Fairpoint, the market leader in providing individual voluntary arrangements (IVAs) to over-indebted consumers, resumed paying a dividend after boosting pre-tax profits from £1.1m ($1.7m) to £5.7m ($8.7m).
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Christopher Moat, chief executive, said that the banks, which had demanded a reduction in the fees charged by IVA providers at the end of 2007, were beginning to see the merits of the arrangements. They had been agitated by advertising that appeared to encourage consumers to default, but that had disappeared, and the banks were now starting to see real returns.
The change in attitude had also resulted in IVAs being written for debt levels of £30,000, down from the historic cut-off point of £35,000. Nevertheless the average IVA was for unsecured debts of £45,000 in households with an annual income of about £25,000.
Last year the company had 8,520 new cases, up by more than 1,200 over the year before. Mr Moat said that unemployment was driving the increase, and he expected more households to get into trouble over debt if interest rates started to rise.
Meanwhile the company was planning to increase the proportion of its revenues from non-IVA operations to 20 per cent of the total from 12 per cent last year. It was continuing to build its debt management plan business, and was developing a pre-paid card business as well as helping consumers to save by switching to cheaper utility suppliers.
Revenues for the year to December 31 rose from £26.5m to £28.9m. Net debt was cut from £8.6m to £4.5m. Earnings per share from operations rose from 1.51p to 9.47p, and an interim dividend of 2p will be paid on March 30.