Ramsdens Holdings PLC Annual Report 2020

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FY2020 Annual Report · Ramsdens Holdings PLC

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Annual Report and Accounts
18 months ended 30 September 2020

HELPING YOU WITH
EVERYDAY LIFE

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

Contents

STRATEGIC REPORT

Chairman’s statement

Section 172 statement

Chief Executive’s review

Business review

Financial Director’s review

Principal risks and uncertainties

CORPORATE GOVERNANCE

Board of Directors

Corporate governance

Audit and Risk Committee report

Nomination Committee report

Remuneration Committee report

Directors’ report

FINANCIAL STATEMENTS

Independent Auditor’s Report

Consolidated statement of comprehensive income 54

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the consolidated financial statements

Parent company statement of financial position

Parent company statement of changes in equity

Notes to the parent company financial statements 89

CAUTIONARY STATEMENT REGARDING
FORWARD -LOOKING STATEMENTS
Certain information contained in this document, including any information as to the
Group’s strategy, plans or future financial or operating performance, constitutes
‘‘forward-looking statements’’. These forward-looking statements may be identified by
the use of forward-looking terminology, including the terms ‘‘believes’’, ‘‘estimates’’,
‘‘anticipates’’, ‘‘projects’’, ‘‘expects’’, ‘‘intends’’, ‘‘aims’’, ‘‘plans’’, ‘‘predicts’’, ‘‘may’’,
‘‘will’’, ‘‘seeks’’, ‘‘could’’, ‘‘targets’’, ‘‘assumes’’, ‘‘positioned’’ or ‘‘should’’ or, in each
case, their negative or other variations or comparable terminology, or by discussions
of strategy, plans, objectives, goals, future events or intentions. These forward-looking
statements include all matters that are not historical facts. They appear in a number
of places throughout this document and include statements regarding the intentions,
beliefs or current expectations of the Directors concerning, among other things,
the Group’s results of operations, financial condition, prospects, growth, strategies
and the industries in which the Group operates. By their nature, forward-looking
statements involve risks and uncertainties because they relate to events and depend
on circumstances that may or may not occur in the future or are beyond the Group’s
control. Forward-looking statements are not guarantees of future performance. Even
if the Group’s actual results of operations, financial condition and the development

of the industries in which the Group operates are consistent with the forward-looking
statements contained in this document, those results or developments may not be
indicative of results or developments in subsequent periods. Accordingly, undue
reliance should not be placed on these statements. The forward-looking statements
contained in this document speak only as of the date of this document. The Group
and its Directors expressly disclaim any obligation or undertaking to update or revise
publicly any forward-looking statements, whether as a result of new information, future
events or otherwise, unless required to do so by applicable law, the AIM Rules for
Companies or the Disclosure and Transparency Rules. Note: The financial information
contained in this document, including the financial information presented in a number
of tables in this document, has been rounded to the nearest whole number or the
nearest decimal place. Therefore, the actual arithmetic total of the numbers in a
column or row in a certain table may not conform exactly to the total figures given
for that column or row. In addition, certain percentages presented in the tables in
this document reflect calculations based upon the underlying information prior to
rounding, and accordingly, may not conform exactly to the percentages that would
be derived if the relevant calculations were based upon the rounded numbers.

Our business

Ramsdens is a diversified financial services
provider and retailer operating in the
following core segments:

FINANCIAL HIGHLIGHTS £000’s

Revenue

Gross Profit

£76,938

£47,149

£59,504

£37,204

£46,785

£39,942

£30,522

£28,347

FY18

FY19

12M201

FP202

FY18

FY19

12M201

FP202

Profit Before Tax

Net Assets

£9,221

£8,452

£34,961

£35,555

£30,908

£27,568

£6,312 £6,492

Foreign
Currency

Pawnbroking

Purchase of
Precious Metals

Retail of new
and second-
hand jewellery

The first Ramsdens store opened in Stockton-on-Tees in May 1987
and the Group retains its Teesside roots with its Head Office located
in Middlesbrough.

Today, Ramsdens’ services are delivered from its 157 stores (including
four franchised outlets) across the UK, supported by a growing online
offering for Foreign Currency and Jewellery Retail.

Our mission is to provide a great customer offering coupled with
such fantastic service that our customers become ambassadors for
Ramsdens. Our strong customer proposition and reputation for service
is reflected in our high levels of repeat business and excellent ratings
on Trustpilot.

Ramsdens is an increasingly trusted and recognised brand in each of
our four key business segments. The continued investment in our staff,
IT systems, marketing and store estate remain an important factor in
supporting the Group’s long-term growth ambitions.

GROSS PROFIT PERCENTAGES RE CORE SEGMENTS
taken from financial statements in £000’s

FY18

FY19 12M201 FP202

FY18

FY19

12M201

FP202

16%

21%

26%

● Foreign Currency
● Pawnbroking
● Purchase of Precious Metals
● Retail of new and second-hand jewellery
● Other

32%

Net Cash

EPS

£15,873

23.1p

21.4p

£12,735

£8,236

£11,051

16.3p

16.7p

FY18

FY19 12M201 FP202

FY18

FY19

12M201

FP202

1 (12 months unaudited)

2 (18 months audited)

RAMSDENS ANNUAL REPORT 2020Strategic
Report

Chairman’s statement

Section 172 statement

Chief Executive’s review

Business review

Financial Director’s review

Principal risks and uncertainties

RAMSDENS ANNUAL REPORT 2020Serving all your
travel money needs

R AMSDENS ANN UAL REP ORT 2020

Chairman’s statement

The Group is publishing its Annual Report to
cover the 18 month period from 1 April 2019
to 30 September 2020, at a time when there
is still uncertainty over the ongoing impact of
the COVID-19 pandemic. Since the outbreak of
the virus, our priority has been the safety and
wellbeing of Ramsdens’ staff, customers and
wider stakeholders.

I always knew that a big strength of the business
was its people and culture. The hard work,
flexibility and extraordinary commitment of
our teams in dealing with the unprecedented
challenges presented in 2020 only reinforces
that belief. I would like to personally thank each
and every one of my colleagues at Ramsdens
for their dedication during this period.

R AMSDENS ANN UAL REP ORT 2020

The Group’s
diversified
business model
has again shown
its strength in these
unprecedented
times.

The Group has continued to make good progress over
the 18 months. Profit before tax for the 18 months is
£9.2m (FY19: £6.5m) which indicates relatively linear
growth on a time basis but the reality of the 18 month
period is far from linear. The reporting period has
two distinct time periods with contrasting trading
conditions. We have the pre COVID-19 trading period
through to March 2020 and the subsequent 6 months
through to the end of the reporting period:

PRE COVID-19 – TRADING TO 23
MARCH 2020 WAS AHEAD OF THE
BOARD’S EXPECTATIONS
We achieved tremendous progress in the first 12 months of
the 18 month period through to March 2020. The business
performed ahead of the Board’s expectation over that time
and achieved record levels of profitability. Furthermore,
we were maintaining momentum by maximising the
opportunity that the Money Shop acquisition from March
2019 presented and continuing to roll out new stores in line
with our growth strategy.

COVID-19 IMPACT TO 30 SEPTEMBER
2020 – TRADING SHOWED
STRENGTH IN DIVERSIFICATION
March 2020 brought a slowdown in activity following
the onset of COVID-19, resulting in all stores closing on
23 March 2020 in line with government guidelines. Since
that time, the Group’s diversified business model has again
shown its strength, enabling the Group to trade profitably
through to the end of the financial period.

As a result of the COVID-19 disruption, we announced on 27 March
2020 that Ramsdens would change its accounting reference date
from 31 March to 30 September. This decision was made by the
Board in consultation with the Group’s auditors. This then created
a one off 18 month reporting period. Going forward, the Company’s
year-end will remain 30 September.

In April to June 2020 our stores were predominantly closed. While
there was some customer demand online for our retail products,
the vast majority of those products were located in stores and the
sales were only fulfilled following store re-openings as government
restrictions were eased.

During the period of the stores being closed, a significant proportion
of staff were furloughed under the Coronavirus Job Retention
Scheme. During this time Ramsdens topped up employees’ pay to
100% of their normal salaries.

By the end of July 2020, 152 stores had re-opened and by August
2020, the significant majority of staff across the Group’s store estate
had returned to work. We traded through to September safely, always
prioritising the protection of our staff and customers.

Following the re-opening of the Group’s stores, foreign currency
commission through to the end of the reporting period was
approximately 30% of the comparable prior year period, due
to ongoing restrictions on international travel as a result of the
pandemic. However, the performance of the Group’s jewellery
retail segment enhanced by online sales was encouraging and the
purchase of precious metals segment benefited from the strong gold
price. During lockdown, the Group’s pawnbroking customer base had
a reduced need for borrowing while at the same time continuing to
repay their loans, improving the Group’s cash position. The Group
completed two loan book acquisitions at the end of the Period, which
added a combined £0.25m to the in-date loan book.

Six of the Group’s stores did not reopen after the period of
enforced closure in the Spring as we took the opportunity to take
advantage of flexible leases and merged these branches into nearby
Ramsdens stores.

FINANCIAL YEAR STARTING OCTOBER 2020
– POSITIONED FOR LONG TERM GROWTH
The beginning of the new financial year has brought further
challenges with the introductions and expected continuation of both
national and local lockdowns across the UK. While Ramsdens is a
provider of certain services which the government has categorised
as essential and therefore has been able to remain open during the
latest lockdowns, consumer sentiment and footfall have inevitably
been impacted.

In addition, UK businesses continue to face macroeconomic
uncertainty with the scheduled end on 31 December 2020 of
the Brexit transition period and, as yet, no clear idea of what will
happen next.

brand, all of which position it well to deliver on the strategic ambitions
of sustainable long-term growth as a sense of normality resumes.

FINANCIAL RESULTS & DIVIDEND
As stated above, the Financial Statements cover an 18 month
reporting period. The results show that revenue increased to £76.9m
and PBT increased to £9.2m.

The Board believes that comparing performance to the prior year,
especially with a six-month period severely impacted by COVID-19,
does not represent the achievements and progress made.

£000’s

Revenue

Gross Profit

Profit Before Tax

Net Assets

Net Cash

EPS

FY19
(12 months)
(audited)

12M 20
(12 months)
(unaudited)

FP20
(18 months)
(audited)

£46,785

£30,522

£6,492

£30,908

£8,236

16.7p

£59,504

£37,204

£8,452

£34,961

£11,051

21.4p

£76,938

£47,149

£9,221

£35,555

£15,873

23.1p

The table above illustrates that the unaudited 12 month period to
March 2020, (12M 20) as reported in our Second Interim Report
on 27 May, compares very favourably to the financial year ended
31 March 2019 (FY19) and also that the Group traded profitably in
the final 6 month period.

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

The Board did not recommend a second interim dividend, as
announced in May 2020, owing to the significant uncertainty at
the time. Against the backdrop of ongoing considerable levels of
uncertainty, continuing to receive government support to protect
jobs and challenging trading conditions, the Board believes it is
both prudent and in the long-term interest of shareholders to
retain its cash resources to trade through this uncertainty. This
will position the Group to maximise the opportunity when the ‘new
normal’ returns. As a result, the Board is not recommending a final
dividend for the full reporting period. Aligned with this decision,
no salary increases have been awarded to directors and senior
executives and both Peter Kenyon, CEO and Martin Clyburn, CFO,
have voluntarily foregone part of their bonus entitlement as outlined
in the Remuneration Committee report. It is the Board’s intention
to return to its previous progressive dividend policy as soon as it is
prudent to do so.

A N D R E W M E E H A N
Non-Executive Chairman

Looking beyond the near term, the Group has a strong cash position,
diversified income streams, a strong management team and a trusted

18 December 2020

RAMSDENS ANNUAL REPORT 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSSection 172 statement

When making decisions of strategic importance, the Board is mindful of all stakeholders,
whose engagement is important to the future success of the Group.

The Board appreciates that different stakeholders have different
requirements and preferences, and our stakeholder engagement
processes enable the Board to understand these and take them into
account. The Board considers all the relevant factors and long-term
consequences of decisions in selecting the best course of action of
how to take the business forward.

a. the likely consequences of any decision in the long-term

b. the interests of the Company’s employees

c. the need to foster the Company’s business relationships

with customers

d. the impact of the Company’s operations on the community and

the environment

The Board considers its key stakeholders to be: employees,
customers, shareholders, the communities in which it operates,
the environment, its regulators, suppliers and franchisees.

e. the desirability of the Company maintaining a reputation for high

standards of business conduct

f. the need to act fairly between members of the Company.

In accordance with Section 172(1) of the Companies Act 2006, a
Director of a company must act in the way he or she considers,
in good faith, would be most likely to promote the success of the
company for the benefit of its members as a whole, and in doing so
have regard, amongst other matters, to:

STAKEHOLDER

ENGAGEMENT EXAMPLES

The following disclosure describes how the Directors of the Group
have taken account of the matters set out in section 172(1) (a) to (f)
and forms the Directors’ statement required under section 172 of the
Companies Act 2006.

Employees

• Comprehensive face to face induction training
• Company-wide digital learning and development platform
• A staff forum has been formed to consider and discuss general matters within the business, environmental

issues and best use of IT
• Weekly staff newsletter
• Annual staff engagement survey
• Regional roadshow involving all managerial grade employees
• Annual meeting of all key influencers within the business as part of a staff development program

Customers

Shareholder

Communities and
Environment

Suppliers and
Franchisees

Regulators

Further information is included in the Governance section, Principle 3 of the QCA Corporate Governance Code

• Interaction with customers in store, online and by telephone
• Customer Service support function assists with customer queries
• Social media and Trustpilot feedback reviewed and customers engaged to resolve any queries and areas of dissatisfaction

Further information is included in the Governance section, Principle 3 of the QCA Corporate Governance Code

• Individual meetings with institutional shareholders throughout the period and particularly following interim and full year results
• Shareholders are invited to submit questions to the Board at the Group’s Annual General Meeting
• Information for investors is published on the Group’s website www.Ramsdensplc.com

Further information is included in the Governance section, Principle 2 of the QCA Corporate Governance Code

• The Group contributes to local and national charities which are important to both the communities where our stores are located

and our staff

• The Group’s Staff Forum has been challenged with reviewing the Company’s efforts to improve its environmental footprint.

Further information is included in the Governance section, Principle 3 of the QCA Corporate Governance Code

• The Group has established long term key suppliers and enjoy good close working relationships. All supplier payments were

made in accordance with normal payment terms despite the impact COVID-19 has had on the business.

• Each Supplier relationship is reviewed on a six monthly basis to meet the Group’s strict responsible supplier policy.
• The Group engaged with its landlords during the store closure period to pay its rent on a monthly basis as opposed to not

paying its rental liabilities

• Each franchisee is audited on a quarterly basis

Further information is included in the Governance section, Principle 3 of the QCA Corporate Governance Code

• The Group has processes in place and uses its retained advisers and lawyers to keep it up to date with legislative changes and
compliance requirements that may impact the business, for example, the forthcoming 6th Money Laundering Directive and the
Guidance issued by the FCA for the treatment of customers experiencing payment difficulties as a result of COVID-19.
• The Group’s management regularly engages with trade bodies including The National Pawnbrokers Association and the

Consumer Credit Trade Association

Further information is included in the Principal Risks and Uncertainties section of the Strategic Report and the
Governance section, Principle 3 of the QCA Corporate Governance Code

RAMSDENS ANNUAL REPORT 2020Key Board Decisions in the Reporting period

BOARD DECISION

CONSIDERATIONS

The requirement to prioritise the welfare and health & safety of all staff. Despite
subsequently having an exemption to stay open to provide essential services,
little was known in the early days about how to protect customers and staff and
the stores remained closed until more detailed guidance was given by the UK
Government. Stores were then opened in a phased way to test and review the
processes implemented.

Flexible working arrangements were made available to facilitate staff who had
childcare issues with schools closed or to care for those shielding.

The requirement to support suppliers and landlords by paying all invoices and rent.
Many suppliers and landlords are small businesses that have supported the ongoing
development of Ramsdens.

The Board reviewed the Business’s response to the impact of COVID-19
on key stakeholders and approved the following actions:

Staff welfare. Those Head Office functions that could operate remotely
were facilitated prior to the national lockdown on 23 March. On 23
March, we closed our stores in line with government guidance. The pay of
furloughed staff was topped up to 100% from March through to July. By
August, the majority of staff had returned in some capacity. A network
of communication was created using mobile messaging and emails to
personal email addresses so staff were informed of the Company’s plans
to reopen, keep staff safe and to assist in supporting the health and well-
being of the individuals.

Customers. Within a week an online facility was made available for
customers to manage their pawnbroking loans and provide access to
a loan if required. There was increased customer communication via
social media, website and text with a primary message that customers
would not be disadvantaged by the store closures. All retail jewellery
sales return timescales were extended. On re-opening, the stores were
operated in a COVID secure way, which protected customers and staff.

Suppliers. All suppliers were paid as their invoices fell due

Landlords. Landlords. Rents continued to be paid, albeit for a short time,
on a monthly basis as opposed to quarterly.

The Board with its auditor, Ernst & Young, discussed the practicalities of
completing the audit for the year to March 20 given the implications of
COVID-19.

Consideration was given to the auditor’s ability to undertake year end stock takes
safely, across a ‘locked down’ store estate, and the auditor’s ability to undertake the
subsequent audit work in a timely manner.

