Fairpoint moves into profit
DEBT adviser Fairpoint moved into profit in the first half of the year.
The Chorley-based firm recorded pre-tax profits of £2.1m in the six months to June 30, up from a £2.1m loss last time. Sales grew 14% to £14.1m.
Revenues from individual voluntary arrangements (IVAs) accounted for £8.7m, the same as last year as a result of “subdued market demand”.
But the division turned an adjusted pre-tax profit of £1.4m, compared to a £700,000 loss last time, which Fairpoint said was down to the reduction in the IVA cost base and increased IVA claims management activities.
“This had the effect of increasing returns to creditors and in turn increasing IVA supervisory fees from the existing portfolio,” said the company.
The total number of fee paying IVAs under management at June 30 was 20,772 (2011: 20,659). The number of new IVAs written in the first half of 2012 fell by 26% to 2,217 (2011: 3,005).
Revenue from debt management plans grew 11% to £2.8m and profits were up 9% to £1.2m thanks to the acquisition of a debt management book in May.
The financial services arm of the business also moved into profit, recording a pre-tax figure of £700,000, up from a £200,000 loss. This was down to the firm making “significant headway” in payment protection insurance claims.
Chief executive Chris Moat said: “Fairpoint has reported a strong financial and operating performance in the first half of 2012, following a much improved second half of 2011. The group has diversified its income streams and grown its revenues in subdued market conditions.
“Early progress in the development of claims management services has been strong, and additional products are under development to ensure continuing momentum in this area.”
He added: “In the second half of 2012 we expect to continue the momentum seen in the first half, benefiting from the normal seasonality of the business, a good stock of work in our back books, the benefit of acquisitions made in this and prior periods and continuing development of the financial services business.”
David Gorman, director at Manchester broker Milkstone, said: “This is an impressive set of interim results from Fairpoint. The management team has worked really hard over the last couple of years to diversify into new business areas and reduce the reliance on IVA revenues.
“We will probably need to upgrade our forecasts a little bit in light of today’s results. The shares have had a good run but they’re still attractive, especially since they pay a really good dividend.”
