Fairpoint trades flat as business transitions

The AIM-traded company said overall group trading for the first half of 2016 was in line with the board’s expectations, with overall revenues increasing in excess of 20% compared to the prior period.

Fairpoint’s board said the principal driver of the revenue increase is the Legal Services business, which has almost doubled in size with the contribution of the Colemans business acquired by the group in August 2015.

Legal Services now represents 75% of group revenues, Fairpoint claimed.

The Debt Solutions and Claims business areas were continuing to show declining revenues and profits due to adverse market conditions, which had been expected.

Its board said group adjusted profit before tax is expected to be flat compared to the prior period.

“This reflects the continued transition of the group from a low growth, higher margin debt solutions company towards a higher growth, lower margin Legal Services business,” the board said in a statement.

During the period, the board made the decision to exit debt management services due to regulatory changes impacting the whole sector, with a consequent impact on group second half expectations.

“We are pleased with the progress the group is making as it transitions to a Legal Services focused business,” said Fairpoint chief executive Chris Moat.

“By simplifying the business by exiting the DMP segment we will be better placed to focus our resources on making continued progress in Legal Services which offers more attractive growth opportunities.

“We therefore believe the long term gain of being a focused business will outweigh any short term negative impact from our decision.