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@bitterstPill ...... I think you mean directors not partners ? Companies House only records directors and there have been a number of changes to the board over the last 6 months. That said Partners come and go, it is a normal part of running a legal practice.
A law firm's revenue is generated by its partners, and Ince has seen a number of significant partner departures in recent months (all on Companies House, for the doubters). As an investor I would be asking how Ince are going to replace, let alone increase, the lost revenue, with the business model they have.
@HumpyDumpy - Yes, it is very tedious I know and I thank you for your patience. As you stay time will tell !
@Canetoad you said "Kindly point out a single comment that I have made about Ince, which is not 100% fact, reported on the public record, either by Ince or by reliable sources." Here is a few just from your posts today that strike me as opinion.
Payment of the dividend was probably illegal - its not
Arden has never been profitable - look at its last set of accounts
Trying to be 'right' is lethal in investing - my experience is it beats being wrong
Canetoad/erratum - The tension between you guys is sizzling! Brings back memories of Kylie and Jason. I’m sure you’re both decent blokes with better things to do with your time than bicker. Time will tell who is right. Nothing else.
@erratum: You'll do better sticking to facts rather than opinion and hope. Trying to be 'right' is lethal in investing.
Kindly point out a single comment that I have made about Ince, which is not 100% fact, reported on the public record, either by Ince or by reliable sources. FYI: that is the purpose of this channel. I'm interested in hearing FACTS about Ince, whether they be good or bad. You seem to be fixated on reporting your own calculations and opinion and are very touchy when anybody says anything which doesn't fit with your own view. I have my own opinion why that is.
FYI. The fact that the share price is not rising means that your opinion is wrong.
@CaneToad. I am keenly aware there are many people on the board that know the company very well, but as you demonstrate with almost every post, you are not one of them.
As you have concluded yourself this is not a stock for "old-fashioned" investors. Best of luck to you and thanks for your shares, I will sell them back to you when you decide to get back in.
@erratum: I couldn't help returning your 'as I have explained to you numerous times' line. That's good!
Do you even realise that there are people here other than yourself that know something about this company?
@erratum. I'm old-fashioned. I like to see a balance sheet and/or trading update which gives actual levels of cash and/or borrowing headroom. To my knowledge, there has been no such update for months. I never said there had been any breach of any debt covenant. What I said was that they had (many months ago) used up almost all borrowing capacity on their RCF. Do you have proof about the levels of cash they have or is just your opinion?
As I have explained to you numerous times, I don't hold onto falling knives. I get out before a loss becomes significant. As they say, 'you can always get back in'. I would do that after seeing financial results rather than predictions from experts on a bulletin board...
@ canetoad. ... Yes you are right Gordon Dadds bought Ince out of receivership. This was 3 years ago and a significant amount of equity was injected in to the business at the time.
As has been explained to you numerous times already the business cash flows are highly weighted to the second half of the year, the last snapshot we had was at the end of the first half (September 2021). Secondly, on an operating basis the business has been strongly cash flow positive both in 2020 and in the first half of 2021. The cash flow pressure has been due to the lumpiness of the payments of (contingent) deferred compensation to the "old" Ince partners, this pressure has now peaked and from September of this year becomes de minimus. Finally, If there had been any breach of debt covenants this would need to be RNSed and we there has been no RNS to this effect. All of this is before the net cash received from the Arden deal.
Anyway not clear to me how you will recoup your losses on this one as you have sold.
@erratum: "Why would the business be headed for insolvency?"
Ince has been insolvent before - just a few years ago ... They were £34m in debt and the partners refused to bail it out. They didn't want to contribute anything and creditors got back ~20p in the pound. Banks tend to remember things like that:
https://www.legalfutures.co.uk/latest-news/the-gory-tale-of-ince-34m-in-debt-as-partners-refused-bail-out
What has changed? The 'new Ince' has maxed out its RCF and has limited cash available, while it seems that they're still a low-margin business that's generating lots of bad press. It's crazy that they paid a dividend. I was a shareholder at the time and I wondered if the dividend was prudent or even legal. With Arden itself never being very profitable and their main business now torpedoed due to losing NOMAD status, it's going to be interesting to watch closely. It would be interesting to know what clients they've kept.
I'm hoping that the business shows some signs of growth and recovery so I can recoup some of my (significant) losses on this firm.
My guess is that Arden will struggle to breakeven now that the Nomad business is gone and they might even need to be subsidised.
I'll keep an eye on it and will consider a new investment after seeing solid financial results. They've kicked a lot of own-goals in the past 6m and I'll need to see some strong evidence that a recovery is in play before touching it again.
Good luck.
@CaneToad, Why would the business be headed for insolvency ?
