TIDMFRP
RNS Number : 7568T
FRP Advisory Group PLC
17 November 2023
FRP Advisory Group plc
("FRP" or the "Group")
Half Year Trading Update
FRP Advisory Group plc, a leading national specialist business
advisory firm, announces a trading update for the half year ended
31 October 2023 ("H1 2024").
Strong first half performance
The Group's performance was strong during the first half, with
continued growth in revenues and profits as well as further
investment in the team.
The Group expects to report revenue for H1 2024 of GBP58.7m, up
19% on the prior year (H1 2023: GBP49.4m), and underlying adjusted
EBITDA* of GBP15.5m, up 34% on the prior year (H1 2023:
GBP11.6m).
Restructuring
During the 2023 calendar year, the restructuring market has seen
an increase in activity levels, including administrations
approaching pre-pandemic levels. Companies with significant
borrowings who have rolled off lower interest rate arrangements are
now subject to much higher debt service costs, with interest rates
now considerably higher than the 2009-2021 period. Businesses are
also exposed to much higher levels of cost inflation . Certain
sectors such as construction, property, casual dining and food
service, retail, administrative and support services are finding
current trading conditions particularly challenging.
FRP continues to be one of the most active Restructuring
Advisory businesses in the UK, supporting clients on both stress
and distress situations where we create commercial solutions to
achieve the best possible outcome.
Wilson Field was acquired in September 2023. The team serve
clients both locally in Sheffield and nationally through a digital
platform. Integration of the business continues as planned and
their results for the seven weeks post-acquisition are in line with
the Board's expectations.
Corporate Finance (including Debt Advisory)
FRP Corporate Finance has continued to invest in both external
and internal talent.
The challenging conditions seen across the broader economy have
impacted the UK M&A market, with deal volumes down as expected
compared to the prior year. The team has remained an active player
in the mid-market and has closed 25 transactions in H1 2024, with a
combined value of GBP537 million and raising GBP209 million of debt
(H1 2023: 40 deals with a combined value of GBP1.2 billion and
raising GBP552 million of debt).
Moving into H2 2024, the pipeline of new opportunities remains
solid and we are continuing to see good levels of activity across
the national Corporate Finance practice. We are seeing signs of an
increase in debt refinancing and restructuring related M&A
activity.
Forensic Services
Compared to the prior year, Forensic Services have seen a high
level of activity across both investigations and disputes. Some of
this increase has been driven by an uptick in fraud related matters
and clients requiring independent investigations.
Financial Advisory
The team is actively engaged in a range of assignments including
option reviews and transaction due diligence, where stakeholders
are seeking more assurance on the viability of new investments and
re-financing given the greater cost of capital and a higher risk
environment. Our valuation specialists have been active with both
mainstream projects and preparing valuations which underpin
restructuring plans and schemes of arrangements.
*Underlying adjusted EBITDA removes exceptional costs and
non-cash costs including share-based payments relating to deemed
remuneration arising on acquisitions that is subject to continuing
employment and the Employee Incentive Plan established on IPO and
funded by partners, resulting in no dilution to existing
shareholders.
Balance sheet strength and discipline
The Group's balance sheet remains strong with an unaudited net
cash balance as at 31 October 2023 of GBP11.7m** (H1 2023:
GBP21.0m). In addition, the Group has an undrawn revolving credit
facility of GBP10m.
As our activity levels have increased, there has been the
expected growth in our unbilled revenue (also known as work in
progress or 'WIP') although we have consistently maintained our
discipline around appropriate valuation. The increase has arisen as
FRP has been appointed on new, large and/or complex administration
assignments that have assets other than cash (i.e. property) and/or
a longer creditor approval process before fees can be drawn. FRP
continues to have a strong track record of converting WIP into
cash.
**GBP15.7m gross cash less GBP4m of structured debt (H1 2023:
GBP26.6m less GBP5.6m), repayable over approximately three
years.
Continued investment in our people and operations
FRP's 28 offices work together, drawing on specialists from
different teams as necessary, in order to deliver the best possible
service and outcome for our clients.
We continued to selectively grow our headcount, increasing the
number of total Colleagues by 13% over H1 2024 (16% year-on-year)
due to demand-led lateral hiring and 63 new colleagues following
the Wilson Field acquisition. The increase in Partners was driven
by 12 internal promotions on 1 May 2023, facilitated by our
investments in developing internal talent. Three further internal
promotions to Partner occurred on 1 November 2023.
31-Oct-23 30-Apr-23 31-Oct-22
Partners 88 78 80
---------- ---------- ----------
Other Fee earners 396 361 342
---------- ---------- ----------
Subtotal - Fee earners 484 439 422
---------- ---------- ----------
Support 138 112 114
---------- ---------- ----------
Total Colleagues (ex Consultants) 622 551 536
---------- ---------- ----------
The Group continues to improve its operational platform,
achieving formal Information Security ISO 27001 certification and
launching both a new Leadership programme and Learning Management
System (LMS) with bespoke training content to assist Colleagues'
learning, development and career paths.
Outlook
Trading since 1 May 2023 has been positive and if current
activity levels continue, the Board remains confident of at least
achieving full year expectations.***
***The Company believes consensus market expectations for FY
2024 to be revenue of GBP112.2m and adjusted EBITDA of
GBP28.8m.
Geoff Rowley, Chief Executive Officer of FRP Advisory Group plc,
said:
"FRP performed well in the first half, with our team, revenues
and profits all continuing to grow. We continued to take market
share and made further progress against our strategy, which remains
to deliver sustainable profitable growth by ensuring our five
service pillars work together to provide solutions that achieve the
best possible outcomes.
Looking ahead, we remain confident of making further progress,
with leading positions in our core markets and a team and structure
that leaves us well positioned to support corporates through the
business cycle and respond to increased demand for our
services."
Notice of results
The Group expects to report its unaudited results for the half
year ended 31 October 2023 on 12 December 2023.
The information contained within this announcement is deemed by
the Group to constitute inside information under the Market Abuse
Regulation No. 596/2014.
Enquiries:
FRP Advisory Group plc
Geoff Rowley, CEO
Jeremy French, COO
Gavin Jones, CFO
Enquiries via MHP
Cavendish Capital Markets Limited (Nominated Adviser and Joint
Broker)
Katy Birkin/Stephen Keys/George Lawson (Corporate Finance)
Tel: +44 (0) 207 220 0500
Investec Bank plc (Joint Broker)
Carlton Nelson/James Rudd (Corporate Broking)
Tel: +44 (0) 207 597 4000
MHP (Financial Public Relations)
Oliver Hughes
Charlie Barker
Catherine Chapman
Tel: +44 (0) 783 462 3818
FRP@mhpgroup.com
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 and valuations, financial due diligence, 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.
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END
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