TIDMREC
RNS Number : 4599E
Record PLC
30 June 2023
PRESS RELEASE
Record plc
30 June 2023
FINAL RESULTS ANNOUNCEMENT FOR THE YEARED 31 MARCH 2023
Strong performance across the Group
Growth in revenue, operating margin, profit and earnings
Continued momentum behind revised strategy
Record plc, the specialist currency and asset manager, today
announces its audited results for the year ended 31 March 2023
("FY-23").
Financial headlines:
-- Revenue growth of 27% to GBP44.7m (FY-22: GBP35.1m)
-- AUME(1) in USD terms up by 6% to $87.7bn (FY-22: $83.1bn)
-- Profit before tax increase of 34% to GBP14.6m (FY-22: GBP10.9m)
-- 36% increase in proposed final ordinary dividend to 2.45p per
share (FY-22: 1.80p); 25% increase in total ordinary dividend for
the year to 4.50p per share (FY-22: 3.60p)
-- Increased operating profit margin of 32% (FY-22: 31%)
-- Basic EPS growth of 32% to 5.95 pence (FY-22: 4.52 pence)
-- Performance fees increased by GBP5.3m to GBP5.8m (FY-22: GBP0.5m)
-- Strong and liquid financial position with shareholders'
equity of GBP28.3m (FY-22: GBP25.9m) and assets managed as cash of
GBP14.5m (FY-22: GBP17.3m)
Key developments:
-- Strong momentum in AUME growth (+6%) driven by net inflows of
$9.1bn to close the year at $87.7bn, the highest ever level of AUME
to date.
-- Regulatory approval received from the German financial
regulator (BaFin) during the year, approving the Group's asset
management activity and increasing the Group's geographical reach
into the EU.
-- Material increase in revenue for FY-23 driven by growth in
both management and performances fees linked to core currency
management products, with new revenue streams from the launch of
asset management products expected for FY-24.
-- Continued progress in modernisation, as evidenced by launch
of Record-Platform and enhanced reporting suite.
-- Collaborative partnerships developed in FY-23 with a range of
high-quality, expert partners expected to lead to new product
launches and higher-margin revenue streams from FY-24.
-- David Morrison announced as an independent Non-executive
Director and Chair-elect following Neil Record's stepping down at
AGM in July 2023, after 40 years of leadership.
(1.) For the majority of its Currency Management and Derivative
overlay products, Record manages only the impact of foreign
exchange and not the underlying assets, therefore its "assets under
management" are notional rather than real. Conversely, for its
Asset Management products, Record's role as investment manager
includes managing the underlying assets in the more conventional
sense of managing AUM. Consequently, when combined, to distinguish
this form the AUM of conventional asset managers, Record uses the
concept of Assets Under Management Equivalents ("AUME") and by
convention this is quoted in US dollars.
Commenting on the results, Leslie Hill, CEO of Record plc,
said:
"I am pleased to report a strong set of results for FY-23,
reflected by the growth in revenues, pre-tax profit, operating
margin and earnings as well as progress in each of our three
strategic priorities of modernisation, diversification and
succession.
"A year ago we set out ambitious targets of reaching GBP60m in
revenue and an operating margin of c. 40% by FY-25 and we continue
to see a clear path to achieving those targets. Our traditional
currency revenues remain fundamental to our business and continue
to grow, and we expect the effort taken over the last two years in
developing our new partnerships and asset management products to
start delivering diversified revenue streams in the current
financial year (FY-24).
"We remain confident that our current strategy is pointing the
business in the right direction, firmly underpinned by our highly
cash-generative business model, strong core of currency management
business, and increased focus on more diversified and higher
revenue-margin products. I look forward to updating our
shareholders on progress, not only with the core business but with
the new opportunities provided through both Record Asset Management
and Record Digital as we grow these business segments."
Analyst presentation
There will be a presentation for analysts at 9.30am on Friday,
30 June 2023 held via a Zoom call. Please contact the team at
Buchanan via record@buchanan.uk.com for further details. A copy of
the presentation will be made available on the Group's website at
www.recordcm.com .
For further information:
Record plc +44 (0) 1753 852222
Leslie Hill - Chief Executive
Officer
Steve Cullen - Chief Financial
Officer
Buchanan +44 (0) 20 7466 5000
Simon Compton record@buchanan.uk.com
Henry Wilson
George Beale
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEARED 31 MARCH 2023
2023 2022
GBP'000 GBP'000
Revenue 44,689 35,152
Cost of sales (37) (219)
Gross profit 44,652 34,933
Administrative expenses (29,888) (23,726)
Other expense (293) (372)
Operating profit 14,471 10,835
Finance income 182 44
Finance expense (55) (23)
Profit before tax 14,598 10,856
Taxation (3,259) (2,225)
Profit after tax 11,339 8,631
Total comprehensive income for the year 11,339 8,631
Profit and total comprehensive income for the year attributable to
Owners of the parent 11,339 8,631
Total comprehensive income for the year 11,339 8,631
Earnings per share for profit attributable to the equity holders of the parent during the
year
Basic earnings per share (pence per share) 5.95 4.52
Diluted earnings per share (pence per share) 5.81 4.37
------------------------------------------------------------------------------------------- -------- --------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023 2023 2022
GBP'000 GBP'000
---------------------------------------------------- ------- -------
Non -- current assets
Intangible assets 1,390 562
Right -- of -- use assets 1,011 1,421
Property, plant and equipment 377 401
Investments 4,901 3,447
Deferred tax assets 134 253
----------------------------------------------------- ------- -------
Total non -- current assets 7,813 6,084
----------------------------------------------------- ------- -------
Current assets
Trade and other receivables 14,373 9,883
Derivative financial assets 54 -
Money market instruments with maturities > 3 months 4,549 13,913
Cash and cash equivalents 9,948 3,345
----------------------------------------------------- ------- -------
Total current assets 28,924 27,141
----------------------------------------------------- ------- -------
Total assets 36,737 33,225
----------------------------------------------------- ------- -------
Current liabilities
Trade and other payables (6,011) (4,721)
Corporation tax liabilities (1,329) (924)
Provisions - (75)
Lease liabilities (285) (366)
Derivative financial liabilities (5) (124)
----------------------------------------------------- ------- -------
Total current liabilities (7,630) (6,210)
----------------------------------------------------- ------- -------
Non-current liabilities
Provisions (122) (125)
Lease liabilities (694) (960)
----------------------------------------------------- ------- -------
Total non-current liabilities (816) (1,085)
----------------------------------------------------- ------- -------
Total net assets 28,291 25,930
----------------------------------------------------- ------- -------
Equity
Issued share capital 50 50
Share premium account 1,809 1,809
Capital redemption reserve 26 26
Retained earnings 26,406 24,045
----------------------------------------------------- ------- -------
Total equity 28,291 25,930
----------------------------------------------------- ------- -------
CHAIRMAN'S STATEMENT
"This past year ending 31 March 2023 ("FY-23") has been another
year of change and growth at Record. The business which I founded
40 years ago is beginning to look fundamentally different from its
founding conception."
Neil Record
Chairman
For most of the past four decades, that conception - of our
specialising solely in the management of currencies and currency
risk - held sway.
In the last three years, the firm has chosen, and is now
executing, an enhanced business strategy rooted in our core
strengths and values. We are using technology to strengthen and
modernise our systems across the whole business, providing
efficiency of delivery and an enhanced user experience for clients
of our core traditional currency management services, whilst
enabling new opportunities for offering a more scalable and
diversified suite of asset management products and services to both
existing and potential clients.
In FY-23, we received regulatory approval from the German
financial regulator, BaFin, for our subsidiary Record Asset
Management GmbH ("RAM") as an asset manager, and are now starting
to manage funds. We are developing an infrastructure fund business
which will be managed by RAM, and which we hope will grow to
provide a material diversification strand. We are engaged in
agreeing partnerships with a range of high-quality asset and fund
managers, for whom we will offer distribution services in Europe
and the UK.
Despite our historic experience of low growth in the currency
management sector, FY-23 has, somewhat surprisingly, proved to be
showing interesting signs of a new type of growth. We have for many
years now been providing passive currency hedging services to
institutional investors, mainly pension funds. While these mandates
can sometimes be large (>$10 billion), we have experienced
steady fee compression over the past decade, only now levelling out
at very low levels. But a different client type - international
asset managers - have begun to recognise that large-scale passive
currency hedging is a specialist activity, where scale and
technology infrastructure means that outsourcing to a firm like
Record is a cost-effective choice.
While we had previously seen a small cadre of our existing asset
manager clients continually increase their mandate size as they
added funds and expanded their businesses, we are now seeing
incoming enquiries from new, large international managers. Asset
manager Passive Hedging mandates are often technically challenging,
but also offer much better fee rates than institutional clients'
mandates. We have not seen significant fee compression in this
sector, and so these mandates offer an attractive risk-adjusted
return, and a new source of potential growth. Some of these asset
managers operate in the private debt sector; this sector is
experiencing strong growth in the wake of the 2008/09 global
financial crisis, supplanting banks as a significant source of loan
capital. Passive Hedging mandates for this sub-sector therefore
represent a substitution for one aspect of the old bank treasury
function; and one we are well-positioned to take advantage of.
Financial overview
For the second successive year, the Group has delivered an
exceptional set of results, reflected by material growth in both
revenue and earnings. As stated above, the opportunities for
further growth are significant and diversified across both new and
traditional products and services, supported by a strong leadership
team and a robust succession plan.
I am confident that our strategy of modernisation and
diversification is the right direction for the Group, firmly
supported by the Group's highly cash-generative business model
accompanied by its robust and liquid balance sheet, with total
equity of GBP28.3 million.
Further information on financial results can be found in the
Financial review section.
Capital and dividend
The change in the firm's strategy, decided and executed in
FY-21, is continuing to flow through to the financial performance
of the business.
Our capital policy aims to ensure retention of capital assessed
as required for regulatory purposes, for working capital purposes
and for investing in new opportunities for the business. Our
dividend policy targets a level of ordinary dividend within the
range of 70% to 90% of annual earnings, and which allows for
progressive and sustainable dividend growth in line with the trend
in profitability. It is also the Board's intention, subject to
financial performance and market conditions at the time, to return
excess earnings over ordinary dividends for the financial year and
adjusted for changes in capital requirements, to shareholders,
normally in the form of special dividends.
The Board is recommending a final ordinary dividend of 2.45
pence per share (FY-22: 1.80 pence) with the full-year ordinary
dividend at 4.50 pence per share (FY-22: 3.60 pence), representing
a 25% increase in the ordinary dividend and an ordinary payout
ratio of 76% of earnings. The interim dividend of 2.05 pence was
paid on 30 December 2022, and the final ordinary dividend of 2.45
pence will be paid on 9 August 2023 to shareholders on the register
at 14 July 2023, subject to shareholder approval.
Having carefully reviewed the current level of Group capital
against its ongoing requirements for regulatory and investment
purposes and to support its continued growth, the Board is
announcing a special dividend of 0.68 pence per share to be paid
simultaneously with the final ordinary dividend. Total proposed
dividends per share for the year are 5.18 pence per share (2022:
4.52 pence) compared to earnings per share of 5.95 pence (2022:
4.52 pence).
The Board
On 1 March 2023 I announced that I would be retiring from the
Chairmanship and the Board after 40 years at the helm. We announced
at the same time the appointment of David Morrison as independent
Non-executive Director, and Chair -- elect.
David is very well known to Record. In 1985, his then employer,
Abingworth, at the time a venture Investment Trust, acquired 24.5%
of Record from a start-up angel investor. Abingworth also became a
client at the same time. David sat on the firm's Board until 1992,
when Abingworth sold its stake. Then again, in 2009, David
re-joined the newly IPO'd firm as an independent Non-executive
Director ("NED"), sitting until 2018, when he reached his term
limit. In his third term as a NED, and, from July 2023, Record's
Chairman, he will preside over a much-changed firm, with multiple
developing strands and a new background of growth. I am confident
his deep understanding of Record, and his own long experience in
asset management, will serve our shareholders well.
I am leaving Record's Board with mixed emotions. Record has been
my life for 40 years. I founded the firm when I had just turned 30,
and I will leave it when I will have just turned 70. It has been
the most rewarding career imaginable, meeting fascinating
individuals from all walks of life, building teams of colleagues
over multiple years, and most importantly building a business which
I believe is capable of becoming multigenerational. I have the
highest confidence in the current management under our CEO Leslie
Hill and her senior team, and I plan to remain a significant
shareholder for many years to come.
Outlook
In contrast with the optimistic tone with which I feel I can
talk about Record, I see many serious and deep challenges ahead for
the global economy in general, and for the developed West in
particular.
Across the board, Western governments have arguably
over-extended themselves both in the scope and scale of public
expenditure, and in their method of financing this expenditure -
namely through debt. Much of this debt is, in practice, monetary
financing via "Quantitative Easing". Central banks, and their
sponsoring governments, may find this financing becoming
increasingly onerous as short rates rise. The same issue has
already hit some regional banks in the US, and may hit more. This
monetary dislocation is running concurrently with very low or zero
productivity growth in much of the global economy. It remains to be
seen whether Western democracies can find policies to re-establish
low-inflation growth.
Record is not immune from these challenges, but structurally we
are positioned to be nimble and adaptable to client demand as it
develops and changes. While cost pressures (particularly labour
costs) will undoubtedly impact the business, the current pace of
growth and change should allow the revenue to grow sufficiently to
more than compensate for the cost-base growth.
I leave the business in good health; vibrant, enthusiastic and
looking for new opportunities. I couldn't have wished for more.
Neil Record
Chairman
29 June 2023
CHIEF EXECUTIVE OFFICER'S STATEMENT
"I have now been CEO for three years and am happy to report
encouraging progress in each of the three pillars of the
revitalising strategy I set out for the business when I took on the
role."
Leslie Hill
Chief Executive Officer
Most of you will I hope remember the three -- year target I set
out last year which aims for revenue of GBP60 million by this time
in 2025, while improving margins and increasing profits. We are on
target to achieve this, with revenues of GBP44.7 million and
pre-tax profits of 14.6 million reported for the financial year
(FY-23). Let me explain in more detail what we have been doing and
what plans we have for this coming year (FY-24).
Our three pillars are diversification, modernisation and
succession planning.
Diversification
There are some key strands to this - diversifying our product
offering, our client base and our activities. To achieve this we
have now created a number of subsidiaries whose leaders report to
me as CEO of the parent company, Record plc, but who have their own
budgets and aspirations for the future. More details are set out
below in our Succession section, but the subsidiaries are Record
Currency Management Limited, Record Asset Management GmbH ("RAM"),
Record Currency Management (US) Inc., Record Group Services Limited
and Record Digital Asset Ventures Ltd ("Record Digital"). This
structure is not there simply to complicate things, but to give
regulatory support and oversight and create efficiency, while
allowing for agency and autonomy for each of the subsidiary
CEOs.
Modernisation
After a few years of using a "renovating the house while we are
living in it" analogy it now feels the right time to retire that
rather tired phrase, as the house is now open for new guests and
looking very much more attractive and modern than it did
previously. We see IT under the leadership of our CTO as central to
our shared services concept and indeed to our whole business, and
will continue to develop and invest in this area. It has been a
complex journey but I am happy, indeed amazed, to say we managed to
stay on budget and on target for deliverables, which is a real
tribute to the whole team. This is a significant achievement which
has been marked by the recent launch of our new Record platform
("R-Platform") which went live post year-end and the rollout of our
new Reporting suite, as well as significant enhancements to the
scope of our trading activities. With this we can unlock scale,
efficiency and ensure happy clients going forward. I am thrilled
with it.
Succession
New subsidiary CEOs - as my focus shifts to working closely with
our new Chairman in further building and leading the Record
Financial Group from the top, our new subsidiary CEOs, Dr Jan Witte
and Rebecca Venis, are already heading up Record Currency
Management and Record Digital respectively and our investors will
see more of them this year. I'm also excited by the future plans we
have for new leadership of our Emerging Market Sustainable Finance
family, upon which we hope to give further information in FY-24.
These changes are a testament, not only to the talents of these
individuals, but also to my commitment with the Board to promoting,
training and offering opportunities for leadership and share
ownership to more and more of our colleagues as we build this
40-year-old stable and experienced currency manager into a real
multi-asset manager for the 21st century.
Financial performance
We continue our focus on growing the business through
diversification and modernisation, and it's testament to the hard
work of the management team and all of our colleagues that we are
reporting impressive growth again this year in both revenue and
profit, of 27% and 34% respectively.
The balance between maintaining good cost control and ensuring
that the business has the appropriate level of resource to support
its growth trajectory has proved even more challenging through this
year due to the high inflationary environment and cost pressure
seen across the whole of our business. Inevitably we have seen a
consequent rise in our cost base for FY-23, which will be carried
forward into the current financial year (FY-24), where we can
expect to see the full-year impact. Whilst this may have inhibited
growth in our operating margin somewhat this year, we remain
confident that the current strong pipeline of opportunities in both
our currency and higher revenue-margin and more scalable asset
management products into FY-24 will serve to counter this impact
over the next couple of years.
Outlook
The next phase of our development of Record is to reap some of
the rewards of our modernisation and diversification. The soil has
been fertilised over the last few years, and the new plants well
heeled in. For quite some time they have been putting down roots
and like any young tree more has been going on under the surface
than on the top. As was clear at our Capital Markets day recently,
the next phase should see some new revenue from our diversifying
strands at RAM and Record Digital as well as continued work to
scale our currency business. This continues our theme of
diversification and modernisation, while our recent promotions
carries on our theme of succession planning for the long-term
future. We will continue to keep a close watch on costs but drive
forward with our three -- year plan.
Leslie Hill
Chief Executive Officer
29 June 2023
KEY PERFORMANCE INDICATORS
Measuring our performance against our strategy.
The Board uses both financial and non -- financial key
performance indicators ("KPIs") to monitor and measure the
performance of the Group against its strategic priorities.
Some KPIs link to specific strategic areas as noted below,
whilst others represent higher-level key metrics in terms of the
Group's business and financial performance.
Financial KPIs
Revenue (GBPm)
For the financial years up to and including FY-23, revenue has
been earned predominantly from the provision of currency management
services in the form of management fees and performance fees. From
FY-24 onwards, revenue will include the new revenue streams arising
as part of the diversification into asset management products and
services.
Revenue GBP million
2023 44.7
------------
2022 35.1
------------
2021 25.4
------------
2020 25.6
------------
2019 25.0
------------
Why this is important
Revenue is a key indicator of client experience, growth and a
key driver of profitability. Growth in AUME, especially into
Record's higher revenue-margin products, resulted in a 12% increase
in management fees. Revenue also includes performance fees, which
increased by GBP5.3 million to GBP5.8 million (2022: GBP0.5
million).
