RNS Number : 7901V
Record PLC
03 June 2008
Record plc
PRESS RELEASE
3 June 2008
MAIDEN PRELIMINARY RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2008
Record plc, the specialist currency investment manager, today announces its maiden set of unaudited results for the year ended 31 March
2008, following its admission to trading on the London Stock Exchange's main market for listed securities in December 2007.
Financial highlights:
* $55.7bn AuME at 31 March 2008 was 35% higher than the prior year
* Pre tax profit up 106% to �40.4m
* Management fee income of �44.0m was 105% higher than the prior year
* Performance fee income of �22.2m was 63% higher than the prior year
* Operating profit margin to 31 March 2008 of 61% (pre IPO costs) compared to 55% for the year ended 31 March 2007
* Basic EPS increased to 12.65 pence compared to 6.67 pence for the year to 31 March 2007
* Proposed final dividend for the six months to 31 March 2008 is 2.160 pence per share.
Operating highlights:
* Strong demand for the Absolute Return product underpinned an exceptional year of growth
* Investment performance in the last three quarters has suffered from contagion from the credit crunch; despite this the five-year
Absolute Return track record remains strong
* Client numbers have continued to rise, reaching 141 by year end 31 March 2008.
Commenting on the results Neil Record, Chairman and Chief Executive Officer of Record plc, said:
"Last year was a transformational year for Record, culminating in our admission to trading on the London Stock Exchange.
The Company has seen substantial top- and bottom-line growth, and a significant increase in operating margins, year-on-year. However
performance over the last three quarters was held back by very difficult investment conditions in the currency markets due to spillover
effects of the credit crunch. Despite these we have continued to grow AuME and our blue-chip client base.
Looking forward, we are laying the foundations for Record's continued growth in both existing and new products, by developing innovative
distribution routes and promoting the adoption of currency for absolute return and active currency hedging in the global investment
community. We believe that investors will continue to allocate new money to currency management, and the company is exceptionally well
positioned to win a significant proportion of this business."
Analyst briefing
There will be a presentation for analysts at 9.30am on Tuesday 3 June 2008 at the offices of JPMorgan Cazenove Limited at 20 Moorgate
London EC2R 6DA. A copy of the presentation will be made available on the Group's website at www.recordcm.com.
For further information, please contact:
Record plc: +44 1753 852222
Neil Record
Chief Executive Officer
Peter Wakefield
Chief Operating Officer
Mike Timmins
Chief Financial Officer
Hogarth Partnership +44 207 357 9477
Nick Denton, Julian Walker, Vicky Watkins
Chairman and Chief Executive Officer's statement
Introduction
I am pleased to present Record plc's first set of preliminary results since the Company was admitted to trading on the London Stock
Exchange's main market for listed securities in December 2007.
Highlights of the year
The year just ended has been a transformational one for us. It saw the ending of over 24 years as a private company and the opening of a
new chapter as a public company.
Despite very difficult investment conditions in the last three quarters of the year (of which more below), our revenue, essentially all
fee income, grew by 88% compared to the previous year. The economies of scale inherent in asset management meant that this translated into
pre-tax profit growth of 106% and basic earnings per share growth of 90%.
Management fee income grew faster (+105%) than performance fee income (+63%). This is because very strong investment performance in the
first quarter of the year (crystallising most of the year's performance fees in one quarter) was followed by three quarters of much weaker
performance.
Our AuME grew at a slower rate (35%) than the revenue and profits, implying that the new assets command higher fees. This is true, not
because fee rates hardened in the year, but because most of the new assets were Absolute Return mandates, which command approximately twice
the marginal fee rate of Active Hedging mandates. Active Hedging mandates in turn command about six times the marginal fee rate for Passive
Hedging.
We propose a final dividend for the year of 2.160 pence per share. This is near the lower end of the two- to four-times cover range of
our dividend policy. We are recommending this level of dividend in view of the low level of performance fees in the last three quarters of
the year. Conversely, in years where performance fees are strong, we would expect to smooth the potential jump in dividend by applying a
higher cover multiple.
After paying the recommended dividend, we will have c. �20m in cash on the balance sheet - rather more than two years of the current
overhead run rate.
Further and more detailed analysis of the results for the year (including payment of the dividend) can be found in the Business Review.
