TIDMHAT
RNS Number : 1089T
H&T Group PLC
23 March 2021
H&T Group ("H&T" or the "Group") today announces its
preliminary results for the year ended
31 December 2020.
Chris Gillespie, chief executive of H&T Group, said:
"In response to the Covid-19 pandemic, H&T acted decisively.
We took robust steps throughout 2020 to protect the health, safety
and wellbeing of our customers, colleagues, and community. We
supported pawnbroking customers by freezing interest while stores
were closed and by making payment deferral arrangements with those
financially impacted by Covid-19, where it was in their best
interests to do so. We progressed the digitalisation of our
business to improve choice and flexibility for our customers and
employees. In November an enhanced retail eCommerce site was
launched.
"H&T ended 2020 robustly, given the challenging conditions,
demonstrating the underlying strength of the business. We have
benefitted from the high gold price.
"We are well placed to reinforce our position as the UK's
largest pawnbroker and grow our lines of business once Covid-19
restrictions are lifted and consumer demand for short term
borrowing returns. We have no debt and significant cash resources
to rebuild the pledge book when underlying customer demand
increases.
"Whilst I am delighted with the resilience shown by the business
during the year, we are aware of the impact upon consumer
confidence of the ongoing Covid-19 related restrictions across the
UK which directly affect the communities we serve. Market
conditions remain challenging, but we are confident that our
long-term goals and strategy will deliver growth and value for all
our stakeholders."
Change
2020 2019 %
Financial highlights (GBPm
unless stated)
Gross profit 82.8 101.4 (18.3%)
EBITDA 26.2 30.0 (12.7%)
Operating profit 16.9 22.5 (24.9%)
Profit before tax 15.6 20.1 (22.4%)
Diluted EPS 32.1 43.8p (26.7%)
Dividend per share 8.5p 4.7p 80.9%
Key performance indicators
Pledge book GBP48.3m GBP72.2m (33.1%)
Redemption of annual lending
* 82.30% 82.40% (0.1%)
Retail gross profits GBP11.3m GBP13.6m (16.9%)
Personal loan book GBP5.9m GBP16.6m (64.5%)
Personal loan revenue less impairment GBP8.1m GBP10.8m (25.0%)
Number of stores 253 252 0.4%
* This is a non IFRS measure and represents the actual
percentage of lending in each year which was redeemed or renewed,
the 2020 figure is an estimate based on recent trend and early
performance.
Operational highlights:
-- Profit before tax of GBP15.6m despite the impact of Covid-19, a fall of GBP4.5m, 22.4%
-- Pledge book reduced 33.1% to GBP48.3m from GBP72.2m
-- Pawnbroking net revenue fell by 12.3% from GBP39.0m to GBP34.2m, due to freezing customer
interest while stores were closed and the reduction in pledge book
-- Retail sales dropped 28.2% with gross profits reducing by 16.9% from GBP13.6m to GBP11.3m
-- Foreign currency gross profit reduced by 34.6% from GBP5.2m to GBP3.4m
-- Personal loan net revenue reduced by 25.0% from GBP10.8m to GBP8.1m, as the book dropped to
GBP5.9m from GBP16.6m
-- Updated our est1897.co.uk retail website and generated revenues of GBP3.6m (2019: GBP4.0m)
from our eCommerce platforms
-- Strong returns from precious-metal scrappage with gross profit increasing from GBP2.4m to
GBP6.2m, reflecting the high gold price
-- Gold-buying gross profit increased 19.3% from GBP5.7m to GBP6.8m
-- Robust cash position, with net cash of GBP34.5m and an undrawn GBP35.0m revolving credit facility
-- Development and launch of our customer portals for lending customers
Enquiries:
H&T Group plc
Tel: 020 8225 2797
Chris Gillespie, Chief Executive
Richard Withers, Chief Financial Officer
Numis Securities (Broker and Nominated Adviser)
Tel: 020 7260 1000
Luke Bordewich, Nominated Adviser
Henry Slater
Haggie Partners (Public Relations)
Tel: 020 7562 4444
Damian Beeley
Vivian Lai
Chairman's statement
The Group has delivered a strong financial performance despite
the impact of the Covid-19 pandemic. There is still uncertainty
over the ongoing impact of Covid-19 and its impact on high street
footfall, overseas travel, and consumer demand for short term
credit. Since the outbreak of the virus, our priority has been the
safety and wellbeing of colleagues, customers, and wider
stakeholders.
The exceptional resilience, flexibility and commitment of our
colleagues is a key factor in the ongoing success story of H&T.
I thank everyone who has contributed to H&T delivering a solid
performance during a challenging year.
IMPACT OF COVID-19 AND ACTIONS TAKEN
Trading to 23 March 2020 was strong, with performance ahead of
management expectations. Revenue growth from the 70 new stores
added to our estate in 2019 was particularly pleasing.
With the issue of HM Government advice outlining the need for
strict social distancing measures and the requirement to close
retail stores, our network of 253 stores was temporarily closed on
24 March 2020. While our stores were closed, we took the
opportunity to review and revise health and safety measures within
our stores and implemented an online pawnbroking payment portal,
allowing customers to settle loans remotely.
The Government added the provision of short-term credit to the
essential services list and later in May widened further the
services that could be offered in our stores to incorporate our
full financial services offering. The Group began a phased
reopening of the store estate on 12 May 2020 and by 31 May 2020 all
stores except two were open, providing financial services with the
exception of personal unsecured lending. From 15 June 2020, the
Group recommenced offering retail jewellery through its stores in
line with updated government guidance.
Since May 2020, all but two of our stores have remained open,
albeit retail jewellery being served via our eCommerce and click
and collect operations during the Q4 2020 and Q1 2021 lockdown
periods.
While the stores were closed, store colleagues were furloughed
under the government's Job Retention Scheme. All colleagues
returned to full employment as stores reopened for business. During
the year, our colleagues across the UK offered support in their
local communities, and the Group provided a charitable fund to
support small, local charities who are connected to our customers
and employees. We have since launched a partnership with FareShare,
the UK's largest charity fighting hunger and food waste.
