Source - RNS
RNS Number : 8860B
Ramsdens Holdings PLC
12 June 2019
 

 

 

12 June 2019

 

Ramsdens Holdings PLC

("Ramsdens", the "Group", the "Company")

Annual Results for the year ended 31 March 2019

 

Good growth underpinned by the continuing strengths of the Group's diversified business model

 

Ramsdens, the diversified financial services provider and retailer, today announces its Annual Results for the year ended 31 March 2019 (the "period").

 

Financial highlights:

 

 

Year ended 31

March 2019

Year ended 31

March 2018

Year on year change

Group Revenue

£46.8m

£39.9m

+17%

Underlying EBITDA*

£8.3m

£7.9m

+5%

Underlying Profit Before Tax*

£6.7m

£6.5m

+4%

Basic EPS

16.7p

16.3p

+2%

 

·   The proposed final dividend of 4.8p, if approved, will take the full year dividend to 7.2p (FY18: 6.6p) and an increase of 9%

·   Net assets up £3.3m to £30.9m, including cash of £13.4m

·   As a consequence of adopting IFRS9 and IFRS15, both Revenue and Cost of sales have increased by £3.0m in FY19, with comparatives not restated.  Excluding this, Revenue grew by 10%.

 

Operational highlights:

·   Continued growth across all business segments with the Group serving more than 832,000 customers during the year

·   £496m of currency was exchanged with the Group in the year (FY18: £485m)

·   Jewellery Retail revenue grew by 23% to £9.8m (FY18: £8.0m)

·   Store estate at the year-end increased by 25 to 156 stores including 4 franchised stores (FY18: 131 stores including 4 franchised)

·   Acquisition of 18 stores and five loan books from The Money Shop completed towards the end of the financial year. Post the year end, the Group completed the acquisition of an additional four stores trading as The Money Shop and 12 loan books


* The underlying figures reflect Earnings before interest, tax, depreciation and amortisation (EBITDA) and Profit before Tax (PBT), adjusted for the share based payments charge.

 

Peter Kenyon, Chief Executive, commented:

"This has been another strong year of growth and strategic progress for Ramsdens. The Group's good performance has been achieved despite external headwinds and reflects the strengths of our diversified business model, our trusted brand, and our value for money proposition.

 

We have continued to expand the Ramsdens brand across both existing and new communities in the UK through store openings and exciting acquisitions. We continue to see further opportunities to grow Ramsdens by capitalising on consolidation opportunities in what remains a highly fragmented market.

 

Customer demand for our products across our business segments remains strong and the Group has a number of clear growth opportunities. The Board remains confident that the Group will successfully deliver its strategic objectives and make further progress in the year ahead."

 

 

Enquiries:

 

Ramsdens Holdings PLC

Peter Kenyon, CEO

Martin Clyburn, CFO

 

Tel: +44 (0) 1642 579957

Liberum Capital Limited, Nominated Adviser

Richard Crawley

Joshua Hughes

 

Tel: +44 (0) 20 3100 2000

Hudson Sandler (Financial PR)

Alex Brennan

Lucy Wollam

 

Tel: +44 (0) 20 7796 4133

 

 

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.

 

Headquartered in Middlesbrough, the Group operates from 163 stores within the UK (including 4 franchised stores and 7stores opened or acquired post year end) and has a small but growing online presence.

 

In the last financial year, the Group served over 832,000 customers across its different services. Ramsdens is fully FCA authorised for its pawnbroking and credit broking activities.

 

www.ramsdensplc.com

www.ramsdensforcash.co.uk

 

 

 

CHAIRMAN'S STATEMENT
 

INTRODUCTION

I am delighted to report on another year of good progress for Ramsdens. The Group's performance in FY19 has been achieved despite external headwinds including an exceptionally hot summer in 2018 in the UK, ongoing Brexit uncertainty impacting consumer confidence, and challenges affecting high-street retail. Against this backdrop, the resilience of the Group and strength of our diversified business model has delivered a financial performance in line with the Board's expectations for the year.  In addition, we have made encouraging progress on our strategic ambitions.  

 

OUR BUSINESS

The first Ramsdens opened in Stockton-on-Tees in May 1987 and the Group retains its Teesside roots with its Head Office located in Middlesbrough.  The last year has seen Ramsdens increase its national footprint considerably with the Group's store estate growing to 156 stores (including four franchised stores), up from 131 stores (including four franchised stores) at the end of the prior financial year. 

 

In March 2019, the Group was delighted to announce the acquisition of 18 stores that previously traded as The Money Shop.  This strategic acquisition supports the Group's growth strategy of expanding its presence and reach in the UK market and enables us to leverage the significant investments the Group has made in recent years across brand, IT systems and people. The acquisition plus the opening of 9 additional new stores as well as an expanded online presence has supported growth in each of our core business segments of foreign currency exchange, pawnbroking loans, precious metals buying and retailing of second hand and new jewellery. 

 

The Group served more than 832,000 customers during the last financial year and, in a market where trust is critical, Ramsdens is an increasingly recognised brand in each of our four key business segments. Our continued investment in marketing, store appearance and store location remain an important factor in supporting the Group's growth.

 

FINANCIAL RESULTS & DIVIDEND

 

Group gross profit increased by 7.7% to £30.5m (FY18: £28.3m).  This was despite the exceptional summer weather in the UK which, as has been widely reported by a number of travel operators, resulted in an increased trend for "staycation" holidays, the Group's foreign currency gross profit grew by 2%. Our investment in our jewellery operations led to 22% growth in gross profit from jewellery retail, which marked a very encouraging performance. Pawnbroking and precious metal buying also grew, by 8% and 10% respectively. 

In line with the Board's expectations, the Group delivered an underlying Profit Before Tax of £6.7m (FY18: £6.5m).  Earnings per share were 16.7 pence (FY18:16.3 pence).  This good performance reflects the continuing strengths of the Group's diversified business model.

 

The Group's financial position remains strong and its good cash generation has allowed for ongoing investment in the business and the continuation of the Board's progressive dividend policy.    The Board is recommending a final dividend of 4.8 pence per share which, if approved at the shareholders' AGM, will take the full year dividend to 7.2 pence per share (FY18: 6.6 pence). Subject to approval at the AGM, the final dividend is expected to be paid on 20 September 2019 for those shareholders on the register on 23 August 2019.

 

The Strategic Report and Financial Review that follow provide a more in-depth analysis of the trading performance and financial results of the Group.

 

OUR TEAM

One of Ramsdens' greatest strengths is its people. Our aim is to nurture and develop the best talent in our industry, and to that end during the year the senior management team have been collectively undertaking a leadership development programme.  This is assisting with an ongoing desire to enhance and demonstrate our three core values of being trusted, open and passionate.  

 

The pride and enthusiasm shown by all of our employees continues to create a working environment of infectious enthusiasm to deliver the Group's mission statement, namely to provide a great customer offering and give such fantastic service that our customers become ambassadors for Ramsdens.  

 

I would like to take this opportunity to thank everyone for their continued hard work and dedication during this past year. 

 

THE FUTURE

The Group has a growing customer base, a great team and a diversified business model. The Board continues to believe that with its broad product offering, good cash generation and strong net asset base, the business remains well positioned for the future.

 

As is the case for most UK consumer-facing businesses, the Group continues to face external headwinds including prevailing Brexit uncertainty that is inevitably impacting consumer sentiment. Whilst the eventual outcome of the UK's negotiations to leave the EU remains uncertain, we are confident that, as a trusted brand with an outstanding value for money proposition, we will remain in a healthy position.  A Brexit scenario that results in sterling weakening further, thereby supporting a higher gold price in sterling terms, could benefit both the Group's pawnbroking and the purchase of precious metals segments. In addition, we continue to believe that, in general terms, UK consumers will continue to prioritise their holidays abroad within their discretionary spending. 

 

The Group's online jewellery retailing and click and collect foreign currency service have shown good progress and our investment in this area of the business will continue as we remain focused on expanding our online operations.

 

Our plan is to continue to execute our strategy of expanding the store estate. Further to our successful acquisition in March of a portfolio of 18 stores trading as The Money Shop, which has expanded Ramsdens' reach into existing and new communities, we will continue to appraise new acquisition opportunities as they arise on the same carefully considered basis.

 

Customer demand for our products across our key business segments remains strong and the Group has a number of clear growth opportunities. The Board remains confident that the Group will successfully deliver its growth strategy and make further progress in the year ahead.

 

Andrew Meehan

Non-Executive Chairman

11 June 2019

 

 

 

 

CHIEF EXECUTIVE'S REVIEW - A YEAR OF GOOD PROGRESS

 

We have continued to see benefits from our ongoing investments across the business. These include: staff training across all services; strengthening the Ramsdens brand to generate greater awareness of the services we provide; enhancing our jewellery retail offering; store relocations; and investment in our online activity to generate profit and support our increasing retail estate.  

 

Our store portfolio increased to 156 stores with new greenfield locations and the strategic acquisition of 18 stores which formerly traded as The Money Shop.

 

The Group delivered growth in line with the Board's expectations for the year with underlying EBITDA of £8.3m and underlying PBT of £6.7m. This was achieved against a backdrop of: a challenging UK high street; a year with the absence of a peak Easter FX trading period; a summer of exceptionally hot weather in the UK; and investment in nine new stores where trading losses in the first year are typical and anticipated.

 

The Group exchanged £496m of currency during the year, which is testament to the scale and appeal of our FX offering. This generated £11.6m in commission (FY18: £11.3m).  Retail jewellery gross profit increased by 22% to £5.0m (FY18: £4.1m) and pawnbroking interest grew by 8% to £7.5m (FY18: £7.0m).

