TIDMFEN
RNS Number : 0821O
Frenkel Topping Group PLC
29 September 2023
29(th) September 2023
Frenkel Topping Group plc
("Frenkel Topping", or "the Group")
Interim Results
Frenkel Topping (AIM: FEN), a specialist financial and
professional services firm operating within the personal injury and
clinical negligence marketplace (PI and Clin Neg), is pleased to
announce its interim results for the six months ended 30 June
2023.
Financial Highlights
H1 2023* H1 2022* % change FY2022
(GBPm) (GBPm) Full year
(GBPm)
---------
Revenue 16.0 11.1 44% 24.8
---------- --------- ---------
Recurring revenue 5.9 5.4 9% 11.0
---------- --------- ---------
Gross profit 6.6 5.0 32% 11.1
---------- --------- ---------
EBITDA** 3.5 2.7 30% 6.1
---------- --------- ---------
Profit attributable
to shareholders 1.7 0.9 89% 1.7
---------- --------- ---------
EPS (basic) 1.4 pence 0.8 pence 75% 1.5 pence
---------- --------- ---------
Cash generated from
operating activities 1.5 0.6 150% 0.7
---------- --------- ---------
Cash at period end 4.9 1.8 272% 5.0
---------- --------- ---------
AUM 1,261 1,155 9% 1,187
---------- --------- ---------
Assets on a discretionary
mandate 761 667 14% 715
---------- --------- ---------
*Unaudited
**EBITDA before share based compensation, acquisition strategy,
integration and reorganisation costs
Operational Highlights
-- Results for first six months in line with management expectations
-- AUM resilient despite challenging market conditions
demonstrating the differentiated and conservative way the Group
manages its clients' assets
-- Client retention rate remains high at 99%
-- Acquisitions made in Q4 2022 bedded in and performing well
-- Cardinal Management Ltd ("Cardinal"), a milestone acquisition
during 2022, has added two new major trauma centres to its
portfolio
-- Continued delivery of the "Working in Partnership" programme
- aligning with top law firms, adding Serious Injury Law and Lime
Solicitors to the growing number of firms who we have joint
ventures with
-- A healthy pipeline of AUM for the second half of the year, a
traditionally stronger half, to underpin management's expectations
for the full year outturn
Delivery of strategy with a strong start to the second half
-- Continued execution of acquisition strategy, with a number of
opportunities being evaluated and the businesses acquired to date
showing positive contribution to the Group
-- Acquisition strategy has built one of the largest players in
the pre-settlement professional services market for Personal Injury
("PI") and Clinical Negligence ("Clin Neg")
-- Entering second half of the year carrying momentum from H1
with services revenue performing particularly well from Somek and
Associates, Bidwell Henderson Cost Consultants (BH) and Forth
Associates.
For further information:
Frenkel Topping Group plc www.frenkeltoppinggroup.co.uk
Richard Fraser, Chief Executive Officer Tel: 0161 886 8000
Cavendish Capital Markets Limited (Nominated Tel: 020 7220 0500
Advisor & Broker)
Carl Holmes/Abigail Kelly (Corporate
Finance)
Tim Redfern / Charlotte Sutcliffe (ECM)
CEO statement - Richard Fraser:
We are pleased with our performance in the first half of FY2023
and the momentum we are carrying into the second half of the year.
Despite the backdrop of economic headwinds and market volatility,
our team has shown remarkable resilience and focus, delivering a
robust set of results for the first six months of the year.
We constantly strive to deliver the best outcomes for our
clients. In response to rising interest rates and subsequent
returns available on cash, our Investment Management business,
Ascencia, has recently launched a cash solution to add to our
existing portfolio of products focused on protecting our clients'
assets, thus adding to our range of recurring income streams. The
solution has been particularly well received by professional
intermediaries and clients.
Further, Ascencia has continued to outperform in its core risk
rated investment strategies, with returns being ahead of their
respective Private Client ARC indices. Ascencia's IP Growth 4
returned 1.24% compared to ARC Sterling Balanced Asset PCI of 1.01%
and Ascencia's IP Growth 3 returned 0.95% compared to ARC Sterling
Cautious PCI of 0.09%.
Our client retention rate, a critical KPI of the Group, remains
exceptionally high at 99%, a testament to the trust and confidence
our clients place in us.
