Ramsdens Holdings (LSE:RFX) — Investor Presentation

0:01 Good afternoon, and welcome to the RAMSDENS HOLDINGS PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time using the Q and A tab situated on the right hand corner of your screen. To click Q and A, scroll to the bottom, type your question and press send. Company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and publish responses where appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Peter Kenyon, CEO, Martin Glyburn, CFO. Good afternoon.

0:32 Afternoon. Thank you. Re reiterate that, that welcome. So for those that don't know RAMSDENS, what I'll do is quickly run through what we actually do. So we have foreign currency exchange. 99 something of our income is selling holiday money to travelers. So if you're going holiday to Benidorm or Dubai, we will sell you euros or drums, for that holiday and buy them off you if you come back with any. So that's foreign currency. Pawnbroking is a small sum short term loan. We will lend from £10 to unlimited, really, if you've got the asset that we can lend against it. So our highest loan currently is about a £100,000 against a very nice watch. We serve all sections of community, for all different purposes.

1:28 We'll come back to form broking on an outlook. Purchase of precious metals is really if we buy unwanted gold from a customer that we do not think is retailable and we melt it down for its intrinsic value, that is where it goes, if, like, in our accounting lines. Then you have jewelry retailing. So you can see to the right hand side of the screen, there's a picture there of our Eldon Square Newcastle store. Looks like a retailer where we retail new jewelry that we bought from wholesalers, premium watches that we might have bought from wholesalers or the public, ex pledge items. If that's the jewelry retailing offering that we've got. So new and secondhand and premium watches.

2:16 And then we do a couple of other services. We offer Western Union transfers, and we offer check cashing. Good, reliable, repeat business, but not services that we really push. We don't do high cost short term credits, so we've not been affected by the FCA's crackdown into that market. In terms of where we are now, basically, we would say it's an excellent recovery from the from the pandemic. We thought we would get through this. We knew we had a a strong balance sheet. We knew we had a diversified model, and income streams would come back at different times. So we were confident of the future. We didn't have to borrow to get through all the, if like, unrest of COVID or the impact of COVID, and we returned to profitability. So profitability is 8,300,000.

3:07 Our net assets are just, just shy of 42,000,000. We've got cash on the balance sheet, and we, we're recommending a final dividend of 6.3, making nine p for the year, which is our higher highest ever dividend. Bottom left of the screen is really our journey from AIM. So you can start to see that we were making progress through to 2020. We've got this hiatus and drop, which most companies have, but it's still profitable. And then, obviously, we'll bounce back now in f y twenty two. We put a few notes on our current trading. So we've had a good quarter for retail, where our gross profit is up 15% year on year. We've had a good, a steady quarter really for foreign currency. So we're about 70% last year and through the summer, and we're about 70% of volumes into the first quarter, of this financial year.

4:02 April is probably the first real event that'll test where will FX get to in the summer, but you've got come you know, positive statements coming out of Jet two, EasyJet, Chewy on holiday bookings for for this summer. Pawnbroken loan book has continued to grow. It's now at 9,100,000. That's driven off, you know, people's need for short term lending, and the fact that there's very little supply if you want to borrow a 100 or £200. You know, where do you go to now with the demise of home collected credit, or payday lending?

4:44 Moving on to precious metals, the weight that we buy is, if you like, in line with our long run averages and in line with our expectation. Following the year end, we've opened a store in Bootle, the Liverpool. We've opened in Basildon, and Bradford pre Christmas, and we've opened Croydon just this week. So that's four stores taking us to a 158, and I'll come back to reflect our plans for for new stores later. Throughout the deck, you'll see that we've shared a column, which is the unaudited results for the twelve months to March 20. That's really, if you like, giving you a pre COVID level of performance. You've got f y twenty one, which is obviously heavily impacted by the COVID and f y twenty two where you've got the first half of the year where we're more coming out of it in the second half of the year, which has been more normalized.

5:40 And, Martin will run through the some of the financials. Thanks, Peter. As Peter says, you know, f y twenty one, the last period was significantly impacted by COVID, and therefore, really, comparison to the the twelve months to March 20 is actually a better yardstick really for how we've been doing. So revenue in in FY '22, 66,100,000. That's 63% up. But, actually, if you look at the twelve months to '20, it's 11% up. So the various segments have been recovering during the period at different rates, but we do now have revenue ahead of where we were before the pandemic. The gross profit growth is only 3%. That's a a reflection of currency coming back a bit slower, which is a high high margin product, and things like retail growing much faster, which is obviously a a cost of sale of that of that product is much higher.

6:34 Administrative expenses in the business has grown significantly in the year, but actually last year's figure has some benefit from furlough. So we had 1,500,000 of furlough grants, which netted out of the previous year's admin expenses. So, again, if you go back to pre pandemic, the admin expenses are only 4% higher, that's a mix, really. So where we've seen pressure, inflationary pressure, really, is into the staff cost. We've given a strong peer review in the prior year of around 8%, and we've just given another peer review on average of about 8% for the current period. So we've seen an increase in staff costs. The rest of the cost of business are really well established and controlled rental costs, for instance, are actually very consistent. If anything, we make a small saving on some lease renewals.

7:24 So what you see then is from that growth, that recovery of the gross profit back through the p and l, you see the return the strong return of profitability. Profit now 8,300,000, which is actually ahead of the underlying profit for March 20. If you remember in March 20, we we explained we saw some we made a one off sale of some old stock, which actually generated 750,000 of profit in that year. So, therefore, you know, as the the segments have recovered, the profitability has really returned quite quickly. If we look at, page seven, and we actually drill into that into a little more detail. So if you look at foreign currency first, as we said at the interims, foreign currency at the start of this period was really quite still quite small in terms of its recovery, so 30% of pre pandemic volume.

