REG - Record PLC - Interim Results <Origin Href="QuoteRef">RECL.L</Origin> - Part 2
14/11/2014 08:00
- Part 2: For the preceding part double click ID:nRSN9996Wa
(47) (13,211) (18,401)
CASH FLOW FROM FINANCING ACTIVITIES
Cash inflow from issue of units in funds 110 793 677
Cash inflow from exercise of share options - 104 104
Purchase of own shares (150) - (171)
Dividends paid to equity shareholders 5 (1,635) (3,264) (4,898)
CASH OUTFLOW FROM FINANCING ACTIVITIES (1,675) (2,367) (4,288)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS IN THE PERIOD 832 (13,494) (17,522)
Cash and cash equivalents at the beginning of the period 11,503 29,025 29,025
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 12,335 15,531 11,503
Closing cash and cash equivalents consists of:
Cash 7 3,863 2,645 1,476
Cash equivalents 8,472 12,886 10,027
Cash and cash equivalents 12,335 15,531 11,503
Notes to the financial statements for the six months ended 30 September 2014
These financial statements exclude disclosures that are immaterial and judged
to be unnecessary to understand our results and financial position.
1. Basis of preparation
The condensed set of financial statements included in this half-yearly
financial report have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted by the
European Union. The financial information set out in this interim report does
not constitute statutory accounts as defined in Section 434 of the Companies
Act 2006. The Group's statutory financial statements for the year ended 31
March 2014 (which were prepared in accordance with IFRSs as adopted by the
European Union) have been delivered to the Registrar of Companies. The
auditor's report on those financial statements was unqualified and did not
contain statements under Section 498(2) or Section 498(3) of the Companies Act
2006.
Going concern
The Directors are satisfied that the Group has adequate resources with which
to continue to operate for the foreseeable future, and therefore these
financial statements have been prepared on a going concern basis.
Consolidation
The accounting policies adopted in these interim financial statements are
identical to those adopted in the Group's most recent annual financial
statements for the year ended 31 March 2014, which applied IFRS 10
'Consolidated Financial Statements' (IFRS 10) for the first time.
IFRS 10 superseded IAS 27 'Consolidated and Separate Financial Statements'
(IAS 27) and SIC 12 'Consolidation-Special Purpose Entities'. IFRS 10 revised
the definition of control and provides extensive new guidance on its
application. These new requirements had the potential to affect which of the
Group's investees are considered to be subsidiaries and therefore change the
scope of consolidation. The requirements on consolidation procedures,
accounting for changes in non-controlling interests and accounting for loss of
control of a subsidiary were unchanged. Management has reviewed its control
assessments in accordance with IFRS 10 and has concluded that there is no
effect on the classification (as subsidiaries or otherwise) of any of the
Group's investees held during the period or comparative periods covered by
these financial statements.
The consolidated financial information contained within the financial
statements incorporates financial statements of the Company and entities
controlled by the Company (its subsidiaries) drawn up to 30 September 2014.
Control is achieved where the Company has the power to govern the financial
and operating policies of an entity so as to obtain benefits from its
activities. Where the Group controls an entity, but does not own all the
share capital of that entity, the interests of the other shareholders are
stated within equity as non-controlling interests, being the share of changes
in equity since the date of consolidation.
An Employee Benefit Trust has been established for the purposes of satisfying
certain share-based awards. The Group has 'de facto' control over this
entity. This trust is fully consolidated within the accounts.
The Group has investments in two funds where it is currently in a position to
be able to control those funds. These fund investments are held by Record plc
and represent seed capital investments by the Group. The funds are
consolidated on a line-by-line basis.
2. Critical accounting estimates and judgements
The accounting policies, presentation and methods of computation applied in
the interim financial statements are consistent with those applied in the
financial statements for the year ended 31 March 2014.
3. Revenue
Segmental analysis
The Executive Committee (comprising the Executive Directors together with two
senior managers) which is the entity's Chief Operating Decision Maker,
considers that its services comprise one operating segment (being the
provision of currency management services) and that it operates in a market
that is not bound by geographical constraints. The Group provides management
with revenue information disaggregated by product, whilst operating costs,
assets and liabilities are presented on an aggregated basis. This reflects
the unified basis on which the products are marketed, delivered and
supported.
