REG - Record PLC - Final Results
28/06/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240628:nRSb2451Ua&default-theme=true
RNS Number : 2451U Record PLC 28 June 2024
PRESS RELEASE
Record plc
28 June 2024
FINAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2024
Positive net inflows take AUM to a record high
Record plc, the specialist currency and asset manager, today announces its
audited results for the year ended 31 March 2024 ("FY-24").
Financial headlines:
· Revenue growth of 1.6% to £45.4m (FY-23: £44.7m)
· AUM(1) in USD terms up by 16.5% to $102.2bn (FY-23: $87.7bn)
· Underlying(2) pre-tax profit increase of 1.4% to £14.8m (FY-23:
£14.6m)
· Pre-tax profit decrease of 11.6% to £12.9m (FY-23: £14.6m)
· Underlying(2) operating profit margin of 32% (FY-23: 32%)
· Decreased operating profit margin of 28% (FY-23: 32%)
· Basic underlying(2) EPS of 5.60 pence (FY-23: 5.95 pence)
· Basic EPS decrease of 18.7% to 4.84 pence (FY-23: 5.95 pence)
· Consistent performance fees of £5.8m (FY-23: £5.8m)
· Final ordinary dividend proposed of 2.45p per share (FY-23:
2.45p)
· Special dividend of 0.60p per share
· Strong and liquid financial position with shareholders' equity of
£28.9m (FY-23: £28.3m) and assets managed as cash of £17.5m (FY-23:
£14.5m)
Key developments:
· Strong momentum in AUM growth (+16.5%) driven by net inflows of
$6.8bn to close the year at $102.2bn, the highest ever level of AUM to date
· Successful launch of two Luxembourg funds with aggregate AUM of
$320 million at year end
· High level of performance fees maintained for FY-24: £5.8m
(FY-23: £5.8m)
· Evolution of the Board in line with succession planning sees Jan
Witte appointed as Group CEO from 1 April 2024 and Richard Heading appointed
as CFO effective 1 July 2024
· Decision to refocus IT strategy results in impairment of £1.9m
for the year
Outlook
· Management fees expected to be broadly flat for FY25 reflecting
full-year impact of headwind due to client mandate switch in FY24 Q3
· Costs will be carefully managed to be in line with management
fees, while accommodating investment to support future growth
· We will provide an update on medium-term growth plans later this
year on completion of our strategic review
Commenting on the results, Jan Witte, CEO of Record plc, said:
"I am proud to be leading Record into the next phase of its development
supported by a strong team of senior colleagues, many of whom have been at
Record for ten years or more.
"The underlying financial performance of the Group remains strong, with
material growth in AUM, which rose to its highest ever level of $102.2
billion, new fund launches and the repeat of last year's high level of
performance fees of £5.8 million.
"I am confident that the renewed focus we have on a core suite of six product
categories, where our offering and value-add is unique, positions us well for
medium-and long-term growth."
Analyst presentation
There will be a presentation for analysts at 9.30am on Friday, 28 June 2024
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
Jan Witte - Chief Executive Officer
Steve Cullen - Chief Financial Officer
Panmure Gordon + 44 (0) 20 7886 2500
Corporate Broking: David Watkins
Corporate Advisory: Atholl Tweedie
Buchanan +44 (0) 20 7466 5000
Simon Compton record@buchanan.uk.com (mailto:record@buchanan.uk.com)
Henry Wilson
George Beale
( )
1. AUM managed by Record Financial Group at 31 March 2024 is a
combination of USD 97.5 billion based on the notional value of currency assets
under management through the Group's currency products and USD 4.7 billion in
total market value of other assets managed by the Group. By convention this is
quoted in US dollars.
2. All Underlying values referred to throughout the annual report are
an alternative performance measure equal to the Statutory values less the
effects of the £1.9 million intangible asset impairment. This impairment is
considered to be a one-time exceptional expense specific to the current period
and has been excluded to enhance comparability with prior year figures.
Chairman's statement
In line with our succession planning now materialising, I am confident we have
a new generation of senior management in place with strong and complementary
skills to take the business forward.
David Morrison | Chairman
Ordinary dividend per share
4.60p
+2.2%
FY-23: 4.50p
Underlying earnings per share(3)
5.60p
-5.9%
FY-23: 5.95p
3. All Underlying values referred to throughout the Annual Report are
an alternative performance measure equal to the Statutory
values less the effects of the £1.9 million intangible asset impairment. This
impairment is considered to be a one-time exceptional expense specific to the
current period, and has been excluded to enhance comparability with prior year
figures.
There are few people who have the desire and determination to start a new
business, who then also have the management skills to allow it to develop and
mature and, in the greater course of time, to set in place the succession to
take on the business from the founding generation. Neil Record, the founder of
the Company, whom I succeeded as Chairman after the last Annual General
Meeting, managed all three over 40 years and I would like to pay tribute to
him for all that he achieved in creating and building Record plc. Not only has
the business developed from a tiny band located in an office next to Windsor
Riverside Station in the early 1980s to one which has AUM of over $100 billion
which it manages on behalf of an impressive and demanding range of clients,
but it has done so in a manner that reflects the high intellectual standards
and personal integrity of its founder.
The last year has also witnessed the retirement of Leslie Hill as Chief
Executive Officer and the impending retirement of Steve Cullen as Chief
Financial Officer. Leslie joined the business in 1992 and, for many years, led
the sales and business development activities of the Company. Record is
fortunate to have retained and served some clients for periods measured in
decades rather than years and I believe much of the loyalty from clients has
been driven both by the quality of the services provided and the relationships
developed and led by Leslie over many years.
Since taking over as Chief Executive Officer in 2020, Leslie also widened the
eyes of the Company with regard to new product and service opportunities,
creating opportunities for the new generation of management to take forward.
Steve Cullen has also been a magnificent servant of the Company. Having joined
in 2003 and taken over as Chief Financial Officer in 2013, he has been an
undemonstrative, but calm and sensible voice in the boardroom for many years.
To both Leslie and Steve, gratitude is owed by shareholders, Board members and
employees alike.
Dr Jan Witte joined Record in 2012, having completed his mathematics doctorate
at Balliol College, Oxford. Since then, he has held various roles in the
Company including, in recent times, leading the development of Record Asset
Management and being Chief Executive of Record Currency Management. I am
delighted that he has stepped up to become the Chief Executive Officer of the
Group. Jan has now been joined by Richard Heading, who will succeed Steve
Cullen as Chief Financial Officer. Richard has a breadth of experience in
sectors and businesses with demands and challenges not dissimilar to Record
and I believe that he will bring to the business complementary skills and
external experience to support Jan's deep knowledge of Record and its
activities. I am confident that, between the two of them, supported by other
senior members of the management team, the Company is in safe hands.
Financial overview
In his short time to date as Group CEO, Jan has brought renewed clarity to the
Group's core product suite and, as previously announced, has also made changes
to the IT strategy. The latter, in particular, will underpin operational
strength and service quality, and is a major focus for the coming year.
The Group continues to make progress in its growth plans as evidenced by AUM
having almost doubled over the last five years to its new high of over $100
billion, coupled with the successful launch of new products under its Custom
Solution suite of asset management products.
From a financial perspective, we fully expect the impact of the above changes,
and others, to be seen over the medium term. However, in the most recent
fiscal year, the overall increase in revenues and underlying profitability was
more mundane, reflecting the pricing of certain products and the Company's
cost base. The year also delivered challenges with some events beyond our
control having an unavoidable financial impact; in particular, the unexpected
client-side delays in launching some of our new funds. In addition, the
decision was also taken to impair £1.9 million of capitalised IT development
expenditure towards the end of the financial year.
In that context, maintaining Group revenue and underlying profitability at the
same level as last year is a reasonable achievement, albeit one below our
initial expectations. However, looking ahead with a solid pipeline, fund
launches planned and AUM at its highest ever level, the Group's trajectory
remains positive and is supported by a highly cash-generative business model
accompanied by a robust and liquid balance sheet, with total equity of £29.0
million (FY‑23: £28.3 million).
Further information on financial results can be found in the Financial review
section.
Capital and dividend
Our capital policy has not changed and aims to ensure retention of capital as
required for regulatory and working capital purposes and for investing in new
opportunities. Our dividend policy currently targets a level of ordinary
dividend within the range of 70% to 90% of annual earnings, which allows for
progressive and sustainable dividend growth in line with the trend in
profitability.
Previously, and subject to financial performance and market conditions at the
time, the Board has considered returning excess cash to shareholders, usually
in the form of special dividends. However, the Board retains the discretion to
change these policies as required, either in line with changes in strategy or
in response to changing business circumstances.
In that context, the Board is recommending a final ordinary dividend of 2.45
pence per share (FY‑23: 2.45 pence) with the full-year ordinary dividend at
4.60 pence per share (FY‑23: 4.50 pence), representing a 2.2% increase in
the ordinary dividend and an ordinary payout ratio of 82% of underlying
earnings. The interim dividend of 2.15 pence was paid on 22 December 2023,
and the final ordinary dividend of 2.45 pence will be paid on 2 August 2024 to
shareholders on the register at 12 July 2024, subject to shareholder approval.
Having reviewed the current level of Group capital against its ongoing
requirements for regulatory and investment purposes and to support its
continued growth and expansion, the Board is announcing a special dividend of
0.6 pence per share to be paid simultaneously with the final ordinary
dividend. Total proposed dividends per share for the year are 5.20 pence per
share (FY-23: 5.18 pence) compared to underlying earnings per share of 5.60
pence (FY‑23: 5.95 pence).
The Board
As noted above, the past year has witnessed substantive changes to the Board
and senior management of the Company. Rarely, however, can one note that the
Chairman stood down after 40 years, the CEO after 31 years with the Company
and the CFO after 21 years. Nevertheless, such changes give rise to management
challenges and I would like to take this opportunity to thank my colleagues on
the Board and the senior members of the management team for their advice,
challenge and support since I took the chair last summer.
Having expressed an inclination to do so some time ago, but having most
helpfully agreed to remain in post to support the process of management change
over the past few months, Tim Edwards recently took the decision to stand
down from the Board, after six years' service, to give him time to focus on
the biotechnology sector.
I would like to thank Tim for the commitment and counsel he has given to the
Board and the management team.
To succeed Tim, shortly before issuing this report, we were able to announce
the appointment of Dr Othman Boukrami as a new Non-executive Director with
effect from 1 July 2024. Othman is currently Chief Investment Officer of TCX,
the Currency Exchange Fund, having earlier in his career held senior positions
in the African Development Group and Citibank. Othman brings highly pertinent
sector expertise to the Board and I am delighted that he accepted the
invitation to join it.
