Travelling abroad? Buy instore or online
for great exchange rates all year round
Treat yourself or a loved one
to new or pre-owned jewellery
Use your jewellery to access
cash when you need it
HELPING YOU WITH
EVERYDAY LIFE
Annual Report 2018
WHAT WE DO
Ramsdens is a diversified financial
services provider and retailer operating
in the following core segments:
HOW WE DO IT
Head quartered in Middlesbrough, with roots
that can be traced back to the 1970s, we
provide our products and services from 131
stores (including 4 franchised outlets) within
the UK and have a growing online offering for
Foreign Currency and Jewellery Retail.
oreign curre n c y
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MISSION
Our mission is to provide a great customer offering and give such fantastic service that
our customers become ambassadors for Ramsdens.
GROSS PROFIT
(taken from accounts in £000’s)
CONTENTS
STRATEGIC REPORT
Chairman’s statement
Chief executive’s review
Financial review
Principal risks and uncertainties
Corporate social responsibility
%
0
4
%
5
2
%
5
1
%
5
1
%
5
Other
services
4
6
14
16
19
CORPORATE GOVERNANCE
Board of directors
Corporate governance
Audit and risk committee
Nomination committee
Remuneration committee
Directors' report for
the year ended 31 March 2018
Statement of directors'
responsibilities
24
25
27
29
30
33
35
44
45
38
FINANCIAL STATEMENTS
Independent auditor’s report to the
members of Ramsdens Holdings PLC
Consolidated statement of comprehensive
income for the year ended 31 March 2018
Consolidated statement of financial
position as at 31 March 2018
Consolidated statement of changes in
equity for the year ended 31 March 2018
Consolidated statement of cash flows
for the year ended 31 March 2018
Notes to the consolidated
financial statements
48
Parent company statement of financial position
as at 31 March 2018
77
Parent company statement of changes
in equity for the year ended 31 March 2018 78
Notes to the parent company
financial statements
Company advisors
79
83
46
47
2
Ramsdens Holdings PLC - Annual Report 2018
A year of growth
Profitable and growing
FY18 was another year
of growth for Ramsdens.
£7.9m*
Underlying EBITDA grew by 31%
£6.5m*
Underlying PBT grew by 60%
(FY17: £6.0m)
(FY17: £4.0m)
Strong Balance Sheet
£27.6m
Net Assets up £4.2m
(£27.6m including cash of £14.6m)
(FY17: £23.4m)
Operational progress
£12.7m
Net Cash
(FY17: £9.5m)
£6.4m
Pawnbroking loan book increased 8%
£483m
Currency exchanged increased 18%
*The underlying figures above and below reflect earnings before interest, tax, depreciation and amortisation
(EBITDA) and profit before tax (PBT) adjusted for the share based payments charge and excluding
exceptional IPO costs. A full reconciliation is provided on page 15
Financial highlights
Gross profit
2018
£
2017
2016
£28 347
£24 288
£21 615
EBITDA*
Profit before tax*
Operating profit*
2018
2017
2016
£7 890
2018
£6 473
£6 010
2017
£4 053
£4 733
2016
£2 336
2018
2017
2016
£6 410
£4 553
£3 190
The figures above are underlying in £000's
3
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS CHAIRMAN’S STATEMENT
CONTINUED PROGRESS IN IMPROVING THE
PERFORMANCE ACROSS OUR CORE INCOME STREAMS
Ramsdens has a strong and trusted brand, a diversified
product offering and a loyal and growing customer base.
This has enabled the Group to deliver strong growth in
profit before tax, significantly ahead of the Board’s initial
expectations for the year. We are very pleased with this
result, which reflects the growing appeal and awareness of
the Ramsdens offering.
OUR BUSINESS
Ramsdens is a growing and diversified financial services
provider and retailer. The Group operates 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. During the
last financial year, the Group served more than 800,000
customers across its different services.
Andrew Meehan
Non-Executive Chairman
I am delighted to report to the
Group’s stakeholders on what has
been another very good year for
the Ramsdens business. This is
the Group’s first full financial year
as a public company and we have
continued to make great progress
in improving the performance
across our core income streams.
Revenue increased by 16% to
£39.9m
FY17 £34.5m
Underlying profit before tax*
£6.5m
FY17 £4.0m
* underlying PBT is adjusted for share based payments charge and
excluding exceptional IPO cost
4
Ramsdens Holdings PLC - Annual Report 2018 The business is headquartered in Middlesbrough and has
a proud heritage. The first Ramsdens store opened in
Stockton-on-Tees in May 1987. In addition to our recognised
and trusted brand, we have a well-invested store estate.
As at the year end, the Group operated from 131 stores
(including 4 franchised stores) within the UK (FY17: 127
stores including 3 franchised stores), supported by a growing
online presence.
In a market where trust is critical, Ramsdens is an
increasingly recognised brand in each of our four key
business segments and our continued investment in
marketing, store appearance and store location remain key
factors in supporting the Group’s growth.
FINANCIAL RESULTS & DIVIDEND
Group reported revenue increased by 16% to £39.9m
(FY17: £34.5m). This growth was primarily driven by strong
performances in foreign currency where the value of foreign
currency exchanged grew by 18% to £483m (FY17: £408m),
and retail jewellery sales, which increased by 35% to £8.0m
(FY17: £5.9m).
We are delighted that the Group delivered an underlying*
Profit Before Tax of £6.5m (FY17: £4.0m). This was
significantly ahead of the Board’s initial expectations for the
year. Earnings per share were 16.3 pence (FY17: 7.8 pence)
The Group’s financial position remains strong. We have a
strong net asset base, good cash generation and positive
indicators for growth.
The Board is recommending a final dividend of 4.4 pence
per share which, if approved at the shareholders AGM, will
take the full year dividend to 6.6 pence per share (FY17: 1.3
pence). Subject to approval at the AGM, the final dividend
is expected to be paid on 20 September 2018 to those
shareholders on the register as at 24 August 2018.
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
Central to Ramsdens’ continued success is our fantastic
team of highly skilled and committed people. I never cease
to be amazed by the infectious energy of the people I meet in
stores and at head office. I would like to take this opportunity
to thank everyone in the Ramsdens team for their continued
hard work and dedication during this outstanding year.
THE FUTURE
The FY18 financial year has started well and in line with the
Board’s expectations.
The macroeconomic environment remains uncertain and the
short to medium term headwinds facing UK retailers have
been well documented. The overall weakness of sterling
continues to benefit the sterling gold price which in turn
supports both our pawnbroking and precious metal buying
segments.
The Group will continue to execute its clear growth strategy
and expand our presence through new store openings whilst
also appraising attractive acquisition and consolidation
opportunities.
Customer demand for our products across our key business
segments remains strong. We have a diversified business,
a strong asset base, a loyal and growing customer base, a
committed team and a strong brand. These qualities give us
confidence to successfully deliver on the Board’s clear growth
strategy and make further progress in the year ahead.
6 June 2018
Group served over
Group operated from
800,000
CUSTOMERS
131
STORES
5
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS CHIEF EXECUTIVE’S REVIEW
ANOTHER YEAR OF STRONG GROWTH
DELIVERING OUR CLEAR GROWTH STRATEGY
The Ramsdens’ growth strategy remains unchanged and built
on the following pillars:
1 | Continuing to improve
the performance of
our core estate
2 | Expanding the
Ramsdens branch
footprint in the UK
3 | Developing our online
4 | Continuing to appraise
proposition
market opportunities
presented by
operating in a
challenging market
The Board believes that the strong balance sheet and
growing positive cash flows underpin the Group’s ability to
leverage the strength of a recognised high street brand with
a diversified offering. The Board is confident that Ramsdens
can continue to adapt and prosper, and is focused on
delivering strong and ongoing capital and income returns for
investors.
Peter Kenyon
Chief Executive Officer
It is a great pleasure to report
another year of strong growth.
We are seeing the benefits of
the investments made in the
Ramsdens brand, staff training,
stock levels, presentation of
retail jewellery, e-commerce
and store relocations come
through in the delivery of a
strong financial performance.
Adjusted* underlying profit
before tax of £6.5m represents
a 60% increase on the prior year.
We have seen very good growth across the Group with
foreign currency commission increasing 26% to £11.3m
(FY17 : £9.0m), retail jewellery gross profit rising 24% to
£4.1m (FY17: £3.3m) and pawnbroking interest growing by
14% to £7.0m (FY17: £6.1m).
*The underlying figure profit before tax above is adjusted for the share
based payments charge
6
Ramsdens Holdings PLC - Annual Report 2018 During the financial year, we have continued to make good progress against our strategy and mission:
1 Continuing to improve the performance of our
core store estate
2 Expanding the branch footprint in the UK
The Group has the opportunity to infill within existing
geographic territories, “ripple out” from existing
territories or seek new territories as it has in the past
with growing branch estates in Wales and Scotland.
Our medium-term strategy remains to grow the estate by
12 stores per annum.
During the year, the Group opened new stores
in Workington, Newton Mearns, Braehead and
Northallerton. Northallerton was the acquisition and
conversion of a jewellers into a Ramsdens branch.
Excluding franchised stores, the Group operated from
127 stores at the year-end
The Group has a continuous improvement philosophy. This
has resulted in initiatives to
• Increase staff skills, motivation and performance
rewards
• Increase the foreign currency margin and the average
transaction value
• Improve retail operations to generate more from the
pawnbroking loan book
• Increase the retail jewellery stock whilst maintaining
close control of stock turnover and discounting older
stock lines
• Investing in the retail jewellery proposition
• Cross selling services across the customer base
• Review store capacity and location
• Develop the new international money transfer service.
By increasing the performance of the existing stores, the
Group will improve the return on capital employed.
During FY18, the Group closed one store, merging it with a
nearby store in Middlesbrough.
Relocated four stores from suburban or secondary
locations to high street locations to reflect the shift from
pure pawnbroker to diversified FX and retail operator.
R
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Group revenue grew by 16% to £39.9m
Revenue by business segment
• Foreign currency £11.3m (only commission is
recognised as revenue net of delivery costs and
exchange rate movements)
• Pawnbroking £7.0m
• Purchase of precious metals £10.9m
• Retail jewellery sales £8.0m
• Other services £2.8m
s
I
P
K
Gross profit was £28.3m
Gross profit by segment
• Foreign currency £11.3m
• Pawnbroking £7.0m
• Purchase of precious metals £4.4m
• Retail jewellery sales £4.1m
• Other services £1.6m
7
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
CHIEF EXECUTIVE’S REVIEW continued
3 Developing our online proposition
Investment has been made in developing the www.
ramsdensjewellery.co.uk website which is a transactional
website focused on jewellery retail only.
Investment has also been made in selling jewellery on
eBay.
The website www.ramsdensforcash.co.uk has been
adjusted to have greater focus on foreign currency
exchange.
The above investments are the start of a journey to
improve the online proposition from Ramsdens in order for
the business to become multi-channel.
The ecommerce retail ‘branch’ was the best performing
gross retail jewellery sales branch in FY18.
The development of the online retail jewellery proposition
has also assisted visibility of stock across the branch
network allowing branches to sell stock not in their store
and thereby increase branch sales.
R
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E-commerce jewellery sales grew by 242%
s
I
P
K
Click and Collect foreign currency exchanged
grew by 117%
4 Continuing to appraise market opportunities
presented by operating in a challenging
market
The pawnbroking market was more stable in 2017
than it had been in previous years following significant
regulatory changes imposed on pay day lenders.
Banks and travel agents are closing locations which
results in customers seeking new local providers for
travel money.
Retail jewellery trading is challenging with some
independent jewellers closing.
During the year, the Group has considered various
small pawnbroking acquisition opportunities but did not
acquire any. The fact that businesses are being offered
for sale and / or simply closing reinforces our belief
that pawnbroking competition will continue to fall.
Over 800,000 customers used Ramsdens in FY18.
By segment:
• Foreign Currency 687,000
• Pawnbroking 34,000
• Purchase of precious metals 67,000
8
Ramsdens Holdings PLC - Annual Report 2018
At the heart of our growth strategy
is a continuous improvement
ethos. This can only be imbedded
across a business by the people
within it sharing a common
mission, having a willingness to
develop, being motivated to work
hard and maintaining a focus on
the customer.
Ramsdens team - Braehead branch
OUR PEOPLE
Our people are well trained and highly skilled which allows
the business to devolve decision making to staff close to
the customer. This empowerment helps Ramsdens’ people
to better engage with, and be part of, the local community,
which is a key contributor to the Group’s strong customer
relationships, high repeat business, growing customer
base and growing product penetration across services. It is
notable that the main source of customer acquisition remains
customer recommendation.
I would therefore like to take this opportunity to thank each
of my colleagues across the business for their contribution,
dedication and effort during this outstanding year.
THE RAMSDENS BRAND
During the year, the Group continued to invest in sports
sponsorship and TV advertising. This continues to contribute
to growing awareness of, and further establishing, the
Ramsdens brand.
From next season, Ramsdens will no longer be the main shirt
sponsor of Middlesbrough FC but will remain involved as
their currency partner and the Ramsdens name will appear
on the reverse of the shirt. The Group has a number of other
marketing opportunities that it is exploring to continue
expanding the brand’s awareness, increase customer
recognition and support the Group's growth.
The high repeat customer base for foreign currency exchange
and pawnbroking loans demonstrates the trust customers
have in Ramsdens to provide a great price for their foreign
currency and to look after their jewellery whilst in pledge.
IT AND INFRASTRUCTURE
During the first half of the year, we had an unauthorised
access to our IT system which did not impact any day to
day operations nor result in any confirmed data loss. We
reviewed our IT infrastructure and further invested in our IT
hardware, software and team to improve security and support
our long-term growth plans.
During the year, the Group has also focused on preparing for
GDPR which came into effect on 25 May 2018. I am pleased
that the Group has demonstrated its agility and flexibility to
fully prepare for the new legislation ahead of its introduction.
9
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS CHIEF EXECUTIVE’S REVIEW continued
The Group has a loyal and growing customer base. Our well
invested and established store estate served more than
800,000 registered customers in our last financial year.
y
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Foreign C
Paw
nbro
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O
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Our diversified
business model:
sales channels
Jewellery R e t a i
l
Precious m
E
-
C
O
M
M
E
R
C
E
i
g
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The Group has a diverse portfolio of 131 stores (including
four franchised outlets). The Group has a regular programme
of maintenance that ensures Ramsdens’ stores are in
good order. The growth strategy is to locate stores in
higher footfall locations representing the shift from ‘pure
pawnbroker’ to a diversified retailer. One of the new stores to
open was in Braehead, an Intu owned shopping centre near
Glasgow. This store has lifted the brand’s appearance and
awareness. New stores were also opened in Newton Mearns,
Workington and Northallerton. All stores are situated in the
main shopping areas. In addition, two suburban stores were
merged in Middlesbrough and four other stores relocated
to higher footfall locations, namely, Scunthorpe, Hamilton,
Lancaster and Stockton. Stockton was relocated to the town
centre shopping centre after 30 years in the same location
having been the original Ramsdens Pawnbrokers store. The
Group has a strong pipeline moving into the current financial
year and is committed to approximately 12 store openings per
annum over the medium term.