Investment Philosophy
Throughout the Group's life, we have believed that the most effective way to exploit the subtle inefficiencies present in the currency
market is by using a disciplined trading process derived from models which are as simple as possible (but no simpler). These models are
based on a thorough understanding of the foreign exchange market and its participants, not on curve-fitting regressions or other
sophisticated mathematical techniques. In particular, we demand from our models that we can explain their foundation using standard English,
without resort to mathematics, and that the explanations are supported by external, verifiable evidence. This approach is the antithesis of
the popular image of the currency trader as the short-term 'punter' who measures his bets' horizons in minutes or hours. Our processes have
core horizons of between six months and one year, and we would wish our performance to be measured over a minimum of three years, and
preferably longer.
While we maintain a watching brief on the 'fundamental' value of currencies vis-vis each other, we do not base any of our processes on
forecasts that rely on currencies returning to 'fair' value. Experience has taught us that the currency market has very long cycles of over-
and under-valuation.
By contrast, we believe that Governmental dominance of the short end of the interest-rate curve has created a continuing opportunity to
add value over time - the so-called 'forward rate bias'. While Governments retain the ability to choose short-term interest rates to control
inflation (and sometimes aggregate demand), we will be given the opportunity to take positions in the currency markets which will have a
materially greater than 50% chance of success. In addition, we utilise highly-disciplined loss-control processes that exploit another
opportunity in the currency market - that of 'momentum'. Momentum (or more formally "serial correlation of price changes"), is a feature of
the same characteristic that has steered us away from fundamental value-based forecasting.
Investment Performance
The year ending 31 March 2008 was an exceptionally challenging one in the currency markets. The cause and nature of the challenge came
from a new (but now familiar) source - namely the credit crunch.
Very strong investment performance in the first quarter (ending 30 June 2007) was followed by a strong reversal in the second and
subsequent quarters.
The challenges were two-fold. The first was the very strong risk-averse sentiment that overwhelmed the asset management and banking
industry from July 2007. This was reflected in the currency market as a flight from what is known as the 'carry trade' (investing in high
interest rate currencies by borrowing low interest rate currencies). While Record is not a tactical carry trader, we do have a bias for
holding long positions in currencies with high relative interest rates and short positions in currencies with low relative interest rates.
The unwinding of the 'carry trade' therefore caused initially a loss of the profit embedded in our end-June 2007 valuations and then
triggered our loss-control mechanisms to prevent further losses from 'anti-carry' currency movements. The remainder of the year has been
characterised by a series of 'false dawns', in which we continuously test the market for the ending of these adverse trends.
The second challenge was the appearance in 2007 of a high level of short-term correlation between the returns of high interest rate
currencies and the returns in global equities and credit. This was translated into a high level of correlation between the performance of
our Absolute Return product and global quoted equity markets. The historical long-term correlation of these two asset classes is close to
zero (even under previous periods of market stress), so the emergence of a high correlation, even if temporary, is unusual. We view this
correlation as a result of the pervasive contagion (originating in the credit markets) that has swept through all markets, creating
risk-aversion across most asset categories, however fundamentally unrelated.
We regard the recent disappointing investment performance of our Absolute Return product, and the correlations with other asset classes,
as a direct result of the very unusual circumstances of the credit crunch. We remain firmly committed to the principles underlying our
Absolute Return product, and are confident that our investment performance will recover as the impact of the credit crunch works through the
system, and likewise that the correlation between our Absolute Return product's returns and equities will fall to its long-term average of
around zero.
Group Strategy and Growth Plans
We are undertaking a series of projects and developments to lay the foundations for continued growth in both existing and new products.
These include:
* A rewrite of our existing proprietary investment process and dealing software to allow us more flexibility to respond to
non-standard client requests, and to simplify future system maintenance and upgrades. This system re-write will not alter our investment
process - just further facilitate its efficient delivery.
* Increased concentration on the US pension and foundation sectors, with more frequent contact and travel, and conference
sponsorships, to raise the profile of both currency as an asset class and Record in this very large (and largely untapped) market.
* The signing of third-party marketing agreements with selected intermediaries, by means of which we open new distribution routes,
distinct from the investment consultants. This is designed to give us access to new groups of investors, particularly high net worth
individuals.
* Making the case at conferences and elsewhere that currency can be seen as a manager-independent value-added asset class, and as
such can be seen as a staple portfolio constituent.
