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Frenkel Topping Group PLC  -  FEN   

Half-year Report

Released 07:00 05-Jul-2017

RNS Number : 1286K
Frenkel Topping Group PLC
05 July 2017
 

5 July 2017

Frenkel Topping Group plc

("Frenkel Topping" or "the Company")

 

Interim Results

 

Frenkel Topping (AIM: FEN), a specialist independent financial advisor and asset manager focused on asset protection for vulnerable clients, announces its interim results for the six months ended 30 June 2017.

Trading reflects the foundations laid during 2016 with operating profit for the first half of 2017 four times more than the same period over 2016. The Company is pleased to announce that it is on target to more than double the operating profit delivered in 2016, as previously reported by year end 2017.

 

Financial Highlights

·     Revenue and other operating income £3.9m (H1 2016: £2.9m)

§ Recurring revenue of £2.9m (H1 2016: £2.2m), representing 81% of total revenue

·     Gross profit of £2.3m (H1 2016: £1.6m)

·     Operating profit (before share based payments) of £1.3m (H1 2016 £0.3m)

·     Pre-tax profit of £1.0m (H1 2016: £0.3m)

·     Basic EPS of 1.022p (H1 2016: 0.27p)

·     Assets under management £765m (as at 30 June 2016: £687m)

·     Assets on a DFM Mandate £291m (as at 30 June 2016: nil)

·     Net cash and marketable securities at the period end of £4.8m (as at 30 June 2016: £4.4m)

·     Interim dividend of 0.2969p per share (H1 2016: 0.2375p)

 

Operational Highlights

·     Board focused on delivering existing  business plan

·     Ogden Review flowing into higher damages awards for clients

 

Jason Granite, Executive Chairman of Frenkel Topping, commented: "The Board is pleased with the positive results delivered during the first half of 2017.  We will continue to execute the existing business plan for the Company.  We will seek to expand our geographical footprint, authorised individuals and establish further joint venture relationships to drive asset growth.

 

Having conducted a thorough strategic review to determine the best direction for the Company, the Board is fully focused on reaching £1bn AUM and remain open to opportunistic investments to maximise its return on its cash position, as well as other investments and acquisitions that might accelerate the growth of the business."

 

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

 

For further information:

Frenkel Topping Group plc

www.frenkeltopping.co.uk

Jason Granite, Executive Chairman

Richard Fraser, Chief Executive Officer

Tel: 0161 886 8000

Julie Dean, Chief Finance Officer




finnCap Ltd

Tel: 020 7220 0500

Adrian Hargrave/James Thompson/ Alex Price (Corporate Finance)

Tony Quirke (Corporate Broking)




Walbrook PR Ltd

Tel: 020 7933 8780 or frenkeltopping@walbrookpr.com

Paul McManus

Mob: 07980 541 893

Nick Rome

Mob: 07748 325 236

 

About Frenkel Topping: www.frenkeltopping.co.uk

Frenkel Topping provides specialist independent financial advice focussed on asset protection for clients. The specialist independent financial adviser has a market leading position providing advice and fund management services for personal injury trusts and clinical negligence awards and is well placed to provide services to a wider customer base.

 

The Company provides a range of wealth management services including bespoke investment portfolios, personal and corporate financial advice and tax planning. It is focused on increasing its assets under management by continued organic growth of the business by an increase in the number of highly qualified fee earners for the provision of its industry leading specialisms. The company expects to increase the number of staff in all departments to support the existing business plan and reinforce its position as industry leader within personal injury and clinical negligence.

 

It has a national presence with offices in Manchester, Birmingham, Cardiff, London and Leeds and has relationships and infrastructure in place to further grow its reach and target markets.

 

 

 

 



 

Chairman's Statement

 

Results

 

The Company is pleased to announce positive results for the half year period ended 30 June 2017. 

 

Profit from operations, before share based compensation and other exceptional costs, has grown by more than four times the operating profit delivered in the same period of 2016, to £1.3m (H1 2016: £0.3m; FY 2016: £1.4m).  

 

Revenues and other operating income for the period has increased by 34% to £3.9m (H1 2016: £2.9m; FY 2016: £6.4m).

 

Gross profit margins have increased to 63% (H1 2016: 55% FY 2016: 58%).  Operating profit margins have increased to 37% (H1 2016: 11% FY 2016: 22%). 

