Franchise Brands Plc · LSE:FRAN
Franchise Brands — H1 2019 Earnings Presentation
27 slides from Franchise Brands's earnings presentation, 2019
Slide 1: Interim Results Presentation 2019
INTERIM RESULTS PRESENTATION 2019
Slide 2: Contents
03 16 Introduction Barking Mad CONTENTS 08 17 Metro Rod Financials 13 22 Metro Plumb and Kemac Acquisitions update 14 23 ChipsAway Summary 15 25 Ovenclean Appendix INTERIM RESULTS PRESENTATION | 2019 2
Slide 3: An Introduction to Franchise Brands plc
AN INTRODUCTION TO FRANCHISE BRANDS PLC • Established in 2008 by Stephen Hemsley (Executive Chairman) and Nigel Wray (Non-executive Director). • International multi-brand franchisor with over 450 franchisees in 12 countries across four principal brands. • Highly experienced Board and senior manageme
Slide 4: Our Strategy & Business Model
OUR STRATEGY & BUSINESS MODEL Our strategy is to develop established franchise businesses into market leaders INTERIM RESULTS PRESENTATION | 2019 4
Slide 5: Franchise Brands: At a Glance
FRANCHISE BRANDS: AT A GLANCE B2B B2C Drainage and Car paintwork Domestic oven Dog home plumbing repairs cleaning boarding Franchisees Franchisees Franchisees Franchisees 42 204 109 82 EBITDA* EBITDA* £1.7m £1.2m * EBITDA excludes head office costs of £489k INTERIM RESULTS PRESENTATION | 2019 5
Slide 6: A Strong Performance Driven by Accelerating Metro Rod System Sales
A STRONG PERFORMANCE DRIVEN BY ACCELERATING METRO ROD SYSTEM SALES HALF YEAR FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS Revenue Adjusted EPS** • Metro Rod's "Vision 2023" £20.1m +19% 2.06p +22% strategy is delivering strong sales growth: 2019 £20.1m 2019 2.06p 2018 £16.8m 2018 1.69p − System sales
Slide 7: The 2019 Half Year Results: At a Glance
THE 2019 HALF YEAR RESULTS: AT A GLANCE 2,600 +526 +27 +17 2,460 2,400 -39 -41 2,200 2,000 1,971 EBITDA £’000 1,800 1,600 1,400 1,200 1,000 H1 2018 Metro Rod ChipsAway Ovenclean Barking Mad Head Office H1 2019 Costs INTERIM RESULTS PRESENTATION | 2019 7
Slide 8: Our Vision 2023 Strategy Is Delivering Increasingly Tangible Benefits
OUR VISION 2023 STRATEGY IS DELIVERING INCREASINGLY TANGIBLE BENEFITS Metro Rod’s rate of growth is accelerating, demonstrating increased engagement from franchisees: • System sales growth of 15% (H1 2018: 4%). • Local sales growth of 19%. (H1 2018: 8%). • Marketing and sales support strengthened. •
Slide 9: Increasing Sales Growth for Metro Rod Franchisees
INCREASING SALES GROWTH FOR METRO ROD FRANCHISEES FRANCHISEES IN SALES GROWTH FRANCHISEES GROWING SALES ABOVE 20% H1 2019 83% H1 2019 39% H1 2018 73% H1 2018 25% FRANCHISEES GROWING SALES ABOVE 40% FRANCHISEES IN SALES DECLINE H1 2019 10% H1 2019 17% H1 2018 3% H1 2018 27% INTERIM RESULTS PRESENTATI
Slide 10: Our Estimates for the Maximum Potential of the System Are Growing
OUR ESTIMATES FOR THE “MAXIMUM POTENTIAL” OF THE SYSTEM ARE GROWING 2018 ESTIMATE 2019 ESTIMATE Maximum Maximum yield Maximum Maximum yield penetration per postcode penetration per postcode 4.61% £1,105 6.23% £1,194 Maximum potential + 46% Maximum potential system sales system sales £110m £161m INTE
Slide 11: Excellent Progress Made in the Development of New Business Systems
EXCELLENT PROGRESS MADE IN THE DEVELOPMENT OF NEW BUSINESS SYSTEMS • New quotation system for additional work rolled out to franchisees: − Pre-populated templates sent directly to the customer. − Nearly 70% reduction in time to quote. − Reduction in headcount in this area, greatly improved data. • A
Slide 12: Strong Traction in Metro Rod and Metro Plumb Franchise Sales
STRONG TRACTION IN METRO ROD AND METRO PLUMB FRANCHISE SALES 1x 2x 3x 1x 1x 1x INTERIM RESULTS PRESENTATION | 2019 12
Slide 13: Development Plans in Progress for Metro Plumb and Kemac
DEVELOPMENT PLANS IN PROGRESS FOR METRO PLUMB AND KEMAC Future potential for >100 Metro Plumb franchise territories: • Decision to create smaller territories – increased focus on developing local work. • Increasing diversification of customer base. • First two independent franchise territories estab
