What Filta does

Filta Group Holdings PLC (LON:FLTA) provides various services to restaurant and other hospitality industry kitchens to manage fryers, remove waste oil and grease, plus replacing air ducts, sewage pumps and refrigeration seals.

The group operates through a mix of franchises and company-owned units in the UK, with a franchise-only model in North America and continental Europe.

Clients range from McDonald’s and pub giant Mitchells & Butlers through to smaller chains and single operators.

Whilst the company generates one-time revenues from the sales of new franchises and equipment installation, the vast majority of its revenues (83% in 2019) comes from royalties and direct service fees generated from the regular servicing of clients.

A new offering, FiltaShield, has been launched in the UK and North America to provide a cleansing service that can eliminate any traces of COVID-19 on surfaces and provide protection for 30 days.

 

How’s it doing?

Revenue in 2020 was down by 34% at £16.4mln from £24.9mln in 2019 but a 28% reduction in operating costs to £17.0mln (2019: £23.7mln limited the loss before tax to £866,231 versus a profit the previous year of £936,284.

Adjusted underlying earnings (EBITDA) declined to £1.1mln from £3.2mln the year before.

Gross margins rose to 42.2% from 40.7% the previous year.

Cash at the end of the year stood at £4.2mln, up from £2.9mln a year earlier, resulting in net debt of £1.6mln (2019: £2.1mln).

 

What the boss says: Jason Sayers, chief executive

With the lockdown restrictions expected to be lifted further over the next two to three months and with the vaccination programmes progressing well in the UK and US, the board is confident that the progress seen in the first quarter will continue through the year.

“As lockdown restrictions continue to ease and vaccine programmes are rolled out successfully, particularly in the US and the UK, current business levels have moved past 70% of that pre-COVID-19, with the majority of our largest US and UK customers still to reopen, indicating that demand for Filta’s services is poised to increase further

 

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What the analyst says: Hardman  

Business is picking up month-on-month and is back to around 70% of pre-COVID-19 levels.

Strong franchisees will prosper and weaker ones may not survive, but an economic downturn tends to lead to increased interest in franchise businesses, and Filta’s recurring revenue model is an attractive one.

Filta has maintained its 40% gross margin and reduced fixed overheads.

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