 

AUM as at 30 June had grown to £765m (£687m as at 30 June 2016).  Assets on a DFM basis has grown to £291m (nil as at 30 June 2016).

 

The Company generated £1.4m of cash from its operating activities during the period (H1 2016: £0.5; FY 2016: £1.6m).

 

The closing cash balance and marketable securities at the period end was £4.8m (H1 2016: £4.4m; FY 2016 £4.2m).  This was after paying the final dividend of £0.6m to shareholders during the period.

 

The net asset value of the Company, before non-controlling interest, at 30 June 2017 was £15.5m (H1 2016: £13.9m; FY 2015 £15.0m).

 

On the 30 June 17, FCFM Group Properties IV Limited repaid the £3m Commercial Property SPV loan and acquired the Company's 37.5% interest for £150,000.  As a result of this transaction the Company has received approximately £3.3m of cash during the period.

 

Dividend

 

In May 2017 the Company paid a final dividend in respect of FY16 of £0.6m.  This represents a total dividend for 2016 of 1.1094 pence per share (2015: 0.8875 pence) to shareholders.  The Company is pleased to announce that it will be paying an interim dividend of 0.2969 pence per share (H1 2016: 0.2375 pence), a 25% increase on the interim paid in 2016.  The interim dividend will be paid on 4 August 2017 to shareholders on the register at close of business on 21 July 2017 and the shares will trade on an ex-dividend basis from 20 July 2017.

 

Operations

 

During the period the Company has moved into its new head office building in Manchester.

 

The foundations laid during 2016 have transitioned into 2017 with profits being increased from higher revenues driven from growth in AUM, assets on a DFM basis and cost synergies across the Company.

 

The effects of the Lord Chancellor's decision to lower the Ogden discount rate, effective from 20 March 2017 are now starting to translate into higher levels of damages available for our clients and this should accelerate the growth of AUM for the Company.  In addition to this, the Company expects to increase its market share in the industry, through expanding its geographical footprint, increasing the number of authorised individuals and establishing further joint venture relationships with legal firms to drive asset growth.

 

The Company also intends to expand its investment offerings through Frenkel Topping Investment Management and its Safety First Product Range.

 

 

 

Outlook

 

The Board is focused on reaching AUM of £1bn and will remain open to opportunistic investments with a view to both maximising its return on its cash position combined with other investment acquisitions that might accelerate the growth of the business and strengthen the existing platform.

 

The Board expects the strong growth demonstrated in the results for H1 to continue over H2 and confirms that it is trading in line with market expectations to deliver operating profit of more than double that of 2016.

 

The Company will continue with its progressive dividend policy that is supported by the growth prospects of the Company.

 

Furthermore the Company finished the period with a strong balance sheet - including £4.8m in cash and marketable securities.  With the first half of 2017 trading in line with market expectations the board reconfirms its profit from operations forecast of £3.5m.  The delivery of such is dependent on the performance of the sales consultants, control of administration expenses, growth in AUM and delivery of future returns from the Company cash balance.

 

I would like to thank all of our staff and shareholders for their continued support and look forward to providing further updates.

 

Jason Granite

 

Executive Chairman

 

5 July 2017

 

 

 



 

Frenkel Topping Group plc


6 Months

6 Months

Year

Group income statement

 


 ended

30-Jun-17

ended

30-Jun-16

ended

31-Dec- 16



Unaudited

Unaudited

Audited


Note

£

£

£

REVENUE


3,627,355

2,859,876

6,398,511






Direct staff costs


(1,336,867)

(1,274,308)

(2,732,515)






Gross Profit


2,290,488

1,585,568

3,665,996

 

OTHER OPERATING INCOME AND ADMINISTRATIVE EXPENSES





Other operating income


284,795

-

-

Share based compensation


(211,764)

(38,772)

(551,045)

Other exceptional costs


(115,973)

-

-

Administration costs


(1,244,829)

(1,284,701)

(2,231,198)






TOTAL OTHER OPERATING INCOME AND ADMINISTRATIVE EXPENSES


(1,287,771)

(1,323,473)

(2,782,243)






Profit from operations before share based compensation and other exceptional costs


1,330,454

300,867

1,434,798

 

