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
for the six months ended 30 June 2017
Notes Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 30 31 December
30 June June 2016 2016
2017
GBP GBP GBP
Revenue 3 6,587,653 4,741,358 10,075,239
Cost of sales (3,589,869) (2,718,109) (5,668,787)
------------ ------------ -------------
Gross profit 2,997,784 2,023,249 4,406,452
Other income 4,513 4,103 25,186
Distribution costs (59,969) (51,432) (80,283)
Administrative expenses 6 (1,946,914) (2,168,851) (4,464,771)
--------------------------------------- ------ ------------ ------------ -------------
Underlying operating profit 995,414 615,546 1,147,123
Costs of IPO - (180,106) (580,603)
Pre-IPO bonus to shareholders - (628,371) (679,936)
--------------------------------------- ------ ------------ ------------ -------------
Profit/(loss) from operations 995,414 (192,931) (113,416)
Finance costs (37,794) (17,617) (104,828)
------------ ------------ -------------
Profit/(loss) before tax 957,620 (210,548) (218,244)
Income tax expense (258,518) 170,334 (124,337)
Net profit/(loss) attributable
to owners 699,102 (40,214) (342,581)
Other comprehensive income
Exchange differences on translation
of foreign operations 143,433 (77,884) (185,557)
------------ ------------ -------------
Total other comprehensive income 143,433 (77,884) (185,557)
Profit/(loss) and total comprehensive
income 842,535 (118,098) (528,138)
============ ============ =============
Basic earnings/(loss) per share
- pence 2 2.59 (0.18) (1.51)
============ ============ =============
Diluted earnings/(loss) per share
- pence 2 2.56 (0.18) (1.51)
============ ============ =============
Filta Group Holdings plc
Condensed consolidated statement of financial position
for the six months ended 30 June 2017
Unaudited Audited 31
30 June December
Notes 2017 2016
GBP GBP
Non-current assets
Property, plant and equipment 1,175,310 1,190,651
Deferred tax assets 874,088 755,965
Intangible assets 145,453 166,624
Deposits 7,320 2,572
Trade receivables 348,282 379,405
---------- ------------
2,550,453 2,495,217
---------- ------------
Current assets
Trade and other receivables 4 2,818,064 1,960,693
Inventories 415,340 376,015
Cash and cash equivalents 4,124,009 4,392,350
---------- ------------
7,357,413 6,729,058
---------- ------------
Total assets 9,907,866 9,224,275
========== ============
Current liabilities
Trade and other payables 5 2,015,080 1,989,885
Borrowings 112,337 103,812
Deferred income 384,210 400,881
---------- ------------
2,511,627 2,494,578
---------- ------------
Non-current liabilities
Borrowings 1,002,364 1,050,992
Deferred income 2,227,678 2,310,477
---------- ------------
3,230,042 3,361,469
---------- ------------
Total liabilities 5,741,669 5,856,047
---------- ------------
Equity
Share capital 2,695,266 2,695,266
Share premium - 3,480,191
Other reserves 49,400 49,400
Merger reserve (339,687) (339,687)
Retained earnings 2 1,878,188 (2,256,539)
Foreign exchange reserve (116,970) (260,403)
----------
Total equity 4,166,197 3,368,228
---------- ------------
Total equity and liabilities 9,907,866 9,224,275
========== ============
Filta Group Holdings plc
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2017
Foreign
Share Share Other Merger Exchange Retained Total
Capital Premium Reserves Reserve Reserve Earnings Equity
GBP GBP GBP GBP GBP GBP GBP
Balance at 31 December
2016 2,695,266 3,480,191 49,400 (339,687) (260,403) (2,256,539) 3,368,228
Profit for the period 699,102 699,102
Other comprehensive
income - - - - 143,433 - 143,433
---------- ------------ --------- ---------- ---------- ------------ ----------
Total comprehensive
income 143,433 699,102 842,535
Transactions with
owners:
Cancellation of
share premium - (3,480,191) - - - 3,480,191 -
Dividends Paid - - - - - (51,210) (51,210)
Share payment expense - - - - - 6,644 6,644
Balance at 30 June
2017 2,695,266 - 49,400 (339,687) (116,970) 1,878,188 4,166,197
---------- ------------ --------- ---------- ---------- ------------ ----------
Foreign
Share Share Other Merger Exchange Retained Total
Capital Premium Reserves Reserve Reserve Earnings Equity
GBP GBP GBP GBP GBP GBP GBP
Balance at 31 December
2015 - - - 380,100 (74,846) (1,913,958) (1,608,704)
Loss for the year - - - - - (342,581) (342,581)
Other comprehensive
income - - - - (185,557) (185,557)
---------- ---------- --------- ---------- ---------- ------------ ------------
Total comprehensive
income - - - - (185,557) (342,581) (528,138)
Transactions with
owners:
Issue of share capital 519,050 3,789,064 - - - - 4,308,114
Share issue expenses - (308,873) - - - - (308,873)
Share based payments - 49,400 - - - 49,400
Group reconstruction 2,176,216 - - (719,787) - - 1,456,429
Balance at 31 December
2016 2,695,266 3,480,191 49,400 (339,687) (260,403) (2,256,539) 3,368,228
---------- ---------- --------- ---------- ---------- ------------ ------------
Filta Group Holdings plc
Condensed consolidated cash flow statement
for the six months ended 30 June 2017
Unaudited Unaudited Audited
6 months 6 months year
ended 30 June ended 30 ended 31
