Frenkel Topping warns of lower earnings in second half

Frenkel Topping, the specialist professional services firm, has reported a rise in revenue in the first half of the year but warned that earnings are trading behind management’s expectations.

In the six months ended 30 June 2024, Frenkel Topping posted £17.9m in revenue, a 12 per cent increase on the previous year’s £16m. Its gross profit also jumped five per cent from £6.6m to £6.9m.

But the AIM-listed firm said it is currently trading slightly behind management’s expectations of earnings before interest, tax, depreciation and amortisation (EBITDA), by around eight per cent.

It blamed this on the underperformance of Partners in Costs (PIC) – one of the UK’s leading costs law specialists – and amendments to charging structures due to consumer duty.

Shares in Frenkel Topping, which provides wealth management services to personal injury and clinical negligence victims, slumped more than 5.6 per cent when the market opened on Thursday.

Cavendish downgraded its full year earnings per share forecast by ten per cent on Thursday. The brokerage has “taken a more cautious view on the pace of growth from now on, to allow for investment and in recognition of the continued difficult markets,” according to analyst Guy Hewett.

“While the downgrade is disappointing,” he added, “it only reflects one business in the group this year, PIC, where the challenges have been addressed, leaving the long-term potential of the group unchanged.”

Frenkel’s funds under management (FUM) was £1.46bn after record growth of 15 per cent, a momentum which the company believes will continue during the second half. 

In April this year, the firm announced a new acquisition of North West Law Services (NWL) by way of acquisition of the current parent company NWL (Group) for a total cash consideration of £2.75m. Frenkel said NWL is trading in line with expectations.