The Board took the decision not to apply for additional bank funding or a
Coronavirus Large Business Interruption Loan (CLBIL).

The Board took the decision not to approve a second interim dividend or
recommend a final dividend for the 18 month period.

The Board stopped all new greenfield store openings but continued to
relocate stores where opportunities existed.

Purchase of loan book and assets from Beauly Financial Limited.

The Board reviewed the results of the Employee Engagement survey and
agreed a number of initiatives to be implemented.

Extend the time qualifying criteria for the Admission Long Term
Incentive Plan.

Consideration was given to the material uncertainties that existed with limited
knowledge of the timing and impact of the Government’s decision re lockdown.

In selecting a new date, consideration was given to keeping the reporting relatable to
prior periods and a change to 30 September was approved by the Board.

Consideration was given to increasing the cash resources available to the Company
but this was considered unnecessary as the Group had a strong balance sheet and
opportunities to improve cash liquidity from its jewellery stock and conversion of its
foreign currency holdings back into sterling.

Consideration was given to rewarding shareholders for the record 12 months
trading to March 20 but the Board decided to preserve cash given the material
uncertainties that existed at that time.

Consideration was given to issuing a scrip issue dividend but the Board decided
against this on the basis that it soon hoped to return to delivering on its progressive
dividend policy.

Consideration was given to recommending a final dividend but in the light of
the ongoing uncertainties and the guidance given in the government’s support
schemes, the Board has decided not to issue a dividend and instead enable the
Group to utilise the government’s job support scheme to support our staff and
retain jobs over the long-term.

Consideration was given to the longer term growth of the Group but it was
decided to preserve cash by not opening new greenfield stores given the material
uncertainties to future trading. Where trading in a town was known and a relocation
of a store would benefit the business, the relocation was undertaken.

The Board agreed to purchase the business assets following careful consideration
due to the long-term value of the transaction and the return on the capital employed.

Consideration of the feedback by employees who completed the survey. Taking
appropriate engagement action is critical to engage employees in the process and
for positive changes to be implemented.

Consideration was given to rewarding the seven beneficiaries of the scheme at a
time when all stores were closed and staff furloughed while balancing the fact that
performance criteria had been exceeded and the performance in the 12 months
to March 20 was a record year. The Board agreed that the Admission LTIP scheme
would vest on production of this Annual Report. The beneficiaries would then be
able to exercise at their discretion subject to Group’s standard share dealing code.

RAMSDENS ANNUAL REPORT 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSChief Executive’s review

Still moving
forward

The 18 month reporting period has included the
high of delivering an unaudited record 12 month
performance through to March 2020 reflecting the
investments made in our staff, brand, IT systems,
store locations, retail jewellery proposition and
digital operations. This was unfortunately followed
by the low of having to close all Ramsdens stores
between March and the end of May 2020, resulting
in a deceleration of online operations owing to stock
being held in closed stores and the pausing of our
planned store roll-out strategy.

P E T E R K E N YO N
Chief Executive Officer

R AMSDENS ANN UAL REP ORT 2020

INTRODUCTION
Excellent trading through to March had positioned the business
well for growth with good liquidity and growing diversified income
streams. We then entered a period, which I relate to the Ramsdens
ship getting caught in the eye of a storm. The storm was not of our
making, we could not navigate around it, and we had – and continue
to have – no control over its severity or duration. We have however
navigated through the first six months of the storm reasonably
successfully and are grateful for the UK Government’s support,
which has helped us to protect the jobs of our colleagues. Pleasingly
we have also remained profitable during this period, but at materially
lower levels than we would have expected under normal trading
conditions. The waters are still choppy, but I am pleased to say that
the Ramsdens ship is still moving forward. We are still able to make
progress notwithstanding the continuing stormy outlook.

As I look forward and see the storm calming – as it inevitably will
at some point – either when a vaccine is developed and widely
rolled out or we further adapt to living with the virus – I believe that
Ramsdens will be in a great position to maximise the opportunities
for continued, long term growth.

Our stores started to reopen at the end of May, initially trialling three
stores. This re-opening gathered pace through England in June, with
Wales and Scotland in July. Our head office staff slowly returned to
the workplace, adhering to additional social distancing rules and with
screens introduced to aid staff segregation.

COVID-19 IMPACT AND ACTIONS
The pandemic has had a huge impact on the lives of many who
work for, engage with, or supply Ramsdens. We have seen periods
of national lockdown and regional restrictions, which have affected
the high street unlike anything contemplated prior to the onset of
the pandemic. More broadly, we have seen a significant reduction in
demand for international travel and the movement of people.

Faced with this, the strength of the Ramsdens team spirit has
never been more evident. Our staff have been flexible, considerate
and collaborative, and did whatever it took to re-open our stores
in the summer and trade in a COVID secure way. I have immense
pride in being able to lead such a committed and talented group
of people and would like to thank them all for their response to the
unprecedented challenges faced during the period.

THE SAFETY OF OUR STAFF,
CUSTOMERS AND COMMUNITY
Our first priority throughout the pandemic has been the health, safety
and wellbeing of our staff, customers and the community at large.

During March 2020, we facilitated more staff being able to work from
home and securely connect to our centralised IT systems. We then
closed our stores in line with the UK Government guidance. In the
early weeks of the first national lockdown, we planned our reopening
and how we could operate in a safe way. The layout of our stores
supported this as they already feature segregated financial services
tills with private spaces for our customers and glass screens offering
additional safety. While Ramsdens became eligible to open for our
essential services, mainly pawnbroking, within a week of lockdown
we implemented an online portal for customers which enabled
them to manage their existing in store loans and apply for new loans
by posting their goods to our ecommerce team. Our message to
customers was that we would not disadvantage them because of the
stores being closed. We ensured we did this when we re-opened and
waived interest where customers were disadvantaged.

Once our stores were open, we strived to continue to provide the
services, for which our loyal customers visit Ramsdens, in our usual
friendly way. We were also able to fulfil the many pending online
orders we had received for jewellery items during the lockdown period
where the items had been securely stored in our closed stores.

During the two week ‘firebreak’ lockdown in Wales in October and
the national lockdown in England in November, our stores remained
open following government advice and the exemption for essential
services. This decision was made with the knowledge that we could
keep our stores as safe as possible for our customers and staff and
adhere to COVID secure guidelines.

LIQUIDITY
The Group was in a good position with its liquidity at the start of
lockdown. We also had opportunities to generate cash from the
intrinsic value of the gold in our jewellery stock if required. This
position has been improved in recent months following:

• profitable trading during the final 6 months of the reporting period;

• postponing the opening of new greenfield stores and saving the

associated capital expenditure;

• accelerating the merger of four stores and closure of two stores,

releasing working capital;

• customers repaying their pawnbroking loans during the period at
the same time as new lending being impacted from store closures
and reduced customer need. This will, however, have an impact
on future income generation while the loan book rebuilds over the
coming months; and

• the reduction of foreign currency cash, which improves sterling

cash held but not the overall net cash figure.

At 30 September 2020, the Group’s cash position was £15.9m and
the revolving credit facility of £10m remained undrawn.

RAMSDENS ANNUAL REPORT 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSBusiness review

The 18 month period encompassed the
ongoing development of: the core estate
of branches; our ecommerce activities; the
young stores which opened in 2018 and
2019; and the stores acquired in March 2019
which previously traded as The Money Shop.

This resulted in Profit Before Tax for the full 18 month period
increasing to £9.2m (FY19: £6.5m). The majority of the profit was
generated during the first 12 months of the 18 month reporting
period when the Group traded in what is best described now as
normal trading conditions delivering a 27% increase in revenue
and a 30% increase in Profit Before Tax to £8.5m (FY19: £6.5m).

The generation of £0.8m Profit Before Tax during the six
months to September 2020 is considered to be a strong
performance by the Board, given the period of store closures
and significant reduction in international travel.

Each of the key income streams is discussed in greater detail
below showing the results for the last two and a half years to
enable comparisons.

The Group’s retail estate grew to 158 stores as at March 2020 but
has now reduced to 153 stores. The reduction is the result of one
new store opening in Boston post-lockdown and the merger of six
stores with other nearby Ramsdens stores. We have continued
to achieve growth in our online jewellery retail sales as we move
forward with our strategy to become a truly multi-channel business.

R AMSDENS ANN UAL REP ORT 2020

Our diversified business model: Product offering
Ramsdens operates in the four core business segments of: foreign currency exchange;
pawnbroking; jewellery retail; and purchase of precious metals.

The following tables have references to;

H1 being the 6 months to 30 September
2019. These numbers are unaudited
H2 being the 6 months to 31 March 2020.
These numbers are unaudited

12M20 being the 12 months to 31 March
2020. These numbers are unaudited

H3 being the 6 months to 30 September
2020. These numbers are unaudited.

The FP20 represented the 18 month
financial period to 30 September 2020
which is audited.

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

Approximately 784,000 customers used the foreign currency
service during the year to March 2020 up 11% on the previous
12 months of approximately 705,000 customers. The significant
impact of COVID-19 on the reduction of international travel
and consequently on the Group’s foreign currency volumes is
highlighted by the number of customers falling from approximately
570,000 in the six months to September 2019 to approximately
69,000 in the six months to September 2020, an 88% fall.

The improvement in the rate of commission, or gross profit
from the product has been driven by a focused effort by the

Group to widen margins in line with our competitors and the
volume of higher margin purchases of currency representing
a greater percentage of the total currency exchanged.

In line with our multi-channel strategy, the Group intended to
refresh its currency travel card proposition in 2020 but given
the impact of COVID-19 this has been delayed to 2021.

As we look forward, we see the income from this service
growing in line with the easing of restrictions and as international
travel returns. We strongly believe that customers’ desire to
go on holiday abroad remains high. While we have seen more
people use card payments in the UK, we believe the need for
foreign currency cash will remain high given the popular holiday
destinations and known spending patterns while abroad.

The table demonstrates the strong growth for the 12 months to March 2020.

000’s

Total Currency exchanged

Income

Online C&C orders

% of online FX

Percentage of GP

FY19
(audited)

H1 20
(unaudited)

H2 20
(unaudited)

12M 20
(unaudited)

12M20 v FY19

H3 20
(unaudited)

£496m

£11.6m

£32m

38%

£340m

£8.4m

£23.9m

41%

£181m

£4.7m

£18.5m

10%

28%

£521m

£13.1m

£42.4m

35%

13%

32%

33%

(3%)

£38m

£1.8m

£3.0m

18%

FP20
(audited)

£559m

£14.9m

£45.4m

32%

PAWNBROKING
Pawnbroking is a small subset of the consumer credit market in
the UK and a simple form of asset backed lending dating back to
the foundations of banking. In a pawnbroking transaction an item
of value, known as a pledge, (in Ramsdens’ case, jewellery and
watches), is held by the pawnbroker as security against a six-month
loan. Customers who repay the capital sum borrowed plus interest
receive their pledged item back. If a customer fails to repay the loan,
the pawnbroker sells the pledged item to repay the amount owed and
returns any surplus funds to the customer. Pawnbroking is regulated
by the FCA in the UK and Ramsdens is fully FCA authorised.

The growth in pawnbroking income to March 2020 was primarily due
to the contribution from the Money Shop loan books that we acquired
in March 2019.

As our stores closed in March 2020, we quickly leveraged our
strengths as a multi-channel business and made a full service online
pawnbroking facility available. Whilst the volume of loans being
requested through the portal has been low, reinforcing the view
that customers prefer a face to face service, the portal did enable
a significant number of customers to repay their loans during the
lockdown period and collect their goods when stores re-opened.

RAMSDENS ANNUAL REPORT 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSB USINESS RE V IE W – CONTIN U ED

The impact of the national lockdown was that our customer base had
a reduced borrowing need. The restrictions on normal life expenditure
within the customer base and the significant UK Government support
– in particular the Coronavirus Job Retention Scheme – led to a
greater number of customers repaying their loans over the normal
redemption patterns.

The average loan value as at 30 September 2020 was £248, up from
£229 as at 31 March 2020 and £224 as at 31 March 2019. The loan
book is considered of high quality with a low loan to value ratio of

approximately 60% on the gold price alone at the period end. Where
loans are not repaid, the current high gold price enables an improved
recovery of interest where goods are scrapped as opposed to being
appropriate for retailing.

As we look forward, the Board is confident that the loan book will
rebuild over time. The typical pawnbroking customer is cautious.
They know that the item pledged is their store of wealth and that this
enables them to borrow when needed.

000’s

Gross profit

Total loan book

Past Due

In date loan book

Percentage of GP

FY19
(audited)

H1 20
(unaudited)

H2 20
(unaudited)

12M 20
(unaudited)

12M20 v FY19

H3 20
(unaudited)

£7,520

£7,643

£1,032

£6,611

25%

£4,261

£7,739

£763

£6,976

21%

£4,706

£7,747

£1,115

£6,632

28%

£8,967

£7,747

£1,115

£6,632

24%

19%

1.4%

0.3%

(1%)

£3,281

£6,548

£1,559

£4,989

33%

FP20
(audited)

£12,248

£6,548

£1,559

£4,989

26%

JEWELLERY RETAIL
The Group offers new and second-hand jewellery for sale. The Board
believes there is significant growth potential in this segment by
leveraging Ramsdens’ retail store estate and ecommerce operations.
The Group aims to cross-sell its retail proposition to existing customers
of the Group’s other services as well as attracting new customers.

Retailing of new jewellery products complements the Group’s
second hand offering to give our customers greater choice in
breadth of products and price points. In addition, the retailing of new
jewellery enables the Group to attract some customers who prefer
not to buy second hand. New jewellery items now account for 31%
of the retail revenue.

Whilst many retailers had been recording falling sales, the
performance to March 2020 was very robust. The ongoing
development of the premium watch sales generates a higher cash
margin per product sold but at a lower percentage margin. Watch
sales are seen as incremental revenue for the Group. This is the
primary reason that the gross margin percentage for jewellery retail
fell during the period.

The total jewellery sold through our ecommerce activities totalled
£1.9m for the 18 month period and represents 9% of all jewellery
items sold. Sales of £846k were delivered in the last 6 months
to September 20 and £1,101k in the 12 months to March 20
representing 94% growth over FY19 at £568k.

With the website recently developed to improve the customer
experience it is hoped that conversion rates will improve and further
growth will follow. 40% of our online sales are now to customers living
outside the natural catchment of our branch network.

We believe there is an ongoing opportunity for improving and growing
our jewellery retail business. Following a restructure of internal
resources, we have placed greater focus on improving the sales of
each product category, diamonds, watches, second hand and new
jewellery through the store estate and online. We have been investing
in the website to improve the customer experience and conversion
rates. We have increased the ecommerce team headcount so that we
can list more individual second hand items and fulfil the increased
sales. We believe these investments will help deliver ongoing growth
in our retail jewellery segment in the coming years.

The table demonstrates the strong growth for the 12 months to March 2020.

000’s

Revenue

Gross Profit

Margin %

Jewellery retail stock

Online sales1

% of sales online1

Percentage of GP

FY19
(audited)

H1 20
(unaudited)

H2 20
(unaudited)

12M 20
(unaudited)

12M20 v FY19

H3 20
(unaudited)

FP20
(audited)

£9,771

£5,039

52%

£9,085

£568

17%

£5,499

£2,598

47%

£8,111

£322

13%

£7,054

£3,113

44%

£8,919

£779

19%

£12,553

£5,711

45%

£8,919

£1,101

15%

28%

13%

(7%)

(2%)

94%

(2%)

£4,556

£1,990

44%

£9,496

£846

14%

20%

£17,109

£7,701

45%

£9,496

£1,947

16%

1 this is based on total jewellery sold which includes ex pledge items

RAMSDENS ANNUAL REPORT 2020PURCHASES 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 sterling gold price increased by 50% during the 18 month period,
reaching an all time record high. The current gold price is considered to
be higher than where we would expect it to be on a medium-term basis.

In the 12 months to March 2020, an additional non-recurring gross
profit of £0.8m was generated from the sale of older stock.

The weight of gold purchased has reduced since the re-opening of
our stores after the national lockdown. This is attributed to people
still not undertaking normal activities, the reduced need for additional
cash and a reduction in the number of foreign currency customers to
whom we have traditionally cross-sold this service. We do anticipate
the weight purchased increasing as we move back to more normal
trading conditions. Until then we believe the gold price will remain high,
assisting margins.

000’s

Revenue

Gross Profit

Percentage of GP

FY19
(audited)

£12,343

£4,801

16%

H1 20
(unaudited)

H2 20
(unaudited)

12M 20
(unaudited)

12M20 v FY19

H3 20
(unaudited)

£10,080

£4,122

20%

£7,499

£3,214

19%

£17,579

£7,336

20%

42%

53%

£5,445

£2,520

25%

FP20
(audited)

£23,024

£9,856

21%

OTHER SERVICES
In addition to the four core business segments, the Group also
provides additional services in cheque cashing, Western Union money
transfer, credit broking and receives franchise fees.

Whilst this has been a steady source of gross profit, we believe that
the impact of COVID has switched some Western Union customers
online rather than using a store network. Cheque cashing was and
continues to be a service in decline.