Link to strategy
Diversification
Modernisation
Operating profit margin (%)
Operating profit margin is an alternative performance measure,
calculated by dividing operating profit by revenue.
Operating %
profit margin
2023 32
---
2022 31
---
2021 24
---
2020 30
---
2019 32
---
Why this is important
Operating profit margin is an indicator of the efficiency of the
business in turning revenue into profit. Inflows into higher
revenue-margin products in addition to efficiencies seen from the
adoption of technology in operational areas both contributed to the
increase in operating margin to 32% for the year.
The Group aims to increase the operating profit margin over time
through investment in resources and technology to maintain its
premium products and services, whilst increasing operating
efficiency and developing more diversified revenue streams in
higher-margin products.
Link to strategy
Diversification
Modernisation
Basic earnings per share ("EPS") (pence per share)
The Group aims to create shareholder value over the long term,
delivered through progressive and sustainable growth in EPS.
EPS pence
2023 5.95
------
2022 4.52
------
2021 2.75
------
2020 3.26
------
2019 3.27
------
Why this is important
EPS measures the overall effectiveness of the business model and
drives both our dividend policy and the value generated for
shareholders. Similarly to operating profit, EPS has increased this
year as the benefits from the implementation of the new strategy
begin to deliver results in financial terms.
Link to strategy
Diversification
Modernisation
Succession
Dividends per share ("DPS") (pence per share)
Our dividend policy targets a level of ordinary dividend within
the range of 70% to 90% of annual earnings, and which allows for
progressive and sustainable dividend growth in line with the trend
in profitability.
DPS Ordinary dividend Special dividend
per share per share
pence pence
2023 4.50 0.68
------------------ -----------------
2022 3.60 0.92
------------------ -----------------
2021 2.30 0.45
------------------ -----------------
2020 2.30 0.41
------------------ -----------------
2019 2.30 0.69
------------------ -----------------
Why this is important
Progressive and sustainable dividends illustrate the
cash-generative nature of Record's business, and its strength in
converting profits into cash and providing a suitable return to
shareholders. The ordinary dividend per share has increased by 25%,
reflecting the Board's confidence in the ability of the business to
deliver its strategy and to achieve sustainable growth. The special
dividend per share of 0.68 pence, results in a 15% increase in
total dividends to 5.18 pence per share (2022: 4.52 pence per
share).
Link to strategy
Diversification
Modernisation
Succession
Non-financial KPIs
AUME ($ billion)
As a currency and derivatives manager, Record manages only the
impact of foreign exchange and not the underlying assets, therefore
its "assets under management" are notional rather than real. To
distinguish this from the AUM of conventional asset managers,
Record uses the concept of Assets Under Management Equivalents
("AUME") and by convention this is quoted in US dollars.
AUME $ billion
2023 87.7
----------
2022 83.1
----------
2021 80.1
----------
2020 58.6
----------
2019 57.3
----------
Why this is important
AUME is a key driver of future revenue and an indicator of
business growth. AUME increased by 5.5% for the year, including net
inflows of $9.1 billion diversified across product lines.
Link to strategy
Diversification
Modernisation
Succession
Client longevity (%)
Client longevity measures how long Record has been providing
either currency and derivative, or asset management, services to
each client with a mandate active as at 31 March 2023.
Client %
longevity
>10 years: 20
---
6-10 years: 11
---
3-6 years: 22
---
1-3 years: 23
---
0-1 years: 24
---
Why this is important
Client longevity is both an indicator of recent client growth,
and also of the Group's success in sustaining quality client
relationships through investment cycles. Building long-standing and
trusted adviser relationships with clients provides opportunities
for collaboration and partnerships on new and innovative investment
products.
Link to strategy
Diversification
Average number of employees
The average number of employees through the year includes Non --
executive Directors.
Average Number
number of
employees
2023 88
-------
2022 82
-------
2021 83
-------
2020 82
-------
2019 85
-------
Why this is important
Average employee numbers is an indicator of business growth and
also of how effectively the Group is using technology to make
processes more efficient. Implementing the new strategy has
necessitated new skill sets in the business, which has brought
additional knowledge and experience into the Group required to
drive innovation and the diversification into new products and
technology.
Link to strategy
Diversification
Modernisation
Succession
Staff retention (%)
Staff retention is calculated as the number of employees who
were employed by Record throughout the period as a percentage of
the number of employees at the beginning of the period.
Staff retention %
2023 90
----
2022 74
----
2021 90
----
2020 81
----
2019 84
----
Why this is important
Planning for generational change is key to the Group's strategy.
A decrease in staff retention in the prior year reflects the focus
on rebalancing the skill sets required by the business to drive the
innovation and growth required to deliver the strategy. FY-23 has
seen a return to retention more aligned with historical trends,
reflecting the successful restructure as part of the Group's
succession plans. The Group remains cognisant of ensuring the
retention and development of key talent as well as the factors
affecting all of our employees' wellbeing.
Link to strategy
Diversification
Modernisation
Succession
Employees with equity interest (%)
The percentage of employees who own shares in Record plc at year
end.
Employees %
with equity
interest
2023 63
---
2022 61
---
2021 68
---
2020 69
---
2019 70
---
Why this is important
The alignment of employee interests with those of our
shareholders is an important factor in ensuring the longer -- term
success of our business and is an important tool in managing
generational change. The decrease last year was linked to changes
made under the new strategy resulting in a higher turnover of staff
and consequently a short-term decrease in employees holding shares.
The Group's remuneration structure includes schemes with both
mandatory and voluntary equity participation, reflecting the
importance the Group places on alignment.
Link to strategy
Succession
Operating review
AUME closed the year at its highest ever level of $87.7 billion,
including net inflows of $9.1 billion for the year.
Product investment performance
Hedging
Our hedging products are predominantly systematic in nature. The
effectiveness of each client mandate is assessed regularly and
adjustments are made when necessary in order to respond to changing
market conditions or to bring the risk profile of the hedging
mandate in line with the client's risk tolerance.
Passive Hedging
Record's enhanced Passive Hedging service aims to reduce the
cost of hedging by introducing flexibility into the implementation
of currency hedges without changing the hedge ratio. The episodic
nature of many opportunities exploited by the strategy means it
requires a higher level of discretionary oversight than has
historically been associated with Passive Hedging. Global markets
have seen steepening interest rate curves from the end of 2021,
which stems from central banks being forced to engage in more
hawkish monetary policy in an attempt to keep inflationary
pressures under control. This has had the effect of introducing a
high degree of volatility into short-term interest rate markets,
from which FX forward pricing is determined. The heightened
volatility has increased the opportunity set for our clients'
portfolios, and as such, we had positioned client portfolios
appropriately to add value from this volatility, achieving positive
performance. Additionally, the team's management of the portfolio
around key market events such as the collapse of Silicon Valley
Bank, and the UK government's "mini-budget", have minimised
downside risks versus the fixed-tenor benchmark.
The table below shows the total value added relative to a
fixed-tenor benchmark for an enhanced Passive Hedging programme for
a representative account. The base currency used is Swiss
francs.
Return for Return
year to since
31 March 2023 inception
----------------------------------------------------------------------------------------
Value added by enhanced Passive Hedging programme relative to a fixed -- tenor benchmark 0.18% 0.10% p.a.
-------------- ----------
Dynamic Hedging
The performance of our Dynamic Hedging product is a function of
foreign currency fluctuations relative to the base currency of
specific clients. For US-based investors, Dynamic Hedging produced
gains in the first half of the period, as the dollar appreciated
against all exposure currencies and hedge ratios rose, helping to
protect against underlying currency losses. The second half of the
period saw some retracement in the US dollar, which coupled with
risk management interventions, resulted in a reduction in hedge
ratios limiting the product's impact in clients' portfolios.
Overall, Dynamic Hedging performance was positive for the year,
partially offsetting currency losses on the underlying
international exposures of our US clients.
For non-US accounts, i.e. those where US exposures were hedged
to other base currencies, the performance of Dynamic Hedging was
opposing over the period given broad US dollar strength and
reflected the mandates' specific objectives and/or benchmarks.
Return for Return
year to since
31 March 2023 inception
------------------------------------------------------------------------------
Value added by Dynamic Hedging programme for a representative US-based account 3.46% 0.67% p.a.
-------------- ----------
Currency for Return
Sustainable investing
Record EM Sustainable Finance ("EMSF") Fund
The Record EMSF Fund USD class A returned 4.65% from inception
(28 June 2021) to 31 March 2023, outperforming the relevant
emerging market local debt benchmark by 17.35%.
The currency portfolio delivered positive returns in the period
following improved risk sentiment over the last two quarters as
oversold and high-yielding currencies in emerging markets recovered
from depreciated levels. Sentiment was supported by the reopening
of the Chinese economy, milder weather conditions in Europe and
elevated carry in developing economies as central banks continued
to deliver rate hikes to curb domestic inflationary pressures. The
positive performance of the currency overlay also benefited from
gains in the diversified hard currency funding basket. The topping
out of rates in developed markets provided further support to local
assets in emerging markets and at the same time contributed to
improving returns in bond markets. The performance of the US dollar
bond underlay in the strategy benefited from its highly rated
credit quality as well as duration exposure following lower
long-dated yields in the US over Q1 2023 as the FED neared the end
of the tightening cycle and recent turmoil in the banking sector
sparked global recessionary fears.
The table below shows the performance of the EMSF Fund USD class
A and the relevant benchmark, being the JP Morgan GBI-EM Global
Diversified. The performance is since inception of the EMSF Fund on
28 June 2021 to 31 March 2023.
Return for Return since
year to inception
31 March 2023
------------------------------------
EMSF Fund USD Share Class A 5.64% 4.65%
------------------------------------ -------------- ------------
JP Morgan GBI-EM Global Diversified (0.72%) (12.70%)
-------------- ------------
Currency Multi-Strategy
Record's Currency Multi-Strategy product combines a number of
diversified return streams, which include:
-- Forward Rate Bias ("FRB", also known as Carry) and Emerging
Market strategies which are founded on market risk premia and as
such perform more strongly in "risk on" environments.
-- Momentum, Value, Range Trading and Developed Market
Classification ("DMC") strategies which are more behavioural in
nature, and as a result are less risk -- sensitive.
Record's Multi-Strategy mandates delivered positive overall
performance over the year which was driven by the outperformance in
Value, Momentum, Range Trading and EM strategies. Value benefited
from a significant reduction in euro area risk premia. Momentum
performed positively on the back of the US dollar cycle and
desynchronised rate expectations. Range Trading accrued gains
mostly in commodity currency pairs due to the absence of major
trends in these pairs. Positive news surrounding China's reopening,
a compression in Russia-Ukraine geopolitical risk premia, and
topping out of US rate expectations, which enticed flows back into
Emerging Market currencies, led to outperformance in the Emerging
Markets strand. For Carry, underperformance was mainly driven by
short positions in low-yielding Developed Market currencies, which
appreciated due to the perceived narrowing of interest rate
differentials. During the reporting period, DMC was introduced to
some mandates, and underperformed during the period due to a long
position in the US dollar.
Return Return since Volatility
for since
12 months inception inception
to
31 March % p.a. % p.a.
2023
%
-----------------------------------
Record Multi -- Strategy composite 0.78% 0.82% 3.16%
----------- ------------ ----------
Scaling
The Multi-Strategy product allows clients to select the level of
exposure they desire in their currency programmes by selecting the
required level of scaling and/or the volatility target.
It should be emphasised that in this case "scaling" refers to
the multiple of the aggregate notional value of forward contracts
in the currency programme to the mandate size. This is limited by
the willingness of counterparty banks to take exposure to the
client. The AUME of those mandates where scaling or a volatility
target is selected is represented in Record's AUME at the scaled
value of the mandate, as opposed to the mandate size.
AUME development
AUME expressed in US dollar terms finished the year at $87.7
billion, an increase of 6% (2022: $83.1 billion). When expressed in
sterling, AUME increased by 13% to GBP71.0 billion (2022: GBP63.1
billion).
AUME movements
Passive Hedging AUME increased by 2% to $63.8 billion (2022:
$62.8 billion) driven by net inflows of $4.9 billion for the year
from new and existing clients. The impact from both market
movements and exchange rates was negative, at $3.3 billion and $0.6
billion respectively.
Dynamic Hedging AUME increased by 39%, ending the year at $14.7
billion (2022: $10.6 billion). The majority of the $4.1 billion
increase is attributable to net inflows ($4.2 billion), offset
slightly by negative market movements of $0.1 billion.
Currency for Return AUME decreased to $3.9 billion (2022: $5.0
billion) by the end of the year, represented by net outflows of
$0.6 billion and negative market movements and exchange rates of
$0.4 billion and $0.1 billion respectively.
Multi-product AUME increased to $5.2 billion (2022: $4.5
billion). Net inflows of $0.6 billion accounted for the majority of
the movement in addition to positive market movements ($0.1
billion).
Market performance
Record's AUME is affected by movements in market levels because
substantially all the Passive and Dynamic Hedging, and some of the
Multi-product mandates, are linked to equity, fixed income and
other market levels. Market movements decreased AUME by $3.8
billion in the year ended 31 March 2023 (2022: increase of $0.3
billion).
Further detail on the composition of assets underlying our
Hedging and Multi-product mandates is provided in the following
table in an attempt to illustrate more clearly the impact of equity
and fixed income market movements on these mandate sizes.
AUME composition by underlying asset class as at 31 March
2023
Fixed
Equity income Other
% % %
----------------
Passive Hedging 23% 31% 46%
Dynamic Hedging 84% 0% 16%
Multi-product 0% 0% 100%
------ ------- -----
Forex
Approximately 76% of the Group's AUME is non -- US dollar
denominated. Therefore, foreign exchange movements may have an
impact on AUME when expressing non-US dollar denominated AUME in US
dollars. Foreign exchange movements decreased AUME by $0.7 billion
over the year. This movement does not have an equivalent impact on
the sterling value of fee income.
At 31 March 2023, the split of AUME by base currency was 10% in
sterling, 47% in Swiss francs, 24% in US dollars, 14% in euros and
5% in other currencies.
AUME composition by base currency
Base currency 31 March 2023 31 March 2022
-----------------
Sterling GBP 7.4bn GBP 7.6bn
US dollar USD 20.8bn USD 17.6bn
Swiss franc CHF 38.3bn CHF 33.1bn
Euro EUR 11.7bn EUR 11.4bn
Australian dollar AUD 3.0bn AUD 2.9bn
Canadian dollar CAD 3.3bn CAD 6.1bn
Japanese yen JPY 27.2bn JPY 0.0bn
------------- -------------
Product mix
AUME composition by product
31 March 2023 31 March 2022
US $bn % US $bn %
-------------------- -------- -------- -----
Passive Hedging 63.8 73% 62.8 76%
Dynamic Hedging 14.7 17% 10.6 13%
Currency for Return 3.9 4% 5.0 6%
Multi-product 5.2 6% 4.5 5%
Cash 0.1 -% 0.2 -%
-------------------- -------- ----- -------- -----
Total 87.7 100% 83.1 100%
-------------------- -------- ----- -------- -----
Notwithstanding hedging AUME continuing to represent
approximately 90% of the total AUME, the product mix within this
figure has shifted towards the higher revenue-margin Dynamic
Hedging product due primarily to net inflows of $4.2 billion during
the year. This has diversified the Group's hedging revenue streams
and further diluted the historical concentration on the lower
revenue-margin Passive Hedging product.
FINANCIAL REVIEW
"Our second successive year of material revenue growth since our
change in strategy has been driven by increases in both management
and performance fees, resulting in a 34% increase to operating
profit."
Steve Cullen
Chief Financial Officer
Overview
The implementation of the Group's change in strategy continues,
focused on the diversification of its products and services and the
modernisation of its systems and processes. The pipeline of new
product launches and new revenue streams in asset management
remains strong, and we expect to see the culmination of our work
over the last three years to start making a material difference to
revenues in FY-24, the current financial year. Our existing strong
core of hedging products remains fundamental to our growth plans,
underscored by net inflows of $9.1 billion for the year in addition
to the $2.4 billion in FY-22. As expected, and somewhat inevitably,
our cost base has risen over the year, linked both to our continued
investment in the modernisation of our business, and to the
exceptional levels of inflationary pressure seen at both a
personnel and non-personnel level.
The Group remains independent, cash generative and profitable,
supported by its strong and liquid balance sheet.
Revenues grew 27% to GBP44.7 million (2022: GBP35.1 million)
supported by a 12% increase in management fees and an increase in
performance fees of GBP5.3 million (2022: GBP0.5 million).
Operating profit for the year increased by 34% to GBP14.5 million
(2022: GBP10.8 million) and the operating profit margin increased
to 32% (2022: 31%) with a 34% increase in profit before tax to
GBP14.6 million (2022: GBP10.9 million).
Profit and loss (GBPm)
2023 2022
------------------------------------ ------ ------
Revenue 44.7 35.1
Cost of sales - (0.2)
Gross profit 44.7 34.9
Personnel (excluding bonus) (12.8) (10.8)
Non -- personnel costs (9.5) (7.2)
Other income or expense (0.3) (0.4)
Total expenditure (excluding bonus) (22.6) (18.4)
Group Bonus Scheme (7.6) (5.7)
Operating profit 14.5 10.8
Operating profit margin 32% 31%
Net interest received 0.1 0.1
Profit before tax 14.6 10.9
Tax (3.3) (2.3)
------------------------------------ ------ ------
Profit after tax 11.3 8.6
------ ------
Revenue - Currency Management
Record's traditional core currency management revenue derives
from the provision of currency and derivative management services,
fees for which can be charged through management fee only or
management plus performance fee structures, which are available
across Record's product range. Management fee only mandates are
charged based upon the AUME of the product, and management plus
performance fee structures include a lower percentage fee applied
to AUME, and a proportional share of the specific product
performance measured over a defined period.
Management fees are typically charged on a quarterly basis,
although Record may charge fees monthly for some of its larger
clients. Performance fees can be charged on quarterly, six-monthly
or annual performance periods on the basis agreed with the
particular client.
Revenue - Asset Management
Asset management did not generate any material revenue
reportable for FY-23. Material new revenue streams derived from
Record's diversification into asset management products and
services will be reported separately from the current financial
year (FY-24) onwards.
Revenue - FY-23
Management fees earned during the year increased by 12% to
GBP38.3 million (2022: GBP34.1 million) driven by net inflows of
$9.1 billion into Record's core currency hedging products, and the
full-year revenue impact on Currency for Return from the Record EM
Sustainable Finance Fund, launched in June 2021. Performance fees
increased by GBP5.3 million to GBP5.8 million for the year (2022:
GBP0.5 million), linked to positive performance from certain
Enhanced Passive Hedging mandates.