2017 June December
2016 2016
GBP GBP GBP
Operating activities
Profit / (loss) before tax 957,620 (210,548) (218,244)
Adjustments for non-cash operating
transactions:
Finance costs 37,794 24,728 104,828
Depreciation 18,611 17,947 118,855
Amortisation 26,638 20,905 63,177
Share based payment charge 17,687 - 49,400
--------------------------------------------- --------- --------- ---------
1,058,350 (146,968) 118,016
--------------------------------------------- --------- --------- ---------
Movements in working capital:
(Increase) in trade and other receivables (662,830) (562,848) (964,536)
Increase in trade and other payables 71,598 949,101 134,951
(Increase) in inventories (39,325) (161,646) (76,636)
(Decrease)/increase in deferred revenue (99,470) - 827,962
Taxes paid (344,177) - -
--------------------------------------------- --------- --------- ---------
Net cash flow from operations (15,854) 77,639 39,757
--------------------------------------------- --------- --------- ---------
Investing activities
Purchase of property, plant and equipment (49,277) (34,251) (43,269)
Purchase of other intangible assets (13,775) - (153,716)
--------------------------------------------- --------- --------- ---------
Net cash used in investing activities (63,052) (34,251) (196,985)
--------------------------------------------- --------- --------- ---------
Financing activities
Proceeds / (repayments) of borrowings (37,357) 106,791 (146,065)
Net proceeds from issue of share
capital - - 3,999,241
Dividends paid (51,210) - -
Interest paid (37,794) (24,728) (104,828)
--------------------------------------------- --------- --------- ---------
Net cash from financing activities (126,361) 82,063 3,748,348
--------------------------------------------- --------- --------- ---------
Net change in cash and cash equivalents (205,267) 125,451 3,591,120
Cash and cash equivalents, beginning
of period 4,392,350 978,939 978,939
Exchange differences on cash and
cash equivalents (63,074) 71,273 (177,709)
--------------------------------------------- --------- --------- ---------
Cash and cash equivalents at end
of period 4,124,009 1,175,663 4,392,350
--------------------------------------------- --------- --------- ---------
Filta Group Holdings plc
Notes to the financial information
for the six months ended 30 June 2017
1. Basis of preparation
The Company is a public limited company limited by shares and
incorporated under the UK Companies Act. The Company is domiciled
in the United Kingdom and the registered office and principal place
of business is The Locks, Hillmorton, Rugby, Warwickshire, CV21
4PP.
The Company acts as the holding company of a group of
subsidiaries that are involved in the franchising of on-site
environmental kitchen solutions to restaurants, catering
establishments and institutional kitchens. The services include
microfiltration of cooking oil, fryer cleaning, temperature
calibration, waste oil disposal and specially designed filters for
refrigeration units and coolers.
The interim financial information has been prepared in
accordance with the basis of the accounting policies set out in the
annual report and accounts for the year ended 31 December 2016,
which have been prepared in accordance with International Financial
Reporting Standards as adopted for use by the European Union. The
interim accounts are unaudited and do not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006.
The same accounting policies, presentation and methods of
computation have been followed in this unaudited interim financial
information as those which were applied in the preparation of the
Group's annual statements for the year ended 31 December 2016, upon
which the auditors issued an unqualified opinion, and which have
been delivered to the registrar of companies.
The interim financial information has been drawn up using
accounting policies and presentation expected to be adopted in the
Group's full financial statements for the year ended 31 December
2017. Any new standards that will be adopted in full for the first
time in the year-end financial statements did not have a material
impact on this interim financial information.
The interim financial information for the six months ended 30
June 2017 was approved by the Board on 6 September 2017.
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
June 201
2017 2016 2016
GBP GBP GBP
Profit/(loss) after tax
attributable
to owners of the Company 699,102 (40,214) (342,581)
Weighted average number of shares
Basic 26,952,659 21,726,160 22,700,716
Fully diluted 27,267,259 21,726,160 22,700,716
Earnings/(loss) per share
Basic earnings/(loss) per share 2.59 pence (0.18) pence (1.51) pence
Fully diluted earnings/(loss) 2.56 pence (0.18) pence (1.51) pence
per share
3. Segmental Analysis
Operating segments have been identified on the basis of internal
reports about components of the Group that are regularly reviewed
by the chief operating decision maker (which takes the form of the
Board of Directors), in order to allocate resources to the segment
and to assess its performance.
