Ramsdens Holdings PLC (RFX) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Ramsdens Holdings PLC Interim Results Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO, Peter Kenyon. Good afternoon to you, sir.

Thank you. Afternoon, everybody. We're going to obviously go through the interim presentation. There's a minor slide change to what's on our website and that's in case people don't know too much about ourselves. So introductory slide, disclaimer. That's inside of our New York Stonegate store. That's New York as in Yorkshire Stonegate Road. I'm going to go through who we are, a summary of what we're doing, and I'm not going to cover off the appendices. But if you've looked at those and you've got any questions, just please fire away. So who we are? We're headquartered in Middlesbrough, 168 stores strong, 169 once the store in Blackpool finishes its shop fit. We're mainly located in the North, Scotland and Wales, as you can see, by pins on that U.K. graph. And our key services are foreign currency, pawnbroking, retail jewelry and precious metals, and I'll explain those in more detail. And you can see on the right-hand side because we keep talking about our diversified income streams that we have a pretty balanced set of income streams there at a gross profit level. We've had some very kind comments on Trustpilot and strong ratings. So that gives you a bit of background. But if you know a bit more about us, then we'll go through some of the details. So some of the summaries. 8% up in pretax profit. All the income streams or retail, jewelry, pawnbroking loan book, pawnbroking gross profit, foreign currency are all up. Precious metals are all up. We've got a stronger balance sheet. We increased the dividend. And we have said that, if you like, April and May have traded well, and we've got positive momentum now as we approach our key summer period with FX. Our strategy for growth has not changed. It's still really got these 4 key things. So driving growth from the core estates. We've got continued maturing of the stores opened in recent years to come through. We're -- we always see continuous improvement in what we do and how we develop our people. And we're encouraged by the early start of our multicurrency card. That's got off to a good start. Over 5,000 people have used that card in the period. 5 new stores opened, plus we've acquired our Bury franchisee store in March. We've got a pipeline of where we can go to, well-researched towns. We've got a couple of more to come through in the second half of the year. Online, we think we're making good progress in retail, jewelry, good progress in currency. We've got pawnbroking and gold buying come in dedicated websites later this year. That's our Broadway Bradford store. So taking our key income streams in order, starting with foreign currency. So the gross profit up 3% year-on-year. So we are making progress. But there's a few moving parts in that. The sales of our foreign currency are up 9%. So this is if you're off to [ Benidorm ], when you want your euros, we've got more sales happening in terms of total currency exchange. On the flip side, the purchase of foreign currency back from customers, that's actually fallen by 9%. Now what we think, obviously, we're encouraged by the fact that more people are traveling, and we're selling currency to them with, if you like, a pretty consistent average transaction value that's higher than it was pre-COVID. But I think people are spending more on holiday, coming back with less, maybe keeping what's in their pockets to spend again next time they go. So it's the mix of everything. In terms of our customer offer, our sales margin is slightly stronger than it was last year. We think that will hold true. And our margin for purchases, that holds true as well that, that is still pretty consistent. We've eked up the margin that we charge when we sell currency, and that is offsetting some of the inflationary pressure that we have within the business. And I'll cover off that through the income streams, too. Bottom-left graph, you can see that we've had a growth in that gross profit income stream over the years. And hopefully, it will continue to grow as we move forward in the next few years. Right-hand side, you can see the Ramsdens multicurrency card. And as I've said, 5,000 customers topped up with that. We're very happy with where we are after now 7, 8 months of the launch of product. Mastercard are quite happy. Obviously, they get a read across against their other programs, but we have very positive conversations with them in terms of direction of travel. So we think we've got opportunity to continue market share and grow our foreign currency. Into pawnbroking, so the loan book is up 12% over the 12 months, and gross profit is up 15% year-on-year. Our interest rates have stayed exactly the same as they were. We haven't, if you like, passed on costs in this area. We think the right thing to do here is just support our customers a little bit more. We understand times are tough. And that is actually bringing more customers to us, especially when you have fewer opportunities to go elsewhere if you only want to borrow GBP 200. The yield on the book, quite strong, quite consistent at 53%. And you can see, if you like, the loan book growth that's there. And you can see bottom left-hand corner, the growth in the pawnbroking interest. It fell down slightly in COVID but is rebuilding back quite strong. One thing to note is we have a new website that will launch this summer that's dedicated to pawnbrokers. That is going to be very much focused on customer acquisition. It's much like a new route to market. It's about acquiring customers, who can then trade through our stores because we've still got that passage of an item that needs to be valued. And that will happen face to face in store. We have experts across all of our products across the whole -- good geographic representation. So that's what we're going to push when that goes live. The strong sterling gold price means that our loan book is very conservatively led. Our loan-to-value now is about 55% of the gold price. And then obviously, you think that some of the stuff that we sell is retailable and obviously, even lower loan-to-value. That gives an opportunity to lend more to customers, and that's something that's currently under review. Obviously, these are loans that need to be repaid. So we don't want to push customers. It's got to be about their ability to repay. We want customers to keep their goods so they can borrow again. But pawnbroking is in a good space, not expecting any changes per se. The Bank of England has that independence on interest rates, and they're going to remain high for probably at least -- well, 2 months, I think, before we see it cut and then maybe slowly over the remainder of the year. So I think, unfortunately, for some, mortgage rate is going to stay high. But that means that there will be gaps in people's cash flow and therefore, have a borrowing need, which pawnbroking can provide a very good solution. On to our retail jewelry, lots of moving parts in this one. So our revenue is up 1%, but our gross profit is up 6%. Now the factors in this is we have seen continued momentum in our new jewelry sales and especially in our preowned jewelry sales. They have gone particularly well. And the growth in those 2 has offset the falling premium watch sales that we have encountered in the period. Now we said in January that it's been slower pre-Christmas. It had been, if you like, a tough quarter 1 2024 in our watch sales. However, post March, when we changed the website, external finance provider that we had, approval rates have improved. And watches since then online have started to improve, but they've also improved in store where we don't have, if you like, finance facilities. We think that the improvement in the watch sales is more to do with the leveling out of the normalization of premium watch prices. So we've seen a good increase in prices and a lot of froth post-COVID, then we've seen a slight downturn. But we think that we've had normalization, and we share the watches of Switzerland comments that we're cautiously optimistic on watches moving forward from here. But overall, given the economic backdrop, given the fact that this is discretionary spending, growing revenue and growing gross profit, we think, is a good result. And we think we still have momentum here to take us forward as we move into the months ahead. Our last key income stream is the purchase of precious metals. So this is buying unwanted jewelry from customers. The way that we bought in H1 this year is very similar to the H2 of last year. So the weight is holding up. And you can see the increase in revenue, which is driven by the gold price. And that's up by 35%, and gross profit is up by 25%. And the differential of the lag really is the customer getting a better price for their gold. When the gold price goes up, we pay the customer more. However, you can see in the bottom left-hand graph there how our purchase of precious metals gross profit has increased. One thing to note, obviously, when we buy gold from the customer, we have 2 options. One, we can melt it straight away for its intrinsic value or we can put it into our retail stock and then sell it through our windows. You've seen in the balance sheet that the -- and Martin will come back on to it that the stock level is pretty flat or fallen slightly. And that's because we've taken choices, been a bit smarter, a bit more effective with our stock management and what stock we have for sales. And therefore, some of the gold that we have bought, we have actually just melted it, taken the cash profit and moved on. And obviously, that's reflected in the segments here. Moving on to the financials and the P&L, I'll hand over to Martin.

Thanks, Peter. As an overall period, the 6 months has been really positive. Revenue is up 12% to GBP 43.8 million in the half. That is a real mix, but all 4 key services are up. There's a slight reduction in other services. If you can remember, a year ago, in April '23, we actually stopped doing check cashing as a service. And actually, that like-for-like in the 6 months is the last comparative where you'll see that reduction come through. To foreign currency, as Peter said, is up 4% at revenue level, 3% at gross profit. There is a logistics cost in getting the currency to the stores. That's the only cost of sale here. And that's just gone up disproportionately slightly to revenue. So that's why it hasn't all fallen through. However, as Peter said as well, sales are up 7% actually, and purchases are down 9%. We do sell more to -- currency to customers than we buy back. But when we buy back, it's a higher margin. So that's shaken out as being 3% up in gross profit. However, we saw that fall in purchases, if you remember backwards, we mentioned that last year. So actually, we think from a like-for-like position, that fell from about May last year. So we should be through the worst of the reduction in purchases. And as Peter said, probably the key driver of that is people spending all of their holiday money abroad and bringing in less back with them. Pawnbroking, the loan growth, obviously, the interest lags the growth. So you can see here, we've got stronger income growth than you've got in the loan book, and that's because of the growth we saw previously as well. So pawnbroking interest of 15% on the gross profit level. Jewelry retail has been a mixed position. Watches have been a bit slower, as mentioned. Actually, the growth in the other retail, particularly preowned jewelry, which is a higher margin, has replaced the revenue actually, therefore, has actually grown gross profit. So the overall margin on jewelry has improved. If you look at the margins individually by 3 types of jewelry retail, they're actually very consistent. So when we sell preowned jewelry, we make around 60% depending on the type of product. And that's because we buy well from the consumer and obviously, refurbish it and sell it on. The new jewelry that we buy, obviously, the input cost that has gone up with the gold price, but actually we've been able to pass that on to the customer by increased pricing. So the margin on new jewelry might be between 30% and 40% depending on the product type, whereas watches generally around 20% to 25%. And actually, they're the ones that have reduced in the period. That's why the mix, if you like, has resulted in a higher gross margin falling through. As Peter mentioned, the purchase of precious metals, we have that choice over what we put into stock versus what we melt. Actually, over the last 2 or 3 years, we've heavily invested in retail stock. We've grown the estate, and we've grown the amount of stock in some of the stores, because we've not done that dramatically in this period. And actually, we already carried in the stock we needed for the new stores. The inventory in the period has actually been relatively flat. It's down slightly. And that's why partly we've been able to [indiscernible] more of the gold we buy as well as at a higher price, which is why purchase of precious metal is probably slightly strong growth than you would see certainly just in the pure volume terms. That's up 35% at revenue and 25% at a gross profit level. If you look at our admin expenses and you compare it to a year ago, we've obviously got more stores now than we had 12 months ago. And the estimate is around GBP 500,000 to GBP 600,000 of the increase in admin expenses is from having a larger estate. The other big growth, if you like, in our admin expenses is the cost of people. At the lower end, we pay the real living wage, and that's increased by around 10% the last 2 years actually. And that's added about GBP 700,000 to our admin expenses in the 6 months. And the other larger ticket item in there is we've got around GBP 200,000 of increase in noncash dilapidation provisions. So we've actually taken a more prudent view in the cost provisions that we put in, in case we relocate our core stores in the future. So that's probably the key movements in the admin expenses, but overall, that's up 9%. Profit before tax, circa GBP 4 million. That's up around 8% on the same period last time. That's good growth. That doesn't all fall through to EPS, partly because of the increased tax charge. So we've been moving from a corporation tax rate of 19% to 25%. Last year, it was a hybrid rate for us, given our year-end. So this year, it's gone higher than that. This is actually a slightly higher-than-usual deferred tax charge in the period as well as the average rate if you work it out there is about 28.5% over a more normalized position for us would be 26% with a slightly higher tax rate than the normal rate, because of some small add-backs in the normal tax composition. But certainly, there is a slightly higher charge there, but you would expect that to normalize going forward towards the normal level. Moving on to the cash flow. We mentioned stock a few times. We've been in a real growth mode for retail over the last probably 4, 5 years really. And actually, we've been putting significant investment behind our income stream because of that and because of the slowdown in watches, particularly in H1. We've been able to rationalize a bit of the stock. And therefore, you can see actually that the working capital movement in total is very small in the period. It's about GBP 0.1 million. And because of that, you see the cash generation is very, very strong in the half year. So GBP 5 million of net cash flow from operating activity. And that's from the normalization of stock and actually the growth in the loan book being a more normal level as well. We've had a recovery in the loan book post-COVID, and that's now in a more standardized position where we've seen GBP 400,000 of growth in the half year. We've opened 5 stores in the half year, and the CapEx is predominantly relate into those stores. And we purchased the store, Bury franchisee store actually March, and that's shown as an acquisition there of GBP 600,000. And obviously, that's a Ramsdens-branded store, which carries on and slots in very easily. It will be profitable from day 1. We actually have, I guess, a very seasonal cash flow in that we pay both dividends in this half year. So we pay the interim and the final dividend. And actually also our profitability is seasonal as well. So we make more profit in the half of the year and pay no dividends. So the interim dividend and the final dividend, when we get to September, the big key months for us in terms of currency are June through September. And we carry more cash in the till throughout that period. And when we come out of the period in October, we release that cash from the till, if you like, and that funds the dividend. So actually, that's the reason why the dividend historically was moved from September to October. We have increased our lending facility. We had a GBP 10 million RCF with the Yorkshire Bank or Virgin Money. We've now got GBP 15 million facility with Bank of Scotland. We actually have a GBP 5 million accordion as well if we want to increase that value in the future. So we've got a strong facility. We've got headroom there if we need to invest in any opportunity in the future. We've increased the dividend. So we've got 9% growth in the interim dividend. We typically pay 1/3, 2/3 for the interim and final. And our philosophy has always been around 50% of our profit is dividend, the other 50% to be reinvested for growth. We've never quite got to 50%. I think 43% is the highest payout we've had. But we continue to have significant opportunity to grow the business. And therefore, we've allocated cash towards growth historically, which is why we probably not got the full 50% payout. Moving on to the balance sheet, very similar to where we've been in recent times. And we've got a very, very strong balance sheet. We're a very strong covenant in terms of being able to get that bank facility. We have better terms than we had, given the growth in the business. And when we're looking for units, for instance, the rents, the landlords are very happy with the strength of the business in order to secure those units. So if you look at the inventories, GBP 27 million, that's about GBP 8 million of premium watches, the balance being jewelry and heavily backed by its intrinsic value. Trade and receivables is the pawnbroking lending. And again, as Peter said, the loan-to-value is actually reduced, given the strength in the gold price, again, very, very strongly backed by intrinsic value of the collateral. And the cash in the balance sheet does include the currency that we hold, and that's GBP 6.8 million at the period end. The way the month end -- the period end finished actually was right on Easter Sunday. So we have to carry in slightly more cash into that weekend because of the bank holidays. And therefore, we've drawn probably slightly more than we would usually have done in our RCF. There's GBP 10 million drawn. There's probably GBP 1 million of the cash in RCF, which was because of the extra bank holiday across Easter. But all in all, net assets are GBP 48 million, very, very strong position, adequately resourced to continue to grow moving forward.

Thanks, Martin. So going to our overview, that is Kay and [ Tony ] outside our Jarrow store. This slide, if you ever had a presentation from ourselves before is exceptionally similar probably apart from the images. So we underpin it, if you like, the ESG actually doesn't underpin what we do, our culture, customer service, the focus that we've got. We've got a strong brand. We've done a lot of sports sponsorship over the years. And we have our own bespoke computer system with 3 exceptionally talented IT developers working on that every day for us. So our option's to grow the business, drive growth from the store estate, have more stores, online and then, if you like, buy somebody. So I shall quickly run through these for you. So the platform, strong store estate, that is Dundee. That's been relocated, which gives us opportunity to grow our business in Dundee. The investment in the staff, those 3 ladies in our Sunderland branch, we just completed one of the jewelry costs that we have. There's just opportunity. We're still a very small value retailer in terms of transactional count. We're still averaging only just over 2 transactions per day per store through the branch network. So we've got growth opportunities to come from retail. The high gold price will stay there. In the short term, pawnbroking, we're getting more customers. They recommend their family and friends, currency, more people are traveling. We can sell more things to them in terms of the card and get more of their spend while that customer's abroad. So we've got more that we can do through our existing business. The store estate, you can see where the pins are there. We've missed out a great big chunk of Birmingham and part of the country. There are 350 towns with 30,000 people, and London is just one with 8 million. So we have a lot of opportunity of where we can go to, at least the 5 stores that we've opened. We have a lot of towns that we have researched that we would look to go to. I'll just talk about a relocation that we are currently doing in Scotland in Cumbernauld. There are 2 shopping centers in Cumbernauld and I wanted -- wants to be in the new one, but I only wanted 1 of 4 units in the new one, because they're on a slight cross path. We finally got one. We've been patient, taken us about 18 months to get there, but we've now got that unit, and that will open later this year. Location does matter for new stores. We can still get some really good attractive rate deals, but there has to be a nucleus within that town of returning customers on which for us to build the business. On that slide, it's got an example of an average model for a new store. So it loses money in year 1. This is to do with having the store and having to pay rent before we've occupied it because we've got to shop fit it. We've got the staff trained and embedded before we open. So we've got some costs coming through before we can generate and start growing our income. And obviously, income grows over time. And obviously, you've got the working capital. So if you like, the jewelry put in and then you've got future years, the loan book growth. You've got the capital expenditure. So the actual -- the leasehold improvements, the pictures and fittings and doing the shop out. So it looks like the new store there, Burnley, which is currently featuring in our TV advert for foreign currency. Moving on to online. If you look at the top graph on the right-hand side, the last 6 months doesn't look very good there when you've got that falling revenue. But if you actually look closely at the gold bar and the gross profit at the bottom, it is very flat. So despite a falling revenue, we've managed to keep gross profit at the same level. And that's the mix of product sales that both Martin and I alluded to earlier, so less watches, more secondhand jewelry. So we think that we're still making progress. We've still got opportunities online in the retail website. And as a separate division, that separate division makes over GBP 1 million contribution to the wider head office costs within the business. We've got a foreign currency website launched last July. We've seen some really encouraging click-and-collect numbers that's not cannibalizing our branch sales. So we've got some growth there that we hope will come through this summer. I mentioned the pawnbroking website been about customer acquisition. And we want a separate gold buying website as well to target customers who just want to sell their gold. Something will always crop up. This is called capitalization on consolidation opportunities. Often, we can't force it. We've got to be patient. We've got to be there. We've got to have our network, and we've got a strong network within our pawnbroking industry. And here, we've got our Bury franchisee who wanted to step back a little from the, if you like, the regulation, all that burden that he would have. He actually still wanted to stay in the business. So the franchisee is now the manager of the Bury store, and it's been obviously seamless to the customer. And you would do this acquisition every day of the week. There are more that we come with quite discerning. If customer want -- sorry, a vendor wants too much money for their store and we can get a better return by opening our own store in that town, that's what we will do. We don't need despite having the cash just to spend it and grow and pay too much for businesses. So we have those growth opportunities. I talked about underpinning it through that environment and doing it the right way. We recently signed up for green energy when our energy contract finished. We've actually had very strong staff service, great engagement with our customers. 91% is saying that their place is a happy place to work in, and they enjoy what they do. So that's a great testament, and that helps us serve customers better. Strong governance as well as [indiscernible] the QCA code. We do Board effectiveness reviews. And as part of our Board review, you'll have seen recently in the RNS that Andy, who is the Chair, he will retire at the AGM next year. And Simon Herrick, who's the Senior Independent Director, he will take the Chair role. And we're currently recruiting for a new nonexec. So that's really us. We have a slide that shows the journey of profit before tax since coming to market and the same with the growth in the dividend over the years. And hey, we're in a good, confident position. We've got a strong business. We've got opportunity to grow. We've been cash generative. We've got a great team that's set behind Martin and I. And we look forward with optimism. So on that note, I'll pass you back to Alessandro.

Perfect. Peter and Martin, thank you very much for presentation. [Operator Instructions] Just while the company take a few moments for those questions have been submitted today, I'd like to remind you the recording of the presentation, along with the slides and the published Q&A, can be accessed via investor dashboard. Peter, Martin, as you can see, you've been very popular. We have received a number of questions throughout today's presentation. If I could hand back to you just to read out those questions and give responses where it's appropriate to do so. I'll pick up from you at the end.

Okay. Thank you. So question one then, what factors are considered important for you to decide whether a store should be opened in a new location? You're looking for a return on your capital invested at the top level. In terms of the location and nucleus of returning customers, we look at the competition levels. Is there a pawnbroker? Is there a bureau to change? What is the jewelry offering? Are people walking around wearing jewelry? Where are people walking from and to? Are there good solid bellwethers of the high street still less or next and Primark? Lots of things. How big is the coffee shop? How many tills the card factory have? Lots of details going to looking at a new store. And I've got 2 or 3 people who are trained in doing this. And I said we have a lot of research locations, but it has to be the right unit. Question two. I believe it's your aim for the company to distribute around 50% of its profits in dividends to shareholders. Is that something that's likely to happen in the next year or 2? Or is it more of a long-term aspiration for shareholders to receive 50% of the company's profits? In one respect, it's aspiration. It's a very crude half out for the shareholders, half in to invest. As Martin said, we got to 43% of our profit paid out in the past. I suspect that, that will increase. It depends on the growth of the profitability and the options that we have for growth. Whether an acquisition comes up, our balance sheet is lowly geared, we have options. But we are intent on increasing our dividend every year in terms of the pound value. Okay, I've got too far. Right. Many years ago, it was usual to take traveler's checks for use on your holiday. That is no longer the case. We are more and more a cashless society. So it seems likely to me that most people in the future will only take a limited amount of euros, dollars, et cetera, with them on holiday. Even though we have a card for them to use for holiday expenditure, surely, it's likely that profits from customers exchanging pounds for the currency of the location they are visiting are likely to fall. Do you agree with my thoughts about this matter? Well, if you look at the Scandinavian countries, it's about 8% of transactions are undertaken in cash. If you take the U.K., in the last 2 years, the use of cash in transactions has increased. If you go to the Eurozone, it's about 60% of Europe uses cash for all transactions. So I don't think cash is going anywhere soon. I think if you're holidaying in Portugal, Italy, Greece, Spain, it's absolutely take cash with you. And it's about the mix. It's been about the mix for years. The card has replaced the traveler's check. About 10% people take a card, a specialist card with them. Some use their bank account. And I would say if you're going to use your main bank account in a bar in Spain that you don't know is take a currency card and have that layer in between. So I can see why the question is asked, but no, I don't wholesalely agree with it. If we were last man standing as well because we've got our other services, we'll be able to widen our margin through that fall. So I don't think we're in a bad position. Question 5. Can you explain what the share-based payments -- this is one for Martin. Can you explain what the share-based payments in your consolidated change in equity statement are?

Yes, a good one. So when you issue LTIP options or share options, you actually -- you come up with a bit of an arbitrary charge through the P&L. So you work out an accounting charge. And actually, the deferred tax on that, you can only put through the tax that matches the P&L charge. Any of the tax actually has to go through the statement of changes in equity. So it's to do with the tax allowability of the options versus the actual charge, the accounting charge, which are not necessarily the same.

Okay. If you can comment, what is the difference in margins on FX purchase and sales? Also are the exchange rate markups the same for the physical cash service and for your multicurrency card? Okay. So very crudely, the average euro is sold at about 2.7%, and that is very attractive on the high street as we know because we have a very strong price proposition. Our purchases are about a 10% margin. And again, because we mystery shop our competitors on the high street, that is a competitive position. On the card, if you top up through the store, you will get the store rate. If you top up on the app, you get a slightly better rate. And if you top up online, you get a slightly different rate depending on what our online rate of the day is. We have a very competitive reload rate. If you've got a currency card from a competitor, I would always check your load rate when you first get the card and your reload rate because some of them are not that competitive.

You can obviously change. On the currency card, you can change it back to sterling at a similar rate to a sales rate as well. It's a much better purchases rate on a currency card than it is physically. But typically on a physical card -- physical cash, they are low value, which this low-value transaction, which is why the margin's wider.

Okay. So I'm just trying to work out some of these comments that goes out of order. Right. The purchase of gold coins and bars has become very popular recently. I think Ramsdens is well placed for such an offering. Will you consider making this offering more prominent on your website? It is relatively prominent in our website. And sales of coins and bars has gone quite well. So I'll have a look on our website to see what its prominence is. But obviously, we're selling a lot of different products, and they've got different profit margins within them. But it is popular, and coins are a good seller for us. People are doing it for investment purposes. Is the increase in your store relocation provision indicative of the likelihood of store relocations over the near medium term? Or is it more about factoring inflationary cost pressures? This -- the increases of provision should we close stores, it's more to do with the accounting side of it and been prudent that, if you like, if we were to wholesale close a lot of stores, there's a provision there to cover the cost of it. When we enter into a lease, we take a lease, we do a shop fit. We have, if you like, a responsibility to return that property to how we found it. And that comes at a cost and that's for -- that increase in that provision is for that reason. We've got more stores, costs are higher, and it might have been a little bit lower in the past. So it's a combination of those. How does profitability compare between your newer stores in the south to your historically core northern ones? I'm not sure what I'm comparing here. The stores in the south that have recently been opened have got higher costs than the stores opened in the north. Lower-cost stores usually get to profitability a bit quicker. We're very happy with where our store estate is new in the south and new in the north. I haven't really got an aged store estate in the south to like compare it against the aged, historically, the northern core stores. Are you aware of any plans from the likely upcoming labor administration about increased regulation, margin ceilings, et cetera, in your market? No plans, no discussion with regulators that I have had as my role in NPA President. We think pawnbroking is well understood by the regulator. If you think of an interest rate cap, that's currently about 24% per month. Our rates are less than 10% per month at the lowest levels or actually at the highest level for the lowest amount borrowed. So I don't think that we're going to be affected by any limits to the rates that we can charge customers. What is your minimal threshold for return on invested capital for opening new store, buying an existing one? 20% is our hurdle rate for that. We might do less if it's one that has maybe more of a premium or logistically a good cited for us all, whatever it is. But generally 20% is our hurdle. Are the new stores opened in FY '23 performing according to expectations? Well, there's a few of them. They are a mixed bag. Some of them are well ahead of our initial expectations. But obviously, as time has lapsed, we've raised our expectations of their possible performance. So very happy as a cohort where with our new store estate, which gives us the confidence to open more stores. As of September '23, you estimated 870 pawnbroking outlets. Are there any updates on this number? It's about the same. Some independents have left the market. H&T and ourselves have opened a few stores. So it's about static at about 870, 880. How much is the gross profit from the multicurrency card in 1H '24? We haven't disclosed that, Andrew, so we haven't disclosed that. It's not massive, but it is growing. It's over 99% that we make from the sale of currency notes. So it's less than 1% together with, if you like, the international payments that we do. Can you go into more detail on the multicurrency card in terms of expectations and the unit economics? Well, it's about the card use. The card gets loaded, we make a small percentage on that load. And then as customers load it and spend abroad, we make money on that card getting loaded without doing any transaction, without doing any activity. So we want customer -- we want cards issued. It has a cost, but it has a 5-year life. It's still early days of what our experience of this card will be, but we think it will contribute, hopefully, into the hundreds of thousands, if not more, over time. Why did online jewelry sales decline 15%? Yes, mentioned that it's to do with the watch sales. Is this because of decline in secondhand luxury watches? Yes, it was for the period. What is your outlook on online jewelry sales? Covered off that the watch sales have recovered in April and May. And we think that will continue to grow, and we'll continue to take market share. What is the most misunderstood aspect of your business by investors? Well, I think I should turn that around and ask you. As investors, what do you think we're not getting across maybe as well as we should? I mean we've got a strong balance sheet. We're cash generative. We pay a decent dividend. We think we tell that pretty clearly. We're diversified. So it doesn't matter what the economic conditions are. It probably won't matter whether we have a blue or a red government. We think we can set this business forward.

I think that's one of the big points we get asked a lot is actually people think the business is countercyclical. People think that in a recession, we'll do well, and we won't do so well when times are better. But actually, I think we've shown over the years, it doesn't really matter what the economy is like. Yes. In tougher times, maybe gold buying and pawnbroking will do slightly better. But actually, in better times, retail and FX will do better as well. So it actually doesn't move the dial as much as people think. And the other one, I guess, we get asked a lot is pawnbroking, people expect a real step forward when you get a recession or tougher times. And again, people need the asset, people lend and it's quite a decision for a customer. They don't want to lose the goods. Therefore, you don't get that spike in lending that you might get in credit cards or other types of lending. And actually, the confidence to borrow sometimes when times are good, people generally will borrow for good reasons as well. So actually, the swing in the loan book isn't as dramatic as people think because of the change in the economy. So they're probably 2 of the things that we get asked a lot.

Pawnbroking loan book past due nearly doubled. Please, could you comment on this? Yes, we had a high-value loan. We put it into the RNS. A high-value loan was expired right on the period end, and that distorted the amount that was past due. It isn't anything that's fundamental. Our pawnbroking loan book is absolutely performing in line with where we'd expect it to be. Our expires would normally be 10%, 11% and normally 10% historically. I suspect 11% in the future as the book levels off. And also as we give customers longer and more forbearance to help them repay their loans, we would expect that to have a little impact into it but not a lot. All right, same question from [indiscernible]. The increase in the value of past due loans impacted by one customer with a high-value lending, which should expire at the period end. Has this loan been collected after the period end? Not yet. We're working with the person to -- what's the best option. It's a property developer. He's got a property to sell. He's weighing up does he want to sell the watch, that's the pledged item or have a little bit longer and accrue a bit more interest? We're working with him on the best solution. How are you measuring the impact of your cross-selling activities or that is well intently measured down to the individual through our operational statistics? So we have a lot of KPIs within the business when we're, if you like, managing the staff from the conversations that they have. So it is highly managed. And because it's measured, we can manage and improve conversations that staff have. What percentage of watch and jewelry sales use finance? Well, it's only online, and I don't know the exact percentage. It's about 1/3 of the online sales are on finance. I'm finding that card payment is almost expected in most European countries. When do you expect this trend to impact your ForEx business? As I explained, Jeff, the statistics that's coming out of Portugal, Italy, Greece and Spain are 60% of transactions are still in cash. You'll find that bars will accommodate a card payment, but they do appreciate customers who are paying by cash.

I think the big thing to acknowledge here is that people have always used cash and card abroad. People -- it's not a new phenomenon. People will always take both and use both. And therefore, yes, it become more prevalent. But actually, the use of cash has increased. So we're still seeing growth in our FX sales.

Wow, Leo, right. Do you expect pawnbroking revenues per store to fully recover to the inflation-adjusted levels immediately before COVID? Or is this now a structurally higher margin, lower sales operation? That's a technical question, Leo. I'm going to pass because I haven't got a quick, short answer for you. Sorry about that. We don't like to pass on questions, but that's a bit too technical, I think, for me or I suppose Martin could give an off-the-cuff reply. Could you please help me understand how time to sell impact your expected credit loss? Martin?

I'll try and do this quickly. So the credit loss calculation, actually, you have to use the interest rate within the pawnbroking agreement. And you look at how long it's going to take you to realize the asset and then you discount back to the value of time to the balance sheet. So actually, if it takes it a year to sell, and we're going to get GBP 100 for the goods. We actually discount that back, and we assume that's somewhere around GBP 50 because of the implicit interest rate. And that creates a credit loss because the goods are worth more than that. So actually a big piece of our credit loss provisioning is because of the value of the goods we're trying to sell, there is a time period before we'll actually realize them. So that's where it is. It's the discounting back using the effective interest rate or the time to sell the value of the goods.

Hopefully, that helps, Andrew. Why is the pawnbroking revenue per store so different to your main listed competitor? I appreciate that our FX are stronger in other segments. All the reserves we've done, Jeff, it's a north-south divide. If you look at their stores, they're in higher population conurbations, the demographic of the conurbations that they are in. And they have some higher value lending to individuals than we have. I think it's as simple as that. It's the edge of the business as well. We're a relatively young staff, and our stores are younger than their stores, but it's a big north, south divide. I can certainly say that our stores in the south, very early months, we're very happy with where the pawnbroking is at. And if I shared the average of those, it will be very positive. That's a comment. Thanks, Pavel, very nice of you to say so. It's a compliment on us answering the questions and the progress we've made. Why don't you consider active buybacks when stock price is depressed? Will it not be attractive for growing equity? That question has raised its head a few times through our institutional meetings so far. We have discussed it in a Board previously. We have options to do with our cash. One could be buying back equity. Option is obviously dividend, and an option is growing the business. So I will make sure that, that goes back onto our Board agenda for another discussion. Joined the call a bit late, so you might have mentioned this, but why is the loan book not increasing faster when you have plenty of cash on the book? It's not growing as fast as H&T. And I could draw a lot of comparisons between ourselves and H&T. I've said there about the north, south divide. We disclose very transparently the active loan book that we have and the amount of that loan book that is expired. I don't have a direct read across to H&T, because they have obviously an active loan book that the customer can collect. They have a loan book that's in the course of going to auction that's expired, if you like. And I just -- I don't know what their numbers are, but they are very positive about the pawnbroking growth. We're positive about pawnbroking growth. I think their AGM statements have been pretty flat this year beyond the acquisition that they made because of higher redemptions. So look, I think we're both in a good place. And the rest of the industry is in a good place. With a high gold price, you've got demand for loans. Do you see Rolex's certified preowned program reducing the demand for buying preowned Rolex's from Ramsdens? I actually think it gives it an authenticity. I think it sort of like validates the sale of secondhand Rolex's. And I think the prices that they charge for such a service or such a product makes ours very competitive. So I think the actual awareness helps, and I think it shows the great value for money that Ramsdens offer. So I don't see it as a detriment at this moment in time. I think -- I don't know whether I have clarified that question but about increasing faster, given you have plenty of cash on the balance sheet. We need customers to borrow. So they're going to come through the door. Our new pawnbroking website will generate new customers for us, I'm sure, both at, if you like, a standard GBP 200 loan level and also higher value. And you talked about not growing as fast as H&T. I think I said that AGM statement says it's pretty flat for the first 4 months of this year. And obviously, we've grown a little bit. Today's presentation no longer mentions expansion in the southeast. Could you please update us? Is there any changes to your expansion strategy? No, it's just we're already there really. We've got 6 stores in Kent, Essex and the outskirts of London. So it's not a case of a changing strategy. We are there. It is -- may be slowed down. One of the things that you do when you enter a new territory, you've got a lot of new staff that have learned a lot of things, and we have to be patient at times. That's why, if you like, Chatham was on its own for a while. Then we grew a few more stores. There's opportunity in the northwest as well. We just have a lot of opportunities. There's no change in strategy. We're still opening stores. Pawn book is the least cyclical segment you have. Would be good to see it growing faster, given plenty of cash on your balance sheet? Val, we're trying to grow pawnbroking. I'm trying to grow gold buying. I'm trying to grow foreign currency, and I'm trying to grow retailing jewelry. The cyclical side of things, I don't know whether you mean over several years or whether that's to do with the economic environment. We're trying to grow all the core services. And actually, we've got investment options. So we're seeing it grow forth. We're back here again in 6 months. Hopefully, you'll see all 4 services higher than they are now. Alessandro, I think that's the last question that we've had.

Perfect. Yes. Peter and Martin, I'd just like to thank you. You've actually managed to go through all of those questions. And of course, we will publish those responses on the investor meet company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Peter, I was just wondering if you had any closing comments?

I don't know whether you're investors or not investors or want to find out more about us for the first time. We've got a strong business. We've got a good, strong cash generation. We are rewarding shareholders with good dividend and dividend growth. We have opportunities for growth that I'm sure we'll take advantage of as the business moves forward over months and years. We're a nice little business, and I'm quite happy with my investment in it.

Perfect. Peter and Martin, thank you 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 is going to take a few moments to complete, but I'm sure it will 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.