Full Year Results

FRP Advisory Group PLC

26 July 2023

FRP ADVISORY GROUP PLC

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

Full Year Results

for the year ended 30 April 2023

FRP Advisory Group plc, a leading national specialist business advisory firm, is pleased to announce its full year results for the year ended 30 April 2023 (FY2023).

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

"The Group made strong progress in the financial year to 30 April 2023, with growth in the team, profits and dividends. A complementary business in Cyprus was acquired, the Financial Advisory pillar was launched in response to client demand and our Corporate Finance team were named 'UK Corporate Finance House of the Year' at the National Real Deals Private Equity Awards 2023. Our Restructuring team continues to make progress in the nature of projects and depth of referral client base across all of our locations. Our Forensic services team has been very active on many confidential projects along with a number of high-profile mandates for listed businesses, for example WANdisco plc, Inland Homes plc and Braemar plc.

The results achieved are ongoing testament to the quality of our colleagues and their continued efforts to collaborate internally and provide a high-quality service, to help achieve the best possible results for our clients. The specialists at FRP can help across the entire economic life cycle. Reflecting the continued development of our team we recently promoted 12 colleagues to Partners spanning across locations and service pillars. This is a record number and shows our commitment to supporting internal career progression. In a competitive market FRP continues to attract talented lateral hire colleagues into the Group.

On behalf of the Board, I wish to express my gratitude for the contribution made by our entire team.

In our new financial year, activity levels have been encouraging to date and trading is in line with the Board's expectations. The short and medium-term outlook for our business remains positive and we are confident of making further progress."

Financial highlights

	2023	2022
	£m	£m
Revenue	104.0	95.2
Adjusted underlying EBITDA*	27.0	25.7
Reported EBITDA	18.5	17.7
Adjusted profit before tax**	24.1	23.1
Reported profit before tax	15.6	15.1
Adjusted Total EPS (pence)***	7.83	7.57
Basic EPS (pence)	5.58	5.35
Total dividend relating to the year (pence)	4.6	4.3
Net cash	22.9	18.1

· Another year of growth:

o Revenue increased by 9% to £104.0 million (2022: £95.2 million) with 8% organic, and 1% inorganic.

o Adjusted underlying EBITDA* rose by 5% to £27.0 million (2022: £25.7 million).

o £1.3 million average revenue per Partner as at year-end (2022: £1.2 million).

o Reported profit before tax for the year grew to £15.6 million (2022: £15.1 million).

· Strong balance sheet maintained with year-end net cash of £22.9 million (2022: £18.1 million). Our banking facilities were refinanced in July 2023 for 3 years, on better terms.

· Increased returns to shareholders:

o Total dividends of 4.6p relating to FY2023 (2022: 4.3p).

o Comprising three interim dividends of 0.85p per eligible Ordinary Share and a final proposed dividend of 2.05p per eligible Ordinary Share for the year ended 30 April 2023 recommended by the Board.

* Adjusted Underlying Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) excludes any exceptional costs and share-based payment expenses that arise from a) the Employee Incentive Plan (EIP) funded on IPO and b) deemed remuneration amortisation linked to acquisitions. See table in the Financial Review section below.

** Reported Profit before Tax plus share based payments and exceptional items

*** Earnings adjusted by adding back share-based payments and related deferred tax. Earnings per total weighted shares in issue. See Note 12 for more details.

Operational highlights

· Delivering on our strategy to achieve organic growth, supplemented by selective acquisitions.

· Continued growth in FRP team size:

o The FRP team grew by 9% (additional 47 colleagues year-on-year) to 551 excluding consultants (2022: 504).

o Growth was driven by demand-led lateral hiring and one acquisition.

o At 30 April 2023, the Group had 78 Partners (2022: 80), 361 other fee earners (2022: 317) and 112 support staff (2022: 107).

o At year-end FRP's UK footprint covered 25 locations (2022: 26) with one international office in Cyprus.

o In May 2023 the Group promoted a record 12 colleagues to Partner across locations and service lines, demonstrating commitment to supporting internal career progression and longer-term succession planning.

· Further progress across specialist service pillars:

o Restructuring team again the most active in the administration appointment market

· Market share in the number of administration appointments slightly increased to 14% (2022: 13%), in a recovering administration market.

o FRP Corporate Finance ranked as the 13^th most active financial adviser in the UK M&A market

· The Corporate Finance and Debt Advisory teams were involved in 73 (2022: 99) successful transactions with an aggregate deal value of £1.8 billion (2022: £3 billion) and £0.8 billion of debt raised (2022: £1.3 billion).

· Nationally the Corporate Finance and Debt Advisory teams comprise 67 fee earners (including 17 Partners) across 10 locations.

· FRP Corporate Finance continued to grow its brand presence, with the launch of a dedicated website and LinkedIn page.

· Corporate Finance team were named 'UK Corporate Finance House of the Year' at the National Real Deals Private Equity Awards 2023.

o Launch of the Financial Advisory pillar in February 2023

· Brings together our existing transaction related services including buy and sell-side financial due diligence; lender services including pre-lending due diligence and independent business reviews; valuation services; financial modelling; board and C-suite advisory and pensions advisory services.

o Our Forensic services team has been very active on many confidential projects along with a number of high-profile mandates for listed businesses, for example WANdisco plc, Inland Homes plc and Braemar plc.

· Strengthened operational infrastructure

o Implemented a new Risk Management Framework and the Group now aligns with ISO 31000.

o Enhancements to the Group's Information Security Management System ("ISMS") and recommended for ISO 27001 certification as complying with ISO 27001:2013 in July 2023.

· Effective succession planning and incentivisation structures in place.

o In March 2023, the Company successfully managed the vesting process of shares gifted to colleagues at IPO.

o In June 2022, the Company executed a secondary share placing and given the demand from investors, raised an additional £7.5 million gross through the issue of new shares. Partner shareholders were invited to sell up to 20% of their holding in return for signing an extended lock-in to June 2024.

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

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

Enquiries:

FRP Advisory Group plc

Geoff Rowley, CEO

Jeremy French, COO

Gavin Jones, CFO

Enquiries via MHP

Cenkos Securities plc (Nominated Adviser and Joint Broker)

Katy Birkin/Max Gould (Corporate Finance)

Alex Pollen (Sales)

Tel: +44 (0) 207 397 8900

Investec Bank plc (Joint Broker)

Carlton Nelson / James Rudd (Corporate Broking)

Tel: +44 (0) 207 597 4000

MHP Group (Financial Public Relations)

Oliver Hughes

Charlie Barker

Catherine Chapman

Tel: +44 (0) 783 462 3818

FRP@mhpgroup.com

Notes to Editors

FRP is a leading national specialist business advisory firm established in 2010. It 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, 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.

· Financial advisory: transaction services including financial due diligence, lender services, financial modelling, valuations, pensions and company-side advisory services.

Chairman's report

Overview

With the COVID pandemic now behind us, much of the recent market commentary has related to how businesses would cope with the ever-increasing challenges of the future headwinds. Commentators were confident that the perfect storm of rapidly rising inflation, higher interest rates, accelerating labour and energy costs would lead to a surge in insolvencies. In fact, for some of the past year, businesses proved this theory wrong and remained remarkably resilient to the external challenges they were facing. In addition, HMRC and the lending community proved supportive, as I suspect we all tried to work out whether the difficulties were longer term or, as the Bank of England described inflation, "transitory" in nature. However, the market reality has been that whilst the higher volume liquidations market, which typically sees lower value and less complex situations, has grown, larger restructurings principally through administrations have continued to remain below pre pandemic levels.

