Frenkel Topping Regulatory News (FEN)

26 Jul 2006 14:30

Frenkel Topping Group PLC26 July 2006 FOR IMMEDIATE RELEASE 26 JULY 2006 Frenkel Topping Group plc ("Frenkel Topping" or "The Group") Frenkel Topping 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 claim 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 provision of trustee and receivership bank accounts. Unaudited Interim Results for the six months ended 30 June 2006 Highlights 6 Months 6 Months Year ended 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000 Turnover 1,244 1,238 2,303Operating loss (466) (233) (938)(Loss)/profit before exceptional items, (174) 95 (161)share based compensation, interest, taxationand goodwill amortisedLoss before taxation and goodwill (303) (54) (589)amortisationLoss for the period (492) (235) (786) Loss per share (1.05)p (0.51)p (1.72p) Frenkel Topping Group plc Richard Fraser (Chief Executive) 0161 886 8000 Chairman's Statement The Group today announces its results for the six months ended 30 June 2006.For the period 1 January to 30 June 2006, the Group recorded turnover of £1.24mand a loss on ordinary activities before interest, taxation, share basedcompensation and goodwill of £174,463. There was a loss before taxation of£482,773. Basic loss per ordinary share was 1.05p. As at 30 June the Group's funds under management were £153 million. Turnover was broadly in line with forecast for the 6 month period and consistentwith the same period of 2005. Included within the £1.24m is £465,000 ofrecurring income. The board continues to believe the value of the Group will beenhanced by increasing its funds under management and as a result provideincreasing recurring income for future years. The loss on ordinary activitiesbefore interest, taxation, share based compensation and goodwill of £174,463 wasincurred mainly as a result of the current high acquisition costs of the fundsunder management. Steps have been taken to reduce these expenses. The board remains focused on growing the funds under management and its fees andcommission from the financial advice provided to personal injury victims. Theseelements with robust cost control should improve the results of the Group. Net debt as at 30 June 2006 was £529,938 and the net asset value of the Group asat that date was £4,523,396. The board does not propose an interim dividend. As at 30 June 2006 the Group was fully utilising its overdraft facility that issubject to renewal in the near future. The Group's ability to meet it futureworking capital requirements and therefore continue as a going concern isdependent on it being able to generate revenues and free cashflow. TheDirectors have prepared projections which they consider to be prudent and thesedemonstrate that the business can operate within its existing bankingfacilities. The Directors remain confident these facilities will be renewed indue course. In June the Group purchased 14% of the issued share capital of Frenkel ToppingLimited and Frenkel Topping Structured Settlements by way of issuing 8,183,833new Ordinary Shares in Group at an issue price of 24p per share. The shareshave a lock-in period of 1 year. The Group has increased its holding in theissued share capital of Frenkel Topping Limited and Frenkel Topping StructuredSettlements to 81%. The market in which the Group operates continues to provide growthopportunities, which are actively being pursued. In addition a Finance Directorhas been appointed to assist the Board in the development of the Group and theDirectors remain focused on returning the Group to profitability as soon aspossible. David R Southworth 26 July 2006 Frenkel Topping Group plc 6 Months 6 Months Year endedConsolidated profit and loss account 30-Jun-06 30-Jun-05 31-Dec-05 £ £ £ Unaudited Unaudited Audited TURNOVER 1,243,822 1,238,198 2,303,306 Cost of sales (682,157) (575,270) (967,914) Gross Profit 561,665 662,928 1,335,392 ADMINISTRATION EXPENSESGoodwill amortisation (179,824) (188,517) (346,677)Share based compensation (111,879) (88,197) (8,663)Exceptional expenses - (130,991) (342,499)Other (736,128) (567,991) (1,496,506) Total administration expenses (1,027,831) (896,162) (2,273,879) OPERATING LOSS (466,166) (233,234) (938,487) Profit on partial disposal of interest in - - 41,015subsidiaries Interest payable (16,607) (9,078) (37,986) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (482,773) (242,312) (935,458) Taxation 13,366 2,607 (19,273) LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (469,407) (239,705) (954,731) Non-equity