Proposed Acquisition and Launch of ABB

RNS Number : 2198V

Franchise Brands PLC

03 April 2023

 

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3 April 2023

Franchise Brands plc

("Franchise Brands", the "Group" or the "Company")

Proposed acquisition of Hydraulic Authority I Limited, the owner of Pirtek Europe,

and proposed Placing by way of an accelerated bookbuild

The Board of Franchise Brands plc, an international multi-brand franchise business, is pleased to announce that it has conditionally agreed to acquire Hydraulic Authority I Limited, the owner of Pirtek Europe, an established European provider of on-site hydraulic hose replacement and associated services, for a consideration of £200 million and £12.2 million for cash, debt and working capital adjustments. The Acquisition is conditional on, inter alia, completion of the Fundraise and the passing of the Resolutions at the General Meeting.

The Acquisition and working capital requirements of Pirtek are to be funded by new bank debt facilities of £110 million and a minimum of £110 million in equity issued by the Company.  The equity issue will comprise: (i) Consideration Shares up to £18.85 million; (ii) a Subscription with Pirtek management and employees of approximately £4.8 million; and (iii) a Placing to raise at least £90 million. The Placing will be undertaken at 180 pence per share by way of an accelerated bookbuild (the "Bookbuild"), which will be launched immediately following this announcement (being, together with the Appendices hereto, the "Announcement") and will be made available to new and existing institutional investors.  

Allenby Capital Limited ("Allenby") and Dowgate Capital Limited ("Dowgate") are acting as bookrunners in the UK and Stifel Nicolaus Europe Limited ("Stifel") is acting as bookrunner for the US and Europe in respect of the Placing (together, the "Bookrunners" or "Joint Brokers").

Further details of the Bookbuild and Acquisition are provided below and in the Appendices of this Announcement.

Acquisition highlights - Pirtek Europe

· Pirtek Europe is an established European provider of on-site hydraulic hose replacement and associated services, operating via 213 service centres and 838 mobile service units (vans).

· Pirtek's mission-critical, emergency response service is provided within a target one hour arrival time, 24 hours a day, 365 days a year to a diverse portfolio of customers.

· 70 franchisees, with system sales largely derived from franchising.

· A strong history of growth, with a 5-year Adjusted EBITDA compound annual growth rate of 18.8% to 31 December 2022*. 

· Systems sales were £164.1 million in 2022*, representing a 33.5% increase since 2020*.

· Adjusted EBITDA was £14.7 million in 2022*, representing a 77.0% increase since 2020*.

· Currently operates in eight European countries (including the UK) and has the potential for geographical expansion with the right to operate in an additional eight European countries. 

· Multiple growth opportunities, including: growing system sales by driving local sales and adding mobile units and service centres; expanding the range of services, including total hose management and planned services; and leveraging technology to increase efficiency.

· All members of Pirtek's senior management team are expected to remain with the Enlarged Group, with Alex McNutt, Chief Executive Officer of Pirtek, to be appointed to the Board following completion of the Acquisition.

· A number of Pirtek's management and employees intend to invest approximately £4.8 million by way of the Subscription and through up to £7.8 million of Consideration Shares.

* unaudited prorated for the year ended 31 December.

Strategic rationale

· In line with Franchise Brands' strategy to complement organic growth with selective accretive acquisitions focused on B2B franchise systems of van-based businesses that provide essential services, Pirtek represents the opportunity to acquire a complementary B2B franchise business of scale that will expand the Group's presence across a number of key European countries.

· The Acquisition is highly complementary to the Group's existing businesses and, by expanding its operations to ten countries, will significantly advance the Board's aim to create a market leading international B2B multi-brand franchisor in the UK, Europe and North America.

· The Board believes that the size and diversification of the Enlarged Group will provide greater resilience in the services provided, customer base, end markets and franchise networks and geographically.

· Pirtek Europe's established overhead will provide a low-cost platform from which to launch the Group's current brands into new markets where Pirtek operates currently.

· The combined franchising experience of the Enlarged Group will accelerate the growth of the combined businesses. The Board considers Pirtek Europe to have a strong management team, providing breadth and capacity for further expansion of the existing and Enlarged Group's brands into Europe and the US. 

· There are a number of opportunities to leverage central services efficiently between Franchise Brands and Pirtek, principally in the areas of technology, marketing and finance, which is expected to allow significant expansion of the Enlarged Group without material additional overhead costs.

· Forecast revenue of the Enlarged Group of £155 million in the year ending 31 December 2023, or £168 million on a pro forma basis**, and £182 million in the year ending 31 December 2024, resulting in forecast Adjusted EBITDA of £29.0 million, £33.5 million and £36.9 million respectively.***

**  assuming the Acquisition completed on 1 January 2022; for illustrative purposes only.

*** the basis of preparation and assumptions for these forecasts are set out in Appendix II below.

Key financial details of the Acquisition and the Fundraising

· Acquisition consideration of £200 million and £12.2 million for cash, debt and working capital adjustments will be financed through new bank debt facilities of £110 million and at least £110 million of equity made up of :

· the issue of up to 10,470,232 Consideration Shares at the Issue Price for a value of up to £18.85 million (which may be reduced subject to the result of the Bookbuild);

· the Placing of at least £90 million; and

· the Subscription of approximately £4.8 million,

with any additional funds above the cash Consideration amount to be used for Acquisition expenses (c. £6.5 million excluding VAT), working capital for the Enlarged Group and maintaining an appropriate level of cash headroom.

· The £200 million Consideration (excluding the Adjustment Payment) represents a multiple of 13.6x Pirtek Europe's Adjusted EBITDA for the unaudited prorated year to 31 December 2022, and the Directors forecast this to fall to approximately 12.0x by 31 December 2023.

· The Acquisition is expected to be immediately earnings accretive and forecast by the Board to generate single digit earnings accretion in the first full year of ownership.

· The new debt facilities comprise a £55 million Term Loan and a £55 million Revolving Credit Facility, with a four year term and one year extension option, and a margin of between 200 and 300 basis points over SONIA, dependent on leverage on a last twelve months basis.

· The Board estimates that net debt to Adjusted EBITDA will be 2.3x at 31 December 2023 (on a pro forma basis), falling to 1.6x at 31 December 2024.

· Full repayment of this new debt is expected within five years (on the basis of an expected drawing of £100 million on Admission).

· The Placing is seeking to raise at least £90 million, before expenses, through the issue of Placing Shares at the Issue Price of 180 pence per share ( representing a discount of approximately 27 per cent. to the latest practicable Closing Price on 31 March 2023) .

· The Bookbuild will commence immediately following this announcement and the Company expects to close the Bookbuild shortly thereafter. However, the Bookrunners and the Company reserve the right to close the Bookbuild earlier or later, without further notice. Details of the result of the Bookbuild and the number of Placing Shares will be announced as soon as practicable after the close of the Bookbuild.

· Certain of the Directors intend to subscribe for at least £2.2 million in the Placing and a number of Pirtek's senior management and employees and the Proposed Director (Alex McNutt) have also indicated their intention to invest approximately £4.8 million via the Subscription in addition to up £7.8 million in Consideration Shares they will receive.

· The Placing and Subscription are conditional upon, among other things, the passing of the Resolutions, completion of the Acquisition, the Placing Agreement not being terminated in accordance with its terms and Admission becoming effective.

· The Bookbuild is subject to the terms and conditions in Appendix III.

· The Acquisition and Fundraising are conditional on the passing of the Resolutions at a General Meeting scheduled for 20 April 2023 to provide the share authority to issue the New Ordinary Shares.

Stephen Hemsley, Executive Chairman of the Company, commented :

"We are delighted to announce the proposed transformational acquisition of Pirtek Europe, a high quality provider of mission-critical, emergency response on-site hydraulic hose replacement and associated services. The Acquisition brings an established business of scale with an attractive financial profile and growth prospects and significantly expands the Group's range of B2B services, customer base and end markets.

"Building on the strong performance of the Group's acquisition of Filta in March 2022, which brought an international footprint in North America and Europe, Pirtek Europe extends the Group's European presence across several key countries, providing a platform from which to launch the Group's existing brands.

"By expanding the Group's operations to ten countries, the Acquisition will significantly advance the Board's aim to create a market leading international B2B multi-brand franchisor that generates its income equally from the UK, North America and continental Europe. We look forward to working with Pirtek Europe's strong management team to accelerate growth and drive operational leverage across the combined business."

Further information on the Placing and Bookbuild and the Subscription

The Placing and the Bookbuild are subject to the Terms and Conditions set out in Appendix III to this Announcement.

The Joint Brokers will commence the Bookbuild and the Bookbuild will open immediately following the release of this Announcement. The timing of the closing of the Bookbuild and allocations are at the absolute discretion of the Company and the Joint Brokers. The number of Placing Shares to be placed in the Bookbuild at the Issue Price will be determined following closing of the Bookbuild. Details of the result of the Bookbuild and the number of Placing Shares to be issued will be announced as soon as practicable after the close of the Bookbuild.

The Placing is conditional upon, among other things, the passing of the Resolutions, completion of the Acquisition, Admission becoming effective and the Placing Agreement not being terminated in accordance with its terms.

A notice convening the General Meeting, at which the Resolutions will be proposed, is expected to be posted to shareholders tomorrow. If the Resolutions are passed at the General Meeting on 20 April 2023, completion of the Acquisition, Placing, Subscription and Admission are expected to take place on or around 21 April 2023.

The Placing Shares, when issued, will be credited as fully paid and will rank pari passu in all respects with the Company's then existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on or in respect of such shares after the date of issue. The New Ordinary Shares (which includes the Placing Shares) will not qualify for the final dividend announced on 9 March 2023.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that settlement for the Placing Shares and Admission will take place at 8.00 a.m. on 21 April 2023 .

Persons who chose to participate in the Placing, by making an oral, electronic or written offer to subscribe for Placing Shares, will be deemed to have read and understood this Announcement in its entirety (including the Appendices) and to be making such offer on the terms and subject to the conditions herein, and to be providing the representations, warranties, agreements, acknowledgements and undertakings contained in Appendix III.

In addition to the Placing, certain of the Management Sellers have conditionally agreed to re-invest approximately £4.8 million of cash Consideration to be received by them pursuant to the Sale and Purchase Agreement in a subscription directly with the Company for Ordinary Shares.

Additional information

Subject to completion of the Bookbuild, a Circular convening a General Meeting of the Company's Shareholders is expected to be posted tomorrow and as set out in Appendix I below, will provide details of, and the background to, the Acquisition and the Fundraise, and will set out the reasons why the Board believes that the Acquisition and the Fundraise are in the best interests of the Company and its Shareholders and to seek Shareholder approval of the Resolutions.

Please refer to Appendix I to this Announcement (which forms part of this Announcement) which sets out further details of Pirtek, the Acquisition and the Fundraise, as extracted from the Circular.

The basis of preparation and assumptions for the forecasts contained in this Announcement are set out in Appendix II (which forms part of this Announcement) .

Appendix III to this Announcement (which forms part of this Announcement) sets out further information relating to the Bookbuild and the terms and conditions of the Placing.

Unless otherwise stated, capitalised terms in this Announcement have the meanings ascribed to them in Appendix IV (which forms part of this Announcement).

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in the "Important Notices" section below and the appendices to this Announcement (which form part of this Announcement) which includes the terms and conditions of the Placing.

