20
June 2024
FRANCHISE BRANDS
PLC
("Franchise Brands", the "Group" or the "Company")
Final results for the year
ended 31 December 2023
Acquisition of Pirtek doubled
the size of the Group and integration progressing
well
Franchise Brands plc (AIM: FRAN), an
international multi-brand franchise business, is pleased to
announce its audited results for the year ended 31 December
2023.
Financial highlights
·
System sales increased by 88% to £350.1m (2022:
£186.4m).
·
Statutory revenue increased by 74% to £121.3m
(2022: £69.8m*).
·
Adjusted EBITDA** increased by 97% to £30.1m
(2022: £15.3m*).
·
Adjusted profit before tax increased 55% to £19.7m
(2022: £12.7m*).
·
Adjusted EPS*** increased by 1% to 8.42p (2022:
8.34p*).
·
Adjusted net debt**** of £74.7m at 31 December
2023 (31 December 2022: net cash of £9.8m), 2.48x Adjusted
EBITDA.
·
Cash conversion rate increased to 100% (2022: 90%)
demonstrating the strong cashflow performance of the Group's
franchise businesses.
·
Final dividend for FY23 of 1.2p per share proposed
(2022: 1.1p), giving a 10% increase in the total dividend for the
year of 10% to 2.2p per share (2022: 2.0p),
3.9 times covered by Adjusted profits after tax (2022: 4.2
times).
*The results include a number of
prior year adjustments which are set out in Note 1 to the Accounts
in the Annual Report & Accounts. The overall impact of the
adjustments in 2022 is a reduction in statutory revenue of £29.3m
and no change in Adjusted EBITDA as explained further
below.
Operational highlights
Another year of momentous change for
the business with the acquisition of Pirtek Europe Ltd for
£210.8m*****, funded by £100m of bank debt and £114.3m of equity,
which has again doubled the size of the Group.
·
The enlarged Group performed strongly in the
period generating both the profitability and the cashflow required
to service and reduce the debt taken on to fund the
Pirtek acquisition.
·
During just over eight months of ownership in
2023, Pirtek traded at record levels, contributing as expected to
the Group's results.
·
The integration of Pirtek is progressing well,
with an immediate focus on optimising the effectiveness of the
business through utilising shared resources, in particular
technology.
·
In the newly named Water & Waste Services
division, system sales grew by 18.2% to £106.7m, with Metro Rod and
Metro Plumb being the main drivers of this increase.
·
Creation of new centralised international
IT function that will manage every aspect of the digital
landscape for the whole business.
Outlook
·
The resilient underlying demand for the Group's
essential reactive services means that the business continues to
perform well and grow. The Group's key divisions all achieved
record results in 2023, despite some softening in demand in the
second half of the year in the construction and hire-fleet customer
sectors which has continued into the current year.
·
The fall in the price for used oil in the US also
impacted profits in 2023, and whilst volumes continue to grow, the
price continues to soften which will impact our income in
2024.
·
The change in the accounting treatment of sale of
franchise territories income from taking revenue upfront to
spreading it over the life of the franchise agreement may also
impact profit in 2024.
·
The short-term operational focus is continuing the
integration of all the Group's businesses and repaying the Pirtek
acquisition debt, which is progressing well.
·
The centralised international IT function will
accelerate growth and new developments that can positively impact
the Group although it will increase our IT expenditure in the short
term.
·
Capital allocation decisions will balance debt
reduction, a progressive dividend policy and organic investment in
the Group. The Board does not expect to make any further
acquisitions of scale until the acquisition debt is substantially
repaid.
Stephen Hemsley, Executive Chairman,
commented:
"The Group has delivered Adjusted
EBITDA at the top end of the range of market expectations in a year
when we once again doubled the size of the Group with the
acquisition of Pirtek, having doubled in size in 2022 as a result
of the acquisition of Filta. The Group now operates seven brands in
ten countries in the UK, Continental Europe and North
America, giving it a more diversified international footprint and
range of resilient business services.
"The resilient underlying demand for
the Group's essential reactive services enabled all of its key
divisions to achieve record results in 2023, despite some softening
in demand in the construction and hire-fleet customer sectors and
in used oil prices which has continued into the current year.
We see significant growth potential for our principal franchise
brands of Pirtek, Metro Rod and Filta, which have small shares of
large markets, as we extend their range of services, geographical
penetration and cross-selling to our larger customer base. This
growth potential is supported by our Maximum Potential Model which
we use to estimate the potential size of our markets.
"We
are progressing well with integrating the Group's businesses and
beginning to share resources internationally, enabled by
technology, which will accelerate operational gearing for both us
and our franchisees in the coming years. This progress will support
our medium-term ambitions of growing system sales to c.£600m and
Adjusted EBITDA of c.£60m in 2027, and given the Group is highly
cash-generative, we will continue to de-gear as previously guided,
giving me great confidence in the tremendous opportunity
ahead."
**
Adjusted EBITDA is earnings before interest, tax, depreciation,
amortisation, exchange differences, share-based payment expense and
non-recurring items.
*** Adjusted EPS is earnings per share before amortisation of
acquired intangibles, share-based payment expense, exchange
differences and non-recurring items.
****Adjusted net debt is the key debt measure used for testing
bank covenants and excludes debt of £7.6m on right-of-use
assets.
*****Less the cash acquired, net of share issue
costs
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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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
CHAIRMAN'S STATEMENT
Introduction
2023 has been another year of
momentous change for the business with the acquisition of Pirtek,
which has again doubled the size of the Group, following the
doubling in size in 2022 as a result of the acquisition of Filta
Group Holdings plc. The expanded Group now operates seven brands in
ten countries in the UK, Continental Europe and North America,
giving it a more diversified international footprint and a broader
range of resilient business services. The Group generated System
sales of £350m in 2023 (statutory
revenue: £121.3m).
The enlarged Group performed strongly
in the period, generating both the anticipated profitability and
the cashflow required to service and reduce the debt taken on to
fund the Pirtek acquisition. The Group will use the cash flow from
its highly cash-generative, mainly franchised businesses to de-gear
and anticipates being in a net cash position in 2027, with this
enhanced value accruing to shareholders.
Pirtek Europe
On 20 April 2023, we acquired the
entire share capital of Hydraulic Authority I Limited and its
subsidiaries, (together "Pirtek"). Pirtek is an established
provider of on-site hydraulic hose replacement and associated
services. The service is provided via 73 franchises that operate
through 217 service centres with over 850 mobile service units
("MSUs"). Its revenues are primarily derived
from franchising.
Pirtek operates in eight European
countries: the UK, Germany, the Netherlands, Belgium, France,
Sweden, Austria and the Republic of Ireland. In the UK, Germany,
the Netherlands, Belgium and the Republic of Ireland, the business
is mostly franchised, whereas the operations in the start-up
markets of France and Sweden are corporately operated. Pirtek has a
significant opportunity to expand into eight additional European
countries under the terms of its master licence agreement, which
gives it perpetual, royalty-free use of the brand in 16 European
countries. However, our priority is to achieve profitability in all
existing countries before venturing into new markets.
The Pirtek division generated total
System sales of £126.0m (statutory revenue: £42.0m). The more
developed franchise markets have national coverage and are highly
profitable, whereas the start-up corporate markets in France and
Sweden and the small Austrian operation have yet to reach scale and
only make a small profit.
The resilient underlying demand for
Pirtek's essential reactive services resulted in the division
trading at record levels during our eight months of ownership in
2023, despite some softening in demand in the second half of the
year in the construction and hire-fleet customer sectors that
particularly impacted Pirtek in the UK and Germany. These sectors
have remained subdued in the year to date, but other Pirtek
customer sectors are growing strongly, including waste management,
logistics and rail.
Following the completion of the
acquisition, we reviewed Pirtek's management structure and
concluded that the previous holding company management structure,
which was needed as an independent private equity-owned business,
was unnecessary as part of a larger group. The objective was to
integrate the Pirtek business into Franchise Brands and share as
many resources as possible. This integration is being led by Chris
Stuckey, previously Managing Director of Pirtek UK, who was
promoted to CEO of Pirtek Europe.
An area of particular focus is IT,
where Pirtek has a variety of both works management and financial
systems, and we have the objective of unifying these, and other
systems around the Group, onto common platforms.
With only a modest amount of
adaptation, our in-house works management system, Vision, will be
an ideal replacement for the Pirtek works management system, and
thereby save third party licensing costs. This will result in
improved functionality, cost savings and sharing of information for
both the franchisees and at corporate level.
We are also working on the closer
integration of the Pirtek businesses in the various countries,
which, under previous private equity ownership, have historically
operated on a more stand-alone basis. We also see a significant
opportunity for co-operation with the Metro Rod and Filta
businesses at both the franchisee and corporate levels. By sharing
resources, knowledge and particularly customers, we believe that
growth in System sales for the whole group will be accelerated and
overhead costs reduced.
The Pirtek business has a significant
opportunity to continue growing in its existing more developed
markets through the expansion of its reactive business and by
extending the range of services offered. The earlier-stage markets
of France, Sweden, and Austria also have huge potential to reach
scale and national coverage, particularly where the competition is
fragmented. In addition, Pirtek has the opportunity to expand into
eight more European markets, which will be developed when the
existing early-stage markets become more mature and
profitable.
Water & Waste Services division
As most of the group's businesses now
operate in the B2B environment, we have renamed the B2B division
the Water & Waste Services division, which more accurately
describes its activities.
This division includes the UK-based
businesses Metro Rod, Metro Plumb, Kemac, Willow Pumps, the Filta
UK direct labour operations ("DLO") and the Filta Environmental
franchise network. The Filta businesses are included for the full
12 months in this period compared with ten months in 2022 following
the acquisition in March 2022. Overall, System sales grew by 18.2%
to £106.7m (statutory revenue: £48.9m), with Metro Rod and Metro
Plumb being the main drivers of this increase.
Metro Rod, Metro Plumb and
Kemac
Metro Rod and Metro Plumb delivered
continued strong momentum, with System sales growing by 19.7% in
the period to £71.6m (statutory revenue: £15.2m). The rate of
growth, however, slowed in H2 to 16% compared with 24% in H1. This
resulted from a planned reduction in our dependency on fixed price,
high volume, emergency work that provides no potential upside for
further work. The valuable labour resources that have been freed up
are driving our average order value, which increased by 12% during
the year on a 7% increase in jobs completed.
This growth was spread throughout
almost the entire network, with 86% of our 42 Metro Rod franchisees
growing their businesses in the period (2022: 91%) and 48% growing
by more than 20% year-on-year (2022: 61%).
Metro Plumb continued to expand with
18 stand-alone and 19 combined Metro Plumb/Metro Rod franchisees,
and six territories operated by Kemac. This results from seven new
stand-alone franchisees and two leavers over the previous 12
months. Metro Plumb System sales grew by 22% and now represent 9.6%
of total Metro Rod and Metro Plumb System sales in 2023. We
continue to focus on increasing the number of stand-alone
franchisees and broadening the customer base in both the commercial
and domestic plumbing sectors.
Kemac, the London-based DLO plumbing
business that operates Metro Plumb corporate franchises and
provides specialist services to several water utilities increased
its revenues by 10.5% in 2023.
Willow
Pumps
Willow Pumps revenue grew by 2.7% to
£18.7m (2022: £18.2m), following a significant slowdown in H2.
However, this can be attributed to the new management team, which
assumed control of the business towards the end of H1, and shifted
it away from activities that produced significant sales but little
profit, such as above-ground installations and adoptable pump
stations. A "special projects" division was also launched during
the year focused on work that would be beyond the scope of the
Metro Rod franchise network. We expect this new activity to make a
significant contribution in future years.
The Metro Rod corporate franchises in
Kent & Sussex operated by Willow Pumps were successfully split
up and sold to two neighbouring Metro Rod franchisees in
H2.
Filta UK
Filta UK has undergone a period of
considerable change since being acquired in March 2022. Following
the initial management reorganisation, which returned the business
to profitability, we have continued to review how best to deliver
the wide range of services offered by this business, which was made
up of the original and much-neglected Filta Environmental franchise
network and two acquisitions that had not been effectively
integrated. Some of these services duplicated Metro Rod and Willow
Pumps services or could be more efficiently serviced by a
re-invigorated Filta Environmental franchise network.
As a result of our review, the
following further actions have been taken:
·
The servicing of Grease Recovery Units ("GRUs")
previously undertaken by direct labour has been largely transferred
to the Filta Environmental franchise network. This has
significantly improved the economics of these franchisees'
businesses and has allowed us to begin expanding this network. This
transfer has reduced our corporate sales and profits but will allow
us to build a more robust and sustainable long-term business model,
which can be expanded nationally on a franchise basis.
·
The previous distribution arrangement for the
supply of the Cyclone GRU has been terminated, and we have acquired
the intellectual property rights associated with this unit. We have
sub-contracted manufacturing, and now have a reliable supply chain
of one of the best-performing GRUs on the market. This will help
ensure a consistent supply to our existing customers. It also
provides us with the ability to push ahead with marketing to new
customers in this rapidly growing market where the treatment of
waste water to reduce fats, oil and grease being discharged into
the public sewerage system has become a legal
requirement.
·
The FiltaSeal business, which provides a
cost-effective service replacing fridge and freezer seals on-site
for a wide range of customers, is being expanded as a DLO by
recruiting more technicians and by additional marketing to the
Group's expanded customer base.
·
Overall, Filta UK System sales increased by 35.0%
to £12.3m (2022 ten months: £9.1m) and on a like-for-like basis by
13% despite the transfer of servicing business to the franchisees.
Now that most of the necessary structural changes have been
implemented, we expect further significant progress in
2024.
Filta International
Filta North America System sales
increased 34% to $108.2m (statutory revenue: $33.0m) and by 12% on
a like-for-like basis. In sterling, System sales increased by 30%
to £87.0m (2022 ten months: £66.7m) and by 8% on a like-for-like
basis. The management team in North America continued to develop
the FiltaMax strategic growth initiatives based on the Maximum
Potential Model and experienced robust activity across all key
customer sectors. Our focus is now on over 50 metro areas where
franchisees can build businesses of scale.
Used oil volumes, sold for recycling
into biodiesel, increased by 25% to 6.2m gallons, and to
accommodate this, more franchisees have been installing 6,000
gallon tanks. However, in local currency, this was more than offset
by a fall in the average weighted selling price of 21% compared
with 2022, resulting in a 1% year-on-year reduction in revenue. In
sterling term, a decline in the average weighted price of 22%
resulted in a decline in revenue of 3%. At the start of 2024, the
price of used oil continued to decline but has now stabilised at a
lower level, impacting revenue and margin in the current year for
both us and our franchisees.
Excluding the revenue from used oil
sales and on a like-for-like basis, System sales in North America
increased by 19% in local currency and 12% in sterling. To reduce
our reliance on used oil sales and to better align us with our
franchisees we are transitioning towards an income model based on
management service fee ("MSF"). This will be introduced as fast as
possible but in some cases may have to wait until the renewal of
the franchise agreement, which could be as long as nine
years.
The range of services offered to our
commercial kitchen customer base is also being expanded with the
addition of new bulk virgin oil sales and a kitchen cleaning
service, on which MSF will be immediately payable. The delivery of
virgin oil (FiltaGold) has been developed with the roll-out of bulk
oil handling equipment to franchisees. This will enable them to buy
virgin oil in bulk, dispense it into reusable 17-litre "jugs", and
profitably supply it to customers at a competitive price. An
additional attraction to our customers is the ESG benefits arising
from the reduction in the waste they generate from the use of
reusable jugs, which will be reported to them in the monthly
Environmental Statement that Filta provides.
We have also strengthened the
management team of the North American business by recruiting John
Michals as Chief Operating Officer. John joined Filta as the
franchisee for New Jersey just before the COVID lockdowns but has
subsequently led one of the fastest-growing franchises in the
network. He is well respected by his fellow franchisees, having
previously been President of the Filta Franchise Association. We
look forward to working with John and using his valuable experience
to accelerate the growth of the Filta system in North
America.
Filta's European markets are at an
earlier stage and require more work to develop a compelling
corporate and franchise model. A number of different strategies are
being considered at present to grow this business and eliminate its
small losses, including merging the overhead with the established
Pirtek business in Europe.
Filta is an almost unique business,
with virtually no direct competition and a huge potential market in
the US, where customers can benefit from both the cost savings
resulting from oil filtration and the environmental benefits
arising from the responsible recycling of used oil and fats, oils
and grease ("FOG") management. This business has real traction in
the US and is poised for significantly accelerated expansion with
the strengthening of the management team.
B2C
division
The B2C division comprises the
ChipsAway, Ovenclean and Barking Mad franchise businesses. The
franchise recruitment and retention environment in the UK continues
to be challenging. Record employment levels, high wages, high
interest rates, and elevated inflation have made people more
risk-averse and less attracted to self-employment, even in the
relative safety of a franchise model.
Notwithstanding this backdrop,
franchise recruitment in 2023 matched that for 2022, with 39 new
franchisees joining our B2C brands, and the number of leavers
declined from 69 to 59. Overall, we closed the year with 327
franchisees compared to 347 at the end of 2022. In a difficult
market, we consider this to be a creditable performance.
In early 2023, we announced that we
intended to seek a buyer for the B2C division. While offers were
received, these did not meet our expectations, so we decided to
suspend marketing activity until further notice. This remains the
current position.
Digital transformation
In my 2020 statement, I announced a
three-year journey to further develop our IT systems so that jobs
could eventually be booked online, deployed to an engineer,
reported to our customer, and billed with minimum human
intervention. I anticipated that efficiency gains and enhanced
sales opportunities would cover the additional cost of the more
extensive digitisation of the business and thereby have very little
effect on short-term profitability.
Most of the 2020 technical objectives
have been met and are being rolled out across the business. The
recent acquisitions of Filta and Pirtek have given us the
opportunity to implement these developments on an international
basis and further enhance them with the new tools available through
AI. As an international group that is now more visible, we also
need to be ever-more vigilant in cyber security.
We are now taking a further strategic
step by creating a centralised international IT function. This
function will manage every aspect of the digital landscape for the
whole business, ensuring efficient day-to-day IT operations and
accelerating new developments that can positively impact the group.
This move builds on the expertise we acquired with Azura, enhancing
our systems and platforms. Our aim is to migrate most of our UK and
European businesses onto a uniform platform based on our "Vision"
works management system and a new accounting system, further
streamlining our operations.
