H&T reports robust year despite market slowdown

Pawnbroker and jewellery retailer H&T Group reported a robust set of preliminary results on Tuesday, with profit before tax jumping 39% year-on-year to £26.4m.

The AIM-traded firm said profit after tax was ahead 42% for the 12 months ended 31 December, reaching £21.1m.

Key drivers of the performance included the sustained growth and contribution to profit from the core pawnbroking business.

The company said its pledge book expanded by 28%, reaching a fair value of £129m by the year's end, indicating sustained demand for pledge lending at record levels.

Net revenue generated by the pledge book saw a 36% increase, totalling £69.5m.

Additionally, foreign currency profits showed resilience, climbing to £6.3m, up 11% from the prior year, with transaction volumes rising 18%.

Retail jewellery and watch sales contributed to the positive trajectory, amounting to £48.6m, an 8% increase year-on-year.

However, the company faced challenges in margins due to adverse trading conditions for certain watch brands in the first half of the year and a shift in the jewellery sales mix during the second half half, including the crucial Christmas trading period.

Despite those challenges, diluted earnings per share jumped 31% to 48.5p, from 37.2p in 2022.

The balance sheet remained robust, with a net asset value of £177m, up 8% on the year, translating to a net asset value per share of 403.3p.

H&T said the growth in pledge lending and capital expenditure used cash resources as expected, resulting in a net debt position of £32m by year-end.

The company's return on average equity rose to 12.4%, reflecting a 25% increase from the prior year's 9.9%.

H&T Group reiterated its commitment to achieving a target return on equity in the mid-teens through the cycle.

In line with its progressive dividend policy, the board proposed a full-year dividend of 17p, a 13% increase from 2022, subject to maintaining a cover of at least two times.

“The group has made significant progress in 2023, delivering record profits and strong growth in a challenging environment for both businesses and individuals,” said chief executive officer Chris Gillespie.

“Pawnbroking is our core business and is attracting increasing numbers of new customers.

“Throughout the year, we saw record demand for our pawnbroking service and this has continued into 2024, with January being a new record month for lending.”

Gillespie said that while retail trading conditions, particularly in the fourth quarter, were challenging given pressure on customers' disposable incomes, sales still increased by 8% year-on-year to £48.6m.

“Pleasingly, demand has remained robust in the early months of 2024.

“We believe the reasons for the strength of this demand include the growing attractiveness of buying pre-owned products, and the environmental and sustainability benefits this brings.

“Throughout 2023 and in February, we diversified and enhanced the group's funding arrangements.”

Chris Gillespie noted that total funding facilities available to H&T currently amounted to £85m, with current headroom available of around £30m, which would support the future growth of the pledge book and investment in the store estate.

“At H&T, customer service is at the heart of everything we do.

“Our colleagues across the group go out of their way to put the customer first and I thank them all for their enthusiasm and commitment to the success of H&T.

“With continued investment in scale and capabilities, along with growing our business in the context of wider macro-economic factors, we believe that the Group has an opportunity for significant growth in the medium term.”

At 1156 GMT, shares in H&T Group were up 8.44% at 368.7p.

Reporting by Josh White for Sharecast.com.