Expected timetable of principal events

Publication of results of the Bookbuild	4 April 2023
Publication of Circular	4 April 2023
Last date and time for receipt of Proxy Forms for the Annual General Meeting	11.00 a.m. on 14 April 2023
Last date and time for receipt of Proxy Forms for the General Meeting	9.00 a.m. on 18 April 2023
Annual General Meeting	11.00 a.m. on 18 April 2023
General Meeting	9.00 a.m. on 20 April 2023
Admission of New Ordinary Shares to trading on AIM and completion of the Acquisition	21 April 2023

Enquiries:

Franchise Brands plc	+ 44 (0) 162 550 7910
Stephen Hemsley, Executive Chairman
Andrew Mallows, Interim Chief Financial Officer
Julia Choudhury, Corporate Development Director
Allenby Capital Limited (Nominated Adviser and Joint Broker)	[phone]
Amrit Nahal / Tony Quirke/ Joscelin Pinnington (Sales & Corporate Broking) Jeremy Porter / George Payne (Corporate Finance)
Dowgate Capital Limited (Joint Broker)	[phone]
James Serjeant / Paul Richards / John Monks / Colin Clime (Corporate Broking & Sales) Russell Cook / Nicholas Chambers (Corporate Finance)
Stifel Nicolaus Europe Limited (Joint Broker)	[phone]
Matthew Blawat / Francis North
MHP Group (Financial PR)	[phone]
Katie Hunt / Catherine Chapman	[phone]
	[e-mail]

IMPORTANT NOTICES

No action has been taken by the Company or Allenby, Dowgate or Stifel or any of their respective affiliates, or any person acting on its or their behalf that would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and the Joint Brokers to inform themselves about, and to observe, such restrictions.

No prospectus, offering memorandum, offering document or admission document has been or will be made available in connection with the matters contained in this Announcement and no such prospectus is required (in accordance with Regulation (EU) No 2017/1129 (as amended) (the "EU Prospectus Regulation") or the EU Prospectus Regulation as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("EUWA") (the "UK Prospectus Regulation")) to be published. Persons needing advice should consult a qualified independent legal adviser, business adviser, financial adviser or tax adviser for legal, business, financial or tax advice.

This Announcement is not for publication or distribution, directly or indirectly, in or into the United States of America.  This Announcement is not an offer of securities for sale into the United States.  The securities referred to herein have not been and will not be registered under the US Securities Act and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration.  No public offering of securities is being made in the United States.

This Announcement has not been approved by the London Stock Exchange.

This Announcement must not be acted on or relied on by persons who are not Relevant Persons (as defined in Appendix III). Persons distributing this Announcement must satisfy themselves that it is lawful to do so. Any investment or investment activity to which this Announcement relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.

The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada, no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; the relevant clearances have not been, and will not be, obtained for the South Africa Reserve Bank or any other applicable body in South Africa in relation to the Placing Shares and the Placing Shares have not been, nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Australia, Canada, Japan or South Africa. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, Japan or South Africa or any other jurisdiction in which such activities would be unlawful.

By participating in the Bookbuild and the Placing, each person who is invited to and who chooses to participate in the Placing (each a "Placee") by making an oral or written and legally binding offer to acquire Placing Shares will be deemed to have read and understood this Announcement in its entirety, to be participating, making an offer and acquiring Placing Shares on the terms and conditions contained in Appendix III to this Announcement and to be providing the representations, warranties, indemnities, acknowledgements and undertakings contained in Appendix III to this Announcement.

Certain statements contained in this Announcement constitute "forward-looking statements" with respect to the financial condition, results of operations and businesses and plans of the Company and its subsidiaries from time to time (including after the Acquisition completes) (the "Group"). Words such as "believes", "anticipates", "estimates", "expects", "intends", "plans", "aims", "potential", "will", "would", "could", "considered", "likely", "estimate" and variations of these words and similar future or conditional expressions, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon future circumstances that have not occurred. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. As a result, the Group's actual financial condition, results of operations and business and plans may differ materially from the plans, goals and expectations expressed or implied by these forward-looking statements. No representation or warranty is made as to the achievement or reasonableness of, and no reliance should be placed on, such forward-looking statements. The forward-looking statements contained in this Announcement speak only as of the date of this Announcement. The Company, its directors, the Joint Brokers, their respective affiliates and any person acting on its or their behalf each expressly disclaim any obligation or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law or regulation or the London Stock Exchange.

This Announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Joint Brokers or by any of its affiliates or any person acting on its or their behalf as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

This Announcement does not constitute a recommendation concerning any investor's investment decision with respect to the Placing. Any indication in this Announcement of the price at which Ordinary Shares have been bought or sold in the past cannot be relied upon as a guide to future performance. The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance. This Announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the Placing Shares. The contents of this Announcement are not to be construed as legal, business, financial or tax advice. Each investor or prospective investor should consult their or its own legal adviser, business adviser, financial adviser or tax adviser for legal, business, financial or tax advice.

All offers of the Placing Shares will be made pursuant to an exemption under the UK Prospectus Regulation or the EU Prospectus Regulation from the requirement to produce a prospectus. This Announcement is being distributed and communicated to persons in the UK only in circumstances to which section 21(1) of the FSMA does not apply.

The Placing Shares to be issued or sold pursuant to the Placing will not be admitted to trading on any stock exchange other than the AIM market of the London Stock Exchange.

Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into or forms part of this Announcement.

This Announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside the United Kingdom.

Allenby, Dowgate and Stifel are authorised and regulated in the United Kingdom by the FCA and are acting exclusively for the Company and no one else in connection with the Placing, the contents of this Announcement or any other matters described in this Announcement. Allenby, Dowgate and Stifel will not regard any other person as its client in relation to the Placing, the content of this Announcement or any other matters described in this Announcement and will not be responsible to anyone (including any Placees) other than the Company for providing the protections afforded to its clients or for providing advice to any other person in relation to the Placing, the content of this Announcement or any other matters referred to in this Announcement.  Allenby's responsibilities as Nominated Adviser to the Company are owed solely to the London Stock Exchange and no-one else.

APPENDIX I - FURTHER INFORMATION ON THE ACQUISITION AND THE FUNDRAISE

The following information has been extracted from the Chairman's letter from the Circular which is proposed to be sent to shareholders on 4 April 2023, subject to the successful closing of the Bookbuild.

1.  Details on Pirtek

Pirtek is an established European provider of on-site hydraulic hose replacement and associated services. It provides this mission-critical, emergency response van-based service within a target one hour arrival time, 24 hours a day, 365 days a year. Time-sensitive service solutions such as this are of great importance in industries where downtime costs typically outweigh the costs of the Pirtek service and which have safety critical needs, high labour costs or well-evolved customer service standards. Pirtek also offers a comprehensive range of related services, underpinned by approximately 2,500 core products that Pirtek supplies to franchisees.

Pirtek Europe was established in 1988 following the grant from the Australian founders of a royalty free, Master Franchise Licence Agreement for an indefinite term in respect of 16 countries in Europe and currently operates in eight countries - the UK, Republic of Ireland, Germany, France, Austria, Belgium, Sweden and the Netherlands - giving it a prominent market presence in western Europe.

Pirtek has 213 service centres and a fleet of 838 mobile service vehicles. System sales are largely generated by its franchise businesses. Pirtek primarily operates a royalty model, with the majority of its 70 franchisees paying a MSF for the use of the brand and ongoing services and support provided by Pirtek, enabling Pirtek to grow as its franchisees grow.

Pirtek has a strong history of growth and in the year to 31 December 2022, Pirtek Europe had system sales of £164.1 million and Adjusted EBITDA of £14.7 million, as per unaudited management accounts.*

Pirtek has a highly experienced management team led by Alex McNutt, who has been Chief Executive Officer since 2015 and will be appointed to the Board following Admission. Each geographic operation of Pirtek has its own Managing Director and support team. All members of Pirtek's senior management team are expected to remain with the Enlarged Group following completion of the Acquisition and together with other Pirtek employees, have committed approximately £4.8 million to the Fundraise. Further details of the participation in the Fundraise by Pirtek's management and employees are set out in paragraph 6 below.

* unaudited prorated for the year ended 31 December.

Pirtek's services and operations

Pirtek delivers its services through a combination of service centres and mobile units operated by highly trained MSTs (mobile service technicians), all of which are supported by a head office management team.

Pirtek provides the following services for hydraulic hoses and associated services:

· a target one hour arrival for on-site emergency hose replacement and associated repairs, undertaken from a fleet of 838 mobile service vehicles;

· non-time critical, or planned, on-site hose replacement and associated repairs and maintenance;

· trade counter service and support from 213 service centres which supply parts and hose assemblies to walk-in customers;

· total hose management, which includes:

· inspection and cataloguing of all hoses in situ, which are then registered and tagged;

· full preventive maintenance programmes for registered hydraulic hoses; and

· training courses of customers' own labour and technicians;

· oil spill products;

· pneumatic products and services;

· hose flushing, testing and fluid analysis;

· ram repair and manufacture;

· systems design and bespoke solutions; and

· training courses.

Jobs are performed by in-house trained MSTs with the aim of ensuring a fast, safe, and high-quality repair or replacement. The MST's primary role includes providing a professional on-site hydraulic hose repair or replacement service, as well as providing routine maintenance checks. The MSTs also assist with marketing the Pirtek service by visiting customers' sites when not engaged in a service call.

Each mobile unit has the capability to perform most of the services that can be carried out at a service centre. Mobile units are well stocked, containing various hoses, fittings and adaptors, as well as specialist tools, such as crimping kits and vices.

Pirtek's mobile units are serviced and managed by 213 service centres, each of which have a trade counter open to the public which sell a diversified range of products for use across a multiplicity of end markets. This includes hoses, fittings, couplings, clamps, fluids and lubricants, valves, pumps and motors.

Franchisees are required to purchase all core products directly from Pirtek. Core hoses are Pirtek branded and delivered to franchisees weekly, or on an overnight basis in the case of an emergency. Pirtek has warehouses in Cologne and Rotterdam and in the UK uses a third party warehouse in Milton Keynes. Pirtek provides franchisees with a nominated supplier list from whom they can purchase tens of thousands of non-core products.

Pirtek uses modern ERP (enterprise resource planning) technology to monitor stock availability and franchisees use Management Information Systems (MIS) to track their inventory profile. Pirtek typically requires franchisees to hold sufficient core product to meet demand.

Pirtek's geographical penetration through its network of service centres and number of mobile units underpins Pirtek's target to be on-site for emergencies within a one hour target, 24 hours a day, 365 days a year.

Country	No. of franchisees	No. of Service centres	No. of Mobile units (vans)
UK & Republic of Ireland	37	86	334
Germany	10	90	321
Benelux	20*	23	99
France	Pirtek operated	7	42
Austria	3	6	20
Sweden	Pirtek operated	1	22
Total	70	213	838

*3 in Belgium are operated by Pirtek

Customers and sales

Pirtek undertakes more than 500,000 jobs per year and services a diverse portfolio of thousands of customers across a number of end markets, with no single customer representing more than 1 per cent. of total revenues. The wide range of customer sectors includes waste treatment and recycling, industrial, maritime, equipment rental, construction, agriculture, mining, events, logistics and transportation. A number of these sectors have a high degree of resilience. Customers include Veolia, Amey, Biffa, Balfour Beatty, Briggs, CAT, Cemex, Felbermayr, Pre Zero, Tarmac and Wacker Neuson. Sales consist of national accounts, regional accounts and local accounts.

In the UK and the Republic of Ireland, Pirtek has historically outscored its key competitors on purchasing criteria such as speed of response, nationwide service, quality of job, customer service and health and safety, allowing Pirtek to charge premium rates. The Directors believe that Pirtek's target one hour response, scale and business model focused on mobile and trade counter services provide Pirtek with a competitive advantage.

The Directors believe that Pirtek benefits from national and international brand awareness, including through its mobile units, which are regularly on the road in a distinct, recognisable livery. Pirtek has in-house marketing teams based in the UK, Germany and the Netherlands.

