REG - Ramsdens Holdings - Annual Results - year ended 30 September 2022
17/01/2023 07:00
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RNS Number : 9014M Ramsdens Holdings PLC 17 January 2023
17 January 2023
Ramsdens Holdings PLC
("Ramsdens", the "Group", the "Company")
Annual Results for the year ended 30 September 2022
Excellent recovery post pandemic
Ramsdens, the diversified financial services provider and retailer, today
announces its Annual Results for the year ended 30 September 2022 (the
"Period").
The financial results for FY22 are significantly ahead of FY21 as the Group
recovers from the impact of the Covid-19 pandemic.
FY22 FY21
Revenue £66.1m £40.7m
Gross Profit £38.2m £22.3m
Profit before tax £8.3m £0.6m
Net Assets £41.8m £36.1m
EPS 20.9p 1.2p
Final dividend 6.3p 1.2p
Full year dividend 9.0p 1.2p
Highlights:
· FY22 profit for the Group has been driven primarily by the strong
recovery in foreign currency gross profit to £12.6m (FY21: £3.3m) as
international travel returned to a reasonable level.
· Revenue generated by the Group's jewellery retail segment increased by
almost 50% to £27.1m (FY21: £18.3m), supported by strategic investments in
stock, merchandising and the website.
· Demand for the Group's pawnbroking loans grew during the year as a
result of customer spending habits returning to normal following the easing of
restrictions related to Covid-19 and fewer alternative options for small sum
short term credit being available. As at 30 September 2022, the loan book
had increased by over 40% to £8.6m (FY21: £6.1m).
· Precious metal buying volumes increased throughout the summer,
aided by the high gold price and increased footfall. Revenue across this
segment increased more than 50% to approximately £16.0m (FY21: £10.3m).
· The Board has recommended a final dividend of 6.3p per share for
approval at the forthcoming AGM taking the total dividend for the Period to
9.0p per share (FY21: 1.2p), representing a return to the Group's progressive
dividend policy.
Current Trading:
The Board is pleased to provide an update on Q1 FY23 trading (October to
December 2022).
· Jewellery retail gross profit increased by over 15% primarily as
a result of strong premium watch sales both instore and online.
· Q1 volumes of foreign currency exchange remained at approximately
70% of pre pandemic levels.
· The pawnbroking loan book has grown further from the year-end
balance of £8.6m to £9.1m.
· The purchase of precious metal volumes and our other services
have continued to perform in line with expectations.
· Following the year end, new stores have been opened in Bootle,
Basildon, Croydon and a second store in Bradford, taking the store estate to
158 stores (including two franchised stores).
Peter Kenyon, Chief Executive, commented:
"Ramsdens delivered a very strong performance in FY22, once again reflecting
the strength of our diversified income streams. The strong rebound in our
foreign currency exchange volumes, coupled with increased demand for our
excellent quality and value for money jewellery, has enabled the Group to
deliver significantly increased profitability.
This momentum continued through Q1, with strong jewellery sales during
December driven by continued consumer demand for premium watches.
Our team of committed staff have once again been central to our success. They
continue to deliver outstanding service to our growing customer base, for
which I am hugely grateful, and I would like to take this opportunity to
publicly thank them all for their commitment. We continue to invest in
attracting, retaining and rewarding our staff as we develop what I believe to
be the best team in the industry.
While fully aware of the economic challenges that lie ahead, with our trusted
brand and proven, well invested and diversified business model, I remain very
optimistic about Ramsdens' future prospects."
Availability of Report and Accounts
The Company confirms that the Annual Report and Financial Statements for the
year ended 30 September 2022, together with notice of the Company's 2022
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. The person responsible for making this announcement on
behalf of the Company is Peter Kenyon.
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
Emily Brooker
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 158 stores within
the UK (including 2 franchised stores) and has a growing online presence.
Ramsdens is FCA authorised for its pawnbroking and credit broking activities.
(file:///C%3A/Users/alex/Dropbox%20(Hudson%20Sandler)/Clients/Ramsdens/Releases/Drafts/www.ramsdensplc.com)
www.ramsdensplc.com (https://www.ramsdensplc.com/)
www.ramsdensforcash.co.uk (http://www.ramsdensforcash.co.uk/)
CHAIRMAN'S STATEMENT
I had every confidence that Ramsdens, underpinned by the strength of its
diversified business model and value-for-money proposition, would emerge from
the Covid-19 pandemic well-positioned for continued growth. I am pleased to
say this is the position we are now in.
This Annual Report covers the 12-month period to 30 September 2022 (FY22).
The financial results for FY22 are significantly ahead of FY21 as the latter
were severely impacted by retail closures and reduced international travel
resulting from the pandemic.
FY22 brought the challenges of the Covid-19 Omicron variant in H1, which
impacted retail, particularly in the weeks prior to Christmas 2021, and also
caused disruption to international travel. While these challenges eased in
H2, the trading conditions did not return to those seen prior to the onset of
the pandemic. Despite these challenges, I am pleased to report that the
Group has had an excellent recovery.
FINANCIAL RESULTS & DIVIDEND
The below table highlights the financial results:
£000's FY22 FY21
Revenue £66,101 £40,677
Gross Profit £38,219 £22,262
Profit Before Tax £8,269 £564
Net Assets £41,843 £36,143
Net Cash* £8,835 £13,032
EPS 20.9p 1.2p
Final dividend 6.3p 1.2p
Full year dividend 9.0p 1.2p
*cash minus bank borrowings
The Group achieved revenue of £66.1m (FY21: £40.7m) and Profit Before Tax of
£8.3m (FY21: £0.6m). The Strategic Report and Financial Review that follow
provide a more in-depth analysis of the Group's trading performance and
financial results.
The Board has recommended a final dividend of 6.3p (FY21: 1.2p) for approval
at the forthcoming AGM. The full year dividend, of 9.0p (FY21: 1.2p)
assuming approval at the AGM, would represent 43% of the earnings per share.
This payment recommences the Group's progressive dividend policy of paying
approximately 50% of post-tax profits to shareholders, always subject to
executing on the Group's growth opportunities. Subject to approval at the
AGM, the final dividend is expected to be paid on 10 March 2023 for those
shareholders on the register on 3 February 2023. The ex-dividend date will
be 2 February 2023.
LOOKING AHEAD
The Board believes Ramsdens' diversified income streams provide defensive
qualities against the macroeconomic challenges that lie ahead. The
uncertainty caused by energy cost increases, general inflationary pressures
and higher interest rates will prove a challenge to many businesses, and
Ramsdens is no different.
However, we also see opportunities. We would hope that after three years of
disruption to summer holidays, 2023 may see the level of holidays taken by
consumers return to 2019 levels, although it is always possible that economic
conditions may delay that.
Tougher economic conditions will no doubt lead to increased and sometimes
unexpected bills for our customers. As an asset-backed loan, pawnbroking
provides a solution to an immediate borrowing need and allows customers six
months to repay their loans or to make longer term financial arrangements.
We have seen the continued demand for this simple solution as the Ramsdens
pawnbroking loan book finished the year end at a record high. Due to global
economic uncertainty, the gold price is also expected to remain higher than
long term averages, which will benefit both our pawnbroking and precious
metals buying business segments. While there is greater uncertainty for the
outlook on retail, as jewellery is often a discretionary spend, Ramsdens has
been investing heavily in upskilling staff, building appropriate stock levels,
stock presentation and replenishment systems and it is expected that the
significant momentum we have seen during FY22 will support a continued strong
performance in FY23.
