TIDMFLTA

RNS Number : 6149L

Filta Group Holdings PLC

14 September 2021

14 September 2021

Filta Group Holdings plc

("Filta" or the "Company" or the "Group")

Interim Results for the 6 months ended 30 June 2021

Filta Group Holdings plc (AIM: FLTA), a market-leading commercial kitchen services provider, is pleased to announce its unaudited Interim Results for the 6 months ended 30 June 2021.

Financial Summary

   --      Group Revenue increased 17% to GBP9.7m (H1 2020:  GBP8.3m, H2 2020: GBP8.1m) 

-- Gross profit, up in line with increased trading levels, GBP3.9m (H1 2020: GBP3.4m, H2 2020: GBP3.5m)

   --      Adjusted EBITDA* increased by 500% to GBP1.3m (H1 2020: GBP0.2m, H2 2020: GBP0.9m) 
   --      Cash inflow from operations doubled to GBP1.0m (H1 2020: GBP0.5m) 
   --      Net debt reduced by 50% to GBP0.8m (31 December 2020: GBP1.6m) 
   --      Cash balance of GBP4.2m (31 December 2020: GBP4.2m) 
   --      Basic loss per share of 0.19p (2020: loss of 3.11p) 
   --      Adjusted EPS** 3.19p (H1 2020: loss of 0.13p) 

-- The Board considers it would be prudent not to pay an interim dividend and to allow the trading recovery to continue to gather momentum. Nonetheless, if the current trading trend carries on through the remainder of the year, the Board expects to resume the payment of a final dividend.

Operational Highlights

-- Strong performance through H1, despite ongoing lockdowns, with Q2 revenues and gross profit growing 29% and 25%, respectively, versus Q1

   --      8 new franchise sales in the period, including a first in France 

-- 7 franchise resales as the Company continues to upgrade its network to underpin future growth

-- 13 new Mobile Filtration Units ("MFUs") sales, the principal driver of Fryer Management recurring revenue, added in the period and in line with pre COVID-19 demand

-- The new Cyclone Grease Recovery Unit ("GRU"), introduced to the market in Q4 2020, has gained significant traction, resulting in 60% quarter-on-quarter revenue growth in H1

-- Initiatives to drive innovation, efficiency and sustainability are accelerating the momentum of the business

*Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortisation, acquisition related costs and share based payment expense.

**Adjusted EPS are earnings per share before depreciation and amortisation, share based payment expense and non-recurring items.

Jason Sayers, CEO of Filta, commented:

"We delivered strong performance for the first half of the year, with underlying market fundamentals continuing to improve in our primary markets of North America, the UK and mainland Europe.

"In the US, we have seen impressive growth, while our larger customers, which include sports stadia and universities, remain on track to fully reopen during the third quarter of the year. The UK market has benefitted from the relaxation of restrictions and we have worked hard to develop new business opportunities in Europe, demonstrated by the first franchisee sale in France. We believe these and further potential opportunities will put us in good stead for when restrictions across Europe relax and trading returns to more normalised pre-COVID levels.

"With rising vaccination rates and the continued reopening of hospitality and leisure markets, we anticipate that our customers will experience increased consumer demand, allowing us to focus our efforts on capturing these growth opportunities. Internally, and in conjunction with our major customers, we have targeted bringing new initiatives to the market that will allow us to continue supporting their needs whilst providing us additional avenues for growth. In particular, we are committed to leading the way in addressing sustainability issues and in providing more cost effective and efficient solutions with innovations that are already generating significant customer interest.

"We are carrying good momentum into the second half of the year and, although we are mindful of continuing risks to the economic recovery in the countries in which we operate, Filta is developing initiatives focused on growing the core business and addressing one of the key industry concerns of sustainability. We are excited about the potential in our business pipeline and believe that we are well placed to deliver attractive growth and shareholder returns."

Management will host a presentation for analysts today at 3pm (UK). For further details please email filta@yellowjerseypr.com .

On Thursday 16 September at 1pm (UK) , the Company will host a presentation and Q&A session for private investors on the Investor Meet Company platform. Non-subscribers to Investor Meet Company can sign up to join the presentation via: https://www.investormeetcompany.com/filta-group-holdings-plc/register-investor .

For further information please contact:

Filta Group Holdings plc Tel: +1 407 996 5550

Jason Sayers, Chief Executive Officer

Brian Hogan, Finance Director

Cenkos Securities (Nomad and Broker) Tel: +44 (0)20 7397 8900

Stephen Keys

Camilla Hume

Yellow Jersey PR Tel: +44(0)7747 788 221

Charles Goodwin

Joe Burgess

Henry Wilkinson

This announcement contains inside information.