Despite a largely unfavourable market backdrop for much of our financial year, I am delighted that we were able to deliver another year of growth in revenue, profits and dividends. It is to the credit of our colleagues that their focus on bringing the right team to each assignment to deliver the best possible results for our clients, continues to produce excellent outcomes and financial performance for shareholders. I remain hugely appreciative and proud of the dedication, commitment and professionalism of our colleagues across all our offices.

It is also encouraging to see an increasing demand for our resources and expertise, particularly in the latter months of the year, as the outlook, if anything, has hardened in our favour, with interest rates predicted to remain higher for longer in order to tame inflation.

Whilst restructuring activities comprise the majority of our activity, we offer a diversified but complementary range of services to corporates across their life-cycle. In February 2023, following increased client demand, we launched our Financial Advisory service pillar. This function is focussed around supporting management in making decisions about funding, pensions, valuations and M&A due diligence. It dovetails neatly, where necessary, with our Restructuring, Debt Advisory and Corporate Finance pillars essentially bringing a full suite of advisory services to our clients. It is also pleasing to report on the continued progress of our Forensic Services team, conducting significant assignments for a number of clients including some publicly listed companies. FRP Corporate Finance and our Debt Advisory team remained active, with the former being named "UK Corporate Finance House of the Year" at the Real Deals PE Awards. Undoubtedly market conditions for M&A and Private Equity investing have softened but 73 transactions were closed, and our colleagues remain active even if deal timescales and values have proved to be less favourable than a year or so ago.

Continued profitable growth

We are pleased with the levels of growth during the year, with revenues of £104 million, up 9% from the previous year (2022: £95.2 million). This performance was driven by 8% organic growth, underpinned by the support offered on some larger projects, with a further 1% coming from acquisitions. Following an acquisition by the Group we treat the first 12 months contribution as inorganic, with month 13 onwards becoming organic.

Adjusted underlying EBITDA of £27 million represented growth of 5% from the previous year (2022: £25.7 million). Reported EBITDA increased to £18.5 million (2022: £17.7 million). During the year we were pleased to welcome 47 new colleagues and the overall headcount grew 9% in the year, to 551 (2022: 504) and the number of Partners decreased by two, to 78.

Strong balance sheet

The Group's balance sheet remains strong with net cash balances at 30 April 2023 of £22.9 million (2022: £18.1 million), consisting of gross cash of £27.7 million less a balance remaining on a term loan of £4.8 million. The Group also has an undrawn revolving credit facility ("RCF") of £10 million with Barclays Bank. These facilities were refinanced in July 2023 for 3 years on better terms.

Consistently delivering on our growth strategy

Our strategy remains to seek steady and sustainable growth through organic initiatives and selective acquisition opportunities. We were delighted to welcome the team from APP Advisory in Cyprus, which we acquired in December 2022. Although this added a new, international office location, at the end of FY2023 our total office footprint remained at 26 locations, as we closed one smaller office in Milton Keynes. The Group explored several other acquisition opportunities although we did not transact due to our highly selective cultural fit, strategic fit, and acceptable deal economics criteria. We continue to explore opportunities across each of our five service pillars.

Dividend

Since 2021, the Group's dividend policy has been to pay quarterly dividends. 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 ("EBT") which was seeded by Partners on IPO, has waived its right to dividends with the corresponding amount retained by the Group. Share options granted to employees first vested on 6 March 2023 onwards, and once exercised, these shares duly attract dividend rights.

The Board recommends a final dividend of 2.05p per eligible Ordinary Share for the financial year ended 30 April 2023. Subject to approval by shareholders, the final dividend will be paid on 27 October 2023 to shareholders on the Company's register at close of business on 29 September 2023. If the final dividend is approved, the total dividends paid by the Company relating to the financial year ended 30 April 2023 will be 4.6p per eligible Ordinary Share (2022: 4.3p).

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 on admission to AIM and shareholders can find more information on our governance arrangements in the Corporate Governance Statement in 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/.

Our Environmental, Social and Governance responsibilities include committing the Group to be 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. Upon IPO, ordinary shares representing 8% of the Company's issued shares were placed in an EBT, with the purpose of being granted to colleagues via share options. Share options were granted to colleagues at IPO, and subsequent joiners to the Group, with a vesting period of 3 years from the date of grant. On 6 March 2023 the first tranche of share options became exercisable and now there is a regular process in place for colleagues to exercise options either on or after their vesting dates. By the end of FY2023, options over 7,865,946 ordinary shares had been exercised, with many colleagues retaining shares.

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 equity of the Group.

We believe that we are 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 continues.

Board changes

In March 2023, as part of the Board's succession planning, we welcomed Kathryn Fleming to the board as an independent, Non-Executive Director. Kathryn is CFO of Control Risks Group, a global risk management consultancy and is a member of both their board and executive committee where she is responsible for overseeing all aspects of the financial performance and strategy across its worldwide operations. Prior to that she held senior executive roles at leading professional service firms, Osborne Clarke and Eversheds. Her experience of working in growing professional service firms with people at the core of the proposition is very relevant to us at FRP.

In addition, on 30 April 2023, Non-Executive Director, David Adams, retired from the Board. David had been on the board of FRP since shortly after its inception in 2010 and his contribution to the Group has been invaluable. He has also played a significant role in the creation and evolution of FRP's Corporate Finance business. We are exceptionally grateful for David's contribution over the last 13 years, and I personally have valued his wise counsel as we have transitioned from a small restructuring business into a listed, national, advisory firm. We wish him well in his retirement.

The Nomination Committee continues to review the Board's succession planning and will announce any further Board changes in the usual way.

Annual General Meeting

The Company's Annual General Meeting will be held on 28 September 2023. 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

In our new financial year activity levels have been encouraging to date and trading is in line with the Board's expectations. The short and medium-term outlook for our business remains positive and we are confident of making further progress.

Nigel Guy

Non-Executive Chairman

25 July 2023

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 life cycle across our five complementary service pillars.

The five service pillars are: Corporate Finance, Debt Advisory, Financial Advisory, Forensic Services and Restructuring Advisory. We specialise in finding strategic solutions to a range of situations for clients of all sizes, including personal clients, SMEs, our core mid-market and high-profile more complex, appointments.

We believe our agile, collaborative and entrepreneurial approach sets us apart from our peers. Our offices continue to work together across our five complementary service pillars as necessary, in order to deliver the best possible service and outcome. The collaborative approach provides greater opportunities across a wide range of clients.

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 acceptable transaction economics.

On 7 December 2022 we were pleased to announce the acquisition of APP Advisory based in Limassol, Cyprus, which provides advisory, tax and audit services, bringing two new Partners and an additional 15 team members to FRP. Adding offices in selective new locations is part of our growth strategy and we currently have 26 locations in the UK and one in Cyprus. All offices continue to work well together, drawing on specialists from our five complementary service pillars as necessary. Many assignments involve specialists from several service pillars, working collaboratively to achieve the best possible outcome. Cross pillar collaboration is possible due to FRP's connected culture.

Our strong balance sheet gives us the flexibility to move quickly should further acquisition opportunities arise.

Continued growth in footprint and team

At 30 April 2023, FRP had 25 UK offices, one international office and 551 colleagues, excluding consultants. The team grew 9% or by 47 colleagues year on year (2022: 504).

Highlights included:

· In August 2022, we launched a Restructuring Advisory service within East Anglia, with Richard Bloomfield as the appointment taking Director.

· In December 2022, two new Partners, Augoustinos Papathomas and Christina Papathomas, joined FRP as part of the acquisition of APP Advisory in Cyprus. The rest of the APP team also joined FRP, comprising 14 colleagues and one consultant.

· In February 2023, we launched the Financial Advisory pillar bringing together our existing transaction related services including buy and sell-side financial due diligence; lender services including pre-lending due diligence and independent business reviews; valuation services; financial modelling; board and C-suite advisory and pensions advisory services. More than 20 of our experienced advisers formed a new team to support boards, lenders and investors on mid-market transactions and advisory assignments.

