TIDMHAT
RNS Number : 8278M
H&T Group PLC
23 August 2011
H&T Group plc
("H&T" or "the Group" or "the Company")
UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2011
H&T ANNOUNCES STRONG RESULTS
H&T Group plc, which trades under the H&T Pawnbrokers
brand, today announces its interim results, for the six months
ended 30 June, 2011.
John Nichols, Chief Executive, commented: "We are delighted to
report another excellent set of results, with profit before tax of
GBP10.3m for the first six months of 2011. Trading has been
especially strong in the Group's core pawnbroking operations with
year on year increases in the key performance indicators of both
lending and redemption. As a result, the gross pledge book has
risen to GBP41.2m as at 30 June 2011 and the Group has delivered a
14% increase in its key revenue stream, the Pawn Service
Charge.
"Performance of the stores added in recent years continues to be
excellent and supports the Board's view of the growth potential
they offer. We have opened 15 new stores year to date, including
the achievement of a significant milestone for the Group with the
recent opening of our 150(th) store. In addition the Group
currently has 45 Gold Bar retail mall units.
"The outlook remains positive and on the basis of the current
gold price we are pleased to announce our expectation for full year
results to be above the top end of current market forecasts. The
Board has approved an interim dividend of 3.75 pence, which itself
represents compound growth of 23% per annum since flotation."
FINANCIAL HIGHLIGHTS
-- Profit before tax of GBP10.3m (H1 2010: GBP9.6m, excluding
working capital gain of GBP4.9m)
-- Net debt of GBP31.3m (30 Jun 2010: GBP30.4m). Interest
charges of GBP0.8m (H1 10: GBP1.7m)
-- Pledge book increased by 10.5% to GBP41.2m (30 Jun 2010:
GBP37.3m)
-- Pawn Service Charge increased 14.3% to GBP13.2m (H1 10:
GBP11.5m)
-- Basic EPS of 21.21p (H1 10: 19.52p, excluding working capital
gain)
-- Increase in interim dividend to 3.75p (2010 interim: 2.50p +
1.00p special)
OPERATIONAL HIGHLIGHTS
-- 11 new stores opened taking the total store estate to 146 as
at 30 June 2010 (H1 2010: 128 stores); 4 additional stores opened
post 30 June and provisional lease terms are agreed on a further
6stores
-- Converted 6 retail mall units into new style 'Gold shops' or
'H&T Lite' stores
-- Launched an on-line pay day loans product and deployed
H&T's new underwriting model in store thus accessing a wider
customer base
-- Enhanced central pricing and central distribution
capabilities
Enquiries:
H&T Group plc Tel: 0870 9022 600
John Nichols, Chief Executive
Alex Maby, Finance Director
Hawkpoint Partners Ltd (Nominated adviser) Tel: 020 7665 4500
Lawrence Guthrie / Sunil Duggal
Numis Securities (Broker) Tel: 020 7260 1000
Mark Lander
Pelham Bell Pottinger (Public Relations) Mob: 07950 481 795
Damian Beeley Tel: 020 7861 3139
Report of the Chief Executive Officer and Finance Director
We are pleased to report another excellent trading performance
for the period to 30 June 2011. The Group has retained its position
as a leading UK pawnbroker through further new store expansion,
improved brand recognition and a continued focus on delivering
excellent customer service. The pawnbroking industry itself also
continues to benefit from the rising gold price and a wider
recognition in the UK of gold as a source of value, particularly in
these times of economic uncertainty.
Taking advantage of these conditions and the strong cash
generation from the Group's gold purchasing activities, the Group
has achieved continued expansion in the store estate. Eleven stores
were opened during H1 11, with a further four year to date,
including the opening of the Group's 150(th) store on 6 August
2011. Of the combined fifteen store openings, fourteen were
greenfield sites and one was an acquisition for a total
consideration of GBP0.18m.
Financial Performance
The Group delivered GBP10.0m of profit before tax pre swap fair
value movement in H1 11. This compares to GBP15.2m in H1 10 when
trading and results during this period benefited from 'one-off'
factors, as disclosed in the Group's 2010 annual report and interim
statement. The primary factor enhancing the prior year result was
the inclusion of GBP4.9m of gross profit delivered via working
capital gains in H1 10. Of this gain, GBP2.8m was delivered via
shortening the time to process gold and was recorded in gold
purchasing profits, and a further GBP2.1m was recorded in
pawnbroking scrap as the Group reduced its aged pledge
balances.