Chief Executive's and Chairman's Statement

Overview

The first six months of the year have brought a steady increase in business and revenues as our industry has continued to emerge from lockdowns and social distancing restrictions. Our support for our franchise base since the outbreak of the pandemic has brought its rewards as the US business recovered at a rate well beyond our expectations. In the UK, where the majority of our revenues are derived from the provision of services direct to our customer base through Company-owned activities, the pick-up has been slower, reflecting a more cautious easing of restrictions, but is now gaining momentum with monthly revenues in June some 60% higher than in January. In mainland Europe, where the relaxing of social distancing restrictions have persisted longer than the UK, revenues remain suppressed, but there is an encouraging level of interest from potential new franchisees.

The resulting revenue for the six months was GBP9.7 million (H1 2020: GBP8.3 million) and a gross profit of GBP3.9 million (H1 2020: GBP3.4 million), giving an adjusted EBITDA of GBP1.3 million (H1 2020: GBP0.2 million). The reported profit before tax of GBP0.2 million (2020: loss of GBP0.8 million) is after incurring GBP1.0 million of non-cash or non-recurring charges (H1 2020: GBP0.9 million). It is encouraging that we have seen significant growth through H1, with Q1 revenue and gross profit increasing from GBP4.2 million and GBP1.7 million to GBP5.5 million and GBP2.2 million, respectively, for Q2.

In the early months of the year we remained focused on cash-protection, continuing to implement efficiency measures and taking advantage of the available government support schemes in the UK and the US, but also made plans for a post-COVID-19 world as we sought innovations, such as our new Cyclone GRU, and potential new customer genres to drive revenue in the future. In the six months the Group received GBP0.2 million (H1 2020: GBP0.5 million) in funding through the UK business support scheme and GBP0.2 million (H1 2020: GBP0.2 million) under the US scheme.

We generated an operating cash flow of GBP1.0 million (H1 2020: GBP0.5 million) and overall cash inflow, after the repayment of GBP0.8 million of debt, of GBP0.1 million (H1 2020: GBP0.2 million) during the six months. The Group's gross cash at 30 June 2021 was GBP4.2 million (31 December 2020: GBP4.2 million) and net debt, including lease liabilities, was GBP0.8 million (31 December 2020: GBP1.6 million).

Operating Review

Fryer Management

Fryer Management derives revenue from recurring franchise royalties, national accounts income, waste oil sales and other continuing income through our franchise network. Revenues in the six months were up by 31% at GBP5.5 million (H1 2020: GBP4.1 million) and gross profit was GBP2.1 million (H1 2020: GBP1.8 million), an outcome which reflects the strength of our franchise base. We added 13 MFUs during the period, of which two were sold in Europe, and these will begin contributing to revenue over the second half of the year and into future periods. Network revenue, which represents the total revenue of our North American franchisees for all services provided to customers, was up 31% in H1 over H1 2020. We are continuing to see improvement in the first half of Q3 as July represented the second highest month on record. Many of the major customers, including sporting and events venues and educational establishments, have not yet fully re-opened and there will, therefore, provide a further revenue uplift as they do.

Franchise Development

Franchise Development revenue includes the sales and resales of franchises as well as the additional territory sales to existing franchisees. Eight new franchise agreements, three in Europe, including our first in France, and five in North America represent a strong start to the year. In addition, as we have highlighted previously, we have embarked on an initiative to strengthen the franchise network by supporting the resale of existing locations to both current and new franchisees. This initiative allows us to replace incumbent franchisees, who may not have plans for future growth, by managing an orderly sale to a new franchisee with greater ambitions. The number and quality of our franchisees is key to the amount and reliability of the Fryer Management income in the future. Through the first half of the year we have closed on seven resales, generating commission income.

Site Services

FOG, Pump and Seal services, collectively Site Services, which are currently provided directly by our own operatives and by franchisees (in a sub-contract capacity), generate revenue from recurring maintenance fees, either under contract or otherwise as well as reactive callouts. This division delivered GBP2.8 million, or 29%, of the Group's total revenue in the six months. Moreover, the monthly revenue has grown steadily through the period and was 20% higher in Q2 than in Q1. Importantly, we expect our FOG revenues to continue to expand on the strong acceptance of our new Cyclone GRU which brings follow on service contracts. Additionally, as more sites are opened or added, we expect the revenues from each of these services to continue to grow.

