Last checked at 21 Aug 2008 11:27
Frenkel Topping Group plc
("Frenkel Topping" or "The Group")
Through its trading subsidiary Frenkel Topping Limited, Frenkel Topping Group Plc, provides specialist independent financial advice on the investment of personal injury damages and clinical negligence awards. Frenkel Topping offers a complete service for all personal injury claims handlers, lawyers and individual clients, dealing with awards from a few thousand pounds to multi-million pound cases. Frenkel Topping's expertise includes asset protection, bespoke investment portfolios, analysis of periodical payments, Court of Protection portfolios and the provision of, and setting up of, trustee and receivership bank accounts.
Unaudited Interim Results for the six months ended 30 June 2008
Highlights
| | 6 Months | 6 Months | Year |
| | ended 30 June | ended 30 June | ended 31 December |
| | 2008 | 2007 | 2007 |
| | £ | £ | £ |
| | | | |
| Revenue | 1,374,799 | 1,394,659 | 2,757,411 |
| Profit from operations before share based compensation | 106,411 | 128,089 | 250,847 |
| Profit from operations | 93,556 | 5,771 | 115,495 |
| | | | |
| | | | |
| Frenkel Topping Group plc | Richard Fraser Chief Executive Tel No: 0161 886 8000 |
| WH Ireland Limited | David Youngman Tel No: 0161 832 2174 |
Chairman's Statement
Results
We are pleased to announce the results of the Group for the six month period ended 30 June 2008.
For the six months ended 30 June 2008 the Group has reported a profit from operations before share based compensation of £106k (£128k for the six months ended 30 June 2007 and £251k for the year ended 31 December 2007). In comparison to the same period last year revenue has fallen slightly, by less than 2% and the gross profit margin has reduced by 6% to 56%. The reduction in gross profit margin has been caused by a planned investment of additional resource into the Group's client servicing department due to the increased volume of clients. The Board understands the importance of, and is committed to, servicing its client bank both from a regulatory and revenue generating point of view and felt it necessary to increase resource in this area.
As at 30 June 2008 the Group's Funds in the Investment Management Service (FIMS) were £224m (£177m as at 30 June 2007 and £200m as at 31 December 2007).
The Group had a cash absorption of £126k from its operating activities during the period (£48k generated in the six month to 30 June 2007, £243k generated for the year ended 31 December 2007). The reduction in cash generated during the period compared to earlier periods is due to the Group experiencing delays in the receipt of cash from investing new clients' funds. This delay has been caused by the introduction of the Mental Capacity Act during the last quarter of 2007 and changes in the administration function of the Office of Public Guardian.
The net asset value of the Group as at 30 June 2008 was £4.8m (£4.7m as at 30 June 2007, £4.8m as at 31 December 2007).
Dividend
The Board does not propose an interim dividend.
Strategy
The Group's aim is still to increase the recurring income from the Funds in the Investment Management Service (FIMS) and to focus on revenue generation and cost control. In addition the Board remains focused on the continued repositioning of the Frenkel Topping brand as one of the market leaders in the field of investment of personal injury awards.
Prospects
The growth in the FIMS year on year is encouraging and, together with a satisfactory pipeline of business to be finalised in the coming months, the Board is confident that progress will continue to be made for the future.
David Southworth
Chairman
20 August 2008
| Frenkel Topping Group plc | 6 Months | 6 Months | Year | |
| Consolidated income statement | ended 30-Jun-08 | ended 30-Jun-07 | ended 31-Dec- 07 | |
| Unaudited | Unaudited | Audited | ||
| Note | £ | £ | £ | |
| REVENUE | 1,374,799 | 1,394,659 | 2,757,411 | |
| Direct staff costs | (608,940) | (535,051) | (1,083,026) | |
| Gross Profit | 765,859 | 859,608 | 1,674,385 | |
| ADMINISTRATIVE EXPENSES | ||||
| Share based compensation | (12,855) | (122,318) | (135,352) | |
| Other | (659,448) | (731,519) | (1,423,538) | |
| TOTAL ADMINISTRATIVE EXPENSES | (672,303) | (853,837) | (1,558,890) | |
| Profit from operations before share based compensation | 106,411 | 128,089 | 250,847 | |
| Share based compensation | (12,855) | (122,318) | (135,352) | |
| PROFIT FROM OPERATIONS | 93,556 | 5,771 | 115,495 | |
| Finance costs | (22,337) | (34,617) | (68,361) | |
| PROFIT/(LOSS) BEFORE TAXATION | 71,219 | (28,846) | 47,134 | |
| Income tax expense | (23,596) | - | (28,503) | |
|
| ||||
| PROFIT/(LOSS) FOR THE PERIOD | 47,623 | (28,846) | 18,631 | |
|
| ||||
| Profit/(Loss) attributable to: | ||||
| Equity holders of parent | 39,088 | (40,971) | (15,386) | |
| Minority Interests | 8,535 | 12,125 | 34,017 | |
| 47,623 | (28,846) | 18,631 | ||
| Earnings/(Loss) per share - basic (pence) | 3 | 0.07 | (0.07) | (0.03) |
| Earnings/(Loss) per share - diluted (pence) | 3 | 0.06 | (0.07) | (0.03) |
The results for the period are derived from continuing activities.