The Group’s primary trading website is
www.ramsdensforcash.co.uk which focuses
on foreign exchange services and allows
customers to buy, on a click and collect basis,
pre-paid travel cards or exchange currency.
In addition, the website acts as a portal to the
international money transfer service where payments
can be made online. The home delivery service
trial was stopped during FY18.
The Group’s second e-commerce site,
www.ramsdensjewellery.co.uk, was launched in
September 2016 and is focused on selling new and
second-hand jewellery.
Both sites are user friendly and operate on
mobile and tablet devices.
10
Ramsdens Holdings PLC - Annual Report 2018
OUR DIVERSIFIED BUSINESS MODEL: PRODUCT OFFERING
Ramsdens operates in the four core business segments of: foreign currency exchange; pawnbroking loans; precious metals
buying; and jewellery retail.
Foreign Currency Exchange
The foreign currency exchange 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.
In FY18, Ramsdens served almost 687,000 foreign currency exchange customers
and continues to enjoy a high rate of repeat customers with customer
recommendation remaining the biggest source of new customers. We estimate
that we have an average 12% market share in foreign exchange in the towns where
we operate with the opportunity to continue grow this share.
The foreign currency exchange service is the largest segment of the business at
40% of total gross profit (FY17: 37%). The volume of foreign currency notes sold or
purchased, including travel card “loads” and “top ups” grew by 18% to
£483m (FY17: £408m) and, with a focus on margin pricing, the commission
generated increased by 26% to £11.3m (FY17: £9.0m).
Improvements to the currency website proposition (www.ramsdenscurrency.
co.uk and www.ramsdensforcash.co.uk) has led to an increase in click and collect
volumes of 117% to £20.8m (FY17: £9.6m).
It should be noted that in FY18 the Group benefited from two pre Easter holiday
periods whereas there will not be one in FY19 due to the late Easter in 2019.
Pawnbroking
Pawnbroking is a small subset of the consumer credit market in the UK and a
simple form of asset backed lending where an item of value, known as a pledge (in
Ramsdens’ case, jewellery and watches), is given to the pawnbroker in exchange for
a cash 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 borrowed plus interest and selling
expenses. Pawnbroking is regulated by the FCA in the UK and Ramsdens is fully FCA
authorised.
Pawnbroking income has provided recurring and stable revenues for the Group in
recent years and represents 25% of total gross profit (FY17: 25%).
The improvements in the retail activities of the Group has enabled the Group to
offer customers higher loan amounts relative to the value of the pledged jewellery.
This has led to an increased loan book. The quality of the loan book has been
maintained with redemption percentages in line with previous years and the expired
portion of the book well controlled.
The capital value of the pawnbroking loan book increased from £6.0m to £6.4m, an
increase of 8%. Interest income, which includes the ultimate realisation of jewellery
sold or scrapped from forfeited pledges, increased by 14% to £7.0m (FY17: £6.1m)
and represented a 112% yield on the average loan book during the year.
FX customers
687,000
FX commission
£11.3m
Loan book
£6.4m
Interest income
£7.0m
11
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS CHIEF EXECUTIVE’S REVIEW continued
Purchases of precious metals
Through its precious metals buying and selling service, Ramsdens buys unwanted
jewellery, gold and other precious metals from customers for cash. 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 items not retailed are sold to a
bullion dealer for their intrinsic value and the proceeds are reflected in the accounts
as precious metals buying income.
The sterling gold price remained steady throughout FY18 which was ahead of the
Board's budgeted expectations. The weight of gold purchased was flat and profits
were broadly flat at £4.4m (FY17: £4.3m – actual year on year difference £20k),
representing 15% of total gross profit (FY17: 18%).
The Group has continued its strategy to increase jewellery retail stock levels to
assist jewellery sales.
Revenue
£10.9m
Gross profit
£4.4m
Jewellery retail
Ramsdens offers a value for money proposition in new and second-hand jewellery,
and the Board believes there is significant growth potential for Ramsdens in this
segment by leveraging its retail store estate, its e-commerce operations as well as
by cross-selling to customers of other services.
Revenue increase
35%
Jewellery retail revenue increased by 35% to £8.0m (FY17: £5.9m) and gross profit
increased by 24% to £4.1m (FY17: £3.3m). The gross margin fell from 56% to
52%. This was a result of a combination of: increased investment in high quality
watches which are high ticket but low margin sales; more new stock which is
at lower margin than refurbished jewellery bought from customers; and general
discounting to sell older and slower moving stock.
Jewellery retail now represents 15% of the Group's total gross profit (FY17: 14%).
Gross profit
£4.1m
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, Franchise Fees and Credit Broking.
Revenue from these services in FY18 was £2.8m (FY17: £2.7m) resulting in £1.6m
of gross profit (FY17: £1.5m). This represented 5% of the Group’s total gross profit
(FY17: 6%).
Gross profit
£1.6m
12
Ramsdens Holdings PLC - Annual Report 2018 Relocated
New
LOOKING AHEAD
We have a strong platform on which to
continue to build. The determination
of my colleagues to be successful at
what they do and their commitment to
our loyal and growing customer base
alongside the strengths of our improving
retail proposition, well invested stores
and IT infrastructure all give the Board
confidence for the future. I am confident
in Ramsdens’ ability to deliver on our
strategic objective and continue to grow.
6 June 2018
HIGHLANDS
Aberdeen
Elgin
Fraserburgh
Inverness
Peterhead
WEST
SCOTLAND
Glasgow Argyle
Street
Ayr
Clydebank
Dumbarton
Greenock
Irvine
Kilmarnock
Paisley
Partick
Glasgow Queens
Park
Saltcoats
The Forge
Newton Mearns
(2018)
Braehead (2018)
SOUTH
YORKSHIRE
Chesterfield
Doncaster
Goole
Grimsby
Hull Hessle Road
Hillsborough
Hull Holderness Road
Lincoln
Rotherham
Sheffield Moor
Scunthorpe (2017)
FRANCHISE
STORES
Bury
Harehills – Leeds
Whitby
Whitby (opened
2017)
EAST
SCOTLAND
Arbroath
Bathgate
Dalkeith
Edinburgh Dalry
Road
Edinburgh Duke
Street
Dundee
Dunfermline
Falkirk
Glenrothes
Grangemouth
Kirkcaldy
Livingston
Musselburgh
Perth
Stirling
CENTRAL
SCOTLAND
Airdrie
Bellshill
Coatbridge
Cumbernauld
Dumfries
East Kilbride
Hamilton (2017)
Kirkintilloch
Motherwell
Rutherglen
Springburn
Wishaw
WEST
WALES
Aberdare
Bridgend
Carmarthen
Ebbw Vale
Haverfordwest
Llanelli
Merthyr
Morriston
Neath
Port Talbot
Swansea
EAST
WALES
Cardiff Albany Road
Barry
Blackwood
Caerphilly
Cardiff Cowbridge
Road
Cwmbran
Llanrumney
Newport
Pontypridd
NORTH
ENGLAND
Ashington
Benwell
Berwick
Blyth
Byker
Cramlington
Gateshead
Jarrow
Killingworth
Newcastle
North Shields
Wallsend
Whitley Bay
NORTH EAST
ENGLAND
Billingham
Bridlington
Coulby Newham
Eston
Middlesbrough Gilkes
Street
Middlesbrough Hill
Street
Middlesbrough
Linthorpe
Northallerton (2018)
Redcar
Scarborough
Stockton (2017)
Thornaby
York
NORTH WEST
ENGLAND
Barrow
Bradford
Carlisle
Halifax
Huddersfield
Keighley
Kirkgate
Morley
Workington (2017)
Lancaster (2018)
NORTH CENTRAL
ENGLAND
Bishop Auckland
Sunderland The
Bridges
Chester le Street
Sunderland Chester
Road
Consett
Darlington
Durham
Hartlepool
South Shields King
Street
Newton Aycliffe
Peterlee
South Shields Prince
Edward Road
Southwick
Washington
13
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
FINANCIAL DIRECTOR'S REVIEW
ANOTHER YEAR OF STRONG GROWTH
Martin Clyburn
Chief Financial Officer
Gross profit was £28.3m for the
year ended 31 March 2018, an
increase of 17% on the prior year
(FY17: £24.3m) driven by growth
in all four core segments.
FINANCIAL RESULTS
The Group’s administrative expenses increased by 11% to
£21.9m (FY17: £19.7m). This increase primarily reflects an
increase in staff costs to support the growth of the business
and costs associated with being a PLC.
Finance costs have reduced by 71% to £0.2m (FY17: £0.6m)
reflecting the repayment of shareholder loan notes upon IPO
in February 2017.
Profit before tax increased 115% to £6.3m (FY17: £2.9m).
To provide a meaningful comparison to the prior financial
period and for future reporting periods, share based
payments and exceptional expenses which consist of IPO
related costs in FY17 have been removed to give the following
underlying results.
The underlying profit before tax was £6.5m an increase of
60% on the prior year of £4.1m.
The underlying EBITDA increased by 31% to £7.9m from
£6.0m in the prior year.
14
Ramsdens Holdings PLC - Annual Report 2018
A reconciliation between the Underlying and Statutory results
is provided below.
inventory levels by £2.2m (jewellery stock to facilitate higher
jewellery sales and stock for new branches) offset by an
increase in trade and others payables of £2.4m.
£000’s
Statutory profit before tax
Share based payments
Exceptional items
Underlying profit before tax
Finance costs
Gain on fair value of
derivative liability
Depreciation, amortisation
and loss on disposal
Underlying EBITDA
FY18
£6,312
£161
-
£6,473
£177
(£79)
£1,319
£7,890
FY17
£2,936
£7
£1,110
£4,053
£614
(£107)
£1,450
£6,010
EARNINGS PER SHARE AND DIVIDEND
The statutory basic and diluted earnings per share for the
year is 16.3p and 16.0p respectively up from 7.8p and 7.6p in
the previous year.
To aid comparison, prior year EPS, using the closing number
of shares and the profit after tax adjusted for exceptional IPO
costs, was 10.1p.
The Board is recommending a final dividend of 4.4 pence per
share in respect of FY18 (FY17:1.3 pence per share). This
brings the total dividend for FY18 to 6.6 pence per share
(FY17: 1.3 pence per share). Subject to approval at the AGM,
the final dividend is expected to be paid on 20 September
2018 to those on the register as at 24 August 2018.
This dividend is in line with the Board’s progressive dividend
policy reflecting the cash flow generation and earnings
potential of the Group. On the basis that there are sufficient
distributable reserves available at the time, 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.
CASH FLOW AND CASH POSITION
The net cash flow from operating activities was £5.6m.
This is after growing trade and other receivables by £1.3m
(principally the Pawnbroking loan book) and increasing our
£2.0m of the £7.0m revolving credit facility from Yorkshire
Bank was drawn (£1.9m net of borrowing costs) as at 31
March 2018 (FY17: £2.5m drawn, £2.3m net of borrowing
costs).
The overall increase in cash and cash equivalents was £2.7m
bringing the total to £14.6m (FY17: £11.9m). This, together
with an additional £5.0m being available to draw down
from the revolving credit facility provides the Group with
substantial funds to deliver its current stated strategy.
CAPITAL EXPENDITURE
During the financial year, the Group acquired a jeweller’s and
paid a goodwill premium of £80,000. The Group invested
£1.2m opening four new stores, relocating four existing stores
and in other leasehold improvements, fixtures and fittings and
IT equipment.
TAXATION
The tax charge for the year was £1.3m (FY17: £0.9m) at an
effective rate of 20.2% (FY17: 31.5%). The effective rate is
higher than the standard UK rate of corporation tax of 19%
(FY17: 20%) due to non-deductible expenses (notably IPO
exceptional expenses in FY17) and the timing difference
between depreciation charges and capital allowances. 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
£161,000 (FY17: £7,000). 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. The LTIP commenced with an initial grant in
March 2017, further details of which are given in note 25 of
the financial statements.
6 June 2018
15
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS PRINCIPAL RISKS AND UNCERTAINTIES
The Corporate Governance Report includes an overview of the Company’s approach to risk management and internal control
systems and processes.
Set out below are the principal risks and uncertainties that the Directors consider could impact the business. The Board
continually reviews the potential risks facing the Group and the controls in place to mitigate those risks and any potential
adverse impacts.
The Board recognises that the nature and scope of risks can change and that there may be other risks to which the Group is
exposed. The list is not intended to be exhaustive and excludes potential risks that the Board currently assess as not being
material.
Mitigating Factors
The Group mitigates this risk by having diversified income
streams which are to some extent counter cyclical and
assist in reducing the impact of a recession.
Where possible the Group has flexible property lease
arrangements being the biggest fixed cost after staff.
Risk and Impact
Economic Risk
The significant majority of the Group’s revenue is generated
in the UK to UK customers. A deterioration in the UK
economy may adversely affect consumer confidence to
travel abroad or buy luxury items.
The expected exit of the UK from the European Union
has created uncertainty on what any trade deal would be
going forward and its economic impact on the UK. There
are various recessionary impact analysis reports as a
consequence of Brexit with a wide variety of outcomes
dependent upon political bias.
Risks could be wide ranging from general economic
downturn to something more specific e.g. restrictions on
travelling to/from the UK.
Regulatory
The risks are that the business may lose its regulatory
approvals, breach other regulations or there are changes
in regulation which impact the Group’s ability to trade,
increase administration costs or result in financial penalties.
The Group has an experienced Board. The Directors receive
legal advice from advisers and through various memberships
of trade associations the Board are always made aware of
regulatory changes.
The Group must be FCA authorised to offer its pawnbroking
and credit broking services and is a registered Money
Service Business (MSB) with HMRC for foreign currency
exchange and cheque cashing.
The Group has well developed IT systems, operational
controls, comprehensive training and a rigorous compliance
monitoring program in order to maintain adherence to
legislation.
16
Ramsdens Holdings PLC - Annual Report 2018 IT Security
The risk is that a malicious attack causes a data breach or
the IT system to fail and lead to business interruption and
reputational damage.
The Group has a significant reliance on the stability and
security of its IT system including to track inventory, record
and process transactions, summarise results and manage its
business. All aspects of the operation of the business, both
customer facing as well as internal management, regulation
and control is reliant on the IT and software systems of the
Group.
Following our cyber incident during the year, policies and
procedures were amended. There was an increase in the
number of access protocols, all data held was reviewed
and greater encryption employed and where possible data
was “air gapped” and stored where remote access is not
possible.
The Group has a comprehensive business continuity plan
to minimize the impact to the business should the IT
systems fail. This continues to be tested regularly as is data
restoration from daily data back ups.
There have been an increasing number of well published
cyber attacks including that against Ramsdens.
The Group continues to undertake annual penetration
testing to test the infrastructure and data security.
Reputation
The risk is that adverse publicity, or customer comment
through social media will have an adverse material impact
on its brand and customers using the stores and websites.
The Group’s financial performance is influenced by the
image, perception and recognition of the Ramsdens
brand. Many factors such as the image of its stores,
its communication activities including marketing, public
relation, sponsorship, commercial partnerships and its
general corporate and market profile all contribute to
maintain the reputation of a brand you can trust. The Group
is also well aware that customer recommendations are
critical to growing the business and that poor service will be
detrimental to that objective.
