FRP Advisory Group plc (LON:FRP) is “superbly positioned” for growth says Gervais Williams, Co-Fund Manager of The Diverse Income Trust plc in an exclusive interview:
DirectorsTalk asked:
FRP Advisory, it’s one of the UK’s largest specialists in corporate restructuring. Now, they’ve been in the headlines recently as administrators for The Body Shop. In 2024, UK insolvencies are expected to increase to around 7,000 per quarter, which suggests FRP Advisory’s services are going to continue to be in high demand?
Gervais Williams responded:
“That’s right. What’s been interesting about the company, it came to the market actually in March 2020, a famous date, of course, to do with COVID, it came right at the start of COVID. Specifically, it came at 80p, the share price has now risen nicely to 127 and that’s incredibly impressive, given that actually we had a long period when insolvencies and such were very limited because of the ability to bridge finance using some of the government schemes and that kind of thing.
Unfortunately, going forward, I think it’s going to get more unsettled for companies. I think there will be more insolvencies, unfortunately, and companies like FRP Advisory are superbly positioned for that.
Along the way, what they’ve done is they’ve actually made a series of very useful acquisitions, the most recent is only this week, actually, Hilton Baird, which is in credit insurance broking, a specialist area, most particularly, again, a very high policy business, enhancing the growth of the business.
Ultimately, as you say, if insolvencies do become a mainstream market, if you do need more debt resolving in your balance sheets as corporates, then unfortunately, FRP are going to be very busy and that will probably drive their share price on from here.”
Full Year Trading Update
Following this interview, FRP Advisory announced on the 17 May 2024 a trading update for its full year ended 30 April 2024 (“FY 2024”).
The company reported an excellent trading performance ahead of expectations. FRP wrote: The Group achieved another year of strong profitable growth, with all five service pillars making positive contributions. The connection of our colleagues across these 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.
Subject to audit, the Group expects to report revenues for FY 2024 of £128 million, up 23% on the prior year (FY 2023: £104 million), and adjusted underlying EBITDA* of £37 million, up 37% on the prior year (FY 2023: £27 million), both exceeding current market consensus**.
Geoff Rowley, Chief Executive Officer of FRP Advisory Group plc, said:
“The Group made excellent progress in FY 2024, continuing to execute our strategy while growing revenues and profits for the thirteenth year. The results achieved are testament to the quality of our colleagues and their continued efforts to provide a high-quality service 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.
Activity levels across all our locations and pillars are encouraging. As a result, we start our new financial year with confidence of making further positive progress.”
Notes:
* 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 FY 2024 market expectations for revenue and adjusted EBITDA of £123 million and £32 million respectively.