This will once again increase our IT
expenditure in the short term, but as we replace third-party
systems, on which we pay licence fees, with our own internally
developed systems, the additional costs of the roll-out
will decline.
Azura, already a SaaS supplier to
around 30 non-group franchise businesses, is also growing as its
work for the group enhances its software platforms, making them
more attractive to larger third-party users. I anticipate this
business becoming a more significant contributor to group profits
over the coming years.
Corporate governance
In line with the expansion of the
Group and our ambitions for the future, we have developed our
corporate governance by introducing a two-tier Board structure. The
plc Board now comprises two Executive Directors and three
Non-executive Directors, two of whom are independent. I am pleased
to welcome to the plc Board Mark Fryer, who joined us as Chief
Financial Officer in August, and Peter Kear, who joined us as our
Senior Independent Non-executive Director in October. I am also
pleased to welcome Rob Bellhouse, previously an independent
Non-executive Director, as Company Secretary.
The Management Board is made up of
the Chairman, the Chief Financial Officer, the divisional CEOs, the
Directors of the central support functions, and the Company
Secretary. It is responsible for the day-to-day operational and
financial management of the business and the delivery of the
Group's strategic plan.
Corporate development
and capital allocation
Following the acquisition of Filta
and, more recently, Pirtek, our strategic focus is on integrating
these businesses into the Group and repaying the acquisition debt
facilities.
We will also seek to organically grow
System sales by cross-selling all group services into our enlarged
customer base, and expanding the range of services offered to
deepen and widen this customer base. We will also seek to use our
shared central services of finance, IT, and marketing to enhance
the effectiveness of all our businesses while looking to reduce
costs by sharing resources.
Capital allocation decisions will
balance debt reduction, a progressive dividend policy and organic
investment in the Group. The Board does not expect to make any
further acquisitions of scale until the Pirtek acquisition debt is
substantially repaid.
Outlook
The acquisitions of Filta and Pirtek
have significantly advanced our ambition of building a
market-leading international B2B multi-brand franchisor that
generates its income equally from the UK, North America and
Continental Europe. The resilient underlying demand for the Group's
essential reactive services means that the business continues to
perform well and grow. Its key divisions all achieved record
results in 2023, despite some softening in demand in the second
half of the year in the construction and hire-fleet customer
sectors which has continued into the current year.
The reduced pricing being received
for used oil in the US also impacted profits in 2023, and whilst
volumes continue to grow, the price continues to soften which will
impact our income in 2024. The change in the accounting treatment
of franchise recruitment income from taking revenue upfront to
spreading it over the life of the franchise agreement may also
impact profit in 2024.
Our short-term operational focus is
integrating all the Group's businesses and repaying the Pirtek
acquisition debt, which is progressing well. We are beginning to
share resources internationally, particularly in IT, which will
accelerate our operational gearing for both us and our franchisees
in the coming years.
The Maximum Potential Model, which we
use to estimate the size of the markets in which we operate,
demonstrates the significant opportunity we have for all our B2B
businesses. The Group's System sales in 2023 were £350m, but we
estimate the maximum market potential for Metro Rod, Filta
International, and Pirtek, based on just the existing range of
services we offer, to be £1.8bn.
We have incorporated this methodology
into a medium-term strategic model that we set out at our Capital
Markets Day on 20 February 2024. The strategic model underscores
the Group's medium-term ambitions of growing System sales at a
compound rate of 11-12% to achieve c.£600m in 2027. Operational
gearing, enabled by technology, will also be a significant driver
of Adjusted EBITDA growth. Our operational gearing KPI is the ratio
of Adjusted EBITDA to System sales which in 2023 was 8.6%. We aim
to improve this by 30 basis points per annum, which, if achieved,
would result in an Adjusted EBITDA of c.£60m in 2027.
As a franchised business, the Group
is highly cash-generative, and we will use this cash flow to
de-gear, with the modelling indicating that we will be in a net
cash position by the end of 2027. Whilst this is not a forecast, it
demonstrates the tremendous opportunity we have and gives me great
confidence in our future prospects.
Conclusion
2023 has been another busy year as we
build a Group with a truly international reach.
I would like to welcome our new
colleagues at Pirtek and look forward to working with them for many
years to come. 2024 is bringing a changed focus as we work on
integrating the recent acquisition and repaying our debt, but I am
not expecting this to be any less exciting for the excellent
corporate team we are building.
Of course, none of this would have
been possible without our dedicated franchisees, so I would also
like to thank them for their continued hard work and commitment to
building our great business. We truly believe that if our
franchisees grow, we grow.
Stephen Hemsley
Executive Chairman
19 June 2024
FINANCIAL REVIEW
At close of business on 20 April
2023, we acquired the entire share capital of Hydraulic Authority 1
Limited and its subsidiaries (together "Pirtek" or "Pirtek
Europe"). The acquisition was announced to the Stock Exchange on 21
April 2023. The Group's results for the year ended 31 December 2023
therefore include a maiden contribution, for just over eight
months, from Pirtek; the first full-year contribution from Filta,
which was acquired in March 2022, and the B2C division, which is
included as a continuing operation as it is no longer being
actively marketed for sale.
Systems sales, which comprise the
underlying sales of our franchisees and the statutory revenue of
our Direct Labour Operations ("DLO"), increased by 88% to £350.1m
in the period (2022: £186.4m). System sales are a KPI of the Group
and are considered a good indicator of Group performance as it
allows total sales to end customers to be visible on a comparable
basis across all businesses within the Group. Statutory revenue
comprises many different types of revenue, including the MSF, which
is now recorded on a net basis, as well as the statutory revenue of
our DLOs. Statutory revenue increased by 74% to £121.3m (2022:
£69.8m) after the prior year adjustments referred to
below.
A strong trading performance and
continued efficiency gains combined with cost savings from
integrating Filta and Pirtek have enabled the Group to increase
Adjusted EBITDA by 97% to a record £30.1m (2022: £15.3m). Adjusted
EBITDA, although an alternate performance measure, is the most
important KPI used in managing the business. Overall Adjusted
EBITDA / System sales for 2023 has grown to 8.6% (2022: 8.2%),
demonstrating the operational gearing arising from the integration
of the acquisitions and the continuing digitisation of the
business.
Another important KPI of the
business, which drives organic investment, debt repayment and
dividends, is cash conversion (cash from operations / Adjusted
EBITDA). Excluding the acquisition and re-organisation costs for
Pirtek in 2023 and Filta in 2022, the cash conversion rate
increased to 100% (2022: 90%) demonstrating the strong cashflow
performance of the Group's franchise businesses.
Prior Year Adjustments
Following the Group's recent material
acquisition and subsequent increase in market capitalisation, the
Group has become an Other Entity of Public Interest ("OPIE") and as
such the audit of its accounts is now in scope for the purposes of
the Financial Reporting Council's audit quality review processes.
Following challenges from our auditors, BDO LLP as part of the
audit process on the application of accounting standards, we have
extensively reviewed our existing accounting policies to ensure
they comply with the latest accounting standards and are consistent
across the enlarged Group. This has caused a significant delay in
publishing this year's results. We are confident this will not
re-occur in future years.
As a result of this extensive review,
several prior year adjustments are incorporated into the 2023
statements to reflect corrections needed in the 2022 Annual Report.
The adjustments are laid out in greater detail in Note 1 on pages
127 to 128 of the Annual Report. The overall impact of the
adjustments in 2022 is a reduction in statutory revenue of £29.3m
and a reduction in adjusted EBITDA of £0.0m. The principal
adjustments are:
·
We have identified that certain transactions in
the Group's Metro Rod Limited, The Filta Group Limited, Filta
Deutschland GmbH and ChipsAway International subsidiaries had been
incorrectly treated in respect of IFRS 15. National account revenue
has historically been treated gross, with these subsidiaries being
the principal. We are now treating this revenue net, as following
consideration of the underlying contracts, facts and circumstances,
we consider these subsidiaries to be acting as a commission agent
for their franchisees.
·
The businesses only have momentary control of the
incoming order following acceptance of the job ahead of passing it
to the incumbent franchise in a back-to-back arrangement where
local Franchisees have a right of first refusal on the order
received. Operational fulfilment also rests with the franchisee.
The impact of this is to reduce revenue in the year ended 31
December 2022 by £29.3m, with an equivalent reduction in cost of
sales; there is no profit impact of this change.
·
We have identified further transactions in the
Metro Rod Limited subsidiary that have been treated incorrectly in
respect of IFRS 15. National account revenue has historically been
recognised at the point of invoice, as we considered this to be our
performance obligation. We now consider our performance obligation
to be the passing of the work order to the franchisee, having
considered the underlying contracts, facts and circumstances.
Therefore, revenue is now recognised at this point. The impact of
this is to increase revenue and profit before tax in the year ended
31 December 2022 by £0.2m. In the Consolidated Statement of
Financial Position this adjustment increases Trade and Other
Receivables for Accrued Income by £3.5m (2021: £2.6m), increases
Trade and Other Payables for Accruals by £2.7m (2021: £2.1m) and
increases Retained Earnings by £0.7m (2021: £0.6m). In the
Consolidated Statement of Cashflows the impact is an increase in
profit of £0.2m, a £0.8m reduction in cash flows from trade and
other receivables and a £0.7m reduction in cash flows to trade and
other payables.
·
We have identified that certain transactions in
the Group had been incorrectly treated in respect of IFRS 15 in
regard to the timing of recognising franchise sales and related
training fees. Within Metro Rod Limited, ChipsAway International
Limited, Ovenclean Limited and Barking Mad Limited in the past we
have recognised the initial franchise fee when we have delivered
the training for the new franchises to operate in line with the
necessary standards on completion of the franchise sale (at a point
in time). This is however considered a pre-opening activity
necessary for the franchisee to operate and not a distinct
performance obligation in the franchisee contracts of these
subsidiaries. We are now recognising this revenue over the life of
the franchise agreement on a straight line basis, as our obligation
is to provide a license for the franchise to operate, which extends
over the life of the agreement. The impact of this is to reduce
revenue and profit before tax in the year ended 31 December 2022 by
£0.2m. At 31 December 2022 this also created current deferred
income of £0.1m (2021: £0.3m) and non-current deferred income of
£0.1m (2021: £0.5m), increased liabilities held for sale by £0.8m
(2021: nil), decreased assets held for sale by £0.1m (2021: nil),
reversed previously held other debtors of nil (2021: £0.1m) and
decreased Retained Earnings by £1.1m (2021: £0.9m) in the
Consolidated Statement of Financial Position. In the Consolidated
statement of Cashflows this decreased profit by £0.2m, increased
cashflows from receivables £0.0m and decreased cashflows to
payables £0.2m.
·
Franchise Brands plc acquired Filta Group Holdings
plc in March 2022. A valuation exercise was completed in the prior
year as part of the purchase price allocation exercise as required
by IFRS 3. Corrections required were identified, including
incorrect rates and unsuitable valuation models for certain
intangibles. Another valuation was completed to correct these
points subsequent to the 12-month measurement period.
·
The review occurred outside the permitted time
period, and as such requires correction as a prior year adjustment,
not as a fair value adjustment. The revaluation decreased the fair
value of intangibles acquired by £1.0m (reduced software acquired
by £2.7m, reduced indefinite life brands by £0.1m, patent
technology by £0.4m and customer relations by £0.6m; however,
increased franchise agreements by £2.8m) and reduced the deferred
tax liability by £0.3m at recognition with the corresponding impact
being a £0.7m increase in goodwill. The impact on the Consolidated
Statement of Income is a £0.2m increase in amortisation of acquired
intangibles and a £0.0m increase in relation to the deferred tax
credit. The impact on the Consolidated Statement of Financial
Position is a £0.4m reduction in intangible assets and a £0.3m
decrease in deferred tax liability. The impact on the Consolidated
Statement of Cash Flows is a £0.1m reduction in profit, a £0.2m
increase in the adjustment for amortisation of acquired intangibles
and a £0.0m decrease in the adjustment for income tax with nil
impact to operating cash flows.
·
In previous periods cash transferred to the
Employee Benefit Trust (EBT) was included as part of the EBT
reserve. As this cash is held on our behalf, it is now accounted
for in cash and cash equivalents. This has increased cash at 31
December 2022 by £0.1m and increased cash at 31 December 2021 by
£0.0m in the Consolidated and Company Statement of Financial
Position with the corresponding decrease in the EBT reserve. In
both the Consolidated and Company Statement of Cashflows this has
decreased the purchase of shares by the EBT £0.1m, increased cash
at the beginning of the period by £0.0m and increased cash at the
end of the period by £0.1m.
·
Cash outflows of £1.7m for the year ended 31
December 2022 with regards to deferred consideration were
incorrectly presented as operating cash outflows. As the deferred
consideration was related to the purchase of Willow Pumps Limited,
these should be recorded as investing activities. As a result,
these have been reclassified in the Consolidated and Company
Statement of Cash Flows for the year ended 31 December 2022,
increasing cash flows from operations by £1.7m and increasing cash
outflows from investing activities by £1.7m, with no overall impact
on cash flows.
·
The company incurred costs of £1.0m in the
acquisition of Filta Group Holdings, expensed as non-recurring
costs. Of this, £0.9m were directly attributable costs therefore
the treatment of this was incorrect, in accordance with IAS 27 that
requires measurement of investment in subsidiaries at cost for the
Company. The correction removes these non-recurring costs and
increases the investment in group companies. This change is
reversed on consolidation in line with IFRS 3 and so has no impact
on the Consolidated Statement of Comprehensive Income. In the
Company Statement of Comprehensive Income it decreases
non-recurring costs by £0.9m and increases profit £0.9m. In the
Company Statement of Financial Position, it increases investment in
subsidiaries by £0.9m; and in the Company Statement of Cash Flows
there is a £0.9m increase in cash flows used in the acquisition of
subsidiaries.
·
We have identified that corrections were required
in recording intercompany debtors in the company, as they had been
incorrectly netted off against creditors in the prior periods.
These were originally shown within Trade and Other Payables, so
adjustments to the Company Statement of Financial Position were
required to increase both Trade and Other Receivables and Trade and
Other Payables by £0.6m (2021: £0.3m). There is no change to profit
or reserves. The adjustments had no overall impact on cashflows. In
the Company Statement of Cashflows it decreased cash flows from
trade and other receivables by £0.3m, with an equivalent decrease
in cash flows to trade and other payables.
·
We have identified that corrections were required
in relation to the treatment of trade debtors recognised in Metro
Rod Limited for Local Account sales. In such transactions, the work
is sourced by the Franchisee but billed by Metro Rod Limited. The
Group is obtaining MSF Royalty income only on the transaction and
does not have the credit risk for the full amount. Trade debtors
should, therefore, reflect only the amounts due to the Group being
the MSF Royalty income. If advanced payments are made to the
franchisee before receipt of the full payment from the customer,
this should be recorded as a franchisee loan debtor. Given that
this is a contractual obligation to the franchisee, the Group has
recorded the open commitments at year-end in Note 22. When payment
is collected from the customer the assets recorded are
de-recognised and a trade payable recorded for the amounts due to
the Franchisee. The impact to the Consolidated Statement of
Financial Position is a £0.1m (2021: £0.4m) reduction in trade and
other receivables and a reduction of £0.1m (2021: £0.4m) in trade
and other payables. There is no impact on the Consolidated
Statement of Cash Flows. The impact on the Consolidated Statement
of Cash Flows is a £0.2m reduction in cash flows from trade and
other receivables and a £0.2m reduction in cash flows to trade and
other payables.
The following restatements have been
made to improve disclosures:
·
Within Note 7 of the financial statements, prior
year revenue has been disaggregated further to better understand
the Group's revenue streams to ensure compliance with the
requirements of IFRS 15.
·
Within Note 14 of the financial statements prior
year, intangible assets with indefinite useful lives have been
disaggregated further to show Filta International and Filta UK as
separate CGUs in line with the conclusions reached by Group
management in the prior year. There is no impact on intangibles.
The note now also includes the recoverable amount for all CGUs as
required by IFRS.
·
In Note 5 of the financial statements, the segment
reporting note has been restated to show the assets arising from
the consolidation as unallocated assets rather than assets from
another segment.
·
Within Note 6 of the financial statements
additional disclosures have been made within the Filta Group
Holdings section regarding the primary reasons for the business
combination, and the amounts of revenue and profit or loss of the
acquiree since the acquisition date included in the consolidated
statement of comprehensive income for 2022 as required by IFRS
3.
·
Within Note 4 of the financial statements we have
restated trade and other payables within the categories of
financial instruments table, as it previously included deferred
income, which is not defined as a financial instrument.
