areas in which we operate are coherent: Records Management,
Shredding and Digital (primarily scanning) are all elements of Document
Management which together with the activities of our Relocation division
share a similar customer base where our services are generally procured
by the same team or individual.
We have nationwide coverage and all of our businesses operate on the
same Customer Relationship Management system, which enables cross-
selling whose effectiveness can be constantly monitored.
Document Management
Records Management
Shredding
Digital
Worth an estimated £500 million per
year, the UK market of this global
industry has been established for over
thirty years and continues to grow at
an estimated 4% per year.
The UK secure shredding and recycling
market is estimated to be worth £280
million per year.
Sales are generated from two sources:
High barriers to entry are generated by
efficiencies of scale, the investment
required to meet increasingly higher
regulatory standards and the difficulty
in acquiring new customers who can
see little benefit in changing suppliers.
Operators with scale in a market such
as the UK benefit from being able to
provide full geographical coverage,
as well as space and cost savings.
As one of the two leading records
management businesses in the UK,
we offer national coverage from
forty-five sites and one of our core
differentiators is understanding
the specific requirements of UK
customers. We continue to build
scale, manage costs to drive operating
margins and increase revenues
through market consolidation
and cross-selling.
•
•
the collection and secure
destruction of documents
sales of baled, shredded material
for recycling into products such
as tissues
Demand for secure destruction
continues to grow, particularly to meet
the latest General Data Protection
Regulations which come into force
in May 2018.
The key factor driving profitability in
shredding is route density: the more
customers a shredding business
has, the more efficient its collection
scheduling should be. For smaller
operators, it is uneconomic to service
large customers with branches with
a wide geographical spread.
Restore Datashred is one of the two
leaders in the UK shredding market.
The business has fourteen sites
providing nationwide on-site and
off-site services.
It is difficult to assess the size of
the UK digitisation market because
different types of businesses provide
document imaging services, ranging
from scanning bureaux to business
process outsourcing, reprographics
and process consultants. An estimate
of the market could be £600–£700
million per year.
Restore Digital’s primary operation is
the conversion of hard copy documents
into electronic data, through scanning
bureaux where paperwork is prepared
and passed through high-speed
scanners. A key element in this process
is investment in technology and
machinery to minimise handling time
and provide automated indexation;
scale plays a significant role in being
able to make this investment. Restore
Digital also supplies advisory and
supervisory services.
We are one of the two largest scanning
businesses in the UK operating from
six sites as well as several facilities on
our customer sites. Much of our work
is of a recurring, contracted nature
such as scanning exam papers and
major long-term projects such as the
digitisation of health records.
Overview
Strategic Report
Governance
Financial Statements
09
Acquisitions in 2017
9 January 2017
Reisswolf Wales, a secure shredding business
based in Welshpool
7 March 2017
The remaining 17% share in our IT relocations
business Relocom Limited
23 January 2017
Bedfordshire-based ID Secured Limited,
a secure shredding business, trading as
Reisswolf London
20 February 2017
The ITAD Works Limited, a Surrey-based
IT recycling company
11 July 2017
The UK-wide shredding activities of
the Banner Group
31 July 2017
Dorset-based records management business,
Solutions for Archiving
14 August 2017
Baxter Confidential Limited,
a secure shredding and archiving
business based in Winchester
8 September 2017
Lombard Recycling Limited and Data Shred
Limited, two related secure shredding
businesses in London
Relocation
Business Relocation
Restore Technology
Demand for high-level corporate and
specialist workplace relocations in
the UK continues to remain buoyant.
While a stable economic background is
helpful, corporate relocation remains
active in less favourable economic
conditions as companies reconfigure
their workspace.
It is a demanding market as success
is based on sophisticated logistics
and complex project management
to meet customers’ mission-critical
requirements. Relationships are long-
term, with the majority of business
deriving from regular reconfigurations
from existing customers.
As the number 1 provider of
workplace relocations services
in the UK, Restore Harrow Green
offers national coverage and is well
established, with a blue chip customer
base for whom skills in complex
project management are essential.
Our IT Lifecycle Services, IT Relocation
and Printer Cartridge Recycling
businesses now operate under the
Restore Technology banner.
IT Lifecycle Services, formerly known
as IT Efficient, operates in the IT
asset recycling market where there
is increasing focus on responsible
handling and secure destruction of IT
hardware. We are also providing more
Lifecycle Services, taking responsibility
for our customers’ hardware
throughout its working life.
IT Lifecycle Services has a strong
market position, particularly in the
insurance and financial sectors,
providing services to five of the
world’s leading investment banks.
Our presence in this market has
doubled in the last year following
the acquisition of The ITAD Works
in February 2017. Due to the critical
nature of this type of service,
customers are very reluctant to
switch from a competent supplier.
Our IT Relocation activities, formerly
known as Relocom, specialise in server
and data centre relocation and offer
other complementary services around
IT equipment asset audit, moves
and changes, and now equipment
installation and deployment. It works
closely with Restore Harrow Green,
delivering a complete relocation
package, and provides our IT Lifecycle
Services business with asset recycling
opportunities.
Restore Technology also includes
our IT Printer Cartridge Recycling
business, formerly know as ITP. It is the
UK’s leading collector of empty toner
cartridges which are collected in local
markets and sold on in bulk to refillers
and original equipment manufacturers
around the world.
10
RESTORE plc Annual Report and Accounts 2017
Our business model and strategy
We provide inter-related office support services to
customers throughout the UK, using our proven
acquisition-based model, resources and expertise
to create value that is shared with our investors and
used to fund continued growth.
BUILD MARKET
SHARE THROUGH:
– ACQUISITIONS
– INVESTMENT
– LEVERAGING GROUP
CUSTOMER BASE
INCREASE
OPERATING
MARGINS
THROUGH:
– SCALE
– SYNERGIES
OPERATE IN
ATTRACTIVE
MARKETS WITH
GOOD MARGINS
SHARE VALUE
CREATED WITH
SHAREHOLDERS
REINVEST IN:
– EXISTING
BUSINESSES
– ENTERING
CLOSELY-RELATED
MARKETS
11
Our Customers’ Needs
Our market is primarily UK offices
where we offer a range of closely
related services. These services are
operationally complex and mission-
critical. They generate recurring
revenues as they are generally
required regularly. High-quality
performance is necessary but, if
this is delivered, customers benefit
from the consistency of the existing
supplier. Our businesses benefit
from being market leaders in sectors
where scale generates significant cost
effectiveness and enables larger multi-
branch customers to be serviced by a
single supplier.
Our Customer Base
Our customer base covers a broad
range of both private and public sector
entities. Examples of our market
sector penetration includes:
90%
of top 100 UK
legal practices
74%
of UK National
Health Trusts
80%
of FTSE 100
companies
55%
of local
authorities in
England, Wales
and Scotland
80%
of top 50 UK
accountancy
companies
Our Business Philosophy
We believe that power and
responsibility should be locked
together and driven as far down the
acquisition as possible. As part of this,
we operate a decentralised model,
with autonomous divisions supported
by a small head office.
Many industries, particularly business-
to-business services, are based
around an established channel to
market. The key advantage that our
divisions derive from being part of the
Restore Group is that they all share a
similar channel to market. Through our
long established Groupwide Customer
Relationship Management system, we
expect to know who the key decision
makers are within our customers and
to be able to offer them the other
services that we provide.
Our Key Resources
and Capabilities
•
Competitive advantage through
our scale, tight cost control, UK
focus and market knowledge
•
Longstanding customer
relationships
• Nationwide coverage
• Motivated, capable people
•
•
•
Efficient processing assets across
the UK
Track record in integrating and
improving acquisitions
Responsible leadership
Our Acquisition Strategy
Our businesses benefit from scale
in the UK market. The services we
supply are those where customers
see little benefit in changing suppliers.
Acquisitions are the logical way to
accelerate business growth and
create value.
The synergies we can generate from
acquisitions means that we can offer
the owners of the acquired businesses
an attractive valuation while achieving
a highly attractive return on capital for
our investors.
We have a proven track record in
integrating acquired businesses and
in maintaining and improving service
levels to our acquired customers.
Strategic ReportGovernanceFinancial StatementsOverview 12
RESTORE plc Annual Report and Accounts 2017
Chief Executive’s statement
“Much of the year-on-year growth derived from
the first full-year contribution from PHS Data
Solutions. But there is more to these results
than one successful acquisition.”
Results
For the year ended 31 December 2017,
profit before tax, exceptional items,
amortisation of intangible assets and
share-based payments charge was
£31.2m, a year-on-year increase of 36%
(2016: £23.0m). Turnover was £176.2m
(2016: £129.4m). Earnings per share on
an adjusted basis were up 25% at 22.4p
(2016: 17.9p).
integration. Organic revenue growth
across our Group ran at 7%, with all
of our activities showing year-on-year
growth. Overall operating margins
across the Group were broadly flat at
19.1%, which is a good achievement
given that businesses acquired over
the last two years such as PHS DS
were all previously operating at
margins below this.
Much of the year-on-year growth
derived from the first full-year
contribution from PHS Data Solutions
(“PHS DS”), which was acquired in
August 2016. PHS DS has been a
highly successful acquisition for our
Document Management division. It
transformed our shredding business
into one of the two UK market leaders
and added critical mass to both our
records management and scanning
businesses. But there is more to
these results than one successful
Document Management Division
Our Document Management division
comprises our records management,
shredding and scanning activities.
It increased revenue by 41% to
£126.9m (2016: £90.1m). Operating
profit increased 41% to £31.0m (2016:
£22.0m). These figures reflect the first
full year of the successful integration
of the PHS DS acquisition. Organic
growth in the division was 5%.
Restore Records Management
remains comfortably the Group’s
largest business in terms of profit
contribution. Operating as Restore
Records Management, we store more
than 15 million boxes across forty-
five UK sites, as well as storing other
ancillary materials. The leading indicator
of growth is annual net box growth,
which continued to remain positive.
Organic growth of new boxes from
existing customers was robust and
new business wins were also steady.
Dividend per share (p)
Adjusted earnings per share (p)
2011
1.0p
2012
1.5p
2013
1.9p
2014
2015
2016
2017
2.4p
3.2p
4.0p
5.0p
10.5p
12.3p
2011
4.3p
2012
7.4p
2013
2014
2015
2016
2017
15.6p
17.9p
22.4p
Overview
Strategic Report
Governance
Financial Statements
13
Destruction rates were slightly higher
than the historic trend and we continued
to see comparatively high levels of box
removal, driven by an ongoing long-
term exit of a major customer from an
acquired business. Revenue growth
was also helped by improved scope to
increase prices to reflect rising rental and
employment costs.
A key determinant of profitability is
occupation rates, which were around
93% at year-end. We have been
successful in increasing occupancy
rates at the acquired PHS DS sites,
which were running at 82% at the
time of acquisition. We vacated the
Leyton site, which was part of the
PHS DS acquisition, and completed
the vacation of the Charlton and
Bristol sites, which were respectively
part of the Cintas and Wincanton
acquisitions. We regularly review
our portfolio and have a programme
of exiting unsuitable sites as lease
terms allow and developing more
appropriate locations. In recent years
we have expanded our capacity in our
freehold site outside Bath and taken
more former aircraft shelters at our
site in Oxfordshire. As part of this
programme, we are also expecting
to expand our site in Rainham,
East London.
We continue to look for further
acquisitions to consolidate our
position as one of the two major
records managers in the UK. During
the year we acquired a small records
management business in Dorset and
also acquired some box contracts as
part of a shredding acquisition.
the former Restore shredding sites
have now been closed. We continue to
invest in our operational infrastructure:
our South London operations will
shortly move into a new flagship site
in Crayford, which will significantly
increase our capacity and efficiency
in the key London area. We are also
relocating our branch in Livingston,
Scotland, to a more modern site.
The key metric for operating
profitability in secure shredding is
revenue generated per collection
vehicle. It is a route-density
business where scale has
considerable advantages in terms of
vehicles collecting from more sites
in the same area, which provides
consistent and increasing volumes
for local processing plants. Further
benefits derive from being one
of the only two operators able to
service national customers from our
own resources. We continue to see
significant scope for consolidating
what is currently a highly fragmented
and growing market.
Restore Datashred, our secure
shredding and recycling business,
which primarily comprises the acquired
PHS Datashred operations, performed
satisfactorily and showed good organic
growth. The UK market for shredding
continues to grow as enterprises
become increasingly aware of the
importance of secure destruction.
Demand for high-quality office paper
for recycling also remains strong.
Profits were in line with those expected
at the time of the PHS DS acquisition,
with stronger revenues balanced by
higher than budgeted costs. During
the year, the business moved off its
former parent’s operating systems.
This was a major task involving the
creation of new operating systems and
a new back office, significant training
for our staff, and the education of
customers on new processes. This
transition had an adverse effect on
debtor collection in the year but the
continued revenue growth of the
business during this testing period is
testimony to its strength.
Restore Datashred’s organic growth
was supplemented by several
acquisitions that further strengthened
its market position as one of the
two major UK operators. Of the five
acquisitions made during the year, only
one acquired site has been retained
for long-term development, and all
Restore Digital, formerly Restore
Scan, grew revenues and recorded
double-digit operating profit margins,
a significant improvement on previous
years. It successfully executed its major
contract for scanning exam papers in
May and June and this contract has now
been extended for another five years.
14
RESTORE plc Annual Report and Accounts 2017
Chief Executive’s statement continued
It continues to work on long-term
partnering contracts with customers
such as the Nuclear Decommissioning
Authority, as well as on major
medium-term projects, particularly
with NHS Trusts on digitising patient
records. It benefits from a regular flow
of work as well as occasional short-
term one-off projects, including a
major public sector project executed in
the first quarter of the year.
The scanning operations of PHS
DS have now been fully integrated,
increasing the business’s critical
mass and the breadth of its offering.
Subsequent to the acquisition, sites
in Leyton, Birmingham and a central
London office were closed, along with
a facility in Oldham that was closed
after a contract for the sole customer
that it served moved towards
completion. We now operate from six
sites across mainland Britain, as well as
facilities on our customers’ sites.
In the core scanning area, we are now
one of the two main UK operators, and
therefore able to support a substantial
technology-driven overhead in a
market with many small scanning
operators. While capacity can easily
be brought on-stream at many of
these smaller businesses, they are
typically unable to keep pace with
technological development and
increasingly sophisticated customer
requirements. We have made two
small acquisitions in this area since
the year-end and we continue to
believe there is considerable scope to
consolidate this fragmented market.
The General Data Protection
Regulations (“GDPR”), which come
into force in May 2018, can be
expected to put more focus on
the importance of professional
document management. We
believe that, as the leading UK
document management business
with market-leading capabilities
in storage, shredding and
scanning, we are well-positioned
to play a leading role in this
development. We expect to
see more major projects for our
records management operations,
which may in turn lead to higher
destruction rates, particularly
in the short-term. As a result,
we expect strong growth in
the shredding market, as more
enterprises understand the need
to ensure secure shredding of
relevant documents, and also
in scanning, driven by the need
for enterprises to access their
customer data more quickly.
Relocation Division
Our Relocation division comprises the
leading UK office relocation business,
Restore Harrow Green, and Restore
Technology which is made up of our
IT recycling businesses, formerly
known as IT Efficient and The ITAD
Works, our IT relocation business,
formerly known as Relocom, and ITP,
our toner recycling business. The
division increased revenue by 25%
to £49.3m (2016: £39.3m). Operating
profit increased by 16% to £5.2m (2016:
£4.5m). Organic growth in the division
was a remarkable 13%.
Restore Harrow Green had another
strong year. Our large regular
customers remained generally busy
and we re-secured long-term contracts
with PwC, UBS and Anglia Ruskin
University. We were also awarded a
further outstanding element of the
Ministry of Defence housing contract
that we first secured in 2014, such
that we are now the sole contractor.
We undertook significant moves for a
number of large customers, including
Facebook, Bloomberg, Westminster
City Council, Royal College of
Surgeons, Provident Financial, Thales
and NHS Dumfries & Galloway. There
was some pressure on labour rates,
particularly for HGV drivers, but we
were generally able to pass additional
costs on to our customers. We have
moved our East London warehouse
to a newer facility nearby. GMS, our
international moves business, had a
quiet year.
Our IT Lifecycle Services business, now
trading under the Restore Technology
name, had an excellent year and
traded ahead of expectations. Our
original business, IT Efficient, had
progressed steadily since acquisition
in 2013 and traded strongly in 2016.
Overview
Strategic Report
Governance
Financial Statements
15
“The General Data
Protection Regulations
which come into
force in May 2018,
can be expected to
put more focus on
the importance of
professional document
management.”
We acquired The ITAD Works in
February 2017 and the combined
businesses have swiftly become a
powerful force in their marketplace.
This is an attractive business at an
exciting stage of its development,
with strong demand for secure IT
disposal and recycling and customers
increasingly looking to us to handle
the full lifecycle of their hardware.
The business has many established
customer relationships and continues
to expand its customer base, partly
through Restore Harrow Green and
other Group businesses. As part
of this, we are moving our original
business to a more modern site in
Bedford. Our IT Relocation business,
formerly Relocom, produced strong
results, helped by the major move
for Bloomberg. Our Printer Cartridge
Recycling business formerly ITP, which
also now trades under the Restore
Technology name, has undergone
significant change over the last 18
months and, although its market
remains difficult, its performance has
improved and we are hopeful that it
will contribute to Group profits in the
current year.
Restore as a Group
Both our divisions and the businesses
within them operate in the same
market, supplying services to UK
offices. They generally share a similar
customer base, within which all of
our services are typically procured
by the same team or individual. We
have nationwide coverage and all of
our businesses operate on the same
Customer Relationship Management
system, which further binds our
businesses together and enables cross-
selling, whose effectiveness can be
constantly monitored. None of the main
competitors in each of our individual
business streams offer these other
closely-related activities in a meaningful
way, giving us a unique proposition
to our customers. Furthermore, our
focus on the UK market gives us the
understanding of our customers’
specific needs and the flexibility to
adapt our services to these needs.
We have been making steady progress
on our cross-selling over the past few
years. For example, over half of our
largest 200 customers in 2014 took
only one service from us. Last year,
of these same customers, less than
a quarter only took one service.
As an illustration of our penetration
of the UK market, across our Group,
we provide a service to:
•
•
•
•
•
90% of the top 100 UK legal
practices
80% of the top 50 UK accountancy
companies
80% of FTSE-100 companies
74% of UK National Health Trusts
55% of mainland Britain local
authorities.
Given the strong coherence of our
businesses, we have committed to
rebrand all of our businesses and the
Group under the Restore banner. This
has been driven by our operations
rather than as a central initiative. As
part of this, Harrow Green is being
branded as Restore Harrow Green, with
Restore Scan becoming Restore Digital
and our IT Lifecycle Services and Printer
Cartridge Recycling activities trading as
Restore Technology.
Outlook
We continue to have an excellent
platform for further growth in the UK
office services market. Our records
management business can be expected
to grow steadily in the coming
years and should make incremental
improvements to its operating margins.
Restore Harrow Green continues to
build on its pre-eminent position in
office relocation. Restore Datashred,
Restore Digital and our IT Lifecycle
Services business are all in strong
positions in growing, fragmented
markets where we would expect to play
a role in further industry consolidation.
