Albemarle & Bond crisis deepens as profits decline on gold slump
Monday 09 December 2013
Albemalre & Bond has revealed pre-tax profits fell to £4.9 million from £21.4 million for the year to end of June, on revenues of £107.1 million, down from £117.7 million, driven by a decline in gold prices.
The results were delayed as the company attempted to rein in its spending.
However, despite sending the company to the brink of collapse, former chief executive Barry Stevenson managed to nearly double his pay packet before taking early retirement this year — including a £331,000 pay-off, according to the latest annual report.
The pawnbroker has been struggling in recent months as gold prices have fallen, and to avoid breaching banking covenants it has been forced to shut nearly all of its pop-up cash-for-gold shops, end offering payday loans and melt down its gold reserves.
Chairman Greville Nicholls said: “Tough trading conditions have continued to impact our results in the new financial year, but we are managing within our current banking facilities.
“A formal sale process for the business was commenced [last week], and although we have received expressions of interest there can be no certainty that an offer will be made.”
H&T Group and Apollo Global Management are said to be interested in Albemarle. However, the most likely buyer is expected to be the company’s biggest shareholder, the US pawnbroker EZCorp. All of Albemarle’s non-executives have resigned, including representatives from EZCorp, giving them more freedom to plot a possible takeover after the US group declined to pay up for a £35 million rights issue.
That led to negotiations with banks to extend until February 3 its next covenant testing, which is calculated on the debt-to-sales ratio. Debt stands at £50.6 million, perilously close to the £53.3 million debt facility at a company with a market value of just £8 million.
A major restructuring has cost £2.4 million for advisers and £2.2 million to close loss-making parts of the business, while a 23 per cent fall in the gold price knocked £7.4 million off profits.
Despite Albemarle’s continuing problems, former chief executive Barry Stevenson managed to walk away from the company with £631,000 this year, up from his salary of £345,000 in 2012. The company said the boost in his pay was in line with his contractual agreements.
Albemarle’s shares did manage to rise 10 per cebt to 16p today. However, the share price has slumped 93% since the start of the year.
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