Summary statement of income
|
|
2023
£'000
|
2022
(restated)
£'000
|
Change
£'000
|
Change
%
|
|
System sales
|
350,053
|
186,353
|
163,700
|
88%
|
|
Statutory revenue
|
121,265
|
69,839
|
51,426
|
74%
|
|
Cost of sales
|
(50,060)
|
(33,898)
|
(16,162)
|
48%
|
|
Gross profit
|
71,205
|
35,941
|
35,264
|
98%
|
|
Administrative expenses
|
(41,104)
|
(20,684)
|
(20,420)
|
99%
|
|
Adjusted EBITDA
|
30,101
|
15,257
|
14,844
|
97%
|
|
Depreciation & amortisation of
software
|
(4,417)
|
(2,281)
|
(2,136)
|
94%
|
|
Finance expense
|
(5,711)
|
(235)
|
(5,476)
|
2330%
|
|
Impairment loss
|
(96)
|
-
|
(96)
|
100%
|
|
Foreign Exchange
|
(146)
|
-
|
(146)
|
100%
|
|
Adjusted profit before tax
|
19,731
|
12,741
|
6,990
|
55%
|
|
Tax expense
|
(5,153)
|
(2,560)
|
(2,593)
|
101%
|
|
Adjusted profit after tax
|
14,578
|
10,181
|
4,397
|
43%
|
|
Amortisation of acquired
intangibles
|
(7,718)
|
(1,693)
|
(6,025)
|
|
|
Share-based payment
expense
|
(838)
|
(535)
|
(303)
|
|
|
Non-recurring items
|
(6,159)
|
(1,708)
|
(4,451)
|
|
|
Other gains and losses
|
-
|
1,232
|
(1,232)
|
|
|
Tax on adjusting items
|
3,174
|
649
|
2,525
|
|
|
Statutory profit
|
3,037
|
8,126
|
(5,089)
|
(63%)
|
Divisional trading results
Following the acquisition of Pirtek,
the decision was taken to rename the B2B Division as Water &
Waste Services division to better distinguish the Group trading
activities. The divisional trading results may be analysed as
follows:
|
|
Pirtek
£'000
|
Water
& Waste Services
£'000
|
Filta
International
£'000
|
B2C
£'000
|
Azura
£'000
|
Inter-company
£'000
|
2023
£'000
|
|
System sales
|
125,976
|
106,661
|
90,482
|
26,189
|
745
|
-
|
350,053
|
|
Statutory revenue
|
41,947
|
48,880
|
27,117
|
6,106
|
745
|
(3,530)
|
121,265
|
|
Cost of sales
|
(11,408)
|
(23,284)
|
(17,349)
|
(1,207)
|
(0)
|
3,188
|
(50,060)
|
|
Gross profit
|
30,539
|
25,596
|
9,768
|
4,899
|
745
|
(342)
|
71,205
|
|
GP%
|
73%
|
52%
|
36%
|
80%
|
100%
|
10%
|
59%
|
|
Administrative expenses
|
(17,221)
|
(14,689)
|
(3,671)
|
(2,583)
|
(531)
|
342
|
(38,353)
|
|
Divisional EBITDA
|
13,318
|
10,907
|
6,097
|
2,316
|
214
|
-
|
32,852
|
|
Group overheads
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,751)
|
|
Adjusted EBITDA
|
-
|
-
|
-
|
-
|
-
|
-
|
30,101
|
|
|
Pirtek
£'000
|
Water
& Waste Services (restated)
£'000
|
Filta
International
£'000
|
B2C
(restated)
£'000
|
Azura
£'000
|
Inter-company
£'000
|
2022
(restated)
£'000
|
|
System sales
|
-
|
90,223
|
69,560
|
25,773
|
797
|
-
|
186,353
|
|
Statutory revenue
|
-
|
42,473
|
23,750
|
6,138
|
797
|
(3,319)
|
69,839
|
|
Cost of sales
|
-
|
(20,111)
|
(15,659)
|
(1,063)
|
(1)
|
2,936
|
(33,898)
|
|
Gross profit
|
-
|
22,362
|
8,091
|
5,075
|
796
|
(383)
|
35,941
|
|
GP%
|
|
53%
|
34%
|
83%
|
100%
|
12%
|
51%
|
|
Administrative expenses
|
-
|
(13,112)
|
(2,877)
|
(2,618)
|
(625)
|
383
|
(18,849)
|
|
Divisional EBITDA
|
-
|
9,250
|
5,214
|
2,457
|
171
|
-
|
17,092
|
|
Group overheads
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,835)
|
|
Adjusted EBITDA
|
-
|
-
|
-
|
-
|
-
|
-
|
15,257
|
On consolidation, certain
inter-company revenues and costs are eliminated to reconcile the
Group's statutory revenues, gross profit, and administrative
expenses to the underlying entities. These include the work
undertaken by Metro Rod on behalf of Willow Pumps and the IT
development work undertaken by Azura on behalf of various Group
subsidiaries. The net effect on Adjusted EBITDA is zero.
Pirtek Europe
Pirtek Europe operates through a
network of depots providing on-site hydraulic hose replacement in
eight European countries. It was acquired in April 2023, and
therefore, the trading results summarised below comprise just
over eight months of
post-acquisition contribution.
|
|
Franchise
£'000
|
DLO
£'000
|
Central
Costs
£'000
|
2023
£'000
|
|
System sales
|
118,687
|
7,289
|
-
|
125,976
|
|
Statutory revenue
|
34,771
|
7,292
|
(116)
|
41,947
|
|
Cost of sales
|
(9,954)
|
(1,570)
|
116
|
(11,408)
|
|
Gross profit
|
24,817
|
5,722
|
0
|
30,539
|
|
GP%
|
71%
|
78%
|
0%
|
73%
|
|
Administrative expenses
|
(11,178)
|
(5,305)
|
(738)
|
(17,221)
|
|
Adjusted EBITDA
|
13,639
|
417
|
(738)
|
13,318
|
Like other businesses in the Group,
System sales comprise the sales made to third parties by
franchisees; franchise territories operated corporately in each
country; and by the DLO operations in the corporate markets of
France and Sweden. 94% of System sales were generated by
franchisees and 6% by DLOs.
Statutory revenue is made up of MSF
and other fee income generated from franchisees (46%), the sale of
materials used in the core hose replacement business (25%), and the
sales revenue generated by the corporate operations (28%). The
business also generates some revenue from the sale and resale of
franchise territories, but as the business has national coverage in
its largest markets of the UK, Germany and the Netherlands, this is
less than 1% of revenue.
When the Pirtek business in Europe
was first established in 1998, the franchise model was set up as it
had been in other countries, with franchisees paying a low
percentage MSF but being tied in under the franchise agreement to
purchase all their materials from the franchisor at a mark-up. This
structure required constant policing to ensure compliance. In 2017,
the company began transitioning to the current model whereby
materials are supplied at cost, and a higher MSF Royalty income is
received in exchange. This better aligns the interests of the
franchisee and franchisor in growing the business, particularly
where the service has a high labour, as opposed to material element
in the sale, such as with total hose management. The transition was
completed in the UK, the Republic of Ireland ("RoI"), Germany, and
Austria before the acquisition. It was finally completed in the
Netherlands and Belgium by the end of 2023.
The UK and the RoI are the most
developed markets, generating £55.8m or 44% of Pirtek Europe's
System sales and £6.8m or 51% of its Adjusted EBITDA. RoI, which is
operated from the UK facility, was started in 1994 and generates 8%
of territory System sales. Both the UK and ROI are almost entirely
franchised, with only two corporate franchises in York and
Aberdeen. Materials supplied to franchisees make up 27% of the
division's Statutory revenue, but these are sold at a small margin,
with almost all gross profit arising from the MSF on System sales
and other small fees that franchisees pay for training and other
add-on services.
Germany & Austria are the next
most developed markets, with Germany having been established in
1996. Austria, which was started in 2014 and is operated from the
German facility, generates 4% of territory System sales. The
combined business generated £46.5m or 37% of Pirtek Europe's System
sales and £4.2m or 32% of its Adjusted EBITDA. Like the UK,
materials are supplied to the franchisees at cost, and it only has
one corporate franchise in Graz, Austria, so once again, the vast
majority of income is generated from MSF and other fee income from
franchisees.
Benelux, which comprises the
operations in the Netherlands and Belgium, were started in 1997 and
1998, respectively. Belgium, which operates from the Netherlands
facility, generates 19% of territory System sales. The combined
business generated £16.4m or 13% of Pirtek Europe's System sales
and £2.6m or 19% of its Adjusted EBITDA. Benelux operates six of
the 24 depots as corporate franchises, contributing 24% of System
sales in these territories. As mentioned above, Benelux only
completed the MSF transition at the end of 2023, so gross profit
was generated from both the margin on materials supplied to
franchisees and MSF on System sales.
The DLO operations in France and
Sweden contributed £7.3m or 6% of the division's System sales and
£0.4m or 3% of its Adjusted EBITDA. These early-stage operations do
not have national coverage, making the acquisition of national
customers more challenging. Whilst they are currently sub-scale, we
intend to continue to invest in growing the footprint of depots and
service vans and expect them to make a more meaningful contribution
over the coming years. Like most franchise businesses, it is
necessary to establish the business model's viability in new
territories before promoting the opportunity to franchisees, which
we may do in the future.
The central costs mostly represent
the cost of the Pirtek Europe senior management team based in
Acton, London.
Water & Waste Services division
The Water & Waste Services
division comprises Metro Rod, Metro Plumb, Filta UK's franchise
activities and the DLO operations of Willow Pumps, Filta UK and
Kemac. The organisation of these activities within this division
reflects both management responsibilities and our internal KPIs.
The results of the Water & Waste Services division may be
summarised as follows:
|
|
Metro Rod
£'000
|
Willow
Pumps
£'000
|
Filta UK
£'000
|
2023
£'000
|
Metro Rod
(restated)
£'000
|
Willow
Pumps
£'000
|
Filta
UK
(restated)
£'000
|
2022
(restated)
£'000
|
Change
£'000
|
Change
%
|
|
System sales
|
75,671
|
18,659
|
12,331
|
106,661
|
62,916
|
18,175
|
9,132
|
90,223
|
16,438
|
18%
|
|
Statutory revenue
|
19,203
|
18,659
|
11,018
|
48,880
|
15,641
|
18,175
|
8,657
|
42,473
|
6,407
|
15%
|
|
Cost of sales
|
(4,020)
|
(12,399)
|
(6,865)
|
(23,284)
|
(2,747)
|
(12,196)
|
(5,168)
|
(20,111)
|
(3,173)
|
16%
|
|
Gross profit
|
15,183
|
6,260
|
4,153
|
25,596
|
12,894
|
5,979
|
3,489
|
22,362
|
3,234
|
14%
|
|
GP%
|
79%
|
34%
|
38%
|
52%
|
82%
|
33%
|
40%
|
53%
|
(0%)
|
(1%)
|
|
Administrative expenses
|
(7,595)
|
(4,406)
|
(2,688)
|
(14,689)
|
(6,556)
|
(4,134)
|
(2,422)
|
(13,112)
|
(1,577)
|
12%
|
|
Adjusted EBITDA
|
7,588
|
1,854
|
1,465
|
10,907
|
6,338
|
1,845
|
1,067
|
9,250
|
1,657
|
18%
|
Metro Rod
Metro Rod comprises the franchise and
direct labour activities of Metro Rod and Metro Plumb and Kemac.
The results may be summarised as follows:
|
|
2023
£'000
|
2022
(restated)
£'000
|
Change
£'000
|
Change
%
|
|
System sales
|
75,671
|
62,916
|
12,755
|
20%
|
|
Statutory revenue
|
19,203
|
15,641
|
3,562
|
23%
|
|
Cost of sales
|
(4,020)
|
(2,747)
|
(1,273)
|
46%
|
|
Gross profit
|
15,183
|
12,894
|
2,289
|
18%
|
|
GP%
|
79%
|
82%
|
(3%)
|
(4%)
|
|
Administrative expenses
|
(7,595)
|
(6,556)
|
(1,039)
|
16%
|
|
Adjusted EBITDA
|
7,588
|
6,338
|
1,250
|
20%
|
Overall, System sales at Metro Rod
and Metro Plumb increased by 20% to a record £71.6m (2022: £59.8m),
compared to a 21% increase in MSF. We continue to support Metro
Rod's franchisees with initiatives to widen and deepen the range of
services offered, particularly those with a high average order
value, such as pump service, which increased by 21%, and tankering,
which increased by 23% during the year. These activities have an
average order value of over three times that of
drainage.
Statutory revenue of £19m includes
MSF; other fee income from franchise sales & resale and
training; DLO customers' revenue from corporate franchises and
Kemac; and the revenue generated from the National Advertising Fund
("NAF"). As MSF is the key driver of Adjusted EBITDA, it is
re-analysed and compared to System sales as follows:
|
|
2023
£'000
|
2022
(restated)
£'000
|
Change
£'000
|
Change
%
|
|
System sales
|
71,616
|
59,814
|
11,802
|
20%
|
|
MSF income
|
13,404
|
11,085
|
2,319
|
21%
|
|
Effective MSF %
|
18.7%
|
18.5%
|
-
|
0.2%
|
|
Other gross profit
|
1,779
|
1,809
|
(30)
|
(2%)
|
|
Gross profit
|
15,183
|
12,894
|
2,289
|
18%
|
MSF represented 69% (2022: 71%) of
Statutory revenue and increased marginally to 18.7% from 18.5% of
System sales in 2023. We continue to use MSF incentives to
encourage franchisees to grow System sales, offering a lower rate
in activities where we are targeting growth. Therefore, the overall
rate for the year depends on the mix of sales and the level of
allowable costs that may be deducted from sales when calculating
the MSF payable, which in turn depends on the type of work
undertaken. We anticipate the MSF percentage will decline over time
as System sales increase, driven partly by these
incentives.
Other gross profit includes the gross
profit generated by Kemac and the corporate franchise in North
Scotland and the gross profit on franchise sales and resales. It
also includes the costs incurred by the national advertising fund,
which is a non-profit generating and is run on behalf of the
franchisees.
Administration expenses grew by 16%,
less than the 20% growth in System sales, due to the operational
gearing inherent in a franchise business, accelerated by the
continuing investment in the Group's digital transformation. As a
result of this operational gearing, Adjusted EBITDA grew by 20% to
£7.6m (2022: £6.3m).
Willow Pumps
Willow Pumps comprises the core DLO
pump & business and the Metro Rod corporate franchises in
Exeter and Kent & Sussex (which was sold in the second half of
2023).
The results for the division may be
summarised as follows:
|
|
2023
£'000
|
2022
£'000
|
Change
£'000
|
Change
%
|
|
Statutory revenue
|
18,659
|
18,175
|
484
|
3%
|
|
Cost of sales
|
(12,399)
|
(12,196)
|
(203)
|
2%
|
|
Gross profit
|
6,260
|
5,979
|
281
|
5%
|
|
GP%
|
34%
|
33%
|
1%
|
2%
|
|
Administrative expenses
|
(4,406)
|
(4,134)
|
(272)
|
7%
|
|
Adjusted EBITDA
|
1,854
|
1,845
|
9
|
0%
|
Willow Pumps' core business has
historically had two distinct revenue streams: Service revenue and
Supply and install revenue ("S&I"). A third revenue stream was
launched in Q2 2023 with the establishment of a Special Project
Division.
S&I revenue is generated from the
design, supply, and installation of pump stations, which
historically have been large projects performed in discrete phases
over several accounting periods. Service revenue is generated from
the routine service and maintenance of above and below-ground pumps
and drains. The new management team at Willow is migrating the
business away from high-revenue, low gross margin business in pump
station design & installation and above-ground pump work to
higher margin work that can be completed in shorter time frames.
This is now being complimented by a newly recruited team that runs
the Special Projects Division. This work will include more
significant, longer-term work, but much of the risk and cash-flow
challenges will be mitigated by the use of subcontractors. We
expect this new activity to start contributing H2 2024.
Off-setting, to some extent, the move
to higher-margin work is the increasing amount of work that is
being subcontracted to Metro Rod, which, whilst still reflected in
Willow Pumps revenue (before consolidation eliminations), is at a
far lower margin than would have been the case had it undertaken
the work itself. This is more efficient for the Group as it
leverages Metro Rod's national coverage in drainage and gives the
Metro Rod engineers practical experience in pump work following
their training.
As a result of this business's
changing focus, revenue has only increased by 3% during the period,
but the gross margin contribution has increased by 5% as the gross
margin percentage increased to 34% from 33% in 2022. Overheads
increased by 7% as a result of the recruitment of the new team for
the Special Project Division. Overall, Adjusted EBITDA grew very
marginally.
Filta UK
Filta UK comprises the DLO services
of fridge & freezer seal replacement; the supply, installation
and maintenance of Grease Recovery Units ("GRUs"); extraction vent
cleaning & servicing; pump & drainage repair and
maintenance; and the Filta Environmental network of 25
franchisees.
The results for 2023 and the
comparative ten months from the acquisition in March 2022 may be
summarised as follows:
|
|
2023
£'000
|
2022
(restated)
£'000
|
Change
£'000
|
Change
%
|
|
System sales
|
12,331
|
9,132
|
3,199
|
35%
|
|
Statutory revenue
|
11,018
|
8,657
|
2,361
|
27%
|
|
Cost of sales
|
(6,865)
|
(5,168)
|
(1,697)
|
33%
|
|
Gross profit
|
4,153
|
3,489
|
664
|
19%
|
|
GP%
|
38%
|
40%
|
(2%)
|
(6%)
|
|
Administrative expenses
|
(2,688)
|
(2,422)
|
(266)
|
11%
|
|
Adjusted EBITDA
|
1,465
|
1,067
|
398
|
37%
|
System sales increased by 35% to
£12.3m from £9.1m and on a like-for-like basis by 13%. FiltaSeal
grew strongly during this period as more technicians were
recruited, allowing us to service a larger range of national
accounts more efficiently on an increasingly country-wide basis.
The revenue generated from the installation of GRUs was impacted by
a dispute with our supplier that held up the delivery of these
units. This has now been resolved through the acquisition of
intellectual property, and we expect strong growth in this area in
2024 and beyond. The cost of resolving this matter was £0.8m, which
has been considered exceptional.
Statutory Revenue increased by 27% to
£11.0m from £8.7m and has increased by 6% on a like-for-like basis.
Administrative expenses were well controlled and declined by 7% on
a like-for-like basis, resulting from the annualisation of overhead
savings made following the acquisition in 2022 and further savings
made possible by subcontracting the GRU servicing work to
franchisees.
Adjusted EBITDA increased by 37% to
£1.5m from £1.1m and by 14% on a like-for-like basis on System
sales, up by 13% on a similar basis. This is considered a
creditable result as a significant margin is being transferred to
franchisees to improve their viability so that we can grow this
franchise system robustly and sustainably in the future.
Filta International
Filta International operates a
franchise network that comprises Filta's franchise activities in
North America and mainland Continental Europe. The results for 2023
and the comparative ten months from acquisition in March 2022 may
be summarised as follows:
|
|
North
America
£'000
|
Europe
£'000
|
2023
£'000
|
North
America
£'000
|
Europe
£'000
|
2022
£'000
|
Change
£'000
|
Change
%
|
|
System sales
|
87,004
|
3,478
|
90,482
|
66,700
|
2,860
|
69,560
|
20,922
|
30%
|
|
Statutory revenue
|
26,506
|
611
|
27,117
|
23,273
|
477
|
23,750
|
3,367
|
14%
|
|
Cost of sales
|
(17,011)
|
(338)
|
(17,349)
|
(15,398)
|
(261)
|
(15,659)
|
(1,690)
|
11%
|
|
Gross profit
|
9,495
|
273
|
9,768
|
7,875
|
216
|
8,091
|
1,677
|
21%
|
|
GP%
|
36%
|
29%
|
36%
|
34%
|
36%
|
34%
|
2%
|
6%
|
|
Administrative expenses
|
(3,171)
|
(500)
|
(3,671)
|
(2,516)
|
(361)
|
(2,877)
|
(794)
|
28%
|
|
Adjusted EBITDA
|
6,324
|
(227)
|
6,097
|
5,359
|
(145)
|
5,214
|
883
|
17%
|
System sales increased 30% to £90.5m
(2022 ten months: £69.6m), a like-for-like increase of 8%. The
like-for-like increase in North America was 9% and 1% in Europe.