Exchange Rate Risk
Whilst the Group trades exclusively in the UK, the foreign
exchange cash held in store is exposed to the risks of
currency fluctuations. The value is mainly in Euro and US$
stocks.
The internal IT team continues to assess daily any
vulnerability to potential cyber threats and uses anti-virus
software to protect the systems integrity.
The Group has cyber insurance appropriate to its risk
profile.
The Group invests heavily in its staff development and
measurement of customer service, through customer
surveys, mystery shops using video and internal audits.
Complaints are reviewed with a root cause analysis
approach so that processes and policies are changed if
required.
The Group uses a mix of monthly and weekly derivative
financial instruments to hedge against adverse exchange
rate movements in its two key currencies, Euros and US
dollars.
There is the daily risk of buying today, receiving the
currency the next day, and subsequently selling it and being
susceptible to movements in the exchange rate.
The policy has been developed over time in conjunction with
our hedging suppliers and reviewed by Manchester Business
School.
There is a period end risk for the FX stock which remains in
the branch tills.
17
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS PRINCIPAL RISKS AND UNCERTAINTIES continued
Gold Price
The Group is sensitive to movements in gold prices and the
prices of other precious metals.
A fall in the price of gold and silver and other precious
metals may reduce the value of the Group’s assets and
adversely affect liquidity.
A significant and sustained decline in the price of gold would
adversely affect the value of jewellery pledged as collateral
by pawnbroking customers and the stock held by the Group.
This may also affect volume of jewellery sales and default
rates on pawnbroking loans.
The Group forecasts using sensitised gold prices.
The Group has the flexibility to amend its lending and buying
parameters at short notice. It also has a greater focus on
the retail of jewellery as the disposition route rather than
obtaining the intrinsic value of the precious metal held as
security or purchased.
The Group could use derivative financial instruments to hedge
against adverse gold price movements.
Liquidity and forecasting risk
The risk is that the Group runs out of cash, this could be as
a result of non performance reducing profitability and cash
generation, expanding too fast, or poor budgetary planning.
The Group has a strong balance sheet with a healthy cash
position supported by a medium term revolving credit finance
facility from Clydesdale Bank trading as Yorkshire Bank.
There is the risk the bank or merchant card supplier
becomes insolvent and we no longer have access to our
credit funds or our card takings.
A reduction in cash for investment will have a significant
impact on the Group’s ability to deliver its strategy of
opening new stores.
Credit Risk Assessment
There is a risk that the staff assessment of the articles
pawned are overvalued increasing credit risk. The Group
is wholly reliant on the article pledged should a customer
default.
Financial crime
The Group is at risk to crime internally and externally.
This could expose the Group to financial losses as a result
of the loss of assets, reimbursement of customers or other
business partners, or due to fines or other regulatory
sanctions, which could also significantly damage the
Group’s reputation.
The Group currently has credit bank balances held with
Barclays Bank and Clydesdale Bank trading as Yorkshire
Bank. The Group currently uses Barclaycard to process its
merchant transactions.
The Group uses a bespoke financial modelling tool to help
predict future cash flows to ensure it has sufficient cash
resources.
The Group has invested in training programs and IT systems
to help the customer facing store staff to accurately
value customer assets. The store staff are supported by
experienced and skilled Area Managers and product experts.
Should loans not be repaid the Group can rely on the intrinsic
value of the stones and metal pledged but can maximise
returns by focusing on, and improving, its jewellery retail
operations.
It should be noted the risk is spread over approximately
34,000 customers and the average pawnbroking loan is £218.
The Group mitigates this risk by having a robust IT system, an
independent internal audit department which randomly audits
branches and head office departments at least twice per
annum and an active centralized compliance and risk function
looking for abnormal patterns in transactions. Processes,
systems and controls are continually being developed and
have been updated in the year.
The Group has high levels of physical security and
sophisticated alarm systems for its stores and head office.
The Group retains all customer data behind two firewalls and
utilises data encryption.
The Group maintains business insurance for material losses.
18
Ramsdens Holdings PLC - Annual Report 2018 CORPORATE SOCIAL RESPONSIBILITY
IT IS OUR PEOPLE THAT MAKE THE SUCCESS
OF RAMSDENS POSSIBLE
We are very grateful for the
opportunity given to us by
Ramsdens to raise awareness
of our vital work in the local
community. Support from
businesses like Ramsdens and
Middlesbrough FC ensures that
we can continue this work.
Maureen Thompson, Chief Executive
at Teesside Hospice
19
19
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS CORPORATE SOCIAL RESPONSIBILITY continued
Peter Kenyon
Chief Executive Officer
PEOPLE
The pursuit to do things better is only possible because of
the hard work, dedication and enthusiasm of the people
within the business. In return we are committed to create a
working environment in which they can grow and develop, be
well rewarded and well respected for what they contribute.
The Group is committed to supporting the people within
the business by facilitating their development through
comprehensive training programmes from a week long
classroom based induction into the business, instore
mentoring supported by elearning and area face to face
training sessions, having one to one development discussions
with all staff through to a Senior Management Leadership
program for the top 30 people influencers in the business.
We believe in appointing the best person based purely on
merit to any role within the business and where possible
promoting from within. The two Regional Managers, four of
the nine Area Managers and four of the six Internal Auditors
and over 50% of the Branch managers were promoted from
within the business.
The Group has a philosophy of wanting to share the financial
success of the business with staff. In addition to basic
remuneration of pay and pension, each member of staff in
head office or branch has the ability to earn a performance
related bonus. The Group has introduced health insurance for
its senior management team and will extend the participation
in its second LTIP scheme. All staff benefited from their
birthday being an additional day’s holiday in our last financial
year and will do so again in the current financial year.
Staff engagement is important to the Board. The Group
operates a staff suggestion scheme and a department
feedback scheme. Both are well supported as our people
contribute to how we can continue to evolve and improve our
products or processes. A centrally issued weekly newsletter
keeps all staff informed on Group matters.
ENVIRONMENTAL AND COMMUNITY INITIATIVES
The Group continues to invest in varying recycling and energy
savings initiatives such as LED lighting and with its foreign
currency exchange service, providing customers their currency
in a clear plastic bag which is the exact size to meet the airline
requirements for carrying liquids on board in hand luggage.
The Group has sought assurance from its suppliers that they
have no modern slavery practices within its supply chains.
The Group’s statement on its compliance with the Act is
included on our websites.
The Group is committed to engaging with its local
communities and has assisted in a variety of fundraising
initiative’s raising money for both national and local charities.
The biggest event saw Ramsdens donate their advertising
assets at Middlesbrough Football Club to two Teesside
charities for a league game against Reading in February.
The names of Teesside Hospice and Butterwick Hospice
appeared across the front of Middlesbrough FC player’s shirts
as well as a text to donate and win scheme appearing on
advertising boards, stadium TV screens and LED perimeter
advertising. As a direct result of the charity takeover within
the stadium, plus profits from the sale of player’s shirts on
eBay, bucket collections and a Boro Legends Sportsman’s
Dinner, the charity takeover raised over £18,000.
In addition, through donations of jewellery for raffle prizes
and auctions, the Company has also supported MacMillan,
Save the Children, Middlesbrough and Teesside Philanthropic
Foundation, Finlay Cooper Foundation, Motor Neurone
Disease Association and promoted a matched funding
scheme for staff taking part in various fundraising initiatives
in their local communities around the country.
The strategic report, as set out on pages 4 to 21, has been
approved by the board.
By order of the Board
6 June 2018
20
Ramsdens Holdings PLC - Annual Report 2018 Football is a large part of every
community and touches the
lives of people of all ages, our
hospice services mirror that
and having the opportunity to
raise awareness of our Charity
within the local community is
vital to our work.
Debbie Jones, Chief Executive
at Butterwick Hospice
21
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS CORPORATE
GOVERNANCE
22
Ramsdens Holdings PLC - Annual Report 2018
Treat yourself or a loved one
to new or pre-owned jewellery
Ramsdens Holdings PLC - Annual Report 2018
23
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS BOARD OF DIRECTORS
EXECUTIVE DIRECTORS
Peter Edward Kenyon (53)
Chief Executive Officer
Peter joined Ramsdens in November 2001 as Operations Director and was appointed Chief
Executive Officer in January 2008. Peter led the MBO in 2014 and has been responsible for
over 25 acquisitions for the Group. He is responsible for overseeing all operations of the
business and for deciding the Group’s strategy. Prior to joining Ramsdens, Peter’s early career
was with Yorkshire Bank for 17 years. He is a Council Member the National Pawnbrokers
Association and became a director of the Company at the time of the MBO in September 2014.
External appointments – Peter is a director of The National Pawnbrokers Association.
Martin Anthony Clyburn (36)
Chief Finance Officer
Martin joined Ramsdens in 2009 and is a Chartered Accountant having previously qualified
with respected North East firm, Keith Robinson & Co. Martin joined the board of the Company
as Chief Financial Officer in August 2016. Martin is responsible for the Finance, IT and
Compliance & Risk functions within the Group. Martin lectured part time at the University of
Teesside from 2006 – 2012. Martin holds a degree in MORSE from Warwick University.
External appointments – none
Andrew David Meehan (63)
Non-Executive Chairman
Andy is a highly experienced retail executive with over 30 years’ experience including CEO and
CFO in roles at the Co-Operative Retail Services, Storehouse plc and Sears plc. For the last 10
years he has held a number of chairmanships and non-executive positions in several retail and
consumer product businesses including Fortnum and Mason, GHD Group and American Golf.
Andy is a Chartered Accountant and holds a degree in Politics and Economics from Oxford
University and has been Chairman of the Company since September 2014.
External appointments – Andy is a director of Lanthorne Limited ,Cheviot Court (Luxborough
Street) Limited and Chairman of University Hospitals Coventry and Warwickshire NHS Trust
and Mayday Trust University Hospitals Coventry and Warwickshire Charity and Mayday Trust
University Hospitals Coventry and Warwickshire Charity.
Simon Edward Herrick (54)
Non-Executive Director
Simon joined the board of the Company on 1 January 2017. Simon has significant experience in
senior finance roles including positions as CFO of Debenhams plc, Northern Foods PLC, Kesa
Electricals plc and PA Consulting Limited. Since leaving Debenhams, Simon has undertaken
consultancy work in a number of sectors, most recently as Interim CEO of Blancco Technology
Group PLC. Simon is a Chartered Accountant and holds an MBA from Durham University.
External appointments – Simon is a director of 53Herrick Limited, Herrick Inc Limited, Sports
Punk Limited, Blancco Technology Group PLC, Blancco -UK Limited, Blancco Trustees Limited,
Blancco (Software) Services Limited, Blancco Finance Limited, Blancco Central Services Limited,
Blancco APAC PTE Limited, Blancco Japan Limited, Blancco Technology Beijing Co Limited.
Stephen John Smith (60)
Non-Executive Director
Steve joined the board of the Company on 1 January 2017. Stephen retired as CEO of
Northgate plc in 2010 after a career with Northgate spanning over 20 years. Since leaving
Northgate, Steve has served as a non-executive director on the boards of various family and
private equity backed businesses, including four positions as Chairman. Steve is a Chartered
Accountant and holds a degree in Economics from the London School of Economics.
External appointments – Steve is a Director and Chairman of Kitwave Ltd, Procomm Site
Services Ltd and Nixon Hire Ltd.
NON-EXECUTIVE DIRECTORS
24
Ramsdens Holdings PLC - Annual Report 2018 CORPORATE GOVERNANCE
Andrew Meehan
Non-Executive Chairman
Chairman’s Introduction
The Directors recognise the importance of sound corporate
governance. The Company is now a member of the Quoted
Companies Alliance (QCA) and is adopting its Corporate
Governance Code.
This statement describes how the company applies the
principles of good corporate governance in the best interests
of all stakeholders in the business.
The Composition of the Board
The board comprises of five directors, three Non-Executive
directors who are all considered independent and two
Executive directors. The Board has a mix of skills, experience
and backgrounds.
How the Board operates
The Board is responsible reviewing, formulating and approving
the Group’s strategy, budgets and corporate actions and
oversee the Group’s progress towards its goals. This is
formally documented in a schedule of matters reserved for
board approval and include:
• Strategy and Business Plans, including annual budget,
new stores and acquisitions
Internal controls on risk management and policies
• Structure and Capital including dividends
• Financial reporting and controls
•
• Significant contracts and expenditure
• Communication with shareholders
• Remuneration and employment benefits
• Changes to the board composition
Board Meetings
The board has met eleven times in the year above its stated
minimum 10 meetings. For all board meetings, an agenda
is established and papers circulated in advance so that all
Directors can give due consideration to the matters in hand.
The board papers have the following standing items; the
matters discussed include:
• Update on all governance legal, health & safety and
risk matters
• Financial performance review including cash flow
management
• Operating performance against KPIs
• Progress on all strategic aims of the business including
new stores and acquisitions
• Proposals on any areas of major expenditure
The Board receives reports from the Executive directors to
enable it to be informed of and supervise the matters within
its remit. The Board considers at least annually the Group’s
strategic plan and, on a regular rolling basis, the Board
receives presentations from senior managers on key areas of
the Group’s operations.
The following table shows directors attendance at scheduled
board and committee meetings during the year.
Board
Audit
Remuneration
Nomination
Andy Meehan
11/11
Simon Herrick
11/11
Steve Smith
Peter Kenyon
11/11
11/11
Martin Clyburn
11/11
3/3
3/3
3/3
2/2
2/2
2/2
2/2
2/2
2/2
Board decisions and activity during the year
The board has a schedule of regular business, financial and
operational matters and each Board Committee has compiled
a schedule of work to ensure that all areas for which the
Board has responsibility are addressed and reviewed
during the course of the year. The Chairman, aided by the
Company Secretary, is responsible for ensuring the Directors
receive accurate and timely information. The Company
Secretary compiles the Board and Committee papers which
are circulated to the Directors prior to the meetings. The
Company Secretary also ensures that any feedback or
suggestions for improvement on Board papers is fed back to
management. The Company Secretary provides minutes of
each meeting and every Director is aware of the right to have
any concerns minuted.
In addition to the board meetings there is regular
communication between the Executive and Non-Executive
Directors including where appropriate updates on matters
requiring attention prior to the next board meeting.
Board Committees
The board has delegated specific responsibilities to the Audit,
Remuneration and Nomination Committees. Each Committee
has terms of reference setting out its duties, authority and
reporting responsibilities. The terms of reference of each
Committee are kept under review to ensure they remain
appropriate and reflect any changes in legislation, regulation
or best practice. Each committee comprises the Non-
Executive directors.
25
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
CORPORATE GOVERNANCE continued
Board effectiveness
Election of Directors
The skills and experience of the Board are set out in their
biographical details on page 24. The experience and knowledge
of each of the Directors gives them the ability to constructively
challenge strategy and scrutinise performance.
The Board has adopted the UK Corporate Governance code’s
recommendation that all Directors will offer themselves for
election at each AGM.
Each of the Non Executive Directors has spent time in stores and
head office speaking with employees for an informal view of the
business from the ground up.