1) in FY21 (and on similar revenue they have reported for FY22) on operating basis, they made a profit and were cashflow positive, given they have further reduced overheads during that period why would they now be loss making to the point of insolvency ? As a reminder for FY2021 Gross Profit was + 44.3 million, Ebitda was +18.2 million, net Income was +6.1 million
2) Also based on the first half figures we have for FY22 we also know on an operating basis they were profitable and cash flow positive . Gross Profit was +21 million, Ebitda was 7.5 million and Net Income was 1.6 million. We also know because of the seasonality in the business that the second half of the financial year is better than the first half.
3) Since the end of the financial year we have added @5 million of net cash from the Arden acquisition
So based on the above it is easy to see that the business on an operating basis is profitable, cash flow generative. As for the the non operating cashflows and accounting treatment which have had such a distorting effect and primarily relate to the deferred compensation due to the Ince partners at the time of acquisition, that impact has now peaked and will drop off a cliff from September of this year. From that point onwards operating and reported numbers will much more close align.
Better days? I'm not yet 50+% sure there'll be any.
One thing for sure is that the CEO and partners will do extremely well. That's usually the way things go for AIM companies.
The problem with averaging-down is that it lulls you into a false sense of security, because it will usually work. But inevitably and inescapably, it will eventually blow you up in spectacular fashion.
In 99% of the time, it's the sign of somebody that has no risk control and hence mediocre- or poor long-term returns.
With Ince, you just have to look at the price history on any time scale to see utter destruction of shareholder value. I'll wait and re-enter if I see any evidence that there's a profitable business. But I'm starting to wonder if this is headed into insolvency.
Added yesterday and again this morning to average down,.....we will see better days soon enough, I am sure of that.
GLA.
@retiredbanker - I think it is almost impossible to see Biles et al take it private at least at a knock down rate. Firstly, the concert party only holds about 20% so there is a pretty big gap to close even if you were to go for the lower threshold of a scheme of arrangement. Secondly, it is almost impossible to imagine if they declared an interest in doing so that the board would not seek to run a process and I would imagine that there would be significant interest from the other listed peers at a minimum.
I am with APD708 once the clouds lift on both the market and some of the recent Ince specific overhang this will bounce and bounce hard and I will keep adding in small clips to my exposure. There is clearly plenty of frustrated small holders about, probably a few Arden holders who want some liquidity and it is clear that River & Mercantile have looking to take down their exposure for sometime. Lots of sellers, few buyers a decent underlying business with some hairs, not going to be for everyone but plenty of money to be made in time.
Hi RetiredBanker, just curious what activities of Ince has created the suspicion that Biles and Co could be going private? The payment of recent dividend suggests otherwise that Ince is not looking to go private otherwise why would they bother with dividend payment.
Also, Ince's revenue is close to £100 million, they need to figure out a way to increase their profit. Even if their revenue stays the same and they can operate at 10 to 14% profit then we are onto a winner here.
I am buying more at the SP. It will bounce. My investment horizon is multi years.
So Arden was valued at £10m at the time of the offer, which I thought undervalued the company. Now INCE + Arden only worth £14m. Even if half the staff quit for pastures new, this should be valued more highly. But I do suspect that Biles and Co are figuring out a way to take it private and shaft the small PI shareholders. Problem for them is ... who will continue to use their "professional" services if they demonstrate that they are simple crooks !
I say incompetents because I still think there is a hidden agenda here but since I have no proof and after all you are dealing with one of the most hated professions in the world, one must choose their words carefully
This is it - Below 16p there is nothing - Maximum fear deservedly so considering the seemingly incompetents that run this co
Easing a bit more each time, most days.
Any realistic ideas on how low Ince might drift to?
@erratum: I am truly impressed by your command of the English language!
I'm not relentlessly negative about Ince. I've been invested in Ince several times over several years. My most recent one was as a Value play with good asymmetric risk, buying in just a couple of months ago. I got it wrong this time - oh well. As a matter of good risk management, I do not continue holding *anything* that drops beyond a small, pre-calculated threshold.
I'll revisit Ince at some point down the track and might consider investing again if they turn the corner. It's already at a substantially lower price than where I exited.
The thing you fail to observe, is that the company has maxed out its RCF, has limited cash on hand and has foolishly paid a dividend, reducing cash even further. This is a common feature of law firms.
In the final analysis, I don't care if they manufacture firecrackers and condoms, but I don't like to see total stupidity, arrogance and disregard for shareholders.
Good luck!
In view of the relentless negativity that dominates some sections of this BB, I thought it was worth reminding everyone what the only independent analysts that covers us forecasts for FY 2022 (the year for which we have just had the profit warning) and FY2023 (the financial year we are now in). These numbers have been updated by them to incorporate the trading update.
2022 Revenue - GBP 97 million
2023 Revenue - GBP 110 million
2022 Pre tax profit - GBP 3.7 million
2023 Pre tax profit - GBP 9.8 million
2022 Net Debt - GBP 13.2 million
2023 Net Debt - GBP 5.23 million
2022 Div - 4.10%
2023 Div - 9.23%
2022 P/E - 4.88 x
2023 P/E - 2.14 x