Last checked at 24 Mar 2009 09:58
FRENKEL TOPPING GROUP PLC
(the "Group" or the "Company")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
Frenkel Topping Limited ("Frenkel Topping") is the trading subsidiary of Frenkel Topping Group Plc. 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 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 provision and setting up of trustee and receivership bank accounts.
Financial Highlights
| Year ended 31 Dec 2008 | Year ended 31 Dec 2007 | |
| Revenue | £2,637,238 | £2,757,411 |
| Gross Profit Profit from operations before share based compensation and provisions Profit before taxation | £1,448,800 £196,461 £79,478 | £1,674,385 £250,847 £47,134 |
For further information:-
| Frenkel Topping Group plc | Richard Fraser (Chief Executive) Tel No: 0161 886 8000 |
| WH Ireland Limited | David Youngman/Robin Gwyn Tel No: 0161 832 2174 |
CHAIRMAN'S STATEMENT
Results
Whilst 2008 has been a challenging year, the Group is pleased to report a profit from operations before share based compensation of £196,461 (2007: £250,847) and profit before taxation of £79,478 (2007: £47,134).
The Group's income is gained from both the fees and commission on our clients' initial investment and the recurring income from servicing the clients' portfolios within Funds in the Investment Management Service ("FIMS"). Group revenue of £2.6m (2007: £2.8m) included fees and commission of £1.2m (2007: £1.4m) and £1.4m (2007: £1.3m) of recurring income from FIMS.
There has been and still is, major uncertainty in the Financial Services Sector. At the start of 2008 the FTSE 100 commenced at 6,456.90 and declined continuously during the year reaching a low of 3,665.20 in October. Such volatility in the market has impacted on the firm's recurring income from FIMS, however the total FIMS grew by 4% from £200m to £207m. This level of uncertainty has also resulted in caution leading to changes in investor behaviour which has impacted on the mix of products that the Group now offers to its clients and has affected our initial fees and commission.
As noted at the half year, the Board is committed to servicing its bank of clients both from a regulatory and revenue generating point of view and thus felt it necessary to increase the resource in the client servicing department. The expansion in this area plus the reduction in revenue has resulted in gross profit reducing by 13% compared to the previous year.
The issues highlighted at the half year with regard to the delays at the Office of Public Guardianship have been resolved. However during the year the Group absorbed cash from operations of £5,641 (2007: cash generated of £282,532). The Board believes that the Group has sufficient working capital to satisfy its future needs.
The net asset value, before minority interests, as at 31 December 2008 was £4,747,810 (2007: £4,635,701).
Dividends
The Board does not propose a dividend.
Prospects
The Group's aim remains to increase the recurring income from 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.
The Board remains confident that the Group will enjoy future success as a result of the strategies that have been employed and the position that has been attained in our market place.
GROUP INCOME STATEMENT
For the year ended 31 December 2008
| 2008 | 2007 | ||
| Notes | £ | £ | |
| REVENUE | 3 | 2,637,238 | 2,757,411 |
| Direct staff costs | (1,188,438) | (1,083,026) | |
|
|
| ||
| GROSS PROFIT | 1,448,800 | 1,674,385 | |
| ADMINISTRATIVE EXPENSES | |||
| Share based compensation | (77,186) | (135,352) | |
| Other | (1,252,339) | (1,423,538) | |
|
|
| ||
| TOTAL ADMINISTRATIVE EXPENSES | (1,329,525) | (1,558,890) | |
|
|
| ||
| Profit from operations before share based compensation | 196,461 |
250,847 | |
| - share based compensation | (77,186) | (135,352) | |
|
|
| ||
| profit from operations | 119,275 | 115,495 | |
| Finance costs | (39,797) | (68,361) | |
|
|
| ||
| profit BEFORE TAX | 79,478 | 47,134 | |
| Income tax expense | 4 | (35,468) | (28,503) |
|
|
| ||
| profit for the year | 44,010 | 18,631 | |
|
|
| ||
| profit/(Loss) ATTRIBUTABLE TO: | |||
| Equity holders of parent | 34,923 | (15,386) | |
| Minority Interest | 9,087 | 34,017 | |
|
|
| ||
| 44,010 | 18,631 | ||
|
|
| ||
| Earnings/(loss) per ordinary - basic (pence) | 5 | 0.06p | (0.02)p |
| Earnings/(loss) per ordinary - diluted (pence) | 5 | 0.06p | (0.02)p |
|
|
|
The results for the period are derived from continuing activities.