The underlying financial performance in H1 11 has exceeded both
the Board and market expectations set at the beginning of the year.
Gross profit derived from the Group's pawnbroking operations (Pawn
Service Charge, Retail and Pawnbroking Scrap) rose to GBP20.1m (H1
10: GBP19.8m excluding GBP2.1m realised via delayed auctions) and
now accounts for 66% of gross profits. The key component, the Pawn
Service Charge grew 14% year on year to GBP13.2m (H1 10:
GBP11.5m).
The Group's disposition activities continue to benefit from both
the higher absolute gold price and the rising price environment.
Gold purchasing profits contributed GBP7.5m in the period (H1 10:
GBP12.6 including GBP2.9m working capital gain).
The Group's financial position remains strong with net debt of
GBP31.3m as at 30 June 2011 (30 Jun 10: GBP30.4m). Interest costs
are also substantially reduced year on year, from GBP1.7m in H1 10
to GBP0.8m in H1 11, benefiting from both a lower average debt
level and a lower margin. Cashflow in the period was impacted by an
increase in inventory, as shown on the Group balance sheet, due to
stock build for both new stores and an improved central
distribution capability. The Group has adequate liquidity to fund
both the capital expenditure and working capital requirements of
its new store opening programme, as it currently has available a
GBP50m revolving facility.
Pre-working capital gains made in H1 10, basic earnings per
share increased by 8.7% to 21.21p (H1 10: 29.37p actual, 19.52p
excluding GBP4.9m working capital gain).
Dividend
The directors have approved an interim dividend of 3.75 pence
(2010 interim: 3.50 pence, including 1.00 pence special dividend).
This will be payable on 14 October 2011 to all shareholders on the
register at the close of business on 16 September 2011. During the
last twelve months, the Group's dividend has been covered 4.1x by
earnings.
Review of Operations
Pawn Service Charge and Pawnbroking Scrap:
- The Pawn Service Charge grew 14% year on year to GBP13.2m (H1
10: GBP11.5m), driven by both a period of record lending and an
improved redemption ratio year on year.
- Continued strong demand for our services and an increased
average loan, supported by the current gold price, has resulted in
the Group's pledge book increasing by 10% to GBP41.2m (30 Jun 10:
GBP37.3m).
- Despite the continued competitive environment, whether from
other pawnbrokers or the continued availability of gold purchasing
as a choice for the consumer, like-for-like lending grew by 8%.
- The performance of the Group's store openings over the last 12
months continues to be ahead of the original forecasts approved by
the Board.
- Pawnbroking scrap profits realised were GBP2.6m (H1 10:
GBP6.4m, including GBP2.1m profits realised from delayed 2009
auctions).
Retail:
- In a challenging retail environment, and given the underlying
price and therefore affordability of gold, the Board is pleased to
report a 7% increase in retail gross profits from GBP4.0m in H1 10
to GBP4.3m in H1 11.
- Like-for-like sales were down 12% year on year, but a gross
margin improvement from 46% to 50% has recovered much of this
shortfall.
- As in 2010, the retail sales trend leading into H2 is
positive, and the Group believe that with improved pricing,
distribution and management information that this trend can be
maintained into the important Christmas trading period.
- Retail remains a key disposition route for unredeemed stock,
while the option to scrap surplus stock remains a viable
alternative. H&T's stock balance, of which the vast majority is
second hand gold, is held at cost to the Group, which in turn is
substantially less than the current spot price of gold.
Gold Purchasing:
- H&T became one of the first companies with a nationwide
high street presence to take advantage of the significant spike in
gold purchasing volumes in late 2009 / early 2010. During this
period, the Group demonstrated speed and flexibility in rolling out
its innovative Gold Bar retail mall units, and was able to benefit
both financially and operationally, from this first mover
advantage.
- Gold purchasing trends since mid-2010 have remained steady
with customer numbers being broadly consistent over the last 12
months. The Group continues to see gold purchasing as a steady
source of cashflow and profitability for the Group, albeit at
levels lower than the 'exceptional' period in H1 10.
- Gross profits from the Group's gold purchasing operations
contributed GBP7.5m in H1 11, (H1 10: GBP9.7m excluding GBP2.9m of
working capital gain).
- The Group's Gold Bar retail mall unit operation continues to
be a success, with regard both profitability and as a means of
testing the local market for further expansion. As at 30 June 2011,
the Group had 45 Gold Bar units.
- This business segment continues to benefit from the higher
absolute price of sterling gold and the rising price environment.
