REG - Frenkel Topping Grp - Interim Results
26/09/2022 07:00
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RNS Number : 5342A Frenkel Topping Group PLC 26 September 2022
26(th) September 2022
The information communicated in this announcement is inside information for
the purposes of Article 7 of Regulation 596/2014
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,
announces its interim results for the six months ended 30 June 2022.
Financial Highlights
H1 2022* H1 2021* % change FY2021
(£m) (£m) Full year (£m)
Revenue 11.1 8.5 31% 18.4
Recurring revenue 5.4 4.3 26% 8.9
Gross profit 5.0 4.5 11% 9.0
EBITDA** 2.7 2.4 13% 4.6
Underlying EPS (basic)*** 1.85 pence 1.75 pence 6% 3.84 pence
AUM 1,155 1,110 4% 1,174
Assets on a discretionary mandate 667 606 10% 676
Interim dividend 0.34 pence 0.34 pence 0% -
*Unaudited
**EBITDA before share based compensation, M&A strategy and re-organisation
costs
**Underlying EPS is calculated using profit attributable to shareholders
adjusted for share based compensation, M&A strategy, re-organisation costs
and unwinding of the discount factor relating to deferred consideration on
acquisitions
Operational Highlights
· Results are in line with management expectations
· AUM resilient despite challenging market conditions demonstrating
the differentiated and conservative way the Company manages its clients assets
· Client retention rate remains high at 99%
· Completion of milestone acquisition of Cardinal Management
Limited
· Reaping benefits of long-established graduate and apprenticeship
schemes and building on strong talent attraction and retention practices to
combat economy-wide talent crisis
· Bidwell Henderson's successful digital training platform has
paved the way for stronger training infrastructure across the Group
· A healthy pipeline of AUM for the second half of the year, a
traditionally stronger half, to underpin full year outturn
· Groupwide rollout of employee engagement app to increase
communication and flow of information
Delivery of strategy with a strong start to the second half
· Successful capital raise of £10m (gross)
· Completion of Somek and Associates Ltd and N-Able Service Ltd
acquisitions
· Continued execution of acquisition strategy, showing positive
results
· 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")
· Integration of all acquisitions progressing well and to plan
· Continued delivery of the "Working in Partnership" programme -
aligning with top law firms and signed JV with CFG Law, its 8(th) such
arrangement
Richard Fraser, CEO of Frenkel Topping Group, statement:
Against a backdrop of economic turbulence, volatility in capital markets,
supply chain issues and the ongoing conflict in Ukraine, we are very pleased
to report results in line with management expectations, in no small part
supported by the recent acquisition strategy which has diversified our income
streams and strengthened our position in the market. Frenkel Topping is a
market leader in its space.
We are particularly pleased with the performance of those of our investment
portfolios which are managed by the Group's in-house discretionary investment
manager, Ascencia, which have continued to perform well. While not completely
immune to the wider market downturns these funds have continued to deliver
returns that have been consistently and notably ahead of world indices over
the period. This demonstrates our ability to navigate volatile markets and the
prudence with which we approach managing the assets of our underlying clients.
In a challenging investment environment, characterised by slowing economic
growth and elevated inflation, Ascencia has delivered returns in line with its
"smoother investment journey" investment philosophy. Ascencia's client
portfolio returns year to date, (as at 31/08/22), have been highly competitive
on a risk adjusted basis, when compared to those of leading UK discretionary
fund managers (DFM).
It is pleasing to report that year to date (as at 31/08/22), Ascencia's
investment flagship investment solutions Safety First 4 and FTIP Income &
Growth 4 returned -3.2% and -6.3% respectively, a decent performance compared
to other mainstream asset managers. The model portfolios are measured by Asset
Risk Consultants (ARC), an independent DFM performance monitoring consultancy,
and returns compare highly favourably against the equivalent ARC Balanced
Asset index return of -8.3%. Ascencia's relative outperformance in challenging
markets, confirms the attractiveness of its specific investment philosophy of
"delivering a smoother investment journey" for its unique client base.
Pleasingly, in these uncertain times, the Ascencia approach is also gaining
wider recognition from the professional introducer market. Overall, the
Company is not entirely immune against the market challenges as some of its
assets are externally managed, explaining why AUM as compared to FY21 has
remained broadly flat. However, the Board is on target to add its expected
£125m of new AUM by the end of the year. September alone has seen the Company
secure £19m in mandate wins across 5 cases to contribute to this target.
