Companies: HAT   

Although laced with a dash of caution, results for the half-year to June from high street pawnbroking chain H&T still showed progress across the business and record profits.

The group, which has expanded considerably in the last few years by acquiring and opening new stores, lifted profits 79% before tax and exceptionals to £5.5m during the first half. The growth was mostly organic, explains finance director Laurent Genthialon, as new stores take a year to break even and the group has opened or acquired 36 since the start of 2006, four in the first half.

However, concedes Frenchman Genthialon, ‘the expansion is slowing down’ as, with the price of gold being so strong, the pricing expectations of vendors of potential acquisitions have risen to ‘unrealistic’ levels.

It is important for the group’s profitability to mix earnings-enhancing acquisitions and ‘greenfield’ openings, so five more of the latter planned this year will dilute earnings slightly.

The company also ‘remains cautious’ about trading conditions at its jewellery business, which sells the gold and diamond items held as security against defaulted loans, though a downturn could be largely offset by selling gold as scrap.

On the upside, this retail business has outshone its high street neighbours, delivering a 14.2% increase in like-for-like sales due to the fact that, says Genthialon, ‘after two years we are getting better at it’. The financial services segment increased its gross profits by 12% to £1.9m, 11% of the group’s total, mostly for its pay-day advance service.

Momentum is firmly with the group, despite the board’s necessary cautiousness. On house broker Numis’s full year forecasts of £10.2m of pre-tax profit and 20.4p of earnings, H&T is cheaper than listed rival Albermarle & Bond and remains a buy.

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H & T Group	AIM	£53.89m	152.50p	-0.50p
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