TIDMFEN
RNS Number : 6728A
Frenkel Topping Group PLC
24 January 2024
The information contained within this announcement was deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK domestic law by virtue of the European Union (Withdrawal) Act
2018 as amended. With the publication of this announcement via a
Regulatory Information Service, this inside information is now
considered to be in the public domain.
Frenkel Topping Group plc
("Frenkel Topping", the "Company" or the "Group")
Trading Update for the year ended 31 December 2023
&
New Debt Facility
Frenkel Topping (AIM: FEN), a specialist financial and
professional services firm operating within the personal injury and
clinical negligence marketplace, provides the following trading
update for the financial year ended 31 December 2023 ("FY2023") and
an outlook for the current financial year ("FY2024").
-- Revenue increased by 32% in FY2023, driven by acquisition and organic growth
-- In light of the challenging market conditions during the
year, revenue is expected to be GBP32.8m in FY2023 and adjusted
EBITDA is expected to be GBP8.0m*
-- Assets Under Management (AUM) up 12% to GBP1,335m (2022: GBP1,187m)
-- Assets on a discretionary mandate up 15% to GBP820m (2022: GBP715m)
-- New Money Market Solution launched in June 2023 attracting investment of GBP39m
-- Acquisition strategy continues to deliver with non-recurring revenue up in excess of 50%
-- Two new Major Trauma Centres and three Working-in-Partnership JVs added during the year
-- Cash generation from operations continues to improve, up over 150% from 2022
-- The Company had GBP2.4m of net cash at the year end
-- Client retention rate remains high at 99%
-- FY2024 has started strongly with a number of AUM opportunities in the pipeline
-- Post period end the Company has signed a new GBP7.5m Revolving Credit Facility with Santander
Richard Fraser, Chief Executive Officer of Frenkel Topping Group
plc, said:
"Volatile market conditions have seen clients channelling funds
into high interest savings accounts and led to a general reluctance
to invest in equities which unsurprisingly has meant high margin
recurring revenue being impacted, with a consequential impact on
both revenue and EBITDA for FY2023 being slightly below
expectations by c6-7%.
However, we have grown our AUM, in no small part thanks to
Ascencia, which has again beaten its benchmark and shown agility in
launching the new Money Market Solution in response to market
dynamics and client demand and overall demonstrated resilience in a
challenging environment.
We are seeing the benefits of our acquisition strategy coming to
fruition. We continue our focus on data and are seeing the growth
in transactional revenue channelling into future growth
opportunities in AUM.
We continue to be optimistic about our long-term goal to grow to
15% market share in each of our business units. "
Non-recurring revenue
The strong growth of 50% in non-recurring revenue has been very
pleasing, demonstrating the success of the Company's acquisition
strategy over recent years, and with a better than expected gross
margin profile, especially for Bidwell Henderson and Forths.
Forth Associates Ltd (acquired 2020) and Bidwell Henderson
(acquired 2021) closed the year with record numbers of active
files. Meanwhile Somek & Associates (acquired 2022) has grown
their number of expert witnesses by 19% during the year which
further increases capacity to accept new instructions. The
onboarding of expert witnesses remains a key area of focus for 2024
and we expect to achieve similar levels of growth throughout the
year ahead.
Recurring Revenue
It is reassuring that our recurring revenue has continued to
grow, and that the year-end AUM has increased. However, growth in
AUM was moderately impacted by market conditions, which remained
challenging and the Company has not been entirely immune from
it.
The performance of our discretionary fund management business
Ascencia Investment Management has again been strong. With global
economic uncertainty, Ascencia's conservative multi-asset
investment approach continues to deliver a smoother client
investment experience and has continued to outperform its key
benchmarks.
High interest rates have meant many potential new Court of
Protection clients were inclined to hold funds within the
Government's Court Funds Office accounts rather than to invest. In
June 2023 and in response to this, Ascencia launched a 'Money
Market Solution' which provides clients with an investment solution
that benefits from the higher interest rate environment. This
product, assisted by the hard work and tenacity of our sales team,
has attracted investment from both new and existing clients with
GBP39m of assets added by the year end. Whilst funds in this Money
Market Solution' product do earn a lower fee than those invested in
our other investment solutions, which has moderately impacted the
overall full year outturn, we are confident that they will be
redeployed to higher fee products across our proposition as
financial markets turn.
Outlook
The Company continues to deliver on its growth strategy, in
particular the transactional businesses are thriving, a clear
indicator that the Group is adding value through its acquisition
strategy. We remain committed to continuing our acquisition path
and are advancing further opportunities.
For the recurring revenue businesses, the market backdrop
continues to be uncertain. The success of the Money Market Solution
means that funds are waiting to be deployed into higher yield
funds, however the timing is unclear and prudently we anticipate a
similar impact on this current financial year from this headwind
and revise our expectations accordingly.
January 2024 has been positive with a strong pipeline of new AUM
opportunities being pursued which provides confidence for the start
of the new financial year.
We remain focused on our strategic course and the Board's view
on the longer term is unchanged notwithstanding the tough market
conditions which are impacting AUM and our recurring revenues. The
growth strategy continues to mature, and we are seeing an increase
in opportunities across the Group. Consequently, we are confident
that we can continue to deliver growth in shareholder value in the
years ahead.
New Debt Facility
The Company is pleased to have entered into a GBP7.5m revolving
credit facility (RCF) at 2.95% over SONIA with high street lender
Santander on standard commercial terms to support its growth and
acquisition strategy.
* The financial expectations noted above are preliminary, and
subject to year-end financial close and audit review processes.
Adj. EBITDA defined as before share based compensation, M&A
strategy and re-organisation costs.
For further information:
Frenkel Topping Group plc www.frenkeltoppinggroup.co.uk
Richard Fraser, Chief Executive Officer Tel: 0161 886 8000
Cavendish Capital Markets Ltd (Nominated Tel: 020 7220 0500
Advisor & Broker)
Carl Holmes/Abigail Kelly/Fergus Sullivan
(Corporate Finance)
Tim Redfern (ECM)
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
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