Zigup (LSE:ZIG), the integrated vehicle hire and fleet management platform, reported underlying earnings before interest and tax (EBIT) excluding disposal profits up 9.7% for the full year ended 30 April, with the standout development being a near-sixfold jump in steady-state cash generation to £95.7m from £16.7m in the prior year.
Underlying revenue rose 5.2%, driven by vehicle hire revenue growth of 9.8%, while underlying profit before tax came in at £160.1m, down 4.1% as disposal profits continued to normalise on reduced sale volumes and lower UK&I profit-per-unit figures; net finance costs also rose £5.3m to fund fleet expansion.
Reported pre-tax profit was £102m after £26.8m of exceptional charges, covering the exit of Charged EV and NewLaw, alongside a £13.9m unwind of a 2022 depreciation adjustment and £1.2m of one-off UK&I simplification costs.
Spain was the performance highlight, with vehicle hire revenue up 16.2% and fleet at record levels; UK&I vehicle hire revenue grew 5.2% through product mix and pricing actions, with rental margins of 19.3% and 16.0% respectively across the two geographies.
Group fleet reached over 139,400 vehicles, up 5.9% year-on-year, with growth capex of £132.4m deployed across both markets.
"The positive inflexion in steady state cash generation underlines the characteristics of the business model," said chief executive Martin Ward, adding that the group remains on track to generate in excess of £200m in steady-state cash in the financial year ending April 2028.
For full-year 2027, Zigup said it is confident in outlook with vehicles on hire (VOH) growth expected in both geographies and profit growth "in line with market expectations," with analyst consensus for adjusted pre-tax profit ranging from £162.9m to £170m.
Panmure Liberum reiterates Buy on ZIGUP at 625p target
Panmure Liberum analyst Andy Smith says the investment case for ZIGUP is becoming clearer as the quality of earnings has improved and core EBIT rose 23% excluding lower vehicle disposal profits.
The broker repeated a BUY rating, and a 625p target, highlighting a FY27E adjusted PBT forecast of £170.6m (c8% growth) and a FY27E PE of 8.0x with a c6% dividend yield.
Smith also flagged operational positives including VoH growth in Spain and UK&I, contract wins in Claims & Services, a £20m UK simplification saving target and the 521p share award hurdle aligning ExCo with investors.