 

OUR PEOPLE

Ramsdens' progress is underpinned by the willingness of our people to strive for continuous improvement.  The team are focused on and committed to delivering fantastic service to our customers and this is evidenced by our high levels of repeat business together with customer recommendations remaining the biggest source of new customer acquisition. 

 

This can only be achieved by the people being well trained, highly skilled, motivated to work hard and by maintaining a focus on the customer. 

 

I am delighted with how our team rose to the challenge of March's acquisition of 18 additional stores and five additional loan books from Instant Cash Loans trading as The Money Shop. We were able to train our new employees and re-open for trading on the Group's IT platform within two days of acquiring the new stores. This was an amazing effort and demonstrates the commitment our people have to growing and developing Ramsdens. I would like to take this opportunity to thank each of my colleagues across the business for their contribution, dedication and effort during the year.

 

THE RAMSDENS BRAND

The high customer repeat levels for foreign currency exchange and pawnbroking loans demonstrates the trust our customers have in Ramsdens to provide a great price for their foreign currency and to look after their jewellery whilst in pledge.

 

The Group continues to drive customer awareness through sports sponsorship and advertising.  Sheffield United's success in achieving promotion from The Championship to The Premier League has resulted in Ramsdens benefiting from a significant amount of TV and newspaper coverage.  However, due to the cost of Premier League sponsorship, the shirt sponsorship has not been renewed for the forthcoming season. 
 

The Group continues to explore other marketing and advertising avenues to grow the brand awareness and increase customer recognition of the diversified services available from Ramsdens.   

 

IT AND INFRASTRUCTURE

The Group has continued to invest in and develop its bespoke customer centric IT operating system.  Underpinning this system is a scalable infrastructure which undergoes regular capacity planning to ensure that the growth of the Group can not only accommodate its core business strategy but also readily take advantage of business acquisition opportunities. The system infrastructure is maintained with resiliency in all areas.

 

The Group maintains a continual focus on cyber security and the associated threat landscape.  Keeping abreast of current threats by engaging with governing bodies and market leading security software vendors, the Group invests in its Cyber Security Framework with a layered approach to improve the protection of the systems and the data held.

 

The Group's internal IT Team provide a highly effective and efficient service ensuring the support requirements of the Group are fulfilled.  The IT Team are also integral to the Group's business expansion strategy provisioning new store locations, relocations and acquisitions of single and multiple stores.

 

OUR DIVERSIFIED BUSINESS MODEL: SALES CHANNELS

The Group served more than 832,000 customers in the year across stores and online.  Both channels are important to achieving the strategic objectives of the business and, importantly, satisfying its customers.

 

Stores

With the exception of one store that was relocated in December 2018, every established store that was opened by Ramsdens prior to 2018 is profitable and contributed to Head Office costs in 2019.

 

Despite a broad range in the size of our stores, each Ramsdens branch offers all of the Group's services.  Our strategy for continuously improving the core estate includes relocating stores to higher footfall locations and, in the last year, Glasgow, Halifax, Grimsby, Barrow and Redcar relocated. 

 

Both the Group's new greenfield sites and recently acquired branches are all in town centre locations. This reflects the diversified income streams and customer offer we have, which have evolved significantly from our roots as a pawnbroker. Nine new stores were opened in the year in Kendal, Preston, Whitehaven, Alloa, Castleford, Otley, Bristol, Ripon and Worksop. 

 

The net 16 acquired stores from The Money Shop (two acquired stores have merged with Ramsdens stores) are a mixture of secondary and prime town centre locations.  Where appropriate, these stores will be refurbished to offer jewellery retail and be more reflective of a Ramsdens store offering.  Whilst the refurbishment of these stores will take a near-term priority over opening new stores, the Group's medium-term objective remains to open 12 stores each year.  

 

E-commerce

The Group has two main customer websites, both of which are user friendly and operate on mobile and tablet devices.


www.ramsdensforcash.co.uk focuses on foreign currency exchange services and allows customers to buy, on a click and collect basis, pre-paid travel cards or travel money.  In addition, the website acts as a portal to the international money transfer service where payments can be made online. 

 

www.ramsdensjewellery.co.uk, is focused on selling new and second-hand jewellery.  As well as a profit centre in its own right, the website acts as a catalogue for stores to generate in store retail sales.

 

OUR DIVERSIFIED BUSINESS MODEL: PRODUCT OFFERING

Ramsdens operates in the four core business segments of: foreign currency exchange; pawnbroking loans; jewellery retail; and precious metals buying.

 

Foreign Currency Exchange

The foreign currency exchange (FX) segment primarily comprises of the sale and purchase of foreign currency notes to holiday makers. Ramsdens also offers prepaid travel cards and international bank-to-bank payments.

 

The Group's FX business delivered a resilient result in challenging market conditions over the summer as the exceptionally hot UK weather reduced overseas holiday volumes and consequently the demand for travel money.  Despite these conditions, and the absence of an Easter trading period in the year over the comparable prior year, customer numbers exchanging currency increased by 4% to 705,0000 during the year (680,000 in FY18).  This outcome is testament to the strong and growing reputation the Group has for great exchange rates and service levels. 

 

£496m of currency was exchanged with the Group in the year, 2% increase year on year (FY18: £485m).  The sales margin continues to be closely managed and as a result FX income was up 2% to £11.6m (FY18: £11.3m).  This represents 38% of total Group gross profit.

 

We continue to drive growth in our online click and collect service which now accounts for 6% of the total currency exchanged or £29.5m (FY18: £20.5m).

 

The commission from international bank payments has a low base but remains an opportunity for growth.  The Group intends refreshing its travel card proposition in FY20.

 

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.

 

Pawnbroking income provides recurring and stable revenues for the Group and represents 25% of total Group gross profit (FY18: 25%). 

 

The loan book growth reflects a combination of more customers (FY19 36,000 vs FY18 34,000) and the ability to offer higher loan amounts on items that can be retailed through the store network.  The level of repayment is consistent with prior years.

 

The year end position shows a slightly higher than anticipated expired position following the acquisition of the pawnbroking loan books from The Money Shop.  The loans were held over for longer than normal after expiry to give the new-to-Ramsdens customers a longer period to redeem their goods.

 

The capital value of the pawnbroking loan book increased from £6.4m to £7.6m or 19%. This includes £0.6m from the acquisition of The Money Shop stores. 

 

Gross profit from pawnbroking was 8% higher at £7.5m (FY18: £7.0m), and represented a 107% yield on the average loan book during the year.  The yield has fallen slightly following the change to six-month loan pledge terms from October 2017.

 

Jewellery Retail

The Group offers new and second-hand jewellery for sale and the Board believes there is significant growth potential in this segment by leveraging the retail store estate and ecommerce operations from both cross selling its other services to existing customers and attracting new customers. 

 

Jewellery Retail revenue grew by 23% to £9.8m (FY18: £8.0m).  This growth was achieved despite the much-publicised difficulties for UK high street retailers and reflects the increasing recognition of the

value and quality of the retail proposition.

 

The Group enjoyed positive contributions from the new stores and improved performance from core stores driven by the increased investment in jewellery stock levels and enhanced window displays.

Ecommerce jewellery sales increased by 77% and now represent 5% of the total jewellery sold.  51% of e-commerce customers originated from outside our stores' customer catchment area. 

 

The jewellery gross profit margin remained flat at 52% (FY18: 52%).  Whilst we are selling more premium watches and new gold jewellery, both at a lower margin, we have managed to maintain overall margin by increasing sales of our new recycled diamond product range and by managing discount levels on our second-hand products.

 

Gross profit from jewellery retail increased by 22% to £5.0m (FY18: £4.1m).  Jewellery retail now represents 16% of the Group's total gross profit (FY18: 15%). 

 

Purchases of precious metals

Through its precious metals buying and selling service, Ramsdens buys unwanted jewellery, gold and other precious metals from customers. Typically, a customer brings unwanted jewellery into a Ramsdens store and a price is agreed with the customer depending upon the retail potential, weight or carat of the jewellery. Ramsdens has various second-hand dealer licences and other permissions and adheres to the Police approved "gold standard" for buying precious metals.

 

Once jewellery has been bought from the customer, the Group's dedicated jewellery department decides whether or not to retail the item through the store network or online. Income derived from jewellery which is purchased and then retailed is reflected in jewellery retail income and profits. The residual items are smelted and sold to a bullion dealer for their intrinsic value and the proceeds are reflected in the accounts as precious metals buying income.  The Group has continued its strategy to increase jewellery stock levels to assist jewellery retail sales.

 

The average sterling gold price fell by 1% during the year.  The weight of gold purchased on a like for like basis was broadly flat and the increased profit was generated by new stores. 

 

Gross profit was up 10% to £4.8m (FY18: £4.4m) and represents 16% of total Group gross profit (FY18: 15%). 

 

Other services

In addition to the four core business segments, the Group also provides additional services in Cheque Cashing, Western Union money transfer, Sale and buy back of Electronics, Credit Broking and receives Franchise Fees.

 

Revenue from these services in FY19 was £2.5m (FY18: £2.8m) resulting in £1.6m of gross profit (FY18: £1.6m). This represented 5% of the Group's total gross profit (FY18: 5%-).

 

DELIVERING OUR CLEAR GROWTH STRATEGY

During the financial year, we have continued to make good progress against our strategic objectives and our growth strategy remains unchanged.  We continue to concentrate on:

1.    Continuing to improve the performance of our core estate;

2.    Expanding the Ramsdens branch footprint in the UK;

3.    Developing our online proposition;

4.    Continuing to appraise market opportunities presented by operating in a challenging market.

 

Continuing to improve the performance of our core store estate

We remain focused on delivering our core mission which has three component parts:

 

1.    To have a great customer offering…

·    We have very competitive exchange rates for currency

·    We offer a simple and trusted pawnbroking service

·    We have invested in the quantity and quality of our jewellery stock and how it is presented to the customer

·    We keep the store estate modern and bright and where appropriate continue to relocate stores to higher footfall locations

 

2.    …and give such fantastic customer service…

·    We have a team of fully trained and motivated staff who are passionate about the business and their customers, including cross-selling to meet customer needs.

