Source - LSE Regulatory
RNS Number : 5283G
FRP Advisory Group PLC
27 July 2021
 

27 July 2021

FRP ADVISORY GROUP PLC

("FRP", the "Group" or the "Company")

 

Full Year Results

For the year ended 30 April 2021

 

FRP Advisory Group plc, a leading UK professional services firm specialising in advisory services, is pleased to announce full year Results for the year ended 30 April 2021.

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

 

"I am pleased to report another year of profitable growth and strategic progress.

 

FRP is a resilient business, with a track record of growth regardless of the economic conditions. We have a strong balance sheet and a structure that provides a good level of flexibility in our internal capacity, allowing us to be well positioned for an increase in demand for our services. Trading since 1 May 2021 is in line with the Board's expectations.

 

Uncertainties about the shape and scale of the UK's Economic recovery remain as Government support continues to extend. However, our strengthened Corporate Finance offering gives the FRP Group a stronger position in the UK mid-cap transactional advisory market. Our specialist advisers are available to help clients post Covid-19 through their entire business cycle; in addressing both their strategic ambitions, as pent up capital is deployed and being available to support as challenges arise."

 

Financial highlights

 

2021

2020

 

£m

£m

Revenue

79.0

63.2

Adjusted* underlying EBITDA

23.0

18.8

Reported profit before tax

16.6

2.9**

Adjusted*** EPS (pence)

7.11

1

Basic EPS

5.69

0.87

Total dividend (pence)

4.1

0.66

Net cash

16.4

21.3

 

·      £79.0 million revenue (2020: £63.2 million) an increase of 25%: 15% organic, 10% inorganic.

·      Underlying adjusted EBITDA* rose by 22% to £23.0 million (2020: £18.8 million).

·      Net cash of £16.4 million. Cash of £24.4 million less recent structured debt of £8 million (2020: £21.3 million cash and no debt) after

paying down 70% or £15.4 million of IPO liabilities relating to Cessation profits owed to Partners and related tax liabilities.

acquiring four businesses.

the Group also has an undrawn revolving credit facility ("RCF") of £10 million.

·      £1.1 million average revenue per Partner as at year end (2020: £1.2 million) - reflecting an increase in Partners, with several joining close to year end.

·      £16.6 million reported profit before tax for the year (2020: £2.9million** for c.2 month period post IPO).

·      Total dividend of 4.1p (2020: 0.66p for c.2 month period as a plc), made up of two Interim dividends of 1.6p and 0.8p, and a final dividend of 1.7p per eligible Ordinary Share for the quarter ended 30 April 2021 recommended by the Board.

* Our underlying adjusted EBITDA compares the current model of Partner compensation on a like-for-like basis to the prior corresponding period, as the business was previously a full distribution Partnership. It also 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. See table below in the extract of the strategic report

** Pre 6 March 2020 the business was a full distribution Partnership.

*** Earnings adjusted by adding back share based payments (non cash) and deferred tax

 

Operational highlights

·      Delivering on our strategy to achieve both organic and inorganic growth

Four acquisitions completed during the period.

During the financial year Restructuring Advisory were able to help and advise on two large projects, Debenhams and Edinburgh Woollen Mill Group.

The FRP Corporate Finance team had a very busy year in a challenging, but ultimately active, UK M&A market.  Notable transactions include advising The Goat Agency on its minority investment from Inflexion, Encore Group on its MBO backed by Queen's Park Equity, Vehicle Replacement Group on its sale to Davies, Everest Dairies on its sale to Vibrant Foods and Prezzo on its sale to Cain International.

·      30% increase in FRP team size, supporting ongoing growth

The FRP team grew by 106 colleagues year on year to 457 colleagues excluding consultants (30 April 2020: 351). 

Growth was driven by four acquisitions and demand-led lateral hiring. At 30 April 2021 we had 73 Partners (2020: 51), 288 other fee earners (2020: 230) and 96 support staff (2020: 70).

At year end FRP's UK footprint had expanded to cover 22 locations (2020: 19).

·      Significantly bolstered the Corporate Finance service pillar

Gives FRP a key position in the mid-cap transactional market. FRP is now better positioned to support clients post Covid-19, in addressing both their strategic ambitions and being available to help as challenges arise.

Nationally FRP's Corporate Finance and Debt Advisory teams now comprise 50 fee earners (including 19 Partners) across 9 locations.

·      Seamless delivery of client service during the Covid-19 pandemic and no Government support taken

The Group did not apply for any Covid-19 support, for example Government backed lending schemes or delayed tax settlements. None of our people were placed on furlough.

During the Covid-19 pandemic period FRP have dedicated significant effort and resources to help businesses navigate the crisis. In addition to our appointments, we have offered pro bono advice and shared extensive business support resources through our website.

·      Continued market share gains

Market share grew in Administration appointments to 13% (2020: 11%) but this is a 14% decline in the number of FRP Administration appointments to 163 (2020: 189). The total Administration market declined by 31% due to the Government support available.

·      Board strengthened

Recruitment of a Chief Financial Officer in June 2020 and independent Non-Executive Director in August 2020.

Post balance sheet events                                                                                                                              

·      Two new international alliances have been formed, Eight International and Alliance of International Corporate Advisors, which enable FRP to access new networks of highly experienced International advisers. FRP is also able to support on the UK component of International transactions.

Eight International is a global advisory organisation that was set up to meet a growing demand for dedicated financial and operational support from businesses with an international footprint. Eight International's member organisations include Eight Advisory, JP Weber, Sincerius, New Deal Advisors, and FCG Partners. With the addition of FRP, its global headcount reaches more than 3,000 consultants and doubles the number of founding members' Partners to 160. https://www.8-international.com/

Spectrum Corporate Finance Limited were a member of the Alliance of International Corporate Advisors ("AICA"). Following the acquisition FRP Corporate Finance has joined AICA. Members are carefully selected on the basis of reputation, relationships, proven track record and knowledge of local markets. They have representation in Europe, Asia, North & Latin America and the Middle East and focus on cross border Mergers and Acquisitions ("M&A") and capital raises. https://aicanetwork.com/

·      Following the JDC Group and Spectrum Corporate Finance Limited acquisitions, we intend to rebrand our combined Corporate Finance offering to FRP Corporate Finance.

·      The Board recommends a final dividend of 1.7p per eligible ordinary share for the financial year ended 30 April 2021. Subject to approval by shareholders, the final dividend will be paid on 29 October 2021 to shareholders on the Company's register at close of business on 1 October 2021. If the final dividend is approved, the total dividends paid by the Company relating to the financial year ended 30 April 2021 will be 4.1p per eligible ordinary share

 

Basis of preparation

With regard to the prior year, the Company was admitted to trading on the AIM market of the London Stock Exchange on 6 March 2020 (the "IPO") and the Company was incorporated on 14 November 2019 specifically for the purposes of the IPO. For the year ended 30 April 2020, the consolidated figures represent the results of the underlying business for the whole financial period before and after acquisition by the Company at the time of the IPO.  The Group financial statements have been compiled on this basis to provide useful comparative information to shareholders.  Partner compensation has been treated as an expense in both the year and comparative.

The information contained within this announcement is deemed by the Group to constitute inside information under the Market Abuse Regulations No. 596/2014.

 

Management will host a presentation for analysts this morning at 09:30am, for details, please contact FRP@mhpc.com.

 

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) 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:

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

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

·      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

 

Chairman's report

I am pleased to present FRP Advisory Group plc and its subsidiaries' (FRP) second annual report, from our first full year of trading as a plc.

Overview

Since last year's Annual Report, many of the challenges created by the Covid-19 pandemic have remained. As businesses have grappled with the operational and financial uncertainty this has created, I have been hugely impressed by the flexibility and dedication shown by our colleagues who have adapted swiftly to new ways of working and continued to provide seamless client service in the most challenging of circumstances.

On behalf of the Board, I would like to thank the entire FRP team for their outstanding response to the crisis. In a people based, service business, this adaptability and professionalism is key to a successful and positive operating environment. In addition, the Group did not apply for any Government support. Recognising the challenges facing our clients throughout the last year or more, we have dedicated significant effort and resources to help businesses navigate the unfolding events relating to Covid-19, including pro bono advice and sharing extensive business support resources through the Corporate Resilience resources on our website.

Continued profitable growth

We are pleased with the levels of growth during the year, FRP generated revenues of £79.0 million, up by 25% from the previous year (30 April 2020: £63.2 million). The growth was mainly organic (15%), underpinned by the support offered on some larger projects, with 10% coming from the four acquisitions completed during the year. Within the Restructuring market, the Government's unprecedented levels of support for business during the Covid-19 crisis has resulted in far fewer insolvencies during the year. In the market, the total formal Company insolvency appointments were 26% down, year-on-year (source London and Regional Gazettes).

Underlying adjusted EBITDA of £23.0 million grew by 22% from the previous year (30 April 2020: £18.8 million). During the year we were pleased to welcome 106 new colleagues and the overall headcount grew 30% in the year, to 457 (30 April 2020: 351). We also increased our number of operating locations by net three, with a new regional presence in Sidcup, Norwich, Milton Keynes and Reading. In addition, the Partner cohort expanded by 22 to 73. We believe that we are becoming an increasingly attractive destination for qualified and skilled staff, with our regional office network and strong culture offering considerable appeal in the marketplace. Retaining and developing our team in a world where the competition for talent will become more intense is a key priority and greater investment in this area will be made in the coming years.

Strong balance sheet

The balance sheet remains strong, despite completing four acquisitions and paying down 70% or £15.4 million of IPO liabilities relating to Cessation profits owed to Partners and related tax liabilities.

Net cash of £16.4 million (30 April 2020: £21.3 million), an undrawn £10 million revolving credit facility ("RCF") and the ability to issue equity, gives the Group sufficient options to act as acquisition opportunities arise, subject to our selective criteria of cultural and strategic fit and transaction economics. The Spectrum acquisition was financed by an £8 million five-year loan, repayable over 20 quarters.

I am pleased that with the bolstered Corporate Finance capabilities the Group is now even more resilient and better able to service clients throughout their entire lifecycle. FRP now has a key position in the UK mid-cap transactional marketplace, able to help clients both realise strategic ambitions, or help as challenges arise.


Strategy

Our strategy is to seek steady and sustainable growth through organic and acquisitive strategies and evidence of the continuation of this exists in abundance in our activities during the year. We also remain alert to opportunities created by ongoing restructuring within the business advisory sector.

FRP has formed two new strategic international alliances, one with Eight International and another with the International Association of Corporate Advisors (IACA).  This will enable FRP to access new networks of highly experienced International advisers. FRP is also able to support on the UK component of International transactions. Further details are set out in the Strategic Report in the Company's Annual Report.

