TIDMREC
RNS Number : 5883N
Record PLC
15 June 2010
Record plc
PRESS RELEASE
15 June 2010
FINAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2010
Building for the future
Record plc, the specialist currency manager, today announces its audited results
for the year ended 31 March 2010.
Financial highlights:
· AuME1 $34.0bn at 31 March 2010 up 8% on the prior year
· AuME1 GBP22.4bn at 31 March 2010 up 2% on the prior year
· Management fee income of GBP33.2m (down 27%)
· Performance fee income of GBP0.2m (down from GBP1.4m)
· Pre tax profit GBP16.7m (down 38%)
· Continued strong balance sheet with no debt and a cash balance of
GBP21.9m
· Operating profit margin to 31 March 2010 of 49% compared to 55% for the
year ended 31 March 2009
· Basic EPS of 5.39p (2009: 8.73p per share)
· Proposed final dividend for the year to 31 March 2010 is 0.59 pence per
share giving a total dividend for the year unchanged at 4.59 pence per share
Operating highlights:
· Active Hedging AuME grew by 200% to represent 35% of AuME1 at 31 March
2010 (2009: 13%) and 43% of management fee income (2009: 13%)
· Two US active hedging mandates commenced in the year accounting for
$8.1bn of AuME at 31 March 2010
· Client numbers fell by 28 to 93 by year end 31 March 2010
· Alpha composite return of -0.73% for year ended 31 March 2010 (year to 31
March 2009 -3.49%)
· Co-operation agreement with FTSE and the launch of the FTSE Currency FRB
(Forward Rate Bias) 5 index series' from 21 September 2009. Launch of
internally funded index tracking product (Carry 250) in October 2009
· Internal launch of emerging markets product in November 2009
_____________
1 As a currency 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.
Commenting on the results Neil Record, Chairman and Chief Executive Officer of
Record plc, said:
"Last year saw a significant growth in clients seeking to minimise their
exposure to currency risk offset by a decline in clients seeking to make a
return from currency exposure. Whilst AuME increased marginally over the
period, the split between Active Hedging and Absolute Return changed
substantially.
Management fee income fell to GBP33.2m as a result of the average AuME over the
year being significantly lower than the previous year. Operating margins
remained strong at 49% and the balance sheet had GBP21.9m cash and no debt at
the year end.
We have seeded two new products in the year, a product to track the FTSE
Currency FRB5 index and an emerging market product. Both these products will be
marketed to clients in the coming year.
Looking to the current year, we anticipate a continuation of the move toward
Active Hedging and further short-term attrition in the Absolute Return product.
Over the longer term we anticipate clients will once again look to invest in
currency as it becomes established as an asset class."
Analyst briefing
There will be a presentation for analysts at 9.30am on Tuesday 15 June 2010 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
Chairman and Chief Executive Officer
Paul Sheriff
Chief Financial Officer
Hogarth Partnership: +44 207 357
9477
Nick Denton, John Olsen, Vicky Watkins
RECORD PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH
+------------------------------------+----------+-+----------+
| | 2010 | | 2009 |
+------------------------------------+----------+-+----------+
| | GBP'000 | | GBP'000 |
+------------------------------------+----------+-+----------+
| Revenue | 33,424 | | 46,796 |
+------------------------------------+----------+-+----------+
| Cost of sales | - | | (11) |
+------------------------------------+----------+-+----------+
| Gross profit | 33,424 | | 46,785 |
+------------------------------------+----------+-+----------+
| Administrative expenses | (16,972) | | (20,928) |
+------------------------------------+----------+-+----------+
| Operating profit | 16,452 | | 25,857 |
+------------------------------------+----------+-+----------+
| Finance income | 220 | | 917 |
+------------------------------------+----------+-+----------+
| Finance costs | - | | (5) |
+------------------------------------+----------+-+----------+
| Profit before tax | 16,672 | | 26,769 |
+------------------------------------+----------+-+----------+
| Taxation | (4,720) | | (7,494) |
+------------------------------------+----------+-+----------+
| Profit after tax | 11,952 | | 19,275 |
+------------------------------------+----------+-+----------+
| Other comprehensive income | | | |
+------------------------------------+----------+-+----------+
| Net losses on available for sale | (60) | | - |
| financial assets | | | |
+------------------------------------+----------+-+----------+
| Income tax relating to components | 13 | | - |
| of other comprehensive income | | | |
+------------------------------------+----------+-+----------+
| Total comprehensive income for the | 11,905 | | 19,275 |
| period | | | |
+------------------------------------+----------+-+----------+
| | | | |
+------------------------------------+----------+-+----------+
| Total comprehensive income for the | | | |
| year attributable to: | | | |
+------------------------------------+----------+-+----------+
| Owners of the parent | 11,905 | | 19,275 |
+------------------------------------+----------+-+----------+
| | | | |
+------------------------------------+----------+-+----------+
| | | | |
+------------------------------------+----------+-+----------+
| Earnings per share for profit | | | |
| attributable to the equity holders | | | |
| of the Company during the year | | | |
| (expressed in pence per share) | | | |
+------------------------------------+----------+-+----------+
| Basic earnings per share | 5.39 | | 8.73 |
+------------------------------------+----------+-+----------+
| Diluted earnings per share | 5.38 | | 8.72 |
+------------------------------------+----------+-+----------+
| | | | |
+------------------------------------+----------+-+----------+
| | | | |
+------------------------------------+----------+-+----------+
RECORD PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | 2010 | 2009 | 2008 |
+--------------------------------------------------------+-----------------------+-----------------------+-----------------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Non-current assets | | | | | | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Property, plant and equipment | 205 | | 368 | | 611 | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Intangible assets | 535 | | - | | - | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Deferred tax assets | 143 | | 146 | | 46 | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | | 883 | | 514 | | 657 |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Current assets | | | | | | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Trade and other receivables | 8,325 | | 7,742 | | 8,917 | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Derivative financial assets | 98 | | - | | - | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Cash and cash equivalents | 21,861 | | 29,798 | | 22,545 | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | | 30,284 | | 37,540 | | 31,462 |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Current liabilities | | | | | | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Trade and other payables | (3,874) | | (7,076) | | (7,191) | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Corporation tax liabilities | (2,384) | | (3,774) | | (6,356) | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Derivative financial liabilities | (149) | | (13) | | (23) | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | | (6,407) | | (10,863) | | (13,570) |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Net current assets | | 23,877 | | 26,677 | | 17,892 |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | | | | | | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Non-current assets available for sale (disposal group) | | 940 | | - | | - |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | | | | | | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Total net assets | | 25,700 | | 27,191 | | 18,549 |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | | | | | | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Equity | | | | | | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Issued share capital | 55 | | 55 | | 55 | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Share premium account | 1,809 | | 1,809 | | 1,809 | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Capital redemption reserve | 20 | | 20 | | 20 | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Retained earnings | 23,816 | | 25,307 | | 16,665 | |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Total equity | | 25,700 | | 27,191 | | 18,549 |
+--------------------------------------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
Chairman and Chief Executive Officer's statement
Set against continued challenging markets, Record has benefited from
diversification through the growth of the Active Hedging product, whose AuME
grew by 200% in the period. Overall, AuME increased by 8%, as a result of the
growth in Active Hedging mandates, offset by a reduction in Absolute Return
mandates. Income was down by 29% as a result of the lower average AuME during
the year. The operating profit margin remained strong at 49%.
The last twelve months have continued to be varied and challenging. Varied
because our clients' experience in our Active Hedging products has been
generally good, while our clients' experience in our Absolute Return products
has been poor. Challenging because we continue to labour under very disrupted
currency and interest rate markets, with widespread monetary laxity providing
headwinds to our core source of absolute return - the Forward Rate Bias.
We have seen growth in our risk-reducing hedging products offset by a decline in
our risk-taking Absolute Return products. Overall, this has increased
diversification by balancing income between our Hedging and Absolute Return
businesses. We see the low correlation between the performance of the Absolute
Return and Active Hedging products as beneficial for the overall stability of
the business.
Our priority remains to enhance the product range we offer clients, and progress
was made in the year with the launch of two internally seeded products. It is
envisaged that both of these products will be externally marketed to clients in
the next twelve months. It is our belief that these two products will gain
traction in the coming years and further improve the diversification of our
income.
The first of these products builds on our firm belief that the currency Forward
Rate Bias is an asset class in its own right, and that there is a currency
'beta' return available to all. Our agreement with FTSE Group, the global index
provider, to develop and market a series of currency indices is a major
development in the move to currency being recognised as a distinct asset class.
The launch of a manager-independent index will add credibility to the case for
investing in currency. The first index, the FTSE Currency FRB (Forward Rate
Bias) 5, represents a readily available investment opportunity and demonstrates
a 'beta' return stream analogous to, although independent of, the equity beta.
Our internally seeded fund has been launched with an investment of GBP1m from
the Group, and has clearly demonstrated that the index is both replicable and
investible.
The second product is the Group's first entry into emerging market currencies.
We see emerging market currencies as an important and growing new opportunity
for the Group, and we intend to launch a series of currency products to exploit
this. A first product has been developed, and again seeded with a GBP1m
investment from the Group. Since its launch in November 2009, the currency
product (which is two times geared) has produced a positive return of 12.1% to
31 March 2010.
Set against continued challenging markets, Record has benefited from the
diversification of the Active Hedging product, whose AuME grew by 200% in the
period. Overall, AuME increased by 8%, as a result of the growth in Active
Hedging mandates offset by a reduction in Absolute Return mandates. Income was
down by 29% as a result of the lower average AuME during the year. The
operating profit margin remained strong at 49%. As we enter the current
financial year, Hedging represents approximately 60% of our revenues compared
with only 13% two years ago.
Management fees decreased to GBP33.2m for the year to 31 March 2010, a decline
of 27% compared to the year ended 31 March 2009. Given prior valuation levels
(or 'high water marks') achieved, performance fees earned in the period were
modest.
The operating margin, at 49%, was also less than that achieved in the year to 31
March 2009 (55%) although the decline was less marked than that in revenues.
This reflects the flexibility in our cost base, not least due to Record's Group
Profit Share (GPS) Scheme which sets aggregate profit share at an average 30% of
pre-GPS operating profit.
Overall profit before tax was GBP16.7m and earnings per share was 5.39p per
share. The proposed final dividend is 0.59p per share and, together with the
interim dividends, means the total dividend for the year remains unchanged at
4.59p per share.
The balance sheet was marginally weaker at the year end due to the early payment
of dividends in the year, with shareholder funds reducing by 5% to GBP25.7m.
Cash balances were GBP21.9m, a decline of 27% on the previous year, reflecting
both the earlier dividend payments and the earlier payments of Group Profit
Share ahead of the year end. The Group has a regulatory capital surplus and has
cash reserves equivalent to two years' operating costs.
Currency for Absolute Return is an eight year old product for Record, which
experienced very strong demand from institutional investors in 2006 and 2007,
and hence rapid growth in AuME over that period. AuME subsequently declined in
2008 and 2009. At 31 March 2010, AuME for Absolute Return stood at $7.7bn
(2009: $13.4bn).
Active Hedging is our longest-standing product, with continuous client track
records since 1985. AuME grew by 200% in the year to $12.0bn at 31 March 2010
(2009: $4.0bn). Growth in this product came principally from two large US state
pension funds totalling $8.1bn. We continue to see interest in this product and
anticipate further client additions in the coming twelve months.
Passive Hedging, at $13.4bn AuME, accounts for 39% of AuME at 31 March 2010, but
only 7% of fee income in the year. In this difficult market environment we are
seeing a renewed interest in Passive Hedging.
Further and more detailed analysis of the results for the year can be found in
the Business Review.
Investment philosophy
Our investment philosophy is now well established. We believe that long-term
returns for investment clients in the currency market are only reliably
achievable by exploiting long-term and persistent characteristics of the
currency market. By contrast, while there are undoubtedly short-term currency
market anomalies that appear and disappear (as in all markets), we do not aim to
use these to add value for our clients, since we believe our ability as a firm
to do this consistently over long horizons is low. We have maintained this
philosophy in the face of extraordinarily volatile and disrupted market
conditions, and we intend to continue to do so.
At the core of our philosophy, we recognise and exploit two principal currency
market characteristics (I use the term in the sense of 'opportunities') - the
Forward Rate Bias (or 'carry') and trends (or 'momentum'). We also recognise
another, less pronounced inefficiency - short-term 'mean reversion'.
In our Absolute Return product, we exploit all three characteristics. In our
Active Hedging product, we exploit primarily one inefficiency - trends - to
allow our clients to effectively insure their portfolios against adverse
currency moves in an efficient and low cost manner. We do not generally exploit
the Forward Rate Bias in our Hedging products.
Our continued focus on the source and nature of the characteristics that we
exploit has led us to reconsider how we describe our products. Our
identification of the Forward Rate Bias (the key return driver in our Absolute
Return products) as a 'beta', to which we seek to add 'alpha' through trends and
short-term mean reversion, suggests Absolute Return is no longer the best
description of these products, and in future these will be described as Currency
for Return products (to include our new emerging market products). At the same
time, we have recognised that Active Hedging, as a description, may suggest a
greater degree of risk-taking in the expectation of generating a return, and
therefore that Dynamic Hedging is a more appropriate description.
As we develop our expertise and track record in emerging market currencies, we
will come to rely on a further long-term characteristic of currency markets -
the observation that a country's real exchange rate rises as its relative GDP
per capita rises. This is often called the Balassa-Samuelson effect.
Investment performance
At the time of writing, ultra-loose monetary policy still dominates almost all
of the major economies in our developed market currency universe. History and
economic logic tells us that this extreme policy position will only survive
while private sector demand remains heavily depressed. Once private sector
demand picks up, we should see a resumption of more normal monetary conditions,
and indeed we may see tight policies emerge to counter the very high fiscal
deficits prevalent in most major economies.
The year ended 31 March 2010 has been one of continuing 'in line' performance of
the Active Hedging product and negative performance for our Absolute Return
product. For Absolute Return, expressed as a percentage of underlying assets
with no gearing ('gearing one' basis i.e. mandate sizes are scaled to an
expected 4% tracking error), the excess return of our segregated composite was
-0.73% (FTSE Currency FRB5 excess return in GBP: -4.78%).
Our Active Hedging product has continued to deliver the risk-reducing benefits
of hedging clients' international investment portfolios. For our US Active
Hedging clients this has resulted in positive performance versus their
benchmarks, particularly in the January-March 2010 quarter.
Investment performance of our Absolute Return products varied dramatically
between the first quarter and the subsequent three quarters. The first quarter
(April-June 2009) saw a strong recovery of confidence in the investment markets
in general, and 'investment' (high interest) currencies in particular. The
gearing one return of our 'alpha composite' was 2.3% (FTSE Currency FRB5 excess
return in GBP: 1.8%).
The second quarter of the period (July-September 2009) saw continued strength in
the equity markets, but this did not flow through to a continuation of a
recovery in the carry trade returns. This meant that we suffered a negative
return in the quarter of -1.4% (FTSE Currency FRB5 excess return in GBP: -4.3%).
The third quarter (October-December 2009) saw the Euro weaken due to a number of
factors during the latter part of the quarter. These included the Fitch rating
agency cutting Greece's credit rating, the S&P rating agency downgrading its
outlook on the rating of both Spain and Portugal and debt problems, in
particular in Ireland and Greece, coming to the fore. The Euro weakness fed
through to the performance of the programme with a negative return of -0.4% over
the quarter (FTSE Currency FRB5 excess return in GBP: 0.6%).
The fourth quarter (January-March 2010) of the period saw a continued
disassociation in correlation between equity markets and carry trade returns as
equity markets rallied in the second half of the quarter after a period of
retrenchment while an anti-carry environment took hold. The resulting negative
return suffered was -1.2% over the quarter (FTSE Currency FRB5 excess return in
GBP: -2.9%).
We believe that, as the world economy returns to more normal fiscal and monetary
policies, the long-standing 30 year track record demonstrated in the FTSE index
should re-establish itself. As a result of our fundamental confidence in the
principles upon which our investment process is based we have maintained the
consistency of that process.
Annual Returns of Record Umbrella Currency Funds: year to 31 March 2010
+-------------------------+---------+------------+------------+
| Fund Name | Gearing | Annual | Volatility |
| | | Return % | since |
| | | | inception |
| | | | % p.a. |
+-------------------------+---------+------------+------------+
| Cash Plus | 7 | (7.10%) | 19.49% |
+-------------------------+---------+------------+------------+
| Equity Plus | 6 | 36.74% | 27.24% |
+-------------------------+---------+------------+------------+
| US Cash Plus | 7 | (2.41%) | 20.04% |
+-------------------------+---------+------------+------------+
| US Equity Plus | 6 | 36.88% | 24.32% |
+-------------------------+---------+------------+------------+
| Euro 1 | 3.5 | (2.01%) | 10.21% |
+-------------------------+---------+------------+------------+
| Sterling 10 | 2.5 | (3.13%) | 6.35% |
+-------------------------+---------+------------+------------+
| Sterling 20 | 5 | (8.42%) | 10.36% |
+-------------------------+---------+------------+------------+
| Alpha composite | 1 | (0.73%) | 2.84% |
+-------------------------+---------+------------+------------+
| Carry 250 | 2.5 | (5.97%)4 | n/a1 |
+-------------------------+---------+------------+------------+
| FTSE Currency FRB5 GBP | 1 | (4.78%) | 5.87%3 |
| Excess return | | | |
+-------------------------+---------+------------+------------+
| Emerging Markets seed | 2 | 12.05%5 | n/a1 |
| product | | | |
+-------------------------+---------+------------+------------+
| Global Equities (S&P | n/a | 46.57% | 15.36%3 |
| 500) 2 | | | |
+-------------------------+---------+------------+------------+
1 Carry 250 and Emerging Markets seed product have less than twelve months
historic data and by convention volatility is not included
2 Included for comparison
3 Since June 1978
4 Since October 2009
5 Since November 2009
Aligned incentives
Record operates a profit share scheme whereby 30% of operating profits over the
medium term are distributed between all members of staff. Every member of staff
is entitled to a profit share, and the distribution within the staff is
determined by each member's profit share 'units' and their salary. These are
determined in a formal six-monthly or annual review process. There are no other
bonus scheme arrangements across the Group.
The scheme requires all senior managers, with the exception of those individuals
who already own in excess of 2% of the Company, to have at least a third of
their remuneration in the form of share-based payments.
Board changes and personnel
The Board was strengthened with the addition in October 2009 of David Morrison
as a Non-executive Director. David is the founder and CEO of Prospect
Investment Management, a specialist private equity investor, and he brings
particular expertise in the management of generational change in growing
businesses. I am pleased to welcome David to the Board.
Peter Wakefield, the Chief Operating Officer, left the Group in August 2009
having been instrumental in the development of the pooled funds and the IPO. I
would like to reiterate my thanks to Peter for the substantial contribution he
made to the business over a ten year period. The responsibilities of the Chief
Operating Officer have been split between the Chief Financial Officer and the
Chief Investment Officer.
At the time of the IPO in November 2007, I indicated that it was my intention to
split the combined role of Chief Executive and Chairman within three to five
years. I have now indicated that I wish to take the role of Chairman following
the appointment of a Chief Executive before the end of the financial year ended
31 March 2011. The Nominations Committee, chaired by David Morrison, has
commenced the process of identifying a suitable Chief Executive.
On behalf of the Board I extend our thanks to all staff for their commitment to
the business and their hard work in this very difficult environment.
Group strategy and growth plans
We see the adoption of the currency Forward Rate Bias as an asset class by the
global investment community as a strategic goal for this business. We believe
that such adoption would transform this business into one of global scale.