Equipment Sales and Installation

This activity comprises FiltaFOG and FiltaPump Equipment Sales and Installation and represents the entry point for customers to our services. It delivered GBP0.8 million, or 8%, of Group revenue. We anticipated a slower recovery in this division as our customers remain more focused on preventative maintenance and less inclined to incur larger one-time outlays during the resumption phase of trading. However, we began to see a significant pick up in business in May that allowed us to deliver quarter-on-quarter growth of 59% and the demand has continued into the second half of the year.

New products

The Company has continued to innovate and seek additional products and services to add to its portfolio with the objective of driving additional income from our existing customer base and of opening up new customer opportunities. Our existing services provide strong environmental benefits, and our focus is on enhancing and leveraging our environmental credentials to help our customers in managing theirs. The launch and highly encouraging market acceptance of our Cyclone GRU, which is both more efficient and less costly to run than its predecessor models, is a perfect example of such advances.

Dividends

Whilst we have experienced significant improvement in our performance in the first half of 2021, there still remains ongoing uncertainty arising from the COVID-19 pandemic and, therefore, the Board considers that it would be prudent to withhold the interim dividend for 2021. However, the Board is keen to resume the payment of dividends, which are an important element of shareholder returns, and, provided that the current trading trend continues through H2, it anticipates that it will resume the payment of dividends in respect of the full year.

Outlook

We have seen an improving sales trend in recent months with quarter-on-quarter revenues growing 29% in Q2. As we look to the remainder of the second half of the year, whilst we are mindful of the ongoing wider macro-economic uncertainty caused by COVID-19, we believe that, with customers still in the process of re-opening their businesses, we are well placed to benefit from the acceleration in demand that should follow.

The Group is in a strong financial position and is a market leader in both of our major operating territories. We will continue to support our near-term financial performance with cost mitigations and cash actions where necessary or prudent, whilst pursuing attractive investment opportunities as they become available, in order to position ourselves to take full advantage of future growth opportunities.

Whilst we do not underestimate the challenges and uncertainties, nor how long they may remain, we believe that our business model, our multiple sources of revenue, many of which are long-term and recurring in nature, and our ability to adapt to changing circumstances, means that Filta is well placed to continue to grow and prosper as the impact of COVID-19 recedes.

Tim Worlledge Jason Sayers

Non-executive Chairman Chief Executive Officer

13 September 2021 13 September 2021

Condensed consolidated statement of comprehensive income

for the six months ended 30 June 2021

 
 
                                                      Unaudited     Unaudited        Audited 
                                                       6 months      6 months     Year ended 
                                                          ended         ended    31 December 
                                                        30 June       30 June           2020 
                                                           2021          2020 
                                            Notes           GBP           GBP            GBP 
 
 
 Revenue                                      3       9,690,686     8,296,948     16,401,621 
 Cost of sales                                      (5,768,456)   (4,912,536)    (9,484,035) 
                                                   ------------  ------------  ------------- 
 Gross profit                                         3,922,230     3,384,412      6,917,586 
 Other income                                            68,822        24,659         76,922 
 Distribution costs                                    (39,809)      (73,195)       (87,824) 
 Administrative expenses                            (3,643,983)   (3,998,360)    (7,495,905) 
                                                   ------------  ------------  ------------- 
 Operating (loss)/profit                                307,260     (662,484)      (589,221) 
-----------------------------------------  ------  ------------  ------------  ------------- 
 Analysed as: 
 Adjusted EBITDA                                      1,292,473       222,222      1,053,569 
 Acquisition and restructuring 
  related costs                                        (95,156)      (17,379)      (187,465) 
 Depreciation and amortisation                        (663,919)     (668,482)    (1,370,258) 
 Share based payments, net of 
  cash settled                                6       (226,138)     (198,845)       (85,067) 
-----------------------------------------  ------  ------------  ------------  ------------- 
                                                        307,260     (662,484)      (589,221) 
-----------------------------------------  ------  ------------  ------------  ------------- 
 
 Finance costs, net                                   (100,725)     (119,889)      (277,010) 
                                                   ------------  ------------  ------------- 
 Profit/(loss) before tax                               206,535     (782,373)      (866,231) 
 Income tax expense                                   (261,906)     (121,930)      (139,748) 
 
 Net loss attributable to owners                       (55,371)     (904,303)    (1,005,979) 
 
 Other comprehensive Income 
 Exchange differences on translation 
  of foreign operations                                (46,368)       130,960      (168,192) 
                                                   ------------  ------------  ------------- 
 Total other comprehensive (loss)/income               (46,368)       130,960      (168,192) 
 
 Loss and total comprehensive 
  loss                                                (101,739)     (773,343)    (1,174,171) 
                                                   ============  ============  ============= 
 
 Earnings/(loss) per share 
 
 
         *    Basic (pence)                   2          (0.19)        (3.11)         (3.46) 
 
