REG - H&T Group PLC - Preliminary Results
18/03/2025 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250318:nRSR0239Ba&default-theme=true
RNS Number : 0239B H&T Group PLC 18 March 2025
18 March 2025
H&T Group PLC
("H&T" or "the Group" or "the Company" or "the business")
PRELIMINARY RESULTS
FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2024
Strong second half performance, delivering record profits and strong growth in
line with expectations
H&T Group plc (AIM:HAT), the UK's largest pawnbroker and a leading
retailer of high quality new and pre-owned jewellery and watches, is pleased
to announce its preliminary results for the twelve months ended 31 December
2024 ("the period" or "the year"), in what was a record year for H&T.
The Group has produced a strong set of results, with profit before tax up 10%
year on year. H&T is the largest pawnbroker in the UK and continues to
grow its market share. There are limited alternatives for individuals who need
to borrow small sums of money for a short term, and the pawnbroking service
offered by H&T is a simple and transparent way to do so. In addition, the
Company is seeing more business owners using its service for working capital
purposes, which is reflected in an increase in the number of larger loans
granted.
The Group remains committed to investing in the store estate as a means of
attracting and serving more customers. We have refurbished 48 stores this
financial year and we have increased the store estate to 285 stores. This is
building significant embedded value in the business, which supports future
earnings potential.
Highlights
· Profit before tax of £29.1m (2023: £26.4m), up 10% year on year as the core
pawnbroking business continued its sustained growth and contribution to
profit. Profit after tax of £22.2m (2023: £21.1m), up 5% year on year.
· Growth in the pledge book of 26%, ending the year at a capital value of £127m
(2023: £101m) and carrying value (inclusive of accrued interest and net of
IFRS 9 provision) of £158m (2023: £129m), following a particularly strong
trading performance in Q4 2024. This included record levels of new customers
borrowing from us for the first time.
· Net revenue generated by the pledge book, inclusive of pawnbroking scrap
revenue, up 5% to £77.8m (2023: £74.2m). Revenue lags the growth in capital
value of the pledge book, which will benefit the 2025 financial year.
· Retail jewellery and watch sales of £61.8m (2023: £48.6m), up 27% year on
year, with gross profit of £19.3m (2023: £14.4m), up 34%.
· Foreign currency profits of £7.0m (2023: £6.3m), up 11% year on year, with
transaction volumes up 10%.
· Balance sheet remains strong, with a net asset value of £192m (2023: £177m),
up 8% year on year. Net asset value per share of 441.9p (2023: 409.0p). The
Group ended the year with a net debt position of £54m (2023: £32m) with the
increase largely due to the growth of the pledge book.
· Post tax return on average monthly equity (RoE) of 12.2% (2023: 12.6%), post
tax return on average monthly tangible equity (RoTE) of 15.1% (2023: 15.1%).
· Diluted earnings per share of 50.9p (2023: 48.5p), up 5% year on year.
· Proposed final dividend of 11p giving a full year dividend of 18p (2023: 17p),
up 6% year on year and in line with our stated progressive dividend policy,
subject to maintaining cover of at least two times.
· As previously advised, we are changing our financial year end to September,
starting in 2025. Prior year comparatives are provided in this announcement to
assist shareholders with the transition.
Outlook
· Current trading is in line with management expectations across all products.
As expected, the pledge book has grown slightly since year end to c. £128m
which underpins future growth.
· Demand for our core pawnbroking service is expected to remain strong in the
year ahead, as the need for small sum, short term lending continues to grow
given macroeconomic conditions, continued lack of supply of small-sum credit
and we focus on raising the profile of our business in the communities we
serve.
· We will continue to invest in the store estate. There are opportunities to
expand the geographic coverage of our store network, through opening new
stores and acquiring existing independent stores which meet our investment
criteria. Our refresh programme for existing stores will continue, with an
ongoing programme of c.50 store refreshes per annum. We have a network of 285
stores, of which 258 are more than five years old and are considered "core
stores", with a further 10 stores which will be more than three years old by
the end of 2025 and which will increasingly contribute to Group growth.
· The Group remains committed to delivering a target post tax RoE of mid-teens
through-the- cycle. We carefully balance our growth prospects with our
dividend policy and our cautious appetite for gearing.
Chris Gillespie, H&T chief executive, said:
"The Group has made significant progress in 2024, delivering record profits
and strong growth.
Demand for our core pawnbroking product continues to grow, with particularly
strong lending demand in the final ten weeks of the year, providing a sound
base for future growth.
Retail sales in the key fourth quarter peak trading period, which included
both the Diwali and Christmas festivities, were in line with management
expectations with product margins showing an improvement. It is notable that
our retail jewellery customers continue to favour items at lower price points
than has historically been the case. This has resulted in increased demand for
our range of lower priced, new jewellery items.
At H&T, customer service is at the heart of everything we do. We provide
our customers with a modern, welcoming and trustworthy place to transact. I
cannot thank our people enough for their hard work and wholehearted commitment
to customer service.
With ongoing investment in scale, service quality, and the continuous
improvement and efficiency of the customer journey, combined with the broader
macroeconomic backdrop, we believe the Group is well-positioned for
significant growth in the medium term. This applies across our product
offering, in particular the core pawnbroking product"
Financial Highlights (£m unless stated) 2024 2023 Increase
Profit before tax £29.1m £26.4m 10%
Diluted EPS (p) 50.9p 48.5p 5%
Dividends per share (p) 18.0p 17.0p 6%
Net assets £192m £177m 8%
Key Performance Indicators
Pledge book carrying value £158m £129m 22%
Pledge book capital value £127m £101m 26%
Net Pawnbroking revenue, inclusive of scrap margin
£77.8m £74.2m 5%
Retail sales £61.8m £48.6m 27%
online sales 22% 20%
new jewellery sales 23% 25%
gross margin 31% 30%
Foreign exchange gross profit £7.0m £6.3m 11%
Number of stores 285 278
Enquiries:
H&T Group plc +44(0)20 8225 2700
Chris Gillespie, Chief Executive Officer
Diane Giddy, Chief Financial Officer
Shore Capital Ltd (Nominated Adviser and Joint Broker) +44(0)20 7408 4090
Stephane Auton / Sophie Collins (Corporate Advisory)
Guy Wiehahn (Corporate Broking)
Canaccord Genuity Limited (Joint Broker) +44(0)20 7523 8000
Emma Gabriel / George Grainger
Alma Strategic Communications (PR) +44(0)20 3405 0205
Sam Modlin handt@almastrategic.com (mailto:handt@almastrategic.com)
Andy Bryant
Rebecca Sanders-Hewett
Will Merison
About H&T Group plc
H&T is the UK's largest pawnbroker, a leading retailer of high quality new
and pre-owned jewellery and pre-owned watches and provides a range of
financial products tailored for a customer base which has limited access to,
or is excluded from, the traditional banking sector. These products include
Pawnbroking, Retail and Foreign Currency.
Chairman's Report
Throughout the year we have continued to reinforce our position as the UK's
leading pawnbroker, making good progress on our strategic objectives and
delivering another year of record growth. I would like to extend my gratitude
to the entire team for yet another year of hard work - their knowledge,
dedication and enthusiasm is what drives the business forward and makes us a
key part of the communities we serve, and the wider financial ecosystem.
The Year in Review
We are proud to be the largest player in the UK marketplace, and in the last
twelve months, we have continued to expand and strengthen our foundations for
continued growth in the years ahead. A key pillar of our strategy is to grow
the business in a responsible and sustainable manner, and I am pleased that we
have continued to do that.
Demand for our core pawnbroking product has continued to grow with record
levels of new customers. The capital value of the pledge book increased ahead
of management expectations to £127m with particularly strong growth in the
last quarter of the year. A key part of our strategy is to grow our support
for the business community, and we took a step forward in this strategy at the
beginning of the year with the acquisition of Maxcroft, who are focused on
this market. Larger loans now make up over 18% of our pledge book.
We added eight new stores with one closure in 2024, to take the total number
of stores to 285 (2023: 278). One store was relocated, and we have continued
with the planned store refresh and refit programme, with 48 stores completed
in 2024.
FY2024 was a record year for retail, with the value and quality of our
offering shining through. This is an important part of the business, and we
see substantial potential for further growth going forward, aided by
innovation in our product mix and insights provided by phase 1 of our bespoke
core technology platform, EVO.
The implementation of EVO across our store network has already seen
improvements to the way we work. Perhaps the most valuable contributions it
has brought to the business have been the improved and more efficient in-store
customer journey, along with the enhanced gathering of data which will help us
focus our lending and collections activities to further improve the quality of
the pledge book. EVO is a significant milestone for H&T, with the data
opening doors to new opportunities which will ultimately result in more
customers in our stores and improved profitability.
It is gratifying that H&T is a business that has become such a key part of
so many communities across the country. We have worked hard over many years to
become a trusted institution and a valued part of so many people's lives. We
are proud of the communities that we serve, and the strong relationships that
our staff have with our customers.
