Portfolio updates 25 May 2025

Weekly news and trading intentions featuring LON:INSE, LON:FOUR, LON:TRST, LON:SAG, LON:AMCO, LON:GAW and LON:LIKE

Please bear in mind when reading this post that I own shares in the companies mentioned, which likely distorts my perspective. Also, the following content is for general information purposes only and is not advice. Please see the about page for my disclosure policy.

The UK investing portfolio, UK trading portfolio and Australian portfolio pages are all up to date as at COB on Friday.

Amcomri Group PLC (LON:AMCO) released its final results for 2024 on Tuesday. I don’t currently hold Amcomri in my investing portfolio, but do in my trading portfolio. I recently wrote a detailed introduction to the company and am increasingly tempted to buy more stock.

I asked about operating company WJ Project Services (WJPS) at Tuesday’s analyst results briefing. WJPS is an engineering company specialising in high voltage systems and was a large acquisition for Amcomri completed in 2023.

WJPS has historically primarily served the rail industry and Tuesday’s release confirmed that the transition to Control Period 7 (CP7) has caused some delays, as I had previously suspected.

I asked Amcomri management if they were happy with the acquisition of WJPS and the general performance of the operating company. CEO, Hugh Whitcomb, replied that a major attraction of the business was the potential to sell WJPS’s specialist HV electrical services into other sectors. This potential is already being realised, with WJPS winning work outside of rail since the acquisition.

He also said that demand from the rail sector is likely to return after the transition to CP7 is complete and this aligns with statements I have read from other listed companies. The need to completely electrify the UK rail network as part of the effort to achieve net zero remains a longterm tailwind for WJPS. I also wonder if the broader electrification of the UK’s energy system might create further opportunities for WJPS.

Overall, Amcomri is performing well and it is to be expected that a minority of operating companies will experience temporary setbacks in any given year. I was impressed that WJPS has already pivoted towards other sectors in light of the difficulties in rail.

I am hopeful that this is evidence of a decentralised entrepreneurial culture within Amcomri. Hugh emphasised that operating companies are independently run by their own management teams with head office primarily providing training and guidance. This allayed my fear that the increasing complexity of the group as ever more businesses are added will drag on growth.

Investment Director, Mark O'Neill, took us through a couple of detailed case studies of operating companies including the recent acquisitions of Drurys and Claro. These two businesses were bought from a distressed group (although they were not distressed themselves) for £1.25 million. They generated a combined £0.9 million in EBITDA in the eight months of 2024 that they both contributed to the group.

It was also reassuring to learn that group EBITDA increased by 11% on an organic basis in 2024 and that six of 17 businesses acquired so far have been negotiated off-market. CFO, Siobhán Tyrrell, said that the group is targeting return on invested capital (ROIC) of 20% to 25% which would translate into healthy returns for investors.

Something which I didn’t address in my original post and that was pointed out to me by another investor, is that former employees of Hilco effectively control Amcomri given they hold more than 50% of the shares on a combined basis. It would be preferable from a small investor’s point of view if the share register was more diversified.

Here is a recording of Amcomri’s retail investor presentation from last Thursday in case you are interested.

On Wednesday, I attended the three AGMs of Science Group, 4imprint and Trustpilot.

Science Group (LON:SAG) executive chair and major shareholder, Martyn Ratcliffe, spent around an hour speaking with me and the only other shareholder present following the formal business of the meeting.

I’m not sure Martyn liked my question about acquisition criteria — he said that focusing on specific sectors was impractical due to a shortage of suitable targets, but not in so many words. He clearly prioritises paying a low price, as can be seen from Science’s history, and this shrinks the opportunity set so I can see where he’s coming from. But he did ultimately acknowledge that certain types of businesses such as B2C and those without a technological angle were not suitable targets, so it’s not like there are no guardrails whatsoever.

Like Amcomri, Science Group also operates with a decentralised structure and it was enlightening to learn how the group prepares its forecasts. Each operating division provides their detailed plan and expected profit for the coming year and then these predictions are reduced by 10%. This is a prudent approach and explains why Science rarely issues “behind expectations” updates.