         *    Diluted (pence)                 2          (0.19)        (3.11)         (3.46) 
 

Filta Group Holdings plc

Condensed consolidated statement of financial position

As at 30 June 2021

 
                                           Unaudited   Audited 31 
                                             30 June     December 
                                                2021         2020 
                                  Notes          GBP          GBP 
 Non-current assets 
 Property, plant and equipment             1,190,229    1,251,656 
 Right of use asset                          796,182    1,041,726 
 Deferred tax assets                         788,190      796,414 
 Intangible assets                         5,516,666    5,836,360 
 Goodwill                                  1,639,523    1,639,523 
 Deposits                                     11,270       11,398 
 Contract acquisition costs                  365,571      419,913 
 Trade receivables                  4        177,576      264,274 
                                         -----------  ----------- 
                                          10,485,207   11,261,264 
                                         -----------  ----------- 
 
 Current assets 
 Trade and other receivables        4      2,942,171    2,325,678 
 Contract acquisition costs                   95,981       72,958 
 Inventories                               1,358,192    1,604,451 
 Cash and cash equivalents                 4,243,778    4,208,498 
                                         -----------  ----------- 
                                           8,640,122    8,211,585 
                                         -----------  ----------- 
 
 
 Total assets                             19,125,329   19,472,849 
                                         ===========  =========== 
 
 Current liabilities 
 Trade and other payables           5      3,142,446    2,289,889 
 Borrowings                                1,217,119    1,076,927 
 Lease liability                             299,171      319,480 
 Deferred income                             527,600      592,065 
                                         -----------  ----------- 
                                           5,186,336    4,278,361 
                                         -----------  ----------- 
 
 Non-current liabilities 
 Deferred tax liability                      908,558    1,027,498 
 Borrowings                                3,006,143    3,647,088 
 Lease liability                             543,840      770,119 
 Deferred income                           1,837,995    2,086,565 
                                         -----------  ----------- 
                                           6,296,536    7,531,270 
 
 Total liabilities                        11,482,872   11,809,631 
                                         -----------  ----------- 
 
 Equity 
 Share capital                             2,913,816    2,909,816 
 Share premium                             3,730,633    3,679,085 
 Other reserves                     6        258,861      233,431 
 Translation reserve                       (747,635)    (701,267) 
 Retained profits                          1,486,782    1,542,153 
 Total equity                              7,642,457    7,663,218 
                                         -----------  ----------- 
 Total equity and liabilities             19,125,329   19,472,849 
                                         ===========  =========== 
 

Filta Group Holdings plc

Condensed consolidated statement of changes in equity

for the six months ended 30 June 2021

 
                                                                                    Foreign 
                      Share       Share      Other                    Merger             Exchange    Retained         Total 
                    Capital     Premium   Reserves                   Reserve              Reserve    Earnings        Equity 
                        GBP         GBP        GBP                       GBP                  GBP         GBP           GBP 
 
 Balance at 1 
  January 
  2021            2,909,816   3,679,085    573,118                 (339,687)            (701,267)   1,542,153     7,663,218 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 Loss for the 
  year                    -           -          -                         -                    -    (55,371)      (55,371) 
 Translation 
  differences             -           -          -                         -             (46,368)           -      (46,368) 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 Total 
  comprehensive 
  income                                                                             (46,368)        (55,371)     (101,739) 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 Dividends paid           -           -          -                         -                    -           -             - 
 Issue of share 
  capital             4,000      51,600          -                        -                     -           -        55,600 
 Return of 
  share premium           -        (52)          -                         -                    -           -          (52) 
 Equity                   -           -          -                         -                    -           -             - 
 consideration 
 paid 
 Shares based 
  payments                -           -     25,430                         -                    -           -        25,430 
---------------  ---------- 
 Balance at 30 
  June 
  2021            2,913,816   3,730,633    598,548                 (339,687)            (747,635)   1,486,782     7,642,457 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 
 
                                                                                          Foreign 
                      Share       Share      Other                    Merger             Exchange    Retained    Total 
                    Capital     Premium   Reserves                   Reserve              Reserve    Earnings   Equity 
                        GBP         GBP        GBP                       GBP                  GBP         GBP      GBP 
 
