Good morning, these are on the menu today:

Finished at 4.55pm.


Ramsdens Holdings (LON:RFX)

  • Share price: 202p (+1%)
  • No. of shares: 31 million
  • Market cap: £62 million

Interim Results

Good results from this major pawnbroker.

Let me give you a quick recap of the two major differences between this one and H & T (LON:HAT) (where I have a long position).

  1. RFX is associated with Northern England, Scotland and Wales, while HAT's home turf is London.
  2. RFX's business is heavily weighted towards foreign currency exchange (there is a clue in its ticker), while HAT is more focused on the traditional pawnbroking segment.

I like both companies, and I admire RFX's very strong return metrics. If I had been invested in RFX rather than HAT recently, I would have avoided the FCA investigation into HAT's personal loans business.

That said, I have a lot of conviction in the strength of HAT's pawnbroking business, and I look forward to the effect that a rising gold price will have on this. I can't muster the same conviction in RFX's foreign currency service. So HAT is my personal favourite.

Let's take a look at these results.

  • FX did well, despite less than favourable conditions ("consumer uncertainty created by Brexit and the weakness of sterling has continued to impact the demand for holidays"). 8% more currency was exchanged, and the margin improved so FX income increased by 15% to £8.4 million.

Note that despite the company finishing the period in a net cash position, it says that it did use its credit facility over the summer to hold stocks of foreign currency. I wonder how much foreign currency risk is involved?

  • Pawnbroking loan book is 14% higher and interest income, net of impairment is 16% higher at £4.3 million. Note that this is little over half the income from FX.
  • Jewellery retail revenues are up 22%, but the mix of items sold had a lower margin, so gross profits only increased 11% to £2.6 million.
  • Gold buying profits were up 57%,…

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