Rare coin and stamps dealer Noble Investments met raised expectations with its auction business doing most of the heavy lifting in the first half of its financial year.
Proving that philately doesn't always get you nowhere, profit before tax surged 59% to £2.42m in the half-year to February 29th from £1.52m the year before. Diluted earnings per share improved to 11.98p from 7.41p last year.
Revenue climbed 7% to £7.00m from £6.52m a year earlier.
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"Our balance sheet has strengthened further to £16.73m of net assets which will continue to allow us to hold a large stock and offer our clients a wide selection of stamps, coins, commemorative and military medals, bank notes and tokens," noted Ian Goldbart, Managing Director of Noble.
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Administration expenses rose to £1.88m from £1.33m in the corresponding period a year earlier due to a number of factors, including additional pre-auction promotional literature, advertising expenses and also due diligence costs incurred relating to ongoing potential acquisitions. It is envisaged that these expenses will fall in the second half back to the level of expenses in the previous year.
"I would love to not have the costs of compiling and mailing thick catalogues, and do it all online," Goldbart confessed to Sharecast. Though the importance of online auctions is expected to increase, auction rooms and retail outlets will be around for a long while yet, Goldbart reckons.
In any case, the firm's web sites would probably need constant modernising to cope should online auctions really take off, a task akin to painting the Golden gate bridge, Goldbart quipped.
"Online auctions will probably serve the lower end of the market," Goldbart predicted, although the odd online sale running into hundred of thousands of dollars cold and does come along occasionally.
One of the curious aspects of the firm's business model is that one part of the business tends to cannibalise sales of the other.
"You can only sell the same coin once, so if you auction it, then obviously you cannot sell it in your shops," Goldbart explained.
In the first half of the current financial year, the auction business was in the ascendancy, particularly after the spectacularly successful sale of the Prospero Collection of ancient Greek coins.
"Collections like that come up once in a blue moon," Goldbart said, as he pursued his normal course of playing down expectations. "They take a lot of preparation. The catalogue alone took eight months to write," Goldbart revealed.
The auction divisions of Baldwin's and Apex saw revenue increase by 282% to £3.20m from £0.84m the year before, resulting in profits rising 471% to £2.38m from £0.42m the year before.
Retail revenue fell from £5.68m to £3.80m in the corresponding period of the previous year, resulting in a 61% decrease in the division's profits to £0.60m from £1.52m.
Given that last year it was the retail business that bagged the lion-share of profits, the balance between the two sides of the business could change again.
Either way, Goldbart reckons that "what is going on in the economy, the low interest rate environment and so on, does not do us any harm."
The group is debt free and cash positive, with cash at the end of February standing at £3.33m, up from £2.39m a year earlier. Goldbart did not rule out using that cash money to make an acquisition to expand the range of collectibles it offers but beyond ruling out moving into the vintage Ferrari market would not be drawn further on what new areas he is targeting.
The cash pile also encouraged the company to pump up the interim dividend by an inflation-busting 29% to 2.25p.
House broker WH Ireland has responded by upping its forecast for the full year dividend from 5.0p to 5.25p; last year's full year dividend was 4.3p.
The broker left its other full year forecasts for the current year unchanged, having raised them following the Prospero sale in January, but noted that the interim profit before tax outcome means the company is already 64% of the way to meeting the broker's full year profit forecast.
Goldbart, who confesses to having been criticised in some quarters for being overly cautious in his outlook statements, was keen to note the "extraordinary" nature of the first half, but did go so far to say that "the first half results have laid a strong foundation on which to build business and as a result, we look forward to reporting to shareholders further progress during 2012."
The shares were trading 3p higher on the day at 197p n the afternoon session, having risen to 199.28p at one point, 10p off the share's 52-week high.
JH