We believe that there is a tremendous opportunity for Record to lead, and benefit from, the continued adoption of currency for Absolute
Return and Active Hedging in the global investment community. The currency management sector is very small compared to the big asset
management sectors - equities; fixed income; private equity; property and hedge funds, but the underlying currency market has the scale to
accommodate currency management at the 'top table' of asset classes.
Even in these very challenging market conditions, Record is being invited to bid for, and winning, both Absolute Return and Active
Hedging mandates. We think this reflects the strength of our investment processes, the quality of our track record and the reputation of the
team at Record.
When investors choose to allocate new money to currency management, we believe that Record is exceptionally well placed to win a
significant proportion of this business.
Neil Record
Chairman and Chief Executive Officer
Business review (extract)
Results for FY08
The year to March 2008 was the most successful year in the Group's history. Consideration of the following key performance indicators
confirms the consistency of the progress across all the key performance measures of the Group.
KPIs 2008 2007
* AuME at 31 March $55.7bn $41.3bn
* Client numbers at 31 March 141 89
* Number of employees at 31 March 54 42
* Operating costs*: management fees 5.0 times 3.5 times
cover
* Total remuneration** : total income 3.0 times 2.6 times
cover
* Operating profit margin (pre IPO 61% 55%
costs)
* Basic EPS 12.65 pence 6.67 pence
* excluding profit related bonus and IPO costs
** including profit related bonus
AuME - increased by 35% during the year, largely as a result of net inflows from both new and existing clients. AuME increased across
all three of the Group's primary products (currency for Absolute Return, Active Hedging and Passive Hedging).
Client numbers - this represents the number of separate legal entities that have invested in a Record managed fund or appointed Record
directly as an investment manager. Each entity may have more than one mandate. The number of clients at 31 March 2008 was 58% higher than at
the previous year end.
Number of employees - the number of employees increased to 54 from 42 during the year to 31 March 2008. This represents an increase of
29% and, when compared to the growth in income and profit before tax, is indicative of the leverage that has been achieved from the
operational infrastructure.
Operating costs to management fees - the improvement in AuME and in blended fee rates has exceeded the increase in operating costs and
resulted in an improvement in the cover of management fees to operating costs to 5.0 times.
Total remuneration to revenue - a further indication of the operational leverage is demonstrated in the improvement achieved in the
ratio of total remuneration costs to revenue, which for the year to 31 March 2008 was 3.0 times covered.
Operating Profit Margin (before IPO costs) - the combination of higher blended fee rates and controlled cost increases resulted in the
operating profit margin improving to 61% for the year to 31 March 2008.
Basic EPS - the strong growth in AuME and associated revenues through the year together with improving operating profit margin is
reflected in the Group's earnings per share increasing to 12.65 pence per share (2007: 6.67 pence per share).
AuME Growth
The growth in AuME achieved during the 2008 financial year of $14.4bn represents a 35% increase since 31 March 2007.
AuME Growth in the year ended 31 March 2008
$ billion
AuME at 31 March 2007 $41.3
Net client inflows +$14.8
Investment performance impact -$3.4
Equity market impact -$0.7
Foreign exchange impact +$3.7
AuME at 31 March 2008 $55.7
The Group has been successful in attracting net AuME inflows of $14.8bn from clients including $13.5bn from new clients. Other movements
included:
* a fall of $3.4bn due to investment performance in the Group's pooled funds which is compounded on a geared basis into the AuME in
those funds;
* a fall of $0.7bn relating to the levels of global stock and other markets, as many mandate sizes are linked to stock and other
market levels;
* a gain of $3.7bn due to changes in exchange rates over the period which affect the conversion of non-US dollar mandate sizes into
US dollar AuME. NB this does not have an equivalent impact on the sterling value of fee income.
Product mix
The AuME of all products increased during the year with that of the Absolute Return product increasing by $9bn, a 45% increase during
the year. Record's Absolute Return products are offered on either a segregated mandate basis or through pooled funds, in which clients
subscribe for units in funds for which Record is the distributor and investment manager. The success of the pooled fund structures was
confirmed by the AuME of pooled Absolute Return mandates overtaking that of segregated mandates during the financial year 2008. Two new
pooled funds were set up during the year offering clients increased choice in currency strategy and risk exposure.
