Serving all your travel
money needs
Treat yourself or
a loved one to
new or pre-owned
jewellery
Use your jewellery
to get cash when
you need it
HELPING YOU WITH
EVERYDAY LIFE
A N N U A L R E P O R T 2 019
A Y EAR OF GOOD PROGRES S
Profits grew in FY19 after new store investments.
PROFITABLE AND GROWING
£6.492m
PBT grew by 3%
(FY18: £6.312m)
£6.713m*
Underlying PBT grew by 4%
(FY18: £6.473m)
£8.250m*
Underlying EBITDA grew by 5%
(FY18: £7.890m)
STRONG FI NANCI AL POSITION
£30.9m
Net Assets up £3.3m
(FY18: £27.6m)
including cash of
£13.4m
(FY18: £14.6m)
OPE RATIONAL PROGRESS
705,000+
FX customers grew 4%
156
Store numbers increased
from 131
(including 4 franchised stores)
£496m
Currency exchanged
increased 2%
£7.6m
Pawnbroking loan book
increased 19%
*The underlying figures above reflect Earnings before interest, tax, depreciation and amortisation (EBITDA) and Profit before Tax (PBT), adjusted for the share based payments charge.
A full reconciliation is provided on page 17
FIN AN CI AL HI GHLIGHTS
GROSS PROFIT
£24,288
£21,615
£28,347
£30,522
2016
2017
2018
2019
EBITDA
PROFIT BEFORE TAX
OPERATING PROFIT
2019 £8,250
2018 £7,890
2017 £6,010
2016 £4,733
The figures above are underlying in £000's
2019 £6,492
2018 £6,473
2017 £4,053
2016 £2,336
2019 £6,583
2018 £6,410
2017 £4,553
2016 £3,190
1
Serving all your travel
money needs
2
ANNUAL REPORT 2019 STRATEGIC
REPORT
3
CHAIRMAN’S STATEMENT
“This good performance reflects the
continuing strengths of the Group’s
diversified business model.”
INTRODUCTION
I am delighted to report on another year of good
progress for Ramsdens. The Group’s performance
in FY19 has been achieved despite external
headwinds including an exceptionally hot summer
in 2018 in the UK, ongoing Brexit uncertainty
impacting consumer confidence, and challenges
affecting high-street retail. Against this backdrop,
the resilience of the Group and strength of our
diversified business model has delivered a financial
performance in line with the Board’s expectations
for the year. In addition, we have made
encouraging progress on our strategic ambitions.
GROUP SERVED OVER
832,000
Customers
A NDREW MEEHAN
Non-Executive Chairman
4
ANNUAL REPORT 2019
OUR B USI NE SS
The first Ramsdens opened in Stockton-on-Tees in May 1987 and
the Group retains its Teeside roots with its Head Office located
in Middlesbrough. The last year has seen Ramsdens increase its
national footprint considerably with the Group’s store estate growing
to 156 stores (including four franchised stores), up from 131 stores
(including four franchised stores) at the end of the prior
financial year.
In March 2019, the Group was delighted to announce the acquisition
of 18 stores that previously traded as The Money Shop. This strategic
acquisition supports the Group’s growth strategy of expanding its
presence and reach in the UK market and enables us to leverage the
significant investments the Group has made in recent years across
brand, IT systems and people. The acquisition plus the opening of 9
additional new stores as well as an expanded online presence has
supported growth in each of our core business segments of foreign
currency exchange, pawnbroking loans, precious metals buying and
retailing of second hand and new jewellery.
The Group served more than 832,000 customers during the last
financial year and, in a market where trust is critical, Ramsdens is
an increasingly recognised brand in each of our four key business
segments. Our continued investment in marketing, store appearance
and store location remain an important factor in supporting the
Group’s growth.
FINANCI AL RESULTS & DIVIDEND
Group gross profit increased by 7.7% to £30.5m (FY18: £28.3m). This
was despite the exceptional summer weather in the UK which, as
has been widely reported by a number of travel operators, resulted
in an increased trend for “staycation” holidays, the Group’s foreign
currency gross profit grew by 2%. Our investment in our jewellery
operations led to 22% growth in gross profit from jewellery retail,
which marked a very encouraging performance. Pawnbroking and
precious metal buying also grew, by 8% and 10% respectively.
In line with the Board’s expectations, the Group delivered an
underlying* Profit Before Tax of £6.7m (FY18: £6.5m). Earnings per
share were 16.7 pence (FY18:16.3 pence). This good performance
reflects the continuing strengths of the Group’s diversified
business model.
The Group’s financial position remains strong and its good cash
generation has allowed for ongoing investment in the business and
the continuation of the Board’s progressive dividend policy. The
Board is recommending a final dividend of 4.8 pence per share
which, if approved at the shareholders’ AGM, will take the full year
dividend to 7.2 pence per share (FY18: 6.6 pence). Subject to
approval at the AGM, the final dividend is expected to be paid on 20
September 2019 for those shareholders on the register on 23
August 2019.
The Strategic Report and Financial Review that follow provide a more
in-depth analysis of the trading performance and financial results of
the Group.
OUR TE AM
One of Ramsdens’ greatest strengths is its people. Our aim is to
nurture and develop the best talent in our industry, and to that end
during the year the senior management team have been collectively
undertaking a leadership development programme. This is assisting
with an ongoing desire to enhance and demonstrate our three core
values of being trusted, open and passionate.
The pride and enthusiasm shown by all of our employees continues
to create a working environment of infectious enthusiasm to deliver
the Group’s mission statement, namely to provide a great customer
offering and give such fantastic service that our customers become
ambassadors for Ramsdens.
I would like to take this opportunity to thank everyone for their
continued hard work and dedication during this past year.
TH E FUTURE
The Group has a growing customer base, a great team and a
diversified business model. The Board continues to believe that with
its broad product offering, good cash generation and strong net
asset base, the business remains well positioned for the future.
As is the case for most UK consumer-facing businesses, the Group
continues to face external headwinds including prevailing Brexit
uncertainty that is inevitably impacting consumer sentiment. Whilst
the eventual outcome of the UK’s negotiations to leave the EU
remains uncertain, we are confident that, as a trusted brand with an
outstanding value for money proposition, we will remain in a healthy
position. A Brexit scenario that results in sterling weakening further,
thereby supporting a higher gold price in sterling terms, could
benefit both the Group’s pawnbroking and the purchase of precious
metals segments. In addition, we continue to believe that, in general
terms, UK consumers will continue to prioritise their holidays abroad
within their discretionary spending.
The Group’s online jewellery retailing and click and collect foreign
currency service have shown good progress and our investment
in this area of the business will continue as we remain focused on
expanding our online operations.
Our plan is to continue to execute our strategy of expanding the
store estate. Further to our successful acquisition in March of
a portfolio of 18 stores trading as The Money Shop, which has
expanded Ramsdens’ reach into existing and new communities, we
will continue to appraise new acquisition opportunities as they arise
on the same carefully considered basis.
Customer demand for our products across our key business
segments remains strong and the Group has a number of clear
growth opportunities. The Board remains confident that the Group
will successfully deliver its growth strategy and make further
progress in the year ahead.
*The underlying figures above reflect Earnings before interest, tax, depreciation and amortisation (EBITDA) and Profit before Tax (PBT), adjusted for the share based payments charge.
A full reconciliation is provided on page 17
5
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS CHIEF EXECUTIVE’S REVIEW
A YEAR OF GOOD PROGRESS
We have continued to see benefits from our
ongoing investments across the business.
These include: staff training across all services;
strengthening the Ramsdens brand to generate
greater awareness of the services we provide;
enhancing our jewellery retail offering; store
relocations; and investment in our online activity
to generate profit and support our increasing
retail estate.
Our store portfolio increased to 156 stores with new
greenfield locations and the strategic acquisition of 18
stores which formerly traded as The Money Shop.
STORE PORTFOLIO
156
Stores
PETER KEN YO N
Chief Executive Officer
6
ANNUAL REPORT 2019
The Group maintains a continual focus on cyber security and the
associated threat landscape. Keeping abreast of current threats by
engaging with governing bodies and market leading security software
vendors, the Group invests in its Cyber Security Framework with a
layered approach to improve the protection of the systems and the
data held.
The Group’s internal IT Team provide a highly effective and
efficient service ensuring the support requirements of the Group
are fulfilled. The IT Team are also integral to the Group’s business
expansion strategy provisioning new store locations, relocations and
acquisitions of single and multiple stores.
UNDERLYING* EBITDA
£8.3m
for the year
CURRENCY EXCHANGED
£496m
during the year
The Group delivered growth in line with the Board’s expectations
for the year with underlying* EBITDA of £8.3m and underlying* PBT
of £6.7m. This was achieved against a backdrop of: a challenging
UK high street; a year with the absence of a peak Easter FX trading
period; a summer of exceptionally hot weather in the UK; and
investment in nine new stores where trading losses in the first year
are typical and anticipated.
The Group exchanged £496m of currency during the year, which is
testament to the scale and appeal of our FX offering. This generated
£11.6m in commission (FY18: £11.3m). Retail jewellery gross profit
increased by 22% to £5.0m (FY18: £4.1m) and pawnbroking interest
grew by 8% to £7.5m (FY18: £7.0m).
OUR PEO PLE
Ramsdens’ progress is underpinned by the willingness of our people
to strive for continuous improvement. The team are focused on and
committed to delivering fantastic service to our customers and this
is evidenced by our high levels of repeat business together with
customer recommendations remaining the biggest source of new
customer acquisition.
This can only be achieved by the people being well trained, highly
skilled, motivated to work hard and by maintaining a focus on
the customer.
I am delighted with how our team rose to the challenge of March’s
acquisition of 18 additional stores and five additional loan books
from Instant Cash Loans trading as The Money Shop. We were able
to train our new employees and re-open for trading on the Group’s
IT platform within two days of acquiring the new stores. This was
an amazing effort and demonstrates the commitment our people
have to growing and developing Ramsdens. I would like to take this
opportunity to thank each of my colleagues across the business for
their contribution, dedication and effort during the year.
THE RAMSDENS BRA ND
The high customer repeat levels for foreign currency exchange and
pawnbroking loans demonstrates the trust our customers have in
Ramsdens to provide a great price for their foreign currency and to
look after their jewellery whilst in pledge.
The Group continues to drive customer awareness through sports
sponsorship and advertising. Sheffield United’s success in achieving
promotion from The Championship to The Premier League has
resulted in Ramsdens benefiting from a significant amount of TV and
newspaper coverage. However, due to the cost of Premier League
sponsorship, the shirt sponsorship has not been renewed for the
forthcoming season.
The Group continues to explore other marketing and advertising
avenues to grow the brand awareness and increase customer
recognition of the diversified services available from Ramsdens.
IT AND INFRASTRUCTURE
The Group has continued to invest in and develop its bespoke
customer centric IT operating system. Underpinning this system is a
scalable infrastructure which undergoes regular capacity planning to
ensure that the growth of the Group can not only accommodate its
core business strategy but also readily take advantage of business
acquisition opportunities. The system infrastructure is maintained
with resiliency in all areas.
*The underlying figures above reflect Earnings before interest, tax, depreciation and amortisation (EBITDA) and Profit before Tax (PBT), adjusted for the share based payments charge.
A full reconciliation is provided on page 17
7
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS OU R DI VERSIF IED BUSINESS MODEL: SALES CHANNELS
The Group served more than 832,000 customers in the year across stores and online.
Both channels are important to achieving the strategic objectives of the business and,
importantly, satisfying its customers.
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STORES
E-CO MMERCE
With the exception of one store that was relocated in December 2018, every established
store that was opened by Ramsdens prior to 2018 is profitable and contributed to Head
Office costs in 2019.
The Group has two main customer websites,
both of which are user friendly and operate on
mobile and tablet devices.
Despite a broad range in the size of our stores, each Ramsdens branch offers all of
the Group’s services. Our strategy for continuously improving the core estate includes
relocating stores to higher footfall locations and, in the last year, Glasgow, Halifax, Grimsby,
Barrow and Redcar relocated.
Both the Group’s new greenfield sites and recently acquired branches are all in town centre
locations. This reflects the diversified income streams and customer offer we have, which
have evolved significantly from our roots as a pawnbroker. Nine new stores were opened in
the year in Kendal, Preston, Whitehaven, Alloa, Castleford, Otley, Bristol, Ripon and Workshop.
The net 16 acquired stores from The Money Shop (two acquired stores have merged with
Ramsdens stores) are a mixture of secondary and prime town centre locations. Where
appropriate, these stores will be refurbished to offer jewellery retail and be more reflective
of a Ramsdens store offering. Whilst the refurbishment of these stores will take a near-term
priority over opening new stores, the Group’s medium-term objective remains to open 12
stores each year.
8
www.ramsdensforcash.co.uk focuses on
foreign currency exchange services and allows
customers to buy, on a click and collect
basis, pre-paid travel cards or travel money.
In addition, the website acts as a portal to the
international money transfer service where
payments can be made online.
www.ramsdensjewellery.co.uk, is focused on
selling new and second-hand jewellery. As well
as a profit centre in its own right, the website
acts as a catalogue for stores to generate in
store retail sales.
ANNUAL REPORT 2019
OU R DI VERSIF IED BUSINESS MODEL: PRODUCT OFFERIN G
Ramsdens operates in the four core business segments of: foreign currency exchange;
pawnbroking loans; jewellery retail; and precious metals buying.
FOREIGN CURRENC Y EXCH ANG E
The foreign currency exchange (FX) segment primarily comprises of the sale and
purchase of foreign currency notes to holiday makers. Ramsdens also offers prepaid
travel cards and international bank-to-bank payments.
The Group’s FX business delivered a resilient result in challenging market conditions
over the summer as the exceptionally hot UK weather reduced overseas holiday volumes
and consequently the demand for travel money. Despite these conditions, and the
absence of an Easter trading period in the year over the prior year, customer numbers
exchanging currency increased by 4% to 705,000 during the year (680,000 in FY18).
This outcome is testament to the strong and growing reputation the Group has for great
exchange rates and service levels.
£496m of currency was exchanged with the Group in the year, 2% increase year on year (FY18:
£485m). The sales margin continues to be closely managed and as a result FX income was up
2% to £11.6m (FY18: £11.3m). This represents 38% of total Group gross profit.
We continue to drive growth in our online click and collect service which now accounts
for 6% of the total currency exchanged or £29.5m (FY18: £20.5m).
The commission from international bank payments has a low base but remains an
opportunity for growth. The Group intends refreshing its travel card proposition in FY20.
PAWNBRO KING
Pawnbroking is a small subset of the consumer credit market in the UK and a simple form
of asset backed lending dating back to the foundations of banking. In a pawnbroking
transaction an item of value, known as a pledge, (in Ramsdens’ case, jewellery and watches),
is held by the pawnbroker as security against a six-month loan. Customers who repay the
capital sum borrowed plus interest receive their pledged item back. If a customer fails to
repay the loan, the pawnbroker sells the pledged item to repay the amount owed and returns
any surplus funds to the customer. Pawnbroking is regulated by the FCA in the UK and
Ramsdens is fully FCA authorised.
Pawnbroking income provides recurring and stable revenues for the Group and represents
25% of total Group gross profit (FY18: 25%).
The loan book growth reflects a combination of more customers (FY19 36,000 vs FY18
34,000) and the ability to offer higher loan amounts on items that can be retailed through the
store network. The level of repayment is consistent with prior years.
The year end position shows a slightly higher than anticipated expired position following the
acquisition of the pawnbroking loan books from The Money Shop. The loans were held over
for longer than normal after expiry to give the new-to-Ramsdens customers a longer period to
redeem their goods.
The capital value of the pawnbroking loan book increased from £6.4m to £7.6m or 19%. This
includes £0.6m from the acquisition of The Money Shop stores.
Gross profit from pawnbroking was 8% higher at £7.5m (FY18: £7.0m), and represented a
107% yield on the average loan book during the year. The yield has fallen slightly following the
change to six-month loan pledge terms from October 2017.
