My Shares

FW THORPE: FY 2024 Declares 22nd Consecutive Annual Dividend Increase After ‘Impressive’ Stock Procurement Improves Gross Margin To 49% While Subdued Outlook And Modest LTIP Targets Leave P/E At Lowest For 10 Years

18 February 2025
By Maynard Paton

FY 2024 results summary for FW Thorpe (TFW):

  • A 1% revenue decline was countered by a 9% profit advance, with H2 profit improving a remarkable 17% to help raise the ordinary dividend 5% and extend the run of annual payout advances to 22 years.
  • TFW’s gross margin improving to 49% through “impressive” stock procurement led to some welcome operating margins, including 20% for Thorlux, 23% for Lightronics/Famostar and 19% for Zemper’s H2, although profitability at the group’s Other subsidiaries remains poor.
  • Very satisfactory cash flow supported cash finishing £18m higher at £53m, which triggered the third special dividend in four years and almost certainly enhances the likelihood of further acquisition activity.  
  • The slimmed-down board with its M&A expertise may wish to consider the success of acquisition specialist Halma, which assesses its ‘capital allocation’ through return on total invested capital and includes the KPI as an LTIP measure.
  • The 15x P/E is the lowest rating for ten years, and seems more influenced by TFW’s subdued near-term prospects and modest LTIP targets rather than the group’s distinguished operating history and longer-term demand for energy-saving lighting. I continue to hold.

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CITY OF LONDON INVESTMENT: Subdued FY 2024 Admits $320m FuM Outflow, 5-7% Client CAGRs And KPI Failure To Reinforce ‘Value Trap’ Credentials With Barely Covered Dividend Yielding 9%

29 January 2025
By Maynard Paton

FY 2024 results summary for City of London Investment (CLIG):

  • Another very subdued performance, showing revenue up 1%, profit down 1% and the annual dividend unchanged for the third consecutive FY after client withdrawals of $320m left average funds under management (FuM) just 3% higher.
  • “Constructive meetings” continue with 31.5% shareholder George Karpus, who now carries “high hopes and high expectations” for CLIG — despite the group failing to achieve its sole KPI after client-fee rates dropped 3bps while salaries climbed an average 6%.
  • Long-term client CAGRs of just 5-7% may reflect the inherent limitations of CLIG “exploiting the discount volatility” of UK investment trusts, and raises awkward comparisons to cash/bonds, the S&P 500 and sector activist Saba Capital.
  • While new clients remain elusive, plans to reduce expenses by $2.5m — albeit mostly through non-staff costs — alongside a stronger USD should help sustain this FY’s barely covered GBP dividend.
  • The subsequent H1 2025 witnessing further client withdrawals of $564m reinforces CLIG’s ‘value trap’ credentials, underlined by a share price that is back to 2007 levels and currently paying a 9% yield. I continue to hold.

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My Portfolio: Year In Review 2024

03 January 2025
By Maynard Paton

Happy New Year!

I trust you enjoyed the festive break and are now ready to battle the market for another twelve months!

This post provides a ‘year in review’ of my current holdings. I recap how each business performed during 2024 as well as provide a few remarks about their attractions, drawbacks and valuations.

These reviews are very useful to write, not least because they help ensure I am still invested for the right reasons. I also hope the reviews help me avoid disappointing returns during the year ahead! I undertook the same review process at the start of 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023 and 2024.

My portfolio gained 22.4% during 2024 and this other post explains that performance in more detail.

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TRISTEL: Record FY 2024 Discloses Impressive 32% UK Growth As Sudden US ‘Purchasing Bureaucracy’ Explains Leadership Change, Boilerplate LTIP Seeks Only 5.5% EPS CAGR And P/E Drops To Lowest Since 2018

23 December 2024
By Maynard Paton

FY 2024 results summary for Tristel (TSTL):

  • A record FY, showcasing revenue up 16%, profit up 32% and the dividend up 29%, with impressive 32% UK growth based upon 9% greater volumes and 23% higher pricing through a new NHS agreement.
  • The retirement of the previous chief executive now makes sense after “purchasing bureaucracy” suddenly beset North American progress, which left TSTL alarmingly “a year behind” schedule after US partner Parker Laboratories proved ineffective with sales.
  • The new chief executive has still to publish his financial targets, although the board has already re-committed to 5%-plus annual dividend growth while a new ‘boilerplate’ LTIP depressingly seeks only a 5.5% adjusted EPS CAGR to vest.  
  • The high-margin, cash-rich, low-tax accounts generally remain in good shape, but are let down by regular restatements alongside stagnant employee productivity that may be due to a 25% margin target limiting additional investment.
  • The trailing 25x PE is the lowest since 2018 and could be justified by further meaningful growth within established markets, the prospect one day of lucrative US royalties, the ongoing ability to raise prices and the possibility of bumper surface-disinfection sales. I continue to hold.

