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H&T comes out of lockdown in a strong financial position
H&T (HAT:AIM) 318.5p
Gain to date: +0.6%
Original entry point: Buy at 316.7p, 11 June 2020
More details around H&T’s (HAT:AIM) store reopening and finances were released at the end of June which highlighted how well the business had been managed during lockdown.
A phased reopening commenced between 12 May and 31 May, allowing the firm to provide its full range of financial services with the exclusion of unsecured lending. From 15 June the company was able to offer the sale of retail jewellery through the stores.
It continued to sell jewellery online throughout lockdown and took advantage of a relatively high gold price to smelt gold, adding to cash flows.
In addition, a new online pawnbroking portal was launched allowing customers to settle loans remotely with 12,000 customers so far taking up the service, making payments of £3 million.
Prompt cost mitigation actions and gold processing income resulted in cash inflows and a reduction of net debt at the end of June which means the group can draw upon its full revolving credit facility in coming months to support growth in the pledge book.
Uncertainty remains around how long it will take to build revenues back up to pre Covid-19 levels, but management are reassured by the volume of customers being served and a recovery in new customer lending.
SHARES SAYS: Swift management actions have left the business well prepared for future growth. Buy.