We will continue to pursue our
strategy of acquisitions and organic
growth. We are well-positioned to
gain further market share across all of
our businesses. Trading at the start
of the year has been in line with our
expectations and we look forward to
delivering another year of progress
in 2018.
Charles Skinner
Chief Executive
21 March 2018
16
RESTORE plc Annual Report and Accounts 2017
Group Finance Director’s statement
Profit Before Tax
Profit before tax from continuing
operations for the year ended 31
December 2017 was £9.7m (2016:
£7.5m). The year-on-year increase in
profitability can be attributed to;
•
•
•
•
The full year contribution of the
PHS Data Solutions ("PHS DS")
acquisition which completed in
August 2016
A robust performance from the
core Document Management
division
Another strong performance
from our Relocation division
This performance has been
partially offset by an increase
in exceptional costs.
Exceptional costs of £15.5m (2016:
£10.3m) include the settlement of a
proportion of the share options issued
under the 2013 Executive Incentive
Plan in cash (£7.2m). There were £6.7m
(2016: £6.2m) of restructuring and
redundancy costs which were largely
incurred as part of the integration
of PHS DS. This primarily consisted
of redundancy payments, double-
running costs of roles which were
scheduled for redundancy and double
running costs of properties prior
to rationalisation. The majority of
these costs are incurred in the twelve
months following an acquisition.
Typically the restructuring and
redundancy costs incurred equate
to approximately the anticipated
annualised cost saving.
Amortisation of intangible assets for
the year was £5.4m (2016: £4.4m) with
the increase attributable to the higher
carrying value of intangible assets.
Reconciliation of Reported
Operating Profit to Adjusted
Operating Profit and Adjusted
EBITDA
Due to the one-off nature of
exceptional costs and the non-
cash element of certain charges
the Directors believe that an
adjusted measure of profit before
tax 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 the
underlying adjusted profit before
tax are as follows:
Continuing
operations
2017
£’m
2016
£’m
Profit before tax
9.7
7.5
Amortisation of
intangible assets
5.4
4.4
Exceptional items
15.5
10.3
Share-based
payments charge
Adjusted profit
before tax
0.6
0.8
31.2
23.0
Continuing
operations
Operating profit
Amortisation of
intangible assets
Exceptional items
Share-based
payments charge
Adjusted operating
profit
Depreciation
Adjusted EBITDA
2017
£’m
12.2
5.4
15.5
2016
£’m
9.5
4.4
10.3
0.6
0.8
33.7
6.0
39.7
25.0
4.3
29.3
Earnings Per Share (EPS)
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. Basic
earnings per share reflect the actual
tax charge which in 2016 included tax
credits relating to the exercise of share
options and recognition of historic
losses due to increased certainty of
recoverability.
Continuing
operations
Basic adjusted
earnings per share
Basic earnings
per share
2017
p
2016
p
22.4
17.9
6.9
10.3
Overview
Strategic Report
Governance
Financial Statements
17
“As part of the Group’s strategy is to grow through
acquisition it is essential that acquired businesses are
restructured to integrate them fully into the Group’s
operations and deliver the anticipated returns."
Taxation
UK Corporation Tax is calculated at
19.25% (2016: 20%) of the estimated
assessable profit/(loss) for the year.
The UK Corporation Tax rate reduced
to 19% on 1 April 2017. The rate
will reduce to 17% on 1 April 2020;
accordingly, these rate reductions
have been reflected in the deferred
tax balance which forms part of the
Statement of Financial Position.
Statement of Financial
Position
Net assets increased slightly to
£155.9m (2016: £152.1m). Goodwill and
intangibles at 31 December 2017 were
£193.9m (2016: £190.3m).
Property, plant and equipment totalled
£46.1m (2016: £47.6m), comprising
the freehold underground storage
facilities in Wiltshire, storage racking,
operational equipment, vehicles and
computer systems.
The development of additional
storage space in the underground
facility continued in 2017 and is now
largely complete.
Exceptional Costs
Acquisition –
transaction costs
Acquisition – box
relocation and
transport costs
Restructuring and
redundancy costs
Other exceptional
Total
2017
£’m
2016
£’m
0.5
1.2
0.5
0.4
6.7
7.8
6.2
2.5
15.5
10.3
As part of the Group’s strategy is
to grow through acquisition it is
essential that acquired businesses are
restructured to integrate them fully
into the Group’s operations and deliver
the anticipated returns. In order to give
a suitable representation of underlying
earnings it is appropriate to show
these costs as exceptional along with
any other items which are exceptional
in nature. In the year the Group has
continued to integrate and restructure
the PHS Data Solutions business
in addition to the seven smaller
acquisitions made during the year.
Transaction costs include stamp
duty costs and transitional service
arrangement fees, in addition to the
cost of legal and professional fees
incurred as part of the acquisitions.
Box relocation and transport costs
include the cost of uplifting boxes to
existing facilities and the movement of
boxes from facilities which closed as
a result of acquisitions. In the year the
Group completed the closure of the
Cintas Charlton site on schedule.
Restructuring and redundancy costs
were £6.7m in 2017. As noted above
these primarily relate to the PHS DS
acquisition and include:
•
•
•
•
The cost of duplicated staff
roles during the integration
and restructuring period
The redundancy cost of
implementing the post
completion staff structures
IT costs associated with the
wind down of duplicated IT
systems and the transfer across
to the destination systems
Property costs associated
with sites which are identified
at the point of acquisition as
being superfluous to ongoing
requirements and where a
credible exit strategy is clear
to management.
Other exceptional costs include £7.2m
related to the cash settlement of a
proportion of share options issued
under the 2013 Executive Incentive
Plan. As a result of this, 1,759,073
nil-cost options granted under the
EIP were cancelled, thereby reducing
the amount of ongoing share dilution.
The Executive Directors used part
of the cash settlement to fund the
tax liability on the remainder of the
options exercised.
Interest
Net finance costs amounted to
£2.5m (2016: £2.0m) which reflects
the increased average levels of debt
experienced during the year as a result
of acquisitions.
18
Group Finance Director’s statement continued
Cash Flow
The net cash inflow from operations
was £15.7m (2016: £18.2m). However
2017 includes a £7.9m outflow related
to the cash settlement of EIP options
already noted.
Net working capital usage in the year
was £7.8m and partially reflects an
unwind of a particularly strong end
to 2016. The key movements can be
summarised as:
•
•
A £2.1m increase in trade
receivables in our shredding
business. The increase has
been driven by the transfer onto
new IT platforms following the
transfer away from PHS supported
systems. We would expect the
debtor levels to return to normal
levels as the new teams and
system bed down in 2018
Settlement of recharges and
customer rebates totalling
£1.6m that were outstanding at
December 2016 as a result of the
PHS Data Solutions acquisition
•
•
•
An estimated reduction of £1.7m
in other payables resulting from
the conversion to monthly
payments on account for VAT
Payments against property
provisions of £1.4m. This includes
rent and rates on the Cintas
Charlton site of £0.6m which has
now been successfully exited
Estimated organic growth related
working capital of £0.9m.
Capital expenditure totalled £5.3m
(2016: £5.2m). The Group has
continued to invest in both the
Scanning and Shredding businesses
in addition to the investment required
in our Storage business to bring the
final chamber in the underground
facility on stream.
Net Debt
Net debt at the end of the year was
£78.2m (2016: £72.3m) reflecting
the seven acquisitions undertaken
during the year. In September we
announced that the Group has agreed
an extension to its bank facilities with
its lenders. The new arrangements
have extended the existing facilities
through to November 2022 and in
addition provided a further £20m
of committed funds and a £30m
uncommitted accordion facility. These
facilities put us in a strong position to
continue our growth strategy for the
foreseeable future.
Bank facilities at the end of the period
totalled £110.7m comprising a £80.7m
term loan and a £30.0m revolving
credit facility. Total amount drawn
against these facilities at the year end
was £89.7m. The Group has sufficient
headroom on its facilities at the end of
the period to continue to fund smaller
acquisitions as part of its strategy.
Adam Councell
Group Finance Director
21 March 2018
Share price (p)
600
500
400
300
200
100
2011
2012
2013
2014
2015
2016
2017
RESTORE plc Annual Report and Accounts 2017 19
Risk Management
Our Risk Committee is chaired by
Sharon Baylay. We convene every four
months and discuss and continue
to assess our most significant risks.
These include; people, property,
infrastructure and IT, health and
safety, financial, environmental and
reputational risks. All of our divisions
are represented within the Committee
and we have updated risk registers
completed every six months.
The Risk Committee reports
directly to our Group Board and
our Operations Board. We seek to
understand our current or future
risks and put a strategic plan in place
should a potential area of concern
be highlighted.
Group Board
Operations
Board
Audit
Committee
External audit
Other activities
e.g. Health and Safety
audits, compliance
inspections,
whistleblowing,
fraud, bribery,
tax evasion,
corporate criminal
offences and MAR
compliance
Corporate risk register
Risk Committee
Business risk
registers
Business
subject matter
experts
Divisional Managing Directors
and Senior Managers
Document
Management
Relocation
Risk owners
Business risks
Strategic ReportGovernanceFinancial StatementsOverview 20
Principal risks and uncertainties
Risk
Potential impact
Risk mitigations
Finance and
liquidity
Lack of liquidity driven by lack of
profitability, failure to meet banking
covenants or reduced appetite from
banks to lend impacting the continuation
of the strategy of the Group.
All of the Group’s businesses benefit
from high levels of recurring revenues
and current trading is more than
adequate to service financial obligations.
Proforma leverage is comfortable at 2x
EBITDA. Historically the Group has not
had any issues in raising capital to fund
its acquisition strategy.
Systems,
technology
and cyber
attack risk
Financial and operational impact of a
loss of systems or operational data in
one or more of the Group’s operations
impacting day to day services.
The Group has disaster recovery plans
in place in all of its businesses which are
reviewed at appropriate intervals. Data
is backed up to secure offsite locations.
Business
property
Damage or loss of access to business
property through fire, flood, terrorism,
loss of power or services.
Regular risk assessments and audits
undertaken to ensure risks are mitigated
as far is practical. Insurance cover is
maintained over business property and
cover business interruption.
Market changes
Material change to business dynamics.
Most notably any shift in the document
storage market which results in a
reduction in the volume of documents
stored.
Business KPI’s are monitored to
identify any potential market trends
to enable appropriate actions to be
taken. In the event of a reduction in
the physical storage of documents the
Group expects to be able to manage its
property portfolio down over a period
of time in line with the nature of any
such reduction.
RESTORE plc Annual Report and Accounts 2017 21
Risk
Potential impact
Risk mitigations
Material increase
in UK business
property costs
Due to the high level of property costs
in the Group, particularly in the records
management business, a material
increase in property costs could have
a significant impact on the Group.
Increase in property costs are likely
to have an impact across the markets
that Restore operate in. As a result the
Group expect to be able to pass on such
increases in costs to our customers
reasonably promptly.
HR and
succession
planning
Lack of succession planning across
the Group for any potential key
management positions.
Succession planning exercises have
been undertaken for all of the key
positions in the Group to identify
potential internal development
opportunities and where external
appointments may be required.
Loss of
confidential
customer
records
Potential financial and reputational
impact of a loss of customer
records/data.
The Group ensure all staff adhere to
training guidelines and understand
data protection legislation. Where
appropriate vehicles are tracked
and staff vetted. All of the Group’s
operations maintain accreditations
appropriate to the activities undertaken.
The Group also maintains adequate
insurance for such events.
Injury or
death through
workplace
accidents
As many of the Group’s operations
involve physical labour, use of
machinery and transport, there is
a potential exposure to accidents,
including RIDDOR incidents.
The Group has well established training,
accident reporting procedures, and
processes in place to mitigate such
risks. These are overseen by the Risk
Committee and Group Board.
Strategic ReportGovernanceFinancial StatementsOverview 22
Corporate Responsibility statement
Employee Welfare and Diversity
We seek to recruit and retain the
best employees. Our view is that
encouraging diversity amongst our
workforce helps us achieve this and
ensures we deliver the best service
to our customers.
We believe that power and
responsibility go hand in hand.
Employees know what is expected
of them and have the power to make
decisions to meet those expectations.
We aim to ensure our workforce is
representative of society and each
employee feels respected and able to
give their best.
We are committed to equality and
fairness for all employees, and do not
discriminate on the grounds of gender,
gender reassignment, marital status,
race, ethnic origin, colour, nationality,
national origin, disability, sexual
orientation, religion or age.
As our Group increases in scale, we
are able to offer greater stability,
development and career opportunities
to our people, but without losing the
flexibility to treat people as individuals.
Health and Safety
Health and Safety is overseen by our
Risk Committee and Group Board,
and we strive continually to improve
our performance. This year we
implemented a new accident reporting
system across our Document
Management division, which has
helped improve our training methods.
Health and Safety Incidents
Employee Man Months
Employee Man Hours*
RIDDOR Events
Near Miss Events
Document Management
Relocation
2017
15,611
2016
9,290
2017
2016
1,225,750
1,128,173
10
23
2
18
8
4
7
2
RIDDOR events per man month
0.06%
0.02%
RIDDOR events per man hour
0.0006% 0.0006%
* Measured in hours due to the nature of the Relocation business
RIDDOR – Reporting of Injuries, Diseases and Dangerous Occurances Regulations 2013
Sustainability
Energy conservation, waste
management and the prevention of
pollution are key considerations within
our operations. We work hard to:
•
•
•
reduce consumption of materials
and promote re-use and recycling.
We aim to achieve 0% landfill,
including furniture unsuitable for
redistribution
achieve ongoing improvement
in environmental performance
and minimise the impact of our
operations on the environment
• minimise the impact of our
buildings, structures and
operational plant by reducing
visibility and noise.
We support customers by helping
them to:
• make more efficient use of office
space and public service facilities
by storing documents in remote
premises
Restore Harrow Green, IT
Lifecycle Services and Printer
Cartridge Recycling provide
ways for our customers to
contribute to charitable causes
through donations of furniture, IT
equipment and payments in lieu
of cash-back programmes.
We also take steps to minimise our use
of natural resources:
•
•
•
Archive boxes: the boxes we
use are made from material
that is 70% recycled, along with
responsibly sourced FSC-certified
raw material
Fuel and fleet management: our
modern fleet is optimised for fuel
efficiency, and we plan routes
to reduce fuel use and enhance
vehicle utilisation
Energy management and recycling:
we continue to follow the plan
produced for us by the Carbon
Trust to reduce our environmental
impacts through recycling and
reducing energy consumption.
Through its work with Planet First,
Restore Harrow Green has further
reduced its carbon footprint by
6.8% at year end 2017
We are proud of our low incident rate
and always seek ways to improve our
training and reporting, as employee
welfare is at the heart of our business.
•
•
improve access to important
documents
reduce their carbon footprint and
increase recycling
80,000
505,000
450,000
Tonnes of paper shredded
Paper briquettes produced
IT assets recyled
RESTORE plc Annual Report and Accounts 2017 23
Group Diversity
as at 31 December 2017
Men
Women
Board of Directors
14%
86%
Senior Management team
24%
•
Lighting: we continue to migrate
our storage facilities to a mix of
ultra-low wattage LED lighting,
very slim T5 fluorescent tubes
and PIR sensors.
participants to find work, and our
support for Crisis at Christmas,
where we worked together to donate
clothing, toiletries, food and transport
to help them set up.
We have a 0% landfill target for
our businesses involved with
secure disposal:
•
•
•
Shredding: In 2017 we produced
80,000 tonnes of shredding
materials for recycling, in addition
to 505,000 paper briquettes from
our shredding dust extraction
process, which are recycled into
paper goods
IT asset recycling: we processed
450,000 items – from PCs to
mobile phones – and refurbished
them for resale or stripped them
down to component level so
that elements (such as precious
metals) could be recycled
Printer cartridge collection:
we not only collected and sent
for remanufacture 1,200,000
proprietary printer cartridges
but also sent over 1,330,000
for recycling.
As well as providing local employment
opportunities, our individual
businesses also support charities
and community groups in various
ways. For example, Restore Harrow
Green provided 701 metric tonnes of
No Longer Needed assets to schools
and local voluntary groups and offers
services free of charge to deserving
causes when possible.
Restore Records Management
continues to support the Surrey
Care Trust, which provides learning,
training, volunteering opportunities
and support for people held back
through disadvantage and hardship,
and the Willow Foundation, which
helps people aged 16 to 40 who
have been diagnosed with a life-
threatening illness.
Restore Datashred have raised money
for Share Tanzania this year, and also
supports several regional hospices.
76%
Community and
Charitable Initiatives
We care for the communities in
which we work. Group initiatives
include our work with the
PricewaterhouseCoopers Growing
Talent project, helping unemployed
In addition to our Group initiatives,
we encourage employees to support
charities and help in our communities,
by sponsoring fundraising efforts and
by allowing time away from work to
participate in events for a range of
approved charities.
Total Employees
26%
The Strategic Report on pages 8 to 23 was approved by the Board of Directors
on 21 March 2018 and signed on it’s behalf by
74%
Charles Skinner
Chief Executive
Adam Councell
Group Finance Director
1,200,000
1,330,000
Cartridges for remanufacturing
Recycled cartridges
Strategic ReportGovernanceFinancial StatementsOverview 24
RESTORE plc Annual Report and Accounts 2017
Our key principle
is that power and
responsibility go
hand in hand. Our
people know what
is expected of them
and we give them the
power to make their
own decisions.
Overview
Strategic Report
Governance
Financial Statements
25
Governance
Board of Directors
Directors’ report
Corporate governance statement
Directors’ remuneration report
Statement of Directors’
responsibilities
Independent auditor’s report
26
28
30
32
34
35
26
Board of Directors
Martin Towers
Aged 65, Non-Executive Chairman
Charles Skinner
Aged 57, Chief Executive
Adam Councell
Aged 39, Group Finance Director
Charles Skinner was appointed Chief
Executive of the Group on 8 June
2009. Charles was previously Chief
Executive of Johnson Service Group
plc and Brandon Hire plc, prior to
which he was at SG Warburg, 3i plc
and Editor of Management Today.
Charles has 20 years’ experience as
Chief Executive of quoted companies,
all operating in the business to
business service sector.
Adam Councell was appointed Group
Finance Director on 18 June 2012.
Previously, he worked at Whitbread
plc before moving to Milward Brown
Precis, a subsidiary of WPP plc.
Subsequently joining Rentokil Initial
plc, Adam was Commercial Director
of the Business and Industry division,
Finance Director of Catering and
Hospitals division and latterly UK
Business Services division.
Martin was appointed Chairman
in January 2018 having joined the
Board as a Non-Executive Director
in September 2017. Martin is Senior
Independent Director of RPC Group
plc, and Non-Executive Chairman of
Tyman plc, and Norcros plc. Martin
was Group Finance Director of Kelda
Group plc from 2003 until 2008 and
was previously Group Finance Director
of McCarthy & Stone plc, The Spring
Ram Corporation plc and Allied Textile
Companies plc. Martin served as Chief
Executive of Spice plc from 2009 until
its sale to Cinven in 2010 and was Non-
Executive Director of Homestyle Group
plc from 2004 to 2006 and KCOM
Group plc from 2009 to 2015.