 Balance at 1 
  January 
  2020            2,908,535   3,659,204    367,102                 (339,687)            (533,075)   2,548,132     8,610,211 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 Loss for the 
  year                    -           -          -                         -                    -   (904,303)     (904,303) 
 Foreign 
  exchange 
  translation             -           -          -                         -              130,960           -       130,960 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 Total 
  comprehensive 
  income                  -           -          -                         -              130,960   (904,303)     (773,343) 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 Dividends paid           -           -          -                         -                    -           -             - 
 Issue of share 
  capital             1,281      19,881          -                         -                    -           -        21,162 
 Equity                   -           -          -                         -                    -           -             - 
 consideration 
 paid 
 Share based 
  payments                -           -    149,905                         -                    -           -       149,905 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 Balance at 30 
  June 
  2020            2,909,816   3,679,085    517,007                 (339,687)            (402,115)   1,643,829     8,007,935 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 Loss for the 
  year                    -           -          -                         -                    -   (101,676)     (101,676) 
 Foreign 
  exchange 
  translation             -           -          -                         -            (299,152)           -     (299,152) 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 Total 
  comprehensive 
  income                  -           -          -                         -            (299,152)   (101,676)     (400,828) 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 Dividends paid           -           -          -                         -                    -           -             - 
 Issue of share           -           -          -                         -                    -           -             - 
 capital 
 Equity                   -           -          -                         -                    -           -             - 
 consideration 
 due 
 Share based 
  payments                -           -     56,111                         -                    -           -        56,111 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 Balance at 31 
  December 
  2020            2,909,816   3,679,085    573,118                 (339,687)            (701,267)   1,542,153     7,663,218 
---------------  ----------  ----------  ---------  ------------------------  -------------------  ----------  ------------ 
 
 
 
 

Filta Group Holdings plc

Condensed consolidated statement of cash flows

for the six months ended 30 June 2021

 
                                                            Unaudited             Unaudited                Audited 
                                                             6 months              6 months                   Year 
                                                        ended 30 June              ended 30               ended 31 
                                                                 2021                  June               December 
                                                                                       2020                   2020 
                                                                  GBP                   GBP                    GBP 
   Operating activities 
    (Loss)/profit before tax                                  206,535             (782,373)              (866,231) 
 
 
   Adjustments for non-cash operating 
    transactions: 
   Finance costs                               100,725    119,889                277,010 
   Depreciation                                 78,361     38,658                172,560 
   Amortisation of intangible assets           425,665    467,630                867,269 
   Amortisation of right of use assets         159,892    162,194                330,429 
   (Gain)/loss on disposal of tangible 
    fixed assets                              (21,545)    (3,451)               (12,215) 
   Share based payment charge                  226,138    198,845                 85,067 
                                             ---------  ---------  --------------------- 
                                             1,175,771    201,392              853,889 
                                             ---------  ---------  ------------------- 
   Movements in working capital: 
   Decrease/(increase) in trade and 
    other receivables                        (510,720)  1,162,681  1,606,223 
   Increase in contract acquisition 
    costs                                       31,319   (43,200)   (19,018) 
   (Decrease)/increase in trade and 
    other payables                             394,354  (628,625)  (795,266) 
   Decrease in cash settled share option 
    liability                                 (14,700)          -          - 
   Increase in proceeds from government 
    grants                                     208,328          -          - 
   (Increase)/decrease in inventories          246,258   (13,431)    155,505 
   (Decrease)/increase in deferred revenue   (313,036)   (26,732)  (351,609) 
                                             ---------  ---------  --------- 
   Cash flow from operations                 1,217,574    652,085  1,676,205 
                                             ---------  ---------  --------- 
   Taxes paid                                (211,769)  (162,307)  (393,249) 
                                             ---------  ---------  --------- 
   Net cash flow (used in)/generated 
    from operations                          1,005,805    489,778  1,282,956 
                                             ---------  ---------  --------- 
 
   Investing activities 
   Purchase of property, plant, and 
    equipment                                 (29,936)    (8,760)  (100,166) 
   Proceeds from disposals of property, 
    plant, and equipment                        23,807      3,525     13,831 
   Purchase of other intangible assets       (103,913)  (163,310)  (194,985) 
                                             ---------  ---------  --------- 
   Net cash (used in)/generated from 
    investing activities                     (110,042)  (168,545)  (281,320) 
                                             ---------  ---------  --------- 
   Financing activities 
   Repayments of borrowings                  (508,366)   (31,385)  (302,538) 
   Net proceeds from borrowings                      -     54,759  1,200,000 
   Net proceeds from issue of share 
    capital                                     38,800          -     21,162 
   Payment of lease liabilities              (244,514)   (95,376)  (231,005) 
   Dividends paid to shareholders                    -          -          - 
   Interest paid                              (81,588)   (95,643)  (232,463) 
                                             ---------  ---------  --------- 
   Net cash used in financing activities     (795,668)  (167,645)    455,156 
                                             ---------  ---------  --------- 
   Net change in cash and cash equivalents     100,095    153,588  1,456,792 
   Cash and cash equivalents, beginning 
    of period                                4,208,498  2,891,014  2,891,014 
   Exchange differences on cash and 
    cash equivalents                          (64,815)    168,523  (139,308) 
                                             ---------  ---------  --------- 
   Cash and cash equivalents at end 
    of period                                4,243,778  3,213,125  4,208,498 
                                             ---------  ---------  --------- 
 
