Franchise Brands Plc · LSE:FRAN
Franchise Brands — H1 2018 Earnings Presentation
21 slides from Franchise Brands's earnings presentation, Jul 26, 2018
Slide 1: Interim results presentation
Interim results presentation July 26 2018
Slide 2: Disclaimer
Disclaimer This presentation is the sole responsibility of the directors of Franchise Brands plc (the “Company”). No offer or invitation or solicitation of any offer to acquire securities of the Company is being made now nor does this presentation constitute or form part of any invitation or inducem
Slide 3: Contents
Contents Page 1. Highlights of interim results 4 2. Metro Rod 5 3. Metro Plumb and Kemac 8 4. ChipsAway, Ovenclean and Barking Mad 9 5. Financials 10 6. Summary 18 Appendix 19 3
Slide 4: Good progress in H1 2018
Good progress in H1 2018 Financial highlights: • Statutory revenue up 88% to £16.8m (H1 2017: £8.9m). • Recurring Management Service Fee (“MSF”) income up 86% to £5.4m (H1 2017:£2.9m), and is now 64% of total fee income (H1 2017: 57%). • Adjusted EBITDA* increased by 46% to £1.8m (H1 2017: £1.3m). •
Slide 5: Metro Rod strategy update
Metro Rod strategy update • New Metro Rod strategy was formulated and rolled out in late 2017. • The strategy has the central objective of making franchisees more independent and responsible for building their own business by giving them the IT, sales and marketing support needed to achieve this. •
Slide 6: Delivering a digitally-enabled business
Delivering a digitally-enabled business • We have started the process of building a digitally-enabled business. • Significant progress has been made in 1H 2018: • Migration of systems to Cloud-based platform has resulted in speed and reliability improvements; • Increased franchisee access to Works M
Slide 7: Sales & Marketing progress
Sales & Marketing progress • An important element of our overall sales and marketing strategy is to provide franchisees with sales and marketing support and training so that they can grow their sales in their local territories. Our strategy is for these local sales to become 60% of total system sale
Slide 8: Metro Plumb & Kemac
Metro Plumb & Kemac Metro Plumb • Metro Plumb has continued to grow sales and these have now reached critical mass for a growing number of franchisees. • System sales for Metro Plumb increased 27% over the same period last year. • The revised strategy is to focus our sales effort on those areas wher
Slide 9: ChipsAway, Ovenclean and Barking Mad
ChipsAway, Ovenclean and Barking Mad • ChipsAway franchisee recruitment slowed, however, the real opportunity lies in helping franchisees develop from being “man-in-a van” operators to management franchisees with turnover-related MSF income: • 7% of the network bought additional territory, demonstra
Slide 10: Summary of group results
Summary of group results 2018 2017 Change Change • Statutory revenue up 88% as we include Metro Rod for the full six Period ended 30 June £’000 £’000 £’000 % months (almost 3 months in 2017). As a result of different revenue Statutory revenue 16,844 8,937 7,907 88% recognition policies, consolidated
Slide 11: Fee and direct labour income
Fee and direct labour income £’000 MSF Area Sales Product Total fee Direct H1 2018 • Core fee income which we earn as a franchisor has sales income labour Total increased by 34% to £6.8m, driven by the inclusion of Metro Rod 3,554 40 0 3,594 1,611 5,205 Metro Rod for a full six months. ChipsAway 1,2
Slide 12: Individual business results
Individual business results Period ended 30 June 2018 2017 Change • Metro Rod is included for a full 6 months, compared to almost Change 3 months in 2017, increasing its contribution by 215% EBITDA £'000s £'000s £'000s • On a ‘pro-forma’ basis EBITDA is up by 36% with % Metro Rod 1,104 351 753 215%
Slide 13: Metro Rod IT expenditure
Metro Rod IT expenditure IT expenditure for period • Total IT spend in the period has been just over £500k. ended 30 June 2018 £'000 • No comparatives, as in prior year Metro Rod IT was being provided under Transitional Business Systems 238 Services Agreement with the previous owner. IT Services 106
Slide 14: EPS and dividend
EPS and dividend • EPS on an adjusted basis has increased by 13% year- For the period ending 30 June 2018 2017 Change (£) Change (%) on-year. Adjusted profit after tax (£’000) 1,163 799 364 46% Non-recurring items (net of tax) (£’000) 0 (1,041) 1,041 -1,005 • Whilst earnings have increased by 46%, t
Slide 15: Movement in net debt
Movement in net debt Period ended 30 June 2018 2017 Change • During the period the net debt has decreased to £5.5m from £’000 £’000 £’000 £6.3m Cash 2,751 3,245 (494) • Moderate capital gearing of 23% (31 December 2017: 27%) Term loan (5,700) (6,000) 300 • Operating well within all covenants RCF (2,
Slide 16: Cash flow
Cash flow Cash flow for period ended 30 June 2018 2017 • The Group has had strong cash inflow from its operations, with £'000 £'000 £1.5m generated. EBITDA 1,820 52 • Cash conversion of 83% (H1 2017: 54%) (Cash from operating Movement on receivables (1,613) (879) activities/adjusted EBITDA). Movemen
Slide 17: Balance sheet
Balance sheet 30 June 31 Dec • Balance sheet has grown by £987k. Balance Sheet 2018 2017 £'000 £'000 • Growth driven by profits in the period (£1,163k), less dividends paid (£257k), and an adjustment for share-based Inventories 276 252 payment (£81k). Debtors 9,779 8,144 Creditors (7,940) (6,406) •
Slide 18: Summary
Summary • Pleasing progress in 1H 2018, with the business as a whole performing as expected. • Metro Rod is capable of significant growth • Benefits of the new strategy starting to come through. • Investment that is being made in IT, sales and marketing will help unlock Metro Rod’s potential. • Chip
Slide 19: Appendix
Appendix
Slide 20: Franchise system at 30 June 2018
Franchise system at 30 June 2018 Network size New Franchisees Network size 31 Dec 2017 franchisees leaving the 30 Jun 2018 recruited system ChipsAway 214 17 (16) 215 Ovenclean 106 13 (10) 109 Barking Mad 71 11 (8) 80 Metro Rod 41 - - 41 Total: 438 41 (34) 445 20
Slide 21: www.franchisebrands.co.uk
www.franchisebrands.co.uk @FB_PLC www.metrorod.co.uk @MetroRodUK www.chipsaway.co.uk @ChipsAwayUK www.ovenclean.com @Oven_Clean www.barkingmad.uk.com @BarkingMadHQ 21