TIDMFRP
RNS Number : 3713T
FRP Advisory Group PLC
22 July 2022
22 July 2022
FRP ADVISORY GROUP PLC
("FRP", the "Group" or the "Company")
Full Year Results
For the year ended 30 April 2022
FRP Advisory Group plc, a leading national specialist business
advisory firm, is pleased to announce full year results for the
year ended 30 April 2022.
Geoff Rowley, Chief Executive Officer of FRP Advisory Group plc,
said:
"I am pleased to report another year of profitable growth. FRP
is a resilient business, with a track record of growth regardless
of the economic conditions.
The UK M&A mid-market remains active, our Corporate Finance
team have an excellent pipeline to help clients realise their
strategic ambitions.
Uncertainties still remain over how long troubled businesses can
continue in their current form or how proactive key creditors like
HMRC and institutional lenders will be on addressing over-due
debts. Following the removal of government support, inflationary
pressures and other disruptive forces, the Group has seen an
increase in the level of enquiries for restructuring services in
recent months.
The Group has a strong balance sheet and the Board believes the
medium-term outlook for all the Group's markets is positive.
Trading since 1 May 2022 is in line with the Board's
expectations."
Financial highlights
2022 2021
GBPm GBPm
------------------------------ ----- -----
Revenue 95.2 79.0
Adjusted underlying EBITDA* 25.7 23.0
Reported profit before
tax 15.1 16.6
Adjusted Total EPS (pence)** 7.57 7.11
Basic EPS (pence) 5.35 6.06
Total dividend relating
to year (pence) 4.3 4.1
Net cash 18.1 16.4
------------------------------ ----- -----
-- GBP95.2 million revenue (2021: GBP79.0 million) an increase
of 21%: 11% organic, 10% inorganic.
-- Adjusted underlying EBITDA* rose by 12% to GBP25.7 million (2021: GBP23 million).
-- Net cash of GBP18.1 million. Cash of GBP24.9 million less a
balance remaining on a term loan of GBP6.8 million (2021: GBP24.4
million cash less structured debt of GBP8 million) after:
o paying down all except GBP1.3 million of IPO liabilities
relating to Cessation profits owed to Partners and related tax
liabilities. As at May 2022 all Partner IPO liabilities have been
repaid.
o acquiring one business.
o the Group also has an undrawn revolving credit facility ("RCF") of GBP10 million.
-- GBP1.2 million average revenue per Partner as at year end (2021: GBP1.1 million).
-- GBP15.1 million reported Profit Before Tax for the year (2021: GBP16.6 million).
-- Total dividends of 4.3p relating to FY2022 (2021: 4.1p), made
up of three Interim dividends of 0.8p per eligible Ordinary Share
and a final dividend of 1.9p per eligible Ordinary Share for the
year ended 30 April 2022 recommended by the Board.
* Adjusted Underlying Earnings Before Interest Tax Depreciation
and Amortisation (EBITDA) excludes share based payment expenses
that arises from a) the Employee Incentive Plan (EIP) funded on IPO
and b) deemed remuneration amortisation linked to acquisitions. See
table in the Financial Review
** Earnings adjusted by adding back share based payments and
related deferred tax. Earnings per total weighted shares in issue.
See note 11 for more details.
Operational highlights
-- Delivering on our strategy to achieve both organic and inorganic growth.
-- 15% increase in FRP team size, supporting ongoing growth.
o The FRP team grew by 66 year on year to 504 excluding consultants (2021: 438).
o Growth was driven by demand-led lateral hiring and one
acquisition. At 30 April 2022 the Group had 80 Partners (2021: 73),
317 other fee earners (2021: 277) and 107 support staff (2021:
88).
o At year end FRP's UK footprint covers 26 locations (2021: 22).
-- Restructuring team again the most active in the administration appointment market
o Market Share in the number of FRP Administration appointments
was consistent on an underlying basis at 13%, in a subdued
Administrations market.
-- FRP Corporate Finance has grown its market share to rank as
the 12th most active financial adviser in the UK M&A market
o The Corporate Finance and Debt Advisory teams were involved in
99 successful transactions with an
aggregate deal value of GBP3 billion and GBP1.3 billion of debt
raised.
o Nationally the Corporate Finance and Debt Advisory teams now
comprises 73 fee earners (including 21 Partners) across 10
locations.
-- The Group has been progressing projects to improve
operational efficiencies and risk management, which include:
o The rollout of four new systems: a new CRM system, a new HR
system, a Document Management System and an upgraded time recording
system.
o Adopting a new Enterprise Risk Management (ERM) framework,
which has enabled ISO 31000 certification in July 2022.
Post balance sheet events
-- In May 2022 the final GBP1.3 million payment of the IPO
liability relating to the Cessation profits owed to Partners was
paid down.
-- On 4 May 2022 393,700 new ordinary shares were issued as part
of the acquisition of BridgeShield Asset Management Limited.
-- In June 2022, the company executed a secondary placing and
given the demand from investors, also raised an additional GBP7.5
million gross through the issue of new shares. Partner shareholders
were invited to sell 20% of their holding in return for signing an
extended lock-in to June 2024. This has enabled us to introduce new
institutional shareholders onto the share register and further
bolster our strong balance sheet as we continue to target
acquisitions. Currently 48.6% of the Group's shareholder base is
now subject to lock-in arrangements, including the Group Employee
Benefit Trust (10.8%).
-- On 21 June 2022 4,412,176 ordinary shares were transferred to
the Employee Benefit Trust for nil consideration, from a former
Partner of the Group.
-- The Board recommends a final dividend of 1.9p per eligible
ordinary share for the financial year ended 30 April 2022. Subject
to approval by shareholders, the final dividend will be paid on 21
October 2022 to shareholders on the Company's register at close of
business on 23 September 2022. If the final dividend is approved,
the total dividends declared by the Company relating to the
financial year ended 30 April 2022 will be 4.3p per eligible
ordinary share.
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
Overview
Since our IPO in March 2020, both FRP and the business community
at large have wrestled with the challenges of operating in a global
pandemic and increasingly volatile economic environment. Few had
the ability to revert to a well-thumbed playbook and for most it
was a case of needing to show clear and decisive leadership,
coupled with flexibility and responsiveness. It is against this
background that I am delighted to report on another year of
excellent progress for FRP. In achieving this, I am hugely
appreciative and proud of the commitment, professionalism and
dedication of our FRP colleagues, who continued to focus on the
needs of our clients in an ever-changing environment.
The UK restructuring market during this period has remained
subdued. For much of the pandemic government support measures
created liquidity, enabling businesses to manage through the
crisis. However, for a period following the removal of the UK
Government support measures, the expected influx of corporate
failures did not occur as lenders, Government forbearance and
available liquidity continued to provide a lifeline for many
businesses. This artificially low level of insolvency appointments
started to increase during the second half of calendar 2021 and
into 2022, driven by an increase in creditors voluntary
liquidations ("CVLs"). The Administration market is one of FRP's
key areas of focus, as it enables us to work with slightly larger
businesses, where we can deploy the wide range of skill sets
contained across the FRP national network. Here, as expected, the
increased activity has been slower to return, although this market
is now starting to show clear signs of returning to growth.
Notwithstanding this, we are pleased to be able to report we
maintained our administration market share during the year. If
business leaders thought better times were returning as the
pandemic's threat receded, then sadly they were disappointed as new
challenges arose. These included supply chain disruption, energy
cost increases, labour shortages, rising inflation and interest
rates, all emerging at the same time as war on the doorstep of
Europe creating further turmoil. It is therefore unsurprising that
following the removal of UK government support measures and the
onset of serious headwinds facing UK corporates, the Group has seen
an increase in the level of enquiries for restructuring services in
recent months. In May and June 2022 the administration appointments
show this market is up on prior year but still below pre-pandemic
2019 levels.
Despite challenging trading conditions for certain parts of the
economy, FRP Corporate Finance had a busy and successful year,
significantly growing its market share to rank as the 12th most
active financial adviser in the UK M&A market. We have invested
in this service line over the last couple of years, both
organically and through acquisition. Within the UK mid-market arena
there continues to be strong liquidity despite softening in the
public markets. The opportunity for corporate M&A occurs across
all economic cycles and the FRP team is available to help more
clients reach their strategic ambitions. The private equity funds
have significant sums of uninvested capital available, which they
are always looking to put to work at the right price, that reflects
the prevalent market outlook. Debt Advisory, which also works in
similar markets to both Restructuring and Corporate Finance, is
also well placed to support businesses in the more challenging
environment over the coming months. Our developing pillars,
Pensions Advisory and Forensic Services continue to be important
cogs in ensuring that we can offer a full range of advisory
services to our introducer base and their clients. Connecting our
five specialist service pillars across our national office network
where we can, remains core to our operating strategy.