·    We have a first-class, customer-centric IT system that allows staff to have a full appreciation of a customer's history with Ramsdens, thereby facilitating efficient processing times

 

3.    ….that our customers become our ambassadors.

·    Recommendations from family and friends remains our biggest source of new customers.

 

Expanding the Ramsdens branch footprint in the UK

The Ramsdens store estate has grown from 131 stores to 156 stores during the financial year.  This includes four franchised stores in both periods.  We remain confident that the future financial performance of the new stores will leverage off the Head Office costs which have been geared up to support our continued growth.

 

The increase in 25 stores reflected:

·    Opening six greenfield sites,

·    Acquiring two independent jewellery stores,

·    Acquiring one small pawnbroking store,

·    Acquiring 16 net new stores from Instant Cash Loans trading as The Money Shop (acquired 18 stores but two stores merged into the existing store network).

 

Whilst the Group's medium-term strategy remains to open 12 stores per annum, in the short term we will focus on developing the portfolio of acquired Money Shop stores.

 

Developing our online proposition

We are continuing our journey to be truly multi-channel and continue to see online growth as additive to store sales.

 

During the year, we have continued to invest in our transactional website focused on jewellery retail www.ramsdensjewellery.co.uk.  We have invested in improved software and hardware to enable more second hand jewellery pieces to be added to the website, improved the imagery, improved the search engine optimization ("SEO") performance, and undertaken various advertising and marketing initiatives.  The additional benefit of this investment is that the range of stock online can be shown to customers in store to assist with store sales.  This investment will continue as we move forward.  As a stand-alone channel, ecommerce retail sales grew by 77% and now account for c.5% of all jewellery sold.  51% of the customers purchasing online live outside the Ramsdens store network's catchment area and we remain confident that this is a great opportunity for growth.

 

The www.ramsdensforcash.co.uk website has been remodeled to have greater focus on foreign currency exchange with an emphasis placed on improving the customer journey.  Click and Collect foreign currency exchanged grew by 44% in the last year.

 

Continuing to appraise market opportunities presented by operating in a challenging market

We have completed the acquisition of 18 stores from Instant Cash Loans trading as The Money Shop, together with 5 small loans books from stores that they chose to close.  We have merged two of the 18 stores into our estate and, at the yearend, this acquisition contributed a net new 16 stores.   

 

During the year we completed the purchase of one store from Jolly's pawnbrokers and two independent jewellery stores.

We believe that the challenges faced by the UK high street will present further opportunities to acquire small jewellers, pawnbroking stores and to gain foreign exchange market share as banks and travel agents close branches.

 

LOOKING AHEAD

The Board remains confident that Ramsdens is well positioned to continue to progress and deliver its growth strategy, thereby delivering strong and ongoing capital and income returns for investors.  

This confidence is derived from the investments we have made in our brand, IT systems, customer offering and staff development.  Our people are customer focused and we feel we have an opportunity to further improve what we currently do.  This, in combination with our strong financial footing and growing diversified income streams, gives us confidence that we will make further progress and take advantage of good growth opportunities.

 

Peter Kenyon

Chief Executive Officer

11th June 2019

 

 

 

 

FINANCIAL DIRECTOR'S REVIEW

 

FINANCIAL RESULTS

For the year ended 31 March 2019, Group reported Revenue increased by 17% to £46.8m (FY18: £39.9m) with growth across the four key income streams. Gross profit increased by £2.2m (8%) to £30.5m (FY18: £28.3m).

 

The Group's administrative expenses increased by £2m (9%) to £23.9m (FY18: £21.9m).  This reflects an increase in staff costs to support the growth of the business and the costs associated with new stores.

Finance costs remain low reflecting the efficient seasonal use of the Group's revolving cash facility during peak holiday periods.

 

Profit before tax increased 3% to £6.5m (FY17: £6.3m).

To provide a comparison to the prior financial period and for future reporting periods, share based payments have been removed to give the following underlying results.

The underlying profit before tax was £6.7m an increase of 4% on the prior year of £6.5m.

The underlying EBITDA increased by 5% to £8.3m from £7.9m in the prior year.

A reconciliation between the Underlying and Statutory results is provided below.     

 

£000's

FY19

FY18

Statutory profit before tax

£6,492

£6,312

Share based payments

£221

£161

Underlying profit before tax

£6,713

£6,473

Finance costs

£131

£177

Gain on fair value of derivative liability

(£40)

(£79)

Depreciation, amortisation and loss on disposal

£1,446

£1,319

Underlying EBITDA

£8,250

£7,890

 

EARNINGS PER SHARE AND DIVIDEND

The statutory basic and diluted earnings per share for the year is 16.7p and 16.3p respectively up from 16.3p and 15.9p in the previous year.

 

The Board is recommending a final dividend of 4.8 pence per share in respect of FY19 (FY18: 4.4 pence per share).  Subject to shareholder approval at the AGM this will be payable on 20 September 2019 for those on the shareholders register as at 23 August 2019.  This brings the total dividend for FY19 to 7.2 pence per share (FY18: 6.6 pence per share).  This dividend is in line with the Board's progressive dividend policy reflecting the cash flow generation and earnings potential of the Group. The Board intends to continue to pay an interim dividend in February and a final dividend in September in the approximate proportion of one third and two thirds respectively subject to the financial performance of the Group. 

 

CAPITAL EXPENDITURE & ACQUISITIONS

During the financial year, the Group invested to increase the store estate by acquisition, opening new stores and relocating existing stores.  This included an acquisition for £1.5m from Instant Cash Loans Limited trading as The Money Shop which contributed net 16 further stores. Capital expenditure for tangible and intangible assets in addition to the acquisition was £2.4m which mainly reflected the opening of a further 9 new stores and relocation of 5 stores during the year.   

 

CASH FLOW

The net cash flow from operating activities was £1.5m. This is after growing trade and other receivables by £1.6m (principally the Pawnbroking loan book), increasing our inventory levels by £3.0m (jewellery stock to facilitate higher jewellery sales and stock for new branches) and reducing trade and others payables of £0.7m.

 

The Group continued to execute its growth strategy in the year by investing in new stores including the acquisition and capital expenditure detailed above.

 

£5.3m of the £10m revolving credit facility from Yorkshire Bank was drawn (£5.2m net of borrowing costs) as at 31 March 2019 (FY18: £2m drawn, £1.9m net of borrowing costs).  The Group renewed its revolving credit facility in March 2019 for a further 3 years to March 2022 and increased the facility limit to £10m (FY18: £7m). The Group is well within its covenant of 1.5x cash cover. The cash position and headroom on the bank facility provide the Group with the funds required to continue to deliver its current stated strategy.

 

The overall decrease in cash and cash equivalents was £1.2m bringing the total to £13.4m (FY18: £14.6m).       

 

These numbers are stated prior to adjusting for the reclassification of £2.1m from receivables to inventory as a result of adopting IFRS 15.

 

FINANCIAL POSITION

At 31 March 2019, net cash and cash equivalents amounted to £8.2m (FY18: £12.7m) and the Group had net assets of £30.9m (FY18: £27.6m).

 

IFRS9

These statements have been prepared under IFRS9 'Financial Instruments' with prior years not restated. The Group has now disclosed pawnbroking revenue gross of impairment with impairment disclosed separately as a cost of sale, totalling £552,000 in the current year.  In previous years, pawnbroking revenue was recorded net of impairment. This change has no impact on profit or reserves in the current or prior years.

 

IFRS15

As a result of the implementation of IFRS 15 during the year, management has reviewed the accounting treatment of unredeemed pawnbroking loans. These are loan balances where the customer has defaulted on their loan.  Management has assessed these transactions against the control criteria in IFRS 15 and has concluded that the substance of the legal arrangement is that control of the pledged item transfers to the Group at the point the customer defaults. This is due to the fact the Group controls the method of disposal and the price, despite legal title of the goods not transferring. Management has recorded revenue of £2,472,000 to reflect the consideration received for the pledged item, with a corresponding adjustment to cost of sales, reflecting the cost to the Group.  There is no impact on gross profit or earnings as a result of this adjustment. The pledge balance, representing the cost of acquiring the pledged item, has been reclassified to inventory, and is measured at the lower of cost and net realisable value in accordance with IAS 2. Accordingly, the Statement of Financial Position has been amended to reflect the transfer from receivables to inventory, amounting to £1,965,000 at 1 April 2018. This has no impact on total current assets or the net assets.

The Group has adopted IFRS15 using the modified retrospective approach.  Therefore, the comparative information was not restated.  The impact of the application of IFRS15 to the comparative balances is detailed in note 2 to the financial statements.

 

TAXATION

The tax charge for the year was £1.3m (FY18: £1.3m) at an effective rate of 20.5% (FY18: 20.2%). The effective rate is higher than the standard UK rate of corporation tax of 19% (FY18: 19%) mainly due to the timing difference between depreciation charges and capital allowances and non-deductible expenses including the amortisation of certain customer lists. A full reconciliation of the tax charge is shown in note 10 of the financial statements.

 

SHARE BASED PAYMENTS

The share-based payment expense in the period was £221,000 (FY18: £161,000). This charge relates to the Long Term Incentive Plan (LTIP) which is a discretionary share incentive scheme under which the Remuneration Committee can grant options to purchase ordinary shares at a nominal 1p per share cost to Executive Directors and other senior management subject to certain performance and vesting conditions.

