REG - Record PLC - Final Results
30/06/2023 07:00
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RNS Number : 4599E Record PLC 30 June 2023
PRESS RELEASE
Record plc
30 June 2023
FINAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2023
Strong performance across the Group
Growth in revenue, operating margin, profit and earnings
Continued momentum behind revised strategy
Record plc, the specialist currency and asset manager, today announces its
audited results for the year ended 31 March 2023 ("FY-23").
Financial headlines:
· Revenue growth of 27% to £44.7m (FY-22: £35.1m)
· AUME(1) in USD terms up by 6% to $87.7bn (FY-22: $83.1bn)
· Profit before tax increase of 34% to £14.6m (FY-22: £10.9m)
· 36% increase in proposed final ordinary dividend to 2.45p per
share (FY-22: 1.80p); 25% increase in total ordinary dividend for the year to
4.50p per share (FY-22: 3.60p)
· Increased operating profit margin of 32% (FY-22: 31%)
· Basic EPS growth of 32% to 5.95 pence (FY-22: 4.52 pence)
· Performance fees increased by £5.3m to £5.8m (FY-22: £0.5m)
· Strong and liquid financial position with shareholders' equity of
£28.3m (FY-22: £25.9m) and assets managed as cash of £14.5m (FY-22:
£17.3m)
Key developments:
· Strong momentum in AUME growth (+6%) driven by net inflows of
$9.1bn to close the year at $87.7bn, the highest ever level of AUME to date.
· Regulatory approval received from the German financial regulator
(BaFin) during the year, approving the Group's asset management activity and
increasing the Group's geographical reach into the EU.
· Material increase in revenue for FY-23 driven by growth in both
management and performances fees linked to core currency management products,
with new revenue streams from the launch of asset management products expected
for FY-24.
· Continued progress in modernisation, as evidenced by launch of
Record-Platform and enhanced reporting suite.
· Collaborative partnerships developed in FY-23 with a range of
high-quality, expert partners expected to lead to new product launches and
higher-margin revenue streams from FY-24.
· David Morrison announced as an independent Non-executive Director
and Chair-elect following Neil Record's stepping down at AGM in July 2023,
after 40 years of leadership.
(1. ) For the majority of its Currency Management and Derivative
overlay products, Record manages only the impact of foreign exchange and not
the underlying assets, therefore its "assets under management" are notional
rather than real. Conversely, for its Asset Management products, Record's role
as investment manager includes managing the underlying assets in the more
conventional sense of managing AUM. Consequently, when combined, to
distinguish this form the AUM of conventional asset managers, Record uses the
concept of Assets Under Management Equivalents ("AUME") and by convention this
is quoted in US dollars.
Commenting on the results, Leslie Hill, CEO of Record plc, said:
"I am pleased to report a strong set of results for FY-23, reflected by the
growth in revenues, pre-tax profit, operating margin and earnings as well as
progress in each of our three strategic priorities of modernisation,
diversification and succession.
"A year ago we set out ambitious targets of reaching £60m in revenue and an
operating margin of c. 40% by FY-25 and we continue to see a clear path to
achieving those targets. Our traditional currency revenues remain fundamental
to our business and continue to grow, and we expect the effort taken over the
last two years in developing our new partnerships and asset management
products to start delivering diversified revenue streams in the current
financial year (FY-24).
"We remain confident that our current strategy is pointing the business in the
right direction, firmly underpinned by our highly cash-generative business
model, strong core of currency management business, and increased focus on
more diversified and higher revenue-margin products. I look forward to
updating our shareholders on progress, not only with the core business but
with the new opportunities provided through both Record Asset Management and
Record Digital as we grow these business segments."
Analyst presentation
There will be a presentation for analysts at 9.30am on Friday, 30 June 2023
held via a Zoom call. Please contact the team at Buchanan
via record@buchanan.uk.com for further details. A copy of the presentation
will be made available on the Group's website at www.recordcm.com
(http://www.recordcm.com/) .
For further information:
Record plc +44 (0) 1753 852222
Leslie Hill - Chief Executive Officer
Steve Cullen - Chief Financial Officer
Buchanan +44 (0) 20 7466 5000
Simon Compton record@buchanan.uk.com (mailto:record@buchanan.uk.com)
Henry Wilson
George Beale
( )
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 MARCH 2023
2023 2022
£'000 £'000
Revenue 44,689 35,152
Cost of sales (37) (219)
Gross profit 44,652 34,933
Administrative expenses (29,888) (23,726)
Other expense (293) (372)
Operating profit 14,471 10,835
Finance income 182 44
Finance expense (55) (23)
Profit before tax 14,598 10,856
Taxation (3,259) (2,225)
Profit after tax 11,339 8,631
Total comprehensive income for the year 11,339 8,631
Profit and total comprehensive income for the year attributable to
Owners of the parent 11,339 8,631
Total comprehensive income for the year 11,339 8,631
Earnings per share for profit attributable to the equity holders of the parent
during the year
Basic earnings per share (pence per share) 5.95 4.52
Diluted earnings per share (pence per share) 5.81 4.37
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023 2023 2022
£'000 £'000
Non‑current assets
Intangible assets 1,390 562
Right‑of‑use assets 1,011 1,421
Property, plant and equipment 377 401
Investments 4,901 3,447
Deferred tax assets 134 253
Total non‑current assets 7,813 6,084
Current assets
Trade and other receivables 14,373 9,883
Derivative financial assets 54 -
Money market instruments with maturities > 3 months 4,549 13,913
Cash and cash equivalents 9,948 3,345
Total current assets 28,924 27,141
Total assets 36,737 33,225
Current liabilities
Trade and other payables (6,011) (4,721)
Corporation tax liabilities (1,329) (924)
Provisions - (75)
Lease liabilities (285) (366)
Derivative financial liabilities (5) (124)
Total current liabilities (7,630) (6,210)
Non-current liabilities
Provisions (122) (125)
Lease liabilities (694) (960)
Total non-current liabilities (816) (1,085)
Total net assets 28,291 25,930
Equity
Issued share capital 50 50
Share premium account 1,809 1,809
Capital redemption reserve 26 26
Retained earnings 26,406 24,045
Total equity 28,291 25,930
CHAIRMAN'S STATEMENT
"This past year ending 31 March 2023 ("FY-23") has been another year of
change and growth at Record. The business which I founded 40 years ago is
beginning to look fundamentally different from its founding conception."
Neil Record
Chairman
For most of the past four decades, that conception - of our specialising
solely in the management of currencies and currency risk - held sway.
In the last three years, the firm has chosen, and is now executing, an
enhanced business strategy rooted in our core strengths and values. We are
using technology to strengthen and modernise our systems across the whole
business, providing efficiency of delivery and an enhanced user experience for
clients of our core traditional currency management services, whilst enabling
new opportunities for offering a more scalable and diversified suite of asset
management products and services to both existing and potential clients.
In FY-23, we received regulatory approval from the German financial regulator,
BaFin, for our subsidiary Record Asset Management GmbH ("RAM") as an asset
manager, and are now starting to manage funds. We are developing an
infrastructure fund business which will be managed by RAM, and which we hope
will grow to provide a material diversification strand. We are engaged in
agreeing partnerships with a range of high-quality asset and fund managers,
for whom we will offer distribution services in Europe and the UK.
Despite our historic experience of low growth in the currency management
sector, FY-23 has, somewhat surprisingly, proved to be showing interesting
signs of a new type of growth. We have for many years now been providing
passive currency hedging services to institutional investors, mainly pension
funds. While these mandates can sometimes be large (>$10 billion), we have
experienced steady fee compression over the past decade, only now levelling
out at very low levels. But a different client type - international asset
managers - have begun to recognise that large-scale passive currency hedging
is a specialist activity, where scale and technology infrastructure means that
outsourcing to a firm like Record is a cost-effective choice.
While we had previously seen a small cadre of our existing asset manager
clients continually increase their mandate size as they added funds and
expanded their businesses, we are now seeing incoming enquiries from new,
large international managers. Asset manager Passive Hedging mandates are often
technically challenging, but also offer much better fee rates than
institutional clients' mandates. We have not seen significant fee compression
in this sector, and so these mandates offer an attractive risk-adjusted
return, and a new source of potential growth. Some of these asset managers
operate in the private debt sector; this sector is experiencing strong growth
in the wake of the 2008/09 global financial crisis, supplanting banks as a
significant source of loan capital. Passive Hedging mandates for this
sub-sector therefore represent a substitution for one aspect of the old bank
treasury function; and one we are well-positioned to take advantage of.
Financial overview
For the second successive year, the Group has delivered an exceptional set of
results, reflected by material growth in both revenue and earnings. As stated
above, the opportunities for further growth are significant and diversified
across both new and traditional products and services, supported by a strong
leadership team and a robust succession plan.
I am confident that our strategy of modernisation and diversification is the
right direction for the Group, firmly supported by the Group's highly
cash-generative business model accompanied by its robust and liquid balance
sheet, with total equity of £28.3 million.
Further information on financial results can be found in the Financial review
section.
Capital and dividend
The change in the firm's strategy, decided and executed in FY-21, is
continuing to flow through to the financial performance of the business.
Our capital policy aims to ensure retention of capital assessed as required
for regulatory purposes, for working capital purposes and for investing in new
opportunities for the business. Our dividend policy targets a level of
ordinary dividend within the range of 70% to 90% of annual earnings, and which
allows for progressive and sustainable dividend growth in line with the trend
in profitability. It is also the Board's intention, subject to financial
performance and market conditions at the time, to return excess earnings over
ordinary dividends for the financial year and adjusted for changes in capital
requirements, to shareholders, normally in the form of special dividends.
The Board is recommending a final ordinary dividend of 2.45 pence per share
(FY-22: 1.80 pence) with the full-year ordinary dividend at 4.50 pence per
share (FY-22: 3.60 pence), representing a 25% increase in the ordinary
dividend and an ordinary payout ratio of 76% of earnings. The interim dividend
of 2.05 pence was paid on 30 December 2022, and the final ordinary dividend
of 2.45 pence will be paid on 9 August 2023 to shareholders on the register
at 14 July 2023, subject to shareholder approval.
Having carefully reviewed the current level of Group capital against its
ongoing requirements for regulatory and investment purposes and to support its
continued growth, the Board is announcing a special dividend of 0.68 pence
per share to be paid simultaneously with the final ordinary dividend. Total
proposed dividends per share for the year are 5.18 pence per share (2022:
4.52 pence) compared to earnings per share of 5.95 pence (2022:
4.52 pence).
The Board
On 1 March 2023 I announced that I would be retiring from the Chairmanship and
the Board after 40 years at the helm. We announced at the same time the
appointment of David Morrison as independent Non-executive Director, and
Chair‑elect.
David is very well known to Record. In 1985, his then employer, Abingworth, at
the time a venture Investment Trust, acquired 24.5% of Record from a start-up
angel investor. Abingworth also became a client at the same time. David sat on
the firm's Board until 1992, when Abingworth sold its stake. Then again, in
2009, David re-joined the newly IPO'd firm as an independent Non-executive
Director ("NED"), sitting until 2018, when he reached his term limit. In his
third term as a NED, and, from July 2023, Record's Chairman, he will preside
over a much-changed firm, with multiple developing strands and a new
background of growth. I am confident his deep understanding of Record, and his
own long experience in asset management, will serve our shareholders well.
I am leaving Record's Board with mixed emotions. Record has been my life for
40 years. I founded the firm when I had just turned 30, and I will leave it
when I will have just turned 70. It has been the most rewarding career
imaginable, meeting fascinating individuals from all walks of life, building
teams of colleagues over multiple years, and most importantly building a
business which I believe is capable of becoming multigenerational. I have the
highest confidence in the current management under our CEO Leslie Hill and her
senior team, and I plan to remain a significant shareholder for many years to
come.
Outlook
In contrast with the optimistic tone with which I feel I can talk about
Record, I see many serious and deep challenges ahead for the global economy in
general, and for the developed West in particular.
Across the board, Western governments have arguably over-extended themselves
both in the scope and scale of public expenditure, and in their method of
financing this expenditure - namely through debt. Much of this debt is, in
practice, monetary financing via "Quantitative Easing". Central banks, and
their sponsoring governments, may find this financing becoming increasingly
onerous as short rates rise. The same issue has already hit some regional
banks in the US, and may hit more. This monetary dislocation is running
concurrently with very low or zero productivity growth in much of the global
economy. It remains to be seen whether Western democracies can find policies
to re-establish low-inflation growth.
Record is not immune from these challenges, but structurally we are positioned
to be nimble and adaptable to client demand as it develops and changes. While
cost pressures (particularly labour costs) will undoubtedly impact the
business, the current pace of growth and change should allow the revenue to
grow sufficiently to more than compensate for the cost-base growth.
I leave the business in good health; vibrant, enthusiastic and looking for new
opportunities. I couldn't have wished for more.
Neil Record
Chairman
29 June 2023
CHIEF EXECUTIVE OFFICER'S STATEMENT
"I have now been CEO for three years and am happy to report encouraging
progress in each of the three pillars of the revitalising strategy I set out
for the business when I took on the role."
Leslie Hill
Chief Executive Officer
Most of you will I hope remember the three‑year target I set out last year
which aims for revenue of £60 million by this time in 2025, while improving
margins and increasing profits. We are on target to achieve this, with
revenues of £44.7 million and pre-tax profits of 14.6 million reported for
the financial year (FY-23). Let me explain in more detail what we have been
doing and what plans we have for this coming year (FY-24).
Our three pillars are diversification, modernisation and succession planning.
Diversification
There are some key strands to this - diversifying our product offering, our
client base and our activities. To achieve this we have now created a number
of subsidiaries whose leaders report to me as CEO of the parent company,
Record plc, but who have their own budgets and aspirations for the future.
More details are set out below in our Succession section, but the subsidiaries
are Record Currency Management Limited, Record Asset Management GmbH ("RAM"),
Record Currency Management (US) Inc., Record Group Services Limited and Record
Digital Asset Ventures Ltd ("Record Digital"). This structure is not there
simply to complicate things, but to give regulatory support and oversight and
create efficiency, while allowing for agency and autonomy for each of the
subsidiary CEOs.
