TIDMRFX
RNS Number : 7927Y
Ramsdens Holdings PLC
18 January 2022
Ramsdens Holdings PLC
("Ramsdens", the "Group", the "Company")
Annual Results for the year ended 30 September 2021
Resilient performance and well positioned to resume our growth
strategy
Ramsdens, the diversified financial services provider and
retailer, today announces its Annual Results for the year ended 30
September 2021 (the "Period").
The prior period financial statements cover an 18 month period
to September 2020, which includes a very strong 12 months of
trading prior to the pandemic. The Board has taken the decision not
to include information for the 12 month period to 30 September 2020
as it would be unaudited and the trading conditions, including
level of restrictions and impact of the COVID-19 pandemic, in the
two periods are not comparable.
FY21 FP 20
(12 months) (18 months)
Revenue GBP40.7m GBP72.5m*
------------- -------------
Gross Profit GBP22.3m GBP47.1m
------------- -------------
Profit before tax GBP0.6m GBP9.2m
------------- -------------
Net Assets GBP36.1m GBP35.6m
------------- -------------
Net Cash GBP13.0m GBP15.9m
------------- -------------
Final dividend 1.2p -
------------- -------------
*Restated. The Group has changed an accounting policy in
relation to pawnbroking loans in the course of realisation. There
is no impact to gross profit or net assets. Further details can be
found in the Financial Director's Review.
Highlights:
-- Resilient performance achieved under challenging trading
conditions caused by COVID-19 restrictions.
-- A profitable year with continued modest investment in long
term strategic growth opportunities and a strong year-end balance
sheet with net cash of GBP13.0m.
-- The Group kept almost all stores open through the retail
lockdowns and continued to provide essential services that offer
financial support to our loyal customers.
-- The Group received GBP1.6m of Government Support during the
year, including GBP1.5m through the furlough scheme to assist in
retaining jobs.
-- Travel restrictions were tougher in summer 2021 than in
summer 2020, significantly impacting foreign currency exchange
volumes. This resulted in foreign currency income approximately
GBP10m lower than pre pandemic levels.
-- The investment in the Group's online retail jewellery
operation has led to online sales more than doubling year on
year.
-- The Board will be recommending a final dividend of 1.2p per
share for approval at the forthcoming AGM.
Current Trading:
The Board is pleased to provide an update on Q1 FY22 trading
(October to December 2021).
-- Investments in our jewellery retail operations have continued to produce strong results.
o In store retail jewellery revenue up more than 30% on October
to December 2020.
o Online retail jewellery revenue up more than 70% on October to
December 2020.
-- The latent demand for foreign holidays remains strong and we
are optimistic of international travel, and therefore our foreign
currency exchange volumes, increasing as COVID-19 testing
restrictions are eased.
o Foreign currency volumes were approximately 40% of pre
pandemic levels but had increased by almost 200% on October to
December 2020.
-- The expected need for our pawnbroking service has seen, and
will continue to see, increased demand as our customers' needs for
short term financing grow.
o Pawnbroking loan book has grown to GBP6.8m as at 31 December
2021 (GBP5.9m at 31 December 2020).
-- As life normalises and we can offer our purchase of precious
metal service to our foreign currency customers, we expect to
increase the volume of gold purchased.
o The weight of the gold purchased from customers was
approximately 80% of pre pandemic levels but had increased by
approximately 50% on October to December 2020.
Ramsdens has remained agile and resilient to the trading
conditions caused by the pandemic. The Group has invested in
activities that have presented opportunities for continued growth
and the Board looks forward with optimism on delivering our growth
strategy for the long-term benefit of all our stakeholders.
Peter Kenyon, Chief Executive, commented:
"We are pleased to have delivered a resilient performance
despite the difficult trading conditions experienced. We remain
committed to our long term growth strategy and are pleased to have
delivered on some key operational objectives, namely: doubling the
jewellery sold through our website www.ramsdensjewellery.co.uk ;
expanding geographically into the South East; relocating stores
where appropriate and investing in our jewellery offering with over
1000 premium watches now available.
We have had to be patient about the return of our foreign
currency volumes as we have no control over the international
travel restrictions imposed, but we are confident that as
international travel returns our foreign currency income will grow.
We were, and remain, confident that the demand for our pawnbroking
service would increase as customers started to live normal lives
again, outside of lockdown. We expect our loan books to continue to
grow in 2022.
Our staff have continued to be fantastic. I have great pride in
the service levels that the team have delivered throughout the
pandemic despite all the challenges faced. I would like to thank
them for their dedication, passion and hard work.
While FY22 remains a transitionary period as we are still very
much subject to the impact of the pandemic, I believe we are making
good progress."
Availability of Report and Accounts
The Company confirms that the annual report and financial
statements for the year ended 30 September 2021, together with
notice of the Company's 2021 annual general meeting, will be
published and posted to shareholders shortly and will be available
to view on the Company's investor relations website:
https://www.ramsdensplc.com/investor-relations/reports-and-presentations
, in accordance with AIM Rule 20.
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulation (EU) No. 596/2014 as amended by The Market
Abuse (Amendment) (EU Exit) Regulations 2019.
S
Enquiries:
Ramsdens Holdings PLC Tel: +44 (0) 1642 579957
Peter Kenyon, CEO
Martin Clyburn, CFO
Liberum Capital Limited (Nominated Adviser) Tel: +44 (0) 20 3100 2000
Richard Crawley
Lauren Kettle
Hudson Sandler (Financial PR) Tel: +44 (0) 20 7796 4133
Alex Brennan
Lucy Wollam
About Ramsdens
Ramsdens is a growing, diversified, financial services provider
and retailer, operating in the four core business segments of
foreign currency exchange, pawnbroking loans, precious metals
buying and selling and retailing of second-hand and new jewellery.
Ramsdens does not offer unsecured high-cost short term credit.
Headquartered in Middlesbrough, the Group operates from 155
stores within the UK (including 3 franchised stores) and has a
growing online presence.
Ramsdens is FCA authorised for its pawnbroking and credit
broking activities.
www.ramsdensplc.com
www.ramsdensforcash.co.uk
CHAIRMAN'S STATEMENT
"I am extremely proud of how the business has faced the
challenges posed by the pandemic in the last year."
INTRODUCTION
This Annual Report covers the 12-month period to 30 September
2021, a year impacted by the ongoing COVID-19 pandemic. The prior
period referred to throughout this report is the 18-month period to
30 September 2020, which includes a very strong 12 months of
trading prior to the pandemic and six months affected by the
pandemic.
I am extremely proud of how the business has faced the
challenges posed by the pandemic in the last year. This is a great
testament to the skill of our team, the strength of our brand, and
the resilience of our diversified business model.
While there is hope that a sense of normality will return in the
UK, 2021 saw tougher international travel restrictions than 2020.
As a result, the Group's income from foreign currency exchange for
the year was approximately GBP10m lower than pre-pandemic levels.
However, with the benefit of the Group's diversified income
streams, successful investment in online jewellery retail which saw
online retail revenue double year on year, and the receipt of
government support particularly through the furlough scheme, the
Group was able to trade profitably for the year.
FINANCIAL RESULTS & DIVID
The below table highlights the financial results:
GBP000's FY21 FP20
(12 months) (18 months)
Revenue GBP40,677 GBP72,493*
------------- -------------
Gross Profit GBP22,262 GBP47,149
------------- -------------
Profit Before GBP564 GBP9,221
Tax
------------- -------------
Net Assets GBP36,143 GBP35,555
------------- -------------
Net Cash GBP13,032 GBP15,873
------------- -------------
EPS 1.2p 23.1p
------------- -------------
Final dividend 1.2p -
------------- -------------
*Restated due to an accounting policy change, see Financial
Director's Review page 26
Despite the tough trading conditions, the Group achieved revenue
of GBP40.7m (FP20: GBP72.5m) and Profit Before Tax of GBP0.6m
(FP20: GBP9.2m). The Strategic Report and Financial Review that
follow provide a more in-depth analysis of the trading performance
and financial results of the Group.
The Board has recommended a final dividend of 1.2p for approval
at the forthcoming AGM. This represents the full earnings for the
year and takes into account that the Group's strong cash position
is sufficient to deliver on its growth plans. Subject to approval
at the AGM, the final dividend is expected to be paid on 10 March
2022 for those shareholders on the register on 4 February 2022. The
ex-dividend date will be 3 February 2022. As we move forward, we
will resume our progressive dividend policy of paying approximately
50% of post-tax profits to shareholders, always subject to
executing on the Group's growth opportunities.
The Ramsdens team has been agile in adapting to the restrictions
caused by the pandemic. We have invested in areas of the business
that have presented opportunities and our teams have showed
continued commitment to our customers and the communities in which
we operate. I would personally like to thank each and every one of
my colleagues at Ramsdens for their dedication during this
period.
While we are still learning to live with COVID-19, I have a
positive outlook on the Group's future. The Group has continued to
make improvements and invest in its retail operations, both instore
and online. Pawnbroking is a highly valued service for many
consumers and the Board is confident that loan books will grow back
over time. Underlying consumer demand for international travel is
strong and therefore the need for our foreign currency exchange
service will return. In addition, we have further opportunities to
grow the footprint of our store estate in the UK. I am therefore
confident that the Group is in a good position to move forward and
deliver on its strategic ambition to achieve long term, sustainable
growth.
Andrew Meehan
Non-Executive Chairman
17 January 2022
CHIEF EXECUTIVE'S REVIEW
" This year has demonstrated, above all else, the resilience of
the Ramsdens business"
INTRODUCTION
The pandemic has presented several new challenges that I had not
encountered in my 20 years at Ramsdens. Back in 2013, when the gold
price crashed, we adapted and successfully diversified the
business, making the Group less reliant on buying and selling gold
and strengthening our balance sheet. Since then, we have continued
to diversify the Group's income streams, a strategy which has
proved its value during the year. We have been able to trade
profitably despite the significant reduction in foreign currency
commission, which was, prior to the pandemic, our main income
stream. This year has demonstrated, above all else, the resilience
of the Ramsdens business.
FY21 has seen retail lockdowns and restrictions placed on UK
consumers travelling abroad that were far tougher than in the
summer of 2020. During this, we utilised, and were grateful for,
the UK Government's Coronavirus Job Support Scheme which helped
protect jobs and allowed the Group to trade flexibly, in particular
operating on reduced opening hours in our high street stores.
RESPONDING TO THE COVID-19 PANDEMIC
The pandemic has had a huge impact on the lives of many within
our communities and for those who work for, engage with, or supply
Ramsdens. We have seen periods of regional restrictions and
national lockdowns, which have affected the high street unlike
anything we had contemplated prior to the onset of the
pandemic.
Classified as an essential service, owing to the financial
support we provide our many loyal customers, we have kept our
stores open throughout FY21, only temporarily closing those stores
in close proximity to another store, or our very new stores.
Throughout the Period, Ramsdens continued to prioritise the
wellbeing of its staff and customers and traded in accordance with
the Government's COVID-19 secure guidelines.
Despite all these challenges the Group has remained committed to
its growth strategy. With the benefit of its strong cash balance
and ability to generate cash from trading, the Group has continued
to invest during the year. Two new stores have opened, five stores
have been relocated and one loan book was acquired. Ramsdens also
increased investment in its online retail jewellery business, which
has continued to show significant growth, broadening customer reach
while offering customers increased choice in how and when they use
the Group's services. After these investments, the Group's cash
position as at 30 September 2021 remained strong at GBP13.0m and
the Group's revolving credit facility of GBP10m remained
undrawn.
The Group's progress and performance would not have been
possible without the hard work, commitment and flexibility of the
Ramsdens team. I have immense pride in being able to lead such a
dedicated and talented group of people and would like to thank them
all for their response to the challenges faced across businesses
and communities during the year.
BUSINESS REVIEW
Where our branches are located, Ramsdens enjoys strong brand
recognition and high levels of repeat business within its income
streams. However, there is an opportunity to improve this
recognition across the full range of diversified services we offer
and grow the penetration of jewellery-based services into our
foreign currency customer base, and vice versa. This remains a key
focus for the Group in addition to further growing our online
presence to become increasingly multi-channel.
The Group's retail estate reduced slightly during the year to
151 stores as at September 2021 from 153 stores in September 2020.
The reduction is the result of mergers of stores in four towns
where we previously operated two stores combined with the addition
of two new stores in Middlesbrough and Manchester. The Group is
also expanding its geographic reach with its first store in the
South East opened post the year end in December 2021.
The furlough scheme has been used flexibly during the year to
enable the Group to restrict the opening times of certain stores to
periods of higher footfall. From the start of the new financial
year, all stores were trading at their pre-pandemic opening
hours.
The performance of each of the Group's key income streams is
discussed in greater detail below. With FP20 being an 18-month
reporting period, which included 12 months of strong trading
pre-pandemic, any comparison across the relative periods needs to
consider the significant difference in trading conditions. By the
end of FY21 we had seen trading conditions improve with the benefit
of the vaccine roll out and easing in travel restrictions.
OUR DIVERSIFIED BUSINESS MODEL: PRODUCT OFFERING
Ramsdens operates in the four core business segments of: foreign
currency exchange; pawnbroking ; jewellery retail; and purchase of
precious metals.
Foreign Currency Exchange
The foreign currency exchange (FX) segment primarily comprises
the sale and purchase of foreign currency notes to holidaymakers.
Ramsdens also offers prepaid travel cards and international
bank-to-bank payments.
000's FY21 FP20
(12 months) (18 months)
Total Currency exchanged GBP77m GBP559m
------------- -------------
Income GBP3.4m GBP14.9m
------------- -------------
Online C&C orders GBP6.9m GBP45.4m
------------- -------------
% of online FX 9% 8%
------------- -------------
Percentage of GP 15% 32%
------------- -------------
The impact of restrictions on international travel resulting
from the UK Government's red, amber and green lists during FY21 was
far more severe than in the summer of 2020. With reduced
international travellers, Ramsdens' ability to sell foreign
currency was limited. To illustrate this, in May 2021, the volume
of foreign currency sold was approximately 5% of May 2019 volumes.
As travel restrictions gradually eased, September's volume of
foreign currency sold was approximately 31% of September 2019
volumes. However, the Group was able to widen margins, with the
overall foreign currency margin increasing by 44% in September 2021
compared to September 2019.