8:19 As we've moved through into the New Year and into post Easter, that stepped up to around 70%, which has been really maintained through the summer months. And that's through a lot of still a lot of disruption through airports and travel. And therefore, we're very confident, you know, there'll be further recovery in that number. If you look at our q one trade in the 70% is sort of stuck in terms of the q one update. But currency, again, we mentioned at the interim, the the market for currency has widened its pricing. So we were always very, very price competitive. We're still very competitive on price, but we've been able to earn a little bit more on each transaction. And therefore, whilst volumes are still not back to pre pandemic levels, that you can see the gross profit here has recovered faster than the volume, if you like. So there's 12,700,000 of gross profit from foreign currency in the year, and it was 13.1 pre pandemic.

9:17 So but very close to full recovery in terms of commission.

9:21 Pawnbroken, as Peter said, the loan book is in a very strong position. Pre pandemic, it was around 7,700,000. What we've seen is obviously that the loan book grow, but that was being during the period, and therefore, there's a lag on the income that that generates. So gross profit for the twelve months, 7,500,000. That's still quite a way below the pre pandemic gross profit of 9,000,000. But as that loan book now is there for the full year, you'd expect to see profitability rebound into the current year. As Peter said, with Bornbroken, there's a continued demand post period end, and the loan book has increased again to $9,100,000 at the end of Q1. Jewelry retail has been a significant, step forward for the business. You've seen that over the number of years. If you look at revenue here, 27,100,000, and that's more than double it was pre pandemic at twelve point six.

10:19 So we've seen significant progress over the last two years. And gross profit running a little bit slower. So this is the mix of what we've been selling. So premium watches, for instance, are lower margin but higher ticket. And therefore, the the mix of the margin is reducing, but that's not due to pressure on the margin. It's more to do with the mix of what we've been selling. So as a business, we're probably now around about a third of our stock is premium watches, a third of our retail is pre owned jewelry, and a third is is new wholesale jewelry as well. So that's been a real success for us, and we've invested very heavily into this segment whilst the pandemic has impacted the other segments more significantly. So what we've seen is 7,200,000 of new stock going to the the network in the last twelve months.

11:09 And we've actually also relocated some stores into better locations for retail, and that's part of our investment as well. The website forms parts forms part of this segment, and the website growth, again, has been very, very strong for jewelry retail. Purchase of precious metals. So this is buying and selling gold. This started the period at the in October 21. A little bit subdued, the footfall on the high street was lower, and the Omnicom variance sort of saw that through to the new year. Volumes, though, in 2022, been very consistent and back to more long run averages. And therefore, h two has been very strong, and we've seen that continue into q one in the current financial year as well.

11:55 As Peter said, the other services are very, very mature services, which, you know, slightly growth in in Western Union, a slight fall back into check cash in as a quite immature service, but very good strong income which supports the profitability of the business.

12:15 Jumping forward onto the cash flow statement. The business has been significantly cash generative, but we've reinvested all of that cash this year into growing the retail segment. So as I just mentioned, 7,200,000 of of stock to to drive that growth in in the revenue for for retail. We've also seen a recovery in the loan book. So the trading of the receivables cash, 2,600,000. That's that recovery in lending and the interest growth as well in the book as the the lending has recovered. But still strong cash operating net cash flow from operating activities. But the going forward, you'd expect to see a much more lower level of working capital required to continue that growth given the the the one off step forward in inventory in in this twelve months.

13:05 We did purchase a a business as well in the last twelve months. That was a business in Boscombe, an independent jeweler and pawnbroker. We paid no 900,000 for that, and there's around about 400,000 of stock that we acquired as part of that business as well. We restarted the dividend following COVID. So you can see then the cash for 1,200,000 paid in the period, and we've declared a record dividend for for the year in terms of from being on the market in 2017. The full year dividend now 9p. This is a 43% payout and is aligned to our strategy of roughly half of our profit, if you like, paid out as as reward for dividends and the other half reinvested for growth.

13:52 We see the tax rate increasing over the next two years. We'll actually increase that payout percentage and still allow us to grow the dividend into the future. See, the group always looks at the opportunity in terms of dividend payouts and the the cash required for growth. Jumping forward to the balance sheet. So the business has always had a very, very strong balance sheet. COVID obviously slowed down the progression, the growth of the business, but actually didn't damage the balance sheet in any shape or form. We didn't have to take, for instance, any seat bills loans. We just obviously had to pause some of that growth activity, which has been restarted in earnest. So what you see is actually that the inventory is the big shift in the balance sheet, which we've mentioned.

14:42 The trade on the receivables is upon broken lending, which is asset backed and significantly, you know, very, very strong asset class. And we've got a lot of cash in the business. Now the cash in the balance sheet does include the currency in the tills. It's around about 10,000,000 as of September 22. So therefore, you know, that's not free cash in the sense that we can for instance, I know one of the questions was was asking around do we purchase our own shares. But what we do in terms of the currency, it's around about 4 to 5,000,000 that we required to run the currency business in the winter. It's around about 10,000,000 in the summer. And therefore, we draw the difference through the summer months by our RCF.

