Shares in listed legal company Fairpoint tumbled today after it revealed that borrowings have tripled in the past year.
The business, which owns national firms Simpson Millar and Colemans, reported to the London Stock Exchange that net debt had risen to £15.6m by the end of June. This was up from £5.2m in June 2015.
The increase in borrowing is largely down to the £11m cash investment on legal services acquisitions during the previous year.
The half-year figures show profit before tax slipping from £4.1m in the first half of 2015 to £4m in the first six months of this year.
The reported basic earnings per share was 1.44p – down from 2.33p in 2015. Fairpoint confirmed that the interim dividend level will be maintained at 2.45p.
The company’s share price fell by 13% to 90p.
The company, which has stated its intention be among the UK’s leading consumer firms, confirmed that legal services now account for 76% of the group revenue, compared with 49% in June 2015.
Revenue did increase by 24% to £28.3m on the back of the growth in Simpson Millar and the acquisition of Colemans in August 2015, with the company noting that the majority of legal services trading is ‘in line with expectations’.
However, expectations for conveyancing have been adjusted downwards, with the statement noting that the Brexit vote has led to mortgage approvals falling to a 15-month low.
Chris Moat, chief executive (pictured), noted that Fairpoint has delivered double-digit revenue growth compared to last year, despite ‘challenging market conditions’.
He added: ‘Looking forward the board will continue to transition the business towards legal services.
‘The scale and fragmented nature of this marketplace presents a significant opportunity for Fairpoint to deploy its core skill of applying process to a professional service, and thereby create a structural competitive advantage relative to existing market incumbents.’