REG - Record PLC - Final Results <Origin Href="QuoteRef">RECL.L</Origin> - Part 4
17/06/2016 07:07
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the
Group's policy to assess debtors for recoverability on an individual basis and
to make a provision where it is considered necessary. In assessing
recoverability the Group takes into account any indicators of impairment up to
the reporting date. The application of this policy generally results in debts
that are 0-3 months overdue not being provided for unless individual
circumstances indicate that a debt is impaired.
Trade receivables are made up of 51 debtors' balances (2015: 44). The largest
individual debtor corresponds to 15% of the total balance (2015: 17%). Debtor
days, based on the generally accepted calculation of debtor days, is 70 days
(2015: 82 days). This reflects the quarterly billing cycle used by the Group
for the vast majority of its fees. As at 31 March 2016 2% of debt was overdue
(2015: 0%). No debtors' balances have been renegotiated during the year or in
the prior year.
Liquidity risk
The Group is exposed to liquidity risk, namely that it may be unable to meet
its payment obligations as they fall due. The Group maintains sufficient cash
and marketable securities to be able to meet all such obligations. Management
review cash flow forecasts on a regular basis to determine whether the Group
has sufficient cash reserves to meet the future working capital requirements
and to take advantage of business opportunities. The average creditor payment
period is 14 days (2015: 15 days).
Contractual maturity analysis for financial liabilities:
Carrying amount Due or due in less than 1 month Due between 1 and 3 months Due between 3 months and 1 year
At 31 March 2016 £'000 £'000 £'000 £'000
Trade payables 171 107 14 50
Accruals 1,951 180 1,017 754
Derivative financial liabilities 108 38 70 -
Carrying amount Due or due in less than 1 month Due between 1 and 3 months Due between 3 months and 1 year
At 31 March 2015 £'000 £'000 £'000 £'000
Trade payables 181 117 14 50
Accruals 2,455 129 1,254 1,072
Derivative financial liabilities 680 70 344 266
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or
cash flows associated with the instrument will fluctuate due to changes in
market interest rates. Interest rate risk arises from interest-bearing
financial assets and liabilities used by the Group. Interest-bearing assets
comprise money market instruments and cash and cash equivalents which are
considered to be short-term liquid assets. It is the Group's policy to settle
trade payables within the credit terms allowed and the Group does not
therefore incur interest on overdue balances.
A sensitivity analysis has not been disclosed for the impact of interest rate
changes as any reasonable range of change in interest rate would not directly
have a material impact on profit or equity.
Interest rate profiles
Fixed rate Floating rate No interest rate Total
At 31 March 2016 £'000 £'000 £'000 £'000
Financial assets
Trade receivables - - 4,027 4,027
Accrued income - - 1,055 1,055
Other receivables - - 25 25
Derivative financial assets at fair value through profit or loss - - 106 106
Money market instruments with maturities > 3 months 13,020 - - 13,020
Cash and cash equivalents 16,281 5,439 - 21,720
Total financial assets 29,301 5,439 5,213 39,953
Financial liabilities
Trade payables - - (171) (171)
Accruals - - (1,951) (1,951)
Derivative financial liabilities at fair value through profit or loss - - (108) (108)
Total financial liabilities - - (2,230) (2,230)
Fixed rate Floating rate No interest rate Total
At 31 March 2015 £'000 £'000 £'000 £'000
Financial assets
Investment in Record Currency - FTSE FRB10 Index fund - - 1,105 1,105
Securities (TIPS) - 1,462 - 1,462
Trade receivables - - 4,648 4,648
Accrued income - - 1,078 1,078
Other receivables - - 74 74
Derivative financial assets at fair value through profit or loss - - 619 619
Money market instruments with maturities > 3 months 18,100 - - 18,100
Cash and cash equivalents 9,280 2,730 - 12,010
Total financial assets 27,380 4,192 7,524 39,096
Financial liabilities
Trade payables - - (181) (181)
Accruals - - (2,455) (2,455)
Derivative financial liabilities at fair value through profit or loss - - (680) (680)
Total financial liabilities - - (3,316) (3,316)
Foreign currency risk
Foreign currency risk refers to the risk that the value of a financial
commitment or recognised asset or liability will fluctuate due to changes in
foreign currency rates. The Group makes use of forward foreign exchange
contracts to manage the risk relating to future transactions in accordance
with the Group's risk management policy.
