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@APD708 - You are spot on in your analysis, until will hear from the company after the purdah caused by the T/O we will be at the mercy of the vivid imagination and neuroses of the market and certain individuals need for liquidity, I would note we have not had any TR-1s indicating selling by substantial shareholders. The share price is being set at the very fringe and it is understandable why some people are seeing shadows around every corner.

This situation will not last much longer and In the near future the company will come out and tell us how they are doing. When they do it is my suspicion that they will tell us they are actually doing pretty decently. It is also clear that a lot of people do not understand Ince's accounts. The claims that company is not profitable are incorrect and any one who can read the accounts will see that. Once certain exceptional items roll off in the coming months it is clear that the underlying profitability is decent.

The issue the company faces is its cash management and I have no insight here other than to say it is normal both at Ince and in the legal profession for this to be seasonal and they faced a similar issue at the same point last year and it resolved in the second half of the financial year. So on a probabilistic basis I am happy to take the risk on this issue.

When the Company speaks to the market again and provides a forecast it may well be that at a 20p per share it is on a p/e of 2.5x for next year. If that is the case I suspect the shares will trade up ! With respect to the dividend I am not sure I agree it is insubstantial. In April we will get an Interim of 0.5p and the final div should be at least 1p (maybe higher) so that is 7.5% yield at the current share price and that should grow to at least 12.5% yeild for next year. I am like a pig in mud at the moment.

What is unfolding in Ukraine is an abomination. The response from the decent world has at one level been unprecedented and at another wholly inadequate. The actions undertaken to date should however, be very supportive of Ince's core legal offering.

From "seizing"private yachts to invalidating insurance contracts, from demanding the return of leased commercial aircraft to making sure KYC is adequate, from export controls on certain products to understanding if it is better to claim "force majure" or "frustration" clauses in contracts. This will all be happening on a multi jurisdictional basis and is likely to be long lasting. These are all areas where Ince should be one of the first names called given the strength of its offering in these areas.

Once the purdah caused by the take over is lifted I will be interested to know how their China alliance with W&H Law performs during this period. In theory it is Chinese firms with multi jurisdictional businesses that are in the most delicate position and where mistakes could be costly. One might suppose that they will need a significant amount of multi jurisdictional legal advice. Given the problems with lock up in Hong Kong I hope they ask for decent retainers.

@APD709 : Inflation is an certainly worth considering. In my experience lawyers are a bit like school fees they are pretty good at adjusting to inflationary environments. But the point you make is valid and there could well be a lag between high costs and adjusted billing rates.

I think you also hit the nail on the head when you talk about profitability being the key. If they can clear the Ince acquisition overhand and normalise profitability even if you saw revenue halve you would see no change in current levels of profitability. I think it is also worth remembering that they bought Ince out of bankruptcy and a good part of the reason Ince got their was their bloated cost base. That is being addressed and you can already see that in the financial metric but the over hang of the acquisition costs, covid and the long cycle of some of these costs have not allowed this to flow through to the profit line yet.

We are all investing in an GBP 18 million pound market cap company, that has been under the pump for a few years now. I am assuming we are not widows and orphans, so we all accept their is risk. However from my perspective the risk reward ratio looks very favourable. The possibility/ probability exists for significant profitability increases and significant multiple expansion, that is a very powerful combination.

Agreed on the length of time markets can stay irrational and the only way to see Ince rerate meaningfully is with cashflow and profit. So, yes they do have to deliver and I think with the headwinds from the Ince acquisition abating over the next 6 months the ball is now firmly in the managements court.

You ask do I thin management can deliver ? Well I certainly think it is possible, even probable that they can but I also understand why the market has concerns and those concerns are not without validity. As for Arden, I would not have bought it but I get the logic of why they did. This is a bolt on acquisition and If the legal side of the business recovers, as I think it will Arden will not be a key driver Ince Group earnings in future years.

Arden is a cyclical business that has been poorly run, no disagreement there. In principal being part of a larger group with cross selling opportunities, should improve the quality of the business and profitability. Can Ince bring that outcome about ? Well that is to be proved. That said they are not over paying for the business it should make at least GBP 1.5 million profit when it report last year’s financial results, it comes with a pile of net cash and one or two decent clients, AssetCo for example. If they could get a slice of AssetCos legal work that would be attractive.

As for Ince, some investors will move on and some will move in. For every share sold there is a share bought. I don’t read to much in substantial shareholders not adding more, each will have their own circumstances, limits and reasons for not doing so. Your outlook seems to be built on the premise that stock prices are rational. I work on the basis that very often (and it holds particularly true for Micro Caps) they are not. Is it rational that Tesla was worth more than US$ 1 trillion or that European corporate bonds had negative yields or that oil traded at -$40 per barrel a couple of years ago ? Irrationally in asset markets is common. Even just doubling Inces first half performance would give an EBITDA profit of GBP6.4 million for the FY ending March 22. They have indicated that profitability should increase in the second half. Nevertheless assuming no improvement that puts us on a P/E of 3 x trailing. For you to be right about more share price weakness, from a fundamental perspective, you have to expect the business to materially deteriorate from the levels it was doing in the first half. I can see no evidence to support that position.

@CaneToad - At these levels I think you have a very decent margin of safety.

