Albemarle & Bond warns on profits

Gross profits from gold buying actually grew 49 per cent year-on-year but, after a first-half growth rate of 87 per cent, profit growth slumped to 18 per cent in the second half. Meanwhile, on the jewellery retailing side, second-half sales recovered but profits still fell from £6.4m in 2011 to £5.7m.

Gross profit from the other financial services unit also fell, from £8.6m last year to £6.9m - partly reflecting last year's withdrawal of the cheque guarantee card. That reduced income from the cheque-based Payday product and, while a new Payday Anyway scheme has been introduced, Payday revenue declined faster than expected.

However, that division should be boosted by this month's £1.2m acquisition of online payday loan provider, Early Pay Day Loans - which has an active loan book of around £300,000. This will allow Albemarle to offer loans to existing customers through this online channel. Indeed, online loan transactions are growing rapidly and the UK payday loan market is expected to expand from £2bn in 2010 to £3.5bn by 2014.

Meanwhile, the core pawnbroking business saw revenues rise 10 per cent year-on-year to £34.8m. Moreover, of its 234 stores, over a third are less than three years old and have yet to reach their full income potential. But, with the cash-generative gold buying business under pressure, the store opening programme has been cut from the current run rate of 25 openings to just five.

Canaccord Genuity has downgraded its pre-tax profit estimate for 2013 from £22.9m to £16.5m, giving EPS of 22.2p (from 28.5p in 2012).