Filta seeing some green shoots after Covid-19 pandemic
Fryer management and commercial kitchen service provider Filta Group updated the market on its trading for 2020 on Monday, reporting that the impact of Covid-19 on the restaurant and leisure sector saw it focus on its cash position in a bid to navigate an “unexpectedly challenging” period.
The AIM-traded firm said that focus produced the desired results, with net debt excluding lease obligations narrowing by 42% to £0.5m.
Cash and cash equivalents as at 31 December totalled £4.2m, up 45% year-on-year, with the company's bank facility of £0.4m unused.
The company said it delivered a “much stronger” performance in the second half, with an increasing number of customers opening up during the summer period.
It said it also adapted to new customer requirements resulting from Covid-19, introducing a new revenue line - its ‘FiltaShield’ service - in May.
As a result of the rise in service demand in the second half, margins had returned to the levels achieved in the first quarter of 2020, following the operational improvements made at the end of 2019.
In the US, demand for Filta’s services in the second half came back quicker than initially expected, helped by the acquisition of new customers.
With stadia, corporate dining and universities - all major contributors in the past - still in lockdown, the board said there remained some “significant future upside” to trading revenues.
In the UK, the opening of restaurants in the summer also led to a resurgence in demand from customers.
While social restrictions were increased again in the autumn, demand for Filta's services had remained “resilient” in the circumstances, the board said, with many customers still operating food takeaway and delivery, so requiring regular kitchen servicing.
In Europe, which accounts for around 1% of revenue and was primarily weighted to Germany, activity was still “heavily restricted” by lockdown, but costs had been cut to shield the business until the market improved.
The company said the pipeline of new sales - both services and franchises - was “promising”, saying it was encouraged by the pick-up in franchise enquiries in the second half of 2020, with six franchises sold, making for a total of 12 in 2020.
That gave the board confidence that it would see improved volume as and when the market restrictions were lifted, alongside greater access to credit and higher unemployment, which had historically led to a rise in demand for new franchises.
In terms of services, in the UK, the new ‘GreaseMaster Cyclone’ grease interceptor had been “extremely well received” by the market, while in the US, the company’s fryer management service had been rolled out further to healthcare and supermarket customers.
At the same time, its FiltaShield offering had continued to register sales in each market, which was complementing the existing services and providing additional revenues.
Despite the further lockdown restrictions, particularly in the UK and Europe, Filta said its stronger cash position and continued demand from major customers did provide more certainty than at any time over the last 12 months.
The actions that it had taken meant that the firm was well-placed to perform strongly and thrive, once more normal trading conditions returned.
Its directors said that it was not yet possible to predict with certainty when that would be, though the vaccine roll-out and pent-up demand for its customers' services gave the firm cause for optimism.
“The business has worked hard to put itself in a much stronger position for when restrictions are eased across all our territories. Importantly, our cash position has improved and we have an encouraging sales pipeline,” said chief executive officer Jason Sayers.
“Despite the difficult circumstances, we have won new contracts, launched new services and sold new franchises, all of which gives us a stronger platform for growth.”
At 1129 GMT, shares in Filta Group Holdings were up 8.98% at 101.9p.