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Allied presentation PD Jan 2015

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From obscurity to contemporary model utilising design and innovative I.T.

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Allied presentation PD Jan 2015

  1. 1. The Allied Opportunity 1 “To re-launch Britain’s best known flooring retail brand and revolutionise the customer experience”.
  2. 2. Agenda 2  Introductions  Background and History  The UK Flooring Market  Allied market positioning  The Franchise model  Our proposition  Headline Financials  Summary
  3. 3. Introductions 3
  4. 4. Introductions 4 Clive Hutchings (Pending) Over 35 years retail experience from the sales floor to the Boardroom. Clive was CEO of Allied Carpets Group plc from January 2002 to 2009 (reporting directly to the French owners) and after taking Allied to its first operating profit in 7 years, he oversaw the management of the business through its sale to Hilco and administration. Paul Davies (In-situ) With nearly 30 years Franchise experience with major brands such as Perfect Pizza, KFC, & Haagen Dazs, Paul spent the last 6 years developing the franchise model at United Carpets before joining the Allied team. He is a regular speaker at franchise events and is well know and respected amongst the franchise community. Moony Victoire-Nijjar (Pending) Moony previously worked with Clive and graduated at Allied. He has considerable experience as a commercial finance director and change manager with particular expertise in the retail and distribution sectors. He has managed M&A projects including acquisitions, private equity fund raising and main market IPO.
  5. 5. Background & History 5
  6. 6. History Over 60 Years Flooring Heritage 6 1953  Creation of the company by Harold Plotnek in Birmingham 1978  Acquisition of Allied by the ASDA Group 1993  Acquisition by Carpetland of Allied (excluding the Maples Furniture). The combined group was renamed Allied Carpets Group 1996  Floatation of Allied Carpets on LSE on 23 July 1996 with Mkt Cap of £350m 1999  Launch of Allied at Home  Acquisition of Allied Carpets by Saint-Maclou for £83m 2009 - 2012  Administration followed by Hilco re- structuring with the objective to downsize the business to a profitable going concern 2004/05  Allied Carpets first Profit for seven years.  New Chairman appointed. 2002  Appointment of Clive Hutchings to CEO of Allied Carpets Group plc. 2012 - Present  Hodges family acquire Allied Brand  Franchise concept tested  Clive Hutchings joins team  Investment partner sought
  7. 7. The UK Flooring market 7
  8. 8. Flooring Market Overview 8
  9. 9. 9 Carpet 57% Wood & Laminate 16% Vinyl 15% Other 12% Sales by product category Flooring Market Overview
  10. 10. Competitor Review 10
  11. 11. Existing Store Proposition 11
  12. 12. Allied market positioning 12
  13. 13. Original Allied Brand  No.1 Carpet retail brand  Still receiving over 3000 hits to the web address  Customer profile ABC1- Middle England  Brand perceptions:  Reliable  Trustworthy  Great Service  Carpet specialists  Always in SALE  A little dated 13
  14. 14. New Allied Brand Values:  On Trend & Innovative  Simple, Clear & Transparent  Trustworthy, Credible & Professional 14 Target Customers:  ABC1 (Traditional Allied)  Professional Women  Younger couples/families
  15. 15. 15New Allied Brand
  16. 16. 16New Allied Brand
  17. 17. 17New Allied Brand
  18. 18. Customer Journey Selection • Room • Carpet type – twist etc. • Price per sq mtr Estimate • Measure & plan • Add Fitting, Underlay etc. Install • Delivered to store • Fitted by sub-contractors 18 Selection • Colour • Texture – suitability • Project Budget Estimate • Measure & plan • Upgrade underlay, confirm Install • Delivered to Fit Centre • Fitted to SLA standards • Follow up “Happy Call” OLD WAY NEW WAY
