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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ramsdens Holdings Plc | LSE:RFX | London | Ordinary Share | GB00BDR6V192 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 190.00 | 185.00 | 195.00 | 190.00 | 190.00 | 190.00 | 39,028 | 07:30:31 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Finance Services | 83.81M | 7.76M | 0.2451 | 7.75 | 60.12M |
From May 2019 to May 2024
TIDMRFX
RNS Number : 3476H
Ramsdens Holdings PLC
07 June 2017
7(th) June 2017
Ramsdens Holdings PLC
("Ramsdens", the "Group", the "Company")
Audited Annual Financial Results for the year ended 31 March 2017
"A transformational year"
Ramsdens, the diversified financial services provider and retailer, today announces its Audited Annual Financial Results for the year ended 31 March 2017.
Financial highlights:
Hot Features
Premium
Year ended Year ended Increase
31 March 31 March
2017 2016
Group Revenue GBP34.5m GBP30.0m 15%
EBITDA* GBP6.0m GBP4.7m 27%
Profit Before Tax* GBP4.0m GBP2.3m 73%
Adjusted Basic EPS** 10.1p 6.8p 49%
Final Dividend 1.3p - -
Operational highlights:
-- Successful flotation on AIM in February 2017 -- Revenue up across all key business segments:
o FX revenue up 18% to GBP9.0m (2016: GBP7.6m)
o Pawnbroking revenue up 7% to GBP6.1m (2016: GBP5.7m)
o Precious metals revenue up 17% to GBP10.8m (2016: GBP9.3m)
o Retail jewellery sales revenue up 23% to GBP5.9m (2016: GBP4.8m)
-- Over 730,000 customers served during the financial year
o FX customers increased 8% to more than 600,000
o Pawnbroking customers grew 14% to more than 33,000
-- Currency exchanged increased 13% to GBP408m -- Pawnbroking loan book increased 5% to GBP6.0m
*Excludes exceptional IPO costs
**Adjusted Basic EPS reflects the shareholding structure at the year-end rather than weighted average and excludes exceptional IPO costs
Peter Kenyon, Chief Executive, commented:
"FY17 was a transformational year for Ramsdens with the Group delivering good growth across all four of its key business segments and achieving the significant milestone of its admission to AIM.
We have made a strong start to the early part of the current year across all core segments. We are about to enter our seasonally important summer period and are confident of making further progress."
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
Robert Johnson
Hudson Sandler (Financial PR) Tel: +44 (0) 20 7796 4133
Alex Brennan
Fern Duncan
About Ramsdens
Ramsdens is a growing, diversified, financial services provider and retailer, operating in the four core business segments of foreign currency exchange, pawnbroking loans, precious metals buying and selling and retailing of second hand and new jewellery.
Headquartered in Middlesbrough, the Group operates from 127 stores within the UK (including 3 franchised stores) and has a small but growing online presence.
In the last financial year, the Group served over 730,000 customers across its different services. Ramsdens is fully FCA authorised for its pawnbroking and credit broking activities.
www.ramsdensplc.com
www.ramsdensforcash.co.uk
CHAIRMAN'S STATEMENT
INTRODUCTION
This is our first Annual Report as a public company and it is a great pleasure to welcome our new shareholders to Ramsdens.
FY17 was a transformational year for the business and included the Company's successful admission to AIM in February 2017. We were pleased with the strong response to the Company's initial public offering on AIM which reflected investors' recognition of the Group's proven operations and its exciting prospects.
Ramsdens has a strong and trusted brand, a diversified product offering and a loyal and growing customer base. With these qualities, combined with our profile as a public company, the Board is more excited than ever about Ramsdens' future and we are looking forward to creating value for shareholders.
OUR BUSINESS
Ramsdens is a growing and diversified financial services provider and retailer. The Group operates in the four core business segments of foreign currency exchange, pawnbroking loans, precious metals buying and selling, and retailing of second hand and new jewellery. In the last financial year, the Group served over 730,000 customers across its different services.
The business is headquartered in Middlesbrough and has a strong heritage - our first store was opened in Stockton-on-Tees in May 1987. In addition to our recognised and trusted brand, we are proud of our well-invested store estate. As at the year end, the Group operated from 127 stores (including 3 franchised stores) within the UK (FY16: 125 stores including 4 franchised stores), supported by a small but growing online presence.
During the year, the Group's investment into growing the Ramsdens brand continued. As the main shirt sponsor for Middlesbrough Football Club, we enjoyed greater exposure during their season in the Premier League. In a market where brand trust is critical, Ramsdens is an increasingly recognised brand in each of our four key business segments and our continued investment in marketing remains a key factor in supporting the Group's growth.
FINANCIAL RESULTS & DIVID
Continued momentum across the Group's four core business segments resulted in reported revenue increasing by 15% to GBP34.5m (FY16: GBP30.0m). This growth was driven by a particularly strong performance in our Foreign Exchange segment, which grew currency exchanged by an impressive 13% to GBP408m (FY16: GBP362m).
As a result, the Group delivered a pleasing adjusted Profit Before Tax* outcome of GBP4.0m (FY16: GBP2.3m) This was, as flagged in our trading update in April 2017, comfortably ahead of the Board's initial expectations. The earnings per share, adjusted for the year end shareholding and excluding exceptional IPO costs were 10.1 pence. The Group has a strong balance sheet, good cash generation and positive indicators for our prospects for growing gross profit.
The Directors intend to adopt a progressive dividend policy to reflect the cash flow generation and earnings potential of the Group. Assuming that there are sufficient distributable reserves available at the time, the Directors intend that the Company will pay an interim dividend and a final dividend in respect of each financial year in the approximate proportions of one third and two thirds, respectively, of the total annual dividend. The Board is recommending a maiden final dividend of 1.3p which covers the period since the Company announced its Intention to Float on 2 February 2017 to 31 March 2017. Subject to approval at the AGM, this first dividend is expected to be paid on 20 September 2017 to shareholders on the register at 23 August 2017.
BOARD
Central to Ramsdens' success during recent years has been the Group's highly committed and skilled management team. They have a deep understanding of our business and customers as well as outstanding leadership qualities and energy. In January 2017, we were pleased to strengthen the Group's Board with the appointment of two new Non-Executive Directors; Simon Herrick and Steve Smith. We are already benefiting from their deep experience and expertise and I look forward to their continued contributions in the years to come.
OUTLOOK
Since I joined the Group as Chairman in 2014, I have witnessed a strong period of growth and investment in the business. Building on this foundation, I am convinced the best is yet to come for Ramsdens.
The pawnbroking and foreign exchange markets remain competitive. However, the Board believes that they are markets in which businesses with strong brands, diversified offerings and robust balance sheets will succeed. The Group will continue to execute its clear growth strategy (which is outlined in detail in our Chief Executive's report) and expand our presence through new store openings whilst also appraising potential acquisition and consolidation opportunities. Having successfully made and integrated more than 10 store or pawnbroking loan book acquisitions in recent years, the Group is confident of its ability to identify and deliver value enhancing opportunities for the Group in this fragmented and dynamic market.
The macroeconomic environment remains uncertain and the devaluation of GBP following the UK's EU referendum in June 2016 is contributing to a stronger sterling gold price, albeit volatile on a daily basis, which supports both our pawnbroking and precious metal buying segments. We believe that the summer of 2016 was a 'staycation' summer but from reading reports that early holiday bookings for summer 2017 are ahead of last year, there is a basis for optimism that we will serve more holiday makers requiring foreign currency in the busy summer period this year.
The FY18 financial year has started well for the Group. Customer demand for our products across our key business segments remains strong and the Group is well positioned to take advantage of its clear growth opportunities. We have a diversified business, a loyal and growing customer base, a committed team and a strong brand. These qualities give us confidence of successfully delivering the Board's clear growth strategy in the year ahead.
Andrew Meehan
Non-Executive Chairman
*Excludes exceptional IPO costs
CHIEF EXECUTIVE'S REVIEW - A YEAR OF EXCELLENT PROGRESS
It is a great pleasure to present the Group's first Strategic Review since our flotation to all our stakeholders. This is an exciting time for Ramsdens as we continue to grow the business whilst remaining as committed as ever to offering our customers market-leading services across our key business areas.
Ramsdens made significant progress during FY17 by driving continued growth across each of its key segments and delivering the major milestone of the Group's admission to AIM in February 2017. The success of the Group's IPO is testament to Ramsdens' track record in recent years of successful growth through investing in the business, improving the store estate and successfully diversifying the product offering to widen the customer base whilst remaining resolutely focused on delivering a truly satisfying customer experience.
DELIVERING OUR CLEAR GROWTH STRATEGY
Ramsdens has a clear strategy for the long-term, sustainable development of the business across its key market segments. The Board continues to believe in the Group's ability to leverage its strengths including a diversified offering, a recognised brand and the solid financial position of a strong balance sheet and positive cash flows to continue to grow the business both organically and through acquisition, thereby generating capital and income returns for shareholders.