During the year the Group implemented several initiatives to
help our customers including: an interest holiday on all
outstanding secured loans while stores were closed; providing
pawnbroking customers with the opportunity to defer payment by
extending their loan period; allowing personal loan customers the
opportunity to take payment deferrals; and launching our new and
fully functional online pawnbroking payment portal. We supported
and stayed in contact with our customers by offering a dedicated
call centre operation and online chat facility, regularly updating
our website with information and guidance, and issued additional
SMS text and postal communications direct to customers.
The Group has continued to invest in its digital capability
allowing customers to access products both remotely and through its
store estate. In addition, the Group opened a new store in
Edinburgh and acquired a trading business in East London towards
the end of the year.
We withdrew the recommendation to pay a final 2019 dividend and
all directors reduced their salary remuneration for the duration of
store closures.
FINANCIAL PERFORMANCE
Revenues were materially impacted during the period of closure
and the phased reopening. At the end of December 2020, the pledge
book stood at GBP48.3m, having fallen from GBP72.2m at the end of
2019. Throughout the year pawnbroking customers have continued to
repay their loans (either by attending the store or via the payment
portal) at normal pledge redemption rates. New loans have been
subdued, reflecting reduced demand from customers for borrowing
under existing economic conditions.
On the other hand, retail sales have been particularly strong,
reflecting increased consumer demand for competitively priced,
high-quality jewellery and watches. The high gold price during the
year has driven increased gross profits both from pawnbroking and
gold purchasing activities. These strong performances have more
than offset weakness in the Group's foreign currency business due
to reduced international leisure travel.
The Group delivered profit after tax of GBP12.6m (2019:
GBP16.7m) and diluted earnings per share of 32.1 pence (2019: 43.8
pence). Subject to shareholder approval, a final dividend of 6.0
pence per ordinary share (2019: nil) will be paid on 25 June 2021
to those shareholders on the register at the close of business on
14 May 2021. This will bring the full year dividend to 8.5 pence
per ordinary share (2019: 4.7 pence).
The Group's financial position is strong with net assets of
GBP134.5m (31 December 2019: GBP122.6m), GBP34.5m cash and bank
balances (31 December 2019: GBP12.0m), and a GBP35.0m undrawn bank
revolving credit facility (31 December 2019; GBP26.0m drawn,
GBP9.0m undrawn).
OUR TEAM
We remain focused on doing the right thing for our colleagues,
customers, and the communities in which we operate. The health and
safety of our colleagues and our customers remains paramount. In
preparation to reopen our branches in May as an essential service
provider, we invested in training, safety measures and PPE for our
colleagues to deliver our services in a way that is safe for them
and our customers.
The loyalty, dedication and expertise of our colleagues is at
the core of our strong customer relationships. We continue to
invest in training, development, and progression of our valuable
staff. The Group is proud of its culture that fosters passion and
enthusiasm to deliver exceptional customer service and
outcomes.
In October 2020 we announced the appointment of Chris Gillespie,
replacing John Nichols as chief executive officer subject to FCA
approval, which was received on 8 January 2021. I thank John on
behalf of the Board for his nearly 24 years of service and we wish
him a long and happy retirement. Chris brings a wealth of
experience to the business including previous senior roles in
consumer finance, most recently as managing director of Provident
Financial PLC's consumer credit division. Chris' understanding of
our business and our customers, and his expertise will enable us to
accelerate our strategy to blend our combined store and digital
networks to serve our customers and communities and further broaden
our reach.
STRATEGY
Following the 2019 acquisitions of certain assets from the Money
Shop and Albemarle & Bond the Group has an enlarged store
estate and customer reach, together with a talented team to serve
them. We have a strong asset base, significant cash reserves and
highly cash generative products and services, this will enable the
Group to exploit further growth opportunities as they emerge.
The demand for small-sum, short-term cash loans has been subdued
over the past 12 months and this is likely to continue for some
time. The Group will continue to focus on its digital development
journey to better support our store colleagues, and on its
operational effectiveness to improve customer experiences. It will
focus on customer experience and communication strategy to ensure
that H&T is in the best position to deliver excellent service
for customers when they need us.
We will invest in our network of stores, supported by further
digital enhancements, and thus reinforce the important distinction
between H&T and a purely online business.
REGULATION
The Group continues to work with the appointed Skilled Person
and the FCA in respect of the review into its creditworthiness
assessments and lending processes for its unsecured High-Cost Short
Term Loans (HCSTC). Given the ongoing disruption from the pandemic,
the outcome of this review will now likely be delayed into the
second quarter of 2021.
PROSPECTS
The start of 2021 has brought ongoing challenges with the
continuation of further national restrictions across the UK. While
H&T has been able to keep its stores open, as its financial
services are classified as essential by the Government, business
activities have been impacted by reduced high street footfall and
subdued demand for its services. The Group has been offering retail
jewellery only via its eCommerce platforms since early January
2021, and this has impacted sales levels significantly during the
first quarter of the year.
The UK faces further macroeconomic uncertainties resultant from
the Brexit transition. The Board consider the impact on our staff,
customers and our business activity to be limited. While the
macroeconomic impact of these risks is uncertain, we believe our
range of products is well positioned to take advantage of any
eventuality.
OUTLOOK
The extent to which social distancing and pandemic restrictions
remain necessary will determine the pace at which the Group returns
to pre-pandemic activity levels. A successful roll-out of the
vaccine program will likely lead to increased demand for our
services and will determine the extent to which we are able to
rebuild our pledge book.
On behalf of the Board and our shareholders, I would like to
thank everyone at H&T for their hard work and dedication over
the past year.
Peter D McNamara
Chairman
Chief executive's review
INTRODUCTION
The Group has performed resiliently through a challenging year
and ends 2020 in a robust position. All revenue categories have
been impacted by Covid-19 restrictions, lockdowns, reduced high
street footfall and temporary reductions in the demand for our
services. Throughout the year we have communicated regularly with
our customers and colleagues and maintained safe store and support
centre environments.
The Group achieved profit before tax of GBP15.6m (2019:
GBP20.1m) despite these challenges, showing the underlying
resilience of the business
THE MARKET
During 2020 Covid-19 restricted our activities and reduced
consumer need for some of our products and services. The increased
gold price and IFRS9 accounting treatment that requires high
initial impairment charges, helped the results. The core of our
business remains strong and we will continue to invest in the
development of our people and our infrastructure. We will continue
to refine our services as we seek to expand our customer base.
