FRP Advisory – so much more growth to come, in business, share price and with an attractive yield

I was interested to see, in yesterday’s edition of The Sunday Times, that Grant Thornton, the auditors of Patisserie Valerie, are the subject of claims of negligence in papers that have been lodged by FRP Advisory Group (LON:FRP), the liquidators of the failed bakery and café chain.

My interest was piqued, not because I may well have frequently visited various venues of Luke Johnson’s former group, but instead because I was in the process of researching FRP, ahead of this profile.

An impressive decade of growth

Established in 2010, the London-based FRP Advisory is a professional services firm, that offers a wide range of services to its various clients and customers.

This group has grown to a firm which now works from 20 offices throughout the UK and comprises approximately 440 staff including 63 partners.

Predominantly it is involved in handling administrations, liquidations and other forms of financial restructuring.

Through its subsidiaries, the group provides business advisory services to companies, lenders, investors, individuals, and other stakeholders.

Such a wide range of services

The company’s services include restructuring and insolvency advisory, taking in corporate financial advisory, formal insolvency appointments, informal restructuring advisory, personal insolvency, and general advice to various stakeholders.

It also offers corporate finance advisory services covering mergers and acquisitions, strategic advisory and valuations, financial due diligence, capital raising, special situations M&A, and partial exits.

Its debt advisory services consist of raising and refinancing debt, debt amendments and extensions, restructuring debt, asset based lending, and corporate and leveraged debt advisory.

Especially useful in its principal roles, the group’s services also include forensic services, such as forensic investigations, compliance and risk advisory, dispute services, and forensic technology.

Finally, the group also offers pensions advisory services including pension scheme transaction advisory, pension scheme restructuring advisory, covenant advisory, and corporate governance. 

Although the group advises across multiple sectors and all business sizes, it principally services smaller and mid-market companies.

Still an AIM newcomer

The company only floated on AIM in early March last year, when its vending shareholders raised £57m and the company itself received £18.7m, both net of Placing expenses.

Valuing the group at £190m on the float. The first dealings of the shares, which were Placed at 80p, was on 6 March, almost a year ago – and what a year that has proved to be for one and all.

Doing better than expected

However, it does appear to have fared quite well since it went public.

Last Friday morning it announced its Q3 Trading Update to end January this year.

We will have to wait until the middle of May for a full year update, but it does appear that the first nine months have shown strong trading.

Current year estimates

In the intervening period it has made a number of acquisitions, which, no doubt, will show fruit in the near future.

Even so the company’s management is confident that the current year to end April will show revenues up from £63.2m to at least £75m.

The group’s brokers Cenkos Securities are estimating that pre-tax profits for the year will have more than trebled to £18.9m (£5.2m), with earnings coming in at around 6.4p against 1.8p per share previously. The anticipated quarterly paid dividend is likely to be a cracking 3.9p (0.7p) per share for the year.

Positive into the future too

For the coming year analyst James Fletcher at Cenkos is pencilling in almost £76m of revenues to produce close to £20m pre-tax, 6.7p of earnings and 4.6p per share of dividend.

CEO Geoff Rowley informed shareholders that:

“Our business model has proven itself to be resilient, with complementary service lines that support clients throughout their entire lifecycle. The medium-term outlook for our market remains positive, although there is still uncertainty around the shape and scale of the economic recovery from the Covid-19 pandemic and additional pressures on some businesses from the UK leaving the EU.”

There are almost 240m shares in issue, with Premier Miton Group (9.23%), RBC Trustees (7.89%), and Liontrust Investment Management (7.39%) amongst the larger shareholders.

Rowley holds 3.98%, while Jeremy French, the Chief Operating Officer, holds 3.18% of the equity.

The shares closed up 4p on Friday at 104p, at which level I can easily see them rising to 130p within a short time frame and offering a tidy little dividend too.