REG - Ramsdens Holdings - Annual Results - year ended 30 September 2021
18/01/2022 07:05
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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 £40.7m £72.5m*
Gross Profit £22.3m £47.1m
Profit before tax £0.6m £9.2m
Net Assets £36.1m £35.6m
Net Cash £13.0m £15.9m
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 £13.0m.
· 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 £1.6m of Government Support during the year,
including £1.5m 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 £10m 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 £6.8m as at 31 December 2021 (£5.9m
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 (http://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
(https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.ramsdensplc.com%2Finvestor-relations%2Freports-and-presentations&data=02%7C01%7Clwollam%40hudsonsandler.com%7C5e65bb6855a840ec736808d6e9028d50%7Ca33bdb157e25438ab1fd5c523a8866f9%7C1%7C0%7C636952594503059063&sdata=Cpng724nGX9wrWhD9NwOlkiZHLeIZZnzg6S71WXuRQE%3D&reserved=0)
, 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.
ENDS
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
(file:///C:/Users/alex/Dropbox%20(Hudson%20Sandler)/Clients/Ramsdens/Releases/Drafts/www.ramsdensplc.com)
www.ramsdensforcash.co.uk (http://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
£10m 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 & DIVIDEND
The below table highlights the financial results:
£000's FY21 FP20
(12 months) (18 months)
Revenue £40,677 £72,493*
Gross Profit £22,262 £47,149
Profit Before Tax £564 £9,221
Net Assets £36,143 £35,555
Net Cash £13,032 £15,873
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 £40.7m
(FP20: £72.5m) and Profit Before Tax of £0.6m (FP20: £9.2m). 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 £13.0m and the
Group's revolving credit facility of £10m 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 £77m £559m
Income £3.4m £14.9m
Online C&C orders £6.9m £45.4m
% 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 £509
(FP20 £399). 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 £6,678 £12,248
Total loan book £6,137 £6,548
Past Due £536 £1,559
In date loan book £5,601 £4,989
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 £5.6m during the year but has since
increased back to £6.1m at the year end. It has risen further post the period
end to £6.8m at the end of December 2021; a significant improvement towards
pre-pandemic loan book levels (FY19: £7.6m).
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 £264, up from £248 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 £18,252 £17,109
Gross Profit £6,965 £7,701
Margin % 38% 45%
Percentage of GP 31% 21%
Jewellery retail stock £13,979 £9,085
Online sales* £3,277 £1,947
% 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 £3.3m 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 £10m 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 £10,369 £23,024
Gross Profit £4,240 £9,856
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 £16.05 per gram during the year compared to
£15.00 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 £1,122 £3,035
Gross Profit £1,122 £2,485
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 (http://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 £3.3m. 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 (http://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
£0.15m 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
£18,000 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
£17,000.
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:
£000's FY21 FP20
(12 months) (18 months)
Revenue £40,677 £72,493*
Gross Profit £22,262 £47,149
Profit Before Tax £564 £9,221
Net Assets £36,143 £35,555
Net Cash £13,032 £15,873
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 £40.7m. Costs have been
well controlled with administration expenses of £21.5m and an overall profit
before tax of £0.6m generated. Key points to note are that our foreign
currency commission has fallen by c.£10m compared to pre pandemic levels and
the Group received £1.6m of Government support, £0.1m has been shown as
other income and £1.5m has been shown as a reduction to administrative
expenses.
The Group has maintained its strong cash position, with £13m net cash at the
year end, and was able to trade without the need to utilise its £10m
revolving cash facility at any point during the year.
EARNINGS PER SHARE AND DIVIDEND
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 EXPENDITURE
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 £1.6m 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 £1.1m (FP20:
£15.8m) which includes government support of £1.6m (FP20: £3.5m). Cash
outflows have included the investments in stock of £4.0m, which has been
partially offset by favourable credit terms with suppliers with creditors
increasing by £1.2m
The 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 £13.0m (FP20: £15.9m).
FINANCIAL POSITION
At 30 September 2021, cash and cash equivalents amounted to £13.0m (FP20
£15.9m) and the Group had net assets of £36.1m (FP20: £35.6m).
TAXATION
The tax charge for the period was £0.2m (FP20: £2.1m) 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 £254,000 (FP20: £389,000).
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 £13.0m and access to an undrawn £10m 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 to 30 September 18 months to 30 September
2021 2020
Notes
(restated)
£'000 £'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 £'000 £'000 £'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 capital Share premium Retained earnings Total
Notes
£'000 £'000 £'000 £'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 2021 12 months to 18 months to 30 September
30 September
2021 2020
(restated)
Operating activities Notes £'000 £'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 (£000), 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 £0.6m and its £10m debt facility
was undrawn.
