Slide 1: Annual Results Presentation 2020
5 FRANCHISE BRANDS BUILDING OUR BUSINESS ANNUAL RESULTS PRESENTATION 2020
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: Contents
CONTENTS 03 Introduction to Franchise Brands 10 Our business strategy 04 2020 results 11 Technology 05 Ata glance 15 Three-year strategic targets 06 Metro Rod 16 Financials 07 Metro Plumb 23 Summary and outlook 08 Willow Pumps 09 B2C brands 24 Appendix FINAL RESULTS PRESENTATION 2020
Slide 4: 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, primarily via a franchise model. Over 425 franchisees across five principal franch
Slide 5: A Strong Q1, Resilient Performance Through Lockdowns and a Robust Recovery in H2
A STRONG Q1, RESILIENT PERFORMANCE THROUGH LOCKDOWNS AND A ROBUST RECOVERY IN H2 FINANCIAL HIGHLIGHTS REVENUE ADJUSTED EBITDA* PROFIT BEFORE TAX 12% +28% 12% £49.3m £6.6m £3.7m 2019: £44.0m 2019: £5.2m 2019: £3.3m ADJUSTED EARNINGS DIVIDEND NET CASH PER SHARE* PER SHARE (NET DEBT) 0% +16% 4.35p 1.1p
Slide 6: Franchise Brands: At a Glance
FRANCHISE BRANDS: AT A GLANCE B2B METRO ROD years’ experience. Provides via B2B ne umbin lich he SYSTEM SALES £40.6m ADJUSTED EBITDA* depreciation, amortsal FINAL RESULTS PRESENTATION 2020 \y WILLOW PUMPS pump de: siness, with a be bility. The slicing EVENUE £13.2m ADJUSTED EBITDA* £1.8m recuring te
Slide 7: Metro Rod Delivered a Strong Performance in a Challenging Environment
B2B METRO ROD DELIVERED A STRONG PERFORMANCE IN A CHALLENGING ENVIRONMENT METR® System sales were down just 2% against 2019, a strong performance given the challenging circumstances and one which masked large COVID-19 related quarterly changes: — Astrong start to the year with system sales in Q1 up
Slide 8: Metro Plumb's Strategy to Create a National Plumbing Business Gained Traction
Lo METRO PLUMB’S STRATEGY TO CREATE A NATIONAL PLUMBING BUSINESS GAINED TRACTION METRQ Initiatives taken towards the end of 2019 to develop Metro Plumb have started to gain traction — 2new franchisees joined in 2020; now 5 independent franchisees. — 25 Metro Rod franchisees also operate Metro Plumb
Slide 9: A Resilient Performance
B2B A RESILIENT PERFORMANCE WILLQW First full year as part of the Group and now fully integrated — Anexcellent Q1 with sales up 15%. — Q2 impacted by construction site closures: reduction in higher-revenue/lower-margin supply and installation (“S&I”) work and greater reliance on lower-revenue/higher
Slide 10: Robust Franchise Recruitment in B2C
ROBUST FRANCHISE RECRUITMENT IN B2C WITH STRONG ACCELERATION IN H2 ChipsAway oven & Barking Mad A strong start to the year with robust recruitment levels and strong consumer demand in QI. The Spring lockdown significantly impacted the B2C division as services provided are not essential. A number of
Slide 11: Our Business Building Strategy Has Four Engines of Growth
OUR BUSINESS BUILDING STRATEGY HAS FOUR ENGINES OF GROWTH PURPOSE We build market- leading businesses primarily via a franchise model. FINAL RESULTS PRESENTATION 2020 SUPPORTING OUR FRANCHISES — We provide support, training and specialist tools. — Enables our franchisees to grow their businesses. If
Slide 12: Our Ambition Is to Become the First Fully Digitally-Enabled Drainage, Pump and Plumbing Business
OUR AMBITION IS TO BECOME THE FIRST FULLY DIGITALLY-ENABLED DRAINAGE, PUMP AND PLUMBING BUSINESS <i Customer Efficiency & Productivity Digitising our business is a key part of the Group’s strategy, particularly for Metro Rod and Metro Plumb. With the core technology infrastructure in place following
Slide 13: Our Approach Is Driven by a Number of Key Principles
OUR APPROACH IS DRIVEN Additional customer benefits to drive sales Better tools to track and manage sales opportunities Self service tools where appropriate Real-time performance reporting Customer Experience Use robots to automate repetitive tasks Reduce errors upstream through customer specific va
Slide 14: Metro Rod's Digital Transformation
METRO ROD’S DIGITAL TRANSFORMATION METRO ROD 1.0 Custo! Custo! '§ log jobs via phone, email or portal. Highly manual for both parties. Customers make/send us thousands of calls/ emails each week requesting updates on jobs, photos and other information. The system records some of the steps of our ist
Slide 15: Projected Benefits of the Additional £1.5m Investment in Our Digital Transformation
