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:
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Franchise Brands plc
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+
44 (0) 1625 813231
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Stephen Hemsley, Executive
Chairman
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Andrew Mallows, Interim Chief
Financial Officer
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Julia Choudhury, Corporate
Development Director
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Allenby Capital Limited (Nominated Adviser and Joint
Broker)
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+44
(0) 20 3328 5656
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Jeremy Porter / Liz Kirchner
(Corporate Finance)
Amrit Nahal / Joscelin Pinnington
(Sales & Corporate Broking)
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Dowgate Capital Limited (Joint Broker)
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+44
(0) 20 3903 7715
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James Serjeant / Nicholas
Chambers
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Stifel Nicolaus Europe Limited (Joint
Broker)
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+44
(0) 20 7710 7600
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Matthew Blawat
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MHP
Group (Financial PR)
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+44
(0) 20 3128 8100
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Katie Hunt / Catherine
Chapman
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+44
(0) 7884 494112
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franchisebrands@mhpgroup.com
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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