GROUP BALANCE SHEET
As ended 31 December 2008
| 2008 | 2007 | ||
| (restated) | |||
| £ | £ | ||
| assets NON CURRENT ASSETS | |||
| Goodwill Property, plant and equipment | 5,095,287 42,072 | 5,095,287 51,670 | |
| Deferred taxation | 35,075 | 35,615 | |
|
|
| ||
| 5,172,434 | 5,182,572 | ||
| CURRENT ASSETS | |||
| Accrued income Trade receivables Other receivables |
| 426,653 240,298 89,470 | 394,032 289,925 123,399 |
| Cash | 19 | 26 | |
|
|
| ||
| 756,440 | 807,382 | ||
|
|
| ||
| total assets | 5,928,874 | 5,989,954 | |
|
|
| ||
| equity and liabilities equity Share capital Share premium account Treasury share reserve Retained losses Other reserve | 273,915 5,744,876 (25,000) (1,258,978) 12,997 | 273,915 5,744,876 (25,000) (1,371,087) 12,997 | |
|
|
| ||
| equity attributable to holder of parent | 4,747,810 | 4,635,701 | |
| Minority interest | 122,508 | 113,421 | |
|
|
| ||
| TOTAL EQUITY | 4,870,318 | 4,749,122 | |
| NON CURRENT LIABILITIES Other payables Financial liabilities | 50,000 208,214 | 75,000 194,176 | |
|
|
| ||
| 258,214 | 269,176 | ||
| CURRENT LIABILITIES Amounts due to bankers and short term financial liabilities Current taxation Trade and other payables Provisions | 244,354 101,941 389,941 64,106 | 143,587 119,025 631,507 77,537 | |
|
|
| ||
| 800,342 | 971,656 | ||
|
|
| ||
| TOTAL LIABILITIES | 1,058,556 | 1,240,832 | |
|
|
| ||
| TOTAL EQUITY AND LIABILITIES | 5,928,874 | 5,989,954 | |
|
|
|
GROUP STATEMENT OF CHANGE IN EQUITY
For the year ended 31 December 2008
| Share Capital | Share Premium | Treasury share reserve | Retained Losses | Other reserve | Minority Interest | Total | |
| £ | £ | £ | £ | £ | £ | £ | |
| Balance 1 January 2007 - as previously reported | 273,915 | 5,744,876 | (25,000) | (1,920,286) | - | 508,637 | 4,582,142 |
| Prior period adjustment (note 6) | - | - | - | 429,233 | - | (429,233) | - |
| _______ | _________ | _______ | ___________ | __________ | _________ | _________ | |
| Balance 1 January 2007 - restated | 273,915 | 5,744,876 | (25,000) | (1,491,053) | - | 79,404 | 4,582,142 |
| Share based compensation | - | - | - | 135,352 | - | - | 135,352 |
| Profit for the period | - | - | - | (15,386) | - | 34,017 | 18,631 |
| Equity element of compound instrument | - | - | - | - | 12,997 | - | 12,997 |
| _______ | __________ | _______ | ___________ | __________ | __________ | __________ | |
| Balance 1 January 2008 | 273,915 | 5,744,876 | (25,000) | (1,371,087) | 12,997 | 113,421 | 4,749,122 |
| Share based compensation | - | - | 77,186 | - | - | 77,186 | |
| Profit for the period | - | - | - | 34,923 | - | 9,087 | 44,010 |
| _______ | __________ | _______ | ___________ | __________ | __________ | __________ | |
| Balance 31 December 2008 | 273,915 | 5,744,876 | (25,000) | (1,258,978) | 12,997 | 122,508 | 4,870,318 |
|
|
|
|
|
|
|
| |
A change in presentation in the financial statements to combine the share based payment reserve and the retained losses has been undertaken in the year. The directors believe this presents the distributable reserve more appropriately in the accounts and provides reliable and more relevant information about the effects of the transactions on the entity's financial position.
The treasury share reserve represents the cost of 1,062,471 shares held by FTG EBT Trustees Limited, a subsidiary of Frenkel Topping Group Plc. The open market value of the shares held at 31 December 2008 was £53,124.