Revenue analysis (GBPm)
Year ended Year ended
31 March 2023 31 March 2022
---------------------- -------------- --------------
Management fees
Passive Hedging 12.9 11.8
Dynamic Hedging 12.0 10.0
Currency for Return 6.8 5.5
Multi-product 6.6 6.8
---------------------- -------------- --------------
Total management fees 38.3 34.1
---------------------- -------------- --------------
Performance fees 5.8 0.5
Other income 0.6 0.5
---------------------- -------------- --------------
Total revenue 44.7 35.1
-------------- --------------
Management fees
Passive Hedging management fees increased by 9% to GBP12.9
million (2022: GBP11.8 million) predominantly driven by the net
inflows of $4.9 billion in the year. Whilst Passive Hedging
commands a significantly lower average fee rate than Record's other
products, it continues to provide a robust and valuable revenue
stream from a long-standing, institutional client base, which
itself provides potential synergies to the Group in the form of
future partnerships and product innovation. More recently, the
extension of our core Passive Hedging product for Asset Managers,
which provides programmes designed to fit specific liquidity and
reporting requirements, has seen growth which we expect to continue
in the current financial year (FY-24).
Dynamic Hedging management fees increased by 20% to GBP12.0
million (2022: GBP10.0 million) as a result of the full -- year
impact of the $0.8 billion of net inflows seen in the second half
of FY-22, combined with the total net inflows of $4.2 billion in
FY-23 from new and existing clients.
Management fees from Currency for Return mandates increased 24%
to GBP6.8 million (2022: GBP5.5 million). The increase has been
driven predominantly by the full-year impact of revenue from the
Record EM Sustainable Finance Fund, launched in June 2021. The net
outflow of $0.6 billion announced in the final quarter of the
financial year will partially offset this increase in the current
financial year (FY -- 24).
Multi-product management fees decreased marginally by 3% to
GBP6.6 million (2022: GBP6.8 million). However, net inflows of $0.6
billion in the second half of FY-23 are expected to increase
revenues in the current financial year (FY-24).
Performance fees
Performance fees can be derived from a combination of hedging
and return -- seeking products. Our enhanced Passive Hedging
products continued the rebound seen towards the end of FY-22 in
making up lost ground versus previous high water marks. This was
accelerated during the year by the opportunities arising to add
value linked to increases in interest rate differentials, which
helped to deliver an exceptional level of performance fees of
GBP5.8 million (2022: GBP0.5 million). Such opportunities for added
value on this product are, to a certain extent, market dependent
and can therefore be episodic in nature. Consequently, the
occurrence and scale of future performance fees is dependent on
market developments through the current financial year (FY-24).
Other income
Other income totalled GBP0.6 million (2022: GBP0.5million) and
consists predominantly of fees from ancillary currency management
services including collateral management, signal hedging and
tactical execution services. Fees charged for these ancillary
services are not linked to AUME.
Expenditure
Cost of sales
Cost of sales previously comprised of referral fees and costs in
relation to the Record Umbrella Fund, which was closed during the
previous financial year (2022: GBP0.2 million).
Operating expenditure
The Group operating expenditure (excluding variable remuneration
and other expenses) increased by 24% to GBP22.3 million for the
year (2022: GBP18.0 million).
As expected, the Group has seen increases in personnel costs
(excluding bonuses) for the year of approximately 19%. Average
headcount increased by 7%, and the exceptional inflationary
environment over the year continued to erode the purchasing power
of our employees' pay, adding pressure for the business to provide
support against the resultant increase to the general cost of
living. Consequently, in order to avoid adding to recurring fixed
costs in future, it was decided to award one-off cost-of-living
allowances of GBP3,000 per employee (excluding Executive Directors
and Board members), amounting to a total cost of approximately
GBP0.3 million. The Group continues to monitor the situation
closely and to provide support to ensure the continued wellbeing of
employees, and in April 2023 it was decided to make a further
cost-of-living payment to employees of GBP2,000 per employee during
FY-24.
Against this backdrop, salaries and related on-costs (including
pensions) increased by 14%, whilst other employment-related costs
associated with the Group's share schemes, including the new LTIP
scheme launched in the year, increased by just over 60%. Commission
paid under the scheme aimed at generating new business rose by
approximately 35%, linked to the increase in revenue.
Similarly, and also as expected, non-personnel costs include
rises linked to inflation as well as those associated with
continued investment by the Group into IT resources in the key
strategic area of modernisation, and those costs linked with
increases in both growth, and ultimately complexity, of the Group
structure and of its products and services.
Consequently, non-personnel costs increased by 32% during the
year to GBP9.5 million (2022: GBP7.2 million). Increases in
professional fees of one third, including both legal and audit
fees, reflect the set-up costs and growing footprint of the Group
abroad, including expansion and regulatory approval in Germany. As
the Group's growth plans and diversification progress, so does the
requirement for additional market data consumed via platforms and
other data sources, plus additional software and IT-consultant
resource, leading to an increase in related costs of approximately
40% for the year.
The new office location in London was expanded halfway through
the year to accommodate growth in employee numbers and to enable
the Group to maintain its strong culture and focus on collaborative
working, regarded as key for future growth and employee retention
and wellbeing. Whilst the increase in cost was slightly offset by
downsizing of the Windsor-based office, occupancy costs increased
by approximately 20% in the year. Alongside the increase in new
business, costs associated with travel and accommodation doubled,
linked to the resumption of more client meetings in person as
opposed to virtually.
The Group remains conscious of the need for good cost control
balanced with ensuring the business is appropriately resourced to
achieve its strategic goals of diversification, modernisation and
succession. However, it is anticipated that the continuation of
inflationary pressures in the current environment, as well as the
full-year impact of associated rises seen in the year, will
inevitably lead to an increase in its cost base in the current year
(FY-24), albeit at more muted levels versus FY-23.
Other expenses were GBP0.3 million for the year (2022: GBP0.4
million) and represent net losses/gains made on derivative
financial instruments employed by the Group's hedging activities
and other FX adjustments or revaluations.
Group Bonus Scheme
The bonus pool has increased by 33% to GBP7.6 million (2022:
GBP5.7 million), broadly in line with, and reflecting, the 34%
increase in operating profit for the year, and has been calculated
at 34.8% of pre -- bonus operating profit.
Operating profit and margin
Group operating profit increased by 34% to GBP14.5 million
(2022: GBP10.8 million) with the Group operating margin increasing
marginally to 32% (2022: 31%). The Group continues its programme of
investment to modernise systems and processes and has seen
increases in costs as described further above. Alongside minor
delays in the launch of new, higher revenue-margin products this
has impacted the Group's operating margin for the year. The Group
remains confident that new product launches in the current
financial year (FY-24), alongside careful cost control, albeit
still challenging in a high inflationary environment, will deliver
increases in the operating margin over the medium term.
Cash flow
The Group consolidated statement of cash flows is shown in the
financial statements.
The Group's year -- end cash and cash equivalents stood at
GBP9.9 million (2022: GBP3.3 million) and the total assets managed
as cash were GBP14.5 million (2022: GBP17.3 million). The cash
generated from operating activities before tax increased by 16% to
GBP14.7 million (2022: GBP12.7 million). During the year, taxation
of GBP2.4 million was paid (2022: GBP1.4 million) and GBP9.1
million was paid in dividends (2022: GBP6.5 million). The Group
spent GBP3.6 million (2022: GBP4.5 million) on the purchase of its
own shares for the EBT to set against the future vesting of share
options, and spent GBP3.6 million on investments (2022: GBP1.8
million).
At the year end, the Group held money market instruments with
maturities between three and twelve months worth GBP4.5 million
(2022: GBP13.9 million). These instruments are managed as cash by
the Group but are not classified as cash under IFRS rules (see note
18 of the financial statements for more details).
Dividends
An interim ordinary dividend of 2.05 pence per share (2022: 1.80
pence) was paid to shareholders on 30 December 2022, equivalent to
GBP3.9 million.
As disclosed in the Chairman's statement, the Board is
recommending a final ordinary dividend of 2.45 pence per share,
equivalent to approximately GBP4.7 million, taking the overall
ordinary dividend for the financial year to 4.50 pence per share.
Simultaneously, the Board is also paying a special dividend of 0.68
pence equivalent to approximately GBP1.3 million, making the total
dividend in respect of the year ended 31 March 2023 of GBP9.9
million equivalent to 87% of total earnings.
The total ordinary and special dividends paid per share in
respect of the prior year ended 31 March 2022 were 3.60 pence and
0.92 pence respectively, equivalent to total dividends of GBP8.6
million and representing 100% of total earnings per share of 4.52
pence.
Financial stability and capital management
The Group's balance sheet is strong and liquid with total net
assets of GBP28.3 million (2022: GBP25.9 million) at the end of the
financial year, including current assets managed as cash totalling
GBP14.5 million (2022: GBP17.3 million). The cash generated by the
business has increased in line with the rise in profitability, with
net cash inflows from operating activities after tax of GBP12.3
million for the year (2022: GBP11.4 million). For further
information on cash flows, see the consolidated statement of cash
flows in the financial statements.
Under the Board's capital and dividend policies, the Group can
pay up to a maximum of 100% of earnings for each financial year,
thereby ensuring distributions do not erode the continued strength
of its balance sheet.
To this end, the Group maintains a financial model to assist it
in forecasting future capital requirements over a three-year cycle
under various scenarios and monitors the capital and liquidity
positions of the Group on an ongoing basis. The Group has no
debt.
Record Currency Management Limited ("RCML") is a UK MiFID
investment firm authorised and regulated by the Financial Conduct
Authority ("FCA") registered as an Investment Adviser with the SEC
and as a Commodity Trading Adviser with the CFTC. Record Asset
Management GmbH ("RAM") is authorised and regulated in Germany by
BaFin. RCML, RAM and the Group submit regular capital adequacy
returns to the respective regulators, and held significant surplus
capital resources relative to the regulatory financial resource
requirements throughout the year.
The Board has concluded that the Group is adequately capitalised
both to continue its operations effectively and to meet regulatory
requirements, due to the size and liquidity of balance sheet
resources maintained by the Group.
Steve Cullen
Chief Financial Officer
29 June 2023
Cautionary statement
This Annual Report contains certain forward -- looking
statements with respect to the financial condition, results,
operations and business of Record. These statements involve risk
and uncertainty because they relate to events and depend upon
circumstances that will occur in the future. There are a number of
factors that could cause actual results or developments to differ
materially from those expressed or implied in this Annual Report.
Nothing in this Annual Report should be construed as a profit
forecast.
Directors' responsibility statement pursuant to DTR4
The Directors confirm to the best of their knowledge:
-- the financial statements have been prepared in accordance
with the applicable set of accounting standards, give a true and
fair view of the assets, liabilities, financial position and profit
and loss of the Group and Company; and
-- the Annual Report includes a fair review of the development
and performance of the business and the financial position of the
Group and Company, together with a description of the principal
risks and uncertainties that they face.
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 March 2023
Note 2023 2022
GBP'000 GBP'000
Revenue 4 44,689 35,152
Cost of sales (37) (219)
Gross profit 44,652 34,933
Administrative expenses 5 (29,888) (23,726)
Other expense 5 (293) (372)
Operating profit 5 14,471 10,835
Finance income 182 44
Finance expense (55) (23)
Profit before tax 14,598 10,856
Taxation 7 (3,259) (2,225)
Profit after tax 11,339 8,631
Total comprehensive income for the year 11,339 8,631
Profit and total comprehensive income for the year attributable to
Owners of the parent 11,339 8,631
Total comprehensive income for the year 11,339 8,631
Earnings per share for profit attributable to the equity holders of the parent during the
year
Basic earnings per share (pence per share) 8 5.95 4.52
Diluted earnings per share (pence per share) 8 5.81 4.37
------------------------------------------------------------------------------------------ ---- -------- --------
The notes below are an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2023
Restated(1)
2023 2022
Note GBP'000 GBP'000
---------------------------------------------------- ---- ------- -----------
Non -- current assets
Intangible assets 11 1,390 562
Right -- of -- use assets 12 1,011 1,421
Property, plant and equipment 13 377 401
Investments 14 4,901 3,447
Deferred tax assets 15 134 253
---------------------------------------------------- ---- ------- -----------
Total non -- current assets 7,813 6,084
---------------------------------------------------- ---- ------- -----------
Current assets
Trade and other receivables 16 14,373 9,883
Derivative financial assets 17 54 -
Money market instruments with maturities > 3 months 18 4,549 13,913
Cash and cash equivalents 18 9,948 3,345
---------------------------------------------------- ---- ------- -----------
Total current assets 28,924 27,141
---------------------------------------------------- ---- ------- -----------
Total assets 36,737 33,225
---------------------------------------------------- ---- ------- -----------
Current liabilities
Trade and other payables 19 (6,011) (4,721)
Corporation tax liabilities 19 (1,329) (924)
Provisions - (75)
Lease liabilities 12 (285) (366)
Derivative financial liabilities 17 (5) (124)
---------------------------------------------------- ---- ------- -----------
Total current liabilities (7,630) (6,210)
---------------------------------------------------- ---- ------- -----------
Non-current liabilities
Provisions 20 (122) (125)
Lease liabilities 12 (694) (960)
---------------------------------------------------- ---- ------- -----------
Total non-current liabilities (816) (1,085)
---------------------------------------------------- ---- ------- -----------
Total net assets 28,291 25,930
---------------------------------------------------- ---- ------- -----------
Equity
Issued share capital 21 50 50
Share premium account 1,809 1,809
Capital redemption reserve 26 26
Retained earnings 26,406 24,045
---------------------------------------------------- ---- ------- -----------
Total equity 28,291 25,930
---------------------------------------------------- ---- ------- -----------
1. See note 30 for details of the reclassification resulting in the restatement of prior year.
Approved by the Board on 29 June 2023. Company registered
number: 1927640
The notes below are an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 March 2023
Equity
Share Capital attributable
to
Called premium redemption Retained equity Total
-- up holders
share capital account reserve earnings of the equity
parent
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April
2022 50 1,809 26 24,045 25,930 25,930
Profit and total
comprehensive
income for the
year - - - 11,339 11,339 11,339
Dividends paid 9 - - - (9,095) (9,095) (9,095)
Own shares acquired
by EBT - - - (3,572) (3,572) (3,572)
Release of shares
held by EBT - - - 2,268 2,268 2,268
Tax on share-based
payments - - - 300 300 300
Share-based payment
reserve movement - - - 1,121 1,121 1,121
Transactions
with shareholders - - - (8,978) (8,978) (8,978)
----------------------- --- ------------- ------- ---------- -------- ------------ -------
As at 31 March
2023 50 1,809 26 26,406 28,291 28,291
----------------------- --- ------------- ------- ---------- -------- ------------ -------
Year ended 31 March 2022
Equity
Share Capital attributable
to
Called premium redemption Retained equity Total
-- up holders
share capital account reserve earnings of the equity
parent
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------------ ------------- ------- ---------- -------- ------------ -------
As at 1 April
2021 50 2,418 26 24,305 26,799 26,799
Restatement
of release of
shares held by
EBT 30 - (609) - 609 - -
Restated balance
as at 1 April
2021 50 1,809 26 24,914 26,799 26,799
Profit and total
comprehensive
income for the
year - - - 8,631 8,631 8,631
Dividends paid 9 - - - (6,512) (6,512) (6,512)
Own shares acquired
by EBT - - - (5,807) (5,807) (5,807)
Restatement of
release of shares
held by EBT 30 - - - 1,838 1,838 1,838
Restatement of
share-based payment
reserve movement 30 - - - 981 981 981
------------------------ --- ------------- ------- ---------- -------- ------------ -------
Transactions
with shareholders - - - (9,500) (9,500) (9,500)
------------------------ --- ------------- ------- ---------- -------- ------------ -------
Restated balance
as at 31 March
2022 50 1,809 26 24,045 25,930 25,930
------------------------ --- ------------- ------- ---------- -------- ------------ -------
The notes below are an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 March 2023
Note 2023 2022
GBP'000 GBP'000
------------------------------------------------------------------------- ---- -------- --------
Profit after tax 11,339 8,631
Adjustments for:
Depreciation of right -- of -- use assets 12 375 489
Depreciation of property, plant and equipment 13 285 357
Amortisation of intangible assets 11 135 192
Loss on asset disposals 11 -
Share-based payments 916 559
Decrease in other non-cash items(1) 1,780 877
Finance income (181) (44)
Finance expense 55 23
Tax expense 7 3,259 2,225
Changes in working capital
(Increase) in receivables (4,490) (1,877)
Increase in payables 1,290 1,296
(Decrease) in provisions (78) -
Cash inflow from operating activities 14,696 12,728
Corporation tax paid (2,433) (1,373)
------------------------------------------------------------------------- ---- -------- --------
Net cash inflow from operating activities 12,263 11,355
------------------------------------------------------------------------- ---- -------- --------
Purchase of intangible assets 11 (964) (334)
Purchase of property, plant and equipment 13 (272) (75)
Purchase of investments (3,570) (1,773)
Payment to seed fund holders - (1,808)
Redemption of bonds 1,607 1,462
Redemption of investments 881 -
Purchase/(disposal) of money market instruments with maturity > 3 months 9,363 (983)
Interest received 181 44
Net cash inflow/(outflow) from investing activities 7,226 (3,467)
Cash flow from financing activities
Lease principal payments 12 (315) (540)
Lease interest payments 12 (55) (17)
Purchase of own shares (3,572) (4,462)
Dividends paid to equity shareholders 9 (9,095) (6,512)
Net cash outflow from financing activities (13,037) (11,531)
Net increase/(decrease) in cash and cash equivalents in the year 6,452 (3,643)
Exchange gains 151 141
------------------------------------------------------------------------- ---- -------- --------
Cash and cash equivalents at the beginning of the year 3,345 6,847
------------------------------------------------------------------------- ---- -------- --------
Cash and cash equivalents at the end of the year 9,948 3,345
Closing cash and cash equivalents consist of:
Cash 6,405 3,345
Cash equivalents 3,543 -
------------------------------------------------------------------------- ---- -------- --------
Cash and cash equivalents 18 9,948 3,345
------------------------------------------------------------------------- ---- -------- --------
1. Other non-cash items include GBP2,473k release of shares held
by Employee Benefit Trust and other share movements (2022:
GBP624k), GBP175k unrealised gains in derivatives (2022: GBP340k
loss), GBP147k foreign exchange gains (2022: GBP137k gain) and
GBP371k unrealised gains in investments (2022: GBP50k loss).