Dividend

The dividend policy of the Group is to pay dividends quarterly, from 2021. The expected dividend pay-out ratio is c.70% of the Group's reported profit after tax, to eligible shareholders. The FRP Staff Employee Benefit Trust which was seeded by Partners on IPO and holds shares that back employee options, has waived its right to dividends and the corresponding amount was retained by the Group. Once the employee shares vest, on or after 6 March 2023, these shares will then attract dividend rights. The Board recommends a final dividend of 1.7p per eligible ordinary share for the financial year ended 30 April 2021. Subject to approval by shareholders, the final dividend will be paid on 29 October 2021 to shareholders on the Company's register at close of business on 1 October 2021. If the final dividend is approved, the total dividends paid by the Company relating to the financial year ended 30 April 2021 will be 4.1p per eligible ordinary share (2020: 0.66p for the c. 2 months post IPO).

Robust corporate governance and strengthened management team

The Board firmly believes that a robust governance structure and input from multiple viewpoints are necessary to arrive at the optimum decisions for the business and its wider stakeholders. During the year there were two Board changes; Gavin Jones joined as FRP's first Chief Financial Officer on 29 June 2020 and Claire Balmforth joined as an independent Non-Executive Director on 3 August 2020. I am delighted with the strong contribution that both Gavin and Claire have made to the Board.

Since the Company's IPO on 6 March 2020, FRP has adopted the Quoted Companies Alliance ("QCA") Corporate Governance Code and you can find more information on our governance arrangements in the Corporate Governance Statement in the Company's Annual Report.  Further information on our Corporate Governance structure is also available on our website at https://www.frpadvisory.com/investors/corporate-governance/.

Our people

The health, safety and wellbeing of all of our colleagues remains our key priority. Since the onset of the Covid-19 pandemic we have operated without interruption and this continued during the periods of lockdown across the UK during the last financial year. Colleagues have adapted well to remote working and previous investments in our IT infrastructure have proven to be invaluable.

We recognise the importance of our people to our ongoing success, and the Board was delighted to be able to implement an Employee Incentive Plan (via the Employee Benefit Trust) as part of the IPO. The Plan enables all our people to share in the success of the business, alongside the Partners. All Partners or permanent colleagues who were part of the Group on 30 April 2021 have a current or future share in the ownership of the Group, via options or shares.

On behalf of the Board, I would again like to thank the whole of our team and our wider support network for their outstanding work across the financial year and beyond.

Annual General Meeting

The Company's Annual General Meeting will be held on 29 September 2021. The Notice of Annual General Meeting will be posted in due course to those shareholders who opted to receive hard copy communications and a copy will also be made available on our website at https://www.frpadvisory.com/investors/financials-documents/

Looking ahead

With a strong balance sheet, enlarged team and strengthened Corporate Finance capabilities, the Board is looking to the future with cautious optimism. While the nation continues to recover from the social and economic impacts of Covid-19, the FRP team will continue to deploy its highly professional skillset to seek opportunities which support business and our clients and also add value to FRP's stakeholders.

Nigel Guy

Non-Executive Chairman

26 July 2021

 

Chief Executive Officer's report

Despite the challenges and uncertainties caused by the Covid-19 pandemic and subdued market conditions, I am pleased to report another year of significant profitable growth and strategic progress.

Resilient and diversified business

With roots in restructuring, FRP has now evolved into a leading business advisory firm with specialists supporting businesses throughout the corporate lifecycle across our five service pillars.

The five service pillars are: Corporate Finance, Debt Advisory, Forensic Services, Pensions Advisory and Restructuring Advisory. We specialise in finding strategic solutions to a range of situations for clients of all sizes, from multinational organisations to small enterprises.

We believe our agile, collaborative and entrepreneurial approach sets us apart from our peers. We also continue to serve the full range of clients including personal clients, SME's, our core mid-market and high-profile more complex, appointments.

Value enhancing acquisitions, in line with our strategy

 

Our focus is organic growth, supplemented with selective acquisitions that meet our strict criteria of:

a cultural fit, a strategic fit within our five service pillars in a growth region and acceptable transaction economics. 

 

We completed four acquisitions in the year:

 

·      In June 2020 we acquired a restructuring team in Newcastle, comprising two Partners and 13 colleagues. These colleagues have integrated well with our existing Newcastle team and this gives us a strong presence in the North East region.

 

·      In September 2020 we acquired the JDC Group, based in East Anglia comprising four Partners and 12 colleagues, who specialise in Corporate Finance and Forensics. This gave us an immediate presence in the Eastern region with a great team that shared our values.

 

·      In September 2020 we acquired a restructuring team in Kent, comprising one Partner and 10 colleagues. We added an appointment taking Director to this team and they are well positioned to help clients in the region, including those impacted by Brexit.
 

·      In late February 2021 we acquired Spectrum Corporate Finance Limited, based in Reading and the South. This brought a team of seven Partners and 20 colleagues. The Spectrum team have earned themselves a great reputation, particularly within the UK private equity community and we are excited about the contribution they will make to FRP. This bolstered our Corporate Finance and Debt Advisory offering, following the above JDC Group acquisition, as well as strengthening our UK footprint.

 

Nationally FRP's Corporate Finance and Debt Advisory teams will now comprise 50 fee earners (including 19 Partners) across 9 locations. These highly complementary combination will give us a key position in the UK mid-cap transactional advisory market; it will enable FRP to continue supporting clients post Covid-19, in addressing both their strategic ambitions and being available to help as challenges arise.

 

Continued growth in UK footprint and team

 

We have also grown through demand-led hiring, have established a new office in Milton Keynes and hired a new team in Glasgow. At 30 April 2021, FRP had 22 offices and 457 colleagues, excluding consultants. The team grew 30% or by 106 colleagues year on year (30 April 2020: 351).


The new team members have increased FRP's referral network and bring new skillsets such that within our five service pillars we can offer a broader range of specialist advice.

Following the two Corporate Finance acquisitions, the significantly bolstered CF team has trebled, giving us a key position in the UK mid-cap transactional market. FRP is now better able to help in a broader range of transactions, from lead Mergers and Acquisitions ("M&A") advisory, through to assisting clients in more challenging situations.

Strong trading results

FRP's revenue grew 25% year on-year to £79.0 million (FY 2020: £63.2 million). 15% was organic growth helped by large high-profile appointments early in the financial year, including Debenhams and Edinburgh Woollen Mill Group. Inorganic growth was 10%, with strong contributions from our new teams in Newcastle, East Anglia and Kent.  Adjusted underlying EBITDA grew 22% year-on-year to £23.0 million (FY 2020: £18.8 million). We maintain a focus on cost control, whilst modestly investing to build a sustainable business.

 

Market backdrop

 

FRP grew despite a subdued market backdrop, due to the unprecedented levels of Government support in response to the Covid-19 pandemic. Our Restructuring market share grew, both in Administration appointments and total formal Company appointments. In the 12 months to 30 April 2021, total formal Company insolvency appointments in the market were 26% down year-on-year. (source London and Regional Gazettes). Demonstrating the resilience of our business, and high quality service delivered to clients, FRP appointments only decreased 2%, and our market share increased from 4% to 5%. Within this, total market Administration appointments were down 31% and This was also reflected in Administration only appointments, which were down 14% (source London and Regional Gazettes) but again, FRP's Administration only appointments were resilient, outperforming the market by 17%, with 2% market share growth from 11% to 13%.

 

The M&A market was also impacted by Covid-19 related investment decision delays. In the 12 months to 30 April 2021, the UK M&A market has proven to be very resilient, recovering strongly from an inevitable slowdown in activity after the national lockdown at the end of March 2020. Our Corporate Finance team, including new colleagues in East Anglia that joined in September 2020, had a very busy year. The FRP Corporate Finance team had a very busy year in a challenging, but ultimately active, UK M&A market.  Notable transactions include advising The Goat Agency on its minority investment from Inflexion, Encore Group on its MBO backed by Queen's Park Equity, Vehicle Replacement Group on its sale to Davies, Everest Dairies on its sale to Vibrant Foods and Prezzo on its sale to Cain International. Spectrum Corporate Finance Limited was acquired on 26 February 2021 and we look forward to them making a full annual contribution to the Group's results in FY2022.

We continue to focus on the basics, giving clear and honest advice to achieve the best possible outcome for stakeholders. Across all offices there is a constant focus on accurate monthly WIP valuation and managing cash collections. I am pleased to report that after completing four acquisitions and after paying down 70% of Partner Cessation profits and tax payments on account at IPO, we closed the year with net cash of £16.4 million (2020: £21.3 million). This strong balance sheet gives us the flexibility to move quickly should further value enhancing acquisition opportunities arise.

Responding to Covid-19

To support our clients, and the business community generally through this crisis, we quickly developed a Corporate Resilience Hub on our website to provide practical, operational, and financial advice to businesses and their management teams. As well as a crisis toolkit and Covid-19 resources, we shared a range of insights and templates to help businesses navigate the unprecedented situation.

The resulting "Review. Adapt. Evolve." campaign was a bespoke solution designed specifically to help business leaders take action and prepare for the future. FRP's team of specialist advisers were made available to support clients every step of the way, providing integrated and tailored guidance that empowered business leaders to prosper in the new economy.

Within FRP, we seamlessly transitioned to home-working arrangements and were pleased to be able to continue our business activities without interruption, during the periods of lockdown in the UK. None of our colleagues were placed on furlough and we have not taken advantage of any of the Government backed lending schemes. Thanks to the collective efforts of our colleagues, our operations have not been impacted by the pandemic.

Empowering our outstanding people

As a professional services business, we understand that our people are central to our success and our most valuable asset. As well as offering competitive financial rewards, we offer opportunities for our team members to grow within the business and reach their full potential.

Development programmes include internal coaching, leadership courses and extensive professional training support. We view this investment in our people as an important investment in the future of our business. We work hard to attract and retain highly skilled professionals by creating a rewarding, high-performance environment. We believe highly engaged colleagues deliver excellent client service and results, and, in turn, strengthen our reputation in the market.

I am immensely grateful for all the hard work and commitment of all colleagues, for their dedication during a year filled with challenges and uncertainties. The FRP team continued to seamlessly deliver the high-quality service clients expect from us and they quickly adapted to new ways of working when required. I would also like to welcome all new colleagues to FRP, many of whom I look forward to meeting in person as Covid-19 restrictions lift.

Outlook

FRP is a resilient business, with a track record of growth regardless of the economic conditions. We have a strong balance sheet and a structure that provides a good level of flexibility in our internal capacity, allowing us to be well positioned for an increase in demand for our services. Trading since 1 May 2021 is in line with the Board's expectations.