FX GROSS PROFIT
£11.6m
increased by 2%
CURRENCY EXCHANGED
£496m
increased by 2%
PAWNBROKING GROSS PROFIT
£7.5m
increased by 8%
LOAN BOOK
£7.6m
increased by 19%
9
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS JEWELLE RY RETAIL
The Group offers new and second-hand jewellery for sale and the Board believes there
is significant growth potential in this segment by leveraging the retail store estate and
ecommerce operations from both cross selling its other services to existing customers and
attracting new customers.
Jewellery Retail revenue grew by 23% to £9.8m (FY18: £8.0m). This growth was achieved
despite the much-publicised difficulties for UK high street retailers and reflects the increasing
recognition of the value and quality of the retail proposition.
The Group enjoyed positive contributions from the new stores and improved performance
from core stores driven by the increased investment in jewellery stock levels and enhanced
window displays. Ecommerce jewellery sales increased by 77% and now represent 5% of
the total jewellery sold. 51% of e-commerce customers originated from outside our stores’
customer catchment area.
The jewellery gross profit margin remained flat at 52% (FY18: 52%). Whilst we are selling
more premium watches and new gold jewellery, both at a lower margin, we have managed to
maintain overall margin by increasing sales of our new recycled diamond product range and
by managing discount levels on our second-hand products.
Gross profit from jewellery retail increased by 22% to £5.0m (FY18: £4.1m). Jewellery retail
now represents 16% of the Group’s total gross profit (FY18: 15%).
PURCHASES OF PRECIOUS METALS
Through its precious metals buying and selling service, Ramsdens buys unwanted jewellery,
gold and other precious metals from customers. Typically, a customer brings unwanted
jewellery into a Ramsdens store and a price is agreed with the customer depending upon the
retail potential, weight or carat of the jewellery. Ramsdens has various second-hand dealer
licences and other permissions and adheres to the Police approved “gold standard” for
buying precious metals.
Once jewellery has been bought from the customer, the Group’s dedicated jewellery department
decides whether or not to retail the item through the store network or online. Income derived
from jewellery which is purchased and then retailed is reflected in jewellery retail income and
profits. The residual items are smelted and sold to a bullion dealer for their intrinsic value and
the proceeds are reflected in the accounts as precious metals buying income. The Group has
continued its strategy to increase jewellery stock levels to assist jewellery retail sales.
The average sterling gold price fell by 1% during the year. The weight of gold purchased on a
like for like basis was broadly flat and the increased profit was generated by new stores.
Gross profit was up 10% to £4.8m (FY18: £4.4m) and represents 16% of total Group gross
profit (FY18: 15%).
RETAIL REVENUE
£9.8m
increased by 23%
GROSS PROFIT
£5.0m
increased by 22%
GROSS PROFIT
£4.8m
increased by10%
OTHER SERVICES
In addition to the four core business segments, the Group also provides additional services
in Cheque Cashing, Western Union money transfer, Sale and buy back of Electronics, Credit
Broking and receives Franchise Fees.
Revenue from these services in FY19 was £2.5m (FY18: £2.8m) resulting in £1.6m of gross
profit (FY18: £1.6m). This represented 5% of the Group’s total gross profit (FY18: 5%).
GROSS PROFIT
£1.6m
10
ANNUAL REPORT 2019
DELI VER IN G OUR CLEAR GROW TH STRATEGY
During the financial year, we have continued to make good progress against our strategic
objectives and our growth strategy remains unchanged. We continue to concentrate on:
01
02
Continuing to improve
the performance of
our core estate
Expanding the
Ramsdens branch
footprint in the UK
03
Developing our
online proposition
04
Continuing to appraise
market opportunities
presented by operating
in a challenging market
CONT INU ING TO IMPROVE THE P ERFO RM ANC E OF OUR CO RE STO RE E STAT E
We remain focused on delivering our core mission which has three component parts:
To have a great customer offering…
…and give such fantastic customer service…
• We have very competitive exchange rates for currency
• We offer a simple and trusted pawnbroking service
• We have invested in the quantity and quality of our jewellery stock
and how it is presented to the customer
• We keep the store estate modern and bright and where appropriate
continue to relocate stores to higher footfall locations
• We have a team of fully trained and motivated staff who are
passionate about the business and their customers, including
cross-selling to meet customer needs
• We have a first-class, customer-centric IT system that allows staff
to have a full appreciation of a customer’s history with Ramsdens,
thereby facilitating efficient processing times
…that our customers become our ambassadors.
Recommendations from family and friends remains our biggest source of new customers.
Fantastic customer service in helping me find the
perfect items I was looking for. Will certainly use again.
JAY
The service was excellent and the watch just as
described. I am very pleased with the purchase and I
would certainly use Ramsdens in the future.
STEVE C
11
11
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS EXPANDING THE RAMSDENS BRANCH
FOOTPRINT IN THE UK
The Ramsdens store estate has grown from 131 stores to 156 stores during the financial
year. This includes four franchised stores in both periods. We remain confident that the
future financial performance of the new stores will leverage off the Head Office costs
which have been geared up to support our continued growth.
WEST SCOTL AND
HIGHL ANDS
CENTRAL SCOTL AND
EAST SCOTL AND
Airdrie
Bathgate
Bellshill
Coatbridge
Cumbernauld
Dumfries
East Kilbride
Hamilton
Kirkintilloch
Livingston
Motherwell
Newton Mearns
Springburn
Wishaw
SOUTH YORKSHIRE
Barnsley
Beeston
Chesterfield
Derby
Doncaster
Doncaster Fgate
Hillsborough
Lincoln
Rotherham
Rotherham 2
Sheffield Moor
Worksop
Goole
Grimsby
Scunthorpe
EAST WALES & SO UTH
WE ST
Albany Rd
Barry
Bristol
Bristol Fishponds
Cowbridge Rd
Cwmbran
Llanrumney
Newport
Alloa
Arbroath
Dundee
Dunfermline
Falkirk
Glenrothes
Grangemouth
Kirkcaldy
Perth
Stirling
T YNE & WEAR
Bishop Auckland
Bridges C Bridges
Chester Le Street
Chester Road
Consett
Durham
Gateshead
Jarrow
King Street
Newton Aycliffe
South Shields PER
Southwick
Washington
WE ST WALES
Aberdare
Blackwood
Bridgend
Caerphilly
Carmarthen
Ebbw Vale
Haverfordwest
Llanelli
Merthyr
Morriston
Neath
Pontypridd
Port Talbot
Swansea
Argyle St
Ayr
Braehead
Clydebank
Dumbarton
Greenock
Greenock 2
Irvine
Kilmarnock
Paisley
Paisley 2
Partick
Queens Park
Rutherglen
Saltcoats
The Forge
NORT H & EDI NB URGH
Ashington
Benwell
Berwick
Blyth
Byker
Cramlington
Dalkeith
Dalry Rd
Duke St
Killingworth
Mussleburgh
Newcastle
North Shields
Wallsend
Whitley Bay
NORT H YORKSHI RE
Bridlington
Castleford
Hessle Road
Holderness Road
Kirkgate
Morley
Otley
Ripon
Scarborough
York
Aberdeen
Aberdeen 2
Elgin
Fraserburgh
Inverness
Inverness 2
Peterhead
TEES SIDE
Billingham
Coulby Newham
Darlington
Eston
Gilkes St
Guisborough
Hartlepool
Hill Street
Linthorpe
Northallerton
Peterlee
Redcar
Stockton
Thornaby
CUM BRIA
Barrow
Bradford
Bradford 2
Carlisle
Halifax
Huddersfield
Keighley
Kendal
Lancaster
Oldham
Whitehaven
Workington
L ANCASHIRE
Altringham
Blackburn
Chorley
L'pool Norris Grn
L'pool Old Swan
Preston
Sale
Skelmersdale
12
ANNUAL REPORT 2019
GL ASGOW
RIPO N
PRESTO N
TH E INCREASE IN 25 STORE S REFL EC TED :
• Opening six greenfield sites,
• Acquiring two independent jewellery stores,
• Acquiring one small pawnbroking store,
• Acquiring 16 net new stores from Instant Cash Loans trading
as The Money Shop (acquired 18 stores but two stores merged
into the existing store network).
Whilst the Group’s medium-term strategy remains to open 12
stores per annum, in the short term we will focus on developing the
portfolio of acquired Money Shop stores.
PE TERLEE
CASTLE FORD
13
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS DEVELOPING OUR ONLINE PROPOSITION
We are continuing our journey to be truly multi-channel and continue to see online growth
as additive to store sales.
During the year, we have continued to invest in our transactional
website focused on jewellery retail www.ramsdensjewellery.co.uk.
We have invested in improved software and hardware to enable
more second hand jewellery pieces to be added to the website,
improved the imagery, improved the search engine optimization
(“SEO”) performance, and undertaken various advertising and
marketing initiatives. The additional benefit of this investment is
that the range of stock online can be shown to customers in store
to assist with store sales. This investment will continue as we
move forward. As a stand-alone channel, ecommerce retail sales
grew by 77% and now account for c.5% of all jewellery sold. 51% of
the customers purchasing online live outside the Ramsdens store
network’s catchment area and we remain confident that this is a
great opportunity for growth.
The www.ramsdensforcash.co.uk website has been remodeled to
have greater focus on foreign currency exchange with an emphasis
placed on improving the customer journey. Click and Collect foreign
currency exchanged grew by 44% in the last year.
CONTINUING TO APPRAISE MARKET
OPPORTUNITIES PRESENTED BY
OPERATING IN A CHALLENGING MARKET
We have completed the acquisition of 18 stores from Instant Cash Loans trading as The Money Shop, together with 5 small loans books from
stores that they chose to close. We have merged two of the 18 stores into our estate and, at the year end, this acquisition contributed a net
new 16 stores.
During the year we completed the purchase of one store from Jolly’s pawnbrokers and two independent jewellery stores.
We believe that the challenges faced by the UK high street will present further opportunities to acquire small jewellers, pawnbroking stores
and to gain foreign exchange market share as banks and travel agents close branches.
14
ANNUAL REPORT 2019 LOOKING AHEAD
The Board remains confident that Ramsdens is well positioned
to continue to progress and deliver its growth strategy, thereby
delivering strong and ongoing capital and income returns
for investors.
This confidence is derived from the investments we have made in
our brand, IT systems, customer offering and staff development. Our
people are customer focused and we feel we have an opportunity
to further improve what we currently do. This, in combination with
our strong financial footing and growing diversified income streams,
gives us confidence that we will make further progress and take
advantage of good growth opportunities.
We believe that the challenges faced by the UK high
street will present further opportunities to acquire
small jewellers, pawnbroking stores and to gain
foreign exchange market share as banks and travel
agents close branches.
PETER KENYON
Chief Executive Officer
15
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
FINANCIAL DIRECTOR’S REVIEW
"Finance costs remain low reflecting
the efficient seasonal use of the
Group’s revolving cash facility during
peak holiday periods."
FINANCIAL RESULTS
For the year ended 31 March 2019, Group
reported Revenue increased by 17% to £46.8m
(FY18: £39.9m) with growth across the four key
income streams. Gross profit increased by £2.2m
(8%) to £30.5m (FY18: £28.3m).
The Group’s administrative expenses increased by
£2m (9%) to £23.9m (FY18: £21.9m). This reflects
an increase in staff costs to support the growth of
the business and the costs associated with new
stores. Finance costs remain low reflecting the
efficient seasonal use of the Group’s revolving
cash facility during peak holiday periods.
PROFIT BEFORE TAX INCREASED
3% TO £6.5M (FY17: £6.3M).
To provide a comparison to the prior
financial period and for future reporting
periods, share based payments have been
removed to give the following underlying
results. The underlying profit before tax was
£6.7m an increase of 4% on the prior year of
£6.5m. The underlying EBITDA increased by
5% to £8.3m from £7.9m in the prior year.
MARTI N CLYBURN
Chief Financial Officer
16
ANNUAL REPORT 2019 A reconciliation between the Underlying and Statutory results is
provided below.
The overall decrease in cash and cash equivalents was £1.2m
reducing net cash and cash equivalents to £13.4m (FY18: £14.6m).
£0 00’S
Statutory profit before tax
Share based payments
FY19
FY 18
£6,492
£6,312
These numbers are stated prior to adjusting for the reclassification of
£2.1m from receivables to inventory as a result of adopting IFRS 15.
£221
£161
FINANC IAL POSITIO N
Underlying profit before tax
£6,713
£6,473
Finance costs
£131
£177
At 31 March 2019, net cash and cash equivalents amounted to
£8.2m (FY18: £12.7m) and the Group had net assets of £30.9m
(FY18: £27.6m).
Gain on fair value of derivative liability
Depreciation, amortisation and loss on
disposal
Underlying EBITDA
(£40)
(£79)
IFRS 9
£1,446
£1,319
£8,250
£7,890
EA RNI NGS PER S HARE A ND DIVIDEND
The statutory basic and diluted earnings per share for the year
is 16.7p and 16.3p respectively up from 16.3p and 15.9p in the
previous year.
The Board is recommending a final dividend of 4.8 pence per
share in respect of FY19 (FY18: 4.4 pence per share). Subject
to shareholder approval at the AGM this will be payable on 20
September 2019 for those on the shareholders register as at 23
August 2019. This brings the total dividend for FY19 to 7.2 pence
per share (FY18: 6.6 pence per share). This dividend is in line with
the Board’s progressive dividend policy reflecting the cash flow
generation and earnings potential of the Group. The Board intends to
continue to pay an interim dividend in February and a final dividend
in September in the approximate proportion of one third and two
thirds respectively subject to the financial performance of the Group.
CAPITA L EXPENDI TURE & ACQUIS IT IO NS
During the financial year, the Group invested to increase the store
estate by acquisition, opening new stores and relocating existing
stores. This included an acquisition for £1.5m from Instant Cash
Loans Limited trading as The Money Shop which contributed net 16
further stores. Capital expenditure for tangible and intangible assets
in addition to the acquisition was £2.4m which mainly reflected the
opening of a further 9 new stores and relocation of 5 stores during
the year.
CASH FLOW
The net cash flow from operating activities was £1.5m. This is
after growing trade and other receivables by £1.6m (principally the
Pawnbroking loan book), increasing our inventory levels by £3.0m
(jewellery stock to facilitate higher jewellery sales and stock for new
branches) and reducing trade and others payables of £0.7m.
The Group continued to execute its growth strategy in the year
by investing in new stores including the acquisition and capital
expenditure detailed above. £5.3m of the £10m revolving credit
facility from Yorkshire Bank was drawn (£5.2m net of borrowing
costs) as at 31 March 2019 (FY18: £2m drawn, £1.9m net of
borrowing costs). The Group renewed its revolving credit facility
in March 2019 for a further 3 years to March 2022 and increased
the facility limit to £10m (FY18: £7m). The Group is well within its
covenant of 1.5x cash cover. The cash position and headroom on the
bank facility provide the Group with the funds required to continue to
deliver its current stated strategy.
These statements have been prepared under IFRS9 ‘Financial
Instruments’ with prior years not restated. The Group has now
disclosed pawnbroking revenue gross of impairment with impairment
disclosed separately as a cost of sale, totaling £552,000 in the
current year. In previous years, pawnbroking revenue was recorded
net of impairment. This change has no impact on profit or reserves
in the current or prior years.