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SYSTEM1: New ‘Performance Culture’ Delivers FY 2024 Platform Revenue Up 43%, Record £208k Employee Productivity And Tantalising Illustrative £18m Ebitda Projection Supporting Possible £16 Share Price

30 November 2024
By Maynard Paton

FY 2024 results summary for System1 (SYS1):

  • The positive transition to data services continues, with a new “performance culture” delivering FY platform revenue up 43%, the highest reported FY profit for seven years and a reinstated annual dividend.
  • SYS1’s “unique selling proposition of predictiveness” keeps winning ad-testing clients, plaudits and attention, but remains frustratingly under-exploited for innovation testing that offers a 5x addressable market.
  • The bumper 87% gross margin, record £208k revenue per employee and near-£10m cash position were counterbalanced by one-off profit gains, mediocre bank interest and hefty bonuses obscuring margin progress.
  • The board’s true growth ambitions will be revealed through a revised LTIP, and I would trust the award-winning directors to retain the scheme’s £45m-£88m revenue range and reinstate a profit ‘underpin’.
  • A tantalising illustrative projection of revenue doubling to £60m should be very achievable given SYS1’s “3 Reasons to Believe“, and would support an adjusted Ebitda of £18m — and possible £16 share price — if the group’s margin target is met.

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MOUNTVIEW ESTATES: £90 Shares Trade 12% Below NAV — Steepest Discount For More Than 10 Years — After FY 2024 Admits Third Consecutive Sub-60% Gross Margin And Re-Emphasises Subpar Gains From Post-2014 Purchases

02 November 2024
By Maynard Paton

FY 2024 results summary for Mountview Estates (MTVW):

  • A reasonable FY performance, which showed revenue up 8%, profit up 22% and the final dividend up 10% after buyers looking for “improvement potential” paid “good prices” for a more normal “profile” of properties.
  • Sales by larger landlords allowed MTVW to spend a substantial £48m on new properties, but the advance to net asset value (NAV) was just 2% after MTVW took on greater debt, paid 6%-plus interest, incurred higher tax and sold properties for £59m.
  • The absence of another formal estate valuation remains frustrating, especially given properties purchased after a 2014 valuation continue to realise subpar ‘reversionary’ gains and the overall property-sales gross margin was less than 60% for the third consecutive year.
  • The board continues to be well paid, attract 30%-plus protest votes and enjoy entrenched support through a family concert party… although not every family member seems a die-hard shareholder and recent AGM remarks even hinted MTVW could one day undertake a trade sale.
  • The £90 shares offer a 5.8% income, trade 12% below NAV — the steepest discount for at least ten years — and may be worth £182 if the group’s properties were all sold today at their vacant possession value. I continue to hold.

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BIOVENTIX: Record H1 2024 Reveals Profit Up 15% Despite Slowing Troponin Growth As Encouraging Alzheimer’s Work Attracts ‘Significant Attention’ And Research-Test Availability Through Quanterix

22 October 2024
By Maynard Paton

H1 2024 results summary for Bioventix (BVXP):

  • A record H1, showing revenue up 13%, profit up 15% and the dividend up 10% as greater sales to China helped offset a “temporary” slowing of troponin growth.
  • Positive long-term progress continues to rest upon Alzheimer’s R&D, in which a study involving pTau212 suggests BVXP may enjoy a research edge beyond an increasingly crowded pTau217 field.
  • BVXP’s Alzheimer’s work on ‘brain-derived tau’ has attracted “significant attention” for helping identify significant, near-term “cognitive decline”, and is now available through Quanterix for wider research purposes.
  • The economics of successful antibodies remain superb, with this H1 displaying a terrific 77% operating margin, net cash equivalent to a hefty 40% of revenue and capex of just £5k.
  • The £37 shares yield a trailing 4.3%, trade at a possible 22x P/E and might — using some very basic assumptions — value the R&D pipeline at £23m. I continue to hold.

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TRISTEL: New Chief Exec’s Financial Targets Keenly Awaited After Record H1 2024 Announces 30% UK Growth, 100% Dividend Jump, Bumper 84% Gross Margin And ‘$100m Opportunity’ In North America

01 October 2024
By Maynard Paton

H1 2024 results summary for Tristel (TSTL):

  • A record H1, displaying revenue up 20%, profit up 28% and the dividend up 100% underpinned by remarkable 30% UK growth and notable price increases accepted by the NHS.
  • North America is now deemed a “$100m per annum opportunity” for TSTL’s initial FDA-approved foam, although competition now involves an FDA-approved UV-light machine that may strengthen the wider argument for automated disinfections. 
  • The new chief exec ticks a lot of boxes for marketing healthcare products in the US, but his stint at LiDCO was unspectacular and shareholders keenly await his strategic ambitions, financial targets and details of his LTIP package.
  • Although employee productivity has flat-lined, the financials remain in good shape with a bumper 84% gross margin and net cash approaching £12m that could lead to another special dividend.
  • A near-term 32x P/E is not an obvious bargain, but a premium rating could be justified by further meaningful growth within established markets, the prospect of lucrative US royalties, the ongoing ability to raise prices and the possibility of successful R&D. I continue to hold.

