8th Jul 2014 09:45
LONDON (Alliance News) - Pawnbroker H&T Group PLC Tuesday said it expects to deliver a pretax profit for the year as a whole, in line with current market expectations.
H&T has been trying to reduce its debt, control costs and improve revenues, after the company's pretax profit fell significantly in 2013 on reduced volumes of gold in circulation. It warned in February that due to the lower gold price and market and regulatory issues around payday lending, 2014 would be a year of consolidation and rationalisation for the UK pawnbroking industry.
The company said the pawnbroking industry experienced a difficult 2013, blaming its fall in revenues on reduced volumes of gold in circulation, a 29% year on year fall in the sterling gold price in 2013, and a heightened competitive environment.
The difficult conditions saw fellow pawnbroking chain Albemarle & Bond Holdings PLC go into administration in March. H&T had made a proposal to Albemarle & Bond's administrators to buy some of its former rival's assets, but it said it ended those talks in April.
H&T said Tuesday that trading conditions in the pawnbroking industry are improving.
"The factors that impacted pawnbroking in the last year are abating," the company said in a statement, adding "recent lending has stabilised and there are early indications of a reduction in competition."
H&T said its pledge book at the end of the first half stood at GBP38.4 million, lower than the GBP48.6 million reported a year earlier, due the increased competition, maintaining its loan-to-value ratio, and a reduction in aged pledge, it said. A pledge is the loan provided by a pawnbroker against a borrower's pawned possession.
"The board would expect only a small reduction in the pledge book in the coming half. The group has a number of initiatives underway to improve performance of this key area of the business going forward," the company said.
H&T said the development of its discount second-hand jewellery format is progressing well, having already converted 36 of its H&T Pawnbrokers stores into the new brand.
"The new format will continue to offer pawnbroking loans, whilst the increased focus on retail is expected to deliver a higher level of retail sales," said H&T.
The company said it opened one store and closed four stores in the first half of the year, and said it will close a small number of additional stores during the remainder of the year as it takes advantage of lease breaks.
"We continue to believe that the current number of stores in the sector is unsustainable and we expect to see further consolidation and rationalisation during 2014," the company said.
The company said it reduced its net debt in the first half, which stood at GBP13.5 million, down from GBP28.5 million last year. It said operating costs also reduced year-on-year.
H&T shares were untraded Tuesday morning, at 170.00 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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