Modernisation
After a few years of using a "renovating the house while we are living in it"
analogy it now feels the right time to retire that rather tired phrase, as the
house is now open for new guests and looking very much more attractive and
modern than it did previously. We see IT under the leadership of our CTO as
central to our shared services concept and indeed to our whole business, and
will continue to develop and invest in this area. It has been a complex
journey but I am happy, indeed amazed, to say we managed to stay on budget and
on target for deliverables, which is a real tribute to the whole team. This is
a significant achievement which has been marked by the recent launch of our
new Record platform ("R-Platform") which went live post year-end and the
rollout of our new Reporting suite, as well as significant enhancements to the
scope of our trading activities. With this we can unlock scale, efficiency and
ensure happy clients going forward. I am thrilled with it.
Succession
New subsidiary CEOs - as my focus shifts to working closely with our new
Chairman in further building and leading the Record Financial Group from the
top, our new subsidiary CEOs, Dr Jan Witte and Rebecca Venis, are already
heading up Record Currency Management and Record Digital respectively and our
investors will see more of them this year. I'm also excited by the future
plans we have for new leadership of our Emerging Market Sustainable Finance
family, upon which we hope to give further information in FY-24. These changes
are a testament, not only to the talents of these individuals, but also to my
commitment with the Board to promoting, training and offering opportunities
for leadership and share ownership to more and more of our colleagues as we
build this 40-year-old stable and experienced currency manager into a real
multi-asset manager for the 21st century.
Financial performance
We continue our focus on growing the business through diversification and
modernisation, and it's testament to the hard work of the management team and
all of our colleagues that we are reporting impressive growth again this year
in both revenue and profit, of 27% and 34% respectively.
The balance between maintaining good cost control and ensuring that the
business has the appropriate level of resource to support its growth
trajectory has proved even more challenging through this year due to the high
inflationary environment and cost pressure seen across the whole of our
business. Inevitably we have seen a consequent rise in our cost base for
FY-23, which will be carried forward into the current financial year (FY-24),
where we can expect to see the full-year impact. Whilst this may have
inhibited growth in our operating margin somewhat this year, we remain
confident that the current strong pipeline of opportunities in both our
currency and higher revenue-margin and more scalable asset management products
into FY-24 will serve to counter this impact over the next couple of years.
Outlook
The next phase of our development of Record is to reap some of the rewards of
our modernisation and diversification. The soil has been fertilised over the
last few years, and the new plants well heeled in. For quite some time they
have been putting down roots and like any young tree more has been going on
under the surface than on the top. As was clear at our Capital Markets day
recently, the next phase should see some new revenue from our diversifying
strands at RAM and Record Digital as well as continued work to scale our
currency business. This continues our theme of diversification and
modernisation, while our recent promotions carries on our theme of succession
planning for the long-term future. We will continue to keep a close watch on
costs but drive forward with our three‑year plan.
Leslie Hill
Chief Executive Officer
29 June 2023
KEY PERFORMANCE INDICATORS
Measuring our performance against our strategy.
The Board uses both financial and non‑financial key performance indicators
("KPIs") to monitor and measure the performance of the Group against its
strategic priorities.
Some KPIs link to specific strategic areas as noted below, whilst others
represent higher-level key metrics in terms of the Group's business and
financial performance.
Financial KPIs
Revenue (£m)
For the financial years up to and including FY-23, revenue has been earned
predominantly from the provision of currency management services in the form
of management fees and performance fees. From FY-24 onwards, revenue will
include the new revenue streams arising as part of the diversification into
asset management products and services.
Revenue £ million
2023 44.7
2022 35.1
2021 25.4
2020 25.6
2019 25.0
Why this is important
Revenue is a key indicator of client experience, growth and a key driver of
profitability. Growth in AUME, especially into Record's higher revenue-margin
products, resulted in a 12% increase in management fees. Revenue also includes
performance fees, which increased by £5.3 million to £5.8 million (2022:
£0.5 million).
Link to strategy
Diversification
Modernisation
Operating profit margin (%)
Operating profit margin is an alternative performance measure, calculated by
dividing operating profit by revenue.
Operating profit margin %
2023 32
2022 31
2021 24
2020 30
2019 32
Why this is important
Operating profit margin is an indicator of the efficiency of the business in
turning revenue into profit. Inflows into higher revenue-margin products in
addition to efficiencies seen from the adoption of technology in operational
areas both contributed to the increase in operating margin to 32% for the
year.
The Group aims to increase the operating profit margin over time through
investment in resources and technology to maintain its premium products and
services, whilst increasing operating efficiency and developing more
diversified revenue streams in higher-margin products.
Link to strategy
Diversification
Modernisation
Basic earnings per share ("EPS") (pence per share)
The Group aims to create shareholder value over the long term, delivered
through progressive and sustainable growth in EPS.
EPS pence
2023 5.95
2022 4.52
2021 2.75
2020 3.26
2019 3.27
Why this is important
EPS measures the overall effectiveness of the business model and drives both
our dividend policy and the value generated for shareholders. Similarly to
operating profit, EPS has increased this year as the benefits from the
implementation of the new strategy begin to deliver results in
financial terms.
Link to strategy
Diversification
Modernisation
Succession
Dividends per share ("DPS") (pence per share)
Our dividend policy targets a level of ordinary dividend within the range of
70% to 90% of annual earnings, and which allows for progressive and
sustainable dividend growth in line with the trend in profitability.
DPS Ordinary dividend per share Special dividend per share
pence pence
2023 4.50 0.68
2022 3.60 0.92
2021 2.30 0.45
2020 2.30 0.41
2019 2.30 0.69
Why this is important
Progressive and sustainable dividends illustrate the cash-generative nature of
Record's business, and its strength in converting profits into cash and
providing a suitable return to shareholders. The ordinary dividend per share
has increased by 25%, reflecting the Board's confidence in the ability of the
business to deliver its strategy and to achieve sustainable growth. The
special dividend per share of 0.68 pence, results in a 15% increase in total
dividends to 5.18 pence per share (2022: 4.52 pence per share).
Link to strategy
Diversification
Modernisation
Succession
Non-financial KPIs
AUME ($ billion)
As a currency and derivatives manager, Record manages only the impact of
foreign exchange and not the underlying assets, therefore its "assets under
management" are notional rather than real. To distinguish this from the AUM
of conventional asset managers, Record uses the concept of Assets Under
Management Equivalents ("AUME") and by convention this is quoted in US
dollars.
AUME $ billion
2023 87.7
2022 83.1
2021 80.1
2020 58.6
2019 57.3
Why this is important
AUME is a key driver of future revenue and an indicator of business growth.
AUME increased by 5.5% for the year, including net inflows of $9.1 billion
diversified across product lines.
Link to strategy
Diversification
Modernisation
Succession
Client longevity (%)
Client longevity measures how long Record has been providing either currency
and derivative, or asset management, services to each client with a mandate
active as at 31 March 2023.
Client longevity %
>10 years: 20
6-10 years: 11
3-6 years: 22
1-3 years: 23
0-1 years: 24
Why this is important
Client longevity is both an indicator of recent client growth, and also of the
Group's success in sustaining quality client relationships through investment
cycles. Building long-standing and trusted adviser relationships with clients
provides opportunities for collaboration and partnerships on new and
innovative investment products.
Link to strategy
Diversification
Average number of employees
The average number of employees through the year includes Non‑executive
Directors.
Average number of employees Number
2023 88
2022 82
2021 83
2020 82
2019 85
Why this is important
Average employee numbers is an indicator of business growth and also of how
effectively the Group is using technology to make processes more efficient.
Implementing the new strategy has necessitated new skill sets in the business,
which has brought additional knowledge and experience into the Group required
to drive innovation and the diversification into new products and technology.
Link to strategy
Diversification
Modernisation
Succession
Staff retention (%)
Staff retention is calculated as the number of employees who were employed by
Record throughout the period as a percentage of the number of employees at the
beginning of the period.
Staff retention %
2023 90
2022 74
2021 90
2020 81
2019 84
Why this is important
Planning for generational change is key to the Group's strategy. A decrease in
staff retention in the prior year reflects the focus on rebalancing the skill
sets required by the business to drive the innovation and growth required to
deliver the strategy. FY-23 has seen a return to retention more aligned with
historical trends, reflecting the successful restructure as part of the
Group's succession plans. The Group remains cognisant of ensuring the
retention and development of key talent as well as the factors affecting all
of our employees' wellbeing.
Link to strategy
Diversification
Modernisation
Succession
Employees with equity interest (%)
The percentage of employees who own shares in Record plc at year end.
Employees with equity interest %
2023 63
2022 61
2021 68
2020 69
2019 70
Why this is important
The alignment of employee interests with those of our shareholders is an
important factor in ensuring the longer‑term success of our business and is
an important tool in managing generational change. The decrease last year was
linked to changes made under the new strategy resulting in a higher turnover
of staff and consequently a short-term decrease in employees holding shares.
The Group's remuneration structure includes schemes with both mandatory and
voluntary equity participation, reflecting the importance the Group places on
alignment.
Link to strategy
Succession
Operating review
AUME closed the year at its highest ever level of $87.7 billion, including
net inflows of $9.1 billion for the year.
Product investment performance
Hedging
Our hedging products are predominantly systematic in nature. The effectiveness
of each client mandate is assessed regularly and adjustments are made when
necessary in order to respond to changing market conditions or to bring the
risk profile of the hedging mandate in line with the client's risk tolerance.
Passive Hedging
Record's enhanced Passive Hedging service aims to reduce the cost of hedging
by introducing flexibility into the implementation of currency hedges without
changing the hedge ratio. The episodic nature of many opportunities exploited
by the strategy means it requires a higher level of discretionary oversight
than has historically been associated with Passive Hedging. Global markets
have seen steepening interest rate curves from the end of 2021, which stems
from central banks being forced to engage in more hawkish monetary policy in
an attempt to keep inflationary pressures under control. This has had the
effect of introducing a high degree of volatility into short-term interest
rate markets, from which FX forward pricing is determined. The heightened
volatility has increased the opportunity set for our clients' portfolios, and
as such, we had positioned client portfolios appropriately to add value from
this volatility, achieving positive performance. Additionally, the team's
management of the portfolio around key market events such as the collapse of
Silicon Valley Bank, and the UK government's "mini-budget", have minimised
downside risks versus the fixed-tenor benchmark.
The table below shows the total value added relative to a fixed-tenor
benchmark for an enhanced Passive Hedging programme for a representative
account. The base currency used is Swiss francs.
Return for Return
year to since
31 March 2023 inception
Value added by enhanced Passive Hedging programme relative to a fixed‑tenor 0.18% 0.10% p.a.
benchmark
Dynamic Hedging
The performance of our Dynamic Hedging product is a function of foreign
currency fluctuations relative to the base currency of specific clients. For
US-based investors, Dynamic Hedging produced gains in the first half of the
period, as the dollar appreciated against all exposure currencies and hedge
ratios rose, helping to protect against underlying currency losses. The second
half of the period saw some retracement in the US dollar, which coupled with
risk management interventions, resulted in a reduction in hedge ratios
limiting the product's impact in clients' portfolios. Overall, Dynamic Hedging
performance was positive for the year, partially offsetting currency losses on
the underlying international exposures of our US clients.
For non-US accounts, i.e. those where US exposures were hedged to other base
currencies, the performance of Dynamic Hedging was opposing over the period
given broad US dollar strength and reflected the mandates' specific objectives
and/or benchmarks.
Return for Return
year to since
31 March 2023 inception
Value added by Dynamic Hedging programme for a representative US-based account 3.46% 0.67% p.a.
Currency for Return
Sustainable investing
Record EM Sustainable Finance ("EMSF") Fund
The Record EMSF Fund USD class A returned 4.65% from inception (28 June 2021)
to 31 March 2023, outperforming the relevant emerging market local debt
benchmark by 17.35%.
The currency portfolio delivered positive returns in the period following
improved risk sentiment over the last two quarters as oversold and
high-yielding currencies in emerging markets recovered from depreciated
levels. Sentiment was supported by the reopening of the Chinese economy,
milder weather conditions in Europe and elevated carry in developing economies
as central banks continued to deliver rate hikes to curb domestic inflationary
pressures. The positive performance of the currency overlay also benefited
from gains in the diversified hard currency funding basket. The topping out of
rates in developed markets provided further support to local assets in
emerging markets and at the same time contributed to improving returns in bond
markets. The performance of the US dollar bond underlay in the strategy
benefited from its highly rated credit quality as well as duration exposure
following lower long-dated yields in the US over Q1 2023 as the FED neared the
end of the tightening cycle and recent turmoil in the banking sector sparked
global recessionary fears.
The table below shows the performance of the EMSF Fund USD class A and the
relevant benchmark, being the JP Morgan GBI-EM Global Diversified. The
performance is since inception of the EMSF Fund on 28 June 2021 to 31 March
2023.
Return for Return since
year to inception
31 March 2023
EMSF Fund USD Share Class A 5.64% 4.65%
JP Morgan GBI-EM Global Diversified (0.72%) (12.70%)
Currency Multi-Strategy
Record's Currency Multi-Strategy product combines a number of diversified
return streams, which include:
· Forward Rate Bias ("FRB", also known as Carry) and Emerging
Market strategies which are founded on market risk premia and as such perform
more strongly in "risk on" environments.
· Momentum, Value, Range Trading and Developed Market
Classification ("DMC") strategies which are more behavioural in nature, and as
a result are less risk‑sensitive.
Record's Multi-Strategy mandates delivered positive overall performance over
the year which was driven by the outperformance in Value, Momentum, Range
Trading and EM strategies. Value benefited from a significant reduction in
euro area risk premia. Momentum performed positively on the back of the US
dollar cycle and desynchronised rate expectations. Range Trading accrued gains
mostly in commodity currency pairs due to the absence of major trends in these
pairs. Positive news surrounding China's reopening, a compression in
Russia-Ukraine geopolitical risk premia, and topping out of US rate
expectations, which enticed flows back into Emerging Market currencies, led to
outperformance in the Emerging Markets strand. For Carry, underperformance was
mainly driven by short positions in low-yielding Developed Market currencies,
which appreciated due to the perceived narrowing of interest rate
differentials. During the reporting period, DMC was introduced to some
mandates, and underperformed during the period due to a long position in the
US dollar.
Return for Return since Volatility since
12 months to inception inception
31 March 2023 % p.a. % p.a.
%
Record Multi‑Strategy composite 0.78% 0.82% 3.16%
Scaling
The Multi-Strategy product allows clients to select the level of exposure they
desire in their currency programmes by selecting the required level of scaling
and/or the volatility target.