 

Uncertainties about the shape and scale of the UK's Economic recovery remain as Government support continues to extend. However, our strengthened Corporate Finance offering gives the FRP Group a stronger position in the UK mid-cap transactional advisory market. Our specialist advisers are available to help clients post Covid-19 through their entire business cycle; in addressing both their strategic ambitions, as pent up capital is deployed and being available to support as challenges arise.

 

Our trading performance over the last twelve months and post period end reinforces our confidence in the ability of FRP to deliver value throughout the economic cycle. Through an unprecedented period, we have outperformed the market and grown market share whilst simultaneously strengthening our offering and growing our team organically and through M&A. We believe that FRP is in the best possible position moving forward to help continue to support our clients and wider stakeholders.

 

Geoff Rowley

Chief Executive Officer

26 July 2021

 

 

Financial review

 

The following is an extract from the Strategic Report, which can be found in the Company's Annual Report.

 

Basis of preparation

With regard to the prior year, the Company was admitted to trading on the AIM market of the London Stock Exchange on 6 March 2020 (the "IPO") and the Company was incorporated on 14 November 2019 specifically for the purposes of the IPO. For the year ended 30 April 2020, the consolidated figures represent the results of the underlying business for the whole financial period before and after acquisition by the Company at the time of the IPO.  The Group financial statements have been compiled on this basis to provide useful comparative information to shareholders.  Partner compensation has been treated as an expense in both the year and comparative.

Revenue

 

FRP's revenue grew 25% year on-year to £79.0 million (FY 2020: £63.2 million). 15% was organic growth helped by large high-profile appointments early in the financial year, including Debenhams and Edinburgh Woollen Mill Group. 10% of the growth was inorganic, with strong contributions from new teams in Newcastle, East Anglia and Kent.  Adjusted underlying EBITDA grew 22% year-on-year to £23.0 million (FY 2020: £18.8 million). We continue to maintain a focus on cost control while modestly investing to building a sustainable business.


Adjusted underlying Earnings Before Interest Tax Depreciation and Amortisation (EBITDA)

 

The Group grew profitably with underlying adjusted EBITDA rising by 22% to £23.0 million (2020: £18.8 million).

 

 

£m

2021

2020

 

Reported profit before tax (PBT)

        16.6

          2.9

 

Add back deprecation, amortisation and interest

          1.8

          1.5

 

Add exceptional items (IPO)

             -

          2.0

 

Add full distribution partner compensation

             -

        23.0

 

Deduct post IPO partner compensation

             -

 

(10.9)

 

Add share based payment expense relating to the Employee Incentive Plan (EIP)

          3.7

          0.3

 

Add share based payment expense - Deemed remuneration

          0.9

             -

 

Underlying adjusted EBITDA

        23.0

        18.8

 

 

FRP team growth

 

We grew the team by 30% by both acquisition and demand-led lateral hiring and we opened four new offices, (Norwich, Sidcup, Reading and Milton Keynes) and closed one during the year. (Glasgow but we have recently hired a team and will open a new FRP Glasgow office soon).
 

The Group started the financial year with 351 colleagues, (excluding Consultants) operating out of 19 offices. By 30 April 2021, this number had increased to 457 colleagues (excluding Consultants), operating out of 22 offices, as set out in the table below:

 

Group's employee numbers at year-end:

FY21

FY20

Partners

73

51

Fee earners

288

230

Administration

96

70

Total

457

351

 

 

 

Number of offices

22

19

 

Balance sheet and cash flow

The Group's balance sheet remains strong with a net cash balance as at 30 April 2021 of £16.4 million (Cash of £24.4 million less recent structured debt of £8 million). The Group also has an undrawn revolving credit facility ("RCF") available of £10 million with Barclays Bank Plc.


This strong closing net cash position is after paying down 70% or £15.4 million of IPO liabilities relating to Cessation profits owed to Partners and related tax liabilities, plus using cash to partly fund the acquisition of four businesses. Conversion of profits into cash will significantly improve going forward, since the above significant proportion of IPO Cessation liabilities were satisfied in the financial year.


FRP acquired Spectrum Corporate Finance Limited on 26 February 2021 which required a temporary draw on the RCF. Post completion, on 25 March 2021, FRP entered into a structured acquisition finance term loan facility with Barclays Bank Plc. £8 million was drawn down from this facility, the temporary RCF draw was repaid and the term loan will be repaid over five years in 20 quarterly instalments.


The Group did not apply for any Covid-19 support, for example Government backed lending schemes or delayed tax settlements.  During the Covid-19 pandemic period FRP have been dedicating significant effort and resources to help businesses navigate the crisis. In addition to our appointments, we have offered pro bono advice and shared extensive business support resources through our website.

 

Dividend

 

The dividend policy of the Group is to pay dividends quarterly, from 2021. The expected dividend pay-out ratio is 70% of the Group's reported profit after tax, to eligible shareholders.

 

The FRP Staff Employee Benefit Trust which was seeded by Partners on IPO and which holds shares that back employee options, has waived its right to dividends and the corresponding amount was retained by the Group. Once the employee shares vest, on or after 6 March 2023, these shares will then attract dividend rights. The Board recommends a final dividend of 1.7p per eligible ordinary share for the financial year ended 30 April 2021. Subject to approval by shareholders, the final dividend will be paid on 29 October 2021 to shareholders on the Company's register at close of business on 1 October 2021. If the final dividend is approved, the total dividends paid by the Company relating to the financial year ended 30 April 2021 will be 4.1p per eligible ordinary share (2020: 0.66p for the c. 2 months post IPO).

 

Consolidated statement of comprehensive income

For the year ended 30 April 2021

 

 

 

Year Ended

Year Ended

 

 

30 April

2021

30  April 
2020

 

Notes

£'000

£'000

 

 

 

 

Revenue

 

78,987

63,187

 

 

 

 

Personnel Costs

8

(46,572)

(42,692)

Depreciation and amortisation

 

(1,551)

(1,359)

Other operating expenses

 

(14,027)

(14,086)

Exceptional costs

7

-

(1,974)

 

 

 

 

Operating profit

6

16,836

3,076

 

 

 

 

Finance income

 

-

7

Finance costs

 

(233)

(177)

 

 

 

 

Net finance costs

10

(233)

(170)

 

 

 

 

Profit before tax

 

16,604

2,906

Taxation

11

(2,993)

(829)

 

 

 

 

Profit for the year

 

13,611

2,077

 

 

 

 

Other comprehensive income

 

-

-

Total comprehensive income for the year

 

13,611

2,077

 

 

 

 

Earnings per share (in pence)

 

 

 

Basic and diluted

12

5.69

0.87

 

All results derive from continuing operations.

FY2020 prior year: The Group reorganised on 6 March 2020 and listed on AIM. Before the listing the business was a full distribution partnership, all profits for the c. 10 month period to IPO were allocated to Partners, as presented in personnel costs above.

The notes form part of these financial statements.

Consolidated statement of financial position

As at 30 April 2021

 

 

 

Year Ended

30 April

Year Ended

30 April

 

 

2021

2020

 

Notes

£'000

£'000

 

 

 

 

Non-current assets

 

 

 

Goodwill

13

9,600

750

Other intangible assets

13

794

-

Property, plant and equipment

14

2,241

1,994

Right of use asset

14

3,527

3,995

Deferred tax asset

19

925

-

Total non-current assets

 

17,087

6,739

 

 

 

 

Current assets

 

 

 

Trade and other receivables

15

42,373

33,576

Cash and cash equivalents

16

24,383

21,311

Total current assets

 

66,756

54,887

 

 

 

 

Total assets

 

83,843

61,626

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

17

34,684

27,276

Loans and borrowings

18

1,600

-

Leases liability

18

872

925

Total current liabilities

 

37,156

28,201

 

 

 

 

Non-current liabilities

 

 

 

Other creditors

17

5,531

9,528

Loans and borrowings

18

6,400

-

Lease liability

18

2,768

3,271

Deferred tax liabilities

19

-

124

Total non-current liabilities

 

14,698

12,923

 

 

 

 

Total liabilities

 

51,855

41,124

 

 

 

 

Net assets

 

31,988

20,502

 

 

 

 

Equity

 

 

 

Share capital

21

243

238

Share premium

26

23,730

18,975

Treasury shares reserve

26

(19)

(19)

Share based payment reserve

26

(4,135)

361

Merger reserve

26

1,287

(90)

Retained earnings

26

10,882

1,037

Shareholders equity

 

31,988

20,502

 

Approved by the Board and authorised for issue on 26 July 2021.

 

Jeremy French                                       Gavin Jones

Director                                                 Director

 

Company Registration No. 12315862

 

Consolidated statement of changes in equity

As at 30 April 2021

 

 

 

Called up share capital

Share premium account

Treasury share reserve

Share based payment reserve

Merger reserve

Retained earnings

Total equity

 

 

 

 

 

 

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Balance at 30 April 2019

-

-

-

-

-

(855)

(855)

 

 

 

 

 

 

 

 

Year ended 30 April 2019

 

 

 

 

 

 

 

Profit and total comprehensive income for the year

-

-

-

-

-

2,077

2,077

Other movements

-

-

-

-

-

(185)

(185)

Group restructuring

-

-

-

-

(90)

-

(90)

Issue of share capital

238

19,975

-

-

-

-

20,213

Issues costs

-

(1,000)

-

-

-

-

(1,000)

Acquisition of treasury shares

-

-

(19)

-

-

-

(19)

Share based payment expenses

-

-

-

361

-

-

361

 

 

 

 

 

 

 

 

Balance at 30 April 2020

238

18,975

(19)

361

(90)

1,037

20,502

 

 

 

 

 

 

 

 

Profit and total comprehensive income for the year

-

-

-

-

-

13,611

13,611

Other movements

-

-

-

-

-

20

20

Issue of share capital

5

4,755

-

-

      1,377

              -

6,137

Dividends

-

-

-

-

-

(6,786)

(6,786)

Share based payment expenses

-

-

-

      3,700

-

-

3,700

Deemed remuneration

-

-

-

(5,196)

-

-

(5,196)

Transfer to retained earnings

-

-

-

(3,000)

-

3,000

-

 

 

 

 

 

 

 

 

Balance at 30 April 2021

         243

23,730

(19)

(4,135)

1,287

10,882

31,988

 

 

Consolidated statement of cash flows

As at 30 April 2021

 

 

Year Ended

Yead Ended

 

30 April

30 April

 

2021

2020

 

£'000

£'000

 

 

 

Cash flows from operating activities

 

 

Profit before taxation

16,604

2,906

Depreciation, amortisation and impairment (non cash)

1,551

1,359

Share based payments (non cash)

4,643

361

Net finance expenses

232

170

Increase in trade and other receivables

(2,833)

(2,510)

(Decrease)/increase in trade and other payables

(4,982)

360

Tax paid

(4,447)

(18)

Net cash from operating activities

10,768

2,628

 

 

 

Cash flows from investing activities

 

 

Purchase of tangible assets

(1,114)

(707)

Acquisition of subsidiaries less cash acquired

(10,599)

-

Acquisition of trade and assets

(1,610)

-

Interest received

-

7

Net cash used in investing activities

(13,322)

(700)

 

 

 

Cash flows from financing activities

 

 

Proceeds from share sales

3,760

20,106

Less issues costs

-

(1,000)

Dividend

(4,990)

-

Principal elements of lease payments

(911)

(850)

Drawdown of new loans

8,000

-

Repayment of loans and borrowings

-

(3,642)

Interest paid

(233)

(177)

Net cash generated from financing activities

5,626

14,437

 

 

 

Net increase in cash and cash equivalents

3,072

16,365

Cash and cash equivalents at the beginning of the year

21,311

4,946

Cash and cash equivalents at the end of the year

24,383

21,311

 

Notes to the financial statements

For the year ended 30 April 2021

 

1.   General information

FRP Advisory Group plc (the "Company") and its subsidiaries' (together "the Group") principal activities include the provision of specialist business advisory services for a broad range of clients, including restructuring and insolvency services, corporate finance, debt advisory, forensic services and pensions advisory.