RESTORE plc Annual Report and Accounts 2017 27
Stephen Davidson
Aged 62, Non-Executive Director
James Wilde
Aged 64, Non-Executive Director
Sharon Baylay
Aged 49, Non-Executive Director
Stephen Davidson joined the Board on
8 January 2014. He is Non-Executive
Chairman of Datatec Limited, PRS
for Music and Actual Experience plc.
Stephen is also Non-Executive Director
of Informa plc and Jaywing plc.
Formerly, Stephen was Chief Financial
Officer then Chief Executive officer
of Telewest Communications plc and
Vice Chairman of investment banking
at WestLB Panmure. Stephen is also
Chairperson of the Group’s
Audit Committee.
James Wilde joined the Board on
1 June 2014. He has previously been
Non-Executive Chairman of several
support services and manufacturing
businesses, including NSL Services
Group, Deb Group Limited, Zenith
Vehicle Contracts Group Limited,
ATPI Limited and Allied Glass Group
Limited. He was on the Board of the
Navy Army and Air Force Institutes
for six years and spent much of his
executive career at Securiguard Group
plc and Rentokil Initial plc, where he
was Chief Executive.
Sharon Baylay joined the Board on
10 September 2014. She is a Non-
Executive Director of ITE Group plc
and Market Tech Holdings Ltd and
Chairman of Exclaimer Ltd. She was
Marketing Director and main Board
Director of the BBC, responsible
for Marketing Communications and
Audiences, and spent much of her
career at Microsoft, as Board Director
of Microsoft UK and Regional General
Manager of MSN International. Sharon
is also Chairperson of the Group’s
Risk Committee.
Strategic ReportGovernanceFinancial StatementsOverview 28
Directors’ report
Restore plc is a public limited company quoted on AIM,
incorporated and domiciled primarily in the United
Kingdom where the vast majority of trading in Document
Management and Relocation occurs.
Share Capital and Substantial Shareholdings
Full details of the authorised and issued share capital of the
Company are set out in note 22 to the financial statements.
The Directors present their report together with the audited
financial statements for the year ended 31 December 2017.
At 20 March 2018 the Company had been notified of
the following interests amounting to 3% or more of the
Company’s issued share capital:
The corporate governance statement on pages 30 and 31
also form part of this Directors’ report.
Review of the Business
The Strategic Report on pages 8 to 23 provide a review
of the business, the Group’s trading for the year ended
31 December 2017, key performance indicators and an
indication of future developments.
Result and Dividend
The Group has reported its Consolidated Financial
Statements in accordance with International Financial
Reporting Standards as adopted by the European
Union. The Group’s results for the year are set out in the
Consolidated statement of comprehensive income on
page 40.
The Directors recommend a final dividend for the year of
3.33p per share payable on 6 July 2018 (2016: 2.67p per
share). An interim dividend of 1.67p was paid during the
year (2016: 1.33p). The estimated final dividend to be paid
is £3.7m (2016: £3.0m).
Directors
The Directors of the Group during the year were:
Executive
Charles Skinner (Chief Executive)
Adam Councell (Group Finance Director)
Independent Non-Executive
Martin Towers (Chairman – appointed 1 January 2018,
appointed as Director 1 September 2017)
Sir William Wells (previously Chairman – retired 31
December 2017, retired as Director 13 March 2018)
Stephen Davidson
James Wilde
Sharon Baylay
The biographical details of the Directors are given
on pages 26 and 27.
Directors’ remuneration, share options, long-term
executive plans, pension contributions, benefits and
interests are set out in the Directors’ remuneration report
on pages 32 and 33. The Company maintains liability
insurance for its Directors and Officers.
Octopus Investments
Hargreave Hale
BlackRock Investment
Management UK
Old Mutual Global Investors
Slater Investments
Charles Stanley & Co Limited
Number of
5p ordinary
shares
Percentage
of issued
share capital
11,963,459
11,522,052
10.6%
10.2%
8,007,774
6,828,434
5,814,650
4,077,995
7.1%
6.0%
5.1%
3.6%
3.3%
Royal London Asset Management
3,731,309
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 2017, for 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 £10.9m.
Employee Involvement process
The Directors believe that the involvement of employees
is an important part of the business culture, are its most
important asset and contribute to the successes achieved
to date (view our Corporate responsibility statement on
pages 22 and 23).
Equal Opportunities
The Group is committed to eliminating discrimination and
encouraging diversity. Its aim is that each employee is
able to perform to the best of their ability. The Group will
not make assumptions about a person’s ability to carry
out their work, for example on their ethnic origin, gender,
sexual orientation, marital status, religion or beliefs, age
or disability.
Disabled Employees
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.
RESTORE plc Annual Report and Accounts 2017 29
Annual General Meeting
The notice of the Annual General Meeting to be held
on 21 May 2018 is set out on pages 91 to 94.
Approval
This Directors’ report was approved on behalf of the
Board on 21 March 2018.
Sarah Waudby
Company Secretary
21 March 2018
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. 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. For further details see our Corporate
responsibility statement on pages 22 and 23.
Health and Safety
The Group recognises the importance of maintaining high
standards of health and safety for everyone working within
our business and also for anyone who may be affected by
our business. Further details on health and safety are given
on page 22.
Political and Charitable Donations
Donations of £10,000 were made by the Group for
charitable purposes during the year (2016: £10,000).
The Group does not make political donations. Further
details on our charitable initiatives are given on page 23.
Financial Risk Management
Information in respect of the financial risk management
objectives and policies of the Group, is contained in note 3,
and detailed in the Group Finance Director’s statement.
Statement, as to Disclosure of Information
to Auditors
The Directors in office on 21 March 2018 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.
Post Balance Sheet Events and Future
Developments
Details of post balance sheet events are given in note 34
of the financial statements. The Board intends to continue
to pursue its business strategy as outlined in the Strategic
Report on pages 8 to 23.
Strategic ReportGovernanceFinancial StatementsOverview 30
Corporate governance statement
The policy of the Board is to manage the affairs of the Company having regard to Quoted Company Alliance. The Directors
support the principles underlying these requirements insofar as is appropriate for a group of the size of Restore plc.
The Board of Directors
The Group is led and controlled by the Board comprising two Executive Directors and four Non-Executive Directors.
Board meetings are held on a regular basis and no significant decision is made other than by the Directors.
All Directors participate in the key areas of decision-making, including the appointment of new directors. There is no
separate Nomination Committee. The Board receives timely information on all material aspects of the Group to enable it
to discharge its duties.
All Directors submit themselves for re-election at the Annual General Meeting at regular intervals. The following meetings
were attended by the Directors during the year:
Number of
Board meetings
Total 11
Number of Audit
Committee meetings
Number of Remuneration
Committee meetings
Total 2
Total 1
Executive Directors
Charles Skinner
Adam Councell
Non-Executive Directors
Martin Towers*
Sir William Wells**
Stephen Davidson
James Wilde
Sharon Baylay
*
appointed on 1 September 2017
** retired on 13 March 2018
11
11
5
11
11
11
11
2
2
1
2
2
2
2
–
–
1
1
1
1
1
The Executive Directors are not members of the Audit Committee or Remuneration Committee but may attend the
meetings as a guest of the Chair of the committee.
Directors’ Remuneration
The Company has an established Remuneration Committee.
Details of the remuneration of each Director are set out in the Remuneration report on pages 32 and 33.
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 auditor. A key responsibility of the Audit Committee during the year was overseeing the tender for the role of
external auditors. The tender was completed in late 2017, and based upon the Audit Committee’s recommendation, the
Board is proposing that shareholders approve that PricewaterhouseCoopers LLP be appointed, effective from the 2018
Annual General Meeting.
The Audit Committee would like to thank each firm that participated in the tender and specifically to thank RSM UK Audit
LLP on the Board’s behalf, for their significant contribution to Restore over the years.
RESTORE plc Annual Report and Accounts 2017
31
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. The Company meets regularly with its large investors and institutional shareholders
who along with analysts are invited to meetings by the Company after the announcement of the Company’s results.
The Company conducts bi-annual investor roadshows in the UK. At the Annual General Meeting, investors are given the
opportunity to question the entire Board.
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 mis-statement 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 Turnbull 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.
Strategic ReportGovernanceFinancial StatementsOverview 32
Directors’ 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-based incentives and other benefits of the Executive 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 meets 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 UK
Corporate Governance code, they are to be terminable by the Company on twelve or six months notice.
Executive Directors
Charles Skinner
Adam Councell
Date of contract
Notice period
8 June 2009
1 May 2012
12 months
6 months
The Non-Executive Directors do not have service contracts but have letters of appointment.
Non-Executive Directors
Martin Towers*
Sir William Wells**
Stephen Davidson
James Wilde
Sharon Baylay
*
appointed on 1 September 2017
** retired on 13 March 2018
Directors’ Emoluments
The aggregate emoluments of the Directors of the Company were:
Date of Letter
Notice period
10 August 2017
8 June 2009
8 January 2014
28 March 2014
12 August 2014
3 months
3 months
3 months
3 months
3 months
£’000
Executive Directors
Charles Skinner
Adam Councell
Non-Executive Directors
Martin Towers*
Sir William Wells **
Stephen Davidson
James Wilde
Sharon Baylay
*
appointed on 1 September 2017
** retired on 13 March 2018
£’000
Executive Directors
Charles Skinner
Adam Councell
Non-Executive Directors
Sir William Wells
Stephen Davidson
James Wilde
Sharon Baylay
Salary & Fees
Benefits
Pension
Costs
Subtotal
2017
510
243
15
75
50
45
50
988
2
12
–
–
–
–
–
14
–
27
–
–
–
–
–
27
Long-term
incentive
vesting
6,676
2,225
–
–
–
–
–
Total
2017
7,188
2,507
15
75
50
45
50
512
282
15
75
50
45
50
1,029
8,901
9,930
Salary & Fees
Benefits
Pension
Costs
Subtotal
2016
475
227
70
45
40
42
899
4
1
–
–
–
–
5
–
25
–
–
–
–
25
479
253
70
45
40
42
929
Long-term
incentive
vesting
6,706
888
Total
2016
7,185
1,141
2,610
2,680
–
–
–
45
40
42
10,204
11,133
RESTORE plc Annual Report and Accounts 2017 33
Directors’ Interests in Shares and Options
The beneficial interests of the Directors who were in office at 31 December 2017 in the shares of the Company (including
family interests) were as follows:
Number of ordinary shares of 5p each
2017
Number of ordinary shares of 5p each
2016
Charles Skinner
Adam Councell
Martin Towers
Sir William Wells (retired 13 March 2018)
Stephen Davidson
James Wilde
Sharon Baylay
1,538,560
292,213
5,000
352,553
–
–
–
1,098,792
145,623
–
352,553
–
–
–
As at 20 March 2018 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 share-based incentive arrangements which will reward the Directors
when shareholder value is created, thereby aligning the interests of the management directly with those of the shareholders.
Restore Share-based Incentives
The following options have been granted to employees within the Group during the year:
Date of Grant
11 January 2017
18 February 2017
26 May 2017
11 September 2017
Number of
ordinary shares
of 5p each
75,000
50,000
Exercise price
Date from which
exercisable
Expiry date
380.0p
11 January 2020
11 January 2027
387.0p
18 February 2020
18 February 2027
100,000
414.0p
26 May 2020
26 May 2027
350,000
516.0p
11 September 2020
11 September 2027
Granted
75,000
50,000
100,000
350,000
The share options granted have no performance conditions. See note 28 for details of the grant.
The closing price for Restore plc shares at 31 December 2017 was 588.5p. During the year the market price of the
Company’s ordinary shares ranged between 350.2p and 588.5p.
On 26 November 2016 the performance conditions under the Executive Incentive Plan (EIP) were met and the
performance units held by the Directors were converted into nil-cost options which were granted on 5 December 2016.
On 13 April 2017 the Directors decided to exercise the nil-cost options granted which were currently exercisable.
Of the 2,345,431 nil-cost options exercised, the Company elected to settle 75% of the value in cash, calculated according to the
closing price on 12 April 2017 of 379.5p. As a result of this 1,759,073 nil-cost options granted under the EIP have been cancelled.
The Executive Directors used part of the cash settlement to fund the tax liability on the exercise and hold the balance of 439,768
(Charles Skinner) and 146,590 (Adam Councell) in the new ordinary shares of 5p which admitted on 21 April 2017.
The options held at 31 December 2017 were as follows:
Number of
nil-cost
options
Date from
which exercisable
2017
Expiry date
Number of
nil-cost
options
Date from
which exercisable
2016
Expiry date
Charles Skinner
–
5 December 2016 26 November 2023
1,759,073
5 December 2016 26 November 2023
Charles Skinner
879,536 26 November 2017 26 November 2023
879,536 26 November 2017 26 November 2023
Charles Skinner
879,536 26 November 2018 26 November 2023
879,536 26 November 2018 26 November 2023
Adam Councell
–
5 December 2016 26 November 2023
586,358
5 December 2016 26 November 2023
Adam Councell
293,179 26 November 2017 26 November 2023
293,179 26 November 2017 26 November 2023
Adam Councell
293,178 26 November 2018 26 November 2023
293,178 26 November 2018 26 November 2023
By order of the Board
Martin Towers
Chairman of the Remuneration Committee
21 March 2018
Strategic ReportGovernanceFinancial StatementsOverview 34
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual report, the Strategic report, 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 Alternative Investment Market 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 also in accordance with
IFRS. 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:
•
select suitable accounting policies and then apply them consistently
• make judgements and accounting estimates that are reasonable and prudent
•
•
for the Group and Company financial statements, state whether they have been prepared in accordance with IFRS
adopted by the EU
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 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 ensuring the Annual Report and the financial statements are made available on
a website. Financial statements are published on the Group’s website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Group’s website is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of the financial statements contained therein.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
RESTORE plc Annual Report and Accounts 2017 35
Independent auditor’s report
to the Members of Restore plc
Opinion on financial statements
We have audited the financial statements of Restore plc (the ’parent Company’) and its subsidiaries (the ‘Group’) for the
year ended 31 December 2017 which comprise Consolidated statement of comprehensive income, Consolidated and
Company Statement of Changes in Equity, Consolidated and Company Statement of Financial Position, Consolidated and
Company Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent Company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
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 2017 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 IFRSs as adopted by the
European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We are independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you
where:
•
•
the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
the Directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the Group’s or the parent Company’s ability to continue to adopt the going concern basis
of accounting for a period of at least twelve months from the date when the financial statements are authorised
for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Goodwill and intangible asset
Risk:
As at 31 December 2017 the Group carries £192.3m of goodwill and intangible assets in respect of past acquisitions.
The recoverability of the goodwill arising on these acquisitions is dependent on individual businesses acquired sustaining
sufficient profitability in the future. Due to the inherent uncertainty involved in forecasting future cash flows and selection
of an appropriate discount rate, which are the basis of the assessment of recoverability, this is a significant risk area that
our audit is focused on.
Refer to note 12 to the financial statements for the disclosures relating to the goodwill and the related impairment
calculations.
Strategic ReportGovernanceFinancial StatementsOverview 36
Independent auditor’s report continued
to the Members of Restore plc
Our response:
Our audit procedures included testing of the discounted cash flow model, challenging the judgements and assumptions
used by management in the calculation and performing sensitivity analysis on the cash flow model.
We have used our knowledge of comparable companies and market data to challenge the assumptions, in particular
the inputs and methodology in determining the discount rate used to calculate the present value of projected future
cash flows.
We considered the historical accuracy of key assumptions by comparing the accuracy of the previous estimates of
profitability to the actual amounts realised. We assessed management’s sensitivity analysis of key assumptions, including
the forecast profitability and the discount rate and considered whether the disclosures around the sensitivity of the
outcome of the impairment assessment to changes in key assumptions were adequate and properly reflected the risks
inherent in the valuation of goodwill. We also considered whether the disclosures regarding the sensitivity of the outcome
of the impairment assessment to reasonably possible changes in key assumptions were adequate and properly reflected
in the financial statements.
Exceptional items
Risk:
The Group discloses exceptional items separately by virtue of their size or incidence to enable a full understanding of
the Group’s financial performance. As set out in the Group’s accounting policy, transactions which may give rise to
exceptional items are principally; integration and other restructuring costs, redundancy costs, provisions made in respect
of onerous leases, acquisition costs relating to business combinations, and national insurance costs on the exercise of
share options.
The nature of these items is such that management judgement is applied in determining whether costs are exceptional or
operational in nature, in particular, additional personnel and premises costs incurred following new acquisitions, where it
can take some time for the optimal levels of staffing and sites to be achieved.
Refer to note 5 to the financial statements for an analysis of exceptional items recognised.
Our response:
Our procedures included auditing the breakdown of the Groups exceptional items. We held discussions with management
to determine the reasoning behind classification of the balances as exceptional, including the assumptions and
judgements behind these decisions.
We challenged management on key assumptions and judgements used, particularly in relation to post acquisition
personnel and premises costs. We also compared management’s reasoning for consistency with the Groups accounting
policy, as per note 2 of the Groups financial statements.
We considered whether the disclosures regarding the exceptional items were adequate and properly reflected in the
financial statements.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing
and extent of our audit procedures and to evaluate the effects of misstatements, both individually and on the financial
statements as a whole. During planning we determined a magnitude of uncorrected misstatements that we judge would
be material for the financial statements as a whole (FSM). During planning FSM was calculated as £2,800,000, which
was not changed during the course of our audit. We agreed with the Audit Committee that we would report to them all
unadjusted differences in excess of £10,000, as well as differences below those thresholds that, in our view, warranted
reporting on qualitative grounds.
Other information
The other information comprises the information included in the Annual Report set out on pages 1 to 34, other than the
financial statements and our auditor’s report thereon. The Directors are responsible for the other information.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit
of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we
are required to determine whether there is a material misstatement in the financial statements or a material misstatement
of the other information.
RESTORE plc Annual Report and Accounts 2017 37
If, based on the work we have performed, we conclude that there is a material misstatement of the other information,
we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent Company and their environment obtained in
the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report
• We have nothing to report in respect of the following matters in relation to which 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.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 34, the Directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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.
Mark Harwood
Senior Statutory Auditor
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London, EC4A 4AB
21 March 2018
Strategic ReportGovernanceFinancial StatementsOverview 38
RESTORE plc Annual Report and Accounts 2017
We focus on retaining
our customers
through a first-class
service and cross-
selling the services
we offer, helping our
customers to deliver
their objectives,
and use our
comprehensive CRM
system to identify
such opportunities.