Franchisees and central services

Pirtek has a total of 70 franchisees, of which 37 are in the UK and Republic of Ireland, 10 in Germany, 20 in Benelux and 3 in Austria. The markets in Sweden and France are operated corporately by PEL and not franchised, as are some franchises in Belgium. The majority of franchisees have between two and six service centres, with the largest having 15 centres in Germany and Austria.

Franchisees are contractually bound by a franchise agreement with Pirtek (the "Franchise Agreement") that contains certain provisions which are intended to ensure compliance with the high standards of the brand. The Franchise Agreement grants the right to operate the Pirtek brand and use the intellectual property in a defined geographical area, on an exclusive basis, with initial and ongoing services and support provided by head office. In return, each franchisee pays an initial franchise fee (or renewal fee as applicable) and an on-going MSF. The MSF is between 15 per cent. (in Germany) and 19.5 per cent. (in the UK) of a franchisee's total sales. Product sales are charged at cost plus a handling fee. Some costs are recharged to franchisees, such as IT, marketing, training and central invoicing services.

Franchise Agreements are typically for a contract term of between five and ten years and, subject to the franchisee having substantially observed and performed the terms of the Franchise Agreement (and certain other conditions), the franchisee can renew the agreement for a further term.

The Directors believe that Pirtek has a high value-added franchisor proposition centred around the provision of a range of central support services to its franchisees. Franchisees are supported by the head office for each country, which is responsible for providing and managing:

· central marketing resources;

· national and regional customer referrals;

· continued support and incentives for new service centres and mobile units;

· core and non-core product procurement support;

· business and commercial support, including assistance with franchisee sales; and

· development and support services such as training, CRM system, uniform, network KPIs and mandatory business planning.

Training and technical support

Pirtek provides training to franchisees and MSTs, including City & Guilds certification in the UK, to provide initial certification and then on a regular basis, to ensure they are kept abreast of developments within the industry and provide good customer service.

Pirtek also seeks to ensure that high health and safety and environmental standards are upheld by all staff. The nature of the work and services provided by Pirtek means there is an elevated level of health and safety requirements and potential risk.

Pirtek operates dedicated training academies in Birmingham (UK), Cologne (Germany) and Rotterdam (the Netherlands). Training includes practical and classroom-based courses ranging from franchisee business planning workshops to hydraulic safety awareness

Recognised in the market for its high standards, Pirtek also offers health and safety training to customers using its standard MST courses. Pirtek is a recognised trainer by the British Fluid Power Association.

Pirtek also provides franchisees with technical support for complex jobs or where they need specialised products or know how.

Master Franchise Licence Agreement

Pirtek Europe entered into a royalty free, Master Franchise Licence Agreement for an indefinite term  with PFSPL, an Australian company, in 1988. There is also a trademark licence agreement alongside the Master Agreement.

The Master Agreement provides that PFSPL grants to PEL an exclusive licence to use the PFSPL system, trade name and related trademarks within 16 countries in Europe: the UK (including the Isle of Man and the Channel Islands), the Republic of Ireland, Germany, Belgium, Austria, the Netherlands, France and Sweden (all countries that Pirtek currently operates in), as well as Denmark, Finland, Iceland, Italy, Luxembourg, Norway, Spain and Portugal (the latter eight being countries where Pirtek does not currently operate).

The Master Agreement is, in effect, a master licence allowing PEL and its subsidiary undertakings to grant franchises and use the Pirtek name and trademarks in the territories referred to above (or subdivisions thereof) in the operation of a business selling, custom manufacturing and installing hydraulic industrial hoses, fittings and components.

Whilst the grant of rights to PEL is irrevocable, there is a termination right which PFSPL may exercise if PEL becomes insolvent or ceases to carry on trading. There is no right in the Master Agreement to terminate for breach of contract or for change of control.

Financial information on HAI and Pirtek Europe

PEL is an intermediary holding company of Pirtek Europe and the principal operating company of the Pirtek group. The ultimate holding company of PEL is HAI, which will be acquired by Franchise Brands in the Acquisition.

Pirtek Europe has a strong history of growth, with an Adjusted EBITDA compound annual growth rate of 18.8 per cent. over the five years to 31 December 2022, as per audited and management accounts. Pirtek Europe's unaudited management accounts for the year to 31 December 2022 record system sales of £164.1 million and Adjusted EBITDA of £14.7 million. This equates to a 33.5 per cent. increase in system sales in the three years to 31 December 2022 and a 77.0 per cent. increase in Adjusted EBITDA.

The following table summarises key financial results of Pirtek Europe For three years to 31 December 2022 using Pirtek Europe's audited accounts for the three financial years ended 31 March 2022 and unaudited management accounts to 31 December 2022 prorated to Franchise Brands' financial year end of 31 December.

	Prorated year ended 31 December1
	2020 £m	2021 £m	2022 £m	3 year % change 2020 to 2022
System sales	122.9	139.1	164.1	33.5%
Statutory revenue	34.8	40.1	49.2	41.6%
Cost of sales	(10.2)	(11.6)	(14.4)	40.4%
Gross profit	24.5	28.5	34.8	40.2%
Gross margin	70.6%	71.1%	70.8%
Administrative expenses	(16.2)	(17.5)	(20.2)	24.4%
Administrative expenses as a % of system sales	13.1%	12.6%	12.3%
Adjusted EBITDA	8.3	11.0	14.7	77.0%
Depreciation and amortisation	(0.4)	(0.5)	(0.6)	68.3%
Adjusted profit before tax	8.0	10.5	14.0	77.4%

¹ Unaudited prorated figures using Pirtek Europe's audited accounts for the three financial years ended 31 March 2022 and unaudited management accounts to 31 December 2022.

Based on the above figures, the £200 million consideration for the Acquisition (excluding the Adjustment Payment) represents a multiple of 13.6 times Pirtek Europe's Adjusted EBITDA for the unaudited prorated year to 31 December 2022, and the Directors forecast this to fall to approximately 12.0 times by 31 December 2023.

The table below shows the geographic split of Pirtek's system sales and the Board's expectation of this for Pirtek's financial year ending 31 March 2023 based on unaudited management accounts.

	System sales
	Year ended 31 March 2019 £m	Year ended 31 March 2020 £m	Year ended 31 March 2021 £m	Year ended 31 March 2022 £m	Year ending 31 March 2023 (actual & forecast)1
UK & Republic of Ireland	65.1	64.5	55.2	68.2	77.9
Germany	46.9	47.4	47.2	53.3	59.9
Benelux	17.0	17.3	16.4	18.0	20.8
France	-	-	-	1.3	6.4
Austria	1.5	1.7	1.7	2.1	2.5
Sweden	2.6	2.3	2.1	2.6	2.8
Total	133.0	133.1	122.6	145.4	170.3

¹ Unaudited management accounts to 31 December 2022 and Director forecasts to 31 March 2023. The above forecasts are management estimates only, using internal assumptions; not independently verified or reported on; actual results may differ. Appendix II provides the basis for compilation of forecasts and the principal assumptions used.

Further information on the Board's forecasts for the Enlarged Group is set out in paragraph 3 below.

The parent company of Pirtek Europe being acquired by Franchise Brands in the Acquisition is HAI. In the most recent financial year ended 31 March 2022, the audited accounts of HAI show revenue of £42.2 million (2021: £33.9 million), Adjusted EBITDA of £12.0 million (2021: £8.1 million), operating profit of £2.6 million (2021: £(0.2) million) and, after £11.1 million of loan interest payable and other finance costs of the Vendor and not being assumed with the Acquisition, a loss before tax of £7.9 million (2021: £(11.1) million). Audited total assets at 31 March 2022 were £94.2 million (2021: £95.2 million).

Growth strategy

Pirtek and the Directors have identified a growth strategy for Pirtek, as summarised below:

· Grow system sales

The Directors see an opportunity to drive local sales, continuing to leverage the embedded growth Pirtek achieves through additional mobile units and additional service centres which create more capacity. The Directors believe this can be achieved through multiple initiatives using CRM, outbound sales capability, targeted marketing campaigns, MST contact calls, incentives and measurement.

· Expand range of services

The Directors believe there is an opportunity to grow the total hose management service (which includes a full preventative maintenance proposition) and expand the amount of planned, as opposed to reactive, business. Technically-driven sales also help franchisees deliver more specialist, high value work.

· Leverage technology

The Directors plan to use business intelligence software to help franchisees improve management information and increase efficiency. This will include increased utilisation of a CRM and Pirtek's customer portal which helps customers to self-serve.

· Potential for geographical expansion

Pirtek currently operates in eight European countries but has rights to an additional eight countries in Europe - Spain, Italy, Portugal, Norway, Denmark, Finland, Iceland and Luxembourg.

2.  Background to and reasons for the Acquisition and associated funding

Franchise Brands is an international multi-brand franchisor, focused on B2B van-based reactive and planned services, with operations in the UK, North America and Europe. The Group currently has 586 franchisees across six principal brands. Since its IPO, the business of the Group has grown organically and through selected accretive acquisitions, increasing its Adjusted EBITDA by more than ten times from £1.4 million in the year ended 31 December 2016 to £15.3 million in the year ended 31 December 2022.

Franchise Brands acquired Filta in March 2022, which has brought highly complementary services to the Group, an international footprint in Europe and the US, and considerably enhanced scale of the Group's operations.

In line with Franchise Brands' strategy to selectively make accretive acquisitions of B2B franchise systems of van-based businesses that provide essential services, Pirtek represents the opportunity to acquire a complementary B2B franchise business of scale that will expand the Group's presence across a number of key European countries. The Acquisition is expected to be immediately earnings accretive and forecast by the Board to generate single digit earnings accretion in the first full year of ownership.

The Board's rationale for the Acquisition is based on the following expected benefits:

· Significantly advance the Board's aim to create a market-leading international B2B multi-brand franchisor in UK, Europe, North America

The size and diversification of the Enlarged Group will provide greater resilience in the services provided, customer base, end markets, franchise networks and geographically

· Ability to launch current brands of the Group outside the UK

While Franchise Brands owns all its brands, it has yet to significantly develop any of its principal brands (excluding Filta) outside the UK. Pirtek's established overhead will provide a low-cost platform from which to launch the Group's current brands into new markets where Pirtek operates currently.

· Combined franchising experience of the Enlarged Group will accelerate growth

The franchising experience of the management team of the Enlarged Group is expected to help accelerate the growth of the combined business. The Board considers Pirtek to have a strong management team, providing breadth and capacity for further expansion of the Enlarged Group's brands into Europe and the US.

· Operating leverage from central services for expansion

There are a number of opportunities to leverage central services efficiently between Franchise Brands and Pirtek, principally in the areas of technology, marketing and finance, which is expected to allow significant expansion of the Enlarged Group without material additional overhead costs.

Rationale for the Acquisition funding structure

Since its IPO in 2016, Franchise Brands has maintained a strong balance sheet with a net cash position at the end of each financial year. However, the Directors believe that the scale, quality and diversification of the Enlarged Group's earnings and cash flow make it appropriate to use leverage to maximise Shareholder value. The Directors have chosen a capital structure to fund the Acquisition that they believe will be the most beneficial to Shareholders taking into account the prospective risks and returns.

As a result of expected drawdown of £100 million on the Facilities Agreements on Admission, on a pro forma basis, the Company's net debt to Adjusted EBITDA ratio is expected to be 2.3 times at 31 December 2023, with a strong deleveraging profile thereafter where it is forecast by the Board to fall to 1.6 times at 31 December 2024. The strength of the cash flow generation of the Enlarged Group means the Board is forecasting the Company to fully repay the Acquisition leverage within five years, whilst continuing to grow organically.

