Shares in recently-listed insolvency and business advisory group FRP (FRP:AIM) jumped 5.5% to 106p after the firm posted a positive trading update for the nine months to the end of January and raised its forecasts for the full year to April, its first as a quoted company.
Trading so far has been ‘pleasing’ despite significant levels of government support for struggling companies and ‘reduced levels of both corporate insolvency and administration appointments across the market’.
As a result, the firm expects full year revenues of at least £75 million compared with market estimates of £72 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of at least £21 million against consensus forecasts of £19.2 million.
Chief executive Geoff Rowley said: ‘The medium-term outlook for our market remains positive, although there is still uncertainty around the shape and scale of the economic recovery from the Covid-19 pandemic and additional pressures on some businesses from the UK leaving the EU.’
However, in a sign of confidence in the outlook, the firm will begin paying quarterly dividends from this June with an initial payout of 0.8p per share.
Analyst Rachel May at house broker Shore Capital commented that FRP was ‘well placed to benefit from the expected increase in insolvency volumes as government support is scaled back’.
‘Whilst it is too early to call whether it is the start of an emerging trend, the latest insolvency statistics for December 2020 reported a 9% increase in company insolvency volumes, marking the first monthly year-on-year increase since the start of the pandemic’, added May.