The Company is a public company limited by shares registered in England and Wales and domiciled in the UK. The address of the registered office is 110 Cannon Street, London, EC4N 6EU and the company number is 12315862.

2.   Significant accounting policies

The following principal accounting policies have been used consistently in the preparation of the consolidated financial statements:

2.1 Basis of preparation

The financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.

 

The financial statements are prepared in sterling, which is the presentational currency of the Company. Amounts in these financial statements are rounded to the nearest £'000.

2.2 Historic cost convention

The financial statements have been prepared under the historical cost convention.

2.3 Basis of consolidation

The financial statements incorporate the results of FRP Advisory Group plc and all of its subsidiary undertakings as at 30 April 2021.

FRP Advisory Group plc was incorporated on 14 November 2019 and on 6 March 2020 it acquired the entire issued share capital of FRP Advisory Trading Limited from FRP Advisory LLP by way of a share-for-share exchange. The shareholding of FRP Advisory Group plc owned by FRP Advisory LLP as a result of the exchange was subsequently distributed to its members in the same proportion to their equity holdings. FRP Advisory Trading Limited had three wholly owned subsidiaries, FRP Debt Advisory Limited, FRP Corporate Finance Limited and Litmus Advisory Limited, as well as being a member of FRP Advisory Services LLP and Apex Debt Solutions LLP.

The accounting treatment in relation to the addition of FRP Advisory Group plc as a new UK holding company of the Group falls outside the scope of IFRS 3 'Business Combinations'. The re-organisation constituted a common control combination of the entities. This was a result of the shareholders of FRP Advisory Group plc being issued shares in the same proportion to their equity holdings in FRP Advisory LLP and the continuity of ultimate controlling parties.

The reconstructed group was consolidated using merger accounting principles, as outlined in Financial Reporting Standard FRS 102 ("FRS"), and the reconstructed Group treated as if it had always been in existence. The Directors believe that this approach presents fairly the financial performance, financial position and cash flows of the Group.

During the year the group completed four acquisitions, two asset and trade transactions and two share transactions. The assets, liabilities and entities acquired have been consolidated within these

Financial Statements, in accordance with IFRS 3. The newly acquired entities are:

 

JDC Group

·      JDC Accounts and Business Advisors Ltd

·      JDC Holdings Ltd

·      Jon Dodge & Co Ltd

·      Walton Dodge Forensic Ltd

 

Spectrum Corporate Finance Limited

 

2.4 New and amended standards adopted by the group

The Group has applied the following new standards and interpretations for the first time for the annual reporting period ending 30 April 2021:

·      IAS 1 Presentation of financial statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Amendments in relation to the definition of material

 

·      Conceptual framework: Amendments to references to the conceptual framework in IFRS standards

 

·      IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures: Amendments arising from the Interest Rate Benchmark Reform - Phase 1

 

·      IFRS 3 Business Combinations: Amendments in relation to the definition of a business

 

The adoption of the other standards and interpretations listed above has not led to any changes to the Group's accounting policies or had any other material impact on the financial position or performance of the Group.

2.5 Standards issued but not yet effective

At the date of authorisation of these financial statements, the following standards and interpretations relevant to the Group and which have not been applied in the financial statements, were in issue but were not yet effective.

The Group's and Company's management have reviewed the application of the amendments and have concluded that there is no expected impact on the group and company financial statements.

Standard

Effective date, annual period beginning on or after

IFRS 16 Leases: Amendments in relation to Covid-19-related rent concessions

1 June 2020

IFRS 4 Insurance Contracts: Amendments in relation to the temporary exemption from applying IFRS 9

25 June 2020

IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and IFRS 16 Leases: Amendments arising from the Interest Rate Benchmark Reform-Phase 2

1 January 2021

IFRS 16 Leases: Amendments in relation to Covid-19-related rent concessions beyond 30 June 2021

1 April 2021

IAS 16 Property, Plant and Equipment: Amendments in relation to proceeds before intended use

1 January 2022

IAS37 Provisions, Contingent Liabilities and Contingent Assets: Amendments in relation to the cost of fulfilling a contract when assessing onerous contracts

 

1 January 2022

IFRS 3 Business Combinations: Amendments to update references to the Conceptual Framework

 

1 January 2022

Annual Improvements to IFRSs (2018 -2020 cycle)

 

1 January 2022

IAS 1 Presentation of Financial Statements: Amendments in relation to the classification of liabilities as current or non-current

 

1 January 2023

IAS 1: Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements: Amendments in relation to the disclosure of accounting policies

1 January 2023

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Amendments in relation to the definition of accounting estimates

 

1 January 2023

IAS 12 Income Taxes: Amendments in relation to deferred tax related to assets and liabilities arising from a single transaction

1 January 2023

IAS 12 Income Taxes: Amendments in relation to deferred tax related to assets and liabilities arising from a single transaction

 

1 January 2023

IFRS 17 Insurance Contracts

 

1 January 2023

Amendments to IFRS 17 Insurance Contracts

 

1 January 2023

 

2.6 Going concern

The business has been, and is currently, both profitable and cash generative. It has consistently grown year on year for 11 years and has proved to be resilient, growing in both periods of economic growth and recession.

At year end the group had net cash of £16.4m. The Group entered into an £8m structured term loan repayable over five years, during the year. The group also has available an undrawn £10m committed revolving credit facility (RCF). Ongoing operational cash generation and this cash balance mean we have sufficient resources to both operate and move swiftly should acquisition opportunities arise.

With specific regard to the 2020 coronavirus (Covid-19) virus pandemic, the Group was well prepared to work remotely, clients were continually serviced without interruption. Consequently, our cash generation and profitability were not significantly impacted by Covid-19. Given our strong financial position no Colleagues of the firm have so far been made redundant or furloughed and none of the other Government assistance schemes available (grants, emergency loans, tax settlement delays) were utilised. Throughout the 'lockdown' period we have continued to win new client appointments, retain existing employees and attract new employees.

The quality of client service, strong referral network and barriers to enter the market, together with the strong cash position, make the board confident that the company will continue to grow. In terms of diversification, offices can adapt quickly to supporting each other and work on both higher value assignments or higher volume lower value jobs. Pension Advisory, Forensic Services, Corporate Finance and Debt Advisory can both support the Restructuring Advisory offering but also earn fees autonomously. The two Corporate Finance acquisitions make FRP even more resilient and they give us a key position in the UK mid-cap transactional advisory market. We are able to help a broader range of clients post Covid-19, to either realise their strategic ambitions via solvent M&A transactions or our Restructuring Advisory team is available to help as challenges arise.

Management have conducted sensitivity analysis by reducing revenue by 20% and separately increasing costs by 20%; both scenarios show FRP to be in a strong financial position with available cash resources.

In the unlikely event that the business had a significant slowdown in cash collections the business has a number of further options available to preserve cash.

Having due consideration of the financial projections, the level of structured debt and the available facilities, it is the opinion of the directors that the group has adequate resources to continue in operation for a period of at least 12 months from signing these financial statements and therefore consider it appropriate to prepare the Financial Statements on the going concern basis.

2.7 Deemed Remuneration

Deemed remuneration arises during acquisitions, where an element of the consideration has an equity component and is subject to a lock in period, in order to retain the fee earnings post acquisition. This equity compensation is not treated as part of the cost of acquisition but is reflected in the share based payment reserve and amortised through the statement of comprehensive income as a share-based payment staff cost, over the lock in period.

 

2.8 Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

The financial statements of trading subsidiaries are included in the consolidated financial statements from the date control is achieved until the date that control ceases. The date of acquisition accounting policies of the subsidiaries are  changed when necessary to align them with the policies adopted by the Group.

2.9 Transactions eliminated on consolidation

Intra-Group balances, and any gains and losses or income and expenses arising from intra-Group transactions, are eliminated in preparing the historical financial information. Losses are eliminated in the same way as gains, but only to the extent that there is no evidence of impairment.

The Group has been consolidated under merger accounting principles set out in Section 19 of FRS 102 as described in 'basis of consolidation' above.

2.10 Foreign currencies

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the income statement for the period.

2.11 Revenue recognition

Revenue is recognised when control of a service or product provided by the group is transferred to the customer, in line with the Group's performance obligations in the contract, and at an amount reflecting the consideration the Group expects to receive in exchange for the provision of services.

Revenue from contracts with customers is recognised when the Group satisfies a performance obligation for a contracted service. The Group applies the following five step model:

·      Identify the contract with a customer;

·      Identify the individual performance obligations within the contract;

·      Determine the transaction price;

·      Allocate the price to the performance obligations; and

·      Recognise revenue as the performance obligations are fulfilled.

 

The Group considers the terms of engagement, either through court appointment or otherwise agreed, issued to customers to be contracts.

There are no significant judgements required in determining the Group's performance obligations in its contracts as the significant majority of contracts contain only one performance obligation.

Transaction price is determined by agreed hourly rates or a fixed fee stated within the letters of engagement or court appointment. If the fee basis is fixed or time based, the provisioning method is based on estimated recoverability of the current unbilled revenue with reference to the billing to date and future billing to be performed as a proportion of costs to date and estimated costs to complete the contract.

Where work is contingent and not based on time-cost, fees are fully provided until performance obligations are satisfied as at this point there is no risk of a material reversal of revenue. Contingent work generally includes investigations, corporate finance services, some forensic work, and other assignments where the outcome is determined by either a judge, pre-trial agreement or completion of a transaction. The group adopts a prudent approach in only recognising revenue on cases that have been resolved with all costs incurred expensed in the relevant month.

