Ramsdens Holdings (LSE:RFX) — Interim Results

0:01 Good afternoon, and welcome to the RAMSDENS HOLDINGS PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be switched at any time by the Q and A tab situated to the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll.

0:28 I'd now like to hand you over to Peter Kenyon, CEO. Good afternoon to you, sir. Thank you, and welcome, everybody. This is our first investor meets company presentation. Obviously, we don't know whether you know what you know about RAMSDENS. So if we can go to page three, we'll we'll give you a a background. So, we've been listed since February 17, and we have four key segments and then the other things that we do. So foreign currency exchange, it's 99% of that is travel money. So if you're off to Benidorm or Dubai and you wanna take your euros or your dirhams, we're able to supply that for you, and we buy it back off customers as well.

1:14 Generally, high volume pre pandemic, we did over 500,000,000 and served over 830,000 foreign our customers for foreign currency. So that's the foreign currency segment topped up with a bit of international money transfer that we do through a third party, and we have an old currency card that we're in the process of modernizing. Pawnbroking. So pawnbroking is a small sum short term loan. It's secured on, for ourselves, a jewelry item, so a chain or a watch. Customer gives us the item. We give them the cash. Customer repairs. We give them their item back. Throughout COVID and currently, the repayment rates are better than they've ever been.

2:03 Currently, it's about 88% of the people pay us back. Of the 12% that don't pay us back, we sell their goods. When we sell it, if there's a shortfall, there are no debt consequences for the customer. And if we sell it with a surplus over what is owed, the customer get those money back. Average loan is £286, and our interest rates vary. And if you wanna borrow a £100, it's roughly 10% a month. If you want to borrow 10,000, it's down at 2% per month. The purchase of precious metals is where a customer has some unwanted jewelry. They don't want a loan. They just wish to sell it. So we'll happily buy that for them from them.

2:49 And if we melt the jewelry, it goes through purse precious metals. It's like the scrap proceeds. Jewelry retailing, and you can see in the picture there, that's our new Eldon Square, Newcastle store. So that window, has new jewelry, it has secondhand watches, and it has secondhand jewelry. And that's the mix of the services that we offer. And where we sell that, that appears through jewelry retailing. The other services that we do, Western Union is a international money transfer, which is a slight cash payment to ourselves and a cash payment somewhere else in the world out to the beneficiary. We will cash checks for customers. We have three franchise units, and we have a little bit of credit broken income go through there as well.

3:38 We do not and have not for over ten years now offered unsecured personal loans or high cost short term credits. So we are just offering pawnbroken loans, and that is what our FCA authorization is for. So that's who we are, what we do. A 153 stores are ours, and we have three franchised units. If we could go to slide four. Thanks. You know, pandemic hit February 20. In February 20, we were in a good position. We were on for record profits, which was annualized at around 7,700,000. And we were in a good good place with a pipeline of new stores.

4:25 We had activities that we're working, and, obviously, everyone knows what's happened in the intervening period. Through the presentation, we have got, like, three or four columns for you, which is either an annual results for the last twelve months, but it's got March 20, which is substantially pre pandemic. It's got the half year to March 21, which includes a retail lockdown, we remember, and very little international travel. And then we have the last six months ended 03/31/2022. We've strengthened our balance sheet in the last six months. Net assets up to $37,600,000 We have cash or net cash of $9,300,000 and cash of $10,700,000 As a result of coming out of COVID and we're seeing a transition in customer behavior, we've restarted our dividend in earnest and approved an interim dividend of 2.7p per share.

5:20 We think we're well positioned for the second half of the year, which we will demonstrate how and why as we go through the presentation. The right hand side of the slide has really the the summary of how we're how we think we have growth opportunities. And, I think I'll leave that for now, and I'll come back to them in detail further into the slide. So if we could go to page six, Martin, I'll I'll take on the the financial view. Thanks, Peter. As Peter said, we we presented for you the March 20 figures, which really we would see as being more normalized pre pandemic trading. Last year's figures were significantly hit, especially in the New Year, January, February, March. That period, a lot of high streets locked down. We were still open because we have essential services, but, obviously, footfall down and and trading was lower than we would normally expect.