Of course, the Group is not immune from rising costs. While energy prices
for the vast majority of our stores are fixed until February 2024, stores
opened since February 2021 are not part of that contract and have been subject
to higher energy costs. The biggest cost to the business is also our most
important asset: our people. We have a duty to look after our people and, in
addition to professional development initiatives, opportunities for career
progression and welfare programmes, we also want to reward our staff well.
In addition to a one off 'thank you' bonus, our January 2023 pay review will
again ensure that our staff are paid at least the Real Living Wage with the
potential to earn more through attractive bonus schemes.
I am extremely proud of the Ramsdens team's skills and their 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 for their
continued dedication.
During the year, Steve Smith took the decision to retire from Ramsdens prior
to the 2023 AGM. The Nominations Committee undertook a recruitment process
and I am pleased to report that Karen Ingham joined the Board on 1 November
2022. I would like to thank Steve for his contribution to Ramsdens and wish
him all the best for the future and welcome Karen to our board.
Andrew Meehan
Non-Executive Chairman
16 January 2023
CHIEF EXECUTIVE'S REVIEW
Despite the challenges faced during the year, I am pleased that our
diversified income streams have performed extremely well to deliver strong
annual profits, in line with those achieved prior to the onset of the
pandemic.
We started the year with optimism. We knew consumers had saved significant
sums and paid down debts through the pandemic and that as restrictions were
removed, normalised spending habits would resume, and as a result there would
be a greater need to borrow. The Covid-19 Omicron variant slowed down the
return to more normalised trading conditions until after Christmas 2021. In
early 2022, we saw the end of the red and green 'traffic light' destination
lists and constraints on international travel reduced, most notably the
uncertainty of a pre-departure Covid-19 test. However, it soon became clear
that many airlines and airports were unable to manage the increased volume of
consumers travelling during peak holiday months which led to a reduced number
of international flights. As a result, our opportunity to sell foreign
currency was more limited than we initially expected.
The war in Ukraine and the resulting energy crisis combined with other
inflationary pressures has impacted on both our business and customers.
However, the Group has fixed energy pricing across the majority of its estate
until February 2024 which provides mitigation in the short term.
Our staff have once again delivered outstanding service to our growing
customer base during the year for which I'm hugely grateful. I would like to
take this opportunity to publicly thank them all for their commitment. We
continue to invest in attracting, retaining and rewarding our staff as we
develop what I believe to be the best team in the industry.
I remain very optimistic for the future of Ramsdens given our diversified
income streams, robust business model and strong balance sheet.
BUSINESS REVIEW
Despite the external challenges faced during recent period, the Group has
remained committed to its growth strategy.
Our continuous improvement ethos has led to the core store estate delivering
growth across all income streams and gives us momentum as we move forward.
Within the core estate, we have relocated four stores, namely Carlisle,
Kilmarnock, Newcastle and Manchester. We opened new stores in Bolton and
Glasgow and successfully expanded into the South East of England with a new
store opening in Chatham. We acquired a further store on the South coast at
Boscombe. All of the new stores and relocations have performed well.
Two stores have been closed and merged locally in line with our approach of
regularly appraising individual store performance, new opportunities and
return on investment, and we ended the financial year with 152 stores and two
franchised locations.
Our online activities continue to grow. We commenced a project to refresh
the retail jewellery website to improve the search facility for customers and
for organic reach. The refreshed website went live in Q1 FY23. In H1 2023,
we will have individual websites for our four key income streams, further
improving the online customer journey.
During the year we acquired the freehold of our head office premises. This
will allow us to expand this bespoke building to support our long-term growth
plans as well as introduce a greener energy solution.
The performance of each of the Group's key income streams is discussed in
greater detail below.
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
international bank-to-bank payments through a third-party arrangement.
FY22 FY21
Total Currency exchanged £364m £77m
Gross profit £12.7m £3.3m
Online click and collect orders £38.7m £6.9m
Percentage of FX online 11% 9%
Percentage of Group gross profit 33% 15%
October 2021 volumes were approximately 30% of pre-pandemic levels, rising to
over 80% in May 2022 before settling through the summer at circa 70% of
pre-pandemic levels.
During this period of supressed volumes, the industry has widened margins, and
Ramsdens has benefited from this while still offering attractive and
competitive exchange rates to our customers. The overall margin achieved on
all foreign currency exchanged was 3.5%, down from 4.2% due to the changes in
mix of foreign currency sales and purchases.
The average foreign currency sale transaction value (ATV) was £469, an
increase on the pre pandemic level of £401. 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.
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
2023.
International payments income continues to be relatively small in comparison
to total foreign currency commission but we have a loyal repeat customer base
using the service.
We strongly believe that customers' desire to go on holiday abroad remains
high, especially after three summers of disruption. We are optimistic that
more holiday makers will travel during summer 2023 than did during 2022, and
that numbers may return to 2019 levels. However, it is also possible that
economic conditions may delay the return to pre-pandemic levels.
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 FY22 FY21
Gross profit £7,533 £6,678
Total loan book* (capital value) £8,648 £6,137
Past due (capital value) £721 £536
In date loan book* (capital value) £7,927 £5,601
Percentage of Group gross profit 20% 30%
*excludes loans in the course of realisation
As Covid-19 restrictions eased, as expected, consumers started to spend more
which resulted in an increase in some customers' short-term requirements for
financial assistance. This occurred across both mainstream consumer credit,
such as credit cards where card balances increased in the last 12 months, as
well as across the consumer base using a pawnbroker. At the same time, the
number of small sum short term credit providers in the market reduced. As a
consequence, demand for pawnbroking loans has increased and the loan book at
the year-end was at a record high of £8.6m (FY21 £6.1m).
The average loan value as at 30 September 2022 was £303, up from £264 as at
30 September 2021. Our lending remains conservative in line with our
long-term policy.
We predict that increased energy bills, high inflation and higher interest
rates will squeeze household incomes in FY23 leading to an increased demand
for consumer borrowing. If consumers have assets to pledge, pawnbroking can
provide a short-term solution and therefore our loan book is expected to
increase during FY23.
Jewellery Retail
The Group offers new and second-hand jewellery, including premium watches, for
sale. The Board continues to believe 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.
The 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, new jewellery retailing enables the Group to attract
customers who prefer not to buy second-hand.
000's FY22 FY21
Revenue £27,107 £18,252
Gross Profit £10,263 £6,965
Margin % 38% 38%
Jewellery retail stock £19,683 £13,979
Online sales £3,904 £2,822
Percentage of sales online 14% 15%
Percentage of Group gross profit 27% 31%
The Group's retail performance is at a record high and continues to perform
well following investments in stock levels, stock presentation, replenishment
systems, staff training and our retail website over recent years.
Retail revenue is now approximately equally spread across three key categories
of premium watches, new jewellery and preowned jewellery. Margins by product
category have remained consistent as has the overall gross margin as all
product categories have performed well.
Online growth remains strong with revenue increasing to £3.9m, up 38% for the
year. Online sales represented 14% of all jewellery items sold.
As well as a profitable sales channel, the jewellery website also serves as a
catalogue for our branches, assisting our staff with serving customers where
stock choice in a branch may be limited. For example, our top watch sales
branches have circa 60 watches in store but there are now over 1,800 watches
available on our website for customers to browse, choose from and buy.
