The higher gold price gave a turbo boost to a business that was already motoring at pawnbroker H & T Group PLC (LON:HAT).
Profit before tax in the first half of 2017 rose 62.2% to £6.0mln from £3.7mln the year before.
Gold purchasing profits increased to £1.8mln from £1.5mln the previous year, on the back of increased volumes of gold scrapped, up 47.7% to £6.5mln from £4.4mln.
WATCH: A 'good strong start' to 2017 for H&T Group
Revenue rose to £49.05mln from £42.39mln in the corresponding period of 2016, with growth seen in all key segments.
The 87.3% growth in the personal loans book to £11.8mln (2016: £6.3mln) caught the eye, and chief executive John Nichols said there is scope for this sort of growth to be maintained.
“A combination of competitive pricing and increasing awareness has seen us establish ourselves in this market and customers are now actively seeking us out,” Nichols said.
In the core pawnbroking business, the gross pledge book rose 10.8% to £43.2mln from £39.0mln in the first half of 2016.
The higher gold price enabled the group to increase the lending rate per gram by around 9%, while H&T has seen an improvement in the quality watch segment of the book.
Net debt at the end of the reporting period stood at £11.5mln, up from £6.9mln a year earlier.
The interim dividend has been hiked by a little more than 10% to 4.3p from 3.9p.
Initiatives beginning to bear fruit
“The results reflect a series of initiatives beginning to bear fruit and a favourable gold price,” CEO John Nichols said.
“We have also broadened our product suite with the launch of our personal loan product providing APRs of less than 50%. This has taken many of our loyal customers on a journey which is now seeing them access longer term, lower cost loans.
“We have also expanded our collection of high-end watches and the investment we have made in the est1897.co.uk website means we are now well placed to cement our position in this marketplace. This is a milestone year in the history of H&T and the enhancements we have made across our business, which have redefined the pawnbroking model, allow us to look to the future with confidence," he added.
House broker Numis Securities responded to the half-year update by raising its full-year profit before tax forecast to £11.6mln from £10.8mln.
“Encouraged by the stability in the pledge book income stream, easing competitive backdrop, and clear progress in Personal Loans, we remain positive on H&T, continuing to believe that the business is successfully diversifying its revenue streams and building its business despite a challenging core pawnbroking market,” Numis said, as it reiterated its ‘add’ recommendation on the stock.
Meanwhile, broker finnCap said the results were ahead of its expectations and it expects to upgrade its full-year profits and earnings per share estimates by around 5%.
“This has been a milestone year for the company and the outlook statement is confident; however, this is not reflected in the share price, which has declined 6% while Ramsden has appreciated 68%. This is an opportunity for investors in a neglected stock,” the broker said.
The shares were up 8.7% at 291.25 in mid-morning trading.