TIDMHAT
RNS Number : 8268V
H&T Group PLC
11 August 2020
INTERIM RESULTS - CORRECTION
The "UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS"
announcement released on 11 August 2020 at 7:00am London time under
RNS No.7100V contained an error relating to dividend dates in the
note 9. The following amendments have been made.
Note 9 Dividends
On 6 August 2020, the directors approved a 2.5 pence interim
dividend (30 June 2019: 4.7 pence) which equates to a dividend
payment of GBP997,000 (30 June 2019: GBP1,866,000). The dividend
will be paid on 2 October 2020 to shareholders on the share
register at the close of business on 4 September 2020 and has not
been provided for in the 2020 interim results. The shares will be
marked ex-dividend on 3 September 2020.
All other details remain unchanged.
The full amended text is shown below.
11 August 2020
H&T Group plc
("H&T" or "the Group" or "the Company")
UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2020
H&T Group plc today announces its interim results for the
six months ended 30 June 2020.
HIGHLIGHTS
-- Profit before tax down 26.5% to GBP5.0m (H1 2019: GBP6.8m)
-- Operating profit down 32.9% to GBP5.5m (H1 2019: GBP8.2m)
-- Diluted EPS of 10.2p (H1 2019: 15.0p)
-- Net pledge book, including accrued interest, increased
by 4.6% to GBP56.3m (30 June 2019: GBP53.8m)
-- Personal Loan book reduced 43.8% to GBP10.0m (30 June 2019:
GBP17.8m)
-- Net debt reduced to nil (30 June 2019: GBP11.6m)
-- Net assets up GBP19.3m to GBP126.9m (30 June 2019: GBP107.6m)
-- Interim dividend of 2.5p (2019 interim: 4.7p)
John Nichols, H&T chief executive, said:
"Our results reflect the impact of Covid-19 on our business and
the closure of our stores from 24 March, all of which have since
reopened. While our revenues and profits reduced in this
unprecedented environment, our focus on costs and cash generation
leaves us presently well positioned as we look to the rest of the
year and enables us to declare an interim dividend of 2.5 pence per
share.
"Pre lock-down the Group was well on track to deliver revenue
growth and increased profitability, underpinned by our diversified
income streams, increased footprint and investment in digital
initiatives. With lock-down in March we closed all stores in order
to protect colleagues and customers, and we have launched our
online payment portal. We also froze interest on pawnbroking loans
while our stores were closed and have offered payment deferral
arrangements to those lending customers impacted by the financial
implications of Covid-19.
"Having safely re-opened our stores, the Board is confident that
H&T is well-positioned to navigate the rest of 2020 and beyond.
The Group has a strong balance sheet, no debt and a good cash
position. This will enable us to build back our pawnbroking book, a
resilient secured asset in times of economic uncertainty, and
deliver our long-term growth plans which remain intact. "
Financial highlights (GBPm unless
stated)
Change
6 months ended 30 June 2020 2019 %
Gross profit 37.4 44.1 (15.2%)
EBITDA (Note 3) 9.6 11.3 (15.0%)
Operating profit 5.5 8.2 (32.9%)
Profit before tax 5.0 6.8 (26.5%)
Diluted EPS (p) 10.2 15.0 (32.0%)
Dividend per share 2.5p 4.7p (46.8%)
Key performance indicators
Net pledge book GBP56.3m GBP53.8m 4.6%
Retail gross profits GBP2.8m GBP5.4m (48.1%)
Personal loan book GBP10.0m GBP17.8m (43.8%)
Personal loan revenue less impairment GBP6.4m GBP11.6m (44.8%)
Number of stores 252 182 38.5%
Enquiries:
H&T Group plc
Tel: 0870 9022 600
John Nichols, chief executive
Richard Withers, chief financial officer
Numis Securities (broker and nominated adviser)
Tel: 020 7260 1000
Luke Bordewich, nominated adviser
Haggie Partners (financial public relations)
Damian Beeley: Tel: 020 7562 4444 (messaging service)
Caroline Klein: Mob: 07902 307333
Vivian Lai: Mob: 07795 153253
INTERIM REPORT
Introduction
We increased our store network by 70 during H2 2019 because of
the business assets added via the Money Shop and Albemarle &
Bond acquisitions. The Group's Q1 2020 trading performance exceeded
expectations with pleasing revenue growth in the new stores.