Margins have remained strong post year end and the percentage of
2019 volumes have increased to approximately 50% in November 2021
following the easing of restrictions on travel to the US.
The average foreign currency sale transaction value (ATV)
increased to GBP509 (FP20 GBP399). We continue to have confidence
that UK travellers will continue to take cash abroad for both
convenience and to assist with budgeting whilst on holiday.
We strongly believe that customers' desire to go on holiday
abroad remains very high. Assuming travel restrictions continue to
ease in the UK and abroad, we believe many more UK consumers will
travel abroad in the summer of 2022.
In line with our multi-channel strategy, the Group is refreshing
its currency travel card proposition with a new multi-currency card
due to be launched in early 2022 ahead of the peak holiday
season.
Pawnbroking
Pawnbroking is a small subset of the consumer credit market in
the UK and a simple form of asset backed lending dating back to the
foundations of banking. In a pawnbroking transaction an item of
value, known as a pledge, (in Ramsdens' case, jewellery and
watches), is held by the pawnbroker as security against a six-month
loan. Customers who repay the capital sum borrowed plus interest
receive their pledged item back. If a customer fails to repay the
loan, the pawnbroker sells the pledged item to repay the amount
owed and returns any surplus funds to the customer. Pawnbroking is
regulated by the FCA in the UK and Ramsdens is fully FCA
authorised.
000's FY21 FP20
(12 months) (18 months)
Gross profit GBP6,678 GBP12,248
------------- -------------
Total loan book GBP6,137 GBP6,548
------------- -------------
Past Due GBP536 GBP1,559
------------- -------------
In date loan book GBP5,601 GBP4,989
------------- -------------
Percentage of GP 30% 26%
------------- -------------
While the loan book fell in FP20 with the majority of customers
repaying their loans, the year end loan book balance included a
number of loans where Ramsdens had allowed customers at least three
months' grace on repaying their loans in line with the FCA COVID
forbearance guidelines. Arrangements were made with all customers
struggling to repay on the due date with those that could not make
or did not want to make longer term arrangements having their goods
sold to repay their loans, with no ongoing debt consequences.
As a result, the loan book fell to GBP5.6m during the year but
has since increased back to GBP6.1m at the year end. It has risen
further post the period end to GBP6.8m at the end of December 2021;
a significant improvement towards pre-pandemic loan book levels
(FY19: GBP7.6m).
The online facility has remained in place for customers to both
borrow and, more importantly, repay loans and save interest.
The average loan value as at 30 September 2021 was GBP264, up
from GBP248 as at 30 September 2020. Our lending remains
conservative in line with our long-term policy. Our lending on
plain gold jewellery items is approximately 70% of the gold value
and approximately 40-50% of the item's second-hand retail
value.
The typical pawnbroking customer is cautious. They know that the
item pledged is their store of wealth and that this enables them to
borrow when needed. As normality returns across society, we believe
customers' needs for short term finance assistance will grow. We
therefore expect our loan book and, consequently, interest income
to grow throughout FY22.
Jewellery Retail
The Group offers new and second-hand jewellery, including
premium watches, for sale. The Board believes there is significant
growth potential in this segment by leveraging Ramsdens' retail
store estate and ecommerce operations. The Group aims to cross-sell
its retail proposition to existing customers of the Group's other
services as well as attracting new customers.
Retailing of new jewellery products complements the Group's
second hand offering to give our customers greater choice in
breadth of products and price points. In addition, the retailing of
new jewellery enables the Group to attract some customers who
prefer not to buy second hand. New jewellery items accounted for
37% of the retail revenue in the year.
000's FY21 FP20
(12 months) (18 months)
Revenue GBP18,252 GBP17,109
------------- -------------
Gross Profit GBP6,965 GBP7,701
------------- -------------
Margin % 38% 45%
------------- -------------
Percentage of GP 31% 21%
------------- -------------
Jewellery retail stock GBP13,979 GBP9,085
------------- -------------
Online sales* GBP3,277 GBP1,947
------------- -------------
% of sales online* 16% 10%
------------- -------------
*this is based on total jewellery sold which includes ex pledge
items
The Group's retail performance has been exceptionally robust
especially given the retail lockdowns with footfall on the high
street much reduced.
Margins by product category have remained consistent and the
reason for the gross margin reduction is simply the mix of products
sold. Second hand sales remained strong with margins remaining
around 55%. New jewellery has a lower average gross margin of circa
33%, whilst our premium watches return a 25% gross margin but have
a high cash value.
Online performance has been strong with growth of over 100% in
the year. Online sales momentum was maintained after high-streets
re-opened post lockdown from April 2021. This trend gives us
confidence that we are continuing to make progress with our
investments to support long-term online growth including greater
stock choice; better website useability; payment flexibility
including the offer of interest free credit and; SEO and marketing
initiatives including digital communications and pay per click
campaigns. The total jewellery sold through our ecommerce
activities totalled GBP3.3m for the year and represented 16% of all
jewellery items sold. Currently approximately 40% of our online
sales are to customers living outside the natural catchment of our
branch network. We believe that the branch network expansion in to
London and the South East, will assist brand recognition and
support online sales to grow further. The online department is a
profitable 'branch' in its own right and we have ambitions to take
our online sales to more than GBP10m in the medium term.
At the same time our website is also a catalogue for our
branches and assists with serving customers where customer stock
choice in a branch may be limited. For example, our top watch
stockists may have circa 50 watches in store but there are now over
1,000 watches available on our website.
Sales of premium watches including ex-pledge items grew by
approximately 80% during the year and accounted for circa 20% of
total jewellery sold. We believe this strong momentum will continue
in FY22 with growing awareness of the Ramsdens brand as a
destination to buy premium watches.
We believe there is an ongoing opportunity to improve and grow
our jewellery retail business. Our internal restructure to place
greater focus on improving the sales of each product category
(namely diamonds, watches, second hand, and new jewellery) through
the store estate and online is starting to generate good results.
We believe this will continue as we invest further in our stock
levels, breadth of stock, and both instore and online
merchandising.
Purchases of precious metals
Through its precious metals buying and selling service, Ramsdens
buys unwanted jewellery, gold and other precious metals from
customers. Typically, a customer brings unwanted jewellery into a
Ramsdens store and a price is agreed with the customer depending
upon the retail potential, weight or carat of the jewellery.
Ramsdens has various second-hand dealer licences and other
permissions and adheres to the Police approved "gold standard" for
buying precious metals.
Once jewellery has been bought from the customer, the Group's
dedicated jewellery department decides whether or not to retail the
item through the store network or online. Income derived from
jewellery, which is purchased and then retailed, is reflected in
jewellery retail income and profits. The residual items are smelted
and sold to a bullion dealer for their intrinsic value and the
proceeds are reflected in the accounts as precious metals buying
income.
000's FY21 FP20
(12 months) (18 months)
Revenue GBP10,369 GBP23,024
------------- -------------
Gross Profit GBP4,240 GBP9,856
------------- -------------
Percentage of GP 19% 21%
------------- -------------
The sterling gold price for 9ct gold has remained high in
comparison to long run averages, with an average of GBP16.05 per
gram during the year compared to GBP15.00 per gram for the prior
period.
With international travel being restricted and the Group selling
less foreign currency, the ability to cross sell this service to
our highest footfall service has been naturally limited. The weight
of gold purchased in the second half of the year was consistent at
approximately 80% of the weight purchased per week prior to the
pandemic. We anticipate the weight of purchases increasing in line
with instore footfall increases over the coming year.
While the pandemic continues to have an impact on global gold
pricing, we believe the gold price will remain high, supporting the
Group's margins.
Other services
In addition to the four core business segments, the Group also
provides additional services in cheque cashing, Western Union money
transfer, credit broking and receives franchise fees.
000's FY21 FP20
(12 months) (18 months)
Revenue GBP1,122 GBP3,035
------------- -------------
Gross Profit GBP1,122 GBP2,485
------------- -------------
Percentage of GP 5% 5%
------------- -------------
While this has been a steady source of gross profit, we believe
that the impact of COVID has switched some Western Union customers
to use services online rather than through a store network. Cheque
cashing continues to be a service in decline.
STRATEGY
We have a consistent and established strategy for the long-term
development and growth of Ramsdens. Underpinned by the ongoing
development of our people and brand, I am confident that the
Group's previously proven strategy remains relevant and appropriate
in the long-term.
We continue to concentrate on:
1. Improving the performance of our existing store estate
2. Expanding the Ramsdens branch footprint in the UK
3. Developing our online proposition
4. Appraising market opportunities presented by operating in a challenging market.
5. Focusing on sustainability through our ESG policy
Improving the performance of the existing store estate
Our strategic focus is on attracting more customers,
cross-selling our diversified services and driving higher spend
from those acquired customers. By doing this and controlling costs,
the profit contribution will increase.
The growth in the four key income segments across the core
estate during the first 12 months of FP20 demonstrated the
effectiveness of this strategy. In the last year, our previous
investments in our retail offering instore and online have
continued to produce great results.
We continue to develop our staff with ongoing training and to
review every store's location against its performance and potential
within that town. Where there is an opportunity to grow and improve
our return on capital, we will relocate a store.
In addition, we aim to improve the performance of our key income
streams:
- Foreign currency:
by having competitive exchange rates to attract new, and retain
existing, customers. Margins will continue to be managed closely
with due regard to local circumstances.
where appropriate we will relocate to higher footfall locations
to improve the convenience we offer to our existing customers and
to attract new customers who may have been unaware of our secondary
location within a town.
by improving the contact frequency we have with our foreign
currency customers
by developing a market-leading multi-currency travel card to
capture more of the customer's holiday spend while abroad.
- Pawnbroking:
by doing what we believe is the right thing for our customers
over the long term. This has included proactively supporting our
customers through the challenges that COVID-19 has brought by
waiving interest, reducing interest rates, and offering long-term
repayment plans.
where customers default, we will continue to obtain the best
price possible for them by selling by private treaty and not using
an auction process which we believe disadvantages customers.
we will continue to have prudent lending policies but look at
developing opportunities to lend more when the customer's borrowing
history suggests greater capacity to repay and where the pledged
assets are more desirable and readily saleable. Our improvement in
our retail jewellery operations gives the Group confidence that it
is able to lend more on higher value jewellery items.
we will continue to build upon the trust and high repeat
customer volumes earned by giving a great service and grow the
customer base through word-of-mouth recommendation.
- Jewellery retail:
our investments in stock quality, choice of stock, and stock
levels has assisted with the improved results delivered during the
year. Further improvements can be made as we shift to greater use
of planogram displays and a structured replenishment system. This
applies to both jewellery and premium watches.
we are continuing to work on the display of our products to
create more customer appeal as well as continuing to invest in our
retail website (see below) which also acts as a stock catalogue for
our branches to facilitate further in store sales.
where appropriate we will relocate to higher footfall locations
to improve the jewellery offer, with larger window display areas,
often at similar rents to current locations.
- Purchase of precious metals:
by growing the awareness amongst our existing customer base,
primarily foreign currency customers who are unaware of the service
or the value held in damaged or simply unwanted or unworn
jewellery.
Expanding the branch footprint in the UK
The Group has a successful branch-based model. With a
diversified income stream, stores generate a good return on capital
while leveraging off the head office cost base in smaller
locations. We have successfully achieved this in towns such as Ebbw
Vale and Dalkeith. Therefore, there is a significant opportunity to
grow the store estate in larger, and smaller, towns as well as
cities, and into new regions.
As at 30 September 2021, we had 154 stores including three
franchised stores.
During the year, we opened two stores; in Manchester (previously
a pawnbrokers), and Middlesbrough (previously a currency kiosk).
Just after the year end, we opened in Chatham, the first Ramsdens
store in the South East.
We have targeted eight locations to open in FY22. These comprise
a mix of locations in Scotland, Yorkshire and the North West, which
are established regions for the Ramsdens brand, as well as
expanding in the South East.
Developing our online proposition
Jewellery retail website
www.ramsdensjewellery.co.uk
We have achieved outstanding progress in the last 12 months,
with the online sales of jewellery items more than doubling to
almost GBP3.3m. This performance excludes jewellery sales in
branches which used the in-store digital facility to access the
website as a catalogue of stock.
Our online retail jewellery sales have grown substantially over
the last four years. While the online performance in FY21 may have
been aided by the COVID-19 pandemic and corresponding growth in
online retail across consumer industries, the Group's performance
has remained very encouraging since the re-opening of non-essential
retail stores, demonstrating the strong underlying customer demand
for Ramsdens' online services.
This momentum has been achieved by:
refreshing the website in October 2020 to optimise search
functionality at the front and back end of the website,
continued investment in search engine optimisation, introduction
of various payment options, use of AI to push product options to
customers, and successful pay per click advertising,
increasing the quantity of stock online significantly and
investing in improvements to product merchandising and
descriptions.
Lessons have been learned as we have progressed over the year
and we will use this knowledge to improve the efficiency and
effectiveness of our initiatives in the future.
As we expand the store estate further, including into the South
East, an improved, more visible website will assist with brand
recognition and, at the same time, an enlarged store estate should
assist online sales.
Foreign Currency website
www.ramsdensforcash.co.uk
It is not a surprise that the website statistics for our online
click and collect foreign currency volumes have been hit by the
pandemic and the travel restrictions throughout FY21. Click and
Collect volumes were down 85% and represent 9% (8% in FP20) of our
total foreign currency sales volumes.
In the coming year we plan to refresh the Group's currency
website and launch a new multi-currency card, which will also be
available via an app.
Appraising opportunities presented by operating in a challenging
market
Our estimate of the number of pawnbroking outlets in the UK
remains steady at approximately 870 outlets operated by circa 130
pawnbroking businesses. Collectively over the last year pawnbrokers
have seen their loan books reduce generating cash reserves to trade
as a result of the loan repayments.
The Group's expansion strategy into the South East is aimed at
creating a nucleus of Ramsdens stores that build brand recognition
and, as opportunities arise, acquiring pawnbroking outlets. The
South East has the highest concentration of pawnbroking outlets in
the UK and presents a compelling expansion opportunity for the
Group.
The Group purchased a single store in Manchester from a London-
based pawnbroker, Hopkins and Jones. The active in-date loan book
was circa GBP0.15m when it was acquired in August 2021.