I also asked how Science is able to consistently deliver very strong cash flow. The answer is that management implements robust financial systems, with monthly accounts prepared against prompt deadlines. All overdue receivables must be explained on a monthly basis, no matter how small. Finally, unlike some businesses, Science Group does not capitalise development costs further indicating a conservative mindset.

As you may be aware, Science Group has built a strategic investment in Ricardo (LON: RCDO) and requisitioned a general meeting to remove its chair, Mark Clare. At Science’s AGM, the point was made that it was interesting that Ricardo did not state the support of its major shareholders in its Notice of General Meeting. We will find out on 18 June whether Science has been successful.

Prior to the meeting, we also touched upon the threat of AI to Science’s business. Group CEO, Dan Edwards, mentioned that Science’s CTO was having success in leveraging large language models to enhance his work. More generally, it seemed to me that Dan’s view was similar to my own which is that it is unlikely that large language models will be able to replace the work of a consultant, but will serve as a powerful tool.

Unsurprisingly, questions at the 4imprint Group (LON:FOUR) AGM centred around tariffs. While there has been no impact on the business to date, tariffs are expected to shift the proportion of 4imprint’s products originally sourced from China. Currently, 4imprint sources products worth just under 60% of its revenue from China and this is likely to fall to just over 50% in the short-term. Management has undertaken exhaustive scenario planning to prepare for a broad range of outcomes given the ongoing uncertainty.

The Trustpilot Group (LON:TRST) AGM was held in its London office, which is the kind of place you’d expect a technology company to inhabit — open-plan, informal and colourful.

When quizzed on the impact of AI chatbots on internet search and associated repercussions for Trustpilot, CEO Adrian Blair said that he believes that “trust” only grows in importance in such a world. Whether or not “trust” is a valid euphemism for Trustpilot is a matter of opinion, but I tend to side with Adrian.

Myself and another shareholder spoke with Adrian after the meeting. I asked Adrain what he would say to businesses which are unhappy about being listed on Trustpilot, but cannot choose to be removed. He reiterated my own view which is that consumer opinions are ubiquitous online and that unlike some other platforms, Trustpilot at least takes measures to ensure their veracity.

One of the most attractive aspects of Trustpilot’s business model is that its customers are incentivised to collect reviews and advertise its brand which in-turn increases the value of its platform. I find it hard to pick holes in the business.

Inspired (LON:INSE) posted its Response Document to Regent’s 68.5 pence per share cash offer for the company on Wednesday. The document states that Inspired is in discussions with a potential additional bidder for a part-share offer for Inspired at above Regent’s offer price. This might explain why the Inspired share price is trading above Regent’s offer price.

The Response Document also contained the following less welcome news:

“… at the end of Q1, there was some slippage in these (projects) into Q2 with the result that Adjusted EBITDA for Optimisation, and therefore the Group overall, was behind management's expectations for Q1 2025.”

and,

“… because of the slower than anticipated pace of conversion of the Optimisation pipeline in H1 2025, there is a higher risk profile than envisaged at the start of the year as management now expects the full year 2025 performance to be materially H2 weighted, with a particular weighting towards Q4 2025.”

I’m not impressed with this. When I bought INSE at the start of April I was aware that certain projects within the Optimisation division had slipped into 2025 which had reduced profit for 2024. I expected this to be a “timing” issue, meaning that I thought it would not repeat in 2025. Now, there is a risk that full year 2025 performance will also be affected.

In addition, net debt is forecast to rise from a 31 December 2024 pro forma position of £33.8 million to £45 million at 30 June 2025.

I have previously said that I do not plan to take up Regent’s offer, but this trading update changes things. My plan is to hold my shares to see if a competing bid arrives and if not, I will accept Regent’s offer.

Games Workshop Group (LON:GAW) delivered a typically low-key trading update exceeding analysts (the small handful which follow the company) expectations on Friday. I’m not sure, but I think I might not be alone in thinking this is a company of the highest quality.

On Wednesday, Likewise Group PLC (LON:LIKE) revealed that Chairman Paul Bassi (incidentally, the CEO and major shareholder of another of my holdings - Real Estate Investors) purchased 0.5 million shares at 19 pence each. This purchase is the best possible answer to my uncharacteristically brazen question which went unanswered at a recent investor call.