Interim Results

RNS Number : 6933S

Fairpoint Group PLC

15 September 2010

 



Fairpoint Group plc

Interim Results for the six months ended 30 June 2010

15 September 2010

Fairpoint Group plc ("Fairpoint" or "the Group") today announces its interim results for the six months ended 30 June 2010.

Highlights

First half earnings show improvement on H1 FY09 in line with management expectations, specifically:

§ Adjusted Profit before tax* rose 9% to £2.6 million in H1 FY10 (H1 FY09: £2.4 million);

§ Net bank borrowings fell £0.3 million in H1 FY10 to £4.2 million (H1 FY09: £6.5 million);

§ Revenue of £13.9 million in H1 FY10 (H1 FY09: £13.8 million) with gross profit increasing to £6.1 million (H1 FY09: £5.7 million); and

§ Interim dividend of 1.5p (H1 FY09: 0.0p).

Strong progress has been made across all key business priorities, namely:

§ Diversified revenue - our organic growth agenda has delivered 25% growth from non-IVA sources to 15% of all revenues and 18% of gross profits (H1 FY09: 12% revenue, 13% gross profit);

§ Cost efficiencies - further improvements have been achieved in H1 FY10.  Direct costs and marketing have been reduced to 55% (H1 FY09: 58%).  Additionally, the significant increase in the number of debt management cases in June 2010 has allowed us to achieve scale benefits in our debt management business;

§ Customer numbers  -  we have exceeded our target of doubling customer numbers with 22,121 new solutions sold (H1 FY09: 7,217) and the ongoing book of cases has grown 44% to 33,547 (H1 FY09: 23,287); 

§ Strong operational cashflow has supported a programme of debt management portfolio acquisition with £1.2 million invested in acquisitions; and

§ Acquisition of Moneyextra.com Limited in July 2010 is a further significant step in increasing the diversity of our income streams and accelerating the strategic move to a broader based financial solutions business for financially stressed consumers.

Further progress is expected in the second half of the year from:

§ Anticipation of continued growth from IVA volumes driven by creditor preference for IVAs over debt management plans;

§ Growth in our debt management business giving increased economies of scale, primarily from continued opportunities to acquire back books as tough competitive conditions lead smaller players to exit the market;

§ Acceleration of growth in the range of products and services following the acquisition of Moneyextra.com in July;

§ Continued cash generation from the core operation;

§ Breakage levels in line with expectations; but

§ Debt solution market growth has slowed due to the combination of a benign interest rate environment and falling unemployment levels and this will restrict growth in the second half.  Looking forward into 2011, the outlook is for an increase in unemployment levels driven by public sector spending cuts, and the yield curve anticipates interest rate rises, both are key drivers of the number of debt solutions.

* adjusted for brand amortisation and exceptional items

Matthew Peacock, Chairman, said

"Fairpoint has delivered another solid set of results, with growth across all areas of the business.  The Group is becoming increasingly diversified and the progress in the first half of 2010 stands us in good stead to deliver on our strategic objectives.  This confidence is reflected in the Board recommending an interim dividend of 1.5p per share."

Chris Moat, CEO, said

"Despite economic conditions proving more benign for financially stressed consumers, Fairpoint continues to deliver growth in its core debt solutions business.  Our focus on strengthening operating efficiencies whilst taking advantage of opportunities to build on our non-IVA businesses has allowed us to both significantly enhance our operations and deliver value to shareholders."

Chief Executive Officer's Report

The first half of 2010 has seen the Group continue to make progress across all product lines.  IVA customer numbers continue to grow, the debt management business continues to be scaled up and has expanded rapidly throughout the period supported by consolidation opportunities presented in the market, and growth in value added services has accelerated.  The increasing diversity of the Group has added resilience to our earnings.  