STRATEGY
The Group's strategy is to serve a customer base whose access to
mainstream credit is limited and for whom small-sum loans can help
to address short-term financial challenges. We are a cash
generative business, well placed for growth through product
diversification and investment in our store estate and digital
strategy.
Our Vision: "To make pawnbroking a widely accepted and valued
financial service"
Our purpose is to meet the real need for lending in the
community across the UK, by ensuring that borrowing against an
asset is simple and inclusive. We aim to exceed our customer's
expectations in this and in the development of a diversified suite
of services (including retail, personal lending, FX and money wire
transfer) that improves returns and reduces the Group's exposure to
gold price volatility.
REVIEW OF OPERATIONS
Pawnbroking
Pawnbroking is a small subset of the consumer credit market in
the UK and a simple form of asset-backed lending where an item of
value, known as a pledge (typically jewellery and watches), is
given in exchange for a cash loan. Customers who repay the capital
sum borrowed plus interest receive their pledged item back. If a
customer fails to repay the loan, we sell the pledged item via
auction, retail or for scrap. The value of the item is set by
auction, whether it is the reserve, or the actual sale price should
it sell. After the deduction of interest accrued plus an admin fee,
any surplus is passed back to the customer. Title to any unsold
items passes to the company.
Pawnbroking is our core business. We are the largest UK
pawnbroker in terms of number of outlets, customers and amounts
lent. It is the key area for the business and where we invest the
most in terms of training and development. Yields are attractive,
and the debt is always secured by the item pledged.
During the year revenues were impacted by Covid-19 in several
ways. During the spring lockdown our stores were closed for around
two months. Throughout the closure period, no interest was charged.
Upon reopening in May, many of our customers who had built up cash
reserves, in part due to reduced spending, came in to collect their
pledged items and repaid their loans. This resulted in a decline of
the pledge book in Q3 2020. We have since seen the book stabilise,
but we have yet to see the full return of consumer demand for short
term loans as lockdowns, restrictions and furlough support
continue.
Retail
The Group offers a value-for-money proposition in new high
quality and pre-owned jewellery. We believe there is further growth
potential in this segment by leveraging our retail store estate and
our eCommerce operations as well as by cross-selling to customers
of other services. The Group was unable to retail from our stores
during the national lockdowns, instead offering items through its
eCommerce sites and via a click and collect service during the most
recent lockdown. During the months unaffected by lockdowns, the
months of July to October and particularly during December sales
were especially strong.
Our eCommerce sites generated revenues of GBP3.6m (2019:
GBP4.0m). In November, we updated our "est1897" website, which
holds more than 5,000 high quality pre-owned watches and jewellery
items.
Personal loans
H&T offers unsecured loans in store and online. Our
dedicated underwriting team carry out manual affordability
assessments prior to issuing any loans.
We ceased offering high-cost-short-term-credit unsecured (HCSTC)
loans in October 2019, with all lending paused in March when we
closed our stores. From August we recommenced non-HCSTC lending,
taking a very cautious approach with a modest number of loans being
made.
Our absence from HCSTC lending, the reduced loan book, limited
current lending during 2021 and the uncertainty surrounding the
future of unsecured personal lending for the Group will have a
financial impact in the future.
During the year we worked with the FCA and a Skilled Person to
review our unsecured HCSTC loans. This process is still ongoing,
primarily as a result of Covid-19.
Finally, and most importantly, I would like to add my sincere
thanks to those of the Chairman, in recognising the contribution of
all of our people whose skills, commitment and enthusiasm continue
to drive our success, and who give us confidence in the future.
Chris Gillespie
Chief Executive
Chief financial officer's review
FINANCIAL RESULTS
For the year ended 31 December 2020, gross profit decreased
18.3% from GBP101.4m to GBP82.8, reflecting the impact of Covid-19
with associated store closures and reduced high street footfall.
Despite freezing interest on customer's secured loans, reduced
demand for short term loans and international travel restrictions
impacting foreign currency volumes, the Group delivered profit
before tax of GBP15.6m (2019: GBP20.1m). Group results benefitted
from the high gold price and the IFRS9 financial impact of
impairment releases as our lending books reduced during the
year.
The increased gold price during the year was the key factor in
combined revenues from gold purchasing and scrap increasing by
GBP4.8m, 58.5% to GBP13.0m (2019: GBP8.2m).
H&T received GBP3.8m in government support payments,
included as 'other income' (see note 2) in relation to the Job
Retention and Business Rate support schemes.
Total direct and administrative expenses reduced by GBP13.0m
(16.5%) to GBP65.9m from GBP78.9m.
Total loan impairment charges (included within direct and
administrative expenses) at GBP6.4m are down GBP14.4m on prior
year, with pawnbroking and personal loan impairment charges
respectively GBP5.4m and GBP9.0m lower. This is a result of reduced
lending and the consequence of not having to charge the
proportionally high amounts of initial impairment charges on new
loans. Other things being equal, IFRS9 impairment accounting
results in a drag on reported earnings as loan books grow relative
to IAS 39's incurred loss models and vice versa as the book
reduces.
The pawnbroking and personal lending books have reduced by
GBP23.9m and GBP10.7m respectively since 31 December 2019.
Pawnbroking
Gross profits from pawnbroking after impairment reduced 12.3% to
GBP34.2m (2019: GBP39.0m) and the pledge book reduced 33.1% to
GBP48.3m (31 December 2019: GBP72.2m). The Group lent GBP114.6m
during the year (2019: 149.0m) and had 76,500 customers with
existing loans as at 31 December 2020 (31 December 2019:
118,700).
The risk-adjusted margin (revenue as a percentage of the average
net pledge book) was 58.1% (2019: 64.6%). The reduction reflected
the interest freeze of approximately two months during spring.
Typically, pre lockdown the Group was recognising circa GBP4.0m per
month in net pawnbroking revenue. The reduction in the pledge book
meant a reversal of approximately GBP2.5m of impairment charges in
the year under IFRS9. The rate at which customers redeem their
pledges has remained consistently high and is essentially unchanged
from 2019 at 82.3%.