The retail landscape has been challenging for a number of years
but the full impact of the pandemic is possibly not yet known. Some
retailers have struggled to pay rents and other competitors in the
retail jewellery or foreign currency market have closed stores. We
continue to hope for a full reform of the non-domestic rates system
which may encourage more retailers to open stores and recreate
vibrant high streets. Without reform, we fear some towns and high
streets may suffer further decline with more empty shops. Our
property portfolio has been purposefully managed to be as flexible
as possible to provide a defensive quality in case any of our
stores become isolated and performance deteriorates.
In terms of looking at new towns and relocations, investments
will only be made in new stores after significant research of
footfall and adjacent retailer quality. The demise of certain
retailers does however present an opportunity to obtain reductions
in rental levels in certain towns while not compromising on
location.
Focusing on sustainability through our ESG policy
ENVIRONMENT
We have maintained a continuous review of our environmental
impact, and what we can do to improve it, in place for many
years.
This review covers;
-- The services offered by Ramsdens
-- Energy & water usage including greenhouse gas emissions
-- Packaging used and waste generated by the business
-- ESOS Audits and data collection
The services offered by Ramsdens
Pawnbroking is a service which uses an asset owned by a customer
to obtain a loan. The expectation is that the customer repays the
loan and is able to borrow again but if they do not, the asset
pledged is either refurbished and recycled being sold to a retail
jewellery customer or the item is melted for its intrinsic value
with the precious metal content reused in the manufacturing of new
jewellery or other manufacturing processes. The reclaimed stones
are reused to manufacture new jewellery either directly by Ramsdens
or through our trade contacts.
The same is true for our purchase of precious metal service. We
buy from customers unwanted, damaged or un-hallmarked jewellery
items. Those items are assessed for retail and refurbished and
recycled accordingly or melted for their intrinsic value.
The recycling of gold plus other metals and precious stones
should result in the mining levels of precious metal and stones in
some way being reduced, saving energy use.
Our retail jewellery offering is a mix of second-hand stock and
new stock with a good proportion of the new stock containing
diamonds and semi-precious stones which have been recycled. We
stopped using plastic jewellery boxes several years ago and now
provide cardboard or polished wood boxes when we retail jewellery
items.
As part of our foreign currency exchange service, we issue the
foreign currency notes in a clear plastic bag which was
specifically designed to meet the airport security standards for
carry on liquids. As airport security evolves to remove the need
for this clear bag we will introduce new paper based wallets to
package our currency notes for customers.
Energy & water usage including greenhouse gas emissions.
Our main energy use is the heating and lighting of our premises.
Smart meters are fitted in some stores with more being fitted on an
ongoing basis.
Our water use is relatively low and facilitates staff personal
needs as opposed to an operational need. Water meters are installed
at some stores with more being fitted on an ongoing basis.
Our greenhouse gas emissions fall under Scope 2, indirect
emissions from the generation of purchased energy. The Group's
methodology involves the initial collection of energy use data in
respect of Electricity and Gas from suppliers, business mileage
data for transport and the subsequent use of UK Government
Conversion Factors to calculate emissions. The emission data set
out below is for the period ended 30 September 2021 and is compiled
in accordance with the Companies (Directors' Report) and Limited
Liability Partnerships (Energy and Carbon Report) regulations 2018,
which implement the Government's policy on Streamlined Energy and
Carbon Reporting.
Tonnes of CO2 Year ended 30 September 2021
--------------------------- ------------------------------
Scope2 Emissions 907
Per Employee 1.21
Energy Consumption (MWh) 2,346
It should be noted that due to the pandemic, some stores have
been closed, some operated on reduced opening hours and some staff
worked from home during the year.
In summary, we will use energy as we need to heat and light our
stores. We use energy efficient LED lighting in all new stores and
have a program of converting older stores to use LED lighting to
make our energy use more efficient.
Nearly all of our stores have air conditioning and guidance is
given to staff on the most efficient way to heat or cool our
premises.
During the pandemic there has been a reduction in business
travel and greater use of tele and video conferencing. This change
in behaviour is one that will last beyond the pandemic.
While we incur logistic costs and use energy to ship our goods
to stores, we use couriers to do so, thereby sharing the
transportation energy use with other businesses. We try to minimise
the number of deliveries we make while also managing the security
aspects of transferring high value parcels.
At this time we do not have defined metrics or targets on the
reduction in our energy and water use. This will evolve as we
determine the most suitable reporting measure.
Packaging used and waste generated by the business
The Group has stopped using plastic boxes within our jewellery
retail operations. We retain the use of a plastic bag for the issue
of foreign currency notes as the bag has an intended second use at
airports.
The main waste generated by the business is general e.g.
household waste, paper and cardboard. All of our confidential
paperwork is shredded and recycled when destroyed.
We work with the company who manages our refuse collections and
have provided each location with an ability to recycle and have
carried out training to promote recycling by all staff.
Our staff forum has established a 'Think Green' initiative to
make all staff more conscious of energy use, not to print paperwork
unless necessary and to re-use and recycle where possible. By
influencing staff to be more personally responsible, create new
behaviours towards energy use and waste, at work and at home,
collectively we can play our part in improving our environmental
footprint.
ESOS Audits and data collection
We have complied with our ESOS audit requirements. Our audits
have been undertaken by Green Tree Consulting. Through these audits
and our wider review, the business has developed a better
understanding of its energy use and is using this data to identify
and support the various initiatives detailed above.
SOCIAL
The Board understands that the Group must play a part in and
contribute to the wider society. The same ethos of seeking
continuous improvement that is adopted for its customer proposition
is adopted for its wider corporate relationships.
The Board continually reviews;
-- Ramsdens' responsible lending
-- Customer service levels
-- Employee relations, engagement and development
-- Charitable endeavours
-- Supplier relationships including franchisees
Ramsdens responsible lending
Ramsdens is FCA authorised for its consumer credit activities of
Pawnbroking and Credit Broking. As such, it is highly regulated and
follows the FCA's 11 principles, adheres to the Senior Management
Regime and the Conduct Rules.
Ramsdens considers itself a responsible lender, offering
transparent straight forward loans which are easily understood by
customers. Unlike other forms of credit, pawnbrokers can assess
creditworthiness based on the value of the goods, which therefore
gives wider access to credit to those who may need it most. In
previous sector surveys, the cost of a pawnbroking loan is often
cheaper than people assume with interest accruing on a daily
basis.
Ramsdens has an online facility which is used by customers to
repay their loans when convenient for them and then collecting the
pledged goods later. This saves the customer money.
We believe that our policies for pawnbroking and looking out for
vulnerable customers are industry leading in treating our customers
fairly. The Group understands that circumstances change for
customers and Ramsdens works with customers offering tailored
financial solutions where necessary, as well as having automatic
forbearance interventions that reduce interest rates for customers
and in certain instances, stops charging interest altogether.
A pawnbroking loan is a flexible loan in that there are no
expected weekly or monthly instalments. The customer chooses when
they repay their loan. As such there are no missed payments until
the loan period expires. Once a loan approaches its expiry date,
Ramsdens contacts its customers to see what they wish to do and as
part of that process signposts providers of financial debt advice
should a customer need to consider this.
Where a customer's pledged items do need to be sold to repay the
loan, Ramsdens sells items by private treaty as we believe this
gets the best return for customers. During this process, Ramsdens
caps the interest payable by the customer from the sale of the
goods. If the item sells for more than the amount owed to Ramsdens
the surplus monies are returned to the customer. If the item sells
for less than the amount is owed, the shortfall is written off by
Ramsdens and there are no ongoing debt consequences for
customers.
Customer service levels
The Group prides itself on its high repeat customer rates and
the low number of complaints it receives.
The Group is committed to offering the highest standards of
customer service and appreciate that at times things go wrong. The
Ramsdens philosophy is to use a root cause analysis approach to put
things right as quickly as possible and learn from any
mistakes.
The Group uses Trustpilot for customer feedback on its retail
jewellery and foreign currency offerings. Both services currently
enjoy excellent 5-star ratings.
The Group, from time to time, undertakes customer pulse surveys
through its branch network to obtain customer feedback. The data is
used to improve the Group's communication and marketing
strategies
Employee relations, engagement and development
The success the Group has had to date is in large part down to
its people. Implementing a continuous improvement ethos can only be
achieved because of the hard work, dedication and enthusiasm of the
people within the business. In return we are committed to create a
working environment in which the employee can grow and develop, be
looked after, well rewarded and well respected for what they
contribute.
The pride shown by all of our employees continues to create a
working environment of infectious enthusiasm to deliver the Group's
mission statement, namely to provide a great customer offering and
give such fantastic service that our customers become ambassadors
for Ramsdens. Our aim is to ensure we remain focused on how we
communicate and engage with all of our staff members.
The Group operates a staff suggestion scheme and a department
feedback scheme. Both are well supported as our people contribute
to how we can continue to evolve and improve our products or
processes. Suggestions received have included changes to the
Group's core IT system which have improved the available
information for the branch staff to make better decisions, simplify
cross selling opportunities and improve the speed of transaction to
improve the customer journey. Other suggestions have included
changes to marketing initiatives, the structure of employee
remuneration and how to improve our COVID-secure procedures.
The Group has an Employee Forum which has met five times in
FY21. The Forum comprises staff in a variety of roles from head
office and branches. The Employee Forum has a remit of discussing
general matters that affect the business as well as how the Group
can improve with the use of technology or its contribution to the
environment.
Ramsdens undertakes regular anonymous employee engagement
surveys. The last survey, undertaken in August 2021, saw 85% of
staff members complete the survey. The Board are grateful to the
high level of participation. The results of the survey are
transparently shared with all staff and an action plan created for
the Company to raise the bar where possible as part of its
continuous improvement ethos.
The key findings in 2021 were;
90% of the staff work in a happy working environment
86% of the staff believe they have job security
84% of the staff said they look forward to coming to work and
are enthusiastic about the job they do
Every staff member also has an individual discussion with their
line manager twice a year. The discussion focuses on the staff
members happiness and wellbeing, how challenged they feel and how
supported they are. The discussion then focuses on the staff
members understanding of expectations in their role and staff
development activity in order that the staff member can be more
successful in their career.
The Group has comprehensive training programmes. These start
with a week long, classroom-based induction into the business, and
are supplemented by instore mentoring, e-learning courses, training
delivered remotely e.g. over zoom and area face to face training
sessions. Certain training courses are mandatory and must be
completed on an annual basis e.g. health and safety, data
protection, conduct rules, cyber risks and anti-money laundering,
while other courses focus on the development of an individual's
skills. We have continued to invest in jewellery and watch
knowledge and selling skills, which have helped drive the great
jewellery retail results.
The Group is an equal opportunities employer and we believe in
appointing the best person based purely on merit to any role within
the business. The Group is committed to ensuring that people
undertaking the same or similar work are paid equally and have an
equal opportunity to progress. The Group encourages flexible
working arrangements for employees to continue to develop their
careers whilst choosing how to maintain their balance between work
and home life.
At Ramsdens we believe that being a diverse organisation allows
us to grow and become the business we aspire to be. The executive
committee of the trading company has eight members. The team
consider the monthly reports of all department heads, signing off
project initiatives in line with the Group's strategy. The
executive committee consists of six male and two female members,
with different specialist skills, aged from 32 to 56. The committee
continues to have great constructive and diverse input to how we
move forward. Two of the four Regional Managers, eight of the
thirteen Area Managers, three of the six auditors and 77% of the
branch managers are female.
Including the executive committee members, the top 45 people
influencers in the business are at the core of the Group's Senior
Management Leadership development programme. Training within FY21
included training on mental wellbeing which has been useful given
all things related to COVID-19 and the Group has introduced an
Employee Assistance Program provided by Health Assured. This
program provides hints and tips to manage and improve a staff
members health and wellbeing but also includes confidential expert
advice and support if and when needed.
Where possible, the Group wishes to promote from within. Three
of the Four Regional Managers, six of the thirteen Area Managers,
five of the six Internal Auditors and over 55% of the Branch
managers were promoted from within the business.
The Group issues a weekly and monthly newsletter keeping all
staff informed on Group matters and recognising the successes of
individuals, branches or departments.
We have been working hard to build on the progress made by
recruiting, retaining and developing the best people. Great
progress had been made in reducing staff turnover prior to the
pandemic. The current recruitment situation is challenging in line
with other retailers but the Group expects to resolve this current
difficulty early in 2022 by concentrating on its long term focus on
staff development, wellbeing and rewards.
The Group recognises and values long service. Each staff member
receives an additional day of holiday entitlement for their first
five years' service and upon reaching their 5th anniversary they
receive company wide recognition and a monetary award. Further
recognition happens at 10, 15, 20 years' service and beyond, with
additional holidays and financial rewards at those milestones. We
were pleased to recognise Darren Smart's 20 years' service award in
2021.
The Group has a philosophy of wanting to share the financial
success of the business with staff. Despite the trading challenges
of COVID-19, 99% of all staff received a minimum of inflationary
pay rise in April 2021 and a further positive pay review took place
in November 21 recognising the impact on staff of increasing
inflation and higher energy bills. All staff are paid more than the
national minimum wage. In addition to their basic remuneration of
pay and pension, each member of staff in head office or branch has
had the ability to earn a performance related bonus. The Group has
health insurance for its senior management team plus extended
company sick pay benefits. All staff benefited from their birthday
being an additional day's holiday during the year
Our philosophy with the Long Term Incentive Plan (LTIP) is to be
inclusive with wider senior manager participation (now 21
participants). 50% of the LTIP award is based on earnings per share
and 50% based on total shareholder return.
The remuneration of the two executive directors is not currently
specifically linked to ESG objectives. The Senior Bonus Scheme has
various clauses that enables the Remuneration Committee to have
discretionary powers over any bonus amounts taking into account all
aspects of the business including ESG. All bonus schemes including
LTIPs have malus and clawback provisions.
Charitable endeavours
The Group has a program of supporting local and national
charities and have used our commercial assets to do this e.g. using
our sponsorship of Middlesbrough football club and Sheffield United
football club to raise funds for charity. The biggest fund raiser
was putting the name of two charities, based locally to Ramsdens
head office, on the Middlesbrough shirt. This not only raised great
awareness in local and national media, we raised over GBP18,000
from the sale of the shirts for the charities.
Recent initiatives have involved donations of jewellery for
raffle prizes or auction lots, foreign coin collections and a
matched funding scheme for staff taking part in local charitable
events.
In addition to fundraising, the Group has been using its IT
expertise to assist a local hospice improve its IT systems and
reporting.
