TIDMRFX
RNS Number : 9890N
Ramsdens Holdings PLC
27 May 2020
Ramsdens Holdings PLC
("Ramsdens", the "Group", the "Company")
Second Interim Results for the twelve months ended 31 March
2020
A year of further growth and increased profitability
Ramsdens, the diversified financial services provider and
retailer, today announces its Second Interim Results for the twelve
months ended 31 March 2020 (the "Period").
Highlights:
-- Underlying Profit Before Tax up 19% to GBP8.0m (FY19: GBP6.7m)
-- Reported Profit Before Tax up 30% to GBP8.5m (FY19: GBP6.5m)
-- Continued revenue growth across the Group's core income streams:
o Foreign Currency Exchange income up 13% to GBP13.1m (FY19:
GBP11.6m);
o Jewellery retail revenue up 28% to GBP12.6m (FY19:
GBP9.8m);
o Pawnbroking income less impairment up 19% to GBP9.0m (FY19:
GBP7.5m);
o Gross profit from purchases of precious metals increased 53%
to GBP7.3m (FY19: GBP4.8m), including a one-off scrapping of old
stock that generated GBP0.8m profit.
-- Net assets up GBP4.1m from 31 March 2019 to GBP35.0m
-- At the period end, net cash was GBP11.1m and the Company's RCF of GBP10m was undrawn
-- 10 additional stores were opened during the Period,
comprising six greenfield locations and four stores acquired from
Instant Cash Loans Limited trading as The Money Shop. One
additional new greenfield store was due to open late March and will
now open in line with government guidance once the lockdown
restrictions are lifted.
-- Given the ongoing impact of the Covid-19 pandemic and
subsequent macro-economic uncertainty, the Board believes it is
prudent and in the long term interests of shareholders to preserve
its available cash resources during these unprecedented times and,
consequently, is not declaring a second interim dividend at this
stage.
Financial Summary:
12 months 12 months Increase
ended 31 ended 31 March
March 2020 2019
Group Revenue GBP59.5m GBP46.8m 27%
EBITDA GBP13.1m GBP8.0m 63%
Adjusted EBITDA* GBP9.9m GBP8.3m 20%
Profit Before Tax GBP8.5m GBP6.5m 30%
Underlying Profit Before
Tax** GBP8.0m GBP6.7m 19%
Basic EPS 21.4p 16.7p 28%
*Adjusted EBITDA is after adding back LTIP costs GBP0.3m (FY19
GBP0.2m), removing the profit on the one-off stock sale GBP0.8m
(FY19 nil) and removing the IFRS16 adjustment GBP2.7m (FY19 nil) to
enable a read across to 2019.
**Underlying PBT is after adding back LTIP costs GBP0.3m (FY19
GBP0.2m) and removing the profit on the one-off stock sale GBP0.8m
(FY19 nil)
Peter Kenyon, Chief Executive, commented:
"We are pleased to have delivered a year of further growth and
increased profitability. This excellent 12-month performance was
underpinned by our diversified income streams, outstanding value
for-money proposition and increasing footprint.
We delivered improvements in all areas of the business and were
preparing for further expansion when Covid-19 began to negatively
affect our society, the UK economy and the Group. In order to
protect our staff, customers and communities where we operate, all
stores were closed on 23 March 2020 in line with government
guidance. We will re-open our stores in line with government
guidance when it is safe to do so.
The Board is confident that Ramsdens is well-positioned to
navigate these unprecedented times, supported by our strong balance
sheet, good cash position and an ability, if needed, to quickly
convert jewellery stock into cash. We are confident that Ramsdens
will emerge from this challenging period of lockdown, and the
subsequent social distancing measures, well positioned to continue
to deliver our long-term growth plans."
S
Enquiries:
Ramsdens Holdings PLC Tel: +44 (0) 1642 579957
Peter Kenyon, CEO
Martin Clyburn, CFO
Liberum Capital Limited (Nominated Adviser) Tel: +44 (0) 20 3100 2000
Richard Crawley
Joshua Hughes
Hudson Sandler (Financial PR) Tel: +44 (0) 20 7796 4133
Alex Brennan
Lucy Wollam
About Ramsdens
Ramsdens is a growing, diversified, financial services provider
and retailer, operating in the four core business segments of
foreign currency exchange, pawnbroking loans, precious metals
buying and selling and retailing of second hand and new jewellery.