The Directors believe that the Fundraise is in the best interest of Shareholders. Recognising the significance of the Acquisition, the Fundraise and the Facilities Agreements, aimed at advancing the Company's consistent and well-articulated strategy, the Company has consulted with and received strong support from many of its largest Shareholders. Given the expected earnings accretion of the Acquisition, funded in part with proceeds from the Fundraise, and given the importance of leveraging a key competitive advantage over other potential buyers of the Pirtek business by being able to raise capital quickly on AIM, the Company believes the structure of the Fundraise is aligned with Shareholder and other stakeholder interests. The Fundraise structure allows the Company to secure the Acquisition, reducing both the complexity and time required to raise the capital necessary to acquire a high quality B2B franchise business.

3.  Current trading and forecasts

The Group announced its audited annual results on 9 March 2023, which provided an update on the Group's performance in 2022 and the start of 2023, as well as future prospects. The Group's annual report and accounts were published on 20 March 2023 and are available on the Company's website.

The Group has grown rapidly in recent years, increasing revenues from £24.9 million in the financial year ended 31 December 2017 to £57.7 million in the financial year ended 31 December 2021 ("FY21"), through a combination of organic expansion and acquisitions. The financial year ended 31 December 2022 ("FY22") saw a further step change in revenues with more than 70 per cent. growth in revenue to £99.2 million. This significant increase year-on-year was driven by the strong organic growth of the Group's B2B businesses and the acquisition of Filta in March 2022.

The Group's Adjusted EBITDA has also grown strongly, increasing by 79 per cent. from £8.5 million in FY21 to £15.3 million in FY22. This has been driven by the strong performance of the acquired Filta business in North America, record organic growth at Metro Rod, and the continuing benefits to operational gearing provided by the on-going investment in technology and digital infrastructure.

The Board is confident in the prospects for the Enlarged Group and is forecasting the following key financial results, conditional on the Acquisition proceeding:

	Year ending 31 December 2023 forecast1,2	Pro forma year ending 31 December 2023 forecast1,3 £m	Year ending 31 December 2024 forecast1 £m
Statutory revenue	155.0	168.0	182.0
Adjusted EBITDA	29.0	33.5	36.9
Growth in Adjusted EBITDA	89.5%	n/a	27.2%
Leverage (net debt/Adjusted EBITDA)	n/a	2.3x	1.6x

The above forecasts are the Board's estimates only, using internal assumptions; not independently verified or reported on; actual results may differ. The Appendix to this letter provides the basis for compilation of forecasts and the principal assumptions used.

Notes to forecasts:

1. Includes B2C division, which has been put up for sale

2. Assumes completion of the Acquisition at the end of April, equating to 8 months of ownership of Pirtek Europe

3. Pro forma assuming a full year of ownership of Pirtek Europe to 31 December 2023 (i.e. assuming the Acquisition completed on 1 January 2023).

Following a strategic review in December 2022, the Company has announced that is has appointed advisers to seek a buyer for the Group's B2C division. There can be no certainty as to the timing of any such sale or if it will ultimately go ahead and the proceeds from any disposal are not included in the expected debt repayment profile indicated above.

4.  Terms of the Acquisition

The Company has entered into the Sale and Purchase Agreement with the Vendors pursuant to which it has conditionally agreed to acquire the entire issued share capital of HAI, the owner of Pirtek Europe, for a consideration of £200 million and the Adjustment Payment. The Consideration will be satisfied by the issue of up to 10,470,232 Consideration Shares and the balance paid in cash from the proceeds of the Fundraise and the Facilities Agreements.

The Sale and Purchase Agreement is conditional upon, inter alia, the Placing Agreement and the Facilities Agreements each becoming unconditional in all respects (save for any conditions relating to completion of the SPA or Admission becoming effective).

The Sale and Purchase Agreement includes customary warranties relating to title, capacity and insolvency matters ("Fundamental Warranties") given to the Company by the Vendors subject to a cap on their liability, save in the case of fraud, of £1.

The Company has also entered into a management warranty deed with the Management Sellers in connection with the Sale and Purchase Agreement, which includes customary warranties in relation to Pirtek's business, assets and trading ("General Warranties") subject to a cap on their liability, save in the case of fraud, of £1.

The Company has obtained warranty and indemnity insurance in respect of the Fundamental Warranties and the General Warranties with a maximum sum insured of £20 million. In addition, the Company has obtained a separate title insurance policy in respect of the title to the shares of HAI and the members of its corporate group (including Pirtek Europe) which has a maximum sum insured of £200 million.

Pursuant to the Sale and Purchase Agreement, the Vendors have agreed to provide non-compete covenants to protect the goodwill of Pirtek.

The Corporate Sellers have agreed that they will not dispose of any Consideration Shares for a period of one year from Admission and thereafter for a further period of 12 months will only dispose of any Consideration Shares through the Company's broker on an orderly market basis, save in certain limited circumstances. In addition, the Management Sellers have agreed that for a period of two years from Admission they will only dispose of any Ordinary Shares that they hold at Admission through the Company's brokers on an orderly market basis, save in certain limited circumstances.

5.  Details of the Facilities Agreements

The Company will part-finance the Acquisition with new debt facilities comprising a £55 million Term Loan and a £55 million Revolving Credit Facility, of which £100 million is expected to be drawn on Admission to pay part of the Consideration.

The Facilities Agreements have a four year term, with the option of a one year extension, and have a margin of between 200 basis points and 300 basis points over SONIA, dependent on leverage on a last twelve months basis.

The Term Loan requires quarterly repayments of £2.5 million, starting from the quarter ending 30 September 2023 and each quarter thereafter up to and including the quarter ending 31 December 2026, with a £10 million final payment.

The Facilities Agreements are conditional upon, inter alia, the Placing Agreement and the Sale and Purchase Agreement each becoming unconditional in all respects (save for any conditions relating to Admission becoming effective).

The Facilities Agreements include typical terms for the facilities granted thereunder, including immediate repayment in the event of default and change of control and also requires the Company to satisfy regular reporting requirements and periodic financial tests.

6.  The Placing

The Company and the Joint Brokers entered into the Placing Agreement on 3 April 2023 pursuant to which the Joint Brokers agreed, subject to certain conditions, to use their respective reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price. The Placing Agreement contains provisions entitling the Joint Brokers to terminate the Placing (and the arrangements associated with it), at any time prior to Admission in certain circumstances, including in the event of a material breach of the warranties given in the Placing Agreement, the failure of the Company to comply with its obligations under the Placing Agreement, the occurrence of a force majeure event which in the Joint Brokers' reasonable opinion may be material and adverse to the Company or the Placing, or a material adverse change affecting the financial position or business or prospects of the Company. If this right is exercised, the Placing will not proceed, any monies that have been received in respect of the Placing will be returned to the applicants without interest, the Acquisition will not complete and Admission will not occur. The Placing is not being underwritten by the Joint Brokers.

The Company has agreed to pay the Joint Brokers, upon Admission, corporate finance fees and a placing commission, together with all other costs and expenses of, or in connection with, the Placing, plus any VAT thereon.

The New Ordinary Shares, when issued, will be credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on or in respect of such shares after the date of issue. The New Ordinary Shares will not qualify for the final dividend announced on 9 March 2023.

7.  Board appointment

Alex Samuel McNutt will be appointed as a director of the Company as Chief Executive Officer, Pirtek following completion of the Acquisition. Alex McNutt is aged 59 and currently the Chief Executive Officer of Pirtek, a role he commenced in 2015. Alex led the implementation of Pirtek's current growth strategy and groupwide initiatives. He has a strong track record of growing and acquiring businesses. He was previously CEO at Waterwell Su Hizmelteri, Pronet Guvenlik, Anglian Group and President of ADT Europe and South Africa prior to joining Pirtek. In addition to the directorships he holds with Pirtek Europe and other HAI group companies, Alex is also a director of Bell Fire and Security Ltd, Bell Fire and Security Holdings Ltd and Amecor PLC.

The Board recognises the need to have adequate independent director representatives on the Board and this will continue to be kept under review as the Group develops.

APPENDIX II - FORECAST ASSUMPTIONS AND BASIS OF PREPARATION

In this Announcement (including in paragraphs 1, 2 and 3 of Appendix I), the Board forecasts revenues, Adjusted EBITDA, earnings accretion and leverage (net debt/Adjusted EBITDA) for the Enlarged Group for the financial years ending 31 December 2023 and 2024 (the "Enlarged Group Forecast").

The Directors have considered the Enlarged Group Forecast, which has been made after due and careful enquiry, and confirm that it remains valid as at the date of this Announcement and that it has been properly compiled on the basis of the assumptions and accounting policies set out below.

Basis of preparation

The Enlarged Group Forecast has been prepared by the Directors by aggregating the management projections of each of Franchise Brands and Pirtek Europe. Pirtek Europe is included in the Enlarged Group's Forecast from 20 April 2023, being the expected date of completion of the Acquisition, on a prorated basis. Therefore, the Enlarged Group Forecast for the financial year ending 31 December 2023 includes Pirtek Europe for approximately eight months and for a full year in the financial year ending 31 December 2024. The latest completed statutory audit for Pirtek Europe was in respect of the financial year ended 31 March 2022 and for Franchise Brands was the financial year ended 31 December 2022.

The Enlarged Group Forecast in respect of Franchise Brands has been prepared on a basis consistent with the accounting policies of Franchise Brands, which are in accordance with IFRS and are those that Franchise Brands will apply in preparing its financial statements for the 2023 and 2024 financial years.

The Enlarged Group Forecast in respect of Pirtek Europe has been prepared on a basis consistent with the accounting policies of Pirtek Europe, which are in accordance with FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland, and are those that Pirtek Europe would have applied in preparing its financial statements for the 2024 and 2025 financial years prior to the Acquisition. Whilst there is increasing alignment between IFRS and FRS 102, a key difference resides in the accounting treatment of leases. IFRS 16 eliminates the concept of 'operating' and 'finance' leases from the perspective of the lessee and introduces a single model where the lessee is required to recognise an asset and liability for all leases with a term over 12 months and depreciate all leased assets. The impact of applying IFRS 16 Leases over the equivalent FRS 102 accounting standard is an increase in lease assets and liabilities on the balance sheet and an increase in EBITDA as operating lease expenses are replaced by a depreciation charge on leased assets and an interest expense on the lease liabilities, both of which are not included in EBITDA.

Key assumptions

In regard to the Enlarged Group Forecast, the Directors made the following principal assumptions:

· no synergy benefits or integration costs have been assumed from the Acquisition;

· there would be no material acquisitions or disposals (notwithstanding that the Company has appointed advisers to sell the B2C division);

· corporation tax is projected as 25 per cent. of profit before tax for the Enlarged Group;

· a tax deduction of 25 per cent. on the interest charged on the assumed new funding structure. This assumes that all of the interest is tax deductible; and

· the payment of dividends.

In regard to the Franchise Brands forecasts, the Directors made the following principal assumptions:

· revenue growth for the B2B Division (comprising Metro Rod, Filta UK and Willow Pumps) would continue but at growth rates below recent historical levels, underpinned by organic growth in the existing customer base and the winning of new customer accounts, at the current run rate of gross margin, with administrative expenditure increasing to support assumed trading growth;

· that the B2C division (the smallest of the three divisions) would experience a slight contraction in trading compared to historical levels before stabilising over the forecast period, reflective of the assumption of a reduction in new franchisees as a result of the ageing franchisee network and strong labour market which is assumed to negatively impact the number of people moving from employment to franchising. Despite the assumed slight contraction in trading, the administrative cost base in the B2C division is assumed to remain constant, subject to inflationary cost increases;

· revenue growth for Filta International (comprising Filta US, Filta EU and Filta Canada) would continue but at growth rates below recent historical levels;

· no further synergies have been reflected in the Enlarged Group Forecast with regards to the continuing integration of Filta (acquired in March 2022) or strategic initiatives to integrate individual brands within each trading division;

· an increase in costs driven by annual salary increases in response to inflationary pressures in the labour market and further recruitment; and

· there would be no change to the management or operational strategy of the Group.

