Real expertise.
Real results.
FRP Advisory Group plc
Annual Report 2020
frpadvisory.com
Real expertise.
Real results.
At FRP we provide solutions to create,
preserve and recover value.
Specialising in restructuring, corporate
finance, debt, forensics and pensions,
we deliver strategic solutions across a
broad range of situations.
Our five pillar services complement each
other. We draw on experts within each of
our service areas to put the best people
in place for each circumstance.
Basis of preparation
Readers should note that the Company was admitted to trading on the AIM market of the
London Stock Exchange on 6 March 2020 (the “IPO”) and the Company was incorporated
on 14 November 2019 specifically for the purposes of the IPO.
The Group, now headed by FRP Advisory Group plc, was formed through a group
reorganisation on 6 March 2020. These financial statements have been prepared,
under the principles of merger accounting, to reflect the Group as if it had been headed
by FRP Advisory Group plc continuously through the current and prior year.
Prior to the reorganisation, the Group was headed by a limited liability partnership that
allocated all profits (as determined under UK GAAP) to its members. As a result, the income
statement in these financial statements reflects full allocation to members of all profits
(as determined under UK GAAP) prior to the reorganisation on 6 March 2020 as an expense.
The recorded profit for the year therefore reflects the profits of the Group arising subsequent
to 6 March 2020, together with immaterial amounts arising before that date relating to the
difference between allocated profits under UK GAAP and recorded profits under IFRS.
The limited liability partnership also recorded partners capital as a liability. As a result,
the balance sheet to the date of the reorganisation reflected no equity other than retained
earnings relating to the difference between allocated profits under UK GAAP and recorded
Contents
Strategic Report
1 Our highlights
2 FRP At a glance
4 Chairman’s Statement
8 Chief Executive Officer’s Report
12 Strategic Report
42 Board of Directors
44 Directors’ Report
Financial Statements
66 Consolidated statement
of comprehensive income
67 Consolidated statement
of financial position
68 Consolidated statement
of changes in equity
69 Consolidated statement
of cash flows
Corporate Governance
70 Notes to the financial
49 Corporate Governance
Statement
53 Report of the Chair of the
Audit and Risk Committee
55 Report of the Chair of the
Remuneration Committee
58 Report of the Chair of the
Nomination Committee
59 Statement of Directors’
responsibilities
60 Independent auditor’s report
statements
93 Parent Company
balance sheet
94 Parent Company statement
profits under IFRS.
of changes in equity
95 Notes to the Parent Company
financial statements
Corporate Infomation
101 Directors and advisers
Our highlights
Financial highlights
£63.2m
£18.5m*
Revenue
(2019: £54.3m)
An increase of 16.3%.
£11.7m
Revenue
(c.2 months since IPO)
Adjusted
underlying EBITDA
(2019: £14.1m)
An increase of 31%.
£3.5m
Adjusted EBITDA
(c.2 months since IPO)
Before £0.4 million exceptional IPO costs
for the c.2 month period post IPO.
£2.5m
0.66p
Adjusted profit after tax
For the c.2 month period since IPO, after
adjusting for £0.4m of one-off IPO costs.
Dividend of 0.66p per
eligible Ordinary Share
For the period from 6 March 2020, the date of the IPO,
to 30 April 2020. Post year end a dividend was paid up from
a subsidiary to enable this company to make a distribution.
£1.2m
Average revenue
per partner
(2019: £1.1m)
An increase of 12.2%.
£3.3m
Adjusted profit before tax
Before £0.4 million exceptional IPO costs for the c.2
month period post IPO. For c.10 months of the year
pre-IPO, the business was a full distribution Partnership.
(2019: £nil million, fully distributed).
£21.3m
Net cash position
Following the oversubscribed £20 million
equity fundraise at IPO. (2019 £4.9 million).
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Operational highlights
Post period end highlights
Admitted to trading on AIM on 6 March 2020.
Seamless delivery of client service and business
support resources during the COVID-19 pandemic.
189 administration appointments in the year,
an increase of 34.0% (2019: 141).
Continued growth in size and complexity of caseloads,
with high-profile insolvency appointments including
Bonmarché, Carluccio’s and Debenhams
Team grew by 27 to 351 as at the year-end (2019: 324),
including one new partner and 15 other fee earners.
Acquisition in June 2020 of a Newcastle
based Restructuring Advisory team of 15,
including two partners and 10 fee earners.
Recruitment of a new Chief Financial Officer
and independent Non-Executive Director.
*
Underlying adjusted EBITDA is calculated by deducting
10 months partner profit allocation in the period up to IPO.
Then for both the two month period post IPO and the
ten month period before IPO the go forward partner
compensation has been applied. For the 2019 comparative,
a full 12 months adjustment has been applied.
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Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020 1
FRP Advisory
At FRP, our approach is honest, clear and considered.
It’s how we get tangible results for our clients.
We always give advice that helps clients make
important decisions quickly.
We’re all about being
transparent.
Recognising a need for
transparency in difficult
situations is how FRP came
about and it is integral to
the solutions we provide.
Every client always receives
clear, honest and strategic
advice.
Each of our partners works
directly with clients to make
important decisions quickly.
They understand the
intricacies of each situation
and have the insights and
expertise to find the right
solution.
Above all, we focus on doing
the right thing. We work
with clients throughout
their business lifecycle, and
they rely on us to be both
understanding and strategic
in our next steps.
281*
Fee earners
nationwide
Each with a wealth of
experience navigating
complex situations.
*As at 30 April 2020
351*
Team
Members
Each with a wealth of
experience navigating
complex situations.
*As at 30 April 2020
2 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
19*
UK
locations
National coverage,
International experience
and local knowledge.
*As at 30 April 2020
Corporate
Finance
Our advice creates value.
Whatever opportunities and
challenges lay ahead, our
independence and objectivity
build solutions and get results.
Debt
Advisory
No matter how complex
the situation, our
experience and expertise
delivers straight answers
and clear strategies.
Pensions
Advisory
We take a straightforward
approach to providing
solutions that preserve
and improve the strength
of support for a company’s
pension scheme.
Forensic
Services
You can’t plan for every event,
but we can help you react to
the unexpected.
Restructuring
Advisory
When businesses face
challenges, we unravel the
complexities, solve problems
and aim to protect value.
Chairman’s Statement
I am pleased to present FRP Advisory Group plc
and its subsidiaries (FRP) first annual report following
our admission to trading on AIM on 6 March 2020.
The Company’s IPO in March 2020
was oversubscribed and raised
£20 million in gross proceeds. The
fundraising provides the Group with a
strong balance sheet and an excellent
capital base to grow the business,
both organically and through strategic
acquisition opportunities of talented
individuals and teams as they arise.
Strategy
FRP’s strategy is to seek steady and
sustainable growth through organic
and acquisitive strategies. We also
remain alert to opportunities created
by potential restructuring within the
business advisory sector, as large
firms tackle the need for independent
audit and advisory functions.
Further details are set out in the
Strategic Report on pages 28 to 41.
Nigel Guy
Non-executive Chairman
Overview
Although the world has changed
markedly since we began the process
to float FRP on the London Stock
Exchange, I am pleased to confirm the
business has adapted swiftly to the
challenges of COVID-19 and continues
to provide seamless delivery of client
service.
In responding to the pandemic,
our key concerns have been:
the health and safety of our people,
our clients, and the wider community.
adapting our ways of working to
ensure minimal disruption to our
services.
supporting our clients and the
business community through
the crisis.
On behalf of the Board, I would like to
thank the whole of our team for their
outstanding response to the challenges
of COVID-19 and in particular with the
flexibility and commitment they have
shown whilst operating remotely. I
would also like to thank those outside
the business who have continued to
support us in delivering our services
– our advisers, our facilities teams
and the wider public services and key
workers – despite facing significant
challenges of their own.
Our talented people are our key asset,
and we want to use our considerable
expertise to play our part in helping
businesses survive and recover.
To this end, we have dedicated
significant effort and resources to
help businesses navigate the crisis.
In addition to our appointments, we
have offered pro bono advice and
shared extensive business support
resources through the COVID-19 hub
on our website.
Strong maiden
financial results
During the year, FRP Advisory Group
plc generated revenues of £63.2
million, up by more than 16.3% from
the previous year. This growth was
enabled by new team members and
fee earners joining the business, and
the continued hard work of the whole
of the FRP team.
Profit before tax was £3.3 million,
after excluding an element of one
off £0.4 million of IPO costs, for
the c. 2 month period post IPO.
For c.10 months of the year pre-IPO,
the business was a full distribution LLP
Partnership. Prior year was also a full
distribution partnership.
4 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
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Chairman’s Statement continued
£3.3m
Profit before tax
Before £0.4 million exceptional IPO costs for the c.2
month period post IPO For c.10 months of the year
pre-IPO, the business was a full distribution Partnership.
(2019: £nil million, fully distributed).
189
Administration
appointments
+34%
Dividend
The Board declares a dividend of
70% of the comprehensive income
after tax for the c.2 month period from
IPO (6 March 2020) to the financial
year end on 30 April 2020 of 0.66p
per eligible Ordinary Share. To enable
payment of this dividend, a dividend
was paid up from a subsidiary to this
company post year end. In future the
Company’s dividend policy will follow
that outlined in the Company’s IPO
Admission Document.
Robust corporate
governance and
strengthened
management team
The business believes strongly that
a robust governance structure and
input from multiple viewpoints are
necessary to make the best decisions
for the business and its stakeholders.
The business’s strong governance
environment functions were bolstered
by the addition of two independent
non-executive directors, Kate O’Neill
and David Chubb, in the year leading
up to the IPO. Unfortunately, a change
in personal circumstances meant that
Kate had to step down at the end of
June, but the Board was delighted
to welcome Claire Balmforth as an
independent non-executive director
in August 2020.
We were also pleased to welcome
Gavin Jones as Chief Financial
Officer on 29 June 2020, meeting the
commitment we made to investors
at the time of our IPO. Gavin was
previously the Global CFO of Bowring
Marsh, part of MMC Group, and
has held financial and operational
leadership roles in a number of
financial services businesses
including Aon plc and ABN Amro.
He is a Chartered Accountant, having
qualified with KPMG. He brings
a wealth of financial leadership
experience to our executive team
and we look forward to him making
a considerable contribution to our
business as we continue to grow as
a listed company.
Since the Company’s IPO on 6 March
2020, FRP complies with the QCA
Corporate Governance Code and
you can find more information on
our governance arrangements in
the Corporate Governance Report
on pages 49 to 52.
Further information on our
Corporate Governance structure
is also available on our website at:
www.frpadvisory.com/investor
corporate-governance
6 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
Chairman’s Statement continued
Our people
We recognise the importance of our
people to our ongoing success, and
the Board was delighted to be able to
implement an Employee Incentive Plan
as part of the IPO.
The plan enables all our people to
share in the success of the business
alongside the partners. As at 30 April
2020, over 11.3m nil-cost options were
held by more than 289 employees
below partner level (representing
96% of our non-partner employees).
On behalf of the Board, I would again
like to thank the whole of our team and
our wider support network for their
outstanding work across the financial
year and beyond.
Annual general meeting
The Company’s first annual general
meeting will be held on 22 October
2020. 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:
www.frpadvisory.com/investors
financials-documents.
351
Headcount
+8%
Looking ahead
With a strong balance sheet and our
new remote working environment
operating well, the Board is looking
to the future with cautious optimism.
While the world adjusts to a new reality,
we will continue to seek opportunities
to help businesses in our wider
communities and support our people
and clients.
Nigel Guy
Non-executive Chairman
26 August 2020
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Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020 7
Chief Executive Officer’s Report
Publishing our first annual report as a public company
is a significant milestone for FRP and I am pleased to
report on a year of significant growth and positive
developments for the business.
Strong trading results
FRP traded strongly during the second
half of the financial year, continuing
to grow caseloads in both size and
complexity. We also secured a number
of high-profile appointments, including
the administrations of Bonmarché,
Carluccio’s and Debenhams.
As a result of this strong momentum,
FRP generated £63.2 million in
revenues for the year to 30 April 2020,
up by 16.3% on the same period last
year (£54.3 million). We closed the
year strongly securing a number of
high-value restructuring appointments,
confirmed late in the year.
Our profit before tax was £3.3 million,
after excluding £0.4 million, an element
of one off IPO costs, for the c. 2 month
period post IPO. For c.10 months of
the year pre-IPO, the entity was full
distribution Partnership. Prior year was
also a full distribution partnership.
Geoff Rowley
Chief Executive Officer
A broad and
diversified business
Since launching in 2010, our firm has
grown into a substantial independent
business. At year end we had 19
offices across the UK, making us
a formidable player in the national
business advisory landscape with a
robust platform to support our growth
prospects.
Offering restructuring and insolvency
services, forensics, corporate finance,
debt and pensions services, we
specialise in finding strategic solutions
to a range of situations for clients of all
sizes, from multinational organisations
to small enterprises. Through our
five pillar services, we offer a multi-
disciplinary approach that allows us
to support businesses across their
lifecycle and all macro-economic
environments.
A track record of scalable
profitable growth
We have enjoyed another year of
profitable growth, building on our
strong track record to date. In line with
our growth strategy, we have pursued
strategic business opportunities and
developed our regional networks by
attracting talented individuals to grow
our team. As at the year-end, our team
had grown from 324 to 351 overall,
while the number of fee earners,
including partners, within that grew
by 22 from 259 to 281.
Organic growth was strong, and
we were appointed on a number of
complex high-profile cases, mentioned
below , alongside the extensive
support we provide to regional
businesses through our national
network. Despite the challenges of
COVID-19, we also continued to pursue
growth through strategic acquisitions,
completing a 15-strong restructuring
team acquisition in June 2020 that
further expands our UK footprint. Our
strategy for future growth is set out in
more detail in the Strategic Report.
Our Restructuring Advisory pillar was
our strongest performer, as all our
service pillars grew their revenues
over the year, confirming our view
that we can best support businesses
by working together and drawing on
expertise from our specialist teams
across FRP. We have worked hard to
avoid silos within the business, and
we believe our agile, collaborative
approach sets us apart from our peers,
enables us to apply our situational
expertise across many sectors, and
allows us to continue to be appointed
to increasingly large and complex
cases. We look forward to building on
this strong position in the future.
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Chief Executive Officer’s Report continued
£63.2m
Revenue
+16.3%
A successful IPO,
strengthening employee
loyalty through ownership
In early March 2020, FRP’s shares
commenced trading on the London
Stock Exchange’s AIM market after
an excellent reception during our IPO.
We raised £20 million, before costs,
through the issue of new shares, has
strengthened our balance sheet and
fund strategic acquisitions of talented
individuals and teams to expand our
profile and market share. We believe
that the ability to offer shares as part
of our incentive packages has made
us more competitive in attracting the
best talent to grow our expert team,
allowing new and established team
members to share in FRP’s collective
success.
Listing on the AIM market of the
London Stock Exchange was a
significant undertaking, and our
success was made possible by our
amazing internal team and external
advisers who managed the process
expertly to minimise the impact
on the business. I would like to
thank everyone who contributed to
this outstanding achievement and
significant milestone for our firm.
Defining our brand
and values
In 2019, the business embarked on
an important rebranding project,
taking the opportunity to define
what we stand for as a business.
These values form the basis of how
we operate as a business and extend
beyond our client work to guide how
we treat our people, shareholders,
and other stakeholders.
Responding to COVID-19
Many businesses across the UK
suffered a sharp shock and their
resilience has been tested since the
country went into lockdown to manage
the impact of the global pandemic.
To support our clients, and the
business community generally through
this crisis, we quickly developed a
Corporate Resilience Hub to provide
practical, operational, and financial
advice to businesses and their
management teams affected by the
pandemic. As well as a crisis toolkit
and COVID-19 resources, we shared
a range of insights and templates
to help businesses navigate the
unprecedented situation.
For our own part, we quickly
transitioned to home-working
arrangements and were pleased to be
able to continue the majority of our
business activities during lockdown.
None of our people were placed
on furlough and we have not taken
advantage of any of the government
backed lending schemes. Thanks to
the collective efforts of our colleagues,
our operations have not been impacted
by the pandemic.
Empowering our 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. Development
programmes include internal coaching,
leadership courses and extensive
professional training support. We view
this investment in our people as an
important investment in the future of
our business.
10 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
Chief Executive Officer’s Report continued
We work hard to attract and retain
highly skilled professionals by creating
a rewarding high-performance
environment. We believe highly
engaged people deliver excellent
client service and results, and, in turn,
strengthen our reputation in the market.
An outstanding team
I would like to take this opportunity
to thank our team for their hard work
and dedication during the year. I am
particularly proud of how they have
all risen to the challenges posed by
COVID-19. The team quickly sought to
understand the government measures
to support businesses as these
initiatives changed and developed,
helping our clients to navigate the
swiftly changing landscape.
Despite the obvious challenges of our
new working arrangements, the team
transitioned smoothly to working from
home and continued to provide our
clients with the outstanding service and
high-quality advice that we are known
for. I am extremely proud of everyone
and look forward to being able to work
together in person again soon.
Outlook
For many businesses across the UK,
their resilience was, and continues to
be, tested as the country went into
lockdown to manage the impact of
the global pandemic. There remains
a significant degree of uncertainty
around the shape and scale of
economic recovery, combined with
potential additional pressure as the
Brexit transitional agreement comes
to an end in 2020.
The support measures made available
to both firms and individuals by the UK
Government in response to COVID-19
has reduced the number of insolvency
appointments in our financial Q1
compared to prior year. Trading for
the period since year end to signing
these accounts has been in line with
expectations. We have maintained
steady growth and utlilisation rates
by continuing to secure larger projects
and market share, while sharing
resources across our office network.
In a recessionary environment, there
will naturally be higher levels of
corporate financial distress, which
depending on a number of factors
– such as creditors’ attitudes to
forbearance – have historically led to
an increase in insolvency volumes.
We believe there should be an increase
in restructuring assignments at all
levels across the business community
as the various UK government support
mechanisms are phased out and the
impact of Brexit is also felt across
the wider economy when the current
transitional agreement concludes.
With a significant and growing market
share, FRP is well placed to service
increasing levels of restructuring
assignments in the UK, both on
increasingly high profile, complex
cases and across regional businesses
through our national network. This is
further supported by the breadth of
our skillset across our service lines,
including forensics, corporate finance
and pensions advisory.
FRP is a resilient business, with a track
record of growth throughout the entire
economic cycle, a strong balance sheet
and a structure that provides a good
level of flexibility in our internal capacity,
allowing us to be well positioned for an
increase in demand for our services.
Geoff Rowley
Chief Executive Officer
26 August 2020
£18.5m*
Adjusted
underlying EBITDA
(2019: £14.1 m)
An increase of 31%.
*
Underlying adjusted EBITDA is calculated
by deducting 10 months partner profit
allocation in the period up to IPO. Then for
both the two month period post IPO and
the ten month period before IPO the go
forward partner compensation has been
applied. For the 2019 comparative, a full
12 months adjustment has been applied.
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Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020 11
Restructuring Advisory
FRP puts the future
of heritage railway
back on track
Weardale Railway Community Interest Company (CIC)
owns and operates 19 miles of historic railway track
between Stanhope and Bishop Auckland, running a
number of leisure train ride experiences including its
annual, festive ‘Train to Christmas Town’.
FRP Partners were appointed Joint Administrators
after US-based Iowa Pacific Holdings – the majority
shareholder of British American Rail Services,
which held a controlling stake in Weardale CIC
– entered insolvency in the US.
173
Deal secured to save
173 year old Weardale Railway
Durham
Outcome
Our Restructuring Advisory team secured
a successful accelerated sale of Weardale
CIC to the subsidiary company of local
regeneration organisation The Auckland
Project. The sale protected jobs and helped
to preserve the 173 year old Weardale
Railway line for the future.
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Restructuring Advisory
Carluccio’s sale
transfers 30 sites and
more than 800 staff
FRP was appointed Joint Administrators of the
Carluccio’s restaurant chain on 30 March 2020,
as the COVID-19 lockdown put incredible pressure on
businesses across the leisure sector. Following an
extensive marketing process the Boparan Restaurant
Group (BRG), which houses well-known brands
including Cinnamon, Fishworks, Slim Chickens,
Giraffe and Ed’s Easy Diner, acquired 30 Carluccio’s
sites across the UK.