It should be emphasised that in this case "scaling" refers to the multiple of
the aggregate notional value of forward contracts in the currency programme to
the mandate size. This is limited by the willingness of counterparty banks to
take exposure to the client. The AUME of those mandates where scaling or a
volatility target is selected is represented in Record's AUME at the scaled
value of the mandate, as opposed to the mandate size.
AUME development
AUME expressed in US dollar terms finished the year at $87.7 billion, an
increase of 6% (2022: $83.1 billion). When expressed in sterling, AUME
increased by 13% to £71.0 billion (2022: £63.1 billion).
AUME movements
Passive Hedging AUME increased by 2% to $63.8 billion (2022: $62.8 billion)
driven by net inflows of $4.9 billion for the year from new and existing
clients. The impact from both market movements and exchange rates was
negative, at $3.3 billion and $0.6 billion respectively.
Dynamic Hedging AUME increased by 39%, ending the year at $14.7 billion (2022:
$10.6 billion). The majority of the $4.1 billion increase is attributable to
net inflows ($4.2 billion), offset slightly by negative market movements of
$0.1 billion.
Currency for Return AUME decreased to $3.9 billion (2022: $5.0 billion) by the
end of the year, represented by net outflows of $0.6 billion and negative
market movements and exchange rates of $0.4 billion and $0.1 billion
respectively.
Multi-product AUME increased to $5.2 billion (2022: $4.5 billion). Net inflows
of $0.6 billion accounted for the majority of the movement in addition to
positive market movements ($0.1 billion).
Market performance
Record's AUME is affected by movements in market levels because substantially
all the Passive and Dynamic Hedging, and some of the Multi-product mandates,
are linked to equity, fixed income and other market levels. Market movements
decreased AUME by $3.8 billion in the year ended 31 March 2023 (2022: increase
of $0.3 billion).
Further detail on the composition of assets underlying our Hedging and
Multi-product mandates is provided in the following table in an attempt to
illustrate more clearly the impact of equity and fixed income market movements
on these mandate sizes.
AUME composition by underlying asset class as at 31 March 2023
Equity Fixed Other
% income %
%
Passive Hedging 23% 31% 46%
Dynamic Hedging 84% 0% 16%
Multi-product 0% 0% 100%
Forex
Approximately 76% of the Group's AUME is non‑US dollar denominated.
Therefore, foreign exchange movements may have an impact on AUME when
expressing non-US dollar denominated AUME in US dollars. Foreign exchange
movements decreased AUME by $0.7 billion over the year. This movement does
not have an equivalent impact on the sterling value of fee income.
At 31 March 2023, the split of AUME by base currency was 10% in sterling, 47%
in Swiss francs, 24% in US dollars, 14% in euros and 5% in other currencies.
AUME composition by base currency
Base currency 31 March 2023 31 March 2022
Sterling GBP 7.4bn GBP 7.6bn
US dollar USD 20.8bn USD 17.6bn
Swiss franc CHF 38.3bn CHF 33.1bn
Euro EUR 11.7bn EUR 11.4bn
Australian dollar AUD 3.0bn AUD 2.9bn
Canadian dollar CAD 3.3bn CAD 6.1bn
Japanese yen JPY 27.2bn JPY 0.0bn
Product mix
AUME composition by product
31 March 2023 31 March 2022
US $bn % US $bn %
Passive Hedging 63.8 73% 62.8 76%
Dynamic Hedging 14.7 17% 10.6 13%
Currency for Return 3.9 4% 5.0 6%
Multi-product 5.2 6% 4.5 5%
Cash 0.1 -% 0.2 -%
Total 87.7 100% 83.1 100%
Notwithstanding hedging AUME continuing to represent approximately 90% of the
total AUME, the product mix within this figure has shifted towards the higher
revenue-margin Dynamic Hedging product due primarily to net inflows of $4.2
billion during the year. This has diversified the Group's hedging revenue
streams and further diluted the historical concentration on the lower
revenue-margin Passive Hedging product.
FINANCIAL REVIEW
"Our second successive year of material revenue growth since our change in
strategy has been driven by increases in both management and performance fees,
resulting in a 34% increase to operating profit."
Steve Cullen
Chief Financial Officer
Overview
The implementation of the Group's change in strategy continues, focused on the
diversification of its products and services and the modernisation of its
systems and processes. The pipeline of new product launches and new revenue
streams in asset management remains strong, and we expect to see the
culmination of our work over the last three years to start making a material
difference to revenues in FY-24, the current financial year. Our existing
strong core of hedging products remains fundamental to our growth plans,
underscored by net inflows of $9.1 billion for the year in addition to the
$2.4 billion in FY-22. As expected, and somewhat inevitably, our cost base has
risen over the year, linked both to our continued investment in the
modernisation of our business, and to the exceptional levels of inflationary
pressure seen at both a personnel and non-personnel level.
The Group remains independent, cash generative and profitable, supported by
its strong and liquid balance sheet.
Revenues grew 27% to £44.7 million (2022: £35.1 million) supported by a 12%
increase in management fees and an increase in performance fees of £5.3
million (2022: £0.5 million). Operating profit for the year increased by 34%
to £14.5 million (2022: £10.8 million) and the operating profit margin
increased to 32% (2022: 31%) with a 34% increase in profit before tax to
£14.6 million (2022: £10.9 million).
Profit and loss (£m)
2023 2022
Revenue 44.7 35.1
Cost of sales - (0.2)
Gross profit 44.7 34.9
Personnel (excluding bonus) (12.8) (10.8)
Non‑personnel costs (9.5) (7.2)
Other income or expense (0.3) (0.4)
Total expenditure (excluding bonus) (22.6) (18.4)
Group Bonus Scheme (7.6) (5.7)
Operating profit 14.5 10.8
Operating profit margin 32% 31%
Net interest received 0.1 0.1
Profit before tax 14.6 10.9
Tax (3.3) (2.3)
Profit after tax 11.3 8.6
Revenue - Currency Management
Record's traditional core currency management revenue derives from the
provision of currency and derivative management services, fees for which can
be charged through management fee only or management plus performance fee
structures, which are available across Record's product range. Management fee
only mandates are charged based upon the AUME of the product, and management
plus performance fee structures include a lower percentage fee applied to
AUME, and a proportional share of the specific product performance measured
over a defined period.
Management fees are typically charged on a quarterly basis, although Record
may charge fees monthly for some of its larger clients. Performance fees can
be charged on quarterly, six-monthly or annual performance periods on the
basis agreed with the particular client.
Revenue - Asset Management
Asset management did not generate any material revenue reportable for FY-23.
Material new revenue streams derived from Record's diversification into asset
management products and services will be reported separately from the current
financial year (FY-24) onwards.
Revenue - FY-23
Management fees earned during the year increased by 12% to £38.3 million
(2022: £34.1 million) driven by net inflows of $9.1 billion into Record's
core currency hedging products, and the full-year revenue impact on Currency
for Return from the Record EM Sustainable Finance Fund, launched in June
2021. Performance fees increased by £5.3 million to £5.8 million for
the year (2022: £0.5 million), linked to positive performance from certain
Enhanced Passive Hedging mandates.
Revenue analysis (£m)
Year ended Year ended
31 March 2023 31 March 2022
Management fees
Passive Hedging 12.9 11.8
Dynamic Hedging 12.0 10.0
Currency for Return 6.8 5.5
Multi-product 6.6 6.8
Total management fees 38.3 34.1
Performance fees 5.8 0.5
Other income 0.6 0.5
Total revenue 44.7 35.1
Management fees
Passive Hedging management fees increased by 9% to £12.9 million (2022:
£11.8 million) predominantly driven by the net inflows of $4.9 billion in the
year. Whilst Passive Hedging commands a significantly lower average fee rate
than Record's other products, it continues to provide a robust and valuable
revenue stream from a long-standing, institutional client base, which itself
provides potential synergies to the Group in the form of future partnerships
and product innovation. More recently, the extension of our core Passive
Hedging product for Asset Managers, which provides programmes designed to fit
specific liquidity and reporting requirements, has seen growth which we expect
to continue in the current financial year (FY-24).
Dynamic Hedging management fees increased by 20% to £12.0 million (2022:
£10.0 million) as a result of the full‑year impact of the $0.8 billion of
net inflows seen in the second half of FY-22, combined with the total net
inflows of $4.2 billion in FY-23 from new and existing clients.
Management fees from Currency for Return mandates increased 24% to £6.8
million (2022: £5.5 million). The increase has been driven predominantly by
the full-year impact of revenue from the Record EM Sustainable Finance Fund,
launched in June 2021. The net outflow of $0.6 billion announced in the final
quarter of the financial year will partially offset this increase in the
current financial year (FY‑24).
Multi-product management fees decreased marginally by 3% to £6.6 million
(2022: £6.8 million). However, net inflows of $0.6 billion in the second half
of FY-23 are expected to increase revenues in the current financial year
(FY-24).
Performance fees
Performance fees can be derived from a combination of hedging and
return‑seeking products. Our enhanced Passive Hedging products continued the
rebound seen towards the end of FY-22 in making up lost ground versus previous
high water marks. This was accelerated during the year by the opportunities
arising to add value linked to increases in interest rate differentials, which
helped to deliver an exceptional level of performance fees of £5.8 million
(2022: £0.5 million). Such opportunities for added value on this product are,
to a certain extent, market dependent and can therefore be episodic in nature.
Consequently, the occurrence and scale of future performance fees is dependent
on market developments through the current financial year (FY-24).
Other income
Other income totalled £0.6 million (2022: £0.5million) and consists
predominantly of fees from ancillary currency management services including
collateral management, signal hedging and tactical execution services. Fees
charged for these ancillary services are not linked to AUME.
Expenditure
Cost of sales
Cost of sales previously comprised of referral fees and costs in relation to
the Record Umbrella Fund, which was closed during the previous financial year
(2022: £0.2 million).
Operating expenditure
The Group operating expenditure (excluding variable remuneration and other
expenses) increased by 24% to £22.3 million for the year (2022: £18.0
million).
As expected, the Group has seen increases in personnel costs (excluding
bonuses) for the year of approximately 19%. Average headcount increased by 7%,
and the exceptional inflationary environment over the year continued to erode
the purchasing power of our employees' pay, adding pressure for the business
to provide support against the resultant increase to the general cost of
living. Consequently, in order to avoid adding to recurring fixed costs in
future, it was decided to award one-off cost-of-living allowances of £3,000
per employee (excluding Executive Directors and Board members), amounting to a
total cost of approximately £0.3 million. The Group continues to monitor the
situation closely and to provide support to ensure the continued wellbeing of
employees, and in April 2023 it was decided to make a further cost-of-living
payment to employees of £2,000 per employee during FY-24.
Against this backdrop, salaries and related on-costs (including pensions)
increased by 14%, whilst other employment-related costs associated with the
Group's share schemes, including the new LTIP scheme launched in the year,
increased by just over 60%. Commission paid under the scheme aimed at
generating new business rose by approximately 35%, linked to the increase in
revenue.
Similarly, and also as expected, non-personnel costs include rises linked to
inflation as well as those associated with continued investment by the Group
into IT resources in the key strategic area of modernisation, and those costs
linked with increases in both growth, and ultimately complexity, of the Group
structure and of its products and services.
Consequently, non-personnel costs increased by 32% during the year to £9.5
million (2022: £7.2 million). Increases in professional fees of one third,
including both legal and audit fees, reflect the set-up costs and growing
footprint of the Group abroad, including expansion and regulatory approval in
Germany. As the Group's growth plans and diversification progress, so does the
requirement for additional market data consumed via platforms and other data
sources, plus additional software and IT-consultant resource, leading to an
increase in related costs of approximately 40% for the year.
The new office location in London was expanded halfway through the year to
accommodate growth in employee numbers and to enable the Group to maintain its
strong culture and focus on collaborative working, regarded as key for future
growth and employee retention and wellbeing. Whilst the increase in cost was
slightly offset by downsizing of the Windsor-based office, occupancy costs
increased by approximately 20% in the year. Alongside the increase in new
business, costs associated with travel and accommodation doubled, linked to
the resumption of more client meetings in person as opposed to virtually.
The Group remains conscious of the need for good cost control balanced with
ensuring the business is appropriately resourced to achieve its strategic
goals of diversification, modernisation and succession. However, it is
anticipated that the continuation of inflationary pressures in the current
environment, as well as the full-year impact of associated rises seen in the
year, will inevitably lead to an increase in its cost base in the current year
(FY-24), albeit at more muted levels versus FY-23.
Other expenses were £0.3 million for the year (2022: £0.4 million) and
represent net losses/gains made on derivative financial instruments employed
by the Group's hedging activities and other FX adjustments or revaluations.
Group Bonus Scheme
The bonus pool has increased by 33% to £7.6 million (2022: £5.7 million),
broadly in line with, and reflecting, the 34% increase in operating profit
for the year, and has been calculated at 34.8% of pre‑bonus operating
profit.
Operating profit and margin
Group operating profit increased by 34% to £14.5 million (2022: £10.8
million) with the Group operating margin increasing marginally to 32% (2022:
31%). The Group continues its programme of investment to modernise systems and
processes and has seen increases in costs as described further above.
Alongside minor delays in the launch of new, higher revenue-margin products
this has impacted the Group's operating margin for the year. The Group
remains confident that new product launches in the current financial year
(FY-24), alongside careful cost control, albeit still challenging in a high
inflationary environment, will deliver increases in the operating margin over
the medium term.
Cash flow
The Group consolidated statement of cash flows is shown in the financial
statements.
The Group's year‑end cash and cash equivalents stood at £9.9 million
(2022: £3.3 million) and the total assets managed as cash were
£14.5 million (2022: £17.3 million). The cash generated from operating
activities before tax increased by 16% to £14.7 million (2022:
£12.7 million). During the year, taxation of £2.4 million was paid (2022:
£1.4 million) and £9.1 million was paid in dividends (2022:
£6.5 million). The Group spent £3.6 million (2022: £4.5 million) on the
purchase of its own shares for the EBT to set against the future vesting of
share options, and spent £3.6 million on investments (2022: £1.8 million).
At the year end, the Group held money market instruments with maturities
between three and twelve months worth £4.5 million (2022: £13.9 million).
These instruments are managed as cash by the Group but are not classified as
cash under IFRS rules (see note 18 of the financial statements for more
details).