The Group has significant cash resources at 30 September 2021 of £13m and
access to an undrawn £10m 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 c£1.6m. 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 £75, 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
£'000 £'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 to 30 September
30 September
2021 2020
Revenue £'000 £'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 to 30 September 18 months to 30 September
2021 2020
(restated)
Revenue £'000 £'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 to 30 September
30 September
2021 2020
(restated)
Revenue £'000 £'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 to 30 September 12 months to 30 September
2021 2020
£'000 £'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 £'000 £'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 to 30 September 18 months to 30 September
2021 2020
£'000 £'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 to 30 September 18 months to 30 September
2021 2020
£'000 £'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 assets (45) -
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 to 30 September 18 months to 30 September
2021 2020
£'000 £'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 (£'000)
12 months to 30 September 2021 18 months to 30 September 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 23 716 845 36 881
204 -
12 months to 30 September 18 months to 30 September
2021 2020
£'000 £'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 to 30 September 18 months 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 to 30 September 18 months to 30 September
2021 2020
£'000 £'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 to 30 September 18 months to 30 September
2021 2020
£'000 £'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
£'000 £'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
£'000 £'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 property Leasehold improvements Fixtures & Fitting Computer equipment Motor vehicles Total
£'000 £'000 £'000 £'000 £'000 £'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 relationships Website Goodwill Total
£'000 £'000 £'000 £'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 £49,000 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 £nil
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 of voting rights and shares held Activity
Subsidiary undertaking
Ramsdens Financial Limited Ordinary Shares 100% Supply of foreign exchange services, pawnbroking, purchase of gold jewellery,
jewellery retail and related financial services.
(Registered office: Unit 16 Parkway Centre, Coulby Newham, TS8 0TJ)
14. Financial assets and financial liabilities
At 30 September 2021 Fair value through statement of comprehensive income Loans and receivables Financial liabilities at amortised cost Book Value Fair Value
£'000 £'000 £'000 £'000 £'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 2020 Fair value through statement of comprehensive income Loans and receivables Financial liabilities at amortised cost Book Value Fair Value
£'000 £'000 £'000 £'000 £'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 amount Gross Loss Net carrying amount
amount allowance amount allowance
Category £'000 £'000 £'000 £'000 £'000 £'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
£'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 £6k/(£6k).
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 (£80k)/£80k.
The ageing of the capital value of the Pawnbroking trade receivables excluding
those in the course of realisation is as follows:
2021 2020
£'000 £'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 2021 <3 months £'000 3-12 months £'000 1-5 years £'000 >5 years £'000 Total
£'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 2020 <3 months £'000 3-12 months £'000 1-5 years £'000 >5 years £'000 Total
£'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 £10million revolving credit facility was fully
utilised then a 1% increase in the LIBOR rate would increase finance costs by
£100,000 pre-tax and reduce post-tax profits by £81,000.
15. Inventories
2021 2020
£'000 £'000
New and second hand inventory for resale (at lower of cost or net realisable 15,151 11,159
value)
16. Trade and other receivables
2021 2020
£'000 £'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
£'000 £'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
£'000 £'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 size £10m
Termination date March 2024.
Utilisation The £10m 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 £10m of undrawn committed
facilities.
19. Non-current liabilities
2021 2020
£'000 £'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
£'000 £'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 £2,304,000 (2020: £3,645,000). 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 £441,000 (2020: £296,000). 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 and fully paid No. £'000
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
£'000 £'000
No final dividend for the year ended 30 September 2020 - 1,480
(31 March 2019 of 4.8p per share)
No interim dividend for the period ended 30 September 2021 - 833
(30 September 2020 of 2.7p per share)
- 2,313
Amounts proposed and not recognised:
Final dividend for the year ended 30 September 2021 408 -
(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 £57,000 (2020:
£57,000)
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 to 30 September 18 months to 30 September
2021 2020
£'000 £'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 to 30 September 18 months to 30 September
2021 2020
£'000 £'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:
Number of conditional Shares Weighted average exercise price in 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 £1.48 £1.48 £1.88 £1.88 £1.75 £1.75
Exercise Price £0.01 £0.01 £0.01 £0.01 £0.01 £0.01
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 (£) 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
£'000 £'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
£'000 £'000 £'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 £'000 £'000 £'000 £'000 £'000 £'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 £'000 £'000 £'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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