Continued profitable growth
We are pleased with the levels of growth during the year, with
revenues of GBP95.2 million, up 21% from the previous year (2021:
GBP79.0 million). The growth was driven by organic (11%),
underpinned by the support offered on some larger projects, with
10% coming from the acquisitions. Following an acquisition we treat
the first 12 months contribution to the Group as inorganic, month
13 onwards becomes organic.
Adjusted underlying EBITDA of GBP25.7 million grew by 12% from
the previous year (2021: GBP23.0 million). Reported EBITDA was
GBP17.7 million (2021: GBP18.4 million). During the year we were
pleased to welcome 66 new colleagues and the overall headcount grew
15% in the year, to 504 (2021: 438). In addition, the Partner
cohort expanded by 7, to 80.
Strong balance sheet
The Group's balance sheet remains strong with net cash balances
at 30 April 2022 of GBP18.1 million (2021: GBP16.4 million),
consisting of gross cash of GBP24.9 million less a balance
remaining on a term loan of GBP6.8 million. The Group also has an
undrawn revolving credit facility ("RCF") of GBP10 million with
Barclays Bank.
Our balance sheet was strengthened further post period end, with
the successful raising of GBP7.5 million gross through a
significantly oversubscribed placing of new shares. I would like to
both welcome and thank our new and existing shareholders who
participated in the Placing and look forward to continuing on our
growth journey with them.
Shortly after year end the Group repaid all IPO liabilities due
to Partners, with a final payment of GBP1.3 million in May 2022.
Net cash of GBP18.1 million (2021: GBP16.4 million), an undrawn
GBP10 million RCF, the recent placing raising GBP7.5 million and
the ability to issue further equity, gives the Group sufficient
options to act as acquisition opportunities arise, subject to our
selective criteria of cultural fit, strategic fit and mutually
acceptable transaction economics.
Strategy
Our strategy remains to seek steady and sustainable growth
through organic initiatives and selective acquisition
opportunities. We are delighted to welcome the team from
BridgeShield Asset Management Limited which we acquired in April
2022 as well as colleagues in a further four new locations,
bringing our office footprint to 26 locations. The Group explored
several acquisition opportunities where we did not transact due to
our highly selective approach of cultural fit, strategic fit, and
acceptable deal economics. We continue to explore opportunities
nationally across each of our five service pillars.
Further details are set out in the Strategic Report in FRP's
Annual Report & Accounts.
Dividend
The dividend policy of the Group from 2021 is to pay dividends
quarterly. The anticipated dividend pay-out ratio is c.70% of the
Group's reported Profit After Tax, to eligible shareholders.
The FRP Group Employee Benefit Trust which was seeded by
Partners on IPO and holds shares backing 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 1.9p per eligible
ordinary share for the financial year ended 30 April 2022. Subject
to approval by shareholders, the final dividend will be paid on 21
October 2022 to shareholders on the Company's register at close of
business on 23 September 2022. If the final dividend is approved,
the total dividends paid by the Company relating to the financial
year ended 30 April 2022 will be 4.3p per eligible ordinary share
(2021: 4.1p).
Robust corporate governance
The Board firmly believes that a robust governance structure is
appropriate to optimise decision making for the business and its
wider stakeholders. To support this, FRP adopted the Quoted
Companies Alliance ("QCA") Corporate Governance Code in 2020 and
you can find more information on our governance arrangements in the
Corporate Governance Statement on pages 37 to 40 of the Group's
Annual Report & Accounts. Further information on our Corporate
Governance structure is also available on our website at
https://www.frpadvisory.com/investors/corporate-governance/.
Greater focus is being placed on our Environmental, Social and
Governance responsibilities and we have committed to the Group
being carbon neutral by 2030.
Our people
As a people business, FRP recognises the importance of keeping
all colleagues motivated, engaged and incentivised to perform at
their best. We work hard to retain our friendly, collaborative,
entrepreneurial and meritocratic culture.
The Board were delighted to implement an Employee Incentive Plan
in 2020. This enabled granting employees at IPO options over FRP
shares which were backed 1:1 by FRP shares in issue and held within
an Employee Benefit Trust (EBT). Employees were granted options
subject to their service, which become exercisable 3 years from
IPO. As the EBT had headroom and the ability to be replenished if
IPO Partners left, the Board has been able to make additional
awards to new joiners (including Partners) since IPO to ensure
colleagues have an ownership stake (including indirectly via
options) in the business.
We believe that we are becoming an increasingly attractive
destination for qualified and skilled people, 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.
Annual General Meeting
The Company's Annual General Meeting will be held on 15th
September 2022. 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
Despite the negative and uncertain outlook being faced currently
by the UK economy, I am positive that FRP's relevant and collective
skill set remains highly sought after by our clients and advisers.
Although we have only been listed for just over two years, FRP has
been in existence as an independent business for 12 years and
during this time has seen many changes in the economic landscape
and has flexed its business model accordingly to maximise its
competitive advantage. As a result, I remain confident in our
ability to both navigate uncertain times and indeed deploy our
considerable expertise exactly where it is needed. Current year
trading reflects this and is in line with expectation. We are
grateful for the trust that our clients continue to demonstrate in
us and once again thank all of our colleagues without whom our
success would not be possible.
Nigel Guy
Non-Executive Chairman
22 July 2022
Chief Executive Officer's report
We have achieved another strong set of results by staying
focused on doing the basics well and giving clients honest, clear
and considered advice.
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 complementary
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, including personal clients, SME's, our
core mid-market and high-profile more complex, appointments.
We believe our agile, collaborative and entrepreneurial approach
sets us apart from our peers.
Selective 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 , and
-- Mutually a cceptable transaction economics .
The acquisition of BridgeShield Asset Management Limited on 28
April 2022 expands our service offering to cover Property Asset
Management services to specialist lenders nationally. The firms'
two Directors, Ben Hubbard and Nick McAuliffe, joined FRP as
Partners. The team, including three colleagues and two consultants,
are based at FRP Leigh-on-Sea.
Our strong balance sheet gives us the flexibility to move
quickly should further acquisition opportunities arise.
Continued growth in UK footprint and team
At 30 April 2022, FRP had 26 offices and 504 colleagues,
excluding consultants. The team grew 15% or by 66 colleagues year
on year (2021: 438).
Highlights were:
-- In October 2021 we opened a new office in Cambridge, led by a
new lateral Partner hire, Dan Bowtell, giving us a wider footprint
in East Anglia.
-- In November 2021 we opened a new office in Glasgow,
comprising two Partners Michelle Elliot and Stuart Robb, and 12
colleagues. All three of our Scottish offices now share business
and market intelligence, giving us greater visibility and impact in
their localities.
-- In March 2022 we opened an office in Southampton with the
appointment of a new Partner, Sandy Kinninmonth.
-- In April 2022, we extended our footprint in the North East,
with a new office in Sunderland.
-- Also in April 2022, we acquired BridgeShield Asset Management
Limited with Nick McAuliffe and Ben Hubbard joining FRP as
Partners. FRP Leigh-on-Sea is a second Essex location alongside FRP
Brentwood.
Strong trading results
FRP's revenue grew 21% year on-year to GBP95.2 million (2021:
GBP79.0 million). 11% was organic, inorganic growth was 10%.
Following an acquisition we treat the first 12 months contribution
to the Group as inorganic, month 13 onwards becomes organic.
Adjusted underlying EBITDA grew 12% year-on-year to GBP25.7 million
(2021: GBP23.0 million). We maintain a focus on cost control,
whilst modestly investing where necessary to continue sustainable
profitable growth. On a reported basis, EBITDA was GBP17.7 million
(2021: GBP18.4 million), with the decline due to an increase in
non-cash share based payment charges.
Across all offices there is a constant focus on accurate monthly
unbilled revenue (work in progress, WIP) valuation and managing
cash collections. I am pleased to report that after completing one
acquisition in this Financial year, we closed the year with net
cash of GBP18.1 million (2021: GBP16.4 million). I am also pleased
to report that in May 2022 all IPO liabilities to Partners (and
HMRC) have now been repaid.
Restructuring Market
Significant government support measures were made available to
both sound and struggling businesses alike during the pandemic,
which have continued to impact the more complex Administration
market. Despite this, FRP's Restructuring team had another strong
year.
