Franchise Brands (FRAN) H2 2025 earnings summary

Executive summary

• System sales reached £435 million in 2025 with EBITDA of £35.2 million, supported by resilient demand for essential services and a capital-light, cash-generative franchise model operating across 10 countries and seven brands.

• Strong growth at Filta International (system sales +13% in $, adjusted EBITDA +21% in $), and Willow Pumps (EBITDA up 15%), with a strategic focus on deleveraging after the Pirtek acquisition and active disposal of non-core businesses.

• Progressive dividend policy maintained, with dividends increasing annually since IPO, and a conservative share buyback program relaunched with a £10 million plan.

• Continued integration of group-wide systems and leveraging technology for operational efficiency, including ongoing IT integration and rollout of NetSuite and HubSpot.

• Decision made to remain listed on AIM due to cost and regulatory considerations, with no current intention to transfer to the Main Market.

Financial highlights

• System sales grew by 2% year-over-year to £435.0m, with statutory revenue at £142.2m (+2%) and standout growth at Filta International (system sales up 13%, adjusted EBITDA up 21% in local currency).

• Adjusted EBITDA was flat at £35.2m, with strong performances from Willow (EBITDA up 15%) and Filta International; pre-tax profit rose 38% to £12.7m.

• Adjusted EPS increased to 9.00p (+5%), and dividend per share rose to 2.50p (+4%).

• Adjusted net debt leverage reduced to 1.6x, with net debt down to £55.6m and £15.8 million of debt repaid during the year.

• Finance expense reduced by 25% due to debt repayment, lower base rates, and renegotiated bank facilities; cash conversion improved to 98%.

Outlook and guidance

• Trading outlook for 2026 is optimistic, with resilient demand and strong U.S. performance expected to continue, though early 2026 trading remains varied with subdued volumes in Europe.

• Board expects FY2026 performance within current analyst forecast range.

• Anticipated improvement in European growth, especially in Germany and the U.K., driven by infrastructure and housing projects.

• Benefits from IT integration and One Franchise Brands initiatives expected to materialize from late 2026 into 2027.

• H2 2026 expected to be stronger than H1, with catalysts including infrastructure spend and increased cross-selling.