The Directors consider that the Group currently has four
reportable segments: the marketing and execution related to
Franchise Development; provision of services and supplies to the
fryer management sector; servicing the refrigerator seal
replacement market; and the provision of design, installation and
services to the refrigeration and cold stores market. The Group
also has two geographic segments: United Kingdom and North
America.
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
2017 2016 2016 2015
GBP GBP GBP GBP
United Kingdom 2,332,392 2,113,723 4,187,226 3,594,188
North America 4,255,261 2,627,635 5,888,013 4,331,084
------------------------ --------------- ------------- ----------
Total 6,587,653 4,741,358 10,075,239 7,925,272
------------------------ --------------- ------------- ----------
Non-current assets
Audited
year
Unaudited ended
6 months ended 30 June 31 December
2017 2016 2015
GBP GBP GBP
United Kingdom 539,308 510,854 547,240
North America 2,011,145 1,984,363 1,569,970
------------------------ --------------- ----------
Total 2,550,453 2,495,217 2,117,210
------------------------ --------------- ----------
Product and services revenue analysis
Revenue
Audited
Unaudited Unaudited year
6 months 6 months ended
ended 30 June ended 30 June 31 December
2017 2016 2016 2015
GBP GBP GBP GBP
Franchise Development 969,213 622,107 1,235,983 3,594,188
Fryer Management 4,025,934 2,842,740 6,217,772
Fita-Seal 699,400 475,520 1,014,932
Filta Refrigeration 893,106 800,991 1,606,552 4,331,084
--------------- --------------- ------------- ----------
Total 6,587,653 4,741,358 10,075,239 7,925,272
--------------- --------------- ------------- ----------
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
2017 2016
GBP GBP
Trade receivables 2,220,867 1,647,665
Prepayments and other receivables 597,197 313,028
---------- -------------
2,818,064 1,960,693
---------- -------------
Accounts receivable include amounts that the Filta Group has
agreed may be settled over extended repayment terms. Accounts
receivable subject to these extended repayment terms totaled
GBP174,940 and GBP227,727 respectively, at 30 June 2017 and 31
December 2016.
5. Trade and other payables
Group Unaudited Audited
6 months year
ended ended
30 June 31 December
2017 2016
GBP GBP
Trade payables 965,459 1,178,105
Taxes and social security 568,095 360,120
Accruals and other payables 481,526 451,660
---------- -------------
2,015,080 1,989,885
---------- -------------
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 has, on 5 May 2017 ("Grant Date"), introduced a
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 330,000 ordinary shares,
equivalent to 1.2% of the Company's current issued share capital.
The options may vest, subject to the satisfaction of certain
conditions, over a period of 3 years between 2019 and 2021 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 (SAR's). The SAR's 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 SAR's the
same reward value as if the SAR's were share options. The
qualifying conditions and timing of vesting are identical to those
within the share option scheme for UK employees. A total of 360,000
SAR's has been awarded at a base price of 97p or GBP341,925.
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.
Movement in the number of share options outstanding during the
year was as follows:
Share options Stock appreciation Total
rights
----------------------------- -------------- ------------------- ---------
Outstanding at 1 January - -
2017
----------------------------- -------------- ------------------- ---------
Granted during the period 330,000 360,000 690,000
----------------------------- -------------- ------------------- ---------
Forfeited/lapsed during the
period (60,000) (7,500) (67,500)
----------------------------- -------------- ------------------- ---------
Outstanding at 30 June 2017 270,000 352,500 622,500
----------------------------- -------------- ------------------- ---------
Exercisable at 30 June 2017 - - -
----------------------------- -------------- ------------------- ---------
During the period ended 30 June 2017 the Company recognised
expense of GBP17,687 related to the fair value of the share based
payment arrangements (30 June 2016: Nil).
7. Dividends
A second interim dividend of 0.65p per share will be paid, out
of the Company's available distributable reserves, on 29 September
2017, to shareholders on the register at 15 September 2017. In
accordance with IAS 1, dividends are recorded only when paid and
are shown as a movement in equity rather than as a charge to the
Income Statement.
8. Events after the reporting date
Acquisition of Grease Management Group Ltd
On 21 August 2017 Filta acquired 100% of Grease Management Ltd
("GMG"), a privately-owned company based in Leamington Spa, for an
initial cash consideration of GBP1 million. Deferred consideration,
equivalent to the Net Current Asset balance at the acquisition
date, is payable in cash upon the finalisation of the Completion
Accounts. This amount is not anticipated to exceed GBP110,000. The
entire consideration will be paid from cash in hand.
GMG supplies, installs, maintains and repairs a broad range of
grease management systems. GMG has been providing grease management
solutions to commercial customers for over 15 years and now
maintains over 3,500 sites in the U.K.
In its statutory unaudited accounts for the year to 31 May 2017,
GMG reported turnover of GBP1.3 million, pro t before tax of
GBP135,229 and a net asset value of GBP179,330.
9. Date of approval of interim financial statements
The unaudited interim financial statements were approved by the
Board on 6 September 2017. Electronic copies are available on the
Filta Group Holdings plc website, www.filtaplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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