Fairpoint faces ‘year of transition’
Adlington-headquartered professional services provider Fairpoint has seen profits halved in the last 12 months and says 2017 will be “a year of transition”.The company issued a trading update today which revealed that its adjusted pre-tax profits for 2016 are expected to be £4.9m compared to £10.5m in 2015.
Earlier this year the business revealed that it had started staff consultations over “structural changes” to its operation.Announcing that move the business, which owns law firm Simpson Millar, said the process reflected its plans to mitigate the impact of a recently revealed reduction in its expected trading performance.
The group had previously revealed that its debt management operation was to shut and plans to concentrate on its legal services business.The company is understood to employ 200 staff at is Lancashire headquarters. Today’s update also revealed expected revenue of £52.9m for the year to the end of December 2016, compared to £54.1m in 2015.
Fairpoint said that its 2016 performance was “broadly in line with revised expectations” and added that management action had been taken to “improve cash flow, working capital and reduce costs”.The statement also said that the company’s restructuring programme was on track “to remove significant costs” and it added that dividends were suspended until further notice.
David Broadbent has been appointed as chief executive officer of Fairpoint with immediate effect.The company says “2017 will be a year of transition as the group completes its restructuring programme and rebases near term expectations for Legal Services”.
Mr Broadbent said: “Significant work has been performed over the last three months to better understand the maturity of the legal case load, improve the visibility of results, and to deliver cost savings primarily within Debt Solutions and Group overheads.“As a consequence, we expect 2017 will be a year of transition with significantly lower revenues in Legal Services coupled with a further contraction in revenues from Debt Solutions. “However, we expect, in 2018, to benefit from an improvement in Legal Services revenues combined with the full realisation of the cost savings currently being made which should deliver a much improved trading performance.”