A strong performance, driven by accelerating Metro Rod system sales and acquisition of Willow Pumps

Franchise Brands plc, a multi-brand franchise business, is pleased to announce its full year audited results for the year ended 31 December 2019.

Financial highlights

• Revenue increased by 24% to £44.0m (2018: £35.5m).
• Fee and direct labour income increased by 35% to £24.4m (2018: £18.1m).
• Adjusted EBITDA* increased by 29% to £5.2m (2018: £4.0m). • Statutory profit after tax increased by 17% to £2.7m (2018: £2.3m).
• Cash conversion rate against Adjusted EBITDA of 90% (2018: 79%).
• Adjusted net debt** of £9.2m at 31 December 2019 (2018: £5.0m), after the £4m initial cash consideration for Willow Pumps.
•  Basic EPS increased by 16% to 3.48p (2018: 2.99p).
• Adjusted EPS*** increased by 29% to 4.34p (2018: 3.36p).
• Final dividend of 0.65p per share proposed (2018: 0.46p per share), giving a 42% increase in the total dividend for the year of 0.95p per share (2017: 0.67p per share), 4.6 times covered by adjusted profit after tax (2018: 5.0x).

*Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, the share-based payment expense, and acquisition-related costs.
** Adjusted net debt is net debt before the effect of IFRS 16.
*** Adjusted EPS is earnings per share before amortisation of acquired intangibles, the share-based payment expense, and acquisition-related costs.

Operational highlights

• Metro Rod’s Vision 2023 strategy continues to drive our organic growth:
  • System sales growth accelerated to 14% in 2019 (2018: 8%).
  • 45% of franchisees achieved annual sales above £1m (2018: 34%).
  • Over 30% of franchisees have grown their sales by over 20% in 2019 (2018: 22% of franchisees).
  • Continued investment in capacity, including 44 additional vehicles and 55 additional engineers.
  • Launch of our ITOL-accredited apprenticeship scheme to support the long-term increase in capacity.
• Acquisition of Willow Pumps and integration into the Group to create a business-to-business (“B2B”) division with Metro Rod and Metro Plumb. 
  • Willow Pumps trading exceeded our expectations in its first three months of ownership.
  • The Willow Pumps Discovery Days have successfully introduced the franchisees to the substantial opportunities in the pumps sector that will allow them to expand their range of “Water in. Waste out.” services.
• Creation of a business-to-consumer (“B2C”) division, under one management team, to facilitate future acquisitions and maximise overhead efficiency.
  • Improved franchise recruitment to 65 (2018: 57) growing the combined B2C networks to 404 franchisees (2018: 387 franchisees).
  • Continued strong cash generation from the B2C brands.

Stephen Hemsley, Executive Chairman, commented: “2019 has seen us successfully build the business both organically and by acquisition, with an acceleration in system sales growth at Metro Rod and Metro Plumb, and a recovery in franchise recruitment in the newly formed B2C division, complemented by the acquisition of Willow Pumps which has expanded Metro Rod’s range of services.

“Trading in 2020 has started well, with job intake at Metro Rod, Metro Plumb and Willow Pumps up on the same period in 2019 and a strong start to the year for franchisee recruitment in the B2C division.

“Whilst we have not yet seen any impact from the Covid-19 virus, we will continue to monitor the situation over the coming weeks. We have put in place plans which seek to mitigate any impact that the virus may have on our employees, franchisees, customers and suppliers.

“Overall, we look forward to 2020 with considerable confidence given the Group’s strong start to the current year and the clear opportunities for growth we see across both our B2B and B2C divisions, particularly as we increasingly realise the benefits of our Vision 2023 strategy and our investment in new capabilities, capacity and a broader range of services at Metro Rod.” 

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