We believe there is an ongoing opportunity, instore and online, across our
product categories, to develop and grow our jewellery retail business.
Purchase of precious metals
Through our 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. If the
items are not retailed, they are smelted and sold to a bullion dealer for
their intrinsic value and the proceeds are reflected in the Group's accounts
as precious metals buying income.
000's FY22 FY21
Revenue £15,847 £10,369
Gross Profit £6,626 £4,240
Percentage of Group gross profit 17% 19%
The Sterling price for 9ct gold has remained high in comparison to long run
averages, at an average of £17.15 per gram during the year (FY21: £16.05).
While in the first half of the year the weight of gold purchased was subdued
in line with reduced footfall, during the second half year, the weight
purchased has returned to pre-pandemic levels.
Given the wider global political and economic situation, we believe the gold
price will remain high in the short to medium term, 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 FY22 FY21
Revenue £1,114 £1,122
Gross Profit £1,114 £1,122
Percentage of Group gross profit 3% 5%
This remains a steady source of income albeit we believe that cheque cashing
will continue to decline over the medium term.
STRATEGY
Following an extensive review, the Board believes that its existing strategy,
communicated over the last few years, remains the right course for growing our
business and delivering value for all our stakeholders in a sustainable
manner. Our staff and their development are a core component of achieving
our aims.
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
challenging markets.
5. Focusing on sustainability through our ESG policies
1. Improving the performance of the existing store estate
All income segments have shown significant growth over FY21 levels, as the
Group has recovered from the pandemic restrictions.
The strategic focus we have placed on attracting new customers and driving a
higher wallet share from our repeat customers has led to a record pawnbroking
loan book and record jewellery retail revenue. Our focus remains the same
across the existing store estate.
Our costs are well controlled, with our largest cost being our staff. We
fully understand the important role our staff play in achieving our strategic
objectives and as a result we have budgeted for a positive pay review which
has been brought forward to January 2023 from April. We are committed to
ensuring that our staff remain not only productive but also feel rewarded in
their careers at Ramsdens.
Rents continue to be negotiated downwards where there is an opportunity to do
so, balanced with a desire for flexibility with lease expiry and break dates,
especially if the town has some demographic challenges. In recognising this
high street challenge, where the return on capital justifies a relocation, we
will actively move a store to improve our footfall-reliant services of foreign
currency exchange and jewellery retail while potentially reducing operating
costs at the same time.
We believe our store estate performance is complemented by a strong online
proposition. By investing in our retail jewellery website in recent years we
have improved each store's access to a wider range of jewellery which has
improved customer service levels and resulted in increased in-store sales.
In addition, we continually aim to improve the performance of our key income
streams:
Foreign currency:
· The three key drivers for foreign currency remain trust,
convenience and price. Having available stock and transparent pricing
continues to build trust among consumers.
· By having branches conveniently located on high streets and in
shopping centres, we will continue to attract consumers wanting foreign
exchange services.
· By having competitive exchange rates, we will attract new and
retain existing customers whilst continuing to manage margins closely, with
due regard to local market conditions.
· By improving the frequency of contact we have with our foreign
currency customers, we will stay in our customers' thoughts when they next
need foreign currency.
· By developing a market-leading multi-currency travel card, we
will seek to capture more of the customer's holiday spend while abroad.
Pawnbroking:
· We have fully embraced the FCAs New Consumer Duty initiative.
We have always had the consumer at the heart of what we do and this has been
demonstrated by our loyal customer base. We will continue doing what we
believe are the right things for our customers - this includes reducing
interest rates for customers needing longer to pay and, if a customer
defaults, by continuing 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 while examining
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:
· Stock levels have significantly increased over the last 18
months. This has been a deliberate strategy to give our customers more
choice in-store and online and enable improved replenishment capabilities.
This investment continues with the benefit of lessons learned during recent
years and with the belief there is room for further improvement across 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 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:
· We are increasing the awareness amongst our existing customer
base, primarily foreign currency exchange customers who are unaware of the
service or the value held in damaged or simply unwanted or unworn jewellery.
2. Expanding the branch footprint in the UK
The Group has a successful branch-based model. With diversified income
streams, stores generate a good return on capital while leveraging the head
office cost base. We have successful stores in small towns and large cities
which gives us confidence that we can be successful on most high streets that
have a nucleus of returning shoppers.
As at 30 September 2022, we had 152 stores plus two franchised stores.
During the year, we opened three greenfield sites and acquired a pawnbroker in
Boscombe. We closed stores in Middlesbrough (secondary foreign currency
kiosk) and Ripon; both of these stores were merged with other local Ramsdens
stores.
The year also saw the first new store opened in the South East of England in
Chatham, Kent. This store has had a good first year, well ahead of
expectations, and we plan to open up to another seven stores in the South East
in FY23.
Overall, we have targeted 12 locations to open in FY23. In Q1, we have now
opened stores in Bootle in the North West, a second store in Bradford in
Yorkshire, and Basildon in Essex. . In Q2 we have stores scheduled to open
in Croydon in Greater London, Maidstone in Kent and additional stores in
Yorkshire and the North West of England.
3. Developing our online proposition
Jewellery retail website
www.ramsdensjewellery.co.uk (http://www.ramsdensjewellery.co.uk)
We continue to make good progress with the online sales of jewellery items.
Sales have increased to £3.9m, up 38% from £2.8m in FY21. This performance
excludes jewellery sales in branches which used the in-store digital facility
to access the website as a catalogue of stock.
As part of our ongoing review of performance, the retail website was refreshed
in Q1 FY23. This review improved the website layout and should significantly
increase the success rates of our search and filter functions. Together with
improved search engine visibility, investment in pay per click advertising,
social media and affiliate advertising, use of differing payment options,
improved photography and descriptions and learning from integrated AI, this
should drive ongoing retail jewellery sales growth.
We see the development of our online retail jewellery website as complementary
to our store estate and both will benefit as the store estate expands and the
website generates increased brand recognition.
Website strategy - other key income streams
www.ramsdensforcash.co.uk (http://www.ramsdensforcash.co.uk)
The ramsdensforcash website is currently being updated to create a portal to
individual websites for each of our four key income streams.
Three new websites for foreign currency exchange, gold buying and pawnbroking
will launch early in 2023 and will be supported by investment in search engine
optimisation. By having this broadened online offering we hope to enhance
our online channel revenues and profitability as well as support the
performance of the branch estate in these segments.
4. Appraising opportunities presented by operating in challenging
markets
The high street retail landscape has been challenging for a number of years.
Following on from the impact of the pandemic, retailers are more likely to
have higher debt burdens and now face increased energy costs and increased
staff costs at a time when consumer income is being squeezed by high levels of
inflation and increasing interest rates. This will impact some travel agents
and jewellers who may leave the high street or indeed the market altogether,
presenting opportunities for Ramsdens to attract new customers, takeover prime
retail locations or acquire businesses.
Our estimate of the number of pawnbroking outlets in the UK remains at
approximately 870 - operated by circa 130 pawnbroking businesses. The
Ramsdens operating board are well networked within the industry and should a
pawnbroking business come up for sale in the UK, we would expect to hear of it
and then evaluate the opportunity against our target rate of return. This
was evidenced by the purchase of Geo A Payne & Sons pawnbrokers in
Boscombe in February 2022. This business has performed well and in line with
expectations since acquisition.
While most pawnbrokers have seen increased lending levels in the last 12
months and have optimism for future lending given the macroeconomic
conditions, the administration and cost burden of increased regulation may
mean some participants seek to exit the industry, which may present further
acquisition and expansion opportunities.
