REG - H&T Group PLC - Unaudited Interim Condensed Financial Statements
13 August 2019
H&T Group plc
("H&T" or "the Group" or "the Company")
UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2019
H&T Group plc today announces its interim results for the six months ended 30 June 2019.
The Group financial statements have been prepared, as required, for the first time under IFRS 16 ('Leases').
FINANCIAL HIGHLIGHTS
•
Profit before tax up £0.5m, 7.9% to £6.8m (H1 2018: £6.3m)
•
Operating profit before non-recurring expenses up 16.0%, £1.2m to £8.7m (H1 2018: £7.5m), after £0.5m transaction expenses up 9.3%, £0.7m to £8.2m (H1 2018: £7.5m)
•
Basic EPS of 15.00p (H1 2018: 13.85p)
•
Net pledge book, including accrued interest, increased by 3.8% from FY18 to £53.8m (30 June 2018: £47.8m)
•
Personal Loan book Risk Adjusted Margin increased to 54.1% (H1 2018: 37.5%)
•
Net debt reduced by £2.1m from FY18 to £11.6m (30 June 2018: £16.8m)
•
Interim dividend of 4.7p (2018 interim: 4.4p)
OPERATIONAL HIGHLIGHTS
•
Growth in pawnbroking, customer lending and new customers
•
Improved personal loan net profitability due to lower impairment and focus on store initiated new business
•
Growth of our foreign currency product, driven by improved systems and in-store displays
•
Improved management of our customer interactions and better conversion of our online leads via the utilisation of our integrated CRM and digital marketing platforms
•
Planned acquisition of 65 trading stores and 46 pledge books from the Money Shop
John Nichols, H&T chief executive, said:
"We have made a good start to the year due to the resilient nature of our product set, our investment in people, and our digital initiatives. A strengthening gold price is helpful to our business. PBT is up nearly 8% to £6.8m, and revenue is up £1.5m, primarily driven by increased pawnbroking, personal lending and retail activity.
"Against this solid background, in July 2019 we completed the acquisition of 65 trading stores and bought 29 pledge books from the Money Shop, all of which have been integrated into the Group (we had previously acquired 17 books for £0.4m in the period). To facilitate this acquisition, in July we raised £6.0m of additional equity funding by way of an accelerated bookbuild placing, having renewed our £35.0m credit facility with Lloyds. The total acquisition price was £11.0m, which included taking possession of £6.0m of pledged assets, £1.0m of cash, a freehold property and trading fixtures and fittings, together with 241 employees.
"We can be confident of the success of this important transaction as a result of the investment in people and processes made over many years. The acquired stores conduct similar business and will geographically complement our existing store estate. With the application of H&T's appropriate capital, staffing support and management, and with the expansion of pledge business and the introduction of our personal lending products the investment will provide significant value to shareholders.
"We will further leverage this expanded store estate by continuing to develop and invest in digital multi-channel capability."
Enquiries:
H&T Group plc
Tel: 0870 9022 600
John Nichols, chief executive
Richard Withers, interim finance director
Numis Securities (broker and nominated adviser)
Tel: 020 7260 1000
Luke Bordewich, nominated adviser
Haggie Partners (financial public relations)
Tel: 020 7562 4444
Caroline Klein
Vivian Lai
INTERIM REPORT
Introduction
We have continued to achieve revenue growth from all core business activities through our ongoing focus on in-store execution excellence alongside continuing development in digital capabilities.
In July we increased our store estate by 65 sites, bringing our estate to 248 stores, via the acquisition of certain assets from the Money Shop. This growth allows us to expand our online to in-store capability.
FINANCIAL RESULTS
The Group has reported profit before tax of £6.8m (H1 2018: £6.3m), a 7.9% increase, reflecting a good operational performance.
Gross profit increased by £1.5m, 3.5%, to £44.1m (H1 2018: £42.6m). Operating profit before non-recurring expenses increased by £1.2m, 16.0%, to £8.7m (H1 2018: £7.5m). The group incurred £0.5m of transaction related costs in respect of the acquisition of certain assets of the Money Shop which have been expensed in full.
The average H1 2019 gold price has increased 5.4% to £1,010 per troy ounce for H1 2019 (H1 2018: £958).
Total direct and administrative expenses increased by £0.3m, reflecting a £0.2m reduction in impairment charges despite aggregate increases in our lending books and a £0.5m, 3.5% increase in wage-related costs, as a result of increases in pension and living wage costs.
