Frp Advisory Share Discussion Threads

[sunshine today] 22/4/2020 11:58

Yet another retailer looking for FRP to help solve an unhappy situation


// Monsoon Accessorize mulls possible sale of the business after Covid-19 disrupts trading

// Restructuring experts at FRP Advisory are currently looking at options

Monsoon Accessorize said on Sunday it had been badly affected by the coronavirus pandemic and was looking at a range of options.

A possible sale of the business is one option, as restructuring experts from FRP Advisory were drafted in to work on possible scenarios.

The fashion retailer said it had been ahead of the financial plan set out at the time of its CVA in 2019 and was trading well until March, but like many other retailers it was impacted by Covid-19 when it was forced to close stores

[sunshine today] 22/4/2020 11:41

A read of the following is useful, great ideas to get the economy moving again but it fails on numerous accounts.

It fails to mention the state of affairs before the virus struck.The world was going downhill even then. People’s mindset may have changed enough that they now might want to save not spend.That alone is a killer.




22 April 2020
To get us out of this mess, the Government must go for growth

By Matt Kilcoyne @MRJKilcoyne



The message from young people is clear: after the crisis they want a tax cut
Going for growth really is the only option once the crisis abates
Public services are nothing if the market economy underpinning them is not firing
We’re going to walk from a public health crisis into an economic one. Stock markets are crashing, oil prices plummeting and big high street names running out of cash and falling into administration.

You can put an economy in effective stasis for a short while – we basically do so every Christmas and various bits of Southern Europe do it for nearly the whole of August, but the longer it goes on the more firms lose the capacity to operate at the level they were operating before. That only gets worse the longer the restrictions endure.

The lack of certainty about when the lockdown will end also creates a host of problems. As a business owner you could justify borrowing for a little longer to bridge the gap between lockdown now and reopening later if you think you’ll make back the costs of doing so. As a bank you can lend if you think a deadweight loss will be greater from a firm’s collapse than the non-performing loan you don’t make. And as a taxpayer you can stomach corporate welfare if you think you’re avoiding huge institutional loss with zero creative destruction gain.

You can’t do any of those things if there’s no prospect of avoiding, mitigating or overcoming the costs. Nor would we want to live in a world where you could — directors of companies have a duty to tell those they’re working with and those who have invested in them if they are a going concern. If they’re not they close. It means resources get allocated in an efficient way and that lies at the heart of a functioning market economy.

This country walked into a pandemic with our eyes closed, so it’s important we don’t walk into this economic one in a similar state of unpreparedness. We’ve also seen what happens in health, procurement, testing, and so on when you rely fully on the state. That must not happen in the economy. It will not be big state solutions or vague witterings about “communityR21; that will get businesses back up and running at the end of lockdown.

The public understand this too. At the end of last week the Adam Smith Institute commissioned Survation to ask 1,001 British adults whether they were worried about the economy, whether the lockdown was currently impacting them, whether a plan would be welcomed, if the Government was doing enough to develop a plan, and whether they supported tax cuts to boost growth and jobs at the end of lockdown.

Two in five respondents (41%) said the lockdown was having a negative personal impact, compared to just over half (52%) who stated that it is having no negative impact. Over time more and more people are reporting to pollsters that they are in trouble. It was just 11% when Opinium asked the same question between March 20-24, when BMG asked between April 7-9, a third of the public said they were taking a financial hit.

Younger people are taking the weight of the lockdown so far. Half (49%) of those under the age of 54 are experiencing a negative financial impact of the lockdown. The worst impacted age demographic are those aged 35-44, with well over half (57%) experiencing a negative financial impact. Older people have certainly been hit hardest by the virus itself, but their incomes are holding up — seven in ten of over-65s said the lockdown had not negatively affected their finances.

The private sector is bearing the heaviest load, with revenues for many firms at nil. Retail and hospitality – both sectors where young people make up a big chunk of the workforce – are almost completely frozen.

Ultimately there are only a few ways you can get out of a mess like the one we’re about to walk into. The first is what some people call ‘austerityR17; — including tax rises. But if government keeps its liabilities up and raises taxes to meet its obligations then it just passes the buck to families and businesses. These are the people currently paying the price for the lockdown in vanished revenue.