Ramsdens does not offer unsecured high cost short term credit.
Headquartered in Middlesbrough, the Group operates from 163
stores within the UK (including 4 franchised stores) and has a
growing online presence.
In the last financial year, the Group served over 930,000
customers across its different services. Ramsdens is fully FCA
authorised for its pawnbroking and credit broking activities.
www.ramsdensplc.com
www.ramsdensforcash.co.uk
CHIEF EXECUTIVE'S REPORT
This interim report covers the 12 months ended 31 March 2020
(the "Period"). As announced on 27 March 2020, Ramsdens changed its
accounting reference date to 30 September. This decision was made
in consultation with the Group's auditors regarding the viability
of completing the audit for the period ended 31 March 2020 given
the ongoing restrictions on the non-essential movement of
people.
The Group delivered a strong performance that was ahead of the
Board's initial expectations for the Period, with a 27% increase in
revenue and a 19% increase in underlying Profit Before Tax GBP8.0m
(FY19: GBP6.7m). This outcome continued to reflect double digit
growth in revenue and gross profit across the Group's four key
business segments underpinned by Ramsdens' outstanding value
for-money proposition, increasing store footprint and growing
customer base.
The Group regularly assesses the saleability of its jewellery
stock and has promotional campaigns to sell slower moving lines.
One benefit of Ramsdens' diversified model is that it provides the
option of scrapping stock for its intrinsic value. During the
Period, the management team took the decision to take advantage of
the high gold price by scrapping slower moving stock and generated
an additional GBP0.8m of gross profit.
The Group delivered GBP8.5m of Reported Profit Before Tax, after
a charge for non-cash share based payments of GBP0.3m.
The Group's retail estate at the end of the Period was 158
stores, an increase of ten from the prior year corresponding period
following six new store openings and the acquisition of a portfolio
of four stores from The Money Shop in May 2019 with one
subsequently merged into an existing Ramsdens branch.
COVID-19 IMPACT & ACTIONS
In line with government guidance and in order to protect our
staff, customers and the communities where we operate, all stores
were closed on 23 March 2020, just prior to the financial period
end with the business having seen a decline in trading for
approximately two weeks before this date.
In the current period of lockdown with all stores temporarily
closed, the Group has paid its trade suppliers as and when they
have fallen due. It has also paid the rents for the quarter days as
at February in Scotland and March in England but has now made or is
making arrangements with its landlords to pay rents on a monthly
basis. All staff are currently being paid 100% of their salary. The
only liabilities that have been deferred are HMRC and business
rates. Business rates have not been paid (approximately GBP0.1m per
month) on the basis that we believe we are entitled to business
rates relief as we operate retail shops.
During this lockdown period, the Group has turned cGBP1m of
foreign currency cash into sterling and realised over GBP2m of cash
from its scrap gold stock to improve its liquidity. Our cash
outflows for the same period, have been less than GBP1m per month,
having made the payments as described above and receiving the
Coronavirus Job Retention Scheme grant.
The Group is grateful for the UK Government's support
initiatives. We have utilised the Coronavirus Job Retention Scheme
in order to protect as many jobs as we can and we are continuing to
apply for business support grants and business rates relief for our
retail store estate.
Whilst the Group has continued to invest in its ecommerce
activities, online jewellery sales have been limited due to much of
Ramsdens' jewellery stock being held securely in our store estate.
We have processed some sales from centralised stock and have a
small order book to fulfil when branches re-open and goods can be
posted to customers. In addition, to assist our pawnbroking
customers, the Group quickly made available online facilities for
customers to access pawnbroking loans and facilities for customers
to redeem their branch loans.
The Group is currently making plans for the re-opening of stores
whilst continuing to follow all appropriate guidance and plan for
various scenarios of enforcing social distancing during trading.
The Group's stores have the benefit of already featuring segregated
tills and glass screens between employees and customers. As a
result, the investment required to comply is currently expected to
be minimal.
FINANCIAL REVIEW
Gross profit increased by 22% to GBP37.2m. Adjusted for the
stock scrapping, described above, gross profit was GBP36.4m, a 19%
increase from GBP30.5m in the prior year.