In FY21, the Group has raised or helped charities directly raise
almost GBP17,000.
Supplier relationships including franchisees
The Group has a limited number of key trade suppliers. Strong
relationships have been built up over many years where the supplier
and Ramsdens work together to improve the trade for both parties.
Ramsdens reports on its supplier payment practices and believes in
paying all suppliers as and when payments are due. The Group has
sought assurance from its suppliers that they have no modern
slavery practices within their supply chains. The Group's statement
on its compliance with the Modern Slavery Act is available on
www.ramsdensplc.com.
The Group has three franchisees operating three franchised
stores. All franchised businesses are well established and audited
quarterly to ensure they meet the standards required by
Ramsdens.
GOVERNANCE
The Group has always prided itself on acting responsibly in
every aspect of the business. We operate with three core values, of
being trusted, open and passionate about our business. We believe
that engaging with our stakeholders, be that, employees, customers,
shareholders, regulators, suppliers, franchisees or the wider local
communities we operate in, and living our values, are the best ways
to develop long term relationships for mutual benefit. This is the
way in which we seek to manage the business.
While we do not believe that we monitor social and human capital
issues to a recognised standard we have a substantial suite of
policies that include data security, customer privacy,
anti-bribery, combatting modern slavery, whistleblowing, staff
welfare, anti-money laundering, as well as adhering to all aspects
of the FCA's Senior Manager Regime and Conduct Rules.
The Group is a member of the QCA and adopts its code of
conduct.
The Nominations Committee undertakes a board effectiveness
review every year and as part of that review discusses diversity
and independence.
LOOKING AHEAD
While we remain vigilant to the risk of, and speed of, potential
new social and travel restrictions being imposed, as we have seen
with the recent development of the Omicron coronavirus variant, we
look forward with optimism for FY22.
Our foreign currency volumes increased back to approximately 50%
of pre pandemic levels in November 2021 and subject to
international travel being relatively restriction free, the
customer demand for a summer holiday abroad is expected to be high
and we hope for a normal summer's FX trading in 2022. With higher
customer footfall to our stores, we would expect our purchase of
precious metals to also increase.
Our pawnbroking loan book is rebuilding as customers recommence
normal spending habits and have an increased need for short term
financial assistance.
We have invested in our retail jewellery, instore and online,
over recent years and we still have significant opportunities for
further growth and improvement.
The Group has the benefit of diversified income streams and a
strong financial base. This gives the Board confidence that we are
well-placed to continue to navigate this ongoing transitional
period and to deliver on our growth strategy for the long-term
benefit of all our stakeholders.
Peter Kenyon
Chief Executive Officer
17 January 2022
FINANCIAL DIRECTOR'S REVIEW
FINANCIAL RESULTS
In 2020 the Group changed its accounting reference date to 30
September which resulted in an 18-month period for FP20, a period
which had approximately 12 months of trading pre pandemic and 6
months of significant pandemic impact including various social,
travel and trading restrictions. FY21 has continued to be impacted
by various levels of restrictions throughout the year. Given the
unusual trading conditions, and the prior year comparative period
being longer, any comparison across the relative periods would need
to carefully factor in the implications of these matters. The table
below shows the headline financial results:
GBP000's FY21 FP20
(12 months) (18 months)
Revenue GBP40,677 GBP72,493*
------------- -------------
Gross Profit GBP22,262 GBP47,149
------------- -------------
Profit Before Tax GBP564 GBP9,221
------------- -------------
Net Assets GBP36,143 GBP35,555
------------- -------------
Net Cash GBP13,032 GBP15,873
------------- -------------
EPS 1.2p 23.1p
------------- -------------
*Restated due to an accounting policy change, see page 26
Our FY21 financial year has been severely impacted by the
restrictions on international travel and despite an essential
services exemption to trade, certain restrictions have been imposed
on our instore retail in some parts of the UK. UK lockdowns have
also significantly impacted footfall on the high streets during the
year. Against this backdrop, the Group has delivered a strong
financial performance, achieving revenue of GBP40.7m. Costs have
been well controlled with administration expenses of GBP21.5m and
an overall profit before tax of GBP0.6m generated. Key points to
note are that our foreign currency commission has fallen by
c.GBP10m compared to pre pandemic levels and the Group received
GBP1.6m of Government support, GBP0.1m has been shown as other
income and GBP1.5m has been shown as a reduction to administrative
expenses.
The Group has maintained its strong cash position, with GBP13m
net cash at the year end, and was able to trade without the need to
utilise its GBP10m revolving cash facility at any point during the
year.
EARNINGS PER SHARE AND DIVID
The statutory basic and diluted earnings per share for FY21 were
both 1.2p, down from 23.1p and 22.5p for the 18-month FP20.
The Board is grateful for the UK Government support during the
pandemic and acknowledges the key part this has played during this
unprecedented period. Following the end of government support via
the furlough scheme and easing of travel restrictions the Board
believes the Group is well positioned to move forward with renewed
optimism.
The Board has recommended that the Group recommences the payment
of dividends with a final dividend of 1.2p being proposed for
approval at the forthcoming AGM (FP20 nil). While this represents
the full post tax profits for the year, it recognises that the
Group's strong cash position is sufficient to deliver on its future
growth plans.
As we move forward, the Board would remind investors its
long-term dividend policy, subject to the performance of the Group
and any growth opportunities that arise, is to distribute
approximately 50% of post tax profits to shareholders. It is
expected that future dividend dates will be scheduled as September
for interim payments and March for final payments, in the
approximate proportion of one third and two thirds
respectively.
CAPITAL EXPITURE
During the reporting period, the Group invested in the store
estate by opening new stores and relocating existing stores.
Capital expenditure for tangible and intangible assets was GBP1.6m
which mainly reflected the relocation of five stores during the
period. One pawnbroking store including its loan book was
acquired.
CASH FLOW
The net cash flow from operating activities for the year was
GBP1.1m (FP20: GBP15.8m) which includes government support of
GBP1.6m (FP20: GBP3.5m). Cash outflows have included the
investments in stock of GBP4.0m, which has been partially offset by
favourable credit terms with suppliers with creditors increasing by
GBP1.2m
T he Group renewed its revolving credit facility in March 2021
for a further three years to March 2024. The Group has one covenant
of 1.5x cash cover. At 30 September 2021, this facility was
undrawn. The cash position and headroom on the bank facility
provide the Group with the funds required to continue to deliver
its current stated strategy.
Net cash at the period end was GBP13.0m (FP20: GBP15.9m).
FINANCIAL POSITION
At 30 September 2021, cash and cash equivalents amounted to
GBP13.0m (FP20 GBP15.9m) and the Group had net assets of GBP36.1m
(FP20: GBP35.6m).
TAXATION
The tax charge for the period was GBP0.2m (FP20: GBP2.1m) at an
effective rate of 33% (FP20 22%). The tax rate was higher than the
standard rate mainly due to the timing difference between
depreciation charges and capital allowances and non-deductible
expenses including the amortisation of certain customer lists. A
full reconciliation of the tax charge is shown in note 10 of the
financial statements.
SHARE BASED PAYMENTS
The share-based payment expense in the period was GBP254,000
(FP20: GBP389,000). This charge relates to the Long-Term Incentive
Plans (LTIP), which are discretionary share incentive schemes under
which the Remuneration Committee can grant options to purchase
ordinary shares at a nominal 1p per share cost to Executive
Directors and other senior management subject to certain
performance and vesting conditions.
During the year the LTIP award from 2017 vested in full against
the performance condition criteria of the scheme. Of the 805,554
share options that passed the performance conditions, the Group
issued 555,554 shares during the year following the exercise of
these options by beneficiaries of the scheme. The remaining 250,000
share options continued to be held but not yet exercised.
CHANGE TO ACCOUNTING POLICY
The Group has changed the accounting policy for pawnbroking
loans that are in the course of realisation. Previously these
assets were recognised as inventory. The updated policy recognises
the value of these assets under IFRS 9 as trade receivables. Whilst
this change in policy has no effect on the net assets of the Group,
a prior period adjustment has been made in the financial statements
to reclassify the asset value and to reflect the fact that the
proceeds from realisation of security during the period is no
longer recognised as revenue, and the inventory cost of the
security no longer recognised as a cost of sale. The prior period
adjustments to revenue and cost of sales are equal and therefore
have no impact on the profit for the period or EPS. Further details
are available in note 2 of the financial statements.
GOING CONCERN
The Group has prepared these financial statements 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 each balance sheet item and conducted a going concern
review to ensure this basis remains appropriate. The Group has
significant cash resources of GBP13.0m and access to an undrawn
GBP10m revolving credit facility with an expiry date of March
2024.
In the year ended 30 September 2021 the Group traded profitably
despite the impact of the pandemic.
The Board has conducted an extensive review of forecast earnings
and cash over the next twelve months, considering various scenarios
and sensitivities given the ongoing situation with the pandemic and
uncertainty around the future economic environment.
The Board has been able to conclude the going concern basis is
appropriate in preparing the financial statements.
Martin Clyburn
Chief Financial Officer
Consolidated statement of comprehensive income
For the year ended 30 September 2021
12 months 18 months
to 30 September to 30 September
2021 2020
Notes
(restated)
GBP'000 GBP'000
Revenue 5 40,677 72,493
Cost of sales (18,415) (25,344)
----------------- -----------------
Gross profit 5 22,262 47,149
Other income 7 284 725
Administrative expenses (21,510) (37,858)
----------------- -----------------
Operating profit 1,036 10,016
Finance costs 6 (472) (795)
----------------- -----------------
Profit before tax 564 9,221
Income tax expense 10 (198) (2,103)
----------------- -----------------
Profit for the year / period 366 7,118
----------------- -----------------
Other comprehensive income - -
Total comprehensive income 366 7,118
----------------- -----------------
Earnings per share in pence 8 1.2 23.1
Diluted earnings per share in pence 8 1.2 22.5
Consolidated statement of financial position
As at 30 September 2021 2020 As at 1
April 2019
(restated) (restated)
Assets Notes GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 11 5,195 4,845 5,485
Right of use of assets 11 8,164 8,536 9,102
Intangible assets 12 714 870 1,228
Investments 13 - - -
Deferred tax assets 10 80 182 281
--------- ----------- --------------
14,153 14,433 16,096
Current Assets
Inventories 15 15,151 11,159 10,607
Trade and other receivables 16 10,379 10,944 12,458
Cash and short term deposits 17 13,032 15,873 13,420
--------- ----------- --------------
38,562 37,976 36,485
--------- ----------- --------------
Total assets 52,715 52,409 52,581
--------- ----------- --------------
Current liabilities
Trade and other payables 18 7,673 6,422 6,324
Lease liabilities 18 2,159 2,005 2,165
Interest bearing loans and
borrowings - - 5,184
Income tax payable 18 61 1,157 689
--------- ----------- --------------
9,893 9,584 14,362
--------- ----------- --------------
Net current assets 28,669 28,392 22,123
--------- ----------- --------------
Non-current liabilities
Accruals - - 130
Lease liabilities 19 6,442 7,094 7,572
Contract liabilities 19 119 153 -
Deferred tax liabilities 19 118 23 140
--------- ----------- --------------
6,679 7,270 7,842
--------- ----------- --------------
Total liabilities 16,572 16,854 22,204
--------- ----------- --------------
Net assets 36,143 35,555 30,377
--------- ----------- --------------
Equity
Issued capital 21 314 308 308
Share premium 4,892 4,892 4,892
Retained earnings 30,937 30,355 25,177
--------- ----------- --------------
Total equity 36,143 35,555 30,377
--------- ----------- --------------
The financial statements of Ramsdens Holdings PLC, registered
number 08811656, were approved by the directors and authorised
for issue on 17 January 2022 and signed on their behalf
by:
M A Clyburn
Consolidated statement of changes in equity
For the period ended 30 September
2021
Share Share Retained
capital premium earnings Total
Notes
GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2019 308 4,892 25,177 30,377
------------- --------- ----------- ------------
Profit for the year - - 7,118 7,118
------------- --------- ----------- ------------
Total comprehensive income - - 7,118 7,118
Transactions with owners:
Dividends paid 22 - - (2,313) (2,313)
Share based payments 25 - - 398 398
Deferred tax on share-based
payments - - (25) (25)
------------- --------- ----------- ------------
Total transactions with owners - - (1,940) (1,940)
As at 30 September 2020 308 4,892 30,355 35,555
------------- --------- ----------- ------------
As at 1 October 2020 308 4,892 30,355 35,555
------------- --------- ----------- ------------
Profit for the period - - 366 366
------------- --------- ----------- ------------
Total comprehensive income - - 366 366
Transactions with owners:
Dividends paid 22 - - - -
Issue of share capital 6 - - 6
Share based payments 25 - - 254 254
Deferred tax on share-based
payments - - (38) (38)
------------- --------- ----------- ------------
Total transactions with owners 6 - 216 222
As at 30 September 2021 314 4,892 30,937 36,143
------------- --------- ----------- ------------
Consolidated statement of cash flows
For the period ended 30 September 12 months
2021 to 18 months
30 September to 30 September
2021 2020
(restated)
Operating activities Notes GBP'000 GBP'000
Profit before tax 564 9,221
-------------- -----------------
Adjustments to reconcile profit
before tax to net cash flows:
Depreciation and impairment of property,
plant
and equipment 11 1,074 2,238
Depreciation and impairment of right
of use assets 11 2,223 3,523
Profit on disposal of right of use
assets 7 (45) -
Amortisation and impairment of intangible
assets 12 218 616
Loss on disposal of property, plant
and equipment 7 140 185
Share based payments 25 254 398
Finance costs 6 472 795
Working capital adjustments:
Movement in trade and other receivables
and prepayments 565 1,631
Movement in inventories (3,992) (552)
Movement in trade and other payables 1,217 170
-------------- -----------------
2,690 18,225
Interest paid (472) (795)
Income tax paid (1,135) (1,678)
-------------- -----------------
Net cash flows from operating activities 1,083 15,752
-------------- -----------------
Investing activities
Proceeds from sale of property,
plant and equipment 10 4
Purchase of property, plant and
equipment (1,574) (1,787)
Purchase of intangible assets (62) (258)
Net cash flows used in investing
activities (1,626) (2,041)
Financing activities
Issue of share capital 21 6 -
Dividends paid 22 - (2,313)
Payment of principal portion of
lease liabilities (2,304) (3,645)
Bank loans drawn down - 2,600
Repayment of bank borrowings - (7,900)
Net cash flows from financing activities (2,298) (11,258)
-------------- -----------------
Net decrease / increase in cash
and cash equivalents (2,841) 2,453
Cash and cash equivalents at 1 October
/ 1 April 15,873 13,420
-------------- -----------------
Cash and cash equivalents at 30
September 27 13,032 15,873
-------------- -----------------
Notes to the consolidated financial statements
Financial information
The financial information set out herein does not constitute the
Group's statutory accounts for the year ended September 2021 or the
18 month period to 30 September 2020 within the meaning of sections
434 of the Companies Act 2006, but is derived from those accounts.