The notes below are an integral part of these consolidated
financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 March 2023
2023 2022
Note GBP'000 GBP'000
------------------------------ ---- ------- -------
Non -- current assets
Right -- of -- use assets 12 871 1,232
Property, plant and equipment 99 -
Investments 14 9,062 5,029
Deferred tax - 1
Total non -- current assets 10,032 6,262
Current assets
Corporation tax 16 3
Trade and other receivables 16 2,428 3,522
Cash and cash equivalents 18 213 43
Total current assets 2,657 3,568
Total assets 12,689 9,830
Current liabilities
Trade and other payables 19 (4,955) (4,161)
Lease liabilities 12 (251) (326)
Provisions - (75)
Total current liabilities (5,206) (4,562)
Non-current liabilities
Lease liabilities 12 (583) (812)
Deferred tax liabilities (11) -
Provisions 20 (122) (125)
Total non-current liabilities (716) (937)
Total net assets 6,767 4,331
Equity
Issued share capital 21 50 50
Share premium account 1,809 1,809
Capital redemption reserve 26 26
Retained earnings 4,882 2,446
------------------------------ ---- ------- -------
Total equity 6,767 4,331
------------------------------ ---- ------- -------
The Company's total comprehensive income for the year (which is
principally derived from intra-group dividends) was GBP10,614,915
(2022: GBP4,558,705).
Approved by the Board on 29 June 2023. Company registered
number: 1927640.
The notes below are an integral part of these consolidated
financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 31 March 2023
Share Capital Total
Called -- premium redemption Retained shareholders'
up
Share capital account reserve earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ----- ------------- -------- ---------- -------- -------------
As at 1 April 2022 50 1,809 26 2,446 4,331
Profit and total
comprehensive income
for the year - - - 10,615 10,615
Dividends paid 9 - - - (9,095) (9,095)
Share option reserve
movement - - - 916 916
Transactions with
shareholders - - - (8,179) (8,179)
------------------------- ----- ------------- -------- ---------- -------- -------------
As at 31 March 2023 50 1,809 26 4,882 6,767
------------------------- ----- ------------- -------- ---------- -------- -------------
Year ended 31 March 2022
Share Capital Total
Called -- premium redemption Retained shareholders'
up
Share capital account reserve earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ----- ------------- -------- ---------- -------- -------------
As at 1 April 2021 50 1,809 26 3,843 5,728
Profit and total
comprehensive income
for the year - - 4,559 4,559
Dividends paid 9 - - - (6,512) (6,512)
Share option reserve
movement - - - 556 556
Transactions with
shareholders - - - (5,956) (5,956)
------------------------- ----- ------------- -------- ---------- -------- -------------
As at 31 March 2022 50 1,809 26 2,446 4,331
------------------------- ----- ------------- -------- ---------- -------- -------------
The notes below are an integral part of these consolidated
financial statements.
COMPANY STATEMENT OF CASH FLOWS
Year ended 31 March 2023
Restated(1)
2023 2022
Note GBP'000 GBP'000
----------------------------------------------------------------- ---- -------- -----------
Profit after tax 10,615 4,559
Adjustments for:
Depreciation of right -- of -- use assets 12 338 453
Depreciation of property, plant and equipment 17 -
Decrease/(Increase) in other non-cash items(2) (155) 45
Finance income (1) -
Finance expense 43 16
Tax expense/(income) 5 (19)
Dividends received from subsidiaries (10,500) (4,600)
Changes in working capital
Decrease/(Increase) in receivables 1,094 (2,134)
Increase in payables 794 2,470
(Decrease) in provisions (78) -
----------------------------------------------------------------- ---- -------- -----------
Cash inflow from operating activities 2,172 790
Corporation taxes (paid)/received (6) 37
----------------------------------------------------------------- ---- -------- -----------
Net cash inflow from operating activities 2,166 827
----------------------------------------------------------------- ---- -------- -----------
Cash flow from investing activities
Dividends received 10,500 4,600
Purchase of property, plant and equipment (116) -
Investment in subsidiaries - (325)
Investment in equity reserve of subsidiary (1,095) -
Purchase of investments (1,869) -
Payments to seed fund holders - 1,798
Interest received 1 -
----------------------------------------------------------------- ---- -------- -----------
Net cash inflow from investing activities 7,421 6,073
----------------------------------------------------------------- ---- -------- -----------
Net cash flow from financing activities
Lease principal payments 12 (280) (502)
Lease interest payments 12 (43) (16)
Dividends paid to equity shareholders (9,095) (6,512)
Net cash outflow from financing activities (9,418) (7,030)
Net increase/(decrease) in cash and cash equivalents in the year 170 (130)
FX revaluation - -
Cash and cash equivalents at the beginning of the year 43 173
Cash and cash equivalents at the end of the year 213 43
Closing cash and cash equivalents consist of:
Cash 213 43
----------------------------------------------------------------- ---- -------- -----------
Cash and cash equivalents 18 213 43
----------------------------------------------------------------- ---- -------- -----------
1. See note 31 for details of the presentational adjustment
resulting in the restatement of prior year.
2. Other non-cash items include unrealised movements in
investments and other foreign exchange movements.
The notes below are an integral part of these consolidated
financial statements.
Notes to the financial statements for the year ended 31 March
2023
These financial statements exclude disclosures that are both
immaterial and judged to be unnecessary to understand our results
and financial position.
1. Accounting policies
In order to provide more clarity to the notes to the financial
statements, accounting policy descriptions appear at the beginning
of the note to which they relate.
The principal accounting policies adopted in the preparation of
these consolidated financial statements are set out in the notes
below. These policies have been consistently applied to all periods
presented unless otherwise stated.
a. Accounting convention
Basis of preparation
The Group financial statements have been prepared in accordance
with UK adopted international accounting standards and the Company
and other Group entities' financial statements have also been
prepared in accordance with UK adopted international accounting
standards. The financial statements have been prepared on a
historical cost basis, modified to include fair valuation of
derivative financial instruments. Investments are measured at fair
value through profit or loss.
The Directors are satisfied that the Company and the Group have
adequate resources with which to continue to operate for the
foreseeable future. In arriving at this conclusion, the Directors
have considered various assessments including both the impact of
the war in Ukraine, and that of the current high inflationary
environment on the Group, the market it operates in and its
stakeholders. These assessments show that the Group should be able
to operate at adequate levels of both liquidity and capital for at
least 12 months from the date of signing this report.
Consequently, the Directors have reasonable expectation that the
Group has adequate financial resources to continue operations for
at least 12 months from the date of signing the report, and
therefore have continued to adopt the going concern basis in
preparing the financial statements.
The preparation of financial statements in accordance with the
recognition and measurement principles set out in IFRSs requires
management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets
and liabilities, income and expenses. The bases for management
judgements, estimates and assumptions are discussed further in note
2.
Changes to international accounting policies
There were no new interpretations or standards which became
applicable during the year that were adopted by the Group.
Additionally, the Group has not early adopted any other
standard, interpretation or amendment that has been issued but is
not yet effective at the year-end date.
b. Basis of consolidation
The consolidated financial information contained within the
financial statements incorporates financial statements of the
Company and its subsidiaries drawn up to 31 March 2023.
Subsidiaries are entities controlled by the Company and are
included from the date that control commences until the date that
control ceases. Control is achieved where the Company is exposed to
or has rights over variable returns from its involvement with the
entity and it has the power to affect returns. The Group has
applied UK adopted IFRSs for periods commencing on or after January
2022.
An Employee Benefit Trust has been established for the purposes
of satisfying certain share-based awards. As the Group has "de
facto" control over this special purpose entity, the trust is fully
consolidated within the financial statements.
Where the Group controls an entity, but does not own all the
share capital of that entity, the interest of the other
shareholders' non-controlling interests is stated within equity at
the non-controlling interests' proportion of the fair value of the
recognised assets and liabilities. In the case of the funds
controlled by the Group, the interests of any external investors in
such funds are recognised as a financial liability as investments
in the fund are not considered to be equity instruments.
The financial statements of subsidiary undertakings, which are
prepared using uniform accounting policies, are coterminous with
those of Record plc, referred to as the "Company".
The Company is taking advantage of the exemption under the
Companies Act 2006 s408(1) not to present its individual statement
of comprehensive income and related notes that form part of the
financial statements. The Company and its subsidiaries are
collectively referred to as the Group; the Group's total
comprehensive income for the year includes a profit of
GBP10,614,915 attributable to the Company (2022: GBP4,558,705). The
Company's principal activity is that of a holding company.
All intra -- group transactions, balances, income, expenses and
dividends are eliminated on consolidation.
c. Foreign currencies
The financial statements are presented in sterling (GBP), which
is the functional currency of the parent company. Foreign currency
transactions are translated into the functional currency of the
parent company using prevailing exchange rates which are updated on
a monthly basis. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the remeasurement of
monetary items at year -- end exchange rates are recognised in the
statement of comprehensive income under "other income or
expense".
d. Administrative expenses
Administrative expense includes staff costs, marketing and IT
costs, which are recognised on an accruals basis as services are
provided to the Group.
e. Financial instruments
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
financial instrument. Financial assets are derecognised when the
contractual rights to the cash flows from the financial assets
expire, or when the financial asset and all substantial risks and
rewards are transferred. A financial liability is derecognised when
it is extinguished, discharged, cancelled or expires.
f. Impairment of assets
The Group assesses whether there is any indication that any of
its assets have been impaired at least annually. If such an
indication exists, the asset's recoverable amount is estimated and
compared to its carrying value.
An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. Impairment
losses are recognised in profit or loss.
g. Provisions and contingent liabilities
Provisions are recognised when present obligations as a result
of a past event will probably lead to an outflow of economic
resources from the Group and amounts can be estimated reliably.
Timing or amount of the outflow may still be uncertain. A present
obligation arises from the presence of a legal or constructive
commitment that has resulted from past events.
Provisions are measured at the estimated expenditure required to
settle the present obligation, based on the most reliable evidence
available at the reporting date, including the risks and
uncertainties associated with the present obligation. Provisions
are discounted to their present values, where the time value of
money is material. Any reimbursement that the Group can be
virtually certain to collect from a third party with respect to the
obligation is recognised as a separate asset. However, this asset
may not exceed the amount of the related provision.
All provisions are reviewed at each reporting date and adjusted
to reflect the current best estimate. In those cases where the
possible outflow of economic resources as a result of present
obligations is considered improbable or remote, no liability is
recognised.
h. Equity
Share capital represents the nominal (par) value of shares that
have been issued. Share premium includes any premium received on
issue of share capital. From time to time, the Group has bought in
ordinary shares for cancellation. The cost of the buy-ins was taken
directly to retained earnings. The nominal value of the shares was
taken to a capital redemption reserve. Retained earnings includes
all current and prior period retained profits and share-based
employee remuneration. All transactions with owners of the parent
are recorded separately within equity.
2. Critical accounting estimates and judgements
In order to prepare the financial statements in accordance with
IFRS, management make certain critical accounting estimates.
Management are also required to exercise judgement in the process
of applying the Group's accounting policies and in determining the
reported amount of certain assets and liabilities.
The estimates and associated assumptions are based on historical
experience and various other factors including expectations of
future events that are believed to be reasonable under the
circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. As a consequence, actual
results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision
affects both current and future periods.
Sources of estimation uncertainty
Management recognise that the use of estimates is important in
calculating both the fair value of share options offered by the
Group to its employees (see note 22) and deferred tax (see note
15), however the sources of estimation uncertainty do not present a
significant risk of material adjustment to the carrying amounts of
assets or liabilities within the next financial year in either
case.
Calculation of leased assets and liabilities requires the use of
both estimation and judgement. The identification of an appropriate
discount rate to use in the calculation of the lease liability
involves both estimation and judgement. Where the lease's implicit
rate is not readily determinable, an incremental borrowing rate
must be calculated by the Group. The discount rate used has a
direct effect on the size of the lease liability capitalised and
although this has been included as an area where the use of
estimation and judgement in note 12 is important, it is unlikely to
materially impact the Group. Intangible assets are written down in
accordance with the Group's amortisation policy. The assets are
reviewed by management to ensure the amortisation period is
appropriate. Investments are revalued monthly at market value as
far as possible. Inputs used in determining fair value measurements
are categorised into different levels based on how observable the
inputs used in the valuation are, as disclosed in note 24. Any
potential impairments would be written down as and when the Group
is notified.
3. Segmental analysis
The Directors, who together are the entity's Chief Operating
Decision Maker, consider that its services for FY-23 and prior
years comprise one operating segment (being the provision of
currency and derivatives management services) and that it operates
in a market that is not bound by geographical constraints. The
Group provides Directors with revenue information disaggregated by
product, whilst operating costs, assets and liabilities are
presented on an aggregated basis. This reflects the unified basis
on which the products are marketed, delivered and supported.
Revenue analysed by product is provided in note 4.
Looking ahead to the current financial year (FY-24), the Group
expects its diversification into asset management will result in an
alternative revenue stream (i.e. Asset Management as opposed to
Currency Management). This will represent a different operating
segment and will be reported separately from FY-24.
4. Revenue
Revenue recognition
Revenue comprises the fair value of the consideration received
or receivable for the provision of currency management services.
Our revenues typically arise from charging management fees,
performance fees and other currency services income and are
accounted for in accordance with IFRS 15 - "Revenue from Contracts
with Customers".
Management fees and other currency services income are recorded
on a monthly basis as the service occurs; there are no other
performance obligations (excluding standard duty of care
requirements). Management fees are calculated as an agreed
percentage of the Assets Under Management Equivalents ("AUME")
denominated in the client's chosen base currency. The percentage
varies depending on the nature of services and the level of AUME.
Management fees are typically invoiced to the customer quarterly
with receivables recognised for unpaid invoices. Fees are
recognised on a monthly based on the agreed fee rate and AUME over
the period.
The Group is entitled to earn performance fees from some clients
where the performance of the clients' mandates exceeds defined
benchmarks over a set time period, and are recognised when the fee
amount can be estimated reliably and it is highly probable that it
will not be subject to significant reversal.
Performance fee revenues are not considered to be highly
probable until the end of a contractual performance period and
therefore are not recognised until they crystallise, at which time
they are payable by the client and cannot be clawed back. There are
no other performance obligations or services provided which suggest
these have been earned either before or after crystallisation
date.
a. Revenue from contracts with customers
The following table provides a breakdown of revenue from
contracts with customers, with management fees analysed by product.
Other currency services income includes fees from signal hedging
and fiduciary execution.
2023 2022
Revenue by product type GBP'000 GBP'000
-------------------------------------------- ------- -------
Management fees
Passive Hedging 12,912 11,768
Dynamic Hedging 12,013 10,020
Currency for Return 6,789 5,513
Multi-product 6,584 6,782
Total management fee income 38,298 34,083
Performance fee income 5,805 499
Other services income 586 570
-------------------------------------------- ------- -------
Total revenue from contracts with customers 44,689 35,152
-------------------------------------------- ------- -------
Management fees are recognised at a point in time and are
invoiced typically on a quarterly basis, although Record may
invoice fees monthly for some of its larger clients. Performance
fees are recognised at a point in time and can be invoiced on a
quarterly, six-monthly or annual basis, as agreed with our
clients.
b. Geographical analysis
The geographical analysis of revenue is based on the destination
i.e. the location of the client to whom the services are provided.
All revenue originated in the UK. Other relates to a number of
regions that are individually immaterial.
2023 2022
Revenue by geographical region GBP'000 GBP'000
-------------------------------------- ------- -------
Management and performance fee income
UK 2,545 2,775
US 14,179 13,049
Switzerland 16,985 10,877
Europe (excluding UK and Switzerland) 9,339 6,926
Other 1,641 1,525
-------------------------------------- ------- -------
Total revenue 44,689 35,152
-------------------------------------- ------- -------
c. Major clients
During the year ended 31 March 2023, four clients individually
accounted for more than 10% of the Group's revenue. The four
largest clients generated revenues of GBP6.6 million, GBP6.3
million, GBP5.2 million and GBP4.9million in the year (2022: two
clients generated revenues of more than 10% totalling GBP4.9
million and GBP4.8 million in the year).
5. Operating profit
Operating profit for the year is stated after
charging/(crediting):
2023 2022
GBP'000 GBP'000
----------------------------------------------------------------------------------------------- ------- -------
Staff costs 20,412 16,479
Other staff-related costs 1,545 1,352
IT and technology 3,582 2,380
Professional fees 1,775 1,139
Occupancy 1,111 668
Depreciation of property, plant and equipment 285 357
Depreciation of leased property 375 489
Amortisation of intangibles 135 192
Auditor fees:
----------------------------------------------------------------------------------------------- ------- -------
Fees payable to the Group's auditor for the audit of the Company's annual accounts 134 72
Fees payable to the Group's auditor for the audit of subsidiary undertakings 191 103
----------------------------------------------------------------------------------------------- ------- -------
Auditor fees total 325 175
Fees payable to the Group's auditor and its associates for other services:
Audit-related assurance services required by law or regulation 6 5
Other non-audit services 15 12
Loss on forward FX contracts held to hedge cash flow 800 467
Loss on derivative financial instruments held by seed funds - 42
Other exchange losses/(gains) (289) (141)
Investment losses/(gains) (218) 4
----------------------------------------------------------------------------------------------- ------- -------
6. Staff costs
The average number of employees, including Directors, employed
by the Group during the year was:
2023 2022
--------------------- ---- ----
Corporate 6 6
Client relationships 13 14
Investment research 18 16
Operations 31 24
Risk management 5 5
Support 15 17
--------------------- ---- ----
Annual average 88 82
--------------------- ---- ----
The aggregate costs of the above employees, including Directors,
were as follows:
2023 2022
GBP'000 GBP'000
Wages and salaries 14,540 11,931
Social security costs 2,295 1,758
Pension costs 686 635
Other employment benefit costs 2,891 2,155
------------------------------- ------- -------
Aggregate staff costs 20,412 16,479
------------------------------- ------- -------
Other employment benefit costs include share -- based payments,
share option costs, and costs relating to the Record plc Share
Incentive Plan.
7. Taxation - Group
Current tax is the tax currently payable based on taxable profit
for the year. Current income tax assets and/or liabilities comprise
those obligations to, or claims from, fiscal authorities relating
to the current or prior reporting periods that are unpaid at the
reporting date. Current tax is payable on taxable profit, which
differs from profit or loss in the financial statements.
Calculation of current tax is based on tax rates and tax laws that
have been enacted or substantively enacted by the end of the
reporting period.