  19. 19. The Franchise Model 19
  20. 20. UK Franchising Overview 20  930 franchises in UK contributing £13.7b to economy  39,000 outlets employing 560k people  92% of franchisee businesses in profit  Only 2.3% of all closures due to commercial failure  Average age of new franchisee is 41yrs  50% increase in female franchisees 2005 to 2013  22,500 franchisees in UK (25% operate multiple units)  1 in 4 UK franchises export their model overseas  Biggest issue is recruitment
  21. 21. Allied Benefits to the Franchisee 21  Re-launch of a recognised and respected brand  Low entry price of £65k, up to 70% funding available  Use of 21st century technology & cutting edge design  Full support by team with proven achievement  Impressive ROI with committed franchisee  Competitive commission structure  Female friendly  BFA membership  Multi-site opportunity for suitable candidates
  22. 22. 22Allied Franchise Territories Sum Avg. Min. Max. Population 240,337 9,950 3749 14,420 Households 109,244 4306 1,672 6,555 Target HH’s 10,704 640 0 5191 A21 HH’s 567 22 0 262 A24 HH’s 503 22 0 264
  23. 23. Franchisee Economics 23  Max. cash requirement = £65k (Discounted Franchise Fee )  Strong working capital model  <2 years cash payback of Fee  11% - 13% EBITDA  Average 51% ROI per annum  -10% sales = 26% ROI per annum Year 1 Year 2 Year 3 Cashflow £ £ £ Income 489,492 650,053 732,173 Payments (448,537) (591,567) (656,762) Cashflow 40,955 58,485 75,411 Fee (65,000) Cash balance c/f (24,045) 34,441 109,851 P&L Sales 386,660 539,015 607,375 EBITDA 611 59,336 79,080 EBITDA % 0.2% 11.0% 13.0% Balance sheet Shareholders funds (53,556) 5,780 84,860
  24. 24. Our Proposition 24
  25. 25. Our proposition  Locations  1000 – 1500 sq ft Showrooms  Main Rd/High St with good visibility and passing trade  Franchisee holds lease  No need for warehouse space 25  Operations  Owner/Managers supported by experienced Retail teams  Outsource service options until skills acquired  SAP system with data analysis and KPI reporting
  26. 26. Our proposition  Supply Chain  Multiple suppliers  No Stock  Individual Franchisee credit terms 26  Key milestones (Delayed)  Aug/Sept – Re-launch Yeovil Store & open 2 Franchises  Dec 2014 - 2 more stores opened to support “POC”  Feb 2015 – Launch at National Franchise Exhibition (NEC)  Dec 2015 – 28 stores opened with a further 20 territory commitments
  27. 27. Marketing Platform  Website:  Simple, clear, inspirational & informative  View in a Room and Samples delivered within 48 hours  Full SEO and PPC strategy  Lead generator - Transactional for non-franchise territories  Micro site for franchisees 27  Store support  Initial launch using local radio, newspapers and Leaflets  Ongoing local magazines & radio  Potential Regional TV & Radio (when territories allow)  Social Media campaigns – Facebook, Twitter, Pinterest  Home Interest Magazine editorial – Allied Ambassadors
  28. 28. Growth Strategies 28 POC – 100 Franchisees 100 – 400 Franchisees European Franchise  Proof Of Concept.  Feb 2015 Launch.  Year 1  30 Franchisees  6 Corporate  Local & Social media  Recruitment Drive  Call Centre Support  Website Leads  Opening Teams  TV, Radio, Magazines  Supplier Rebates  Re-sales  Cutting Warehouse  Affinity schemes  Kiosks  Europe Short -Term Medium -Term Longer -Term
  29. 29. Headline Financials 29