However, even though we see our efforts to encourage this adoption as highly
rewarding in the long term, in the interim we see the expansion of the Active
Hedging client base, and the development and successful marketing of emerging
market currency products as more practical and immediate steps to take.
On the Active Hedging side, we are seeing interest from a group of mainly UK
pension fund investors who have found the cash flows that arose from their
passive hedges too disruptive, and where our Active Hedging is seen as a
cash-flow-controlled alternative. In the US and elsewhere, we have seen a
sharpening of interest in adopting Active Hedging without going through the
passive route. This has been particularly enhanced by a feeling on the part of
some investors that currencies will continue to be very volatile over the coming
years.
On our Absolute Return products, investors are increasingly looking for reliable
'alternative' assets in order to generate a more predictable return stream than
is available from equities. We believe that the 'asset class' project and
emerging market currency products could benefit in such an environment. Whilst
the short-term performance of the Absolute Return product is leading to further
client redemptions and a difficult backdrop for short-term sales, the
longer-term investment case remains strong. In particular we are encouraged by
early indicators of clients and consultants measuring our performance relative
to a 'beta' benchmark, as well as in absolute terms.
In order to position Record to benefit from developments in the currency market,
we have continued to recruit talented individuals, enhance our processes and
invest in systems infrastructure. In particular, the Group is currently in the
process of implementing a new back-office system that we anticipate will be
implemented in the second half of the current financial year.
We believe that the foundations that are being put in place will position the
business to benefit in the long term as currency becomes a recognised asset
class.
Neil Record
Chairman and Chief Executive Officer
Business Review
The twelve months to 31 March 2010 saw a continued move towards currency risk
aversion by clients. This led to a substantial increase in Active Hedging, which
accounted for 43% of fee income. Absolute Return products continued to see a
decline in AuME and, whilst overall investment performance was negative for the
year as a whole, this represented an improvement on the previous year.
Introduction
The Business Review is a review of the business by management. Its purpose is to
provide shareholders with a summary, setting out the business objectives of the
Group, the Board's strategy to achieve those objectives, the risks faced, the
regulatory and operating environment and the key performance indicators (KPIs)
used to measure performance.
This review has been prepared in accordance with the requirements of Section 417
of the Companies Act 2006 and it forms part of the Directors' Report. The
Company's auditors are required to report on whether the information given in
the Directors' Report and Business Review is consistent with the financial
statements.
Overview
The twelve months to 31 March 2010 saw a continued move towards currency risk
aversion by clients. This led to a substantial increase in Active Hedging, which
accounted for 43% of fee income. Absolute Return products continued to see a
decline in AuME and whilst overall investment performance was negative for the
year as a whole, this represented an improvement on the previous year. The Group
saw a marginal increase in AuME but falls in client numbers, fee income and
operating profit. Management fee income saw a significant reduction as a result
of a lower average AuME in the year compared to the previous year. The balance
sheet of the Group remains strong with substantial cash and capital resources
available to the Group.
KPIs
The Board and Executive Committee use a number of key performance indicators
(KPIs) to monitor the performance of the Group. A three year history of these
KPIs is shown below.
+----------------------------+-----------+------------+------------+
| KPIs | 2010 | 2009 | 2008 |
+----------------------------+-----------+------------+------------+
| · AuME at 31 March - | $34.0bn | $31.5bn | $55.7bn |
| US Dollars | | | |
+----------------------------+-----------+------------+------------+
| · AuME at 31 March - | GBP22.4bn | GBP22.0bn | GBP28.0bn |
| Sterling | | | |
+----------------------------+-----------+------------+------------+
| · Average AuME - US | $34.8bn | $45.6bn | $52.2bn |
| Dollars | | | |
+----------------------------+-----------+------------+------------+
| · Currency Alpha | (0.73%) | (3.49%) | (2.39%) |
| Composite | | | |
+----------------------------+-----------+------------+------------+
| · Client numbers at | 93 | 121 | 141 |
| 31 March | | | |
+----------------------------+-----------+------------+------------+
| · Average management | 15.2 | 17.1 | 16.3 |
| fee rates | | | |
+----------------------------+-----------+------------+------------+
| · Operating profit | 49% | 55% | 61% |
| margin | | | |
+----------------------------+-----------+------------+------------+
| · Basic EPS | 5.39 | 8.73 pence | 12.65 |
| | pence | | pence |
+----------------------------+-----------+------------+------------+
Summary of highlights
· AuME increased by $2.5bn (8%) during the year. AuME, when measured in
Sterling, increased by GBP0.4bn (2%).
· Average AuME decreased by $10.8bn (24%) during the year. The largest
component was the significant fall in Absolute Return AuME in the last quarter
of the year ended 31 March 2009.
· The excess return of our segregated composite, expressed as a percentage
of underlying assets on a gearing 1 basis, was -0.73%.
· Client numbers: this represents the number of separate legal entities
that have invested in a Record fund or appointed Record directly as an
investment manager. Each entity may have more than one mandate. The number of
clients at 31 March 2010 was 93, 23% lower than at the previous year end.
· The average management fee rates achieved for both segregated and pooled
Absolute Return mandates decreased to 26.6bps and 24.4bps respectively. The
average Active Hedging management fee rate increased to 23.7 bps.
· A combination of reduced management fees, marginally higher costs and a
reduced profit share cost resulted in an operating profit margin of 49% for the
year to 31 March 2010.
· The decrease in operating profit margin is reflected in the Group's
earnings per share decreasing to 5.39p per share.
Product review
Annual Returns of Record Umbrella Currency Funds: year to31 March 2010
+-------------------------+---------+------------+------------+
| Fund Name | Gearing | Annual | Volatility |
| | | Return % | since |
| | | | inception |
| | | | % p.a. |
+-------------------------+---------+------------+------------+
| Cash Plus | 7 | (7.10%) | 19.49% |
+-------------------------+---------+------------+------------+
| Equity Plus | 6 | 36.74% | 27.24% |
+-------------------------+---------+------------+------------+
| US Cash Plus | 7 | (2.41%) | 20.04% |
+-------------------------+---------+------------+------------+
| US Equity Plus | 6 | 36.88% | 24.32% |
+-------------------------+---------+------------+------------+
| Euro 1 | 3.5 | (2.01%) | 10.21% |
+-------------------------+---------+------------+------------+
| Sterling 10 | 2.5 | (3.13%) | 6.35% |
+-------------------------+---------+------------+------------+
| Sterling 20 | 5 | (8.42%) | 10.36% |
+-------------------------+---------+------------+------------+
| Alpha composite | 1 | (0.73%) | 2.84% |
+-------------------------+---------+------------+------------+
| Carry 250 | 2.5 | (5.97%)4 | n/a1 |
+-------------------------+---------+------------+------------+
| FTSE Currency FRB5 GBP | 1 | (4.78%) | 5.87%3 |
| Excess return | | | |
+-------------------------+---------+------------+------------+
| Emerging Markets seed | 2 | 12.05%5 | n/a1 |
| product | | | |
+-------------------------+---------+------------+------------+
| Global Equities (S&P | n/a | 46.57% | 15.36%3 |
| 500) 2 | | | |
+-------------------------+---------+------------+------------+
1 Carry 250 and Emerging Markets seed product have less than twelve months
historic data and by convention volatility is not included
2 Included for comparison
3 Since June 1978
4 Since October 2009
5 Since November 2009
AuME development
The Group has seen an overall increase in AuME of $2.5bn through the year,
reaching $34.0bn at the year end.
AuME movements result both from factors within Record's control and external
factors. External factors include the Sterling/US Dollar exchange rate and the
underlying asset value (usually equities) on which hedging mandates are based.
External factors accounted for a rise of $5.4bn in AuME during the year.
The Group has seen net outflows of $3.0bn from clients. Inflows from new
clients, which totalled $9.0bn, were offset by outflows from existing clients of
$12.0bn. Other movements included:
(i) a rise of $3.3bn related to movements in global stock and other markets
as many mandate sizes are linked to such markets;
(ii) a rise of $2.1bn due to changes in exchange rates over the period,
which affects the conversion of non-US Dollar mandate sizes into US Dollar AuME.
This does not have an equivalent impact on the Sterling value of fee income; and
(iii) a rise of $0.1bn due to investment performance in the Group's pooled
funds, which is compounded on a geared basis into the AuME in those funds.
Of these movements, (i) and (ii) are outside the control of the Group.
When expressed in Sterling, AuME in the year increased by 2% to GBP22.4bn (2009:
GBP22.0bn). This rise is more representative of the impact of AuME on underlying
management fee income with 37% of year end AuME being denominated in Sterling,
30% in US Dollars, 28% in Swiss Francs and 5% in Euros.
Record's Absolute Return products are offered on either a segregated mandate
basis or through pooled funds, where clients subscribe for units in funds for
which Record is the distributor and investment manager. Segregated Absolute
Return AuME fell to $3.6bn (2009: $8.3bn) following significant outflows of
$5.3bn. Record's pooled funds also experienced outflows with AuME falling to
$4.1bn (2009: $5.1bn).
Active Hedging mandates increased from $4.0bn to $12.0bn in the year. This
increase was principally due to the commencement of several large mandates in
the period.
Passive Hedging AuME increased by $0.4bn, a 3% increase in the year. This
increase was the combination of three factors: the movement in the Sterling/US
Dollar exchange rate (an increase of $1.0bn), a rise of $1.4bn in value of the
underlying assets, typically international equities, that the hedging programme
is established to hedge against, offset by the net outflow of $2.0bn. A number
of passive mandates are linked to overall programmes under which an additional
Absolute Return or Active Hedging mandate incorporates an element of Passive
Hedging.
Product mix
The Group's product mix has changed markedly over the period due to the AuME
movements described above. Hedging AuME has grown to 74% of AuME (2009: 54%), as
a result of the strong growth of the Active Hedging product, which accounts for
35% of AuME (2009: 13%). Together Absolute Return and Active Hedging represent
58% of AuME (2009: 56%) being higher margin products compared to Passive
Hedging. Absolute Return pooled funds made up 12% of AuME (2009: 16%) and
Absolute Return segregated funds 11% of AuME (2009: 27%).
At 31 March 2010 Record had 93 clients. The Group has gained several new clients
in the year but overall experienced a net loss of 28 clients.
+------------------------+---------+------+--------+-------+
| AuME by product |
+----------------------------------------------------------+
| AuME $ billions | 31-Mar-10 | 31-Mar-09 |
+------------------------+----------------+----------------+
| Absolute Return - | 3.6 | 11% | 8.3 | 27% |
| segregated | | | | |
+------------------------+---------+------+--------+-------+
| Absolute Return - | 4.1 | 12% | 5.1 | 16% |
| pooled | | | | |
+------------------------+---------+------+--------+-------+
| Sub-Total | 7.7 | 23% | 13.4 | 43% |
| Absolute Return | | | | |
+------------------------+---------+------+--------+-------+
| Active Hedging | 12.0 | 35% | 4.0 | 13% |
+------------------------+---------+------+--------+-------+
| Passive Hedging | 13.4 | 39% | 13.0 | 41% |
+------------------------+---------+------+--------+-------+
| Cash | 0.9 | 3% | 1.1 | 3% |
+------------------------+---------+------+--------+-------+
| Total | 34.0 | 100% | 31.5 | 100% |
+------------------------+---------+------+--------+-------+
| AuME by product |
+----------------------------------------------------------+
| AuME GBP billions | 31-Mar-10 | 31-Mar-09 |
+------------------------+----------------+----------------+
| Absolute Return - | 2.4 | 11% | 5.8 | 27% |
| segregated | | | | |
+------------------------+---------+------+--------+-------+
| Absolute Return - | 2.7 | 12% | 3.5 | 16% |
| pooled | | | | |
+------------------------+---------+------+--------+-------+
| Sub-Total | 5.1 | 23% | 9.3 | 43% |
| Absolute Return | | | | |
+------------------------+---------+------+--------+-------+
| Active Hedging | 7.9 | 35% | 2.8 | 13% |
+------------------------+---------+------+--------+-------+
| Passive Hedging | 8.8 | 39% | 9.1 | 41% |
+------------------------+---------+------+--------+-------+
| Cash | 0.6 | 3% | 0.8 | 3% |
+------------------------+---------+------+--------+-------+
| Total | 22.4 | 100% | 22.0 | 100% |
+------------------------+---------+------+--------+-------+
+----------+-----------+------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| AuME composition by product and base currency |
+-----------------------------------------------------------------------------------------------------------------------+
| | Absolute Return Segregated | Absolute | Active | Passive |
| | | Return | Hedging | Hedging |
| | | Pooled | | |
+----------+------------------------------------+-----------------------+-----------------------+-----------------------+
| Base | 31-Mar-10 | 31-Mar-09 | 31-Mar-10 | 31-Mar-09 | 31-Mar-10 | 31-Mar-09 | 31-Mar-10 | 31-Mar-09 |
| Currency | | | | | | | | |
+----------+-----------+------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Sterling | GBP | GBP 2.2bn | GBP | GBP | GBP | GBP | GBP | GBP |
| | 1.3bn | | 2.4bn | 3.2bn | 1.1bn | 0.3bn | 3.0bn | 3.6bn |
+----------+-----------+------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| US | USD | USD 3.3bn | - | - | USD | USD | - | USD |
| Dollar | 0.8bn | | | | 9.4bn | 1.3bn | | 0.2bn |
+----------+-----------+------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Swiss | CHF | CHF 1.7bn | - | - | CHF | CHF | CHF | CHF |
| Franc | 0.7bn | | | | 0.9bn | 2.6bn | 8.2bn | 7.8bn |
+----------+-----------+------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Euro | - | - | EUR | EUR | - | - | EUR | EUR |
| | | | 0.3bn | 0.3bn | | | 0.8bn | 0.6bn |
+----------+-----------+------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Canadian | CAD | CAD 0.5bn | - | - | - | - | - | - |
| Dollar | 0.2bn | | | | | | | |
+----------+-----------+------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | | | | | | | | |
+----------+-----------+------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Total | USD | USD 8.3bn | USD | USD | USD | USD | USD | USD |
| AuME US | 3.6bn | | 4.1bn | 5.1bn | 12.0bn | 4.0bn | 13.4bn | 13.0bn |
| Dollars | | | | | | | | |
+----------+-----------+------------------------+-----------+-----------+-----------+-----------+-----------+-----------+
+--------------------------------+-----------+------------+
| Client numbers by product |
+---------------------------------------------------------+
| |31-Mar-10 | 31-Mar-09 |
+--------------------------------+-----------+------------+
| Absolute Return - segregated | 14 | 20 |
+--------------------------------+-----------+------------+
| Absolute Return - pooled | 60 | 87 |
+--------------------------------+-----------+------------+
| Sub-Total Absolute | 74 | 107 |
| Return | | |
+--------------------------------+-----------+------------+
| Active Hedging | 7 | 4 |
+--------------------------------+-----------+------------+
| Passive Hedging | 12 | 10 |
+--------------------------------+-----------+------------+
| Total | 93 | 121 |
+--------------------------------+-----------+------------+
+------------------------------+------+-------+------+-------+
| AuME by Client type |
+------------------------------------------------------------+
| AuME $ billions / % | 31-Mar-10 | 31-Mar-09 |
+------------------------------+--------------+--------------+
| Government & Public funds | 20.2 | 59% | 15.4 | 49% |
+------------------------------+------+-------+------+-------+
| Corporate Pension funds | 9.5 | 28% | 9.0 | 28% |
+------------------------------+------+-------+------+-------+
| Foundations & Investment | 4.3 | 13% | 7.1 | 23% |
| funds | | | | |
+------------------------------+------+-------+------+-------+
| Total | 34.0 | 100% | 31.5 | 100% |
+------------------------------+------+-------+------+-------+
+-----------------------------+------+------+------+------+
| AuME by Client location |
+---------------------------------------------------------+
| AuME $ billions / % | 31-Mar-10 | 31-Mar-09 |
+-----------------------------+-------------+-------------+
| UK | 12.5 | 37% | 14.4 | 46% |
+-----------------------------+------+------+------+------+
| Europe (excluding UK) | 12.0 | 35% | 13.3 | 42% |
+-----------------------------+------+------+------+------+
| North America | 9.5 | 28% | 2.0 | 6% |
+-----------------------------+------+------+------+------+
| Rest of the World | - | - | 1.8 | 6% |
+-----------------------------+------+------+------+------+
| Total | 34.0 | 100% | 31.5 | 100% |
+-----------------------------+------+------+------+------+
Gearing
The Absolute Return product allows clients to pick the level of exposure they
desire in the FX currency programme. The pooled funds offer clients the ability
to be either 2.5, 3.5, 5, 6 or 7 times geared with either Sterling, US Dollars
or Euros as the base currency. The segregated mandates allow clients to
individually pick the level of gearing.
It should be emphasised that in this case 'gearing' refers to the multiple of
the maximum size of the aggregate forward contracts in the currency programme,
to the pooled fund's net assets or the segregated mandate size. This is limited
by the willingness of counterparty banks to take exposure to the pooled fund or
segregated client. Gearing in this context does not involve borrowing.
The level of gearing has a direct consequence on the level of volatility to
which the investment will be exposed. A 5 times geared fund should anticipate
volatility of 20%, compared to a 2.5 times geared fund volatility of 10%. By
comparison, an equity portfolio typically has a volatility of around 14%.
The level of gearing obviously impacts on the returns that clients have
experienced and this has been particularly relevant in an environment of
predominantly negative returns. Pooled clients in the higher geared funds have
seen losses that have increased their propensity to redeem their investment.
Investment performance
Both the Passive and Active Hedging products are systematic in nature. Both
products continued to perform in line with client expectations and in particular
the Active Hedging product generated significant value for our US clients in the
second half of the financial year.
For the Absolute Return product, the core investment process, the Trend/Forward
Rate Bias (FRB) strategy, aims to buy selected higher interest rate currencies
and sell selected lower interest rate currencies and to manage these positions
with a view to controlling losses. Historically this investment approach has
shown positive returns due to the existence of the Forward Rate Bias and
trending movements in selected currency pairs. The Forward Rate Bias captures
the real interest rate differentials which arise as a result of surplus
countries demanding a risk premium for financing deficit countries.
We regard the Forward Rate Bias as a beta, or risk premium, return, rationally
paid to current account surplus investors for financing other countries' current
account deficits. Trending, or momentum, is a well-established market
inefficiency, that arises due to constraints on real arbitrage, the availability
of arbitrage capital, the long lags associated with real economic adjustments
and the market's response to news.
Due to the credit crunch and banking crisis, deficit countries moved to lower
short-term interest rates before the start of the fiscal year, and accelerated
quantitative easing programmes in response to the global recession as the year
progressed. This led to an environment of low interest rates and differentials,
which continued through the year. The low interest rates and recessionary
environment did not allow spot rates of the high interest rate currencies to
increase appreciably from the lows experienced. This, along with the costs
involved in the risk control process, resulted in the Trend/FRB strategy making
losses over the period.
In contrast, the Range Trading strategy, which relies on certain currency pairs
trading in a narrow price range, benefited from the lower interest rate
environment as many currency pairs oscillated around the yearly mean. However,
the gains made were insufficient to compensate for the losses experienced from
the core Trend/FRB strategy.
The process of deficit economies 'draining' the built up excess liquidity will
provide the Trend/FRB strategy with opportunities to potentially outperform in
the future. The strengthening of the Australian Dollar, following the Reserve
Bank of Australia's decision to tighten its monetary policy by increasing rates
earlier than other deficit countries, supports our view that the low interest
rate environment is a transitory phase in the economic cycle and therefore gives
us grounds for optimism for the Trend/FRB strategy performance going forward.