000’s

Revenue3

Gross Profit3

Percentage of GP

FY19
(audited)

£2,542

£1,577

H1 20
(unaudited)

H2 20
(unaudited)

12M 20
(unaudited)

12M20 v FY19

H3 20
(unaudited)

£1,594

£1,138

£1,029

£937

£2,623

£2,075

32%

£412

£410

FP20
(audited)

£3,035

£2,485

RAMSDENS ANNUAL REPORT 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSB USINESS RE V IE W – CONTIN U ED

Our people
It has been clearly demonstrated since
the outbreak of the pandemic earlier in
2020, that one of Ramsdens’ greatest
strengths is its people. Our aim is to
nurture, train and develop the best talent
in our industry, and to that end during the
period 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.

As well as doing the ‘day job’ and seeking a never ending higher
bar of achievement during the 18 month reporting period,
the team have successfully embedded the acquired Money
Shop stores from March 2019, trained the 89 staff members
who transferred to Ramsdens in the Ramsdens values and
ways, maintained high levels of repeat business from loyal
customers, and faced the challenges of COVID-19 head on. We
have only been able to do this thanks to the team’s dedication,
commitment, willingness to strive for continuous improvement
and its focus on delivering fantastic service to our customers.

Reflecting the vital role of our staff and their contribution,
in the period from March to July 2020 the Group topped
up all furloughed employees’ pay to 100% of their normal
salaries. We are grateful to the UK Government for providing
the Coronavirus Job Retention (Furlough) Scheme and its
extension to March 2021 which has enabled the Group to
protect the jobs of the Group’s skilled employees whose
training and development we have already invested in.

THE RAMSDENS BRAND
The high levels of repeat purchasing of foreign currency exchange
and pawnbroking loans demonstrates the trust our customers have
in Ramsdens.

Where our branches are located, we enjoy strong brand recognition.
However there is scope to improve this recognition across the full
range of diversified services we offer, which remains a key focus
for the Group. In addition, improving our online capabilities and the
associated awareness of Ramsdens’ great products and value will
enable the brand to increase recognition beyond the branch network
catchment areas.

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

The Group maintains a continual focus on cyber security and the
associated threat landscape. The IT team regularly review the cyber
defences of the Group and have recently installed additional network
security software to raise the barriers and reduce cyber risk.

The longstanding and layered approach we have to protecting our
systems and the data held allowed a seamless transition to remote
working for more of our staff in the last six months.

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.

RAMSDENS ANNUAL REPORT 2020Strategy
We have a consistent and established strategy for the long-term development and growth of
Ramsdens. Underpinned by the development of our people, I am confident that the four pillars
of the Group’s previously proven strategy remain relevant and appropriate in the long-term.

We continue to concentrate on:

Improving the
performance of our
existing store estate

Expanding the
Ramsdens branch
footprint in the UK

Developing our
online proposition

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

WE REMAIN FOCUSED ON DELIVERING OUR CORE MISSION,
WHICH HAS THREE COMPONENT PARTS:

1. TO HAVE A GREAT

CUSTOMER OFFERING…

2. …AND GIVE SUCH FANTASTIC

3. …THAT OUR CUSTOMERS

CUSTOMER SERVICE…

BECOME OUR AMBASSADORS.

• We offer 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

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

Second purchase from
Ramsdens Jewellers. Excellent
service. Quality purchases. No
problems at all. I would highly
recommend. Thank you guys.
S E P T E M B E R 2020

Excellent service from Marie,
very helpful and took the time
to look at a number of items.
O C TO B E R 2020

RAMSDENS ANNUAL REPORT 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSB USINESS RE V IE W – CONTIN U ED

Improving performance of
the existing store estate

Our strategic focus is on attracting more customers,
cross-selling our diversified services and driving higher
spend from those acquired customers. By doing this and
controlling costs, the profit contribution will increase.

• Purchase of precious metals: by growing the awareness

amongst our existing customer base, primarily foreign currency
customers who are unaware of the service or the value held in
damaged or simply unwanted or unworn jewellery.

The growth in the four key income segments across the core
estate during the first 12 months of the reporting period
demonstrate the effectiveness of this strategy. We are not resting
on past results and believe we have significant capacity for
further improvement. We will do this by continuing to engage with
our customers and provide standout products and service.

We aim to improve the performance of our key income streams:

• Foreign currency: by having competitive exchange rates to

attract new and retain existing customers. Margins will continue
to be managed closely with due regard to local circumstances.
We will develop a market-leading multi-currency travel card to
capture more of the customer’s holiday spend while abroad. We
have relocated stores to higher footfall locations to improve the
convenience we offer our existing customers and to attract those
customers who may have been unaware of our secondary location
within a town.

• Pawnbroking: by doing what we believe is the right thing for the

long term. This has included proactively supporting our customers
through the challenges that COVID-19 has brought by waiving
interest, reducing interest rates and offering long-term repayment
plans. Where customers default, we will continue to obtain the
best price possible for them by selling by private treaty and
not using an auction process which we believe disadvantages
customers. We will continue to give a great service and grow the
customer base through recommendation. We have very prudent
lending policies particularly given the high gold price. Whilst not
losing our in-built prudent approach to business and management
of cash, we are looking at improving our lending on items that
are desirable to retail and offering a more attractive solution for
borrowers with high value assets. The introduction of a jewellery
offering in the March 2019 acquired Money Shop stores will also
improve the pawnbroking results of those stores.

• Jewellery retail: by continuing to offer our customers greater
product choice and depth of supply with improved stock
replenishment systems and, where appropriate, greater levels of
inventory. This will apply to jewellery and premium watches. We are
continuing to work on the display of our products to create more
customer appeal as well as continuing to invest in our retail website
(see below) which also acts as a stock catalogue for our branches to
facilitate further in store sales. By relocating stores to higher footfall
locations we are often able to provide an improved jewellery offering
with greater stock on display for similar rents. In addition, there is
still the opportunity to convert stores acquired from The Money Shop
in March 2019 to have a strong retail jewellery offering. An example
is the recent conversion of our Altrincham store.

Expanding the branch footprint in the UK
As at 30 September 2020, we had 157 stores including the
four franchised stores. During the 18 month period, we;

• Opened seven greenfield sites

• Opened four stores that previously traded as the Money Shop

• Merged eight stores where we had two stores in a town, seven
of which were in plan as part of the short-term strategy from
The Money Shop acquisition in March 2019

• Closed two stores in towns which were marginal and relocated

the pawnbroking loan book to a local Ramsdens branch

In February 2020, we had nine new greenfield sites in various
stages of agreement. These were all paused when the March
lockdown was implemented and will remain so as we continue
to re-evaluate the impact of the pandemic in those locations.

Whilst we have paused new greenfield stores, the Group’s
medium-term strategy remains to open new stores and expand
its geographic footprint, leveraging off the Head Office cost base
which has been geared up to support our continued growth.

An example of the
recent conversion of
our Altrincham store.

Before

After

RAMSDENS ANNUAL REPORT 2020The Ramsdens branch
footprint in the UK

WALES
Aberdare
Barry
Blackwood
Bridgend
Caerphilly
Carmarthen
Cardiff,
Albany Road
Cowbridge Road
Cwmbran
Ebbw Vale
Haverfordwest
Llanelli
Llanrumney
Merthyr
Neath
Newport
Pontypridd
Port Talbot
Swansea

FRANCHISES
Bury
Leeds, Harehills
Whitby,
Baxtergate
Church Street

Middlesborough,
Hillstreet Centre
Linthorpe Road
Morley
Newcastle,
Grainger Street
Newton Aycliffe
North Shields
Northallerton
Oldham
Otley
Peterlee
Preston
Redcar
Ripon
Rotherham
Sale
Scarborough
Scunthorpe
Sheffield,
Hillsborough
The Moor
Skelmersdale
South Shields,
King Street
Prince Edward Road
Stockton
Sunderland,
Chester Road
Southwick
The Bridges
Teesside
International Airport
Thornaby
Wallasey
Wallsend
Washington
Whitehaven
Whitley Bay
Workington
Worksop
York

SCOTLAND
Aberdeen,
132 Union Street
27 Union Street
Airdrie
Alloa
Arbroath
Ayr
Bellshill
Braehead
Clydebank
Coatbridge
Cumbernauld
Dumbarton
Dumfries
Dundee
Dunfermline
East Kilbride
Edinburgh,
Shandwick Place
Elgin
Falkirk
Fraserburgh
Glasgow,
Argyle Street
The Forge
Queens Park
Glenrothes
Grangemouth
Greenock
Hamilton
Inverness,
High Street
Inglis Street
Irvine
Killingworth
Kilmarnock
Kirkcaldy
Kirkintilloch
Leith
Livingston
Motherwell
Musselburgh
Newton Mearns
Paisley
Partick
Perth
Peterhead
Rutherglen
Saltcoats
Springburn
Stirling
Wishaw

ENGLAND
Altrincham
Ashington
Barnsley
Barrow
Benwell Newcastle
Berwick
Billingham
Bishop Auckland
Blyth
Boston
Bradford
Bridlington
Bristol, The Galleries
Byker
Carlisle
Castleford
Chester Le Street
Chesterfield
Chippenham
Chorley
Consett
Coulby Newham
Cramlington
Darlington
Derby
Doncaster
Durham
Eston
Gateshead
Goole
Grimsby
Guisborough
Halifax
Harrogate
Hartlepool
Huddersfield
Hull,
Hessle Road
Holderness Road
Jarrow
Keighley
Kendal
Killingworth
Lancaster
Leeds, Kirkgate
Lincoln
Liverpool,
Lord Street
Norris Green
Old Swan
Whitechapel

RAMSDENS ANNUAL REPORT 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSB USINESS RE V IE W – CONTIN U ED

Developing our online proposition

Our journey to becoming truly multi-channel continues. Our ecommerce activities include
our jewellery retail website www.ramsdensjewellery.co.uk and the use of ebay.

APPRAISING OPPORTUNITIES PRESENTED BY
OPERATING IN A CHALLENGING MARKET
The retail landscape has been challenging for a number of years.
The uncertainties of Brexit and general economic outlook created a
headwind for most retailers but the COVID-19 pandemic seems to
have been a challenge too far for some high street retail jewellery
outlets, bureaux de change and travel agents with stores closing
permanently in many towns. This changing and challenging backdrop
will create an opportunity to acquire displaced customers that do not
wish to shop online once we see a post-pandemic new normal. There
is the caveat that certain high streets may have been damaged too
badly to ever recover without large investment in towns or changes
to the non-domestic rates system. Our property portfolio has been
purposefully managed to be as flexible as possible to provide a
defensive quality in case of one of our stores becomes isolated and
performance deteriorates, or agile should the town nucleus shift.

The number of pawnbroking outlets in the UK continues to fall. Our
estimation is that there are circa 130 pawnbroking businesses in
the UK trading from circa 870 locations. The largest three National
Pawnbroker Association members account for circa 610 locations.
Within our existing geographic territories, the opportunity to acquire
good pawnbrokers is limited but there may be the possibility to
acquire and expand our geographic footprint in the future. In
September 2020, the Group purchased two of the oldest pawnbroking
names in Scotland , Robert Biggar Pawnbrokers in Glasgow and
Duncanson & Edwards Pawnbrokers in Edinburgh. They were
purchased from Beauly Financial Limited with the combined active
loan books of £0.25m.

The total jewellery sold including ex pawnbroking items through
our ecommerce activities totalled £1.9m for the 18 month period
and represents 9% of all jewellery items sold. Sales of £846k were
delivered in the last 6 months to September 20 and £1,101k in the
12 months to March 20 representing 94% growth over FY19 at £568k.

With this momentum we have recently developed and launched a
new retail website in October 2020 to enhance the user experience
and improve conversion rates by ensuring customers can find what
they are looking for quickly and more efficiently than ever before. The
development has remodelled the front end that the customer sees
and also optimised the platform on which the website is built which
we hope will achieve higher rankings in Google searches.

Offering a holistic set of payment options to our customers further
underlines the commitment to improving conversion rate and the
re-introduction of interest free finance as an additional online
payment method is expected to help drive additional growth. We are
looking at additional payment options for the customer early in 2021.

Additional investment to deliver website personalisation (the
process of creating customised experiences for visitors to the
website using AI) is also planned and is expected to further increase
conversion rate.

The branch estate only covers approximately 25% of the UK
population and a fast-improving online offering will allow those people
outside of the Ramsdens network to have access to great jewellery at
fantastic prices.

Our online retail offering will be further improved by additional
investments in software to enhance product images and upload times,
increased focus on organic search engine optimisation (‘SEO’) and
online advertising. With more products being listed on the website
than ever before, the customer has a greater choice and our branch
network has the opportunity to sell more products from our website,
which acts as a catalogue for our products.

The currency part of the Group’s website has been developed to
improve the customer journey throughout the 18 month period. The
improvements made are demonstrated by the 32% growth in Click
and Collect foreign currency volumes through www.ramsdensforcash.
co.uk in the 12 months to March 2020 over the prior comparable year.
Further developments are planned to improve the customer journey.
While the website is mobile friendly, an app is being developed
alongside the planned launch of a multi-currency travel card.

RAMSDENS ANNUAL REPORT 2020LOOKING AHEAD
The first half of FY21 will remain challenging, with pressure
continuing on high street footfall through regional lockdowns and
ongoing restrictions in line with the devolved governments’ tiered
systems. Added to this, we have the challenges of macroeconomic
uncertainty with the scheduled end of the Brexit transition period at
the beginning of 2021 and, as yet, no clarity with respect to future
trading arrangements. Our foreign exchange service is dependent
upon the return of international travel and we await a change to the
UK Government’s stance on quarantine and airport testing prior to
the development and roll out of a vaccine.

While headwinds remain, we have operated and will continue to
operate in a COVID secure way by ensuring that our customers
continue to receive excellent, socially distanced service in our stores
nationwide and by further developing our online capabilities to better
reflect the well-publicised consumer shift to online. Driving this
will be a greater focus on our retail jewellery proposition and staff
development in this area.

The Group has a strong financial footing, the benefit of diversified
income streams and a well-invested infrastructure. This gives the
Board confidence that Ramsdens is well-placed to not only navigate
this ongoing transitional period better than some of its competitors,
but also to emerge strongly from this challenging period, with
a growth strategy proven to deliver long term benefit for all our
stakeholders and value for our shareholders.

P E T E R K E N YO N
Chief Executive Officer

Ramsdens is well-placed to
not only navigate this ongoing
transitional period better
than some of its competitors,
but also to emerge strongly
from this challenging period.

RAMSDENS ANNUAL REPORT 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
Financial Director’s review

The Group’s administrative expenses for the 18 month period
were £37.9m. This is after receiving the Coronavirus Job Support
payments. For comparison purposes, the administrative expenses for
the 12 months ended 31 March 2020 were £28.2m which was a 18%
increase on FY19 reflecting an increase in staff costs to support the
growth of the business and the costs associated with new stores.

In total the Group received £3.5m of Government support during the
final 6 months of FP20, £0.7m has been shown as other income and
£2.8m has been shown as a reduction to administrative expenses.

Finance costs from borrowing remain low reflecting the Group’s
strong cash position and the efficient seasonal use of the Group’s
revolving cash facility during peak holiday periods.

EARNINGS PER SHARE AND DIVIDEND

The Group changed its accounting reference
date to 30 September following consultation
with the Group’s auditors.

To assist comparison, the previously announced second interim
unaudited figures for the 12 months to 31 March 2020 have been
included below.

£000’s

Revenue

Gross Profit

Profit Before Tax

Net Assets

Net Cash

EPS

FY19
(12 months)
(audited)

12M 20
(12 months)
(unaudited)

FP20
(18 months)
(audited)

£46,785

£30,522

£6,492

£30,908

£8,236

16.7p

£59,504

£37,204

£8,452

£34,961

£11,051

21.4p

£76,938

£47,149

£9,221

£35,555

£15,873

23.1p

Revenue increased to £76.9m for the full 18 month period with profit
before tax increasing to £9.2m. As commented above the 18 month
period covers two contrasting periods for trading conditions. The 12
months ended 31 March 2020 represented mainly normal trading
conditions, with COVID-19 only impacting the final weeks of the
year. The Group previously reported strong growth for the year to
31 March 2020 with Revenue increasing 27% and growth coming
from across all segments. The final 6 months of FY20 were severely
impacted by COVID-19.

In the 12 months ended 31 March 2020 profit before tax increased
30% to £8.5m (FY19: £6.5m) representing a record 12 months for the
Group. In the final six months, the Group utilised government support
to offset the store closure impact and was able to report a profit
for the period. With store closures lasting almost three months and
significantly reduced international travel impacting foreign currency
volumes, these results demonstrate the strength of the Group’s
diversified business model.

M A RT I N C LY B U R N
Chief Financial Officer

R AMSDENS ANN UAL REP ORT 2020

The statutory basic and diluted earnings per share for FP20 the year
is 23.1p and 22.5p respectively up from 16.7p and 16.3p in FY19.

The Board has not recommended a final dividend (FY19: 4.8 pence
per share) in respect of the reporting period ended 30 September
2020 owing to the impact of COVID-19 and the Group continuing to
receive ongoing government support. The total dividend for the 18
month period ended 30 September 2020 is therefore 2.7 pence per
share (FY19: 7.2 pence per share).

The Board intends to recommence its progressive dividend policy
once new normal trading conditions return. Owing to the change in
accounting reference date, future dividend dates are expected to be
scheduled as September for interim payments and March for final
payments, with the approximate proportion of one third and two
thirds respectively, subject to the financial performance of the Group.