We are a regulated business, and we work hard to ensure we meet our
obligations to our customers, treating them with respect, and providing them
with a fair, transparent and efficient service. Our customer service team
based in Liverpool is dedicated to providing individual support to those
customers who are vulnerable or may have difficulty in being able to redeem
their pledged items. This is illustrated by the low level of complaints
received about our pawnbroking service that are referred to the Financial
Ombudsman Service (FOS), and the low proportion that are then upheld.
In the year, James Thornton retired from the Board after almost twelve years.
I'd like to thank James for his commitment to the business over so many years,
and I wish him all the best for the future. He was succeeded as Senior
Independent Director by Toni Wood who was originally appointed to the Board in
May 2022. Toni has already made a significant impact on the Group, and her
expertise in retail, FMCG and e-commerce will continue to be of great value to
the Company.
Subject to shareholder approval, a final dividend of 11.0p (2023: 10.5p) per
ordinary share will be paid on 27 June 2025 to those shareholders on the
register at close of business on 30 May 2025. This brings the full year
dividend to 18.0p (2023: 17.0p), a 6% increase. This reflects the Board's
confidence in the future prospects of the business, whilst being mindful of
the need to continue to invest in the growth of the pledge book, and capital
investment in technology and the store estate. The dividend remains in line
with our progressive dividend policy and maintains a coverage ratio of at
least two times that of earnings.
Outlook
We look ahead with confidence that we will achieve another year of strong
growth in our pledge book and retail activities. We will widen the range of
new jewellery we stock which we expect to drive further sales growth. The
increased use of data analytics, using the information captured via EVO, will
enable us to focus further on dynamic performance improvement, cost management
and maximising the contribution made by each store.
The modernisation of our existing store estate remains a focus, and we will
continue to invest selectively to elevate both customer and staff experience.
Inevitably, rising business rates, Employers' National Insurance contributions
and minimum wage increases will put pressure on the profitability of some
parts of our store estate and we will be actively reviewing future store
profitability as leases come up for renewal.
We believe that demand for our core pawnbroking service will remain strong in
the year ahead, with the need for small sum, short term lending continuing to
grow as macroeconomic conditions continue to affect our customers' disposable
incomes.
Our excellent market position as the largest player in the UK provides a
strong foundation for growth. We have a clear strategy, a strong investment
case, a motivated team, and solid foundations for further growth. The Board is
confident in the prospects of the Group both for the current financial year
and the future.
Chief Executive's Review
The past year saw encouraging progress, culminating in a strong finish to
trading in the fourth quarter, driven by the growth of the pledge book. This
performance was achieved at a time when our customers continue to navigate
high prices, elevated interest rates, and consequently, squeezed disposable
incomes.
The positive underlying demand for H&T's products and the strong second
half performance, has enabled the Group to deliver revenue growth across the
business, and profit before tax up 10% to £29.1m (2023: £26.4m), in-line
with market expectations.
Our stores, and our exceptional people, are at the centre of our philosophy
and strategy. We added 8 new stores during 2024, including the acquisition of
the Maxcroft business in Q1, with the Group's store estate ending the year at
285 locations (2023: 278). Opportunities remain to expand the geographic
coverage of our store network, both through the opening of our own stores and
through allocating capital towards acquiring existing independent stores,
where the investment returns are increasingly attractive relative to new
openings.
As previously disclosed, the increase in Employers' National Insurance rates
from April 2025 will increase our employment costs by c.£2m per annum. This
is through the combined impact of lowering the earnings threshold at which
employers start paying National Insurance contributions, and the increase in
the rate of those contributions. We have put plans in place to mitigate some
of the impact and will continue to explore options to drive further cost
savings through the year.
The additional funding facilities put in place over the past year will enable
us to continue to fund further growth in the pledge book, maintain our
investment in enhancing our store estate and technology platforms and
selectively look at opportunities to acquire stores.
As previously advised, we are changing our financial year end to September,
starting in 2025. Prior year comparatives are provided in this announcement to
assist shareholders with the transition.
The Group provides a range of products and services, often used by customers
in combination, such as money transfer alongside foreign currency or jewellery
purchases later pledged for pawnbroking loans. Our strategy prioritises
increasing store footfall and fostering long-term customer relationships
through exceptional levels of service. By enhancing the in-store experience
and utilising data insights, we aim to drive cross-selling of additional
products, attract more customers, and encourage greater customer engagement
with our pawnbroking service over time.
Looking ahead, we anticipate a positive near-term trading environment for
H&T. Although inflation has eased from peak levels, the real cost of
living for consumers remains high, and interest rates are likely to stay
elevated for an extended period. Additionally, we expect unemployment levels
to rise during 2025 within our core customer base. This is expected to
continue to support demand for our core pawnbroking service, with a high gold
price assisting both retail and gold purchase volumes. Given these factors and
strong pledge book growth in Q4 of 2024, we believe we have a sound base for
the delivery of future growth.
Review of Operations
Pawnbroking
Demand for pawnbroking continues to grow across all regions, supported in part
by broader macroeconomic factors. Rising living costs, along with higher rent
and mortgage payments, have placed pressure on customers' disposable incomes,
increasing the need for short-term borrowing. At the same time, the
availability of small-sum, short-term credit remains constrained. These market
dynamics have created a significant growth opportunity for the pawnbroking
sector, and as the UK market leader, H&T is well-positioned to continue to
capitalise on this trend.
The pledge book grew strongly in the second half of the year, with
particularly strong lending demand in the final ten weeks of the year. The
capital value of the pawnbroking pledge book, excluding accrued interest and
IFRS 9 provisions, grew ahead of management expectations to £127m as at 31
December 2024 (December 2023: £101m). This capital value includes the
Maxcroft pledge book of £6m, up 9% since acquisition in Q1 2024.
As at 31 December 2024, the carrying value of the pledge book, including
accrued interest and after IFRS 9 provision, amounted to £158m (December
2023: £129m).
Aggregate lending for the year increased by 14% to £296m (2023: £260m)
including record levels of new customers borrowing from us for the first time.
In the year, 12% of loans were to new borrowers, with new customer volumes
particularly strong in the second half of the year.
The total number of stores increased by 7 to 285 in the year, with pledge book
growth delivered across the store estate. It remains the case that growth in
the c.70 stores acquired in 2019 is at a faster rate than for the store estate
as a whole. This highlights the ongoing opportunity to acquire existing
independent stores in key locations where we can implement our marketing,
technology and financing know-how to drive growth. Since 2021, we have opened
or acquired 34 new stores. All of these stores, with two exceptions, are
performing at or above planned levels. Stores that have been open for more
than five years, of which there are 258, are considered "core stores" and are
collectively responsible for the highest proportion of Group growth and
profitability. In addition, a further 10 stores will be more than three years
old by the end of 2025 and are increasingly contributing to Group growth and
profits.
As previously reported, we saw a marked increase in early redemptions in the
spring months of the year. This impact was in respect of the timing of
customer redemptions and had no impact on overall redemption rates. Customers
chose to repay their pledge loans earlier than would ordinarily be the case,
resulting in a c.15% increase in the normal monthly flow of redemptions during
the months of March, April and May. This adversely affected the yield
generated by the pledge book. Our core planning assumption is that this
repeats in 2025, and in subsequent years.
In February 2024 we acquired from Maxcroft, their pledge book of c.£5.5m in
capital value. The underlying nature of the acquired pledge book's collateral
items is aligned with that of H&T's existing pawnbroking business and
consists primarily of gold, jewellery, and watches, with a similar asset mix.
At the date of acquisition, the mean value of the acquired pledge loans was
£4,063, significantly larger than that of H&T, with the majority of
customers utilising the service for working capital purposes in their
businesses. The Maxcroft pledge book redemption rates and yield are broadly in
line with higher value loans in H&T's current pledge book.
Maxcroft traded in-line with expectations for the 10 months of ownership, with
the pledge book growing by 9% as at December 2024. We continue to believe that
the acquisition provides us with an opportunity to expand our reach into a
different customer segment, leveraging some of the acquired know-how to drive
growth in the volume of larger value pawnbroking loans across the group.
Loans of £5,000 or more tend to be used for business purposes and currently
represent 18% (2023: 13%) of the pledge book by value and c.2% by customer
numbers.
The strong demand seen in Q4 2024 included a number of customers seeking to
borrow slightly more than recent averages. Accordingly, the median loan size
has increased as at 31 December to £245 (2023: £201). Mean loan sizes
continued to increase to £460 (December 2023: £428).
Loan duration across the business was consistent at 97 days (2023: 97 days),
continuing the recent trend of customers generally repaying their loans more
quickly than historic averages. Redemption rates throughout the year were
consistent at 85% (2023: 85%). Loan to Value ratios continue to average c.65%
(2023: c.65%).
