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(Sharecast News) - FRP Advisory Group reported a "strong" first-half performance in an update on Friday, with continued growth in revenues and profits.
The AIM-traded firm said it expected to report revenue of £49.4m for the six months ended 31 October, up 10% year-on-year.
Underlying adjusted EBITDA was set to have risen 5% over the prior year to £11.6m, in line with the board's expectations to-date.
The company said its restructuring team was continuing to serve the full range of UK clients across all sectors, with a focus on the core mid-market, and assignments ranging from personal clients, small-to-medium enterprises, and higher-profile appointments.
FRP said it had 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 were typically lower value and less complex, had continued, including creditors voluntary liquidation's (CVLs) and compulsory liquidations.
"However, the formal administration appointment market still remains below pre-pandemic levels," the board said in its statement.
"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, Brexit and the withdrawal of pandemic support measures."
FRP said many "troubled" UK corporates had avoided the need to consider and implement formal restructuring processes as they took advantage of government-backed support measures during the pandemic.
Additionally, key creditors such as HMRC had a tax arrears backlog to address, and institutional lenders were continuing 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."
In corporate finance, the board noted the launch of the integrated FRP Corporate Finance brand in July, supported by a new dedicated website to amalgamate the previous FRP Advisory, 2021 acquisition of Spectrum Corporate Finance and the 2020 acquisition JDC Corporate Finance.
The last six months also saw the development of centralised support across the division, encompassing research, marketing and deal origination to provide a strong and consistent platform for growth.
Despite well-publicised economic headwinds, mergers and acquisitions in the UK mid-market proved resilient in the first half, and FRP Corporate Finance was continuing to be an "active player" in the market, advising on 40 deals in the first half, with a combined value of £1.2bn and raising £552m of debt.
The team had a "good pipeline" of existing merger and acquisition and debt advisory mandates, with the level of new enquiries described as "encouraging", although rising interest rates and the forecast recession were impacting buyer appetite, particularly in consumer-exposed sectors, which was likely to reduce mainstream merger and acquisition activity over the second half compared to last year.
Conversely, that should lead to an increase in debt refinancings and restructuring-related merger and acquisition activity.
On the liquidity front, FRP completed a "significantly oversubscribed" £39m placing in June, comprising £7.5m in gross cash raised from new and existing institutional investors to further bolster the balance sheet to continue to target acquisitions, as well as a placing by certain directors and partners for £31.5m.
The transaction increased the free float and market liquidity of the firm's shares.
It described its balance sheet as "strong", with an unaudited net cash balance as at 31 October of £21.0m, up from £9.2m a year earlier.
Additionally, the group said it was continuing to have an undrawn revolving credit facility of £10m.
Looking ahead, the company said trading since 1 May had been in line with the board's expectations.
The medium-term outlook for its key markets remained positive, with the directors "confident" of making further progress in the current financial year.
"FRP has made good progress in the first half, continuing to grow our team, revenues and profits," said chief executive officer Geoff Rowley.
"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 overdue 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."
FRP said it would report its unaudited results for the half-year ended 31 October on 13 December.
At 1157 GMT, shares in FRP Advisory Group were down 2.26% at 162.74p.
Reporting by Josh White for Sharecast.com.
