Middlesbrough-based financial services group Ramsdens (RFX:205p) has delivered record full-year pre-tax profits of £10.1mn, having upgraded guidance no fewer than four times during the financial year. Perhaps investors were expecting another beat, hence the subdued 5 per cent share price markdown post results. It’s a harsh reaction.
For starters, the group’s pawnbroking business looks set for another solid performance in the new financial year, having seen higher demand from both new and existing customers, which boosted the closing pledge book by a fifth to a record high of £10.3mn. New customer volumes increased by 11 per cent and repeat business remained high at 90 per cent, partly due to weaker consumer credit competition from peers such as NSF, Morses and Amigo, which are all facing company-specific or regulatory issues. Average loan size is on the rise, too, up from £303 to £325, a reflection of inflationary pressures on customers.
Moreover, having delivered 33 per cent higher annual gross profit of £10mn, or 22 per cent of the group total, last year’s loan book growth should deliver higher profitability in the new financial year given the lag between the interest earned and the recognition of the loan in the pledge book. Since the financial year-end, the pawnbroking book has increased to another record high of £10.6mn.