CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


	Notes	2020	2019
		£	£

Revenue	5	16,401,621	24,922,526
Cost of sales		(9,484,035)	(14,756,297)
Gross profit		6,917,586	10,166,229
Other income		76,922	191,404
Distribution costs		(87,824)	(203,344)
Administrative costs		(7,495,905)	(8,946,691)
Operating (loss)/profit		(589,221)	1,207,598
Analysed as:
Adjusted EBITDA		1,053,569	3,162,571
Acquisition and restructuring related costs	6	(187,465)	(296,410)
Depreciation and amortisation	15,16,17	(1,370,258)	(1,396,932)
Share based payment expense, net of cash settled	32	(85,067)	(261,631)
		(589,221)	1,207,598

Finance income		5,041	6,945
Finance costs	9,17	(282,051)	(278,259)
(Loss)/profit before tax		(866,231)	936,284
Income tax expense	10	(139,748)	(532,418)

(Loss)/profit after tax		(1,005,979)	403,866

Net (loss)/profit attributable to owners		(1,005,979)	403,866
Other comprehensive income

Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations		(168,192)	(149,110)
Total other comprehensive loss for the year		(168,192)	(149,110)

(Loss)/profit and total comprehensive income for the year		(1,174,171)	254,756
(Loss)/earnings per share

- Basic (pence)	12	(3.46)	1.39
- Diluted (pence)	12	(3.46)	1.39

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Notes	2020	2019
		£	£
Non-current assets
Property, plant and equipment	16	1,251,656	1,336,110
Right of use asset	17	1,041,726	1,270,479
Deferred tax assets	11	796,414	678,497
Intangible assets	15	5,836,360	6,514,954
Goodwill	15	1,639,523	1,639,523
Deposits		11,398	5,272
Contract acquisition costs	19	419,913	415,663
Trade receivables	18	264,274	411,732
		11,261,264	12,272,230

Current assets
Inventories	20	1,604,451	1,759,955
Trade and other receivables	18	2,325,678	4,064,811
Contract acquisition costs	19	72,958	57,426
Cash and cash equivalents	21	4,208,498	2,891,014
		8,211,585	8,773,206

Total assets		19,472,849	21,045,436

Current liabilities
Trade and other payables	22	2,289,889	3,260,885
Borrowings	23	1,076,927	792,672
Lease Liability	24	319,480	332,974
Deferred income	26	592,065	534,066
		4,278,361	4,920,597

Non-current liabilities
Deferred tax liability		1,027,498	1,159,121
Borrowings	23	3,647,088	2,976,887
Lease Liability	24	770,119	882,447
Deferred income	26	2,086,565	2,496,173
		7,531,270	7,514,628
Total liabilities		11,809,631	12,435,225

Equity
Share capital	28	2,909,816	2,908,535
Share premium	28	3,679,085	3,659,204
Other reserves	29	233,431	27,415
Translation reserve		(701,267)	(533,075)
Retained profits		1,542,153	2,548,132
Total equity		7,663,218	8,610,211
Total equity and liabilities		19,472,849	21,045,436

The financial statements were approved and authorised for issue by the Board on 19 April 2021 and were signed on its behalf by:

____________________

Brian Hogan, Chief Financial Officer

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

					Translation
	Share	Share	Other	Merger	Exchange	Retained	Total
	Capital	Premium	Reserves	Reserve	Reserve	Earnings	Equity
	£	£	£	£	£	£	£

Balance at 31 December 2018	2,891,863	3,372,351	329,634	(339,687)	(383,965)	2,711,352	8,581,548
Adjustment on initial application of IFRS 16 net of tax	-	-	-	-	-	(8,971)	(8,971)
At 1 January 2019 restated	2,891,863	3,372,351	329,634	(339,687)	(383,965)	2,702,381	8,572,577
Profit for the year						403,866	403,866
Foreign exchange translation differences	-	-	-	-	(149,110)	-	(149,110)
Total comprehensive income	-	-	-	-	(149,110)	403,866	254,756
Dividends paid (note 14)	-	-	-	-	-	(558,115)	(558,115)
Issue of share capital (note 28)	16,672	286,853	-	-	-	-	303,525
Equity consideration paid	-	-	(250,000)	-	-	-	(250,000)
Share based payments (note 29/32)	-	-	287,468	-	-	-	287,468
Balance at 31 December 2019	2,908,535	3,659,204	367,102	(339,687)	(533,075)	2,548,132	8,610,211


Balance at 31 December 2019	2,908,535	3,659,204	367,102	(339,687)	(533,075)	2,548,132	8,610,211
Loss for the year						(1,005,979)	(1,005,979)
Foreign exchange translation differences	-	-	-	-	(168,192)	-	(168,192)
Total comprehensive income	-	-	-	-	(168,192)	(1,005,979)	(1,174,171)
Dividends paid (note 14)	-	-	-	-	-	-	-
Issue of share capital (note 28)	1,281	19,881	-	-	-	-	21,162
Share based payments (note 29/32)	-	-	206,016	-	-	-	206,016
Balance at 31 December 2020	2,909,816	3,679,085	573,118	(339,687)	(701,267)	1,542,153	7,663,218

During the year 12,809 shares (2019: 166,725) were issued as part of the contingent consideration related to our acquisitions in 2018.

CONSOLIDATED STATEMENT OF CASH FLOWS

	Notes	2020	2019
		£	£
Operating activities
Profit before taxation for the year		(866,231)	936,284
Adjustments for non-cash operating transactions:
Finance costs	9,17	277,010	271,314
Depreciation	16	172,560	216,677
Amortisation of intangible assets	15	867,269	857,992
Depreciation of right of use assets	17	330,429	322,262
(Gain)/loss on disposal of tangible fixed assets		(12,215)	(10,739)
Share based payment charge	29,32	85,067	283,215
		853,889	2,877,005

Movements in working capital:
Decrease in trade and other receivables		1,606,223	271,249
Increase in contract acquisition costs		(19,018)	(78,814)
Decrease in trade and other payables		(795,266)	(1,080,879)
Decrease in cash settled share option liability		-	(21,584)
Increase in proceeds from government grants		226,481	-
Decrease/(increase) in inventories		155,505	(538,301)
Decrease in deferred revenue		(351,609)	(629,680)
Cash flow from operations		1,676,205	798,996
Taxes paid		(393,249)	(485,798)
Net cash flow from operations		1,282,956	313,198

Investing activities
Purchase of property, plant and equipment	16	(100,166)	(288,251)
Proceeds from disposals of property, plant and equipment		13,831	39,697
Deferred consideration on subsidiary acquisition	25	-	(1,800,293)
Purchase of other intangible assets	15	(194,985)	(176,538)
Net cash used in investing activities		(281,320)	(2,225,385)
Financing activities
Repayment of borrowings		(302,538)	(876,272)
Net proceeds from borrowings	23	1,200,000	-
Payment of lease liabilities		(231,005)	(291,656)
Net proceeds from issue of share capital		21,162	31,525
Dividends paid to shareholders	14	-	(558,115)
Interest paid	9	(232,463)	(226,826)

Net cash from/(used in) financing activities		455,156	(1,921,344)

Net change in cash and cash equivalents		1,456,792	(3,833,531)
Cash and cash equivalents, beginning of the year	21	2,891,014	6,789,968
Exchange differences on cash and cash equivalents		(139,308)	(65,423)
Cash and cash equivalents, end of year	21	4,208,498	2,891,014

Parent company statement of financial position

	Notes	2020	2019
		£	£
Assets

Non-current assets
Investments in subsidiaries	13	8,765,743	8,765,743
Intangible assets		1,401	1,275
Amount due from subsidiaries	18	3,172,036	3,188,966
		11,939,180	11,955,984
Current assets
Trade and other receivables		83,541	161,041
Amount due from subsidiaries	18	72,229	600,246
Cash and cash equivalents	21	51,856	109,089
		207,626	870,376
Total assets		12,146,806	12,826,360

Current liabilities
Trade and other payables	22	21,485	44,016
Borrowings	23	942,763	786,049
Amount due to subsidiaries		622,748	522,534
		1,586,996	1,352,599

Non-current liabilities
Borrowings	23	2,385,526	2,746,541
		2,385,526	2,746,541

Total liabilities		3,972,522	4,099,140

Equity
Share capital	28	2,909,816	2,908,535
Share premium	28	3,679,085	3,659,204
Other reserves	29	573,118	367,102
Retained earnings		1,012,265	1,792,379
Total equity		8,174,284	8,727,220

Total equity and liabilities		12,146,806	12,826,360

No statement of comprehensive income is presented by the company as permitted by section 408 of the Companies Act. The loss dealt within the financial statements of the parent Company for the year ended 31 December 2020 is £780,114 (2019:Profit £370,426).

The financial statements were approved and authorised for issue by the Board on 19 April 2021 and were signed on its behalf by:

____________________

Brian Hogan, Chief Financial Officer

parent company statement of changes in equity


Share	Share	Other	Retained	Total
Capital	Premium	reserve	Earnings	Equity
£	£	£	£	£

Balance at 1 January 2019	2,891,863	3,372,351	329,634	1,980,068	8,573,916

Loss for the year	-	-	-	370,426	370,426
Total comprehensive income				370,426	370,426
Dividends paid (note 14)	-	-	-	(558,115)	(558,115)
Issue of share capital (note 28)	16,672	286,853	-	-	303,525
Share based payments (note 29/32)	-	-	287,468	-	287,468
Equity consideration paid	-	-	(250,000)	-	(250,000)
Balance at 31 December 2019	2,908,535	3,659,204	367,102	1,792,379	8,727,220

Balance at 1 January 2020	2,908,535	3,659,204	367,102	1,792,379	8,727,220

Loss for the year	-	-	-	(780,114)	(780,114)
Total comprehensive income				(780,114)	(780,114)
Dividends paid (note 14)	-	-	-	-	-
Issue of share capital (note 28)	1,281	19,881	-	-	21,162
Share based payments (note 29/32)	-	-	206,016	-	206,016
Equity consideration paid	-	-	-	-	-
Balance at 31 December 2020	2,909,816	3,679,085	573,118	1,012,265	8,174,284

During the year 12,809 shares (2019: 166,725) were issued of which Nil (2019: 32,500) were issued for cash (2019: £31,525) and the balance of shares were issued as part of the contingent consideration related to our acquisition in 2018.

