REG - Frenkel Topping Grp - Interim Results
29/09/2023 07:00
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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
(£m) (£m) Full year (£m)
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 (http://www.frenkeltoppinggroup.co.uk)
Richard Fraser, Chief Executive Officer Tel: 0161 886 8000
Cavendish Capital Markets Limited (Nominated Advisor & Broker) Tel: 020 7220 0500
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
c£1.2bn 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 £5.9m (H1 22 - £5.5m) .
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 £16.0m (H1 22: £11.1m).
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 £0.6m in the first half
of last year to £1.1m 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 £4.9m (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
Group income statement for the period: ended ended ended
30-Jun-23 30-Jun-22 31-Dec- 22
Unaudited Unaudited Audited
Notes £'000 £'000 £'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
£'000 £'000 £'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
Group Cash Flow Statement ended ended ended
For the period: 30-Jun-23 30-Jun-22 31-Dec- 22
Unaudited Unaudited Audited
£'000 £'000 £'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, (1,660) (1,015) (2,205)
trade and other receivables
(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
30-Jun-23 30-Jun-22 31-Dec- 22
£'000 £'000 £'000
5,899 5,424 11,045
Recurring
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.
Financial services Costs Other Professional Services Central Services Total
Law
6 Months ended June 2023
£'000 £'000 £'000 £'000 £'000
Revenue 6,305 4,162 5,550 25 16,042
Adjusted EBITDA 1,924 1,056 1,437 (888) 3,529
Financial services Costs Other Professional Services Central Services Total
Law
6 Months ended June 2022
£'000 £'000 £'000 £'000 £'000
Revenue 5,846 3,154 2,110 - 11,110
Adjusted EBITDA 2,124 631 693 (788) 2,660
Financial services Costs Other Professional Services Central Services Total
Law
Year ended December 2022
£'000 £'000 £'000 £'000 £'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
30-Jun-23 30-Jun-22 31-Dec- 22
£'000 £'000 £'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
30-Jun-23 30-Jun-22 31-Dec- 22
£'000 £'000 £'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
(https://protect-eu.mimecast.com/s/WNCMCR1EKSxDwoTNKWD-?domain=frenkeltoppinggroup.co.uk)
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