6:15 So revenue for this period, 29,300,000. That's up 51% on prior year, which is actually 15% ahead of pre pandemic volumes. And when you look at that, that's the retail segment, which has performed very strongly, and the rest of the segments transitioning back through various levels of of where we've got back to in terms of normalized trading. There is slightly fewer stores in in the current six months than there were pre pandemic. An average would probably be a six a reduction of about 5%, about six stores. So the admin expenses have reduced. Our biggest cost as a business is our staff, and the staff cost the underlying staff cost will go forward with inflation. You know, we've we've put a pay review at the bottom end, probably about 12%.

7:05 On average, at the top, it's much lower, and therefore, the average increase in in wages in the business is probably more 8%. So we do have some cost inflation, but certainly the rest of the business, the costs are are very well controlled. Profit before tax, 2,200,000. So you can see that's that's pretty much got back to where we were pre pandemic at 2,300,000 profit. So whilst the business is transitioning back through

7:32 various levels through the segments, the profitability now has has come back really strongly as we come out of the pandemic restrictions. We'll go through the segments on the next slide in more detail, but certainly, the profitability back to where it was, EPS of 5.6p, which as Peter says, allowed us to to restart the dividend at 2.7p. So we go to slide seven. We'll give a lot more detail here about the different segments of the business. So foreign currency, as Peter said, the restrictions through through the travel industry significantly impacting us from the start of the COVID period. If you look at our report for our financial year to September 21, we explained that volumes for travel for our currency business were around 30% of pre pandemic levels.

8:24 If you roll forward to the end of March, we got to about 60% of daily volumes that we'd expect to see. And what we said as well in the r and s is actually if you go forward again to to where we are now, it's sort of April, May, we're seeing volumes about 85%. So travel's certainly starting to to really get some momentum. And people like TUI and other other airlines are all giving, you know, those sort of numbers in terms of bookings for the summer. So we think, you know, restrictions easing will give us that opportunity to get currency back to to to some level of higher volumes. And, obviously, with that, we'd expect to see strong profitability in the second half of the year. But when you look at currency in the market for currency, obviously, with that risk restriction in volume, what you've seen is a lot of people in the market widen the pricing.

9:16 We've we've always been a price disruptor in the currency space, so we've always tried to be the cheapest. So we've widened our margin like everyone else very slightly and still being the cheapest on the high streets. But because we start from such a a keen position on pricing, we've been able to move out and and make more of gross profit, if you like, is recovering faster than than the volumes that we're seeing. Pawnbroken. When you look at the the start of the pandemic, people had more cash. They weren't, you know, they weren't going out and about as much and spending money on other things, and therefore, loans got repaid. Our lending was 7.7. Our loan book at the end at the beginning of the pandemic. We've seen lending improve through the six months.

10:02 And when we get to the end of the period in March 22, the loan book is 7,500,000. So not quite back to where it was, but, you know, it's substantially back. But, obviously, there's a drag in terms of when you lend the money and and when you earn the interest. So the p and l income, if you like, will recover a bit slower than the loan book, and you can see there the gross profit for Pawnbroken, 3,700,000 for the six months. It was 4.7 for the March twenty six months. So it's still on its way back through. We'll send you a level of lending now that we're seeing day to day, the loan book is is recovered back to to normalized lending patterns. Jewelry retail. So this segment is the biggest segment we've invested in the last two years. So whilst the pandemic really restricted business for foreign currency and lending, jewelry retail has performed very well. We've invested heavily in retail stock, £6,000,000 of inventory gone in in the six months.

11:02 Of that, about two and a half million of that is premium watches. Premium watches have been a real success. They've grown revenue wise about a 176% in the period. There's a huge demand for Rolex and and other premium watches. We had about 30 stores stock in premium watches. We've increased that to circa 90 stores. So it's it's it's a rollout, if you like, of of more stores. And we've got the online business performing very strongly as well for watches. The online business has grown 48% in the six months, and that's contributing as well to that jewelry retail growth that is coming through. Purchase of precious metals. So this is gold buying. And what we saw during the pandemic is less people on the high street, less people needing to sort of sell the gold in normal circumstances because, you know, they're not necessarily thinking about spending money as we would normally do.