The Chairman led specific discussions on the effectiveness of
the Board, each member’s contribution and how the Board can
develop its effectiveness. No major changes to the function
and focus of the Board arose from this evaluation, however, the
findings will be used as the basis of future discussions by the
Board, and the Nomination Committee, when considering short
and long term succession planning. The Chairman will continue
to meet regularly with the Non-Executive Directors without the
Executive Directors being present.
There are no plans to change the Board composition at this time.
Time Commitments
The Board is satisfied that the Chairman and each of the Non-
Executive and Executive Directors continue to be able to devote
sufficient time to the Company’s business.
Development
The Company Secretary ensures that all Directors are kept
abreast of changes in relevant legislation and regulations, with
the assistance of the Group’s advisers where appropriate.
Executive Directors are subject to the Groups performance
review process through which their performance against
objectives is reviewed and their personal and professional
development needs considered.
External Appointments
In the appropriate circumstances, the Board may authorise
Executive Directors to take non-executive positions in other
companies and organisations provided the time commitment
does not conflict with the Director’s duties to the Company.
The appointment to such position is subject to the Boards
approval. The Board has authorised Peter Kenyon to be a
director of the National Pawnbrokers Association, the trade
body for pawnbroking.
Conflicts of Interest
At each meeting, the Board considers Directors’ conflicts of
interest. The Company’s Articles of Association (Articles) provide
for the Board to authorise any actual or potential conflicts of
interest.
Directors’ and Officers’ Liability Insurance
The Company has purchased Directors’ and Officers’ liability
insurance as allowed by the Company’s Articles.
Risk Management and Internal Controls
The Board has ultimate responsibility for the Group’s system
of internal control and for reviewing its effectiveness.
However, any such system of internal control can provide
only reasonable, but not absolute, assurance against material
misstatement or loss. The board considers that the internal
controls in place are appropriate for the size, complexity and
risk profile of the Group. The principal elements of the Group’s
internal control system include:
• Day to day management of the activities of the Group by
the Executive Directors;
• An organisation structure with defined levels of
responsibility including a comprehensive compliance
and risk function. The Head of Compliance and Risk
maintains a risk register, compliance monitoring
program and reports to the Executive Directors at least
monthly and to the Board at least twice per year;
• A detailed annual budget is prepared including profit
and loss, balance sheet and cash flow. The budget is
approved by the Board;
• Detailed monthly reporting of performance against
budget; and
• Central control over key areas of capital expenditure,
commercial contracts, litigation and treasury.
The Group continues to review its system of internal control to
ensure compliance with best practice, whilst also having regard
to its size and resources available.
Relations with Shareholders
The Group intends to maintain communication with institutional
shareholders through individual meetings with Executive
Directors, particularly following publication of the Group’s
interim and full year preliminary results. Private shareholders
are encouraged to attend the AGM at which the Group’s
activities are considered and questions answered. General
information about the Group is available on the Group’s
website; www.ramsdensplc.com. The Non-Executive Directors
are available to discuss any matters stakeholders might wish
to raise, and the Chairman and Non-Executive Directors will
attend meetings with investors and analysts as required.
Investor relations activity and a review of the share register are
standing items on the board agenda.
Annual General Meeting (AGM)
The Company’s AGM will take place on 18th July 2018. The
Annual Report and Accounts and Notice of the AGM will be
sent to shareholders at least 20 working days prior to this date.
26
Ramsdens Holdings PLC - Annual Report 2018
AUDIT AND RISK COMMITTEE
Simon Herrick
Chair of the Audit
and Risk Committee
On behalf of the Board, I am
pleased to present the Audit and
Risk Committee report for the
year to 31 March 2018.
The Audit and Risk Committee is responsible for ensuring that
the financial performance of the Group is properly reported
and reviewed. Its role includes monitoring the integrity of the
financial statements (interim and annual accounts and results
announcements), reviewing any changes to accounting policies,
reviewing and monitoring the extent of the non-audit services
undertaken by external auditors, advising on the appointment
of external auditors and reviewing the effectiveness of the
Group’s internal controls and risk management systems.
Members of the Audit and Risk Committee
The Committee consists of myself as Chair and my two fellow
Non-Executive Directors, Stephen Smith and Andrew Meehan.
The Committee has met three times in the period. The Board
is satisfied that I, as Chair of the Committee have recent and
relevant financial experience. I am a chartered accountant and
serving Chief Financial Officer at Blancco Technology Group
PLC. I have previously served as Chief Financial Officer at
Debenhams plc and Northern Foods PLC. I report to the Board
on all issues discussed by the Committee and present the
Committee’s recommendations. The Committee also meets
the external auditors without any Executive directors or senior
management present.
Duties of the Committee
The main duties of the Audit and Risk Committee are set out
in its terms of reference. The Committee will meet a minimum
twice per year.
The main items of business considered by the Committee to
date have been:
• Review of the financial statements and Annual Report;
• Consideration of the external audit report and
management representation letter;
• Review of the suitability of the external auditor;
• Going concern review; and
• Review of the risk management and internal control
systems including the internal compliance and risk
function and compliance monitoring program.
Role of the External Auditor
The Audit and Risk Committee monitors the relationship with
the external auditor, Ernst & Young LLP, to ensure that auditor
independence and objectivity are maintained. As part of its
review the Committee monitors the provision of non-audit
services by the external auditor and assesses the auditor’s
performance. Having reviewed the auditor’s independence and
performance the Audit and Risk Committee recommends that
Ernst & Young LLP be re-appointed as the Company’s auditor at
the next AGM.
Audit process
The auditor prepares an audit plan for the review of the year’s
financial statements. The audit plan sets out the scope of
the audit, areas to be targeted and audit timetable. The plan
is reviewed and agreed in advance by the Audit and Risk
Committee. Following the audit, the auditor presented its
findings to the Audit and Risk Committee for discussion.
The Audit and Risk Committee also has discussions with
the Auditor, without the management being present, on the
adequacy of controls and on any judgemental areas. The
Auditor’s report can be found on pages 38 to 43.
Internal Audit
The Group has a compliance and risk function which under the
direction of the Audit and Risk Committee undertakes asset
verification checks of all branch and head office departmental
cash, pledge and inventory balances and processes for
adherence to policies and procedures. The compliance and
risk function meets on a fortnightly basis with at least one
Executive Director and the minutes of those meetings are
reviewed by the Audit and Risk Committee.
Risk Management and Internal Controls
As described on page 26, the Group has established a
framework of risk management and internal control systems,
policies and procedures. The Audit and Risk Committee is
responsible for reviewing the risk management and internal
control framework and ensuring it operates effectively. During
the year, and following the cyber incident, the Committee
discussed at length how it was possible that unauthorised
access had been gained to the IT system and what changes
had been made to stop a potential recurrence. The Committee
control systems in place are currently operating effectively.
27
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS AUDIT AND RISK COMMITTEE continued
Whistleblowing
The Group has in place a whistleblowing policy which sets out
the formal process by which an employee of the Group may,
in confidence, raise concerns about possible improprieties
in financial reporting and other matters. Whistleblowing is a
standing item on the Committee’s agenda and updates are
provided at each meeting. During the period there were no
incidents for consideration.
Anti-Bribery
The Group has in place an anti-bribery and anti-corruption
policy which sets out its zero tolerance position and provides
information and guidance to those working for the Group on
how to recognise and deal with bribery and corruption issues.
During the period there were no incidents for consideration.
Going Concern
The Directors have prepared a detailed forecast with a
supporting business plan for the foreseeable future. The
forecast indicates that the Group will remain in compliance
of its banking covenants throughout the forecast period. As
such, the Directors have a reasonable expectation that the
Company and the Group has adequate resources to continue
in operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis in
preparing financial statements.
28
Ramsdens Holdings PLC - Annual Report 2018 NOMINATION COMMITTEE
Andrew Meehan
Chair of the
Nominations Committee
On behalf of the Board I am
pleased to present the
Nomination Committee report for
the year ended 31 March 2018.
Members of the Nomination Committee
The Nomination Committee consists of myself and my fellow
Non-executive Directors, Simon Herrick and Steve Smith.
Duties of the Nomination Committee
In carrying out its duties, the Nomination Committee is
primarily responsible for:
•
Identifying and nominating individuals to fill Board
vacancies
• Evaluating the structure and composition of the
Board with regards the balance of skills, knowledge,
experience and making recommendations accordingly
• Drafting the job descriptions of all Board members
• Reviewing the time requirements of the Non-Executive
Directors
• Giving full consideration to succession planning
• Reviewing the leadership of the Group
The Committee is scheduled to meet once a year but it will
meet more frequently if required. The Committee reports
to the Board on how it has discharged its responsibilities in
accordance with its terms of reference.
Activity during the year
The Committee discussed the skills, experience and diversity
of the current Board and committee members taking into
account the current and future needs of the Group, its culture
and strategic objectives. The Committee believes that the
Board has the necessary balance of skills, knowledge and
experience for its current needs. The Committee believes that
the Directors are able to devote sufficient time to the Group,
taking into account their other Directorships.
The Committee discussed long term succession planning
and emergency cover at Board level and of the senior
management team. The senior management team is relatively
young and the Committee is fully supportive of the Leadership
development programme that commenced during the last
financial year which will further develop the team and identify
potential senior leaders of the future.
The Committee reviewed but made no amendment to its
terms of reference with its main objective of ensuring that
an appropriate management framework and governance
structure remains in place.
29
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS REMUNERATION COMMITTEE
Simon Herrick
Chair of the Remuneration
Committee
On behalf of the Board I am
pleased to present the Directors’
Remuneration Report for the year
ending 31 March 2018 (FY18)
which sets out the remuneration
policy and the remuneration paid
to the Directors for the year.
Composition and Role
Executive Directors’ Service Contracts
The Remuneration Committee consists of myself and my
fellow Non-Executive Directors, Andy Meehan and Steve
Smith. The Committee operates under the Group’s agreed
terms of reference and is responsible for reviewing all senior
executive appointments and determining the Group’s policy
in respect of terms of employment including remuneration
packages of Executive Directors. The remuneration
Committee met twice during the year.
Remuneration Policy
Our remuneration policy adopted on AIM is to:
The Executive Directors signed new service contracts with
the Company on admission to AIM. These are not of fixed
duration and terminable by either party giving 12 months
written notice.
Non-Executive Directors
The Non-Executive Directors signed letters of appointment
with the Company on admission to AIM for the provision of
Non-Executive directors’ services, which may be terminable
on giving three months written notice. The Non-Executive
Directors’ remuneration is determined by the Board.
•
Include a competitive mix of base salary, pension,
annual bonus and long term incentives, with an
appropriate proportion of the package determined by
stretching targets linked to the Group’s performance;
• Promote the long-term success of the Group in line
with our strategy; and
• Provide appropriate alignment between the interests
of shareholders and executives including minimum
shareholdings.
30
Ramsdens Holdings PLC - Annual Report 2018 Directors Remuneration
The following table summarises the total gross remuneration of the Directors who served during the year to 31 March 2018.
FY18
Basic salary
Bonus
Pension
LTIP
PHI
Total
FY17
Total
£177,500
£134,000
£15,000
£49,921
£1,105
£377.526
£207,083
£113,333
£92,400
£9,996
£27,734
£635
£244,098
£57,504
£42,000
£35,000
£57,504
£42,000
£35,000
£68,333
£92,424
£89,677
£31,545
£10,500
£8,750
£425,337
£226,400
£24,996
£77,655
£1,740
£756,128
£508,312
Executive
Peter Kenyon
Martin Clyburn*
Kevin Brown**
Michael Johnson**
Non- Executive
Andy Meehan
Simon Herrick
Steve Smith
Aggregate
remuneration
*Martin Clyburn’s remuneration above relates only to the period after which he became a director of the Company in
August 2016.
**Kevin Brown and Michael Johnson resigned as directors of the Company prior to admission to AIM and the above relates to
their period as directors of the Company.
As detailed in the Strategic Report and Financial Review, Ramsdens has delivered strong results and made progress against
its stated strategic priorities. Based on FY18 underlying PBT of £6.5 million the Executive Directors will receive 77% of their
maximum annual bonus opportunity.
The Remuneration Policy for FY19 will operate as follows:
Total
remuneration
(Pay and
pension)
Private Health
Insurance
Bonus
The bonus opportunities for the FY19 financial year will be
assessed against the Group’s profit and against personal
performance objectives. The bonus percentage will adjust
from zero to a maximum of 100% set against challenging
performance targets.
Executive
Peter Kenyon
Martin Clyburn
Non-Executive
Andy Meehan
Simon Herrick
Steve Smith
£192,500
£140,000
£63,254
£46,420
£38,500
Long Term Incentive Plan
Yes
Yes
Up to 100%
Up to 100%
On admission to AIM the Group introduced a Long Term
Incentive Plan (LTIP) for the following set against two
performance criteria over the financial years from admission
to the year ending 31 March 2020 (FY2020).
Fifty percent of the award is based on the total shareholder
return (share price movement and the value of dividends)
over the period from admission to AIM to 31 March 2020 with
no award being made if the return rate is less than 30% over
the period. A sliding scale will apply with 100% of the award
vesting if 60% growth is achieved over the period.
31
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
REMUNERATION COMMITTEE continued
Fifty percent of the award is based on increasing the earnings
per share. No award will be made if the earnings per share do
not grow by 24% over the three years from FY17 to FY20. A
sliding scale will apply with 100% of the award vesting if 45%
growth is achieved over the period.
The award is a number of shares which can be bought at their
nominal value.
The Directors hold the following notifiable beneficial interests
in the ordinary share capital of the Company
e
r
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1
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8
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2
The following Directors and employees are included within
the LTIP.
Executive
Peter Kenyon
Martin Clyburn
Mike Johnson
Jason Carr
Matt Fothergill
Michael Wilson
Mark Smith
Number of shares awarded
under the LTIP scheme
250,000
138,889
138,889
69,444
69,444
69,444
69,444
Peter Kenyon
1p ordinary 1,591,250
Martin Clyburn*
1p ordinary
209,375
Non-Executive
Andy Meehan*
1p ordinary
332,320
Simon Herrick
1p ordinary
19,950
Steve Smith*
1p ordinary
31,894 22,454
*held in personal name or in spouse’s name.
1,591,250
209,375
332,320
19,950
54,348
If you have any comments or questions on anything contained
in this Remuneration Report, I will be available at the AGM.
In accordance with the strategy of aligning the senior team
with the interests of shareholders it is intended that a
second LTIP scheme will be awarded within 42 days of the
Annual Report being published. It is the intention to increase
the number of employees included within the scheme to
recognise their contribution in seeking to implement the
Group’s strategy and achieve improved financial performance.
The scheme will follow the principles of the Admission
scheme with 50% of any award linked to growing EPS and 50%
of any award linked to total shareholder returns over a three
year period. Again stretching targets will be set to achieve
100% of the award.
32
Ramsdens Holdings PLC - Annual Report 2018
DIRECTORS' REPORT FOR THE YEAR ENDED 31 MARCH 2018
The directors have pleasure in presenting their report and
the financial statements of the group for the year ended 31
March 2018.
Principal Activities and Business Review
The principal activities of the Group during the year continue
to be; the supply of foreign exchange services, pawnbroking,
related financial services, jewellery sales, and the purchase of
unwanted gold jewellery from the general public subsequently
sold to the bullion market. The results for the year and the
financial position of the group are as shown in the annexed
financial statements.