System sales in North America comprise MSF income; used oil sales;
equipment and supplies sales; the fees generated from the sale and
resale of franchise territories; and national corporate accounts
("NCA"), marketing and IT revenues.
MSF revenue in North America
currently mainly consists of the fixed monthly fee paid by the
franchisees for each mobile filtration unit ("MFU") in operation.
The high price of used oil in 2022 and the early months of 2023
encouraged the franchises to expand their capacity by purchasing
additional MFUs. This drove MSF in 2023, which increased by 38% to
£3.1m (2022: £2.3m) and, on a like-for-like basis, by 13%. Our
strategy is changing to one where MSF will be based on System sales
so that our interests are aligned with franchisees and not focused
principally on selling more MFUs. We hope to negotiate this
transition with each franchise as soon as possible.
Used oil revenues, all of which is
generated in in North America, are derived from the sale of used
cooking oil for biodiesel production. Filta administers the
programme through national agreements with biodiesel companies,
which involves the franchisees collecting and storing the oil
before local pick-up via tankers organised centrally. On a
like-for-like basis, volumes in 2023 increased by 25% over 2022 to
6.2m gallons, however, this was offset by a 21% decline in the
average dollar price. Used oil sales are accounted for on a gross
basis, with the margin reflected as gross profit. Filta's margin in
2023 averaged 17% (2022: 18%). Whilst reported revenue from used
oil sales increased by 8% to £17.6m from £16.3m and gross profit by
3% to £3.0 from £2.9m, on a like-for-like basis, revenue and gross
margin (in sterling) declined by 10% and 14%
respectively.
Equipment & Supply revenue in
North America consists of revenue from selling new and replacement
MFUs, spare parts, and supplies to franchisees. In 2023, revenue
increased by 14%, but on a like-for-like basis, it fell by 4%,
reflecting the franchisees' reduction in cashflow from the sale of
used oil.
Area Sales revenue in North America
is derived from the sale and resale of franchise territories. Many
new franchisees are introduced by external brokers who are paid a
5-10% commission. The commission payable is recognised when the
transaction is completed. Six new franchises and seven resales were
completed during the period.
The NCA, marketing, and IT revenues
in North America are the additional fees charged to franchisees for
generating and administering the national accounts and providing
marketing and IT systems. Revenue from these high-margin activities
increased by 49% in 2023 or 24% on a like-for-like basis,
reflecting the strong growth in the core franchise business. The
NCA revenues will eventually be absorbed in the percentage MSF as
this is rolled out.
Overall, Adjusted EBITDA in North
America, including oil sales, increased by 18% to £6.3m (2022:
£5.4m). If the gross margin on oil sales is excluded and without
any reapportionment of central overheads, Adjusted EBITDA from the
core franchise business grew by 37% to £3.3m (2022: £2.4m) or 14%
on a like-for-like basis.
System sales in Europe are generated
from fryer management, seal replacement and GRU installations.
Overall, System sales grew by 22% and on a like-for-like basis by
only 1%, although gross profit grew on a like-for-like basis by 5%,
reflecting the sales mix. The slow recovery of this sub-scale
business from the effects of the COVID-19 shutdowns continues. This
has been compounded by hold-ups in rolling out the GRU due to the
supply problems that also impacted Filta in the UK, referred to
above. In 2022, additional sales people were recruited in an
attempt to accelerate growth, but this has not been successful, and
the additional costs have resulted in an increased, albeit
relatively small, loss of £0.2m in the period.
B2C
Division
The B2C division comprises the
ChipsAway, Ovenclean and Barking Mad franchise businesses. The
results of the division may be summarised as follows:
|
|
2023
£'000
|
2022
(restated)
£'000
|
Change
£'000
|
Change
%
|
|
System sales
|
26,189
|
25,773
|
416
|
2%
|
|
Statutory revenue
|
6,106
|
6,138
|
(32)
|
(1%)
|
|
Cost of sales
|
(1,207)
|
(1,063)
|
(144)
|
14%
|
|
Gross profit
|
4,899
|
5,075
|
(176)
|
(3%)
|
|
GP%
|
80%
|
83%
|
(2%)
|
(3%)
|
|
Administrative expenses
|
(2,583)
|
(2,618)
|
35
|
(1%)
|
|
Adjusted EBITDA
|
2,316
|
2,457
|
(141)
|
(6%)
|
Overall, System sales of the B2C
division grew by 2% in 2023. This was driven by a 10% increase in
the average order values at ChipsAway which represents 72% of
divisional System sales. The key Statutory revenue streams are MSF
and Area Sales income. MSF income is primarily made up of fixed
monthly fees, as this remains the most effective method of
generating income given the large number of franchisees with a
lower level of individual sales. MSF income overall was flat as
whilst the fixed monthly fee was increased, the number of
franchisees over the period reduced to 327 at 31 December 2023 (31
December 2022: 349). Notwithstanding the challenging franchise
recruitment and retention environment, ChipsAway performed
robustly, recruiting 25 new franchisees (2022: 20) with 30 leavers
(2022: 40). Overall, 39 new franchisees were recruited (2022: 39)
and 59 (2022: 69) left the system.
Prudent cost control resulted in
administrative expenses declining slightly during the period.
Adjusted EBITDA declined by 6% to £2.3m (2022: £2.5m), but if the
one-off £0.1m income from the sale of the MyHome domain name were
excluded from 2022, profits were flat year-on-year.
Azura
Azura is a SaaS supplier of franchise
management software to the Group and 30 other franchise businesses.
The 2023 results may be summarised as follows:
|
|
2023
£'000
|
2022
£'000
|
Change
£'000
|
|
Statutory revenue
|
745
|
797
|
(52)
|
|
Cost of sales
|
(0)
|
(1)
|
1
|
|
Gross profit
|
745
|
796
|
(51)
|
|
GP%
|
100%
|
100%
|
0%
|
|
Administrative expenses
|
(531)
|
(625)
|
94
|
|
Adjusted EBITDA
|
214
|
171
|
43
|
Statutory revenue is comprised of
third-party income of £0.4m (2022: £0.4m) and charges to Group
companies of £0.3m (2022: £0.4m), which are eliminated on
consolidation. Azura continues to develop its software solution
with £0.2m capitalised in 2023, which will be amortised over a
5-year period. The enhanced platform is now being targeted at
larger international multi-site franchisors rather than its
traditional market of smaller domestic franchise businesses. It has
also been building its internal resources to support the further
digital enablement of the Group's businesses by improving the
functionality of the Vision works-management platform and
developing this for a roll-out to the Pirtek businesses in the UK
and continental Europe.
Adjusted & statutory profit
|
|
2023
£'000
|
2022
(restated)
£'000
|
Change
£'000
|
Change
%
|
|
Adjusted EBITDA
|
30,101
|
15,257
|
14,844
|
97%
|
|
Depreciation &
amortisation
|
|
|
|
|
|
of software
|
(4,417)
|
(2,281)
|
(2,136)
|
94%
|
|
Finance expense
|
(5,807)
|
(235)
|
(5,572)
|
2371%
|
|
Foreign exchange
|
(146)
|
-
|
(146)
|
100%
|
|
Adjusted profit before tax
|
19,731
|
12,741
|
6,990
|
55%
|
|
Tax expense
|
(5,153)
|
(2,560)
|
(2,593)
|
101%
|
|
Adjusted profit after tax
|
14,578
|
10,181
|
4,397
|
43%
|
|
Amortisation of acquired
intangibles
|
(7,718)
|
(1,693)
|
(6,025)
|
|
|
Share-based payment
expense
|
(838)
|
(535)
|
(303)
|
|
|
Non-recurring costs
|
(6,159)
|
(1,708)
|
(4,451)
|
|
|
Other gains and losses
|
-
|
1,232
|
(1,232)
|
|
|
Tax on adjusting items
|
3,174
|
649
|
2,525
|
|
|
Statutory profit
|
3,037
|
8,126
|
(5,089)
|
(63%)
|
Software depreciation and
amortisation increased 94% to £4.4m (2022: £2.1m), primarily due to
the acquisitions of Pirtek and the full twelve-month impact of the
Filta acquisition. The finance expense reflects the additional
interest cost of the debt taken to acquire Pirtek combined with the
increasing base rate over the year.
The overall effective tax rate of the
Group has increased from 20% to 26% as a result of the increase in
the UK tax rate to 25%, a full-year charge in respect of Filta
North America, where the combined state and federal corporate tax
rate is 27%, and the acquisition of Pirtek, where tax rates can be
higher than in the UK. For example, the combined state, local, and
trade taxes are 30% in Germany.
The non-recurring costs of £6.2m
(2022: £1.7m) reflect the Pirtek acquisition costs of £3.6m and the
subsequent one-off re-organisation costs of £1.5m, the one-off
costs of the Filta Cyclone GRU dispute of £0.5m, software written
off as a result of the adjustments referred to above of £0.3m, and
other costs of £0.3m. The tax on adjusting items reflects the tax
relief available on some of these exceptional costs. The
exceptional item in 2022 is mainly related to the acquisition and
subsequent reorganisation costs of the Filta
acquisition.
The increase in the amortisation of
acquired intangibles reflects the additional intangible assets
acquired with the Pirtek acquisition and the full twelve-month
impact of the Filta acquisition. See Note 6.
The increase in the share-based
payment expense principally reflects additional grants made to the
Pirtek team and other new employees who joined the group during the
year.
As a result of the costs incurred in
acquiring Pirtek, statutory profit after tax reduced by 63% to
£3.0m (2022: £8.1m).
Earnings per share
The adjusted and basic EPS is shown
in table:
|
|
2023
£'000
|
EPS
p
|
2022
(restated)
£'000
|
EPS
p
|
|
Adjusted profit after tax / Adjusted EPS
|
14,578
|
8.42
|
10,181
|
8.34
|
|
Amortisation of acquired
intangibles
|
(7,718)
|
(4.46)
|
(1,693)
|
(1.39)
|
|
Share-based payment
expense
|
(838)
|
(0.48)
|
(535)
|
(0.44)
|
|
Non-recurring costs
|
(6,159)
|
(3.56)
|
(1,708)
|
(1.40)
|
|
Other gains and losses
|
-
|
-
|
1,232
|
1.01
|
|
Tax on adjusting items
|
3,174
|
1.83
|
649
|
0.53
|
|
Statutory profit after tax / Basic EPS
|
3,037
|
1.75
|
8,126
|
6.65
|
During the year, the Group issued
63,472,968 new ordinary shares of 0.5p each ("ordinary shares") in
consideration for the acquisition of Pirtek. This increased the
total number of ordinary shares in issue to 193,784,080 at the
year-end (31 December 2022: 130,311,112).
The Employee Benefit Trust ("EBT")
started the year holding 1,770,683 ordinary shares, purchased
18,420 ordinary shares during the year at an average price of
£2.00, disposed of 226,418 ordinary shares in respect of the
exercise of employee shares options, and therefore ended the year
holding 1,562,685 ordinary shares. On 31 December 2023, there were
10,347,231 shares under option, of which 2,480,394 were vested and
capable of exercise.
The total number of ordinary shares
in issue on 31 December 2023, net of the EBT holding, was
192,221,395 (31 December 2022: 128,540,429), and a basic weighted
average number of ordinary shares in issue of 173,090,691 (2022:
122,126,350).
Adjusted basic EPS increased by 1% to
8.42p (2022: 8.34p as restated), and basic earnings per share
decreased by 74% to 1.75p (2022: 6.65p as restated).
Financing and cash flow
A summary of the Group cash flow for
the period is set out in the table below.
|
|
2023
£'000
|
2022
(restated)
£'000
|
|
Adjusted EBITDA
|
30,101
|
15,257
|
|
Acquisition and reorganisation
costs
|
(6,159)
|
(1,708)
|
|
Working capital movements
|
(61)
|
(1,512)
|
|
Cash generated from operations
|
23,881
|
12,037
|
|
Taxes paid
|
(4,498)
|
(2,629)
|
|
Purchases of property, plant and
equipment
|
(986)
|
(422)
|
|
Purchase of software
|
(1,350)
|
(1,088)
|
|
Purchase of IP
|
(522)
|
-
|
|
Acquisition of subsidiaries net of
cash
|
(48,894)
|
4,320
|
|
Acquired debt repaid
|
(136,747)
|
-
|
|
Deferred consideration
|
-
|
(1,680)
|
|
Funds raised via debt
|
100,012
|
-
|
|
Funds raised via equity
|
94,106
|
-
|
|
Bank loans repaid
|
(13,000)
|
(2,953)
|
|
Interest Paid
|
(5,374)
|
-
|
|
Lease payments
|
(2,687)
|
(1,156)
|
|
Funds supplied to EBT
|
192
|
(2,370)
|
|
Dividends paid
|
(3,371)
|
(2,339)
|
|
Other net movements
|
859
|
(41)
|
|
Net
cash movement
|
1,621
|
1,679
|
|
Net cash at beginning of
year
|
10,935
|
9,057
|
|
Exchange differences on cash and
cash equivalents
|
(278)
|
199
|
|
Net
cash at end of year
|
12,278
|
10,935
|
The Group generated cash from
operating activities of £23.9m (2021: £12.0m), resulting in a cash
conversion rate of 79% (2022: 79%). However, if the cost of the
Pirtek and Filta acquisitions and reorganisation is added back, the
rate of cash conversion in 2023 was 100% (2022: 90%).
Taxes paid increased as profits
increased, and the Group moved to quarterly advance payments.
Purchases of property, plant, and equipment increased due to the
addition of the Pirtek DLO operation. The purchase of IP relates to
the purchase of the Cyclone GRU IP.
The acquisition of subsidiaries
represents the acquisition of Pirtek for £210.8m, which was
financed with bank debt of £100m, £93.5m from the issue of new
shares (after costs), and £17.6m new shares given as consideration
shares. Immediately after the acquisition Franchise Brands
settled Pirtek's preference shares and loans and borrowings in
order to consolidate Group borrowings. The total value of
this post-acquisition settlement was £137.3m, comprising £78.2m
loans and borrowings, £0.6m acquisition costs, £21.7m interest on
preference shares and £36.8m in relation to the nominal value of
the preference shares. Cash acquired of £7.0m is deducted to
result in an acquisition of subsidiaries in the Consolidated
Statement of Cash Flows of £48.9m. In 2022, Filta was
acquired in an all-shares transaction, so it did not involve cash
movement.
Bank loans repaid represent the
repayment of the loans taken out in April 2023 to finance the
acquisition of Pirtek. Dividends paid in 2023 represent the
combined cash cost of the 2022 final and the 2023 interim
dividends.
After these outflows, the Group
finished the period with cash of £12.3m (31 December
2022: £10.9m) and gross debt, including hire purchase debt of
£87.0m. Lease debt of £7.6m (2022: £1.6m) increased considerably
due to the acquisition of Pirtek, which funds the vans used in its
DLO operation using lease finance.
|
|
31 Dec 2023
|
31 Dec
2022 (restated)
|
Change
|
|
|
£'000
|
£'000
|
£'000
|
|
Cash
|
12,278
|
10,935
|
1,343
|
|
Term loan
|
(50,000)
|
-
|
(50,000)
|
|
RCF
|
(36,908)
|
-
|
(36,908)
|
|
Loan fee
|
749
|
-
|
749
|
|
Hire purchase debt
|
(837)
|
(1,132)
|
295
|
|
Adjusted (net debt)/net cash
|
(74,718)
|
9,803
|
(84,521)
|
|
Other lease debt
|
(7,567)
|
(1,624)
|
(5,943)
|
|
(Net
Debt) / Net cash
|
(82,285)
|
8,179
|
(90,464)
|
The Group had headroom of £23.0m on
its bank facilities (total facility including accordion option of
£110.0m less £87.0m in use) at 31 December 2023.
The Group's adjusted net debt, as
used to test the bank covenants, was £74.7m at 31 December 2023,
which represents 2.48x Adjusted 2023 EBITDA. Thus, the Group has
comfortable headroom on all its bank covenants.
Dividend
The Board is pleased to propose a
final dividend of 1.2 pence per share (2022: 1.1 pence per share).
This takes the total dividend for the year to 2.2 pence per share
(2022: 2.0 pence per share), an increase of 10%. The dividend is
3.9 times covered by Adjusted profits after tax (2022: 4.2
times).
Subject to shareholder approval at
the AGM, the final dividend will be paid to those shareholders on
the register on 28 June 2024, at the close of business on 25 July
2024.