The Group's balance sheet remains strong with net debt at £11.6m (30 June 2018: £16.8m) and a net debt to EBITDA ratio, calculated in accordance with bank covenant arrangements, of 0.64x (30 June 2018: 0.97x).
The reduced borrowings reflected the cash generative nature of the Group and a relative slow-down in the growth of our personal lending offering. The bank debt position is well within the covenant test of 3.0x. The Group had £14.0m (30 June 2018: £9.0m) of headroom available on its debt facility of £35.0m at 30 June 2019. The credit facility was renewed with Lloyds on principally the same terms for a period of up to five years, expiring in June 2024.
Dividend
The Board has approved an interim dividend of 4.7 pence (2018 interim: 4.4 pence). This will be payable on 4 October 2019 to all shareholders on the register at the close of business on 6 September 2019.
IFRS 16
IFRS 16, applicable for accounting periods beginning on or after 1 January 2019 has been adopted by the Group and prior periods restated using the fully retrospective approach. The standard introduces the identification of lease arrangements and the impact on the Group's financial statements is shown in detail at note 10.
As at 30 June 2019 the Group has non-cancellable operating lease commitments of £22.0m (30 June 2018: £25.3m). The new accounting requirement results in a reduction in retained earnings of £3.1m, primarily resulting from the Group recognising a right-of-use asset capitalised at a net book value of £18.4m (30 June 2018: £21.5m) offset by a lease liability of £20.7m (30 June 2018: £24.0m). The impact on the Group's statement of comprehensive income for H1 2019 is £0.1m (H1 2018: £0.1m).
REVEW OF OPERATIONS
Pawnbroking
Pawnbroking remains a core product for H&T and we report that the gross pledge book increased to £53.8m, including accrued interest (30 June 2018: £47.8m). This growth has been achieved due to the following factors:
•
Increase in number of customer transactions by 6.5% on H1 2018
•
Higher carat lending, principally 14ct and 22ct, driving a £0.9m increase in book value from this category on 31 December 2018
•
Improvement in the quality-watch segment of the book, with the support of the Expert Eye system and additional specialist valuation staff, which has seen a £0.5m book increase on 31 December 2018
•
Consistently high redemption rate of 84% (H1 2018: 84%)
•
Continued growth in customer lending sourced via our appointed introducers
Pawnbroking-revenue less impairment increased £0.6m to £16.8m (H1 2018: £16.2m) resulting in an annualised risk-adjusted margin (RAM) of 62.9% (H1 2018: 67.9%). The was a consequence of a change in mix towards lending on higher value (higher carat gold and premium watches) items.
Pawnbroking summary:
6 months ended 30 June:
2019
2018
Change
£'000
£'000
%
Year-end net pledge book1
53,799
47,847
12.4%
Average monthly net pledge book
53,422
47,665
12.1%
Revenue less impairment
16,793
16,182
3.8%
Annualised Risk-adjusted margin2
62.9%
67.9%
Notes to table
1 - Includes accrued interest
2 - Revenue less impairment as a percentage of average pledge book
Pawnbroking scrap
Pawnbroking scrap produced gross profits of £0.4m (H1 2018: £1.0m) for the half year, on sales of £5.9m (H1 2018: £8.0m). The reduced margin from 13% to 7% results primarily from delay in the realisation of diamond sales yet to be auctioned.
Retail
Retail sales increased 12.8% to £18.5m (H1 2018: £16.4m) while gross profits reduced by 10.0% to £5.4m (H1 2018: £6.0m). Margin at 29.2% (H1 2018: 36.6%) is reflected by an increased proportion of lower-margin watches sold in store and online and higher watch repair and refurbishment costs. The Group has also reduced its stock holding of aged items, requiring higher level of sales discounting. As a result, retail stock has reduced by £2.3m to £31.6m (30 June 2018: £33.9m).
Our online retail site continues to grow, with online generated sales reaching £2.0m (H1 2018: £1.1m). Our www.est1897.co.uk website typically holds more than 2,000 high-end pre-owned watches and jewellery items.
Electronic item sales are a necessary consequence of buyback fee income. Revenue from electronic items was £1.9m (H1 2018: £1.5m). In the period, losses from these items were £0.4m (H1 2018: profit £0.1m). Our online sales process only became operational end H1 2019. As a result, a higher proportion of items were disposed of at auction, as opposed to online or in-store where we achieve a higher price, resulting in these net losses and depressing the overall retail margin.