The audited accounts for the year ended 30 September 2021 will be
posted to all shareholders in due course and will be available on
the Group's website. Grant Thornton UK LLP have reported on those
accounts and expressed an unmodified audit opinion which did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
The financial information for the period ended 30 September 2020
is derived from the statutory accounts for that period, which have
been delivered to the Registrar of Companies. Ernst & Young LLP
have reported on those accounts and expressed an unmodified audit
opinion which did not contain a statement under section 498 (2) or
(3) of the Companies Act 2006. Selected explanatory notes are
included to explain events and transactions that are significant to
an understanding of the changes in financial position and
performance of the Group.
1. Corporate information
Ramsdens Holdings PLC (the "Company") is a public limited
company incorporated and domiciled in England and Wales. The
registered office of the Company is Unit 16, Parkway Shopping
Centre, Coulby Newham, Middlesbrough, TS8 0TJ. The registered
company number is 08811656. A list of the Company's subsidiaries is
presented in note 13.
The principal activities of the Company and its subsidiaries
(the "Group") are the supply of foreign exchange services,
pawnbroking and related financial services, jewellery sales, and
the purchase of gold jewellery from the general public.
2. Changes in accounting policies
Following a review, the Group has changed its accounting policy
for pawnbroking loans that are in the course of realisation. The
Board believes the change in accounting policy gives a more
appropriate basis under IFRS 9. The Group previously recognised
these assets as inventory, however the revised accounting policy
treats all pawnbroking loans as financial assets under IFRS 9, on
the basis that the derecognition criteria has not been met and
therefore the asset values are classified as trade receivables and
are recognised at amortised cost.
When a customer defaults on a pawnbroking loan, the pledged
goods held as security are sold to repay the customer debt. At the
point the pawnbroking loan becomes past due the loan is classified
as in default and interest income is accrued net of expected credit
losses per stage 3 of the expected credit loss model. At the start
of the realisation process the expected credit loss calculation is
re-performed based on the expected cash flows of the retail
process, with any increase in expected credit losses recognised as
a cost of sale. The expected credit loss calculation is based on an
estimate of the time required to sell the pledged goods and an
estimate of the retail price achieved, valued at amortised cost
under IFRS 9 using the original effective rate of interest. The
value of expected credit losses is updated at each reporting date
to reflect any change in circumstances.
Under the previous accounting policy the sales proceeds of
pledged goods were recognised as revenue and the cost of inventory
recognised as a cost of sale under IFRS 15. However, under the new
accounting policy the sales proceeds are outside the scope of IFRS
15 and are instead used to repay the trade receivable and therefore
only incremental interest earned is recognised on the realisation
of the pledged goods.
A prior period adjustment has been made to restate revenue and
cost of sales in the Consolidated Income Statement, and to restate
Inventories and Trade receivables in the Consolidated Statement of
Financial Position. The Consolidated Statement of Cash Flows has
also been restated for the prior period to reflect the
reclassification of cash movements in Inventories and
Receivables.
The prior period adjustment has not changed the Profit for the
period, the Group's Net assets, or the Net Increase in Cash
Equivalents for the period.
Note 3.16 details the revenue recognition of all pawnbroking
loans including those in the course of realisation, and note 4.1
give further details on the estimates used in the amortised cost
valuation.
Note 28 shows the full effect of the prior period
adjustments.
Adoption of new and revised standards
At the date of authorisation of these financial statements,
several new, but not yet effective, standards and amendments to
existing standards, and Interpretations have been published by the
IASB. None of these standards or amendments to existing standards
have been adopted early by the Group. Management anticipates that
all relevant pronouncements will be adopted for the first period
beginning on or after the effective date of the pronouncement. The
impact of new standards, amendments and interpretations not adopted
in the current year have not been disclosed as they are not
expected to have a material impact on the Group's financial
statements.
3. Significant accounting policies
3.1 Basis of preparation
The consolidated financial statements of the Group have been
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006.
The consolidated financial statements have been prepared on a
historical cost basis. The consolidated financial statements are
presented in pounds sterling which is the functional currency of
the parent and presentational currency of the Group. All values are
rounded to the nearest thousand (GBP000), except when otherwise
indicated.
3.2 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and all of its subsidiary undertakings
(as detailed above). The financial information of all Group
companies is adjusted, where necessary, to ensure the use of
consistent accounting policies. In line with IFRS10, an investor
controls an investee when it is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
3.3 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 each balance sheet item and conducted a
going concern review to ensure this basis remains appropriate.
In the year ended September 2021 the Group generated cash from
operations and traded profitably with profit before tax of GBP0.6m
and its GBP10m debt facility was undrawn.
The Group has significant cash resources at 30 September 2021 of
GBP13m and access to an undrawn GBP10m revolving credit facility
with an expiry date of March 2024. The Group has successfully
applied for government support grants including the Coronavirus Job
Retention Scheme and Retail Grants. The grant support received in
the period to September 2021 was cGBP1.6m. The Group was awarded
business rates relief in respect of a number of its branches.
The Group's activities include services deemed essential
services by the government and therefore the Group's stores are
able to open in the event of a further lockdown. 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 conducted an extensive review of forecast earnings
and cash for the period to 31 January 2023 considering various
scenarios and sensitivities given the COVID-19 situation and
uncertainty around the future economic environment.
The Board has been able to conclude that it has a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, the
Group continue to adopt the going concern basis in preparing the
financial statements. The going concern assessment covers the
period to 31 January 2023.
3.4 Business combinations and goodwill
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate of
the consideration transferred which represents the fair value of
the assets transferred and liabilities incurred or assumed.
Acquisition related costs are expensed as incurred and included in
administrative expenses.
Goodwill is initially measured at cost, being the excess of the
aggregate of the consideration transferred over the fair value of
the identifiable assets acquired and liabilities assumed. If the
fair value of the net assets acquired is in excess of the aggregate
consideration transferred, the Group re-assesses whether it has
correctly identified all of the assets acquired and all of the
liabilities assumed and reviews the procedures used to measure the
amounts to be recognised at the acquisition date. If the
reassessment still results in an excess of the fair value of net
assets acquired over the aggregate consideration transferred, then
the gain is recognised in the statement of comprehensive income as
a gain on bargain purchase.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group's cash generating
units (CGU) that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree
are assigned to those units.
3.5 Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a
business combination is their fair value as at the date of
acquisition. Following initial recognition, intangible assets are
carried at cost less accumulated amortisation and accumulated
impairment losses, if any. Internally generated intangible assets,
excluding capitalised development costs, are not capitalised and
expenditure is recognised in the statement of comprehensive income
when it is incurred.
The useful lives of intangible assets are assessed as either
finite or indefinite and at each date of the statement of financial
position only goodwill assets are accorded an indefinite life.
Intangible assets with finite lives are amortised over their
useful economic lives and assessed for impairment whenever there is
an indication that the intangible asset may be impaired. The
amortisation period and the amortisation method for an intangible
asset with a finite useful life are reviewed at least at the end of
each reporting period.
Amortisation is calculated over the estimated useful lives of
the assets as follows:
-- Customer relationships - 40% reducing balance
-- Software - 20% straight line
Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset are
accounted for by changing the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates.
The amortisation expense on intangible assets with finite lives is
recognised in the statement of comprehensive income in the expense
category consistent with the function of the intangible assets.
3.6 Property, plant and equipment
Property, plant and equipment are stated at cost, net of
accumulated depreciation and accumulated impairment losses (if
any). All other repair and maintenance costs are recognised in the
statement of comprehensive income as incurred.
Depreciation is calculated over the estimated useful lives of
the assets as follows:
-- Leasehold improvements - straight line over the lease term
-- Fixtures & fittings - 20% & 33% reducing balance
-- Computer equipment - 25% & 33% reducing balance
-- Motor vehicles - 25% reducing balance
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the
statement of comprehensive income when the asset is
derecognised.
The residual values, useful lives and methods of depreciation of
property, plant and equipment are reviewed at each financial year
end and adjusted prospectively, if appropriate.
3.7 Impairment of non-financial assets
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 CGU's fair value
less costs of disposal 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
that reflects 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 transactions are taken into
account. If no such transactions can be identified, an appropriate
valuation model is used.
The Group bases its impairment calculation on detailed budgets
and forecasts which are prepared separately for each of the Group's
CGUs to which the individual assets are allocated, which is usually
taken to be each individual branch store based on the independence
of cash inflows. Central costs and assets are allocated to CGUs
based on revenue. These budgets and forecast calculations are
estimated for three years and extrapolated to cover a total period
of ten years.
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.
For assets excluding goodwill, an assessment is made at each
reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may
have decreased. If such indication exists, the Group estimates the
asset's or CGU's recoverable amount. A previously recognised
impairment loss is reversed only if there has been a change in the
assumptions used to determine the asset's recoverable amount since
the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset
does not exceed its recoverable amount, nor exceed the carrying
amount that would have been determined, net of depreciation or
amortisation, had no impairment loss been recognised for the asset
in prior years. Such reversal is recognised in the Statement of
Comprehensive income unless the asset is carried at a revalued
amount, in which case the reversal is treated as a revaluation
increase.
Goodwill
Goodwill is tested for impairment at the end of each accounting
period and when circumstances indicate that the carrying value may
be impaired.
Impairment is determined for goodwill by assessing the
recoverable amount of each CGU (or group of CGUs) to which the
goodwill relates. Where the recoverable amount of the
cash-generating unit is less than their carrying amount, an
impairment loss is recognised. Impairment losses relating to
goodwill cannot be reversed in future periods. Goodwill is
allocated to CGUs based on the price paid of the relevant
acquisition.
3.8 Inventories
Inventories comprise of retail jewellery and precious metals
held to be scrapped and are valued at the lower of cost and net
realisable value.
Cost represents the purchase price plus overheads directly
related to bringing the inventory to its present location and
condition.
Where the Group takes title to pledged goods on default of
pawnbroking loans up to the value of GBP75, cost represents the
principal amount of the loan plus the term interest.
Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and
estimated costs to sell.
3.9 Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.
Financial assets
Financial assets are all recognised and derecognised on a trade
date basis. All recognised financial assets are measured and
subsequently measured at amortised cost or fair value depending on
the classification of the financial asset.
Classification of financial assets
Financial assets that meet the following criteria are measured
at amortised cost:
-- the financial asset is held within the business model whose
objective is to hold financial assets in order to collect
contractual cash flows; and
-- the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
In accordance with IFRS 9 Financial Instruments the Group has
classified its financial assets as amortised cost.
The amortised cost of a financial asset is the amount at which
the financial asset is measured at initial recognition less the
principal repayments, plus the cumulative amortisation using the
effective interest method of any difference between that initial
amount and the maturity amount, adjusted for any loss allowance.
The gross carrying amount of a financial asset is the amortised
cost of a financial asset before adjusting for any loss
allowance.
Cash and cash equivalents
Cash and short-term deposits in the statement of financial
position comprise cash at banks and on hand, foreign currency held
for resale and short term deposits held with banks with a maturity
of three months or less from inception.
For the purpose of the consolidated statement of cash flows,
cash and cash equivalents consist of cash, foreign currency held
for resale and short-term deposits as defined above, net of
outstanding bank overdrafts as they are considered an integral part
of the Group's cash management.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses
on financial assets that are measured at amortised cost. The amount
of credit losses is updated at each reporting date to reflect
changes in credit risk since initial recognition of the respective
financial instrument.
The Group recognises lifetime expected credit losses when there
has been a significant increase in credit risk since initial
recognition. However, if the credit risk on the financial
instrument has not increased significantly since initial
recognition, the Group recognises the 12 month expected credit
losses. As pawnbroking loans are typically over a six month term
the lifetime credit losses are usually the same as the 12 month
expected credit losses.
In assessing whether the credit risk on a financial instrument
has increased significantly since initial recognition, the Group
compares the risk of a default occurring on the financial
instrument at the reporting date with the risk of a default
occurring on the financial instrument at the date of initial
recognition. In making this assessment, the Group considers both
quantitative and qualitative information that is reasonable and
supportable including historical experience.
The measurement of expected credit losses is a function of the
probability of default, and the loss (if any) on default. The
assessment of the probability of default is based on current and
historical data. The loss on default is based on the assets gross
carrying amount less any realisable security held.
When a customer defaults on a pawnbroking loan, the pledged
goods held as security are sold to repay the customer debt. At the
point the pawnbroking loan becomes past due the loan is classified
as in default and interest income is accrued net of expected credit
losses per stage 3 of the expected credit loss model. At the start
of the realisation process the expected credit loss calculation is
re-performed based on the expected cash flows of the retail
process, with any increase in expected credit losses recognised as
a cost of sale. The expected credit loss calculation is based on an
estimate of the time required to sell the pledged goods and an
estimate of the retail price achieved, valued at amortised cost
under IFRS 9 using the original effective rate of interest. The
value of expected credit losses is updated at each reporting date
to reflect any change in circumstances.
The expected credit loss calculation considers both the interest
income and the capital element of the pawnbroking loans. Details of
the key assumptions for pawnbroking expected credit losses are
given in note 4.
Derecognition
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset to another entity. On
derecognition of a financial asset measured at amortised cost, the
difference between the assets carrying amount and the sum of the
consideration received and receivable is recognised in the
Statement of Comprehensive Income.
Financial liabilities
Debt and equity instruments are classified as either financial
liabilities or equity in accordance with the substance of the
contractual arrangements and the definitions of a financial
liability and equity instrument.
All financial liabilities are recognised initially at amortised
cost or at fair value through profit and loss (FVTPL).
The Group's financial liabilities include trade and other
payables, loans and borrowings including bank overdrafts, and
derivative financial instruments.