This growth strategy is built on the following key pillars, and is continuously underpinned by a firm focus on our customer and exceptional service:
Strategic Developments KPIs pillar in FY17 -------------- ----------------------------------------------------------- ----------------------------------------------------------- Continue to improve the * During 2016 the Group introduced international bank * Group revenue grew 15% to GBP34.5m driven by growth performance to bank payments. across business segments of the core store estate The Group is * Group Gross profit increased 12% to GBP24.3m focused * During the financial year, the Group closed one sto on increasing re revenues and relocated one store generated by its existing stores. This will improve the Group's return on capital employed. Key drivers to achieving this include the cross selling of services to the Group's existing customer base and the introduction of new products. -------------- ----------------------------------------------------------- ----------------------------------------------------------- Expand the branch estate * During the year, the Group acquired four stores from * Excluding franchised stores, the Group operated from in the UK a competitor. 124 stores at the year end (FY16: 121) We continue to see significant opportunities for growth given the Group's current geographic penetration. Our strategy is to increase the number of stores by approximately 12 per annum over the medium term. -------------- ----------------------------------------------------------- ----------------------------------------------------------- Grow Ramsdens' * In September 2016 the Group launched * E-commerce revenue grew by 162% online www.ramsdensjewellery. co.uk, a new transactional presence and website focused on jewellery retail. improve * Click and Collect currency exchanged grew by 31% performance The Group recently launched a retail website for jewellery and refocused its informational website to do more foreign currency exchange. The Board believes there is a clear opportunity for Ramsdens to drive multi-channel growth. -------------- ----------------------------------------------------------- ----------------------------------------------------------- Capitalise on the * During the year, the Group acquired four stores from * Registered customers using Ramsdens was over 730,000 opportunity a competitor. comprising more than 600,000 Foreign Exchange of operating customers, 33,000 Pawnbroking customers and 70,000 in a Precious Metals customers challenging market Following the fall in the gold price in 2013 and significant regulatory changes imposed on pay day lenders, many large competitors have reduced their store estate in the last two years and a trend we believe will continue through 2017. As a result, this will present further opportunities for the Group to attract new customers and increase the income generated from existing stores. -------------- ----------------------------------------------------------- -----------------------------------------------------------
THE RAMSDENS BRAND
The Group's investment in sports sponsorship and TV advertising has contributed to developing a well-established high street brand that has created the platform for an increasingly diversified and growing product offering. In particular, the Group has used TV advertising to promote Ramsdens' gold buying service and foreign exchange services and this continued in FY17. The high repeat customer base for foreign currency exchange and pawnbroking loans demonstrates the trust customers have in Ramsdens to provide a great price for their foreign currency and to look after their jewellery whilst in pledge.
Throughout FY17 Ramsdens continued as the main shirt sponsor of Middlesbrough Football Club. During the year Middlesbrough FC enjoyed promotion to the Premier League from the Football League Championship and, in doing so, made Ramsdens one of only four UK-based Premier League sponsors during the 2016-17 football season. Whilst Middlesbrough's time in the Premier League was, regrettably, short-lived, the Group continues to benefit from the local and national exposure of the brand that the sponsorship has provided since 2010. Ramsdens will continue to sponsor the club for the 2017-18 season.
OUR PEOPLE
Central to the delivery of our growth strategy are the efforts of our skilled and committed team throughout the business. The Group's flotation on AIM enables Ramsdens to better reward the key people who will lead the Group's growth in the coming years through a share-based Long Term Incentive Plan.
Ramsdens' ethos is to train and empower its people to think of their store as their own business, enabling them to be local decision makers within the parameters set by the Group that are supported by our well-invested IT systems and comprehensive training. This empowerment helps Ramsdens' people to better engage with, and be part of, their local community, which is a key contributor to the Group's strong customer relationships, high repeat business and growing customer base.
The first pillar of our growth strategy is to continue to do things better in our existing stores. This is only possible because of the skill and commitment of the people we employ and their efforts. I would therefore like to take this opportunity to thank each of my colleagues across the business for their contribution, dedication and effort during this transformational year.
OUR DIVERSIFIED BUSINESS MODEL: SALES CHANNELS
The Group has a loyal and growing customer base with more than 730,000 customers served in our last financial year.
Stores
The Group has a diverse portfolio of 127 stores (including three franchised outlets). Ramsdens' stores are maintained to a high standard with a regular programme of maintenance and modernisation and the Group's strategy is to concentrate new stores and store relocations in primary high street sites and shopping centres with higher customer footfall.
The Group continued to develop its store estate during FY17 and, during the financial year, closed one store, relocated one store and, in December 2016, acquired four stores from a competitor. The Group continues to see an opportunity to expand the store estate with, as previously indicated, approximately 12 store openings planned during the forthcoming year.
E-commerce
The Group's primary trading website is www.ramsdensforcash.co.uk which focuses on foreign exchange services and allows customers to buy pre-paid travel cards or exchange currency. These can be delivered to customers by post or collected at a Ramsdens branch.
The Group's second e-commerce site, www.ramsdensjewellery.co.uk, was launched in September 2016 and is focused on selling new and second hand jewellery. Both sites are fully responsive on mobile and tablet devices.
OUR DIVERSIFIED BUSINESS MODEL: PRODUCT OFFERING
Ramsdens operates in the four core business segments of foreign currency exchange; pawnbroking loans; precious metals buying and jewellery retail
Foreign Currency Exchange
The foreign currency exchange segment primarily comprises of the sale and purchase of foreign currency notes to holiday makers. Ramsdens also offers prepaid travel cards and, as of September 2016, international bank to bank payments.
Ramsdens served over 600,000 customers for foreign currency exchange during FY17 and continues to enjoy a high rate of repeat customers. We estimate that we have a 10-12% market share in foreign exchange in the towns where we operate with the opportunity to continue to grow this share.
The foreign currency exchange service is the largest segment of the business in recent years and continued its impressive growth in FY17 with currency exchanged up 8% year on year to GBP408m. Gross profit (commission net of delivery costs and exchange rate movements) was GBP9.0m, up from GBP7.6m in the prior year representing growth of 18%. This represents 37% of Group gross profit in the year (FY16: 35%). This strong growth is a reflection of increasing awareness of the Ramsdens brand as a highly competitive and trusted provider of foreign currency exchange services.
Pawnbroking
Pawnbroking is a small subset of the consumer credit market in the UK and a simple form of asset backed lending where an item of value, known as a pledge, (in Ramsdens' case jewellery and watches), is given to the pawnbroker in exchange for a cash loan. Customers who repay the capital sum borrowed plus interest receive their pledged item back. If a customer fails to repay the loan, the pawnbroker sells the pledged item to repay the amount borrowed plus interest and fees. Pawnbroking is regulated by the FCA in the UK and Ramsdens is fully FCA authorised.
Pawnbroking income has provided recurring and stable revenues for the Group in recent years.
Over 33,000 customers used our pawnbroking service during the financial year and the pawnbroking loan book increased from GBP5.7m to GBP6.0m, a year on year increase of 5%. Interest income, which includes the ultimate realisation of jewellery sold or scrapped from forfeited pledges, was 7% higher at GBP6.1m (FY16: GBP5.7m) and represented a yield of 105% on the average pledge book during the year. Pawnbroking represented 25% of Group gross profit in FY17 (FY16: 27%).
Purchases of precious metals
Through its precious metals buying and selling service, Ramsdens buys unwanted jewellery, gold and other precious metals from customers for cash. Typically a customer brings unwanted jewellery into a Ramsdens store and a price is agreed with the customer depending upon the retail potential, weight or carat of the jewellery. Ramsdens has various second-hand dealer licences and other permissions and adheres to the police approved "gold standard" for buying precious metals.
Once jewellery has been bought from the customer, the Group's dedicated jewellery department decides whether or not to retail the item through the store network or online. Income derived from jewellery which is purchased and then retailed is reflected in jewellery retail income and profits. The residual items are sold to a bullion dealer for their intrinsic value and the proceeds are reflected in the accounts as precious metals buying income.
During FY17, revenue from this segment increased by 17% year on year to GBP10.8m (FY16: GBP9.3m) and contributed GBP4.3m to Group gross profit (FY16: GBP3.8m), representing 18% of Group gross profit (FY16:18%). The weight of gold purchased from customers was up by 3% with the higher gold price contributing to the segment's strong performance.
Jewellery Retail
Ramsdens offers a value for money proposition in new and second hand jewellery and the Board believes there is significant growth potential for Ramsdens in this segment by leveraging its retail store estate, its e-commerce operations as well as by cross-selling to customers of other services.
During FY17, revenue from this segment increased by 23% year on year to GBP5.9m (FY16: GBP4.8m) and contributed GBP3.3m to Group gross profit (FY16: GBP2.9m), representing 14% of Group gross profit (FY16:14%). The jewellery gross profit margin decreased from 62% to 56%. This was primarily a result of a concerted and successful effort to discount older slow moving stock.
Other Financial Services
In addition to the four core business segments the Group also provides additional services in Cheque Cashing, Western Union money transfer, Sale and Buy Back of Electronics, Franchise Fees and Credit Broking.
Revenue from these services in FY17 was GBP2.7m (FY16: GBP2.6m) resulting in GBP1.5m (FY16: GBP1.5m) of gross profit. This represented 6% of the Group's total gross profit (FY16: 7%-).
Peter Kenyon
Chief Executive Officer
FINANCIAL REVIEW
Ramsdens Holdings PLC was admitted to AIM on 15 February 2017 (the 'IPO').
To provide a meaningful comparison to the prior financial year and for future reporting periods, the Financial Review reports on the adjusted results excluding expenses which consist of IPO related costs.
PROFIT BEFORE TAX
The underlying adjusted profit before tax excluding exceptional items relating to IPO costs for 2017 was GBP4.0m an increase of 73% on the prior year results of GBP2.3m.
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION & AMORTISATION ('EBITDA')
The adjusted EBITDA increased by 27% to GBP6.0m from GBP4.7m in the prior year.
