Franchise Brands (FRAN) H2 2025 earnings summary

Executive summary

• System sales reached £435 million, up 2% year-over-year, with resilient demand for essential services across seven brands in 10 countries, supported by 600 franchisees.

• The business model is capital light and cash generative, with income primarily from royalties on franchisee sales.

• Strong growth at Filta International (system sales +13% in $, adjusted EBITDA +21% in $), and Willow Pumps (EBITDA up 15%).

• Strategic focus on de-leveraging after the Pirtek acquisition, with active disposal of non-core businesses and a conservative share buyback program.

• Decision to remain listed on AIM due to cost and regulatory considerations; no intention to transfer to Main Market.

Financial highlights

• System sales: £435.0m (+2% year-over-year); statutory revenue: £142.2m (+2%).

• Adjusted EBITDA: £35.2m (flat year-over-year); pre-tax profit: £12.7m (+38%).

• Adjusted EPS: 9.00p (+5%); dividend per share: 2.50p (+4%), with a progressive dividend policy maintained.

• Adjusted net debt reduced to £55.6m (from £65.1m); leverage ratio improved to 1.6x (from 1.9x), with £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 at 98%.

Outlook and guidance

• Trading outlook for 2026 is optimistic, with resilient demand and strong U.S. performance expected to continue.

• Early 2026 trading remains varied, with strong performance at Filta International but subdued volumes in Europe.

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

• H2 2026 expected to be stronger due to macro catalysts and benefits from IT integration and cross-selling.

• No significant acquisitions planned until at least 2028, prioritizing debt repayment and IT platform completion.