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The growth of business advisory services is being propelled by rising corporate debt and administrations. FRP Advisory, in particular, is seeing an upswing in business, with increased revenues, cash profits and a boost in its utilisation rate.

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A Glimpse into FRP Advisory’s Half-Year Figures

FRP Advisory’s half-year figures released in late 2023 have demonstrated a substantial increase in revenues (by a fifth), with organic sales contributing a 16 per cent rise. The underlying cash profits have climbed by a third to £15.5mn. The company also acquired Wilson Field, a move expected to generate an incremental annual contribution to the group of revenue worth £5.6mn and cash profits of £1.1mn.

The number of administration appointments has more than doubled, thereby pushing up the market share in administration appointments to 20 per cent. Advisory volumes in corporate finance and financial services have also seen a surge.

Expanding Team and Improved Utilisation Rate

With increased business comes increased commitments. The number of FRP fee earners and colleagues, excluding consultants, has grown by 15 per cent and 16 per cent respectively. This has been mirrored in an improved utilisation rate, indicating maximised efficiency and productivity within the company.

Positive Trading and Projections

Trading remains upbeat and the board is optimistic that the group will surpass consensus for FY2024. Projections include revenue of £123mn and cash profits of £32mn. Despite the shares appearing slightly expensive at 16 times consensus earnings compared to industry peer Begbies Traynor, the implied dividend yield stands at 3.7 per cent.

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The half-year figures related earlier for FRP Advisory show an encouraging trend not just for the company, but for the business advisory industry as a whole. The steady rise in corporate debt and administrations has been a catalyst for growth in this sector. This trend is likely to continue, given the precarious financial health of many companies in the wake of recent interest rate increases.

The acquisition of Wilson Field could be seen as a strategic move by FRP Advisory to consolidate its position and broaden its revenue stream. The company’s ability to double its administration appointments and grow its market share in this area also demonstrates its competitive edge.

The increase in fee earners and colleagues, along with an improved utilisation rate, shows a company ready to scale up and capitalise on growing demand. This is a positive sign for potential investors, as it indicates a confident approach to business growth and an efficient utilisation of resources.

While the shares may seem slightly pricey, the company’s strong performance and positive future guidance make it an attractive proposition. The implied dividend yield of 3.7 per cent is an enticing factor for investors looking for steady returns.

FRP Advisory’s robust performance, strategic acquisitions and efficient resource utilisation all contribute to a positive investment outlook.