FINANCIAL RESULTS
A number of nonrecurring costs related to the IPO were incurred during the year and have been treated as exceptional expenses in the financial statements. To provide a meaningful year on year comparison for historical and future periods, exceptional expenses in the year of GBP1.1m have been excluded from the adjusted results. The financial results are tabled below:
GBP000's FY17 FY16 --------------------------------- ------------ ------------ Revenue GBP34,516 GBP29,978 --------------------------------- ------------ ------------ Gross profit GBP24,288 GBP21,615 --------------------------------- ------------ ------------ Administration expenses (GBP19,735) (GBP18,425) --------------------------------- ------------ ------------ Underlying operating profit GBP4,553 GBP3,190 --------------------------------- ------------ ------------ Net finance costs (GBP614) (GBP938) --------------------------------- ------------ ------------ Gain on fair value of derivative GBP107 GBP84 financial liability --------------------------------- ------------ ------------ Underlying profit before tax GBP4,046 GBP2,336 --------------------------------- ------------ ------------ Exceptional items (GBP1,110) - --------------------------------- ------------ ------------ Statutory profit before tax GBP2,936 GBP2,336 --------------------------------- ------------ ------------ Underlying operating profit GBP4,553 GBP3,190 --------------------------------- ------------ ------------ Depreciation and amortization GBP1,450 GBP1,543 --------------------------------- ------------ ------------ Share based payments GBP7 - --------------------------------- ------------ ------------ Underlying EBITDA GBP6,010 GBP4,733 --------------------------------- ------------ ------------ Exceptional items (GBP1,110) - --------------------------------- ------------ ------------ Statutory EBITDA GBP4,900 GBP4,733 --------------------------------- ------------ ------------
REVENUE
Group revenue increased by 15% to GBP34.5m (FY16: GBP30.0m). Revenue increased across all business segments as shown in the table below:
GBP000's FY17 FY16 % change -------------------------- ----------- ----------- --------- Foreign currency margin GBP8,971 GBP7,586 18.3 -------------------------- ----------- ----------- --------- Pawnbroking interest GBP6,128 GBP5,731 7.0 -------------------------- ----------- ----------- --------- Jewellery sales GBP5,909 GBP4,807 22.9 -------------------------- ----------- ----------- --------- Precious metals buying GBP10,839 GBP9,257 17.1 -------------------------- ----------- ----------- --------- Other Financial Services GBP2,669 GBP2,597 2.8 -------------------------- ----------- ----------- --------- Total GBP34,516 GBP29,978 -------------------------- ----------- ----------- ---------
As the above table shows we delivered significant double digit revenue growth in three of the five reporting segments as a result of continuing to improve our product offering and customer service across the business.
GROSS PROFIT
With the exception of profit from Other Financial Services, which has remained broadly flat, the Group's business segments demonstrated good growth in profitability against the previous year, as shown in the table below:
GBP000's FY2017 FY2016 % change -------------------------- ----------- ----------- --------- Foreign currency margin GBP8,971 GBP7,586 18.3 -------------------------- ----------- ----------- --------- Pawnbroking interest GBP6,128 GBP5,731 7.0 -------------------------- ----------- ----------- --------- Jewellery sales GBP3,321 GBP2,957 12.3 -------------------------- ----------- ----------- --------- Precious metals buying GBP4,336 GBP3,801 14.1 -------------------------- ----------- ----------- --------- Other Financial Services GBP1,532 GBP1,540 (0.5) -------------------------- ----------- ----------- --------- Total GBP24,288 GBP21,615 -------------------------- ----------- ----------- ---------
EXPENSES
The Group's costs and administrative expenses increased by 7% to GBP19.7m from GBP18.4m in the previous year. This increase includes investment in staff and the additional costs in relation to Ramsdens' sponsorship of Middlesbrough Football Club during the club's time in the Premier League last season.
TAXATION
The apparent disproportionate charge to tax in the current year is due to the impact of the IPO costs which are non-deductible costs for corporation tax purposes.
EARNINGS PER SHARE AND DIVID
The statutory basic and diluted EPS for the year were 7.8p and 7.6p respectively, up from 6.8p for both basic and fully diluted EPS in the previous year.
To aid future comparisons, the adjusted profit after tax and the year end closing number of shares give EPS of 10.1p up from FY16 6.8p.
CASH FLOW AND CASH POSITION
The new money raised in the IPO of GBP5.0m was used to repay the Group's loan notes of GBP4.0m and to substantially finance the IPO costs of GBP1.1m.
The overall increase in cash and cash equivalents was GBP0.9m, bringing total cash and cash equivalents to GBP11.9m (FY16: GBP11.0m). This is after:
1) growing trade and other receivables by GBP0.7m, principally the Pawnbroking loan book; and 2) increasing the inventory level by GBP2.0m.
GBP2.9m of the Group's GBP5.0m revolving credit facility from Yorkshire Bank was repaid during the year and GBP2.5m (GBP2.3m net of borrowing costs) was drawn from the new three year GBP7.0m revolving credit facility from Yorkshire Bank by the year end.
The Group's strong cash position together with an additional GBP4.5m being available to draw down from the revolving credit facility, provides the Company with substantial funds to deliver its strategy.
INVENTORY
Inventory comprises jewellery stock for resale and precious metals in the course of realisation through scrapping. Inventory at year end increased from GBP3.3m to GBP5.3m. The increase is attributable to offering more jewellery for sale in the existing store network and stock being accumulated for the new store opening program.
CAPITAL EXPITURE
During the financial year, the Group acquired a small loan book from a competitor and paid a small premium of GBP21,000 to acquire the attendant customer relationships associated with the trading assets. In terms of fixed and intangible assets, the Group invested GBP471,000 in leasehold improvements, IT equipment, website and fixtures and fittings.
Martin Clyburn
Chief Financial Officer
Consolidated statement of comprehensive
income
For the year ended 31 March
2017
2017 2016
Notes
GBP'000 GBP'000
Revenue 5 34,516 29,978
Cost of sales (10,228) (8,363)
--------- ---------
Gross profit 5 24,288 21,615
Administrative expenses (19,735) (18,425)
--------- ---------
Operating profit before exceptional
expenses 4,553 3,190
Exceptional expenses 7 (1,110) -
Operating profit 3,443 3,190
Finance income - 25
Finance Costs 6 (614) (963)
Gain on fair value of derivative
financial liability 107 84
--------- ---------
Profit before tax 2,936 2,336
Income tax expense 10 (926) (628)
Profit for the period 2,010 1,708
--------- ---------
Other comprehensive income
Total comprehensive income 2,010 1,708
--------- ---------
Earnings per share in pence 8 7.8 6.8
Diluted earnings per share
in pence 8 7.6 6.8
Consolidated statement of financial
position
As at 31 March 2017
2017 2016
Assets Notes GBP'000 GBP'000
Non-current assets
Property, plant and equipment 11 4,210 4,889
Intangible assets 12 529 808
Investments 13 - -
4,739 5,697
Current Assets
Inventories 15 5,338 3,336
Trade and other receivables 16 9,362 8,726
Cash and short term deposits 17 11,864 10,947
-------- --------
26,564 23,009
-------- --------
Total assets 31,303 28,706
-------- --------
Current liabilities
Trade and other payables 18 3,843 3,938
Interest bearing loans and
borrowings 18 2,318 2,908
Accruals and deferred income 18 773 398
Income tax payable 18 305 40
-------- --------
7,239 7,284
-------- --------
Net current assets 19,325 15,725
-------- --------
Non-current liabilities
Interest bearing loans and
borrowings 19 9 4,017
Accruals and deferred income 19 404 514
Derivative financial liabilities 19 119 226
Deferred tax liabilities 19 137 237
-------- --------
669 4,994
-------- --------
Total liabilities 7,908 12,278
-------- --------
Net assets 23,395 16,428
-------- --------
Equity
Issued capital 20 308 247
Share premium 20 4,892 -
Retained earnings 18,195 16,181
-------- --------
Total equity 23,395 16,428
-------- --------
The financial statements of Ramsdens Holdings
PLC, registered number 8811656, were approved
by the directors and authorised for issue on
6 June 2017 and signed on their behalf by:
Martin Clyburn
Chief Financial Officer
Consolidated statement of changes
in equity
For the year ended 31 March
2017
Share Share Retained
Capital premium earnings Total
Notes
GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2015 247 - 14,473 14,720
Profit for the year - - 1,708 1,708
--------- --------- ---------- --------
Total comprehensive
income - - 1,708 1,708
As at 31 March 2016 247 - 16,181 16,428
As at 1 April 2016 247 - 16,181 16,428
Profit for the year - - 2,010 2,010
--------- --------- ---------- --------
Total comprehensive
income - - 2,010 2,010
Bonus issue of share
capital 20 3 - (3) -
Issue of share capital 20 58 4,942 - 5,000
Costs associated with
issue of share capital 20 - (50) - (50)
Share option movement 25 - - 7 7
--------- --------- ---------- --------
As at 31 March 2017 308 4,892 18,195 23,395
--------- --------- ---------- --------
Consolidated statement of
cash flows
For the year ended 31 March
2017
2017 2016
Operating activities Notes GBP'000 GBP'000
Profit before tax 2,936 2,336
-------- --------
Adjustments to reconcile
profit before tax to net
cash flows:
Depreciation and impairment
of property, plant
and equipment 11 1,047 1,135
Amortisation and impairment
of intangible assets 12 320 365
Change in derivative financial
instruments (107) (83)
Loss on disposal of property,
plant and equipment 83 42
Exceptional expenses 7 1,110 -
Share based payments 7 -
Finance income - (25)
Finance costs 6 614 963
Exceptional expenses - bonus (172) -
Working capital adjustments:
Movement in trade and other
receivables and prepayments (693) 108
Movement in inventories (2,002) (1,189)
Movement in trade and other
payables 170 616
-------- --------
3,313 4,268
Interest received - 25
Interest paid (614) (963)
Income tax paid (704) (680)
-------- --------
Net cash flows from operating
activities 1,995 2,650
-------- --------
Investing activities
Proceeds from sale of property,
plant and equipment
Purchase of property, plant
and equipment (451) (184)
Purchase of intangible assets (41) (371)
-------- --------
Net cash flows from investing
activities (492) (555)
Financing Activities
Dividends paid 21 - -
Payment of finance lease
liabilities (8) (4)
Bank borrowings drawn down 2,310 2,900
Repayment of bank borrowings (2,900) -
Repayment of loan notes (4,000) (4,860)
Exceptional expenses - IPO (938) -
Proceeds of issue of ordinary 4,950 -
shares
-------- --------
Net cash flows from/(used
in) financing activities (586) (1,964)
-------- --------
Net increase in cash and
cash equivalents 917 131
Cash and cash equivalents
at 1 April 10,947 10,816
-------- --------
Cash and cash equivalents
at 31 March 11,864 10,947
-------- --------
Notes to the consolidated financial statements
1. Corporate information
Ramsdens Holdings PLC (the "Company") is a public limited company incorporated and domiciled in England and Wales. The registered office of the Company is Unit 16, Parkway Centre, Coulby Newham, Middlesbrough, TS8 0TJ. The registered company number is 08811656. A list of the Company's subsidiaries is presented in note 13.
