Franchise Brands Share News (FRAN)

(Sharecast News) - Franchise Brands reported robust final results for the year ended 31 December on Thursday, with record system sales and improved profitability amid a challenging macroeconomic environment.

The AIM-traded firm said system sales climbed 20% to £418.5m, while statutory revenue increased 15% to £139.2m.

Adjusted EBITDA rose 16% to £35.1m, and adjusted profit before tax grew 8% to £21.3m, with profit before tax surging 86% to £9.2m.

Earnings per share also improved, with adjusted earnings per share increasing 2% to 8.59p and basic earnings more than doubling to 3.78p per share.

The group further strengthened its balance sheet by reducing adjusted net debt to £65.1m from £74.7m and lowering leverage from 2.5x to 1.9x, while its cash conversion rate improved to 94% from 80%.

A final dividend of 1.3p per share was proposed, bringing the total dividend for the year to 2.4p per share, an increase of 9% compared to the previous year.

Operationally, Franchise Brands said it benefited from resilient underlying demand for its essential services, achieving record system sales across its key divisions.

The group launched its 'One Franchise Brands' strategic initiative to drive integration, enhance sales, and create a more efficient overhead structure, while a refreshed leadership team - with the appointment of a new chief executive officer, the separation of roles with the executive chairman, and new appointments including CFO, COO, group finance director, and an independent non-executive director - had been established to support its strategy.

Looking ahead, the group said it was optimistic about benefiting from a potential uptick in discretionary spend across international markets, while focusing on cost efficiencies and a robust cash generation profile that should enable leverage to fall below 1.5x by the end of 2025, supporting performance in line with market expectations for the next full year.

"The group achieved record System sales in all key divisions and a creditable adjusted EBITDA outturn for the year, despite ongoing challenging macroeconomic conditions in many of our key markets," said executive chairman Stephen Hemsley.

"This is a testament to the strength and resilience of the Franchise Brands business model and international diversification of our market-leading brands.

"Our essential services and diverse geographies provide a resilient base from which we are driving opportunities through our 'One Franchise Brands' strategic initiative, whilst growing our small share of large, fragmented, markets to position us well for recovery in our markets."

Hemsley said that as the company accelerated the pace of integration of the group's businesses, it would drive operational gearing by maximising sales opportunities while leveraging an efficient structure, on an enhanced IT platform.

"We are confident that we have the strengthened leadership team in place to unlock the significant opportunities ahead."

At 1113 GMT, shares in Franchise Brands were up 1.9% at 139.6p.

Reporting by Josh White for Sharecast.com.