Overview
Strategic Report
Governance
Financial Statements
39
39
Financial statements
Consolidated statement of comprehensive income 40
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the Group financial statements
Company statement of financial position
Company statement of changes in equity
Company statement of cash flows
Company accounting policies
Notes to the Company financial statements
41
42
43
44
76
77
78
79
80
Strategic ReportOverviewGovernance 40
Consolidated statement of comprehensive income
For the year ended 31 December 2017
Revenue
Cost of sales
Gross profit
Administrative expenses
Amortisation of intangible assets
Exceptional items
Operating profit
Finance costs
Profit before tax
Income tax (charge)/credit
Profit and total comprehensive income for the year from continuing operations
Profit from discontinued operations
Attributable to owners of the parent
Earnings per share attributable to owners of the parent (pence)
Total – basic
Total – diluted
Continuing operations – basic
Continuing operations – diluted
Discontinued operations – basic
Discontinued operations – diluted
Year ended
31 December
2017
£'m
Year ended
31 December
2016
£'m
Note
4
6
6
12
5
7
8
4
9
176.2
(108.9)
67.3
(34.2)
(5.4)
(15.5)
12.2
(2.5)
9.7
(1.9)
7.8
–
7.8
6.9p
6.7p
6.9p
6.7p
–
–
129.4
(81.6)
47.8
(23.6)
(4.4)
(10.3)
9.5
(2.0)
7.5
3.1
10.6
7.7
18.3
17.8p
16.9p
10.3p
9.8p
7.5p
7.1p
The reconciliation between the statutory results shown above and the non-GAAP adjusted measures are shown below:
Operating profit
Adjustments for:
Amortisation of Intangible assets
Exceptional Items
Share-based payments charge
Adjustments
Adjusted operating profit
Depreciation of property, plant and equipment
Earnings before interest, taxation, depreciation, amortisation
and exceptional items (EBITDA)
Profit before tax
Adjustments (as stated above)
Adjusted profit before tax
Year ended
31 December
2017
£'m
Year ended
31 December
2016
£'m
Note
9
9
9
9
6
12.2
5.4
15.5
0.6
21.5
33.7
6.0
39.7
9.7
21.5
31.2
9.5
4.4
10.3
0.8
15.5
25.0
4.3
29.3
7.5
15.5
23.0
RESTORE plc Annual Report and Accounts 2017
Consolidated statement of financial position
As at 31 December 2017
Company registered no. 05169780
41
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
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
Other long term liabilities
Other financial liabilities
Deferred tax liability
Provisions
Total liabilities
Net assets
EQUITY
Share capital
Share premium account
Other reserves
Retained earnings
Equity attributable to the owners of the parent
Note
2017
£’m
2016
£’m
12
13
20
14
15
17
16
17
18
21
17
11
18
20
21
22
23
24
25
193.9
46.1
3.9
243.9
2.0
43.4
10.7
56.1
190.3
47.6
2.8
240.7
1.9
38.4
13.4
53.7
300.0
294.4
(33.5)
(34.3)
(9.4)
(0.1)
(0.9)
(1.5)
(7.3)
(0.1)
(1.5)
(1.0)
(45.4)
(44.2)
(79.5)
(0.1)
(0.2)
(13.3)
(5.6)
(98.7)
(144.1)
155.9
5.6
100.9
3.2
46.2
155.9
(78.4)
(0.2)
(0.3)
(13.2)
(6.0)
(98.1)
(142.3)
152.1
5.6
100.9
2.4
43.2
152.1
These financial statements were approved by the Board of Directors and authorised for issue on 21 March 2018 and were
signed on its behalf by:
Charles Skinner
Chief Executive
Adam Councell
Group Finance Director
Strategic ReportFinancial StatementsOverviewGovernance
42
Consolidated statement of changes in equity
For the year ended 31 December 2017
Attributable to owners of the parent
Balance at 1 January 2016
Profit for the year
Total comprehensive income for the year
Transactions with owners
Issue of shares during the year
Issue costs
Dividends
Transfers (note 25)
Share-based payments charge
Deferred tax on share-based payments
Balance at 31 December 2016
Balance at 1 January 2017
Profit for the year
Total comprehensive income for the year
Transactions with owners
Dividends
Transfers (note 25)
Share-based payments charge
Cash settlement of EIP options
Deferred tax on share-based payments
Minority interest (note 11)
Share
capital
£’m
Share
premium
£’m
4.8
–
–
0.8
–
–
–
–
–
0.8
5.6
5.6
–
–
–
–
–
–
–
–
–
67.5
–
–
34.6
(1.2)
–
–
–
–
33.4
100.9
100.9
–
–
–
–
–
–
–
–
–
Balance at 31 December 2017
5.6
100.9
Other
reserves
£’m
4.7
–
–
–
–
–
(0.9)
0.8
(2.2)
(2.3)
2.4
2.4
–
–
–
(0.4)
0.6
(0.8)
1.4
–
0.8
3.2
Retained
earnings
£’m
27.7
18.3
18.3
–
–
(3.7)
0.9
–
–
(2.8)
43.2
43.2
7.8
7.8
(4.9)
0.4
–
–
–
(0.3)
(4.8)
46.2
Total
Equity
£’m
104.7
18.3
18.3
35.4
(1.2)
(3.7)
–
0.8
(2.2)
29.1
152.1
152.1
7.8
7.8
(4.9)
–
0.6
(0.8)
1.4
(0.3)
(4.0)
155.9
RESTORE plc Annual Report and Accounts 2017 Consolidated statement of cash flows
For the year ended 31 December 2017
Net cash generated from operations
Net finance costs
Income taxes paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment and applications software
Purchase of subsidiary undertakings, net of cash acquired
Purchase of trade and assets
Proceeds from sale of available for sale assets
Cash flows used in investing activities
Cash flows from financing activities
Net proceeds from share issues
Dividends paid
Repayment of bank borrowings
Repayment of revolving credit facility
New bank loans raised
Finance lease repayments
Net cash (used in)/generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
Cash and cash equivalents shown above comprise:
Cash at bank
Bank overdraft
43
Year ended
31 December
2017
£’m
Year ended
31 December
2016
£’m
15.7
(2.2)
(2.5)
11.0
(5.3)
(5.6)
(1.5)
0.1
(12.3)
–
(4.9)
(7.3)
(9.0)
20.0
(0.1)
(1.3)
(2.6)
12.9
10.3
10.7
(0.4)
10.3
18.2
(2.0)
(0.4)
15.8
(5.2)
(82.6)
–
29.9
(57.9)
34.2
(3.7)
–
(2.5)
20.0
(0.1)
47.9
5.8
7.1
12.9
13.4
(0.5)
12.9
Note
26
11
11
19
Strategic ReportFinancial StatementsOverviewGovernance 44
Notes to the Group financial statements
For the year ended 31 December 2017
1. General Information
Restore plc and its subsidiaries specifically focus on Document Management and Relocation. The Group primarily 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 The Databank, 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 21 March 2018.
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, liquidity position, principal risks and uncertainties affecting the business are set out in the
Strategic Report on pages 8 to 23.
The Group meets its day-to-day working capital requirements through its financing facilities which are due to expire in
November 2022. Details of the Group’s borrowing facilities are given in note 19 of the financial statements.
The Group’s budgets for 2018 and forecasts for 2019, 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.
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.
RESTORE plc Annual Report and Accounts 2017 45
Contingent Consideration
Contingent consideration is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the
contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit
or loss or as a change to other comprehensive income unless the contingent consideration is classified as equity. In such
circumstances, changes are recognised within equity.
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.
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 two segments,
Document Management and Relocation, whose reports are reviewed by the Board in order to allocate resources and
assess performance. Segment revenue comprises sales to external customers most of whom are located in the UK.
Services are provided primarily 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 – Document 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.
The Group provides all round secure document destruction and recycling processes, including the rental and servicing
of office recycling units as well as larger secure waste containers providing a confidential waste destruction process.
Revenue is recognised on a time-apportioned basis in respect of rental and when destruction is complete. For the sale of
paper products, revenue is currently recognised when the goods are delivered to the customers' premises, which is taken
to be the point in time at which the customer accepts the goods and the related risks and rewards of ownership transfer.
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 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 – Relocation
Revenue represents amounts in respect of relocation, furniture storage, asset disposal and recycling. Revenue is
recognised based upon the value of the work completed for removals, storage revenue is recognised on a per day basis
for the furniture stored on behalf of its customers and when a disposal is complete.
Sale of goods
Revenue from the sale of goods is recognised when the risks and rewards of ownership have been transferred to the
customer, the amount of revenue can be measured reliably and the recovery of the consideration is probable.
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.
Strategic ReportFinancial StatementsOverviewGovernance 46
2. Significant Accounting Policies continued
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, integration and other restructuring
costs, provisions made in respect of onerous leases, acquisition costs relating to business combinations, cash-settled EIP
charges and national insurance costs on the exercise of share options.
Profit Measures
Due to the one-off nature of exceptional items and the non-cash element of certain charges, the Directors believe that
an adjusted measure of operating profit, EBITDA, profit before tax and earnings per share provide shareholders with a
more appropriate representation of the underlying earnings of the Group. The items adjusted for in arriving at these are
amortisation of intangible assets, exceptional items (including exceptional finance costs), share-based payments charge
and a standard tax charge.
Intangible Assets
Goodwill arising on consolidation represents the excess of the cost 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.
Other intangible assets
Other 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.
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 and management believes that a 5–10% customer attrition rate is
appropriate giving the life of customer relationships as ten to twenty years, depending upon the nature of the customer
contract. All customer relationships are being written off on a straight-line basis and have a remaining life of four to
twenty years. 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. Trade names are being written off on a straight-line
basis over ten years. The life of the trade name is assessed annually.
Application software
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).
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.
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 47
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
Long leasehold land
Leasehold improvements
Plant and machinery
Racking
Office equipment, fixtures and fittings
Motor vehicles
Basis
2–5% per annum
over the remaining life of the lease
over the life of the lease
5–50% per annum
5% per annum
10–40% per annum
20–25% per annum
Leased Assets
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
Loans and receivables are 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 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 which are held for the long term and over which management do not exercise significant control are carried
at cost.
An impairment review is carried out annually.
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.
Strategic ReportFinancial StatementsOverviewGovernance 48
2. Significant Accounting Policies continued
Customer Incentives
Incentives provided to new customers are in the form of either costs borne on behalf of new customers or the provision
of services free of charge. Such incentives are recognised as an asset at amortised cost at the point when the contract is
signed and the costs are incurred, or when the service is provided and are amortised in the income statement over the
period of the contract.
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.
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.
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 49
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.
Equity Instruments
Equity instruments issued by the Company are recorded at fair value net of transaction costs.
Share-Based Payments
The Group has applied the requirements of IFRS 2 Share-based Payment.
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 if the
option has not yet vested or retained earnings if the option has vested.
The Group has the ability to net-settle share options such that only shares equating to the gain over the option price
are issued directly to the option holder. This has the benefit of reducing the number of shares that must be issued in
connection with an option exercise thereby reducing shareholder dilution.
Pensions
The Group operates a number of defined contribution pension schemes. Contributions are charged to profit or loss as incurred.
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
when considered appropriate 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.
Acquisitions
The Group has made several acquisitions during the year, as shown in note 11, and in 2016, the significant acquisition of PHS
DS. The assessment of the fair values of the assets and liabilities at acquisition is inherently judgemental and where these
are still being assessed until further information is received, the amounts included in these financial statements are included
as provisional. The key assumptions that have been made are in respect of the valuation of customer relationships, and the
allocation of the consideration between cash-generating units.
Valuation of separable intangibles on acquisition
When valuing the intangibles acquired in a business combination, management estimate the expected future cash flows
from the asset and select 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 £3.7m (2016: £19.5m) as detailed further in note 11.
Strategic ReportFinancial StatementsOverviewGovernance 50
2. Significant Accounting Policies continued
Consideration
In the 2017 acquisitions, the businesses acquired operate a single cash generation unit and therefore no allocation of
consideration was required. In the acquisition of PHS DS, the consideration has been allocated to the cash-generating
units based on historic earnings as the Directors believe this to be the most appropriate measure.
Dilapidations provision
On the acquisition of PHS DS, the Group acquired a further 34 sites to increase its Document Management business.
The Group instructed a third party valuer to establish in the general state of repair of the properties and to prepare a
projected estimate for the potential dilapidations liability acquired as a result of the acquisition. The assessment was
based upon the acquired lease agreements with regard to the unexpired lease term and schedules of condition. This
resulted in an adjustment of £1.0m, increasing the acquired goodwill.
Exceptional items
Included within exceptional items, and as disclosed in note 5, are amounts included in respect of restructuring and
reorganisation and the related duplication of costs. The period taken to complete restructuring varies for each acquisition
and management judgement is applied in determining the level of duplication of costs incurred, particularly in relation to
personnel costs where it can take some time for the optimal levels of staffing to be achieved, but it is generally within
12 months of the date of acquisition.
Executive Incentive plan
The Board’s current judgement is that future settlements under the EIP will be settled in shares, rather than cash as in
the first tranche. This judgement will be reconsidered when the Directors exercise their options, and a decision made
dependent on what the Board consider to be most appropriate for the Company at that time.
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 is 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.
Provisions
Included within provisions is an onerous lease provision which relates to the amount by which future lease rental
commitments, arising as a result of acquisitions, exceed the fair market rentals (note 21). In calculating this provision the
key estimates are those relating to the fair values of the rentals on the properties concerned, the impact of future rent
reviews and the discount rate applicable.
Adoption of New and Revised Standards
New standards, amendments and interpretations issued and effective during the financial year commencing 1 January 2017:
Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses*
The amendments are aimed at reducing diversity by clarifying how to account for deferred tax assets related to debt
instruments measured at fair value. The following clarifications are made.
An entity takes into account any restrictions imposed by tax law on the source or type of taxable profits against which a
deductible temporary difference can be relieved when assessing whether taxable profit will be available against which the
deductible temporary difference can be utilised. If a restriction exists the entity considers the recovery of a deductible
temporary difference only with other such differences of the appropriate type.
Future taxable profit used for assessing the utilisation of deductible temporary differences excludes tax deductions
resulting from the reversal of those deductible temporary differences; otherwise they would be double counted.
This comparison shows the extent to which the future taxable profit is sufficient for the entity to deduct the amounts
resulting from the reversal of the deductible temporary differences.
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 51
Future taxable profit may include the recovery of some of an entity’s assets for more than their carrying value if there is
sufficient evidence that it is probable that the entity will achieve this. The amendment suggests that this may be the case
for an asset measured at fair value, for example, when an entity expects to hold a fixed-rate debt instrument measured at
fair value and collect the contractual cash flows.
Amendments to IAS 7: Disclosure initiative*
The amendment has the objective of ensuring that disclosures help users of financial statements to evaluate changes in
liabilities arising from financing activities.
To achieve the following changes in liabilities arising from financing activities are to be disclosed, changes from financing
cash flows; changes arising from obtaining or losing control of subsidiaries or other businesses; the effect of changes in
foreign exchange rates; changes in fair values; and other changes.
Periods commencing on or after 1 January 2018
IFRS 15 Revenue from Contracts with Customers (endorsed for use in the EU on 22 September 2016)
The core principle of the new standard is for entities to recognise revenue to depict the transfer of goods or services to
customers in amounts that reflect the consideration to which the entity expects to be entitled in exchange for those
goods or services. The new standard will also result in enhanced disclosures about revenue.
The final standard has the following stepped approach, which is to identify the contract with a customer, identify
the performance obligations in the contract, determine the transaction price, allocate the transaction price to the
performance obligations in the contract, recognise revenue when the entity satisfies a performance obligation.
The Group has undertaken analysis of how the adoption of IFRS 15 will have an impact on the timing of recognition of
revenue across its business, depending upon the nature and terms of their customer contracts.
The key areas which have been assessed are:
•
•
•
•
•
•
•
contract modifications
the determination of distinct goods and services
customer options for future purchases
the determination of a standalone selling price
the allocation of the transaction price and any discounts to the separate performance obligations
how the performance obligation is satisfied over time
how contract costs should be allocated to fulfilling a contract.
The current contract terms and business practices were reconsidered, and it has been concluded that the new standard
is not expected to have an impact on the timing of the recognition of revenue and that no restatement will be required.
All new contracts and changes to existing contract terms are considered on an ongoing basis to ensure that the
accounting is appropriate.
IFRS 9 Financial Instruments (endorsed for use in the EU on 22 November 2016)
The amendments include a logical model for classification and measurement, a single, forward-looking ‘expected loss’
impairment model and a substantially-reformed approach to hedge accounting. IFRS 9 Financial Instruments replaces IAS
39 Financial Instruments: Recognition and Measurement.
Financial assets are still measured at amortised cost, fair value through profit or loss or fair value through other
comprehensive income but their classification and measurement is driven by the contractual cash flow characteristics
of the financial asset and the business model in which an asset is held. This single, principle-based approach replaces
existing rule-based requirements that are generally considered to be overly complex and difficult to apply. The new model
also results in a single impairment model being applied to all financial assets, thereby removing a source of complexity
associated with previous accounting requirements.
The classification and measurement of financial liabilities is largely unchanged, except for entities that designate financial
liabilities as at fair value through profit and loss. They will be required to present the portion of the change in fair value
attributable to the entity’s own credit risk in other comprehensive income rather than profit or loss. Entities can elect to
early-adopt this requirement without applying the other requirements in IFRS 9.
IFRS 9 introduces a substantially-reformed model for hedge accounting, with enhanced disclosures about risk
management activity. The new model represents a significant overhaul of hedge accounting that aligns the accounting
treatment with risk management activities, enabling entities to better reflect these activities in their financial statements.
In addition, as a result of these changes, users of the financial statements will be provided with better information about risk.
Strategic ReportFinancial StatementsOverviewGovernance 52
2. Significant Accounting Policies continued
The Group has undertaken an assessment of how the adoption of IFRS 9 will have an impact on the Group’s financial
instruments. The key area that was considered across the business was the bad debt provisioning because of the
implementation of the expected loss model and it was concluded that there will not be an impact as a result of the
changes and that no restatement is required (note 15).
Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions*
The amendment seeks clarification in three main areas, vesting conditions when measuring cash-settled share-based
payment transactions, classification of share-based payment transactions with net settlement features for withholding
tax obligations, change of classification from cash-settled to equity-settled.
Annual Improvements to IFRSs 2014–2016 Cycle*
In December 2016, the IASB published Annual Improvements to IFRSs 2014–2016 Cycle as part of its annual improvements
project. A summary of the amendments is set out below:
IFRS 1 First-time Adoption of International Financial Reporting Standards
Deletion of short-term exemptions that are no longer applicable for first-time adopters. Applies for annual periods
beginning on or after 1 January 2018.
IFRS 12 Disclosure of Interests in Other Entities
Clarification that except as described in paragraph B17, the disclosure requirements for interests in other entities also
apply to interests that are classified as held for sale or distribution. Applies retrospectively in annual periods beginning
on or after 1 January 2017.
IAS 28 Investments in Associates and Joint Ventures
Clarification that a venture capital organisation, or other qualifying entity, may elect to measure its investments in an associate
or joint venture at fair value through profit or loss. This election can be made on an investment-by-investment basis.
A non-investment entity investor may also elect to retain the fair value accounting applied by an investment entity
associate or investment entity joint venture to its subsidiaries. This election can be made separately for each investment
entity associate or joint venture. Applies retrospectively for annual periods beginning on or after 1 January 2018. Early
application is permitted as long as that fact is disclosed.
Periods commencing on or after 1 January 2019
IFRS 16 Leases*
The new standard, which was issued in January 2016 recognises a leased asset and a lease liability for almost all leases
and requires them to be accounted for in a consistent manner. This introduces a single lessee accounting model and
eliminates the previous distinction between an operating lease and a finance lease.