15:30 So that's why you'll see that we have 6,500,000 of RCF drawn at the year end, just supporting that increased currency in the currency season of September. So very strong balance sheet, as Peter says, nearly 42,000,000, and we're really well positioned to continue the growth. Thanks, Martin. In terms of our growth strategy going forward, there are no plans to change what we're already doing. You know, we feel that what we're already doing is working, and so it's how we incrementally grow from here. We've got it in in five focused areas. So going through those in in turn, if we look at the core estate to start with, it really is taking the income streams and say, how do we improve?

16:23 So how do we improve the foreign currency? How do we manage the margin very closely to maximize that across both sales and purchases? How do we stay in touch with our customer base so that we can get them to to come back and make sure that they they get their euros this year from us and next year from us, etcetera?

16:44 And how do we slowly enhance our market share or quickly enhance our market share? The the the the people spend in a particular town on foreign currency, how do we how do we garner that to be as much as we possibly can? And then with the launch of a new multicurrency card later in 2023, How do we get part of that spend whilst they're abroad while when the customer might use their debit card, from their main bank? So good activities, and it's all about the conversation that we have with our customers. One of the things in the business and the operational challenges that we have had, if you like, post COVID, we're not immune despite some of the excellent feedback we get from our staff. We're not immune from the resourcing issues where people have made lifestyle choices to work from home, seek a different career within in NHS or whatever that might be.

17:39 And we've got a raft of new staff. Now pre COVID, the number of staff that we had that had less than one year's experience was about 14% of the workforce in store. That's actually now about 13% of the workforce

17:54 in store. At a senior level, we've got very good retention of the staff. So it's really, if you like, at the in the stores where we've lost a bit of experience. But the systems are very good. The induction training is very good, which is why we've delivered the results that we have. What we need to do is work with the inexperienced staff, make sure that they can have better foreign currency conversations so that we can cross sell our other services. If you look at retail staff training and the knowledge of our stock and the knowledge of jewelry helps our jewelry performance. So that's been a big effort over recent years. And, obviously, with new staff, we have to go again with that. So we have that investment in our staff development.

18:41 The displays have improved immeasurably over recent years.

18:46 The appeal to a wide variety of customers, you know, the diamonds, the watches, the, you know, the silver jewelry as well. The whole the whole stock inventory is working for us. Moving into pawnbroking, again, how do we, give that experience to our staff so they know when they're lending against something, what can we sell it for? And if you know that you can it's in perfect condition, you can sell it quickly. Or you've got a customer that is immotively attached to that jewelry, you can lend a little bit more and be cautious if the jewelry needs to be repaired, etcetera, and rely on the intrinsic value. So we've got areas that we can progress here, and how do we grow the awareness of our gold buying activities

19:35 amongst our customer base. Those are also like self help, self improvement, relocations and refurbishments. We've got a nice picture of our store that relocated late in the year. I was speaking to Caroline, the manager, just before Christmas because it's December retail was very good. And she said customers are popping in saying, I didn't know you were still here. You know, as the crow flies, this store has moved about a 150 yards, but it's moved inside the shopping center. So we've moved some stores. We've got more stores to to move, more stores to couple stores to refurbish and give them improved jewelry windows because we've the space to do that. And in the appendices within the lease, you can see that we've got a flexible lease portfolio.

20:21 So as leases mature or if a town moves, we can relocate a store, and we're not frightened to do that.

20:29 So that's driving growth from what we're already doing. Moving on, we have what we would determine as a a repeatable model. So why don't we expand the store estate? Our progress in in f y twenty two is a little bit slower than we wanted, but that's actually resulted in a fast start into f y twenty three. So following the year end, I mentioned earlier, we've opened in Bootle, Basildon, Croydon, and a second store in Bradford. We've got Maidstone, currently going through a shop fit. I have four of the stores, progressing through legals, and we've got two stores with new heads of terms recently agreed with lawyers to be instructed. So we've got a good pipeline already ready for f y twenty three and the start of f y twenty four. But the intention is to open 12 stores in this financial year, 10 stores in in the next financial year, and 10 stores in the year to financial, to 25.

21:33 Now we will go quicker than that if we're making great progress, and, obviously, we can go slower than that if things economically become tough, but that's the where we're setting out our expansion plans at

21:45 the moment. In terms of geographic spread of that, We've recently had a rejig of our areas, if you like, the operational areas within the business, created capacity within three or four of the area managers so they can take two or three stores across the Yorkshire and the Northwest and, obviously, especially in the South and Southeast. So we've got, good growth to ripple out from where we are now. Moving on because the store estate is only part of our expansion plans. We want to get better online because that gives us enough national appeal as quick as we can. We've talked a lot about our growth of jewelry retailing over recent years, and there's a graph top right hand corner, which is obviously very pretty and very successful.

22:36 Now our retail offering online is still very low, so we still have a long way to go, but we are improving.

22:45 Those results have been delivered with a if like an old website platform, a new website platform has been, integrated and launched in October. And we know that the customer search facilities post launch is far slicker for the customers. The customer gets a better journey to find what they're looking for. But also the if, like, the of the website and the SEO and all that mystique is is has been simplified so that we should improve our Google rankings. We should be able to get better pay per click and affiliate returns, and we've certainly seen that in q one. Moving to our other income streams, everything has been, like, dumped onto RAMSDENS for cash, which is not re it's an informational site that you can do other things on, but it's not optimized. It's not optimized to acquire customers.

23:40 So one of the deliverables for the first half of the calendar year of f y of of financial year sorry, calendar year 2023 is to have new websites, soulless websites focusing on foreign currency, pawnbroking, gold buying, and using, if you like, the domain authority of RAMSDENS for cash as a pathway to these individual sites, a bit like the jewelry retailing site. And, hopefully, we can expand, those services as an online service or supporting the branch estate with that website appeal. The last site growth strategy that we have, is often called something will come up, which is really the consolidation opportunities that we get.

