28 Franchise Brands plc Annual Report and Accounts 2018 KEY PERFORMANCE INDICATORS Financial and non-financial measures used by management ChipsAway Metro Rod Description Adjusted EBITDA (profit before interest, tax, depreciation, amortisation, share-based payments, non-recurring items and excluding central costs) is the KPI which the Group uses to measure the underlying performance of its brands. Metro Rod – Performance in 2018 Metro Rod, which includes Metro Plumb, Kemac and Exeter, made an EBITDA contribution of £2.5m in 2018, up from the £1.3m for the almost nine months of ownership in 2017. On a pro forma basis, Metro Rod would have contributed around £1.8m if it had been owned for the full year, which gives an implied organic EBITDA growth of 38%. Description Adjusted EBITDA (profit before interest, tax, depreciation, amortisation, share-based payments, non-recurring items and excluding central costs) is the KPI which the Group uses to measure the underlying performance of its brands. ChipsAway – Performance in 2018 EBITDA was flat in 2018 due to a slowdown in franchise recruitment. However, lower recruitment income was compensated for by higher levels of MSF income, including a higher proportion of ChipsAway franchisees paying supplemental licence fees, rather than purely fixed monthly fees. EBITDA (£m) EBITDA (£m) £2.5m +91% £1.9m 0% 2018£2.5m 2017£1.3m 2016n/a 2018£1.9m 2017£1.9m 2016£1.6m Description This is the total number of drainage and plumbing jobs completed and is a key measure of activity levels within the business. Metro Rod – Performance in 2018 The total number of jobs completed was 174,000, up from 108,750 during the period of almost nine months of ownership in 2017. On a pro forma basis job numbers would have increased 14% comparing 2018 with the full year 2017, when 152,000 jobs were completed. Total number of jobs completed 174,000 +60% 2018 174,000 2017 108,750 2016 n/a Description The number of franchisees recruited is a driver of franchise recruitment income in the current year and MSF in both the current and future years. It is not measured in isolation as the Group also assesses the quality of new franchisees. ChipsAway – Performance in 2018 The number of franchisees recruited in 2018 was less than in recent years due, we believe, to the UK macroeconomic climate of record high employment and uncertainty around Brexit. However, 30 franchises invested in additional territories or extra postcodes to increase the size of their businesses. Number of franchisees recruited 23 -30% 2018 23 2017 33 2016 34 Description System sales are the total aggregate sales of franchisees and Metro Rod-owned operations of services to third party customers. Metro Rod – Performance in 2018 System sales were £37.4m compared to £26.1m in the almost nine months of ownership in 2017. On a pro forma basis, system sales would have increased 10% from £33.9m in 2017 to £37.4m in 2018. Of these, local sales by franchisees grew 14% in 2018. Description The total number of UK franchisees is an indicator of the overall health of the franchise system, however, the Group is placing more emphasis on the quality of franchisees and their ability to grow their businesses. ChipsAway – Performance in 2018 While the number of franchisees in the system in 2018 was 6% lower than in 2017, this was mainly due to the reduction in new franchisees recruited, as one fewer franchisee left the system than in 2017. The quality of franchisees has continued to increase with 45% now operating expanded operations. System sales (£m) Total number of UK franchisees £37.4m +43% 201 -6% 2018£37.4m 2017£26.1m 2016n/a 2018201 2017214 2016218