Personal Loans
Net revenue increased 74.2% to £5.4m (H1 2018: £3.1m), while the loan book decreased 5.3% from 31 December 2018 to £19.4m (30 June 2018: £17.8m). Organic store lending increased 2.1% vs H1 2018.
We have improved the annualised risk-adjusted margin to 54% (H1 2018: 37%) by taking proactive action in areas identified as not economically viable. Since the end of 2018 we have been refocusing on the quality of our lending.
Marketing activities have been stepped up to leverage our investment in our Customer Relations Management system so that we can more effectively engage with and redirect loan enquiries to local branches. The process of encouraging a potential customer from the website to a physical branch is now an important component of our strategy, blending a digital offering with our store estate.
We have made further progress in delivery of the longer-term strategy of helping our customers to rebuild their credit rating, with more customers obtaining access to one of the two lower interest rate and longer-term products. As a result, the proportion of loans that fall under the definition of high-cost short-term credit fell to 36% (H1 2018: 50%).
Personal Loans summary:
6 months ended 30 June:
2019
2018
Change
£'000
£'000
%
Period-end net loan book
19,363
17,757
9.0 %
Average monthly net loan book
20,050
16,639
20.5%
Revenue
11,620
10,566
10.0%
Impairment
(6,196)
(7,443)
(16.8%)
Revenue less impairment
5,424
3,123
73.7%
Annualised Risk-adjusted margin1
54.1%
37.5%
Notes to table
1 - Revenue less impairment as a percentage of average loan book
Gold purchasing
Gold purchasing profits reduced to £1.5m (H1 2018: £2.1m) on sales of £8.4m (H1 2018: £10.1m). The reduced margin from 21% to 18% is a result of timings differences in the sales of purchased gold together with diamonds awaiting auction as at 30 June 2019. Gold held in stock for melting was £1.7m (30 June 2018: £1.4m).
Other services
Total revenues from other services increased to £3.3m (H1 2018: £2.8m) with a £0.3m increase in Foreign Currency (FX) transaction profit partially offset by reductions in buyback income.
FX profit increased by 18.8% to £1.9m (H1 2018: £1.6m) while the value of currency traded increased by 14.0% from £71.9m to £82.0m. We continue to maintain competitive rates as we raise customer awareness in the product. The product is still relatively new to the business and we have seen trading uplift due to a new system deployment that optimises currency holdings in store. We continue to see improved customer awareness through development of marketing and point-of-sale materials.
Buyback customer transactions were up 14.4% on H1 2018, driving an additional £0.1m in fees with revenue at £0.9m (H1 2018: £0.8m).
Cheque cashing revenue was flat at £0.4m (H1 2018: £0.4m).
REGULATION
Continued focus on affordability and creditworthiness in consumer credit
Our historic approach to affordability and creditworthiness ensured we were in a positive position to be able to meet all new requirements with minimal changes to our policies or procedures. In November 2018 the FCA's new rules and guidance on assessing affordability and creditworthiness in consumer credit came into force. The Group's strategy is to evolve the Personal Loans product to lower interest rates.
Senior Managers & Certification Regime
The FCA is extending the Senior Managers & Certification Regime (SM&CR) to all firms from the 9th December 2019. The Group has always adopted a robust approach to governance and internal controls and is well placed to meet the additional demands of the SM&CR.
STRATEGY AND OUTLOOK
We are excited about the opportunity to achieve uplift and return from our newly enlarged store estate. We will continue to focus on people development and transfer the Group's success factors into the 65 newly acquired ex-Money Shop stores. We will also look at opportunities where the Money shop excelled (for example Western Union, FX, cheque cashing) and transfer knowledge and synergies where relevant.
The demand for small-sum, short-term cash loans remains strong. The Company continues to focus and seek strategies to grow its pawnbroking offering while sensibly expanding its unsecured personal lending product and retail offering by focusing on digital and online strategies to complement its store estate.
We will continue to work towards our vision of helping our customers to rebuild their credit history by giving them access to more affordable lending products. We will also maintain our relentless focus on operational effectiveness aligned with the training, development and progression of our valuable staff.
Current trading is in line with management's expectations.