I am also pleased that we have appointed Kevin Ayles to the Board in an
executive capacity. Kevin has been with Record since 2007 and, in a company
that is wholly dependent on the calibre and commitment of its employees, he
has played a critical role in developing the strength of the management team
in his capacity as Head of Human Resources. Kevin's appointment is both
recognition of the contribution he makes to the business and a reflection of
the importance of his role to the future of the Company.
Outlook
A new senior management team quite rightly takes the opportunity to review the
strategic and operational imperatives of a business as well as the environment
and markets in which a company is operating. That is a process that is ongoing
within Record at present, on which Jan Witte comments in his CEO report, and
which will continue during the first half of the current financial year. The
focus, in the short term, is on ensuring operational strength and stability
along with client satisfaction.
Taking a medium-term view, I am confident that we have a new generation of
senior management in place able to take the Company forward and that we are
operating in political and economic conditions that will provide the Company
with an opportunity-rich environment both for currency hedging mandates and
for alternative asset investments that are not correlated with more
conventional asset classes.
David Morrison
Chairman
Chief executive officer's statement
Since my appointment on 1 April of this year, as a team, we have now
crystalised our long-term strategy for growth around some very clear
priorities
Jan Witte | Chief Executive Officer
Revenue
£45.4m
+1.6%
FY-23: £44.7m
Underlying profit before tax(3)
£14.8m
+1.4%
FY-23: £14.6m
Overview
I am proud to have become CEO of Record and consider it a great privilege to
be able to both lead and evolve the business going forward, supported by an
experienced team of senior colleagues, many of whom have been at Record for
ten years or more.
To put things in context, it is instructive to look back at the transformation
the business has seen over the last decade and more specifically in the last
couple of years.
In the period after the financial crisis of 2008/9, Record's product set,
while profitable, became somewhat stagnant and, in 2017, fee pressure across
the industry was becoming an increasing concern. This highlighted the need for
change and, against a backdrop of falling profitability, Leslie Hill, formerly
Head of Sales, was appointed CEO in 2020 to introduce fresh thinking and to
explore new opportunities for growth.
Leslie successfully created this younger, more dynamic senior management team
across the Group and encouraged a more entrepreneurial mindset to take root.
As a result, over the last couple of years, we have proactively developed and
explored a number of new possibilities, not all of which we plan to take
forward given the need to focus on those areas offering the greatest potential
Strategy
Since my appointment on 1 April of this year, the senior management team has
been working to crystallise our long‑term strategy for growth and we have
started by setting some very clear priorities. With a much higher level of
strategic clarity, our focus now is firmly on execution and we must get the
details right.
One of the things that has become very clear is that we need to define our
positioning in the industry landscape. We now strongly identify (and reinforce
this positioning) as a specialist asset manager focused on offering
best‑in-class products to large global investors.
Being a specialist is a role that is consistent with our roots, our
established product lines, and our more recent expansion into new products. It
is also consistent with our culture and the exceptional expertise of many of
the people we employ. We don't aspire to, and it is not necessary to, excel at
everything; but where we are competing, we aim to provide best‑in‑class
solutions.
Another quality that makes us unique is our ability to structure and deliver
large purpose-built investment solutions. Our size here is key. We are large
enough to structure and deliver multi-billion USD mandates, and simultaneously
small enough to be nimble and accommodate the unique and often complex detail
required to deliver exceptional output for our rightly demanding clients.
In an increasingly complex world, where rapid technological progress competes
for attention with de-globalisation and geopolitical tensions, these
purpose-built investment solutions of exceptional quality and the way we can
deliver them, are in demand. As testament to that, we now manage more than
USD 100 bn for clients worldwide.
Our client-base continues to comprise institutional investors, pension funds,
and foundations. In recent years, we have also attracted an increasing number
of international asset managers, which is an exciting development and is now
one of the key areas of support and development.
With teams in London, Zurich, Frankfurt, Amsterdam, and New York, and around
100 employees globally, we have our eyes firmly set on the work that is
required to build on our recent AUM milestones and to continue our trajectory
of growth. To this end, our energy is now directed towards six distinct
product categories where we offer a unique value proposition, and where we can
be best-in-class.
Currency Management, with a renewed focus on core products, comprises:
· Passive Hedging;
· Hedging for Asset Managers
· Dynamic Hedging; and
· FX Alpha (formerly Currency for Return).
Asset Management, where products require more preparatory work and hence lead
times are greater, comprises;
· Emerging Market Debt; and
· Custom Solutions (including Private Credit and Infrastructure
Equity).
We will be heavily focused on this envelope of six core product categories and
have created high hurdles for ourselves when it comes to adding
new products.
Our priority is very much "bigger and better" in the areas where we are
already strong, with the expansion of our range a secondary aim.
Financial performance
Group revenue increased by 2% and, on an underlying basis (excluding one-off
and exceptional costs), operating profit margin and pre-tax profit were 32%
and £14.8 million respectively. Against a difficult backdrop, maintaining
these at the same level as in the previous year can be considered a
respectable result.
The underlying financial performance of the Group remains strong. We saw
material growth in AUM across both currency and asset management products
during the year, which reflects the time and effort of colleagues spent both
in maintaining, but also in growing and winning client mandates.
Consequently, FY-24 saw the Group pass some milestones of note: AUM rose by
over 16% to its highest ever level of $102.2 billion, with FY-24 being the
fifth consecutive year of positive net inflows. In addition, we launched two
funds under our new Custom Solutions suite of asset management products and
maintained the high level of performance fees of £5.8 million earned in the
previous fiscal year.
The impairment of the previously capitalised IT-development expenditure of
£1.9 million for the R-Platform was announced prior to the year end.
Whilst disappointing, having taken account of both the scale of improvement
delivered over the previous two years plus the future investment required over
a prolonged period, the strategic decision was taken to cease further
development and to bring future IT infrastructure and development teams
in-house. The Board was fully supportive of this decision which we believe
will strengthen the Group's ability to develop and deliver our tailored
solutions in a more cost-effective way, which can only be in the best
interests both of our clients and shareholders.
Further information on financial results can be found in the Financial review
section.
Outlook
It's a privilege to be leading the Group and a delight to be working with both
superb colleagues and clients who really make every day at Record enjoyable. I
am confident that the renewed focus we have on a core suite of six product
categories, where our offering and value-add is unique, positions us well for
growth in the years ahead.
Jan Witte
Chief Executive Officer
Operating review
AUM closed the year at its highest ever level of $102.2 billion, including
net AUM inflows of $6.8 billion for the year.
Product investment performance
Currency Management
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 saw interest rates remain elevated in the first half of FY-24,
stemming from hawkish central bank policy to curb the persistent inflationary
pressures. Towards the second half of FY-24, inflation prints across major
economies showed signs of moderation, alongside slowing GDP growth and
employment data. These have had the effect of introducing increased volatility
into short-term interest rate markets, from which FX forward pricing is
determined. The heightened volatility increased the opportunity set for our
clients' portfolios, and as such, we positioned client portfolios
appropriately to net add value from this volatility, achieving positive
performance. Additionally, the team's management of the portfolio around key
market events such as the acquisition of Credit Suisse by UBS, and the
consequential liquidity issues, 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 2024 Inception(4)
Value added by enhanced Passive Hedging programme relative to a fixed‑tenor 0.07% 0.10% p.a.
benchmark
4. Since inception in October 2014.
Dynamic Hedging
The performance of our Dynamic Hedging product is a function of foreign
currency fluctuations relative to the base currency of specific clients.
During the year, US investors saw losses from currency on international assets
when valuing positions in US dollars, as the US dollar appreciated against the
majority of G10 currencies. Record's Dynamic Hedging product adjusted hedge
ratios in line with US dollar fluctuations, reducing hedging losses when the
US dollar was weaker and helping to protect against currency losses when the
US dollar was episodically stronger. As a result, Dynamic Hedging performance
was positive, partially offsetting currency losses on the underlying
international exposures. Positive hedging performance was largely due to gains
made from the Japanese yen hedge, which weakened substantially against the US
dollar.
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 2024 Inception(5)
Value added by Dynamic Hedging programme for a representative US-based account 0.67% 0.67% p.a.
5. Since inception in April 2009.
FX Alpha (formerly Currency for Return)
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, or the tendency for
high interest rate currencies to outperform low interest rate currencies.
· Value which purchases undervalued currencies and sells overvalued
currencies relative currency fair value.
· EM Long/Short which captures returns from relative growth, value
and carry opportunities within Emerging Market and Developed Market
currencies.
· Developed Market Classification ("DMC") which dynamically allocate
to various currency factor groups.
Record's Multi-Strategy mandates delivered positive returns over the period
which was driven by outperformance in the EM Long/Short, Carry and DMC
strategies, offsetting underperformance in the Value strand. Carry benefited
from the low FX volatility environment and stable interest rate differentials.
DMC performed positively as its factors were able to pick up some stronger US
dollar. The EM strategy saw strong performance on the back of high real
interest rates dispersion, resilient domestic economies, and the supportive
macro environment, comprising of a continued disinflation trend in major
economies. In Value, underperformance was mainly driven by short US dollar and
long Japanese yen positions where the Federal Reserve's "higher for longer"
narrative and continued monetary accommodation in Japan led to depreciation of
the yen versus the US dollar.
Return for
year to Return since Volatility since
31 March 2024 inception inception
Record Multi‑Strategy composite(6) 4.65% 1.15% p.a. 3.10% p.a.
6. Record Multi-Strategy composite is since inception in July 2012,
showing excess returns data gross of fees in USD base, and scaled to a 4%
volatility target.
Asset Management
EM Debt
Record EM Sustainable Finance ("EMSF") Fund
The Record EMSF Fund USD class A returned 12.6% from inception (28 June 2021)
to 31 March 2024, outperforming the relevant emerging market local debt
benchmarks by 20.43%-21.02% (see table below).
The currency portfolio delivered positive returns during the period on the
back of continued outperformance of high carry EM selections despite elevated
US treasury yield volatility. Central banks in developed markets progressed
with their tightening cycles during FY-24 and adopted a prudent policy tone
even after pressures had eased somewhat given second-round inflation risks.
Major EM central banks embarked on rate cutting cycles whilst remaining
cautious, which supported the asset class through elevated real rate pickup
and real currency appreciation, especially in Latin American markets, where
local assets also outperformed on the back of US exceptionalism and
nearshoring. Valuations were a key driver in the period, particularly in
Central and Eastern Europe currency recovery as well due to reduced regional
risk premia. The DM funding basket performed positively despite a weaker US
dollar on the back of tactical management of the funding basket.