On 24 March, in the light of HM Government's introduction of
nationwide social restrictions and instructions regarding retail
operations we closed all our stores. From 12 May we commenced a
phased reopening such that all stores except two were open by 31
May, servicing essential financial services with the exclusion of
personal unsecured lending. Retail jewellery was then reintroduced
into all those stores that previously offered jewellery during the
last two weeks in June. All stores are now open.
Since reopening, all product categories have continued to build,
showing week on week growth, although business levels for most
products are yet to reach either pre closure or pre-Covid-19
expectation levels.
Re-establishing business to levels pre closure and the building
of our lending books is the primary focus for H2 2020.
COVID-19 IMPACT AND ACTIONS
In line with government guidance and in order to protect our
colleagues, customers and the communities where we operate, all
stores were closed on 24 March 2020. Stores have since
reopened.
During the temporary store closure period, we have supported and
stayed in touch with our customers by offering a dedicated call
centre operation and online chat facility, regularly updating our
website providing information and guidance, and issuing additional
SMS text and postal communications direct to customers. Pawnbroking
customers were provided with an interest holiday while our stores
were closed and offered the opportunity to defer payment, by
extending their loan. Personal lending customers, financially
impacted by Covid-19, were offered the opportunity to take payment
deferrals.
At the same time, we have finalised and implemented our online
pawnbroking payment portal, allowing customers to settle loans
remotely. To date 14,000 customers have used this service, making
payments of GBP3.5m.
Throughout the period we have continued to sell jewellery online
and have maintained our gold processing operation, smelted gold and
so benefited from the relatively high gold price.
While our stores were closed, our store colleagues were
furloughed under the Government's Job Retention Scheme. Most
colleagues have now returned to employment as we have reopened for
business. During the past three months, our colleagues across the
UK have offered support in their local communities and the Group
has provided a small charitable fund to support local, small
charities who are connected to our customers and employees.
The Group's colleagues remained internally connected during
lock-down with cross functional teams established to provide
effective customer support, to review our operating methods, to
accelerate our digital development work and to maintain risk
management including vigilance surrounding IT security during
Covid-19.
FINANCIAL RESULTS
The Group has reported profit before tax of GBP5.0m (H1 2019:
GBP6.8m), a 26.5% fall, reflecting the impact of Covid-19 and
associated store closures.
Gross profit reduced by GBP6.7m, 15.2%, to GBP37.4m (H1 2019:
GBP44.1m). Operating profit reduced by GBP2.7m, 32.9%, to GBP5.5m
(H1 2019: GBP8.2m). H&T received GBP3.5m in HM Government
support payments, included as 'other income' (see note 2) in
relation to the Job Retention and Business Rate support
schemes.
The average H1 2020 gold price has increased 29.3% to GBP1,306
per troy ounce (H1 2019: GBP1,010). As at 30 June 2020: GBP1,440
(30 June 2019: GBP1,108).
Total direct and administrative expenses reduced by GBP4.0m.
This comprises an increase in costs, primarily by increased staff
and property related costs arising from the Group's increased store
estate, offset by a GBP8.4m reduction in impairment charges as a
result of reduced lending books. While some operational and
transactional costs reduced while stores were closed, we have
incurred some additional Covid-19 related costs, associated with
ensuring colleague and customer safety. Further related expenditure
will continue in the near term. The pawnbroking and personal
lending books have reduced by GBP15.9m and GBP6.6m respectively
since 31 December 2019.
The Group's balance sheet remains strong with zero net debt (30
June 2019: GBP11.6m) leaving GBP34.0m (30 June 2019: GBP14.0m) of
the GBP35.0 RCF Lloyds facility undrawn.
