REG - FRP Advisory Grp PLC - Half Year Trading Update

Frp AdvisoryAnnouncement

11/11/2022 07:16

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RNS Number : 0624G  FRP Advisory Group PLC  11 November 2022

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 2022 ("H1
2023").

 

Trading performance

 

The Group's performance remained strong during the first half, with continued
growth in revenues and profits.

 

The Group expects to report revenue for H1 2023 of £49.4m, up 10% on the
prior year (H1 2022: £44.7m), and underlying adjusted EBITDA* of £11.6m, up
5% on the prior year (H1 2022: £11.1m), in line with the Board's expectations
to date.

 

Restructuring

 

The Restructuring team continue to serve the full range of UK clients across
all sectors, there is a focus on the core mid-market, with assignments ranging
from personal clients, SMEs and higher-profile appointments.

 

FRP has seen an increase in demand for confidential advisory projects and
enquiries for restructuring services compared to last year.

 

Growth in the higher volume liquidations market, which are typically lower
value and less complex, has continued, including Creditors Voluntary
Liquidation's ("CVLs") and Compulsory Liquidations. However, the formal
administration appointment market still remains below pre-pandemic levels.
This level is despite the long list of well documented headwinds facing UK
corporates including recent interest rate rises, supply chain disruption,
input cost inflation (i.e. wages, energy, supplies and materials), Brexit and
the withdrawal of pandemic support measures.

 

Many troubled UK corporates have avoided the need to consider and implement
formal restructuring processes as they took advantage of the government-backed
support measures made available during the pandemic. Furthermore, key
creditors like HMRC have a tax arrears backlog to address and institutional
lenders continue to be supportive where possible. The Group expects that as
the headwinds further impact the UK economy that the demand for the Group's
restructuring services will continue to increase.

 

Corporate Finance

The integrated FRP Corporate Finance brand was launched in July 2022 supported
with a new dedicated corporate finance website to amalgamate the previous FRP
Advisory, Spectrum Corporate Finance (acquired in 2021) and JDC Corporate
Finance (acquired in 2020) brands. The last six months has also seen the
development of centralised support across corporate finance which encompasses
research, marketing and deal origination to provide a strong and consistent
platform for growth.

Despite the well-publicised economic headwinds, M&A in the UK mid-market
proved resilient in H1 2023 and FRP Corporate Finance has continued to be an
active player in this market, advising on 40 deals in H1 with a combined value
of £1.2 billion and raising £552 million of debt.

Notable deals in H1 included:

-           MBO of healthcare services provider, Partnering Health
Limited.

-           Sale of multi-brand distributor, BTC Activewear to New
Wave Group AB in Sweden.

-           Sale of Blueback Global, a leader in global expansion
services, to TopSource Worldwide.

The team has a good pipeline of existing M&A and Debt Advisory mandates
and the level of new enquiries remains encouraging, although rising interest
rates and the forecast recessionary period continued to impact the buyers'
appetite, particularly in consumer exposed sectors, which is likely to reduce
mainstream M&A activity over H2 compared to last year. Conversely, this
should lead to an increase in debt refinancings and restructuring related
M&A activity.

*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 and liquidity

 

The Group completed a significantly oversubscribed £39m placing in June 2022
comprising approximately £7.5m (gross) cash raised from new and existing
institutional investors to further bolster the balance sheet to continue to
target acquisitions and a placing by certain directors and partners for
approximately £31.5m. The transaction increased the free float and market
liquidity of FRP's shares.

 

The Group's balance sheet is strong with an unaudited net cash balance as at
31 October 2022 of £21.0m** (H1 2022: £9.2m). In addition, the Group
continues to have an undrawn revolving credit facility of £10m.

 

**£26.6m gross cash less £5.6m of structured debt (H1 2022: £16.8m less
£7.6m), repayable over approximately three years.

 

People and operations

 

FRP's 26 offices across the UK continue to work well together, drawing on
specialists from different service lines as necessary, in order to deliver the
best possible service and outcome.

We continued to selectively grow our headcount, increasing the number of total
Colleagues by 6% over H1 as a result of demand-led lateral hiring, and by 11%
year-on-year including Colleagues that came with the BridgeShield Asset
Management Ltd acquisition (April 2022).

                                    31-Oct-22  30-Apr-22  31-Oct-21
 Partners                           80         80         76
 Other Fee earners                  342        317        310
 Subtotal - Fee earners             422        397        386
 Support                            114        107        99
 Total Colleagues (ex Consultants)  536        504        485

 

The Group continues to make progress in improving operational efficiency and
enhancing internal controls. Salesforce, a CRM system, and an upgraded time
recorded system has been rolled out across the firm, along with the
implementation of a new risk management framework and the Group now aligns
with ISO 31000.  During the second half of this financial year, a new HR
system with various modules and a Document Management System (DMS) will be
rolled out.

Outlook

 

Trading since 1 May 2022 has been in line with the Board's expectations. The
medium-term outlook for our key markets remains positive and the Board is
confident of making further progress in the current Financial year.

 

 

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

 

"FRP has made good progress in the first half, continuing to grow our team,
revenues and profits. Our strategy remains to deliver sustainable profitable
growth by ensuring our five service pillars work together to provide solutions
that achieve the best possible outcomes.

 

Our Restructuring team is well positioned to service the expected increase in
demand stemming from the many challenges faced by UK businesses, although
uncertainties persist over how long the available liquidity and government
backed loans can sustain troubled businesses or how proactive key creditors
like HMRC and institutional lenders will be on addressing over-due debts.

 

Our Corporate Finance team has a strong pipeline and they are seeing an
increase in demand for debt advisory colleagues to support on transactions."

 

 

Notice of results

 

The Group expects to report its unaudited results for the half year ended 31
October 2022 on 13 December 2022.

 

 

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 Sole Broker)

Katy Birkin/Max Gould (Corporate Finance)

Alex Pollen (Sales)

Tel: +44 (0) 207 397 8900

 

MHP Communications (Financial Public Relations)

Oliver Hughes

Charlie Barker

Pete Lambie

Tel: +44 (0) 3128 8540 / +44 (0) 20 3128 8570

FRP@mhpc.com (mailto:FRP@mhpc.com)

 

Notes to Editors

 

FRP is a professional services firm established in 2010 which 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.

§ Pensions advisory: pension scheme transaction advisory, pension scheme
restructuring advisory, covenant advisory and corporate governance

 

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