- Ince Shares are down on that trading announcement
- The audited accounts are delayed until September
- But why did they buy Arden Partners?
Ince Group (LON: INCE) shares are down some 15% this morning off the back of their trading update. Business has been tough apparently, revenues will be a little below last year's numbers. They've not been lucky is one way of putting it.
Ince themselves point to four different causes of the difficulties. One is the UK's resurgence of covid from November last year. The second is the effect of that same resurgence in Hong Kong and China – turns out that zero covid isn't a viable policy after all. The problems in Ukraine have affected the shipping market. And then there's the cyber attack that Ince itself has suffered. All of these combine to make it not a good trading year – revenue is, as they say, down a bit on the year before.
As ever with corporate reporting though it's the little things that need to be noted. Ince says, for example, “Together with some adverse movements in our overheads” which isn't what we want to hear at al. They've lost their grip on costs that is. No wonder profits are likely to be below market expectations.
All of this also means that the audited results aren't going to be available until September. That's really not a good look if we're frank about it.
The big issue at Ince though is their takeover of Arden Partners. The big question actually being, well, why did they do it?
The idea of adding Arden to the business looked fine at the start. A professional services firm adds another set of professional services that it can market to the customer base, sharing the overhead base as it does so, why not? Assuming there are some synergies in the business, plus some cost savings, it could be a very good deal over time.
Except a major part of the Arden, business was being a NOMAD. The regulatory adviser to AIM-listed firms that is. When one of those is taken over the regulatory authorities have to approve the new ownership structure. Which they didn't. Arden no longer can or may act as a NOMAD and it's the very takeover by Ince which makes this so. Which makes the continuation of the takeover something of a mystery. Why would you pay a controlling premium for a business if the very act of doing so guts some portion of that business you're just buying?
Ince themselves tell us “we are now starting to capitalise on the identified synergies and cross-selling opportunities” despite the “reduced forecasts” as a result of that regulatory objection. But it has to be said that it's difficult to see that the price offered and paid was still wholly justified given the collapse of one of Arden's business lines as a result.
That worry is going to continue to hang over Ince's share price until there's clear evidence that the surmise is wrong. It could be that Arden was a bargain even so but we'd all need to see strong evidence of that contention before it's generally believed. It might well take until the next set of results, after the integration, rather than just the wait until the audited accounts in September to check this.