27th Nov 2013 08:46
LONDON (Alliance News) - Pawnbroker Albemarle & Bond Holdings PLC saw its shares fall sharply again Wednesday after saying it had incurred a loss during the first five months of its financial year as a further deterioration in its market and a fall in the gold price outweighed the benefits of cost cutting.
That cost cutting includes what it describes as a "programme of exceptional smelting" of its retail stocks.
The company is struggling. Last month it did a deal with its lenders to defer a test of its covenants until February 3, giving it more time to try and turn around the business and resolve its tight financing situation.
The company has run into financial difficulties after gold prices fell sharply earlier this year. It has been in talks with its lenders since the end of September about extending the testing date for its covenants after discussions with its largest shareholder about an equity raising failed, meaning it will potentially breach the covenants.
In a trading update Wednesday, the company said that trading and competition had remained challenging during November. It said the gold price is now 27% below where it was in March.
As a result, it says it will have incurred a loss before interest, tax, depreciation and amortisation for the first five months of the current financial year despite its efforts to bring down costs. It has now closed all but two of its pop up gold buying shops.
Albemarle & Bond hasn't yet published its results for the financial year that ended in June due to the uncertainties over its future. It said it hopes to publish them around December 9, but said that market expectations for those results are still too high.
It said it is still managing within the constrained banking facilities it has. The facilities are GBP53.5 million, and it has GBP50.1 million of debt. It said it has constrained its own lending, closed its online lending business to new advances and started smelting its retail stocks.
"Tough trading conditions have continued to impact our results, but we are making progress controlling costs and managing within our constrained banking facilities," Chief Executive Chris Gillespie said in the statement.
Albemarle & Bond shares were down 39.6% at 22.5 pence early Wednesday, the biggest faller on AIM. The stock was trading at over 300 pence a year ago.
By Steve McGrath; [email protected]; @SteveMcGrath1
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