Administration expenses increased by 18% to GBP28.2m (FY19:
GBP23.9m) primarily caused by increased staff costs and overheads
arising from the Group's increased store estate.
The balance sheet remains strong with net assets of GBP35.0m, a
GBP4.1m increase from the year ended 31 March 2019 (FY19:
GBP30.9m). The main assets are cash (including foreign currency),
pawnbroking loans secured on gold jewellery and watches, and retail
jewellery stock. Net cash as at 31 March 2020 was GBP11.1m.
The Group has the benefit of a GBP10.0m revolving credit
facility, expiring in March 2023, which is currently undrawn.
The interim dividend for the first six months of the current
financial period of 2.7p per share (GBP0.8m) was paid in February
2020. Given the uncertainty surrounding the future impact of the
Covid-19 pandemic on the economy, business in general and retail
specifically, the Board is not declaring a second interim dividend
despite the strength of the last six months trading performance.
The Board believes it is prudent and in the long-term interests of
shareholders to preserve its available cash resources during these
unprecedented times. The Board remains committed to the Group's
long-term dividend policy.
IFRS 16 - Leases
The Group has adopted IFRS 16 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 adoption of IFRS 16 has
resulted in a reduction in balance sheet retained earnings of
GBP0.5m, primarily resulting from the Group recognising
right-of-use assets of GBP9.1m offset by lease liabilities of
GBP9.7m, with further adjustment for rental prepayments, rent
incentive accruals and deferred tax.
The full impact on the Group's financial statements is shown in
detail in note 9.
SEGMENTAL REVIEW
Foreign Currency Exchange
The foreign currency exchange (FX) segment primarily comprises
the sale and purchase of foreign currency notes to holiday-makers.
Ramsdens also offers prepaid travel cards and international
bank-to-bank payments.
Ongoing Brexit-related consumer uncertainty throughout the
period as well as the weakness of sterling continued to impact
overall demand for holidays. This was illustrated, inter alia, by
the demise of Thomas Cook. However, the Group's FX business
delivered a resilient result for the Period despite these
challenging market conditions reflecting the strength of Ramsdens'
value for money proposition, convenience and great customer
service. This performance was also achieved despite the dramatic
slowdown in international travel due to the Covid-19 pandemic from
February and the consequent lower demand for travel money.
The Group exchanged GBP521m of currency in the Period (FY19:
GBP496m) an increase of 5%. The sales margin continues to be
closely managed and, as a result, FX income increased by 13% to
GBP13.1m (FY19: GBP11.6m).
We continue to drive growth online, allowing the Group to access
a broader customer base, and improvements to the currency website (
www.ramsdenscurrency.co.uk ) led to a 32% increase in online FX
transactions to GBP42.4m (FY19: GBP32.0m).
The number of customers exchanging currency with Ramsdens
increased by 11% year on year to 784,000 (FY19: 705,000).
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 this is jewellery and
watches) is held by the pawnbroker as security against a six-month
loan. Customers pay interest on this loan, repay the capital sum
borrowed and recover their pledged item. If a customer defaults on
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.
Interest income, net of impairment, was 19% higher at GBP9.0m
(FY19: GBP7.5m) and represented a yield of 116% on the average
pledge book during the Period.
GBP000s (12 months to FY20 FY19 % change
31 March)
Within contractual term
PP 6,632 6,611 0.3%
Past due 1,115 1,032
Total Loan Book 7,747 7,643 1.4%
Jewellery Retail
The Group retails new and second-hand jewellery to customers
both in store and online. The Board continues to believe there is
further growth potential for Ramsdens in this segment which can be
achieved by leveraging the Group's store estate and e-commerce
operations and by cross-selling to existing customers and
attracting new ones.
Jewellery retail revenue grew by 28% to GBP12.6m (FY19:
GBP9.8m). This growth was achieved despite the much-publicised
difficulties on the UK high street and reflects increasing customer
recognition of the value and quality of the Group's Jewellery
Retail proposition. Online sales during the Period grew by 94% and
amounted to 6% of total jewellery sold
(www.ramsdensjewellery.co.uk).