 

Filta Group Holdings plc

Notes to the condensed consolidated interim financial statements

for the six months ended 30 June 2021

   1.       Accounting Policies 

Basis of preparation

The condensed consolidated financial statements for the six months ended 30 June 2021 and 2020 are unaudited and were approved by the Directors on 13 September 2021. They do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial statements for the year ended 31 December 2020 were prepared in accordance with International Financial Reporting Standards as adopted by the EU and have been delivered to the Registrar of Companies. The report of the auditor on those financial statements was unqualified and did not draw attention to any matters by way of emphasis of matter.

Applicable standards

These unaudited consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, under the historical cost convention. They have not been prepared in accordance with IAS 34, the application of which is not required to the interim financial statements of AIM companies. The interim financial statements have been prepared in accordance with the accounting policies set out in the Group's Annual Report and Accounts for the year ended 31 December 2020.

Basis of consolidation

The Group's financial statements consolidate the financial statements of Filta Group Holdings plc and its subsidiaries.

Going concern

The Board has undertaken a review of the Group's forecasts and associated risks and sensitivities, considering the expected impact of COVID-19 on trading in the period from the date of approval of the interim financial statements to December 2022. The Group had GBP4.2m of cash as of 30 June 2021, with debt of GBP5.1m which included GBP0.8m of IFRS 16 lease liabilities. The Group also has access to an undrawn GBP0.4m UK bank overdraft facility.

Throughout the first half of the year, activity levels have picked up resulting in improved revenue and profits. Notwithstanding this increased activity the Board is mindful that a degree of uncertainty due to the ongoing impact of the pandemic remains. However, given the analysis performed on the forecasts, the strength of performance in H1 and into the early months of H2, the level of cash in the business and additional borrowing availability, our geographical and service diversification, as well as our ability to manage our cost base, the Board has concluded that the Group has adequate resources to continue in operational existence for the period through December 2022. Accordingly, the financial statements are prepared on a going concern basis.

   2.       Earnings per share 

The calculation of earnings per share is based on the following earnings and number of shares:

 
                                                          Unaudited               Unaudited                    Audited 
                                                           6 months                6 months                 Year ended 
                                                      ended 30 June                ended 30                31 December 
                                                               2021                    June                       2020 
                                                                                       2020 
                                                                GBP                     GBP                        GBP 
   Earnings attributable to equity 
    holders of the Company                                 (55,371)               (904,303)                (1,005,979) 
   Weighted average number of shares 
   Basic                                                 29,108,992              29,096,123                 29,097,146 
   Dilutive effect of share options                               -                       -                          - 
    and awards 
                                      -----------------------------  ----------------------  ------------------------- 
   Diluted                                               29,108,992              29,096,123                 29,097,146 
                                      -----------------------------  ----------------------  ------------------------- 
 
 
   3.     Segmental Analysis 

The Company continues to have four reportable segments as follows:

The Site Service's segment consists of our preventive maintenance and reactive services, including our Seal replacement service. The Equipment Sales & Installation segment represents the provision of design, sale and installation solutions. The Franchise Development and Fryer Management segments encompass our franchise model and consist of the sale of franchises and the ongoing recurring revenue on royalties and other supplied services, respectively. The Group also has three geographic segments: United Kingdom, North America and Europe.

The segments represent components of the Company for which separate financial information is available that is utilised on a regular basis by the chief operating decision maker (which takes the form of the Board of Directors), in determining how to allocate resources and evaluate performance. The segments are determined based on several factors, including client base, homogeneity of products, technology, delivery channels and similar economic characteristics.

