Frenkel Topping Group plc

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

Results for the 12 months ended 31 December 2022

A year of executing strategy and delivering a strong performance

Frenkel Topping Group (AIM: FEN), a specialist professional and financial services firm operating in the Personal Injury (PI) Clinical Negligence (CN) space, is pleased to announce its final results for the 12 months ended 31 December 2022.  These results demonstrate a strong performance through 2022 and the Board is pleased to report an encouraging start to the 2023 financial year in line with management's expectations.

Financial Highlights

Operational Highlights

A strong start to the new financial year

Richard Fraser, CEO of Frenkel Topping, said:

"Our 2022 results demonstrate our focused approach to delivering on our acquisition strategy, along with the organic growth of our enlarged Group, in order to deliver the best possible outcomes for our clients, both professional and individuals.

We are continuing to develop a market-leading suite of services from which to offer greater breadth of support to people who have suffered significant and often life changing injuries. Our impressive client retention rate reflects our clients' trust and confidence in us to manage their money conservatively.

We are particularly proud of the performance of the Group's discretionary fund manager, Ascencia Investment Management ("Ascencia"), where assets on a DFM Mandate increased to £715m (2021: £676m). 

Comparing Ascencia's positive performance against a backdrop of wider market contraction and material outflows further demonstrates Ascencia's success in managing multi-asset investment solutions that are positioned to capture the upside of market fluctuations, while aiming to reduce the negative impact of market turbulence on client assets.

Ascencia's strong performance in the previous financial year continued last year, with the core risk-rated strategies outperforming their respective Private Client Indices/ARC indices. It is testament to the Group's in-house strategy and approach to risk management. The Company views the Ascencia platform as a clear growth opportunity in the coming years and a key tool to winning future business. Ascencia portfolios are currently defensively positioned given the uncertain and opaque investment outlook, with cash ready to be deployed should the opportunity arise.

We would like to take this opportunity to thank the staff, both longstanding and those that have joined during our acquisition journey, for their commitment and dedication to our clients enabling us to achieve these results.

The current financial year has begun robustly giving cause for optimism for the remainder of the year.

The Board remain focused on delivering value for all stakeholders and are happy to report that the Group is trading in line with management's expectations."

Elaine Cullen-Grant, CFO of Frenkel Topping said:

"Despite a challenging market, we delivered a strong set of financial results, in no small part a reflection of our delivery against a focused acquisition strategy resulting in diversified revenue streams.  This coupled with control on costs has meant we were able to maintain our adjusted EBITDA margin at 25% and mitigate the slight reduction in recurring revenue. 

We are well positioned to continue to grow the business in the year ahead and are pleased with the 2023 performance to date"

For further information:     

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

Chairman's Statement

Overview

On behalf of the Frenkel Topping Group (FTG) Board of Directors, I am pleased to report on another positive year of growth for the Group in which we continued to deliver strong results for our shareholders.

The Group's performance in the last financial year demonstrates the company's resilience in a challenging financial market, as well as further progress made by the Group through its focused acquisition strategy and continued consolidation of the Personal Injury (PI) and Clinical Negligence (CN) space.

FTG is a unique group of businesses operating in a niche sector and its continued growth despite challenging market conditions shows how well positioned its service offering and reputation is in the marketplace. The Group demonstrated the power of diversifying revenue streams, which tempered the impact of the challenging capital markets, while the performance of the Group's discretionary fund manager, Ascencia Investment Management ("Ascencia") continues to be a credit to the firm.

FTG's work for both claimants and defendants makes it a stand out provider of expert witness reports. Its unique business model, offering multiple services and touch points from the very start of a case at the 'index event' and throughout the claimant lifecycle, means one of its key revenue streams (expert witness services) is also a key business development pipeline. 

The Group's expansion by acquisition into complementary areas continues to be very well received and the last year has seen the Group make excellent progress in developing new business while continuing to grow existing relationships.

Following the fundraises in July 2020 and July 2022, FTG has capitalised on the opportunity to consolidate a highly fragmented area of professional services. FTG has executed a buy-and-build strategy bringing complementary services into the Group, creating multiple touch points in the PI and CN space providing the opportunity to grow Assets Under Management and delivering recurring revenues.

