Wild swings in company profits and losses seldom please investors but deep fryer cleaning firm Filta (FLTA:AIM) has bucked the trend. Its first results since floating on the junior market show a pre-tax loss of £218,244, although underlying operating profit came in at £1.15m. That's after stripping out one-off £0.58m AIM admission costs plus £0.68m of special shareholder/director bonuses, which presumably will not recur in future.
Ultimately, investors appear to be looking beyond short-term performance to concentrate on what could be a niche growth segment. The share price rose 2.5% to 124p, versus a 4 November 2016 IPO price of 83p.
Filta provides filtration and other services for kitchen operators. Its core activity, fryer management, saw revenues jump 38% to £6.2m. The firm’s other, smaller divisions, Filta-Seal and Filta-Refigeration, saw sales increase 14% and 30% respectively, to a little more than £1m and £1.6m.
As a franchise business, its franchise owners are up to 182 from 2015’s 167. Chairman Tim Worlledge says that this will enhance royalties in the current and future years. He adds that the business has already secured a further six new franchises this year suggesting it is well positioned for growth.
Its Filta-Fry business in Orlando, Florida has a contract with Starwood Hotel Brands, including names such as The Sheraton and Westing. The business extends the life of cooking oil by removing impurities. Despite the complaints from some franchise owners over the price of the license, the firm claims that extending the life of cooking oil is cheaper than the cost of its service.
Filta’s US presence is surely a bonus given the vast market there for snack food outlets. Hammering the point home, Filta's president Jason Sayers says, ‘fried food isn’t going anywhere anytime soon. Fryer’s are an essential part of almost any commercial kitchen’.
The company is ambitious, it has a truly international presence, being in 11 countries from the Benelux region to Lebanon. It is also seeking franchisees in countries ranging from Qatar to Norway, it has 26 target country markets.
Even if it only meets a fraction of those countries, being a niche company with £4.4m in cash to spend, it looks like stock with great potential.