AIM-quoted Franchise Brands (LON: FRAN) combined organic growth and a ten-week contribution from Pirtek, which was acquired during the first half, to grow interim revenues 57% to £69.8m. The consumer business is no longer being marketed for sale.
Franchise Brands had intended to sell the consumer franchise brands, but it is no longer actively marketing the businesses. Offers did not meet expectations. These operations were previously disclosed as discontinued in the 2022 results but are not in the interims.
In the six months to June 2023, underlying pre-tax profit rose 45% to £8.6m, although a higher tax charge and the additional shares in issue to fund the Pirtek acquisition meant that earnings were 4% ahead at 4.24p/share. The interim dividend is 11% ahead at 1p/share. Net debt was £79.1m at the end of June 2023.
The drainage businesses Metro Rod and Metro Plumb businesses grew system sales by 24% to £35.3m. The kitchen services business Filta grew system sales by 16% even though the price of waste oil fell.
Pirtek Europe provides on-site hydraulic hose replacement and other services through 217 service centres and 843 mobile service vans. There are franchisees in eight countries and the company has the right to enter eight other European countries. There is still a long way to go with integrating the business so that it shares resources with other parts of the group.
Stifel forecasts a jump in full year pre-tax profit from £12.8m to £20.5m, while earnings would be 6% higher at 8.9p/share. The full benefits of Pirtek will come through in 2024.
The share price dipped 0.5p to 147.5p, which is down one-quarter on the start of the year. The large share issue to fund the Pirtek acquisition has held up the share price, but it should recover as the benefits of the acquisition show through.