Financial services firm confident following ‘robust’ year
Frenkel Topping Group, the Salford-based financial services firm, has reported a strong year, but admitted today that it has been impacted by the Bank of England’s decision to slash interest rates.
In a trading update ahead of its annual general meeting at midday today chief executive Richard Fraser updated shareholders on the company’s performance for 2019, which he described as “robust”.
He said revenue and profit before tax increased by 12% and nine per cent to £8.6m and £1.2m, respectively, and, as at April 30, its assets under management (AUM) was up around four per cent to £880m, compared with the end of March figure of £849m which reflected net inflows and strong levels of new business wins.
He said: “Our key growth drivers are innovation and the expansion of our client base.
“Post year-end, we established a joint venture with Horwich Cohen Coghlan Ltd to develop new and innovative investment products.
“A further joint venture was established with Hudgell Solicitors where Frenkel Topping Limited, our IFA business, has become Hudgell’s preferred partner for their clients who require investment advice post-settlement.
“We have also made significant progress on digitalising the business which included the launch of LUCI.”
He said Ascencia had an outstanding year and grew assets on a discretionary mandate by 32% to £399m.
In fact, all the company’s model portfolios achieved positive returns, each posting growth of between 7.5% and 18.5% according to the risk criteria set for the fund, despite the geopolitical backdrop.
The group maintained a strong balance sheet with net cash and marketable securities of £2.4m as at April 30, 2020, compared with £2.1m at December 31, 2019.
However, Mr Fraser said: “Since the Bank of England base rate was cut to 0.1% in March 2020, lower interest rates have had a negative impact on the business. However, the board has taken steps to reduce the cost base in order to mitigate this impact.
“Our focus on the customer, and conservative approach to investments, has seen our client retention rate remain high at 99% and, as a result of the strong financial performance and our view of the future, the board has recommended a five per cent increase in total dividends to 1.35p per share.”
Looking ahead, he added: “Despite the impact of COVID-19, which the board continues to monitor closely, we have continued to trade positively during the first five months of the year and, as indicated in our final results, the year began robustly with significant AUM mandates won and new business wins from our expert witness work, the latter a key pipeline for future AUM growth.
“The board believes the business is very well positioned to deliver further growth in this financial year, guided by our deep-rooted culture of integrity, honesty and clearly-defined commercial objectives and reiterates its confidence in the full year outturn.”