The principal activities of the Company and its subsidiaries (the "Group") are the supply of foreign exchange services, pawnbroking and related financial services, jewellery sales, and the purchase of gold jewellery from the general public.
2. Changes in accounting policies
Adoption of new and revised standards
In the current year, the Group has applied a number of amendments to IFRSs issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2016. The adoption has not had any material impact on the disclosures
or on the amounts reported in these financial statements:
Amendments to IFRS Accounting for Acquisitions
11 of Interests in Joint Operations
Amendments to IAS Clarification of Acceptable
16 and IAS 38 Methods of Depreciation and
Amortisation
Amendments to IAS Equity Method in Separate Financial
27 Statements
Amendments to IFRS Sale or Contribution of Assets
10, IFRS 12 and IAS between an Investor and its
28 Associate or Joint Venture
Amendments to IAS
1 Disclosure initiative
Annual Improvements Amendments to: IFRS 5 Non-current
to IFRSs: 2012-2014 Assets Held for Sale and Discontinued
Operations, IFRS 7 Financial
Instruments: Disclosures, IAS
19 Employee Benefits and IAS
34 Interim Financial Reporting
None of the new or revised standards that have been adopted affected the amounts reported in the financial statements.
Standards issued but not yet effective
At the date of authorisation of these financial statements the Group had not applied the following new and revised IFRSs that have been issued but are not yet effective:
IFRS 9 Financial Instruments
IFRS 14 Regulatory Deferral Accounts
IFRS 15 Revenue from Contracts with
Customers
IFRS 16 Leases
Amendments to IFRS Classification and Measurement
2 of Share-Based Payment Transactions
Amendments to IAS Disclosure Initiative
7
Amendments to IAS Recognition of Deferred Tax
12 Assets for Unrealised Losses
Amendments to IAS Sale or Contribution of Assets
10 and IAS 28 between an Investor and its
Associate or Joint Venture
The Directors have considered the likely impact of the above standards on the financial statements of the Group in future periods. Other than those detailed below, the directors do not consider that the standards will have a material impact on the financial statements in future periods.
IFRS 9 will impact both the measurement and disclosures of financial instruments and IFRS 15 may have an impact on revenue recognition and related disclosures. Beyond the information above it is not practicable to provide a reasonable estimate of the impact of IFRS 9 and IFRS 15 until a detailed review has been completed.
IFRS 16 establishes principles for the recognition, measurement, presentation and disclosure of leases, with the objective of ensuring that lessees and lessors provide relevant information that faithfully represents those transactions.
Under IFRS 16 significant changes are introduced to lessee accounting, with the distinction between operating and finance leases removed and assets and liabilities recognised in respect of all leases (subject to limited exceptions for short-terms leases and leases of low value assets).
Upon lease commencement a lessee recognises a right-of-use asset and a lease liability. The right-of-use asset is initially measured at the amount of the lease liability plus any direct costs incurred by the lessee. Under the cost model, a right-of-use asset is measured at cost less accumulated depreciation and accumulated impairment. The lease liability is initially measured at the present value of the lease payment payable over the lease term, discounted at the rate implicit in the lease if that can be readily determined. If that rate cannot be readily determined, the lessee shall use their incremental borrowing rate.
Subject to EU endorsement, IFRS 16 would apply for annual reporting periods beginning on or after 1 January 2019. The Group is currently assessing the impact of accounting changes that will arise under IFRS 16. The changes are expected to have a material impact on the Consolidated Financial Statements.
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 (GBP000), except when otherwise indicated.
3.2 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all of its subsidiary undertakings (as detailed above). The financial information of all Group companies is adjusted, where necessary, to ensure the use of consistent accounting policies. In line with IFRS10, an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
3.3 Going Concern
The Directors have made appropriate enquiries and formed a judgement at the time of approving the financial statements that there is a reasonable expectation that the Group has adequate resources to continue in business for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements.
3.4 Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred which represents the fair value of the assets transferred and liabilities incurred or assumed. Acquisition related costs are expensed as incurred and included in administrative expenses.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in the statement of comprehensive income as a gain on bargain purchase.
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 the balance sheet date 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 profit or loss as incurred.
Depreciation is calculated over the estimated useful lives of the assets as follows: -- Leasehold property - straight line over the lease term -- Fixtures & fittings - 20% & 33% reducing balance -- Computer equipment - 25% reducing balance -- Motor vehicles - 25% reducing balance
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
3.7 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or CGU's fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
The Group bases its impairment calculation on detailed budgets and forecasts which are prepared separately for each of the Group's CGUs to which the individual assets are allocated, which is usually taken to be each individual branch store. These budgets and forecast calculations are generally covering a period of ten years.
Impairment losses of continuing operations are recognised in the statement of comprehensive income in those expense categories consistent with the function of the impaired asset.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset's or CGU's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the Statement of Comprehensive income unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.
Goodwill
Goodwill is tested for impairment annually as at 31 March and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
3.8 Inventories
Inventories comprise of electronics, retail jewellery and precious metals held to be scrapped and are valued at the lower of cost and net realisable value.
Cost represents the purchase price plus overheads directly related to bringing the inventory to its present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs to sell.
3.9 Financial instruments - initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
In accordance with IAS 39, 'Financial Instruments: Recognition and Measurement' the Group has classified its financial assets as 'loans and receivables'. The Group determines the classification of its financial assets at initial recognition.
All financial assets are recognised initially at fair value plus, in the case of assets not at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as described below:
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. This category applies to trade and other receivables due from customers in the normal course of business and includes pawnbroking receivables which are interest bearing. The accrued interest arising on pawnbroking receivables is included in prepayments and accrued income using the effective rate of interest. All other amounts which are not interest bearing are stated at their recoverable amount, being invoice value less provision for any bad debts.
Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand, foreign currency held for resale and short term deposits held with banks with a maturity of three months or less from inception.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash, foreign currency held for resale and short-term deposits as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Group's cash management.
Impairment of financial assets
The Group assesses, at each reporting date, whether there is any objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred 'loss event'), has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears, fall in value of the secured pledges below the value of the outstanding loans or economic conditions that correlate with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.
The amount of any impairment loss identified is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset's original effective interest rate.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, or 'other financial liabilities'.
All financial liabilities are recognised initially at fair value and, in the case of other financial liabilities, net of directly attributable transaction costs.
The Group's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as follows:
Financial liabilities at fair value through profit or loss
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 profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.
Other financial liabilities
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method (EIR). Gains and losses are recognised in the statement of profit or loss when the liabilities are derecognised as well as through the (EIR) amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the statement of comprehensive income.
This category generally applies to interest-bearing loans and borrowings.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:
-- The rights to receive cash flows from the asset have expired, or
-- The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement, and either
(a) the Group has transferred substantially all the risks and rewards of the asset, or
(b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the assets
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset with the net amount reported in the consolidated statement of financial position only if there is a current enforceable legal right to offset the recognised amounts and intent to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
3.10 Fair value measurement
The Group measures financial instruments, such as derivatives, at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy. This is described, as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
-- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
-- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
-- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
3.11 Taxation
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
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 each balance sheet date 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 assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
3.12 Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date.
For arrangements entered into prior to 1 April 2013, the date of inception is deemed to be 1 April 2013 in accordance with IFRS 1 First-time Adoption of International Reporting Standards.
Hire purchase agreements and finance lease agreements
Finance leases and hire purchase agreements that transfer to the Group substantially all of the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. The leased asset is depreciated over the shorter of the lease term and its useful economic life.
Obligations under such agreements are included within payables, net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the Consolidated statement of Comprehensive Income so as to produce a constant periodic rate of interest on the net obligation outstanding in each period.
Operating lease agreements
Rentals applicable to operating leases, where substantially all of the risks and benefits or ownership remains with the lessor, are charged to the Statement of Comprehensive Income on a straight line basis over the period of the lease.
Lease incentives are spread over the period of the lease on a straight line basis.
3.13 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured using the directors' best estimate of the expenditure required to settle the obligation at the balance sheet date.
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 Carlo Model depending on the vesting conditions attached to the share option. The fair value is expensed on a straight line basis over the vesting period based on an estimate of the number of options that will eventually vest.