Interim Condensed Financial Statements
Unaudited statement of comprehensive income
For the 6 months ended 30 June 2019
6 months ended 30 June 2019
6 months ended 30 June 2018
12 months ended 31 December 2018
Note
Total
Total
Total
Unaudited
Unaudited
Restated*
Restated*
£'000
£'000
£'000
Revenue
2
69,999
68,486
143,025
Cost of sales
(25,929)
(25,915)
(54,781)
________
________
________
Gross profit
2
44,070
42,571
88,244
Other direct expenses
(28,013)
(27,740)
(58,736)
Administrative expenses
(7,384)
(7,341)
(13,272)
________
________
________
Operating profit before non-operating expenses
8,673
7,490
16,236
________
________
________
Non-recurring expenses
11
(500)
-
-
________
________
________
Operating profit
3
8,173
7,490
16,236
Investment revenues
-
3
3
Finance costs
5
(1,342)
(1,196)
(2,468)
________
________
________
Profit before taxation
6,831
6,297
13,771
Tax on profit
6
(1,275)
(1,197)
(2,818)
________
________
________
Total comprehensive income for the period
5,556
5,100
10,953
________
________
________
Pence
Pence
Pence
Earnings per ordinary share - basic
7
15.00
13.85
29.69
Earnings per ordinary share - diluted
7
14.97
13.78
29.59
All results derive from continuing operations.
* Certain comparative information has been restated as a result of the initial application of IFRS 16 as set out in note 10.
Unaudited condensed consolidated statement of changes in equity
For the 6 months ended 30 June 2019
Note
6 months
ended
30 June
20196 months
ended
30 June
201812 months
ended
31 December
2018
Unaudited
Unaudited
Restated*
Restated*
£'000
£'000
£'000
Opening total equity
103,821
96,404
96,404
Total comprehensive income for the period
5,556
5,100
10,953
Issue of share capital
328
522
522
Share option movement taken directly to equity
368
(12)
(72)
Dividends paid
9
(2,496)
(2,329)
(3,986)
________
________
________
Closing total equity
107,577
99,685
103,821
________
________
________
Unaudited condensed consolidated balance sheet
At 30 June 2019
At 30 June
2019
At 30 June
2018
At 31 December
2018
Unaudited
Unaudited
Restated*
Restated*
Note
£'000
£'000
£'000
Non-current assets
Goodwill
17,643
17,643
17,643
Other intangible assets
280
449
343
Property, plant and equipment
6,497
6,660
6,032
Deferred tax assets
1,760
2,015
1,683
Right-of-use assets
10
18,408
21,529
20,159
44,588
48,296
45,860
Current assets
Inventories
30,653
33,035
29,262
Trade and other receivables
74,315
67,219
73,379
Other current assets
947
841
877
Cash and cash equivalents
9,501
9,272
11,414
115,416
110,367
114,932
Total assets
160,004
158,663
160,792
Current liabilities
Lease liability
10
(4,830)
(4,657)
(4,779)
Trade and other payables
(9,031)
(7,086)
(7,384)
Current tax liabilities
(722)
(759)
(842)
(14,583)
(12,502)
(13,005)
Net current assets
100,833
97,865
101,927
Non-current liabilities
Borrowings
4
(20,656)
(25,831)
(24,888)
Lease liability
10
(15,890)
(19,326)
(17,825)
Provisions
(1,298)
(1,319)
(1,253)
(37,844)
(46,476)
(43,966)
Total liabilities
(52,427)
(58,978)
(56,971)
Net assets
107,577
99,685
103,821
EQUITY
Share capital
8
1,891
1,883
1,883
Share premium account
27,472
27,153
27,152
Employee Benefit Trust share reserve
(35)
(35)
(35)
Retained earnings
78,249
70,684
74,821
Total equity attributable to equity holders of the parent
107,577
99,685
103,821
* Certain comparative information has been restated as a result of the initial application of IFRS 16 as set out in note 10.