The Group has focused on enhancing the appeal of its jewellery
stock offering. This has been through better displays, expansion
and regular replenishment of the new jewellery range, increased
investment in pre-owned premium watches and undertaking more
promotional activity to reinforce the brand's value for money
reputation.
The jewellery gross profit margin fell from 52% to 45% year on
year reflecting the mix of sales with new jewellery sales and
pre-owned premium watch sales (typically both higher value but
lower margin than second hand jewellery) increasing as a percentage
of total sales.
Gross profit from Jewellery Retail increased by 13% to GBP5.7m
(FY19: GBP5.0m).
Purchases of Precious Metals
Through the precious metals buying and selling service, Ramsdens
buys unwanted jewellery, gold and other precious metals from
customers for cash. Typically, a customer brings unwanted jewellery
into a Ramsdens store and a price is agreed with the customer
depending upon the retail potential, weight or carat of the
jewellery. The Group has second-hand dealer licences and other
permissions and adheres to the approved "gold standard" for buying
precious metals.
Once jewellery has been bought from the customer, the Group's
dedicated jewellery department assesses whether to retail the item
through the store network or online or scrap it for its intrinsic
value. Income derived from the sale of 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.
Group gross profit was up 53% to GBP7.3m (FY19: GBP4.8m)
including the non-recurring stock scrapping profit of GBP0.8m. The
average sterling gold price during the Period was 20% higher than
the comparable prior year period.
Other Financial Services
In addition to the four core business segments, the Group also
provides additional services in cheque cashing, Western Union money
transfer, franchise fees and credit broking. Sale and buy back
facilities on electronic goods were stopped during the Period.
Gross profit from these income streams increased 32% to GBP2.1m
(FY19: GBP1.6m) primarily due to the acquisitions of the Money Shop
stores in March 2019 and May 2019.
OPERATIONAL REVIEW
The retail estate continues to be actively managed. Where it is
possible and beneficial to do so, we have sought greater
flexibility in our lease arrangements.
We are pleased to continue to report that all of the Group's 126
established stores (defined as stores opened more than two years)
were profitable on a standalone basis for the 12 months ended 31
March 2020.
The Group's new stores opened over the last two years and the
stores acquired from The Money Shop continued to trade in line with
the Board's expectations.
Within the year, three stores were relocated to have a greater
focus on retail jewellery. These were Peterlee, Worksop and
Ashington. We are pleased with the post relocation performance of
each store. Ten further stores have been identified for relocation
and will be progressed at the appropriate time.
Six new greenfield stores have opened in the year in - Barnsley,
Doncaster, Guisborough, Harrogate, Chippenham and Teesside Airport.
Four Money Shop stores were acquired, two in Liverpool, one in
Wallasey and one in Bristol which has since closed and merged into
our existing Bristol store. One new greenfield store was at the
point of opening when lockdown commenced. The shop fit is all
complete, staff are trained and it is ready to open when
circumstances allow.
As part of progressing the Group's strategic aim to grow its
store estate, following detailed research, a further nine
properties have been identified for new locations with heads of
terms agreed. The opening of these new stores is on hold until some
normality returns to trading conditions.
Our ethos remains to have a culture of continuous improvement
with staff development and process improvement constantly under
review. We have continued to invest in our training and staff
development activities. I would like to take this opportunity to
thank each and every staff member for their hard work and
outstanding contribution during the Period as well as their
flexibility and commitment during these current unprecedented
times.
OUTLOOK
As the UK begins to move out of the current period of lockdown
and stores are able to re-open, we anticipate three phases of
trading. Firstly, opening with restrictive social distancing;
secondly, an easing of social distancing restrictions; and thirdly,
a return to a level of normality. However, we cannot currently
predict the time period over which the current restrictions will be
reversed.
During the first phase, Ramsdens will initially open a portion
of its store estate to ensure the Group can comply with government
guidance, trade effectively and keep staff and customers as safe as
possible. The Group will then open further stores as it is
appropriate to do so. However, it is not possible for the Board to
predict what impact social distancing in stores and across our high
streets will have on future trading volumes.
Ramsdens has the benefit of diversified income streams. Whilst
customer demand will fluctuate across the income streams, as time
passes the Board is confident that, underpinned by the strength of
the Ramsdens brand and the Group's business model, Ramsdens has the
ability to recover in what will initially be challenging market
conditions.
