7th Jan 2014 09:55
LONDON (Alliance News) - Pawnbroker H&T Group PLC Tuesday said it expects full year pretax profit to be in line with expectations, even as its business was hit by a steep fall in gold prices during the year.
The group said that the sharp decline in gold prices had a "material impact" on the business, reducing earnings from both gold purchasing and pawnbroking scrap, together with pressure on lending rates as it seeks to maintain its loan-to-value ratio.
H&T had attempted to curb its losses and respond to the challenging trading environment by suspending its new store opening programme, increasing cost savings, and focusing on driving retail sales to reduce the exposure to gold price on disposition. The savings resulted in lower operating costs for 2013, and this reduction is expected to continue into 2014, the company said, due to the full year effect of measures it implemented in the second half of 2013.
H&T said that it will close a small number of non-contributing stores in 2014 and is looking to acquire profitable pawnbroking opportunities.
It said that in the final quarter of the year, it benefited from its continued presence in the retail jewellery market, with like-for-like sales in the fourth quarter up 56% on the prior year, and gross profit up 18%. This compares to a like-for-like sales fall of 12% in the first half of 2013.
H&T said that its pledge book fell by nearly 15% to GBP44.1 million at year end, compared with GBP51.6 million a year earlier, largely due to a competitive environment and reduced lending rates.
The group said its plan to de-risk the balance sheet by reducing borrowing progressed well in 2013, with net debt at year end lower at GBP20.8 million, and it expects to see further improvements as the post-Christmas stock reductions take effect.
In October, the group announced that Finance Director Alex Maby will be leaving the company and will be replaced with insider Steve Fenerty.
Shares in H&T Group were trading 4.0% higher Tuesday morning at 151.00 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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