Franchise Brands (FRAN) H1 2025 earnings summary

Executive summary

• Delivered resilient H1 2025 performance amid challenging macroeconomic and geopolitical conditions, with record system sales, strong cash generation, and EPS/dividend growth; U.S. and Filta International led growth while Europe faced headwinds.

• Integration of recent acquisitions and group-wide technology initiatives are progressing on time and budget, strengthening the business for future growth.

• Adjusted EBITDA was broadly maintained despite cost pressures, with EPS up 8% and interim dividend increased by 5% to 1.15p per share.

Financial highlights

• System sales up 3% to £209.4m; statutory revenue flat at £70.4m due to franchising model changes.

• Adjusted EBITDA declined 2% to £17.4m; adjusted profit before tax up 10% to £11.7m; adjusted EPS increased 8% to 4.42p.

• Adjusted net debt reduced by £8.7m to £62.0m, lowering leverage to 1.8x; cash conversion rate improved to 83%.

• Statutory profit after tax rose 14% to £4.2m.

• Dividend of £2.5m paid in H1; share buybacks of £600k resumed.

Outlook and guidance

• Outlook for H2 2025 similar to H1, with full-year adjusted EBITDA expected at 2024 levels and adjusted EPS/dividend anticipated to grow.

• Growth in construction and plant hire sectors now expected in 2026, not H2 2025.

• Targeting net debt of £55m by end of 2025 and full repayment by 2028.

• Prudent approach to expectations given lack of "green shoots" in key markets.