Bond investments performed positively as well despite notable volatility in
global rate markets. Performance was driven by lower rates as the tightening
cycle matured and inflationary pressures started to ease. Bond returns
benefited from duration extension, as well as diversification into local
currency denominated bonds in markets where local rates offered attractive
ex-ante risk/return. The peer-to-peer ("P2P") portfolio continued to grow in
the period as a result of a closer collaboration with the multilateral
development banks to support development loans that are denominated in local
currency. These innovative and bespoke transactions aim to deliver targeted
positive impact that support the development of local currency markets,
benefit local communities and mitigate exposure to hard currency by
end-borrowers. P2P trade highlights in the period include gender bond
transactions denominated in Mongolian tugrik, Azerbaijani manat and
Kazakhstani tenge; sustainability bonds to finance green and social projects
in Colombia in local currency; and green bonds denominated in Indian rupee to
support climate resilience and transition in India.
The table below shows the performance of the EMSF Fund USD class A and the
relevant benchmarks, being the JP Morgan GBI-EM Global Diversified and JP
Morgan EMBI Global Diversified. The performance is since inception of the EMSF
Fund on 28 June 2021 to 31 March 2024.
Return for Return
year to since
31 March 2024 inception
EMSF Fund USD Share Class A 7.59% 12.60%
JP Morgan GBI-EM Global Diversified 4.91% (8.42)%
Custom solutions
Record Diversified GP Stakes
The first of our Luxembourg funds launched offers access to a portfolio of
equity stakes in privately-held asset managers who specialise in private
markets - private debt, private equity, private real estate and private
infrastructure.
The fund delivered positive returns to investors in the period. This
investment strategy has four key return drivers. The largest contributor to
the positive performance was the earned management fees on the GP's existing
funds. The other three drivers were either neutral (in the case of enterprise
value) or negative (in the case of the crystallise performance fees and the
GP-commit). For these last two return drivers to start contributing positively
again to the overall fund performance we would need the planned asset exits of
the underlying portfolio assets to resume and normalise.
The fund performed better than industry returns, mainly due to diversification
(over 70 GP stakes at the end of March 2024) and the poor correlation of the
return drivers to the typical private market returns.
The table below shows the performance of the Record Diversified GP Stakes
class USD A. The performance is since inception of the Record Diversified GP
Stakes Fund on 3 April 2023 to 29 December 2023 (the most recent available
data).
Return
since
inception
Record Diversified GP Stakes - USD Share Class A 6.07%
Record Protected Equities
The second fund we launched combines a multi-factor active global equity
approach with a tail risk hedging solution to protect against significant
drawdowns. By packaging the strategies of two US-based investment specialists,
Record was able to bring to the European market an investment product that
wasn't previously available.
The fund delivered positive returns to investors in the period driven by an
overall outperformance of the factor equity strategy (over the passive
benchmark). The strong performance of the long global equity strategy fully
covered the expense of buying downside protection and still returned over
75bps after fees to investors above the passive benchmark. In general, the
period August 2023 to March 2024 was a good period for global equity markets,
returning over 10% to investors.
The table below shows the performance of the Record Protected Equities class
USD F and the relevant benchmark, being the MSCI ACWI IMI. The performance is
since inception of the Record Protected Equities Fund on 1 August 2023 to 31
March 2024.
Return for Return
period to since
31 March 2024 inception
Record Protected Equities - USD Share Class F 11.03% 11.03%
MSCI ACWI IMI 10.25% 10.25%
AUM development
AUM expressed in US dollar terms finished the year at $102.2 billion, an
increase of 17% (FY-23: $87.7 billion). When expressed in sterling, AUM
increased by 14% to £80.9 billion (FY-23: £71.0 billion).
AUM development bridges - year to 31 March 2024
Currency Management Asset Management
US $bn US $bn
AUM at 1 April 2023 81.4 6.3
Net flows 9.0 (2.2)
Equity & other markets 6.7 0.2
FX & scaling adjustment 0.4 0.4
AUM at 31 March 2024 97.5 4.7
Currency Management AUM movements
Passive Hedging increased by 20% to $66.0 billion (FY-23: $54.5 billion)
driven by net inflows of $7.4 billion for the year from new and existing
clients. The impact from market movements and exchange rates was also positive
at $3.6 billion and $0.5 billion respectively.
Hedging for Asset Managers AUM increased to $10.4 billion (FY-23: $9.3
billion) as a result of net inflows of $1.3 billion being partially offset by
adverse exchange movements ($0.2 billion).
Dynamic Hedging AUM increased by 12%, ending the year at $16.5 billion (FY-23:
$14.7 billion). The majority of the $1.8 billion increase is attributable to
positive market movements of $1.5 billion with net inflows of $0.3 billion.
FX Alpha AUM increased to $4.5 billion (FY-23: $2.8 billion) by the end of the
year, represented predominantly by positive market movements of $1.5 billion.
Asset Management AUM movements
Custom Solutions AUM decreased to $3.7 billion (FY-23: $5.2 billion). Net
outflows of $2.1 billion are attributable to a $2.4 billion outflow from
Multi-product which has been offset by a $0.3 billion inflow following the
launch of the two Luxembourg funds. A further partial offset is as a result
of favourable exchange rates ($0.4 billion) and market movements ($0.1
billion).
EM Debt remained broadly level at $1.0 billion (FY-23: $1.1 billion) due to
net outflows ($0.1 billion).
Market performance
Record's AUM is affected by movements in market levels because substantially
all the Passive and Dynamic Hedging, and some of the Multi-product (within
Custom Solutions) mandates, are linked to equity, fixed income and other
market levels. Market movements increased AUM by $6.9 billion in the year
ended 31 March 2024 (FY-23: decrease of $3.8 billion).
Forex
Approximately 75% of the Group's AUM is non-US dollar denominated. Therefore,
foreign exchange movements may have an impact on AUM when expressing non-US
dollar denominated AUM in US dollars. Foreign exchange movements increased AUM
by $0.8 billion over the year. This movement does not have an equivalent
impact on the sterling value of fee income.
At 31 March 2024, the split of AUM by base currency was 8% in sterling, 55% in
Swiss francs, 25% in US dollars, 8% in euros and 4% in other currencies.
AUM composition by base currency
31 March 31 March
Base currency 2024 2023
Sterling GBP 6.6bn GBP 7.4bn
US dollar USD 25.4bn USD 20.8bn
Swiss franc CHF 50.9bn CHF 38.3bn
Euro EUR 7.3bn EUR 11.7bn
Australian dollar AUD 5.8bn AUD 3.0bn
Canadian dollar CAD 0.1bn CAD 3.3bn
Japanese yen JPY 42.6bn JPY 27.2bn
Product mix
AUM composition by product
31 March 2024 31 March 2023
US $bn US $bn
Currency Management
Passive Hedging 66.0 65% 54.5 64%
Dynamic Hedging 16.5 16% 14.7 17%
Hedging for Asset Managers 10.4 10% 9.3 11%
FX Alpha 4.5 4% 2.8 3%
Cash 0.1 -% 0.1 -%
Total Currency Management AUM 97.5 95% 81.4 93%
Asset Management
Custom Solutions 3.7 4% 5.2 6%
EM Debt 1.0 1% 1.1 1%
Total Asset Management AUM 4.7 5% 6.3 7%
Total AUM 102.2 100% 87.7 100%
The product mix has remained broadly consistent with the prior year. With the
exception of a switch of mandate by one client from Multi-Product (within
Custom Solutions) to Passive Hedging, growth can be seen across the product
range predominantly due to a mixture of net inflows of $6.8 billion and market
movements of $6.9 billion.
Financial review
A renewed focus on best-in-class core products and good cost control is
expected to deliver an improved quality of earnings over the medium term.
Steve Cullen | Chief Financial Officer
Revenue
£45.4m
+2%
FY-23: £44.7m
Management fees
£38.7m
+1%
FY-23: £38.3m
Underlying operating profit margin(3)
32%
FY-23: 32%
Overview
FY-24 has been a busy, somewhat challenging, but productive year for the
Group. Changes in the leadership team in line with succession planning, new
product launches delivered and further launches expected in FY-25, and the
highest ever level of AUM achieved at year end combine to form a robust base
upon which the business can continue to grow.
Strong net AUM inflows of $6.8 billion and solid investment performance, as
evidenced by another year of exceptional performance fees, have helped to
underpin revenues, albeit set against higher costs associated with investment
in technology projects and resources, and the full-year impact from continued
inflationary and cost‑of-living pressures.
The underlying performance of the business remains strong. An analysis of the
IT strategy linked to the change in Record's leadership prompted the decision
to cease any further work with external consultants on the development of the
IT platform ("R-Platform"), to instead focus on bringing IT development and
infrastructure expertise in-house. This will be more efficient and
cost‑effective in enabling greater focus on near-term projects and
enhancements aligned with Record's approach of offering purpose-built
investment solutions of exceptional quality. However, as previously announced
just prior to the year-end, this decision resulted in the impairment of the
R-Platform project and the consequent write down of previously capitalised
development costs of £1.9 million and associated reorganisation costs and
professional fees of approximately £0.5 million.
Notwithstanding the strong performance on an underlying basis, the Board
exercised its discretion by decreasing the size of the bonus pool linked
directly to the Group's financial performance overall, resulting in a
reduction to variable remuneration of 42% versus the prior year.
Whilst the business continues its focus on offering best-in-class products and
service across all of its product range, the evolution into a specialist asset
manager offering bespoke investment solutions has prompted a change to its
reporting structure going forward. Consequently, it has taken the opportunity
to re-categorise its revenue streams to more clearly define and differentiate
flows between the more traditional currency management business and those new
revenue streams associated with the asset management business. This allows for
a better understanding of the investment case and the overall value and
strength of the business, both for current shareholders and potential
investors in future.
The Group remains independent, cash generative and profitable, supported by
its strong and liquid balance sheet.