2023 2022
GBP'000 GBP'000
-------------------------------------------------- ------- -------
UK current year charge 2,961 2,006
Overseas taxes 64 56
Prior year adjustments 175 (88)
Current tax charge 3,200 1,974
Origination and reversal of temporary differences 76 (12)
Prior year adjustment (17) 240
Impact of change in tax rate for deferred tax - 23
Total deferred tax 59 251
-------------------------------------------------- ------- -------
Tax on profit on ordinary activities 3,259 2,225
-------------------------------------------------- ------- -------
The total charge for the year can be reconciled to the
accounting profit as follows:
2023 2022
GBP'000 GBP'000
------------------------------------------------------------------ ------- -------
Profit before taxation 14,598 10,856
Taxation at the standard rate of tax in the UK of 19% (2022: 19%) 2,774 2,062
Tax effects of:
Other disallowable expenses and non -- taxable income 164 (37)
Deferred tax asset not recognised on start-up entities 146 -
Higher tax rates on subsidiary undertakings 15 15
Prior year adjustment 160 162
Change in tax rates - 23
Total tax expense 3,259 2,225
The tax expense comprises:
Current tax expense 3,200 1,974
Deferred tax expense 59 251
------------------------------------------------------------------ ------- -------
Total tax expense 3,259 2,225
------------------------------------------------------------------ ------- -------
The standard rate of UK corporation tax for the year is 19%
(2022: 19%). A full corporation tax computation is prepared at the
year end. The actual charge as a percentage of the profit before
tax may differ from the underlying tax rate. Differences typically
arise as a result of capital allowances differing from depreciation
charged, and certain types of expenditure not being deductible for
tax purposes. Other differences may also arise. The rate increased
to 25% from 1 April 2023.
The tax charge for the year ended 31 March 2023 was 22% of
profit before tax (2022: 20%). Other temporary differences for the
year ended 31 March 2023 include the impact of deferred tax expense
of GBP59k (2022: expense of GBP251k).
8. Earnings per share
Basic earnings per share is calculated by dividing the profit
after tax for the financial year attributable to equity holders of
the parent by the weighted average number of ordinary shares in
issue during the year.
Diluted earnings per share is calculated as for the basic
earnings per share with a further adjustment to the weighted
average number of ordinary shares to reflect the effects of all
potential dilution.
There is no difference between the profit for the financial year
attributable to equity holders of the parent used in the basic and
diluted earnings per share calculations.
2023 2022
GBP'000 GBP'000
------------------------------------------------------------------------------------ ----------- -----------
Weighted average number of shares used in calculation of basic earnings per share 190,483,365 191,068,307
Effect of potential dilutive ordinary shares - share options 4,830,186 6,230,794
Weighted average number of shares used in calculation of diluted earnings per share 195,313,551 197,299,101
------------------------------------------------------------------------------------ ----------- -----------
pence pence
--------------------------- ----- -----
Basic earnings per share 5.95 4.52
Diluted earnings per share 5.81 4.37
--------------------------- ----- -----
The potential dilutive shares relate to the share options, JSOP
and LTIP awards granted in respect of the Group's Share Scheme (see
note 22). There were share options and JSOP awards in place at the
beginning of the year over 13,513,045 shares. During the year
3,607,836 share options were exercised, 633,125 JSOP awards vested
and a further 1,247,502 options lapsed or were forfeited. The Group
granted 3,810,000 share options and LTIP awards over 2,890,000
shares with a potentially dilutive effect during the year. Of the
14,724,582 share options, JSOP and LTIP awards in place at the end
of the period, 11,878,815 have a dilutive impact at the year
end.
9. Dividends
Ordinary, special and interim dividends are recognised in the
financial statements when paid. Final ordinary dividends are
required to be approved by shareholders.
The dividends paid by the Group during the year ended 31 March
2023 totalled GBP9,095,232 (4.77 pence per share), which comprised
a final dividend in respect of the year ended 31 March 2022 of
GBP3,420,850 (1.8 pence per share), a special dividend in respect
of the year ended 31 March 2022 of GBP1,748,435 (0.92 pence per
share) and an interim dividend for the year ended 31 March 2023 of
GBP3,925,947 (2.05 pence per share).
The dividends paid by the Group during the year ended 31 March
2022 totalled GBP6,511,887 (3.40 pence per share), which comprised
a final dividend in respect of the year ended 31 March 2021 of
GBP2,220,404 (1.15 pence per share), a special dividend in respect
of the year ended 31 March 2021 of GBP868,854 (0.45 pence per
share) and an interim dividend for the year ended 31 March 2022 of
GBP3,422,629 (1.80 pence per share).
For the year ended 31 March 2023, a final ordinary dividend of
2.45 pence per share has been proposed and a special dividend of
0.68 pence per share has been declared, totalling approximately
GBP4.7 million and GBP1.3 million respectively.
10. Retirement benefit obligations
The Group operates defined contribution pension plans for the
benefit of employees. The Group makes contributions to
independently administered plans, such contributions being
recognised as an expense when they fall due. The assets of the
schemes are held separately from those of the Group in
independently administered funds.
The Group is not exposed to the particular risks associated with
the operation of defined benefit plans and has no legal or
constructive obligation to make any further payments to the plans
other than the contributions due.
The pension cost charge disclosed in note 6 to the accounts
represents contributions payable by the Group to the funds.
11. Intangible assets
Intangible assets are shown at historical cost less accumulated
amortisation and impairment losses. Amortisation is charged to
profit or loss on a straight -- line basis over the estimated
useful lives of the intangible assets unless such lives are
indefinite. Amortisation is included within operating expenses in
the statement of comprehensive income. Intangible assets are
measured from the date they are available for use. Useful lives are
as follows:
-- Software - 2 to 5 years.
Amortisation periods and methods are reviewed annually and
adjusted if appropriate.
The Group's intangible assets comprise both purchased software
and the capitalised cost of software deployment. No internal costs
of software development are capitalised. Internal software costs,
which would represent attributable employee costs, would be
capitalised if they meet the IAS 38 criteria. The carrying amounts
can be analysed as follows:
Software Total
2023 GBP'000 GBP'000
-------------------- -------- -------
Cost
At 1 April 2022 1,475 1,475
Additions 964 964
Disposals (119) (119)
At 31 March 2023 2,320 2,320
-------------------- -------- -------
Amortisation
At 1 April 2022 913 913
Charge for the year 135 135
Disposals (118) (118)
At 31 March 2023 930 930
-------------------- -------- -------
Net book amounts
At 31 March 2023 1,390 1,390
-------------------- -------- -------
At 1 April 2022 562 562
-------------------- -------- -------
Software Total
2022 GBP'000 GBP'000
-------------------- -------- -------
Cost
At 1 April 2021 1,141 1,141
Additions 334 334
-------------------- -------- -------
At 31 March 2022 1,475 1,475
-------------------- -------- -------
Amortisation
At 1 April 2021 721 721
Charge for the year 192 192
-------------------- -------- -------
At 31 March 2022 913 913
-------------------- -------- -------
Net book amounts
At 31 March 2022 562 562
-------------------- -------- -------
At 1 April 2021 420 420
-------------------- -------- -------
The annual contractual commitment for the maintenance and
support of the above software is GBP207,253 (2022: GBP396,710). All
amortisation charges are included within administrative
expenses.
12. Leases
The Group's lease arrangements consist of business premises
property leases. Rental contracts are typically made for fixed
periods between three to six years but they may have extension
and/or modification options. Lease terms are negotiated on an
individual basis and contain a wide range of different terms and
conditions. The lease agreements do not impose any covenants, but
leased assets cannot be used as security for borrowing
purposes.
New and modified leases have been recognised as a right-of-use
asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease payment is
allocated between the liability and finance cost. The finance cost
is charged to profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Right-of-use assets include the
net present value of the lease payments less any lease incentives
receivable.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
Group's incremental borrowing rate is used, being the rate that the
Group would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic environment with
similar terms and conditions. As the Group has no borrowings it has
estimated the incremental borrowing rate based on interest rate
data available in the market, adjusted to reflect Record's
creditworthiness, the leased asset in question and the terms and
conditions of the lease. For those leases which existed prior to
the IFRS 16 transition date on 1 April 2019, a discount rate of 4%
was used in calculating the lease liability on transition.
The leases relevant to the twelve months ended 31 March 2023,
and the comparative period, are as described below:
On 7 September 2016, the Group signed a new lease on premises at
Second and Third Floors, Morgan House, Madeira Walk, Windsor, at an
annual commitment of GBP507,603, expiring on 1 September 2022. On
11 February 2022, the Group signed a lease on premises at Second
Floor, Morgan House, Madeira Walk, Windsor, at an annual commitment
of GBP267,900, expiring on 1 September 2026. The 1 September 2022
lease modification has been capitalised and discounted at a rate of
3.95%.
On 1 June 2017, the Group signed a five-year lease on premises
in Zürich, at an annual commitment of CHF 49,680. On 12 August
2021, the Group extended the lease to 1 June 2027, at an annual
commitment of CHF 49,680.
Record assesses whether a contract is, or contains, a lease at
the inception of the contract.
Right -- of -- use ("ROU") assets
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability;
-- any lease payments made at or before the commencement date,
less any lease incentives received;
-- any initial direct costs; and
-- an estimate of costs to be incurred to restore the assets to
the condition required by the terms and conditions of the
lease.
Depreciation is calculated on a straight-line basis over the
lease term and included within administration costs (note 5).
Net book value of right -- of -- use assets
Group Company
Year ended 31 March 2023 GBP'000 GBP'000
Net book value on transition at 1 April 2022 1,421 1,232
Valuation adjustment on lease modification (35) (23)
Depreciation (375) (338)
--------------------------------------------- ------- -------
Net book value at 31 March 2023 1,011 871
--------------------------------------------- ------- -------
Group Company
Year ended 31 March 2022 GBP'000 GBP'000
-------------------------------- ------- -------
Net book value at 1 April 2021 684 642
Addition 1,226 1,043
Depreciation (489) (453)
-------------------------------- ------- -------
Net book value at 31 March 2022 1,421 1,232
-------------------------------- ------- -------
Lease liabilities
Group Company
Year ended 31 March 2023 GBP'000 GBP'000
------------------------- ------- -------
Current 285 251
Non-current 694 583
Total lease liabilities 979 834
------------------------- ------- -------
Group Company
GBP'000 GBP'000
------------------------------------------- ------- -------
At 1 April 2022 1,326 1,138
Additions - -
Interest expense 55 41
Lease - principal payments (315) (280)
Lease - interest payments (55) (43)
Valuation adjustment on lease modification (35) (22)
Foreign exchange movements 3 -
------------------------------------------- ------- -------
At 31 March 2023 979 834
------------------------------------------- ------- -------
Group Company
Year ended 31 March 2022 GBP'000 GBP'000
------------------------- ------- -------
Current 366 326
Non-current 960 812
------------------------- ------- -------
Total lease liabilities 1,326 1,138
------------------------- ------- -------
Group Company
GBP'000 GBP'000
--------------------------- ------- -------
At 1 April 2021 638 597
Additions 1,226 1,042
Interest expense 17 16
Lease payments (540) (501)
Lease interest payments (17) (16)
Foreign exchange movements 2 -
--------------------------- ------- -------
At 31 March 2022 1,326 1,138
--------------------------- ------- -------
Lease payments
At 31 March 2023, the undiscounted operating lease payments on
an annual basis are as follows:
Maturity of lease liability at 31 March 2023
Group Company
GBP'000 GBP'000
----------------------------------------- ------- -------
Within 1 year 320 280
1-2 years 320 280
2-3 years 320 280
After 3 years 85 47
----------------------------------------- ------- -------
Total lease liability before discounting 1,045 887
----------------------------------------- ------- -------
The remainder of the movement in the lease liability relates to
non-cash movements. The lease term is determined as the
non-cancellable period of a lease, together with periods covered by
an option to extend the lease if the Group considers that exercise
of the option is reasonably certain.
13. Property, plant and equipment - Group
All property, plant and equipment assets are stated at cost less
accumulated depreciation. Depreciation of property, plant and
equipment is provided to write off the cost, less residual value,
on a straight -- line basis over the estimated useful life as
follows:
-- leasehold improvements - period from lease commencement to
the earlier of the lease termination date and the next rent review
date;
-- computer equipment - 2 to 5 years; and
-- fixtures and fittings - 4 to 6 years.
Residual values, remaining useful economic lives and
depreciation methods are reviewed annually and adjusted if
appropriate. Gains or losses on disposal are included in profit or
loss.
The Group's property, plant and equipment comprise leasehold
improvements, computer equipment and fixtures and fittings. The
carrying amount can be analysed as follows:
Leasehold Computer Fixtures
improvements equipment and fittings Total
2023 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------------ --------- ------------ -------
Cost
At 1 April 2022 693 1,056 293 2,042
Additions 116 148 8 272
Disposals (33) (181) (70) (284)
-------------------- ------------ --------- ------------ -------
At 31 March 2023 776 1,023 231 2,030
-------------------- ------------ --------- ------------ -------
Depreciation
At 1 April 2022 642 718 281 1,641
Charge for the year 68 204 13 285
Disposals (33) (170) (70) (273)
-------------------- ------------ --------- ------------ -------
At 31 March 2023 677 752 224 1,653
-------------------- ------------ --------- ------------ -------
Net book amounts
At 31 March 2023 99 271 7 377
At 1 April 2022 51 338 12 401
-------------------- ------------ --------- ------------ -------
Leasehold Computer Fixtures
improvements equipment and fittings Total
2022 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------------ --------- ------------ -------
Cost
At 1 April 2021 693 983 305 1,981
Additions - 73 2 75
Disposals - - (14) (14)
-------------------- ------------ --------- ------------ -------
At 31 March 2022 693 1,056 293 2,042
-------------------- ------------ --------- ------------ -------
Depreciation
At 1 April 2021 520 515 263 1,298
Charge for the year 122 203 32 357
Disposals - - (14) (14)
-------------------- ------------ --------- ------------ -------
At 31 March 2022 642 718 281 1,641
-------------------- ------------ --------- ------------ -------
Net book amounts
At 31 March 2022 51 338 12 401
-------------------- ------------ --------- ------------ -------
At 1 April 2021 173 468 42 683
-------------------- ------------ --------- ------------ -------
The Group's tangible non-current assets are located
predominantly in the UK.
14. Investments
Group Company
---------------- ----------------
2023 2202 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------------- ------- ------- ------- -------
Investment in subsidiaries at cost - - 2,069 2,069
Capitalised investment in respect of share-based payments - - 2,932 2,018
Investment in equity reserve of subsidiary - - 1,095 -
Investment in funds 2,530 1,070 1,965 942
Investment in impact bonds 770 2,177 - -
Other investments 1,601 200 1,001 -
Total direct investments 4,901 3,447 9,062 5,029
---------------------------------------------------------- ------- ------- ------- -------
Other investments includes GBP600k invested directly in the
share capital of start-up companies in the digital asset sector
(2022: GBP200k) through Record Digital. Also included is GBP1
million invested into a separate investment strategy to test the
viability of a potential new product offering in a diverse set of
alternative assets.
During the year, the Group signed commitments totalling $823,507
(GBP804,384), which were fully called up in the year. At the
beginning of the year, the Group had existing commitments of
$383,100 (GBP309,839) of which $78,100 (GBP63,165) was called up in
the year, leaving a balance of $305,000 (GBP246,674) which may or
may not be called up in future (see note 26: contingent liabilities
for further information).
Company
Investments in subsidiaries
Investments in subsidiaries are shown at cost less impairment
losses. The capitalised investment in respect of share -- based
payments offered by subsidiaries is equal to the cumulative fair
value of the amounts payable to employees recognised as an expense
by the subsidiary.
2023 2022
GBP'000 GBP'000
------------------------------------------------------------------- ------- -------
Investment in subsidiaries (at cost)
Record Currency Management Limited 10 10
Record Group Services Limited 10 10
Record Portfolio Management Limited 10 10
Record Currency Management (US) Inc. - -
Record Currency Management (Switzerland) GmbH 16 16
Record Digital Asset Ventures Limited 2,000 2,000
Record Asset Management GmbH 23 23
Record Fund Management Limited - -
N P Record Trustees Limited - -
------------------------------------------------------------------- ------- -------
Total investment in subsidiaries (at cost) 2,069 2,069
------------------------------------------------------------------- ------- -------
Capitalised investment in respect of share -- based payments
Record Group Services Limited 2,530 1,801
Record Currency Management (US) Inc. 89 89
Record Currency Management (Switzerland) GmbH 316 129
------------------------------------------------------------------- ------- -------
Total capitalised investment in respect of share -- based payments 2,935 2,019
------------------------------------------------------------------- ------- -------
Total investment in subsidiaries 5,004 4,088
------------------------------------------------------------------- ------- -------
Particulars of subsidiary undertakings
Name Nature of business
---------------------------------------- -------------------------------------
Record Currency Management Limited Currency management services (FCA,
SEC and CFTC registered)
Record Group Services Limited Management services to other Group
undertakings
Record Currency Management (US) US advisory and service company
Inc. (SEC and CFTC registered)
Record Currency Management (Switzerland) Swiss advisory and service company
GmbH
Record Digital Asset Ventures Limited UK company investing in opportunities
linked to innovation and research
surrounding digital assets
Record Asset Management GmbH German advisory and service company
RAM Strategies GmbH German consultant and distribution
agent
Record Portfolio Management Limited Dormant
Record Fund Management Limited Dormant
N P Record Trustees Limited Dormant trust company
---------------------------------------- -------------------------------------
The Group's interest in the equity capital of subsidiary
undertakings is 100% of the ordinary share capital in all cases.
Record Currency Management (US) Inc. is incorporated in Delaware
(registered office: Corporation Service Company, 251 Little Falls
Drive, Wilmington, DE 19808), Record Currency Management
(Switzerland) GmbH is incorporated in Zürich (registered office:
Münsterhof 14, 8001 Zürich) and Record Asset Management GmbH and
RAM Strategies GmbH are incorporated in Germany (registered office:
Königsallee 92a, 40212 Düsseldorf). All other subsidiaries are
incorporated in the UK and have the registered office at Morgan
House , Madeira Walk, Windsor, Berkshire, SL4 1EP. All investments
in subsidiaries are directly held with the exception of RAM
Strategies which is held 100% indirectly through the Company's 100%
holding in Record Asset Management GmbH.
Capitalised investment in respect of share-based payments
The accounting treatment of capitalised investment in respect of
share-based payments can be found in note 22.
Group
Entities are consolidated on a line-by-line basis where the
Group has determined that a controlling interest exists through an
investment holding in the entity, in accordance with IFRS 10 -
"Consolidated Financial Statements". Otherwise, investments in
entities are measured at fair value through profit or loss.
15. Deferred taxation - Group
Deferred tax is the future tax consequences of temporary
differences between the carrying amounts and tax bases of assets
and liabilities shown on the statement of financial position. The
amount of deferred tax provided is based on the expected manner of
recovery or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the statement of financial position date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. The carrying amounts of the
deferred tax assets are reviewed at each statement of financial
position date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the asset to be recovered.
A deferred tax liability is generally recognised for all taxable
temporary differences.
Deferred tax assets or liabilities arising on goodwill are not
recognised but are however recognised on separately identifiable
intangible assets. Deferred tax arising on the initial recognition
of an asset or liability, other than a business combination, that
at the time of the transaction affects neither the accounting
profit or loss nor the taxable profit or loss, is not
recognised.
