Filta Group Holdings PLC Interim Results (0406Q)

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Filta Group Holdings Plc	LSE:FLTA	London	Ordinary Share	GB00BDB7J920	ORD 10P

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	170.00	165.00	175.00				0.00	01:00:00

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
	0	0		N/A	0

Filta (LSE:FLTA)
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TIDMFLTA

RNS Number : 0406Q

Filta Group Holdings PLC

07 September 2017

7 September 2017

Filta Group Holdings plc

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

Interim Results for the 6 months ended 30 June 2017

Filta Group Holdings plc (AIM: FLTA), a provider of fryer management and other services to commercial kitchens, is pleased to announce its unaudited Interim Results for the six-month period ended 30 June 2017.

Financial Highlights

   --      Revenues increased 39% to GBP6.6 million (H1 2016:  GBP4.7 million) 
   --      Gross profit margins improved to 46% (H1 2016:  GBP43%) 
   --      Underlying Operating Profit up 62% to GBP1.0 million (H1 2016: GBP0.6 million) 
   --      Basic EPS of 2.59p (H1 2016: .18p loss) 
   --      Board has approved an interim dividend of 0.65p per ordinary share

Operational Highlights

   --      12 new Franchise sales in the period resulting in a period end total franchise count of 182 
   --      30 new Mobile Filtration Units ("MFU's") added in the period increasing the total to 371

-- Significant increase in number of seals fitted, up 46% over the same period last year to 14,869

-- Major new Fryer Management accounts include a major US Contract Caterer and several large University and Stadium accounts

-- Major new FiltaDrain and Fita-Seal customers, including one of the largest operators of restaurants, pubs and bars in the UK

-- Established Filta in Canada with first franchisee appointed June 2017 (started trading in August 2017)

-- New global accounting software adopted, which went live in the U.S. on 1 March 2017 and in the U.K. and Canada on 1 May 2017

-- Acquisition of Grease Management Group Ltd ("GMG") post the period end (Note 8) adds to service offering and will have an immediate impact on profitability

Jason Sayers, CEO of Filta, commented:

"We are very pleased to report on a solid performance for the first half of the financial year, which saw strong revenue growth across our principal service platforms, good interest from potential new franchisees and an encouraging pick-up in the volumes of business in our non-fryer activities."

"We continue to invest in people and systems as we develop a group infrastructure capable of supporting our growing franchise and customer base. We also continue to seek and invest in new and complimentary products and services to offer to our customers, all of which strengthen the business and improve its prospects."

For further information please contact:

Filta Group Holdings plc Tel: 01788 550100

Jason Sayers, Chief Executive Officer

   Cenkos Securities (Nomad and Broker)                                  Tel:         020 7397 8900

Bobbie Hilliam

   Redleaf Communications (Financial Public Relations)           Tel:         020 7382 4747

Elisabeth Cowell

David Ison

Chief Executive's and Chairman's Statement

Overview

We are pleased to report on a successful first half of the financial year for Filta. Strong performances across all our business platforms have resulted in profit before tax for the half year ended 30 June 2017 of GBP957,620 (H1 2016: loss of GBP210,548, profit of GBP597,929 after adjustment for non-recurring costs) and revenues up 39% at GBP6.6 million (H1 2016: GBP4.7 million).

Although we have seen an increase in costs, principally associated with the change in our status to a publicly quoted company and investment in people and systems, the significant growth in revenues has allowed us to deliver a profit before tax in line with expectations. We have also seen a growth in our core deferred revenue balance (the amounts relating to territory fees which will be released over 10 years in the US and, 5 years in the UK) of GBP200,000 as a result of GBP400,000 added and GBP200,000 utilised, before the adverse effect of the Sterling: Dollar exchange rate which occurred during the period. However, the impact of the weakening USD through the period also resulted in an increase in our deferred tax asset which moves in relation to the change in deferred revenue.

Cash, net of borrowings, at the period end was GBP3.0 million (31 December 2016: GBP3.2 million). The primary reasons for the reduction in cash, outside of normal working capital changes, include the payment of our 2016 corporate tax liability (GBP200,000), 2017 U.S. estimated tax payments (GBP100,000), the exit from the Royal Bank of Scotland financing facility (GBP200,000) in the U.K. and, lastly, the dividend payment (GBP51,000) earlier in the year.

