LONDON (ShareCast) - (Sharecast News) - Multi-brand franchisor Franchise Brands reported a 43% improvement in its revenue in its full-year results on Wednesday, to £35.5m.
The AIM-traded firm said its fee income increased 41% in the year ended 31 December, to £17.9m, while its adjusted EBITDA was ahead 37% at £3.7m.

Adjusted profit before tax grew 36% to £2.9m, and on a statutory basis the company swung to a profit after tax of £2.3m, from a loss of £0.1m in 2017.

Cash generated from operations totalled £2.9m, compared to £0.7m a year earlier.

Net debt stood at £5.0m as at 31 December, narrowing from £6.3m year-on-year, with its gearing falling to 20% from 26%.

Adjusted basic earnings per share rose 21% to 3.00p, and basic earnings per share swung to 3.00p from losses of 0.18p.

The board proposed a final dividend of 0.46p per share, up from 0.33p a year earlier, giving a 34% increase in the total dividend for the year to 0.67p per share, rising from 0.5p per share.

It said its dividend was covered 4.4 times by adjusted profit after tax, compared to 4.9 times in 2017.

On the operational front, Franchise Brands siad Metro Rod's 'Vision 2023' strategy was greeted with "real engagement" by the franchise network, with its benefits are starting to be visible.

It said half of the Metro Rod network achieved double-digit like-for-like sales growth, with system sales growing 10.2% on a pro-forma basis.

The firm said the development of new business systems in Metro Rod was progressing well, with several having been rolled out to the franchisees.

Kemac outperformed due to a number of large one-off jobs, while Metro Plumb continued to grow "rapidly", with system sales up 27%, and the first independent franchise launched.

ChipsAway continued to grow management service fee income, with 30% of the network now paying turnover related, as opposed to fixed, fees.

Franchisee recruitment in Franchise Brands' business-to-consumer brands was said to have been more challenging, with new franchisees recruited lower at 57, from 80 in the prior year, and the total number of UK franchisees decreasing by 2% to 428.

"Franchise Brands has made considerable progress in 2018," said Franchise Brands executive chairman Stephen Hemsley.

"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."

Hemsley said with the integration of Metro Rod now complete, the company could begin to turn its attention to acquisition opportunities.

"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."

As at 1236 GMT, shares in Franchise Brands were up 8.65% at 73.88p.

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