On average the gold price per troy ounce was GBP894 during H1 11
(H1 10: GBP757) and has risen by an average of 1.8% per month from
January 2011 to June 2011.
Financial services:
- In H1 2011 the Group's financial services activities
contributed GBP2.8m (H1 10: GBP2.6m) or 9.2% of Group gross profit
(H1 10: 7.0%). The increase was driven evenly across the Group's
three key products: Third Party Cheque Cashing, Pay Day Loans and
the longer term, KwikLoan product.
- Gross commission earned from third party cheque cashing was
broadly stable year on year, reversing the years of decline in this
product. The Group is also pleased to report on the major decision
taken by the Payments Council recently in having decided to
withdraw its target end date to close the centralised cheque
clearing system in the UK.
- Revenues generated by the Group's pay day advance product have
been impacted by the gradual withdrawal of the cheque guarantee
card, but net revenues have increased year on year due to
improvements in debt recovery.
- Further underwriting improvements will allow the Group to
widen its distribution of the pay day advance product, and the
Group has recently launched an on-line pay day loans product,
charging on average, half the interest cost of its competitors in
this market.
Trading outlook
The outlook for the Group continues to be positive. For the
current financial year, the Board believes that the overall trading
performance will result in full year profits being above the top
end of current market expectations. Looking further forward, the
Group still holds excellent prospects for organic growth in
pawnbroking as the store estate is still relatively immature. The
average size of a pledge book for the Group's pre-2005 stores is
over 3.5x greater than the average of the post 2005 greenfield
stores, demonstrating the considerable growth potential existing in
these newer stores as their pledge books continue to grow to a size
more consistent with the estate average.
Depending on market conditions, future growth is also likely to
be driven via expansion of the Group's geographical footprint,
either via development of greenfield sites or acquisitions. The
Board currently expect to open a total of 25 stores in the current
financial year.
Interim Condensed Financial Statements
Unaudited statement of comprehensive income
For the 6 months ended 30 June 2011
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2011 2010 2010
Note Total Total Total
Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000
Revenue 2 55,604 70,991 126,397
Cost of sales 2 (25,290) (33,901) (59,637)
______ ______ ______
Gross profit 30,314 37, 090 66,760
Other direct expenses (14,470) (14,814) (29,790)
Administrative expenses (4,965) (5,370) (8,329)
______ ______ ______
Operating profit 3 10,879 16,906 28,641
Investment revenues 1 2 1
Finance costs 5 (832) (1,664) (2,606)
Movement in fair value of
interest rate swap 237 (763) (533)
_______ ______ ______
Profit before taxation 10,285 14,481 25,503
Tax on profit 6 (2,777) (4,073) (8,316)
______ ______ ______
Total comprehensive income
for the period 7,508 10,408 17,187
______ ______ ______
Pence Pence Pence
Earnings per ordinary share
- basic 7 21.21 29.37 48.77
Earnings per ordinary share
- diluted 7 20.71 29.12 47.52
All results derive from continuing operations.
Unaudited condensed consolidated statement of changes in
equity
For the 6 months ended 30 June 2011
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
Note 2011 2010 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Opening total equity 61,681 47,055 47,055
Total comprehensive
income for the period 7,508 10,408 17,187
Issue of share capital 212 130 486
Share option credit taken
directly to equity 125 100 149
Deferred Tax on share
options taken directly
to equity 213 31
Dividends paid 9 (2,136) (1,985) (3,227)
Employee Benefit Trust
shares (12) - -
Closing total equity 67,591 55,708 61,681
Unaudited condensed consolidated balance sheet
At 30 June 2011
At 30 June At 30 June At 31 December
2011 2010 2010
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 16,825 16,806 16,825
Other intangible assets 873 915 978
Property, plant and equipment 11,906 10,653 10,751
Deferred tax assets 550 1,238 281
30,154 29,612 28,835
Current assets
Inventories 28,118 21,211 24,100
Trade and other receivables 52,812 50,491 50,159
Cash and cash equivalents 2,664 2,631 4,029
83,594 74,333 78,288
Total assets 113,748 103,945 107,123
Current liabilities
Trade and other payables (7,592) (8,836) (8,623)
Current tax liabilities (3,283) (4,927) (4,361)
Borrowings - - -
Derivative financial instruments (735) (1,201) (972)
(11,610) (14,964) (13,956)
Net current assets 71,984 59,369 64,332
Non-current liabilities
Borrowings 4 (34,000) (33,000) (31,000)
Deferred tax liabilities - - -
Provisions (547) (273) (486)
(34,547) (33,273) (31,486)