Mark
Fryer
Chief Financial Officer
19 June 2024
Consolidated Statement of
Comprehensive Income
For the year ended 31 December
2023
|
|
Note
|
2023
Total
£'000
|
Restated*
2022
Total
£'000
|
|
Revenue
|
5
|
121,265
|
69,839
|
|
Cost of sales
|
|
(50,060)
|
(33,898)
|
|
Gross profit
|
|
71,205
|
35,941
|
|
Adjusted earnings before interest,
tax, depreciation, amortisation, share-based payments, impairment
loss & non-recurring items ("Adjusted EBITDA")
|
|
30,101
|
15,257
|
|
Depreciation
|
6
|
(3,492)
|
(1,781)
|
|
Amortisation of software
|
6
|
(925)
|
(500)
|
|
Amortisation of acquired
intangibles
|
|
(7,718)
|
(1,693)
|
|
Impairment loss
|
|
(96)
|
-
|
|
Share-based payment
expense
|
|
(838)
|
(535)
|
|
Non-recurring items
|
6
|
(6,159)
|
(475)
|
|
Total administrative
expenses
|
|
(60,332)
|
(25,668)
|
|
Operating profit
|
|
10,873
|
10,273
|
|
Foreign exchange losses
|
|
(146)
|
-
|
|
Finance expense
|
|
(5,711)
|
(235)
|
|
Profit before tax
|
|
5,016
|
10,038
|
|
Tax expense
|
|
(1,979)
|
(1,912)
|
|
Profit for the year attributable to equity holders of the
Parent Company
|
|
3,037
|
8,126
|
|
Other comprehensive (expense)/income
|
|
|
|
|
Actuarial gains
|
|
63
|
-
|
|
Exchange differences on translation
of foreign operations
|
|
(131)
|
28
|
|
Total comprehensive (expense)/income attributable to equity
holders of the Parent Company
|
|
(68)
|
28
|
|
|
|
|
|
|
Total Profit and other comprehensive income for the year
attributable to equity holders of the Parent
Company
|
|
2,969
|
8,154
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
Basic
|
7
|
1.75
|
6.65
|
|
Diluted
|
7
|
1.73
|
6.54
|
Consolidated Statement of Financial
Position
For the year ended 31 December
2023
|
|
Note
|
2023
£'000
|
Restated*
2022
£'000
|
Restated*
2021
£'000
|
|
Assets
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Intangible assets
|
|
305,328
|
84,664
|
35,278
|
|
Property, plant and
equipment
|
|
4,418
|
3,208
|
2,609
|
|
Right-of-use assets
|
|
8,404
|
2,568
|
2,723
|
|
Contract acquisition
costs
|
|
427
|
402
|
-
|
|
Trade and other
receivables
|
|
641
|
811
|
182
|
|
Total non-current assets
|
|
319,218
|
91,653
|
40,792
|
|
|
|
|
|
|
|
Assets in disposal groups classified as held for
sale
|
|
-
|
5,455
|
-
|
|
Current assets
|
|
|
|
|
|
Inventories
|
|
7,062
|
1,989
|
908
|
|
Trade and other
receivables
|
|
42,701
|
24,991
|
18,685
|
|
Contract acquisition
costs
|
|
79
|
92
|
-
|
|
Current tax asset
|
|
1,104
|
220
|
-
|
|
Cash and cash equivalents
|
|
12,278
|
10,935
|
9,057
|
|
Total current assets
|
|
63,224
|
38,227
|
28,650
|
|
Total assets
|
|
382,442
|
135,335
|
69,442
|
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Trade and other payables
|
|
34,746
|
20,778
|
13,882
|
|
Loans and borrowings
|
|
9,251
|
-
|
-
|
|
Obligations under leases
|
|
2,617
|
831
|
754
|
|
Deferred income
|
|
1,318
|
873
|
302
|
|
Current tax liability
|
|
603
|
-
|
213
|
|
Contingent consideration
|
|
-
|
-
|
345
|
|
Total current liabilities
|
|
48,535
|
22,482
|
15,496
|
|
Liabilities directly associated with assets in Disposal groups
classified as held for sale
|
|
-
|
2,561
|
-
|
|
Non-current liabilities
|
|
|
|
|
|
Loans and borrowings
|
|
76,908
|
-
|
-
|
|
Obligations under leases
|
|
5,787
|
1,626
|
1,780
|
|
Deferred income
|
|
2,894
|
1,848
|
460
|
|
Contingent consideration
|
|
-
|
-
|
2,567
|
|
Deferred tax liability
|
|
33,925
|
4,134
|
2,139
|
|
Total non-current liabilities
|
|
119,514
|
7,608
|
6,946
|
|
Total liabilities
|
|
168,049
|
32,651
|
22,442
|
|
Total net assets
|
|
214,393
|
102,684
|
46,999
|
|
Issued capital and reserves attributable to owners of the
Company
|
|
|
|
|
|
Share capital
|
|
969
|
652
|
480
|
|
Share premium
|
|
131,131
|
37,293
|
36,966
|
|
Share-based payment
reserve
|
|
1,936
|
1,217
|
789
|
|
Merger reserve
|
|
69,754
|
52,212
|
1,390
|
|
Translation reserve
|
|
24
|
155
|
-
|
|
EBT reserve
|
|
(2,679)
|
(2,871)
|
(501)
|
|
Retained earnings
|
|
13,258
|
14,026
|
7,875
|
|
Total equity attributable to equity holders
|
|
214,393
|
102,684
|
46,999
|
* See Note 1
for details.
Company Statement of Financial
Position
At 31 December 2023
|
|
Note
|
2023
£'000
|
Restated*
2022
£'000
|
Restated*
2021
£'000
|
|
Assets
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Investment in Group
companies
|
|
207,830
|
92,514
|
42,823
|
|
Total non-current assets
|
|
207,830
|
92,514
|
42,823
|
|
|
|
|
|
|
|
Assets in disposal groups classified as held for
sale
|
|
-
|
2,564
|
-
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Trade and other
receivables
|
|
103,177
|
1,876
|
1,158
|
|
Cash and cash equivalents
|
|
875
|
3,418
|
3,961
|
|
Total current assets
|
|
104,052
|
5,294
|
5,119
|
|
Total assets
|
|
311,882
|
100,372
|
47,942
|
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Trade and other payables
|
|
16,311
|
5,139
|
1,480
|
|
Loans and borrowings
|
|
9,251
|
-
|
-
|
|
Contingent consideration
|
|
-
|
-
|
344
|
|
Total current liabilities
|
|
25,562
|
5,139
|
1,824
|
|
Non-current liabilities
|
|
|
|
|
|
Loans and borrowings
|
|
76,908
|
-
|
-
|
|
Contingent consideration
|
|
-
|
-
|
2,568
|
|
Total non-current liabilities
|
|
76,908
|
-
|
2,568
|
|
Total liabilities
|
|
102,470
|
5,139
|
4,392
|
|
Net
assets
|
|
209,412
|
95,233
|
43,550
|
|
Issued capital and reserves attributable to owners of the
Company
|
|
|
|
|
|
Share capital
|
|
969
|
652
|
480
|
|
Share premium
|
|
131,131
|
37,293
|
36,966
|
|
Share-based payment
reserve
|
|
1,936
|
1,217
|
789
|
|
Merger reserve
|
|
69,634
|
52,092
|
1,270
|
|
Translation reserve
|
|
-
|
-
|
-
|
|
EBT reserve
|
|
(2,679)
|
(2,871)
|
(501)
|
|
Retained earnings
|
|
8,421
|
6,850
|
4,546
|
|
Total equity attributable to equity holders
|
|
209,412
|
95,233
|
43,550
|
* See Note 1
for details.
Consolidated Statement of Cash
Flows
For the year ended 31 December
2023
|
|
Note
|
2023
£'000
|
Restated*
2022
£'000
|
|
Cash flows from operating activities
|
|
|
|
|
Profit for the year
|
|
3,037
|
8,154
|
|
Adjustments for:
|
|
|
|
|
Depreciation of property, plant and
equipment
|
|
1,066
|
756
|
|
Depreciation of right-of-use
assets
|
|
2,427
|
1,025
|
|
Amortisation of software & other
intangibles
|
|
925
|
500
|
|
Amortisation of acquired
intangibles
|
|
7,718
|
1,693
|
|
Non-recurring costs
|
|
786
|
-
|
|
Share-based payment
expense
|
|
838
|
535
|
|
Willow Pumps contingent
consideration
|
|
-
|
(1,232)
|
|
Gain on disposal of property, plant
and equipment
|
|
(54)
|
-
|
|
Finance expense
|
|
5,711
|
235
|
|
Exchange differences on translation
of foreign operations
|
|
76
|
(28)
|
|
Tax expense
|
|
1,979
|
1,912
|
|
Operating cash flow before movements in working
capital
|
|
24,509
|
13,550
|
|
(Increase) in trade and other
receivables
|
|
(3,767)
|
(3,062)
|
|
(Increase)/decrease in
inventories
|
|
338
|
(401)
|
|
Increase in trade and other
payables
|
|
3,368
|
1,950
|
|
Cash generated from operations
|
|
24,448
|
12,037
|
|
Corporation taxes paid
|
|
(4,498)
|
(2,629)
|
|
Net
cash generated from operating activities
|
|
19,950
|
9,408
|
|
Cash flows from investing activities
|
|
|
|
|
Purchases of property, plant and
equipment
|
|
(1,183)
|
(422)
|
|
Proceeds from the sale of property,
plant and equipment
|
|
251
|
259
|
|
Purchase of software
|
|
(1,350)
|
(1,088)
|
|
Purchase of Intellectual
Property
|
|
(522)
|
-
|
|
Loans to franchisees
|
|
(149)
|
(1,062)
|
|
Loans to franchisees
repaid
|
|
412
|
548
|
|
Deferred consideration
|
|
-
|
(1,680)
|
|
Acquisition of subsidiaries
including costs, net of cash acquired
|
4
|
(48,894)
|
4,320
|
|
Net
cash used in investing activities
|
|
(51,435)
|
875
|
|
Cash flows from financing activities
|
|
|
|
|
Bank loans - received
|
|
100,012
|
-
|
|
Bank loans - repaid
|
|
(62,097)
|
(2,953)
|
|
Loan notes - repaid
|
|
(29,155)
|
-
|
|
Preference shares -
repaid
|
|
(58,520)
|
-
|
|
Capital element of lease liability
repaid
|
|
(2,362)
|
(1,037)
|
|
Interest paid - bank and other
loan
|
|
(5,374)
|
(116)
|
|
Interest paid - leases
|
|
(325)
|
(119)
|
|
Proceed from issue of
shares
|
|
94,106
|
330
|
|
Proceeds from sale/(purchase) of
shares by the Employee Benefit Trust
|
|
192
|
(2,370)
|
|
Dividends paid
|
8
|
(3,371)
|
(2,339)
|
|
Net
cash generated/(absorbed) from financing
activities
|
|
33,106
|
(8,604)
|
|
Net
increase/(decreased) in cash and cash equivalents
|
|
1,621
|
1,679
|
|
Cash and cash equivalents at beginning of
year
|
|
10,935
|
9,057
|
|
Exchange differences on cash and
cash equivalents
|
|
(278)
|
199
|
|
Cash and cash equivalents at end of year
|
|
12,278
|
10,935
|
* See Note 1 for
details.
Reconciliation of cash flow to the Group net debt
position
|
Group
|
Term
Loan
£'000
|
Revolving
credit facility
£'000
|
Loans
& borrowings
£'000
|
Preference
shares
£'000
|
Lease
liabilities
£'000
|
Total
liabilities from financing activities
£'000
|
*Restated
Cash
£'000
|
*Restated
Total net cash/(net debt)
£'000
|
|
At
1 January 2022
|
-
|
-
|
-
|
-
|
(2,534)
|
(2,534)
|
9,057
|
6,523
|
|
Financing cash flows
|
(2,953)
|
-
|
-
|
-
|
1,155
|
(1,798)
|
-
|
(1,798)
|
|
Other cash flows*
|
-
|
-
|
-
|
-
|
-
|
-
|
1,679
|
1,679
|
|
Other changes
|
2,953
|
-
|
-
|
-
|
(1,377)
|
1,576
|
199
|
1,775
|
|
At
1 January 2023*
|
-
|
-
|
-
|
-
|
(2,756)
|
(2,756)
|
10,935
|
8,179
|
|
Financing cash inflows
|
(55,000)
|
(45,012)
|
-
|
-
|
-
|
(100,012)
|
-
|
(100,012)
|
|
Financing cash outflows
|
5,000
|
8,000
|
78,227
|
58,520
|
2,687
|
152,434
|
-
|
152,434
|
|
Leases interest expense
|
-
|
-
|
-
|
-
|
(325)
|
(325)
|
-
|
(325)
|
|
Other cash flows
|
-
|
-
|
-
|
-
|
-
|
-
|
(5,421)
|
(5,421)
|
|
Acquired through business
combination
|
-
|
-
|
(78,227)
|
(58,520)
|
(6,127)
|
(142,874)
|
7,042
|
(135,832)
|
|
Amortised loan fees
|
749
|
-
|
-
|
-
|
-
|
749
|
-
|
749
|
|
Foreign exchange
movements
|
-
|
104
|
-
|
-
|
(53)
|
51
|
(278)
|
(227)
|
|
New leases
|
-
|
-
|
-
|
-
|
(1,925)
|
(1,925)
|
-
|
(1,925)
|
|
Disposals
|
-
|
-
|
-
|
-
|
95
|
95
|
-
|
95
|
|
At
31 December 2023
|
(49,251)
|
(36,908)
|
-
|
-
|
(8,404)
|
(94,563)
|
12,278
|
(82,285)
|
* See Note 1
for details.
Company Statement of Cash
Flows
For the year ended 31 December
2023
|
|
Note
|
2023
£'000
|
Restated*
2022
£'000
|
|
Cash flows from operating activities
|
|
|
|
|
Profit for the year
|
|
5,000
|
4,639
|
|
Adjustments for:
|
|
|
|
|
Non-recurring costs
|
|
130
|
-
|
|
Management charges
|
|
(2,834)
|
-
|
|
Finance expenses
|
|
5,384
|
40
|
|
Willow Pumps contingent
consideration
|
|
-
|
(1,232)
|
|
Tax expense
|
|
(1,377)
|
(108)
|
|
Exchange differences on translation
of foreign operations
|
|
(105)
|
-
|
|
Share-based payment
expense
|
|
211
|
90
|
|
Operating cash flow before movements in working
capital
|
|
6,409
|
3,429
|
|
(Increase) in trade and other
receivables
|
|
3,373
|
(311)
|
|
Increase in trade and other
payables
|
|
11,071
|
4,292
|
|
Cash (absorbed)/generated from operations
|
|
20,853
|
7,410
|
|
Corporation taxes paid
|
|
(1,345)
|
(930)
|
|
Net
cash generated from operating activities
|
|
19,508
|
6,480
|
|
Cash flows from investing activities
|
|
|
|
|
Deferred consideration
|
|
-
|
(1,680)
|
|
Investment in subsidiary
|
|
(36,826)
|
-
|
|
Loan to subsidiary
|
|
(99,925)
|
-
|
|
Acquisition of subsidiaries
including costs
|
|
(57,855)
|
(924)
|
|
Net
cash used in investing activities
|
|
(194,606)
|
(2,604)
|
|
Cash flows from financing activities
|
|
|
|
|
Bank loans - received
|
|
100,012
|
-
|
|
Bank loans - repaid
|
|
(13,000)
|
-
|
|
Interest paid - bank and other
loans
|
|
(5,384)
|
(40)
|
|
Proceed from issue of shares (net of
costs)
|
|
94,106
|
330
|
|
Proceeds from sale/(purchase) of
shares by the Employee Benefit Trust
|
|
192
|
(2,370)
|
|
Dividends paid
|
8
|
(3,371)
|
(2,339)
|
|
Net
cash flows (used)/generated by financing
activities
|
|
172,555
|
(4,419)
|
|
Net
(decrease) in cash and cash equivalents
|
|
(2,543)
|
(543)
|
|
Cash and cash equivalents at beginning of
year
|
|
3,418
|
3,961
|
|
Cash and cash equivalents at end of year
|
|
875
|
3,418
|
Reconciliation of cash flow to the Company net debt
position
|
Group
|
Term Loan
£'000
|
Revolving
credit facility
£'000
|
Total liabilities
from financing
activities
£'000
|
*Restated
cash
£'000
|
*Restated
Total net cash
(net debt)
£'000
|
|
At
1 January 2022
|
-
|
-
|
-
|
3,961
|
3,961
|
|
Financing cash flows
|
-
|
-
|
-
|
-
|
-
|
|
Other cash flows*
|
-
|
-
|
-
|
(543)
|
(543)
|
|
Other changes
|
-
|
-
|
-
|
-
|
-
|
|
At
1 January 2023*
|
-
|
-
|
-
|
3,418
|
3,418
|
|
Financing cash inflows
|
(55,000)
|
(45,012)
|
(100,012)
|
-
|
(100,012)
|
|
Financing cash outflows
|
5,000
|
8,000
|
13,000
|
-
|
13,000
|
|
Other cash flows
|
-
|
-
|
-
|
(2,543)
|
(2,543)
|
|
Amortised loan fees
|
749
|
-
|
749
|
-
|
749
|
|
Foreign exchange
movements
|
-
|
104
|
104
|
-
|
104
|
|
At
31 December 2023
|
(49,251)
|
(36,908)
|
(86,159)
|
875
|
(85,284)
|
* See Note 1
for details.
Consolidated Statement of Changes in
Equity
For the year ended 31 December
2023
|
Group
|
Share
capital
£'000
|
Share
premium
account
£'000
|
Share-based
payment
£'000
|
Merger
reserve
£'000
|
Translation
reserve
£'000
|
*Restated
EBT reserve
£'000
|
*Restated Retained
earnings
£'000
|
Total
£'000
|
|
At
1 January 2022
|
480
|
36,966
|
789
|
1,390
|
-
|
(504)
|
8,205
|
47,325
|
|
Correction of Errors
|
-
|
-
|
-
|
-
|
-
|
3
|
(329)
|
(326)
|
|
*Restated At 1 January 2022
|
480
|
36,966
|
789
|
1,390
|
-
|
(501)
|
7,875
|
46,999
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
8,154
|
8,154
|
|
Foreign exchange translation
differences
|
-
|
-
|
-
|
-
|
155
|
-
|
-
|
155
|
|
Profit for the year and total
comprehensive income
|
-
|
-
|
-
|
-
|
155
|
-
|
8,154
|
8,309
|
|
Contributions by and distributions to owners
|
|
|
|
|
|
|
|
|
|
Shares issued
|
169
|
-
|
-
|
50,822
|
-
|
-
|
-
|
50,991
|
|
Dividend paid
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,339)
|
(2,339)
|
|
Contributions to Employee Benefit
Trust
|
3
|
327
|
-
|
-
|
-
|
(2,370)
|
-
|
(2,040)
|
|
Share-based payment
|
-
|
-
|
428
|
-
|
-
|
-
|
335
|
763
|
|
At 1 January 2023
|
652
|
37,293
|
1,217
|
52,212
|
155
|
(2,871)
|
14,026
|
102,684
|
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
3,037
|
3,037
|
|
Actuarial gain
|
-
|
-
|
-
|
-
|
-
|
-
|
63
|
63
|
|
Foreign exchange translation
differences
|
-
|
-
|
-
|
-
|
(131)
|
-
|
-
|
(131)
|
|
Profit for the year and total
comprehensive income
|
-
|
-
|
-
|
-
|
(131)
|
-
|
3,100
|
2,969
|
|
Contributions by and distributions to owners
|
|
|
|
|
|
|
|
|
|
Shares issued
|
317
|
96,392
|
-
|
17,542
|
-
|
-
|
-
|
114,251
|
|
Share Placing costs charged to Share
Premium
|
-
|
(2,554)
|
-
|
-
|
-
|
-
|
-
|
(2,554)
|
|
Dividend paid
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,371)
|
(3,371)
|
|
Contributions to Employee Benefit
Trust
|
-
|
-
|
-
|
-
|
-
|
192
|
-
|
192
|
|
Share-based payment
|
|
|
|
|
|
|
|
|
|
Tax on share-based payment
expense
|
-
|
-
|
-
|
-
|
-
|
-
|
(496)
|
(496)
|
|
At
31 December 2023
|
969
|
131,131
|
1,936
|
69,754
|
24
|
(2,679)
|
13,258
|
214,393
|
* See Note 1
for details.