Action was taken in mid-2023 to reduce the risk profile of lending against
certain high-value watch brands, where price volatility was apparent. As a
result, the value of lending against watches reduced in the first half of 2024
as planned, both in respect of stock and flow. At the year end, the proportion
of the pledge book secured on watches was 13% (2023: 14%), with watch lending
representing 12% of full year lending flow (2023: 15%). With the return of
better predictability in pre-owned watch prices, we now believe it is
appropriate to cautiously increase activity in this asset class once again.
The Group implemented an increase in lending interest rates in mid-2024, which
will increase the gross yield on the pledge book over time. This has
necessitated a review of the input assumptions within the Group's IFRS 9
impairment model, particularly in respect of the calculated effective interest
rate ("EIR"). As a result of this review, together with the strong growth seen
in the pledge book in Q4 2024, the provision held under IFRS 9 has increased
by £4.7m (2023: decrease £6m) to £10.5m (2023: £5.8m). This represents
coverage of 6.2% (December 2023: 4.3%). The net yield generated by the pledge
book, inclusive of pawnbroking scrap profit, was 71% (2023: 78%), having been
adversely impacted by higher redemptions in Q2, increased IFRS 9 provision
requirements and the very strong growth in the pledge book in Q4. In the
latter case, time on book in the financial year was not significant and
generated only modest revenue, whilst increased IFRS 9 provisions to reflect
the growth were required.
For the first time, segmental revenues and profits for pawnbroking include
pawnbroking scrap. Pawnbroking scrap margins are earned as a direct
consequence of our pawnbroking activities and solely represent the disposition
of the collateral held as security on unredeemed pawnbroking pledges. As the
pledge book grows and matures, the volume of items released for retail sale or
scrap rises commensurately. Gross profit grew to £9.5m (2023: £4.7m), at a
gross margin of 27% (2023: 17%). This has been included and will continue to
be included in future periods, as part of pawnbroking revenue and profit.
2024 2023 Change %
£'m £'m
Pawnbroking £102.3m £90.4m 13%
Pawnbroking scrap £9.5m £4.7m 102%
Pawnbroking total revenue £111.8m £95.1m 18%
Less IFRS 9 provision movement (£4.7m) £6.0m (178%)
Less Impairment (£29.3m) (£26.9m) 9%
Pawnbroking income £77.8m £74.2m 5%
Pledge book carrying value - note 1 £158m £129m 22%
Average pledge book carrying value - note 2 £135m £114m 18%
Risk adjusted margin on carry value - note 3 58% 65%
Pledge book capital value - note 4 £127m £101m 26%
Average pledge book capital value - note 2 £109m £95m 15%
Risk adjusted margin on capital value - note 3 71% 78%
Notes:
1. Includes accrued interest and IFRS 9 impairment charge
2. Based on rolling monthly average
3. After impact of higher redemptions in the spring, increased IFRS 9
provisions and Q4 growth in the pledge book
4. Excludes accrued interest and before IFRS 9 impairment charge
Retail
H&T is a leading retailer of high-quality new and pre-owned jewellery and
pre-owned watches, via its physical store network and increasingly, online.
Retail sales increased by 27% to £61.8m (2023: £48.6m). Retail gross profit
grew 34% to £19.3m (2023:
£14.4m) with an overall gross margin of 31% (2023: 30%).
Pleasingly, we saw strong performances in the periods leading up to Diwali and
Christmas, both of which occurred in Q4. We achieved this growth alongside a
continued preference by customers towards lower priced items, often choosing
to purchase new rather than pre-owned items because of their generally lower
relative price point. Better understanding this trend is enabling us to
increasingly optimise our in-store jewellery offering, and we are running a
trial of some stores selling primarily new jewellery. This is being tested in
almost half of the store network. New jewellery is easier to merchandise, sell
online and requires less processing time centrally at the jewellery centre.
Sales of new products represented 23% (2023: 25%) of full-year sales by value,
and 57% of full year sales by volume (2023: 55%). Sales of pre-owned items
represented 77% (2023: 75%) of full-year sales by value, and 43% of full year
sales by volume (2023: 45%).
Sales of both new and pre-owned coins and gold bars were particularly strong
in the latter months of the year, encouraged by the high gold price. This has
continued into 2025. Sales of pre-owned watches have been encouragingly
robust, with a return to lower price volatility than was experienced in 2023.
Swiss Time Services, which was acquired in 2022, is now integrated into
H&T's watch offering, which is benefitting the wider Group significantly.
During the year, Swiss Time Services was awarded an exclusive contract to
provide accredited repairs by a high-profile watch brand.
Online originated sales increased by 36% to £13.3m (2023: £9.8m). This
represents 22% (2023: 20%) of total sales by value. We successfully
implemented a new H&T retail website in the first half of 2024, which has
significantly modernised, simplified and enhanced customers' online
experience.
Foreign Currency
Demand for overseas travel remained strong despite challenging economic
conditions for customers.
Gross profit increased by 11% to £7.0m in 2024 (2023: £6.3m), driven by a
10% increase in transaction volumes compared to the prior year. Average
margins on currency sales are c.3%, and on purchases c.10%. Whilst UK
travellers continue to make increasing use of cashless payments when
travelling overseas, our customers often choose to take physical foreign
currency which we believe will continue for the foreseeable future. The
average store transaction value increased slightly year on year, to £405
(2023: £386). Click-and-collect transaction values continue to significantly
exceed store-based transactions, averaging £757 (2023: £685), albeit at
lower margins.
Overall, the growth of this product, which often represents the first
transaction with customers who are new to H&T, was achieved through
increased focus and a number of initiatives implemented in 2023 and early
2024. These included the expansion of online click-and-collect services, a
broader range of currencies being stocked in stores, and improved marketing
and promotion, including the deployment of some of the learnings following the
Maxcroft acquisition.
Gold Purchasing
Gross profit earned from the scrapping of purchased items was £14.8m (2023:
£8.6m). Margins were significantly higher at 27% (2023: 20%), supported by a
strong gold price. Transaction volumes were broadly flat year on year. The
average gold price per troy ounce during the period was £1,739 (2023:
£1,550).
Other Services
Money Transfer
Money transfer activity drives significant footfall to our store estate and
represents an opportunity for colleagues to bring customers' attention to our
wider service offering. Profit in the year was £1.0m (2023: £1.1m). Customer
numbers remained broadly consistent year on year. However, it remains the case
that customers are transacting less often, and are sending or receiving lower
amounts, reflecting challenging personal circumstances for individuals.
Cheque Cashing
H&T is one of the very few retail locations continuing to offer cheque
cashing services, outside of high- street banks. The use of cheques in the
wider economy continues to decline. Profits earned in the period were £0.8m
(2023: £1.1m).
Personal Lending
The Group no longer offers an unsecured lending product. Lending volumes
reduced significantly after Q4 2019, and all lending ceased in early 2022. The
unsecured loan book has since continued to receive repayments, and
corresponding impairment provisions have been released. The outstanding net
book remained at £0.1m (2023: £0.1m) with profits earned reducing to £0.4m
(2023: £0.9m) as the underlying book repays.
2025 Business Focus and Outlook
With ongoing investment in scale, service quality, and the continuous
improvement and efficiency of the customer journey, combined with the broader
macroeconomic backdrop, we believe the Group is well-positioned for
significant growth in the medium term. This applies across our core product
offering. Our focus is to ensure that the Group is well positioned to take
advantage of these growth opportunities. Our priorities are:
Store Estate
We believe that our stores, and our outstanding people, are and will remain at
the heart of our business. There are opportunities to expand the geographic
coverage of our store network, whether that be through opening new stores or
acquiring existing independent stores. We are investing both in new store
openings and in refreshing existing stores and we will continue with the
planned store refresh programme, with an ongoing programme of c.50 store
refreshes per annum.
We added 8 new stores during 2024, including the Maxcroft acquisition, with
one store relocation and one store closure. As at the end of December 2024,
the Group's store estate stood at 285 (2023: 278). This was within the range
of our expectation at the start of the year.
We will continue to expand the store estate in a controlled, measured and
sustainable way. However, due to upward cost pressures, which are primarily
employee related costs, we are being more cautious towards opening new stores
and anticipate a slower pace of store openings in 2025. In the short term, we
will prioritise opportunities to acquire existing independent stores. We will
only acquire stores that align with our strategy and desired location, and
which meet our investment hurdles.
Digital Strategy and Customer Journey
Our bespoke core technology platform, EVO, is fully operational across our
store network, with an ongoing plan of functionality enhancements. Phase two
of the EVO programme is now underway. EVO will be implemented across the
broader business over the next three years.
EVO is enhancing the in-store customer journey and improving operational
efficiency for our teams, whilst providing us with richer customer data. The
improvements delivered through the EVO programme, supported by investment in
the Group's data analytics capabilities, are enabling more effective and
targeted marketing communications and merchandising, along with improving our
lending and collections activities.