IFRS 15
As a result of the implementation of IFRS 15 during the year,
management has reviewed the accounting treatment of unredeemed
pawnbroking loans. These are loan balances where the customer
has defaulted on their loan. Management has assessed these
transactions against the control criteria in IFRS 15 and has
concluded that the substance of the legal arrangement is that
control of the pledged item transfers to the Group at the point the
customer defaults. This is due to the fact the Group controls the
method of disposal and the price, despite legal title of the goods
not transferring. Management has recorded revenue of £2,472,000
to reflect the consideration received for the pledged item, with a
corresponding adjustment to cost of sales, reflecting the cost to
the Group. There is no impact on gross profit or earnings as a result
of this adjustment. The pledge balance, representing the cost of
acquiring the pledged item, has been reclassified to inventory, and is
measured at the lower of cost and net realisable value in accordance
with IAS 2. Accordingly, the Statement of Financial Position has
been amended to reflect the transfer from receivables to inventory,
amounting to £1,965,000 at 1 April 2018. This has no impact on
total current assets or the net assets. The Group has adopted
IFRS15 using the modified retrospective approach. Therefore,
the comparative information was not restated. The impact of the
application of IFRS15 to the comparative balances is detailed in note
2 to the financial statements.
TAXATI ON
The tax charge for the year was £1.3m (FY18: £1.3m) at an effective
rate of 20.5% (FY18: 20.2%). The effective rate is higher than the
standard UK rate of corporation tax of 19% (FY18: 19%) mainly due
to the timing difference between depreciation charges and capital
allowances and non-deductible expenses including the amortisation
of certain customer lists. A full reconciliation of the tax charge is
shown in note 10 of the financial statements.
SHARE BASED PAYMENTS
The share-based payment expense in the period was £221,000
(FY18: £161,000). This charge relates to the Long Term Incentive
Plan (LTIP) which is a discretionary share incentive scheme under
which the Remuneration Committee can grant options to purchase
ordinary shares at a nominal 1p per share cost to Executive Directors
and other senior management subject to certain performance and
vesting conditions.
17
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
PRINCIPAL RISKS
AND UNCERTAINTIES
The Corporate Governance Report includes an overview of the Group’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 model, the strategy,
future performance, solvency and/or liquidity of the Group. The
Board continually reviews the potential risks facing the Group and
the controls in place to mitigate those risks as well as reduce any
potential adverse impacts.
ECONOMIC RISK
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.
This list is not intended to be exhaustive and excludes potential risks
that the Board currently assess as not being material.
RISK A ND IMPACT
MITIG ATING FAC TO RS
IMPAC T AND CHANGE I N RISK
The Board considers that there has been
no change in the level of risk.
The Group mitigates this risk by having
diversified income streams which are
counter cyclical and to a degree leave
the business recession neutral.
Where possible the Group has flexible
property lease arrangements being the
biggest fixed cost after staff.
Jewellery made in Europe can be
manufactured in the UK and there are
approximately 25 individuals from the
EEA who work for the Group, none of
whom are in key management roles.
Almost all of the Group’s revenue is
generated in the UK from 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 been delayed and
uncertainty of the outcome and the
impact continues.
Risks could be wide ranging from
a general economic downturn to
something more specific e.g. restrictions
on travelling to / from the UK or people
not holidaying abroad impacting foreign
currency revenues.
The ultimate outcome of any Brexit
trading agreement may mean an
increase in the cost of goods imported
from Europe or an impact on the ability
of EEA nationals to work for the group.
18
ANNUAL REPORT 2019 IT SECURITY
RISK AND IMPACT
MITIG ATING FAC TO RS
IMPAC T AND CHANGE I N RISK
The Board considers that there has been
no change in the level of risk.
A malicious attack may cause a data
breach or the IT system to fail and lead
to business interruption and reputational
damage.
The Group has significant reliance on
the stability and security of its IT system
which manages inventory tracking,
recording and processing transactions,
summarising results and managing the
business. All aspects of the operations
of the business, both customer facing as
well as internal management, regulation
and control are reliant on the IT and
software systems of the Group.
The Group’s internal IT team assesses
daily any vulnerability to potential cyber
threats and uses a suite of tools such
as anti–virus, air–gapping and email
filtering to protect the system’s integrity.
The Group undertakes annual
penetration testing and RedTeaming
testing to test the infrastructure
and data security. The Group has a
comprehensive business continuity plan
to minimise the impact to the business
should the IT systems fail. This is
regularly reviewed and tested.
The Group also has cyber insurance
cover which the Board believes is
appropriate for its risk profile.
The IT Director reports to the Executive
Compliance & Risk Committee on a
monthly basis.
STAYCATION
RISK A ND IMPACT
MITIG ATI NG FACTORS
IMPAC T AND CHANGE I N RISK
If the UK holiday maker chooses to
remain in the UK or take fewer or
shorter holidays, the demand for foreign
currency could decline and reduce
revenue.
The Group mitigates this risk by having
other diversified income streams.
The Board considers that there has been
a slight increase in risk following the
exceptional weather in the summer of
2018 and Brexit uncertainty, together
impacting summer 2019 holiday
bookings.
REGULATORY
RISK A ND IMPACT
MITIG ATI NG FACTORS
IMPAC T AND CHANGE I N RISK
The Board considers that there has been
no change in the risk.
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 expert legal and
compliance 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 programme
in order to maintain adherence to
legislation.
19
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
REPUTATION
RISK AND IMPACT
MITIG ATI NG FAC TO RS
IMPAC T AND CHANGE I N RISK
The Board considers that there has been
no change in the risk.
A risk of adverse publicity, or customer
comment through social media could
have an adverse material impact
on the Group’s brand, reputation
and customers using the stores and
websites.
The Group’s financial performance is
influenced by the image, reputation,
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 trusted brand. The Group is also well
aware that customer recommendations
are critical to growing the business and
that poor service will not enhance that
objective.
The Group invests heavily in its staff
development. Offering a great customer
service is part of the mission statement
for the Group and as such, customer
service levels are measured 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.
Staff incentive schemes are approved by
Head of Compliance and Risk to ensure
that all bonuses are aligned with long-
term principles and do not promote poor
short-term behaviour.
The Group retains a financial and
consumer PR consultancy to provide
ongoing support and media engagement.
EXCHANGE RATE RISK
RISK A ND IMPACT
MITIG ATING FAC TO RS
IMPAC T AND CHANGE I N RISK
Whilst the Group trades almost
exclusively in the UK, the foreign
exchange cash held in store is exposed
to the risks of currency fluctuations. The
value exposed is mainly in Euro and US
dollars.
There is the daily risk of buying today,
receiving the currency the next day,
and subsequently selling it and being
susceptible to movements in the
exchange rate.
There is a period end risk for the FX
stock which remains in the branch tills.
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.
Sterling has become more volatile as
a result of the uncertainty surrounding
Brexit and therefore the Board consider
the risk is slightly higher than historically
experienced.
The policy has been developed over
time in conjunction with our hedging
suppliers and reviewed by Manchester
Business School.
20
ANNUAL REPORT 2019 GOLD PRICE
RISK A ND IMPACT
MITIG ATI NG FAC TO RS
IMPAC T AND CHANGE IN RISK
The Group’s assets and profit are
sensitive to movements in the gold price
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.
The Group closely monitors the gold
price.
Due to the systems, controls and staff
training, the Group has the flexibility
to amend its buying parameters at
short notice to maintain margins in the
purchase of its precious metals.
The volatility of Sterling is affecting
the Sterling value of the gold price and
therefore the Board consider the risk
to be slightly higher than historically
experienced.
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.
With respect to pawnbroking the same
systems, controls and staff training
allows the lending values to be amended
to reflect changes in the gold price but
the best disposal route for unredeemed
pledges remains retailing through the
Group’s stores or online rather than the
intrinsic value of the precious metal held
as security.
The Board sensitises the gold price in
its budget assumptions and keeps the
possibility of hedging the gold price
under review.
LIQUIDITY AND FORECASTING RISK
RISK AND IMPACT
MITIG ATING FACTORS
IMPACT AND CH ANGE I N RISK
The Board considers that there has been
no change in the risk.
The result of a risk to liquidity would
be that the Group runs out of cash and
would be unable to pay its creditors
as they become due. This could be as
a result of non performance reducing
profitability and cash generation,
expanding too quickly, or poor budgetary
planning.
There is the risk that the bank or
merchant card supplier becomes
insolvent and we would no longer have
access to the 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 and expanding.
The Group has a strong balance sheet
with a healthy cash position. The
Group has entered into a £10m, 3 year
revolving credit finance facility, from
March 2019, provided by Clydesdale
Bank trading as Yorkshire Bank.
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 at all times.
21
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS CREDIT RISK ASSESSMENT
RISK A ND IMPACT
MITIG ATING FAC TO RS
IMPAC T AND CHANGE I N RISK
The Board considers that there has been
no change in the risk.
There is a risk that the pawned articles
are overvalued increasing credit risk.
The Group is wholly reliant on the article
pledged should a customer default. A fall
in the gold price also impacts the value
of the intrinsic value of the security held.
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 36,000 customers and
the average pawnbroking loan is £225.
22
ANNUAL REPORT 2019 FINANCIAL CRIME
RISK AND IMPACT
MITIG ATI NG FAC TO RS
IMPACT AND CH ANGE IN RISK
The Board considers that there has been
no change in the risk.
The Group is at risk of staff acting
independently or in collusion to defraud
the Group. This could be the theft of
cash, jewellery or other assets or data.
The Group mitigates risk by having
policies and processes to identify and
stop attempts to involve the business
with financial crime activity.
The Group is at risk from various forms
of criminal activity including theft,
money laundering, cyber crime or fraud.
This could expose the Group to financial
losses as a result of the loss of assets,
reimbursement to customers or other
business partners, or to fines or other
regulatory sanctions, which could
also significantly damage the Group's
reputation.
The Group has a robust compliance
monitoring programme which involves
every branch being randomly audited at
least twice per annum and a centralised
team reviewing and investigating any
abnormal patterns with transactions.
Processes, systems and controls are
continually evolving and being developed
within the Group’s bespoke IT system.
The Group has high levels of physical
security and sophisticated alarm
systems for its stores and head office.
The Group encrypts all customer data
and retains it behind two firewalls.
The Group maintains business insurance
including cyber insurance cover for
material losses.
The strategic report, as set out on pages 2 to 23, has been approved by the board
By order of the Board
PE T E R KENYON
Chief Executive Officer
11 June 2019
23
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Treat yourself or a loved one to
new or pre-owned jewellery
24
ANNUAL REPORT 2019 CORPORATE
GOVERNANCE
25
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS BOARD OF DIRECTORS
EXECUTIVE DIRECTORS
PETER EDWA RD KEN YON ( 5 4) , 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 30 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 C LY BU RN ( 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
NON-EXECUTIVE DIRECTORS
ANDR EW DAVID MEEHA N (6 4) , Non-Executive Chairman
Andy is a highly experienced retail executive with over 30 years' experience including CEO and CFO roles
at the Co-Operative Retail Services, Storehouse plc and Sears plc. Since 2006 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 Chairman of University Hospitals Coventry and Warwickshire NHS
Trust and the hospitals' charity and NEF Holdings Limited. He is also Pro-chancellor and Deputy Chair of
Governors at Coventry University, Chairman of Mayday Trust, Chair of the Council at Coventry Cathedral,
a director of Lanthorne Limited and Cheviot Court (Luxborough Street) Limited.
SIMON EDWARD HE RR ICK ( 55 ), 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
STEP HEN JOHN SMITH ( 61) , 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 Procomm Site Services Ltd and Nixon Hire Ltd
26
ANNUAL REPORT 2019 CHAIRMAN’S INTRODUCTION
The Directors recognise the importance of sound
corporate governance. The Company is a member
of the Quoted Companies Alliance (QCA) and
has adopted and complied with its Corporate
Governance Code.
This statement describes how the company applies
the ten principles of good corporate governance in
the best interests of all stakeholders in
the business.
A NDREW MEEHAN
Non-Executive Chairman
27
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
PRIN CIPLE 1 – ESTABLISH A ST RAT EGY AN D
BUS IN ESS MODE L WH ICH PROMOTE LO NG TE RM
VA LUE FOR SHAREHO LDERS
within the business. In return we are committed to create a working
environment in which the employee can grow and develop, be well
rewarded and well respected for what they contribute.
Please see the Strategic Report from pages 2 to 23.
The Board is responsible for the strategic direction of the Group and
the implementation of that strategy rests with the Chief Executive
officer and his senior management team.
The strategy of the Business has not changed since it listed on AIM.
The Group will continue to;
•
•
•
•
•
improve the performance of our core estate stores,
expand the branch footprint in the UK,
develop our online proposition,
appraise market opportunities presented by operating in a
challenging market, and
develop our people.
PRIN CIPLE 2 – SEEK TO UNDERSTAN D AND
MEET SHAREHOLDER NEEDS AND EXP EC TAT ION S
The Executive Directors are keen to engage with shareholders
and they intend to maintain communication with institutional
shareholders through individual meetings, particularly following
publication of the Group's interim and full year results.
Private shareholders are encouraged to attend the AGM at which
the Group's activities are considered and questions answered or
alternatively an investor can email IR@ramsdensplc.com directly.
Videos have been produced to explain the interim and yearend
results as well as to give a background and insight into the Group.
These are available to watch on the Company’s website
www.ramsdensplc.com.
The Non-Executive Directors are available to discuss any matters
shareholders might wish to raise, and the Chairman and Non-
Executive Directors will, and have, attended meetings with
institutional investors during the year.
PRIN CIPLE 3 – TAKE INTO ACCO UN T W IDER
STAKE HOLDER A N D SOCIA L RESP ON SIBIL IT IE S
AN D THEIR I MPLICATIONS FOR LON G T ERM
SUC CESS
The Group has always prided itself on acting responsibly in every
aspect of the business. We operate with three core values, of being
trusted, open and passionate about our business. We believe that
engaging with our stakeholders, be they, employees, customers,
shareholders, regulators, suppliers or the wider local communities
we operate in, and living our values, are the best ways to develop
long term relationships for mutual benefit.
EMP LOYE ES
At Ramsdens we believe that being a diverse organisation allows
us to grow and become the business we aspire to be. Our aim is
to ensure that all employees at Ramsdens are treated equally and
are able to grow and develop their careers with the business while
ensuring equality is maintained and demonstrated throughout all
aspects of their career journey with us.
The success the Group has had to date, is down to its people.
Implementing a continuous improvement ethos can only be achieved
through the hard work, dedication and enthusiasm of the people
The Group is an equal opportunities employer and we believe
in appointing the best person based purely on merit to any role
within the business. The Group is committed to ensure that people
undertaking the same or similar work are paid equally and have an
equal opportunity to progress. The Business encourages flexible
working arrangements for people to continue to develop their
careers whilst choosing how to maintain their balance between work
and home life.
The Group has comprehensive training programmes. These start
with a week long, classroom-based induction into the business,
and supplemented by instore mentoring, e-learning courses and
area face to face training sessions. Every staff member has one to
one development discussions with their Line Manager and training
courses are provided as required. Certain training courses are
mandatory and must be completed on an annual basis e.g. health
and safety, data protection, cyber risks and anti-money laundering,
whilst other courses focus on the development of an individual’s
skills. During the last year there has been a major investment in a
new retail jewellery course, which continues to be rolled out. The
top 30 people influencers in the business are continuing with their
Senior Management Leadership programme.
Where possible the Group wishes to promote from within. The three
Regional Managers, five of the eleven Area Managers, five of the
seven Internal Auditors and over 50% of the Branch Managers were
promoted from within the business.
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.
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 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.
As part of the Board’s desire to reward key senior employees over
the long term, the Group long term incentive plans was extended to
include 16 participants in 2018.
REGUL ATO RS
The Group engages proactively with, and believes it has, open and
good relationships with its Regulators.
ENVIRONME NT & SUPPLY CH AI N
We also understand that, as a company, we can help make a
difference to the environment. The Group continues to invest in
various 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.
28
ANNUAL REPORT 2019
The Group is constantly striving to reduce its carbon footprint
through means of recycling as much as we can and using materials
from sustainable sources where possible.
The Group has a limited number of key trade suppliers. Strong
relationships have been built up over many years where the supplier
and Ramsdens work together to improve the trade for both parties.
Ramsdens reports on its supplier payment practices and believes
in paying all suppliers as and when payments are due. The Group
has sought assurance from its suppliers that they have no modern
slavery practices within its supply chains. The Group's statement
on its compliance with the Modern Slavery Act is available on its
Website, www.ramsdensplc.com.