Active Hedging mandates increased during the year by $0.8bn, a 19% increase. Indications are that certain groups of investors may be
seeking to protect existing gains or limit currency risk on portfolios denominated in currencies other than their base currency by choosing
to hedge their currency exposures actively rather than passively. If these indications are sustained and translate into new client business
for Record, the Active Hedging AuME is likely to increase further in both absolute and proportional terms.
Passive Hedging AuME increased by $3.1bn, a 20% increase in the year. This increase is the result of combined mandates under which an
additional Absolute Return or Active Hedging Mandate will incorporate an element of Passive Hedging.
AuME by product
AuME $ billions 31-Mar-08 31-Mar-07
Absolute Return - segregated 14.1 10.8
Absolute Return - pooled 14.9 9.2
Sub-Total Absolute Return 29.0 20.0
Active Hedging 5.0 4.2
Passive Hedging 18.3 15.2
Cash 3.4 1.9
Total 55.7 41.3
The overall product mix has moved towards the higher margin Absolute Return product which now makes up 52% of the Group's AuME (2007:
48%). Pooled funds now make up 27% of AuME (2007: 22%) and segregated funds 25% of AuME (2007: 26%).
Client Numbers
Client numbers by product
31-Mar-08 31-Mar-07
Absolute Return - segregated 27 24
Absolute Return - pooled 106 48
Sub-Total Absolute Return 133 72
Active Hedging 5 7
Passive Hedging 3 10
Total 141 89
At 31 March 2008, Record had 141 clients. The Group has experienced a sustained period of growth in client numbers over the last three
financial years and the growth in client numbers achieved during the 2008 financial year (plus 52) exceeded the increase in the year to
March 2007 (plus 43).
The strongest rate of increase was in Absolute Return clients: up from 72 to 133. Within that the number of pooled fund clients,
predominately in the UK, grew most quickly. The pooled fund structure enables smaller clients to access the investment process and, as a
result, there are a greater number of clients of a smaller average size than with segregated accounts.
Substantially all Record's clients are wholesale investors with corporate and public pension funds collectively representing 76% of the
Group's AuME at 31 March 2008.
AuME by Client type
AuME $ billions / % 31-Mar-08 31-Mar-07
Government & Public funds 24.6 44.1% 17.5 42.3%
Corporate Pension funds 19.2 34.5% 15.8 38.2%
Foundations & Investment funds 11.9 21.4% 8.0 19.5%
Total 55.7 100.0% 41.3 100.0%
The client base is geographically diverse with clients based in the UK making up 58% of the Group's AuME at 31 March 2008. European
clients outside the UK represent a further 32% of AuME.
AuME by Client location
AuME $ billions / % 31-Mar-08 31-Mar-07
UK 32.0 58% 22.5 55%
Europe (excluding UK) 17.8 32% 15.0 36%
North America 3.5 6% 2.6 6%
Rest of the World 2.4 4% 1.2 3%
Total 55.7 100% 41.3 100%
FINANCIAL REVIEW
Total income increased by 88% to �66.2m. Total expenditure (excluding IPO costs) increased by 62% to �25.7m. Profit before tax increased
by 106% to �40.4m.
�'000 FY08 FY07
Management fees 43,987 21,497
Performance fees 22,160 13,603
Other income 82 144
Total income 66,229 35,244
Personnel (excluding Group Profit Bonus) (5,113) (3,781)
Non-personnel cost (3,728) (2,452)
Total expenditure (excl. Group Profit Bonus) (8,841) (6,233)
Group Profit Bonus (16,829) (9,636)
Operating profit before IPO costs 40,559 19,375
% 61.2% 55.0%
Non recurring IPO costs (1,293) 0
Net interest received 1,127 271
Profit before tax 40,393 19,646
Tax (12,480) (5,501)
Profit after tax 27,913 14,145
Fees
The growth in the number of clients and increase in AuME has driven the growth in total fee income which was equal to a compound annual
growth rate of 130 per cent. for the three year period 1 April 2005 to 31 March 2008.
Record charges fees to its clients based upon the AuME of the product provided. Record typically offers Absolute Return clients the
choice of paying an asset based management fee only or a management fee plus performance fee alternative. Higher performance fee rates
usually accompany lower management fee rates, and vice versa, and the fee combinations are structured so that Record is indifferent between
them in the medium term.