 

Martin Clyburn

Chief Financial Officer

11th June 2019

 

 

Consolidated Statement of Comprehensive Income

 

 

For the year ended 31 March 2019

 

 

 

 

 

 

 

 

 

 

 

 

2019

2018

 

Notes

 

 

 

 

 

 

£'000

£'000

 

 

 

 

 

 

 

 

 

 

Revenue

5

 

46,785

39,942

Cost of sales

 

 

(16,263)

(11,595)

 

 

 

 

 

Gross profit

5

 

30,522

28,347

 

 

 

 

 

Administrative expenses

 

 

(23,939)

(21,937)

 

 

 

 

 

Operating profit

 

 

6,583

6,410

 

 

 

 

 

Finance Costs

6

 

(131)

(177)

 

 

 

 

 

Gain on fair value of derivative financial liability

 

 

40

79

 

 

 

 

 

Profit before tax

 

 

6,492

6,312

 

 

 

 

 

Income tax expense

10

 

(1,332)

(1,278)

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

 

5,160

5,034

 

 

 

 

 

Other comprehensive income

 

 

-

-

 

 

 

 

 

Total comprehensive income

 

 

5,160

5,034

 

 

 

 

 

 

 

 

 

 

Earnings per share in pence

8

 

16.7

16.3

 

 

 

 

 

Diluted earnings per share in pence

8

 

16.3

15.9

 

 

 

 

 

 

 

Consolidated Statement of Financial Position

 

 

 

 

As at 31 March 2019

 

 

 

 

 

 

 

 

 

 

2019

2018

 

 

 

 

 

 

 

 

Assets

Notes

 

 

£'000

£'000

 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

12

 

 

5,485

4,302

 

Intangible assets

13

 

 

1,228

429

 

Investments

14

 

 

-

-

 

Deferred tax assets

10

 

 

167

84

 

 

 

 

 

6,880

4,815

 

Current Assets

 

 

 

 

 

 

Inventories

16

 

 

12,658

7,567

 

Trade and other receivables

17

 

 

10,906

10,613

 

Cash and short term deposits

18

 

 

13,420

14,619

 

 

 

 

 

36,984

32,799

 

Total assets

 

 

 

43,864

37,614

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

19

 

 

6,490

7,074

 

Interest bearing loans and borrowings

19

 

 

5,184

1,883

 

Income tax payable

19

 

 

689

633

 

 

 

 

 

12,363

9,590

 

Net current assets

 

 

 

24,621

23,209

 

Non-current liabilities

 

 

 

 

 

 

Interest bearing loans and borrowings

20

 

 

-

1

 

Accruals and deferred income

20

 

 

453

300

 

Derivative financial liabilities

20

 

 

-

40

 

Deferred tax liabilities

20

 

 

140

115

 

 

 

 

 

593

456

 

Total liabilities

 

 

 

12,956

10,046

 

Net assets

 

 

 

30,908

27,568

 

Equity

 

 

 

 

 

 

Issued capital

21

 

 

308

308

 

Share premium

 

 

 

4,892

4,892

 

Retained earnings

 

 

 

25,708

22,368

 

Total equity

 

 

 

30,908

27,568

 

The financial statements of Ramsdens Holdings PLC, registered number 8811656, were approved by the directors and authorised for issue on 11 June 2019 and signed on their behalf by:

 

M A Clyburn

 

 

 

 

 

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

                     

 

Consolidated Statement of Changes in Equity

 

 

For the year ended 31 March 2019

 

 

 

 

 

 

 

 

 

 

 

 

Share Capital

Share premium

Retained earnings

Total

 

Notes

 

 

 

 

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

 

As at 1 April 2017

 

308

4,892

18,195

23,395

Profit for the year

 

 -

 -

5,034

5,034

Total comprehensive income

 

-

-

5,034

5,034

 

 

 

 

 

 

Dividends paid

22

-

 -

(1,079)

(1,079)

Share based payments

26

-

-

161

161

Deferred tax on share based payments

 

-

 -

57

57

As at 31 March 2018

 

308

4,892

27,568

 

 

 

 

 

 

As at 1 April 2018

 

308

4,892

22,368

27,568

Profit for the year

 

-

 -

5,160

5,160

Total comprehensive income

 

-

-

5,160

5,160

Dividends paid

22

-

-

(2,097)

(2,097)

Share based payments

26

-

-

221

221

Deferred tax on share based payments

 

-

-

56

56

As at 31 March 2019

 

308

4,892

25,708

30,908

 

 

Consolidated Statement of Cash Flows

 

 

 

 

For the year ended 31 March 2019

 

 

 

 

 

 

 

2019

2018

Operating activities

Notes

 

£'000

£'000

 

 

 

 

 

Profit before tax

 

 

6,492

6,312

Adjustments to reconcile profit before tax to net cash flows:

 

 

 

 

Depreciation and impairment of property, plant

 

 

 

 

and equipment

12

 

1,215

1,079

Amortisation and impairment of intangible assets

13

 

157

211

Change in derivative financial instruments

 

 

(40)

(79)

Loss on disposal of property, plant and equipment

 

 

74

29

Share based payments

25

 

221

161

Finance costs

6

 

131

177

Working capital adjustments:

 

 

 

 

Movement in trade and other receivables and prepayments

 

 

424

(1,251)

Movement in inventories

 

 

(5,091)

(2,229)

Movement in trade and other payables

 

 

(651)

2,350

 

 

 

2,932

6,760

Interest paid

 

 

(131)

(173)

Income tax paid

 

 

(1,278)

(999)

Net cash flows from operating activities

 

 

1,523

5,588

Investing activities

 

 

 

 

Proceeds from sale of property, plant and equipment

 

 

3

1

Purchase of property, plant and equipment

12

 

(2,315)

(1,201)

Purchase of intangible assets

13

 

(109)

(111)

Acquisition

11

 

(1,504)

-

Net cash flows used in investing activities

 

 

(3,925)

(1,311)

Financing Activities

 

 

 

 

Dividends paid

22

 

(2,097)

(1,079)

Payment of finance lease liabilities

 

 

(8)

(8)

Bank loans drawn down

 

 

5,183

1,875

Repayment of bank borrowings

 

 

(1,875)

(2,310)

Net cash flows from financing activities

 

 

1,203

(1,522)

Net increase in cash and cash equivalents

 

 

(1,199)

2,755

Cash and cash equivalents at 1 April

 

 

14,619

11,864

Cash and cash equivalents at 31 March

 

 

13,420

14,619

 

 

 

 

 

 

 

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 14.

 

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

 

Adoption of new and revised standards

In the current year, the Company has applied the following accounting standards that are mandatorily effective for an accounting period that begins on or after 1 January 2018. Further details of the impact of IFRS 9 are given below. The other changes have not had a material impact on the amounts reported in these financial statements.

 

IFRS 9

Financial Instruments

IFRS 15

Revenue from Contracts with Customers

Amendments to IFRS 2

Classification and Measurement of Share-based Payment Transactions

Amendments to IFRS 4

Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts

Amendments to IAS 40

Transfer of Investment Property

IFRIC 22

Foreign Currency Transactions and Advanced Consideration

Annual Improvements to IFRSs: 2014-2016

Annual Improvements to IFRSs:2014-16 Cycle - IFRS 1 and IAS 28 Amendments

 

 

Standards issued but not yet effective

At the date of authorisation of these financial statements the Company had not applied the following new and revised IFRSs that have been issued but are not yet effective:

 

IFRS 16

Leases

Amendments to IFRS 9

Prepayment Features with Negative Compensation

Amendments to IAS 10 and IAS 28

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

Amendments to IAS 40

Transfer of Investment Property

 

The Directors have considered the likely impact of the above standards on the financial statements of the Company in future periods. Other than IFRS 16 detailed below, the directors do not consider that the standards will have a material impact on the financial statements in future periods.

 

IFRS 9 Financial Instruments

The Group has applied IFRS 9 Financial Instruments and has adopted consequential amendments to IFRS 7 Financial Instruments: Disclosures. The Group has opted not to amend 2018 comparatives.

Pawnbroking loans are financial instruments and are therefore in scope of IFRS 9.

 

The impairment model under IFRS 9 reflects expected credit losses. The Group now shows gross pawnbroking interest as revenue and recognises impairment as a cost of sale. In the previous year the Group showed revenue net of impairment. This change does not affect the profit or reserves in the current or previous year, and therefore the comparative balances have not been restated.

 

The Group has also reviewed receivables from segments other than pawnbroking and has concluded that  expected credit losses for these receivables are consistently immaterial to the Group.

 

There is no change in the accounting for any financial liabilities.

 

There has been no changes in classification as a result of the implementation of IFRS 9.

 

IFRS 15 Revenue from Contracts with Customers

The Group has applied IFRS 15 Revenue from Contracts with Customers. IFRS 15 introduces a 5 step approach to revenue recognition which has been reviewed against the revenue recognition policies of the Group.

 

IFRS 15 uses the terms 'contract asset' and 'contract liability' to describe what is more commonly known as 'accrued income' and 'deferred income', however the standard does not prohibit the use of alternative descriptions in the financial statements. The Group has retained the use of 'deferred income' in the financial statements.

 

As a result of the implementation of IFRS 15 during the year, management has reviewed the accounting treatment of unredeemed pawnbroking loans. These are loan balances where the customer has defaulted on their loan.  Management has assessed these transactions against the control criteria in IFRS 15 and has concluded that the substance of the legal arrangement is that control of the pledged item transfers to the Group at the point the customer defaults. This is due to the fact the Group controls the method of disposal and the price, despite legal title of the goods not transferring. Management has recorded revenue of £2,472,000 to reflect the consideration received for the pledged item, with a corresponding adjustment to cost of sales, reflecting the cost to the Group.  There is no impact on gross profit or earnings as a result of this adjustment. The pledge balance, representing the cost of acquiring the pledged item, has been reclassified to inventory, and is measured at the lower of cost and net realisable value in accordance with IAS 2. Accordingly, the Statement of Financial Position has been amended to reflect the transfer from receivables to inventory, amounting to £1,965,000 at 1 April 2018. This has no impact on total current assets or the net assets.