Profit and loss (£m)
2024 2023
Revenue 45.4 44.7
Cost of sales (0.1) -
Gross profit 45.3 44.7
Personnel (excluding bonus) (14.9) (12.8)
Non‑personnel costs (11.4) (9.5)
Other income or expense (0.1) (0.3)
Total expenditure (excluding bonus) (26.4) (22.6)
Group Bonus Scheme (4.4) (7.6)
Operating profit (pre impairment of intangible assets) 14.5 14.5
Operating profit margin (underlying) 32% 32%
Impairment of intangible assets (1.9) -
Operating profit 12.6 14.5
Net interest received 0.3 0.1
Profit before tax 12.9 14.6
Tax (3.6) (3.3)
Profit after tax 9.3 11.3
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. Management fee only mandates are charged based upon the AUM of the
product, and management plus performance fee structures include a lower
percentage fee applied to AUM, 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 revenue has been classified into two categories, being
Emerging Market Debt ("EM Debt") and Custom Solutions. EM Debt includes the
Emerging Market Sustainable Finance ("EMSF") strategy, incorporating the EMSF
Fund launched back in June 2021. The Custom Solutions revenue category
includes management fees from either segregated accounts or funds built to
suit client demand, for example the Protected Equity and GP Stakes funds
launched in the year. Distribution fees are also received for the introduction
of clients into these and other third-party funds. Revenue from future product
launches, such as the Infrastructure and Islamic finance products, will also
be reported within the Custom Solutions category. The Multi-product strategy,
previously included under Currency Management, has been re-categorised under
Custom Solutions, reflecting its bespoke nature in combining two or more
investment objectives (e.g. both risk-reducing and return-seeking) and hybrid
fee rates.
Similarly to currency management revenue, management fees for Custom Solutions
can be charged either monthly or quarterly depending on the structure through
which the programme is run. Distribution fees are earned as a percentage of
the value invested for the duration of the investment lifecycle.
Revenue - FY-24
Total management fees earned during the year increased marginally to £38.7
million (FY-23: £38.3 million). Performance fees were again reported at £5.8
million, in line with FY-23, although now linked to performance both from FX
Alpha (formerly Currency for Return) mandates (£2.9 million, FY-23: £nil)
and certain Enhanced Passive Hedging mandates (£2.9 million, FY-23: £5.8
million). Revenue earned from the new asset management products and services
totalled £0.5 million (FY-23: £nil).
Revenue analysis (£m)
Year ended Year ended
31 March 2024 31 March 2023
Management fees
Currency Management
Passive Hedging 9.7 10.5
Hedging for Asset Managers 2.9 2.4
Dynamic Hedging 13.7 12.0
FX Alpha 1.3 1.6
Total 27.6 26.5
Asset Management
EM Debt - EMSF 4.8 5.2
Custom Solutions - Multi-product 6.2 6.6
Custom Solutions - Fund management 0.1 -
Total 11.1 11.8
Total management fees 38.7 38.3
Currency Management - Performance fees 5.8 5.8
Asset Management - Distribution fees 0.4 -
Other income 0.5 0.6
Total other services income 0.9 0.6
Total revenue 45.4 44.7
Currency Management fees
Passive Hedging management fees (including Hedging for Asset Managers)
decreased by 2% to £12.6 million (FY‑23: £12.9 million). Total net inflows
for FY-24 were reported at +$8.7 billion, however the impact from the timing
of net flows over the last 18 months (i.e. net outflows of $3.6 billion for
the four quarters to H1-24 were only offset by net inflows of $10 billion in
H2-24) resulted in a small decrease to management fees for FY-24. However, we
expect this to reverse with the full‑year impact from the latter inflows in
the current financial year (FY-25). Importantly, 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-25) and consequently Hedging for
Asset Managers revenue will now be reported as a separate Currency Management
category.
Dynamic Hedging management fees increased by 14% to £13.7 million (FY‑23:
£12.0 million) predominantly as a result of the full‑year impact of the
$2.5 billion of net inflows seen in the second half of FY-24, combined with
the total net inflows of $0.3 billion in FY-24 from existing clients.
Management fees from FX Alpha (formerly Currency for Return) mandates
decreased by 19% to £1.3 million (FY-23: £1.6 million) broadly arising as a
result of the full-year impact from the net outflows of $0.3 billion in the
second half of FY-24.
Asset Management fees
EM Debt - EMSF
Management fees arising from the Record EM Sustainable Finance Fund ("EMSF")
decreased by 8% to £4.8 million (FY-23: £5.2 million). Notwithstanding
positive performance for the year, net outflows of $0.1 billion for FY-24
linked to the client's decision to rebalance the portfolio resulted in the
reduction to revenue. The EMSF, launched in June 2021, reached its three-year
live track record in June 2024 and it is anticipated that this, when combined
with its exceptional performance to date and the recent appointment of Andreas
Koester to lead Record's EMSF team (as announced in April 2024), will deliver
further revenue growth over the next three to five years.
Custom Solutions - Multi-product
Multi-product management fees decreased by 6% to £6.2 million (FY-23: £6.6
million). As previously announced in January 2024, one of Record's
long-standing clients made the strategic decision towards the end of the third
quarter to switch approximately $4 billion of assets under its
Multi‑product mandate into the lower-margin Passive Hedging product.
However, other net inflows of $1.6 billion in H2-24 will offset a proportion
of the reduction to Multi‑product revenue for FY-25 although the net
full-year impact for FY-25 revenue on a like-for-like basis is expected to be
a reduction of approximately 50%.
Custom Solutions - Fund management
In partnership with other specialist asset managers, Record launched two funds
on its Luxembourg fund platform in FY-24: Protected Equities and GP Stakes,
which reached an aggregate NAV of $321 million by the end of the year. As
expected during the start-up phase, management fees for FY-24 remained fairly
low at £0.1 million. However, the launches provide a solid platform from
which to expand, and the pipeline of opportunities remains strong both from
existing and prospective clients.
Distribution fees
Custom Solutions - Liquid Credit Solutions
In addition to distributing Record's own branded funds, we also work closely
with selected external fund managers in the distribution of their funds in
Europe and the UK. Distribution fees of $0.4 million were earned in FY-24.
Performance fees
Performance fees can be derived from a combination of hedging and
return‑seeking products. Record's Enhanced Passive Hedging benefited from
opportunities to add value arising from continued interest rate differentials,
which helped to deliver performance fees of £2.9 million (FY‑23: £5.8
million). Record's FX Alpha product also delivered £2.9 million of
performance fees in the year (FY‑23: £nil). Such opportunities for added
value on both products 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‑25).
Other income
Other income totalled £0.5 million (FY-23: £0.6 million) 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 AUM.
Expenditure
Cost of sales
Cost of sales of £0.1 million (FY-23: £nil) represents third-party
commission due on a proportion of revenue earned for certain bespoke mandates
utilising AI technology to assist with calculating optimal asset allocations.
Due to recent growth in these mandates, we would anticipate a doubling in the
commission costs for FY-25.
Operating expenditure
The Group operating expenditure (excluding variable remuneration and other
expenses) increased by 18% to £26.3 million for the year (FY-23:
£22.3 million).
As expected, the Group has seen increases in personnel costs (excluding
bonuses) for the year of approximately 16% linked to a number of factors,
including an increase in average headcount of 9% and the continuation of the
higher inflationary environment through the year, albeit on the slow downward
trajectory. The continuation of a heightened cost of living for our employees
has again added pressure for the business to provide support in the form of
pay increases, either through one‑off cost‑of-living allowances or in
general pay increases to keep up with market rates of pay. Consequently,
cost‑of‑living payments were made in FY-24 of £2,000 per employee
(excluding Executive Directors and Board members), amounting to a total cost
of approximately £0.2 million. The Group continues to monitor the situation
closely by benchmarking rates of pay in the market to ensure our employees
receive the appropriate rate of pay linked to their role and responsibilities.
Whilst we do not expect to make any further cost-of-living payments, changes
made to bring certain roles in line with market rates have been made with
effect from April 2024, at a total additional cost in FY-25 of £0.5 million.
Against this backdrop, salaries and related on-costs (including pensions)
increased by 17% to £13.0 million (FY-23: £11.1 million), whilst other
employment-related costs associated with the Group's share schemes, including
the full-year impact of the new LTIP scheme launched last year, increased by
22% to £1.1 million (FY-23: £0.9 million). Commission paid under the scheme
aimed at generating new business remained flat at £0.8 million, broadly in
line with the change in year‑on-year revenues.
Similarly, and also as expected, we have seen an increase in non-personnel
costs due to the full-year impact of inflationary increases seen throughout
FY-23 as well as those incurred in FY-24, albeit at a reduced rate. The
continuation of Record's investment into IT systems contributed to the
increase, particularly in using external consultants for the development of
the R-Platform until the end of FY-24, when the decision to stop the project
was taken. As previously announced, a reorganisation programme has already
been implemented to restructure the technology team by bringing both
development and infrastructure expertise in-house. Whilst this will be
additive to FY-25 personnel costs, we anticipate this to be offset by the
decrease in non-personnel costs with the advantage of having greater focus for
development in key areas identified for near-term and sustainable growth.
Non-personnel costs, excluding impairment write-downs, increased by 20% during
the year to £11.4 million (FY-23: £9.5 million). Increases in professional
fees, including insurance, legal and internal and external audit fees, reflect
the costs associated with added complexity, expansion and regulatory
requirements in the UK and abroad, especially in Germany.
In the UK, the Group is currently based over two sites in serviced offices in
London and a leased office in Windsor. Due to its continued expansion plans,
the business will consolidate its UK base to one central London-based office
during the current financial year (FY-25). The move will enable the Group to
maintain its strong culture and focus on collaborative working, regarded as
key for future growth, whilst having the anticipated advantages of improved
employee retention and wellbeing and in maintaining high levels of
productivity and efficiency. Consequently, the inevitable overlap of office
costs during the transitional period will result in an increase in Group
occupancy costs of approximately £0.5 million for FY-25, dependent on timing.
Following full occupation in the new office and vacating of the current
offices, it is expected for annual occupancy costs for the Group to fall back
to the current level.
Costs associated with the winning and servicing of clients, such as marketing,
travel and accommodation costs, have increased by approximately 35% linked to
a higher preference for more in-person meetings with current and potential
clients, as opposed to virtual.
Notwithstanding more recent decreases in headline inflation, the full year
impact of inflationary increases on running costs announced during FY-24 is
expected to be felt in the current financial year, FY-25. However, the Group
remains conscious of the level of cost increases seen over the last couple of
years and consequently of the need for a closer focus on ensuring the business
receives value for money on its day-to-day operating costs balanced with
ensuring it remains appropriately resourced to achieve its strategic goals.
Other expenses were £0.1 million for the year (FY-23: £0.3 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 Board retains discretion to operate the bonus pool between 25% to 35% of
pre‑bonus operating profit and decided to exercise its discretion resulting
in a reduction to the bonus pool, linking the Group's financial performance
directly to the size of the variable remuneration pool. Consequently, the
Group bonus cost has decreased by approximately 42% to £4.4 million (FY-23:
£7.6 million), meaning that the underlying operating profit remains at 32%,
in line with FY-23. The Group bonus has been calculated at 26% of pre‑bonus
operating profit (FY-23: 34%).
