Strip out exceptional items and adjust for 2012's VAT refund, and pre-tax profit at debt management group Fairpoint (FRP) rose 7 per cent to £8.1m in 2013. That was in line with Shore Capital's expectations and the broker anticipates £8.6m for 2014, giving adjusted EPS of 15.5p (15p in 2013).
This progress reflects continued diversification away from the depressed market for Individual Voluntary Agreements (IVAs), which allow individuals to both pay back and write off debt. Claims management saw profit jump 28 per cent to £6.4m, as Fairpoint continued to benefit from making PPI claims for IVA clients - claims that are used to repay creditors. Meanwhile, buying up portfolios of debt management plan (DPMs), which are less onerous than IVAs, pushed the share of revenues Fairpoint receives from DPMs and claims management up to 42 per cent, from 36 per cent in 2012. The group has bought six books since the end of 2012, but more deals are possible as small rivals struggle with the new regulatory regime that begins next month under the FCA.
The IVA business, meanwhile, remains under pressure. Market volumes rose in 2013, but that was driven by indebted consumers with low disposable incomes, so fees remain under pressure. It's hard to predict when IVA conditions will improve, but rising interest rates could boost mortgage-related work.
FAIRPOINT (FRP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 130p | MARKET VALUE: | £55.1m | |
| TOUCH: | 129-130p | 12-MONTH HIGH: | 136p | LOW: 100p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 103p* | NET CASH: | £2.8m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 28.9 | 5.7 | 9.5 | 2.0 |
| 2010 | 29.4 | 5.9 | 9.6 | 4.0 |
| 2011 | 25.9 | -1.0 | -2.2 | 4.5 |
| 2012 | 34.4 | 10.5 | 18.6 | 5.5 |
| 2013 | 28.4 | 5.9 | 11.1 | 6.0 |
| % change | -17 | -44 | -40 | +9 |
Ex-div: 21 May Payment: 19 Jun *Includes intangible assets of £19.3m, 46p a share | ||||
