Franchise Brands’ 2025: resilient profits, stronger cash, and a £10m buy-back on the way
Franchise Brands has delivered a steady set of full-year results for 2025, leaning on its portfolio of essential, non-discretionary services and growing international mix. The numbers won’t set pulses racing, but they do show a business generating healthy cash, paying down debt, and preparing to return more to shareholders.
Management is keeping the Company on AIM, pushing ahead with “One Franchise Brands” integration, and signalling further balance sheet progress via disposals and a new share buy-back of up to £10 million.
Key numbers investors should know
| Metric (year to 31 Dec 2025) | Result |
|---|---|
| System sales (franchisee and DLO end-customer sales) | £435.0m, up 2% |
| Statutory revenue | £142.2m, up 2% |
| Adjusted EBITDA (underlying cash profit) | £35.2m, up 0.4% |
| Adjusted profit before tax | £23.9m, up 12% |
| Statutory profit before tax | £12.7m, up 38% |
| Adjusted EPS | 9.00p, up 5% |
| Basic EPS | 4.67p, up 23% |
| Adjusted net debt | £55.6m (down from £65.1m) |
| Leverage (net debt/Adjusted EBITDA) | 1.6x (down from 1.9x) |
| Interest charge | £5.6m, down 25% |
| Cash conversion | 98% (2024: 94%) |
| Total dividend | 2.50p (2024: 2.40p), final 1.35p |
Quick jargon check: “System sales” are the total sales made to end customers across the franchise network and any direct labour operations; it’s a good volume indicator. “Adjusted EBITDA” strips out non-cash and non-recurring items to show underlying operating cash profit.
Cash, debt and capital returns: the big positives
Cash generation remains the star of the show. Adjusted cash from operations hit £34.4 million, converting 98% of Adjusted EBITDA. That underpinned £15.7 million of net bank loan repayments and a 15% reduction in Adjusted net debt to £55.6 million. Leverage is now 1.6x, giving clear headroom.
The finance expense dropped 25% to £5.6 million thanks to repayments, lower base rates and a sharpened banking setup. The average interest rate fell to 6.4% (from 7.6%), and the interest margin was reduced from 2.5% to 1.7% by year-end. That helps earnings quality in 2026.
On shareholder returns, the Board proposes a 1.35p final dividend, lifting the full-year payout to 2.50p. More notably, they intend to launch a new share buy-back of up to £10 million, to be used opportunistically for the EBT (employee options cover) and, where earnings-enhancing, for treasury or cancellation. Given deleveraging progress, that signals confidence.
Divisional performance: Filta shines; Pirtek and B2C mixed
Filta International – strong US-led growth
- System sales rose 10% to £107.5 million; in North America they were up 13% in local currency to $136.1 million.
- Adjusted EBITDA increased 17% to £7.0 million (up 21% in local currency for the US franchisor).
- Strategically important shift to royalties continued: around 68% of US System sales are now royalty-based; FiltaGold and FiltaClean services rose to 23% of System sales (2024: 20%).
- Used Cooking Oil (UCO) sales increased 20% to £17.8 million, lifted by a 12% price rise and 11% higher volume.
Opinion: This is the growth engine. The pivot to royalty income typically improves predictability and margins over time. UCO tailwinds helped in 2025 and early 2026 commentary remains supportive.
Pirtek Europe – resilient top line; margin pressure
- System sales edged up 1% to £193.5 million.
- Adjusted EBITDA fell 4% to £19.2 million; the margin on System sales eased from 10.4% to 9.9% amid a 3% rise in admin costs.
- By geography: Germany & Austria grew 3% in local currency; UK & Ireland dipped 1%; Benelux was flat; France flat; Sweden down 15% in local currency.
Opinion: In a tough European backdrop, holding volumes is creditable, but cost inflation and slower project work are evident in margins. 2026 benefits should come from sector diversification (rail, industrial services, infrastructure) and the new works management system.
Water & Waste Services – incremental gains, better mix
- Divisional Adjusted EBITDA up 7% to £11.8 million.
- Willow Pumps stood out: revenue up 5% to £19.2 million and Adjusted EBITDA up 15% to £2.3 million as Special Projects bedded in.
- Metro Rod held System sales flat at £79.4 million; EBITDA slipped 3% to £7.8 million, mainly due to reallocated IT charges.
- Filta UK EBITDA rose 63% to £1.8 million helped by efficiencies and a property sale profit of £0.6 million; underlying EBITDA still improved by 14% even excluding that gain.
Opinion: Quiet but constructive progress. The pivot to higher quality, planned and pump-related work should support margins.
B2C – still under pressure
- Adjusted EBITDA declined 12% to £2.0 million.
- Net franchisee numbers fell by 29 to 269 as recruitment remained challenging.
Opinion: A drag on group momentum. The Board is reviewing strategic fit across the Group; B2C is the obvious area to watch for potential portfolio action.
Strategy and systems: One Franchise Brands taking shape
Integration is a clear theme. The Group-wide finance system (NetSuite) and CRM (HubSpot) are live across most businesses, with the Vision works management system rolling into Pirtek through 2026. Standardising data and processes sets up the next phase: deploying AI to automate workflows, speed job logging, improve scheduling and push predictive maintenance. It’s early, but the groundwork is important for operational gearing.
On listing venue, after shareholder feedback the Board confirmed no current intention to move from AIM to the Main Market. Sensible, given the added costs and the strong institutional support already on AIM.
Outlook for 2026: steady guidance, focus on deleveraging
- Early 2026 trading is “varied”: Filta International remains strong; Europe subdued, partly due to harsher winter weather and ongoing macro uncertainty.
- The Board still expects full-year performance within the current range of analyst forecasts for Adjusted EBITDA (£35.3 million to £38.0 million).
- Capital allocation will balance deleveraging, a progressive dividend and organic investment; potential disposals of non-core assets would accelerate debt reduction.
- Infrastructure investment in Germany and the UK could be a tailwind when broader conditions improve.
My take: why this update matters
What looks good
- Cash engine is humming: 98% cash conversion and a 15% drop in Adjusted net debt to £55.6 million.
- Lower financing costs give a clean earnings tailwind for 2026; margin cut to 1.7% is meaningful.
- Filta’s US growth and royalty shift strengthen quality of earnings.
- Buy-back up to £10 million alongside a 4% dividend increase signals confidence.
What to watch
- Europe remains patchy. Pirtek’s margin dip shows the impact of cost inflation and muted project work.
- B2C continues to shrink; strategic review could lead to disposals, which would be positive for focus and deleveraging, but may trim near-term revenue.
- Tax rate stepped up to 29.4%, which slightly tempers EPS conversion.
Bottom line
This is a sensible, de-risking year: modest growth, firmer profits, strong cash, less debt and a clearer focus on the highest-return B2B franchises. If Filta’s momentum holds and European conditions stabilise, the combination of systems integration, AI-enabled efficiency and portfolio pruning should lift margins. In the meantime, shareholders get a rising dividend and a buy-back, backed by robust cash flow.
For the full Annual Report (available from 31 March 2026) and AGM details, visit Franchise Brands’ investor page: https://www.franchisebrands.co.uk/investor-information/.