30
Restaurants sites saved following the
sale to Boparan Restaurant Group
London
Outcome
The sale will ensure the continuation of the
Carluccio’s brand, along with the transfer
of more than 800 employees. Unfortunately,
40 sites not included in the transaction
closed, and as Administrators we worked
hard to facilitate redundancy payments for
those staff.
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Corporate Finance
Shareholder sale
wraps up a bright
business future
Bristol-based Prowrap Ltd group is a specialist rewinder
and manufacturer of aluminium foil, cling film and
baking paper, with more than 50 staff, revenue of
£22 million, and exports to 25 countries. The sole
shareholder, looking to dispose of his majority shares
to realise value and fund growth while remaining
as Managing Director post-deal, appointed FRP’s
Corporate Finance team to advise on the sale.
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Prowrap has a current
revenue of £22 million
Bristol
Outcome
We negotiated a sale to a mid-market investor for
well in excess of the shareholder’s expectations,
enabling him to maintain a minority share going
forward and continue as MD, while also securing
the financial backing necessary for the business’
future growth.
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Corporate Finance
Building services group
sale creates foundations
for future growth
Outsourced facilities management firms T-Jolly
Services and Atlas Sterile Services have a national
reputation in the hotel, care home, retail and university
sectors, for providing high-quality HVAC maintenance,
repair and compliance testing services. With a turnover
in excess of £7 million, the Managing Director and
shareholders of this Preston-based group were looking
for a business sale to fund continued future growth.
25,000
Businesses join JLA Group with
major presence in UK & Ireland
with over 25,000 customers
Preston
Outcome
Our Corporate Finance team was able to help
secure the acquisition by JLA Group, guiding
shareholders through the detailed sale process
while also working with the client, the buyer
and their advisers to ensure the transaction
progressed as efficiently as possible.
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Forensic Services
Forensic team
instructed on
family dispute
A dispute between relatives over a family company
led to litigation, with the claimant alleging that the
defendant had conducted company affairs in a
way that prejudiced her interests, and had received
unauthorised director’s remuneration. FRP provided
forensic accounting and valuation expertise on behalf
of the defendant, quantifying the extent of transactions
between the family business and related companies,
and the value of the claimant’s shareholding over the
relevant period.
Our expert witness report set out
the findings of the forensic accounting
analysis, and our valuation of the
claimant’s shareholding
London
Outcome
Our Forensic Services team compiled an
expert witness report setting out its findings,
and prepared a joint statement with the
claimant’s expert. The parties considered the
findings of both independent forensic accountants
and reached a settlement through mediation.
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Forensic Services
Fast-turnaround
eDiscovery services
for expedited trial
An international law firm appointed FRP to provide
eDiscovery services to help its client in a legal dispute.
The client held a large quantity of key documents,
and our forensic technology team also received
documents from other parties in the dispute.
Undaunted by the tight eight-week turnaround,
our team ensured most of the data was available to
view within 24 hours of receipt, and relevant documents
were produced in a suitable format for court.
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Our team designed workflows to
enable a speedy review within 24 hours
London
Outcome
The matter was heard in the High Court, and the
firm was extremely grateful and impressed with
our speedy turnaround and support. Our forensic
technology team is now on the firm’s panel of
preferred suppliers for eDiscovery services.
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Debt Advisory
FRP supports funding
boost for Hereford
Contract Canning
Hereford Contract Canning is the second largest
contract-canning provider in the UK, delivering services
for a range of high-profile cider and soft drink brands
including Corinthian Brands, Kopparberg and Dash.
Recently acquired by a private equity firm, the
company sought further investment to meet market
demand for small-to-medium size batch runs in
the UK canning industry.
Founded in 2010, HCC provides canning
services for a range of cider and soft
drink brands including Corinthian Brands,
Kopparberg, Dash and a range of other
high profile drink brand manufacturers
Hereford
Outcome
FRP secured a refinancing package that will
enable the business to capitalise on changing
market demands, as well as the industry-wide
shift away from single-use plastics and launch
a new production line that will substantially
increase production capacity.
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Pensions Advisory
Addressing trustees’
concerns over a
multi-billion pound
transaction
FRP was appointed by the trustees of the LGC Staff
Pension Scheme to assist them during a transaction
which involved the change in ownership of its
sponsoring employer, part of the LGC Group.
KKR had owned the global life sciences group for
several years. The trustees wanted to ensure a
continuation of the collaborative working agreement
and that the position of the scheme was protected
with the new owner.
£3bn
Advice to Trustees on the impact of
the disposal by KKR of its £3 billion
stake in LGC to private equity entities
Middlesex
Outcome
FRP worked with the trustees to understand the
transaction and identify aspects which impacted
upon the Scheme. This swift assessment and
practical solutions provided by FRP addressed
the trustees’ concerns and the multi-billion pound
transaction to the new owners completed within
the agreed timetable.
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The Group’s continued steady growth
can be demonstrated by it having
been formally appointed on 1,654
engagements during the year, an
increase of almost 7% on the prior
year’s total of 1,547 appointments.
This percentage uplift is in line with
the Group’s 10-year compound annual
growth rate in case appointments,
particularly within the Group’s
restructuring advisory business,
which again captured the bulk of the
appointments and continues to be the
largest of the Group’s five service pillars.
The Group’s growing reputation led
to assignments on a number of
high-profile cases during the period,
including Bonmarché, Carluccio’s and
Debenhams, as well as an improved
geographical spread of engagements
across the UK.
Adjusted underlying EBITDA
Adjusted EBITDA*
FY20
£m
3.5
FY19
£m
1.6
Add 10 months EBITDA** 2.9
_
Add pre IPO full distribution 23.0 24.5
Deduct post IPO
partner compensation*** (10.9) (12.0)
Total
18.5 14.1
* Adjusted EBITDA is after adding back element
of IPO exceptional costs of £0.4 million.
* * After adding back the remaining element
of IPO
exceptional costs of £1.6 million.
* * *As per current going forward partner
compensation model since IPO.
Strategic Report
For the year ended 30 April 2020
The Directors present
their strategic report for
the year ended 30 April
2020 (“FY20”).
Principal activities
During the year under review, the principal
activities of FRP Advisory Group plc
(the “Company”), together with its
wholly owned subsidiaries (the “Group”)
consisted of the provision of professional
business and advisory services under
the following service pillars:
Restructuring and insolvency
services: corporate financial advisory,
formal insolvency appointments,
informal restructuring advisory,
personal insolvency, and general
advice to all stakeholders.
Corporate finance: mergers &
acquisitions (“M&A”), strategic
advisory and valuations, financial
due diligence, capital raising, special
situations M&A and partial exits.
Debt advisory: raising and
refinancing debt, debt amendments
and extensions, restructuring debt,
asset based lending and corporate
and leveraged debt advisory.
Forensic services: forensic
investigations, compliance
and risk advisory, dispute services
and forensic technology.
Pensions advisory: pension scheme
transaction advisory, pension scheme
restructuring advisory, covenant
advisory and corporate governance.
The Group considers that it can
best support businesses through
collaborating and drawing in expertise
from specialist teams across different
areas of the business. Accordingly,
each of the Group’s service pillars are
structured to support and facilitate
other work streams and often work
together on engagements to best
support clients.
The Group provides its professional
services across multiple sectors
and all business sizes, however it
principally services smaller and
mid-market companies.
Financial review
Basis of preparation
The Company was admitted to trading
on the AIM market of the London Stock
Exchange on 6 March 2020 (the “IPO”)
and the Company was incorporated on
14 November 2019 specifically for the
purposes of the IPO. The comparative
figures, for the consolidated financial
statements, presented in this annual
report for the year ended 30 April
2019 (“FY19”) are for FRP Advisory
LLP and its subsidiary companies, the
businesses of which were acquired by
the Company immediately prior to the
IPO. For the year ended 30 April 2020,
the consolidated figures represent the
results of the underlying business for
the whole financial period before and
after acquisition by the Company at
the time of the IPO. Merger accounting
principles were adopted. The financial
statements have been compiled on this
basis to provide useful comparative
information to shareholders.
Revenue
The Group’s total revenue for FY20
increased by more than 16.3% to
£63.2 million (FY19: £54.3 million)
driven by a growing number of client
engagements year-on-year, higher
value cases and increased numbers
of fee earners across the Group. The
overall higher levels of uncertainty
within “UK Plc” during the financial year
under review expanded the size of the
Group’s market, due in part to Brexit
and the political uncertainty during
the period.
28 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
Strategic Report continued
Operating profit
Reported operating profit for the c.2
month period was £3.1m. The 10
month period before IPO and prior
year were both a fully distributed
partnership. In these Financial
Statements partners compensation
has been included as an expense.
The Group started the financial year
under review with 324 employees
operating out of 19 offices. By 30 April
2020, this number had increased to 351
people, as set out in the table below:
Group’s employee numbers
at year-end:
Partners
Fee earners
Administration
Total
Number of offices
FY20
51
230
70
351
19
FY19
50
209
65
324
19
Since the end of FY20, total colleague
numbers have increased further such
that, at the date of this report, the
Group employs 400 people, of which
56 are partners. On 31 July 2020 the
Group closed its Glasgow office.
Each of the Group’s 19 offices provide
restructuring advisory services, with
six providing one or more additional
service lines from the partners and
employees based there. The Group’s
network of offices covers the length
of the UK, with an office as far north
as Inverness and one as far south as
Brighton. The London office, where 17
of the Group’s partners are based, has
the greatest breadth of service offering,
and is the largest office by partner
and employees number. The Group’s
Brentwood office also operates as the
Central Services Headquarters.
Reflecting the increase in headcount
during the year, the Group’s
employee costs, including partners
compensation charged as an
expense, increased 6.5% to £42.7
million (FY19: £40.1 million). The
Group’s other operating expenses in
the year increased 11.0% to £14.1
million (FY19: £12.7 million) and the
Group incurred £2 million of one-off
exceptional costs associated with the
IPO in March 2020. Planned increased
investment spending on marketing
and IT compared to the prior year
came through as the Group builds
the necessary foundations for its
continued steady growth.
The Group’s net finance costs for the
year were £0.2 million (FY19: £0.3
million) and relate to the interest on
its bank borrowing facilities.
The Group’s reported profit before tax
for the year is £2.9 million, which arose
in the c.2month period to year end. The
10 months before IPO and prior year
were a fully distributed partnership
with partner compensation treated
as an expense in these Financial
Statements.
The overall tax charge for the year was
£0.8 million, arising from the period
following the IPO to the end of the
financial year. As the business was
partner-owned before the IPO, there
was no material corporate taxation
incurred within the Group.
Earnings per share for the year (after
tax) was 0.87p. During FY19 and the
first 10 months of FY20, the business
was a partner-owned full profit
distribution LLP, and therefore there is
no comparative EPS figure available.
Balance sheet and cash flow
The Group’s net asset position as
at 30 April 2020 was £20.5 million
(2019: net liability £(0.9) million).
On a like for like basis, trade and other
receivables were £33.6 million at the
year-end (2019: £31.1million) of which
£28.3 million (2019: £26.3 million)
was in relation to unbilled revenue.
The Group’s cash balance at the year-
end of £21.3 million (2019: £4.9 million)
was bolstered significantly as a result of
the IPO when the Company raised £20
million gross. The net cash raised has
been used to strengthen the Group’s
balance sheet and provide resources
for potential strategic acquisitions.
The Group had no borrowings as at
30 April 2020 (2019: £3.6 million),
and the Group has an unused revolving
credit facility of £5 million.
The Group retained its strong cash
generation during FY20, with cash
collection from cases up £15.7 million
from the prior year to £72.9 million
(FY19: £57.2 million) including VAT
where applicable.
The Group’s current trade and other
payables decreased from £30.9 million
at the end of April 2019 to £27.3 million.
This includes £9.5 million of non-
current liabilities (FY19: £4.6 million)
which predominantly relate to amounts
owed to partners and related statutory
deductions following the corporate
restructuring ahead of the IPO.
Dividend
In line with its stated strategy at
the time of the IPO, the Directors
expect the Group to continue to be
cash-generative and accordingly, the
dividend policy reflects the long-term
earnings and cashflow potential of the
Group. The Directors’ stated dividend
policy is to pay a 70% overall dividend.
In respect of the Group’s trading in the
two-month period from the date of
its IPO to the end of FY20, the Board
declared a dividend of 0.66 pence
per eligible ordinary share. To enable
payment of this dividend, a dividend
was paid up from a subsidiary to
the Company post year end. The
Company’s annual general meeting
(“AGM”) is to be held on 22 October
2020, the dividend will be paid on
13 November 2020 to all shareholders
on the register on the record date of
23 October 2020.
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Business model and strategy
The Group’s objective is to deliver shareholder value
in the medium to long-term while protecting the
Group from unnecessary risk. The business model
underpinning this objective is to generate revenues
from selling professional services. Fees are charged
on a basis suitable to the engagement.
Our assets
Our primary asset is our team
Their experience, their expertise,
and their relationships, all of which
add value to our brand and reputation
daily, as well as generating revenue.
Our multi-pillar practice model of
complementary services which
provides us with a broad knowledge
base, the ability to draw on multiple
sources of expertise on any given
engagement and the ability
to support businesses through
their entire life cycle.
Our investment in our employees
is supported by robust finances -
a strong cash balance and the
availability of debt funding.
Our method
We adhere to our
core values
To be straightforward,
confident, pragmatic,
and real.
We value our people
Close relationships
Cross-selling
We maintain close
relationships with
our referral network
and Panel partners.
We seek to leverage cross-
selling opportunities across
our business.
Our culture is supportive,
inspiring, empowering
and collaborative.
We recognise and reward
individual excellence
and team performance.
Career progression and
personal development
initiatives are provided
by The FRP Advisory
Academy and other
learning providers.
30 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
Our values
Straight forward
Confident
Pragmatic
Real
We convey our
expertise and integrity
through clarity. We are
straightforward about
our services and the
breadth of our offering.
We give our clients clear
advice, making a real
recommendation based
on their situation, not
We speak plainly and
honestly to our clients,
focusing on tangible
outcomes for our clients.
We speak like real people
and use language that’s
direct and personal,
while also professional.
just listing a range of
confusing options.
How we create value
1
Increasing our fee earning capacity
through providing shared central
services, compliance, marketing,
and strategy management to enable
fee earners to focus on clients,
business development and
professional development.
2
Growing our fee earning capacity
through the recruitment of high-quality
individuals, teams and businesses
and integrating them into our model.
3
Investing in our team to enable them
to provide the best possible service
and fulfil their own ambitions.
4
Developing our Corporate Finance,
Debt Advisory, Forensic and Pension
Advisory services alongside our
Restructuring Advisory Services to
create an integrated business able to
take advantage of opportunities across
the economic cycle and the life cycle
of individual businesses as well as
providing a broad range of expertise
to deploy on any given engagement
through inter-pillar collaboration.
Our charging structure
Restructuring Advisory:
For advisory assignments, fees are
generally agreed either on a fixed
fee basis or by reference to time
spent as agreed with the client.
For formal insolvency proceedings
work, fees are charge on the basis of
time costs, fixed fees or percentage
of realisations and/or distributions
or a combination of bases as approved
by creditors.
The Group’s fees for acting in
connection with formal insolvency
proceedings are paid from the
proceeds of the sale of the insolvent
estate’s assets and rank ahead of
distributions to creditors.
Other service pillars:
Fee structures for the other service
pillars are charged on a project
appropriate basis.
Fee structures include time
charged (potentially with a cap),
fixed fees and part committed/part
contingent success fees based on
transaction value.
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Growth strategy
The Group’s primary growth strategy
comprises a combination of seeking
organic growth and making carefully
selected lateral hires and acquisitions
of small partner groups and related
employees from specialist restructuring
advisory, corporate finance and other
related businesses.
The Board is seeking sustainable and
well-managed growth as a significant
multi-pillar nationwide independent
professional services group providing
a long-term income opportunity for
shareholders.
Due to the fundraising conducted
at the time of the IPO and its debt
facilities, the Company has significant
cash resources available to support
its growth strategy and invest in
its business through acquisitions,
recruitment, supporting organic
growth, and infrastructure, marketing
and central services enhancements.
Organic growth
Identified opportunities exist for the
Group to grow organically, in particular:
Continuing to open offices in regions
not currently covered by the Group’s
existing office network, thereby
increasing the Group’s geographic
coverage in restructuring and
advisory work.
Attracting and retaining new
talent who want to be part of an
independent, prominent, and growing
restructuring and advisory firm.
Developing the Group’s smaller
Corporate Finance, Debt Advisory,
Forensic Advisory and Pensions
Advisory service pillars.
Enhancing cross-selling of and from
the Group’s Corporate Finance,
Debt Advisory, Forensic Advisory
and Pensions Advisory businesses
and leveraging growth in these
businesses to further drive cross-
selling opportunities.
Increasing the level of restructuring
engagements from clients based
outside of the UK.
Taking on engagements which are
larger in size and complexity and
therefore likely to generate a higher
level of fees.
Acquisitive growth
In addition to organic growth, the
Group intends to take selective
advantage of anticipated consolidation
within the restructuring advisory
sector and of opportunistic acquisition
opportunities. The Group focuses
primarily on acquisitions of smaller
partner groups and related employees
in specialist restructuring advisory,
corporate finance and other related
businesses. Despite the challenges
encountered due to COVID-19, the
Group has remained active in reviewing
potential opportunities and conducting
due diligence, completing the
acquisition of a restructuring advisory
team of 15 in June 2020. The Company
maintains acquisition as a key part of
the growth strategy.
The Group only pursues opportunities
where it believes it will be acquiring
teams or businesses which are aligned
with its values and business model,
will progress its strategic aims and
can deliver high-quality professional
services to the Group’s clients.
Acquisitions and integrations can be
disruptive and management intensive
and accordingly the Group’s acquisition
and team recruitment strategy is
managed to enable acquisitions to
become embedded in the business
effectively without overburdening
the management infrastructure.
Failed integrations can lead to poor
results and reputational damage.
To address these risks, the Group
carries out extensive due diligence on
potential targets and follows internally
developed integration protocols to
assist with effective integration.
Growth opportunity
Market growth
In the short to medium term, the
Company considers that the economic
environment and outlook means
that the services of insolvency and
restructuring specialists are likely to
be in increased demand. The number
of UK businesses considered to be in
significant distress was approximately
527,000 as at 30 June 2020, an
increase of 8.9% since 30 June 2019.
The sectors considered the most
severely affected are the real estate
and property, leisure and hospitality,
construction, retail and travel sectors
but the majority of industries have
been impacted to an extent, with the
COVID-19 crisis exacerbating this trend
across most sectors.
Although Government support
measures combined with the
forbearance of lenders, landlords
and other creditors has helped
maintain viable businesses through
the nationwide lockdown, the phased
withdrawal of the furlough scheme,
combined with increased financial
pressure from the unwind of working
capital savings, could create significant
pressure on many businesses in the UK.
The group anticipates that the UK
will continue to experience an
underlying level of corporate
insolvencies further impacted by,
the withdrawal of support introduced
during the COVID-19 crisis and the
effects on business of the withdrawal
of the UK from the European Union.
However, Government support
measures and legislative initiatives
designed to assist businesses in the
short term through the COVID-19
crisis are likely to cause delay in
formal restructuring and insolvency
appointments. HMRC will become a
secondary preferential creditor from
1 December, which may change the
timing of insolvencies as secured
lenders seek to protect their positions.
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Structural growth
The Directors believe that with the
recent increased levels of regulatory
and political scrutiny which have
impacted the “Big Four” and other
mid-tier accounting firms, there may
be an opportunity for the Group to
gain market share in restructuring and
other advisory work. This opportunity
derives from perceived potential
conflicts of interest affecting these
accounting firms given a large portion
of their revenues are derived from
auditing. The Directors believe it may
increasingly be considered beneficial to
appoint a larger specialist restructuring
Key performance indicators (KPIs)
adviser which does not have an
auditing function and does not suffer
from conflicts or potential conflicts
created by the full-service model
of large accounting firms. In 2010,
approximately 33% of administration
appointments were completed by the
“Top six” and other mid-tier accounting
firms, with this figure closer to 16% in
2019. Any such sustained trend could
considerably increase the Group’s
market share and revenues.