The South East has the highest concentration of pawnbroking outlets in the UK
and presents a compelling expansion opportunity for the Group. Our continued
expansion into the South East is aimed at creating a nucleus of Ramsdens
stores that build brand recognition and then, as opportunities arise,
acquiring further pawnbroking outlets or loan books to supplement our organic
growth.
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 and 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.
When looking at new town and relocation opportunities, investments will only
be made in new stores after significant research of footfall and adjacent
retailer quality. The demise of certain retailers in a town can however
provide an opportunity to obtain reductions in rental levels in certain towns
while not compromising on location.
5. Focusing on sustainability through our ESG policies
Our ESG policies are detailed on page 24.
Our long-term strategic aims will only be delivered if we have good
foundations.
We remain:
· conscious of the impact of our activities on the environment and
aim to reduce our energy use and recycle where we can;
· focused on our place in the communities in which we operate; how
we look after our staff; how we play a wider societal role with respect to our
customers, suppliers and charitable organisations; and
· committed to having the highest standards of governance
throughout the business.
LOOKING AHEAD
With the gradual removal of restrictions put in place during the pandemic,
FY22 saw the Group recommence the growth journey which it had been on since
its IPO in February 2017.
The graphs below set out the Group's performance in adjusted profit before tax
and in each of the four main income streams since the IPO.
To enhance comparability, the profit before tax below, has been adjusted in
2017 by adding back the IPO fees and in 2020 by removing the one-off profit
from scrapping of aged stock. In addition, the six-month period from April
to September 2020, which was the period severely impacted by the pandemic
including the closure of all stores and furloughing of 692 colleagues, has
been excluded from the graphs.
The graphs show the adjusted profit before tax, pawnbroking gross profit,
purchase of precious metals gross profit and foreign currency exchange gross
profit trajectories being interrupted by the pandemic and the growth in
jewellery retail revenue throughout the time period as a result of the ongoing
self-help investments.
Adjusted profit before tax
The graph below demonstrates the growth in profit before tax over the period
and shows that profitability has now returned to pre-Covid levels, despite
performance in the first six months of FY22 being impacted by Covid-related
restrictions.
The adjustments are (1) adding back IPO fees in 2017 and (2) removing the
one-off profit from scrapping of aged stock in 2020.
Foreign Currency Exchange
The expected number of international travellers in FY23 is subject to some
debate given the squeeze on household incomes, but with disrupted holiday
travel over the past three years it is anticipated that summer 2023 will bring
normalised levels of demand. Due to rising costs for bureau de change
operators, we believe that the margins will remain higher than pre-pandemic
levels.
Pawnbroking
It is reasonable to expect that the demand for pawnbroking loans may continue
to be high in FY23 due to the cost-of-living increases and the squeeze on
household incomes at a time when there are fewer providers of short-term
loans. There is potentially a greater risk of default on the repayment of
loans but the pawnbroker is secured and would sell the jewellery to repay the
loan, potentially at a value which can return surplus funds to
borrowers.
Jewellery Retail
Our jewellery retail segment may experience the greatest headwinds in FY23 as
a result of the inflationary environment and rising cost of living, but we are
pleased to be starting from a strong position. This will be enhanced by
several 'self-help' initiatives - higher stock levels, staff training,
improved window displays and a website refresh, which means we have momentum
to navigate those headwinds and the confidence to continue to grow.
Purchase of precious metals
We believe the gold price will remain high and with increasing footfall over
recent years our ability to cross sell should enable gold purchases to remain
strong in FY23.
SUMMARY
Our diversified income streams and our strong financial base have allowed the
Group to trade through the pandemic successfully. We believe we have made good
progress as a business since the Group's IPO in 2017 and are well positioned
for the future particularly with regards to our well-invested staff
development and our pipeline of new stores.
The Board has continued optimism for the future and confidence in our ability
to deliver on our growth strategy for the long-term benefit of all our
stakeholders.
Peter Kenyon
Chief Executive Officer
16 January 2023
FINANCIAL DIRECTOR'S REVIEW
FINANCIAL RESULTS
For the year ended 30 September 2022, the Group's reported Revenue increased
by 63% to £66.1m (FY21: £40.7m) with growth across each of the four key
income streams. Gross profit increased by £16.0m (72%) to £38.2m (FY21:
£22.3m).
The Group's administrative expenses increased by £7.9m (37%) to £29.4m
(FY21: £21.5m), reflecting an increase in staff costs as the business
returned to more normalised trading operating levels. Finance costs remained
low reflecting the seasonal use of the Group's revolving credit facility
during peak holiday periods.
Profit before tax increased to £8.3m (FY21: £0.6m) as the Group benefited
from improved trading conditions.
The Group's cash position remains strong with £8.8m net cash at the year-end
(FY21: £13.0m), with the reduction in the period reflecting increased
investment into jewellery stock and the recovery of the pawnbroking loan book.
The table below shows the headline financial results:
£000's FY22 FY21
Revenue £66,101 £40,677
Gross Profit £38,219 £22,262
Profit Before Tax £8,269 £564
Net Assets £41,843 £36,143
Net Cash* £8,835 £13,032
EPS 20.9p 1.2p
*Cash less bank borrowings
EARNINGS PER SHARE AND DIVIDEND
The statutory basic earnings per share for FY22 was 20.9p, up from 1.2p in the
previous year.
The Board is recommending a final dividend of 6.3p in respect of FY22 (FY21:
1.2p). Subject to approval at the AGM, the final dividend is expected to be
paid on 10 March 2023 for those shareholders on the register on 3 February
2023. The ex-dividend date will be 2 February 2023. This brings the total
dividend for FY22 to 9.0p (FY21: 1.2p). This dividend is in line with the
Board's progressive dividend policy reflecting the cash flow generation and
earnings potential of the Group.
This dividend represents a 43% pay-out ratio of FY22 EPS. The FY22 ratio is
mindful of the forthcoming changes to the rate of corporation tax and allows
for future dividends to be increased incrementally in line with profits
generated and our stated policy of approximately 50% of post-tax profits being
distributed.
Moving forward, the Board intends to pay interim dividends in October and
final dividends in March in the approximate proportion of one third and two
thirds respectively, subject always to the financial performance of the Group
and growth opportunities.
FINANCIAL POSITION
At 30 September 2022, cash and cash equivalents amounted to £15.3m (FY21:
£13.0m) and the Group had net assets of £41.8m (FY21: £36.1m).
CAPITAL EXPENDITURE
During the reporting period, the Group invested in the store estate by opening
three new stores and relocating four existing stores. Capital expenditure for
tangible and intangible assets was £2.8m which also included the purchase of
the head office building for £0.5m. A business in Boscombe was acquired
during the year for £0.9m which included its pawnbroking loan book and
jewellery stock.
CASH FLOW
Working capital outflows in the year include the significant investment in
stock of £7.2m, and the growth of the pawnbroking loan book which has
resulted in trade and other receivables increasing by £2.6m. Trade and
other payables increased by £1.1m mainly due to the increased currency
creditor which was lower in the prior year due to the impact of Covid-19.
The net cash flow from operating activities for the year was £2.9m (FY21:
£1.1m)
Net cash at the period end was £8.8m (FY21: £13.0m).
