Interview: Frenkel Topping increases dividend payout by 93 per cent

The provider of financial advice on the investment of personal injury damages Frenkel Toping has reported a 15 per cent increase in its full-year revenues to 5.5m pounds. Profits before taxes grew by 35% to reach £1.39m (1.76p per share), as gross margins improved to 64% from 60% beforehand. Funds deposited by clients with their Investment Management Service rose to £558m while recurring income hit £3.8m, versus the £3.2m achieved in 2012.Cashflow from operations nearly tripled to £1.7m. Profit from operations before share based compensation and provisions increased 30% to £1.437m, as operating margins improved to 26% (Shore Capital forecast: 23%) from 23% in the year before. The company´s cash balance at the end of 2013 came in at £1.5m, ahead of the £0.4m that was on hand at the end of 2012. David Southworth, Chairman of Frenkel Topping, highlighted the fact that the company achieved a fifth consecutive year of client retention at 99% and his confidence in the future, as reflected in the group´s continued progressive dividend policy. The dividend has been increased by 93% to 0.58p, as a result of which the 'dividend cover' has been reduced to 3.1 times net profits, compared to the 4.7 seen in 2012. High-quality earnings, broker saysShares are now trading hands at approximately 22.7 times´ Shore Capital´s earnings estimates for 2014, falling to 19.1 times 2015 profits. While the broker conceded that the valuation may appear to be high when compared to rivals´ it adds that "however, the quality of the earnings stream, and its transparency, makes it a price worth paying, in our view."Shore Capital has raised its forecast for the company´s dividends per share this year to 0.7p from 0.44p previously. In remarks to Sharecast management highlighted the fact that the balance sheet is debt-free and the firm´s ability to generate cash in a sustained manner going forward. Shore Capital is expecting net cash to rise to 3.66m by the end of calendar year 2015 on revenues of 6.364m.Stock in the AIM-listed company was off by 12% to 44p in mid-afternoon trading but well above the closing 2013 level of 31p.AB