The higher volume and typically more straightforward liquidation
market (including Company Voluntary Liquidation's ("CVLs") and
Compulsory Liquidations) increased by 68% in our financial year,
however the more complex Administration market, where FRP are
particularly active, declined by 22% year-on-year. Despite this,
FRP's Administration market share, by number of appointments, was
consistent year-on-year on an underlying basis at 13%. (Source:
London and Regional Gazettes). We continued to serve the full range
of UK clients across all sectors, including personal clients and
SMEs, along with the core mid-market and high-profile
appointments.
UK M&A Market
In the financial year, FRP Corporate Finance was launched, which
integrated the existing Corporate Finance team with the JDC and
Spectrum acquisitions in the prior year. The Corporate Finance team
was involved in 99 successful transactions with an aggregate deal
value of GBP3 billion and GBP1.3 billion of debt raised. This level
of activity gives FRP Corporate Finance a 1% market share of the UK
M&A market, by number of appointments (Source: Experian). The
average deal value of GBP30 million places FRP Corporate Finance in
the heart of its target SME market, with deals ranging in value
from GBP3 million to GBP150 million.
FRP Corporate Finance remains strong in its commitment to the
private equity community with over half of the deals in the period
involving private equity: including buy-side, sell-side and debt
advisory transactions.
-- Notable FRP Corporate Finance transactions in H2 2022 included:
o Sell-side adviser to Emma's Diary, an online communication
platform for pregnant women and new mothers, in its sale to
Everyday Health Group Pregnancy & Parenting.
o Sell-side adviser to Mr Fothergill's Seeds, a supplier of
garden products, in a GBP100 million+ buyout backed by Harwood
Private Capital.
o Debt adviser on the GBP357.5 million ABL facility to help fund
the acquisition of McKesson UK, the parent company of Lloyds
Pharmacy Group, by AURELIUS.
o Sell-side adviser to Ludlow Healthcare Group, a specialist
care provider, to Holmleigh Care Group.
o Sell-side adviser to SSQ, a legal recruitment consultancy, to
an Employee Ownership Trust.
-- FRP's Corporate Finance and Debt Advisory teams now comprise
76 fee earners (including 21 Partners) across 10 locations and we
have seen a positive impact on revenue from our FY2021
acquisitions.
Forensic Services and Pensions Advisory Markets
The Forensic Services team continue to be engaged on a variety
of complex disputes and investigations, many of which are
confidential in nature. The last year has seen the team grow their
footprint in the Midlands and in East Anglia. Over the next year or
so, more international opportunities are expected, as we continue
to integrate this service with 8 International, 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.
The Pensions Advisory team has continued to provide services to
scheme trustees and sponsoring employers navigating through the
ever changing regulatory landscape. The implementation of the
Pension Schemes Act 2021 legislation continues to bring a new
dynamic to stakeholder considerations on corporate transactions and
the team have been working with their colleagues in Corporate
Finance and Debt Advisory to support their clients. Since last
reporting, the Pensions Advisory team have assisted clients to
complete transactions, agree significant forbearance to support
sponsoring employers' strategies but equally, particularly in the
food and on-line retail sectors, advised trustees in securing
scheme buy-out obligations.
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.
During FY2022 the Group conducted a cultural survey with
colleagues. Overall, the feedback was very positive with colleagues
feeling the internal culture was excellent. However, we acknowledge
that there will always be room for improvement and the Board is
constantly seeking feedback on ways the business can develop. Here
are a few things that were implemented in FY2022:
-- Hired a specialist Learning & Development Senior Manager
as we continue to invest in this area, to support the continued
development of our nationwide team.
-- Rolled out Ideadrop - an innovation platform for colleagues to share ideas
-- Established an Environment, Social and Governance ("ESG") committee
-- Continued support of colleagues in acquiring professional
qualifications and supporting their career aspirations, including
for promising young stars to become future Directors and Partners
of the 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, who contribute so much to the Group's success.
Outlook
FRP continues to demonstrate resilience, with a track record of
growth regardless of the economic conditions. At FRP our five
service pillars work together to provide solutions that achieve the
best possible outcomes; while colleagues are able to work
seamlessly and service clients remotely we all appreciate the
ongoing value of working together physically with clients and
colleagues. As a UK focused business, the Russia/Ukraine conflict
does not have a material impact on FRP's operations.
The medium term outlook for our key markets remains positive.
Our Corporate Finance team have an excellent pipeline to help
clients realise their strategic ambitions. Despite softening in the
capital markets, mid-market M&A activity levels are strong with
institutional lenders and private equity well financed with
significant capital to deploy; plus there is also considerable
overseas interest in UK assets. Our Restructuring team are
well-positioned to service the expected increase in demand stemming
from the increasing challenges and disruption emerging in the
economy. However, uncertainties still remain over how long the
available corporate liquidity and government backed loans can
sustain troubled businesses or how proactive key creditors like
HMRC and institutional lenders will be on addressing over-due
debts.
The Group has a strong balance sheet and a network of offices
that are connected to ensure each project is serviced by the right
team of specialists from across the UK. In the current financial
year, we plan to continue making progress in areas which we can
control to deliver our strategy of sustainable profitable
growth.
Current year trading to date is in line with Board
expectation.
Geoff Rowley
Chief Executive Officer
22 July 2022
Financial review
The following is an extract from the Strategic Report, which can
be found in the Company's Annual Report.
Financial review
Revenue
FRP's revenue grew 21% year on-year to GBP95.2 million (2021:
GBP79.0 million). 11% was organic growth and 10% inorganic, defined
as an acquisition's first 12 months contribution to the Group.
Inorganic growth was mainly due to the Corporate Finance businesses
acquired in the prior year. Adjusted underlying EBITDA grew 12%
year-on-year to GBP25.7 million (2021: GBP23.0 million). We
continue to maintain a focus on cost control while modestly
investing, to continue executing on delivering sustainable
profitable growth.
Adjusted underlying Earnings Before Interest Tax Depreciation
and Amortisation (EBITDA)
The Group grew profitably with adjusted underlying EBITDA*
rising by 21% to GBP25.7 million (2021: GBP23.0 million).
GBPm 2022 2021
---------------------------------------------------------- ---------- ----------
Reported profit before tax 15.1 16.6
Add back depreciation, amortisation and interest 2.6 1.8
---------------------------------------------------------- ---------- ----------
Reported EBITDA 17.7 18.4
Add share based payment expense relating to the Employee
Incentive Plan (EIP) 5.4 3.7
Add share based payment expense - Deemed remuneration 2.6 0.9
Adjusted underlying EBITDA* 25.7 23.0
---------------------------------------------------------- ---------- ----------
*Adjusted underlying EBITDA excludes any exceptional costs and
share based payment expenses that arises from a) the Employee
Incentive Plan (EIP) funded on IPO and b) deemed remuneration
amortisation linked to acquisitions.
FRP team growth
The FRP team grew by 15% through both acquisition and demand-led
lateral hiring and we opened four new offices in Cambridge,
Glasgow, Southampton and Sunderland and a second Essex location in
Leigh-on-Sea, following the acquisition of BridgeShield Asset
Management Limited.
The Group started the financial year with 438 colleagues,
(excluding consultants) operating out of 22 offices. By 30 April
2022, this number had increased to 504 (excluding consultants),
operating out of 26 offices, as set out in the table below:
Team FY 2022 FY 2021
----------------------------- ----------- -----------
Partners 80 73
Colleagues - fee earners 317 277
Total fee earners 397 350
Colleagues - support 107 88
Total (exc Consultants) 504 438
Balance sheet and cash flow
The Group's balance sheet remains strong with an unaudited net
cash balance as at 30 April 2022 of GBP18.1 million (2021: GBP16.4
million), consisting of gross cash of GBP24.9 million less a
balance remaining on a term loan of GBP6.8 million. The Group also
has an undrawn RCF of GBP10 million with Barclays Bank.
The Group has repaid all IPO liabilities due to Partners, after
a final payment of GBP1.3 million was made in May 2022.
Dividend
Given the trading performance and strong balance sheet, the
Board intends to propose a final dividend, in line with its stated
dividend policy to pay dividends quarterly. 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 1.9p per eligible ordinary
share for the financial year ended 30 April 2022. Subject to
approval by shareholders, the final dividend will be paid on 21
October 2022 to shareholders on the Company's register at close of
business on 23 September 2022. If the final dividend is approved,
the total dividends paid by the Company relating to the financial
year ended 30 April 2022 will be 4.3p per eligible ordinary share
(2021: 4.1p).
The Group have changed their dividend recognition policy.