In 2022 the Group has completed three further acquisitions of Cardinal, Somek and Associates Ltd and N-Able Services Ltd. The three additions to the family of businesses have integrated incredibly well both operationally and culturally. The fundraise during the year has also allowed the group to gain further momentum and enact a number of key investments that will drive further operational efficiencies, maintain client retention rates and future-proof the business through developing in areas including technology, talent and the client journey. We are grateful for the support shown by both existing and new investors in supporting our growth strategy.

These important, successful developments are outlined in further detail in the Chief Executive Officer's Statement and the Strategic Report.  In addition, we are very proud of the firm's longstanding client retention rate which has been maintained at 99%, a fourteenth consecutive year of excellent performance.

Finally, on behalf of the Board I would like to thank all FTG employees for their dedication and hard work.

Dividend                                                                                                                                                        

Total dividends (paid and proposed) for the year are 1.37p per share (FY 2021: 1.36p). This is a reflection of the board's intention to continue to invest in the future of the business.

Outlook

The current financial year has started well and the Board is confident that the acquisitions made to date will continue to contribute revenue and profitable growth to the Group. Expectations for FY2023 therefore remain unchanged as a result of the solid start to the financial year.

Chief Executive Officer's Statement

I am very pleased to report on another strong 12-month period that has seen the group move into the next stage of its strategy, integrating the companies we have acquired, harnessing the strength of our shared services and maximising commercial opportunities within a larger client pool. We are developing an extensive service offering under the Frenkel Topping Group name which is held in high regard in the PI and CN space and can act as single destination, providing an end-to-end service for lawyers, consultants and claimants involved in PI and CN cases both pre and post settlement.

We have continued to execute on the buy and build strategy outlined ahead of our capital raise in 2020 and we are in a strong position to accelerate growth through the Group in the coming years, capitalising on the significant opportunity in the PI and CN sector. I am incredibly proud of the team's efforts and I look forward to seeing the positive impact of the key investments we are making following our more recent fundraise in July 2022.

These acquisitions have served to diversify our revenue streams, which has been especially important in the year given the backdrop of market volatility.

Additionally, of note during the year is the performance of the Group's discretionary fund manager (DFM), Ascencia Investment Management, where assets on a DFM mandate increased to £715m (2021: £676m).  Comparing Ascencia's positive performance against a backdrop of wider market contraction further demonstrates Ascencia's success in managing multi-asset investment solutions that are positioned to capture the upside of market fluctuations, while aiming to reduce the negative impact of market turbulence on client assets.

Ascencia has performed strongly in recent periods and in the year under review, with the core risk-rated strategies outperforming their respective Private Client Indices/ARC indices. It is testament to the Group's in-house strategy and approach to risk management and something the Board is justifiably proud of.

We see our Ascencia platform as a clear growth opportunity in the coming years and a key tool to winning future business. Ascencia portfolios are currently defensively positioned given the uncertain and opaque investment outlook, with cash ready to be deployed should the opportunity arise.

The Group continued to make significant progress delivering against its acquisition strategy to consolidate the pre-settlement professional services marketplace in the PI and CN space, positioning Frenkel Topping as a market leader in its sector.

Across the Group, we support litigators pre-settlement in achieving appropriate damages for their clients, by providing expert witness services. Post-settlement, we support clients in achieving the best long-term financial outcomes after injury, meaning FTG provides a true end-to-end service.

I now want to give some more information on the three acquisitions we made in the year.

Cardinal Management Ltd

We started 2022 with our most impactful deal to date in January with the acquisition of Cardinal Management Ltd.

Cardinal works in close partnership with a number of key NHS Major Trauma Centres to provide a Major Trauma Signposting Partnership support service.

It is the sole commercial organisation operating in its space and has a six-year track record of contracts with the NHS with a 100% contract renewal rate.

The acquisition of Cardinal provides a clear and direct link to claimants and their professional representatives, at the earliest stage possible after injury or illness, introducing the portfolio of FTG services in a relevant and timely way to its clients in the PI and CN litigation space as well as claimants themselves.

Cardinal is performing to plan, as successful claims and cases come to settlement, driving growth in AUM.

