Filta becomes unlikely AIM star

As AIM success stories go, they don’t come much more random than Filta (FLTA) and its rapidly-expanding business helping restaurant kitchens to deal with the used cooking oil in their deep fat fryers.

Having launched in 1996 and then listed on the London stock market in November 2016, the company is now racking up annual revenues of £13.5 million and profits of £1.7 million from its franchise-based model.

Filta’s cooking oil filtration and fryer management services are taken by 6,000 sites every week, with a regular visit from a FiltaFry operator said to double the life of cooking oil.

The company thinks it has now recycled over 250 million litres of oil, meaning cleaner, safer kitchens, less downtime for staff and better quality oil for cooking.

Source: interactive investor        Past performance is not a guide to future performance

Filta, which has over 180 franchise owners, has particularly benefited from its decision in 2003 to target the US market, where there’s clearly a huge demand for the maintenance of deep fat fryers.

With majority shareholder and chief executive Jason Sayers based in Florida, the North American operation is now the company’s biggest.

Shares have risen 142% since the IPO in November 2016, with today’s brief AGM update sufficient to trigger a 4% rise. Even though revenues have been impacted by the weaker US dollar, Filta said underlying earnings at the start of the new financial year were still 11% ahead of last year and 23% stronger at constant exchange rates.

The company added: “We currently have a good pipeline of enquiries from high-quality aspiring franchisees in both North America and Europe, and the board therefore has confidence in the prospects for the current year as well as the outlook for subsequent periods.”

After the company’s recent annual results in April, broker Cenkos Securities wrote that management had more than delivered for shareholders.

They said: “The strategy of focusing on growing existing franchisees’ businesses and expanding geographically (Canada and continental Europe being the new additions), provides a structural platform from which the business can continue to grow.”

Filta announced a total dividend for the year of 1.3p, which Cenkos thinks will rise to 2.1p this year and 2.8p the year after. The projected 2019 dividend yield is 1.5%.

The broker’s buy recommendation in April was based on the company’s “compounding and cash generative” business.

Over the years, other products and services have been developed for the same customer base. The company also replaces damaged or perished refrigerator and freezer door seals through its FiltaSeal brand and prevents the build-up of fats, oil and grease through its FiltaGMG brand.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation, and is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company’s or index name highlighted in the article.