Dividends
An interim ordinary dividend of 2.05 pence per share (2022: 1.80 pence) was
paid to shareholders on 30 December 2022, equivalent to £3.9 million.
As disclosed in the Chairman's statement, the Board is recommending a final
ordinary dividend of 2.45 pence per share, equivalent to approximately
£4.7 million, taking the overall ordinary dividend for the financial year to
4.50 pence per share. Simultaneously, the Board is also paying a special
dividend of 0.68 pence equivalent to approximately £1.3 million, making the
total dividend in respect of the year ended 31 March 2023 of £9.9 million
equivalent to 87% of total earnings.
The total ordinary and special dividends paid per share in respect of the
prior year ended 31 March 2022 were 3.60 pence and 0.92 pence respectively,
equivalent to total dividends of £8.6 million and representing 100% of total
earnings per share of 4.52 pence.
Financial stability and capital management
The Group's balance sheet is strong and liquid with total net assets of £28.3
million (2022: £25.9 million) at the end of the financial year, including
current assets managed as cash totalling £14.5 million (2022:
£17.3 million). The cash generated by the business has increased in line
with the rise in profitability, with net cash inflows from operating
activities after tax of £12.3 million for the year (2022: £11.4 million).
For further information on cash flows, see the consolidated statement of cash
flows in the financial statements.
Under the Board's capital and dividend policies, the Group can pay up to a
maximum of 100% of earnings for each financial year, thereby ensuring
distributions do not erode the continued strength of its balance sheet.
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
basis. The Group has no debt.
Record Currency Management Limited ("RCML") is a UK MiFID investment firm
authorised and regulated by the Financial Conduct Authority ("FCA") registered
as an Investment Adviser with the SEC and as a Commodity Trading Adviser with
the CFTC. Record Asset Management GmbH ("RAM") is authorised and regulated in
Germany by BaFin. RCML, RAM and the Group submit regular capital adequacy
returns to the respective regulators, and held significant surplus capital
resources relative to the regulatory financial resource requirements
throughout the year.
The Board has concluded that the Group is adequately capitalised both to
continue its operations effectively and to meet regulatory requirements, due
to the size and liquidity of balance sheet resources maintained by the Group.
Steve Cullen
Chief Financial Officer
29 June 2023
Cautionary statement
This Annual Report contains certain forward‑looking statements with respect
to the financial condition, results, operations and business of Record. These
statements involve risk and uncertainty because they relate to events and
depend upon circumstances that will occur in the future. There are a number of
factors that could cause actual results or developments to differ materially
from those expressed or implied in this Annual Report. Nothing in this Annual
Report should be construed as a profit forecast.
Directors' responsibility statement pursuant to DTR4
The Directors confirm to the best of their knowledge:
· the financial statements have been prepared in accordance with
the applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit and loss of the Group and
Company; and
· the Annual Report includes a fair review of the development and
performance of the business and the financial position of the Group and
Company, together with a description of the principal risks and uncertainties
that they face.
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 March 2023
Note 2023 2022
£'000 £'000
Revenue 4 44,689 35,152
Cost of sales (37) (219)
Gross profit 44,652 34,933
Administrative expenses 5 (29,888) (23,726)
Other expense 5 (293) (372)
Operating profit 5 14,471 10,835
Finance income 182 44
Finance expense (55) (23)
Profit before tax 14,598 10,856
Taxation 7 (3,259) (2,225)
Profit after tax 11,339 8,631
Total comprehensive income for the year 11,339 8,631
Profit and total comprehensive income for the year attributable to
Owners of the parent 11,339 8,631
Total comprehensive income for the year 11,339 8,631
Earnings per share for profit attributable to the equity holders of the parent
during the year
Basic earnings per share (pence per share) 8 5.95 4.52
Diluted earnings per share (pence per share) 8 5.81 4.37
The notes below are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2023
Restated(1)
2023 2022
Note £'000 £'000
Non‑current assets
Intangible assets 11 1,390 562
Right‑of‑use assets 12 1,011 1,421
Property, plant and equipment 13 377 401
Investments 14 4,901 3,447
Deferred tax assets 15 134 253
Total non‑current assets 7,813 6,084
Current assets
Trade and other receivables 16 14,373 9,883
Derivative financial assets 17 54 -
Money market instruments with maturities > 3 months 18 4,549 13,913
Cash and cash equivalents 18 9,948 3,345
Total current assets 28,924 27,141
Total assets 36,737 33,225
Current liabilities
Trade and other payables 19 (6,011) (4,721)
Corporation tax liabilities 19 (1,329) (924)
Provisions - (75)
Lease liabilities 12 (285) (366)
Derivative financial liabilities 17 (5) (124)
Total current liabilities (7,630) (6,210)
Non-current liabilities
Provisions 20 (122) (125)
Lease liabilities 12 (694) (960)
Total non-current liabilities (816) (1,085)
Total net assets 28,291 25,930
Equity
Issued share capital 21 50 50
Share premium account 1,809 1,809
Capital redemption reserve 26 26
Retained earnings 26,406 24,045
Total equity 28,291 25,930
1. See note 30 for details of the reclassification resulting in the
restatement of prior year.
Approved by the Board on 29 June 2023. Company registered number: 1927640
The notes below are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 March 2023
Equity
Share Capital attributable to
Called‑up premium redemption Retained equity holders Total
share capital account reserve earnings of the parent equity
Note £'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2022 50 1,809 26 24,045 25,930 25,930
Profit and total comprehensive income for the year - - - 11,339 11,339 11,339
Dividends paid 9 - - - (9,095) (9,095) (9,095)
Own shares acquired by EBT - - - (3,572) (3,572) (3,572)
Release of shares held by EBT - - - 2,268 2,268 2,268
Tax on share-based payments - - - 300 300 300
Share-based payment reserve movement - - - 1,121 1,121 1,121
Transactions with shareholders - - - (8,978) (8,978) (8,978)
As at 31 March 2023 50 1,809 26 26,406 28,291 28,291
Year ended 31 March 2022
Equity
Share Capital attributable to
Called‑up premium redemption Retained equity holders Total
share capital account reserve earnings of the parent equity
Note £'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2021 50 2,418 26 24,305 26,799 26,799
Restatement of release of shares held by EBT 30 - (609) - 609 - -
Restated balance as at 1 April 2021 50 1,809 26 24,914 26,799 26,799
Profit and total comprehensive income for the year - - - 8,631 8,631 8,631
Dividends paid 9 - - - (6,512) (6,512) (6,512)
Own shares acquired by EBT - - - (5,807) (5,807) (5,807)
Restatement of release of shares held by EBT 30 - - - 1,838 1,838 1,838
Restatement of share-based payment reserve movement 30 - - - 981 981 981
Transactions with shareholders - - - (9,500) (9,500) (9,500)
Restated balance as at 31 March 2022 50 1,809 26 24,045 25,930 25,930
The notes below are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 March 2023
Note 2023 2022
£'000 £'000
Profit after tax 11,339 8,631
Adjustments for:
Depreciation of right‑of‑use assets 12 375 489
Depreciation of property, plant and equipment 13 285 357
Amortisation of intangible assets 11 135 192
Loss on asset disposals 11 -
Share-based payments 916 559
Decrease in other non-cash items(1) 1,780 877
Finance income (181) (44)
Finance expense 55 23
Tax expense 7 3,259 2,225
Changes in working capital
(Increase) in receivables (4,490) (1,877)
Increase in payables 1,290 1,296
(Decrease) in provisions (78) -
Cash inflow from operating activities 14,696 12,728
Corporation tax paid (2,433) (1,373)
Net cash inflow from operating activities 12,263 11,355
Purchase of intangible assets 11 (964) (334)
Purchase of property, plant and equipment 13 (272) (75)
Purchase of investments (3,570) (1,773)
Payment to seed fund holders - (1,808)
Redemption of bonds 1,607 1,462
Redemption of investments 881 -
Purchase/(disposal) of money market instruments with maturity > 3 months 9,363 (983)
Interest received 181 44
Net cash inflow/(outflow) from investing activities 7,226 (3,467)
Cash flow from financing activities
Lease principal payments 12 (315) (540)
Lease interest payments 12 (55) (17)
Purchase of own shares (3,572) (4,462)
Dividends paid to equity shareholders 9 (9,095) (6,512)
Net cash outflow from financing activities (13,037) (11,531)
Net increase/(decrease) in cash and cash equivalents in the year 6,452 (3,643)
Exchange gains 151 141
Cash and cash equivalents at the beginning of the year 3,345 6,847
Cash and cash equivalents at the end of the year 9,948 3,345
Closing cash and cash equivalents consist of:
Cash 6,405 3,345
Cash equivalents 3,543 -
Cash and cash equivalents 18 9,948 3,345
1. Other non-cash items include £2,473k release of shares held by
Employee Benefit Trust and other share movements (2022: £624k), £175k
unrealised gains in derivatives (2022: £340k loss), £147k foreign exchange
gains (2022: £137k gain) and £371k unrealised gains in investments (2022:
£50k loss).
The notes below are an integral part of these consolidated financial
statements.
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 March 2023
2023 2022
Note £'000 £'000
Non‑current assets
Right‑of‑use assets 12 871 1,232
Property, plant and equipment 99 -
Investments 14 9,062 5,029
Deferred tax - 1
Total non‑current assets 10,032 6,262
Current assets
Corporation tax 16 3
Trade and other receivables 16 2,428 3,522
Cash and cash equivalents 18 213 43
Total current assets 2,657 3,568
Total assets 12,689 9,830
Current liabilities
Trade and other payables 19 (4,955) (4,161)
Lease liabilities 12 (251) (326)
Provisions - (75)
Total current liabilities (5,206) (4,562)
Non-current liabilities
Lease liabilities 12 (583) (812)
Deferred tax liabilities (11) -
Provisions 20 (122) (125)
Total non-current liabilities (716) (937)
Total net assets 6,767 4,331
Equity
Issued share capital 21 50 50
Share premium account 1,809 1,809
Capital redemption reserve 26 26
Retained earnings 4,882 2,446
Total equity 6,767 4,331
The Company's total comprehensive income for the year (which is principally
derived from intra-group dividends) was £10,614,915 (2022: £4,558,705).
Approved by the Board on 29 June 2023. Company registered number: 1927640.
The notes below are an integral part of these consolidated financial
statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 31 March 2023
Share Capital Total
Called‑up premium redemption Retained shareholders'
Share capital account reserve earnings equity
Note £'000 £'000 £'000 £'000 £'000
As at 1 April 2022 50 1,809 26 2,446 4,331
Profit and total comprehensive income for the year - - - 10,615 10,615
Dividends paid 9 - - - (9,095) (9,095)
Share option reserve movement - - - 916 916
Transactions with shareholders - - - (8,179) (8,179)
As at 31 March 2023 50 1,809 26 4,882 6,767
Year ended 31 March 2022
Share Capital Total
Called‑up premium redemption Retained shareholders'
Share capital account reserve earnings equity
Note £'000 £'000 £'000 £'000 £'000
As at 1 April 2021 50 1,809 26 3,843 5,728
Profit and total comprehensive income for the year - - 4,559 4,559
Dividends paid 9 - - - (6,512) (6,512)
Share option reserve movement - - - 556 556
Transactions with shareholders - - - (5,956) (5,956)
As at 31 March 2022 50 1,809 26 2,446 4,331
The notes below are an integral part of these consolidated financial
statements.
COMPANY STATEMENT OF CASH FLOWS
Year ended 31 March 2023
Restated(1)
2023 2022
Note £'000 £'000
Profit after tax 10,615 4,559
Adjustments for:
Depreciation of right‑of‑use assets 12 338 453
Depreciation of property, plant and equipment 17 -
Decrease/(Increase) in other non-cash items(2) (155) 45
Finance income (1) -
Finance expense 43 16
Tax expense/(income) 5 (19)
Dividends received from subsidiaries (10,500) (4,600)
Changes in working capital
Decrease/(Increase) in receivables 1,094 (2,134)
Increase in payables 794 2,470
(Decrease) in provisions (78) -
Cash inflow from operating activities 2,172 790
Corporation taxes (paid)/received (6) 37
Net cash inflow from operating activities 2,166 827
Cash flow from investing activities
Dividends received 10,500 4,600
Purchase of property, plant and equipment (116) -
Investment in subsidiaries - (325)
Investment in equity reserve of subsidiary (1,095) -
Purchase of investments (1,869) -
Payments to seed fund holders - 1,798
Interest received 1 -
Net cash inflow from investing activities 7,421 6,073
Net cash flow from financing activities
Lease principal payments 12 (280) (502)
Lease interest payments 12 (43) (16)
Dividends paid to equity shareholders (9,095) (6,512)
Net cash outflow from financing activities (9,418) (7,030)
Net increase/(decrease) in cash and cash equivalents in the year 170 (130)
FX revaluation - -
Cash and cash equivalents at the beginning of the year 43 173
Cash and cash equivalents at the end of the year 213 43
Closing cash and cash equivalents consist of:
Cash 213 43
Cash and cash equivalents 18 213 43
1. See note 31 for details of the presentational adjustment resulting in
the restatement of prior year.
2. Other non-cash items include unrealised movements in investments and
other foreign exchange movements.
The notes below are an integral part of these consolidated financial
statements.
Notes to the financial statements for the year ended 31 March 2023
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 provide more clarity to the notes to the financial statements,
accounting policy descriptions appear at the beginning of the note to which
they relate.
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 periods presented unless
otherwise stated.
a. Accounting convention
Basis of preparation
The Group financial statements have been prepared in accordance with UK
adopted international accounting standards and the Company and other Group
entities' financial statements have also been prepared in accordance with UK
adopted international accounting standards. The financial statements have been
prepared on a historical cost basis, modified to include fair valuation of
derivative financial instruments. Investments are measured at fair value
through profit or loss.
The Directors are satisfied that the Company and the Group have adequate
resources with which to continue to operate for the foreseeable future. In
arriving at this conclusion, the Directors have considered various assessments
including both the impact of the war in Ukraine, and that of the current high
inflationary environment on the Group, the market it operates in and its
stakeholders. These assessments show that the Group should be able to operate
at adequate levels of both liquidity and capital for at least 12 months from
the date of signing this report.
Consequently, the Directors have reasonable expectation that the Group has
adequate financial resources to continue operations for at least 12 months
from the date of signing the report, and therefore have continued to adopt the
going concern basis in preparing the financial statements.
