Full Year Trading Update

FRP Advisory Group PLC

15 May 2023

 

FRP Advisory Group plc

("FRP" or the "Group")

Full Year Trading Update

Continued profitable growth and well placed to service increasing demand

FRP Advisory Group plc, a leading national specialist business advisory firm, announces a trading update for the full year ended 30 April 2023 ("FY 2023").

Trading performance

The Group continued to grow profitably with all five service pillars contributing strongly. The connection of our colleagues across different pillars is a key point of differentiation at FRP. The Group ensures the right team from the right service line and locations are working on each project, to secure the optimal outcome for our clients.

The Group expects to report revenues for the full year to 30 April 2023 of £104 million, up 9% on the prior year (FY 2022: £95.2 million), and adjusted underlying EBITDA* of £27 million, up 5% on the prior year (FY 2022: £25.7 million), both slightly ahead of current market consensus**.

Update on our service pillars

The Restructuring team serves the full range of UK clients across all sectors, with assignments ranging from personal clients, SMEs to larger corporates.

Growth in the higher volume liquidations market, which are typically lower value and less complex, continues, including Creditors Voluntary Liquidation's ("CVLs") and Compulsory Liquidations.  Whilst the restructuring administration market has remained below pre-pandemic levels for a significant part of the year, the Group slightly increased its administration market share to 14% (FY 2022: 13%, Source: London and Regional Gazettes) and has seen encouraging levels of activity during Q4 FY 2023. Given the long list of well documented headwinds facing UK corporates including continuing interest rate rises, supply chain disruption, input cost inflation (i.e. wages, energy, supplies and materials), Brexit and the withdrawal of pandemic support measures, it is expected that the administration market should experience greater volumes during financial year 2024 and FRP is well placed to serve this market.

Outside of the formal insolvency market, FRP has seen an encouraging increase in demand for confidential advisory projects and enquiries for restructuring services; this includes a number of mandates seeking to utilise the Restructuring Plan. This mechanism was introduced into law in 2020 and after a relatively hesitant start is now starting to be a useful addition to the restructuring toolkit. The Group expects that demand for the Group's overall restructuring advisory services will continue to increase.

FRP Corporate Finance successfully closed 73 transactions in FY 2023 with an aggregate deal value of £1.8 billion and £0.8 billion of debt raised. FRP was the 13^th most active M&A adviser in the UK by deal volume, maintaining its position in the market (source: Experian's MarketIQ). An average deal value of £25 million for the year places FRP Corporate Finance in the heart of the UK SME market.

The progress achieved within our Corporate Finance business was recognised by a significant win at the National Real Deals Private Equity Awards 2023 when it was named 'UK Corporate Finance House of the Year.' The team also strengthened its brand presence with the launch of a new dedicated website. The new financial year commences with a healthy pipeline; although deals are taking longer to close due to more transaction due diligence and scenario analysis given the increased cost of borrowing and inflation, reflecting a more cautious attitude of buyers and capital providers.

During the year a Financial Advisory pillar was launched within the Group. It includes financial and pre-lending review services, financial modelling expertise and wider transaction services including financial due diligence for buy-side and sell-side transactions; these services have been developed in response to market demand from Institutional Lenders and Private Equity.  The pillar also includes our Valuation services, which are often involved in complex restructuring assignments, and Pensions Advisory services.  Since launch, Colleagues within Financial Advisory have been active across all of these services and demand continues to be strong.

Our Forensic Services pillar has seen an increase in work in 2023 across both forensic accounting and forensic technology. Notable recent assignments include independent investigations at WANDisco plc and Inland Homes plc.

Balance sheet

The Group's balance sheet remains strong with an unaudited net cash balance as at 30 April 2023 of £22.9 million (FY 2022: £18.1 million). The Group also has an undrawn revolving credit facility (RCF) available of £10 million with Barclays Bank. This enables the Group to act swiftly on any acquisitions that meet FRP's criteria: Cultural alignment and Strategic fit, together with mutually acceptable economics.