Previously the Group recognised interim dividends at the point when
the Board declared publicly, however going forward the Group will
recognise interim dividends when paid. The impact of this change
results in the de-recognition of a GBP1.8 million interim divided
liability in FY2021 as it was paid in FY2022, with a corresponding
increase in net assets and retained earnings of the same amount.
There was no impact on the Group's profit or cash flows for the
year ended 30 April 2021.
Consolidated statement of comprehensive income
For the year ended 30 April 2022
Year Ended Year Ended
30 April 30 April
2022 2021
Notes GBP'000 GBP'000
----------------------------------- ------ ----------------------- ------------------
Revenue 95,156 78,987
Personnel Costs 7 (58,796) (46,572)
Depreciation and amortisation (2,131) (1,551)
Other operating expenses (18,618) (14,027)
Operating profit 6 15,611 16,836
----------------------------------- ------ ----------------------- ------------------
Finance costs 9 (495) (233)
----------------------------------- ------ ----------------------- ------------------
Profit before tax 15,116 16,604
Taxation 10 (3,205) (2,993)
----------------------------------- ------ ----------------------- ------------------
Profit and total comprehensive
income for the year attributable
to the owners of the Group 11,911 13,611
----------------------------------- ------ ----------------------- ------------------
Earnings per share (in pence)
Total 11 4.90 5.69
Basic 11 5.35 6.06
Diluted 11 5.04 5.81
----------------------------------- ------ ----------------------- ------------------
All results derive from continuing operations.
The notes form part of these financial statements.
Consolidated statement of financial position
As at 30 April 2022
As at As at
30 April 2022 30 April
2021
(restated)
Notes GBP'000 GBP'000
------------------------------- ------ ----------------------- ------------------
Non-current assets
Goodwill 12 10,200 9,600
Other intangible assets 12 727 794
Property, plant and equipment 13 2,847 2,241
Right of use asset 13 6,279 3,527
Deferred tax asset 18 2,431 925
Total non-current assets 22,484 17,087
------------------------------- ------ ----------------------- ------------------
Current assets
Trade and other receivables 14 46,063 42,373
Cash and cash equivalents 15 24,924 24,383
Total current assets 70,987 66,756
------------------------------- ------ ----------------------- ------------------
Total assets 93,471 83,843
------------------------------- ------ ----------------------- ------------------
Current liabilities
Trade and other payables 16 30,159 32,888
Loans and borrowings 17 2,000 1,600
Lease liabilities 17 1,365 872
Total current liabilities 33,524 35,360
------------------------------- ------ ----------------------- ------------------
Non-current liabilities
Other creditors 16 5,716 5,531
Loans and borrowings 17 4,800 6,400
Lease liabilities 17 4,913 2,768
Total non-current liabilities 15,429 14,699
------------------------------- ------ ----------------------- ------------------
Total liabilities 48,953 50,059
------------------------------- ------ ----------------------- ------------------
Net assets 44,518 33,784
------------------------------- ------ ----------------------- ------------------
Equity
Share capital 20 243 243
Share premium 25 23,730 23,730
Treasury shares reserve 25 (23) (19)
Share based payment reserve 25 (1,139) (4,135)
Merger reserve 25 1,287 1,287
Retained earnings 25 20,420 12,678
Shareholders' funds 44,518 33,784
------------------------------- ------ ----------------------- ------------------
Approved by the Board and authorised for issue on 22 July
2022.
Jeremy French Gavin Jones
Director Director
Company Registration No. 12315862
Consolidated statement of changes in equity
As at 30 April 2022
Called Share Treasury Share Merger Retained Total
up share premium share based reserve earnings equity
capital account reserve payment
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
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
(restated) - - - - - (4,990) (4,990)
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
(restated) 243 23,730 (19) (4,135) 1,287 12,678 33,784
--------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Profit and
total
comprehensive
income
for the year - - - - - 11,911 11,911
Other
movements - - (4) - - 4 -
Dividends - - - - - (9,173) (9,173)
Share based
payment
expenses - - - 5,402 - - 5,402
Unwind of
deemed
remuneration - - - 2,594 - - 2,594
Transfer to
retained
earnings - - - (5,000) - 5,000 -
--------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Balance at 30
April
2022 243 23,730 (23) (1,139) 1,287 20,420 44,518
--------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Consolidated statement of cash flows
As at 30 April 2022
Year Ended Year Ended
30 April 30 April
2022 2021
GBP'000 GBP'000
------------------------------------------- -------------------------- --------------------
Cash flows from operating activities
Profit before taxation 15,116 16,604
Depreciation, amortisation and
impairment (non cash) 2,131 1,551
Share based payments: employee
options 5,402 3,700
Share based payments: deemed remuneration 2,594 943
Net finance expenses 495 232
Increase in trade and other receivables (3,571) (2,833)
Decrease in trade and other payables (2,431) (4,982)
Tax paid (5,462) (4,447)
Net cash from operating activities 14,274 10,768
------------------------------------------- -------------------------- --------------------
Cash flows from investing activities
Purchase of tangible assets (1,398) (1,114)
Acquisition of subsidiaries less
cash acquired (365) (10,599)
Acquisition of trade and assets - (1,610)
Net cash used in investing activities (1,763) (13,322)
------------------------------------------- -------------------------- --------------------
Cash flows from financing activities
Proceeds from share sales - 3,760
Dividend (9,173) (4,990)
Principal elements of lease payments (1,165) (911)
Drawdown of new loans - 8,000
Repayment of loans and borrowings (1,200) -
Interest paid (432) (233)
Net cash (used in) / generated
from financing activities (11,970) 5,626
------------------------------------------- -------------------------- --------------------
Net increase in cash and cash equivalents 541 3,072
Cash and cash equivalents at the
beginning of the year 24,383 21,311
Cash and cash equivalents at the
end of the year 24,924 24,383
------------------------------------------- -------------------------- --------------------
Notes to the financial statements
For the year ended 30 April 2022
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
nance, 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 of ce is 110 Cannon Street, London, EC4N 6EU and the
company number is 12315862.
2. Signi cant accounting policies
The following principal accounting policies have been used
consistently in the preparation of the consolidated nancial
statements:
2.1 Basis of preparation
These financial statements have been prepared in accordance with
UK-adopted International Accounting Standards ('IFRS') and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
The nancial statements are prepared in sterling, which is the
presentational currency of the Group. Amounts in these nancial
statements are rounded to the nearest GBP'000, unless otherwise
stated.
2.2 Historic cost convention
The nancial statements have been prepared under the historical
cost convention.
2.3 Basis of consolidation
The nancial statements incorporate the results of FRP Advisory
Group plc and all of its subsidiary undertakings as at 30 April
2022.
FRP Advisory Trading Limited has eight wholly owned
subsidiaries, FRP Debt Advisory Limited, FRP Corporate Finance
Limited, Litmus Advisory Limited, Abbott Fielding Limited, JDC
Accountants & Business Advisors Limited, JDC Holdings Limited,
Spectrum Corporate Finance Limited, and BridgeShield Asset
Management Limited, as well as being a member of FRP Advisory
Services LLP and Apex Debt Solutions LLP.
During the year the Group completed one acquisition. The assets,
liabilities and entity acquired have been consolidated within these
Financial Statements, in accordance with IFRS 3. The newly acquired
entity is BridgeShield Asset Management 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 2022:
-- IFRS 9 Financial Instruments, IAS 39 Financial Instruments:
Recognition and Measurement, IFRS 7 Financial Instruments:
Disclosures, IFRS 4 Insurance Contracts and IFRS 16 Leases
(Amendments): Interest Rate Benchmark Reform - Phase 2
-- IFRS 4 Insurance Contracts (Amendment): Extension of the
Temporary Exemption from Applying IFRS 9
-- IFRS 16 Leases (Amendment): Covid-19-related Rent Concessions Beyond 30 June 2021
The adoption of the standards and interpretations listed above
has not led to any changes to the Group's accounting policies or
had any 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 material impact on the Group and Company financial
statements.