The preparation of financial statements in accordance with the recognition and
measurement principles set out in 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.
Changes to international accounting policies
There were no new interpretations or standards which became applicable during
the year that were adopted by the Group.
Additionally, the Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet effective at
the year-end date.
b. Basis of consolidation
The consolidated financial information contained within the financial
statements incorporates financial statements of the Company and its
subsidiaries drawn up to 31 March 2023. Subsidiaries are entities controlled
by the Company and are included from the date that control commences until the
date that control ceases. 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. The Group has applied UK adopted IFRSs for
periods commencing on or after January 2022.
An Employee Benefit Trust has been established for the purposes of satisfying
certain share-based awards. As the Group has "de facto" control over this
special purpose entity, the trust is fully consolidated within the financial
statements.
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. In the case of the funds
controlled by the Group, the interests of any external investors in such funds
are recognised as a financial liability as investments in the fund are not
considered to be equity instruments.
The financial statements of subsidiary undertakings, which are prepared using
uniform accounting policies, are coterminous with those of Record plc,
referred to as the "Company".
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 Company and its
subsidiaries are collectively referred to as the Group; the Group's total
comprehensive income for the year includes a profit of £10,614,915
attributable to the Company (2022: £4,558,705). The Company's principal
activity is that of a holding company.
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 the
functional currency of the parent company. Foreign currency transactions are
translated into the functional currency of the parent company using prevailing
exchange rates which are updated on a monthly basis. Foreign exchange gains
and losses resulting from the settlement of such transactions and from the
remeasurement of monetary items at year‑end exchange rates are recognised in
the statement of comprehensive income under "other income or expense".
d. Administrative expenses
Administrative expense includes staff costs, marketing and IT costs, which are
recognised on an accruals basis as services are provided to the Group.
e. 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.
f. 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.
g. 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.
h. Equity
Share capital represents the nominal (par) value of shares that have been
issued. Share premium includes any premium received on issue of share capital.
From time to time, the Group has bought in ordinary shares for cancellation.
The cost of the buy-ins was taken directly to retained earnings. The nominal
value of the shares was taken to a capital redemption reserve. 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
In order to prepare the financial statements in accordance with IFRS,
management make certain critical accounting estimates. Management are also
required to exercise judgement in the process of applying the Group's
accounting policies and in determining the reported amount of certain assets
and liabilities.
The estimates and associated assumptions are based on historical experience
and various other factors including expectations of future events 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. As a
consequence, 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.
Sources of estimation uncertainty
Management recognise that the use of estimates is important in calculating
both the fair value of share options offered by the Group to its employees
(see note 22) and deferred tax (see note 15), however the sources of
estimation uncertainty do not present a significant risk of material
adjustment to the carrying amounts of assets or liabilities within the next
financial year in either case.
Calculation of leased assets and liabilities requires the use of both
estimation and judgement. The identification of an appropriate discount rate
to use in the calculation of the lease liability involves both estimation and
judgement. Where the lease's implicit rate is not readily determinable, an
incremental borrowing rate must be calculated by the Group. The discount rate
used has a direct effect on the size of the lease liability capitalised and
although this has been included as an area where the use of estimation and
judgement in note 12 is important, it is unlikely to materially impact the
Group. Intangible assets are written down in accordance with the Group's
amortisation policy. The assets are reviewed by management to ensure the
amortisation period is appropriate. Investments are revalued monthly at market
value as far as possible. Inputs used in determining fair value measurements
are categorised into different levels based on how observable the inputs used
in the valuation are, as disclosed in note 24. Any potential impairments would
be written down as and when the Group is notified.
3. Segmental analysis
The Directors, who together are the entity's Chief Operating Decision Maker,
consider that its services for FY-23 and prior years comprise one operating
segment (being the provision of currency and derivatives 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. Revenue analysed by product is
provided in note 4.
Looking ahead to the current financial year (FY-24), the Group expects its
diversification into asset management will result in an alternative revenue
stream (i.e. Asset Management as opposed to Currency Management). This will
represent a different operating segment and will be reported separately from
FY-24.
4. Revenue
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable
for the provision of currency management services. Our revenues typically
arise from charging management fees, performance fees and other currency
services income and are accounted for in accordance with IFRS 15 - "Revenue
from Contracts with Customers".
Management fees and other currency services income are recorded on a monthly
basis as the service occurs; there are no other performance obligations
(excluding standard duty of care requirements). Management fees are calculated
as an agreed percentage of the Assets Under Management Equivalents ("AUME")
denominated in the client's chosen base currency. The percentage varies
depending on the nature of services and the level of AUME. Management fees are
typically invoiced to the customer quarterly with receivables recognised for
unpaid invoices. Fees are recognised on a monthly based on the agreed fee rate
and AUME over the period.
The Group is entitled to earn performance fees from some clients where the
performance of the clients' mandates exceeds defined benchmarks over a set
time period, and are recognised when the fee amount can be estimated reliably
and it is highly probable that it will not be subject to significant reversal.
Performance fee revenues are not considered to be highly probable until the
end of a contractual performance period and therefore are not recognised until
they crystallise, at which time they are payable by the client and cannot be
clawed back. There are no other performance obligations or services provided
which suggest these have been earned either before or after crystallisation
date.
a. Revenue from contracts with customers
The following table provides a breakdown of revenue from contracts with
customers, with management fees analysed by product. Other currency services
income includes fees from signal hedging and fiduciary execution.
2023 2022
Revenue by product type £'000 £'000
Management fees
Passive Hedging 12,912 11,768
Dynamic Hedging 12,013 10,020
Currency for Return 6,789 5,513
Multi-product 6,584 6,782
Total management fee income 38,298 34,083
Performance fee income 5,805 499
Other services income 586 570
Total revenue from contracts with customers 44,689 35,152
Management fees are recognised at a point in time and are invoiced typically
on a quarterly basis, although Record may invoice fees monthly for some of its
larger clients. Performance fees are recognised at a point in time and can be
invoiced on a quarterly, six-monthly or annual basis, as agreed with our
clients.
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 revenue
originated in the UK. Other relates to a number of regions that are
individually immaterial.
2023 2022
Revenue by geographical region £'000 £'000
Management and performance fee income
UK 2,545 2,775
US 14,179 13,049
Switzerland 16,985 10,877
Europe (excluding UK and Switzerland) 9,339 6,926
Other 1,641 1,525
Total revenue 44,689 35,152
c. Major clients
During the year ended 31 March 2023, four clients individually accounted for
more than 10% of the Group's revenue. The four largest clients generated
revenues of £6.6 million, £6.3 million, £5.2 million and £4.9million in
the year (2022: two clients generated revenues of more than 10% totalling
£4.9 million and £4.8 million in the year).
5. Operating profit
Operating profit for the year is stated after charging/(crediting):
2023 2022
£'000 £'000
Staff costs 20,412 16,479
Other staff-related costs 1,545 1,352
IT and technology 3,582 2,380
Professional fees 1,775 1,139
Occupancy 1,111 668
Depreciation of property, plant and equipment 285 357
Depreciation of leased property 375 489
Amortisation of intangibles 135 192
Auditor fees:
Fees payable to the Group's auditor for the audit of the Company's annual 134 72
accounts
Fees payable to the Group's auditor for the audit of subsidiary undertakings 191 103
Auditor fees total 325 175
Fees payable to the Group's auditor and its associates for other services:
Audit-related assurance services required by law or regulation 6 5
Other non-audit services 15 12
Loss on forward FX contracts held to hedge cash flow 800 467
Loss on derivative financial instruments held by seed funds - 42
Other exchange losses/(gains) (289) (141)
Investment losses/(gains) (218) 4
6. Staff costs
The average number of employees, including Directors, employed by the Group
during the year was:
2023 2022
Corporate 6 6
Client relationships 13 14
Investment research 18 16
Operations 31 24
Risk management 5 5
Support 15 17
Annual average 88 82
The aggregate costs of the above employees, including Directors, were as
follows:
2023 2022
£'000 £'000
Wages and salaries 14,540 11,931
Social security costs 2,295 1,758
Pension costs 686 635
Other employment benefit costs 2,891 2,155
Aggregate staff costs 20,412 16,479
Other employment benefit costs include share‑based payments, share option
costs, and costs relating to the Record plc Share Incentive Plan.
7. 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.
2023 2022
£'000 £'000
UK current year charge 2,961 2,006
Overseas taxes 64 56
Prior year adjustments 175 (88)
Current tax charge 3,200 1,974
Origination and reversal of temporary differences 76 (12)
Prior year adjustment (17) 240
Impact of change in tax rate for deferred tax - 23
Total deferred tax 59 251
Tax on profit on ordinary activities 3,259 2,225
The total charge for the year can be reconciled to the accounting profit as
follows:
2023 2022
£'000 £'000
Profit before taxation 14,598 10,856
Taxation at the standard rate of tax in the UK of 19% (2022: 19%) 2,774 2,062
Tax effects of:
Other disallowable expenses and non‑taxable income 164 (37)
Deferred tax asset not recognised on start-up entities 146 -
Higher tax rates on subsidiary undertakings 15 15
Prior year adjustment 160 162
Change in tax rates - 23
Total tax expense 3,259 2,225
The tax expense comprises:
Current tax expense 3,200 1,974
Deferred tax expense 59 251
Total tax expense 3,259 2,225
The standard rate of UK corporation tax for the year is 19% (2022: 19%). 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 rate
increased to 25% from 1 April 2023.
The tax charge for the year ended 31 March 2023 was 22% of profit before tax
(2022: 20%). Other temporary differences for the year ended 31 March 2023
include the impact of deferred tax expense of £59k (2022: expense of £251k).
8. Earnings per share
Basic earnings per share is calculated by dividing the profit after tax 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.
2023 2022
£'000 £'000
Weighted average number of shares used in calculation of basic earnings per 190,483,365 191,068,307
share
Effect of potential dilutive ordinary shares - share options 4,830,186 6,230,794
Weighted average number of shares used in calculation of diluted earnings per 195,313,551 197,299,101
share
pence pence
Basic earnings per share 5.95 4.52
Diluted earnings per share 5.81 4.37
The potential dilutive shares relate to the share options, JSOP and LTIP
awards granted in respect of the Group's Share Scheme (see note 22). There
were share options and JSOP awards in place at the beginning of the year over
13,513,045 shares. During the year 3,607,836 share options were exercised,
633,125 JSOP awards vested and a further 1,247,502 options lapsed or were
forfeited. The Group granted 3,810,000 share options and LTIP awards over
2,890,000 shares with a potentially dilutive effect during the year. Of the
14,724,582 share options, JSOP and LTIP awards in place at the end of the
period, 11,878,815 have a dilutive impact at the year end.
9. Dividends
Ordinary, special and interim dividends are recognised in the financial
statements when paid. Final ordinary dividends are required to be approved by
shareholders.
The dividends paid by the Group during the year ended 31 March 2023 totalled
£9,095,232 (4.77 pence per share), which comprised a final dividend in
respect of the year ended 31 March 2022 of £3,420,850 (1.8 pence per share),
a special dividend in respect of the year ended 31 March 2022 of £1,748,435
(0.92 pence per share) and an interim dividend for the year ended 31 March
2023 of £3,925,947 (2.05 pence per share).
The dividends paid by the Group during the year ended 31 March 2022 totalled
£6,511,887 (3.40 pence per share), which comprised a final dividend in
respect of the year ended 31 March 2021 of £2,220,404 (1.15 pence per share),
a special dividend in respect of the year ended 31 March 2021 of £868,854
(0.45 pence per share) and an interim dividend for the year ended 31 March
2022 of £3,422,629 (1.80 pence per share).
For the year ended 31 March 2023, a final ordinary dividend of 2.45 pence per
share has been proposed and a special dividend of 0.68 pence per share has
been declared, totalling approximately £4.7 million and £1.3 million
respectively.
10. 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 disclosed in note 6 to the accounts represents
contributions payable by the Group to the funds.
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
measured from the date they are available for use. Useful lives are as
follows:
· Software - 2 to 5 years.
Amortisation periods and methods are reviewed annually and adjusted if
appropriate.
The Group's intangible assets comprise both purchased software and the
capitalised cost of software deployment. No internal costs of software
development are capitalised. Internal software costs, which would represent
attributable employee costs, would be capitalised if they meet the IAS 38
criteria. The carrying amounts can be analysed as follows:
Software Total
2023 £'000 £'000
Cost
At 1 April 2022 1,475 1,475
Additions 964 964
Disposals (119) (119)
At 31 March 2023 2,320 2,320
Amortisation
At 1 April 2022 913 913
Charge for the year 135 135
Disposals (118) (118)
At 31 March 2023 930 930
Net book amounts
At 31 March 2023 1,390 1,390
At 1 April 2022 562 562
Software Total
2022 £'000 £'000
Cost
At 1 April 2021 1,141 1,141
Additions 334 334
At 31 March 2022 1,475 1,475
Amortisation
At 1 April 2021 721 721
Charge for the year 192 192
At 31 March 2022 913 913
Net book amounts
At 31 March 2022 562 562
At 1 April 2021 420 420
The annual contractual commitment for the maintenance and support of the above
software is £207,253 (2022: £396,710). All amortisation charges are included
within administrative expenses.
12. Leases
The Group's lease arrangements consist of business premises property leases.
Rental contracts are typically made for fixed periods between three to six
years but they may have extension and/or modification options. Lease terms are
negotiated on an individual basis and contain a wide range of different terms
and conditions. The lease agreements do not impose any covenants, but leased
assets cannot be used as security for borrowing purposes.
New and modified leases have been recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is available for
use by the Group. Each lease payment is allocated between the liability and
finance cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the lease term on
a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Right-of-use assets include the net present value of the
lease payments less any lease incentives receivable.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be determined, the Group's incremental borrowing
rate is used, being the rate that the Group would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions. As the Group has no borrowings
it has estimated the incremental borrowing rate based on interest rate data
available in the market, adjusted to reflect Record's creditworthiness, the
leased asset in question and the terms and conditions of the lease. For those
leases which existed prior to the IFRS 16 transition date on 1 April 2019, a
discount rate of 4% was used in calculating the lease liability on transition.