Share based compensation and other exceptional costs


(327,737)

(38,772)

(551,045)











PROFIT FROM OPERATIONS


1,002,717

262,095

883,753

Finance costs


-

(427)

(427)






PROFIT BEFORE TAXATION

1,002,717

261,668

883,326

Income tax expense

 

PROFIT FOR YEAR

 

ITEMS THAT WILL NOT BE SUBSEQUENTLY RECLASSIFIED TO PROFIT AND LOSS

Gains on property revaluation arising net of tax

 

 

TOTAL COMPREHENSIVE INCOME FOR YEAR

 


(248,031)

  __________

754,686

 

 

 

-

 

__________

754,686

 

(63,953)

___________

197,715

 

 

 

-

 

___________

197,715

 

(189,322)

___________

694,004

 

 

 

70,991

 

__________

764,995

 

 

PROFIT AND TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:





Owners of parent undertakings


754,686

197,715

764,995

Non controlling interest

-

-

-



754,686

197,715

764,995






Earnings per share - basic (pence)

3

1.022

0.27

0.96

Earnings per share - diluted (pence)

3

0.96

0.27

0.91

The results for the period are derived from continuing activities.

 

 

Frenkel Topping Group plc





Group Statement of Financial Position


30-Jun-17

30-Jun-16

31-Dec-16

As at 30 June 2017


Unaudited

Unaudited

Audited



£

£

£

ASSETS





NON CURRENT ASSETS





Goodwill


7,020,287

7,020,287

7,020,287

Property, Plant and equipment


1,263,284

10,839

1,247,401

Deferred tax


178,500

277,683

178,500



8,462,071

7,308,809

8,446,188

CURRENT ASSETS





Accrued income


663,621

680,129

714,901

Trade receivables


1,202,658

1,028,801

1,170,969

Other receivables


392,044

426,610

490,518

Investments


999,542

40,000

3,061,980

Cash at bank and in hand


3,846,743

4,430,803

1,162,645



7,104,608

6,606,343

6,601,013






TOTAL ASSETS


15,566,679

13,915,152

15,047,201






EQUITY AND LIABILITIES





EQUITY





Share capital

Share Premium

Merger reserve

Revaluation reserve


384,954

361,028

5,314,702

70,991

373,111

79,300

5,314,702

-

384,954

361,028

5,314,702

70,991

Own share reserve

Other reserve


(774,197)

(341,174)

(774,197)

(341,174)

(774,197)

(341,174)

Retained earnings


9,669,176

8,507,971

9,346,735

EQUITY ATTRIBUTABLE TO HOLDER OF PARENT

Non controlling Interests

TOTAL EQUITY


14,685,480

-

14,685,480

13,159,713

-

13,159,713

14,363,039

-

14,363,039






CURRENT LIABILITIES





Current taxation


275,167

248,341

13,816

Trade and other payables


606,032

507,098

670,346








881,196

755,439

684,162






TOTAL LIABILITIES


881,199

755,439

684,162

TOTAL EQUITY AND LIABILITIES


15,566,679

13,915,152

15,047,201






 

 

 

 


Consolidated Statement of Changes in Equity

For the period to 30 June 2017


 

 

 

Share Capital

 

 

 

Share Premium

 

 

 

Merger

Reserve

 

 

 

Other

Reserve

 

 

Own share

Reserve

 

 

 

Retained

Earnings

 

 

 

Revaluation reserve

 

 

Total controlling interest

 

 

Non controlling interest

 

 

 

 

Total


£

£

£

£

£

£

£

£

£

£

Balance 1 January 2016

 

370,061

 

-

 

5,314,702

 

(341,174)

 

(774,197)

 

8,770,155

 

-

 

13,339,547

 

490

 

13,340,037

 

New shares issued

 

 

3,050

 

 

79,300

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

82,350

 

 

-

               

 

82,350

 

Share based compensation

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

38,772

 

 

-

 

 

38,772

 

 

-

               

 

38,772

 

Minority interest

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(490)

               

 

(490)

 

Dividend paid to shareholders

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(498,671)

 

 

 

-

 

 

 

(498,671)

 

 

 

-

 

 

 

        (498,671)


_______

_______

_______

_______

_______

________

________

________

_____

________

Total transactions with owners recognised in equity

 

