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Patience needed here. Happy to hold long term. Top up and forget about it.
Real confirmation for me will be only when we see the numbers to come with the next results....and of course the further ahead outlook at that time....
With 30% Costs already rescued
Max, The company confirmed they were back to pre covid levels last Wednesday ?
They also confirmed Asia was ahead of expectations in terms of revenue and all overseas offices were cash generating.
And 7% up on last years Q1
Market was not impressed with last week results, hence the SP is what it is....I think it will slowly recover now to at least circa 30p...and will continue to rise on a slow pace until the next trading update.....if the company will confirm that business is back to pre covid levels (or better...)
Then we can expect to see the latest 45p placing price left behind....personally I am holding now at least until next year and will consider any further holding after next results....
GLA.
Knights Group maybe over valued as you state however in comparison to Ince it evidentially shows how undervalued INCE is.
INCE should be Trading round 60p
Sorry it should say "banned" discretionary spending
Had a look at Knights Group.
Hadn't really focussed on them before. Similar business model. Acquisition (although not so much emphasis on distressed companies) of other companies and centralising costs. Outside M25 and scooping up provincial firms in a certain category.
I will have a more detailed look. Two things that jumped out of results on first reading. Firstly, a lot of shares held by one person. Worries me a bit. Also the results make clear that the company have not attempted to gauge the effect of covid going forward. Ince I think are being penalised for that. Knights have cut board pay by 30% and made similar cuts of salaries and based discretionary spend. That does not suggest a firm that is not being hit both one income and collections. This does not have the diversity of an international firm with overseas offices. Some good clients they say like Roll Royce but RR are being hammered in Derby.
I don't know if they had a similar Q & A but my first reaction is that these guys are over valued and the share price is based on last year's performance. But there is absolutely nothing being offered about the effect of covid on their income. Watch this space because I am not sure any of that is factored in. As I say that is very much a first impression.
Knights Group
82 Million Shares in Issue
Share Price 420.00
Last Accounts
Revenue £74.30 Million
PBT £13 Million
Cancelled Divi (Previous Year) 1.87pps
Debt £15.9 Million
Ince undervalued all day long
Hellas, Thanks for this.
Did you listen to the Q& A feedback.
AB clearly states that the Partners percentages are accounted for in the current accounts therefore its no different to a Payroll line on a normal P&L, so realistically if the budget isn't met the partner payments would be less and vice versa
Granted they did explain the way the accounts read are hard to decipher hence the explanations were appreciated.
I believe if people actually spent the time to listen to the presentation they would firmly understand that the company is undervalued.
£17 Million MC
69 Million Shares in Issue
£98.5 Million Revenue Last Period
£26.2 Million Profit
£8 Profit B.T
Currently Back to pre covid levels across the group
7% up on Last year Q1
Q1&Q2 last year was 125% up on 2018 at £45.30 Million
So already ahead of last year, with 30% costs already reduced this financial year ask explain in presentation.
Dividends back here in no time (Half Year Report is 7 weeks away)
Huge Rerate on the cards - Look at Knights Group for comparisons in Rev / PBT
On another not they did agree to update the market more on news which would obviously be a nice thing to see.
Jaftrade
Just a point about "partner" remuneration.
In a partnership (or LLP) the partners are exactly that and share the profits. They usually take a monthly drawing which is effectively an on account payment of profits. That means they have monthly income with profits being distributed in the following financial year or indeed the one after that. That always means there is tension when fee income is down because you are distributing profits from a decreasing pool of money.
The thing about partnerships is that profits are always distributed and you cant really keep money for a rainy day. The only you can do is recapitalise so the partners have to put in more working capital. So the mantra is about getting lock up down.
At Ince its is not really a partnership. So the "partners" have to be remunerated and that means they set up a contractual formula which will mean that you get paid based on cash collected and not just bills rendered. That was what they were saying the the cash position improves at year end. Partners push for bills to be paid.
The problem about that is that you tend to be much more likely to put your arms around a client and not let anyone else in. There is nothing collegiate about an eat what you kill system. So they seem to be explaining a system whereby they also get some credit if their client (and I am not sure how you decide whose client is whose as many are legacy clients) uses other departments.
But the more you bring in the more you get paid and as they said the aim is to have business development hungry lawyers. But it is a tricky system to get right and to make sure people behave collegiately. The other system is lock step where you get paid more by dint of seniority and that actually works because the clients are the clients of the firm and they are passed down the chain. Very few lawyers really understand why that should work well. The tensions there are where the young bulls resent the elderly elephants and yet it is the elder elephants who know where the water holes are.
As I have said below 16m does not strike me as very much. It probably means that there are a golden few who earn a lot but others who will be paid relatively modestly. But profits are being deferred and that makes those who are the big earners restless.
Got to go and cool down.
Am tempted to buy at these levels as a punt but I think i will wait and see a little longer.
Correction China, Ahead of Expectations.
Hellas,
You didn't add the part about ALL overseas offices being cash generating now. (the lock up of overseas was longer than UK) that was it but they are reducing this to below 100 days is better than industry standard (I believe)
Hong Kong have just announced a new senior partner yesterday to support growth
Costs are down 30% and will be reflected in this years half yearly report as the chucks for the moving of offices and redundancies we least period.
AB - stated he owns 16% of the company and the value is far greater than 16 million and stated its in his interest to ensure shareholders are rewarded (inc himself) with 16%
The budget was pre covid for the group as stated in the presentation and Q&A therefore 10% down on a pre covid budget.