We are also focused on enhancing and modernising our online presence. The
customer-facing website is undergoing continuous upgrades, following the
consolidation of the est1897 website into the H&T website in 2023. This
consolidation marked the start of an ongoing process of evolution aimed at
modernising functionality, design, and overall user experience. Our strategy
is to make it easier for customers to engage with us through their preferred
channels.
Effectively managing our cost base
Like all businesses, H&T is experiencing the impact of cost inflation,
particularly with regards to employee related costs, both in respect of
ourselves and key suppliers. We are mindful of the impact of these economic
factors on all our stakeholders. H&T is primarily a fixed cost business
and achieving operating efficiencies will remain a key management focus.
We have rewarded our employees with increases in basic pay, and with bonuses
intended to recognise their hard work, delivery and contribution throughout
2024. Employee related costs for 2024 rose as anticipated by 9% and will
continue to rise at a rate above that of headline inflation, primarily as a
result of government decisions taken in respect of national living wage and
employment related taxes. Ensuring that our people are appropriately
remunerated will remain a priority for the Group.
The increase in Employers' National Insurance rates announced by the UK
Government in its Budget on 30 October 2024 will impact our business from
April 2025. We estimate the combined impact of lowering the earnings threshold
at which employers start paying National Insurance contributions, and the
increase in the rate of those contributions, will increase our employment
costs by c.£2m per annum. We have put plans in place to mitigate the impact
of these cost increases and are also closely monitoring any potential pass-on
costs from our partners and suppliers.
Since April 2022, National Living Wage has risen significantly, which along
with the recent increase in Employers' National Insurance contributions, has
resulted in us carefully considering our planning assumptions around staffing
levels and the pace of new store openings. Whilst we remain fully committed to
ensuring we always provide exceptional customer service, we will be slowing
recruitment in the year ahead to manage costs effectively.
More customers, using more of our services
The Group offers a diverse range of products and services designed to meet the
specific needs of its customer base. Many customers engage with multiple
services and product offerings; for example, a money transfer customer may
also purchase foreign currency for travel, or a piece of retail jewellery
purchased from H&T might later be pledged as collateral for a pawnbroking
loan.
Our strategy focuses on driving footfall into our stores and, through the
exceptional service provided by our store colleagues, building long-term
customer relationships that often span many years and multiple products. Over
time, this strategy aims to attract more new customers, increase the frequency
with which they use our pawnbroking services, and leverage both the in-store
experience and enhanced data insights to encourage cross-selling of our
additional products.
Funding our Growth
To capitalise on the growth opportunity presented to the Group in the medium
term, in February 2024 we agreed additional financing of £25m to support the
growth of the business, from PGIM (previously Pricoa Private Capital), the
private capital arm of PGIM, Inc., the global investment management business
of Prudential Financial, Inc. This facility is in addition to financing
facilities provided by our longstanding bankers, Lloyds Bank plc, and by
Allica Bank Limited.
The support of these banks and capital providers helps finance the growth
ambitions of the business. In the year ahead we expect to invest in further
growth in the pledge book, maintain our investment in enhancing our store
estate and technology platforms and selectively look at opportunities to
acquire independent stores.
Macroeconomic Environment
Looking ahead, we anticipate a positive near-term trading environment for
H&T. Although inflation has eased from peak levels, the real cost of
living for consumers remains high, and interest rates are likely to stay
elevated for an extended period. Additionally, we expect unemployment levels
to rise during 2025 within our core customer base. Given these factors and
strong pledge book growth in Q4 of 2024, we believe we have a sound base for
the delivery of future growth.
Pledge Book
We anticipate continued strong demand for our core pawnbroking product as the
impact of inflation on the consumer increases the need for small sum, short
term loans at a time when supply of credit is more constrained than has been
the case for many years. We are also seeing increased demand from customers
who are business owners using the pawnbroking service for working capital
purposes, and who often find themselves excluded by mainstream financial
institutions.
Retail
H&T is a leading retailer of high quality pre-owned jewellery and
pre-owned watches. We also offer our customers an expanding range of new
jewellery items. Demand has remained robust through 2024 and has continued
into 2025. We believe that there are clear reasons for the strength of this
demand.
● The growing attractiveness of buying pre-owned products, and the
environmental and sustainability benefits this brings.
● A recent change of preference by some customers to purchase new
rather than pre-owned items because of the generally lower price point.
● Customers view our retail items as good value for money, and also as
a store of value which can be sold or used as collateral for a future pledge
loan if their circumstances change.
We believe that these dynamics are likely to continue, notwithstanding the
challenges of broader macroeconomic pressures felt by our customers. Better
understanding this trend is enabling us to increasingly optimise our in-store
new jewellery strategy and we are trialling the sale of exclusively new
jewellery items in selected stores. The Group is responding by focussing on
ensuring that we have the right mix of items for sale both in terms of price
and in mix of new and pre-owned.
Foreign Currency
We expect demand for foreign exchange services to remain resilient. Whilst UK
travellers continue to make increasing use of cashless payments when
travelling overseas, our customers often choose to take physical foreign
currency which we believe will continue for the foreseeable future.
CHIEF FINANCIAL OFFICER'S REVIEW
Change of accounting reference date ("Year End")
The Board has made the decision to change the Group's financial year end from
31 December to 30 September, with effect from September 2025, as previously
communicated. This will result in financial performance being more evenly
spread across the two half year reporting periods. Comparative unaudited
figures for the twelve months to 30 September 2024, to establish the base for
the new accounting reference dates, are summarised on pages 23-24 of this
announcement.
For the 2025 financial year, being the first financial year with the new year
end, statutory audited results covering the nine-month period to 30 September
2025 are expected to be published in January 2026. Simultaneously, the Group
will publish unaudited comparative results for the twelve months to 30
September 2025. Given that there will be no interim financial reporting in
this first year of transition, the Group will publish a trading update in July
2025, covering the first six months of the calendar year to 30 June 2025.
For future financial years, the reporting cycle will comprise six months
interim reporting to March, which we expect to publish in May, and full year
reporting to September, which we expect to publish in January.
A reporting calendar will be published on the Group's investor relations
website at https://handt.co.uk/pages/investor-relations.
The expected future dividend timetable for the year end September 2025 is
shown in the table below:
Interim Dividend Final Dividend
9 month Statutory Year 2025
Period 3 months to March 2025 6 months to September 2025
Payment Date August 2025 April 2026
Financial Results
Gross Profit
Reported gross profit increased to £155.4m (2023: £127.2m), up 22% year on
year as sustained demand for H&T's core product offerings delivered
revenue growth.
The Group delivered profit before tax of £29.1m (2023: £26.4m), up 10% year
on year and profit after tax of £22.2m (2023: £21.1m), up 5% year on year.
Illustrated in the table below, the pawnbroking and retail segments continue
to be the core contributors to the Group's performance, supported by growing
demand for our foreign currency service and over the counter gold purchase.
Gold purchase margins are benefiting from current elevated gold prices with
volumes broadly flat.
12 months ended 12 months ended % Change
31 December 2024 31 December 2023
£'m £'m
Gross profit:
Pawnbroking 102.3 90.4 13%
Pawnbroking scrap 9.5 4.7 102%
Pawnbroking total 111.8 95.1 18%
Retail 19.3 14.4 34%
Gold purchasing 14.8 8.6 72%
Foreign exchange 7.0 6.3 11%
Other services 2.5 2.8 -11%
Total gross profit 155.4 127.2 22%
Less IFRS 9 impairment charge:
Pawnbroking IFRS 9 provision
movement (4.7) 6.0 -178%
Pawnbroking (29.3) (26.9) 9%
Personal loans 0.7 0.6 17%
Income from Operations 122.1 106.9 14%
Pawnbroking is the Group's core product offering, with income from operations
(after IFRS 9 impairment charge) growing by 5% to £77.8m (2023: £74.2m).
Pawnbroking income is strongly correlated to the timing of growth in the
underlying pledge book, the distribution of individual pledge loan values
within the portfolio and the impairment charge required to be raised in line
with International Financial Reporting Standard (IFRS) 9.
The risk adjusted yield earned on the pledge book, which now includes
pawnbroking scrap income with prior years restated, is 71% (2023 restated to
include Pawnbroking scrap profit: 78%), having been impacted by the following:
· Very strong growth in the Pledge Book in Q4: The strong growth in the pledge
book achieved in Q4 provides a sound base for future growth. However, 2024
revenues reflect limited benefit from this growth, as it occurred late in the
year and therefore, time on book was not significant.
· Higher redemptions: Customers chose to repay their pledge loans earlier than
would ordinarily be the case, during the spring months of 2024, resulting in a
c.15% increase in the normal monthly flow of redemptions during the months of
March, April and May 2024. These higher levels of redemptions reduced the
capital value of the pledge book, and correspondingly reduced the yield earned
on the book during the year.