12:01 So what we saw is is volumes in September 21, around about 80% of pre pandemic levels. So as we've gone through the period, that's gradually got better. And as we've ended the

12:13 period, that's that's now the volume of the gold that we buy in is now back to to pre pandemic levels. The gold price is still relatively high compared to where it was in 2020. So therefore, revenues recovered a bit faster. But, certainly, the the run rate now is slightly better than it's been on average in the in the in the first half of the year. As Peter said, the other services, check cashing, Western Union, very stable products, and actually, check cashing has probably been in decline for a number of years. And therefore, the the services there are a 500,000, if you like, for the six months. Not expecting anything significant to change with those services going forward. So whilst revenue is is ahead of where we were pre pandemic, total gross profit is still slightly behind, and that's from that recovery, that progression, if you like, of the the three of the big segments working back through.

13:06 But where we end the period in a really good position with all all four key segments really as we enter the second half of the year. We move forward to the to the cash flow statement on page eight.

13:22 What we have is we've always had a very cash generative business. You know, we open a store, we pay the CapEx, And then after that, the the profit of the of the store comes through as cash. You know, there's there's no investment required other than improving sort of improving the loan book and and more stock if we move the stock, etcetera. So the the business has always been strongly cash generative. We've used that cash historically. I guess our strategy has been half of that cash that we generate out as dividend and half to to grow the estate and grow the working capital of the segments. But what we've done in this period is that we we've sort of step changed the the stock, the retail inventory. So you can see a substantial increase in inventory, and and that's really working for us in terms of the retail sales that are coming through.

14:11 The new store rollout has been slowed down during COVID, and we've opened two new stores, and we've acquired a business in this six months as we've sort of restarted that growth strategy. We bought a business in Boston. Of that 900,000 that was paid for the business, about 400,000 of that is actually for retail stock that that business held. So you can see that we've been very cash generative. We've had a lot of cash during the COVID pandemic, and we've reinvested some of that cash into stock as we come out of the pandemic. So because we're cash generative, because the profitability has come back, 2.7p dividend and, you know, that long term strategy of of being able to grow the business with half approximately half of that profit that we generate, neither half reinvested for growth.

15:05 So we move on to slide nine, which is the balance sheet. We started the the the pandemic with a very strong balance sheet, and we came out of the pandemic with a very strong balance sheet. We've got very, very strong asset classes. You look at the inventory in our balance sheet. Whilst, you know, we've we've got premium watches and new jewelry in there, we've also got pre owned jewelry, which we actually hold at less than its intrinsic value. And even the the new jewelry is backed at least 80%, if not more, by its intrinsic value as well. We can very easily turn that stock back into gold if we wanted to reduce our stock. The trade and the receivables is the pawnbroken lending. And, we have very prudent lending policies, and the liquidity of the asset is very strong.

15:56 The cash in the balance sheet includes the currency that we sell to customers through the stores. So the 10,700,000, 5,900,000 of that in March 22 is currency in the till. So what we what happens with currency is, obviously, it's very seasonal. And as a business, we probably hold 5,000,000 on average in the winter months, and that 5,000,000 grows to 9 to 10,000,000 in the summer months as the footfall and travel industry is up for for the key period. And what we have is we have a 10,000,000 RCF facility currently, and we use that facility to increase that currency in the till across that 5 to 10,000,000 swing. So we lend the money, put it in the till effectively in the winter, pay that back. So at the period end, we'd we had borrowed 1,500,000, which net of of amortized cost is actually 1,400,000.

16:51 And you'll see that grow through the summer and then come back through the winter. We have very strong balance sheet, 37,600,000, and well well positioned. The pandemic has not hurt the business in terms of creating a legacy debt or creating a requirement to sort of rebuild any damaged balance sheets. So we're in a very strong position to kick forward with our growth strategy.

17:16 Okay. Thanks, Martin. If we could move to page through slide page 10 so you have a look at the, sorry, window in in closer detail. Page 11, is a summary of the four growth strategies that we have. We underpin that with well invested systems. That's the IT system. That's the processes. That's the the control that we have in the systems and controls through our internal audit and compliance and risk departments. The marketing and the brand position, the sports sponsorship that we have done over the years, the high street locations that we have, and how we look on those high streets. The people, the ethos is the culture that we have within the business, that desire to give great customer service, that underpins the, you know, the development of those staff. That's an ongoing job of how we try and improve that day in, day out.