 

 

373,111

 

 

 

79,300

 

 

 

5,314,702

 

 

 

(341,174)

 

 

 

(774,197)

 

 

 

8,310,256

 

 

 

-

 

 

 

12,961,998

 

 

 

-

 

 

 

12,961,998

 

Profit and total comprehensive income for the period

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

197,715

 

 

 

 

-

 

 

 

 

197,715

 

 

 

 

-

 

 

 

 

197,715


_______

_______

_______

_______

_______

________

________

________

_____

________

Balance 30 June 2016

 

373,111

 

79,300

 

5,314,702

 

(341,174)

 

(774,197)

 

8,507,971

 

-

 

13,159,713

 

-

 

13,159,713

 

New shares issued

 

 

11,843

 

 

281,728

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

293,571

 

 

-

 

 

293,571

 

Share based compensation

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

512,274

 

 

-

 

 

512,274

 

 

-

 

 

512,274

 

Dividend paid to shareholders

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(169,798)

 

 

 

-

 

 

 

(169,798)

 

 

 

-

 

 

 

(169,798)


_______

_______

_______

_______

_______

_______

_______

_______

_____

________

Total transactions with owners recognised in equity

 

 

 

384,954

 

 

 

361,028

 

 

 

5,314,702

 

 

 

(341,174)

 

 

 

(774,197)

 

 

 

8,850,447

 

 

 

-

 

 

 

13,795,759

 

 

 

-

 

 

 

13,795,759

 

Profit and total comprehensive income for the period

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

496,289

 

 

 

 

-

 

 

 

 

496,289

 

 

 

 

-

 

 

 

 

496,289

 

Other comprehensive income

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

70,991

 

 

 

70,991

 

 

 

-

 

 

 

70,991


_______

_______

_______

_______

_______

_______

_______

_______

_____

_______

Balance 31 December 2016

 

384,954

 

361,028

 

5,314,702

 

(341,174)

 

(774,197)

 

9,346,735

 

70,991

 

14,363,039

 

-

 

14,363,039

 

Share based compensation

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

211,764

 

 

-

 

 

211,764

 

 

-

 

 

211,764

 

Dividend paid to shareholders

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(644,009)

 

 

 

-

 

 

 

(644,009)

 

 

 

-

 

 

 

(644,009)


_______

_______

_______

_______

_______

_______

_______

_______

_____

________

Total transaction with owners recognised in equity

 

384,954

 

361,028

 

5,314,702

 

(341,174)

 

(774,197)

 

8,914,490

 

70,991

 

13,930,794

 

 

-

 

 

13,930,794

 

Profit and total comprehensive income for the period

 

 

-

 

-

 

-

 

-

 

-

 

754,686

 

-

 

754,686

 

-

 

754,686


_______

_______

_______

_______

_______

_______

_______

_______

_____

________

 

Balance 30 June 2017

 

 

384,954

 

 

361,028

 

 

5,314,702

 

 

(341,174)

 

 

(774,197)

 

 

9,669,176

 

 

70,991

 

 

14,685,480

 

 

 

-

 

 

 

14,685,480


============

============

 

 

==============

 

 

==============

 

 

=============

 

 

=============

 

 

=============

 

 

=============

 

 

==========

 

 

===============

 

 

·     The share capital represents the number of shares issued at nominal price.

·     The merger reserve represents the cost of the shares issued to purchase the non controlling interest at market value at the date of the acquisition and the excess of fair value over nominal value of shares issued to acquire Frenkel Topping Investment Management Limited.

·     The other reserve represents the excess paid for the non controlling interest over the book value at the date of the acquisition.

·     The own shares reserve represents the cost of 3,128,016 (2016: 3,128,016) shares held by an employee benefit trust.  The open market value of the shares held at 30 June 2017 was £1,657,848 (2016: £1,407,607).

·     Retained earnings represents the profit generated by the Company since trading commenced, together with dividends paid, share premium cancelled and share based payment and credits.

·     The Company has conformed with all capital requirements as imposed by the FCA.


