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H&T GROUP – another positive trading update but how long will the good times continue?

07/01/2011 · H&T Group (HAT) 

The UK pawnbroker with 135 store outlets and 45 Gold Bar retail mall units issued a pleasing trading statement covering the year ending 31st December 2010 announcing that it expects that full year profit before tax for 2010 (but before exceptionals and amortisation) will be above the top end of current market expectations – can’t quite understand that last one as market expectations surely also generally take into account amortisation!

All business segments are expected to show year-on-year growth in gross profit, driven both by existing store performance and the addition of a further 13 stores across the estate during 2010. They also benefited from the delivery of one-off working capital improvements, contributing an estimated £4.9m to profit before tax in 2010.

The key factors behind the out-performance have been their continued success in the gold purchasing market and significantly increased profit from pawnbroking scrap.

Their pawnbroking business experienced record lending levels during 2010, driven by an increased average loan and new store additions. The Group’s gross pledge book at 31 December 2010 was £39.5m, up from £37.3m as at 30 June 2010.

Management also confirmed that current consensus forecasts (Pre-tax £14.38m and eps of 28.6p?) represent a reasonable expectation of financial performance for the year ending 31 December 2011.

The shares look good value if one looks at current year earning’s forecasts (Eps 46.4p for 2010) and…

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