The expense recognised in profit and loss is consistent with the charge recognised under IAS 17 with regards to finance
leases in that it will comprise a depreciation charge on the leased asset and an interest charge on the lease liability.
For leases previously classified as operating leases, this will replace the expense for lease payments.
Short-term leases (less than twelve months) and leases of low-value assets (such as personal computers) are exempt
from the requirement to recognise a leased asset and lease liability. Instead, lessees can recognise the lease payments
as an expense over the term of the lease either on a straight-line basis or on another systematic basis more representative
of the pattern of the lessee’s benefit.
The lessor accounting model is largely unchanged as it retains the classification of leases as operating or finance leases
and the different methods of accounting for them.
Effective Date: Periods commencing on or after 1 January 2019. Early application is permitted but only if companies also
apply IFRS 15 Revenue from Contracts with Customers at the same time. Transition exemptions from full retrospective
application are available.
The Group has started the analysis of how IFRS 16 should be implemented and is in the process of taking tentative
accounting policy decisions. Based upon this analysis and given the number of the Group’s properties we expect that
the adoption of IFRS 16 will have a material impact on the financial position of the Group. The key judgements which are
currently in the process of being quantified are the interest rate which is implicit in the lease, and the lease term including
judgements on break clause options, extensions and renewals.
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 53
This project will continue during 2018 and the Group expects to be able to quantify the impact of these changes as part of
its 2018 interim reporting.
* Not yet endorsed by the EU
Other than where specifically stated above, the Directors are still considering the impact that the adoption of these
Standards and Interpretations in future periods will have but do not expect a material impact on the financial statements
of the Group when the relevant standards and interpretations come into effect.
3. Financial Risk Management
The Group’s activities expose it to a variety of financial risks: market risk, credit risk, liquidity risk and capital 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 may use 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.
Market risk
Foreign exchange risk
The Group operates primarily in the UK and has limited exposure to foreign exchange risk.
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 2017 and 2016, the Group’s borrowings at variable rates were denominated in pounds
sterling. 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 swaps when considered appropriate. Such interest
rate swaps have the economic effect of converting borrowings from floating rates to fixed rates at a certain level. Interest
rate swaps are 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. The Group does not currently hold any interest
rate swaps.
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 customers before standard payment, 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 maximum exposure is the carrying amount as disclosed in note 15.
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 15.
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 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 19.
Capital risk
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,
other reserves, retained earnings and net debt as noted below. Net debt includes short and long-term borrowings
(including overdrafts) net of cash and cash equivalents.
No changes were made in the objectives, policies or processes during the years ending 31 December 2017
and 31 December 2016.
Strategic ReportFinancial StatementsOverviewGovernance 54
3. Financial Risk Management continued
The Group’s strategy is to strengthen its capital base in order to sustain the future development of the business.
Debt to Capital Ratio
Total debt
Less: cash and cash equivalents (note 17)
Net debt
Total equity
Debt to capital ratio
2017
£’m
88.9
(10.7)
78.2
155.9
0.5
2016
£’m
85.7
(13.4)
72.3
152.1
0.5
The gearing during 2017 remained at a consistent level to that in 2016. 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 two main operating segments, Document Management and Relocation and incurs Head
Office costs. Services per segment operate as described in the Strategic report. The main segmental profit measure
is adjusted operating profit and is shown before exceptional items, share-based payments charge and amortisation of
intangible assets. The vast majority of trading of the Group is undertaken within the United Kingdom. Segment assets
include intangibles, property, plant and equipment, inventories, receivables and operating cash. Central assets include
deferred tax and head office assets. Segment liabilities comprise operating liabilities. Central liabilities include income
tax and deferred tax, corporate borrowings and head office liabilities. Capital expenditure comprises additions to
computer software, property, plant and equipment and includes additions resulting from acquisitions through business
combinations. Segment assets and liabilities are allocated between segments on an actual basis.
Revenue
The revenue from external customers was derived from the Group’s principal activities primarily in the UK (where the
Company is domiciled) as follows:
Continuing operations
Revenue
Segment adjusted operating profit/(loss)
Amortisation of intangible assets
Exceptional items
Share-based payments charge
Operating profit
Finance costs
Profit before tax
Tax charge
Profit after tax
Segment assets
Segment liabilities
Capital expenditure
Depreciation and amortisation
Document
Management
£’m
126.9
31.0
Relocation
£’m
49.3
5.2
Head
Office
£’m
–
(2.5)
246.1
34.6
4.9
10.6
53.5
11.4
0.4
0.8
0.4
98.1
–
–
2017
Total
£’m
176.2
33.7
(5.4)
(15.5)
(0.6)
12.2
(2.5)
9.7
(1.9)
7.8
300.0
144.1
5.3
11.4
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 55
2016
Total
£’m
129.4
25.0
(4.4)
(10.3)
(0.8)
9.5
(2.0)
7.5
3.1
10.6
294.4
142.3
5.2
8.7
Document
Management
£’m
90.1
22.0
Relocation
£’m
39.3
4.5
Head
Office
£’m
–
(1.5)
249.8
43.1
5.0
8.0
40.5
10.9
0.2
0.7
4.1
88.3
–
–
Continuing operations
Revenue
Segment adjusted operating profit/(loss)
Amortisation of intangible assets
Exceptional items
Share-based payments charge
Operating profit
Finance costs
Profit before tax
Tax credit
Profit after tax
Segment assets
Segment liabilities
Capital expenditure
Depreciation and amortisation
On 10 March 2016, the Group disposed of Restore Document Management Ireland Limited for €36.0m. For 2016, revenue
was £1.7m, operating profit and profit before tax £0.1m, gain on disposal £9.2m, with a tax charge of £1.6m. The operating
cashflow for the period was £0.2m.
Major Customers
For the year ended 31 December 2017 no customers individually accounted for more than 4% (2016: 3%) of the Group’s
total revenue.
5. Exceptional Items
Acquisition – transaction costs
Acquisition – box relocation and transport costs
Restructuring and redundancy costs
Settlement of EIP (note 28)
Other exceptional
Total
2017
£’m
0.5
0.5
6.7
7.2
0.6
15.5
2016
£’m
1.2
0.4
6.2
–
2.5
10.3
As part of the Group’s strategy is to grow through acquisition it is essential that acquired businesses are restructured to
integrate them fully into the Group’s operations and deliver anticipated returns. In order to give a suitable representation
of underlying earnings it is appropriate to show these costs as exceptional along with any other items which are
exceptional in nature. In the year the Group has continued to integrate and restructure the PHS Data Solutions business in
addition to the seven smaller acquisitions made during the year.
Transaction costs include stamp duty costs and transitional service arrangement fees, in addition to the cost of legal and
professional fees incurred as part of the acquisitions.
Box relocation and transport costs include the cost of uplifting boxes to existing facilities and the movement of boxes
from facilities which closed as a result of acquisitions. In the year the Group completed the closure of the Cintas Charlton
site on schedule.
Strategic ReportFinancial StatementsOverviewGovernance 56
5. Exceptional Items continued
Restructuring and redundancy costs were £6.7m in 2017. As noted above these primarily relate to the PHS DS acquisition
and include:
•
•
•
•
The cost of duplicated staff roles during the integration and restructuring period
The redundancy cost of implementing the post completion staff structures
IT costs associated with the wind down of duplicated IT systems and the transfer across to the destination systems
Property costs associated with sites which are identified at the point of acquisition as being superfluous to ongoing
requirements and where a credible exit strategy is clear to management.
An amount of £7.2m related to the cash settlement of a proportion of share options issued under the 2013 Executive
Incentive Plan. As a result of this, 1,759,073 nil-cost options granted under the EIP were cancelled, thereby reducing the
amount of ongoing share dilution. The Executive Directors used part of the cash settlement to fund the tax liability on the
remainder of the options exercised.
6. Operating Profit
2017
£’m
2016
£’m
The following items have been included in arriving at operating profit:
Amortisation of intangible assets
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Share-based payments charge
Operating leases – plant and machinery
Operating leases – land and buildings
Auditors’ remuneration:
– Parent and consolidated financial statements
– Audit of Company’s subsidiaries pursuant to legislation
– Tax compliance
Expenses by function:
Staff costs (note 29)
Depreciation
Premises costs
Materials costs
Subcontractor costs
Selling and distribution expenses
Transport costs
Computer costs
Audit and tax costs
Legal and professional costs
Telecommunication costs
Exceptional items
Other expenses
Total cost of sales and administrative expenses
Amortisation of intangible assets
Total operating costs
5.4
6.0
–
0.6
4.4
13.3
0.1
0.1
–
57.9
6.0
23.1
11.6
18.4
1.0
10.2
2.6
0.2
0.5
1.2
15.5
10.4
158.6
5.4
164.0
4.4
4.3
0.8
0.8
2.5
11.2
0.1
0.1
0.1
41.4
4.3
18.3
6.7
14.9
2.3
4.1
2.1
0.3
0.4
0.8
10.3
9.6
115.5
4.4
119.9
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 7. Finance Costs
Interest on bank loans and overdrafts
Amortisation of deferred finance costs
Total
8. Taxation
Current tax:
UK corporation tax on profit for the year
Adjustment in respect of previous periods
Total current tax
Deferred tax: (note 20)
Current year
Adjustment in respect of previous periods
Total deferred tax
Total tax charge/(credit)
57
2016
£’m
1.8
0.2
2.0
2016
£’m
0.3
(0.6)
(0.3)
(1.9)
(0.9)
(2.8)
(3.1)
2017
£’m
2.3
0.2
2.5
2017
£’m
1.9
–
1.9
(0.9)
0.9
–
1.9
The charge/(credit) for the year can be reconciled to the profit in the Consolidated statement of comprehensive income as
follows:
Profit before tax
Profit before tax multiplied by the rate of corporation tax of 19.25% (2016: 20.0%)
Effects of:
Expenses not deductible for tax purposes
Fixed asset differences
Tax losses not previously recognised
Share-based payments deduction
Effect of change in rate used for deferred tax
Adjustment in respect of corporation tax for previous periods
Adjustment in respect of deferred tax for previous periods
Tax charge/(credit)
2017
£’m
9.7
1.9
0.3
(0.6)
–
(0.8)
0.2
–
0.9
1.9
2016
£’m
7.5
1.5
0.8
–
(0.8)
(2.6)
(0.5)
(0.6)
(0.9)
(3.1)
Strategic ReportFinancial StatementsOverviewGovernance 58
9. Earnings Per Ordinary Share
Basic earnings per share have been calculated on the profit 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
Total profit for the year
Total basic earnings per ordinary share
Weighted average number of shares in issue
Share options
Weighted average fully diluted number of shares in issue
Total fully diluted earnings per share
Continuing profit for the year
Continuing basic earnings per share
Continuing fully diluted earnings per share
Discontinued profit for the year
Discontinued basic earnings per share
Discontinued fully diluted earnings per share
2017
2016
112,607,015
102,712,773
£7.8m
6.9p
£18.3m
17.8p
112,607,015
102,712,773
3,448,077
5,454,143
116,055,092
108,166,916
6.7p
£7.8m
6.9p
6.7p
–
–
–
16.9p
£10.6m
10.3p
9.8p
£7.7m
7.5p
7.1p
Adjusted earnings per share
The Directors believe that the adjusted earnings per share provide a more appropriate representation of the underlying
earnings derived from the Group’s business. The adjusting items are shown in the table below:
Continuing profit before tax
Adjustments:
Amortisation of intangible assets
Exceptional items
Share-based payments charge
Adjusted continuing profit for the year
2017
£’m
9.7
5.4
15.5
0.6
31.2
2016
£’m
7.5
4.4
10.3
0.8
23.0
The adjusted earnings per share, based on the weighted average number of shares in issue during the year, 112.6m (2016:
102.7m) is calculated below:
Adjusted profit before tax (£’m)
Tax at 19.25%/20.0% (£’m)
Adjusted profit after tax (£’m)
Adjusted basic earnings per share
Adjusted fully diluted earnings per share
2017
31.2
(6.0)
25.2
22.4p
21.7p
2016
23.0
(4.6)
18.4
17.9p
17.0p
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 59
10. Dividends
In respect of the current year, the Directors propose a final dividend of 3.33p per share (2016: 2.67p) will be paid to ordinary
shareholders on 6 July 2018. 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. An interim dividend of 1.67p per share (2016: 1.33p) was paid
during the year.
The proposed final dividend for 2017 is payable to all shareholders on the Register of Members on 8 June 2018. The final
estimated dividend to be paid is £3.7m (2016: £3.0m).
11. Business Combinations
On 9 January 2017, the Group completed the acquisition of the trade and assets of Reisswolf Wales, a secure shredding
business based in Welshpool for cash consideration of £0.8m. The customer relationships acquired were £0.8m.
On 23 January 2017, the Company completed the acquisition of Bedfordshire based ID Secured Limited, trading as
Reisswolf London for cash consideration £0.4m. Cash of £0.2m was acquired as part of the net assets and the customer
relationships acquired were £0.1m and goodwill £0.1m.
Deferred tax at 17% has been provided on the value of intangible assets. Acquisition costs of £17k were incurred and have
been charged to profit or loss.
On 20 February 2017, the Company acquired The ITAD Works Limited, a Surrey based IT recycling company, for cash
consideration of £1.9m. Cash of £0.6m was acquired as part of the net assets and the customer relationships acquired
were £0.4m and goodwill £0.8m.
Deferred tax at 17% has been provided on the value of intangible assets. Acquisition costs of £37k were incurred and have
been charged to profit or loss.
On 7 March 2017, the Group acquired the remaining 17% share in Relocom Limited for cash consideration of £0.4m.
On 11 July 2017, the Group acquired the shredding activities of Banner group for cash consideration of £0.3m. The
customer relationships acquired were £0.3m.
On 31 July 2017, the Company acquired the trade and assets of Solutions for Archiving, a Dorset based Records
Management business for cash consideration of £0.4m. The customer relationships acquired were £0.4m.
On 14 August 2017, the Company acquired Baxter Confidential Limited, a shredding business for cash consideration of
£1.4m. Cash of £0.1m was acquired as part of the net assets and the provisional customer relationships acquired were
£0.6m and goodwill £1.0m.
On 8 September 2017, the Company acquired Lombard Recycling Limited and Datashred Limited (together Lombard) for
cash consideration of £2.4m. The provisional customer relationships acquired were £1.1m and goodwill £1.3m.
The goodwill acquired represents the value attributable to new business and the assembled and trained workforce.
Strategic ReportFinancial StatementsOverviewGovernance 60
11. Business Combinations continued
As the Group is still in the process of establishing the fair value of the assets and liabilities acquired in the Baxter
Confidential and Lombard acquisitions the fair values presented below are provisional.
Intangibles assets – customer relationships
Property, plant and equipment
Inventories
Trade receivables
Cash and cash equivalents
Trade and other payables
Deferred tax liabilities
Net assets acquired
Goodwill
Consideration
Satisfied by:
Cash to vendors
ID Secured
£'m
The ITAD
Works
£'m
Baxter
Confidential
£'m
Lombard
£'m
0.1
0.1
–
0.4
0.2
(0.5)
–
0.3
0.1
0.4
0.4
0.4
0.1
0.1
0.5
0.6
(0.5)
(0.1)
1.1
0.8
1.9
1.9
0.6
–
–
0.2
0.1
(0.4)
(0.1)
0.4
1.0
1.4
1.4
1.1
0.1
0.1
0.1
–
(0.1)
(0.2)
1.1
1.3
2.4
2.4
In 2016, the fair value of assets acquired as part of the PHS acquisition were shown as provisional in order that
management have further opportunity to revisit some of the key adjustments made in assessing the assets acquired.
During the year a re-assessment of these was undertaken resulting in an adjustment of £1.1m, primarily in respect of an
increase in a dilapidations provision for 34 acquired sites, increasing the goodwill on acquisition (note 21).
Other financial liabilities include £0.2m (2016: £0.4m) in respect of the contingent consideration for Crimson UK Limited,
of which £0.2m is due after more than one year (2016: £0.3m).
Post acquisition results
The table below gives the revenue and profit for the acquisitions completed in the year and included in the consolidated results.
Revenue
Profit before tax since acquisition included in the Consolidated statement of comprehensive income
£’m
8.3
0.4
If the acquisitions had been completed on the first day of the financial year, Group revenue would have been £178.5m and
Group continuing profit before tax would have been £9.9m. As explained in note 5, following the acquisitions a number of
restructuring costs are incurred, and after this post acquisition restructuring the acquisitions have a positive impact on
Group profit before tax.
The acquisitions made during the year were to further extend national coverage, increase customers and sites and
increase the Group’s market share in its shredding, storage and lifecycle services.
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 12. Intangible Assets
Cost
1 January 2016
Additions – external
Disposals
Arising on acquisition of subsidiaries
31 December 2016
1 January 2017
Additions – external
Disposals
Arising on acquisition of subsidiaries
31 December 2017
Accumulated amortisation and impairment
1 January 2016
Charge for the year
31 December 2016
1 January 2017
Charge for the year
Disposals
31 December 2017
Carrying amount
31 December 2017
31 December 2016
1 January 2016
Goodwill
£’m
Customer
relationships
£’m
Trade
names
£’m
Applications
software
£’m
75.3
–
–
56.2
131.5
131.5
–
–
4.3
135.8
10.6
–
10.6
10.6
–
–
10.6
125.2
120.9
64.7
57.3
–
–
17.2
74.5
74.5
–
–
3.7
78.2
5.7
3.6
9.3
9.3
4.5
–
13.8
64.4
65.2
51.6
2.0
–
–
2.3
4.3
4.3
–
–
–
4.3
1.1
0.2
1.3
1.3
0.3
–
1.6
2.7
3.0
0.9
2.7
0.5
(0.1)
–
3.1
3.1
1.0
(0.3)
–
3.8
1.3
0.6
1.9
1.9
0.6
(0.3)
2.2
1.6
1.2
1.4
The customer relationships have a remaining life of 4–20 years.