The leases relevant to the twelve months ended 31 March 2023, and the
comparative period, are as described below:
On 7 September 2016, the Group signed a new lease on premises at Second and
Third Floors, Morgan House, Madeira Walk, Windsor, at an annual commitment of
£507,603, expiring on 1 September 2022. On 11 February 2022, the Group signed
a lease on premises at Second Floor, Morgan House, Madeira Walk, Windsor, at
an annual commitment of £267,900, expiring on 1 September 2026. The 1
September 2022 lease modification has been capitalised and discounted at a
rate of 3.95%.
On 1 June 2017, the Group signed a five-year lease on premises in Zürich, at
an annual commitment of CHF 49,680. On 12 August 2021, the Group extended the
lease to 1 June 2027, at an annual commitment of CHF 49,680.
Record assesses whether a contract is, or contains, a lease at the inception
of the contract.
Right‑of‑use ("ROU") assets
Right-of-use assets are measured at cost comprising the following:
· the amount of the initial measurement of lease liability;
· any lease payments made at or before the commencement date, less
any lease incentives received;
· any initial direct costs; and
· an estimate of costs to be incurred to restore the assets to the
condition required by the terms and conditions of the lease.
Depreciation is calculated on a straight-line basis over the lease term and
included within administration costs (note 5).
Net book value of right‑of‑use assets
Group Company
Year ended 31 March 2023 £'000 £'000
Net book value on transition at 1 April 2022 1,421 1,232
Valuation adjustment on lease modification (35) (23)
Depreciation (375) (338)
Net book value at 31 March 2023 1,011 871
Group Company
Year ended 31 March 2022 £'000 £'000
Net book value at 1 April 2021 684 642
Addition 1,226 1,043
Depreciation (489) (453)
Net book value at 31 March 2022 1,421 1,232
Lease liabilities
Group Company
Year ended 31 March 2023 £'000 £'000
Current 285 251
Non-current 694 583
Total lease liabilities 979 834
Group Company
£'000 £'000
At 1 April 2022 1,326 1,138
Additions - -
Interest expense 55 41
Lease - principal payments (315) (280)
Lease - interest payments (55) (43)
Valuation adjustment on lease modification (35) (22)
Foreign exchange movements 3 -
At 31 March 2023 979 834
Group Company
Year ended 31 March 2022 £'000 £'000
Current 366 326
Non-current 960 812
Total lease liabilities 1,326 1,138
Group Company
£'000 £'000
At 1 April 2021 638 597
Additions 1,226 1,042
Interest expense 17 16
Lease payments (540) (501)
Lease interest payments (17) (16)
Foreign exchange movements 2 -
At 31 March 2022 1,326 1,138
Lease payments
At 31 March 2023, the undiscounted operating lease payments on an annual basis
are as follows:
Maturity of lease liability at 31 March 2023
Group Company
£'000 £'000
Within 1 year 320 280
1-2 years 320 280
2-3 years 320 280
After 3 years 85 47
Total lease liability before discounting 1,045 887
The remainder of the movement in the lease liability relates to non-cash
movements. The lease term is determined as the non-cancellable period of a
lease, together with periods covered by an option to extend the lease if the
Group considers that exercise of the option is reasonably certain.
13. 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 as follows:
· leasehold improvements - period from lease commencement to the
earlier of the lease termination date and the next rent review date;
· computer equipment - 2 to 5 years; and
· fixtures and fittings - 4 to 6 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 Computer Fixtures
improvements equipment and fittings Total
2023 £'000 £'000 £'000 £'000
Cost
At 1 April 2022 693 1,056 293 2,042
Additions 116 148 8 272
Disposals (33) (181) (70) (284)
At 31 March 2023 776 1,023 231 2,030
Depreciation
At 1 April 2022 642 718 281 1,641
Charge for the year 68 204 13 285
Disposals (33) (170) (70) (273)
At 31 March 2023 677 752 224 1,653
Net book amounts
At 31 March 2023 99 271 7 377
At 1 April 2022 51 338 12 401
Leasehold Computer Fixtures
improvements equipment and fittings Total
2022 £'000 £'000 £'000 £'000
Cost
At 1 April 2021 693 983 305 1,981
Additions - 73 2 75
Disposals - - (14) (14)
At 31 March 2022 693 1,056 293 2,042
Depreciation
At 1 April 2021 520 515 263 1,298
Charge for the year 122 203 32 357
Disposals - - (14) (14)
At 31 March 2022 642 718 281 1,641
Net book amounts
At 31 March 2022 51 338 12 401
At 1 April 2021 173 468 42 683
The Group's tangible non-current assets are located predominantly in the UK.
14. Investments
Group Company
2023 2202 2023 2022
£'000 £'000 £'000 £'000
Investment in subsidiaries at cost - - 2,069 2,069
Capitalised investment in respect of share-based payments - - 2,932 2,018
Investment in equity reserve of subsidiary - - 1,095 -
Investment in funds 2,530 1,070 1,965 942
Investment in impact bonds 770 2,177 - -
Other investments 1,601 200 1,001 -
Total direct investments 4,901 3,447 9,062 5,029
Other investments includes £600k invested directly in the share capital of
start-up companies in the digital asset sector (2022: £200k) through Record
Digital. Also included is £1 million invested into a separate investment
strategy to test the viability of a potential new product offering in a
diverse set of alternative assets.
During the year, the Group signed commitments totalling $823,507 (£804,384),
which were fully called up in the year. At the beginning of the year, the
Group had existing commitments of $383,100 (£309,839) of which $78,100
(£63,165) was called up in the year, leaving a balance of $305,000
(£246,674) which may or may not be called up in future (see note 26:
contingent liabilities for further information).
Company
Investments in subsidiaries
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.
2023 2022
£'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) Inc. - -
Record Currency Management (Switzerland) GmbH 16 16
Record Digital Asset Ventures Limited 2,000 2,000
Record Asset Management GmbH 23 23
Record Fund Management Limited - -
N P Record Trustees Limited - -
Total investment in subsidiaries (at cost) 2,069 2,069
Capitalised investment in respect of share‑based payments
Record Group Services Limited 2,530 1,801
Record Currency Management (US) Inc. 89 89
Record Currency Management (Switzerland) GmbH 316 129
Total capitalised investment in respect of share‑based payments 2,935 2,019
Total investment in subsidiaries 5,004 4,088
Particulars of subsidiary undertakings
Name Nature of business
Record Currency Management Limited Currency management services (FCA, SEC and CFTC registered)
Record Group Services Limited Management services to other Group undertakings
Record Currency Management (US) Inc. US advisory and service company (SEC and CFTC registered)
Record Currency Management (Switzerland) GmbH Swiss advisory and service company
Record Digital Asset Ventures Limited UK company investing in opportunities linked to innovation and research
surrounding digital assets
Record Asset Management GmbH German advisory and service company
RAM Strategies GmbH German consultant and distribution agent
Record Portfolio Management Limited Dormant
Record Fund Management Limited Dormant
N P Record Trustees Limited Dormant trust company
The Group's interest in the equity capital of subsidiary undertakings is 100%
of the ordinary share capital in all cases. Record Currency Management (US)
Inc. is incorporated in Delaware (registered office: Corporation Service
Company, 251 Little Falls Drive, Wilmington, DE 19808), Record Currency
Management (Switzerland) GmbH is incorporated in Zürich (registered office:
Münsterhof 14, 8001 Zürich) and Record Asset Management GmbH and RAM
Strategies GmbH are incorporated in Germany (registered office: Königsallee
92a, 40212 Düsseldorf). All other subsidiaries are incorporated in the UK and
have the registered office at Morgan House , Madeira Walk, Windsor, Berkshire,
SL4 1EP. All investments in subsidiaries are directly held with the exception
of RAM Strategies which is held 100% indirectly through the Company's 100%
holding in Record Asset Management GmbH.
Capitalised investment in respect of share-based payments
The accounting treatment of capitalised investment in respect of share-based
payments can be found in note 22.
Group
Entities are consolidated on a line-by-line basis where the Group has
determined that a controlling interest exists through an investment holding in
the entity, in accordance with IFRS 10 - "Consolidated Financial Statements".
Otherwise, investments in entities are measured at fair value through profit
or loss.
15. Deferred taxation - Group
Deferred tax is the future tax consequences of temporary differences between
the carrying amounts and tax bases of assets and liabilities shown on the
statement of financial position. The amount of deferred tax provided is based
on the expected manner of recovery or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively enacted at
the statement of financial position date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. The carrying amounts of the deferred tax assets are reviewed at each
statement of financial position date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all
or part of the asset to be recovered.
A deferred tax liability is generally recognised for all taxable temporary
differences.
Deferred tax assets or liabilities arising on goodwill are not recognised but
are however recognised on separately identifiable intangible assets. Deferred
tax arising on the initial recognition of an asset or liability, other than a
business combination, that at the time of the transaction affects neither the
accounting profit or loss nor the taxable profit or loss, is not recognised.
2023 2022
£'000 £'000
Opening balance deferred tax asset/(liability) 253 212
Current year movement (72) (251)
Prior year adjustment 14
Deferred tax in Equity (61) 292
Closing balance deferred tax asset/(liability) 134 253
The deferred tax asset consists of the tax effect of temporary differences in
respect of:
2023 2022
£'000 £'000
Deferred tax allowance on unvested share options and LTIP awards 366 393
Excess of taxation allowances over depreciation on fixed assets (232) (140)
Total 134 253
At the year end there were share options and LTIP awards not exercised with an
intrinsic value for tax purposes of £1,937,599 (2022: £4,287,634). On
exercise, the Group will be entitled to a corporation tax deduction in respect
of the difference between the exercise price and the strike price. The Group
has losses in relation to overseas entities totalling £766k (2022: £438k)
which are available to carry forward against future profits. No deferred tax
asset has been recognised in respect of these in the current or prior year as
there is uncertainty as to when these losses will be reversed. Deferred tax
has been calculated based on the future tax rate of 25% for differences from 1
April 2023. It is subject to change if tax rates change in future years.
16. Trade and other receivables
Trade and other receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method,
less loss allowances. The amortised cost of trade and other receivables is
stated at original invoice value, as the interest that would be recognised
from discounting future cash receipts over the short credit period is not
considered to be material.
An analysis of receivables is provided below:
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Trade receivables 10,185 8,231 1,538 3,441
Accrued income 1,743 25 - -
Other receivables 685 497 26 38
Prepayments 1,760 1,130 864 43
Total 14,373 9,883 2,428 3,522
All amounts are short‑term. The Directors consider that the carrying amount
of trade and other receivables approximates to their fair value. The Group has
not renegotiated the terms of any receivables in the year ended 31 March 2023.
The Group's trade receivables are generally short-term and do not contain
significant financing components.
The Group applies the IFRS 9 simplified approach to measuring ECLs for trade
receivables at an amount equal to lifetime ECLs. The ECLs on trade receivables
are calculated based on actual historic credit loss experience over the
preceding 25 years on the total balance of non-credit impaired trade
receivables, adjusted to incorporate any relevant forward looking information.
The Group has therefore concluded that the ECLs for trade receivables are
reasonable. The Group does not expect to incur any credit losses and has not
recognised any ECLs in the current year (2022: £nil).
Accrued income relates to accrued management and performance fees earned but
not yet invoiced.
17. Derivative financial assets and liabilities
Derivative financial instruments are initially recognised at cost on the date
on which the contract is first entered into, unless the fair value at
acquisition is different to cost, in which case fair value is recognised.
Subsequently they are measured at fair value with gains and losses recognised
in profit or loss. Transaction costs are immediately recognised in profit or
loss. The fair values of derivative financial instruments are determined by
reference to active market transactions.
The Group holds derivative financial instruments for two purposes. The Group
uses forward foreign exchange contracts to reduce the risk associated with
assets denominated in foreign currencies, and additionally uses both foreign
exchange options and forward foreign exchange contracts in order to achieve a
return within the seed funds. The instruments are recognised at fair value.
The fair value of the contracts is calculated using the market rates
prevailing at the period end date. The net gain or loss on instruments is
included within other income or expense.
2023 2022
Derivative financial assets £'000 £'000
Forward foreign exchange contracts held to hedge non-sterling-based assets 31 -
Forward foreign exchange contracts held for trading 23 -
Total 54 -
2023 2022
Derivative financial liabilities £'000 £'000
Forward foreign exchange contracts held to hedge non-sterling-based assets (5) (15)
Forward foreign exchange contracts held for trading - (109)
Total (5) (124)
Derivative financial instruments held to hedge non-sterling-based assets
At 31 March 2023 there were outstanding contracts with a principal value of
£8,647,055 (31 March 2022: £9,085,804) for the sale of foreign currencies in
the normal course of business. The fair value of the contracts is calculated
using the market forward contract rates prevailing at 31 March 2023. The Group
does not apply hedge accounting.
The net gain or loss on forward foreign exchange contracts held to hedge
non-sterling-based assets is as follows:
2023 2022
Derivative financial instruments held to hedge non-sterling-based assets £'000 £'000
Net loss on forward foreign exchange contracts at fair value through profit or 800 467
loss
Derivative financial instruments held for trading
The Record - Currency Multi‑Strategy Fund may use a variety of instruments
including forward foreign exchange contracts, options and futures in order to
achieve a return.
All derivative financial instruments held by the Record - Currency
Multi-Strategy Fund were classified as held for trading until termination in
June 2021.
At 31 March 2023 there were outstanding contracts with a principal value of
£nil (31 March 2022: £nil).
The net gain or loss on derivative financial instruments held for trading for
the year was as follows:
2023 2022
Derivative financial instruments held to hedge non-sterling-based assets £'000 £'000
Net loss on forward foreign exchange contracts and foreign exchange options at - 42
fair value through profit or loss
18. Cash management
The Group's cash management strategy employs a variety of treasury management
instruments including cash, money market deposits and treasury bills. Whilst
the Group manages and considers all of these instruments as cash, which are
subject to its own internal cash management process, not all of these
instruments are classified as cash or cash equivalents under IFRS.
IFRS defines cash and cash equivalents as cash in hand, on demand and
collateral deposits held with banks, and other short‑term highly liquid
investments that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value. Moreover, instruments
can only generally be classified as cash and cash equivalents where they are
held for the purpose of meeting short‑term cash commitments rather than for
investment or other purposes.
In the Group's judgement, bank deposits and treasury bills with maturities in
excess of three months do not meet the definition of short‑term or highly
liquid and are held for purposes other than meeting short‑term commitments.