We are increasingly able to agree IVAs at lower yielding contributions than was possible previously.  This widening of access to an IVA is, when used appropriately, positive news for customers and as a result we have seen a migration from DMPs to IVAs, although the lower yielding contributions lead to a lower average fee per case.  As a result the market for IVAs continued to grow during the period with an increase of 15% to 25,248, although the rate of IVA growth slowed in the second quarter and we anticipate it will slow further in the second half of the year without renewed impetus from either rising unemployment or interest rates. 

We have improved our IVA operational costs through the period with tight cost control and greater operational efficiency and been largely able to absorb the expected revenue fall from our back book of IVA cases which declined during the period as the proportion of cases under the new fee protocol increased. 

The migration of consumers from debt management plans to IVAs has restricted growth in the debt management market segment and the market sector remains highly competitive.  The spectre of increased regulation has however led to a number of smaller players choosing to exit the market and which should present the Group with consolidation opportunities.

We have continued to grow our own debt management business both through organic channels and through the acquisition of back books from smaller companies exiting the market place.  Consequently, overall case numbers doubled from 5,539 at 31 December 2009 to 11,158.  The timing of the acquisitions, in June 2010, has meant that first half benefits have been limited, despite this debt management profits rose from £0.8 million to £1.0 million.  The new cases have been successfully migrated to our existing operation at Adlington.  By operating from a single system platform the Group has significantly improved its economies of scale presenting the Group with enhanced profitability in the second half.

The introduction of value added services has proven successful and we have swiftly reached our target of doubling customer numbers.  Solutions sold rose to 12,055 bringing our financial services business back to a profitable contribution.  This was achieved solely through our organic growth agenda and clearly demonstrates a strong customer appetite for value added services.

In order to accelerate revenue and profit growth in this segment our strategy is to extend the number of products we are able to offer to consumers to reduce their expenditure.  The acquisition of Moneyextra.com, announced on 27 July 2010, provides the capability to fulfil this customer demand.  In particular Moneyextra brings to the Group:

§ A broad product supply capability allowing us to extend from primary value added service of utility switching into other product areas where market prices are highly variable.  Such product areas tend to be almost compulsory purchases for most households and include for example, home insurance, car insurance, broadband, landline, mobile phones and media packages.  Our objective is to ensure that all of our customers can make their money go further by benefiting from our switching service;

§ A technology capability which will allow us to accelerate the provision of a multi product switching service to customers; and

§ Additional distribution from the 60,000 customers who visit the Moneyextra web site on a monthly basis.

Increasingly our success will be fuelled by our ability to provide a wider range of products to our growing number of customer enquiries and ongoing book of existing customers.  Our first half financial performance is almost entirely generated from organic activity due to the completion timing of our debt management and Moneyextra.com acquisition.  Despite this non-IVA revenues reached 15% of Group revenues in the period and through continued organic growth and the benefit of acquisition activity are on track to reach more than 25% of Group revenues on an annualised basis from the final quarter of FY10 onwards. 

Total Group revenues amounted to £13.9 million (six months to 30 June 2009: £13.8 million) and profit before tax adjusted for brand amortisation reached £2.6 million (six months to 30 June 2009: £2.4 million).  The continued focus on efficient marketing and operations allowed the Group to reduce net bank borrowings by a further £0.3 million to £4.2 million at 30 June 2010 even after allowing for acquisitions and this strong operating cash generation allows us to provide shareholders with an interim dividend of 1.5p per share.  

Finance Director's Report

Group revenues were slightly ahead of H1 FY09 at £13.9 million.  Revenues from IVAs fell slightly as the expected decline in back book income stemming from the 2007 fee protocol changes crystallised.  Debt management revenues were strongly ahead as the book grew significantly, although the impact from the acquired portfolio was only felt in the final month of the period.  Financial services revenues rose as we rolled out our value added services.