Strategy
The strategic goals of the Group remain unchanged even in the current period of
strain in all financial markets:
· Seek to exploit opportunities for hedging (Active and Passive) products
in the current market environment
· Promote currency Forward Rate Bias as a manager-independent asset class -
currency 'beta'
· Seek to maintain and grow currency Absolute Return, including emerging
market currencies
· Develop both existing and new products within currency investment
management, including emerging market currencies
· Continued investment in people and infrastructure
Market development
Active and Passive Hedging
The movements in exchange rates over the last 18 months have caused investors to
re-examine their strategy for managing exchange rate exposure. For example, UK
investors with international equities have seen the value of their international
equities appreciate as Sterling has weakened. Those investors who chose a
passive hedging strategy have seen an offsetting cost associated with this
hedging strategy that has often had very significant cash flow implications.
Similar investors who were unhedged are examining how they protect currency
gains.
Record's Active Hedging programme has continued to perform in line with
expectations during this period, and has reduced the cost of a purely passive
hedging programme for UK clients. The programme continues to protect those UK
clients against a rise in Sterling.
Absolute Return
The Absolute Return programme has seen a period of negative performance from
July 2007. The product has seen significant outflows over the last 18 months and
it is likely that there will be further outflows in the short term.
Record remains committed to the long-term performance of this product and
believes that performance will return. In the near future, interest rates are
likely to revert to longer-term averages and this should benefit the investment
process.
In the immediate future, it is unlikely that there will be client inflows. In
the medium term, providing positive performance returns, Record believes that
the environment will be favourable for clients to consider currency as an
alternative asset class.
Currency beta
Record's medium-term aim is to develop currency as an asset class in its own
right. The 'asset class project' is now well under way with the launch of the
first currency index, the FTSE Currency FRB5 Index, in September 2009. This
represents the first in a series of indices that it is anticipated FTSE will
launch for currencies. The development of products to track the FTSE indices has
the potential to result in an inflow of investment into the currency universe.
Product development
Index products
The asset class project requires the launch of products that track published
indices. Record launched the first fund to track the FTSE Currency FRB5 Index,
Carry 250, which has been trialled successfully since October 2009. The fund is
2.5 times geared. This fund will be launched to external investors in July 2010.
Emerging markets
In addition to the asset class project, we continue to pursue opportunities in
emerging markets. A product has been developed and trialled internally since
November 2009. We have commenced discussions with clients on emerging markets
and it is anticipated that individual mandates will be tailored to specific
client requirements. Since the inception of the trial, the product, that is
twice geared, has delivered a return of 12.1% over the five months to 31 March
2010.
People management
Record's success depends on its ability to attract, retain and motivate highly
talented staff.
Recruitment
The recruitment process is carefully structured to ensure that the right people
are recruited into the Group. This continues with a comprehensive induction
programme for all new joiners to allow them to adapt to the specialist
environment within Record.
The Group has continued to recruit selectively throughout the year in order to
sustain a flexible, scalable platform for future growth. The number of employees
in the Group has increased marginally to 70 at 31 March 2010 (2009: 62).
Staff retention and motivation
An effective performance review and objective setting process, personal
development planning including the development of career paths, together with
our open and involving office culture, are all key priorities in the development
and retention of our staff. In addition, the Group Profit Share Scheme promotes
the acquisition of equity in the Company by staff, improving both motivation and
retention.
Board and management succession
There have been a number of changes to the Board during the year. As detailed in
the Chairman and Chief Executive Officer's statement, the Board has been
strengthened by the addition of David Morrison as a Non-executive Director. As
reported in last year's Annual Report and Accounts, Peter Wakefield left the
business in August 2009.
Record's Executive Committee has been strengthened during the year by the
addition of two senior members of management, Dmitri Tikhonov (Head of Portfolio
Management) and James Wood-Collins (Head of Client Team), to the team comprised
of Record's four Executive Directors.
Neil Record, Chairman and Chief Executive, has indicated that before the end of
the financial year ending 31 March 2011, he would like to assume the role of
Executive Chairman and relinquish the role of Chief Executive. The Board has
tasked the Nominations Committee, chaired by David Morrison, with selecting an
appropriate successor as Chief Executive. The Nominations Committee has met on a
number of occasions and is moving forward with a process to identify the
individual who is able to continue to deliver the strategic goals identified by
the Board.
Infrastructure development
Record is constantly reviewing its internal systems and processes in order to
realise gains in capability, profitability, efficiency and effectiveness, and to
reduce its risk profile. After a formal evaluation process, the Grouphas
commenced the implementation of a new software system to enhance Record's middle
and back office platform across a range of financial instruments.
The system will provide Record with increased flexibility, both now and in the
future, in terms of:
· adding new instruments;
· deploying new products and portfolios; and
· delivering an improved level of client service.
The implementation of this system should enhance the control environment through
the:
· robustness of a proven third party system;
· reduction of 'off system' processes; and
· standardisation of operational processes.
It is anticipated that the system will go live towards the end of 2010.
Risk management
The Board recognises that risk is inherent in all of its business dealings, and
in the markets and instruments in which the Group operates. It therefore places
a high priority on ensuring that there is a strong risk management culture
within the Group. Effective risk management and strong internal controls are
central to the Group's business model and during the year the Group has made
further progress in developing this framework.
The Audit Committee was established to provide oversight and independent
challenge in relation to internal control and risk management systems and
procedures. The Compliance Director is responsible for ensuring compliance with
appropriate legal and other regulatory standards, and for internal risk review
of operational processes. Additionally, Mazars LLP performed a number of pieces
of assurance work in respect of Record's internal controls during the year.
The Board has established a Risk Management Committee which is chaired by the
Chief Financial Officer and has the Managing Director, the Head of Operations,
the Head of Trading, the Head of Reporting Services, the Head of Portfolio
Management and the Compliance Director as members. The Committee reviews
existing and new risks, and the incidence and nature of any operational errors
with the objective of ensuring that adequate systems and controls are in place
to minimise and preferably eliminate such errors and their impact on both the
Group and its clients. Further details are provided in the Corporate Governance
section of the Annual Report.
The Group appointed Grant Thornton UK LLP as the reporting accountant for its
Audit and Assurance 01/06 (AAF) report. There are two types of assurance
engagements associated with the framework, specifically 'reasonable' assurance
engagements and 'limited' assurance engagements. The Group undertakes the higher
standard of 'reasonable' assurance engagements.
The principal risks faced by the Group fall into a number of distinct categories
and the means used to mitigate them are both diverse and relevant to the nature
of the risk concerned. The principal risks and the means used to mitigate them
are set out below:
+----------------+---------------------+-----------------------------+
| Risk | Description of risk | Mitigation |
| type / | | |
| owner | | |
+----------------+---------------------+-----------------------------+
| Strategic | | |
| and | | |
| business | These include: | These include: |
| risks | Any impairment to | The Board's lengthy |
| | Record's standing | investment management |
| The risk | in the currency | experience. |
| that the | management markets | The Group's investment |
| medium | with investors and | process is steered by an |
| and long | investment | Investment Committee of |
| term | consultants may | four, and managed on a day |
| profitability | result in the loss | to day basis by a |
| of the Group | of AuME and / or | systematic process which is |
| could be | fee income. | not reliant on any |
| adversely | Loss of key | individual employee. |
| impacted by | personnel; could | All clients have two points |
| the failure | impact on the | of contact to ensure |
| to identify | management of the | continuity in the client |
| and implement | Group and / or lead | relationship if any one |
| the correct | to a loss of AuME. | person left. |
| strategy. | Concentration risk | The Group considers that |
| | on single product | its remuneration policy and |
| Delegated to: | type; Record's | in particular the operation |
| Record plc | products are all | of the Group Profit Share |
| Board; and | currency management | Scheme promotes key |
| Executive | based hence it | personnel retention and |
| Committee | would be adversely | effective risk management. |
| | affected by a move | The Group devotes |
| | away from Active | considerable senior |
| | Hedging and / or | management time and effort |
| | currency as an | to its relationships with |
| | asset class by its | the investment consultancy |
| | core client base. | firms to ensure that |
| | Account | developments within the |
| | concentration; | Group and its investment |
| | Record has a | research and processes are |
| | relatively small | understood by these firms. |
| | number of high | Diversification of |
| | value clients. | investment capabilities |
| | Reliance on | across risk reducing and |
| | investment | risk taking products to |
| | consultants; if a | reduce single event / |
| | consultant no | product exposure. |
| | longer believes | Record's commitment to |
| | that currency for | client services excellence, |
| | return or Active | the transparency of the |
| | Hedging is suitable | investment process and the |
| | for clients and / | regular reporting and face |
| | or a consultant no | to face contact with |
| | longer believes | clients is integral to |
| | that Record is a | retention. |
| | recommended | Record's risk appetite does |
| | investment manager, | not extend to taking either |
| | then this could | regulatory or reputational |
| | result in a loss of | risks within the decision |
| | AuME. | making process. Sufficient |
| | Changes in the | allocation of resources is |
| | regulatory | provided to enhance |
| | environment or tax | prevention of any systemic |
| | regime making | failures of day to day |
| | investment in | product implementation that |
| | currency less | could affect the firm's |
| | attractive to | reputation. |
| | investors. | The firm has an almost |
| | | equal split between revenue |
| | | generated via Hedging |
| | | products and that from |
| | | Absolute Return. |
+----------------+---------------------+-----------------------------+
| Investment | | |
| risks | | |
| | The Group is paid | These include: |
| The risk | by its Absolute | Experienced Investment |
| that long | Return clients to | Committee meets frequently |
| term | generate positive | ensuring consistent core |
| investment | investment | investment processes are |
| outperformance | performance over | applied. |
| is not | the medium and long | Dedicated currency |
| delivered, | term by taking | management research and |
| damaging | investment risk on | investment focus. |
| prospects for | their behalf. Any | Remuneration policy links |
| winning and | sustained period of | investment senior |
| retaining | poor investment | managements' remuneration |
| clients, and | performance reduces | to long term performance of |
| putting | the value of AuME | the Group. |
| average | in the Group's | |
| management fee | pooled funds and | |
| margins under | segregated mandates | |
| pressure. | that could lead to | |
| Delegated to: | mandate | |
| Investment | terminations by | |
| Committee | clients, to loss of | |
| | confidence in the | |
| | Group's investment | |
| | model by clients, | |
| | potential clients | |
| | and the investment | |
| | consultants who | |
| | advise them. | |
+----------------+---------------------+-----------------------------+
| Operational | | |
| risks | | |
| | These include: | These include: |
| Risks in | The Group is | Record prepares an annual |
| this | exposed to the risk | AAF 01/06 report. The |
| category | of failure of its | contents of this report, |
| are broad | proprietary IT | which have been |
| in nature | system (ROMP, or | independently reviewed and |
| and | Record Overlay | tested by Grant Thornton UK |
| inherent in | Management | LLP, provide assurances of |
| all | Programme) and / | the Group's procedures and |
| businesses. | or other IT | controls to mitigate |
| They | systems. | operating risk. |
| include the | Execution and | Record has an outsourced |
| risk that | process management; | Internal Audit function |
| operational | dealing, portfolio, | that reports independently |
| flaws | settlement and | to the Audit Committee. |
| result in | reporting errors. | Each department has |
| business | Non compliance, | established procedures |
| losses - | including | manuals that are available |
| through | monitoring of | to all members of staff. |
| error or | investment | The adherence to these |
| fraud, the | breaches. | procedures is checked |
| inability | Record's investment | through the compliance |
| to | process involves | monitoring programme, AAF |
| capitalise | high daily trading | review and the internal |
| on market | turnover of client | audit programme. |
| opportunities, | positions in both | The Group has developed |
| or weaknesses | size and volume, | comprehensive disaster |
| in systems and | therefore it can be | recovery and business |
| controls. | said to be reliant | contingency plans. These |
| | on market | cover scenarios from server |
| Delegated to: | liquidity. | failure to destruction of |
| | Record exposes | the Group's offices. |
| Risk | clients to | Alternative office |
| Management | derivative | facilities and equipment |
| Committee | transactions with | are available at a disaster |
| | large banks as the | recovery provider should |
| | counterparty. As an | the premises be |
| | over the counter | compromised. Disaster |
| | (OTC) product, | recovery procedures are |
| | these contracts | tested on a regular basis |
| | inherently contain | at the site of the disaster |
| | a degree of | recovery provider. |
| | counterparty risk | There is an established |
| | with the | Risk Management Committee |
| | counterparty bank. | that meets on a monthly |
| | | basis. The Risk Management |
| | | Committee oversees the |
| | | credit policy regarding |
| | | counterparty exposure. |
| | | Engagement letters or |
| | | service level agreements |
| | | are in place with all |
| | | significant service |
| | | providers. |
| | | The Group's investment |
| | | processes are at the day to |
| | | day level systematic and |
| | | non-discretionary in |
| | | nature. ROMP prompts trades |
| | | that are executed by a |
| | | dedicated trading team |
| | | without discretion. ROMP |
| | | therefore controls the |
| | | trading to ensure that |
| | | portfolios are within the |
| | | structure dictated by the |
| | | investment process. A |
| | | dedicated portfolio |
| | | management team oversee the |
| | | investment process and |
| | | provide post-trade |
| | | compliance assurances. |
+----------------+---------------------+-----------------------------+
| Treasury | | |
| risks | | |
| | These include: | These include: |
| The | | |
| risks | More than 50% of | Monthly reporting of all |
| that | Group revenues are | balance sheet exposures to |
| management | denominated in a | the Executive Committee and |
| does not | currency other than | Board. |
| appropriately | Sterling, the | The Group has adopted a |
| mitigate | Group's functional | credit risk policy to |
| balance sheet | and reporting | manage its credit risks, |
| risks or | currency, yet the | under which it keeps its |
| exposures | Group's cost base | cash on deposit with at |
| potentially | is almost 100% | least two A1/A+ or better |
| resulting in | Sterling based. | rated banks at any one |
| an adverse | The Group invests a | time. |
| impact on the | limited amount of | The Group hedges its |
| financial | its resources in | non-Sterling income on a |
| performance | its own funds (seed | monthly basis from the |
| or position | capital), exposing | moment income is accrued |
| of the Group. | it to price risk, | until the anticipated date |
| | credit risk, and | of receipt by using forward |
| Delegated to: | foreign exchange | fixed rate currency sales |
| | risk. | contracts. |
| Chief | Liquidity | |
| Financial | management. | |
| Officer | The Group is | |
| | exposed to credit | |
| | risk and interest | |
| | rate risk in | |
| | respect of its cash | |
| | balances. | |
+----------------+---------------------+-----------------------------+
Financial review
Total revenue decreased by 29% to GBP33.4m, principally due to the reduction in
management fees. This is broadly in line with the reduction in average AuME
during the year of 24%. Total expenditure decreased by 19% to GBP17.0m
principally through a reduction in the Group Profit Share cost. Profit before
tax decreased by 38% to GBP16.7m.
+--------------------------------------+----------+----------+
| GBP'000 | FY10 | FY09 |
+--------------------------------------+----------+----------+
| Management fees | 33,244 | 45,561 |
+--------------------------------------+----------+----------+
| Performance fees | 224 | 1,436 |
+--------------------------------------+----------+----------+
| Other revenue | (44) | (201) |
+--------------------------------------+----------+----------+
| Total revenue | 33,424 | 46,796 |
+--------------------------------------+----------+----------+
| Personnel (excluding Group Profit | (6,119) | (5,628) |
| Share Scheme) | | |
+--------------------------------------+----------+----------+
| Non-personnel cost | (3,800) | (4,220) |
+--------------------------------------+----------+----------+
| Total expenditure (excl. Group | (9,919) | (9,848) |
| Profit Share Scheme) | | |
+--------------------------------------+----------+----------+
| Group Profit Share Scheme | (7,053) | (11,091) |
+--------------------------------------+----------+----------+
| Operating profit | 16,452 | 25,857 |
+--------------------------------------+----------+----------+
| % | 49.2% | 55.3% |
+--------------------------------------+----------+----------+
| Net interest received | 220 | 912 |
+--------------------------------------+----------+----------+
| Profit before tax | 16,672 | 26,769 |
+--------------------------------------+----------+----------+
| Tax | (4,720) | (7,494) |
+--------------------------------------+----------+----------+
| Profit after tax | 11,952 | 19,275 |
+--------------------------------------+----------+----------+
Fees
In the year ended 31 March 2010, the fall in the number of clients and the
associated decline in average AuME together with a reduction in performance fees
have driven a decline in total fee income of 29%. Excluding performance fees,
fee income decreased by 27%.
+----------------------------------+------------+------------+
| Average management fee rates by product - (bps*) |
+------------------------------------------------------------+
| Product | FY10 | FY09 |
+----------------------------------+------------+------------+
| Absolute Return: | 24.4 | 29.8 |
| - pooled | | |
+----------------------------------+------------+------------+
| - segregated | 26.6 | 27.2 |
+----------------------------------+------------+------------+
| Absolute Return - combined | 25.4 | 28.5 |
| average | | |
+----------------------------------+------------+------------+
| Active Hedging | 23.7 | 20.6 |
+----------------------------------+------------+------------+
| Passive Hedging | 2.6 | 1.7 |
+----------------------------------+------------+------------+
| Weighted average | 15.2 | 17.1 |
+----------------------------------+------------+------------+
Record charges fees to its clients based upon the AuME of the product provided.
Record typically offers all Absolute Return clients the choice of paying an
asset-based management fee only or the alternative of management fee plus
performance fee. Higher performance fee rates usually accompany lower management
fee rates and vice versa. The fee combinations are structured so that Record is
indifferent between them in the medium term. Both Passive and Active Hedging
typically have fixed fee arrangements. Both management fees and performance fees
are normally invoiced on a quarterly basis, although Record invoices management
fees for some of its larger clients on a monthly basis. 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.
+---------------------------------+-----------+------------+
| Total fee analysis |
+----------------------------------------------------------+
| Fees GBPm | FY10 | FY09 |
+---------------------------------+-----------+------------+
| Management | 33.2 | 45.6 |
+---------------------------------+-----------+------------+
| Performance | 0.2 | 1.4 |
+---------------------------------+-----------+------------+
| Other | - | (0.2) |
+---------------------------------+-----------+------------+
| Total | 33.4 | 46.8 |
+---------------------------------+-----------+------------+
Management fees
Management fee income during the year was GBP33.2m (2009: GBP45.6m). The table
below shows strong growth in both Hedging products, with management fee income
attributable to Active Hedging of GBP14.4m, up 136% in the period and Passive
Hedging up 47% to GBP2.2m. The management fee income attributable to the
Absolute Return product is down 56% to GBP16.6m.
+--------------------------------+----------+------------+
|Management fee by product (excluding performance fees) |
+--------------------------------------------------------+
| Fees GBPm | FY10 | FY09 |
+--------------------------------+----------+------------+
| Absolute Return - segregated | 8.0 | 18.3 |
+--------------------------------+----------+------------+
| Absolute Return - pooled | 8.6 | 19.7 |
+--------------------------------+----------+------------+
| Sub-Total Absolute | 16.6 | 38.0 |
| Return | | |
+--------------------------------+----------+------------+
| Active Hedging | 14.4 | 6.1 |
+--------------------------------+----------+------------+
| Passive Hedging | 2.2 | 1.5 |
+--------------------------------+----------+------------+
| Total | 33.2 | 45.6 |
+--------------------------------+----------+------------+
Performance fees
Performance fees earned in the year were GBP0.2m compared with GBP1.4m in the
previous year, a decrease of 86%. Performance fee structures apply primarily to
Absolute Return mandates. Clients may choose between management fee only
structures or lower management fees with a performance fee. The balance is
towards fee structures with a performance fee element.
