Franchise Brands Plc · LSE:FRAN
Franchise Brands — H1 2023 Earnings Presentation
34 slides from Franchise Brands's earnings presentation, 2023
Slide 1: Franchise Brands: Building an international business
B FRANCHISE BRANDS: | Building an international. business EK a ulic Service
Slide 2: Presenters
Presenters Stephen Hemsley Executive Chairman Stephen co-founded Franchise Brands in 2008 and has led the development of the business, including the IPO and external growth. A Chartered Accountant by training, he spent nearly ten years with 3i as Investment Director. He joined Domino's Pizza as Fina
Slide 3: Overview of Franchise Brands
Overview of Franchise Brands Our purpose is to build market-leading businesses primarily via a franchise model: If they grow, we grow. = y a 650 PRESENCE IN OVER 2,200 715 PEOPLE SYSTEM SALES FRANCHISEES TEN COUNTRIES service vehicles In our support OF £400M* across seven across UK, centres and DLOs
Slide 4: Interim highlights 1H 2023
Our Interim highlights 1H 2023 A period of significant progress SYSTEM SALES £146.0m +81% H1 2022: £80.6m ADJUSTED* PBT £8.6m +45% H1 2022: £5.9m * "Adjusted" throughout this presentation means exclusion of amortisation of acquired intangibles, exchange differences, share- REVENUE £69.8m +57% H1 202
Slide 5: Strategic developments
Strategic developments ee Acquisition of Pirtek Europe, the leading European provider of on- site hydraulic hose replacement and associated services which operates in eight countries. Revenues largely derived through franchising. On 21 April the Group completed the acquisition of Hydraulic Authority
Slide 6: Strategic rationale for the acquisition
Interim Results Presentation 2023 Building a market-leading international B2B multi-brand franchisor in UK, Europe and North America,. Strategic rationale for the Operating leverage from central services, particularly technology, acquisition marketing and finance. Ability to launch brands of existin
Slide 7: Divisional performance
Divisional performance. .
Slide 8: The B2B division at a glance
The B2B division at a glance METR@ ROD WILLOW PUMPS Commercial drainage experts Pump design, installation and 42 franchisees, >50 depots servicing business (DLO) nationwide. METRO PLUMB are @ ELUM filta Specialist plumbing services Services to commercial kitchens. 15 stand-alone franchisees DLO & 24
Slide 9: Continued strong momentum at Metro Rod and Metro Plumb
Continued strong momentum at Metro Rod and Metro Plumb METRQ PLUMB t €0>5 v METR®@ ROD System sales increased 24% to a record £35.3m. * Continues to expand, now 15 stand alone franchisees. Driven by increase in job volumes and AOV. * Six new stand-alone franchisees and two leavers in last 12M. Progr
Slide 10: Progress in development and integration
Progress in development and integration WILLQW PUMPS * Improved performance in H1 with sales growing by 10%: - Management reorganisation - Expansion of sales team - Reorganisation of support services - More work passed to Metro Rod franchisees * Challenging period for corporate franchises, decision
Slide 11: B2B division
B2B division 2023 2022 Metro Willow Metro Willow Rod Pumps FiltaUK 12023 Rod Pumps Filta UK 12022 £000s £'000s £'000s £'000s £000s f£'000s £'000s £'000s System sales 37,348 9,683 5,613 52,644 30,110 8,773 3,563 42,446 Statutory 26,507 9,683 5,613 41,803 21,037 8,773 3,563 «33,373 revenue Cost of sal
Slide 12: FiltaMax gaining traction
FiltaMax gaining traction © * Cooking oil filtration and fryer management services to commercial kitchens through the FiltaFry service. Recycling of used oil into biodiesel. filta * 131 franchisees in North America and 28 franchisees in Europe. * The business performed well in H1 with system sales u
Slide 13: Waste oil volume and pricing
Interim Results Presentation 2023 12 Waste oil Waste Oil Volume (gallons) and Pricing, H1 2022 v H1 2023 (US$) 600 509 Acquisition asa 500 of Filta 476 4719 aia 400 351 308 300 Thousands, ($) 20nd 200 100 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-
Slide 14: Filta International
Filta 7 International 00 mn North : 7 oon mn North E 7 oon The results for the period are for a full six months compared to four merica urope merica urope i £000 £000 £000 £000 £000 £000 months in HI 2022. System sales 41,281 417 42,998 23,741 4144 24,885 System sales in North America increased by 7
Slide 15: Pirtek Europe
Pirtek Europe AS) > _ tl FRANCHISEES CENTRES VANS * Established provider of on-site hydraulic hose replacement and UK & 37 86 330 associated services. Ireland * Operates via 217 service centres and 843 mobile service units Germany 19 92 324 (“MSUs"). * Revenues primarily derived from franchising: Au
Slide 16: Pirtek's value-added service offering to diverse customers
Pirtek’s value-added service offering to diverse customers Typically, a hydraulic hose will fail when equipment is in use and needs replacing on site Pirtek targets a one-hour response time, 24/7/365. Demand for time-sensitive service solutions key in sectors with high labour costs, well evolved cus
Slide 17: Pirtek Europe
Pirtek Europe Pirtek has operations in eight countries but is managed as five business units. The UK business is the largest in the division: 46% (£171m) of system sales and 49% (£1.9m) of Adjusted EBITDA. Germany and Austria: 36% (£13.2m) of system sales and 31% of Adjusted EBITDA of £1.2m. Benelux