The application of IFRS 15, including identification of performance obligations and the point at which these are satisfied, is disclosed in the updated revenue recognition policy detailed in 3.16 below.

 

The Group has adopted IFRS 15 using the modified retrospective approach. Therefore the comparative information was not restated. The impact of the application of IFRS 15 is detailed below:

 

 

Consolidated Statement of Comprehensive Income

 

 

For the year ended 31 March 2019

 

 

 

 

 

 

IFRS15

Previous IFRS

Change

 

 

£'000

£'000

£'000

Revenue

 

46,785

44,313

2,472

Cost of sales

 

(16,263)

(13,791)

(2,472)

Gross profit

 

30,522

30,522

-

Profit before tax

 

6,492

6,492

-

Profit for the period

 

5,160

5,160

-

Total comprehensive income

 

5,160

5,160

-

 

 

Consolidated Statement of Financial Position

 

 

As at 1 April 2018

 

 

 

 

 

 

IFRS15

Previous IFRS

Change

 

 

£'000

£'000

£'000

Inventories

 

9,532

7,567

1,965

Trade and other receivables

 

8,648

10,613

(1,965)

Current assets

 

32,799

32,799

-

Total assets

 

37,614

37,614

-

Total liabilities

 

10,046

10,046

-

Net assets

 

27,568

27,568

-

Total equity

 

27,568

27,568

-

 

IFRS 16 Leases

IFRS 16 introduces a comprehensive model for the identification of lease arrangements and accounting treatments for both lessors and lessees. IFRS 16 will supersede the current lease guidance including IAS 17 Leases and the related interpretations when it becomes effective for accounting periods beginning on or after 1 January 2019. The Group expects to adopt IFRS 16 for the year ending 31 March 2020. As at 31 March 2019, the Group has non-cancellable operating lease commitments of £11.7m. IAS 17 does not require the recognition of any right-of-use asset or liability for future payments for these leases; instead, certain information is disclosed as operating lease commitments in note 24. Our assessment indicates that these arrangements will meet the definition of a lease under IFRS 16, and hence the Group will recognise a right-of-use asset and a corresponding liability in respect of all these leases unless they qualify for low value or short-term leases upon the application of IFRS 16. The new requirement to recognise a right-of-use asset and a related lease liability is expected to have a significant impact on the amounts recognised in the Group's consolidated financial statements. Preliminary calculations indicate that the impact on the balance sheet will be a net reduction in retained earnings of £1.1m as at 31 March 2019, with the right-of-use asset capitalised at net book value of £9.9m offset by lease liability of £10.8m. The impact on the Group's Statement of Comprehensive Income for 2019 is likely to be favourable by £0.1m.

  

 

3. Significant accounting policies

 

3.1 Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union.

 

The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments that have been measured at fair value. 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 IFRS 10, 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 Directors have made appropriate enquiries and formed a judgement at the time of approving the financial statements that there is a reasonable expectation that the Group has adequate resources to continue in business for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

 

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 no intangible assets are accorded an indefinite life.

 

Intangible assets with finite lives are amortised over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.

 

Amortisation is calculated over the estimated useful lives of the assets as follows:

•      Customer relationships - 40% reducing balance

•      Software - 20% straight line

 

Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the Statement of Comprehensive Income in the expense category consistent with the function of the intangible assets.

 

3.6 Property, plant and equipment 

Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses (if any).  All other repair and maintenance costs are recognised in the Statement of Comprehensive Income as incurred.

 

Depreciation is calculated over the estimated useful lives of the assets as follows:

•    Leasehold property    - 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. These budgets and forecast calculations are generally covering a 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 annually as at 31 March 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.

 

3.8 Inventories

Inventories comprise of electronics, 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.

 

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, no financial assets have been classified as FVTOCI or FVTPL at the reporting dates for 2019 and 2018.

The effective interest method is used to calculate the amortised cost of debt instruments by allocating interest income over the relevant period.

 

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition less the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

 

Cash and cash equivalents

Cash and short-term deposits in the Statement of Financial Position comprise cash at banks and on hand, foreign currency held for resale and short term deposits held with banks with a maturity of three months or less from inception.

 

For the purpose of the consolidated Statement of Cash Flows, cash and cash equivalents consist of cash, foreign currency held for resale and short-term deposits as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Group's cash management.

 

Impairment of financial assets

The Group recognises a loss allowance for expected credit losses on financial assets that are measured at amortised cost. The amount of credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

 

The Group recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group recognises the 12 month expected credit losses. As pawnbroking loans are typically over a six month term the lifetime credit losses are usually the same as the 12 month expected credit losses.

 

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the 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. Details of the key assumptions for pawnbroking expected credit losses are given in note 4.

 

Derecognition

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset to another entity. On derecognition of a financial asset measured at amortised cost, the difference between the assets carrying amount and the sum of the consideration received and receivable is recognised in the Statement of Comprehensive Income.

 

Financial liabilities

Debt and equity instruments are classified as either financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and equity instrument.

 

All financial liabilities are recognised initially at amortised cost or at fair value through profit and loss (FVTPL).

 

The Group's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.

 

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method (EIR). Gains and losses are recognised in the Statement of Comprehensive Income when the liabilities are derecognised as well as through the (EIR) amortisation process.

 

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the Statement of Comprehensive Income.

 

Only the Group's derivative financial instruments are classified as financial liabilities at fair value through profit or loss.

 

Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in the Statement of Comprehensive Income. The net gain or loss recognised in the Statement of Comprehensive Income incorporates any interest paid on the financial liability.

 

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Comprehensive Income.

 

Offsetting of financial instruments

Financial assets and financial liabilities are offset with the net amount reported in the Statement of Financial Position only if there is a current enforceable legal right to offset the recognised amounts and intent to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

 

3.10 Fair value measurement

The Group measures 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

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date.

 

For arrangements entered into prior to 1 April 2013, the date of inception is deemed to be 1 April 2013 in accordance with IFRS 1 First-time Adoption of International Reporting Standards.

 

Hire purchase agreements and finance lease agreements

Finance leases and hire purchase agreements that transfer to the Group substantially all of the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. The leased asset is depreciated over the shorter of the lease term and its useful economic life.

 

Obligations under such agreements are included within payables, net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the Consolidated Statement of Comprehensive Income so as to produce a constant periodic rate of interest on the net obligation outstanding in each period.

 

Operating lease agreements

Rentals applicable to operating leases, where substantially all of the risks and benefits or ownership remains with the lessor, are charged to the Statement of Comprehensive Income on a straight line basis over the period of the lease.

Lease incentives are spread over the period of the lease on a straight line basis.

 

3.13 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured using the Directors' best estimate of the expenditure required to settle the obligation at the date of each Statement of Financial Position.

 

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

 

All of the Group's premises are leased under operating leases. The majority of the leases include an end of lease rectification clause to return the property to its original state. No provision is made until a board decision has been taken to either terminate or not to renew the lease. Additionally, the Group maintains stores to a high standard and completes any necessary repairs and maintenance on a timely basis using the in-house property department and external contractors. These costs are expensed as incurred.

 

3.14 Pensions and other post-employment benefits

The Group 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 Carlo 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.                                                           

 

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 interest 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 comprises interest on pledge loan books and comprises the following two distinct components:

 

Contractual interest earned:

Contractual interest is earned on pledge loans up to the point of redemption or the end of the primary contract term. Interest receivable on loans is recognised as interest accrues by reference to the principle 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.

 

Revenue arising from the disposal of unredeemed pledge contracts:

When a customer defaults on a pawnbroking loan, the unredeemed pledge contracts are recognised as inventory. Revenue is recognised on the subsequent sale of the pledged assets supporting the pledge contract under IFRS 15.

 

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 made. 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 Group 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 fees, buyback and other miscellaneous revenues. Cheque cashing revenue is recognised when the service is provided under IFRS 15 which includes making a payment to the customer. Buyback revenue relates to the sale of items to a customer, either the person who originally sold that item to the business, or to a third party. Revenue is recognised when the goods are transferred to the customer. Full payment is taken at the time or prior to transferring the goods.

 

3.17 Administrative expenses

Administrative expenses include branch staff and establishment costs.

 

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.

 

Management do not consider there to be significant accounting judgements affecting the consolidated financial statements, however, they have identified the following areas of estimation uncertainty:

 

Revenue recognition - pawnbroking loans interest and impairment

The Group recognises interest on pawnbroking loans as disclosed in note 3.16. The provision for impairment of pawnbroking loans is material and is dependent on the estimate that the Group makes of both the expected level of the unredeemed pawnbroking loans and the ultimate realisation value for the pledge assets supporting those loans. 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 deficits. The principle estimates within the loan interest accrual are;

1.       Non Redemption Rate

This is based upon current and historical data held in respect of non-redemption rates

 

2.       Realisation Value

This is 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.

 

See note 15 for further details on pawnbroking credit risk and impairment provision values.

 

Impairment of property, plant and equipment and intangible assets

Determining whether property, plant and equipment 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.

 

The principal assumptions applied by management in arriving at the value in use of each CGU are as follows:

1.       The Group prepares cash flow forecasts for each branch. Cash flows represent management's estimate of the revenue of the relevant CGU, based upon the specific characteristics of the branch and its stage of development.

2.       The Group has discounted the forecast cash flows at a pre-tax, risk adjusted rate of 12%.

3.       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.