There was no recognised income or expenditure other than the profit/ (loss) for the period/year. Accordingly no Statement of Recognised Income and Expenditure has been prepared.
| Frenkel Topping Group plc | ||||
| Consolidated Balance Sheet | 30-Jun-08 | 30-Jun-07 | 31-Dec-07 | |
| As at 30 June 2008 | Unaudited | Unaudited | Audited | |
| £ | £ | £ | ||
| ASSETS | ||||
| NON CURRENT ASSETS | ||||
| Plant and equipment | 50,603 | 30,197 | 51,670 | |
| Goodwill | 5,095,287 | 5,095,287 | 5,095,287 | |
| Deferred tax | 35,615 | 7,069 | 35,615 | |
|
|
| 5,181,505 | 5,132,553 | 5,182,572 |
| CURRENT ASSETS |
| |||
| Accrued income | 519,774 | 490,587 | 394,032 | |
| Trade receivables | 246,824 | 308,030 | 289,925 | |
| Other receivables | 138,421 | 77,540 | 123,399 | |
| Cash | 38 | 161 | 26 | |
|
|
| 905,057 | 876,318 | 807,382 |
| TOTAL ASSETS | 6,086,562 | 6,008,871 | 5,989,954 | |
| EQUITY AND LIABILITIES | ||||
| EQUITY | ||||
| Issued capital | 273,915 | 273,915 | 273,915 | |
| Share premium account | 5,744,876 | 5,744,876 | 5,744,876 | |
| Share based payment reserve | 434,705 | 408,816 | 421,850 | |
| Other reserve | 12,997 | 12,997 | 12,997 | |
| Treasury share reserve | (25,000) | (25,000) | (25,000) | |
| Retained losses | (2,183,082) | (2,247,755) | (2,222,170) | |
| 4,258,411 | 4,167,849 | 4,206,468 | ||
| Minority Interests | 551,189 | 520,762 | 542,654 | |
| TOTAL EQUITY | 4,809,600 | 4,688,611 | 4,749,122 | |
| NON CURRENT LIABILITIES |
| |||
| Other payables | 75,000 | 75,000 | 75,000 | |
| Financial liabilities | 201,156 | 187,118 | 194,176 | |
| 276,156 | 262,118 | 269,176 | ||
| CURRENT LIABILITIES |
| |||
| Amounts due to bankers and short financial liabilities | 293,832 | 274,792 | 143,587 | |
| Current taxation | 144,986 | 89,890 | 119,025 | |
| Trade and other payables | 485,516 | 578,460 | 631,507 | |
| Provisions | 76,472 | 115,000 | 77,537 | |
| 1,000,806 | 1,058,142 | 971,656 | ||
| TOTAL LIABILITIES | 1,276,962 | 1,320,260 | 1,240,832 | |
| TOTAL EQUITY AND LIABILITIES | 6,086,562 | 6,008,871 | 5,989,954 | |
Consolidated Statement of Changes in Equity
For the period to 30 June 2008
| Share Capital | Share Premium | Share based payment reserve | Other reserve | Treasury share reserve | Retained losses | Total Equity | |
| £ | £ | £ | £ | £ | £ | £ | |
| Balance 1 January 2007 | 273,915 | 5,744,876 | 286,498 | - | (25,000) | (2,206,784) | 4,073,505 |
| Share base compensation | - | - | 122,318 | - | - | - |
122,318 |
| Loss for the period | - | - | - | - | - | (40,971) | (40,971) |
| Equity element of compound instrument | - | - | - | 12,997 | - | - |
12,997 |
| _______ | _______ | _______ | ________ | _______ | ________ | ________ | |
| Balance 30 June 2007 | 273,915 | 5,744,876 | 408,816 | 12,997 | (25,000) | (2,247,755) | 4,167,849 |
| Share base compensation | - | - | 13,034 | - | - | - |
13,034 |
| Profit for the period | - | - | - | - | - | 25,585 | 25,585 |
| _______ | _______ | _______ | _______ | _______ | _______ | ________ | |
| Balance 31 December 2007 | 273,915 | 5,744,876 | 421,850 | 12,997 | (25,000) | (2,222,170) | 4,206,468 |
| Share base compensation | - | - | 12,855 | - | - | - |
12,855 |
| Profit for the period | - | - | - | - | - | 39,088 | 39,088 |
| _______ | _______ | _______ | _______ | _______ | _______ | ________ | |
| Balance 30 June 2008 | 273,915 | 5,744,876 | 434,705 | 12,997 | (25,000) | (2,183,082) | 4,258,411 |
| ============ | ============== | ============== | ============== | =============== | ============= | =============== | |
The treasury share reserve represents the cost of 1,067,471 shares held by FTG EBT Trustees Limited, a subsidiary of Frenkel Topping Group Plc. The open market value of the shares held at 30 June 2008 was £64,049.
