Franchise Brands PLC (AIM:FRAN) hiked its dividend by 33% as its revenue and profit both increased by more than 70% last year, with good momentum seen into the new year.
Following a strategic review, the company said it has decided to offer its B2C division for sale, with finnCap Cavendish appointed to seek a buyer. The division comprises ChipsAway, Ovenclean and Barking Mad.
Franchise Brands noted that the B2B businesses was continuing to enjoy positive progress on both sides of the Atlantic in 2023, with the review concluding there are “greater opportunities for the group for organic, acquisitive and international growth within the B2B franchise sector”.
Group revenue for 2022 came to £99.15mln, up 72% on the previous year, helped by the acquisition of Filta International last March.
The B2B division grew revenue by 34%, with Metro Rod and Metro Plumb system sales up 19% to a record £60mln, Willow Pumps rose 14% and a significant turnaround was reported at Filta UK.
Franchise Brands executive chairman Stephen Hemsley said the B2B momentum continued “as we capture the defensive growth opportunities afforded by the goup's mostly essential services, strong leadership positions in its chosen markets, and reputation for high quality, reliable services among its diversified client base”.
Underlying earnings (EBITDA) jumped 80% to £15.3mln and statutory profit before tax 78% to £10.3mln. Before the company's trading update in January, analysts had been forecasting sales of £98.75mln and EBITDA of £14.73mln.
Net cash increased to £8mln by the end of December 2022 from £6.5mln a year earlier and a final dividend of 1.1p per share will result in a total pay-out for the year of 2.0p, up from 1.5p a year ago, and 4.2 times covered by adjusted profit.
On the outlook, the company said there has been no noticeable impact from slowing economic growth or the rising cost of living.
Hemsley expressed confidence in expanding the business organically and through earnings-enhancing acquisitions.
“We have clear opportunities to grow our franchise businesses through further investment in sales and marketing, supporting franchisees to expand their services, and leveraging efficiency-enhancing technology.
“In addition, our focus on B2B franchise businesses provides a strong platform from which to seek selective acquisitions of van-based businesses that provide essential services, as we seek to expand our international footprint," he said in the results statement.