FRP Advisory maintains expectations after strong first half

(Sharecast News) - FRP Advisory Group reported strong first-half growth in revenue and profits in a trading update on Friday, along with continued investments in its team. The AIM-traded firm anticipated reporting revenue of £58.7m for the period, reflecting an increase of 19% year-on-year.

Underlying adjusted EBITDA was expected to reach £15.5 million, a 34% increase from the prior year.

The board said the restructuring market in 2023 had seen increased activity levels, with administrations approaching pre-pandemic levels.

Businesses with significant borrowings facing higher debt service costs due to rising interest rates were particularly affected, especially in the construction, property, casual dining, food service, retail, administrative and support service sectors.

FRP Advisory said it was highly active in the restructuring advisory sector, supporting clients in stress and distress situations to achieve optimal outcomes.

In September, FRP acquired Wilson Field - a Sheffield-based team serving local and national clients through a digital platform.

The business integration proceeded as planned, with results aligning with the board's expectations.

Meanwhile, FRP Corporate Finance continued to invest in external and internal talent despite challenging conditions in the broader economy impacting the UK merger and acquisition market.

The team closed 25 transactions in the first half, totalling £537m and raising £209m of debt.

While deal volumes decreased compared to the prior year, there were signs of increased activity in debt refinancing and restructuring-related mergers and acquisitions.

Forensic services saw a heightened level of activity driven by increased demand for independent investigations and fraud-related matters.

The financial advisory team was also actively engaged in several assignments, offering assurance on the viability of new investments and refinancing in a higher-risk environment.

FRP said its balance sheet remained strong, with an unaudited net cash balance of £11.7m as of 31 October.

Additionally, it held an undrawn revolving credit facility of £10m.

Unbilled revenue, reflecting work in progress, was increasing as FRP undertook complex administration assignments with non-cash assets like property while the group continued to convert work in progress into cash efficiently.

FRP said its commitment to investing in people and operations was evident, with a 13% increase in total colleagues over the first half and significant investments in internal talent development, including promotions to partner positions and enhancements to its operational platform, including ISO 27001 certification, a new leadership program, and a learning management system (LMS).

Looking ahead, the company maintained a positive outlook with trading since 1 May, reflecting positively on full-year expectations.

The firm believed consensus market expectations for 2024, for revenue of £112.2m and adjusted EBITDA of £28.8m, were attainable based on current activity levels.

"FRP performed well in the first half, with our team, revenues and profits continuing to grow," said Geoff Rowley, chief executive officer.

"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."

At 1106 GMT, shares in FRP Advisory Group were up 0.98% at 123.2p.

Reporting by Josh White for Sharecast.com.