Other income
Other income includes gains made on the Emerging Market product trial, losses on
hedging revenues denominated in currencies other than Sterling, and foreign
exchange gains, in addition to revenues from activities other than currency
management.
Group Profit Share Scheme
The Group operates a Group Profit Share Scheme such that a long term average of
30% of operating profit before Group Profit Share is made available to be
awarded to employees. The Remuneration Committee has recommended that for the
year ended 31 March 2010, the Group Profit Share Scheme is 30% of pre-GPS
operating profit. For the year ended 31 March 2010, this represents GBP7.1m, a
reduction of GBP4.0m from the previous financial year. This represents a year on
year decrease of 36% compared with a 29% year on year decrease in total fee
income.
Directors and senior management, who do not already own at least 2% of the
issued shares in Record plc, are required to take a proportion of this
remuneration in the form of shares subject to lock-up arrangements.
Operating margin
The operating profit for the year ended 31 March 2010 of GBP16.5m was GBP9.4m
lower than the operating profit for the previous financial year (2009:
GBP25.9m). The Group achieved an operating profit margin of 49% for the year
ended 31 March 2010 (55% in 2009). This results principally from operating costs
(excluding Group Profit Share) being spread across lower fee income resulting in
a reduced operating margin.
During the year ended 31 March 2010, total operating expenditure of the Group
decreased by GBP3.9m to GBP17.0m. This results from a GBP0.5m increase in
personnel costs (excluding Group Profit Share Scheme), offset by a GBP4.0m
reduction in the Group Profit Share Scheme and a GBP0.4m reduction in
non-personnel costs.
Cash flow
The Group's ability to generate cash has remained strong, albeit the year end
cash position has been weakened by the advancement of profit share and dividend
payments in March that would typically occur in June and August respectively.
Cash generated from operations before tax was GBP12.2m, with GBP6.1m paid in
taxation and GBP13.6m in dividends. At 31 March 2010 the closing cash and cash
equivalents was GBP21.9m compared with GBP29.8m at 31 March 2009.
Dividends
Shareholders have received two interim dividends during the year, being an
interim dividend of 2.00p per share paid on 22 December 2009 and a further
interim dividend of 2.00p per share paid on 16 March 2010. The Board recommends
paying a final dividend of 0.59p per share, equivalent to GBP1.3m. This would
take the overall dividend to 4.59p per share, being an unchanged dividend on the
prior year. This represents an 85% payment of profits after tax for the year
ended 31 March 2010.
Subject to shareholder approval, the dividend will be paid on 4 August 2010 to
shareholders on the register on 25 June 2010, the ex-dividend date being 23 June
2010. The dividend cover achieved in the year was 1.2 (2009: 1.9).
Capital management
The Board's intention is to retain sufficient capital (being equivalent to
shareholders' funds) within the business to meet continuing obligations, sustain
future growth and to provide a buffer against adverse market conditions. To this
end the Group has developed a financial model to assist it in forecasting future
capital requirements over a four year time horizon under various scenarios.
Shareholders' funds were GBP25.7m at 31 March 2010 (2009: GBP27.2m). The Group
has no debt.
Regulatory environment and regulatory capital
Record Currency Management Limited (RCML) is authorised and regulated in the UK
by the Financial Services Authority. RCML is registered as an Investment Adviser
with the Securities and Exchange Commission in the United States. RCML is
registered in Canada in the category of International Adviser (Investment
Counsel & Portfolio Manager) with the Ontario Securities Commission in Ontario,
although this category was abolished in September 2009. RCML is currently
operating under a transition exemption whilst the new registration process is
completed. RCML is approved by the Irish Financial Services Regulator to act as
promoter and investment manager to Irish authorised collective investment
schemes.
The Group has one UK regulated entity, RCML, on behalf of which quarterly
capital adequacy returns are filed. RCML held surplus capital resources relative
to its requirements at all times during the period under review. The Group is
also subject to consolidated regulatory capital requirements, whereby the Board
is required to assess the degree of risk across the business, and hold
sufficient capital within the Group against it.
The Group has an active risk-based approach to monitoring and managing risks
used for reviewing and amending its Internal Capital Adequacy Assessment Process
(ICAAP).
The Board is satisfied that the Group is adequately capitalised to continue its
operations effectively given the considerable balance sheet resources maintained
by the Group. At 31 March 2010, Record had Tier 1 capital of GBP25.7m. Further
information regarding the Group's capital adequacy status can be found in the
Group's Pillar 3 disclosure, which is available on our website at
www.recordcm.com.
Outlook - The new financial year
The short-term outlook is likely to see a continuation of the growth of new
Active Hedging mandates, offset by further attrition in the Absolute Return
product.
In July 2010 the Carry 250 product will be launched to external investors. The
launch of an index tracking currency product represents a milestone in the asset
class project. It is likely that there will be further indices and index
tracking products launched in 2010, probably including a FTSE Currency FRB10
index of ten developed market currencies.
The successful seeding of the Emerging Market product will be followed with
marketing the concept of emerging market currency to clients during 2010. Any
client wins are likely to be relatively modest and involve segregated mandates
rather than fund based structures.
The project to implement the new middle and back office system is progressing
towards implementation by the end of 2010.
The fiscal environment will probably lead to increased interest rates in a
number of developed countries in the next twelve months. A return to more normal
monetary conditions should be favourable to our investment strategy and the
Forward Rate Bias. If this occurs, we anticipate the resumption of positive
returns from the Absolute Return investment strategy. A sustained period of
positive investment performance is likely to be a precursor for investors to
consider an investment in the Absolute Return product.
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.
RECORD PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH
+------------------------------------+------+----------+----------+
| | | 2010 | 2009 |
+------------------------------------+------+----------+----------+
| |Note | GBP'000 | GBP'000 |
+------------------------------------+------+----------+----------+
| Revenue | 3 | 33,424 | 46,796 |
+------------------------------------+------+----------+----------+
| Cost of sales | | - | (11) |
+------------------------------------+------+----------+----------+
| Gross profit | | 33,424 | 46,785 |
+------------------------------------+------+----------+----------+
| Administrative expenses | | (16,972) | (20,928) |
+------------------------------------+------+----------+----------+
| Operating profit | 4 | 16,452 | 25,857 |
+------------------------------------+------+----------+----------+
| Finance income | 6 | 220 | 917 |
+------------------------------------+------+----------+----------+
| Finance costs | 7 | - | (5) |
+------------------------------------+------+----------+----------+
| Profit before tax | | 16,672 | 26,769 |
+------------------------------------+------+----------+----------+
| Taxation | 8 | (4,720) | (7,494) |
+------------------------------------+------+----------+----------+
| Profit after tax | | 11,952 | 19,275 |
+------------------------------------+------+----------+----------+
| Other comprehensive income | | | |
+------------------------------------+------+----------+----------+
| Net losses on available for sale | | (60) | - |
| financial assets | | | |
+------------------------------------+------+----------+----------+
| Income tax relating to components | | 13 | - |
| of other comprehensive income | | | |
+------------------------------------+------+----------+----------+
| Total comprehensive income for the | | 11,905 | 19,275 |
| period | | | |
+------------------------------------+------+----------+----------+
| | | | |
+------------------------------------+------+----------+----------+
| Total comprehensive income for the | | | |
| year attributable to: | | | |
+------------------------------------+------+----------+----------+
| Owners of the parent | | 11,905 | 19,275 |
+------------------------------------+------+----------+----------+
| | | | |
+------------------------------------+------+----------+----------+
| | | | |
+------------------------------------+------+----------+----------+
| Earnings per share for profit | | | |
| attributable to the equity holders | | | |
| of the Company during the year | | | |
| (expressed in pence per share) | | | |
+------------------------------------+------+----------+----------+
| Basic earnings per share | 9 | 5.39 | 8.73 |
+------------------------------------+------+----------+----------+
| Diluted earnings per share | 9 | 5.38 | 8.72 |
+------------------------------------+------+----------+----------+
| | | | |
+------------------------------------+------+----------+----------+
| | | | |
+------------------------------------+------+----------+----------+
RECORD PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| | | 2010 | 2009 | 2008 |
+--------------------------------------------------------+----------+---------------------+---------------------+---------------------+
| | Note | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Non-current assets | | | | | | | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Property, plant and equipment | 12 | 205 | | 368 | | 611 | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Intangible assets | 13 | 535 | | - | | - | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Deferred tax assets | 15 | 143 | | 146 | | 46 | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| | | | 883 | | 514 | | 657 |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Current assets | | | | | | | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Trade and other receivables | 16 | 8,325 | | 7,742 | | 8,917 | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Derivative financial assets | 17 | 98 | | - | | - | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Cash and cash equivalents | 18 | 21,861 | | 29,798 | | 22,545 | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| | | | 30,284 | | 37,540 | | 31,462 |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Current liabilities | | | | | | | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Trade and other payables | 19 | (3,874) | | (7,076) | | (7,191) | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Corporation tax liabilities | 19 | (2,384) | | (3,774) | | (6,356) | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Derivative financial liabilities | 19 | (149) | | (13) | | (23) | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| | | | (6,407) | | (10,863) | | (13,570) |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Net current assets | | | 23,877 | | 26,677 | | 17,892 |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Non-current assets available for sale (disposal group) | 20 | | 940 | | - | | - |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Total net assets | | | 25,700 | | 27,191 | | 18,549 |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Equity | | | | | | | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Issued share capital | 21 | 55 | | 55 | | 55 | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Share premium account | | 1,809 | | 1,809 | | 1,809 | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Capital redemption reserve | 23 | 20 | | 20 | | 20 | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Retained earnings | | 23,816 | | 25,307 | | 16,665 | |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
| Total equity | | | 25,700 | | 27,191 | | 18,549 |
+--------------------------------------------------------+----------+----------+----------+----------+----------+----------+----------+
RECORD PLC
COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH
+-------------------+------+---------+---------+---------+---------+---------+---------+
| |Note | 2010 | 2009 | 2008 |
+-------------------+------+-------------------+-------------------+-------------------+
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Non-current | | | | | | | |
| assets | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Investments | 14 | | 30 | | 30 | | 30 |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Current assets | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Trade and other | 16 | - | | 3 | | 21 | |
| receivables | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Derivative | 17 | 98 | | - | | - | |
| financial assets | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Cash and cash | 18 | 1,077 | | 2,018 | | 2,129 | |
| equivalents | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| | | | 1,175 | | 2,021 | | 2,150 |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Current | | | | | | | |
| liabilities | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Trade and other | 19 | (47) | | (28) | | (10) | |
| payables | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Corporation tax | 19 | (15) | | (18) | | (18) | |
| liabilities | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| | | | (62) | | (46) | | (28) |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Net current | | | 1,113 | | 1,975 | | 2,122 |
| assets | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Non-current | 20 | | 940 | | - | | - |
| assets available | | | | | | | |
| for sale | | | | | | | |
| (disposal group) | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Total net assets | | | 2,083 | | 2,005 | | 2,152 |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Equity | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Issued share | 21 | 55 | | 55 | | 55 | |
| capital | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Share premium | | 1,809 | | 1,809 | | 1,809 | |
| account | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Capital | 23 | 20 | | 20 | | 20 | |
| redemption | | | | | | | |
| reserve | | | | | | | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Retained earnings | | 199 | | 121 | | 268 | |
+-------------------+------+---------+---------+---------+---------+---------+---------+
| Total equity | | | 2,083 | | 2,005 | | 2,152 |
+-------------------+------+---------+---------+---------+---------+---------+---------+
RECORD PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2010
+-------------------+---------+---------+------------+----------+---------------+
| | Called | Share | Capital | Retained | Total |
| | up | premium | redemption | earnings | shareholders' |
| | share | account | reserve | | equity |
| | capital | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+---------+---------+------------+----------+---------------+
| As at 1 April | 55 | 1,809 | 20 | 25,307 | 27,191 |
| 2009 | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Dividends paid | - | - | - | (13,596) | (13,596) |
+-------------------+---------+---------+------------+----------+---------------+
| Own shares held | - | - | - | (51) | (51) |
| by EBT | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Employee share | - | - | - | 251 | 251 |
| options | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Transactions with | - | - | - | (13,396) | (13,396) |
| owners | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Profit for the | - | - | - | 11,952 | 11,952 |
| year | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Other | | | | | |
| comprehensive | | | | | |
| income | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Available for | - | - | - | (60) | (60) |
| sale financial | | | | | |
| assets | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Income tax | - | - | - | 13 | 13 |
| relating to | | | | | |
| components of | | | | | |
| other | | | | | |
| comprehensive | | | | | |
| income | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| As at 31 March | 55 | 1,809 | 20 | 23,816 | 25,700 |
| 2010 | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2009
+-------------------+---------+---------+------------+----------+---------------+
| | Called | Share | Capital | Retained | Total |
| | up | premium | redemption | earnings | shareholders' |
| | share | account | reserve | | equity |
| | capital | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+---------+---------+------------+----------+---------------+
| As at 1 April | 55 | 1,809 | 20 | 16,665 | 18,549 |
| 2008 | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Dividends paid | - | - | - | (10,142) | (10,142) |
+-------------------+---------+---------+------------+----------+---------------+
| Own shares held | - | - | - | (579) | (579) |
| by EBT | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Employee share | - | - | - | 88 | 88 |
| options | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Transactions with | - | - | - | (10,633) | (10,633) |
| owners | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Profit for the | - | - | - | 19,275 | 19,275 |
| year | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| As at 31 March | 55 | 1,809 | 20 | 25,307 | 27,191 |
| 2009 | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
RECORD PLC
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2010
+-------------------+---------+---------+------------+----------+---------------+
| | Called | Share | Capital | Retained | Total |
| | up | premium | redemption | earnings | shareholders' |
| | share | account | reserve | | equity |
| | capital | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+---------+---------+------------+----------+---------------+
| As at 1 April | 55 | 1,809 | 20 | 121 | 2,005 |
| 2009 | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Dividends paid | - | - | - | (13,596) | (13,596) |
+-------------------+---------+---------+------------+----------+---------------+
| Transactions with | - | - | - | (13,596) | (13,596) |
| owners | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Profit for the | - | - | - | 106 | 106 |
| year | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Dividends | - | - | - | 13,615 | 13,615 |
| received from | | | | | |
| subsidiaries | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Other | | | | | |
| comprehensive | | | | | |
| income | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Available for | - | - | - | (60) | (60) |
| sale financial | | | | | |
| assets | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Income tax | - | - | - | 13 | 13 |
| relating to | | | | | |
| components of | | | | | |
| other | | | | | |
| comprehensive | | | | | |
| income | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| As at 31 March | 55 | 1,809 | 20 | 199 | 2,083 |
| 2010 | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2009
+-------------------+---------+---------+------------+----------+---------------+
| | Called | Share | Capital | Retained | Total |
| | up | premium | redemption | earnings | shareholders' |
| | share | account | reserve | | equity |
| | capital | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+---------+---------+------------+----------+---------------+
| As at 1 April | 55 | 1,809 | 20 | 268 | 2,152 |
| 2008 | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Dividends paid | - | - | - | (10,142) | (10,142) |
+-------------------+---------+---------+------------+----------+---------------+
| Transactions with | - | - | - | (10,142) | (10,142) |
| owners | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Profit for the | - | - | - | 65 | 65 |
| year | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| Dividends | - | - | - | 9,930 | 9,930 |
| received from | | | | | |
| subsidiaries | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
| As at 31 March | 55 | 1,809 | 20 | 121 | 2,005 |
| 2009 | | | | | |
+-------------------+---------+---------+------------+----------+---------------+
RECORD PLC
CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 MARCH
+----------------------------+----------+----------+----------+----------+----------+
| | 2010 | | 2009 |
+----------------------------+---------------------+----------+---------------------+
| | GBP'000 | GBP'000 | | GBP'000 | GBP'000 |
+----------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Profit after tax | 11,952 | | | 19,275 | |
+----------------------------+----------+----------+----------+----------+----------+
| Adjustments for: | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Corporation tax | 4,720 | | | 7,494 | |
+----------------------------+----------+----------+----------+----------+----------+
| Finance income | (220) | | | (917) | |
+----------------------------+----------+----------+----------+----------+----------+
| Finance expense | - | | | 5 | |
+----------------------------+----------+----------+----------+----------+----------+
| Depreciation of property, | 250 | | | 363 | |
| plant and equipment | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Loss on AFS assets | (60) | | | - | |
+----------------------------+----------+----------+----------+----------+----------+
| Share-based payments | 251 | | | 89 | |
| expense | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| | | 16,893 | | | 26,309 |
+----------------------------+----------+----------+----------+----------+----------+
| Changes in working capital | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| (Increase)/Decrease in | | (591) | | | 1,038 |
| receivables | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Decrease in payables | | (3,202) | | | (116) |
+----------------------------+----------+----------+----------+----------+----------+
| Decrease in other | | (902) | | | (11) |
| financial liabilities | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| CASH INFLOW FROM OPERATING | | 12,198 | | | 27,220 |
| ACTIVITIES | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Interest paid | | - | | | (5) |
+----------------------------+----------+----------+----------+----------+----------+
| Corporation taxes paid | | (6,094) | | | (10,176) |
+----------------------------+----------+----------+----------+----------+----------+
| NET CASH INFLOW FROM | | 6,104 | | | 17,039 |
| OPERATING ACTIVITIES | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| CASH FLOW FROM INVESTING | | | | | |
| ACTIVITIES | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Purchase of property, | (87) | | | (120) | |
| plant and equipment | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Purchase of intangible | (535) | | | - | |
| assets | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Interest received | 229 | | | 1,054 | |
+----------------------------+----------+----------+----------+----------+----------+
| NET CASH (OUTFLOW)/ INFLOW | | (393) | | | 934 |
| FROM INVESTING ACTIVITIES | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| CASH FLOW FROM FINANCING | | | | | |
| ACTIVITIES | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Purchase of treasury | (52) | | | (578) | |
| shares | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Dividends paid to equity | (13,596) | | | (10,142) | |
| shareholders | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| CASH OUTFLOW FROM | | (13,648) | | | (10,720) |
| FINANCING ACTIVITIES | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| NET (DECREASE)/INCREASE IN | | (7,937) | | | 7,253 |
| CASH AND CASH EQUIVALENTS | | | | | |
| IN THE PERIOD | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Cash and cash equivalents | | 29,798 | | | 22,545 |
| at the beginning of the | | | | | |
| period | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| CASH AND CASH EQUIVALENTS | | 21,861 | | | 29,798 |
| AT THE END OF THE PERIOD | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
RECORD PLC
COMPANY STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 MARCH
+----------------------------+----------+----------+----------+----------+----------+
| | 2010 | | 2009 |
+----------------------------+---------------------+----------+---------------------+
| | GBP'000 | GBP'000 | | GBP'000 | GBP'000 |
+----------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Profit after tax | 106 | | | 65 | |
+----------------------------+----------+----------+----------+----------+----------+
| Adjustments for: | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Corporation tax | 28 | | | 19 | |
+----------------------------+----------+----------+----------+----------+----------+
| Loss on AFS assets | (60) | | | - | |
+----------------------------+----------+----------+----------+----------+----------+
| Finance income | (15) | | | (84) | |
+----------------------------+----------+----------+----------+----------+----------+
| | | 59 | | | - |
+----------------------------+----------+----------+----------+----------+----------+
| Changes in working capital | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Decrease in other | | (1,038) | | | - |
| financial assets | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Increase in payables | | 18 | | | 19 |
+----------------------------+----------+----------+----------+----------+----------+
| CASH (OUTFLOW)/INFLOW FROM | | (961) | | | 19 |
| OPERATING ACTIVITIES | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Corporation taxes paid | | (17) | | | (19) |
+----------------------------+----------+----------+----------+----------+----------+
| NET CASH OUTFLOW FROM | | (978) | | | - |
| OPERATING ACTIVITIES | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| CASH FLOW FROM INVESTING | | | | | |
| ACTIVITIES | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Dividends received | 13,615 | | | 9,930 | |
+----------------------------+----------+----------+----------+----------+----------+
| Interest received | 18 | | | 101 | |
+----------------------------+----------+----------+----------+----------+----------+
| NET CASH INFLOW FROM | | 13,633 | | | 10,031 |
| INVESTING ACTIVITIES | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| CASH FLOW FROM FINANCING | | | | | |
| ACTIVITIES | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Dividends paid to equity | (13,596) | | | (10,142) | |
| shareholders | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| CASH OUTFLOW FROM | | (13,596) | | | (10,142) |
| FINANCING ACTIVITIES | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| NET DECREASE IN CASH AND | | (941) | | | (111) |
| CASH EQUIVALENTS IN THE | | | | | |
| PERIOD | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Cash and cash equivalents | | 2,018 | | | 2,129 |
| at the beginning of the | | | | | |
| period | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| CASH AND CASH EQUIVALENTS | | 1,077 | | | 2,018 |
| AT THE END OF THE PERIOD | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
Notes to the accounts for the year ended 31 March 2010
1 Accounting policies
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all the periods presented unless otherwise stated.