The reduced borrowing is a direct consequence of the reduction
in our personal and pawnbroking lending books. The relatively high
levels of customer redemptions following the reopening of our
stores and the strong use of the customer payment portal has
resulted in the reduction in the pledge book across all stores.
H&T's decision to at least temporarily cease HCSTC lending in
October 2019 and then temporarily cease all personal lending as a
result of stores closing has seen our personal lending book
reduce.
Dividend
The Board has approved an interim dividend of 2.5 pence (2019
interim: 4.7 pence). This will be payable on 2 October 2020 to all
shareholders on the register at the close of business on 4
September 2020. It is intended that a final dividend, commensurate
with historical levels, will be declared should trading return to
pre lock-down levels by the year end.
REVEW OF OPERATIONS
Pawnbroking
Pawnbroking remains a core product for H&T and we report
that the gross pledge book increased to GBP56.3m, including accrued
interest (30 June 2019: GBP53.8m). Pledge balances in the 70 new
H&T stores at 30 June 2020 were GBP5.9m. Initial pledge books
on acquisition in these sites was GBP4.9m.
Prior to lock-down, at the end of March the pledge book across
all stores had increased to GBP72.7m, with growth in both core and
the newly acquired stores.
Interest was frozen for customers during the period stores were
closed, meaning that all customers have benefitted from at least
two months of interest holiday. The payment portal drove GBP3.5m of
online redemption payments and once stores re-opened we have seen
loan redemptions exceed new lending. This is in part because
customers reduced discretionary spending and reduced interest
charged which appears to have enabled reduced borrowing which has
resulted in the GBP16.4m reduction in pledge book compared with pre
lock-down and consequential pay down of debt.
During the period pawnbroking revenue less impairment was
unchanged at GBP16.8m (H1 2019: GBP16.8m) resulting in a
risk-adjusted margin (RAM) for the period of 24.4% (H1 2019:
35.2%). The lock-down period has resulted in a higher ageing
profile of the book, resulting in higher impairment provisioning.
Revenue less impairment from new stores was GBP3.5m, leaving core
stores at GBP13.3m, GBP3.5m, 20.8% down on H1 2019.
The reduction in like for like net revenues is a consequence of
stores being temporary closed during the Covid-19 lock down.
Pawnbroking summary:
6 months ended 30 2020 2019 Change
June: %
GBP'm GBP'm
Period-end net pledge
book(1) 56.3 53.8 4.6%
Average net pledge
book 68.9 47.7 44.4%
------------------------------ ------- ------- -------
Revenue less impairment 16.8 16.8 0.0%
Risk-adjusted margin(2) 24.4% 35.2%
------------------------------ ------- ------- -------
Notes to table
1 - Includes accrued interest
and impairment
2 - Revenue as a percentage of the average
net pledge book
------------------------------------------------ -------
Pawnbroking scrap
Pawnbroking scrap increased gross profits by GBP1.6m to GBP2.0m
(H1 2019: GBP0.4m) for the half year, on sales of GBP6.7m (H1 2019:
GBP6.0m). The margin increased from 7% to 30%. The rise in gold
price is the main reason for the gross profit uplift.
Retail
Retail sales reduced 47.0% to GBP9.8m (H1 2019: GBP18.5m) while
gross profits reduced by 48.1% to GBP2.8m (H1 2019: GBP5.4m).
Margin at 28% (H1 2019: 29%) reflects a continuation of the move
towards an increasing proportion of new sales. New sales accounted
for 17% of total retail sales (H1 2019: 12%). The Group has reduced
its retail stock holding by GBP3.3m to GBP27.3m (30 June 2019:
GBP30.6m)
Personal Loans
Net revenue reduced 20.4% to GBP4.3m (H1 2019: GBP5.4m), while
the loan book decreased 43.8% to GBP10.0m (30 June 2019: GBP17.8m).
The contraction of the loan book is a result of ceasing HCSTC
lending in October 2019 and suspending all personal lending from 24
March 2020.