· During FY2023, we announced 8 Director promotions and a further 86 promotions across a wide range of senior and specialist roles, from Office Managers to Associate Directors/Senior Managers.

Immediately following the year-end, on 1 May 2023, 12 internal promotions to Partner were announced, which were part of a total of 72 promotions across the Group. This was a record number of promotions and, when combined with our ongoing investments in learning and development, demonstrates the Group's long-term commitment to developing talent and providing attractive career paths.

In June 2023, we opened an additional office in Salisbury, to support continued team and business growth from our Southampton office.

Strong trading results

FRP's revenue grew 9% year on-year to £104 million (2022: £95.2 million). 8% was organic and inorganic growth was 1%. Following an acquisition we treat the first 12 months contribution to the Group as inorganic, month 13 onwards becomes organic. Adjusted underlying EBITDA grew 5% year-on-year to £27 million (2022: £25.7 million). We maintain a focus on cost control, whilst modestly investing where necessary to continue sustainable profitable growth. On a reported basis, EBITDA grew to £18.5 million (2022: £17.7 million).

Across all offices there is a constant focus on accurate monthly unbilled revenue (work in progress or "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 £22.9 million (2022: £18.1 million). I am also pleased to report that in May 2022, all IPO liabilities to Partners (and HMRC) were repaid.

Restructuring Market

Growth in the higher volume liquidations market, which are typically lower value and less complex, continues, including Creditors Voluntary Liquidation's and Compulsory Liquidations which increased by 20% in the financial year (Source: London and Regional Gazettes).

The more complex Administration market, where FRP are particularly active, increased by 40% comparing financial years FY2023 and FY2022. FRP's Administration market share, by number of appointments, slightly grew year-on-year to 14% (Source: London and Regional Gazettes), and has seen encouraging levels of activity during Q4 FY2023 and post year-end. 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.

Given the long list of well documented headwinds facing UK corporates including continuing interest rate rises, input cost inflation (i.e. wages, energy, supplies and materials), weakening consumer demand, supply chain disruption, Brexit and the withdrawal of pandemic support measures, it is expected that the administration market should continue to experience greater volumes during financial year 2024 and FRP is well placed to serve this market.

Outside of the formal insolvency market, FRP has seen an encouraging increase in demand for confidential advisory projects and enquiries for restructuring services; this includes a number of mandates seeking to utilise the Restructuring Plan. This corporate restructuring process was introduced into law in 2020 and after a relatively hesitant start is now starting to be a useful addition to the restructuring toolkit. The Group expects that demand for its overall restructuring advisory services will continue to increase.

UK M&A Market

FRP Corporate Finance remains a UK member firm of Alliance of International Corporate Advisors ("AICA"), an integrated network of middle-market M&A advisory firms, and in the financial year over 40% of its disposals were to international buyers. In November 2023, FRP Corporate Finance will host the AICA European conference in London, which will assist in further developing its international network. FRP Corporate Finance Partner Simon Davies has been elected as the Chairman of the AICA for a two-year term in 2023 and 2024. Simon was voted in at AICA's recent Annual Global Meeting, in Dublin.

The Corporate Finance team was involved in 73 successful transactions with an aggregate deal value of £1.8 billion and £0.8 billion of debt raised. This level of activity gives FRP Corporate Finance a c.1% market share of the UK M&A market, by number of appointments (Source: Experian Market IQ). The average deal value of £25 million places FRP Corporate Finance in the heart of its target SME market.

The Corporate Finance team continued 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 FY2023 included:

o Sell-side adviser to multi-brand distributor, BTC Activewear on its sale to New Wave Group AB.

o Sell-side adviser to WysePower, one of the UK's biggest providers of temporary site solutions for construction projects, on its sale to RSK Group.

o Sell-side adviser to California-based Blueback Global on its sale to TopSource Worldwide.

o Sell-side adviser to healthcare services provider, Partnering Health Limited (PHL), on the management buyout.

o Buy-side M&A and debt adviser to LDC on its significant investment in water and environmental sustainability specialist, Stonbury.

o Debt adviser to CBPE on a debt raise to fund the primary management buyout of BKL, a leading SME accountancy firm.

o Debt adviser to Airedale Catering Equipment Group, and PE investor Rubicon Partners on the refinancing of the group.

FRP's Corporate Finance and Debt Advisory teams now comprise 67 fee earners (including 17 Partners) across 10 locations.

Financial Advisory Market

In response to increasing market demand from institutional lenders and private equity, FRP launched a Financial Advisory pillar in February 2023 to develop our financial and pre-lending review services, financial modelling expertise and wider transaction services including financial due diligence for buy-side and sell-side transactions. This pillar also includes our valuation services which support transactions, disputes and complex restructuring situations, together with our board and C-suite advisory and pensions advisory services.

These services bring already established FRP experts with many years' experience into one team, so we can assist our clients in complex situations, with straightforward advice based on thorough analysis.

Since the launch, this combined team has been actively engaged across all these service areas. Demand for these services remains strong, and we will continue to develop this team with appropriate hires across the country.

FRP's Financial Advisory team now comprises 23 fee earners including 7 partners.

Forensic Services Market

FY2023 was another year of growth and expansion for the Forensic Services team. The team received further accreditations, which saw them gain recognition for their industry expertise and experience in Chambers and Who's Who Legal.

An enhanced eDiscovery tool, RelativityOne, was also launched: the transition to this has improved the Forensic Services team's performance when processing data, with access to new enhanced analytics and features.

The team launched a new global Forensics and Dispute Resolution network in partnership with Eight International which has increased FRP's brand presence, market profile and showcased combined cross-border and international collaboration capabilities across all of the countries in which the Eight International network operates.

Our Forensic Services team has seen an increase in investigation work in the first part of 2023, across both forensic accounting and forensic technology. Notable recent assignments include independent investigations at WANdisco plc, Inland Homes plc and Braemar plc.

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.

Our specialist Learning and Development Senior Manager has implemented more focused training options to reflect individual career progression, incorporating a flexible approach to development across our five service pillars. Continued support of colleagues in acquiring professional qualifications and supporting their career aspirations remains a priority, enabling 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.

Outlook

At FRP our five service pillars, now including Financial Advisory, are each connected and work together as needed. This internal collaboration and always putting the best team, from the right locations forward for each project is part of FRP's culture, which helps achieve the best possible outcome for clients.

Our Restructuring team are being engaged on projects due to a range of pressures on UK Corporates including cost of financing, debts owed to HMRC, supply chain issues, labour shortages, impact of inflation and weakening consumer demand. We are also seeing institutional lenders and Investors being more cautious on providing additional support, where they have not received significant comfort on future viability. A number of these pressures have yet to work through and some are at the early stages of being felt by many UK companies. As activity levels continue to increase, our teams are helping clients to preserve and generate value. Where early engagement is possible to deploy innovative turnaround and restructuring solutions, to seek to avoid formal insolvency.

Our Corporate Finance team have a strong pipeline although due to the increase in interest rates and economic uncertainties, the market has seen demand for more pre-deal due diligence and debt advice, with completion timelines extending. The FRP Corporate Finance team are continuing to grow their reputation and credentials in the mid-market arena, as evidenced by being named 'UK Corporate Finance House of the Year' at the National Real Deals Private Equity Awards 2023.

Our Forensic team has been very active on many confidential projects along with a number of high-profile mandates for listed businesses, for example WANdisco plc, Inland Homes plc and Braemar plc.

We have a strong balance sheet and recently refinanced our banking facilities for 3 years from July 2023. As a UK focused business, the Russia/Ukraine conflict does not have a material impact on FRP's operations.