(a) Accounting convention
Basis of preparation
The Group and Company have prepared their financial statements under
International Financial Reporting Standards (IFRSs) as adopted by the European
Union. IFRSs comprise standards and interpretations approved by the
International Accounting Standards Board (IASB) and the International Financial
Reporting Interpretations Committee (IFRIC) as adopted in the European Union as
at 31 March 2010. The financial statements have been prepared on an historical
cost basis, modified to include fair valuation of derivative financial
instruments.
The preparation of financial statements in accordance with the recognition and
measurement principles with 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.
Adoption of International Financial Reporting Standards ('Standards')
The following standards have been applied by the Group from 1 April 2009:
IAS 1 (Revised) Presentation of financial statements
IFRS 1 (Amendment) First time adoption of IFRS
IFRS 7 (Amendment) Financial instruments: Disclosure
IFRS 8 Operating segments
IAS 1 - The revised standard has changed the way the Group's primary financial
statements have been presented. The revision required information to be
aggregated on the basis of shared characteristics and introduced a 'statement of
comprehensive income' to enable readers to analyse changes in an entity's equity
resulting from transactions with owners separately from 'non-owner' changes. The
revisions included changes in the titles of the primary statements to reflect
their function more clearly (for example, the balance sheet is renamed a
'statement of financial position'). The new titles are not mandatory but have
been added by the Group. Comparative information has been re-presented so that
it also is in conformity with the revised standard.
IFRS 7 - The amendment introduced a three-level hierarchy for fair value
measurement disclosures and required entities to provide additional disclosures
about the relative reliability of those fair value measurements. In addition,
the amendment clarified and enhanced liquidity risk disclosure requirements to
enable users to better evaluate the nature and extent of liquidity risk arising
from financial instruments and how the entity managed that risk. The Group has
provided these additional disclosures in the notes to the financial statements
where relevant.
IFRS 8 - This standard replaced IAS 14 and requires entities whose debt or
equity instruments are traded on a public market to adopt the 'management
approach' to reporting the financial performance and position of its operating
segments. Information to be reported is what management (specifically the Chief
Operating Decision Maker (CODM)) uses internally for evaluating performance and
deciding how to allocate resources to operating segments. There is no longer a
requirement to make disclosure based on primary and secondary reporting formats,
nor is there a requirement to distinguish between business and geographical
segments.
Despite these changes, application of the new standard has not significantly
impacted the way management reports segmental information. Management believe
that under the new standard it continues to have only one reporting segment,
being the provision of currency management services.
Any standards and interpretations that have been issued but are not yet
effective, and that are available for early application, have not been applied
by the Group in these financial statements. Application of these standards and
interpretations is not expected to have a material effect on the financial
statements in the future.
(b) Basis of consolidation
The Group financial statements consolidate those of the parent company and all
of its subsidiary undertakings drawn up to 31 March 2010. Subsidiaries are all
entities over which the Group has the power to control the financial and
operating policies. Record plc obtains and exercises control through more than
half the voting rights for all its subsidiaries. All subsidiaries have a
reporting date of 31 March.
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 Group profit
after tax for the year includes a profit of GBP77,362 (2009 loss: GBP146,602)
which is dealt with in the financial statements of the holding company.
Inter-company transactions, balances and unrealised gains and losses on
transactions between Group companies are eliminated.
(c) Segment reporting
The Group provides its Directors with additional revenue information by product.
It is unable to allocate costs, assets and liabilities by product, and on that
basis, the Directors consider that the Group has only one segment. The Group
sub-divides the single operating segment into two currency management products
being 'Hedging' and 'Absolute Return' and reports its performance between two
fee structures being 'management fees' and 'performance fees'. Revenue
information analysing the aforementioned products is presented in note 3.
(d) Foreign currencies
The financial statements are presented in Sterling (GBP), which is also the
functional currency of the parent company. Foreign currency transactions are
translated into the functional currency of the parent company using the exchange
rates prevailing at the dates of the transactions (spot exchange rate). 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 profit or loss.
In order to hedge its exposure to certain foreign exchange risks, the Group
enters into forward contracts (see note 24 Financial risk management). The
Group does not apply hedge accounting.
(e) Revenue recognition
Revenue is recognised in the statement of comprehensive income when the amount
of revenue can be measured reliably; it is probable that economic benefits will
flow to the entity; the stage of completion can be measured reliably; and the
costs incurred and costs to complete the transaction can be measured reliably
also.
Management fees are accrued on a daily basis based upon the Assets under
Management Equivalent (AuME). The Group is entitled to earn performance fees
from a number of clients where the performance of the clients' assets exceeds
defined benchmarks by an agreed level of outperformance over a set time period.
Performance fees are recognised when the fee amount can be estimated reliably
and it is probable that the fee will be received. Fees are recognised at the end
of a performance period.
(f) Retirement benefits
The Group operates defined contribution pension plans for the benefit of certain
employees. The Group makes contributions to independently administered plans,
such contributions being recognised as an expense when they fall due. The Group
has no legal or constructive obligation to make any further payments to the
plans other than the contributions due.
(g) Share-based payments
The Group issues share awards to employees. Share options and deferred share
awards issued under the Group Bonus Scheme, the Group Profit Share Scheme and
the Flotation Bonus Scheme are classified as share-based payments with cash
alternatives under IFRS 2. The fair value of the debt component of the amounts
payable to the employee is calculated as the cash amount offered to the employee
at grant date and the fair value of the equity component of the amounts payable
to the employee is calculated as the market value of the share options or award
at grant date less the cash forfeited in order to receive the share options or
award. The debt component is charged to the statement of comprehensive income
over the period in which the option or award is earned, the equity component is
charged to the statement of comprehensive income over the vesting period of the
option or award.
All other awards have been classified as equity-settled under IFRS 2. The fair
value of the amounts payable to employees under these awards is recognised as an
expense over the vesting period of the option, with a corresponding increase in
equity.
The fair value of options granted prior to listing was measured at grant date
using the Black-Scholes formula, taking into account the terms and conditions
upon which the instruments were granted. The fair value amounts for the options
issued since listing on the London Stock Exchange were determined using quoted
share prices. Further details on the share-based compensation plans are included
in note 22.
(h) Leases
Leases in which substantially all the risks and rewards are retained by the
lessor are classified as operating leases. Payments made under these operating
leases are recognised in profit or loss on a straight line basis over the term
of the lease. Benefits received as an incentive to sign a lease, whatever form
they may take, are credited to profit or loss on a straight line basis over the
lease term.
(i) Dividend distribution
Interim and special dividends are recognised when paid and final dividends when
approved by shareholders.
(j) Property, plant and equipment
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.
Computer equipment - 2-5 years
Fixtures and fittings - 4 years
Leasehold improvements - period from acquisition to next rent review
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.
(k) 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 asset unless such lives
are indefinite. Amortisation is included within operating expenses in the
statement of comprehensive income. Intangible assets are amortised from the date
they are available for use. Useful lives are as follows:
Software - 5 years
Amortisation periods and methods are reviewed annually and adjusted if
appropriate.
(l) Trade and other receivables
Trade and other receivables are stated at their 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. Trade receivables are
reduced by appropriate allowances for estimated irrecoverable amounts.
(m) Cash and cash equivalents
Cash and cash equivalents comprise 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.
(n) Deferred taxation
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 substantially 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 amount 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.
(o) Trade and other payables
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.
(p) 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.
Financial assets and financial liabilities are measured initially at fair value
plus transaction costs, except for financial assets and financial liabilities
carried at fair value through profit or loss, which are measured initially at
fair value. Financial assets and liabilities are measured subsequently as
described below.
Financial Assets
For the purpose of subsequent measurement, financial assets are classified into
the following categories upon initial recognition:
Loans and receivables;
Financial assets at fair value through profit or loss; and
Available for sale financial assets.
The category determines subsequent measurement and whether any resulting income
and expense is recognised in profit or loss or in other comprehensive income.
All financial assets except those at fair value through profit or loss are
subject to review for impairment at least at each reporting date. Financial
assets are impaired when there is any objective evidence that a financial asset
or a group of financial assets is impaired. Different criteria to determine
impairment are applied for each category of financial assets.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. After initial
recognition these are measured at amortised cost using the effective interest
method, less provision for impairment. Discounting is omitted where the effect
of discounting is immaterial. The Group's cash and cash equivalents and trade
and other receivables fall into this category of financial instruments.
Individual receivables are considered for impairment when they are past due or
when other objective evidence is received that a specific counterparty will
default. Impairment of trade receivables is presented within 'other expenses'.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets
that meet certain conditions and are designated at fair value through profit or
loss upon initial recognition. All derivative financial instruments fall into
this category. Assets in this category are measured at fair value with gains or
losses recognised in profit or loss. The fair values of derivative financial
instruments are determined by reference to active market transactions.
Available for sale financial assets (disposal group)
Available for sale financial assets are non-derivative financial assets that are
either designated to this category or do not qualify for inclusion in any of the
other categories of financial assets. The Group's available for sale assets are
limited to seed capital in the Carry 250 fund (disposal group).
All available for sale financial assets are measured at fair value. Gains and
losses are recognised in other comprehensive income and reported within reserves
within equity, except for impairment losses which are recognised in profit or
loss. When the asset is disposed of or is determined to be impaired the
cumulative gain or loss recognised in other comprehensive income is reclassified
from the equity reserve to profit or loss and presented as a reclassification
adjustment within other comprehensive income.
Financial liabilities
Financial liabilities are measured at amortised cost using the effective
interest method, except for financial liabilities held for trading or designated
at fair value through profit or loss, that are carried at fair value with gains
or losses recognised through profit or loss.
Derivative financial liabilities
The Group uses foreign exchange forward contracts to manage its foreign currency
exposures.
Derivatives are initially recognised at cost on the date on which the contract
is entered into unless 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.
(q) Impairment of assets
The Group assesses annually whether there is any indication that any of its
assets have been impaired. 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.
(r) Taxation
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.
(s) Own shares
The Record plc Employee Benefit Trust (EBT) was formed under a Trust Deed dated
19 December 2007 to hold shares acquired under the Record plc share-based
compensation plans. A total of 586,068 (2009: 696,972; 2008: 168,287) ordinary
shares were held in the EBT at the reporting date. 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.
The EBT is consolidated in the Group financial statements.
Neither the purchase nor sale of own shares leads to a gain or loss being
recognised in the Group income statement. Further information regarding the
Record plc share-based compensation plans and relevant transactions made during
the year are included in note 22.
(t) Group and Company reserves
The share premium account records the difference between the nominal value of
shares issued and the value of the consideration received. The use of the share
premium account is governed by the Companies Act 2006.
Where shares have been redeemed or purchased wholly out of the Company's
profits, the Companies Act 2006 requires a transfer to the capital redemption
reserve equal to the amount by which the Company's issued share capital is
diminished. Furthermore the provisions of the Act relating to a reduction of the
Company's share capital apply as if the capital redemption reserve were paid up
share capital of the Company.
(u) 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.
(v) Non-current assets classified as available for sale (disposal groups)
When the Group intends to sell a non-current asset (disposal group), and if sale
within twelve months is highly probable, the asset is classified as 'available
for sale' and presented separately in the statement of financial position.
Assets classified as 'available for sale' are measured at the lower of their
carrying amounts immediately prior to their classification as 'available for
sale' and their fair value less costs to sell. However, some available for sale
assets, such as financial assets or deferred tax assets, continue to be measured
in accordance with the Group's accounting policy for those assets.
2 Critical accounting estimates and judgements
The estimates and associated assumptions are based on historical experience and
various other factors 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. 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. Note 22 covers the assumptions made in calculating the fair value of
share options offered by the Group to its employees. The Directors have judged
that the Group does not bear substantially all the risks and rewards of
ownership of its leasehold premises and therefore accounts for the leases as
operating leases as described in note 27.
3 Segmental analysis
The Directors, who together are the entity's Chief Operating Decision Maker,
consider that its services comprise one operating segment (being the provision
of currency management services) and that it operates in a market that is not
bound by geographical constraints.
For management purposes, the Group sub-divides the single business segment into
two currency management products being Hedging and Absolute Return and reports
its performance between two fee structures being management fees and performance
fees. Revenue information analysing the aforementioned products is presented
below:
(a) Product class
The Group's main trading activities can be split between currency management and
other Group activities including consultancy.
+--------------------------------+----------+------------+
| Product Class |
+--------------------------------------------------------+
| Fees | FY10 | FY09 |
+--------------------------------+----------+------------+
| | GBP'000 | GBP'000 |
+--------------------------------+----------+------------+
| Active hedging | | |
+--------------------------------+----------+------------+
| Management fees | 14,432 | 6,065 |
+--------------------------------+----------+------------+
| Performance fees | - | 831 |
+--------------------------------+----------+------------+
| Passive hedging | | |
+--------------------------------+----------+------------+
| Management fees | 2,211 | 1,547 |
+--------------------------------+----------+------------+
| Absolute Return segregated | | |
| funds | | |
+--------------------------------+----------+------------+
| Management fees | 8,038 | 18,261 |
+--------------------------------+----------+------------+
| Performance fees | - | - |
+--------------------------------+----------+------------+
| Absolute Return pooled funds | | |
+--------------------------------+----------+------------+
| Management fees | 8,563 | 19,688 |
+--------------------------------+----------+------------+
| Performance fees | 224 | 605 |
+--------------------------------+----------+------------+
| Other revenues | (44) | (201) |
+--------------------------------+----------+------------+
| Total | 33,424 | 46,796 |
+--------------------------------+----------+------------+
(b) Countries served
The geographical analysis of revenue is based on the destination. All turnover
originated in the UK. All assets of the Group are located in the UK.
Other group activities form less than 1% of the total Group income. This is not
considered significant and they are not analysed by geographical region.
+--------------------------------+----------+------------+
| Currency Management Income by Geographical Region |
+--------------------------------------------------------+
| Fees | FY10 | FY09 |
+--------------------------------+----------+------------+
| | GBP'000 | GBP'000 |
+--------------------------------+----------+------------+
| UK | 14,885 | 27,388 |
+--------------------------------+----------+------------+
| US | 10,921 | 4,311 |
+--------------------------------+----------+------------+
| Switzerland | 4,568 | 4,699 |
+--------------------------------+----------+------------+
| UAE | 720 | 5,167 |
+--------------------------------+----------+------------+
| Other | 2,374 | 5,432 |
+--------------------------------+----------+------------+
| | 33,468 | 46,997 |
+--------------------------------+----------+------------+
| Other Group activities | (44) | (201) |
+--------------------------------+----------+------------+
| | 33,424 | 46,796 |
+--------------------------------+----------+------------+
During the year ended 31 March 2010, GBP7.6m or 23% of the Group's revenue was
accounted for by a single client. No other clients accounted for more than 10%
of the Group's revenue during the year.
4 Operating profit
Operating profit for the year is stated after charging/(crediting):
+------------------------------------------+----------+-----------+
| | FY10 | FY09 |
+------------------------------------------+----------+-----------+
| | GBP'000 | GBP'000 |
+------------------------------------------+----------+-----------+
| Staff costs | 13,172 | 16,868 |
+------------------------------------------+----------+-----------+
| Depreciation of property, plant and | 250 | 363 |
| equipment | | |
+------------------------------------------+----------+-----------+
| Fees payable to the Company's auditor | 33 | 32 |
| for the audit of the Company's annual | | |
| accounts | | |
+------------------------------------------+----------+-----------+
| The audit of the Company's subsidiaries, | 34 | 31 |
| pursuant to legislation | | |
+------------------------------------------+----------+-----------+
| Other services pursuant to legislation | 71 | 59 |
+------------------------------------------+----------+-----------+
| Other services relating to taxation | 15 | 29 |
+------------------------------------------+----------+-----------+
| Operating lease rentals: Land and | 195 | 195 |
| buildings | | |
+------------------------------------------+----------+-----------+
| Exchange (gains)/losses on hedging | (140) | 782 |
| activities | | |
+------------------------------------------+----------+-----------+
| Other exchange losses /(gains) | 288 | (538) |
+------------------------------------------+----------+-----------+
5 Staff costs
The average number of employees, including Directors, employed by the Group
during the year was:
+--------------------------------------+----------+-----------+
| | FY10 | FY09 |
+--------------------------------------+----------+-----------+
| Client Services | 10 | 10 |
+--------------------------------------+----------+-----------+
| Research | 6 | 4 |
+--------------------------------------+----------+-----------+
| Portfolio Management | 9 | 4 |
+--------------------------------------+----------+-----------+
| Trading | 5 | 4 |
+--------------------------------------+----------+-----------+
| Operations | 7 | 5 |
+--------------------------------------+----------+-----------+
| Reporting Services | 6 | 8 |
+--------------------------------------+----------+-----------+
| Systems | 6 | 6 |
+--------------------------------------+----------+-----------+
| Finance, Human Resources and Legal | 7 | 5 |
+--------------------------------------+----------+-----------+
| Administration | 3 | 3 |
+--------------------------------------+----------+-----------+
| Compliance | 2 | 2 |
+--------------------------------------+----------+-----------+
| Corporate | 8 | 7 |
+--------------------------------------+----------+-----------+
| Annual Average | 69 | 58 |
+--------------------------------------+----------+-----------+
The Group reorganised its operational structure with effect from 1 April 2009.
The employee numbers for the year ended 31 March 2009 have been restated as if
the reorganisation was implemented on 1 April 2008.
The Company had no employees during the year (2009: nil).