The Group continues to have access to its £10m revolving credit facility
which expires in March 2024. The Group has one covenant of 1.5x cash cover. At
30 September 2022, this facility was £6.5m drawn to support the currency cash
held. The cash position and headroom on the bank facility provide the Group
with the funds required to continue to deliver its current stated strategy.
TAXATION
The tax charge for the period was £1.7m (FY21: £0.2m) representing an
effective rate of 20% (FY21: 33%). The tax rate was higher than the standard
UK rate of corporation tax mainly due to 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 £314,000 (FY21: £254,000).
This charge relates to the Long-Term Incentive Plans (LTIP) and Company Share
Option Plans (CSOP). Both schemes are discretionary share incentive schemes
under which the Remuneration Committee can grant options to purchase ordinary
shares. The shares under option in the LTIP scheme can be purchased at a
nominal 1p cost to Executive Directors and other senior management subject to
certain performance and vesting conditions. The shares under option in the
CSOP scheme can be purchased at their issue price of 200.5p.
During the year, the LTIP award from 2018 did not meet the performance
criteria and therefore none of the share options vested. 250,000 share
options, which vested in the 2017 LTIP scheme, were exercised during the
year.
GOING CONCERN
The Board has conducted an extensive review of forecast earnings and cash over
the next 12 months, considering various scenarios and sensitivities given the
ongoing economic challenges and has concluded that it has adequate resources
to continue in business for the foreseeable future. For this reason, 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 2022
2022 2021
Notes
£'000 £'000
Revenue 5 66,101 40,677
Cost of sales (27,882) (18,415)
Gross profit 5 38,219 22,262
Other income 7 1 284
Administrative expenses (29,392) (21,510)
Operating profit 8,828 1,036
Finance costs 6 (559) (472)
Profit before tax 8,269 564
Income tax expense 10 (1,683) (198)
Profit for the year 6,586 366
Other comprehensive income - -
Total comprehensive income 6,586 366
Earnings per share in pence 8 20.9 1.2
Diluted earnings per share in pence 8 20.7 1.2
Consolidated statement of financial position
As at 30 September 2022
2022 2021
Assets Notes £'000 £'000
Non-current assets
Property, plant and equipment 11 6,681 5,195
Right of use of assets 11 9,551 8,164
Intangible assets 12 779 714
Investments 13 - -
Deferred tax assets 10 - 80
17,011 14,153
Current assets
Inventories 15 22,764 15,151
Trade and other receivables 16 13,264 10,379
Cash and short-term deposits 17 15,278 13,032
51,306 38,562
Total assets 68,317 52,715
Current liabilities
Trade and other payables 18 8,905 7,673
Interest bearing loans and borrowings 18 6,443 -
Lease liabilities 18 2,086 2,159
Income tax payable 18 932 61
18,366 9,893
Net current assets 32,940 28,669
Non-current liabilities
Lease liabilities 19 7,871 6,442
Contract liabilities 19 88 119
Deferred tax liabilities 19 149 118
8,108 6,679
Total liabilities 26,474 16,572
Net assets 41,843 36,143
Equity
Issued capital 21 316 314
Share premium 4,892 4,892
Retained earnings 36,635 30,937
Total equity 41,843 36,143
The financial statements of Ramsdens Holdings PLC, registered number 08811656,
were approved by the directors and authorised for issue on 16 January 2023 and
signed on their behalf by:
M A Clyburn
Chief Financial Officer
Consolidated statement of changes in equity
For the year ended 30 September 2022
Issued capital Share premium Retained earnings Total
Notes
£'000 £'000 £'000 £'000
As at 1 October 2020 308 4,892 30,355 35,555
Profit for the year - - 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
As at 1 October 2021 314 4,892 30,937 36,143
Profit for the period - - 6,586 6,586
Total comprehensive income - - 6,586 6,586
Transactions with owners:
Dividends paid 22 - - (1,231) (1,231)
Issue of share capital 21 2 - - 2
Share based payments 25 - - 314 314
Deferred tax on share-based payments - - 29 29
Total transactions with owners 2 - (888) (886)
As at 30 September 2022 316 4,892 36,635 41,843
Consolidated statement of cash flows
For the year ended 30 September 2022
2022 2021
Operating activities Notes £'000 £'000
Profit before tax 8,269 564
Adjustments to reconcile profit before tax to net cash flows:
Depreciation and impairment of property, plant
and equipment 11 1,265 1,074
Depreciation and impairment of right of use assets 11 2,261 2,223
Profit on disposal of right of use assets 7 (81) (45)
Amortisation and impairment of intangible assets 12 163 218
Loss on disposal of property, plant and equipment 7 78 140
Share based payments 25 314 254
Finance costs 6 559 472
Working capital adjustments:
Movement in trade and other receivables and prepayments (2,583) 565
Movement in inventories (7,221) (3,992)
Movement in trade and other payables 1,144 1,217
4,168 2,690
Interest paid (559) (472)
Income tax paid (672) (1,135)
Net cash flows from operating activities 2,937 1,083
Investing activities
Proceeds from sale of property, plant and equipment 3 10
Purchase of property, plant and equipment 11 (2,817) (1,574)
Purchase of intangible assets 12 (28) (62)
Payment for acquisition 26 (909) -
Net cash flows used in investing activities (3,751) (1,626)
Financing activities
Issue of share capital 21 2 6
Dividends paid 22 (1,231) -
Payment of principal portion of lease liabilities (2,211) (2,304)
Bank loans drawn down 8,000 -
Repayment of bank borrowings (1,500) -
Net cash flows from financing activities 3,060 (2,298)
Net increase / decrease in cash and cash equivalents 2,246 (2,841)
Cash and cash equivalents at 1 October 13,032 15,873
Cash and cash equivalents at 30 September 28 15,278 13,032
Notes to the consolidated financial statements
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
There are no changes to accounting policies in the current year. There are
no future changes in accounting standards which would materially impact the
Group.
3. Significant accounting policies
3.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in
accordance with UK adopted international accounting standards.
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 present economic situation.
The Board have conducted an extensive review of forecast earnings and cash for
the period to 31 January 2024 considering various scenarios and sensitivities
given the residual effects Covid-19 and the ongoing cost of living crisis and
uncertainty it has produced around the future economic environment.
At 30 September 2022 the Group has significant cash balances of £15.3m,
readily realisable stock of gold jewellery and access to the £3.5m unutilised
element of a £10m revolving credit facility with an expiry date of March
2024. In the year ended 30 September 2022 the Group has traded profitably and
generated cash from operations.
The Board have been able to conclude that they a reasonable expectation that
the Group has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, the Group continues to adopt the going
concern basis in preparing the financial statements. The going concern
assessment covers the period to 31 January 2024.
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:
· Freehold property - 2% straight line
· 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.
When 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
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. Debit / credit card receipts are recognised as cash at point of
transaction.
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 Company 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 Company 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 historical data. The loss on default is based on the
assets gross carrying amount less any realisable security held. The expected
credit loss calculation considers both the interest income and the capital
element of the pawnbroking loans. Interest on loans in default is accrued net
of expected credit losses. 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. Pawnbroking loans in the course of realisation
continue to be recognised as loan receivables until the pledged items are
realised.
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 inception 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 identified 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.
The majority of the Group's premises are leased and 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 exit 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 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.
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.
2022 2021
£'000 £'000
Other income 1 134
Administrative expenses - 1,472
Total 1 1,606
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
Pawnbroking loans interest and impairment
The group recognises interest on pawnbroking loans as disclosed in note 3.16.