Average management fee rates by product - (bps*)
Product FY08 FY07
Absolute Return: 30.0 23.3
- Pooled
- Segregated 25.3 20.1
Absolute Return - combined average 27.9 21.4
Active Hedging 22.5 17.1
Passive Hedging 1.3 1.2
Composite average fee rate 16.9 11.5
*bps = basis points which are 100th of one percentage point
(Average management fee rates = fees earned in period / average AuME through period)
Both management fees and performance fees are normally invoiced on a quarterly basis, although Record invoices management fees for some
of its larger clients monthly. Performance fees are subject to a "high water mark" clause that states that cumulative performance, typically
since inception of the mandate, must be above the previous high point on which performance fees were charged before performance fees are
charged again. Record charges similar fees for both segregated and pooled Absolute Return mandates and generally offers lower marginal fee
rates for larger mandate sizes.
Total fee analysis
Fees �millions 31-Mar-08 31-Mar-07
Management 44.0 21.5
Performance 22.1 13.6
Other 0.1 0.1
Total 66.2 35.2
Management Fees
Management fee income during the 2008 financial year was �44.0m, which is more than double the management fee income during the previous
financial year (2007: �21.5m). The table below shows that the most significant increase in management fee income was attributable to the
Absolute Return product which grew to �38.1m and represented 87% of total management fee income. This reflects the increase in AuME of the
Absolute Return product and the higher management fee rates that the Absolute Return product attracts relative to the Group's hedging
products.
Management fee by product
Fees �m 31-Mar-08 31-Mar-07
Absolute Return - segregated 15.9 8.1
Absolute Return - pooled 22.2 6.4
Sub-Total Absolute Return 38.1 14.5
Active Hedging 4.8 6.1
Passive Hedging 1.1 0.9
Total 44.0 21.5
Within Absolute Return the growth in pooled fund income exceeded the growth in segregated Absolute Return income. The pooled fund
structure has proved to be an attractive alternative to the segregated structure for many clients and has allowed smaller clients to make an
allocation to currency for absolute return.
Performance Fees
Performance fees earned in the year were �22.2m compared with �13.6m in the previous year (an increase of 63%). Performance fee
structures apply primarily to Absolute Return mandates and, as mentioned earlier, clients may choose between management fee only structures
or lower management fees with performance fee structures. The balance is approximately 60:40 in favour of management fee only structures,
although the trend in the latest subscriptions has been towards management and performance fee structures.
Operating Margin
The operating profit for the financial year ended 31 March 2008 (before IPO costs of �1.3m) of �40.6m was more than double the operating
profit for the previous financial year (2007: �19.4m). The Group achieved an operating profit margin of 61% prior to IPO costs for the
financial year ended 31 March 2008 (55% in 2007). The increase has arisen due to scale efficiencies achieved as the Group has grown its
revenues whilst managing its costs effectively.
During the financial year ended 31 March 2008, total operating expenditure (pre IPO costs) of the Group increased by �9.8m to �25.7m, an
increase of 62%. Of this increase, �1.3m related to non-personnel related costs which represented a 52% increase on the previous year.
Personnel Costs
In order to support the growth of the business the number of employees in the Group has increased to 54 at 31 March 2008 from 42 at 31
March 2007. The key areas of growth have been in Client Services, Research and Operations.
Employee numbers by function (at year end date)
31-Mar-08 31-Mar-07
Trading and operations 17 15
Client services 11 10
Finance and administration 9 7
Investment research 8 5
Information systems 6 5
Corporate 2 -
Compliance 1 -
Total 54 42
Personnel costs (excluding Group Profit Bonus) increased to �5.1m, which represented a 35% increase on the previous year. Of the net
increase of twelve staff during the year three were in investment research, two were in trading, one in client services and the balance of
six in the support services of compliance, finance and legal. The Group Profit Bonus is currently 30% of pre bonus earnings before interest
and tax (EBIT) and increased to �16.8m from �9.6m in the previous financial year. This represents a year on year increase of 75% compared
with 88% year on year increase in total fee income.
The IPO resulted in a one off cost of �1.3m.
Cash Flow
The Group's ability to generate cash has remained strong. The Group generated �10.0m of net cash flow during the financial year ended 31
March 2008. The cash generated from operations before tax was �42.0m of which �8.8m was paid in taxation and �24.2m was paid in dividends.
