Filta : Purchase of FiltaFry Deutschland GmbH, master franchise owner in Germany

FILTA GROUP HOLDINGS PLC
('Filta' or 'the Company')

Purchase of FiltaFry Deutschland GmbH, master franchise owner in Germany

The acquisition is the first step in Filta's strategy to expand its fryer management franchise business in Europe, by replacing the master franchise structure with a multi-unit franchise model which has been highly effective in the USA over the last 15 years. This provides more direct influence over the marketing and sale of FiltaFry franchises and enables the Group to provide 'hands-on' assistance with a central sales and support office to drive the growth of each franchisee within the network. As a result of the acquisition, the Group will immediately have 6 franchise operations and 7 MFU's operating in Germany. Filta plans to perfect the model and establish a meaningful presence in the German market before expanding into, initially, neighbouring European countries.

Filta has paid an initial consideration of €200,000, satisfied as to €175,000 in cash and €25,000 by the issue of 10,904 new Ordinary Shares. Filta will also pay deferred consideration of €50,000, to be satisfied by the issue of Filta shares, in two equal installments, on 30 January 2019 and 30 January 2020. In its most recent unaudited management accounts, for the year ended 31 December 2017, FiltaFry GmbH reported revenue of €193,000, adjusted EBITDA of €32,250 and a loss before tax of €11,370. As at 31 December 2017, FiltaFry GmbH had net assets of €6,230. FiltaFry GmbH will cease to incur certain costs relating to its current ownership structure and is therefore expected to trade profitably following the acquisition.

Jos van Aalst, who originally purchased the master licence rights to operate the FiltaFry business in Germany in late 2014, has been appointed as managing director of Filta's European business and will have direct responsibility for all operational matters in Europe. Mr. van Aalst, a Dutch national, has extensive experience in building businesses, having grown several brands on the European continent. Since acquiring the master licence for Germany 3 years ago, he has expanded FiltaFry GmbH to include six Franchise Owners and has secured some key customers, including two of the top three contract caterers and top trophy sporting venues. This provides Filta with an established base of European franchisees from the outset and supports faster expansion than would otherwise be possible. His ongoing remuneration as an employee of the Company, which includes payments in shares and share options, is heavily performance-weighted, specifically on growth in the franchisee and MFU base.

Filta's business model in the USA is focused on recruiting the right franchisees and then working with them to grow their businesses. Accordingly, it intends to hire a national accounts salesperson in Germany to drive the growth of existing franchise owners, which will allow Jos van Aalst to focus on accelerating the recruitment of new franchise owners in the country. The business is projected to achieve a similar gross margin to our FiltaFry business in the USA and to make a small profit in 2018. Thereafter, the Directors expect to achieve revenue and gross profit growth with only a modest increase in overheads.

Filta CEO Jason Sayers says 'we have a built a very successful franchise model in North America and it makes sense to expand in Europe using the same model. Jos was instrumental in growing a large operation across the continent with his previous company and has, through owning the master license, worked with Filta for the last two years, during which time he has shown his business development ability. We believe that Europe represents an exciting and significant new market for us but getting the model right in Germany is key, which may take the rest of this year. With Jos leading Filta Europe, we are confident that we have the right person to lead our team to execute our European plans over the coming years.'

The Company has made application for the admission of 10,904 new Ordinary Shares to trading on AIM, which is expected to take place at 8.00 a.m. on or around 5 February 2018.

Following the issue of shares above, the Company's issued share capital comprises 27,143,563 Ordinary Shares, of which none are held in treasury. Therefore, the total number of Ordinary Shares with voting rights in Filta Group Holdings PLC is 27,143,563, which may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FCA's Disclosure Guidance and Transparency Rules.

This announcement contains inside information.