After a review of the company, a restructuring is underway resulting in an increased cost base.
Companies: Frenkel Topping Group
Specialist independent financial advisor and asset manager Frenkel Topping (LON: FEN) has said today that the Group's cost base is set to rise, as it looks to restructure the company after a review of the Group's operations.
Following changes made to its executive team, today's trading update said:
"The Company has increased its cost base slightly this year and will continue to do so in 2018 and beyond."
Paul Richardson, Executive Chairman, explained:
"Since the new executive team has been put in place, we have thoroughly reviewed the Company's strengths and the best way to leverage Frenkel Topping's competitive advantage in servicing vulnerable clients. The Company benefits from a high proportion of recurring revenue, which provides us with the confidence to make additional investments in Frenkel Topping's infrastructure. Whilst this will result in some increased costs, we believe that the addressable market will be greatly increased and we expect that these investments will drive significant additional revenue growth..."
The funds will be spent on information technology, compliance, marketing and additional hiring.
Shares in FEN dove almost 10% to 52p off the back of the update this morning.
The stock trades on a 12-month forecast PE ratio of 14x versus an industry median of 17x, despite forecast Revenue and Net Profit growth of 25% and 230% in FY17 respectively. In FY18, Revenues are forecast to grow a further 16% YoY while Net Profit is forecast to grow by more than a third YoY.