Trading Statement

15 October 2013

H&T Group plc

("H&T" or "the Group")

Trading Statement

Group trading continues to be in line with market expectations of full year profit before tax.

As previously announced, the Group is faced with lower returns in the short term as a result of the increased competitive environment and the reduced gold price. Consequently, our focus is now on retail optimisation as opposed to greenfield store expansion and this has led to significantly increased retail sales, a reduction in net debt and the successful launch of ancillary products. The alternative credit industry as a whole also faces regulatory challenges and the Board believe that opportunities may arise to capitalise on these combined market pressures.

The Group's retail operation has been a key focus in H2 13. The retail sale of jewellery provides the Group with a degree of hedging against the lower gold price and the resulting fall in disposition profits via scrap. In August our like-for-like sales were up 13%, with this measure increasing to 27% in September and being maintained month to date in October. This compares to our H1 13 like-for-like sales fall of 12%.

Other successful initiatives include the rollout of our new unsecured product and system to replace the Group's payday advance product. This has driven an increase in our KwikLoan loan book to £2.5m (30 June: £2.2m). Foreign exchange has also experienced a successful take-up, currently achieving a £0.7m gross profit per annum run rate.

A measured approach to cost reductions is expected to result in the cost base for 2013 being lower than that reported in 2012 despite the increased estate size.

The Group is also launching several initiatives to de-risk its balance sheet and reduce net debt by way of stock and aged pledge reductions. The pledge book currently stands at £47.2m.

The Group currently has £30.6m of retail stock which is conservatively recorded on the balance sheet at the original pledge or purchase amount. The Group has identified all aged stock balances and an excess holding at the Group's central jewellery processing centre, both of which will be reduced post the Christmas trading period.

Further efficiencies to working capital, without detriment to the Group's operations, will materially reduce net debt over the coming months. Group net debt currently stands at £25.8m with a net debt to EBITDA ratio of 1.7x as defined under the Group's credit agreement.

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