“A strengthening gold price is good for our business,” says John Nichols, chief executive of pawnbrokers H&T (HAT). With the yellow metal’s sterling-denominated price having just hit a multi-year high of £1,270 an ounce, half-year results landed with a fresh cause for investor optimism.
The other source of recent cheer – assuming investors support the logic of high-street expansion – is the acquisition of 65 trading stores and 29 pledge books from the Money Shop, which completed last month following a successful £6m equity placing.
For a total acquisition price of £11m, H&T has added £6m in pledged assets, £1m in cash, a freehold property, fixtures and fittings, and 241 more employees, which collectively looks like a steal. Deal costs have been booked in the first-half income statement, without which pre-tax profits would have risen 16.4 per cent.
Mr Nicholas says the new stores are a neat geographic fit with the existing branch network, and promises “significant value to shareholders” once H&T management takes over. Central to this drive will be the introduction of personal lending products. In the six months to June, lower impairments and an increased focus on store-initiated new business contributed to a steep rise in the loan book’s risk-adjusted margin from 37.5 to 54.1 per cent.
Broker Numis raised its forecasts following these numbers, and now expects full-year earnings of 35.6p a share, rising to 38.4p in 2020.
| H&T (HAT) | ||||
| ORD PRICE: | 342p | MARKET VALUE: | £ 136m | |
| TOUCH: | 339-345p | 12-MONTH HIGH: | 349p | LOW: 234p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 271p | NET DEBT: | 11% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 (restated) | 68.5 | 6.3 | 13.9 | 4.4 |
| 2019 | 70.0 | 6.8 | 15.0 | 4.7 |
| % change | +2 | +8 | +8 | +7 |
| Ex-div: | 05 Sep | |||
| Payment: | 04 Oct |