They did correct and state that the actuals for Q1 is 7% higher than last year
And also stated that the business in Q2 is back to pre covid levels
Last Q1&Q1 was revenue of £45.3 Million 125% up and 264% up on PBT at £4.5 Mil
I do respect your knowledgeable posts but this company is severely undervalued at the current MC
I have listened to the presentation. No doubt that the guys in charge are serious people. Their model is to drive costs down helped by moving the support function to Cardiff and that has spare capacity so adding partners and acquisitions does not require a commensurate increase in cost. Overseas offices have been a drain on money and that is being addressed by lateral hires. In particular tier 1 partners who I now understand are defined as having a following of £1m. Not sure how many of those are really going to be moving. They will be attracted by brand and of course remuneration. On the latter that is based mainly on an eat what you kill model but there is an element which allows for reward where "your client" generates work for others. A sort of reward for internal collaboration which is a hybrid of what I think the Biles model usually allows for. Traditionally there is a rule of thumb that only about 50% of lateral hires work as hoped. That may be different in a firm which has so much by way of acquisition. Business model depends on fee income increasing and that is not going to be acheived only by organic growth alone.
As I understand what they are saying is that the budget agreed in january was based on the organic growth which they would say was around 5%. I am pretty sure that the reference to pre covid business levels being achieved already applies only to the Far East and China. That is not across the board. I may have mis heard that but that was said in the context of explaining China.
Bits of UK such as Real Estate, transactional work and family down and that was not just because of covid but the wider issues of brexit. Collections were a theme but the figures are set out in a conservative way.
If you take the profit plus the partners pay (which in a traditional firm would be the total profit) then that gives a figure of about 23m. If you look at the old Ince accounts say to 2012 then they achieved 34m on a 91m income. In fact they achieved 24m on 88m income in the year before they were taken over.
That probably reflects the drain of the overseas offices and the partner attrition. It also reflects the challenge of turning this around. I think they do have a strategic vision of how to achieve and it will be interesting to watch.
The explanation to the 9m “loss” is t actually a loss as it a figure held against the holding company for which it doesn’t make revenue. So knocked that out the park.
AB seems genuinely shocked at the market reaction and stated the company is worth a hell of a lot more than 17mil.
The bonuses to partners what everyone’s harping on about isn’t actually bonuses it there salary as they only get paid per fee - so encourages them to be hungry as such to convert and generate revenue.
Costs being cut by 30%
Costs are also reduced in Q1
All over seas now cash generating.
Q1 is up already by 7%
The reference to COVID impact of 10% was based on A BUDGET pre COVID however actual is over last years actual.
Confirmed they will be updating the Market more regularly.
Looking at further growth and revenue and beat last year even with COVID.
Agreed that shareholders should be rewarded ASAP
No need to raise funds at all
Very very bullish indeed
The presentation is saved so anyone can access
Huge Costs have already been Saved due to the office move from the strand also the redundancy’s made were in last years financials
Moving away from the latest bottom....expecting quick correction back to the 3o's in the near term...much higher before the year end...as always only IMHO.
GLA.
People just need to listen to the investors presentation - easy push on now - bagger all day long.
Costs have been saved
I expect a bounce to the late 20s from here, feels like seller since the update is done for now...
Checking the major share holders list on the company website, it looks like Legal and General were selling out and Cavendish, Legal and General are not on the list anymore, so hopefully that should take take the pressure down especially with the selling over the last few days.
Yes they said they had made various redundancies and office move from the strand which significantly cut costs. The fees for redundancy etc were in last years accounts therefore savings made already for this financial year
It's good presentation and the the Q&A is really good
£16 million is paid in absence of salary to partners which is done to incentives partners to generate fees
£9.4 million is reported for a cost centre which is not fee generative, the financial statement is for the group company. clearly misunderstood by the market and explained well in the presentation.
Debtor collection policy is very prudent, 6 months to provide fully for debtors is very prudent, I would fully expect it reasonable to provide for after 12 months which they also explained in the presentation.
For anyone want to go straight to questions it starts around 32mins in.
Link: https://www.investormeetcompany.com/investor/companies
Fund raise question also answered and they have done a cash stress-test which showed sufficient tolerance to not, need to raise further.
Good article here also comparing Ince group against peers PE ratio of 2.05 vs PE ratio of 15
https://yhoo.it/31si77k
I think clearer and more frequent communication is required going forward. the business has a lot of potential. clear notes to accounts will support the market better understand nuisance in trading updates. they have elected specific methods of presenting information but are advised that supplementary disclosures are available to them and should be utilise to help support the market the way the business operates.
I continue to hold with an ave of 25p for transparency.
30% cost cut? Impressive. Did they say how they would go about doing that, and over how long?
Market not always get it right!!! and I think here it is one of those....IIMHO.
Bought few here when the price took a dive after the placing and added few recently, with average of below 30p I intend to hold at least until the next results before assessing my future holding.
GLA.
Thanks , great news
Yeah was very bullish.
The explanation to the 9m “loss” is t actually a loss as it a figure held against the holding company for which it doesn’t make revenue. So knocked that out the park.
AB seems genuinely shocked at the market reaction and stated the company is worth a hell of a lot more than 17mil.
The bonuses to partners what everyone’s harping on about isn’t actually bonuses it there salary as they only get paid per fee - so encourages them to be hungry as such to convert and generate revenue.
Costs being cut by 30%
Costs are also reduced in Q1
All over seas now cash generating.
Q1 is up already by 7%
The reference to COVID impact of 10% was based on A BUDGET pre COVID however actual is over last years actual.
Confirmed they will be updating the Market more regularly.
Looking at further growth and revenue and beat last year even with COVID.
Agreed that shareholders should be rewarded ASAP
No need to raise funds at all
Very very bullish indeed
The presentation is saved so anyone can access