The Group recognises revenue from the following activities:

•     insolvency and advisory services;

•     debt advisory services; and

•     corporate finance services.

 

Insolvency and advisory services

 

For the Group's formal insolvency appointments and other advisory engagements, where remuneration is typically determined based on hours worked by professional partners and colleagues, the Group transfers control of its services over time and recognises revenue over time if the Group:

•     provides services for which it has no alternative use or means of deriving value; and

•     has an enforceable right to payment for its performance completed to date, and for formal insolvency appointments has approval from creditors to draw fees which will be paid from asset realisations.

 

Progress on each assignment is measured using an input method based on costs incurred to date as a percentage of total anticipated costs.

 

In determining the amount of revenue and the related balance sheet items (such as trade receivables, unbilled income and deferred income) to recognise in the period, management is required to form a judgement on each individual contract of the total expected fees and total anticipated costs. These estimates and judgements may change over time as the engagement completes and this will be recognised in the consolidated statement of comprehensive income in the period in which the revision becomes known. These judgements are formed over a large portfolio of contracts and are therefore unlikely to be individually material.

Invoices on formal insolvency appointments are generally raised having achieved approval from creditors to draw fees. This is typically settled on a timely basis from case funds. On advisory engagements, invoices are generally raised in line with contract terms.

Where revenue is recognised in advance of the invoice being raised (in line with the recognition criteria above) this is disclosed as unbilled revenue within trade and other receivables.

Unbilled revenue

Unbilled revenue recognised by the Group falls into one of three categories: insolvency & advisory services, corporate finance services and debt-advisory services.

When FRP are engaged to work on large and complex administration assignments it can take longer to negotiate final fees with creditors and therefore our appointment on these more complex cases can increase our unbilled revenue and extend the cash conversion cycle.  Within our sector work in progress days (unbilled revenue) can typically range from c.five to seven months.

Debt advisory services

Revenue will typically be recognised at a point in time following satisfaction of the performance obligation(s) in the contract, at which point the Group is typically entitled to invoice the customer, and payment will be due.

Corporate finance services

Revenue is recognised at a point in time on the date of completion of the transaction or when unconditional contracts have been exchanged. For non-refundable retainer fees, these are recognised upon signing of the contract. Fees typically comprise a non-refundable retainer and a success fee based on a fixed percentage of the transaction value. Retainer fees are invoiced to the client and are payable in the first three to four months. Success fees are deferred and recognised on completion.

2.12 Goodwill

Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed).If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date.

If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in the income statement.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. The goodwill is tested annually for impairment irrespective of whether there is an indication of impairment. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

2.13 Intangible assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date if the fair value can be measured reliably.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives, being 12.5% on a straight-line basis.

2.14 Property plant and equipment

Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses.

Cost comprises purchase cost together with any incidental costs of acquisition.

Depreciation is provided to write down the cost less the estimated residual value of all tangible fixed assets by equal instalments over their estimated useful economic lives on a straight-line basis. The following rates are applied:

Computer software

25%

Computer equipment

25%

Fixtures and fittings

15%

Leasehold improvements

Over the term of the lease

 

Right of use assets

Over the term of the lease

 

Motor vehicles 

25%

     

 

2.15 Financial instruments

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are recognised on trade date when the Group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair value plus, in the case of a financial instrument not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires

2.16 Non-derivative financial instruments

Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables. All financial instruments held are classified financial assets or liabilities held as at amortised cost.

Trade and other receivables and trade and other payables

Trade and other receivables are recognised initially at transaction price less attributable transaction costs. Trade and other payables are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any expected credit losses in the case of trade receivables. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a similar debt instrument.

Interest bearing borrowings

Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose only of the cash flow statement.

2.17 Impairment of tangible and intangible assets

At each reporting end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. The impairment indicator assessment applies to all assets excluding assets with indefinite useful lives including goodwill for which an impairment assessment is performed annually regardless of whether an impairment indicator exists or not. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. Impairment losses are recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. The reversal of an impairment loss is recognised immediately in profit or loss.

 

2.18 Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are enacted or substantively enacted when the liability is settled, or the asset is realised. Deferred tax is charged or credited to the consolidated statement of comprehensive income except when it relates to items charged or credited to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis.

2.19 Employee benefits

The Group operates defined contribution plans for its employees. A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the periods during which services are rendered by employees.

Termination benefits are recognised immediately as an expense when the Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

2.20 Provisions

A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cashflows at a pre-tax rate that reflects risks specific to the liability.

In common with comparable businesses, the Group is involved in a number of disputes in the ordinary course of business which may give rise to claims. Provision is made in the financial statements for all claims where costs are likely to be incurred and represents the cost of defending and concluding claims. The Group carries professional indemnity insurance and no separate disclosure is made of the cost of claims covered by insurance as to do so could seriously prejudice the position of the Group.

2.21 Leases

The Group leases a number of properties in various locations around the UK from which it operates.

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

•     Leases of low value assets; and

•     Leases with a duration of twelve months or less.

 

In accordance with IFRS16 Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease at the commencement date.

2.22 Leases continued

Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

On initial recognition, the carrying value of the lease liability also includes:

•     Amounts expected to be payable under any residual value guarantee;

•     The exercise price of any purchase option granted in favour of the Group if it is reasonably certain to assess that option;

•     Any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

 

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

•     Lease payments made at or before commencement of the lease;

•     Initial direct costs incurred; and

•     The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations).

 

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made.

Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining(revised) lease term.

2.23 Financing income and expenses

Financing expenses comprise interest payable, finance charges on leases recognised in profit or loss using the effective interest method, unwinding of the discount on provisions, and net foreign exchange losses that are recognised in the statement of comprehensive income.

Other interest receivable and similar income include interest receivable on funds invested and net foreign exchange gains.

Interest income and interest payable are recognised in the statement of comprehensive income as they accrue, using the effective interest method.

2.24 Share capital

Ordinary shares are classified as equity. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

2.25 Share based payments

Equity settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date.

The fair value determined at the grant date of the equity settled share based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the number of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in the statement of comprehensive income such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to other reserves. Where equity settled share-based payments of the parent company have been issued to employees of its subsidiaries this is recognised as a cost of investment in the parent company financial statements and as an expense and capital contribution in the subsidiary.

The Employee Benefit Trust has been consolidated.

2.26 Dividends

Interim dividends are recognised in the financial statements when they are declared. Final dividends which are recommended for shareholder approval, after the yearend balance sheet date, are disclosed as a post year end event.

3.   Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group's accounting policies, directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the critical judgements, apart from those involving estimates (which are dealt with separately below), that have been made in the process of applying the Group's accounting policies and that have had the most significant effect on amounts recognised in the financial statements, as listed below:

Deemed remuneration

Deemed remuneration arises during acquisitions, where compensation in the form of equity is subject to a lock in period, in order to retain the key fee earners post acquisition. This is a judgement area but the guidance in IFRS 3 Business Combinations is followed. As the equity compensation is restricted until the key fee earners have completed the required lock in period, it is not considered to be part of the cost of the acquisition and  it is initially recognised in the share based payments reserve as a debit to the reserve and amortised through the statement of comprehensive income over the lock in period. Compensation for three of the acquisitions made in the year was in the form of equity subject to a lock in period. The directors have made the judgement that this equity compensation is deemed remuneration. Note 24 provides further detail on the acquisitions in the year.

 

Purchase price allocation (PPA)

When acquiring a business FRP perform a purchase price allocation exercise, with specialist assistance if required.

Any identified intangibles are amortised over their useful economic life. The Group applies judgement in determining the fair value of net assets acquired and in evaluating whether there are separately identifiable intangible assets that require recognition. Please refer to Note 24 for further detail on the acquisitions made in the year.

 

Key source of estimation uncertainty

The judgements involving estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Impairment of goodwill

The Group records all assets and liabilities acquired in business combinations, including goodwill, at fair value. Goodwill is not amortised but is subject, at a minimum, to annual tests for impairment. The initial goodwill recorded, and subsequent impairment review require management to determine appropriate assumptions (which are sources of estimation uncertainty) in relation to cash flow projections over a five year period, the terminal growth rate and the discount rate used to discount the cash flows to present value. See note 13 for further details on the Group's assumptions.

Unbilled revenue

Time recorded for chargeable professional services work is regularly reviewed to ensure that only what the Directors believe to be recoverable from the client is recognised as unbilled revenue within prepayments and accrued revenue.

Estimates are made with allocating revenue to the performance obligation and the valuation of contract assets. The Group estimates the contract completion point, costs yet to be incurred and the potential outcome of the contract.

Significant assumptions are involved on a case by case basis in order to estimate the time to complete an assignment and the resultant final compensation, where variable consideration is involved, and which results in the recognition of unbilled revenue.

Management base their assumptions  on historical experience, market insights and rational estimates of future events. Estimates are made in each part of the business by engagement teams with experience of the service being delivered and are subject to review and challenge by management.

Share based payments

The charge related to equity settled transactions with employees is measured by reference to the fair value of the equity instruments at the date they are granted, using an appropriate valuation model selected according to the terms and conditions of the grant. Judgement is applied in determining the most appropriate valuation model and in determining the inputs to the model. Third-party experts are engaged to advise in this area where necessary. There is estimation uncertainty in the determination of assumptions related to the number of options which are expected to vest, by reference to historic leaver rates and expected outcomes under relevant performance conditions. Refer to Note 23 for further detail on share based payments.

 

4.   Financial risk management

The Group is exposed to a variety of financial risks through its use of financial instruments which result from its operating activities. All of the Group's financial instruments are classified as financial assets or liabilities measured at amortised cost.

The Group does not actively engage in the trading of financial assets for speculative purposes. The most significant financial risks to which the Group is exposed are described below.

Credit risk associated with cash balances is managed by transacting with major global financial institutions and periodically reviewing their creditworthiness. The Group mainly banks with Barclays Bank plc and Natwest whose credit ratings are A-1 short term, (Standard & Poor's) and A-2 short term, (Standard & Poor's) respectively. Accordingly, the Group's associated credit risk is limited.

Generally, the Group's maximum exposure to credit risk is limited to the carrying amount of the financial assets recognised at the balance sheet date, as summarised below.

Credit risk is the risk of financial risk to the Group if a counter party to a financial instrument fails to meet its contractual obligation. The nature of the group's debtor balances, the time taken for payment by clients and the associated credit risk are dependent on the type of engagement.

 

 

 

 

 

Restated

 

 

 

Year Ended

Year Ended

 

 

 

30 April

30 April

 

 

 

2021

2020

Credit Risk

 

£'000

£'000

 

 

 

 

 

Trade receivables

 

4,855

3,391

Cash and cash equivalents

24,383

21,311

 

 

 

29,238

24,702

 

 

On formal insolvency appointments (which form the majority of the Group's activities), invoices are generally raised having achieved approval from creditors to draw fees. This is typically settled on a timely basis from case funds. The credit risk on these engagements is therefore considered to be extremely low.