COMMU NI T Y & CUSTOMERS
The Group prides itself on its high repeat customer rates and the
low number of complaints it receives and is committed to offering
the highest standards of customer service. We appreciate at times
things go wrong and the Ramsdens philosophy is to use a root cause
analysis approach to put things right as quickly as possible and learn
from any mistakes.
The Group recognises that customers' circumstances change and
is aware of the needs of vulnerable customers. It has policies and
procedures to help customers, including proactive forbearance
programmes, and recognise signs of vulnerability including any
customers who may be suffering from modern slavery.
The Group is committed to engaging with its local communities and
has assisted in a variety of fundraising initiatives raising money for
both national and local charities. This was primarily done through
donations of jewellery for raffle prizes or auction lots, and a matched
funding scheme for staff taking part in local charitable events.
Some of the charities supported include Great North Air Ambulance,
Teenage Cancer Charity, Children in Need, St Luke’s Hospice, MIND,
PGA Benevolent Fund, Breast Cancer Support, Teesside Hospice,
Butterwick Hospice, Middlesbrough and Teesside Philanthropic
Society and Sheffield Teaching Hospitals Foundation. Community
projects include Castleton Village Hall, Yarm Community Project and
Romanby School Fundraising.
One of the fundraising initiatives involved four members of the head
office team participating in the CEO Sleepout in Stockton. The
team joined business leaders, business owners, CEOs and other
senior executives who gave up home comforts and a warm bed for
one night and slept outdoors, raising money and awareness to fight
homelessness and poverty in the Teesside region.
This financial year the company has raised or helped charities raise
over £7,000.
29
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
PRIN CIPLE 4 – EM BED EFFEC TIVE RIS K
MANAGE MENT, CONS IDERING BOT H
OPP ORT UNITIES A ND THREATS TH RO UG HOU T T HE
ORG AN ISATION
specialist advice from regulatory advisers and lawyers. During
the last year this advice has included anti money laundering, FCA
regulations, GDPR, and Cyber Security. This has been achieved by
attendance on courses or through retained advisory relationships.
The Board recognises that effective risk management is essential
and continually invests in its Compliance and Risk department
and activities. The Audit & Risk Committee has detailed terms of
reference which are available on the Company’s website, www.
ramsdensplc.com.
The risk assessments together with the systems and controls are
well established within the Business but are continually monitored as
being fit for purpose as new threats emerge or as new opportunities
are explored.
There is an Operational Compliance and Risk Committee, chaired
by the Head of Compliance and Risk, which meets at least monthly
and reports to the Audit & Risk Committee on a 6 monthly basis. The
chair of the Audit and Risk Committee and Head of Compliance and
Risk have open dialogue when ever they feel it is necessary outside
of the two formal reports.
The Head of Compliance and Risk implements a comprehensive
compliance monitoring programme to evidence the business has
the required systems and control to manage risk. He is assisted by a
centralised team of three Compliance and Risk officers and a team
of seven field internal auditors. All branches are audited at least
twice per annum and head office departments at least annually.
The audit and compliance monitoring programmes are reviewed
and developed on an ongoing basis and include asset checks and
adherence to policy and procedures.
PRIN CIPLE 5 – MAINTAIN THE BOARD A S A
WE L L- FUNCTIO NING, BAL ANCED TEAM L ED BY
THE CHAIR
The Board comprises 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.
Each Director individually reviews the effectiveness of the Board as
a whole and the contribution made by each Director. This is then
reviewed by the Nominations Committee who meet at least annually.
PRIN CIPLE 6 – ENS URE THAT BET W EEN T H EM
THE DIR ECTO RS HAVE THE NEC ES SARY UP -TO-
DATE E XPERIENCE, S KILLS AND CA PABIL IT IES
The Directors of the Group and their biographies are set out on
page 26.
The CEO and Company Secretary are satisfied that the Non-
Executive Directors have devoted sufficient time to the role as
required to make a good contribution to the Group.
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.
There are no plans to change the Board composition at this time and
the Board believes that it has the appropriate experience, skills and
capability for a FCA regulated business of its size.
PRINCIPLE 7 – EVALUATE BOARD P ERFO RMAN CE
BASED O N CLEAR AND RELEVANT OBJ EC TI VES,
SEEK ING CONTINUO US I MPROVEME NT
The Board is responsible for reviewing, formulating and approving the
Group’s strategy, budgets and corporate actions and overseeing 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
Structure and capital including dividends
Financial reporting and controls
Internal controls on risk management and policies
Significant contracts and expenditure
•
•
•
•
• Communication with shareholders
• Remuneration and employment benefits
• Changes to the board composition
Each member of the Board undertakes annually a structured
questionnaire style review of the effectiveness of the Board, as
a collective and the contribution by each Director. The Chairman
then leads specific discussion 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 year's 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.
The experience and knowledge of each of the Directors gives them
the ability to constructively challenge strategy and
scrutinise performance.
There are no plans to change the Board composition at this time and
the Board believes that it has the appropriate governance framework
and internal controls for a FCA regulated business of its size.
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 two Executive Directors both work full time and are participating
in the Senior Leadership Development Programme facilitated
by external consultants. They receive support from a dedicated
management team and professional advisers. The Directors receive
30
ANNUAL REPORT 2019
PRIN CIPLE 8 – PROMOTE A CORP O RAT E
CU LT URE THAT I S BASED ON ETHICAL VALU ES
AN D BEHAVI OURS
The Group’s future success over the long term is dependent upon it
living up to its high ethical values and demonstrating
exemplary behaviours.
The Board and the senior management team work to ensure that
the mission statement, in which the customer is at the heart of
everything the Group tries to do, is delivered. This work includes
consistent communications of what is expected, delivered through
a weekly newsletter and face to face by Regional Managers, Area
Managers, Internal Auditors and Department Heads.
All of the Directors have visited stores to gain direct feedback.
Video mystery shopping results, complaint and compliment statistics
are used to monitor customer service levels.
All feedback received from staff and customers is used to test the
policies and procedures to ensure they remain fit for purpose and
that the business continues to evolve.
PRIN CIPLE 9 – MAINTAIN GOVERNANC E
STRUCTURES AND PRO CES SES THAT ARE FIT
FOR PURPOSE AND S UP PORT GOO D DEC ISIO N –
MAKI NG BY THE BOARD
The Board, comprising two Executive Directors and three Non-
Executive Directors, has met eleven times in the year, above its
stated minimum of 10 meetings.
The following table shows directors' attendance at scheduled board
and committee meetings during the year.
We appreciate at times
things go wrong and the
Ramsdens philosophy is to
use a root cause analysis
approach to put things right
as quickly as possible and
learn from any mistakes.
Andy Meehan
Simon Herrick
Steve Smith
Peter Kenyon
Martin Clyburn
BOARD
AU D IT
REMU N ERATIO N
N OM IN AT IO N
11/11
11/11
11/11
11/11
11/11
4/4
4/4
4/4
-
-
2/2
2/2
2/2
-
-
1/1
1/1
1/1
-
-
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 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
•
31
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
PRINCI PLE 10 – COMMUNICATE H OW T HE
COMPANY IS GOVE RNED AND I S PERFO RMING BY
MAI NTAINING A DI ALOGUE WI TH SHAREH OLDE RS
AND OTH ER RELEVANT STAKE HO LD E RS
The Group has and intends to maintain communication with
institutional shareholders through individual meetings with Executive
Directors, particularly following publication of the Group’s interim
and full year 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 have attended meetings or had calls with
investors and analysts as required. Investor relations activity and a
review of the share register are standing items on the board agenda.
The Company’s AGM will take place on 17 July 2019. The Annual
Report and Accounts and Notice of the AGM will be sent to
shareholders at least 20 working days prior to this date.
The Board receives reports from the Executive Directors to enable it to
be informed of and supervise the matters within its remit. At varying
Board meetings, Department Heads are invited to present on key
areas of the Group’s operations. The Board considers at least annually
the Group’s strategic plan. Several senior managers from the wider
executive management team present and participate in
the discussion.
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.
The Board has delegated specific responsibilities to the Audit and
Risk, 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. The terms of
reference are available on the Company’s website, www.ramsdensplc.
com. Each committee comprises the Non-Executive Directors. The
reports by the Committees follow starting on page 33.
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.
The Company has purchased Directors’ and Officers’ liability
insurance as allowed by the Company’s Articles.
All of the Directors offer themselves for re-election at each AGM.
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;
• A detailed annual budget is prepared including income statement,
statement of financial position and statement of cash flows. 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.
32
ANNUAL REPORT 2019
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 2019.
for discussion. The Audit 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 44 to 48.
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.
MEMBE RS O F THE AUDI T AND RI SK CO M M IT TEE
The Committee consists of myself as Chair and my two fellow
Non-Executive Directors, Stephen Smith and Andrew Meehan. The
Committee has met four 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 have recently served
as 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.
DUT IE S OF THE COMMITTEE
Two issues have been raised as Key Audit Matters by the Auditor.
TH E RISK OF INCORRECT REVENUE RECO GNITION
AS A RE SULT O F FRAUDULEN T TRANSACT ION S AT
A BRANCH LEVEL
The Group has developed a bespoke IT system which includes
significant controls to prevent transactions outside of certain
policies and requires authorisation to complete transactions outside
certain thresholds. The system also produces exception reporting
which can be used by the Compliance and Risk team to monitor
trends and unusual transactions.
The Committee has considered the reports from the Head of
Compliance and Risk and the individual branch internal audit reports.
The Committee is satisfied with the internal controls, which
include the branches being audited at least twice annually, and the
verification of the existence of the assets. The Committee is further
satisfied that the audit of the IT system and cash book would identify
any anomalies.
The Committee is satisfied that there is not a material misstatement
of revenue as a result of fraudulent transactions at a branch level.
The main duties of the Audit and Risk Committee are set out in its
terms of reference, which are available on www.ramsdensplc.com.
The Committee will meet a minimum twice per year.
TH E RISK OF INCORRECT RECO GNI TI ON O F
PROFI T AND TH E ASSOC IATE D C REDI T LO SS
ACCRUAL I N RESPECT TO PAWNBRO K ING
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 programme.
ROL E OF THE EXTERNA L 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.
AUD IT 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,
significant and other risks associated with the audit (including Key
Audit Matters) 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
•
Interest receivable on pawnbroking loans is recognised as interest
accrues by reference to the principle outstanding and the effective
rate of interest 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. The recognition of
contractual interest reflects the application of IFRS 9.
The calculation for impairment of pawnbroking interest due to
expected credit losses 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 are;
Non Redemption Rate
•
This is based upon current and historical data held in respect of
non redemption rates
Realisation Value
This based upon either;
•
The anticipated price of the metal that will be received through
the sale of the metal content via disposal through a bullion
dealer.
The expected resale value of those jewellery items within the
pledge that can be retailed through the branch network.
33
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
The Committee has considered the effective rate of interest
calculation and the recognition of pawnbroking interest. The
Committee has also reviewed the calculations undertaken to
establish the expected credit losses for unredeemed loans. This
includes the impact of changes to loan repayment outcomes and
realisation proceeds of unredeemed pledged items. The Committee
is satisfied that the recognition of pawnbroking revenue and
pawnbroking credit losses are materially correct.
INTER NAL 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.
RIS K MANAGEMEN T AND INTERNAL CO NT RO LS
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.
The Committee has reviewed the framework and is satisfied that the
internal control systems in place are currently operating effectively.
WHI ST LEBLOWI NG
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. There were no incidents for
consideration during the year.
AN TI-BR IBE RY
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 CO NCERN
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.
SIM ON HERRICK
Chair of the Audit and Risk Committee.
NOMINATION COMMITTEE REPORT
On behalf of the Board I am pleased to present the Nomination
Committee report for the year ended 31 March 2019.
MEMBERS OF TH E NOMINATION CO MMI TT EE
The Nomination Committee consists of myself and my follow Non-
Executive Directors, Simon Herrick and Stephen Smith.
DUTI ES OF THE NO MI NATION COMMIT TE E
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.
ACTIVIT Y DURING TH E 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.
Please refer to page 26 for the Directors biographies. 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 remains relatively young and
the Committee is fully supportive of the Leadership development
programme which will further develop the team and identify potential
senior leaders of the future.
The terms of reference were reviewed and are available on www.
ramsdensplc.com
A NDY M EEHA N
Chair of the Nominations Committee
3 4
ANNUAL REPORT 2019
REMUNERATION COMMITTEE
On behalf of the Board I am pleased to present the Directors’
Remuneration Report for the year ending 31 March 2019 which
sets out the remuneration policy and the remuneration paid to the
Directors for the year.
COM PO SITION A ND ROLE
The Remuneration Committee consists of myself and my fellow
Non-Executive Directors, Andy Meehan and Stephen 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.
RE MUNERATI ON POLICY
Our remuneration policy is to:
•
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.
•
•
EXE CUTIVE DIRE CTO RS’ SERVI CE CO NTRACTS
The Executive Directors have service contracts which are not of fixed
duration and can be terminated by either party giving 12 months
written notice.
NON-EXEC UTI VE DI RE CTORS
The Non-Executive Directors signed letters of appointment which
may be terminated on giving three months written notice. The Non-
Executive Directors’ remuneration is determined by the Board.
DI RE CTORS' REMUNE RATI ON
The following table summarises the total gross remuneration of the
Directors who served during the year to 31 March 2019.
B A SIC SA L ARY
BONU S
PEN SION
LTIP
PHI
TOTA L
F Y19
FY18
TOTAL
Executive
Peter Kenyon
£182,500
£50,000
£10,000
£63,654
£1,306
£307,460
£377,526
Martin Clyburn
£127,500
£30,000
£12,500
£34,600
£613
£205,213
£244,098
Non Executive
Andy Meehan
Simon Herrick
Steve Smith
Aggregate
remuneration
£63,254
£46,200
£38,500
-
-
-
-
-
-
-
-
-
-
-
-
£63,254
£57,504
£46,200
£42,000
£38,500
£35,000
£457,954
£80,000
£22,500
£98,254
£1,919
£660,627
£756,128
35
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT As detailed in the Strategic Report and Financial Review, Ramsdens has delivered a good performance and made progress against its stated
strategic priorities. The Executive bonus payment has been assessed against pre set objectives. Peter Kenyon received 27% of his potential
maximum bonus and Martin Clyburn received 23% of his potential maximum bonus.
The Remuneration Policy for FY20 will operate as follows:
Executive
Peter Kenyon
Martin Clyburn
Non Executive
Andy Meehan
Simon Herrick
Steve Smith
B A SI C SAL ARY
PEN SION
PRIVATE HEALTH IN SU RAN CE
BO NUS
£191,625
10% of basic salary
£134,400
10% of basic salary
£65,907
£48,140
£40,117
-
-
-
Yes
Yes
Up to 100%
Up to 100%
-
-
-
-
-
-
The bonus opportunities for the FY19 financial year will be assessed by the Remuneration Committee, who retain discretion over the awards,
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.
LONG TERM INCENTIVE PLANS
AD MI SSI ON LT IP
On admission to AIM the Group introduced a Long Term Incentive Plan (LTIP) set against two performance criteria over the financial years
from admission to the year ending 31 March 2020 (FY20).
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.
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.
36
ANNUAL REPORT 2019
The following directors and employees are included within the
Admission LTIP.
NUMBER OF SHA RE S
AWARDED UNDER T HE LTIP
SCHEM E
Peter Kenyon
Martin Clyburn
Mike Johnson
Jason Carr
Matt Fothergill
Michael Wilson
Mark Smith
250,000
138,889
138,889
69,444
69,444
69,444
69,444
LT IP FY18 – FY21
A further LTIP scheme was introduced following the publication of
the FY18 Annual Report. This widened the participation in line with
the Group’s strategy to align the senior managers with
the shareholders.