The successful integration of our acquisitions has not only
diversified our income streams but also strengthened our position
in the personal injury and clinical negligence sectors. We continue
to pursue future acquisition opportunities within the space that
will further add to our full market offering.
The Company's group businesses have enjoyed real momentum in the
period with Cardinal adding two new sites to its Major Trauma
Centre portfolio in recent months both John Radcliffe Hospital, run
by Oxford University Hospitals NHS Foundation Trust, and Alder Hey
Children's Hospital opting to join Cardinal after a competitive
tender process.
Somek and Associates (Somek), Bidwell Henderson Cost Consultants
(BH) and Forth Associates (Forths) have especially contributed to
the service revenue performance during the first six month of the
year. This is primarily due to the successful execution of our
people plan, specifically increasing the number of Experts in
Somek, the success of the BH training academy and recruitment
programme, and staff progression in Forths, all underpinned by the
overall execution of our strategy to be the 'go to' provider of
professional services within PI and Clin Neg.
Our marketplace continues to present significant opportunity for
growth with cGBP1.2bn of personal injury awards related to motor
accident claims alone paid out in H1 2023. In addition, we have
noticed a tightening of court deadlines within the industry which
presents opportunities across our full service offering which, in
turn, we expect should drive faster settlement of damages moving
forward.
As we look ahead, we are excited about the potential of AI to
drive efficiencies and are committed to delivering value to our
shareholders and clients alike. It's not just about numbers; it's
about making a meaningful difference in the lives of those who have
been through life-altering experiences. That's what keeps us
motivated every single day.
Outlook
The Group has entered the second half of the year carrying real
momentum from H1, benefiting from the diversification of revenue
and encouraging growth in transactional revenue. We expect
financial markets to remain challenging, which will continue to
moderately impact AUM growth and consequently the Company's
recurring revenue. However, the Board maintains its confidence in
the full year outturn which is tracking in line with management's
expectation.
CFO statement - Elaine Cullen-Grant:
We are pleased to report such a strong set of results against
the backdrop of a challenging economic climate and furthermore to
have been able to grow our recurring revenue in the first half by
9% to GBP5.9m (H1 22 - GBP5.5m) .
The acquisitions made in recent years have further strengthened
our position in these challenging times by broadening our income
streams and helping to contribute to an overall 44% growth in
revenue to GBP16.0m (H1 22: GBP11.1m).
By their nature the margin profile within our transactional
businesses is a little lower than our financial businesses, however
we are delighted that we continue to grow EBITDA across the
Group.
Our acquisition strategy is focused on profitable and growing
businesses. Evidence of the success of this strategy can be seen
within our Costs businesses, Partners in Costs, A&M Bacon and
BH, acquired during 2021, which have increased their EBITDA
contribution from GBP0.6m in the first half of last year to GBP1.1m
in the same period this year.
Following the increase in share capital with our fundraise in
2022, it is pleasing that we have been able to increase our basic
earnings per share by 74% to 1.4 pence for H1 23 (H1 22: 0.8
pence), coming close to delivering the same earnings per share as
we did in the full year 2022 (FY22: 1.5 pence) in just six
months.
Whilst the transactional businesses do have a greater working
capital requirement when compared with the financial businesses, we
are pleased that even the with the 44% increase in revenue, cash
generated from operating activities has improved by 150%. This is
both a reflection on the Group's focus on cash conversion and
evidence of the strength of the recoverability of our debtor book.
This has helped contribute to our strong balance sheet and cash
position of GBP4.9m (H1 22 1.8m)
Change of Name of Nominated Adviser and Broker
The Company also announces that its Nominated Adviser and Broker
has changed its name to Cavendish Capital Markets Limited following
completion of its own corporate merger.