Marketing spend in the period amounted to 22% of revenues compared to 23% in H1 FY09, with tight control of expenditure in a highly competitive marketplace.  Continued improvements in operational efficiency fed through strongly to direct cost lines mitigating the impact of lower case revenues and leading to overall gross margin rising to 45% (H1 FY09: 42%).  Overheads grew to £3.0 million (H1 FY09: £2.9 million) as we incurred higher costs in debt management and portfolio acquisition costs.  When compared to the second half of 2009, overheads fell  as we reduced head office roles due to greater operating efficiencies.

Profit after tax was £1.7 million compared to a profit of £1.5 million in the equivalent period last year.

					6 months to June 10 £'m		6 months to June 09 £'m
Revenue					13.9		13.8
Gross Profit					6.3		5.7
Adjusted Profit Before Tax					2.6		2.4
Profit After Tax
from continuing operations					1.7		1.5
Selected Segmental information				6 months to June 10 £'m		6 months to June 09 £'m
Revenue
IVA				11.8			12.1
Financial Services				0.3			0.2
Debt Management				1.8			1.5
				13.9			13.8
Contribution1
IVA				5.0			5.1
Financial Services				0.1			-
Debt Management				1.0			0.8
Total Group Contribution				6.1			5.9
Overheads2				(3.0)			(2.9)
Interest, depreciation and amortisation				(0.5)			(0.6)
Adjusted Profit Before Tax				2.6			2.4
				6 months to June 10 No.			6 months to  June 09 No.
New Customers
IVA Services				4,053			3,858
Financial Services				12,055			1,144
Debt Management				6,013			2,029
				22,121			7,031
Existing Customers
IVA Services				22,389			18,771
Debt Management				11,158			4,516
				33,547			23,287

The total number of new product solutions increased dramatically driven by the acquisition of debt management portfolios and the successful roll-out of value added services.  Secure lending solutions remained very low with a scarce supply of mortgage products for our customers.

1 Contribution includes gross profit, finance income from the unwinding of discounts and bad debts.

² Overheads comprise administrative expenses less bad debts, depreciation and amortisation.

Balance Sheet and Cashflow		June 2010 £m	June 2009 £m
Shareholder funds		37.1	33.7
Net bank borrowings		4.2	6.5

Net bank borrowings fell to £4.2 million with the Group generating cash from operations of £3.0 million before investment of £1.2 million in debt management portfolios and £0.9 million in dividend payments.  The Group continues to actively manage its working capital and benefitted from slightly stronger than expected cashflows from IVA cases as the growth in failure rates in 2009 flattened in H1 2010.

 The Directors have recommended the payment of an interim dividend of 1.5p payable on 26 October 2010 to shareholders registered on 8 October 2010.

Outlook

Demand for debt solutions increased rapidly through 2009 and the early part of 2010 mainly driven by growth in unemployment levels.  Unemployment levels have since levelled off and more recently reduced slightly.  Despite this our expectations are for the number of consumers experiencing financial stress to continue to grow as we enter 2011.  The principle drivers are expected to be:

§ The UK household debt burden remains high at 151% of annual income³;

§ Public sector expenditure reviews are forecast to result in 610,000 job losses³; and

§ Finally as economic growth returns inflationary pressures will build and upward pressure on interest rates is expected to stretch household budgets with rising mortgage rates.

Our focus for the second half will be to position the Group to benefit from:

§ Continued growth in its core debt services, particularly new business origination of IVAs;

§ Further acquisition of debt management plan portfolios as sub scale providers look to exit the market;

§ A rapid extension in its reach to a wider population of customers requiring money saving solutions, enhanced by the acquisition of Moneyextra.

The progress in the first half of 2010 stands the group in good stead to deliver on its strategic objectives supported by established market leadership in a growing IVA market, a scale debt management business and a strong and established Moneyextra platform for extending reach.  Our targets for the next six months are to diversify the Group further and extend revenue and gross profit to 25% from non IVA solutions. 