24:29 We've a picture of paying pawn brokers and jewelers out of Boston that Martin mentioned that we acquired for 900,000 in February. That acquisition has gone well. Very pleased with that. Very pleased, if you like, with the offering that we've got for the customers and the acceptance of the changes because Nick, who owned the business, worked in the business. So we've, we've developed it with a great manager in Sonya in the store, and wanna take it to to another level. The high street has changed. I think you'll all agree that, you know, there's sometimes less travel agents, there's less jewelers, and that allows an opportunity to pick up customers and take local market share. We're open minded whether we can buy more pawnbrokers.

25:14 We're very much looking at it now at a national footprint. So if it's a good business that we want to buy that gives us the right return on capital over and above just opening a Greenfield site and being a little bit more patient, yes, we're happy to buy a pawnbrokers. We've looked at currency providers. We're open minded on that. We're open minded on jewelers because we have bought jewelers over the years and converted them. We've done that very successfully in North Allentown. So I'm sure we will get opportunities. And like I said, I sum that up with something will crop up. But we make our own look. We're well networked, and we're obviously got a positive message throughout our industry, in terms of we're willing to to buy and and make it easy for people who may want to sell.

26:04 We underpin this, with our ESG, policies or the old phrase for our corporate social responsibility. So, you know, taking it in turn, if we think about the environment, we want to be very good citizens. We're looking at enhanced reporting next year in part because we have to, but we need to find the right measures so people can see what our green credentials are. But really good citizens, let's reduce our energy use, let's recycle where we can, and do things right. So, you know, we've replaced plastic, with paper, and that's all been integrated. And we're on a journey of improvement. You think of social, I talked earlier about our our staff and great engagement that we have. We've got a great customer feedback program.

26:55 We have a engaged staff that engage with our weekly and monthly newsletters. We have a annual staff feedback survey, and you can see some of the things there. You know, 90% of employees saying that their department or branch is a very happy place to work, and 87% of the employees look forward to coming to work. I think that, you know, that's great feedback. And from a feedback from a customer perspective, our Trustpilot rating is 4.9 out of five, and that's actually improved over the last twelve months. And customer service is very important to us because we grow our business through customer recommendations. So we're very focused on customer service. We wanna be socially aware to charities in our local communities.

27:44 We'll help local charities, raise over 19,000 in the last financial year, and more will be raised in this financial year. In terms of governance, we like to do things right. We want to see ourselves very much at the white end of any of the regulatory.

28:04 I want to be, like, the leading light to drive, you know, what is good, what is the what is best practice across all of our services, whether that's advertising or foreign currency rates, whether that's how we treat customers through pawnbroking, all of that. You know, with QCA, a member of the QCA, we adopt their code. We have all the policies that you would expect the business that's listed to have. We do have board effectiveness reviews. We have reviews on diversity, diversity, and we've had a board change this year. So I'd like to thank Steve Smith who has who came on board as we came onto the market in in early twenty seventeen. So the six years that we're market, Steve has been with us.

28:48 And he's helped us tremendously with his challenge and his guidance and his, you know, his wisdom along the case. But Steve has decided to step down, and we're very fortunate. We were you know, we had a lot of people apply to to to refill Phil Steve's boots. And Karen Mingham was a standout candidate with her background in both online activities with her day job at Expedia, her NED at the Newcastle Building Society, and her background generally in customer service. So I'm sure Karen will add value as we move forward. In summary, we've got through the the pandemic well. We've returned to profitability higher than where we were. All of the income streams are working.

29:37 Foreign currency can only grow if people travel, but we think we're selling that well with enhanced market share. We have a strengthened balance sheet. We've got firepower with cash to make an acquisition should we need to. We've got a strong pipeline of further stores. We've got a plan for improving the existing stores, rewarding shareholders with a positive dividend, and really optimistic as we sit here today. You know, we're we're confident that we can deliver growth. We're confident that we can deliver growth in the dividend, growth in the profitability, growth in the strength of the balance sheet. So, we're very optimistic for the future. I don't propose to go through the detailed slides, but, obviously, if you have read those in advance and you've got a question on them, please, if you like, do what Paul has asked you to do earlier in that go to the q and a and ask a question.

30:35 So if that that's the the content. I'm very happy to run through the questions. Great. Thank you very much, Peter and Martin. Thank you for the presentation. Ladies and gentlemen, as Peter just said, do please continue to submit your questions. See quite a few have come through already. But just while the team take a few moments to review those questions submitted already, I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. Perhaps before going on to some of the live questions, we did have a number of pre submitted questions that have come through. And if I may, I'll start off with those. The first question reads, will the Board give consideration to using some of our cash balance to buy back shares in the company? We have actually talked about it previously, but it's not on any, short term or medium time medium term horizon. As Martin said, you know, the £15,000 cash that we had on our balance sheet at the year end, $1,010,000,000,000 of it was foreign currency in the tills.

31:28 You still need sterling, in the tills where customers have paid you. So if, like, the spare cash to buy shares back, has been invested in in stock and is there to, you know, grow our loan book and and pay for the CapEx in new stores. So currently, no plans, to do that. Fantastic. Thank you. Next question we've got here, I think, obviously, you've touched on performance as you've gone through the presentation, but I don't if there's anything further to add. How are performing in the Southeast so far? What's the opportunity in the region? Opportunity is huge. In terms of the one store that I have got as a as a representative representative sample of one, Chatham in its fifteen months is doing fantastically well. So a baby store for ourselves would lose money in its first year, would make about 20,000 in year two, and would make, sorry, 60,000 in year three.