In regard to the Pirtek Europe forecasts, the Directors made the following principal assumptions:

· the rollout of additional mobile units and additional service centre openings, particularly in the UK, Germany and the Netherlands;

· improved trading performance for owned centres;

· average price increases of 5.6 per cent., across the Pirtek Europe group starting 1 April 2023;

· further leverage of the overhead cost base;

· the full-year effect of the acquisitions in France ramping up; and

· an increase in costs driven by annual salary increases in response to inflationary pressures in the labour market and further recruitment.

The Directors also made the following principal assumptions which are outside the Enlarged Group's influence or control:

· there would be no material changes to existing prevailing macroeconomic or political conditions in the markets and regions in which the Enlarged Group operates;

· there would be no material changes to the conditions of the markets in which the Enlarged Group operates or in relation to customer demand or the behaviour of competitors in those markets and regions;

· the interest, inflation, tax rates and foreign exchange rates in the markets and regions in which the Enlarged Group operates would remain materially unchanged from the prevailing rates (including the increase in UK corporation tax rates to 25 per cent. from 1 April 2023);

· there would be no material adverse events that would have a significant impact on the Enlarged Group's financial performance;

· there would be no business disruptions that materially affect the Enlarged Group or its key customers, including natural disasters, acts of terrorism, cyberattack and/or technological issues or supply chain disruptions;

· there would be no material changes in legislation or regulatory requirements impacting on the Enlarged Group's operations or on its accounting policies (save for the increase in UK corporation tax rates as noted above); and

· there would be no material litigation in relation to any of the Enlarged Group's operations.

APPENDIX III - TERMS AND CONDITIONS OF THE BOOKBUILD

IMPORTANT INFORMATION ON THE BOOKBUILD FOR INVITED PLACEES ONLY

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE ONLY DIRECTED AT, AND BEING DISTRIBUTED TO, PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE: (A) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA ("EEA"), PERSONS WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(E) OF THE REGULATION (EU) 2017/1129 ("EU PROSPECTUS REGULATION"); OR (B) IF IN THE UNITED KINGDOM, PERSONS WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(E) OF THE UK VERSION OF THE REGULATION (EU) 2017/1129 AS IT FORMS PART OF DOMESTIC LAW PURSUANT TO THE EUROPEAN UNION WITHDRAWAL ACT 2018 (THE "UK PROSPECTUS REGULATION") AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS WHO FALL WITHIN THE DEFINITION OF "INVESTMENT PROFESSIONALS" IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED ("THE ORDER") OR FALL WITHIN THE DEFINITION OF "HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC" IN ARTICLE 49(2) (A) TO (D) OF THE ORDER; AND (C) ANY OTHER PERSON TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED; AND, IN EACH CASE, WHO HAVE BEEN INVITED TO PARTICIPATE IN THE PLACING BY ALLENBY CAPITAL LIMITED ("ALLENBY") AND/OR DOWGATE CAPITAL LIMITED ("DOWGATE") AND/OR STIFEL NICOLAUS EUROPE LIMITED ("STIFEL") (EACH A "JOINT BROKER", TOGETHER THE "JOINT BROKERS") (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY PERSON WHO HAS RECEIVED OR IS DISTRIBUTING THESE TERMS AND CONDITIONS MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THESE TERMS AND CONDITIONS RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THESE TERMS AND CONDITIONS DO NOT THEMSELVES CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN ACQUISITION OF PLACING SHARES (AS SUCH TERM IS DEFINED BELOW).

This Announcement is not for publication or distribution, directly or indirectly, in or into the United States of America.  This Announcement is not an offer of securities for sale into the United States.  The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration.  No public offering of securities is being made in the United States.

Unless otherwise defined in these terms and conditions, capitalised terms used in these terms and conditions shall have the meaning given to them in Appendix IV below headed "Definitions".

If a person indicates to a Joint Broker that it wishes to participate in the Placing by making an oral or written offer to acquire Placing Shares (each such person, a "Placee") it will be deemed to have read and understood these terms and conditions and the Announcement of which they form a part in their entirety and to be making such offer on the terms and conditions, and to be providing the representations, warranties, indemnities, agreements and acknowledgements, contained in these terms and conditions as deemed to be made by Placees. In particular, each such Placee represents, warrants and acknowledges that it is a Relevant Person and undertakes that it will acquire, hold, manage and dispose of any of the Placing Shares that are allocated to it for the purposes of its business only. Further, each such Placee represents, warrants and agrees that: (a) if it is a financial intermediary, as that term is used in Article 5(1) of the UK Prospectus Regulation, that the Placing Shares acquired by and/or subscribed for by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of securities to the public other than an offer or resale to qualified investors (as defined above) in the UK or in a member state of the EEA, or in circumstances in which the prior consent of the relevant Joint Broker has been given to each such proposed offer or resale; and (b) it is and, at the time the Placing Shares are acquired, will be outside the United States, and acquiring the Placing Shares in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S under the US Securities Act. These terms and conditions do not constitute an offer to sell or issue or the invitation or solicitation of an offer to buy or acquire Placing Shares. Potential investors in the United States will need to be Qualified Institutional Buyers.

Subject to certain exceptions, these terms and conditions and the information contained herein are not for release, publication or distribution, directly or indirectly, in whole or in part, to persons in the United States, Australia, Canada, Japan, the Republic of South Africa or any other jurisdiction in which such release, publication or distribution would be unlawful ("Excluded Territory").

The distribution of these terms and conditions and the offer and/or placing of Placing Shares in certain other jurisdictions may be restricted by law. No action has been taken by the Joint Brokers or the Company that would permit an offer of the Placing Shares or possession or distribution of these terms and conditions or any other offering or publicity material relating to the Placing Shares in any jurisdiction where action for that purpose is required, save as mentioned above. Persons into whose possession these terms and conditions come are required by the Joint Brokers and the Company to inform themselves about and to observe any such restrictions.

No prospectus or other offering document has been or will be submitted to be approved by the Financial Conduct Authority ("FCA") in relation to the Placing or the Placing Shares and each Placee's commitment will be made solely on the basis of the information set out in this Announcement. Each Placee, by participating in the Placing, agrees that it has neither received nor relied on any other information, representation, warranty or statement made by or on behalf of the Joint Brokers or the Company and none of the Joint Brokers, the Company, nor any person acting on such person's behalf nor any of their respective affiliates has or shall have liability for any Placee's decision to accept this invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

No undertaking, representation, warranty or any other assurance, express or implied, is made or given by or on behalf of the Joint Brokers or any of their affiliates, their respective directors, officers, employees, agents, advisers, or any other person, as to the accuracy, completeness, correctness or fairness of the information or opinions contained in this Announcement or for any other statement made or purported to be made by any of them, or on behalf of them, in connection with the Company or the Placing and no such person shall have any responsibility or liability for any such information or opinions or for any errors or omissions. Accordingly, save to the extent permitted by law, no liability whatsoever is accepted by the Joint Brokers or any of their respective directors, officers, employees or affiliates or any other person for any loss howsoever arising, directly or indirectly, from any use of this Announcement or such information or opinions contained herein.

All offers of the Placing Shares will be made pursuant to an exemption under the EU Prospectus Regulation and/or the UK Prospectus Regulation from the requirement to produce a prospectus.

These terms and conditions do not constitute or form part of, and should not be construed as, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any Placing Shares or any other securities or an inducement to enter into investment activity, nor shall these terms and conditions (or any part of them), nor the fact of their distribution, form the basis of, or be relied on in connection with, any investment activity. No statement in these terms and conditions is intended to be nor may be construed as a profit forecast and no statement made herein should be interpreted to mean that the Company's profits or earnings for any future period will necessarily match or exceed historical published profits or earnings of the Company.

UK Product Governance Requirements

Solely for the purposes of the product governance requirements of Chapter 3 of the FCA Handbook Product Intervention and Product Governance Sourcebook (the "UK Product Governance Requirements") and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the UK Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of (a) retail investors, (b) investors who meet the criteria of professional clients and (c) eligible counterparties, each as defined in UK Product Governance Requirements; and (ii) eligible for distribution through all distribution channels as are permitted by UK Product Governance Requirements (the "UK Target Market Assessment").

Notwithstanding the UK Target Market Assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom.

The UK Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the UK Target Market Assessment, each Joint Broker is only procuring investors in the United Kingdom which meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the UK Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Chapter 9A or 10A respectively of the FCA Handbook Conduct of Business Sourcebook; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to, the Placing Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the Placing Shares and determining appropriate distribution channels.

EU Product Governance Requirements

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "EU Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the EU Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of: (a) retail investors, (b) investors who meet the criteria of professional clients and (c) eligible counterparties (each as defined in MiFID II); and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "EU Target Market Assessment"). Notwithstanding the EU Target Market Assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The EU Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing.  In all circumstances the Joint Brokers will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the EU Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the Placing Shares and determining appropriate distribution channels.

Proposed Placing of Ordinary Shares

The Joint Brokers have entered into the Placing Agreement with the Company pursuant to which, on the terms and subject to the conditions set out in such Placing Agreement, the Joint Brokers as agents for and on behalf of the Company, have agreed to use their reasonable endeavours to procure Placees for the Placing Shares at the Issue Price.

Placees are referred to these terms and conditions and this Announcement containing details of, inter alia, the Placing. These terms and conditions and this Announcement have been prepared and issued by the Company, and is the sole responsibility of the Company.

The Placing Shares will, when issued and fully paid, be identical to, and rank pari passu with, the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on the existing Ordinary Shares after their admission to trading on AIM. The New Ordinary Shares (which includes the Placing Shares) will not qualify for the final dividend announced on 9 March 2023.

Application will be made to the London Stock Exchange for the Placing Shares to be issued under the Placing to be admitted to trading on AIM.

Subject to the conditions below being satisfied, it is expected that Admission of the Placing Shares will become effective on or around 21 April 2023. It is expected that dealings for normal settlement in the Placing Shares will commence at 8.00 a.m. on the same day.

Bookbuild of the Placing

Commencing today, the Joint Brokers will be conducting an accelerated bookbuild (the "Bookbuild") to determine demand for participation in the Placing. The Joint Brokers will seek to procure Placees as agents for the Company as part of this Bookbuild. These terms and conditions give details of the terms and conditions of, and the mechanics of participation in, the Placing.

Principal terms of the Bookbuild

(a)  By participating in the Placing, Placees will be deemed to have read and understood this Announcement and these terms and conditions in their entirety and to be participating and making an offer for any Placing Shares on these terms and conditions, and to be providing the representations, warranties, indemnities, acknowledgements and undertakings, contained in these terms and conditions.

(b)  The Joint Brokers are arranging the Placing as agents of the Company.

(c)  The Bookbuild will establish the number of Placing Shares to be issued and the aggregate proceeds to be raised through the Placing, which will be agreed between the Joint Brokers and the Company following completion of the Bookbuild.  The number of Placing Shares to be issued will be announced through the Placing Results Announcement (as defined below) following the completion of the Bookbuild.

(d)  Participation in the Placing will only be available to persons who are Relevant Persons and who may lawfully be and are invited to participate by a Joint Broker. The Joint Brokers (in their independent and individual capacity) and their affiliates are entitled to offer to subscribe for Placing Shares as principals in the Bookbuild.

(e)  Any offer to subscribe for Placing Shares should state the aggregate number of Placing Shares which the Placee wishes to acquire. The Issue Price will be payable by the Placees in respect of the Placing Shares allocated to them.