³ Office for budget responsibility

Enquiries:

Fairpoint Group plc

Chris Moat, Chief Executive Officer                 0845 296 0100

Andy Heath, Finance Director                           0845 296 0200

Shore Capital (Nomad and Joint Broker)

Pascal Keane                                                        020 7408 4090

Edward Mansfield

Oriel Securities (Joint Broker)

Tom Durie                                                             020 7710 7600

Emma Griffin

Financial Dynamics

Nick Henderson                                                   020 7269 7114

Laura Pope                                                           020 7269 7243

Analyst presentation

There will be an analyst presentation to discuss the interim results at 09:30 today at Financial Dynamics, Holborn Gate, 26 Southampton Buildings, London, WC2A 1PB.  Those analysts wishing to attend are asked to contact Justine Cording at Financial Dynamics on [phone] or at [e-mail].

FAIRPOINT GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
PERIOD FROM 1 JANUARY 2010 TO 30 JUNE 2010
						Period from				Period from					Year ended
						1 January 10 to				1 January 09 to					31 December
						30 June 10				30 June 09					2009
						Unaudited				Unaudited					Audited
						£'000				£'000					£'000
CONTINUING OPERATIONS
Revenue						13,876				13,759					28,900
Cost of sales						(7,801)				(8,023)					(15,446)
GROSS PROFIT						6,075				5,736					13,454
Administrative expenses						(5,834)				(5,604)					(11,777)
Finance income - unwinding of discount on IVA Revenue						2,233				2,242					4,415
Finance Income - other						4				9					10
Finance cost						(104)				(208)					(379)
ADJUSTED PROFIT BEFORE TAX						2,574				2,361					6,101
Amortisation - brand and other intangibles						(200)				(186)					(378)
PROFIT BEFORE TAX						2,374				2,175					5,723
Corporation tax charge						(685)				(647)					(1,662)
PROFIT FOR THE PERIOD
FROM CONTINUING OPERATIONS						1,689				1,528					4,061
DISCONTINUED OPERATIONS
Loss for the period from discontinued operations						-				-					(66)
PROFIT FOR THE PERIOD						1,689				1,528					3,995
Other comprehensive income:
Total comprehensive income for the period						1,689				1,528					3,995
Earnings/(Loss) per ordinary share
Profit from continuing operations					3.88					3.58					9.47
(Loss) from discontinued operations					-					-					(0.15)
Total profit from operations					3.88					3.58					9.32
Diluted earnings/(loss) per ordinary share
Profit from continuing operations					3.87					3.58					9.45
(Loss) from discontinued operations					-					-					(0.15)
Total profit from operations					3.87					3.58					9.30
FAIRPOINT GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2010
					As at 30 June 2010					As at 30 June 2009					As at 31 December 2009
					Unaudited					Unaudited					Audited
					£'000					£'000					£'000
ASSETS
Non current assets
Property, plant and equipment					1,688					1,672					1,603
Goodwill					11,972					11,343					11,343
Brand and other intangible assets					4,268					3,812					3,621
Software development					1,772					1,717					1,731
Total non current assets					19,700					18,544					18,298
Current assets
Trade and other receivables					24,897					23,276					25,595
Other current assets					1,388					1,466					787
Cash and cash equivalents					802						425					832
Total current assets					27,087						25,167					27,214
Total assets					46,787						43,711					45,512
EQUITY AND LIABILITIES
Capital and reserves
Share capital					436						429					429
Share premium account					528						18					18
Merger reserve					11,842						11,842					11,842
Other reserves					254						254					254
Treasury share reserve					(510)						-					-
Retained earnings					24,584						21,155					23,709
Total equity attributable to equity holders of the parent					37, 134							33,698				36,252
Non current liabilities
Long term bank borrowings					5,000						6,900					5,300
Other long term borrowings					232						-					263
Deferred tax liabilities					1,030						801					1,030
					6,262						7,701					6,593
Current liabilities
Trade and other payables					2,328						1,976					1,848
Current tax liabilities					1,010						336					766
Short-term borrowings					53						-					53
					3,391						2,312					2,667
Total liabilities					9,653						10,013					9,260
Total equity and liabilities					46,787						43,711					45,512
The interim financial statements were approved by the board of directors on 14 September 2010