CAPITAL EXPENDITURE
During the reporting period, the Group invested in the store
estate by opening new stores and relocating existing stores.
Capital expenditure for tangible and intangible assets was
£2.0m which mainly reflected the opening of a further 7
new stores and relocation of 4 stores during the period.
Six pawnbroking loan books were acquired. Additionally we
entered into new leases (or licences to occupy) in relation
to four stores previously trading as The Money Shop.

CASH FLOW
The net cash flow from operating activities for the 18 month
period was £15.8m which includes government support of £3.5m
(FY19: £1.5m). Cash inflows have benefited from a reduction
of approximately £1.8m in trade and receivables, which was
mainly due to reduced pawnbroking lending during the final 6
months of the period impacted by COVID-19 restrictions. As
a result of the implementation of IFRS16, property & vehicle
lease payments of £3.6m are now shown as a financing
cash outflow, whereas in the prior year lease payments were
included in operating cash flows. The total increase in cash
in the period was £2.5m after repaying £5.2m of debt.

The Group renewed its revolving credit facility in March 2020
for a further 3 years to March 2023. The Group has one
covenant of 1.5x cash cover. At 30 September 2020, this
facility was undrawn. The cash position and headroom on
the bank facility provide the Group with the funds required
to continue to deliver its current stated strategy.

Net cash at the period end was £15.9m (FY19: £8.2m).

FINANCIAL POSITION
At 30 September 2020, cash and cash equivalents amounted to
£15.9m (FY19: £13.4m) and the Group had net assets of £35.6m
(FY19: £30.9m).

IFRS16
The Group adopted IFRS16 ‘Leases’ from the start of the period
applying the modified retrospective approach with no restatement
of the prior year. On transition at the end of FY19, qualifying lease
commitments have been brought onto the balance sheet, as both a
‘Right of use’ asset and a corresponding lease liability. The adoption
of IFRS 16 has resulted in a reduction in balance sheet retained
earnings of £0.5m, primarily resulting from the Group recognising
right-of-use assets of £9.1m offset by lease liabilities of £9.7m, with
further adjustment for rental prepayments, rent incentive accruals
and deferred tax. Further detail on the impact of IFRS16 is provided
in the consolidated financial statements at Note 2.

TAXATION
The tax charge for the period was £2.1m (FY19: £1.3m) at an
effective rate of 22% (FY19: 20.5%). The effective rate is higher
than the standard UK rate of corporation tax of 19% (FY19: 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 £398,000
(FY19: £221,000). 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.

GOING CONCERN
The Group has prepared these financial statements with due
consideration to the unprecedented impact of COVID-19 on the
economy and society. The Board has considered the impact of
COVID-19 on each balance sheet item and conducted a going
concern review to ensure this basis remains appropriate. The Group
has significant cash resources of £15.9m and access to an undrawn
£10m revolving credit facility with an expiry date of March 2023.

The Board has conducted an extensive review of forecast earnings
and cash over the next twelve months, considering various scenarios
and sensitivities given the COVID-19 situation and uncertainty
around the future economic environment, including extreme stress
test scenarios that are detailed in note 3 of the financial statements.

The Board has been able to conclude the going concern basis is
appropriate in preparing the financial statements.

M A RT I N C LY B U R N
Chief Financial Officer

RAMSDENS ANNUAL REPORT 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSPrincipal 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.

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 AND IMPACT

MITIGATING FACTORS

IMPACT AND
CHANGE IN RISK

Global / Regional Pandemic
As the current global pandemic, COVID-19 has
shown, the implications of such an event are
extreme, sudden and challenging to mitigate. The
impacts of a global or regional pandemic include;

• Restriction in international travel, having an adverse
impact on our foreign currency exchange revenues

• Customer demand reduction having an adverse

impact on our retail values, purchase of
precious metals and pawnbroking loans

• Supply chain disruption and delays could
be experienced in the supply of new
jewellery resulting in reduced revenue

As evidenced by the Global response to COVID-19,
a second wave and further lockdowns, the ability to
mitigate the impact is challenging. To navigate the
challenges and mitigate the potential adverse impacts
on the Group, we have established the following

The Board considers this
risk to be high and its impact
significant. The risk manifested
itself and has developed during
the reporting period.

• Business continuity plans with delegated
decision making authorities to establish a
rapid response to crisis situations

• Well invested IT systems which enabled

remote working quickly

• Flexible leases across the store portfolio to adapt to any
longer term shifts in customer behavior or local demand

• The failure of key suppliers could impact

• Alternative supplier networks for key supplies

The Group mitigates this risk by having diversified
income streams, which are counter cyclical and to
a degree leave the business recession neutral.

The Bank of England is forecasting
that the UK economy will not get back
to pre COVID-19 levels until late 2022.

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 40 individuals
from the EEA who work for the Group, none
of whom are in key management roles.

Excluding COVID-19, the Board
considers that there has been
no change in the risk.

the provision of key services

• Employee health and well being with the impact

that key individuals, branches or departments may
be unable to undertake day to day operations

Economic Risk
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 UK is transitioning from membership of the European
Union. The impact post January 2021 is unknown.

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.

RAMSDENS ANNUAL REPORT 2020RISK AND IMPACT

MITIGATING FACTORS

IT Security
Non availability of the IT systems, including its
e-commerce websites, if prolonged, could have an
adverse impact on the Group leading to business
interruption, lost revenue and reputational damage.

Malicious attacks, data breaches or viruses could lead
to business interruption and reputation damage.

A malicious attack may cause a data breach
or the IT system to fail and lead to business
interruption and reputational damage.

Regulatory
The risks are that the business may lose its regulatory
approvals, breach other regulations or there are
changes in regulation which impact the Group’s
ability to trade, increase administration costs, result
in financial penalties and reputational damage.

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.

Reputation
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 relations, 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.

IMPACT AND
CHANGE IN RISK

The Board considers that there
has been no change in the risk.

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, network management
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 Group was able to facilitate home working
in a secure way in response to COVID-19.

The Group has extensive training in cyber security for all
staff including an annual mandatory refresher course.

The IT Director reports to the Executive Compliance
& Risk Committee on a monthly basis.

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 has dedicated internal audit and compliance &
risk teams that have overview and control of our developed
IT systems, operational controls, comprehensive training
and a rigorous compliance monitoring programme
in order to maintain adherence to legislation.

The Group has followed the government’s COVID-
secure guidance and the FCA’s guidance on assisting
customers through difficulties caused by COVID-19.

The Group invests heavily in its staff development including
a face to face induction course which lasts one week.

The Board considers that there
has been no change in the risk.

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 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 has mandatory annual courses, which all
staff have to pass. These include anti money laundering
and financial crime, treating the customer fairly, policies
and procedures dealing with vulnerable customers

The Group retains a PR consultancy to provide
ongoing support and media engagement.

RAMSDENS ANNUAL REPORT 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSPRINCIPAL RISKS AND U NCERTAINTIES – CONTIN U ED

RISK AND IMPACT

MITIGATING FACTORS

Exchange Rate 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.

Gold Price
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.

A significant and sustained decline in the price of gold
would adversely affect the value of jewellery pledged
as collateral by pawnbroking customers and the stock
held by the Group. This may also affect volume of
jewellery sales and default rates on pawnbroking loans.

The Group 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.

The policy has been developed over time in
conjunction with our hedging suppliers and
reviewed by Manchester Business School.

IMPACT AND
CHANGE IN RISK

Sterling has been less volatile
in recent months but it has
been at a depressed value
in relation to € and US$.

The Board considers the risk
is unchanged as there remains
uncertainty around Brexit and
the impact of COVID-19.

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.

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. 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.

Sterling has been less volatile in
recent months but it has been at a
depressed value in relation to US$.

The COVID-19 pandemic and general
concerns over global macro factors
including the US and China trade wars
have resulted in a high gold price.

The Board considers the risk
is unchanged as there remains
uncertainty around Brexit and
the impact of COVID-19 but
would expect the gold price to
fall over the medium term.

Liquidity and forecasting 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 a bank or merchant card supplier
becomes insolvent and we would no longer have
access to the credit funds or our card takings.

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 2020,
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.

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 uses a bespoke financial modelling
tool to help predict future cash flows to ensure
it has sufficient cash resources at all times.

The Board considers that there
has been no change in the risk.

Credit Risk Assessment
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 Board considers that there
has been no change in the risk.

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
17,000 customers and the average pawnbroking
loan is £248 as at 30 September 20.

RAMSDENS ANNUAL REPORT 2020IMPACT AND
CHANGE IN RISK

The Board considers that there
has been no change in the risk.

RISK AND IMPACT

MITIGATING FACTORS

Financial crime
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 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 mitigates risk by having policies and
processes to identify and stop attempts to involve
the business with financial crime activity.

The Group has a robust compliance monitoring
programme which involves every branch being
randomly audited 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 4 to 25, has been approved by the Board.

By order of the Board

P E T E R K E N YO N
Chief Executive Officer

18 December 2020

RAMSDENS ANNUAL REPORT 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
Corporate
Governance

Board of Directors

Corporate governance

Audit and Risk Committee report

Nomination Committee report

Remuneration Committee report

Directors’ report

RAMSDENS ANNUAL REPORT 2020
Treat yourself or a
loved one to new or
pre-owned jewellery

R AMSDENS ANN UAL REP ORT 2020

Board of Directors

Executive directors

PETER EDWARD KENYON (55)
CHIEF EXECUTIVE OFFICER

MARTIN ANTHONY CLYBURN (39)
CHIEF FINANCE 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 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

RAMSDENS ANNUAL REPORT 2020Non-Executive directors

ANDREW DAVID MEEHAN (65)
NON-EXECUTIVE CHAIRMAN

SIMON EDWARD HERRICK (57)
NON-EXECUTIVE DIRECTOR

STEPHEN JOHN SMITH (63)
NON-EXECUTIVE DIRECTOR

Simon joined the board of the Company
on 1 January 2017. Simon has significant
experience in senior executive roles
including positions as CFO of Debenhams
plc, Northern Foods plc, Kesa Electricals
plc and PA Consulting Limited and CEO
of Northern Foods plc. 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 Fellow
of the Institute of Chartered Accountant in
England and Wales and holds an MBA from
Durham University.

External appointments
Simon is a director of FireAngel Safety
Technology Group plc, Herrick Inc Ltd
and Sports Punk Ltd.

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
John Nixon Limited.

Andy is a highly experienced retail executive
with over 30 years’ experience including
CEO and CFO in roles at the Co-Operative
Retail Services, Storehouse plc and Sears
plc. 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 NEF Holdings Ltd,
Polyco Healthline Group Ltd, Dr Morton’s
Ltd, University Hospitals Coventry and
Warwickshire NHS Trust Charity, Shaw
Education Trust, and Coventry Cathedral
Council. He is Pro-chancellor and Governor
at Coventry University and a director
of Lanthorne Ltd, Coventry University
Enterprises Limited, The FutureLets Limited,
PeoplesFuture Limited, CU Services Limited
and Cheviot Court (Luxborough Street) Ltd.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Corporate governance

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 N D R E W M E E H A N
Non-Executive Chairman

R AMSDENS ANN UAL REP ORT 2020

Employees
The success the Group has had to date, is down to its people.
Implementing a continuous improvement ethos can only be achieved
because of the hard work, dedication and enthusiasm of the people
within the business. In return we are committed to create a working
environment in which the employee can grow and develop, be well
rewarded and well respected for what they contribute.

During the COVID-19 lockdown period we have focused
on supporting our staff both emotionally and financially.
A communication network was created in March 2020 to check
on the wellbeing of each of the almost 700 individual employees
who were furloughed. Through social media messenger channel
group’s and weekly emails all staff were kept up to date with the
Group’s response to the pandemic. To help support financially the
Group topped up the pay of all furloughed employees to 100% from
March through to July inclusive. By August the majority of the staff
had returned to work.

We have been working hard to build on the progress made by
recruiting, retaining and developing the best people. Great progress
had been made in reducing staff turnover from April 2019 to March
2020 prior to the pandemic. Following this period there has been
minimal turnover as a result of furlough and the unusual situation
created by COVID-19.

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

Marina Dunn 20 years’ service.

PRINCIPLE 1
Establish a strategy and business model which promote long
term value for shareholders
Please see the Strategic Report from pages 4 to 25.

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 long term strategy of the business has not changed since it listed
on AIM. The Group will continue to;

• improve the performance of our existing store estate,

• 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.

PRINCIPLE 2
Seek to understand and meet shareholder needs
and expectations
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 preliminary results.

Private shareholders have been encouraged to attend the AGM at
which the Group’s activities are considered and questions answered.
In advance of the AGM in July 20, which was held behind closed
doors due to COVID-19, all shareholders when issued with their
notice of meeting were invited to email questions to the Board.
At any other time an investor can email IR@ramsdensplc.com
directly. Videos have been produced to explain the interim and
period end 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.

PRINCIPLE 3
Take into account wider stakeholder and social
responsibilities and their implications for long term success
The Group has always prided itself on acting responsibly in every
aspect of the business. We operate with three core values, of being
trusted, open and passionate about our business. We believe that
engaging with our stakeholders, be that, employees, customers,
shareholders, regulators, suppliers, franchisees or the wider local
communities we operate in, and living our values, are the best ways
to develop long term relationships for mutual benefit.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020

CORP OR ATE GOV ERNANCE – CONTIN U ED

Andrea Bramley 20 years’ service.

Margaret Bazeley 20 years’ service.

and anti-money laundering, while other courses focus on the
development of an individual’s skills. We have continued to
invest in jewellery and watch knowledge and selling skills,
which have helped drive the great jewellery retail results.

The Group is an equal opportunities employer and we believe
in appointing the best person based purely on merit to any role
within the business. The Group is committed to 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.

At Ramsdens we believe that being a diverse organisation allows us
to grow and become the business we aspire to be. The executive
committee of the trading company has been extended from six
to eight members. The team consider the monthly reports of all
department heads, signing off project initiatives in line with the
Group’s strategy. The executive committee consists of 6 male and
2 female members, with different specialist skills, aged from 31 to
55. The committee continues to have great constructive and diverse
input to how we move forward.

Including the executive committee members, the top 45 people
influencers in the business meet annually and have continued their
collective development within the Group’s Senior Management
Leadership programme. It has been interrupted by COVID-19, but is
in a great place to recommence in 2021. A new training course in
mental wellbeing is currently been rolled out to this leadership team.

Where possible, the Group wishes to promote from within. The three
Regional Managers, four of the eleven Area Managers and five of
the six Internal Auditors and over 55% 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.

One of the developments held up by the pandemic is the first face
to face meeting of the Employee Forum which was formed in 2020.
The Employee Forum has a remit of discussing general matters that
affect the business as well as how the Group can improve with the
use of technology or its contribution to the environment.

The Group recognises and values long service. Each staff member
receives an additional day of holiday entitlement for their first
five years’ service and upon reaching their 5th anniversary they
receive company wide recognition and a monetary award. Further
recognition happens at 10 and 20 years’ service, with additional
holidays and financial rewards at those milestones. We were pleased
to recognise three 20 year service awards in this reporting period.

The Group has a philosophy of wanting to share the financial success
of the business with staff. All staff received a minimum of inflationary
pay rise in 2020 and in addition to their 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 plus
extended company sick pay benefits. All staff benefited from their
birthday being an additional day’s holiday.

As part of the Board’s desire to reward key senior employees over
the long term, the Group extended participation in the long-term
incentive plan to 17 staff members in 2019.

RAMSDENS ANNUAL REPORT 2020Customers
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 it has a need to be a responsible lender,
be aware that customer’s circumstances change and be proactive in
assisting the needs of all 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 uses Trustpilot for customer feedback on its retail
jewellery and foreign currency offerings. Both services currently
enjoy excellent ratings.

Suppliers & Franchisees
The Group has a limited number of key trade suppliers. Strong
relationships have been built up over many years where the supplier
and Ramsdens work together to improve the trade for both parties.
Ramsdens reports on its supplier payment practices and believes
in paying all suppliers as and when payments are due. The Group
has sought assurance from its suppliers that they have no modern
slavery practices within their supply chains. The Group’s statement
on its compliance with the Modern Slavery Act is available on its
Website, www.ramsdensplc.com.

During the period, two of its main suppliers had difficulties. Travelex,
had both cyber and group financial difficulties but maintained all
services for Ramsdens. Wirecard Card Services UK Limited’s global
difficulties led to a short interruption to the Group’s currency card
but with minimal customer impact. The card program is now with
Railsbank as issuer.

The Group has three franchisees operating four franchised stores.
All franchised businesses are well established and audited quarterly
to ensure they meet the standards required by Ramsdens.

Regulators
The Group engages proactively with, and believes it has, open and
good relationships with its Regulators.

Some of the charities supported are listed below

Trustpilot reviews

Communities & the Environment
The Group is committed to engaging with its local communities and
has assisted in a variety of fundraising initiative’s raising money for
both national and local charities.

This was primarily done through donations of jewellery for raffle
prizes or auction lots, foreign coin collections and a matched funding
scheme for staff taking part in local charitable events.

In addition to fundraising, the Group has been using its IT expertise
to assist a local hospice improve its IT systems and reporting. This
project is ongoing with delays caused by the pandemic.