Unaudited condensed consolidated cash flow statement
For the 6 months ended 30 June 2019
Note
6 months
ended
30 June
2019
6 months
ended
30 June
2018
12 months ended
31 December 2018
Unaudited
Unaudited
Restated*
Restated*
£'000
£'000
£'000
Cash flows from operating activities
Profit for the period
5,556
5,100
10,953
Adjustments for:
Investment revenues
-
(3)
(3)
Finance costs
1,342
1,196
2,468
Increase/(decrease) in provisions
45
6
(60)
Income tax expense
1,275
1,197
2,818
Depreciation of property, plant and equipment
1,045
1,160
2,333
Depreciation of right-of-use assets
2,004
2,092
4,188
Amortisation of intangible assets
71
72
150
Loss on disposal of property, plant and equipment
5
81
133
Share based payment expense
146
-
-
Operating cash flows before movements in working capital
11,489
10,901
22,980
(Increase)/decrease in inventories
(1,391)
1,112
4,884
Increase in other current assets
(70)
(176)
(212)
Increase in receivables
(517)
(3,821)
(9,947)
Decrease in payables
(259)
(4,264)
(5,405)
Cash generated from operations
9,252
3,752
12,300
Income taxes paid
(1,248)
(1,511)
(2,776)
Interest paid
(1,206)
(1,128)
(2,344)
Net cash generated from operating activities
6,798
1,113
7,180
Investing activities
Interest received
-
3
3
Purchases of property, plant and equipment
(1,520)
(1,563)
(2,101)
Acquisition of right-of-use assets
(253)
(548)
(1,275)
Acquisition of trade and assets of business
(419)
(569)
(575)
Net cash used in investing activities
(2,192)
(2,677)
(3,948)
Financing activities
Dividends paid
9
(2,497)
(2,329)
(3,986)
(Decrease)/increase in borrowings
(4,000)
4,000
3,000
Debt restructuring cost
(350)
(34)
(31)
Proceeds on Issue of shares
328
523
523
Net cash (used in)/generated from financing activities
(6,519)
2,160
(494)
Net (decrease)/increase in cash and cash equivalents
(1,913)
596
2,738
Cash and cash equivalents at beginning of period
11,414
8,676
8,676
Cash and cash equivalents at end of period
9,501
9,272
11,414
Unaudited notes to the condensed interim financial statements
For the 6 months ended 30 June 2019
Note 1 Basis of preparation
The interim financial statements of the group for the six months ended 30 June 2019, which are unaudited, have been prepared in accordance with the International Financial Reporting Standards ('IFRS') accounting policies adopted by the group and set out in the annual report and accounts for the year ended 31 December 2018, except for the adoption of IFRS 16. The group does not anticipate any change in these accounting policies for the year ended 31 December 2019. As permitted, this interim report has been prepared in accordance with the AIM rules but not in accordance with IAS 34 "Interim financial reporting". While the financial figures included in this preliminary interim earnings announcement have been computed in accordance with IFRSs applicable to interim periods, this announcement does not contain sufficient information to constitute an interim financial report as that term is defined in IFRSs.
The financial information contained in the interim report also does not constitute statutory accounts for the purposes of section 434 of the Companies Act 2006. The financial information for the year ended 31 December 2018, prior to the restatement as a result of the adoption of IFRS 16, is based on the statutory accounts for the year ended 31 December 2018. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
After conducting a further review of the group's forecasts of earnings and cash over the next twelve months and after making appropriate enquiries as considered necessary, the directors have a reasonable expectation that the company and group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half yearly condensed financial statements.
Unaudited notes to the condensed interim financial statements
For the 6 months ended 30 June 2019
Note 2 Segmental Reporting
2019
Revenue
Pawnbroking
£'000
Gold
purchasing
£'000
Retail
£'000
Pawnbroking scrap
£'000
Personal
Loans
£'000
Other
Services
£'000
Consolidated
for the 6 months ended
30 June 2019
£'000
External revenue
21,790
8,752
18,511
6,040
11,620
3,286
69,999
___________
__________
_______
__________
______
__________
___________
Total revenue
21,790
8,752
18,511
6,040
11,620
3,286
69,999
Gross profit
21,790
1,495
5,432
447
11,620
3,286
44,070
Impairment
(4,997)
-
-
-
(6,196)
-
(11,193)
Segment result
16,793
1,495
5,432
447
5,424
3,286
32,877
Other direct expenses excluding impairment