So if I understand you correctly the point you are making is a mark to market analysis or that of a shareholder who held at the time of the offer and was to sell today ? If that is the case then I agree with your logic. I would however make a few points.

1) I would not read to much in to the spot share prices of two microcap companies with low liquidity and a few hairs on them. I think they are indicative of exactly nothing other than liquidity and an information vacuum created by the TO process.

2) Share prices on AIM and in the penny dreadful range are not rational and are certainly not predictive of future underlying business performance in either direction.

3) With issues in the Ukraine and worries about inflation. Babies are being thrown out with the bath water. The frustration evident on the BB over the last 4 or 5 months signals to me that expectations for the group are pretty low as is understanding of the group, its accounting and cash flows. A disconnect between the share price and reality perhaps ? Time will tell

Ince has had a pretty rough run of things over the last 2 1/2 years. Partly through its own missteps, partly through poor luck with the timing of the Ince acquisitions and the debt they took on to fund it. Over the next 12 months they need to "show me, don't tell me". If they can do that the share price will go 5x from here, if they cannot I think the downside is in the 18p to 20p range. From all the work I have done I am confident that cash flow will improve significantly from this point. With a fair wind and a bit of luck the company will generate @ GBP 18 million of free cash flow over the next 24 months. It will be lumpy given the seasonality in cash collections but on a pcp basis the trend will be strongly positive from the next financial year onward (starting April 2022).

@contrarian123 : I can allay one of your concerns, as of today I am a shareholder. Any Ince specific knowledge I may have has come from reading the financial reports, watching the Investormeetcompnay presentations, RNSs and the Arden Offering circular.

@canetoad : I think a takeout by management is a low probability event. Hard to raise cash and hard to get pass the shareholders, if it is a low ball.

I think it is much more likely, that if we see the predicted cash flow improvements that in addition to the dividend they will launch an aggressive share buy back.

Thank you. It is indeed nice to discuss thoughts and ideas without dogma. Let’s enjoy it while it lasts.

The concert party declared their position a few months ago, their was an RNS. Obviously if the Arden takeover closes their stake will fall but they would still only need to convince one of the larger shareholders to support them to maintain their effective veto.

There will be no takeover unless the Billes
Concert Party agree to it. They have @ 21% stake (A Biles has 15.97%) even if a bidder were to go down the less onerous Scheme of Arrangement route they have an effective blocking stake.

@Tshaw: I think you might be confusing two concepts but if you are using the term dilution correctly you are wrong.

Let’s use a different ratio to make it easier. Let’s assume it was 10 Arden shares for 5 Ince shares and assume there was only 10 Arden shares and 5 Ince shares in issue. So after the takeover there would be 10 Ince shares in issue 5 owned by the former Arden shareholders and 5 by the former Ince shareholders.

After that ratio is agreed no further dilution is possible to either side the enlarged company will still be owned 50/50. Changes in the share price between the deal being agreed and closed does not change that ratio so cannot result in additional dilution.

I am not sure I understand what you are saying there is no change in the dilution to Ince caused by its underperformance of the share price. The deal is still 12:7.

But clearly if you belive the deal will close you would buy Ince shares as they represent a cheaper entry point in to the post takeover Ince group.

@ Tshaw: Your maths would be correct if it was a cash offer but it is a scrip offer. Thus the merger ratio was set by the respective market cap on the day the offer was agreed between Arden and Ince. Any subsequent change in the share price does not alter the respective shareholding of each grouping in the enlarged, post takeover Ince Group.

@TShaw: Merit or not for Arden it has been approved by their shareholders and if the last 2 closing conditions are meet the deal will close.

Merit for Ince are a pile of cash, cross selling corporate finance service to their client base and an estimated GBP 1 million of costs that can be stripped out of Arden.

As for the Arden turnover and quality of staff, it is about what I would expect for a company with a market cap of @6 million pounds. I think we can all agree it is not JP Morgan

With respect to cash there are 3 things to consider 1) cash collection has historically been skewed to 2H. 2) They have been having a problem with lockup in Hong Kong . 3) Deferred cash outflow from the Ince acquisition has peaked and will drop quickly from the end of this FY year.

There should be a significant improvement in the cash position by FY end, the extent of the improvement will principally be determined by their ability to reduce the lockup. Clearly the Arden deal will further improve the cash situation but a good portion of their net cash position is regulatory and can not be used.

Looking forward to the next FY the business should be strongly cash flow positive but as we have seen historically, it will be significantly skewed to the second half of the financial year.

@canetoad - I can address your concern about the liability to partners.

It seems you might not be aware that this is a contingent liability. As such it will only be paid to the extent that the old Ince partners hit certain billing targets and that revenue is subsequently collected. This is clearly laid out in the notes financial statements and in various presentations made by management over the last 18 months.

Simplistically if those partners do not perform the liability is not paid.

@contrarian123 No, neither an insider nor as of yet a shareholder.

@ronaldo981, while your comment re communication may indeed be broadly correct, currently (given the Arden takeover process), the company is subject to the Takeover Code and the whims of the Takeover Panel. This places very significant restrictions on what the Company is able to communicate to the market and particularly to individual investors. This will remain the case until the takeover is either completed or abandoned.