TIDMFRAN
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 GBP200 million, plus a working capital adjustment
of GBP12.2m. 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
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
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