t
Frenkel Topping Group plc announced its interim results for the six months ended 30 June 2023. The Group reported revenue of £16.0 million, a 44% increase from £11.1 million in H1 2022, and profit attributable to shareholders of £1.7 million, up 89% from £0.9 million. Basic earnings per share increased by 75% to 1.4 pence (H1 2022: 0.8 pence), with Assets Under Management reaching £1,261 million as of 30 June 2023, a 9% rise from £1,155 million in H1 2022.
| Date | 29 Sept 2023 |
| Time | 07:00:12 |
| Category | Results |
| ID | 0821O |
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* (£m) |
H1 2022* (£m) |
% change |
FY2022 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 |
|
|
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 30-Jun-23 |
ended 30-Jun-22 |
ended 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 For the period: |
|
ended 30-Jun-23 |
ended 30-Jun-22 |
ended 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, 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 30-Jun-23 |
ended 30-Jun-22 |
ended 31-Dec- 22 |
|
|
£'000 |
£'000 |
£'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.
|
6 Months ended June 2023 |
Financial services |
Costs |
Other Professional Services |
Central Services |
Total |
|
|
£'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 |
|
6 Months ended June 2022 |
Financial services |
Costs |
Other Professional Services |
Central Services |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Revenue |
5,846 |
3,154 |
2,110 |
- |
11,110 |
|
Adjusted EBITDA |
2,124 |
631 |
693 |
(788) |
2,660 |
|
Year ended December 2022 |
Financial services |
Costs |
Other Professional Services |
Central Services |
Total |
|
|
£'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 30-Jun-23 |
ended 30-Jun-22 |
ended 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 30-Jun-23 |
ended 30-Jun-22 |
ended 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