Slide 18: B2C division
B2C division ChipsAway ovenclean LUKE IT NEVER HAPPENED — SESS ORIN, Mone Sime Current environment of high employment, high wages and elevated inflation, more risk aversion and reduced attractiveness of self-employment. Reduction in leavers but anticipated recruitment more challenging. Pleased to ha
Slide 19: Financial Performance
4 J , e ¢ by Financia A 4 ic Performa
Slide 20: Summary of group results
Summary of group results H12023* 12022" Change System sales, main driver of MSF income and DLO margin, £000 £000 £000 % increased by 81% to £146.0m System Sales MAE 2ED 80,642 85,418 8% Administration expenses up by 80% to £16.8m partly as a Statutory revenue 69,751 44,508 25,243 57% result of the i
Slide 21: Adjusted and statutory profit
Adjusted and statutory profit H1 2023 H12022 Change Change £000 £000 £000 % Adjusted profit after tax 520 4722 1,798 38% Increase in amortisation of acquired intangibles, share- based charge and non-recurring costs relate to Amortisation of acquired intangibles (4,476) (669) (8,806) acquisition of F
Slide 22: Adjusted EPS and dividend
Adjusted EPS and dividend (p) un Adjusted EPS increased 4% to 4.24p (H1 2022: 4.07p). 2023 4.00 4.24 This modest increase results from; * The issue of shares for the Pirtek acquisition. + 4% increase in the tax rate (at consistent tax rate, EPS increased by 10%). * Budgeted reduced profits at B2C di
Slide 23: Cash flow and leverage
Cash flow and leverage £m Acquisition cost of Pirtek (net of cash acquired) 200.6 Acquisition costs (6.3) Proceeds from issue of shares 4.3 Term loan and RCF drawdown 100.0 Net cash flow from operations 26 Cash increase in period 10.0 Net cash at beginning of period 108 Ted ine 9023 Net cash at end
Slide 24: Corporate Governance
Corporate Governance im Interim Results Presentation 2023 Focus on optimising management and board structures to manage the significantly enlarged group and operate to high standards of corporate governance. Introducing two-tier governance structure: plc and management board Appointment of new CFO,
Slide 25: Corporate development and capital allocation
Corporate development and capital allocation im Interim Results Presentation 2023 Strategic focus is integrating acquisitions and repaying acquisition debt. Capital allocation decisions will balance debt reduction, a progressive dividend policy and organic investment: * The deleveraging profile is a
Slide 26: Summary and outlook
Interim Results Presentation 2023 25 Another very productive and successful period as we build a Group with international reach Significantly advances our ambition of building a market-leading international B2B multi-brand franchisor that generates its income equally from the UK, North America and C
Slide 27: Appendix
Interim Results Presentation 2023 26
Slide 28: The Group at a glance
The Group at a glance ined B2B Pirtek Hd Fitta international _filta Adjusted EBITDA Total franchisees Adjusted EBITDA Total franchisees Adjusted EBITDA Total franchisees £5.1m 81 £3.8m 69 £3.1m 159 Leading European provider of on-site Cooking oil filtration and fryer METRO ROD WILLQW PUMPS hydraulic
Slide 29: Divisional trading results
Divisional trading results H1 2023 H1 2022 Filta Inter-co Filta Inter-co B2B International _Pirtek B2C Azura elimination H12023 B2B International © B2C —Azuraelimination H12022 £'000s £1000s £'000s_—£'000s_£'000s £000s £'000s £'000s £1000s £1000s £'000s £000s__—£'000s Systemsales 52,644 42,998 37,16
Slide 30: The 2023 interim results at a glance
The 2023 interim results At a glance 14 £3.8m Adjusted EBITDA £m o mm ~ Ww 3 H1 2022 Pirtek Filta International B2B B2c Group overheads H1 2023 | crm | filta — METRAROD Chips Away METRO PLUMB WILLQW PUMPS filta
Slide 31: The Group's business building strategy
The Group’s business building strategy Our business-building strategy has five engines of growth. ©O©@od Interim Results Presentation 2023 30 SUPPORTING OUR FRANCHISEES Help our franchisees to successfully grow their businesses by providing them with the right support services and hiring the right p
Slide 32: The Group's franchise systems
The Group’s franchise systems as at 30 June 2023 __ fs Network size New franchisees Franchisees leaving Net new Network size 31 December, recruited the system franchisees 30 June 2022 in 1H 2023 in H1 2023 in 1H 2023 2023 +) ° =) Metro Rod 42 > - - 42 Metro Plumb* 3 3 () 2 15 B2c 349 24 (34) (10) 33
Slide 33: Disclaimer
Disclaimer The information contained in this document (“Presentation”) and the presentation made to you verbally has been prepared by Franchise Brands ple (the *Company). Franchise Brands plc is a UK company quoted on AIM, a market operated by London Stock Exchange ple. This Presentation has not bee
Slide 34: Interim Results Presentation 2023
Interim Results Presentation 2023 33 @—___— FRANCHISE BRANDS www.franchisebrands.co.uk METR®@ ROD METRO PLUMB WILLOW PUMPS www.metrorod.co.uk www.metrorod.co.uk www.willowpumps.co.uk Franchise Brands plc Ashwood Court = Tutherington Business Park | cpemrex | WK ra Macclesfield fi Ita ZU oe SK10 2XF