Franchise Brands Plc · LSE:FRAN
Franchise Brands — H1 2020 Earnings Presentation
29 slides from Franchise Brands's earnings presentation, 2020
Slide 1: Interim Results Presentation 2020
INTERIM RESULTS PRESENTATION 2020
Slide 2: Introduction to Franchise Brands
02 13 Introduction to The B2C division Franchise Brands 15 03 Financials At a glance 21 04 Acquisitions update Strong Q1 performance 22 05 Summary and outlook 2020 interim results 23 06 Appendix Our B2B division 07 Metro Rod 11 Willow Pumps 12 Water in. Waste out. FRANCHISE BRANDS PLC: INTERIM RESUL
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). • Focused on building market-leading businesses in selected customer segments using primarily a franchise model. • The Group currently has a combined network
Slide 4: Franchise Brands: H1 at a Glance
FRANCHISE BRANDS: H1 AT A GLANCE B2B B2C Founded in 1983, commercial drainage specialist Founded in 1997, Willow Pumps is a leading ChipsAway, Ovenclean and Barking Mad Metro Rod provides a range of drain clearance, pump supply, installation and servicing business, each provide a high level of servi
Slide 5: Strong Q1, Followed by Resilient Lockdown Performance and Recovery in June
STRONG Q1, FOLLOWED BY RESILIENT LOCKDOWN PERFORMANCE AND RECOVERY IN JUNE 2020 HALF YEAR FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS • Strong Q1, followed by decreased REVENUE ADJUSTED EBITDA* ADJUSTED NET CASH** trading during the COVID-19 lockdown, +21% +13% with signs of recovery in June. • B2B
Slide 6: The 2020 Interim Results: At a Glance
ADJUSTED THE 2020 INTERIM RESULTS: AT A GLANCE EBITDA* +29% £0.8m £0.0m £2.8m £0.1m £(0.3)m £2.5m £(0.3)m Adjusted EBITDA £m FRANCHISE BRANDS PLC: INTERIM RESULTS PRESENTATION 2020 5
Slide 7: Our B2B Division Provides Key Workers to Essential Services
OUR B2B DIVISION PROVIDES KEY WORKERS TO ESSENTIAL SERVICES • Metro Rod, Metro Plumb, Willow Pumps: provide a • Key priority is the safety of our team members, “Water In. Waste Out” range of drainage, plumbing engineers, customers and the public. and pumps services. • Trading in April and May was ch
Slide 8: Metro Rod Has Traded Resiliently Through the Crisis
METRO ROD HAS TRADED RESILIENTLY THROUGH THE CRISIS • Strong Q1 for system sales, followed by decreased trading during lockdown with signs of recovery in June and July: – Q1: growth of 16% y-o-y – June: 88% of 2019 levels – April and May: 70% of 2019 levels – July job lead intake to date: 93% of 201
Slide 9: Metro Rod Network Maintained Profitability and Balance Sheet Strength During Lockdown
OVERALL THE METRO ROD NETWORK MAINTAINED PROFITABILITY AND BALANCE SHEET STRENGTH DURING LOCKDOWN MONTH OF MAY 2020 YTD MAY MAY AVERAGE SALES: • We have received 37 out of 43 sets of 86% 86% £443k May management accounts from our profitable (April: 84%) net current assets network. AVERAGE GM: AVERAG
Slide 10: Organic Growth Being Driven by Expanding Metro Rod's Range of Services
ORGANIC GROWTH BEING DRIVEN BY EXPANDING METRO ROD’S RANGE OF SERVICES • Expanding the range of services that Metro Rod franchisees can offer is a key part of our Vision 2023 strategy. • Excellent progress has been made over the past 2 years in expanding the tanker capability of the network through
Slide 11: Maximum Potential of the System Has Increased with Expanded Range of Services
THE MAXIMUM POTENTIAL OF THE SYSTEM HAS INCREASED WITH THE EXPANSION OF THE RANGE OF SERVICES MAXIMUM POTENTIAL MAXIMUM POTENTIAL MAXIMUM POTENTIAL MAXIMUM POTENTIAL £110m £161m £189m £180m MAXIMUM PENETRATION MAXIMUM PENETRATION MAXIMUM PENETRATION MAXIMUM PENETRATION 4.6% 6.2% 7.4% 7.4% MAXIMUM YI
Slide 12: Willow Pumps, Acquired in October 2019, Made Inaugural Contribution to Profits
WILLOW PUMPS, ACQUIRED IN OCTOBER 2019, MADE AN INAUGURAL CONTRIBUTION TO PROFITS IN H1 • Willow Pumps had a strong start to the year. Q1 also saw it assume responsibility for the Metro Rod Kent & Sussex corporate franchise which was integrated into the Willow Pumps business. • Following that succes
Slide 13: Our Ambition Is to Offer a Water In. Waste Out. Service
OUR AMBITION IS TO OFFER A “WATER IN. WASTE OUT.” SERVICE TO THE COMMERCIAL SECTOR COMMERCIAL ADDRESSES IN THE UK 2.2m FRANCHISE BRANDS PLC: INTERIM RESULTS PRESENTATION 2020 12
Slide 14: The B2C Division: Relative Strength from ChipsAway
THE B2C DIVISION: RELATIVE STRENGTH FROM CHIPSAWAY • Good start to the year with recruitment at ChipsAway particularly strong. • Lockdown significantly impacted the B2C division as services provided are not essential. • 85% of the team were furloughed and franchisee fees and charges, other than thos