This financial year the company has raised or helped charities
directly raise over £14,000.

We also understand that, as a company, we can help make a
difference to the environment.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020CORP OR ATE GOV ERNANCE – CONTIN U ED

The Group is constantly striving to reduce its carbon footprint by
using materials from sustainable sources where possible, through
means of recycling as much as we can and planning how what
we use can be recycled or reused. The Group supplies its foreign
currency exchange customers their notes in a clear plastic bag which
is the exact size to meet the airline requirements for carrying liquids
on board in hand luggage.

How we can improve our environmental footprint is a big challenge
the Employee Forum has been tasked with.

Greenhouse gas emissions
This report has been prepared in accordance with our regulatory
obligation to report greenhouse gas (GHG) emissions pursuant to
the Companies (Directors’ Report) and Limited Liability Partnerships
(Energy and Carbon Report) regulations 2018, which implement the
Government’s policy on Streamlined Energy and Carbon Reporting.

All the Group’s Emissions fall under Scope 2, indirect emissions
from the generation of purchased energy. The Group’s methodology
involves the initial collection of energy use data in respect of Electricity
and Gas from suppliers, business mileage data for transport and the
subsequent use of UK Government Conversion Factors to calculate
emissions. The emission data set out below is for the period ended
30 September 2020.

Tonnnes of CO2

Scope2 Emissions

Per Employee

Energy Consumption (MWh)

Period ended 30 September 2020

507

0.68

1,808

The Group’s initiatives to mitigate greenhouse gas emissions include:

• An ongoing replacement of light bulbs in all our properties to

energy efficient LED’s

• The reduction in business travel through the use of tele and video

conferencing and car sharing.

It should be noted that the closure of stores due to the pandemic,
employees working from home and a general reduction in business
operations has resulted in a material reduction in our greenhouse gas
emissions in the last 18 months.

PRINCIPLE 4
Embed effective risk management, considering both
opportunities and threats throughout the organisation
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. These and the operational
contingency plans are continually monitored as being fit for purpose
as new threats emerge, as new opportunities are explored and as the
business develops.

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 six monthly basis. The
chair of the Audit and Risk Committee and Head of Compliance and
Risk have open dialogue whenever they feel it is necessary outside of
the two formal reports.

The Head of Compliance and Risk reviews and develops the Group’s
comprehensive compliance monitoring programme to provide
evidence that 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 six field internal auditors.
All branches and head office departments, have been audited at
least twice and once respectively, in the reporting period. The audit
and compliance monitoring programmes are reviewed and developed
on an ongoing basis as risks change and include asset checks and
adherence to policy and procedures.

PRINCIPLE 5
Maintain the board as a well-functioning, balanced team led
by the chair.
The Board comprises of five directors, three Non-Executive directors,
who are all considered independent and two Executive directors. The
Board has a mix of skills, experience and backgrounds.

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.

PRINCIPLE 6
Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities
The Directors of the Group and their biographies are set out on
pages 28 and 29.

The experience and knowledge of each of the Directors gives
them the ability to constructively challenge strategy and
scrutinise performance.

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

RAMSDENS ANNUAL REPORT 2020

management team and professional advisers. The Directors receive
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 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
believes that it has the appropriate experience, skills and capability
for a FCA regulated business of its size.

PRINCIPLE 7
Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
The Board is responsible for reviewing, formulating and approving
the Group’s strategy, budgets and corporate actions and oversee the
Group’s progress towards its goals. This is formally documented in a
schedule of matters reserved for board approval and include;

• Strategy and Business Plans, including annual budget, new stores

and acquisitions

• 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.

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.

PRINCIPLE 8
Promote a corporate culture that is based on ethical values
and behaviours
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 business operates with 3 core values of being trusted, open
and passionate and challenges its senior management team of key
influencers to consider the values in the decisions they make and
actions they take.

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.

As a FCA authorised business, the Group must adhere to the
Senior Managers and Certification regime. This sets out nine key
responsibilities and four conduct rules for senior managers and five
conduct rules for all staff. The Board is satisfied that the culture of the
business is to undertake all activities in line with the conduct rules.

Living the values, obeying the FCA conduct rules and delivering the
mission statement is integral to the 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.

The Directors and NEDs have visited stores to gain direct feedback.

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.

PRINCIPLE 9
Maintain governance structures and processes that are fit for
purpose and support good decision – making by the Board.
The Board, comprising two Executive directors and three Non-
Executive directors. Whilst the Board aims to meet at least 10
times per year, the unprecedented impact of COVID-19 led to more
frequent board meetings in the spring of 2020.

The following table shows directors attendance at scheduled board
and committee meetings during the reporting period.

Andy Meehan

Simon Herrick

Steve Smith

Peter Kenyon

Martin Clyburn

Board

25/25

Audit

Remuneration

Nomination

4/4

–

5/5

–

1/1

–

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CORP OR ATE GOV ERNANCE – CONTIN U ED

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

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 37.

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. The Board is pleased with how the
senior management team managed the impact of the pandemic
from closing the stores, managing the Group through the lockdown,
including short term liquidity, contingency planning and how it re-
opened the stores taking into account all stakeholders and how this
was controlled and communicated.

PRINCIPLE 10
Communicate how the company is governed and is performing
by maintaining a dialogue with shareholders and other
relevant stakeholders
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 preliminary results.

Private shareholders are encouraged to attend the AGM at which the
Group’s activities are considered and questions answered. General
information about the Group is available on the Group’s website;
www.ramsdensplc.com.

The Non-Executive Directors are available to discuss any matters
stakeholders might wish to raise, and the Chairman and Non-
Executive Directors 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 10 February 2021. The
Annual Report and Accounts and Notice of the AGM will be sent to
shareholders at least 20 working days prior to this date.

RAMSDENS ANNUAL REPORT 2020
Audit and Risk
Committee report
On behalf of the Board, I am pleased to
present the Audit and Risk Committee report
for the period to 30 September 2020.

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.

ROLE OF THE EXTERNAL AUDITOR
The Audit and Risk Committee monitors the relationship with
the external auditor, Ernst & Young LLP, to ensure that auditor
independence and objectivity are maintained. As part of its review
the Committee monitors the provision of non-audit services by the
external auditor and assesses the auditor’s performance. Having
reviewed the auditor’s independence and performance the Audit
and Risk Committee recommends that Ernst & Young LLP be re-
appointed as the Company’s auditor at the next AGM.

MEMBERS OF THE AUDIT AND RISK COMMITTEE
The Committee consists of myself as Chair and my two fellow
Non-Executive Directors, Stephen Smith and Andrew Meehan. The
Committee has met 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 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.

DUTIES OF THE COMMITTEE
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.

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.

As part of the continuous review of risks, the principal risks and
uncertainties were updated with the risks presented by the COVID-19
pandemic. The Audit and Risk Committee were reassured by the
Group’s business continuity planning in how the Group adapted to
greater home working in a cyber secure way and to operate in a
covid secure way.

AUDIT PROCESS
The auditor prepares an audit plan for the review of the year’s
financial statements. The audit plan sets out the scope of the audit,
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
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 48 to 53.

Three issues have been raised as Key Audit Matters by the Auditor.

1
The risk of incorrect revenue recognition as a result of
fraudulent transactions at a branch level.
The Group’s 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
is 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 regularly, 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.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020CORP OR ATE GOV ERNANCE – CONTIN U ED

2
The risk of incorrect recognition of revenue and the
associated revenue accrual in respect to pawnbroking
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;

1. Non Redemption Rate based on current and historical data

held in respect of non redemption rates,

2. Realisation Value 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.

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.

3
Impairment risk in relation to Intangible Assets, Property,
Plant and Equipment and Right of Use Assets
Prior to the COVID-19 pandemic, all core Ramsdens stores that were
older than two years old were profitable in the 12 months to February
2020. All young stores were trading in line with or better than
expectation. All acquired stores were trading satisfactorily.

The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. The impact that the
COVID-19 pandemic has brought has been factored into this
year’s review.

Determining whether intangible assets, property, plant and
equipment and right of use assets are impaired requires an
estimation of the value in use of the Group’s cash generating units
(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 impairment review is
conducted at the level of each CGU, which is usually taken to be
each individual branch store.

The Committee has reviewed the detailed impairment test
calculations and considered the principal assumptions applied
by management in arriving at the value in use of each CGU. The
committee has compared the discount rate of 12% to industry peers
and considered the Group’s weighted average cost of capital and has
concluded it is appropriate. The Committee has also reviewed the
assumptions used in arriving at future cash flows for less profitable
stores including new stores with less trading history, and challenged
management on other potential indications of impairment.

The Committee is satisfied that the intangible assets, property,
plant and equipment and right of use assets are fairly valued and are
materially correct.

Internal Audit
The Group has a compliance and risk function which under the
direction of the Audit and Risk Committee undertakes asset
verification checks of all branch and head office departmental cash,
pledge and inventory balances and audits processes for adherence
to policies and procedures. Each audit report for every branch and
department is circulated to senior compliance and operational
team. A summary of the findings are discussed in the monthly
Compliance & Risk presentation to the executive committee.
The minutes of the executive committee meetings are reviewed
by the Audit and Risk Committee.

Risk Management and Internal Controls
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.

Whistleblowing
The Group has in place a whistleblowing policy, which sets out
the formal process by which an employee of the Group may, in
confidence, raise concerns about possible improprieties in financial
reporting and other matters. There were no incidents or concerns
raised for consideration during the year.

Anti-Bribery
The Group has in place an anti-bribery and anti-corruption policy,
which sets out its zero tolerance position and provides information
and guidance to those working for the Group on how to recognise
and deal with bribery and corruption issues. During the period there
were no incidents for consideration.

S I M O N H E R R I C K
Chair of the Audit and Risk Committee.

RAMSDENS ANNUAL REPORT 2020
The Committee discussed long term succession planning and
emergency cover at Board level and of the senior management
team. The short-term emergency planning was tested during the
period when the Operations Director had a six month leave of
absence for personal reasons. We are pleased to say the Senior
Management Team responded well to the challenge. On a long-term
basis, 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 N D R E W M E E H A N
Chair of the Nominations Committee

Nomination
Committee report
On behalf of the Board I am pleased to
present the Nomination Committee report
for the period ended 30 September 2020.

MEMBERS OF THE NOMINATION COMMITTEE
The Nomination Committee consists of myself and my follow Non-
Executive Directors, Simon Herrick and Stephen Smith.

DUTIES OF THE NOMINATION COMMITTEE
In carrying out its duties, the Nomination Committee is primarily
responsible for:

• Identifying and nominating individuals to fill Board vacancies;

• Evaluating the structure and composition of the Board with

regards the balance of skills, knowledge, experience and making
recommendations accordingly;

• Drafting the job descriptions of all Board members;

• Reviewing the time requirements of the Non-Executive Directors

• Giving full consideration to succession planning

• Reviewing the leadership of the Group

The Committee is scheduled to meet once a year but it will meet
more frequently if required. The Committee reports to the Board on
how it has discharged its responsibilities in accordance with its terms
of reference.

Please refer to pages 28 and 29 for the Director’s biographies. The
Committee believes that the Directors are able to devote sufficient
time to the Group, taking into account their other Directorships

ACTIVITY DURING THE YEAR
The Committee discussed the skills, experience and diversity of
the current Board and committee members taking into account
the current and future needs of the Group, its culture and strategic
objectives. The Committee identified a need for greater strategic
marketing input and utilised a program called Boardroom Ready.
Through this program we were able to recruit Jane McKenzie-Lawrie
a marketing professional who wanted to develop her skills to take
on non executive directorship roles. Jane joined the Board as an
observer for 12 months from June 2020.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020CORP OR ATE GOV ERNANCE – CONTIN U ED

Remuneration Committee

On behalf of the Board I am pleased to present the Directors’ Remuneration
Report for the period ended 30 September 2020 which sets out the
remuneration policy and the remuneration paid to the Directors for the period.

COMPOSITION AND ROLE
The Remuneration Committee consists of myself and my fellow
Non-Executive Directors, Andrew 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 five times during the period.

Due to the annual pension contribution cap, the Remuneration
Committee have approved that any contributions above the cap
can be paid as a cash allowance.

• 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.

REMUNERATION 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;

• The Executive Directors are entitled to have 10% of their Basic
annual salary paid into their respective pension schemes.

EXECUTIVE DIRECTORS’ SERVICE CONTRACTS
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-EXECUTIVE DIRECTORS
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.

DIRECTORS REMUNERATION
The following table summarises the total gross remuneration of the Directors who served during the 18 month period to 30 September 2020.

Executive

Peter Kenyon

Martin Clyburn

Non Executive

Andrew Meehan

Simon Herrick

Stephen Smith

Salary

Pension1

PHI

Fixed Pay

Bonus

LTIP

Variable Pay

Total FY20
(18 months)

FY19
(12 months)

£301,181

£201,600

£15,000

£21,280

£2,208

£1,068

£318,389

£223,948

£57,000

£50,000

£102,283

£159,283

£477,672

£307,460

£53,923

£103,923

£327,871

£205,213

£98,866

£72,211

£60,175

–

£98,866

£72,211

£60,175

–

£98,866

£72,211

£60,175

£63,254

£46,200

£38,500

Aggregate remuneration

£734,033

£36,280

£3,276

£773,599

£107,000

£156,206

£263,206

£1,036,795

£660,627

1 Includes sums paid into pension scheme and/or pension allowance

The bonus for the 18 month period represents achievement against stretching annual targets for the period to March 2020 where the Group
had record profits. Peter Kenyon would have received a bonus equivalent to 60% of his maximum annual award but has voluntarily foregone 50%
of this award in light of the non-payment of a second interim and final dividend. Martin Clyburn would have received a bonus equivalent to 56%
of his maximum annual award but has voluntarily foregone 33% of this award in light of the non-payment of a second interim and final dividend.

RAMSDENS ANNUAL REPORT 2020The Remuneration Policy for FY21 will operate as follows:

Basic Salary

Pension

Private Health Insurance

Bonus

Executive

Peter Kenyon

Martin Clyburn

Non Executive

Andy Meehan

Simon Herrick

Steve Smith

£191,625

£134,400

£65,907

£48,140

£40,117

10% of basic salary

–

All of the Directors basic annual remuneration will remain the same
in FY21 as the prior reporting period. The bonus opportunities for the
FY21 financial year will be assessed by the Remuneration Committee,
which retains 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

ADMISSION LTIP
On admission to AIM the Group introduced a Long Term Incentive
Plan (LTIP) for the following set against two performance criteria
over the financial years from admission to the year ending
31 March 2020 (FY20).

Peter Kenyon

Martin Clyburn

Mike Johnson

Jason Carr

Matt Fothergill

Michael Wilson

Mark Smith

Yes

–

Up to 100%

–

Number of shares awarded
under the LTIP scheme

250,000

138,889

69,444

LTIP 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 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 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.

The total shareholder return for the period under review to 31 March
2020 grew by 73%. The Admission price was 86 pence and the
average share price for the qualifying period was 131 pence and
dividends of 17.8 pence had been paid.

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 earnings per share for the period under review to 31 March 2020
grew by 174%. The FY17 earnings per share was 7.8 pence and the
earnings per share for the 12 months ended 30 March 2020 was
21.4 pence.

The Remuneration Committee exercised its discretion to extend
the time qualifying criteria from March 2020 to the production of
the Annual Report for the period ended 30 September 2020 before
allowing the shares to vest. Therefore the following Directors and
employees will have the option to acquire the below number of
shares at nominal value.

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.

The Remuneration Committee exercised its discretion and the final
12 month period for assessing whether the performance criteria
has been met has been changed from the 12 months ending
31 March 2021 to the 12 months ending 30 September 2021.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020CORP OR ATE GOV ERNANCE – CONTIN U ED

LTIP FY19 – FY22
A further LTIP scheme was introduced following the publication
of the FY19 Annual Report. This further 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 FY19 results to 31 March 2022 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 FY19 to FY22. 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 160,000 shares were
allocated to 17 Group employees.

LTIP PERIOD ENDED 30 SEPTEMBER 2020 – FY23
It is the Board’s intention to issue a further LTIP within 42 days of the
publication of this Annual Report. This will continue to 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.

The Directors hold the following notifiable beneficial interests in the ordinary share capital of the Company

Executive

Peter Kenyon1

Martin Clyburn1

Non Executive

Andy Meehan1

Simon Herrick

Steve Smith1

Type of share

Holding as at
31 March 2019

Acquired in the
financial period

Sold in the
financial period

As at
30 September 2020

1p ordinary

1,139,734

209,375

332,320

19,950

54,348

12,773

15,000

1,152,507

209,375

347,320

19,950

54,348

1 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.

S I M O N H E R R I C K
Chair of the Remuneration Committee

RAMSDENS ANNUAL REPORT 2020Directors’ report

The directors have pleasure in presenting their
report and the financial statements of the group
for the period ended 30 September 2020.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
The principal activities of the Group during the period 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 period and the financial position of
the group are as shown in the annexed financial statements.

A review of the business and its future development is given in the
Chairman’s and Chief Executive’s statements

RESULTS AND DIVIDENDS
The results for the period are set out in the consolidated statement
of comprehensive income on page 54.

The directors are not proposing a final dividend.

During the period, the Group paid an interim dividend of 2.7 pence
per share. In FY19 the Group declared dividends totalling of
7.2 pence per share.