(f)  The Bookbuild is expected to close no later than 6.00 p.m. on 4 April 2023 but may close earlier or later, at the discretion of the Joint Brokers and the Company. The timing of the closing of the books and allocations will be agreed between the Joint Brokers and the Company following completion of the Bookbuild (the "Allocation Policy"). The Joint Brokers may, in agreement with the Company, accept offers to subscribe for Placing Shares that are received after the Bookbuild has closed. An offer to subscribe for Placing Shares in the Bookbuild will be made on the basis of these terms and conditions and will be legally binding on the Placee by which, or on behalf of which, it is made and will not be capable of variation or revocation after the close of the Bookbuild.

(g)  Subject to paragraph (e) above, the Joint Brokers reserve the right including with or at the instruction of the Company not to accept an offer to subscribe for Placing Shares, either in whole or in part, on the basis of the Allocation Policy and may scale down any offer to subscribe for Placing Shares for this purpose.

(h)  If successful, each Placee's allocation will be confirmed to it by the relevant Joint Broker following the close of the Bookbuild. Oral or written confirmation (at the relevant Joint Broker's discretion) from the relevant Joint Broker to such Placee confirming its allocation will constitute a legally binding commitment upon such Placee, in favour of the relevant Joint Broker and the Company to acquire the number of Placing Shares allocated to it on the terms and conditions set out herein. Each Placee will have an immediate, separate, irrevocable and binding obligation, owed to the Company, to pay to the relevant Joint Broker (or as the relevant Joint Broker may direct) as agent for the Company in cleared funds an amount equal to the product of the Issue Price and the number of Placing Shares which such Placee has agreed to acquire.

(i)  The Company will make a further announcement following the close of the Bookbuild detailing the number of Placing Shares to be issued (the "Placing Results Announcement"). It is expected that such Placing Results Announcement will be made as soon as practicable after the close of the Bookbuild.

(j)  Subject to paragraphs (g) and (h) above, the Joint Brokers reserve the right not to accept bids or to accept bids, either in whole or in part, on the basis of allocations determined at their discretion and may scale down any bids as they may determine, subject to agreement with the Company. The acceptance of bids shall be at the relevant Joint Broker's absolute discretion, subject only to agreement with the Company.

(k)  Irrespective of the time at which a Placee's allocation(s) pursuant to the Placing is/are confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the time specified, on the basis explained below under the paragraph entitled "Registration and Settlement".

(l)  No commissions are payable to Placees in respect of the Placing.

(m)  By participating in the Bookbuild, each Placee agrees that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee. All obligations under the Placing will be subject to the fulfilment of the conditions referred to below under the paragraphs entitled "Conditions of the Placing" and "Termination of the Placing Agreement".

Conditions of the Placing

The obligations of the Joint Brokers under the Placing Agreement in respect of the placing of the Placing Shares are conditional on, amongst other things:

(a)  the Company having complied with its obligations under the Placing Agreement (to the extent that such obligations fall to be performed prior to Admission);

(b)  the SPA: (i) not having been terminated or amended; (ii) having become unconditional in all respects, save for any condition relating to the Placing Agreement becoming unconditional in accordance with its terms (including, for the avoidance of doubt, Admission) and (iii) no notice of breach or notice of termination having been issued by any party to the Acquisition Agreement;

(c)  Escrow Completion (as defined in the SPA) having occurred in accordance with the Acquisition Agreement;

(d)  in respect of the Facilities Agreement, all initial conditions precedent having been satisfied and the agreement not having been terminated or amended;

(e)  the Subscription Agreements having become unconditional in all respects (other than with respect to Admission) and not having been terminated or rescinded prior to Admission;

(f)  receipt of the consideration payable by the Subscribers pursuant to the terms of the Subscription Agreements prior to Admission;

(g)  receipt by the Escrow Agent (as defined in the Acquisition Agreement) of the funds payable to pay down existing Pirtek debt prior to Admission;

(h)  the passing at the General Meeting of the resolutions to authorise the issue of the New Ordinary Shares, without amendment; and

(i)  Admission having occurred at 8.00 a.m. 21 April 2023 or such later date as the Company and the Joint Brokers may agree, but in any event not later than 8.00 a.m. on 5 May 2023.

If (i) any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by the Joint Brokers by the respective time or date where specified, (ii) any of such conditions becomes incapable of being fulfilled or (iii) the Placing Agreement is terminated in the circumstances specified below, the Placing will not proceed and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time, all monies received from a Placee pursuant to the Placing shall be returned to such Placee without interest, at the risk of the relevant Placee and each Placee agrees that no claim can be made by the Placee in respect thereof.

The Joint Brokers, at their discretion and upon such terms as they think fit, may waive compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Placing Agreement. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.

None of the Joint Brokers nor the Company nor any other person shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or the date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Joint Brokers.

Termination of the Placing Agreement

Any of the Joint Brokers is entitled at any time before Admission, to terminate the Placing Agreement in relation to its obligations in respect of the Placing Shares by giving notice to the Company if, amongst other things:

(a)  the Company fails, in any material respect, to comply with any of its obligations under the Placing Agreement; or

(b)  it comes to the notice of any Joint Broker that any statement contained in this Announcement was untrue, incorrect or misleading at the date of this Announcement or has become untrue, incorrect or misleading in each case in any respect which any Joint Broker considers to be material in the context of the Placing or that any matter which any Joint Broker considers to be material in the context of the Placing has arisen which would, if the Placing were made at that time, constitute a material omission therefrom; or

(c)  any of the warranties given by the Company in the Placing Agreement was not true as at the date of the Placing Agreement or has ceased to be true and accurate by reference to the facts subsisting at the time when notice to terminate is given, in each case, in any respect which any Joint Broker considers to be material in the context of the Placing; or

(d)  it comes to the notice of each of the Joint Brokers that there has been, or will be a material breach of the Acquisition Agreement including any of the warranties in that agreement or the Acquisition Agreement is otherwise terminated, rescinded or frustrated; or

(e)  in the opinion of each of Joint Brokers, acting in good faith, there shall have occurred any material adverse change in, or any development reasonably likely to involve an adverse change in, the condition (financial, operational, legal or otherwise), profits, business, management, property, assets, rights, results, operations or prospects of the Company or the Group which is material in the context of the Company or the Group taken as a whole, whether or not arising in the ordinary course of business; or

(g)  there happens, develops or comes into effect: (i) a general moratorium on commercial banking activities in London declared by the relevant authorities or a material disruption in commercial banking or securities settlement or clearance services in the United Kingdom; or (ii) the outbreak or escalation of hostilities, war or acts of terrorism, declaration of emergency or martial law or other calamity or crisis or event including a material escalation of the conflict in Ukraine or response to the Covid-19 pandemic; or (iii) any other occurrence of any kind which in any such case (by itself or together with any other such occurrence) in the reasonable opinion of any Joint Broker is likely to materially and adversely affect the market's position or prospects of the Company taken as a whole; or (iv) any other crisis of international or national effect or any change in any currency exchange rates or controls or in any financial, political, economic or market conditions or in market sentiment which, in any such case, in the reasonable opinion of any Joint Broker is materially adverse.

If the Placing Agreement is terminated in accordance with its terms, the rights and obligations of each Placee in respect of the Placing as described in this Announcement shall cease and terminate at such time, all monies received from a Placee pursuant to the Placing shall be returned to such Placee without interest, at the risk of the relevant Placee and each Placee agrees that no claim can be made by or on behalf of the Placee (or any person on whose behalf the Placee is acting) in respect thereof.

Placing Procedure

Placees shall acquire the Placing Shares to be issued pursuant to the Placing and any allocation of the Placing Shares to be issued pursuant to the Placing will be notified to them on or around 4 April 2023 (or such other time and/or date as the Company and the Joint Brokers may agree).

Payment in full for any Placing Shares so allocated in respect of the Placing at the Issue Price must be made by no later than 21 April 2023 (or such other date as shall be notified to each Placee by the relevant Joint Broker) on the expected closing date of the Placing. The relevant Joint Broker or the Company will notify Placees if any of the dates in these terms and conditions should change.

Registration and Settlement

Settlement of transactions in the Placing Shares following Admission of the Placing Shares will take place within the CREST system, subject to certain exceptions. The Joint Brokers and the Company reserve the right to require settlement for, and delivery of, the Placing Shares to Placees by such other means that they deem necessary if delivery or settlement is not possible within the CREST system within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in the Placee's jurisdiction. Each Placee will be deemed to agree that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions which they have in place with a respective Joint Broker.

Settlement for the Placing will be on a delivery versus payment basis and settlement is expected to take place on or around 21 April 2023. Interest is chargeable daily on payments to the extent that value is received after the due date from Placees at the rate of 2 percentage points above the prevailing Sterling Overnight Index Average. Each Placee is deemed to agree that if it does not comply with these obligations, the relevant Joint Broker may sell any or all of the Placing Shares allocated to it on its behalf and retain from the proceeds, for its own account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. By communicating a bid for Placing Shares, each Placee confers on the relevant Joint Broker all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which the relevant Joint Broker lawfully takes in pursuance of such sale. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon any transaction in the Placing Shares on such Placee's behalf.

Acceptance

By participating in the Placing, a Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with the Joint Brokers and the Company, the following:

1.  it is a Relevant Person and undertakes to subscribe at the Issue Price for those Placing Shares allocated to it by the Joint Brokers;

2.  it has read and understood this Announcement (including these terms and conditions) in its entirety and that it has neither received nor relied on any information given or any investigations, representations, warranties or statements made at any time by any person in connection with Admission, the Placing, the Company, the Placing Shares, or otherwise, other than the information contained in this Announcement (including these terms and conditions) and that in accepting the offer of its Placing participation it will be relying solely on the information contained in this Announcement (including these terms and conditions) and undertakes not to redistribute or duplicate such documents;

3.  its oral or written commitment will be made solely on the basis of the information set out in this Announcement and the information publicly announced to a Regulatory Information Service by or on behalf of the Company as at the date of this Announcement, such information being all that such Placee deems necessary or appropriate and sufficient to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given, or representations or warranties or statements made, by the Joint Brokers or the Company nor any of their respective affiliates and neither the Joint Brokers nor the Company will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement;

4.  the content of this Announcement and these terms and conditions are exclusively the responsibility of the Company and agrees that neither the Joint Brokers nor any of their affiliates nor any person acting on behalf of any of them will be responsible for or shall have liability for any information, representation or statements contained therein or any information previously published by or on behalf of the Company, and neither the Joint Brokers nor the Company, nor any of their respective affiliates or any person acting on behalf of any such person will be responsible or liable for a Placee's decision to accept its Placing participation;

5.  (i) it has not relied on, and will not rely on, any information relating to the Company contained or which may be contained in any research report or investor presentation prepared or which may be prepared by the Joint Brokers, the Company or any of their affiliates; (ii) none of the Joint Brokers, their affiliates or any person acting on behalf of any of such persons has or shall have any responsibility or liability for public information relating to the Company; (iii) none of the Company their affiliates or any person acting on behalf of any of such persons has or shall have any responsibility or liability for public information relating to the Company save for any information published via a regulatory information service; (iv) none of the Joint Brokers, the Company or their affiliates or any person acting on behalf of any of such persons has or shall have any responsibility or liability for any additional information that has otherwise been made available to it, whether at the date of publication of such information, the date of these terms and conditions or otherwise; and that (v) none of the Joint Brokers, the Company or their affiliates or any person acting on behalf of any of such persons makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of any such information referred to in (i) to (iv) above, whether at the date of publication of such information, the date of this Announcement or otherwise;

6.  it has made its own assessment of the Company and has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing, and has satisfied itself concerning the relevant tax, legal, currency and other economic considerations relevant to its decision to participate in the Placing;