After initial recognition, interest bearing loans and borrowings
are subsequently measured at amortised cost using the effective
interest rate method (EIR). Gains and losses are recognised in the
Statement of Comprehensive Income when the liabilities are
derecognised as well as through the (EIR) amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included in finance costs
in the Statement of Comprehensive Income.
Only the Group's derivative financial instruments are classified
as financial liabilities at fair value through profit or loss.
Financial liabilities at fair value through profit or loss are
stated at fair value, with any resultant gain or loss recognised in
the Statement of Comprehensive Income. The net gain or loss
recognised in the Statement of Comprehensive Income incorporates
any interest paid on the financial liability.
Derecognition
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in the Statement of
Comprehensive Income.
Offsetting of financial instruments
Financial assets and financial liabilities are offset with the
net amount reported in the Statement of Financial Position only if
there is a current enforceable legal right to offset the recognised
amounts and intent to settle on a net basis, or to realise the
assets and settle the liabilities simultaneously.
3.10 Fair value measurement
The Group measures financial instruments, such as derivatives,
at fair value at the date of each statement of financial
position.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy. This is described, as follows, based on the
lowest level input that is significant to the fair value
measurement as a whole:
-- Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities
-- Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly
or indirectly observable
-- Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable
3.11 Taxation
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
Consolidated Statement of Comprehensive Income because it excludes
items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or
deductible. The Group's liability for current tax is calculated
using tax rates and laws that have been enacted or substantively
enacted by the date of the statement of financial position.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the
date of each statement of financial position and reduced to the
extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates and laws that are
expected to apply in the period when the liability is settled or
the asset is realised. Deferred tax is charged or credited in the
Consolidated Statement of Comprehensive Income, except when it
relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity. Deferred tax is
recognised on an undiscounted basis.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities when they relate to income taxes levied by
the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
3.12 Leases
At interception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Group assesses
whether:
The contract involves the use of an identifier asset - this may
be specified explicitly or implicitly, and should be physically
distinct or represent substantially all of the capacity of a
physically distinct asset. If the supplier has a substantive
substitution right, then the asset is not identified;
-- The Group has the right to obtain substantially all of the
economic benefits from use of the asset throughout the period of
use; and
-- The Group has the right to direct the use of the asset. The
Group has this right when it has the decision-making rights that
are most relevant to changing how and for what purpose the asset is
used. In rare cases where the decision about how and for what
purpose the asset is used is predetermined, the Group has the right
to direct the use of the asset if either: The Group has the right
to operate the asset; or
-- The Group designed the asset in a way that predetermines how
and for what purpose it will be used.
As a lessee
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an
estimate costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of
the lease term. The estimated useful lives of the right-of-use
assets are determined on the same basis as those of property and
equipment. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability initially measured at the present value of
the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. Generally, the Group uses its incremental borrowing
rate as the discount rate.
Lease payments included in the measurement of the lease
liability comprise the following:
-- Fixed payments, including in-substance fixed payments;
-- Variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement
date;
-- Amounts expected to be payable under a residual value guarantee; and
-- The exercise price under a purchase option that the Group is
reasonably certain to exercise, lease payments in an optional
renewal period if the Group is reasonably certain to exercise an
extension option, and penalties for early termination of a lease
unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate,
if there is a change in the Group's estimate of the amount expected
to be payable under a residual value guarantee, or if the Group
changes its assessment of whether it will exercise a purchase,
extension or termination option.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced to
zero.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and
lease liabilities for short-term leases of machinery that have a
lease term of 12 months or less and leases of low-value assets,
including IT equipment. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis
over the lease term.
3.13 Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Provisions
are measured using the directors' best estimate of the expenditure
required to settle the obligation at the date of each statement of
financial position.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting
is used, the increase in the provision due to the passage of time
is recognised as a finance cost.
All of the group's premises are leased under operating leases.
The majority of the leases include an end of lease rectification
clause to return the property to its original state. No provision
is made until a board decision has been taken to either terminate
or not to renew the lease. Additionally, the group maintains stores
to a high standard and completes any necessary repairs and
maintenance on a timely basis using the in-house property
department and external contractors. These costs are expensed as
incurred.
3.14 Pensions and other post-employment benefits
The company operates a defined contribution pension scheme. The
assets of the scheme are held and administered separately from
those of the Group. Contributions payable for the year are charged
in the statement of comprehensive income. Total contributions for
the year are disclosed in note 9 to the accounts. Differences
between contributions payable in the year and contributions
actually paid are shown as either accruals or prepayments in the
Statement of Financial Position.
3.15 Employee share incentive plans
The group grants equity settled share option rights to the
parent entity's equity instruments to certain directors and senior
staff members under a LTIP (Long term incentive Plan).
The employee share options are measured at fair value at the
date of grant by the use of either the Black- Scholes Model or a
Monte Carle model depending on the vesting conditions attached to
the share option. The fair value is expensed on a straight line
basis over the vesting period based on an estimate of the number of
options that will eventually vest. The expense is recognised in the
entity in which the beneficiary is remunerated. Further details are
provided in note 25.
3.16 Revenue recognition
The major sources of revenue come from the following:
-- Pawnbroking
-- Foreign currency exchange
-- Purchase of precious metals
-- Retail jewellery sales
-- Income from other financial services
Pawnbroking revenue is recognised in accordance with IFRS 9,
whereas revenue from other sources is recognised in accordance with
IFRS 15.
Pawnbroking revenue
Revenue from pawnbroking loans comprises interest earned over
time by reference to the principal outstanding and the effective
rate applicable, which is the rate that discounts the estimated
cash receipts through the expected life of the financial asset to
that asset's net carrying value. When a customer defaults on a
pawnbroking loan, the pledged goods held as security are sold to
repay the customer debt. At the point the loan becomes overdue the
loan is classified as in default and interest income is accrued net
of expected credit losses. At the start of the realisation process
the expected credit loss calculation is re-performed based on the
expected cash flows of the retail process, with any increase in
expected credit losses recognised as a cost of sale. Further
details of the expected credit loss calculations are provided in
note 4.1.
Foreign currency exchange income
Revenue is earned in respect of the provision of Bureau de
Change facilities offered and represents the margin earned which is
recognised at the point the currency is collected by the customer
as this represents when the service provided under IFRS 15 has been
delivered.
Sale of precious metals acquired via over the counter
purchases
Revenue is recognised when control of the goods has transferred,
being at the point the goods are received by the bullion dealer and
a sell instruction has been issued. If a price has been fixed in
advance of delivery, revenue is recognised at the point the goods
are received by the bullion dealer.
Jewellery retail sales
Revenue is recognised at the point the goods are transferred to
the customer and full payment has been received. Customers either
pay in full at the time of the transaction and receive the goods,
or pay in instalments and receive the goods once the sale is fully
paid. Instalment payments are recognised as deferred income until
the item is fully paid. The Company has a 7 day refund policy in
store, and a 14 day refund policy online reflecting the distance
selling regulations.
Other financial income
Other financial income comprises cheque cashing, buyback and
other miscellaneous revenues. Cheque cashing revenue is recognised
when the service is provided under IFRS 15 which includes making a
payment to the customer. Buyback revenue relates to the sale of
items to a customer, either the person who originally sold that
item to the business, or to a third party. Revenue is recognised at
the point in time the goods are transferred to the customer. Full
payment is taken at the time or prior to transferring the
goods.
3.17 Administrative expenses
Administrative expenses includes branch staff and establishment
costs.
3.18 Government grants
Government grants that are a contribution to a specific
administrative expense are recognised in the income statement as a
reduction to administrative expenses in the period to which the
expense relates. Other government grants are recognised as other
income when there is reasonable assurance that the entity will
comply with the conditions and the grants will be received.
The grants recognised in the financial statements all relate to
COVID-19 support with job retention scheme support shown net of the
wage cost in administrative expenses and retail grants shown as
other income. There are no unfulfilled conditions and contingencies
attaching to recognised grants.
2021 2020
GBP'000 GBP'000
Other income 134 725
Administrative expenses 1,472 2,769
-------- --------
Total 1,606 3,494
Any grants recognised in the Statement of Comprehensive Income
but not received are included within the Statement of Financial
position under Trade and other Receivables
4. Key sources of estimation uncertainty and significant
accounting judgements
The preparation of the Group's consolidated financial statements
requires management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities, and the accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these assumptions and
estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected
in future periods.
4.1 Key sources of estimation uncertainty
Revenue recognition - pawnbroking loans interest and
impairment
The group recognises interest on pawnbroking loans as disclosed
in note 3.16. The pawnbroking loans interest accrual (pledge
accrual) is material and is dependent on the estimate that the
Group makes of both the expected level of the unredeemed
pawnbroking loans, the ultimate realisation value for the pledge
assets supporting those loans and the time taken to realise assets
relating to loans in default. An assessment is made on a pledge by
pledge basis of the amortised cost value to identify any expected
credit losses. The principal estimates within the amortised cost
calculation are;
1. Non Redemption Rate - This is based upon current and historical data
2. Realisation Value - This based upon either;
- The anticipated price of the metal that will be received
through the sale of the metal content via disposal through a
bullion dealer.
- The expected resale value of those jewellery items within the
pledge that can be retailed through the branch network.
3. Time taken to sell assets relating to loans in default - This
is based upon current and historical data
See note 14 for further details on pawnbroking credit risk and
provision values, including sensitivity
Impairment of property, plant and equipment, right-of-use assets
and intangible assets estimate
Determining whether property, plant and equipment, right-of-use
and intangibles are impaired requires an estimation of the value in
use of the CGU to which the assets have been allocated. The value
in use calculation requires the Group to estimate the future cash
flows expected to arise from the CGU and selecting a suitable
discount rate in order to calculate present value. The review is
conducted annually, in the final quarter of the year. The
impairment review is conducted at the level of each CGU, which is
usually taken to be each individual branch store.
Management have determined that the key sources of estimation
uncertainty, to which the impairment analysis of property plant and
equipment, right-of-use assets and intangible assets is most
sensitive, relate to the following assumptions:
1. The Group prepares cash flow forecasts for each branch. Cash
flows represent management's estimate of the revenue of the
relevant CGU, based upon the specific characteristics of the branch
and its stage of development.
2. The Group has discounted the forecast cash flows at a pre-tax, risk adjusted rate of 12%.
Whilst the impairment review has been conducted based on the
best available estimates at the impairment review date, the Group
notes that actual events may vary from management expectation. If
outcomes within the next financial year are different from the
assumptions made in relation to future cash flows, this could lead
to a material adjustment to the carrying amount of the assets
affected. The carrying amounts for tangible assets, right-of use
assets and intangible assets are disclosed in notes 11 &12.
Where the recoverable amount of the CGU was estimated to be less
than its carrying amount, the carrying amount of the CGU was
reduced to the estimated recoverable amount.
4.2 Significant accounting judgements
In the process of applying the Group's accounting policies,
management has made the following judgements, which have the most
significant effect on the amounts recognised in the consolidated
financial statements:
Lease term
For leases which contain a break clause an assessment is made on
entering a lease on the likelihood that the lease break would be
exercised. If the lease break is not expected to be exercised the
break clause is ignored in establishing the lease term.
5. Segmental analysis
The group's revenue from external customers is shown by
geographical location below:
12 months
to 18 months
30 September to 30 September
2021 2020
Revenue GBP'000 GBP'000
United Kingdom 40,665 72,411
Other 12 82
-------------- -----------------
40,677 72,493
The Group's assets are located entirely in the United Kingdom
therefore, no further geographical segments analysis is presented.
The Group is organised into operating segments, identified based on
key revenue streams, as detailed in the CEO's review.
The Group's revenue is analysed below between revenue from
contracts with customers and other sources which comprises interest
income earned on pawnbroking loans.
12 months 18 months
to 30 September to 30 September
2021 2020
(restated)
Revenue GBP'000 GBP'000
Contracts with customers 33,151 58,027
Pawnbroking interest income 7,526 14,466
40,677 72,493
Pawnbroking interest income is recognised over time as each loan
progresses whereas all other revenue is recognised at a point in
time.
12 months
to 18 months
30 September to 30 September
2021 2020
(restated)
Revenue GBP'000 GBP'000
Pawnbroking 7,526 14,466
Purchases of precious metals 10,369 23,024
Retail Jewellery sales 18,252 17,109
Foreign currency margin 3,408 14,859
Income from other financial
services 1,122 3,035
Total revenue 40,677 72,493
-------------- -----------------
Gross profit
Pawnbroking 6,678 12,248
Purchases of precious metals 4,240 9,856
Retail Jewellery sales 6,965 7,701
Foreign currency margin 3,257 14,859
Income from other financial services 1,122 2,485
Total gross profit 22,262 47,149
----------------- -----------------
12 months 12 months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
Total gross profit 22,262 47,149
----------------- -----------------
Other income 284 725
Administrative expenses (21,510) (37,858)
Finance costs (472) (795)
Profit before tax 564 9,221
----------------- -----------------
Income from other financial services comprises of cheque cashing
fees, agency commissions on miscellaneous financial products.
Revenue from the purchases of precious metals is currently from
one bullion dealer. There is no reliance on key customers in other
revenue streams.
The Group is unable to meaningfully allocate 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 segmental results.
In addition to the segmental reporting on products and services
the Group also manages each branch as a separate CGU and makes
local decisions on that basis.
2021 2020
Other information GBP'000 GBP'000
Tangible & intangible capital
additions (*) 1,636 2,045
Depreciation and amortisation
(*) 3,515 6,377
Assets
Pawnbroking 9,173 9,685
Purchase of precious metals 1,172 1,664
Retail Jewellery sales 14,306 9,707
Foreign currency margin 5,314 5,692
Income from other financial
services 139 145
Unallocated (*) 22,611 25,516
------- -------
52,715 52,409
------- -------
Liabilities
Pawnbroking 492 375
Purchase of precious metals 21 3
Retail Jewellery sales 3,433 2,130
Foreign currency margin 1,335 471
Income from other financial
services 541 438
Unallocated (*) 10,750 13,437
------- -------
16,572 16,854
------- -------
(*) The Group cannot meaningfully allocate this information by
segment due to the fact that all segments operate from the same
stores and the assets in use are common to all segments.
Fixed assets are therefore included in the unallocated assets
balance.