18:16 And then we have our our position on ESG, and I'll come back to that later in the deck. So if we go to page 12, our strategies haven't changed. So our strategies have been very much the same since coming to market and and before. So we want to drive growth from our core estate. What does that mean? It means we wanna do everything a little bit better. So we we look at our foreign currency. We think how can we how can we manage this a little bit better. So we, you know, we manage the the rates in different towns to make sure that we're very competitive. We try and influence our repeat customer rates. And then that bulk of customers that we serve for foreign currency, we want to cross sell our other services to them.

19:04 Purchase precious metals, that's that cross sell cross selling conversation. So if you have, unwanted jewelry that you don't wear in a jewelry box, then we want to make you aware when you're buying your currency from us about that service when you may maybe never thought of doing selling that jewelry for cash. Jewelry retailing, lots of investment in stock level, lots of investment in replenishment levels, skill levels, how we look and feel. And that is a a journey that we've we've got some self help and some momentum taking us into, if you like, the headwinds that people are seeing with the rising cost of living. We've got some momentum already that should see that does have the ability to grow going forward.

19:53 Pawnbroking, we want to maintain our prudent lending, but there's opportunities for us to lend a little bit smarter. We're getting better at identifying watches, which watches if we are left with, we can sell very quickly, which watches we're highly unlikely to be left with. And it's the same for other jewelry products. What else is there within the existing core estate? There's the opportunity to relocate. So on the picture, you've got Carlisle. If you know Carlisle, we were in a sort of Bathwater location. We've now taken the old High Samuels unit on the High Street opposite Smiths and the post office who sell foreign currency. So the locations change. The mix of services will change, and we have been building up our jewelry retailing and foreign currency in this higher profile location.

20:47 Since the the period ends, we have relocated Durham and Newcastle. And Newcastle said it's on the the front of the presentation. We've got three stores identified to improve the jewelry offering. One of those is one of the stores that we acquired from the money shop. In in layout, it still looks like a money shop. It needs to be converted, and that's in plan to do. And we have a very flexible lease portfolio. What I'm what happens there is, and I'll cover up on the questions that I've seen, is that if our leases come to an end and let's say the rent is one of the smaller rents at 11 or £12,000, if we could get a 10% reduction in the rent because there are still some independents still wanting to take that size of store, would lose that in legal fees in doing a new lease.

21:42 So what we do is we leave the the the property goes out of lease. We the landlord's relatively happy because they're getting a higher sum than than they would get if they renegotiated, but we have full flexibility should that location not suit our eye going forward because it's got isolated or the town center has shifted. So opportunities to get better and drive growth from our core estate. And obviously, the relocations that we've done, the improved performance, as we see in 2023, we'll have a full year of the benefits of the relocations that we processed through this year. Moving on to slide 13. We think we've got quite a robust business model. We can replicate it in other towns.

22:29 There are, statistically, 300 towns with 30,000 people or more residing in those towns, of which London counts as one. So there's ample opportunity for us to grow our estate. We have some very successful stores in locations that have only got twelve, fifteen thousand people. So we think that there's lots of options for us to to grow the estate. The recent change that we have made is that we have decided to come to the South and the Southeast, and we planted a flag in Chatham, and we will we will roll out of of Kent. By making that strategic decision to expand the geographic area of our stores, which is now really national.

23:19 We were approached, were we interested in buying a business in Boston near Bournemouth? If we hadn't made that strategic decision, like previously, two, three years ago, we would have said, no. We're not interested. That doesn't catch our eye. Now we've made this, like, decision to have a national approach. It caught our eye. It was a very good business. We were very pleased to buy it. And that's one of the three additional stores that we have opened in the last in that period, and we would expect to have another five in the second half of the year. We've got a good pipeline to continue store opening at a rate of between eight and twelve annually on a look forward basis. I'm aware some of you might not know our model. It has been in previous presentations.

24:10 But if we have a new store, it costs around £250,000, and that's roughly 50% of the CapEx of the shop fit, etcetera, and 50% into the working capital. So working capital to cover some early losses, to cover the growth of the loan book, to put the currency, the sterling in the tills, and obviously, the jewel stock. In terms of the performance of a new store, the model, is roughly a 20 to £30,000 loss in year one, and that's primarily the costs incurred before we open the store. So, obviously, we've got the rental costs before we open. We've got the staff recruited before we open. It gen passes into a $1,520,000 pound profit in year two and then a £60,000 profit in year three.