At 31 March 2008 the closing cash and cash equivalents was �22.5m.
Capital Management
The Board's intention is to retain sufficient capital within the business to meet continuing obligations, sustain future growth and to
provide a buffer against adverse market conditions. Prior to the IPO, the Group created a financial model to assist it in estimating future
capital requirements over a four year time horizon under various scenarios. It is the Group's stated policy that any accumulated capital
surplus to its identified capital requirements will be returned to shareholders in an appropriate manner. The Group has no debt to repay or
service. Shareholders' funds were �18.5m at 31 March 2008 (2007: �14.9m).
Regulatory Capital
The Group established its Internal Capital Adequacy Assessment Process (ICAAP) during the financial year ended 31 March 2008,
introducing an active risk-based approach to monitoring and managing risks, and ensuring that it maintains a minimum amount of capital to
cover those risks. At 31 March 2008, Record had Tier 1 capital of �12.1m which provided excess regulatory capital of �10.5m using the new
rules and �10.6m using the old rules. The Group's capital resources were comfortably in excess of the regulatory requirements throughout the
year.
Dividends
At the time of the IPO, the Group stated its intention to distribute between one quarter and one half of post tax earnings by way of a
dividend and that any final dividend declared for the year ended 31 March 2008 would apply this policy in respect of the six month period
ended 31 March 2008. In respect of the year ended 31 March 2008, the Board has decided to recommend a final dividend of �4.8m, equivalent to
2.160 pence per share which represents 50% of the profit after tax for the six month period ended 31 March 2008. Subject to shareholder
approval, the dividend will be paid on 28 July 2008 to shareholders on the register on 20 June 2008, the ex-dividend date being 18 June
2008. The dividends of �24.2m recognised in the Financial Statements for the year ended 31 March 2008 were all paid out before Record was
admitted to trading on the London Stock Exchange's main market for listed securities. A dividend was paid to shareholders on 20 July 2007
which equated to a distribution of �4.2m and equivalent to 1.875 pence per ordinary 0.025 pence share. An exceptional pre IPO dividend was paid on 13 November 2007 which equated to a distribution
of �20.0m and was equivalent to 9.033 pence per ordinary 0.025 pence share.
Regulatory Environment
Record Currency Management Limited (RCML) is authorised and regulated in the UK by the Financial Services Authority. RCML is
additionally registered as an Investment Adviser with the Securities and Exchange Commission in the United States and in the category of
International Adviser (Investment Counsel & Portfolio Manager) with the Ontario Securities Commission in Ontario.
During 2007, the Group undertook a project to ensure its preparedness for the Markets in Financial Instruments Directive (MiFID) and to
assess the capital requirements of the business required by the Capital Requirements Directive (CRD). The Group's capital resources are well
in excess of the regulatory requirement.
The impact of MiFID for RCML was mainly in the areas of client re-categorisation and trading (in terms of the further development of the
best execution policy and the two-way agreements required for continued over-the-counter dealing).
The Internal Capital Adequacy Assessment Process (ICAAP) which came into effect on 1 January 2008 involves the Group's assessment of its
key risks and how much capital it needs in respect of those risks. As a result of this process the Group's capital requirement increased
slightly but, as stated above, the Group holds significant capital surplus over the regulatory requirement.
The Current Financial Year
In conclusion, the recent progress made in the business is reflected in the financial performance for the year to 31 March 2008 which,
in addition to the developments in risk management and internal controls, provides an excellent foundation for further growth during the
coming financial year. The market conditions during the second half of the year ended 31 March 2008 have been challenging but have provided
opportunities, in particular, for the Group's Active Hedging product which will be of value to clients seeking to protect gains made during
periods of base currency depreciation.
