Fairpoint Group

www.fairpoint.co.uk
Ticker: FRP Exchange: AIM

Fairpoint provides a range of retail consumer targeted professional services pivoted on debt solutions and legal services. The group's four core business segments are: IVA services, debt management plan (DMP) services, claims management and legal services. 

Latest Reports

Whiplash reforms parked

Published: 13th October 2016

Fairpoint Group provides a range of consumer targeted professional services. The group’s core business is a consumer legal operation (76% of H116 revenues), supported by legacy debt solutions services.

Press coverage this morning states that a previous source of concern over group earnings may have gone away. This related to changes, proposed by George Osborne in his Autumn statement last year, to reform the UK’s compensation culture around minor motor accident injuries, specifically the operation of whiplash claims. 

According to press reports this morning these reforms have been set aside by the government, indeed the insurance industry has concluded that they will never happen. 
The Ministry of Justice confirmed that the whiplash changes are not a priority but claims reforms are 'not off the agenda'. 

We recently adjusted our forecasts for Fairpoint in the light of their strategic decision to focus on the growth and margin opportunities in Legal Services. On those new forecasts the prospective yield on the shares is a remarkable 10% and the PER just 5.0x …and that is for the current year to Dec 2016. 

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Strategic focus on strong growth

Published: 21st July 2016


Fairpoint Group provides a range of retail consumer targeted professional services. The group's core business is a consumer legal operation, supported by legacy IVA services.

The two key messages from yesterday's H1'16 trading update were (a) strong progress by Legal Services, in line with expectations and (b) the decision to pursue an orderly wind-down of the debt management plan services (DMP), prompted by new FCA regulation which increased costs and made that business appear unviable.

This will continue the group's focus on core Legal Services which contributed 75% of H1'16 revenues. That was 20% up y-o-y, but the current run rate is closer to twice last year driven by the acquisition of Colemans completed in August 2015, near fully integrated. This division already represented 100% of medium term growth potential. DMP income pivoted on a steadily shrinking client portfolio, management of which has become more complex and time-consuming, resulting in higher potential churn. 

The transition to predominantly legal services is ahead of schedule, but was already well underway. There were no operational synergies between the two operations and no plans to rescale debt solutions. Legal Services reported a positive H1'16 and continues to seek acquisitions to complement its service portfolio.

Legal Services revenues are growing even without new acquisitions, long term facilities are available to fund organic growth and acquisitions, and even after this adjustment the dividend is very well covered. Share price weakness post small claims uncertainty and this latest news puts them on an attractive prospective FY16 PER of 6.5x and 7.1% yield.
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Q1 - trading on track

Published: 8th May 2016

Fairpoint Group provides a range of retail consumer targeted professional services pivoted on debt solutions and legal services. The group's four core business segments are: consumer legal services, IVA, debt management plan and claims management services.

Today's AGM statement confirmed performance in line with management expectations in the first three months of the financial year. That completes what is typically the group's quietest and arguably least illuminating quarter, but we take reassurance in confirmation that finances are on track.

A more detailed update - covering the first six months - is due in July. That is expected to reveal the benefits to the Legal Services division of the successful integration of Colemans and Simpson Millar. Recent investment in that division's infrastructure is specifically designed to support acquisitions that broaden and develop the Legal Services platform.

They also announced the CFO's decision to step down and pursue a portfolio career of NED positions. He will work with the Board to ensure a smooth handover, and a process has commenced to identify a replacement.

The decline in the price today leaves the shares on a prospective FY16 PER of 6.5x and 5.6% yield which looks overly pessimistic. We have not adjusted our forecasts, since we had already built in materially lower IVA volumes, modest growth in legal services division revenues and no new acquisitions. 
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View the Results Webinar

Published: 21st March 2016
You can now hear Chris Moat, CEO, John Gittins, Finance Director, and Peter Watson, Managing Director of Simpson Millar, present the FY2015 results for Fairpoint Group and answer investor questions.

To view simply click on the video below.

FY 2015 on track

Published: 19th January 2016

Fairpoint provides a range of retail consumer targeted professional services pivoted on debt solutions and legal services and today gave a reassuring update on trading, saying that FY15 results will be in line with expectations. That means  'double digit' year-on-year growth in segmental revenues and adjusted profit and improved margins.

