Q1 - trading on track
​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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