2020 2019 Change
GBP'm GBP'm %
---------------------------------------------- -------
Year-end net pledge book(1) 48.3 72.2 (33.1%)
Average net pledge book 58.9 60.4 (2.5%)
-------------------------------------- ------- ------- --------
Revenue less impairment 34.2 39.0 (12.3%)
Risk-adjusted margin(2) 58.1% 64.6%
-------------------------------------- ------- ------- --------
Notes to table
1 - Includes accrued interest
and impairment
2 - Revenue as a percentage of the average
net pledge book
----------------------------------------------- ------- --------
Retail
Retail sales for the full year reduced 28.2% to GBP29.8m (2019:
GBP41.5m), gross profits reduced 16.9% to GBP11.3m (2019: GBP13.6m)
and margin increased to 37.9% (2018: 31.8%). Margin increase was a
consequence of fewer promotional activities in the year compared to
prior year.
The Group reduced its investment in average retail inventories
held during the year by GBP0.8m or 2.6% to GBP29.8m (2019:
GBP30.6m).
Personal loans
The net personal loans book has reduced by 64.5% to GBP5.9m (31
December 2019: GBP16.6m). Revenue less impairment has reduced by
25.0% to GBP8.1m (2019: GBP10.8m) as the Group has reduced its
volume of lending.
The increase in the risk-adjusted margin (RAM) to 79.4% (2019:
56.3%) is a consequence of the collect out of the loan book, with a
reversal of impairment charges under IFRS9 accounting of
approximately GBP2.0m and further tightening of credit risk
assessments for the lending made in the year. Other than 40 sample
loans made as part of the S166 review, all lending in the year was
non-HCSTC, a total of GBP4.8m of lending was made in 2020 (2019:
GBP30.0m).
Impairment as a percentage of the average monthly net loan book
was 17.3% (2019: 49.8%), reflecting the increased mix of lower
yield, higher quality loans and the wind down of the book.
2020 2019 Change
----------------------------------------
GBP'm GBP'm %
---------------------------------------- ------ ------- --------
Year-end net loan book 5.9 16.6 (64.5%)
Average monthly net loan book 10.2 19.2 (46.9%)
---------------------------------------- ------ ------- --------
Revenue 9.8 21.5 (54.4%)
Impairment (1.7) (10.7) (84.1%)
Revenue less impairment 8.1 10.8 (25.0%)
---------------------------------------- ------ ------- --------
Interest yield(1) 96.1% 112.0%
Impairment % of revenue 17.3% 49.8%
Impairment % of average monthly
net loan book 16.7% 55.7%
Risk-adjusted margin(2) 79.4% 56.3%
---------------------------------------- ------ ------- --------
1 - Revenue as a percentage of average
loan book
2 - Revenue less impairment as a
percentage of average loan book
---------------------------------------- ------ ------- --------
Pawnbroking scrap
The average gold price during 2020 was GBP1,379 per troy ounce
(2019: GBP1,094), a 26.1% increase. The gold price directly impacts
the revenue received on the sales of scrapped gold.
Gross profits increased by 148% to GBP6.2m (2019: GBP2.5m).
Increased margin, driven by the high gold price, accounts for
GBP3.0m of the increase, with GBP0.7m accounted for by increased
volume of activity.
Gold purchasing
Gross profit increased by GBP1.1m to GBP6.8m (2019: GBP5.7m).
Increased margin contributed GBP1.9m to the GP increase with an 11%
decrease in the volume of gold sold offsetting the uplift by
GBP0.8m.
Other services
Other services principally comprise trading activities of
foreign currency exchange (FX), cheque cashing, money-transfer and
buyback. Gross profits from these activities reduced to GBP6.0m
(2019: GBP9.0m).
FX, cheque cashing and buyback revenues all declined in the year
with gross profits from FX reducing to GBP3.4m (2019: GBP5.2m),
cheque cashing reducing to GBP1.2m (2019: 1.5m) and buyback
reducing to GBP0.3m (2019: GBP1.7m). Money-transfer revenues
increased to GBP1.1m (2019: 0.3m). The buyback operation (the
purchase and sale of mobile phones and tablets) was ceased early in
the year.
Other income
Other income of GBP3.8m (2019: nil) comprises HM Government job
retention scheme and rate grant monies.
Costs
Taking out the impact of loan impairment charges, the Group's
aggregated direct and administration costs increased by GBP1.4m,
2.4%. The uplift is primarily a result of the full year impact of
operating the additional 70 stores acquired during 2019, partially
offset by some operational and transactional cost reductions while
stores were closed. We have incurred some additional Covid-19
related costs, associated with ensuring colleague and customer
safety.
Debt finance costs fell to GBP0.5m (2019: GBP0.9m), as the Group
paid down its borrowing in full during the year. The reduced
borrowing is a direct consequence of the reduction in our personal
and pawnbroking lending books.
CASH FLOW
The reduction in lending books during the year resulted in a
GBP29.6m increase in operating cash flow to GBP55.4m (2019:
GBP25.8m).
Total increase in cash during the year was GBP22.5m after
repaying GBP26.0m of borrowings, with net cash of GBP34.5m (31
December 2019: GBP12.0m). As at 31 December 2020 the GBP35.0m
revolving credit facility was undrawn. This facility, together with
the strong cash position provide the Group with the funds required
to deliver its current strategy.
BALANCE SHEET
As at 31 December 2020, the Group had net assets of GBP134.5m
(2019: GBP122.6m), no debt and GBP34.5m cash (2019: GBP12.0m). The
Group was well within banking covenants with a net debt to EBITDA
ratio of nil (2019: 0.58) and an EBITDA to interest ratio of 49.9
(2018: 30.4) (see note 3 for the definition of EBITDA).
The combination of cash reserves and a secure credit facility
provides the Group with the ability to make selective investments
in the future while maintaining appropriate headroom.
GOING CONCERN
The Group has considered the impact of Covid-19 on its financial
statements. The Group has significant cash resources of GBP34.5m
and access to an undrawn GBP35.0m revolving credit facility with an
expiry date of June 2022.
IMPAIRMENT REVIEW
The Group performs an annual review of the expected earnings of
each acquired store and considers whether the associated goodwill
and other property, plant and equipment values are impaired. The
Group has also considered impairment of its right-of-use-assets
(property leases). A total impairment charge of GBP0.5m (2019: nil)
has been applied in respect of its right-of-use-assets.