The Directors believe there may,
in addition, be future inorganic
opportunities as a result of any
future operational separation of the
“Big Four’s” and other mid-tier firms’
advisory and audit functions as
recommended by the UK Competition
and Markets Authority in 2019 and, in
the case of the “Big Four”, mandated by
the FRC in July 2020 to be completed
by June 2024. The Directors believe
that such a separation of advisory
services and the related market
changes may present the Group with
opportunities to acquire teams or
experienced partners from these firms.
The Board continues to monitor
developments in this area.
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Financial
Revenue
Adjusted underlying EBITDA*
Adjusted Profit Before Tax** (c.2 months)
Cash collection (inclusive of VAT where applicable)
Revenue per Partner***
Year Ended
30 April 2020
£million
Year Ended
30 April 2019
£million
63.2
18.5
3.3
72.9
1.2
54.3
14.1
0.0
57.2
1.1
* Underlying adjusted EBITDA is calculated by deducting 10 months partner profit allocation in the period up to IPO. Then for both the two month period post IPO and
the ten month period before IPO the go forward partner compensation has been applied. For the 2019 comparative, a full 12 months adjustment has been applied.
**For the c.2 month period and adjusted for a £0.4 million element of the one-off exceptional costs associated with the IPO.
***Based on 12 months revenue and partner numbers as at the respective financial year end.
Non-Financial
Number of administration appointments
Number of fee earners, including partners
Staff utilisation rate
Year Ended
30 April 2020
Year Ended
30 April 2019
189
281
65%
141
259
65%
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Principal risks
and uncertainties
The operations of the Group and
the implementation of the Group’s
strategy involve a number of risks and
uncertainties. The Board is responsible
for developing a comprehensive risk
framework and a system of internal
controls. Control and mitigation
measures to reduce risk are designed
to manage rather than eliminate risk
and can only provide reasonable
and not absolute assurance against
material misstatement or loss.
The Board has identified the following
as the principal risks and uncertainties
facing the Group:
Risk
Colleague risk
For any professional services business, personnel are a
particularly prominent asset contributing to the Group’s
continued growth and success. The Group is heavily
reliant on its partners and employees to generate, manage,
progress, and complete the Group’s engagements.
As part of this, the Group is reliant on its licensed
insolvency practitioners to act on insolvency and
restructuring matters (which account for the majority
of the Group’s revenue). In particular, the top 10
partners were responsible for approximately 50%
of the Group’s revenue in FY20 (FY19: 50%).
If the Group were to lose the services of either:
(i) one or more key partners who are responsible for
significant revenue generation; or (ii) a significant
number of its partners or employees in a short
timeframe, this could significantly impair the strategy
and success of the Group from both a reputational
and financial standpoint, as well as hinder the growth
of the Group over the short to medium term.
This could result in a material adverse effect on the
Group, its business operations and financial condition,
including its ability to generate revenue and to service
its existing clients.
Reliance on senior management
Since 2010, the Group’s senior management has
developed the business of the Group and its future
success is, to an extent, currently dependent on a
small number of individuals.
These individuals include Geoff Rowley and Jeremy
French. The continued involvement of the Group’s
senior management and Directors is therefore important
and their replacement at short notice would be very
challenging at present.
Mitigation and Control
The Group recognises the value of its people as its
key asset and prioritises them accordingly. The Group
seeks to mitigate and manage its “Human Capital” risk
generally through:
A competitive reward structure
The employee share option scheme
Providing support for our people to reach their
potential through professional training programmes,
coaching initiatives and the FRP Leadership Academy
Maintaining a corporate culture which keeps the team
motivated and engaged
In the short to medium term, partners at the time of
the IPO will, save in certain circumstances, forfeit all or
most of their shares in the Company if they give notice
to leave the Group before the third anniversary of the
IPO in 2023. This acts as a lock-in mechanism for the
Group. In addition, the partners’ compensation is
linked to the success of the business both in terms
of direct partner drawings and in terms of dividends
and share price. Accordingly, the partners are
significantly and directly incentivised to pursue the
success of the business.
The Group has taken steps to ensure that the knowledge,
skills, contacts and expertise of key individuals are shared,
where possible. The appointment of an experienced
CFO to the Board with full responsibility for the Group’s
financial matters will improve the governance and add
a new perspective on decision making.
All partners employed by the Group at 6 March 2020
are subject to lock in for 3 years (see “Colleague risk”).
The Nomination Committee is responsible for ensuring
that adequate focus is given to succession planning.
34 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
Strategic Report continued
Risk
Mitigation and Control
Referral relationship risk
The Group is heavily reliant on its referral network
in order to generate business. These relationships
are managed by the Group’s partners and are critical
for revenue generation. The Group is on every major
UK clearing bank’s formal approved advisory panel
together with those of numerous other regional
and national lenders, such as asset-based lenders,
investment banks, credit funds and peer-to-peer
lenders. The Group also sits on the formal panels for
other bodies such as the Department for Education.
A failure to manage and grow these relationships (or
the departure of key partners that are responsible for
maintaining these relationships) could result in the firm
not being appointed to new advisory panel positions, or
not being reappointed to the Group’s existing positions
(which could also negatively affect the Group’s
reputation). Either of these outcomes would have a
detrimental effect on the Group’s ability to generate
revenue, which would, in turn, impact the Group’s
financial performance and position.
Reputational risk and negative publicity
Negative publicity that can have an adverse impact
on the Group’s reputation could have a direct effect
on revenue, brand damage, retaining key partners/
employees, removal of clients from bank panel work,
investor trust & future opportunities.
There is a risk that a serious regulatory violation, or a
major security incident (reportable GDPR data breach or
loss of client data) could impact the Group’s reputation.
All partners employed by the Group at 6 March 2020
are subject to lock in for 3 years until March 2023
(see “Colleague risk”).
Each office maintains a strong network of local
accountants and lawyers. The Group believes the
best way to maintain this network is to continue
delivering a high-quality service to clients.
The Group’s reputation comes from consistently
delivering a high-quality service and achieving the best
possible outcome for clients. As the Group continues
to grow, it is committed to operating sufficient internal
checks and controls to ensure each client receives the
best of FRP.
The Group has demonstrated its commitment to a
Governance, Risk & Compliance framework through
effective Enterprise Risk Management, Information
Security Management System & Cyber Security
framework.
Cyber-crime risk
The risk of cyber-crime to FRP could be devastating,
affecting strategic objectives and posing significant
financial risk to the Group’s value, through regulatory
fines and the impact of reputational damage.
The Group recognises the importance of protecting
its assets with executive ownership and management
responsibility for maintaining an effective Information
Security Management System & Cyber Security
framework.
Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020 35
Strategic Report continued
Risk
Acquisition risk
Part of the Group’s strategy is to acquire teams and
businesses to join the Group. There is a risk that
acquisitions either do not generate the returns that
were anticipated and/or fail to embed properly within
the culture and systems of the Group. This can lead
to below expected returns on investment, excessive
application of management time and ultimately failure
of the acquisition resulting in potentially wasted costs,
loss of opportunity and negative reputational impacts.
There is also a risk that the Group will not be able to
source appropriate acquisition opportunities at an
acceptable valuation or at all.
Operational gearing risk
The business is operationally geared with a significant
proportion of relatively fixed salary and property costs.
Consequently, the Group’s profitability is liable to
short-term fluctuations dependent on activity levels.
Government policy, legal and regulatory risk
Legal and regulatory changes and/or changes to government
policy may adversely impact the business. The Group will be
affected by legal and regulatory changes within the areas in which
it operates, such as insolvency and administration law, pension
law and the laws and regulations governing equity and debt
financing of corporate entities.
The regulatory landscape relating to whether and to what extent
auditors are able to offer non-audit services to their audit clients
could change within the UK in the short to medium term as a number
of reviews are concluded and their recommendations published or
implemented, including those of the Financial Reporting Council
and the Competition and Markets Authority. Any resulting changes
may affect the degree and/or nature of competition between market
participants, including through the emergence of new or specialist
firms. Generally, it is difficult to predict the extent to which policy
and regulatory changes that may come into force might affect the
Group. Any such changes may detrimentally affect revenue and/
or require increased expenditure or increase competition for clients
or colleague, impacting the Group’s operating margin and business
development plans. Any of these may have a materially adverse
impact on the Group’s operations and financial condition.
Mitigation and Control
The Group conducts financial and legal due diligence
and financial modelling exercises to minimise the risk
of overvaluing an acquisition and to understand any
issues within the target. Potential joiners meet Board
Members and key central services to ensure that the
businesses are culturally aligned and operationally
ready to join.
Consideration structures including earn outs may
be used to ensure that the acquired business is as
expected and valued according to returns generated.
The group conducts regular extensive forecasting
exercises to mitigate any potential short-term adverse
fluctuations. It is noted that the majority of the
workforce are qualified professionals, however, several
costs are performance based. As the Group grows, we
will continue to review the balance between increasing
headcount on a permanent basis vs shorter term more
flexible options (consultants, secondments).
The knowledge and expertise of the staff ensures that the
Group is aware of pending legal or regulatory changes.
The Group has many of its employees as members of technical
or expert panels within the various regulatory bodies that the
Group’s activities fall within.
The Group has dedicated resource to monitor legal and regulatory
changes affecting its business.
The Group routinely monitors the changing industry landscape
and reacts accordingly.
36 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
Strategic Report continued
Risk
Competition risk
In the current macroeconomic environment, the
Company considers that there is a risk that new entrants
will seek to join the insolvency advisory market and
existing participants will increase their investment
and staffing levels in the space. This could lead to the
Group facing increasing competition for engagements,
downward pressure on its fee levels and difficulties in
attracting and retaining talent.
Mitigation and Control
The Group maintains strict internal risk management
procedures, particularly high standards of Information
Security which have assisted in appointment to all
major bank panels. These standards may act as a
barrier of entry to new entrants.
In comparison to larger competitor firms, the group
does not offer audit or tax services and therefore
does not have conflicts of interest.
In comparison to larger competitor firms, the group is
not full service and as such is less exposed to potential
conflicts of interest.
Potential claims against the Group
The Group typically receives claims each year in relation
to its engagements, with the majority of these relating
to the Group’s insolvency practice. These claims are
typical of those received by the participants in the UK
insolvency industry. As a result, the Group routinely
notifies its professional indemnity insurers of these
claims and they are generally defended. There is a
risk that a claim could be successful (and an award
made against the Group) or settled by the professional
indemnity insurer as a result of a mistake or the
negligence of one or more of the Group’s partners
or employees.
The Group has in place suitable professional indemnity
insurance. Whilst it is likely that the majority of the cost
of any successful claim will be covered by the Group’s
professional indemnity insurance, the Group may still
be required to contribute an amount in respect of such
a claim (being the insurance policy excess, a costlier
sum agreed upon with the insurer or an amount beyond
the cover provided the Group’s insurance). The Group
may also be at risk of reputational damage resulting
from a successful claim, in addition to any financial cost.
We have internal procedures and external advisors in
place to effectively manage incidents like these.
Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020 37
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Brexit
The Board does not currently consider
Brexit of itself to be a material risk to
the business given that it is entirely
focussed on the domestic market and
does not have any material exposure
to EU supply chains or staffing issues.
The Board does however recognise
the possibility that Brexit may give
rise to material and fast moving
changes in the regulatory and legal
environment which may impact the
business and its client base, leading
to operational challenges which may
require significant time and resources
to address. The Board also recognises
that the full effects of the UK’s potential
departure from the EU are unknown
and unquantifiable (including whether it
may have significant upside, significant
downside or be less material in its
impact on the UK economy).
Risk management
The Board has established an Audit
and Risk Committee (ARC), the remit
of which includes overseeing the risk
management processes of the Group
and responses to key risk items at
Board level.
The Group’s operational risk
management governance is currently
in transition to a formally recognised
risk management framework, to
provide principles and guidelines
for the design, implementation and
maintenance of risk management.
Historically, the Operational Risk
Committee (ORC) comprising senior
members of the Group’s Central
Services Group has convened
twice a year to provide operational
risk oversight across the business
disciplines and reporting to the
Management Board of the Partnership
pre-IPO and the Board post-IPO. Inputs
into the ORC are reporting of top-
level operational risks via managed
Risk Registers for the Front Office,
Corporate Finance and Back-Office
areas. The risk registers are reviewed
and updated throughout the course
of the year by the relevant register
owners. Other risk disciplines are
embedded into operational processes
across Front Office and Back Office
(Vendor Management, Information/
Cyber Security Management, Privacy
Management etc.).
Under the new Risk Framework,
the ARC will assist the Board in its
oversight of FRP’s risk management
framework, by monitoring its
effectiveness through oversight of the
ORC which will continue to oversee
the implementation and day to day
management of the Risk Framework
at an operational level and report into
the ARC. The ARC will also provide
input to the Board in its assessment
of enterprise risks and determination
of risk appetite & tolerance levels, as
part of the overall setting of strategy
for FRP. The ORC will manage the
risk framework within the boundaries
set by the ARC reporting on top level
risks. Risk ownership will be integrated
into all business activities and form
the input/ feedback channel into the
managed risk registers, reviewed
within the ORC.
Section 172 statement
This section serves as our Section
172 statement and should be read
in conjunction with the Strategic
Report and the Company’s Corporate
Governance Statement.
The Directors are well aware of and
comply with their duty under section
172 of the Companies Act 2006 to act
in the way which they consider, in good
faith, would be most likely to promote
the success of the Company for the
benefit of its members as a whole and,
in doing so, to have regard (amongst
other matters) to:
the likely consequences of any
decision in the long term;
the interests of the Company’s
employees;
38 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
the need to foster the Company’s
business relationships with suppliers,
customers and others;
the impact of the Company’s
operations on the community and
the environment;
the desirability of the Company
maintaining a reputation for high
standards of business conduct; and
the need to act fairly between
members of the Company.
The Board now ensures that the
requirements of s172 are front of mind
by including them on all Board meeting
agendas and requiring s172 impact
assessments for key Board decisions.
The Board recognises that the
business is reliant on maintaining
its reputation for high standards
of conduct, professionalism and
integrity and this is always given high
priority. As a business with substantial
numbers of regulated individuals in
an industry where reputation is of
paramount importance, the Board
will not countenance any course of
action that it considers may threaten
its regulatory compliance or bring the
business into disrepute.
Key decisions will be assessed by the
Board for alignment to and furthering
of the Company’s long-term strategy
and purpose.
Engagement with our shareholders
and wider stakeholder groups plays
a valuable role throughout our
business. The Board is aware that
each stakeholder group requires a
tailored engagement approach to
foster effective and mutually beneficial
relationships. Our understanding of
stakeholders is then factored into
boardroom discussions and decisions.
Strategic Report continued
The stakeholder voice is also brought
into the boardroom throughout the
annual cycle through information
provided by management and also by
direct engagement with stakeholders
themselves. The relevance of each
stakeholder group may increase or
decrease depending on the matter or
issue in question, so the Board seeks
to consider the needs and priorities of
each stakeholder group during
its discussions and as part of its
decision making.
The table below sets out our key
stakeholder groups, their interests and
how we have engaged with them over
the reporting period (including prior to
the restructuring and IPO). However,
given the importance of our team, our
clients and our referral network, these
themes are also discussed throughout
this Annual Report.
While the COVID-19 crisis has
interrupted our regular physical face
to face interactions with various
stakeholders internally and externally,
we do consider them to be important
in maintaining open communications
and team cohesion and will be
reintroducing these gradually
provided it is safe to do so in line
with Government guidelines and the
needs of individual attendees. In the
meantime, we have taken advantage
of various video conferencing
platforms where appropriate.
Stakeholder
Their interests
How we engage and react
Our Investors
Comprehensive review of
financial performance of
the business
Meeting financial expectations
Business sustainability
High standard of governance
Success of the business
Ethical behaviour
Awareness of long-term
strategy and direction
Annual Report and Accounts
Stock exchange announcements
Press releases
Paid for research available via
Nomad (post financial year end)
Feedback from the
Company’s broker
Company website
Retained financial PR Firm
Meetings with external investors
More than 50% of Shares are
owned by Partners actively
involved in the business and
nearly 8% are owned by the
Employee Benefit Trust
AGM (2020 onwards)
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Stakeholder
Their interests
How we engage and react
Our Team
Job satisfaction
Appropriate incentivisation
and reward
Internal FRP Leadership
Programme (FILM)
Internal coaching programmes
Career progression
Internal training courses
Colleague portal
Colleague newsletter
Colleague conferences (pre-COVID-19)
Board visits to regional offices
Pre-IPO consultation and
communications exercises for
partners and non-partner team
members
Annual performance reviews
Options granted to almost all non-
Partner team members at IPO
Partners own more than 50%
of the Company’s shares
Whistleblowing policy in place
to report wrongdoing
Project meetings
Detailed advice notes, project
plans and regular progress
updates
Client management teams
Online Service Portals for
case specific creditors
Company website
Panel audit processes
Periodic compliance
certifications
Regular relationship meetings
Regular project updates
Dedicated panel support teams
Company website
Professional development
and training support
Enjoyable working environment
Management accessibility
Our Clients
High quality advice
Professional delivery
Competitive fees
Data security
Panel Partners
and Referrers
Responsiveness
Competitive fees
High quality advice
Maximising returns for all
Reputation protection
Compliance with practice standards
40 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
Strategic Report continued
Stakeholder
Their interests
How we engage and react
Regulatory Bodies
Regulatory compliance
Membership of regulatory bodies
Integrity of the profession
Colleagues regularly part of and
contribute to technical groups of
regulatory bodies
Regulatory visits every three
years as well as interim visits
Supervised by ICAEW AML
legislation
Local Communities
Community participation
COVID-19 website resource hub
Support of local businesses
Charitable initiatives
Work opportunities
Environment
Energy usage and efficiency
Recycling
Waste management
Professional comment and
updating via LinkedIn, website
and professional publications
Press comment
Support charities local to
the offices
Apprenticeships and work
experience placements
Workplace recycling processes
and policies
SECR energy use monitoring
and reporting
On behalf of the Board
Geoff Rowley
Chief Executive Officer
26 August 2020
Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020 41
Strategic ReportCorporate InformationGovernanceFinancial Statements Board of Directors
The Board of
Directors of the
Company is
made up of
three Executive
Directors, two
independent
Non-Executive
Directors, a further
Non-Executive
Director and
the Chairman.
Nigel Guy
Non-Executive
Chairman
Geoff Rowley
Chief Executive
Officer
Jeremy French
Chief Operating
Officer
Jeremy is the Chief
Operating Officer of
the Group. Jeremy is a
Chartered Accountant
and Licensed Insolvency
Practitioner with more
than 35 years’ experience.
Jeremy is a joint founder
of the business as part
of the 2010 Vantis plc
management buyout
team and was the Group’s
managing partner from
inception until admission to
AIM. While Jeremy manages
the operations of the Group,
a proportion of his time
is spent on restructuring
engagements and dealing
with stakeholders.
Nigel Guy is a Chartered
Accountant and has spent
the majority of his executive
career in private equity
where he has over 20 years’
experience. During this time,
he held leadership positions
both in the UK regions and in
London, with firms including
3i plc and Baird Capital
Partners Europe Limited.
Since then he has developed
a portfolio career and has
sat on a number of private
and public company boards
either as non-executive
director or chairman, often
representing strategic
financial investors. He joined
the management board
of FRP Advisory LLP as
chairman, shortly after the
management buyout
in 2010.
Geoff is the Group CEO
and is a Chartered Certified
Accountant and Licensed
Insolvency Practitioner
with 30 years’ experience
including at firms RSM
Robson Rhodes and PKF.
Geoff is a partner in the
London restructuring
advisory team and was
joint founder of the business
as part of the Vantis plc
management buyout in 2010.
Outside of management
responsibilities, his focus
is on dealing with corporate
restructuring assignments
acting for a range of
stakeholders including
boards, lenders and
investors. Recent UK and
international assignments
have included BHS, Force
India Formula One Team,
Patisserie Valerie, Koovs
plc, Debenhams, Carluccio’s
and a significant PFI project
arising from the failure of
Carillion.
