Greater diversification and a tight control on costs have marked a strong turnaround in fortunes for debt management specialist Fairpoint (FRP). First-half underlying operating profit soared from £143,000 to £3.16m, mainly as a result of a return to profit for the company's core individual voluntary arrangement (IVA) service, which benefited from a lower cost base and higher supervisory fees. So although new cases were down a quarter to 2,217, the number of IVAs generating fees actually rose slightly to 20,772 which helped turn last year's adjusted first-half loss of £0.7m from IVA services into a profit of £1.4m.
Fairpoint also benefited from a sharp increase in revenue from non-IVA activities, which now account for 38 per cent of turnover. For instance, fee income from debt management plans was up 11 per cent to £2.8m, helped by acquisitions, which increased case numbers by 9 per cent to 16,090. Fairpoint has also been encouraging IVA clients to make claims on payment protection insurance (PPI), and fees here jumped from £0.6m to £2.6m.
Shore Capital expects full-year adjusted pre-tax profits to rise sharply from £4m to £7.6m, giving EPS of 12.8p (from £4m and 6.8p for 2011) and is pencilling in a further increase to £8.1m and 13.6p, respectively, in 2013.
| FAIRPOINT (FRP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 83.5p | MARKET VALUE: | £35m | |
| TOUCH: | 83-84p | 12-MONTH HIGH: | 84p | LOW: 47p |
| DIVIDEND YIELD: | 5.7% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 87p* | NET DEBT: | 5% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 11.8 | -2.15 | -3.78 | 1.75 |
| 2012 | 14.1 | 2.15 | 3.72 | 1.95 |
| % change | +19 | - | - | +11 |
Ex-div: 3 Oct Payment: 26 Oct *Includes intangible assets of £19m, or 46p a share | ||||