· Increased IFRS 9 provisions: The Group implemented an increase in lending
interest rates in mid-2024, which will increase the gross yield on the pledge
book over time. This has necessitated a review of the input assumptions within
the Group's IFRS 9 impairment model, particularly in respect of the calculated
effective interest rate ("EIR"). As a result of this review, and the strong
growth seen in the pledge book in Q4 2024, the provision held under IFRS 9 has
increased by £4.7m (2023: decrease of £6.0m) to £10.5m (2023: £5.8m)
· Uncollected interest: The IFRS 9 impairment charge includes uncollected
interest on pledge loans that have reached the point of forfeit, and the IFRS
9 expected credit loss provision charge. This charge increased in line with
the growth in the underlying pledge book, to £29.3m (2023: £26.9m).
Uncollected pledge book interest on loans that have reached the point of
forfeit, is recovered through the disposal of the collateral item, either
through pawnbroking scrap or retail activities. Pawnbroking scrap profits are
now incorporated into the segmental performance of pawnbroking, with prior
periods restated to present an appropriate comparison.
Recognition and Measurement of Financial Assets: Pledge Book IFRS 9 provision
requirements
International Financial Reporting Standard, IFRS 9, is issued by the
International Accounting Standards Board (IASB) to govern the recognition,
measurement, and disclosure of financial instruments. This requires the Group
to classify, measure and recognise expected credit losses on its financial
assets, from the point of initial recognition of the pawnbroking loan made to
the customer.
For the pawnbroking pledge book, the Group is exposed to credit risk through
customers defaulting on their loans, with the key mitigation to this risk
being the requirement for all customers to provide security (the pledge item)
to H&T for safe keeping, at the point they enter into the pawnbroking
contract. This security (the pledge item) acts to minimise the credit risk as
a customer pledge becomes the property of H&T on the default of the
pawnbroking loan.
IFRS 9 requires that the Group measures loss allowances for financial assets,
specifically the pledge book, using the expected credit loss model. The
Group's expected credit loss model compares the carrying value of pledge loans
(being the principal loan value plus interest accrued at the effective
interest rate for each pawnbroking loan) to the expected recoveries through
redemption and the realisable value of the underlying collateral (the pledge).
A detailed and comprehensive review of the key estimates considered in the
Group's IFRS 9 impairment model is concluded annually. This review focuses on
the key estimates captured in the IFRS 9 expected credit loss model, which
are:
i) Redemption rates: this captures both the rate at which, and
timing of when, customers redeem their pledge loans.
ii) Forfeit profile: this is the time taken to realise the
underlying value of the collateral (the pledge) for loans which ultimately
forfeit. Pledge loans are considered to be in default when they reach the end
of their contractual period of 6 months, and from this point value can be
realised through normal redemption, or through forfeit.
iii) Expected realisation value of collateral: this is the
realisable value of the collateral (the pledge), and this security
significantly reduces the credit risk. In the event of forfeiture, these
collateral items (the pledge), can be either sold as retail items or scrapped
by H&T to settle the outstanding carrying value (principal plus accrued
interest) of the pledge loan. If sold as retail items, the realisable value is
the retail price at which these items are sold, through the Group's store
estate or on-line. If scrapped, the realisable value is the prevailing trade
price of the underlying metals, precious stones or watches. The Group
estimates that the current fair value of the security held (the pledge item)
is in excess of the current pledge book value.
The review further considers the effective interest rate ("EIR") applied in
determining the value of the expected future credit losses, also noting the
impact of any changes in the key assumptions noted above. We are satisfied
that the recognition and measurement of the pledge book fairly represents the
minimal exposure to credit risk, given the current fair value of the security
held (the pledge item) is in excess of the pledge book value.
Profit Before Tax
The Group delivered profit before tax of £29.1m (2023: £26.4m), up 10% year
on year and profit after tax of £22.2m (2023: £21.1m), up 5% year on year.
12 months ended 12 months ended % Change
31 December 2024 31 December 2023
£'m £'m
Income from Operations 122.1 106.9 14%
Operating expenses: (86.6) (77.4) 12%
other direct costs (59.2) (53.2) 11%
administrative expenses (27.4) (24.2) 13%
Investment revenues 0.1 0.1 0%
Finance costs (6.5) (3.2) 103%
Profit before taxation 29.1 26.4 10%
Operating Expenses
Operating expenses, being direct and administrative expenses, increased to
£86.6m (2023: £77.4m), up 12% year on year. Within this, employee related
costs rose by 9% and represent approximately 58% (2023: 58%) of total costs.
The Group is primarily a fixed cost business, with continued ongoing close
control of costs to achieve operating efficiencies remaining a priority of the
Group.
Ensuring that our employees are appropriately rewarded remains a priority for
the Group. Employee related costs for 2025 will continue to rise at a rate
above that of headline inflation, primarily as a result of decisions taken by
the UK government in respect of National Living Wage and Employers' National
Insurance contributions.
We continue to be able to negotiate improved leasehold occupancy terms upon
lease renewal and the Group fixed its energy costs in 2024 until December
2026, on improved terms relative to the previous fixed rate contract.
The Group employed 1,678 people (2023: 1,625) at 31 December 2024, being 1,453
FTE (2023: 1,410), with the increase in headcount supporting the growth in
store estate and in key support functions.
Taxation
The corporation taxation charge for the year was £6.8m (2023: £5.3m).
Corporation tax rates increased from 1 April 2023, from 19% to 25%. The Group
has an effective tax rate of 24% (2023: 20%). These effective tax rates are
lower than the standard rate of tax due the additional tax relief from the use
of the super-deduction allowance for investment in plant and machinery for
three years from 1 April 2021, giving rise to a net credit relating to prior
years. The timing difference between tax relief on the group's investment in
its capital programme versus the timing of the accounting recognition of this
expenditure, along with other timing differences, results in deferred
taxation. As tax relief has been accelerated, a deferred tax liability arises
for the year and this is provided at 25%, being the tax rate at which the
liability is expected to reverse.
Balance Sheet
31 December 2024 31 December 2023 % Change
£'m £'m
Pledge book capital value of loans 126.8 101.3 25%
Accrued interest 42.0 33.4 26%
IFRS 9 impairment provision (10.5) (5.8) 81%
Net carrying value of pledge book 158.3 128.9 23%
Inventories 40.6 40.7 0%
Goodwill 27.3 21.9 25%
Property, plant and equipment 15.8 15.7 1%
Intangible assets 9.5 7.6 25%
Net debt (54.4) (31.6) 72%
Other net assets/(liabilities) (5.0) (5.8) -14%
Net assets 192.1 177.4 8%
The Group's net asset value increased to £192m (2023: £177m). The balance
sheet is underpinned by the inherent value, expressed at cost, of precious
metals and watches in the form of collateral for the pledge book and in
inventory, as well as cash balances.
The Group ended the year with a net debt position of £54.4m (2023: £31.6m),
primarily funding investment in working capital through growing the pledge
book (including the acquisition of the Maxcroft pledge book), the store
estate, both new and existing stores and investment in technology and data
capabilities. Cash on hand at the end of December amounted to £15m (2023:
£11m).
Non-current assets grew to £70m (2023: £65m) with the investment of capital
expenditure, particularly in respect of the Group's store estate, both
existing and new stores, of £3.3m (2023: £2.7m) and continued strategic
investment in the Group's technology capabilities and platform of £2.8m
(2023:
£1.6m). These costs have been capitalised in line with accounting standard,
IAS 38. To date £6.9m (2023: £2.9m) of technology costs incurred in the
development of EVO have been capitalised. Further costs are expected to be
capitalised as further phases of development are undertaken over a further
three years.
Pledge Book
With sustained demand, the pledge book capital value, excluding accrued
interest and IFRS 9 provisions, grew by 26% to £127m (December 2023: £101m)
at 31 December 2024, while the carrying value of the pledge book, including
interest accrued and after IFRS 9 provisions, was £158m (December 2023:
£129m), up 22%.The provision held under IFRS 9 has increased by £4.7m (2023:
decrease £6m) to £10.5m (2023:£5.8m). This represents coverage of 6.2%
(December 2023: 4.3%). This increase is in part a result of an increase in
lending interest rates, which will increase the gross yield on the pledge book
over time. This has necessitated a review of the input assumptions within the
Group's IFRS 9 impairment model, particularly in respect of the calculated
effective interest rate ("EIR"). Primarily as a result of this review,
together with the strong growth seen in the pledge book in Q4 2024, the
provision held under IFRS 9 has increased.
The fair value of the collateral held in support of the pledge book at 31
December is estimated to be
£229m (2023: £184m).
Inventory
The value of inventory held was unchanged at £41m (2023: £41m) and is valued
at the lower of cost or net realisable value. Of this total inventory, £26m
was available for retail sale in the stores (2023:
£29m). For inventory arising from unredeemed pledge loans upon default, this
cost represents the value of the pledge loan plus overheads. The net
realisable value represents the estimated selling price less all estimated
costs of completion and costs to be incurred in marketing, selling and
distribution. Relative to these measures, the Group considers the value of
inventory to be conservatively stated.
