Profits rise as demand grows for pawnbroker H&T

Pawnbroker and jewellery retailer H&T Group reported a profit before tax of £19m in its preliminary results for 2022 on Tuesday, up from £10m in 2021, supported by strong performance across its business segments.

The AIM-traded company said its pledge book grew more than 50% to £100.7m, reflecting increasing demand for pledge lending.

Demand for retail jewellery and watches also continued to rise, with sales of £45.2m in 2022 compared to £36.2m in 2021.

However, margins moderated as expected to 39.3% from 45.9% in the prior year, as a result of an “evolving” product mix and the proportion of new versus pre-owned items.

The firm also reported significant growth in foreign currency net income, amounting to £5.7m, compared to £3m in 2021, which exceeded pre-Covid levels, as international travel demand continued to build momentum.

H&T Group’s balance sheet remained robust, with a net asset value of £164.1m at year-end on 31 December, up from £136.6m in 2021, augmented by its recent capital raise, which brought in £16.1m net.

Net asset value per share was 374.3p, up from 342.7p, but the growth in pledge lending and capital expenditure had used cash resources as expected, resulting in a net debt position of £2.8m in 2022, swinging from a cash balance of £17.6m at the end of 2021.

Basic earnings per share came in at 37.2p, up from 15.4p in 2021.

The board proposed a full-year dividend of 15p, up from 12p year-on-year, representing a payout ratio of 40%, in line with H&T’s progressive dividend policy.

“Trading performance continued to build steadily throughout the year, materially ahead of initial expectations,” said chief executive officer Chris Gillespie.

“This trend has continued into the new year - January 2023 was a record month, both for lending demand and for online retail sales, the value of which reached £1m in a single month for the first time.”

Gillespie said that at the end of February, the pledge book had seen further growth and stood at £104m.

“We also continue to see strong demand for our foreign exchange services - we continue to believe that forex represents a growth opportunity for the group.”

At the close on Tuesday, shares in H&T Group were down 0.44% at 449p.

Reporting by Josh White for Sharecast.com.