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.

 

Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.

 

5. Segmental analysis

The Group's revenue from external customers is shown by geographical location below:

 

 

 

 

2019

2018

Revenue

 

 

£'000

£'000

 

 

 

 

 

United Kingdom

 

 

46,707

39,800

Other

 

 

78

142

 

 

 

46,785

39,942

 

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.

 

 

 

 

2019

2018

Revenue

 

 

£'000

£'000

 

 

 

 

 

Contracts with customers

 

 

39,543

32,976

Pawnbroking interest income

 

 

7,242

6,966

 

 

 

46,785

39,942

 

 

 

 

 

2019

2018

Revenue

 

 

£'000

£'000

 

 

 

 

 

Pawnbroking

 

 

10,544

6,966

Purchases of precious metals

 

 

12,343

10,936

Retail Jewellery sales

 

 

9,771

7,960

Foreign currency margin

 

 

11,585

11,329

Income from other financial services

 

 

2,542

2,751

Total revenue

 

 

46,785

39,942

 

 

 

 

 

Included within the pawnbroking segment revenue above, is pawnbroking interest of £7,242,000 and revenue arising from the disposal of pledges of £3,302,000.  As a consequence of adopting IFRS9 and IFRS15, both Pawnbroking Revenue and Pawnbroking Cost of sales have increased by £3.0m in FY19, with comparatives not restated. 

 

 

 

 

2019

2018

Gross profit

 

 

£'000

£'000

 

 

 

 

 

Pawnbroking

 

 

7,520

6,966

Purchases of precious metals

 

 

4,801

4,356

Retail Jewellery sales

 

 

5,039

4,130

Foreign currency margin

 

 

11,585

11,329

Income from other financial services

 

 

1,577

1,566

Total gross profit

 

 

30,522

28,347

 

 

 

 

 

Administrative expenses

 

 

(23,939)

(21,937)

Finance costs

 

 

(131)

(177)

Gain on fair value of derivative financial liability

 

 

40

79

Profit before tax

 

 

6,492

6,312

 

Income from other financial services comprises of cheque cashing fees, electronics & buybacks, 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.

 

 

 

 

 

2019

2018

Other information

 

 

£'000

£'000

Tangible & intangible capital additions (*)

 

 

3,431

1,312

Depreciation and amortisation (*)

 

 

1,372

1,290

 

 

 

 

2019

2018

 

 

 

£'000

£'000

Assets

 

 

 

 

Pawnbroking

 

 

11,363

9,421

Purchase of precious metals

 

 

1,492

1,323

Retail Jewellery sales

 

 

9,085

6,214

Foreign currency margin

 

 

7,566

7,162

Income from other financial services

 

 

591

472

Unallocated (*)

 

 

13,767

13,022

 

 

 

43,864

37,614

 

Liabilities

 

 

 

 

Pawnbroking

 

 

284

254

Purchase of precious metals

 

 

4

5

Retail Jewellery sales

 

 

1,286

1,418

Foreign currency margin

 

 

2,402

2,814

Income from other financial services

 

 

525

422

Unallocated (*)

 

 

8,455

5,133

 

 

 

12,956

10,046

 

(*) The Group cannot meaningfully allocate this information by segment due to the fact that all segments operate from the same stores and the assets in use are common to all segments.

Fixed assets are therefore included in the unallocated assets balance.

 

 

6. Finance costs

 

 

 

2019

2018

 

 

£'000

£'000

 

 

 

 

Interest on debts and borrowings

 

130

176

Finance charges payable under finance leases and hire purchase contracts

 

1

1

Total finance costs

 

131

177

 

 

7. Profit before taxation has been arrived at after charging/(crediting)

 

 

 

2019

2018

 

 

£'000

£'000

Depreciation of property, plant and equipment reported within:

 

 

 

-          Administrative expenses

 

1,215

1,079

Amortisation of intangible assets reported within:

 

 

 

-          Administrative expenses

 

157

211

Loss on disposal of property, plant and equipment

 

74

29

Cost of inventories recognised as an expense

 

15,711

11,595

Staff costs

12,250

11,256

Foreign currency exchange losses/(gains)

85

(93)

Operating lease payments

3,165

2,726

Auditor's remuneration

90

78

 

The Company and Group audit fees are borne by a subsidiary undertaking, Ramsdens Financial Limited. There were no fees payable to the Company's auditor in respect of non-audit services.

 

8. Earnings per share

 

 

2019

2018

 

 

£'000

£'000

 

 

 

 

Profit for the year

 

5,160

5,034

 

 

 

 

Weighted average number of shares in issue

 

30,837,653

30,837,653

 

 

 

 

Earnings per share (pence)

 

16.7

16.3

 

 

 

 

Fully diluted earnings per share (pence)

 

16.3

15.9

  

 

9. Information regarding directors and employees

 

Directors' emoluments

 

 

 

 

2019

2018

 

Emoluments

Pension

LTIP

Total

Emoluments

Pension

LTIP

Total

Executive

 

 

 

 

 

 

 

 

Peter Kenyon

232

10

64

306

312

15

50

377

Martin Clyburn

158

13

34

205

207

10

28

245

Non Executive

 

 

 

 

 

 

 

 

Andrew Meehan

63

-

-

63

58

-

-

58

Simon Herrick

46

-

-

46

42

-

-

42

Steve Smith

39

-

-

39

35

-

-

35

Total

538

23

 

98

659

654

25

 

78

757

 

 

 

 

2019

2018

 

 

£'000

£'000

Included in administrative expenses:

 

 

 

Wages and salaries

 

10,997

10,211

Social security costs

 

783

738

Share option scheme

 

221

161

Pension costs

 

249

146

Total employee benefits expense

 

12,250

11,256

 

The average number of staff employed by the Group during the financial period amounted to:

 

 

2019

2018

 

 

No.

No.

 

 

 

 

Head Office and management

 

91

84

Branch Counter staff

 

546

491

 

 

637

575

 

 

10. Income Tax

 

The major components of income tax expense are:

 

Consolidated Statement of Comprehensive Income

 

 

2019

2018

 

 

£'000

£'000

Current income tax:

 

 

 

Current income tax charge

 

1,373

1,341

Adjustments in respect of current income tax of previous year

 

(39)

(14)

 

 

1,334

1,327

Deferred tax:

Relating to origination and reversal of temporary differences

 

(2)

(49)

Income tax expense reported in the Statement of Comprehensive Income

 

1,332

1,278

 

A reconciliation between tax expense and the product of accounting profit multiplied by the UK domestic tax rate is as follows:

 

 

2019

2018

 

 

£'000

£'000

 

 

 

 

Profit before income tax

 

6,492

6,312

UK corporation tax rate at 19% (2018: 19%)

 

1,233

1,199

Expenses not deductible for tax purposes

 

138

93

Prior period adjustment

 

(39)

(14)

Income tax reported in the Statement of Comprehensive Income

 

1,332

1,278

 

Deferred tax

Deferred tax relates to the following:

 

 

2019

2018

 

 

£'000

£'000

Deferred tax assets

 

 

 

Share based payments

 

167

84

Deferred tax assets

 

167

84

 

 

 

 

Deferred tax liabilities

 

 

 

Accelerated depreciation for tax purposes

 

41

1

Other short-term differences

 

99

114

Deferred tax liabilities

 

140

115

 

 

 

Reconciliation of deferred tax liabilities net

 

 

 

 

 

2019

2018

 

 

£'000

£'000

 

 

 

 

Opening balance as of 1 April

 

31

137

Deferred tax recognised in the Statement of Comprehensive Income

 

(2)

(49)

Other deferred tax

 

(56)

(57)

Closing balance as at 31 March

 

(27)

31

 

Factors affecting tax charge

The standard rate of UK corporation tax for the period was 19% (2018: 19%). Reductions in the rate to 19% from 1 April 2017 and 17% from 1 April 2020 were enacted prior to the date of the Statement of Financial Position and have been applied to the Group's deferred tax balances. This will adjust the Group's future tax charge accordingly.

 

11. Acquisitions

 

On the 1 March 2019 the company purchased the trade and certain assets of 18 stores and 5 pawnbroking loan books from Instant Cash Loans Ltd trading as The Money Shop for a cost of £1,504,000. The fair value of the assets and liabilities acquired were as follows: 

 

 

 

 

£'000

 

Intangible Fixed Assets - Customer relationships

486

 

Tangible Fixed Assets - Fixtures & Fittings

160

 

Trade debtors

717

 

Creditors due within one year

(220)

 

 

 

 

Fair value of assets and liabilities acquired

1,143

 

 

 

 

Goodwill arising on acquisition

361

 

 

 

 

Total consideration paid

1,504

 

         

Total consideration was paid in cash.

 

 

Post acquisition, 16 stores continue to trade, with 2 stores and the 5 pawnbroking loan books being merged into existing Ramsdens stores. The acquisition has generated £159,000 of revenue and a loss before tax of £24,000 for the period from acquisition to 31 March 2019. The Group notes it is impractical to calculate the historic revenue and profit of the acquisition for the period prior to acquisition given incomplete information. The goodwill of £361,000 comprises the residual intangible assets which do not meet the recognition criteria under IAS 38 Intangibles to be treated as separate identifiable assets. The goodwill arising on acquisition is not deductible for tax purposes.