Standard Effective date, annual
period beginning on
or after
IAS 16 Property, Plant and Equipment 1 January 2022
(Amendment): Proceeds Before Intended
Use
-----------------------
IAS 37 Provisions, Contingent Liabilities 1 January 2022
and Contingent Assets: (Amendment): Onerous
Contracts - Cost of Fulfilling a Contract
-----------------------
IFRS 3 Business Combinations (Amendment): 1 January 2022
Reference to the Conceptual Framework
-----------------------
Annual Improvements to IFRSs (2018 - 1 January 2022
2020 cycle)
-----------------------
IAS 1 Presentation of Financial Statements 1 January 2023
(Amendment): Classification of Liabilities
as Current or Non-current and Classification
of Liabilities as Current or Non-current
- Deferral of Effective Date
-----------------------
IAS 1: Presentation of Financial Statements 1 January 2023
and IFRS Practice Statement 2 Making
Materiality Judgements (Amendment): Disclosure
of accounting policies
-----------------------
IAS 8 Accounting Policies, Changes in 1 January 2023
Accounting Estimates and Errors: Amendments
in relation to the definition of accounting
estimates
-----------------------
IAS 12 Income Taxes: Amendments in relation 1 January 2023
to deferred tax related to assets and
liabilities arising from a single transaction
-----------------------
IFRS 17 Insurance Contracts and Amendments 1 January 2023
to IFRS 17
-----------------------
IFRS 17 Insurance Contracts (Amendment): 1 January 2023
Initial Application of IFRS 17 and IFRS
9 - Comparative Information
-----------------------
2.6 Going concern
The business has been, and is currently, both pro table and cash
generative. It has consistently grown year on year for 12 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 GBP18.1 million. The Group
entered into an GBP8 million structured term loan repayable over
five years, during FY2021 and had GBP6.8 million outstanding at 30
April 2022. The Group also has available an undrawn GBP10 million
committed revolving credit facility ("RCF"). Ongoing operational
cash generation and this cash balance mean we have suf cient
resources to both operate and move swiftly should acquisition
opportunities arise. As seen post year end, the Group also has the
capacity to raise funds through share issue, demonstrated with the
GBP7.5 million raise as part of a secondary placing
transaction.
The quality of client service, strong referral network and
barriers to enter the market, together with the strong cash
position, make the Board con dent that the company will continue to
grow. In terms of diversi cation, of ces can adapt quickly to
supporting each other and work on both higher value assignments or
higher volume, lower value jobs. Pensions Advisory, Forensic
Services, Corporate Finance and Debt Advisory can both support the
Restructuring Advisory offering and also earn fees
autonomously.
Management have conducted sensitivity analysis by reducing
revenue by over 50% and separately decreasing margin by 75%: both
scenarios show FRP to be in a strong financial position with
available cash resources. These sensitivities represent extreme
scenarios that are highly unlikely to occur.
In the unlikely event that the business had a signi cant
slowdown in cash collections the business has a number of further
options available to preserve cash.
FRP was able to operate seamlessly during the pandemic and is
well placed to manage future developments. As a UK focused business
the Russia/Ukraine conflict does not have a material impact on
FRP's operations.
Having due consideration of the nancial 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 earners 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 nancial statements of trading subsidiaries are included in
the consolidated nancial statements from the date control is
achieved until the date that control ceases. The accounting period
of the subsidiaries are changed when necessary to align them with
that of 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 nancial information. Losses are eliminated
in the same way as gains, but only to the extent that there is no
evidence of impairment.
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 and unbilled revenue
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 re ecting the consideration the Group expects to receive in
exchange for the provision of services.
Revenue from contracts with customers is recognised when the
Group satis es a performance obligation for a contracted service.
The Group applies the following ve 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 signi cant judgements required in determining the
Group's performance obligations in its contracts as the signi cant
majority of contracts contain only one performance obligation.
Transaction price is determined by agreed hourly rates or a xed
fee stated within the letters of engagement or court appointment.
If the fee basis is xed 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 satis ed as at
this point there is no risk of a material reversal of revenue.
Contingent work generally includes investigations, corporate nance
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 nance
services and debt advisory services.
When the Group is 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 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
Fees typically comprise a non-refundable retainer and a success
fee based on a xed percentage of the transaction value.
Non-refundable retainer fees are recognised over the course of the
contract during which the ongoing provision of services, which vary
by assignment, is delivered. The scope and value of the retainer is
agreed upon commencement and reviewed regularly over the delivery
period. Retainer fees are invoiced to the client and are payable in
the rst three to four months. Success fees are deferred and
recognised on completion when unconditional contracts have been
exchanged.
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 identi able 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 identi ed 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 bene t 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 at the fair
value.
Amortisation is recognised so as to write off the cost or
valuation of assets less their residual values over their useful
lives, being 25% on a straight-line basis for computer software,
and 8% on a straight-line basis for client lists.
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 xed assets by equal
instalments over their estimated useful economic lives on a
straight-line basis. The following rates are applied:
Computer equipment 25%
------------------------ -----------------
Fixtures and
fittings 15%
------------------------ -----------------
Leasehold improvements Over the term of
the lease
------------------------ -----------------
Right of use Over the term of
assets the lease
------------------------ -----------------
Motor vehicles 25%
2.15 Financial instruments
The Group classi es nancial instruments, or their component
parts, on initial recognition as a nancial asset, a nancial
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 nancial
instrument not at fair value through pro t and loss, transaction
costs that are directly attributable to the acquisition or issue of
the nancial 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 nancial instruments
Non-derivative nancial instruments comprise trade and other
receivables, cash and cash equivalents, loans and borrowings and
trade and other payables. All nancial instruments held are classi
ed as nancial 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 and
other receivables. If the arrangement constitutes a nancing
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 interest for a similar debt
instrument.
Interest bearing borrowings
Interest bearing borrowings are recognised initially at their
fair value. 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 ow 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 including assets with indefinite useful lives, and 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 ows are discounted to their present value using a
pre-tax discount rate that re ects current market assessments of
the time value of money and the risks speci c to the asset for
which the estimates of future cash ows 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
the consolidated statement of comprehensive income.
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 pro t
or loss. Impairment of goodwill is not reversed.
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 pro t for the
year. Taxable pro t differs from net pro t 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 nancial statements and the corresponding tax bases used in
the computation of taxable pro t 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 pro ts 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 pro t nor the accounting
pro t.
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 suf cient taxable pro ts 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 bene ts
The Group operates de ned contribution plans for its employees.
A de ned contribution plan is a post-employment bene t plan under
which the Group pays xed contributions into a separate entity and
will have no legal or constructive obligation to pay further
amounts. Obligations for contributions to de ned contribution
pension plans are recognised as an expense in the periods during
which services are rendered by employees.
Termination bene ts are recognised immediately as an expense
when the Group is demonstrably committed to terminate the
employment of an employee or to provide termination bene ts.
2.20 Provisions
A provision is recognised in the statement of nancial 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 out ow of economic bene ts will be required to
settle the obligation. Provisions are determined by discounting the
expected future cash ows at a pre-tax rate that re ects risks speci
c 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 nancial 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. There are currently
no provisions held at year end for legal claims.
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.
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 depreciated 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 re ect 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 depreciated over the remaining (revised) lease
term.
2.22 Financing income and expenses
Financing expenses comprise interest payable, nance charges on
leases recognised in pro t 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.
2.23 Share capital
Ordinary shares are classi ed as equity. Equity instruments
issued by the Company are recorded at the proceeds received, net of
direct issue costs.
2.24 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 re ects 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 nancial
statements and as an expense and capital contribution in the
subsidiary.
The Employee Bene t Trust has been consolidated.
2.25 Dividends
Interim dividends are recognised in the financial statements
when they are paid. Final dividends which are recommended for
shareholder approval after the year end balance sheet date, are
disclosed as a post year end event. Prior year dividends have been
restated as details in 2.27.
2.26 Liabilities to Partners
The Group recognises liabilities to Partners, and due to the
nature of the transactions discloses these amounts separately to
other payables. Upon IPO in March 2020 the Group had cessation
profits due to Partners and related tax due to HMRC totalling
GBP22.0 million, these have been disclosed separately to the go
forward profits due to Partners as part of the ongoing profit share
agreements that Partners have with Group companies. As at 30 April
2022, of the IPO liabilities GBP1.3 million was outstanding and
post year end in May 2022 this was repaid, so all IPO liabilities
have been satisfied. Going forward the only liabilities to Partners
are the go-forward profit shares.
2.27 Restatement of prior year results
In March 2022 the Group's annual report for FY2021 was reviewed
by the Financial Reporting Council ("FRC"). The review was based on
the annual report and accounts and did not benefit from detailed
knowledge of the business or an understanding of the underlying
transactions entered into and therefore provides no assurance that
the annual report is correct in all material respects. It was,
however, conducted by staff of the FRC who have an understanding of
the relevant legal and accounting framework. Following the review
by the FRC, the Group have changed their dividend recognition
policy. Previously the Group recognised interim dividends at the
point when the Board declared publicly, however, going forward the
Group will follow paragraph 2.10 of the ICAEWs Technical Release
02/17BL and recognise interim dividends when paid. The impact of
this change results in the de-recognition of a GBP1.8 million
interim divided liability in FY2021 as it was paid in FY2022, with
a corresponding increase in net assets and retained earnings of the
same amount. There was no impact on the Group's profit or cash
flows for the year ended 30 April 2021.