In accordance with IFRS, these instruments are not categorised as cash or cash
equivalents and are disclosed as money market instruments with maturities
>3 months from origination.
Group Company
2023 2022 2023 2022
Assets managed as cash £'000 £'000 £'000 £'000
Bank deposits with maturities > 3 months 4,549 13,913 - -
Money market instruments with maturities > 3 months 4,549 13,913 - -
Cash 6,405 3,345 213 43
Cash equivalents 3,543 - - -
Cash and cash equivalents 9,948 3,345 213 43
Total assets managed as cash 14,497 17,258 213 43
Group Company
2023 2022 2023 2022
Cash and cash equivalents £'000 £'000 £'000 £'000
Cash and cash equivalents - sterling 6,632 1,169 212 43
Cash and cash equivalents - USD 821 450 1 -
Cash and cash equivalents - CHF 748 318 - -
Cash and cash equivalents - other currencies 1,747 1,408 - -
Total cash and cash equivalents 9,948 3,345 213 43
Details of how the Group manages credit risk are provided in note 23.
19. Current liabilities
Trade and other payables are stated at their original invoice value, as the
interest that would be recognised from discounting future cash payments over
the short payment period is not considered to be material.
Group Company
2023 2022 2023 2022
Trade and other payables £'000 £'000 £'000 £'000
Trade payables 221 478 - -
Amounts owed to Group undertakings - - 4,953 4,155
Other payables - 16 - -
Other tax and social security 716 619 - -
Accruals 5,074 3,608 2 6
Total 6,011 4,721 4,955 4,161
Accruals include £3,637,640 for the Group Bonus Scheme (31 March 2022:
£2,506,656). The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
Group Company
2023 2022 2023 2022
Current tax liabilities £'000 £'000 £'000 £'000
Corporation tax 1,329 924 - -
20. Provisions
The Group has provisions reflecting its contractual obligations connected to
reaching the end of its contractual lease terms.
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Provisions 122 200 122 200
The provision relates to an obligation to pay for dilapidations in connection
with the Group's office lease on the second floor of Morgan House, Windsor,
further information for which is included in note 12.
21. Issued share capital
The share capital of Record plc consists only of fully paid ordinary shares
with a par value of 0.025p each. All shares are equally eligible to receive
dividends and the repayment of capital and represent one vote at the
shareholders' meeting.
2023 2022
£'000 Number £'000 Number
Authorised
Ordinary shares of 0.025p each 100 400,000,000 100 400,000,000
Called‑up, allotted and fully paid
Ordinary shares of 0.025p each 50 199,054,325 50 199,054,325
Movement in Record plc shares held by the Record plc Employee Benefit Trust
("EBT")
The EBT was formed to hold shares acquired under the Record plc share‑based
compensation plans. Under IFRS the EBT is considered to be under de facto
control of the Group, and has therefore been consolidated into the Group
financial statements.
Neither the purchase nor sale of own shares leads to a gain or loss being
recognised in the Group statement of comprehensive income.
Number
Record plc shares held by EBT as at 31 March 2021 6,296,657
Adjustment for net purchases by EBT 3,335,374
Record plc shares held by EBT as at 31 March 2022 9,632,031
Adjustment for net purchases by EBT (897,029)
Record plc shares held by EBT as at 31 March 2023 8,735,002
The holding of the EBT comprises own shares that have not vested
unconditionally to employees of the Group. Own shares are recorded at cost and
are deducted from retained earnings.
Further information regarding the Record plc share‑based compensation plans
and relevant transactions made during the year is included in note 22.
22. Share-based payments
During the year ended 31 March 2023 the Group has managed the following
share‑based compensation plans:
· the Record plc Bonus Scheme (previously the Group Profit Share
Scheme): share awards issued under the Bonus Scheme are classified as
share‑based payments with cash alternatives under IFRS 2;
· the Record plc Share Scheme: share options issued under the Record
plc Share Scheme are classified as equity‑settled share‑based payments
under IFRS 2;
· the Record plc Share Incentive Plan: the Group operates the Record
plc Share Incentive Plan ("SIP") to encourage more widespread ownership of
Record plc shares by employees. The SIP is a tax‑approved scheme offering
attractive tax savings for employees retaining their shares in the scheme over
the medium to long term;
· the Record plc Jointly Owned Share Plan: participants' interests
awarded under the Jointly Owned Share Plan ("JSOP") are classified as
equity-settled share-based payments under IFRS 2; and
· the Record Long-Term Incentive Plan: participants' interests
awarded under the Long-Term Incentive Plan ("LTIP") are classified as
equity-settled share-based payments under IFRS 2.
All obligations arising from the five schemes have been fulfilled through
purchasing shares in the market.
a. Bonus Scheme
Share-based payments with cash alternatives
These transactions are compound financial instruments, which include a debt
element and a cash element. The fair value of the debt component of the
amounts payable to the employee is calculated as the cash amount alternative
offered to the employee at grant date and the fair value of the equity
component of the amount payable to the employee is calculated as the market
value of the share award at grant date less the cash forfeited in order to
receive the share award. The debt component is charged to profit or loss over
the period in which the award is earned and remeasured at fair value at each
reporting date. The equity component is charged to profit or loss over the
period in which the award is earned.
The Bonus Scheme allocates a proportion of operating profits to a profit share
pool to be distributed between all employees of the Group. The Remuneration
Committee has the discretion to vary the proportion allocated to the Bonus
pool between 25% and 35% of operating profits. Directors and senior employees
receive one-third of their Bonus in cash, one-third in shares ("Earned
Shares") and may elect to receive the final third as cash only or to allocate
some, or all, of the amount for the purchase of Additional Shares. The charge
to profit or loss in respect of Earned Shares in the period was £2,047,328
(2022: £1,463,802). Other employees receive two-thirds of their profit share
in cash and may elect to receive the final third as cash only or to allocate
some, or all, of the amount for the purchase of Additional Shares.
All shares which are the subject of share awards vest immediately and are
transferred to a nominee, allowing the employee, as beneficial owner, to
retain full rights in respect of the shares purchased. Shares awarded under
the Bonus Scheme are subject to restrictions over subsequent sale and transfer
and these restrictions are automatically lifted over one-third on each
anniversary of the profit share payment date for the next three years. In the
meantime, these shares cannot be sold, transferred or otherwise disposed of
without the consent of the Remuneration Committee.
The Bonus Scheme rules contain clawback provisions allowing for the repayment
of Bonus payments under certain circumstances, including a material breach of
contract, an error in performance of duties or a restatement of accounts which
leads to a change in any prior award under the scheme.
b. The Record plc Share Scheme
Equity‑settled share‑based payments
The fair value of the amounts payable to employees under these awards is
recognised as an expense over the vesting period of the award, with a
corresponding increase in equity. All such awards made by the Group involve
the parent company granting rights to its equity instruments to employees of
its subsidiary. Consequently, the subsidiary measures the services received
from its employees in accordance with the above classification under IFRS 2
and recognises a corresponding increase in equity as a contribution from the
parent. The parent has the obligation to settle the transaction with the
subsidiary's employees and therefore recognises an increase in its investment
in the subsidiary and a corresponding increase in equity.
The fair value of options granted is measured at grant date using an
appropriate valuation model, taking into account the terms and conditions upon
which the instruments were granted including any market or performance
conditions, and using quoted share prices.
The Record plc Share Scheme allows deferred share awards to be granted to
employees and Directors in the Record Group. Part 1 of the scheme allows the
grant of tax-unapproved ("Unapproved") options to employees and Directors and
Part 2 allows the grant of HMRC tax-approved ("Approved") options to employees
and Directors. Each participant may be granted Approved options over shares
with a total market value of up to £30,000 on the date of grant. There is no
such limit on the value of grant for Unapproved options, which have
historically been granted with a market value exercise price in the same way
as for the Approved options.
Options over an aggregate of 3,810,000 shares were granted under the Share
Scheme during the year (2022: 3,747,500), of which options over 814,000 shares
were granted as Approved options and options over 2,996,000 shares were
granted as Unapproved options (2022: 195,000 granted as Approved options and
3,552,500 granted as Unapproved options). All Approved and Unapproved options
were granted with an exercise price per share equal to the share price
prevailing at the time of grant.
The 588,000 Approved options issued to employees on 13 May 2022 all become
exercisable on the fourth anniversary of the date of grant, subject to the
employee being in employment with the Group at the relevant vesting date and
to the extent performance conditions have been satisfied.
The 2,052,000 Unapproved options issued to employees on 13 May 2022 each
become exercisable in four equal tranches on the first, second, third and
fourth anniversary of the date of grant, subject to the employee being in
employment with the Group at the relevant vesting date and to the extent
performance conditions have been satisfied.
The 26,000 Approved options issued to employees on 29 June 2022 all become
exercisable on the fourth anniversary of the date of grant, subject to the
employee being in employment with the Group at the relevant vesting date and
to the extent performance conditions have been satisfied.
The 199,000 Unapproved options issued to employees on 29 June 2022 each become
exercisable in four equal tranches on the first, second, third and fourth
anniversary of the date of grant, subject to the employee being in employment
with the Group at the relevant vesting date and to the extent performance
conditions have been satisfied.
The 50,000 Approved options issued to employees on 2 August 2022 all become
exercisable on the fourth anniversary of the date of grant, subject to the
employee being in employment with the Group at the relevant vesting date and
to the extent performance conditions have been satisfied.
The 70,000 Unapproved options issued to employees on 3 August 2022 each become
exercisable in four equal tranches on the first, second, third and fourth
anniversary of the date of grant, subject to the employee being in employment
with the Group at the relevant vesting date and to the extent performance
conditions have been satisfied.
The 150,000 Approved options issued to employees on 27 January 2023 all become
exercisable on the fourth anniversary of the date of grant, subject to the
employee being in employment with the Group at the relevant vesting date and
to the extent performance conditions have been satisfied.
The 675,000 Unapproved options issued to employees on 27 January 2023 each
become exercisable in four equal tranches on the first, second, third and
fourth anniversary of the date of grant, subject to the employee being in
employment with the Group at the relevant vesting date and to the extent
performance conditions have been satisfied.
The fair value of the services provided by employees has been calculated
indirectly by reference to the fair value of the equity instruments granted.
Fair value amounts for the options granted in the year ended 31 March 2023,
and for which a charge to profit or loss was made in the year, were determined
using a Black-Scholes option-pricing method and the following assumptions:
Weighted
Model input average value
Share price 76.0p
Dividend yield 7.21%
Exercise price 76.0p
Expected volatility 48%
Option life 3 years
Risk-free interest rate (%) 2.7%
Expected volatility is based on historical volatility.
The Group share‑based payment expense in respect of the Share Scheme was
£569,136 for the year ended 31 March 2023 (2022: £530,779).
Outstanding share options
At 31 March 2023, the total number of ordinary shares of 0.025p outstanding
under Record plc share compensation schemes was 10,560,207 (2022: 11,605,545).
These deferred share awards and options are over issued shares, a proportion
of which are hedged by shares held in an EBT. Details of outstanding share
options awarded to employees are set out below:
Earliest Latest
At 1 April Lapsed/ At 31 March vesting vesting Exercise
Date of grant 2022 Granted Exercised forfeited 2023 date date(1) price
26/01/18 155,000 - (155,000) - - 26/01/22 26/01/22 £0.4350
26/01/18 5,125 - (5,125) - - 26/01/20 26/01/22 £0.4350
26/01/18 17,334 - - (17,334) - 26/01/21 26/01/23 £0.4350
26/01/18 644,336 - - (644,336) - 26/01/21 26/01/23 £0.4350
29/03/19 460,000 - (460,000) - - 29/03/23 29/03/23 £0.2830
29/03/19 185,000 - (92,500) - 92,500 29/03/20 29/03/23 £0.2830
21/08/19 1,985,000 - (330,836) (330,832) 1,323,332 21/08/22 21/08/24 £0.3110
18/03/20 1,237,500 - (475,000) - 762,500 18/03/21 18/03/24 £0.28902
21/09/20 2,818,750 - (1,106,250) - 1,712,500 21/09/21 21/09/24 £0.3730
25/01/21 225,000 - (75,000) - 150,000 25/01/22 25/01/25 £0.49425
09/03/21 125,000 - (31,250) - 93,750 09/03/22 09/03/25 £0.63986
13/08/21 195,000 - - (35,000) 160,000 13/08/25 13/08/25 £0.85713
13/08/21 2,600,000 - (650,000) - 1,950,000 13/08/22 13/08/25 £0.4000
13/08/21 952,500 - (226,875) (45,000) 680,625 13/08/22 13/08/25 £0.85713
13/05/22 - 588,000 - - 588,000 13/05/26 13/05/26 £0.698708
13/05/22 - 2,052,000 - (75,000) 1,977,000 13/05/23 13/05/26 £0.698708
29/06/22 - 26,000 - - 26,000 29/06/26 29/06/26 £0.729609
29/06/22 - 199,000 - - 199,000 29/06/23 29/06/26 £0.729609
02/08/22 - 50,000 - (50,000) - 02/08/26 02/08/26 £0.717197
03/08/22 - 70,000 - (50,000) 20,000 03/08/23 03/08/26 £0.717197
27/01/23 - 150,000 - - 150,000 27/01/27 27/01/27 £0.972835
27/01/23 - 675,000 - - 675,000 27/01/24 27/01/27 £0.972835
Total options 11,605,545 3,810,000 (3,607,836) (1,247,502) 10,560,207
Weighted average exercise price of options £0.41 £0.76 £0.39 £0.47 £0.54
1. Under the terms of the deeds of grants, options are exercisable for
twelve months following the vesting date.
During the year 3,607,836 options were exercised. The weighted average share
price at date of exercise was £0.81. At 31 March 2023, a total of 473,750
options had vested and were exercisable (2022: 946,375). At 31 March 2023, the
weighted average exercise price of the options vested and exercisable was
£0.31 (2022: £0.35) and the weighted average contractual life was three
years (2022: two years).
Performance measures
Performance conditions attached to all options granted to Board Directors
differ to those granted for all other staff. All Executive Director option
awards are subject to a performance condition and vest on each of the third,
fourth and fifth anniversaries of the date of grant subject to an earnings per
share ("EPS") hurdle linked to the annualised EPS growth for the respective
three, four and five-year periods from grant. Vesting is on a stepped basis,
with 25% of each tranche vesting if EPS growth over the relevant period is at
least RPI plus 4% per annum, increasing through 50%, 75% and with 100% vesting
if EPS growth exceeds RPI plus 13%, as shown in the table below. Options
awarded subject to EPS performance conditions are valued using a Black-Scholes
model, adjusted for the impact of the performance conditions.