Fifty percent of the award is based on the total shareholder return
(share price movement and the value of dividends) over the period
from FY18 results to 31 March 2021 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 50% growth is achieved over the
period.
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 FY18 to FY21. 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.
Peter Kenyon was awarded 50,000 shares and Martin Clyburn
25,000 shares under the scheme. An additional 145,000 shares
were allocated to 14 Group employees.
LT IP FY19 – FY22
It is the Board’s intention to issue a further LTIP within 42 days of
the publication of this Annual Report. This will be issued to the wider
Senior Management Team to recognise their contribution in seeking
to implement the Group’s strategy and achieve improved financial
performance over the three year period. The scheme will follow the
principles of the two existing LTIPs with 50% of any award linked
to growing EPS and 50% of any award linked to total shareholder
returns. Again, stretching targets will be set to achieve 100% of
the award.
The Remuneration Committee retain discretion over the amount and
terms of any LTIP awards.
37
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT The Directors hold the following notifiable beneficial interests in the ordinary share capital of the Company
Executive
Peter Kenyon*
Martin Clyburn*
Non Executive
Andy Meehan*
Simon Herrick
Steve Smith*
T YPE OF SHARE
HOL DIN G AS AT 31
MARCH 2018
AC QU IRED IN THE
FIN A N CIA L Y EAR
SOLD I N THE
FIN A N CIA L Y EAR
A S AT 31
MA RCH 2019
1p ordinary
1p ordinary
1p ordinary
1p ordinary
1p ordinary
1,591,250
209,375
332,320
19,950
54,348
48,484
500,000
1,139,734
-
-
-
-
-
-
-
-
209,375
332,320
19,950
54,348
*held in personal name, in spouse’s name or pension scheme.
If you have any comments or questions on anything contained in this
Remuneration Report, I will be available at the AGM.
SIMO N HERRICK
Chair of the Remuneration Committee
38
ANNUAL REPORT 2019 DIRECTORS’ REPORT
for the year ended 31 March 2019
The Directors have pleasure in presenting their report and the
financial statements of the group for the year ended 31 March 2019.
PR IN CIPAL ACT IVITIES AND BUSINES S 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.
LIK ELY FUTURE DE VE LOPMEN T
RE SULTS AND DIVIDENDS
Our priorities for the following financial year are disclosed in the
CEO’s Strategic Report on pages 6 to 15.
The results for the year are set out in the consolidated income
statement on page 49.
SUBSTANTI AL SHAREH OLDI NGS
The Directors propose a final dividend of 4.8 pence per share subject
to the approval at the Annual General Meeting on 17 July 2019.
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.
During the year, the Group paid the final dividend for FY18 of 4.4
pence per share (FY17: 1.3) and an interim dividend of 2.4 pence per
share for the year ended 31 March 2019 (FY18: 2.2).
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
2019 were as shown in the table below.
N A ME OF HOLDER
Downing LLP
Cannacord Genuity Group
AXA Investment Mgrs.
Premier Fund Mgt.
Otus Capital Mgt.
Hargreaves Lansdown Asset
Close Asset Management
Peter Kenyon (CEO)
Interactive Investor
NUMBER
5,172,721
3,059,148
2,378,000
2,287,142
2,236,721
2,118,645
1,203,321
1,139,734
1,093,349
% O F VOTIN G RIGHTS IN THE ISSU ED SHAR E CAP I TAL
16.77
9.92
7.71
7.42
7.25
6.87
3.90
3.70
3.55
39
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
DI RECTORS AND THEIR IN TEREST
DI SABLED EMPLOYE ES
The Directors who served throughout the year, except where
otherwise stated, and up to the date of signing of the Annual Report
and Accounts as follows;
EXE CUT IVE
Peter Kenyon
Martin Clyburn
N ON-EXECUTIVE
Andrew Meehan
Stephen Smith
Simon Herrick
Directors’ beneficial interests and their remuneration are detailed in
the Remuneration Report on pages 35 to 38.
DI RECTORS’ I NDEMNITIES
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 CO NCERN
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.
FINANCI AL RISK MANAGEMENT
Financial risk is managed by the board on an ongoing basis. The
principal risks relating to the Group are outlined in more details on
pages 18 to 23 of the strategic report.
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 I NVOLVEMEN T
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 participate in the performance of the business
through varying incentive schemes.
DI SCLOSURE O F INFORMATION TO TH E AUDITOR
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.
AUDI TOR
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
POST BAL ANCE SHEET EVENTS
Signed by order of the Directors
As announced, on 28 May 2019, the Group has purchased 12 Loan
books and 4 stores, from Instant Cash Loans Limited trading as The
Money Shop, for a total consideration of £0.5m which has been
settled in cash. The purchase included the acquisition of £0.3m of
pawnbroking loan book.
KEV IN BROW N
Company Secretary
AN N UAL GENERA L ME ETIN G
The Company’s AGM will be held on 17 July 2019.
POLI TI CAL DONATIONS
No political contributions were made during the year (FY18: £nil).
Approved by the Directors on
11 June 2019
40
ANNUAL REPORT 2019
STAT EMENT OF D IRECTORS’ RESP O NS IBIL ITIE S
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.
WE BSI TE PUBLI CATION
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,
www.ramsdensplc.com, 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.
41
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT Access cash against your valuables
FINANCIAL
STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RAMSDENS HOLDINGS PLC
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
2019 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:
GROUP
PARENT COMPANY
Consolidated balance sheet as
at 31 March 2019
Balance sheet as at 31 March
2019
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
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 27 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).
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 at a
branch level
• Risk of incorrect recognition of profit
and the associated expected credit loss
accrual in respect of pawnbroking
• We performed an audit of the complete
financial information of the Group,
including Ramsdens Financial Limited.
AUDIT SCOPE
MATERIALITY
• Overall group materiality of £0.325m
(2018: £0.342m) which represents 5% of
Profit before tax (2018: 5%).
44
ANNUAL REPORT 2019 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RAMSDENS HOLDINGS PLC
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 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 accounting policies in Note 3.16
of the consolidated financial statements
(page 61).
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 even
a 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 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.
We have reviewed internal audit reports and
noted no significant control deficiencies in
the current year.
We have reviewed the weekly desktop audit
procedures 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 reviewed the implementation of
new controls in the year 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.
45
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RAMSDENS HOLDINGS PLC
KEY AUDIT MATTERS (continued)
RISK
OUR RESPONSE TO THE RISK
KEY OBSERVATIONS COMMUNICATED TO
THE AUDIT COMMITTEE
Risk of incorrect recognition of profit and
the associated expected credit loss accrual
in respect of pawnbroking
We have tested the accuracy and
completeness of data used to calculate the
provisions.
From our substantive testing, we have
concluded that the inputs to the calculation
are clerically accurate.
Refer to the Accounting policies in Note 3.16
and Note 4 in the Consolidated Financial
Statements (page 61 to 62).
We have challenged the provisioning
methodology, with particular focus on
changes to assumptions.
We have concluded that the profit recorded
in the year, and the related provisions on the
statement of financial position at the year-
end date are materially correct.
Interest receivable on pawnbroking loans is
recognised as interest accrues, by reference
to the effective interest rate applicable.
In line with IFRS 9: Financial Instruments,
management calculate the expected credit
loss on pawnbroking contracts and recognise
a provision for this within cost of sales.
The expected credit loss is 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 profit
recognised.
In the year to 31 March 2019, pawnbroking
interest of £7.2m (2018: £7.0m) was
recognised in the accounts.
At 31 March 2019 the gross loanbook
totalled £9.7m (2018: £9.8m), with
related pawnbroking provisions of £0.4m
(2018: £0.4m).
We identified the three-year average spot
price of 9 carat gold (£11.64) to recalculate
the underlying value of security and
compared this to management estimates
used in the provision (2019: £11.61,
2018: £10.85).
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 (2019: 27%. 2018: 28%), to
the rates applied in the provision (2019: 28%,
2018: 28%).
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 pledged items.
In the prior year, our auditor’s report included a key audit matter in relation to the risk of incorrect recognition of revenue and the associated
revenue accrual in respect of pawnbroking. In the current year this has been replaced by the risk of incorrect recognition of profit and the
associated expected credit loss accrual in respect of pawnbroking. The reason for the change is due to the adoption of IFRS 9: Financial
Instruments. Under this standard, the impairment model reflects expected credit losses. The Company now shows gross pawnbroking interest as
revenue and recognises impairment as a cost of sale. In the previous year the Company showed revenue net of impairment. Our significant risk
has been restated to reflect this reclassification on the income statement however the underlying risk and audit procedures remain unchanged.
46
ANNUAL REPORT 2019 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RAMSDENS HOLDINGS PLC
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 the trading subsidiary, Ramsdens
Financial Limited.
We have performed a full scope audit of Ramsdens Financial
Limited and tested significant balances to an assigned performance
materiality of £0.325m, which is equivalent to 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 £0.325 million (2018:
£0.342 million), which is 5% (2018: 5%) of profit before tax. We believe
that profit before tax provides us with consistent year on year basis
for determining materiality and is the most relevant performance
measure to the stakeholders of the Group.
We determined materiality for the Parent Company to be £0.113
million (2018: £0.108 million), which is 1% (2018: 1%) of net assets.
During the course of our audit, we reassessed initial materiality and
have revised this to reflect final results, rather than basing on forecasts.
Per formance 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, together with our assessment
of the Group’s overall control environment, our judgement was
that performance materiality was 75% (2018: 75%) of our planning
materiality, namely £0.243m (2018: £0.237m). We have set
performance materiality at this percentage which reflects our
expectation of the level of audit differences based on the prior year.
Repor ting 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 (2018: £0.016m),
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 to 41, 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.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE
COMPANIES ACT 2006
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.
47
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RAMSDENS HOLDINGS PLC
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 41, 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.
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
11 June 2019
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.
48
ANNUAL REPORT 2019 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2019
Revenue
Cost of sales
Gross profit
Administrative 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
6
10
8
8
2019
£’000
46,785
(16,263)
30,522
(23,939)
6,583
(131)
40
6,492
(1,332)
5,160
–
5,160
16.7
16.3
2018
£’000
39,942
(11,595)
28,347
(21,937)
6,410
(177)
79
6,312
(1,278)
5,034
–
5,034
16.3
15.9
49
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2019
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
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
12
13
14
10
16
17
18
19
19
19
20
20
20
20
21
2019
£’000
5,485
1,228
–
167
6,880
12,658
10,906
13,420
36,984
43,864
6,490
5,184
689
12,363
24,621
–
453
–
140
593
12,956
30,908
308
4,892
25,708
30,908
2018
£’000
4,302
429
–
84
4,815
7,567
10,613
14,619
32,799
37,614
7,074
1,883
633
9,590
23,209
1
300
40
115
456
10,046
27,568
308
4,892
22,368
27,568
The financial statements of Ramsdens Holdings PLC, registered number 8811656, were approved by the directors and authorised for issue on
11 June 2019 and signed on their behalf by:
M A CLYBURN
Chief Financial Officer
50
ANNUAL REPORT 2019 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2019
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
As at 1 April 2018
Profit for the year
Total comprehensive income
Dividends paid
Share based payments
Deferred tax on share based payments
As at 31 March 2019
NOTES
22
26
22
26
Share
Capital
£’000
308
–
–
–
–
–
308
308
–
–
–
–
–
Share
premium
£’000
4,892
–
–
–
–
–
4,892
4,892
–
–
–
–
–
Retained
earnings
£’000
18,195
5,034
5,034
(1,079)
161
57
22,368
22,368
5,160
5,160
(2,097)
221
56
Total
£’000
23,395
5,034
5,034
(1,079)
161
57
27,568
27,568
5,160
5,160
(2,097)
221
56
308
4,892
25,708
30,908
51
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2019
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
Share based payments
Finance costs
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
Acquisition
Net cash flows used in investing activities
Financing Activities
Dividends paid
Payment of finance lease liabilities
Bank loans drawn down
Repayment of bank borrowings
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 April
Cash and cash equivalents at 31 March
NOTES
12
13
25
6
12
13
11
22
2019
£’000
6,492
2018
£’000
6,312
1,215
1,079
157
(40)
74
221
131
424
(5,091)
(651)
2,932
(131)
(1,278)
1,523
3
(2,315)
(109)
(1,504)
(3,925)
(2,097)
(8)
5,183
(1,875)
1,203
(1,199)
14,619
13,420
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
52
ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
Ramsdens Holdings PLC (the “Company”) is a public limited company incorporated and domiciled in England and Wales. The registered office
of the Company is Unit 16, Parkway Shopping Centre, Coulby Newham, Middlesbrough, TS8 0TJ. The registered company number is 08811656.
A list of the Company’s subsidiaries is presented in note 14.
The principal activities of the Company and its subsidiaries (the “Group”) are the supply of foreign exchange services, pawnbroking and related
financial services, jewellery sales, and the purchase of gold jewellery from the general public.
2. CHANGES IN ACCOUNTING POLICIES
Adoption of new and revised standards
In the current year, the Company has applied the following accounting standards that are mandatorily effective for an accounting period that
begins on or after 1 January 2018. Further details of the impact of IFRS 9 are given below. The other changes have not had a material impact on
the amounts reported in these financial statements.
IFRS 9
IFRS 15
AMENDMENTS TO IFRS 2
AMENDMENTS TO IFRS 4
AMENDMENTS TO IAS 40
IFRIC 22
Financial Instruments
Revenue from Contracts with Customers
Classification and Measurement of Share-based Payment Transactions
Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
Transfer of Investment Property
Foreign Currency Transactions and Advanced Consideration
ANNUAL IMPROVEMENTS TO IFRSS: 2014-2016
Annual Improvements to IFRSs:2014-16 Cycle – IFRS 1 and IAS 28 Amendments
Standards issued but not yet effective
At the date of authorisation of these financial statements the Company had not applied the following new and revised IFRSs that have been
issued but are not yet effective:
IFRS 16
Leases
AMENDMENTS TO IFRS 9
Prepayment Features with Negative Compensation
AMENDMENTS TO IAS 10 AND IAS 28
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
AMENDMENTS TO IAS 40
Transfer of Investment Property
The Directors have considered the likely impact of the above standards on the financial statements of the Company in future periods. Other than
IFRS 16 detailed below, the directors do not consider that the standards will have a material impact on the financial statements in future periods.
IFRS 9 Financial Instruments
The Group has applied IFRS 9 Financial Instruments and has adopted consequential amendments to IFRS 7 Financial Instruments: Disclosures.
The Group has opted not to amend 2018 comparatives.
Pawnbroking loans are financial instruments and are therefore in scope of IFRS 9.
The impairment model under IFRS 9 reflects expected credit losses. The Group now shows gross pawnbroking interest as revenue and
recognises impairment as a cost of sale. In the previous year the Group showed revenue net of impairment. This change does not affect the
profit or reserves in the current or previous year, and therefore the comparative balances have not been restated.
The Group has also reviewed receivables from segments other than pawnbroking and has concluded that expected credit losses for these
receivables are consistently immaterial to the Group.
There is no change in the accounting for any financial liabilities.
There has been no changes in classification as a result of the implementation of IFRS 9.
53
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. CHANGES IN ACCOUNTING POLICIES continued
IFRS 15 Revenue from Contracts with Customers
The Group has applied IFRS 15 Revenue from Contracts with Customers. IFRS 15 introduces a 5 step approach to revenue recognition which has
been reviewed against the revenue recognition policies of the Group.
IFRS 15 uses the terms ‘contract asset’ and ‘contract liability’ to describe what is more commonly known as ‘accrued income’ and ‘deferred
income’, however the standard does not prohibit the use of alternative descriptions in the financial statements. The Group has retained the use
of ‘deferred income’ in the financial statements.