25:02 The cohort that we opened about four years ago running into COVID, the worst store was performing to that model. The rest of the stores were performing better than that, and obviously, that's what we wish to do. But that is an average model to give you an indication of of what a new store would look like. In the bottom corner, that's our new store in the Argyle Arcade in Glasgow. That's the jewelry quarter of Glasgow in Scotland. We go to slide 14. Jewelry retailing and the jewelry retailing website have had great progress, growth of 48% period on period. You can see the the growth chart there in the top right hand corner and a very nice picture of a Rolex watch.

25:49 It's now 15% of our total jewelry revenue, up from 9% pre pandemic. We want to push our website sales because it gives us that national approach now, the ability to to sell across The UK. We'll be maintaining our momentum with the investments in SEO, affiliate links, our pay per click activities. We're continually increasing the stock that's available online, which also acts as a catalog for our, store estate. And very recently, about three weeks ago, we had a phenomenal week in our Croydon store for people who had been sorry. Our Chatham store where people have been viewing products online, and seven people wanted to buy a watch in our Chatham store that week. So it was a very good week.

26:48 It's a separate business unit. It's a profitable business unit, so high expectations for future growth for our retail website as we move forward. We're refreshing because of the success of our jewelry retailing website. We're investing in our currency website, our pawnbroking website, and our gold buying website so that we can focus on them individually separated out of the general RAMSDENS for cash website. So that's our online activities. Should see future growth. And then the last one for growth on slide 15, the capitalization on the consolidation opportunity. So there's a picture of GeoPayne in Boscombe. It'd been there for about seventy years. It's third generation. It's a good business.

27:39 And I've talked about it previously, and and Martin shared the purchase price. Opportunities will come up. We're well networked in the industry, so we hope that we'll be have the opportunity to buy other pawn brokers as we move forward. But we're open minded. We have converted jewelry stores to our model and bought in stores of independent jewelers. Travel agents have closed doors, and jewelers have closed doors. So I think there's there's opportunities here for us to to to move forward. And we have the the the the cash and the balance sheet to, to acquire businesses if opportunities exist. On page 16, we've got some details about our ESG policies.

28:29 You know, we're we're a low energy use business. We have a sustainable offering, if you like. People take something that's second hand and use that asset to borrow against it. If if the loan is is not repaid, we will recycle that jewelry either as a gold item for future manufacturing or retail in the windows. We recycle diamonds into new jewelry. We'll recycle unwanted jewelry. So one customer doesn't want it, another customer may, and that's part of our retail offering. Within our communities and our staff, we're very conscious that we should give back to our community, and we do support various issues. We've got a good think green campaign going through the stores at the moment, so we'll recycle and reuse wherever possible, and minimize our energy use.

29:19 Our staff relations are, very good. We get good engagement with our engagement surveys. The scores, if you like, the feedback that we get from our staff is very positive. We have high repeat rates with our customers. We have a good, excellent not good and excellent trust piling trust pilot rating at 4.8 out of five. We have very few complaints. We support our customers if they're struggling financially and believe in doing everything right. When we get into our governance, you know, not only are we aim listed, we are FCA authorized for pawnbroking and credit broking. We are HMRC approved for our money service business activities.

30:06 We're a QCA member, and I'm the current president of the National Pawnbroking Association. So within the business, you know, we've got high regulations, good systems and controls. We have a a strong board to support and challenge Martin and I, and we have a very experienced internal audit and compliance and risk team. So we we think we have a responsible attitude to our ESG position, and we'll continue that. And, you know, the investment company platform allows us to have greater shareholder engagement. In summary, strong start to the half of the year, 2,200,000 profit before tax. Those that follow our financials historically, we would make 2.2 we'd be half of our profit sorry, third of our profit in the first half of the year and two thirds of our profit in the summer month.

31:04 So 2,200,000 in the first half, you would think that should be about 6,600,000, for the year. However, excuse me, however, the the run rate should be better in the second year for the income, but we have got higher costs, as Martin explained, you know, an 8% increase in our, in our peer review, slight increase in our energy bills, etcetera, but the rest of the cost is well controlled. So that's the look forward position. Proven business model. We said that we would get through COVID. We've got through COVID. We haven't taken on any extra debt. We have a still have a strong balance sheet. We have good assets on that balance sheet.