The Group also has the ability to generate cash quickly from its
foreign currency holding and its retail jewellery stock, if
required. The Board is confident that it has sufficient liquidity
within the business and existing bank facilities to trade through
the forthcoming transitional period and emerge well-positioned to
continue to deliver its long-term growth plans as future economic
and social conditions allow.
Peter Kenyon
Chief Executive Officer
Interim Condensed Financial Statements
Unaudited condensed consolidated statement of comprehensive
income
For the twelve months ended 31 March 2020
12 months 12 months
ended ended
31 March 31 March
2020 2019
Unaudited Audited
Note GBP'000 GBP'000
Revenue 2 59,504 46,785
Cost of sales (22,300) (16,263)
---------- ----------
Gross profit 2 37,204 30,522
Administrative expenses (28,198) (23,939)
---------- ----------
Operating profit 9,006 6,583
Finance Costs 4 (554) (131)
Gain on fair value of derivative
financial liability - 40
---------- ----------
Profit before tax 8,452 6,492
Income tax expense (1,860) (1,332)
Total comprehensive income for
the period 6,592 5,160
---------- ----------
Basic earnings per share in pence 21.4 16.7
Diluted earnings per share in
pence 20.8 16.3
Unaudited condensed consolidated statement of changes in
equity
For the twelve months ended 31 March 20
12 months 12 months
ended ended
31 March 31 March
2020 2019
Unaudited Audited
GBP'000 GBP'000
Opening total equity 30,908 27,568
IFRS 16 - Leases adoption (note (531) -
9)
Total comprehensive income for
the period 6,592 5,160
Dividends paid (2,312) (2,097)
Share based payments 304 221
Deferred tax on share based payments - 56
---------- ----------
Closing total equity 34,961 30,908
---------- ----------
Unaudited condensed consolidated statement of financial
position
At 31 March 2020
As at As at
31 March 31 March
2020 2019
Unaudited Audited
Note GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 5,354 5,485
Intangible assets 1,089 1,228
Investments - -
Right-of-use assets 9,009 -
Deferred tax assets 273 167
15,725 6,880
Current Assets
Inventories 13,055 12,658
Trade and other receivables 10,147 10,906
Cash and short term deposits 11,051 13,420
---------- -------------
34,253 36,984
---------- -------------
Total assets 49,978 43,864
---------- -------------
Current liabilities
Trade and other payables 4,551 6,490
Lease liability 1,818 -
Interest bearing loans and borrowings 3 - 5,184
Income tax payable 809 689
---------- -------------
7,178 12,363
---------- -------------
Net current assets 27,075 24,621
---------- -------------
Non-current liabilities
Lease liability 7,647 -
Accruals and deferred income - 453
Deferred tax liabilities 192 140
---------- -------------
7,839 593
---------- -------------
Total liabilities 15,017 12,956
---------- -------------
Net assets 34,961 30,908
---------- -------------
Equity
Issued capital 7 308 308
Share premium 4,892 4,892
Retained earnings 29,761 25,708
---------- -------------
Total equity 34,961 30,908
---------- -------------
Unaudited condensed consolidated statement of cash flows
For the twelve months ended 31 March 2020
12 months 12 months
ended ended
31 March 31 March
2020 2019
Unaudited Audited
GBP'000 GBP'000
Operating activities
Profit before tax 8,452 6,492
---------- ----------
Adjustments to reconcile profit before
tax to net cash flows:
Depreciation and impairment of property,
plant & equipment 1,365 1,215
Depreciation of right-of-use assets 2,333 -
Amortisation and impairment of intangible
assets 357 157
Change in derivative financial instruments - (40)
Loss on disposal of property, plant
and equipment 61 74
Share based payments 304 221
Finance costs 554 131
Working capital adjustments:
Movement in trade and other receivables
and prepayments 260 424
Movement in inventories (397) (5,091)
Movement in trade and other payables (1,903) (651)
---------- ----------
11,386 2,932
Interest paid (554) (131)
Income tax paid (1,680) (1,278)
---------- ----------
Net cash flows from operating activities 9,152 1,523
---------- ----------
Investing activities
Proceeds from sales of property, plant
and equipment - 3
Purchase of property, plant and equipment (1,295) (2,315)
Purchase of intangible assets (218) (109)
