REG - Franchise Brands PLC - AGM Statement and Trading Update

Franchise BrandsAnnouncement

18/04/2023 07:00

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RNS Number : 5046W  Franchise Brands PLC  18 April 2023

18 April 2023

 

Franchise Brands plc

("Franchise Brands" or the "Group")

 

AGM Statement and Q1 Trading Update

 

Strong momentum continued in Q1 2023

 
 

Announcement of transformational acquisition of Pirtek Europe

 

Franchise Brands plc (AIM: FRAN), an international multi-brand franchise
business, will hold its Annual General Meeting today at 11.00am, at
which Stephen Hemsley, Executive Chairman, will provide the following update:

 

"As reported in our annual results, the excellent momentum in the B2B Division
that was a feature of 2022 has continued. Metro Rod experienced strong growth
in system sales, achieving record levels in Q1. The integration of Filta UK
within this division continues with the combined objectives of improving
customer service and reducing costs in the medium term. The defensive, mainly
essential services provided by this division have proved resilient despite the
current macro-economic uncertainties.

 

"Filta in North America has continued to perform robustly in Q1 with franchise
and equipment sales driving growth. Revenue from the sale of used cooking oil
for biodiesel production was in line with expectations, with increased volumes
compensating for the anticipated lower price of used oil. The outlook for used
oil revenues remains unchanged. The FiltaMax expansion strategy is gathering
momentum, underpinning our confidence in the continued growth of Filta in
North America.

 

"As expected, franchisee recruitment in the B2C division has improved in Q1
compared to Q4 2022. ChipsAway, the largest brand in the division, is now
back to the same level as achieved in Q1 2022.  The level of attrition has
also reduced to below the five-year average. However, as anticipated, the loss
of franchisees in 2022 and increased overheads generally have impacted
income in Q1 2023.

 

"On 3 April 2023, Franchise Brands announced the proposed transformational
acquisition of Hydraulic Authority I Limited, the owner of Pirtek Europe, the
leading European provider of on-site hydraulic hose replacement and associated
services, for a consideration of £200 million, plus a working capital
adjustment of £12.2m. Subject to shareholder approval at the General Meeting
on 20 April, the acquisition is expected to complete on 21 April.

 

"Pirtek Europe provides a mission-critical, emergency response service to a
diverse portfolio of customers, principally via a network of 70 franchisees.
The business has 213 service centres and 838 mobile service vehicles in eight
countries - the UK, Republic of Ireland, Germany, France, Austria, Belgium,
Sweden and the Netherlands. Pirtek Europe has a royalty-free, indefinite
Master Franchise Licence Agreement in respect of 16 countries in Europe, so
has significant opportunities for expansion.

 

"The acquisition of Pirtek Europe, which will expand the Group's operations
into ten countries, will significantly advance the Board's ambition of
creating a market-leading international B2B multi-brand franchisor that
generates its income equally from the UK, North America and
continental Europe. It also provides a low-cost platform from which to launch
the Group's current brands into new markets and the opportunity to further
leverage central services efficiently, principally in the areas of technology,
marketing and finance. The acquisition is expected to be immediately earnings
accretive.

 

"In conclusion, the existing Group has had a good start to 2023. The
acquisition of Pirtek Europe will further transform the Group by diversifying
the range of emergency response services provided and our geographical reach
and customer base. This will provide greater resilience to earnings and
provide a platform for the acceleration in the growth of our business. We,
therefore, look forward to the rest of 2023 and beyond with great confidence."

 

 

Enquiries:

 

 Franchise Brands plc                                           + 44 (0) 162 550 7910
 Stephen Hemsley, Executive Chairman
 Andrew Mallows, Interim Chief Financial Officer
 Julia Choudhury, Corporate Development Director

 Allenby Capital Limited (Nominated Adviser and Joint Broker)   +44 (0) 20 3328 5656
 Jeremy Porter / George Payne (Corporate Finance)

 Amrit Nahal (Sales & Corporate Broking)

 Dowgate Capital Limited (Joint Broker)                         +44 (0) 20 3903 7715
 James Serjeant / Russell Cook / Nicholas Chambers

 Stifel Nicolaus Europe Limited (Joint Broker)                  +44 (0)20 7710 7688
 Matthew Blawat / Francis North

 MHP Group (Financial PR)                                       +44 (0) 20 3128 8100
 Katie Hunt / Catherine Chapman                                 +44 (0) 7884 494112
                                                                franchisebrands@mhpgroup.com (mailto:franchisebrands@mhpgroup.com)

 

About Franchise Brands plc

 

Franchise Brands is an international, multi-brand franchisor focused on
building market-leading businesses primarily via a franchise model. The Group
currently has a combined network of 586 franchisees across six principal
franchise brands in the UK, North America and Europe.

Franchise Brands' focus is on B2B van-based reactive and planned services.
The Company owns several market-leading brands with a long trading history
which benefit from the Group's central support services, in particular
technology, marketing, management experience and other group resources. At the
centre of Franchise Brands' business building strategy is helping its
franchisees grow their businesses.

Franchise Brands employs 415 people from 5 principal offices in
the UK, Orlando, Florida and the Netherlands.

For further information, visit www.franchisebrands.co.uk
(http://www.franchisebrands.co.uk/)

 

 

 

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