minority interests (22,750) 5,100 168,789 LOSS FOR THE PERIOD (492,157) (234,605) (785,942) Loss per share - basic (pence) (1.05)p (0.51)p (1.72p)Loss per share - diluted (pence) (1.05)p (0.51)p (1.72p) Frenkel Topping Group plcConsolidated Balance Sheet 30-Jun-06 30-Jun-05 31-Dec-05As at 30 June 2006 Unaudited Unaudited Audited £ £ £FIXED ASSETSIntangible assets 4,646,838 3,437,226 2,620,855Tangible 57,732 119,407 68,426 4,704,570 3,556,633 2,689,281 CURRENT ASSETSStock 184,430 161,524 218,427Debtors 732,244 682,556 541,561Cash 83 2,809 183 916,757 846,889 760,171 CREDITORS - Amounts falling due within one year (1,215,582) (1,145,847) (782,553) NET CURRENT LIABILITIES (298,825) (298,958) (22,382) TOTAL ASSETS LESS CURRENT LIABILITIES 4,405,745 3,257,675 2,666,899 CREDITORS - Amounts falling due after one year (32,748) (8,487) (34,807) 4,372,997 3,249,188 2,632,092 PROVISION FOR LIABILITIES AND CHARGES (142,500) (5,612) (233,973) Non-equity minority interests 292,899 192,301 540,955NET ASSETS 4,523,396 3,435,877 2,939,074 CAPITAL AND RESERVESCalled up share capital 268,927 227,998 227,998Other reserve 200,076 8,663 88,197Own shares (25,000) - (25,000)Share premium account 5,509,864 3,586,193 3,586,193Profit and loss account (1,430,471) (386,977) (938,314)EQUITY SHAREHOLDERS' FUNDS 4,523,396 3,435,877 2,939,074 Frenkel Topping Group plc 6 Months 6 Months Year endedConsolidated Cash Flow Statement 30-Jun-06 30-Jun-05 31-Dec-05For the period to 30 June 2006 Unaudited Unaudited Audited £ £ £ Net Cash Outflow from Operating Activities (228,067) (147,035) (108,587) Returns on Investments and servicing of financeInterest paid (16,607) (9,078) (37,986)Net cash outflow from returns on investment and (16,607) (9,078) (37,986)servicing of Finance Taxation 13,366 - (9,595) Capital ExpenditurePurchase of tangible fixed assets (4,419) (6,498) (35,472) (4,419) (6,498) (35,472)Acquisitions and DisposalsPurchase of subsidiaries (15,900) - -Net overdraft acquired with subsidiaries - - 511,760Purchase of own shares - - (25,000)Net cash outflow from acquisitions and disposals (15,900) - 486,760 Net cash (outflow)/inflow before financing (251,627) (162,611) 295,120 FinancingNew short term loans 31,211 250,000 275,000Repayment of bank loans - (13,296) (13,296)Other loan repayments - (77,159) (236,985)Capital element of finance lease payments (4,580) (7,900) (2,059)Net cash inflow from financing 29,152 154,965 16,819 (Decrease)/increase in cash (222,475) (7,646) 311,939 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS £ £ £ (Decrease)/increase in cash in the period (222,475) (7,646) 311,939Net cash outflow from debt financing (154,965) (16,819) (29,152)Change in net debt (251,627) (162,611) 295,120Net debt as 1 January (278,311) (573,431) (573,431)Net debt as 31 December (529,938) (736,042) (278,311) Notes to the Interim Financial Statements 1. The information set out does not constitute statutory accounts within themeaning of Section 240 of the Companies Act 1985. The financial information forthe full preceding year is based on the financial statements for the financialyear ended 31 December 2005. These accounts, upon which the auditors issued anunqualified opinion, have been delivered to the Registrar of Companies. The accounts are prepared on a going concern basis, which assumes that the Groupwill continue in operational existence for the foreseeable future. The Group'sability to meet its future working capital requirements and therefore continueas a going concern is dependent on it being able to generate revenues and freecash flow. The directors have prepared projections which they consider to beprudent and which demonstrate that the business can operate within its existingfacilities. These facilities are expected to be renewed at least at theircurrent level in the next few months. Whilst there is fundamental uncertainty in relation to the above matters, thedirectors are in negotiation with potential financiers and based on indicationsreceived so far anticipate a positive outcome and consider that is itappropriate for the accounts to be prepared on a going concern basis. Theaccounts therefore do not include any adjustments that would result from theGroup being unable to continue as a going concern. The Board of Directors approved the interim report on 26 July 2006. 