Frenkel Topping Group plc 6 Months 6 Months Year
ended
ended ended 31-Dec-
Group income statement for the period: 30-Jun-23 30-Jun-22 22
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
REVENUE 16,042 11,110 24,850
Direct staff costs (9,436) (6,068) (13,717)
------------ ----------- ---------
Gross Profit 6,606 5,042 11,133
Administrative expenses 2 (3,996) (3,544) (8,230)
Underlying profit from operations 3,200 2,422 5,492
* share based compensation (314) (349) (660)
* acquisition strategy, integration and reorganisation
costs (276) (575) (1,929)
------------------------------------------------------------------- ------ ------------ ----------- ---------
PROFIT FROM OPERATIONS 2,610 1,498 2,903
Finance and other income/ (fair value
losses on investments) 4 (9) (7)
Finance costs 3 (186) (205) (477)
------------ ----------- ---------
PROFIT BEFORE TAX 2,428 1,284 2,419
Income tax expense (628) (309) (570)
------------ ----------- ---------
PROFIT FOR THE PERIOD 1,800 975 1,849
Gains on property revaluation arising net
of tax - - 127
------------ ----------- ---------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 1,800 975 1,976
============ =========== =========
PROFIT ATTRIBUTABLE TO:
Owners of parent undertakings 1,680 881 1,652
Non-controlling interest 120 94 197
============ =========== =========
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE
TO:
Owners of parent undertakings 1,680 881 1,779
Non-controlling interest 120 94 197
============ =========== =========
0. 0.
Earnings per share - basic (pence) 1.4 0.8 1.5
Earnings per share - diluted (pence) 1.3 0.8 1.4
------------ ----------- ---------
The results for the period are derived from continuing
activities.
Frenkel Topping Group plc
Group Statement of Financial Position
as at: 30-Jun-23 30-Jun-22 31-Dec-22
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
ASSETS
NON CURRENT ASSETS
Goodwill and other intangibles 29,250 24,088 29,579
Plant, property and equipment 2,717 2,457 2,834
Loans receivable 168 166 162
32,135 26,711 32,575
CURRENT ASSETS
Accrued income 4,903 3,102 4,072
Trade receivables 11,086 7,693 10,661
Other receivables 1,146 858 749
Investments 101 99 100
Cash at bank and in hand 4,866 1,761 4,986
---------- ---------- ----------
22,102 13,513 20,568
TOTAL ASSETS 54,237 40,224 53,143
========== ========== ==========
EQUITY AND LIABILITIES
EQUITY
Share capital 637 566 637
Share premium 22,705 13,140 22,705
Merger reserve 6,245 6,245 6,245
Revaluation reserve 479 352 479
Own share reserve (2,134) (2,315) (2,210)
Other reserve (341) (341) (341)
Retained earnings 14,149 12,965 12,296
---------- ---------- ----------
Equity attributable to owners of
the parent company 41,740 30,612 39,811
Non-controlling interests 238 180 283
---------- ---------- ----------
TOTAL EQUITY 41,978 30,792 40,094
---------- ---------- ----------
CURRENT LIABILITIES
Current taxation 1,075 871 760
Trade and other payables 7,375 4,508 7,680
---------- ---------- ----------
8,450 5,379 8,440
LONG TERM LIABILITIES 3,809 4,053 4,609
TOTAL EQUITY AND LIABILITIES 54,237 40,224 53,143
========== ========== ==========
Frenkel Topping Group plc 6 Months 6 Months Year
ended
Group Cash Flow Statement ended ended 31-Dec-
For the period: 30-Jun-23 30-Jun-22 22
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit before tax 2,428 1,284 2,419
Adjustments to reconcile profit
for the period to cash generated
from operating activities:
Finance income/loss (4) 9 7
Finance costs 186 205 477
Share based compensation 242 349 480
Depreciation 304 238 574
(Increase)/decrease in accrued income,
trade and other receivables (1,660) (1,015) (2,205)
(Decrease)/increase in trade and other
payables 405 (101) (95)
------------ ----------- ---------
Cash generated from operations 1,901 969 1,657
Income Tax paid (363) (323) (999)
------------ ----------- ---------
Cash generated from operating activities 1,538 646 658
Investing Activities
Acquisition of plant, property
and equipment (148) (163) (240)
Acquisition of subsidiaries (1,100) (8,084) (13,478)
Cash acquired on acquisition of
subsidiaries - 1,033 1,992
Loans advanced - (21) (22)
Cash (used) / generated in investing
activities (1,248) (7,235) (11,748)
Financing activities
Shares issued (net of costs) - - 9,637
Exercise of share options 1 - 1
Dividend paid (165) (110) (1,771)
Repayment of borrowing (36) - (2)
Interest received 4 - -
Interest element of lease payments (17) (17) (36)
Principal element of lease payments (197) (141) (368)
Other interest paid and FX losses - - (3)
Cash used in financing (410) (268) 7,458
------------ ----------- ---------
(Decrease)/ increase in cash (120) (6,857) (3,632)
Opening cash 4,986 8,618 8,618
------------ ----------- ---------
Closing cash 4,866 1,761 4,986
============ =========== =========
Closing Cash and Cash Equivalents
Cash 4,866 1,761 4,986
Cash equivalents 101 99 100
------ ------ ------
Closing cash and cash equivalents 4,967 1,860 5,086
====== ====== ======
Cash equivalents are held in liquid investments.