(16,820)
Administrative expenses
(7,384)
Operating profit before non-recurring expenses
8,673
Non recurring expenses
(500)
Operating profit
8,173
Investment revenue
-
Finance costs
(1,342)
Profit before taxation
6,831
Tax charge on profit
(1,275)
Profit for the period and total comprehensive income
5,556
2018
Revenue
Pawnbroking
£'000
Gold
purchasing
£'000
Retail
£'000
Pawnbroking scrap
£'000
Personal
Loans
£'000
Other
Services
£'000
Consolidated
for the 6 months ended
30 June 2018
£'000
External revenue
20,092
10,611
16,420
7,954
10,566
2,843
68,486
Total revenue
20,092
10,611
16,420
7,954
10,566
2,843
68,486
Gross profit
20,092
2,107
5,965
998
10,566
2,843
42,571
Impairment
(3,910)
-
-
-
(7,443)
-
(11,353)
Segment result
16,182
2,107
5,965
998
3,123
2,843
31,218
Other direct expenses excluding impairment
(16,387)
Administrative expenses
(7,341)
Operating profit
7,490
Investment revenue
3
Finance costs
(1,196)
Profit before taxation
6,297
Tax charge on profit
(1,197)
Profit for the period and total comprehensive income
5,100
Unaudited notes to the condensed interim financial statements (continued)
For the 6 months ended 30 June 2019
Note 2 Segmental Reporting (continued)
2018
Revenue
Pawnbroking
Restated*
£'000
Gold
purchasing
£'000
Retail
£'000
Pawnbroking scrap
£'000
Personal
Loans
Restated*
£'000
Other
Services
Restated*
£'000
For the year
ended 2018
Restated*
£'000
External revenue
41,278
20,745
38,338
14,059
22,472
6,133
143,025
Total revenue
41,278
20,745
38,338
14,059
22,472
6,133
143,025
Gross profit
41,278
3,757
13,203
1,401
22,472
6,133
88,244
Impairment
(10,366)
-
-
-
(15,515)
-
(25,881)
Segment result
30,912
3,757
13,203
1,401
6,957
6,133
62,363
Other direct expenses excluding impairment
(32,855)
Administrative expenses
(13,272)
Operating profit
16,236
Investment revenue
3
Finance costs
(2,468)
Profit before taxation
13,771
Tax charge on profit
(2,818)
Profit for the financial year and total comprehensive income
10,953
Note 3 Operating profit and EBITDA
The Board consider EBITDA to be a key performance measure as the Group borrowing facility includes a number of loan covenants based on it.
EBITDA is defined as Earnings Before Interest, Taxation, Depreciation and Amortisation. It is calculated by adding back depreciation and amortisation to the operating profit as follows:
6 months ended 30 June 2019
Unaudited
6 months ended
30 June
2019
Unaudited
6 months ended
30 June
2018
Restated*
Unaudited
12 months ended
31 December 2018
Restated*
Audited
Total
Total
Total
£'000
£'000
£'000
Operating profit
8,173
7,490
16,236
Depreciation and amortisation
1,116
1,232
2,483
Depreciation of right-of-use assets
2,004
2,092
4,188
EBITDA
11,293
10,814
22,907
See note 10 for impact of IFRS 16 ('leases').
Unaudited notes to the condensed interim financial statements (continued)
For the 6 months ended 30 June 2019
Note 4 Borrowings
6 months
ended
30 June
20196 months
ended
30 June
201812 months
ended
31 December
2018
Unaudited
Unaudited
Audited
£'000
£'000
£'000
Long term portion of bank loan
21,000
26,000
25,000
Unamortised issue costs
(344)
(169)
(112)
Amount due for settlement after more than one year
20,656
25,831
24,888
Note 5 Finance costs
6 months
ended
30 June
2019
6 months
ended
30 June
2018
12 months
ended
31 December
2018
Unaudited
Unaudited
Audited
£'000
£'000
£'000
Interest payable on bank loans and overdraft
331
294
657
Other interest
1
1
1
Amortisation of debt issue costs
118
53
109
Interest on right-of-use assets
892
848
1,701
Total finance costs
1,342
1,196
2,468
Note 6 Tax on profit
The taxation charge for the 6 months ended 30 June 2019 has been calculated by reference to the expected effective corporation tax and deferred tax rates for the full financial year to end on 31 December 2019. The underlying effective full year tax charge is estimated to be 19% (six months ended 30 June 2018: 19%).
Unaudited notes to the condensed interim financial statements (continued)
For the 6 months ended 30 June 2019
Note 7 Earnings per share
Basic earnings per share is calculated by dividing the profit for the period attributable to equity shareholders by the weighted average number of ordinary shares in issue during the period.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. With respect to the group these represent share options granted to employees where the exercise price is less than the average market price of the company's ordinary shares during the period.
