TIDMFRAN
RNS Number : 3084L
Franchise Brands PLC
12 January 2021
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the
publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
12 January 2021
FRANCHISE BRANDS PLC
("Franchise Brands", "the Group" or "the Company")
Trading Update and Notice of Full Year Results
The Board of Franchise Brands plc (AIM: FRAN), a multi-brand
franchise business, is pleased to provide the following trading
update for the year ended 31 December 2020.
The Board expects the Group's revenue, adjusted EBITDA, and
adjusted EPS for the year ended 31 December 2020 to be ahead of
consensus market expectations*.
This resilient performance has been driven by strong trading in
the first quarter, early and decisive action taken at the start of
the Spring lockdown to reduce costs, and a strong recovery in the
second half of the year across most of the businesses. Although we
start 2021 with further restrictions that will impact our business,
we are now well practiced at how to mitigate the impact by
protecting our people, controlling costs and continuing to serve
our customers where it is safe to do so.
Our B2B division, which comprises Metro Rod, Metro Plumb, and
Willow Pumps, provides a "Water In. Waste Out" range of drainage,
plumbing and pumps services to commercial and domestic customers
across the whole of the UK. Most of these services have been
designated by the Government as essential and continued to operate
throughout the lockdowns. At the height of the Spring lockdown, the
B2B division saw a year-on-year decrease in sales of up to 30%, but
these businesses recovered strongly from June onwards as many of
our customers resumed normal trading.
Our B2C division demonstrated the robust nature of our franchise
business model that is primarily based on franchisees paying a
fixed monthly fee (rather than a turnover-related fee as in our B2B
franchise businesses). Although closed during the Spring lockdown,
ChipsAway and Ovenclean, which in aggregate generated nearly 90 per
cent. of the divisional income in 2019, quickly returned to
pre-COVID-19 levels of trading following the end of this
period.
Considering the background, franchise recruitment in the B2C
division was robust in 2020 and accelerated in the second half of
the year with 31 new franchisees joining (H2 2019: 27), resulting
in 58 new recruits for the year (2019: 61). However, given the
trading difficulties experienced by some B2C franchisees, mainly in
the Barking Mad network, there has been a reduction in the total
number of franchisees in the B2C network at the year end to 386
from 404 at the end of 2019.
The cash generative nature of the Group's businesses, combined
with the proceeds from the April share placing, meant the Group
finished the year with gross cash of GBP13.2m (2019: GBP2.9m). The
Group has GBP7m of unutilised debt facilities, giving it over
GBP20m of cash and available facilities at 31 December 2020 (2019:
GBP5.7m). This balance sheet strength and high level of liquidity
puts the Group in a strong position to support its franchisees,
invest in the business, support our dividend policy, and take
advantage of acquisition opportunities.
Notice of results
The final results for the year ended 31 December 2020 are
expected to be announced on 4 March 2021 and the Board looks
forward to updating shareholders with further details at that
time.
Stephen Hemsley, Executive Chairman of Franchise Brands,
commented:
"Against the backdrop of a challenging year, I am very pleased
by what has been achieved by our franchisees and team members, but
I would like to particularly acknowledge and thank all our
engineers who continued to serve our customers throughout the
lockdowns. The entire team has continued to show their dedication,
determination and resourcefulness and are a credit to our
business.
"Although we start 2021 with further restrictions that will
impact our business, we are now well practiced at how to mitigate
the impact of these by protecting our people, controlling costs and
continuing to serve our customers where it is safe to do so. These
restrictions are temporary, and we are focussed on preparing the
business to take advantage of the recovery when they are lifted.
Therefore, we continue to progress all our development projects to
allow us to recover quickly and realise the considerable potential
of the business.
"I believe that we have the people, resources, and strategy to
thrive in the post-pandemic environment and look forward to the
future with confidence."
*Consensus market expectations for the financial year ended 31
December 2020 are as follows:
-- Revenue GBP48.6m
-- Adjusted EBITDA GBP6.1m
-- Adjusted EPS 3.87p
-- Dividend 0.95p
Enquiries:
Franchise Brands plc + 44 (0) 1625 813231
Stephen Hemsley, Executive Chairman
Chris Dent, Chief Financial Officer
Julia Choudhury, Corporate Development Director
Allenby Capital Limited (Nominated Adviser
and Joint Broker) +44 (0) 20 3328 5656
Jeremy Porter / Liz Kirchner (Corporate Finance)
Amrit Nahal (Sales and Corporate Broking)
Dowgate Capital Limited (Joint Broker) +44 (0) 20 3903 7715
James Serjeant / Colin Climie / Nicholas Chambers
MHP Communications (Financial PR) +44 (0) 20 3128 8100
Katie Hunt +44 (0) 7884 494112
franchisebrands@mhpc.com
About Franchise Brands plc
Franchise Brands is focused on building market-leading
businesses in selected customer segments using primarily a
franchise model. The Group currently has a combined network of over
425 franchisees across five principal franchise brands. Our focus
is on established brands which can benefit from our shared support
services, specialist sector expertise, management experience and
group resources.
The Group is organised into a B2B division comprised of Metro
Rod, Metro Plumb, and Willow Pumps, and a B2C division that
incorporates ChipsAway, Ovenclean and Barking Mad. This divisional
organisation of our brands is designed to provide a greater focus
and structure to support the strategic development of our B2B and
B2C brands.
Each of our brands are leaders in their respective markets and
each brand has a long trading history. The combined trading history
of all the Group's brands is over 135 years.
Franchise Brands plc employs some 250 people across three
principal locations in Macclesfield, Kidderminster and
Aylesford.
For further information, visit www.franchisebrands.co.uk.
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END
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