Frenkel Topping Regulatory News (FEN)

31 Mar 2006 16:22

Frenkel Topping Group PLC31 March 2006 FRENKEL TOPING GROUP PLC ("FRENKEL TOPPING" OR "tHE GROUP") PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005 Frenkel Topping provides specialist independent financial advice on theinvestment of personal injury damages and clinical negligence awards. FrenkelTopping offers a complete service for all personal injury claim handlers,lawyers and individual clients dealing with awards from a few thousand pound tomulti-million pound cases. Frenkel Topping's expertise includes assetprotection, bespoke investment portfolios, analysis of periodical payments,Court of Protection portfolios and provision of trustee and receivership bankaccounts. FINANCIAL HIGHLIGHTS Year Ended 5 Months 31 Dec 2005 Ended 31 Dec 2004 Turnover £2,303,306 £1,093,238 Operating (loss)/profit before amortisation of goodwill £(591,810) £46,390 Operating loss £(938,487) £(112,791) (Loss)/profit before taxation and amortisation of goodwill £(588,781 £16,380 Loss before taxation £(935,458) £(148,801) Basic and fully diluted loss per share (1.72)p (0.46)p OPERATIONAL HIGHLIGHTS Funds under management as at 31 December 2005 £145 million (31 December 2004:£119 million) Business re-organisation now complete For further information: Frenkel Topping Group Plc Richard Fraser (Chief Executive) Tel No: 0161 886 8000 CHAIRMAN'S STATEMENT The financial year ending 31 December 2005 was challenging for the Group, itsDirectors and Staff. Our main focus has been to attempt to establish theFrenkel Topping brand as a leader in the field of independent financial advicefor personal injury victims. The Group is also well placed to take advantagesof the changes in law as to how payment awards are made as part of personalinjury or clinical negligence claims. Our income is gained primarily from fees and commission together with recurringincome from investment funds under management. Frenkel Topping does not justfocus on the generation of new clients but aims to serve its existing clientbase of both professional and non-professional clients with excellent aftersales service. The Group recorded a turnover of £2.3m, which was broadly in line withexpectations. Included within this figure was £0.8m of recurring income. Inaddition our funds under management have grown by 20% to £145m as at 31stDecember 2005. Due to our continued focus on retaining existing clients andobtaining new business, our funds under management will continue to grow, andprovide an increasing recurring income for future years. Changes in the market place and our own ambitions for the future necessitatedthe implementation of a reorganisation of the Group, and this has affected ourfinancial results for the year ending 31 December 2005. During the year we havestrengthened the management team, expanded our premises and created a businessdevelopment department to augment our team of fee earners. The loss for the Group before Tax, Goodwill and Minority Interests was £0.6m.This loss reflects the cost of our reorganisation, which is now complete, and anumber of significant one-off costs. The cost of the reorganisation and theone-off costs during the year amounted to £0.4m. This has mainly been spent onrecruitment, legal fees, the issue of share options to long term staff andenhanced marketing. In July 2005 the Group sold a number of shares in two ofits subsidiary companies for net proceeds of £512,000. These funds were usedfor purposes of working capital. Net assets at the year end were £2.9m and netdebt was £0.3m. The Board does not propose a dividend. Part of our focus in 2006 is to expand on the Frenkel Topping operation inLondon and the surrounding areas, and in December 2005 the Group relocated itsLondon offices to a more favourable position in order to facilitate this plan. Through enhanced marketing, we have increased the leads and enquiries that willgenerate income and as a result, at the commencement of 2006 we had a strongpipeline of both fee income and funds to invest under management. Whilst 2005 had been difficult and challenging, progress has been made in there-positioning of the Group for the future, and the Directors are primarilyfocused on returning the Group to profitability as soon as possible. D R Southworth Chairman Consolidated profit and loss account For the year ended 31 December 2005 2005 2004 Notes £ £ TURNOVER 2 2,303,306 1,093,238Cost of sales (967,914) (579,079) GROSS PROFIT 1,335,392 514,159 ADMINISTRATIVE EXPENSES Amortisation of goodwill (346,677) (159,181)Share based compensation (88,197) -Exceptional items 3 (342,499) -Other administrative expenses (1,496,506) (467,769) TOTAL ADMINISTRATIVE EXPENSES (2,273,879) (626,950) OPERATING LOSS (938,487) (112,791) Profit on partial disposal of interest 41,015 -in subsidiaries Interest receivable - 6,830Interest payable (37,986) (36,840) LOSS ON ORDINARY ACTIVITIES BEFORE (935,458) (142,801)TAXATIONTax on profit on ordinary activities 4 (19,273) (5,227) LOSS ON ORDINARY ACTIVITIES AFTER (954,731) (148,028)TAXATION Equity minority interest 168,789 (4,344) RETAINED LOSS FOR THE FINANCIAL PERIOD (785,942) (152,372) Basic loss per ordinary share 5 (1.72)p (0.46)pfully Diluted loss per ordinary share 5 (1.72)p (0.46)p All the activities of the group are classed as continuing. Consolidated BALANCE SHEET As at ended 31 December 2005 2005 Restated (note 1) 2004 £ £FIXED ASSETSIntangible assets 2,620,855 3,628,243Tangible assets 68,426 139,931 2,689,281 3,768,174CURRENT ASSETSWork in progress 218,427 80,893Debtors 541,561 793,938Cash at bank and in hand 183 15,568 760,171 890,399CREDITORS: amounts falling due within one year (782,553) (987,980) NET CURRENT LIABILITIES (22,382) (97,581) TOTAL ASSETS LESS CURRENT LIABILITIES 2,666,899 3,670,593 CREDITOR amounts falling due after more than one year (34,807) (67,756) PROVISIONS FOR LIABILITIES AND CHARGES (233,973) (128,219) MINORITY INTERESTS Minority Interests 540,955 187,201 NET ASSETS 2,939,074 3,661,819 CAPITAL AND RESERVESCalled up share capital 227,998 227,998Other reserve 88,197 -Own Shares (25,000) -Share premium account 3,586,193 3,586,193Profit and loss account (938,314) (152,372) equity SHAREHOLDERS' FUNDS 2,939,074 3,661,819 Consolidated cash flow statement For the year ended 31 December 2005 Notes 2005 2004 £ £Net cash (outflow) from operating activities 6 (108,587) (927,020) Returns on investments and servicing of finance 6 (37,986) (30,010) Taxation 6 (9,595) (23,483) Capital expenditure 6 (35,472) (7,381) Acquisitions and disposals 6 486,760 (909,010) net cash inflow/(outflow) before financing 295,120 (1,896,904) Financing 6 16,819 1,495,432 increase/(decrease) in cash in the period 311,939 (401,472) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Notes 2005 2004 £ £Increase/(decrease) in cash in the period 311,939 (401,472) Net cash (outflow)/inflow from debt financing (16,819) 69,809 295,120 (331,663)Loans and finance leases acquired with subsidiary undertakings - (254,268) Change in net debt 295,120 (585,931)Net (debt)/funds as 1 January (573,431) 12,500 Net debt as 31 December 7 (278,311) (573,431) 1 presentation of financial information Information in this preliminary announcement does not constitute statutoryaccounts of the Group within the meaning of Section 240 of the Companies Act1985. The figures for the year ended 31 December 2005 are audited. Thepreliminary announcement is prepared on the same basis as set out in theprevious year's statutory accounts except for the changes in accountingstandards as detailed below. FRS 21 "Events after the Balance Sheet Date", FRS 22 "Earnings Per Share" andthe disclosure requirements of FRS 25 "Financial Instruments: Disclosure andPresentation" are effective for accounting periods beginning on or after 1January 2005 but have had no impact on the financial statements. FRS 20 "Share-base Payment" is effective for unlisted companies (including AIMcompanies) for accounting periods beginning on or after 1 January 2006. TheGroup has however adopted FRS 20 early and the loss for the year has beenincreased by £88,197. The change in accounting policy has not resulted in aprior year adjustment. The professional indemnity claims provision has also beenreclassified within provisions for liabilities. Statutory accounts for the year ended 31 December 2004, which were preparedunder accounting practices generally accepted in the UK, have been filed withthe Registrar of Companies. The auditors' report on those accounts wasunqualified and did not contain any statement under Section 237 (2) or (3) ofthe Companies Act 1985. 