17th May 2024 12:12
(Alliance News) - FRP Advisory Group PLC pleased investors on Friday as it disclosed earnings "materially ahead" ahead of City forecasts.
In a trading update, FRP Advisory said its revenue and profit for the recent financial year was above market expectations.
In the year that ended April 30, the London-based business advisory firm said it had delivered an "excellent trading performance", adding that it was "confident for the year ahead".
Shares in FRP were up 11% at 142.51 pence each in London midday Friday. The stock is up 27% over the past 12 months.
FRP expects to report GBP128 million in revenue for the year, up 23% from GBP104 million a year prior.
Underlying earnings before interest, tax, depreciation and amortisation are expected to rise 37% to GBP37 million from GBP27 million in financial 2023.
Both figures are ahead of current market consensus, FRP said, which forecast GBP123 million in revenue and GBP32 million in Ebitda.
FRP said activity levels in its Corporate Advisory division increased in the second half, "as UK economic conditions began to stabilise and market sentiment improved".
FRP said its Corporate Finance and Debt Advisory teams closed 76 transactions in the year, up from 73 the year before, though the aggregate deal value of GBP1.4 billion marked a decline from GBP1.8 billion the previous year.
Peter Renton, equity analyst at Cavendish, described the update as "stunning", with adjusted Ebitda of GBP37 million, "materially ahead" of his GBP32 million forecast.
Net cash of around GBP30 million was nearly double his forecast, aided by strong working capital management, he said.
"With the number of industry administrations up 22% [year-on-year], it has been a busy year for FRP," Renton noted, adding it has also completed two acquisitions and grown its team by around 20%.
"With many businesses continuing to face challenges due to the weak economic environment, the outlook remains positive for FRP in our view," Renton commented.
The analyst increased his financial 2025 adjusted Ebitda forecast for FRP to GBP39 million from GBP34 million to account for expected continued strong organic growth and the recent Hilton-Baird acquisition.
On Monday, FRP announced the acquisition of commercial finance and risk management specialists Hilton-Baird Group for an initial GBP7 million.
Cavendish's Renton raised his share price target for FRP to 200 pence from 175p, implying 40% upside to the current market price.
By Jeremy Cutler, Alliance News reporter
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