As a result of the implementation of IFRS 15 during the year, management has reviewed the accounting treatment of unredeemed pawnbroking
loans. These are loan balances where the customer has defaulted on their loan. Management has assessed these transactions against the
control criteria in IFRS 15 and has concluded that the substance of the legal arrangement is that control of the pledged item transfers to the
Group at the point the customer defaults. This is due to the fact the Group controls the method of disposal and the price, despite legal title of
the goods not transferring. Management has recorded revenue of £2,472,000 to reflect the consideration received for the pledged item, with
a corresponding adjustment to cost of sales, reflecting the cost to the Group. There is no impact on gross profit or earnings as a result of this
adjustment. The pledge balance, representing the cost of acquiring the pledged item, has been reclassified to inventory, and is measured at the
lower of cost and net realisable value in accordance with IAS 2. Accordingly, the Statement of Financial Position has been amended to reflect
the transfer from receivables to inventory, amounting to £1,965,000 at 1 April 2018. This has no impact on total current assets or the
net assets.
The application of IFRS 15, including identification of performance obligations and the point at which these are satisfied, is disclosed in the
updated revenue recognition policy detailed in 3.16 below.
The Group has adopted IFRS 15 using the modified retrospective approach. Therefore the comparative information was not restated. The impact
of the application of IFRS 15 is detailed below:
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2019
Revenue
Cost of sales
Gross profit
Profit before tax
Profit for the period
Total comprehensive income
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 1 APRIL 2018
Inventories
Trade and other receivables
Current assets
Total assets
Total liabilities
Net assets
Total equity
54
IFRS15
£'000
46,785
(16,263)
30,522
6,492
5,160
5,160
IFRS15
£'000
9,532
8,648
32,799
37,614
10,046
27,568
27,568
PREVIOUS IFRS
£'000
44,313
(13,791)
30,522
6,492
5,160
5,160
PREVIOUS IFRS
£'000
7,567
10,613
32,799
37,614
10,046
27,568
27,568
CHANGE
£'000
2,472
(2,472))
–
–
–
–
CHANGE
£'000
1,965
(1,965)
–
–
–
–
–
ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
IFRS 16 Leases
IFRS 16 introduces a comprehensive model for the identification of lease arrangements and accounting treatments for both lessors and
lessees. IFRS 16 will supersede the current lease guidance including IAS 17 Leases and the related interpretations when it becomes effective
for accounting periods beginning on or after 1 January 2019. The Group expects to adopt IFRS 16 for the year ending 31 March 2020. As at
31 March 2019, the Group has non-cancellable operating lease commitments of £11.7m. IAS 17 does not require the recognition of any right-
of-use asset or liability for future payments for these leases; instead, certain information is disclosed as operating lease commitments in note
24. Our assessment indicates that these arrangements will meet the definition of a lease under IFRS 16, and hence the Group will recognise
a right-of-use asset and a corresponding liability in respect of all these leases unless they qualify for low value or short-term leases upon the
application of IFRS 16. The new requirement to recognise a right-of-use asset and a related lease liability is expected to have a significant impact
on the amounts recognised in the Group’s consolidated financial statements. Preliminary calculations indicate that the impact on the balance
sheet will be a net reduction in retained earnings of £1.1m as at 31 March 2019, with the right-of-use asset capitalised at net book value of
£9.9m offset by lease liability of £10.8m. The impact on the Group’s Statement of Comprehensive Income for 2019 is likely to be favourable
by £0.1m.
3. SIGNIFICANT ACCOUNTING POLICIES
3.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS),
as adopted by the European Union.
The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments that have been
measured at fair value. The consolidated financial statements are presented in pounds sterling which is the functional currency of the parent and
presentational currency of the Group. All values are rounded to the nearest thousand (£000), except when otherwise indicated.
3.2 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all of its subsidiary undertakings (as detailed
above). The financial information of all Group companies is adjusted, where necessary, to ensure the use of consistent accounting policies. In
line with IFRS 10, an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee.
3.3 Going Concern
The Directors have made appropriate enquiries and formed a judgement at the time of approving the financial statements that there is a
reasonable expectation that the Group has adequate resources to continue in business for the foreseeable future. For this reason, they continue
to adopt the going concern basis in preparing the financial statements.
3.4 Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the
consideration transferred which represents the fair value of the assets transferred and liabilities incurred or assumed. Acquisition related costs
are expensed as incurred and included in administrative expenses.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the fair value of the identifiable assets
acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses
whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to
be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration
transferred, then the gain is recognised in the Statement of Comprehensive Income as a gain on bargain purchase.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill
acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash generating units (CGU) that are expected
to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
55
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT 3. SIGNIFICANT ACCOUNTING POLICIES continued
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 Proper ty, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses (if any). All other repair
and maintenance costs are recognised in the Statement of Comprehensive Income as incurred.
Depreciation is calculated over the estimated useful lives of the assets as follows:
• Leasehold property
– straight line over the lease term
• Fixtures & fittings
– 20% & 33% reducing balance
• Computer equipment – 25% & 33% reducing balance
• Motor vehicles
– 25% reducing balance
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or
disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the Statement of Comprehensive Income when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and
adjusted prospectively, if appropriate.
3.7 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual
impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher
of an asset’s or CGU’s fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or
CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market
transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
56
ANNUAL REPORT 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3. SIGNIFICANT ACCOUNTING POLICIES continued
The Group bases its impairment calculation on detailed budgets and forecasts which are prepared separately for each of the Group’s CGUs to
which the individual assets are allocated, which is usually taken to be each individual branch store. These budgets and forecast calculations are
generally covering a period of ten years.
Impairment losses of continuing operations are recognised in the Statement of Comprehensive Income in those expense categories consistent
with the function of the impaired asset.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable
amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s
recoverable amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for the asset in prior years. Such
reversal is recognised in the Statement of Comprehensive Income unless the asset is carried at a revalued amount, in which case the reversal is
treated as a revaluation increase.
Goodwill
Goodwill is tested for impairment annually as at 31 March and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates.
Where the recoverable amount of the cash-generating unit is less than their carrying amount, an impairment loss is recognised. Impairment
losses relating to goodwill cannot be reversed in future periods.
3.8 Inventories
Inventories comprise of electronics, retail jewellery and precious metals held to be scrapped and are valued at the lower of cost and net
realisable value.
Cost represents the purchase price plus overheads directly related to bringing the inventory to its present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs
to sell.
3.9 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of
another entity.
Financial assets
Financial assets are all recognised and derecognised on a trade date basis. All recognised financial assets are measured and subsequently
measured at amortised cost or fair value depending on the classification of the financial asset.
Classification of financial assets
Financial assets that meet the following criteria are measured at amortised cost:
•
•
the financial asset is held within the business model whose objective is to hold financial assets in order to collect contractual cash flows;
and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
In accordance with IFRS 9 Financial Instruments the Group has classified its financial assets as amortised cost, no financial assets have been
classified as FVTOCI or FVTPL at the reporting dates for 2019 and 2018.
The effective interest method is used to calculate the amortised cost of debt instruments by allocating interest income over the relevant period.
57
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3. SIGNIFICANT ACCOUNTING POLICIES continued
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition less the principal repayments,
plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount,
adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any
loss allowance.
Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial Position comprise cash at banks and on hand, foreign currency held for resale and
short term deposits held with banks with a maturity of three months or less from inception.
For the purpose of the consolidated Statement of Cash Flows, cash and cash equivalents consist of cash, foreign currency held for resale
and short-term deposits as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Group’s cash
management.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets that are measured at amortised cost. The amount of credit
losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
The Group recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition. However,
if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group recognises the 12 month expected
credit losses. As pawnbroking loans are typically over a six month term the lifetime credit losses are usually the same as the 12 month expected
credit losses.
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Company compares the
risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the
date of initial recognition. In making this assessment, the Company considers both quantitative and qualitative information that is reasonable
and supportable including historical experience.
The measurement of expected credit losses is a function of the probability of default, and the loss (if any) on default. The assessment of the
probability of default is based on historical data. The loss on default is based on the assets gross carrying amount less any realisable security
held. The expected credit loss calculation considers both the interest income and the capital element of the pawnbroking loans. Details of the
key assumptions for pawnbroking expected credit losses are given in note 4.
Derecognition
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the
financial asset to another entity. On derecognition of a financial asset measured at amortised cost, the difference between the assets carrying
amount and the sum of the consideration received and receivable is recognised in the Statement of Comprehensive Income.
Financial liabilities
Debt and equity instruments are classified as either financial liabilities or equity in accordance with the substance of the contractual
arrangements and the definitions of a financial liability and equity instrument.
All financial liabilities are recognised initially at amortised cost or at fair value through profit and loss (FVTPL).
The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative
financial instruments.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate
method (EIR). Gains and losses are recognised in the Statement of Comprehensive Income when the liabilities are derecognised as well as
through the (EIR) amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
The EIR amortisation is included in finance costs in the Statement of Comprehensive Income.
Only the Group’s derivative financial instruments are classified as financial liabilities at fair value through profit or loss.
58
ANNUAL REPORT 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3. SIGNIFICANT ACCOUNTING POLICIES continued
Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in the Statement of
Comprehensive Income. The net gain or loss recognised in the Statement of Comprehensive Income incorporates any interest paid on the
financial liability.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability
is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such
an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognised in the Statement of Comprehensive Income.
Of fsetting of financial instruments
Financial assets and financial liabilities are offset with the net amount reported in the Statement of Financial Position only if there is a current
enforceable legal right to offset the recognised amounts and intent to settle on a net basis, or to realise the assets and settle the liabilities
simultaneously.
3.10 Fair value measurement
The Group measures derivatives, at fair value at the date of each Statement of Financial Position.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy.
This is described, as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
• Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly
observable
• Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
3.11 Taxation
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Consolidated Statement
of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates and laws that have been enacted or
substantively enacted by the date of the Statement of Financial Position.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet
liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to
the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the date of each Statement of Financial Position and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
59
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3. SIGNIFICANT ACCOUNTING POLICIES continued
Deferred tax is calculated at the tax rates and laws that are expected to apply in the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the Consolidated Statement of Comprehensive Income, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax is recognised on an undiscounted basis.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities
when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a
net basis.
3.12 Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date.
For arrangements entered into prior to 1 April 2013, the date of inception is deemed to be 1 April 2013 in accordance with IFRS 1 First-time
Adoption of International Reporting Standards.
Hire purchase agreements and finance lease agreements
Finance leases and hire purchase agreements that transfer to the Group substantially all of the risks and benefits incidental to ownership of
the leased item, are capitalised at the commencement of the lease at the fair value of the leased asset or, if lower, at the present value of the
minimum lease payments. The leased asset is depreciated over the shorter of the lease term and its useful economic life.
Obligations under such agreements are included within payables, net of the finance charge allocated to future periods. The finance element of
the rental payment is charged to the Consolidated Statement of Comprehensive Income so as to produce a constant periodic rate of interest on
the net obligation outstanding in each period.
Operating lease agreements
Rentals applicable to operating leases, where substantially all of the risks and benefits or ownership remains with the lessor, are charged to the
Statement of Comprehensive Income on a straight line basis over the period of the lease.
Lease incentives are spread over the period of the lease on a straight line basis.
3.13 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an
outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of
the obligation. Provisions are measured using the Directors’ best estimate of the expenditure required to settle the obligation at the date of each
Statement of Financial Position.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the
risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
All of the Group’s premises are leased under operating leases. The majority of the leases include an end of lease rectification clause to return
the property to its original state. No provision is made until a board decision has been taken to either terminate or not to renew the lease.
Additionally, the Group maintains stores to a high standard and completes any necessary repairs and maintenance on a timely basis using the
in-house property department and external contractors. These costs are expensed as incurred.
3.14 Pensions and other post-employment benefits
The Group operates a defined contribution pension scheme. The assets of the scheme are held and administered separately from those of the
Group. Contributions payable for the year are charged in the Statement of Comprehensive Income. Total contributions for the year are disclosed
in note 9 to the accounts. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or
prepayments in the Statement of Financial Position.
3.15 Employee share incentive plans
The Group grants equity settled share option rights to the parent entity’s equity instruments to certain directors and senior staff members
under a LTIP (Long term incentive plan). The employee share options are measured at fair value at the date of grant by the use of either the
Black- Scholes Model or a Monte Carlo model depending on the vesting conditions attached to the share option. The fair value is expensed on a
straight line basis over the vesting period based on an estimate of the number of options that will eventually vest.
60
ANNUAL REPORT 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3. SIGNIFICANT ACCOUNTING POLICIES continued
3.16 Revenue recognition
The major sources of revenue come from the following:
• Pawnbroking
• Foreign currency exchange
• Purchase of precious metals
• Retail jewellery sales
•
Income from other financial services
Pawnbroking interest is recognised in accordance with IFRS 9, whereas revenue from other sources is recognised in accordance with IFRS 15.
Pawnbroking revenue
Revenue from pawnbroking comprises interest on pledge loan books and comprises the following two distinct components:
Contractual interest earned:
Contractual interest is earned on pledge loans up to the point of redemption or the end of the primary contract term. Interest receivable
on loans is recognised as interest accrues by reference to the principle outstanding and the effective rate applicable, which is the rate that
discounts the estimated cash receipts through the expected life of the financial asset to that asset’s net carrying value.
Revenue arising from the disposal of unredeemed pledge contracts:
When a customer defaults on a pawnbroking loan, the unredeemed pledge contracts are recognised as inventory. Revenue is recognised on the
subsequent sale of the pledged assets supporting the pledge contract under IFRS 15.
Foreign currency exchange income
Revenue is earned in respect of the provision of Bureau de Change facilities offered and represents the margin earned which is recognised at the
point the currency is collected by the customer as this represents when the service provided under IFRS 15 has been delivered.
Sale of precious metals acquired via over the counter purchases
Revenue is recognised when control of the goods has transferred, being at the point the goods are received by the bullion dealer and a sell instruction has
been issued. If a price has been fixed in advance of delivery, revenue is recognised at the point the goods are received by the bullion dealer.
Jeweller y retail sales
Revenue is recognised at the point the goods are transferred to the customer and full payment has been made. Customers either pay in full at
the time of the transaction and receive the goods, or pay in instalments and receive the goods once the sale is fully paid. Instalment payments
are recognised as deferred income until the item is fully paid. The Group has a 7 day refund policy in store, and a 14 day refund policy online
reflecting the distance selling regulations.
Other financial income
Other financial income comprises cheque cashing fees, buyback and other miscellaneous revenues. Cheque cashing revenue is recognised
when the service is provided under IFRS 15 which includes making a payment to the customer. Buyback revenue relates to the sale of items
to a customer, either the person who originally sold that item to the business, or to a third party. Revenue is recognised when the goods are
transferred to the customer. Full payment is taken at the time or prior to transferring the goods.
3.17 Administrative expenses
Administrative expenses include branch staff and establishment costs.
61
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 4. KEY SOURCES OF ESTIMATION, UNCERTAINTY AND SIGNIFICANT ACCOUNTING JUDGEMENTS
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent
liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying
amount of assets or liabilities affected in future periods.
Management do not consider there to be significant accounting judgements affecting the consolidated financial statements, however, they have
identified the following areas of estimation uncertainty:
Revenue recognition – pawnbroking loans interest and impairment
The Group recognises interest on pawnbroking loans as disclosed in note 3.16. The provision for impairment of pawnbroking loans is material
and is dependent on the estimate that the Group makes of both the expected level of the unredeemed pawnbroking loans and the ultimate
realisation value for the pledge assets supporting those loans. An assessment is made on a pledge by pledge basis of the carrying value
represented by original capital loaned plus accrued interest to date and its corresponding realisation value on sale of unredeemed pledges to
identify any deficits. The principle estimates within the loan interest accrual are:
1. Non Redemption Rate
This is based upon current and historical data held in respect of non–redemption rates
2. Realisation Value
This is based upon either;
• The current price of the metal that will be received through the sale of the metal content via disposal through a bullion dealer.
• The expected resale value of those jewellery items within the pledge that can be retailed through the branch network.
See note 15 for further details on pawnbroking credit risk and impairment provision values.