FAIRPOINT GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
PERIOD FROM 1 JANUARY 2010 TO 30 JUNE 2010
					Share
				Share	Premium	Merger	Other	Treasury	Retained
				Capital	Account	Reserve	Reserves	Share Reserve	Earnings
				£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2009				429	18	11,842	254	-	19,599
Changes in equity for the six months ended 30 June 2009 :
Total comprehensive income for the period					-	-	-	-	1,528
Share based payment expense				-	-	-	-	-	28
Balance at 30 June 2009				429	18	11,842	254	-	21,155
Changes in equity for the six months ended 31 Dec 2009 :
Total comprehensive income for the period				-	-	-	-	-	2,467
Realisation on disposal				-	-	-	-	-	66
Share based payment expense				-	-	-	-	-	21
Balance at 31 December 2009				429	18	11,842	254	-	23,709
Changes in equity for the six months ended 30 June 2010 :
Share issues				7	510	-	-	(510)	-
Total comprehensive income for the period				-	-	-	-	-	1,689
Share based payment expense				-	-	-	-	-	50
Dividends				-	-	-	-	-	(864)
Balance at 30 June 2010				436	528	11,842	254	(510)	24,584

FAIRPOINT GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM 1 JANUARY 2010 TO 30 JUNE 2010
					Period from		Period from		Year ended
					1 January 2010 to		1 January 2009 to		31 December
					30 June 2010		30 June 2009		2009
					Unaudited		Unaudited		Audited
Cash flows from continuing operating activities					£'000		£'000		£'000
Profit on continuing operations before tax					2,374		2,175		5,723
Share based payments charge					50		28		49
Depreciation of property, plant and equipment					230		221		424
Amortisation of intangible assets and development expenditure					429		410		822
Loss on sale of non current assets					-		-		34
Interest received					(4)		(9)		(10)
Interest expense					104		208		379
Decrease/(Increase) in trade and other receivables					84		729		(1,600)
(Decrease) in trade and other payables					261		(487)		225
Cash generated from operations					3,528		3,275		6,046
Interest paid					(104)		(208)		(530)
Corporation taxes paid					(441)		(490)		(846)
Net cash generated from operating activities					2,983		2,577		4,670
Cash flows from investing activities
Purchase of property, plant and equipment (PPE)					(315)		(91)		(123)
Proceeds from sale of non current assets					-		5		26
Interest received					4		9		10
Purchase of goodwill					(629)		-		-
Purchase of software development					(258)		(238)		(473)
Purchase of intangible assets					(620)		-		-
Net cash (absorbed by) investing activities					(1,818)		(315)		(560)
Cash flows from financing activities
Payment of short-term borrowings					-		(243)		(243)
Equity dividends paid					(864)		-		-
(Payment) of long-term borrowings					(300)		(2,000)		(3,600)
Payment of finance lease liabilities					(31)		(159)		-
Net cash (absorbed by) from financing activities					(1,195)		(2,402)		(3,843)
Net change in cash and cash equivalents					(30)		(140)		267
Cash and cash equivalents at start of period					832		565		565
Cash and cash equivalents at end of period					802		425		832

FAIRPOINT GROUP PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2010

1.  BASIS OF PREPARATION

The financial information presented in this documentation has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations that are

These are subject to ongoing review and endorsement by the European Commission, and possible amendment by the International Accounting Standards Board (IASB), and are therefore subject to possible change.

The financial information in this statement relating to the six months ended 30 June 2010 and the six months ended 30 June 2009 has neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board. The financial information for the periods ended 30 June 2010 and 31 December 2009 does not constitute the full statutory accounts for those periods. The Annual Report and Financial Statements for 2009 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for 2009 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.                      

2. SEGMENT INFORMATION

Reportable segments

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are operating divisions that offer different products and services.  They are managed separately because each business requires different marketing strategies.

Measurement of operating segment profit and assets

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.