Further details about the Board and
its role are set out in the Corporate
Governance Report on pages 49 to 52.
42 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
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Gavin Jones
Chief Financial
Officer
David Chubb
Senior Independent
Non-Executive Director
David Adams
Non-Executive
Director
Claire Balmforth
Independent Non-
Executive Director
David has been a non-
executive director of the
Group since 2010. David
spent the majority of his
career as a Partner in the
corporate law team at
Travers Smith LLP.
Since then David has run
his own corporate advisory
business and held a
number of non-executive
directorships of private and
listed companies. David
helped establish the Group’s
corporate finance division
and sits on the board of FRP
Corporate Finance Limited.
Claire joined the Board as an
independent non-executive
director in August 2020.
Claire has significant listed
company experience in both
executive and non-executive
roles, having previously
held senior commercial and
operational positions at
FTSE250 companies.
Claire has significant
knowledge of organisational
leadership and employee
engagement in founder led
businesses and is currently
a non-executive director and
chair of the Remuneration
Committee of both
Safestore Holdings plc
and Trifast plc
Gavin joined FRP as its
Chief Financial Officer in
June 2020. He is responsible
for all of the Group’s finance
activities, investor relations
and supporting the Partners
and employees to deliver
FRP’s growth strategy. He
also oversees a number of
the Group’s shared service
functions.
Gavin previously held
executive roles within
financial services, including
a Divisional CFO at Marsh,
Regional Financial Controller
at Aon and an Executive
Director at ABN AMRO’s
Investment Banking division.
He is a Chartered
Accountant and a member
of the Chartered Institute for
Securities and Investment.
David is a Chartered
Certified Accountant and
until recently, also held a
license as an Insolvency
Practitioner, with experience
across a range of sectors.
David joined the Group as
a non-executive director
in 2019 following a career
in banking at Standard
Chartered and Hambros,
and as a restructuring
partner at PwC.
Spanning a period of over
20 years with PwC, he
covered a wide range of
insolvency and restructuring
cases, with one of his final
appointments being as a
Special Manager of Carillion.
Following retirement as a
partner at PwC, David has
undertaken consulting roles
and project work for both
boards and shareholders
of businesses in financial
distress.
Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020 43
Directors’ Report
For the year ended 30 April 2020
The Directors present
their report with the
financial statements of
the Group for the year
ended 30 April 2020.
Catherine (Kate) O’Neill
(Appointed 6 March 2020 and
resigned 30 June 2020)
Gavin Jones
(Appointed 29 June 2020)
Claire Balmforth
(Appointed 3 August 2020)
Principal activities
and business review
The principal activities of the Group
during the period under review are
detailed in the Strategic Report.
The requirements of the business
review have been considered within
the Strategic Report.
Results and Dividends
An analysis of the Group’s and
Company’s performance is contained
within the Strategic Report. The Group’s
income statement is set out on page
66 and shows the result for the year.
The Directors declare a dividend of
0.66 pence per eligible Ordinary Share
in respect of the financial year to
30 April 2020. This will be paid on
13 November 2020 to shareholders
on the register on the record date
of 23 October 2020.
Directors
The current Directors and their brief
biographies are detailed on pages
42 to 43.
The Directors of the Company during
the year and since the year end were:
Nigel Guy
(Appointed 6 March 2020)
Geoff Rowley
(Appointed 14 November 2019)
Jeremy French
(Appointed 14 November 2019)
David Chubb
(Appointed 6 March 2020)
David Adams
(Appointed 6 March 2020)
Jeremy French and Geoff Rowley were
appointed on incorporation of the
Company. The non-executive directors
joined the Board on the day the Group
completed its pre-float restructuring
and IPO. Kate O’Neill resigned on 30
June 2020. Gavin Jones joined the
Board after the year end on 29 June
2020 as Chief Financial Officer. Claire
Balmforth joined the Board after the
year end on 3 August 2020 as a
Non-Executive Director.
In accordance with the Articles of
Association, each of the Directors
will retire and being eligible offer
themselves for re-election at the
Company’s forthcoming AGM.
Directors’ emoluments
Details of the Directors’ emoluments
and rewards during the year under
review are set out in the Remuneration
Committee Report on pages 55 to 56.
Share capital
Details of the changes in the share
capital of the Company during the year
are set out in Note 21.
Directors’ interests in shares
The beneficial interests of the Directors
in the Ordinary Shares of the Company
on 30 April 2020 are set out below:
Ordinary Shares as at 30 April 2020
Nigel Guy
Geoff Rowley
Jeremy French
David Chubb
David Adams
Kate O’Neill
25,000
9,454,663
7,563,730
62,500
312,500
12,500
There has been no change to the Directors’ share
interests noted above since 30 April 2020.
44 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
Gavin Jones and Claire Balmforth,
both of whom joined the Board after
the year end, have no ordinary shares
as at the date of this Report.
Equal opportunities policy
It is the Group’s policy to ensure equal
opportunity in employment and,
accordingly, the Group maintains an
Equal Opportunities Policy.
The Equal Opportunities Policy
expresses the Group’s commitment
to equal opportunities and sets out
a framework to assist the Group in
delivering on that commitment. In
particular, the Equal Opportunities
Policy provides that:
FRP will avoid unlawful discrimination
in all aspects of employment
including recruitment, promotion,
opportunities for training, pay and
benefits, discipline, and selection
for redundancy.
Person and job specifications will
be limited to those requirements
that are necessary for the effective
performance of the job. Candidates
for employment or promotion will
be assessed objectively against
the requirements for the job,
taking account of any reasonable
adjustments that may be required for
candidates with a disability. Disability
and personal or home commitments
will not form the basis of employment
decisions except where necessary.
The Group will also make reasonable
adjustments to its standard working
practices to overcome barriers
caused by disability.
Directors’ Report continued
Employee engagement
The Group focuses on employee
engagement and maintaining the
positive culture that motivates
existing and attracts new colleagues.
During the year, the business engaged
with its partners and employees on an
ongoing basis and through multiple
channels to ensure that their views
were taken into account appropriately
and the business was able to
communicate its strategy, priorities,
values and goals effectively throughout
the organisation. These regular
interactions included:
These regular interactions included:
A Colleague newsletter
Colleague Portal
Continual Performance Reviews
An Annual Colleague Conference
Regional Partner meetings with,
and presentations to, the Board
Particular developments during the
year were also subject to specific
communications programmes.
These included:
A rebranding exercise leading to an
extensive internal communication
programme on launch of the new
brand identity and website.
A TUPE consultation and
communications exercise arising as a
result of the restructuring associated
with the IPO to fully inform employees
of the impact of the IPO.
Meetings and communications
with the partner group in relation
to the IPO and the impact thereof.
The roll out of new policies relating
to the IPO including a Share Dealing
Code and updated Social Media Policy.
The institution on IPO of an Employee
Share Scheme and communications
to help employees understand their
participation in it.
A COVID-19 employee
communication programme to (a)
ensure the health and safety of the
team and appropriate and timely
responses to the changing advice
affecting workplaces, (b) facilitate
remote working, and (c) remain
connected while out of the office.
The Partners of the business hold
over 50% of the issued shares in the
Company and their views are routinely
sought through formal and informal
meetings with Board members.
The Board and the partners were
delighted to have been able to grant
an Employee Share Option Plan in
conjunction with the IPO meaning
the vast majority of employees across
the entire business now have a direct
interest in the performance of the
Company.
The Board will take employee interests
into account in principal decisions
through its s172 compliance procedure.
Statement of engagement
with suppliers, customers
and others in a business
relationship with the
Company
The primary business relationships
of the Group are with its client
businesses, referral network and
Panel partners, bankers and landlords.
The Group maintains external property
consultants to ensure its leased estate
is managed in accordance with lease
terms and any issues are properly and
professionally managed and resolved.
The Group finance function maintains
regular contact with the Company’s
bank and supplies regular financial
information to the bank to ensure
compliance with the terms of its loan
facilities. The business has a long
established and productive relationship
with its bankers. Where relevant to the
matter under consideration the bank
is consulted in line with the terms of
the facilities.
The Company maintains a general
supplier payment policy whereby
suppliers are paid within 30 days in
the absence of any other agreement.
The Board will take the interests of
those with whom it is in a significant
business relationship (either individually
or as a category) into account in
principal decisions through its s172
compliance procedure.
Energy and
carbon reporting
Under the Streamlined Energy and
Carbon Reporting Regime, the
Company is required to report its
energy consumption and greenhouse
gas emissions arising in the UK
(including offshore UK) from:
the annual quantity of energy
consumed in the UK resulting from
the purchase of electricity by the
Company for its own use, including
for the purposes of transport;
the annual quantity of energy
consumed from stationary or mobile
activities for which business is
responsible involving the combustion
of gas; and
the annual quantity of energy
consumed from activities for
which the Company is responsible,
involving the consumption of fuel
for the purposes of transport (where
the Company is responsible for
purchasing the fuel).
Our disclosures are set out below
and include energy and emissions
from the entire Group, regardless of
whether individual companies would
be required to report. The disclosures
relate to the entire financial year
including the period prior to the
Company’s ownership of the business.
This is the first time that the Company
has been required to report and
accordingly, the report does not
include comparative figures for
the prior financial year.
Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020 45
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Directors’ Report continued
UK Energy
use
Year ended 30 April 2020
Notes
Consumption
Greenhouse Gas (GHG)
Emissions (tCO2e)
Electricity
449,243 kWH
Gas
40,154 kWH
Vehicle Fuel
147,287 miles
Total
Methodology
Electricity
The electricity consumed by the Group
relates solely to the routine power
requirements of its offices – lighting,
heating, IT, air conditioning etc. To
calculate the tCO2e figure we have
taken our overall electricity spend for
the year and divided it by our average
price paid per kWh to derive a kWh
figure to which a kgCo2e factor of
0.2556 was applied, being the UK
Government’s Conversion Factor
2019 for this type of electricity use.
Gas
The gas consumed by the Group
relates solely to the use of natural
gas for the running of boilers for
heating and hot water in its offices.
To calculate the tCO2e figure we have
taken our overall gas spend for the
year and divided it by our average price
paid per kWh to derive a kWh figure to
which a kgCo2e factor of 0.18385 was
applied, being the UK Government’s
Conversion Factor 2019 for this sort
of natural gas use.
114,873
7,382
41,797
164,052
Electricity consumed relates to routine
office power requirements (Scope 2)
Gas used to fuel heating and hot water
boilers in office locations (Scope 1)
Fuel relates to the Group reimbursing
employees for mileage related to the
use of their private vehicles for the
business of the Group (Scope 3)
Intensity Ratio
Tonnes of CO2e per total £m sales
revenue during the year to 30 April
2020: 0.0026.
Energy Efficiency Activity
The business did not undertake any
particular energy efficiency activities
over the year. Given the business is
office-based and primarily operates
from leased premises, there are
few opportunities to significantly
impact energy efficiency. However,
the Company is mindful of its
environmental obligations and will
examine opportunities to further cut
its carbon emissions.
Branches
The Company has no branches
outside of the UK.
Fuel Consumption
The GHG emissions related to fuel
combustion derive solely from the
payment to employees of mileage
allowances where they use their
private vehicles for Group business.
We do not keep records of our
employees’ vehicle makes, models
and fuel type. To arrive at a reasonable
estimate of distribution across petrol,
diesel and other vehicles, we used
the DVLA licensed car statistics from
2019 of that distribution to create our
model (petrol – 58.5%, diesel – 39.1%
and other – 2.4%). We applied those
figures to our total mileage claimed to
calculate estimated mileage figures
for each of diesel, petrol and other
fuels. The UK Government Conversion
Factors 2019 for an average vehicle in
respect of each fuel type (and using
the hybrid vehicle factor for the other
fuels category) were then applied to
the relevant mileage figure to obtain
the tCO2e figures.
46 Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020
Directors’ Report continued
Political and
charitable donations
The Company made charitable
donations totalling £4,842 during
the year ended 30 April 2020 (2019:
£6,172). The Company made no
political donations during the year
ended 30 April 2020 (2019: £nil).
Post-Balance Sheet Events
Following the year end, the Group
acquired a restructuring advisory
team in Newcastle, consisting of 15
colleagues including two partners
and 10 other fee earners.
Research and Development
The Group did not undertake any
research & development during the
year under review.
Financial Instruments
Disclosures in respect of the Company
policy regarding financial instruments
and risk management are contained
in notes 2 and 4 to the financial
statements.
Statement of
disclosure to auditor
So far as each Director is aware,
there is no relevant audit information
of which the Company’s auditor is
unaware.
Each Director has taken all the steps
that they ought to have taken as a
Director in order to make himself or
herself aware of any relevant audit
information and to establish that the
Company’s auditor is aware of that
information.
Mazars LLP has expressed its
willingness to continue in office
and a resolution to re-appoint them
will be proposed at the annual
general meeting.
Going Concern Basis
Having due consideration of the
financial projections, the level of debt,
and available facilities, it is the opinion
of the Directors that the Group has
adequate resources to continue in
operation for the foreseeable future
and, therefore, consider it appropriate
to prepare the Financial Statements
on the going concern basis.
The Group has been, and is currently,
both profitable and cash generative.
The business has consistently grown
year on year for 10 years and has
proved to be resilient, growing in
both periods of economic growth
and recession.
At year end the group had £21m of
cash reserves, higher than historic
positions due to funds raised during
the IPO. The group also has an
undrawn £5m committed revolving
credit facility (RCF). Ongoing operational
cash generation and this cash balance
mean we have sufficient resources to
both operate and move swiftly should
acquisition opportunities arise.
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 supporting each other and
work on both higher value assignments
or higher volume lower value jobs.
Also, the business has four other
pillars: Pensions, Forensics, Corporate
Finance and Debt Advisory that both
support the restructuring offering
but also earn fees autonomously.
With specific regard to the 2020
coronavirus (COVID-19) virus
pandemic, the Group immediately
adapted our ways of working, clients
were continually serviced without
interruption. Consequently, our cash
generation and profitability were not
significantly impacted by COVID-19.
Given our strong financial position
no employees of the firm have so far
been made redundant or furloughed
and none of the other Government
assistance schemes available (grants,
emergency loans, tax settlement
delays) were utilised. Throughout the
‘lock-down’ period we have continued
to win new client appointments, retain
existing employees and attract new
employees.
Remote working has reduced
colleague interaction, limiting virus
exposure to our Partners and staff.
Staff that choose to come into work
are temperature checked and work in
a socially distanced layout.
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.
The report of the Directors was
approved by the Board on 26 August
2020 and signed on its behalf by:
Geoff Rowley
Chief Executive Officer
26 August 2020
Strategic Report FRP Advisory Group plc | Annual Report and Accounts 2020 47
Strategic ReportCorporate InformationGovernanceFinancial Statements Governance
48 Governance FRP Advisory Group plc | Annual Report and Accounts 2020
Corporate Governance Statement
For the year ended 30 April 2020
Introduction
As Chairman of the FRP Board of
Directors, I am responsible for the
leading the Board to ensure it functions
effectively, setting its agenda and
monitoring its effectiveness.
The most significant governance event
in the period under review was the
Company’s IPO on the AIM Market
of the London Stock Exchange on 6
March 2020 (“IPO”) which involved
the creation of a new “topco”, FRP
Advisory Group plc, that, immediately
before the IPO, acquired the business
of FRP Advisory LLP together with all
of its subsidiaries through a corporate
reorganisation. It was at this point that
the Board was constituted in its current
form, the matters reserved to the
Board were set and the Committees
established. The Board has also now
agreed a formal split of responsibilities
between the Chair and the CEO.
While Geoff Rowley, Jeremy French,
David Adams and I have worked
together with FRP for 10 years and
had established what we considered
to be a sensible governance
environment as a private limited
liability partnership, in the lead up
to the IPO, we reviewed our board
composition and arrangements
and implemented the appropriate
changes to enhance our governance
environment to meet the expectations
of our shareholders and reinforce
our ability to develop our strategy
and deliver long term value to
our shareholders. We recognise
the benefits that good corporate
governance and diverse opinion brings
to a business and have worked (and
will continue to work) to develop
and embed processes, cultures and
practices that position us to reap the
benefit of robust governance.
We also recognise the importance of
the Board displaying and embodying
the ethics and behaviours we expect
from our team at large.
Prior to the IPO the Company was
a shell company and the Board
consisted of Geoff Rowley and Jeremy
French in the period from incorporation
in November 2019 until the IPO. This
report does not refer to the pre-IPO
period.
Compliance
We comply with the QCA Code in all
material respects and have become
members of the QCA.
Set out below are the ten principles of
the QCA Code and where to find further
information on how we apply them.
Principle
Information
Page Number
1.
Establish a strategy and business
model which promote long-term
value for shareholders
2.
Seek to understand and
meet shareholder needs
and expectations
3.
Take into account wider
stakeholder and social
responsibilities and their
implications for long-term
success
See the “Business model and strategy”
section in the Strategic Report.
30 and 31
See the Section 172 Statement
in the Strategic Report.
See the Section 172 Statement
in the Strategic Report.
38
38
Governance FRP Advisory Group plc | Annual Report and Accounts 2020 49
Strategic ReportCorporate InformationGovernanceFinancial Statements Corporate Governance Statement continued
Principle
Information
Page Number
4.
Embed effective risk
management, considering
both opportunities and threats,
throughout the organisation
See the “Principal risks and
uncertainties” section in the
Strategic Report.
34
See also the Audit Committee Report.
53 and 54
5.
Maintain the board as a
well-functioning, balanced team
led by the chair
6.
Ensure that between them the
directors have the necessary
up-to-date experience, skills
and capabilities
7.
Evaluate board performance
based on clear and relevant
objectives, seeking continuous
improvement
8.
Promote a corporate culture
that is based on ethical values
and behaviours
9.
Maintain governance structures
and processes that are fit for
purpose and support good
decision-making by the board
10.
See “The Board” section below.
See “The Board” and “Nomination
Committee” sections below.
Also see the Director Biographies.
42 and 43
See “The Board” section below.
See “Culture” section below.
See “The Board”, “Board Committees”
and “Internal Control” below.
Communicate how the Company
is governed and is performing
by maintaining a dialogue with
shareholders and other relevant
stakeholders
See “The Board” and “Board
Committee” sections below.
See also the Corporate Governance
Report and the Section 172
Statement in the Strategic Report.
38
50 Governance FRP Advisory Group plc | Annual Report and Accounts 2020
Corporate Governance Statement continued
We consider that the application of
the QCA Principles will support the
Company’s medium to long term
success through establishing and
maintaining an effective, balanced
and appropriately skilled Board and
committees which benefit from
diverse and independent viewpoints,
challenging and supporting the
executive to set and deliver the Group’s
strategy within an agreed system of
risk tolerance and management and
in accordance with the expectations
and needs of our shareholders.
We consider that the clarity of
purpose in setting out a strategy
and business model and risk
management processes creates an
environment whereby the executives
are empowered to deliver the Group’s
objectives but remain subject to
appropriate oversight and review. To
develop and, when necessary, amend
strategy the Group is best served
through multiple sources of experience
and expertise provided by a diverse
board with a range of experience to
lend to the enterprise.
In turn, the Board expects that in
delivering its strategy in line with
shareholder expectations, in an
ethical way and taking into account
the wider stakeholder group, this will
generate trust between the Group, its
shareholders and wider stakeholder
group, reinforce its brand, motivate
team members (through their own
share ownership and options), attract
new talent and make the Group’s
investment proposition more attractive.
The Board
The Board is responsible for setting
the vision and strategy for the Group
to deliver value to shareholders by
effectively implementing its business
model. The Board members are
collectively responsible for defining
corporate governance arrangements
to achieve this purpose, under my
leadership.
The Board has a schedule of matters
formally reserved to it and this is
available on the Company’s website.
The matters reserved include setting
strategy, budget approval, approval of
major capital expenditure and material
contracts and partner hires and
promotions.
A biography of each of the Directors
is set out on pages 42 to 43. The
Board has significant experience
in professional advisory services
environments supplemented by
expertise in the private equity,
public markets and legal arenas.
