Torex Retail

It has been a hectic few weeks for Torex Retail, supplier of software and solutions to the retail sector. Developments have come thick and fast, with the company not only securing a brace of significant new contracts (a £3.3m order from Somerfield included) but also completing two small acquisitions and launching a £72.7m bid for profitable AIM-listed peer XN Checkout. The proposed takeover of XN is by far the most significant development. Whereas Torex has traditionally focused on supplying electronic point of sale (EPOS) solutions to retail outlets and convenience stores, XN generally sells its systems to the related hospitality and gaming sectors. It is this move into complimentary sectors that appears to have appealed to Torex. The two other recent acquisitions also have strategic importance. US-based Retail Store Systems (purchased for $27.9m) grants Torex access to the North American market for the first time and German competitor Hoffmann, meanwhile, bolsters the group’s European operations. First recommended by Growth Company Investor at 59.5p in October, Torex’s shares have performed strongly and currently trade at 95.5p. With so much hard integration work ahead, it may now seem attractive to cash in. Yet analysts remain upbeat and forecasts are for sales of around £135m and profits (before tax and goodwill) of £20m for 2005. Trading on a prospective p/e of just 13.1 the shares remain decent value.