LIKELY FUTURE DEVELOPMENT
Our priorities for the following financial year are disclosed in the
CEO’s Strategic Report on pages 4 to 25.

SUBSTANTIAL SHAREHOLDINGS
The Company has one class of ordinary share, which carry no right
to fixed income. Each ordinary share has the right to one vote at
general meetings.

As far as the Directors are aware, the only notifiable holdings
equal to or in excess of 3% of the issued ordinary share capital at
30 September 2020 were as shown in the table below.

Name of holder

Downing LLP

Cannacord
Genuity Group

Hargreaves
Lansdown Asset

Otus Capital Mgt.

Close Asset
Management

Interactive Investor

Peter Kenyon (CEO)

number

4,382,715

3,921,039

2,863,277

2,047,760

1,764,289

1,567,935

1,152,507

% of voting rights in the
issued share capital

14.21

12.72

9.29

6.64

5.72

5.08

3.74

DIRECTORS AND THEIR INTEREST
The directors who served throughout the year, except where
otherwise stated, and up to the date of signing of the Annual Report
and Accounts are as follows;

Executive

Peter Kenyon

Martin Clyburn

Non Executive

Andy Meehan

Simon Herrick

Steve Smith

Directors’ beneficial interests and their remuneration are detailed in
the Remuneration Report on pages 40 to 42.

DIRECTORS’ INDEMNITIES
The Directors are entitled to be indemnified by the Company to the
extent permitted by law and the Company’s articles of association
in respect of certain losses arising out of or in connection with the
execution of their powers, duties and responsibilities. As permitted
by the Companies Act 2006, the Company has also executed
deeds of indemnity for the benefit of each Director in respect of
liabilities that may attach to them in their capacity as Directors of
the Company.

The Company also purchased and maintained Directors’ and officers’
liability insurance throughout the year.

GOING CONCERN
The Directors have considered the impact of COVID-19 on each
balance sheet item and conducted a going concern review to ensure
this basis remains appropriate. The Group has significant cash
resources of £15.9m and access to an undrawn £10m revolving
credit facility with an expiry date of March 2023.

The Directors have conducted an extensive review of forecast
earnings and cash over the next twelve months, considering
various scenarios and sensitivities given the COVID-19 situation
and uncertainty around the future economic environment, including
extreme stress test scenarios that are detailed in note 3 of the
financial statements.

Accordingly, the Directors continue to adopt the going concern basis
in the preparation of the financial statements.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020AUDITOR
A resolution to reappoint Ernst & Young LLP as auditors will be put to
the members at the Annual General Meeting.

Registered office:
Unit 16
Parkway Shopping Centre
Coulby Newham
Middlesbrough
TS8 0TJ

Signed by order of the directors

K E V I N B RO W N
Company Secretary

Approved by the directors on 18 December 2020

CORP OR ATE GOV ERNANCE – CONTIN U ED

FINANCIAL RISK MANAGEMENT
Financial risk is managed by the board on an ongoing basis. The
principal risks relating to the Group are outlined in more detail on
pages 22 to 25 of the Strategic Report.

POST BALANCE SHEET EVENTS
There have been no material post balance sheet events.

ANNUAL GENERAL MEETING
The Company held an AGM on 6 July 2020. This AGM passed a small
number of resolutions but did not have the financial statements to
approve. The next AGM will be held on 10 February 2021

POLITICAL DONATIONS
No political contributions were made during the period (FY19: £nil).

DISABLED EMPLOYEES
The group gives full consideration to applications for employment
from disabled persons where the candidate’s particular aptitudes
and abilities are consistent with adequately meeting the
requirements of the job. Opportunities are available to disabled
employees for training, career development and promotion. Where
existing employees become disabled, it is the group’s policy to
provide continuing employment wherever practicable in the same or
an alternative position and to provide appropriate training to achieve
this aim.

EMPLOYEE INVOLVEMENT
The group operates a framework for employee information
and consultation which complies with the requirements of the
Information and Consultation of Employees Regulations 2004. The
Directors have a policy of providing employees with information
about the group to keep them informed. The Group’s employment
structure facilitates management to engage regularly with staff at all
levels thereby allowing a free flow of information and communication
of Group policies and alignment of core goals. Employees are
encouraged to participate in the performance of the business
through varying incentive schemes.

DISCLOSURE OF INFORMATION TO THE 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.

RAMSDENS ANNUAL REPORT 2020Statement of directors’
responsibilities
The directors are responsible for preparing the Strategic Report,
the Directors’ Report and the financial statements in accordance
with applicable law and regulations.

WEBSITE PUBLICATION
The Directors are responsible for ensuring the Annual Report and
the financial statements are made available on a website. Financial
statements are published on the Company’s website, 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.

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.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Financial
statements

Independent Auditor’s Report

Consolidated statement of
comprehensive income

Consolidated statement of
financial position

Consolidated statement of
changes in equity

Consolidated statement of caSh flows

Notes to the consolidated
financial statements

Parent company statement of
financial position

Parent company statement of changes
in equity

Notes to the parent company
financial statements

R AMSDENS ANN UAL REP ORT 2020

Use your jewellery
to get cash when
you need it

R AMSDENS ANN UAL REP ORT 2020

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 30 September 2020 and of the group’s
profit for the period 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 statement of financial
position as at 30 September 2020

Statement of financial position
as at 30 September 2020

Consolidated statement of
comprehensive income for
the period then ended

Consolidated statement of changes
in equity for the period then ended

Statement of changes in equity
for the period then ended

Related notes A to I to the financial
statements including a summary
of significant accounting policies

Consolidated statement of cash
flows for the period then ended

Related notes 1 to 26 to the financial
statements, including a summary
of significant accounting policies

The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. The financial reporting framework that has
been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting
Standards, including FRS 101 “Reduced Disclosure Framework”
(United Kingdom Generally Accepted Accounting Practice).

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 • Risk of incorrect revenue recognition as a result of

fraudulent transactions at a branch level.

• Risk of incorrect recognition of profit as a result of

judgments relating to the expected credit loss accrual
in respect of pawnbroking

• Impairment risk in relation to Property, Plant and
Equipment, Intangibles and Right of Use Assets

• We performed an audit of the complete financial
information of the Group, which we considered a
single component, including Ramsdens Financial
Limited.

Audit scope

Materiality

• Overall group materiality of £0.436m which represents

5% of adjusted Profit before Tax.

RAMSDENS ANNUAL REPORT 2020KEY 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

The results of our testing did
not identify any incorrectly
recognised revenue. Whilst our
substantive procedures are
not designed to detect fraud
in the period which may have
occurred in the period, 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 (overstatement of revenue)

Refer to the Audit and Risk Committee Report (page 37);
Accounting policies Note 3.16 of the consolidated financial
statements (page 68); and Note 5 of the Consolidated
Financial Statements (page 70)

At a branch level there is a risk that fraudulent revenue
transactions can occur and that these are recorded in the
accounts. 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. Individual
branch transactions are generally low value. However,
if fraudulent transactions occurred at a relatively small
percentage of stores, the financial impact could be material.

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 performed a walkthrough of the process and controls
in place in relation to transactions at a branch level.

We have performed substantive analytical procedures
including a monthly analysis of sales and gross margin,
and review of branch level results throughout the period
to identify unusual fluctuations or transactions requiring
further investigation. We investigated outliers and
corroborated these to underlying audit evidence.

We performed the following tests of transactions
around the period-end date to ensure that revenue
is recorded in the correct financial period:

• Pawnbroking – recalculation of interest due at period

end based on loan agreements in place

• Precious metals – cut-off testing on pre and post period

end sales transactions

• Jewellery and Foreign currency – stock counts at a

sample of branches to test the existence of stock in the
closing balance sheet and validate sales transactions
within the month

We performed detailed substantive testing, to test the
occurrence and measurement of sales recorded in the period.

We performed testing of sample of material manual
journal entries to revenue to identify any journals that
were out of the ordinary course of business through
testing the rationale for the postings and ensuring they are
accounted for and recorded in the accounts correctly.

We performed a review of board and related
committee minutes throughout the period,
to identify any unusual transactions.

Further, we have performed procedures to identify any other
indicators of risk or contradictory evidence before drawing
conclusions, as follows. We held meetings 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 reviewed internal audit reports and noted no significant
control deficiencies in the current period. We reviewed
the implementation of any new controls in the period and
confirmed that any exceptions identified under the new
procedures had been responded to appropriately.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020INDEPENDENT AU DITORS REP ORT TO THE MEMB ERS OF R AMSDENS HOLDINGS PLC – CONTIN U ED

Key observations communicated
to the Audit Committee

We have concluded that the
profit recorded in the period,
and the related provisions on the
statement of financial position
at the period-end date are
recognised in accordance with
the requirements of IFRS 9.

The estimates made by
management in respect of the
ECL provision are reasonable.

The related disclosures within
the financial statements
are appropriate.

Risk

Our response to the risk

Risk of incorrect recognition of profit (overstatement
of revenue) as a result of judgments relating to
the expected credit loss accrual in respect of
pawnbroking (understatement of provision)

We performed a walkthrough to gain an understanding
of the process and controls in relation to pawnbroking
interest income and related provisions.

(30 September 2020 £1.3m, 31 March 2019 £0.4m)

Refer to the Note 14 of the consolidated
financial statements (page 78);

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 a risk of management override as 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 period to 30 September 2020, pawnbroking
gross profit of £12.2m (31 March 2019: £7.5m)
was recognised in the accounts.

At 30 September 2020 the gross loan book totalled
£8.8m (2019: £9.7m), with a total provision relating
to expected credit losses of £1.3m (2019: £0.4m).

We have tested the accuracy and completeness of data used
to calculate the provisions by performing tests of detail to
validate key inputs into the calculation of the provision.

We have challenged the provisioning methodology,
with particular focus on identifying contra-
indicators to significant assumptions, identifying
and corroborating changes to assumptions.

We identified the three-year average spot price of
9 carat gold and silver to recalculate the underlying
value of security and compared this to management
estimates used in the provision. The redemption rate
is based upon management’s best estimate of the
number of pawnbroking loans that will be redeemed.

We compared the historic actual lifetime redemption
rates (2020: 22%; 2019: 27%) to the rates applied
in the provision (2020: 28%, 2019: 28%).

We have performed sensitivity analysis of the provision in
the context of planning materiality. This was performed on
the key assumptions, including comparison of redemption
rates against actual outcomes, varying values of underlying
security, and expected sales price of pledged items.

We performed testing of manual journal entries to
revenue and related cost of sales accounts to identify
journals which were out of line from our expectations.

We assessed the completeness and adequacy
of related financial statement disclosures.

RAMSDENS ANNUAL REPORT 2020Key observations communicated
to the Audit Committee

Impairment charges have
been recognised in the
financial statements in relation
to one branch following
our audit procedures.

We identified a judgmental and
immaterial unadjusted audit
difference in relation to two
further immature branches.

An impairment charge has been
recognised within the financial
statements in accordance with
the requirements of IAS36.

The related disclosures within
the financial statements
are appropriate.

Risk

Our response to the risk

Impairment risk in relation to Intangible Assets,
Property, Plant and Equipment and Right of Use Assets

(30 September 2020 £13.9m, 31 March 2019 £6.7m)

Refer to Note 3.7 and 4.1 of the consolidated
financial statements (pages 63 and 69);

COVID-19 has had a significant impact on the performance
of branches in recent months due to both lockdown and
travel restrictions which impact on foreign currency sales.

There are a number of branches generating low profit
margins or at a loss, which presents a risk that individual
branches (‘CGUs’) may require an impairment provision
against the value of the tangible, intangible and ROU assets.

We obtained management’s branch impairment assessment
and undertook a walkthrough of the process performed
by management to assess impairment risk and determine
significant assumptions.

We confirmed the clerical accuracy of the calculation to
identify any anomalies in formulas used and reconciled
underlying data to accounting records.

We engaged our EY Valuation team, to corroborate the
discount factors of 12% used in the calculations. These audit
procedures included the benchmarking of management’s
discount factors against that of comparable publicly quoted
companies, and independently calculating a discount factors
based on external benchmarking data adjusted for size and
risk premiums.

We performed sensitivity analysis on this assumption based
upon our own independently calculated discount factors (a
range from 13.3% to 15.9%).

We challenged significant assumptions through sensitivity
analysis and obtaining evidence to corroborate key inputs.
Our challenges were informed by the other evidence we have
obtained during the course of the audit to ensure any indicators
of risk or contradictory evidence were included within the
scope of our audit procedures. Our challenges included:

• The impact of COVID-19 on the future growth

assumptions, in particular on foreign currency;

• The performance of immature branches against the

baseline performance of new branches in recent years

• Stores performance in months prior to February 2020,
and stores loss-making in the period after lockdown

We performed a re-calculation of the impairment model,
incorporating the following adjustments:

• Comparing the NPV to the asset value of stores at

30 September 2020

• Incorporating the range of discount factors identified by

EY’s Valuation team.

As a result of these procedures, we identified a number of
branches with an enhanced risk of impairment.

We obtained management’s focused review of these stores
and challenged key assumptions. Following management’s
further focused review an impairment charge was recognised
in relation to immature branches.

Immature branches – an additional impairment charge of
£0.175m was recognised in relation to one immature branch.
No impairment identified in relation to other immature
branches as they are at an early stage in the lifecycle and
performing in line with other portfolio branches at this stage
in their development

We assessed the completeness and adequacy of
related financial statement disclosures in relation to this
accounting estimate.

There have been no changes to the key audit matters in comparison to our prior year auditor’s report other than the inclusion of a key audit
matter in relation to Impairment risk in relation to Intangible Assets, Property, Plant and Equipment and Right of Use Assets. This reflects the
fact that COVID-19 has had a significant impact on the performance of branches in recent months due to both lockdown and travel restrictions
which impact on foreign currency sales.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020INDEPENDENT AU DITORS REP ORT TO THE MEMB ERS OF R AMSDENS HOLDINGS PLC – CONTIN U ED

AN OVERVIEW OF THE SCOPE OF OUR AUDIT

TAILORING THE SCOPE
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 as a Group audit team an audit of the complete
financial information of Ramsdens Holdings PLC and the trading
subsidiary, Ramsdens Financial Limited which was considered to be
one single component.

The period-end audit fieldwork has been completed remotely due to
the restrictions on people movement due to the COVID-19 situation.
Audit procedures were tailored to include appropriate incremental
procedures including testing of the integrity of source data and
reports. The period-end stock takes and sample testing was
performed in person.

The reporting components where we performed audit procedures
accounted for 100% (2019: 100%) of the Group’s Profit before tax,
or adjusted PBT measure used to calculate materiality, 100% (2019:
100%) of the Group’s Revenue and 100% (2019: 100%) of the Group’s
Total assets.

All audit work performed for the purposes of the audit was
undertaken by the Group audit team.

• Starting point – £9.221m Profit before Tax

Starting
basis

• Removal of non-recurring items (government grant

Adjustments

for retail business) – £0.725m

Materiality

• Totals £8.496m adjusted Profit before Tax

• Materiality of £0.436m (approximately 5% of

materaility basis)

We determined materiality for the Parent Company to be £0.120
million (2019: £0.113 million), which is 1% (2019: 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.

PERFORMANCE MATERIALITY
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment
of the Group’s overall control environment, our judgement was
that performance materiality was 75% (2019: 75%) of our planning
materiality, namely £0.327m (2019: £0.243m). We have set
performance materiality at this percentage which reflects our
expectation of the level of audit differences based on the prior year.

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.

REPORTING THRESHOLD
An amount below which identified misstatements are considered as
being clearly trivial.

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 £0.436 million (2019:
£0.325 million), which is 5% (2019: 5%) of adjusted Profit before
Tax. We believe that adjusted Profit before Tax provides us with a
consistent year on year basis for determining materiality and is the
most relevant performance measure to the stakeholders of the
group, whilst accounting for non-recurring items (as disclosed in
Note 3.18 to the financial statements).

We agreed with the Audit Committee that we would report to them all
uncorrected audit differences in excess of £0.021m (2019: £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 in pages 1 to 45, 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.

RAMSDENS ANNUAL REPORT 2020In 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 period for which the financial statements
are prepared is consistent with the financial statements; and

• the strategic report and directors’ report have been prepared in

accordance with applicable legal requirements.

MATTERS ON WHICH WE ARE REQUIRED
TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the group and the
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic
report or the directors’ report.

We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:

• adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been
received from branches not visited by us; or

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.

• the parent company financial are not in agreement with the

accounting records and returns; or

A L I S TA I R D E N TO N
Senior statutory auditor

• 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

for and on behalf of Ernst & Young LLP, Statutory Auditor
Leeds
18 December 2020

RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement,
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.