The risk-adjusted margin for the period at 32.8% is relatively
unchanged (H1 2019: 32.5%). However, the cessation of HCSTC lending
has increased the proportion of the book derived from lower APR
products and consequently has resulted in lower interest yield of
48.9% (H1 2019: 69.9%). This has also significantly impacted
impairment rates, with impairment as a proportion of the average
monthly net loan book reducing to 16.0% (H1 2019: 37.3%).
Personal Loans summary:
6 months ended 30 June: 2020 2019
GBP'm GBP'm Change
%
Period-end net loan book 10.0 17.8 (43.8%)
Average monthly net loan book 13.1 16.6 (21.1%)
---------------------------------------- ----------------------------- ----------------------------- ----------
Revenue 6.4 11.6 (44.8%)
Impairment (2.1) (6.2) (66.1%)
Revenue less impairment 4.3 5.4 (20.4%)
---------------------------------------- ----------------------------- ----------------------------- ----------
Interest yield(1) 48.9% 69.9%
Impairment % of revenue 32.8% 53.4%
Impairment % of average monthly
net loan book 16.0% 37.3%
Risk-adjusted margin(2) 32.8% 32.5%
---------------------------------------- ----------------------------- ----------------------------- ----------
1 - Revenue as a percentage of average
loan book
2 - Revenue less impairment as a
percentage of average loan book
---------------------------------------- ----------------------------- ----------------------------- ----------
Gold purchasing
Gold purchasing profits increased by 1.3m to GBP2.8m (H1 2019:
GBP1.5m) on sales of GBP9.6m (H1 2019: GBP8.8m). The increased
margin from 17% to 29% is a result of gold price increase and the
main driver for the GP uplift.
Other services
Total revenues from other services reduced by GBP0.9m to GBP2.4m
(H1 2019: GBP3.3m). A GBP0.5m fall in Foreign Exchange (FX)
transaction profit and GBP0.8m reduction in buyback is partially
offset by GBP0.1m increase in cheque cashing revenue and GBP0.3m
new revenue from Western Union.
FX profit reduced by 29.0% to GBP1.3m while the value of
currency traded reduced by 53.0%. We have seen a change in the mix
between buying and selling currency, initially as a result of new
stores. This has resulted in 19% of FX transactions being buys (H1
2019: 8%) which has increased our FX margin.
Buyback product was ceased during Q1 2020 with gross profits
consequently falling to GBP0.2m in the period. Cheque cashing and
Western Union revenues were ahead primarily driven by increased
revenues from new H&T stores.
REGULATION - FCA REVIEW
Continued focus on affordability and creditworthiness in
consumer credit
On 18 November 2019 the Group announced that it was working with
the Financial Conduct Authority (FCA) to review its
creditworthiness assessments and lending processes for its
unsecured HCSTC loans. Since then the Group has been developing its
methodology for conducting a past-book review. In collaboration
with the FCA progress towards appointment of a skilled person was
postponed until Covid-19 restrictions allowed engagement. During
July we engaged with advisers and conducted interviews in order to
put forward proposals to the FCA. We anticipate a skilled person
will be selected shortly with their work commencing in
September.
STRATEGY AND OUTLOOK
We are pleased with the way our business has returned since
stores re-opened, with pawnbroking lending run rates developing so
far week on week, although we have some way still to go to reach
pre lock-down levels. Our focus is on being able to provide
short-term cash loans to customers when they need it and
consequently building our lending portfolios. This rebuilding is
supported by our strong cash generation in the first half and our
ungeared balance sheet. The opportunity to achieve uplift and
return from our newly enlarged store estate remains. We have
already demonstrated an ability to grow pawnbroking in new stores
and to leverage opportunities in Western Union, FX and cheque
cashing.
The Group will continue to focus and seek strategies to grow its
pawnbroking offering while building our other lines of business.
Further investment in digital and online capabilities to complement
our store estate will be fundamental.