Impairment of proper ty, plant and equipment and intangible assets
Determining whether property, plant and equipment and intangibles are impaired requires an estimation of the value in use of the CGU to which
the assets have been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the CGU
and selecting a suitable discount rate in order to calculate present value. The review is conducted annually, in the final quarter of the year. The
impairment review is conducted at the level of each CGU, which is usually taken to be each individual branch store.
The principal assumptions applied by management in arriving at the value in use of each CGU are as follows:
1. The Group prepares cash flow forecasts for each branch. Cash flows represent management’s estimate of the revenue of the relevant CGU,
based upon the specific characteristics of the branch and its stage of development.
2. The Group has discounted the forecast cash flows at a pre-tax, risk adjusted rate of 12%.
3. Where the recoverable amount of the CGU was estimated to be less than its carrying amount, the carrying amount of the CGU was reduced
to the estimated recoverable amount.
Whilst the impairment review has been conducted based on the best available estimates at the impairment review date, the Group notes that
actual events may vary from management expectation.
Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the
losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised,
based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
62
ANNUAL REPORT 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5. SEGMENTAL ANALYSIS
The Group’s revenue from external customers is shown by geographical location below:
Revenue
United Kingdom
Other
2019
£’000
46,707
78
46,785
2018
£’000
39,800
142
39,942
The Group’s assets are located entirely in the United Kingdom therefore, no further geographical segments analysis is presented. The Group is
organised into operating segments, identified based on key revenue streams, as detailed in the CEO’s review.
The Group’s revenue is analysed below between revenue from contracts with customers and other sources which comprises interest earned on
pawnbroking loans.
Revenue
Contracts with customers
Pawnbroking interest income
Revenue
Pawnbroking
Purchases of precious metals
Retail Jewellery sales
Foreign currency margin
Income from other financial services
Total revenue
2019
£’000
39,543
7,242
46,785
2019
£’000
10,544
12,343
9,771
11,585
2,542
46,785
2018
£’000
32,976
6,966
39,942
2018
£’000
6,966
10,936
7,960
11,329
2,751
39,942
Included within the pawnbroking segment revenue above, is pawnbroking interest of £7,242,000 and revenue arising from the disposal of
pledges of £3,302,000. As a consequence of adopting IFRS9 and IFRS15, both Pawnbroking Revenue and Pawnbroking Cost of sales have
increased by £3.0m in FY19, with comparatives not restated.
Gross profit
Pawnbroking
Purchases of precious metals
Retail Jewellery sales
Foreign currency margin
Income from other financial services
Total gross profit
Administrative expenses
Finance costs
Gain on fair value of derivative financial liability
Profit before tax
2019
£’000
7,520
4,801
5,039
11,585
1,577
30,522
2018
£’000
6,966
4,356
4,130
11,329
1,566
28,347
(23,939)
(21,937)
(131)
40
6,492
(177)
79
6,312
63
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5. SEGMENTAL ANALYSIS continued
Income from other financial services comprises of cheque cashing fees, electronics & buybacks, agency commissions on miscellaneous
financial products.
Revenue from the purchases of precious metals is currently from one bullion dealer. There is no reliance on key customers in other
revenue streams.
The Group is unable to meaningfully allocate administrative expenses, or financing costs or income between the segments. Accordingly, the
Group is unable to meaningfully disclose an allocation of items included in the Consolidated Statement of Comprehensive Income below gross
profit, which represents the reported segmental results.
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 (*)
2019
£’000
3,431
1,372
2019
£’000
11,363
1,492
9,085
7,566
591
13,767
43,864
284
4
1,286
2,402
525
8,455
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
(*) The Group cannot meaningfully allocate this information by segment due to the fact that all segments operate from the same stores and the
12,956
10,046
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
64
2019
£’000
130
1
131
2018
£’000
176
1
177
ANNUAL REPORT 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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 exchange losses/(gains)
Operating lease payments
Auditor’s remuneration
2019
£’000
1,215
157
74
15,711
12,250
85
3,165
90
2018
£’000
1,079
211
29
11,595
11,256
(93)
2,726
78
The Company and Group audit fees are borne by a subsidiary undertaking, Ramsdens Financial Limited. There were no fees payable to the
Company’s auditor in respect of non-audit services.
8. EARNINGS PER SHARE
Profit for the year
Weighted average number of shares in issue
Earnings per share (pence)
Fully diluted earnings per share (pence)
2019
£’000
5,160
2018
£’000
5,034
30,837,653
30,837,653
16.7
16.3
16.3
15.9
9. INFORMATION REGARDING DIRECTORS AND EMPLOYEES
Directors’ emoluments
Executive
Peter Kenyon
Martin Clyburn
Non Executive
Andrew Meehan
Simon Herrick
Steve Smith
Total
2019
2018
Emoluments
Pension
LTIP
Total Emoluments
Pension
LTIP
Total
232
158
63
46
39
538
10
13
–
–
–
23
64
34
–
–
–
98
306
205
63
46
39
659
312
207
58
42
35
654
15
10
–
–
–
25
50
28
–
–
–
78
377
245
58
42
35
757
65
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 9. INFORMATION REGARDING DIRECTORS AND EMPLOYEES continued
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:
2019
£’000
2018
£’000
10,997
10,211
783
221
249
738
161
146
12,250
11,256
Head Office and management
Branch Counter staff
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
2019
No.
91
546
637
2019
£’000
1,373
(39)
1,334
(2)
1,332
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% (2018: 19%)
Expenses not deductible for tax purposes
Prior period adjustment
Income tax reported in the Statement of Comprehensive Income
2019
£’000
6,492
1,233
138
(39)
1,332
2018
No.
84
491
575
2018
£’000
1,341
(14)
1,327
(49)
1,278
2018
£’000
6,312
1,199
93
(14)
1,278
66
ANNUAL REPORT 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 10. INCOME TAX continued
Deferred tax
Deferred tax relates to the following:
Deferred tax assets
Share based payments
Deferred tax assets
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 af fecting tax charge
2019
£’000
2018
£’000
167
167
41
99
140
2019
£’000
31
(2)
(56)
(27)
84
84
1
114
115
2018
£’000
137
(49)
(57)
31
The standard rate of UK corporation tax for the period was 19% (2018: 19%). Reductions in the rate to 19% from 1 April 2017 and 17% from 1 April
2020 were enacted prior to the date of the Statement of Financial Position and have been applied to the Group’s deferred tax balances. This will
adjust the Group’s future tax charge accordingly.
11. ACQUISITIONS
On the 1 March 2019 the company purchased the trade and certain assets of 18 stores and 5 pawnbroking loan books from Instant Cash Loans
Ltd trading as The Money Shop for a cost of £1,504,000. The fair value of the assets and liabilities acquired were as follows:
Intangible Fixed Assets – Customer relationships
Tangible Fixed Assets – Fixtures & Fittings
Trade debtors
Creditors due within one year
Fair value of assets and liabilities acquired
Goodwill arising on acquisition
Total consideration paid
Total consideration was paid in cash.
£’000
486
160
717
(220)
1,143
361
1,504
Post acquisition, 16 stores continue to trade, with 2 stores and the 5 pawnbroking loan books being merged into existing Ramsdens stores.
The acquisition has generated £159,000 of revenue and a loss before tax of £24,000 for the period from acquisition to 31 March 2019. The
Group notes it is impractical to calculate the historic revenue and profit of the acquisition for the period prior to acquisition given incomplete
information. The goodwill of £361,000 comprises the residual intangible assets which do not meet the recognition criteria under IAS 38
Intangibles to be treated as separate identifiable assets. The goodwill arising on acquisition is not deductible for tax purposes.
67
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 12. PROPERTY, PLANT AND EQUIPMENT
Leasehold
property
£’000
Fixtures
& Fitting
£’000
Computer
equipment
£’000
Motor
vehicles
£’000
Cost
At 1 April 2018
Additions
Acquisition (note 11)
Disposals
At 31 March 2019
Depreciation
At 1 April 2018
Depreciation charge for the year
Disposals
At 31 March 2019
Net book value
At 31 March 2019
At 31 March 2018
Finance leases
4,146
1,289
–
(182)
5,253
1,861
674
(160)
2,375
2,878
2,285
2,732
859
160
(324)
3,427
1,096
422
(277)
1,241
2,186
1,636
511
141
–
(20)
632
150
109
(17)
242
390
361
40
26
–
(26)
40
20
10
(21)
9
31
20
Total
£’000
7,429
2,315
160
(552)
9,352
3,127
1,215
(475)
3,867
5,485
4,302
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 31 March 2019 was £11,000 (2018:
£15,000). Assets under hire purchase contracts are pledged as security for the related hire purchase liabilities. Total future obligations under
finance leases are £1,000 (2018: £9,000).
13. INTANGIBLE ASSETS
Cost
At 1 April 2018
Additions
Acquisition (note 11)
Disposals
At 31 March 2019
Amortisation
At 1 April 2018
Amortisation charge for the year
Disposals
At 31 March 2019
Net book value
At 31 March 2019
At 31 March 2018
Customer
relationships
£’000
Website
£’000
Goodwill
£’000
1,375
24
486
–
1,885
1,071
141
–
1,212
673
304
79
–
–
–
79
34
16
–
50
29
45
80
85
361
–
526
–
–
–
–
526
80
Total
£’000
1,534
109
847
–
2,490
1,105
157
–
1,262
1,228
429
Customer relationship additions relate to £24,000 paid for the pawnbroking customer list purchased on the 5 December 2018.
Goodwill of £85,000 relates to 3 separate purchases of individual stores during the year.
68
ANNUAL REPORT 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 14. INVESTMENTS
The Group has a minor holding in Big Screen Productions 5 LLP.
Big Screen Productions 5 LLP, whilst still trading, has wound down its operations and made a capital distribution equivalent to the value of the
carrying value of the investment in 2015. The investment now has a £nil carrying value.
Group Investments
Details of the investments in which the Group and Company holds 20% or more of the nominal value of any class of share capital are as follows:
Name of company
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
Ordinary
Shares
Ordinary
Shares
15. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Proportion of
voting rights and
shares held
Activity
100%
Dormant
100%
Supply of foreign exchange services, pawnbroking,
purchase of gold jewellery, jewellery retail and related
financial services.
At 31 March 2019
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 2018
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)
Fair value
through profit
and loss
£’000
Loans and
receivables
£’000
Financial
liabilities at
amortised cost
£’000
Book Value
£’000
Fair Value
£’000
–
–
–
–
–
–
9,944
13,420
–
–
–
–
–
(5,553)
(5,184)
–
23,364
(10,737)
9,944
13,420
(5,553)
(5,184)
–
12,627
9,944
13,420
(5,553)
(5,184)
–
12,627
Fair value
through profit
and loss
£’000
Loans and
receivables
£’000
Financial
liabilities at
amortised cost
£’000
Book Value
£’000
Fair Value
£’000
–
–
–
–
(40)
(40)
9,930
14,619
–
–
–
24,549
–
–
(6,170)
(1,883)
–
(8,053)
9,930
14,619
(6,170)
(1,883)
(40)
16,456
9,930
14,619
(6,170)
(1,883)
(40)
16,456
Trade and other receivables shown above comprises trade receivables, other receivables and pledge accrued income as disclosed in note 17.
69
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 15. FINANCIAL ASSETS AND FINANCIAL LIABILITIES continued
Trade and other payables comprises of trade payables and other payables as disclosed in notes 19 & 20.
Borrowings comprises of bank borrowings, obligations under finance leases, loan notes and other loans as disclosed in notes 19 & 20.
Loans and receivables are non-derivative financial assets carried at amortised cost which generate a fixed or variable interest income for the
Group. The carrying value may be affected by changes in the credit risk of the counterparties.
Management have assessed that for cash and short-term deposits, trade receivables, trade payables, bank overdrafts and other current liabilities
their fair values approximate to their carrying amounts largely due to the short-term maturities of these instruments. Book values are deemed to
be a reasonable approximation of fair values.
Fair value
The assumptions used by the Group to estimate the fair values are summarised below:
The fair value of the interest rate swaps is based upon the projected interest rate curves, over the life of the interest rate swaps.
The fair value of all other financial instruments is equivalent to their book value due to their short maturities.
Financial Risks
The Group monitors and manages the financial risks relating to the financial instruments held. The principal risks include credit risk on financial
assets, and liquidity and interest rate risk on financial liability borrowings. The key risks are analysed below.
Credit risk
Pawnbroking loans
Pawnbroking loans are not credit impaired at origination as customers are expected to repay the capital plus interest due at the contractual
term. The Group is exposed to credit risk through customers defaulting on their loans. Customers are deemed to default when the Group
assesses that a loan will be repaid by realising the pledged assets rather than by repayment by the customer. The key mitigating factor to this
risk is the requirement for the borrower to provide security (the pledge) in entering a pawnbroking contract. The security acts to minimise credit
risk as the pledged item can be disposed of to realise the loan value on default.
The Group estimates that the current fair value of the security is equal to the current book value.
In addition to holding security, the Group further mitigates credit risk by:
1)
Applying strict lending criteria to all pawnbroking loans. Pledges are rigorously tested and appropriately valued. In all cases where the Group
lending policy is applied, the value of the pledged items is in excess of the pawn loan.
2)
Seeking to improve redemption ratios. For existing customers, loan history and repayment profiles are factored into the loan making
decision. The Group has a high customer retention ratio and all customers are offered high customer service levels.
3)
The carrying value of every pledge comprising the pawnbroking loans is reviewed against its expected realisation proceeds should it not be
redeemed and any deficits are provided for based on current and historical non redemption rates.
The Group continually monitors, at both store and at Board level, its internal controls to ensure the adequacy of the pledged items. The key
aspects of this are:
• Appropriate details are kept on all customers the Group transacts with;
• All pawnbroking contracts comply with the Consumer Credit Act 2006;
• Appropriate physical security measures are in place to protect pledged items; and
• An internal audit department monitors compliance with policies at the Group’s stores.
Expected Credit losses
The Group measures loss allowances for pawnbroking loans using IFRS 9 expected credit losses model. The Group’s policy is to begin the
disposal process one month after the loan expiry date unless circumstances exist indicating the loan may not be credit impaired.
70
ANNUAL REPORT 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 15. FINANCIAL ASSETS AND FINANCIAL LIABILITIES continued
Category
Performing
Gross
amount
£’000
9,705
9,705
Loss
allowance
£’000
Net carrying
amount
£’000
(393)
(393)
9,312
9,312
The pawnbroking expected credit losses which have been provided on the period end pawnbroking assets are:
At 1 April 2017
Net Statement of Comprehensive Income charge
At 31 March 2018
Net Statement of Comprehensive Income charge
Balance at 31 March 2019
Expected credit losses have increased in the year due to the increase in the pawnbroking loan book.
Bad Debts written off during the year net of recoveries were:
Pawnbroking loans
The ageing of the Pawnbroking loans excluding those in the course of realisation is as follows:
Within contractual term
Past due
Cash and cash equivalents
Pawnbroking
loans
£’000
292
50
342
51
393
2018
£’000
14
2018
£’000
5,732
699
6,431
2019
£’000
9
2019
£’000
6,611
1,032
7,643
The cash and cash equivalents balance comprises both bank balances and cash floats at the stores. The bank balances are subject to very
limited credit risk as they are held with banking institutions with high credit ratings assigned by international credit rating agencies. The cash
floats are subject to risks similar to any retailer, namely theft or loss by employees or third parties. These risks are mitigated by the security
systems, policies and procedures that the Group operates at each store, the Group recruitment and training policies and the internal
audit function.
Market risk
Pawnbroking loans
The collateral which protects the Group from credit risk on non-redemption of pawnbroking loans is principally comprised of gold, jewellery
items and watches. The value of gold items held as security is directly linked to the price of gold. The Group is therefore exposed to adverse
movements in the price of gold on the value of the security that would be attributable for sale in the event of default by the borrower.