The directors keep their skills up to
date through various channels. As
practising regulated professionals,
the Executive team update their
professional knowledge through
professional journals and in-house
and external training materials and
seminars. The Non-Executive Directors
work with other businesses and
bring their learning from those roles
to the business and all subscribe to
newsletters, bulletins and journals
relevant to their areas of interest.
The Company is also a member of
the QCA which gives the Directors
access to a range of materials and
training opportunities relevant to the
Company’s listed status, corporate
governance issues and investor relations.
During the year, Kate O’Neill and David
Chubb were considered by the Board
to be independent directors. David
joined the board of FRP Advisory LLP
in May 2019 and Kate was introduced
to the Company in connection with
its IPO and both formally joined the
Board on the Company’s admission
to AIM. Neither Kate or David had any
prior connection to the business or
the other directors and although both
were granted share options on float
and participated in the associated
placing, these were not at levels the
Board consider material enough
(in the context of their personal
circumstances) to compromise their
independence. Details of Kate and
David’s shareholdings and options are
set out in the Director’s Report and
Remuneration Report respectively.
Following Kate’s departure on 30 June
2020, the Board has welcomed Claire
Balmforth as an independent Non-
Executive Director. Again, Claire has
no prior connection to the Company or
any director, no shares or share options
of the Company and was recruited
through an external recruitment agent.
The Chief Executive Officer, Chief
Operating Officer and Chief Financial
Officer all work in the business full
time with Jeremy French and Geoff
Rowley’s roles also encompassing
client facing work as practising
Insolvency Practitioners. The Non-
Executive Directors (including the
Chairman) are expected to devote
as much time as necessary to the
business for the proper performance
of their duties and at least 1 to 2 days
per month.
Between the IPO and the financial year
end, there were two scheduled Board
meetings at which all directors were
present.
The Board obtained advice on tax,
legal matters, share option schemes,
accounting matters, the IPO process
and related transactions and investor
relations during the year connected to
the IPO process and the acquisition of
its business.
As the Board is newly constituted,
it has not undergone an effectiveness
evaluation process at this point.
However, the Board anticipates
conducting an annual performance
review in the future. Furthermore, the
Nominations Committee is tasked
with keeping the Board composition
under review.
Governance FRP Advisory Group plc | Annual Report and Accounts 2020 51
Strategic ReportCorporate InformationGovernanceFinancial Statements Corporate Governance Statement continued
Culture
The Group’s culture is supportive,
inspiring, empowering and collaborative.
This positive workplace culture acts
to both attract and retain talent within
the Group. Leadership continues to
promote the 4 core values of being
straightforward, confident, pragmatic
and real. The Board monitors and acts
to promote a healthy corporate culture.
Board Committees
The Board has four standing
committees which were established
on IPO as set out below.
Terms of reference for each of the
Audit and Risk Committee (ARC),
Remuneration Committee and
Nomination Committee (Principal
Committees) are available on the
Company’s website. A report from
the Chair of each of the Principal
Committees detailing their activities
follows this report.
Audit and Risk Committee
The ARC has primary responsibility
for monitoring the quality of internal
controls and ensuring that the financial
performance of the Company is
properly measured and reported on.
It will receive and review reports from
the Company’s management and
auditor relating to the interim and
annual accounts and the accounting
and internal control systems in use
throughout the Group. The ARC will
normally meet at least three times
a year at appropriate times in the
reporting and audit cycle.
Remuneration Committee
The Remuneration Committee is
responsible for reviewing the performance
of the Executive Directors and the
Chair and making recommendations to
the Board on matters relating to their
remuneration and terms of service.
The Remuneration Committee will
normally meet at least twice a year.
Nomination Committee
The Nomination Committee has
responsibility for reviewing the
structure, size and composition
(including the skills, knowledge and
experience) of the Board and giving full
consideration to succession planning.
The Nomination Committee meets at
least twice a year at appropriate times
in the reporting cycle.
Disclosure Committee
The Disclosure Committee is responsible
for supporting the Board in relation
to compliance with the Market Abuse
Regulation, the Disclosure, Guidance and
Transparency Rules and the AIM Rules
for Companies and the identification,
control and disclosure of “inside
information”. The Disclosure Committee
comprises all of the Directors but has a
quorum of any three Directors provided
at least one Executive Director and at least
one Non-Executive Director is present. Nigel
Guy chairs the Disclosure Committee,
which will meet at such times and in
such manner (including by telephone)
as may be necessary or appropriate.
Members of the Principal Committees during the year under review were:
Committee
Chair
Other Members
Audit and Risk
David Chubb
Kate O’Neill**
Nigel Guy*
Remuneration
Kate O’Neill**
David Chubb
Nomination
Nigel Guy*
Kate O’Neill**
David Chubb
* Non-independent director.
** Resigned post year end on 30 June 2020.
There were no scheduled formal
Committee meetings during the period
under review due to the relatively
short period between the IPO and the
financial year end (Review Period).
The first meeting of the Audit
Committee was in early May 2020.
On 30 June 2020, Kate O’Neill resigned
as a director and accordingly stepped
down from the Committees. Claire
Balmforth has since joined each of
the Principal Committees and has
taken over the role of Chair of the
Remuneration Committee.
The work undertaken by each of the
Committees and any external advice
sought is set out in the reports of the
Committee Chairs following.
Internal Control
David Chubb acts as the Board’s Senior
Independent Director. The role of the
Senior Independent Director is to act as
a sounding board and intermediary for
the chair or other Board members, as
necessary and provide an alternative
route of access for Shareholders and
other directors who have a concern
that cannot be raised through the
normal channels.
The Board is advised and supported by
the Company Secretary, ONE Advisory
Limited, which provides professional
company secretarial and MAR
compliance services. The services of
the Company Secretary are available
to all Directors.
Nigel Guy
Chairman
26 August 2020
52 Governance FRP Advisory Group plc | Annual Report and Accounts 2020
Report of the Chair of the Audit and Risk Committee
For the year ended 30 April 2020
Overview
The Audit and Risk Committee (ARC)
was established at the time of the
Company’s IPO and until 30 June
2020, comprised myself, David Chubb,
as Chairman, Kate O’Neill and Nigel
Guy. Kate and I are both considered
independent Non-Executives by
the Board. Since Kate’s resignation
on 30 June 2020, the Committee
has welcomed Claire Balmforth, an
independent Non-Executive Director,
as a member. Nigel has worked with
the business for 10 years and brings
significant institutional knowledge
and memory to the Committee,
as well as his professional skills.
Nigel and I are qualified accountants
and Kate is a qualified lawyer
with significant investor relations
experience in the financial services
sector. Claire is an experienced non-
executive public company director
and Remuneration Committee chair.
As such, I consider that we possess
recent and relevant financial experience
in various sectors to contribute to our
work on the Committee.
Duties
The ARC’s Terms of Reference are
available to view on the Company’s
website. Its primary duties as set out
in the Terms of Reference include:
monitoring the integrity of the
financial statements of the Company,
including its annual and interim
reports, reviewing significant financial
reporting issues and judgements
contained in them.
reviewing the content of the annual
report and accounts and advising the
Board on whether, taken as a whole,
it is fair, balanced and understandable
and provides the information
necessary for shareholders to
assess the Company’s performance,
business model and strategy.
overseeing and advising the Board
on the Company’s overall risk
exposures and strategy.
monitoring the need for an internal
audit function and making appropriate
recommendations to the Board.
overseeing the relationship with
the external auditor.
keeping under review the adequacy,
effectiveness and independence
of the Company’s internal financial
controls, internal risk assessment
processes and internal control and
risk management systems.
Activities
The Committee did not meet formally
during the period between its
constitution on the Company’s IPO
on 6 March 2020 and the financial
year end but held its first meeting on
12 May 2020. The external auditor
attended this meeting at the invitation
of the Committee Chairman and all
committee members were present.
Since the year end, the Audit Committee
has met formally on a total of three
occasions for the following main
purposes:
To review the audit plan and terms
of engagement and areas of key
risk for the auditor.
To review the Group’s response
to the COVID-19 crisis.
To review the financial statements.
In particular the Committee focussed
on the following matters:
• Review of significant reporting
issues and judgements identified
by the auditor during their audit.
• Considering whether the Annual
Report was fair, balanced and
understandable with all necessary
information included for
shareholders to reasonably
assess business.
• Risk related disclosures in
the Annual Report.
To review the Management
Representation letter and
Audit Completion Report.
To review the effectiveness
of the audit.
To separately obtain feedback from
both Mazars and the Company on
the conduct of the audit and also
commence a review on lessons
to be learnt from the process.
Auditor Independence
It is the Company’s policy that the
auditor shall not undertake any non-
audit services for the Group without
the approval of the ARC. Potential
conflicts of interest with the external
auditor are a standing agenda item
for all ARC meetings to ensure
regular review.
Mazars were appointed as the
Company’s auditor post IPO. Mazars
was not an auditor of the pre-IPO
business of FRP. The Committee is
satisfied with the independence of
the auditor at the current time.
Governance FRP Advisory Group plc | Annual Report and Accounts 2020 53
Strategic ReportCorporate InformationGovernanceFinancial Statements Report of the Chair of the Audit and Risk Committee continued
Audit Effectiveness
The Committee met with the auditor
who presented their Audit Strategy
Document which included their plan
for the audit. Key areas were discussed
including materiality levels and the
Committee satisfied itself as to the
effectiveness of the planned audit
approach.
The Committee also met to review
a draft of the annual report and
accounts. The meeting also included
discussions with the auditor regarding
the audit process and to receive a
presentation on the Audit Completion
Report.
Given the significant amount of change
involving transitions from LLP to
PLC, from private to public company
and adopting IFRS (previously FRP
Advisory LLP reported under UK
GAAP), a huge amount of work has
needed to be undertaken to produce
our first Annual Report. The Committee
was pleased to learn that the audit
process had been completed with
the business and audit teams working
well together.
Dividend process
The Committee has also considered
the mechanism and reporting
requirements in relation to dividend
payments and in particular the process
being implemented for the first
dividend payment.
Risk Management
and Internal Controls
The Committee has responsibility for
reviewing the risk registers and for
satisfying itself that risk identification
and management processes, including
the Company’s financial and other
controls, are robust and sufficient to
keep the risks faced by the business
within the level which can be tolerated
by the business and which fit with the
Board’s appetite for risk.
I chaired the audit committee of the
business pre-listing and we continue
to evolve the Group’s approach
towards risk management as
the business grows. The recent
transition to a public company, has
led to further assessment and the
planned implementation of a formally
recognised Risk Management
Framework in order to ensure that we
continue to achieve our objectives.
Prior to the IPO, the Group’s internal
audit function reported to the then
Audit Committee. Since the IPO, whist
the internal audit function’s work is
integral to monitoring key areas of risk
across the Group, it is not a formal
process on which the auditor will
place reliance. As a consequence and
in order to enable the Committee to
better focus on strategic risk issues,
the internal audit function will report to
the operational risk committee which
will report to the Committee on specific
issues including matters arising from
the internal audit programme.
David Chubb
Chairperson,
Audit Committee
26 August 2020
54 Governance FRP Advisory Group plc | Annual Report and Accounts 2020
Report of the Chair of the Remuneration Committee
For the year ended 30 April 2020
Chairperson’s Introduction
The Committee was formed on the
Company’s IPO on 6 March 2020 and
was made up of Kate O’Neill (as Chair)
and David Chubb, both independent
Non-Executive Directors. I took over
the Chair and the Committee now
comprises myself and David Chubb.
We are both independent Non-
Executive Directors.
The role of the Committee is set out in
its Terms of Reference, a copy of which
is available on the Company’s website.
Its primary responsibilities are to:
determine and agree on behalf of
the Board, the Company’s policy and
framework for the remuneration of
the Chair, Chief Executive and other
executive directors including pension
rights and compensation payments,
including any such remuneration,
rights and/or payments as arise from
any such persons’ engagement as a
member of FRP Advisory Services LLP.
review the on-going appropriateness and
relevance of the remuneration policy;
approve the design of, and determine
targets for, any performance-related
remuneration schemes operated by
the Company and approve the total
Executive directors
Geoff Rowley
Jeremy French
Gavin Jones*
Non-Executive Directors
Nigel Guy
David Chubb
David Adams
Kate O’Neill
Total remuneration
annual payments made under such
schemes, save to the extent such
matters are expressly reserved to
the Board;
review the design of all share
incentive plans for approval by the
Board and shareholders. For any such
plans, determine each year whether
awards will be made to executive
directors or other colleagues, and
if so, the overall amount of such
awards, the individual awards
to executive directors and other
designated senior executives and the
performance targets to be used; and
determine the policy for, and scope
of, pension arrangements for each
executive director and other senior
executives.
No formal meetings of the Committee
were held between the IPO and the
financial year end.
Since the financial year end, the
Committee’s work has focussed on
and will be focussed on:
developing an appropriate
remuneration package for the new
Chief Financial Officer, Gavin Jones,
who was appointed on 29 June 2020.
developing the Remuneration Policy
for the executive directors.
To this end the Committee has had
regular remote dialogues on the above,
but as yet no formal meetings at which
all committee members were present.
While we seek to comply with the
QCA disclosure requirements, we do
not consider it appropriate to include
market performance metrics this year
due to the short trading history of the
Company at this time. This will be
revisited in future reporting cycles.
Single Total Figure
of Remuneration
The following tables detail the total
remuneration earned by each Director
from the Group in respect of the
financial year ended 30 April 2020
(which is effectively March and April,
approximately the period since the IPO
as they received no remuneration from
the Company prior to that date). Due
to the new structure of the business,
comparative figures for 2019 and
figures relating to the pre-IPO period
have not been given. Information on
their remuneration structure is set
out in more detail overleaf.
Salary
& fees
£
2,000
2,000
Nil
12,500
9,167
9,167
9,167
44,000
Bonus
£
Partner Profit
Allocation
£
Taxable
Benefits
£
Share
Options
£***
Post-IPO 2020
Total
£
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
276,179
107,151
N/A
N/A
N/A
N/A
N/A
**
**
Nil
65
412
48
47
Nil
Nil
Nil
278,179
109,151
Nil
55,000
67,565
5,000
14,579
50,000
59,214
5,000
14,214
383,330
572
115,000
542,902
*Gavin Jones was appointed after the year end on 29 June 2020.
**See “Partner Director Pay Structure” below.
***The share options are the market value at IPO, further details below.
Governance FRP Advisory Group plc | Annual Report and Accounts 2020 55
Strategic ReportCorporate InformationGovernanceFinancial Statements
Report of the Chair of the Remuneration continued
Non-Executive Director Annual Fees
The Annual Fees currently payable to the Non-Executive Directors are set out below. They were originally determined
on completion of the IPO in March 2020. The fees include any role on a Board Committee.
Nigel Guy
David Chubb
David Adams
Claire Balmforth
Total remuneration
Director Share Options
Details of the Directors’ share options at the year end and currently are set out below.
Fees
£
75,000
55,000
55,000
55,000
240,000
Executive directors
Geoff Rowley
Jeremy French
Gavin Jones (appointed 29 June 2020)
Non-Executive Directors
Nigel Guy
David Chubb
David Adams
Kate O’Neill (resigned 30 June 2020)
Claire Balmforth
Total number of Share Options
At 30 April 2020
At the date hereof
Nil
Nil
n/a
68,750
6,250
62,500
6,250
Nil
143,750
Nil
Nil
146,044
68,750
6,250
62,500
Nil
Nil
283,544
56 Governance FRP Advisory Group plc | Annual Report and Accounts 2020
Report of the Chair of the Remuneration continued
The Chief Executive Officer and
Chief Operating Officer are rewarded
primarily through their Partnership
interests in FRP Advisory Services
LLP in the same way as all the other
Partners of the business. They also
hold significant equity stakes
in the Company and will receive
dividends paid in respect of those
shareholdings.
The 146,044 Share Options granted
to Gavin Jones on his appointment
are nil cost options which vest on 29
June 2023. There are no performance
conditions attached to these options in
line with the other options granted at
the time of the IPO.
The Share Options granted to the
Non-Executive Directors at IPO have
an exercise price of 0.1p per Share
(nominal value), vest on 6 March 2023
and carry no performance conditions.
Remuneration Policy
Following the IPO, a review will be
conducted in this financial year using
an external Consultant to develop the
longer term remuneration strategy
linked to the overall company strategy
and also succession and retention
plans. This is to be included in next
year’s Annual Report.
Partner Director
Pay Structure
Geoff Rowley and Jeremy French are
remunerated in the following ways:
Base Salary: £12,000 per year.
This derives from their employment
by FRP Advisory Trading Limited.
Partner Base Profit Share: Jeremy
and Geoff will each receive basic
drawings in their capacity as partners
of FRP Advisory Services LLP of
£315,000 per year.
Discretionary Profit Share: There is
an annual variable profit-sharing pool
available for partners in respect of
each financial year equivalent to 25
per cent. of the Group’s consolidated
earnings before interest, tax, the value
of the profit-sharing pool and (in 2020
only) any exceptional costs related to
Admission and the Reorganisation.
Payments from the annual profit-
sharing pool will generally be paid in
four quarterly tranches following the
publication of the Company’s audited
accounts in respect of the relevant
year in four equal tranches of 25
per cent. Distribution of the annual
profit-sharing pool is determined by
the Remuneration Committee of FRP
Advisory Services LLP and, in relation
to Jeremy and Geoff, reviewed and
approved by the Remuneration
Committee of the Board.
Share Options: To reward and
incentivise exceptional performance,
Partners may also be made awards
of options or Ordinary Shares under
the EIP (which may in each case be
subject to vesting and/or performance
criteria). No options have been
awarded to Partners at this point.
Geoff and Jeremy maintain Life
Assurance Cover, Critical Illness
Cover, Private Medical Insurance and
Permanent Health Insurance through
the Partnership Scheme but these are
paid for by them personally. Pension
Contributions are also paid personally
from Partnership profit allocations.
In addition, Jeremy and Geoff will be
entitled to receive dividends arising
from their shareholdings in the
Company.
Chief Financial Officer
Pay Structure
Gavin Jones’s current annual
remuneration package is as follows:
Base Salary: £180,000
Bonus: up to 100% of salary, based
on FRPs financial performance and
specific objectives set and measured
by the Remuneration Committee
Pension contribution: £18,000
Share Options: 146,044 share options
awarded on appointment (see
“Director Share Options” above for
terms). Gavin is eligible for further
option awards under the terms of the
Share Option Scheme as determined
by the Remuneration Committee.
Other benefits: Life Assurance Cover,
Critical Illness Cover, Private Medical
Insurance and Permanent Health
Insurance.
Report Status
The Company is not required by
law or the AIM rules to produce a
Remuneration Report. It is provided in
compliance with the requirements of
the QCA Corporate Governance Code
and in the interests of transparent
and open reporting to shareholders.
This report has not been audited.
Claire Balmforth
Chairperson,
Remuneration Committee
26 August 2020
Governance FRP Advisory Group plc | Annual Report and Accounts 2020 57
Strategic ReportCorporate InformationGovernanceFinancial Statements Report of the Chair of the Nomination Committee
Ridgeway Partners produced a
shortlist and the Committee reviewed
the submitted CVs before inviting four
candidates for initial interview.
We were very pleased with the calibre
of candidates who expressed an
interest in joining us in both roles and
are delighted that Gavin and Claire
have joined the Board.
The Company is fully committed
to the elimination of unlawful and
unfair discrimination and values the
differences that a diverse workforce
brings to the Group. The Group will not
discriminate because of age, disability,
gender reassignment, marriage and
civil partnership, pregnancy and
maternity, race (which includes colour,
nationality and ethnic or national
origins), religion or belief, sex or sexual
orientation. It will not discriminate
because of any other irrelevant factor
and has built a culture that values
openness, fairness and transparency.
Nigel Guy
Chairperson,
Nomination Committee
26 August 2020
For the year ended 30 April 2020
The Committee
The Committee was formed on the
Company’s IPO on 6 March 2020 and
was made up of myself (as Chair) and
the two independent Non-Executive
Directors, Kate O’Neill and David
Chubb. Following Kate’s departure in
June, Claire Balmforth, an independent
Non-Executive Director, joined the
Committee.
The role of the Committee is set out in
its Terms of Reference, a copy of which
is available on the Company’s website.