2 Turnover and segmental analysis The total turnover, losses before tax and net assets areattributable to the one principal activity of the Group, the provision of adviceregarding Structured Settlements and related financial services. An analysis ofturnover is given below: 2005 2004 £ £ United Kingdom 2,303,306 1,093,238 3 EXCEPTIONAL COSTS 2005 2004 £ £Redundancy and restructuring costs 228,526 -PI exceptional provision 113,973 - 342,499 - 4 TAx on loss on ordinary activities Analysis of charge in period 2005 2004 £ £Current taxUK Corporation tax based on the results for the period at 30% (2004:19%) 27,615 9,595UK Corporation tax based on the results for the period at 19% 5,020 - Total current tax charge 32,635 9,595 Total deferred tax (13,362) (4,368) Tax on loss on ordinary activities 19,273 5,227 Factors affecting tax charge for period The tax assessed on the loss for the period is that of the Group, the combinedrate being lower than the standard rate of corporation tax in the UK of 30%. The differences areexplained below: 2005 2004 £ £ Loss on ordinary activities before taxation (935,458) (142,801) Loss on ordinary activities multiplied by standard rate of corporation (280,637) (27,132)tax in the UK of 30% (2004: 19%) Effects of:Expenses not deductible for tax purposes (including goodwill) 126,952 33,377Capital allowances in excess of depreciation 13,362 3,350Deferred tax movements not recognised 173,472 -Effect of rate change (10,277) -Marginal relief 4,743 -Prior year under provision 5,020 - Current tax charge for period 32,635 9,595 Factors that may affect future charges The Group has unrecognised deferred tax assets of £446,732 at 31 December 2005and £288,939 at 31 December 2004, which have arisen mainly due to trading lossescarried forward. The deferred tax asset has not been provided for because it isuncertain whether the trading losses giving rise to the asset will be utilisedin the foreseeable future. 5 EARNINGS PER SHARE The calculation of basic loss per ordinary share is based on losses of £785,942(2004: £152,372) and on 45,599,614 (2004: 33,009,759) ordinary shares of 0.005peach being the weighted average number of ordinary shares in issue during theperiod. The loss for the period and the weighted average number of ordinary shares forthe purpose of calculating the diluted earnings per share are the same as forthe basic earnings per share calculation. This is because the outstanding share options would have the effect of reducingthe loss per ordinary share and would therefore not be dilutive under the termsof Financial Reporting Standard ("FRS") 22. 6 GROUP GROSS CASHFLOWSReconciliation of operating loss to net cash outflow from operating activities 2005 2004 £ £Operating loss (938,487) (112,791)Share based compensation 88,197 -Loss on disposal of fixed assets - 691Depreciation and amortisation 458,654 184,898(Increase)/decrease in work-in-progress (137,534) 52,940Decrease/(increase) in debtors 257,520 (294,691)Increase/(decrease) in creditors 163,063 (758,067) Net cash outflow from operating activities (108,587) (927,020) 2005 2004 £ £Returns on investments and servicing of financeInterest received - 6,830Interest paid (37,986) (36,840) (37,986) (30,010) TaxationPayment of UK corporation tax (9,595) (23,483) Capital expenditurePayments to acquire tangible fixed assets (35,472) (7,381) Acquisitions and DisposalsPurchase of additional shareholding in subsidiaries - (600,000)Proceeds from disposal of interest in subsidiary undertakings 511,760 -Purchase of own shares (25,000) (309,010) 486,760 (909,010) FinancingIssue of ordinary shares (net of costs) - 1,565,241New short term loans 25,000 -Repayment of bank loans (13,296) (23,956)Other loan repayments 13,015 (39,299)Capital element of finance lease payments (7,900) (6,554) 16,819 1,495,432 7 group analysis of changes in net debt DEbt As at Non As at 1 January Cash cash 31 December 2005 flows changes 2005 £ £ £ £Cash at bank and in hand 15,568 (15,385) - 183Overdrafts (404,540) 327,324 - (77,216) (388,972) 311,939 - (77,033) Debt due within one year (108,803) 281 (53,831) (162,353)Debt due after one year (53,831) (25,000) 53,831 (25,000)Finance leases (21,825) 7,900 - (13,925) (184,459) (16,819) - (201,278) Net debt (573,431) 295,120 - (278,311) 8 Basis of the preliminary announcement The board of directors of Frenkel Topping Group Plc approved the PreliminaryResults on 31st March 2006. The statutory accounts for the year ended 31 December 2005 will be delivered tothe Registrar of Companies following the Annual General Meeting. The statutoryaccounts will be posted to shareholders on 4 April 2006. Further copies willavailable to the public, free of charge, at the company's registered office,Frontier House, Merchants Quay, Salford Quays, Manchester M50 3SR. The Annual General Meeting will be held on 27 April 2006 at 10 am at WacksCaller, Steam Packet House, 76 Cross Street, Manchester, M2 4JU. This information is provided by RNS The company news service from the London Stock Exchange