6. Finance costs
12 months 18 months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
Interest on debts and borrowings 84 181
Lease charges 388 614
----------------- -----------------
Total finance costs 472 795
----------------- -----------------
7. Profit before taxation has been arrived at after
charging/(crediting)
12 months 18 months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
Items reported within Other income
-
Compensation for surrendering a lease (150) -
Retail grants (134) (725)
Items reported within Cost of sales
-
Cost of inventories recognised as an
expense 17,416 22,576
Pawnbroking expected credit losses 848 2,218
Items reported within Administrative
expenses -
Depreciation of property, plant and
equipment 1,073 2,004
Impairment of property, plant and equipment 1 234
Depreciation of right of use of assets 2,223 3,483
Impairment of right of use of assets - 40
Profit on disposal of right of use (45) -
assets
Amortisation of intangible assets 172 524
Impairment of intangible assets 46 92
Loss on disposal of property, plant
and equipment 140 185
Staff costs (see note 9) 11,452 19,374
Foreign currency exchange losses/(gains) 135 212
Auditor's remuneration 140 189
Short term lease payments 441 296
Share based payments (see note 25) 254 398
The Company and Group audit fees are borne by a subsidiary
undertaking, Ramsdens Financial Limited. There were no fees payable
to the Company's auditor in respect of non-audit services.
8. Earnings per share
12 months 18 months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
Profit for the period/ year 366 7,118
Weighted average number of shares in
issue 31,161,726 30,837,653
----------------- -----------------
Earnings per share (pence) 1.2 23.1
Weighted average number of dilutive
shares 481,481 805,554
Effect of dilutive shares on earnings
per share (pence) (0.0) (0.6)
----------------- -----------------
Fully Diluted earnings per share (pence) 1.2 22.5
----------------- -----------------
9. Information regarding directors and employees
Directors' emoluments (GBP'000)
12 months to 30 September 18 months to 30 September
2021 2020
------------------------------------
Emoluments Pension LTIP Total Emoluments Pension LTIP Total
Executive
Peter Kenyon 201 10 - 211 361 15 - 376
Martin Clyburn 134 13 204 351 253 21 - 274
Non Executive
Andrew Meehan 66 - - 66 99 - - 99
Simon Herrick 48 - - 48 72 - - 72
Steve Smith 40 - - 40 60 - - 60
----------- -------- ------ ------ ----------- -------- ----- ------
Total 489 23 204 716 845 36 - 881
12 months 18 months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
Included in administrative expenses:
Wages and salaries 10,011 16,852
Social security costs 856 1,665
Share option scheme 254 398
Pension costs 331 459
----------------- -----------------
Total employee benefits expense 11,452 19,374
----------------- -----------------
The average number of staff employed by the group during the
financial period amounted to:
12 months 18 months
to 30 September to 30 September
2021 2020
No. No.
Head Office and management 106 103
Branch Counter staff 586 647
----------------- -----------------
692 750
----------------- -----------------
10. Income Tax
The major components of income tax expense are:
Consolidated statement of comprehensive income
12 months 18 months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
Current income tax:
Current income tax charge 32 2,060
Adjustments in respect of current income
tax of previous year 7 86
----------------- -----------------
39 2,146
Deferred tax:
Relating to origination and reversal
of temporary differences 159 (43)
---- ------
Income tax expense reported in the statement
of comprehensive income 198 2,103
---- ------
A reconciliation between tax expense and the product of
accounting profit multiplied by the UK domestic tax rate is as
follows:
12 months 18 months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
Profit before income tax 564 9,221
UK corporation tax rate at 19% (2020
19%) 107 1,752
Expenses not deductible for tax purposes 84 265
Prior period adjustment 7 86
----------------- -----------------
Income tax reported in the statement
of comprehensive income 198 2,103
----------------- -----------------
Deferred tax
Deferred tax relates to the following:
2021 2020
GBP'000 GBP'000
Deferred tax assets
Share based payments 80 182
Deferred tax assets 80 182
Deferred tax liabilities
Accelerated depreciation for tax
purposes 112 13
Other short-term differences 6 10
-------- --------
Deferred tax liabilities 118 23
-------- --------
Reconciliation of deferred tax (asset)
/ liabilities net
2021 2020
GBP'000 GBP'000
Opening balance as of 1 October /
1 April (159) (141)
Deferred tax recognised in the statement
of comprehensive income 159 (43)
Other deferred tax 38 25
----------------- --------
Closing balance as at 30 September 38 (159)
----------------- --------
Factors affecting tax charge
The standard rate of UK corporation tax for the period was 19%
(2020: 19%). An increase in the UK corporation tax rate from 19% to
25% (effective 1 April 2023) was substantively enacted on 24 May
2021.
11. Property, plant and equipment
Freehold Leasehold Fixtures Computer Motor Total
property improvements & Fitting equipment vehicles
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 October 2020 - 6,099 3,533 715 40 10,387
Additions 210 796 400 141 27 1,574
Disposals - (539) (304) (16) (14) (873)
At 30 September 2021 210 6,356 3,629 840 53 11,088
---------- -------------- ----------- ----------- ---------- --------
Depreciation
At 1 October 2020 - 3,439 1,680 403 20 5,542
Depreciation charge
for the year 2 547 422 95 7 1,073
Impairment - - 1 - - 1
Disposals - (468) (236) (12) (7) (723)
At 30 September 2021 2 3,518 1,867 486 20 5,893
---------- -------------- ----------- ----------- ---------- --------
Net book value
At 30 September 2021 208 2,838 1,762 354 33 5,195
At 30 September 2020 - 2,660 1,853 312 20 4,845
Right of Use of Assets
Leasehold Property Motor Vehicles Total
Cost
At 1 October 2020 11,758 301 12,059
Additions 2,504 2 2,506
Disposals (1,343) (129) (1,472)
--------------------- ----------------- ------------
At 30 September 2021 12,919 174 13,093
--------------------- ----------------- ------------
Depreciation
At 1 October 2020 3,360 163 3,523
Depreciation Charge for the year 2,128 95 2,223
Disposals (688) (129) (817)
------------
At 30 September 2021 4,800 129 4,929
--------------------- ----------------- ------------
Net Book Value
At 30 September 2021 8,119 45 8,164
At 30 September 2020 8,398 138 8,536
12. Intangible assets
Customer Website Goodwill Total
relationships
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 October 2020 2,130 92 526 2,748
Additions 49 13 - 62
At 30 September 2021 2,179 105 526 2,810
--------------- -------- --------- --------
Amortisation
At 1 October 2020 1,730 75 73 1,878
Amortisation charge
for the year 162 10 - 172
Impairment 46 - - 46
At 30 September 2021 1,938 85 73 2,096
--------------- -------- --------- --------
Net book value
At 30 September 2021 241 20 453 714
At 30 September 2020 400 17 453 870
Customer relationship additions relate to GBP49,000 paid for the
pawnbroking customer lists purchased during the period
13. Investments
The Group has a minor holding in Big Screen Productions 5
LLP.
Big Screen Productions 5 LLP, whilst still trading, has wound
down its operations and made a capital distribution equivalent to
the value of the carrying value of the investment in 2015. The
investment now has a GBPnil carrying value.
Group Investments
Details of the investments in which the group and company holds
20% or more of the nominal value of any class of share capital are
as follows:
Name of company Holding Proportion Activity
of voting
rights
and shares
held
Subsidiary undertaking
Ramsdens Financial Ordinary 100% Supply of foreign exchange
Limited Shares services, pawnbroking,
(Registered office: purchase of gold jewellery,
Unit 16 Parkway jewellery retail and related
Centre, Coulby Newham, financial services.
TS8 0TJ)
14. Financial assets and financial liabilities
At 30 September 2021 Fair value Loans Financial Book Fair
through and receivables liabilities Value Value
statement at amortised
of comprehensive cost
income
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Financial assets at
amortised cost - 9,723 - 9,723 9,723
Cash and cash equivalents - 13,032 - 13,032 13,032
Financial liabilities
Trade and other payables - - (7,514) (7,514) (7,514)
Lease liabilities - - (8,601) (8,601) (8,601)
Net financial assets/(liabilities) - 22,755 (16,115) 6,640 6,640
At 30 September Fair value Loans Financial Book Fair
2020 through and receivables liabilities Value Value
statement at amortised
of comprehensive cost
income
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Financial assets
at amortised cost - 10,321 - 10,321 10,321
Cash and cash equivalents - 15,873 - 15,873 15,873
Financial liabilities
Trade and other
payables - - (6,083) (6,083) (6,083)
Lease liabilities - - (9,099) (9,099) (9,099)
Net financial assets/(liabilities) - 26,194 (15,182) 11,012 11,012
Financial assets at amortised cost shown above comprises trade
receivables, other receivables and pledge accrued income as
disclosed in note 16.
Trade and other payables comprise of trade payables, other
payables as disclosed in notes 18 & 19
Loans and receivables are non-derivatives financial assets
carried at amortised cost which generate a fixed or variable
interest income for the Group. The carrying value may be affected
by changes in the credit risk of the counterparties.
Management have assessed that for cash and short-term deposits,
trade receivables, trade payables, bank overdrafts and other
current liabilities their fair values approximate to their carrying
amounts largely due to the short-term maturities of these
instruments. Book values are deemed to be a reasonable
approximation of fair values.
Financial Risks
The Group monitors and manages the financial risks relating to
the financial instruments held. The principal risks include credit
risk on financial assets, and liquidity and interest rate risk on
financial liability borrowings. The key risks are analysed
below.
Credit risk
Pawnbroking loans
Pawnbroking loans are not credit impaired at origination as
customers are expected to repay the capital plus interest due at
the contractual term. The Group is exposed to credit risk through
customers defaulting on their loans. The key mitigating factor to
this risk is the requirement for the borrower to provide security
(the pledge) in entering a pawnbroking contract. The security acts
to minimise credit risk as the pledged item can be disposed of to
realise the loan value on default.
The Group estimates that the current fair value of the security
is equal to the current book value of pawnbroking receivables.
In addition to holding security, the Group further mitigates
credit risk by:
1) Applying strict lending criteria to all pawnbroking loans.
Pledges are rigorously tested and appropriately valued. In all
cases where the Group lending policy is applied, the value of the
pledged items is in excess of the pawn loan.
2) Seeking to improve redemption ratios. For existing customers,
loan history and repayment profiles are factored into the loan
making decision. The Group has a high customer retention ratio and
all customers are offered high customer service levels.
3) The carrying value of every pledge comprising the pawnbroking
loans is reviewed against its expected realisation proceeds should
it not be redeemed and expected credit losses are provided for
based on current and historical non redemption rates.
The Group continually monitors, at both store and at Board
level, its internal controls to ensure the adequacy of the pledged
items. The key aspects of this are:
- Appropriate details are kept on all customers the Group
transacts with;
- All pawnbroking contracts comply with the Consumer Credit Act
2006;
- Appropriate physical security measures are in place to protect
pledged items; and
- An internal audit department monitors compliance with policies
at the Group's stores.
Expected Credit losses
The Group measures loss allowances for pawnbroking loans using
IFRS 9 expected credit losses model. The Group's policy is to begin
the disposal process one month after the loan expiry date unless
circumstances exist indicating the loan may not be credit
impaired.
2021 2020
Gross Loss Net carrying Gross Loss Net
amount allowance amount amount allowance carrying
amount
Category GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Performing 6,747 173 6,574 5,553 127 5,426
In default 3,127 528 2,599 5,653 1,394 4,259
-------- ----------- ------------- -------- ----------- ----------
Total 9,874 701 9,173 11,206 1,521 9,685
The pawnbroking expected credit losses which have been provided
on the period end pawnbroking assets are:
Pawnbroking
loans
GBP'000
At 1 April 2019 713
Statement of comprehensive
income charge 2,218
Utilised in the period (1,410)
At 30 September 2020 1,521
Statement of comprehensive
income charge 847
Utilised in the period (1,667)
------------
Balance at 30 September 2021 701
Expected credit losses were high in 2020 due to higher than
usual past due pawnbroking loans which is a result of the Group's
decision to offer further time to customers before commencing the
realisation process in line with FCA guidance following the impact
of COVID19. The position has normalised by 30 September 2021.
A 1% increase/(decrease) in the Group's redemption ratio is a
reasonably possible variance based on historical trends and would
result in an impact on Group pre-tax profit of GBP6k/(GBP6k).
A one month increase/(decrease) in the Group's estimate of the
expected time to sell pledge goods in the course of realisation
from the balance sheet date is a reasonably possible variance based
on historical trends and would result in an impact on Group pre-tax
profit of (GBP80k)/GBP80k.
The ageing of the capital value of the Pawnbroking trade
receivables excluding those in the course of realisation is as
follows:
2021 2020
GBP'000 GBP'000
Within contractual term 5,601 4,989
Past due 536 1,559
-------- --------
6,137 6,548
-------- --------
Cash and cash equivalents
The cash and cash equivalents balance comprise of both bank
balances and cash floats at the stores. The bank balances are
subject to very limited credit risk as they are held with banking
institutions with high credit ratings assigned by international
credit rating agencies. The cash floats are subject to risks
similar to any retailer, namely theft or loss by employees or third
parties. These risks are mitigated by the security systems,
policies and procedures that the Group operates at each store, the
Group recruitment and training policies and the internal audit
function.
Market risk
Pawnbroking trade receivables
The collateral which protects the Group from credit risk on
non-redemption of pawnbroking loans is principally comprised of
gold, jewellery items and watches. The value of gold items held as
security is directly linked to the price of gold. The Group is
therefore exposed to adverse movements in the price of gold on the
value of the security that would be attributable for sale in the
event of default by the borrower.
The Group considers this risk to be limited for a number of
reasons. First of all, the Group applies conservative lending
policies in pawnbroking pledges reflected in the margin made on
retail sales and scrap gold when contracts forfeit. The Group is
also protected due to the short term value of the pawnbroking
contract. In the event of a significant drop in the price of gold,
the Group could mitigate this risk by reducing its lending policy
on pawnbroking pledges, by increasing the proportion of gold sold
through retail sales or by entering gold hedging instruments.
Management monitors the gold price on a constant basis.