The aggregate payroll costs of the above employees, including Directors, were as
follows:
+------------------------------------------+----------+-----------+
| | FY10 | FY09 |
+------------------------------------------+----------+-----------+
| | GBP'000 | GBP'000 |
+------------------------------------------+----------+-----------+
| Wages and salaries | 8,875 | 14,408 |
+------------------------------------------+----------+-----------+
| Social security costs | 1,410 | 1,822 |
+------------------------------------------+----------+-----------+
| Pension costs | 483 | 489 |
+------------------------------------------+----------+-----------+
| Equity-settled share-based payments | 2,404 | 149 |
+------------------------------------------+----------+-----------+
| Aggregate payroll costs | 13,172 | 16,868 |
+------------------------------------------+----------+-----------+
6 Finance income
+------------------------------------------+----------+-----------+
| | FY10 | FY09 |
+------------------------------------------+----------+-----------+
| | GBP'000 | GBP'000 |
+------------------------------------------+----------+-----------+
| Interest on short-term deposits | 220 | 917 |
+------------------------------------------+----------+-----------+
7 Finance costs
+------------------------------------------+----------+-----------+
| | FY10 | FY09 |
+------------------------------------------+----------+-----------+
| | GBP'000 | GBP'000 |
+------------------------------------------+----------+-----------+
| Interest on bank overdraft | - | 5 |
+------------------------------------------+----------+-----------+
8 Taxation - Group
+------------------------------------------+----------+-----------+
| | FY10 | FY09 |
+------------------------------------------+----------+-----------+
| Tax expense comprises: | GBP'000 | GBP'000 |
+------------------------------------------+----------+-----------+
| Current tax expense | 4,718 | 7,644 |
+------------------------------------------+----------+-----------+
| Adjustments recognised in current year | (1) | (50) |
| in relation to the current tax of prior | | |
| years | | |
+------------------------------------------+----------+-----------+
| Total current tax | 4,717 | 7,594 |
+------------------------------------------+----------+-----------+
| Deferred tax charge/(income) relating to | 3 | (100) |
| the origination and reversal of | | |
| temporary differences | | |
+------------------------------------------+----------+-----------+
| Total tax expense | 4,720 | 7,494 |
+------------------------------------------+----------+-----------+
The total charge for the year can be reconciled to the accounting profit as
follows:
+------------------------------------------+----------+-----------+
| | FY10 | FY09 |
+------------------------------------------+----------+-----------+
| | GBP'000 | GBP'000 |
+------------------------------------------+----------+-----------+
| Profit before taxation | 16,672 | 26,769 |
+------------------------------------------+----------+-----------+
| Taxation at the standard rate of tax in | 4,668 | 7,495 |
| the UK of 28% | | |
+------------------------------------------+----------+-----------+
| Tax effects of: | | |
+------------------------------------------+----------+-----------+
| Other disallowable expenses and | 13 | 10 |
| non-taxable income | | |
+------------------------------------------+----------+-----------+
| Capital allowances for the period lower | 30 | 57 |
| than depreciation | | |
+------------------------------------------+----------+-----------+
| Lower tax rates on UK subsidiary | (9) | (6) |
| undertakings | | |
+------------------------------------------+----------+-----------+
| Adjustments recognised in current year | (1) | (50) |
| in relation to the current tax of prior | | |
| years | | |
+------------------------------------------+----------+-----------+
| Other temporary differences | 19 | (12) |
+------------------------------------------+----------+-----------+
| Total tax expense | 4,720 | 7,494 |
+------------------------------------------+----------+-----------+
At the year end the Group had net deferred tax assets of GBP143,991 (2009:
GBP146,598). At the reporting date there were earned and unearned share options
not exercised and deferred share awards with anintrinsic value for tax purposes
of GBP350,175 (2009: GBP460,002). The Group will be entitled to a corporation
tax deduction in respect of the difference between the exercise price and the
strike price upon the vesting of these shares.
The standard rate of corporation tax in the UK is 28% (2009: 28%). 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 tax charge for the year ended 31 March 2010 was GBP4,719,102 (2009:
GBP7,494,179) which was 28.3% of profit before tax (2009: 28.0%).
9 Earnings per share
Basic earnings per share is calculated by dividing the profit 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.
+-----------------------------------------+-------------+----------+-------------+
| | FY10 | | FY09 |
+-----------------------------------------+-------------+----------+-------------+
| Weighted average number of shares used | 220,668,098 | | 220,878,796 |
| in calculation of basic earnings per | | | |
| share | | | |
+-----------------------------------------+-------------+----------+-------------+
| Effect of dilutive potential ordinary | 416,830 | | 246,472 |
| shares - share options | | | |
+-----------------------------------------+-------------+----------+-------------+
| Weighted average number of shares used | 221,084,928 | | 221,125,268 |
| in calculation of diluted earnings per | | | |
| share | | | |
+-----------------------------------------+-------------+----------+-------------+
| | | | |
+-----------------------------------------+-------------+----------+-------------+
| | pence | | pence |
+-----------------------------------------+-------------+----------+-------------+
| Basic earnings per share | 5.39 | | 8.73 |
+-----------------------------------------+-------------+----------+-------------+
| Diluted earnings per share | 5.38 | | 8.72 |
+-----------------------------------------+-------------+----------+-------------+
The potential dilutive shares relate to the share options and deferred share
awards granted in respect of three of the Group's incentive schemes i.e. the
Group Bonus Scheme, the Flotation Bonus Scheme and the Share Scheme. There were
share options and deferred share awards in place at the beginning of the year
over 696,972 shares. During the year options were exercised, or share awards
vested, over 193,364 shares. In June 2009, the Group granted a further 82,460
deferred share awards with a potentially dilutive effect.
10 Dividends
The dividends paid by the Group during the year ended 31 March 2010 totalled
GBP13,595,519 (6.15p per share). The dividends paid during the year ended 31
March 2009 totalled GBP10,141,982 (4.59p per share).
11 Retirement benefit obligations
The Group operates a defined contribution pension scheme. The assets of the
scheme are held separately from those of the Group in an independently
administered fund. The pension cost charge represents contributions payable by
the Group to the fund and amounted to GBP482,908 (2009: GBP489,490).
12 Property, plant and equipment - Group
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 | Total |
| | improvements | equipment | and | |
| | | | fittings | |
+---------------+--------------+-----------+------------+------------+
| 2010 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+--------------+-----------+------------+------------+
| Cost | | | | |
+---------------+--------------+-----------+------------+------------+
| At 1 April | 506 | 640 | 269 | 1,415 |
| 2009 | | | | |
+---------------+--------------+-----------+------------+------------+
| Additions | 23 | 55 | 9 | 87 |
+---------------+--------------+-----------+------------+------------+
| Disposals | - | (13) | - | (13) |
+---------------+--------------+-----------+------------+------------+
| At 31 March | 529 | 682 | 278 | 1,489 |
| 2010 | | | | |
+---------------+--------------+-----------+------------+------------+
| Depreciation | | | | |
+---------------+--------------+-----------+------------+------------+
| At 1 April | 315 | 560 | 172 | 1,047 |
| 2009 | | | | |
+---------------+--------------+-----------+------------+------------+
| Charge for | 115 | 76 | 59 | 250 |
| the year | | | | |
+---------------+--------------+-----------+------------+------------+
| Disposals | - | (13) | - | (13) |
+---------------+--------------+-----------+------------+------------+
| At 31 March | 430 | 623 | 231 | 1,284 |
| 2010 | | | | |
+---------------+--------------+-----------+------------+------------+
| Net book | | | | |
| amounts | | | | |
+---------------+--------------+-----------+------------+------------+
| At 31 March | 99 | 59 | 47 | 205 |
| 2010 | | | | |
+---------------+--------------+-----------+------------+------------+
| At 1 April | 191 | 80 | 97 | 368 |
| 2009 | | | | |
+---------------+--------------+-----------+------------+------------+
+---------------+--------------+-----------+------------+------------+
| | Leasehold | Computer | Fixtures | Total |
| | improvements | equipment | and | |
| | | | fittings | |
+---------------+--------------+-----------+------------+------------+
| 2009 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+--------------+-----------+------------+------------+
| Cost | | | | |
+---------------+--------------+-----------+------------+------------+
| At 1 April | 483 | 628 | 253 | 1,364 |
| 2008 | | | | |
+---------------+--------------+-----------+------------+------------+
| Additions | 23 | 81 | 16 | 120 |
+---------------+--------------+-----------+------------+------------+
| Disposals | - | (69) | - | (69) |
+---------------+--------------+-----------+------------+------------+
| At 31 March | 506 | 640 | 269 | 1,415 |
| 2009 | | | | |
+---------------+--------------+-----------+------------+------------+
| Depreciation | | | | |
+---------------+--------------+-----------+------------+------------+
| At 1 April | 212 | 426 | 115 | 753 |
| 2008 | | | | |
+---------------+--------------+-----------+------------+------------+
| Charge for | 103 | 203 | 57 | 363 |
| the year | | | | |
+---------------+--------------+-----------+------------+------------+
| Disposals | - | (69) | - | (69) |
+---------------+--------------+-----------+------------+------------+
| At 31 March | 315 | 560 | 172 | 1,047 |
| 2009 | | | | |
+---------------+--------------+-----------+------------+------------+
| Net book | | | | |
| amounts | | | | |
+---------------+--------------+-----------+------------+------------+
| At 31 March | 191 | 80 | 97 | 368 |
| 2009 | | | | |
+---------------+--------------+-----------+------------+------------+
| At 1 April | 271 | 202 | 138 | 611 |
| 2008 | | | | |
+---------------+--------------+-----------+------------+------------+
+---------------+--------------+-----------+------------+------------+
| | Leasehold | Computer | Fixtures | Total |
| | improvements | equipment | and | |
| | | | fittings | |
+---------------+--------------+-----------+------------+------------+
| 2008 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+--------------+-----------+------------+------------+
| Cost | | | | |
+---------------+--------------+-----------+------------+------------+
| At 1 April | 473 | 495 | 200 | 1,168 |
| 2007 | | | | |
+---------------+--------------+-----------+------------+------------+
| Additions | 10 | 156 | 53 | 219 |
+---------------+--------------+-----------+------------+------------+
| Disposals | - | (23) | - | (23) |
+---------------+--------------+-----------+------------+------------+
| At 31 March | 483 | 628 | 253 | 1,364 |
| 2008 | | | | |
+---------------+--------------+-----------+------------+------------+
| Depreciation | | | | |
+---------------+--------------+-----------+------------+------------+
| At 1 April | 116 | 279 | 67 | 462 |
| 2007 | | | | |
+---------------+--------------+-----------+------------+------------+
| Charge for | 96 | 169 | 48 | 313 |
| the year | | | | |
+---------------+--------------+-----------+------------+------------+
| Disposals | - | (22) | - | (22) |
+---------------+--------------+-----------+------------+------------+
| At 31 March | 212 | 426 | 115 | 753 |
| 2008 | | | | |
+---------------+--------------+-----------+------------+------------+
| Net book | | | | |
| amounts | | | | |
+---------------+--------------+-----------+------------+------------+
| At 31 March | 271 | 202 | 138 | 611 |
| 2008 | | | | |
+---------------+--------------+-----------+------------+------------+
| At 1 April | 357 | 216 | 133 | 706 |
| 2007 | | | | |
+---------------+--------------+-----------+------------+------------+
13 Intangible assets
The Group's intangible assets comprise acquired software only. The carrying
amounts can be analysed as follows:
+----------------------------------------+------------+------------+
| | Software | Total |
+----------------------------------------+------------+------------+
| 2010 | GBP'000 | GBP'000 |
+----------------------------------------+------------+------------+
| Cost | | |
+----------------------------------------+------------+------------+
| At 1 April 2009 | - | - |
+----------------------------------------+------------+------------+
| Additions | 535 | 535 |
+----------------------------------------+------------+------------+
| Disposals | - | - |
+----------------------------------------+------------+------------+
| At 31 March 2010 | 535 | 535 |
+----------------------------------------+------------+------------+
| Amortisation | | |
+----------------------------------------+------------+------------+
| At 1 April 2009 | - | - |
+----------------------------------------+------------+------------+
| Charge for the year | - | - |
+----------------------------------------+------------+------------+
| Disposals | - | - |
+----------------------------------------+------------+------------+
| At 31 March 2010 | - | - |
+----------------------------------------+------------+------------+
| Net book amounts | | |
+----------------------------------------+------------+------------+
| At 31 March 2010 | 535 | 535 |
+----------------------------------------+------------+------------+
| At 1 April 2009 | - | - |
+----------------------------------------+------------+------------+
The Company had no intangible assets in the years ending 31 March 2009 or 31
March 2008.
As at 31 March 2010 the Company is part way through the implementation of a new
back office software project. Amortisation of the capitalised development costs
will commence from the date that the project is completed (expected go-live date
30 September 2010). The estimated useful economic life of the completed
software is five years. During the year, the Company entered into an agreement
to develop a back office operating system and to operate and support this system
for five years. Minimum contractual commitments resulting from this agreement
are GBP1,523,750 payable from 2010 through to 2014. All amortisation charges are
included within administrative expenses.
14 Investments
+----------------------------------+-----------+-----------+-----------+
| Company | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 |
+----------------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------+-----------+-----------+-----------+
| Investment in subsidiaries (at | | | |
| cost) | | | |
+----------------------------------+-----------+-----------+-----------+
| Record Currency Management | 10 | 10 | 10 |
| Limited | | | |
+----------------------------------+-----------+-----------+-----------+
| Record Group Services Limited | 10 | 10 | 10 |
+----------------------------------+-----------+-----------+-----------+
| Record Portfolio Management | 10 | 10 | 10 |
| Limited | | | |
+----------------------------------+-----------+-----------+-----------+
| Record Fund Management Limited | - | - | - |
+----------------------------------+-----------+-----------+-----------+
| N P Record Trustees Limited | - | - | - |
+----------------------------------+-----------+-----------+-----------+
| | 30 | 30 | 30 |
+----------------------------------+-----------+-----------+-----------+
Particulars of subsidiary undertakings
+-----------------------------+-------------------------------------+
| Name | Nature of Business |
+-----------------------------+-------------------------------------+
| Record Currency Management | Currency overlay and investment |
| Limited | management services |
+-----------------------------+-------------------------------------+
| Record Group Services | Management services to other Group |
| Limited | undertakings |
+-----------------------------+-------------------------------------+
| Record Portfolio Management | Dormant |
| Limited | |
+-----------------------------+-------------------------------------+
| Record Fund Management | Dormant |
| Limited | |
+-----------------------------+-------------------------------------+
| N P Record Trustees Limited | Trust company |
+-----------------------------+-------------------------------------+
The Group's interest in the equity capital of subsidiary undertakings is 100% of
the ordinary share capital in all cases. All subsidiary undertakings are
incorporated in England and Wales and have a reporting date of 31 March..
15 Deferred taxation - Group
+--------------------------------------+-----------+-----------+-----------+
| | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 |
+--------------------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------+-----------+-----------+-----------+
| Profit and loss account movement | (3) | 100 | 88 |
| arising during the year | | | |
+--------------------------------------+-----------+-----------+-----------+
| Asset/(liability) brought forward | 146 | 46 | (42) |
+--------------------------------------+-----------+-----------+-----------+
| Asset carried forward | 143 | 146 | 46 |
+--------------------------------------+-----------+-----------+-----------+
The provision for deferred taxation consists of the tax effect of temporary
differences in respect of:
+--------------------------------------+-----------+-----------+-----------+
| | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 |
+--------------------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------+-----------+-----------+-----------+
| Deferred tax allowance on unvested | 101 | 103 | 53 |
| share options | | | |
+--------------------------------------+-----------+-----------+-----------+
| Excess of taxation allowances over | 42 | 43 | (7) |
| depreciation on fixed assets | | | |
+--------------------------------------+-----------+-----------+-----------+
| | 143 | 146 | 46 |
+--------------------------------------+-----------+-----------+-----------+
At the year end the Group had deferred net tax assets of GBP143,992 (2009:
GBP146,598; 2008: GBP46,371) including provision for share options not exercised
with an intrinsic value for tax purposes of GBP350,175 (2009: GBP460,002; 2008:
GBP144,727). 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. There is no other unprovided deferred taxation.
16 Trade and other receivables
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | Group | Company |
+---------------+-----------------------------------+-----------------------------------+
| | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Trade | 7,697 | 7,026 | 7,616 | - | - | - |
| receivables | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Other | 33 | 36 | 195 | - | 3 | 21 |
| receivables | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Prepayments | 595 | 680 | 1,106 | - | - | - |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | 8,325 | 7,742 | 8,917 | - | 3 | 21 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
All amounts are short term. The Directors consider that the carrying amount of
trade and other receivables approximates to their fair value. All of the Group's
trade and other receivables have been reviewed for indicators of impairment; no
such indicators were noted. The carrying amount of receivables whose terms have
been renegotiated, that would otherwise be past due or impaired is GBPnil (2009:
GBPnil; 2008: GBPnil).
17 Derivative financial assets
The Group is trialling a new product, being a GBP1m investment in an Emerging
Markets product. This is a twice geared investment that invests in 13 long
emerging market currencies and 3 short currencies (being the USD, EUR and JPY).
These contracts are classified as financial assets held for trading. At 31 March
2010 there were outstanding contracts with a principal value of GBP3,195,836
(2009: GBPnil; 2008: GBPnil) for the purchase 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 2010. The maximum
exposure to credit risk is represented by the fair value of the positions and
this is mitigated by using cash of GBP1m deposited as collateral. The principal
value of the contracts that make up the Emerging Markets portfolio
(GBP3,195,836) recognises that the aggregate principal value of a buy BRL
(Brazilian real) sell USD contract and a buy USD sell BRL contract are additive
although in terms of the fair value of the portfolio they would (partially) net
off. Further detail including sensitivity analysis on the fair value of
outstanding contracts is contained in note 24.
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | Group | Company |
+---------------+-----------------------------------+-----------------------------------+
| | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Forward | 98 | - | - | 98 | - | - |
| foreign | | | | | | |
| exchange | | | | | | |
| contracts | | | | | | |
| held for | | | | | | |
| trading | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
The net gain on forward exchange contracts at fair value is included in other
income. The net gain on financial assets is as follows:
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | Group | Company |
+---------------+-----------------------------------+-----------------------------------+
| | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Net gain on | 119 | - | - | 119 | - | - |
| forward | | | | | | |
| exchange | | | | | | |
| contracts at | | | | | | |
| fair value | | | | | | |
| through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
18 Cash and cash equivalents
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | Group | Company |
+---------------+-----------------------------------+-----------------------------------+
| | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Cash at bank | 21,804 | 29,729 | 20,674 | 1,077 | 2,018 | 2,129 |
| and in hand - | | | | | | |
| Sterling | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Cash at bank | 57 | 69 | 1,871 | - | - | - |
| and in hand - | | | | | | |
| other | | | | | | |
| currencies | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | 21,861 | 29,798 | 22,545 | 1,077 | 2,018 | 2,129 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
The Group holds short-term deposits that are made for varying periods, depending
on the cash requirements of the Group. The Group also deposits cash as
collateral against the forward exchange contracts used in the trialling of its
new product (2010: GBP1,022,578, 2009: GBPnil; 2008: GBPnil). These deposits
earn interest at market short-term deposit rates. The Group has unrestricted
access to these deposits which meet the definition of a cash equivalent.
19 Current liabilities
Amounts falling due within one year
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | Group | Company |
+---------------+-----------------------------------+-----------------------------------+
| | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Trade | 457 | 130 | 68 | - | - | - |
| payables | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Amounts owed | - | - | - | 47 | 28 | 10 |
| to Group | | | | | | |
| undertaking | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Other | 562 | 760 | 270 | - | - | - |
| payables | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Other tax and | 1,957 | 442 | 759 | - | - | - |
| social | | | | | | |
| security | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Accruals and | 898 | 5,744 | 6,094 | - | - | - |
| deferred | | | | | | |
| income | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | 3,874 | 7,076 | 7,191 | 47 | 28 | 10 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
The Directors consider that the carrying amount of trade and other payables
approximates to their fair value.