In the current financial year, trading to date is in line with the Board's expectations and we are confident of making further progress in the year.

Geoff Rowley

Chief Executive Officer

25 July 2023

Financial review

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

Revenue

FRP's revenue grew 9% year-on-year to £104 million (2022: £95.2 million). 8% was organic growth and 1% inorganic, defined as an acquisition's first 12 months' contribution to the Group.

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

The Group grew profitably with adjusted underlying EBITDA* rising by 5% to £27 million (2022: £25.7 million). We continue to maintain a focus on cost control, while modestly investing, to continue executing on delivering sustainable profitable growth.

£m	2023	2022
Reported Profit before tax	15.6	15.1
Add back depreciation, amortisation and interest	2.9	2.6
Reported EBITDA	18.5	17.7

Add share-based payment expense relating to the Employee Incentive Plan (EIP)	6.3	5.4
Add share-based payment expense - Deemed remuneration	2.1	2.6
Add back exceptional items	0.1	-
Adjusted underlying EBITDA*	27.0	25.7

*Adjusted underlying EBITDA excludes any exceptional costs and non-cash share-based payment expenses that arise 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 9% through both acquisition and demand-led lateral hiring and we opened one new office in Limassol, Cyprus, following the acquisition of APP Advisory in December 2022.

The Group started the financial year with 504 colleagues, (excluding consultants) operating out of 26 UK offices. By 30 April 2023, there were 25 UK offices and one international location, while the colleague number had increased to 551 (excluding consultants), as set out in the table below:

Team	FY2023	FY2022
Partners	78	80
Colleagues - fee earners	361	317
Total fee earners	439	397
Colleagues - support	112	107
Total (exc consultants)	551	504

Balance sheet and cash flow

The Group's balance sheet remains strong with a net cash balance as at 30 April 2023 of £22.9 million (2022: £18.1 million), consisting of gross cash of £27.7 million, less a balance remaining on a term loan of £4.8 million. The Group also has an undrawn RCF of £10 million with Barclays Bank. These facilities were refinanced in July 2023 on better terms for 3 years.

The Group has repaid all IPO liabilities due to Partners, after a final payment of £1.3 million was made in May 2022.

The Group has improved the staff utilisation rate to 65% (2022: 61%). Utilisation is expected to be circa. 60% or greater. The Group monitors utilisation and capacity and has a culture of internal collaboration whereby colleagues can be utilised across different locations.

Dividend

Given the trading performance and strong balance sheet, the Board recommends a final dividend, in line with its stated dividend policy to pay quarterly dividends. The expected dividend pay-out ratio to eligible shareholders is high at c. 70% of the Group's reported profit after tax.

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. As the employee share options became exercisable from 6 March 2023, these shares will attract dividend rights when converted. The Board recommends a final dividend of 2.05p per eligible Ordinary Share for the financial year ended 30 April 2023. Subject to approval by shareholders, the final dividend will be paid on 27 October 2023 to shareholders on the Company's register at close of business on 29 September 2023. If the final dividend is approved, the total dividends paid by the Company relating to the financial year ended 30 April 2023 will be 4.6p per eligible Ordinary Share (2022: 4.3p).

Consolidated statement of comprehensive income

For the year ended 30 April 2023

		Year Ended	Year Ended
		30 April 2023	30 April 2022
	Notes	£'million	£'million

Revenue		104.0	95.2

Personnel costs	8	(64.3)	(58.8)
Depreciation and amortisation		(2.5)	(2.1)
Other operating expenses		(21.1)	(18.6)
Exceptional costs	7	(0.1)	-

Operating profit	6	16.0	15.6

Finance income	10	0.2	-
Finance costs	10	(0.6)	(0.5)

Net finance costs		(0.4)	(0.5)

Profit before tax		15.6	15.1
Taxation	11	(2.9)	(3.2)

Profit and total comprehensive income for the year attributable to the owners of the Group		12.7	11.9

Earnings per share (in pence)
Total	12	5.13	4.90
Basic	12	5.58	5.35
Diluted	12	5.33	5.04

All results derive from continuing operations.

The Notes form part of these financial statements.

Consolidated statement of financial position

As at 30 April 2023

		As at 30 April	As at 30 April
		2023	2022
	Notes	£'million	£'million

Non-current assets
Goodwill	13	10.8	10.2
Other intangible assets	13	0.6	0.7
Property, plant and equipment	14	2.5	2.8
Right of use asset	14	6.5	6.3
Deferred tax asset	19	2.5	2.4
Total non-current assets		22.9	22.5

Current assets
Trade and other receivables	15	58.3	46.1
Cash and cash equivalents	16	27.7	24.9
Total current assets		86.0	71.0

Total assets		108.9	93.5

Current liabilities
Trade and other payables	17	29.7	30.2
Loans and borrowings	18	1.6	2.0
Lease liabilities	18	1.2	1.4
Total current liabilities		32.5	33.5

Non-current liabilities
Other creditors	17	4.8	5.7
Loans and borrowings	18	3.2	4.8
Lease liabilities	18	5.3	4.9
Total non-current liabilities		13.3	15.4

Total liabilities		45.8	49.0

Net assets		63.1	44.5

Equity
Share capital	21	0.2	0.2
Share premium	27	32.0	23.7
Own shares (EBT)	27	(0.0)	(0.0)
Share based payment reserve	27	1.3	(1.1)
Merger reserve	27	1.3	1.3
Retained earnings	27	28.3	20.4
Shareholders' equity		63.1	44.5

Approved by the Board and authorised for issue on 25 July 2023.

Jeremy French Gavin Jones

Director Director

Company Registration No. 12315862

Consolidated statement of changes in equity

For the year ended 30 April 2023

	Called up share capital	Share premium account	Own shares (EBT)	Share based payment reserve	Merger reserve	Retained earnings	Total equity
	Called up share capital	Share premium account	Own shares (EBT)	Share based payment reserve	Merger reserve	Retained earnings	Total equity
	£'million	£'million	£'million	£'million	£'million	£'million	£'million

Balance at 30 April 2021	0.0	0.0	(0.0)	(4.1)	1.3	12.7	9.8

Profit and total comprehensive income for the year	-	-	-	-	-	11.9	11.9
Other movements	-	-	(0.0)	-	-	0.0	-
Issue of share capital	0.2	23.7					23.9
Dividends	-	-	-			(9.2)	(9.2)
Share based payment expenses	-	-	-	5.4	-	-	5.4
Deemed remuneration	-	-	-	2.6	-	-	2.6
Transfer to retained earnings	-	-	-	(5.0)	-	5.0	-

Balance at 30 April 2022	0.2	23.7	(0.0)	(1.1)	1.3	20.4	44.5

Profit and total comprehensive income for the year	-	-	-	-	-	12.7	12.7
Other movements	-	-	0.0	-	-	(0.0)	-
Issue of shares	0.0	8.5	-	-	-	-	8.5
Share issue costs	-	(0.2)	-	-	-	-	(0.2)
Dividends	-	-	-	-	-	(9.8)	(9.8)
Share based payment expenses	-	-	-	6.3	-	-	6.3
Deemed remuneration additions	-	-	-	(1.0)	-	-	(1.0)
Deemed remuneration charge	-	-	-	2.1	-	-	2.1
Transfer to retained earnings	-	-	-	(5.0)	-	5.0	-

