Turnaround plans paying off for Fairpoint
FAIRPOINT, the Lancashire firm specialising in arranging IVAs for people struggling with debts, reported an improved half-year showing today.
The Chorley-based firm, formerly known as Debt Free Direct, said adjusted pre-tax profits had risen from £300,000 last year to £2.4m, while revenues were maintained at £13.8m, despite shaving more than £1m from the marketing budget.
The firm also reduced bank borrowings by £2.1m to £6.5m in the six months to June 30.
Chief executive Chris Moat hailed the turnaround of the company’s performance, which he said was the result of a plan to revive the business begun last year.
He said: We continue to be the IVA market leader with an 18% market share in the period, rising to 19% in Q2.
“In the last six months we have seen a growing preference for IVA solutions from consumers as they seek to permanently resolve their debt situation rather than deferring the issue.”
He said the return to popularity of IVAs had impacted on the growth of the firm’s debt management business.
“We have continued to diversify our business with the number of live debt management cases rising 27% in the six months, generating revenues of £1.5m and a contribution of £0.8m.
“However, the shift in consumer preference towards IVAs has meant that the growth of the debt management business has slowed.”
Fairpoint’s financial services business, which arranges loans and mortgages, continues to suffer from the affects of the credit crunch and saw revenues fall from £900,000 to £200,000 in the period.
Mr Moat said: “Our Financial Services division continues to diversify from being focused on mortgages, towards other financial solutions.
“We introduced a prepaid card offering to our customers towards the end of 2008 and have now added 1,079 new customers.
“Our mortgage revenues were down 82% on the prior year due to the lack of credit supply and so the division suffered a small loss, due partly to investment in new product development.”
Looking ahead Fairpoint said it would continue to focus on costs, reduce borrowings and diversify its product range.
