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Company Albemarle & Bond Holdings PLC
TIDM ABM
Headline

Half Yearly Report

Released 07:00 12-Feb-2013
Number 6494X07

RNS Number : 6494X
Albemarle & Bond Holdings PLC
12 February 2013
 



 

12 February 2013

 

 

ALBEMARLE & BOND HOLDINGS PLC

("Albemarle" or "the Group")

Interim results for the six months to 31 December 2012

 

Financial Highlights

 

·   In line with expectations, first half performance reflected the anticipated reduction in Gold Buying profits

·   Profits before tax reduced 33% to £8.1m (2012: £12.1m) with EPS of 11.20p (2012: 16.27p) down 31%

·   Gold Buying margins maintained above 30% with profits now stable for the last three consecutive quarters following the reduction from the H1 2012 peak

·   Operating costs increased by 2.9% against a store base increase of 8%

·   Pawnbroking profits of £17.6m up 2.3% (2012: £17.2m)

·   Pledge book of £38.1m at 31 December 2012 (31 Dec 2011: £38.3m) reflects the reduced volumes of gold in circulation and increased competition

·   Retail sales up by 16.7% to £10.5m (2012: £9.0m) and profits up 32%

·   Interim dividend maintained at 3.00p

 

Operational Highlights

 

·   Successful introduction of new products and services across our stores

·   Early Pay Day Loans fully integrated to develop unsecured lending products

·   Four London store acquisitions completed out of the planned five this year

·   Diversified Gold Buying pop up stores into a 'cash solutions' offer in 43 locations

·   Strong cost controls resulted in like for like operating costs being 5.2% lower

 

Barry Stevenson, Chief Executive, commented: "Profits were in line with expectations as we experienced tougher and more competitive markets in the first six months of the year and we expect these market conditions to continue in the second half.  The investment we made to more than double our store base is delivering positive returns and the majority of the new stores have contributed an operating profit in the first half with potential for future growth.  Demand for short term cash in the wider market is robust and we are now well-positioned to exploit that opportunity further by diversifying our core pawnbroking offer into new customer segments and products. In the second half of the year our strategy is to continue to leverage our expanded store base in combination with our online unsecured lending offer."

 

Enquiries:

 

Albemarle & Bond Holdings plc                                          0118 955 8100

Barry Stevenson, Chief Executive Officer

Liam Moran, Chief Financial Officer

 

Canaccord Genuity                                                               020 7523 8350

Piers Coombs

Lucy Tilley

Mark Whitmore 

 

Cardew Group                                                                       020 7930 0777

Anthony Cardew

Shan Shan Willenbrock

Alexandra Stoneham

 

 

Chief Executive's Statement

 

In more demanding market conditions and with increased competition, the Group's core pawnbroking division increased income by 2.3% to £17.6m with the pledge book broadly flat.  We are focused in the second half on implementing our strategy to increase our pawnbroking market share through new customer segments, such as Asian gold and small business owners, targeted promotions and marketing to recruit new customers.

 

The retail division contributed very strongly as ex pledge jewellery sales and profits grew, driven primarily by carefully targeted stock investment.  Retail remains key to our offer as a customer signal for our pawnbroking business and a key disposition route for forfeited items.

 

As previously indicated, Gold Buying peaked for Albemarle in March 2012.  The exceptional profits we made from Gold Buying, over the past three years, have been invested in opening or acquiring 68 full line stores providing us with a strong store footprint throughout the UK.  We believe Gold Buying will provide us with a significant long term revenue stream on a reducing basis.

 

In response to the change in Gold Buying trading patterns and the reduced cash flow generated, our strategy has been to focus store expansion on selective well located acquisitions, with four out of the five planned for this year already completed.

 

We are already very well placed with our 233 store locations to serve the majority of our target market and our investment focus is increasingly centered on product and channel development.  60% of our target customer groups live within three miles of one of our stores.

 

Pawnbroking remains the cornerstone of our business and represents the best value and most flexible loan available to our customer base.  We will continue to modernise, innovate and increase the range of cash solutions and services to meet the increasing demands of our customers.  The demand for short term cash in the wider market has never been greater but with the reduction in gold jewellery for our traditional customers to pawn and sell, our objective is to reach out to growing customer segments and help all customers find other fast, affordable and convenient cash solutions.