Balance at 30 April 2023	0.2	32.0	(0.0)	1.3	1.3	28.3	63.1

Consolidated statement of cash flows

For the year ended 30 April 2023

		Year Ended	Year Ended
		30 April 2023	30 April 2022
	Notes	£'million	£'million

Cash flows from operating activities
Profit before taxation		15.6	15.1
Depreciation, amortisation and impairment (non cash)	13,14	2.5	2.1
Share based payments: employee options (non cash)	8	6.3	5.4
Share based payments: deemed remuneration (non cash)	8	2.1	2.6
Net finance expenses	10	0.4	0.5
Increase in trade and other receivables		(11.6)	(3.6)
(Decrease) / increase in trade and other payables		(2.2)	1.6
Tax paid		(2.0)	(5.5)
Net cash from operating activities		11.1	18.3

Cash flows from investing activities
Purchase of tangible assets	14	(0.6)	(1.4)
Acquisition of subsidiaries less cash acquired	24	(1.6)	(4.4)
Interest received		0.2	-
Net cash used in investing activities		(2.0)	(5.8)

Cash flows from financing activities
Proceeds from share sales	21	7.5	-
Dividends paid	22	(9.8)	(9.2)
Principal elements of lease payments		(1.4)	(1.2)
Repayment of loans and borrowings	18	(2.0)	(1.2)
Interest paid		(0.6)	(0.4)
Net cash used in financing activities		(6.3)	(12.0)

Net increase in cash and cash equivalents		2.8	0.5
Cash and cash equivalents at the beginning of the year		24.9	24.4
Cash and cash equivalents at the end of the year	16	27.7	24.9

Notes to the Financial Statements

For the year ended 30 April 2023

1. General information

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

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

2. Signiﬁcant accounting policies

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

2.1 Basis of preparation

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 ﬁnancial statements are prepared in sterling, which is the presentational currency of the Group. Amounts in these ﬁnancial statements are rounded to the nearest £'million, unless otherwise stated.

2.2 Historic cost convention

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

2.3 Basis of consolidation

The ﬁnancial statements incorporate the results of FRP Advisory Group plc and all of its subsidiary undertakings as at 30 April 2023.

FRP Advisory Trading Limited has eleven owned subsidiaries, FRP Debt Advisory Limited, FRP Corporate Finance Limited, FRP Corporate Advisory Limited, Litmus Advisory Limited, Abbott Fielding Limited, JDC Accountants & Business Advisors Limited, JDC Holdings Limited, Spectrum Corporate Finance Limited, BridgeShield Asset Management Limited, FRP Advisory (Cyprus) Limited and APP Audit Co Limited, as well as being a member of FRP Advisory Services LLP.

During the year FRP Corporate Finance Limited was renamed to FRP Corporate Advisory Limited, and a new entity set up called FRP Corporate Finance Limited. The Group also completed one acquisition as set out in Note 24. The assets, liabilities and entity acquired have been consolidated within these Financial Statements, in accordance with IFRS. The newly acquired entities are FRP Advisory (Cyprus) Limited and APP Audit Co 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 2023:

· IAS 16 Property, Plant and Equipment (Amendment): Proceeds before Intended Use

· IAS 37 Provisions, Contingent Liabilities and Contingent assets (Amendment): Onerous Contracts: Cost of Fulfilling a Contract

· IFRS 3 Business Combinations (Amendment): Reference to the Conceptual Framework

· Annual Improvements Cycle 2018 to 2020

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.

IFRS standards effective for accounting periods commencing on or after 1 January 2023

• IAS 1 Amendment: Disclosure of Accounting Policies

• IAS 8 Amendment: Definition of Accounting Estimates

• IAS 1 Amendment: Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants

• IAS 12 Amendment: Deferred Tax related to Assets and Liabilities arising from a Single Transaction

• IFRS 16 Amendment: Lease Liability in a Sale and Leaseback

• IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction

• IFRS 17 Insurance Contracts (Amendment): Initial Application of IFRS 17 and IFRS 9 - Comparative Information

• IFRS 17 Insurance Contracts and Amendments to IFRS 17

• Amendments to IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules

• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements

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.

2.6 Going concern

The business has been, and is currently, both proﬁtable and cash generative. It has consistently grown year on year for 13 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 £22.9 million. In July 2023 the Group refinanced its bank facilities with Barclays, which expire in 3 years' time on better terms. As part of these facilities, the Group has available an undrawn £10 million committed revolving credit facility ("RCF"). Ongoing operational cash generation and this cash balance mean the Group has sufﬁcient resources to both operate and move swiftly should acquisition opportunities arise. The Group also has the capacity to raise funds through share issue, demonstrated with the £7.5 million gross raise in June 2022.

The quality of client service, strong referral network and barriers to enter the market, together with the strong cash position, make the Board conﬁdent that the Company will continue to grow. In terms of diversiﬁcation, ofﬁces can adapt quickly to support each other and work on both higher value assignments or higher volume, lower value jobs. Financial Advisory, Forensic Services, Corporate Finance and Debt Advisory can all support the Restructuring Advisory offering and also earn fees autonomously.

Management have conducted sensitivity analysis by reducing revenue by over 35% and separately increasing direct costs by 25% over the next 12 months: both scenarios show FRP to be in a healthy financial position with available cash resources. The Group has also assessed the impact of inflation, rising interest rates and climate change. These sensitivities represent extreme scenarios that are highly unlikely to occur.

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

When preparing the budget for future years, the Group undertakes significant stress testing in areas utilisation, recovery and WIP days. These help the Group highlight and prepare for future eventualities.

FRP 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 ﬁnancial projections, the level of structured debt and the available facilities, it is the opinion of the Directors that the Group has adequate resources to continue in operation for a period of at least 12 months from signing these financial statements and therefore consider it appropriate to prepare the Financial Statements on a 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 ﬁnancial statements of trading subsidiaries are included in the consolidated ﬁnancial statements from the date control is achieved, until the date that control ceases. The 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 ﬁnancial 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.

The assets and liabilities of foreign operations, including goodwill, are translated into GBP at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into GBP at the rates ruling when the transactions occur, or appropriate averages. Foreign currency differences on translating the opening net assets at an opening rate and the results of operations at actual rates are recognised in retained earnings.

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 reﬂecting the consideration the Group expects to receive in exchange for the provision of services.

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

• Identify the contract with a customer;

• Identify the individual performance obligations within the contract;

• Determine the transaction price;

• Allocate the price to the performance obligations; and

• Recognise revenue as the performance obligations are fulfilled.

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

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

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

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

The Group recognises revenue from the following activities:

• Insolvency and advisory services;

• Debt advisory services; and

• Corporate finance services.

Insolvency and advisory services

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

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

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

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

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

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

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

Our property asset management team recognise revenue (typically LPA receivership work) as performance obligations are delivered during a project.

Unbilled revenue

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

When 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 ﬁxed 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 ﬁrst 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 identiﬁable assets acquired and liabilities assumed). If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identiﬁed all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date.

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

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

2.13 Intangible assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date 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 ﬁxed 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 assets	Over the term of the lease
Motor vehicles		25%

2.15 Financial instruments

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

2.16 Non-derivative ﬁnancial instruments

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

Trade and other receivables and Trade and other payables

Trade and other receivables are recognised initially at transaction price less attributable transaction costs. Trade and other payables are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any expected credit losses in the case of trade and other receivables. The Group applies the simplified approach to providing for expected credit losses, which permits the use of the lifetime expected loss provision for trade receivables. The Group makes specific provisions for lifetime expected credit losses against trade receivables where additional information is known regarding the recoverability of those balances. For the remaining trade receivables balances, the Group has established an expected credit loss model based on historical data. If the arrangement constitutes a ﬁnancing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of 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 ﬂow statement.

