Fairpoint

As foreshadowed here in September, debt management and financing specialist Fairpoint Group expects 2009 profits up six-fold to £6m pre-tax.

The Lancashire-based company, formerly Debt Free Direct, says revenues in the second half of last year were 19% ahead of the previous year’s second half and 9% above those achieved in the first six months of 2009, which saw 2008’s £1.2m interim loss turned into £2.2m of interim pre-tax profits. By the end of last year, Fairpoint had brought borrowings down to £4.5m from a £10.9m peak 18 months previously and directors plan to reinstate dividends, with an interim payout of 2p a share in March.

Chief executive officer Chris Moat says the company is now in a position to consider its ‘strategic options’. He says these could include acquisitions and/or joint ventures.

According to Moat, offering a wider product range, with individual voluntary arrangements (IVAs) as well as debt management, has helped win more business. With 25,000 customers now on long-term debt solutions, he maintains unemployment has been ‘a real catalyst’ for growth and suggests a coming public sector shakeout should offset any falls in private sector jobless rates.

Moat also suggests the prospect of returning inflation, with rising interest rates, could bring more debt-laden consumers to Fairpoint’s door. He notes ‘a higher proportion of home owners are coming to us’ and argues the company could see a revival of its mortgage broking activities.

Fairpoint recently launched its ‘Clear Start’ service, giving free advice to customers for a fee from their creditors. Distribution will be through partnerships with other commercial debt advisers and bodies such as the Citizens' Advice Bureaux.

Crucial to Fairpoint’s progress has been a beefing up of its operating effectiveness. ‘Eighteen months ago we converted 3 to 4% of calls into arrangements and now the figure is more than 10%’, boasts Moat.

With earnings of 10.15p on the cards for 2009, City analysts see the company making £7.5m pre-tax this year, for earnings of 12.5p a share. Highlighted by Growth Company Investor at 51.5p last March, the shares have reached 81p, which leaves scope for further potential gains over the medium term.