Interim Condensed Financial Statements
Unaudited statement of comprehensive income
For the 6 months ended 30 June 2020
12 months
6 months 6 months ended 31
ended 30 ended 30 December
June 2020 June 2019 2019
Note Total Total Total
Unaudited Unaudited
GBP'000 GBP'000 GBP'000
Revenue 2 55,830 69,999 160,213
Cost of sales (18,478) (25,929) (58,852)
________ ________ ________
Gross profit 2 37,352 44,070 101,361
Other direct expenses (21,567) (28,513) (60,842)
Administrative expenses (10,324) (7,384) (18,031)
________ ________ ________
Operating profit 3 5,461 8,173 22,488
Finance costs 5 (446) (1,342) (2,405)
________ ________ ________
Profit before taxation 5,015 6,831 20,083
Tax on profit 6 (1,132) (1,275) (3,393)
________ ________ ________
Total comprehensive income for
the period 3,883 5,556 16,690
________ ________ ________
Pence Pence Pence
Earnings per ordinary share
- basic 7 10.21 15.00 43.88
Earnings per ordinary share
- diluted 7 10.20 14.97 43.80
All results derive from continuing operations.
Unaudited condensed consolidated statement of changes in
equity
For the 6 months ended 30 June 2020
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
Note 2020 2019 2019
Unaudited Audited
Unaudited Restated* Restated*
GBP'000 GBP'000 GBP'000
Opening total equity 122,606 103,821 103,821
Total comprehensive income for the
period 3,883 5,556 16,690
Issue of share capital 313 328 6,130
Share option movement taken directly
to equity 102 368 328
Dividends paid 9 - (2,496) (4,363)
Closing total equity 126,904 107,577 122,606
Unaudited condensed consolidated balance sheet
At 30 June 2020
At 30 June At 30 June At 31 December
2020 2019 2019
Unaudited Unaudited
Note GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 19,330 17,643 19,580
Other intangible assets 3,264 280 3,889
Property, plant and equipment 7,595 6,497 7,739
Deferred tax assets 2,184 1,760 2,180
Right-of-use assets 18,689 18,408 21,147
51,062 44,588 54,535
Current assets
Inventories 27,306 30,653 29,157
Trade and other receivables 68,582 74,315 90,606
Other current assets 38 947 714
Cash and cash equivalents 13,938 9,501 12,003
109,864 115,416 132,480
Total assets 160,926 160,004 187,015
Current liabilities
Trade and other payables (8,842) (9,031) (10,578)
Lease liability (5,708) (4,830) (253)
Current tax liabilities (890) (722) (2,066)
(15,440) (14,583) (12,897)
Net current assets 94,424 100,833 119,583
Non-current liabilities
Borrowings 4 (773) (20,656) (25,715)
Lease liability (16,298) (15,890) (24,307)
Provisions (1,511) (1,298) (1,490)
(18,582) (37,844) (51,512)
Total liabilities (34,022) (52,427) (64,409)
Net assets 126,904 107,577 122,606
EQUITY
Share capital 8 1,993 1,891 1,987
Share premium account 33,486 27,472 33,179
Employee Benefit Trust share
reserve (35) (35) (35)
Retained earnings 91,460 78,249 87,475
Total equity attributable to
equity holders of the parent 126,904 107,577 122,606
Unaudited condensed consolidated cash flow statement
For the 6 months ended 30 June 2020
6 months 6 months 12 months
Note ended ended ended
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit for the period 3,883 5,556 16,690
Adjustments for:
Finance costs 446 1,342 2,405
Increase in provisions 21 45 237
Income tax expense 1,132 1,275 3,393
Depreciation of property, plant
and equipment 1,097 1,045 2,272
Depreciation of right-of-use assets 2,239 2,004 4,604
Amortisation of intangible assets 785 71 591
Loss on disposal of property, plant
and equipment - 5 70
Loss on disposal of right-of-use
assets 92 - -
Share based payment expense 69 146 266
Operating cash flows before movements
in working capital 9,764 11,489 30,528
Decrease/(increase) in inventories 1,851 (1,391) 105
Decrease/(increase) in other current
assets 676 (70) 163
Decrease/(Increase) in receivables 22,022 (517) (5,500)
(Decrease)/increase in payables (3,734) (259) 5,347
Cash generated from operations 30,579 9,252 30,643
Income taxes paid (2,279) (1,248) (2,604)
Interest paid on loan facility (259) (314) (686)
Interest paid on lease liability (108) (892) (1,524)
Net cash generated from operating
activities 27,933 6,798 25,829
Investing activities
Purchases of intangible assets (160) - (9)
Purchases of property, plant and equipment (1,037) (1,520) (3,316)
Acquisition of right-of-use assets (365) (253) (5,592)
Acquisition of trade and assets of business 251 (419) (18,740)