Further information on variable remuneration can be found in the Remuneration
report.
Operating profit and underlying profit margin
Operating profit on an underlying basis (i.e. before impairment write-down)
remained flat at £14.5 million (FY-23: £14.5 million), reflecting an
underlying operating profit margin of 32%, the same level as for FY-23.
However, as a result of the impairment write-down of £1.9 million, on a
statutory basis the Group operating profit decreased by 13% to £12.6 million
(FY-23: £14.5 million) with the Group operating margin decreasing to 28%
(FY-23: 32%).
Whilst in the medium term it is anticipated that changes to the IT strategy
will bring cost efficiencies and improved value for money alongside a more
efficient and focused approach to future IT projects, some overlap and the
passing over of current IT projects may lead to a short‑term decrease in
operating margin for FY-25.
The Group remains confident that, through such cost improvements and with the
impact of growth from higher revenue-margin products, it can increase the
operating margin over the medium term.
Cash flow
The Group's year‑end cash and cash equivalents stood at £9.2 million
(FY‑23: £9.9 million) and the total assets managed as cash were
£17.5 million (FY-23: £14.5 million). The cash generated from operating
activities before tax increased by 25% to £16.3 million (FY-23 (restated):
£13.0 million).
During the year, taxation of £3.2 million was paid (FY-23: £2.4 million)
and £10.1 million was paid in dividends (FY-23: £9.1 million). The Group did
not purchase any of its own shares for the EBT in the year to set against the
future vesting of share options (FY-23: £1.8 million) and received net
proceeds on the purchases and/or redemption of bonds and investments of £0.8
million (FY-23: net purchases: £1.1 million).
At the year end, the Group held money market instruments that mature in excess
of 30 days after the reporting date worth £8.3 million (FY-23:
£4.5 million). These instruments are managed as cash by the Group but are
not classified as cash under IFRS rules (see note 19 of the financial
statements for more details).
Dividends
The FY-24 interim ordinary dividend of 2.15 pence per share (FY-23:
2.05 pence) was paid to shareholders on 22 December 2023, equivalent to
£4.1 million.
The decision to impair previously capitalised development expenditure and to
incur a one-off cost of £1.9 million has inevitably depleted the level of
earnings by approximately 0.76 pence per share for the year. Notwithstanding
this impact, the underlying performance of the business has been strong in
FY-24 with a 32% underlying profit margin, high performance fees and the
launch of new funds in the year, with further launches anticipated for the
current financial year.
With this in mind, the Board remains confident in the future trajectory of the
Group and consequently comfortable with the current dividend policy.
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 4.60
pence per share.
Simultaneously, the Board is also paying a special dividend of 0.6 pence
equivalent to approximately £1.1 million, making the total dividend in
respect of the year ended 31 March 2024 of £9.9 million, equivalent to 93% of
total underlying earnings.
The total ordinary and special dividends paid per share in respect of the
prior year ended 31 March 2023 were 4.50 pence and 0.68 pence respectively,
equivalent to total dividends of £9.9 million and representing 87% of total
earnings per share of 5.95 pence.
Financial stability and capital management
The Group's balance sheet is strong and liquid with total net assets of
£28.9 million (FY-23: £28.3 million) at the end of the financial year,
including current assets managed as cash totalling £17.5 million (FY-23:
£14.5 million). The cash generated by the business has increased, with net
cash inflows from operating activities after tax of £13.1 million for the
year (FY-23: £10.5 million). For further information on cash flows, see the
consolidated statement of cash flows of the financial statements.
Under the Board's capital and dividend policies, the Group can pay up to a
maximum of 100% of adjusted 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
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.
Consolidated statement of comprehensive income
Year ended 31 March 2024
2024 2023
Note £'000 £'000
Revenue 4 45,378 44,689
Cost of sales (82) (37)
Gross profit 45,296 44,652
Administrative expenses 5 (30,746) (29,888)
Other expense 5 (15) (293)
Operating profit prior to impairment of intangible assets 14,535 14,471
Impairment of intangible assets 11 (1,937) -
Operating profit 12,598 14,471
Finance income 394 182
Finance expense (81) (55)
Profit before tax 12,911 14,598
Taxation 7 (3,658) (3,259)
Profit after tax 9,253 11,339
Foreign exchange gains on translation of foreign operations 13 -
Other comprehensive income that may be reclassified subsequently to profit and 13 -
loss
Total comprehensive income for the year net of tax 9,266 11,339
Profit and total comprehensive income for the year attributable to
Equity holders of the parent 9,271 11,339
Non-controlling interest (5) -
9,266 11,339
Earnings per share for profit attributable to the equity holders of the parent
during the year
Basic earnings per share (pence per share) 8 4.84 5.95
Diluted earnings per share (pence per share) 8 4.78 5.81
The notes below are an integral part of these consolidated financial
statements.
Consolidated statement of financial position
As at 31 March 2024
2024 2023
Note £'000 £'000
Non‑current assets
Intangible assets 11 11 1,390
Right‑of‑use assets 12 174 1,011
Property, plant and equipment 13 193 377
Investments 14 4,949 4,901
Deferred tax assets 16 168 134
Total non‑current assets 5,495 7,813
Current assets
Trade and other receivables 17 13,022 14,373
Derivative financial assets 18 63 54
Money market instruments 19 8,264 4,549
Cash and cash equivalents 19 9,221 9,948
Total current assets 30,570 28,924
Total assets 36,065 36,737
Current liabilities
Trade and other payables 20 (4,930) (6,011)
Corporation tax liabilities 20 (1,865) (1,329)
Provisions 21 (122) -
Lease liabilities 12 (106) (285)
Derivative financial liabilities 18 (9) (5)
Total current liabilities (7,032) (7,630)
Non-current liabilities
Provisions 21 - (122)
Lease liabilities 12 (79) (694)
Total non-current liabilities (79) (816)
Total net assets 28,954 28,291
Equity
Issued share capital 22 50 50
Share premium account 1,809 1,809
Capital redemption reserve 26 26
Foreign currency translation reserve 13 -
Retained earnings 27,051 26,406
Equity attributable to the equity holders of the parent 28,949 28,291
Non-controlling interests 5 -
Total equity 28,954 28,291
Approved by the Board on 27 June 2024 and signed on its behalf by:
David Morrison Steve Cullen
Chairman Chief Financial Officer
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 2024
Note Called‑up Share Capital Foreign Retained Equity Non- Total
share capital premium redemption currency earnings attributable to controlling equity
£'000 account reserve translation £'000 equity holders interest £'000
£'000 £'000 reserve of the parent £'000
£'000 £'000
As at 1 April 2023 50 1,809 26 - 26,406 28,291 - 28,291
Profit and total comprehensive income for the year - - - 13 9,258 9,271 (5) 9,266
Non-controlling interest acquired in subsidiaries - - - - - 10 10
-
Dividends paid 9 - - - - (10,113) (10,113) - (10,113)
Own shares acquired by EBT - - - - (1,266) (1,266) - (1,266)
Release of shares held by EBT - - - - 2,584 2,584 - 2,584
Tax on share-based payments - - - - (86) (86) - (86)
Other share-based payment reserve movements - - - - 268 268 - 268
Transactions with shareholders - - - (8,613) (8,613) 10 (8,603)
-
As at 31 March 2024 50 1,809 26 13 27,051 28,949 5 28,954
Year ended 31 March 2023
Note Called‑up Share Capital Foreign Retained Equity Non- Total
share capital premium redemption currency earnings attributable to controlling equity
£'000 account reserve translation £'000 equity holders interest £'000
£'000 £'000 reserve of the parent £'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
Other share-based payment reserve movements - - - - 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
The notes below are an integral part of these consolidated financial
statements.
Consolidated statement of cash flows
Year ended 31 March 2024
Restated(1)
2024 2023
Note £'000 £'000
Net cash inflow from operating activities 26 13,055 10,541
Cash flows from investing activities
Purchase of intangible assets 11 (789) (964)
Purchase of property, plant and equipment 13 (29) (272)
Purchase of investments 14 (1,080) (3,570)
Redemption of bonds 14 753 1,607
Redemption of other investments 14 1,144 881
(Purchase)/disposal of money market instruments (3,715) 9,363
Interest received 360 181
Net cash (outflow)/inflow from investing activities (3,356) 7,226
Cash flows from financing activities
Lease principal payments 12 (288) (315)
Lease interest payments 12 (33) (55)
Purchase of own shares(7) 33 - (1,850)
Dividends paid to equity shareholders 9 (10,113) (9,095)
Net cash outflow from financing activities (10,434) (11,315)
Net increase/(decrease) in cash and cash equivalents in the year (735) 6,452
Exchange gains 8 151
Cash and cash equivalents at the beginning of the year 9,948 3,345
Cash and cash equivalents at the end of the year 9,221 9,948
Closing cash and cash equivalents consist of:
Cash 4,954 6,405
Cash equivalents 4,267 3,543
Cash and cash equivalents 19 9,221 9,948
7. See note 33 for details of the presentational adjustment resulting
in the restatement of prior year amounts.
The notes below are an integral part of these consolidated financial
statements.
Company statement of financial position
As at 31 March 2024
2024 2023
Note £'000 £'000
Non‑current assets
Right‑of‑use assets 12 68 871
Property, plant and equipment 70 99
Investments 14 10,843 9,062
Total non‑current assets 10,981 10,032
Current assets
Corporation tax 195 16
Trade and other receivables 17 711 2,428
Cash and cash equivalents 19 214 213
Total current assets 1,120 2,657
Total assets 12,101 12,689
Current liabilities
Trade and other payables 20 (7,176) (4,955)
Lease liabilities 12 (71) (251)
Provisions 21 (122) -
Total current liabilities (7,369) (5,206)
Non-current liabilities
Lease liabilities 12 - (583)
Deferred tax liabilities (124) (11)
Provisions 21 - (122)
Total non-current liabilities (124) (716)
Total net assets 4,608 6,767
Equity
Issued share capital 22 50 50
Share premium account 1,809 1,809
Capital redemption reserve 26 26
Retained earnings 2,723 4,882
Total equity 4,608 6,767
The Company's total comprehensive income for the year (which is principally
derived from intra-group dividends) was £6,809,523 (2023: £10,614,915).