7.  it is acting as principal only in respect of the Placing or, if it is acting for any other person: (i) it is duly authorised to do so and has full power to make the acknowledgments, representations and agreements herein on behalf of each such person; (ii) it is and will remain liable to the Company and the Joint Brokers for the performance of all its obligations as a Placee in respect of the Placing (regardless of the fact that it is acting for another person); (iii) if it is in the United Kingdom, it is a person: (a) who has professional experience in matters relating to investments and who falls within the definition of "investment professionals" in Article 19(5) of the Order or who falls within Article 49(2) of the Order; and (b) is a "qualified investor" as defined in Article 2(e) of the UK Prospectus Regulation; (iv) if it is in a member state of the EEA, it is a "qualified investor" within the meaning of Article 2(e) of the EU Prospectus Regulation; and (v) if it is a financial intermediary, as that term is used in Article 5(1) of the UK Prospectus Regulation, the Placing Shares subscribed by it in the Placing are not being acquired on a nondiscretionary basis for, or on behalf of, nor will they be acquired with a view to their offer or resale to persons in the UK or in a member state of the EEA in circumstances which may give rise to an offer of shares to the public, other than their offer or resale to qualified investors within the meaning of Article 2(e) of the UK Prospectus Regulation or within the meaning of Article 2(e) of the EU Prospectus Regulation in a member state of the EEA which has implemented the EU Prospectus Regulation;

8.  if it has received any confidential price sensitive information about the Company in advance of the Placing, it has not: (i) dealt in the securities of the Company; (ii) encouraged or required another person to deal in the securities of the Company; or (iii) disclosed such information to any person, prior to the information being made generally available;

9.  it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006, the Criminal Justice (Money Laundering and Terrorism Financing) Act 2010 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and any related or similar rules, regulations or guidelines, issued, administered or enforced by any government agency having jurisdiction in respect thereof (the "Regulations") and, if it is making payment on behalf of a third party, it has obtained and recorded satisfactory evidence to verify the identity of the third party as may be required by the Regulations;

10.  it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 ("FSMA")) relating to the Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person;

11.  it is not acting in concert (within the meaning given in the City Code on Takeovers and Mergers) with any other Placee or any other person in relation to the Company;

12.  it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving the United Kingdom;

13.  unless otherwise agreed by the Company (after agreement with the Joint Brokers), it is not, and at the time the Placing Shares are subscribed for and purchased will not be, subscribing for and on behalf of a resident of  Canada, Australia, Japan, the Republic of South Africa or any other Excluded Territory and further acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of any Excluded Territory and, subject to certain exceptions, may not be offered, sold, transferred, delivered or distributed, directly or indirectly, in or into those jurisdictions, and acknowledges that any Placing Shares being offered and sold in the United States are sold in a transaction exempt from registration under the US Securities Act, and that no public offering of the Placing Shares is being made in the United States or elsewhere;

14.   it does not expect the Joint Brokers to have any duties or responsibilities towards it for providing protections afforded to clients under the rules of the FCA Handbook (the "Rules") or advising it with regard to the Placing Shares and that it is not, and will not be, a client of either of the Joint Brokers as defined by the Rules. Likewise, any payment by it will not be treated as client money governed by the Rules;

15.  any exercise by the Joint Brokers of any right to terminate the Placing Agreement or of other rights or discretions under the Placing Agreement or the Placing shall be within the Joint Brokers' absolute discretion and the Joint Brokers shall not have any liability to it whatsoever in relation to any decision to exercise or not to exercise any such right or the timing thereof;

16.  it has the funds available to pay for the Placing Shares which it has agreed to acquire and acknowledges, agrees and undertakes that it will make payment to the relevant Joint Broker for the Placing Shares allocated to it in accordance with the terms and conditions of this Announcement on the due times and dates set out in this Announcement, failing which the relevant Placing Shares may be placed with others on such terms as the relevant Joint Broker may, in its absolute discretion determine without liability to the Placee and it will remain liable for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to the terms set out or referred to in this Announcement) which may arise upon the sale of such Placee's Placing Shares on its behalf;

17.  it will not distribute, forward, transfer or otherwise transmit this Announcement or any part of it, or any other presentational or other materials concerning the Placing in or into any Excluded Territory (including electronic copies thereof) to any person, and it has not distributed, forwarded, transferred or otherwise transmitted any such materials to any person;

18.  neither it, nor the person specified by it for registration as a holder of Placing Shares is, or is acting as nominee(s) or agent(s) for, and that the Placing Shares will not be allotted to, a person/person(s) whose business either is or includes issuing depository receipts or the provision of clearance services and therefore that the issue to the Placee, or the person specified by the Placee for registration as holder, of the Placing Shares will not give rise to a liability under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depository receipts or to issue or transfer Placing Shares into a clearance system;

19.  the person who it specifies for registration as holder of the Placing Shares will be: (i) itself; or (ii) its nominee, as the case may be, and acknowledges that the Joint Brokers and the Company will not be responsible for any liability to pay stamp duty or stamp duty reserve tax (together with interest and penalties) resulting from a failure to observe this requirement; and each Placee and any person acting on behalf of such Placee agrees to participate in the Placing on the basis that the Placing Shares will be allotted to a CREST stock account of the relevant Joint Broker who will hold them as nominee on behalf of the Placee until settlement in accordance with its standing settlement instructions with it;

20.  where it is acquiring Placing Shares for one or more managed accounts, it is authorised in writing by each managed account to acquire Placing Shares for that managed account;

21.  if it is a pension fund or investment company, its acquisition of any Placing Shares is in full compliance with applicable laws and regulations;

22.  it and/or each person on whose behalf it is participating: (i) is entitled to acquire Placing Shares pursuant to the Placing under the laws and regulations of all relevant jurisdictions; (ii) has fully observed such laws and regulations; and (iii) has the capacity and has obtained all requisite authorities and consents (including, without limitation, in the case of a person acting on behalf of a Placee, all requisite authorities and consents to agree to the terms set out or referred to in this Appendix) under those laws or otherwise and has complied with all necessary formalities to enable it to enter into the transactions and make the acknowledgements, agreements, indemnities, representations, undertakings and warranties contemplated hereby and to perform and honour its obligations in relation thereto on its own behalf (and in the case of a person acting on behalf of a Placee on behalf of that Placee); (iv) does so agree to the terms set out in this Appendix III and does so make the acknowledgements, agreements, indemnities, representations, undertakings and warranties contained in this Announcement on its own behalf (and in the case of a person acting on behalf of a Placee on behalf of that Placee); and (v) is and will remain liable to the Company and the Joint Brokers for the performance of all its obligations as a Placee of the Placing (whether or not it is acting on behalf of another person);

23.  it is aware of the obligations regarding insider dealing in the Criminal Justice Act 1993, market abuse under the MAR and the Proceeds of Crime Act 2002 and confirms that it has and will continue to comply with those obligations;

24.  in order to ensure compliance with the Money Laundering Regulations 2017, the Joint Brokers (for their own purposes and as agent on behalf of the Company) or the Company's registrars may, in their absolute discretion, require verification of its identity.  Pending the provision to the relevant Joint Broker or the Company's registrars, as applicable, of evidence of identity, definitive certificates in respect of the Placing Shares may be retained at the relevant Joint Broker's absolute discretion or, where appropriate, delivery of the Placing Shares to it in uncertificated form may be delayed at the relevant Joint Broker's or the Company's registrars', as the case may be, absolute discretion.  If within a reasonable time after a request for verification of identity the relevant Joint Broker (for its own purpose and as agent on behalf of the Company) or the Company's registrars have not received evidence satisfactory to them, the relevant Joint Broker and/or the Company may, at their absolute discretion, terminate their commitment in respect of the Placing, in which event the monies payable on acceptance of allotment will, if already paid, be returned without interest to the account of the drawee's bank from which they were originally debited at the risk of the relevant Placee and each Placee agrees that no claim can be made by the Placee in respect thereof;

25.  it has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the FSMA;

26.  it has not offered or sold and will not offer or sell any Placing Shares to persons in any member state of the EEA prior to Admission except to persons whose ordinary activities involve them acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of their business or otherwise in circumstances which have not resulted and will not result in an offer to the public in any member state of the EEA within the meaning of the EU Prospectus Regulation;

27.  participation in the Placing is on the basis that, for the purposes of the Placing, it is not and will not be a client of either of the Joint Brokers and that the Joint Brokers do not have any duties or responsibilities to it for providing the protections afforded to their clients nor for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement or the contents of these terms and conditions;

28.  to provide the Joint Brokers or the Company (as relevant) with such relevant documents as they may reasonably request to comply with requests or requirements that either they or the Company may receive from relevant regulators in relation to the Placing, subject to its legal, regulatory and compliance requirements and restrictions;

29.  to the extent that it is a legal or beneficial holder of Ordinary Shares, that it will submit, or procure the submission by its nominee of, either: (i) a validly signed Form of Proxy; or (ii) CREST voting instructions, voting in favour of the Resolutions, in either case not later than 72 hours prior to the General Meeting;

30.  any agreements entered into by it pursuant to these terms and conditions shall be governed by and construed in accordance with the laws of England and Wales and it submits (on its behalf and on behalf of any Placee on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Joint Brokers in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;

31.  to fully and effectively indemnify on an on-demand after tax basis and hold harmless the Company, the Joint Brokers and each of their respective affiliates, and any such person's respective affiliates, subsidiaries, branches, associates and holding companies, and in each case their respective directors, employees, officers and agents from and against any and all losses, claims, damages, liabilities, costs and expenses (including legal fees and expenses): (i) arising from any breach by such Placee of any of the provisions of these terms and conditions; (ii) incurred by either Joint Broker and/or the Company arising from the performance of the Placee's obligations as set out in these terms and conditions and (iii) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements or undertakings contained in the Announcement and further agrees that the provisions of these terms and conditions shall survive after completion of the Placing;

32.  in making any decision to subscribe for the Placing Shares: (i) it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of acquiring the Placing Shares; (ii) it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain a complete loss in connection with, the Placing; (iii) it has relied on its own examination, due diligence and analysis of the Company and its affiliates taken as a whole, including the markets in which the Company operates, and the terms of the Placing, including the merits and risks involved; (iv) it has had sufficient time to consider and conduct its own investigation with respect to the offer and purchase of the Placing Shares, including the legal, regulatory, tax, business, currency and other economic and financial considerations relevant to such investment; and (v) will not look to the Joint Brokers or any of their respective affiliates or any person acting on their behalf for all or part of any such loss or losses it or they may suffer;

33.  its commitment to acquire Placing Shares will continue notwithstanding any amendment that may in future be made to the terms and conditions of the Placing, and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's or the Joint Brokers' conduct of the Placing; and

34.  it acknowledges and understands that the Joint Brokers and the Company and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgments and undertakings which are irrevocable.

Please also note that the agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as agent) free of stamp duty and stamp duty reserve tax in the UK relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct from the Company for the Placing Shares in question. Such agreement assumes that such Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer such Placing Shares into a clearance service. If there were any such arrangements, or the settlement related to other dealing in such Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which none of the Company nor the Joint Brokers would be responsible and Placees shall indemnify the Company and the Joint Brokers on an after-tax basis for any stamp duty or stamp duty reserve tax paid by them in respect of any such arrangements or dealings. Furthermore, each Placee agrees to indemnify on an after-tax basis and hold each of the Joint Brokers and/or the Company and their respective affiliates harmless from any and all interest, fines or penalties in relation to stamp duty, stamp duty reserve tax and all other similar duties or taxes to the extent that such interest, fines or penalties arise from the unreasonable default or delay of that Placee or its agent. If this is the case, it would be sensible for Placees to take their own advice and they should notify the relevant Joint Broker accordingly. In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares.

