Slide 1: Final Results Presentation 2018
FINAL RESULTS PRESENTATION 2018
Slide 2: Contents
01 06 At a glance Barking Mad CONTENTS 02 07 Metro Rod Financials 03 08 Metro Plumb and Kemac Acquisitions update 04 09 ChipsAway Summary 05 10 Ovenclean Appendix F I N A L R E S U L TS P R E S E N TA TI O N | 2 0 1 8 1
Slide 3: Franchise Brands: At a Glance
FRANCHISE BRANDS: AT A GLANCE Drainage and plumbing Car paintwork repairs Domestic oven cleaning Dog home boarding Franchisees EBITDA Franchisees EBITDA Franchisees EBITDA Franchisees EBITDA 40 £2.5m 201 £1.9m 106 £0.3m 80 £0.2m F I N A L R E S U L TS P R E S E N TA TI O N | 2 0 1 8 2
Slide 4: A Strong Performance: Ahead of Expectations
A STRONG PERFORMANCE: AHEAD OF EXPECTATIONS FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS Fee income Adjusted earnings per share • Metro Rod's "Vision 2023" £17.9m +41% 3.0p +21% strategy has been greeted with 2018 £17.9m 2018 3.00p real engagement from the 2017 £12.7m 2017 2.47p 2016 £4.9m 2016 2.40p
Slide 5: The 2018 Results: At a Glance
THE 2018 RESULTS: AT A GLANCE 4,100 +1,192 +8 +7 -27 -178 3,900 3,700 3,700 EBITDA £’000 3,500 3,300 3,100 2,900 2,697 2,700 2,500 2017 Metro Rod ChipsAway Ovenclean Barking Mad Head Office Costs 2018 F I N A L R E S U L TS P R E S E N TA TI O N | 2 0 1 8 4
Slide 6: Metro Rod Vision 2023: On Track
METRO ROD VISION 2023: ON TRACK Vision 2023: engagement from a re-invigorated franchise community. Implementation of most strategic and operational changes. Vision 2023 principles: • Return the franchisee to front and centre of the business. • Help them grow local sales. • Decrease franchisee relian
Slide 7: Good Progress Against Key Strategic Objectives
GOOD PROGRESS AGAINST KEY STRATEGIC OBJECTIVES Good progress made against two key elements of Vision 2023: technology and sales & marketing. • Development of new business systems is progressing well and several new systems have been rolled out to the franchisees. • Most important system to be update
Slide 8: Our Investment in Technology: Starting to Deliver
OUR INVESTMENT IN TECHNOLOGY: STARTING TO DELIVER Digitally-enabling our business: • WMS being developed in close • Automating manual, repetitive, tasks cooperation with our franchisees: using robotics: – Currently on trial. – 40% of all jobs are now logged – Expect to start rolling it out to a auto
Slide 9: Kemac and Metro Plumb: A Year of Achievement
KEMAC AND METRO PLUMB: A YEAR OF ACHIEVEMENT A positive year for both Kemac and • Anticipate many independent Metro Plumb: Metro Plumb franchises going • Excellent performance at Kemac forward. due to a number of large one-off • Metro Plumb has continued to jobs. grow rapidly with sales up 27% • Kem
Slide 10: Metro Rod: Progress on Many Fronts
METRO ROD: PROGRESS ON MANY FRONTS Progress in 2018 Focus for 2019 FOCUSED ON • Appointment of Sales & Marketing Director, • Implementation of sales recruitment, training implementation of new marketing strategy. and support. GROWTH • Roll-out of field-based marketing training. • Launch of new websi
Slide 11: ChipsAway: A Brand in Transition
CHIPSAWAY: A BRAND IN TRANSITION The automotive aftermarket will experience significant disruption: • Autonomous vehicles: introduction of Advanced Driver Assist Systems. • Growth of electric and hybrid vehicles. • Connected vehicles. • Strategic shift for ChipsAway from a van-based operation to Car
Slide 12: ChipsAway: A Brand in Transition
CHIPSAWAY: A BRAND IN TRANSITION • Lower numbers of franchisees • Our model Car Care Centre will recruited due to challenging open shortly at the Kidderminster external environment. Head Office: • Encouragingly, some shortfall was – Test new specialist equipment. made up through existing – Train our
Slide 13: Ovenclean: Steady Progress
OVENCLEAN: STEADY PROGRESS Ovenclean franchisees continue Number of jobs to trade well in a business that is carried out in 2018 predominantly one man, one van. • “Milk round” of 400-500 76,000 customers and six-monthly cleans. Trustpilot ranking • Fixed monthly fee increases with inflation and time
Slide 14: Barking Mad: Slower Franchise Recruitment
