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@bridgedogg1 - I think it depends if you have any faith in management revenue forecasts, if they are accurate and given the very high margins they enjoy then the business is clearly very profitable from next FY onward.

They have made two revenue "projections" the merits of which need to be considered and weighed

1) They now have an annual capacity to process @ 30,000 samples per year. They charge a flat fee euro 1,100 per sample (@GBP 950). They also claim to now be substantially at full capacity. The ramp up in forecast second half revenues would be somewhat supportive of this view given the very significant enhanced capacity has only recently started to come on line. It should be noted that gross margins on the business are +@80% so a very significant drop through rate. Lets assume they hit 25,000 samples next FY year that would be GBP @ 22.5 million of revenue and @ 18million of GP. You need to add some CDT Lung revenue and they are claiming some adjacent services that can be offered to Insight clients.

2) The other way to look at it is they have said based on a market study they have commissioned that their segment is worth @ GBP 100 million and is growing at 27% per year and they have visibility through to end of 2023 to a 12% share of that market. So that would suggest that they are at that point at @ GBP 19.5 million pa revenue at that point (100million x 2 years of 27% growth). That is not a million miles from the assumption reached in the first approach.

I think the other points to consider are, they say they have good visibility in the business given sales cycles for new customers is between 12 and 15 months and 6 to 9 months for follow on business with existing customers. They claim to be aware off but do not see competitors and that they have never lost a piece of business . They have claimed no further capital (debt or equity) is required for the existing business.

So with the margins they enjoy if management are right, they are currently on a single digit P/E and if they are half right they are on a mid teen P/E. In both cases they would be throwing of significant levels of cash with a significant structural growth runway ahead of them.

So I think this all boils down to what do you think of management ability to forecast future revenue.

Yes, mine was posted to my account last night.

RetiredBanker, I think you are spot on in your assessment of where managements incentives lie. There is still a bit of rough air to clear and I suspect we will have a to clear out a few trapped holders (both Arden and Ince) over the next few months but I think your forecast of reported revenue of 110million and NP of 8million for FY 2022 should not be a huge stretch and with positive free cash flow restored, nor should be the 10% pa growth you forecast thereafter. At 0.35 times price to book, a forecast div of almost 7% and growing , a current and forward P/E of 2-3X. if you are right, when the market finally has a moment of clarity the upside will be explosive.

It does not seem to have been posted on this board before but this Apple/Biogen study contract, that they won last year is hugely important and all investors and potential investors should be aware of it. I assume COG are unable to talk about it due to confidentiality constraints.

Cambridge Cognition is providing the cognitive tests to the Apple/Biogen sponsored Intuition Study. This is a huge and ground breaking digital study using IPhones and Apple watches to monitor @25,000 participants over a number of years and looking for signs of Mild Cognitive Impairment (MCI). It would seem that this contracts relates to the GBP2.3 million study win that they disclosed last year.

How do I know this ? Below is a link to a recent Biogen presentation and on page 51 you will see a reference to CANTAB being used as part of the Intuition study. For those that don't know CANTAB is COG's cognitive testing product. You can look up the Intuition study to see its purpose and scope, it is co-sponsored by Apple and Biogen

hTtps://investors.biogen.com/static-files/019bc8a4-527e-4565-a58b-91ef680630c1

This is huge and completely ground breaking in and of itself but if the study produces useful insights who do you think Apple will call if they want to embed cognitive tests in to their products.

Sensyne would be a huge burden for who ever is brave enough to take it on. It might fit one of COGs clients but not COG. COGs management are very clear they will stick to their knitting and with a large growth runway, limited competition, digital biomarker IP that is not in anyones numbers and 80% gross margins they don't need to mess with the formula too much. They just need to keep on, keeping on.

If I was to tell you that there was a business that was a key player in providing the digital infrastructure for regulatory record keeping, compliance and submission formatting for preclinical and clinical data for FDA and EMA clinical trials, If I was to tell you that, that company was profitable, growing both organically and via acquisition and on a valuation that was not outrageous, you would think the chat boards would be jammed with eager long-term investors keen to understand and research this company.

This is that company, and there has not been a post on this board for 1 year and 2 months. I love it, you can read and research away from the hype, you can buy in small blocks as and when your cash flow allows. A great business and great buying.

Tshaw, I will need to look in to the historic performance of acquisitions against target, I cannot give you a sensible view without a pen and paper to hand.

Only thing I would say is I don’t think this will apply to the Arden deal as it is very specific to the WIP and receivables of partners and I do not see how that would be applicable to a brokerage. But that is a question for management when they exit purdah.

CaneToad, No, but chat boards are !

I am very happy to see people be critical of the company. I think all I am doing is correcting misunderstandings or incorrect information. Other than concluding the stock is cheap I don’t think I have really given much of a view one way or other.

@Ronaldo, I know this bonus has been a bit of a bugbear for you. I am not sure I have much to add. I am not sure if any investor has questioned it, I have listened to all of the online earnings calls and cannot recall hearing a question on this issue.

For what it’s worth, I would rather the money in my pocket but if I am honest it does not bother me hugely. His base salary is pretty low and if you take the two together I think he would be earning significantly less than the managing partner of other large multi jurisdictional law firms. However that is a guess on my part rather than a known fact.

Can I suggest that you attend this years AGM and ask your question/ relay your concern directly.