(a) Product revenues
The Group has split its currency management revenues by product. Revenue
attributable to the non-controlling interests' (NCI) holding in seed funds and
other income arises mainly from gains / losses on derivative financial
instruments. No performance fee was earned in the reported periods.
Revenue by product type Six monthsended30 Sep 14 Six monthsended30 Sep 13 Yearended31 Mar 14
£'000 £'000 £'000
Management fees
Dynamic Hedging 4,722 6,558 11,872
Passive Hedging 3,825 2,357 5,728
Currency for Return 1,160 1,425 2,671
Total management fee income 9,707 10,340 20,271
Other income 186 (127) (5)
Underlying revenue 9,893 10,213 20,266
Revenue attributable to NCI holding in seed funds 165 (341) (344)
Total revenue 10,058 9,872 19,922
(b) Geographical analysis
The geographical analysis of revenue is based on the destination i.e. the
location of the client to whom the services are provided. All revenue
originated in the UK.
Revenue by geographical region Six monthsended30 Sep 14 Six monthsended30 Sep 13 Yearended31 Mar 14
£'000 £'000 £'000
Management fee income
UK 2,434 2,625 5,077
US 1,910 3,422 5,804
Switzerland 4,761 3,810 8,384
Other 602 483 1,006
Total management fee income 9,707 10,340 20,271
Other income 186 (127) (5)
Underlying revenue 9,893 10,205 20,266
Revenue attributable to NCI holding in seed funds 165 (341) (344)
Total revenue 10,058 9,872 19,922
Revenue attributable to NCI holding in seed funds and other income are not
analysed by geographical region.
(c) Major clients
During the six months ended 30 September 2014, three clients individually
accounted for more than 10% of the Group's revenue during the period. The
three largest clients generated revenues of £1.7m, £1.1m and £1.0m in the
period.
4. Earnings per share
Basic earnings per share is calculated by dividing the profit for the
financial period attributable to equity holders of the parent by the weighted
average number of ordinary shares in issue during the period.
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 period
attributable to equity holders of the parent used in the basic and diluted
earnings per share calculations.
Six monthsended30 Sep 14 Six monthsended30 Sep 13 Yearended31 Mar 14
Weighted average number of shares used in calculation of basic earnings per share 218,530,962 217,670,894 217,778,666
Effect of dilutive potential ordinary shares - share options 962,518 612,263 893,900
Weighted average number of shares used in calculation of diluted earnings per share 219,493,480 218,283,157 218,672,566
pence pence pence
Basic earnings per share 1.23 1.20 2.48
Diluted earnings per share 1.23 1.19 2.47
The potential dilutive shares relate to the share options granted in respect
of the Group's Share Scheme. At the beginning of the period, there were share
options in place over 6,955,000 shares. During the six months ended 30
September 2014, options over 325,000 shares lapsed, and options over 320,000
shares were forfeited.
5. Dividends
The dividends paid during the six months ended 30 September 2014 totalled
£1,634,833 (0.75p per share), which was the final dividend paid in respect of
the year ended 31 March 2014. An interim dividend of £1,634,250 (0.75p per
share) was paid in the six months ended 31 March 2014, thus the full dividend
in respect of the year ended 31 March 2014 was 1.50p per share. The dividend
paid by the Group during the six months ended 30 September 2013 totalled
£3,263,625 (1.50p per share), which was the final dividend paid in respect of
the year ended 31 March 2013.
The interim dividend proposed in respect of the six months ended 30 September
2014 is 0.75p per share.
6. Investments
The Group holds certain securities through its seeded fund vehicles. As at 30
September 2014, the Group held US government treasury inflation protected
securities (TIPS), with a fair value of £1,753,043 (31 March 2014: £1,633,184;
30 September 2013: £1,634,760). These securities are designated as fair value
through profit or loss and the fair value is determined by reference to quoted
market price. These securities are classified as a Level 1 investment.