Its primary responsibilities are to:
regularly review the structure, size
and composition (including the
skills, knowledge, experience and
diversity) of the Board and make
recommendations to the Board with
regard to any changes.
give full consideration to succession
planning for directors and other
senior executives in the course of
its work, taking into account the
challenges and opportunities facing
the Company and the skills and
expertise needed on the Board in
the future.
be responsible for identifying and
nominating for the approval of
the Board, candidates to fill Board
vacancies as and when they arise.
keep under review the leadership
needs of the organisation, both
executive and non-executive, with
a view to ensuring the continued
ability of the organisation to compete
effectively in the marketplace.
Committee Activities
No formal meetings of the Committee
were held between the IPO and the
financial year end.
The Committee’s work since the
IPO has focussed on:
Recruiting a new Chief Financial
Officer, Gavin Jones; and
Recruiting a new independent
Non-Executive Director,
Claire Balmforth.
In recruiting Gavin Jones and Claire
Balmforth, the Committee retained
independent search firms. In the case
of the Chief Financial Officer, the
search firm was Definitive Consulting
and in the case of the Non-Executive
search, the Committee used Ridgeway
Partners. Neither firm has a connection
to the Group or any member of the
Board or, so far as the Committee is
aware, any employee of the Group.
In the case of the Chief Financial
Officer, following a review of potential
candidates’ CVs with the search firm,
a shortlist was drawn up and invited
for interview with the two members
of the Nominations Committee
including the ARC Chair and also the
Executive Directors. The preferred
candidate was invited to a further
interview with the remaining member
of the Nominations Committee, the
remaining Non-Executive Director
and for a further time, the Chairman
following which the Nominations
Committee formally recommended
Gavin Jones to the Board and an offer
was made subject to independent third
party due diligence, Nomad approval
and references. We were delighted
that Gavin joined us on 29 June 2020
following completion of this process.
In the case of the Non-Executive
Director, while we needed to find the
best person for the role, we expressed
a preference for female representation
on the Board.
58 Governance FRP Advisory Group plc | Annual Report and Accounts 2020
Statement of Directors’ responsibilities
For the year ended 30 April 2020
The Directors are responsible for
preparing the director’s report, annual
report and the financial statements in
accordance with applicable laws and
regulations.
Company law requires the Directors
to prepare financial statements for
each financial year. Under that law
the Directors have elected to prepare
the Group financial statements in
accordance with International Financial
Reporting Standards (“IFRSs”) as
adopted by the European Union.
The financial reporting framework that
has been applied in the preparation
of the parent company financial
statements is applicable law and FRS
101 “reduced Disclosure Framework”
(United Kingdom Generally Accepted
Accounting Practice) as applied in
accordance with the provisions of the
Companies Act 2006. Under company
law the Directors must not approve the
financial statements unless they are
satisfied that they give a true and fair
view of the state of affairs of the group
and company, and of the profit or loss
of the group for that period.
In preparing these financial statements,
the Directors are required to:
select suitable accounting policies
and then apply them consistently;
make judgements and accounting
estimates that are reasonable
and prudent;
state whether they have been
prepared in accordance with IFRSs
as adopted by the European Union,
subject to any material departures
disclosed and explained in the
financial statements; and
prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and
explain the group’s and company’s
transactions and disclose, with
reasonable accuracy, at any time
the financial position of the Group
and Company and enable them to
ensure that the financial statements
comply with the requirements of the
Companies Act 2006. They are also
responsible for safeguarding the
assets of the Group and Company
and hence for taking reasonable steps
for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for
the maintenance and integrity of the
corporate and financial information
included on the Group’s website.
Governance FRP Advisory Group plc | Annual Report and Accounts 2020 59
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Independent auditor’s report
to the Members of FRP Advisory Group plc
Opinion
We have audited the financial statements
of FRP Advisory Group plc (the ‘Parent
Company’) and its subsidiaries (the
‘Group’) for the year ended 30 April
2020 which comprise the:
Consolidated Statement
of Comprehensive Income;
Consolidated Statement
of Financial Position;
Consolidated Statement
of Changes in Equity;
Consolidated Statement
of Cash Flows;
Parent Company Balance Sheet;
Parent Company Statement
of Changes in Equity; and
notes to the financial statements,
including a summary of significant
accounting policies.
The financial reporting framework that
has been applied in the preparation
of the Group financial statements
is applicable law and International
Financial Reporting Standards (IFRSs)
as adopted by the European Union.
The financial reporting framework that
has been applied in the preparation
of the Parent Company financial
statements is applicable law and
FRS101 “Reduced Disclosure
Framework” (United Kingdom Generally
Accepted Accounting Practice)
as applied in accordance with the
provisions of the Companies Act 2006.
In our opinion:
the financial statements give a true
and fair view of the state of the
Group’s and of the Parent Company’s
affairs as at 30 April 2020 and of the
Group’s profit for the year then ended;
the Group financial statements have
been properly prepared in accordance
with IFRSs as adopted by the
European Union;
the Parent Company financial
statements have been properly
prepared in accordance with
United Kingdom Generally Accepted
Accounting Practice and as applied
in accordance with the Companies
Act 2006; and
the financial statements have been
prepared in accordance with the
requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance
with International Standards on
Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities
under those standards are
further described in the ‘Auditor’s
responsibilities for the audit of the
financial statements’ section of our
report. We are independent of the
Parent Company in accordance with
the ethical requirements that are
relevant to our audit of the financial
statements in the UK, including the
FRC’s Ethical Standard as applied to
listed entities, and we have fulfilled
our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence
we have obtained is sufficient and
appropriate to provide a basis for
our opinion.
Conclusions relating
to going concern
We have nothing to report in respect
of the following matters in relation
to which the ISAs (UK) require us to
report to you where:
the directors’ use of the going
concern basis of accounting in
the preparation of the financial
statements is not appropriate; or
the directors have not disclosed
in the financial statements any
identified material uncertainties that
may cast significant doubt about
the Group’s or the Parent Company’s
ability to continue to adopt the going
concern basis of accounting for a
period of at least twelve months
from the date when the financial
statements are authorised for issue.
Key audit matters
Key audit matters are those matters
that, in our professional judgement,
were of most significance in our audit
of the financial statements of the
current period and include the most
significant assessed risks of material
misstatement (whether or not due to
fraud) we identified, including those
which had the greatest effect on:
the overall audit strategy;
the allocation of resources
in the audit; and
directing the efforts of the
engagement team.
These matters were addressed in the
context of our audit of the financial
statements as a whole, and in forming
our opinion thereon, and we do not
provide a separate opinion on these
matters.
60 Governance FRP Advisory Group plc | Annual Report and Accounts 2020
Independent auditor’s report continued
Key audit matter
How the matter was addressed in the audit
Revenue recognition and the value
of unbilled revenue (contract assets)
The Group’s accounting policy in respect of revenue
recognition is set out in note 2.10 ‘Revenue recognition’
on page 72 of the financial statements. Under this
policy, the amount of revenue recognised in a period
will represent the fair value of the Group’s entitlement
to consideration in respect of professional services
provided in that period. In determining the entitlement
to non-contingent consideration, which represents
approximately 90% of the Group’s revenues, the
Group’s engagement teams consider the nature of
the fee arrangements for each engagement. These
arrangements may include the requirement for
credit committee approval, and the assessment may
require an estimate of both the proportion of each
engagement that is complete at the period-end, and the
total consideration expected to be received under the
engagement.
The directors’ commentary on the related judgements
and estimates is set out in note 3 page 77. Unbilled
revenue is included in the statement of financial
position within Trade and other receivables.
Reflecting the complex nature of some fee arrangements
and the judgmental nature of the assessments required
by the Group’s engagement teams, we have identified
revenue recognition and the associated value of unbilled
revenue as a key audit matter.
Our audit procedures over revenue recognition and
contract assets included general procedures on the
methodology adopted and related control environment
and control procedures, and substantive testing on a
sample of engagements.
General procedures included, but were not limited to:
assessing the related internal control environment,
including testing certain controls that we considered to
be key in the determination of revenue to be recognised.
considering the appropriateness of the methodology
adopted, with reference to IFRS15;
considering the adequacy of the disclosures related
to revenue recognition; and
reviewing the recovery of a sample of prior year
contract assets by reference to recorded outcomes
in the current year.
Our substantive procedures performed on a sample of cases
ongoing at the year end included, but were not limited to:
assessing the right to consideration by reference
to fee arrangements and/or contractual terms; and
robustly challenging the judgements and estimates
made by the Group’s engagement teams including;
contract completion point, costs yet to be incurred
and the potential outcome of the contract, in
determining the level of and the value of contract
assets recorded in the financial statements.
Key observations
Our testing did not identify any significant deficiencies in
either the internal control environment or in the operation of
related controls. As a result, no revision to the nature and/or
scope of our planned audit procedures was required.
Overall, our assessment is that the methodology and
models used in estimating the level of revenue and the
valuation of unbilled revenue are appropriate and in
accordance with IFRS 15, and that the level of revenue
and value of unbilled revenue in the financial statements
are appropriate.
Our sample-based audit work indicated that revenue has
been recognised when a right to consideration had been
obtained through performance of the agreed services.
We consider the related disclosure in note 3 to the
financial statements appropriately describes and
explains the significant judgement used in determining
the stage of completion of revenue contracts
Governance FRP Advisory Group plc | Annual Report and Accounts 2020 61
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Independent auditor’s report continued
Our application
of materiality
The scope of our audit was influenced
by our application of materiality. We
set certain quantitative thresholds for
materiality. These thresholds, together
with qualitative considerations, helped
us to determine the scope of our audit
and the nature, timing and extent of
our audit procedures on the individual
financial statement line items and
disclosures and in evaluating the effect
of misstatements, both individually
and on the financial statements as
a whole. Based on our professional
judgement, we determined materiality
for the financial statements as a whole
as follows:
Overall materiality
Performance materiality
Group materiality:
£1.2m
Parent Company materiality:
£0.9m
How we determined it
Group materiality:
1.9% of revenue
Parent Company materiality:
5% of net assets.
Rationale for
benchmark applied
In light of the group reorganisation
in the year in which the previous
parent partnership, which
distributed profits in full, was
replaced by a company, we consider
revenue to be the most appropriate
basis for determining materiality.
As the Parent Company operates
solely as a holding company,
we consider net assets to be an
appropriate basis for determining
materiality.
Group performance materiality:
£0.78m
Parent Company performance
materiality: £0.59m
We performed our audit procedures
using a lower level of materiality –
termed ‘performance materiality’
– which is set to reduce to an
appropriate level the probability
that the aggregate of uncorrected
and undetected misstatements in
the financial statements exceeds
materiality for the financial
statements as a whole. Having
considered factors such as the
Group and Company’s control
environment and the fact that this is
our first year as the group’s auditor,
we have set our performance
materiality at 65% of materiality.
Reporting threshold
We agreed with the Audit
Committee that we would report
to that committee all identified
corrected and uncorrected audit
differences in excess of £36,000
(representing 3% of Group financial
statement materiality) together with
differences below that threshold
that, in our view, warranted reporting
on qualitative grounds.
We consider the Group to be a single
significant component.
62 Governance FRP Advisory Group plc | Annual Report and Accounts 2020
Independent auditor’s report continued
An overview of the
scope of our audit
As part of designing our audit, we
determined materiality and assessed
the risk of material misstatement in
the financial statements. In particular,
we looked at where the directors
made subjective judgements, such as
determining appropriate accounting
treatments where alternatives
exist, and making assumptions on
significant accounting estimates.
Although comprising a number of
legal entities, we consider the Group
to be a single significant component
which was subject to a full scope audit
performed by the group audit team,
which also tested the consolidation
process.
We gained an understanding of
the legal and regulatory framework
applicable to the Group, the structure
of the Group and the industry in which
it operates. We considered the risk of
acts by the Group which were contrary
to the applicable laws and regulations,
including the risk of fraud. We designed
our audit procedures to respond to
those identified risks, including non-
compliance with laws and regulations
(irregularities) that are material to the
financial statements.
We focused on laws and regulations
that could give rise to a material
misstatement in the financial
statements, including, but not limited
to, the Companies Act 2006. We
tailored the scope of our Group
audit to ensure that we performed
sufficient work to be able to give an
opinion on the financial statements
as a whole. We used the outputs of a
risk assessment, our understanding
of the Group’s accounting processes
and controls and its environment, and
considered qualitative factors in order
to ensure that we obtained sufficient
coverage across all financial statement
line items.
Our tests included, but were not
limited to, obtaining evidence about
the amounts and disclosures in the
financial statements sufficient to give
reasonable assurance that the financial
statements are free from material
misstatement, whether caused by
fraud or error; review of minutes of
directors’ meetings in the year; and
enquiries of management.
The risks of material misstatement
that had the greatest effect on our audit,
including the allocation of resources
and effort, are discussed under ‘Key
audit matters’ within this report.
Other information
The directors are responsible for
the other information. The other
information comprises the information
included in the Annual Report, other
than the financial statements and our
auditor’s report thereon. Our opinion
on the financial statements does not
cover the other information and, except
to the extent otherwise explicitly stated
in our report, we do not express any
form of assurance conclusion thereon.
In connection with our audit of the
financial statements, our responsibility
is to read the other information and, in
doing so, consider whether the other
information is materially inconsistent
with the financial statements or our
knowledge obtained in the audit or
otherwise appears to be materially
misstated. If we identify such material
inconsistencies or apparent material
misstatements, we are required
to determine whether there is a
material misstatement in the financial
statements or a material misstatement
of the other information. If, based
on the work we have performed, we
conclude that there is a material
misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Opinions on other
matters prescribed by
the Companies Act 2006
In our opinion, based on the work
undertaken in the course of the audit:
the information given in the Strategic
Report and the Directors’ Report
for the financial year for which the
financial statements are prepared
is consistent with the financial
statements; and
the Strategic Report and the
Directors’ Report have been prepared
in accordance with applicable legal
requirements.
Matters on which we
are required to report
by exception
In light of the knowledge and
understanding of the Group and the
Parent Company and its environment
obtained in the course of the audit,
we have not identified material
misstatements in the Strategic Report
or the Directors’ Report.
We have nothing to report in respect
of the following matters in relation
to which the Companies Act 2006
requires us to report to you if, in our
opinion:
adequate accounting records
have not been kept by the Parent
Company, or returns adequate for our
audit have not been received from
branches not visited by us; or
the Parent Company financial
statements are not in agreement with
the accounting records and returns; or
certain disclosures of directors’
remuneration specified by law are
not made; or
we have not received all the
information and explanations
we require for our audit.
Governance FRP Advisory Group plc | Annual Report and Accounts 2020 63
Strategic ReportCorporate InformationGovernanceFinancial Statements Independent auditor’s report continued
A further description of our
responsibilities for the audit of the
financial statements is located on the
Financial Reporting Council’s website at
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our
auditor’s report.
Use of the audit report
This report is made solely to the
Parent Company’s members as a
body in accordance with Chapter 3 of
Part 16 of the Companies Act 2006.
Our audit work has been undertaken
so that we might state to the Parent
Company’s members those matters
we are required to state to them in
an auditor’s report and for no other
purpose. To the fullest extent permitted
by law, we do not accept or assume
responsibility to anyone other than
the Parent Company and the Parent
Company’s members as a body for our
audit work, for this report, or for the
opinions we have formed.
William Neale Bussey
Senior Statutory Auditor
for and on behalf of
Mazars LLP
Chartered Accountants
and Statutory Auditor
Tower Bridge House
St Katherine’s Way
London
E1W 1DD
26 August 2020
Responsibilities of directors
As explained more fully in the directors’
responsibilities statement set out on
page 59, the directors are responsible
for the preparation of the financial
statements and for being satisfied that
they give a true and fair view, and for
such internal control as the directors
determine is necessary to enable the
preparation of financial statements that
are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements,
the directors are responsible for
assessing the Group’s and the
Parent Company’s ability to continue
as a going concern, disclosing, as
applicable, matters related to going
concern and using the going concern
basis of accounting, unless the
directors either intend to liquidate the
Group or the Parent Company or to
cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
for the audit of the financial
statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditor’s
report that includes our opinion.
Reasonable assurance is a high level
of assurance, but is not a guarantee
that an audit conducted in accordance
with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud
or error and are considered material
if, individually or in the aggregate,
they could reasonably be expected
to influence the economic decisions
of users taken on the basis of these
financial statements.
64 Governance FRP Advisory Group plc | Annual Report and Accounts 2020
Financial
Statements
Consolidated statement of comprehensive income
For the year ended 30 April 2020
Revenue
Personnel costs
Depreciation and amortisation
Other operating expenses
Exceptional costs
Operating profit
Finance income
Finance costs
Net finance costs
Profit before tax
Taxation
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Earnings per share (in pence)
Basic and diluted
All results derive from continuing operations.
Notes
Year Ended
30 April 2020
£’000
Year Ended
30 April 2019
£’000
63,187
54,312
7
6
10
11
(42,692)
(1,359)
(14,086)
(1,974)
(40,082)
(1,325)
(12,651)
–
3,076
254
7
(177)
7
(257)
(170)
(250)
2,906
(829)
2,077
–
2,077
4
(4)
–
–
–
12
0.87p
n/a
Prior to the group reorganisation on 6 March 2020, the Group was headed by a partnership. Under the terms of the partnership agreement, all profits for the c.10 month
period to IPO and prior year were automatically allocated to the partners, with the allocation being presented within staff costs.
The notes on pages 70 to 92 form part of these financial statements.
66 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Consolidated statement of financial position
As at30 April 2020
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right of use asset
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Loans and borrowings
Lease liability
Total current liabilities
Non-current liabilities
Other creditors
Loans and borrowings
Lease liability
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
Equity
Share capital
Share premium
Treasury shares reserve
Share based payment reserve
Merger reserve
Retained earnings
Shareholders equity
Notes
Year Ended
30 April 2020
£’000
Year Ended
30 April 2019
£’000
13
13
14
14
15
16
17
18
18
17
18
18
19
21
24
22
750 750
– 2
1,853
4,786
1,994
3,995
6,739
7,391
33,576
21,311
54,887
31,069
4,946
36,015
61,626
43,406
27,276
–
925
28,201
30,947
358
850
32,155
9,528
4,625
– 3,284
4,197
–
3,271
124
12,923
12,106
41,124
44,261
20,502
(855)
238
18,975
(19)
361
(90)
1,037
20,502
–
–
–
–
–
(855)
(855)
Approved by the Board and authorised for issue on 26 August 2020.
Jeremy French
Director
Company Registration No. 12315862
Gavin Jones
Director
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 67
Strategic ReportCorporate InformationGovernanceFinancial Statements
Consolidated statement of changes in equity
For the year ended 30 April 2020
Balance at 30 April 2018 and 2019
–
–
–
–
–
(855)
(855)
Called up
share
capital
£’000
Share
premium
account
£’000
Treasury Share based
payment
reserve
£’000
share
reserve
£’000
Merger
reserve
£’000
Retained
earnings
£’000
Total
Total
equity
£’000
Year ended 30 April 2019
Profit for the year
Other movements
Group restructuring
Issue of share capital
Issue costs
Acquisition of treasury shares
Share based payment expense
–
–
–
238
–
–
–
–
–
–
19,975
(1,000)
–
–
–
–
–
–
–
(19)
–
–
–
–
–
–
–
361
–
–
(90)
–
–
–
–
2,077
(185)
(90)
2,077
(185)
–
– 20,213
–
–
–
(1,000)
(19)
361
Balance at 30 April 2020
238 18,975
(19)
361
(90)
1,037 20,502
Prior to the group reorganisation on 6 March 2020, the Group was headed by a partnership. Under the terms of the partnership agreement, all members’ interests,
including partner capital, was considered to be a liability of the partnership. As such, the group has recorded no net assets or equity, other than amounts relating to
the adoption of IFRS, prior to 6 March 2020.