The Group evaluates performance on the basis of adjusted (for brand amortisation and exceptional restructuring costs) profit/(loss) before taxation from continuing operations.

Segment assets exclude tax assets and assets used primarily for corporate purposes.

For management purposes, the Group is organised into three operating divisions; Individual Voluntary Arrangements (IVA), Debt Management and Financial Services.  These divisions are the basis on which the group is structured and managed, based on its principal services provided.  These are summarised as follows:

-      IVA consists primarily of Group companies Debt Free Direct Limited and Clear Start UK Limited, our core debt solution brands.  The primary product offering of these brands is an Individual Voluntary Arrangement (IVA) which consists of a managed payment plan providing both interest and capital forgiveness and results in a consumer being debt free within five years of the agreement commencing. 

-      Debt Management consists primarily of the group company Lawrence Charlton Limited, the trading brand used to provide Debt Management Plans (DMP's) for consumers.  Debt Management Plans are generally suitable for consumers who can repay their debts in full, if they are provided with some relief on the rate at which interest accrues on their debts.  They could take 15 years to complete and offer consumers a fixed repayment discipline as well as third party management of creditors.

-      Financial Services that we provide fall into two distinct categories:

o  Refinancing Solutions - We provide a range of secured finance solutions, from mortgages through to loans that are appropriate for consumers who have an ability to meet their debt obligations, subject to reorganising their finances.

o  Value Added Services - A wide range of solutions fall under this category.  All of them have the primary objective of making the core debt solution work smoothly.  Examples include products such as prepaid bank accounts and utility switching services.

Segment information about these reportable segments is presented below.

Period ended 30 June 2010

	Continuing Operations
	IVA	Debt Management	Financial Services	Unallocated	Total
	£'000	£'000	£'000		£'000
Total external revenue	11,792	1,787	297	-	13,876
Total inter-segment revenue	-	-	-	-	-
	_______	_______	_______	_______	_______
Total revenue	11,792	1,787	297	-	13,876
Total operating profit/(loss)	(354)	571	24	-	241
Finance income - unwinding of discount on IVA revenue	2,233	-	-	-	2,233
Finance expense	-	-	-	(104)	(104)
Finance income - other	-	-	-	4	4
Adjusted profit/(loss) before taxation from continuing operations	2,065	585	24	(100)	2,574
Brand and other intangibles amortisation	(186)	(14)	-	-	(200)
	_______	_______	_______	_______	_______
Profit/(loss) before taxation from continuing operations	1,879	571	24	(100)	2,374
Taxation	-	-	-	(685)	(685)
	_______	_______	_______	_______	_______
Profit/(loss) for the year from continuing operations	1,879	571	24	(785)	1,689
	_______	_______	_______	_______	_______
Total comprehensive income for the year	1,879	571	24	(785)	1,689
	_______	_______	_______	_______	_______
Reportable segment assets	41,583	4,810	387	-	46,780
Capital additions	556	1,505	-	-	2,061
Depreciation and amortisation	630	25	4	-	659

Period ended 30 June 2009

	Continuing Operations
	IVA	Debt Management	Financial Services	Unallocated	Total
	£'000	£'000	£'000		£'000
Total external revenue	12,058	1,528	173	-	13,759
Total inter-segment revenue	-	-	-	-	-
	_______	_______	_______	_______	_______
Total revenue	12,058	1,528	173	-	13,759
Total operating (loss)/ profit	(215)	463	(116)	-	132
Finance income - unwinding of discount on IVA revenue	2,242	-	-	-	2,242
Finance expense	-	-	-	(208)	(208)
Finance income - other	-	-	-	9	9
Adjusted profit/(loss) before taxation from continuing operations	2,213	463	(116)	(199)	2,361
Brand and other intangibles  amortisation	(186)	-	-	-	(186)
	_______	_______	_______	_______	_______
Profit/(loss) before taxation from continuing operations	2,027	463	(116)	(199)	2,175
Taxation	-	-	-	(647)	(647)
	_______	_______	_______	_______	_______
Profit/(loss) for the year from continuing operations	2,027	463	(116)	(846)	1,528
	_______	_______	_______	_______	_______
Total comprehensive income for the year	2,027	463	(116)	(846)	1,528
	_______	_______	_______	_______	_______
Reportable segment assets	43,520	144	47	-	43,711
Capital additions	311	13	-	-	324
Depreciation and amortisation	618	8	5	-	631