Investments in funds which are not consolidated on a line-by-line basis are
designated as fair value through profit or loss. The investment in Record
Currency FTSE FRB10 Index Fund had a fair value of £1,123,838 as at 30
September 2014 (31 March 2014: £1,120,400; 30 September 2013: £nil, Record
Currency FTSE FRB10 Index Fund was consolidated on a line-by-line basis until
28 February 2014). This fund investment is classified as a Level 1
investment.
7. Cash management
The Group's cash management strategy employs a variety of treasury management
instruments including cash, money market deposits and treasury bills with
maturities of up to 1 year. Whilst the Group manages and considers all of
these instruments as cash, which are subject to its own internal cash
management process, not all of these instruments are classified as cash or
cash equivalents under IFRS.
IFRS defines cash and cash equivalents as cash in hand, on demand and
collateral deposits held with banks, and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value. Moreover, instruments
can only generally be classified as cash and cash equivalents where they are
held for the purpose of meeting short-term cash commitments rather than for
investment or other purposes.
In the Group's judgement, bank deposits and treasury bills with maturities in
excess of 3 months do not meet the definition of short-term or highly liquid
and are held for purposes other than meeting short-term commitments. In
accordance with IFRS, these instruments are not categorised as cash or cash
equivalents and are disclosed as money market instruments with maturities
greater than 3 months.
The table below summarises the instruments managed by the Group as cash, and
their IFRS classification:-
As at30 Sep 14 As at30 Sep 13 As at31 Mar 14
£'000 £'000 £'000
Bank deposits with maturities > 3 months 14,843 11,655 14,989
Treasury bills with maturities > 3 months 599 499 499
Money market instruments with maturities > 3 months 15,442 12,154 15,488
Cash 3,863 2,645 1,476
Bank deposits with maturities <= 3 months 8,472 12,886 10,027
Cash and cash equivalents 12,335 15,531 11,503
Total assets managed as cash by the Group 27,777 27,685 26,991
8. Called up share capital
The share capital of Record plc consists only of fully paid ordinary shares
with a par value of 0.025p. All shares are equally eligible to receive
dividends and the repayment of capital and represent one vote at the
shareholders' meeting.
Unaudited as at 30 Sep 14 Unaudited as at 30 Sep 13 Audited as at 31 Mar 14
£'000 Number £'000 Number £'000 Number
Authorised
Ordinary shares of 0.025p each 100 400,000,000 100 400,000,000 100 400,000,000
Called up, allotted and fully paid
Ordinary shares of 0.025p each 55 221,380,800 55 221,380,800 55 221,380,800
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, any such gains or
losses are recognised directly in equity.
Number
Record plc shares held by EBT as at 31 March 2013 3,805,808
Net change in holding of own shares by EBT in period (325,000)
Record plc shares held by EBT as at 30 September 2013 3,480,808
Net change in holding of own shares by EBT in period 393,175
Record plc shares held by EBT as at 31 March 2014 3,873,983
Net change in holding of own shares by EBT in period (54,135)
Record plc shares held by EBT as at 30 September 2014 3,819,848
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.
On 20 June 2014, the EBT released 470,926 shares with a market value of
£170,000 to settle obligations under the Group Profit Share Scheme.
9. Non-controlling interests
Record plc has made investments in a number of funds where it is in a position
to be able to control those funds by virtue of the size of its holding.
Non-controlling interests occur when Record plc is not the only investor in
such funds. The non-controlling interests are measured at cost plus movement
in value of the third party investment in the fund.
The mark to market value of the units held by other investors in these funds
represents the only non-controlling interests in the Group.
The Record Currency - FTSE FRB10 Index Fund was considered to be under control
of the Group until 28 February 2014, when new external investment meant that
Record no longer held a majority interest.