61
Total
£’m
137.3
0.5
(0.1)
75.7
213.4
213.4
1.0
(0.3)
8.0
222.1
18.7
4.4
23.1
23.1
5.4
(0.3)
28.2
193.9
190.3
118.6
Strategic ReportFinancial StatementsOverviewGovernance 62
12. Intangible Assets continued
The changes to goodwill during the year were as follows:
Cost
1 January 2016
Adjusted – Diamond
Acquired – PHS DS
Adjusted – ITP
31 December 2016
Acquired – ID Secured
Acquired – The ITAD Works
Acquired – Baxter Confidential
Acquired – Lombard
Adjusted – PHS DS
31 December 2017
Accumulated impairment
1 January 2016 and 31 December 2016
31 December 2017
Carrying amount at 31 December 2017
Carrying amount at 31 December 2016
Carrying amount 1 January 2016
£’m
75.3
(0.4)
57.0
(0.4)
131.5
0.1
0.8
1.0
1.3
1.1
135.8
10.6
10.6
125.2
120.9
64.7
Allocation to cash-generating units
Goodwill has been allocated for impairment testing purposes to the following cash-generating units. The carrying value is
as follows:
Document Management
Relocation
2017
£’m
117.7
7.5
125.2
2016
£’m
114.2
6.7
120.9
Annual test for impairment
For the purpose of impairment testing, goodwill and other intangibles are allocated to business segments which
represent the lowest level at which that those assets are monitored for internal management purposes. The recoverable
amount of each cash-generating unit is determined from value-in-use calculations. The calculations use pre-tax cash flow
projections based on financial budgets approved by the Directors for year one and cash flow projections for years two
and three using growth rates that are considered to be in line with the general trends in which each cash-generating unit
operates. 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 2018 have
been assessed by reference to existing contracts and market volumes. Margins have been assumed to be consistent with
those currently achieved in the Document Management and Relocation divisions. The forecasts have been discounted at
a pre-tax rate of 13.3% (2016: 12.9%). This discount rate was calculated using a pre-tax rate based on the weighted average
cost of capital for the Group. This has changed during the year as a result of changes in both the cost of equity and cost of
debt for the Group. The key assumptions used for the value in use calculations are as follows:
Revenue growth – average over 3 years
Revenue growth – remainder
Cost growth – employee/overheads, average over 3 years
Document
Management
%
Relocation
%
4
1
4
2
1
1
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 63
Sensitivity
The Group has not identified any reasonable potential changes to key assumptions that would cause the carrying value of
the remaining goodwill or intangibles to exceed its recoverable amount.
The key sensitivity concerns ITP, our printer cartridge recycling business which operates under the Restore Technology
banner. The recoverable amount calculated as value in use exceeded the carrying value by £0.1m, based on a small profit
being achieved in 2018 and a return to pre-acquisition profitability levels in 2019 and 2020, following a renewed focus
across sales and operations in 2017. A 10% worsening of the future profits would cause the value in use to fall below the
carrying value of £1.3m and suggest a potential impairment to goodwill of £0.5m.
13. Property, Plant and Equipment
Freehold
and long
leasehold land
& buildings
£’m
Leasehold
improvements
£’m
Racking
plant &
machinery
£’m
Office
equipment
fixtures &
fittings
£’m
Motor
vehicles
£’m
11.9
–
0.5
–
–
–
12.4
12.4
0.4
–
–
12.8
0.9
0.1
–
1.0
1.0
0.2
–
1.2
11.6
11.4
11.0
6.8
–
1.1
(0.2)
1.3
–
9.0
9.0
0.9
–
–
9.9
0.7
0.7
(0.1)
1.3
1.3
1.0
–
2.3
7.6
7.7
6.1
16.2
–
1.9
(0.6)
6.0
6.0
29.5
29.5
2.2
–
0.2
31.9
4.2
2.3
(0.3)
6.2
6.2
3.3
–
9.5
22.4
23.3
12.0
8.2
0.1
1.0
(0.3)
0.4
(6.0)
3.4
3.4
0.7
(0.3)
–
3.8
0.5
0.7
(0.1)
1.1
1.1
0.8
(0.3)
1.6
2.2
2.3
7.7
0.8
–
0.1
(0.3)
2.8
–
3.4
3.4
0.1
(0.2)
0.1
3.4
0.2
0.5
(0.2)
0.5
0.5
0.7
(0.1)
1.1
2.3
2.9
0.6
Total
£’m
43.9
0.1
4.6
(1.4)
10.5
–
57.7
57.7
4.3
(0.5)
0.3
61.8
6.5
4.3
(0.7)
10.1
10.1
6.0
(0.4)
15.7
46.1
47.6
37.4
Cost
1 January 2016
Exchange differences
Additions
Disposals
Acquisitions
Reclassification*
31 December 2016
1 January 2017
Additions
Disposals
Acquisitions
31 December 2017
Accumulated depreciation
1 January 2016
Charge for the year
Disposals
31 December 2016
1 January 2017
Charge for the year
Disposals
31 December 2017
Net book value
31 December 2017
31 December 2016
1 January 2016
*
In 2016 an amount of £6.0m previously recognised on 2015 acquisitions as office equipment fixtures & fitting was reclassified to racking plant & machinery on the
hive-up of these assets.
Capital expenditure contracted for but not provided in the financial statements is shown in note 31.
Depreciation is charged to profit or loss as an administrative expense. Assets with a net book value of £0.1m (2016: £0.4m)
were held under finance leases.
Strategic ReportFinancial StatementsOverviewGovernance 64
14. Inventories
Finished goods and goods for resale
£8.1m (2016: £4.4m) of inventories were recognised as an expense in cost of sales in the year.
15. Trade and Other Receivables
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Other receivables
Prepayments and accrued income
2017
£’m
2.0
2017
£’m
29.2
(0.7)
28.5
1.6
13.3
43.4
2016
£’m
1.9
2016
£’m
26.8
(0.4)
26.4
2.4
9.6
38.4
The average credit period is 50 days (2016: 51 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.
Movement in the allowance for impairment
1 January
Increase in amount recognised in profit or loss
31 December
2017
£’m
0.4
0.3
0.7
2016
£’m
0.1
0.3
0.4
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 19 for an analysis of trade
receivables that were past due but not impaired.
16. Trade and Other Payables
Trade payables
Other taxation and social security
Other payables
Accruals and deferred income
2017
£’m
10.7
5.6
0.9
16.3
33.5
2016
£’m
11.4
5.4
0.6
16.9
34.3
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 67 days (2016: 65 days).
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 17. Financial Liabilities – Borrowings
Current
Bank loans and overdrafts
Bank loans – secured
Deferred financing costs
Non-current
Bank loans – secured
Deferred financing costs
65
2016
£’m
0.5
7.0
(0.2)
7.3
79.0
(0.6)
78.4
2017
£’m
0.4
9.3
(0.3)
9.4
80.4
(0.9)
79.5
The bank debt is due to The Royal Bank of Scotland plc and 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 19. Under the bank
facility the Group is required to meet quarterly covenant tests in respect of cashflow cover, interest cover and leverage.
All tests were met during the year and the Directors expect to continue to meet these tests.
Analysis of net debt
Cash at bank and in hand
Bank loans due within one year
Bank loans due after one year
18. Other Financial Liabilities
Obligations under finance leases – present value of finance lease liabilities
Repayable by instalments:
In less than one year
In two to five years
Over five years
2017
£’m
10.7
(9.4)
(79.5)
(78.2)
2017
£’m
0.3
0.1
0.2
–
0.3
2016
£’m
13.4
(7.3)
(78.4)
(72.3)
2016
£’m
0.4
0.1
0.2
0.1
0.4
Strategic ReportFinancial StatementsOverviewGovernance 66
19. 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
2017
£’m
10.3
2016
£’m
12.9
As at 31 December 2017, trade receivables of £3.6m (2016: £5.4m) 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
2017
£’m
1.3
2.3
2016
£’m
4.8
0.6
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 flow forecasts are produced on a regular basis to minimise liquidity risks.
Carrying value of financial assets and (liabilities) excluding cash and borrowings
Loans and receivables
Financial liabilities measured at amortised cost
2017
£’m
30.2
(32.5)
2016
£’m
27.3
(29.2)
Currency and interest rate risk profile of financial liabilities
All bank borrowings were subject to floating interest rates, at LIBOR plus a margin of between 1.85% and 2.10%,
depending on the leverage covenant.
The interest rate risk profile of the Group’s gross borrowings for the year was:
Currency
Sterling at 31 December 2017
Sterling at 31 December 2016
Floating rate
financial
liabilities
£’m
Weighted
average
interest rates
%
88.9
85.7
2.3
2.5
Total
£’m
88.9
85.7
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
2017
£’m
88.9
2016
£’m
85.7
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 67
Interest rate sensitivity
At 31 December 2017, 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 £0.5m (2016: £0.4m) 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 future interest rates changes has increased during the current year due to the increased debt.
Financial assets recognised in the statement of financial position and interest rate profile
All financial assets are short-term receivables and cash at bank. The cash at bank 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:
Within one year, or on demand
Between one and two years
Between two and five years
More than five years
Bank
debt
£’m
9.4
7.0
72.5
–
88.9
Other
financial
liabilities*
£’m
0.1
0.2
0.1
–
0.4
2017
Total
£’m
9.5
7.2
72.6
–
89.3
Bank
debt
£’m
7.3
7.0
71.4
–
85.7
Other
financial
liabilities*
£’m
0.2
0.3
0.2
0.1
0.8
2016
Total
£’m
7.5
7.3
71.6
0.1
86.5
* Other financial liabilities include interest accruals, amounts owing under finance leases and contingent and deferred consideration.
Borrowing facilities
The Company has a finance facility with The Royal Bank of Scotland plc and Barclays Bank plc which expires on
4 November 2022. This new facility in 2017 comprised a term loan of £84.5m and a revolving credit facility (RCF) of
£30.0m, which is partly reduced by an on demand net overdraft facility of £1.5m (2016: term loan £67.5m, RCF £30.0m
and overdraft £1.5m). An offset facility is in place and on a gross basis; £11.8m of the overdraft facility was unutilised at
31 December 2017 (2016: £13.9m). Details of security are given in note 17. Committed but undrawn borrowing facilities
as at 31 December 2017 amounted to £33.3m (2016: £12.0m).
All of the Company’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 does not currently hold any interest rate swaps to mitigate the risk of changing interest rates on the issued
variable rate debt held due to the current interest rates incurred and forecasted market rates. This policy is reviewed on a
regular basis by the Board.
20. Deferred Tax
Summary of balances
Deferred tax liabilities
Deferred tax asset
Net position at 31 December
2017
£’m
(13.3)
3.9
(9.4)
2016
£’m
(13.2)
2.8
(10.4)
Strategic ReportFinancial StatementsOverviewGovernance 68
20. Deferred Tax continued
The movement in the year in the Group’s net deferred tax position is as follows:
1 January
Credit to profit for the year
Tax credited/(charged) directly to equity
Acquisitions
31 December
2017
£’m
(10.4)
–
1.4
(0.4)
(9.4)
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 2016
Credit to income for the year
Acquisitions
31 December 2016
(Charge)/credit to income for the year
Acquisitions
31 December 2017
Deferred tax assets
1 January 2016
Credit/(charge) to income for the year
Transactions with owners
31 December 2016
Credit/(charge) to income for the year
Transactions with owners
31 December 2017
Accelerated
capital
allowances
£’m
Intangible
assets
£’m
Properties
£’m
(1.3)
0.6
–
(0.7)
(0.3)
–
(1.0)
(9.7)
1.4
(3.3)
(11.6)
0.6
(0.4)
(11.4)
(1.0)
0.1
–
(0.9)
–
–
(0.9)
Share-based
payments
£’m
Losses
£’m
Depreciation
in excess
of capital
allowances
£’m
Provisions
£’m
2.6
0.1
(2.2)
0.5
0.2
1.4
2.1
–
0.7
–
0.7
(0.2)
–
0.5
0.3
0.1
–
0.4
(0.4)
–
–
1.4
(0.2)
–
1.2
0.1
–
1.3
2016
£’m
(7.7)
2.8
(2.2)
(3.3)
(10.4)
Total
£’m
(12.0)
2.1
(3.3)
(13.2)
0.3
(0.4)
(13.3)
Total
£’m
4.3
0.7
(2.2)
2.8
(0.3)
1.4
3.9
A deferred tax asset has been recognised on the expected future tax deductions on the exercise of share options. An
amount of £1.4m (2016: £2.2m charged) has been credited to equity.
A deferred tax asset of £0.5m (2016: £0.7m) has been recognised on brought forward tax losses due to greater certainty
over recoverability of the asset.
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 21. Provisions
1 January 2016
Used during the year
Arising during the year
31 December 2016
Used during the year
Arising on the acquisition of PHS (note 11)
Arising during the year
Released during the year
31 December 2017
69
Total
£’m
7.7
(1.0)
0.3
7.0
(1.0)
1.0
0.4
(0.3)
7.1
Onerous lease
provision
£’m
Dilapidation
provision
£’m
7.6
(1.0)
0.3
6.9
(1.0)
–
0.4
(0.3)
6.0
0.1
–
–
0.1
–
1.0
–
–
1.1
The onerous lease provision relates to future payments at above market rents on onerous leases on a number of sites
expiring before March 2030. £1.5m of costs are expected to be incurred within one year and the balance over the next
seven years. This provision has been discounted at 6%, being the market commercial property yield rates (2016: 6%).
The dilapidation provision relates to the estimated liability in respect of 34 sites acquired as part of the PHS acquisition.
Provisions are analysed as follows:
Current
Non-current
Total
22. Called Up Share Capital
Authorised:
199,000,000 ordinary shares of 5p each
Allotted, issued and fully paid:
112,962,586 (2016: 112,067,479) ordinary shares of 5p each
The issued ordinary share capital is as follows:
Date
1 January 2016
11 May 2016 – exercise of share options
9 June 2016 – exercise of share options
26 August 2016 – equity raised to acquire PHS Data Solutions
13 December 2016 – exercise of share options
31 December 2016
23 January 2017 – exercise of share options
20 April 2017 – exercise of share options
21 April 2017 – exercise of share options
28 April 2017 – exercise of share options
9 June 2017 – exercise of share options
18 September 2017 – exercise of share options
25 September 2017 – exercise of share options
13 November 2017 – exercise of share options
15 December 2017 – exercise of share options
31 December 2017
2017
£’m
1.5
5.6
7.1
2017
£’m
10.0
5.6
Number of
ordinary
shares
95,954,760
3,916,015
38,051
12,143,632
15,021
112,067,479
60,187
15,591
586,358
16,268
32,717
35,776
75,366
36,410
36,434
112,962,586
2016
£’m
1.0
6.0
7.0
2016
£’m
10.0
5.6
Issue price
5.0p
5.0p
290.0p
5.0p
5.0p
5.0p
5.0p
5.0p
5.0p
5.0p
5.0p
5.0p
5.0p
The 895,107 (2016: 3,969,087) ordinary shares shown as issued above as a result of the exercise of share options
were net-settled at market price on the day of exercise (note 28).
Strategic ReportFinancial StatementsOverviewGovernance 70
23. Share Premium Account
1 January
Premium on shares issued during the year
Share issue costs
31 December
2017
£’m
100.9
–
–
2016
£’m
67.5
34.6
(1.2)
100.9
100.9
The Company may use the reserve to reduce a deficit in the retained earnings 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.
24. Other Reserves
Share-based payments reserve
1 January
Charge for the year
Cash settlement of EIP options
Deferred tax on share-based payments charge
Transfers*
31 December
2017
£’m
2.4
0.6
(0.8)
1.4
(0.4)
3.2
2016
£’m
4.7
0.8
–
(2.2)
(0.9)
2.4
* A net amount of £0.4m has been reclassified from share-based payments reserve to retained earnings in respect of lapsed and exercised options (2016: £0.9m).
The share-based payments reserve comprises charges made to the income statement in respect of share-based
payments under the Group’s equity compensation schemes.
25. Retained Earnings
1 January
Profit for the year
Dividends
Transfers*
Minority interest (note 11)
31 December
2017
£’m
43.2
7.8
(4.9)
0.4
(0.3)
46.2
2016
£’m
27.7
18.3
(3.7)
0.9
–
43.2
* A net amount of £0.4m has been reclassified from share-based payments reserve to retained earnings in respect of lapsed and exercised options (2016: £0.9m).
Retained earnings are the balance of income retained by the Group. Retained earnings may be distributed to shareholders
by a dividend payment.
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 26. Cash Inflow From Operations
Continuing operations
Profit before tax
Depreciation of property, plant and equipment
Amortisation of intangible assets
Net finance costs
Share-based payments charge
Share-based payments charge on cash-settled EIP options
Cash settlement of EIP options
Gain on disposal of property, plant and equipment
Decrease in inventories
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Net cash generated from continuing operations
Discontinued operations
Profit before tax
Depreciation of property, plant and equipment
Profit on disposal of available for sale assets
Net cash generated from discontinued operations
Net cash generated from operations
71
2017
£’m
2016
£’m
9.7
6.0
5.4
2.5
0.6
7.2
(7.9)
–
0.3
(4.0)
(4.1)
15.7
–
–
–
–
15.7
7.5
4.3
4.4
2.0
0.8
–
–
0.8
0.2
(5.1)
3.1
18.0
7.7
0.1
(7.6)
0.2
18.2
27. Pensions
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 profit or
loss of £1.1m (2016: £0.9m) represents contributions payable to these schemes by the Group at rates specified in the rules
of the plan.
Strategic ReportFinancial StatementsOverviewGovernance 72
28. Share-Based Payments
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.
Between 2010 and 2017 the Company made grants of options to Senior Management and Directors, on which there are
no performance conditions and which are exercisable within 0–10 years.
Options were valued using a stochastic model. The fair value per option and the assumptions used in the calculation for
the options issued in 2016 and 2017 are as follows:
Grant date
Share price at grant date
Exercise price
Number of employees
11 September
2017
26 May
2017
18 February
2017
516.0p
516.0p
3
414.0p
414.0p
2
387.0p
387.0p
1
11 January
2017
380.0p
380.0p
1
10 October
2016
8 September
2016
337.0p
337.0p
2
347.0p
347.0p
1
16 June
2016
311.0p
311.0p
1
Share options granted
350,000
100,000
50,000
75,000
150,000
300,000
250,000
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
3
30%
10
6
1.5%
1.3%
123.9p
3
30%
10
6
1.5%
1.3%
99.4p
3
30%
10
6
1.5%
1.3%
95.2p
3
30%
10
6
1.5%
1.3%
91.3p
3
30%
10
6
1.5%
0%
94.3p
3
30%
10
6
1.5%
0%
97.1p
3
30%
10
6
1.5%
0%
87.1p
The total fair value of options issued in the year was £1.2m (2016: £0.7m). 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 2017 is:
Grant date
Outstanding at 1 January
Granted
Exercised
Converted from EIP
Exercised from EIP
Outstanding at 31 December
Exercisable at 31 December
2017
Weighted
average
exercise price
2016
Weighted
average
exercise price
Number
63.8p
6,316,588
469.1p
124.4p
–
0p
700,000
(4,975,588)
4,690,860
–
142.5p
6,731,860
55.9p
3,386,430
79.0p
344.4p
62.4p
0p
–
63.8p
34.3p
Number
6,731,860
575,000
(425,000)
–
(2,345,431)
4,536,429
1,988,715
The 425,000 options exercised as shown in the table above were net-settled at the market price on the day of exercise
and resulted in 308,749 ordinary shares being issued (note 22), (2016: 4,975,588 options exercised, 3,969,087 ordinary
shares issued).
The exercisable options outstanding at 31 December 2017 had an exercise price of between 0p and 516.0p and a weighted
average remaining contractual life of 8.3 years (2016: 7.7 years). The weighted average share price at exercise date for
options exercised in the year was 454.1p.
Notes to the Group financial statements continuedFor the year ended 31 December 2017RESTORE plc Annual Report and Accounts 2017 73
Executive Incentive Plan (EIP)
On 26 November 2016, the performance conditions under the EIP were met and the performance units previously held by
the Directors were converted into nil-cost options which were granted on 5 December 2016. On 13 April 2017 the Directors
decided to exercise the nil-cost options granted which were currently exercisable.
