Inspecs FY2025 results show resilient eyewear revenue, but profits and debt went the wrong way
Inspecs has put out a mixed set of final results for 2025. The headline from management is resilience, and that is fair enough on sales. Revenue held up at £191.7 million versus £193.3 million in 2024, or £193.4 million on a constant currency basis, which means stripping out exchange rate swings.
But the rest of the picture is less comfortable. Margins slipped, underlying EBITDA fell, cash generation weakened sharply, and net debt excluding lease liabilities jumped to £32.3 million from £22.9 million. So this was not a disaster, but it was not a clean victory either.
| Key FY2025 numbers | FY2025 | FY2024 |
|---|---|---|
| Revenue | £191.7 million | £193.3 million |
| Revenue at constant currency | £193.4 million | £193.3 million |
| Gross profit margin | 51.7% | 52.4% |
| Underlying EBITDA | £17.7 million | £19.5 million |
| Operating profit before non-underlying items | £5.7 million | £5.9 million |
| Loss from continuing operations | £3.3 million | £2.0 million |
| Net debt excluding lease liabilities | £32.3 million | £22.9 million |
| Cash generated from operating activities | £0.1 million | £7.1 million |
Why Inspecs’ 2025 eyewear trading was better than the profit line suggests
There are some decent operational points in here. Eyewear unit volumes increased to 11.5 million, which tells you demand did not fall off a cliff. The Frames and Optics division, which is the core of the group, delivered stable revenue of £175.4 million and actually improved underlying EBITDA to £17.5 million from £16.6 million.
Europe sounds like the bright spot. Management says sales and order inflow in European markets were ahead of the first quarter of 2025, and the business describes that region as highly cash generative. That matters because it gives Inspecs a steadier earnings base while the US stays harder work.
The Vietnam factory is another genuine positive. Revenue there rose to £12.8 million from £11.6 million, and the company says performance improved materially in the second half as the site ramped up. In plain English, the factory was a drag earlier in the year because it was not fully utilised, but it started to do what it was supposed to do later on.
- Legacy acquisition integration is now complete
- Centralised procurement is still driving supply chain efficiencies
- European momentum looks encouraging
- Vietnam should help resilience against tariffs and trade disruption
That is the bullish case. A simpler group, a better manufacturing footprint, and core operations that are still profitable before the nastier accounting items are stripped in.
Inspecs margin pressure, weak cash flow and higher debt are the bits investors should not ignore
Now for the less flattering part. Gross margin dropped by 70 basis points to 51.7%, largely due to inflationary pressures and US tariffs. That fed straight into underlying EBITDA, which fell by £1.8 million to £17.7 million, with margin dropping to 9.2% from 10.1%.
The manufacturing division was the main weak spot. Revenue there was broadly flat at £21.9 million, but gross profit fell to £9.2 million from £11.1 million and underlying EBITDA slid to £3.2 million from £5.9 million. Tariffs, supply chain disruption, and start-up under-utilisation in Vietnam all got in the way.
Cash flow was even more concerning than profits. Net cash from operating activities collapsed to just £93,000 from £7.1 million, mainly because Inspecs accelerated payments to a key Asian supplier to deal with fast-changing tariffs in the second half. That may have been sensible operationally, but it still drained cash.
That helps explain why net debt excluding lease liabilities rose so sharply to £32.3 million. The company also disclosed that leverage, calculated in the context of its banking covenants, was 2.22 against a required ratio of 2.25. That is uncomfortably close to the line.
There was also a breach in the cashflow cover covenant at 31 March 2025, although HSBC formally waived it on 9 April 2025. Management says controls have been strengthened and leverage improved in the first quarter of 2026, which is reassuring, but this is still an area worth watching closely.
- Gross margin fell to 51.7%
- Underlying EBITDA margin fell to 9.2%
- Operating cash flow nearly vanished
- No dividend for 2025
Norville closure and prior year accounting restatements make the statutory numbers look messy
Inspecs has shut the Norville lens business, and that had a meaningful impact on the reported numbers. The discontinued operation made a loss of £6.3 million in 2025, including a £3.0 million loss on remeasurement of assets held for sale. Management’s view is blunt – there was no realistic route to profitability in the UK lens factory.
From an investor perspective, that is painful in the short term but probably sensible if the asset was dragging on returns. Better to stop feeding a weak business than pretend it is fixable forever.
The accounts also include six prior period errors and restatements. These relate to items such as right of return provisions, inventory in transit, revenue cut-off and foreign exchange treatment of goodwill. The company says these adjustments did not affect the 2024 consolidated income statement, but they do make the historic balance sheet comparisons look messy.
I would not treat that as a trivial footnote. It does not automatically mean something is broken, and the audit opinion was unqualified, but it does tell you this has not been the tidiest finance story in the market.
Luke Johnson and Ian Livingstone takeover means the market may stop focusing on quarterly noise
There is also the corporate angle. On 13 March 2026, Bidco 1125 Limited, indirectly owned by Luke Johnson and Ian Livingstone, declared its takeover offer unconditional in all respects. On 1 May 2026, Bidco said the offer will close for acceptance at 6.00 p.m. on 15 May 2026.
That changes the context quite a bit. Retail investors are no longer just judging a standalone AIM company trying to improve margins. They are looking at a business that is effectively in the process of changing control, with backing from two well-known investors.
The company says the change of control has not altered day-to-day operations, governance arrangements, or management, and HSBC has waived its right to accelerate or recall facilities because of the takeover. That removes one obvious risk. It also means the new owners appear to be backing the current operating plan rather than ripping it up on day one.
What matters next for Inspecs in 2026 after these final results
The company says it is on track to deliver Board expectations for 2026, helped by stronger European trading and better performance from Vietnam. That is encouraging, especially after a year when the first half looked messy and margins were under pressure.
Still, this is a recovery story, not a polished compounder right now. The 2027 targets remain ambitious: annual organic revenue growth at least 40% above market growth, a double-digit underlying EBITDA margin by 2027, and much lower net debt relative to underlying EBITDA. After 2025, those goals look possible, but not automatic.
My read is simple. The positives are real: resilient revenue, improving second-half manufacturing, a cleaner structure, and a better start to 2026. The negatives are just as real: weak cash conversion, higher debt, covenant pressure, and untidy statutory reporting.
So if you are looking for the bottom line, it is this: Inspecs looks operationally better than the headline loss suggests, but financially it still needs to prove it can turn that operational progress into stronger margins, cash flow and debt reduction. That is the bit that really matters now.