Net cash used in investing activities (1,311) (2,192) (27,657)
Financing activities
Dividends paid 9 - (2,497) (4,363)
(Decrease)/increase in borrowings (25,000) (4,000) 1,000
Debt restructuring cost - (350) (350)
Proceeds on Issue of shares 313 328 6,130
Net cash (used in)/generated from financing
activities (24,687) (6,519) 2,417
Net increase/(decrease) in cash and cash
equivalents 1,935 (1,913) 589
Cash and cash equivalents at beginning
of period 12,003 11,414 11,414
Cash and cash equivalents at end of period 13,938 9,501 12,003
Unaudited notes to the condensed interim financial
statements
For the 6 months ended 30 June 2020
Note 1 Basis of preparation
The interim financial statements of the group for the six months
ended 30 June 2020, 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 2019.
The group does not anticipate any change in these accounting
policies for the year ended 31 December 2020. As permitted, this
interim report has been prepared in accordance with the AIM rules
but 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 2019 is based on the statutory accounts for
the year ended 31 December 2019. 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.
The Board have conducted an extensive review of forecast
earnings and cash over the next twelve months, considering various
scenarios and sensitivities given the Covid--19 situation and
uncertainty around the future economic environment. The Board 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 interim condensed financial statements. Further
details of the impact of Covid--19 are set out in note 11.
Unaudited notes to the condensed interim financial
statements
For the 6 months ended 30 June 2020
Note 2 Segmental Reporting
Consolidated
for the
6 months
ended
Gold Pawnbroking Personal Other Other 30 June
2020 Pawnbroking purchasing Retail scrap Loans Services Income 2020
Revenue GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
External revenue 17,399 9,607 9,768 6,698 6,426 2,434 3,498 55,830
Total revenue 17,399 9,607 9,768 6,698 6,426 2,434 3,498 55,830
Gross profit 17,399 2,831 2,775 1,989 6,426 2,434 3,498 37,352
Impairment (642) - - - (2,147) - - (2,789)
Segment result 16,757 2,831 2,775 1,989 4,279 2,434 3,498 34,563
Other direct expenses excluding impairment (18,778)
Administrative expenses (10,324)
Operating profit 5,461
Finance costs (446)
Profit before taxation 5,015
Tax charge on profit (1,132)
Profit for the financial year and
total comprehensive income 3,883
Consolidated
for the
6 months
ended
Gold Pawnbroking Personal Other Other 30 June
2019 Pawnbroking purchasing Retail scrap Loans Services Income 2019
Revenue GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
External
revenue 21,790 8,752 18,511 6,040 11,620 3,286 - 69,999
Total revenue 21,790 8,752 18,511 6,040 11,620 3,286 - 69,999
Gross profit 21,790 1,495 5,432 447 11,620 3,286 - 44,070
Impairment (4,997) - - - (6,196) - - (11,193)
Segment result 16,793 1,495 5,432 447 5,424 3,286 - 32,877
Other direct expenses excluding
impairment (17,320)
Administrative expenses (7,384)
Operating profit 8,173
Finance costs (1,342)
Profit before taxation 6,831
Tax charge on profit (1,275)
Profit for the financial year and
total comprehensive income 5,556
Unaudited notes to the condensed interim financial statements
(continued)
For the 6 months ended 30 June 2020
Note 2 Segmental Reporting (continued)
Pawnbroking Gold Pawnbroking Personal Other Other For the year
2019 Restated* purchasing Retail scrap Loans Services Income ended 2019
Revenue GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
External
revenue 49,102 24,229 41,516 14,944 21,459 8,963 - 160,213
Total revenue 49,102 24,229 41,516 14,944 21,459 8,963 - 160,213
Gross profit 49,102 5,736 13,639 2,462 21,459 8,963 - 101,361
Impairment (10,142) - - - (10,656) - (20,798)
Segment result 38,960 5,736 13,639 2,462 10,803 8,963 80,563
Other direct expenses excluding impairment (40,044)
Administrative expenses (18,031)
Operating profit 22,488
Finance costs (2,405)
Profit before taxation 20,083
Tax charge on profit (3,393)
Profit for the financial year and
total comprehensive income 16,690
Note 3 Operating profit and EBITDA
EBITDA
The Board consider EBITDA to be a key performance measure as the
Group borrowing facility includes a number of loan covenants based
on it.