Given the trading performance and strong balance sheet, the Group intends to propose a final dividend, in line with its stated dividend policy.

People and operations

FRP grew its team during the year by over 9% to 551 Colleagues. The growth included the acquisition of a team in Cyprus, which strengthens our international presence and supports our work with global advisory organisation Eight International, enabling us to better support our clients on international matters.

	FY 2023	FY 2022
Partners	78	80
Other Fee earners	361	317
Subtotal - Fee earners	439	397
Support	112	107
Total Colleagues (excluding consultants)	551	504

Developing talent and managing succession is a key focus of the Group. To that end, immediately following our year end on 1 May 2023, 12 internal promotions to Partner were announced, which were part of a total of 72 promotions across the Group. This was a record number of promotions and, when combined with our ongoing investments in Learning and Development, demonstrates the Group's long-term commitment to developing talent and providing attractive career paths.

FRP's offices, across 25 locations in the UK and 1 international location in Cyprus, continue to work well together, drawing on specialists from different service lines as necessary, to resource each assignment with the right team to deliver the best possible service and outcome.  

Notice of results

The Group expects to report its audited results for the full year ended 30 April 2023 on 26 July 2023.

Geoff Rowley, Chief Executive Officer of FRP Advisory Group plc, said:

"The Group made excellent progress in the financial year to 30 April 2023, continuing to execute our growth strategy. The results achieved are an ongoing testament to the quality of our colleagues and their continued efforts to provide a high-quality service, to order to achieve the best possible results for our clients. On behalf of the Board, I wish to express my gratitude for the contribution made by our entire team.

Whilst the UK economy continues to be impacted by uncertainty, FRP remains well placed to serve our clients across the entire economic life cycle and we will continue to invest to ensure we are able to develop our team and client offerings. Recent activity levels have been encouraging and we start our new financial year with confidence.

The medium-term outlook for our markets remains positive and we have sufficient resource flexibility to respond to an increase in demand for our services.

The Board is confident of making further progress in the current financial year."

* Adjusted underlying EBITDA excludes exceptional costs and a share-based payment expense that arises from a) the Employee Incentive Plan (EIP) funded on IPO and b) deemed remuneration amortisation linked to acquisitions.

** Current consensus market expectations for revenue and adjusted EBITDA of £100.5 million and £25.8 million respectively for FY 2023.

The information contained within this announcement is deemed by the Group to constitute inside information under the Market Abuse Regulations No. 596/2014.

Enquiries:

FRP Advisory Group plc  

Geoff Rowley, CEO

Jeremy French, COO

Gavin Jones, CFO

Enquiries via MHP

Cenkos Securities plc (Nominated Adviser and Joint Broker)

Katy Birkin / Max Gould (Corporate Finance)

Alex Pollen (Sales)

Tel: [phone]

Investec Bank plc (Joint Broker)

Carlton Nelson / James Rudd (Corporate Broking)

Tel: [phone]

MHP (Financial Public Relations)

Oliver Hughes

Charlie Barker

Pete Lambie

Tel: [phone]

[e-mail] 

Notes to Editors

FRP is a leading national specialist business advisory firm established in 2010. It offers a range of advisory services to companies, lenders, investors and other stakeholders, as well as individuals. These services include:

§ Restructuring advisory: corporate financial advisory, formal insolvency appointments, informal restructuring advisory, personal insolvency and general advice to all stakeholders.

§ Corporate finance: mergers & acquisitions (M&A), strategic advisory, capital raising, special situations M&A and partial exits.

§ Debt advisory: raising and refinancing debt, debt amendments and extensions, restructuring debt, asset based lending and corporate and leveraged debt advisory.

§ Forensic services: forensic investigations, compliance and risk advisory, dispute services and forensic technology.

§ Financial advisory: transaction services including financial due diligence, lender services, financial modelling, valuations, pensions and company-side advisory services.

 

END