Slide 1: Final Results Presentation
Final Results Presentation 22 March 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 final results 4 2. Metro Rod 6 3. Metro Plumb 11 4. Kemac 12 5. ChipsAway, Ovenclean and Barking Mad 13 6. Final results 14 7. Summary 20 Appendix 3
Slide 4: Highlights
Highlights Financial highlights: • Revenue up five-fold to £24.3m (2016: £4.9m). • Adjusted EBITDA increased by 101% to £2.7m (2016: £1.4m). • Adjusted profit after tax grew by 77% to £1.7m (2016: £1.0m). • Cash generated from operations before exceptional costs of £2.6m (2016: £1.4m). • Net debt of
Slide 5: Highlights
Highlights Operational highlights • Trading summary: • Metro Rod was acquired in April 2017 for £28.4m and traded in-line with management expectations. • ChipsAway and Ovenclean exceeded budget through strong Management Service Fee (“MSF”) growth. • Barking Mad made a good contribution in its first
Slide 6: Metro Rod Strategy (1)
Metro Rod Strategy (1) • Feedback exercises with the franchisees and Support Centre teams confirmed that Metro Rod has a market-leading national offering in the commercial drainage market which has never been fully exploited. • Significant opportunity identified for Metro Rod to take market share fr
Slide 7: Metro Rod Strategy (2)
Metro Rod Strategy (2) • New strategy formulated for Metro Rod, the central objective of which is to grow franchisee sales and their profitability whilst also building our MSF income. • A key driver of the new strategy is for the franchisees to become more independent and more responsible for buildi
Slide 8: IT: Challenges and Opportunities
IT: Challenges and Opportunities • Metro Rod’s business processes and IT systems need to be completely overhauled: • IT systems: old technology, over engineered for our needs, functionality issues, clunky, • Business processes: overly complicated, very manual, very poor MI. • The scale of the Metro
Slide 9: IT: Vision and Strategy
IT: Vision and Strategy • Key design principles: cloud-based, future-proofed, customer-centric, simple to use, flexible, franchisee involvement, right sized, secure. Current IT systems Future IT systems • Manual logging, deployment, amendments, updating, • Automatic logging, deployment, amendment, u
Slide 10: Metro Rod Marketing and Sales
Metro Rod Marketing and Sales • A key element of the Metro Rod strategy is to significantly improve the profile and awareness of the Metro Rod brand amongst key decision makers. • Investment in marketing is being funded through the introduction of a National Advertising Fund (“NAF”) at Metro Rod: •
Slide 11: Metro Plumb & Kemac
Metro Plumb & Kemac Metro Plumb • Metro Plumb is a national cold-water plumbing business operated currently through a network of 36 franchisees, of which 30 are Metro Rod franchisees and six corporate territories are operated by Kemac. • Metro Plumb’s focus is the provision of a reactive call-out to
Slide 12: ChipsAway, Ovenclean and Barking Mad
ChipsAway, Ovenclean and Barking Mad • Main sources of revenue from these brands is MSF (50% of total), followed by sales of franchise territories (29%) and product sales (16%). • ChipsAway continues to recruit new franchisees, however, the real opportunity lies in helping franchisees develop from b
Slide 13: Summary of Group Results
Summary of Group Results 2017 2016 Change • Statutory revenue up 5-fold due to the almost nine months ownership Year ended 31 December % of Metro Rod. As a result of different revenue recognition policies, £’000 £’000 £’000 consolidated turnover is not a KPI management monitor. Statutory revenue 24,
Slide 14: Non-recurring Items
Non-recurring Items Year ended 31 December 2017 2016 Change • Significant increase of non-recurring items in the current year arising % £’000 £’000 £’000 from acquisition of Metro Rod. Adjusted profit after tax 1,737 979 758 77% • £1.1m in relation to the cost of the reverse take-over of Metro Rod C
Slide 15: Individual Business Results
Individual Business Results Year ended 31 December • Of the existing businesses ChipsAway has performed very 2017 2016 Change % strongly growing by 18%, with Ovenclean being flat year-on- Fee Income* year. £'000s £'000s £'000s ChipsAway 4,277 3,978 299 8% • Barking Mad is included for a full year fo
Slide 16: EPS and Dividend
EPS and Dividend For the year ended 31 December 2017 2017 2016 Change % • EPS on an adjusted basis has increased by a Adjusted profit after tax (£’000) 1,737 979 758 77% modest 4% year-on-year, despite earnings Non-recurring items (net of tax) (£’000) (1,849) (455) (1,394) 306% growing by 77% in the
Slide 17: Movement in Net Debt
Movement in Net Debt At 31 December 2017 2017 2016 Change • During the year the Group negotiated new debt facilities with HSBC in order to fund the acquisition of Metro Rod. These facilities £’000 £’000 £’000 included: • £12m term loan Cash 3,245 2,999 246 • £5m Revolving Credit Facility (“RCF”) Ter
Slide 18: Balance Sheet
Balance Sheet At 31 December 2017 2017 2016 • Balance sheet has fundamentally changed £'000 £'000 due to the purchase of Metro Rod, which was funded through £20m of new equity and Inventories 252 193 £12m of loans. Trade and other receivables 9,670 419 Trade and other payables (7,132) (1,289) • Work
Slide 19: Cash Flow
Cash Flow Cash flow for year ended 31 December 2017 £'000 • The Group has had strong cash inflow from its operations, with £2.6m generated from is underlying operations. Adjusted EBITDA 2,715 Movement on receivables (1,574) • The Group has incurred exceptional costs of £1.8m in Movements on inventor
Slide 20: Summary
Summary • Transformational acquisition of Metro Rod: • Significantly increased the scale of the business. • Challenges and opportunities, but upside potential of the business much greater than originally anticipated. • Strategy being implemented. • Original brands trading well and strategy is to dev
Slide 21: Appendix
Appendix
Slide 22: Franchise system at 31 December 2017
Franchise system at 31 December 2017 Network size New Franchisees Network size Jan 2017 franchisees leaving the Dec 2017 recruited system ChipsAway 218 33 37 214 Ovenclean 102 23 19 106 Barking Mad 71 24 18 77 Metro Rod 40* 2 1 41 Total: 431 82 75 438 * As at 11 April 2017 22
Slide 23: 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 23