32:23 Now that's, if you like, a model, and then it would grow average and above average store performance. Obviously, we want to better that. What I can say is that Chatham at 15 old is certainly well ahead of year two and on its way to our year three numbers, so it's got off to a good start. Basildon had a good December. Croydon is too early to tell with that one. We've got, like, three days numbers. So we think there's opportunity in the South, but we've got off to a good start. Fantastic. Thank you. Next one we've got here. Are you surprised how well retail has done with the cost of living pressures? What's behind this growth? Okay. Self help. You know, we've invested in it, you know, talked about the staff development, but you look at the windows, some of the relocations, the way that we present the stock, you know, the 7,000,000 that we have put into stock over the the last twelve months.

33:22 The proposition has changed for the customer. We're more more it's got this it's a more professional looking jeweler store, basically, and we're getting the rewards for that. You know, we've had a good q one, gross profit up 15% in that quarter year on year. We're still very optimistic despite all the economic challenges and the media doom and gloom that we will push retail forward, over the forthcoming years because we've got a a proposition that that continues to strengthen. So we're optimist optimistic for retail. Fantastic. Thanks for that. Again, question here. Have you seen any changes in customer trends across your pawnbroking segment, e g different types of customers using the service, different amounts borrowed, different types of items born?

34:12 Okay. I I'd have to say no. And the reason for saying no is really, historically, we've served all walks of life. We've lent across, if that old portfolio of assets. So, you know, we've lent small lending, you know, ten, twenty grid on a couple of rings, and we've lent, you know, £100,000 on on premium watches. We've done that historically. We're doing that now. What I would say is, historically, we would be 92% repeat customers. We're now about 90% repeat customers. So the new customer levels are up 25%. Would be the change. So more customers are using us, as a pawnbrokers, and we think that will continue. I think you've got people who want a small sum of money have less options to go to, And RAMSDENS will offer a loan.

35:08 You know, if you want five, ten thousand pounds, you'll only pay 2% a month. And that's quite a very flexible loan. You you know, you pay it back on a daily basis.

35:19 So that's attractive to people who want help with with short term cash flow, if you like, of a larger sum. So we think we've got a good offering. We've got the, the skill set to do those higher value loans, and that's something that we want to attract going forward. You know, that might make our our yields lower a bit, but it'll grow the loan book, but the overall return will be higher.

35:44 Fantastic. Thanks, Peter. Next two questions really, are talking about the additional opportunities to open more stores, where you're looking to open. I think you covered that off towards the end of the presentation with with that rollout strategy. But one piece perhaps just to dwell on, what's happening to high street rents? Okay. Yeah. It's interesting, high streets. I mean, I've just got a a new store that'll open in the next couple of months, that's in a town, a city that is you know, the street that we are opening on was sought after. You know, we were in a race to get that unit. Our strong covenants has enabled us to to get that rent, and we paid actually full price for it. In other towns, we're getting 30% off the asking rents.

36:31 In other towns, there's competition because we have might have a small store in a small town, and the rent is sub £15,000. And there's competition. You know, the the one man independent business for whatever business that they're in, you know, it is competitive to to want that space. And, obviously, they might get a bit of business rates relief at the same time. There are obviously some towns that are the shopping experience is far too large. There's too many shops for the number of retailers now having an offer on that high street that needs to to centralize it. So Stockton would be the example. I know that it's held out, you know, across different local governments.

37:16 Stockton have bought both shopping centers. They relocated people out of one shopping center to the other. We were part of that relocation. And the and the retail offering of Stockton is now concentrated in the Wellington Square shopping area and a bit of the high street. The old shopping center has been knocked down. So the the the shopper has a better experience now in in Stockton as a result of that. You know, there are there are other towns that I've walked out. I'll give you example, Wrexham. You know, Wrexham is a very large town, very large high street with a strong offering at either end and a complete mixture in between. So lots of towns, lots of opportunity, some rents are coming down, but we, you know, we wanna be where the shoppers go.

38:05 And we're quite happy to pay a market rent if that's where the shoppers go and and are buying things. So that's where we wanna be. I think the other the other thing just to mention on the rents is that we do have quite a low average rent, and therefore, we've generally taken flexibility rather than take rent savings. So where our lease ends, generally, we can stay out of lease, protected under the landlord and tenant act. Actually, just pay the same rent rather than fix it in for a longer period to get a quite a small financial benefit. So you can see in the back of the the pack, we we have a a very short average time to the end of a lease. Yep. Great. And the final pre submitted question we have is, you know, m and a. What opportunities are you really seeing there? Look, we've had a couple of early conversations with one man one man's in the pawnbroken sector, but, you know, we've talked about our optimism for the pawnbroken sector and, you know, market conditions should be favorable through 2023 for pawnbrokers to grow their loan books. You've a high gold price. You've got demand. You've got a lack of alternative credit for small sums.

39:12 So the independent pawnbrokers know that as well. So I'm sure when when when they've had that growth in their loan book, they might ask the question then. So you you, you know, you've got that as that market conditions are favorable. But regulatory creep, the FCA is not making it easier for independents or larger firms. It's more of an administration burden, but it's not as much a cost for us. And, you know, independents are usually, you know, older retiring jewelers. So we're we're happy. We're open minded. We're advertising to to buy businesses, but it's not something that we can speed up because you've gotta be conscious that we can buy and we can open a store and build a greenfield site and be very competitive.