Current tax liabilities
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | Group | Company |
+---------------+-----------------------------------+-----------------------------------+
| | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Corporation | 2,384 | 3,774 | 6,356 | 15 | 18 | 18 |
| tax | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
Derivative financial liabilities
+------------------------+-----------+-----------+-----------+
| | Group |
+------------------------+-----------------------------------+
| | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 |
+------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+------------------------+-----------+-----------+-----------+
| Forward foreign | 149 | 13 | 23 |
| exchange contracts | | | |
+------------------------+-----------+-----------+-----------+
The Group uses forward exchange contracts to reduce the risk associated with
sales denominated in foreign currencies. At 31 March 2010 there were outstanding
contracts with a principal value of GBP4,710,619 (2009: GBP3,375,693; 2008:
GBP2,840,495) 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 2010. Further detail including sensitivity
analysis on the fair value of outstanding contracts is contained in note 24.
The net gain or loss on forward foreign exchange contracts held to hedge cash
flow is as follows:
+-------------------------+-----------+-----------+-----------+
| | Group |
+-------------------------+-----------------------------------+
| | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 |
+-------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+-----------+-----------+-----------+
| Net gain or (loss) on | 259 | (782) | (58) |
| fair value through | | | |
| profit or loss | | | |
+-------------------------+-----------+-----------+-----------+
20 Non-current assets available for sale (disposal group)
From time to time, the Group injects capital into funds operated by the Group to
trial new products (seed capital). The Group has placed GBP1,000,000 in the
Record Currency Fund Carry 250. The only other investor in this fund is Neil
Record, a Director of Record plc, therefore the fund is under de facto control
of the Group. In accordance with SIC-12 and IAS 27, such funds are considered to
be under control of the Group and as such the fund is a subsidiary of the Group.
However, as the Group is actively seeking to reduce its holding within twelve
months, the fund is classified as being available for sale as it is considered
highly probable that the fund will not remain under the control of the Group one
year after the original investment was made.
If the Group still retains control of the fund after this time, the fund ceases
to be classified as available for sale and will be consolidated in full.
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | Group | Company |
+---------------+-----------------------------------+-----------------------------------+
| | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 | 31-Mar-10 | 31-Mar-09 | 31-Mar-08 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
| Seed capital | 940 | - | - | 940 | - | - |
| classified as | | | | | | |
| being | | | | | | |
| available for | | | | | | |
| sale | | | | | | |
+---------------+-----------+-----------+-----------+-----------+-----------+-----------+
21 Called up share capital
The share capital of Record plc consists only of fully paid ordinary shares with
a par value of 0.025p. All shares are equally eligible to receive dividends and
the repayment of capital and represent one vote at the shareholders' meeting.
+---------------+---------+-------------+---------+-------------+---------+-------------+
| | 2010 | 2009 | 2008 |
+---------------+-----------------------+-----------------------+-----------------------+
| | GBP'000 | Number | GBP'000 | Number | GBP'000 | Number |
+---------------+---------+-------------+---------+-------------+---------+-------------+
| Authorised | | | | | | |
+---------------+---------+-------------+---------+-------------+---------+-------------+
| Ordinary | 100 | 400,000,000 | 100 | 400,000,000 | 100 | 400,000,000 |
| shares of | | | | | | |
| 0.025p each | | | | | | |
+---------------+---------+-------------+---------+-------------+---------+-------------+
| Called up, | | | | | | |
| allotted and | | | | | | |
| fully paid | | | | | | |
+---------------+---------+-------------+---------+-------------+---------+-------------+
| Ordinary | 55 | 221,380,800 | 55 | 221,380,800 | 55 | 221,380,800 |
| shares of | | | | | | |
| 0.025p each | | | | | | |
+---------------+---------+-------------+---------+-------------+---------+-------------+
Changes to the authorised and issued share capital
+------------------------------------------+----------+-------------+
| | GBP'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 |
+------------------------------------------+----------+-------------+
| | | |
+------------------------------------------+----------+-------------+
| Adjustment for own shares held by EBT | - | (528,685) |
+------------------------------------------+----------+-------------+
| | | |
+------------------------------------------+----------+-------------+
| As at 31 March 2009 | 55 | 220,683,828 |
+------------------------------------------+----------+-------------+
| | | |
+------------------------------------------+----------+-------------+
| Adjustment for own shares held by EBT | - | 110,904 |
+------------------------------------------+----------+-------------+
| | | |
+------------------------------------------+----------+-------------+
| As at 31 March 2010 | 55 | 220,794,732 |
+------------------------------------------+----------+-------------+
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 main market for listed
securities of the London Stock Exchange, all issued and unissued ordinary shares
of 10p were each split into 400 ordinary shares of 0.025p.
The Group has established an Employee Benefit Trust (EBT) to hold shares to be
used to meet future liabilities relating to the Group's 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. As at 31 March 2010,
the EBT held 586,068 ordinary shares of 0.025p in Record plc (2009: 696,972).
22 Share-based payments
During the year ended 31 March 2010 the Group has managed the following
share-based compensation plans:
The Record plc Group Bonus Scheme
The Record plc Group Bonus Scheme (GBS) was adopted by the company on 1 November
2007. Under the terms of the scheme rules, certain employees of the company may
elect to receive a proportion of their bonus in the form of a deferred share
award. The number of shares is calculated based on the residual bonus divided
by the market value of the shares at grant date. The shares are available to the
employee after the vesting period for nil consideration upon exercise. The Group
simultaneously granted additional rights to acquire shares ('bonus' shares equal
to 20% of the shares elected for) to those same employees. Elected shares vest
equally over the next one and two years and bonus shares will vest in full only
after two years. The vesting of the shares is subject to certain good leaver
provisions.
The Record plc Group Profit Share Scheme
The Record plc Group Bonus Scheme (GBS) was amended with the approval of a
general meeting of the Company's members on 30 July 2009 and became the Record
plc Group Profit Share Scheme. Under the terms of the scheme rules, employees
and Directors of the company may elect to receive a proportion of their profit
share in the form of a share award, with the exception of certain employees and
Directors deemed significant shareholders who must receive their profit share in
cash. Directors and senior employees receive one third of their profit share 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. 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.
If an individual elects to receive Additional shares, the Group simultaneously
awards a Matching share value amount, the multiple being 1 for Directors and
senior employees and 0.2 for other employees. The Matching share value amount
for Directors and senior employees is funded from a deduction to the cash-based
profit share from the Directors and senior employees who are deemed significant
shareholders. The number of shares is determined by the post-tax cash attributed
to Earned shares plus Additional shares plus Matching shares divided by the
aggregate market value achieved on the purchase of all such shares in the
market. All shares which are the subject of share awards are transferred
immediately to a nominee. None of these shares are subject to any vesting or
forfeiture provisions and the individual is entitled to full rights in respect
of the shares purchased. No such shares can be sold, transferred or otherwise
disposed of without the consent of the Remuneration Committee except as follows:
Earned shares - one third on each anniversary of the Profit Share Payment date;
and
Additional or Matching shares - the third anniversary of the Profit Share
Payment date for Directors and senior employees and the second anniversary of
the Profit Share Payment date for all other employees.
The Record plc Flotation Bonus Scheme
The Record plc Flotation Bonus Scheme was adopted by the company on 15 November
2007. As a result of flotation, a cash bonus was made on a discretionary basis
to certain employees. Under the terms of the scheme rules, employees were able
to elect to receive a smaller cash bonus in exchange for the right to acquire a
number of shares. The number of shares was calculated based on the residual
bonus divided by the market value of the shares at grant date. The shares are
available to the employee after the vesting period for nil consideration upon
exercise. The Group simultaneously granted additional rights to acquire shares
('bonus' shares equal to 50% of the shares elected for) to those same employees.
Elected shares vest equally over the next one and two years and bonus shares
will vest in full only after two years. The vesting of the shares is subject to
certain good leaver provisions. The rights to acquire the shares are issued
under Enterprise Management Incentive Discounted Share Price (EMI DSP) option
agreements.
The Record plc Share Scheme
The Record plc Share Scheme was adopted by the company on 1 August 2008. During
the prior year two new senior employees were granted deferred share awards upon
appointment. The number of shares for each employee was calculated based on
GBP200,000 divided by the market price of one Record plc ordinary share on the
day of appointment (or on the first business day after a close period, if the
appointment occurred within a close period). The shares are available to the
employee after the vesting period for nil consideration upon exercise. The
shares vest equally on the second, third and fourth anniversary of appointment.
The vesting of the shares is subject to certain good leaver provisions. The
rights to acquire the shares are issued under nil cost option agreements.
Share-based payment transactions with cash alternatives
Deferred share awards granted under the Record plc Group Bonus Scheme, the
Record plc Group Profit Share Scheme and options granted under the Record plc
Flotation Bonus Scheme are accounted for under IFRS 2 as share-based payment
transactions with cash alternatives.
Equity-settled share-based payments
Deferred share awards granted under the Record plc Share Scheme are accounted
for under IFRS 2 as equity-settled share-based payment transactions.
At 31 March 2010, the total number of ordinary shares of 0.025p outstanding
under Record plc share compensation schemes was 586,068 (2009: 696,972; 2008:
168,287). These deferred share awards and options are over issued shares held in
an Employment Benefit Trust. Details of outstanding share options and deferred
shares awarded to employees are set out below:
+-------------+----------+---------+-----------+----------+----------+----------+-----------+
| Date of | At | Granted | Exercised | At | Exercise | Exercise | Exercise |
| grant | 01/04/09 | | | 31/03/10 | price | / | / vesting |
| | | | | | GBP | vesting | date: To |
| | | | | | | date: | |
| | | | | | | From | |
+-------------+----------+---------+-----------+----------+----------+----------+-----------+
| Flotation | | | | | | | |
| Bonus | | | | | | | |
| Scheme | | | | | | | |
+-------------+----------+---------+-----------+----------+----------+----------+-----------+
| 21/12/07 | 108,847 | - | (108,847) | - | GBP0.00 | 21/12/08 | 21/12/09 |
+-------------+----------+---------+-----------+----------+----------+----------+-----------+
| Record plc | | | | | | | |
| Share | | | | | | | |
| Scheme | | | | | | | |
+-------------+----------+---------+-----------+----------+----------+----------+-----------+
| 04/08/08 | 170,245 | - | - | 170,245 | GBP0.00 | 04/08/10 | 04/08/12 |
+-------------+----------+---------+-----------+----------+----------+----------+-----------+
| 01/09/08 | 215,053 | - | - | 215,053 | GBP0.00 | 01/09/10 | 01/09/12 |
+-------------+----------+---------+-----------+----------+----------+----------+-----------+
| | 385,298 | - | - | 385,298 | | | |
+-------------+----------+---------+-----------+----------+----------+----------+-----------+
| Total | 494,145 | - | (108,847) | 385,298 | | | |
| options | | | | | | | |
+-------------+----------+---------+-----------+----------+----------+----------+-----------+
| Weighted | GBPnil | GBPnil | GBPnil | GBPnil | | | |
| average | | | | | | | |
| exercise | | | | | | | |
| price of | | | | | | | |
| options | | | | | | | |
+-------------+----------+---------+-----------+----------+----------+----------+-----------+
The weighted average exercise price of all outstanding options at the beginning
of the year was GBPnil.
The share price at the date of exercise of the Record plc Flotation Bonus Scheme
options above was GBP0.83 per share.
+--------------+----------+---------+----------+----------+-----------+---------------+
| Date of | At | Granted | Vested | At | Vesting | Vesting date: |
| grant | 01/04/09 | | | 31/03/10 | date: | To |
| | | | | | From | |
+--------------+----------+---------+----------+----------+-----------+---------------+
| Record plc | | | | | | |
| Group Bonus | | | | | | |
| Scheme | | | | | | |
+--------------+----------+---------+----------+----------+-----------+---------------+
| 20/06/08 | 99,158 | - | (41,320) | 57,838 | 20/06/09 | 20/06/10 |
+--------------+----------+---------+----------+----------+-----------+---------------+
| 28/11/08 | 103,669 | - | (43,197) | 60,472 | 28/11/09 | 28/11/10 |
+--------------+----------+---------+----------+----------+-----------+---------------+
| 30/06/09 | - | 82,460 | - | 82,460 | 30/06/10 | 30/06/11 |
+--------------+----------+---------+----------+----------+-----------+---------------+
| Total | 202,827 | 82,460 | (84,517) | 200,770 | | |
| deferred | | | | | | |
| share awards | | | | | | |
+--------------+----------+---------+----------+----------+-----------+---------------+
During the year shares vested on 20 June 2009 and 28 November 2009, the first
anniversary of the respective scheme above. The share price at each vesting
date was GBP0.60 and GBP0.84 per share respectively.
The Directors had no interests in the combined share schemes at the beginning of
the period. As at 31 March 2010, under the terms of the Group Profit Share
Scheme, Paul Sheriff held 231,033 ordinary shares via a nominee.
There were no performance measures attached to vesting conditions in any of the
schemes.
Fair values of share-based compensation plans
The fair value amounts for the options issued since Admission were determined
using quoted share prices, which was a fair representation of fair value at the
grant date..
23 Capital redemption reserve
The Group has bought in a total of 202,072 ordinary shares of 10p for
cancellation. The buy-ins occurred in five tranches, all occurring prior to the
share split.
+-----------+--+---------------------+
| March | | 66,553 ordinary |
| 2001 | | shares of 10p |
+-----------+--+---------------------+
| April | | 36,357 ordinary |
| 2004 | | shares of 10p |
+-----------+--+---------------------+
| February | | 50,000 ordinary |
| 2005 | | shares of 10p |
+-----------+--+---------------------+
| October | | 24,581 ordinary |
| 2005 | | shares of 10p |
+-----------+--+---------------------+
| December | | 24,581 ordinary |
| 2005 | | shares of 10p |
+-----------+--+---------------------+
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.
24 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, cash and cash
equivalents and investments in seed products. Financial liabilities comprise
trade and other payables and derivative financial liabilities. The main risks
arising from financial instruments are credit risk, liquidity risk, foreign
currency risk and interest rate risk each of which is discussed in further
detail below. The Group monitors and mitigates financial risk on a consolidated
basis and therefore separate disclosures for the Company have not been included.
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 reviewed
by the Audit Committee.
Credit risk
Record plc's Risk Management Committee has established a credit risk policy to
ensure that it only trades with counterparties that meet requirements consistent
with the Group's agreed risk appetite. 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 Group invests some of its surplus funds in high quality liquid market
instruments. Such investments have a maturity no greater than three months. To
reduce the risk of counterparty default the Group deposits the rest of its
surplus funds in approved high quality banks; the financial institutions
involved have high credit ratings assigned by international credit agencies.
The Group's maximum exposure to credit risk is as follows:
Financial assets at 31 March
+--------------------------------------+----------+----------+---------+
| | 2010 | 2009 | 2008 |
+--------------------------------------+----------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------+----------+----------+---------+
| Trade receivables | 7,697 | 7,026 | 7,616 |
+--------------------------------------+----------+----------+---------+
| Other receivables | 33 | 36 | 195 |
+--------------------------------------+----------+----------+---------+
| Available for sale financial assets | 940 | - | - |
| (disposal group) | | | |
+--------------------------------------+----------+----------+---------+
| Other financial assets at fair value | 98 | - | - |
| through profit or loss | | | |
+--------------------------------------+----------+----------+---------+
| Cash and cash equivalents | 21,861 | 29,798 | 22,545 |
+--------------------------------------+----------+----------+---------+
| | 30,629 | 36,860 | 30,356 |
+--------------------------------------+----------+----------+---------+
The debtors' age analysis is also evaluated on a regular basis for potential
doubtful debts. It is management's opinion that no provision for doubtful debts
is required. The table below is an analysis of financial assets by due date:
+-------------------+----------+----------+---------+---------+
| | Carrying | Neither | 0-3 | More |
| | amount | impaired | months | than 3 |
| | | nor past | past | months |
| | | due | due | past |
| | | | | due |
+-------------------+----------+----------+---------+---------+
| At 31 March 2010 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+----------+----------+---------+---------+
| Trade receivables | 7,697 | 7,697 | - | - |
+-------------------+----------+----------+---------+---------+
+-------------------+----------+----------+---------+---------+
| | Carrying | Neither | 0-3 | More |
| | amount | impaired | months | than 3 |
| | | nor past | past | months |
| | | due | due | past |
| | | | | due |
+-------------------+----------+----------+---------+---------+
| At 31 March 2009 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+----------+----------+---------+---------+
| Trade receivables | 7,026 | 6,700 | 326 | - |
+-------------------+----------+----------+---------+---------+
+-------------------+----------+----------+---------+---------+
| | Carrying | Neither | 0-3 | More |
| | amount | impaired | months | than 3 |
| | | nor past | past | months |
| | | due | due | past |
| | | | | due |
+-------------------+----------+----------+---------+---------+
| At 31 March 2008 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+----------+----------+---------+---------+
| Trade receivables | 7,616 | 7,616 | - | - |
+-------------------+----------+----------+---------+---------+
The Group allows an average debtor payment period of 30 days after invoice date.
It is the Group's policy to assess debtors for recoverability 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
until the reporting date. The application of this policy generally results in
debts between 0-3 months overdue not being provided for unless individual
circumstances indicate that a debt is impaired.
Trade receivables are made up of 44 debtor balances (2009: 57; 2008: 63). The
largest individual debtor corresponds to 33% of the total balance (2009: 21%;
2008: 14%). The average age of these debtors, based on the generally accepted
calculation of debtor days, is 84 days (2009: 54; 2008: 42) although this
ignores the quarterly billing cycle used by the Group for the vast majority of
its fees. Historically these debtors have always paid balances when due. No
debtor 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. 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 16 days (2009: 14 days; 2008: 9 days).
Contractual maturity analysis for financial liabilities:
+-------------------------+------------+------------+------------+
| | Due or due | Due | Due |
| | in less | between 1 | between 3 |
| | than 1 | to 3 | months to |
| | month | months | 1 year |
+-------------------------+------------+------------+------------+
| At 31 March 2010 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+------------+------------+------------+
| Trade and other | 2,976 | - | - |
| payables | | | |
+-------------------------+------------+------------+------------+
+-------------------------+------------+------------+------------+
| | Due or due | Due | Due |
| | in less | between 1 | between 3 |
| | than 1 | to 3 | months to |
| | month | months | 1 year |
+-------------------------+------------+------------+------------+
| At 31 March 2009 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+------------+------------+------------+
| Trade and other | 1,332 | - | - |
| payables | | | |
+-------------------------+------------+------------+------------+
+-------------------------+------------+------------+------------+
| | Due or due | Due | Due |
| | in less | between 1 | between 3 |
| | than 1 | to 3 | months to |
| | month | months | 1 year |
+-------------------------+------------+------------+------------+
| At 31 March 2008 | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+------------+------------+------------+
| Trade and other | 1,097 | - | - |
| payables | | | |
+-------------------------+------------+------------+------------+
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 used by the Group. Interest bearing assets comprise trade
receivables 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.