68 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Consolidated statement of cash flows
For the year ended 30 April 2020
Cash flows from operating activities
Profit/(loss) before taxation
Depreciation, amortisation and impairment
Share based payments
Net finance expense
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
Tax paid
Net cash from operating activities
Cash flows from investing activities
Purchase of tangible assets
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from share sales
Less issue costs
Principal elements of lease payments
Drawdown of new loans
Repayment of loans and borrowings
Interest paid
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Year Ended
30 April 2020
£’000
Year Ended
30 April 2019
£’000
2,906
1,359
361
170
(2,510)
360
(18)
2,628
(707)
7
(700)
20,106
(1,000)
(850)
–
(3,642)
(177)
14,437
4
1,325
–
250
(5,786)
(2,308)
4
(6,511)
(937)
7
(930)
–
–
(767)
3,000
(345)
(257)
1,631
16,365
4,946
21,311
(5,810)
10,756
4,946
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 69
Strategic ReportCorporate InformationGovernanceFinancial Statements
Notes to the Financial Statements
For the year ended 30 April 2020
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
pensions advisory.
The Company is a public company
limited by shares registered in England
and Wales and domiciled in the UK.
The address of the registered 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 consolidated
financial statements:
2.1 Basis of preparation
The financial statements have
been prepared in accordance with
International Financial Reporting
Standards (“IFRS”) as adopted by the
European Union, in accordance with
the IFRS Interpretations Committee
(“IFRIC”) interpretations, and with those
parts of the Companies Act 2006 as
applicable to companies reporting
under IFRS. The financial statements
comply with IFRS as issued by the
International Accounting Standards
Board (IASB).
The financial statements are prepared
in sterling, which is the presentational
currency of the Company. Monetary
amounts in these financial statements
are rounded to the nearest £000.
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 2020.
FRP Advisory Group plc was
incorporated on 14 November 2019
and on 6 March 2020 it acquired the
entire issued share capital of FRP
Advisory Trading Limited from FRP
Advisory LLP by way of a share-for-
share exchange. The shareholding
of FRP Advisory Group plc owned
by FRP Advisory LLP as a result
of the exchange was subsequently
distributed to its members in the
same proportion to their equity
holdings. FRP Advisory Trading
Limited has three wholly owned
subsidiaries, FRP Debt Advisory
Limited, FRP Corporate Finance
Limited and Litmus Advisory Limited,
as well as being a member of FRP
Advisory Services LLP and Apex
Debt Solutions LLP.
The accounting treatment in relation
to the addition of FRP Advisory Group
plc as a new UK holding company of
the Group falls outside the scope of
IFRS 3 ‘Business Combinations’. The
re-organisation constituted a common
control combination of the entities.
This was a result of the shareholders
of FRP Advisory Group plc being
issued shares in the same proportion
to their equity holdings in FRP
Advisory LLP and the continuity
of ultimate controlling parties.
The reconstructed group was
consolidated using merger accounting
principles, as outlined in Financial
Reporting Standard FRS 102 (“FRS”),
and the reconstructed Group treated
as if it had always been in existence.
The Directors believe that this
approach presents fairly the financial
performance, financial position
and cash flows of the Group.
2.4 New and amended standards
adopted by the group
The Group has applied the following
standards and amendments for the
first time for their annual reporting
period ending 30 April 2020:
IFRS 16 ‘Leases’
IFRS 16 specifies how the Group
will recognise, measure, present and
disclose leases. The standard provides
a single lessee accounting model,
requiring lessees to recognise assets
and liabilities for all leases unless the
lease term is 12 months or less or the
underlying asset has a low value. The
full retrospective application of IFRS16
has been applied. For each lease the
Group has recognised an asset for
the remaining lease term and lease
liability reflecting the obligation to
make lease payments. Both the asset
and the liability have been recognised
on-balance sheet where previously
they were off balance sheet. There has
been no impact on cash flow but there
has been an impact on the Income
Statement as the operating lease
payments have been replaced with
a depreciation charge on the leased
asset and an interest expense on the
lease liability.
The Group has taken advantage
of the exemptions available under
IFRS 16 not to apply the recognition
and requirements of IFRS 16 to leases
with a term of 12 months or less. The
recognition of these exempted leases
will therefore continue unchanged
– a charge will be recognised in
the income statement based on
straight-line recognition of the lease
payments payable on each lease,
after adjustment for lease incentives
received. These are also recognised
in the operating profit note.
A number of other new standards are
also effective from 1 May 2019 but
they do not have a material effect on
the Group’s financial statements.
70 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Financial Statements continued
2. Significant accounting policies continued
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. In some cases, these
standards and guidance have not been endorsed for use in the European Union.
The Group’s and Company’s management have reviewed the application of the amendments and have concluded that there
is no expected impact on the group and company financial statements.
Standard
Conceptual Framework and Amendments to References
to the Conceptual Framework in IFRS Standards
Amendments to IFRS 3 Business Combinations
Amendments to IAS 1 and IAS 8: Definition of Material
Amendments to IFRS9, IAS39 and IFRS 7: Interest Rate Benchmark Reform
Amendment to IFRS16: Covid-19 Related Rent Concessions
IFRS 17 – Insurance Contracts
Effective date, annual period
beginning on or after
1 January 2020
1 January 2020
1 January 2020
1 January 2020
1 June 2020
1 January 2021
2.6 Going concern
The Group has been, and is currently, both profitable and cash generative. The business has consistently grown year
on year for 10 years and has proved to be resilient, growing in both periods of economic growth and recession.
At year end the group had £21m of cash reserves, higher than historic positions due to funds raised during the IPO.
The group also has an undrawn £5m committed revolving credit facility (RCF). Ongoing operational cash generation
and this cash balance mean we have sufficient resources to both operate and move swiftly should acquisition
opportunities arise.
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
supporting each other and work on both higher value assignments or higher volume lower value jobs. Also, the business
has 4 other pillars: Pensions, Forensics, Corporate Finance and Debt Advisory that both support the restructuring offering
but also earn fees autonomously.
With specific regard to the 2020 coronavirus (COVID-19) virus pandemic, the Group immediately adapted our ways of
working, clients were continually serviced without interruption. Consequently, our cash generation and profitability were
not significantly impacted by COVID-19. Given our strong financial position no employees of the firm have so far been made
redundant or furloughed and none of the other Government assistance schemes available (grants, emergency loans, tax
settlement delays) were utilised. Throughout the ‘lock-down’ period we have continued to win new client appointments,
retain existing employees and attract new employees.
Remote working has reduced colleague interaction, limiting virus exposure to our Partners and colleagues. Colleagues that
choose to come into work are temperature checked and work in a socially distanced layout.
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.
Having due consideration of the financial projections, the level of debt and the available facilities, it is the opinion of the
directors that the group has adequate resources to continue in operation for the foreseeable future and therefore consider
it appropriate to prepare the Financial Statements on the going concern basis.
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 71
Strategic ReportCorporate InformationGovernanceFinancial Statements
Notes to the Financial Statements continued
2. Significant accounting
policies continued
2.7 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
until the date that control ceases.
The accounting policies of the
subsidiaries have been changed when
necessary to align them with the
policies adopted by the Group.
2.8 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.
The Group has been consolidated
under merger accounting principles
set out in Section 19 of FRS
102 as described in ‘basis of
consolidation’ above.
2.9 Foreign currencies
Transactions in currencies other
than pounds sterling are recorded
at the rates of exchange prevailing
at the dates of transactions. At each
reporting end date, monetary assets
and liabilities that are denominated in
foreign currencies are retranslated at
the rates prevailing on the reporting
end date. Gains and losses arising
on translation are included in the
income statement for the period.
2.10 Revenue recognition
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
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;
obligations within the contract;
• debt advisory services; and
• Determine the transaction price;
• corporate finance services.
• 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.
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.
72 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Financial Statements continued
2. Significant accounting
policies continued
2.10 Revenue recognition continued
Insolvency and advisory
services continued
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 income
within trade and other receivables.
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
Revenue is recognised at a point in
time on the date of completion of the
transaction or when unconditional
contracts have been exchanged.
For non-refundable retainer fees,
these are recognised upon signing
of the contract. Fees typically
comprise a non-refundable retainer
and a success fee based on a fixed
percentage of the transaction value.
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.
2.11 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.
2.12 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 if the fair value can
be measured reliably.
Amortisation is recognised so as
to write off the cost or valuation of
assets less their residual values over
their useful lives, being 10% on a
straight line basis.
2.13 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 software
Computer equipment
Fixtures and fittings
Leasehold
improvements
Right of
use assets
Motor vehicles
25%
25%
15%
Over the term
of the lease
Over the term
of the lease
25%
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 73
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Notes to the Financial Statements continued
2. Significant accounting
policies continued
2.14 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 instruments
are derecognised on the trade date
when the Group is no longer a party
to the contractual provisions of
the instrument.
2.15 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 financial assets or
liabilities held 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 receivables. 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 instrument for a
similar debt instrument.
Unbilled revenue
Unbilled revenue recognised by
the Group falls into one of three
categories: insolvency & advisory
services, corporate finance services
and debt-advisory services.
Insolvency and advisory services
Unbilled revenue is recognised at the
fair value of services provided at the
balance sheet date reflecting the stage
of completion (determined by costs
incurred to date as a percentage of
the total anticipated costs) of each
assignment. This is included in trade
and other receivables.
Debt advisory services and
corporate finance services
Revenue is recognised upon the
completion of each performance
obligation (i.e. “stages”) at a point in
time. There is therefore no unbilled
revenue at each year end as revenue
is only recognised once these
performance obligations have been
fulfilled and invoicing has taken place.
Interest bearing borrowings
Interest-bearing borrowings are
recognised initially at the present value
of future payments discounted at a
market rate of interest. Subsequent
to initial recognition, interest-bearing
borrowings are stated at amortised
cost using the effective interest
method, less any impairment losses.
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.
2.16 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. 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 profit or loss.
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.
74 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Financial Statements continued
2. Significant accounting
policies continued
2.17 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.
The tax payable prior to the group
reorganisation was the personal
liability of the individual members;
consequently, neither tax on
partnership profits nor related deferred
taxation have been accounted for in
the financial statements.
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 expected to apply in the
period 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.
2.18 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.
2.19 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 cash
flows 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.
2.20 Leases
The Group leases a number of
properties in various locations around
the UK from which it operates.
All leases are accounted for by
recognising a right-of-use asset
and a lease liability except for:
• Leases of low value assets; and
• Leases with a duration of twelve
months or less.
IFRS16 full retrospective method
has been applied. 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.
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 75
Strategic ReportCorporate InformationGovernanceFinancial Statements Notes to the Financial Statements continued
2. Significant accounting
policies continued
2.20 Leases continued
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 reasonable 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 amortised 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 amortised over the remaining
(revised) lease term.
2.21 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 include interest receivable
on funds invested and net foreign
exchange gains.
Interest income and interest payable
are recognised in the statement
of comprehensive income as
they accrue, using the effective
interest method.
2.22 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.
2.23 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 income statement 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.
76 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Financial Statements continued
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.
Critical judgements
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.
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 make subjective
judgements concerning the value
in use of cash-generating units.
Investments in subsidiaries
The directors assess the recoverability
of investments in subsidiaries at the
reporting date by reference to the
profitability and its net asset position.
Where applicable, investments in
subsidiaries are impaired down to the
amount assessed as recoverable.
Merger accounting
IFRS Standards do not specify how to
account for Business Combinations
Under Common Control. Management
has used its judgement to determine
that the substance of this transaction
is solely a reorganisation of the group
not affecting the nature or conduct
of the underlying trading operation.
As such, in accordance with IAS 8,
management has considered other
standard setting bodies when using
judgement to determine an accounting
policy and has adopted the principles
of merger accounting under FRS 102.
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.
Unbilled revenue
Time recorded for chargeable
professional services work is regularly
reviewed to ensure that only what the
Directors believe to be recoverable
from the client is recognised as
unbilled revenue within prepayments
and accrued revenue.
Estimates are made with allocating
revenue to the performance obligation
and the valuation of contract assets.
The Group estimates the contract
completion point, costs yet to be
incurred and the potential outcome
of the contract.
Significant judgement is involved in
estimating the amount of revenue,
where variable consideration is
involved and which results in the
recognition of unbilled revenue.
Management base their assessments
for judgements and estimates on
historic experience, market insights
and rational estimates of future
events. Judgements and 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.
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. Judgements are also
applied in relation to estimations of the
number of options which are expected
to vest, by reference to historic leaver
rates and expected outcomes under
relevant performance conditions.
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.
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 77
Strategic ReportCorporate InformationGovernanceFinancial Statements Notes to the Financial Statements continued
4. Financial risk management continued
Credit risk
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.
Trade receivables
Unbilled revenue
Cash and cash equivalents
As at
30 April 2020
£’000
3,391
28,285
21,311
52,987
As at
30 April 2019
£’000
3,229
26,313
4,946
34,488
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 and unbilled revenue 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.
Unbilled revenue is recognised by the Group only when all conditions for revenue recognition have been met in line with
the Group’s accounting policy. Changes in contract asset balances this year primarily relate to increases in revenue and
the Group undertaking more complex cases.
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 maturities of borrowings and other financial liabilities are disclosed below.
Within 1 year
Within 2-5 years
Beyond 5 years
As at
30 April 2020
£’000
925
2,552
719
4,196
As at
30 April 2019
£’000
1,208
6,442
1,039
8,689
78 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Financial Statements continued
4. Financial risk management continued
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.
Foreign currency risk
There is no material risk associated with foreign currency transactions or overseas subsidiaries.
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 Group’s assets are held in the UK and all its capital expenditure
arises in the UK. The Group’s operations and markets are located in the UK.
All revenue is recognised in relation to contracts held with customers.
6. Operating profit
Operating profit has been arrived at after charging:
Depreciation of owned assets
Depreciation of right-of-use-assets
Fees payable to the Group’s auditor for the audit of the group accounts
Fees payable to the auditor for other services:
the auditing of Subsidiary accounts
taxation compliance and other services
all other services
Expenses relating to short term leases
Year ended
30 April 2020
£’000
Year ended
30 April 2019
£’000
542
815
80
40
–
–
35
462
860
27
11
3
85
35
7. Exceptional costs
Items that are material, either because of their size or their nature, or that are nonrecurring are considered as exceptional
items and are presented within the line items to which they best relate.
An analysis of the amount presented as exceptional items in these financial statements is given below.
Operating items
Costs in relation to the IPO
Total exceptional costs
Year ended
30 April 2020
£’000
1,974
1,974
Year ended
30 April 2019
£’000
–
–
Attributable costs relating to the group restructuring and IPO performed during the year have been recognised within the
consolidated income statement as an exceptional cost.
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 79
Strategic ReportCorporate InformationGovernanceFinancial Statements
Notes to the Financial Statements continued
8. Director and employee information
The average number of employees during the year was:
Directors
Fee earning employees
Non fee earning employees
The aggregate payroll costs of these persons were as follows:
Wages, salaries and partner compensation charged as an expense
Social security costs
Pension costs – defined contribution scheme
Share-based payment expense
Year ended
30 April 2020
Number
5
279
67
£’000
40,735
1,202
394
361
42,692
Year ended
30 April 2019
Number
–
259
61
£’000
38,413
1,257
412
–
40,082
9. Directors’ remuneration and emoluments (including partner profit allocations)
Details of emoluments paid to the key management personnel from the date of incorporation to the year-end
(including partner profit allocations in respect of Messrs Rowley and French) are as follows:
Directors’ emoluments
Benefits in kind (inc. pension contributions)
Share based payment expense
14 November 2019
to 30 April 2020
£’000
Year ended
30 April 2019
£’000
427
1
115
543
–
–
–
–
Remuneration (including partner profit allocation) disclosed above include the following amounts paid to the highest paid director:
Remuneration for qualifying services
Key management personnel including directors:
Salaries and fees
Contributions to pension plans
Benefits in kind
Share based payment expense
£’000
278
£’000
1,238
33
29
39
1,339
£’000
–
£’000
1,071
–
–
–
1,071
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted
to 5 (2019: n/a).
80 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Financial Statements continued
10. Finance income and expense
On short term deposits and investments
Total finance income
On bank loans and overdrafts measured at amortised cost
On lease liability
Total finance expense
11. Taxation
Current tax
UK corporation tax
Deferred tax
Origination of temporary differences
Total tax expense
Reconciliation of tax charge:
Profit before tax
Corporation tax in the UK at 19%
Effects of:
Non-deductible expenses
Other permanent temporary differences
Total tax charge
Year ended
30 April 2020
£’000
Year ended
30 April 2019
£’000
7
7
148
29
177
7
7
72
185
257
Year ended
30 April 2020
£’000
Year ended
30 April 2019
£’000
705
705
124
124
829
Year ended
30 April 2020
£’000
2,906
552
132
145
829
4
4
–
–
4
Year ended
30 April 2019
£’000
4
1
5
(2)
4
Finance Bill 2016 enacted provisions to reduce the main rate of UK corporation tax to 17% from 1 April 2020. However, in
the March 2020 Budget it was announced that the reduction in the UK rate to 17% will now not occur and the Corporation
Tax Rate will be held at 19%.
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 81
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Notes to the Financial Statements continued
12. Earnings per share
The earnings per share has been calculated using the profit for the year and the weighted average number of ordinary
shares outstanding during the year, as follows:
Profit for the period attributable to equity holders of the company
Weighted average number of ordinary shares
Earnings per share (in pence)
Year ended
30 April 2020
£’000
2,077
237,500,560
0.87
Year ended
30 April 2019
£’000
n/a
n/a
n/a
Earning per share has not been reported for the comparative period as the group was headed by an LLP and there was
no share capital in issue. The potential ordinary shares which arise as a result of the options in issue are not dilutive under
the terms of IAS 33 because the share options are backed by shares already in issue. Accordingly, there is no difference
between the basic and dilutive loss per share.
The Employee Benefit Trust does not have an entitlement to dividends, holding 18,750,000 shares of the above
237,500,560 shares.
82 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Financial Statements continued
13. Intangible assets
Cost
At 1 May 2018
Additions
Disposals
At 30 April 2019
At 1 May 2019
Additions
At 30 April 2020
Amortisation
At 1 May 2018
Charge for the period
Disposals
At 30 April 2019
At 1 May 2019
Charge for the period
At 30 April 2020
Net book value
At 30 April 2019
At 30 April 2020
Computer
software
£’000
Goodwill
£’000
46
–
(36)
10
10
–
10
(41)
(3)
36
(8)
(8)
(2)
(10)
2
–
750
–
–
750
750
–
750
–
–
–
–
–
–
–
750
750
Analysis of Goodwill by entity as at 30 April 2020:
FRP Debt Advisory Limited
Date of acquisition
29 January 2016
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.
Total
£’000
796
–
(36)
760
760
–
760
(41)
(3)
36
(8)
(8)
(2)
(10)
752
750
£’000
750
750
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 83
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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 10.45%, 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 growth rate of 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 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.
Notes to the Financial Statements continued
13. Intangible assets
continued
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).
In practice CGU’s could represent:
• An entire entity (parent or
subsidiary entities within a group)
• Departments or business units
within an entity
• Production lines within a
department, or within an entity
• Groups of items of property,
plant and equipment within a
production line, department
and 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.
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 cash
flow projections for the 5-year
period assume a conservative
growth rate of 7.5%.
84 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Financial Statements continued
14. Property, plant and equipment
Right of
use asset
£’000
Computer
equipment
£’000
Fixtures and
fittings
£’000
Leasehold
improvements
£’000
Motor
vehicles
£’000
Group
Total
£’000
Cost
At 1 May 2018
Additions
Disposals
Other
At 30 April 2019
At 1 May 2019
Additions
Disposals
At 30 April 2020
Depreciation
At 1 May 2018
Depreciation charge for the period
Disposals
At 30 April 2019
At 1 May 2019
Depreciation charge for the period
Disposals
6,329
869
–
11
7,209
7,209
24
–
7,233
(1,563)
(860)
–
(2,423)
(2,423)
(815)
–
1,041
364
–
–
1,405
1,405
310
–
1,715
(522)
(228)
–
(750)
(750)
(292)
–
At 30 April 2020
(3,238)
(1,042)
511
133
(112)
–
532
532
90
–
622
(232)
(78)
112
(198)
(198)
(83)
(0)
(281)
956
442
–
–
1,398
1,398
283
–
1,681
(385)
(154)
–
(539)
(539)
(166)
–
(705)
7
–
–
–
7
7
–
–
7
(0)
(2)
–
(2)
(2)
(1)
–
(3)
8,844
1,808
(112)
11
10,551
10,551
707
–
11,258
(2,702)
(1,322)
(112)
(3,912)
(3,912)
(1,357)
(0)
(5,269)
Net book value
At 30 April 2019
At 30 April 2020
4,786
3,995
655
673
334
341
859
976
5
4
6,639
5,989
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 85
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Notes to the Financial Statements continued
15. Trade and other receivables
Trade and other receivables
Trade receivables
Other receivables
Unbilled revenue
The ageing profile of non-related party trade receivables is as follows:
Due in:
<30 days
30-60 days
60-90 days
>90 days
Total
Group As at
30 April 2020
£’000
3,391
1,900
28,285
33,576
Group As at
30 April 2019
£’000
3,229
1,527
26,313
31,069
As at
30 April 2020
£’000
As at
30 April 2019
£’000
1,305
434
485
1,167
3,391
1,159
962
307
801
3,229
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.