Of the 2,345,431 nil-cost options exercised, the Company elected to settle 75% of the value in cash, calculated using
the closing price on 12 April 2017 of 379.5p. As a result of this 1,759,073 nil-cost options granted under the EIP have been
cancelled. The Executive Directors used part of the cash settlement to fund the tax liability on the exercise and hold the
balance of 439,768 (Charles Skinner) and 146,590 (Adam Councell) in the new shares of 5p which admitted on 21 April 2017.
The options held as at 31 December 2017 were as follows:
Number of
nil-cost
options
Date from which
exercisable
2017
Expiry
date
Number of
nil-cost
options
Date from which
exercisable
2016
Expiry
date
Charles Skinner
–
5 December 2016 26 November 2023
1,759,073
5 December 2016 26 November 2023
Charles Skinner
879,536
26 November 2017
26 November 2023
879,536
26 November 2017
26 November 2023
Charles Skinner
879,536 26 November 2018 26 November 2023
879,536 26 November 2018 26 November 2023
Adam Councell
–
5 December 2016 26 November 2023
586,358
5 December 2016 26 November 2023
Adam Councell
293,179
26 November 2017
26 November 2023
293,179
26 November 2017
26 November 2023
Adam Councell
293,178 26 November 2018 26 November 2023
293,178 26 November 2018 26 November 2023
Strategic ReportFinancial StatementsOverviewGovernance 74
Notes to the Group financial statements continued
For the year ended 31 December 2017
29. Directors and Employees
Staff costs during the year
Wages and salaries
Social security costs
Post employment benefits
Share-based payments charge
2017
£’m
51.1
5.1
1.1
0.6
57.9
2016
£’m
36.2
3.5
0.9
0.8
41.4
Average monthly number of employees during the year
Number
Number
Directors
Management
Administration
Operatives
Total amounts for Directors’ remuneration and other benefits
Emoluments for Directors’ services
Directors’ remuneration shown above included the following amounts
in respect of the highest paid Director:
2
108
348
1,435
1,893
2017
£’m
9.9
2
101
300
1,395
1,798
2016
£’m
11.1
Salary and benefits
7.2
7.2
Directors’ exercised share options during the year as shown on page 33.
Key management compensation
Short-term employment benefits
Social security costs
Post employment benefits
Other benefits
Share-based payments charge
Long-term incentives vesting*
*
£1.2m (2016: £nil) of employers national insurance has been categorised within exceptional items
The key management of the Group are management attending divisional board meetings.
2017
£’m
3.1
0.6
0.3
0.1
0.6
8.9
13.6
2016
£’m
2.4
2.0
0.2
0.1
0.8
11.9
17.4
RESTORE plc Annual Report and Accounts 2017 30. Leasing Commitments
The Group leases various premises and assets 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.
Future aggregate minimum lease payments under
non-cancellable operating leases
– Within one year
– Within two to five years
– Over five years
Land and buildings
Plant and machinery
2017
£’m
14.4
49.2
73.2
136.8
2016
£’m
12.1
42.8
44.6
99.5
2017
£’m
1.7
4.7
0.7
7.1
The operating leases represent rentals payable by the Group for certain properties, vehicles and equipment.
31. Capital Commitments
Capital expenditure
Contracted for but not provided in the financial statements
2017
£’m
0.1
75
2016
£’m
1.8
5.6
0.7
8.1
2016
£’m
0.3
32. Contingent Liabilities
The Company has entered into a bank cross guarantee with its subsidiaries. The guarantee amounts to £78.2m at
31 December 2017 (2016: £72.3m). The assets of the Company and its subsidiaries are pledged as security for the
bank borrowings, by way of a fixed and floating charge.
33. Related Party Transactions and Controlling Party
The remuneration of key management personnel and details of the Directors’ emoluments are shown in note 29.
Dividends of £66,774, £15,301, £12,682, £84 (2016: £38,787, £12,445, £5,140, £nil) were paid to Charles Skinner, Sir William
Wells, Adam Councell and Martin Towers respectively.
The Directors exercised nil-cost options in the year, as disclosed within the Directors’ remuneration report (pages 32 and 33).
The Directors do not consider there to be a controlling party.
34. Post Balance Sheet Events
On 3 January 2018, the Group completed the acquisition of the trade and assets of Scanning Direct for £0.1m.
On 9 January 2018, the Group completed the acquisition of certain trade and assets of Papershrink Limited, a scanning
business for £0.2m.
Strategic ReportFinancial StatementsOverviewGovernance 76
Company statement of financial position
As at 31 December 2017
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Investments
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
Current tax liabilities
Non-current liabilities
Financial liabilities – borrowings
Other long term liabilities
Deferred tax liability
Provisions
Total liabilities
Net assets
EQUITY
Share capital
Share premium account
Other reserves
Retained earnings
Equity attributable to the owners of the parent
The Company’s loss for the financial year was £1.7m (2016: profit £16.1m).
Note
2017
£’m
2016
£’m
35
36
37
44
38
39
41
40
41
41
42
44
45
46
113.1
30.4
102.2
2.2
247.9
0.4
21.5
4.5
26.4
274.3
(16.2)
(9.4)
–
(25.6)
(79.5)
(29.9)
(8.4)
(0.6)
(118.4)
(144.0)
130.3
5.6
100.9
3.1
20.7
130.3
114.4
31.5
95.5
0.2
241.6
0.3
21.2
6.0
27.5
269.1
(16.1)
(6.8)
(0.2)
(23.1)
(78.4)
(23.9)
(8.0)
–
(110.3)
(133.4)
135.7
5.6
100.9
2.3
26.9
135.7
These financial statements were approved by the Board of Directors and authorised for issue on 21 March 2018 and were
signed on its behalf by:
Charles Skinner
Chief Executive
Adam Councell
Group Finance Director
RESTORE plc Annual Report and Accounts 2017
Company statement of changes in equity
For the year ended 31 December 2017
Attributable to owners of the parent
Balance at 1 January 2016
Profit for the year
Total comprehensive income for the year
Transactions with owners
Issue of shares during the year
Issue costs
Dividends
Transfers*
Acquisition**
Share-based payments charge
Deferred tax on share-based payments
Balance at 31 December 2016
Balance at 1 January 2017
Loss for the year
Transactions with owners
Dividends
Transfers*
Share-based payments charge
Cash settlement of EIP options
Deferred tax on share-based payments
Share
capital
£’m
Share
premium
£’m
4.8
–
–
0.8
–
–
–
–
–
–
0.8
5.6
5.6
–
–
–
–
–
–
–
–
67.5
–
–
34.6
(1.2)
–
–
–
–
–
33.4
100.9
100.9
–
–
–
–
–
–
–
–
Balance at 31 December 2017
5.6
100.9
Other
reserves
£’m
4.6
–
–
–
–
–
(0.9)
–
0.8
(2.2)
(2.3)
2.3
2.3
–
–
–
(0.4)
0.6
(0.8)
1.4
0.8
3.1
Retained
earnings
£’m
12.6
16.1
16.1
–
–
(3.7)
0.9
1.0
–
–
(1.8)
26.9
26.9
(1.7)
(1.7)
(4.9)
0.4
–
–
–
(4.5)
20.7
77
Total
Equity
£’m
89.5
16.1
16.1
35.4
(1.2)
(3.7)
–
1.0
0.8
(2.2)
30.1
135.7
135.7
(1.7)
(1.7)
(4.9)
–
0.6
(0.8)
1.4
(3.7)
130.3
* A net amount of £0.4m has been reclassified from share-based payments reserve to retained earnings in respect of lapsed and exercised options (2016: £0.9m).
** As a result of hive-ups shown in note 35, retained earnings of nil were transferred to the Company (2016: £1.0m).
Strategic ReportFinancial StatementsOverviewGovernance
78
Company statement of cash flows
For the year ended 31 December 2017
Net cash generated from operations
Net finance costs
Income taxes paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment and applications software
Purchase of subsidiary undertakings, net of cash acquired
Purchase of trade and assets
Proceeds from sale of available for sale assets
Cash flows used in investing activities
Cash flows from financing activities
Net proceeds from share issues
Dividends paid
Repayment of bank borrowings
Repayment of revolving credit facility
New bank loans raised
Net cash (used in)/generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
Cash and cash equivalents shown above comprise:
Cash at bank
Bank overdrafts
Note
47
43
Year ended
31 December
2017
£’m
Year ended
31 December
2016
£’m
12.7
(2.2)
(2.3)
8.2
(2.2)
(6.3)
(0.4)
–
(8.9)
–
(4.9)
(7.3)
(9.0)
20.0
(1.2)
(1.9)
6.0
4.1
4.5
(0.4)
4.1
14.4
(1.7)
(0.3)
12.4
(2.9)
(83.1)
–
27.7
(58.3)
34.2
(3.7)
–
(2.5)
20.0
48.0
2.1
3.9
6.0
6.0
–
6.0
RESTORE plc Annual Report and Accounts 2017 79
Company accounting policies
These financial statements for the Company have been prepared under the historical cost convention and in accordance
with the Companies Act 2006 and EU endorsed International Financial Reporting Standards (IFRS). The Directors consider
that the accounting policies as shown on pages 44 to 53 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 as follows.
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 44 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 results for the financial year of the Company are given on page 76 of the financial
statements.
Hive-Ups
The Company holds investments in trading subsidiaries, but has a policy of hiving-up the trade and assets of acquired
subsidiaries within records management. In 2016, the trade and assets of the records management business of
Wincanton UK and PHS DS was hived-up to Restore plc. On hive-up, separable intangible assets recognised on the
original acquisition are recognised within the Company statement of financial position together with other assets and
liabilities. The previously recognised investment in the subsidiary is de-recognised and any balance is taken to goodwill.
Strategic ReportFinancial StatementsOverviewGovernance 80
Notes to the Company financial statements
For the year ended 31 December 2017
35. Intangible Assets
Cost
1 January 2016
Additions – external
Arising on acquisition of subsidiaries
31 December 2016
1 January 2017
Additions – external
Arising on acquisition of subsidiaries
31 December 2017
Accumulated amortisation and impairment
1 January 2016
Charge for the year
31 December 2016
1 January 2017
Charge for the year
31 December 2017
Carrying amount
31 December 2017
31 December 2016
1 January 2016
Goodwill
£’m
Customer
relationships
£’m
Applications
software
£’m
33.4
–
32.1
65.5
65.5
–
0.6
66.1
3.8
–
3.8
3.8
–
3.8
62.3
61.7
29.6
13.9
–
40.8
54.7
54.7
–
0.4
55.1
0.6
2.2
2.8
2.8
2.2
5.0
50.1
51.9
13.3
1.7
0.3
–
2.0
2.0
0.3
–
2.3
0.8
0.4
1.2
1.2
0.4
1.6
0.7
0.8
0.9
Total
£’m
49.0
0.3
72.9
122.2
122.2
0.3
1.0
123.5
5.2
2.6
7.8
7.8
2.6
10.4
113.1
114.4
43.8
Customer relationships have a life of 4–20 years. Amortisation is charged to profit or loss as an administrative expense.
The changes to goodwill during the year were as follows:
Cost
1 January 2016
Acquired – Wincanton UK
Acquired – PHS DS
31 December 2016
Adjusted – PHS DS
31 December 2017
Accumulated impairment
1 January 2016
31 December 2016
31 December 2017
Carrying amount at 31 December 2017
Carrying amount at 31 December 2016
Carrying amount 1 January 2016
£’m
33.4
13.0
19.1
65.5
0.6
66.1
3.8
3.8
3.8
62.3
61.7
29.6
In 2016 the trade and assets of the records management business of Wincanton UK and PHS DS was hived-up into the
Company.
RESTORE plc Annual Report and Accounts 2017 81
Annual test for impairment
The recoverable amount of the Company is determined from value-in-use calculations. The calculations use pre-tax cash
flow projections based on financial budgets approved by the Directors for year one and cash flow projections for years
two and three using growth rates that are considered to be in line with the general trends in which the Company operates.
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 2018 have been assessed
by reference to existing contracts and market volumes. Margins have been assumed to be consistent with those currently
achieved in the Document Management division. The forecasts have been discounted at a pre-tax rate of 13.3% (2016: 12.9%).
This discount rate was calculated using a pre-tax rate based on the weighted average cost of capital for the Company. This has
changed during the year as a result of changes in both the cost of equity and cost of debt for the Company.
The key assumptions used for the value in use calculations are as follows:
Revenue growth – average over 3 years
Revenue growth – remainder
Cost growth – employee/overheads, average over 3 years
Document
Management
%
4
1
4
Sensitivity
The Company has not identified any reasonable potential changes to key assumptions that would cause the carrying
value of the remaining goodwill or intangibles to exceed its recoverable amount.
36. Property, Plant And Equipment
Freehold and
long leasehold
land & buildings
£’m
Leasehold
improvements
£’m
Racking
plant &
machinery
£’m
Office
equipment
fixtures
& fittings
£’m
Motor
vehicles
£’m
5.7
0.5
–
6.2
6.2
0.4
6.6
0.2
0.1
0.3
0.3
0.2
0.5
6.1
5.9
5.5
6.0
0.5
0.8
7.3
7.3
0.6
7.9
0.8
0.6
1.4
1.4
0.6
2.0
5.9
5.9
5.2
12.9
1.3
8.3
22.5
22.5
0.7
23.2
1.9
1.7
3.6
3.6
1.8
5.4
17.8
18.9
11.0
0.8
0.3
0.1
1.2
1.2
0.2
1.4
0.3
0.2
0.5
0.5
0.3
0.8
0.6
0.7
0.5
0.1
–
–
0.1
0.1
–
0.1
–
–
–
–
0.1
0.1
–
0.1
0.1
Total
£’m
25.5
2.6
9.2
37.3
37.3
1.9
39.2
3.2
2.6
5.8
5.8
3.0
8.8
30.4
31.5
22.3
Cost
1 January 2016
Additions
Acquisitions
31 December 2016
1 January 2017
Additions
31 December 2017
Accumulated depreciation
1 January 2016
Charge for the year
31 December 2016
1 January 2017
Charge for the year
31 December 2017
Net book value
31 December 2017
31 December 2016
1 January 2016
Capital expenditure contracted for but not provided in the financial statements is shown in note 51.
Depreciation is charged to profit or loss as an administrative expense. Assets with a net book value of £nil (2016: £nil) were
held under finance leases.
Strategic ReportFinancial StatementsOverviewGovernance 82
Notes to the Company financial statements continued
For the year ended 31 December 2017
37. Investments
Shares in subsidiary undertakings
Cost
1 January 2016
Adjusted – Diamond
Adjusted – ITP
Acquired – PHS DS
Capital contribution – subsidiary share-based payment
Transfer to intangible assets (less deferred tax)
31 December 2016
1 January 2017
Acquired – ID Secured
Acquired – The ITAD Works
Acquired – Baxter Confidential
Acquired – Lombard
Capital contribution – subsidiary share-based payment
31 December 2017
Accumulated impairment
1 January 2016 and 31 December 2016
31 December 2017
Net book value
31 December 2017
31 December 2016
1 January 2016
£’m
114.4
(1.4)
(0.4)
83.1
0.2
(66.6)
129.3
129.3
0.4
1.9
1.6
2.4
0.4
136.0
33.8
33.8
102.2
95.5
80.6
RESTORE plc Annual Report and Accounts 2017 83
At 31 December 2017 the Company held directly and indirectly equity and voting rights of the following undertakings:
Company
Document Management Division
Class of
holding
% held
Country of
incorporation
Nature of
business
All companies within this division are registered at The Databank, Unit 5 Redhill Distribution Centre, Salbrook Road, Redhill, Surrey RH1 5DY.
*Data Solutions 2016 Limited**
*Datashred Limited**
*Lombard Recycling Limited**
*Baxter Confidential Limited**
*ID Secured Limited**
*Restore Scan Limited**†
*Restore (Spur) Limited
*Restore Shred Limited
*Wansdyke Security Limited
Relocation Division
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
England and Wales
Shredding Services
England and Wales
Dormant
England and Wales
Dormant
England and Wales
Dormant
England and Wales
Dormant
England and Wales
Digital Services
England and Wales
Dormant
England and Wales
Dormant
England and Wales
Dormant
All UK companies within this division are registered at 2 Oriental Road, Silvertown, London, E16 2BZ.
*Harrow Green Limited
Relocom Limited**
*IT Efficient Limited**
*The ITAD Works Limited**
*ITP Group Holdings Limited**
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
England and Wales
Relocation
England and Wales
Relocation
England and Wales
Lifecycle Services
England and Wales
Lifecycle Services
England and Wales
Holding Company
Printer Cartridge
Recycling
Printer Cartridge
Recycling
Printer Cartridge
Recycling
Printer Cartridge
Recycling
International Technology Products (UK) Limited**
Ordinary
100%
England and Wales
International Technology Products GmbH***
Ordinary
100%
Germany
Office Green Limited**
Ordinary
100%
England and Wales
Takeback Limited**
*Diamond Relocations Limited
*Sargents Trading Limited
* Held directly
Ordinary
Ordinary
Ordinary
100%
100%
100%
England and Wales
England and Wales
Dormant
England and Wales
Dormant
** The Company has taken the exemption from audit under section 479A of the Companies Act 2006
*** The registered address of International Technology Products GmbH is Röntgenstraße 4, Hainburg, D-63512, Germany
† The registered address of Restore Scan Limited is Unit 2, Tally Close, Agecroft Commerce Park, Swinton, Manchester, M27 8WJ
Dormant companies are exempt from filing accounts under section 394 of the Companies Act 2006.
38. Inventories
Finished goods and goods for resale
2017
£’m
0.4
2016
£’m
0.3
£3.0m (2016: £2.0m) of inventories were recognised as an expense in cost of sales in the year.
Strategic ReportFinancial StatementsOverviewGovernance 84
Notes to the Company financial statements continued
For the year ended 31 December 2017
39. Trade and Other Receivables
Due in less than one year
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Amounts due from group undertakings
Other receivables
Prepayments and accrued income
Due after more than one year
Amounts due from group undertakings
2017
£’m
10.6
(0.1)
10.5
0.6
1.0
6.3
18.4
3.1
21.5
2016
£’m
11.3
(0.2)
11.1
0.5
0.1
4.6
16.3
4.9
21.2
The average credit period is 47 days (2016: 50 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.
Movement in the allowance for impairment
1 January
(Decrease)/increase in amount recognised in profit or loss
31 December
2017
£’m
0.2
(0.1)
0.1
2016
£’m
0.1
0.1
0.2
In determining the recoverability of the trade receivables, the Company 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 43 for an analysis of trade
receivables that were past due but not impaired.
40. Trade and Other Payables
Trade payables
Amount due to group undertakings
Other taxation and social security
Other payables
Accruals and deferred income
2017
£’m
4.9
0.3
2.1
0.3
8.6
16.2
2016
£’m
4.9
0.5
2.1
–
8.6
16.1
The Company 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 52 days (2016: 62 days).
RESTORE plc Annual Report and Accounts 2017 41. Financial Liabilities – Borrowings
Current
Overdraft on demand
Bank loans – secured
Deferred financing costs
Non-current
Bank loans – secured
Deferred financing costs
85
2016
£’m
–
7.0
(0.2)
6.8
79.0
(0.6)
78.4
2017
£’m
0.4
9.3
(0.3)
9.4
80.4
(0.9)
79.5
The bank debt is due to The Royal Bank of Scotland plc and 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 43. Under the bank
facility the Group is required to meet quarterly covenant tests in respect of cashflow cover, interest cover and leverage.