Mark to market value of external holding in seeded funds consolidated into the
accounts of the Record Group
As at30 Sep 14 As at30 Sep 13 As at31 Mar 14
£'000 £'000 £'000
Record Currency - FTSE FRB10 Index Fund - 821 -
Record Currency - Emerging Market Currency Fund 2,626 2,642 2,488
Record Currency - Global Alpha Fund 1,309 1,163 1,179
3,935 4,626 3,667
10. Fair value measurement
The following table presents financial assets and liabilities measured at fair
value in the consolidated statement of financial position in accordance with
the fair value hierarchy. This hierarchy groups financial assets and
liabilities into three levels based on the significance of inputs used in
measuring the fair value of the financial assets and liabilities. The fair
value hierarchy has the following levels:
§ Level 1: quoted prices (unadjusted) in active markets for identical assets
or liabilities;
§ Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
§ Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The level within which the financial asset or liability is classified is
determined based on the lowest level of input to the fair value measurement.
The financial assets and liabilities measured at fair value in the statement
of financial position are grouped into the fair value hierarchy as follows:
As at 30 September 2014 Total Level 1 Level 2 Level 3
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
TIPS 1,753 1,753 - -
Investment in seed fund 1,124 1,124 - -
Forward foreign exchange contracts used for seed funds 203 - 203 -
Options used for seed funds 170 - 170 -
Forward foreign exchange contracts used for hedging 2 - 2 -
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts used for seed funds (189) - (189) -
Options used for seed funds (115) - (115) -
Forward foreign exchange contracts used for hedging (10) - (10) -
2,938 2,877 61 -
As at 31 March 2014 Total Level 1 Level 2 Level 3
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
TIPS 1,634 1,634 - -
Investment in seed fund 1,120 1,120 - -
Forward foreign exchange contracts used for seed funds 153 - 153 -
Options used for seed funds 38 - 38 -
Forward foreign exchange contracts used for hedging 7 - 7 -
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts used for seed funds (33) - (33) -
Options used for seed funds (86) - (86) -
Forward foreign exchange contracts used for hedging (3) - (3) -
2,830 2,754 76 -
As at 30 September 2013 Total Level 1 Level 2 Level 3
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
TIPS 1,635 1,635 - -
Forward foreign exchange contracts used for seed funds 138 - 138 -
Options used for seed funds 32 - 32 -
Forward foreign exchange contracts used for hedging 85 - 85 -
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts used for seed funds (72) - (72) -
Options used for seed funds (2) - (2) -
1,816 1,635 181 -
There have been no transfers between levels in any of the reported periods.
Basis for classification of financial instruments classified as Level 2 within
the fair value hierarchy
Both forward foreign exchange contracts and options are classified as Level 2.
Both of these instruments are traded on an active market. Options are valued
using an industry standard model with inputs based on observable market data
whilst the fair value of forward foreign exchange contracts may be established
using interpolation of observable market data rather than from a quoted
price.
11. Related parties transactions
Transactions or balances between Group entities have been eliminated on
consolidation and in accordance with IAS 24, and are not disclosed in this
note.
The compensation given to key management personnel is as follows:
Six months ended30 Sep 14 Six months ended30 Sep 13 Yearended31 Mar 14
£'000 £'000 £'000
Short-term employee benefits 1,695 1,991 3,651
Post-employment benefits 117 136 263
Share-based payments 411 543 1,052
Dividends 835 1,758 2,504
3,058 4,428 7,470
12. Post reporting date events
No adjusting or significant non-adjusting events have occurred between the
reporting date and the date of approval.
Notes to Editors
This announcement includes information with respect to Record's financial
condition, its results of operations and business, strategy, plans and
objectives. All statements in this document, other than statements of
historical fact, including words such as "anticipates", "expects", "intends",
"plans", "believes", "seeks", "estimates", "may", "will", "continue",
"project" and similar expressions, are forward-looking statements.
These forward-looking statements are not guarantees of the Company's future
performance and are subject to risks, uncertainties and assumptions that could
cause the actual future results, performance or achievements of the Company to
differ materially from those expressed in or implied by such forward-looking
statements.
The forward-looking statements contained in this document are based on
numerous assumptions regarding Record's present and future business and
strategy and speak only as at the date of this announcement.
The Company expressly disclaims any obligation or undertaking to disseminate
any updates or revisions to any forward-looking statements contained in this
announcement whether as a result of new information, future events or
otherwise.
This information is provided by RNS
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