SHARE PRICE AND EPS
At 31 December 2020 the share price was 258p (2019: 338p) and
market capitalisation was GBP102.6m (2019: GBP134.3m). Basic
earnings per share were 32.1p (2019: 43.9p), diluted earnings per
share were 32.1p (2019: 43.8p).
Richard Withers
Chief Financial Officer
Group statement of comprehensive income
For the year ended 31 December 2020
2020 2019
Continuing operations: Note GBP'000 GBP'000
Revenue 2 129,115 160,213
Cost of sales (46,316) (58,852)
Gross profit 2 82,799 101,361
Other direct expenses (50,188) (60,842)
Administrative expenses (15,727) (18,031)
Operating profit 16,884 22,488
Investment revenues 5 -
Finance costs 3 (1,257) (2,405)
Profit before taxation 15,632 20,083
Tax charge on profit 4 (3,070) (3,393)
Profit for the financial year and total
comprehensive income 12,562 16,690
2020 2019
Earnings per share from continuing Pence Pence
operations
Basic 5 32.11 43.88
Diluted 5 32.11 43.80
All profit for the year is attributable to equity
shareholders.
Group statement of changes in equity
For the year ended 31 December 2020
Employee
Benefit
Trust
Share premium shares Retained
Share capital account reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2019 1,883 27,153 (35) 74,820 103,821
Profit for the year - - - 16,690 16,690
Total comprehensive
income - - - 16,690 16,690
Issue of share capital 104 6,026 - - 6,130
Share option movement - - - 328 328
Dividends paid - - - (4,363) (4,363)
At 31 December 2019 1,987 33,179 (35) 87,475 122,606
At 1 January 2020 1,987 33,179 (35) 87,475 122,606
Profit for the year - - - 12,562 12,562
Total comprehensive
income - - - 12,562 12,562
Issue of share capital 6 307 - - 313
Share option movement - - - 64 64
Dividends - - - (996) (996)
At 31 December 2020 1,993 33,486 (35) 99,105 134,549
Group balance sheet
As at 31 December 2020
Note 31 December 31 December
2020 2019
GBP'000 GBP'000
Non-current assets
Goodwill 19,330 19,580
Other intangible assets 2,729 3,889
Property, plant and equipment 8,635 7,739
Right-of-use assets 18,337 21,147
Deferred tax assets 2,822 2,180
51,853 54,535
Current assets
Inventories 27,564 29,157
Trade and other receivables 55,751 90,891
Other current assets 1 714
Cash and bank balances 34,453 12,003
117,769 132,765
Total assets 169,622 187,300
Current liabilities
Trade and other payables (10,807) (10,578)
Lease liabilities (3,568) (4,890)
Current tax liability (1,972) (2,066)
(16,347) (17,534)
Net current assets 101,422 115,231
Non-current liabilities
Borrowings - (26,000)
Lease liabilities (17,077) (19,670)
Long term provisions (1,649) (1,490)
(18,726) (47,160)
Total liabilities (35,073) (64,694)
Net assets 134,549 122,606
Equity
Share capital 8 1,993 1,987
Share premium account 33,486 33,179
Employee Benefit Trust shares
reserve (35) (35)
Retained earnings 99,105 87,475
Total equity attributable
to equity holders 134,549 122,606
The financial statements of H&T Group plc, registered number
05188117, were approved by the Board of Directors and authorised
for issue on 22 March 2021. They were signed on its behalf by:
C D Gillespie
Chief Executive
Group cash flow statement
For the year ended 31 December 2020
Note 2020 2019
GBP'000 GBP'000
Net cash generated from operating activities 6 55,350 25,829
Investing activities
Interest received 5 -
Purchases of intangible assets (233) (9)
Purchases of property, plant and equipment (3,005) (3,316)
Acquisition of trade and assets of
businesses (50) (18,740)
Acquisition of Right-of-use assets (2,934) (5,592)
Net cash used in investing activities (6,217) (27,657)
Financing activities
Dividends paid (996) (4,363)
(Reduction)/Increase in borrowings (26,000) 1,000
Debt restructuring costs - (350)
Proceeds on issue of shares 313 6,130
Net cash generated / (used in) from
financing activities (26,683) 2,417
Net increase in cash and cash equivalents 22,450 589
Cash and cash equivalents at beginning
of the year 12,003 11,414
Cash and cash equivalents at end of
the year 34,453 12,003
Notes to the preliminary announcement
for the year ended 31 December 2020
1. Finance information and significant accounting policies
The financial information has been abridged from the audited
financial statements for the year ended 31 December 2020.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2020
or 2019 but is derived from those accounts. Statutory accounts for
2019 have been delivered to the Registrar of Companies and those
for 2020 will be filed with the Registrar in due course. The
auditors have reported on those accounts: their reports were
unqualified, did not draw attention to any matters by way of
emphasis and did not contain statements under s498 (2) or (3)
Companies Act 2006 or equivalent preceding legislation.
Whilst the financial information included in this preliminary
announcement has been prepared in accordance with International
Financial Reporting Standards (as adopted for use in the UK)
('IFRS'), this announcement does not itself contain sufficient
information to comply with IFRS. The Group will be publishing full
financial statements that comply with IFRS in April 2021.
Going concern
The Group has prepared the financial statements on a going
concern basis, with due consideration to the unprecedented impact
of Covid-19 on the economy and society. The Board has considered
the impact of Covid-19 on the business and conducted a going
concern review to ensure this basis remains appropriate.
The Group delivered profit before tax of GBP15.6m for the year
ended 31 December 2020 (2019: GBP20.1m). The Group also increased
its net assets to GBP134.5m (2019: GBP122.6m).
The Group has significant cash resources at 31 December 2020 of
GBP34.5m and access to an unutilised revolving credit facility with
Lloyds Bank plc which allows for maximum borrowings of GBP35.0m,
subject to covenants. The facility terminates on 12 June 2022, with
the potential to extend for two additional years to June 2023 and
2024. This strong balance sheet position provides a high level of
confidence that the Group will be able to repay all liabilities as
they fall due during 2021 and into H1 2022 at least. The Group met
all covenants in 2020 and there is no evidence to suggest that they
will not be met in 2021 or H1 2022.