Approved by the Board on 27 June 2024 and signed on its behalf by:
David Morrison Steve Cullen
Chairman Chief Financial Officer
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 2024
Note Called‑up Share Capital Retained Total
share capital premium redemption earnings shareholders'
£'000 account reserve £'000 equity
£'000 £'000 £'000
As at 1 April 2023 50 1,809 26 4,882 6,767
Profit and total comprehensive income for the year - - - 6,810 6,810
Dividends paid 9 - - - (10,113) (10,113)
Share option reserve movement - - - 1,144 1,144
Transactions with shareholders - - - (8,969) (8,969)
As at 31 March 2024 50 1,809 26 2,723 4,608
Year ended 31 March 2023
Note Called‑up Share Capital Retained Total
share capital premium redemption earnings shareholders'
£'000 account reserve £'000 equity
£'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
The notes below are an integral part of these consolidated financial
statements.
Company statement of cash flows
Year ended 31 March 2024
2024 2023
Note £'000 £'000
Net cash inflow from operating activities 26 1,555 2,166
Cash flows from investing activities
Dividends received 7,700 10,500
Purchase of property, plant and equipment - (116)
Investment in equity reserve of subsidiary - (1,095)
Purchase of investments (13) (1,869)
Redemption of investments 1,144 -
Interest received 8 1
Net cash inflow from investing activities 8,839 7,421
Cash flows from financing activities
Lease principal payments 12 (253) (280)
Lease interest payments 12 (27) (43)
Dividends paid to equity shareholders 9 (10,113) (9,095)
Net cash outflow from financing activities (10,393) (9,418)
Net increase in cash and cash equivalents in the year 1 170
Exchange losses - -
Cash and cash equivalents at the beginning of the year 213 43
Cash and cash equivalents at the end of the year 214 213
Closing cash and cash equivalents consist of:
Cash 214 213
Cash equivalents 19 - -
Cash and cash equivalents 19 214 213
The notes below are an integral part of these consolidated financial
statements.
Notes to the financial statements for the year ended 31 March 2024
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 material 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.
1.1 Basis of preparation
The Group financial statements have been prepared in accordance with UK
adopted international accounting standards and the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
The financial statements have been prepared on a going concern basis.
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 accounting policies have been applied consistently to all periods
presented in these financial statements and by all Group entities, unless
otherwise stated. The financial statements of subsidiary undertakings are
coterminous with those of Record plc, referred to as the "Company".
1.2 Changes to international accounting policies
The following amendments and interpretations became effective during the year.
Their adoption has not had any significant impact on the Group.
Effective from
IAS 1 Presentation of Financial Statements (Amendments) 1 January 2023
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendments) 1 January 2023
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.
1.3 Basis of consolidation
The consolidated financial information contained within the financial
statements incorporates financial statements of the Company, its subsidiaries
and share in the results of its joint ventures drawn up to 31 March 2024.
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 those
returns.
The Record plc Employee Benefit Trust ("EBT") has been established for the
purpose 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. The movements in the EBT are disclosed in the
statement of changes in equity as own shares acquired and released by the EBT.
This includes net settlements, through which employees have the option to sell
back shares to cover the exercise price and tax liabilities arising as a
result of exercising share awards. As the amounts are netted off, there are no
cash movements.
Joint ventures are entities in which the Group has an investment where it has
contractually agreed to share control of the business and where the major
decisions require the unanimous consent of the joint partners. The results, as
well as the assets and liabilities of joint ventures, are incorporated in the
consolidated financial statements using the equity method of accounting. The
Group's share of post-tax profits or losses is recognised in the consolidated
statement of comprehensive income.
All intra‑group transactions, balances, income, expenses and dividends are
eliminated on consolidation.
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 £6,809,523
attributable to the Company (FY-23: £10,614,915). The Company's principal
activity is that of a holding company.
1.4 Going concern
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 capital and liquidity positions, the current economic and
geopolitical environment and the market in which the Group operates, 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 twelve 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 twelve months
from the date of signing the report, and therefore have continued to adopt the
going concern basis in preparing the financial statements.
1.5 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".
The functional currency of Record Asset Management GmbH and RAM Strategies
GmbH has changed from sterling to euro, due to changes in their economic
environment as they begin to generate revenue. The change in functional
currency of these subsidiaries has been applied prospectively from 1 January
2024. On consolidation, the results of foreign operations are translated into
sterling at rates approximating to those when the transactions took place. The
assets and liabilities of foreign operations are translated at the period-end
spot rate. Exchange differences arising on translating the opening net assets
at opening rate and the results of overseas operations at monthly average rate
are recognised in other comprehensive income, and accumulated in the foreign
currency translation reserve.
1.6 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.
1.7 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.
1.8 Segmental reporting
Operating segments are identified on the basis of internal reports about
components of the Group that are regularly reviewed by the Group's Chief
Operating Decision Maker ("CODM") in order to allocate resources to the
segments and to assess their performance. The CODM is considered to be the
Board of Directors.
As a result of the diversification and growth of the Group's operations into
asset management, the Group has identified two reportable segments: Currency
Management and Asset Management.
2. Critical accounting estimates and judgements
The preparation of the financial statements in accordance with IFRS requires
management to make accounting estimates and judgements that affect the
application of the Group's accounting policies and reported amounts.
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 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.
The key areas involving estimates and judgements have been set out below, and
detailed further within the respective notes:
Area Note Related estimates and judgements
Impairment of assets 1.7, 11 Impairment indicators and recoverable amounts
Intangible assets 11 Qualifying expenditure and amortisation
Leases 12 Discount rate
Provisions 21 Consideration required to settle future obligations
Share-based payments 16, 23 Fair value of share options and related deferred tax
Fair value of investments 25 Valuation methodology and inputs, and input level allocation
Basis of consolidation 28 Interests in unconsolidated structured entities
3. Segmental analysis
The Board and management team of the Group are beginning to organise and
report on the performance of the business by Currency Management and Asset
Management segments. This will recognise both the current and anticipated
future growth in revenues as well as the difference in contribution and risk
levels across both segments.
The Currency Management segment comprises bespoke solutions to clients
including Passive Hedging, Dynamic Hedging, Hedging for Asset Managers,
and FX Alpha products.
The Asset Management segment principally comprises investment management
services for products including EM debt and Custom Solutions.
3.1 Operating segments
The majority of activities and revenues in FY-24 are derived from operations
within the Currency Management segment. However, with further product launches
and continued interest from clients anticipated in the Asset Management
segment, the expectation is for this segment to become more significant in the
future.
Operating profit per segment is not presented, as such information is not
presented on a regular basis to the Group's CODM. Therefore, for FY-24, these
are not yet considered to be operating segments. The operating segmental
information will, however, be presented to the Group's CODM from FY-25
onwards, thus transitioning these segments into operating segments.
For FY-24, only revenue is reviewed by the CODM. Currency Management revenue
totalled £33.9 million for the period, and Asset Management revenue totalled
£11.5 million for the period. Note 4 provides further detail on this.
3.2 Segment assets and liabilities
Segment assets and liabilities are not presented, as such information is not
presented on a regular basis to the Group's CODM.
4. Revenue
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 ("AUM") denominated in
the client's chosen base currency. The percentage varies depending on the
nature of services and the level of AUM. Management fees are typically
invoiced to the customer quarterly with receivables recognised for unpaid
invoices. Fees are recognised on a monthly basis, based on the agreed fee rate
and AUM 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.
4.1 Revenue by product type
2024 2023
Currency Asset Currency Asset
Management Management Total Management Management Total
£'000 £'000 £'000 £'000 £'000 £'000
Dynamic Hedging 13,719 - 13,719 12,013 - 12,013
Passive Hedging 9,720 - 9,720 10,464 - 10,464
Hedging for asset managers 2,886 - 2,886 2,448 - 2,448
FX Alpha 1,250 - 1,250 1,628 - 1,628
EM Debt - 4,793 4,793 - 5,161 5,161
Custom solutions - 6,327 6,327 - 6,584 6,584
Management fees 27,575 11,120 38,695 26,553 11,745 38,298
Passive Hedging 2,898 - 2,898 5,805 - 5,805
FX Alpha 2,942 - 2,942 - - -
Performance fees 5,840 - 5,840 5,805 - 5,805
Other services income 439 404 843 520 66 586
Total revenue 33,854 11,524 45,378 32,878 11,811 44,689
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 when they crystallise and can
be invoiced on a quarterly, six-monthly or annual basis, as agreed with our
clients. Other services income includes Currency Management fees from signal
hedging and fiduciary execution, as well as Asset Management distribution
fees.
4.2 Revenue by geographical analysis
All revenue received during the period was for services provided by Group
companies situated in the UK and Germany. The following geographical analysis
of revenue is based on the destination i.e. the location of the client to whom
the services are provided. Other relates to a number of regions that are
individually immaterial.
2024 2023
Revenue by geographical region £'000 £'000
Management and performance fee income
UK 2,593 2,545
US 15,652 14,179
Switzerland 15,281 16,985
Europe (excluding UK and Switzerland) 8,049 9,339
Other 3,803 1,641
Total revenue 45,378 44,689
4.3 Major clients
During the year ended 31 March 2024, two Currency Management clients
individually accounted for more than 10% of the Group's revenue. The two
largest clients generated revenues of £6.7 million and £4.8 million in the
year (FY-23: four clients generated revenues of more than 10% totalling £6.6
million, £6.3 million, £5.2 million, and £4.9 million in the year).
5. Operating profit
Operating profit for the year is stated after charging/(crediting):
2024 2023
£'000 £'000
Administrative expenses
Staff costs 19,404 20,412
Other staff-related costs 1,778 1,545
IT and technology 4,584 3,582
Auditor's remuneration
Fees payable to the Group's auditor for the audit of the Company's annual 188 134
accounts
Fees payable to the Group's auditor for the audit of subsidiary 268 191
undertakings
Audit-related assurance services required by law or regulation 9 6
Other non-audit services 16 15
Other professional fees 1,888 1,775
Occupancy 989 1,111
Travel and marketing 899 668
Depreciation of right-of-use assets 278 375
Depreciation of property, plant and equipment 213 285
Amortisation of intangibles 232 135
Impairment of intangible assets 1,937 -
Other income or expense
(Gain)/loss on forward FX contracts held to hedge cash flow (252) 800
Other exchange losses/(gains) 360 (289)
Investment gains (93) (218)
Of the above auditor's remuneration, audit-related services for the year
totalled £455,500 (FY-23: £325,000).
6. Staff costs
The average number of employees, including Directors, employed by the Group
during the year was:
2024 2023
Corporate 6 6
Client relationships 13 13
Investment research 20 18
Operations 34 31
Risk management 6 5
Support 17 15
Annual average 96 88
The aggregate costs of the above employees, including Directors, were as
follows:
2024 2023
£'000 £'000
Wages and salaries 14,792 14,540
Social security costs 2,007 2,295
Pension costs 817 686
Other employment benefit costs 1,788 2,891
Aggregate staff costs 19,404 20,412
Other employment benefit costs include share‑based payments, share option
costs, and costs relating to the Record plc Share Incentive Plan.
