Debt management group Fairpoint (FRP) continued its renaissance and, crucially, it is continuing to reduce its reliance on the subdued market for individual voluntary agreements (IVAs). In fact, non-IVA revenue grew from 38 per cent to 44 per cent of turnover.
As expected, revenue from the core IVA service fell, from £8.7m to £7.8m, as low interest rates and steady unemployment restricted the number of IVAs originated in the UK to a modest rise of 0.9 per cent to 23,240 plans, of which Fairpoint wrote 2,179. However, the company's total number of IVAs under management slipped 2 per cent, which explain why the division's profits fell from £1.35m to £1.14m.
So to compensate, Fairpoint has been growing its debt management plan (DMP) business - a less onerous form of IVA - acquiring two back books earlier in the year, and a further 850 plans in August. The company has also successfully developed claims management activities. Turnover there grew by 37 per cent to £3.4m, while profits rose 30 per cent to £1.3m. Revenue from claiming back payment protection insurance charges for its IVA and DMP clients formed a bulk of the revenue, while a number of other mis-selling services, such as mortgages and packaged bank accounts, are being piloted.
Shore Capital expects full-year adjusted EPS of 14.5p (13.4p in 2012), rising to 15.4p next year.
| FAIRPOINT (FRP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 125p | MARKET VALUE: | £52m | |
| TOUCH: | 123-127p | 12-MONTH HIGH: | 127p | LOW: 72p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 99p* | NET CASH: | £2.8m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 14.1 | 2.15 | 3.72 | 1.95 |
| 2013 | 14.0 | 2.48 | 4.51 | 2.15 |
| % change | -1 | +15 | +21 | +10 |
Ex-div: 2 Oct Payment: 25 Oct *Includes intangible assets of £19m, or 45p a share | ||||