Considering areas outside of those financial assets defined
under IFRS 9, the Group is subject to higher degrees of pricing
risk. The price of gold will affect the future profitability of the
Group in three key ways:
i) A lower gold price will adversely affect the scrap
disposition margins on existing inventory, whether generated by
pledge book forfeits or direct purchasing. While scrap profits will
be impacted immediately, retail margins may be less impacted in the
short term.
ii) While the Group's lending rates do not track gold price
movements in the short term, any sustained fall in the price of
gold is likely to cause lending rates to fall in the longer term
thus potentially reducing future profitability.
iii) A lower gold price may reduce the attractiveness of the
Group's gold purchasing operations.
Conversely, a lower gold price may dampen competition as lower
returns are available and hence this may assist in sustaining
margins and volumes.
Financial assets
The Group is not exposed to significant interest rate risk on
the financial assets, other than cash and cash equivalents, as
these are lent at fixed rates, which reflect current market rates
for similar types of secured or unsecured lending, and are held at
amortised cost.
Cash and cash equivalents are exposed to interest rate risk as
they are held at floating rates, although the risk is not
significant as the interest receivable is not significant.
The foreign exchange cash held in store is exposed to the risks
of currency fluctuations. The value exposed is mainly in Euro and
US dollars. There is the daily risk of buying today, receiving the
currency the next day, and subsequently selling it and being
susceptible to movements in the exchange rate. The Company uses
monthly forward contracts to hedge against adverse exchange rate
movements in its two key currencies, Euros and US dollars. There
are no contracts in place at the year end.
Liquidity risk
Cash and cash equivalents
Bank balances are held on short term / no notice terms to
minimise liquidity risk.
Trade and other payables
Trade and other payables are non-interest bearing and are
normally settled on 30 day terms, see note 18.
Borrowings
The maturity analysis of the cash flows from the group's
borrowing arrangements that expose the group to liquidity risk are
as follows:
As at 30 September <3 months 3-12 months 1-5 years >5 years Total
2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Lease Liabilities 621 1,757 5,388 2,579 10,345
Trade payables 5,406 - - - 5,406
---------- ------------ ---------- --------- ---------
Total 6,027 1,757 5,388 2,579 15,751
As at 30 September <3 months 3-12 months 1-5 years >5 years Total
2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Lease Liabilities 442 2,006 5,642 2,369 10,459
Trade payables 3,153 - - - 3,153
---------- ------------ ---------- --------- ---------
Total 3,595 2,006 5,642 2,369 13,612
Although the Group is currently not utilising its bank facility,
the interest charged on bank borrowings is based on a fixed
percentage above LIBOR. There is therefore a cash flow risk should
there be any upward movement in LIBOR rates and in the event that
the Group requires to utilise the borrowing facility. Assuming the
GBP10million revolving credit facility was fully utilised then a 1%
increase in the LIBOR rate would increase finance costs by
GBP100,000 pre-tax and reduce post-tax profits by GBP81,000.
15. Inventories
2021 2020
GBP'000 GBP'000
New and second hand inventory
for resale (at lower
of cost or net realisable
value) 15,151 11,159
16. Trade and other receivables
2021 2020
GBP'000 GBP'000
Trade receivables - Pawnbroking 9,173 9,685
Trade receivables - other 489 372
Other receivables 61 264
Prepayments 656 623
-------- --------
10,379 10,944
-------- --------
Pawnbroking accrued income is disclosed net of expected credit
losses, details of which are shown in note 14.
17. Cash and cash equivalents
2021 2020
GBP'000 GBP'000
Cash and cash equivalents 13,032 15,873
Cash and cash equivalents comprise cash held by the Group and
short-term bank deposits.
Further details on financial instruments, including the
associated risks to the Group and allowances for expected credit
losses is provided in note 14.
18. Trade and other payables (current)
2021 2020
GBP'000 GBP'000
Trade payables 5,406 3,153
Other payables 767 594
Other taxes and social security 277 566
Accruals 1,170 2,069
Contract liabilities 53 40
------------- --------
Subtotal 7,673 6,422
Lease liabilities 2,159 2,005
Income tax liabilities 61 1,157
------------- --------
9,893 9,584
------------- --------
Terms and conditions of the above financial liabilities:
-- Trade and other payables are non-interest bearing and are
normally settled on up to 60-day terms
For explanations on the Group's liquidity risk management
processes, refer to note 14.
Bank borrowings
The RCF facility was renewed during 2021 an option agreement for
a term for a further 3 years. Details of the facility are as
follows:
Key Term Description
Facility Revolving Credit Facility with Clydesdale Bank
Plc (trading as Yorkshire Bank)
Total facility GBP10m
size
Termination date March 2024.
Utilisation The GBP10m facility is available subject to the
ratio of cash at bank and in hand (inclusive of
currency balances) to the RCF borrowing exceeding
1.5 as stipulated in the banking agreement
Interest Interest is charged on the amount drawn down at
2.4% above LIBOR rate when the initial drawdown
is made and for unutilised funds interest is charged
at 0.84% from the date when the facility was made
available. The LIBOR rate is reset to the prevailing
rate at every interest period which is typically
one and three months.
Interest Payable Interest is payable at the end of a drawdown period
which is typically between one and three months.
Repayments The facility can be repaid at any point during
its term and re-borrowed,
Security The facility is secured by a debenture over all
the assets of Ramsdens Financial Ltd and cross
guarantees and debentures have been given by Ramsdens
Holdings PLC.
Undrawn facilities At 30 September 2021 the group had available GBP10m
of undrawn committed facilities.
19. Non-current liabilities
2021 2020
GBP'000 GBP'000
Lease liabilities 6,442 7,094
Contract liabilities 119 153
Deferred tax (note 10) 118 23
-------- --------
6,679 7,270
-------- --------
20. Lease Liability
2021 2020
GBP'000 GBP'000
Lease Liabilities as at 1
October / 1 April 9,099 9,737
Additions 2,506 3,304
Disposals (700) (297)
Interest 388 614
Payments (2,692) (4,259)
-------- --------
As at 30 September 8,601 9,099
-------- --------
Current lease liability 2,159 2,005
-------- --------
Non-current lease liability 6,442 7,094
-------- --------
The cash flows relating to financing activities for repayment of
lease principal amounts is GBP2,304,000 (2020: GBP3,645,000).
Amounts repaid in the year are shown in the consolidated Statement
of Cash Flows.
Short term lease payments recognised in administrative expenses
in the year total GBP441,000 (2020: GBP296,000). The maturity
analysis of lease liabilities is disclosed in note 14, the finance
cost associated with lease liabilities is disclosed in note 6, and
the depreciation and impairment of right-of-use assets associated
with lease liabilities are disclosed is note 11.
21. Issued capital and reserves
Ordinary shares issued No. GBP'000
and fully paid
At 30 September 2020 30,837,653 308
Issued during the year 555,554 6
----------- --------
At 30 September 2021 31,393,207 314
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
the return to stakeholders through the optimisation of the debt and
equity balance. The capital structure of the Group consists of cash
and cash equivalents and equity attributable to the equity holders
of the parent, comprising issued capital, reserves and retained
earnings. The Group has a debt facility as disclosed in note 18 but
the facility was undrawn at the end of the period.
22. Dividends
Amounts recognised as distributions to equity holders in the
year:
2021 2020
GBP'000 GBP'000
No final dividend for the year ended 30 September
2020
(31 March 2019 of 4.8p per share) - 1,480
No interim dividend for the period ended
30 September 2021
(30 September 2020 of 2.7p per share) - 833
---------- ---------
- 2,313
Amounts proposed and not recognised:
Final dividend for the year ended 30 September 408 -
2021
(No final dividend for 30 September 2020
)
The proposed final dividend is subject to approval at the Annual
General Meeting accordingly has not been included as a liability in
these financial statements.
23. Pensions
The company operates a defined contribution scheme for its
directors and employees. The assets of the scheme are held
separately from those of the company in an independently
administered fund.
The outstanding pension contributions at 30 September 2021 are
GBP57,000 (2020: GBP57,000)
24. Related party disclosures
Ultimate controlling party
The Company has no controlling party.
Transactions with related parties
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Transactions with key management personnel
The remuneration of the directors of the company, who are the
key management personnel of the Group, is set out below in
aggregate:
12 months 18 months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
Short term employee benefits 688 1,183
Post employment benefits 39 61
Share based payments 139 240
----------------- -----------------
866 1,484
----------------- -----------------
25. Share based payments
The Company operates a Long-term Incentive Plan (LTIP). The
charge for the year in respect of the scheme was:
12 months 18 months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
LTIP 254 398
----------------- -----------------
The LTIP is a discretionary share incentive scheme under which
the Remuneration Committee of Ramsdens Holdings PLC can grant
options to purchase ordinary shares at nominal 1p per share cost to
Executive Directors and other senior management. A reconciliation
of LTIP options is set out below:
Weighted
average
Number exercise
of conditional price in
Shares pence
Outstanding at the beginning
of the year 1,025,554 -
Granted during the period 462,500 -
Forfeited during the period - -
Exercised during the period (555,554) 1
----------------
Outstanding at the end of the
period 932,500
----------------
The options vest according to the achievement against two
criteria
Total Shareholder Return - TSR - 50% of options awarded
Earnings per Share - EPS - 50% of options awarded
The Fair value of services received in return for share options
granted is based on the fair value of share options granted and are
measured using the Monte Carlo method for TSR performance condition
as this is classified as a market condition under IFRS2 and using
the Black Scholes method for the EPS performance condition which is
classified as a non- market condition under IFRS2. The fair values
have been computed by an external specialist and the key inputs to
the valuation model were:
TSR Condition EPS Condition TSR Condition EPS Condition TSR Condition EPS Condition
Model Monte Carlo Black Scholes Monte Carlo Black Scholes Monte Carlo Black Scholes
Grant Date 08/02/2021 08/02/2021 16/07/2019 16/07/2019 02/07/2018 02/07/2018
Share Price GBP1.48 GBP1.48 GBP1.88 GBP1.88 GBP1.75 GBP1.75
Exercise Price GBP0.01 GBP0.01 GBP0.01 GBP0.01 GBP0.01 GBP0.01
Vesting period 2.64 years 2.64 years 2.71 years 2.71 years 2.75 years 2.75 years
Risk Free return 0.01% 0.01% 0.5% 0.5% 0.7% 0.7%
Volatility 51% 51% 26% 26% 30% 30%
Dividend Yield 0.0% 0.0% 3.9% 3.9% 4.0% 4.0%
Fair value of Option
(GBP) 0.64 1.47 0.52 1.68 0.46 1.56
Early exercise of the options is permitted if a share award
holder ceases to be employed by reason of death, injury,
disability, or sale of the Company. The maximum term of the share
options is 10 years.
26. Post Balance Sheet Events
There were no post balance sheets events that require further
disclosure in the financial statements.
27. Cash and cash equivalents
30 September 30 September
2021 2020
GBP'000 GBP'000
Sterling cash and cash equivalents 7,747 10,204
Other currency cash and cash equivalents 5,285 5,669
-------------- -------------
13,032 15,873
-------------- -------------
28. Prior period adjustment
Following a review, the Group has changed its accounting policy
for pawnbroking loans in the course of realisation, on the basis
that the derecognition criteria under IFRS9 has not been met. Note
2 provides further details of this change. The change in accounting
policy has resulted in a prior period adjustment to previously
reported results as follows:
Consolidated statement of comprehensive income
For the 18 month period ended 30 September
2020
Reported Adjustment Restated
GBP'000 GBP'000 GBP'000
Revenue 76,938 (4,445) 72,493
Cost of sales (29,789) 4,445 (25,344)
Gross profit 47,149 - 47,149
Other income 725 - 725
Administrative expenses (37,858) - (37,858)
--------- ----------- ---------
Operating profit 10,016 - 10,016
Finance costs (795) - (795)
--------- ----------- ---------
Profit before tax 9,221 - 9,221
Income tax expense (2,103) - (2,103)
--------- ----------- ---------
Profit for the year / period 7,118 - 7,118
--------- ----------- ---------
Other comprehensive income - - -
Total comprehensive income 7,118 - 7,118
--------- ----------- ---------
Restated consolidated statement of financial position
As at 30 September 2020 As at 01 April 2019
Reported Adjustment Restated Reported Adjustment Restated
Assets GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets 14,433 - 14,433 16,096 - 16,096
Current Assets
Inventories 13,360 (2,201) 11,159 12,658 (2,051) 10,607
Trade and other
receivables 8,743 2,201 10,944 10,407 2,051 12,458
Cash and short
term deposits 15,873 - 15,873 13,420 - 13,420
--------- --------- --------- ---------
37,976 - 37,976 36,485 - 36,485
--------- --------- --------- ---------
Total assets 52,409 - 52,409 52,581 - 52,581
--------- --------- --------- ---------
Current liabilities 9,584 - 9,584 14,362 - 14,362
--------- --------- --------- ---------
Net current assets 28,392 - 28,392 22,123 - 22,123
--------- --------- --------- ---------
Non-current liabilities 7,270 - 7,270 7,842 - 7,842
--------- --------- --------- ---------
Total liabilities 16,854 - 16,854 22,204 - 22,204
--------- --------- --------- ---------
Net assets 35,555 - 35,555 30,377 - 30,377
--------- --------- --------- ---------
Restated consolidated statement
of cash flows
For the period ended 30 September
2020
Reported Adjustment Restated
Operating activities GBP'000 GBP'000 GBP'000
Profit before tax 9,221 - 9,221
--------- ---------
Adjustments to reconcile profit
before tax to net cash flows:
Depreciation and impairment of property,
plant
and equipment 2,238 - 2,238
Depreciation and impairment of right
of use assets 3,523 - 3,523
Profit on disposal of right of use - -
assets -
Amortisation and impairment of intangible
assets 616 - 616
Loss on disposal of property, plant
and equipment 185 - 185
Share based payments 398 - 398
Finance costs 795 - 795
Working capital adjustments:
Movement in trade and other receivables
and prepayments 1,781 (150) 1,631
Movement in inventories (702) 150 (552)
Movement in trade and other payables 170 - 170
--------- ---------
18,225 - 18,225
Interest paid (795) - (795)
Income tax paid (1,678) - (1,678)
--------- ---------
Net cash flows from operating activities 15,752 - 15,752
--------- ---------
Net cash flows used in investing
activities (2,041) - (2,041)
Net cash flows from financing activities (11,258) - (11,258)
--------- ---------
Net decrease / increase in cash
and cash equivalents 2,453 - 2,453
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FR BKFBPABKKODD
(END) Dow Jones Newswires
January 18, 2022 02:03 ET (07:03 GMT)
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