The other reserve represents the fair value of the embedded option to convert the loan instrument into equity.
GROUP CASH FLOW STATEMENT
For the year ended 31 December 2008
| Year ended | Year ended | |
| 31 December 2008 | 31 December 2007 | |
| £ | £ | |
| Profit for the year | 44,010 | 18,631 |
| Adjustments to reconcile profit for the year to cash (used in)/generated from operating activities Tax expense Finance cost | 35,468 39,797 | 28,503 68,361 |
| Share based compensation | 77,186 | 135,352 |
| Depreciation Decrease in accrued income, trade and other receivables (Decrease) in trade and other payables | 20,338 50,935 (273,375) | 26,920 19,044 (14,279) |
|
|
| |
| Cash (used in)/generated from operations | (5,641) | 282,532 |
| Income tax paid | (58,630) | (39,605) |
|
|
| |
| Cash (used in)/generated from operating activities | (64,271) | 242,927 |
| Investment activities Acquisition of property, plant and equipment | (10,740) | (34,942) |
|
|
| |
| Cash (used in) investing activities | (10,740) | (34,942) |
| Financing activities Repayments/borrowings Repayment of finance lease Interest on loans | (99,500) - (26,609) | 114,668 (9,807) (68,361) |
|
|
| |
| Cash (used in)/ from financing | (126,109) | 36,500 |
| (Decrease)/increase in cash and cash equivalents | (201,120) | 244,485 |
| Opening cash and cash equivalents | (43,215) | (287,700) |
|
|
| |
| Closing cash and cash equivalents | (244,335) | (43,215) |
|
|
|
1. General information
The preliminary financial information does not constitute full accounts within the meaning of section 240 of the Companies Act 1985 but is derived from accounts for the years ended 31 December 2008 and 31 December 2007. The figures for the year ended 31 December 2008 are audited. The preliminary announcement is prepared on the same basis as set out in the statutory accounts for the year ended 31 December 2008. Those accounts upon which the auditors issued an unqualified opinion, will be delivered to the Registrar of Companies following the Annual General Meeting.
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), this announcement does not in itself contain sufficient information to comply with IFRS's.
Frenkel Topping Group Plc is incorporated and domiciled in the United Kingdom.
At the date of the authorisation of the financial information the following standards and interpretations, which have not been applied in the financial information, were in issue but not yet effective:
| IFRS 2 | Share based Payment - Amendments relating to vesting conditions and cancellations |
| IFRS 3 | Business Combinations - Amendments |
| IFRS 7 | Financial Instruments: Disclosures - Consequential amendments arising from amendments to IAS 32 |
| IFRS 8 | Operating Segments (endorsed) |
| IAS 1 | Presentation of Financial Statements - Revised |
| IAS 1 | Presentation of Financial Statements - Amendments relating to Puttable Financial Instruments and obligations arising on liquidation |
| IAS 23 | Borrowing Costs - Amendment |
| IAS 27 | Consolidated and separate Financial Statements - Consequential amendments arising from Amendments from IFRS 3 |
| IAS 32 | Financial Instruments Presentation - Amendments relating to Puttable Financial Instruments and obligations arising on liquidation |
| IAS 39 | Financial Instruments: Recognition and Measurement - Consequential amendments arising from amendments to IAS 32 |
| IFRIC 11 | IFRS 2 - Group and Treasury Share Transactions (endorsed) |
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial information when the relevant standards and interpretations come into effect.
2. significant accounting policies
GOING CONCERN
The financial statements are prepared on a going concern basis, which assumes the Group will continue in operational existence for the foreseeable future. The Group's ability to meet its future working capital requirements and therefore continue as a going concern is dependent upon it being able to generate significant revenues and free cash flow and the availability of bank facilities. The current facility has been secured until December 2009 and the Directors do not foresee a problem in securing funding after this date. The Directors have prepared projections which they consider to be prudent and demonstrate that the business can operate within its existing cash resources, and have identified a series of realistically achievable actions that they are committed to taking to mitigate the rate of cash outflow should revenues not be secured as predicted.
3. revenue
The total revenue, profit 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.