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
ongoing 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 signi cant effect on amounts
recognised in the nancial 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 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 23 provides further
detail on the acquisitions in the year.
Key source of estimation uncertainty
The judgements involving estimates and assumptions which have a
signi cant 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. Due to the size and nature of goodwill
it is considered an area of estimation uncertainty. The balance of
goodwill is GBP10.2 million (2021: GBP9.6 million). See Note 12 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.
Signi cant 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. The balance of unbilled revenue at
year end was GBP35.3 million (2021: GBP35.1 million). Refer to Note
14 for further detail on unbilled revenue.
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. The share based payment
expense for the year was GBP8.0 million (2021: GBP4.6 million).
Refer to Note 22 for further detail on share based payments.
4. Financial risk management
The Group is exposed to a variety of nancial risks through its
use of nancial instruments which result from its operating
activities. All of the Group's nancial instruments are classi ed as
nancial assets or liabilities measured at amortised cost.
The Group does not actively engage in the trading of nancial
assets for speculative purposes. The most signi cant nancial risks
to which the Group is exposed are described below.
Credit risk
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 nancial assets recognised at
the balance sheet date, as summarised below.
Credit risk is the risk of nancial risk to the Group if a
counter party to a nancial 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.
As at As at
30 April
30 April 2022 2021
Credit Risk GBP'000 GBP'000
---------------------- ----------------
Trade receivables 7,178 4,855
Cash and cash equivalents 24,924 24,383
32,102 29,238
---------------------- ----------------
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 pro le of trade receivables that were not impaired is
shown within Note 14. The Group does not believe it is exposed to
any material concentrations of credit risk.
The Group reviews unbilled revenue on a case-by-case basis. On a
monthly basis, following the receipt of information implying
irrecoverability the appropriate provisions are booked. The
unbilled revenue disclosed within the accounts is net of
provisioning, therefore the Group does not consider the unbilled
revenue disclosed on the balance sheet to be of material credit
risk. Unbilled revenue represented GBP35.3 million (2021: GBP35.1
million).
Liquidity risk
Liquidity risk is the risk that the Group will encounter dif
culty in meeting its obligations associated with its nancial
liabilities. The Group seeks to manage nancial risks to ensure suf
cient liquidity is available to meet foreseeable needs and to
invest cash assets safely and pro tably.
The contractual undiscounted maturities of borrowings, trade
payables and other nancial liabilities are disclosed below.
As at As at
30 April
30 April 2022 2021
Liquidity risk GBP'000 GBP'000
---------------------- -----------------
Within 1 year 26,301 31,424
Within 2-5 years 11,986 13,994
Beyond 5 years 3,996 935
42,283 46,353
---------------------- -----------------
The discounted carrying value of these liabilities is GBP41.2
million (2021: GBP44.2 million), comprising GBP6.3 million lease
liabilities (2021: GBP3.6 million), GBP6.8 million loans (2021:
GBP8.0 million), and GBP28.1 million trade and other payables
(2021: GBP32.6 million).
Interest rate risk
Interest rate risk is the risk that the value of a nancial
instrument or cash ows associated with the instrument will uctuate
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.
The Group has a GBP8 million term loan (GBP6.8 million
outstanding as at April 2022) with an interest base rate plus 3%
repayable over a 4 year period. 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 GBP0.2m. If base rate (prevailing at the
date of signing of 1.25%) reduced there would be a negligible
impact on the Group's FY2022 Profit before tax.
Foreign currency risk
There is no material risk associated with foreign currency
transactions or overseas subsidiaries.
Capital management
The Group monitors the capital requirements within the Group and
maintains a capital management policy that enable the Group to meet
requirements it may face. Shortly after year end the Group repaid
all IPO liabilities due to Partners, with a final payment of GBP1.3
million in May 2022. Net cash of GBP18.1 million (2021: GBP16.4
million), an undrawn GBP10 million RCF, the recent placing raising
GBP7.5 million and the ability to issue further equity, gives the
Group sufficient options to act as acquisition opportunities arise,
subject to our selective criteria of cultural fit, strategic fit
and mutually acceptable transaction economics.
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 pro t
Operating pro t has been arrived at after charging:
Year Ended Year Ended
30 April 2022 30 April 2021
GBP'000 GBP'000
----------------------- -----------------
Depreciation of owned assets 794 677
Depreciation of right of use assets 1,270 835
Amortisation of intangible assets 67 39
Fees payable to the Group's auditor for the
audit of the Group accounts 90 80
Fees payable to the auditor for other services
the auditing of Subsidiary accounts 25 20
Expenses relating to short term leases 329 52
7. Director and employee information
The average number of Directors and employees during the year
was:
Year Ended Year Ended
30 April
30 April 2022 2021
Number Number
------------------------- -------------------
Directors 7 7
Fee earning employees (including
Partners) 397 314
Non fee earning employees 107 77
The aggregate payroll costs of
these persons were as follows:
GBP'000 GBP'000
------------------------- -------------------
Wages, salaries and Partner compensation
charged as an expense 46,402 38,426
Social security costs 3,673 2,892
Pension costs - defined contribution
scheme 725 611
Share-based payment expense 7,996 4,643
58,796 46,572
------------------------- -------------------
Two directors are currently included in the Company pension
scheme.
8. Directors' remuneration and emoluments (including Partner profit allocations)
Details of emoluments paid to the key management personnel
(including Partner pro t allocations in respect of Messrs Rowley
and French) are as follows:
Year Ended Year Ended
30 April
2022 30 April 2021
GBP'000 GBP'000
------------------------- ----------------------------
Directors' emoluments 2,729 2,571
Benefits in kind (inc. pension
contributions) 27 19
Share option award - 180
2,756 2,769
------------------------- ----------------------------
Remuneration (including Partner profit allocation) disclosed
above include the following amounts paid to the highest
paid Director:
GBP'000 GBP'000
------------------------- ----------------------------
Remuneration for qualifying services 1,304 1,353
------------------------- ----------------------------
9. Finance expense
Year Ended Year Ended
30 April
30 April 2022 2021
GBP'000 GBP'000
----------------------- ------------------
On bank loans and overdrafts
measured at amortised cost 305 93
On lease liability 190 140
Total finance expense 495 233
----------------------- ------------------
10. Taxation
Year Ended Year Ended
30 April 2022 30 April 2021
GBP'000 GBP'000
-------------------------- ----------------------------
Current tax
UK Corporation tax 4,699 4,194
Deferred tax
Reversal of temporary differences (1,494) (1,201)
Total tax charge 3,205 2,993
-------------------------- ----------------------------
Reconciliation of tax charge:
Year Ended Year Ended
30 April 2022 30 April 2021
GBP'000 GBP'000
-------------------------- ----------------------------
Profit before tax 15,116 16,604
Corporation tax in the UK at 19% 2,872 3,155
Effects of:
Non-deductible expenses 866 26
Other permanent differences (533) (188)
Total tax charge 3,205 2,993
-------------------------- ----------------------------
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. The relevant corporation tax
rate has been applied in the calculation of deferred tax
balances.
11. Earnings per share
The earnings per share ("EPS") has been calculated using the pro
t for the year and the weighted average number of ordinary shares
outstanding during the year, as follows:
Adjusted Adjusted
GBPm EPS EPS EPS EPS
----------- ------------------------- --------------------- ---------------------------- -----------------------
2022 2022 2021 (restated) 2021 (restated)
----------- ------------------------- --------------------- ---------------------------- -----------------------
Reported
Profit
after tax 11.9 11.9 13.6 13.6
Add Share
based
payments - 8.0 - 4.6
Less
deferred
tax - (1.5) - (1.2)
----------- ------------------------- --------------------- ---------------------------- -----------------------
Adjusted
Profit
after tax 11.9 18.4 13.6 17.0
----------- ------------------------- --------------------- ---------------------------- -----------------------
Total
shares in
issue 243,191,489 243,191,489 239,393,684 239,393,684
----------- ------------------------- --------------------- ---------------------------- -----------------------
Total
share EPS
(pence) 4.90 7.57 5.69 7.11
----------- ------------------------- --------------------- ---------------------------- -----------------------
Weighted
average
shares in
issue
excluding
EBT 222,669,711 222,669,711 224,441,489 224,441,489
----------- ------------------------- --------------------- ---------------------------- -----------------------
Basic EPS
(pence) 5.35 8.27 6.06 7.58
----------- ------------------------- --------------------- ---------------------------- -----------------------
Dilutive
potential
ordinary
shares
under
share
option
schemes 13,424,101 13,424,101 9,976,097 9,976,097
----------- ------------------------- --------------------- ---------------------------- -----------------------
Weighted
diluted
shares in
issue 236,093,812 236,093,812 234,417,586 234,417,586
----------- ------------------------- --------------------- ---------------------------- -----------------------
Diluted
EPS
(pence) 5.04 7.80 5.81 7.26
----------- ------------------------- --------------------- ---------------------------- -----------------------
The Employee Bene t Trust has waived its entitlement to
dividends and is not included within weighted average shares in
issue. It holds 22,531,865 shares of the 243,191,489 shares in
issue at 30 April 2022 (2021: 18,750,000). When options are
exercised by employees, dividend rights accrue.