The Group's activities include services deemed essential by the
government and therefore the Group's stores have been able to open
during recent lockdowns. The Group's essential services include
pawnbroking, foreign currency, money transfer and cheque cashing.
The Group has a strong asset base and the ability to generate cash
quickly through the sale of jewellery stock for its intrinsic value
or by restricting new pawnbroking lending.
The Board has approved a detailed budget for 2021, which has
subsequently been updated to form a reasonable worst-case forecast
taking into consideration the current lockdown. All forecasts and
sensitivities indicate surplus cash generated from operations for
the period reviewed after accounting for the Company's forecast
levels of capital expenditure. In considering the going concern
basis of preparation longer term forecasts are also prepared, with
the financial forecasts revealing no inability to meet financial
covenants or repay liabilities. Covid-19 is an unprecedented event
that has already had and will continue to have for an unknown
period profound impacts on economic and social behaviour.
The Group's offering is principally through secured lending
against pledges. The Group's policies on pawn lending remain
rigorous and prudent, such that the Group has limited exposure to
loss in the event of customers not redeeming their pledges, due to
the value of the pledge collateral held, principally being gold and
precious stones. The Group has no reason to believe that the value
will not be maintained in the near future.
Based on the above considerations and after reviewing in detail
2021 and H1 2022 forecasts, the Directors have formed the view that
the Group has adequate resources to continue as a going concern for
the next 12 months and has prepared the financial statements on
this basis.
Impairment of non--financial assets including goodwill and other
intangibles
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the
Group estimates the asset's recoverable amount. An asset's
recoverable amount is the higher of an asset's or cash-generating
unit (CGU)'s fair value and its value in use. It is determined for
an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or
groups of assets. Where the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre--tax discount rate of
9% (2019: 9%) which reflects the current market assessments of the
time value of money and the risks specific to the asset. In
determining fair value less costs of disposal, recent market
conditions, including Covid-19 are taken into account.
The Group bases its impairment calculation on detailed budgets
and historical performance measures. These are prepared separately
for each of the Group's CGUs to which the individual assets are
allocated, which is usually taken to be at store level.
Impairment losses of continuing operations are recognised in the
statement of comprehensive income in those expense categories
consistent with the function of the impaired asset.
While the impairment review has been conducted based on the best
available estimates at the impairment review dates, the Group notes
that actual events may vary from management expectation, but are
comfortable that other than a right-of-use-assets (property leases)
impairment charge of GBP0.5m (2019: nil) no further impairment
exists at the balance sheet date based on reasonably possible
sensitivities.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
and services and interest income provided in the normal course of
business, net of discounts, VAT and other sales-related taxes.
The Group recognises revenue from the following major
sources:
-- Pawnbroking, or Pawn Service Charge (PSC);
-- Retail jewellery sales;
-- Pawnbroking scrap and gold purchasing;
-- Personal loans interest income;
-- Income from other services and
-- Other income
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured.
Pawnbroking, or Pawn Service Charge (PSC)
PSC comprises contractual interest earned on pledge loans, plus
auction profit or loss, less any auction commissions payable and
less surplus payable to the customer. Revenue is recognised over
time in relation to the interest accrued by reference to the
principal outstanding and the effective interest rate applicable as
governed by IFRS 9.
Retail jewellery sales
Jewellery inventory is sourced from unredeemed pawn loans, newly
purchased items and inventory refurbished from the Group's gold
purchasing operation. For sales of goods to retail customers,
revenue is recognised when control of the goods has transferred,
being at the point the customer purchases the goods at the store.
Payment of the transaction price is due immediately at the point
the customer purchases the goods.
Under the Group's standard contract terms, customers have a
right of return within 30 days. Whilst stores were closed owing to
Covid-19 restrictions the returns policy was extended to cover a
period of 30 days after the store reopened. Additional flexibility
was offered during the year to allow customers to return items by
post rather than attend store. At the point of sale, a refund
liability and a corresponding adjustment to revenue is recognised
for those products expected to be returned. At the same time, the
Group has a right to recover the product when customers exercise
their right of return so consequently recognises a right to
returned goods asset and a corresponding adjustment to cost of
sales.
The Group uses its accumulated historical experience to estimate
the number of returns. It is considered highly probable that a
significant reversal in the cumulative revenue recognised will not
occur given the consistent and immaterial level of returns over
previous years; as a proportion of sales 2020 returns were 6%
(2019: 6%)
Pawnbroking scrap and gold purchasing
Scrap revenue comprises proceeds from gold scrap sales. Revenue
is recognised when control of the goods has transferred, being at
the point the smelter purchases the relevant metals.
Personal loans interest income
This comprises income from the Group's unsecured lending
activities. Personal loan revenues are shown stated before
impairment when in stages 1 and 2 of the expected credit loss model
and net of impairment when in stage 3. The impairment charge is
included within other direct expenses in the Group statement of
comprehensive income. Revenue is recognised over time in relation
to the interest accrued, as dictated by IFRS 9.
Other services
Other services comprise revenues from third party cheque
cashing, foreign exchange income, buyback, Western Union and other
income. Commission receivable on cheque cashing, foreign exchange
income and other income is recognised at the time of the
transaction as this is when control of the goods has transferred.
Buyback revenue is recognised at the point of sale of the item back
to the customer, when control of the goods has transferred.
The Group recognises interest income arising on secured and
unsecured lending within trading revenue rather than investment
revenue on the basis that this represents most accurately the
business activities of the Group.
Other income
Government grants, including monies received under the
Coronavirus job retention scheme are recognised as other income
when there is reasonable assurance that the Group will comply with
the scheme conditions and the monies will be received. There are no
unfulfilled conditions and contingencies attaching to recognised
grants.
Gross profit
Gross profit is stated after charging inventory, pledge and
other services provisions and direct costs of inventory items sold
or scrapped in the year.
Other direct expenses
Other direct expenses comprise all expenses associated with the
operation of the various stores and collection centre of the Group,
including premises expenses, such as rent, rates, utilities and
insurance, all staff costs and staff related costs for the relevant
employees.
Inventories provisioning
Where necessary provision is made for obsolete, slow moving and
damaged inventory or inventory shrinkage. The provision for
obsolete, slow moving and damaged inventory represents the
difference between the cost of the inventory and its market value.