2. Exceptional costs/income 6 Month 6 Months 12 Months 30-Jun-06 30-Jun-05 31-Dec-05 Unaudited Unaudited Audited £ £ £ operating costsRedundancy and restructuring costs - 130,991 228,526PI exceptional provision - - 113,973Total current - 130,991 342,499 NON OPERATING INCOMEProfit on disposal of 41,015 interest in subsidiaries - - 3. The tax charge is based on the current rate of UK corporation tax applicable to the company and comprises: 6 Month 6 Months 12 Months 30-Jun-06 30-Jun-05 31-Dec-05 Unaudited Unaudited Audited £ £ £ UK corporation tax at 30% (13,366) - 27,615UK corporation tax at 19% - - 5,020Total current (13,366) - 32,635Deferred taxation - (2,607) (13,362)Total current (13,366) (2,607) 19,273 4. Earnings per share 6 Month 6 Months 12 Months 30-Jun-06 30-Jun-05 31-Dec-05 Unaudited Unaudited Audited £ £ £Basic and Fully Diluted Loss after Taxation (492,157) (234,605) (785,942)Weighted average number of shares 46,956,382 45,599,614 45,599,614EPS (Pence) (1.05)p (0.51)p (1.72)p 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. 4. Cashflows Reconciliation of operating loss to net cash outflow from operating activities 6 Month 6 Month 12 Months 30-Jun-06 30-Jun-05 31-Dec-05 Unaudited Unaudited Audited £ £ £ Operating loss (466,166) (233,234) (938,487)Share based compensation 111,879 8,663 88,197Depreciation and amortisation 194,937 218,039 458,654Decrease/(increase) in work in progress 33,997 (80,631) (137,534)(Increase)/Decrease in debtors (190,683) 111,382 257,520Increase/(decrease) in creditors 87,969 (171,254) 163,063Net cash outflow from operating activities (228,067) (147,035) (108,587) 5. Cashflows (continued) Analysis of net debt 1-Jan-06 Cash Flow Non-Cash 30-Jun-06 Movements £ £ £ £ Cash at bank and in hand 183 (100) - 83Bank overdraft (77,216) (222,375) - (299,591) (77,033) (222,475) - (299,508) Debts due within one year (162,353) (31,211) - (193,564)Debts due after one year (25,000) - - (25,000)Finance leases (13,925) 2,059 - (11,866) (201,278) (29,152) - (230,430)Net debt (278,311) (251,627) - (529,938) 6. Acquisition of minority interests On 11 May 2006 the company announced its intention to acquire 14% of the issuedshare capital of its two trading subsidiaries Frenkel Topping Limited andFrenkel Topping Structured Settlements Limited. The offer was accepted in fullon 9 June 2006. The consideration was satisfied by the allotment of 8,183,833new ordinary shares at an issue price of 24p giving a total consideration of£1,964,600 plus costs of acquisition of £15,900 resulting in goodwill arising onacquisition of £2,205,808 7. Equity reserves Share premium Other Profit and Share capital account Own shares reserve loss account Total £ £ £ £ £ £ At 1 January 2006 227,998 3,586,193 (25,000) 88,197 (938,314) 2,939,074 Loss for the period - - - - (492,157) (492,157)Share based - - - 111,879 - 111,879compensationArising on 40,929 1,923,671 - - - 1,964,600acquisition ofminority interest Net debt 268,927 5,509,864 (25,000) 200,076 (1,430,471) 4,523,396 INDEPENDENT REVIEW REPORT TO FRENKEL TOPPING GROUP PLC Introduction We have been instructed by the company to review the financial information setout in the consolidated profit and loss account, the consolidated balance sheet,the consolidated cash flow statement and the related notes and we have read theother information in the interim statement and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. This report, including the conclusion, has been prepared for and only for thecompany for the purpose of their interim statement and for no other purpose. Wedo not, therefore in producing this report, accept or assume responsibility forany other purpose or to any other person to whom this report is shown or intowhose hands it may come save where expressly agreed by our prior consent inwriting. Directors' responsibilities The interim statement, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the Interim Statement in accordance with theAlternative Investment Market Rules which require that the accounting policiesand presentation applied to the interim figures must be consistent with thosethat will be adopted in the company's annual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board as if that Bulletin applied. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand based thereon assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with Auditing Standards and therefore provides a lowerlevel of assurance than an audit. Accordingly we do not express an audit opinionon the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. Baker Tilly Chartered Accountants Brazennose House Lincoln Square Manchester M2 5BL This information is provided by RNS The company news service from the London Stock Exchange