Restore (RST) H2 2024 earnings summary

Executive summary

• Achieved solid progress in 2024, focusing on operating margin improvement, high cash conversion, and unlocking business unit potential.

• Decentralized operations, reduced senior posts, and restructured leadership to drive autonomy and energy.

• Integrated digital and records management into a single division, delivering significant cost savings and improved customer focus.

• Won major contracts, including the UK’s largest mailroom for the Department of Work and Pensions, enhancing market leadership.

• Announced the acquisition of Synertec, a document management company, for up to £33 million, expanding public sector reach.

Financial highlights

• Revenue of £275.3 million, down 1% year-over-year.

• Adjusted operating profit up 10% to £48.8 million; operating margin increased 170 bps to 17.7%.

• Adjusted profit before tax up 14% to £34.4 million; statutory profit before tax £17.9 million.

• Adjusted basic EPS up 12% to 19.0p; total dividend up 12% to 5.8p.

• High cash conversion at 107%, with net debt reduced to £89 million and leverage down to 1.6x EBITDA.

Outlook and guidance

• All divisions expected to improve adjusted operating profit and revenue in the coming year.

• Focus on driving operating margins toward a 20% target, with property moves, price increases, and digital integration as key drivers.

• Synertec expected to deliver c.£70 million revenue and c.£5.5 million operating profit annualised, with significant cross-sell opportunities.

• Cash conversion rate expected to remain strong, no less than 80%.

• Continued pursuit of value-accretive acquisitions and organic/inorganic growth.