2.17 Impairment of tangible and intangible assets

At each reporting end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. The impairment indicator assessment applies to all assets, 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 ﬂows are discounted to their present value using a pre-tax discount rate that reﬂects current market assessments of the time value of money and the risks speciﬁc to the asset for which the estimates of future cash ﬂows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. Impairment losses are recognised immediately in 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 proﬁt 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 proﬁt for the year. Taxable proﬁt differs from net proﬁt as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

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

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

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

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

2.19 Employee beneﬁts

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

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

2.20 Provisions

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

In common with comparable businesses, the Group is involved in a number of disputes in the ordinary course of business which may give rise to claims. Provision is made in the ﬁnancial statements for all claims where costs are likely to be incurred and represents the cost of defending and concluding claims. The Group carries professional indemnity insurance and no separate disclosure is made of the cost of claims covered by insurance, as to do so could seriously prejudice the position of the Group. 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 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 reﬂect the payments to make over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right of use asset, with the revised carrying amount being depreciated over the remaining (revised) lease term.

2.22 Financing income and expenses

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

Other interest receivable and similar income includes 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 classiﬁed 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 reﬂects the revised estimate, with a corresponding adjustment to other reserves. Where equity settled share-based payments of the Parent Company have been issued to employees of its subsidiaries, this is recognised as a cost of investment in the Parent Company ﬁnancial statements and as an expense and capital contribution in the subsidiary.

The Employee Beneﬁt Trust has been consolidated.

2.25 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.

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 £22.0 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 £1.3 million was outstanding and 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.

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 signiﬁcant effect on amounts recognised in the ﬁnancial statements:

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 24 provides further detail on the acquisitions in the year.

Key source of estimation uncertainty

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

Impairment of goodwill

The Group records all assets and liabilities acquired in business combinations, including goodwill, at fair value. Goodwill is not amortised but is subject, at a minimum, to annual tests for impairment. The initial goodwill recorded, and subsequent impairment review, require management to determine appropriate assumptions (which are sources of estimation uncertainty) in relation to cash flow projections over a five year period, the terminal growth rate and the discount rate used to discount the cash flows to present value. Due to the size and nature of goodwill it is considered an area of estimation uncertainty. The balance of goodwill is £10.8 million (2022: £10.2 million). See Note 13 for further details on the Group's assumptions.

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

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

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

Management base their assumptions on historical experience, market insights and rational estimates of future events. Estimates are made in each part of the business by engagement teams with experience of the service being delivered and are subject to review and challenge by management. The balance of unbilled revenue at year-end was £45.8 million (2022: £35.3 million). Refer to Note 15 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 £8.4 million (2022: £8.0 million). Refer to Note 23 for further detail on share-based payments.

4. Financial risk management

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

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

Credit risk

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. The definition of default is when a client or member of other party are unable to pay the amounts due based on internal credit risk management procedures and information.

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

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

	Year Ended	Year Ended
	30 April 2023	30 April 2022
Credit Risk	£'million	£'million

Trade receivables	7.9	7.2
Cash and cash equivalents	27.7	24.9
	35.6	32.1

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

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

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

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 amounted to £45.8 million (2022: £35.3 million).

Liquidity risk

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

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

	Year Ended	Year Ended
	30 April 2023	30 April 2022
Liquidity risk	£'million	£'million

Within 1 year	25.2	26.3
Within 2-5 years	8.9	12.0
Beyond 5 years	4.1	4.0
	38.2	42.3

The discounted carrying value of these liabilities is £37.4 million (2022: £41.2 million), comprising £6.5 million lease liabilities (2022: £6.3 million), £4.8 million loans (2022: £6.8 million), and £26.1 million trade and other payables (2022: £28.1 million).

Interest rate risk

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

The Group has a term loan of £4.8 million as at April 2023 and had a rate of interest being base plus 3% repayable over a 3 remaining years. This was refinanced on better terms in July 2023. The company has an interest risk management strategy and reforecasts cashflow whenever the base rate changes. The recent rise in base interest rates has increased repayments due, but the Group is well placed to meet the amounts due.

In terms of sensitivity analysis, if interest rates increased by 200 basis points or 2% the incremental FY2023 impact would reduce the Profit before tax by £0.1 million. If base rate (prevailing at the date of signing of 5%) reduced, there would be a marginal increase in the Group's FY2024 Profit before tax.

Foreign currency risk

While the Group now has a location operating in Cyprus with a primary currency of Euro, it is considered that 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 enables the Group to meet requirements it may face. In May 2022, the Group repaid all IPO liabilities due to Partners, with a final payment of £1.3 million. Net cash of £22.9 million (2022: £18.1 million), an undrawn £10 million revolving credit facility ("RCF"), the secondary share placing raising £7.5 million in June 2022 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 service pillars which individually do not meet the definition of a disclosable operating segment.

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

6. Operating proﬁt

Operating proﬁt has been arrived at after charging:

	Year Ended	Year Ended
	30 April 2023	30 April 2022
	£'million	£'million
Depreciation of owned assets	0.8	0.8
Depreciation of right-of-use-assets	1.6	1.3
Amortisation of intangible assets	0.1	0.1
Fees payable to the Group's auditor for the audit of the group accounts	0.1	0.1
Expenses relating to short term leases	0.4	0.3

7. Exceptional costs

	Year Ended	Year Ended
	30 April 2023	30 April 2022
	£'million	£'million
Operating items
Costs in relation to June 2022 share placing	0.1	-
Total exceptional costs	0.1	-

8. Director and employee information

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

	Year Ended	Year Ended
	30 April 2023	30 April 2022
	Number	Number
Directors	7	7
Fee earning employees (including Partners)	406	370
Non fee earning employees	97	90



The aggregate payroll costs of these persons were as follows:

	£'million	£'million
Wages, salaries and Partner compensation charged as an expense	51.2	46.4
Social security costs	3.6	3.7
Pension costs - defined contribution scheme	1.1	0.7
Share-based payment expense	6.3	5.4
Deemed remuneration	2.1	2.6
	64.3	58.8

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

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

	Year Ended	Year Ended
	30 April 2023	30 April 2022
	£'million	£'million
Directors' emoluments	2.8	2.7
Benefits in kind (inc. pension contributions)	0.0	0.0
	2.8	2.7

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

	£'million	£'million
Remuneration for qualifying services	1.4	1.3

One director is currently included in the company pension scheme.

10. Finance income and expense

	Year Ended	Year Ended
	30 April 2023	30 April 2022
	£'million	£'million
On short term deposits and investments	0.2	-
Total finance income	0.2	-


On bank loans and overdrafts measured at amortised cost	0.4	0.3
On lease liabilities	0.2	0.2
Total finance expense	0.6	0.5

11. Taxation

	Year Ended	Year Ended
	30 April 2023	30 April 2022
	£'million	£'million
Current tax
UK Corporation tax	3.0	4.7

Deferred tax
Deferred tax credit	(1.7)	(1.5)
Reversal of temporary differences	1.6	-

Total tax charge	2.9	3.2


Reconciliation of tax charge:

	Year Ended	Year Ended
	30 April 2023	30 April 2022
	£'million	£'million
Profit before tax	15.6	15.1

Corporation tax in the UK at 19.5% (2022: 19%)	3.0	2.9

Effects of:
Non-deductible expenses	0.4	0.9
Other permanent differences	(0.5)	(0.5)

Total tax charge	2.9	3.2

The UK Budget 2021 announcements on 3 March 2021 included an increase to the UK's main corporation tax rate to 25%, which was effective from 1 April 2023. The relevant corporation tax rate has been applied in the calculation of deferred tax balances.