RECORD PLC
GROUP INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2008
UNAUDITED
Note 2008 2007
�*000 �*000
REVENUE
Management fees 43,987 21,497
Performance fees 22,160 13,603
Other revenue 82 144
TOTAL FEES RECEIVABLE 66,229 35,244
Cost of sales (296) (177)
GROSS PROFIT 65,933 35,067
Administrative expenses (26,667) (15,692)
OPERATINGPROFIT 2 39,266 19,375
Finance income 1,134 272
Finance costs (7) (1)
PROFITBEFORE TAX 40,393 19,646
Taxation (12,480) (5,501)
PROFITAFTER TAX 27,913 14,145
Basic earnings per share 3 12.65p 6.67p
Diluted earnings per share 3 12.62p 6.35p
Memo
Dividends paid in the period 4 24,151 4,916
RECORD PLC
GROUP BALANCE SHEET FOR THE YEAR ENDED 31 MARCH 2008
UNAUDITED
Notes 2008 2007
�*000 �*000 �*000 �*000
NON-CURRENT ASSETS
Property, plant and equipment 611 706
Deferred tax assets 46 -
657 706
CURRENT ASSETS
Trade and other receivables 8,917 8,052
Cash and cash equivalents 22,545 12,518
31,462 20,570
CURRENT LIABILITIES
Trade and other payables (7,191) (3,748)
Corporation tax liabilities (6,356) (2,602)
Derivative financial (23) (1)
liabilities
(13,570) (6,351)
NET CURRENT ASSETS 17,892 14,219
NON-CURRENT LIABILITIES
Deferred tax liabilities - (42)
TOTAL NET ASSETS 18,549 14,883
EQUITY
Issued share capital 5 55 55
Share premium account 1,809 1,636
Capital redemption reserve 20 20
Retained earnings 16,665 13,172
TOTAL EQUITY 18,549 14,883
RECORD PLC
GROUP STATEMENT OF CHANGE IN EQUITY FOR THE YEAR ENDED 31 MARCH 2008
UNAUDITED
Called up share Share premium Capital redemption Retained earnings Total shareholder's
capital account reserve equity
�'000 �'000 �'000 �'000 �'000
As at 1 April 2007 55 1,636 20 13,172 14,883
Profit for the period - - - 27,913 27,913
Employee share options - - - 1 1
Dividends paid - - - (24,151) (24,151)
Issue of shares - 173 - - 173
Own shares held by EBT - - - (270) (270)
As at 31 March 2008 55 1,809 20 16,665 18,549
RECORD PLC
GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2008
UNAUDITED
2008 2007
�'000 �'000 �'000 �'000
Profit after tax 27,913 14,144
Adjustments for:
Corporation tax 12,480 5,501
Finance income (1,133) (272)
Finance expense 6 1
Loss on disposal of property, plant 1 12
and equipment
Depreciation of property, plant and 313 149
equipment
Share-based payments expense 1 12
39,581 19,547
Changes in working capital
(Increase) in receivables (754) (2,970)
Increase in payables 3,173 1,784
Increase/(Decrease) in other
financial liabilities 23 (50)
CASH INFLOW FROM OPERATING ACTIVITIES
42,023 18,311
Interest paid (6) (1)
Corporation taxes paid (8,815) (3,655)
NET CASH INFLOW FROM OPERATING
ACTIVITIES 33,202 14,655
CASH INFLOW FROM INVESTING ACTIVITIES
Proceeds on disposal of property,
plant and equipment - 15
Purchase of property, plant and
equipment (219) (372)
Interest received 1,022 272
NET CASH INFLOW FROM INVESTING
ACTIVITIES 803 (85)
CASH OUTFLOW FROM FINANCING
ACTIVITIES
Cash inflow from issue of shares 173 1,142
Dividends paid to equity shareholders (24,151) (4,916)
CASH OUTFLOW FROM FINANCING
ACTIVITIES (23,978) (3,774)
NET INCREASE IN CASH AND CASH
EQUIVALENTS IN THE PERIOD 10,027 10,796
Cash and cash equivalents at the
beginning of the period 12,518 1,722
CASH AND CASH EQUIVALENTS AT THE END
OF THE PERIOD 22,545 12,518
NOTES
1. BASIS OF PREPARATION
The preliminary results for the year ended 31 March 2008 are unaudited. The financial information included in this statement does not
constitute the Group's statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended
31 March 2008 will be delivered to the Registrar of Companies imminently.
The annual report will be posted to the shareholders on or before 25 June 2008. Record's Annual General Meeting will be held on 24 July
2008 at 10.00am at Morgan House, Madeira Walk, Windsor, Berkshire SL4 1EP.
In preparing the financial information included in this statement the Group has applied policies which are in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union at 31 March 2008. The accounting policies applied in
these financial statements are consistent with those applied in the Group's prospectus, prior to being admitted to trading on the London
Stock Exchange's main market for listed securities on 3 December 2007. The prospectus is available on the Group's website.