 

Frenkel Topping Group plc


6 Months

6 Months

Year

Group Cash Flow Statement

For the period to 30 June 2017


ended

30-Jun-17

ended

30-Jun-16

ended

31-Dec -16



Unaudited

Unaudited

Audited



£

£

£





Profit before tax


1,002,717

261,668

883,326

Adjustments to reconcile profit for the year to cash generated from operating activities





 

Finance cost

Share based compensation


 

-

211,764

 

427

38,772

 

427

551,045

Depreciation


22,718

2,625

5,543

Decrease in accrued income,

trade and other receivables

80,502

280,118

129,583

Increase/(decrease) in trade and other payables

61,302

(41,951)

14,721

Cash generated from operations

1,379,003

541,659

1,584,645

Income Tax paid


(112,295)

(164,418)

(430,849)

Cash generated from operating activities

1,266,708

377,241

1,153,796






Acquisition of property, plant and equipment

Investments

(38,601)

2,100,000

(3,603)

-

(1,172,090)

(3,000,000)

Cash generated /(used) in investing activities


2,061,399

(3,603)

(4,172,090)






Financing activities





Shares issued


-

82,350

375,921

Dividend paid


(644,009)

(498,671)

(668,469)

Interest on loans and borrowings


-

(428)

(427)

Cash used in financing


(644,009)

(416,749)

(292,975)






Increase/(decrease) in cash and cash equivalents

 

2,684,098

 

(43,111)

 

(3,311,269)

 

Opening cash and cash equivalents


1,162,645

4,473,914

4,473,914

Closing cash and cash equivalents


3,846,743

4,430,803

1,162,645






 

Reconciliation of cash and cash equivalent










Cash at bank and in hand


3,846,743

4,430,803

1,162,645

Overdraft


-

-

-

Closing cash and cash equivalent


3,846,743

4,430,803

1,162,645

 

Cash and cash equivalents are held at National Westminster Bank Plc.



Notes to the Interim Financial Statements

 

1.    Basis of preparation and accounting policies


Basis of preparation

The Company's interim result consolidates the results of the Frenkel Topping and its subsidiary undertakings up to 30 June 2017.  Frenkel Topping 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 consolidated financial information of Frenkel Topping is presented in Pounds Sterling (£), which is also the functional currency of the parent.

 

The financial information contained in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. It does not therefore include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company's annual financial statements as at 31 December 2016 which have been prepared in accordance with IFRS's as adopted by the European Union.

 

The financial information for the 6 months ended 30 June 2017 is also unaudited.

 

The Company's statutory accounts for the year ended 31 December 2016 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 498(2) or (3) of the Companies Act 2006.

 

The Company has not applied IAS 34, Interim Financial Reporting, which is not mandatory for UK Companys, in the preparation of these interim financial statements.

 

Significant accounting policies

The accounting policies used in the preparation of the financial information for the six months ended 30 June 2017 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 will be adopted in the annual statutory financial statements for the year ended 31 December 2016.

 

2.            Revenue Segmental Reporting

All of the Company's revenue arises from activities within the UK.  Management consider there to be only one operating segment within the business based on the way the business is organised and the way results are reported internally.



 

3.            Earnings per ordinary share

 


6 months

6 months

Year ending


June 2017

June 2016

December 2016

Earnings




Earning for the purpose of basic earnings per share (net profit for the year attributable to equity holder of the parent)

£754,686

£197,715

£694,004

 

Earning for the purpose of diluted earnings per share

£754,686

£197,715

£694,004

 

Number of shares




Purpose for basic earnings per share

Less: own shares held

76,990,683

 

(3,128,016)

----------------

 

73,862,667

74,215,957

 

(3,128,016)

----------------

 

71,087,941

75,294,625

 

(3,128,016)

--------------

 

72,166,609

 

Effect of dilutive potential ordinary shares - share options

4,565,322

1,863,931

4,366,476


---------------

---------------

----------------

Purpose of diluted earnings per share

78,427,989

72,951,872

76,533,085


---------------

---------------

---------------





 

4.            Dividend

A dividend of £644,009 representing 0.8719 pence per share was approved by the Shareholders at the AGM on 3 May 2017 and has not been included as a liability as at 31 December 2016.  The dividend was paid on 26 May 2017.

5.            The Board of Directors approved the interim report on 4 July 2017.

6.            Copies of this report are available from the company website on www.frenkeltopping.co.uk

 

7.            The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014

 

 

- Ends -


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Half-year Report - RNS