On 4 May 2022 393,700 new ordinary shares were issued as part of
the acquisition of BridgeShield Asset Management Limited. These are
not considered dilutive for the above calculations.
12. Goodwill and other intangible assets
Computer
software Client List Goodwill Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------------------- ------------------ --------------------------
Cost
At 1 May 2020 10 - 750 760
Additions - 833 8,850 9,683
At 30 April 2021 10 833 9,600 10,443
---------------------------- ------------------- ------------------ --------------------------
At 1 May 2021 10 833 9,600 10,443
Additions - - 600 600
Disposals (10) - - (10)
At 30 April 2022 - 833 10,200 11,033
---------------------------- ------------------- ------------------ --------------------------
Amortisation
At 1 May 2020 (10) - - (10)
Charge for the
period - (39) - (39)
At 30 April 2021 (10) (39) - (49)
---------------------------- ------------------- ------------------ --------------------------
At 1 May 2021 (10) (39) - (49)
Charge for the
period - (67) - (67)
Disposals 10 - - 10
At 30 April 2022 - (106) - (106)
---------------------------- ------------------- ------------------ --------------------------
Net book value
At 30 April 2021 - 794 9,600 10,394
At 30 April 2022 - 727 10,200 10,927
---------------------------- ------------------- ------------------ --------------------------
Additions to goodwill in the year relate to acquisitions as set
out in Note 23.
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 bene ts arising from assets that are not capable of being
individually identi ed and separately recognised. Goodwill does not
generate cash ows 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 ows 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 bene t from the synergies of the business
combination.
The de nition of a CGU is "the smallest identi able group of
assets that generates cash in ows that are largely independent of
the cash in ows from other assets or groups of assets" (per IAS
36).
For the Group a 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 2022:
-- Debt Advisory GBP750k
-- JDC Group GBP3,210k
-- Spectrum GBP5,640k
-- BridgeShield GBP600k
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 ow ('DCF')
calculation estimating the future cash in ows and out ows to be
derived from the continuing use of the CGU, The DCF calculation
would include the estimated net cash ows, 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 ows used
The recoverable amount of the CGU is based on a value in use
calculation using speci c cash ow projections over a 5-year period
and a terminal growth rate thereafter. The cash ow projections for
the 5-year period assume a growth rate for each CGU between 0% to
7.5% (2021: 7.5%) based on prior performance and future
expectation.
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% (2021:
12.9%), which re ects current market assessments of the time value
of money for the period under review and the risks speci c to the
Group.
Terminal growth rate
A terminal growth rate of 1.0% (2021: 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, Spectrum, and BridgeShield 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.
13. Property, plant and equipment
30 April 2022
Property, Plant and Equipment
Fixtures
Computer and Leasehold Motor
Leasehold equipment fittings improvements vehicles Total
properties
(right
of use
asset)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ---------------- ------------------ ---------------------- ----------- ----------------
Cost
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
----------------- ---------------- ------------------ ---------------------- ----------- ----------------
At 1 May 2021 7,600 2,190 808 1,946 7 12,550
Arising on
acquisitions - 6 - - - 6
Additions 4,022 461 251 686 - 5,421
Disposal - (991) (142) (557) - (1,690)
At 30 April
2022 11,622 1,666 917 2,075 7 16,287
----------------- ---------------- ------------------ ---------------------- ----------- ----------------
Depreciation
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)
----------------- ---------------- ------------------ ---------------------- ----------- ----------------
At 1 May 2021 (4,073) (1,381) (391) (932) (4) (6,781)
Depreciation
charge for
the period (1,270) (397) (114) (280) (3) (2,064)
Disposals - 991 142 551 - 1,684
At 30 April
2022 (5,342) (787) (362) (661) (7) (7,161)
----------------- ---------------- ------------------ ---------------------- ----------- ----------------
Net book
value
At 30 April
2021 3,527 808 417 1,013 3 5,769
At 30 April
2022 6,279 879 554 1,414 - 9,126
----------------- ---------------- ------------------ ---------------------- ----------- ----------------
14. Trade and other receivables
Group as at Group as at
30 April 2022 30 April 2021
Trade and other receivables GBP'000 GBP'000
----------------------- -------------------
Trade receivables 7,178 4,855
Other receivables 3,625 2,466
Unbilled revenue 35,261 35,052
46,063 42,373
----------------------- -------------------
The ageing profile of non-related party trade receivables is as follows:
As at As at
30 April 2022 30 April 2021
Due in GBP'000 GBP'000
----------------------- -------------------
<30 Days 3,353 2,286
30-60 Days 1,700 1,182
60-90 Days 784 309
90-180 Days 847 586
>180 Days 494 492
Total 7,178 4,855
----------------------- -------------------
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 acquisition completed during the year fell within FRP's five
service pillars, and therefore the treatment of providing or
writing off acquired receivables follows the 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
following the receipt of information implying irrecoverability.
The gross receivables have increased in line with the growth of
the business.
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:
<30 days 30-60 days 60-90 90-180 days >180 days Total
As at 30 GBP'000 GBP'000 days GBP'000 GBP'000 GBP'000
April 2021 GBP'000
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)
------------------------ --------------------- ---------- ---------------- ----------------- ------------
2,286 1,182 309 586 492 4,855
As at 30
April 2022
Expected
loss rate 0% 2% 3% 7% 62% 12%
Gross
carrying
amount 3,367 1,735 810 913 1,289 8,114
Expected
credit
loss
provision (14) (35) (27) (66) (795) (936)
------------------------ --------------------- ---------- ---------------- ----------------- ------------
3,353 1,700 784 847 494 7,178
15. Cash and cash equivalents
Group as
Group as at at
30 April
30 April 2022 2021
GBP'000 GBP'000
--------------------- ---------------
Cash at bank and in hand 24,924 24,383
16. Trade and other payables
Group as
Group as at at
30 April
30 April 2022 2021
(restated)
Current liabilities GBP'000 GBP'000
------------------------- --------------------
Trade payables 1,556 877
Other taxes and social security costs 7,428 5,849
Liabilities to Partners go forward 9,129 9,074
Liabilities to Partners cessation
profits at IPO 1,302 5,440
Deferred consideration - 813
Other payables and accruals 10,743 10,835
30,159 32,888
------------------------- --------------------
Group as
Group as at at
30 April
30 April 2022 2021
Non-current liabilities GBP'000 GBP'000
------------------------- --------------------
Other payables and accruals 1,443 -
Liabilities to Partners go forward - 245
Liabilities to Partners cessation
profits at IPO - 1,114
Partner capital 4,273 3,833
Deferred consideration - 339
5,716 5,531
------------------------- --------------------
The liabilities to Partners mentioned in both of the above
tables includes tax due to HMRC on their behalf.
Other payables and accruals includes GBP7.1 million of staff
costs (2021: GBP4.5 million).
17. Loans and borrowings
Group as
Group as at at
30 April 2022 30 April 2021
GBP'000 GBP'000
--------------------- ----------------
Current borrowings
Bank loan 2,000 1,600
Lease liability 1,365 872
3,365 2,472
--------------------- ----------------
Non-current borrowings
Bank loan 4,800 6,400
Lease liability 4,913 2,768
9,713 9,168
--------------------- ----------------
Bank loan is repayable
Within one year 2,000 1,600
Within two to five years 4,800 6,400
6,800 8,000
--------------------- ----------------
The above GBP6.8 million (2021: GBP8 million) five-year term
loan is with Barclays Bank plc (Barclays) and is repayable over 20
quarterly instalments. Interest rate is the Bank of England base
rate, plus 3%. The Group also has a GBP10 million revolving credit
facility with Barclays that was undrawn at 30 April 2022, running
until 30 November 2023. 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.