 

Financial Performance

 

Group gross profits decreased by 8% to £33.7m driven by an expected decline in volumes and gross margin from Gold Buying.

 

Pawnbroking gross profit was £17.6m, a 2.3% increase over the same period last year.  The pledge book at the end of December 2012 stood at £38.1m compared with £38.3m for H1 2011.  The increase in gross profit was therefore a result of the actions we took to improve the yield.

 

Gold Buying has contributed £9.0m compared to £12.0m in the prior year period, due to the decline in volumes and percentage margins seen since April 2012.

 

Retail delivered an improved performance with an increase in sales of 16.7% to £10.5m (2012: £9.1m).  This was driven by stock investment benefiting ex pledge retail sales with sales from this category up 40%. The resultant gross profits were up 32.0% to £3.8m (2012: £3.0m).

 

Gross profits from Other Financial Services were £3.3m (2011: £4.5m).  This reduction was due to the removal of the cheque guarantee card in July 2011 and the impact of the transition from the old cheque based lending products to a re-designed product range.  Third Party Cheque Cashing has contributed £1.1m, a 7% increase compared to the previous year.

 

Operating costs increased by 2.9% compared to an increase of 8% in the average number of stores in the same period.  The underlying LFL operating cost reduction of 5.2 is the result of strong controls on central staff cost investment, initiatives targeting discretionary consumables costs and renegotiated key third party supplier contracts.

 

Operating profits decreased by 29% to £8.9m (2012: £12.5m) with profit before tax 33% down at £8.1m (2012: £12.1m) which led to EPS of 11.20p (2012:16.27p).

 

The Group's financial position is stable and we have headroom of £16m on facilities that run to November 2016.  Net debt as at 31 December 2012 was £50.3m, an increase of £6.8m as compared to 30 June 2012.  The key drivers behind the increase were lower cash generation from Gold Buying and a careful investment in stock to support the recovering Retail business.

 

Update on Strategy

 

In 2012 we initiated a review of the changing structure of our business, the market, our customers, and the competition.  This has resulted in an updated growth plan for the business that will shape the evolution of the Group.

 

There are around 10 million cash and credit constrained consumers in the UK today under-served by the banks and by traditional forms of lending.  Our pawnbroking customers use many forms of borrowing including home collected credit, unsecured loans, store cards and catalogue credit but despite its undoubted consumer advantages, pawnbroking is still one of the smallest sectors of the non-standard credit market.  Growth over recent years in pawnbroking has been driven by the expansion of stores, gold price rises and improved consumer awareness.  Our strategy to drive future growth will build on our pawnbroking offer and provide a broader set of lending choices and cash services to our customer base, underpinned by the roll out of our new 'Diamond' operating system during 2013.

 

There has been rapid growth in the 'payday' lending sector.  We anticipate much tighter regulatory controls in that sector, and welcome the changes that those controls will bring.  We are well positioned to carve out a larger, and profitable, niche in non-standard unsecured installment lending using our combined store and online presence. 

 

We will focus on three strategic objectives:-

 

Diversifying our Profitable Pawnbroking Business

 

We will increase our offer to existing customers, and attract new customers by offering secured pawnbroking loans against a broader range of items including:

 

·   diamonds and other precious stones

·   non-hallmarked gold, as well as hallmarked gold

·   other precious metals

·   prestige watches

·   mobile phones and electronics

 

We have been actively growing the amount of high carat gold in our pledge book and this will remain an important focus for gold-based pawnbroking.  We have increased the number of watches we 'buy, sell and lend on' and diversified our service by launching 'cash for phones' across all of our stores.  We have invested in state of the art technology that enables our staff to precisely evaluate customer's jewellery for all of its precious metal content.  We are currently promoting a more flexible pawnbroking approach that is more consistent with our customers' cash flow requirements, and we continue to maximise profits and lending potential by improving disposition activities, as witnessed by our growing retail business.

 

Offering a Broader Set of Lending and Cash Solutions

 

Having developed a well located store estate that enables us to serve the majority of our target market; we are now focused on expanding our product range and further improving our offer. We have already introduced a range of financial services products to each of our 43 gold buying 'pop up' stores.  This enables us to support the profitability of these outlets as gold buying volumes decline.  We have also been increasing the range of lending and cash solutions at all of our full line stores, with, for example, 'cash for phones' and log book loans already available in all branches.  Other product launches are planned for H2 FY 2013.

