Filta eyes European franchise growth as US reaches saturation

The AIM traded cooking oil filtration and fryer management services provider scored a profit before tax of £1.7m for 2018, an increase of 8% compared to the year before, after a revenue increase of 23% to £14.2m was only partially offset by a 21% increase in cost of sales to £7.1m.

The increase in revenue was driven by an 11% increase in Fryer Management revenue to £9.3m as the division increased its franchise owner base to 199 whilst realising a 14% increase in the number of mobile filtration units from 394 to 450, with European and Canadian operations particularly strong.

Meanwhile, FiltaSeal's revenue increased by 24% to £1.6m, Franchise Development revenue climbed from £1.3m to £1.5m and FiltaGMG revenue came in at £1.7m, up from £0.4m for the last four months of 2017.

Jason Sayers, chief executive of Filta, said: "2018 was an active year for the group as we continued to experience strong organic growth whilst completing two strategically significant acquisitions. The buy-in of the German master franchise gave us an immediate foothold in the German market, where we are experiencing good initial results applying the US franchise model, provides a base for expansion into mainland Europe."

The chief executive added that the company will spend the first half of the current year focused on the integration of Watbio, a "high margin repeat revenue business" which it acquired late in 2018.

Filta had cash and cash equivalents of £6.8m at the end of the year, up from £4.0m at the same point the year beforehand, while a proposed final dividend of 0.92p per share would bring the total dividend up to 1.64p, a 26% increase over the year before.

In the ongoing year, Filta said the growth of all its core businesses has continued, while the company has secured four new franchisees, allocated six further territories and added ten MFUs in the year to date, all of which will contribute to additional revenues from Fryer Management Services through the year.

"Whilst we anticipate a slowdown in new franchise sales as our territory coverage gets closer to maturity in the US, our European operation has picked up the mantle and we are encouraged both by the strength of the new business pipeline and the opportunities that will come from a broader geographic base," said Sayers.

Filta Group Holdings' shares were down 2.61% at 224.00p at 0904 BST.