The inventory shrinkage provision is based on an estimate of the
inventory missing at the reporting date using historical shrinkage
experience.
2. Operating segments
Business segments
For reporting purposes, the Group is currently organised into
six segments - pawnbroking, gold purchasing, retail, pawnbroking
scrap, personal loans and other services.
The principal activities by segment are as follows:
Pawnbroking:
Pawnbroking is a loan secured against a collateral (the pledge).
In the case of the Group, over 99% of the collateral against which
amounts are lent comprises precious metals (predominantly gold),
diamonds and watches. The pawnbroking contract is a six-month
credit agreement bearing a monthly interest rate of between 1.99%
and 9.99%. The contract is governed by the terms of the Consumer
Credit Act 2008 (previously the Consumer Credit Act 2002). If the
customer does not redeem the goods by repaying the secured loan
before the end of the contract, the Group is required to dispose of
the goods either through public auctions if the value of the pledge
is over GBP75 (disposal proceeds being reported in this segment)
or, if the value of the pledge is GBP75 or under, through public
auctions or the retail or pawnbroking scrap activities of the
Group.
Purchasing:
Jewellery is bought direct from customers through all of the
Group's stores. The transaction is simple with the store agreeing a
price with the customer and purchasing the goods for cash on the
spot. Gold purchasing revenues comprise proceeds from scrap sales
on goods sourced from the Group's purchasing operations.
Retail:
The Group's retail proposition is primarily gold and jewellery
and the majority of the retail sales are forfeited items from the
pawnbroking pledge book or refurbished items from the Group's gold
purchasing operations. The retail offering is complemented with a
small amount of new or second-hand jewellery purchased from third
parties by the Group.
Pawnbroking scrap:
Pawnbroking scrap comprises all other proceeds from gold scrap
sales of the Group's inventory assets other than those reported
within gold purchasing. The items are either damaged beyond repair,
are slow moving or surplus to the Group's requirements, and are
smelted and sold at the current gold spot price less a small
commission.
Personal loans:
Personal loans comprise income from the Group's unsecured
lending activities. Personal loan revenues are stated at amortised
cost after taking into consideration an assessment on a
forward-looking basis of expected credit losses.
Other services:
This segment comprises:
-- Third party cheque encashment which is the provision of cash
in exchange for a cheque payable to our customer for a commission
fee based on the face value of the cheque.
-- Buyback which is a service where items are purchased from
customers, typically high-end electronics, and may be bought back
up to 31 days later for a fee.
-- The foreign exchange currency service where the Group earns a
margin when selling or buying foreign currencies.
-- Western Union commission earned on the Group's money transfer service.
Cheque cashing is subject to bad debt risk which is reflected in
the commissions and fees applied.
Further details on each activity are included in the Chief
Executive's review.
Segment information for these businesses is presented below:
Gold Pawnbroking Personal Other Other
2020 Pawnbroking purchasing Retail scrap loans services income Total
Revenue GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
External revenue 38,970 21,508 29,827 19,249 9,781 6,014 3,766 129,115
Total revenue 38,970 21,508 29,827 19,249 9,781 6,014 3,766 129,115
Gross profit 38,970 6,802 11,303 6,163 9,781 6,014 3,766 82,799
Impairment (4,763) - - - (1,675) - - (6,438)
Segment result 34,207 6,802 11,303 6,163 8,106 6,014 3,766 76,361
Other direct expenses excluding impairment (43,750)
Administrative expenses (15,727)
Operating profit 16,884
Interest receivable 5
Financing costs (1,257)
Profit before taxation 15,632
Tax charge on profit (3,070)
Profit for the financial year and
total comprehensive income 12,562
Gold Pawnbroking Personal Other Other
2019 Pawnbroking purchasing Retail scrap loans services income Total
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
Interest receivable -
Financing 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
Gross profit is stated after charging the direct costs of
inventory items sold or scrapped in the period. Other operating
expenses of the stores are included in other direct expenses. The
Group is unable to meaningfully allocate the other direct expenses
of operating the stores between segments as the activities are
conducted from the same stores, utilising the same assets and
staff. The Group is also unable to meaningfully allocate Group
administrative expenses, or financing costs or income between the
segments. Accordingly, the Group is unable to meaningfully disclose
an allocation of items included in the consolidated statement of
comprehensive income below gross profit, which represents the
reported segment results.
The Group does not apply any inter-segment charges when items
are transferred between the pawnbroking activity and the retail or
pawnbroking scrap activities .
Pawn- Unallocated
2020 Gold broking Personal Other assets/
Pawn-broking purchasing Retail scrap loans services (liabilities) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Other information
Capital additions
(*) 6,060 6,060
Depreciation,
amortisation
and impairment
(*) 9,286 9,286
Balance sheet
Assets
Segment assets 48,344 986 25,740 839 5,891 - 81,800
Unallocated
corporate
assets 72,476 72,476
Consolidated total
assets 169,622
Liabilities
Segment liabilities - - (814) - - (274) (1,088)
Unallocated
corporate
liabilities (33,985) (33,985)
Consolidated total
liabilities (35,073)
Pawn- Unallocated
2019 Gold broking Personal Other assets/
Pawn-broking purchasing Retail scrap loans services (liabilities) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Other information
Capital additions
(*) 15,716 15,716
Depreciation and
amortisation (*) 7,467 7,467
Balance sheet
Assets
Segment assets 72,199 1,414 27,391 1,067 16,628 - 118,699
Unallocated
corporate
assets 45,418 45,418
Consolidated total
assets 187,300
Liabilities
Segment liabilities - - (657) - - (209) (866)
Unallocated
corporate
liabilities (63,828) (63,828)
Consolidated total
liabilities (64,694)
(*) The Group cannot meaningfully allocate this information by
segment due to the fact that all the segments operate from the same
stores and the assets in use are common to all segments.
Geographical segments
The Group's revenue from external customers by geographical
location are detailed below:
2020 2019
GBP'000 GBP'000
United Kingdom 127,487 158,582
Other 1,628 1,631
129,115 160,213
The Group's non-current assets are located entirely in the
United Kingdom. Accordingly, no further geographical segments
analysis is presented.