The other reserve represents the fair value of the embedded option to convert the loan instrument into equity.
| Frenkel Topping Group plc | 6 Months | 6 Months | Year | |
| Consolidated Cash Flow For the period to 30 June 2008 | ended 30-Jun-08 | ended 30-Jun-07 | ended 31-Dec -07 | |
| Unaudited | Unaudited | Audited | ||
| £ | £ | £ | ||
| Profit/(loss) before tax | 71,219 | (28,846) | 47,134 | |
| Adjustments to reconcile profit/(loss) before tax to cash generated from/(used in) operating activities | ||||
| Finance cost Share based compensation | 22,337 12,855 | 34,617 122,318 | 68,361 135,352 | |
| Depreciation | 9,954 | 22,957 | 26,920 | |
| (Increase)/decrease in accrued income trade and other receivables | (97,625) | (50,722) | 19,044 | |
| (Decrease)/increase in trade and other payables | (144,726) | (52,620) | (14,279) | |
| Cash generated (used in)/from operations | (125,986) | 47,704 | 282,532 | |
| Taxation | - | - | (39,605) | |
| Cash generated (used in)/from operating activities | (125,986) | 47,704 | 242,927 | |
| Acquisition of property, plant and equipment | (8,887) | (4,506) | (34,942) | |
| Cash used in investing activities | (8,887) | (4,506) | (34,942) | |
| Financing | ||||
| Net borrowings |
| (100,000) | 167,668 | 114,668 |
| Repayment of finance lease |
| - | (9,807) | (9,807) |
| Interest on loans |
| (15,706) | (34,617) | (68,361) |
| Cash (used in)/from financing |
| (115,706) | 123,244 | 36,500 |
|
| ||||
| (Decrease)/Increase in cash and cash equivalents | (250,579) | 166,442 | 244,485 | |
| Opening cash and cash equivalents | (43,215) | (287,700) | (287,700) | |
| Closing cash and cash equivalents | (293,794) | (121,258) | (43,215) | |
Notes to the Interim Financial Statements
1. Basis of preparation and accounting policies
Basis of preparation
The Group's interim result consolidates the results of the company and its subsidiary undertakings made up to 30 June 2008. The company is a limited liability company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by the London Stock Exchange.
The financial information contained in this interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. It does not therefore include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 31 December 2007.
The financial information for the 6 months ended 30 June 2008 is also unaudited but has been reviewed by the auditors in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. The Group has not applied IAS 34, Interim Financial Reporting, which is not mandatory for UK Groups, in the preparation of these interim financial statements.
The Group's statutory accounts for the year ended 31 December 2007 have been delivered to the Registrar of Companies. The report of the auditors on these accounts was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.
Significant accounting policies
The accounting policies used in the preparation of the financial information for the six months ended 30 June 2008 are in accordance with the recognition and measurement criteria of International Financial Reporting Standards ('IFRS') as adopted by the European Union and are consistent with those which were adopted in the annual statutory financial statements for the year ended 31 December 2007.
2. Segmental Reporting The total revenue, losses before tax and net assets are attributable to the one principal activity of the Group, the provision of advice regarding structured settlements and related financial services. All revenue and costs originate within the United Kingdom.
3. Earnings/(Loss) per ordinary share
| 6 months | 6 months | Year ending | |
| June 2008 | June 2007 | December 2007 | |
| Profit/(loss) attributable to equity holders of parent | £39,088 | £(40,971) | £(15,386) |
| Number of shares - basic | 54,782,947 | 54,782,947 | 54,782,947 |
| Number of shares - diluted | 60,083,886 | 54,782,947 | 54,782,947 |
| Earnings/(Loss) per share- basic (pence) | 0.07 | (0.07) | (0.03) |
| Earnings/(Loss) per share - diluted (pence) | 0.06 | (0.07) | (0.03) |
The weighted average number of ordinary shares for calculating the diluted loss per share for the year ended 31 December 2007 and the period ended 30 June 2007 are identical to those for the basic loss per share. This is because the outstanding share options would have the effect of reducing the loss per ordinary share and would therefore not be dilutive under the terms of International Accounting Standard ("lAS") 33.
4. The Board of Directors approved the interim report on 20 August 2008.
INDEPENDENT REVIEW REPORT TO FRENKEL TOPPING GROUP PLC
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 which comprises Consolidated Income Statement, Consolidated Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Equity and related notes that have been reviewed. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information contained in the condensed set of financial statements.
This report, including the conclusion, has been prepared for and only for the company for the purpose of meeting the requirements of the AIM Rules for Companies and for no other purpose. We do not, therefore, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Directors' responsibilities
The half-yearly financial report, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing and presenting the half-yearly financial report in accordance with the AIM Rules For Companies
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards and International Financial Reporting Interpretations Committee ("IFRIC") pronouncements as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the measurement and recognition criteria of International Financial Reporting Standards and International Financial Reporting Interpretations Committee ("IFRIC") pronouncements, as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Review work performed
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Review conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with the measurement and recognition criteria of International Financial Reporting Standards and International Financial Reporting Interpretations Committee ("IFRIC") pronouncements as adopted by the European Union, and the AIM Rules for Companies.
BAKER TILLY UK AUDIT LLP
Chartered Accountants
Brazennose House
Lincoln Square
Manchester
M2 5BL
20 August 2008