29 Sep 2020 07:00
The Ince Group plc
("Ince" or the "Group")
AGM statement
Trading update
The Ince Group plc (AIM: INCE), the international legal and professional services company, is today holding its closed AGM at its offices in Mayfair, London and provides the following trading update.
The Group continues to follow the advice from the World Health Organization and local and regional governmental bodies in respect of the Covid-19 pandemic and the health and safety of its clients, staff and partners remains of the utmost importance. The Group's offices in different locations are at varying stages of returning to office-based working according to local conditions and in the UK staff are encouraged to work from home where possible. In all locations the Group's remote working protocols continue to be very effective in supporting clients and the business and can be deployed rapidly if conditions change at short notice.
Trading update
Overall the Group remains on track to achieve the Board's expectations when the annual accounts were signed at the end of July. The Board remains focused on cash management and the Group remains well positioned for business to return quickly when normal trading conditions resumes.
Trading from 1 April 2020 to 31 August 2020 produced revenues ahead of the same period last year. Geographically, all the overseas offices have delivered revenues ahead of the same period last year with improving gross margins and all are now achieving a positive contribution to the Group. The UK has not performed as well as the impact of Covid-19 has limited activity in, particularly, the aviation, real estate and corporate sectors, in part offset by more stable levels of activity in both shipping and dispute resolution.
The Group continues to monitor and, where necessary, limit overhead expenditure. In the year this has involved a limited global programme of some 50 redundancies amongst fee earners and support staff in areas where it is not expected that business will recover sufficiently in the medium term. Further reductions in overheads will be achieved when the Group's new practice management system is rolled out beyond the UK, adding to the originally envisaged synergies of the Ince deal. This will be possible when travel restrictions are eased.
The Group's cash holdings at 31 August 2020 were £4.9 million (31 March 2020: £5.3 million) and net debt was £8.0 million (31 March 2020: £9.0 million). As expected, cash collections have remained at year end levels, particularly in Greater China where travel between mainland China and Hong Kong remains restricted. Despite the Group's policy of fully providing against debtor balances over 180 days old, collections continue to be vigorously pursued and profits are boosted when such collections occur - for example £1.2 million of debtor balances that were provided as at 31 March 2020 have now been collected.
Outlook
In the light of recent announcements concerning Covid-19 restrictions in the UK, there is now increased uncertainty over a more protracted period.
Cash projections remain the same as outlined during presentations of the Group's year end results, with net debt at 31 August 2020 having reduced to £8 million (from £9 million at 31 March 2020). It remains the Board's expectation that the cash position of the Group will start to improve from Q4 onwards. The Group's recently deployed cash management reporting tools (through its internally developed practice management systems) have been highly effective in enabling real time active management of its cash position over the year to date.
Since the year end and after lengthy negotiations with the local regulator, the Singapore office's international law practice has been consolidated with the Incisive Law local law partnership (previously separately owned) which significantly improves the viability of that office. We have also concluded lengthy negotiations to establish an office in Cyprus, another jurisdiction with strong marine activity. Other lateral hires which have been under negotiation for many months have continued to be concluded in the UK and overseas and these new partners are beginning to engage and generate revenues as they join following notice periods.
The Board recognises that working practices are likely to change over coming years and that the Group's current office space may be too large or may no longer be suitable. In this context, investors should note that the Group's material long term property commitments all have an opportunity for a tenant's break within the next three years. This will allow the Group the flexibility to meet such changed working practices and, in the medium, the potential to achieve significant further operational cost savings.
Overall the business continues robustly with adjustments to the cost base being continuously made and numerous short and medium term cost saving opportunities identified for action.
The Group is therefore poised to weather the challenges of the current market conditions and uncertainties and to perform strongly once more normal circumstances return.
Dividend
In the light of the expected cash flow profile, the board does not intend to re-introduce dividend payments to shareholders at the time of the half year report but will keep this under consideration in future announcements.
Half year results for the six months ending 31 September 2020
A further general update on the Group's progress will be made with the announcement of its interim results, expected to be made in early December 2020. A further trading update will be scheduled between that announcement and the July 2021 announcement.
AGM and presentation
The proceedings of the AGM will be accessible through the Investor Meet Company platform and following the conclusion of the AGM business there will be a presentation and Q&A session for all investors through the Investor Meet Company platform. Investors should register via www.investormeetcompany.com and follow The Ince Group plc. Once registered, shareholders will be automatically invited to this AGM and future online meetings held on the platform.
FOR FURTHER INFORMATION, PLEASE CONTACT:
The Ince Group plc investorrelations@incegd.com
Adrian Biles, Group Chief Executive
Simon Oakes, Chief Financial Officer
Arden Partners plc
Nominated Advisor and Broker to the Company +44 (0) 20 7614 5900
John Llewellyn-Lloyd, Corporate Finance
Ciaran Walsh, Corporate Finance
Dan Gee-Summons, Corporate Finance
Fraser Marshall, Equity Sales
Portland Communications +44 (0) 7767 345 563
Steffan Williams ince@portland-communications.com
Simon Hamer
Riku Heikkila