There are no Company staff costs.
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.
2024 2023
£'000 £'000
UK current year charge 3,723 2,961
Overseas taxes 66 64
Prior year adjustments 48 175
Current tax charge 3,837 3,200
Origination and reversal of temporary differences (151) 76
Prior year adjustment (28) (17)
Total deferred tax (179) 59
Tax on profit on ordinary activities 3,658 3,259
The total charge for the year can be reconciled to the accounting profit as
follows:
2024 2023
£'000 £'000
Profit before taxation 12,911 14,598
Taxation at the standard rate of tax in the UK of 25% (2023: 19%) 3,228 2,774
Tax effects of:
Other disallowable expenses and non‑taxable income 106 164
Deferred tax asset not recognised on start-up entities 199 146
Different tax rates on subsidiary undertakings 104 15
Prior year adjustment 21 160
Total tax expense 3,658 3,259
The tax expense comprises:
Current tax expense 3,837 3,200
Deferred tax (credit)/expense (179) 59
Total tax expense 3,658 3,259
The standard rate of UK corporation tax for the year is 25% (FY-23: 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 2024 was 28% of profit before tax
(FY-23: 22%). Other temporary differences for the year ended 31 March 2024
include the impact of deferred tax credit of £179k (FY-23: expense of £59k).
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.
2024 2023
Weighted average number of shares used in calculation of basic earnings per 191,509,539 190,483,365
share
Effect of potential dilutive ordinary shares - share options 2,174,866 4,830,186
Weighted average number of shares used in calculation of diluted earnings per 193,684,405 195,313,551
share
pence pence
Basic earnings per share 4.84 5.95
Diluted earnings per share 4.78 5.81
The potential dilutive shares relate to the share options, JSOP and LTIP
awards granted in respect of the Group's Share Scheme (see note 23). There
were share options, JSOP and LTIP awards in place at the beginning of the year
over 14,724,582 shares. During the year 1,915,336 share options were
exercised, 633,125 JSOP awards vested and a further 1,319,230 share options
and LTIP awards lapsed or were forfeited. The Group granted 3,335,000 share
options and LTIP awards over 1,641,000 shares with a potentially dilutive
effect during the year. Of the 15,832,891 share options, JSOP and LTIP awards
in place at the end of the period, 13,331,655 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 2024 totalled
£10,113,174 (5.28 pence per share), which comprised a final dividend in
respect of the year ended 31 March 2023 of £4,678,947 (2.45 pence per share),
a special dividend in respect of the year ended 31 March 2023 of £1,298,647
(0.68 pence per share) and an interim dividend for the year ended 31 March
2024 of £4,135,580 (2.15 pence per share).
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).
For the year ended 31 March 2024, a final ordinary dividend of 2.45 pence per
share has been proposed and a special dividend of 0.6 pence per share has
been declared, totalling approximately £4.7 million and £1.1 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
The Group's intangible assets comprise both purchased software and the
capitalised costs of software development. Internal software development
costs, which represent attributable employee costs, are capitalised if they
meet the IAS 38 criteria. The amount recognised for an internally generated
intangible asset is the sum of qualifying expenditure incurred from the date
when the asset first meets the recognition criteria.
Intangible assets are shown at historical cost less accumulated amortisation
and impairment losses. Amortisation is charged from the date an intangible
asset is available for use, on a straight‑line basis, over the estimated
useful life of the intangible asset. Amortisation is included within
administration expenses in the statement of comprehensive income. Useful lives
are as follows:
· Software - 2 to 5 years.
Amortisation periods and methods are reviewed annually and adjusted if
appropriate.
The carrying amounts of intangible assets can be analysed as follows:
2024 2023
Software Total Software Total
£'000 £'000 £'000 £'000
Cost
At 1 April 2,320 2,320 1,475 1,475
Additions 789 789 964 964
Impairment (2,088) (2,088) (119) (119)
At 31 March 1,021 1,021 2,320 2,320
Amortisation
At 1 April 930 930 913 913
Charge for the year 232 232 135 135
Impairment (152) (152) (118) (118)
At 31 March 1,010 1,010 930 930
Net book value
At 31 March 11 11 1,390 1,390
At 1 April 1,390 1,390 562 562
The above impairments relate to the Board's decision to cease the development
of our internally generated R-Platform and Smart Reports software. Following a
thorough analysis, the Board concluded that these projects did not produce the
scale of improvement targeted and would require further meaningful investment
over a prolonged period to reach the level required, and that focus of the
Group's resources will instead be shifted to building out our internal IT
development expertise. This has resulted in the impairment of these two
projects to a recoverable amount of zero, their value in use, the net effect
of which has been reflected as an impairment expense of £1,936,893 in the
statement of comprehensive income.
The annual contractual commitment for the maintenance and support of the above
software is £231,068 (FY-23: £207,253). 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 and 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.
At the commencement date of a lease, a lease liability and a corresponding
right-of-use ("ROU") asset are recognised.
The lease liability is initially measured at the present value of expected
future lease payments discounted at 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.
Subsequently the lease liability decreases by the lease payments made, offset
by interest on the liability, and may be remeasured to reflect any
reassessment of expected payments or to reflect any lease modifications.
The right-of-use asset is initially measured at the amount of the initial
lease liability, adjusted for any lease incentives received, any lease
payments made at or before the commencement date, any initial direct costs,
and the costs of decommissioning the asset and any restoration work to return
the asset to the condition required under the terms of the lease.
Subsequently the right-of-use asset is valued using the cost model. The asset
is depreciated on a straight-line basis over the shorter of the asset's useful
life and expected term of the lease, adjusted for any remeasurement of the
lease liability, and is shown net of the accumulated depreciation and any
impairment provisions.
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 leases relevant to the twelve months ended 31 March 2024, and the
comparative period, are as described below:
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. On 19 February 2024, the Group enacted the right
to early termination of this lease which resulted in a modification of lease
term, now expiring on 2 September 2024. The modified lease 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.
Net book value of right‑of‑use assets
2024 2023
Group Company Group Company
£'000 £'000 £'000 £'000
Net book value at 1 April 1,011 871 1,421 1,232
Valuation adjustment on lease modification (559) (559) (35) (23)
Depreciation (278) (244) (375) (338)
Net book value at 31 March 174 68 1,011 871
Lease liabilities
2024 2023
Group Company Group Company
£'000 £'000 £'000 £'000
Current 106 71 285 251
Non-current 79 - 694 583
Total lease liabilities 185 71 979 834
2024 2023
Group Company Group Company
£'000 £'000 £'000 £'000
At 1 April 979 834 1,326 1,138
Interest expense 33 27 55 41
Lease - principal payments (288) (253) (315) (280)
Lease - interest payments (33) (27) (55) (43)
Valuation adjustment on lease modification (510) (510) (35) (22)
Foreign exchange movements 4 - 3 -
At 31 March 185 71 979 834
Lease payments
At 31 March, the undiscounted operating lease payments on an annual basis are
as follows:
Maturity of lease liability at 31 March:
2024 2023
Group Company Group Company
£'000 £'000 £'000 £'000
Within 1 year 111 72 320 280
1-2 years 39 - 320 280
2-3 years 39 - 320 280
After 3 years - - 85 47
Total lease liability before discounting 189 72 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:
2024 2023
Leasehold Computer Fixtures Leasehold Computer Fixtures
improvements equipment and fittings Total improvements equipment and fittings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 April 776 1,023 231 2,030 693 1,056 293 2,042
Additions - 27 2 29 116 148 8 272
Disposals - - - - (33) (181) (70) (284)
At 31 March 776 1,050 233 2,059 776 1,023 231 2,030
Depreciation
At 1 April 677 752 224 1,653 642 718 281 1,641
Charge for the year 29 179 5 213 68 204 13 285
Disposals - - - - (33) (170) (70) (273)
At 31 March 706 931 229 1,866 677 752 224 1,653
Net book value
At 31 March 70 119 4 193 99 271 7 377
At 1 April 99 271 7 377 51 338 12 401
The Group's tangible non-current assets are located predominantly in the UK.
14. Investments
2024 2023
Group Company Group Company
£'000 £'000 £'000 £'000
Investment in subsidiaries at cost - 59 - 2,069
Capitalised investment in respect of share-based payments - 4,078 - 2,932
Investment in equity reserve of subsidiary - 1,625 - 1,095
Investment in funds 3,412 3,544 2,530 1,965
Investment in impact bonds - - 770 -
Other investments 1,537 1,537 1,601 1,001
Total direct investments 4,949 10,843 4,901 9,062
Details on the fair value measurement of investments can be found in note 25.
During the period, the Record Digital Asset Ventures ("RDAV") portfolio of
investments was transferred to the parent company, Record plc, via a dividend
in specie.
At year end, this portfolio consists of investments in funds of £597k, and
other investments of £1,537k invested directly in the share capital of
start-up companies in the digital asset sector through Record plc (FY-23:
investments in funds of £555k, and other investments of £600k through RDAV).
At the beginning of the year, the Group had existing commitments of $305,000
(£246,674) of which $84,950 (£68,095) was called up in the year, leaving a
balance of $220,050 (£178,579) which may or may not be called up in future
(see note 29: 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.
2024 2023
£'000 £'000
Investment in subsidiaries (at cost)
Record Currency Management Limited 10 10
Record Group Services Limited 10 10
Record Portfolio Management Limited - 10
Record Currency Management (US) Inc. - -
Record Currency Management (Switzerland) GmbH 16 16
Record Digital Asset Ventures Limited - 2,000
Record Asset Management GmbH 23 23
Record Fund Management Limited - -
N P Record Trustees Limited - -
Total investment in subsidiaries (at cost) 59 2,069
Capitalised investment in respect of share‑based payments
Record Group Services Limited 3,495 2,530
Record Currency Management (US) Inc. 88 89
Record Currency Management (Switzerland) GmbH 495 316
Total capitalised investment in respect of share‑based payments 4,078 2,935
Total investment in subsidiaries 4,137 5,004
During the year, the Company completed the sale of Record Digital Asset
Ventures ("RDAV"). The disposal transaction consisted of a dividend in specie
from RDAV to the Company and an intercompany capital write off by the Company,
resulting in a net loss on disposal of £210,000.
Particulars of subsidiary undertakings
Information about the subsidiaries held by the Group at 31 March is shown
below. The companies are unlisted.