The Group considers this risk to be limited for a number of reasons. First of all, the Group applies conservative lending policies in pawnbroking
pledges reflected in the margin made on retail sales and scrap gold when contracts forfeit. The Group is also protected due to the short-term
value of the pawnbroking contract. In the event of a significant drop in the price of gold, the Group could mitigate this risk by reducing its
lending policy on pawnbroking pledges, by increasing the proportion of gold sold through retail sales or by entering gold hedging instruments.
Management monitors the gold price on a constant basis.
71
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 15. FINANCIAL ASSETS AND FINANCIAL LIABILITIES continued
Considering areas outside of those financial assets, the Group is subject to higher degrees of pricing risk. The price of gold will affect the future
profitability of the Group in three key ways:
i)
A lower gold price will adversely affect the scrap disposition margins on existing inventory, whether generated by pledge book forfeits or
direct purchasing. While scrap profits will be impacted immediately, retail margins may be less impacted in the short term.
ii) While the Group’s lending rates do not track gold price movements in the short term, any sustained fall in the price of gold is likely to cause
lending rates to fall in the longer term thus potentially reducing future profitability.
iii) A lower gold price may reduce the attractiveness of the Group’s gold purchasing operations.
Conversely, a lower gold price may dampen competition as lower returns are available and hence this may assist in sustaining margins
and volumes.
Financial assets
The Group is not exposed to significant interest rate risk on the financial assets, other than cash and cash equivalents, as these are lent at fixed
rates, which reflect current market rates for similar types of secured or unsecured lending, and are held at amortised cost.
Cash and cash equivalents are exposed to interest rate risk as they are held at floating rates, although the risk is not significant as the interest
receivable is not significant.
Liquidity risk
Cash and cash equivalents
Bank balances are held on short term/no notice terms to minimise liquidity risk.
Trade and other payables
Trade and other payables are non-interest bearing and are normally settled on up to 60 day terms, see note 19.
Borrowings
The maturity analysis of the cash flows from the Group’s borrowing arrangements that expose the Group to liquidity risk are as follows:
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
2019
£’000
5,183
5,183
–
–
5,183
2018
£’000
1,875
1,875
–
–
1,875
The interest charged on bank borrowings is based on a fixed percentage above LIBOR. There is therefore a cash flow risk should there be any
upward movement in LIBOR rates. Assuming the £10million revolving credit facility was fully utilised then a 1% increase in the LIBOR rate would
increase finance costs by £100,000 pre-tax and reduce post-tax profits by £81,000.
Derivative financial instruments comprise of interest rate swap facilities that matured in October 2018. The movement in this liability is shown as
a gain on fair value of derivative financial liability in the Statement of Comprehensive Income. For the year ended 31 March 2019 the gain was
£40,000 (2018: £79,000)
Liabilities from financing activities include bank borrowings and obligations under finance leases. Bank borrowings at 31 March 2018 were all
repaid during the year and the balance at 31 March 2019 was drawn during the year. The obligations under finance leases at 31 March 2018
which were due within one year have all been paid in the year with the remaining £1,000 which was due in greater than one year now included as
a liability within a year at 31 March 2019. Amounts repaid in the year are shown in the consolidated Statement of Cash Flows.
72
ANNUAL REPORT 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 16. INVENTORIES
New and second hand inventory for resale (at lower of cost or net realisable value)
17. TRADE AND OTHER RECEIVABLES
Pawnbroking loans
Pawnbroking in the course of realisation
Pledge accrued income
Trade receivables
Other receivables
Prepayments and accrued income
18. CASH AND CASH EQUIVALENTS
Cash and cash equivalents
2019
£’000
12,658
2019
£’000
7,643
–
1,669
615
17
962
10,906
2019
£’000
13,420
2018
£’000
7,567
2018
£’000
6,431
1,965
1,025
495
14
683
10,613
2018
£’000
14,619
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits.
Further details on financial instruments, including the associated risks to the Group and allowances for bad and doubtful debts and fair values is
provided in note 15.
19. TRADE AND OTHER PAYABLES (CURRENT)
Trade payables
Other payables
Income tax liabilities
Other taxes and social security
Accruals
Deferred income
Bank borrowings
Obligations under finance leases (note 11)
2019
£’000
4,225
423
689
216
1,144
482
5,183
1
12,363
2018
£’000
5,003
336
633
198
1,246
291
1,875
8
9,590
£257,000 of the deferred income balance at 31 March 2018 has been recognised in the Statement of Comprehensive Income in the
current year.
Terms and conditions of the above financial liabilities:
• Trade and other payables are non-interest bearing and are normally settled on up to 60 day terms
For explanations on the Group’s liquidity risk management processes, refer to note 15.
73
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 19. TRADE AND OTHER PAYABLES (CURRENT) continued
Bank borrowings
The RCF facility was renewed during the year with an increase in facility size from £7m to £10m and an increase in term for a further 3 years.
Details of the facility are as follows:
Key Term
Facility
Description
Revolving Credit Facility with Clydesdale Bank Plc (trading as Yorkshire Bank)
Total facility size
£10m
Termination date
March 2022
Utilisation
Interest
The £10m facility is available subject to the ratio of cash at bank in hand (inclusive of currency balances) to
the RCF borrowing exceeding 1.5 as stipulated in the banking agreement
Interest is charged on the amount drawn down at 2.4% above LIBOR rate when the initial drawdown is made
and for unutilised funds interest is charged at 0.84% from the date when the facility was made available. The
LIBOR rate is reset to the prevailing rate at every interest period which is typically one and three months.
Interest Payable
Interest is payable at the end of a drawdown period which is typically between one and three months.
Repayments
Security
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.
Undrawn facilities
At 31 March 2019 the group had available £4.7m of undrawn committed facilities.
Finance lease and hire purchase commitments
The Group has finance leases and hire purchase contracts for one motor vehicle. The Group’s obligations under finance leases are secured by
the lessor’s title to the leased assets. Future minimum lease payments under finance leases and hire purchase contracts, together with the
present value of the net minimum lease payments at 31 March 2019 is £1,000 (2018: £9,000).
20. NON-CURRENT LIABILITIES
Obligations under finance leases (note 12)
Accruals
Deferred income
Derivative financial instruments
Deferred tax (note 10)
21. ISSUED CAPITAL AND RESERVES
Ordinary shares issued and fully paid
At 31 March 2018 & 31 March 2019
Capital risk management
2019
£’000
–
453
–
–
140
593
2018
£’000
1
265
35
40
115
456
No.
£’000
30,837,653
308
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to
stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the
borrowings disclosed in note 19, cash and cash equivalents and equity attributable to the equity holders of the parent, comprising issued capital,
reserves and retained earnings.
74
ANNUAL REPORT 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 22. DIVIDENDS
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2018 of 4.4p per share
(31 March 2017 of 1.3p per share)
Interim dividend for the year ended 31 March 2019 of 2.4p per share
(31 March 2018 of 2.2p per share)
Amounts proposed and not recognised:
Proposed final dividend for the year ended 31 March 2019 of 4.8p per share
(31 March 2018 of 4.4p per share)
2019
£’000
1,357
740
2,097
2018
£’000
401
678
1,079
1,480
1,357
The proposed final dividend is subject to approval at the Annual General Meeting and accordingly has not been included as a liability in these
financial statements.
23. PENSIONS
The Group operates a defined contribution scheme for its directors and employees. The assets of the scheme are held separately from those of
the Group in an independently administered fund.
The outstanding pension contributions at 31 March 2019 are £36,000 (2018: £13,000).
24. COMMITMENTS AND CONTINGENCIES
Operating lease commitments – Group as lessee
At the date of the Statement of Financial Position, the Group had outstanding commitments for future minimum rentals payable under non-
cancellable operating leases, which fall due as follows:
Land and buildings
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
2019
£’000
2,634
6,659
2,743
12,036
2019
£’000
89
130
–
219
2018
£’000
2,368
6,566
1,673
10,607
2018
£’000
61
36
–
97
Significant operating lease payments represent rentals payable by the Group for rental of store premises. Leases are normally renegotiated for
an average term of 10 years at the then prevailing market rate, with a break option after 5 years. Break clauses are ignored in the
above calculations.
75
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 25. RELATED PARTY DISCLOSURES
Ultimate controlling par ty
The Company has no controlling party.
Transactions with related par ties
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
26. SHARE BASED PAYMENTS
The Company operates a Long-term Incentive Plan (LTIP). The charge for the year in respect of the scheme was:
LTIP
2019
£’000
772
39
151
962
2019
£’000
221
2018
£’000
946
43
119
1,108
2018
£’000
161
The LTIP is a discretionary share incentive scheme under which the Remuneration Committee of Ramsdens Holdings PLC can grant options to
purchase ordinary shares at nominal 1p per share cost to Executive Directors and other senior management. The LTIP commenced in March
2017, details were as follows:
Number of
conditional
Shares
805,554
220,000
–
–
1,025,554
Weighted
average
exercise price
in pence
–
–
–
–
–
Outstanding at the beginning of the year
Granted during the year
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
76
ANNUAL REPORT 2019NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 26. 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 IFRS 2 and using the Black Scholes
method for the EPS performance condition which is classified as a non- market condition under IFRS 2. The fair values have been computed by
an external specialist and the key inputs to the valuation model were:
Model
Grant Date
Share Price
Exercise Price
Vesting period
Risk Free return
Volatility
Dividend Yield
Fair value of Option (£)
TSR Condition
Monte Carlo
02/07/2018
£1.75
£0.01
2.75 years
0.7%
30.0%
4.0%
0.46
EPS Condition
Black Scholes
02/07/2018
£1.75
£0.01
2.75 years
0.7%
30.0%
4.0%
1.56
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.
27. POST BALANCE SHEET EVENTS
As announced, on 28 May 2019, The Group has purchased 12 Loan books and 4 stores, from Instant Cash Loans Limited trading as The Money
Shop, for a total consideration of £0.5m which has been settled in cash. The purchase included the acquisition of £0.3m of pawnbroking
loan book.
77
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2019
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
2019
£’000
7,804
167
7,971
3,708
7
3,715
11,686
152
152
3,563
11,534
11,534
308
4,892
6,334
11,534
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
The Profit after tax for the Company for the year ended 31 March 2019 was £2,339,000 (2018: £2,050,000).
These financial statements were approved by the directors and authorised for issue on 11 June 2019 and signed on their behalf by:
M A CLYBURN
Chief Financial Officer
Company Registration Number: 8811656
78
ANNUAL REPORT 2019
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2019
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
As at 1 April 2018
Profit for the year
Total comprehensive income
Dividends paid
Share based payments
Deferred tax on share based payments
As at 31 March 2019
Share
Capital
£’000
308
Share
premium
£’000
4,892
–
–
–
–
–
308
308
–
–
–
–
–
–
–
–
–
–
4,892
4,892
–
–
–
–
–
308
4,892
Retained
earnings
£’000
4,598
2,050
2,050
(1,079)
161
71
5,801
5,801
2,339
2,339
(2,097)
221
70
6,334
Total
£’000
9,798
2,050
2,050
(1,079)
161
71
11,001
11,001
2,339
2,339
(2,097)
221
70
11,534
79
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 Statement of Cash Flow, standards not yet effective, impairment of assets and related
party transactions.
Where required, equivalent disclosures are given in the Group financial statements of Ramsdens Holdings PLC. The Group financial statements of
Ramsdens Holdings PLC are available to the public
The financial statements have been prepared on a going concern basis as discussed in the Directors’ Report.
The particular accounting policies adopted are described below.
Taxation
Current Tax
The tax currently payable is based on taxable profit for the year. The Company’s liability for current tax is calculated using tax rates and laws that
have been enacted or substantively enacted by the date of the Statement of Financial Position.
Deferred Tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet
liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to
the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Investments
Fixed assets investments are shown at cost less provision for impairment.
Financial Liabilities and Equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity
instrument is any contract that evidences a residual interest in the assets of the company after deducting liabilities.
Equity instruments issued are recorded at the proceeds received, net of direct issue costs.
Dividends
Dividends receivable from subsidiary undertakings are recorded in the Statement of Comprehensive Income on the date that the dividend
becomes a binding liability on the subsidiary company.
Dividends payable are recorded as a distribution from retained earnings in the period in which they become a binding liability on the Company.
80
ANNUAL REPORT 2019 NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
A. ACCOUNTING POLICIES continued
Employee Share Incentive Plans
Ramsdens Holdings PLC grants equity settled share option rights to the parent entity’s equity instruments to certain directors and senior staff
members under a LTIP (Long term incentive plan). The employee share options are measured at fair value at the date of grant by the use either
the Black Scholes Model or a Monte Carlo model depending on the vesting conditions attached to the share option. The fair value is expensed
on a straight line basis over the vesting period based on an estimate of the number of options that will eventually vest.
B. COMPANY STATEMENT OF COMPREHENSIVE INCOME
As permitted by s408 of the Companies Act 2006 the Company has elected not to present its Statement of Comprehensive Income for the year.
The auditor’s remuneration for the current and preceding financial years is borne by a subsidiary undertaking, Ramsdens Financial Limited.
Note 7 to the Group financial statements discloses the amount paid.
C. STAFF AND KEY PERSONNEL COSTS
Other than the Directors who are the key personnel, the Company has no employees, details of their remuneration is set out below
Remuneration receivable
Value of company pension contributions to money purchase schemes
Share based payments
Remuneration of the highest paid director:
Remuneration receivable
Value of company pension contributions to money purchase schemes
Share Based Payments
The number of directors accruing retirement benefits under the money purchase scheme is 2 (2018: 2).
2019
£’000
538
23
98
659
2019
£’000
232
10
64
306
2018
£’000
654
25
78
757
2018
£’000
312
15
50
377
81
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
D. INVESTMENTS
Shares in subsidiary undertakings
Cost
Cost brought forward
Additions – Share based payments
Impairment – reduction in capital in Ramsdens Group Limited
Cost carried forward
2019
£’000
7,681
123
–
7,804
2018
£’000
7,845
83
(247)
7,681
Additions represent share based payment expense recognised in Ramsdens Financial Limited. The impairment in the previous year was the
result of a reduction in capital in Ramsdens Group Limited. This reduction in capital facilitated a dividend paid by Ramsdens Group Limited to
Ramsdens Holdings PLC of £250,000.
The Investments in Group Companies which are included in the consolidated statements are as follows
Proportion of
voting rights and
shares held
Activity
100%
Dormant
100%
Supply of foreign exchange services, pawnbroking,
purchase of gold jewellery, jewellery retail and related
financial services.
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
Ordinary
Shares
Ordinary
Shares
E. DEFERRED TAX
Deferred tax relates to the following:
Deferred tax assets
Share based payments
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
82
2019
£’000
167
167
2019
£’000
84
13
70
167
2018
£’000
84
84
2018
£’000
–
13
71
84
ANNUAL REPORT 2019 NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
F. RECEIVABLES
Amounts owed by subsidiary companies
Prepayments
The expected credit losses on amounts owed by subsidiary companies is £nil.
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
2019
£’000
3,694
14
3,708
2019
£’000
11
92
20
29
152
2018
£’000
3,477
34
3,511
2018
£’000
10
261
17
14
302
Details of the called up share capital including share shares issued during the year can be found in note 21 within the Group financial statements
of Ramsdens Holdings PLC.
I. POST BALANCE SHEET EVENTS
There were no post balance sheets events that require further disclosure in the financial statements.
83
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT 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 Secretar y
Kevin Nigel Brown, F.C.A.
Registered Of fice and
Principal Place of
Business
Unit 16
The Parkway Centre
Coulby Newham
Middlesbrough TS8 0TJ
Telephone Number
01642 579957
Website
www.ramsdensplc.com
Nominated Advisor
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 Advisor
to the Company
Hudson Sandler LLP
25 Charterhouse Square
London EC1M 6AE
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Principal Bankers
Clydesdale Bank trading as Yorkshire Bank
1st Floor
94-96 Briggate
Leeds LS1 6NP
84
ANNUAL REPORT 2019