2023 2022
GBP'000 GBP'000
----------------------------------------------- ------- -------
Opening balance deferred tax asset/(liability) 253 212
Current year movement (72) (251)
----------------------------------------------- ------- -------
Prior year adjustment 14
----------------------------------------------- ------- -------
Deferred tax in Equity (61) 292
----------------------------------------------- ------- -------
Closing balance deferred tax asset/(liability) 134 253
----------------------------------------------- ------- -------
The deferred tax asset consists of the tax effect of temporary
differences in respect of:
2023 2022
GBP'000 GBP'000
----------------------------------------------------------------- ------- -------
Deferred tax allowance on unvested share options and LTIP awards 366 393
Excess of taxation allowances over depreciation on fixed assets (232) (140)
----------------------------------------------------------------- ------- -------
Total 134 253
----------------------------------------------------------------- ------- -------
At the year end there were share options and LTIP awards not
exercised with an intrinsic value for tax purposes of GBP1,937,599
(2022: GBP4,287,634). On exercise, the Group will be entitled to a
corporation tax deduction in respect of the difference between the
exercise price and the strike price. The Group has losses in
relation to overseas entities totalling GBP766k (2022: GBP438k)
which are available to carry forward against future profits. No
deferred tax asset has been recognised in respect of these in the
current or prior year as there is uncertainty as to when these
losses will be reversed. Deferred tax has been calculated based on
the future tax rate of 25% for differences from 1 April 2023. It is
subject to change if tax rates change in future years.
16. Trade and other receivables
Trade and other receivables are recognised initially at fair
value and subsequently measured at amortised cost using the
effective interest method, less loss allowances. The amortised cost
of trade and other receivables is stated at original invoice value,
as the interest that would be recognised from discounting future
cash receipts over the short credit period is not considered to be
material.
An analysis of receivables is provided below:
Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------- ------- ------- -------
Trade receivables 10,185 8,231 1,538 3,441
Accrued income 1,743 25 - -
Other receivables 685 497 26 38
Prepayments 1,760 1,130 864 43
------------------ ------- ------- ------- -------
Total 14,373 9,883 2,428 3,522
------------------ ------- ------- ------- -------
All amounts are short -- term. The Directors consider that the
carrying amount of trade and other receivables approximates to
their fair value. The Group has not renegotiated the terms of any
receivables in the year ended 31 March 2023. The Group's trade
receivables are generally short-term and do not contain significant
financing components.
The Group applies the IFRS 9 simplified approach to measuring
ECLs for trade receivables at an amount equal to lifetime ECLs. The
ECLs on trade receivables are calculated based on actual historic
credit loss experience over the preceding 25 years on the total
balance of non-credit impaired trade receivables, adjusted to
incorporate any relevant forward looking information. The Group has
therefore concluded that the ECLs for trade receivables are
reasonable. The Group does not expect to incur any credit losses
and has not recognised any ECLs in the current year (2022:
GBPnil).
Accrued income relates to accrued management and performance
fees earned but not yet invoiced.
17. Derivative financial assets and liabilities
Derivative financial instruments are initially recognised at
cost on the date on which the contract is first entered into,
unless the fair value at acquisition is different to cost, in which
case fair value is recognised. Subsequently they are measured at
fair value with gains and losses recognised in profit or loss.
Transaction costs are immediately recognised in profit or loss. The
fair values of derivative financial instruments are determined by
reference to active market transactions.
The Group holds derivative financial instruments for two
purposes. The Group uses forward foreign exchange contracts to
reduce the risk associated with assets denominated in foreign
currencies, and additionally uses both foreign exchange options and
forward foreign exchange contracts in order to achieve a return
within the seed funds. The instruments are recognised at fair
value. The fair value of the contracts is calculated using the
market rates prevailing at the period end date. The net gain or
loss on instruments is included within other income or expense.
2023 2022
Derivative financial assets GBP'000 GBP'000
--------------------------------------------------------------------------- ------- -------
Forward foreign exchange contracts held to hedge non-sterling-based assets 31 -
Forward foreign exchange contracts held for trading 23 -
--------------------------------------------------------------------------- ------- -------
Total 54 -
--------------------------------------------------------------------------- ------- -------
2023 2022
Derivative financial liabilities GBP'000 GBP'000
--------------------------------------------------------------------------- ------- -------
Forward foreign exchange contracts held to hedge non-sterling-based assets (5) (15)
Forward foreign exchange contracts held for trading - (109)
--------------------------------------------------------------------------- ------- -------
Total (5) (124)
--------------------------------------------------------------------------- ------- -------
Derivative financial instruments held to hedge
non-sterling-based assets
At 31 March 2023 there were outstanding contracts with a
principal value of GBP8,647,055 (31 March 2022: GBP9,085,804) for
the sale of foreign currencies in the normal course of business.
The fair value of the contracts is calculated using the market
forward contract rates prevailing at 31 March 2023. The Group does
not apply hedge accounting.
The net gain or loss on forward foreign exchange contracts held
to hedge non-sterling-based assets is as follows:
2023 2022
Derivative financial instruments held to hedge non-sterling-based assets GBP'000 GBP'000
------------------------------------------------------------------------------------ ------- -------
Net loss on forward foreign exchange contracts at fair value through profit or loss 800 467
------------------------------------------------------------------------------------ ------- -------
Derivative financial instruments held for trading
The Record - Currency Multi -- Strategy Fund may use a variety
of instruments including forward foreign exchange contracts,
options and futures in order to achieve a return.
All derivative financial instruments held by the Record -
Currency Multi-Strategy Fund were classified as held for trading
until termination in June 2021.
At 31 March 2023 there were outstanding contracts with a
principal value of GBPnil (31 March 2022: GBPnil).
The net gain or loss on derivative financial instruments held
for trading for the year was as follows:
2023 2022
Derivative financial instruments held to hedge non-sterling-based assets GBP'000 GBP'000
------------------------------------------------------------------------------------------ -------- -------
Net loss on forward foreign exchange contracts and foreign exchange options at fair value
through profit or loss - 42
------------------------------------------------------------------------------------------ -------- -------
18. Cash management
The Group's cash management strategy employs a variety of
treasury management instruments including cash, money market
deposits and treasury bills. Whilst the Group manages and considers
all of these instruments as cash, which are subject to its own
internal cash management process, not all of these instruments are
classified as cash or cash equivalents under IFRS.
IFRS defines cash and cash equivalents as cash in hand, on
demand and collateral deposits held with banks, and other short --
term highly liquid investments that are readily convertible to a
known amount of cash and are subject to an insignificant risk of
changes in value. Moreover, instruments can only generally be
classified as cash and cash equivalents where they are held for the
purpose of meeting short -- term cash commitments rather than for
investment or other purposes.
In the Group's judgement, bank deposits and treasury bills with
maturities in excess of three months do not meet the definition of
short -- term or highly liquid and are held for purposes other than
meeting short -- term commitments. In accordance with IFRS, these
instruments are not categorised as cash or cash equivalents and are
disclosed as money market instruments with maturities >3 months
from origination.
Group Company
---------------- ----------------
2023 2022 2023 2022
Assets managed as cash GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------- ------- ------- ------- -------
Bank deposits with maturities > 3 months 4,549 13,913 - -
Money market instruments with maturities > 3 months 4,549 13,913 - -
Cash 6,405 3,345 213 43
Cash equivalents 3,543 - - -
---------------------------------------------------- ------- ------- ------- -------
Cash and cash equivalents 9,948 3,345 213 43
---------------------------------------------------- ------- ------- ------- -------
Total assets managed as cash 14,497 17,258 213 43
---------------------------------------------------- ------- ------- ------- -------
Group Company
---------------- ----------------
2023 2022 2023 2022
Cash and cash equivalents GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- ------- ------- ------- -------
Cash and cash equivalents - sterling 6,632 1,169 212 43
Cash and cash equivalents - USD 821 450 1 -
Cash and cash equivalents - CHF 748 318 - -
Cash and cash equivalents - other currencies 1,747 1,408 - -
--------------------------------------------- ------- ------- ------- -------
Total cash and cash equivalents 9,948 3,345 213 43
--------------------------------------------- ------- ------- ------- -------
Details of how the Group manages credit risk are provided in
note 23.
19. Current liabilities
Trade and other payables are stated at their original invoice
value, as the interest that would be recognised from discounting
future cash payments over the short payment period is not
considered to be material.
Group Company
---------------- ----------------
2023 2022 2023 2022
Trade and other payables GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ------- ------- ------- -------
Trade payables 221 478 - -
Amounts owed to Group undertakings - - 4,953 4,155
Other payables - 16 - -
Other tax and social security 716 619 - -
Accruals 5,074 3,608 2 6
----------------------------------- ------- ------- ------- -------
Total 6,011 4,721 4,955 4,161
----------------------------------- ------- ------- ------- -------
Accruals include GBP3,637,640 for the Group Bonus Scheme (31
March 2022: GBP2,506,656). The Directors consider that the carrying
amount of trade and other payables approximates to their fair
value.
Group Company
---------------- ----------------
2023 2022 2023 2022
Current tax liabilities GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------- ------- ------- -------
Corporation tax 1,329 924 - -
------------------------ ------- ------- ------- -------
20. Provisions
The Group has provisions reflecting its contractual obligations
connected to reaching the end of its contractual lease terms.
Group Company
---------------- ----------------
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
----------- ------- ------- ------- -------
Provisions 122 200 122 200
----------- ------- ------- ------- -------
The provision relates to an obligation to pay for dilapidations
in connection with the Group's office lease on the second floor of
Morgan House, Windsor, further information for which is included in
note 12.
21. Issued share capital
The share capital of Record plc consists only of fully paid
ordinary shares with a par value of 0.025p each. All shares are
equally eligible to receive dividends and the repayment of capital
and represent one vote at the shareholders' meeting.
2023 2022
-------------------- --------------------
GBP'000 Number GBP'000 Number
-------------------------------------- ------- ----------- ------- -----------
Authorised
Ordinary shares of 0.025p each 100 400,000,000 100 400,000,000
-------------------------------------- ------- ----------- ------- -----------
Called -- up, allotted and fully paid
Ordinary shares of 0.025p each 50 199,054,325 50 199,054,325
-------------------------------------- ------- ----------- ------- -----------
Movement in Record plc shares held by the Record plc Employee
Benefit Trust ("EBT")
The EBT was formed to hold shares acquired under the Record plc
share -- based compensation plans. Under IFRS the EBT is considered
to be under de facto control of the Group, and has therefore been
consolidated into the Group financial statements.
Neither the purchase nor sale of own shares leads to a gain or
loss being recognised in the Group statement of comprehensive
income.
Number
-------------------------------------------------- ---------
Record plc shares held by EBT as
at 31 March 2021 6,296,657
Adjustment for net purchases by
EBT 3,335,374
-------------------------------------------------- ---------
Record plc shares held by EBT as at 31 March 2022 9,632,031
Adjustment for net purchases by EBT (897,029)
-------------------------------------------------- ---------
Record plc shares held by EBT as at 31 March 2023 8,735,002
-------------------------------------------------- ---------
The holding of the EBT comprises own shares that have not vested
unconditionally to employees of the Group. Own shares are recorded
at cost and are deducted from retained earnings.
Further information regarding the Record plc share -- based
compensation plans and relevant transactions made during the year
is included in note 22.
22. Share-based payments
During the year ended 31 March 2023 the Group has managed the
following share -- based compensation plans:
-- the Record plc Bonus Scheme (previously the Group Profit
Share Scheme): share awards issued under the Bonus Scheme are
classified as share -- based payments with cash alternatives under
IFRS 2;
-- the Record plc Share Scheme: share options issued under the
Record plc Share Scheme are classified as equity -- settled share
-- based payments under IFRS 2;
-- the Record plc Share Incentive Plan: the Group operates the
Record plc Share Incentive Plan ("SIP") to encourage more
widespread ownership of Record plc shares by employees. The SIP is
a tax -- approved scheme offering attractive tax savings for
employees retaining their shares in the scheme over the medium to
long term;
-- the Record plc Jointly Owned Share Plan: participants'
interests awarded under the Jointly Owned Share Plan ("JSOP") are
classified as equity-settled share-based payments under IFRS 2;
and
-- the Record Long-Term Incentive Plan: participants' interests
awarded under the Long-Term Incentive Plan ("LTIP") are classified
as equity-settled share-based payments under IFRS 2.
All obligations arising from the five schemes have been
fulfilled through purchasing shares in the market.
a. Bonus Scheme
Share-based payments with cash alternatives
These transactions are compound financial instruments, which
include a debt element and a cash element. The fair value of the
debt component of the amounts payable to the employee is calculated
as the cash amount alternative offered to the employee at grant
date and the fair value of the equity component of the amount
payable to the employee is calculated as the market value of the
share award at grant date less the cash forfeited in order to
receive the share award. The debt component is charged to profit or
loss over the period in which the award is earned and remeasured at
fair value at each reporting date. The equity component is charged
to profit or loss over the period in which the award is earned.
The Bonus Scheme allocates a proportion of operating profits to
a profit share pool to be distributed between all employees of the
Group. The Remuneration Committee has the discretion to vary the
proportion allocated to the Bonus pool between 25% and 35% of
operating profits. Directors and senior employees receive one-third
of their Bonus in cash, one-third in shares ("Earned Shares") and
may elect to receive the final third as cash only or to allocate
some, or all, of the amount for the purchase of Additional Shares.
The charge to profit or loss in respect of Earned Shares in the
period was GBP2,047,328 (2022: GBP1,463,802). Other employees
receive two-thirds of their profit share in cash and may elect to
receive the final third as cash only or to allocate some, or all,
of the amount for the purchase of Additional Shares.
All shares which are the subject of share awards vest
immediately and are transferred to a nominee, allowing the
employee, as beneficial owner, to retain full rights in respect of
the shares purchased. Shares awarded under the Bonus Scheme are
subject to restrictions over subsequent sale and transfer and these
restrictions are automatically lifted over one-third on each
anniversary of the profit share payment date for the next three
years. In the meantime, these shares cannot be sold, transferred or
otherwise disposed of without the consent of the Remuneration
Committee.
The Bonus Scheme rules contain clawback provisions allowing for
the repayment of Bonus payments under certain circumstances,
including a material breach of contract, an error in performance of
duties or a restatement of accounts which leads to a change in any
prior award under the scheme.
b. The Record plc Share Scheme
Equity -- settled share -- based payments
The fair value of the amounts payable to employees under these
awards is recognised as an expense over the vesting period of the
award, with a corresponding increase in equity. All such awards
made by the Group involve the parent company granting rights to its
equity instruments to employees of its subsidiary. Consequently,
the subsidiary measures the services received from its employees in
accordance with the above classification under IFRS 2 and
recognises a corresponding increase in equity as a contribution
from the parent. The parent has the obligation to settle the
transaction with the subsidiary's employees and therefore
recognises an increase in its investment in the subsidiary and a
corresponding increase in equity.
The fair value of options granted is measured at grant date
using an appropriate valuation model, taking into account the terms
and conditions upon which the instruments were granted including
any market or performance conditions, and using quoted share
prices.
The Record plc Share Scheme allows deferred share awards to be
granted to employees and Directors in the Record Group. Part 1 of
the scheme allows the grant of tax-unapproved ("Unapproved")
options to employees and Directors and Part 2 allows the grant of
HMRC tax-approved ("Approved") options to employees and Directors.
Each participant may be granted Approved options over shares with a
total market value of up to GBP30,000 on the date of grant. There
is no such limit on the value of grant for Unapproved options,
which have historically been granted with a market value exercise
price in the same way as for the Approved options.
Options over an aggregate of 3,810,000 shares were granted under
the Share Scheme during the year (2022: 3,747,500), of which
options over 814,000 shares were granted as Approved options and
options over 2,996,000 shares were granted as Unapproved options
(2022: 195,000 granted as Approved options and 3,552,500 granted as
Unapproved options). All Approved and Unapproved options were
granted with an exercise price per share equal to the share price
prevailing at the time of grant.
The 588,000 Approved options issued to employees on 13 May 2022
all become exercisable on the fourth anniversary of the date of
grant, subject to the employee being in employment with the Group
at the relevant vesting date and to the extent performance
conditions have been satisfied.
The 2,052,000 Unapproved options issued to employees on 13 May
2022 each become exercisable in four equal tranches on the first,
second, third and fourth anniversary of the date of grant, subject
to the employee being in employment with the Group at the relevant
vesting date and to the extent performance conditions have been
satisfied.
The 26,000 Approved options issued to employees on 29 June 2022
all become exercisable on the fourth anniversary of the date of
grant, subject to the employee being in employment with the Group
at the relevant vesting date and to the extent performance
conditions have been satisfied.
The 199,000 Unapproved options issued to employees on 29 June
2022 each become exercisable in four equal tranches on the first,
second, third and fourth anniversary of the date of grant, subject
to the employee being in employment with the Group at the relevant
vesting date and to the extent performance conditions have been
satisfied.
The 50,000 Approved options issued to employees on 2 August 2022
all become exercisable on the fourth anniversary of the date of
grant, subject to the employee being in employment with the Group
at the relevant vesting date and to the extent performance
conditions have been satisfied.
The 70,000 Unapproved options issued to employees on 3 August
2022 each become exercisable in four equal tranches on the first,
second, third and fourth anniversary of the date of grant, subject
to the employee being in employment with the Group at the relevant
vesting date and to the extent performance conditions have been
satisfied.
The 150,000 Approved options issued to employees on 27 January
2023 all become exercisable on the fourth anniversary of the date
of grant, subject to the employee being in employment with the
Group at the relevant vesting date and to the extent performance
conditions have been satisfied.
The 675,000 Unapproved options issued to employees on 27 January
2023 each become exercisable in four equal tranches on the first,
second, third and fourth anniversary of the date of grant, subject
to the employee being in employment with the Group at the relevant
vesting date and to the extent performance conditions have been
satisfied.
The fair value of the services provided by employees has been
calculated indirectly by reference to the fair value of the equity
instruments granted. Fair value amounts for the options granted in
the year ended 31 March 2023, and for which a charge to profit or
loss was made in the year, were determined using a Black-Scholes
option-pricing method and the following assumptions:
Weighted
Model input average value
---------------------------- -------------
Share price 76.0p
Dividend yield 7.21%
Exercise price 76.0p
Expected volatility 48%
Option life 3 years
Risk-free interest rate (%) 2.7%
---------------------------- -------------
Expected volatility is based on historical volatility.
The Group share -- based payment expense in respect of the Share
Scheme was GBP569,136 for the year ended 31 March 2023 (2022:
GBP530,779).