PARENT COMPANY STATEMENT OF CASH FLOWS

	2020	2019
	£	£
Operating activities
Profit before tax	(757,640)	466,270
Adjustments for non-cash operating transactions:
Finance costs	168,745	194,997
Amortisation	854	308
Shared based payment charge	191,004	283,215
	(397,037)	944,790
Movements in working capital:
Decrease/(increase) in trade and other receivables	466,739	(537,790)
Increase/(decrease) in trade and other payables	129,657	(7,471)
Net cash from operations	199,359	399,529


Investing activities
(Decrease)/increase in advances to subsidiaries	96,273	(1,242,853)
(Increase)/decrease in investment in subsidiary	-	117,339
Deferred consideration on subsidiary acquisition	-	(1,800,293)
Purchase of other intangible assets	(980)	(1,583)
Net cash used in investing activities	95,293	(2,927,390)


Financing activities
Repayment of borrowings	(246,154)	(800,000)
Proceeds from issue of share capital, net of costs	21,162	31,525
Proceeds from borrowings, net of costs	-	500,000
Dividends paid to shareholders	-	(558,115)
Interest paid	(126,893)	(153,145)
Net cash (used in)/from financing activities	(351,885)	(979,735)


Net change in cash and cash equivalents	(57,233)	(3,507,596)
Cash and cash equivalents, beginning of the year	109,089	3,616,685
Cash and cash equivalents, end of year	51,856	109,089

NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL INFORMATION

Filta Group Holdings plc was incorporated in England and Wales on 31 March 2016. Its registered office is at The Locks, Hillmorton, Rugby, Warwickshire, England, CV21 4PP.

The Company is listed on the AIM market of the London Stock Exchange. The Company acts as the holding company of a group of subsidiaries that are involved in the franchising of on-site environmental kitchen solutions to restaurants, catering establishments and institutional kitchens. The services include microfiltration of cooking oil, fryer cleaning, temperature calibration, waste oil disposal and specially designed filters for refrigeration units and coolers. The Filta Group sells franchises and operates in the UK, the United States and Canada. Additionally, the Company operates two direct sale businesses including refrigeration seal replacement and the installation, repair and maintenance of drain dosing and grease recovery units. Further details of the Company's subsidiaries are provided in Note 13.

2. BASIS OF PREPARATION

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union including interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The consolidated financial statements have been prepared under the historical cost convention except for financial instruments that have been measured at fair value through profit and loss. The presentational and functional currency of the Company is Pounds Sterling. The functional currency of the subsidiaries is determined by the primary economic environment in which they operate.

Basis of consolidation

The consolidated financial statements comprise the financial information of the Company and its subsidiaries (the "Group") made up to the end of the reporting period.

The consolidated financial statements present the results of the Company and its subsidiaries and joint arrangements as if they formed a single entity. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights; currently exercisable or convertible potential voting rights; or by way of contractual agreement. Where necessary, adjustments are made to the financial statements of subsidiaries to align with the Group accounting policies.

Where a subsidiary undertaking is sold, the profit or loss on disposal is calculated as the difference between the aggregate of the fair value of the consideration received and the carrying amount of the assets and liabilities of the subsidiary on the date of disposal less any transaction costs relating to the disposal. Cash received on disposal of businesses is shown within investing activities in the Consolidated cash flow statement, net of cash and cash equivalents disposed of and transaction costs.

All intercompany transactions and balances between Group entities, including unrealised profits arising from them, are eliminated upon consolidation.

Going concern

The Group has reacted quickly and decisively to the COVID-19 pandemic, implementing a range of prudent cost management and cash preservation actions, securing additional funding facilities, revising bank covenants and taking advantage of government programs to protect the business from any potential adverse impact. Notwithstanding all of these actions, there continues to be uncertainty surrounding the resolution of the pandemic and the impact on the wider economy.

The current and plausible future impact of COVID-19 and the related macroeconomic environment on the Group's activities and performance has been considered by the Board in preparing its going concern assessment. The Group has prepared a base case scenario, reflecting an initial set of assumptions around financial projections and trading performance, together with various, more pessimistic, expectations for market developments over the remainder of 2021 and 2022 to reflect subdued trading conditions. The specific assumptions used within the base case scenario, with regard to the assumed dates for the staged reopening of hospitality, follow those set out within the UK Government's recently announced four-step roadmap for the easing of restrictions across England. It is assumed that arrangements within the Group's other geographies will follow a similar roadmap.

The Board is required to assess going concern at each reporting period. These assessments are significantly more difficult given the uncertainties about the impact of COVID-19, the extent and duration of social distancing measures and the impact on the markets in which the Group operates. The level of judgment to be applied has therefore increased considerably. The Directors have considered three main factors in reaching their conclusions on going concern, as set out below.

1) Cash Flows and Sensitivity Analysis

In assessing going concern, the Directors considered a variety of scenarios in the context of the COVID-19 pandemic. These scenarios are designed to stress test liquidity and covenant compliance. EBITDA used within the scenarios is that used for bank covenant purposes. The three most relevant scenarios, in ascending order of severity, reviewed to test going concern are as follows:

Base Case Scenario

This scenario assumes that those markets that the Group operates in, and which are yet to open, will gradually begin to reopen during the second quarter. April assumes a modest increase in current volumes, based on the planned reopening of restaurants, pubs and outdoor hospitality whilst May assumes a more stepped increase as a result of the planned reopening of indoor hospitality (UK pubs and restaurants), stadiums and arenas at partial occupancy. By June 2021, this scenario assumes that volumes have reached c. 80% of normalised levels and stays there through Q2. Volumes increase in Q3, reaching a maximum of c. 90% of normalised volumes by September 2021 with modest decreases thereafter due to seasonality to reach c.85% of normalised volumes for the year. Further monthly increases are then assumed throughout 2022 that will result in a c.10% revenue growth over our pre-COVID levels.

10% Revenue decline off Base Case

In this scenario the gradual recovery to the Group's markets assumed within the Base Case is delayed by an additional month, a result that would not enable a return to our normalised monthly levels in 2021, reaching c.77% of normalised volumes for the year. Revenue in, and beyond, the final quarter of 2021 is then consistent with that assumed in the Base Case, reflective of a successful vaccine rollout and pent-up consumer demand.

20% Revenue decline off Base Case

This scenario largely mirrors that within the 'Delay in Lifting of Restrictions Scenario' above, however, it effectively assumes a full quarter delay in recovery which subdues volumes further.

2) Covenants

As previously announced, the Group negotiated waivers of testing on its banking covenants up to and including until the June 2021 covenant test date. From September 2021, the Group will be expected to submit to its originally agreed upon covenant testing requirements. In all three scenarios detailed above, the financial projections indicate that the Group would remain in compliance with the financial covenants in its bank facilities. A decline in underlying EBITDA in excess of that contemplated in the scenarios would need to persist throughout the period for a covenant breach to occur. Whilst the Q1 2022 Cash Flow Cover under the 20% revenue decline scenario is met it does so with little margin for further decline. All other covenants, under each scenario, are met with reasonable margin to absorb further downside.

The Group also has a number of mitigating actions within its control (not all of which were included in the scenarios) including balance sheet management, further reducing levels of discretionary spend and rationalising its overhead base in order to be able to meet the covenant tests.

3) Liquidity

The Group finished the year ended 31 December 2020 with £4.2m in cash and a further unutilised £0.4m overdraft facility. Under each of the above scenarios, the Group maintains a sufficient level of cash to fully support its ongoing requirements through the measurement period and beyond.

Going Concern Statement

After considering the current financial scenarios, the severe but plausible sensitivities and the facilities available to the Group and Company, the Directors have a reasonable expectation that the Group and Company have adequate resources for their operational needs, will remain in compliance with the financial covenants set out in the bank facility agreement and will continue in operation for at least the

next 12 months from the date of approving both the Group and Company financial statements. As a

consequence, and having reassessed the principal risks and uncertainties, the Directors considered it appropriate to adopt the going concern basis in preparing the Group and Company financial statements.

Parent Company

The parent company has taken advantage of s.408 of the Companies Act 2016 not to publish

the parent company profit and loss account.

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

The principal accounting policies of Filta Group Holdings plc and its subsidiaries are set out below. These policies have been consistently applied unless otherwise stated.

3.1 Foreign currencies

Functional and presentation currency

The consolidated financial statements are presented in Pounds Sterling, which is also the functional currency of the parent company.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at year-end exchange rates are recognised in profit or loss.

Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.

Foreign operations

In the Group's financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than Pounds Sterling are translated into Pounds Sterling upon consolidation. The functional currency of the entities in the Group has remained unchanged during the reporting period.

On consolidation, assets and liabilities have been translated into Pounds Sterling at the closing rate at the reporting date. Income and expenses have been translated into Pounds Sterling at the average rate, as an approximation of rates on the dates of the transactions over the reporting period. Exchange difference are charged/credited to other comprehensive income and recognised in the translation reserve in equity.

3.2 Segment reporting

The results of operating segments are reported in a manner consistent with internal reporting.

