REG - Frenkel Topping Grp - Trading Update & New Debt Facility

Frenkel ToppingAnnouncement

24/01/2024 07:00

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RNS Number : 6728A  Frenkel Topping Group PLC  24 January 2024

The information contained within this announcement was deemed by the Company
to constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 as amended.  With the publication of
this announcement via a Regulatory Information Service, this inside
information is now considered to be in the public domain.

Frenkel Topping Group plc

("Frenkel Topping", the "Company" or the "Group")

Trading Update for the year ended 31 December 2023

&

New Debt Facility

Frenkel Topping (AIM: FEN), a specialist financial and professional services
firm operating within the personal injury and clinical negligence marketplace,
provides the following trading update for the financial year ended 31
December 2023 ("FY2023") and an outlook for the current financial year
("FY2024").

·    Revenue increased by 32% in FY2023, driven by acquisition and organic
growth

·    In light of the challenging market conditions during the year,
revenue is expected to be £32.8m in FY2023 and adjusted EBITDA is expected to
be £8.0m*

·    Assets Under Management (AUM) up 12% to £1,335m (2022: £1,187m)

·    Assets on a discretionary mandate up 15% to £820m (2022: £715m)

·    New Money Market Solution launched in June 2023 attracting investment
of £39m

·    Acquisition strategy continues to deliver with non-recurring revenue
up in excess of 50%

·    Two new Major Trauma Centres and three Working-in-Partnership JVs
added during the year

·    Cash generation from operations continues to improve, up over 150%
from 2022

·    The Company had £2.4m of net cash at the year end

·    Client retention rate remains high at 99%

·    FY2024 has started strongly with a number of AUM opportunities in the
pipeline

·    Post period end the Company has signed a new £7.5m Revolving Credit
Facility with Santander

 

Richard Fraser, Chief Executive Officer of Frenkel Topping Group plc,
said:

"Volatile market conditions have seen clients channelling funds into high
interest savings accounts and led to a general reluctance to invest in
equities which unsurprisingly has meant high margin recurring revenue being
impacted, with a consequential impact on both revenue and EBITDA for FY2023
being slightly below expectations by c6-7%.

However, we have grown our AUM, in no small part thanks to Ascencia, which has
again beaten its benchmark and shown agility in launching the new Money Market
Solution in response to market dynamics and client demand and overall
demonstrated resilience in a challenging environment.

 We are seeing the benefits of our acquisition strategy coming to fruition.
We continue our focus on data and are seeing the growth in transactional
revenue channelling into future growth opportunities in AUM.

 We continue to be optimistic about our long-term goal to grow to 15% market
share in each of our business units."

Non-recurring revenue

The strong growth of 50% in non-recurring revenue has been very pleasing,
demonstrating the success of the Company's acquisition strategy over recent
years, and with a better than expected gross margin profile, especially for
Bidwell Henderson and Forths.

Forth Associates Ltd (acquired 2020) and Bidwell Henderson (acquired 2021)
closed the year with record numbers of active files. Meanwhile Somek &
Associates (acquired 2022) has grown their number of expert witnesses by 19%
during the year which further increases capacity to accept new instructions.
The onboarding of expert witnesses remains a key area of focus for 2024 and we
expect to achieve similar levels of growth throughout the year ahead.

Recurring Revenue

It is reassuring that our recurring revenue has continued to grow, and that
the year-end AUM has increased. However, growth in AUM was moderately impacted
by market conditions, which remained challenging and the Company has not been
entirely immune from it.

The performance of our discretionary fund management business Ascencia
Investment Management has again been strong. With global economic uncertainty,
Ascencia's conservative multi-asset investment approach continues to deliver a
smoother client investment experience and has continued to outperform its key
benchmarks.

High interest rates have meant many potential new Court of Protection clients
were inclined to hold funds within the Government's Court Funds Office
accounts rather than to invest. In June 2023 and in response to this, Ascencia
launched a 'Money Market Solution' which provides clients with an investment
solution that benefits from the higher interest rate environment. This
product, assisted by the hard work and tenacity of our sales team, has
attracted investment from both new and existing clients with £39m of assets
added by the year end.  Whilst funds in this Money Market Solution' product
do earn a lower fee than those invested in our other investment solutions,
which has moderately impacted the overall full year outturn, we are confident
that they will be redeployed to higher fee products across our proposition as
financial markets turn.

Outlook

The Company continues to deliver on its growth strategy, in particular the
transactional businesses are thriving, a clear indicator that the Group is
adding value through its acquisition strategy. We remain committed to
continuing our acquisition path and are advancing further opportunities.

For the recurring revenue businesses, the market backdrop continues to be
uncertain.  The success of the Money Market Solution means that funds are
waiting to be deployed into higher yield funds, however the timing is unclear
and prudently we anticipate a similar impact on this current financial year
from this headwind and revise our expectations accordingly.

January 2024 has been positive with a strong pipeline of new AUM opportunities
being pursued which provides confidence for the start of the new financial
year.

We remain focused on our strategic course and the Board's view on the longer
term is unchanged notwithstanding the tough market conditions which are
impacting AUM and our recurring revenues.  The growth strategy continues to
mature, and we are seeing an increase in opportunities across the Group.
Consequently, we are confident that we can continue to deliver growth in
shareholder value in the years ahead.

New Debt Facility

The Company is pleased to have entered into a £7.5m revolving credit facility
(RCF) at 2.95% over SONIA with high street lender Santander on standard
commercial terms to support its growth and acquisition strategy.

* The financial expectations noted above are preliminary, and subject to
year-end financial close and audit review processes. Adj. EBITDA defined as
before share based compensation, M&A strategy and re-organisation costs.

 

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 Ltd (Nominated Advisor & Broker)       Tel: 020 7220 0500
 Carl Holmes/Abigail Kelly/Fergus Sullivan  (Corporate Finance)

 Tim Redfern (ECM)

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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