 

Building a Profitable Unsecured Lending Business

 

We have successfully integrated our Early Payday Loans ('EPDL') acquisition into the group, which is trading profitably.  During the second half, the current EPDL online short term loan product will be available in all 233 of our stores and we expect to pilot a multichannel 'click and collect' proposition later in this calendar year.  We have already made a promising start on these three strategic objectives and will provide a further update with our full year results.

 

On behalf of the Board, I would like to thank all of our colleagues for their hard work and immense contribution to the progress of the business and adapting so positively to changing market conditions.

 

Summary and Outlook

 

Whilst the demand for short term cash remains robust the market continues to be highly competitive and we expect that to remain the case in the second half of the year. In the unsecured lending market consumers are increasingly looking to the ease of online with a convenient store location, while in the secured market they want a greater range of cash solutions.  With our strong brand, extensive store portfolio and growing on line platform, the Group is well positioned to serve the needs of the over 10 million cash and credit constrained consumers in the UK today.  Our strategy will be focused on continuing to drive operational performance as well as diversifying our pawnbroking business, offering a broader set of lending and cash solutions and building our unsecured lending business.

 

-END-

 

To access more information on the company please visit: www.albemarlebondplc.com

The interim report will be solely available to view online enabling the Group to communicate in a more environmentally friendly and cost effective manner.

 

Images of the Group's stores are available from the website.

 

 



 

 

 

Albemarle & Bond Holdings PLC Consolidated Income Statement



6 months

6 months

Year ended


ended

ended



31.12.12

31.12.11

30.06.12


(unaudited)

£'000

(unaudited)

£'000

 

£'000

Revenue

58,893

62,695

117,697

 

Cost of sales

 

(25,230)

 

(26,157)

 

(48,602)

 

Gross profit

 

33,663

 

36,538

 

69,095

 

Administrative expenses excluding amortization

 

(24,406)

 

(23,729)

 

(45,823)

Amortisation of intangible assets

(351)

(338)

(682)

Total administrative expenses

(24,757)

(24,067)

(46,505)

 

Operating profit

 

8,906

 

12,471

 

22,590

 

Finance income

 

-

 

9

 

9

 

Finance costs

 

(830)

 

(419)

 

(1,227)

 

Profit before taxation

 

8,076

 

12,061

 

21,372

 

Tax on profit on ordinary activities

 

(1,925)

 

(3,136)

 

(5,697)

Profit for the period

6,151

8,925

15,675

 

 

Earnings per share




Basic

11.20p

16.27p

28.55p

Diluted

11.09p

16.04p

28.19p

 

 

STATEMENT OF COMPREHENSIVE INCOME





6 months

6 months

Year ended


ended 

ended  



31.12.12

31.12.11

30.06.12


(unaudited)

£'000

(unaudited)

£'000

 

£'000

 

Profit for the period

 

6,151

 

8,925

 

15,675

 

Hedging reserve fair value movement

 

-

 

-

 

-

Hedging reserve reclassified to profit

-

-

(559)

Fair value movement on cash flow hedges




Deferred tax on hedging reserve

-

-

134

Employee Benefit Trust tax paid

-

(9)

-

Total comprehensive income for the period

6,151

8,916

15,250

 



 

 

Albemarle & Bond Holdings PLC Consolidated Statement of Financial Position



31.12.12

31.12.11

30.06.12


(unaudited)

£'000      

(unaudited)

£'000   

 

£'000  

Non current assets




Goodwill

23,868

23,204

23,318

Other intangible assets

5,981

2,649

4,544

Property, plant and equipment

16,403

16,439

16,507

Total non current assets

46,252

42,292

44,369

Current assets




Inventories

27,981

16,839

18,383

Trade and other receivables

63,537

62,480

67,382

Cash and cash equivalents

8,786

7,646

5,061

Derivative financial instruments

35

-

35

Total current assets

100,339

86,965

90,861

Total assets

146,591

129,257

135,230

 