40:01 So it needs to be a mixture of the two. Fantastic. That concludes the pre submitted questions. As you can see, quite a few questions come through during the meeting itself. So if I may just ask you just to click on that q and a tab. And where appropriate to do so, if you could just read out the question for the benefit of everyone online and, give your response, that'd be wonderful, I'll pick up from you at the end. Okay. Thank you. So, question one, what are the main criterion when considering opening a new store? Well, first one is, hopefully, we'll make money. And I've talked about the the the location's important. It has to be within a nucleus of retail. It has to have a footfall for retail. It has to have a footfall for foreign currency. We, you know, we draw a pie chart of what we expect the income streams to be when we open a store.

40:50 We often get that wrong, not really wrong, just so that the picture always morphs a little bit when a store opens. We give ourselves a minimum return on capital of 20%. If we can't get to that, then it doesn't fly at all. So we have a, a trusted, tried methodology, if you like, for assessing a new store. We walk the high streets. We look at the foot floor. We look at what people are wearing. You know, we look at the other stores, staff levels, tills, how many how many desks and chairs you've got in a coffee shop, how busy the coffee shops. We do it the old fashioned way, as well as if you like the demographics and size of a town. So lots go into the, assessment before we actually, take it forward.

41:40 What is the medium term vision five years for a state size, and what size could The UK ultimately support? Very simply, yeah, five years, 50 stores, over 200 stores in five years' time, is a goal that we should deliver. So, yeah, that's what I would say. In terms of overall size, the statistic is there are 300 towns with more than 30,000 people in them, and London counts as one. And we have some very successful stores where the town population is 12,000. So, yeah, you know, five, six hundred stores is easily the the the possibility.

42:27 Are you targeting any particular parts of the country for new stores? Northwest, Yorkshire, we've got some gaps. South, Southeast, we've got a lot of gaps. So that's where we're initially targeting and lots of opportunity, and we have a good strong pipeline of towns that we've already researched that have passed the bar, and it's about finding the right location. What is your expectation for FX expansion given that the New Year to date has not changed? Ian, I wish I had a crystal ball. Easter is the is the first first test. I've mentioned about holiday makers sorry, holiday travel agents and the sales of holidays. You know, they've been very optimistic.

43:20 They've said very nice things about the level of holidays that they're selling now compared to pre pandemic being close to pre pandemic levels and some over pre pandemic levels. Who knows? I think yeah. Hey. Look. It's it's a crystal ball. I wouldn't wanna lead anybody, but I think it'll be north of 70. And a very optimistic view with a couple of pints in my hand might be a 120% of where we were prepandemic because you've got to remember that, you've had three years of disruption to go on holiday. So, hopefully, everyone, if you like, listening in is going on holiday and get your currency from RAMSDENS, and that'll help. What is the bad debt ratio in home broken? Well, let me not take it as an accounting question. Take it out of reality.

44:07 Unless we make a mistake, we don't get bad debts in home broking. So, we should less lend up to a level of the intrinsic value or a percentage of what we think we can sell it for. So the old maxim is lend half of what you think you can sell it for. If you do that, you do it correctly, then you shouldn't have bad debts. But regrettably, staff do make mistakes. So therefore, we have the odd ones, but not much in a 9,100,000 loan book. How cost effective to the consumer will your multicurrency card for use when abroad versus a bank debit card. We will sell the currency at less than the banks offer offer it. So most banks would charge you 3% or 3% plus a fee.

44:59 We will do our card at less than that. The card will be provided free to customers. It will have an app. You'll be able to, stop the card. You'll be able to switch between currencies, and that will all be competitive. It won't be at Revolut competitive because we're not gonna give it away for nothing. You talk about aiming to increase your market share. What segments are you referring to? How do you measure that, and what is, your targets? I'm not gonna release any targets because that would give you to, if you like, a very good indication of of where we see future profitability. But in terms of market share, FX, we have a small market share across The UK, probably 4%.

45:52 In certain towns, I'm sure we might have 40% market share. The the leader is the post office, but you have to remember their 25% market share is because they've got 11,000 outlets. I would probably suggest that EuroChange are the ones with the most market share, and, obviously, we aspire to pinch some of their customers by offering great service and a better rates. In a jewelry market share, we are still a minnow at 27,000,000, turnover. Can you deliver growth in any environment provided the stores stay open? Yes. Confident of our offer. Think we will grow through 2023, and beyond.

46:40 If currency travel cards were to become much more popular at the expense of cash, would this be beneficial for or detrimental to RAMSDENS profitability? RAMSDENS would change and evolve. What I can say at this moment in time is the average transaction value, is about £468, and pre COVID, it was about 407 pounds from memory. So the average transaction value that the customer is taking now has increased. I think if the market changes, then some people will move out of the market. We have our other services. That means we can be last man standing if that was the case.

47:27 So I think we have a positive outlook on the supply of euro notes if you're going to, the Eurozone. How do you expect the return on capital employed on stores to be to be open in the Southeast to compare with the rest of the store portfolio? You know what? That's a great question. I haven't got an exact answer. Like I said, we've got a hurdle. We have a method. We have an expectation of stores to get to. As I've explained, Chatham is already ahead of that growth curve. But in terms of, you know, their ultimate return on capital, I can tell you that, when I chat to my chairman, Andy, he does remind me that we're not trying to replicate average with our new stores.