BARKING MAD: SLOWER FRANCHISE RECRUITMENT 2018 progress against strategic System sales objectives: • Franchise recruitment was £3.8m affected by high levels of employment. Number of • Income generated from a 10% franchisees MSF on system sales which grew 6%. 80 • Barking Mad franchise network grew f
Slide 15: Summary of Group Results
SUMMARY OF GROUP RESULTS 2018 2017 Change • Statutory revenue increased by 43% to £35.5m. Metro Rod Year ended 31 December £’000 £’000 £’000 % included for a full year (2017: nine months). Statutory revenue 35,470 24,867 10,603 43% • Fee income, which reflects our income as franchisor, increased Fra
Slide 16: Fee and Direct Labour Income
FEE AND DIRECT LABOUR INCOME • Strategically important MSF income increased 2018 2017 by 32% to £10.9m: – Comprises 61% of Group income. – 62% of ChipsAway’s income now MSF (2017: 57%). • Area sales to new franchisees disappointing at £17.9m £12.7m 59 (2017: 82). • Direct labour income increased: –
Slide 17: Individual Business Results
INDIVIDUAL BUSINESS RESULTS • Metro Rod delivered an EBITDA contribution of £2.5m EBITDA by business in the period, with implied organic growth of 38%: 2018 2017 Change – System sales growth of 10.2% from re-invigorated Year ended 31 December £’000 £’000 £’000 % franchise network. Metro Rod 2,498 1,
Slide 18: Breakdown of IT Expenditure
BREAKDOWN OF IT EXPENDITURE • 2018 is the first year we have fully supported the IT IT expenditure, 2018 (£’000) infrastructure of the business. • Total cash IT costs in 2018 of £1.5m: – “Grow” and “Run” - the general running costs of IT are approximately £1m (P&L). – “Transform”: we invested a furt
Slide 19: EPS and Dividend
EPS AND DIVIDEND • Adjusted EPS increased by 21% to 3.00p from Growth in EPS and dividend (p) 2.47p: – Earnings growth of 36%. 2018 0.67 3.0 – Offset by dilution from 12% increase in the weighted average number of shares (as a result of April 2017 Metro Rod fundraise). 2017 0.50 2.5 – Dilutive effec
Slide 20: Movement in Net Debt
MOVEMENT IN NET DEBT • Net debt fell by £1.3m to £5.0m (2017: £6.3m). Movement in net debt (£’000) • Gross debt fell by £1.6m to £7.9m (2017: £9.5m): £6,260 – £600k of scheduled term loan payments. – £1m reduction of the RCF. £420 £151 £4,971 • EBITDA of £3.7m offset by: £570 £138 £283 – £0.9m inves
Slide 21: Balance Sheet
BALANCE SHEET 2018 2017 Change • PPE increased to £0.4m as we invested in IT and also At 31 December £’000 £’000 £’000 % equipped our Exeter corporate franchise. Property, plant and equipment 382 162 220 136% • Net working capital investment of £512k, as Metro Rod Intangible assets 27,232 27,025 sys
Slide 22: Acquisitions Update
ACQUISITIONS UPDATE • With the integration of Metro Rod now complete we are focusing again on acquisitions. • We evaluated several opportunities in 2H 2018 which were rejected due to valuation. • In scope are: – Reasonably valued and earnings enhancing franchise businesses that can leverage our core
Slide 23: Summary
SUMMARY • A strong performance in 2018 as we start to unlock Metro Rod’s significant potential. • Benefits of the Metro Rod investment to be increasingly more visible in the current year and beyond. • Potential to transition ChipsAway from a mobile-based operation to Car Care Centres. • Acquisitions
Slide 24: Appendix
APPENDIX F I N A L R E S U L TS P R E S E N TA TI O N | 2 0 1 8 23
Slide 25: Franchise System as at 31 December 2018
FRANCHISE SYSTEM AS AT 31 DECEMBER 2018 Franchisees Network size New franchisees Network size leaving the system 31 December, 2017 recruited in 2018 31 December, 2018 in 2018 ChipsAway 214 23 36 201 Ovenclean 106 19 19 106 Barking Mad 77 15 12 80 Metro Rod 41 1 2 40 Metro Plumb* 0 1 0 1 Total: 438 5
Slide 26: Disclaimer
DISCLAIMER The information contained in this document (“Presentation”) and the presentation made to you verbally has been prepared by Franchise Brands plc (the “Company”). Franchise Brands plc is a UK company quoted on AIM, a market operated by London Stock Exchange plc. This Presentation has not be
Slide 27: Contact details
www.metrorod.co.uk www.chipsaway.co.uk www.ovenclean.com www.barkingmad.uk.com @MetroRodUK @ChipsAwayUK @Oven_Clean @BarkingMadHQ Franchise Brands plc Ashwood Court Tytherington Business Park Macclesfield SK10 2XF mail@franchisebrands.co.uk www.franchisebrands.co.uk 01562 826705 @FB_PLC