31:51 We're confident about our position going forward. Hopefully, that's displayed in the interim dividend awarded. We have a strong pipeline of new stores, and we have growth opportunities. So hopefully, we can continue our journey and pick up where we left off in February 'twenty and move it forward through 'twenty three, 'twenty four, 'twenty five. There are some further slides in the back, which provides further details. I don't propose to covering that off, so I'm I'm happy to go through, some of the questions that have been asked. Peter, Martin, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just using the Q and A tab situated in the top right corner of your screen. Just for the company to take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q and A can be accessed via investor dashboard.

32:46 Peter Martin received a number of pre submitted questions from investors and I want to start off the q and a session with these. The first one reads as follows. What is the cost and payback of a new store fit out? Well, hopefully, I said I've covered that. The CapEx is around, well, the CapEx and the working capital required is about 250,000. And after three years where we have some level of maturity, £60,000 plus is the the store profit contribution. Perfect. Thank you very much. Moving on. What size do you see your store estate becoming over the medium term? I got asked that by the press this week, and my first target number is is 200 stores, and we'll probably achieve that in four years, something of that order.

33:32 Thank you very much. We have another question here that asks, how was the cost how has the cost of living crisis impacted your business both in terms of operating costs and trading? So Martin's, you know, covered off if, like, the operating cost, the the the cost in, electricity bills and the the the wage increases that we have put in to reward our staff. The the we have a robust business model, diversified business model. So you look forward and think if there's turmoil in the world, the gold price is usually high. That then supports pawnbroking and our purchase of precious metals. So those two segments of our business should have, if you like, tailwinds with a high gold price.

34:23 If you then move across to our foreign currency, I think that the, you know, the foreign currency is used oh, sorry. The holiday that creates the foreign currency need is usually the last discretion we spend that customers give up. And when we come out of two years of being unable to go on holiday, I think that people this year are desperate to go. You know, Martin again alluded to 80% issue of capacity of past prepandemic capacity. People should travel this summer. I think that demand will grow into next year, so I don't necessarily see the the rising living cost impacting that. And then into jewelry retailing, we have a mix of products. We're a value for money proposition, so people might choose us over more expensive goods with other jewelers if they still want to buy jewelry.

35:17 But I'm encouraged that in the last you know, in recent weeks and months, our jewelry has remained robust. And if you think of the COVID times, and I think The UK consumer saved up about, I don't know, 220,000,000,000, and they've spent a bit of that in in in recent months. But I think that our red report, there's about a 160,000,000,000 of savings there saved up. So I think that people still have some money to spend, and we're there to support people who maybe, suffer some, gaps in their cash flows or short term cash need without pawnbroking service, which provides a solution. So I'm I'm, I I don't think that the headwinds are going to be a a significant barrier to our future growth. I think either either part of of that conversation really is that as a business, you know, being so diversified, we've come through COVID a lot stronger than than some people that who particularly would just be in one of the set segments that we're in. And and equally, that means that if there are headwinds, we should be able to to see them off better than than people, particularly just in the retail segments. The whole value for money proposition will mean that we will we will trade through very strongly. I think the balance of the businesses, as Peter says, things will go better in retail and and FX in certain times, and things will go better in either segments of the time. So we've we've got a model that really is quite quite a

36:48 stable model. That diversification will will always see us do well in whether the the economy is doing well or not. Perfect. That's great. The next question reads as follows. How much more investment, if any, is planned in inventory? So Peter's talked about, you know, the relocations that have worked really well in Newcastle. The the on the front is is day and night really from where it was before, and that's that's a much bigger window. And that's that with that comes the inventory investment. I think we still got opportunities that the stock we put in, we put some of that stock in quite late in the six months. So assuming that turns very quickly, then we would put more in. But I think, you know, we we've got a lot of stock now. And and if if it doesn't increase, if retail if there are headwinds, then we will probably put less into into retail. But you'd expect to see probably a million, maybe even 2,000,000 depending on the number of new stores in the second half and, you know, how retail trades through the summer, really.