The Group is exposed to foreign currency risk on sales and cash holdings that
are denominated in a currency other than sterling, and also on assets and
liabilities held by the Record Currency - Strategy Development Fund (formerly
Global Alpha Fund). The principal currencies giving rise to this risk are the
US dollar, the Swiss franc, the euro and the Canadian dollar.
In the year ended 31 March 2016, the Group invoiced the following amounts in
currencies other than sterling:
Local currency value Value in reporting currency
'000 £'000
Swiss franc (CHF) 13,546 9,286
US dollar (USD) 9,389 6,234
Euro (EUR) 1,084 808
Canadian dollar (CAD) 660 334
Singapore dollar (SGD) 39 19
16,681
The value of revenues for the year ended 31 March 2016 that were denominated
in currencies other than sterling was £16.7 million (31 March 2015: £15.2
million).
Record's policy is to reduce the risk associated with the Group's sales
denominated in foreign currencies by using forward fixed rate currency sales
contracts, taking into account any forecast foreign currency cash flows.
The settlement of these forward foreign exchange contracts is expected to
occur within the following three months. Changes in the fair values of forward
foreign exchange contracts are recognised directly in profit or loss.
Of the cash denominated in currencies other than sterling (refer to note 16),
only the cash holdings of the Record Currency - Strategy Development Fund
(totalling £919,479) are not covered by the Group's hedging process, therefore
the Directors consider that the foreign currency risk on cash balances is not
material.
The Group is exposed to foreign currency risk on all the assets and
liabilities held by the Record Currency - Strategy Development Fund, which are
consolidated into the Group financial statements. The impact of the valuation
of the net assets of this seed fund is incorporated into the analysis of
sensitivity to the sterling / US dollar rate below.
Foreign currency risk - sensitivity analysis
The Group has considered the sensitivity to exchange rate movements by
considering the impact on those revenues, costs and assets denominated in
foreign currencies as experienced in the given period.
Impact on profit after tax Impact on total equity
for the year ended 31 March as at 31 March
2016 2015 2016 2015
£'000 £'000 £'000 £'000
10% weakening in the £/$ exchange rate 653 588 653 588
10% strengthening in the £/$ exchange rate (653) (588) (653) (588)
10% weakening in the £/CHF exchange rate 583 505 583 505
10% strengthening in the £/CHF exchange rate (583) (505) (583) (505)
Sterling/US dollar exchange rate
The impact of a change of 10% has been selected as this is considered
reasonable given the current level of exchange rates and the volatility
observed both on a historical basis and market expectations for future
movement. When applied to the average sterling/USD exchange rate of $1.51/£
this would result in a weakened exchange rate of $1.37/£ and a strengthened
exchange rate of $1.67/£.
Sterling/Swiss franc exchange rate
The impact of a change of 10% has been selected as this is considered
reasonable given the current level of exchange rates and the volatility
observed both on a historical basis and market expectations for future
movement. When applied to the average sterling/CHF exchange rate of CHF1.46/£
this would result in a weakened exchange rate of CHF1.33/£ and a strengthened
exchange rate of CHF1.62/£.
Sensitivity analyses have not been disclosed for other currencies as any
reasonable range of change in exchange rate would not have a material impact
on profit or equity.
Emerging Market Currency Fund
The Group seeded a product in December 2010 called the Record Currency -
Emerging Market Currency Fund, which manages a portfolio of emerging market
currency deliverable forward exchange contracts and emerging market currency
non-deliverable forward exchange contracts in order to achieve a return. As
Record plc exerts control over the fund, it has been consolidated into the
Group's primary statements. The net assets of the fund at 31 March 2016 were
£4,583,029 (2015: £3,714,107).
The Group is not materially exposed to any of the 19 Emerging Market
currencies traded in its portfolio, but the Group has considered sensitivity
to Emerging Market currencies as a group in the following table:
Impact on profit after tax for the year ended 31 March Impact on total equity
as at 31 March
2016 2015 2016 2015
£'000 £'000 £'000 £'000
10% depreciation in the Emerging Market portfolio (412) (324) (412) (324)
10% appreciation in the Emerging Market portfolio 412 324 412 324
The impact of a change to the portfolio value of 10% has been selected as this
is considered reasonable given the current level of exchange rates and the
volatility observed both on a historical basis and expectations for future
movement in emerging markets. The proportion of the impact of the change
attributable to the owners of the parent and to the non-controlling interest
is dependent on their respective holdings in the fund (see note 20 for further
detail on relative holdings at year end).
