Franchise Brands (FRAN) Trading Update summary

Trading performance and outlook

• Trading remains in line with market expectations for 2024, supported by resilient demand for essential services.

• System sales rose 41% to £206m in H1 2024, with core brands achieving 6% like-for-like growth in local currency, excluding used oil sales.

• Filta International's used oil income was impacted by a 28% price drop, partially offset by a 15% volume increase; new services are being introduced to diversify revenue.

• Adjusted net debt at H1 2024 is expected below £70m, with a net debt to adjusted EBITDA ratio of less than 2x, aligning with strategic targets.

• Adjusted EBITDA for 2024 is forecasted within £35.7m to £37.2m.

Strategic initiatives and integration

• Focus remains on integrating acquired businesses and repaying Pirtek Europe acquisition debt.

• Migration to a centralized IT platform is underway to enhance operational efficiency and support future margin expansion.

• Expansion of service offerings and cross-selling to a large customer base are key growth drivers.

Brand and market positioning

• Principal brands Pirtek, Metro Rod/Metro Plumb, and Filta have small shares in large markets, presenting significant growth potential.

• The group operates in 10 countries with over 625 franchisees and employs around 700 people.

• Central support services in technology, marketing, and finance underpin franchisee growth.