Reconciliations of the earnings per ordinary share and weighted average number of shares used in the calculations are set out below:
Unaudited
Unaudited (Restated*)
(Restated*)
6 months ended 30 June 2019
6 months ended 30 June 2018
12 months ended 31 December 2018
Earnings
£'000
Weighted average number of shares
Per-share amount pence
Earnings
£'000
Weighted average number of shares
Per-share amount pence
Earnings
£'000
Weighted average number of shares
Per-share amount pence
Earnings per share -
basic
5,556
37,039,443
15.00
5,100
36,832,563
13.85
10,953
36,895,316
29.69
Effect of dilutive securities
Options
-
70,999
(0.03)
-
165,465
(0.07)
-
126,277
(0.10)
Earnings per share diluted
5,556
37,110,442
14.97
5,100
36,998,028
13.78
10,953
37,021,593
29.59
Note 8 Share capital
At
30 June 2019
At
30 June 2018
At
31 December 2018
Unaudited
Unaudited
Audited
Allotted, called up and fully paid
(Ordinary Shares of £0.05 each)
£'000 Sterling
1,891
1,883
1,883
Number
37,827,501
37,658,511
37,658,511
Note 9 Dividends
On 9 August 2019, the directors approved a 4.7 pence interim dividend (30 June 2018: 4.4 pence) which equates to a dividend payment of £1,866,000 (30 June 2018: £1,657,000), which incorporates additional shares issued on 4 July 2019 (see note 11). The dividend will be paid on 4 October 2019 to shareholders on the share register at the close of business on 6 September 2019 and has not been provided for in the 2019 interim results. The shares will be marked ex-dividend on 5 September 2019.
On 2 May 2019, the shareholders approved the payment of a 6.6 pence final dividend for 2018 (2017: 6.4 pence) which equates to a dividend payment of £2,450,000 (2018: £2,329,000). The dividend was paid on 31 May 2019.
Unaudited notes to the condensed interim financial statements (continued)
For the 6 months ended 30 June 2019
Note 10 Explanation of adoption of IFRS 16
The table below shows the impact of adopting IFRS 16 on each financial statement line item affected.
Impact on profit or loss, other comprehensive income and total comprehensive income
As at
30 June 2019
Unaudited
£'000
As at
30 June 2018
Unaudited
£'000
As at 31 December
2018
Unaudited
£'000
Decrease in Operating expenses
3,052
3,135
6,126
Increase in Depreciation
(2,004)
(2,092)
(4,189)
Increase in Finance costs
(892)
(848)
(1,701)
Increase in Tax charged on profit
(64)
(71)
(112)
-----------
-----------
-----------
Increase in Profit for the year
92
124
124
Impact on assets, liabilities and equity
As at 31 December 2017
Unaudited
£'000
As at
30 June 2019
Unaudited
£'000
As at
30 June 2018
Unaudited
£'000
As at 31 December
2018
Unaudited
£'000
Increase in Right-of-use assets (NBV)
23,073
18,408
21,529
20,159
Increase in Deferred tax assets
675
574
641
608
Decrease in Trade and other receivables
(1,389)
(1,269)
(1,324)
(1,291)
Increase in Trade and other payables
(25,656)
(20,720)
(23,983)
(22,604)
Increase in Current tax liabilities
-
(74)
(37)
(45)
------------
------------
------------
-----------
Total reduction in net assets
(3,297)
(3,081)
(3,174)
(3,173)
Retained earnings
(3,297)
(3,081)
(3,174)
(3,173)
Note 11 Subsequent events
On 1 July 2019 the Group completed the acquisition of 65 trading stores and 29 pledge books from the Money Shop, all of which have been integrated into the Group, having previously acquired 17 books for £0.4m in the period. To facilitate this acquisition, the Group raised £6.0m of additional equity funding by way of an accelerated bookbuild Placing. The total acquisition price was £11.0m, which included taking possession of £6.0m of pledged assets, £1.0m of cash, a freehold property and trading fixtures and fittings, together with 241 employees.
The group incurred £0.5m of transaction related costs in the form of legal and professional fees in respect of the acquisition of assets from the Money Shop which have been expensed in full in the period.
Movement in share capital as a result of the Placing
Allotted, called up and fully paid
(Ordinary Shares of £0.05 each)
At 30 June 2019
37,827,501
Shares issued (placing priced at £3.16 and issued 4 July 2019)
1,882,925
------------
At 4 July 2019
39,710,426
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