Slide 15: The B2C Division: 1H at a Glance
THE B2C DIVISION: 1H AT A GLANCE FRANCHISEES FRANCHISEES FRANCHISEES RECRUITED IN 1H2020 RECRUITED IN 1H2020 RECRUITED IN 1H 2020 23 2 2 FRANCHISEES LEAVING FRANCHISEES FRANCHISEES IN 1H2020 LEAVING IN 1H2020 LEAVING IN 1H2020 21 13 8 FRANCHISEES FRANCHISEES FRANCHISEES 207 101 81 GROSS PROFIT GROSS
Slide 16: Summary of Group Results
SUMMARY OF GROUP RESULTS H1 2020 H1 2019 Change Change Period Ending 30 June £’000 £’000 £’000 % Statutory revenue A 24,209 20,084 4,125 21% A • Revenue increased by 21% to £24.2m (H1 2019: £20.1m) including contribution from Franchise payments (9,488) (9,493) 5 0% Willow Pumps acquisition (like-for
Slide 17: Fee & Direct Labour Income
FEE & DIRECT LABOUR INCOME H1 2020 % of H1 2019 % of Change Change £’000 Total £’000 Total £’000 % A • Strategically important MSF income increased Period Ending 30 June by 7% at Metro Rod, but limited trading at our B2C division caused overall MSF to MSF income A 5,323 36% 5,401 51% (78) -1% decrea
Slide 18: Individual Business Results
INDIVIDUAL BUSINESS RESULTS A • B2B- Franchisor delivered an EBITDA EBITDA BY BUSINESS contribution of £1.5m in the period, an increase of 5%: H1 2020 H1 2019 Change Change £’000 £’000 £’000 % − Slight fall in system sales of 3%. − MSF up by 7% due to weighting towards sales B2B- Franchisor A 1,452
Slide 19: Adjusted EPS and Dividend
ADJUSTED EPS AND DIVIDEND • Adjusted EPS decreased by 10% to 1.84p from GROWTH IN EPS AND DIVIDEND (P) 2.06p: − Adjusted Earnings decrease of 2%. 2020 0.30 1.84 − Weighted average number of Ordinary Shares has increased from 77.9m to 85.0m as a result of the Placing of 15.6m Ordinary Shares. 2019 0.
Slide 20: Movement in Adjusted Net Debt
MOVEMENT IN ADJUSTED NET DEBT • April Placing raised £13.6m (net). • Group has moved from a net debt to a net cash position of £4.2m. • Investment in working capital due to extended payment terms to our commercial customers, meaning debtor days • Investment in PPE deferred until H2 have increased fr
Slide 21: Balance Sheet
BALANCE SHEET 30 June 31 Dec 2020 2019 Change Change A • Statutory net cash position of £2.6m (31 Dec 2019: Year ended 31 December £’000 £’000 £’000 % net debt £11.1m). Property, plant and equipment 4,486 4,781 (295) -6% − Placing of 15.6m new Ordinary Shares to raise a net £13.6m. Intangible assets
Slide 22: Acquisitions Update
ACQUISITIONS UPDATE • The short-term focus of the Group will be the resumption of the organic growth achieved prior to the lockdown, which will be significantly assisted by the strengthened capital structure provided by the recent Placing. • We also remain receptive to earnings-enhancing acquisition
Slide 23: Summary & Outlook
SUMMARY & OUTLOOK • The second half of the year has started well. • In particular, with the opening up of the hospitality and retail sectors, we have continued to see a return to levels of trading in the B2B division similar to 2019. • In the B2C division, ChipsAway is leading the recovery both in t
Slide 24: Appendix
FRANCHISE BRANDS PLC: INTERIM RESULTS PRESENTATION 2020 23
Slide 25: The Group's Franchise Systems
THE GROUP’S FRANCHISE SYSTEMS* AS AT 30 JUNE 2020 Network size New franchisees Franchisees leaving Net new Network size 31 December, 2019 recruited in 1H 2020 the system in 1H 2020 franchisees in 1H 2020 30 June, 2020 B2C 404 27 + (42) = (15) 389 Metro Rod 42 2 + (1) = 1 43 Metro Plumb** 3 1 + (1) =
Slide 26: Our Board
OUR BOARD Stephen Hemsley Chris Dent Peter Molloy Executive Chairman Chief Financial Officer Managing Director, Metro Rod Tim Harris Julia Choudhury Colin Ross Managing Director, B2C Division Corporate Development Director Chief Information Officer Nigel Wray David Poutney Rob Bellhouse Non-executiv
Slide 27: Our Senior Team
OUR SENIOR TEAM Ian Lawrence Andrew Mallows Robin Auld Rachel Stewart Managing Director, Deputy Managing Director, Commercial Director Group Marketing Director Willow Pumps B2C FRANCHISE BRANDS PLC: INTERIM RESULTS PRESENTATION 2020 26
Slide 28: 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 29: Contact details
www.franchisebrands.co.uk www.metrorod.co.uk www.metrorod.co.uk www.willowpumps.co.uk @FB_PLC @MetroRodUK @MetroPlumbUK @WillowPumps Franchise Brands plc Ashwood Court Tytherington Business Park Macclesfield SK10 2XF mail@franchisebrands.co.uk www.chipsaway.co.uk www.ovenclean.com www.barkingmad.uk.