Acquisition - (1,504)
---------- ----------
Net cash flows from investing activities (1,513) (3,925)
Financing Activities
Dividends paid (2,312) (2,097)
Payment of finance lease liabilities (2,512) (8)
Bank loans drawn down 2,600 5,183
Repayment of bank borrowings (7,784) (1,875)
---------- ----------
Net cash flows (used in)/from financing
activities (10,008) 1,203
---------- ----------
Net (decrease) in cash and cash equivalents (2,369) (1,199)
Cash and cash equivalents at start
of period 13,420 14,619
---------- ----------
Cash and cash equivalents at end of
period 11,051 13,420
---------- ----------
Unaudited notes to the interim condensed financial
statements
For the twelve months ended 31 March 2020
1. Basis of preparation
During the period, the Group changed its Accounting Reference
Date to 30 September. The interim condensed financial statements of
the group for the twelve months ended 31 March 2020, which are
unaudited, have been prepared in accordance with the International
Financial Reporting Standards ('IFRS') accounting policies adopted
by the group and set out in the annual report and accounts for the
year ended 31 March 2019, except for the adoption of IFRS 16. The
Group does not anticipate any change in these accounting policies
for the period ended 30 September 2020. As permitted, this interim
report has been prepared in accordance with the AIM rules and not
in accordance with IAS 34 "Interim financial reporting". While the
financial figures included in this preliminary interim earnings
announcement have been computed in accordance with IFRS's
applicable to interim periods, this announcement does not contain
sufficient information to constitute an interim financial report as
that term is defined in IFRS's.
The financial information contained in the interim report also
does not constitute statutory accounts for the purpose of section
434 of the Companies Act 2006. The financial information for the
year ended 31 March 2019 is based on the statutory accounts for the
year ended 31 March 2019 which have been filed with the Registrar
of Companies and are available on the group's website
www.ramsdensplc.com. The auditors reported on those accounts: their
report was unqualified, did not draw attention to any matters by
way of emphasis and did not contain a statement under section 498
(2) or (3) of the Companies Act 2006.
The Board 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. The Board have
a reasonable expectation that the Company and Group have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing the interim condensed financial statements. Further
details of the impact of COVID-19 and detailed factors considered
in making this going concern assertion are set out in note 10.
Unaudited notes to the interim condensed financial statements
(continued)
For the twelve months ended 31 March 2020
2. Segmental Reporting
12 months 12 months
ended ended
31 March 31 March
2020 2019
Unaudited Audited
GBP'000 GBP'000
Revenue
Pawnbroking 13,634 10,544
Purchases of precious metals 17,579 12,343
Retail Jewellery sales 12,553 9,771
Foreign currency margin 13,115 11,585
Income from other financial services 2,623 2,542
---------- ----------
Total Revenue 59,504 46,785
---------- ----------
Gross profit
Pawnbroking 8,967 7,520
Purchases of precious metals 7,336 4,801
Retail Jewellery sales 5,711 5,039
Foreign currency margin 13,115 11,585
Income from other financial services 2,075 1,577
---------- ----------
Total Gross profit 37,204 30,522
---------- ----------
Administrative expenses (28,198) (23,939)
Finance costs (554) (131)
Gain on fair value of derivative financial
liability - 40
---------- ----------
Profit before tax 8,452 6,492
---------- ----------
Income from other financial services comprises of cheque cashing
fees, Electronics & buybacks, agency commissions on
miscellaneous financial products.
The Group is unable to meaningfully allocate administrative
expenses, or financing costs between the segments due to the fact
that these include staff costs who undertake all services in
branches. Accordingly, the Group is unable to disclose an
allocation of items included in the Consolidated Statement of
Comprehensive Income below Gross profit, which represents the
reported segmental results.