Company Statement of Changes in
Equity
For the year ended 31 December
2023
|
Company
|
Share
capital
£'000
|
Share
premium
account
£'000
|
Share-based
payment
reserve
£'000
|
Merger
reserve
£'000
|
*Restated
EBT reserve
£'000
|
*Restated
Retained
earnings
£'000
|
*Restated
Total
£'000
|
|
At
1 January 2022
|
480
|
36,966
|
789
|
1,270
|
(504)
|
4,546
|
43,547
|
|
Correction of Errors
|
-
|
-
|
-
|
-
|
3
|
-
|
3
|
|
*Restated At 1 January 2022
|
480
|
36,966
|
789
|
1,270
|
(501)
|
4,546
|
43,550
|
|
*Restated Profit for the year and
total comprehensive income
|
-
|
-
|
-
|
-
|
-
|
4,639
|
4,639
|
|
Contributions by and distributions to owners
|
|
|
|
|
|
|
|
|
Shares issued
|
169
|
-
|
-
|
50,822
|
-
|
-
|
50,991
|
|
Dividend paid
|
-
|
-
|
-
|
-
|
-
|
(2,339)
|
(2,339)
|
|
Contributions to Employee Benefit
Trust
|
3
|
327
|
-
|
-
|
(2,370)
|
-
|
(2,040)
|
|
Share-based payment
|
-
|
-
|
428
|
-
|
-
|
4
|
432
|
|
At
1 January 2023
|
652
|
37,293
|
1,217
|
52,092
|
(2,871)
|
6,850
|
95,233
|
|
Profit for the year and total
comprehensive income
|
-
|
-
|
-
|
-
|
-
|
5,000
|
5,000
|
|
Contributions by and distributions to owners
|
|
|
|
|
|
|
|
|
Shares issued
|
317
|
96,392
|
-
|
17,542
|
-
|
-
|
114,251
|
|
Share Placing costs charged to Share
Premium
|
-
|
(2,554)
|
-
|
-
|
-
|
-
|
(2,554)
|
|
Dividend paid
|
-
|
-
|
-
|
-
|
-
|
(3,371)
|
(3,371)
|
|
Contributions to Employee Benefit
Trust
|
-
|
-
|
-
|
-
|
192
|
-
|
192
|
|
Share-based payment
|
|
|
|
|
|
|
|
|
Tax on share-based payment
expense
|
-
|
-
|
-
|
-
|
-
|
(58)
|
(58)
|
|
At
31 December 2023
|
969
|
131,131
|
1,936
|
69,634
|
(2,679)
|
8,421
|
209,412
|
* See Note 1
for details.
Notes forming part of the Financial
Statements
For the year ended 31 December
2023
1 Basis of preparation
The Group's financial statements
have been prepared in accordance with UK-adopted international
accounting standards, in accordance with the Companies Act 2006 as
they apply to the financial statements of the Group for the year
ended 31 December 2023. The Group's consolidated financial
statements are prepared under the historical cost convention. The
principal accounting policies adopted are set out below and have
been consistently applied to all the years presented. The Group's
financial statements are presented in sterling and all values are
rounded to the nearest thousand pounds (£'000s) except where
indicated.
The consolidated financial
statements incorporate the results and net assets of the Company
and its subsidiary undertakings. Subsidiaries are consolidated from
the date of their acquisition, being the date on which the Group
obtains control, and continue to be consolidated until the date
control ceases. All inter-company transactions and balances between
Group entities are eliminated upon consolidation.
2
Restatements
During the year we have identified a
number of errors that have given rise to a restatement of the prior
year accounts.
1. We
have identified errors that certain transactions in the Group's
Metro Rod Limited, The Filta Group Limited, Filta Deutschland GmbH
and ChipsAway International Limited subsidiaries had been
incorrectly treated in respect of IFRS 15. National account revenue
has historically been treated gross, with Metro Rod, The Filta
Group, Filta Deutschland GmbH and ChipsAway being the principal. We
are now treating this revenue net, as following consideration of
the underlying contracts, facts and circumstances, we consider
these subsidiaries to be acting as a commission agent for their
franchisees. The businesses only have momentary control of the
incoming order following acceptance of the job ahead of passing it
to the incumbent franchise in a back-to-back arrangement where
local franchisees have a right of first refusal on the order
received. Operational fulfilment also rests with the franchisee.
The impact of this is to reduce revenue in the year ended 31
December 2022 by £29.3m, with an equivalent reduction in cost of
sales; there is no profit impact of this change. This affects Note
1a.
2. We have identified
further transactions in the Metro Rod Limited subsidiary that have
been treated incorrectly in respect of IFRS 15. National account
revenue has historically been recognised at the point of invoice,
as we considered this to be our performance obligation. We now
consider our performance obligation to be the passing of the work
order to the franchisee, having considered the underlying
contracts, facts and circumstances. Therefore, revenue is now
recognised at this point. The impact of this is to increase revenue
and profit before tax in the year ended 31 December 2022 by £0.2m.
In the Consolidated Statement of Financial Position this adjustment
increases Trade and Other Receivables for Accrued Income by £3.5m
(2021: £2.6m), increases Trade and Other Payables for Accruals by
£2.7m (2021: £2.1m) and increases Retained Earnings by £0.7m (2021:
£0.6m). In the Consolidated Statement of Cashflows the impact is an
increase in profit of £0.2m, a £0.8m reduction in cash flows from
trade and other receivables and a £0.7m reduction in cash flows to
trade and other payables. This affects Note 1a, 1b and
1d.
3. We
have identified errors that certain transactions in the Group had
been incorrectly treated in respect of IFRS 15 in regard to the
timing of recognising franchise sales and related training fees.
Within Metro Rod Limited, ChipsAway International Limited,
Ovenclean Limited and Barking Mad Limited in the past we have
recognised the initial franchise fee when we have delivered the
training for the new franchises to operate in line with the
necessary standards on completion of the franchise sale (at a point
in time). This is however considered a pre-opening activity
necessary for the franchisee to operate and not a distinct
performance obligation in the franchisee contracts of these
subsidiaries. We are now recognising this revenue over the life of
the franchise agreement on a straight line basis, as our obligation
is to provide a licence for the franchise to operate, which extends
over the life of the agreement. The impact of this is to reduce
revenue and profit before tax in the year ended 31 December 2022 by
£0.2m. At 31 December 2022 this also created current deferred
income of £0.1m (2021: £0.3m) and non-current deferred income of
£0.1m (2021: £0.5m), increased liabilities held for sale by £0.8m
(2021: nil), decreased assets held for sale by £0.1m (2021: nil),
reversed previously held other debtors of nil (2021: £0.1m) and
decreased Retained Earnings by £1.1m (2021: £0.9m) in the
Consolidated Statement of Financial Position. In the Consolidated
statement of Cashflows this decreased profit by £0.2m, increased
cashflows from receivables by £0.0m and decreased cashflows to
payables by £0.2m. This affects Notes 1a, 1b and
1d.
4. Franchise Brands plc
acquired Filta Group Holdings plc in March 2022. A valuation
exercise was completed in the prior year as part of the purchase
price allocation exercise as required by IFRS 3. Errors were
identified in this valuation including incorrect rates being
applied and unsuitable valuation models being used for certain
intangibles. Another valuation was completed to correct these
errors subsequent to the 12 month measurement period. The review
occurred outside the permitted time period, and as such this is an
error in the prior year accounts and requires amendment as a prior
year adjustment not as fair value adjustment. The revaluation
decreased the fair value of intangibles acquired by £1.0m (reduced
software acquired by £2.7m, reduced indefinite life brands by
£0.1m, patent technology by £0.4m and customer relations by £0.6m;
however increased franchise agreements by £2.8m) and reduced the
deferred tax liability by £0.3m at recognition with the
corresponding impact being a £0.7m increase in goodwill. The impact
on the Consolidated Statement of Income is a £0.2m increase in
amortisation of acquired intangibles and a £0.0m increase in
relation to the deferred tax credit. The impact on the Consolidated
Statement of Financial Position is a £0.4m reduction in
intangible assets, a £0.3m decrease in deferred tax liability and a
£0.1m reduction in Retained Earnings. The impact on the
Consolidated Statement of Cash Flows is a £0.1m reduction in
profit, a £0.2m increase in the adjustment for amortisation of
acquired intangibles and a £0.0m decrease in the adjustment for
income tax with nil impact to operating cash flows. This affects
Notes 1a, 1b and 1d.
5. In previous periods
cash transferred to the Employee Benefit Trust ("EBT") which is
under the control of the Group, was assumed to be used immediately,
and therefore part of the EBT reserve. However, some of this cash
is held on our behalf, and as we have immediate access to this
cash, it is now accounted for in cash and cash equivalents. This
has increased cash at 31 December 2022 by £0.1m and increased cash
at 31 December 2021 by £0.0m in the Consolidated and Company
Statement of Financial Position with the corresponding decrease in
the EBT reserve. In both the Consolidated and Company Statement of
Cash Flows this has decreased the purchase of shares by the EBT by
£0.1m, increased cash at the beginning of the period by £0.0m and
increased cash at the end of the period by £0.1m. This affects
Notes 1b, 1c, 1d, 1e and the reconciliation of cash flow to the net
debt position of the Group and the Company.
6. Cash outflows of
£1.7m for the year ended 31 December 2022 with regards to deferred
consideration were incorrectly presented as operating cash
outflows. As the deferred consideration was related to the purchase
of Willow Pumps Limited these should be recorded as investing
activities. As a result these have been reclassified in the
Consolidated and Company Statement of Cash Flows for the year ended
31 December 2022 decreasing cash flows to trade and other payables
by £1.7m and increasing cash outflows for deferred consideration by
£1.7m with no overall impact on cash flows. This affects Notes 1d
and 1e.
7. The Company incurred
costs of £1.0m in the acquisition of Filta Group Holdings, expensed
as non-recurring costs. However, of this £0.9m were directly
attributable costs therefore the treatment of this was incorrect,
in accordance with IAS 27 that requires measurement of investment
in subsidiaries at cost for the Company. The correction removes
these non-recurring costs and increases the investment in Group
companies. This change is reversed on consolidation in line with
IFRS 3 and therefore has no impact on the Consolidated Statement of
Comprehensive Income. In the Company Statement of Comprehensive
Income it decreases non-recurring costs by £0.9m and increases
profit by £0.9m. In the Company Statement of Financial Position, it
increases investment in subsidiaries by £0.9m and retained earnings
by £0.9m. The impact on the Company Statement of Cash Flows is a
£0.9m increase in cash flows used in the acquisition of
subsidiaries with an increase in profit for the year of £0.9m. This
affects Notes 1c and 1e.
8. It was identified
that an error had been made recording intercompany debtors in the
Company, whereby they had been incorrectly netted off against
creditors in the prior periods. These were originally shown within
Trade and Other Payables, so adjustments to the Company Statement
of Financial Position were required to increase both Trade and
Other Receivables and Trade and Other Payables by £0.6m (2021:
£0.3m). There is no change to profit or reserves. The adjustments
had no overall impact on cash flows. In the Company Statement of
Cash Flows it decreased cash flows from trade and other receivables
by £0.3m, with an equivalent decrease in cash flows to trade and
other payables. This affects Notes 1c and 1e.
9. We have identified
errors in relation to the treatment of trade debtors recognised in
Metro Rod Limited for local account sales. In such transactions,
the work is sourced by the franchisee but billed by Metro Rod
Limited. The Group is obtaining royalty income only on the
transaction and does not have the credit risk for the full amount.
Trade debtors should therefore reflect only the amounts due to the
Group being the royalty fee. If advanced payments are made to the
franchisee before receipt of the full payment from the customer,
this should be recorded as a franchisee loan debtor. Given this is
a contractual obligation to the franchisee, the Group has recorded
the open commitments at year end in Note 22. When payment is
collected from the customer the assets recorded are de-recognised
and a trade payable recorded for the amounts due to the franchisee.
The total impact to the Consolidated Statement of Financial
Position is a £0.1m (2021: £0.4m) reduction in trade and other
receivables and a reduction of £0.1m (2021: £0.4m) in trade and
other payables. This is broken down as a reduction in trade
receivables of £2.4m (2021: £2.1m), and increase in other debtors
of £2.3m (2021: £1.7m); an increase in trade payables of £0.1m
(2021: a reduction of £0.1m), an increase in other creditors of
£1.4m (2021: £1.1m), a reduction in accruals of £1.4m (2021: £1.2m)
and a reduction in social security and other taxes of £0.2m (2021:
£0.1m). The impact on the Consolidated Statement of Cash Flows is a
£0.2m reduction in cash flows from trade and other receivables and
a £0.2m reduction in cash flows to trade and other payables. This
affects Notes 1b and 1d.
Restatements have been made to the
following notes to improve disclosures:
1. Within Note 7 of the financial statements prior year revenue
has been disaggregated further to give a greater understanding of
the Group's revenue streams to ensure compliance with the
requirements of IFRS 15. There is no impact on
revenue.
2. Within Note 14 of the
financial statements prior year intangible assets with indefinite
useful lives have been disaggregated further, to show Filta
International and Filta UK as separate CGUs in line with the
conclusions reached by Group management in the prior year. There is
no impact on intangibles. The note now also includes the
recoverable amount for all CGUs as required by IFRS
(UK).
3. Within Note 5 of the
financial statements, we have restated the segment reporting note
to show the assets arising from consolidation as unallocated assets
as opposed to within the other segment.
4. Within Note 6 of the
financial statements additional disclosures have been made within
the Filta Group Holdings section regarding the primary reasons for
the business combination, and the amounts of revenue and profit or
loss of the acquiree since the acquisition date included in the
Consolidated Statement of Comprehensive Income for 2022 as required
by IFRS 3.
5. Within Note 4 of the
financial statements we have restated trade and other payables
within the categories of financial instruments table, as it
previously included deferred income, which is not defined as a
financial instrument.