The Group's trade receivables are actively monitored by management on a monthly basis. The group provides a variety of different professional services in line with its pillars to spread credit risk over its service lines. The Group also controls cash collection of its insolvency assignments in line with the terms of appointment.

The ageing profile of trade receivables that were not impaired is shown within Note 15. The Group does not believe it is exposed to any material concentrations of credit risk.

 

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting its obligations associated with its financial liabilities. The Group seeks to manage financial risks to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.

The contractual maturities of borrowings, trade payables and other financial liabilities are disclosed below.

 

 

 

Year Ended

Restated

 

 

 

30 April

2021

30 April 2020

Liquidity risk

 

£'000

£'000

 

 

 

 

 

Within 1 year

 

31,424

24,921

Within 2-5 years

 

13,994

12,342

Beyond 5 years

 

935

753

 

 

 

46,352

38,016

 

Interest rate risk

Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest bearing assets including cash and cash equivalents are considered to be short term liquid assets. It is the Group's policy to settle trade payables within the credit terms allowed and the Group does therefore not incur interest on overdue balances.

FRP has a £8m term loan with an interest base rate plus 3%. The company has an interest risk management risk strategy and reforecasts cashflow whenever the base rate changes, base interest rates are currently low and in the medium term it is expected that this will remain stable.

In terms of sensitivity analysis, if interest rates increased by 200 basis points or 2% the incremental FY2022 impact would reduce the profit before tax by £0.2m. If base rate (prevailing at the date of signing of 0.1%) reduced there would be a negligible impact on FRP's FY2022 profit before tax.

Foreign currency risk

There is no material risk associated with foreign currency transactions or overseas subsidiaries.

5.   Operating segments

The Group has one single business segment and therefore all revenue is derived from the provision of specialist business advisory services as stated in the principal activity. The Chief operating Decision Maker (CoDM) is the Chief Executive Officer. The Group has five pillars which individually do not meet the definition of a disclosable operating segment.

The Group's assets are held in the UK and all its capital expenditure arises in the UK. The Group's operations and markets are located in the UK.

All revenue is recognised in relation to contracts held with customers. No customer contributed 10% or more of the Group's revenue.

6.   Operating profit

Operating profit has been arrived at after charging:

 

 

Year Ended

Restated

 

 

30 April

2021

30 April 2020

 

 

£'000

£'000

Depreciation of owned assets

677

542

Depreciation of right-of-use-assets

835

815

Fees payable to the Group's auditor for the audit of the group accounts

80

100

Fees payable to the auditor for other services

 

 

 

the auditing of Subsidiary accounts

20

40

Expenses relating to short term leases

52

35

 

7.   Exceptional costs

Items that are material, either because of their size or their nature, or that are nonrecurring are considered as exceptional items and are presented within the line items to which they best relate.

An analysis of the amount presented as exceptional items in these financial statements is given below.

 

 

Year Ended

Year Ended

 

30 April

2021

30 April 
2020

 

£'000

£'000

Operating items

 

 

Costs in relation to the IPO

-

1,974

Total exceptional costs

-

1,974

 

8.   Director and employee information

The average number of Directors and employees during the year was:

 

Year Ended

Year Ended

 

30 April
2021

30 April 2020

 

Number

Number

Directors

7

5

Fee earning employees (including Partners)

314

279

Non fee earning employees

77

67

 

 

 

 

 

 

 

 

 

The aggregate payoll costs of these persons were as follows:

 

 

 

 

 

 

£'000

£'000

Wages, salaries and Partner compensation charged as an expense

38,426

40,735

Social security costs

2,892

1,202

Pension costs - defined contribution scheme

611

394

Share-based payment expense

4,643

361

 

46,572

42,692

 

9.   Directors' Remuneration and emoluments (including Partner profit allocations)

Details of emoluments paid to the key management personnel (including Partner profit allocations in respect of Messrs Rowley and French) are as follows:

 

Year Ended

 

14 November 2019

 

30 April

2021

 

to 30 April

2020

 

£'000

 

£'000

Directors' emoluments

2,571

 

427

Benefits in kind (inc. pension contributions)

19

 

1

Share option award

180

 

115

 

2,769

 

543

 

Remuneration (including Partner profit allocation) disclosed above include the following amounts paid to the highest paid Director:

 

 

 

 

 

£'000

 

£'000

Remuneration for qualifying services

1,353

 

278

 

 

10.  Finance income and expense

 

 

Year Ended

Year Ended

 

30 April

2021

30 April 2020

 

£'000

£'000

On short term deposits and investments

-

7

Total finance income

-

7

 

 

 

 

 

 

On bank loans and overdrafts measured at amortised cost

93

148

On lease liability

140

29

Total finance expense

233

177

 

 

11.  Taxation

 

Year Ended

Year Ended

 

30 April

2021

30 April

2020

 

£'000

£'000

Current tax

 

 

UK Corporation tax

4,194

705

 

 

 

Deferred tax

 

 

(Reversal)/orignation of temporary differences

(1,201)

124

 

 

 

Total tax charge

2,993

829

 

 

 

 

 

 

Reconciliation of tax charge:

 

 

 

 

 

 

Year Ended

Year Ended

 

30 April

2021

30 April

2020

 

£'000

£'000

Profit before tax

16,604

2,906

 

 

 

Corporation tax in the UK at 19%

3,155

552

 

 

 

Effects of:

 

 

Non-deductible expenses

26

132

Other Permanent differences

(188)

145

 

 

 

Total tax charge

2,993

829

 

 

The UK Budget 2021 announcements on 3 March 2021 included an increase to the UK's main corporation tax rate to 25%, which is due to be effective from 1 April 2023. These changes were not substantively enacted at the balance sheet date and hence have not been reflected in the measurement of deferred tax balances at the period end. If the Group's deferred tax balances at the period end were remeasured at 25% this would result in a deferred tax asset increase of £0.4m.

12.    Earnings per share

The earnings per share has been calculated using the profit for the year and the weighted average number of ordinary shares outstanding during the year, as follows:

£m

Basic and diluted EPS

Adjusted     EPS

 

Basic and diluted EPS

Adjusted    EPS

 

2021

2021

 

2020

2020

Reported Profit after tax

                           13.6

                    13.6

 

                             2.1

                      2.1

Add Share based payments

                                 -

                      4.6

 

                                 -

                      0.3

Less deferred tax

                                 -

(1.2)

 

                                 -

                          -

Adjusted profit after tax

                           13.6

                    17.0

 

                             2.1

                      2.4

 

 

 

 

 

 

Shares in issue

              239,393,684

       239,393,684

 

              237,500,560

       237,500,560

EPS (pence)

                           5.69

                    7.11

 

                           0.87

                    1.00

 

The potential ordinary shares which arise as a result of the options in issue are not dilutive under the terms of IAS 33 because the share options are backed by shares already in issue. Accordingly, there is no difference between the basic and dilutive loss per share.

The Employee Benefit Trust has waived its entitlement to dividends. It holds 18,750,000 shares of the 243,191,489 shares in issue at 30 April 2021.

13.  Goodwill and other intangible assets

 

30 April 2021

 

Computer

 

 

 

 

software

Client List

Goodwill

Total

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Cost

 

 

 

 

At 1 May 2019

10

                   -

750

760

At 30 April 2020

10

                   -

750

760

 

 

 

 

 

At 1 May 2020

10

                   -

750

760

Additions

-

              833

8,850

9,683

At 30 April 2021

10

              833

9,600

10,443

 

 

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

At 1 May 2019

(8)

                   -

-

(8)

Charge for the period

(2)

                   -

-

(2)

At 30 April 2020

(10)

                   -

-

(10)

 

 

 

 

 

At 1 May 2020

(10)

                   -

-

(10)

Charge for the period

 -

(39)

-

(39)

At 30 April 2021

(10)

(39)

-

(49)

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

At 30 April 2020

-

                   -

750

750

At 30 April 2021

                -

              794

9,600

10,394

 

Additions to goodwill and intangible assets in the year relate to acquisitions as set out in note 24.

Following initial recognition, goodwill is subject to impairment reviews, at least annually, and measured at cost less accumulated impairment losses. Any impairment is recognised immediately in the consolidated statement of comprehensive income and is not subsequently reversed.

There are three steps to performing an impairment review:

•     Allocating the goodwill to the relevant cash generating unit (CGU) or multiple CGUs.

•     Determining the recoverable amount of the CGU to which the goodwill belongs.

•     Recognising any impairment losses after performing an impairment review of the CGU or CGUs.

Goodwill acquired in a business combination represents future economic benefits arising from assets that are not capable of being individually identified and separately recognised. Goodwill does not generate cash flows independently from other assets or groups of assets and so the recoverable amount of goodwill as an individual asset cannot be determined. However, goodwill often contributes to the cash flows of individual or multiple CGUs. Therefore, goodwill acquired in a business combination must be allocated from the acquisition date to each of the acquirer's CGUs or groups of CGUs that are expected to benefit from the synergies of the business combination.

The definition of a CGU is "the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets" (per IAS 36).

For FRP the CGU is represented by:

•     A net cash inflow stream from a group of acquired Partners

•     A net cash inflow from an entire location

•     An entire entity (parent or subsidiary entities within a group)

•     Departments or business units within an entity

In accordance with IAS 36, a CGU to which goodwill has been allocated shall be tested for impairment annually and whenever there is indication of impairment by comparing the carrying amount of the unit, including the goodwill, with the recoverable amount of the unit.

If the recoverable amount of the unit exceeds the carrying amount of the unit, the unit and the goodwill allocated to that unit shall be regarded as not impaired. If the carrying amount of the unit exceeds the recoverable amount of the unit, the entity shall recognise an impairment loss.

Goodwill

At 30 April 2021

•     Debt Advisory £750k

•     JDC Group £3,210k

•     Spectrum £5,640k

The recoverable amount is the higher of a CGU's fair value less costs to sell and its value in use. In brief the fair value less costs to sell is likely to involve a valuation of the CGU if sold at an arm's length and deducting the costs of disposal.

The value in use will involve a discounted cash flow ('DCF') calculation estimating the future cash inflows and outflows to be derived from the continuing use of the CGU, The DCF calculation would include the estimated net cash flows, if any, to be received for the disposal of the CGU at the end of its useful life.

Key assumptions used in value in use calculation

The key assumptions for the value in use calculation are those regarding:

•     number of years of cash flows used and budgeted EBITDA growth rate;

•     discount rate; and

•     terminal growth rate.