Unaudited notes to the interim condensed financial statements
(continued)
For the twelve months ended 31 March 2020
2. Segmental Reporting
12 months 12 months
ended ended
31 March 31 March
2020 2019
Unaudited Audited
Other information GBP'000 GBP'000
Capital additions (*) 3,697 3,431
Depreciation and amortisation (*) 4,119 1,372
Assets
Pawnbroking 11,844 11,363
Purchases of precious metals 1,765 1,492
Retail Jewellery sales 9,089 9,085
Foreign currency margin 9,019 7,566
Income from other financial services 90 591
Unallocated (*) 18,171 13,767
---------- ----------
49,978 43,864
---------- ----------
Liabilities
Pawnbroking 347 284
Purchases of precious metals 19 4
Retail Jewellery sales 1,365 1,284
Foreign currency margin 32 2,402
Income from other financial services 31 525
Unallocated (*) 13,223 8,455
---------- ----------
15,017 12,956
---------- ----------
(*) The Group is unable to meaningfully allocate this
information by segment due to the fact that all segments operate
from the same stores and the assets and liabilities are common to
all segments. Capital additions for the period ended 31 March 2020
includes right of use assets acquired after 31 March 2019.
Unaudited notes to the interim condensed financial statements
(continued)
For the twelve months ended 31 March 2020
3. Borrowing
12 months 12 months
ended ended
31 March 31 March
2020 2019
Unaudited Audited
GBP'000 GBP'000
Short term bank loans - 5,183
Hire purchase agreements - 1
----------- ---------------------
Amount due for settlement within one year - 5,184
----------- ---------------------
The Group has a GBP10m revolving credit facility that expires
in March 2023.
4. Finance costs
12 months 12 months
ended Ended
31 March 31 March
2020 2019
Unaudited Audited
GBP'000 GBP'000
Interest on debts and borrowings 140 130
Interest on right-of-use assets 414 -
Finance charges payable under hire purchase
contracts - 1
----------- ---------------------
Total finance costs 554 131
----------- ---------------------
5. Tax on profit
The taxation charge for the twelve months ended 31 March 20
has been calculated by reference to the expected effective
corporation tax and deferred tax rates for the full financial
period to 30 September 2020. The underlying effective full
period tax charge is estimated to be 20%.
6. Earnings per share
12 months 12 months
ended ended
31 March 31 March
2020 2019
Unaudited Audited
Profit for the period (GBP'000) 6,592 5,160
Weighted average number of shares in issue 30,837,653 30,837,653
Earnings per share (pence) 21.4 16.7
Fully diluted earnings per share (pence) 20.8 16.3
Unaudited notes to the interim condensed financial statements
(continued)
For the twelve months ended 31 March 2020
7. Issued capital and reserves
Ordinary shares issued and fully paid No. GBP'000
At 31 March 2019 30,837,653 308
At 31 March 2020 30,837,653 308
8. Dividends
On 2 December 2019, the directors approved a 2.7 pence interim
dividend (26th November 2018: 2.4p) which equates to a dividend
payment of GBP833,000 (26th November 2018: GBP740,000). The
dividend was paid on 20 February 2020.
On 19 July 2019, the shareholders approved the payment of a 4.8
pence final dividend for the year ended 31 March 2019 which equates
to a dividend payment of GBP1,480,207 (31 March 2018:
GBP1,357.000). The dividend was paid on 20 September 2019.
9. 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.
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).
GBP'000
Operating lease commitments disclosed at 31 March
2019 12,255
Removal of non-recoverable VAT (902)
Restated operating lease commitments at 31 March
2019 11,353
Removal of prepaid lease payments (289)
Discounted using the incremental borrowing rate
at 1 April 2019 (1,327)
--------
Lease liability recognised at 1 April 2019 9,737
Current lease liabilities 2,165
Non-current lease liabilities 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:
GBP'000
Properties 8,919
Motor vehicles 183
--------
Total right-of-use asset 9,102
--------
The change in accounting policy affected the following items in
the statement of financial position at 1 April 2019:
As at IFRS16 Adjusted
31 March Adjustment balance
2019
GBP'000 GBP'000 GBP'000
Right-of-use assets 0 9,102 9,102
Deferred tax asset 167 114 281
Trade and other receivables (prepayments) 10,906 (499) 10,407
Trade and other payables (rent incentive
& onerous lease accruals) (6,490) 166 (6,324)
Accruals and deferred income (rent
incentive accrual) (453) 323 (130)
Lease liabilities 0 (9,737) (9,737)
---------- ------------ ---------
Net impact on retained earnings 25,708 (531) 25,177
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 12 month period ended 31 March
2020, deprecation of right of use assets reported within
administration expenses is GBP2,333,000 and the interest cost of
right of use assets reported in finance costs is GBP414,000.
