The rising price of gold has worked wonders for H&T (HAT). Gross profit from pawnbroking scrap increased to £0.6m during the first half of the year, up from just £0.1m, while gold purchasing profit was also higher due to the delay between a store buying the precious metal and reselling it. The average sterling price of gold in July shot up to an average £1,017 per troy ounce compared with £852 during the first half of the year.
The bulk of management's focus was on developing its personal loan product. Chief executive John Nichols sees what he calls the "clicks to bricks" business as a big opportunity for H&T. That means loans can be taken out online or in store, depending on a customer's creditworthiness. The loan book increased 85 per cent to £6.3m, while gross profit grew by a quarter to £1.5m. Mr Nichols is trying to reduce the proportion of high-cost, short-term loans - which make up the bulk of lending - in favour of longer-term credit.
Despite increasing competition and a reduction in gold circulation, the core pawnbroking business grew its pledge book marginally to £39m. However, gross profit for its retail business was flat on the prior year, leading the group to invest in a new merchandising team to improve sales and inventory management.
Analysts at house broker Numis expect adjusted pre-tax profit of £8.7m this calendar year, giving EPS of 19.2p (from £7.1m and 15.8p in 2015).
H&T (HAT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 300p | MARKET VALUE: | £111m | |
| TOUCH: | 296-300p | 12-MONTH HIGH: | 312p | LOW: 180p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 258p | NET DEBT: | 7% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 40.8 | 2.6 | 5.5 | 3.5 |
| 2016 | 42.4 | 3.7 | 8.0 | 3.9 |
| % change | +4 | +43 | +44 | +11 |
Ex-div: 8 Sep Payment: 7 Oct | ||||
