- Pre-tax profit up 39 per cent to £26.4mn
- EPS rises 31 per cent to 48.7p
- Dividend per share up 13 per cent to 17p
- Return on equity 12.4 per cent
Diversified financial services group H&T (HAT: 355p) delivered a record year of profitability, buoyed by strong growth in its pawnbroking business, an alternative credit market shunned by mainstream lenders. The segment accounted for 71 per cent of H&T’s gross profit of £127mn.
In the 12-month period, the group’s aggregate lending increased by 19 per cent to £260mn, a reflection of the ongoing impact of inflation on customers’ disposable incomes and the withdrawal from the market of other forms of short-term unsecured lending. H&T’s closing pledge book ended the year 28 per cent higher at £128mn with average lending maintained at 65 per cent of the pledged assets' valuation. Importantly, the risk adjusted margin (revenue less impairment divided by average net pledge book) held steady at 61 per cent, so profitability has not been sacrificed. If anything, the group has tightened its lending criteria, reducing exposure to high-end watches to mitigate the impairment risk on unredeemed pledges.