 

 

 

12. Property, plant and equipment

 

Leasehold property

Fixtures & Fitting

Computer equipment

Motor vehicles

Total

 

£'000

£'000

£'000

£'000

£'000

Cost

 

 

 

 

 

At 1 April 2018

4,146

2,732

511

40

7,429

Additions

1,289

859

141

26

2,315

Acquisition (note 11)

-

160

-

-

160

Disposals

(182)

(324)

(20)

(26)

(552)

At 31 March 2019

5,253

3,427

632

40

9,532

 

 

 

 

 

 

Depreciation

 

 

 

 

 

At 1 April 2018

1,861

1,096

150

20

3,127

Depreciation charge for the year

674

422

109

10

1,215

Disposals

(160)

(277)

(17)

(21)

(475)

At 31 March 2019

2,375

1,241

242

9

3,867

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 31 March 2019

2,878

2,186

390

31

5,485

At 31 March 2018

2,285

1,636

361

20

4,302

 

Finance leases

The carrying value of plant and equipment held under finance leases and hire purchase contracts at 31 March 2019 was £11,000 (2018: £15,000). Assets under hire purchase contracts are pledged as security for the related hire purchase liabilities.  Total future obligations under finance leases are £1,000 (2018: £9,000).

 

 

13. Intangible assets

 

 

Customer relationships

Website

Goodwill

Total

 

 

£'000

£'000

£'000

£'000

Cost

 

 

 

 

 

At 1 April 2018

 

1,375

79

80

1,534

Additions

 

24

-

85

109

Acquisition (note 11)

 

486

-

361

847

Disposals

 

-

-

-

-

At 31 March 2019

 

1,885

79

526

2,490

 

 

 

 

 

 

Amortisation

 

 

 

 

 

At 1 April 2018

 

1,071

34

-

1,105

Amortisation charge for the year

 

141

16

-

157

Disposals

 

-

-

-

-

At 31 March 2019

 

1,212

50

-

1,262

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 31 March 2019

 

673

29

526

1,228

At 31 March 2018

 

304

45

80

429

 

Customer relationship additions relate to £24,000 paid for the pawnbroking customer list purchased on the 5 December 2018.

 

Goodwill of £85,000 relates to 3 separate purchases of individual stores during the year.  

 

14. 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 undertakings

 

 

 

Ramsdens Group Limited

(Registered office: Unit 16 Parkway Centre, Coulby Newham, TS8 0TJ)

Ordinary Shares

100%

Dormant

Ramsdens Financial Limited

(Registered office: Unit 16 Parkway Centre, Coulby Newham, TS8 0TJ)

Ordinary Shares

100%

Supply of foreign exchange services, pawnbroking, purchase of gold jewellery, jewellery retail and related financial services.

 

 

15. Financial assets and financial liabilities

At 31 March 2019

Fair value through profit and loss

Loans and receivables

Financial liabilities at amortised cost

Book Value

Fair Value

 

£'000

£'000

£'000

£'000

£'000

Financial assets

 

 

 

 

 

Trade and other receivables

-

9,944

-

9,944

9,944

Cash and cash equivalents

-

13,420

-

13,420

13,420

Financial liabilities

 

 

 

 

 

Trade and other payables

-

-

(5,553)

(5,553)

(5,553)

Borrowings

-

-

(5,184)

(5,184)

(5,184)

Derivative financial liabilities - interest rate swap

-

-

-

-

-

Net financial assets/(liabilities)

-

23,364

(10,737)

12,627

12,627

 

 

At 31 March 2018

Fair value through profit and loss

Loans and receivables

Financial liabilities at amortised cost

Book Value

Fair Value

 

£'000

£'000

£'000

£'000

£'000

Financial assets

 

 

 

 

 

Trade and other receivables

-

9,930

-

9,930

9,930

Cash and cash equivalents

-

14,619

-

14,619

14,619

Financial liabilities

 

 

 

 

 

Trade and other payables

-

-

(6,170)

(6,170)

(6,170)

Borrowings

-

-

(1,883)

(1,883)

(1,883)

Derivative financial liabilities - interest rate swap

(40)

 -

(40)

(40)

Net financial assets/(liabilities)

(40)

24,549

(8,053)

16,456

16,456

 

Trade and other receivables shown above comprises trade receivables, other receivables and pledge accrued income as disclosed in note 17.

 

Trade and other payables comprises of trade payables and other payables as disclosed in notes 19 & 20

Borrowings comprises of bank borrowings, obligations under finance leases, loan notes and other loans as disclosed in notes 19 & 20.

 

Loans and receivables are non-derivative 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.

 

Fair value

The assumptions used by the Group to estimate the fair values are summarised below:

The fair value of the interest rate swaps is based upon the projected interest rate curves, over the life of the interest rate swaps.

The fair value of all other financial instruments is equivalent to their book value due to their short maturities.

 

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. Customers are deemed to default when the Group assesses that a loan will be repaid by realising the pledged assets rather than by repayment by the customer. 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.

 

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 any deficits 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.

 

Category

Gross amount

£'000

Loss allowance

£'000

Net carrying amount

£'000

Performing

9,705

(393)

9,312

 

9,705

(393)

9,312

 

The pawnbroking expected credit losses which have been provided on the period end pawnbroking assets are:

 

 

 

 

£'000

At 1 April 2017

 

292

Net Statement of Comprehensive Income charge

50

At 31 March 2018

 

342

Net Statement of Comprehensive Income charge

51

Balance at 31 March 2019

 

393

 

 

 

Expected credit losses have increased in the year due to the increase in the pawnbroking loan book.

Bad Debts written off during the year net of recoveries were:

 

 

 

 

2019

2018

 

£'000

£'000

Pawnbroking loans

 

9

14

 

The ageing of the Pawnbroking loans excluding those in the course of realisation is as follows:

 

 

2019

2018

 

£'000

£'000

Within contractual term

 

6,611

5,732

Past due

 

1,032

699

 

 

7,643

6,431

 

Cash and cash equivalents

The cash and cash equivalents balance comprises 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 loans

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, 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.

 

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 up to 60 day terms, see note 19.

 

 

Borrowings

The maturity analysis of the cash flows from the Group's borrowing arrangements that expose the Group to liquidity risk are as follows:

 

 

 

2019

2018

 

 

£'000

£'000

 

 

 

 

Bank borrowings

 

5,183

1,875

 

Amount repayable

 

 

 

In one year or less

 

5,183

1,875

In more than one year but no more than two years

 

-

-

In more than two years but no more than five years

 

-

-

 

 

5,183

1,875

 

The interest charged on bank borrowings is based on a fixed percentage above LIBOR. There is therefore a cash flow risk should there be any upward movement in LIBOR rates. Assuming the £10million revolving credit facility was fully utilised then a 1% increase in the LIBOR rate would increase finance costs by £100,000 pre-tax and reduce post-tax profits by £81,000.

 

Derivative financial instruments comprise of interest rate swap facilities that matured in October 2018. The movement in this liability is shown as a gain on fair value of derivative financial liability in the Statement of Comprehensive Income. For the year ended 31 March 2019 the gain was £40,000 (2018: £79,000)

 

Liabilities from financing activities include bank borrowings and obligations under finance leases. Bank borrowings at 31 March 2018 were all repaid during the year and the balance at 31 March 2019 was drawn during the year. The obligations under finance leases at 31 March 2018 which were due within one year have all been paid in the year with the remaining £1,000 which was due in greater than one year now included as a liability within a year at 31 March 2019. Amounts repaid in the year are shown in the consolidated Statement of Cash Flows.

 

16. Inventories

 

 

 

 

2019

2018

 

 

 

£'000

£'000

New and second hand inventory for resale (at lower of cost or net realisable value)

 

 

12,658

7,567

 

17. Trade and other receivables

 

 

 

2019

2018

 

 

 

 

£'000

£'000

 

Pawnbroking loans

 

 

7,643

6,431

 

Pawnbroking in the course of realisation

 

-

1,965

 

Pledge accrued income

 

1,669

1,025

 

Trade receivables

 

 

615

495

 

Other receivables

 

 

17

14

 

Prepayments and accrued income

 

 

962

683

 

 

 

 

10,906

10,613

 

 

18. Cash and cash equivalents

 

 

 

2019

2019

 

 

 

£'000

£'000

Cash and cash equivalents

 

 

13,420

14,619

 

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 bad and doubtful debts and fair values is provided in note 15.

 

19. Trade and other payables (current)

 

 

 

2019

2018

 

 

 

£'000

£'000

Trade payables

 

 

4,225

5,003

Other payables

 

 

423

336

Income tax liabilities

 

 

689

633

Other taxes and social security

 

 

216

198

Accruals

 

 

1,144

1,246

Deferred income

 

 

482

291

Bank borrowings

 

 

5,183

1,875

Obligations under finance leases (note 11)

 

 

1

8

 

 

 

12,363

9,590

 

£257,000 of the deferred income balance at 31 March 2018 has been recognised in the Statement of Comprehensive Income in the current year.

 

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 15.

 

Bank borrowings

 

The RCF facility was renewed during the year with an increase in facility size from £7m to £10m and an

increase in term for a further 3 years. Details of the facility are as follows:

 

Key Term

Description

 

 

 

 

 

Facility

Revolving Credit Facility with Clydesdale Bank Plc (trading as Yorkshire Bank)

Total facility size

£10m

 

 

 

 

 

Termination date

March 2022

 

 

 

 

 

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 LIBOR rate when the initial drawdown is made and for unutilised funds interest is charged at 0.84% from the date when the facility was made available.  The LIBOR rate is reset to the prevailing rate at every interest period which is typically one and three months.

Interest Payable

Interest is payable at the end of a drawdown period which is typically between one and three months.

Repayments

The facility can be repaid at any point during its term and re-borrowed,

 

Security

The facility is secured by a debenture over all the assets of Ramsdens Financial Ltd and cross guarantees and debentures have been given by Ramsdens Group Limited and Ramsdens Holdings PLC.

Undrawn facilities

At 31 March 2019 the group had available £4.7m of undrawn committed facilities.