The Group has four operating segments. In identifying these operating segments, management follows the Group's service lines representing its main products and services. Further details of segment reporting are provided in Note 5.

3.3 Revenue

For the year ended 31 December 2020 the Group used the five-step model as prescribed under IFRS 15 on the Group's revenue transactions. This included the identification of the contract, identification of the performance obligations under same, determination of the transaction price, allocation of the transaction price to performance obligations and recognition of revenue. The point of recognition

arises when the Group satisfies a performance obligation by transferring control of a promised good or service to the customer, which could occur over time or at a point in time.

Revenue represents the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Revenue from goods and services provided to customers not invoiced at the reporting date is recognised as accrued income within trade and other receivables.

The Filta Group executes franchise agreements for each franchise area which set out the terms of the arrangement with the franchisee.

These agreements require the franchisee to pay an initial, non-refundable franchise fee and royalties based upon the number of filtration machines operating in each franchise area.

The franchise fee consists of two distinct components:

· the opening package; and

· the territory fee

Each of these revenue streams are defined in the franchise agreement and support the treatment under our accounting policy.

The revenue associated with the opening package is recognised when substantially all initial services required by the franchise agreement are performed, which is generally upon the completion of training of the franchisee. Therefore, there is no deferral of this revenue unless the training period spans the year-end.

The territory fee represents the exclusive right to operate in a designated territory for a stated length of time. The territory fee is deferred over the length of the franchise agreement and released to the combined statements of comprehensive income on a straight-line basis.

In circumstances where franchise territories are resold, on an arm's length basis, between ar franchisee and a third party, it is the Group's policy to continue to recognise the deferred revenue over the life of the original franchise agreement. Should there be an additional opening package, or territory sale, as part of the resale, these components will follow the aforementioned revenue recognition process under the new franchise agreement policy.

Royalty income is recognised as earned with an appropriate provision for estimated uncollectible amounts, which is included in operating expenses.

Supplies and other revenues are recognised when the product or service is delivered or shipped to customers. Provision for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period in which the related sales are recorded.

3.4 Contract acquisition costs

The incremental costs to directly obtain a contract with a customer are capitalised and recognised within contract assets where management expects to recover those costs. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained are recognised as an expense in the period where incurred. Contract assets are subsequently amortised over the period consistent with the Group's transfer of the related goods or services to the customer.

The costs capitalised include sales commission paid to employees and broker fees paid to third parties where payment is identified as relating directly to the sale of a territory license and initially recognised upon the signing of a customer contract. The costs are amortised over the contract life. Management

is required to determine the recoverability of contract related assets at each reporting date. An

impairment exists if the carrying amount of any asset exceeds the amount of consideration the Group expects to receive in exchange for providing the associated goods and services, less the remaining costs

that relate directly to providing those goods and services under the relevant contract. An impairment is recognised immediately where such losses are forecast.

The movement in the contract asset balance in the period therefore represents additional payments made, subsequent amortisation and any required impairment.

3.5 Investments in subsidiaries

Investments in subsidiaries are valued at cost less provision for any impairment, and an impairment review is carried out annually by the Directors.

3.6 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. All repair and maintenance expenses are recognised in profit or loss when incurred.

After initial recognition, property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.

All items of property, plant and equipment are depreciated to write off the cost of the assets over their estimated useful lives as follows:

Annual rate

Freehold property 2%

Plant and machinery 10-15%

Motor vehicles 25%

Fixtures and fittings 20%

The estimated useful life and depreciation method are reviewed, and adjusted as appropriate, at each reporting date. Fully depreciated assets are retained in the financial statements until they are no longer in use.

3.7 Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree. Acquisition costs are expenses and included in Administrative expenses. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition are recognised at their fair value at the acquisition date.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of any contingent consideration deemed to be

an asset or liability will be recognised in accordance with IFRS 9, either in profit or loss or in other comprehensive income.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of cost of the business combination over the group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. It is reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash generating units (or groups of cash generating units) that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or group of units to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

3.8 Intangible assets

Intangible assets identified in a business combination are capitalised at fair value as at the date of the acquisition and their costs are amortised over a straight-line basis over their expected useful lives. Software and development expenditure is capitalised as an intangible asset if the asset created can be identified, if it is probable that the asset created will generate future economic benefits and if the development cost of the asset can be measured reliably. Amortisation expense is charged to administrative expenses in the income statement on a straight-line basis over its useful life.

The expected useful lives of the assets are as follows:

Customer relationships - 5 to 10 years

Customer contracts - 5 to 10 years

Supply contracts - 15 years

Reacquired Rights - 6.75 years

Software development - 3 years

Those costs associated with maintaining computer software programmes are recognised as an expense as incurred.

3.9 Impairment of tangible and intangible assets

At each reporting end date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

3.10 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is based on the first in, first out principal and comprise direct materials and, where applicable, direct labour costs and overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. A provision is made, where necessary, in all inventory categories for obsolete, slow moving, and defective items.

3.11 Financial instruments

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the relevant financial instrument. The accounting policy for financial instruments is as follows:

Financial assets

(i) Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities. For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(ii) Trade and other receivables

Trade receivables are recognised initially at the invoice amount and subsequently measured at amortised cost, less provision for impairment.

Under IFRS 9, the Group elected to use the simplified approach to measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables and contract assets that result from transactions that are within the scope of IFRS 15, irrespective of whether they contain a significant financing component or not.

IFRS 9 requires the Group to consider forward looking information and the probability of default when calculating expected credit losses. The measurement of expected credit losses reflects an unbiased and probability weighted amount that is determined by evaluating the range of possible outcomes as well as incorporating the time value of money. The Group considers reasonable and supportable customer-specific and market information about past events, current conditions and forecasts of future economic conditions when measuring expected credit losses.

The amount of the provision is the difference between the carrying amount and the present value of estimated future cash flows of the asset, discounted, where material, at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the Income Statement within 'administrative costs'. When a trade receivable is uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against 'administrative costs' in the Income Statement.

Financial liabilities

(i) Trade and other payables

Trade payables are not interest-bearing and are initially measured at fair value. Subsequent to initial recognition these liabilities are measured at amortised cost. The Group has contract liabilities in the form of deferred income which arises from consideration received in advance of the satisfaction of performance obligations.

(ii) Borrowings

Interest-bearing loans and overdrafts are initially measured at fair value, net of direct issue costs. These financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised over the period of the relevant liabilities.

3.12 Equity

Equity comprises the following:

· "Share capital" represents the nominal value of equity shares.

· "Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

· "Other reserves" represent the equity element in the form of share options and warrants, see notes 29 and 32 for additional information on these instruments.

· "Retained earnings" represents retained profits and accumulated losses.

· "Merger reserve" arose on the reverse takeover of the Group in October 2016.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

3.13 Share-based payments

(I) Equity-settled share-based payments

Equity-settled share-based payments are measured at the fair value of the awards based on the market value of the shares at the grant date. Fair value excludes the effect of non-market-based vesting conditions. The fair value is charged to the consolidated statement of income and credited to retained earnings on a straight-line basis over the period the estimated awards are expected to vest.

At each reporting date, the Company revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the consolidated statement of income such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to retained earnings.

(II) Cash-settled share-based payments

For cash-settled share-based payments, a liability is initially recognised at fair value based on the estimated number of awards that are expected to vest, adjusting for market based performance conditions. Subsequently, at each reporting period until the liability is settled, it is remeasured to fair value with any changes in fair value recognised in the consolidated statement of income.

3.14 Taxation

The income tax expense for the year comprises current and deferred tax.

Current tax

The charge for current taxation is the tax currently payable based on taxable profit for the year. Taxable profit differs from net profit as reported in the consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax is provided using the liability method on differences between the carrying amounts of assets and liabilities in the consolidated balance sheet and the tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction which is not a business combination and at the time of the transaction affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is realised based on tax rates that have been enacted or substantively enacted by the reporting end date. Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax arising from a business combination is included in the resulting

goodwill or excess of the acquirer's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities over the business combination costs.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

3.15 Leases

The Group adopted IFRS 16 Leases effective 1 January 2019. The Group leases various properties, equipment, and vehicles. Contracts typically cover fixed periods between one and 10 years and may contain extension options as described below. Lease terms are negotiated on an individual basis and include a wide variety of different terms and conditions.

Leases are booked as a right-of-use asset and as a corresponding lease liability at the date at which the leased asset is available for use by the Group. Each lease payment is apportioned between the reduction of the outstanding lease liability and finance cost. The finance cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life or the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities are valued at the net present value of the future lease payments, which includes fixed lease payments, variable lease payments based on indexes and rates, residual value guarantees, purchase options and termination penalties. Lease payments are discounted using the interest rate implicit in the lease, or if that rate cannot be determined, the Group's incremental borrowing rate.

Right-of-use assets are measured at cost, comprising the amount of the initial lease liability adjusted by any lease payments made at or before the commencement date of the lease, any lease incentives received, initial direct costs and any estimated restoration costs.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are identified as leases with a term of 12 months or less. Low-value assets comprise general office equipment.

3.16 Government Grants

Grants are accounted for under the accruals model as permitted by IAS 20. Grants are recognised in profit or loss statement in the same period as the related expenditure. This includes the Government Coronavirus Job Retention Scheme ('Furlough') and the US Payroll Protection Program ('PPP').

3.17 Adjusted EBITDA

Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, exceptional items and share based payment expense. The separate reporting of these items helps provide a better picture of the Group's underlying performance. Items which may be included within this category include:

· Costs associated with acquisitions; and

· Other particularly significant or unusual items.

Adjusted EBITDA is presented separately in the statement of comprehensive income as the Directors believe that it needs to be considered separately to gain an understanding of the underlying profitability of the trading businesses.