Non current liabilities




Long term borrowings

50,250

39,514

43,500

Finance leases and hire purchase

-

-

-

Derivative financial instruments

559

-

559

Deferred taxation

780

717

780

Total non current liabilities

51,589

40,231

44,839

 

Current liabilities




Bank loans

-

-

-

Finance leases and hire purchase

-

12

1

Trade payables

1,192

1,343

3,075

Current tax liabilities

1,912

3,333

2,474

Accrued liabilities and provisions

5,267

3,562

4,550

Dividend payable

5,414

5,353

-

Total current liabilities

13,785

13,603

10,100

Total liabilities

65,374

53,834

54,939

 

Equity




Share capital

2,221

2,221

2,221

Share premium

20,425

20,416

20,425

Capital redemption reserve

1,018

1,018

1,018

Share-based payments reserve

1,098

802

909

Other reserve

(1,174)

(1,280)

(1,174)

Hedging reserve

(425)

-

(425)

Retained earnings

58,054

52,246

57,317

Total equity

81,217

75,423

80,291

Total equity and liabilities

 

146,591

129,257

135,230

 



 

 

Albemarle & Bond Holdings PLC Consolidated Statement of Cash Flows



6 months

6 months

Year ended


ended

ended



31.12.12

31.12.11

30.06.12


(unaudited)

£'000

(unaudited)

£'000

 

£'000

Cash generated by operating activities

4,056

7,695

17,497

Taxes paid

(2,487)

(2,275)

(5,655)

Net cash inflow / (outflow) from operating activities

1,569

11,842

 

Investing activities




Acquisition of business

(550)

-

(454)

Purchase of property, plant and equipment

(1,621)

(3,615)

(5,330)

Purchase of intangible assets

(1,788)

(384)

(2,623)

Proceeds from sale of plant and equipment

9

13

40

Net cash outflow in investing activities

(3,950)

(8,367)

 

Financing activities




Interest paid

(643)

(282)

(1,073)

Fees paid to refinance the Group's longer term borrowings

-

-

(933)

Dividends paid to company shareholders

-

-

(7,002)

Exercise of share options less EBT acquisition of shares

-

158

274

Net increase / (repayment) of borrowings

6,750

2,721

6,707

Repayment of obligations under finance leases

(1)

(23)

(34)

Net proceeds from issue of shares

-

9

18

Net cash inflow from financing

6,106

(2,043)

 

 

Net increase in cash and cash equivalents

 

 

3,725

 

 

4,017

 

 

1,432

 

Summary of cash and cash equivalents




Cash at bank and in hand

8,786

7,646

5,061

Cash and cash equivalents

8,786

7,646

5,061

 



 

Albemarle & Bond Holdings PLC Consolidated Statement of Changes in Equity

 

 


Share Capital

Share Premium

Capital Redemption Reserve

Share based payment reserves

Other reserve

Hedging Reserve

Retained earnings

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 31 December 2011

2,221

20,416

1,018

802

(1,280)

-

52,246

75,423

Profit for the period

-

-

-

-

-

-

6,750

6,750

Other comprehensive income and expense

Employee Benefit Trust tax paid

 

-

 

-

 

-

 

-

 

-

 

-

 

(40)

 

(40)

Fair value movement on cash flow hedges






(559)


(559)

Defarred tax on fair value movement on cash flow hedges






134


134

 

Total other comprehensive income and expense

 

-

 

-

 

-

 

-

 

-

 

(425)

 

(40)

 

(465)

 

Total comprehensive income

 

-

 

-

 

-

 

-

 

-

 

(425)

 

6,710

 

6,285

 

Issue of share capital

 

-

 

9

 

-

 

-

 

-

 

-

 

-

 

9

Issue of shares by Employee Benefit Trust

-

-

-

-

116

-

-

116

Share-based payment credit

-

-

-

224

-

-

-

224

Deferred tax recognised directly in equity

-

-

-

(117)

-

-

-

(117)

Transfer reserves

-

-

-

-

(10)

-

10

-

Dividends paid / payable

-

-

-

-

-

-

(1,649)

(1,649)

At 30 June 2012

2,221

20,425

1,018

909

(1,174)

(425)

57,317

80,291

 

Profit for the period

 

-

 

-

 

-

 

-

 

-

 

-

 

6,151

 

