Respect the law
​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.
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