3.16 Revenue recognition
Revenue is recognised when the entity transfers significant risks and rewards of ownership to the buyer. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is received. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The following specific recognition criteria must also be met before revenue is recognised:
Pawnbroking revenue
Revenue from pawnbroking comprises interest on pledge loan books and comprises the following two distinct components:
Contractual interest earned:
Contractual interest is earned on pledge loans up to the point of redemption or the end of the primary contract term. Interest receivable on loans is recognised as interest accrues by reference to the principal outstanding and the effective rate applicable, which is the rate that discounts the estimated cash receipts through the expected life of the financial asset to that asset's net carrying value.
Revenue arising from the disposal of unredeemed pledge contracts:
Revenue is recognised on the disposal of unredeemed pledge contracts when additional interest and transaction fee income is earned.
Sale of precious metals and diamonds acquired via over the counter purchases
Gold/Silver - Revenue is recognised at either the prevailing spot price, or in the case of gold, at the fixed amount booked, at the point it is received by the Group's bullion dealer.
Platinum and palladium - Revenue is recognised at the point a confirmed sell instruction is issued to the Group's bullion dealer.
Retail sales
Revenue is recognised at the point the goods are delivered to the customer.
Currency income
Revenue is earned in respect of the provision of Bureau de Change facilities offered and represents the margin earned which is recognised at the point the currency is collected by the customer.
Other financial income
Other financial income comprises cheque cashing fees, buyback and other miscellaneous revenues. Cheque cashing fees earned are recognised within revenue by reference to the date the transaction takes place. Buyback revenue relates to the sale of items to a customer, either the person who originally sold that item to the business, or to a third party. Revenue is recognised at the delivery of the item to a customer.
Dividend income
Revenue is recognised when the Group's right to receive the payment is established, which is generally when shareholders approve the dividend.
3.17 Administrative Expenses
Administrative expenses include branch staff and establishment costs.
4. Key sources of estimation, uncertainty and significant accounting judgements
The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:
Revenue recognition - pawnbroking loans interest accrual estimation
The group recognises interest on pawnbroking loans as disclosed in note 3.16. The pawnbroking loans interest accrual (pledge accrual) is material and is dependent on the estimate that the Group makes of both the expected level of the unredeemed pawnbroking loans and the ultimate realisation value for the pledge assets supporting those loans. An assessment is made on a pledge by pledge basis of the carrying value represented by original capital loaned plus accrued interest to date and its corresponding realisation value on sale of unredeemed pledges to identify any deficits. The principal 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 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.
See note 14 for further details on pawnbroking credit risk and provision values.
Impairment of property, plant and equipment and intangible assets
Determining whether property, plant and equipment and intangibles are impaired requires an estimation of the value in use of the CGU to which the assets have been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the CGU and selecting a suitable discount rate in order to calculate present value. The review is conducted annually, in the final quarter of the year. The impairment review is conducted at the level of each CGU, which is usually taken to be each individual branch store.
The principal assumptions applied by management in arriving at the value in use of each CGU are as follows:
1. The Group prepares cash flow forecasts for each branch. Cash flows represent management's estimate of the revenue of the relevant CGU, based upon the specific characteristics of the branch and its stage of development.
2. The Group has discounted the forecast cash flows at a pre-tax, risk adjusted rate of 12%.
3. Where the recoverable amount of the CGU was estimated to be less than its carrying amount, the carrying amount of the CGU was reduced to the estimated recoverable amount.
Whilst the impairment review has been conducted based on the best available estimates at the impairment review date, the Group notes that actual events may vary from management expectation.
Trade and other receivables provisioning
Trade and other receivables, with the exception of expired pledges, are stated at their nominal amount less expected impairment losses.
For unredeemed pledges, the goods securing the loan are put up for sale as the Group is selling the goods on behalf of the customer to repay the loan. An impairment review of the carrying value for each unredeemed pledge is undertaken and the resultant amount is shown within trade and other receivables at the lower of:
(i) the original capital loaned together with the accrued primary term interest less the proceeds of any goods sold to date; and
(ii) the current market value of the remaining goods within the pledge that have yet to be realised
Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
5. Segmental analysis
The Group is organised into operating segments, identified based on key revenue streams, as detailed in the CEO's review.
The group's revenue from external customers is derived entirely in the United Kingdom and the Group's assets are located entirely in the United Kingdom. Therefore, no further geographical segments analysis is presented.
2017 2016
Revenue GBP'000 GBP'000
Pawnbroking 6,128 5,731
Purchases of precious
metals 10,839 9,257
Retail Jewellery
sales 5,909 4,807
Foreign currency
margin 8,971 7,586
Income from other
financial services 2,669 2,597
-------- --------
Total revenue 34,516 29,978
======== ========
2017 2016
Gross profit GBP'000 GBP'000
Pawnbroking 6,128 5,731
Purchases of precious
metals 4,336 3,801
Retail Jewellery sales 3,321 2,957
Foreign currency margin 8,971 7,586
Income from other financial
services 1,532 1,540
--------- ---------
Total gross profit 24,288 21,615
========= =========
Administrative expenses (19,735) (18,425)
Exceptional expenses (1,110) -
Finance income - 25
Finance costs (614) (963)
Gain/(Loss) on fair value
of derivative financial
liability 107 84
--------- ---------
Profit before tax 2,936 2,336
========= =========
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 or income between the segments due to the fact that these include staff costs who undertake all services in branches. 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.
2017 2016
Other information GBP'000 GBP'000
Capital additions
(*) 492 581
Depreciation and
amortisation (*) 1,367 1,500
2017 2016
GBP'000 GBP'000
Assets
Pawnbroking 8,242 7,718
Purchase of precious
metals 773 410
Retail Jewellery
sales 4,354 2,811
Foreign currency
margin 6,096 5,446
Income from other
financial services 480 327
Unallocated (*) 11,358 11,994
-------- --------
31,303 28,706
======== ========
Liabilities
Pawnbroking 167 96
Purchase of precious
metals - 1
Retail Jewellery
sales 657 655
Foreign currency
margin 1,771 1,896
Income from other
financial services 190 372
Unallocated (*) 5,123 9,258
------ -------
7,908 12,278
====== =======
(*) The Group cannot 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.
6. Finance costs
2017 2016
GBP'000 GBP'000
Interest on debts and borrowings 613 962
Finance charges payable under
finance leases and hire purchase
contracts 1 1
-------- --------
Total finance costs 614 963
======== ========
7. Profit before taxation has been arrived at after charging/(crediting)
2017 2016
GBP'000 GBP'000
Depreciation of property,
plant and equipment reported
within:
- Administrative expenses 1,047 1,134
Amortisation of intangible
assets reported within:
- Administrative expenses 320 365
Loss on disposal of property,
plant and equipment 83 43
Cost of inventories recognised
as an expense 10,228 8,363
Staff costs 9,177 8,404
Foreign currency translation
(Profit)/ losses (128) 35
Operating lease payments 2,643 2,760
Auditors remuneration 89 58
Exceptional expenses 1,110 -
The Company and Group audit fees are borne by a subsidiary undertaking, Ramsdens Financial Limited. There were no fees payable to the Company's auditor in respect of non-audit services.
Exceptional Expenses relates to professional costs incurred in relation to the Ramsdens Holdings PLC listing on AIM together with a bonus paid to those members of staff that were employed at the time of the Group's MBO on the 2nd September 2014 in recognition of their hard work and loyalty.
8. Earnings per share
2017 2016
GBP'000 GBP'000
Profit for the year 2,010 1,708
Weighted average number of
shares in issue 25,750,444 25,023,700
Earnings per share (pence) 7.8 6.8
Fully Diluted earnings per
share (pence) 7.6 6.8
9. Information regarding directors and employees
Directors' emoluments
2017 2016
--------------------------------------- -----------------------------
Share
Option
Emoluments Pension Scheme Total Emoluments Pension Total
Executive
Peter Kenyon 194 13 2 209 168 13 181
Martin Clyburn* 67 1 1 69 - - -
Michael
Johnson** 84 6 90 118 6 124
Kevin Brown** 50 42 92 60 59 119
Non Executive
Andrew Meehan 32 - 32 13 13
Simon Herrick*** 10 - 10
Stephen
Smith*** 9 - 9
----------- -------- -------- ------ ----------- -------- ------
Total 446 62 3 511 359 78 437
* Martin Clyburn was appointed to the board in August 2016
** Michael Johnson and Kevin Brown resigned as directors of the Company in February 2017
***Simon Herrick and Stephen Smith were appointed to the board in January 2017
2017 2016
GBP'000 GBP'000
Included in administrative
expenses:
Wages and salaries 8,436 7,892
Social security costs 565 367
Share option scheme 7 -
Pension costs 169 145
Total employee benefits expense 9,177 8,404
-------- --------
The average number of staff employed by the group during the financial period amounted to:
2017 2016
No. No.