Over the first half of 2022 we have continued to see the cumulative positive
impact of our recent acquisitions and the effectiveness of integrating the new
Group businesses in close succession, maximising the clear synergies that
exist in cross-sell opportunities, shared data, resource and marketing
opportunities at Group level.
The continued successful implementation of the Group's Strategy, to
consolidate the fragmented and niche sector of Personal Injury and Clinical
Negligence, has highlighted further opportunities for growth and the effective
integration of acquisitions in recent years has provided the blueprint for
similar acquisitions to join the group in a seamless and positive way.
Frenkel Topping continues to strengthen its reputation as a full-service
provider with multiple touch points across the space that allow us to scale
routes into growing AUM mandates from successful claims.
The acquisition of Cardinal Management Limited in January 2022 marked a truly
transformational deal for the Group. Cardinal works in close partnership with
a number of key NHS Major Trauma Centres to provide a Major Trauma Signposting
Partnership support service. It is the sole commercial organisation operating
in its space and has a 6-year track record of contracts with the NHS with a
100% contract renewal rate. Cardinal is also in high demand from PI legal
providers seeking quality multi-track cases and provides a clear opportunity
to expand the Major Trauma Signposting Partnership into additional Major
Trauma Centres within the NHS. Cardinal is currently in 7 NHS Major Trauma
Centres and are in discussions to enter more in the near future. There are a
total of 28 such Major Trauma Centres around the country.
We are focused on consolidating ownership of the full supply chain in the PI
and CN space because we are confident that we can deliver the very best
service levels to clients from immediately after injury or illness and for the
rest of their lives.
The Cardinal acquisition, along with the continued integration of acquisitions
made in previous years, have added to the Company's momentum in 2022,
strengthening an already compelling and market leading proposition.
Throughout 2022 we have developed greater access to clients - both directly to
the injured party and via their legal representatives - and extended the
customisation of their care. Frenkel Topping Group now delivers an end-to-end
service to its client base under a tried and trusted umbrella group, making us
a stand out player in our space.
Our client retention rate remains exceptionally high at 99%, reflecting
resilient performance of Ascencia's portfolios and our relentless focus on
excellent customer service.
During a time when no industry has been shielded from a talent crisis, the
Group's longstanding focus on training and development has been highlighted.
The Group's Graduate Academy is something we have invested in heavily over the
last five years and will continue to do so as part of the Group's growth
strategy.
We annually attract the brightest talent who are switched on and eager to
progress and we are proud of the success rate in cohorts completing the scheme
and taking up full-time roles across the business.
They have honed their skills in a structured environment, understood the
theory with guidance from the most experienced team players and applied it in
practice to real-life scenarios. They have developed at pace, defined their
skillsets and refined the softer skills that only on-the-job experience can
bring.
Frenkel Topping Group apprentices have been recognised in regional award
ceremonies. The accolades demonstrate why we decided to invest in our
apprenticeship scheme, to highlight the importance of the alternative routes
into a career in our sector and to encourage talent from a wider and more
diverse pool.
The Group's talent mapping scheme was bolstered with the acquisition of
Bidwell Henderson in 2021 - who had developed their own digital training
platform to train cost drafts people. Bringing BH's years of experience in
training into the group has allowed us to professionalise our training
division further and extend its reach across all departments inside the group
businesses.
Collaboration across the group businesses in the last 18 months has identified
areas of opportunity for the benefit of all divisions. The Group has begun
and will continue to invest in its digital infrastructure project not only to
harness technology to maximise efficiencies and streamline processes but to
take advantage of opportunities that exist in creating a sophisticated online
presence in a very traditional sector.
Outlook
The second half of the year has begun positively, with some excellent mandate
wins contributing £19m of AUM, and trading (in what is a traditionally a
second half weighted business) remains in line with management's expectations
for the full year. The Board is confident of our future and that we have the
right culture, resources and expertise to continue to grow our business
organically, execute our clear strategy and become the market leader in
providing a full service offering to clients and claimants in PI and Clin Neg.
We were delighted with the support in the recent £10m capital raise where we
had strong support from existing and new investors alike and gives the Company
the ability to execute on its strategy of consolidation in the PI and CN
space.