2a
Consolidated Statement of Comprehensive Income
(restated)
For the year ended 31 December
2022
|
|
Restatement number
|
As previously reported
31 December 2022
£'000
|
Correction
of errors
£'000
|
(Restated)
31 December
2022
£'000
|
|
Revenue
|
1, 2,
3
|
99,152
|
(29,313)
|
69,839
|
|
Cost of sales
|
1
|
(63,187)
|
29,289
|
(33,898)
|
|
Gross profit
|
|
35,965
|
(24)
|
35,941
|
|
Adjusted earnings before interest,
tax, depreciation, amortisation, share-based payments &
non-recurring items ("Adjusted EBITDA")
|
|
15,281
|
(24)
|
15,257
|
|
Depreciation
|
|
(1,781)
|
-
|
(1,781)
|
|
Amortisation of software
|
|
(500)
|
-
|
(500)
|
|
Amortisation of acquired
intangibles
|
4
|
(1,504)
|
(189)
|
(1,693)
|
|
Share-based payment
expense
|
|
(535)
|
-
|
(535)
|
|
Non-recurring items
|
|
(475)
|
-
|
(475)
|
|
Total administrative
expenses
|
|
(25,479)
|
(189)
|
(25,668)
|
|
Operating profit
|
|
10,486
|
(213)
|
10,273
|
|
Finance expense
|
|
(235)
|
-
|
(235)
|
|
Profit before tax
|
|
10,251
|
(213)
|
10,038
|
|
Tax expense
|
4
|
(1,961)
|
49
|
(1,912)
|
|
Profit for the year attributable to equity holders of the
Parent Company
|
|
8,290
|
(164)
|
8,126
|
|
Other comprehensive income
|
|
|
|
|
|
Exchange differences on translation
of foreign operations
|
|
28
|
-
|
28
|
|
Total comprehensive income attributable to equity holders of
the Parent Company
|
|
28
|
-
|
28
|
|
Earnings per share
|
|
|
|
|
|
Basic
|
|
6.81
|
(0.16)
|
6.65
|
|
Diluted
|
|
6.70
|
(0.16)
|
6.54
|
2b
Consolidated Statement of Financial Position
(restated)
As at 1 January 2022 and 31 December
2022
|
|
Restatement number
|
As
previously reported
31
December 2022
£'000
|
Correction
of errors
£'000
|
As
at 31 December
2022
(restated)
£'000
|
As
previously reported
1
January
2022
£'000
|
Correction
of errors
£'000
|
As
at 1 January 2022
(restated)
£'000
|
|
Assets
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Intangible assets
|
4
|
85,113
|
(449)
|
84,664
|
35,278
|
-
|
35,278
|
|
Property, plant and
equipment
|
|
3,208
|
-
|
3,208
|
2,609
|
-
|
2,609
|
|
Right-of-use assets
|
|
2,568
|
-
|
2,568
|
2,723
|
-
|
2,723
|
|
Contract acquisition
costs
|
|
402
|
-
|
402
|
-
|
-
|
-
|
|
Trade and other
receivables
|
|
811
|
-
|
811
|
182
|
-
|
182
|
|
Total non-current assets
|
|
92,102
|
(449)
|
91,653
|
40,792
|
-
|
40,792
|
|
|
|
|
|
|
|
|
|
|
Assets in disposal groups classified as held for
sale
|
3
|
5,576
|
(121)
|
5,455
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Inventories
|
|
1,989
|
-
|
1,989
|
908
|
-
|
908
|
|
Trade and other
receivables
|
2, 3,
9
|
21,660
|
3,331
|
24,991
|
16,514
|
2,171
|
18,685
|
|
Contract acquisition
costs
|
|
92
|
-
|
92
|
-
|
-
|
-
|
|
Current tax asset
|
|
220
|
-
|
220
|
-
|
-
|
-
|
|
Cash and cash equivalents
|
5
|
10,799
|
136
|
10,935
|
9,054
|
3
|
9,057
|
|
Total current assets
|
|
34,760
|
3,467
|
38,227
|
26,476
|
2,174
|
28,650
|
|
Total assets
|
|
132,438
|
2,897
|
135,335
|
67,268
|
2,174
|
69,442
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Trade and other payables
|
2,
9
|
18,160
|
2,618
|
20,778
|
12,144
|
1,738
|
13,882
|
|
Obligations under leases
|
|
831
|
-
|
831
|
754
|
-
|
754
|
|
Deferred income
|
3
|
807
|
66
|
873
|
-
|
302
|
302
|
|
Current tax liability
|
|
-
|
-
|
-
|
213
|
-
|
213
|
|
Contingent consideration
|
|
-
|
-
|
-
|
345
|
-
|
345
|
|
Total current liabilities
|
|
19,798
|
2,684
|
22,482
|
13,456
|
2,040
|
15,496
|
|
Liabilities directly associated with assets in disposal groups
classified as held for sale
|
3
|
1,786
|
775
|
2,561
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Obligations under leases
|
|
1,626
|
-
|
1,626
|
1,780
|
-
|
1,780
|
|
Deferred income
|
3
|
1,744
|
104
|
1,848
|
-
|
460
|
460
|
|
Contingent consideration
|
|
-
|
-
|
-
|
2,567
|
-
|
2,567
|
|
Deferred tax liability
|
4
|
4,444
|
(310)
|
4,134
|
2,139
|
-
|
2,139
|
|
Total non-current liabilities
|
|
7,814
|
(206)
|
7,608
|
6,486
|
460
|
6,946
|
|
Total liabilities
|
|
29,398
|
3,253
|
32,651
|
19,942
|
2,500
|
22,442
|
|
Total net assets
|
|
103,040
|
(356)
|
102,684
|
47,325
|
(326)
|
46,999
|
|
Issued capital and reserves attributable to owners of the
Company
|
|
|
|
|
|
|
|
|
Share capital
|
|
652
|
-
|
652
|
480
|
-
|
480
|
|
Share premium
|
|
37,293
|
-
|
37,293
|
36,966
|
-
|
36,966
|
|
Share-based payment
reserve
|
|
1,217
|
-
|
1,217
|
789
|
-
|
789
|
|
Merger reserve
|
|
52,212
|
-
|
52,212
|
1,390
|
-
|
1,390
|
|
Translation reserve
|
|
155
|
-
|
155
|
-
|
-
|
-
|
|
EBT reserve
|
5
|
(3,007)
|
136
|
(2,871)
|
(504)
|
3
|
(501)
|
|
Retained earnings
|
2, 3,
4
|
14,518
|
(492)
|
14,026
|
8,204
|
(329)
|
7,875
|
|
Total equity attributable to equity holders
|
|
103,040
|
(356)
|
102,684
|
47,325
|
(326)
|
46,999
|
2c
Company Statement of Financial Position
(restated)
As at 1 January 2022 and 31 December
2022
|
|
Restatement number
|
As
previously reported
31
December 2022
£'000
|
Correction
of errors
£'000
|
(Restated)
31
December 2022
£'000
|
As
previously reported
31
December 2021
£'000
|
Correction
of errors
£'000
|
(Restated)
31
December 2021
£'000
|
|
Assets
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Investment in Group
companies
|
7
|
91,590
|
924
|
92,514
|
42,823
|
-
|
42,823
|
|
Total non-current assets
|
|
91,590
|
924
|
92,514
|
42,823
|
-
|
42,823
|
|
|
|
|
|
|
|
|
|
|
Assets in disposal groups classified as held for
sale
|
|
2,564
|
-
|
2,564
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Trade and other
receivables
|
8
|
1,268
|
608
|
1,876
|
859
|
299
|
1,158
|
|
Cash and cash equivalents
|
5
|
3,282
|
136
|
3,418
|
3,958
|
3
|
3,961
|
|
Total current assets
|
|
4,550
|
744
|
5,294
|
4,817
|
302
|
5,119
|
|
Total assets
|
|
98,704
|
1,668
|
100,372
|
47,640
|
302
|
47,942
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Trade and other payables
|
8
|
4,531
|
608
|
5,139
|
1,181
|
299
|
1,480
|
|
Contingent consideration
|
|
-
|
-
|
-
|
344
|
-
|
344
|
|
Total current liabilities
|
|
4,531
|
608
|
5,139
|
1,525
|
299
|
1,824
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Contingent consideration
|
|
-
|
-
|
-
|
2,568
|
-
|
2,568
|
|
Total non-current liabilities
|
|
-
|
-
|
-
|
2,568
|
-
|
2,568
|
|
Total liabilities
|
|
4,531
|
608
|
5,139
|
4,093
|
299
|
4,392
|
|
Net
assets
|
|
94,173
|
1,060
|
95,233
|
43,547
|
3
|
43,550
|
|
Issued capital and reserves attributable to owners of the
Company
|
|
|
|
|
|
|
|
|
Share capital
|
|
652
|
-
|
652
|
480
|
-
|
480
|
|
Share premium
|
|
37,293
|
-
|
37,293
|
36,966
|
-
|
36,966
|
|
Share-based payment
reserve
|
|
1,217
|
-
|
1,217
|
789
|
-
|
789
|
|
Merger reserve
|
|
52,092
|
-
|
52,092
|
1,270
|
-
|
1,270
|
|
Translation reserve
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
EBT reserve
|
5
|
(3,007)
|
136
|
(2,871)
|
(504)
|
3
|
(501)
|
|
Retained earnings
|
7
|
5,926
|
924
|
6,850
|
4,546
|
-
|
4,546
|
|
Total equity attributable to equity holders
|
|
94,173
|
1,060
|
95,233
|
43,547
|
3
|
43,550
|
2d
Consolidated Statement of Cash Flows (restated)
For the year ended 31 December
2022
|
|
Restatement number
|
As
previously reported
31 December 2022
£'000
|
Correction
of errors
£'000
|
(Restated)
31
December 2022
£'000
|
|
Cash flows from operating activities
|
|
|
|
|
|
Profit for the year
|
2, 3,
4
|
8,318
|
(164)
|
8,154
|
|
Adjustments for:
|
|
|
|
|
|
Depreciation of property, plant and
equipment
|
|
756
|
-
|
756
|
|
Depreciation of right-of-use
assets
|
|
1,025
|
-
|
1,025
|
|
Amortisation of software
|
|
500
|
-
|
500
|
|
Amortisation of acquired
intangibles
|
4
|
1,504
|
189
|
1,693
|
|
Share-based payment
expense
|
|
535
|
-
|
535
|
|
Willow Pumps contingent
consideration
|
|
(1,232)
|
-
|
(1,232)
|
|
Finance expense
|
|
235
|
-
|
235
|
|
Exchange differences on translation
of foreign operations
|
|
(28)
|
-
|
(28)
|
|
Tax expense
|
4
|
1,961
|
(49)
|
1,912
|
|
Operating cash flow before movements in working
capital
|
|
13,574
|
(24)
|
13,550
|
|
(Increase)/decrease in trade and
other receivables
|
2, 3,
9
|
(2,022)
|
(1,040)
|
(3,062)
|
|
(Increase) in inventories
|
|
(401)
|
-
|
(401)
|
|
Increase/(decrease) in trade and
other payables
|
2, 3, 6,
9
|
(794)
|
2,744
|
1,950
|
|
Cash generated from operations
|
|
10,357
|
1,680
|
12,037
|
|
Corporation taxes paid
|
|
(2,629)
|
-
|
(2,629)
|
|
Net
cash generated from operating activities
|
|
7,728
|
1,680
|
9,408
|
|
Cash flows from investing activities
|
|
|
|
|
|
Purchases of property, plant and
equipment
|
|
(422)
|
-
|
(422)
|
|
Proceeds from the sale of property,
plant and equipment
|
|
259
|
-
|
259
|
|
Purchase of software
|
|
(1,088)
|
-
|
(1,088)
|
|
Loans to franchisees
|
|
(1,062)
|
-
|
(1,062)
|
|
Franchisee loans repaid
|
|
548
|
-
|
548
|
|
Deferred consideration
|
6
|
-
|
(1,680)
|
(1,680)
|
|
Acquisition of subsidiaries
including costs, net of cash acquired
|
|
4,320
|
-
|
4,320
|
|
Net
cash used in investing activities
|
|
2,555
|
(1,680)
|
875
|
|
Cash flows from financing activities
|
|
|
|
|
|
Bank loans - repaid
|
|
(2,953)
|
-
|
(2,953)
|
|
Capital element of lease liability
repaid
|
|
(1,037)
|
-
|
(1,037)
|
|
Interest paid - bank and other
loan
|
|
(116)
|
-
|
(116)
|
|
Interest paid - leases
|
|
(119)
|
-
|
(119)
|
|
Proceed from issue of
shares
|
|
330
|
-
|
330
|
|
Purchase of shares by the Employee
Benefit Trust
|
5
|
(2,503)
|
133
|
(2,370)
|
|
Dividends paid
|
|
(2,339)
|
-
|
(2,339)
|
|
Net
cash generated from financing activities
|
|
(8,737)
|
133
|
(8,604)
|
|
Net
increase in cash and cash equivalents
|
|
1,546
|
133
|
1,679
|
|
Cash and cash equivalents at beginning of
year
|
5
|
9,054
|
3
|
9,057
|
|
Exchange differences on cash and
cash equivalents
|
|
199
|
-
|
199
|
|
Cash and cash equivalents at end of year
|
|
10,799
|
136
|
10,935
|
2e
Company Statement of Cash Flows (restated)
For the year ended 31 December
2022
|
|
Restatement number
|
As
previously reported
31
December 2022
£'000
|
Correction
of errors
£'000
|
(Restated)
31
December 2022
£'000
|
|
Cash flows from operating activities
|
|
|
|
|
|
Profit for the year
|
7
|
3,715
|
924
|
4,639
|
|
Adjustments for:
|
|
|
-
|
|
|
Finance expenses
|
|
40
|
-
|
40
|
|
Willow Pumps contingent
consideration
|
|
(1,232)
|
-
|
(1,232)
|
|
Tax expense
|
|
(108)
|
-
|
(108)
|
|
Share-based payment
expense
|
|
90
|
-
|
90
|
|
Operating cash flow before movements in working
capital
|
|
2,505
|
924
|
3,429
|
|
Decrease/(increase) in trade and
other receivables
|
8
|
(2)
|
(309)
|
(311)
|
|
Increase/(decrease) in trade and
other payables
|
6,
8
|
2,303
|
1,989
|
4,292
|
|
Cash generated from operations
|
|
4,806
|
2,604
|
7,410
|
|
Corporation taxes paid
|
|
(930)
|
-
|
(930)
|
|
Net
cash generated from operating activities
|
|
3,876
|
2,604
|
6,480
|
|
Cash flows from investing activities
|
|
|
|
|
|
Deferred consideration
|
6
|
-
|
(1,680)
|
(1,680)
|
|
Acquisition of subsidiaries
including costs
|
7
|
-
|
(924)
|
(924)
|
|
Net
cash used in investing activities
|
|
-
|
(2,604)
|
(2,604)
|
|
Cash flows from financing activities
|
|
|
|
|
|
Interest paid - bank and other
loans
|
|
(40)
|
-
|
(40)
|
|
Proceed from issue of
shares
|
|
330
|
-
|
330
|
|
Purchase of shares by the Employee
Benefit Trust
|
5
|
(2,503)
|
133
|
(2,370)
|
|
Dividends paid
|
|
(2,339)
|
-
|
(2,339)
|
|
Net
cash flows (used)/generated by financing
activities
|
|
(4,552)
|
133
|
(4,419)
|
|
Net
(decrease)/increase in cash and cash equivalents
|
|
(676)
|
133
|
(543)
|
|
Cash and cash equivalents at beginning of
year
|
5
|
3,958
|
3
|
3,961
|
|
Cash and cash equivalents at end of year
|
|
3,282
|
136
|
3,418
|
3.
Operating segments
The Group's operating segments are
determined based on the Group's internal reporting to the Chief
Operating Decision Maker ("CODM"). The CODM has been determined to
be the Executive Chairman, with support from the Board of
Directors, as the function primarily responsible for the allocation
of resources to segments and assessment of performance of the
segments. The business is organised along the lines of our Pirtek,
Water & Waste Services, Filta International and B2C
businesses.
Therefore, the Board has determined
that we have six different operating segments:
· Pirtek
Europe, the franchise and direct labour operations of Pirtek across
eight European countries;
· Water
& Waste Services, which is made up of Metro Rod and Metro
Plumb, Willow Pumps and Filta UK;
· Filta
International, which is made up of Filta US and Filta
Europe;
· B2C,
which is made up of ChipsAway, Ovenclean and Barking
Mad;
· Azura,
which is made up of the software business of Azura; and
· Other
operations including central administration costs and non-trading
companies.
The CODM uses Adjusted EBITDA, as
reviewed at Board meetings and as part of the Managing Directors'
and Chief Financial Officer's weekly report to the senior
management team, as the key measure of segments' results as it
reflects the underlying performance for the financial year under
evaluation.
|
2023
|
Pirtek
£'000
|
Water &
Waste
£'000
|
Filta
International
£'000
|
B2C
£'000
|
Azura
£'000
|
Unallocated
assets
£'000
|
Total
£'000
|
|
Revenue
|
41,947
|
48,880
|
27,117
|
6,106
|
745
|
(3,530)
|
121,265
|
|
Gross profit
|
30,539
|
25,597
|
9,768
|
4,899
|
745
|
(343)
|
71,205
|
|
Adjusted EBITDA*
|
13,318
|
10,907
|
6,097
|
2,316
|
214
|
(2,751)
|
30,101
|
|
Depreciation & amortisation of
software
|
(1,808)
|
(2,147)
|
(222)
|
(178)
|
(89)
|
27
|
(4,417)
|
|
Amortisation of acquired
intangibles
|
(5,468)
|
-
|
(35)
|
-
|
-
|
(2,215)
|
(7,718)
|
|
Share-based payment
expense
|
(290)
|
(329)
|
(86)
|
(28)
|
(4)
|
(101)
|
(838)
|
|
Non-recurring costs
|
(1,864)
|
(1,189)
|
(98)
|
(16)
|
(43)
|
(2,949)
|
(6,159)
|
|
Finance expense
|
(403)
|
(54)
|
(93)
|
(12)
|
(2)
|
(5,389)
|
(5,953)
|
|
Other gains and losses
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Profit before tax*
|
3,485
|
7,188
|
5,563
|
2,082
|
76
|
(13,378)
|
5,016
|
|
Tax expense
|
(1,042)
|
(1,315)
|
(1,605)
|
(409)
|
(20)
|
2,412
|
(1,979)
|
|
Profit after tax*
|
2,443
|
5,873
|
3,958
|
1,673
|
56
|
(10,966)
|
3,037
|
|
Additions to non-current
assets
|
2,573
|
1,928
|
319
|
136
|
270
|
223,539
|
228,765
|
|
Reportable segment assets
|
88,141
|
49,315
|
8,013
|
3,836
|
545
|
232,592
|
382,442
|
|
Reportable segment
liabilities
|
(115,533)
|
(30,165)
|
(6,910)
|
(2,322)
|
(206)
|
(12,913)
|
(168,049)
|
* Operating
segments presented before inter-company management recharges which
eliminate on consolidation.
|
2022 (restated)**
|
Pirtek
£'000
|
Water
& Waste
£'000
|
Filta
International
£'000
|
B2C
£'000
|
Azura
£'000
|
Unallocated assets
£'000
|
Total
£'000
|
|
Revenue
|
-
|
42,473
|
23,749
|
6,138
|
797
|
(3,318)
|
69,839
|
|
Gross profit
|
-
|
22,362
|
8,090
|
5,076
|
796
|
(383)
|
35,941
|
|
Adjusted EBITDA*
|
-
|
9,250
|
5,214
|
2,457
|
171
|
(1,835)
|
15,257
|
|
Depreciation & amortisation of
software
|
-
|
(1,998)
|
(180)
|
(188)
|
(32)
|
117
|
(2,281)
|
|
Amortisation of acquired
intangibles
|
-
|
(4,620)
|
(30)
|
-
|
-
|
2,957
|
(1,693)
|
|
Share-based payment
expense
|
-
|
(303)
|
(107)
|
(25)
|
(10)
|
(90)
|
(535)
|
|
Non-recurring costs
|
-
|
(363)
|
(11)
|
-
|
-
|
(101)
|
(475)
|
|
Finance expense
|
-
|
(210)
|
31
|
(14)
|
(2)
|
(40)
|
(235)
|
|
Other gains and losses
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Profit before tax*
|
-
|
1,756
|
4,917
|
2,230
|
127
|
1,008
|
10,038
|
|
Tax expense
|
-
|
(75)
|
(1,203)
|
(405)
|
(16)
|
(213)
|
(1,912)
|
|
Profit after tax*
|
-
|
1,681
|
3,714
|
1,825
|
111
|
795
|
8,126
|
|
Additions to non-current
assets
|
-
|
1,593
|
798
|
55
|
212
|
52,564
|
55,222
|
|
Reportable segment assets
|
-
|
34,866
|
9,189
|
5,456
|
328
|
85,496
|
135,335
|
|
Reportable segment
liabilities
|
-
|
(16,397)
|
(4,871)
|
(2,562)
|
(9)
|
(8,812)
|
(32,651)
|
* Operating
segments presented before inter-company management recharges which
eliminate on consolidation.
** See Note
1.
4.
Business combination
Acquisition of Pirtek
At close of business on 20 April
2023, the Company completed the acquisition of the entire
share capital of Hydraulic Authority I
Limited ("HAI") and its subsidiaries (together "Pirtek Europe") for
consideration of £73,527,000. Accordingly, the Company owns 100% of
the entire issued share capital of Hydraulic
Authority I Limited. The acquisition was announced to the
Stock Exchange on 21 April 2023.
Pirtek Europe was acquired to
purchase a complementary high growth B2B essential services
business in a franchise and direct labour
operation with operations throughout Europe so increasing the Group
footprint. Pirtek Europe is also the clear market leader in Europe,
with a long-standing and highly regarded brand, excellent customer
services and a range of long-standing customers across a wide range
of industries. Pirtek Europe has multiple growth opportunities
itself as well as potential synergies through cross selling to
Group customers and operational leverage in purchasing, IT
and finance with the rest of the Group.
|
|
£'000
|
|
Cash
|
55,936
|
|
Consideration shares
|
17,591
|
|
Fair value of consideration
|
73,527
|
|
Cash flows
|
Group
£'000
|
Company
£'000
|
|
Cash
|
(55,936)
|
(55,936)
|
|
Cash acquired
|
7,042
|
-
|
|
Capitalised acquisition
costs
|
-
|
(1,919)
|
|
Acquisition of subsidiaries including costs, net of cash
acquired
|
(48,894)
|
(57,855)
|
The gross cost of the acquisition of
£210.8m was funded through a combination of cash and equity. Cash
was raised via £100.0m debt, £94.1m from the issue of new shares
(after costs), and £17.6m new shares were given as consideration
shares. Immediately following the acquisition Franchise Brands
settled Pirtek Europe's preference shares as well as loans and
borrowings in order to consolidate Group borrowings. The total
value of this post-acquisition settlement is £137.3m comprising of
£78.2m loans and borrowings, £0.6m acquisition costs paid by HAI on
behalf of the Company (recorded as an intercompany payable in the
Company and an intercompany receivable in HAI), £21.7m interest on
preference shares (recorded as an intercompany receivable in the
Company and an intercompany payable in HAI), and £36.8m in relation
to the nominal value of the preference shares (which were converted
to ordinary shares in HAI); these were recorded as an investment in
subsidiary in the Company and reallocated to eliminate share
capital on consolidation.
