REG - Franchise Brands PLC - AGM Statement and Trading Update

Franchise BrandsAnnouncement

18/07/2024 07:00

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RNS Number : 8358W  Franchise Brands PLC  18 July 2024

18 July 2024

FRANCHISE BRANDS PLC

("Franchise Brands", the "Group" or the "Company")

 

AGM Statement and Trading Update

 

Current trading in line with market expectations for 2024

 

Significant growth potential for principal franchise brands

 

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:

"The resilient underlying demand for the Group's essential reactive services
means that the business continues to perform in line with current market
expectations for 2024. This enables us to generate both the profitability and
the cash flow required to service and reduce the debt taken on to fund
the Pirtek Europe acquisition.

 

System sales in the first half of the year increased by 41% to £206m (2023:
£146m). On a like-for-like basis, system sales grew by 6% in the period in
our core franchise brands of Pirtek, Metro Rod/Metro Plumb and Filta, in local
currency and excluding used oil sales.

 

As indicated in the recent 2023 final results announcement, Filta
International's income from the sales of used cooking oil in the first half of
2024 was impacted by a 28% fall in the average price, which was only partially
compensated for by a 15% increase in volume in the period. As part of the
"FiltaMax" strategic growth initiatives, the range of services offered to our
commercial kitchen customer base is being expanded with the addition of new
bulk virgin oil sales and an eco-friendly kitchen cleaning service, which will
reduce the impact of used oil sales in the future.

 

As a predominantly franchised business, the Group is highly cash-generative,
and Adjusted net debt* at the end of the first half of 2024 is anticipated to
be below £70m. Based on current market expectations for 2024, this represents
a multiple of Adjusted net debt* to Adjusted EBITDA** of less than two times,
in line with the medium-term strategic model outlined at our Capital Markets
Day in February 2024.

 

The short-term operational focus of the business remains on integrating the
Group's businesses and repaying the Pirtek Europe acquisition debt. A
particular focus will be migrating the business onto a common IT platform that
will be managed centrally. We believe this will be key to unlocking the
benefits of operational gearing and will play a significant part in
underpinning future margin expansion.

 

We see significant growth potential for our principal franchise brands
of Pirtek, Metro Rod/Metro Plumb and Filta, which currently have small shares
of large markets, as we expand their range of services and geographical
penetration and cross-sell to our large customer base.

 

The Board confirms that the Group is trading within the range of current
market expectations for 2024 of Adjusted EBITDA** of £35.7m to £37.2m.

 

We will provide a further update to the market in our half-year financial
report, which is due to be published in September."

 

* Adjusted net debt is the key debt measure used for testing bank covenants
and excludes debt on right-of-use assets

 

**Adjusted EBITDA is earnings before interest, tax, depreciation,
amortisation, exchange differences, share-based payment expense, non-recurring
items.

 

 

 

Enquiries:

 

 Franchise Brands plc                                                    + 44 (0) 1625 813231
 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 / Liz Kirchner (Corporate Finance)

 Amrit Nahal / Joscelin Pinnington (Sales & Corporate Broking)

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

 Stifel Nicolaus Europe Limited (Joint Broker)                           +44 (0) 20 7710 7600
 Matthew Blawat

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

 

 

About Franchise Brands plc

 

Franchise Brands is an international, multi-brand franchisor focused on B2B
van-based service with 7 franchise brands and a presence in 10 countries
across the UK, North America and Europe. The Group is focused on building
market-leading businesses primarily via a franchise model and has a combined
network of over 625 franchisees.

 

The Company owns several market-leading brands with long trading histories,
including Pirtek in Europe, Filta, Metro Rod and Metro Plumb, all of which
benefit from the Group's central support services, particularly technology,
marketing, and finance. At the heart of Franchise Brands' business-building
strategy is helping its franchisees grow their businesses: "if they grow, we
grow".

 

Franchise Brands employs c700 people across the Group.

 

 

For further information, visit www.franchisebrands.co.uk
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