Company announces update ahead of visit by analysts and investors.
Pawnbroker Albemarle & Bond has announced that business continues to perform strongly, and believes end-of-year trading will be “at the top end of analyst expectations.”
Speaking of the results ahead of a visit from analysts and investors earlier this week, chief executive of Albemarle & Bond, Barry Stevenson, said: “This was always going to be a critical financial year as we have had to absorb a substantial increase in costs to support the expanding business in advance of benefitting from increasing revenues. It is therefore pleasing to be reporting on a trading and profit performance that is at the top end of expectations.”
The company’s pledge book stood at a total of £37m on April 30 this year. Gold buying has continued to contribute significantly to the growth and the gross margin levels reported at the half year have been sustained.
Albemarle has focused on several areas of business this year, and has seen positive results.
On April 30, the pledge book showed a year-on-year growth; on a like for like basis, trading was up 23.9%. Albemarle suggest this was due to the sustained rise in the gold price, its market leading lending practices, an increasing number of new customers and its consequent ability to increase the average loan size per pledge.
The core pawn broking business, which includes the company’s high street outlets, represents 50% of its gross profit.
The company’s new store opening programme is described as “on track”, with 28 new stores confirmed to open this financial year. The existing new stores have performed ahead of Albemarle’s expectations, with the continued development of pop-up stores in shopping malls and centres which should total 40 units by the end of the year.
The total number of Albemarle trading units including pop-up shops is expected to be 200 at the end of June 2011, an increase of 85 outlets since June 2009.
“Now we are well into the store roll-out programme, the 16 new greenfield stores opened in 2010 are now profit positive as a group and there will be a better balance to the business as the stores continue to mature”, said Stevenson.
Net profitability from other financial services “has been encouraging”, with strong bad debt management offsetting volume challenges in Albemarle’s cheque based products. The company is also looking to develop a number of new product launches, which will capitalise on demand for growth in the small loans markets.
The gold hedging instrument that Albemarle has had in place for the last four years will end on the June 30. It is estimated that the cost of this hedge to the company is now in excess of £3.5m, driven by the further appreciation in the gold price.
“We believe margins from gold buying are stable and whilst we do not expect to sustain the recent exceptional 20% plus like-for-like growth in the pledge book in the medium term, we are targeting a positive market leading expansion rate to help drive overall profitability. Overall, we are delighted with the group’s progress to date on delivering our growth plans”, concluded Stevenson.