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.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Consolidated statement of comprehensive income
For the period ended 30 September 2020

Revenue

Cost of sales

Gross profit

Other income

Administrative expenses

Operating profit

Finance costs

Gain on fair value of derivative financial liability

Profit before tax

Income tax expense

Profit for the period/year

Other comprehensive income

Total comprehensive income

Earnings per share in pence

Diluted earnings per share in pence

18 months to
30 September
2020
£’000

12 months to
31 March
2019
£’000

Notes

76,938

(29,789)

47,149

725

(37,858)

10,016

(795)

–

9,221

(2,103)

7,118

–

7,118

23.1

22.5

46,785

(16,263)

30,522

–

(23,939)

6,583

(131)

6,492

(1,332)

5,160

–

5,160

16.7

16.3

RAMSDENS ANNUAL REPORT 2020Consolidated statement of financial position
As at 30 September 2020

Assets

Non-current assets

Property, plant and equipment

Right of use of assets

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

Lease liability

Interest bearing loans and borrowings

Income tax payable

Net current assets

Non-current liabilities

Lease liability

Accruals and deferred income

Deferred tax liabilities

Total liabilities

Net assets

Equity

Issued capital

Share premium

Retained earnings

Total equity

30 September
2020
£’000

Notes

31 March
2019
£’000

4,845

8,536

870

–

182

14,433

13,360

8,743

15,873

37,976

52,409

6,422

2,005

–

1,157

9,584

28,392

7,094

153

7,270

16,854

35,555

308

4,892

30,355

35,555

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

The financial statements of Ramsdens Holdings PLC, registered number 8811656, were approved by the directors and authorised for issue on
18 December 2020 and signed on their behalf by:

M A C LY B U R N
Chief Financial Officer

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Consolidated statement of changes in equity
For the period ended 30 September 2020

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

As at 1 April 2019

IFRS 16 Leases – transitional adjustment

As at 1 April 2019 – adjusted

Profit for the period

Total comprehensive income

Dividends paid

Share based payments

Deferred tax on share-based payments

As at 30 September 2020

Notes

Share
capital
£’000

308

–

308

–

Share
premium
£’000

4,892

–

4,892

–

Retained
earnings
£’000

22,368

5,160

(2,097)

221

25,708

(531)

25,177

7,118

(2,313)

398

(25)

Total
£’000

27,568

5,160

(2,097)

221

30,908

(531)

30,377

7,118

(2,313)

398

(25)

308

4,892

30,355

35,555

RAMSDENS ANNUAL REPORT 2020Consolidated statement of cash flows
For the period ended 30 September 2020

Operating activities

Profit before tax

Adjustments to reconcile profit before tax to net cash flows:

Depreciation and impairment of property, plant

and equipment

Depreciation and impairment of right of use assets

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 principle portion of lease liabilities

Bank loans drawn down

Repayment of bank borrowings

Net cash flows from financing activities

Net increase/decrease in cash and cash equivalents

Cash and cash equivalents at 1 April

Cash and cash equivalents at 30 September/31 March

18 months to
30 September
2020
£’000

12 months to
31 March
2019
£’000

Notes

9,221

6,492

2,238

3,523

616

–

185

398

795

1,781

(702)

170

18,225

(795)

(1,678)

15,752

(1,787)

(258)

–

(2,041)

(2,313)

(3,645)

2,600

(7,900)

(11,258)

2,453

13,420

15,873

1,215

–

157

(40)

221

131

424

(5,091)

(651)

2,932

(131)

(1,278)

1,523

(2,315)

(109)

(1,504)

(3,925)

(2,097)

(8)

5,183

(1,875)

1,203

(1,199)

14,619

13,420

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

1. CORPORATE INFORMATION

Ramsdens Holdings PLC (the “Company”) is a public limited company incorporated and domiciled in England and Wales. The registered office
of the Company is Unit 16, Parkway Shopping Centre, Coulby Newham, Middlesbrough, TS8 0TJ. The registered company number is 08811656.
A list of the Company’s subsidiaries is presented in note 13.

The principal activities of the Company and its subsidiaries (the “Group”) are the supply of foreign exchange services, pawnbroking and related
financial services, jewellery sales, and the purchase of gold jewellery from the general public.

2. CHANGES IN ACCOUNTING POLICIES

Adoption of new and revised standards
Amendments to IFRSs that are mandatorily effective for the current year
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 2019. Further details of the impact of IFRS 16 are given below. The other changes have not had a material impact
on the amounts reported in these financial statements.

Amendments to IFRS 9 Financial Instruments

Prepayment Features with Negative Compensation

IFRS 16 – Leases

Amendments to IAS 28

Amendments to IAS 19

IFRIC 23

Annual Improvements to IFRSs:

The treatment of Lease transactions

Prepayment Features with Negative Compensation

Employee Benefits Plan Amendment, Curtailment or Settlement

Uncertainty over Income Tax Treatments

2015-17 Cycle Annual Improvements to IFRS Standards 2015–2017 Cycle
Amendments to IFRS 3 Business Combinations, IFRS 11 Joint Arrangements, IAS 12
Income Taxes and IAS 23 Borrowing Costs

Explanation of the adoption of IFRS 16
The Group has adopted IFRS 16 – Leases using the modified retrospective approach with the date of initial application of 1 April 2019. Under
this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised at the date of
initial application. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were
previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application.

Therefore, the cumulative effect of adopting IFRS 16 – Leases was recognised as an adjustment to the opening balance of retained earnings
at 1 April 2019 with no restatement of comparative information. Comparative information continues to be reported under IAS 17 – Leases and
IFRIC 4 – Determining whether an Arrangement contains a Lease.

The Group has lease contracts for properties and motor vehicles. Before the adoption of IFRS 16, the Group classified each of its leases (as
lessee) at the inception date as an operating lease. In an operating lease, the leased asset was not capitalised and the lease payments were
recognised as an expense in profit or loss on a straight-line basis over the lease term. Any prepaid rent and accrued rent were recognised
under Prepayments and Trade and other payables, respectively.

Upon adoption of IFRS 16, the Group applied a single recognition and measurement approach for all leases, except for short-term leases
and leases of low-value assets. The standard provides specific transition requirements and practical expedients, which has been applied by
the Group.

RAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

2. CHANGES IN ACCOUNTING POLICIES continued

Lease liabilities
On adoption of IFRS 16 – Leases, the Group recognised liabilities in relation to leases which had previously been classified as operating leases
under the principles of IAS 17 – Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using
the Group’s incremental borrowing rate at 1 April 2019. The weighted average incremental borrowing rate applied to the property leases on
1 April 2019 was 4.3% (with a range between 3.36% & 4.42%) and for motor vehicles was 3.5% (with all vehicles using the same rate).

Operating lease commitments disclosed at 31 March 2019

Removal of non-recoverable VAT

Restated operating lease commitments at 31 March 2019

Removal of prepaid lease payments

Discounted using the incremental borrowing rate at 1 April 2019

Lease liability recognised at 1 April 2019

Current lease liabilities

Non-current lease liabilities

£’000

12,255

(902)

11,353

(289)

(1,327)

9,737

2,165

7,572

9,737

Right-of-use assets
The associated right-of-use assets for the Group’s property and motor vehicle leases were measured on a retrospective basis as if the new
rules had always been applied using the incremental borrowing rate as at 1 April 2019 and adjusted for any prepayments or rent incentive
accruals. The recognised right of use assets at 1 April related to the following asset types:

Properties

Motor vehicles

Total right-of-use assets

The change in accounting policy affected the following items in the statement of financial position at 1 April 2019:

Right-of-use assets

Deferred tax asset

Trade and other receivables (prepayments)

Trade and other payables (rent incentive & onerous lease accruals)

Accruals and deferred income (rent incentive accrual)

Lease liabilities

Net impact on retained earnings

As at
31 March
2019
£’000

–

167

10,906

(6,490)

(453)

–

25,708

IFRS16
adjustment
£’000

9,102

114

(499)

166

323

(9,737)

(531)

£’000

8,919

183

9,102

Adjusted
balance
£’000

9,102

281

10,407

(6,324)

(130)

(9,737)

25,177

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

2. CHANGES IN ACCOUNTING POLICIES continued

The change in accounting policy has also resulted in operating lease costs previously shown in administration expenses within the Income
Statement being replaced with depreciation (which is contained within administration expenses) and finance costs related to the right of use
assets. For the 18 month period ended 30 September 2020, deprecation and impairment of right of use assets reported within administration
expenses is £3,523,000 and the interest cost of right of use assets reported in finance costs is £614,000. The table below show the amount of
adjustment for each financial statement line item affected by the application of IFRS 16 for the current period.

Increase in depreciation of right-of-use asset

Increase in impairment of right-of-use asset

Increase in finance costs

Decrease in other operating expenses

Impact on profit

18 months to
30 September
2020
£’000

(3,483)

(40)

(614)

4,259

122

Practical expedients applied
In applying IFRS 16 – Leases for the first time, the Group has used the following practical expedients permitted by the standard:

• the use of a single discount rate for a portfolio of leases with reasonably similar characteristics

• reliance on previous assessments of whether leases are onerous

• accounting for low value operating leases and operating leases with a remaining term of less than 12 months at 1 April 2019 on a straight

line basis as an expense without recognizing a right-of-use asset or a lease liability

• the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

The Group has also elected not to reassess whether a contract is, or contains, a lease at the date of initial application. Instead for contracts
entered into before the transition date the Group relied on its assessment made applying IAS 17 – Leases and IFRIC 4 – Determining whether
an Arrangement contains a Lease

Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-
of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease
liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments
made at or before the commencement date less any lease incentives received. Unless the Group is certain to obtain ownership of the leased
asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated
useful life and the lease term. Right-of-use assets are subject to impairment.

Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made
over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable,
variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for
terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on
an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date. After
the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments
made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the
in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

RAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

2. CHANGES IN ACCOUNTING POLICIES continued

Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or
less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption
to leases that are considered of low value (under £5,000). Lease payments on short-term leases and leases of low-value assets are recognised
as expense on a straight-line basis over the lease term.

3. SIGNIFICANT ACCOUNTING POLICIES

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

The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments that have been
measured at fair value. The consolidated financial statements are presented in pounds sterling which is the functional currency of the parent
and presentational currency of the Group. All values are rounded to the nearest thousand (£000), except when otherwise indicated.

3.2 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all of its subsidiary undertakings (as detailed
above). The financial information of all Group companies is adjusted, where necessary, to ensure the use of consistent accounting policies. In
line with IFRS10, an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over the investee.

3.3 Going Concern
The Company has prepared the financial statements on a going concern basis, with due consideration to the unprecedented impact of
COVID-19 on the economy and society. The Board has considered the impact of COVID-19 on each balance sheet item and conducted a going
concern review to ensure this basis remains appropriate.

In the 18 month period to September 2020 the Company traded profitably with profit before tax of £9.2m and repaid its debt facility in full.

The Company has significant cash resources at 30 September 2020 of £15.9m and access to an undrawn £10m revolving credit facility with
an expiry date of March 2023. The Company has successfully applied for government support grants including the Coronavirus Job Retention
Scheme and Retail Grants. The grant support received in the period to September 2020 was c£3.5m. The company also took advantage of the
VAT deferral scheme and was awarded business rates relief in respect of a number of its branches.

The Company’s activities include services deemed essential services by the government and therefore the Company’s stores are able to open
in the event of a further lockdown. The Company’s essential services include pawnbroking, foreign currency, money transfer and cheque
cashing. The Company has a strong asset base and the ability to generate cash quickly through the sale of jewellery stock for its intrinsic value
or by restricting new pawnbroking lending.

The Board have conducted an extensive review of forecast earnings and cash for the period to 31 December 2021, considering various
scenarios and sensitivities given the COVID-19 situation and uncertainty around the future economic environment.

One such stress test scenario was to model the closure of all stores for the period to 31 December 2021. This scenario is deemed implausible
given the essential services categorisation of some of the Company’s services and the fact that income has already been generated in the
period elapsed since 30 September 2020 to date.

This scenario assumes that there is no revenue generation at all. The only cost reduction applied to this scenario are variable costs linked to
revenue generation (such as the cost of taking payments and handling cash), and discretional spending, for example advertising. All budgeted
capital expenditure and dividends were assumed to be suspended. This scenario assumes only £0.6m of further government support, despite
the now confirmed extension of the Coronavirus Job Retention scheme up to March 2021. The scenario also did not include the further
mitigating actions that could be taken. Further mitigation could include online income generation, staff redundancies, and exit of certain
store leases. Further options to improve liquidity, which are outside management’s control, would be the ability to defer/renegotiate creditor
payments (including rents), the opportunity to access increased government support, including for example CBILs, increase bank lending and/
or relax the cash covenant on the existing £10m RCF facility, or an equity raise.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

3. SIGNIFICANT ACCOUNTING POLICIES continued

The output of this scenario without considering the available mitigation, was that the Company had enough resources to pay the costs due
throughout the period despite no income. This was due to the strong cash balance at the start of the going concern period of £15.9m and the
ability to realise cash from inventory and pawnbroking assets.

Given the extreme stress test modelling the Board have been able to conclude that they a reasonable expectation that the Company has
adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis
in preparing the financial statements. The going concern assessment covers the period to 31 December 2021.

3.4 Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the
consideration transferred which represents the fair value of the assets transferred and liabilities incurred or assumed. Acquisition related costs
are expensed as incurred and included in administrative expenses.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the fair value of the identifiable
assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the
Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures
used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net
assets acquired over the aggregate consideration transferred, then the gain is recognised in the statement of comprehensive income as a gain
on bargain purchase.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill
acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash generating units (CGU) that are
expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

3.5 Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business
combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less accumulated
amortisation and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalised development costs, are
not capitalised and expenditure is recognised in the statement of comprehensive income when it is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite and at each date of the statement of financial position no
intangible assets are accorded an indefinite life.

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

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

• Customer relationships – 40% reducing balance

• Software

– 20% straight line

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

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

RAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

3. SIGNIFICANT ACCOUNTING POLICIES continued

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

• Leasehold property

• Fixtures & fittings

• Computer equipment

• Motor vehicles

–

straight line over the lease term

20% & 33% reducing balance

25% & 33% reducing balance

25% reducing balance

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use
or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement of comprehensive income when the asset is derecognised.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and
adjusted prospectively, if appropriate.

3.7 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when
annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the
higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does
not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset
or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal,
recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

The Group bases its impairment calculation on detailed budgets and forecasts which are prepared separately for each of the Group’s CGUs to
which the individual assets are allocated, which is usually taken to be each individual branch store. These budgets and forecast calculations are
estimated for three years and extrapolated to cover a total period of ten years.

Impairment losses of continuing operations are recognised in the statement of comprehensive income in those expense categories consistent
with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable
amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s
recoverable amount since the last impairment loss was recognised.

The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for the asset in prior years. Such
reversal is recognised in the Statement of Comprehensive income unless the asset is carried at a revalued amount, in which case the reversal
is treated as a revaluation increase.

Goodwill
Goodwill is tested for impairment at the end of each accounting period and when circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates.
Where the recoverable amount of the cash-generating unit is less than their carrying amount, an impairment loss is recognised. Impairment
losses relating to goodwill cannot be reversed in future periods.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

3. SIGNIFICANT ACCOUNTING POLICIES continued

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 2020 and 2019.

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

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

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

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

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

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

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Company compares the
risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the
date of initial recognition. In making this assessment, the Company considers both quantitative and qualitative information that is reasonable
and supportable including historical experience.

RAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

3. SIGNIFICANT ACCOUNTING POLICIES continued

The measurement of expected credit losses is a function of the probability of default, and the loss (if any) on default. The assessment of the
probability of default is based on historical data. The loss on default is based on the assets gross carrying amount less any realisable security
held. The expected credit loss calculation considers both the interest income and the capital element of the pawnbroking loans. Details of the
key assumptions for pawnbroking expected credit losses are given in note 4.

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

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

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

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

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

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

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

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

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

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

3.10 Fair value measurement
The Group measures financial instruments, such as derivatives, at fair value at the date of each statement of financial position.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

3. SIGNIFICANT ACCOUNTING POLICIES continued

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy.
This is described, as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities

• Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

• Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

3.11 Taxation
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Consolidated Statement
of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates and laws that have been enacted or
substantively enacted by the date of the statement of financial position.

Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet
liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to
the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the date of each statement of financial position and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates and laws that are expected to apply in the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the Consolidated Statement of Comprehensive Income, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax is recognised on an undiscounted basis.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities
when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a
net basis.

3.12 Leases
At interception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract
conveys the right to control the use of an identified asset, the Group assesses whether:

The contract involves the use of an identifier asset – this may be specified explicitly or implicitly, and should be physically distinct or represent
substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

• The Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

• The Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that are most relevant
to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used
is predetermined, the Group has the right to direct the use of the asset if either: The Group has the right to operate the asset; or

• The Group designed the asset in a way that predetermines how and for what purpose it will be used.

As a lessee
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus
any initial direct costs incurred and an estimate costs to dismantle and remove the underlying asset or to restore the underlying asset or the
site on which it is located, less any lease incentives received.

RAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

3. SIGNIFICANT ACCOUNTING POLICIES continued

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of the right-of-use assets are determined on the
same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.

The lease liability initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using
the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group
uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• Fixed payments, including in-substance fixed payments;

• Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• Amounts expected to be payable under a residual value guarantee; and

The exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if
the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably
certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease
payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a
residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is
recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of
12 months or less and leases of low-value assets, including IT equipment. The Group recognises the lease payments associated with these
leases as an expense on a straight-line basis over the lease term.

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

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

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

3.14 Pensions and other post-employment benefits
The company operates a defined contribution pension scheme. The assets of the scheme are held and administered separately from those
of the Group. Contributions payable for the year are charged in the statement of comprehensive income. Total contributions for the year are
disclosed in note 9 to the accounts. Differences between contributions payable in the year and contributions actually paid are shown as either
accruals or prepayments in the Statement of Financial Position.

