Trading Statement

7 July 2014

H&T Group plc

Trading Update and Notice of Results

H&T Group plc ("H&T" or "the Group"), today issues a trading update prior to the announcement of its interim results for the six months ended 30 June 2014 which are expected to be reported on 19 August 2014.

The Board expects to deliver full year profit before tax in line with current market expectations.

The Group has continued the strategy set out last year to reduce debt, control costs and drive revenues. The Group's plan to reduce borrowings has continued to progress well in the first half of the year, with net debt at 30 June 2014 of £13.5m (30 June 2013: £28.5m) and operating costs have reduced year on year.

The pledge book at 30 June 2014 was £38.4m (30 June 2013: £48.6m). This reduction, which was in line with management's expectations, was principally driven by the impact of competition, maintaining the loan to value ratio and a reduction in aged pledge. The increase in interest rates implemented in December 2013 helped to offset the reduction in revenue that would otherwise be expected. 

The Board believes that the factors that impacted pawnbroking in the last year are abating and notes that recent lending has stabilised and there are early indications of a reduction in competition. Accordingly, 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 strong retail performance seen during H2 2013 has continued with retail sales in H1 2014 up 49% on H1 2013. The development of the Discount Secondhand Jewellery format has progressed well with the conversion of 36 H&T Pawnbrokers stores to 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.

The Group has closed four stores so far this year and opened one resulting in 191 trading units at 30 June 2014. The Board anticipates a small number of additional closures during the remainder of the year as we take advantage of lease breaks.

The Board continues 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 Board believes that the Group is well positioned to take advantage of this changing marketplace as and when opportunities arise. 

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