Total liabilities (46,157) (48,237) (45,442)
Net assets 67,591 55,708 61,681
EQUITY
Share capital 8 1,799 1,773 1,782
Share premium account 24,751 24,209 24,556
Employee Benefit Trust share
reserve (25) (13) (13)
Retained earnings 41,066 29,739 35,356
Total equity attributable to
equity holders of the parent 67,591 55,708 61,681
Unaudited condensed consolidated cash flow statement
For the 6 months ended 30 June 2011
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
Note 2011 2010 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit for the period 7,508 10,408 17,187
Adjustments for:
Investment revenues (1) (2) (1)
Finance costs 832 1,664 2,606
Movement in fair value of interest
rate swap (237) 763 533
Movement in provisions 61 105 318
Income tax expense 2,777 4,073 8,316
Depreciation of property, plant
and equipment 1,154 1,148 2,350
Amortisation of intangible assets 105 132 244
Share based payment expense 125 144 149
Loss on disposal of fixed assets 66 96 207
Operating cash inflows before
movements in working capital 12,390 18,531 31,909
(Increase)/decrease in inventories (4,018) 1,818 (1,035)
Increase in receivables (2,653) (1,859) (1,411)
(Decrease)/increase in payables (1,674) 1,551 1,838
Cash generated from operations 4,045 20,041 31,301
Income taxes paid (3,913) (3,076) (6,852)
Interest paid (861) (1,088) (2,033)
Net cash used in/(from) operating
activities (729) 15,877 22,416
Investing activities
Interest received 1 2 1
Purchases of property, plant and equipment (1,701) (2,114) (3,970)
Purchase of intangible assets - - (115)
Acquisition of trade and assets of
business - - (283)
Net cash used in investing activities (1,700) (2,112) (4,367)
Financing activities
Dividends paid 9 (2,136) (1,985) (3,227)
Proceeds on issue of shares 212 130 486
Net increase / (decrease) in borrowings 3,000 (11,500) (13,500)
Loan to the Employee Benefit Trust
for acquisition of own shares (12) - -
Net cash from financing activities 1,064 (13,355) (16,241)
Net increase / (decrease) in cash and
cash equivalents (1,365) 410 1,808
Cash and cash equivalents at beginning
of period 4,029 2,221 2,221
Cash and cash equivalents at end of
period 2,664 2,631 4,029
Unaudited notes to the condensed interim financial
statements
For the 6 months ended 30 June 2011
Note 1 Basis of preparation
The interim financial statements of the Group for the six months
ended 30 June 2011, which are unaudited, have 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 2010.
The Group does not anticipate any change in these accounting
policies for the year ended 31 December 2011. As permitted, this
interim report has been prepared in accordance with the AIM rules
and not in accordance with IAS 34 "Interim financial reporting".
While the financial figures included in this preliminary interim
earnings announcement have been computed in accordance with IFRSs
applicable to interim periods, this announcement does not contain
sufficient information to constitute an interim financial report as
that term is defined in IFRSs.
The financial information contained in the interim report also
does not constitute statutory accounts for the purposes of section
434 of the Companies Act 2006. The financial information for the
year ended 31 December 2010 is based on the statutory accounts for
the year ended 31 December 2010. The auditors 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.
After conducting a further review of the Group's forecasts of
earnings and cash over the next twelve months and after making
appropriate enquiries as considered necessary, the directors have a
reasonable expectation that the Company and Group have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing the half yearly condensed financial statements.
Note 2 Segmental Reporting
Year ended
Revenue 6 months ended 6 months ended 31 December
6 months ended 30 June 2011 30 June 2011 30 June 2010 2010
Unaudited Unaudited Unaudited Audited
Total Total Total
GBP'000 GBP'000 GBP'000
Pawn Service Charge 13,168 11,516 23,181
Retail 8,512 8,636 19,558
Pawnbroking Scrap 8,484 14,000 22,301
Gold Purchasing 22,655 34,244 55,712
Cheque Cashing 2,500 2,364 5,120
Other Financial Services 285 231 525
Total Revenue 55,604 70,991 126,397
Year ended
Gross Profit 6 months ended 6 months ended 31 December
6 months ended 30 June 2011 30 June 2011 30 June 2010 2010
Unaudited Unaudited Unaudited Audited
Total Total Total
GBP'000 GBP'000 GBP'000
Pawn Service Charge 13,168 11,516 23,181
Retail 4,262 3,980 8,785
Pawnbroking Scrap 2,643 6,413 9,042
Gold Purchasing 7,456 12,586 20,107
Cheque Cashing 2,500 2,364 5,120
Other Financial Services 285 231 525
Total Gross Profit 30,314 37,090 66,760
Unaudited notes to the condensed interim financial statements
(continued)
For the 6 months ended 30 June 2011
Note 3 Operating profit and EBITDA
EBITDA
The Board considers EBITDA as a key measure of the Group's
financial performance.
