An acquisition too far.
Adrian Biles is being replaced as the CEO of Ince and it is scrambling to raise millions of pounds, it has emerged. The listed firm's share price dropped from 12p to 5p as the market digested the news, from a high of 188p in 2019.
Ince says it must raise £8.6m or it will face “financial difficulties” which would require “alternative sources of funding in the short term, which may not be readily available or so advantageous”.
The firm has been reduced to considering loan sharks after a terrible couple of years, which Ince described as "continuously challenging conditions". It's a stark contrast to the glowing financial results being released by many other law firms.
Ince said Covid restrictions in the UK and Asia were partly to blame, and that its Hong Kong office is "under review" because money which was poured into the operation "has not led to similar cash returns".
Before it was acquired by Gordon Dadds, which then took its name, Ince was a shipping specialist, and management has also blamed the war in Ukraine for affecting global shipping, a key market. In March, ROF revealed that Ince staff were encouraged not to express a view on the conflict.
Ince’s announcement revealed the full scale of last year’s cyber-attack. Producing invoices was “impossible for an extended period” after the hack shut down Ince’s time recording systems in the crucial year-end period, and staff had to work on paper. Recovery "was longer and slower than anticipated" and its systems were still not completely restored by May 2022.
The firm estimated the cash impact of the hack at £4.9 million, although it may end up being higher. After the attack, Ince optimistically obtained an injunction to attempt to prevent the cyber criminals from using their stolen data. Insurance, if it applies, will only cover up to £2m, and the claim "could take up to 12 months to be processed and received". To make matters worse, whatever comes in will have to be handed straight over to repay a loan.
All of which means that Ince is operating "at the limit of its borrowing facilities". The situation became so dire that two months ago the firm was unable to make a short term repayment.
Ince has 700 staff and 22 offices around the world, but now mass redundancies and the shuttering of offices are on the cards, raising the possibility the group will dispose of significant parts of its network.
Management said it has identified “synergies” worth £1m following its £10m acquisition of Arden this year, and "further cost savings of £4.0 million across the Group". These include "potential for a reduced overseas footprint", "review and rationalisation of non-core business streams", and "further property rationalisation and headcount reductions and tighter control of overhead costs".
The disaster has claimed the head of the group’s CEO. Having masterminded the stock market listing of Gordon Dadds, Biles embarked on an aggressive growth strategy that saw the group snapping up troubled firms at bargain prices in pre-pack administration deals, including Ince. Staff shafted by the merger were only offered statutory redundancy, which won’t provide the current workforce with much comfort.
The shareholders may have regretted their generosity after Ince announced it was buying Arden Partners. The broker and corporate advisor was also Ince’s nominated advisor, and under AIM rules, Arden had to resign as Ince’s NOMAD when the deal was announced, resulting in the embarrassing spectacle of Ince shares being temporarily suspended.
As if all that wasn’t enough, a PR nightmare engulfed the firm’s leadership in May after a chef tweeted allegations that one of his restaurant’s waitresses was "talked down to, disrespected, and touched unwantedly" by members of a group of Ince staff hosted by Robert Biles, the firm's head of finance.
In a humbling move, Biles, who will step down after the money is raised from shareholders and via a further bank loan, is being replaced by the CEO of Arden, Donald Brown. Asked if Biles's departure was connected to the restaurant incident, and if he was leaving the group as well as the CEO role, the firm did not respond.