37:51 That's great. Thank you, Martin. We have a question that relates to rent reductions and asks, what level of rent reductions have you achieved in the last twelve months at lease expiry slash rent rev rent review dates? Okay. You know, we we have seen all sorts, if I'm honest. I think that I talked about if it's a low value rent, so $1,012,000 pounds, there's often competition for the for those units from independents who might wanna start a business. So I said if if there's only a 10% saving to be had, it's not worth taking it because the legal costs involved as long as we can get flexibility. When you have a higher rental unit, $3,040,000 pounds, and you can take a a 10% reduction, then, you know, it's worth taking, and and we we do that, we, you know, progress and enter into a new lease.

38:46 And then there's a mix. So, you know, there's some stores that we have seen 60% reductions in rent, there and are some stores that I've resisted rent increases, believe it or not. So there's a quite a good mix, but probably a a 10% reduction is the average. Perfect. Thanks very much. The next question has a few parts to it. I know, Peter, you might have touched on one of the parts, but I'll I'll read it anyway. How many store openings a year on average you planning over the next three to five years? What's the average CapEx and investment in working capital per store opening? And how long on average before a new store reaches EBIT breakeven? Oh, yeah. So so well, new store openings eight to 12 over the next three to five years. Average CapEx well, I say it's roughly fifty fifty. So average CapEx, one two five. Average working capital, one two five.

39:43 And after three years, it's $60 profit for the store pre head office boss. Thank you very much. That's great. Turning to the next question. How has the competitive landscape for the type of foreign exchange services RAMSDENS changed since March 2020? Okay. So well, there's there's there's the two big factors are, one, there are less competitors. So travel agents have closed stores. Thomas Cook slash Hayes, Chewy of of of closing about a 170 stores. That's public information. And the sole view of the change businesses are offering the customer a worse price and a higher deal. So we're able to be more we're still able to be, you know, highly competitive, but wide now margins. So favorable is probably, I would say, the competitive landscape since 2020.

40:42 Perfect. Thanks very much. Moving on. If provision of foreign exchange moves more to prepaid travel cards, how would this affect the margin RAMSDEN makes on foreign exchange? Yeah. It's a question we get asked quite frequently. Prepaid cards are not normal. And not sorry. Not not new. And they're not that they're not that common, if I'm honest. 9% of the volume of of card spend is on a prepaid card. Most of it is still on a customer's debit card. Our average transaction value has increased, from 415 to £425 when we sell currency to a customer. So there's no there's no immediate threat to that On a margin basis, we would expect to be able to, you know, maintain margins.

41:33 It's a card scheme generally has higher cost base because, obviously, we still need our store estate for all of the services. But at this moment in time, we're not seeing a shift to card. So the the the travel card generally is replaced, the traveler's check, and people, you know, who use that service Typically, a lot of people sell a travel card at the same rate as they sell cash, but the infrastructure cost is high. There's obviously disruptors like Revolut. I think these are the the questions you can see that I mentioned those type of products. Obviously, they they are for a frequent traveler of people to use these products, but certainly, the the the too good to be true rates, I guess. These businesses are losing money, eventually, they've already started to to charge more commercial rates. So we're in that space, and we have a travel card which we expect to to relaunch this year.

42:28 But, certainly, the cash spend from people traveling is increasing, albeit we do appreciate that people do spend in cards and debit card as much as a travel card is probably what we see. Perfect. Thank you very much. And we've got final pre submitted question here, which asks, how big can the online jewelry business get without cannibalizing in store jewelry sales? And how big do you think the online jewelry business will be in five years' time? All for a crystal ball. We I I don't see our online growth cannibalizing our store estate. Our store estate covers about 25% of The UK population. Well, actually, doesn't cover. It it it it's close to 25% of The UK population.

43:14 So we have a lot of The UK population that is not near RAMSDENS, so massive opportunity for our online business to grow. Our online sales growth our online sales are still very, very small. I read a report that the Signet Group's international sales, which I believe is The UK, is well over a 100,000,000. And if you look at our our chart, it's about 2,000,000. So there's a massive opportunity for our for growing our online jewelry business. I know that my team have got a set of challenging targets for them to hit prior to five years, but where we are in five years is a little bit into the future for me to hazard a number or guess a number.