A review of the business and its future development is given
in the Chairman’s and Chief Executive’s statements.
Results and Dividends
The results for the year are set out in the consolidated
income statement on page 44.
The directors propose a final dividend of 4.4 pence per share
subject to the approval at the Annual General Meeting on
18 July 2018.
During the year, the Group paid the final dividend for FY17 of
1.3 pence per share (FY16: nil) and an interim dividend of 2.2
pence per share for the year ended 31 March 2018 (FY17: nil).
Likely Future Development
Our priorities for the following financial year are disclosed in
the CEO’s Strategic Report on pages 6 to 13.
Substantial Share Holdings
The Company has one class of ordinary share which carry no
right to fixed income. Each ordinary share has the right to one
vote at general meetings.
As far as the Directors are aware, the only notifiable holdings
equal to or in excess of 3% of the issued ordinary share
capital at 31 March 2018 were as shown in the table below.
Name of holder
Downing
City Financial
Hargreave Hale
Premier Fund Mgt.
Number
4,516,403
3,211,491
2,676,815
2,219,642
Artemis Investment Mgt.
2,000,000
Otus Capital Mgt.
1,911,721
% of voting
rights in the issued
share capital
14.65
10.41
8.68
7.2
6.49
6.2
AXA Investment Mgrs.
Mr Peter Kenyon (CEO)
Hargreaves Lansdown Asset
Managers
1798 Volantis
Interactive Investor
1,600,000
1,591,250
1,274,144
936,129
931,251
5.19
5.16
4.13
3.04
3.02
Directors and their Interest
The directors who served throughout the year except where
otherwise stated and in place at the date of this report are
as follows:
Executive
Peter Kenyon
Martin Clyburn
Non-Executive
Andrew Meehan
Stephen Smith
Simon Herrick
Directors’ beneficial interests and their remuneration are
detailed in the Remuneration Report on pages 31 and 32.
Directors’ indemnities
The Directors are entitled to be indemnified by the Company
to the extent permitted by law and the Company’s articles
of association in respect of certain losses arising out of or
in connection with the execution of their powers, duties and
responsibilities. As permitted by the Companies Act 2006,
the Company has also executed deeds of indemnity for the
benefit of each Director in respect of liabilities that may
attach to them in their capacity as Directors of the Company.
The Company also purchased and maintained Directors’ and
officers’ liability insurance throughout the year.
Going Concern
The Directors confirm that, after having made appropriate
enquiries, they have a reasonable expectation that the Group
and the Company have adequate resources to continue
operations for the foreseeable future. Accordingly, the
Directors continue to adopt the going concern basis in the
preparation of the financial statements.
33
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS DIRECTORS' REPORT FOR THE YEAR ENDED 31 MARCH 2018 continued
Financial Risk Management
Disclosure of Information to the Auditor
Financial risk is managed by the board on an ongoing basis.
The principal risks relating to the Group are outlined in
more detail on pages 16 to 18 to the consolidated financial
statements.
The Group’s principal risks and uncertainties are outlined in
the strategic report.
Post Balance Sheet Events
There have been no material post balance sheet events.
In so far as each person who was a director at the date of
approving this report is aware:
• there is no relevant audit information, being
information needed by the auditor in connection with
preparing its report, of which the Group’s auditor is
unaware; and
• the directors have taken all steps that they ought to
have taken to make themselves aware of any relevant
audit information and to establish that the auditor is
aware of that information.
Annual General Meeting
The Company’s AGM will be held on 18 July 2018.
AUDITOR
A resolution to reappoint Ernst & Young LLP as auditors will
be put to the members at the Annual General Meeting.
Registered office:
Unit 16
Parkway Shopping Centre
Coulby Newham
Middlesbrough
TS8 0TJ
Signed by order of the directors
Kevin Brown
Company Secretary
Approved by the directors on 6 June 2018
Political Donations
No political contributions were made during the current and
prior year.
Disabled Employees
The group gives full consideration to applications for
employment from disabled persons where the candidate’s
particular aptitudes and abilities are consistent with
adequately meeting the requirements of the job.
Opportunities are available to disabled employees for
training, career development and promotion. Where existing
employees become disabled, it is the group’s policy to provide
continuing employment wherever practicable in the same or
an alternative position and to provide appropriate training to
achieve this aim.
Employee Involvement
The group operates a framework for employee information
and consultation which complies with the requirements of
the Information and Consultation of Employees Regulations
2004. The Directors have a policy of providing employees
with information about the group to keep them informed.
The Group’s employment structure facilitates management
to engage regularly with staff at all levels thereby allowing a
free flow of information and communication of Group policies
and alignment of core goals. Employees are encouraged to
particpate in the performance of the business through varying
incentive schemes.
34
Ramsdens Holdings PLC - Annual Report 2018 STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Strategic
Report, the Directors’ Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors have elected to prepare the financial statements in
accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union and Article 4 of
the IAS regulation. Under company law the directors must
not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of
the company and of the group and of the profit or loss of the
group for that period. In preparing those financial statements,
the directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable
and prudent;
• state whether applicable UK Accounting Standards
have been followed, subject to any material departures
disclosed and explained in the financial statements;
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
group will continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the group’s transactions and disclose with reasonable
accuracy at any time the financial position of the group and
enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for
safeguarding the assets of the group and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report
and the financial statements are made available on a website.
Financial statements are published on the Company’s
website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial
statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Company’s
website is the responsibility of the Directors.
The Directors’ responsibility also extends to the ongoing
integrity of the financial statements contained therein.
35
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS FINANCIAL
STATEMENTS
36
Ramsdens Holdings PLC - Annual Report 2018
Use your jewellery to access
cash when you need it
Ramsdens Holdings PLC - Annual Report 2018
37
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RAMSDENS HOLDINGS PLC
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of
the financial statements section of our report below. We are
independent of the group and parent company in accordance
with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters
in relation to which the ISAs (UK) require us to report to you
where:
•
the directors’ use of the going concern basis of
accounting in the preparation of the financial
statements is not appropriate; or
•
the directors have not disclosed in the financial
statements any identified material uncertainties that
may cast significant doubt about the group’s or the
parent company’s ability to continue to adopt the
going concern basis of accounting for a period of at
least twelve months from the date when the financial
statements are authorised for issue.
OVERVIEW OF OUR AUDIT APPROACH
Key audit matters We have identified the following key audit matters,
which were of most significance to our audit.
•
Risk of incorrect revenue recognition as a result
of fraudulent transactions in branch
Risk of incorrect recognition of revenue and
the associated revenue accrual in respect of
pawnbroking
•
Audit scope
• We performed an audit of the complete financial
Materiality
•
information of the Group, including Ramsdens
Financial Limited and Ramsdens Group Limited.
Overall group materiality of £0.342m
(2017: £0.188m) which represents 5% of Profit
before tax (2017: 5%).
OPINION
In our opinion:
•
•
•
•
Ramsdens Holdings PLC’s group financial statements
and parent company financial statements (the
“financial statements”) give a true and fair view of
the state of the group’s and of the parent company’s
affairs as at 31 March 2018 and of the group’s profit
for the year then ended;
the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
We have audited the financial statements of Ramsdens
Holdings PLC which comprise:
Parent Company
Balance sheet as at 31 March
2018
Statement of changes in equity
for the year then ended
Related notes A to I to the
financial statements including
a summary of significant
accounting policies
Group
Consolidated statement of financial
position as at 31 March 2018
Consolidated statement of
comprehensive income for the year then
ended
Consolidated statement of changes in
equity for the year then ended
Consolidated statement of cash flows for
the year then ended
Related notes 1 to 26 to the financial
statements, including a summary of
significant accounting policies
The financial reporting framework that has been applied
in the preparation of the group financial statements is
applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union. The
financial reporting framework that has been applied in the
preparation of the parent company financial statements is
applicable law and United Kingdom Accounting Standards,
including FRS 101 “Reduced Disclosure Framework”(United
Kingdom Generally Accepted Accounting Practice).
38
Ramsdens Holdings PLC - Annual Report 2018 KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate
opinion on these matters.
Key observations communicated to the
Audit Committee
No material losses have been incurred during the
year as a result of such transactions.
Whilst our substantive procedures are not
designed to detect all fraud which may have
occurred in the year, we have not identified any
anomalies as a result of our procedures.
Risk
Our response to the risk
Risk of incorrect revenue recognition as a result of
fraudulent transactions at a branch level.
Refer to the accounting policies in note 3.16 of the
consolidated financial statements (page 56)
We have met with the Head of Compliance & Risk
to obtain an understanding of the procedures
performed by both the compliance department and
the internal audit function to monitor controls.
At a branch level there is a risk that fraudulent
transactions can occur and that these are
recorded in the accounts. Branch management is
in a unique position to perpetrate fraud because
of its ability to manipulate accounting records
directly or indirectly and prepare fraudulent
financial statements by overriding controls that
otherwise appear to be operating effectively.
Individual transactions are generally low value,
thus such transactions may go unnoticed without
a robust control environment. If transactions
occurred at a relatively small percentage of stores,
the financial impact could be material. This is a
significant area of focus for the year-end audit.
Management has the primary responsibility to
prevent and detect fraud. It is important that
management, with the oversight of those charged
with governance, has put in place a culture of
ethical behaviour and a strong control environment
that both deters and prevents fraud.
We have reviewed internal audit reports for those
branches identified as having control deficiencies
in the year and confirmed that such findings were
escalated to those charged with governance on a
timely basis.
We have reviewed the weekly desktop audit
procedures and to understand how exceptions at a
transaction level are identified and how these are
addressed, including how these are escalated to
those charged with governance.
We have discussed the results of specific
investigations performed during the year and
ensured that any remaining unrecoverable debt
has been appropriately provided for at the year-
end.
We have reviewed the implementation of new
controls post year end and confirmed that any
exceptions identified under the new procedures
have been responded to appropriately.
We have performed substantive procedures
including a monthly analysis of sales and gross
margin, review of p-status deficits in the year
and transactional testing to identify any unusual
transactions.
We have performed extensive testing to validate
the existence of cash, physical stock, pawnbroking
agreements and the related pledged items.
39
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RAMSDENS HOLDINGS PLC continued
Key observations communicated to the
Audit Committee
From our substantive testing, we have concluded
that the inputs to the calculation are clerically
accurate.
We have concluded that the revenue recorded in
the year, and the related provisions on the balance
sheet at the year-end date are materially correct.
KEY AUDIT MATTERS continued
Risk
Our response to the risk
Risk of incorrect recognition of revenue and
the associated revenue accrual in respect of
pawnbroking
Refer to the accounting policies in note 3.16 and
note 4 of the consolidated financial statements
(pages 56 and 57)
Interest receivable on pawnbroking loans is
recognised as interest accrues by reference to
the percentage of the pawnbroking loans that
are estimated to be redeemed and the effective
interest rate applicable.
We have tested the accuracy and completeness of
data used to calculate the provisions.
We have challenged the provisioning methodology,
with particular focus on changes to assumptions.
We identified the year-end actual spot price
of 9 carat gold (£11.36) to recalculate the
underlying value of security and compared this to
management estimates used in provision (2018:
£10.85, 2017: £10.41).
The same test is performed for silver items.
The redemption rate is based upon management
best estimate of the number of pawnbroking loans
that will be redeemed.
We compare the historic actual lifetime redemption
rates of loans (2018: 28%, 2017: 27%) to the rates
applied in the provision (2018: 28%, 2017:27%).
We have performed sensitivity analysis on the
key assumptions, including comparison of rates
against actual outcomes, varying values of
underlying security, and expected sales price of
non-redeemed loans.
The recognition of pawnbroking interest and the
provisions held in the accounts are subject to
estimates determined by management, notably the
expected recoverable amount of the underlying
security and the expected level of redemption rate
of pawnbroking loans.
There is an opportunity for management to change
underlying assumptions of the pawnbroking
provisions, which could materially impact the level
of revenue recognised.
In the year to 31 March 2018, pawnbroking
interest of £7.0m (2017: £6.1m) was recognised in
the accounts.
At 31 March 2018 the gross loanbook totalled
£10.2m (2017: £8.9m), with related pawnbroking
provisions of £0.4m (2017: £0.3m).
40
Ramsdens Holdings PLC - Annual Report 2018 AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our assessment of audit risk, our evaluation of materiality
and our allocation of performance materiality determine our
audit scope for each entity within the Group. Taken together,
this enables us to form an opinion on the consolidated
financial statements. We take into account size, risk profile,
the organisation of the group and effectiveness of group-wide
controls, changes in the business environment and other
factors when assessing the level of work to be performed at
each entity.
We performed an audit of the complete financial information
of Ramsdens Holdings PLC and both components, Ramsdens
Financial Limited and Ramsdens Group Limited.
We have performed a full scope audit of Ramsdens Financial
Limited and tested significant balances to an assigned
performance materiality of £0.237m, which is lower than the
statutory materiality. We have also performed statutory audit
procedures on Ramsdens Group Limited, in accordance with
an assigned performance materiality significantly lower than
the Group materiality.
All audit work performed for the purposes of the audit was
undertaken by the Group audit team.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality in planning and
performing the audit, in evaluating the effect of identified
misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably be
expected to influence the economic decisions of the users
of the financial statements. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £0.342 million
(2017: £0.188 million), which is 5% (2017: 5%) of profit before
tax, £6.312m (2017: £3.753m after adding back exceptional
costs of £0.817m). We believe that Profit before tax provides
us with a consistent year on year basis for determining
materiality and is the most relevant performance measure to
the stakeholders of the Group.
During the course of our audit, we reassessed initial
materiality and have revised this to reflect final results, rather
than basing on forecasts.
Performance materiality
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality.
On the basis of our risk assessments and our assessment
of the Group’s overall control environment, our judgement
was that performance materiality was 75% (2017: 75%) of our
planning materiality, namely £0.237m (2017: £0.141m). We
have set performance materiality at this percentage which
reflects our expectation of the level of audit differences based
on the prior year.
Reporting threshold
An amount below which identified misstatements are
considered as being clearly trivial.
We agreed with the Audit Committee that we would report to
them all uncorrected audit differences in excess of £0.016m
(2017: £0.009m), which is set at 5% of planning materiality,
as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations in forming
our opinion.
OTHER INFORMATION
The other information comprises the information included
in the annual report set out on pages 1-34, other than the
financial statements and our auditor’s report thereon. The
directors are responsible for the other information.
Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in this report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to
determine whether there is a material misstatement in the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of the other
information, we are required to report that fact.
We have nothing to report in this regard.
41
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RAMSDENS HOLDINGS PLC continued
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE
COMPANIES ACT 2006
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at https://www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
USE OF OUR REPORT
This report is made solely to the company’s members, as
a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for
the opinions we have formed.
Sandra Thompson (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Newcastle
Date 6 June 2018
In our opinion, based on the work undertaken in the course of
the audit:
•
the information given in the strategic report and the
directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
•
the strategic report and directors’ report have
been prepared in accordance with applicable legal
requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY
EXCEPTION
In the light of the knowledge and understanding of the group
and the parent company and its environment obtained in
the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters
in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
• the parent company financial are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities
statement set out on page 35, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group and parent company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
42
Ramsdens Holdings PLC - Annual Report 2018 NOTES:
1. The maintenance and integrity of the Ramsdens Holdings
PLC web site is the responsibility of the directors;
the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the
auditors accept no responsibility for any changes that
may have occurred to the financial statements since they
were initially presented on the web site.
2. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
43
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit before exceptional expenses
Exceptional expenses
Operating profit
Finance Costs
Gain on fair value of derivative financial liability
Profit before tax
Income tax expense
Profit for the period
Other comprehensive income
Total comprehensive income
Earnings per share in pence
Diluted earnings per share in pence
Notes
5
5
7
6
14
10
8
8
2018
£’000
39,942
(11,595)
28,347
(21,937)
6,410
–
6,410
(177)
79
6,312
(1,278)
5,034
–
5,034
16.3
15.9
2017
£’000
34,516
(10,228)
24,288
(19,735)
4,553
(1,110)
3,443
(614)
107
2,936
(926)
2,010
–
2,010
7.8
7.6
44
Ramsdens Holdings PLC - Annual Report 2018 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Deferred tax assets
Current Assets
Inventories
Trade and other receivables
Cash and short term deposits
Total assets
Current liabilities
Trade and other payables
Interest bearing loans and borrowings
Accruals and deferred income
Income tax payable
Net current assets
Non-current liabilities
Interest bearing loans and borrowings
Accruals and deferred income
Derivative financial liabilities
Deferred tax liabilities
Total liabilities
Net assets
Equity
Issued capital
Share premium
Retained earnings
Total equity
Notes
11
12
13
10
15
16
17
18
18
18
18
19
19
19
19
20
2018
£’000
4,302
429
–
84
4,815
7,567
10,613
14,619
32,799
37,614
5,793
1,883
1,281
633
9,590
2017
£’000
4,210
529
–
–
4,739
5,338
9,362
11,864
26,564
31,303
3,843
2,318
773
305
7,239
23,209
19,325
1
300
40
115
456
10,046
27,568
308
4,892
22,368
27,568
9
404
119
137
669
7,908
23,395
308
4,892
18,195
23,395
The financial statements of Ramsdens Holdings PLC, registered number 8811656, were approved by the directors and
authorised for issue on 6 June 2018 and signed on their behalf by:
Martin Clyburn
Chief Financial Officer
45
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2018
As at 1 April 2016
Profit for the year
Total comprehensive income
Bonus issue of share capital
Issue of share capital
Costs associated with issue of share
capital
Share based payments
As at 31 March 2017
As at 1 April 2017
Profit for the year
Total comprehensive income
Dividends paid
Share based payments
Deferred tax on share based payments
As at 31 March 2018
Notes
25
21
25
Share
Capital
£’000
247
–
–
3
58
–
–
308
308
–
–
–
–
–
308
Share
premium
£’000
–
–
–
–
4,942
(50)
–
4,892
4,892
–
–
–
–
–
4,892
Retained
earnings
£’000
16,181
2,010
2,010
(3)
–
–
7
18,195
18,195
5,034
5,034
(1,079)
161
57
22,368
Total
£’000
16,428
2,010
2,010
–
5,000
(50)
7
23,395
23,395
5,034
5,034
(1,079)
161
57
27,568
46
Ramsdens Holdings PLC - Annual Report 2018 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018
Operating activities
Profit before tax
Adjustments to reconcile profit before tax to net cash flows:
Depreciation and impairment of property, plant and equipment
Amortisation and impairment of intangible assets
Change in derivative financial instruments
Loss on disposal of property, plant and equipment
Exceptional expenses
Share based payments
Finance costs
Exceptional expenses – bonus
Working capital adjustments:
Movement in trade and other receivables and prepayments
Movement in inventories
Movement in trade and other payables
Interest paid
Income tax paid
Net cash flows from operating activities
Investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Purchase of intangible assets
Net cash flows used in investing activities
Financing Activities
Dividends paid
Payment of finance lease liabilities
Bank loans drawn down
Repayment of bank borrowings
Repayment of loan notes
Exceptional expenses – IPO
Proceeds of issue of ordinary shares
Net cash flows used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 April
Cash and cash equivalents at 31 March
Notes
11
12
7
6
21
2018
£’000
6,312
1,079
211
(79)
29
–
161
177
–
(1,251)
(2,229)
2,350
6,760
(173)
(999)
5,588
1
(1,201)
(111)
(1,311)
(1,079)
(8)
1,875
(2,310)
–
–
–
(1,522)
2,755
11,864
14,619
2017
£’000
2,936
1,047
320
(107)
83
1,110
7
614
(172)
(693)
(2,002)
170
3,313
(614)
(704)
1,995
–
(451)
(41)
(492)
–
(8)
2,310
(2,900)
(4,000)
(938)
4,950
(586)
917
10,947
11,864
47
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
Ramsdens Holdings PLC (the “Company”) is a public limited company incorporated and domiciled in England and Wales.
The registered office of the Company is Unit 16, Parkway Shopping Centre, Coulby Newham, Middlesbrough, TS8 0TJ. The
registered company number is 08811656. A list of the Company’s subsidiaries is presented in note 13.
The principal activities of the Company and its subsidiaries (the “Group”) are the supply of foreign exchange services,
pawnbroking and related financial services, jewellery sales, and the purchase of gold jewellery from the general public.
2. CHANGES IN ACCOUNTING POLICIES
Adoption of new and revised standards
In the current year, the Group has applied a number of amendments to IFRSs issued by the International Accounting Standards
Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2017. None of the new or
revised standards that have been adopted affected the amounts reported in the financial statements.
Amendments to IAS 7
Amendments to IAS 12
Disclosure initiative
Recognition of Deferred Tax Assets for Unrealised Losses
Annual Improvements to IFRSs: 2014-2016
Amendments to: IFRS 12 Disclosure of Interest in Other Entities
Standards issued but not yet effective
At the date of authorisation of these financial statements the Group had not applied the following new and revised IFRSs that
have been issued but are not yet effective:
IFRS 9
IFRS 15
IFRS 16
IFRS 17
Amendments to IFRS 2
Amendments to IFRS 4
Amendments to IAS 10 and IAS 28
Amendments to IAS 40
IFRIC 22
IFRIC 23
Financial Instruments
Revenue from Contracts with Customers
Leases
Insurance Contracts
Classification and Measurement of Share-Based Payment Transactions
Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture
Transfer of Investment Property
Foreign Currency Transactions and Advanced Consideration
Uncertainty over Income Tax Treatments
The Directors have considered the likely impact of the above standards on the financial statements of the Group in future
periods. Other than IFRS16 detailed below, the directors do not consider that the standards will have a material impact on the
financial statements in future periods.
During the year the Directors carried out an impact assessment of IFRS 15 Revenue from Contracts with Customers. All
income streams were reviewed against the requirements of IFRS 15 and the review concluded that the current accounting
policies were compliant with the new standard. Therefore the introduction of IFRS 15 will not impact on the financial
statements in future periods.
IFRS 16 establishes principles for the recognition, measurement, presentation and disclosure of leases, with the objective of
ensuring that lessees and lessors provide relevant information that faithfully represents those transactions.
Under IFRS 16 significant changes are introduced to lessee accounting, with the distinction between operating and finance
leases removed and assets and liabilities recognised in respect of all leases (subject to limited exceptions for short-terms
leases and leases of low value assets).
48
Ramsdens Holdings PLC - Annual Report 2018 2. CHANGES IN ACCOUNTING POLICIES continued
Upon lease commencement a lessee recognises a right-of-use asset and a lease liability. The right-of-use asset is initially
measured at the amount of the lease liability plus any direct costs incurred by the lessee. Under the cost model, a right-of-use
asset is measured at cost less accumulated depreciation and accumulated impairment. The lease liability is initially measured
at the present value of the lease payment payable over the lease term, discounted at the rate implicit in the lease if that can be
readily determined. If that rate cannot be readily determined, the lessee shall use their incremental borrowing rate.
IFRS 16 will apply for annual reporting periods beginning on or after 1 January 2019. The Group currently expects to adopt
IFRS16 for the year ending 31 March 2020. The Group is currently assessing the impact of accounting changes that will arise
under IFRS 16. The changes are expected to have a material impact on the Group Statement of Comprehensive Income and
Consolidated Financial Statements. At 31 March 2018 the Group had non-cancellable lease commitments of £10,704,000 as
disclosed in note 23. Our assessment indicates these commitments will meet the definition of a lease under IFRS 16 unless
they qualify for low value or short-term leases. On adopting IFRS 16, the Group will recognise a right-of-use asset and a related
lease liability. In the statement of comprehensive income the lease expense will be replaced with amortisation of the right-
of-use asset and a finance charge on the lease liability. The effect on profit will be nil over the life of the lease but may vary
throughout the lease term. EBITDA will increase but the charges will have no net cash flow impact.
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 IFRS10, an investor controls an investee when it is exposed, or has rights,
to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the
investee.
3.3 Going Concern
The 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.
49
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
3. SIGNIFICANT ACCOUNTING POLICIES continued
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.
50
Ramsdens Holdings PLC - Annual Report 2018 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 – initial recognition and subsequent measurement
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.
51
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
3. SIGNIFICANT ACCOUNTING POLICIES continued
Financial assets
Initial recognition and measurement
In accordance with IAS 39, ‘Financial Instruments: Recognition and Measurement’ the Group has classified its financial assets
as ‘loans and receivables’. The Group determines the classification of its financial assets at initial recognition.
All financial assets are recognised initially at fair value plus, in the case of assets not at fair value through the statement of
comprehensive income, transaction costs that are attributable to the acquisition of the financial asset.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as described below:
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. This category applies to trade and other receivables due from customers in the normal course of business
and includes pawnbroking receivables which are interest bearing. The accrued interest arising on pawnbroking receivables
is included in prepayments and accrued income using the effective rate of interest. All other amounts which are not interest
bearing are stated at their recoverable amount, being invoice value less provision for any bad debts.
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 assesses, at each reporting date, whether there is any objective evidence that a financial asset or a group of
financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of
the asset (an incurred ‘loss event’), has an impact on the estimated future cash flows of the financial asset or the group of
financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of
debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability
that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable
decrease in the estimated future cash flows, such as changes in arrears, fall in value of the secured pledges below the value of
the outstanding loans or economic conditions that correlate with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses whether impairment exists individually for financial
assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group
determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or
not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them
for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be,
recognised are not included in a collective assessment of impairment.
The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The
present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate.
52
Ramsdens Holdings PLC - Annual Report 2018 3. SIGNIFICANT ACCOUNTING POLICIES continued
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through the statement of
comprehensive income, or ‘other financial liabilities’.
All financial liabilities are recognised initially at fair value and, in the case of other financial liabilities, net of directly
attributable transaction costs.
The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and
derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as follows:
Financial liabilities at fair value through the statement of comprehensive income
Only the Group’s derivative financial instruments are classified as financial liabilities at fair value through the statement of
comprehensive income.
Financial liabilities at fair value through the statement of comprehensive income 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.
Other financial liabilities
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.
This category generally applies to interest-bearing loans and borrowings.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised
when:
• The rights to receive cash flows from the asset have expired, or
• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement, and either
(a) the Group has transferred substantially all the risks and rewards of the asset, or
(b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the assets
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.
53
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
3. SIGNIFICANT ACCOUNTING POLICIES continued
Offsetting of financial instruments
Financial assets and financial liabilities are offset with the net amount reported in the consolidated statement of financial
position only if there is a current enforceable legal right to offset the recognised amounts and intent to settle on a net basis, or
to realise the assets and settle the liabilities simultaneously.
3.10 Fair value measurement
The Group measures financial instruments, such as derivatives, at fair value at the date of each statement of financial position.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy. This is described, as follows, based on the lowest level input that is significant to the fair value measurement
as a whole:
• Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
• Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
3.11 Taxation
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
Consolidated Statement of Comprehensive Income because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current
tax is calculated using tax rates and laws that have been enacted or substantively enacted by the date of the statement of
financial position.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and
is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
54
Ramsdens Holdings PLC - Annual Report 2018 3. SIGNIFICANT ACCOUNTING POLICIES continued
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.
55
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
3. SIGNIFICANT ACCOUNTING POLICIES continued
3.14 Pensions and other post-employment benefits
The company operates a defined contribution pension scheme. The assets of the scheme are held and administered separately
from those of the Group. Contributions payable for the year are charged in the statement of comprehensive income. Total
contributions for the year are disclosed in note 9 to the accounts. Differences between contributions payable in the year and
contributions actually paid are shown as either accruals or prepayments in the Statement of Financial Position.
3.15 Employee share incentive plans
The group grants equity settled share option rights to the parent entity’s equity instruments to certain directors and senior
staff members under a LTIP (Long term incentive Plan). The employee share options are measured at fair value at the date of
grant by the use of either the Black– Scholes Model or a Monte Carle model depending on the vesting conditions attached to
the share option. The fair value is expensed on a straight line basis over the vesting period based on an estimate of the number
of options that will eventually vest.
3.16 Revenue recognition
Revenue is recognised when the entity transfers significant risks and rewards of ownership to the buyer. Revenue is recognised
to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured,
regardless of when the payment is received. Revenue is measured at the fair value of the consideration received or receivable,
taking into account contractually defined terms of payment and excluding taxes or duty. The following specific recognition
criteria must also be met before revenue is recognised:
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:
Revenue is recognised on the disposal of unredeemed pledge contracts when additional interest and transaction fee income is
earned.
Sale of precious metals and diamonds acquired via over the counter purchases
Gold/Silver – Revenue is recognised at either the prevailing spot price, or in the case of gold, at the fixed amount booked, at
the point it is received by the Group’s bullion dealer.
Platinum and palladium – Revenue is recognised at the point a confirmed sell instruction is issued to the Group’s bullion
dealer.
Retail sales
Revenue is recognised at the point the goods are delivered to the customer.
Currency 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.
56
Ramsdens Holdings PLC - Annual Report 2018 3. SIGNIFICANT ACCOUNTING POLICIES continued
Other financial income
Other financial income comprises cheque cashing fees, buyback and other miscellaneous revenues. Cheque cashing fees
earned are recognised within revenue by reference to the date the transaction takes place. Buyback revenue relates to the
sale of items to a customer, either the person who originally sold that item to the business, or to a third party. Revenue is
recognised at the delivery of the item to a customer.
Dividend income
Revenue is recognised when the Group’s right to receive the payment is established, which is generally when shareholders
approve the dividend.
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.
In the process of applying the Group’s accounting policies, management has made the following judgements, which have the
most significant effect on the amounts recognised in the consolidated financial statements:
Revenue recognition – pawnbroking loans interest accrual estimation
The group recognises interest on pawnbroking loans as disclosed in note 3.16. The pawnbroking loans interest accrual (pledge
accrual) is material and is dependent on the estimate that the Group makes of both the expected level of the unredeemed
pawnbroking loans 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 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 14 for further details on pawnbroking credit risk and 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.
57
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
4. KEY SOURCES OF ESTIMATION, UNCERTAINTY AND SIGNIFICANT ACCOUNTING JUDGEMENTS continued
The principal assumptions applied by management in arriving at the value in use of each CGU are as follows:
1.
2.
