Frenkel Topping Regulatory News (FEN)

29th September 2023

Frenkel Topping Group plc

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

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

*Unaudited

**EBITDA before share based compensation, acquisition strategy, integration and reorganisation costs

Operational Highlights

Delivery of strategy with a strong start to the second half

For further information: 

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)

The results for the period are derived from continuing activities.

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:

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.

2. Administrative Expenses

The following table analyses the nature of expenses:

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