44:00 Guess the the speed of opening stores and the speed of the growth online will will determine the mix of how much the the the retail online as a percentage. Obviously, it's 15% now. The stores are growing. The online is growing. And I guess our focus is on just growing both of those aspects rather than necessary targeting a a mix in particular. Thank you very much for providing some color there. That actually concludes the pre submitted questions. But as you can see, we've received a number of questions throughout today's presentation, and thank you to all the investors for submitting those. Could I just ask you to read out those questions and give responses where it is appropriate to do so? And then I'll pick up from you both at the end. Okay. So Paul has asked, how do you view how do you view the evolution of the likes of Revolut as a risk to the FX business? Well, Martin, you know, commented on that one.

44:50 Revolut have done fantastically well in growing customer numbers, I don't believe they're making any money. And to make money, they're gonna have to alter their rates. We have about 830,000 previous foreign currency customers who will hopefully use us again, and we will be able to sell a card to those or offer them a card later this year that is multicurrency, app based, and will have most of the features of a Revolut card. Second question from Andy. What do you see as the biggest opportunity, and how do you view acquisitions versus organic expansion? Well, I think we can improve what we do in the store estate, and I think we can grow our store estate.

45:42 Acquisitions versus organic, I think that's the return on capital. So if if an acquisition is too expensive, I'll walk away, and I'll build it through Greenfield Estate. So it depends on the price. Obviously, the price that we paid for Boscombe was 909,000, including this Jewish stock, and we thought that was worth it. Yeah. It just it just you know, it does depend on that return on capital question, which we do challenge ourselves when we want to buy a business or open a new store. So but I think I think we've got growth in in all of the, like, the three self help categories of improving what we do in store, improving what we do online, and we have opportunities to grow the the core estate.

46:30 Jeff has asked, how do you expect contactless payment to affect foreign currency demand? In Europe, I'm finding contactless payment is expected in many transactions and is easier and cheaper than taking cash. Well, the the the currently, travelers are taking more cash than they did previously from ourselves, whether that's a bit of inflationary, whether that's just that confidence, or whether that's that ability to budget. Lots of people like to take currency on holiday because it helps with their budgeting. I think it's a challenge that we've had historically. I think COVID has changed people's view of using contactless payments in The UK where they're very confident that the corner shop takes it and how it works.

47:19 But I look at the, you know, some of the holiday destinations, which is in Europe, and I think they they much prefer cash. So, no. I think it it is a a challenge, one that we have our eye open on. It's why we're developing a multicurrency card, but I think that, cash will be allowed cash will be around for a long time to come. Jeff's asked another question. For jewelry, are RAMSDENS doing well due to a strong market or increasing market share? I'm surprised to see this going so well considering all the other rises in living costs. I so I think it's self help. I think when if you go back to slide page seven, you know, Martin explained that it was a bit progressive.

48:06 So whilst our revenue was, what, 7,000,000 pre pandemic, 8,000,000 in the in the pandemic, and then 13,000,000 in the last six months. The 8,000,000 is understated really because of the the the the suffering of the high streets and the closures and not many people on the high streets. You know, it would have been a lot more linear, I suspect, had that been, if you like, the same trading conditions as we've had in the last six months. So self help to grow our retailing. I think we, therefore, are increasing market share. We're working very hard to educate customers that we sell new and secondhand jewelry and our investment into watches, you know, 176% year on year growth in watches, and we're still know, you we're only just going up to 90 stores, where it's available for customers to see it as well as online. So I think we've got some more more growth to come in jewelry.

49:09 Pete and Martin, thank you very much for being so generous with your time there. I think you managed to get through all the questions. And of course, the company will review all questions submitted today and will publish those responses on the Investor Me company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Peter, could I just ask you for a few closing comments? Yeah. I I think that let's say that the summary for me is in February 20, we were in a good position. We had momentum. COVID has created a pause. Our balance sheet as of today is slightly stronger than it was in in February 2020. The the opportunities, I think, are wider and more than we had in February 20 because of of of what's gone in the intervening period. So we're very optimistic of future future growth or improved performance.

49:59 That's the how I would wish to leave the message. Thanks very much, Peter. Martin, thanks once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few minutes to complete. I'm sure it'll be greatly valued by the company. On behalf of the management team of RAMSDENS HOLDINGS PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.