For active pawnbroking loans (loans not in the course of realisation) the
Group estimates the expected credit losses. An assessment is made on a
pledge by pledge basis of the carrying value represented by original capital
loaned plus accrued interest to date and its corresponding realisation value
on sale of unredeemed pledges to identify any credit losses. The key estimates
within the expected credit loss calculation are;
1. Non Redemption Rate
This is based upon current and historical data held in respect of
non-redemption rates.
2. Realisation Value
This based upon either;
- The current 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.
For pawnbroking loans in the course of realisation the Group estimates the
expected credit losses based on the expected outcome from selling the pledged
goods. The key estimates within the expected credit loss calculation are;
1. Proceeds of sale
This is based upon the retail price the goods are offered for sale at.
2. Time to sell
This is based upon current and historical data in respect of the average time
to sell.
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 pre-tax 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:
2022 2021
Revenue £'000 £'000
United Kingdom 65,948 40,665
Other 153 12
66,101 40,677
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.
2022 2021
Revenue £'000 £'000
Contracts with customers 57,134 33,151
Pawnbroking interest income 8,967 7,526
66,101 40,677
Pawnbroking interest income is recognised over time as each loan progresses
whereas all other revenue is recognised at a point in time.
2021 2021
Revenue £'000 £'000
Pawnbroking 8,967 7,526
Purchases of precious metals 15,847 10,369
Retail jewellery sales 27,107 18,252
Foreign currency margin 13,066 3,408
Income from other financial services 1,114 1,122
Total revenue 66,101 40,677
Gross profit
Pawnbroking 7,533 6,678
Purchases of precious metals 6,626 4,240
Retail jewellery sales 10,263 6,965
Foreign currency margin 12,683 3,257
Income from other financial services 1,114 1,122
Total gross profit 38,219 22,262
Other income 1 284
Administrative expenses (29,392) (21,510)
Finance costs (559) (472)
Profit before tax 8,269 564
Income from other financial services comprises of cheque cashing fees and
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.
2022 2021
Other information £'000 £'000
Tangible & intangible capital additions (*) 3,060 1,636
Depreciation and amortisation (*) 3,689 3,515
Assets
Pawnbroking 11,853 9,173
Purchases of precious metals 3,081 1,172
Retail jewellery sales 20,125 14,306
Foreign currency margin 10,123 5,314
Income from other financial services 139 139
Unallocated (*) 22,996 22,611
68,317 52,715
Liabilities
Pawnbroking 613 492
Purchases of precious metals 3 21
Retail jewellery sales 2,012 3,433
Foreign currency margin 2,042 1,335
Income from other financial services 392 541
Unallocated (*) 21,412 10,750
26,474 16,572
(*) 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 and sterling cash and cash equivalents are therefore included in
the unallocated assets balance.
6. Finance costs
2022 2020
£'000 £'000
Interest on debts and borrowings 163 84
Lease charges 396 388
Total finance costs 559 472
7. Profit before taxation has been arrived at after charging/(crediting)
2022 2021
£'000 £'000
Items reported within Other income -
Compensation for surrendering a lease - (150)
Retail grants (1) (134)
Items reported within Cost of sales -
Cost of inventories recognised as an expense 26,065 17,416
Pawnbroking expected credit losses 1,434 848
Items reported within Administrative expenses -
Depreciation of property, plant and equipment 1,265 1,073
Impairment of property, plant and equipment - 1
Depreciation of right of use of assets 2,261 2,223
Profit on disposal of right of use assets (81) (45)
Amortisation of intangible assets 163 172
Impairment of intangible assets - 46
Loss on disposal of property, plant and equipment 78 140
Staff costs (see note 9) 16,643 11,452
Foreign currency exchange losses/(gains) 265 135
Auditor's remuneration 145 140
Short term lease payments 470 441
Share based payments (see note 25) 314 254
The Company paid an additional £5,000 to the auditor in respect of non-audit
services for a first half of the year review.
8. Earnings per share
2022 2021
£'000 £'000
Profit for the year 6,586 366
Weighted average number of shares in issue 31,559,874 31,161,726
Earnings per share (pence) 20.9 1.2
Weighted average number of dilutive shares 291,939 481,481
Effect of dilutive shares on earnings per share (pence) (0.2) (0.0)
Fully Diluted earnings per share (pence) 20.7 1.2
9. Information regarding directors and employees
Directors' emoluments (£'000)
2022 2021
Emoluments Pension LTIP Total Emoluments Pension LTIP Total
Executive
Peter Kenyon 427 10 435 872 201 10 - 211
Martin Clyburn 295 12 - 307 134 13 204 351
Non Executive
Andrew Meehan 68 - - 68 66 - - 66
Simon Herrick 49 - - 49 48 - - 48
Steve Smith 41 - - 41 40 - - 40
Total 880 22 435 1,337 489 23 716
204
2022 2021
£'000 £'000
Included in administrative expenses:
Wages and salaries 14,890 10,011
Social security costs 1,089 856
Share option scheme 314 254
Pension costs 350 331
Total employee benefits expense 16,643 11,452
The average number of staff employed by the Group during the financial period
amounted to:
2022 2021
No. No.
Head office and management 115 106
Branch counter staff 578 586
693 692
10. Income tax
The major components of income tax expense are:
Consolidated statement of comprehensive income
2022 2021
£'000 £'000
Current income tax:
Current income tax charge 1,552 32
Adjustments in respect of current income tax of previous year (9) 7
1,543 39
Deferred tax:
Relating to origination and reversal of temporary differences 140 159
Income tax expense reported in the statement of comprehensive income 1,683 198
A reconciliation between tax expense and the product of accounting profit
multiplied by the UK domestic tax rate is as follows:
2022 2021
£'000 £'000
Profit before income tax 8,269 564
UK corporation tax rate at 19% (2021 19%) 1,571 107
Expenses not deductible for tax purposes 122 84
Prior period adjustment (10) 7
Income tax reported in the statement of comprehensive income 1,683 198
Deferred tax
Deferred tax relates to the following:
2022 2021
£'000 £'000
Deferred tax assets
Share based payments - 80
Deferred tax assets - 80
Deferred tax liabilities
Accelerated depreciation for tax purposes 180 112
Other short-term differences (31) 6
Deferred tax liabilities 149 118
Reconciliation of deferred tax (asset) / liabilities net
2022 2021
£'000 £'000
Opening balance as of 1 October 38 (159)
Deferred tax recognised in the statement of comprehensive income 140 159
Other deferred tax (29) 38
Closing balance as at 30 September 149 38
Factors affecting tax charge
The standard rate of UK corporation tax for the year was 19% (2021: 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 2021 210 6,356 3,629 840 53 11,088
Additions 485 1,280 926 126 - 2,817
Acquisition (note 26) - - 15 - - 15
Disposals - (623) (389) (370) - (1,382)
At 30 September 2022 695 7,013 4,181 596 53 12,538
Depreciation
At 1 October 2021 2 3,518 1,867 486 20 5,893
Depreciation charge for the year 9 622 520 106 8 1,265
Disposals - (617) (341) (343) - (1,301)
At 30 September 2022 11 3,523 2,046 249 28 5,857
Net book value
At 30 September 2022 684 3,490 2,135 347 25 6,681
At 30 September 2021 208 2,838 1,762 354 33 5,195
Right of use of assets
Leasehold Property Motor Total
£'000
Vehicles
£'000
Cost
£'000
At 1 October 2021 12,919 174 13,093
Additions 4,039 - 4,039
Disposals (2,659) (129) (2,788)
At 30 September 2022 14,299 45 14,344
Depreciation
At 1 October 2021 4,800 129 4,929
Depreciation Charge for the year 2,221 40 2,261
Disposals (2,268) (129) (2,397)
At 30 September 2022 4,753 40 4,793
Net Book Value
At 30 September 2022 9,546 5 9,551
At 30 September 2021 8,119 45 8,164
12. Intangible assets
Customer relationships Website Goodwill Total
£'000 £'000 £'000 £'000
Cost
At 1 October 2021 2,179 105 526 2,810
Additions 28 - - 28
Acquisition (note 26) 200 - - 200
At 30 September 2022 2,407 105 526 3,038
Amortisation
At 1 October 2021 1,938 85 73 2,096
Amortisation charge for the year 158 5 - 163
Impairment - - - -
At 30 September 2022 2,096 90 73 2,259
Net book value
At 30 September 2022 311 15 453 779
At 30 September 2021 241 20 453 714
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 2022 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 - 12,683 - 12,683 12,683
Cash and cash equivalents - 15,278 - 15,278 15,278
Financial liabilities
Trade and other payables - - (8,700) (8,700) (8,700)
Interest bearing loans and borrowings - - (6,443) (6,443) (6,443)
Lease liabilities - - (9,957) (9,957) (9,957)
Net financial assets/(liabilities) - 27,961 (25,100) 2,861 2,861
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) 6,440 6,440
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.