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
Summary of new accounting policies
Set out below are the new accounting policies of the Group upon
adoption of IFRS 16, which have been applied from the date of
initial application:
--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 reasonably 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.
-- 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.
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.
10. Covid-19 considerations
In line with government guidance and in order to protect our
staff, customers and the communities where we operate, all stores
were closed on 23 March 2020.
During this lockdown period, the Group has turned cGBP1m of
foreign currency cash into sterling and realised over GBP2m of cash
from its scrap gold stock to improve its liquidity. Our cash
outflows for the same period, have been less than GBP1m per month,
having made payments for rent, trade suppliers and salaries net of
receiving the Coronavirus Job Retention Scheme grant.
The Group is currently making plans for the re-opening of stores
whilst continuing to follow all appropriate guidance and plan for
various scenarios of enforcing social distancing during
trading.
The Group has prepared these interim financial statements with
due consideration to the unprecedented impact of COVID-19 on the
economy and society. The Board has considered the impact of COVID19
on each balance sheet item and conducted a going concern review to
ensure this basis remains appropriate. A brief commentary on key
balance sheet items is as follows:
Balance sheet asset Key factors considered
Property, plant and equipment Store profitability will not
be impacted significantly in
the medium term.
---------------------------------------
Intangible assets Customer lists relate to pawnbroking
customers with medium term demand
expected to be unchanged for
this segment.
Goodwill relates to purchased
stores which are expected to
remain sufficiently profitable
in the medium term.
---------------------------------------
Right of use assets Store profitability will not
be impacted significantly in
the medium term. It should be
noted that lease break clauses
are ignored unless served/expected
to be served when calculating
the right of use asset and lease
liabilities. Serving a lease
break would therefore reduce
both right of use assets and
lease liabilities.
---------------------------------------
Inventory Jewellery stock is underpinned
by the intrinsic value of the
precious metal
---------------------------------------
Trade Receivables These are primarily asset backed
pawnbroking loans, where jewellery
is held as security and it's
value is underpinned by the intrinsic
value of the precious metal
---------------------------------------
The Group has significant cash resources and access to an
undrawn GBP10m revolving credit facility with an expiry date of
March 2023. The Group has successfully applied for government
support grants including the Coronavirus Job Retention Scheme.
In considering the Group's position, the Board has not included
the following mitigating actions which could be taken should the
Group need to take further steps to protect liquidity and earnings
should the COVID-19 outlook deteriorate;
-- Jewellery stock could be realised for its intrinsic value to raise cash,
-- The Group has the option to defer creditor payments to HMRC to assist future cash flows,
-- The Group can continue to access government support through
the extension to the Coronavirus Job Retention Scheme to
October,
-- Cost reductions could be achieved by, for example, stopping discretionary advertising,
-- The Group operates from leased premises with flexible break
clauses and lease terms. If any stores became economically
unviable, the Group has the ability to close or merge locations to
save costs and realise working capital assets.
In considering the Group's position, the Board has
considered;
-- the FCA's guidelines to allow pawnbroking customers extra
time to repay and its impact on the cash flow of the business,
-- the reduced demand for international travel and the
consequential reduction in need for foreign currency exchange,
-- the customer demand across its diversified income streams and the current high gold price.
-- the fixed and variable cost base, and its ability to reduce costs.
-- the store environment which already has segregated customer
serving points with screens and an ability to control customer
entry and waiting areas, assisting compliance with social distance
guidelines.
-- the various mitigation steps available which can improve
short term liquidity as detailed above.
After reviewing all these factors, and the Group's projections
on the impact to earnings and cash flows, the Board has concluded
that it has sufficient liquidity within the business and existing
bank facilities to trade through the forthcoming transitional
period. Therefore, the Group has not included any impairment in
these interim financial statements and has continued to adopt the
going concern basis.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BRGDUDBDDGGL
(END) Dow Jones Newswires
May 27, 2020 02:00 ET (06:00 GMT)
Ramsdens (LSE:RFX)
Historical Stock Chart
From Apr 2024 to May 2024
Ramsdens (LSE:RFX)
Historical Stock Chart
From May 2023 to May 2024