All trade receivables and unbilled revenue are derived from contracts with customers. Unbilled revenue constitutes
the costs incurred to fulfil contracts with customers.
The expected loss provision for trade receivables is calculated on the gross carrying amount of trade receivables less
any specific loss allowance, and is detailed below as follows:
As at 30 April 2019
Expected loss rate
Gross carrying amount
Expected credit loss provision
As at 30 April 2020
Expected loss rate
Gross carrying amount
Expected credit loss provision
<30 days
£’000
0%
1,668
–
<30 days
£’000
0%
1,305
–
<60 days
£’000
<90 days
£’000
<180 days
£’000
>180 days
£’000
0%
401
–
0%
278
–
0%
550
–
33%
498
(166)
<60 days
£’000
<90 days
£’000
<180 days
£’000
>180 days
£’000
0%
434
–
0%
485
–
4%
785
(34)
49%
822
(406)
Total
£’000
5%
3,395
(166)
Total
£’000
11%
3,831
(440)
86 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Financial Statements continued
16. Cash and cash equivalents
Cash at bank and in hand
Cash at banks earn interest at floating rates based on daily bank deposit rates.
17. Trade and other payables
Current liabilities
Trade payables
Other taxes and social security costs
Other payables and accruals
Non-current liabilities
Other payables and accruals
Group As at
30 April 2020
£’000
21,311
Group As at
30 April 2019
£’000
4,946
Group As at
30 April 2020
£’000
1,064
3,416
22,796
27,276
Group As at
30 April 2020
£’000
9,528
9,528
Group As at
30 April 2019
£’000
662
1,683
28,602
30,947
Group As at
30 April 2019
£’000
4,625
4,625
The fair value of trade and other payables approximates to book value at each year end. Trade payables are non-interest
bearing. Accruals are normally settled monthly throughout the financial year.
The increase in other payables and accruals primarily relates to amounts owed to partners following the corporate
restructuring prior to the IPO.
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 87
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Notes to the Financial Statements continued
18. Loans and borrowings
Current borrowings
Bank loan
Lease liability
Non-current interest-bearing loans and borrowings
Bank loan
Lease liability
Bank loan is repayable:
Within one year
Within two to five years
Group As at
30 April 2020
£’000
Group As at
30 April 2019
£’000
–
925
925
–
3,271
3,271
–
–
–
358
850
1,208
3,284
4,197
7,481
358
3,284
3,642
Interest on the bank loan was charged at 2.5% over LIBOR per annum.
The bank loan was secured by fixed and floating charges over the assets of FRP Advisory LLP. Cross guarantees
and debentures existed between FRP Advisory LLP, Apex Debt Solutions LLP and FRP Debt Advisory Limited.
Also included within bank loans was a quarterly Revolving Capital Facility on which interest was charged
at 1.5% over LIBOR.
19. Provisions for liabilities
The deferred tax provision of the group is as follows:
Deferred tax liability brought forward
Recognised in profit and loss for the period
The deferred tax provision is analysed as follows:
Accelerated capital allowances
Other temporary differences
Group As at
30 April 2020
£’000
–
124
124
Group As at
30 April 2019
£’000
–
–
–
Group As at
30 April 2020
£’000
Group As at
30 April 2019
£’000
138
(14)
124
–
–
–
88 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Financial Statements continued
20. Financial instruments
Financial assets held at amortised cost
Financial liabilities held at amortised cost
21. Share capital
Allotted, called up and fully paid
237,500,560 Ordinary shares of £0.001 each
Group As at
30 April 2020
£’000
33,576
41,000
Group As at
30 April 2019
£’000
31,069
44,261
Group and
company as at
30 April 2020
£
237,501
Group and
company as at
30 April 2019
£
n/a
The shares have attached to them full voting, dividend and capital distributions (including on winding up) rights; they do
not confer any rights of redemption. The employee benefit trust, holding 18,750,000 shares does not have an entitlement
to dividends, when these options convert to shares held by staff, there will be a dividend entitlement.
Reconciliation of movements in shares during the year
At 1 May 2018
Issued on incorporation
Issued on 21 February 2020
Subdivision
Share for share exchange
Issued on 6 March 2020
Issued on 6 March 2020
Group and company
Ordinary
number
£1 shares
–
2
51,808
(51,810)
–
–
–
–
Ordinary
number
£0.001 shares
–
–
–
51,810,000
141,940,560
18,750,000
25,000,000
237,500,560
The Company was incorporated on 14 November 2019, issuing 2 Ordinary shares of £1 each.
On 21 February 2020, the Company issued 51,808 Ordinary shares of £1 each at par.
On 25 February 2020, the Company subdivided the Ordinary shares of £1 each into Ordinary shares of £0.001 each.
On 6 March 2020, the Company issued 141,940,560 Ordinary shares of £0.001 at a value of £0.80 each in exchange
for the entire issued share capital of FRP Advisory Trading Limited.
On 6 March 2020, the Company issued 18,750,000 Ordinary shares of £0.001 each at par.
On 6 March 2020, the Company issued 25,000,000 Ordinary shares of £0.001 for cash consideration of £0.80 each
and incurred issue costs of £1,000,000.
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 89
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Notes to the Financial Statements continued
22. Share based payments
FRP Advisory Group plc has granted share options at its discretion to directors and employees. These are accounted for as
equity settled options. Details for the share options granted and outstanding at the year-end are as follows:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Outstanding at the end of the year
Exercisable at the end of the year
Number of
share options
2020
–
11,463,008
(64,539)
11,398,469
–
Weighted average
exercise price £
2020
–
–
–
–
–
The weighted average life of outstanding options was three years (2019: n/a).
Details of the number of share options outstanding by type of company scheme were as follows:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Outstanding at the end of the year
Employees
–
11,319,258
(64,539)
11,254,719
Non-executive
directors
–
143,750
–
143,750
Total
–
11,463,008
(64,539)
11,398,469
Exercisable at the end of the year
–
–
–
Options arrangements that exist over FRP Advisory Group plc’s shares at the end of the year are detailed below:
Date of grant
6 March 2020
6 March 2020
2020
11,254,719
143,750
Exercise
price (£)
–
0.001
Vesting
06/03/2023
06/03/2023
90 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Financial Statements continued
22. Share based payments continued
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, an entity that is not controlled by the Group. 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 option life is the estimated period over which the options will be exercised. The options have no expiry date to
discount, so 3 years has been considered a reasonable expected life as those awarded are required to remain in
employment for 3 years;
• No variables change during the life of the option (such as the dividend yield remaining zero);
• As the Group has limited trading history, the volatility rate has been based on other AIM support services entities.
The volatility rate used was 21%;
• A risk-free interest rate of 0.7% has been used; and
• 80% of the options issued under the employee scheme are expected to vest. 90% of the options issued to the
non-executive directors are expected to vest.
The total recognised share-based payment expense during the year by the Group was £361,000 (2019: n/a).
23. Leases
Expenses relating to short term leases
Cash outflow for leases
The carrying value of right-of-use assets all relate to leasehold land and buildings.
Lease liabilities in relation to right-of-use assets fall due as follows:
Due within one year
Due within two to five years
Due after more than five years
Group As at
30 April 2020
£’000
35
1,020
Group As at
30 April 2020
£’000
925
2,552
719
4,196
Group As at
30 April 2019
£’000
35
952
Group As at
30 April 2019
£’000
850
3,158
1,039
5,047
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 91
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Notes to the Financial Statements continued
24. Reserves
Called up share capital
The called up share capital reserve
represents the nominal value of
equity shares issued.
Share premium account
The share premium account reserve
represents the amounts above the
nominal value of shares issued
and called up by the Company.
Treasury shares reserve
The Treasury shares reserve
represents the shares of FRP
Advisory plc that are held in Treasury
or by the Employee Benefit Trust.
Share based payment reserve
The share based payment reserve
represents the cumulative expense of
equity-settled share-based payments
provided to employees, including key
management personnel, as part of
their remuneration.
Merger reserve
The merger reserve represents the
difference between the nominal value
of shares issued and the fair value
of the assets received during the
reorganisation. 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 and IPO
during the year.
Retained earnings
The retained earnings reserve
represents the Group’s cumulative
net gains and losses less
contributions/distributions.
25. Related party
transactions
During the year the Group recharged
costs of £19K (2019: £23K) to Apex
Debt Solutions LLP, an LLP in which
the Group has a controlling interest.
FRP Advisory Services LLP provides
services to FRP Advisory Trading Ltd,
a subsidiary of FRP Advisory Group Plc.
During the period FRP Advisory Trading
Ltd paid £2,261k to FRP Advisory
Services LLP. Geoff Rowley and
Jeremy French are directors of FRP
Advisory Group PLC and designated
members of FRP Advisory Services LLP.
28. Capital commitments
At the balance sheet date, the Group
had no material capital commitments
in respect of property, plant and
equipment (2019: £nil).
29. 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.
26. Control
There is no one ultimate controlling
party of FRP Advisory Group plc.
27. Events after the
reporting period
The following director has resigned
their position on the Board:
• Kate O’Neill – 30 June 2020.
The following directors were
appointed to the Board:
• Gavin Jones – 29 June 2020.
• Claire Balmforth – 3 August 2020.
Acquisition in June 2020 of a
Newcastle based Restructuring
Advisory team of 15, including
2 partners and 10 fee earners.
92 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Parent Company balance sheet
As at 30 April 2020
Non-current assets
Investment in subsidiary
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Total liabilities
Net assets
Equity
Share capital
Share premium
Treasury shares reserve
Share based payment reserve
Retained earnings
Total Equity
Notes
6
7
8
10
10
11
Company
30 April 2020
£’000
503
503
8,499
10,157
18,656
19,159
–
19,159
238
18,975
(19)
361
(396)
19,159
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 93
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Total
equity
£’000
(396)
20,213
(1,000)
(19)
361
(396)
–
–
–
–
(396)
19,159
Parent Company statement of changes in equity
For the year ended 30 April 2020
Called up
share
capital
£’000
Share
premium
account
£’000
Treasury
shares
reserve
£’000
Share based
payment
reserve
£’000
Profit
& loss
account
£’000
Incorporated on 14 November 2019
Loss for the year
Issue of share capital
Issue costs
Acquisition of treasury shares
Share based payments
Balance at 30 April 2020
–
238
–
–
–
238
–
19,975
(1,000)
–
–
18,975
–
–
–
–
361
361
(19)
(19)
94 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Parent Company financial statements
For the year ended 30 April 2020
1. General information
FRP Advisory Group plc’s (the
“Company”) principal activity is
that of a holding company.
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 consolidated
financial statements:
2.1 Accounting convention
The financial statements have been
prepared in accordance with Financial
Reporting Standard 101 Reduced
Disclosure Framework (FRS 101)
and in accordance with applicable
accounting standards.
The financial statements are
prepared in sterling, which is the
functional currency of the company.
Monetary amounts in these financial
statements are rounded to the
nearest £’000.
The financial statements have
been prepared under the historical
cost convention.
The company meets the definition
of a qualifying entity under FRS 101,
The Financial Reporting Standard
applicable in the UK and Republic of
Ireland. These financial statements
for the period ended 30 April 2020
are the first financial statements of
FRP Advisory Group plc prepared in
accordance with FRS 101.
The company has taken advantage
of the following disclosure
exemptions under FRS 101:
• the requirements of IFRS 7 Financial
Instruments: Disclosures;
• the requirements of paragraphs
10(d), 10(f), 16, 38A to 38D, 40A
to 40D, 111 and 134-136 of IAS 1
Presentation of Financial Statements;
• the requirements of IAS 7 Statement
of Cash Flows;
• the requirements of paragraphs 30
and 31 of IAS 8 Accounting Policies,
Changes in Accounting Estimates
and Errors;
• the requirements of paragraph 17
and 18A of IAS 24 Related Party
Disclosures; and
• the requirements in IAS 24 Related
Party Disclosures to disclose related
party transactions entered into
between two or more members of a
group, provided that any subsidiary
which is a party to the transaction is
wholly owned by such a member.
Where required, equivalent disclosures
are given in the group accounts of
FRP Advisory Group plc.
A number of new standards and
amendments to standards and
interpretations are effective for annual
periods beginning after 1 January
2019, however none of these are
expected to have a significant effect
of the annual financial statements
of the company, and have thus not
been disclosed.
2.2 Going concern
The directors have at the time of
approving the financial statements,
a reasonable expectation that the
company has adequate resources
to continue in operational existence
for the foreseeable future. Thus they
continue to adopt the going concern
basis of accounting in preparing the
financial statements. Refer to note 2.6
to the Group financial statements.
2.3 Investment in subsidiaries
Investments in subsidiaries are
stated at cost less, where appropriate,
provisions for impairment. The
Company tests the investment
balances for impairment annually
or when there are indicators
of impairment.
2.4 Foreign currencies
Transactions in currencies other
than pounds sterling are recorded
at the rates of exchange prevailing
at the dates of transactions. At each
reporting end date, monetary assets
and liabilities that are denominated in
foreign currencies are retranslated at
the rates prevailing on the reporting
end date. Gains and losses arising
on translation are included in the
income statement for the period.
2.5 Financial instruments
The Company 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 Company 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
instruments are derecognised on
the trade date when the Company is
no longer a party to the contractual
provisions of the instrument.
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 95
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2. Significant accounting
policies continued
2.6 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 financial assets or
liabilities held 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 receivables. 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 instrument for a
similar debt instrument.
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.
2.7 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 expected to apply in the
period 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.
2.8 Employee benefits
The Company operates defined
contribution plans for its employees.
A defined contribution plan is a post-
employment benefit plan under which
the Company 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 Company is demonstrable
committed to terminate the
employment of an employee or
to provide termination benefits.
96 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Parent Company financial statements continued
2. Significant accounting
policies continued
2.9 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 cash
flows at a pre-tax rate that reflects
risks specific to the liability.
2.10 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 include interest receivable
on funds invested and net foreign
exchange gains.
Interest income and interest payable
are recognised in the statement of
comprehensive income as they accrue,
using the effective interest method.
2.11 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.
2.12 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 income statement 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.
3. Critical accounting
judgements and key
sources of estimation
uncertainty
In the application of the Company’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.
Critical judgements
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.
Investments in subsidiaries
The directors assess the recoverability
of investments in subsidiaries at the
reporting date by reference to the
profitability and its net asset position.
Where applicable, investments in
subsidiaries are impaired down to the
amount assessed as recoverable.
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.
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. Judgements are also
applied in relation to estimations of the
number of options which are expected
to vest, by reference to historic leaver
rates and expected outcomes under
relevant performance conditions.
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 97
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4. Auditors remuneration
Fees payable to the Company’s auditor for the audit of the Company and Group financial statements are disclosed in
Note 6 to the Group financial statements.
5. Director and employee information
The average number of employees during the year was:
Directors
No amounts were paid to Directors through this Company.
6. Non-current asset investments
Cost
At 14 November 2019
Additions
At 30 April 2020
Net book value
At 14 November 2019
At 30 April 2020
Period ended
30 April 2020
Number
5
Company
£’000
–
503
503
–
503
Non-current asset investments consist of investments in subsidiaries, measured at cost. On 6 March 2020, the Company
acquired the entire issued share capital of FRP Advisory Trading Limited, its sole directly owned subsidiary, via a share for
share exchange as part of the group re-organisation. 141,940,560 Ordinary shares of £0.001 each were issued at a value
of £0.80 per share. Merger relief has been applied under s615 of the Companies Act 2006. At the balance sheet date further
share based payment charge of £361,000 was capitalised into the cost of investment in the subsidiary as the employees
to whom options granted are employed by FRP Advisory Trading Limited.
98 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes to the Parent Company financial statements continued
6. Non-current asset investments continued
The undertakings in which the company’s interest at the year-end is 20% or more are as follows:
Subsidiary undertakings
Held directly:
FRP Advisory Trading Limited
Apex Debt Solutions LLP
FRP Advisory Services LLP
FRP Corporate Finance Limited
FRP Debt Advisory Limited
Litmus Advisory Limited
Country of
Incorporation
Principal activity
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
Professional services
Professional services
Professional services
Professional services
Professional services
Dormant
Shareholding
% Ordinary shares held
Direct
2020
Indirect
2020
100%
0%
0%
0%
0%
0%
0%
99.6%
99.9%
100%
100%
100%
The recoverability of intercompany debtors and the cost of investment is dependent on the future profitability of those entities.
No provision for impairment has been made in these accounts and this is a significant judgement but one that only affects
the parent company and its distributable reserves. It does not affect the group results as the results of the subsidiaries
have been consolidated.
7. Trade and other receivables
Amounts owed by Group undertakings
As at
30 April 2020
£’000
8,499
8,499
The Company’s other receivables are due from its subsidiaries and are interest free as well as repayable on demand.
8. Cash and cash equivalents
Cash at bank and in hand
Cash at banks earn interest at floating rates based on daily bank deposit rates.
As at
30 April 2020
£’000
10,157
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 99
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Notes to the Parent Company financial statements continued
9. Financial instruments
Financial assets held at amortised cost
10. Share capital
Refer to Note 21 to the Group financial statements.
11. Share based payments
Refer to Note 22 to the Group financial statements.
12. Related party transactions
As at
30 April 2020
£’000
8,499
The Company has taken advantage of the exemption from reporting related party transactions with
subsidiaries included within the consolidated financial statements of FRP Advisory Group plc.
13. Control
There is no one ultimate controlling party of FRP Advisory Group plc.
14. Events after the reporting period
The following director has resigned their position on the Board:
• Kate O’Neill – 30 June 2020.
The following directors were appointed to the Board:
• Gavin Jones – 29 June 2020.
• Claire Balmforth – 3 August 2020.
15. Capital commitments
At the balance sheet date, the Company had no material capital commitments in respect of property, plant and equipment.
100 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Directors and advisers
Directors
Nigel Guy
Non-Executive Chairman
Geoff Rowley
Chief Executive Officer
Jeremy French
Chief Operating Officer
Gavin Jones
Chief Financial Officer
David Adams
Non-Executive Director
David Chubb
Non-Executive Director
Claire Balmforth
Non-Executive Director
Corporate Information
Advisers
Company Secretary
ONE Advisory Limited
201 Temple Chambers
3 – 7 Temple Avenue
London EC4Y 0DT
Registered Office
110 Cannon Street
London EC4N 6EU
Company number
12315862
(Registered in England and Wales)
Company Website
www.frpadvisory.com
Nominated adviser and broker
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London EC2R 7AS
Independent auditor
Mazars LLP
Tower Bridge House
St Katharine’s Way
London
E1W 1DD
Solicitors
Bryan Cave Leighton Paisner LLP
Governor’s House
5 Laurence Pountney Hill
London EC4R 0BR
Registrars
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen B62 8HD
Financial PR Consultants
Engine MHP
60 Great Portland Street
London W1W 7RT
Bankers
Barclays Bank Plc
One Churchill Place
London E14 5HP
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 101
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Notes
102 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
Notes continued
Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 103
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104 Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020
This Annual Report is available
at www.frpadvisory.com
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Financial Statements FRP Advisory Group plc | Annual Report and Accounts 2020 105
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110 Cannon Street
London EC4N 6EU
frpadvisory.com
frpadvisory.com