2022
2021
Category Gross amount Loss allowance Net carrying amount Gross amount Loss allowance Net carrying amount
£'000 £'000 £'000 £'000 £'000 £'000
Performing 9,510 178 9,332 6,747 173 6,574
Default 3,366 844 2,522 3,127 528 2,599
Total 12,876 1,022 11,854 9,874 701 9,173
The pawnbroking expected credit losses which have been provided on the period
end pawnbroking assets are:
Pawnbroking loans
£'000
At 1 October 2020 1,521
Statement of comprehensive income charge 847
Utilised in the period (1,667)
At 30 September 2021 701
Statement of comprehensive income charge 1,434
Utilised in period (1,113)
Balance at 30 September 2022 1,022
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 time to sell assumption is a reasonably possible variance based on
historical trends and would result in an impact on Group pre tax profit of
(£100k)/£100k.
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 2022 <3 months £'000 3-12 months £'000 1-5 years £'000 >5 years £'000 Total
£'000
Lease liabilities 422 1,664 6,426 1,445 9,957
Trade payables 4,870 - - - 4,870
Interest bearing loans and borrowings 6,443 - - - 6,443
Total 11,735 1,664 6,426 1,445 21,270
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
The interest charged on bank borrowings is based on a fixed percentage above
Bank of England base rate. There is therefore a cash flow risk should there be
any upward movement in base rates. Assuming the £10million revolving credit
facility was fully utilised then a 1% increase in the base rate would increase
finance costs by £100,000 pre-tax and reduce post-tax profits by £81,000.
15. Inventories
2022 2021
£'000 £'000
New and second-hand inventory for resale (at lower of cost or net realisable 22,764 15,151
value)
16. Trade and other receivables
2022 2021
£'000 £'000
Trade receivables - Pawnbroking 11,854 9,173
Trade receivables - other 601 489
Other receivables 228 61
Prepayments 581 656
13,264 10,379
Trade receivables - Pawnbroking is disclosed net of expected credit losses,
details of which are shown in note 14.
17. Cash and cash equivalents
2022 2021
£'000 £'000
Cash and cash equivalents 15,278 13,032
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)
2022 2021
£'000 £'000
Trade payables 4,870 5,406
Other payables 844 767
Other taxes and social security 293 277
Accruals 2,858 1,170
Contract liabilities 40 53
Subtotal 8,905 7,673
Lease liabilities (note 20) 2,086 2,159
Interest bearing loans and borrowings 6,443 -
Income tax liabilities 932 61
18,366 9,893
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
Details of the RCF 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 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 base 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 base 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 2022 the group had available £3.5m of undrawn committed
facilities.
19. Non-current liabilities
2022 2021
£'000 £'000
Lease liabilities (note 20) 7,871 6,442
Contract liabilities 88 119
Deferred tax (note 10) 149 118
8,108 6,679
20. Lease Liability
2022 2021
£'000 £'000
Lease Liabilities as at 1 October 8,601 9,099
Additions 4,039 2,506
Disposals (472) (700)
Interest 396 388
Payments (2,607) (2,692)
As at 30 September 9,957 8,601
Current lease liability 2,086 2,159
Non-current lease liability 7,871 6,442
The cash flows relating to financing activities for repayment of lease
principal amounts is £2,211,000 (2021: £2,304,000). 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 £470,000 (2021: £441,000). 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 2021 31,393,207 314
Issued during the year 250,000 2
At 30 September 2022 31,643,207 316
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.
22. Dividends
Amounts recognised as distributions to equity holders in the year:
2022 2021
£'000 £'000
Final dividend for the year ended 30 September 2021 of 1.2p per share 377 -
Interim dividend for the period ended 30 September 2022 of 2.7p per share 854 -
(30 September 2020 Nil)
1,231 -
Amounts proposed and not recognised:
Final dividend for the year ended 30 September 2022 of 6.3p per share 1,994 377
(Final dividend for 30 September 2021 of 1.2p per share)
The proposed final dividend is subject to approval at the Annual General
Meeting and 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 2022 are £62,000 (2021:
£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:
2022 2021
£'000 £'000
Short term employee benefits 880 688
Post employment benefits 22 39
Share based payments 136 139
1,038 866
25. Share based payments
The Company operates a Long-term Incentive Plan (LTIP). The charge for the
year in respect of the scheme was:
2022 2021
£'000 £'000
LTIP 314 254
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 1,126,500 -
Granted during the year 338,000 -
Forfeited during the year (220,000) -
Exercised during the year (250,000) 1
Outstanding at the end of the year 994,500
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 17/03/22 17/03/22 08/02/2021 08/02/2021 16/07/2019 16/07/2019
Share Price £1.67 £1.67 £1.48 £1.48 £1.88 £1.88
Exercise Price £0.01 £0.01 £0.01 £0.01 £0.01 £0.01
Vesting period 2.5 years 2.5 years 2.64 years 2.64 years 2.71 years 2.71 years
Risk Free return 1.4% 1.4% 0.01% 0.01% 0.5% 0.5%
Volatility 53% 53% 51% 51% 26% 26%
Dividend Yield 3.5% 3.5% 0.0% 0.0% 3.9% 3.9%
Fair value of Option (£) 0.77 1.51 0.64 1.47 0.52 1.68
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. Fair value of acquisition
On the 14th February 2022 the company purchased the trade and certain assets
of Geo A Payne & Son Limited for a total consideration of £909,000, which
was fully paid in cash. The fair value of the assets acquired were as follows:
£'000
Tangible fixed assets (fixtures and fittings 15
Intangible assets (customer relationships) 200
Trade receivables - Pawnbroking 302
Inventories 392
Net assets acquired 909
27. Post Balance Sheet Events
There were no post balance sheets events that require further disclosure in
the financial statements.
