ZIGUP Delivers Strong Full Year Performance with Cash Flow Inflection and Positive Outlook

ZIGUP full year results show stronger core trading, better cash generation and a more normal used vehicle market

ZIGUP has put out a full-year result that looks good on the bits that matter most operationally, even if the headline profit numbers are a touch messy. Revenue rose, core profits improved, Spain had another excellent year, and the company says it has hit an inflexion point in steady state cash generation.

That last point is important. Steady state cash generation is ZIGUP’s measure of cash left after replacing vehicles and paying lease principal – in other words, a way of showing what the business can throw off before growth investment. That figure jumped to £95.7 million from £16.7 million, which is a big change in direction.

ZIGUP FY2026 key numbers retail investors should know

Metric	FY2026	FY2025	Change
Reported revenue	£1,858.9 million	£1,812.6 million	+2.6%
Underlying revenue	£1,636.3 million	£1,555.0 million	+5.2%
Underlying EBIT excluding disposal profits	£164.0 million	£149.5 million	+9.7%
Underlying PBT	£160.1 million	£166.9 million	-4.1%
Underlying EPS	53.1p	58.4p	-9.2%
Steady state cash generation	£95.7 million	£16.7 million	+£79.0 million
Net debt	£999.3 million	£836.7 million	+£162.6 million
Total dividend	27.0p	26.4p	+2.3%

Why the ZIGUP results are better than the headline profit drop suggests

The standout number for me is underlying EBIT excluding disposal profits rising 9.7% to £164.0 million. That strips out the profit ZIGUP makes when it sells vehicles from the fleet, which has been flattered in recent years by unusually strong used vehicle prices.

That matters because used vehicle gains were always going to cool off. Disposal profits fell to £36.5 million from £52.5 million as sales volumes dropped to 29,200 vehicles from 34,500 and residual values normalised. In plain English, ZIGUP is making less easy money from selling old vans and cars, so investors need the operating business to do more of the heavy lifting. This year, it did.

Vehicle hire revenue rose 9.8% to £749.9 million, which is a strong showing. Claims and services revenue also edged higher to £886.4 million, helped by contract wins even though repair volumes were softer in parts of the market.

Spain was the star performer while UK&I had a more mixed year

Spain was excellent again. Vehicle hire revenue there rose 16.2% to £348.6 million, underlying EBIT increased 12.1% to £91.6 million, and closing vehicles on hire rose 9.5% to 70,000. Rental margin held firm at 19.3%, which tells you the growth was not bought cheaply.

The Spanish business looks like a real engine room for the group right now. ZIGUP says it is benefiting from strong structural demand, a premium offering and national scale. When a company can grow fleet, keep utilisation at 91% and hold margins steady, that is usually a very healthy sign.

UK&I Rental was more complicated. Hire revenue rose 5.2% to £412.7 million and rental profit increased 7.3% to £66.2 million, with rental margin improving to 16.0%. That is the good news.

The bad news is that UK&I underlying EBIT fell 13.4% to £78.2 million because disposal profit collapsed to £12.0 million from £28.7 million. So the rental operation itself improved, but the used vehicle tailwind faded fast. That is not a disaster, but it does make comparisons look uglier.

Claims and services growth gives ZIGUP another useful profit leg

Claims & Services had a solid year, with underlying EBIT up 7.0% to £41.0 million and EBIT margin rising to 4.6% from 4.3%. New contract wins and renewals mattered here, including Howden Insurance, Tesco Insurance and a 10-year extension with National Highways.

I like this part of the story because it adds diversification. ZIGUP is not just a rental fleet owner – it also manages incidents, repairs and related services. That broad platform can help smooth earnings when one area, like vehicle disposals, becomes less favourable.

Cash flow inflection is encouraging, but ZIGUP net debt still needs watching

The company is right to make a big deal of steady state cash generation improving to £95.7 million. After years of heavy fleet replacement, this suggests the business is moving into a more cash-generative phase. That supports the FY2028 target of generating more than £200 million in steady state cash.

But investors should not ignore the other side of the ledger. Free cash flow was still an outflow of £74.7 million, worse than the £58.1 million outflow last year, because ZIGUP spent heavily on growth capex of £132.4 million. Net debt rose to £999.3 million and leverage increased to 1.9x from 1.8x.

That leverage level is still within the company’s stated 1x to 2x operating range, so this is not flashing red. Even so, when debt is nudging £1 billion, it becomes a number worth respecting. Especially with net finance costs up £5.3 million to £40.4 million.

Exceptional costs and lower EPS take some shine off the ZIGUP full year performance

There were also some chunky exceptional costs. ZIGUP booked £26.8 million, including £22.3 million related to exiting NewLaw personal injury claims, £3.4 million from closing ChargedEV, and £1.2 million of UK&I simplification costs.

Those moves may improve future profitability, but they still hit this year’s reported numbers. Reported profit before tax was only slightly higher at £102.0 million, while underlying EPS fell 9.2% to 53.1p and reported EPS dropped 5.3% to 33.7p.

So this is not a perfect set of results. Core trading improved, but earnings per share went backwards and return on capital employed fell to 11.2% from 12.6%.

ZIGUP outlook for FY2027 looks confident and the dividend kept moving higher

The company sounds upbeat on FY2027. It expects vehicles on hire growth in both geographies, sees a good pipeline in FMG, and says it is positioned to deliver growth in line with market expectations for adjusted PBT of £162.9 million to £170.0 million.

The UK&I simplification is another key piece. Northgate Mobility launched on 1 May 2026, and management still expects a £20 million run-rate of annualised savings by FY2028. If those savings come through without disrupting service, that should help margins.

Shareholders also get a slightly higher payout. The proposed final dividend is 18.2p, taking the full-year total to 27.0p, up from 26.4p. It is not a huge increase, but it shows confidence.

What ZIGUP shareholders should take away from these annual results

• Positive: Core profit performance improved meaningfully, with underlying EBIT excluding disposal profits up 9.7%.
• Positive: Cash generation improved sharply, suggesting the fleet replacement drag is easing.
• Positive: Spain remains a standout growth business and Claims & Services is adding resilience.
• Negative: EPS fell, disposal profits normalised, and free cash flow remained negative.
• Negative: Net debt rose to £999.3 million, which is manageable but not something to shrug off.

My view is that this is a good operational update wrapped inside a slightly awkward earnings presentation. If you focus on the quality of the underlying business, there is clear progress here. If you focus on statutory profit, EPS and debt, it looks less exciting.

For long-term retail investors, the big question is whether ZIGUP can turn this year’s cash flow inflexion into sustained deleveraging while still growing Spain and improving UK&I returns. If it can, these results may end up looking like an important turning point.