Small Cap Breakfast
Path Investments—Publication of prospectus from the Energy Investment Company. Raising £1.4m. Admission due on or around 30 March | Franchise Brands—Schedule 1 detailing £28m reverse takeover of Metro Rod. Admission expected 11 April | Alpha FX Group— Schedule 1 from the foreign exchange provider focused on managing exchange rate risk for UK corporates that trade internationally. Fundraise TBC. Admission expected 7 April | SkinBioTherapeutics—Schedule 1 update from the Company focused on certain molecules found in the human microbiota that can be used to protect, manage and restore the skin. £4.5m raise. Admission due 5 April | Integumen— Schedule 1 from the personal health company developing and commercialising technology and products for the human integumentary system. Raising £2.16m at 5p. Expected market cap £8.16m. Admission expected 5 April | Tufton Oceanic Assets– Offer extended to 9 May to enable investors to complete further due diligence.
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29 Mar 17
Whiplash reforms parked
Press coverage this morning states that a previous source of concern over group earnings may have gone away. This related to changes, proposed by George Osborne in his Autumn statement last year, to reform the UK’s compensation culture around minor motor accident injuries, specifically the operation of whiplash claims.
13 Oct 16
Respect the law
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.
19 Sep 16
Last week saw plenty of news for smaller financials. WH Ireland’s interim results, which are covered in a separate note (“Strategic progress in choppy waters”) were followed by impressive ones from Beazley (see below) and accompanied by a trading statement from Charles Stanley, an update and strategic focus on Legal Services from Fairpoint (separate note), an acquisition by Randall & Quilter and interims from Hiscox: the latter no longer a “smaller” financial, with a market cap. of >£3 billion.
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26 Jul 16
Strategic focus on strong growth
The two key messages from the H116 trading update were (a) strong progress by Legal Services, in line with expectations and (b) the decision to pursue an orderly wind-down of the debt management plan services (DMP), prompted by new FCA regulation which increased costs and made that business appear unviable. Fairpoint also confirmed the appointment of David Broadbent as new CFO from 1 August.
21 Jul 16
Q1 - trading on track F
Fairpoint’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, which is at odds with the dip in the share price which followed the announcement.
09 May 16
Legal services driving growth
FY15 results reveal a number of positive core messages; double-digit growth in legal services’ revenues and adjusted profit; continued cash generation and attractive operating margins from debt solutions; a strong balance sheet with access to further long-term debt to fund new opportunities to drive consolidation in the consumer legal services market.
17 Mar 16
FY15 on track
The shares’ reaction to the Autumn Statement was perhaps inevitable after a strong run, but looks overdone. There is further detail to be determined during the course of the consultation process this year, but the increased breadth and balance of group activities post recent acquisitions should leave it well-placed to capitalise as reform is rolled out, and certainly limits the downside. The current, well-covered 5% prospective FY16 yield provides material attractions pending further clarification, possibly with the FY15 results, due on 16 March.
19 Jan 16
Fairpoint’s shares fell yesterday due to concerns over how proposals in the Chancellor’s Autumn Statement could affect the performance of its consumer legal services operation. As per today’s RNS, there is no impact on expectations for the current year or FY16. Management briefings will put any future impact into perspective.
27 Nov 15
Resilient model offers much more growth
A prospective 9.8x FY16 PER (materially below pure legal quoted peer, Gateley) is supported by a well covered 3.7% yield. Forecasts are based upon conservative assumptions: lower than anticipated savings and synergies from recent acquisitions, no further additions to the group complement and further pressure on IVA/DM markets. We also see potential for better than expected growth in legal services revenues over the forecast period. The group’s robust finances, including access to long term bank facilities are available to fund further organic and acquisition-led growth.
16 Nov 15
Strong growth driven by legal services acquisitions
The success of Fairpoint’s diversification policy is shown in the 64% increase in revenue and the 21% rise in “adjusted profits” (IFRS profits rose by even more) despite the 30.4% fall in the number of IVAs passed in the half-year and a significantly greater fall in the value of those cases.
03 Sep 15
A longer arm of the law
Fairpoint has today announced the acquisition, on a cash-free debt-free basis, of the Colemans-CTTS legal services business for an initial payment of £9m, with further contingent payments of up to £7m, and also published a trading update on the first half ahead of the interim results next month.
03 Aug 15