12. Earnings per share

The earnings per share ("EPS") has been calculated using the proﬁt for the year and the weighted average number of Ordinary Shares outstanding during the year, as follows:

	EPS	Adjusted EPS	EPS	Adjusted EPS
	2023	2023	2022	2022
Reported Profit after tax £m	12.7	12.7	11.9	11.9
Add Share based payments £m	-	8.4	-	8.0
Less deferred tax £m		(1.7)		(1.5)
Adjusted Profit after tax £m	12.7	19.4	11.9	18.4

Total average shares in issue	248,305,296	248,305,296	243,191,489	243,191,489

Total share EPS* (pence)	5.13	7.83	4.90	7.57

Weighted average shares in issue excluding EBT	228,182,054	228,182,054	222,669,711	222,669,711
Basic EPS (pence)	5.58	8.52	5.35	8.27

Dilutive potential ordinary shares under share option schemes	10,711,511	10,711,511	13,424,101	13,424,101

Weighted diluted shares in issue	238,893,564	238,893,564	236,487,512	236,487,512

Diluted EPS (pence)	5.33	8.14	5.04	7.80

The Employee Beneﬁt Trust has waived its entitlement to dividends and is not included within weighted average shares in issue. It holds 20,123,242 shares of the 249,401,058 shares in issue at 30 April 2023 (2022: 22,531,865). When options are exercised by employees, dividend rights accrue.

*Total share EPS is an alternative performance measure used by management to assess performance.

13. Goodwill and other intangible assets


	Client List	Goodwill	Total
	£'million	£'million	£'million

Cost
At 1 May 2021	0.8	9.6	10.4
Additions		0.6	0.6
At 30 April 2022	0.8	10.2	11.0

At 1 May 2022	0.8	10.2	11.0
Additions		0.6	0.6
At 30 April 2023	0.8	10.8	11.6


Amortisation
At 1 May 2021	(0.0)	-	(0.0)
Charge for the period	(0.1)	-	(0.1)
At 30 April 2022	(0.1)	-	(0.1)

At 1 May 2022	(0.1)	-	(0.1)
Charge for the period	(0.1)	-	(0.1)
At 30 April 2023	(0.2)	-	(0.2)


Net book value
At 30 April 2022	0.7	10.2	10.9
At 30 April 2023	0.6	10.8	11.4

Additions to goodwill in the year relate to acquisitions as set out in Note 24.

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

There are three steps to performing an impairment review:

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

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

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

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

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

For 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 2023:

· Spectrum £5.6m

· JDC Group £3.2m

· Debt Advisory £0.8m

· BridgeShield £0.6m

· APP £0.6m

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

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

Key assumptions used in value in use calculation

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

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

• Discount rate; and

• Terminal growth rate.

Number of years of cash ﬂows used

The recoverable amount of the CGU is based on a value in use calculation using speciﬁc cash ﬂow projections over a 5-year period and a terminal growth rate thereafter. The cashﬂow projections for the 5-year period assume a growth rate for each CGU between 0% to 6% (2022: 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% (2022: 12.9%), which reﬂects current market assessments of the time value of money for the period under review and the risks speciﬁc to the Group.

Terminal growth rate

A terminal growth rate of 1.0% (2022: 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, BridgeShield, and APP CGU, the Directors believe that reasonably possible changes in any of the above key assumptions would not cause the carrying value of the unit to exceed its recoverable amount.

14. Property, plant and equipment



	Leasehold	Computer	Fixtures and	Leasehold
	Properties (right of use asset)	equipment	fittings	improvements	Total
	£'million	£'million	£'million	£'million	£'million

Cost
At 1 May 2021	7.6	2.2	0.8	1.9	12.5
Additions	4.0	0.5	0.3	0.7	5.4
Disposal	-	(1.0)	(0.1)	(0.6)	(1.7)
At 30 April 2022	11.6	1.7	0.9	2.1	16.3

At 1 May 2022	11.6	1.7	0.9	2.1	16.3
Arising on acquisitions	0.1	0.0	0.0	0.0	0.1
Additions	1.7	0.4	0.1	0.1	2.3
Disposals	-	(0.2)	-	-	(0.2)
At 30 April 2023	13.4	1.9	1.0	2.2	18.5


Depreciation
At 1 May 2021	(4.1)	(1.4)	(0.4)	(0.9)	(6.8)
Depreciation charge for the period	(1.3)	(0.4)	(0.1)	(0.3)	(2.1)
Disposals	-	1.0	0.1	0.6	1.7
At 30 April 2022	(5.3)	(0.8)	(0.4)	(0.7)	(7.2)

At 1 May 2022	(5.3)	(0.8)	(0.4)	(0.7)	(7.2)
Depreciation charge for the period	(1.6)	(0.4)	(0.1)	(0.3)	(2.4)
Disposals	-	0.1	-	-	0.1
At 30 April 2023	(6.9)	(1.1)	(0.5)	(1.0)	(9.5)


Net book value
At 30 April 2022	6.3	0.9	0.6	1.4	9.1
At 30 April 2023	6.5	0.8	0.5	1.2	9.0

15. Trade and other receivables

	Group as at	Group as at
	30 April 2023	30 April 2022
Trade and other receivables	£'million	£'million
Trade receivables	7.9	7.2
Other receivables	4.6	3.6
Unbilled revenue	45.8	35.3
	58.3	46.1


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

	As at	As at
	30 April 2023	30 April 2022
Due in	£'million	£'million
<30 Days	4.1	3.4
30-60 Days	1.6	1.7
60-90 Days	0.8	0.8
90-180 Days	0.8	0.8
>180 Days	0.6	0.5
Total	7.9	7.2

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 non-recoverability.

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. Changes from prior periods are due to specific loss allowances, and are detailed below as follows:

As at 30 April 2022	<30 Days	30-60 Days	60-90 Days	90-180 Days	>180 Days	Total
Expected loss rate	0%	2%	3%	7%	62%	12%
Gross carrying amount	3.4	1.7	0.8	0.9	1.3	8.1
Expected credit loss provision	(0.0)	(0.0)	(0.0)	(0.1)	(0.8)	(0.9)
	3.4	1.7	0.8	0.8	0.5	7.2

As at 30 April 2023
Expected loss rate	5%	2%	2%	16%	64%	16%
Gross carrying amount	4.3	1.6	0.8	1.0	1.6	9.3
Expected credit loss provision	(0.2)	(0.0)	(0.0)	(0.2)	(1.0)	(1.4)
	4.1	1.6	0.8	0.8	0.6	7.9

16. Cash and cash equivalents

	Group as at	Group as at
	30 April 2023	30 April 2022
	£'million	£'million
Cash at bank and in hand	27.7	24.9

17. Trade and other payables

	Group as at	Group as at
	30 April 2023	30 April 2022
Current liabilities	£'million	£'million
Trade payables	1.9	1.6
Other taxes and social security costs	8.4	7.4
Liabilities to Partners go forward	10.3	9.1
Liabilities to Partners cessation profits at IPO	-	1.3
Deferred consideration	-	0.4
Other payables and accruals	9.1	10.3
	29.7	30.2


	Group as at	Group as at
	30 April 2023	30 April 2022
Non-current liabilities	£'million	£'million
Other payables and accruals	0.7	1.4
Partner capital	4.1	4.3
	4.8	5.7

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

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

Other payables and accruals includes £5.5 million of staff costs (2022: £7.1 million).

18. Loans and borrowings

	Group as at	Group as at
	30 April 2023	30 April 2022
	£'million	£'million

Current borrowings
Bank loan	1.6	2.0
Lease liability	1.2	1.4
	2.8	3.4

Non-current borrowings
Bank loan	3.2	4.8
Lease liability	5.3	4.9
	8.5	9.7

Bank loan is repayable
Within one year	1.6	2.0
Within two to five years	3.2	4.8
	4.8	6.8

The above £4.8 million (2022: £6.8 million) loan is with Barclays Bank plc (Barclays) and is repayable over quarterly instalments of £0.4m. Interest rate was the Bank of England base rate, plus 3%. The Group also has a £10 million revolving credit facility with Barclays that was undrawn at 30 April 2023, running until 30 November 2023. These facilities were refinanced in July 2023 on better terms, for 3 years. The Directors consider that the carrying value of loans and borrowings approximates to their fair value.