  30. 30. Trading Summary 30  Max. cash requirement £529k  includes £254k of set-up  2 years cash payback  20 Self funded owned Franchises  83 Total stores trading  Online Transactions & Leads  Combined EBITDA £3M+  Safety margin v “What-if’s” Year 1 Year 2 Year 3 Cashflow £ £ £ Income 3,817,403 11,530,001 20,485,973 Payments (3,940,566) (10,043,576) (17,152,364) Net Cash (123,164) 1,486,424 3,333,609 Set-up (253,800) 0 0 Cash c/f (376,964) 1,109,461 4,443,070 Max. Cash need (529,006) P&L Sales Franchisor 371,164 1,912,473 4,339,631 Owned Stores 952,077 3,770,595 8,321,894 Online 1,728,938 3,921,465 4,464,780 Total Sales 3,052,179 9,604,534 17,126,306 EBITDA Franchisor (330,993) 556,211 1,921,664 Owned Stores (32,304) 136,496 589,317 Online 94,003 554,313 664,727 Total EBITDA (269,295) 1,247,020 3,175,708 EBITDA % -8.8% 13.0% 18.5% No' of Owned Stores 5 13 20 Total no' of Stores 20 50 83
  31. 31. Franchisor Summary 31  Max. cash requirement £534k  includes £140k of set-up  2 years cash payback  EBITDA = £1.9m Year 3  Trading breakeven at 17 stores Year 1 Year 2 Year 3 Cashflow £ £ £ Income 330,174 2,064,577 4,892,024 Payments (712,643) (1,533,345) (2,989,950) Cashflow (382,468) 531,232 1,902,074 Set-up (140,400) Cash c/f (522,868) 8,364 1,910,438 Max. Cash need (534,690) P&L Sales 371,164 1,912,473 4,339,631 EBITDA (330,993) 556,211 1,921,664 EBITDA % 29.1% 44.3% Total no' of Stores 20 50 83 Balance sheet Shareholders funds (447,993) 108,218 1,605,286 **Excludes Website & Owned stores [total 83 stores/50 trading full year]
  32. 32. Online Summary 32  Max. cash requirement £121k.  Includes £68k development / launch costs.  Pay back within 1 year.  Good w/c trading model.  15%+ EBITDA. Year 1 Year 2 Year 3 Cashflow £ £ £ Income 2,239,238 4,740,189 5,384,242 Payments (2,075,179) (4,175,202) (4,838,676) Net Cashflow 164,058 564,987 545,566 Set-up (68,400) Cash c/f 95,658 660,645 1,206,211 Max. Cash need (120,782) P&L Sales 1,728,938 3,921,465 4,464,780 EBITDA 94,003 554,313 664,727 EBITDA % 5% 14% 15% Balance sheet Shareholders funds (210,013) 186,033 696,384
  33. 33. Owned Stores Summary 33  Max. cash requirement £45k.  Pay back by Q1  Good working cap. trading model  £1.4m value (£85k each)  Full year EBITDA = £1.5m Year 1 Year 2 Year 3 Cashflow £ £ £ Income 1,247,990 4,725,235 10,209,707 Payments (1,152,744) (4,335,030) (9,323,738) Cashflow 95,246 390,205 885,969 Set-up (45,000) 0 0 Cash c/f 50,246 440,451 1,326,420 Max. Cash need (45,000) P&L Sales 952,077 3,770,595 8,321,894 EBITDA (32,304) 136,496 589,317 EBITDA % -3.4% 3.6% 7.1% Total no' of Stores 5 13 20
  34. 34. Investment Opportunity 34  Maximum cash flow need = £700k  Pay back within 2 years  £1.4m value of 20 owned Franchises  EBITDA Year 3 potential exit value  Future £17k per Franchise fee profit Market Sales £65.2 m £121.5 m £242.9 m No of Stores 100 200 400 Owned Stores 20 15 15 Turnover £ £ £ Franchise Fee Income 6,073,748 12,147,496 24,294,991 50% of Supplier rebate 321,909 643,817 1,287,635 Website Revenue 4,464,780 Owned Stores Revenue 12,147,496 9,110,622 9,110,622 Total Revenue 23,007,933 21,901,935 34,693,248 EBITDA Franchise model 2,546,678 6,869,808 16,700,369 Website 664,727 -260,410 -286,451 Owned Stores 1,581,603 1,186,202 1,186,202 Total EBITDA 4,793,009 7,795,601 17,600,120 EBITDA % 21% 36% 51%
  35. 35. Summary 35
  36. 36. Summary 36  RIGHT PROPOSITION:  That reflects Todays Customer needs  Simple, Clear & Female friendly  Franchise for rapid expansion and Owner/Manager motivation  “light” with no huge establishment cost or stock  Outsource supply chain to avoid handling and warehouse costs  Qualified Team to support  RIGHT TIMING  Housing market set to improve - Flooring market will follow  Pensions and “Buy to Let” exhausted  Franchise market looking for new Brand opportunities  Women in business on the rise

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