2 OPERATING PROFIT
Record was admitted to the Official List of the Financial Services Authority on 3 December 2007. Non-recurring costs of �1.3m were
charged against the income statement within administrative expenses in this respect.
3 EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit for the financial period attributable to equity holders of the parent by
the weighted average number of ordinary shares in issue during the 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 dilutive potential ordinary shares.
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.
2008 2007
Weighted average number of shares used in 220,739,001 212,090,224
calculation of basic earnings per share
Effect of dilutive potential ordinary shares - 499,040 10,812,821
share options
Weighted average number of shares used in 221,238,041 222,903,045
calculation of diluted earnings per share
pence pence
Basic earnings per share 12.65 6.67
Diluted earnings per share 12.62 6.35
4 DIVIDENDS
The dividends paid by the Group during the year ended 31 March 2008 totalled �24,150,890 (10.91 pence per share). The dividends were
paid in two payments prior to being admitted to trading on the London Stock Exchange's main market for listed securities on 3 December 2007.
The dividends paid during the year ended 31 March 2007 were �4,915,600 (2.25 pence per share).
The Directors have decided to recommend a final dividend of 2.160 pence per share in respect of the year ended 31 March 2008, subject to
shareholder approval.
5 CALLED UP SHARE CAPITAL
2008
�'000 Number
Authorised
Ordinary shares of 0.025p each 100 400,000,000
Called up, allotted and fully paid
Ordinary shares of 0.025p each 55 221,380,800
2007
�'000 Number
Authorised
Ordinary shares of 10p each 70 700,000
'A' ordinary shares of 10p each 30 300,000
100 1,000,000
Called up, allotted and fully paid
Ordinary shares of 10p each 40 402,967
'A' ordinary shares of 10p each 15 146,583
55 549,550
Changes to the authorised and issued share capital �'000 Number
As at 1 April 2007 55 549,550
Exercise of share options
'A' ordinary shares issued - 3,902
Conversion of 'A' ordinary shares to Ordinary shares
Ordinary shares of 10p each 15 150,485
'A' ordinary shares of 10p each (15) (150,485)
Ordinary shares of 10p each 55 553,452
400 to 1 Split of Ordinary shares
Ordinary shares of 0.025p each 55 221,380,800
-
Adjustment for own shares held by EBT - (168,287)
As at 31 March 2008 55 221,212,513
The two classes of share authorised as at 1 April 2007 ranked pari passu in all respects save that the 'A' ordinary shares were subject
to a mandatory transfer upon the termination of the shareholder's employment. On 23 August 2007, a resolution was passed with the effect
that all issued and unissued 'A' ordinary shares were converted to ordinary shares. On 15 November 2007, a resolution was passed with the
effect that, on admission to the London Stock Exchange's main market for listed securities, all issued and unissued ordinary shares of 10p
were each split into 400 ordinary shares of 0.025p.
The Group has set up an Employee Benefit Trust to hold shares to be used to meet future liabilities relating to the Group's share option
plans. Under IFRS the Employee Benefit Trust is considered to be under de facto control of the Group, and has therefore been consolidated
into the Group. As at 31 March 2008, the Employee Benefit Trust held 168,287 ordinary shares of 0.025p in Record plc.
Other information
This announcement may contain certain 'forward-looking statements' with respect to certain of the Group's plans and its current goals
and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements containing the words
'believes', 'intends', 'expects', 'plans', 'seeks' and 'anticipates', and words of similar meaning, are forward-looking.
By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances
which are beyond the Group's control including among other things, UK domestic and global economic and business conditions, market related
risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally, the policies and
actions of regulatory authorities, the impact of competition, inflation and deflation, the timing, impact and other uncertainties of future
acquisitions or combinations with relevant industries, and the impact of changes in capital, solvency or accounting standards, and tax and
other legislation and regulations in the jurisdictions in which the Group operates.
As a result, the Group's actual future financial condition, performance and results may differ materially from the plans, goals and
expectations set forth in the Group's forward-looking statements. The Group undertakes no obligation to update the forward-looking
statements contained in this announcement. Nothing in this announcement should be considered as a profit forecast.
This information is provided by RNS
The company news service from the London Stock Exchange
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