Company Announcements

FRP Advisory Group plc

("FRP" or the "Group")

Full Year Trading Update

Continued expansion and profitable growth

FRP Advisory Group plc, a leading national specialist business advisory firm, today announces a trading update for the full year ended 30 April 2022 ("FY 2022").

Trading performance

The Group has delivered another strong performance in FY 2022, continuing to grow revenues, profits and the team.

The Group expects to report revenues for FY 2022 of £95.2 million, up 21% on the prior year (FY 2021: £79 million), and adjusted EBITDA* of £25.7 million, up 12% on the prior year (FY 2021: £23 million), both ahead of current market consensus.**

The Group benefited from notable contributions that were success fee based, including: several sizeable Corporate Finance deals completing; and certain contingent fees within Restructuring, where fee recognition only occurs once asset realisation outcomes have been achieved.

Restructuring

Within our financial year, the higher volume and typically less complex liquidation market (including Company Voluntary Liquidation's ("CVLs") and Compulsory Liquidations) increased by 68% however the more complex Administration market, where FRP are particularly active, declined by 22% year-on-year. FRP's Administration market share, by number of appointments, was consistent year-on-year on an underlying basis at 13%. (Source: London and Regional Gazettes)

Significant government support measures were made available to both sound and struggling businesses alike during the pandemic, which have continued to impact the more complex Administration market. Despite this, FRP's Restructuring team had another strong year.

The Restructuring team continued to serve the full range of UK clients across all sectors, including personal clients, SMEs, along with the core mid-market and high-profile appointments.

From North to South, a sample of appointments during the year included:

·      Dawnfresh, a leading fish and seafood producer based in Scotland.

·      Scotland's iconic Glenburn Hotel.

·      Together Energy from Newcastle.

·      Construction firm Cleveland Bridge in Teesside.

·      Restaurant chain Corbin & King in London.

·      High street camera retailer Jessops.

·      Bemaco Steel based at Cardiff Docks.

·      Safe Hands Funeral Plans from Kent.

FRP were also appointed by the court in the Special Administration of Xpress Money Services Limited, an FCA authorised payments service provider in the UK. The Group has also undertaken many confidential advisory assignments during the financial year.

Corporate Finance

FRP Corporate Finance had a busy and successful year, significantly growing its market share to rank as the 12^th most active financial adviser in the UK M&A market.

In the financial year, FRP Corporate Finance was launched, which integrated the existing Corporate Finance team with the JDC and Spectrum acquisitions.  The team was involved in 99 successful transactions with an aggregate deal value of £3 billion and £1.3 billion of debt raised. This level of activity gives FRP Corporate Finance a 1% market share of the UK M&A market, by number of appointments (Source: Experian). The average deal value of £30 million places FRP Corporate Finance in the heart of its target SME market, with deals ranging in value from £3 million to £150 million.

FRP Corporate Finance remains strong in its commitment to the private equity community with over half of the deals in the period involving private equity: including buy-side, sell-side and debt advisory transactions. 

Notable FRP Corporate Finance transactions in H2 2022 included:

·   Sell side adviser to Emma's Diary, an online communication platform for pregnant women and new mothers, in its sale to Everyday Health Group Pregnancy & Parenting.

·      Sell side adviser to Mr Fothergill's Seeds, a supplier of garden products, in a £100 million+ buyout backed by Harwood Private Capital.

·     Debt adviser on the £357.5 million ABL facility to help fund the acquisition of McKesson UK, the parent company of Lloyds Pharmacy Group, by AURELIUS.

·      Sell side adviser to Ludlow Healthcare Group, a specialist care provider, to Holmleigh Care Group.

·      Sell side adviser to SSQ, a legal recruitment consultancy, to an Employee Ownership Trust.

Balance sheet

The Group's balance sheet remains strong with an unaudited net cash balance as at 30 April 2022 of £18.1 million (2021: £16.4 million), consisting of gross cash of £24.9 million less a balance remaining on a term loan of £6.8 million. The Group also has an undrawn revolving credit facility (RCF) of £10 million with Barclays Bank.

The Group will have repaid all IPO liabilities due to Partners in May 2022, after a final payment of £1.3 million is paid this month.

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

People and operations

The growth of the FRP team continued on a demand-led basis, with total colleagues increasing by 15% during the year to 504, which includes 80 Partners but excludes consultants.

Recent H2 2022 Partner hires within our Restructuring pillar, include:

·      Dan Conway, based in London, who joined from the FCA;

·      Sandy Kinninmonth, based in Southampton; and

·     Ben Hubbard and Nick McAuliffe, based in Leigh-on-Sea, as part of the acquisition of BridgeShield Asset Management, providing Property Asset Management advisory services to specialist lenders nationally.

On an organic basis, FRP opened four new offices in FY 2022 to increase its footprint to 26 UK locations; Glasgow and Cambridge in H1 2022 and Southampton and Sunderland in H2 2022.

Throughout FY 2022 and moving into FY 2023, the Group has been progressing projects to improve operational efficiencies and risk management, which include:

·      The rollout of four new systems: a new CRM system, a new HR system, a Document Management System and an upgraded time recording system.

·   Adopting a new Enterprise Risk Management (ERM) framework, which should enable ISO 31000 certification in FY 2023.

Following the implementation of the above system changes, together with other enhancements to the Group's Information Security Management System (ISMS), the Group hopes to achieve ISO 27001 accreditation within FY 2023.

The Group has also formed an Environmental, Social and Governance (ESG) committee and increased investment in Learning and Development for colleagues. 

Outlook

Following the removal of UK government support measures and ongoing headwinds facing UK corporates, the Group has seen an increase in the level of enquiries for restructuring services in recent months.

The UK M&A market continues to remain buoyant despite economic and inflationary headwinds affecting UK corporates. Banks, debt funds and private equity businesses remain well financed with significant capital to deploy.

Across its network of 26 locations nationally with five connected specialist service pillars, FRP is well positioned to help more clients and continue making progress.

Notice of results

The Group expects to report its audited results for the full year in late July.

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

"We have achieved another strong result by staying focused on doing the basics well and giving clients honest, clear and considered advice.

The medium term outlook for our key markets remains positive. Our Corporate Finance team have a strong pipeline and are well positioned to continue helping clients realise their strategic ambitions.  Our Restructuring team are well positioned to service the expected increase in demand stemming from the increasing challenges emerging in the economy. However, uncertainties still remain 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.

We plan to continue making progress in the next financial year and delivering on our strategy of sustainable profitable growth by ensuring our five service pillars work together to provide solutions that achieve the best possible outcomes."

* Adjusted 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.

** Market consensus, at the time of this announcement: revenue of £87.7 million and adjusted EBITDA of £24.3 million, per Factset.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the UK version of the EU Market Abuse Regulation (2014/596) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended and supplemented from time to time.

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 

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:

·      Corporate finance: mergers & acquisitions (M&A), strategic advisory and valuations, financial due diligence, capital raising, special situations M&A and partial exits.

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

·      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.