Franchise Brands PLC - Trading and dividend update, notice of AGM
Trading update, posting of Annual Report, notice of AGM and dividend update
However, like many others, our business has been impacted by the effects of the COVID-19 pandemic, and the evolving Government guidelines and interventions. We are continuing to model a range of scenarios and mitigating actions to understand the potential impact on sales, profit and cashflow. Whilst we are confident that the post-pandemic future of the business remains strong, trading in the near term is likely to be impacted by the effects of the pandemic.
In this context, the Board's objective is to ensure that the Group is as well placed as possible to resume normal trading once the Covid-19 situation has abated, and we have taken a number of proactive steps to ensure the business remains resilient during this period, as set out in the divisional commentary below.
Our B2B division, which comprises Metro Rod, Metro Plumb and Willow Pumps, provides a "Water in. Waste out" range of national drainage, plumbing and pump services to the commercial market. On a pro-forma basis, had Willow Pumps been part of the Group for a full twelve months in 2019, this division would have contributed 67% of Adjusted EBITDA (excluding group overheads).
Most of the services provided by this division have been designated by the Government as essential services to ensure the smooth running of public utilities and other key businesses. Therefore, we and our franchisees have the legal flexibility to remain trading as normal. However, the health and safety of our people, our customers and the public remains our top priority. This is particularly the case in respect of our engineers who continue to be active in the community, and the priority to keep them safe and well may limit the scope of work we are able to undertake in the current environment, particularly if personal protection equipment ("PPE") becomes difficult to source.
As it currently stands, all three B2B businesses are operating as usual and we are focused on serving critical establishments so they can continue to deliver vital public services. Our B2B division has nearly 450 engineers across almost 50 depots nationwide, so the wide geographical spread and large workforce provides a high degree of resilience to the impact of the pandemic in one particular area.
On the basis of current Government guidelines, the Board expects that Metro Rod, Metro Plumb and Willow Pumps will continue to operate and serve our customers throughout the course of the Covid-19 crisis. However, volumes will be lower than normal as a result of the disruption to the businesses of a number of our commercial customers, particularly in the hospitality and retail sectors. We are, therefore, reducing our overheads in line with the expected revenue reduction by furloughing staff, agreeing pay cuts and reducing other overheads. This has allowed us to reduce some of the fees charged to franchisees to help ensure their viability through this crisis. We expect these measures to result in the B2B division continuing to trade profitably, albeit at a lower level than originally anticipated.
Our B2C division, which comprises
Additional cost saving measures and outlook
Both our B2B and B2C divisions intend to make use of the Government's Coronavirus Job Retention Scheme. Remaining higher paid staff (with the exception of our engineers) will be asked to take a pay-cut of up to 20%. In addition, the Board has collectively reduced their salaries by around 50%, which will account for two-thirds of the overall savings being achieved by pay cuts. Other key cost saving measures include a significant reduction in marketing spend and the temporary suspension of IT developments not directly related to working capital management.
Following strong trading in the first quarter, continued profitable operation of the B2B division, albeit at a lower level than originally anticipated, and cash-flow breakeven trading of the B2C division is expected to enable the Group to remain profitable over the year as a whole. This further assumes that Government regulations do not become even tighter, key staff remain fit and healthy, it remains safe for our engineers to continue working and we do not suffer from an abnormal level of bad debts. We will provide a further Trading Update at the forthcoming AGM.
Posting of Annual Report, Notice of AGM and dividend update
The Company has posted to shareholders its annual report and accounts for the year ended
The Company has also written to its shareholders regarding the proposed final dividend of
A scrip dividend is a dividend which is payable to shareholders in the form of new ordinary shares in the Company ("Scrip Shares") rather than in cash. The number of new ordinary shares which will be issued instead of the cash dividend will be calculated according to the following formula:
(Number of ordinary shares held at the dividend record date X 0.65p) ÷ Scrip Reference Price
The Scrip Reference Price is
A circular setting out full details of the scrip dividend will be posted to shareholders later this week and will be available immediately thereafter on the Company's website www.franchisebrands.co.uk/investor-relations/.
Further, the revised dividend timetable is set out below:
| || |
Annual General Meeting
| || |
| || |
| || |
Final date and time for receipt of elections to receive the scrip dividend alternative
| || |
Payment of Dividend, issue and admission to AIM of Scrip Shares
"Like all business,
"We do expect to remain profitable overall, albeit at lower levels than originally anticipated. We have a robust balance sheet, which, in combination with the utilisation of the various government schemes, will enable us to support our people and franchisees during this challenging period. Once the current necessary restrictions are lifted, we hope this will also position our business well to recommence its previous growth path."
"Metro Rod, Metro Plumb and Willow Pumps, with almost 450 engineers operating from nearly 50 depots around the
| || |
+ 44 (0) 1625-813231
| || |
| || |
Allenby Capital Limited (Nominated Adviser and Joint Broker)
+44 (0) 203 328 5656
| || |
Dowgate Capital Limited (Joint Broker)
+44 (0) 203 903 7715
| || |
MHP Communications (Financial PR)
+44 (0) 203 128 8100
| || |
The Group is organised into a B2B division comprised of Metro Rod, Metro Plumb and Willow Pumps, and a B2C division incorporates
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 125 years.
For further information, visit www.franchisebrands.co.uk.
This information is provided by RNS, the news service of the
Quick facts: Franchise Brands PLC
Market Cap: £102.8 m
NO INVESTMENT ADVICE
The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...FOR OUR FULL DISCLAIMER CLICK HERE