Filta : 2017 Annual Report

Full year audited results for the financial year ended 31 December 2017

Financial Highlights

• Total revenue (including Continuing and Discontinued Operations) increased 34% to £13.5m (2015: £10.1m).
• Revenue from Continuing Operations increased 36% to £11.5m (2016: £8.5m).
• Recurring Revenue Fryer Management segment grew 36% to £8.4m (2016: £6.2m).
• Adjusted EBITDA* from Continuing and Discontinued operations up 67% to £2.2m (2016: £1.3m) and up 77% to £2.1m (2016: £1.2m) from Continuing operations.
• Increase in total deferred revenue balance of £0.2m to £2.9m, despite £0.3m negative impact of weakened dollar.
• Revenue from FiltaSeal up 31% to £1.3m whilst FiltaGMG contributed £0.4m of revenue since its acquisition in late August.
• £4.0m of cash at year end to fund strategic growth initiatives.
• Proposed final dividend of 0.65 pence per share, which together with the second interim dividend of 0.65 pence, makes a total dividend for the year of 1.30 pence per share.

Operational Highlights

• Net increase in Franchise Owner base to 184, the number of allocated territories increased by 49 to 347, and a 16% increase in the number of MFUs (mobile filtration units) from 341 to 394.
• Highest grossing Franchise Owner achieved over $2m (£1.5m) in revenue and six (2016 - four) Franchise Owners recorded revenue over $1m (£0.8m).
• Significant growth in fryer management services driven by organic growth and new franchise development which, in turn, enlarges the platform for increasing Fryer Management Services.
• Robust revenue growth in our Company Owned Operations due to strong performances from, particularly, FiltaSeal whose revenues were up 31% and, since the acquisition of Grease Management Group, FiltaGMG.
• Execution of strategy to expand Fryer Management activities into new geographies ,to add complementary activities and improve operating margins, with a number of key events:
  • Launch of FiltaFry in Canada;
  • Acquisition of Grease Management Ltd, a drain management business, enabling the expansion of Filta's UK Company-owned services to include higher margin drain management activities;
  • Sale of Filta Refrigeration Limited, the Company's refrigeration and air-conditioning installation and maintenance business; and,
  • Acquisition of FiltaFry Deutschland GmbH, being the Filta German master licence in Germany, providing a platform for franchise expansion in Europe.

Jason Sayers, CEO, commented:

'In 2017 we continued to build our franchise base and took several strategic steps, including the entry into Canada and the acquisition of Grease Management Limited. This has been followed, more recently, by the purchase of FiltaFry Deutschland GmbH, all of which laid the ground for further growth and improved margins in the years ahead.

Early 2018 has seen the benefit of these actions with further growth in Fryer Management revenues, the recurring revenue engine, while FiltaSeal volumes have experienced a good start to the year. We continue to integrate FiltaGMG and we anticipate an acceleration in revenue and profitability as it builds its client base through the year.

Franchise Development remains important to the growth of Fryer Management revenues. We have continued to add new franchises, territories and MFU's to our franchise platform through the first quarter and are encouraged by the strength of the new business pipeline.

Finally, we are already seeing a modest improvement in our gross margins as a result of the strategic moves outlined above and we expect this trend to continue through the year.'

16^th April 2018