Archived article

Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.

Ramsdens is generating plenty of cash flow to back up earnings growth
Thursday 14 Jun 2018 Author: David Stevenson

Ramsdens (RFX:AIM) 199.5p

Gains to date: 40.5%

Original entry point: Buy at 142p, 15 June 2017

Ramsden diversifying away from its historically core pawnbroking operations is one of the key factors behind its success according to its chief executive Peter Kenyon.

This was evident in the company’s results for the 12 months to 31 March 2018. Released this month, they show Ramsdens makes most of its money through its high street foreign currency exchange arm. Gross profit from this segment hit £11.3m compared to £7m from pawnbroking.

The results show a company growing at a fair click on practically all fronts. Revenue grew by 16% to £39.9m with underlying pre-tax profit up 60% to £6.5m. The total dividend per share proposed is, at 6.6p, a huge increase on 2017’s 1.3p per share.

The company is also growing by number of stores, which with this type of business is crucial to growing the bottom line. The medium term goal is to grow by 12 stores a year which if it can be maintained, should underpin growth in earnings and cash flow.

Of the 800,000 customers Ramsdens served throughout its financial year, the vast majority were buying money for their holidays, 687,000.

With less reliance on pawnbroking and precious metal sales, the company is not as reliant on a strong gold price. The fact that gold has held up quite well during the time is therefore merely an added bonus.


‹ Previous2018-06-14Next ›