3.18 Critical accounting judgments and key sources of estimation uncertainty

Revenue recognition (Judgement)

Under IFRS 15, revenue recognition is based on the principle that revenue is recognised when control of a good or service transfers to a customer. Revenue is measured based on the consideration specified in a contract with a customer and is recognised when a customer obtains control of the services. The Group's franchise contracts are defined as having two distinct performance obligations, the Opening Package and the Territory Fee.

A degree of judgement arises with respect to the recognition of revenue on initial franchise fees, giving rise to estimation uncertainty. Management reviews on a regular basis the allocation within an initial franchise fee between the opening package and the territory fee. Whereas the opening package fee is recognised, as explained in note 3.3, generally upon the completion of the training of the franchisee, the portion related to the territory fee is deferred and recognised over the life of the franchise agreement. The total amount currently in deferred income in this respect amounts to £2,678,630 (2019: £3,030,239). The revenue recognised in respect of the opening package and the apportioned territory fee in the current year was £1,086,248 (2019: £1,381,567).

Recoverability of trade receivables (Judgement and estimates)

The Group provides credit to customers and as a result there is an associated risk that the customer may not be able to pay outstanding balances.

Under IFRS 9 the Group uses an allowance matrix to measure Expected Credit Loss (ECL) of trade receivables from customers. Loss rates are calculated based on the probability of a receivable progressing through successive chains of non-payment to write-off. The rates are calculated at a business unit level which reflects the risks associated with geographic region, age mix of customer relationship and type of product purchased.

IFRS 16 "Leases" (Judgement)

Where the Group has an option to extend or terminate a lease, management uses its judgement to determine whether such an option would be reasonably certain to be exercised. Management considers all facts and circumstances, including past practice and costs that would be incurred if an option were to be exercised, to help them determine the lease term. Management have also applied judgements in assessing the discount rate, which are based on the incremental borrowing rate. Such judgements could impact lease terms and associated lease liabilities. The Group has availed of the practical expedient available on transition to IFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with IAS 17 and the guidance in IFRIC 4 will continue to be applied to those leases entered into or modified before 1 January 2019.

Going concern (Judgement and estimates)

Since the COVID-19 pandemic began management has endeavored to understand the uncertainties associated with this unprecedented event, to quantify its impact on the future of the business and assess whether these uncertainties would cast doubt on the Group's ability to continue as a going concern. Given the improved but ongoing degree of uncertainty management has relied on its knowledge of its customers, the markets they operate in and the anticipated impact and duration of government restrictions that have been instituted globally to stem the transmission of the virus. To address this uncertainty, management completed a three year forecast that estimated the impact on the Group's revenue, profits and current and future cash resources under a best case and plausible downside scenarios. Significant judgment was required in preparing these forecasts including but not limited to;

· Duration of government restrictions - As of the date of this report, governments in our two primary markets of the United Kingdom and North America have been more definitive regarding the timing and nature of their plans to loosen restrictions as they anticipate a phased reopening of the economy over the coming months. Management has used its judgement to estimate how and when its customers will ramp up through the spring and summer and ultimately through year end. As we have outlined in Note 2 "Going Concern", we have assumed various degrees of recovery in our scenario testing none of which are assumed to return us to our pre-COVID normalised run rates.

· Government support - The Group has taken advantage of government support programs put in place by in each of our operating locations. This principally consists of the employee furlough scheme and the Coronavirus Business Interruption Loan Scheme in the UK and the Paycheck Protection Program offered in the US. Whilst it is estimated that the furlough program saves c.£0.1m per month, management has used the best information available to it and its judgement, where needed, to anticipate the duration of the furlough program, the changing resource requirements throughout the forecast period and how and when employees will be transitioned off of furlough as customers begin to ramp up. The Group has been successful in accessing both a UK CBILS loan and two tranches of the US Paycheck Protection loan/grant in the amounts of £1.2m and £0.4m respectively each of which are factored into the forecast.

· Liquidity and Banking - At year end the Group's available cash and unutilised overdraft facility totalled £4.6m and the forecast assumed the same starting point. Within each of the considered scenarios the Group maintains sufficient cash to meet all its obligations. The Group also has in place appropriate amendments to the covenants through June 2021.

Management has used its best judgement to forecast its cash requirements and cash availability in order to assess whether the Group is able to continue as a going concern for at least, but not limited to, 12 months from the reporting date and in each scenario the Group maintains sufficient levels of cash and unutilised overdraft to support the business through FY22.

Impairment (Judgement and estimates)

The Group is required to review assets for objective evidence of impairment. It does this on the basis of a review of the budget and rolling forecasts, which by their nature are based on a series of assumptions and estimates. The Group has performed impairment tests on those cash generating units which contain goodwill, and on any assets where there are indicators of impairment. The key assumptions associated with these reviews are detailed in Note 15.

Taxation (Judgement and estimates)

The Group is subject to income tax in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions for which the ultimate tax determination is uncertain. The Group recognises liabilities based on estimates of whether additional taxes will be due. Once it has been concluded that a liability needs to be recognised, the liability is measured based on the tax laws that have been enacted or substantially enacted at the end of the reporting period. The amount shown for current taxation includes an estimate for tax uncertainties and is based on the Directors' best probability weighted estimate of the probable outflow of economic resources that will be required to settle the liability. Where the final tax outcome of these matters is different from the amounts that were initially estimated, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. The Group estimates the most probable amount of future taxable profits, using assumptions consistent with those employed in impairment calculations, and taking into consideration applicable tax legislation in the relevant jurisdiction. These calculations also require the use of estimates.

4. ADOPTION OF REVISED STANDARDS EFFECTIVE DURING 2020

A number of new amendments to standards are effective for annual periods beginning after 1 January

2020 and earlier application is permitted; however, the Group has not early adopted them in preparing these consolidated financial statements. These are not expected to have a significant impact on adoption.

5. SEGMENT ANALYSIS

In January 2019, following the acquisition of Watbio Holdings Ltd ("Watbio"), the Group began to make a number of changes to its organisational structure and management system consistent with its integration of Watbio. With these changes, the Group has updated its reportable segments. There continues to be four reportable segments as follows:

The Site Service's segment includes the legacy Seal replacement service as well as capabilities in providing preventive maintenance and reactive services in the markets that it serves. The Equipment Sales & Installation segment represents the provision of design, sale and installation solutions. The Franchise Development and Fryer Management segments remain unchanged. The Group also has three geographic segments: United Kingdom, North America and Europe.

Previously reported segment information has been recast, as applicable, for all periods presented to reflect the changes in the Company's reportable segments.

The segments represent components of the Company for which separate financial information is available that is utilised on a regular basis by the chief operating decision maker (which takes the form of the Board of Directors), in determining how to allocate resources and evaluate performance. The segments are determined based on several factors, including client base, homogeneity of products, technology, delivery channels and similar economic characteristics.

Revenue and non-current assets by origin of geographical segment for all entities in the Group are as follows:

Revenue
	2020 £	2019 £
North America	7,762,771	11,302,537
U.K.	8,154,425	13,124,702
Europe	484,425	495,287
Total	16,401,621	24,922,526
Non-current assets	2020 £	2019 £
North America	1,882,302	2,009,411
U.K.	8,972,757	9,643,205
Europe	406,205	619,614
Total	11,261,264	12,272,230
Revenue
	2020 £		2019 £
Franchise Development	1,038,287		1,494,674
Fryer Management	7,812,833		11,716,594
Equipment Sales & Installation	1,377,210		2,792,685
Site Services	6,173,291		8,918,573
Total	16,401,621		24,922,526

Management measures revenues by reference to the Group's core services and products and related services, which underpin such income. No customer has accounted for more than 10% of total revenue during the periods presented. Assets and liabilities are not fully allocated to the individual revenue segments as such information is not provided to the chief operating decision maker.

Operating segment performance for the year ended 31 December 2020:

	Franchise Development	Fryer Management	Equipment Sales & Installation	Site Service	Total
	£m	£m	£m	£m	£m
Sales to external customers	1.0	7.8	1.4	6.2	16.4
Adjusted EBITDA	0.4	0.8	(0.1)	0.0	1.1
Acquisition and legal costs	-	(0.0)	(0.0)	(0.1)	(0.2)
Share based payments	0.0	0.1	(0.0)	(0.2)	(0.1)
Depreciation and amortisation	(0.1)	(0.7)	(0.1)	(0.5)	(1.4)
Operating loss	0.3	0.2	(0.3)	(0.7)	(0.6)
Net finance costs	(0.0)	(0.1)	(0.0)	(0.1)	(0.3)
Loss before taxation	0.3	0.0	(0.3)	(0.8)	(0.9)
Taxation					(0.1)
Other comprehensive income					(0.2)
Loss and total comprehensive income					(1.2)

Operating segment performance for the year ended 31 December 2019:

	Franchise Development	Fryer Management	Equipment Sales & Installation	Site Service	Total
	£m	£m	£m	£m	£m
Sales to external customers	1.5	11.7	2.8	8.9	24.9
Adjusted EBITDA	0.7	1.8	0.2	0.5	3.2
Acquisition and legal costs	-	-	(0.1)	(0.3)	(0.3)
Share based payments	(0.0)	(0.1)	(0.0)	(0.1)	(0.3)
Depreciation and amortisation	(0.1)	(0.7)	(0.2)	(0.5)	(1.4)
Operating profit	0.6	1.0	(0.1)	(0.4)	1.2
Net finance costs	(0.0)	(0.1)	(0.0)	(0.1)	(0.3)
Profit before taxation	0.6	0.9	(0.1)	(0.4)	0.9
Taxation					(0.5)
Other comprehensive income					(0.1)
Profit and total comprehensive income					0.3