In total £7.6m costs were incurred
relating to this transaction. £2.6m of these costs related to the
new share issue have been disclosed as a reduction in share premium
with the remaining £5.0m disclosed within the consolidated
statement of comprehensive income in non-recurring costs. Of the
£5.0m non-recurring costs £3.5m were acquisition-related costs and
£1.5m were reorganisation costs.
The Company incurred costs totalling
£6.1m; £1.6m has been disclosed within the Company statement of
comprehensive income in non-recurring costs, £2.6m as a reduction
in share premium and £1.9m of directly attributable costs were
capitalised as investment in Group companies and reallocated to
non-recurring costs on consolidation.
Details of the fair value of the
identifiable assets and liabilities acquired, purchase
consideration and goodwill were as follows:
|
|
Book
value
£'000
|
Adjustments
£'000
|
Fair
value
£'000
|
|
Intangible assets
|
64,927
|
50,418
|
115,345
|
|
IT systems
|
768
|
-
|
768
|
|
Property, plant and
equipment
|
1,219
|
-
|
1,219
|
|
Right-of-use assets
|
6,127
|
-
|
6,127
|
|
Inventories
|
5,225
|
-
|
5,225
|
|
Trade and other
receivables
|
14,577
|
-
|
14,577
|
|
Cash
|
7,042
|
-
|
7,042
|
|
Trade and other payables
|
(10,969)
|
152
|
(10,817)
|
|
Deferred income
|
(1,126)
|
-
|
(1,126)
|
|
Loans and borrowings
|
(78,227)
|
-
|
(78,227)
|
|
Lease liability
|
(6,127)
|
-
|
(6,127)
|
|
Dilapidation provision
|
-
|
(334)
|
(334)
|
|
Preference shares
|
(58,520)
|
-
|
(58,520)
|
|
Deferred tax liability
|
(10,669)
|
(20,519)
|
(31,188)
|
|
Total fair value of the identifiable assets and liabilities
acquired
|
(65,753)
|
29,717
|
(36,036)
|
|
Fair value of
consideration
|
|
|
73,527
|
|
Goodwill
|
|
|
109,563
|
On acquisition net assets have been
reviewed and adjusted to Fair value. Adjustments have been made to
intangible assets, which were revalued at acquisition, giving rise
to a £50.4m adjustment. Adjustments have also been made to
trade and other payables to remove pre-acquisition tax charges at
the point of acquisition and a dilapidation provision has been
created for warehouse relocation costs. The book value acquired has
been amended to align with the relevant IFRS standards for
rights-of-use assets, lease liabilities, IT systems and deferred
income.
A deferred tax liability adjustment
has been calculated on the value of intangible assets using a
blended deferred tax rate of 27.3% followed by the deduction of the
existing deferred tax liability relating to acquired intangibles.
Two deferred tax assets were created in relation to the adjustment
of IT systems at 25% and the dilapidation provision at 30%. An
additional deferred tax asset was created in relation to
pre-acquisition tax credits not recognised.
The fair value of consideration was
calculated using a 13.6 times earnings multiple (and discounted
future cash flows), which is comparable with other entities within
the Group. The rationale behind this allowed for significant growth
and performance enhancement in the future due to operational
leverage that management believe can be achieved given the similar
business model to current operations.
The goodwill recognised includes
certain intangible assets that cannot be separately identified and
measured due to their nature, such as the assembled workforce and
synergies that are expected to be achieved. This includes control
over the acquired business, and the scale and the future growth
opportunities that it provides to the Group's operations. If the
acquisition had occurred on 1 January 2023 Group revenue would have
been £139.2m and Group loss before tax would have been £2.4m; the
revenue for Pirtek Europe would have been £59.9m and loss before
tax would have been £5.0m (both profit figures include a £5.8m
goodwill amortisation adjustment in Pirtek in March 2023). Since
acquisition Pirtek Europe has contributed £41.9m revenue and profit
before tax of £2.4m to the Group.
In Austria, Pirtek 24/7
HydraulikService GmbH is a subsidiary where Pirtek Austria GmbH
(acquired by Franchise Brands) owns 51% of the ordinary shares.
This gives rise to an immaterial non-controlling interest which has
not been disclosed within these accounts.
Acquisition of Filta Group Holdings Plc
On 10 March 2022, the Company
announced that its all-share offer for Filta Group Holdings Plc and
its subsidiaries (together, "Filta") became unconditional. On 1
June 2022 the Company announced that the compulsory acquisition of
the remaining Filta shares was completed. Accordingly, the Company
owns 100% of the entire issued share capital of Filta.
Filta was purchased to buy a high
growth complementary B2B franchisee business, in a niche market
with no direct competitor. Filta delivers cost savings to clients
and distinct positive environmental outcomes. Filta has opportunity
to grow complementary services, increase revenue per customer,
upgrade existing franchisees and achieve operational leverage as it
grows. It also increases the Group's presence in
North America.
|
|
£'000
|
|
Consideration shares
|
50,991
|
|
Fair value of consideration
|
50,991
|
The consideration paid was made up
of £50,991,000 through the issue of 33,788,008 new ordinary shares
of 0.5p each in the Company at 151 pence per share.
Acquisition costs relating to this
transaction amounted to £1,011,000 and have been disclosed within
the consolidated statement of comprehensive income in non-recurring
items. The Company's financial statements have been amended for the
period to capitalise £924,000 of directly attributable acquisition
costs as investment in subsidiaries that were previously reported
as non-recurring costs; this change has no impact on the Group
financial statements.
Details of the fair value of the
identifiable assets and liabilities acquired, purchase
consideration and goodwill were as follows:
|
|
Book
value
£'000
|
*Restated
Adjustments
£'000
|
*Restated
Fair
value
£'000
|
|
Intangible assets
|
6,701
|
9,594
|
16,295
|
|
Property, plant and
equipment
|
1,191
|
(44)
|
1,147
|
|
Right-of-use assets
|
656
|
-
|
656
|
|
Inventories
|
1,466
|
-
|
1,466
|
|
Trade and other
receivables
|
4,436
|
(250)
|
4,186
|
|
Cash
|
4,229
|
91
|
4,320
|
|
Trade and other payables
|
(7,507)
|
33
|
(7,474)
|
|
Loans and borrowings
|
(2,953)
|
-
|
(2,953)
|
|
Deferred tax
asset/(liability)
|
570
|
(3,458)
|
(2,888)
|
|
Total fair value of the identifiable assets and liabilities
acquired
|
8,789
|
5,966
|
14,755
|
|
Fair value of
consideration
|
|
|
50,991
|
|
Goodwill
|
|
|
36,236
|
* See Note 1
for further information.
On acquisition intangible assets
were reviewed and adjusted by £10.6m to a deemed fair value. In
2023 we completed a further review of the fair value of intangible
assets at acquisition and subsequently reduced this by £1.0m; this
has reduced the deferred tax liability by £0.3m, and increased
goodwill by £0.7m. There were no changes to the original forecasts
used at acquisition date. The review reduced software acquired by
£2.7m, reduced indefinite life brands by £0.1m, patent technology
by £0.5m and customer relations by £0.5m; however it has increased
franchise agreements by £2.8m. As this review was performed more
than 12 months after the date of acquisition this adjustment has
been processed as a prior period correction and further information
can be seen in Note 1.
On acquisition adjustments were made
to write off £0.25m of other receivables which management does not
believe to be supported at the acquisition date; to cash and other
payables for pre-acquisition share option exercises that were not
reflected in the financial statements at acquisition; and to PPE to
better reflect the fair value of assets acquired.
A deferred tax liability adjustment
has been calculated on the fair value of intangible assets using a
blended deferred tax rate of 26% followed by the deduction of the
existing deferred tax liability relating to acquired
intangibles.
The fair value of consideration was
calculated as the present value of future expected free cash flows
using a discount rate of 18.9%, slightly above our WACC of 16.6% at
acquisition. The rationale behind this allowed for significant
growth and performance enhancement in the future due to synergies
that management believe can be achieved given the similar business
model to current operations.
The goodwill recognised includes
certain intangible assets that cannot be separately identified and
measured due to their nature, such as the assembled workforce and
synergies that are expected to be achieved. This includes control
over the acquired business, and the scale and the future growth
opportunities that it provides to the Group's operations. If the
acquisition had occurred on 1 January 2022, Group revenue would
have been £74.5m and Group profit before tax would have been
£10.0m; the revenue for Filta would have been £37.1m and loss
before tax would have been £0.0m.
As at 9 March 2022 the Company had
received acceptances equal to 82% from the holders of Filta Group
Holdings plc shares. As at 25 March 2022 this had risen to above
90%. This gave rise to an immaterial non-controlling interest which
has not been disclosed within these accounts.
5.
Revenue
|
|
2023
£'000
|
2022
(*restated)
£'000
|
|
Management service fee income -
commission agent revenue
|
7,393
|
5,358
|
|
Management service fee income -
royalty fee income
|
32,827
|
11,339
|
|
Franchise sales and resales -
licence fees - recognised over time
|
1,754
|
1,209
|
|
Franchise sales and resales -
termination fees and immediate sales -
recognised at point in time
|
1,030
|
787
|
|
Product sales
|
18,415
|
3,605
|
|
Waste oil
|
17,469
|
16,139
|
|
Direct labour income
|
39,165
|
29,017
|
|
IT Contribution SAAS
|
436
|
433
|
|
National advertising
funds
|
1,632
|
1,446
|
|
Central billing fee
|
268
|
-
|
|
Training facility income
|
304
|
41
|
|
Other income
|
572
|
465
|
|
|
121,265
|
69,839
|
The table shows revenue from
contracts disaggregated into major classes of revenue and
reconciled to the Group revenue reported.
Revenue and non-current assets by
origin of geographical segment for all entities in the Group are as
follows:
|
Revenue
|
2023
£'000
|
2022
(*restated)
£'000
|
|
North America
|
26,507
|
23,273
|
|
United Kingdom
|
68,327
|
46,089
|
|
Europe
|
26,431
|
477
|
|
|
121,265
|
69,839
|
|
Non-current assets
|
2023
£'000
|
2022
(*restated)
£'000
|
|
North America
|
44,251
|
44,985
|
|
United Kingdom
|
167,989
|
47,605
|
|
Europe
|
107,414
|
(937)
|
|
|
319,654
|
91,653
|
|
Contract assets
|
2023
£'000
|
2022
£'000
|
|
At 1 January
|
-
|
53
|
|
Revenue recognised in the
year
|
-
|
(53)
|
|
At
31 December
|
-
|
-
|
* See Note 1
for further information.
Contract assets are included within
trade and other receivables. They have historically arisen from
advance payments made to our franchisees.
6.
Operating profit
|
Operating profit is stated after charging:
|
2023
£'000
|
2022
(*restated)
£'000
|
|
Depreciation
|
3,492
|
1,781
|
|
Amortisation
|
8,643
|
2,193
|
|
Share-based payment
expense
|
838
|
535
|
|
Auditors' remuneration:
|
|
|
|
Fees for audit of the
Company
|
44
|
24
|
|
Fees for the audit of the
Group
|
618
|
249
|
|
Fees for non-audit services:
|
|
|
|
Taxation services
|
113
|
80
|
|
Corporate finance
services
|
726
|
106
|
|
Other services
|
66
|
10
|
* See Note 1
for further information.
Of the total fee for the audit of
the Group, £662,000 (2022: £273,000) was paid to the Group
statutory auditors BDO LLP. No non-audit services were provided on
a contingent fee basis.
The following costs have been drawn
to the attention of the users of the accounts due to their nature
and materiality within the accounts.
|
|
2023
£'000
|
2022
£'000
|
|
Acquisition-related costs
|
3,514
|
1,011
|
|
Reorganisation expense
|
1,496
|
686
|
|
Intellectual property
dispute
|
516
|
-
|
|
Write-off software
intangibles
|
314
|
-
|
|
Other exceptional costs
|
319
|
-
|
|
|
6,159
|
1,697
|
A summary of the separately
disclosed items for the current year is as follows:
Acquisition-related costs £3,514,000 (2022:
£1,011,000).
At close of business on 20 April
2023, the Group acquired the entire share capital of Hydraulic
Authority I Limited and its subsidiaries (together "Pirtek" or
"Pirtek Europe"). The Group incurred total professional costs of
£2,855,000 for the acquisition of Pirtek. These fees were primarily
related to legal, financial and IT due diligence £763,000, Group
legal fees including legal due diligence £756,000, stamp duty
£659,000, Pirtek legal fees funded by the Group £343,000, legal
fees paid by the Group on behalf of the four bank lending syndicate
£201,000, legal fees paid by the Group on behalf of the Group
brokers £77,000 that helped raise the equity to part fund the
acquisition, debt advisory fees £435,000 for raising the debt to
partially fund acquisition, underwriting and other debt costs fees
£91,000, and other professional costs of £189,000 including the AIM
stock exchange fee for listing the shares. In addition to these
costs, which have been separately disclosed as non-recurring costs
in the Consolidated Statement of Comprehensive Income additional
costs of £2,554,000 have been charged to the share premium account
as these costs directly related to the equity issuance on the
acquisition of Pirtek. The 2022 acquisition related fees all relate
to the acquisition of Filta Group Holdings PLC.
Reorganisation costs £1,496,000 (2022:
£686,000)
Following the acquisition of Pirtek,
a restructuring plan has been completed that has been the departure
from the Group of several long-serving Directors of Pirtek
including the Chief Executive, Chief Financial Officer, Financial
Controller, IT Director and Operations Director. The total cost of
this restructuring is £1,350,000 and the legal and other associated
costs are £146,000. The 2022 restructuring costs of £686,000 were
for redundancies £250,000, loss of office for the Chief Financial
Officer £319,000 and other reorganisation costs of
£117,000.
Intellectual property dispute £516,000 (2022:
Nil)
The Group has been in a
long-standing relationship with Fog Fellow Designs Limited ("FF")
that manufactures the cyclone GRU used by Filta UK. The dispute
arose over ownership of the intellectual property and loans to FF
to enable the development of GRU. The total separately disclosed
costs for this dispute were £516,000 broken down as loan written
off to FF when this went into administration in the second half of
2023 £233,000, write-off of non-compliant GRU inventory £220,000,
legal fees £23,000 and other associated costs £40,000.
Software costs £314,000 (2022: Nil)
The Group's accounting policy has
historically been to capitalise all costs related to the
configuration or customisation of software as intangible assets.
Following the agenda decision of the International Financial
Reporting Standards Interpretations Committee (IFRIC) certain
previously recognised intangible assets have been treated as an
expense.
Other costs £319,000 (2022: Nil)
Other exceptional costs are made up
of costs such as relocation fees, redundancies and the abortive
sale of B2C.
7.
Earnings per share
Basic earnings per share amounts are
calculated by dividing profit for the year attributable to ordinary
equity holders of the Parent Company by the weighted average number
of ordinary shares outstanding during the year.
Diluted earnings per share are
calculated by dividing the profit attributable to ordinary equity
holders of the Parent Company by the weighted average number of
ordinary shares outstanding during the year plus the weighted
average number of ordinary shares that would have been issued on
the conversion of all dilutive share options at the start of the
period or, if later, the date of issue.
|
|
2023
£'000
|
*Restated
2022
£'000
|
|
Profit attributable to owners of the
Parent Company
|
3,037
|
8,126
|
|
Non-recurring costs (Note
8)
|
6,159
|
1,708
|
|
Amortisation of acquired intangibles
(Note 14)
|
7,718
|
1,693
|
|
Change in the fair value of deferred
consideration (Note 24)
|
-
|
(1,232)
|
|
Share-based payment expense (Note
10)
|
838
|
535
|
|
Tax on adjusting items
|
(3,174)
|
(649)
|
|
Adjusted profit attributable to
owners of the Parent Company
|
14,578
|
10,181
|
|
|
2023 Total
Number
|
2022
Total
Number
|
|
Basic weighted average number of
shares
|
173,090,691
|
122,126,350
|
|
Dilutive effect of share
options
|
2,241,161
|
2,042,848
|
|
Diluted weighted average number of
shares
|
175,331,852
|
124,169,198
|
|
|
Pence
|
*Restated
Pence
|
|
Basic earnings per share
|
1.75
|
6.65
|
|
Diluted earnings per
share
|
1.73
|
6.54
|
|
Adjusted earnings per
share
|
8.42
|
8.34
|
|
Adjusted diluted earnings per
share
|
8.31
|
8.20
|
* See Note 1
for further information.
8.
Dividends
|
|
2023
£'000
|
2022
£'000
|
|
Final 2022 dividend of 1.1p per
ordinary share paid and declared (2022: Final 2021 dividend of
0.9p)
|
1,433
|
1,169
|
|
Interim dividend of 1.0p per
ordinary share paid and declared (2022: 0.9p)
|
1,938
|
1,170
|
|
|
3,371
|
2,339
|
A final dividend of 1.2 pence per
ordinary share is proposed.
9.
Annual Report & Accounts
The annual report and accounts for
the year ended 31 December 2023 will be available on the Company's
website at www.franchisebrands.co.uk/investor-relations from 21
June 2024, and copies will be sent to those shareholders who
have elected to receive hard copy communications on 24
June.
10.
Annual General Meeting
Under the Companies Act 2006 (the
"Act"), the Company is required to convene its AGM by 30 June
2024 on at least 21 clear days' notice and the notice of AGM,
which is on the Company's website, was sent to shareholders on 3
June to convene a meeting on 27 June 2024. The Act
also requires that the annual report and accounts for the year
ended 31 December 2023 ("Annual Report") is laid before
shareholders at a general meeting and that the document must be
posted at least 21 clear days before the meeting at which it is to
be laid.
The Company intends to post the
Annual Report to relevant shareholders on 24 June. Since
that date is less than 21 clear days before the date of the AGM,
the Company intends to immediately adjourn the AGM when it
commences on 27 June 2024, with no formal business being
transacted, and then resume the meeting on 18 July 2024. Full
details of the business of the AGM, all of which will be considered
on 18 July 2024, was set out in the letter to shareholders
accompanying the notice of AGM published on 3 June.