The second is inflation. We have tried that before and It ended with our country taking the begging bowl to the IMF. Just ask Zimbabwe, Venezuela and Argentina what happens if it goes really wrong.

The third and by far the most palatable is sustained economic growth. As Jethro Elsden wrote on this site recently, growth is “as close as humanity has to a universal panacea”. Achieving it means every company that has its revenue hit now needs to be freed up to perform more strongly when we return to economic normality.

I think that people understand this too. In fact 72% of the British public are supportive of tax cuts to boost economic growth and jobs. It’s an area that’s ripe for action too. The TaxPayers’ Alliance last year showed that the tax burden was at its highest in fifty years, with taxes now taking up 34.6% of value of UK GDP. Let’s not forget either that the impact of taxes is uneven. The lowest income households are hit the hardest, with the bottom 10% of households losing almost half (48%) of their gross income to taxes. Those people that have kept the country going during this time, stacking shelves and moving things about the country? It’s time for Britain’s private sector heroes to get a reward.



In a rare bit of good news, the group that’s most in favour of tax cuts is the young. Of those aged 18-34, two-in-five (44%) strongly support lower taxes after the lockdown, compared to one-third (33%) of those over the age of 65.

There is also slightly stronger support for lower taxes among those with the lowest income. Of those who earn less than £20,000 per annum, two-in-five (42%) strongly support lower taxes after the lockdown; compared to 37% of those who earn over £40,000 per annum.

But oh no, I hear the patricians and wets cry. We can’t be cutting tax now, it’s far too expensive, we have so many projects planned that need the cash, the state needs to spend to keep the economy afloat. No. No. No.

Every penny the Government spends and borrows is ultimately paid for by taxpayers and our public services only exist thanks to a vibrant free market economy. The Prime Minister has said as much himself.

And let’s not forget, if tax cuts aren’t planned and if regulation isn’t being suspended or removed, then the Government’s choices dry up anyway. There won’t be any ‘revenue lost to tax cuts’ because there won’t be any revenue at all! A 35% drop in GDP and job losses in the millions will mean no money for white elephant projects for years to come.

So it’s time for the Tories to get their priorities straight. Are you on the side of businesses and entrepreneurs struggling to make ends meet and facing financial oblivion — or pandering to patronage, public sector unions, and PR campaigns?

Time too to drop the aversion to ambition. Young people know that these formative years are when they get to strike out and make it, and they are acutely aware of the time they are losing sitting at home during this crisis. Above all, they need to know their efforts are worth it and that government is on their side.

[sunshine today] 22/4/2020 11:24

Devonking

Ta,


30% more staff on the books compared with a year ago.25% growth in the market size in 2019 Big four suffering in this area due to conflicts of interest 2020 - 2023 might see growth of 50% plus could be considerably more.As a reminder each partner at KPMG pull in C £5M a year, £1.2 at FRP.First broker note will be well worth waiting for.

[devonking] 21/4/2020 18:17

Thanks, Sunshine. FRP were engaged with Bonmarché during the H2 period, as well as a number of other smaller businesses. They also went on to begin work with Carluccios in March. They continued to deal with the Comet into the New Year too. Insolvency data shows it was a difficult period across several sectors. Reasons to be optimistic regarding the trading update I think.

[sunshine today] 21/4/2020 11:41

Some profit taking today.

[sunshine today] 21/4/2020 09:14

Very interesting and self explanatory


This will provide work for at least 2 years clearing up the mess and proves yet again that the big four should not be administrators.



Patisserie Valerie: Restructuring firm FRP to take over from KPMG

FRP Advisory, a restructuring firm, were chosen by creditors that include HMRC and Luke Johnson, the former chairman of Patisseries Valerie.

Author
Chris Jewers
Date published
July 26, 2019

[sunshine today] 21/4/2020 08:20

Reading this shows a fair few companies are going to go bust very soon, being unable to get cash to keep going.