6. Operating profit and adjusted EBITDA

The following have been included in arriving at operating profit and adjusted EBITDA:
				2020		2019
				£		£
Depreciation of property, plant and equipment (note 16)				172,560		216,677
Amortisation of intangible assets (note 15)				867,269		857,992
Depreciation of right of use assets				330,429		322,263
Gain on disposal of plant and equipment				(12,215)		(10,739)
Staff costs, including Directors (note 7)				4,972,012			7,137,774
Receipts from Government Grants				(959,117)		-
Share based payment				85,067		283,215
Cost of acquisition				-		60,448
Recovery on contingent consideration (note 25)				-		(138,942)
Restructuring				187,465		374,904
Foreign exchange gains				67,156		83,975

Profit before tax is stated after charging:
Auditors' remuneration:
Fees payable to the Company's Auditor and their associates for the audit of the Company's annual accounts				90,582				66,413
Fees payable to the Company's Auditor and their associates for other services:				4,630				-
The audit of the Company's subsidiaries pursuant to legislation				39,074				39,666
Tax and other services				40,567				66,299
Total auditors' remuneration				174,853				172,378

Lease rental expense on low value and/or short term leases				3,402					10,178

During the period, the Group benefited from €0.7m of government grants in the form of the Job Retention Scheme in the UK. In addition, the subsidiaries also benefitted from personnel cost reductions for a total amount of €1.0m due to Government assistances around the world. In accordance with accounting policy, this credit is included in the Income Statement over the same period as the staff costs for which it compensates. Additionally, £0.5m of VAT payments have been deferred to 2021.

Exceptional items consist of the following:

	2020		2019
	£		£
Acquisition related	-		60,448
Recovery on contingent consideration	-		(138,942)
Restructuring	121,682		374,904
COVID-19 customer provision	62,287		-
Legal and professional	3,496		-
	187,465		296,410

7. STAFF COSTS
		2020	2019
		£	£
Gross salaries		5,121,236	6,005,194
Social security costs		507,689	601,968
Pension contributions		76,528	93,725
Share based payment charge		85,067	283,215
Other staff benefits		140,609	153,672
		5,931,129	7,137,774
Government support		(959,117) 4,972,012	- 7,137,774

The average number of employees of the Group during the year was as follows:
		2020	2019
		No.	No.
Directors		8	8
Staff
Administration		26	34
Customer Services/Network Support		30	25
Business Development/Marketing		4	6
Sales		14	9
Other		62	86
		144	168

8. REMUNERATION OF KEY MANAGEMENT PERSONNEL

2020

2019

Remuneration for qualifying services

671,262

658,845

671,262

658,845

Details of Directors' remuneration are provided in the Remuneration Report.

9. FINANCE COSTS

2020

2019

Bank and other loans

231,639

234,604

Finance fees

50,412

43,655

282,051

278,259

10. INCOME TAX EXPENSE

2020

2019

Corporation Tax

Charge for the year

410,434

604,458

Deferred tax

Origination and reversal of temporary differences

(270,686)

(72,040)

Total tax charge

139,748

532,418

Reconciliation of corporation taxation:

	2020	2019
	£	£
(Loss)/profit before tax	(866,231)	929,432

Tax calculated at the domestic tax rate of 19% (2019: 19%)	(164,584)	176,592

Tax effects of:
Income not subject to tax	(49,900)	(20,689)
Expenses not deductible for tax purposes	-	194,999
Tax deductions not recognised as an expense	(91,765)	(58,150)
Tax losses in the year for which no deferred tax is recognised	-	57,909
Other timing differences	167,794	14,306
Withholding tax payable on intercompany dividend	-	53,393
Adjustments in respect to prior years	-	(78,178)
Impact of overseas tax rates	255,728	149,785
Release of deferred tax on share options	22,475	42,451
Total	139,748	532,418

The Filta Group's effective tax rate for the year ended 31 December 2020 was (16.1%) (2019: 57.3%). The effective rate is an amalgamation of mainly UK (19%), US (28%) and Canadian (27.6%) rates for the periods reported. The change from prior year has been particularly affected by the geographic mix of profits for the year and the inability to offset US and Canadian pre-tax profits with UK losses.

The Filta Group has tax losses of approximately £1,462,379 (2019: £749,447) to carry forward against future profits. The UK tax losses have no expiry date and a deferred tax asset of £277,852 (2019: £110,731) has been recognised in respect of them.

There are no other available tax losses in the Group.

11. DEFERRED TAX ASSETS / LIABILITIES

The movement in the Group's deferred tax asset during the year is as follows:
	2020	2019
	£	£
At start of year	678,497	754,728
Movement for the year	137,166	(59,183)
Foreign exchange differences	(19,249)	(17,048)
At end of year	796,414	678,497

The deferred tax balances relate to temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial information as summarised below.

	2020	2019
	£	£
Tax losses	277,852	110,731
Deferred revenue	518,562	545,291
Other	-	22,475
At end of year	796,414	678,497

The movement in the Group's deferred tax liability during the year is as follows:

		2020		2019
		£		£
At start of year		1,159,121		1,291,31
Credit for the year	(131,623)		(132,197)
At end of year	1,027,498		1,159,121

12. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the company by the weighted average number of shares in issue during the year.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares to take account of all dilutive potential ordinary shares and adjusting the profit attributable, if applicable, to account for any tax consequences that might arise from conversion of those shares.

	2020			2019
Earnings attributable to equity holders of the company	(1,005,979)			403,866

Weighted average number of shares	29,097,146			29,041,697
Effect of dilutive share options and awards	-			104,870
Weighted average number of shares for dilutive earnings	29,097,146			29,146,567
Earnings per share
Basic		(3.46)	1.39
Diluted		(3.46)	1.39

13. INVESTMENT IN SUBSIDIARIES

The subsidiaries of Filta Group Holdings plc are as follows:

		2020	2019
Company	Class	ownership interest	ownership interest	Nature of business
The Filta Group Limited	Ordinary	100%	100%	Environmental Services
The Filta Group Incorporated	Ordinary	100%	100%	Environmental Services
Filta Refrigeration Limited	Ordinary	100%	100%	Discontinued
FiltaFry Limited	Ordinary	100%	100%	Dormant
Bio Depot Limited	Ordinary	100%	100%	Dormant
FitaSeal Limited	Ordinary	100%	100%	Dormant
Filta Environmental Canada, Limited	Ordinary	100%	100%	Environmental Services
Filta Europe B.V.	Ordinary	100%	100%	Environmental Services
FiltaFry Deutschland GmbH	Ordinary	100%	100%	Environmental Services
Watbio Holdings Limited	Ordinary	100%	100%	Environmental Services
Watbio Limited	Ordinary	100%	100%	Environmental Services
Watling Hope Installations Limited	Ordinary	100%	100%	Environmental Services
Environmental Biotech Limited	Ordinary	100%	100%	Environmental Services
M&M Asset Maintenance	Ordinary	100%	100%	Environmental Services

The registered office of all subsidiaries is The Locks, Hillmorton, Rugby, Warwickshire, CV21 4PP, apart from the following:

Company	Registered Office address
The Filta Group Incorporated	7075 Kingspointe Parkway, Suite 1, Orlando, Florida 32819 United States
Filta Environmental Canada Limited	27^th floor, P.O. Box 49123, 595 Burrard Street, Vancouver, British Columbia, V7X 1J2 Canada
Filta Europe B.V.	Debbeshoek 14B, 7071XK Ulft, Netherlands
FiltaFry Deutschland GmbH	Pliniusstraße 8, 48488 Emsbüren, Germany
14. DIVIDENDS
		2020	2019
		£	£
Distributions to equity holders in the year:
Final dividend for the year ended 31 December 2019 of Nil (2018:0.92p per share)		-	267,286
Interim dividend for the year ended 31 December 2020 of Nil (2019: 1.00p per share)		-	290,829
		-	558,115
The Board has not recommended a final dividend for the year ended 31 December 2020		-	-

15. INTANGIBLE ASSETS


		Computer Software	Goodwill	Customer Relationships		Customer Contracts		Supply Contract			Total
		£	£	£		£		£			£
Cost
Balance at 1 January 2020		719,320	1,639,523	3,963,737		2,489,489		724,481			9,536,550
Additions		194,985	-	-		-		-			194,985
Foreign exchange		(21,917)	-	-		-		-			(21,917)
Balance at 31 December 2020		892,388	1,639,523	3,963,737		2,489,489		724,481			9,709,618

Amortisation and impairment
Balance at 1 January 2020		507,804	-	525,348		300,623		48,298			1,382,073
Amortisation		124,392	-	430,995		263,584		48,298			867,269
Foreign exchange		(20,857)	-	-		5,250					(15,607)
Balance at 31 December 2020		611,339	-	956,343		569,457		96,596			2,233,735

Net book value at 31 December 2020		281,049	1,639,523	3,007,394		1,920,032		627,885	7,475,883


	Computer Software		Goodwill		Customer Relationships		Customer Contracts	Supply Contract				Total
	£		£		£		£	£				£
Cost
Balance at 1 January 2019	542,782		1,639,523		3,963,737	2,489,489		724,481				9.360.012
Additions	194,245		-		-	-		-				194.245
Foreign exchange	(17,707)		-		-	-		-				(17,707)
Balance at 31 December 2019	719,320		1,639,523		3,963,737	2,489,489		724,481				9,536,550

Amortisation and impairment
Balance at 1 January 2019	398,963		-		94,353	40,741		-			534,057
Amortisation	115,687		-		430,995	263,012		48,298			857,992
Foreign exchange	(6,846)		-		-	(3,130)					(9,976)
Balance at 31 December 2019	507,804		-		525,348	300,623		48,298			1,382,073

Net book value at 31 December 2019	211,516		1,639,523		3,438,389	2,188,866		676,183		8,154,477

Intangible assets are valued separately for each acquisition and the primary method of valuation used is the discounted cash flow method. The majority of acquired intangibles are amortised using an amortisation profile based on the projected cash flows underlying the acquisition date valuation of the intangible asset. The Group keeps the expected pattern of consumption under review.

