Final Results for the Year 2018

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Franchise Brands plc (AIM: FRAN), an international multi-brand franchisor, is pleased to announce its full year audited results for the year ended 31 December 2018.

Chipsaway Franchise

Financial highlights

  • Revenue increased by 43% to £35.5m (2017: £24.9m)
  • Fee income increased by 41% to £17.9m (2017: £12.7m)
  • Adjusted EBITDA* increased by 37% to £3.7m (2017: £2.7m)
  • Adjusted profit before tax* grew by 36% to £2.9m (2017: £2.1m)
  • Statutory profit after tax increased to £2.3m (2017: loss £0.1m)
  • Cash generated from operations of £2.9m (2017: £0.7m)
  • Net debt** of £5.0m at 31 December 2018 (2017: £6.3m), with gearing of 20% (2017: 26%)
  • Adjusted basic EPS* increased by 21% to 3.00p (2017: 2.47p)
  • Basic EPS of 3.00p (2017: loss of 0.18p)
  • Final dividend of 0.46p per share proposed (2017: 0.33p per share), giving a 34% increase in the total dividend for the year to 0.67p per share (2017: 0.5p per share), 4.4 times covered by adjusted profit after tax (2017: 4.9x)

Operational highlights

  • Metro Rod’s “Vision 2023” strategy greeted with real engagement by the franchise network and the benefits are starting to be visible:
  1. Half of the Metro Rod network achieved double-digit like-for-like sales growth.
  2. System sales grew 10.2% on a pro-forma basis.
  3. Development of new business systems is progressing well and several have been rolled out to the franchisees. • Kemac outperformed due to a number of large one-off jobs.
  • Metro Plumb has continued to grow rapidly with system sales up 27%. First independent franchise launched.
  • ChipsAway continues to grow Management Service Fee income with 30% of the network now paying turnover related, as opposed to fixed, fees.
  • Franchisee recruitment in our B2C brands was more challenging with new franchisees recruited lower at 57 (2017: 80), and the total number of UK franchisees decreased by 2% to 428 (2017: 438).

Stephen Hemsley, Executive Chairman, commented: “Franchise Brands has made considerable progress in 2018. 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. 2019 has started encouragingly, with a good trading performance across the Group’s businesses in the first two months of the year and we, therefore, look forward to the year ahead with confidence”.

“With the integration of Metro Rod now complete we can begin to turn our attention to acquisition opportunities. We will consider the selective acquisition of reasonably valued and earnings enhancing franchise businesses that can 2 leverage our core functions, and complementary drainage and plumbing businesses which expand our scope of works.”

Chairman’s statement

2018 has been a year of consolidation and development following the April 2017 acquisition of Metro Rod. Our stated strategy has been to invest in our business systems, team members and franchisees to ensure that we can capitalise on the opportunities presented by the sectors in which we operate and provide a first-class customer experience. I am therefore pleased to report that this investment is beginning to deliver tangible benefits that I expect to become increasingly more visible in the current year and beyond.

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