Listed legal services business Fairpoint PLC today warned shareholders that it may be forced to suspend future dividends as a result of fresh financial struggles.
The company, which has bought national firms Simpson Millar and Colemans in recent years, reported to the London Stock Exchange that full-year results for 2016 are likely to be ‘materially below market expectations’.
The board says it is formulating plans to mitigate the potential impact on the trading performance and financial position of the group, which may involve cancelling any dividends to shareholders.
The share price value took a dive following the announcement, falling almost 16% to 17.25p within two hours. As recently as March this year stocks were trading at 165p per share.
Fairpoint had already reported in September that it had increased borrowing to fund acquisitions during the previous year, as it sought to expand its legal services provision and focus less on its original debt recovery business.
Today’s announcement added: ‘Trading in legal services for 2016 was in line with expectations in terms of both revenue and profit to the end of October. However, the results for November are below plan and are likely to be lower than expected in December as well.
‘Trading across debt services is broadly in line with expectations and the closure of the debt management business remains on track for completion in early 2017. However, the planned benefit of the reduction in associated overheads is taking longer than expected.’
The Fairpoint group now represents one of the biggest providers of consumer legal services in the UK. Simpson Millar has more than 500 staff members across 13 offices, having brought Colemans on board earlier this year. Combined revenue was estimated at around £40m a year at the time of the acquisition.
Shares plummet as law firm owner issues profit warning
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