Impairment tests for goodwill and intangibles

The Group is obliged to test goodwill and other intangibles with indefinite useful lives for impairment, at least annually, or at any time if there are indications that these assets might be impaired.

In order to perform this test, management is required to compare the carrying value of the relevant cash generating unit ('CGU') including the goodwill with its recoverable amount. The CGU's to which the goodwill has been attributed and their carrying value are summarised below.

	2020 £	2019 £
Franchise development	90,946	90,946
Equipment sales & installation	369,297	369,297
Site service	1,179,280	1,179,280
Total	1,639,523	1,639,523

The recoverable amount of a CGU is primarily determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on annual financial budgets which are approved by the Board and the same as used in the Group's going concern assessment. Income and costs within

the budget are derived on a detailed, 'bottom up' basis - all income streams and cost lines are considered and appropriate growth, or decline, rates are assumed for each, all of which are then reviewed, challenged and stress tested, firstly by senior management and ultimately by the Board.

Income and cost growth forecasts are risk adjusted to reflect specific risks facing each CGU and take into account the markets in which they operate. Cash flows beyond the three year budgeted period are extrapolated using an estimated 3% growth rate into perpetuity. The growth rate does not exceed the long-term average growth rate for the markets in which the CGU's operate. Further, other than as included in the financial budgets, it is assumed that there are no material adverse changes in legislation that would affect the forecast cash flows.

The pre-tax discount rate used within the recoverable amount calculations was 10.18% (2019: 8.11%) and is based upon the weighted average cost of capital reflecting specific principal risks and uncertainties. The discount rate takes into account, amongst other things, the risk free rate of return, the market risk premium and beta factor reflecting the average Beta for the Group. The same discount rate has been used for each CGU as the principal risks and uncertainties associated with the Group, as highlighted on pages 20 to 23, would also impact each CGU in a similar manner. The Board acknowledge that there are additional factors that could impact the risk profile of each CGU. These additional factors were considered by way of sensitivity analysis performed as part of the annual

impairment tests. The level of impairment recognised is predominantly dependent upon judgments used in arriving at future growth rates and the discount rate applied to cash flow projections. Key drivers to future growth rates are dependent on the Group's ability to maintain and grow income streams whilst effectively managing operating costs. The level of headroom may change if different growth rate assumptions or a different pre-tax discount rate were used in the cash flow projections. Where the value-in-use calculations suggest an impairment, the Board would consider alternative use values prior to realising any impairment, being the fair value less costs to dispose.

A sensitivity analysis has been performed and the Board have concluded that no reasonably foreseeable change in the key assumptions would result in an impairment of the goodwill. In particular, a 5% increase in the discount rate or a 5% decrease in the terminal value growth rate would not result in impairment.

16. PROPERTY, PLANT AND EQUIPMENT

Details of the Group's property, plant and equipment and their carrying amounts are as follows:

				Fixture and			Plant and
			Fittings				Machinery	Motor	Total
	Freehold Property				& Equipment			Vehicles
	£				£		£	£	£
Cost
At 1 January 2020	1,567,860				161,327		436,294	168,835	2,334,316
Additions	7,060				36,660		50,724	5,722	100,166
Disposals	-				(988)		(3,300)	(52,305)	(56,593)
Foreign exchange	(49,715)				2,343		(2,443)	(1,370)	(51,185)

At 31 December 2020	1,525,205				199,342		481,275	120,882	2,326,704

Depreciation
At 1 January 2020	711,396				76,537		155,133	55,140	998,206
Depreciation charge	40,178				40,428		68,595	23,359	172,560
Disposals	-				(546)		(3,300)	(51,130)	(54,976)
Foreign exchange	(29,538)				(8,058)		(2,512)	(634)	(40,742)

At 31 December 2020	722,036				108,361		217,916	26,735	1,075,048

Net Book Values
At 31 December 2020	803,169				90,981		263,359	94,147	1,251,656
Cost
At 1 January 2019		1,618,452				179,986	299,723	477,947	2,576,108
IFRS 16 transition								(287,396)	(287,396)
Additions		1,674				49,137	233,490	3,950	288,251
Disposals		(10,640)				(64,989)	(94,999)	(24,351)	(194,979)
Foreign exchange		(41,626)				(2,807)	(1,920)	(1,315)	(47,668)
At 31 December 2019		1,567,860				161,327	436,294	168,835	2,334,316

Depreciation
At 1 January 2019		704,960				115,070	140,871	122,027	1,082,928
IFRS 16 transition		-				-	-	(77,068)	(77,068)
Depreciation charge		45,561				28,732	113,483	28,901	216,677
Disposals		(10,468)				(63,566)	(94,785)	(17,174)	(185,993)
Foreign exchange		(28,657)				(3,699)	(4,436)	(1,546)	(38,338)
At 31 December 2019		711,396				76,537	155,133	55,140	998,206

Net Book Values
At 31 December 2019		856,464				84,790	281,161	113,695	1,336,110

Certain of the property, plant and equipment listed above are held as security against bank facilities referred to in note 23.

17. RIGHT OF USE ASSETS


	Land and buildings	Plant and equipment	Motor vehicles	Total
Cost	£	£	£	£
At 1 January 2019	535,485	1,525	309,063	846,073
Additions	-	3,169	912,596	915,765
Disposals	(175,677)	-	(44,704)	(220,381)
At 31 December 2019	359,808	4,694	1,176,955	1,541,457
Additions	12,980	-	99,688	112,667
Disposals	(20,232)	-	(100,237)	(120,469)
Foreign exchange	2,177	(170)	237	2,245
At 31 December 2020	354,733	4,525	1,176,643	1,535,900
Depreciation
At 1 January 2019	-	-	-	-
Charge for the year	(125,714)	(75)	(196,473)	(322,262)
Disposals	38,329	-	11,994	50,323
Foreign exchange	-	-	961	961
At 31 December 2019	(87,384)	(75)	(183,519)	(270,978)
Charge for the year	(84,378)	(862)	(245,189)	(330,429)
Disposals	20,232	-	88,111	108,343
Foreign exchange	(594)	3	(519)	(1,111)
At 31 December 2020	(152,124)	(934)	(341,116)	(494,174)
Net book value
At 31 December 2020	202,608	3,591	835,527	1,041,726
At 31 December 2019	272,423	4,620	993,436	1,270,479
At 1 January 2019	535,485	1,525	309,063	846,073

			2020	2019
			£	£
Depreciation expense on right of use assets			330,429	322,262
Interest expense on lease liabilities			50,412	43,655

18. TRADE AND OTHER RECEIVABLES

Trade and other receivables consist of the following:


Total	2020	2019
	£	£
Trade receivables, gross	2,248,013	3,591,379
Impairment allowance	(208,278)	(83,262)
Trade receivables, net	2,039,735	3,508,117

Prepayments and other receivables	258,937	402,206
Franchise payment plans, net	291,280	566,220
	2,589,952	4,476,543
Current	2020	2019
	£	£
Trade receivables	1,962,842	3,508,117
Prepayments and other receivables	258,937	402,206
Franchise payment plans, net	103,899	154,488
	2,325,678	4,064,811

Non-current	2020	2019
	£	£
Trade receivables	76,893	-
Franchise payment plans, net	187,381	411,732
	264,274	411,732

Trade and other receivables include amounts that the Filta Group has agreed may be settled over extended repayment terms. The amount due from related parties in the parent company of £3.2m consist of £1.5m of loans to subsidiaries to fund debt repayment and acquisitions and is repayable after more than twelve months while the balance of £1.7m is for normal working capital requirements. The loans to subsidiaries bear interest at commercial rates. All amounts are eliminated on the Group Consolidated Statement of Financial Position.

The Group applies a simplified approach to measure the loss allowance for trade receivables classified at amortised cost, using the lifetime expected loss provision. The expected credit loss on trade receivables is estimated using a provision matrix by reference to past default experience and credit rating, adjusted as appropriate for current observable data. The following table details the risk profile of trade receivables based on the Group's provision matrix.

		Trade receivables - days past due
31 December 2020	Not past due	< 30	31 - 60	60 - 90	> 90	Total
Gross carrying amount	328,141	565,174	386,660	149,822	724,428	2,154,225
Weighted average expected credit loss rate	1.1%	1.4%	2.4%	9.4%	24.0%	9.7%
Expected credit loss	3,610	7,630	9,154	14,111	173,773	208,278
		Trade receivables - days past due
31 December 2019	Not past due	< 30	31 - 60	60 - 90	> 90	Total
Gross carrying amount	2,115,940	534,788	273,355	140,802	526,494	3,591,379
Weighted average expected credit loss rate	0.8%	1.8%	4.2%	6.1%	6.8%	2.3%
Expected credit loss	17,826	9,698	11,421	8,624	35,693	83,262

Movement in the expected credit loss:

	2020	2019
	£	£
At beginning of year	83,262	184,022
Impairment loss recognised	135,290	(18,353)
Utilised	(10,274)	(84,407)
At end of year	208,278	83,262

19. CONTRACT ACQUISITION COSTS

The Group capitalises incremental costs to obtain contracts with customers where it is expected these costs will be recoverable. Incremental costs to obtain contracts with customers are considered those which would not have been incurred if the contract had not been obtained. For the Group, these costs relate primarily to third party broker fees. The Group has elected to use the practical expedient as allowable by IFRS 15 whereby such costs will be expensed as incurred where the expected amortisation period is one year or less. Where the amortisation period is greater than one year, these costs are amortised over the contract term on a systematic basis consistent with the transfer of the underlying goods and services within the contract to which these costs relate, which will generally be on a rateable basis. Expense recognised in 2020 was £86,256 (2019: £76,845) whilst

Impairment of capitalised contract costs was £nil in 2020 (2019: £nil).

