Shares in Franchise Brands (FRAN:AIM) rallied after the multi-brand franchisor delivered resilient FY25 results.
The company also launched a £10 million buyback to reflect debt reduction progress and management’s confidence in the group’s prospects.
Franchise Brands said it is ‘actively reviewing the strategic fit’ of businesses that do not support the ‘considerable’ potential of its key franchise networks. Any disposal proceeds would be used to accelerate balance sheet deleveraging.
Led by CEO Peter Molloy, Franchise Brands also stressed it has ‘no current intention’ to transfer its listing to the Main Market. This addressed a key concern among AIM-focused investors.
Essential services
Franchise Brands owns several well-established and market-leading brands including Pirtek in Europe, Metro Rod and Metro Plumb and also Filta International. In the face of tough market conditions, the Macclesfield-based business delivered robust FY25 results that reflected the essential nature of the bulk of its services.
Revenue rose 2% to £142.2 million, driven by a strong performance from Filta International. Adjusted pre-tax profits ticked up 12% to £23.9 million thanks to self-help initiatives and a boost from lower interest costs.
Net debt reduced from £65.1 million to £55.6 million as the cash generative nature of the franchise model shone through once again.
Turning to the FY26 outlook, executive chairman Stephen Hemsley said: ‘While we are mindful of the geopolitical backdrop, the board continues to expect a full year performance within the current range of analyst forecasts.’
What the analysts are saying
Cavendish has a ‘buy’ rating and 163p price target for Franchise Brands. The broker said: ‘Early trading in FY26 has continued to be varied but outperformed against our FY25 forecasts enabling us to upgrade FY26E and FY27E earnings per share (EPS) by 3%.
‘Initiatives to expand revenue streams, develop group-wide sales and drive efficiency position the group well for an improvement in its markets.’
Allenby Capital commented: ‘Once again, Franchise Brands delivered solid results in market conditions that have tested management at all levels. We are pleased to say that those challenges were met, with the result being another record year for system sales and pre-tax profits.
‘At the same time the group has generated strong cash flows, reduced net debt, increased the total dividend for the year and bought back £2 millionof shares. In our opinion, the group remains seriously undervalued and exceptionally well placed to benefit strongly from any upturn in its markets.’
Read the press release here: https://franchisebrands.co.uk/investor-information/
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