4. TAxation
| 2008 | 2007 | |
| £ | £ | |
| Analysis of charge in year | ||
| Current tax | ||
| UK corporation tax | 34,072 | 58,627 |
| Adjustments in respect of previous periods | 856 | (5,615) |
|
|
| |
| Total current tax charge | 34,928 | 53,012 |
|
|
| |
| Deferred tax | ||
| Temporary differences, origination and reversal | 540 | (24,509) |
|
|
| |
| Total deferred tax credit | 540 | (24,509) |
|
|
| |
| Tax on profit/(loss) for the period | 35,468 | 28,503 |
|
|
|
Factors affecting tax charge for year
The tax assessed for the period is higher than the standard rate of corporation tax in the UK 28% (30%). The differences are explained below:
| 2008 | 2007 | |
| £ | £ | |
| Profit before taxation | 79,478 | 47,134 |
|
|
| |
| Profit multiplied by standard rate of corporation tax in the UK of 28% (2007: 30%) | 22,253 | 14,141 |
| Effects of: | ||
| Expenses not deductible | 23,789 | 29,433 |
| Adjustments to tax charge in respect of previous periods | 857 | (5,615) |
| Unrelieved tax losses and other deductions in period | - | (2,268) |
| Marginal relief | (11,431) | (7,188) |
|
|
| |
| Current tax expense for year | 35,468 | 28,503 |
|
|
|
5. EARNINGS/(LOSS) PER SHARE
The calculation of the basic and diluted earnings/(loss) per share is based on the following data:
| 2008 | 2007 | |
| £ | £ | |
| Earnings/(loss) | ||
| Earnings/(loss) for the purposes of basic earnings per share (net profit for the year attributable to equity holders of the parent) | 34,923 | (15,386) |
| Earnings for the purposes of diluted earnings per share | 34,923 | - |
| Number of shares | ||
| Weighted average number of ordinary shares for the purposes of basic earnings per share | 54,782,947 | 54,782,947 |
| Effect of dilutive potential ordinary shares: | ||
| - Share options | 8,646,406 | - |
|
|
| |
| Weighted average number of ordinary shares for the purposes of diluted earnings per share | 63,429,353 | 54,782,947 |
|
|
|
The loss for the year ended 2007 and the weighted average number of ordinary shares for the purpose of calculating the diluted loss per share for 2007 are the same as for the basic loss per share calculation. 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 IAS 33.
6. PRIOR PERIOD ADJUSTMENT
In the financial statements for the year ended 31 December 2007 an IFRS transition adjustment was made to comply with the requirements of IAS 27 - Consolidated and Separate Financial Statements. The impact of this adjustment was to remove the losses allocated to the minority interest in respect of Frenkel Topping Structured Settlements Limited and reallocate these to the majority holder. The result of the adjustment was that the minority would only have the percentage of net assets of Frenkel Topping Limited allocated to them.
The calculation of the transition adjustment noted in the 2007 statutory accounts did not take into consideration the change in percentage of the minority interest in Frenkel Topping Structured Settlements in 2006. This has resulted in deducting too much of the share of losses of the subsidiary on transition and the minority's share of the net assets of Frenkel Topping Limited was overstated by £429,233 as at the date of transition.
A prior period adjustment has been made in the accounts during 2008 to reflect the correct amount of the minority interest's share of Frenkel Topping Limited's net assets as at 1 January 2007 and 31 December 2007. The effect of the adjustment is to decrease the retained losses of the Group by £429,233 and decrease the minority interest's share of Frenkel Topping Limited by £429,233. There is no effect on the net assets at 1 January 2007 or 31 December 2007 nor the income and expenditure account for the year ended 31 December 2007.
7. Basis of the preliminary announcement
The board of directors of Frenkel Topping Group Plc approved the Preliminary Results on 23 March 2009.
The statutory accounts for the year ended 31 December 2008 will be delivered to the Registrar of Companies following the Annual General Meeting. The statutory accounts will be posted to shareholders on 25 March 2009. Further copies will be available to the public, free of charge, at the company's registered office, 4th Floor, Statham House, Talbot Road, Old Trafford, Manchester, M32 0FP and the Company's website at www.frenkeltopping.co.uk
The Annual General Meeting will be held on 14 May 2009 at 11 am at Addleshaw Goddard LLP, 100 Barbirolli Square, Manchester, M2 3AB.