Last thing on the net debt figure of 9 million you are using the mid year figure. Cash flow in this business is massively skewed to the second half. It should improve dramatically…. IF and it is the issue I have flagged as a concern all along they can improve their collections especially in Asia.

As a result and , absent further acquisitions, the deferred consideration remaining on the balance sheet should shrink considerably during FY21, FY22 and FY23 as the £13.5m of Ince & Co UK deferred consideration is paid, and should fall to below £5m in FY24 after the Ince & Co International consideration has been paid.

As an example take the acquisition of the Ince & Co UK business, by far the largest yet undertaken by Ince – back when it was still called Gordon Dadds. This was not dissimilar in terms of goodwill payments – though there were key differences:
(i) UK WIP and debtors weren’t bought as the business was bought through a pre-pack insolvency and it was agreed to realise those for the administrator for a (significant) commission.
(ii) The new Ince is paying the former Ince partners 15% of fees billed and collected over 3 years, not 5.
(iii) While the target revenue wasn’t made public, we can estimate this deferred consideration would represent c. £13.5m if the revenue target is hit. This estimate is based on the amount of deferred consideration shown on the balance sheet as published before and after the acquisition completed. We would therefore expect the following: Based on the 15% rate, this implies a target £90m of revenue, or £30m per annum for 3 years.
(iv) In accounting terms this deferred consideration liability would be balanced through the addition of £13.5m to intangible assets.
(v) However, if after 3 years, the Ince & Co business only generated £20m of revenue per annum, the total revenue would be £60m rather than £90m. 15% of this is £9m, leading to a difference of £4.5m between the deferred consideration to be paid, and that recorded as owed on the balance sheet. This difference would be written back to P&L as a profit, and the remaining deferred consideration liability would be extinguished:

Contingent on Performance – Not a Fixed Liability
A brief and simplified take on Ince’s deferred consideration is that, despite IFRS requiring an estimate be included on the balance sheet as a liability of a fixed size, it is almost entirely contingent upon the revenue and cash collection of the purchased businesses. In other words, if the purchased businesses don’t meet revenue estimates set at the point of acquisition, deferred consideration is not payable on the shortfall. If they do meet these estimates, it is easily affordable. That’s the crux of the matter: it’s win-win.
Furthermore, the amount of deferred revenue owed is diminishing as time passes because most is payable regularly over 5 years and the most recent material transaction, the purchase of Ince & Co UK, completed on 31 December 2018. The deferred consideration for Ince & Co was based on 3 years’ results not 5, so this will see the balance reduce meaningfully this year.
In summary then, in a not-dissimilar fashion to partner remuneration, Ince has taken a fixed cost (the purchase price of a business) and converted much of it into a variable cost. The amount that will ultimately be paid out to the vendors is generally a fixed proportion of the cash collections of the businesses in question.

You will note how this figure has been falling significantly at each accounting period.

Why question your honesty? Because this is an anonymous chat board dealing with a penny stock and in this part of town at least every other poster is footpad, degenerate or spiv. So I am happy to offer you an apology for using a probabilistic approach and misidentifying the cohort to which you belong.

However, a 1.75% position does not legally, technically or from a tax perspective make you a significant shareholder. I will concede that you have a not insignificant amount of capital on risk. I also accept, as you say from YOUR perspective you are a significant shareholder but I would highlight that this is a subjective view. I wish you well with your investment in Ince.

This board is so beautifully quiet. Lots to like here.

Meanwhile - Hydrogen Storage is going great guns and this growth has a runway of at least a decade. submarine work also has a decade of growing work ahead of it and now the embargoes on Russian energy will put the wind back in the oil and gas segment as well.

To date I have never commented on the deal good or bad, not going to start now. I have said I think at below 25p Ince is very, very cheap and I hold that view regardless of the deal closing or falling over. I will add to my position if we trade below 25p.

Not disappeared. It is just nobody has posted anything incorrect until the last few minutes.

Firstly, Salmon you are not a substantial shareholder. The definition of a substantial shareholder is that you own more than 3% of the share capital. While you may well be a decent size shareholder, I even doubt that. Under the takeover code anyone with a position grater than 1% has to have declared their position. We have 4 individuals in that position so, I suspect you are not one of them. But I am happy to be be proved wrong.

TShaw, net debt at Ince is not £25m. It seems you are taking the CONTINGENT liabilities that are payable to the old Ince partners in the event that certain billings and collections are made. Net debt position was @£9m at the last report and if historical trends are repeated should have improved substantially in the second half of the year.

Put another tick in the box, we trade ex div today. We are once again a dividend paying company.

@APD708 - I use a shareholding monitoring service and this was the largest sell down over the last month (@970k). As of March 4th they still held 11,797 shares. One would assume these have now also been sold. The shares were held in Charles Stanley & Co Client Account. I don't know if they offer retail brokerage (I will check) in which case it is possible it is a retail client/s and not one of their funds. The fact that we have not seen a form 8.3 filing suggests it was retail and for more than 1 client. HSBC - HSBC Securities Services Trading Account was the next largest sell with @420k shares sold. There are still @ 150K shares registered under the HSBC umbrella.

So top 5 shareholders currently hold 42.3% of the company

It looks like a good chunk of the sell down from about 32p in late February was mainly Charles Stanley Group exiting their whole position (@990k shares). Seem like they either had redemptions or panicked, given their haste and lack of price sensitivity.