Turnover surges threefold at Kidderminster-based Franchise Brands group

Underlying pre-tax profits for the group, which floated on the AIM small stock market last year, rose 38 per cent to £1million.

Revenue jumped threefold to £8.6 million, boosted by the £28.5m acquisition of Metro Rod in April. The franchise drainage business has more than 40 sites across the UK.

But exceptional costs from the AIM flotation and the takeover deal dragged statutory figures to a pre-tax loss of £237,000, compared to last year's £575,000 profit. Despite this, the company is paying shareholders a maiden interim dividend of 0.17p per share.

The company said its Metro Rod, Chips Away, Ovenclean and Barking Mad franchise operations were trading in-line with management expectations. But direct plumbing labour firm Kemac experienced 'disappointing' sales to its water utility customers. "Remedial action has been taken," said the group today.

The total number of UK franchisees across the group has risen to 443 from 320 last year.

Executive chairman Stephen Hemsley said: "Our principal existing brands have delivered strong growth, and in a relatively short space of time we have created a high quality portfolio of businesses with significant critical mass in the franchising sector.

"We are focused on maximising the earnings potential from all our brands, particularly with the recent acquisition of Metro Rod, where the medium-term upside potential is substantially better than our initial expectations, with the benefit of additional near term investment.

"I am hugely confident that the group will develop into a highly profitable and cash generative business enabling a progressive dividend policy."

He added: "In a relatively short space of time, we have created a high quality portfolio of businesses with significant critical mass in the franchising sector.

"We have also assembled an excellent and highly entrepreneurial team that can really drive it forward. This team has also made a considerable personal investment in the recent equity fundraisings, such that the board and senior management now own 64% of the equity of the enlarged group.

"I am hugely confident that following significant investment in infrastructure over the next couple of years we will have a highly profitable and cash generative business able to successfully take on still more challenges and grow into a substantial force in franchising."