Percentage of
shares subject
to the award
Record's average EPS growth which vest
>RPI growth + 13% 100%
>RPI growth + 10%, =RPI growth + 7%, =RPI growth + 4%, = 3 months 4,549 13,913
Cash and cash equivalents 9,948 3,345
Total financial assets 27,164 26,011
The debtors' age analysis is also evaluated on a regular basis for expected
credit losses. It is management's opinion that there is no requirement to
provide for any expected credit losses. The table below is an analysis of
trade receivables and accrued income by due date:
Neither More than
Carrying impaired nor 0-3 months 3 months
amount past due past due past due
At 31 March 2023 £'000 £'000 £'000 £'000
Trade receivables 10,185 9,775 309 101
Accrued income 1,743 1,743 - -
Total 11,928 11,518 309 101
97% 2% 1%
Neither More than
Carrying impaired nor 0-3 months 3 months
amount past due past due past due
At 31 March 2022 £'000 £'000 £'000 £'000
Trade receivables 8,231 8,231 - -
Accrued income 25 25 - -
Total 8,256 8,256 - -
100% 0% 0%
The Group offers standard credit terms of 30 days from invoice date. It is the
Group's policy to assess debtors for expected loss 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, adjusting to incorporate any relevant forward looking
information. The application of this policy generally results in debts that
are past due not being provided for unless individual circumstances indicate
that a debt is impaired.
Trade receivables are made up of 113 debtors' balances (2022: 91). The largest
individual debtor corresponds to 16% of the total balance (2022: 16%). Debtor
days, based on the generally accepted calculation of debtor days, is 83 days
(2022: 85 days). This reflects the quarterly billing cycle used by the Group
for the vast majority of its fees. As at 31 March 2023, 3% of debt was overdue
(2022: 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 9 days (2022: 28 days).
Contractual maturity analysis for financial liabilities
Due or due Due between Due between
Carrying in less than 1 and 3 months
amount 1 month 3 months and 1 year
At 31 March 2023 £'000 £'000 £'000 £'000
Trade payables 221 221 - -
Accruals 5,074 486 2,001 2,587
Derivative financial liabilities 5 - 5 -
Total 5,300 707 2,006 2,587
Due or due Due between Due between
Carrying in less than 1 and 3 months
amount 1 month 3 months and 1 year
At 31 March 2022 £'000 £'000 £'000 £'000
Trade payables 478 318 29 131
Accruals 3,608 302 1,503 1,803
Derivative financial liabilities 124 7 117 -
Total 4,210 627 1,649 1,934
Lease liabilities are not included within the table below, please see note 12
for further details.
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 held 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
No
Fixed rate interest rate Total
At 31 March 2023 £'000 £'000 £'000
Financial assets
Trade receivables - 10,185 10,185
Accrued income - 1,743 1,743
Other receivables - 685 685
Derivative financial assets at fair value through profit or loss - 54 54
Money market instruments with maturities > 3 months 4,549 - 4,549
Cash and cash equivalents 9,948 - 9,948
Total financial assets 14,497 12,667 27,164
Financial liabilities
Trade payables - (221) (221)
Accruals - (5,074) (5,074)
Lease liability - (979) (979)
Derivative financial liabilities at fair value through profit or loss - (5) (5)
Total financial liabilities - (6,279) (6,279)
No
Fixed rate interest rate Total
At 31 March 2022 £'000 £'000 £'000
Financial assets
Trade receivables - 8,231 8,231
Accrued income - 25 25
Other receivables - 497 497
Money market instruments with maturities > 3 months 13,913 - 13,913
Cash and cash equivalents 3,345 - 3,345
Total financial assets 17,258 8,753 26,011
Financial liabilities
Trade payables - (478) (478)
Accruals - (3,608) (3,608)
Lease liability - (1,326) (1,326)
Derivative financial liabilities at fair value through profit or loss - (124) (124)
Total financial liabilities - (5,536) (5,536)
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 revenue invoices 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. The principal currencies giving rise to this risk are the US dollar, the
Swiss franc, the euro and the Canadian dollar.
During the year ended 31 March 2023, the Group invoiced the following amounts
in currencies other than sterling:
2023 2022
Local Value in Local Value in
currency reporting currency reporting
value currency value currency
£'000 £'000 £'000 £'000
US dollar (USD) 24,978 20,869 23,949 17,742
Swiss franc (CHF) 16,138 14,223 12,460 10,010
Euro (EUR) 4,293 3,748 4,135 3,498
Canadian dollar (CAD) 1,618 1,014 1,626 960
Australian dollar (AUD) 1,089 612 1,029 563
Japanese yen (JPY) 8,795 54 4,824 31
Swedish krona (SEK) - - 36 3
Singapore dollar (SGD) - - 4 2
The value of revenues for the year ended 31 March 2023 that were denominated
in currencies other than sterling was £40.2 million (31 March 2022: £32.8
million).
Record's policy is to reduce the risk associated with the Group's revenues
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.
The cash denominated in currencies other than sterling (refer to note 18) is
covered by the Group's hedging process, therefore the Directors consider that
the foreign currency risk on cash balances is not material.
Foreign currency risk - sensitivity analysis
The Group has considered the sensitivity to exchange rate movements by
considering the impact on those revenues, costs, assets and liabilities
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
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Sterling weakening by 10% against the dollar 1,000 871 1,000 871
Sterling strengthening by 10% against the dollar (1,000) (871) (1,000) (871)
Sterling weakening by 10% against the Swiss franc 755 445 755 445
Sterling strengthening by 10% against the Swiss franc (755) (445) (755) (445)
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 on a historical basis and market expectations for future movement.
When applied to the average sterling/USD exchange rate of £1 = $1.20 this
would result in sterling weakening to £1 = $1.09 and sterling strengthening
to £1 = $1.33.
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 on a historical basis and market expectations for future movement.
When applied to the average sterling/CHF exchange rate of £1 = CHF 1.13 this
would result in sterling weakening to £1 = CHF 1.03 and sterling
strengthening to £1 = CHF 1.26.
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.
Concentration risk
The Group is exposed to concentration risk in respect of product, client type
and geographical location, which could lead to over-reliance on any one
category of revenue. Note 4 provides detail on clients contributing greater
than 10% of revenue. Mitigating activities are detailed in the Risk management
section.
Concentration risk - sensitivity analysis
The Group has considered the impact of losing the Group's largest client,
assuming that only variable remuneration costs can be reduced in the short
term.
Impact on profit after tax Impact on total equity
for the year ended 31 March as at 31 March
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Loss of largest client 3,486 2,594 3,486 2,594
24. 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
financial assets or liabilities;
· level 2: inputs other than quoted prices included within level 1
that are observable for the financial asset or liability, indirectly (i.e.
derived from prices); and
· level 3: inputs for the financial 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:
2023 Level 1 Level 2 Level 3
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Impact bonds 770 770 - -
Investment in funds 2,530 1,077 - 1,453
Other investments 1,601 1,001 - 600
Forward foreign exchange contracts held to hedge non-sterling assets 54 - 54 -
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts held to hedge non-sterling assets (5) - (5) -
Total 4,950 2,848 49 2,053
2022 Level 1 Level 2 Level 3
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Impact bonds 2,177 2,177 - -
Investment in funds 1,070 944 - 126
Other investments 200 - - 200
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts used by seed funds (15) - (15) -
Other investments (110) - (110) -
Total 3,322 3,121 (125) 326
There have been no transfers between levels in the reporting period (2022:
none).
Basis for classification of financial instruments classified as level 1 within
the fair value hierarchy
Impact bonds, listed funds and other listed investments are classified as
level 1. These investments are valued using market prices and coupon rates as
applicable.
Basis for classification of financial instruments classified as level 2 within
the fair value hierarchy
Forward foreign exchange contracts and options are both 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.
Basis for classification of financial instruments classified as level 3 within
the fair value hierarchy
Direct investments in private funds and share capital of start-up companies in
the digital sector have been classified as level 3. There is no observable
market for these investments, therefore fair value measurements have been
derived from valuation techniques that include inputs that are not based on
observable market data. The private funds are valued at net asset value in
accordance with independent professional valuation reports or International
Private Equity and Venture Capital Valuation Guidelines where relevant. The
direct investments in capital of the start-up companies are valued at cost.
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
Financial Assets at Liabilities at
Assets at liabilities fair value fair value
amortised measured at through through profit
cost amortised cost profit or loss or loss
At 31 March 2023 Note £'000 liabilities £'000 £'000
Impact bonds 14 - - 770 -
Investment in funds 14 - - 2,530 -
Other investments 14 - - 1,601 -
Trade and other receivables (excludes prepayments) 16 12,613 - - -
Money market instruments with maturities > 3 months 18 4,549 - - -
Cash and cash equivalents 18 10,757 - - -
Derivative financial assets at fair value through profit or loss 17 - - 54 -
Trade payables 19 - (221) - -
Accruals 19 - (5,074) - -
Derivative financial liabilities at fair value through profit or loss 17 - - - (5)
Total 27,919 (5,295) 4,955 (5)
Financial Assets at Liabilities at
Assets at liabilities fair value fair value
amortised measured at through through profit
cost amortised cost profit or loss or loss
At 31 March 2022 Note £'000 liabilities £'000 £'000
Impact bonds 14 - - 2,177 -
Investment in funds 14 - - 1,070 -
Other investments 14 - - 200 -
Trade and other receivables (excludes prepayments) 16 8,753 - - -
Money market instruments with maturities > 3 months 18 13,913 - - -
Cash and cash equivalents 18 3,345 - - -
Trade payables 19 - (478) - -
Accruals 19 - (3,608) - -
Derivative financial liabilities at fair value through profit or loss 17 - - - (124)
Total 26,011 (4,086) 3,447 (124)
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 14, which includes a
description of the nature of their business.
2023 2022
£'000 £'000
Amounts due to subsidiaries (3,415) (714)
Dividends received from subsidiaries 10,500 4,600
Amounts due to subsidiaries consist of funds lent by the subsidiaries to the
Company to facilitate the Company's investing activities. Amounts due to
subsidiaries are disclosed as a net amount, and consist of amounts owed to
Group undertakings in note 19 and trade receivables in note 16. All amounts
owed to and by related parties will be settled in cash. No guarantees have
been given or received. No provisions for expected credit losses have been
raised against amounts outstanding (2022: £nil). No expense has been
recognised during the year in respect of expected credit losses 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
2023 2022
£'000 £'000
Short‑term employee benefits 10,311 8,457
Post‑employment benefits 327 330
Share‑based payments 3,539 2,467
Total 14,177 11,254
Key management personnel dividends
The dividends paid to key management personnel in the year ended 31 March 2023
totalled £4,073,511 (2022: £3,056,662).
Directors' remuneration
2023 2022
£'000 £'000
Emoluments (excluding pension contribution) 3,580 2,809
Pension contribution (including payments made in lieu of pension 101 96
contributions)
Total 3,681 2,905
During the year, no Directors of the Company (2022: none) participated in the
Group Personal Pension Plan, a defined contribution scheme. Further detail on
Directors' remuneration is provided in the Remuneration report.
26. Contingent liabilities and commitments
The Group has committed to subscriptions to equity capital of $1,791,870, of
which $1,486,870 has been called.
On 20 January 2023, the Group committed to a licence to use an office in
London. The commitment is to 28 February 2025 and the outstanding amount to be
paid at 31 March 2023 was £1,628,225. £836,060 is payable within twelve
months and £864,180 within the following twelve months.
A previous commitment on an office in London had been made on 1 October 2021,
with the commitment being to 31 October 2023 and the original outstanding
amount to be paid between 1 April 2023 and 31 October 2023 being £352,800.
However, this commitment ended on 28 February 2023, when it was replaced and
superseded by the commitment made on 20 January 2023.
27. 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 under the
relevant jurisdictions (FCA and BaFin).
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,
while also continuing to ensure that the minimum required regulatory capital
is maintained. 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 total capital is equal to the net assets of the Group, and is
managed within the categories set out below:
2023 2022
£m £m
Required regulatory capital 7.1 5.4
Other operating capital 21.2 20.5
Total capital 28.3 25.9
Total capital covers the Group's regulatory capital requirements plus capital
required for day‑to‑day operational purposes and other investment
purposes. The Directors consider that the other operating capital
significantly exceeds the actual day-to-day operational requirements.
28. Ultimate controlling party
As at 31 March 2023 the Company had no ultimate controlling party, nor at 31
March 2022.
29. Post-reporting date events
No adjusting or significant non‑adjusting events have occurred between the
reporting date and the date of authorisation.
30. Restatement of the share premium account and retained earnings
Gains prior to 31 March 2022 on the release of shares from the Employee
Benefit Trust have been reclassified from share premium to retained earnings
as there was no issue of new shares. The prior cumulative movements to 31
March 2021 and for the year ended 31 March 2022 of £609,000 and £820,000
respectively, resulting in a total reclassification of £1,429,000 to the
retained earnings balance as at 31 March 2022.
In addition to this, a reclassified of £1,240,000 between the release of
shares held by EBT and share based payment reserve movement in the statement
of changes in equity was made to correct the classification of consolidation
adjustments necessary to remove internal gains and losses arising when shares
are transferred within the Group, and recognise it separately from the IFRS 2
charges.
The restatement does not impact the current or previous years' profit or loss.
31. Restatement of profit after tax in the Company statement of cash flows
For the prior year ended 31 March 2022, the Company statement of cash flows
previously showed the loss after tax of £41,000 excluding dividends received
of £4,600,000. In order for the profit after tax figure to reconcile to the
Company statement of changes in equity, this figure has now been updated in
the FY-22 comparative figure to a profit after tax of £4,599,000 including
dividends. A corresponding line to remove the dividends received from
subsidiaries from cash flows from operating activities was also added, as this
is recognised in investing activities in line with the company policy. Since
this represents a presentational adjustment only, the restatement does not
impact the totals reported for cash inflow from operating activities nor the
net decrease in, or closing balance for, cash and cash equivalents for the
year.
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.
The information contained within this announcement is deemed by the Group to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via
Regulatory Information Service ("RIS"), this inside information is now
considered to be in the public domain.
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