 

 

Finance lease and hire purchase commitments

The Group has finance leases and hire purchase contracts for one motor vehicle. The Group's obligations under finance leases are secured by the lessor's title to the leased assets. Future minimum lease payments under finance leases and hire purchase contracts, together with the present value of the net minimum lease payments at 31 March 2019 is £1,000 (2018: £9,000).

 

20. Non-current liabilities

 

 

 

2019

2018

 

 

 

£'000

£'000

Obligations under finance leases (note 12)

 

 

-

1

Accruals

 

 

453

265

Deferred income

 

 

-

35

Derivative financial instruments

 

 

-

40

Deferred tax (note 10)

 

 

140

115

 

 

 

593

456

 

 

21. Issued capital and reserves

Ordinary shares issued and fully paid

 

 

No.

£'000

At 31 March 2018 & 31 March 2019

 

 

30,837,653

308

 

 

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 debt, which includes the borrowings disclosed in note 19, cash and cash equivalents and equity attributable to the equity holders of the parent, comprising issued capital, reserves and retained earnings.

 

 

22. Dividends

Amounts recognised as distributions to equity holders in the year:

 

 

2019

£'000

2018

£'000

 

 

 

Final dividend for the year ended 31 March 2018 of 4.4p per share

(31 March 2017 of 1.3p per share)

1,357

401

Interim dividend for the year ended 31 March 2019 of 2.4p per share

(31 March 2018 of 2.2p per share)

740

678

 

2,097

1,079

Amounts proposed and not recognised:

 

 

Proposed final dividend for the year ended 31 March 2019 of 4.8p per share

(31 March 2018 of 4.4p per share)

1,480

1,357

 

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 Group operates a defined contribution scheme for its directors and employees.  The assets of the scheme are held separately from those of the Group in an independently administered fund.

 

The outstanding pension contributions at 31 March 2019 are £36,000 (2018: £13,000).

 

24. Commitments and contingencies

 

Operating lease commitments - Group as lessee

At the date of the Statement of Financial Position, the Group had outstanding commitments for future minimum rentals payable under non-cancellable operating leases, which fall due as follows:

 

Land and buildings

 

 

 

2019

2018

 

 

 

 

£'000

£'000

Within one year

 

 

 

2,634

2,368

After one year but not more than five years

 

 

 

6,659

6,566

More than five years

 

 

 

2,743

1,673

 

 

 

 

12,036

10,607

 

 

 

 

 

 

Other

 

 

 

2019

2018

 

 

 

 

£'000

£'000

Within one year

 

 

 

89

61

After one year but not more than five years

 

 

 

130

36

More than five years

 

 

 

-

 

 

 

 

219

97

 

Significant operating lease payments represent rentals payable by the Group for rental of store premises. Leases are normally renegotiated for an average term of 10 years at the then prevailing market rate, with a break option after 5 years. Break clauses are ignored in the above calculations.

 

 

25. 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:

 

 

 

2019

2018

 

 

 

£'000

£'000

Short term employee benefits

 

 

772

946

Post employment benefits

 

 

39

43

Share based payments

 

 

151

119

 

 

 

962

1,108

 

 

26. Share based payments

The Company operates a Long-term Incentive Plan (LTIP). The charge for the year in respect of the scheme was:

 

 

 

 

2019

2018

 

 

 

£'000

£'000

LTIP

 

 

221

161

 

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. The LTIP commenced in March 2017, details were as follows:

 

 

 

Number of conditional Shares

Weighted average exercise price in pence

Outstanding at the beginning of the year

 

805,554

-

Granted during the year

 

220,000

-

Forfeited during the year

 

-

-

Exercised during the year

 

-

-

Outstanding at the end of the year

 

1,025,554

-

 

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 IFRS 2 and using the Black Scholes method for the EPS performance condition which is classified as a non- market condition under IFRS 2. 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

Model

Monte Carlo

Black Scholes

Monte Carlo

Black Scholes

Grant Date

02/07/2018

02/07/2018

13/03/2017

13/03/2017

Share Price

£1.75

£1.75

£1.06

£1.06

Exercise Price

£0.01

£0.01

£0.01

£0.01

Vesting period

2.75 years

2.75 years

3.05 years

3.05 years

Risk Free return

0.7%

0.7%

0.2%

0.2%

Volatility

30.0%

30.0%

27.0%

27.0%

Dividend Yield

4.0%

4.0%

7.5%

7.5%

Fair value of Option (£)

0.46

1.56

0.39

0.81

 

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.

 

27. Post Balance Sheet Events

As announced, on 28 May 2019, The Group has purchased 12 Loan books and 4 stores, from Instant Cash Loans Limited trading as The Money Shop, for a total consideration of £0.5m which has been settled in cash.  The purchase included the acquisition of £0.3m of pawnbroking loan book.

 

Parent Company Statement of Financial Position

As at 31 March 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

2018

 

Notes

 

 

 

 

Assets

 

 

 

£'000

£'000

Non-current assets

 

 

 

 

 

Investments

D

 

 

7,804

7,681

Deferred tax

E

 

 

167

84

 

 

 

 

7,971

7,765

Current assets

 

 

 

 

 

Receivables

F

 

 

3,708

3,511

Cash and short term deposits

 

 

 

7

27

 

 

 

 

3,715

3,538

Total assets

 

 

 

11,686

11,303

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

G

 

 

152

302

 

 

 

 

152

302

Net current assets

 

 

 

3,563

3,236

 

 

 

 

 

 

Total assets less current liabilities

 

 

 

11,534

11,001

 

 

 

 

 

 

Net assets

 

 

 

11,534

11,001

 

 

 

 

 

 

Equity

 

 

 

 

 

Issued capital

H

 

 

308

308

Share Premium

 

 

 

4,892

4,892

Retained earnings

 

 

 

6,334

5,801

Total equity

 

 

 

11,534

11,001

 

 

 

 

 

 

 

 

 

 

 

 

The Profit after Tax for the Company for the year ended 31 March 2019 was £2,339,000 (2018: £2,050,000)

 

These financial statements were approved by the directors and authorised for issue on 11 June 2019 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 31 March 2019

 

 

 

 

 

 

 

 

 

Share Capital

Share premium

Retained earnings

Total

 

 

 

 

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

As at 1 April 2017

308

4,892

4,598

9,798

Profit for the year

-

-

2,050

2,050

Total comprehensive income

-

-

2,050

2,050

 

 

 

 

 

Dividends paid

-

-

(1,079)

(1,079)

Share based payments

-

-

161

161

Deferred tax on share based payments

-

-

71

71

 

308

4,892

5,801

11,001

As at 31 March 2018

 

 

 

 

 

 

 

 

 

As at 1 April 2018

308

4,892

5,801

11,001

Profit for the year

-

-

2,339

2,339

Total comprehensive income

-

-

2,339

2,339

 

 

 

 

 

Dividends paid

-

-

(2,097)

(2,097)

Share based payments

-

-

221

221

Deferred tax on share based payments

-

-

70

70

As at 31 March 2019

308

4,892

6,334

11,534

 

 

 

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 September 2015.

 

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 Statement of Cash Flow, 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 Carlo 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.

 

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 is set out below

 

 

2019

2018

 

£'000

£'000

Remuneration receivable

538

654

Value of company pension contributions to money purchase schemes

23

25

Share based payments

98

78

 

659

757

                                                     

Remuneration of the highest paid director:

 

2019

2018

 

£'000

£'000

Remuneration receivable

232

312

Value of company pension contributions to money purchase schemes

10

15

Share Based Payments

64

50

 

306

377

 

The number of directors accruing retirement benefits under the money purchase scheme is 2 (2018: 2)

 

 

D. INVESTMENTS

Shares in subsidiary undertakings

2019

2018

 

£'000

£'000

Cost

 

 

Cost brought forward

7,681

7,845

Additions - Share based payments

123

83

Impairment - reduction in capital in Ramsdens Group Limited

-

(247)

Cost carried forward

7,804

7,681

 

Additions represent share based payment expense recognised in Ramsdens Financial Limited. The impairment in the previous year was the result of a reduction in capital in Ramsdens Group Limited. This reduction in capital facilitated a dividend paid by Ramsdens Group Limited to Ramsdens Holdings PLC of £250,000.

 

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 Group Limited

(Registered office: Unit 16 Parkway Centre, Coulby Newham, TS8 0TJ)

Ordinary Shares

100%

Dormant

Ramsdens Financial Limited

(Registered office: Unit 16 Parkway Centre, Coulby Newham, TS8 0TJ)

Ordinary Shares

100%

Supply of foreign exchange services, pawnbroking, purchase of gold jewellery, jewellery retail and related financial services.

E. DEFERRED TAX

Deferred tax relates to the following:

 

 

2019

2018

 

 

£'000

£'000

Deferred tax assets

 

 

 

Share based payments

 

167

84

 

 

167

84

 

Reconciliation of deferred tax assets

 

 

 

 

 

2019

2018

 

 

£'000

£'000

Opening balance as of 1 April

 

84

-

Deferred tax credit recognised in the Statement of Comprehensive Income

 

13

13

Other deferred tax

 

70

71

Closing balance as at 31 March

 

167

84

 

 

 

F. RECEIVABLES

 

2019

2018

 

£'000

£'000

Amounts owed by subsidiary companies

3,694

3,477

Prepayments

14

34

 

3,708

3,511

 

The expected credit losses on amounts owed by subsidiary companies is £nil.

 

 

G LIABILITIES: AMOUNTS FALLING DUE WITHIN ONE YEAR

 

2019

2018

 

£'000

£'000

Trade Payables

11

10

Other Creditors

92

261

Other taxes and Social Security

20

17

Current tax liabilities

29

14

 

152

302

 

 

 

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. POST BALANCE SHEET EVENTS

There were no post balance sheets events that require further disclosure in the financial statements.

 


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FR LLFLARIILLIA