Acquisition of Watbio Holdings Limited

The information contained within this announcement (the "Announcement") is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this Announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.

19 December 2018

Filta Group Holdings plc("Filta" or the "Company" or the "Group")

Acquisition of Watbio Holdings Limited

Placing of new Ordinary Shares to raise £3 million

Filta Group Holdings plc (AIM: FLTA), a provider of fryer management and other services to commercial kitchens, is pleased to announce that it has entered into a conditional agreement to acquire Watbio Holdings Limited ("Watbio"), which provides grease and drain management solutions to commercial kitchens across the UK, for a consideration of £6.9 million (the "Acquisition"), subject to adjustment for working capital movements of up to a maximum of a further £1.2 million. The consideration will be payable in two principal tranches followed by a final payment to take account of any increase in the working capital between 30 September 2018 and the date of completion and will be satisfied as to £0.8 million by the issue of 400,000 new Ordinary Shares in Filta to the vendors ("Consideration Shares") and by the payment of up to £7.3 million in cash.

The cash element of the consideration is being satisfied from the proceeds of an issue of new ordinary shares to raise £3.0 million, from a new £4.0 million 5-year term loan facility and from the Group's existing bank and cash in hand. To this end, the Company also announces that it has completed a conditional placing with new and existing institutional investors to raise gross proceeds of £3.0 million (the "Placing"), through the issuance of 1,500,000 new ordinary shares of 10 pence each in the capital of the Company ("Placing Shares") at a price of 200 pence per Placing Share ("Placing Price"). The Placing Price represents a premium of 8.1 percent to the closing price of 185 pence per ordinary share on 18 December 2018.

The first tranche of the consideration of £4.4 million will be satisfied as to £3.85 million in cash and £0.55 million by the issue, at the Placing Price, of 275,000 Consideration Shares, and the second tranche, due by 31 December 2018, of £2.5 million will be satisfied as to £2.25 million in cash and £0.25 million by the issue of 125,000 Consideration Shares. A final payment of up to a maximum of £1.2 million in cash, representing working capital adjustments, will be due 35 days following completion.

Completion of the Acquisition is conditional on the admission of the Placing Shares to trading, which is expected to occur on or around 20 December 2018.

Background to and strategic rationale for the Acquisition

The Directors believe that the Acquisition:

· Delivers a high-margin, repeat-revenue business, with scope for significant margin improvement;

· Creates the leading national provider of grease management and drainage services in the UK;

· Strengthens and diversifies the Group's relationships with national, blue-chip customers; and

· Expands the Group's service delivery market, with increased scope for cross-selling FiltaSeal.

The Group is targeting annual operational synergies in the order of £0.9 million once fully implemented and expects the Acquisition to be earnings enhancing in the first full year of ownership.

Current Trading

Trading remains in line with market expectations with all of fryer management, FiltaSeal and FiltaGMG revenues continuing to grow and with a strong pipeline of potential franchisees expected to be signed in the current year or during the first quarter of 2019.

About Watbio

Formed in 2014 through the merger of Watling Hope and Environmental Biotech, Watbio provides the following services nationally:

· Fat, Oil and Grease ("FOG") Control and Management - installation and maintenance services to control FOG in drainage lines

· Wastewater Pumping and Treatment - Installation, maintenance and compliance services for wastewater treatment plants, pumps, pumping systems and oil interceptors

· Drainage Services - Full suite of drainage services

Watbio operates from its head office in Maldon, Essex, and a further 10 regional office and warehouse locations, including Glasgow, Newcastle, Manchester, Birmingham, London and Plymouth and Stratford-upon-Avon. Watbio employs approximately 90 staff and operates through its fleet of c. 70 vans, providing services to over 860 customers, including major fast food, pub and coffee chains.

In the year ended 30 September 2018, Watbio's audited accounts reflect an Adjusted EBITDA1 of £1.13 million and profit before tax of £0.8 million on revenues of £10.3 million and, as at 30 September 2018, had gross assets of £3.1 million. The Directors deem Watbio to have low capital intensity, with annual capital expenditures averaging less than £0.1 million over the last three years.

1 earnings before interest, tax, depreciation, amortisation and excluding costs (payments to the former shareholders) which are not expected to continue following the Acquisition

Consideration Shares

250,000 of the Consideration Shares are being issued, at the Placing Price, on completion to Edward Palin, Managing Director of Watbio and are locked in for a period of 24 months. Mr Palin is entering into a new service contract as part of the Acquisition and will remain with the combined business going forward.

The remaining 150,000 Consideration Shares will be issued at the Placing Price to other vendors of Watbio and are subject to orderly market provisions for 2 years.

The Placing

The Company has raised gross proceeds of £3.0 million, approximately £2.9 million net of expenses ("Net Proceeds"), from the issue of the Placing Shares at the Placing Price through Cenkos Securities plc pursuant to a conditional agreement dated 19 December 2018. The Placing is not conditional upon completion of the Acquisition, and is neither underwritten nor subject to shareholder approval.

The Net Proceeds of the Placing, and the new loan facility, will be used to satisfy the funding requirements in relation to the Acquisition, and the Directors expect average net debt to EBITDA ratio for the Enlarged Group to remain below 1.0x following the acquisition.

Related party transaction

The following substantial Shareholder (being a Shareholder holding 10 per cent. or more of the Company's Ordinary Shares as at 18 December 2018, being the latest practicable date prior to the date of this announcement) is participating in the Placing as described below:

*following Admission of the Placing and all the Consideration Shares

The participation by the Shareholder referred to above in the Placing is classified as a related party transaction for the purposes of the AIM Rules by virtue of such Shareholder being a 'substantial shareholder' (as defined in the AIM Rules for Companies) in the Company. The Directors, having consulted with Cenkos, the Company's Nominated Adviser, consider that the terms of the transaction, namely the participation by Gresham House Asset Management Limited in the Placing, are fair and reasonable insofar as the Company's Shareholders are concerned.

Total Voting Rights

Application has been made for 1,500,000 Placing Shares and 275,000 Consideration Shares to be admitted to trading on AIM, and it is expected that admission will occur at 8.00 a.m. on or around 20 December 2018. Following admission of the Placing Shares and Consideration Shares, the Company's issued ordinary share capital will comprise 28,918,630 ordinary shares, none of which are held in treasury.

Therefore, the total number of ordinary shares with voting rights in the Company will be 28,918,630, 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.

A further application for admission to trading on AIM will be made for the remaining 125,000 Consideration Shares in advance of their issue, which will be on or before 31 December 2018.

For further information please contact:

Filta Group Holdings plc Tel: +1 407 996 5550

Jason Sayers, Chief Executive Officer

Brian Hogan, Finance Director

Cenkos Securities (Nomad and Broker) Tel: +44 (0)20 7397 8900

Stephen Keys

Harry Hargreaves