3. Financing costs
2020 2019
GBP'000 GBP'000
Interest on bank loans 404 693
Other interest 1 1
Interest expense on the
lease liability 735 1,524
Amortisation of debt issue
costs 117 187
Total interest expense 1,257 2,405
4. Tax charge on profit
(a) Tax on profit on ordinary activities
2020 2019
Current tax GBP'000 GBP'000
United Kingdom corporation tax charge at 19%
(2018: 19%)
based on the profit for the year 3,628 3,634
Adjustments in respect of prior years (14) 195
Total current tax 3,614 3,829
Deferred tax
Timing differences, origination and reversal (358) 262
Adjustments in respect of prior years (6) (698)
(180) -
Total deferred tax (note 24) (544) (436)
Tax charge on profit 3,070 3,393
(b) Factors affecting the tax charge for the year
The tax assessed for the year is higher than that resulting from
applying a standard rate of corporation tax in the UK of 19% (2019:
19%). The differences are explained below:
2020 2019
GBP'000 GBP'000
Profit before taxation 15,632 20,083
Tax charge on profit at standard rate 2,970 3,816
Effects of:
Disallowed expenses and non-taxable income 236 150
Non-qualifying depreciation 840 (80)
Effect of change in tax rate (180) -
Movement in short-term timing differences (776) 10
Adjustments to tax charge in respect of
prior years (20) (503)
Tax charge on profit 3,070 3,393
In addition to the amount charged to the income statement and in
accordance with IAS 12, the excess of current and deferred tax over
and above the relative related cumulative remuneration expense
under IFRS 2 has been recognised directly in equity. The amount
released from equity in the current period was GBP98,000 (2019:
GBP61,000).
5. Earnings per share
Basic earnings per share is calculated by dividing the profit
for the year attributable to equity shareholders by the weighted
average number of ordinary shares in issue during the year.
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 and conditional shares granted to employees
where the exercise price is less than the average market price of
the Company's ordinary shares during the year.
Reconciliations of the earnings per ordinary share and weighted
average number of shares used in the calculations are set out
below:
Year ended 31 December Year ended 31 December
2020 2019
Weighted Weighted
average Per-share average Per-share
Earnings number amount Earnings number amount
GBP'000 of shares pence GBP'000 of shares pence
Earnings per share:
basic 12,562 39,124,959 32.11 16,690 38,039,328 43.88
Effect of dilutive
securities
Options and conditional
shares - 1,278 (0.00) - 68,197 (0.08)
Earnings per share:
diluted 12,562 39,126,237 32.11 16,690 38,107,525 43.80
6. Notes to the Cash Flow Statement
2020 2019
GBP'000 GBP'000
Profit for the year 12,562 16,690
Adjustments for:
Investment revenues (5) -
Financing costs 1,257 2,405
Increase in provisions 160 237
Income tax expense 3,070 3,393
Depreciation of property, plant and equipment 2,204 2,272
Depreciation of right-of-use assets 5,122 4,604
Amortisation of intangible assets 1,428 591
Right of use asset Impairment 531 -
Share-based payment expense (35) 266
Loss on disposal of property, plant and equipment 99 70
Operating cash flows before movements in working
capital 26,393 30,528
Decrease in inventories 1,679 105
Decrease in other current assets 713 163
Decrease/(increase) in receivables 35,200 (5,500)
(Decrease)/increase in payables (3,842) 5,347
Cash generated from operations 60,143 30,643
Income taxes paid (3,707) (2,604)
Interest paid on loan facility (350) (686)
Interest paid on lease liability (736) (1,524)
Net cash generated from operating activities 55,350 25,829
Cash and cash equivalents (which are presented as a single class
of assets on the face of the balance sheet) comprise cash at bank
and other short-term highly liquid investments with a maturity of
three months or less.
7. Earnings before interest, tax, depreciation and amortisation ("EBITDA")
EBITDA
EBITDA is a non IFRS9 measure and 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:
2020 2019
GBP'000 GBP'000
Operating profit 16,884 22,488
(i) Depreciation of the right-of-use assets 5,122 4,604
(ii) Depreciation and amortisation- other 3,633 2,862
(iii) Impairment of the right-of-use-assets 531 -
EBITDA 26,170 29,954
The Board consider EBITDA to be a key performance measure as the
Group borrowing facility includes a number of loan covenants based
on it.
8. Share capital
2020 2019
GBP'000 GBP'000
Issued, authorised and fully paid
39,864,077 (2019: 39,736,476) ordinary shares
of GBP0.05 each 1,993 1,987
The Group has one class of ordinary shares which carry no right
to fixed income.
The Group issued share capital amounting to GBP6,000 (2019:
GBP104,000) during the year. Associated share premium of GBP307,000
(2019: GBP6,026,000) was created.
9. Acquisitions
The following acquisitions were made during the year:
Total Total
2020 2019
GBP'000 GBP'000
Assets
Goodwill - 1,937
Intangible assets 35 3,891
Property, plant and equipment 3 1,185
Inventory 86 -
Trade receivables 177 11,727
Cash - 1,012
Total assets acquired 301 19,752
Total consideration:
Cash 301 19,752
Net cash outflow arising
on acquisition
Cash consideration 301 19,752
Less: cash balances acquired - (1,012)
Total assets acquired 301 18,740
On 30 November 2020, the Company acquired trade and assets from
A.F. Discount Jewellery Ltd for total consideration of GBP301k. The
fair value of financial assets includes trade receivables measured
in accordance with IFRS 9 and intangible assets which have been
valued by the Group based on discounted cash flow.
10. Contingent Liabilities
As set out initially in our market release of 18 November 2019
and in subsequent updates the Group has been 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. The skilled person was appointed
on 3 September 2020 under section 166 of the Financial Services and
Markets Act 2000 to oversee the group's proposed redress
methodology.
Given the ongoing disruption from the pandemic, the skilled
person has currently been unable to carry out sufficient review to
satisfy themselves on the appropriate methodology for establishing
potential customer redress. The outcome of this review will now
likely be delayed into the second quarter of 2021 and it is
primarily for this reason that we are unable to reliably estimate
the financial effect on the Group. H&T expects an outcome
within previous guidance.
11. Events after the balance sheet date
The Directors have proposed a final dividend for the year ended
31 December 2020 of 6.0p (2019: nil).
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