Head Office and management 66 61
Branch Counter staff 486 469
----- -----
552 530
----- -----
10. Income Tax
The major components of income tax expense are:
Consolidated statement of comprehensive income
2017 2016
GBP'000 GBP'000
Current income tax:
Current income tax charge 969 610
Adjustments in respect of current
income tax of previous year 57 12
-------- --------
1,026 622
Deferred tax:
Relating to origination and
reversal of temporary differences (100) 6
------ ----
Income tax expense reported
in the statement of comprehensive
income 926 628
------ ----
A reconciliation between tax expense and the product of accounting profit multiplied by the UK domestic tax rate is as follows:
2017 2016
GBP'000 GBP'000
Profit before income tax 2,936 2,336
UK corporation tax rate at
20% 587 467
Expenses not deductible for
tax purposes 282 149
Prior period adjustment 57 12
Income tax reported in the
consolidated statement of profit
or loss 926 628
-------- --------
Deferred tax
Deferred tax relates to the following:
2017 2016
GBP'000 GBP'000
Accelerated depreciation
for tax purposes 4 64
Other short-term differences 133 173
Deferred tax liabilities
net 137 237
======== ========
Reconciliation of deferred
tax liabilities net
2017 2016
GBP'000 GBP'000
Opening balance as of 1 April 237 175
Deferred tax recognised in
profit or loss (100) 6
Other deferred tax - 56
-------- --------
Closing balance as at 31
March 137 237
======== ========
Factors affecting tax charge
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) were substantively enacted on 2 July 2013. Further reductions from 20% to 19% (effective 1 April 2017) and to 18% (effective from 1 April 2020) were substantively enacted on 26 October 2015. An additional reduction to 17% (effective 1 April 2020) was announced in the Budget on 16 March 2016. This will adjust the Group's future tax charge accordingly.
11. Property, plant and equipment
Leasehold Fixtures Computer Motor Total
property & Fitting equipment vehicles
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 April 2016 3,618 2,546 399 40 6,603
Additions 156 219 76 - 451
Disposals (88) (248) (83) - (419)
At 31 March 2017 3,686 2,517 392 40 6,635
---------- ----------- ----------- ---------- --------
Depreciation
At 1 April 2016 908 697 104 5 1,714
Depreciation charge
for the year 559 394 85 9 1,047
Disposals (51) (214) (71) - (336)
At 31 March 2017 1,416 877 118 14 2,425
---------- ----------- ----------- ---------- --------
Net book value
At 31 March 2017 2,270 1,640 274 26 4,210
At 31 March 2016 2,710 1,849 295 35 4,889
Finance leases
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 31 March 2017 was GBP19,000 (2016: GBP26,000). Additions during the year ended 2017 include GBPNil (2016: GBP26,000) of motor vehicles on hire purchase contracts. Assets under hire purchase contracts are pledged as security for the related hire purchase liabilities.
12. Intangible assets
Customer Website Total
relationships
GBP'000 GBP'000 GBP'000
Cost
At 1 April 2016 1,323 59 1,382
Additions 21 20 41
Disposals - - -
At 31 March
2017 1,344 79 1,423
--------------- -------- --------
Amortisation
At 1 April 2016 570 4 574
Amortisation
charge for the
year 306 14 320
Disposals - - -
At 31 March
2017 876 18 894
--------------- -------- --------
Net book value
At 31 March
2017 468 61 529
--------------- -------- --------
At 31 March
2016 753 55 808
--------------- -------- --------
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 GBPnil carrying value.
Group Investments
Details of the investments in which the group and company holds 20% or more of the nominal value of any class of share capital are as follows:
Name of company Holding Proportion Activity
of voting
rights
and
shares
held
Subsidiary undertakings
Ramsdens Group Ordinary 100% Supply of management
Limited Shares & strategic services
- now dormant
Ramsdens Financial Ordinary 100% Supply of foreign
Limited Shares exchange services,
pawnbroking, purchase
of gold jewellery,
jewellery retail
and related financial
services.
14. Financial assets and financial liabilities
At 31 March 2017 Fair Loans Financial Book Fair
value and liabilities Value Value
through receivables at
profit amortised
& loss cost
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Trade and other
receivables - 8,672 - 8,672 8,672
Cash and cash equivalents - 11,864 - 11,864 11,864
Financial liabilities
Trade and other
payables - - (4,809) (4,809) (4,809)
Borrowings - - (2,327) (2,327) (2,327)
Derivative financial
liabilities (119) - - (119) (119)
--------- ------------- ------------- -------- --------
Net financial assets/(liabilities) (119) 20,536 (7,136) 13,281 13,281
At 31 March 2016 Fair Loans Financial Book Fair
value and liabilities Value Value
through receivables at
profit amortised
& loss cost
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Trade and other
receivables - 7,968 - 7,968 7,968
Cash and cash equivalents - 10,947 - 10,947 10,947
Financial liabilities
Trade and other
payables - - (4,661) (4,661) (4,661)
Borrowings - - (6,925) (6,925) (6,925)
Derivative financial
liabilities (226) - - (226) (226)
--------- ------------- ------------- -------- --------
Net financial assets/(liabilities) (226) 18,915 (11,586) 7,103 7,103
Trade and other receivables shown above comprises trade receivables, other receivables and pledge accrued income as disclosed in note 16.
Trade and other payables comprises of trade payables, other payables and accruals as disclosed in notes 18 & 19
Borrowings comprises of bank borrowings, obligations under finance leases, loan notes and other loans as disclosed in notes 18 & 19.
Loans and receivables are non-derivatives financial assets carried at amortised cost which generate a fixed or variable interest income for the Group. The carrying value may be affected by changes in the credit risk of the counterparties.
Management have assessed that for cash and short-term deposits, trade receivables, trade payables, bank overdrafts and other current liabilities their fair values approximate to their carrying amounts largely due to the short-term maturities of these instruments. Book values are deemed to be a reasonable approximation of fair values.
Fair value
The assumptions used by the Group to estimate the fair values are summarised below:
The fair value of the interest rate swaps is based upon the projected interest rate curves, over the life of the interest rate swaps. This valuation falls within level 2 of the fair value hierarchy in IAS39.
The fair value of all other financial instruments is equivalent to their book value due to their short maturities.
Financial Risks
The Group monitors and manages the financial risks relating to the financial instruments held. The principal risks include credit risk on financial assets, and liquidity and interest rate risk on financial liability borrowings. The key risks are analysed below.
Credit risk
Pawnbroking trade receivables
The Group is exposed to credit risk through customers defaulting on their loans. The key mitigating factor to this risk is the requirement for the borrower to provide security (the pledge) in entering a pawnbroking contract. The security acts to minimise credit risk as the pledged item can be disposed of to realise the loan value on default.
The Group estimates that the current fair value of the security is equal to the current book value.
In addition to holding security, the Group further mitigates credit risk by:
1) Applying strict lending criteria to all pawnbroking loans. Pledges are rigorously tested and appropriately valued. In all cases where the Group lending policy is applied, the value of the pledged items is in excess of the pawn loan.
2) Seeking to improve redemption ratios. For existing customers, loan history and repayment profiles are factored into the loan making decision. The Group has a high customer retention ratio and all customers are offered high customer service levels.
3) The carrying value of every pledge comprising the pawnbroking trade receivables in the loan book is reviewed against its expected realisation proceeds should it not be redeemed and any deficits are provided for based on current and historical non redemption rates. In addition a further provision is made in respect of those expired pledges that are in the course of realisation by reviewing the carry value of each pledge against the expected realisation proceeds and writing the pledge down to its recoverable amount.
The Group continually monitors, at both store and at Board level, its internal controls to ensure the adequacy of the pledged items. The key aspects of this are:
- Appropriate details are kept on all customers the Group transacts with; - All pawnbroking contracts comply with the Consumer Credit Act 2006; - Appropriate physical security measures are in place to protect pledged items; and - An internal audit department monitors compliance with policies at the Group's stores.
The pawnbroking accrued income is disclosed net of the provision for bad and doubtful debts associated with these financial assets. The movement on these provisions is as follows;
Pawnbroking Pawnbroking
Trade Trade
Receivables receivables
in the
course
of realisation
GBP'000 GBP'000
At 1 April 2015 351 141
Statement of comprehensive
income credit (50) (29)
At 31 March 2016 301 112
Statement of comprehensive
income credit (9) (46)
Balance at 31 March
2017 292 66
Bad Debts written off during
the year net of recoveries
were:
2017 2016
GBP'000 GBP'000
Pawnbroking Trade Receivables 12 3
The ageing of the Pawnbroking trade receivables excluding those in the course of realisation is as follows:
2017 2016
GBP'000 GBP'000
Within contractual
term 5,402 5,020
Past due 572 688
-------- --------
5,974 5,708
The Group has not provided for the contractually overdue receivables (i.e. loans where the pawnbroking agreement has terminated but the customer has not redeemed the assets) at the reporting date since the realisable value of the security held is greater than the carrying value of the capital element of the pledge loan as disclosed above. The Group does not start the disposition process of the unredeemed pledges until at least one month after the due repayment date since it is commercial practice to allow additional time for the customers to redeem their pledges.
Cash and cash equivalents
The cash and cash equivalents balance comprises both bank balances and cash floats at the stores. The bank balances are subject to very limited credit risk as they are held with banking institutions with high credit ratings assigned by international credit rating agencies. The cash floats are subject to risks similar to any retailer, namely theft or loss by employees or third parties. These risks are mitigated by the security systems, policies and procedures that the Group operates at each store, the Group recruitment and training policies and the internal audit function.
Market risk
Pawnbroking trade receivables
The collateral which protects the Group from credit risk on non-redemption of pawnbroking loans is principally comprised of gold, jewellery items and watches. The value of gold items held as security is directly linked to the price of gold. The Group is therefore exposed to adverse movements in the price of gold on the value of the security that would be attributable for sale in the event of default by the borrower.
The Group considers this risk to be limited for a number of reasons. First of all, the Group applies conservative lending policies in pawnbroking pledges reflected in the margin made on retail sales and scrap gold when contracts forfeit. The Group is also protected due to the short term value of the pawnbroking contract (5 months). In the event of a significant drop in the price of gold, the Group could mitigate this risk by reducing its lending policy on pawnbroking pledges, by increasing the proportion of gold sold through retail sales or by entering gold hedging instruments. Management monitors the gold price on a constant basis.
