H&t Group Plc Regulatory News (HAT)

7 JANUARY 2014

H&T GROUP PLC

TRADING UPDATE

H&T Group plc ("H&T" or "the Group"), today issues a trading update prior to the announcement of its preliminary results for the year ended 31 December 2013. H&T expects to report its preliminary results for the year ended 31 December 2013 on 27 February 2014.

The Board expects full year profit before tax to be in line with current market expectations.

The 29% reduction in gold price during the year had a material impact on the business with reduced earnings from both gold purchasing and pawnbroking scrap together with pressure on lending rates as we seek to maintain our loan to value ratio. 

The pledge book reduced by 14.5% to £44.1m as at 31 December 2013 (2012: £51.6m) principally as a result of the competitive environment and reduced lending rates.

The Group benefitted from its continued presence in the retail jewellery market as the switch in disposition from scrap sales to retail has shown good results with like-for-like sales in Q4 being up 56% on prior year and gross profit up 18%. This compares to our H1 13 like-for-like sales fall of 12%.

The Board expects that the current challenging market will accelerate the industry consolidation and rationalisation that we believe is necessary in the short term. It is likely that H&T will close a small number of non-contributing stores in 2014 and at the same time will look to acquire profitable Pawnbroking opportunities.

As previously communicated we have responded to the challenging trading environment by suspending the new store opening programme, measured cost reductions and a focus on driving retail sales to reduce the exposure to gold price on disposition.

Cost savings resulted in lower operating costs for 2013 despite the Group's larger footprint and this reduction is expected to continue into 2014 due to the full year effect of measures implemented in H2 2013.

The Group's plan to de-risk the balance sheet by reducing borrowing progressed well in 2013 with net debt at year end being £20.8m (2012: £27.6m), we would expect to see further improvements as the post-Christmas stock reductions take effect.

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