Operating Review

The Group has enjoyed strong trading in each of its operating divisions with the performances of FiltaFry and Fita-Seal being particularly noteworthy.

Franchise Development

Twelve new franchise agreements and three franchise resales contributed to franchise development income of GBP1.0 million, up 56% on the first half of last year. This included GBP0.2 million carried forward from 2016 relating to franchises which were secured in 2016 but which did not commence trading until the current year (Nil from 2015 into 2016) and GBP0.2 million of territory fees released from deferred income. Additionally, we added GBP0.4 million of territory fees to deferred income, where payment has been received but will not be recognised as income until future periods. We signed our first franchise agreement in Canada in June and the franchisee began trading in August. We have experienced strong interest from potential, additional, Canadian franchisees, and we expect that several such appointments will be made in 2018.

Fryer Management

Royalties and other revenue, most of which is recurring in nature, from our fryer management services increased by 42% over the same period last year to GBP4.0 million and the addition of 30 MFU's during the period will ensure further revenue growth over the second half and into future periods. We have also upgraded an additional 12 U.S. franchisees to 6,000-gallon (25 metric tonnes) waste oil storage sites, taking the total number of sites to 40.

Seals and Refrigeration

Our commercial refrigerator and freezer seal business, Fita-Seal, has benefitted from major client wins at the end of last year giving us a 46% uplift in the number of seals fitted in the first half over the same period last year generating revenue of GBP0.7 million up by 47%.

Our refrigeration business grew 12% year on year but with margins of 22% it had only a small impact on overall profitability in the first half year. Although, we do see a strong order book going into the second half, we anticipate that this business will continue to be a marginal contributor to group profits.

Drains and Grease Management

Although revenues are not yet material to the group, we are seeing increasing interest in our drains service as customers must comply with ever-growing regulations and are attracted by the regular servicing which helps to maintain kitchen efficiency. The recent acquisition of GMG in the U.K. not only broadens the scope of our offering, by adding grease trap maintenance, but also increases our customer base to whom we can cross sell the full range of Filta services.

Infrastructure

The Company has continued to invest in and expand its customer support capacity with 5 additional staff hired to boost the accounts, administration, marketing and sales support teams. This will enable us to handle the continued growth that we are experiencing. In addition to people, the Company increased its marketing investment to accelerate growth and increased its investment in its Annual Conference, which is an important event that continues to attract more attendees each year.

We implemented a new global accounting platform during the period, at a cost of approximately GBP0.1 million. The additional ongoing cost will be in the order of GBP16,500 per year. New field service scheduling software for our Company owned businesses is planned to come on line during the final quarter of the year at a cost of GBP6,000, with additional ongoing costs of GBP18,000 per year. Both investments will allow for increased, real-time, visibility over our business and provide improved efficiencies, which will be essential to support our growth.

Dividends

We paid a first interim dividend of 0.19 pence per share to shareholders on 31 May 2017 in lieu of a final dividend for the year ended 31 December 2016. We are now pleased to announce the payment of a secondary interim dividend, being the first dividend in respect of the year ending 31 December 2017, of 0.65 pence per share. This will be paid on 29 September 2017 to shareholders on the register on 15 September 2017 and the shares will become ex-dividend on 14 September 2017.

Outlook

The second half of the year has started well with growth on plan across all business sectors. Moreover, the recent acquisition of GMG will have a modest beneficial effect in the current year but a greater impact in the following year from both the extra revenue and the higher profit margins that it delivers.

With the additional royalties that will be generated from the already enlarged franchisee base, the growing revenues being delivered by the non-fryer activities and the investment in infrastructure that has been made during the year, your Board believes that the Group is well placed for further progress in the second half of this year and, more particularly, in future years as our recurring revenues continue to grow.

Tim Worlledge Jason Sayers

Non-executive Chairman Chief Executive Officer

6 September 2017 6 September 2017

Condensed consolidated statement of comprehensive income