Following the capital raise, the Group's most recent acquisitions, Somek and
Associates Ltd and N-Able Services Ltd both operate in the Care and Case
management sector and significantly enhances the groups position in this space
and complement the expertise and scope of Keystone incredibly well.
Post period end the Group extended its 'Working in Partnership' programme with
a 50:50 joint venture (JV) between its IFA arm and law firm, CFG Law, taking
its joint ventures to eight in the Personal Injury and Clinical Negligence
space. CFG is the latest in Frenkel Topping's strategy to strengthen
relationships with likeminded firms in the Personal Injury and Clinical
Negligence space. The Group's seven other JVs have added c.£68.5m of AUM to
the Company to date and represented 16% of AUM added in the last financial
year.
Through the combination of a disciplined buy and build strategy and our
continued efforts to grow our core business and deliver high-quality services
to our clients, we are building a substantial business with considerable
scale.
Whilst not being immune to external market conditions, the Group continues to
show resilience through its diversification of revenue streams, alongside its
99% retention rates has a solid pipeline of new business opportunities.
For further information:
Frenkel Topping Group plc www.frenkeltoppinggroup.co.uk (http://www.frenkeltoppinggroup.co.uk)
Richard Fraser, Chief Executive Officer Tel: 0161 886 8000
finnCap Ltd (Nominated Advisor & Broker) Tel: 020 7220 0500
Carl Holmes/James Thompson/Milesh Hindocha (Corporate Finance)
Tim Redfern / Richard Chambers (ECM)
Frenkel Topping Group plc 6 Months 6 Months Year
Group income statement for the period: ended ended ended
30-Jun-22 30-Jun-21 31-Dec- 21
Unaudited Unaudited Audited
Notes £'000 £'000 £'000
REVENUE 11,110 8,459 18,366
Direct staff costs (6,068) (3,974) (9,349)
Gross Profit 5,042 4,485 9,017
ADMINISTRATIVE EXPENSES
Share based compensation (349) (137) (430)
M&A strategy and re-organisation costs (575) (641) (972)
Other administrative expenses 1 (2,620) (2,244) (4,771)
TOTAL ADMINISTRATIVE EXPENSES (3,544) (3,022) (6,173)
Other Operating Income 24
Underlying profit from operations 2,422 2,241 4,270
- share based compensation (349) (137) (430)
- M&A strategy and re-organisation costs (575) (641) (972)
PROFIT FROM OPERATIONS 1,498 1,463 2,868
Finance and other income/(fair value losses on investments) (9) 9 146
Finance costs 2 (205) (144) (319)
PROFIT BEFORE TAX 1,284 1,328 2,695
Income tax expense (309) (354) (219)
PROFIT FOR THE PERIOD 975 974 2,476
Gains on property revaluation arising net of tax - - 125
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 975 974 2,601
PROFIT ATTRIBUTABLE TO:
Owners of parent undertakings 881 902 2,337
Non-controlling interest 94 72 139
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of parent undertakings 881 902 2,462
Non-controlling interest 94 72 139
0. 0.
Earnings per share - basic (pence) 0.82 0.87 2.23
Earnings per share - diluted (pence) 0.78 0.82 2.11
Underlying earnings per share - basic (pence) 1.85 1.75 3.84
Underlying earnings per share - diluted (pence) 1.75 1.64 3.63
The results for the period are derived from continuing activities.
