Frenkel Topping flags solid revenue growth despite challenges

29th Aug 2024 13:38

(Sharecast News) - Frenkel Topping Group, a specialist financial and professional services firm in the personal injury and clinical negligence markets, reported solid revenue growth for the first half of the year in an update on Thursday, despite facing challenges within one of its subsidiaries.

The AIM-traded firm said that for the six months ended 30 June, it achieved a 12% increase in revenue to £17.9m, with recurring revenue up 10% to £6.5m.

Gross profit rose 5% to £6.9m, while adjusted EBITDA saw a modest increase of 3% to £3.6m.

The group's funds under management (FUM) reached £1.46bn, a 15% increase, with discretionary fund management (DFM) assets growing 23% to £935m.

A significant portion of new mandates flowed into the money market solution (MMS), which was launched in June last year and now stood at £113.5m.

One highlight was the recognition of Ascencia Investment Management's Safety First 2 & 3 portfolios, which were highly commended in the Defaqto Defensive Comparator Sector.

Additionally, Ascencia received the ARC 3D Research Award and continued to outperform benchmarks, with its Income and Growth 4 fund achieving a 4.92% return over three years, compared to the ARC Sterling Balanced Asset's 3.29%.

However, the group faced challenges with its subsidiary, Partners in Costs (PIC), which struggled with recruitment and technology implementation.

That impacted PIC's performance and, as a result, the group's overall EBITDA was expected to be about 8% below management's initial expectations for the year.

Despite the setbacks, the board said it had taken corrective actions, including process changes and new hires, to improve PIC's medium-term performance.

Other subsidiaries, such as Somek & Associates, Cardinal, and Bidwell Henderson, reported progress in expanding their operations and expertise.

Somek & Associates increased the number of expert witnesses, while Cardinal expanded its presence in NHS Major Trauma Centres, adding Sheffield Children's Hospital to its portfolio.

Bidwell Henderson continued to grow its graduate training program, with further expansion planned.

Looking ahead, Frenkel Topping said it was confident in its overall growth trajectory, buoyed by strong funds under management performance and progress across most business units.

Despite the underperformance at PIC and the impact of regulatory changes related to Consumer Duty, the group said it was trading in line with revenue expectations and expected to consolidate its leadership position in the personal injury and criminal negligence sectors.

The company said it would provide a more detailed update on its progress and strategy with its final, unaudited results for the first half on 30 September.

At 1236 BST, shares in Frenkel Topping Group were down 4.08% at 47p.

Reporting by Josh White for Sharecast.com.