The amount of capitalised contract cost expected to be recovered after more than one year is £0.4m (2019: £0.4m).

20. INVENTORIES

	2020	2019
	£	£
Finished goods	1,604,451	1,759,955
Total	1,604,451	1,759,955

Inventories primarily consists of filtration machines, filters, grease recovery units and parts and are stated at the lower of cost (on a first-in, first-out basis) and net realisable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realisable value. There are no material stock provisions at either period end. No material amounts have been written-off in either year ended 31 December 2020 or 31 December 2019 within the income statement of the Company. £2.9m of inventories were recognised as an expense within the year (2019: £4.1m).

21. CASH AND CASH EQUIVALENTS

Group	2020	2019
	£	£

Cash at bank and in hand	4,208,498	2,891,014

Company
Cash at bank and in hand	51,856	109,089

22. TRADE AND OTHER PAYABLES

	2020	2019
Group	£	£

Trade payables	1,294,512	2,555,860
Taxes and social security	531,763	194,199
Accruals and other payables	463,614	510,826
	2,289,889	3,260,885

Company

Trade payables	16,933	39,272
Taxes and social security	4,552	4,744
Accruals and other payables	-	-
	21,485	44,016

Analysis of trade and other payables

These are classified as short term and are expected to be settled within 12 months.

23. LOANS AND OTHER BORROWINGS

Group	2020	2019
	£	£
Total
Bank loans	4,674,378	3,722,617
Related party loans	49,637	46,942
	4,724,015	3,769,559

Current
Bank loans	1,076,927	792,672
	1,076,927	792,672

Non-current
Bank loans	3,597,451	2,929,945
Related party loans	49,637	46,942
	3,647,088	2,976,887

Company	2020	2019
	£	£
Total
Bank loans	3,328,289	3,532,590
	3,328,289	3,532,590

Non-current

Bank loans

2,385,526

2,746,541

2,385,526

2,746,541

The bank loans are comprised of a £4,000,000 term loan (£2,828,289 net of debt issuance costs), which carries a variable interest rate of Libor plus 3% and is repayable in equal instalments of £246,154 per quarter, a $905,785 US Dollar denominated mortgage loan (£646,089), which carries an interest rate of 4.5% and matures in 2024 and a £1,200,000 Coronavirus Business Interruption Loan which carries a variable interest rate of 3.99% over the Bank of England base rate and is repayable in equal instalments of £20,000 per month.

24. LEASE LIABILITIES

Details of the Group' Lease Liabilities are as follows:

Group	2020	2019
	£	£
Total
Leases	1,089,599	1,215,421
	1,089,599	1,215,421

Current
Leases	319,480	332,974
	319,480	332,974

Non-current
Leases	770,119	882,447
	770,119	882,447

25. CONTINGENT CONSIDERATION

As part of the business combinations completed by the Group in 2018 certain contingent consideration formed the basis of the total consideration reported.

Filtafry Deutschland GmbH

On 6 February 2020, pursuant to a share purchase agreement between the Company and FiltaFry Deutschland GmbH, 12,809 shares of 10 pence each were issued to Chesskin Beheer B.V. at a price of 165.2 pence each, giving rise to a share premium of £19,881.

On 6 February 2019, pursuant to a share purchase agreement between the Company and FiltaFry Deutschland GmbH, 9,225 shares, calculated based on an average share price of 236p and an exchange rate of 0.8694, were issued to the Seller.

Watbio Holdings Limited

Contingent consideration of £1,954,611 to be satisfied by the following:

Final EBITDA payment £1,440,455

Retention debt payment £ 264,156

Consideration shares £ 250,000

On 22 March 2019, 125,000 ordinary shares priced at 200p were issued to the sellers to satisfy the consideration shares due. On 28 March 2019, a payment of £1,440,455 was remitted to the Sellers to satisfy the final EBITDA payment consideration. On 30 June 2019, a payment of £125,314 was remitted to the Sellers and represented a full and final payment of the retention debt. The remaining amount of £138,942 was recognised in income in the period. This has been included in other income in the profit and loss accounts and has been deducted when calculating the adjusted EBITDA.

26. DEFERRED INCOME

Deferred income relates to certain performance obligations from franchise sales that are deferred over the life of the franchise agreement. The deferral period is 10 years in North America and 5 years in the UK and mainland Europe and revenue is recognised equally over the deferral period.

Movements in Deferred income are as follows:

	1 Jan 2020	New franchise agreements	Utilisation	Foreign exchange	31 Dec 2020
	£	£	£	£	£
Deferred income	3,030,239	467,775	(736,374)	(83,010)	2,678,630

Current					592,065
Non-current					2,086,565
Total					2,678,630

27. RECONCILIATION OF MOVEMENTS IN NET DEBT

	1 January 2020	Cash flows	Acquisition	Non-cash changes		31 December 2020
				Foreign exchange movements	Fair value changes
	£	£	£	£	£	£
Long term borrowings	3,769,559	(284,178)	1,200,000	38,634		4,724,015
Lease liabilities	1,215,421	(231,005)	100,952	4,231	-	1,089,599
Total	4,984,980	(515,183)	1,300,952	42,865	-	5,813,614


	1 January 2019	Cash flows	Acquisition	Non-cash changes		31 December 2019
				Foreign exchange movements	Fair value changes
	£	£	£	£	£	£
Long term borrowings	4,581,505	(832,434)	-	20,488		3,769,559
Lease liabilities	168,448	(32,588)	251,561	-	828,000	1,215,421
Total	4,749,953	(865,022)	251,561	20,488	828,000	4,984,980

28. SHARE CAPITAL

The share capital of Filta Group Holdings plc consists of fully paid ordinary shares with a nominal value of 10 pence. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote.

		2020		2019
	Number		£		Number £
Allotted and fully paid
Total shares in issue at 1 January	29,085,355		2,908,535		28,918,630	2,891,863
Issue of ordinary shares	12,809		1,281		134,225	13,422
Issued under share option scheme	-		-		32,500	3,250
Total shares in issue at 31 December	29,098,164		2,909,816		29,085,355		2,908,535

On 6 February 2019, pursuant to a share purchase agreement between the Company and FiltaFry Deutschland GmbH, 9,225 shares of 10 pence each were issued to Chesskin Beheer B.V. at a price of 238.5 pence each, giving rise to a share premium of £21,078.

On 22 March 2019, pursuant to a share purchase agreement between the Company and Watbio Holdings Limited, 125,000 shares of 10 pence each were issued to the sellers at a price of 200 pence, giving rise to a share premium of £237,500, to partially satisfy share consideration due as part of the total consideration paid for the business.

Between 3 June 2019 and 3 October 2019 certain employees exercised their rights under the Company's EMI Share Option Scheme and 32,500 shares of 10 pence each were issued to satisfy the exercise. These shares were priced at a range of 177 pence to 224 pence and gave rise to a share premium of £28,275.

29. OTHER RESERVES

Group	2020	2019
	£	£
Merger reserve	(339,687)	(339,687)
Share based payment reserve	573,118	367,102
	233,431	27,415
Company
Share based payment reserve	573,118	367,102
	573,118	367,102

Merger reserve

The Directors consider the substance of the acquisition of the Subsidiaries by Filta Group Holdings plc is that of a combination of entities under common control and therefore it fell outside the scope of IFRS 3 (revised 2008).

Share based payment reserve

The Company established the Filta Group Holdings Enterprise Management Incentive Scheme in 2017 to award U.K. employees with equity settled share options. The options were granted on 5 May 2017

and vest equally over a three-year period beginning on 5 May 2019. Subsequent options were granted on 16 October 2017, 11 January 2019, 15 May 2019, 18 November 2019 and 15 July 2020 all with similar vesting schedules to the original grants. The total charge recognised for share-based payments in respect of employee services received for the year ended 31 December 2020 was £85,067 (2019: £287,468).

30. FINANCIAL INSTRUMENTS

Risk Management objectives and policies

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Filta Group's competitiveness and flexibility. Further details regarding these policies are set out below.

Management reviews its monthly reports through which it assesses the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to meet their financial obligations as they arise while maximising the return to shareholders.

The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the Parent, comprising issued capital, reserves and retained earnings, and long and medium-term debt facilities. Term loans are used to finance long-term investment such as acquisitions. Overdrafts are used to manage short-term cash requirements and minimise interest costs. The Group's financing facilities contain the usual financial covenants including maximum leverage, minimum interest cover and minimum operating cash flow. The Group has been provided waivers from its bank through 30 June 2021.

The Group's dividend policy is to provide sustainable dividends to shareholders, consistent with the Group's earnings growth to attract long-term investors and to align shareholders returns on their investment in tandem with the Group's growth. The payment and amount of any dividends or distributions to shareholders is at the discretion of the Board, and subject to shareholder approval.

Market risk management

Management do not consider the company exposed to interest rate or inflation risks significant enough to have a material effect on the profitability of the company.

Foreign currency sensitivity

The Filta Group is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than Pounds Sterling. The currency giving rise to this risk is primarily the US Dollar. Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level.

A majority of the Filta Group's financial assets and liabilities are held in Dollars and movements in the exchange rate against Sterling has an impact on both the results for the year and equity. The Filta Group maintains a natural hedge whenever possible, by matching the cash inflows (revenue streams) and cash outflows in foreign currencies.