Monday 20 April 2020 4:30 pm
City fitness studio fears insolvency after being rejected for CBILS coronavirus loan
James Booth

The director of a City fitness studio said he fears the company could go bust after being rejected for support under the Coronavirus Business Interruption Loan Scheme (CBILS).
City fitness studio Victus Soul on Mansell Street (Photo credit Victus Soul)
The director of a City fitness studio said he fears the company could go bust after being rejected for support under the Coronavirus Business Interruption Loan Scheme (CBILS).

Victus Soul, a fitness studio in Mansell Street near Aldgate, launched in November 2018 and turned a profit from last November.

Read more: The Long Read: The coronavirus loan scheme risks failing the people it was designed to help


The business offers high intensity training and boxing to City workers and has 25 staff on an employed and self-employed basis.

Its founder and chief executive Paul Trendell told City A.M. he feared for the businesses’ future after being rejected for a loan under CBILS by Lloyds Bank.

“Lloyds rejected us due to being unable to demonstrate affordability having only recently turned profitable in November. Clearly it must almost be impossible for any new business to obtain this government lifeline and so many new SMEs [small and medium-sized enterprises] will fail,” he said.

Read more: Treasury Committee calls on banks to provide daily updates on coronavirus business interruption loan scheme lending

CBILS was set up to offer loans to firms with a turnover of up to £45m. Companies can access the money through more than 40 approved lenders and 80 per cent of the loan is guaranteed by the government.


Trendell said Lloyds would not approve the CBILS loan as the business could not show it had been profitable for the whole of 2019.

“We were told one of the criteria we had to demonstrate is that we could afford the loan and they weren’t prepared to look at our recent trading history, it would have to be a 12-month period.

“In 2019 we were loss-making for obvious reasons. We are a startup business and it’s hard to make a profit from day one. We were effectively told there was nothing they could do for us.”

Trendell said Victus Soul, which has £10,000 in cash left, had applied to other banks for CBILs loans, and was also exploring the new government scheme to help startups.

[sunshine today] 20/4/2020 20:57

Totally unrelated but shows that things are very wrong in the world economy


Devika Krishna Kumar
@Devikakrishnak
·
1h
I HAVE NO MORE WORDS - MAY U.S. CRUDE FUTURES SETTLE AT MINUS $37.63 A BARREL, DOWN $55.90, AFTER FALLING TO A SESSION LOW OF MINUS $40.32 A BARREL #oil #crude #energy

[sunshine today] 20/4/2020 20:46

No idea but if they issue a trading update I would be of the opinion it would be issued between the end of April and the third week in May. The year ends on 30th April. The fruits of this chaos will not start to appear in the form of profits until next year.The prospectus informs us the second half started well and can only have got better in the last quarter.At this stage your buying into the theory that FRP is in a superb position going forward. The next few years are going to be littered with profit warnings and dividend cuts across the board.They will be utterly depressing for shareholders particularly when the market is still on an amazingly high rating. Stocks will repeatedly get hammered unless the world economy fires back up exceeding quickly.

[devonking] 20/4/2020 20:16

A nice little rise here today on good volume! The board appear to be well experienced, a few members having held positions with FTSE100 companies. Time will tell but I hope for good management to guide this ship. Does anyone know when to expect FY results - June/July time?

[sunshine today] 20/4/2020 17:11

It’s a pleasure.

[moormoney] 20/4/2020 16:47

Thanks for the thread sunshine. I got a small holding today FRP looks good!

[sunshine today] 20/4/2020 16:11

Media
Likes
FRP Advisory’s Tweets

FRP Advisory
@FRP_Advisory
·
40m
FRP’s Debt Advisory team has advised fast-growing marine fuelling business, Sonan Bunkers (UK) Ltd, on a new 18-month ABL facility with BREAL Zeta Commercial Finance. Click here to read more:

[sunshine today] 20/4/2020 14:44

The floatation was oversubscribed and the only one on AIM to get away at that time.
That says a hell of a lot. Covid was never priced in as the market was at its all time high when the price was set.30% plus more staff work for them than this time last year. They have just picked up £20M of working capital from the float.Debt Advisory is red hot and will be for the next 3 to five years.The partners and staff are all highly incentivised with shares they can cash in at the 3rd anniversary of listing. I am not going to judge what is good value here and now.Unlike so many companies they are not going to be struggling for work. A large part of FRP”S income rates are set by themselves. The growth rate going forward is key. The worlds financial condition is going downhill fast. It’s going to be a very rough road for sure.If the markets turns down again then this stock is going to get yet another boost.