2024 2023
Percentage Percentage
owned by the owned by the
Name of entity Nature of business Group Group
Record Currency Management Limited Currency management services (FCA, SEC and CFTC registered) 100 100
Record Group Services Limited Management services to other Group undertakings 100 100
Record Currency Management (US) Inc. US advisory and service company (SEC and CFTC registered) 100 100
Record Currency Management (Switzerland) GmbH Swiss advisory and service company 100 100
Record Asset Management GmbH German advisory and service company 100 100
RAM Strategies GmbH German consultant and distribution agent 100 100
OWI-RAMS GmbH German advisory company 51 -
Record Digital Asset Ventures Limited UK company investing in opportunities linked to innovation and research - 100
surrounding digital assets - sold during the period
Record Portfolio Management Limited Dormant - closed during the period - 100
Record Fund Management Limited Dormant - closed during the period - 100
N P Record Trustees Limited Dormant trust company - closed during the period - 100
The Group's interest in the equity capital of subsidiaries is through the
holding of ordinary share capital in all cases. All investments in
subsidiaries are directly held with the exception of RAM Strategies GmbH,
which is held 100% indirectly through the Company's 100% holding in Record
Asset Management GmbH, and OWI-RAMS GmbH, which is held 51% indirectly through
RAM Strategies GmbH.
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, RAM Strategies GmbH and OWI-RAMS are incorporated in Germany
(registered office: Bockenheimer Anlage 46, 60322 Frankfurt am Main). All
other subsidiaries are incorporated in the UK and have the registered office
at Morgan House, Madeira Walk, Windsor, Berkshire SL4 1EP.
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 23.
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. Interests in joint ventures
The financial and operating activities of the Group's joint ventures are
jointly controlled by the participating shareholders. The participating
shareholders have rights to the net assets of the joint ventures through their
equity shareholdings. Unless otherwise stated, the Company's principal joint
ventures all have share capital consisting solely of ordinary shares.
The country of incorporation of all joint ventures is also their principal
place of operation.
Particulars of joint venture undertakings
Information about the joint ventures held by the Group at 31 March is shown
below. The company is unlisted.
2024 2023
Percentage Percentage
owned by the owned by the
Name of entity Nature of business Group Group
Dair Record Limited UK advisory and service company 50.1 -
Dair Record Limited is a joint venture, held by Record plc incorporated in the
UK (registered office: Morgan House, Madeira Walk, Windsor, Berkshire SL4
1EP).
As at 31 March 2024, the Group holds no material joint ventures, therefore
additional summarised financial information for the above joint ventures has
not been presented.
16. 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 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.
2024 2023
£'000 £'000
Opening balance deferred tax asset 134 253
Current year movement 151 (72)
Prior year adjustment 28 14
Deferred tax in equity (145) (61)
Closing balance deferred tax asset 168 134
The deferred tax asset consists of the tax effect of temporary differences in
respect of:
2024 2023
£'000 £'000
Deferred tax allowance on unvested share options and LTIP awards 145 366
Excess of taxation allowances over depreciation on fixed assets 23 (232)
Total 168 134
At the year end there were share options and LTIP awards not exercised with an
intrinsic value for tax purposes of £629,489 (FY-23: £1,937,599). 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 £2,436k (FY-23:
£1,205k) 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 2024. It is subject to change if tax rates change in
future years.
17. 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:
2024 2023
Group Company Group Company
£'000 £'000 £'000 £'000
Trade receivables 9,149 610 10,185 1,538
Accrued income 1,505 - 1,743 -
Other receivables 1,125 41 685 26
Prepayments 1,243 60 1,760 864
Total 13,022 711 14,373 2,428
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 2024.
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 (FY-23: £nil).
Accrued income relates to accrued management and performance fees earned but
not yet invoiced.
2024 2023
Group Company Group Company
Current tax £'000 £'000 £'000 £'000
Corporation tax asset - 195 - 16
18. 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.
2024 2023
Derivative financial assets £'000 £'000
Forward foreign exchange contracts held to hedge non-sterling-based assets 19 31
Forward foreign exchange contracts held for trading 44 23
Total 63 54
2024 2023
Derivative financial liabilities £'000 £'000
Forward foreign exchange contracts held to hedge non-sterling-based assets (9) (5)
Total (9) (5)
Derivative financial instruments held to hedge non-sterling-based assets
At 31 March 2024 there were outstanding contracts with a principal value of
£7,243,998 (31 March 2023: £8,647,055) 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 2024. 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:
2024 2023
Derivative financial instruments held to hedge non-sterling-based assets £'000 £'000
Net (gain)/loss on forward foreign exchange contracts at fair value through (252) 800
profit or loss
19. 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 that mature in
excess of 30 days after the reporting date 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.
2024 2023
Group Company Group Company
Assets managed as cash £'000 £'000 £'000 £'000
Money market instruments 8,264 - 4,549 -
Cash 4,954 214 6,405 213
Cash equivalents 4,267 - 3,543 -
Cash and cash equivalents 9,221 214 9,948 213
Total assets managed as cash 17,485 214 14,497 213
2024 2023
Group Company Group Company
Cash and cash equivalents £'000 £'000 £'000 £'000
Cash and cash equivalents - sterling 7,887 196 6,632 212
Cash and cash equivalents - USD 277 17 821 1
Cash and cash equivalents - CHF 316 - 748 -
Cash and cash equivalents - other currencies 741 1 1,747 -
Total cash and cash equivalents 9,221 214 9,948 213
Details of how the Group manages credit risk are provided in note 24.
20. 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.
2024 2023
Group Company Group Company
Trade and other payables £'000 £'000 £'000 £'000
Trade payables 212 - 221 -
Amounts owed to Group undertakings - 7,176 - 4,953
Other payables 43 - - -
Other taxes and social security 678 - 716 -
Accruals 3,997 - 5,074 2
Total 4,930 7,176 6,011 4,955
Accruals include £2,385,865 for the Group Bonus Scheme (FY-23: £3,637,640).
The Directors consider that the carrying amount of trade and other payables
approximates to their fair value.
2024 2023
Group Company Group Company
Current tax £'000 £'000 £'000 £'000
Corporation tax liability/(asset) 1,865 - 1,329 -
21. Provisions
Provisions are liabilities where there is uncertainty over the timing or
amount of settlement and therefore require the use of estimates. Provisions
are recognised when there is a present obligation as a result of a past event,
and it is probable that the Group will be required to settle that obligation.
The amount recognised as a provision is the best estimate of the consideration
required to settle that obligation at the reporting date.
The Group has provisions reflecting its contractual obligations connected to
reaching the end of its contractual lease terms.
2024 2023
Group Company Group Company
£'000 £'000 £'000 £'000
Provisions 122 122 122 122
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.
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.
22. 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.
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.
2024 2023
£'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 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
Adjustment for net purchases by EBT (2,034,535)
Record plc shares held by EBT as at 31 March 2024 6,700,467
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.
During FY-24, the EBT did not acquire any shares directly from the market
(FY-23: the EBT acquired 2,000,000 shares directly from the market at a
monetary value of £1,850,533).
Further information regarding the Record plc share‑based compensation plans
and relevant transactions made during the year is included in note 23.
23. Share-based payments
During the year ended 31 March 2024 the Group has managed the following
share‑based compensation plans:
a. the Record plc Bonus Scheme: share awards issued under the Record
plc Bonus Scheme ("Bonus Scheme") are classified as share‑based payments
with cash alternatives under IFRS 2;
b. the Record plc Share Scheme: share options issued under the Record
plc Share Scheme ("Share Scheme") are classified as equity‑settled
share‑based payments under IFRS 2;
c. 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;
d. 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
e. the Record plc 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. The Record plc Bonus Scheme ("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 £1,081,804
(FY‑23: £2,047,328). 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 ("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 the
Black-Scholes 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 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 £60,000 on the date of grant. There is no such
limit on the value of grant for Unapproved options. All Approved and
Unapproved options granted in the year were granted with an exercise price per
share equal to the share price prevailing at the time of grant.
Share Scheme options granted during the period
The following table summarises the Share Scheme options that were granted
during the period:
Grant Option life Earliest Latest Number Exercise
Option type date (years) vesting date vesting date(8) of shares price
Approved 24 May 23 4 24 May 27 24 May 27 855,000 0.877093
Unapproved 24 May 23 4 24 May 24 24 May 27 1,510,000 0.877093
Approved 12 Sep 23 4 27 Mar 24 12 Sep 27 270,000 0.756836
Unapproved 12 Sep 23 4 27 Mar 24 12 Sep 27 640,000 0.756836
Approved 25 Sep 23 4 25 Sep 27 25 Sep 27 60,000 0.784656
Total Approved shares granted 1,185,000
Total Unapproved shared granted 2,150,000
Total shares granted during the period 3,335,000
8. Under the terms of the deeds of grants, options are exercisable for
twelve months following the vesting date.
All options granted are 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 2024,
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 84.26p
Dividend yield 6.05%
Exercise price 84.26p
Expected volatility 45.46%
Option life 4 years
Risk-free interest rate (%) 4.54%
Expected volatility is based on historical volatility.
The Group share‑based payment expense in respect of the Share Scheme was
£655,090 for the year ended 31 March 2024 (FY‑23: £569,136).
Outstanding Share Scheme options
At 31 March 2024, the total number of ordinary shares of 0.025p outstanding
under Record plc share compensation schemes was 11,398,039 (FY-23:
10,560,207). These deferred share awards and options are over issued shares, a
proportion of which are hedged by shares held in an EBT.
The following table summarises the outstanding options for the Share Scheme as
at 31 March 2024:
2024 2023
Weighted Weighted
average average
exercise price exercise price
Number £ Number £
Outstanding at 1 April 10,560,207 0.58 11,605,545 0.41
Granted 3,335,000 0.84 3,810,000 0.76
Exercised (1,915,336) 0.44 (3,607,836) 0.39
Forfeited (581,832) 0.48 (1,247,502) 0.47
Outstanding at 31 March 11,398,039 0.65 10,560,207 0.58
Exercisable at 31 March 2,774,707 0.51 473,750 0.31
Weighted average share price on date of exercise 0.78 0.81
Weighted average contractual life 3 years 3 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,
as shown in the table below.
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%, =Recent news on Record
See all newsRCS - Record PLC - Non-Binding Term Sheets for US$2.2 billion signed
AnnouncementREG - Record PLC - Director/PDMR Shareholding
AnnouncementREG - Record PLC - Holding(s) in Company
AnnouncementREG - Record PLC - Director/PDMR Shareholding
AnnouncementREG - Record PLC - Fourth Quarter Trading Update
Announcement