19. Deferred tax

	Group as at	Group as at
	30 April 2023	30 April 2022
	£'million	£'million
Deferred tax asset brought forward	2.4	0.9
Recognised in profit and loss for the period	0.1	1.5
Deferred tax asset brought forward	2.5	2.4


The deferred tax provision is analysed as follows:

	Group as at	Group as at
	30 April 2023	30 April 2022
	£'million	£'million
Accelerated capital allowance	(0.2)	(0.1)
Share based payments	2.8	2.6
Deferred tax on acquisition	(0.1)	(0.1)
	2.5	2.4

20. Financial instruments

	Group as at	Group as at
	30 April 2023	30 April 2022
	£'million	£'million
Financial assets held at amortised cost	35.6	32.1
Financial liabilities held at amortised cost	38.1	42.3

21. Share capital

	Group as at	Group as at
	30 April 2023	30 April 2022
Allotted, called up and fully paid	£	£
249,401,058 (2022: 243,191,489) Ordinary shares of £0.001 each	249,401	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 5,357,143 new shares were issued as part of a £7.5 million gross raise linked to an oversubscribed secondary share placing.

On 16 December 2022, 321,226 new Ordinary Shares were issued as part of the acquisition of FRP Advisory (Cyprus) Limited and APP Audit Co Ltd.

On 30 March 2023, 137,500 new Ordinary Shares were issued under the company share option scheme.

22. Dividends

For FY2023 a dividend of £1,887k, equivalent to 0.85p per eligible Ordinary Share, was declared on 15 September 2022 and paid on 23 December 2022. A dividend of £1,882k, equivalent to 0.85p per eligible Ordinary Share, was declared on 13 December 2022 and paid on 24 March 2023. A dividend of £1,959k, equivalent to 0.85p per eligible Ordinary Share, was declared on 13 February 2023 and paid on 16 June 2023. The Board recommends a final dividend of 2.05p per eligible Ordinary Share for the financial year ended 30 April 2023. Subject to approval by shareholders, the final dividend will be paid on 27 October 2023 to shareholders on the Company's register at close of business on 29 September 2023. If the final dividend is approved, the total dividends paid by the Company relating to the financial year ended 30 April 2023 will be 4.6p per eligible Ordinary Share.

23. Share based payments

	Number of	Number of
	share options	share options
	April 2023	April 2022
Outstanding at the beginning of the year	18,336,286	16,163,479
Granted during the year	2,112,312	2,448,975
Forfeited during the year	(295,595)	(276,168)
Exercised during the year	(7,865,946)	-
Outstanding at the end of the year	12,287,057	18,336,286

Exercisable at the end of the year	4,387,779	-


The weighted average life of outstanding options was one year (2022: 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	18,198,786	137,500	18,336,286
Granted during the year	2,112,312	-	2,112,312
Forfeited during the year	(295,595)	-	(295,595)
Exercised during the year	(7,728,446)	(137,500)	(7,865,946)
Outstanding at the end of the year	12,287,057	-	12,287,057

Exercisable at the end of the year	4,387,779	-	4,387,779

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 (£)	Vesting
From 6 March 2020	12,287,057	-	from 06/03/2023

Weighted average fair value per option is £0.97 (2022: £0.85).

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 Group's share price since IPO

· A risk-free interest rate of 3% has been used (2022: 0.6%); and

· 100% of the options issued under the employee scheme are expected to vest.

The total recognised share-based payment expense relating to the employee incentive plan during the year by the Group was £6.3 million (2022: £5.4 million).

	Value of deemed
	remuneration
	£'million

As at 1 May 2021	5.2
Amortised in the year	(2.6)
As at 30 April 2022	2.6

As at 1 May 2022	2.6
Granted in the year	1.0
Amortised in the year	(2.1)
As at 30 April 2023	1.5

24. 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.

APP (FRP Advisory Cyprus Limited and APP Audit Co Limited)

Date	Name	Location	Type	Percentage bought	Services
7 December 2022	FRP Advisory Cyprus Limited (formerly APP Advisory Limited)	Cyprus	Share	100%	Restructuring Advisory
7 December 2022	APP Audit Co Limited	Cyprus	Share	49% Class A (Voting) and 100% Class B (Economic rights)	Audit

Acquisition costs of £0.01 million (2022: £0.03 million) relating to the acquisition have been expensed in the period but not adjusted for in adjusted underlying EBITDA.

The fair values of APP at the acquisition date on 7 December 2022, following the purchase price allocation exercise are detailed below.

On 16 December 2022, equity compensation of £540k was also granted to certain vendor fee earners. As this is subject to a lock-in, this has not been included within the cost of the acquisition but as deemed remuneration within the share based payment reserve in the Statement of Changes in Equity.

The key shareholders who sold APP joined the Group as Partners.

The acquisition contributed £439k of revenue and £105k to the Group's underlying EBITDA for the period between the date of acquisition and the balance sheet date.

	Book value	Fair value
	£'million	£'million
Combined net assets acquired

Right of use assets	0.1	0.1
Trade receivables	0.5	0.5
Unbilled revenue	0.2	0.2
Cash	0.5	0.5
Trade payables	(0.2)	(0.2)
Accruals	(0.2)	(0.2)
VAT	(0.1)	(0.1)
Corporation tax	(0.0)	(0.0)
Total	0.8	0.8

Consideration		1.4

Goodwill		0.6

Cash flow		£'million
Cash paid as consideration on acquisition		1.4
Less cash acquired at acquisition		(0.5)
Net cash outflow		0.9

Cash outflow linked to the consideration paid on the acquisition of subsidiaries.

JDC (prior year acquisition)	£0.4m
BridgeShield (prior year acquisition)	£0.3m
APP (see above)	£0.9m
	£1.6m

25. Leases

	Group as at	Group as at
	30 April 2023	30 April 2022
	£'million	£'million
Expenses relating to short term leases	0.4	0.3
Lease interest	0.2	0.2
Cash outflow for leases	1.7	1.4


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 at	Group as at
	30 April 2023	30 April 2022
	£'million	£'million
Due within one year	1.9	1.6
Due within two to five years	1.3	1.5
Due after more than five years	4.1	4.0
	7.3	7.0

26. Cash flow of financing activities

	Note	Bank Loan	Lease Liability

At 1 May 2021		8.0	3.6
Repayment of principal		(1.2)	(1.2)
New contracts entered		-	3.9
At 30 April 2022		6.8	6.3

At 1 May 2022	18	6.8	6.3
Repayment of principal		(2.0)	(1.4)
New contracts entered		-	1.6
At 30 April 2023		4.8	6.5

27. 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.

Own shares (EBT)

The own shares reserve represents the shares of FRP Advisory Group plc that are held in the Employee Beneﬁt Trust ("EBT").

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.

28. 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 £21.1 million (2022: 19.9 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.

29. 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.

30. Events after the reporting period

A dividend of £2.0m, equivalent to 0.85p per eligible Ordinary Share, was declared on 13 February 2023 and paid on 16 June 2023.

31. Capital commitments

At the balance sheet date, the Group had no material capital commitments in respect of property, plant and equipment (2022: £nil).

32. Contingent liabilities

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

NOTE

The financial information set out above does not constitute the Group's statutory accounts for the year ended 30 April 2023 but is derived from those accounts. Statutory accounts for FY 2023 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 available at www.frpadvisory.com/investors/

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 25 July 2023.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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FRP Advisory Group (FRP)

Monday, 29th April 2024

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