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H&T Group sees steady pawnbroking growth

The average number of customer visits at the company's pawnbroking outlets has increased

H&T store
"With the pledge book continuing to show stability, and growth coming through from the PL book, we see more to go for," Numis said

Pawnbroking firm H&T GROUP PLC (LON:HAT) continued to achieve growth from all of its core revenue streams in the first half of 2018.

Profit before tax in the six months to the end of June rose 10.9% to £6.1mln from £5.5mln the year before, on revenue that climbed to £68.5mln from £57.7mln.

READ: Pawnbroker H&T confident about the future after 'milestone year'

The net pledge book, including accrued interest, increased by 8.6% to £47.8mlm from £44.0mln in the first half of 2017, while the personal loan book shot up 78% to £17.8mln from £10.0mln.

The group’s net debt increased to £16.8mln from £11.5mln a year earlier due to increases in personal loans made and other working capital increases.

The interim dividend has been increased to 4.4p from 4.3p.

“Steady pawnbroking growth, driven by increasing numbers of new customers and the continuing growth of the personal loans book, is pleasing,” declared John Nichols, the chief executive officer of H&T.

“The personal lending book has increased by 19% since December 2017. We have maintained this growth while ensuring we remain disciplined around our credit-risk management practices. The broadening of our product suite into lower APR categories has proven successful, with 54% of our personal lending now out of the High-Cost Short-Term credit category. This is important as we strive towards our vision of helping our customers to rebuild their credit rating,” he added.

“We have further developed our digital platforms by upgrading and revamping our retail site, www.est1897.co.uk and our main H&T site. Our click-to-bricks retail and lending offering has been further expanded by introducing click-and-collect foreign currency. We will continue to invest in digital technology as we refine the pawnbroking model and leverage our store estate," Nichols concluded.

WATCH: H&T boss pleasantly surprised by strong growth

Profit before tax (PBT) of £6.1mln “reflects a solid interim result, albeit one complicated by the transition from accounting standard IAS39 to IFRS9, without which profits would have been flat at £6.0mln, Numis Securities noted.

“In terms of forecasts, we recognise the impact of the transition to IFRS9, which lowers the FY17 base from £14.1m to £11.9m. Set against this, where we had been looking for a £1m YOY [year-on-year] improvement in PBT to £15.1mln, we now look for a £1.5mln YOY improvement to £13.4mln; these changes reflect a markedly stronger PSC [pawnbroking] progression under IFRS9, partly offset by slightly slower contribution growth from PL [personal loans] and higher opex [operating expenditure]. In all, a half year made more complex by accounting but which reflected a solid performance, with management also noting that current trading is in line with its expectations,” the broker said.

Numis, which noted the share price has been soft of late, has an ‘add’ rating on the stock and a target price of 360p.

H&T shares were up 2.6% at 318p after the results.

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Quick facts: H&T GROUP PLC

Price: 318 GBX

LSE:HAT
Market: LSE
Market Cap: £126.36 m
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