Other market risk - sensitivity analysis
FRB10 Index Fund
The Group seeded a product in December 2010 called the Record Currency - FRB10
Index Fund, which manages a portfolio of forward exchange contracts in order
to achieve a return following the FTSE FRB10 index.
As Record plc exerts control over the fund, it has been consolidated into the
Group's primary statements. The net assets of the fund at 31 March 2016 were
£1,496,189 (2015: £45,446,584).
The FTSE FRB10 index represents the return from the Forward Rate Bias strategy
which can be derived from ten of the world's largest currencies (by
turnover).The Group has provided the following data in respect of sensitivity
to the FTSE FRB10 index:
Impact on profit after tax for the year ended 31 March Impact on total equity
as at 31 March
2016 2015 2016 2015
£'000 £'000 £'000 £'000
10% depreciation in the FRB10 index (146) (107) (146) (107)
10% appreciation in the FRB10 index 146 107 146 107
The impact of a change to the FTSE FRB10 index of 10% has been selected as
this is considered reasonable given the current level of exchange rates and
the volatility observed both on a historical basis and expectations for future
movement. The proportion of the impact of the change attributable to the
owners of the parent and to the non-controlling interest is dependent on their
respective holdings in the fund (see note 20 for further detail on relative
holdings at year end).
22. Fair value measurement
The following table presents financial assets and liabilities measured at fair
value in the consolidated statement of financial position in accordance with
the fair value hierarchy. This hierarchy groups financial assets and
liabilities into three levels based on the significance of inputs used in
measuring the fair value of the financial assets and liabilities. The fair
value hierarchy has the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2: inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The level within which the financial asset or liability is classified is
determined based on the lowest level of input to the fair value measurement.
The financial assets and liabilities measured at fair value in the statement
of financial position are grouped into the fair value hierarchy as follows:
2016 Level 1 Level 2 Level 3
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Forward foreign exchange contracts used for seed funds 106 - 106 -
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts used for hedging (108) - (108) -
Total (2) - (2) -
2015 Level 1 Level 2 Level 3
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Investment in Record Currency - FTSE FRB10 Index Fund 1,105 1,105 - -
TIPS 1,462 1,462 - -
Forward foreign exchange contracts used for seed funds 35 - 35 -
Options used for seed funds 576 - 576 -
Forward foreign exchange contracts used for hedging 8 - 8 -
Financial liabilities at fair value through profit or loss
Options used for seed funds (680) - (680) -
Total 2,506 2,567 (61) -
There have been no transfers between levels in the reporting period (2015:
none).
Basis for classification of financial instruments classified as level 2 within
the fair value hierarchy
Both forward foreign exchange contracts and options are classified as level 2.
Both of these instruments are traded on an active market. Options are valued
using an industry standard model with inputs based on observable market data
whilst the fair value of forward foreign exchange contracts may be established
using interpolation of observable market data rather than from a quoted
price.
Classes and fair value of financial instruments
It is the Directors' opinion that the carrying value of all financial
instruments approximates to their fair value.
Categories of financial instrument
Loans and receivables Financial liabilities measured at amortised cost Assets at fair value through profit or loss Liabilities at fair value through profit or loss
At 31 March 2016 Note £'000 £'000 £'000 £'000
Trade and other receivables (excludes prepayments) 14 5,107 - - -
Money market instruments with maturities > 3 months 16 13,020 - - -
Cash and cash equivalents 16 21,720 - - -
Derivative financial assets at fair value through profit or loss 15 - - 106 -
Current trade payables 17 - (171) - -
Accruals 17 - (1,951) - -
Derivative financial liabilities at fair value through profit or loss 15 - - - (108)
Total 39,847 (2,122) 106 (108)
Loans and receivables Financial liabilities measured at amortised cost Assets at fair value through profit or loss Liabilities at fair value through profit or loss
At 31 March 2015 Note £'000 £'000 £'000 £'000
Investment in Record Currency - FTSE FRB10 Index Fund 12 - - 1,105 -
TIPS 12 - - 1,462 -
Trade and other receivables (excludes prepayments) 14 5,800 - - -
Money market instruments with maturities > 3 months 16 18,100 - - -
Cash and cash equivalents 16 12,010 - - -
Derivative financial assets at fair value through profit or loss 15 - - 619 -
Current trade payables 17 - (181) - -
Accruals 17 - (2,455) - -
Derivative financial liabilities at fair value through profit or loss 15 - - - (680)
Total 35,910 (2,636) 3,186 (680)
23. Operating lease commitments
Leases in which substantially all the risks and rewards are retained by the
lessor are classified as operating leases. Payments made under these operating
leases are recognised in profit or loss on a straight-line basis over the term
of the lease. Benefits received as an incentive to sign a lease, whatever form
they may take, are credited to profit or loss on a straight-line basis over
the lease term.