Slide 14: ChipsAway Increasingly Well Positioned for the Future
CHIPSAWAY INCREASINGLY WELL POSITIONED FOR THE FUTURE Franchisee recruitment has recovered strongly: • 19 franchisees recruited in H1 compared to 6 in H2 2018 (H1 2018: 17) Successful launch of pilot Car Care Centre: • Incorporates the technology required to repair and recalibrate cars fitted with A
Slide 15: Recovery in Franchise Recruitment but Continual Focus Required
RECOVERY IN FRANCHISE RECRUITMENT BUT CONTINUAL FOCUS REQUIRED Franchise recruitment recovered Number of from low level in H2 2018: franchisees • 9 new franchisees recruited compared to 6 in H2 2018 109 (H1 2018: 13). • Franchise system grew from 106 Trustpilot ranking to 109 franchisees. • 25% incr
Slide 16: New Management and Reorganisation Resulting in Deeper Group Integration
NEW MANAGEMENT AND REORGANISATION RESULTING IN DEEPER GROUP INTEGRATION New management at Barking Mad: Number of • Reorganisation of the business franchisees following the departure of the founder. • Rachel Stewart, formerly in senior 82 business development role, appointed Managing Director. Franch
Slide 17: Summary of Group Results
SUMMARY OF GROUP RESULTS H1 2019 H1 2018 Change Change • First fully comparative set of numbers since Six months ended 30 June £’000 £’000 £’000 % Metro Rod acquisition. Statutory revenue 20,084 16,844 3,240 19% • Statutory revenue increased by 19% to £20.1m. Franchise payments (9,493) (8,395) (1,09
Slide 18: Fee & Direct Labour Income
FEE & DIRECT LABOUR INCOME • Strategically important MSF income increased by H1 2019 % of H1 2018 % of Change Change £’000 Total £’000 Total £’000 % 11% to £5.4m. • Fees generated from the sale (or resale) of MSF income 5,401 51% 4,861 58% 540 11% franchise territories were essentially flat in H1 20
Slide 19: Individual Business Results
INDIVIDUAL BUSINESS RESULTS • Metro Rod delivered an EBITDA contribution of EBITDA by business £1.7m in the period, an increase of 44%: − Accelerating system sales growth of 15% from a H1 2019 H1 2018 Change Change re-invigorated franchise network (H1 2018: 4%). £’000 £’000 £’000 % − Strong performa
Slide 20: EPS and Dividend
EPS AND DIVIDEND • Basic EPS increased by 24% to 1.84p from 1.49p. Growth in Basic EPS and dividend (p) • Diluted EPS increased by 27% to 1.82p from 1.43p. • Adjusted EPS increased by 22% to 2.06p from 1.69p. H1 2019 0.30 1.84 • Interim dividend of 0.30p per share, an increase of 43%. H1 2018 0.21 1
Slide 21: Movement in Net Debt
MOVEMENT IN NET DEBT • Net debt fell by £0.5m to £5.4m Movement in net debt (£’000) (2018: £5.9m). • Gross debt fell by £0.7m to £8.2m (2018: £8.9m): £5,908 − £500k of scheduled term loan payments. £120 £5,431 £358 − £200k reduction in lease debt. £748 £151 − Gross debt repayable over next 3 years.
Slide 22: Potential for Prudently Financed, Earnings-Enhancing Complementary Acquisitions
POTENTIAL FOR PRUDENTLY FINANCED, EARNINGS- ENHANCING COMPLEMENTARY ACQUISITIONS • Each of the Group’s businesses have interesting opportunities for expansion both organically and by complementary acquisitions. • The Group is well positioned to consider acquisition opportunities that extend the rang
Slide 23: Summary
SUMMARY • A strong performance in H1 2019 driven by accelerating Metro Rod system sales. • Investment in technology starting to unlock sales growth, efficiencies and improved customer service. • Substantial improvement in franchise recruitment in our B2C businesses. • Successful launch of ChipsAway’
Slide 24: Appendix
APPENDIX INTERIM RESULTS PRESENTATION | 2019 24
Slide 25: The Group's Franchise Systems as at 30 June 2019
THE GROUP’S FRANCHISE SYSTEMS AS AT 30 JUNE 2019 Franchisees Network size New franchisees Net new leaving the Network size 31 December, recruited in franchisees in H1 system in H1 30 June, 2019 2018 H1 2019 2019 2019 ChipsAway 201 19 (16) 3 204 Ovenclean 106 9 (6) 3 109 Barking Mad 80 6 (4) 2 82 Met
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