LONDON (ShareCast) - (Sharecast News) - Multi-brand franchisor Franchise Brands reported a 19% improvement in revenue to £20.1m in its half-year results on Tuesday.
The AIM-traded firm said its fee and direct labour income increased 25% year-on-year for the six months ended 30 June, to £10.6m.

Its adjusted EBITDA was ahead 25% at £2.5m, while its profit before tax increased 27% to £1.8m.

Statutory profit after tax was 23% higher at £1.4m.

The company sadi its net debt stood at £5.4m as at 30 June, narrowing from £5.9m on 31 December, with its balance sheet gearing being 21%, down from 24% at the end of 2018.

Basic earnings per share improved 24% to 1.84p, while adjusted earnings per share were 22% higher at 2.06p.

An interim dividend of 0.30p per share was declared, which was 43% more than that paid at the half year in 2018, and was 6.1 times covered by profit after tax.

On the operational front, Franchise Brands said the 'Vision 2023' strategy at its Metro Rod brand was delivering increasingly tangible benefits, with system sales growing 15%, and 83% of the network being in growth, with 39% of franchisees growing at over 20% year-on-year.

Local sales in the division had grown 19%.

The board also reported "excellent" progress in the development of new business systems, with the roll-out of a quotation system for additional works, the implementation of a finance system and the trial of a works management system all taking place.

It also saw "substantial" improvement in franchise recruitment at its ChipsAway, Ovenclean and Barking Mad brands compared to the second half of 2018, with 34 new franchisees recruited in its consumer-facing businesses.

The company successfully launched ChipsAway's pilot 'Car Care Centre', incorporating the technology required to repair and recalibrate cars fitted with advanced driver assistance systems.

It also installed new management at Barking Mad, which the board said resulted in a "deeper integration" with the group, and increased efficiencies.

"Franchise Brands has delivered a strong performance in the first half of 2019 driven primarily by Metro Rod's accelerating rate of growth," said executive chairman Stephen Hemsley.

"We have made significant progress with our strategy at Metro Rod and have begun to realise the benefits of our investment in infrastructure - in particular IT - that is starting to unlock sales growth, efficiencies and improved customer service, enhancing both corporate and franchisee profitability."

Hemsley said all of its profitable, cash generative consumer-facing brands had seen a substantial improvement in franchise recruitment compared to the challenging second half of last year, with ChipsAway said to be increasingly well-positioned for the rapid changes underway in the automotive sector, in particular in relation to advanced driver assistance systems and the growth of electric and hybrid vehicles.

"The outlook for the group therefore remains very positive, with the combination of accelerating organic growth and the potential for prudently financed, earnings-enhancing complementary acquisition opportunities giving us the confidence of delivering further significant growth in earnings and dividends in the current year and beyond."

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