PROJECTED BENEFITS OF THE ADDITIONAL £1.5M INVESTMENT IN OUR DIGITAL TRANSFORMATION The increased investment we are making in the accelerated digital transformation of our business is projected to be an additional £1.5m over the next three years. This additional investment will contribute to increas
Slide 16: Three-Year Strategic Targets
THREE-YEAR STRATEGIC TARGETS Since being admitted to AIM in August 2016, we have developed a market-leading portfolio of brands through organic growth and targeted acquisitions: Since IPO: — 47% compound growth in adjusted EBITDA. — 59% compound growth in dividends. We now set out for the first time
Slide 17: Summary of Group Results
SUMMARY OF GROUP RESULTS Statutory consolidated revenue increased by 12% to £49.3m (2019: £44.0m), including the first full year contribution from Willow Pumps. Fee income, which reflects our income as franchisor, increased by 20% to £29.4m. Adjusted EBITDA increased by 28% to £6.6m Depreciation inc
Slide 18: Fee and Direct Labour Income
FEE AND DIRECT LABOUR INCOME MSF income declined marginally by 5% to £10.7m: — B2B- Franchisor MSF remained at £7.8m due to sales mix despite 2% fall in system sales. — B2C fees suspended or reduced in Spring lockdown to ensure financial viability of networks. Fees generated from the sale (or resale
Slide 19: Individual Business Results
INDIVIDUAL BUSINESS RESULTS ADJUSTED EBITDA BY BUSINESS 2020 2019 Change B2B-Franchisor: 17% rise in adjusted EBITDA despite 2% fall £’000 £000 £000 in system sales, as the effective rate of MSF was higher due ; to the sales mix. B2B- Franchisor (Metro Rod) 3,722 3,184 538 _ A B2B- DLO: significant
Slide 20: Adjusted and Statutory Profit
ADJUSTED AND STATUTORY PROFIT Adjusted EBITDA increased by 28% to £6.6m. Adjusted profit before tax increase 19% to £4.8m, with higher depreciation due to acquisition of Willow Pumps Non-recurring items include: — Provision of £0.5m on the expectation of higher bad debt following the crisis. — £0.2m
Slide 21: Adjusted EPS and Dividend
ADJUSTED EPS AND DIVIDEND GROWTH IN EPS AND DIVIDEND (P) Adjusted EPS increased to 4.35p from 4.34p: — Earnings growth of 16%. — Weighted average number of Ordinary Shares has increased from 77.9m to 90.5m as a result of the April placing. — Atthe end of the period the total number of Ordinary Share
Slide 22: Balance Sheet
BALANCE SHEET 2020 2019 Change Change Year ended 31 December £000 £000 £000 % Property, plant and equipment 4,651 4,781 (130) -3% Significant strengthening of balance sheet by £16m to £43.8m post successful April 2020 placing: Intangible assets 34,754 35,507 — 15,555,556 new Ordinary Shares issued a
Slide 23: Cash Flow and Movement from Adjusted Net Debt to Adjusted Net Cash
CASH FLOW AND MOVEMENT FROM ADJUSTED NET DEBT TO ADJUSTED NET CASH 8 13.6 67 Overall move from adjusted net debt of £9.2m to adjusted net “ cash of £6.7m (excluding IFRSI6 lease debt). 6 Cash from operations of £6.0m: 4 — EBITDA of £6.6m, less £0.6m of working capital investment. 2 — 90% cash conver
Slide 24: Summary and Outlook
SUMMARY AND OUTLOOK A resilient performance in 2020 driven by strong trading across the Group in QI, early and decisive action at the start of the Spring lockdown to reduce costs and a strong recovery across most of our businesses in H2 Strengthened balance sheet as a result of the successful placin
Slide 25: Appendix
_ APPENDIX FRANCHISE BRANDS FINAL RESULTS PRESENTATION 2020
Slide 26: The Group's Franchise Systems as at December 2020
THE GROUP’S FRANCHISE SYSTEMS* AS AT 31 DECEMBER 2020 Network size New franchisees Franchisees leaving Net new Network size 31 December, 2019 recruited in 2020 the system in 2020 franchisees in 2020 31 December, 2020 B2C 404 58 + (76) 386 Metro Rod 42 BE + (2) 42 Metro Plumb** 3 3 + (1) 5 Total 449
Slide 27: Working Responsibly
WORKING RESPONSIBLY Our sustainability commitments and ESG ambitions underpin our actions across the Group. We are committed to adopting responsible business practices, delivering sustainable growth, positively supporting employees and empowering our franchisees ENVIRONMENTAL We are committed to red
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 bee
Slide 29: Franchise Brands contact details
FRANCHISE BRANDS www.franchisebrands.co.uk @FB_PLC Franchise Brands plc Ashwood Court Tytherington Business Park Macclesfield SK10 2XF mail@franchisebrands.co.uk 01562 826705 METR@ ROD www.metrorod.co.uk @MetroRodUK METRQ PLUMB www.metrorod.co.uk @MetroPlumbUK WILLQW PUMPS www.willowpumps.co.uk @Wil