Year ended 31 December 2009

	Continuing Operations
	IVA	Debt Management	Financial Services	Unallocated	Total
	£'000	£'000	£'000		£'000
Total external revenue	25,403	3,105	392	-	28,900
Total inter-segment revenue	-	-	-	-	-
	_______	_______	_______	_______	_______
Total revenue	25,403	3,105	392	-	28,900
	_______	_______	_______	_______	_______
Total operating profit/(loss)	806	973	(102)	-	1,677
Finance income - unwinding of discount on IVA revenue	4,415	-	-	-	4,415
Finance expense	-	-	-	(379)	(379)
Finance income - other	-	-	-	10	10
Adjusted profit/loss before taxation from continuing operations	5,599	973	(102)	(369)	6,101
Brand and other intangibles amortisation	(378)	-	-	-	(378)
Exceptional restructuring costs	-	-	-	-	-
	_______	_______	_______	_______	_______
Profit/(loss) before taxation from continuing operations	5,221	973	(102)	(369)	5,723
Taxation	-	-	-	(1,662)	(1,662)
	_______	_______	_______	_______	_______
Profit/(loss) for the year from continuing operations	5,221	973	(102)	(2,031)	4,061
Loss for the year from discontinued operations	(66)	-	-	-	(66)
	_______	_______	_______	_______	_______
Total comprehensive income for the year	5,155	973	(102)	(2,031)	3,995
	_______	_______	_______	_______	_______
Reportable segment assets	45,413	59	40	-	45,512
Capital additions	735	18	-	-	753
Depreciation and amortisation	1,220	16	10	-	1,246

The group's operations are located wholly within the United Kingdom.

Segment assets consist primarily of property, plant and equipment, intangible assets, trade and other receivables and cash. 

Unallocated expenses comprise finance costs and finance income - other.

Capital expenditure comprises additions to property, plant and equipment and intangible assets.

3. CORPORATION TAX CHARGE

Interim period corporation tax is accrued based on the estimated average annual effective corporation tax rate of 29% (6 months ended 30 June 2009: 30%)

4. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share is based on the following data:

Period from

Period from

Year ended

1 January 10 to

1 January 09 to

31 December

30 June 10

30 June 09

2009

£'000

£'000

£'000

Numerator

Continuing operations

Profit for the period - used in basic and diluted EPS

1,689

1,528

4,061

Discontinuing operations

Loss for the period - used in basic and diluted EPS

-

-

(66)

Total operations

Profit  for the period - used in basic and diluted EPS

1,689

1,528

3,995

Denominator

Weighted average number of shares used in basic EPS

43,535,877

42,678,488

42,870,578

Effects of:

- other  share options

93,116

-

84,498

Weighted average number of shares used in diluted EPS

43,628,993

42,678,488

42,955,076

5. DIVIDENDS

During the interim period, a dividend of 2p per share was paid (6 months ended 30 June 2009: £nil)

6.  CONTINGENT LIABILITIES

At 31 December 2009, the group disclosed a contingent liability with respect to legal proceedings issued by five former holders of 'B' preference shares in Debt Free Direct Limited.

During the period the group obtained summary judgement from the high court in its favour.  No liability fell on the group and costs were awarded in its favour.  The successful outcome of the case has had no material impact on the group's financial results for the period.

7.  INTERIM REPORT

A copy of this report is available on the Company's website at www.fairpoint.co.uk.

 

END

 

 

IR LLFSAALISLII