Revenue and non-current assets by origin of geographical segment for all entities in the Group is as follows:

 
 Revenue 
                                                                Audited 
                              Unaudited        Unaudited           Year 
                               6 months         6 months          ended 
                          ended 30 June    ended 30 June    31 December 
                                   2021             2020           2020 
                                    GBP              GBP            GBP 
 United Kingdom               3,778,283        4,014,968      8,154,425 
 North America                5,707,206        4,051,751      7,762,771 
 Europe                         205,197          230,229        484,425 
                        ---------------  ---------------  ------------- 
 Total                        9,690,686        8,296,948     16,401,621 
 
 
   Non-current assets 
                                                 Audited 
                              Unaudited            As at 
                          As at 30 June      31 December 
                                   2021             2020 
                                    GBP              GBP 
 United Kingdom               8,510,068        8,972,757 
 North America                1,701,764        1,882,302 
 Europe                         273,375          406,205 
                        ---------------  --------------- 
 Total                       10,485,207       11,261,264 
                        ---------------  --------------- 
 

Product and services revenue analysis

 
 Revenue 
                                                                          Audited 
                                        Unaudited        Unaudited           Year 
                                         6 months         6 months          ended 
                                    ended 30 June    ended 30 June    31 December 
                                             2021             2020           2020 
                                              GBP              GBP            GBP 
 Franchise Development                    608,744          521,204      1,038,287 
 Fryer Management                       5,494,941        4,131,325      7,812,833 
 Equipment Sales & Installation           766,259          755,572      1,377,210 
 Site Services                          2,820,742        2,888,847      6,173,291 
                                  ---------------  ---------------  ------------- 
 Total                                  9,690,686        8,296,948     16,401,621 
                                  ---------------  ---------------  ------------- 
 

No customer has accounted for more than 10% of total revenue during the periods presented.

   4.     Trade and other receivables 

Trade and other receivables consist of the following:

 
 
         Group                                Unaudited        Audited 
                                               6 months           Year 
                                                  ended          ended 
                                                30 June    31 December 
                                                   2021           2020 
                                                    GBP            GBP 
 
         Trade receivables, net               2,600,433      2,039,735 
         Prepayments and other receivables      244,071        258,937 
         Franchise payment plans                275,243        291,280 
                                             ----------  ------------- 
                                              3,119,747      2,589,952 
                                             ----------  ------------- 
 

Accounts receivable include amounts that the Filta Group has agreed may be settled over extended repayment terms.

   5.   Trade and other payables 
 
         Group                          Unaudited        Audited 
                                         6 months           Year 
                                            ended          ended 
                                          30 June    31 December 
                                             2021           2020 
                                              GBP            GBP 
 
         Trade payables                 1,420,027      1,294,512 
         Taxes and social security        691,598        531,763 
         Accruals and other payables    1,030,821        463,614 
                                       ----------  ------------- 
                                        3,142,446      2,289,889 
                                       ----------  ------------- 
 

Analysis of trade and other payables

These are classified as short term and are expected to be settled within 12 months from the reporting date.

   6.     Share option scheme 

The Company maintains an EMI Share Option Scheme to incentivise executives and employees of Filta Group Holdings and its subsidiaries. For U.K. employees, Options have been awarded over a total of 2,497,500 ordinary shares, equivalent to 8.5% of the Company's current issued share capital. The options vest, subject to the satisfaction of certain conditions, over a period of 4 years from the date of grant. All options issued will have met or will meet the vesting conditions between 2021 and 2025 and are exercisable at any time after vesting and within 10 years from the grant date.

Additionally, all qualifying U.S. employees have been awarded share acquisition rights (SARs). The SARs are conditional bonuses whose value will be calculated by reference to the amount by which the price of the Company's ordinary shares has risen above the base price at the date of exercise, thus providing holders of SARs the same reward value as if the SARs were share options. The qualifying conditions and timing of vesting are identical to those within the share option scheme for UK employees. All SARs are settled in cash when exercised. A total of 872,500 SARs have been awarded.

In the ordinary course of business, an option will normally only be exercisable to the extent it has fully vested, and any applicable non-market performance conditions have been satisfied or waived. Options shall lapse to the extent unexercised on the tenth anniversary of the date of grant or such earlier date as specified by the Board at the date of grant.

As at 30 June 2021, a total of 1,711,500 (2020: 1,550,000) were outstanding, having a range of exercise prices from 0.97p to 2.30p (2020: 0.97p to 2.30p) and a weighted average exercise price of 1.62p (2020:1.81p). These outstanding awards have a weighted average contractual life of 7.17 years (2020: 7.73 years).

