- Clear pick-up in activity this year
- High interest rates sinking more firms
- Earnings ‘at least’ to meet forecasts
It’s often said it’s an ill wind which blows no good, and as corporate bankruptcies and insolvencies rise firms such as FRP Advisory (FRP:AIM) which provide services like debt restructuring and financial advice are seeing a growing stream of business.
In its half-year update, the £300 million company reported a 19% increase in revenue to £58.7 million and a 34% jump in underlying EBITDA (earnings before interest, tax, depreciation and amortization) to £15.5 million.
The firm – and the wider restructuring market – has seen a clear increase in activity since the start of the year with the number of companies going into administration almost back at pre-pandemic levels.
As interest rates have rocketed, companies with large borrowings which are rolling off lower rate arrangements are now facing much higher debt servicing costs while at the same time battling with much higher levels of cost inflation.
The firm cites sectors such as construction, property, casual dining and food service, retail, administrative and support services as finding current trading conditions ‘particularly challenging’.
Alongside financial advisory, the group’s forensic services division has seen ‘a high level of activity across both investigations and disputes’, partly driven by an uptick in fraud-related matters and clients requiring independent investigations.
EARNINGS ‘AT LEAST’ IN LINE
‘FRP performed well in the first half, with our team, revenues and profits all continuing to grow. We continued to take market share and made further progress against our strategy, which remains to deliver sustainable profitable growth by ensuring our five service pillars work together to provide solutions that achieve the best possible outcomes’, commented chief executive Geoff Rowley.
‘Looking ahead, we remain confident of making further progress, with leading positions in our core markets and a team and structure that leaves us well positioned to support corporates through the business cycle and respond to increased demand for our services.’
Assuming business continues at current levels, the firm remains confident of ‘at least’ achieving its full-year revenue and EBITDA guidance.
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