Notes to the Interim Financial Statements
1. Revenue and Segmental Reporting
All of the Group's revenue arises from activities within the
UK.
Revenue arising from recurring and non-recurring sources is as
follows:
6 Months 6 Months Year
ended
ended ended 31-Dec-
30-Jun-23 30-Jun-22 22
GBP'000 GBP'000 GBP'000
Recurring 5,899 5,424 11,045
Non-recurring 10,143 5,686 13,805
_______ _______ _______
Total revenue 16,042 11,110 24,850
_______ _______ _______
Operating Segments
The Group's chief operating decision maker is deemed to be the
CEO. The CEO has identified the following operating segments:
Financial Services
This segment includes our independent financial advisory,
discretionary fund management and financial services
businesses.
Costs Law
This segment includes each of our costs law services
businesses.
Other Professional Services
This segment includes our major trauma signposting, forensic
accountancy, care and case management and medico-legal reporting
businesses.
Central Services
This is predominantly a cost centre for managing Group related
activities or other costs not specifically related to a
product.
Other
6 Months ended June 2023 Financial Costs Professional Central
services Law Services Services Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 6,305 4,162 5,550 25 16,042
Adjusted EBITDA 1,924 1,056 1,437 (888) 3,529
Other
6 Months ended June 2022 Financial Costs Professional Central
services Law Services Services Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 5,846 3,154 2,110 - 11,110
Adjusted EBITDA 2,124 631 693 (788) 2,660
Other
Year ended December 2022 Financial Costs Professional Central
services Law Services Services Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 11,792 7,057 6,001 - 24,850
Adjusted EBITDA 4,302 1,721 1,763 (1,732) 6,054
2. Administrative Expenses
The following table analyses the nature of expenses:
6 Months 6 Months Year
ended
ended ended 31-Dec-
30-Jun-23 30-Jun-22 22
GBP'000 GBP'000 GBP'000
Depreciation 329 238 574
Share based compensation 314 349 660
Acquisition strategy, integration and
reorganisation costs 276 575 1929
Other administrative expenses 3,077 2,382 5,067
------------ ----------- ---------
Total Other administrative expenses 3,996 3,544 8,230
3. Interest and similar items
6 Months 6 Months Year
ended
ended ended 31-Dec-
30-Jun-23 30-Jun-22 22
GBP'000 GBP'000 GBP'000
Interest on lease liabilities 17 17 36
Loan and other interest charges - - 3
Unwinding discount - deferred consideration 169 188 438
------------ ----------- ---------
Total finance costs 186 205 477
About Frenkel Topping Group
The Frenkel Topping Group of companies specialises in providing
financial advice and asset protection services to clients at times
of financial vulnerability, with particular expertise in the field
of personal injury (PI) and clinical negligence (CN).
For more than 30 years the Group has worked with legal
professionals and injured clients themselves to provide
pre-settlement, at-settlement and post-settlement services to help
achieve the best long-term outcomes for clients after injury. It
boasts a client retention rate of 99%.
Frenkel Topping Group is focused on consolidating the fragmented
PI and CN space in order to provide the most comprehensive suite of
services to clients and deliver a best-in-class service offering
from immediately after injury or illness and for the rest of their
lives.
The group's services include the Major Trauma Signposting
Partnership service inside NHS Major Trauma Centres, expert
witness, costs, tax and forensic accountancy, independent financial
advice, investment management, and care and case management.
The Group's discretionary fund manager, Ascencia, manages
financial portfolios for clients in unique circumstances, often who
have received a financial settlement after litigation. In recent
years Ascencia has diversified its portfolios to include a
Sharia-law-compliant portfolio and a number of ESG portfolios in
response to increased interest in socially responsible investing
(SRI).
Frenkel Topping has earned a reputation for commercial
astuteness underpinned by a strong moral obligation to its clients,
employees and wider society, with a continued focus on its
Environmental, Social and Governance (ESG) impact.
For more information visit: www.frenkeltoppinggroup.co.uk
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END
IR FFFIIADITFIV
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September 29, 2023 02:00 ET (06:00 GMT)
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