Selling Restrictions

By participating in the Placing, a Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with the Joint Brokers and the Company, the following:

1.  it is not a person who has a registered address in, or is a resident, citizen or national of, a country or countries, in which it is unlawful to make or accept an offer to subscribe for Placing Shares;

2.  it has fully observed and will fully observe the applicable laws of any relevant territory, including complying with the selling restrictions set out herein and obtaining any requisite governmental or other consents and it has fully observed and will fully observe any other requisite formalities and pay any issue, transfer or other taxes due in such territories;

3.  if it is in the United Kingdom, it is a person: (i) who has professional experience in matters relating to investments and who falls within the definition of "investment professionals" in Article 19(5) of the Order or who falls within Article 49(2) of the Order, and (ii) is a "qualified investor" as defined in Article 2(e) of the UK Prospectus Regulation;

4.  if it is in a member state of the EEA, it is a "qualified investor" within the meaning of Article 2(e) of the EU Prospectus Regulation;

5.  it is a person whose ordinary activities involve it (as principal or agent) in acquiring, holding, managing or disposing of investments for the purpose of its business and it undertakes that it will (as principal or agent) acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business; and

6.  it (on its behalf and on behalf of any Placee on whose behalf it is acting) has: (a) fully observed the laws of all relevant jurisdictions which apply to it; (b) obtained all governmental and other consents which may be required; (c) fully observed any other requisite formalities; (d) paid or will pay any issue, transfer or other taxes; (e) not taken any action which will or may result in the Company or the Joint Brokers (or any of them) being in breach of a legal or regulatory requirement of any territory in connection with the Placing; (f) obtained all other necessary consents and authorities required to enable it to give its commitment to subscribe for the relevant Placing Shares; and (g) the power and capacity to, and will, perform its obligations under the terms contained in these terms and conditions.

Miscellaneous

The Company reserves the right to treat as invalid any application or purported application for Placing Shares that appears to the Company or its agents to have been executed, effected or dispatched from the United States or any other Excluded Territory or in a manner that may involve a breach of the laws or regulations of any jurisdiction or if the Company or its agents believe that the same may violate applicable legal or regulatory requirements or if it provides an address for delivery of the share certificates of Placing Shares in the United States, any other Excluded Territory, or any other jurisdiction outside the United Kingdom in which it would be unlawful to deliver such share certificates.

When a Placee or person acting on behalf of the Placee is dealing with a Joint Broker, any money held in an account with the relevant Joint Broker on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA made under the FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the relevant Joint Broker's money in accordance with the client money rules and will be used by the relevant Joint Broker in the course of their own business; and the Placee will rank only as a general creditor of the relevant Joint Broker.

Times

Unless the context otherwise requires, all references to time are to London time. All times and dates in these terms and conditions may be subject to amendment. The Joint Brokers will notify Placees and any persons acting on behalf of the Placees of any changes.

APPENDIX IV - DEFINITIONS

The following definitions apply throughout this Announcement, unless the context requires otherwise:

"Acquisition"	the acquisition of the entire issued share capital of HAI, the owner of Pirtek
"Act"	the Companies Act 2006
"Adjusted EBITDA"	earnings before interest, tax, depreciation, amortisation, exchange differences, share based payments and non-recurring items
"Adjustment Payment	£12.2 million for cash, debt and working capital adjustments in Pirtek and HAI
"Admission"	admission of the New Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules
"AIM"	AIM, a market operated by the London Stock Exchange
"AIM Rules"	the AIM Rules for Companies and the AIM Rules for Nominated Advisers, as applicable
"AIM Rules for Companies"	the rules for AIM companies published by the London Stock Exchange, as amended from time to time
"AIM Rules for Nominated Advisers"	the rules for nominated advisers to AIM companies published by the London Stock Exchange, as amended from time to time
"Allenby"	Allenby Capital Limited, a limited liability company incorporated and registered in England and Wales with registered number 06706681, authorised and regulated by the FCA, and the Company's joint financial adviser, nominated adviser and joint broker
"Annual General Meeting" or "AGM"	the annual general meeting of the Company which has been convened to take place on 18 April 2023 at 11.00 a.m.
"Bookbuild"	the accelerated bookbuild conducted by the Joint Brokers in relation to the Placing
"Closing Price"	unless otherwise stated, the closing middle market quotation of an Ordinary Share on any given day as derived from the AIM Appendix to the Daily Official List as published by the London Stock Exchange
"Code"	The City Code on Takeovers and Mergers
"Company" or "Franchise Brands"	Franchise Brands plc, a company incorporated and registered in England and Wales with registered number 10281033
"Completion"	completion of the Acquisition pursuant to the Sale and Purchase Agreement
"Concert Party"	Stephen Hemsley, Nigel Wray, Tim Harris, Julia Choudhury, Robin Auld and Mark Peters and their respective families, trusts and associates, being those that the Company has agreed with the Takeover Panel are considered to be acting in concert for the purposes of the Code
"Consideration"	£200 million, being the consideration payable by the Company to the Vendors plus the Adjustment Payment, of which up to £18.85 million is payable by the issue of the Consideration Shares at the Issue Price and the remainder shall be settled in cash
"Consideration Shares"	up to 10,470,232 new Ordinary Shares to be issued by the Company to the Vendors to settle part of the Consideration
"Corporate Sellers"	PNC Capital Finance, LLC, a company incorporated under the laws of the United States, and certain other corporate shareholders of HAI
"CREST"	the relevant system (as defined in the CREST Regulations) in respect of which Euroclear UK & International Limited is the Operator (as also defined in the CREST Regulations)
"CREST Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001 No.3755) (as amended from time to time)
"CRM"	Customer Relationship Management, a technology system used to manage interactions with customers and potential customers
"Directors" or "Board"	the directors of the Company
"Dowgate"	Dowgate Capital Limited, a limited liability company incorporated and registered in England and Wales with registered number 02474423, authorised and regulated by the FCA, and the Company's joint financial adviser and joint broker
"earnings"	earnings per share before interest, taxes, depreciation and amortisation plus other adjustments for non-recurring items and share based payments
"Enlarged Group"	the Group as enlarged by the Acquisition
"Enlarged Share Capital"	the enlarged share capital of the Company upon Admission, comprising the Existing Ordinary Shares and the New Ordinary Shares
"Existing Ordinary Shares"	the 130,311,112 Ordinary Shares in issue
"Facilities Agreements"	the Revolving Credit Facility and the Term Loan
"FCA"	the Financial Conduct Authority
"Filta"	Filta Group Holdings Limited, a company incorporated and registered in England and Wales with registered number 10095071 and a subsidiary of the Company
"Form of Proxy"	the form of proxy for use by Shareholders in connection with the General Meeting
"FRS 102"	Financial Reporting Standard 102, the principal accounting standard in the UK financial reporting regime
"FSMA"	the Financial Services and Markets Act 2000 (as amended) including any regulations made pursuant thereto
"Fundraise"	the Placing and the Subscription
"Fundraise Shares"	the Placing Shares and the Subscription Shares
"General Meeting"	the general meeting of the Company which will be convened to take place on 20 April 2023 at 9.00 a.m.
"Group"	the Company and its subsidiaries as at the date of this Announcement
"HAI"	Hydraulic Authority I Limited, a limited liability company incorporated and registered in England and Wales with registered number 11685895 wholly owned by the Vendor and which is the ultimate parent company of Pirtek
"IFRS"	International Financial Reporting Standards, the accounting standards issued by the International Accounting Standards Board
"ISIN"	International Securities Identification Number
"Issue Price"	180 pence per New Ordinary Share
"Joint Brokers"	means each of Allenby, Dowgate and Stifel, and "Joint Broker" shall mean any one of them
"KPI(s)"	key performance indicator(s), a quantifiable measure of performance over time for a specific objective
"London Stock Exchange"	London Stock Exchange plc
"Management Sellers"	Alexander McNutt and certain other employees of Pirtek Europe who are shareholders of HAI
"MAR"	the Market Abuse Regulation (596/2014/EU) as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018
"MSF"	managed service fee, the regular fee paid by franchisees to PEL
"MSTs"	mobile service technicians
"New Ordinary Shares"	the Placing Shares, Subscription Shares and the Consideration Shares
"Notice of General Meeting"	the notice convening the General Meeting
"Official List"	the official list of the Financial Conduct Authority
"Ordinary Shares"	ordinary shares in the share capital of the Company each with a nominal value of 0.5 pence
"PEL"	Pirtek Europe Limited, a limited liability company incorporated and registered in England and Wales with registered number 03232759, a subsidiary of HAI which is the principal operating and holding company of Pirtek Europe
"PFSPL"	Pirtek Fluid Systems Pty Ltd, a company incorporated in Australia and the licensor of Pirtek
"Pirtek" or "Pirtek Europe"	PEL and its direct and indirect subsidiaries, Pirtek (UK) Limited, CH Hydraulics Limited, CSS Hydraulics Limited, CSY Hydraulics Limited, CST Hydraulics Limited, Pirtek France Holdings SAS, Pirtek Hydraulique Service SAS, Pirtek Deutschland GmbH, Pirtek Austria GmbH, Pirtek 24/7 HydraulikService GmbH, Pirtek BV, Pirtek Sweden AB, Pirtek Liege bvba, Pirtek Brussel bvba, Pirtek Lummen bvba, CSK Hydraulics Limited, Pirtek Rotterdam Noord BV and Pirtek Europoort BV
"Placing"	the conditional placing of the Placing Shares at the Issue Price pursuant to the Placing Agreement
"Placing Agreement"	the conditional agreement dated 3 April 2023 between (1) the Company (2) Allenby Capital (3) Dowgate and (4) Stifel relating to the Placing
"Placing Shares"	the new Ordinary Shares to be issued by the Company pursuant to the Placing
"Proposed Director"	Alexander Samuel McNutt, who is proposed to become a director of the Company following Admission
"Prospectus Regulation Rules"	the prospectus regulation rules made by the FCA pursuant to the section 73A of the FSMA
"Resolutions"	the resolutions set out in the Notice of General Meeting
"Revolving Credit Facility"	the conditional revolving credit facilities provided to the Company for, in aggregate, £55 million from a syndicate of four lenders, the terms of which are summarised in paragraph 5 of Appendix I of this announcement
"Sale and Purchase Agreement" or "SPA"	The conditional sale and purchase agreement dated 3 April 2023 entered into between the Company and the Vendors in relation to the Acquisition
"Shareholders"	holders of the Ordinary Shares from time to time
"SONIA"	the sterling overnight index average, the effective overnight interest rate paid by banks for unsecured transactions in the British sterling market
"sterling" or "£"	pounds sterling, the lawful currency of the United Kingdom
"Stifel"	Stifel Nicolaus Europe Limited a limited liability company incorporated and registered in England and Wales with registered number 03719559, the Company's joint broker
"Subscribers"	Alex McNutt, Adrian Richards, Christopher Stuckey, Paul Dunlop, Keith Hardy, Dinesh Seetahul, Stephen Martin, Adam Burrows and Charles Simon Falla, all being employees of Pirtek
"Subscription"	the conditional subscription of the Subscription Shares at the Issue Price
"Subscription Agreements"	the proposed conditional agreements to be delivered to the Company by each of the Subscribers pursuant to the Subscription
"Subscription Shares"	the new Ordinary Shares to be issued by the Company pursuant to the Subscription
"system sales"	the total sales to third party customers by franchisees, corporate and direct labour organisations
"Takeover Panel"	The Panel on Takeovers and Mergers, an independent body that issues and administers the Code and supervises and regulates takeovers and other matters to which the Code applies
"Term Loan"	the conditional term loans to the Company of, in aggregate, £55 million from a syndicate of four lenders, the terms of which are summarised in paragraph 5 of Appendix I of this Announcement
"United Kingdom" or "UK"	the United Kingdom of Great Britain and Northern Ireland
"United States" or "US"	the United States of America, its territories and possessions, any State of the United States and the District of Columbia
"US Securities Act"	the United States Securities Act of 1933 (as amended)
"Vendors"	together the Corporate Sellers and the Management Sellers

 

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