The following table demonstrates the sensitivity to a reasonably possible change in sterling against the US Dollar and Canadian Dollar with all other variables held constant.

	Change in rate	Effect on profit before tax £	Effect on equity £
USD	+10%	(161,369)	298,412
USD	-10%	197,228	(364,725)
CAD	+10%	(2,092)	12,492
CAD	-10%	13,390	(15,268)
EUR	+10%	13,446	(38,218)
EUR	-10%	(16,435)	46,710

Interest rate sensitivity

The interest rate sensitivity has been determined based on the exposure at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the reporting date was outstanding for the full year. All financial liabilities, other than financing liabilities, are interest free.

The following table analyses interest bearing loans, borrowings, and lease liabilities by fixed and floating mix.

	2020	2019
	£	£
Floating LIBOR	2,828,289	3,032,590
Floating Base	1,200,000	-
Fixed	1,785,325	1,952,390
Total	5,813,614	4,984,980

As the Group has no significant interest-bearing assets, the Group's income and operating cash flows are substantially independent of changes in market interest rates. The Group's interest rate risk arises from its borrowings, chiefly its floating GBP LIBOR term debt. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.

An increase or decrease of 100 basis points in each of the applicable rates would impact reported after-tax profit by £0.04m (2019: £0.03m) and equity by £0.04m (2019: £0.03m).

Credit risk management:

The Filta Group's exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The Filta Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial

assets (including cash and bank balances), the Filta Group minimises credit risk by dealing exclusively with high credit rating counterparties.

As the Filta Group does not hold any collateral, the maximum exposure to credit risk is represented by the carrying amount of the financial assets as at the end of each reporting period.

Liquidity risk management:

The Filta Group currently holds cash balances to provide funding for normal trading activity. The Filta Group also has access to both short-term and long-term borrowings to finance capital expenditure requirements. Trade and other payables are monitored as part of normal management routine.

Categories of financial instruments:

The table below sets out the Group's classification of each of its financial assets and liabilities at 31 December 2020 All amounts are stated at their carrying value.

	2020	2019
	£	£
Financial Assets At amortised cost:
Cash and cash equivalents	4,208,498	2,891,014
Trade and other receivables (excluding prepayments)	2,341,916	4,084,963
Deposits	11,398	5,272
	6,561,812	6,981,249
Financial Liabilities
Trade and other payables (excluding taxes)	1,758,127	3,066,685
Borrowings	4,724,015	3,769,559
	6,482,142	6,836,244

The table below summarises the maturity profile (representing undiscounted contractual cash flows) of the Group's financial liabilities:


At 31 December 2020	Less than 3 months	3 to 12 months	1 to 5 years	Over 5 years	Total
	£	£	£	£	£

Trade and other payables	1,708,679	20,288	29,160	-	1,758,127
Expected future interest payments	11,942	178,930	300,510	1,861	493,243
Borrowings	5,492	1,071,435	3,507,088	140,000	4,724,015
Total	1,726,113	1,270,653	3,836,758	141,861	6,975,385


At 31 December 2019	Less than 3 months	3 to 12 months	1 to 5 years	Over 5 years	Total
	£	£	£	£	£
Trade and other payables	3,019,615	16,817	30,253	-	3,066,685
Expected future interest payments	34,150	158,510	316,725	-	509,385
Borrowings	5,559	787,113	2,976,887	-	3,769,559
Total	3,059,324	962,440	3,323,864	-	7,345,628

31. RETIREMENT BENEFIT SCHEMES

Defined contribution scheme

Since October 2016, the Group has operated a defined contribution retirement benefit scheme for all eligible employees in its U.K. subsidiary. The assets of the scheme are held separately from those of the group in funds under the control of the trustee. The subsidiary is required to contribute 2% of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit scheme is to make the specified contributions.

The total cost charged to income of £76,528 (2019: £93,725) represents contributions payable to the scheme by the Group at specified rates. Any contributions unpaid at the balance sheet date are included as an accrual at that date. The Group has no further payment obligations once the contributions have been paid.

32. SHARE OPTION SCHEME

The Company maintains an EMI Share Option Scheme to incentivise executives and employees of Filta Group Holdings and its subsidiaries. For U.K. employees, Options have been awarded over a total of 2,285,000 ordinary shares, equivalent to 7.9% of the Company's current issued share capital. The options vest, subject to the satisfaction of certain conditions, over a period of 4 years from the date of grant. All options issued, which have not previously vested, will meet the vesting conditions between 2021 and 2024 and are exercisable at any time after vesting and within 10 years from the grant date.

Additionally, all qualifying U.S. employees have been awarded share acquisition rights (SARs). The SARs are conditional bonuses whose value will be calculated by reference to the amount by which the price of the Company's ordinary shares has risen above the base price at the date of exercise, thus providing holders of SARs the same reward value as if the SARs were share options. The qualifying conditions and timing of vesting are identical to those within the share option scheme for UK employees. All SARs are settled in cash when exercised. A total of 800,000 SARs have been awarded.

In the ordinary course of business, an option will normally only be exercisable to the extent it has fully vested, and any applicable non-market performance conditions have been satisfied or waived. Options shall lapse to the extent unexercised on the tenth anniversary of the date of grant or such earlier date as specified by the Board at the date of grant.

As at 31 December 2020, a total of 1,690,000 (2019: 1,690,000) were outstanding, having a range of exercise prices from 0.97p to 2.30p (2019: 0.97p to 2.30p) and a weighted average exercise price of 1.60p (2019:1.76p). These outstanding awards have a weighted average contractual life of 8.13 years (2019: 8.59 years).

Certain of the share options and share acquisition rights contain performance conditions which must be met in order to vest. The performance condition for each holder, relate to targets for annual EBITDA growth.

Movement in the number of share options outstanding during the year, including grant dates and grant price were as follows:

	Share Options	Share acquisition rights	Total
Outstanding at 1 January 2020	1,175,000	515,000	1,690,000
Granted on 15 July 2020 (0.970p)	300,000	132,500	432,500
Total granted during the year	300,000	132,500	432,500
Exercised during the year	-	-	-
Total exercised during the year	-	-	-
Forfeited during the year (0.970p)	(15,000)	(20,000)	(35,000)
Forfeited during the year (1.74p)	-	-	-
Forfeited during the year (2.15p)	(195,000)	(22,500)	(217,500)
Forfeited during the year (2.30p)	(15,000)	-	(15,000)
Forfeited during the year (1.46p)	(120,000)	(15,000)	(135,000)
Forfeited during the year (0.965p)	(22,500)	(7,500)	(30,000)
Total forfeited during the year	(367,500)	(65,000)	(432,500)
Total Outstanding at 31 December 2020	1,107,500	582,500	1,690,000
Exercisable at 31 December 2020	67,500	115,000	182,500

During the year, the Company recognised total expense of £85,067 (2019: £283,215) related to the fair value of the share-based payment arrangements. This included £206,016 (2019: £303,360) related to equity-settled share options and (£120,949) (2019: (£20,145) from cash-settled SARs. The SARs liability at 31 December 2020 was £187,347 (2019: £284,117). The Group's share price at 31 December 2020 is lower than grant price on the outstanding options issued and, as a result, there is no deferred tax asset recongnised.

These amounts were determined using the Black Scholes model, with the following assumptions for each type of award granted:

Stock Options
Weighted average fair value	86.01p
Weighted average exercise price	164.7p
Expected life of option (years)	8.3
Risk free rate	1.75%
Dividend yield	0.0%
Volatility	51.9%
Share Appreciation Rights
Weighted average fair value	52.54p
Weighted average exercise price	149.5p
Expected life of option (years)	7.8
Risk free rate	1.56%
Dividend yield	0.0%
Volatility	54.2%

33. RELATED PARTY TRANSACTIONS

Remuneration of Directors and other transactions

The remuneration, interests and related party transactions with the directors of Filta Group Holdings plc and its subsidiaries (the "Directors") who are considered to be the key management personnel of the entity, are disclosed in Note 8. There are no other transactions with directors.

Notes payable to related party

On 31 January 2018, Filtafry Deutschland GmbH entered into notes totaling £48,201, bearing interest at 2.5%, with companies which held the master licenses acquired in the acquisition. The managing director of FiltaFry Deutschland GmbH is the sole director of one of these companies. The notes mature on 31 January 2023 and include the right to repay early without penalty. These amounts are classified within borrowings.

Interest accrued on the notes amounted to £1,241 at 31 December 2020 (2019: £1,071).

34. EVENTS AFTER THE REPORTING DATE

On 4 February 2021, following application through our incumbent bank HSBC, we received a second PPP loan through the U.S. Small Business Administration in the amount of $288,605. The loan is

intended to be used to cover payroll costs and other eligible expenses for a period of up to 24 weeks from receipt of the loan proceeds. There is a stipulation in the loan agreement allowing the borrower to apply for loan forgiveness on a prorated basis up to 100% of the loan value. The borrower must show that at least 60% of the loan was used to retain and compensate employees and that the average full time equivalent employee count was not reduced over a prescribed period. We anticipate that we will be making a request for full forgiveness of the loan, however, at this time it is too early to determine the amount and outcome of that request. The loan term, for any residual value of the loan not forgiven, is 5 years and begins 12 months from receipt of the loan at an interest rate of 1%.

Adjusted EBITDA has been arrived at as follows:
	2020	2019
	£	£
Profit before tax	(866,231)	936,284
Acquisition, legal and restructuring costs	187,465	296,410
Share-based payments	85,067	261,631
Depreciation and amortisation	1,370,258	1,396,932
Finance costs, net	277,010	271,314
Adjusted EBITDA	1,053,569	3,162,571

Bank loans