Franchise Brands shares up after solid end to year

Multi-brand franchising group Franchise Brands updated the market on its trading for the year ended 31 December on Wednesday, reporting that it was expecting revenue and profits to be at least in line with consensus market expectations, which would represent significant growth over the prior year.

The AIM-traded firm said that strong performance was driven by accelerating year-on-year momentum in the top-line growth generated by its “excellent” Metro Rod franchisees, which resulted in system sales growth of 14% in the year, up from 10% in 2018.

Willow Pumps, which was acquired in October, was trading in line with the board's expectations, with Franchise Brands saying the integration of the business was progressing well.

The board said it was “delighted” that the Metro Rod network had already begun to embrace the “significant” opportunities afforded by that acquisition in the specialist pump sector.

During November and December, Willow Pumps hosted the Metro Rod network at a series of 'discovery days', which provided a forum to discuss the strategic opportunities and practical ways in which the network could develop its expertise to offer a full range of drainage, pumps and plumbing-related services.

The company’s business-to-consumer brands, being ChipsAway, Ovenclean and Barking Mad, continued to be “strongly” cash-generative, and achieved a “pleasing” upturn in recruitment in 2019, bringing in 65 new franchisees in the 12 months, up from 57.

That, the directors said, had taken the total number of UK franchisees in the businesses to 404, from 387.

The board also reported that trading in 2020 had started well, with job intake at Metro Rod and Willow Pumps up on the same period in 2019, alongside a “strong start” to the year for franchisee recruitment in the business-to-consumer 0brands.

“The group has delivered a strong performance in 2019, which, in combination with the recent acquisition of Willow Pumps, leaves us confident about the prospects for Franchise Brands as we enter 2020,” said executive chairman Stephen Hemsley.

“The addition of Willow Pumps to the Group represented an important step in expanding Metro Rod's scope of services to the commercial market, consistent with our Vision 2023 strategy.

“Longer-term, the group has a significant opportunity to provide a ‘water in, waste out’ range of drainage, pumps and plumbing-related services on a national basis.”

Hemsley said he was “delighted” with the success of the Willow Pumps 'discovery days' at the end of 2019, that provided both focus and impetus for the Metro Rod franchise network to grow their above-ground and below-ground pump capabilities.

“We look forward to an exciting year ahead.”

Franchise Brands said its full results for the year ended 31 December were expected to be announced on 5 March.

At 1528 GMT, shares in Franchise Brands were up 6.06% at 127.8p.