The collateral (the pledge item) which protects the Group from credit risk in
the event of default of pledge book loans, comprises 98% (2023: 99%) gold,
jewellery items and watches. The value of the majority of these items is
correlated to the prevailing gold price and they are conservatively valued as
the Group applies conservative lending policies when providing pawnbroking
pledge loans. Lending rates do not track the gold price movement in the short
term. Considering the combination of these factors, the Group considers the
value of the collateral (the pledge item) to be conservatively stated.
Asset Carrying Value Review
The Group performs an annual review of the expected earnings of acquired
stores and considers whether the associated goodwill and other property, plant
and equipment values require an impairment as required by accounting
standards. The Group has also considered whether its right-of- use assets
(property leases) are fairly valued.
Share Capital
The Group has a total of 43,987,934 (2023: 43,987,934) shares in issue.
As at 31 December 2024, the Group operated a single share award scheme, the
Performance Share
Plan "PSP". The charge to the income statement for the year for this scheme
was £0.3m (2023: £0.2m).
Awards that can be granted under this current PSP scheme total a maximum of
4,398,793 shares (2023: 4,398,793 shares), being 10% of the issued share
capital of the Group as defined in the Articles of Association. Under the 2022
PSP scheme, which references a December 2024 performance end date, a total of
195,770 shares are expected to vest.
Cash Flow
31 December 2024 31 December 2023
£'m £'m
Operating cash inflows 46.8 39.1
Working capital (22.3) (33.4)
Taxation paid (6.8) (6.0)
Capital investment (7.3) (8.6)
Interest and finance costs paid (6.0) (2.6)
Dividend paid (7.6) (7.2)
Payment of leases (7.1) (6.9)
Acquisitions (12.5) (3.2)
Net cash utilised (22.8) (28.8)
As expected, we continued to invest available cash resources in growing the
core pawnbroking business of the Group, with £23m (2023: £29m) invested in
growing working capital, primarily the pledge book, and £7.3m (2023: £8.6m)
invested in capital expenditure, firstly in the store estate, both new stores
and existing stores, and secondly in our technology platforms.
Taxation and dividend payments were made of £6.8m (2023: £6.0m) and £7.6m
(2023: £7.2m) respectively, whilst interest paid on loan facilities was
£6.0m (2023: £3.5m), reflecting increased use of financial facilities
available to the Group along with rising interest rates.
Financing Facilities
During the year, the Group made use of an additional £26.1m of its available
funding facilities, with gross borrowings at 31 December 2024 of £69.1m
(2023: £43.0m). The Group's net debt position at 31 December 2024, amounted
to £54.4m (2023: £31.6m) as the growing business was funded through the
increasing use of the Group's available funding facilities. Cash in hand and
held within the store estate increased to £15m (2023: £11m).
During the course of the year, we further diversified and enhanced the Group's
funding arrangements with £25m of additional term financing from PGIM Private
Capital (previously Pricoa Private Capital). This additional financing brings
the total funding facilities available to H&T to £85m, with all funders
ranking Pari Passu and the financial covenants aligned.
Financial covenants are summarised in the table below and all are comfortably
met.
Financial Covenant Ratio 31 December 2024 31 December 2023
Total Net Debt to EBITDA 2.5x 1.4x 0.9x
Interest Cover Ratio 4x 7.6x 18.4x
Fixed Cover Charge Ratio 1.5x 3.5x 14.8x
Asset Cover Ratio 3x 3.7x 5.4x
Return on Equity
The Group had average net asset value over the course of the year of £183m
(2023: £168m) and reported profit after tax of £22.2m (2023: £21.1m),
representing a post-tax return on equity (RoE) using monthly averages, of
12.2% (2023: 12.6%) and a post tax return on monthly average tangible equity
(RoTE) of 15.1% (2023: 15.1%)The Group targets to achieve a sustainable
post-tax ROE % in the mid-teens, through the cycle, and is committed to
achieving this objective.
Going Concern
The Board has assessed the impact of appropriate scenarios and believes that
it has sufficient committed funding facilities available to meet the
anticipated needs of the Business. The Group has prepared the financial
statements on a going concern basis.
Share Price and EPS
The closing share price at 31 December 2024 was 355p (2023: 432p).
Basic earnings per share was 51.1p (2023: 48.7p), up 5% year-on-year after the
impact of the increase in the rate of corporation tax from 19% to 25% from 1st
April 2023. Diluted earnings per share was 50.9p (2023: 48.5p). Net asset
value per share was 441.9p (2023: 409.0p), up 8% on prior year.
Change of accounting reference date ("Year End")
The Board has made the decision to change the Group's financial year end from
31 December to 30 September, with effect from September 2025, as previously
communicated. This will result in financial performance being more evenly
spread across the two half year reporting periods. Comparative unaudited
figures for the twelve months to September 2024 are summarised below:
Revenue and Income Statement
30 September 2024 31 December 2024
Unaudited Audited
£'m £'m
Pawnbroking 97.7 102.3
Pawnbroking scrap 32.2 35.3
Pawnbroking total 129.9 137.6
Retail 58.6 61.8
Gold purchasing 44.1 54.8
Foreign exchange 7.8 8.0
Other services 3.4 3.2
Revenue 243.8 265.4
Pawnbroking 97.7 102.3
Pawnbroking scrap 7.4 9.5
Pawnbroking total 105.1 111.8
Retail 18.7 19.3
Gold purchasing 10.5 14.8
Foreign exchange 6.8 7.0
Other services 2.4 2.5
Gross profit 143.5 155.4
Less IFRS 9 impairment charge:
Pawnbroking (26.3) (34.0)
Personal loans 0.6 0.7
Income from operations 117.8 122.1
Less Operating expenses:
Other direct costs (57.9) (59.2)
Administrative costs (26.2) (27.4)
Operating Profit 33.7 35.5
Finance costs (6.0) (6.4)
Profit before tax 27.7 29.1
Tax charge on profit (6.9) (6.9)
Profit after tax 20.8 22.2
Key Performance Indicators 30 September 2024 31 December 2024
Unaudited Audited
Number of stores 282 285
Capital value pledge book £111m £127m
Carrying value pledge book £138m £158m
Monthly average capital value pledge
book £104m £109m
Risk adjusted margin on capital value 76% 71%
Monthly average carrying value pledge
book £129m £135m
Risk adjusted margin on carrying value 61% 58%
Diluted EPS (p) 47.6p 50.9p
GROUP BALANCE SHEET
30 September 2024 31 December 2024
Unaudited Audited
£'000 £'000
Non-current assets
Goodwill 27.2 27.3
Other intangible assets 8.9 9.5
Property, plant and equipment 15.8 15.8
Right-of-use assets 17.7 17.9
69.6 70.5
Current assets
Inventories 51.9 40.6
Trade and other receivables 146.0 164.9
Cash and cash equivalents 21.1 14.6
219.0 220.1
Total assets 288.6 290.6
Current liabilities
Trade and other payables (9.4) (7.7)
Lease liability (5.4) (5.3)
(14.8) (13.0)
Net current assets 204.2 207.1
Non-current liabilities
Borrowings (74.5) (69.1)
Lease liabilities (14.3) (14.5)
Deferred tax liabilities (0.4) (1.5)
Long term provisions (0.4) (0.4)
(89.6) (85.5)
Total liabilities (104.4) (98.5)
Net assets 184.2 192.1
EQUITY
Share capital 2.2 2.2
Share premium account 50.2 49.7
Retained earnings 131.8 140.2
Total equity attributable to equity holders 184.2 192.1
Diane Giddy
Chief Financial Officer
CONSOLIDATED GROUP STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
Note £'000 £'000
Continuing operations:
Revenue 2 265,373 220,775
Cost of sales (109,983) (93,539)
Gross profit 2 155,390 127,236
Impairment charges 2 (33,332) (20,298)
Income from operations 2 122,058 106,938
Other direct expenses (59,171) (53,223)
Administrative expenses (27,384) (24,204)
Operating profit 35,503 29,511
Investment revenues 82 82
Finance costs 3 (6,528) (3,233)
Profit before taxation 29,057 26,360
Tax charge on profit 4 (6,829) (5,277)
Profit for the financial year and total comprehensive income
22,228 21,083
Earnings per share from continuing operations Pence Pence
Basic 5 51.17 48.74
Diluted 5 50.94 48.49
All profit for the period is attributable to equity shareholders.