Number of years of cash flows used

The recoverable amount of the CGU is based on a value in use calculation using specific cash flow projections over a 5-year period and a terminal growth rate thereafter. The cashflow projections for the 5-year period assume a conservative growth rate of 7.5% (2020: 7.5%).

The 5-year forecast is prepared considering members' expectations based on market knowledge, numbers of new engagements and the pipeline of opportunities.

Discount rate

The Group's post-tax weighted average cost of capital has been used to calculate a group pre-tax discount rate of 12.9% (2020: 12.9%), which reflects current market assessments of the time value of money for the period under review and the risks specific to the Group.

Terminal growth rate

A terminal growth rate of 1.0% (2020: 1.0%) is used. This is derived from members' expectations based on market knowledge, numbers of new engagements, and the pipeline of opportunities.

Sensitivity to changes in assumptions

With regard to the assessment of value in use for Debt Advisory, JDC and Spectrum CGU, the directors believe that reasonably possible changes in any of the above key assumptions would not cause the carrying value of the unit to exceed its recoverable amount.

 

14.    Property, plant and equipment

 

30 April 2021

 

 

Property, Plant and Equipment

 

 

use asset

Computer

equipment

Fixtures and

fittings

Leasehold

improvements

Motor

vehicles

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

At 1 May 2019

         7,209

1,405

             532

1,398

7

     10,551

Additions

              24

310

               90

283

-

          707

Disposals

 

 

 

 

 

               -

At 30 April 2020

         7,233

1,715

             622

1,681

7

     11,258

 

 

 

 

 

 

 

At 1 May 2020

         7,233

1,715

             622

1,681

7

     11,258

Arising on acquisitions

                -

74

                 5

145

-

          224

Additions

            413

401

             181

120

-

       1,114

Disposal

(46)

-

                 -

-

-

(46)

At 30 April 2021

         7,600

2,190

             808

1,946

7

     12,550

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

At 1 May 2019

(2,423)

(750)

(198)

(539)

(2)

(3,912)

Depreciation charge for the period

(815)

(292)

(83)

(166)

(1)

(1,357)

Disposals

                -

-

                 -

-

-

               -

At 30 April 2020

(3,238)

(1,042)

(281)

(705)

(3)

(5,269)

 

 

 

 

 

 

 

At 1 May 2020

(3,238)

(1,042)

(281)

(705)

(3)

(5,269)

Depreciation charge for the period

(835)

(339)

(110)

(227)

(1)

(1,512)

Disposals

                -

-

                 -

-

-

               -

At 30 April 2021

(4,073)

(1,381)

(391)

(932)

(4)

(6,781)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

At 30 April 2020

         3,995

          673

             341

976

4

       5,989

At 30 April 2021

         3,527

          807

             417

1,013

3

       5,769

 

 

 

15.  Trade and other receivables

 

Group as at

Group as at

 

30 April

2021

30 April

2020

Trade and other receivables

£'000

£'000

Trade receivables

4,855

3,391

Other receivables

2,466

1,900

Unbilled revenue

35,052

28,285

 

42,373

33,576

 

 

 

 

Group as at

Group as at

 

30 April

2021

30 April

2020

Non-current Assets

£'000

£'000

Deemed Remuneration

-

-

 

-

-

 

The ageing profile of non-related party trade receivables is as follows:

 

 

 

 

As at

As at

 

30 April

2021

30 April

2020

Due in

£'000

£'000

<30 Days

2,286

1,305

30-60 Days

1,182

434

60-90 Days

309

485

>90 Days

1,078

1,167

Total

4,855

3,391

 

All of the trade receivables were non-interest bearing and receivable under normal commercial terms. The directors consider that the carrying value of trade and other receivables approximates to their fair value.

The acquisitions completed during the year fall within FRP's five service pillars, and therefore the treatment of providing or writing off acquired receivables follows FRP group policy.

All trade receivables and unbilled revenue are derived from contracts with customers. Unbilled revenue constitutes income recognised based on stage of completion but not yet billed to the customer. Write offs happen on a case by case basis immediately followings the receipt of information implying irrecoverability.

The gross receivables have increased in line with the growth of the business. During the Covid-19 pandemic our receivables from HMRC increased due to a delay in settlements. FRP believes these amounts to be recoverable.

The expected loss provision for trade receivables is calculated on the gross carrying amount of trade receivables less any specific loss allowance, and is detailed below as follows:

As at 30 April 2020

<30 days
£'000

<60 days
£'000

<90 days
£'000

<180 days
£'000

>180 days
£'000

Total
£'000

Expected loss rate

0%

0%

0%

4%

49%

11%

Gross carrying amount

                 1,305

                434

        485

              785

               822

        3,831

Expected credit loss provision

                        -

                     -

            -

(34)

(406)

(440)

 

 

 

 

 

 

 

As at 30 April 2021

 

 

 

 

 

 

Expected loss rate

0%

0%

5%

2%

59%

13%

Gross carrying amount

                 2,286

             1,182

        324

              601

            1,210

        5,603

Expected credit loss provision

 

 

(15)

(15)

(718)

(748)

 

16.    Cash and cash equivalents

 

 

Group as at

 

Group as at

 

30 April

2021

 

30 April 2020

 

£'000

 

£'000

Cash at bank and in hand

24,383

 

21,311

 

 

Cash at banks earn interest at floating rates based on daily bank deposit rates.

 

17.    Trade and other payables

 

 

Group as at

Restated

 

30 April

2021

30 April 2020

Current liabilities

£'000

£'000

Trade payables

877

1,064

Other taxes and social security costs

5,849

3,416

Liabilities to Partners go forward

9,074

1,393

Liabilities to Partners cessation profits at IPO

5,440

15,422

Deferred Consideration

813

-

Other payables and accruals

12,631

5,981

 

34,684

27,276

 

 

 

 

 

 

 

Group as at

Restated

 

30 April

2021

30 April 2020

Non-current liabilities

£'000

£'000

Other payables and accruals

-

109

Liabilities to Partners go forward

245

139

Liabilities to Partners cessation profits at IPO

1,114

6,554

Partner capital

3,833

2,726

Deferred Consideration

339

-

 

5,531

9,528

The liabilities to Partners mentioned in both of the above tables includes tax due to HMRC on their behalf.

 

18.  Loans and borrowings

 

Group as at

Group as at

 

30 April

2021

30 April 2020

 

£'000

£'000

 

 

 

Current borrowings

 

 

Bank loan

1,600

-

Lease liability

872

925

 

2,472

925

 

 

 

Non-current interest-bearing loans and borrowings

 

Bank loan

6,400

-

Lease liability

2,768

3,271

 

9,168

3,271

 

 

 

Bank loan is repayable

 

 

Within one year

1,600

-

Within two to five years

6,400

-

 

8,000

-

 

 

 

The above £8 million five year term loan is with Barclays Bank plc (Barclays) and is repayable over 20 quarterly instalments. The interest rate is, the Bank of England base rate plus 3%. The Group also has a £10 million revolving credit facility with Barclays that was undrawn at 30 April 2021. Barclays have security over FRP entities for both the RCF and the term loan, in the form of both a fixed and floating charge over the Group's assets.

19.    Deferred tax

 

Group as at

Group as at

 

30 April

2021

30 April 2020

 

£'000

£'000

Deferred tax liability brought forward

124

-

Recognised in profit and loss for the period

(1,200)

124

Deferred tax on acquisition

151

 

Deferred tax (asset)/liability

(925)

124

 

 

 

 

 

 

The deferred tax provision is analysed as follows:

 

 

 

 

 

Group as at

Group as at

 

30 April

2021

30 April 2020

 

£'000

£'000

Accelerated capital allowance

138

138

Other temporary differences

(14)

(14)

Share based payments

(1,200)

-

Deferred tax on acquisition

151

-

 

(925)

124

 

20.    Financial instruments

 

Group as at

Restated

 

30 April

2021

30 April 2020

 

£'000

£'000

Financial assets held at amortised cost

29,238

24,702

Financial liabilities held at amortised cost

46,352

38,016

 

 

21.    Share capital

 

Ordinary
Number

Reconciliation of movement in shares during the year

£0.001 shares

At 1 May 2020

237,500,560

Shares issued in the year

5,690,929

At 30 April 2021

243,191,489

 

22.  Dividends

During the period a dividend of £1,457k, equivalent to 0.66p per eligible ordinary share, was paid out to shareholders on 13 November 2020. This related to FY2020.

For FY2021 a dividend of £3,533k, equivalent to 1.6p per eligible ordinary share, was declared on 16 December 2020 and paid on 18 March 2021. A further dividend of £1,796k, equivalent to 0.8p per eligible ordinary share, was declared on 12 February 2021 and paid on 11 June 2021. The Board recommends a final dividend of 1.7p per eligible ordinary share for the financial year ended 30 April 2021. Subject to approval by shareholders, the final dividend will be paid on 29 October 2021 to shareholders on the Company's register at close of business on 1 October 2021. If the final dividend is approved, the total dividends paid by the Company relating to the financial year ended 30 April 2021 will be 4.1p per eligible ordinary share.

23.  Share based payments

 

 

Number of

 

 

 

 

share options

 

 

 

 

April 2021

 

 

 

Outstanding at the beginning of the year

11,398,469

 

 

 

Granted during the year

5,444,139

 

 

 

Forfeited during the year

(679,129)

 

 

 

Outstanding at the end of the year

16,163,479

 

 

 

 

 

 

 

 

Exercisable at the end of the year

-

 

 

 

 

 

 

 

 

 

 

 

 

 

The weighted average life of outstanding options was two years (2020: three years).

 

Details of the number of share options outstanding by type of company scheme were as follows:

 

 

 

 

 

 

 

Employees

Non-executive

Total

 

 

 

directors

 

 

Outstanding at the beginning of the year

11,254,719

143,750

11,398,469

 

Granted during the year

5,444,139

-

5,444,139

 

Forfeited during the year

(672,879)

(6,250)

(679,129)

 

Outstanding at the end of the year

16,025,979

137,500

16,163,479

 

 

 

 

 

 

Exercisable at the end of the year

-

-

-

 

 

 

 

 

 

Option arrangements that exist over FRP Advisory Group plc's shares at the end of the year are detailed below:

 

 

 

 

 

 

April

 

 

 

Date of grant

2021

Vesting

 

 

6 March 2020

16,025,979

from 06/03/2023

 

 

6 March 2020

137,500

from 06/03/2023

 

 

 

The majority of the options vest in March 2023.

The Group uses a Black Scholes model to estimate the fair value of share options. The options were issued over shares held by the FRP Advisory Group Employee Benefit Trust. The following information is relevant in the determination of the fair value of the above options. The assumptions inherent in the use of this model, at the time of issue, are as follows:

•     The options are nil cost for the employee scheme established on IPO and nominal cost for the non-exec scheme.