All tests were met during the year and the Directors expect to continue to meet these tests.
Analysis of net debt
Cash at bank and in hand
Bank loans and overdrafts due within one year
Bank loans due after one year
42. Other Financial Liabilities
Amount due to group undertakings
2017
£’m
4.5
(9.4)
(79.5)
(84.4)
2017
£’m
29.9
2016
£’m
6.0
(6.8)
(78.4)
(79.2)
2016
£’m
23.9
43. Financial Instruments
The Company’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 Company operations.
Cash and cash equivalents
2017
£’m
4.1
2016
£’m
6.0
As at 31 December 2017 trade receivables of £0.2m (2016: £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
2017
£’m
0.2
–
2016
£’m
1.1
0.4
The main financial risks arising from the Company’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.
Strategic ReportFinancial StatementsOverviewGovernance 86
Notes to the Company financial statements continued
For the year ended 31 December 2017
43. Financial Instruments continued
Carrying value of financial assets and (liabilities) excluding cash and borrowings
Loans and receivables
Financial liabilities measured at amortised cost
2017
£’m
12.2
(14.2)
2016
£’m
11.6
(13.8)
Currency and interest rate risk profile of financial liabilities
All bank borrowings were subject to floating interest rates, at LIBOR plus a margin of between 1.85% and 2.10%,
depending on the leverage covenant.
The interest rate risk profile of the Company’s gross borrowings for the year was:
Currency
Sterling at 31 December 2017
Sterling at 31 December 2016
Floating rate
financial
liabilities
£’m
Subject
to interest
rate collar
£’m
Weighted
average
interest rates
%
88.9
85.2
–
–
2.3
2.4
Total
£’m
88.9
85.2
The exposure of Company’s borrowings to interest rate changes and contractual pricing dates at the end of the year are
as follows:
6 months or less
2017
£’m
88.9
2016
£’m
85.2
Interest rate sensitivity
At 31 December 2017, if interest rates had been 50 basis points higher and all other variables were held constant, it is
estimated that the Company’s loss before tax would be approximately £0.5m lower (2016: profit £0.3m lower). This is
mainly attributable to the Company’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 Company’s sensitivity to future interest rates changes has increased during the current year due to the
increased debt.
Financial assets recognised in the statement of financial position and interest rate profile
All financial assets are short-term receivables and cash at bank. The cash at bank 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 Company’s financial liabilities (including interest payments), other than
short-term trade payables and accruals which are due within one year was as follows:
Within one year, or on demand
Between one and two years
Between two and five years
Bank
debt
£’m
9.4
7.0
72.5
88.9
Other
financial
liabilities*
£’m
0.1
–
29.9
30.0
2017
Total
£’m
9.5
7.0
102.4
118.9
Bank
debt
£’m
6.8
6.0
72.4
85.2
Other
financial
liabilities*
£’m
–
–
23.9
23.9
2016
Total
£’m
6.8
6.0
96.3
109.1
* Other financial liabilities include interest accruals, amounts owing under finance leases and contingent and deferred consideration.
RESTORE plc Annual Report and Accounts 2017 87
Borrowing facilities
The Company has a finance facility with The Royal Bank of Scotland plc and Barclays Bank plc which expires on
4 November 2022. This new facility in 2017 comprised a term loan of £84.5m and a revolving credit facility (RCF) of
£30.0m, which is partly reduced by an on demand net overdraft facility of £1.5m (2016: term loan £67.5m, RCF £30.0m
and overdraft £1.5m). An offset facility is in place and on a gross basis; £5.6m of the overdraft facility was unutilised at
31 December 2017 (2016: £7.5m). Details of security are given in note 41. Committed but undrawn borrowing facilities
as at 31 December 2017 amounted to £33.3m (2016: £12.5m).
All of the Company’s borrowings are in sterling.
Fair values of financial assets and financial liabilities
The Company’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 (see page 67)
44. Deferred Tax
Summary of balances
Deferred tax liabilities
Deferred tax asset
Net position at 31 December
The movement in the year in the Company’s net deferred tax position is as follows:
1 January
Credit to profit or loss for the year
Tax credited/(charged) directly to equity
Acquisitions
31 December
2017
£’m
(8.4)
2.2
(6.2)
2017
£’m
(7.8)
0.3
1.4
(0.1)
(6.2)
2016
£’m
(8.0)
0.2
(7.8)
2016
£’m
(0.8)
1.6
(2.2)
(6.4)
(7.8)
The following are the major deferred tax liabilities and assets recognised by the Company and the movements thereon
during the year:
Deferred tax liabilities
1 January 2016
Credit to income for the year
Acquisitions
31 December 2016
(Charge)/credit to income for the year
31 December 2017
Accelerated
capital
allowances
£’m
Intangible
assets
£’m
(1.1)
0.4
–
(0.7)
(0.6)
(1.3)
(2.0)
1.1
(6.4)
(7.3)
0.2
(7.1)
Total
£’m
(3.1)
1.5
(6.4)
(8.0)
(0.4)
(8.4)
Strategic ReportFinancial StatementsOverviewGovernance 88
Notes to the Company financial statements continued
For the year ended 31 December 2017
44. Deferred Tax continued
Deferred tax assets
1 January 2016
Credit to income for the year
Transactions with owners
31 December 2016
Credit to income for the year
Transactions with owners
31 December 2017
A deferred tax asset has been recognised on the share-based payments charge. An amount of £1.4m (2016: £2.2m
charged) has been credited to equity.
45. Provisions
1 January 2016
Used during the year
31 December 2016
Arising on the acquisition of PHS
31 December 2017
Onerous lease
provision
£’m
Dilapidation
provision
£’m
0.1
(0.1)
–
–
–
–
–
–
0.6
0.6
The dilapidation provision relates to the estimated liability acquired in respect of 23 sites acquired as part of the PHS
acquisition.
Provisions are analysed as follows:
Non-current
46. Share Capital
Authorised:
199,000,000 ordinary shares of 5p each
Allotted, issued and fully paid:
112,962,586 (2016: 112,067,479) ordinary shares of 5p each
2017
£’m
0.6
2017
£’m
10.0
5.6
Share-based
payments
£’m
2.3
0.1
(2.2)
0.2
0.6
1.4
2.2
Total
£’m
0.1
(0.1)
–
0.6
0.6
2016
£’m
–
2016
£’m
10.0
5.6
RESTORE plc Annual Report and Accounts 2017 The issued ordinary share capital is as follows:
Date
1 January 2016
11 May 2016 – exercise of share options
9 June 2016 – exercise of share options
26 August 2016 – equity raised to acquire PHS DS
13 December 2016 – exercise of share options
31 December 2016
23 January 2017 – exercise of share options
20 April 2017 – exercise of share options
21 April 2017 – exercise of share options
28 April 2017 – exercise of share options
9 June 2017 – exercise of share options
18 September 2017 – exercise of share options
25 September 2017 – exercise of share options
13 November 2017 – exercise of share options
15 December 2017 – exercise of share options
31 December 2017
89
Number of
ordinary
shares
95,954,760
3,916,015
38,051
12,143,632
15,021
112,067,479
60,187
15,591
586,358
16,268
32,717
35,776
75,366
36,410
36,434
112,962,586
Issue price
5.0p
5.0p
290.0p
5.0p
5.0p
5.0p
5.0p
5.0p
5.0p
5.0p
5.0p
5.0p
5.0p
The 895,107 (2016: 3,969,087) ordinary shares shown as issued above as a result of the exercise of share options were
net-settled at market price on the day of exercise (note 28).
47. Cash Inflow From Operations
Continuing operations
(Loss)/profit before tax
Depreciation of property, plant and equipment
Amortisation of intangible assets
Net finance costs
Share-based payments charge
Share-based payments charge on cash-settled EIP options
Cash settlement of EIP options
Increase in inventories
Decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Net cash generated from continuing operations
Discontinued operations
Profit before tax
Profit on disposal of available for sale assets
Net cash generated from discontinued operations
Net cash generated from operations
48. Share-Based Payments
Details of the share-based payments can be found in note 28.
2017
£’m
2016
£’m
(1.7)
3.0
2.6
2.8
0.2
7.2
(7.9)
(0.1)
(0.3)
6.9
12.7
–
–
–
12.7
5.1
2.6
2.6
1.7
0.6
–
–
–
4.9
(3.1)
14.4
7.9
(7.9)
–
14.4
Strategic ReportFinancial StatementsOverviewGovernance 90
Notes to the Company financial statements continued
For the year ended 31 December 2017
49. Directors and Employees
Staff costs during the year
Wages and salaries
Social security costs
Post employment benefits
Share-based payments charge
2017
£’m
14.6
1.5
0.3
0.2
16.6
2016
£’m
12.6
1.2
0.3
0.6
14.7
Average monthly number of employees during the year
Number
Number
Directors
Management
Administration
Operatives
Total amounts for Directors’ remuneration and other benefits
Emoluments for Directors’ services
Directors’ remuneration shown above included the following amounts in respect of the highest
paid Director:
2
51
78
458
589
2017
£’m
9.9
2
53
64
447
566
2016
£’m
11.1
Salary and benefits
7.2
7.2
Directors exercised share options during the year as shown on page 33.
Key management compensation
Short-term employment benefits
Social security costs
Post employment benefits
Share-based payments charge
Long-term incentives vesting*
2017
£’m
1.8
1.6
0.2
0.2
8.9
12.7
2016
£’m
1.3
1.4
0.1
0.6
11.4
14.8
*
£1.2m (2016: £nil) of employers national insurance has been categorised within exceptional items
50. Leasing Commitments
The Company leases various premises and assets 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.
Future aggregate minimum lease payments
under non-cancellable operating leases
– Within one year
– Within two to five years
– Over five years
Land and buildings
Plant and machinery
2017
£’m
11.5
41.5
53.0
106.0
2016
£’m
10.8
39.2
37.3
87.3
2017
£’m
0.7
0.8
–
1.5
The operating leases represent rentals payable by the Company for certain properties, vehicles and equipment.
51. Capital Commitments
Capital expenditure
Contracted for but not provided in the financial statements
2017
£’m
0.1
2016
£’m
0.7
1.0
–
1.7
2016
£’m
0.2
52. Contingent Liabilities
The Company has entered into a bank cross guarantee. The guarantee amounts to £78.2m at 31 December 2017 (2016:
£72.3m). The assets of the Company are pledged as security for the bank borrowings, by way of a fixed and floating charge.
53. Related Party Transactions and Controlling Party
Details of related party transactions can be found in note 33.
RESTORE plc Annual Report and Accounts 2017 91
Notice of Annual General Meeting
Restore plc
Notice is hereby given that the Annual General Meeting of Restore plc (“the Company”) will be held at the offices of
Cenkos Securities plc, 6.7.8 Tokenhouse Yard, London EC2R 7AS on 21 May 2018 at 1.00pm for the following purposes:
Ordinary Business
1.
To receive the Company’s annual accounts for the financial year ended 31 December 2017, together with the
Directors’ report and the auditors’ report on those accounts.
2.
3.
4.
5.
6.
7.
To appoint PricewaterhouseCoopers 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 Sharon Baylay, who retires by rotation pursuant to the Company’s articles of association, as a
Director of the Company.
To re-appoint Charles Antony Lawrence Skinner, who retires by rotation pursuant to the Company’s articles of
association, as a Director of the Company.
To re-appoint James Christie Falconer Wilde, who retires by rotation pursuant to the Company’s articles of
association, as a Director of the Company.
To declare a final dividend of 3.33p per ordinary share in respect of the year ended 31 December 2017.
This dividend will be paid on 6 July 2018 to the holders of ordinary shares at 6pm on 8 June 2018 (the
ex-dividend date being 7 June 2018).
Special Business
As special business, to consider and, if thought fit, to pass the following resolutions which will be proposed as to
resolution 8 as an ordinary resolution and as to resolutions 9 and 10 as special resolutions:
8.
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 £1,882,709.75
(being 37,654,195 ordinary shares of 5p 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.
That, subject to the passing of resolution number 8 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 8 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:
9.1
9.2
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
the allotment (otherwise than pursuant to paragraph 9.1 above) of equity securities up to an aggregate
nominal amount of £564,812.93, and shall expire upon the expiry of the general authority conferred by
resolution 8 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.
Strategic ReportFinancial StatementsOverviewGovernance 92
Notice of Annual General Meeting continued
10.
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 5p 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:
10.1
the maximum number of Ordinary Shares authorised to be purchased is 11,296,258;
10.2
the minimum price which may be paid for each Ordinary Share is 5p (exclusive of expenses payable by the
Company); and
10.3
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.
By order of the Board
Sarah Waudby
Company Secretary
21 March 2018
Registered Office
The Databank
Unit 5
Redhill Distribution Centre
Salbrook Road
Redhill
Surrey RH1 5DY
RESTORE plc Annual Report and Accounts 2017
93
Notes: These notes are important and require your immediate attention.
1. 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.
2. 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.
3. 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, Link Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF so that it is received
no later than 1.00pm on 17 May 2018.
4. Only those members entered on the register of members of the Company at close of business on 17 May 2018 or, in
the event that this meeting is adjourned, in the register of members as at close of business 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 17 May 2018 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.
5. 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 1.00pm on 21 May 2018 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, Link Market Services 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.
6. 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 Link Asset Services, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
7. 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.
8. 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. copies of all service agreements or letters of appointment under which the Directors of the Company are employed
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.
Strategic ReportFinancial StatementsOverviewGovernance
94
Notice of Annual General Meeting continued
EXPLANATION OF RESOLUTIONS
Resolution 8 – authority to allot shares
At the last Annual General Meeting of the Company held on 22 May 2017, the directors were given authority to allot
ordinary shares in the capital of the Company up to a maximum nominal amount of £1,868,794.45 representing
approximately one third of the Company’s then issued ordinary share capital.
The Directors consider it appropriate that a further authority be granted to allot ordinary shares in the capital of the
Company up to a maximum nominal amount of £1,882,709.75 representing approximately one third of the Company’s
issued ordinary share capital as at 20 March 2018 (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 2019 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 9 – disapplication of statutory pre-emption rights
Resolution 9 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 £564,812.93, representing approximately 10 per cent of the issued ordinary share capital of the
Company as at 20 March 2018 (the latest practicable date before publication of this document).
Resolution 10 – authority to make market purchases of own shares
Resolution 10 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 11,296,258
(representing approximately 10 per cent. of the Company’s issued ordinary share capital as at 20 March 2018 (the latest
practicable date before publication of this document)), 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 alternative to cancelling them.
No dividends are paid on shares whilst held in treasury and no voting rights attach to treasury shares.
RESTORE plc Annual Report and Accounts 2017 95
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 2018 AT 1.00pm.
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 2018 at 1.00pm 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.
To receive the Company’s annual accounts for the financial year ended
31 December 2017 together with the Directors’ report and the auditor’s
report on those accounts.
2. To appoint PricewaterhouseCoopers LLP as auditors.
3. To authorise the Directors to set the auditors’ remuneration.
4. To re-appoint Sharon Baylay as a Director of the Company.
5. To re-appoint Charles Antony Lawrence Skinner as a Director of
the Company.
6. To re-appoint James Christie Falconer Wilde as a Director of the Company.
7.
To declare a dividend of 3.33p per Ordinary Share .
8. To authorise the Directors to allot shares pursuant to section
551 Companies Act 2006.
Special Resolutions
9. To disapply section 561 Companies Act 2006.
10. To authorise the Company to make market purchases of its own shares.
Signature:
Date:
2018
To return your completed Proxy form
please use the reply paid envelope provided
Strategic ReportFinancial StatementsOverviewGovernance
96
Notice of Annual General Meeting continued
NOTES
1.
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 Link Asset
Services, PXS1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF, 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 Link Asset Services in the same envelope.
2.
3.
4.
5.
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 detailed in Note 6 below.
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.
6.
To be valid any proxy form or other instrument appointing a proxy must be:
a. completed and signed;
b. sent or delivered to Link Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF; and
c. received by Link Asset Services no later than 1.00pm on 17 May 2018.
7.
8.
9.
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, Link Market Services 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.
RESTORE plc Annual Report and Accounts 2017 Officers and advisers
Company Secretary
Sarah Waudby
Registered Number and Office
05169780
The Databank
Unit 5 Redhill Distribution Centre
Salbrook Road
Redhill
Surrey
RH1 5DY
Nominated Adviser & Broker
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London
EC2R 7AS
Public relations
FTI Consulting
200 Aldersgate
Aldersgate Street
London
EC1A 4HD
Investor Relations Consultants
Capital Access Group
Sky Light City Tower
50 Basinghall Street
London
EC2V 5DE
Trading Record
Year ended 31 December
Revenue
Adjusted profit before taxation*
Adjusted earnings per share*
Net debt
Net assets
97
Independent Auditor
RSM UK Audit LLP
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
Solicitors
Brabners LLP
55 King Street
Manchester
M2 4LQ
Bankers
Barclays Bank PLC
1 Churchill Place
London
E14 5HP
The Royal Bank of Scotland plc
Floor 9
280 Bishopsgate
London
EC2M 4RB
Registrars
Link Asset Services
34 Beckenham Road
Beckenham Kent
BR3 4TU
2017
£’m
176.2
31.2
22.4p
78.2
155.9
2016
£’m
129.4
23.0
17.9p
72.3
152.1
2015
£’m
91.9
16.3
15.6p
60.6
104.7
2014
£’m
67.5
12.0
12.3p
30.9
67.0
2013
£’m
53.6
10.0
10.5p
16.0
47.1
*
Before discontinued operations, exceptional items (including exceptional finance costs), amortisation of intangible assets and share-based payments charge.
Financial calendar
Annual General Meeting
Held in May
Half year results
Financial year end
Full year results
September
31 December
March
Strategic ReportFinancial StatementsOverviewGovernance
LOCATIONS
Restore plc
Head Office
66 Grosvenor Street,
London, W1K 3JL
T: 020 7409 2420
E:
info@restoreplc.com
W: www.restoreplc.com
Restore Records Management
The Databank, Unit 1 Redhill Distribution Centre,
Salbrook Road, Redhill, Surrey, RH1 5DY
T: 01293 446 270
E: admin@restore.co.uk
W: www.restore.co.uk
Restore Datashred
Unit Q1, Queen Elizabeth Distribution Centre,
Purfleet, Essex, RM19 1NA
T: 0800 376 4422
E: customerhub@restore.co.uk
W: www.shredding.info
Restore Digital
Unit 2 Tally Close, Agecroft Commerce Park,
Swinton, Manchester, M27 8WJ
T: 0333 043 5643
E:
info@restorescan.co.uk
W: www.restore.co.uk/scan
Restore Harrow Green
2 Oriental Road, Silvertown,
London, E16 2BZ
T: 0345 603 8774
E:
info@harrowgreen.com
W: www.harrowgreen.com
Restore Technology
Cardington Point, Telford Way,
Bedford, MK42 0PQ
T: 01462 813 132
E: technology@restore.co.uk
W: www.restore.co.uk/technology
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