3.
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.
The Group has discounted the forecast cash flows at a pre-tax, risk adjusted rate of 12%.
Where the recoverable amount of the CGU was estimated to be less than its carrying amount, the carrying amount of
the CGU was reduced to the estimated recoverable amount.
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.
Trade receivables provisioning
Trade and other receivables, with the exception of expired pledges, are stated at their nominal amount less expected
impairment losses.
For unredeemed pledges, the goods securing the loan are put up for sale as the Group is selling the goods on behalf of the
customer to repay the loan. An impairment review of the carrying value for each unredeemed pledge is undertaken and the
resultant amount is shown within trade receivables at the lower of:
(i)
the original capital loaned together with the accrued primary term interest less the proceeds of any goods sold to
date; and
(ii)
the current market value of the remaining goods within the pledge that have yet to be realised.
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:
Revenue
United Kingdom
Other
2018
£’000
39,800
142
39,942
2017
£’000
34,516
–
34,516
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.
58
Ramsdens Holdings PLC - Annual Report 2018
5. SEGMENTAL ANALYSIS continued
Revenue
Pawnbroking
Purchases of precious metals
Retail Jewellery sales
Foreign currency margin
Income from other financial services
Total revenue
Gross profit
Pawnbroking
Purchases of precious metals
Retail Jewellery sales
Foreign currency margin
Income from other financial services
Total gross profit
Administrative expenses
Exceptional expenses
Finance costs
Gain on fair value of derivative financial liability
Profit before tax
2018
£’000
6,966
10,936
7,960
11,329
2,751
39,942
2018
£’000
6,966
4,356
4,130
11,329
1,566
28,347
(21,937)
–
(177)
79
6,312
2017
£’000
6,128
10,839
5,909
8,971
2,669
34,516
2017
£’000
6,128
4,336
3,321
8,971
1,532
24,288
(19,735)
(1,110)
(614)
107
2,936
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.
59
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
5. SEGMENTAL ANALYSIS continued
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.
Other information
Tangible & intangible capital additions (*)
Depreciation and amortisation (*)
Assets
Pawnbroking
Purchase of precious metals
Retail Jewellery sales
Foreign currency margin
Income from other financial services
Unallocated (*)
Liabilities
Pawnbroking
Purchase of precious metals
Retail Jewellery sales
Foreign currency margin
Income from other financial services
Unallocated (*)
2018
£’000
1,312
1,290
2018
£’000
9,421
1,323
6,214
7,162
472
13,022
37,614
254
5
1,418
2,814
422
5,133
10,046
2017
£’000
492
1,368
2017
£’000
8,242
773
4,354
6,096
480
11,358
31,303
167
–
657
1,771
190
5,123
7,908
(*) 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
Interest on debts and borrowings
Finance charges payable under finance leases and hire purchase contracts
Total finance costs
2018
£’000
176
1
177
2017
£’000
613
1
614
60
Ramsdens Holdings PLC - Annual Report 2018 7. PROFIT BEFORE TAXATION HAS BEEN ARRIVED AT AFTER CHARGING/(CREDITING)
Depreciation of property, plant and equipment reported within:
– Administrative expenses
Amortisation of intangible assets reported within:
– Administrative expenses
Loss on disposal of property, plant and equipment
Cost of inventories recognised as an expense
Staff costs
Foreign currency gains
Operating lease payments
Auditor's remuneration - Audit Fees
Exceptional expenses
2018
£’000
1,079
211
29
11,595
11,256
(93)
2,726
78
–
2017
£’000
1,047
320
83
10,228
9,177
(128)
2,643
89
1,110
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.
Exceptional expenses in 2017 relates to professional costs incurred in relation to the Ramsdens Holdings PLC listing on the
AIM market together with a bonus paid to those members of staff that were employed at the time of the Group’s MBO on the 2
September 2014 in recognition of their loyalty.
8. EARNINGS PER SHARE
Profit for the year
Weighted average number of shares in issue
Earnings per share (pence)
Fully Diluted earnings per share (pence)
2018
£’000
5,034
2017
£’000
2,010
30,837,653
25,750,444
16.3
15.9
7.8
7.6
61
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
9. INFORMATION REGARDING DIRECTORS AND EMPLOYEES
Directors’ emoluments
2018
2017
Emoluments
Pension
LTIP
Total Emoluments
Pension
LTIP
Total
13
1
6
42
–
–
–
62
2018
£’000
10,211
738
161
146
11,256
2018
No.
84
491
575
2
1
–
–
–
–
–
3
209
69
90
92
32
10
9
511
2017
£’000
8,436
565
7
169
9,177
2017
No.
66
486
552
Executive
Peter Kenyon
Martin Clyburn*
Michael Johnson**
Kevin Brown**
Non Executive
Andrew Meehan
Simon Herrick***
Steve Smith***
Total
*
**
***
312
207
–
–
58
42
35
654
15
10
–
–
–
–
–
50
28
–
–
–
–
–
25
78
377
245
–
–
58
42
35
757
194
67
84
50
32
10
9
446
Martin Clyburn was appointed to the board in August 2016
Michael Johnson and Kevin Brown resigned as directors of the Company in February 2017
Simon Herrick and Steve Smith were appointed to the board in January 2017
Included in administrative expenses:
Wages and salaries
Social security costs
Share option scheme
Pension costs
Total employee benefits expense
The average number of staff employed by the group during the financial period amounted to:
Head Office and management
Branch Counter staff
62
Ramsdens Holdings PLC - Annual Report 2018 10. INCOME TAX
The major components of income tax expense are:
Consolidated statement of comprehensive income
Current income tax:
Current income tax charge
Adjustments in respect of current income tax of previous year
Deferred tax:
Relating to origination and reversal of temporary differences
Income tax expense reported in the statement of comprehensive income
2018
£’000
1,341
(14)
1,327
(49)
1,278
2017
£’000
969
57
1,026
(100)
926
A reconciliation between tax expense and the product of accounting profit multiplied by the UK domestic tax rate is as follows:
Profit before income tax
UK corporation tax rate at 19% (2017: 20%)
Expenses not deductible for tax purposes
Prior period adjustment
Income tax reported in the statement of comprehensive income
Deferred tax
Deferred tax assets
Share based payments
Total
Deferred tax relates to the following:
Deferred tax liabilities
Accelerated depreciation for tax purposes
Other short-term differences
Deferred tax liabilities
Reconciliation of deferred tax liabilities net
Opening balance as of 1 April
Deferred tax recognised in the statement of comprehensive income
Other deferred tax
Closing balance as at 31 March
Factors affecting tax charge
2018
£’000
6,312
1,199
93
(14)
1,278
2018
£’000
84
84
2018
£’000
1
114
115
2018
£’000
137
(49)
(57)
31
2017
£’000
2,936
587
282
57
926
2017
£’000
–
–
2017
£’000
4
133
137
2017
£’000
237
(100)
–
137
The standard rate of UK corporation tax for the period was 19% (2017: 20%). 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.
63
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
11. PROPERTY, PLANT AND EQUIPMENT
Cost
At 1 April 2017
Additions
Disposals
At 31 March 2018
Depreciation
At 1 April 2017
Depreciation charge for the year
Disposals
At 31 March 2018
Net book value
At 31 March 2018
At 31 March 2017
Finance leases
Leasehold
property
£’000
Fixtures &
Fitting
£’000
Computer
equipment
£’000
Motor
vehicles
£’000
3,686
601
(141)
4,146
1,416
586
(141)
1,861
2,285
2,270
2,517
387
(172)
2,732
877
382
(163)
1,096
1,636
1,640
392
213
(94)
511
118
105
(73)
150
361
274
40
–
–
40
14
6
–
20
20
26
Total
£’000
6,635
1,201
(407)
7,429
2,425
1,079
(377)
3,127
4,302
4,210
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 31 March 2018 was
£15,000 (2017: £19,000). Assets under hire purchase contracts are pledged as security for the related hire purchase liabilities.
Total future obligations under finance leases are £9,000 (2017: £17,000).
64
Ramsdens Holdings PLC - Annual Report 2018 12. INTANGIBLE ASSETS
Cost
At 1 April 2017
Additions
Aquisitions
Disposals
At 31 March 2018
Amortisation
At 1 April 2017
Amortisation charge for the year
Disposals
At 31 March 2018
Net book value
At 31 March 2018
At 31 March 2017
Customer
relationships
£’000
Website
£’000
Goodwill
£’000
1,344
31
-
–
1,375
876
195
–
1,071
304
468
79
-
–
–
79
18
16
–
34
45
61
-
–
80
–
80
–
–
–
–
80
–
Total
£’000
1,423
31
80
–
1,534
894
211
–
1,105
429
529
On 5 January 2018 the Group purchased a jewellery business for consideration of £100,000 paid in cash. This comprised
£20,000 for tangible fixed assets and £80,000 for goodwill. The store was refurbished and rebranded and opened in
March 2018.
65
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
13. INVESTMENTS
The Group has a minor holding in Big Screen Productions 5 LLP.
Big Screen Productions 5 LLP, whilst still trading, has wound down its operations and made a capital distribution equivalent to
the value of the carrying value of the investment in 2015. The investment now has a £nil carrying value.
Group Investments
Details of the investments in which the group and company holds 20% or more of the nominal value of any class of share
capital are as follows:
Name of company
Subsidiary undertakings
Ramsdens Group Limited
(Registered office: Unit 16
Parkway Centre, Coulby
Newham, TS8 0TJ)
Ramsdens Financial Limited
(Registered office: Unit 16
Parkway Centre, Coulby
Newham, TS8 0TJ)
Proportion of
voting rights
and shares
held
Activity
100%
Supply of management & strategic services
Holding
Ordinary
Shares
Ordinary
Shares
100%
Supply of foreign exchange services, pawnbroking,
purchase of gold jewellery, jewellery retail and related
financial services.
66
Ramsdens Holdings PLC - Annual Report 2018 14. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
At 31 March 2018
Fair value
through
statement of
comprehensive
income
£’000
Loans and
receivables
£’000
Financial
liabilities at
amortised
cost
£’000
Financial assets
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Trade and other payables
Borrowings
Derivative financial liabilities - interest
rate swap
Net financial assets/(liabilities)
At 31 March 2017
–
–
–
–
(40)
(40)
Book
Value
£’000
9,930
14,619
(7,176)
(1,883)
(40)
Fair
Value
£’000
9,930
14,619
(7,176)
(1,883)
(40)
9,930
14,619
–
–
–
–
–
(7,176)
(1,883)
–
24,549
(9,059)
15,450
15,450
Fair value
through
statement of
comprehensive
income
£’000
Loans and
receivables
£’000
Financial
liabilities at
amortised
cost
£’000
Financial assets
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Trade and other payables
Borrowings
Derivative financial liabilities - interest
rate swap
Net financial assets/(liabilities)
–
–
–
–
(119)
(119)
–
–
(4,809)
(2,327)
8,672
11,864
–
–
–
20,536
(7,136)
13,281
13,281
–
(119)
(119)
Book
Value
£’000
8,672
11,864
(4,809)
(2,327)
Fair
Value
£’000
8,672
11,864
(4,809)
(2,327)
Trade and other receivables shown above comprises trade receivables, other receivables and pledge accrued income as
disclosed in note 16.
Trade and other payables comprises of trade payables, other payables and accruals as disclosed in notes 18 & 19.
Borrowings comprises of bank borrowings, obligations under finance leases, loan notes and other loans as disclosed in notes
18 & 19.
Loans and receivables are non-derivatives financial assets carried at amortised cost which generate a fixed or variable interest
income for the Group. The carrying value may be affected by changes in the credit risk of the counterparties.
Management have assessed that for cash and short-term deposits, trade receivables, trade payables, bank overdrafts and
other current liabilities their fair values approximate to their carrying amounts largely due to the short-term maturities of these
instruments. Book values are deemed to be a reasonable approximation of fair values.
67
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
14. FINANCIAL ASSETS AND FINANCIAL LIABILITIES continued
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. This valuation falls within level 2 of the fair value hierarchy in IAS39.
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 trade receivables
The Group is exposed to credit risk through customers defaulting on their loans. The key mitigating factor to this risk is
the requirement for the borrower to provide security (the pledge) in entering a pawnbroking contract. The security acts to
minimise credit risk as the pledged item can be disposed of to realise the loan value on default.
The Group estimates that the current fair value of the security is equal to the current book value.
In addition to holding security, the Group further mitigates credit risk by:
1)
2)
3)
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.
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.
The carrying value of every pledge comprising the pawnbroking trade receivables in the loan book 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. In addition a further provision is made in respect of those expired pledges that are
in the course of realisation by reviewing the carry value of each pledge against the expected realisation proceeds and
writing the pledge down to its recoverable amount.
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.
68
Ramsdens Holdings PLC - Annual Report 2018 14. FINANCIAL ASSETS AND FINANCIAL LIABILITIES continued
The pawnbroking accrued income is disclosed net of the provision for bad and doubtful debts associated with these financial
assets.
The movement on these provisions is as follows:
Pawnbroking
Trade
Receivables
£’000
301
Pawnbroking
Trade
receivables in
the course of
realisation
£’000
112
(9)
292
50
342
2018
£’000
14
(46)
66
12
78
2017
£’000
12
2017
£’000
5,402
572
5,974
At 1 April 2016
Statement of comprehensive income charge
At 31 March 2017
Statement of comprehensive income charge
Balance at 31 March 2018
Bad Debts written off during the year net of recoveries were:
Pawnbroking Trade Receivables
The ageing of the Pawnbroking trade receivables excluding those in the course of realisation is as follows:
Within contractual term
Past due
2018
£’000
5,732
699
6,431
The Group has not provided for the contractually overdue receivables (i.e. loans where the pawnbroking agreement has
terminated but the customer has not redeemed the assets) at the reporting date since the realisable value of the security held
is greater than the carrying value of the pledge loan as disclosed above. The Group does not start the disposition process
of the unredeemed pledges until at least one month after the due repayment date since it is commercial practice to allow
additional time for the customers to redeem their pledges.
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.
69
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
14. FINANCIAL ASSETS AND FINANCIAL LIABILITIES continued
Market risk
Pawnbroking trade receivables
The collateral which protects the Group from credit risk on non-redemption of pawnbroking loans is principally comprised of
gold, jewellery items and watches. The value of gold items held as security is directly linked to the price of gold. The Group is
therefore exposed to adverse movements in the price of gold on the value of the security that would be attributable for sale in
the event of default by the borrower.
The Group considers this risk to be limited for a number of reasons. First of all, the Group applies conservative lending policies
in pawnbroking pledges reflected in the margin made on retail sales and scrap gold when contracts forfeit. The Group is also
protected due to the short term value of the pawnbroking contract. In the event of a significant drop in the price of gold, the
Group could mitigate this risk by reducing its lending policy on pawnbroking pledges, by increasing the proportion of gold sold
through retail sales or by entering gold hedging instruments. Management monitors the gold price on a constant basis.
Considering areas outside of those financial assets defined under IAS 39, 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)
ii)
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.
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.
70
Ramsdens Holdings PLC - Annual Report 2018 14. FINANCIAL ASSETS AND FINANCIAL LIABILITIES continued
Trade and other payables
Trade and other payables are non-interest bearing and are normally settled on 30 day terms, see note 18.