18. Deferred tax
Group as
Group as at at
30 April 2022 30 April 2021
GBP'000 GBP'000
------------------------ ----------------
Deferred tax (asset)/liability brought
forward (925) 124
Recognised in profit and loss for the
period (1,494) (1,200)
Deferred tax on acquisition (13) 151
Deferred tax (asset) (2,431) (925)
------------------------ ----------------
The deferred tax provision is analysed as follows:
Group as at Group as at
30 April 2022 30 April 2021
GBP'000 GBP'000
------------------------ ----------------
Accelerated capital allowance 65 138
Other temporary differences - (14)
Share based payments (2,635) (1,200)
Deferred tax on acquisition 138 151
(2,431) (925)
------------------------ ----------------
19. Financial instruments
Group as
Group as at at
30 April
30 April 2022 2021
GBP'000 GBP'000
--------------------- ---------------
Financial assets held at amortised
cost 32,102 29,238
Financial liabilities held at amortised
cost 42,283 36,556
20. Share capital
Group as
Group as at at
30 April 30 April
2022 2021
Allotted, called up and fully paid GBP GBP
-------------------- ----------------
243,191,489 Ordinary shares of GBP0.001
each 243,191 243,191
On 4 May 2022 393,700 new ordinary shares were issued as part of
the acquisition of BridgeShield Asset Management Limited.
In June 2022, the company executed, a secondary placing and
given the over subscription also raised an additional GBP7.5
million through the issue of 5,357,143 new shares.
21. Dividends
For FY2022 a dividend of GBP1,796k, equivalent to 0.8p per
eligible ordinary share, was declared on 12 February 2021 and paid
on 11 June 2021. A dividend of GBP1,796k, equivalent to 0.8p per
eligible ordinary share, was declared on 28 September 2021 and paid
on 24 December 2021. A dividend of GBP1,796k, equivalent to 0.8p
per eligible ordinary share, was declared on 15 December 2021 and
paid on 24 March 2022. The Board recommends a final dividend of
1.9p per eligible ordinary share for the financial year ended 30
April 2022. Subject to approval by shareholders, the final dividend
will be paid on 21 October 2022 to shareholders on the Company's
register at close of business on 23 September 2022. If the final
dividend is approved, the total dividends paid by the Company
relating to the financial year ended 30 April 2022 will be 4.3p per
eligible ordinary share.
22. Share based payments
Number
of
share options
April 2022
Outstanding at the beginning of
the year 16,163,479
Granted during the year 2,448,975
Forfeited during the year (276,168)
Outstanding at the end of the
year 18,336,286
Exercisable at the end of the
year -
The weighted average life of outstanding options was
two years (2021: two 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 16,025,979 137,500 16,163,479
Granted during the year 2,448,975 - 2,448,975
Forfeited during the year (276,168) - (276,168)
Outstanding at the end of the
year 18,198,786 137,500 18,336,286
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 Exercise
Date of grant 2022 Price (GBP) Vesting
From 6 March 2020 18,198,786 - from 06/03/2023
From 6 March 2020 137,500 0.001 from 06/03/2023
Weighted average fair value per option is GBP0.85 (2021:
GBP0.71).
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-Executive 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);
-- The volatility rate has been based on the Groups share price since IPO
-- A risk-free interest rate of 0.6% has been used (2021: 0.6%); 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 GBP5.4 million (2021: GBP3.7 million).
23. Acquisitions
The Group's growth strategy is to focus on organic growth
supported by selective inorganic opportunities where there is a
cultural, strategic and mutually acceptable transactional economics
fit. The Group made one acquisition in the year as detailed below.
The acquisition strategically fits into the Group's five service
pillars and we believe there to be revenue synergies of the
combinations.
Date Name Location Type Percentage Pillars
bought
28 April 2022 BridgeShield Leigh-on-Sea Share 100% Restructuring advisory
Asset Management
Limited
------------------ ------------- ------ ----------- -----------------------
Acquisition costs of GBP0.03 million (2021: GBP0.4 million)
relating to the acquisition have been expensed in the period but
not adjusted for in adjusted underlying EBITDA.
BridgeShield Asset Management Limited
The fair values of BridgeShield Asset Management Ltd at the
acquisition date on 28 April 2022, following the purchase price
allocation exercise are detailed below:
Book
value Fair value
GBP'000 GBP'000
Net assets acquired
Property, plant and equipment 6 6
Trade Receivables 20 20
Unbilled revenue 99 99
Cash 235 235
Trade Payables (1) (1)
Accruals (33) (33)
VAT (8) (8)
Corporation tax (40) (40)
Total provisional fair value 278 278
------------------------------------------- -------- --------------------
Consideration 878
Goodwill 600
Cash flow GBP'000
Cash paid as consideration on acquisition 600
Less cash acquired at acquisition (235)
--------
Net cash outflow 365
------------------------------------------- -------- --------------------
Fair value
Consideration GBP'000
Initial consideration - Cash 600
Consideration settled in cash post
year end 278
Total Consideration 878
------------------------------------------- -------- --------------------
After year end, on 4 May 2022 equity compensation of GBP500k was
also granted to certain vendor fee earners. As this is subject to a
lock-in, this will not been included within the cost of the
acquisition but in FY2023 is expected to be accounted for as deemed
remuneration within the share based payment reserve in the
Statement of Changes in Equity.
The key shareholders who sold BridgeShield joined the Group as
Partners. Other new colleagues who TUPE'd to the Group received nil
cost option awards, from the Employee Incentive Plan (EIP) funded
on IPO.
Acquisition costs has been absorbed but not adjusted for in
adjusted underlying EBITDA.
The acquisition contributed GBPnil of revenue and GBPnil to the
Group's underlying EBITDA for the period between the date of
acquisition and the balance sheet date.
The company provides property asset management advice to
specialist short-term lenders across bridging, refurbishment and
development finance. It supports lenders across the UK, advising on
asset management, LPA receiverships and loan risk management. They
will work closely with the Brentwood office providing growth
opportunities within the restructuring pillar.
24. Leases
Group as
Group as at at
30 April
30 April 2022 2021
GBP'000 GBP'000
-------------------------- ----------------------
Expenses relating to short
term leases 329 52
Lease interest 190 140
Cash outflow for leases 1,355 911
The carrying value of right of use assets all relate
to leasehold land and buildings.
Undiscounted lease liabilities cashflows in relation
to right of use assets fall due as follows:
Group as
Group as at at
30 April
30 April 2022 2021
GBP'000 GBP'000
-------------------------- ----------------------
Due within one year 1,570 988
Due within two to five years 1,470 2,063
Due after more than five
years 3,996 935
7,036 3,986
-------------------------- ----------------------
25. 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 Group plc that are held in Treasury or by the Employee
Bene t 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.
26. Related party transactions
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 GBP19.9 million (2021: 17.1 million)
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.
27. 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%.
28. Events after the reporting period
The Board of Directors proposed a final dividend of 1.9p per
eligible ordinary share for the final quarter to 30 April 2022
(2021: 1.6p). Subject to approval by shareholders, the final
dividend will be paid on 21 October 2022 to shareholders on the
Company's register at close of business on 23 September 2022.
On 4 May 2022 393,700 new ordinary shares were issued as part of
the acquisition of BridgeShield Asset Management Limited.
In June 2022, the company executed, a secondary placing and
given the over subscription also raised an additional GBP7.5
million through the issue of new shares. Partner shareholders were
invited to sell 20% of their holding and sign an extended lock-in
to June 2024. This has enabled us to introduce new institutional
shareholders onto the share register and further bolster our strong
balance sheet as we continue to target attractive acquisitions.
Alongside placing the majority of FRP Partners entered into
extension of their lock-in arrangements until June 2024. Currently
48.6% of the Group's shareholder base is now subject to lock-in
arrangements, including the Group Employee Benefit Trust
(10.8%).
On 21 June 2022 4,412,176 ordinary shares were transferred to
the Employee Benefit Trust for nil consideration, from a former
Partner of the Group.
Post year end, the final GBP1.3 million payment of the IPO
liability relating to the Cessation profits owed to Partners was
paid down.
29. Capital commitments
At the balance sheet date, the Group had no material capital
commitments in respect of property, plant and equipment (2021:
GBPnil).
30. 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 signi cantly affect the
nancial position or pro tability of the Group.
NOTE
The financial information set out above does not constitute the
Group's statutory accounts for the year ended 30 April 2022 but is
derived from those accounts. Statutory accounts for 2022 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 UK adopted International
Accounting Standards ('IFRS') 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 22 July 2022.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
FR DZGZNLMVGZZM
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