Somek and Associates Ltd

Somek has been operating since 1997 and is one of the largest providers of Expert Witnesses in the UK, delivering highly professional trained experts in a range of health professions. As a trusted source of Expert Witnesses, Somek has a balanced portfolio with instructions from claimants and defendants and has experts with specialist experience in a range of clinical fields based throughout the UK.

The addition of Somek to the Group's existing Expert Witness professional service offering transforms FTG into a market leader in this space.

N-Able Services Ltd

N-Able is a professional service firm, founded in 2002 in response to the growing demand for bespoke, specialist Case Management services to support those who had experienced catastrophic injuries. N-Able is now one of the largest independent Case Management providers in the UK. N-Able works directly with many of the UK's leading law and insurance firms to guide and support clients through the rehabilitation and litigation process and beyond, enabling clients to maximise their independence and live life to their fullest.

The Board believes that N-Able's presence in Case Management in regional areas where the Group does not currently operate will bolster the Group's existing Keystone Case Management business significantly and provides a platform for growth.

Care and Case Management is a core part of the client journey in PI and CN and the ability to provide those services within FTG strengthens our position as an end-to-end provider in the marketspace. These specific areas are well covered by the addition of N-Able and Somek, increasing our touchpoints on the journey of a potential claimant and allowing the Group to apply the same high standards consistently throughout the client journey.

The trust and respect we have earned, the relationships we have nurtured and the results we have achieved across all our Group brands over many years can only be matched by high calibre businesses such as these two firms. The addition of Somek and N-Able enhance the Group's position as a flagship firm in its field.

Strategy in Action

2022 saw the further enactment of the strategy that was outlined in 2020 of consolidating the PI and CN space. By acquiring a number of highly complementary businesses that have contributed to the financial performance of the Group, we have increased visibility and significantly enhanced our touchpoints within the space, we have developed a market-leading platform from which to offer a greater breadth of services to people who have suffered significant and often life-changing injuries and to their professional representatives.

By focusing on the consolidation of professional services in a very niche sector, we have developed greater access to clients - both directly to the injured party and via their legal representatives - and extended the customisation of their care. Frenkel Topping Group now delivers an end-to-end service to its client base under a tried and trusted umbrella group, making us a leading operator in our field..

In January 2023, subsidiaries Forth Associates and Bidwell Henderson Cost Consultants (BH) both delivered record revenues and BH surpassed its previous highest recorded number of files received by 20% - some examples of how the businesses are stronger together.

We are driven by our ambition to provide a full, end-to-end service in the personal injury and clinical negligence space because we are confident that we can deliver the very best service levels to clients from immediately after injury or illness and for the rest of their lives.

The most recent acquisitions are in line with the Board's strategy of expanding the Group's activities in Care & Case management as set out at the time of the Group's July 2022 fundraising. In addition, the acquisition of N-Able adds regional reach in Case Management, helping drive further growth in this sector.

Revenue for the year increased by 35% to £24.8m (2021: £18.4m), within which recurring revenue has grown by 24% to £11.0m (2021: £8.9m).

Gross profit was up to £11.1m (2021: £9.0m) and underlying profit from operations (as defined in our Accounting Policies on page 45) was £5.5m (2021: £4.3m), an increase of 31%. The Group is in a robust financial position, with total assets of £53.1m (2021 £37.8m) and as at 31 December 2022, net cash remained strong at £5.0m (2021 £8.6m).  Following the year end the Group paid £1.1m in respect of deferred consideration for previous acquisitions.

Our client retention rate within the financial advisory business remains exceptionally high at 99%, reflecting positive performance from our portfolios and our relentless focus on excellent customer service.

The Directors believe the acquisitions made to date have given the Group visibility and oversight of the Group's future business pipeline in a way that no other professional services group in the PI and CN space can compete with and also drives revenue across the Group's entire claims management systems.

We are looking forward to building on the successes of the last year with a continued focus on growing our core business, driving AUM, integrating our acquisitions (from a cultural and commercial point of view), maintaining our outstanding client retention levels and generating strong and sustainable returns for our shareholders.

group STATEMENT of comprehensive income

for the year ended 31 December 2022

All amounts are derived from continuing operations.

The Notes to the Financial Statements form an integral part of these financial statements.

group STATEMENT of FINANCIAL POSITION

As at 31 December 2022