H&T Group PLC (AIM:HAT) proposed a 25% hike to its full-year dividend as profits rose 90% in 2022 and the new year got off to a record start.
Consolidating its position as the UK’s largest pawnbroker in its 125th year and also the sixth largest jewellery and watch retailer, the group reported 50.5% growth in the pledge book to finish the calendar year at £100.7mln.
Retail sales of jewellery and watches grew 25% to £45.2mln, with profit margin moderating to reflect an “evolving” product mix and the proportion of new versus pre-owned items.
Foreign currency net income grew 90% to £5.7mln, recovering to exceed pre-Covid levels as international travel continues to rebound.
Group profit before tax rose to £19mln from £10mln last time, which was materially ahead of initial market expectations and in line with forecasts that were revised upwards after September’s equity fundraising.
A full year dividend of 15p was proposed, representing a payout ratio of 40%.
Chief executive Chris Gillespie said the cash raised in September is enabling growth of the pledge book and the store estate, with 11 stores added last year to take the total to 267 at the year-end, with two more added so far this year and seven more in the immediate pipeline.
January started in record style and two months of growth combined with strong online retail sales saw the pledge book reach £104mln at the end of February. The record demand for online sales in January is believed to relate to growing demand for pre-owned items due to sustainability considerations.
Gillespie said: “we continue to see strong demand for our FX services. We continue to believe that FX represents a growth opportunity for the group.”
The board also believes the group has an opportunity for “significant growth” in the medium term, with priorities being invested in growing and accelerating refurbishment of the store estate, investment in digital improvements such as an in-house point of sale system and an improved online presence.
As well as the addition of FX services in recent year and last year’s acquisition of Swiss Time Services, there is also a desire to pursue further opportunities to broaden the business.
H&T anticipates continued strong demand for pawnbroking in 2023 as the impact of inflation on the consumer increases the need for small-sum, short-term loans at a time when supply of credit is more constrained than has been the case for many years.