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S & U: FY 2024 Confirms 41% H2 Profit Slump And 17% Final-Dividend Cut After Enhanced ‘Forbearance’ Regulations Prompt 74% Impairment Surge And Collections To Slide To A Pandemic-Like 69% 

19 September 2024
By Maynard Paton

FY 2024 results summary for S & U (SUS):

  • A very disappointing FY, with H2 profit slumping 41% and the final dividend cut by 17% as enhanced FCA “forbearance” regulations prompted the “temporary” modification of motor-finance collections and led to impairments surging 74%.
  • Various motor-finance ratios unsurprisingly deteriorated, including the first-payment proportion plunging to an alarming 94%, collections of due falling to a below-budget 90%, anticipated repayments hitting a fresh 127% low and up-to-date accounts sliding to 74%. 
  • At least the property-loan subsidiary continues to perform well, as minimal bad loans led to a new £5m profit high, an impressive 58% divisional return on equity and a company-blog ambition to double cumulative lending to £1 billion “in the next couple of years“.
  • Debt advancing to £224m and borrowing rates climbing to 8% caused net finance costs to absorb a significant 13% of revenue; extra post-FY debt could meanwhile take net finance costs from £15m to £19m and exacerbate the profit “headwinds“.
  • Post-FY references to “vigorous” FCA discussions, political intervention and up-to-date accounts running at a pandemic-like 69% now leave the £18 shares firmly below NAV, a valuation witnessed only very occasionally during the last 30 years. I continue to hold.

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FW THORPE: 25% Dutch Profit Growth Supports Subdued H1 2024 As New Combined CEO/FD Role Plus Slimmed-Down Board Raise Concerns About Executive Power, Technical Expertise And Aggressive M&A

30 August 2024
By Maynard Paton

H1 2024 results summary for FW Thorpe (TFW):

  • A 5% dividend advance was the highlight of this rather subdued H1, as revenue gained 1% and profit fell 2% after customers apparently finished (very) early for Christmas.
  • Divisional performances were extremely mixed, with Dutch profit up a super 25%, Thorlux’s profit sinking a disappointing 8%, Zemper’s profit still to show its full potential and Ratio’s losses becoming even larger.
  • The accounts remain in good shape, showing an acceptable 15% group margin, healthy net cash of £29m and a very welcome stock reduction, although Ratio has (probably) required extra funding and the pension scheme may one day follow suit.
  • The roles of chief executive and finance director have been combined, which alongside a slimmed-down board raises concerns about executive technical expertise, a concentration of leadership power and future M&A that may not be adequately challenged.
  • A possible 20x P/E seemingly reflects TFW’s distinguished operating history, future “synergy initiatives” and continual demand for energy-saving lighting rather than the group’s modest near-term prospects, doubts about the re-jigged board and the risk of an aggressive acquisition strategy. I continue to hold.

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ANDREWS SYKES: ‘Robust’ FY 2023 Delivers Record £23m Profit After 13% Workforce Reduction Helps Lift Group Margin To 29% High

07 August 2024
By Maynard Paton

FY 2023 results summary for Andrews Sykes (ASY):

  • A “robust” FY performance, which delivered a record £23m profit through “careful cost management” and positive sales momentum within a number of European countries.
  • UK air-conditioning revenue declined 14% to £8m following lower summer temperatures, leaving the domestic market’s progress to again be dictated by pump hire — up 2% to register a sixth consecutive FY improvement.
  • Closing the French subsidiary, curtailing Middle Eastern losses and reducing the wider workforce by 13% were among the decisive actions that helped the group margin achieve a new 29% high.
  • The very respectable accounts showcased net cash at £20m, capex requirements of just £3m, a 34% return on equity and a “fully de-risked” pension scheme.
  • A possible 13-14x P/E does not appear outrageous, with the restricted free float, weather-sensitive operations and absence of obvious economies of scale counterbalanced perhaps by bid-target potential. I continue to hold.