Outstanding share options
At 31 March 2023, the total number of ordinary shares of 0.025p
outstanding under Record plc share compensation schemes was
10,560,207 (2022: 11,605,545). These deferred share awards and
options are over issued shares, a proportion of which are hedged by
shares held in an EBT. Details of outstanding share options awarded
to employees are set out below:
Earliest Latest
At 1 April Lapsed/ At 31 vesting vesting Exercise
March
Date of 2022 Granted Exercised forfeited 2023 date date(1) price
grant
------------- ---------- --------- ----------- ----------- ---------- -------- -------- -----------
26/01/18 155,000 - (155,000) - - 26/01/22 26/01/22 GBP0.4350
26/01/18 5,125 - (5,125) - - 26/01/20 26/01/22 GBP0.4350
26/01/18 17,334 - - (17,334) - 26/01/21 26/01/23 GBP0.4350
26/01/18 644,336 - - (644,336) - 26/01/21 26/01/23 GBP0.4350
29/03/19 460,000 - (460,000) - - 29/03/23 29/03/23 GBP0.2830
29/03/19 185,000 - (92,500) - 92,500 29/03/20 29/03/23 GBP0.2830
21/08/19 1,985,000 - (330,836) (330,832) 1,323,332 21/08/22 21/08/24 GBP0.3110
18/03/20 1,237,500 - (475,000) - 762,500 18/03/21 18/03/24 GBP0.28902
21/09/20 2,818,750 - (1,106,250) - 1,712,500 21/09/21 21/09/24 GBP0.3730
25/01/21 225,000 - (75,000) - 150,000 25/01/22 25/01/25 GBP0.49425
09/03/21 125,000 - (31,250) - 93,750 09/03/22 09/03/25 GBP0.63986
13/08/21 195,000 - - (35,000) 160,000 13/08/25 13/08/25 GBP0.85713
13/08/21 2,600,000 - (650,000) - 1,950,000 13/08/22 13/08/25 GBP0.4000
13/08/21 952,500 - (226,875) (45,000) 680,625 13/08/22 13/08/25 GBP0.85713
13/05/22 - 588,000 - - 588,000 13/05/26 13/05/26 GBP0.698708
13/05/22 - 2,052,000 - (75,000) 1,977,000 13/05/23 13/05/26 GBP0.698708
29/06/22 - 26,000 - - 26,000 29/06/26 29/06/26 GBP0.729609
29/06/22 - 199,000 - - 199,000 29/06/23 29/06/26 GBP0.729609
02/08/22 - 50,000 - (50,000) - 02/08/26 02/08/26 GBP0.717197
03/08/22 - 70,000 - (50,000) 20,000 03/08/23 03/08/26 GBP0.717197
27/01/23 - 150,000 - - 150,000 27/01/27 27/01/27 GBP0.972835
27/01/23 - 675,000 - - 675,000 27/01/24 27/01/27 GBP0.972835
------------- ---------- --------- ----------- ----------- ---------- -------- -------- -----------
Total
options 11,605,545 3,810,000 (3,607,836) (1,247,502) 10,560,207
------------- ---------- --------- ----------- ----------- ---------- -------- -------- -----------
Weighted
average
exercise
price of
options GBP0.41 GBP0.76 GBP0.39 GBP0.47 GBP0.54
------------- ---------- --------- ----------- ----------- ---------- -------- -------- -----------
1. Under the terms of the deeds of grants, options are
exercisable for twelve months following the vesting date.
During the year 3,607,836 options were exercised. The weighted
average share price at date of exercise was GBP0.81. At 31 March
2023, a total of 473,750 options had vested and were exercisable
(2022: 946,375). At 31 March 2023, the weighted average exercise
price of the options vested and exercisable was GBP0.31 (2022:
GBP0.35) and the weighted average contractual life was three years
(2022: two years).
Performance measures
Performance conditions attached to all options granted to Board
Directors differ to those granted for all other staff. All
Executive Director option awards are subject to a performance
condition and vest on each of the third, fourth and fifth
anniversaries of the date of grant subject to an earnings per share
("EPS") hurdle linked to the annualised EPS growth for the
respective three, four and five-year periods from grant. Vesting is
on a stepped basis, with 25% of each tranche vesting if EPS growth
over the relevant period is at least RPI plus 4% per annum,
increasing through 50%, 75% and with 100% vesting if EPS growth
exceeds RPI plus 13%, as shown in the table below. Options awarded
subject to EPS performance conditions are valued using a
Black-Scholes model, adjusted for the impact of the performance
conditions.
Percentage of
shares subject
to the award
Record's average EPS growth which vest
-------------------------------------- --------------
>RPI growth + 13% 100%
>RPI growth + 10%, =<RPI growth + 13% 75%
>RPI growth + 7%, =<RPI growth + 10% 50%
>RPI growth + 4%, =<RPI growth + 7% 25%
=<RPI growth + 4% 0%
-------------------------------------- --------------
Approved and Unapproved options issued to all other staff are
not subject to a Group performance measure.
Approved options issued to all other staff vest in full on the
fourth anniversary of the date of grant, subject to the employee
being employed with the Group at the relevant vesting date and to
the extent personal performance conditions have been satisfied.
Unapproved options issued to all other staff vest in four equal
tranches on the first, second, third and fourth anniversaries of
the date of grant, subject to the employee being employed with the
Group at the relevant vesting date and to the extent personal
performance conditions have been satisfied.
Clawback provisions
In addition to the performance measures above, both Approved and
Unapproved options granted to Executive Directors under the Share
Scheme are subject to clawback provisions. These provisions allow
the Remuneration Committee to adjust the number of shares that may
be, or were, acquired to be decreased if the Committee considers
that either a material breach of contract has arisen or in respect
of retrospective amendments required to calculations of the Group's
performance upon which vesting calculations were originally based.
The clawback provisions allow the Group to take various steps until
the clawback obligation is satisfied, including reduction of future
share option awards, transfer of shares back to the Group for nil
consideration, reduction of future payments under the Group Bonus
Scheme or payment of sales proceeds back to the Group.
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.
As an incentive to employees, the Group matches every two shares
bought by employees with a free matching share. During the year,
the Group awarded 31,039 matching shares (2022: 23,309 matching
shares) to employees. The expense charged in respect of the SIP was
GBP24,950 in the year ended 31 March 2023 (2022: GBP18,310).
There are no restrictions over shares issued under the Record
plc Share Incentive Plan.
d. The Record plc Jointly Owned Share Plan ("JSOP")
Equity-settled share-based payments
At inception the employee is required to pay the Employee
Benefit Trust ("EBT") for the market value of the participation
interest, and the employing subsidiary has agreed to bear the
expense of 50% of the amount due. The participation interest paid
over at inception is non-refundable, regardless of whether the
hurdle is reached. Therefore the amount paid by the employing
subsidiary is expensed at inception.
The fair value of the amounts payable to employees under JSOP
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 JSOP scheme allows a set number of ordinary shares to be
held jointly by the participant and the EBT. Under the terms of the
JSOP agreement, the participant holds the beneficial interest in
the future growth of the shares above the hurdle, whilst the
trustee is entitled to the value up to the hurdle; the hurdle being
the market price upon grant date. Upon vesting, the participant is
entitled to receive the growth in value of the shares above the
hurdle, which is settled in shares priced at market value on the
vesting date.
The fair value of the JSOP award is measured at grant date using
an appropriate valuation model, taking into account the terms and
conditions upon which the instruments were granted including any
performance conditions, and using quoted share prices.
No JSOP agreements were entered into during the year.
The Group share -- based payment expense in respect of the JSOP
scheme was GBP2,384 for the year ended 31 March 2023 (2022:
GBP28,438).
At 31 March 2023, the total number of ordinary shares of 0.025p
outstanding under the Record plc JSOP was 1,274,375. These shares
are jointly owned and are ring-fenced within the EBT. The JSOP
award vests immediately on the vesting date, and the participant is
entitled to any value over the hurdle; the trustee is then entitled
to the value up to the hurdle.
Earliest Latest
At 1 Lapsed/ At 31 vesting vesting
April March
Date of 2022 Granted Vested forfeited 2023 date date Hurdle
grant
-------------- --------- ------- --------- --------- --------- -------- -------- ----------
21/09/20 1,781,250 - (593,750) - 1,187,500 21/09/21 21/09/24 GBP0.37300
09/03/21 93,750 - (31,250) - 62,500 09/03/21 09/03/25 GBP0.63986
13/08/21 32,500 - (8,125) - 24,375 13/08/22 13/08/25 GBP0.85713
-------------- --------- ------- --------- --------- --------- -------- -------- ----------
Total
JSOP awards 1,907,500 - (633,125) - 1,274,375
-------------- --------- ------- --------- --------- --------- -------- -------- ----------
Weighted
average
exercise
price
of options GBP0.39 - GBP0.39 - GBP0.40
-------------- --------- ------- --------- --------- --------- -------- -------- ----------
There are no Directors' interests in the JSOP scheme. No
performance measures are attached to the JSOP.
During the year 633,125 shares over which a JSOP agreement had
been granted vested. The weighted average share price at the
vesting date was GBP0.75.
The JSOP scheme rules contain clawback provisions allowing
re-transfer of the participant's interest and/or any vested shares
for nil consideration under certain circumstances including a
material breach of contract or an error in performance of
duties.
e. The Record plc Long-Term Incentive Plan ("LTIP")
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 LTIP awards granted is measured at grant date
using an appropriate valuation model, taking into account the terms
and conditions upon which the instruments were granted including
any market or performance conditions, and using quoted share
prices.
The Record plc LTIP scheme started in April 2022, and allows
nil-cost options to be granted to employees and Directors in the
Record Group.
LTIP awards over an aggregate of 2,890,000 shares were granted
under the LTIP scheme during the year (2022: nil). All will vest on
31 March 2025, 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 LTIP awards granted
in the year ended 31 March 2023, and for which a charge to profit
or loss was made in the year, were determined using a Black-Scholes
option-pricing method and the following assumptions:
Weighted
Model input average value
---------------------------- -------------
Share price 68.7p
Dividend yield 6.58%
Expected volatility 42.7%
LTIP award life 3 years
Risk-free interest rate (%) 3%
---------------------------- -------------
Expected volatility is based on historical volatility.
The Group share -- based payment expense in respect of the LTIP
scheme was GBP344,231 for the year ended 31 March 2023 (2022:
GBPnil).
Outstanding LTIP awards
At 31 March 2023, the total number of LTIP awards outstanding
under Record plc share compensation schemes was 2,890,000 (2022:
nil). These LTIP awards are over issued shares, a proportion of
which are hedged by shares held in an EBT. Details of outstanding
LTIP awards to employees are set out below:
Earliest Latest
At 1 April Lapsed/ At 31 March vesting vesting
Date of grant 2022 Granted Vested forfeited 2023 date date
------------------ ---------- --------- ------ --------- ----------- -------- --------
08/09/22 - 2,890,000 - - 2,890,000 31/03/25 31/03/25
------------------ ---------- --------- ------ --------- ----------- -------- --------
Total LTIP awards - 2,890,000 - - 2,890,000
------------------ ---------- --------- ------ --------- ----------- -------- --------
Performance measures
Performance conditions attached to all LTIP awards granted to
Board Directors are the same as to those granted for all other
staff. LTIP awards granted to Executive Directors and all other
staff vest after three years and vesting is subject to Record's
average annualised EPS growth and Total Shareholder Return ("TSR")
over the relevant period since grant as follows:
Two-thirds of the vesting for LTIP awards granted in September
2022 is subject to a three-year cumulative EPS threshold target of
15 pence, resulting in the EPS portion vesting at 25%, rising on a
straight-line basis to 100% vesting for a three-year cumulative EPS
of 18 pence at the end of the performance period.
One-third of the vesting for LTIP awards granted in September
2022 is subject to a relative TSR using a benchmark of the FTSE
Small Cap index. The threshold target for the TSR portion is a TSR
outcome in the 25th percentile of the index at which 25% of the TSR
portion will vest, rising on a straight-line basis to 100% of the
TSR portion at a TSR outcome in the 75% percentile of the
index.
A principal strategic objective of the business is to create
shareholder value for our investors over the long term. The Board
considers this to be delivered by consistent growth in earnings of
the business, and the chosen performance conditions and the EPS and
TSR outcome which determine the number of LTIP awards that
ultimately vest under the scheme rules reflect this.
The Directors' interests in the combined share schemes are as
follows:
Ordinary shares
held as at
------------------
31 March 31 March
2023 2022
------------------------------------------------------------- -------- --------
Record plc Group Bonus Scheme (interest in restricted share
awards)
Leslie Hill 591,284 467,296
Steve Cullen 44,896 57,422
------------------------------------------------------------- -------- --------
Record plc Share Scheme (interest in unvested share options)
Leslie Hill 383,333 668,334
Steve Cullen 173,333 301,668
------------------------------------------------------------- -------- --------
Record plc LTIP Scheme (interest in unvested LTIP awards)
Steve Cullen 325,000 -
------------------------------------------------------------- -------- --------
Clawback provisions
In addition to the performance measures above, LTIP awards
granted to Executive Directors under the Share Scheme are subject
to clawback provisions. These provisions allow the Remuneration
Committee to adjust the number of shares that may be, or were,
acquired to be decreased if the Committee considers that either a
material breach of contract has arisen or in respect of
retrospective amendments required to calculations of the Group's
performance upon which vesting calculations were originally based.
The clawback provisions allow the Group to take various steps until
the clawback obligation is satisfied, including reduction of future
share option awards, transfer of shares back to the Group for nil
consideration, reduction of future payments under the Bonus Scheme
or payment of sales proceeds back to the Group.
23. Financial risk management
The Group's current activities result in the following financial
risks and management responses to those risks in order to minimise
any resulting adverse effects on the Group's financial
performance.
Objectives, policies and processes for managing risk and the
methods used to measure the risk
Financial assets principally comprise trade receivables, accrued
income, other receivables, money market instruments, cash and cash
equivalents and derivative financial assets. Financial liabilities
comprise trade and other payables, financial liabilities relating
to investment in seed funds, lease liabilities and derivative
financial liabilities. The main risks arising from financial
instruments are credit risk, liquidity risk, foreign currency risk,
interest rate risk and concentration risk, each of which is
discussed in further detail below.
The Group monitors and mitigates financial risk on a
consolidated basis. The Group has implemented a framework to manage
the risks of its business and to ensure that the Directors have in
place risk management practices appropriate to a listed company.
The management of risk is directed by the Board and controlled and
reviewed by the Head of Business Risk.
The Company's material financial instruments are investments in
the seed funds, cash and cash equivalents, and balances due to/from
Group undertakings. Intercompany balances are classified as loans
and receivables and are repayable on demand. No interest is charged
on these balances. The Group has sufficient cash resources and
hence management does not believe that the Company has a material
exposure to credit risk. The Company's financial risk is managed as
part of the Group financial risk management process and therefore
separate disclosures for the Company have not been provided. Market
risk is not considered to have a material impact on financial
instruments, neither is it one of the Group's principal risks.
Credit risk
The Group has established a cash management team to manage Group
cash in accordance with an approved cash management policy. The
policy stipulates exposure limits by instruments, counterparty,
tenor and duration. Counterparty exposures are measured against
ratings published by credit -- rating agencies and are monitored
daily. The maximum single exposure to any counterparty under the
policy is 20% of total assets managed as cash.
The primary objective of the cash management team is to
diversify and manage counterparty risk within the risk appetite of
the Group and the limits set by the policy. The secondary objective
is to maintain yield given the constraints under the policy whilst
ensuring sufficient liquidity to meet future cash flow commitments
as instructed by the Finance team.
The Chief Financial Officer is responsible for reviewing the
Group's credit exposure and ensuring that any credit concerns are
raised to the Risk Management Committee and that action is taken to
mitigate these risks.
The quality of our clients and banking counterparties is
reflected in the business having not suffered from any credit
default for over 20 years through various market crises and cycles,
and we do not anticipate this changing under the current
circumstances.
The Group's maximum exposure to credit risk is as follows:
2023 2022
Financial assets at 31 March GBP'000 GBP'000
---------------------------------------------------- ------- -------
Trade receivables 10,185 8,231
Accrued income 1,743 25
Other receivables 685 497
Derivative financial assets 54 -
Money market instruments with maturities > 3 months 4,549 13,913
Cash and cash equivalents 9,948 3,345
---------------------------------------------------- ------- -------
Total financial assets 27,164 26,011
---------------------------------------------------- ------- -------
The debtors' age analysis is also evaluated on a regular basis
for expected credit losses. It is management's opinion that there
is no requirement to provide for any expected credit losses. The
table below is an analysis of trade receivables and accrued income
by due date:
Neither More than
Carrying impaired 0-3 months 3 months
nor
amount past due past due past due
At 31 March 2023 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- -------- ---------- ---------
Trade receivables 10,185 9,775 309 101
Accrued income 1,743 1,743 - -
------------------ -------- -------- ---------- ---------
Total 11,928 11,518 309 101
------------------ -------- -------- ---------- ---------
97% 2% 1%
------------------ -------- -------- ---------- ---------
Neither More than
Carrying impaired 0-3 months 3 months
nor
amount past due past due past due
At 31 March 2022 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- -------- ---------- ---------
Trade receivables 8,231 8,231 - -
Accrued income 25 25 - -
------------------ -------- -------- ---------- ---------
Total 8,256 8,256 - -
------------------ -------- -------- ---------- ---------
100% 0% 0%
------------------ -------- -------- ---------- ---------
The Group offers standard credit terms of 30 days from invoice
date. It is the Group's policy to assess debtors for expected loss
on an individual basis and to make a provision where it is
considered necessary. In assessing recoverability, the Group takes
into account any indicators of impairment up to the reporting date,
adjusting to incorporate any relevant forward looking information.
The application of this policy generally results in debts that are
past due not being provided for unless individual circumstances
indicate that a debt is impaired.
Trade receivables are made up of 113 debtors' balances (2022:
91). The largest individual debtor corresponds to 16% of the total
balance (2022: 16%). Debtor days, based on the generally accepted
calculation of debtor days, is 83 days (2022: 85 days). This
reflects the quarterly billing cycle used by the Group for the vast
majority of its fees. As at 31 March 2023, 3% of debt was overdue
(2022: 0%). No debtors' balances have been renegotiated during the
year or in the prior year.
Liquidity risk
The Group is exposed to liquidity risk, namely that it may be
unable to meet its payment obligations as they fall due. The Group
maintains sufficient cash and marketable securities to be able to
meet all such obligations. Management review cash flow forecasts on
a regular basis to determine whether the Group has sufficient cash
reserves to meet the future working capital requirements and to
take advantage of business opportunities. The average creditor
payment period is 9 days (2022: 28 days).