48:21 We're trying to replicate top third with our new stores. So, you on that basis, hopefully, the return on capital employed is better with our new stores. What was the cost oh, good. This is a a Martin question. What was the cost to RAMSDENS of light and heat in the year to the September 30, so FY '22? And how much do you expect this to go up by when the current hedges expire in February 24? That's a good question. I mean, hopefully, the the market will have softened by then. But if you look at the cost as a business, it's circa 400,000. If you look at what we signed in a new a new property at some of the new stores where that fixes and cover those properties, The average is probably 3,000 per store in the existing state.

49:12 We we paid as high as 12,000 on a new store. So it could, you know, it could triple, but I wouldn't expect it all to go that high. You'd expect some of that to to fall back by the time you get to to 24, at least not increase and inflate down slightly in real terms. So it's that sort of number in terms of the risk to us, but equally, you know, it's quite a long time out till March 24. And that risk goes to all of our competitors too. Okay. Why do you believe customers choose RAMSDENSONS versus competitors, and who do you regard are your main competitors? Okay. Let's let's go through that in in in service. If you take pawnbroking, by far the biggest pawnbroker in The UK is HNT.

50:03 We bought up against H and T probably in the 50 towns, something like that, and more as we both expand our estate. And, obviously, as they expand their estate, there's a chance that we will compete against each other. But a lot of our stores are in smaller towns. That's not to say that H and T wouldn't open against us because they've done so across South Wales, but no detriment to our existing store performance. In terms of jewelry, that can be anybody. So the biggest, premium watch supply watch provider in The UK is Watchfinder, in our opinion. Sales are well over a 100,000,000. We're a minnow compared to them, but fast, increasing our watch sales have doubled in the last twelve months, and high hopes that we can continue to grow that service with our experience and very good watch offering online and in store.

51:07 Other jewelers, you know, we've got some of our bread and butter gold product. So Samuels, Hines, Warren James actually, not Warren James because they're mainly into the silver or gold plated jewelry. So but, you know, there's there's there's a lot of jewelers out there. And, obviously, HNT again for secondhand jewelry. In terms of FX, you've got, you know, said euro change, but, euro change, supermarkets to a lesser degree, travel agents to a lesser degree. Main competitors would be specialist bureaus. Why would the customer come to RAMSDENS? Well, we try very, very hard to give the best service because we know that we have to overcome, if you like, a long held prejudice against the pawnbroker. So we've worked very hard at the smartness of our store, the attractiveness of the store, the way the staff are presented, the privacy that we give the store, the customer inside, and the absolutely value for money that they get from RAMSDENS.

52:18 That's why it's like we have a a growing customer base, and both our general services and our retail services have great feedback on Trustpilot. Has the Bank of England interest rates currently increasing affect the number of stores you target opening, higher interest charges exceptional on refurbishing? We don't borrow a lot. We borrow through the summer months for our foreign currency deposit, So it's not really a big cost that would affect us significantly. We've not got, so, like, what's the word I'm looking for? Structural debt within the business. Know, we've got a proper revolving credit facility. So, now it doesn't affect our ability to grow, and, it's just a slight increase in in the cost, but not significant.

53:13 You stated that the margins on currency had widened post pandemic. Do you think they will continue like this or revert to the mean as the number of travelers increase? Hey. Look. Pockets will have competitive exchange rates. You know, we've opened in Croydon with a very aggressive, exchange rate offering for customers because we're trying to take market share as we open the town. I think, you know, that you've got an increased cost base. If I take EuroChain that I talked about as the main competitor, staff will be their biggest cost. You know, that cost staff cost will have gone up 10%, and they've got to recover that somewhere. So I think they will widen margins. I think the post office will widen margins.

53:59 I just ask customers to make sure they read the rate boards and make sure that the they've got transparency in exchange rates, and we will continue to grow our market share. What is the average length of your leases, and what length will you start your new store on? Well, there's a full table of where we are, with average length of leases in the back. Typically, you know, if if I might enter into a ten year lease, but I will have flexible breaks throughout that period just in case we get a store wrong or if in case a town moves. So we want flexibility in our leases with break clauses, but, you know, five year lease with a three year break, ten year lease with a rolling break from three years would always back ourselves with three years into a into a new location.

54:52 For the new southern stores, do you make any changes to the store offering? Now if you have a look at Basildon, if you have a look at Croydon, they're very much the same. Probably the subtle change because we're not known in the South Southeast is it does say RAMSDENS Pawnbroker's above the door. But if you stood outside and looked at that store, you would see that we have a strong jewelry offering. So we're jewelers. You'll see that we've got a rate board, which says that we do foreign currency. And if you look inside the store, you will see if you like a cross between a jeweler and bank style tills to give the customer the privacy that we talked about. What steps can you take to ensure watches sold on your site are not stolen?

55:38 Well, the provenance of a watch and the person who send sells a watch to us, you know, we take a lot of effort. We take our money laundering or anti money laundering responsibilities or prevention of crime. The last thing we wanna do is pay for a watch for, let's say, £10,000 and find that it's stolen, hand it over to insurance company because we can't sell it. So we, take a lot of steps to ensure that we don't buy stolen watches. What do you see as your biggest regulatory risk? Oh, interesting question. From what I you know, I I don't know what I don't know. From the conversations that I've had as the, the president of the National Pawnbroken Association with the FCA and what my chief exec at the National Pawnbroking Association tells me is we have a very strong relationship with the FCA. The FCA understands, what pawnbroking has to offer, and understands the simplicity of the the product.

56:47 They know that the customer has very few complaints. So in that respect, I'm not really seeing any changes to the regulatory nature of pawnbroking. You know, we're a money service business, and we have to be very careful, you know, what I've explained there about our anti money laundering policies. So we don't like I said earlier, we wanna be at the white extent of regulatory risk and have great governance. You know, the the more regulation, the better because it'll take some of the chances away from the market. Sorry. Excuse me. In the Southeast, new area of development. What do consumers know about RAMSDENS? The personal recommendation won't exist, presumably. Absolutely correct.

57:32 So that's why we pitch up in in high footfall locations, and we use rent as a marketing expense. So we get a number of eyes going in front of our stores, and then, obviously, we build those personal recommendations as we go. We have supported stores. We've had a TV campaign in December that was national. We do social media, and we actually have done leaflet drops in areas of new stores. So we do support our new stores, as well as its high street offering. I noticed that there are two ramps and stores with a few 100 yards of each other in Glasgow. Is that plan to continue going forward? If that question means I might took my two stores in Glasgow that are a 100 yards apart, about 300,400 yards apart going to both stay open. Yes. They serve different sections of the Glasgow community. One is very good for retail. One is very good for FX.

58:31 Would we have two stores in other locations? Yes. I've just done the same in Bradford. Again, it serves two different communities. And one of our sorry. One of our new stores is also a second store in a town. Excuse me. Many questions regarding retail stores, but what are the largest risks to the FX business? Do you provide FX to businesses? Largest risks to FX business, people don't travel. Do you provide FX to businesses? No. But we do provide FX to business owners. Sorry. Excuse me.

59:18 Okay. My last question, how do you think Chatham customers came to you to such good effect in the advertising? No. We're in a well, we've done some advertising. We did some leaflet drops. We've got a very good location. We're next to JD Sports opposite Pandora. So it's a good location in the shopping center in the town, which is anchored by sales breeze, and supported by social media advertising. Growth plans are commendable and exciting. Thank you. How do we fare in staffing, in particular, in new areas like the Southeast given full employment and you're paying towards the lower end of salaries, maybe not lower end of salaries in the industry.

1:00:07 Retail, we actually do pay the real living wage, and that is, if you like, above what people are paying. So, you know, we've done well in attracting staff to our new stores. I think I've got a gap left in Croydon, but, Basildon is fully staffed. Chatham is fully staffed, and we have staff for, if you like, our new store in Maidstone. So it hasn't been too much of a trouble, in doing that. And, you know, the stores that we have at at look good, look great. So, you know, we're attracting people, when we do that. What explains the increase in wages and salaries from 10,000,000 to 14,900,000 when the average number of employees was the same as in the previous year?

1:00:54 I think, I think the average is probably slightly skewed in in that calculation. But, certainly, there's there's obviously a peer review, as we mentioned earlier, an 8% peer review, and that's been done twice really in the last eighteen months. We've got the number of people that has gradually increased through the year. So, actually, there's furlough in there as well, I think. So you've got the offset of furlough, which is 1,500,000 in the prior year. So, yeah, I guess we'd have to look into it more detail, those two numbers. But, certainly, you know, there is inflationary cost into wages, and there is a bit of variable cost in maybe the number of hours people work as the business has sort of recovered back through through the current year. So the underlying cost, I think we've given a decent understanding of what the actual the fixed cost inflationary cost is. And there's obviously, we've rewarded the staff who delivered a fantastic set of results, and they've had some bonuses.

1:01:54 I think this might be the last question. Ria, earlier answer, you are not you are not hedged for energy costs in the new stores. Presumably, that sharply affects profitability. Are your comments on Chatham revenue based rather than profitability based? No. My comments on Chatham are absolutely profit based. I think the only the caveat with that is the contribution towards head office costs rather than net profit cost of those stores such as But it is after all the operating costs of the store. Not hedged for the energy costs. No. Just because there's turmoil in the market. So we stayed variable with our limited stores that are subject to the variability of energy costs.

1:02:41 We'll review that on an ongoing basis with our energy broker. Yeah. You can't actually fix the cost of the size you don't have yet, which is why we're in that position. But certainly, you know, hopefully, that, you know, market softens in the next next year. Thank you for those questions. We we've had yeah. Yeah. You're well you're welcome, Ian. We have had a lot of very good questions there, and, you know, we appreciate that because we like to to have that challenge and engagement. We're we don't we want to give you transparency in our presentation, transparency in our annual report, and we welcome questions. So if you've got any questions, you know, email us at ir@RAMSDENSPLC.com, and I do my best to answer them if I can. And and thank you so much for answering every single question, as as Ian said, that's come through. So, we appreciate that. And we're just just through the hour, which is wonderful. And Peter, perhaps just before redirecting, the investors to provide you with their feedback, which I know is particularly important to you guys, If there are just a few closing comments before we wrap up.

1:03:49 I know the the the briefness is we got to COVID. We were in a good space running into COVID, positive about our future, positive that we could have a staircase to our profitability. We've had a hiatus. FY twenty two delivers back to where we were. We've got a very positive outlook and confident we can deliver going forward. So optimistic and confident where is how I would how we feel and how we will take the business forward. That's fantastic. Thank you very much indeed for updating investors today. Can I please ask investors not to close the session as we automatically redirect it to provide your feedback in order the team can better understand your views and expectations? This will only take a few moments to complete, and I'm now greatly valued by the company. On behalf of the management team of RAMSDEN Holdings PLC, we'd like to thank you for attending today's presentation. That concludes today's session.

1:04:41 Thank you very much, and good evening to you all. Cheers.