Movement in the number of share options and SARs outstanding during the year, including grants, exercises and forfeitures were as follows:

 
                                                                       Share acquisition 
                                                 Share Options                    rights                         Total 
 Outstanding at 1 January 
  2020                                               1,175,000                   515,000                     1,690,000 
-------------------------  -----------------------------------  ------------------------  ---------------------------- 
 Granted on 15 July 2020 
  (0.965p)                                             300,000                   132,500                       432,500 
 Total granted during the 
  year                                                 300,000                   132,500                       432,500 
-------------------------  -----------------------------------  ------------------------  ---------------------------- 
 Exercised during the 
 year                                                        -                         -                             - 
 Total exercised during 
 the 
 year                                                        -                         -                             - 
-------------------------  -----------------------------------  ------------------------  ---------------------------- 
 Forfeited during the 
  year 
  (0.97p)                                             (15,000)                  (20,000)                      (35,000) 
 Forfeited during the 
 year 
 (1.74p)                                                     -                         -                             - 
 Forfeited during the 
  year 
  (2.15p)                                            (195,000)                  (22,500)                     (217,500) 
 Forfeited during the 
  year 
  (2.30p)                                             (15,000)                         -                      (15,000) 
 Forfeited during the 
  year 
  (1.46p)                                            (120,000)                  (15,000)                     (135,000) 
 Forfeited during the 
  year 
  (0.965p)                                            (22,500)                   (7,500)                      (30,000) 
 Total forfeited during 
  the 
  year                                               (367,500)                  (65,000)                     (432,500) 
-------------------------  -----------------------------------  ------------------------  ---------------------------- 
 Total outstanding at 31 
  December 2020                                      1,107,500                   582,500                     1,690,000 
-------------------------  -----------------------------------  ------------------------  ---------------------------- 
 Granted on 1 June 2021 
  (1.55p)                                              212,500                    72,500                       285,000 
 Total granted during the 
  year                                                 212,500                    72,500                       285,000 
-------------------------  -----------------------------------  ------------------------  ---------------------------- 
 Exercised during the 
  year                                                (40,000)                  (20,000)                      (60,000) 
 Total exercised during 
  the 
  year                                                (40,000)                  (20,000)                      (60,000) 
-------------------------  -----------------------------------  ------------------------  ---------------------------- 
 Forfeited during the 
  period 
  (0.97p)                                              (7,500)                         -                       (7,500) 
 Forfeited during the 
  year 
  (2.15p)                                             (75,000)                         -                      (75,000) 
 Forfeited during the 
  year 
  (2.30p)                                              (7,500)                         -                       (7,500) 
 Forfeited during the 
  year 
  (1.46p)                                             (67,500)                         -                      (67,500) 
 Forfeited during the 
  year 
  (0.965p)                                            (31,000)                         -                      (31,000) 
 Forfeited during the 
  year 
  (1.55p)                                             (15,000)                         -                      (15,000) 
 Total forfeited during 
  the 
  period                                             (203,500)                         -                     (203,500) 
-------------------------  -----------------------------------  ------------------------  ---------------------------- 
 Total outstanding at 30 
  June 2021                                          1,076,500                   635,000                     1,711,500 
-------------------------  -----------------------------------  ------------------------  ---------------------------- 
 Exercisable at 30 June 
  2021                                                 192,500                   207,500                       400,000 
-------------------------  -----------------------------------  ------------------------  ---------------------------- 
 

During the period ended 30 June 2021 the Company recognised total expense; net of cash settled awards of GBP226,138 (2020: GBP198,845) related to the fair value of the share-based payment arrangements. This included GBP42,230 (2020: GBP149,905) related to equity-settled share options and GBP183,908 (2020: GBP48,940) from cash-settled SARs.

These amounts were determined using the Black Scholes model, with the following assumptions for each type of award granted:

 
         Stock Options 
         Weighted average fair value             0.886p 
                                       ---------------- 
         Weighted average exercise 
          price                                  165.0p 
                                       ---------------- 
         Expected life of options 
          (years)                                   8.4 
                                       ---------------- 
         Risk free rate                           1.70% 
                                       ---------------- 
         Dividend yield                            0.0% 
                                       ---------------- 
         Volatility                               53.0% 
                                       ---------------- 
 
 
         Share Appreciation Rights 
         Weighted average fair value            0.986p 
                                       --------------- 
         Weighted average exercise 
          price                                 151.7p 
                                       --------------- 
         Expected life of options 
          (years)                                  7.7 
                                       --------------- 
         Risk free rate                          1.25% 
                                       --------------- 
         Dividend yield                           0.0% 
                                       --------------- 
         Volatility                              62.6% 
                                       --------------- 
 
   7.     Dividends 

The Board is not recommending the payment of an interim dividend in respect of the period ended 30 June 2021. It does, however, anticipate that, should the business continue to progress favourably in H2, the Group will be in a position to pay a full year dividend.

   8.     Date of approval of interim financial statements 

The unaudited consolidated interim financial statements were approved by the Board on 13 September 2021. Electronic copies are available on the Filta Group Holdings plc website, www.filtaplc.com.

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END

IR BUGDCXXBDGBX

(END) Dow Jones Newswires

September 14, 2021 02:00 ET (06:00 GMT)

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