[neg] 20/4/2020 14:02

Thanks firtashia, but I think £27m PBT is before partner costs?

[firtashia] 20/4/2020 13:42

neg- I don't think analyst forecasts are issued for the first month after an IPO so I don't know where the forward PE estimates have come from either. Looking at the admissions doc for FY19 the company made £24.3m PBT from £54.3m revs. For H1 2020 the company didn't offer PBT figures (EBITDA instead) but provided a rev figure of £31.4m. Assuming revs for FY20 will be double at £62.8m then PBT could be in the region of ca. £27-28m (prior to admission costs). For a company whose m/cap is still <£300m I'd say that was reasonably valued given today's "turbulent" business climate which may benefit FRP. I accept that my calcs are very rough and ready & that people use different methods of valuation.

[sunshine today] 20/4/2020 12:19

“Debt advisory firms will also be in great demand.”
FRP are ideally placed to advise and organise cash to struggling companies.Its yet one more stand of extremely profitable income. They can match the borrower and the lender quickly to save the business.

[sunshine today] 20/4/2020 12:15

The FCA relaxation on rules and disclosures for emergency fund-raisings due to the corona crisis will potentially be a BIG BOOST for the NOMAD sector at a time when pipe-line IPO's may potentially be delayed.

An article in today's FT on page 2 refers and contains this quote from the interim CEO at the FCA :

"The UK's capital markets will play a vital role providing finance to business to help aid the recovery from the crisis. Our aim is to help companies quickly and effectively, while ensuring they respect the need of investors".

The message from the FCA seems loud and clear to get out and help companies suffering financial disruption through no fault of their own in these unprecedented times.


Not only will this relaxation of FCA requirements be a big fillip for NOMAD business volumes but DEBT ADVISORY services will also be in great demand.

[jeanesy] 20/4/2020 12:12

looks like these are suddenly in demand :)

[sunshine today] 20/4/2020 11:30

NEG look back at post No 2.

[neg] 20/4/2020 11:22

I agree with everything you say sunshine, just trying to get a handle of future profits. Who is the famous investor quoting a pe of 10 @ 93p?

[sunshine today] 20/4/2020 11:17

FRP is the only way an investor can get exposure to a pure firm of insolvency practitioners on the LSE today.Thats one out of 3,000 odd companies listed.The world is facing a savage downturn in economic growth and just almost all of those remaining companies, at a guess 2950 require growth to perform well. I can see a wall of money looking for a home in FRP. The prospect of growing dividends in the next 3+ years is yet another huge attraction .

[sunshine today] 20/4/2020 11:03

No I don’t but one of the articles from a famous investor quoted a PE of 10 when the shares were floated or 93P when he wrote the article. They were floated at a cheap price to get the float away in a difficult market.Institutions don’t overpay. Investors buying now want a slice of what FRP might be worth in 18 months time.I personally believe they are set to grow at least 50% a year for the next 3- 5 years. FRP has Three massive tailwinds behind it. The first is the splitting up of the work that till now, went to the big four.Thats being driven by government.It would make sense for administrations to be actioned by specialists not accounts with conflicting in house issues.The second driver is the massive debts built up over personal , corporate, and government that’s just not going to be repaid. Third is the covid effect that is a human and economic disaster that has yet to show its short, medium and long term effect. If growth is 50% or higher then the shares should be rated accordingly.A pe of 50 might sound outrageous but I don’t rule it out if the market thinks growth of that or more can be achieved.

[neg] 20/4/2020 10:34

Sunshine Today: Do you have any idea of the profits going forward? Previously it was a partnership with the equity partners taking roughly £0.5 million each. Now it seems they will be taking 55% with the balance given in shares of the new PLC. Am I correct? If so 45% profits based on this market cap makes it look quite expensive?