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:
6 months ended 30 June 2020 6 months 6 months 12 months
Unaudited ended ended ended
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Total Total Total
GBP'000 GBP'000 GBP'000
Operating profit 5,461 8,173 22,488
Depreciation and amortisation 1,882 1,116 2,862
Depreciation of right-of-use assets 2,239 2,004 4,604
EBITDA 9,582 11,293 29,954
Unaudited notes to the condensed interim financial statements
(continued)
For the 6 months ended 30 June 2020
Note 4 Borrowings
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Long term portion of bank loan 1,000 21,000 26,000
Unamortised issue costs (227) (344) (285)
--------- --------- ------------
Amount due for settlement after more
than one year 773 20,656 25,715
========= ========= ============
Note 5 Finance costs
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Interest payable on bank loans and overdraft 280 331 693
Other interest - 1 1
Amortisation of debt issue costs 58 118 187
Interest on expense on the lease liability 108 892 1,524
Total finance costs 446 1,342 2,405
Unaudited notes to the condensed interim financial statements
(continued)
For the 6 months ended 30 June 2020
Note 6 Tax on profit
The taxation charge for the 6 months ended 30 June 2020 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 2020. The underlying effective full year tax charge is
estimated to be 19% (six months ended 30 June 2019: 19%).
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
6 months ended 30 6 months ended 30 12 months ended 31
June 2020 June 2019 December 2019
Earnings Weighted Per-share Earnings Weighted Per-share Earnings Weighted Per-share
GBP'000 average amount GBP'000 average amount GBP'000 average amount
number pence number pence number pence
of shares of shares of shares
Earnings
per share
-
basic 3,883 38,039,328 10.21 5,556 37,039,443 15.00 16,690 38,039,328 43.88
Effect of
dilutive
securities
Options - 18,201 (0.01) - 70,999 (0.03) - 68,197 (0.08)
Earnings
per share
diluted 3,883 38,057,529 10.20 5,556 37,110,442 14.97 16,690 38,107,525 43.80
Unaudited notes to the condensed interim financial statements
(continued)
For the 6 months ended 30 June 2020
Note 8 Share capital
At At At
30 June 2020 30 June 2019 31 December
2019
Unaudited Unaudited Audited
Allotted, called up and fully
paid
(Ordinary Shares of GBP0.05
each)
GBP'000 Sterling 1,993 1,891 1,987
Number 39,864,077 37,827,501 39,736,476
Note 9 Dividends
On 6 August 2020, the directors approved a 2.5 pence interim
dividend (30 June 2019: 4.7 pence) which equates to a dividend
payment of GBP997,000 (30 June 2019: GBP1,866,000). The dividend
will be paid on 2 October 2020 to shareholders on the share
register at the close of business on 4 September 2020 and has not
been provided for in the 2020 interim results. The shares will be
marked ex-dividend on 3 September 2020.
