A strong set of full-year results from Fairpoint Group (FRP) shows the extent of the company’s diversification away from the flat market for individual voluntary agreements (IVA). Non-IVA activities made up 65 per cent of turnover in 2014 - up from 42 per cent the year before - thanks to the acquisition of three debt management books and the law firm Simpson Millar.
Since the latter deal was only signed in June, full-year revenues from Simpson Millar were not reflected in Fairpoint's financials. But the acquisition - for an upfront cost of £8.1m in cash and shares and a further consideration of up to £6m - has performed well so far. In six and a half months of trading, the new legal services division made £11.9m in revenues and £1.6m in pre-tax profits. Management expects to pursue further acquisitions in what remains a highly fragmented market for consumer legal services.
Overall, acquisitions helped swell Fairpoint's turnover by more than a third. Adjusted pre-tax profit rose 15 per cent to £9.3m before acquisition and financing costs of £2.5m and amortisation charges of £3.3m.
Broker Shore Capital forecasts full-year adjusted pre-tax profits of £10.1m this year and earnings per share of 17.8p.
FAIRPOINT (FRP) | ||||
---|---|---|---|---|
ORD PRICE: | 125p | MARKET VALUE: | £55m | |
TOUCH: | 123-127p | 12-MONTH HIGH: | 164p | LOW: 107p |
DIVIDEND YIELD: | 5.1% | PE RATIO: | 19 | |
NET ASSET VALUE: | 105p* | NET DEBT: | 16% |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
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 |
2014 | 38.3 | 3.4 | 6.6 | 6.4 |
% change | +35 | -41 | -40 | +7 |
Ex-div: 21 May Payment: 19 Jun *Includes £34.2m of intangibles assets, or 78p a share |