20th Jul 2016 07:00
Fairpoint Group plc (FRP)Fairpoint Group plc: Trading update, appointment of Finance Director andNotice of Half Year Results 20-Jul-2016 / 08:00 CET/CESTDissemination of a Regulatory Announcement, transmitted by EQS Group AG.The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- 20 July 2016 Fairpoint Group plc Trading update, appointment of Finance Director andNotice of Half Year Results This announcement contains inside information Fairpoint Group plc ('Fairpoint' or 'the Group'), one of the UK's leadingproviders of consumer professional services, today issues a trading updateon the Group's performance for the six months ended 30 June 2016, ahead ofannouncing its half year results on Thursday, 15 September 2016. Half year trading update Overall Group trading for the first half of 2016 has been in line with theBoard's expectations. Summary - Overall revenues have increased in excess of 20% compared to the prior period - The principal driver of the revenue increase is the Legal Services business, which has almost doubled in size, benefiting from the contribution of the Colemans business acquired by the Group in August 2015 - Legal Services now represents 75% of Group revenues - As expected, the Debt Solutions and Claims business areas continue to show declining revenues and profits due to adverse market conditions - Group adjusted* profit before tax is expected to be flat compared to the prior period (H1 2015: £4.1m). 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 - Decision to exit debt management plan (DMP) services due to regulatory changes impacting the whole sector with consequent impact on Group second half expectations Segmental updates Legal Services: - Strong progress has been made on the integration programme with 80% of Legal Services revenues now administered on a common IT platform and encouraging early results being generated from our new marketing approach. - During the period the Group acquired a small market leading practice specialising in child abuse actions in order to expand further its range of legal services. This resulted in one-off transaction and related costs of £0.3m. - Conveyancing represented 6% of Group first half revenues; as reported at the AGM in May, it has experienced quieter trading relative to original expectations, offset by performance in other product lines. - Consultation regarding the Chancellor's proposed changes to small claims limits on whiplash claims has yet to commence. As a consequence, it is not anticipated that any changes will be implemented before Autumn 2017 and therefore no impact is expected on 2016 or 2017 trading. Small whiplash claims represented 9% of Group revenues in the first half. Debt Solutions and Claims: - IVA: As expected, market conditions in the Group's debt solutions market remain challenging. The Group therefore continues to focus on delivering good margins and cash generation and avoiding uneconomic business. Given the reduced prospect of upwards interest rate movement, traditionally a catalyst for customer demand for debt solutions, the Group has put marketing activity in support of this segment on hold. - DMP: - As reported at the time of the final results in March 2016, the FCA is driving a rigorous regulatory agenda in the DMP sector. This resulted in the Board's decision to halt acquisition activity last year. - The regulatory regime has already severely impacted the commerciality of the whole of the industry, including Fairpoint's DMP business and has resulted in a reduction in DMP's profitability in the first half. - The ultimate outcome of the revised regulatory regime is expected to transfer competitive advantage to the charitable DMP sector from the commercial DMP sector, thus rendering the commercial DMP business model as unsustainable. - As a consequence, the Group has decided to simplify its range of business activities and intends to complete an orderly wind down of its DMP operations during the second half of 2016. - This will materially affect the results of the Group's DMP segment in the second half of 2016, as well as those of the Claims segment, given its dependency on selling services to DMP clients. - DMP is now expected to make little or no profit contribution to the Group for the second half of the current financial year. - The Board expects the restructuring will give rise to exceptional charges in the second half of approximately £2m (£1m of which will be cash costs in 2016), and a non-cash impairment of the debt management intangible asset of £5m. From 2017 the Group will implement and benefit from a reduced cost base anda simplified business model, focused on its higher growth Legal Servicessegment. Director succession planning update Good progress has been made on the recruitment of a new Chief FinancialOfficer and we are delighted to announce the appointment of DavidBroadbent, who will join the Group from 1 August 2016. David has over 20 years' experience in professional and financial services.He was previously on the board of International Personal Finance plc fromits initial listing in 2007 through to 2016, serving as Finance Directorand more recently as Chief Commercial Officer. Earlier in his career, Davidheld the role of Finance Director of the International Division ofProvident Financial Plc and was a Senior Manager with PwC. He graduated inClassics at Durham University, has an MBA and is a Chartered Accountant. Hewill commence an orderly transfer of responsibilities from John Gittins,who has previously announced his intention to step down from the Board topursue a portfolio career. We expect to complete the hand-over by the endof September. We would like to thank John for his significant contributionto the Group over the last 4 years. Notice of Half year results The Group will release its half year results for the six months ended 30June 2016 on 15 September 2016. Chris Moat, Fairpoint's Chief Executive said: 'We are pleased with the progress the Group is making as it transitions toa Legal Services focused business. By simplifying the business by exitingthe DMP segment we will be better placed to focus our resources on makingcontinued progress in Legal Services which offers more attractive growthopportunities. We therefore believe the long term gain of being a focusedbusiness will outweigh any short term negative impact from our decision.' Enquiries please contact: Fairpoint Group plcwww.fairpoint.co.ukChris Moat, Chief Executive Officer 0845 296 0100John Gittins, Group Finance Director Shore Capital (Nomad and Broker)Mark Percy 020 7408 4090Edward Mansfield Panmure Gordon & Co (Joint Broker)Dominic Morley 020 7866 2500Charles Leigh -Pemberton MHP CommunicationsReg Hoare 020 3128 8100Katie Hunt *profit before tax adjusted for amortisation of acquired intangible assets,unwinding of discount on contingent consideration and exceptional items Additional Information: The following information is disclosed under Schedule 2 (g) of the AIMRules.(i) David Edward Spencer Broadbent is 47, was formerly a director or partner of: International Personal Finance PlcInternational Personal Finance Investments LimitedIPF Development (2003) LimitedIPF Financing LimitedIPF Holdings LimitedIPF International LimitedIPF Financial Services Limited David Broadbent has confirmed that there is no other additional informationto be disclosed under Schedule 2 (g) of the AIM Rules --------------------------------------------------------------------------- Dissemination of a Regulatory Announcement, transmitted by EQS Group AG.The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- Language: English ISIN: GB0032360280 Category Code: TST TIDM: FRP Sequence Number: 3264 Time of Receipt: 20-Jul-2016 / 07:02 CET/CEST End of Announcement EQS News Service --------------------------------------------------------------------------- 484013 20-Jul-2016UK-Regulatory-announcement transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.
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