28. Cash and cash equivalents
30 September 30 September
2022 2021
£'000 £'000
Sterling cash and cash equivalents 5,190 7,747
Other currency cash and cash equivalents 10,088 5,285
15,278 13,032
Parent Company Statement of Financial Position
As at 30 September 2022
2022 2021
Notes
Assets £'000 £'000
Non-current assets
Investments D 8,383 8,205
Deferred tax E 37 80
8,420 8,285
Current assets
Receivables F 3,683 450
Cash and short-term deposits 1 3,968
3,684 4,418
Total assets 12,104 12,703
Current liabilities
Trade and other payables G 409 94
409 94
Net current assets 3,275 4,324
Total assets less current liabilities 11,695 12,609
Net assets 11,695 12,609
Equity
Issued capital H 316 314
Share Premium 4,892 4,892
Retained earnings 6,487 7,403
Total equity 11,695 12,609
The loss after tax for the Company for the year ended 30 September 2022 was
£9,000 (2021: Profit £55,000)
These financial statements were approved by the directors and authorised for
issue on 16 January 2023 and signed on their behalf by:
M A Clyburn
Chief Financial Officer
Company Registration Number: 8811656
Parent Company statement of changes in equity
For the year ended 30 September 2022
Share Capital Share premium Retained earnings Total
£'000 £'000 £'000 £'000
As at 1 October 2020 308 4,892 7,180 12,380
Profit for the year - - 55 55
Total comprehensive income - - 55 55
Transactions with owners:
Issue of share capital 6 - - 6
Share based payments - - 254 254
Deferred tax on share based payments - - (86) (86)
Total transactions with owners 6 - 168 174
As at 30 September 2021 314 4,892 7,403 12,609
As at 1 October 2021 314 4,892 7,403 12,609
Loss for the period - - (9) (9)
Total comprehensive income - - (9) (9)
Transactions with owners:
Issue of share capital 2 - - 2
Dividends paid (note I) - - (1,231) (1,231)
Share based payments - - 314 314
Deferred tax on share based payments - - 10 10
Total transactions with owners 2 - (907) (905)
As at 30 September 2022 316 4,892 6,487 11,695
Notes to the parent company financial statements
A. ACCOUNTING POLICIES
BASIS OF PREPARATION
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 D.
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.
The separate financial statements of the Company are presented as required by
the Companies Act 2006. The Company meets the definition of a qualifying
entity under FRS 100 (Financial Reporting Standard 100) issued by the
Financial Reporting Council. Accordingly, the financial statements have been
prepared in accordance with FRS 101 (Financial Reporting Standard 101)
'Reduced disclosure Framework' as issued by the FRC in July 2015 and July 2016
The financial statements have been prepared on the historical cost basis.
As permitted by FRS 101, the Company has taken advantage of the disclosure
exemptions available under that standard in relation to business combinations,
share-based payment, non-current assets held for sale, financial instruments,
capital management, presentation of comparative information in respect of
certain assets, presentation of a cash-flow statement, standards not yet
effective, impairment of assets and related party transactions.
Where required, equivalent disclosures are given in the Group financial
statements of Ramsdens Holdings PLC. The Group financial statements of
Ramsdens Holdings PLC are available to the public.
The financial statements have been prepared on a going concern basis as
discussed in the Directors' Report.
The particular accounting policies adopted are described below.
TAXATION
Current tax
The tax currently payable is based on taxable profit for the year. The
Company'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.
INVESTMENTS
Fixed assets investments are shown at cost less provision for impairment.
FINANCIAL LIABILITIES AND EQUITY
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the
company after deducting liabilities
Equity instruments issued are recorded at the proceeds received, net of direct
issue costs.
DIVIDENDS
Dividends receivable from subsidiary undertakings are recorded in the
statement of comprehensive income on the date that the dividend becomes a
binding liability on the subsidiary company.
Dividends payable are recorded as a distribution from retained earnings in the
period in which they become a binding liability on the Company.
Employee Share Incentive Plans
Ramsdens Holdings PLC 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 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. The share based payment expense in the period
which relates to subsidiaries increases the carrying value of the investment
held.
B. COMPANY STATEMENT OF COMPREHENSIVE INCOME
As permitted by s408 of the Companies Act 2006 the Company has elected not to
present its statement of comprehensive income for the year.
The auditor's remuneration for the current and preceding financial years is
borne by a subsidiary undertaking, Ramsdens Financial Limited. Note 7 to the
Group financial statements discloses the amount paid.
C. STAFF AND KEY PERSONNEL COSTS
Other than the Directors who are the key personnel, the Company has no
employees, details of their remuneration are set out below
2022 2021
£'000 £'000
Remuneration receivable 880 489
Social security cost 65 90
Value of company pension contributions to money purchase schemes 22 23
Share based payments 136 95
1,103 697
Some of the directors of the Company are also directors of Ramsdens Financial
Ltd. These directors did not receive remuneration from Ramsdens Financial
Limited and amounts paid through the Company were £947,000 (2021: £519,000).
The directors do not believe it is practicable to apportion this amount
between their services as directors of the Company and other group companies.
Remuneration of the highest paid director:
2022 2021
£'000 £'000
Remuneration receivable 427 201
Value of company pension contributions to money purchase schemes 10 10
Share Based Payments 82 60
519 271
The number of directors accruing retirement benefits under the money purchase
scheme is 2 (2020: 2)
D. INVESTMENTS
Shares in subsidiary undertakings 2022 2021
£'000 £'000
Cost
Cost brought forward 8,205 8,046
Additions - Share based payments 178 159
Cost carried forward 8,383 8,205
Additions represent share based payment expense recognised in Ramsdens
Financial Limited.
The Investments in Group Companies which are included in the consolidated
statements are as follows
Name of company Holding Proportion of voting rights and shares held Activity
Subsidiary undertakings
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)
E. DEFERRED TAX
Deferred tax relates to the following:
2022 2021
£'000 £'000
Deferred tax assets
Share based payments 37 80
37 80
Reconciliation of deferred tax assets
2022 2021
£'000 £'000
Opening balance as of 1 October / 1 April 80 182
Deferred tax credit recognised in the statement of comprehensive income (53) (64)
Other deferred tax 10 (38)
Closing balance as at 30 September 37 80
F. RECEIVABLES
2022 2021
£'000 £'000
Amounts owed by subsidiary companies 3,671 439
Prepayments 12 11
3,683 450
Amounts owed by subsidiary companies is payable on demand and no interest is
charged.
G LIABILITIES: AMOUNTS FALLING DUE WITHIN ONE YEAR
2022 2021
£'000 £'000
Trade Payables 10 10
Other Creditors 379 63
Other taxes and Social Security 20 21
Current tax liabilities - -
409 94
H. CALLED UP SHARE CAPITAL
Details of the called up share capital including share shares issued during
the year can be found in note 21 within the Group financial statements of
Ramsdens Holdings PLC.
I. Dividends
Amounts recognised as distributions to equity holders in the year:
2022 2021
£'000 £'000
Final dividend for the year ended 30 September 2021 of 1.2p per share 377 -
Interim dividend for the period ended 30 September 2022 of 2.7p per share 854 -
(30 September 2020 Nil)
1,231 -
Amounts proposed and not recognised:
Final dividend for the year ended 30 September 2022 of 6.3p per share 1,994 377
(Final dividend for 30 September 2021 of 1.2p per share)
The proposed final dividend is subject to approval at the Annual General
Meeting and accordingly has not been included as a liability in these
financial statements.
J. POST BALANCE SHEET EVENTS
There were no post balance sheets events that require further disclosure in
the financial statements.
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