CONSOLIDATED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
Share premium account Employee Benefit Trust shares reserve
Share capital Retained earnings
Total
£'000 £'000 £'000 £'000 £'000
At 1 January 2023 2,193 49,423 (34) 112,537 164,119
Profit for the year - - - 21,083 21,083
Total comprehensive income - - - 21,083 21,083
Issue of share capital 6 300 - (306) -
Share option movement - - 3 (679) (676)
Dividends - - - (7,156) (7,156)
At 31 December 2023 2,199 49,723 (31) 125,479 177,370
At 1 January 2024 2,199 49,723 (31) 125,479 177,370
Profit for the year - - - 22,228 22,228
Total comprehensive income - - - 22,228 22,228
Settlement of share-based payments - - 6 - 6
Deferred tax on share-based payments - - - (39) (39)
Share-based payment charge - - - 283 283
Employee Benefit Trust - - - (107) (107)
Dividends - - - (7,609) (7,609)
At 31 December 2024 2,199 49,723 (25) 140,235 192,132
CONSOLIDATED
GROUP BALANCE SHEET
AS AT 31 DECEMBER 2024
31 December 31 December
2024 2023
Note £'000 £'000
Non-current assets
Goodwill 27,310 21,851
Other intangible assets 9,504 7,618
Property, plant and equipment 15,780 15,686
Right-of-use assets 17,901 19,581
70,495 64,736
Current assets
Inventories 40,582 40,711
Trade and other receivables 164,792 135,271
Current tax recoverable 137 -
Cash and cash equivalents 14,654 11,387
220,165 187,369
Total assets 290,660 252,105
Current liabilities
Trade and other payables (7,700) (7,955)
Lease liability (5,338) (3,965)
Current tax liability - (858)
(13,038) (12,778)
Net current assets 207,127 174,591
Non-current liabilities
Borrowings (69,100) (43,000)
Lease liabilities (14,445) (18,002)
Deferred tax liabilities (1,520) (508)
Long term provisions (425) (447)
(85,490) (61,957)
Total liabilities (98,528) (74,735)
Net assets 192,132 177,370
EQUITY
Share capital 8 2,199 2,199
Share premium account 49,723 49,723
Employee Benefit Trust share reserve (25) (31)
Retained earnings 140,235 125,479
Total equity attributable to equity holders
192,132 177,370
The financial statements of H&T Plc, registered number 05188117, were
approved by the Board of Directors on 17 March 2025 and authorised for issue
on 18 March 2025.
They were signed on its behalf by: CD Gillespie
Chief Executive Officer
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
As restated*
Note £'000 £'000
Net cash from operating activities 6 11,857 (3,509)
Investing activities
Interest received 82 82
Purchases of intangible assets (2,840) (1,554)
Purchases of property, plant and equipment (4,444) (7,045)
Acquisition of trade and assets of businesses (12,491) (3,155)
Net cash used in investing activities (19,693) (11,672)
Financing activities
Dividends paid (7,609) (7,156)
Payment of lease liabilities (6,219) (6,046)
Increase in borrowings 26,100 28,000
Debt restructuring costs (1,062) (490)
Employee Benefit Trust (107) 31
Net cash from financing activities 11,103 14,339
Net increase/(decrease) in cash and cash equivalents 3,267 (842)
Cash and cash equivalents at beginning of the period 11,387 12,229
Cash and cash equivalents at end of the period 14,654 11,387
* The restatement of the 2023 figures is explained in note 6.
Notes to the Preliminary Announcement For the year ended 31 December 2024
1. Finance information and significant accounting policies
The financial information has been abridged from the audited financial
statements for the year ended 31 December 2024.
Whilst the financial information included in this preliminary announcement has
been prepared in accordance with the International Financial Reporting
Standards ('IFRS') accounting policies adopted by the Group and set out in the
annual report and accounts for the year ended 31 December 2024, this
announcement does not itself contain sufficient information to comply with
IFRS. The Group will be publishing full financial statements that comply with
IFRS in April 2025.
The financial information set out above does not constitute the statutory
accounts for the purposes of section 434 of the Companies Act 2006. The
financial information for the year ended 31 December 2023 is based on the
statutory accounts filed with the Registrar of Companies and those for 2024
will be filed with the Registrar in due course. The auditors have reported on
those accounts: their report was unqualified, did not draw attention to any
matters by way of emphasis and did not contain a statement under section 498
(2) or (3) of the Companies Act 2006.
Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services and
interest income provided in the normal course of business, net of discounts,
VAT, and other sales-related taxes.
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and be reliably measured.
The Group recognises revenue from the following major sources:
● Pawnbroking, or Pawn Service Charge (PSC);
● Retail jewellery sales;
● Pawnbroking scrap and gold purchasing;
● Foreign exchange income; and
● Income from other services
Pawnbroking, or Pawn Service Charge (PSC)
PSC comprises contractual interest earned on pledge loans, plus auction profit
or loss, less any auction commissions payable and less surplus payable to the
customer. Revenue is recognised over time in relation to the interest accrued
by reference to the principal outstanding and the effective interest rate
applicable as governed by IFRS 9.
Retail jewellery sales
Jewellery inventory is sourced from unredeemed pawn loans, newly purchased
items and inventory refurbished from the Group's gold purchasing operation.
For sales of goods to retail customers, revenue is recognised when control of
the goods has transferred, being at the point the customer purchases the goods
at the store. Payment of the transaction price is due immediately at the point
the customer purchases the goods. Under the Group's standard contract terms,
customers have a right of return within 30 days. At the point of sale, a
refund liability and a corresponding adjustment to revenue is recognised for
those products expected to be returned. At the same time, the Group has a
right to recover the product when customers exercise their right of return so
consequently recognises a right to returned goods asset, and a corresponding
adjustment to cost of sales.
The Group uses its accumulated historical experience to estimate the number of
returns. It is considered highly probable that a significant reversal in the
cumulative revenue recognised will not occur given the consistent and
immaterial level of returns over previous years; as a proportion of sales,
2024 returns were 7.5% (2023: 7.3%)
Pawnbroking scrap and gold purchasing
Scrap revenue comprises proceeds from gold scrap sales, jewellery items and
watches. Revenue is recognised when control of the goods has transferred,
being at the point the smelter purchases the relevant metals, or the items are
sold or auctioned.
Foreign exchange
The foreign exchange currency service where the Group earns a margin when
selling or buying foreign currencies.
Other services
Other services comprise revenues from third party cheque cashing, money
transfer income, watch repairs, income from the Group's former unsecured
lending activities (ceased in April 2022) and other income. Commission
receivable on cheque cashing and other income is recognised at the time of the
transaction as this is when control of the goods has transferred.. Repair
income is recognised when the repair has been completed. The Group recognises
interest income arising on secured and unsecured lending within trading
revenue rather than investment revenue on the basis that this represents most
accurately the business activities of the Group.
Gross profit
Gross profit is stated after charging inventory, pledge and other services'
provisions and direct costs of
inventory items sold or scrapped in the year, before loan and pawnbroking
impairments.
Impairment charges
Impairment charges comprise a charge for interest earned on pawnbroking loans
that ultimately forfeit, net of the movement in the IFRS 9 provision.
Operating expenses
Operating expenses comprise all expenses associated with the operation of the
various stores and collection centre of the Group, including premises
expenses, such as rent, rates, utilities and insurance, all staff costs and
staff related costs for the relevant employees, and the administrative
expenses and overheads of the Group.
Inventory stock provisions
Where necessary provision is made for obsolete, slow moving, damaged goods or
inventory shrinkage. The provision for obsolete, slow moving, and damaged
inventory represents the difference between the cost of the inventory and its
net realisable value. The inventory shrinkage provision is based on an
estimate of the inventory missing at the reporting date using historical
shrinkage experience.
2. Operating segments
For reporting purposes, the Group is currently organised into five segments -
pawnbroking (being pawnbroking and pawnbroking scrap), retail, gold
purchasing, foreign exchange and other services. Operating segments are
reported in a manner consistent with the internal reporting provided to the
Board of Directors, who are the chief operating decision-makers. The Board of
Directors are responsible for allocating resources and assessing performance
of the operating segments and has been identified as the steering committee
that makes strategic decisions.
The principal activities by segment are as follows:
Pawnbroking:
Pawnbroking is a loan secured against a collateral (the pledge). In the case
of the Group, over 98% (2023: 99%) of the collateral against which amounts are
lent comprises precious metals (predominantly gold), diamonds and watches. The
pawnbroking contract is a six-month credit agreement bearing a monthly
interest rate of between 2% and 10.49%. The contract is governed by the terms
of the Consumer Credit Act 2008. If the customer does not redeem the goods by
repaying the secured loan before the end of the contract, the Group is
required to dispose of the goods either through public auctions if the value
of the pledge is over £75 (disposal proceeds being reported in this segment)
or, if the value of the pledge is £75 or under, through public auctions or
the retail or pawnbroking scrap activities of the Group.
Pawnbroking scrap comprises all other proceeds from gold scrap sales of the
Group's inventory assets other than those reported within gold purchasing. The
items are either damaged beyond repair, are slow moving or surplus to the
Group's requirements, and are smelted and sold at the current gold spot price
less a small commission.