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M WINKWORTH: Non-Exec Appointments Invite Bid-Target Speculation After Suppressed Property Market Reduces FY 2023 Profit By 25% And ‘Top 3 Contender’ Ambition Prompts 9 Branch Closures 

29 July 2024
By Maynard Paton

FY 2023 results summary for M Winkworth (WINK):

  • Only the dividend advanced higher (+6%) as a suppressed property market alongside greater costs left franchise-network income 8% lower, revenue unchanged and profit down 25%.
  • Requiring every franchisee to be a “top three contender” prompted nine branch closures but underpinned industry-leading sales, lettings and conversion statistics versus (now anonymous) rival agents.
  • Company-owned offices now include Pimlico and collectively reported a £0.48m profit, although divisional progress remains dominated by Tooting — the exit strategy for which is unclear.
  • After reporting a lower margin, adverse cash conversion and weaker employee productivity, a post-FY update heralded a stronger FY 2024 that supports a possible 12-14x P/E and near-6% yield.
  • Celebrations marking the chairman’s 50-year tenure invite bid speculation, especially following the appointment of two non-execs with M&A backgrounds and sector merger activity involving Property Franchise and Belvoir. I continue to hold.

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CITY OF LONDON INVESTMENT: Subdued H1 2024 Shows Rising Staff Costs Cutting Profit By 5% Although Welcome ‘Engagement’ With George Karpus And Bumper $224m Q3 FuM Inflow Now Lend Greater Support To 9% Yield

10 July 2024
By Maynard Paton

H1 2024 results summary for City of London Investment (CLIG):

  • A subdued performance due to ongoing market “headwinds”, with funds under management (FuM) and revenue up 2%, profit down 5% and the dividend kept at 11p per share for the fourth consecutive H1. 
  • CLIG blamed further FuM withdrawals of $294m on higher deposit rates and appealing index trackers, although the follow-up Q3 statement reported a bumper $224m inflow as clients reappraised the group’s “compelling” portfolio valuations. 
  • A “strategy of engagement” with unhappy major shareholder George Karpus has led to welcome cost cuts, yet the staff profit-share continues to edge higher and doubts persist about whether CLIG is run for the benefit of employees instead of shareholders.
  • Other questions from this H1 concern the effectiveness of the salesforce, the reduced disclosure on fee rates, the necessity of a main-market listing, the revised testing for goodwill impairment and the failure to meet the group’s sole KPI.
  • While CLIG’s own projections point to earnings that just about support the 33p dividend and 9% yield, publishing USD accounts but declaring GBP dividends may confuse the 1.2x payout-cover policy. I recently bought more and continue to hold.

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SYSTEM1: Positive H1 2024 Reveals Platform Revenue Up 44% And Leads To Encouraging Dividend Reappearance While £17.5m Illustrative CMD Ebitda Projection Supports Possible £15 Share Price And Reinforces Bid-Target Speculation

23 June 2024
By Maynard Paton

H1 2024 results and Capital Markets Day (CMD) summary for System1 (SYS1):

  • A positive H1, with platform revenue up 44%, greater workforce productivity and improved cash generation leading to better-than-expected Q3/Q4 statements and the upcoming reappearance of the dividend.
  • H1 progress was not perfect, and drawbacks included questionable adjustments, revenue per client seemingly stagnating and services beyond ad-testing — which offer much larger addressable markets — still losing sales and still requiring product revamps.
  • Despite the higher H1 revenue, direct costs declined a remarkable 17% to deliver a record 88% gross margin. But significant bonuses limited the Ebitda margin to 13% — somewhat below the “at scale” target of 30%.
  • The subsequent CMD disclosed founder/executive John Kearon is now evaluating “long-term strategic opportunities“, which raises questions about his “relentless execution” of his own platform plan.
  • The CMD also provided a £17.5m illustrative Ebitda projection, which supports a possible £15 share price and reinforces my speculation that SYS1 could/should become a bid target.

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MOUNTVIEW ESTATES: Reassuring 59% Gross Margin And Hefty £29m Property Acquisitions Support Satisfactory H1 2024 Although £100 Shares Still Trade At NAV Despite Possible £189 Value

17 May 2024
By Maynard Paton

H1 2024 results summary for Mountview Estates (MTVW):

  • A satisfactory H1 performance, showing revenue up 5% and profit up 16% buoyed by the gross margin on property sales rebounding to a reassuring 59%.
  • Despite a hefty £29m spent acquiring new properties, greater debt, higher interest costs, extra tax and the chunky dividend kept net asset value (NAV) at approximately £101 per share. 
  • Properties purchased after a 2014 valuation and then sold look to have realised limited gains, and could explain why NAV growth has slowed and the share price has stagnated during recent years.
  • The protracted search for a replacement non-exec could spark further tensions between the board and unhappy shareholders, with the chief executive still entrenched through family support albeit with no obvious successor.
  • The £100 shares currently offer a 5% income, the highest for decades aside from the banking crash, and could be worth £189 if all the group’s properties were sold today at their vacant possession value. I continue to hold.

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