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Franchise Brands on the prowl for acquisitions

"2018 has been a period of significant change for the team at Franchise Brands as we have integrated Metro Rod and further developed our shared support services of IT, finance, marketing and franchisee recruitment," said executive chairman, Stephen Hemsley

Man in a drain
"With the integration of Metro Rod now complete we can begin to turn our attention to acquisition opportunities"

The multi-brand franchisor, Franchise Brands PLC (LON:FRAN), is looking forward to the year with confidence after making a strong start to the year.

The company behind franchise brands ChipsAway and Metro Rod said it was looking for more acquisition opportunities now that the integration of Metro Rod is complete.

READ: Franchise Brands reinvigorates the Metro Rod franchise

2019 has started encouragingly, with a good trading performance across the networks in the first two months of the year and order intake at Metro Rod ahead of 2018. The level of franchise enquiries at ChipsAway, Ovenclean and Barking Mad is also significantly ahead of last year, the group revealed.

Franchise Brands reported a 43% increase in revenue to £35.5mln in 2018 from £24.9mln in 2017.

Fee income increased by 41% to £17.9mln from £12.7mln the year before.

Adjusted profit before tax, which strips out what the company considers to be exceptional items, surged 36% to £2.9mln from £2.1mln the year before, while statutory profit before tax turned positive at £2.3mln versus a loss in 2017 of £0.1mln.

Cash generated from operations shot up to £2.9mln from £0.7mln in 2017. Net debt at the end of the year had narrowed to £5.0mln from £6.3mln at the end of 2017.

Dividend rises

Shareholders have been rewarded with a 34% increase in the total dividend for the year (0.67p, up from 0.5p the year before) after the final dividend was whacked up to 0.46p from 0.33p the previous year.

“The investment we have made in Metro Rod to support our Vision 2023 strategy is beginning to deliver tangible benefits which I expect to become increasingly more visible in the current year and beyond as we continue to unlock the clear potential for the business,” said Stephen Hemsley, the executive chairman.

“We will consider the selective acquisition of reasonably valued and earnings enhancing franchise businesses that can leverage our core functions, and complementary drainage and plumbing businesses which expand our scope of works," he added.

Shares in Franchise Brands opened 6.6% higher at 72.5p.

Quick facts: Franchise Brands PLC

Price: 92.5 GBX

Market: AIM
Market Cap: £88.54 m

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