Considering areas outside of those financial assets defined under IAS 39, the Group is subject to higher degrees of pricing risk. The price of gold will affect the future profitability of the Group in three key ways:
i) A lower gold price will adversely affect the scrap disposition margins on existing inventory, whether generated by pledge book forfeits or direct purchasing. While scrap profits will be impacted immediately, retail margins may be less impacted in the short term.
ii) While the Group's lending rates do not track gold price movements in the short term, any sustained fall in the price of gold is likely to cause lending rates to fall in the longer term thus potentially reducing future profitability.
iii) A lower gold price may reduce the attractiveness of the Group's gold purchasing operations.
Conversely, a lower gold price may dampen competition as lower returns are available and hence this may assist in sustaining margins and volumes.
Financial assets
The Group is not exposed to significant interest rate risk on the financial assets, other than cash and cash equivalents, as these are lent at fixed rates, which reflect current market rates for similar types of secured or unsecured lending, and are held at amortised cost.
Cash and cash equivalents are exposed to interest rate risk as they are held at floating rates, although the risk is not significant as the interest receivable is not significant.
Liquidity risk
Cash and cash equivalents
Bank balances are held on short term / no notice terms to minimise liquidity risk.
Trade and other payables
Trade and other payables are non-interest bearing and are normally settled on 30 day terms, see note 18.
Borrowings
The maturity analysis of the cash flows from the group's borrowing arrangements that expose the group to liquidity risk are as follows;
2017 2016
GBP'000 GBP'000
Bank borrowings 2,310 2,900
Loan notes - 4,000
-------- --------
Total 2,310 6,900
Amount repayable
In one year or less 2,310 2,900
In more than one year but
no more than two years - -
In more than two years
but no more than five years - 4,000
------ ------
2,310 6,900
The bank borrowings interest is based on a fixed percentage above LIBOR. There is therefore a cash flow risk should there be any upward movement in LIBOR rates. Assuming the GBP7million revolving credit facility was fully utilised then a 1% increase in the LIBOR rate would increase finance costs by GBP70,000 pre-tax and reduce post-tax profits by GBP56,000.
Derivative financial instruments comprises of interest rate swap facilities that mature in October 2018.
15. Inventories
2017 2016
GBP'000 GBP'000
New and second hand
inventory for resale
(at lower of cost
or net realisable
value) 5,338 3,336
16. Trade and other receivables
2017 2016
GBP'000 GBP'000
Trade receivables 7,730 7,126
Pledge Accrued Income 917 827
Other receivables 25 15
Corporation tax receivable - 57
Prepayments and accrued income 690 701
-------- --------
9,362 8,726
-------- --------
17. Cash and cash equivalents
2017 2016
GBP'000 GBP'000
Cash and cash equivalents 11,864 10,947
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less from inception.
Further details on financial instruments, including the associated risks to the Group and allowances for bad and doubtful debts and fair values is provided in note 14.
18. Trade and other payables (current)
2017 2016
GBP'000 GBP'000
Bank borrowings 2,310 2,900
Trade payables 3,335 3,285
Other payables 297 464
Current tax liabilities 305 40
Other taxes and social
security 211 189
Accruals and deferred
income 773 398
Obligations under finance
leases (note 23) 8 8
-------- --------
7,239 7,284
-------- --------
Terms and conditions of the above financial liabilities:
-- Trade and other payables are non-interest bearing and are normally settled on 30-day terms
For explanations on the Group's liquidity risk management processes, refer to Note 14
Bank Borrowings
The RCF facility was renewed during the year with an increase in facility size from GBP5m to GBP7m and an increase in term for a further 3 years. Details of the new facility are as follows:
Key Term Description
Facility Revolving Credit
Facility
Total facility GBP7m
size
Termination 04/03/2020
date
Utilisation The GBP7m facility is available subject
to the ratio of cash at bank in hand
(inclusive of currency balances) to
the RCF borrowing exceeding 1.5 as
stipulated in the banking agreement
Interest Interest is charged on the amount drawn
down at 2.5% above LIBOR rate when
the initial drawdown is made and for
unutilised funds interest is charged
at 1% above LIBOR rate from the date
when the facility was made available.
The LIBOR rate is reset to the prevailing
rate every interest period typically
three months throughout the facility
period
Interest Payable Interest is payable at intervals to
suit the company but typically three
months
Repayments The facility can be repaid at any point
during its term and re-borrowed
Security The facility is secured by a debenture
over all the assets of Ramsdens Financial
Ltd and cross guarantees and debentures
have been given by Ramsdens Group Limited
and Ramsdens Holdings PLC
Undrawn facilities At the 31 March 2017 the group had
available GBP4.5m of undrawn committed
facilities
19. Non-current liabilities
2017 2016
GBP'000 GBP'000
Loan Notes - 4,000
Obligations under finance
leases (note 23) 9 17
Accruals and deferred
income 404 514
Derivative financial
instruments (note 14) 119 226
Deferred tax (note
10) 137 237
669 4,994
-------- --------
Loan Notes
To fund the acquisition of Ramsdens Financial Limited and its subsidiaries, the following loan notes were issued on 2 September 2014:
10% fixed
rate
secured
A loan
notes
repayable
2 September
2018
GBP'000
At 31 March
2016 4,000
Repaid (4,000)
-------------
At 31 March -
2017
-------------
On 16 February 2017 following the listing on AIM of Ramsdens Holdings PLC the loan notes were repaid. The loan notes were subsequently delisted on the 22 February 2017 from the Channel Islands Security Exchange and the security released. The loan Notes up to repayment were secured by a fixed and floating charge over the company's assets and carry a coupon rate of 10%, interest being paid quarterly, 2nd January, 2nd April, 2nd July and 2nd September each year.
At 31 March 2017 the accrued interest charge in relation to the loan notes was GBPNil (2016: GBP33,000).
20. Issued capital and reserves
Ordinary shares No. GBP'000
issued and fully
paid
Ordinary A shares
of GBP1 each 186,250 186
Ordinary B shares
of GBP1 each 60,983 61
----------- --------
At 31 March 2016 247,233 247
----------- --------
Reorganisation
of existing share
capital and reclassification
to 1p shares 24,723,300 247
Bonus issue of
ordinary 1p shares 300,400 3
Issue of new ordinary
1p shares 5,813,953 58
At 31 March 2017 30,837,653 308
----------- --------
The Company reorganised the issued ordinary share capital during the year to unify the 'A' shares & 'B' shares into one class of 1p ordinary shares. As part of this re-organisation a bonus issue of 300,400 ordinary shares was issued capitalising GBP3,000 of reserves.
The Company issued 5,813,953 ordinary 1p shares during the year at 86p per share. Associated fees of GBP50,000 have been charged to share premium account.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 18, cash and cash equivalents and equity attributable to the equity holders of the parent, comprising issued capital, reserves and retained earnings.
21. Dividends
No Dividends were paid during the year.
22. Pensions
The company operates a defined contribution scheme for its directors and employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The outstanding pension contributions at 31 March 2017 are GBP107,000 (2016: GBP32,000)
23. Commitments and contingencies
Operating lease commitments - Group as lessee
At the balance sheet date, the Group had outstanding commitments for future minimum rentals payable under non-cancellable operating leases, which fall due as follows:
Land and buildings 2017 2016
GBP'000 GBP'000
Within one year 2,442 2,482
After one year but
not more than five
years 7,812 8,549
More than five years 1,335 2,368
-------- --------
11,589 13,399
-------- --------
Other 2017 2016
GBP'000 GBP'000
Within one year 79 76
After one year but
not more than five
years 54 100
More than five years - -
-------- --------
133 176
-------- --------
Significant operating lease payments represent rentals payable by the Group for rental of store premises. Leases are normally renegotiated for an average term of 10 years at the then prevailing market rate, with a break option after 5 years. The Group also sublets two of the premises above the stores, the outstanding receipts from which are immaterial.
Finance lease and hire purchase commitments
The Group has finance leases and hire purchase contracts for one motor vehicle. The Group's obligations under finance leases are secured by the lessor's title to the leased assets. Future minimum lease payments under finance leases and hire purchase contracts, together with the present value of the net minimum lease payments at 31 March 2017 is GBP17,000 (2016: GBP25,000)
24. Related party disclosures
Ultimate controlling party
The Company has no controlling party. Prior to 15 February 2017 the Company was controlled by NorthEdge Capital Fund 1 LP which held 73.89% of the issued share capital since 2 September 2014.
Transactions with related parties
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Fees charged in the period by NorthEdge Capital LLP the manager of NorthEdge Capital Fund 1 LP, amounted to GBP54,000 (2016: GBP101,000).
The Group has GBPnil (2016: GBP3,910,000) of loan notes outstanding at 31 March 2017 to NorthEdge Capital Fund 1 LP. Interest of GBP345,000 was charged during the year (2016: GBP830,000). There was GBPnil of interest accrued on these loan notes at 31 March 2017 (2015: GBP32,000).
The Group has GBPnil (2016: GBP90,000) of loan notes outstanding at 31 March 2017 to NorthEdge Capital 1 GP LLP. Interest of GBP9,000 was charged during the year (2016: GBP19,000) and there was GBPnil of interest accrued on these loan notes at 31 March 2017 (2016: GBP1,000).
