City round-up: Franchise Brands; SysGroup; K3 Business Technology

Stephen Hemsley

Macclesfield-based Franchise Brands, the multi-brand franchise business, said it saw a steady recovery in trading during the third quarter, in a trading update today.

While the environment is still uncertain, the board said it is confident of meeting current consensus market expectations for revenue and adjusted EBITDA for the year to December 31, 2020, of £48.6m in revenues and adjusted EBITDA of £6.1m

The business said quarter three saw a welcome recovery from the reduced levels of activity in quarter two and trading in October has continued to follow that trend.

If the ‘second wave’ COVID-19 restrictions persist for any length of time, or become tighter, or more widespread, this could have an impact on the group and reduce activity levels.

The group’s balance sheet and liquidity position remain strong as a result of the underlying profitability of the group and the cash generative nature of its businesses, combined with the proceeds from the April share placing.

This puts Franchise Brands in a strong position to support its franchisees and continue to invest in the business, and also provides the group with the ability to take advantage of any external growth opportunities that may arise.

Executive chairman, Stephen Hemsley, said: “I am very pleased that the group saw a return to more normal levels of trading during Q3.

“Our key priority remains the safety of our team members, particularly our engineers, customers and the public whilst continuing to provide the best possible service we can in a challenging environment.

“The resilience and resourcefulness of our people and franchisees is allowing us to navigate through these difficult times.

“The strength of the group provides a platform for organic and acquisitive growth as the economic environment recovers from the pandemic. I remain optimistic for the future growth and prosperity of Franchise Brands.”

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Adam Binks

SysGroup, the Liverpool-based managed IT services and cloud hosting provider, said first half revenues are expected to be broadly in line with the same period last year.

In a trading update for the half year ended September 30, it said adjusted EBITDA is expected to show an increase of at least 15%.

Cash conversion continues to be strong and the group ended the period with more than £1.0m of net cash, compared with net debt of £0.7m the same time last year, having made the final deferred consideration payment of £0.975m relating to the Certus IT acquisition during the period.

The company said it utilised the ability to defer a VAT payment, totalling £0.28m, which it intends to repay in full no later than March 31, 2021. No other government support schemes, such as the COVID Job Retention Scheme, have been used by the group.

Chief executive, Adam Binks, said: “The first half of the year shows the resilience of our business model and the mission critical nature of our services within our customer base, some of whom have been impacted by the COVID-19 pandemic.

“It also highlights both the importance and success of our focus over recent years on recurring revenue streams.

“Our staff remain committed to helping our customers navigate this difficult environment and their dedication has been exemplary.

“This performance has continued into the start of the second half of the year and we can expect a good outcome for the full year, although we remain cautious given the volatility of the economic landscape.”

SysGroup expects to publish its half year results for the six months ended September 30, 2020 on November 23.

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Salford software group K3 Business Technology, which provides mission‐critical business software, cloud solutions and managed services, has announced the appointment of Tom Crawford as non-executive chairman.

Jonathan Manley, who has been acting as interim chairman since February 2020, will assume his previous position as a non-executive director. These changes take immediate effect.

Tom, 52, has substantial experience of the software industry, both in the UK and internationally, including Europe and North America.

He has a successful track record of growing and developing product-based software businesses, and was, until January 2020, chief executive of Aptitude Software Group, the global financial management software company.

Before that, he led the expansion of a number of the group’s divisions.

The K3 board said it wishes to thank Jonathan for his guidance as chairman while this recruitment process was under way.

Jonathan Manley said: “We are delighted to welcome Tom to the board of K3 as chairman. He brings significant relevant experience and will be a tremendous asset as we drive the development of our flagship product, K3|imagine.”

Tom Crawford said: “I share the board’s view of the significant potential for K3|imagine to be a powerful platform for customers and for K3’s profitable growth as sales gain traction. I very much look forward to working with the board as we continue to develop new opportunities to realise the full potential of our exciting technology.”

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