Franchise Brands Plc · LSE:FRAN
Franchise Brands — H1 2017 Earnings Presentation
25 slides from Franchise Brands's earnings presentation, Sep 14, 2017
Slide 1: Interim results presentation
Interim results presentation 14 September 2017
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. Presentation team 4 2. Introduction to the Group 5 3. Metro Rod post completion: activities, findings, actions 8 4. Franchise Brand’s growth strategy 11 5. The Board and management team 12 6. Highlights of interim results 14 7. Interim results 16 8. Future prospects 21 9. Summary 22
Slide 4: Presentation team
Presentation team Stephen Hemsley – Executive Chairman • Currently Non-Executive Chairman of Domino's Pizza • During his nearly 20-year association with Domino’s Pizza: o Market capitalisation risen from £25m to around £1.3bn – FTSE250 company o Number of stores grown from c.100 to over 1,000 stores
Slide 5: Overview of Franchise Brands plc
Overview of Franchise Brands plc • International multi-brand franchisor with over 450 franchisees – mainly UK, but presence in 11 other countries • September 2008: Founded by Stephen Hemsley and Nigel Wray (who are both Directors and controlling shareholders) • August 2016: IPO on AIM at market capi
Slide 6: Overview of Metro Rod
Overview of Metro Rod Metro Rod • Founded in 1983 – one of only five national companies in the drainage sector • Provides a 24/7/365 emergency response and scheduled service to primarily business customers across multiple sectors including facilities management, retail, water utilities, social housi
Slide 7: Overview of other brands
Overview of other brands • Established in the UK since 1994 • Provider of “SMART” (Small to Medium Area Repair Technology) car body repairs • usually carried out on a mobile basis - competitive pricing when compared to that of a typical body shop • Brand leading SMART repairer in the UK with 222 fra
Slide 8: Key activities since completion of Metro Rod: franchisee roadshow
Key activities since completion of Metro Rod: franchisee roadshow • Completed a tour of all 40 Metro Rod franchisees, visiting them at their local offices and meeting their teams • This has given us a tremendous insight into the business and confirms the exciting opportunity presented by the Metro R
Slide 9: Key activities since completion of Metro Rod: meeting the teams in the Support Centre
Key activities since completion of Metro Rod: meeting the teams in the Support Centre • We have also spent a considerable amount of time in the Support Centre in Macclesfield: • All-team meetings attended by the Franchise Brands board • A “day in the life”: sales, marketing, technical, franchise ope
Slide 10: Key findings and actions
Key findings and actions Metro Rod • The upside potential of the Metro Rod core business is substantially better than our expectations. We are firmly of the view that Metro Rod has a market leading national offering in the commercial drainage market which has never been fully exploited during the co
Slide 11: Franchise Brand’s growth strategy
Franchise Brand’s growth strategy Overarching strategy • Develop franchise businesses that provide primarily services to individuals and businesses – a combination of organic growth and acquisitions • Intention to grow by selective acquisition focusing on both B2B and B2C franchisee businesses where
Slide 12: The Board: executive team
The Board: executive team In addition to Stephen Hemsley, Chris Dent and Julia Choudhury, the plc executive Directors are as follows: Tim Harris - Chief Executive Officer • Seasoned franchise professional with over 20 years’ experience of successfully developing franchise brands in both the UK and o
Slide 13: Senior management team
Senior management team Peter Molloy – Managing Director, Lee Dancy – Managing Director, Colin Rees – Chief Information Andrew Mallows – Finance Director, Metro Rod Barking Mad Officer ChipsAway, Ovenclean and Barking • Promoted to the position of • Over 25 years of commercial • Colin joined the Grou
Slide 14: Highlights of interim results
Highlights of interim results Financial highlights: • Revenue up three-fold to £8,639,000 (H1 2016: £2,488,000) • Adjusted EBITDA increased by 66% to £1,256,000 (H1 2016: £758,000) • Organic EBITDA increased by 13% to £1.16m (H1 2016: £1.03m) • Adjusted profit before tax and exceptional items grew b
Slide 15: Highlights of interim results
Highlights of interim results Operational highlights • £28.5m acquisition of Metro Rod completed on 11 April 2017, funded by: • Placing of new shares which raised £20m before expenses (29,850,746 shares issued at 67p each); • Bank debt of £12m raised by way of five-year term loan, and • Secured a fu
Slide 16: Summary of group results
Summary of group results 6 months ended 30 June 2017 2016 Change % • Revenue up 3-fold due to the 2.5 months ownership of Metro Rod £'000 £'000 • Gross margin has reduced to 42% from 67% due to Metro Rod’s revenue recognition policy Revenue 8,639 2,488 6,151 247% • Overheads up by 160%, due to the i
Slide 17: Individual business results
Individual business results 6 months ended 30 June 2017 2016 Change % • The existing businesses have performed strongly in the period, with £'000 £'000 Chips Away growing by 5%, and Ovenclean by 75%. Note that H1 Revenue tends to be slightly stronger than H2 due to August and December Metro Rod 5,62
Slide 18: EPS and dividend
EPS and dividend 2017 Weighted number Basic EPS Weighted number Diluted EPS £'000 of Basic Shares (p) of Diluted Shares (p) (Loss)/profit (237) 61,239,907 (0.39) 62,067,382 (0.38) Exceptiona l s 1,198 Ta x on Exceptiona l s (157) Net Exceptiona l s 1,041 Adjusted Result 804 61,239,907 1.31 62,067,38
Slide 19: Balance sheet
Balance sheet As at 30 June 2017 2016 Change % • Balance sheet has fundamentally changed due to the purchase of Metro £'000 £'000 Rod funded by £20m of equity and a £12m loan • Working capital increased due to Metro Rod revenue cycle Inventories 353 193 160 83% • Move from net cash to net debt due t
Slide 20: Cash flow
Cash flow For the six months ended 30 June 2017 £'000 • The group has had strong cash inflow from its operations, with £2.1m generated from is EBITDA 1,256 underlying operations Recei va bl es (885) • The group has incurred exceptional costs of £1.2m in relation to the professional fees incurred Inv
Slide 21: Future prospects
Future prospects • Principal brands delivered strong growth and on track to deliver another strong performance in the current year • Remedial action in place with Kemac • Intensive investment activity should enhance earnings and improve operational gearing as overheads decline as a proportion of inc
Slide 22: Summary
Summary • Four established franchise brands: Metro Rod, ChipsAway, Ovenclean and Barking Mad • Experienced management team and Board with experience of franchising, operating and growing profitable businesses and identifying acquisition targets • Strategy to develop franchise businesses that provide
Slide 23: Appendix
Appendix
Slide 24: The Board: non-executive team
The Board: non-executive team Nigel Wray • Entrepreneurial investor in both public and private companies • Currently a substantial shareholder and director at Prestbury Investment Holdings Limited and many other companies • Chairman and co-owner of Saracens Rugby Club • Significant investor in a num
Slide 25: 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 25