Contractual maturity analysis for financial liabilities
Due or due Due between Due between
Carrying in less than 1 and 3 months
amount 1 month 3 months and 1 year
At 31 March 2023 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- ------------ ----------- -----------
Trade payables 221 221 - -
Accruals 5,074 486 2,001 2,587
Derivative financial liabilities 5 - 5 -
--------------------------------- -------- ------------ ----------- -----------
Total 5,300 707 2,006 2,587
--------------------------------- -------- ------------ ----------- -----------
Due or due Due between Due between
Carrying in less than 1 and 3 months
amount 1 month 3 months and 1 year
At 31 March 2022 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- ------------ ----------- -----------
Trade payables 478 318 29 131
Accruals 3,608 302 1,503 1,803
Derivative financial liabilities 124 7 117 -
--------------------------------- -------- ------------ ----------- -----------
Total 4,210 627 1,649 1,934
--------------------------------- -------- ------------ ----------- -----------
Lease liabilities are not included within the table below,
please see note 12 for further details.
Interest rate risk
Interest rate risk is the risk that the value of a financial
instrument or cash flows associated with the instrument will
fluctuate due to changes in market interest rates. Interest rate
risk arises from interest-bearing financial assets and liabilities
held by the Group. Interest-bearing assets comprise money market
instruments and cash and cash equivalents which are considered to
be short -- term liquid assets. It is the Group's policy to settle
trade payables within the credit terms allowed and the Group does
not therefore incur interest on overdue balances.
A sensitivity analysis has not been disclosed for the impact of
interest rate changes as any reasonable range of change in interest
rate would not directly have a material impact on profit or
equity.
Interest rate profiles
No
Fixed rate interest Total
rate
At 31 March 2023 GBP'000 GBP'000 GBP'000
---------------------------------------------------------------------- ---------- -------- -------
Financial assets
Trade receivables - 10,185 10,185
Accrued income - 1,743 1,743
Other receivables - 685 685
Derivative financial assets at fair value through profit or loss - 54 54
Money market instruments with maturities > 3 months 4,549 - 4,549
Cash and cash equivalents 9,948 - 9,948
---------------------------------------------------------------------- ---------- -------- -------
Total financial assets 14,497 12,667 27,164
---------------------------------------------------------------------- ---------- -------- -------
Financial liabilities
Trade payables - (221) (221)
Accruals - (5,074) (5,074)
Lease liability - (979) (979)
Derivative financial liabilities at fair value through profit or loss - (5) (5)
---------------------------------------------------------------------- ---------- -------- -------
Total financial liabilities - (6,279) (6,279)
---------------------------------------------------------------------- ---------- -------- -------
No
Fixed rate interest Total
rate
At 31 March 2022 GBP'000 GBP'000 GBP'000
---------------------------------------------------------------------- ---------- -------- -------
Financial assets
Trade receivables - 8,231 8,231
Accrued income - 25 25
Other receivables - 497 497
Money market instruments with maturities > 3 months 13,913 - 13,913
Cash and cash equivalents 3,345 - 3,345
---------------------------------------------------------------------- ---------- -------- -------
Total financial assets 17,258 8,753 26,011
---------------------------------------------------------------------- ---------- -------- -------
Financial liabilities
Trade payables - (478) (478)
Accruals - (3,608) (3,608)
Lease liability - (1,326) (1,326)
Derivative financial liabilities at fair value through profit or loss - (124) (124)
---------------------------------------------------------------------- ---------- -------- -------
Total financial liabilities - (5,536) (5,536)
---------------------------------------------------------------------- ---------- -------- -------
Foreign currency risk
Foreign currency risk refers to the risk that the value of a
financial commitment or recognised asset or liability will
fluctuate due to changes in foreign currency rates. The Group makes
use of forward foreign exchange contracts to manage the risk
relating to future transactions in accordance with the Group's risk
management policy.
The Group is exposed to foreign currency risk on revenue
invoices and cash holdings that are denominated in a currency other
than sterling, and also on assets and liabilities held by the
Record Currency - Strategy Development Fund. The principal
currencies giving rise to this risk are the US dollar, the Swiss
franc, the euro and the Canadian dollar.
During the year ended 31 March 2023, the Group invoiced the
following amounts in currencies other than sterling:
2023 2022
------------------- -------------------
Local Value in Local Value in
currency reporting currency reporting
value currency value currency
GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- --------- -------- ---------
US dollar (USD) 24,978 20,869 23,949 17,742
Swiss franc (CHF) 16,138 14,223 12,460 10,010
Euro (EUR) 4,293 3,748 4,135 3,498
Canadian dollar (CAD) 1,618 1,014 1,626 960
Australian dollar (AUD) 1,089 612 1,029 563
Japanese yen (JPY) 8,795 54 4,824 31
Swedish krona (SEK) - - 36 3
Singapore dollar (SGD) - - 4 2
------------------------ -------- --------- -------- ---------
The value of revenues for the year ended 31 March 2023 that were
denominated in currencies other than sterling was GBP40.2 million
(31 March 2022: GBP32.8 million).
Record's policy is to reduce the risk associated with the
Group's revenues denominated in foreign currencies by using forward
fixed rate currency sales contracts, taking into account any
forecast foreign currency cash flows.
The settlement of these forward foreign exchange contracts is
expected to occur within the following three months. Changes in the
fair values of forward foreign exchange contracts are recognised
directly in profit or loss.
The cash denominated in currencies other than sterling (refer to
note 18) is covered by the Group's hedging process, therefore the
Directors consider that the foreign currency risk on cash balances
is not material.
Foreign currency risk - sensitivity analysis
The Group has considered the sensitivity to exchange rate
movements by considering the impact on those revenues, costs,
assets and liabilities denominated in foreign currencies as
experienced in the given period.
Impact on profit after Impact on total equity
tax as at 31 March
for the year ended
31 March
------------------------ ------------------------
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------ ----------- ----------- ----------- -----------
Sterling weakening by 10% against the dollar 1,000 871 1,000 871
Sterling strengthening by 10% against the dollar (1,000) (871) (1,000) (871)
Sterling weakening by 10% against the Swiss franc 755 445 755 445
Sterling strengthening by 10% against the Swiss franc (755) (445) (755) (445)
------------------------------------------------------ ----------- ----------- ----------- -----------
Sterling/US dollar exchange rate
The impact of a change of 10% has been selected as this is
considered reasonable given the current level of exchange rates and
the volatility observed on a historical basis and market
expectations for future movement. When applied to the average
sterling/USD exchange rate of GBP1 = $1.20 this would result in
sterling weakening to GBP1 = $1.09 and sterling strengthening to
GBP1 = $1.33.
Sterling/Swiss franc exchange rate
The impact of a change of 10% has been selected as this is
considered reasonable given the current level of exchange rates and
the volatility observed on a historical basis and market
expectations for future movement. When applied to the average
sterling/CHF exchange rate of GBP1 = CHF 1.13 this would result in
sterling weakening to GBP1 = CHF 1.03 and sterling strengthening to
GBP1 = CHF 1.26.
Sensitivity analyses have not been disclosed for other
currencies as any reasonable range of change in exchange rate would
not have a material impact on profit or equity.
Concentration risk
The Group is exposed to concentration risk in respect of
product, client type and geographical location, which could lead to
over-reliance on any one category of revenue. Note 4 provides
detail on clients contributing greater than 10% of revenue.
Mitigating activities are detailed in the Risk management
section.
Concentration risk - sensitivity analysis
The Group has considered the impact of losing the Group's
largest client, assuming that only variable remuneration costs can
be reduced in the short term.
Impact on profit after Impact on total equity
tax as at 31 March
for the year ended
31 March
------------------------ ------------------------
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ----------- ----------- ----------- -----------
Loss of largest client 3,486 2,594 3,486 2,594
----------------------- ----------- ----------- ----------- -----------
24. Fair value measurement
The following table presents financial assets and liabilities
measured at fair value in the consolidated statement of financial
position in accordance with the fair value hierarchy. This
hierarchy groups financial assets and liabilities into three levels
based on the significance of inputs used in measuring the fair
value of the financial assets and liabilities. The fair value
hierarchy has the following levels:
-- level 1: quoted prices (unadjusted) in active markets for
identical financial assets or liabilities;
-- level 2: inputs other than quoted prices included within
level 1 that are observable for the financial asset or liability,
indirectly (i.e. derived from prices); and
-- level 3: inputs for the financial asset or liability that are
not based on observable market data (unobservable inputs).
The level within which the financial asset or liability is
classified is determined based on the lowest level of input to the
fair value measurement. The financial assets and liabilities
measured at fair value in the statement of financial position are
grouped into the fair value hierarchy as follows:
2023 Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------------------------- ------- ------- ------- -------
Financial assets at fair value through profit or loss
Impact bonds 770 770 - -
Investment in funds 2,530 1,077 - 1,453
Other investments 1,601 1,001 - 600
Forward foreign exchange contracts held to hedge non-sterling assets 54 - 54 -
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts held to hedge non-sterling assets (5) - (5) -
Total 4,950 2,848 49 2,053
--------------------------------------------------------------------- ------- ------- ------- -------
2022 Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------------- ------- ------- ------- -------
Financial assets at fair value through profit or loss
Impact bonds 2,177 2,177 - -
Investment in funds 1,070 944 - 126
Other investments 200 - - 200
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts used by seed funds (15) - (15) -
Other investments (110) - (110) -
----------------------------------------------------------- ------- ------- ------- -------
Total 3,322 3,121 (125) 326
----------------------------------------------------------- ------- ------- ------- -------
There have been no transfers between levels in the reporting
period (2022: none).
Basis for classification of financial instruments classified as
level 1 within the fair value hierarchy
Impact bonds, listed funds and other listed investments are
classified as level 1. These investments are valued using market
prices and coupon rates as applicable.
Basis for classification of financial instruments classified as
level 2 within the fair value hierarchy
Forward foreign exchange contracts and options are both
classified as level 2. Both of these instruments are traded on an
active market. Options are valued using an industry standard model
with inputs based on observable market data whilst the fair value
of forward foreign exchange contracts may be established using
interpolation of observable market data rather than from a quoted
price.
Basis for classification of financial instruments classified as
level 3 within the fair value hierarchy
Direct investments in private funds and share capital of
start-up companies in the digital sector have been classified as
level 3. There is no observable market for these investments,
therefore fair value measurements have been derived from valuation
techniques that include inputs that are not based on observable
market data. The private funds are valued at net asset value in
accordance with independent professional valuation reports or
International Private Equity and Venture Capital Valuation
Guidelines where relevant. The direct investments in capital of the
start-up companies are valued at cost.
Classes and fair value of financial instruments
It is the Directors' opinion that the carrying value of all
financial instruments approximates to their fair value.
Categories of financial instrument
Financial Assets at Liabilities
at
Assets at liabilities fair value fair value
amortised measured through through profit
at
cost amortised profit or or loss
cost loss
At 31 March 2023 Note GBP'000 liabilities GBP'000 GBP'000
-------------------------------------------- ---- --------- ----------- ---------- --------------
Impact bonds 14 - - 770 -
Investment in funds 14 - - 2,530 -
Other investments 14 - - 1,601 -
Trade and other receivables (excludes
prepayments) 16 12,613 - - -
Money market instruments with maturities
> 3 months 18 4,549 - - -
Cash and cash equivalents 18 10,757 - - -
Derivative financial assets at
fair value through profit or loss 17 - - 54 -
Trade payables 19 - (221) - -
Accruals 19 - (5,074) - -
Derivative financial liabilities
at fair value through profit or
loss 17 - - - (5)
-------------------------------------------- ---- --------- ----------- ---------- --------------
Total 27,919 (5,295) 4,955 (5)
-------------------------------------------- ---- --------- ----------- ---------- --------------
Financial Assets at Liabilities
at
Assets at liabilities fair value fair value
amortised measured through through profit
at
cost amortised profit or or loss
cost loss
At 31 March 2022 Note GBP'000 liabilities GBP'000 GBP'000
-------------------------------------------- ---- --------- ----------- ---------- --------------
Impact bonds 14 - - 2,177 -
Investment in funds 14 - - 1,070 -
Other investments 14 - - 200 -
Trade and other receivables (excludes
prepayments) 16 8,753 - - -
Money market instruments with maturities
> 3 months 18 13,913 - - -
Cash and cash equivalents 18 3,345 - - -
Trade payables 19 - (478) - -
Accruals 19 - (3,608) - -
Derivative financial liabilities
at fair value through profit or
loss 17 - - - (124)
-------------------------------------------- ---- --------- ----------- ---------- --------------
Total 26,011 (4,086) 3,447 (124)
-------------------------------------------- ---- --------- ----------- ---------- --------------
25. Related parties transactions
Company
Details of transactions between the Company and other Group
undertakings, which are related parties of the Company, are shown
below:
Transactions with subsidiaries
The Company's subsidiary undertakings are listed in note 14,
which includes a description of the nature of their business.
2023 2022
GBP'000 GBP'000
------------------------------------- ------- -------
Amounts due to subsidiaries (3,415) (714)
Dividends received from subsidiaries 10,500 4,600
------------------------------------- ------- -------
Amounts due to subsidiaries consist of funds lent by the
subsidiaries to the Company to facilitate the Company's investing
activities. Amounts due to subsidiaries are disclosed as a net
amount, and consist of amounts owed to Group undertakings in note
19 and trade receivables in note 16. All amounts owed to and by
related parties will be settled in cash. No guarantees have been
given or received. No provisions for expected credit losses have
been raised against amounts outstanding (2022: GBPnil). No expense
has been recognised during the year in respect of expected credit
losses due from related parties.
Group
Transactions or balances between Group entities have been
eliminated on consolidation, and in accordance with IAS 24, are not
disclosed in this note.
Key management personnel compensation
2023 2022
GBP'000 GBP'000
-------------------------------- ------- -------
Short -- term employee benefits 10,311 8,457
Post -- employment benefits 327 330
Share -- based payments 3,539 2,467
-------------------------------- ------- -------
Total 14,177 11,254
-------------------------------- ------- -------
Key management personnel dividends
The dividends paid to key management personnel in the year ended
31 March 2023 totalled GBP4,073,511 (2022: GBP3,056,662).
Directors' remuneration
2023 2022
GBP'000 GBP'000
-------------------------------------------------------------------------------- ------- -------
Emoluments (excluding pension contribution) 3,580 2,809
Pension contribution (including payments made in lieu of pension contributions) 101 96
-------------------------------------------------------------------------------- ------- -------
Total 3,681 2,905
-------------------------------------------------------------------------------- ------- -------
During the year, no Directors of the Company (2022: none)
participated in the Group Personal Pension Plan, a defined
contribution scheme. Further detail on Directors' remuneration is
provided in the Remuneration report.
26. Contingent liabilities and commitments
The Group has committed to subscriptions to equity capital of
$1,791,870, of which $1,486,870 has been called.
On 20 January 2023, the Group committed to a licence to use an
office in London. The commitment is to 28 February 2025 and the
outstanding amount to be paid at 31 March 2023 was GBP1,628,225.
GBP836,060 is payable within twelve months and GBP864,180 within
the following twelve months.
A previous commitment on an office in London had been made on 1
October 2021, with the commitment being to 31 October 2023 and the
original outstanding amount to be paid between 1 April 2023 and 31
October 2023 being GBP352,800. However, this commitment ended on 28
February 2023, when it was replaced and superseded by the
commitment made on 20 January 2023.
27. Capital management
The Group's objectives when managing capital are (i) to
safeguard the Group's ability to continue as a going concern; (ii)
to provide an adequate return to shareholders; and (iii) to meet
regulatory capital requirements under the relevant jurisdictions
(FCA and BaFin).
The Group sets the amount of capital in proportion to risk. The
Group manages the capital structure and makes adjustments to it in
light of changes in economic conditions and the risk
characteristics of the underlying assets, while also continuing to
ensure that the minimum required regulatory capital is maintained.
In order to maintain or adjust the capital structure, the Group may
adjust the amount of dividends paid to shareholders, return capital
to shareholders, or issue new shares. The Group had no debt in the
current or prior financial year and consequently does not calculate
a debt -- to -- adjusted capital ratio.
The Group's total capital is equal to the net assets of the
Group, and is managed within the categories set out below:
2023 2022
GBPm GBPm
---------------------------- ---- ----
Required regulatory capital 7.1 5.4
Other operating capital 21.2 20.5
---------------------------- ---- ----
Total capital 28.3 25.9
---------------------------- ---- ----
Total capital covers the Group's regulatory capital requirements
plus capital required for day -- to -- day operational purposes and
other investment purposes. The Directors consider that the other
operating capital significantly exceeds the actual day-to-day
operational requirements.
28. Ultimate controlling party
As at 31 March 2023 the Company had no ultimate controlling
party, nor at 31 March 2022.
29. Post-reporting date events
No adjusting or significant non -- adjusting events have
occurred between the reporting date and the date of
authorisation.
30. Restatement of the share premium account and retained
earnings
Gains prior to 31 March 2022 on the release of shares from the
Employee Benefit Trust have been reclassified from share premium to
retained earnings as there was no issue of new shares. The prior
cumulative movements to 31 March 2021 and for the year ended 31
March 2022 of GBP609,000 and GBP820,000 respectively, resulting in
a total reclassification of GBP1,429,000 to the retained earnings
balance as at 31 March 2022.
In addition to this, a reclassified of GBP1,240,000 between the
release of shares held by EBT and share based payment reserve
movement in the statement of changes in equity was made to correct
the classification of consolidation adjustments necessary to remove
internal gains and losses arising when shares are transferred
within the Group, and recognise it separately from the IFRS 2
charges.
The restatement does not impact the current or previous years'
profit or loss.
31. Restatement of profit after tax in the Company statement of
cash flows
For the prior year ended 31 March 2022, the Company statement of
cash flows previously showed the loss after tax of GBP41,000
excluding dividends received of GBP4,600,000. In order for the
profit after tax figure to reconcile to the Company statement of
changes in equity, this figure has now been updated in the FY-22
comparative figure to a profit after tax of GBP4,599,000 including
dividends. A corresponding line to remove the dividends received
from subsidiaries from cash flows from operating activities was
also added, as this is recognised in investing activities in line
with the company policy. Since this represents a presentational
adjustment only, the restatement does not impact the totals
reported for cash inflow from operating activities nor the net
decrease in, or closing balance for, cash and cash equivalents for
the year.
Notes to Editors
This announcement includes information with respect to Record's
financial condition, its results of operations and business,
strategy, plans and objectives. All statements in this document,
other than statements of historical fact, including words such as
"anticipates", "expects", "intends", "plans", "believes", "seeks",
"estimates", "may", "will", "continue", "project" and similar
expressions, are forward- looking statements.
These forward-looking statements are not guarantees of the
Company's future performance and are subject to risks,
uncertainties and assumptions that could cause the actual future
results, performance or achievements of the Company to differ
materially from those expressed in or implied by such
forward-looking statements.
The forward-looking statements contained in this document are
based on numerous assumptions regarding Record's present and future
business and strategy and speak only as at the date of this
announcement.
The Company expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking
statements contained in this announcement whether as a result of
new information, future events or otherwise.
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
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Policy.
END
FR FLFITRVIAFIV
(END) Dow Jones Newswires
June 30, 2023 02:00 ET (06:00 GMT)
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