Note 10 Contingent Liabilities
As set out in the market release issued by H&T Group plc on
18 November 2019, we will be working with a skilled person
appointed in conjunction with the FCA on a past-book review of our
lending since April 2014 within the High Cost Short Term unsecured
lending (HCSTC) market. A skilled person is in the course of being
appointed. At this stage, under the criteria in IAS 37 Provisions,
contingent liabilities and contingent assets it is possible that a
liability may exist, but H&T is unable to estimate the quantum
of any such possible liability.
Note 11 Covid-19 Considerations
The outbreak of Covid-19 and its impact on the global and UK
economies has resulted in financial consequences also for
H&T.
In line with HM Government Guidance and in order to protect
colleagues and customers all stores were closed on 24 March 2020.
Whilst stores were closed no interest on pawnbroking loans was
charged. During lock-down the Company's ability to operate was
impacted as stores were closed. During this period costs were
reduced and the operational impact on the business was mitigated by
developing online capabilities and continuing to scrap gold and
collect in loan receivables. Whilst stores have since re-opened,
the Group is adhering to HM Government guidance in respect of the
provision of a safe environment for colleagues and customers which
reduces store capacity.
The most significant financial impact of the Covid-19 crisis on
the Company is expected to be the extent to which the need for
short-term cash loans returns following a period immediately post
lock-down which saw high levels of pawnbroking loan redemptions.
Further, we anticipate ongoing reduced demand in the short term for
foreign currency, as overseas travel is likely to continue to be
affected, and there remains uncertainty surrounding retail footfall
which might reduce retail sales.
The impact of impairments on loan receivables is not yet clear.
Charges may increase as the Company offers payment deferrals to
customers experiencing financial difficulties as a result of events
caused by Covid-19.
The Group' has considered its position and the likely impact on
trading, including customer demand across its diversified income
streams, the impact of the current high gold price and of its cost
base. The Group has concluded that it has sufficient liquidity
within the business and existing bank facilities. After reviewing
these factors, it has determined that the preparation of these
interim financial statements on a going concern basis remains
appropriate.
A goodwill impairment review has also been carried out. The
Group further considers that store profitability will not be
significantly impacted in the medium term and therefore no change
in the assessment of the fair value of its assets, including
goodwill and intangibles, is required at this time. We will review
the position at year end.
The Board has considered the impact of risks around Covid-19,
summarised as follows:
Description of risk Examples of mitigating activities
Failure to implement social -- Risk assessments carried
distancing in stores or -- out for each location
office locations resulting 2- metre distancing rule
in colleagues or customers applied by implementing distancing
becoming ill or transmitting tape and restricting staff
the virus. -- and customers to no more
than two per store
Commercial risk leading -- Perspex applied to speech
to reduced profits and gaps in counter bays
cash pressure resulting Colleague and customer guidance
from: regarding social distancing
i) a necessity to close -- and hygiene measures communicated
stores once more again -- via posters, website and
should a new virus waive direct communications
reoccur or Home-working implemented
ii) reduced product demand -- where possible
resulting from changes Regular communication to
in consumer behaviour, -- staff regarding latest Government
e.g. less overseas travel guidelines, including self-isolation
or reduced high street and hygiene factors
footfall Awareness of the vulnerability
iii) an economic downturn -- status of colleagues who
resulting in, for example, remain shielded
higher unemployment and Online alternatives developed
a consequential change -- to service customer requirements
in customer behaviours - e.g. online pawnbroking,
which might impact loan payment portal and online
repayment and redemption -- unsecured lending channels
profiles. reviewed
Diversified product range
ensuring reduced demand in
-- one area does not overly
impact the whole
The ability to generate cash
via melting gold and collecting
in loans even where stores
are closed.
Maintaining prudent loan
underwriting and affordability
assessment criteria and conservative
loan to value percentages
for gold based secured loans.
Pawnbroking loans are secured
on valuable assets e.g. gold
and thus the Group is protected
financially if customers
are unable to redeem their
pledged items.
---- -------------------------------------------------
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 or visit www.rns.com.
END
IR UASORRNUWAAR
(END) Dow Jones Newswires
August 11, 2020 09:50 ET (13:50 GMT)
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