On 25 January 2006, the Group signed a ten year lease on premises at Morgan
House, Madeira Walk, Windsor, at an annual commitment of £229,710 per annum
and which expires on 19 June 2016.
On 16 March 2016, the Group signed a three year lease on premises in New York
City, at an average annual commitment of £87,500 per annum. Prior to this,
the Group held a lease on offices based in Atlanta, Georgia at an average
annual commitment of £21,300 which ceases on 31 July 2016.
The Group has considered the risks and rewards of ownership of the leased
properties, and considers that they remain with the lessors, consequently, all
property leases are recognised as operating leases.
At 31 March 2016 the Group had commitments under non-cancellable operating
leases relating to land and buildings as set out below:
2016 2015
£'000 £'000
Not later than one year 143 230
Later than one year and not later than five years 177 57
320 287
On 20 May 2016, a lease extension was signed allowing the business to remain
in its current offices from 20 June 2016, for a maximum of nine months to 20
March 2017. Simultaneously, an agreement for lease was signed on alternative
space in the same building, subject to the completion of refurbishment works,
allowing the business to remain in the same building until September 2022.
Once works are complete and the new offices are fully occupied, the annual
commitment will increase to approximately £480,000 per annum subject to final
confirmation of net internal area.
24. Cash flow from operating activities
Group
This note should be read in conjunction with the cash flow statements. It
provides a reconciliation to show how operating profit, which is based on
accounting rules, translates to cash flows.
2016 2015
£'000 £'000
Operating profit 6,790 7,536
Adjustments for non-cash movements:
Depreciation of property, plant and equipment 77 85
Amortisation of intangible assets 244 230
Release of shares previously held by EBT 374 308
Share-based payments 388 167
Other non-cash movements (282) (137)
7,591 8,189
Changes in working capital
Decrease / (increase) in receivables 610 (672)
(Decrease) / increase in payables (600) 243
Decrease / (increase) in other financial assets 1,182 (421)
(Decrease) / increase in other financial liabilities (1,664) 558
Cash inflow from operating activities 7,119 7,897
Corporation taxes paid (1,610) (1,562)
Net cash inflow from operating activities 5,509 6,335
Company
2016 2015
£'000 £'000
Operating loss (114) (3)
Adjustment for:
Loss on investments 113 5
Changes in working capital
Decrease in receivables - 146
(Decrease) / increase in payables (470) 29
Cash (outflow) / inflow from operating activities (471) 177
Corporation taxes paid - -
Net cash (outflow) /inflow from operating activities (471) 177
25. Related parties transactions
Company
Details of transactions between the Company and other Group undertakings,
which are related parties of the Company, are shown below:
Transactions with subsidiaries
The Company's subsidiary undertakings are listed in note 12, which includes a
description of the nature of their business.
2016 2015
£'000 £'000
Amounts due from subsidiaries - -
Amounts due to subsidiaries (11) (480)
Interest received from subsidiaries on intercompany loan balances - 1
Net dividends received from subsidiaries 4,205 3,070
Amounts owed to and by related parties will be settled in cash. No guarantees
have been given or received. No provisions for doubtful debts have been raised
against amounts outstanding (2015: £nil). No expense has been recognised
during the period in respect of bad or doubtful debts due from related
parties.
Group
Transactions or balances between Group entities have been eliminated on
consolidation and in accordance with IAS 24, are not disclosed in this note.
Key management personnel compensation
2016 2015
£'000 £'000
Short-term employee benefits 3,894 3,568
Post-employment benefits 280 229
Share-based payments 989 940
Total 5,163 4,737
The dividends paid to key management personnel in the year ended 31 March 2016
totalled £1,963,285 (2015: £1,677,173)
Directors' remuneration
2016 2015
£'000 £'000
Emoluments (excluding pension contribution) 2,326 2,254
Pension contribution (includes payments made in lieu of pension contributions) 150 137
Aggregate emoluments of the Directors 2,476 2,391
During the year, three Directors of the Company (2015: four) participated in
the Group Personal Pension Plan, a defined contribution scheme.
