I really enjoyed this conversation with Con from FOS Capital. I forgot who suggested it, but glad you did!

So, first off, it's worth stressing that FOS is extremely illiquid, an issue we discussed during the interview. Basically, don't expect any institutional interest for the time being. Also, giving the growth strategy, expect more capital raisings -- although, as I'll note below, I think they are going about it in a sensible way.

Beyond that, there are a lot of boxes ticked here. Here are my notes:

• FOS often competes on design and quality rather than price, allowing them to maintain higher margins even in a competitive market.
• FOS offers 17 product ranges, 60% of which are manufactured in-house, with the rest sourced from global suppliers. This diverse product portfolio enables the company to offer comprehensive lighting solutions for various projects.
• The company focuses on manufacturing complex, custom products that are difficult to import, such as long aluminum extrusions.
• Massive insider ownership (57% by board and management). Con is on a salary of $240k with no additional performance based compensation, and (in Con's words) no fancy options or similar instruments. They are very much aligned to regular shareholders. Con owns ~20% of the business.
• This is an industry where reputation is paramount, and this was something Con spent some time emphasising. They do what is needed to ensure they are well regarded by customers and stakeholders
• They have a very focused position in the market, and do not compete against commodity-oriented lighting suppliers. What they do is bespoke/custom solutions that are designed for a specific purpose.
• They only stock raw materials. Everything is made to order, or sourced from distributors as is needed.
• The business has been profitable since day one and delivered very high growth at the top and bottom lines
• Acquisitions were and remain a big part of the growth strategy, but Con's elaboration on this revealed it's very much about delivering profitable, per-share growth. He also said some wise things in regard to choosing between debt and equity, essentially saying the right mix depended on the prevailing conditions
• They have made 5 acquisitions so far, but have looked at 35. He underscored the importance of paying a sensible price, and ensuring the acquired business made sense.
• The order book is a very good forward indicator, giving a good sense of how revenue will trend in the coming 12-18 months.
• The company works closely with electrical engineers and architects at the design stage of projects, often leading to high win rates (about 80%) on jobs where FOS is the specified supplier.
• The EBITDA margin has doubled in the last two years, and is on track to hit 10% in the medium term.
• Con aims to grow into a $50M-$100M revenue business in the coming years while maintaining profitability and paying dividends.

We ran out of time, so I didn't get a chance to ask about things like cyclicality and the sensitivity to the construction sector. I imagine things are very dependent on the broader level of activity in the sector, so something to be mindful of.

I'd also imagine this is a business that will take at least a few years to grow the register, improve liquidity and hit the kind of scale they'd need to put them on the radar of bigger players. But they do appear on the right track.

The PE is deceptive at 23x -- as they cycle through a full year of the latest acquisition, and extrapolating the H2 margin, I estimate a normalised EBITDA of closer to $2.5m. Con suggested $30m revenue in FY26 was doable -- prior to any acquisition, and they are working on one right now. So that's 20% top line growth from continuing ops, and perhaps an EBITDA of ~$3m. So the forward PE could be a lot closer to 10-12. I need to drill into it more, but that sounds about right.

I don't have any position, and won't in real life (little free cash available...sadly). But I'll be adding it to my watchlist.

Keen for any negatives.