•     The option life is the estimated period over which the options will be exercised. The options have no expiry date to discount, so three years has been considered a reasonable expected life as those awarded are required to remain in employment for three years;

•     No variables change during the life of the option (such as the dividend yield remaining zero);

•     As the Group has limited trading history, the volatility rate has been based on other AIM support services entities. The volatility rate used was 21%;

•     A risk-free interest rate of 0.6% has been used (2020: 0.7%); and

•     100% of the options issued under the employee scheme are expected to vest. 100% of the options issued to the non-executive directors are expected to vest.

The total recognised share-based payment expense during the year by the Group was £3,700k (2020: £361k)

24.    Acquisitions

FRP's growth strategy is to focus organic growth supported by selective inorganic opportunities where there is a cultural, strategic and mutually acceptable transactional economics fit. The four acquisitions strategically fit into FRP's 5 service pillars and we believe there to be revenue synergies of the combinations.

Date

Name

Location

Type

Percentage bought

Pillars

15 June 2020

Team acquisition

Newcastle

WIP/Assets

100%

Restructuring Advisory

15 September 2020

JDC Group

East Anglia       

Share

100%

Corporate Finance and Forensics Services

27 September 2020

Abbott Fielding assets

Kent   

WIP/Assets

100%

Restructuring Advisory

26 February 2021

Spectrum Corporate Finance Limited

Reading/South

Share

100%

Corporate Finance and Debt Advisory

 

Acquisition costs of £0.4m relating to the four acquisitions have been expensed in the period but not adjusted for in adjusted underlying EBITDA.

JDC Group

The Group was acquired to bolster two of FRP's pillars, Corporate Finance and Forensic Services and give FRP an immediate presence in the East Anglia region. FRP acquired 100% of the shares of JDC Holdings Limited, the JDC Group TopCo.

The fair values of JDC Group at the acquisition date of 15 September 2020, following the purchase price allocation exercise are detailed below:

 

 

Fair value

 

£'000

Net assets acquired

 

 

 

Intangible Asset - Customer Relationships

833

Property, plant and equipment

49

Trade Receivables

377

WIP

257

Prepayments

37

Cash

338

Deferred tax liability

(158)

Trade Payables

(58)

Accruals

(327)

VAT

(258)

Corporation tax

(246)

Total provisional fair value

845

 

Consideration

4,055

 

 

Goodwill

3,210

 

 

Cash flow

 £'000

Cash paid as consideration on acquisition

(2,959)

Less cash acquired at acquisition

338

Net cash outflow

(2,621)

 

 

 

Fair value

Consideration

 £'000

Consideration settled by cash

2,959

Deferred consideration               

1,096

Total Consideration

             4,055

 

During the acquisition equity compensation of £1,379k was also granted to certain vendor fee earners. As this is subject to a lock-in, this has not been included in the cost of the acquisition but as deemed remuneration within the share based payment reserve in the financial statements.

Goodwill arises due to intangible assets that do not qualify for separate recognition. The JDC Group team have a referral network of accountants and lawyers but this is not separately identifiable.  

On acquisition fair value adjustments of £675k relating to the separate recognition of intangible assets were recorded.

The key shareholders who sold JDC joined FRP as Partners. Another Partner and colleagues who TUPEed to FRP received nil cost option awards, from the Employee Incentive Plan (EIP) funded on IPO.

In the financial year, the acquisition contributed £2,493k of revenue and £743k to the group's underlying EBITDA for the period between 15 September 2020 and 30 April 2021.

Spectrum Corporate Finance Limited

The Company was acquired to bolster two of FRP's pillars, Corporate Finance and Debt Advisory. Regionally they are based in Reading and the South. This acquisition combined with the JDC acquisition gives FRP a key position in the UK mid cap transactional market place. FRP is now able to help on both advising clients to realise their strategic ambitions as lead advisor or the restructuring advisory team is able to assist as challenges arise. FRP acquired 100% of the shares of Spectrum Corporate Finance Limited.

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed as at 26 February 2021 are set out below:

 

 

Fair value

 

£'000

Net assets acquired

 

 

 

Property, plant and equipment

175

Trade Receivables

1,471

Other Debtors

2,082

Prepayments

137

Cash

1,422

Trade Payables

(140)

Accruals

(560)

PAYE

(173)

VAT

(235)

Corporation tax

(908)

Total provisional fair value

3,271

 

 

Consideration

8,911

 

 

Goodwill

5,640

 

 

Cash flow

£'000

Cash paid as consideration on acquisition

(9,400)

Less cash acquired at acquisition

1,422

Net cash outflow

(7,978)

 

 

 

Fair value

Consideration

£'000

Initial Consideration - Cash

9,400

Consideration settled in cash in post year end

3,271

Share subscription income

(3,760)

Total Consideration

                8,911

 

 

During the acquisition equity compensation of £3,760k was also granted to certain vendor fee earners. As this is subject to a lock-in, this has not been included in the cost of the acquisition but as deemed remuneration within the share based payment reserve in the financial statements.

Goodwill arises due to intangible assets that do not qualify for separate recognition. The Spectrum Corporate Finance team have a referral network of accountants and lawyers but this is not separately identifiable.  

No fair value adjustments relating to the separate recognition of intangible assets were recorded.

The key shareholders who sold Spectrum, joined FRP as Partners. Other new FRP Partners and colleagues who TUPEed to FRP received nil cost option awards, from the Employee Incentive Plan (EIP) funded on IPO.

In the financial year, the acquisition contributed £479k of revenue and £5k to the group's underlying EBITDA for the period between 26 February 2021 and 30 April 2021.

A restructuring team and assets in Newcastle

FRP had an existing operation in Newcastle to which we acquired two Partners and a team of 13. This combined hub is well positioned to service the North East region.  

Partners and colleagues who TUPEed to FRP received nil cost option awards, from the Employee Incentive Plan (EIP) funded on IPO.

 

£'000

 

 

Assets Acquired

945

Consideration - Cash

(945)

Goodwill

-

 

In the financial year, revenue contribution was £2,786k. EBITDA contribution to the Group since acquisition was £792k for the period between 15 June 2020 and 30 April 2021.

 

The assets and trade of Abbott Fielding Ltd, Kent

This transaction gives FRP presence in the Kent region. The team specialises in corporate recovery and turnaround strategies. One Partner and 10 colleagues joined FRP.

Colleagues who TUPEed to FRP received nil cost option awards, from the Employee Incentive Plan (EIP) funded on IPO.

 

£'000

 

 

Assets Acquired

665

Consideration - Cash

(665)

Goodwill

-

 

 

During the acquisition equity compensation of £1,000k was also granted to the vendor fee earner. As this is subject to a lock-in, this has not been treated as part of the cost of acquisition but as deemed remuneration within the share based payment reserve in the financial statements.

In the financial year, revenue contribution was £1,227k. EBITDA contribution to the Group since acquisition was £294k for the period between 27 September 2020 and 30 April 2021.

25.    Leases

 

Group as at

Restated

 

30 April

2021

30 April

2020

 

£'000

£'000

Expenses relating to short term leases

52

35

Lease interest

140

170

Cash outflow for leases

911

850

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The carrying value of right-of-use assets all relate to leasehold land and buildings.

 

 

 

Lease liabilities cashflows in relation to right-of-use assets fall due as follows:

 

 

 

 

Group as at

Restated

 

30 April

2021

30 April

2020

 

£'000

£'000

Due within one year

988

1,061

Due within two to five years

2,063

2,814

Due after more than five years

935

753

 

3,986

4,628

 

26.  Reserves

Called up share capital

The called-up share capital reserve represents the nominal value of equity shares issued.

Share premium account

The share premium account reserve represents the amounts above the nominal value of shares issued and called up by the Company.

Treasury shares reserve

The Treasury shares reserve represents the shares of FRP Advisory plc that are held in Treasury or by the Employee Benefit Trust.

Share based payment reserve

The share-based payment reserve represents:

•     The cumulative expense of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration.

•     Deemed remuneration arising from acquisitions, which is amortised over the lock-in period.

Merger reserve

The merger reserve represents the difference between the nominal value of shares issued and the fair value of the assets received. The merger reserve arose following: a share for share exchange between FRP Advisory LLP and FRP Advisory Group plc as part of the group reorganisation in March 2020 and a FRP Advisory Group plc share for share exchange in the JDC Group acquisition.

Retained earnings

The retained earnings reserve represents the Group's cumulative net gains and losses less distributions. Transfers from the share based payment reserve to retained earnings are subject to board approval.

27.  Related party transactions

During the year the Group recharged costs of NIL (2020: £19k) to Apex Debt Solutions LLP, an LLP in which the Group has a controlling interest.

FRP Advisory Services LLP provides services to FRP Advisory Trading Ltd, a subsidiary of FRP Advisory Group Plc.

Relating to the financial year FRP Advisory Trading Ltd contracted services valued at £17.1m from FRP Advisory Services LLP. Geoff Rowley and Jeremy French are directors of FRP Advisory Group plc, FRP Advisory Trading Ltd and designated members of FRP Advisory Services LLP.

28.  Control

There is no one ultimate controlling party of FRP Advisory Group plc. It is listed on London Stock Exchange AIM market but the IPO vendor Partners are treated as a concert party with a holding of c. 49%.

29.  Events after the reporting period

The Board of Directors proposed a final dividend of 1.7p for the final quarter to 30 April 2021. Subject to approval by shareholders, the final dividend will be paid on 29 October 2021 to shareholders on the Company's register at close of business on 1 October 2021.

30.  Capital commitments

At the balance sheet date, the Group had no material capital commitments in respect of property, plant and equipment (2020: £nil).

31.  Contingent liabilities

The Group is from time to time involved in legal actions that are incidental to its operations. Currently the Group is not involved in any legal actions that would significantly affect the financial position or profitability of the Group.

NOTE

The financial information set out above does not constitute the Group's statutory accounts for the year ended 30 April 2021 but is derived from those accounts. Statutory accounts for 2021 will be delivered to the Registrar of Companies following the company's annual general meeting. The auditors have reported on these accounts; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) of the Companies Act 2006.

The information included in this announcement is taken from the audited financial statements which are expected to be dispatched to the members shortly and will be available at www.frpadvisory.com

This announcement is based on the Group's financial statements, which are prepared in accordance with International accounting standards in conformity with the requirements of the Companies Act 2006.

Neither an audit nor a review provides assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular whether any changes may have occurred to the financial information since first published.  These matters are the responsibility of the directors but no control procedures can provide absolute assurance in this area.

Legislation in the United Kingdom governing the preparation and dissemination of financial information differs from legislation in other jurisdictions.

This preliminary statement was approved by the Board of Directors on 26 July 2021.

  
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