Transactions with key management personnel
The remuneration of the directors of the Group, who are the key management personnel, is set out below in aggregate for each of the categories specified in the Companies Act:
2017 2016
GBP'000 GBP'000
Short term employee
benefits 613 437
Post employment benefits 78 83
Share based payments 6 -
697 520
-------- --------
25. Share based payments
As at 31 March 2017 the Company operated a Long Term Incentive Plan (LTIP). The charge for the year in respect of the scheme was:
2017 2016
GBP'000 GBP'000
LTIP 7 -
The LTIP is a discretionary share incentive scheme under which the Remuneration Committee can grant options to purchase ordinary shares at nominal 1p per share cost to Executive Directors and other senior management. The LTIP commenced in March 2017, details were as follows:
Weighted
average
Number exercise
of conditional price
Shares in pence
Outstanding at the beginning
of the year - -
Granted 805,554 -
Forfeited during the year - -
Exercised during the year - -
Outstanding at the end of
the year 805,554 -
================ ==========
The options vest according to the achievement against two criteria
Total Shareholder Return - TSR - 50% of options awarded
Earnings per Share - EPS - 50% of options awarded
The Fair value of services received in return for share options granted is based on the fair value of share options granted and are measured using the Monte Carlo Model for TSR performance condition as this is classified as a market condition under IFRS2 and using the Black Scholes Model for the EPS performance condition which is classified as a non- market condition under IFRS2. The fair values have been computed by an external specialist and the key inputs to the valuation model were:
TSR Condition EPS Condition
Model Monte Carlo Black Scholes
Grant Date 13/03/2017 13/03/2017
Share Price GBP1.06 GBP1.06
Exercise Price GBP0.01 GBP0.01
Vesting period 3.05 years 3.05 years
Risk Free return 0.2% 0.2%
Volatility 27.0% 27.0%
Dividend Yield 7.5% 7.5%
Fair value
of Option (GBP) 0.39 0.81
Early exercise of the options is permitted if a share award holder ceases to be employed by reason of death, injury, disability, or sale of the Company. The maximum term of the share options is 10 years.
Parent Company Balance
Sheet
As at 31 March 2017
2017 2016
Notes
Assets GBP'000 GBP'000
Non-current assets
Investments D 7,845 247
7,845 247
Current Assets
Receivables E 1,854 -
Cash and short term -
deposits 207
-------- --------
2,061 -
-------- --------
Total assets 9,906 247
-------- --------
Current liabilities
Trade and other payables F 108 -
-------- --------
108 -
-------- --------
Net current assets 1,953 -
-------- --------
Total assets less
current liabilities 9,798 247
Net assets 9,798 247
-------- --------
Equity
Issued capital 308 247
Share Premium 4,892 -
Retained earnings 4,598 -
-------- --------
Total equity 9,798 247
-------- --------
The Profit after tax for the Company for the
year ended 31 March 2017 was GBP4,594,000
(2016:GBPNil)
These financial statements were approved by
the directors and authorised for issue on
6 June 2017 and signed on their behalf by:
Martin Clyburn
Chief Financial Officer
Company Registration
Number: 8811656
Parent Company statement of changes in equity
For the year ended 31 March
2017
Share Share Retained
Capital premium earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2016 247 - - 247
Profit for the year - - - -
--------- --------- ---------- --------
Total comprehensive - - - -
income
As at 31 March 2017 247 - - 247
As at 1 April 2016 247 - - 247
Profit for the year - - 4,594 4,594
--------- --------- ---------- --------
Total comprehensive
income - - 4,594 4,594
Bonus issue of share
capital 3 - (3) -
Issue of share capital 58 4,942 - 5,000
Costs associated with
issue of share capital - (50) - (50)
Share option movement - - 7 7
--------- --------- ---------- --------
As at 31 March 2017 308 4,892 4,598 9,798
A. ACCOUNTING POLICIES
BASIS OF PREPARATION
Ramsdens Holdings PLC (the "Company") is a public limited company incorporated and domiciled in England and Wales. The registered office of the Company is Unit 16, Parkway Centre, Coulby Newham, Middlesbrough, TS8 0TJ. The registered company number is 08811656. A list of the Company's subsidiaries is presented in note D.
The principal activities of the Company and its subsidiaries (the "Group") are the supply of foreign exchange services, pawnbroking and related financial services, jewellery sales, and the purchase of gold jewellery from the general public.
The separate financial statements of the Company are presented as required by the Companies Act 2006. The Company meets the definition of a qualifying entity under FRS 100 (Financial Reporting Standard 100) issued by the Financial Reporting Council. Accordingly, the financial statements have been prepared in accordance with FRS 101 (Financial Reporting Standard 101) 'Reduced disclosure Framework' as issued by the FRC in September 2015.
The financial statements have been prepared on the historical cost basis.
These financial statements are separate financial statements. The Company is exempt from the preparation of consolidated financial statements, because it is included in the Group financial statements of Ramsdens Holdings PLC.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to business combinations, share-based payment, non-current assets held for sale, financial instruments, capital management, presentation of comparative information in respect of certain assets, presentation of a cash-flow statement, standards not yet effective, impairment of assets and related party transactions.
Where required, equivalent disclosures are given in the Group financial statements of Ramsdens Holdings PLC. The Group financial statements of Ramsdens Holdings PLC are available to the public.
The financial statements have been prepared on a going concern basis as discussed in the Directors' Report.
The particular accounting policies adopted are described below.
TAXATION
Current tax
The tax currently payable is based on taxable profit for the year. The Company's liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
INVESTMENTS
Fixed assets investments are shown at cost less provision for impairment.
FINANCIAL LIABILITIES AND EQUITY
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting liabilities.
Equity instruments issued are recorded at the proceeds received, net of direct issue costs.
DIVIDENDS
Dividends receivable from subsidiary undertakings are recorded in the profit and loss account on the date that the dividend becomes a binding liability on the subsidiary company.
Dividends payable are recorded as a distribution from retained earnings in the period in which they become a binding liability on the Company.
Employee Share Incentive Plans
Ramsdens Holdings PLC grants equity settled share option rights to the parent entity's equity instruments to certain directors and senior staff members under a LTIP (Long Term Incentive Plan). The employee share options are measured at fair value at the date of grant by the use of either the Black Scholes Model or a Monte Carlo Model depending on the vesting conditions attached to the share option. The fair value is expensed on a straight line basis over the vesting period based on an estimate of the number of options that will eventually vest.
B. COMPANY PROFIT AND LOSS ACCOUNT
As permitted by s408 of the Companies Act 2006 the Company has elected not to present its own profit and loss account or statement of comprehensive income for the year.
The Company made a Profit after taxation of GBP4,594,000 in 2017 (2016: GBPNil).
The auditor's remuneration for the current and preceding financial years is borne by a subsidiary undertaking, Ramsdens Financial Limited. Note 7 to the Group financial statements discloses the amount paid.
C. STAFF AND KEY PERSONNEL COSTS
Other than the Directors who are the key personnel, the Company has no employees. Details of their remuneration is set out below:
2017 2016
GBP'000 GBP'000
Remuneration receivable 96 -
Social security cost 11 -
Value of company pension contributions 55 -
to money purchase schemes
Share based payments 3 -
165 -
-------- --------
Remuneration of the highest paid director:
2017 2016
GBP'000 GBP'000
Remuneration receivable 29 -
Social security cost 4 -
Value of company pension contributions 53 -
to money purchase schemes
Share Based Payments 2 -
88 -
-------- --------
The number of directors accruing retirement benefits under the money purchase scheme is 2 (2016: nil)
D. INVESTMENTS
Shares in subsidiary undertakings Total
GBP'000
Cost
At 1 April 2016 247
Additions 7,594
Additions - Share based payments 4
At 31 March 2017 7,845
--------
Additions during the year represent the transfer of shares in Ramsdens Financial Ltd following a group reorganisation which resulted in the entire share capital now being held directly as opposed to it being formerly held indirectly via the wholly owned subsidiary Ramsdens Group Ltd.
The Investments in Group Companies which are included in the consolidated statements are as follows:
Name of company Holding Proportion Activity
of voting
rights
and shares
held
Subsidiary undertakings
Ramsdens Group Ordinary 100% Supply of management
Limited Shares & strategic services
- now dormant
Ramsdens Financial Ordinary 100% Supply of foreign
Limited Shares exchange services,
pawnbroking, purchase
of gold jewellery,
jewellery retail
and related financial
services
E. RECEIVABLES
2017 2016
GBP'000 GBP'000
Amounts owed by subsidiary companies 1,814 -
Prepayments 38 -
1,852 -
-------- --------
F. LIABILITIES: AMOUNTS FALLING DUE WITHIN ONE YEAR
2017 2016
GBP'000 GBP'000
Trade Payables 15 -
Other Creditors 75 -
Other taxes and Social Security 11 -
Current tax liabilities 7 -
108 -
-------- --------
G. CALLED UP SHARE CAPITAL
Details of the called up share capital including share shares issued during the year can be found in note 20 within the Group financial statements of Ramsdens Holdings PLC .
H. SIGNIFICANT EVENTS DURING THE YEAR
The Group restructured during the year following the listing of the Company onto the AIM London stock exchange. The GBP5,000,000 raised from the issue of new shares enabled the Company to lend money to Ramsdens Group Limited to repay loan notes of GBP4,000,000 and to pay exceptional expenses. The Company also received dividends during the year of GBP5,400,000. The restructuring consisted of the investment in Ramsdens Financial Limited being transferred from Ramsdens Group Limited to the Company, with the intercompany loans settled except for GBP1,814,000 owed by Ramsdens Financial Limited to the Company post restructuring.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UNOWRBNANRAR
(END) Dow Jones Newswires
June 07, 2017 02:00 ET (06:00 GMT)
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