Frenkel Topping Group plc
Group Statement of Financial Position as at: 30-Jun-22 30-Jun-21 31-Dec-21
Unaudited Unaudited Audited
£'000 £'000 £'000
ASSETS
NON CURRENT ASSETS
Goodwill and other intangibles 24,088 15,260 16,256
Plant, property and equipment 2,457 1,917 1,994
Loans receivable 166 100 128
Deferred tax - 105 433
26,711 17,382 18,811
CURRENT ASSETS
Accrued income 3,102 2,531 3,314
Trade receivables 7,693 4,810 6,350
Other receivables 858 1,007 610
Investments 99 1,237 109
Cash at bank and in hand 1,761 6,860 8,618
13,513 16,445 19,001
TOTAL ASSETS 40,224 33,827 37,812
EQUITY AND LIABILITIES
EQUITY
Share capital 566 566 566
Share premium 13,140 12,697 13,140
Merger reserve 6,245 6,245 6,245
Revaluation reserve 352 227 352
Own share reserve (2,315) (4,128) (2,315)
Other reserve (341) (341) (341)
Retained earnings 12,965 10,700 11,716
Equity attributable to owners of the parent company 30,612 25,966 29,363
Non-controlling interests 180 130 196
TOTAL EQUITY 30,792 26,096 29,559
CURRENT LIABILITIES
Current taxation 871 668 669
Trade and other payables 4,508 5,275 5,201
5,379 5,943 5,870
LONG TERM LIABILITIES 4,052 1,788 2,384
TOTAL LIABILITIES 9,431 7,731 8,254
TOTAL EQUITY AND LIABILITIES 40,223 33,827 37,812
Frenkel Topping Group plc 6 Months 6 Months Year
Group Cash Flow Statement ended ended ended
For the period: 30-Jun-22 30-Jun-21 31-Dec- 21
Unaudited Unaudited Audited
£'000 £'000 £'000
Profit before tax 1,284 1,328 2,695
Adjustments to reconcile profit for the period to cash generated from
operating activities:
Finance income/loss 9 (5) (142)
Finance costs 205 144 319
Share based compensation 349 102 291
Depreciation 238 162 334
(Increase)/decrease in accrued income, (1,015) (941) (1,709)
trade and other receivables
(Decrease)/increase in trade and other payables (101) (250) (164)
Cash generated from operations 969 540 1,624
Income Tax paid (323) (250) (884)
Cash generated from operating activities 646 290 740
Investing Activities
Acquisition of plant, property and equipment (163) (36) (100)
Acquisition of subsidiaries (8,084) (4,632) (6,119)
Cash acquired on acquisition of subsidiaries 1,033 222 519
Investment disposals - 12 1,278
Loans advanced (21) - (28)
Cash (used) / generated in investing activities (7,235) (4,434) (4,450)
Financing activities
Exercise of share options - - 84
Own shares (purchased)/sold - 367 2,256
Dividend paid (110) (1,192) (1,558)
Repayment of borrowing - (64) (235)
Interest element of lease payments (17) (10) (19)
Principal element of lease payments (141) (94) (188)
Other interest paid and FX losses - (9)
Cash used in financing (268) (993) 331
(Decrease)/ increase in cash (6,857) (5,137) (3,379)
Opening cash 8,618 11,997 11,997
Closing cash 1,761 6,860 8,618
Closing Cash and Cash Equivalents
Cash 1,761 6,860 8,618
Cash equivalents 99 1,237 109
Closing cash and cash equivalents 1,860 8,097 8,727
Cash is held at National Westminster Bank Plc.
Cash equivalents are held in liquid investments.
Notes to the Interim Financial Statements
1. Administrative Expenses
The following table analyses the nature of expenses:
6 Months 6 Months Year
ended ended ended
30-Jun-22 30-Jun-21 31-Dec- 21
£'000 £'000 £'000
Depreciation 238 162 334
Other administrative expenses 2,382 2,082 4,437
Total Other administrative expenses 2,620 2,244 4,771
2. Interest and similar items
6 Months 6 Months Year
ended ended ended
30-Jun-22 30-Jun-21 31-Dec- 21
£'000 £'000 £'000
Interest on lease liabilities 17 10 19
Loan and other interest charges - - 6
FX Losses - - 3
Unwinding discount - deferred consideration 188 134 291
Total finance costs 205 144 319
3. Events after the Reporting Date
Capital raise
On 5(th) July 2022, the Group announced a proposed placing of 14,285,715
shares at 70 pence per share raising £10 million before expenses.
On 6(th) July 2022, the Group announced that the placing had been successful.
8,627,915 of the new shares were subject to shareholder approval at an
extraordinary general meeting which took place on 29(th) July and all
resolutions were passed.
Acquisitions
On 13(th) September 2022, the Group announced the acquisition of Somek and
Associates Limited (total consideration capped at £7m) and N-Able Services
Limited (total consideration capped at £1.1m).
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
(https://protect-eu.mimecast.com/s/WNCMCR1EKSxDwoTNKWD-?domain=frenkeltoppinggroup.co.uk)
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