Filta Group Holdings PLC (AIM: FLTA), a provider of fryer management and other services to commercial kitchens, provides the following update on trading, ahead of the Group's full year results for the year ended 31 December 2020, which it intends to announce on 20 April 2021.
Despite the pandemic's impact on the restaurant and leisure sectors, the Group was able to demonstrate the resilience of its model and Filta is pleased to announce that it expects to report adjusted EBITDA in the region of £1.0m (2019: £3.2m), from revenues which were approximately one third lower than the £24.9m achieved in 2019. The Group introduced efficiencies in the last quarter of 2019 and, through close attention to spending through 2020, we have achieved a small improvement in gross margins and a £1.4m reduction in overhead spending.
As stated in previous announcements to the market, the Group took quick, decisive action to meet the challenges of the COVID-19 pandemic, with the principal focus being on the preservation of cash. We are pleased to report that, with the benefit of delivering positive EBITDA, the Group's operations were cash neutral and that, having utilised the available government support schemes, the net debt (excluding lease liabilities) has reduced from £0.9m to £0.5m during the year, leaving us with a gross cash balance of £4.2m at the year end.
In the US, we have supported our franchisees through the pandemic with reduced royalties, based on revenues. Many states are now reopening with the vaccine programmes being rolled out successfully and this is allowing a rapid recovery within the restaurant and leisure sectors. Our US operations have remained profitable and cash generative throughout the period and, by the end of 2020, recurring revenue levels had recovered to over 65% of the levels being achieved in 2019, despite some of the Group's major existing customers, including stadia and universities, not having reopened. This has been achieved by some 20% growth in the total US customer base and leaves us well-positioned to capitalise on both the additional revenues that will derive from further re-openings and from the US recovery generally, which we are seeing this year. We achieved six US franchise sales in 2020 and continue to receive encouraging levels of new franchisee interest. As such, with unemployment likely to remain high and government-driven market stimuli anticipated in the coming months, we expect to see further interest from prospective franchisees.
In the UK, margins have greatly improved as a result of the reorganisation and efficiency measures introduced at the end of the previous year. As with the US, the Group's major UK customers are yet to re-open and, in consequence, business levels are at approximately 60% of pre-Covid levels. However, looking to the future, we have invested in building our UK sales teams in order to achieve closer relationships with our key customers. It is pleasing to report that we have, as a result, seen an increase in sales activity and have developed a strong sales pipeline. Additionally, Filta's new GreaseMaster Cyclone grease interceptor has been extremely well received by the market and its FiltaShield products continue to register sales in the UK, US and Europe.
The effects of the pandemic have had a greater impact in Europe, where it is taking longer to return to normal market conditions. However, our operations in Europe make up less than 3% of the Group's revenue and our exposure is, therefore, minimal at this stage, but we remain positive about the opportunities for us in Europe and believe that by maintaining a strong foothold we will be well-positioned for rapid future growth.
While Filta charts its path ahead as the easing of restrictions in the restaurant and leisure sectors allows for more of our customers to re-open, the Group is actively looking to engage more closely with private investors. It is therefore planning to participate in a number of retail investor-facing events in the coming months, including the Proactive One2One Investor Forum on 25 March 2021 and the MelloMonday Investor Event on 29 March 2021. The Group hopes that both existing and prospective investors will take the opportunity to learn more about Filta at these upcoming events.
CEO of Filta Group, Jason Sayers, said: "We are strongly encouraged by the performance of the Group during undoubtedly very challenging times. With the rollout of vaccine programmes making excellent progress, particularly in the UK and the US, the restaurant and leisure sectors are expected to open up as we approach the summer months. As a result of the proactive measures we implemented early in the pandemic, the Group has a robust balance sheet and we believe we are coming out of this period as a more efficient organisation and with an exciting sales pipeline.
"The OECD has predicted UK and US GDP growth for 2021 of 5.1% and 6.5% respectively and we expect trading to continue strengthening as we go through 2021. With markets expected to be fully open and back to pre-pandemic levels by next year, we look forward to further growth through 2022 and beyond.
"Once again, we would like to express our gratitude to all Filta staff and franchise owners during these challenging times and encourage them to look forward, as we are, to the brighter future on the horizon."