6,151

 

Total other comprehensive income and expense

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

Total comprehensive income

 

-

 

-

 

-

 

-

 

-

 

-

 

6,151

 

6,151

 

Share-based payment credit

 

-

 

-

 

-

 

189

 

-

 

-

 

-

 

189

Dividends paid / payable

-

-

-

-

-

-

(5,414)

(5,414)

At 31 December 2012

2,221

20,425

1,018

1,098

(1,174)

(425)

58,054

81,217

 



Albemarle & Bond Holdings plc 

Notes

 

 

1       The figures for the six months ended 31 December 2012 and 31 December 2011 are unaudited and do not constitute statutory accounts. The interim results have been prepared using accounting policies which are consistent with International Financial Reporting Standards as adopted by the European Union. The financial information for the year ended 30 June 2012 set out in this interim report does not comprise the Group's statutory accounts as defined in section 434 of the Companies Act 2006. The statutory accounts for the year ended 30 June 2012, which were prepared under International Financial Reporting Standards (IFRS) as adopted for use in the EU, applied in accordance with the provisions of the Companies Act2006, have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis.
 
2    A copy of this announcement is being sent to shareholders and is available at the company's registered office.
 
3    Earnings per share have been calculated based on the profit after tax and the weighted average number of shares in issue during the half year ended 31 December 2012 of 54,917,629 (31 December 2011 - 54,864,414; 30 June 2012 - 54,900,215). The diluted earnings per share also includeweighted average unexercised share options at 31 December 2012 of 615,262 (31 December 2011 - 643,985; 30 June 2012 - 615,273).
 
4    Taxation is based on the unaudited results and the provision has been estimated at the rate applicable to the company at the time of this statement.
 
5    Dividends approved on 18 November 2012 were paid on 30 January 2013. Interim dividends of 3.00p per share (2012: 3.00p per share) will be paid on 20 May 2013 to members on the register at 15 April 2013. This dividend has not been included within the results for the six months to 31 December 2012.
 
6    The Directors have elected not to apply IAS 34 Interim financial reporting.
 
7    The interim report is prepared on the basis of the accounting policies set out in the most recent set of annual financial statements.
 
8    The directors have identified sectors based on the products and services provided. Segmental analysis to gross profit level is as set out below:-
 

 

 


 

 

 

Pawnbroking

 

 

 

Retail jewellery

 

 

 

Gold purchasing

Unsecured lending, cheque cashing and other financial services

 

 

 

Total

£'000

£'000

£'000

£'000

£'000

6 Months to December 2012






Revenue

17,546

10,521

27,527

3,299

58,893

Gross profit

17,546

3,828

8,990

3,299

33,663

Gross profit %

100%

36%

33%

100%

57%

 

6 Months to December 2011






Revenue

17,172

8,971

32,054

4,498

62,695

Gross profit

17,172

2,905

11,987

4,474

36,538

Gross profit %

100%

32%

37%

99%

58%

 

9    Forward looking statements
This announcement may contain certain 'forward-looking' statements with respect to the financial conditions, results, operations and businesses of the Company. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements.
 
Any forward-looking statements made by or on behalf of the Company speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. The Company does not undertake to update forward-looking statements to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions   or circumstances on which any such statement is based.
 
Information contained in this document relating to the Company or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance. Nothing in this announcement should be considered as a profit forecast.

 

 

10

Note to statement of cash flows






6 months

ended

6 months

ended

 

Year ended


31.12.12

31.12.11

30.06.12


(unaudited)

(unaudited)



Cash generated by operating activities

£'000

£'000

£'000


Operating profit

8,906

12,471

22,590


Depreciation of property, plant and equipment

1,707

1,514

3,134


Amortisation of intangible assets

351

338

682


(Profit) on disposal of property, plant and equipment


9

-

2


Loss on disposal of intangible assets

-


-

-


Non cash share option charges

189

179

403


Gain on a bargain purchase



-

(21)


Amortisation of loan arrangement fees



-

117


Change in inventories

(9,598)

(4,718)

(6,065)


Change in trade and other receivables

3,845

345

(3,614)


Change in trade payables

(1,883)

(2,015)

(283)


Change in accrued liabilities

530

(419)

552



4,056

7,695

17,497

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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