EBITDA is defined as Earnings Before Interest, Taxation,
Depreciation and Amortisation. It is calculated by adding back
depreciation and amortisation to the operating profit as
follows:
Year ended
6 months ended 6 months ended 31 December
6 months ended 30 June 2011 30 June 2011 30 June 2010 2010
Unaudited Unaudited Unaudited Audited
Total Total Total
GBP'000 GBP'000 GBP'000
Operating profit 10,879 16,906 28,641
Depreciation 1,154 1,148 2,350
Amortisation 105 132 244
EBITDA 12,138 18,186 31,235
Unaudited notes to the condensed interim financial statements
(continued)
For the 6 months ended 30 June 2011
Note 4 Borrowings
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Secured borrowing at amortised
cost
Bank loans 34,000 33,000 31,000
Unamortised issue costs - - -
Total borrowings 34,000 33,000 31,000
Short term portion of bank loan - - -
Unamortised issue costs - - -
Amount due for settlement within one year
- - -
Long term portion of bank loan 34,000 33,000 31,000
Unamortised issue costs - - -
Amount due for settlement after
more than one year 34,000 33,000 31,000
Note 5 Finance costs
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Interest payable on bank
loans and overdraft 832 1,123 2,069
Other interest - 4 -
Amortisation of debt
issue costs - - -
Write off of loan issue
costs - 537 537
Total finance costs 832 1,664 2,606
Note 6 Tax on profit
The taxation charge for the 6 months ended 30 June 2011 has been
calculated by reference to the expected effective corporation tax
and deferred tax rates for the full financial year to end on 31
December 2011. The underlying effective full year tax charge is
estimated to be 26.6% (year ended 31 December 2010: 28.1%).
Unaudited notes to the condensed interim financial statements
(continued)
For the 6 months ended 30 June 2011
Note 7 Earnings per share
Basic earnings per share is calculated by dividing the profit
for the period attributable to equity shareholders by the weighted
average number of ordinary shares in issue during the period.
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 granted to employees where the exercise
price is less than the average market price of the Company's
ordinary shares during the period.
Reconciliations of the earnings per ordinary share and weighted
average number of shares used in the calculations are set out
below:
Unaudited Unaudited Audited
6 months ended 30 June 2011 6 months ended 30 June 2010 Year ended 31 December 2010
Weighted Weighted Weighted
average Per-share average Per-share average Per-share
Earnings number of amount Earnings number of amount Earnings number of amount
GBP'000 shares pence GBP'000 shares pence GBP'000 shares pence
Earnings
per share
- basic 7,508 35,393,625 21.21 10,408 35,439,612 29.37 17,187 35,240,321 48.77
Effect of
dilutive
securities
Options - 857,520 (0.50) - 298,193 (0.25) - 928,658 (1.25)
Earnings
per share
diluted 7,508 36,251,145 20.71 10,408 35,737,805 29.12 17,187 36,168,979 47.52
Unaudited notes to the condensed interim financial statements
(continued)
For the 6 months ended 30 June 2011
Note 8 Share capital
At 30 June At 30 June At 31 December
2011 2010 2010
Unaudited Unaudited Audited
Allotted, called up and fully
paid
(Ordinary Shares of GBP0.05
each)
GBP'000 Sterling 1,799 1,773 1,782
Number 35,973,032 35,461,168 35,631,827
Note 9 Dividends
On 18 August 2011, the directors approved a 3.75 pence interim
dividend (30 June 2010: 3.50 pence, including a 1.00 pence special
dividend) which equates to a dividend payment of GBP1,349,000 (30
June 2010: GBP1,242,000). The dividend will be paid on 14 October
2011 to shareholders on the share register at the close of business
on 16 September 2011 and has not been provided for in the 2011
interim results.
On 21 April 2011, the shareholders approved the payment of a
6.00 pence final dividend for 2011 which equates to a dividend
payment of GBP2,136,000 (2010: GBP1,985,000). The dividend was paid
on the 2 June 2011.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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