3.15 Employee share incentive plans
The group grants equity settled share option rights to the parent entity’s equity instruments to certain directors and senior staff members
under a LTIP (Long term incentive Plan). The employee share options are measured at fair value at the date of grant by the use of either the
Black- Scholes Model or a Monte Carle model depending on the vesting conditions attached to the share option. The fair value is expensed on
a straight line basis over the vesting period based on an estimate of the number of options that will eventually vest.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Notes 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 revenue is recognised in accordance with IFRS 9, whereas revenue from other sources is recognised in accordance with IFRS 15.

Pawnbroking revenue
Revenue from pawnbroking comprises interest on pledge loan books and comprises the following two distinct components:

Contractual interest earned:
Contractual interest is earned on pledge loans up to the point of redemption or the end of the primary contract term. Interest receivable
on loans is recognised as interest accrues by reference to the principle outstanding and the effective rate applicable, which is the rate that
discounts the estimated cash receipts through the expected life of the financial asset to that asset’s net carrying value.

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

Foreign currency exchange income
Revenue is earned in respect of the provision of Bureau de Change facilities offered and represents the margin earned which is recognised at
the point the currency is collected by the customer as this represents when the service provided under IFRS 15 has been delivered.

Sale of precious metals acquired via over the counter purchases
Revenue is recognised when control of the goods has transferred, being at the point the goods are received by the bullion dealer and a sell
instruction has been issued. If a price has been fixed in advance of delivery, revenue is recognised at the point the goods are received by the
bullion dealer.

Jewellery retail sales
Revenue is recognised at the point the goods are transferred to the customer and full payment has been received. Customers either pay in
full at the time of the transaction and receive the goods, or pay in instalments and receive the goods once the sale is fully paid. Instalment
payments are recognised as deferred income until the item is fully paid. The Company has a 7 day refund policy in store, and a 14 day refund
policy online reflecting the distance selling regulations.

Other financial income
Other financial income comprises cheque cashing, buyback and other miscellaneous revenues. Cheque cashing revenue is recognised when
the service is provided under IFRS 15 which includes making a payment to the customer. Buyback revenue relates to the sale of items to
a customer, either the person who originally sold that item to the business, or to a third party. Revenue is recognised 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 includes branch staff and establishment costs.

3.18 Government grants
Government grants that are a contribution to a specific administrative expense are recognised in the income statement as a reduction to
administrative expenses in the period to which the expense relates. Other government grants are recognised as other income when there is
reasonable assurance that the entity will comply with the conditions and the grants will be received.

RAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

3. SIGNIFICANT ACCOUNTING POLICIES continued

The grants recognised in the financial statements all relate to Covid-19 support with job retention scheme support shown net of the wage
cost in administrative expenses and retail grants shown as other income. There are no unfulfilled conditions and contingencies attaching to
recognised grants.

Other income

Administrative expenses

Total

FP20
£’000

725

2,769

3,494

FY19
£’000

–

Any grants recognised in the Statement of Comprehensive Income but not received are included within the Statement of Financial position
under Trade and other Receivables

4. KEY SOURCES OF ESTIMATION UNCERTAINTY AND SIGNIFICANT ACCOUNTING JUDGEMENTS

The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent
liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying
amount of assets or liabilities affected in future periods.

4.1 Key sources of estimation uncertainty
Revenue recognition – pawnbroking loans interest and impairment
The group recognises interest on pawnbroking loans as disclosed in note 3.16. The pawnbroking loans interest accrual (pledge accrual) is
material and is dependent on the estimate that the Group makes of both the expected level of the unredeemed pawnbroking loans and the
ultimate realisation value for the pledge assets supporting those loans. An assessment is made on a pledge by pledge basis of the carrying
value represented by original capital loaned plus accrued interest to date and its corresponding realisation value on sale of unredeemed
pledges to identify any deficits. The principle estimates within the loan interest accrual are;

1. Non Redemption Rate
This is based upon current and historical data held in respect of non-redemption rates.

2. Realisation Value
This based upon either;

• The current price of the metal that will be received through the sale of the metal content via disposal through a bullion dealer.

• The expected resale value of those jewellery items within the pledge that can be retailed through the branch network.

See note 14 for further details on pawnbroking credit risk and provision values, including sensitivity.

Impairment of property, plant and equipment, right-of-use assets and intangible assets estimate
Determining whether property, plant and equipment, right-of-use and intangibles are impaired requires an estimation of the value in use of
the CGU to which the assets have been allocated. The value in use calculation requires the Group to estimate the future cash flows expected
to arise from the CGU and selecting a suitable discount rate in order to calculate present value. The review is conducted annually, in the final
quarter of the year. The impairment review is conducted at the level of each CGU, which is usually taken to be each individual branch store.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

4. KEY SOURCES OF ESTIMATION UNCERTAINTY AND SIGNIFICANT ACCOUNTING JUDGEMENTS continued

Management have determined that the key sources of estimation uncertainty, to which the impairment analysis of property plant and
equipment, right-of-use assets and intangible assets is most sensitive, relate to the following assumptions:

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

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

It is reasonably possible, on the basis of existing knowledge, that outcomes within the next financial year are different from the assumptions
made in relation to future cash flows, which could require a material adjustment to the carrying amount of the assets affected. The carrying
amounts for tangible assets, right-of use assets and intangible assets are disclosed in notes 11 &12. 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.

Where the recoverable amount of the CGU was estimated to be less than its carrying amount, the carrying amount of the CGU was reduced to
the estimated recoverable amount.

4.2 Significant accounting judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most significant
effect on the amounts recognised in the consolidated financial statements:

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

5. SEGMENTAL ANALYSIS

The group’s revenue from external customers is shown by geographical location below:

Revenue

United Kingdom

Other

18 months to
30 September
2020
£’000

12 months to
31 March
2019
£’000

76,856

76,938

46,707

46,785

The Group’s assets are located entirely in the United Kingdom therefore, no further geographical segments analysis is presented. The Group is
organised into operating segments, identified based on key revenue streams, as detailed in the CEO’s review.

The Group’s revenue is analysed below between revenue from contracts with customers and other sources which comprises interest income
earned on pawnbroking loans.

Revenue

Contracts with customers

Pawnbroking interest income

18 months to
30 September
2020
£’000

12 months to
31 March
2019
£’000

64,267

12,671

76,938

39,543

7,242

46,785

RAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

5. SEGMENTAL ANALYSIS continued

Revenue

Pawnbroking

Purchases of precious metals

Retail Jewellery sales

Foreign currency margin

Income from other financial services

Total revenue

Gross profit

Pawnbroking

Purchases of precious metals

Retail Jewellery sales

Foreign currency margin

Income from other financial services

Total gross profit

Other income

Administrative expenses

Finance costs

Gain on fair value of derivative financial liability

Profit before tax

18 months to
30 September
2020
£’000

12 months to
31 March
2019
£’000

18,911

23,024

17,109

14,859

3,035

76,938

10,544

12,343

9,771

11,585

2,542

46,785

18 months to
30 September
2020
£’000

12 months to
31 March
2019
£’000

12,248

9,856

7,701

14,859

2,485

47,149

725

7,520

4,801

5,039

11,585

1,577

30,522

–

(37,858)

(23,939)

(795)

–

9,221

(131)

6,492

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.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

5. SEGMENTAL ANALYSIS continued

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 (*)

30 September
2020
£’000

31 March
2019
£’000

2,045

2,854

2020
£’000

9,685

1,664

9,707

5,692

145

25,516

52,409

375

2,130

471

438

13,437

16,854

3,431

1,372

2019
£’000

11,363

1,492

9,085

7,566

591

13,767

43,864

284

1,286

2,402

525

8,455

12,956

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

the assets in use are common to all segments.

Fixed assets are therefore included in the unallocated assets balance.

6. FINANCE COSTS

18 months to
30 September
2020
£’000

12 months to
31 March
2019
£’000

181

614

795

130

131

Interest on debts and borrowings

Lease charges

Total finance costs

RAMSDENS ANNUAL REPORT 2020Notes 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

Impairment of property, plant and equipment reported within:

– Administrative expenses

Depreciation of right of use of assets reported within:

– Administrative expenses

Impairment of right of use of assets reported within:

– Administrative expenses

Amortisation of intangible assets reported within:

– Administrative expenses

Impairment of intangible assets reported within:

– Administrative expenses

Loss on disposal of property, plant and equipment

Cost of inventories recognised as an expense

Staff costs (see note 9)

Foreign currency exchange losses/(gains)

Operating lease payments

Auditor’s remuneration

18 months to
30 September
2020
£’000

12 months to
31 March
2019
£’000

2,004

1,215

234

3,483

524

185

28,688

19,374

212

–

189

–

157

–

15,711

12,250

3,165

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.

Other Income – relates to the receipt of retail grants from HM Government arising from Covid-19.

8. EARNINGS PER SHARE

Profit for the period/year

Weighted average number of shares in issue

Earnings per share (pence)

Weighted average number of dilutive shares

Effect of dilutive shares on earnings per share (pence)

Fully Diluted earnings per share (pence)

18 months to
30 September
2020
£’000

12 months to
31 March
2019
£’000

7,118

5,160

30,837,653

23.1

805,554

(0.6)

22.5

16.7

805,554

(0.4)

16.3

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

9. INFORMATION REGARDING DIRECTORS AND EMPLOYEES

Directors’ emoluments

18 months to 30 September2020

12 months to 31 March 2019

Emoluments

Pension

LTIP

Total Emoluments

Pension

LTIP

Total

Executive

Peter Kenyon

Martin Clyburn

Non Executive

Andrew Meehan

Simon Herrick

Steve Smith

Total

361

253

845

–

102

–

478

328

156

1,037

232

158

538

Included in administrative expenses:

Wages and salaries

Social security costs

Share option scheme

Pension costs

Total employee benefits expense

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

Head Office and management

Branch Counter staff

–

306

205

659

18 months to
30 September
2020
£’000

12 months to
31 March
2019
£’000

16,852

1,665

398

459

19,374

10,997

783

221

249

12,250

18 months to
30 September
2020
No.

12 months to
31 March
2019
No.

103

647

750

546

637

RAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

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

18 months to
30 September
2020
£’000

12 months to
31 March
2019
£’000

2,060

2,146

(43)

2,103

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

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

18 months to
30 September
2020
£’000

12 months to
31 March
2019
£’000

9,221

1,752

265

2,103

6,492

1,233

138

(39)

1,332

30 September
2020
£’000

31 March
2019
£’000

182

167

140

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020 30 September
2020
£’000

31 March
2019
£’000

(27)

(43)

(89)

(159)

(2)

(56)

(27)

Total
£’000

9,352

1,787

(752)

10,387

3,867

2,004

234

(563)

5,542

4,845

5,485

Notes to the consolidated financial statements

10. INCOME TAX continued

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 30 September

Factors affecting tax charge
The standard rate of UK corporation tax for the period was 19% (2019: 19%).

11. PROPERTY, PLANT AND EQUIPMENT

Cost

At 1 April 2019

Additions

Disposals

At 30 September 2020

Depreciation

At 1 April 2019

Depreciation charge for the period

Impairment

Disposals

At 30 September 2020

Net book value

At 30 September 2020

At 31 March 2019

Leasehold
property
£’000

Fixtures
& Fitting
£’000

Computer
equipment
£’000

Motor
vehicles
£’000

5,253

1,060

(214)

6,099

2,375

1,056

177

(169)

3,439

2,660

2,878

3,427

612

(506)

3,533

1,241

753

(371)

1,680

1,853

2,186

632

115

(32)

715

242

184

–

(23)

403

312

390

–

RAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

11. PROPERTY, PLANT AND EQUIPMENT continued

Right of Use of Assets

Cost

At 1 April 2019

Additions

Disposals

At 30 September 2020

Depreciation

At 1 April 2019

Depreciation Charge for the period

Impairment

At 30 September 2020

Net Book Value

At 30 September 2020

At 1 April 2019

12. INTANGIBLE ASSETS

Cost

At 1 April 2019

Additions

At 30 September 2020

Amortisation

At 1 April 2019

Amortisation charge for the period

Impairment

At 30 September 2020

Net book value

At 30 September 2020

At 31 March 2019

Leasehold
Property
£’000

Motor
Vehicles
£’000

8,919

3,136

(297)

11,758

–

3,320

3,360

8,398

8,919

183

118

–

301

–

163

–

163

138

183

Customer
relationships
£’000

Website
£’000

Goodwill
£’000

1,885

245

2,130

1,212

499

1,730

400

673

–

526

–

526

–

453

526

Total
£’000

9,102

3,254

(297)

12,059

–

3,483

3,523

8,536

9,102

Total
£’000

2,490

258

2,748

1,262

524

1,878

870

1,228

Customer relationship additions relate to £245,000 paid for the pawnbroking customer lists purchased during the period

13. INVESTMENTS

The Group has a minor holding in Big Screen Productions 5 LLP.

Big Screen Productions 5 LLP, whilst still trading, has wound down its operations and made a capital distribution equivalent to the value of the
carrying value of the investment in 2015. The investment now has a £nil carrying value.

STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSRAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

13. INVESTMENTS continued

Group Investments
Details of the investments in which the group and company holds 20% or more of the nominal value of any class of share capital are as follows:

Name of company

Holding

Proportion of
voting rights and
shares held

Activity

Subsidiary undertaking

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

Ordinary Shares

100%

14. FINANCIAL ASSETS AND FINANCIAL LIABILITIES

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

Fair value
through
statement of
comprehensive
income
£’000

–

Fair value
through
statement of
comprehensive
income
£’000

–

Loans and
receivables
£’000

8,120

15,873

–

23,993

Loans and
receivables
£’000

9,944

13,420

–

23,364

Financial
liabilities at
amortised
cost
£’000

–

(5,470)

–

(5,470)

Financial
liabilities at
amortised
cost
£’000

–

(5,553)

(5,184)

(10,737)

Book
Value
£’000

8,120

15,873

(5,470)

–

18,523

Book
Value
£’000

9,944

13,420

(5,553)

(5,184)

12,627

Fair
Value
£’000

8,120

15,873

(5,470)

–

18,523

Fair
Value
£’000

9,944

13,420

(5,553)

(5,184)

12,627

At 30 September 2020

Financial assets

Trade and other receivables

Cash and cash equivalents

Financial liabilities

Trade and other payables

Borrowings

Net financial assets/(liabilities)

At 31 March 2019

Financial assets

Trade and other receivables

Cash and cash equivalents

Financial liabilities

Trade and other payables

Borrowings

Net financial assets/(liabilities)

Trade and other receivables shown above comprises trade receivables, other receivables and pledge accrued income as disclosed in note 16.

Trade and other payables comprise of trade payables, other payables and accruals as disclosed in notes 18 & 19

Borrowings comprises of bank borrowings and lease liabilities, disclosed in notes 18 & 19.

RAMSDENS ANNUAL REPORT 2020Notes to the consolidated financial statements

14. FINANCIAL ASSETS AND FINANCIAL LIABILITIES continued

Loans and receivables are non-derivatives financial assets carried at amortised cost which generate a fixed or variable interest income for
the Group. The carrying value may be affected by changes in the credit risk of the counterparties.

Management have assessed that for cash and short-term deposits, trade receivables, trade payables, bank overdrafts and other current
liabilities their fair values approximate to their carrying amounts largely due to the short-term maturities of these instruments. Book values are
deemed to be a reasonable approximation of fair values.

Financial Risks
The Group monitors and manages the financial risks relating to the financial instruments held. The principal risks include credit risk on financial
assets, and liquidity and interest rate risk on financial liability borrowings. The key risks are analysed below.

Credit risk
Pawnbroking loans
Pawnbroking loans are not credit impaired at origination as customers are expected to repay the capital plus interest due at the contractual
term. The Group is exposed to credit risk through customers defaulting on their loans. The key mitigating factor to this risk is the requirement
for the borrower to provide security (the pledge) in entering a pawnbroking contract. The security acts to minimise credit risk as the pledged
item can be disposed of to realise the loan value on default.

The Group estimates that the current fair value of the security is equal to the current book value of pawnbroking receivables.

In addition to holding security, the Group further mitigates credit risk by:

Applying strict lending criteria to all pawnbroking loans. Pledges are rigorously tested and appropriately valued. In all cases where the
Group lending policy is applied, the value of the pledged items is in excess of the pawn loan.

Seeking to improve redemption ratios. For existing customers, loan history and repayment profiles are factored into the loan making
decision. The Group has a high customer retention ratio and all customers are offered high customer service levels.

The carrying value of every pledge comprising the pawnbroking loans is reviewed against its expected realisation proceeds should it not be
redeemed and expected credit losses are provided for based on current and historical non redemption rates.

The Group continually monitors, at both store and at Board level, its internal controls to ensure the adequacy of the pledged items. The key
aspects of this are:

• Appropriate details are kept on all customers the Group transacts with;

• All pawnbroking contracts comply with the Consumer Credit Act 2006;

• Appropriate physical security measures are in place to protect pledged items; and

• An internal audit department monitors compliance with policies at the Group’s stores.

Expected Credit losses
The Group measures loss allowances for pawnbroking loans using IFRS 9 expected credit losses model. The Group’s policy is to begin the
disposal process one month after the loan expiry date unless circumstances exist indicating the loan may not be credit impaired.