Retail:
The Group's retail proposition is primarily gold, jewellery and watches, and
the majority of the retail sales are forfeited items from the pawnbroking
pledge book or refurbished items from the Group's gold purchasing operations.
The retail offering is complemented with an amount of new or second-hand
jewellery purchased from third parties by the Group.
Gold purchasing:
Jewellery is bought direct from customers through all of the Group's stores.
The transaction is simple with the store agreeing a price with the customer
and purchasing the goods for cash on the spot. Gold purchasing revenues
comprise proceeds from scrap sales on goods sourced from the Group's
purchasing operations.
Foreign exchange:
The foreign exchange currency service where the Group earns a margin when
selling or buying foreign currencies.
Other services:
This segment comprises:
● Third party cheque encashment which is the provision of cash in
exchange for a cheque payable to our customer for a commission fee based on
the face value of the cheque.
● Money Transfer commission earned on the Group's money transfer
service.
● Watch repair services provided by Group company, Swiss Time
Services Limited
● Personal loans income from the Group's former unsecured lending
activities which ceased in April 2022. Personal loan revenues are stated at
amortised cost after taking into consideration an assessment on a
forward-looking basis of expected credit losses.
Cheque cashing is subject to bad debt risk which is reflected in the
commissions and fees applied.
Further details on each activity are included in the Chief Executive's review.
Segment information about these businesses is presented below:
2024 2023
£'000 £'000
Revenue
Pawnbroking 102,314 90,412
Pawnbroking scrap 35,268 27,908
Pawnbroking total 137,582 118,320
Retail 61,782 48,584
Gold purchasing 54,824 42,811
Foreign exchange 7,983 7,136
Other services 3,202 3,924
External and total revenue 265,373 220,775
Gross profit
Pawnbroking 102,314 90,412
Pawnbroking scrap 9,463 4,695
Pawnbroking total 111,777 95,107
Retail 19,320 14,417
Gold purchasing 14,781 8,577
Foreign exchange 7,040 6,276
Other services 2,472 2,859
Gross profit 155,390 127,236
Impairment charges (33,332) (20,298)
Income from operations
Pawnbroking 68,335 69,482
Pawnbroking scrap 9,463 4,695
74,177
Pawnbroking total
77,798
Retail* 14,417
19,320
Gold purchasing 14,781 8,577
Foreign exchange 7,040 6,276
Other services 3,119 3,491
Income from operations 122,058 106,938
Other direct expenses excluding impairment**
(59,171) (53,223)
Administrative expenses (27,384) (24,204)
Operating profit 35,503 29,511
Interest receivable 82 82
Financing costs (6,528) (3,233)
Profit before taxation 29,057 26,360
Tax charge on profit (6,829) (5,277)
Profit for the period and total 22,228 21,083
comprehensive income
* includes retail of forfeited pledge items
** The Group cannot meaningfully allocate this information by segment due to
all the segments operating from the same stores and the assets in use being
common to all segments
Geographical segments
The Group's revenue from external customers by geographical location is
detailed below:
2024 2023
£'000 £'000
United Kingdom 263,218 217,388
Other 2,155 3,387
Total revenue 265,373 220,775
The Group's non-current assets are located entirely in the United Kingdom.
Accordingly, no further geographical segment analysis is presented.
3. Financing costs
2024 2023
£'000 £'000
Interest on bank loans 5,219 2,176
Other interest 3 4
Interest expense on the lease 907 945
liability
Amortisation of debt issue cost 399 108
Total interest expense 6,528 3,233
4. Tax charge on profit
The Group recognised an effective tax rate of 23.5% (2023: 20.0%). This is
lower than the standard blended UK statutory rate for the year of 25%
primarily due to adjustments relating to previous periods.
a. Tax on profit on ordinary activities
2024 2023
£'000 £'000
Current tax
UK corporation tax charge at 6,530 6,195
25% (2023: 23.5%)
Adjustments in respect of prior (674) (338)
periods
Total current tax charge 5,856 5,857
Deferred tax
Origination and reversal of 809 (300)
temporary differences
Adjustments in respect of prior 164 (202)
periods
Effect of changes in tax rates - (78)
Total deferred tax charge 973 (580)
Tax on profit on ordinary 6,829 5,277
activities
b. Factors affecting the tax charge for the year
2024 2023
£'000 £'000
Profit before taxation 29,057 26,360
Tax on profit on ordinary activities at standard CT rate of 25% (2023: 23.5%)
7,264 6,195
Effects of:
Expenses not deductible for tax purposes
1 6
Fixed asset differences 122 (43)
Other differences (51) (277)
Adjustments to tax charge in (674) (736)
respect of previous periods
Adjustments to tax charge in
respect of previous periods - 167 202
deferred tax
Remeasurement of deferred tax - (70)
for changes in tax rates
Total current tax charge 6,829 5,277
In addition to the amount charged to the income statement and in accordance
with IAS 12, the excess of current and deferred tax over and above the
relative related cumulative remuneration expense under IFRS 2 has been
recognised directly in equity. The amount taken to equity in the current
period was a debit of £39,000 (2023: debit of £398,000).
5. Earnings per share
Basic earnings per share is calculated by dividing the profit for the year
attributable to equity shareholders by the weighted average number of ordinary
shares in issue during the year.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. With respect to the Group these represent share options and
conditional shares granted to employees where the exercise price is less than
the average market price of the Company's ordinary shares during the year.
Reconciliations of the earnings per ordinary share and weighted average number
of shares used in the calculations are set out below:
Year ended 31 December 2024 Year ended 31 December 2023
Weighted average number of Weighted average number of
Earnings shares Per-share amount pence Earnings shares Per-share amount
pence
£'000 £'000
Earnings per share: basic 22,228 43,440,536 51.17 21,083 43,253,136 48.7
Effect of dilutive securities
Options and conditional - 195,770 (0.23) - 223,629 (0.2)
shares
Earnings per share: diluted 22,228 43,636,306 50.94 21,083 43,476,765 48.5
6. Notes to the Cash Flow Statement
2024 2023
As restated*
£'000 £'000
Profit for the year 22,228 21,083
Adjustments for:
Investment revenues (82) (82)
Financing costs 6,528 3,233
Decrease in provisions (22) (1,699)
Income tax expense 6,829 5,277
Depreciation of property, plant and 4,277 4,171
equipment
Depreciation of right-of-use assets 5,755 5,769
Amortisation of intangible assets 954 915
Right-of-use asset impairment (38) (57)
Share based payment expense 283 215
Loss on disposal of property, plant and 74 233
equipment
Loss on disposal of right-of-use assets - 1
Operating cash inflows before movements in working capital
46,786 39,059
Decrease/(Increase) in inventories 895 (5,079)
Decrease/(Increase) in receivables (22,594) (29,347)
(Decrease)/Increase in payables (577) 930
Cash generated from operations 24,510 5,563
Tax paid (6,841) (5,957)
Interest paid on loan facility (4,905) (2,169)
Interest paid on lease liability (907) (946)
Net cash from operating activities 11,857 (3,509)
Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and other short-term
highly liquid investments with a maturity of three months or less.
*The Group has reclassified payments made in respect of lease liabilities and
debt restructuring costs for 2023. There has been no impact on the Group
Statement of Comprehensive Income.
7. Earnings before interest, tax, depreciation and amortisation
("EBITDA") EBITDA
EBITDA is a non-IFRS measure defined as earnings before interest, taxation,
depreciation, and amortisation. It is calculated by adding back depreciation
and amortisation to the operating profit as follows:
2024 2023
£'000 £'000
Operating profit
35,503 29,511
(i) Depreciation of the right-of-use assets
5,755 5,769
(ii) Depreciation and amortisation-other
5,231 3,418
(iii) Impairment of the right-of-use assets
(38) (57)
EBITDA 46,451 38,641
The Board considers EBITDA to be a key performance measure as the Group's
borrowing facility includes a
number of loan covenants based on EBITDA.
8. Share Capital
2024 2023
Issued, authorised and fully paid:
Ordinary shares of £0.05 each £'000 2,199 2,199
Number of shares 43,987,934 43,987,934
The Group has one class of ordinary shares which carry no right to fixed
income.
No share capital has been issued in 2024. During 2023, the Group issued share
capital amounting to £6,873 with the creation of £300,000 associated share
premium. The shares were issued to satisfy share option awards that vested
during the year and were at £nil consideration.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR SFUEFWEISELDRecent news on H & T
See all newsREG - H&T Group PLC - Performance Share Plan ("PSP") 2025
AnnouncementREG - H&T Group PLC - Annual Report & Notice of AGM
AnnouncementREG - H&T Group PLC - Holding(s) in Company
AnnouncementREG - H&T Group PLC - Holding(s) in Company
AnnouncementREG - H&T Group PLC - Preliminary Results
Announcement