A robust full-year performance from debt management specialist Fairpoint (FRP) helped its shares jump over 5 per cent. Diversification away from its core business of arranging individual voluntary agreements (IVAs) continued, with debt management and claims management services now contributing 36 per cent of group revenue.
Average gross fees per IVA were lower, partly because creditors are accepting IVAs on smaller amounts. But, while new IVAs written fell from 5,840 to 5,391, divisional adjusted pre-tax profit more than doubled to £4.9m - thanks to a reduction in costs and higher supervisory fees. Debt management plans (DMP) also fell from 15,838 to 14,880, but this was because some customers were able to switch to an IVA - a more attractive option because the repayment period is fixed. Since the year-end, more than 2,000 DMPs have also been acquired through two debt book purchases.
Claims management revenue more than doubled to £5m and profits rose from £0.3m to £1.6m. Moreover, as well as servicing payment protection insurance claims for the existing 20,000 IVA customers, the service will now be extended to Fairpoint’s 15,000 DMP customers. Fairpoint is exploring other possible mis-selling areas, too, such as packaged bank accounts, mortgages and mobile telephone contracts.
Shore Capital expects adjusted pre-tax profit of £8.1m for 2013, giving EPS of 14.3p (from £7.6m and 13.4p in 2012).
| FAIRPOINT (FRP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 107p | MARKET VALUE: | £44.8m | |
| TOUCH: | 105-107p | 12-MONTH HIGH: | 109p | LOW: 55p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 98p* | NET CASH: | £1.6m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 26.5 | 1.12 | 1.51 | nil |
| 2009 | 28.9 | 5.72 | 9.47 | 2.00 |
| 2010 | 29.4 | 5.85 | 9.56 | 4.00 |
| 2011 | 25.9 | -1.04 | -2.20 | 4.50 |
| 2012 | 34.4 | 10.5 | 18.6 | 5.50 |
| % change | +33 | - | - | +22 |
Ex-div: 22 May Payment: 20 Jun *Includes intangible assets of £18.9m, or 45p a share | ||||
