H&T (HAT) is trying to “de-couple” its business from the fortunes of the gold price by growing its personal loan book, says chief executive John Nichols. Progress has been made on that front, growing the loan book by 87 per cent over the year to June to £11.8m. The group is shifting towards providing longer-term loans at lower interest rates, mainly to repeat customers. As a result, the proportion of loans that fell under the definition of high-cost shorter-term credit – a current focus of regulators – declined to 71 per cent, from 82 per cent the previous year.
Nevertheless, pawnbroking remained a core product, accounting for 30 per cent of overall revenue. The gross pledge book was up 11 per cent to £43.2m, with a prior increase in the gold price pushing up the lending rate per gram of gold by 9 per cent. However, the impact of a higher gold price on gold purchasing profits is more short-lived. With the rate paid in store for gold also increasing, margins normalised, reducing to 22.1 per cent from 26.3 per cent.
The retail business benefited from the expansion of jewellery lines available to purchase online. Sales increased 13 per cent to £15.3m, while expanding its product range meant new jewellery sales surpassed £1m for the first time.
Analysts at Numis increased adjusted pre-tax profits forecasts for the 12 months to December 2017 to £11.6m from £10.8m, giving EPS of 25.7p (from £9.7m and 20.9p in 2016).
| H&T (HAT) | ||||
| ORD PRICE: | 295p | MARKET VALUE: | £110m | |
| TOUCH: | 290-295p | 12-MONTH HIGH: | 310p | LOW: 230p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 274p | NET DEBT: | 11% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 42.4 | 3.75 | 8.0 | 3.9 |
| 2017 | 49.1 | 6.03 | 13.1 | 4.3 |
| % change | +16 | +61 | +64 | +10 |
| Ex-div: | 7 Sep | |||
| Payment: | 6 Oct |