Transactions with seeded funds
From time to time, the Group injects capital into funds operated by the Group
to trial new products (seed capital). If the Group is able to exercise control
over such a seeded fund by holding a majority interest (whether the majority
interest is held by Record plc alone, or by combining the interests of Record
plc and its Directors), then the fund is considered to be a related party.
Record Currency - Strategy Development Fund (formerly Global Alpha Fund) and
Record Currency - Emerging Market Currency Fund are both related parties on
this basis. Similarly, the Record Currency - FTSE FRB10 Index Fund has been a
related party since the Record plc holding became a majority interest as a
result of a divestment of an external investment from the fund. There were no
transactions between the Company and these funds during the year.
During the year, five key management personnel adjusted their seed investment
in the funds, as set out below
Related party Trade date Type Value Fund
N. Record 15 Apr 2015 Redemption GBP 473,474 Record Currency - FTSE FRB10 Index Fund
L. Hill 27 Aug 2015 Redemption USD 898,530 Record Currency - Global Alpha Fund
B. Noyen 08 Oct 2015 Redemption USD 687,113 Record Currency - Global Alpha Fund
B. Noyen 16 Oct 2015 Subscription USD 250,000 Record Currency - Emerging Market Currency Fund
Other key management personnel 08 Oct 2015 Redemption USD 38,487 Record Currency - Global Alpha Fund
26. Capital management
The Group's objectives when managing capital are (i) to safeguard the Group's
ability to continue as a going concern, (ii) to provide an adequate return to
shareholders, and (iii) to meet regulatory capital requirements set by the UK
Financial Conduct Authority.
The Group sets the amount of capital in proportion to risk. The Group manages
the capital structure and makes adjustments to it in light of changes in
economic conditions and the risk characteristics of the underlying assets. In
order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to shareholders, or
issue new shares. The Group had no debt in the current or prior financial year
and consequently does not calculate a debt-to-adjusted capital ratio.
The Group's capital is managed within the categories set out below:
2016 2015
£m £m
Regulatory capital 8.5 8.8
Other operating capital 23.2 20.5
Operating capital 31.7 29.3
Seed capital 3.0 3.1
Total capital 34.7 32.4
Operating capital is equivalent to the aggregate net current assets of the
Company and the main trading subsidiaries of the Group. Operating capital is
intended to cover the regulatory capital requirement plus capital required for
day to day operational purposes. The Directors consider that the other
operating capital significantly exceeds the actual day to day operational
requirements.
Seed capital is the capital deployed to support the growth of new funds. Seed
capital is limited to 15% of the Group's total capital.
For regulatory capital purposes Record plc is subject to consolidated
financial supervision by the Financial Conduct Authority ("FCA"). Our
regulatory capital requirements are in accordance with FCA rules consistent
with the Capital Requirements Directive. Our financial resources have exceeded
our financial resource requirements (regulatory capital requirements) at all
times during the year. Further information is provided in the Business
Review.
27. Ultimate controlling party
As at 31 March 2016 the Company had no ultimate controlling party, nor at 31
March 2015.
28. Post reporting date events
No adjusting or significant non-adjusting events have occurred between the
reporting date and the date of authorisation.
29. Statutory Accounts
This statement was approved by the Board on 15 June 2015. The financial
information set out above does not constitute the Company's statutory
accounts.
The statutory accounts for the financial year ended 31 March 2014 have been
delivered to the Registrar of Companies, and those for the year ended in 31
March 2015 will be delivered in due course. The auditor has reported on those
accounts; the reports were unqualified, did not include a reference to any
matters to which the auditor drew attention by way of emphasis without
qualifying the report, and did not contain statements under section 498(2) or
498(3) of the Companies Act 2006 in respect of either set of accounts.
Notes to Editors
This announcement includes information with respect to Record's financial
condition, its results of operations and business, strategy, plans and
objectives. All statements in this document, other than statements of
historical fact, including words such as "anticipates", "expects", "intends",
"plans", "believes", "seeks", "estimates", "may", "will", "continue",
"project" and similar expressions, are forward-looking statements.
These forward-looking statements are not guarantees of the Company's future
performance and are subject to risks, uncertainties and assumptions that could
cause the actual future results, performance or achievements of the Company to
differ materially from those expressed in or implied by such forward-looking
statements.
The forward-looking statements contained in this document are based on
numerous assumptions regarding Record's present and future business and
strategy and speak only as at the date of this announcement.
The Company expressly disclaims any obligation or undertaking to disseminate
any updates or revisions to any forward-looking statements contained in this
announcement whether as a result of new information, future events or
otherwise.
This information is provided by RNS
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