Expanding brokerage relationships and investing in valuation services lifted profits for H&T’s (HAT) core pawnbroking business last year. The pledge book rose 10 per cent after the business attracted better quality customers and grew higher-value loans. However, that shift, which brought with it a reduction in interest rates, meant the risk-adjusted margin for the pawnbroking business declined to 62.2 per cent, from 64.2 per cent in the prior year.
Geopolitical turmoil may be prompting a rally in the gold price, but interim finance director Richard Withers says the group remains committed to diversifying further towards personal loans. The net loan book grew by more than a third to £21m, with the 49.9 per cent APR product – launched in 2017 – accounting for £1.2m of balances. Following the regulatory clampdown on ‘high-cost, short-term’ credit (HCSTC), around 59 per cent of the loan book falls outside that category. Higher risk online loans are now an “insignificant” part of the business, says Mr Withers. An improvement in customer quality resulted in slower loan book, but a lower proportion of new customers – who are more likely to default on repayments – meant lower impairments and a boost to the risk-adjusted margin.
Analysts at Numis expect adjusted pre-tax profits of £14.5m and EPS of 31.4p for 2019, up from £13.5m and 29.2p in 2018
| H&T (HAT) | ||||
| ORD PRICE: | 295p | MARKET VALUE: | £111m | |
| TOUCH: | 291-304p | 12-MONTH HIGH: | 370p | LOW: 235p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 284p | NET DEBT: | 13% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 88 | 5.5 | 11.8 | 4.8 |
| 2015 | 89 | 6.8 | 14.9 | 8.0 |
| 2016 | 97 | 9.7 | 20.9 | 9.2 |
| 2017 | 125 | 11.9 | 26.0 | 10.5 |
| 2018 | 143 | 13.5 | 29.4 | 11.0 |
| % change | +14 | +13 | +13 | +5 |
| Ex-div: | 2 May | |||
| Payment: | 31 May |