Importantly, the potential impact of proposed changes to small claims limits and whiplash claims outlined in the Autumn Statement has no impact this year, looks manageable i.e. affects 8% of pro-forma revenues, appear specifically focused on whiplash claims relating to road traffic accidents and may well present an opportunity to leverage in-house competitive advantages in processing volume low-cost legal claims.

The key driver for the group is continued development of consumer legal services business Simpson Millar LLP, with the current year underpinned by the Colemans acquisition last August.

In summary, the strategic transition and evolution progresses. Debt solutions remains profitable and cash generative, but in the absence of any recovery in market volumes the shift towards legal services will continue.

The shares' reaction to the Autumn Statement was perhaps inevitable after a strong run, but looks overdone. The increased breadth and balance of group activities post recent acquisitions should leave it well-placed to capitalise as reform is rolled out, and certainly limits the downside. 

The current, well-covered 5% prospective FY16 yield provides material attractions pending further clarification, possibly with the FY15 results, due on 16 March. 

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View the Results Webinar

Published: 19th September 2016
You can now hear Chris Moat, CEO, and John Gittins, Finance Director, present the half year results for the six months ended 30 June 2016 and then answer investors questions.

To view simply click on the video below.

Respect the law

Published: 18th September 2016


Fairpoint Group provides a range of consumer targeted professional services. The group's core business is a consumer legal operation (76% of H1, 2016 revenues), supported by legacy debt solutions services.

Progress in H1 pivoted on successful integration of newer parts of the group's Legal Services division, its growing scale and achievement of key strategic targets. This is driving Fairpoint's transformation into a focused legal services business with well-defined strategies and visible growth targets. 

The shift to Legal Services continues as Debt Management is wound down and acquisitions bolted on. Group H116 revenue was 24% up y o y on the back of acquisitions and c 4% organic growth attributed to marketing initiatives. Legal Services revenue was £21.5m in the first half, 90% up y-o-y post acquisitions; adjusted segment PBT was £3.1m (H115: £1.4m). Margin growth from 13% to 14% was achieved despite conveyancing performance and we see potential for further material progress over the next few years.

Legal Services is increasingly well-diversified but conveyancing had a disproportionate impact on earnings. We have reduced our full year adjusted PBT forecasts by c £1m to reflect this. The interim dividend was held and distributions remains very well covered.

On new FY'16 forecasts the yield on the shares is a healthy 6.7%, and the PER just 7.5x.


NB management will host a webinar today at 1.30pm: Register here


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View the Results Webinar

Published: 19th September 2016
You can now hear Chris Moat, CEO, and John Gittins, Finance Director, present the half year results for the six months ended 30 June 2016 and then answer investors questions.

To view simply click on the video below.

Respect the law

Published: 18th September 2016


Fairpoint Group provides a range of consumer targeted professional services. The group's core business is a consumer legal operation (76% of H1, 2016 revenues), supported by legacy debt solutions services.

Progress in H1 pivoted on successful integration of newer parts of the group's Legal Services division, its growing scale and achievement of key strategic targets. This is driving Fairpoint's transformation into a focused legal services business with well-defined strategies and visible growth targets. 

The shift to Legal Services continues as Debt Management is wound down and acquisitions bolted on. Group H116 revenue was 24% up y o y on the back of acquisitions and c 4% organic growth attributed to marketing initiatives. Legal Services revenue was £21.5m in the first half, 90% up y-o-y post acquisitions; adjusted segment PBT was £3.1m (H115: £1.4m). Margin growth from 13% to 14% was achieved despite conveyancing performance and we see potential for further material progress over the next few years.

Legal Services is increasingly well-diversified but conveyancing had a disproportionate impact on earnings. We have reduced our full year adjusted PBT forecasts by c £1m to reflect this. The interim dividend was held and distributions remains very well covered.

On new FY'16 forecasts the yield on the shares is a healthy 6.7%, and the PER just 7.5x.


NB management will host a webinar today at 1.30pm: Register here


Download Now