Borrowings
The maturity analysis of the cash flows from the group’s borrowing arrangements that expose the group to liquidity risk are as
follows:
Bank borrowings
Amount repayable
In one year or less
In more than one year but no more than two years
In more than two years but no more than five years
2018
£’000
1,875
2017
£’000
2,310
1,875
2,310
–
–
–
–
1,875
2,310
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 £7million revolving credit facility was fully utilised then a
1% increase in the LIBOR rate would increase finance costs by £70,000 pre-tax and reduce post-tax profits by £57,000.
Derivative financial instruments comprises of interest rate swap facilities that mature in October 2018. The movement in this
liability is shown as a gain on fair value of derivative financial libility in the statement of comprehensive income. For the year
ended 31 March 2018 the gain was £79,000 (2017: £107,000).
15. INVENTORIES
New and second hand inventory for resale (at lower of cost or net realisable value)
16. TRADE AND OTHER RECEIVABLES
Trade receivables - Pawnbroking
Trade receivables - Pawnbroking in the course of realisation
Trade receivables - other
Other receivables
Pledge accrued Income
Prepayments and accrued income
2018
£’000
7,567
2018
£’000
6,431
1,965
495
14
1,025
683
10,613
2017
£’000
5,338
2017
£’000
5,974
1,350
405
25
917
690
9,362
71
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
17. CASH AND CASH EQUIVALENTS
Cash and cash equivalents
2018
£’000
14,619
2017
£’000
11,864
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 14.
18. TRADE AND OTHER PAYABLES (CURRENT)
Bank borrowings
Trade payables
Other payables
Income tax liabilities
Other taxes and social security
Accruals and deferred income
Obligations under finance leases (note 11)
2018
£’000
1,875
5,259
336
633
198
1,281
8
9,590
2017
£’000
2,310
3,335
297
305
211
773
8
7,239
Terms and conditions of the above financial liabilities:
• Trade and other payables are non-interest bearing and are normally settled on 30-day terms.
For explanations on the Group’s liquidity risk management processes, refer to note 14.
Bank borrowings
The RCF facility was renewed during the previous year with an increase in facility size from £5m to £7m and an increase in
term for a further 3 years. Details of the facility are as follows:
Key Term
Facility
Total facility size
Description
Revolving Credit Facility with Clydesdale Bank Plc (trading as Yorkshire Bank)
£7m
Termination date
04/03/2020
Utilisation
Interest
Interest Payable
Repayments
Security
Undrawn facilities
The £7m 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 is charged on the amount drawn down at 2.5% above LIBOR rate when the initial the
drawdown is made and for unutilised funds interest is charged at 1% above Libor rate from the date
when the facility was made available. The LIBOR rate is reset to the prevailing rate every interest
period typically three months throughout the facility period
Interest is payable at intervals to suit the company but typically three months
The facility can be repaid at any point during its term and re-borrowed
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
At the 31 March 2018 the group had available £5m of undrawn committed facilities
72
Ramsdens Holdings PLC - Annual Report 2018 18. TRADE AND OTHER PAYABLES (CURRENT) continued
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 31st March 2018 is £9,000 (2017: £17,000).
19. NON-CURRENT LIABILITIES
Obligations under finance leases (note 11)
Accruals and deferred income
Derivative financial instruments (note 14)
Deferred tax (note 10)
20. ISSUED CAPITAL AND RESERVES
Ordinary shares issued and fully paid
Ordinary A shares of £1 each
Ordinary B shares of £1 each
At 31 March 2016
Reorganisation of existing share capital and reclassification to 1p shares
Bonus issue of ordinary 1p shares
Issue of new ordinary 1p shares
At 31 March 2017 & 31 March 2018
2018
£’000
1
300
40
115
456
No.
186,250
60,983
247,233
24,723,300
300,400
5,813,953
30,837,653
2017
£’000
9
404
119
137
669
£’000
186
61
247
247
3
58
308
The Company reorganised the issued ordinary share capital during the previous year to unify the ‘A’ shares & ‘B’ shares into one
class of 1p ordinary shares. As part of this re-organisation a bonus issue of 300,400 ordinary shares was made capitalising £3,000
of reserves.
The Company issued 5,813,953 ordinary 1p shares during the previous year at 86p per share. Associated fees of £50,000 were
charged to share premium account.
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 18, cash and cash equivalents and equity attributable to the equity holders of the
parent, comprising issued capital, reserves and retained earnings.
73
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
21. DIVIDENDS
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2017 of 1.3 pence per share
Interim dividend for the year ended 31 March 2018 of 2.2 pence per share
Amounts proposed and not recognised:
Proposed final dividend for the year ended 31 March 2018 of 4.4p (2017:1.3p) per share
2018
£’000
401
678
1,079
1,357
2017
£’000
–
–
–
401
The proposed final dividend is subject to approval at the Annual General Meeting accordingly has not been included as a
liability in these financial statements.
22. PENSIONS
The company operates a defined contribution scheme for its directors and employees. The assets of the scheme are held
separately from those of the company in an independently administered fund.
The outstanding pension contributions at 31 March 2018 are £13,000 (2017: £107,000).
23. 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
Within one year
After one year but not more than five years
More than five years
Other
Within one year
After one year but not more than five years
More than five years
2018
£’000
2,368
6,566
1,673
10,607
2018
£’000
61
36
–
97
2017
£’000
2,442
7,812
1,335
11,589
2017
£’000
79
54
–
133
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.
74
Ramsdens Holdings PLC - Annual Report 2018 24. RELATED PARTY DISCLOSURES
Ultimate controlling party
The Company has no controlling party. Prior to 15 February 2017 the Company was controlled by NorthEdge Capital Fund 1 LP
which held 73.89% of the issued share capital since 2 September 2014.
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:
Short term employee benefits
Post employment benefits
Share based payments
25. SHARE BASED PAYMENTS
2018
£’000
946
43
119
1,108
As at 31 March 2018 the Company operated a Long-term Incentive Plan (LTIP). The charge for the year in respect of the
scheme was:
LTIP
2018
£’000
161
2017
£’000
613
78
6
697
2017
£’000
7
The LTIP is a discretionary share incentive scheme under which the Remuneration Committee 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:
Outstanding at the beginning of the year
Granted
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
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
2018
Number of
conditional
Shares
805,554
Weighted
average
exercise price
in pence
–
–
–
–
805,554
–
–
–
–
75
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
25. SHARE BASED PAYMENTS continued
The Fair value of services received in return for share options granted is based on the fair value of share options granted and
are measured using the Monte Carlo method for TSR performance condition as this is classified as a market condition under
IFRS2 and using the Black Scholes method for the EPS performance condition which is classified as a non– market condition
under IFRS2. The fair values have been computed by an external specialist and the key inputs to the valuation model were:
Model
Grant Date
Share Price
Exercise Price
Vesting period
Risk Free return
Volatility
Dividend Yield
Fair value of Option (£)
TSR Condition
Monte Carlo
13/03/2017
£1.06
£0.01
3.05 years
0.2%
27.0%
7.5%
0.39
EPS Condition
Black Scholes
13/03/2017
£1.06
£0.01
3.05 years
0.2%
27.0%
7.5%
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.
26. POST BALANCE SHEET EVENTS
There were no post balance sheet events that require further disclosure in the financial statements.
76
Ramsdens Holdings PLC - Annual Report 2018 PARENT COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018
Assets
Non-current assets
Investments
Deferred tax
Current assets
Receivables
Cash and short term deposits
Total assets
Current liabilities
Trade and other payables
Net current assets
Total assets less current liabilities
Net assets
Equity
Issued capital
Share Premium
Retained earnings
Total equity
Notes
D
E
F
G
H
2018
£’000
7,681
84
7,765
3,511
27
3,538
11,303
302
302
3,236
11,001
11,001
308
4,892
5,801
11,001
2017
£’000
7,845
–
7,845
1,854
207
2,061
9,906
108
108
1,953
9,798
9,798
308
4,892
4,598
9,798
The Profit after tax for the Company for the year ended 31 March 2018 was £2,050,000 (2017:£4,594,000).
These financial statements were approved by the directors and authorised for issue on 6 June 2018 and signed on their behalf
by:
M A Clyburn
Chief Financial Officer
Company Registration Number: 8811656
77
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS PARENT COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2018
As at 1 April 2016
Profit for the year
Total comprehensive income
Bonus issue of share capital
Issue of share capital
Costs associated with issue of share capital
Share based payments
As at 31 March 2017
As at 1 April 2017
Profit for the year
Total comprehensive income
Dividends paid
Share based payments
Deferred tax on share based payments
As at 31 March 2018
Share
Capital
£’000
247
–
–
3
58
–
–
308
308
–
–
-
-
-
308
Share
premium
£’000
–
–
–
–
4,942
(50)
–
4,892
4,892
–
–
-
-
-
4,892
Retained
earnings
£’000
–
4,594
4,594
(3)
–
–
7
4,598
4,598
2,050
2,050
(1,079)
161
71
5,801
Total
£’000
247
4,594
4,594
–
5,000
(50)
7
9,798
9,798
2,050
2,050
(1,079)
161
71
11,001
78
Ramsdens Holdings PLC - Annual Report 2018 NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
A. ACCOUNTING POLICIES
Basis of Preparation
Ramsdens Holdings PLC (the “Company”) is a public limited company incorporated and domiciled in England and Wales.
The registered office of the Company is Unit 16, Parkway Shopping Centre, Coulby Newham, Middlesbrough, TS8 0TJ. The
registered company number is 08811656. A list of the Company’s subsidiaries is presented in note D.
The principal activities of the Company and its subsidiaries (the “Group”) are the supply of foreign exchange services,
pawnbroking and related financial services, jewellery sales, and the purchase of gold jewellery from the general public.
The separate financial statements of the Company are presented as required by the Companies Act 2006. The Company
meets the definition of a qualifying entity under FRS 100 (Financial Reporting Standard 100) issued by the Financial Reporting
Council. Accordingly, the financial statements have been prepared in accordance with FRS 101 (Financial Reporting Standard
101) ‘Reduced disclosure Framework’ as issued by the FRC in 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 cash-flow statement,
standards not yet effective, impairment of assets and related party transactions.
Where required, equivalent disclosures are given in the Group financial statements of Ramsdens Holdings PLC. The Group
financial statements of Ramsdens Holdings PLC are available to the public.
The financial statements have been prepared on a going concern basis as discussed in the Directors’ Report.
The particular accounting policies adopted are described below.
Taxation
Current tax
The tax currently payable is based on taxable profit for the year. The Company’s liability for current tax is calculated using tax
rates and laws that have been enacted or substantively enacted by the date of the statement of financial position.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and
is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Investments
Fixed assets investments are shown at cost less provision for impairment.
Financial Liabilities And Equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting
liabilities.
Equity instruments issued are recorded at the proceeds received, net of direct issue costs.
79
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS continued
A. ACCOUNTING POLICIES continued
Dividends
Dividends receivable from subsidiary undertakings are recorded in the statement of comprehensive income on the date that
the dividend becomes a binding liability on the subsidiary company.
Dividends payable are recorded as a distribution from retained earnings in the period in which they become a binding liability
on the Company.
Employee Share Incentive Plans
Ramsdens Holdings PLC grants equity settled share option rights to the parent entity’s equity instruments to certain directors
and senior staff members under a LTIP (Long term incentive Plan). The employee share options are measured at fair value at
the date of grant by the use either the Black– Scholes Model or a Monte Carle model depending on the vesting conditions
attached to the share option. The fair value is expensed on a straight line basis over the vesting period based on an estimate of
the number of options that will eventually vest.
B. COMPANY STATEMENT OF COMPREHENSIVE INCOME
As permitted by s408 of the Companies Act 2006 the Company has elected not to present its own 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:
Remuneration receivable
Social security cos
Value of company pension contributions to money purchase schemes
Share based payments
Remuneration of the highest paid director:
Remuneration receivable
Social security cost
Value of company pension contributions to money purchase schemes
Share Based Payments
2018
£’000
654
86
25
78
843
2018
£’000
312
42
15
50
419
2017
£’000
96
11
55
3
165
2017
£’000
29
4
53
2
88
The number of directors accruing retirement benefits under the money purchase scheme is 2 (2017: nil)
80
Ramsdens Holdings PLC - Annual Report 2018 D. INVESTMENTS
Shares in subsidiary undertakings
Cost
At 1 April 2017
Additions – Share based payments
Impairment – reduction in capital in Ramsdens Group Limited
At 31 March 2018
Total
£’000
7,845
83
(247)
7,681
Additions during the year represent share based payment expense recognised in Ramsdens Financial Limited. The impairment
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
Subsidiary undertakings
Ramsdens Group Limited
(Registered office: Unit 16
Parkway Centre, Coulby Newham,
TS8 0TJ)
Ramsdens Financial Limited
(Registered office: Unit 16
Parkway Centre, Coulby Newham,
TS8 0TJ)
Holding
Proportion of voting
rights and shares
held
Activity
Ordinary
Shares
100%
Ordinary
Shares
100%
Supply of management & strategic services
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:
Deferred tax assets
Reconciliation of deferred tax assets
Opening balance as of 1 April
Deferred tax credit recognised in the statement of comprehensive income
Other deferred tax
Closing balance as at 31 March
2018
£’000
84
84
2018
£’000
-
13
71
84
2017
£’000
-
-
2017
£’000
-
-
-
-
81
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS continued
F. RECEIVABLES
Amounts owed by subsidiary companies
Prepayments
G. LIABILITIES: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade Payables
Other Creditors
Other taxes and Social Security
Current tax liabilities
H. CALLED UP SHARE CAPITAL
2018
£’000
3,477
34
3,511
2018
£’000
10
261
17
14
302
2017
£’000
1,814
38
1,852
2017
£’000
15
75
11
7
108
Details of the called up share capital including share shares issued during the year can be found in note 20 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.
82
Ramsdens Holdings PLC - Annual Report 2018 COMPANY ADVISORS
Directors
Andrew David Meehan (Non-Executive Chairman)
Peter Edward Kenyon (Chief Executive Officer)
Martin Anthony Clyburn (Chief Financial Officer)
Simon Edward Herrick (Non-Executive Director)
Stephen John Smith (Non-Executive Director)
Company Secretary
Kevin Nigel Brown, F.C.A.
Registered Office and Principal
Place of Business
Unit 16
The Parkway Centre
Coulby Newham
Middlesbrough TS8 0TJ
Telephone Number
01642 579957
Website
www.ramsdensplc.com
Nominated Adviser
Auditor
Solicitors
Liberum Capital Limited
25 Ropemaker Street
London EC2Y 9LY
Ernst & Young LLP
Citygate
St James Boulevard
Newcastle Upon Tyne NE1 4JD
Addleshaw Goddard
Exchange Tower
19 Canning Street
Edinburgh EH3 8EH
Financial Public Relations Adviser Hudson Sandler LLP
to the Company
25 Charterhouse Square
London EC1M 6AE
Registrars
Principal Bankers
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Clydesdale Bank trading as Yorkshire Bank
1st Floor
94-96 Briggate
Leeds LS1 6NP
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83
Ramsdens Holdings PLC - Annual Report 2018STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS