REG - Record PLC - Final Results <Origin Href="QuoteRef">RECL.L</Origin> - Part 2
16/07/2015 11:05
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The Group operates a Group Profit Share Scheme such that a long-term average
of 30% of operating profit before Group Profit Share ("GPS") is made available
to be awarded to staff. The Remuneration Committee has agreed that for the
year ended 31 March 2015, the Group Profit Share Scheme is 30% of pre-GPS
operating profit. This represents £3.2m, an increase of £0.3m from the
previous financial year. Directors and senior management in Record are
required to take a proportion of this remuneration in the form of shares which
are subject to lock-up arrangements under the scheme rules.
Under the scheme rules, the intention is to purchase shares in the market
following the announcement of interim and full year financial results.
Operating profit and margins
On a fully consolidated basis, operating profit for the year ended 31 March
2015 of £7.5m was 17% higher than the operating profit for the previous
financial year (2014: £6.4m) and operating margin increased from 32% to 36%.
Management also considers operating profit and profit before tax on an
"underlying" basis, which excludes the impact of the income and expenditure
attributable to non-controlling interests (i.e. gains and losses attributable
to other investors in the seed funds which are consolidated into the Group's
financial statements on a line-by-line basis, as required under IFRS). This
reflects the approach used for internal management reporting and is considered
to represent more accurately the core revenues and costs driving current and
future cash flows of the business. Underlying operating profit for the year
was £7.3m (2014: £6.8m) with underlying profit before tax for the year of
£7.5m (2014: £6.9m).
Cash flow
The Group's year end cash position was £12.0m (2014: £11.5m). The cash
generated from operating activities before tax was £8.0m (2014: £6.7m), with
£1.6m paid in taxation (2014: £1.6m) and £3.3m paid in dividends (2014:
£4.9m). At the year end, the Group held money market instruments with
maturities between 3 and 12 months, worth £18.1m (2014: £15.5m). These
instruments are managed as cash by the Group but are not classified as cash
under IFRS rules (see note 16 in the financial statements for more details).
Dividends
Shareholders received an interim dividend of 0.75p per share paid on 19
December 2014. The Board recommends paying a final dividend of 0.90p per
share, equivalent to £1.9m, taking the overall dividend to 1.65p per share, an
increase of 10% over the prior year (dividend paid in respect of year ended 31
March 2014: 1.50p per share).
Subject to shareholder approval, the dividend will be paid on 29 July 2015 to
shareholders on the register on 26 June 2015, the ex-dividend date being 25
June 2015. The dividend cover in the year was 1.6 (2014: 1.7).
Financial stability and Capital management
The Group's financial position remains strong, with consolidated net assets
growing to £35.8m (2014: £32.9m) at the end of the year represented
predominantly by assets managed as cash totalling £30.1m (2014: £27.0m).
The Board's policy is to retain capital (being equivalent to shareholders'
funds) within the business sufficient to meet continuing obligations, to meet
regulatory capital requirements, to sustain future growth and to provide a
buffer against adverse market conditions. To this end, the Group maintains a
financial model to assist it in forecasting future capital requirements over a
three year cycle under various scenarios and monitors the capital and
liquidity positions of the Group on an ongoing and frequent basis. The Group
has no debt.
Record Currency Management Limited ("RCML") is a BIPRU limited licence firm
authorised and regulated in the UK by the Financial Conduct Authority ("FCA"),
and is a wholly owned subsidiary of Record plc. RCML is required to submit
semi-annual capital adequacy returns, and it held significant surplus capital
resources relative to its regulatory financial resource requirement throughout
the year. Similarly the Group also submits semi-annual capital adequacy
returns but on a consolidated basis, taking account of the risks across the
business assessed by the Board as requiring further capital. In assessing
these risks, the Group uses an active risk-based approach to monitoring and
managing risks, which includes its Internal Capital Adequacy Assessment
Process ("ICAAP").
The Board is satisfied that the Group is adequately capitalised both to
continue its operations effectively and to meet regulatory requirements, due
to the size and liquidity of ongoing balance sheet resources maintained by the
Group.
The Group held regulatory capital resources based on the audited financial
statements as at 31 March, as follows:
Regulatory capital resources (£m) 2015 2014
Core Tier 1 capital 31.9 29.2
Deductions: Intangible assets (0.5) (0.7)
Regulatory capital resources 31.4 28.5
Further information regarding the Group's capital adequacy information can be
found in the Group's Pillar 3 disclosure, which is available on the Group's
website at www.recordcm.com.
Consolidated statement of comprehensive income
Year ended 31 March
2015 2014
Note £'000 £'000
Revenue 3 21,057 19,922
Cost of sales (148) (86)
Gross profit 20,909 19,836
Administrative expenses (13,373) (13,412)
Operating profit 4 7,536 6,424
Finance income 146 113
Profit before tax 7,682 6,537
Taxation 6 (1,708) (1,494)
Profit after tax and total comprehensive income for the year 5,974 5,043
Profit and total comprehensive income for the year attributable to:
Non-controlling interests 192 (364)
Owners of the parent 5,782 5,407
Earnings per share for profit attributable to the equity holders of the Group during the year (expressed in pence per share)
Basic earnings per share 7 2.66p 2.48p
Diluted earnings per share 7 2.65p 2.47p
Consolidated statement of financial position
As at 31 March
Note 2015 2014
£'000 £'000
Non-current assets
Property, plant and equipment 10 129 86
Intangible assets 11 504 734
Investments 12 2,567 2,754
Deferred tax assets 13 73 158
3,273 3,732
Current assets
Trade and other receivables 14 6,324 5,646
Derivative financial assets 15 619 198
Money market instruments with maturity > 3 months 16 18,100 15,488
Cash and cash equivalents 16 12,010 11,503
Total current assets 37,053 32,835
Total assets 40,326 36,567
Current liabilities
Trade and other payables 17 (2,949) (2,706)
Corporation tax liabilities 17 (893) (832)
Derivative financial liabilities 15 (680) (122)
Total current liabilities (4,522) (3,660)
Total net assets 35,804 32,907
Equity
Issued share capital 18 55 55
Share premium account 1,847 1,838
Capital redemption reserve 20 20
Retained earnings 30,006 27,327
Equity attributable to owners of the parent 31,928 29,240
Non-controlling interest 20 3,876 3,667
Total equity 35,804 32,907
Consolidated statement of changes in equity
Year ended 31 March 2015
Called up share capital Share premium account Capital redemption reserve Retained earnings Total attributable to equity holders of the parent Non-controlling interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2014 55 1,838 20 27,327 29,240 3,667 32,907
Profit and total comprehensive income for the year - - - 5,782 5,782 192 5,974
Dividends paid - - - (3,266) (3,266) - (3,266)
Own shares purchased by EBT - - - (318) (318) - (318)
Release of shares held by EBT - 9 - 314 323 - 323
Transactions with shareholders - 9 - (3,270) (3,261) - (3,261)
Issue of units in funds to non-controlling interests - - - - - 17 17
Share option reserve movement - - - 167 167 - 167
As at 31 March 2015 55 1,847 20 30,006 31,928 3,876 35,804
Year ended 31 March 2014
Called up share capital Share premium account Capital redemption reserve Retained earnings Total attributable to equity holders of the parent Non-controlling interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2013 55 1,838 20 26,729 28,642 3,646 32,288
Profit and total comprehensive income for the year - - - 5,407 5,407 (364) 5,043
Dividends paid - - - (4,898) (4,898) - (4,898)
Own shares purchased by EBT - - - (171) (171) - (171)
Release of shares held by EBT - - - 104 104 - 104
Transactions with shareholders - - - (4,965) (4,965) - (4,965)
Issue of units in funds to non-controlling interests - - - - - 1,198 1,198
Divestment of non-controlling interest - - - - - (813) (813)
Share option reserve movement - - - 156 156 - 156
As at 31 March 2014 55 1,838 20 27,327 29,240 3,667 32,907
Consolidated statement of cash flows
Year ended 31 March
Note 2015 2014
£'000 £'000
Operating profit 7,536 6,424
Adjustments for:
Profit on disposal of property, plant and equipment - (1)
Depreciation of property, plant and equipment 10 85 79
Amortisation of intangible assets 11 230 229
Release of shares previously held by EBT 308 -
Share option expense 167 156
8,326 6,887
Changes in working capital
Increase in receivables (672) (68)
Increase in payables 243 29
Increase in other financial assets (421) (231)
Increase in other financial liabilities 558 121
CASH INFLOW FROM OPERATING ACTIVITIES 8,034 6,738
Corporation taxes paid (1,562) (1,571)
NET CASH INFLOW FROM OPERATING ACTIVITIES 6,472 5,167
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds on disposal of property, plant and equipment - 1
Purchase of property, plant and equipment (128) (25)
Sale / (purchase) of securities 186 (1,114)
Purchase of money market instruments with maturity > 3 months 16 (2,612) (15,488)
Decrease in cash due to accounting treatment of funds previously consolidated on line by line basis - (1,877)
Interest received 141 102
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (2,413) (18,401)
CASH FLOW FROM FINANCING ACTIVITIES
Cash inflow from issue of units in funds 17 677
Exercise of share options 15 104
Purchase of own shares (318) (171)
Dividends paid to equity shareholders (3,266) (4,898)
CASH OUTFLOW FROM FINANCING ACTIVITIES (3,552) (4,288)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS IN THE YEAR 507 (17,522)
Cash and cash equivalents at the beginning of the year 11,503 29,025
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 12,010 11,503
Closing cash and cash equivalents consists of:
Cash 2,730 1,476
Cash equivalents 9,280 10,027
Cash and cash equivalents 16 12,010 11,503
Company statement of financial position
As at 31 March
Note 2015 2014
£'000 £'000
Non-current assets
Investments 12 3,539 3,378
3,539 3,378
Current assets
Trade and other receivables 14 - 146
Cash and cash equivalents 16 17 34
Total current assets 17 180
Total assets 3,556 3,558
Current liabilities
Trade and other payables 17 (481) (452)
Total current liabilities (481) (452)
Total net assets 3,075 3,106
Equity
Issued share capital 18 55 55
Share premium account 1,809 1,809
Capital redemption reserve 20 20
Retained earnings 1,191 1,222
Total equity 3,075 3,106
Company statement of changes in equity
Year ended 31 March 2015
Called up share capital Share premium account Capital redemption reserve Retained earnings Total shareholders' equity
£'000 £'000 £'000 £'000 £'000
As at 1 April 2014 55 1,809 20 1,222 3,106
Profit and total comprehensive income for the year - - - 3,068 3,068
Dividends paid - - - (3,266) (3,266)
Transactions with shareholders - - - (3,266) (3,266)
Share option reserve movement - - - 167 167
As at 31 March 2015 55 1,809 20 1,191 3,075
Year ended 31 March 2014
Called up share capital Share premium account Capital redemption reserve Retained earnings Total shareholders' equity
£'000 £'000 £'000 £'000 £'000
As at 1 April 2013 55 1,809 20 1,402 3,286
Profit and total comprehensive income for the year - - - 4,562 4,562
Dividends paid - - - (4,898) (4,898)
Transactions with shareholders - - - (4,898) (4,898)
Share option reserve movement - - - 156 156
As at 31 March 2014 55 1,809 20 1,222 3,106
Company statement of cash flows
Year ended 31 March
2015 2014
£'000 £'000
Operating loss (3) (345)
Adjustment for:
Loss on investments 5 142
Changes in working capital
Decrease in receivables 146 1,515
Increase / (decrease) in payables 29 (1,265)
CASH INFLOW FROM OPERATING ACTIVITIES 177 47
Corporation taxes paid - (24)
NET CASH INFLOW FROM OPERATING ACTIVITIES 177 23
CASH FLOW FROM INVESTING ACTIVITIES
Investment in seed funds - (1,000)
Dividends received 3,070 4,900
Interest received 2 8
NET CASH INFLOW FROM INVESTING ACTIVITIES 3,072 3,908
CASH FLOW FROM FINANCING ACTIVITIES
Dividends paid to equity shareholders (3,266) (4,898)
CASH OUTFLOW FROM FINANCING ACTIVITIES (3,266) (4,898)
NET DECREASE IN CASH AND CASH EQUIVALENTS IN THE YEAR (17) (967)
Cash and cash equivalents at the beginning of the year 34 1,001
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 17 34
Closing cash and cash equivalents consists of:
Cash 17 34
Cash equivalents - -
Cash and cash equivalents 17 34
Notes to the financial statements for the year ended 31 March 2015
These financial statements exclude disclosures that are both immaterial and
judged to be unnecessary to understand our results and financial position.
1. Accounting policies
In order to increase the clarity of the notes to the financial statements,
accounting policy descriptions appear at the beginning of the note to which
they relate, and are shown in italics.
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out in the notes below. These
policies have been consistently applied to all the periods presented unless
otherwise stated.
(a) Accounting convention
Basis of preparation
The Group and Company have prepared their financial statements under
International Financial Reporting Standards (IFRSs) as adopted by the European
Union. IFRSs comprise standards and interpretations approved by the
International Accounting Standards Board (IASB) and the International
Financial Reporting Interpretations Committee (IFRIC) as adopted in the
European Union as at 31 March 2015. The financial statements have been
prepared on a historical cost basis, modified to include fair valuation of
derivative financial instruments.
The Directors are satisfied that the Company and the Group have adequate
resources with which to continue to operate for the foreseeable future. For
this reason the financial statements have been prepared on a going concern
basis.
The preparation of financial statements in accordance with the recognition and
measurement principles with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The bases for
management judgements, estimates and assumptions are discussed further in note
2.
Impact of new accounting standards
A number of amendments to existing standards and interpretations have been
issued, some of which were mandatory for periods beginning 1 April 2014, with
the remaining becoming effective in future periods. The new standards and
amendments to existing standards effective for the year to 31 March 2015 have
not had a material impact on the financial statements of Record plc, but the
application of IFRS 12 has resulted in additional disclosures for financial
instruments (refer to note 20).
New standards and interpretations
IFRS 9 "Financial Instruments" has yet to be endorsed by the EU and replaces
the classification and measurement models for financial instruments in IAS 39
with two classification categories; amortised cost and fair value. No other
standards or interpretations issued but not yet effective are expected to have
a material impact on the Group's financial statements.
(b) Basis of consolidation
The consolidated financial information contained within the financial
statements incorporates financial statements of the Company and entities
controlled by the Company (its subsidiaries) drawn up to 31 March 2015.
Control is achieved where the Company is exposed to or has rights over
variable returns from its involvement with the entity and it has the power to
affect returns. Where the Group controls an entity, but does not own all the
share capital of that entity, the interest of the other shareholders'
non-controlling interests is stated within equity at the non-controlling
interests' proportion of the fair value of the recognised assets and
liabilities.
An Employee Benefit Trust has been established for the purposes of satisfying
certain share-based awards. The Group has 'de facto' control over this
special purpose entity. This trust is fully consolidated within the
accounts.
The Group has investments in three funds. These funds are held by Record plc
and represent seed capital investments by the Group. If the Group is in a
position to be able to control a fund by virtue of holding a majority of units
in the fund, then the fund is consolidated within the Group accounts. We
consider that the Group exerts such control in cases where it (either in
isolation or together with its related parties) holds a majority of units in
the fund. Such funds are consolidated either on a line by line basis, or if it
meets the definition of a disposal group held for sale it is classified and
accounted for on that basis. In the case that the Group does not control a
fund for the complete reporting period, then the fund is consolidated only for
the part of the reporting period for which the Group has control over the
entity.
The accounts of subsidiary undertakings, which are prepared using uniform
accounting policies, are coterminous with those of the Company apart from
those of the seeded funds which have accounting reference dates of 30
September. The consolidated accounts incorporate the financial performance of
the seeded funds in the year ended 31 March 2015 and the financial position of
the seeded funds as at 31 March 2015.
The Company is taking advantage of the exemption under the Companies Act 2006
s408(1) not to present its individual statement of comprehensive income and
related notes that form part of the financial statements. The Group total
comprehensive income for the year includes a profit of £3,069,187 attributable
to the Company (2014: £4,561,908).
All intra-Group transactions, balances, income, expenses and dividends are
eliminated on consolidation.
(c) Foreign currencies
The financial statements are presented in Sterling (£), which is also the
functional currency of the parent company. Foreign currency transactions are
translated into the functional currency of the parent company using the
exchange rates prevailing at the dates of the transactions (spot exchange
rate). Foreign exchange gains and losses resulting from the settlement of
such transactions and from the re-measurement of monetary items at year end
exchange rates are recognised in profit or loss.
(d) Financial instruments
Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial assets expire, or when the financial asset and all
substantial risks and rewards are transferred. A financial liability is
derecognised when it is extinguished, discharged, cancelled or expires.
(e) Impairment of assets
The Group assesses whether there is any indication that any of its assets have
been impaired at least annually. If such an indication exists, the asset's
recoverable amount is estimated and compared to its carrying value.
An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. Impairment losses are recognised in
profit or loss.
(f) Provisions and contingent liabilities
Provisions are recognised when present obligations as a result of a past event
will probably lead to an outflow of economic resources from the Group and
amounts can be estimated reliably. Timing or amount of the outflow may still
be uncertain. A present obligation arises from the presence of a legal or
constructive commitment that has resulted from past events.
Provisions are measured at the estimated expenditure required to settle the
present obligation, based on the most reliable evidence available at the
reporting date, including the risks and uncertainties associated with the
present obligation. Provisions are discounted to their present values, where
the time value of money is material. Any reimbursement that the Group can be
virtually certain to collect from a third party with respect to the obligation
is recognised as a separate asset. However, this asset may not exceed the
amount of the related provision.
All provisions are reviewed at each reporting date and adjusted to reflect the
current best estimate. In those cases where the possible outflow of economic
resources as a result of present obligations is considered improbable or
remote, no liability is recognised.
(g) Equity
Share capital represents the nominal value (par) of shares that have been
issued. Share premium includes any premium received on issue of share capital.
Retained earnings includes all current and prior period retained profits and
share based employee remuneration. All transactions with owners of the parent
are recorded separately within equity.
2. Critical accounting estimates and judgements
The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates. The
estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods. Note 19 covers the assumptions made in calculating the fair
value of share options offered by the Group to its employees. The Directors
have judged that the Group does not bear substantially all the risks and
rewards of ownership of its leasehold premises and therefore accounts for the
leases as operating leases as described in note 23.
3. Revenue
Revenue recognition
Revenue is recognised in profit or loss when the amount of revenue can be
measured reliably; it is probable that economic benefits will flow to the
entity; the stage of completion can be measured reliably; and the costs
incurred and costs to complete the transaction can be measured reliably also.
Management fees are accrued on a daily basis, typically based upon an agreed
percentage of the assets under management equivalents ("AUME") denominated in
the client's chosen base currency. The Group is entitled to earn performance
fees from some clients where the performance of the clients' mandates exceeds
defined benchmarks by an agreed level of outperformance over a set time
period. Performance fees are recognised at the end of each contractual
performance period as this is the first point at which the fee amount can be
estimated reliably and it is probable that the fee will be received.
Segmental analysis
The Directors, who together are the entity's Chief Operating Decision Maker,
consider that its services comprise one operating segment (being the provision
of currency management services) and that it operates in a market that is not
bound by geographical constraints. The Group provides Directors with revenue
information disaggregated by product, whilst operating costs, assets and
liabilities are presented on an aggregated basis. This reflects the unified
basis on which the products are marketed, delivered and supported.
(a) Product revenues
The Group has split its currency management revenues by product. Revenue
attributable to the non-controlling interests' ("NCI") holding in seed funds
and other income arises mainly from gains / losses on derivative financial
instruments.
Revenue by product type 2015 2014
£'000 £'000
Management fees
Dynamic Hedging 9,376 11,872
Passive Hedging 8,105 5,728
Currency for Return 2,774 2,671
Total management fee income 20,255 20,271
Performance fee income - Dynamic Hedging 480 -
Revenue attributable to NCI holding in seed funds 192 (344)
Other income 130 (5)
Total revenue 21,057 19,922
(b) Geographical analysis
The geographical analysis of revenue is based on the destination i.e. the
location of the client to whom the services are provided. All turnover
originated in the UK.
Revenue by geographical region 2015 2014
£'000 £'000
Management and performance fee income
UK 5,501 5,141
US 3,660 5,769
Switzerland 10,352 6,893
Other 862 2,468
Total management and performance fee income 20,735 20,271
Revenue attributable to NCI holding in seed funds 192 (344)
Other income 130 (5)
Total revenue 21,057 19,922
Revenue attributable to NCI holding in seed funds and other income are not
analysed by geographical region.
All of the Group's tangible non-current assets are located in the UK.
(c) Major clients
During the year ended 31 March 2015, five clients individually accounted for
more than 10% of the Group's revenue during the year. The five largest
clients generated revenues of £3.2m, £2.4m, £2.3m, £2.2m and £2.1m in the year
(2014: two largest clients generated revenues of £4.9m and £2.4m).
4. Operating profit
Operating profit for the year is stated after charging / (crediting):
2015 2014
£'000 £'000
Staff costs 8,919 8,911
Depreciation of property, plant and equipment 85 79
Amortisation of intangibles 230 229
Auditor fees
Fees payable to the Group's auditor for the audit of the Company's annual accounts 44 36
The audit of the Group's subsidiaries, pursuant to legislation 42 39
Other services pursuant to legislation 65 62
Other services relating to taxation 10 12
Operating lease rentals: Land and buildings 224 231
Losses / (gains) on forward FX contracts held to hedge cash flow 92 (173)
Other exchange (gains) / losses (701) 326
5. Staff costs
The average number of employees, including Directors, employed by the Group
during the year was:
2015 2014
Client Team 9 10
Research 11 10
Portfolio Management 9 9
Trading 6 5
Operations 4 4
Reporting Services 7 6
Systems 4 4
Finance, Human Resources and Legal 6 6
Administration 1 1
Compliance 2 2
Corporate 9 9
Annual average 68 66
The aggregate costs of the above employees, including Directors, were as
follows:
2015 2014
£'000 £'000
Wages and salaries 6,489 6,273
Social security costs 871 905
Pension costs 416 412
Other employment benefit costs 1,143 1,321
Aggregate staff costs 8,919 8,911
Other employment benefit costs include share-based payments, share option
costs, and costs relating to the Record plc Share Incentive Plan.
6. Taxation - Group
Current tax is the tax currently payable based on taxable profit for the year.
Current income tax assets and/or liabilities comprise those obligations to,
or claims from, fiscal authorities relating to the current or prior reporting
periods, that are unpaid at the reporting date. Current tax is payable on
taxable profit, which differs from profit or loss in the financial statements.
Calculation of current tax is based on tax rates and tax laws that have been
enacted or substantively enacted by the end of the reporting period.
The total charge for the year can be reconciled to the accounting profit as
follows:
2015 2014
£'000 £'000
Profit before taxation 7,682 6,537
Taxation at the standard rate of tax in the UK of 21% (2014: 23%) 1,613 1,504
Tax effects of:
Other disallowable expenses and non-taxable income 32 68
Capital allowances for the period lower than depreciation 8 24
Lower tax rates on subsidiary undertakings - (42)
Adjustments recognised in current year in relation to the current tax of prior years 5 (18)
Other temporary differences 50 (42)
Total tax expense 1,708 1,494
The tax expense comprises:
2015 2014
£'000 £'000
Current tax expense 1,623 1,647
Deferred tax expense 85 (153)
Total tax expense 1,708 1,494
The standard rate of UK corporation tax for the year is 21% (2014: 23%). A
full corporation tax computation is prepared at the year end. The actual
charge as a percentage of the profit before tax may differ from the underlying
tax rate. Differences typically arise as a result of capital allowances
differing from depreciation charged, and certain types of expenditure not
being deductible for tax purposes, other differences may also arise.
The tax charge for the year ended 31 March 2015 was £1,707,824 (2014:
£1,493,615) which was 22.2% of profit before tax (2014: 22.9%).
7. Earnings per share
Basic earnings per share is calculated by dividing the profit for the
financial year attributable to equity holders of the parent by the weighted
average number of ordinary shares in issue during the year.
Diluted earnings per share is calculated as for the basic earnings per share
with a further adjustment to the weighted average number of ordinary shares to
reflect the effects of all potential dilution.
There is no difference between the profit for the financial year attributable
to equity holders of the parent used in the basic and diluted earnings per
share calculations.
2015 2014
Weighted average number of shares used in calculation of basic earnings per share 217,501,040 217,778,666
Effect of dilutive potential ordinary shares - share options 892,093 893,900
Weighted average number of shares used in calculation of diluted earnings per share 218,393,133 218,672,566
pence pence
Basic earnings per share 2.66 2.48
Diluted earnings per share 2.65 2.47
The potential dilutive shares relate to the share options granted in respect
of the Group's Share Scheme (see note 19). There were share options and
deferred share awards in place at the beginning of the period over 6,955,000
shares. During the year 51,250 options were exercised, and a further
1,320,000 share options lapsed or were forfeited. The Group granted 4,327,000
share options with a potentially dilutive effect during the year, but these
4,327,000 share options did not have a dilutive impact at the year end.
8. Dividends
Interim and special dividends are recognised when paid and final dividends
when approved by shareholders.
The dividends paid by the Group during the year ended 31 March 2015 totalled
£3,266,329 (1.50p per share) which comprised a final dividend in respect of
the year ended 31 March 2014 of £1,634,833 (0.75p per share) and an interim
dividend for the year ended 31 March 2015 of £1,631,496 (0.75p per share).
The dividends paid by the Group during the year ended 31 March 2014 totalled
£4,897,875 (2.25p per share) which comprised a final dividend in respect of
the year ended 31 March 2013 of £3,263,625 (1.50p per share) and an interim
dividend for the year ended 31 March 2014 of £1,634,250 (0.75p per share).
The final dividend proposed in respect of the year ended 31 March 2015 is
0.90p per share.
9. Retirement benefit obligations
The Group operates defined contribution pension plans for the benefit of
employees. The Group makes contributions to independently administered plans,
such contributions being recognised as an expense when they fall due. The
assets of the schemes are held separately from those of the Group in
independently administered funds.
The Group is not exposed to the particular risks associated with the operation
of Defined Benefit plans and has no legal or constructive obligation to make
any further payments to the plans other than the contributions due.
The pension cost charge represents contributions payable by the Group to the
funds and amounted to £416,276 (2014: £412,357).
10. Property, plant and equipment - Group
All property, plant and equipment assets are stated at cost less accumulated
depreciation. Depreciation of property, plant and equipment is provided to
write off the cost, less residual value, on a straight-line basis over the
estimated useful life:
§ Leasehold improvements - period from lease commencement to the earlier of
the lease termination date and the next rent review date
§ Computer equipment - 2-5 years
§ Fixtures and fittings - 4 years
Residual values, remaining useful economic lives and depreciation methods are
reviewed annually and adjusted if appropriate. Gains or losses on disposal
are included in profit or loss.
The Group's property, plant and equipment comprise leasehold improvements,
computer equipment, and fixtures and fittings. The carrying amount can be
analysed as follows:
Leasehold improvements Computer equipment Fixtures and fittings Total
2015 £'000 £'000 £'000 £'000
Cost
At 1 April 2014 534 721 272 1,527
Additions - 96 32 128
Disposals - (193) - (193)
At 31 March 2015 534 624 304 1,462
Depreciation
At 1 April 2014 534 637 270 1,441
Charge for the year - 78 7 85
Disposals - (193) - (193)
At 31 March 2015 534 522 277 1,333
Net book amounts
At 31 March 2015 - 102 27 129
At 1 April 2014 - 84 2 86
Leasehold improvements Computer equipment Fixtures and fittings Total
2014 £'000 £'000 £'000 £'000
Cost
At 1 April 2013 534 721 270 1,525
Additions - 22 3 25
Disposals - (22) (1) (23)
At 31 March 2014 534 721 272 1,527
Depreciation
At 1 April 2013 534 582 269 1,385
Charge for the year - 77 2 79
Disposals - (22) (1) (23)
At 31 March 2014 534 637 270 1,441
Net book amounts
At 31 March 2014 - 84 2 86
At 1 April 2013 - 139 1 140
11. Intangible assets
Intangible assets are shown at historical cost less accumulated amortisation
and impairment losses. Amortisation is charged to profit or loss on a
straight-line basis over the estimated useful lives of the intangible assets
unless such lives are indefinite. Amortisation is included within operating
expenses in the statement of comprehensive income. Intangible assets are
amortised from the date they are available for use. Useful lives are as
follows:
§ Software - 5 years
Amortisation periods and methods are reviewed annually and adjusted if
appropriate.
The Group's intangible assets comprise the capitalised cost of software
development only. The carrying amounts can be analysed as follows:
Software Total
2015 £'000 £'000
Cost
At 1 April 2014 1,150 1,150
Additions - -
Disposals - -
At 31 March 2015 1,150 1,150
Amortisation
At 1 April 2014 416 416
Charge for the year 230 230
Disposals - -
At 31 March 2015 646 646
Net book amounts
At 31 March 2015 504 504
At 1 April 2014 734 734
Software Total
2014 £'000 £'000
Cost
At 1 April 2013 1,150 1,150
Additions - -
Disposals - -
At 31 March 2014 1,150 1,150
Amortisation
At 1 April 2013 187 187
Charge for the year 229 229
Disposals - -
At 31 March 2014 416 416
Net book amounts
At 31 March 2014 734 734
At 1 April 2013 963 963
Intangible assets are comprised of the capitalised development costs of the
Group's middle and back office system which was completed in June 2012 and has
an estimated useful economic life of five years. The annual contractual
commitment for the maintenance and support of software is £138,112 (2014:
£136,071). All amortisation charges are included within administrative
expenses.
12. Investments
Group
The Group holds certain securities through its seed funds. These securities
are designated as fair value through profit and loss and the fair value is
determined by reference to quoted market prices. Investments in funds which
are not consolidated on a line by line basis are designated as fair value
through profit or loss.
Investments 2015 2014
£'000 £'000
Record Currency - FTSE FRB10 Index Fund 1,105 1,120
US government treasury inflation protected securities ("TIPS") 1,462 1,634
2,567 2,754
The Record Currency - FTSE FRB10 Index Fund was consolidated into the Group
financial statements on a line by line basis until 28 February 2014. After
this date the Group ceased to control the fund as a result of investment into
the fund by an external investor. There was no gain or loss arising on the
transaction. The Group ceased to consolidate the fund from this time, and its
own investment in the fund is now measured at fair value.
Company
Investments in subsidiaries are shown at cost less impairment losses. The
capitalised investment in respect of share-based payments offered by
subsidiaries is equal to the cumulative fair value of the amounts payable to
employees recognised as an expense by the subsidiary. Investments in funds
are measured at fair value through profit or loss.
2015 2014
£'000 £'000
Investment in subsidiaries (at cost)
Record Currency Management Limited 10 10
Record Group Services Limited 10 10
Record Portfolio Management Limited 10 10
Record Currency Management (US)
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