+-----------------------+----------+----------+-----------+----------+
| | Fixed | Floating | Not | Total |
| | rate | rate | directly | |
| | | | exposed | |
| | | | to | |
| | | | interest | |
| | | | rate | |
+-----------------------+----------+----------+-----------+----------+
| At 31 March 2010 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------------+----------+----------+-----------+----------+
| Financial assets | | | | |
+-----------------------+----------+----------+-----------+----------+
| Trade and other | - | - | 7,730 | 7,730 |
| receivables | | | | |
+-----------------------+----------+----------+-----------+----------+
| Financial assets at | - | - | 1,038 | 1,038 |
| fair value | | | | |
+-----------------------+----------+----------+-----------+----------+
| Cash and cash | 19,299 | 2,562 | - | 21,861 |
| equivalents | | | | |
+-----------------------+----------+----------+-----------+----------+
| Total financial | 19,299 | 2,562 | 8,768 | 30,629 |
| assets | | | | |
+-----------------------+----------+----------+-----------+----------+
| Financial liabilities | | | | |
+-----------------------+----------+----------+-----------+----------+
| Financial liabilities | - | - | (149) | (149) |
| at fair value through | | | | |
| profit or loss | | | | |
+-----------------------+----------+----------+-----------+----------+
| Trade and other | - | - | (2,976) | (2,976) |
| payables | | | | |
+-----------------------+----------+----------+-----------+----------+
| Total financial | - | - | (3,125) | (3,125) |
| liabilities | | | | |
+-----------------------+----------+----------+-----------+----------+
+-----------------------+----------+----------+-----------+----------+
| | Fixed | Floating | Not | Total |
| | rate | rate | directly | |
| | | | exposed | |
| | | | to | |
| | | | interest | |
| | | | rate | |
+-----------------------+----------+----------+-----------+----------+
| At 31 March 2009 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------------+----------+----------+-----------+----------+
| Financial assets | | | | |
+-----------------------+----------+----------+-----------+----------+
| Trade and other | - | - | 7,062 | 7,062 |
| receivables | | | | |
+-----------------------+----------+----------+-----------+----------+
| Cash and cash | 26,828 | 2,970 | - | 29,798 |
| equivalents | | | | |
+-----------------------+----------+----------+-----------+----------+
| Total financial | 26,828 | 2,970 | 7,062 | 36,860 |
| assets | | | | |
+-----------------------+----------+----------+-----------+----------+
| Financial liabilities | | | | |
+-----------------------+----------+----------+-----------+----------+
| Financial liabilities | - | - | (13) | (13) |
| at fair value through | | | | |
| profit or loss | | | | |
+-----------------------+----------+----------+-----------+----------+
| Trade and other | - | - | (1,332) | (1,332) |
| payables | | | | |
+-----------------------+----------+----------+-----------+----------+
| Total financial | - | - | (1,345) | (1,345) |
| liabilities | | | | |
+-----------------------+----------+----------+-----------+----------+
+-----------------------+----------+----------+-----------+----------+
| | Fixed | Floating | Not | Total |
| | rate | rate | directly | |
| | | | exposed | |
| | | | to | |
| | | | interest | |
| | | | rate | |
+-----------------------+----------+----------+-----------+----------+
| At 31 March 2008 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------------+----------+----------+-----------+----------+
| Financial assets | | | | |
+-----------------------+----------+----------+-----------+----------+
| Trade and other | - | - | 7,811 | 7,811 |
| receivables | | | | |
+-----------------------+----------+----------+-----------+----------+
| Cash and cash | 22,315 | 230 | - | 22,545 |
| equivalents | | | | |
+-----------------------+----------+----------+-----------+----------+
| Total financial | 22,315 | 230 | 7,811 | 30,356 |
| assets | | | | |
+-----------------------+----------+----------+-----------+----------+
| Financial liabilities | | | | |
+-----------------------+----------+----------+-----------+----------+
| Financial liabilities | - | - | (23) | (23) |
| at fair value through | | | | |
| profit or loss | | | | |
+-----------------------+----------+----------+-----------+----------+
| Trade and other | - | - | (1,097) | (1,097) |
| payables | | | | |
+-----------------------+----------+----------+-----------+----------+
| Total financial | - | - | (1,120) | (1,120) |
| liabilities | | | | |
+-----------------------+----------+----------+-----------+----------+
Interest rate exposure and sensitivity analysis
+---------------+----------+----------+---------+---------+---------+---------+
| | | | If interest | If interest |
| | | | rates were 0.5% | rates were 0.5% |
| | | | higher | lower |
+---------------+----------+----------+-------------------+-------------------+
| | Carrying | Average | Net | Equity | Net | Equity |
| | Amount | interest | profit | | profit | |
| | | rate | | | | |
+---------------+----------+----------+---------+---------+---------+---------+
| At 31 March | GBP'000 | % | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| 2010 | | | | | | |
+---------------+----------+----------+---------+---------+---------+---------+
| Cash and cash | 21,861 | 0.88 | 12,035 | 25,782 | 11,868 | 25,614 |
| equivalents | | | | | | |
+---------------+----------+----------+---------+---------+---------+---------+
+---------------+----------+----------+---------+---------+---------+---------+
| | | | If interest | If interest |
| | | | rates were 0.5% | rates were 0.5% |
| | | | higher | lower |
+---------------+----------+----------+-------------------+-------------------+
| | Carrying | Average | Net | Equity | Net | Equity |
| | Amount | interest | profit | | profit | |
| | | rate | | | | |
+---------------+----------+----------+---------+---------+---------+---------+
| At 31 March | GBP'000 | % | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| 2009 | | | | | | |
+---------------+----------+----------+---------+---------+---------+---------+
| Cash and cash | 29,798 | 3.97 | 19,368 | 27,284 | 19,181 | 27,097 |
| equivalents | | | | | | |
+---------------+----------+----------+---------+---------+---------+---------+
+---------------+----------+----------+---------+---------+---------+---------+
| | | | If interest | If interest |
| | | | rates were 0.5% | rates were 0.5% |
| | | | higher | lower |
+---------------+----------+----------+-------------------+-------------------+
| | Carrying | Average | Net | Equity | Net | Equity |
| | Amount | interest | profit | | profit | |
| | | rate | | | | |
+---------------+----------+----------+---------+---------+---------+---------+
| At 31 March | GBP'000 | % | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| 2008 | | | | | | |
+---------------+----------+----------+---------+---------+---------+---------+
| Cash and cash | 22,545 | 5.88 | 27,984 | 18,620 | 27,843 | 18,479 |
| equivalents | | | | | | |
+---------------+----------+----------+---------+---------+---------+---------+
The average rate is calculated as the weighted average effective interest rate.
The tables above show the effect on profit and equity after tax if interest
rates had been 0.5% higher or lower with all other variables held constant. A
sensitivity of 0.5% has been selected as this is considered reasonable given the
current level of both short-term and long-term interest rates.
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 exchange contracts to
manage the risk relating to future transactions in accordance with the Group's
risk management policy. The fair value of the forward contracts was GBP148,855
(2009: GBP12,758; 2008: GBP23,116). Losses on the forward exchange contracts
were GBP140,466 in the year (2009: gain of GBP782,627; 2008: gain of GBP57,660).
The future transactions related to the forward exchange contracts are expected
to occur within three months of the year end. Changes in the fair values of
forward exchange contracts are recognised directly in profit or loss.
The Company is exposed to foreign currency risks on sales and cash holdings that
are denominated in a currency other than Sterling. The principal currencies
giving rise to this risk are primarily the US Dollar, the Swiss Franc, the Euro
and the Canadian Dollar.
In the year ended 31 March 2010, the Group invoiced the following amounts in
currencies other than Sterling.
+------------------------------------------+----------+-----------+
| | Local | Value in |
| | currency | reporting |
| | value | currency |
+------------------------------------------+----------+-----------+
| | '000 | GBP'000 |
+------------------------------------------+----------+-----------+
| US Dollar (USD) | 20,744 | 13,076 |
+------------------------------------------+----------+-----------+
| Swiss Franc (CHF) | 6,925 | 4,092 |
+------------------------------------------+----------+-----------+
| Euro (EUR) | 1,063 | 941 |
+------------------------------------------+----------+-----------+
| Canadian Dollar (CAD) | 1,025 | 592 |
+------------------------------------------+----------+-----------+
| Total | | 18,701 |
+------------------------------------------+----------+-----------+
The value of revenues for the year ended 31 March 2010 that were denominated in
currencies other than Sterling was GBP18.7m (56% of total revenues). For the
year ended 31 March 2009: GBP20.8m being 44% of total revenues.
Record plc's policy is to reduce the risk associated with the Company's sales
denominated in foreign currencies by using forward fixed rate currency sales
contracts, taking into account any forecast foreign currency cash flows.
Foreign currency risk - sensitivity analysis
+------------------------+---------+--------------+------------+---------+
| | Profit for the year | Equity |
+------------------------+------------------------+----------------------+
| | 2010 | 2009 | 2010 | 2009 |
+------------------------+---------+--------------+------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------+---------+--------------+------------+---------+
| 10% weakening in the | 12,684 | 19,985 | 26,432 | 27,901 |
| GBP/US$ exchange rate | | | | |
+------------------------+---------+--------------+------------+---------+
| 10% strengthening in | 11,353 | 18,695 | 25,101 | 26,610 |
| the GBP/US$ exchange | | | | |
| rate | | | | |
+------------------------+---------+--------------+------------+---------+
| 10% weakening in the | 12,005 | 19,379 | 25,753 | 27,295 |
| GBP/EUR exchange rate | | | | |
+------------------------+---------+--------------+------------+---------+
| 10% strengthening in | 11,909 | 19,190 | 25,657 | 27,106 |
| the GBP/EUR exchange | | | | |
| rate | | | | |
+------------------------+---------+--------------+------------+---------+
| 10% weakening in the | 11,985 | 19,316 | 25,733 | 27,232 |
| GBP/CAD$ exchange rate | | | | |
+------------------------+---------+--------------+------------+---------+
| 10% strengthening in | 11,925 | 19,242 | 25,673 | 27,158 |
| the GBP/CAD$ exchange | | | | |
| rate | | | | |
+------------------------+---------+--------------+------------+---------+
| 10% weakening in the | 12,181 | 19,584 | 25,929 | 27,500 |
| GBP/CHF exchange rate | | | | |
+------------------------+---------+--------------+------------+---------+
| 10% strengthening in | 11,765 | 19,022 | 25,513 | 26,938 |
| the GBP/CHF exchange | | | | |
| rate | | | | |
+------------------------+---------+--------------+------------+---------+
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 both on an
historical basis and market expectations for future movement. When applied to
the average Sterling/USD exchange rate of $1.586/GBP this would result in a
weakened exchange rate of $1.428/GBP and a strengthened exchange rate of
$1.745/GBP. This range is considered reasonable given the historic changes that
have been observed.
Sterling/Euro 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 both on an
historical basis and market expectations for future movement. When applied to
the average Sterling/Euro exchange rate of EUR1.130/GBP this would result in a
weakened exchange rate of EUR1.017/GBP and a strengthened exchange rate of
EUR1.243/GBP. This range is considered reasonable given the historic changes that
have been observed.
Sterling/Canadian 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 both on an
historical basis and market expectations for future movement. When applied to
the average Sterling/CAD exchange rate of CAD$1.731/GBP this would result in a
weakened exchange rate of CAD$1.558/GBP and a strengthened exchange rate of
CAD$1.905/GBP. This range is considered reasonable given the historic changes
that have been observed.
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 both on an
historical basis and market expectations for future movement. When applied to
the average Sterling/CHF exchange rate of CHF1.692/GBP this would result in a
weakened exchange rate of CHF1.523/GBP and a strengthened exchange rate of
CHF1.862/GBP. This range is considered reasonable given the historic changes
that have been observed.
Carry 250 product trial
The Group has seeded a new product, which is a fund that tracks the FTSE
Currency FRB5 Index by holding a portfolio of developed market currency
deliverable forward exchange contracts. The fund is 2.5 times geared, and the
value of the Group's investment as at 31 March 2010 was GBP940,337. The
investment is recognised as an available for sale financial asset and as such,
all gains and losses are recognised in other comprehensive income. The Group has
provided the following data in respect of sensitivity to this product trial. As
the product trial started in October 2009, no comparative data is provided.
+-------------------------------------------------+----------------------------+----------------------------+
| | Profit for the year | Equity |
| | 2010 | 2010 |
| | (GBP'000s) | (GBP'000s) |
+-------------------------------------------------+----------------------------+----------------------------+
| 10% depreciation in the FTSE Currency FRB5 | 11,720 | 25,514 |
| Index | | |
+-------------------------------------------------+----------------------------+----------------------------+
| 10% appreciation in the FTSE Currency FRB5 | 12,091 | 25,886 |
| Index | | |
+-------------------------------------------------+----------------------------+----------------------------+
The impact of a change to the index of 10% has been selected as this is
considered reasonable given the current level of exchange rates and the
volatility observed both on a historical basis and market expectations for
future movement.
Emerging markets currencies
The Group has seeded a new product, managing a portfolio of emerging market
currency deliverable forward exchange contracts and emerging market currency
non-deliverable forward exchange contracts in order to achieve a return. The
fund is 2 times geared, and at the year end the Group had allocated capital of
GBP1,022,578 to this product trial. The Group has provided the following data
in respect of sensitivity to this product trial. As the product trial started
in November 2009, no comparative data is provided.
+-------------------------------------------------+----------------------------+----------------------------+
| | Profit for the year | Equity |
| | 2010 | 2010 |
| | (GBP'000s) | (GBP'000s) |
+-------------------------------------------------+----------------------------+----------------------------+
| 20% depreciation in the Emerging Market | 11,629 | 25,377 |
| portfolio | | |
+-------------------------------------------------+----------------------------+----------------------------+
| 20% appreciation in the Emerging Market | 12,275 | 26,023 |
| portfolio | | |
+-------------------------------------------------+----------------------------+----------------------------+
The impact of a change to the portfolio value of 20% has been selected as this
is considered reasonable given the current level of exchange rates and the
volatility observed both on a historical basis and expectations for future
movement in emerging markets.
25 Additional financial instruments disclosures
Financial instruments measured at fair value
The Group adopted the amendments to IFRS 7 Improving Disclosures about Financial
Instruments, effective from 1 January 2009. These amendments require the Group
to present certain information about financial instruments measured at fair
value in the statement of financial position. In the first year of application
comparative information need not be presented for the disclosures required by
the amendment. Accordingly, the disclosure for the fair value hierarchy is only
presented for the 31 March 2010 year end.
The following table presents financial assets and liabilities measured at fair
value in the consolidated statement of financial position in accordance with the
fair value hierarchy. This hierarchy groups financial assets and liabilities
into three levels based on the significance of inputs used in measuring the fair
value of the financial assets and liabilities. The fair value hierarchy has the
following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities
Level 2: inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs)
The level within which the financial asset or liability is classified is
determined based on the lowest level of significant 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:
+-----------------+--------+----------+---------+----------+---------+
| | | 2010 | Level | Level 2 | Level |
| | | | 1 | | 3 |
+-----------------+--------+----------+---------+----------+---------+
| | Note | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------+--------+----------+---------+----------+---------+
| Financial | | | | | |
| instruments at | | | | | |
| fair value | | | | | |
| through profit | | | | | |
| or loss | | | | | |
+-----------------+--------+----------+---------+----------+---------+
| Forward foreign | a | 98 | - | 98 | - |
| exchange | | | | | |
| contracts used | | | | | |
| for product | | | | | |
| trial | | | | | |
+-----------------+--------+----------+---------+----------+---------+
| Forward foreign | a | (149) | - | (149) | - |
| exchange | | | | | |
| contracts used | | | | | |
| for hedging | | | | | |
+-----------------+--------+----------+---------+----------+---------+
| Available for | | | | | |
| sale financial | | | | | |
| assets | | | | | |
+-----------------+--------+----------+---------+----------+---------+
| Available for | b | 940 | - | 940 | - |
| sale | | | | | |
| investments | | | | | |
+-----------------+--------+----------+---------+----------+---------+
| | | 889 | - | 889 | - |
+-----------------+--------+----------+---------+----------+---------+
There have been no transfers between levels in the reporting period.
Basis for classification of financial instruments within the fair value
hierarchy
(a) Forward foreign exchange contracts
Forward foreign exchange contracts are classified as level 2. Although
these instruments are traded on an active market, the fair value of forward
foreign exchange contracts is established using interpolation of observable
market data rather than from a quoted price. All forward foreign exchange
contracts are strictly short term in duration.
(b) Available for sale investments
Record plc has invested in Record Currency Fund Carry 250. Although this
fund is priced daily, it is currently a closed fund and therefore the fund is
not actively traded and, according to the Directors' interpretation of the
standard, the investment in the fund is most appropriately categorised as level
2.
Classes and fair value of financial instruments
Financial assets
+---------------+----------+---------+----------+---------+----------+---------+
| | 2010 | 2009 | 2008 |
+---------------+--------------------+--------------------+--------------------+
| | Carrying | Fair | Carrying | Fair | Carrying | Fair |
| | value | value | value | value | value | value |
+---------------+----------+---------+----------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+----------+---------+----------+---------+----------+---------+
| Available for | 940 | 940 | - | - | - | - |
| sale | | | | | | |
| financial | | | | | | |
| assets | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+
| Derivative | 98 | 98 | - | - | - | - |
| financial | | | | | | |
| instruments | | | | | | |
| at fair value | | | | | | |
| through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+
| Cash and cash | 21,861 | 21,861 | 29,798 | 29,798 | 22,545 | 22,545 |
| equivalents | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+
Financial liabilities
+---------------+----------+---------+----------+---------+----------+---------+
| | 2010 | 2009 | 2008 |
+---------------+--------------------+--------------------+--------------------+
| | Carrying | Fair | Carrying | Fair | Carrying | Fair |
| | value | value | value | value | value | value |
+---------------+----------+---------+----------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+----------+---------+----------+---------+----------+---------+
| Derivative | 149 | 149 | 13 | 13 | 23 | 23 |
| financial | | | | | | |
| instruments | | | | | | |
| at fair value | | | | | | |
| through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+
It is the Directors' opinion that the carrying value of trade receivables and
trade payables approximates to their fair value.
Categories of financial instrument
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| | Note | Loans | Financial | Assets | Derivatives | Available |
| | | and | liabilities | at | used for | for sale |
| | | receivables | measured at | fair | hedging | |
| | | | amortised | value | | |
| | | | cost | through | | |
| | | | | profit | | |
| | | | | or loss | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| At 31 March 2010 | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Available for sale | 20 | - | - | - | - | 940 |
| financial assets | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Trade and other | 16 | 7,730 | - | - | - | - |
| receivables | | | | | | |
| (excludes | | | | | | |
| prepayments) | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Cash and cash | 18 | 21,861 | - | - | - | - |
| equivalents | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Other financial |17, 19 | - | - | 98 | (149) | - |
| instruments at | | | | | | |
| fair value through | | | | | | |
| profit or loss | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Current trade and | 19 | - | (6,258) | - | - | - |
| other payables | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| | | 29,591 | (6,258) | 98 | (149) | 940 |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| | Note | Loans | Financial | Assets | Derivatives | Available |
| | | and | liabilities | at | used for | for sale |
| | | receivables | measured at | fair | hedging | |
| | | | amortised | value | | |
| | | | cost | through | | |
| | | | | profit | | |
| | | | | or loss | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| At 31 March 2009 | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Trade and other | 16 | 7,062 | - | - | - | - |
| receivables | | | | | | |
| (excludes | | | | | | |
| prepayments) | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Cash and cash | 18 | 29,798 | - | - | - | - |
| equivalents | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Other financial |17, 19 | - | - | - | (13) | - |
| instruments at | | | | | | |
| fair value through | | | | | | |
| profit or loss | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Current trade and | 19 | - | (10,850) | - | - | - |
| other payables | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| | | 36,860 | (10,850) | - | (13) | - |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| | Note | Loans | Financial | Assets | Derivatives | Available |
| | | and | liabilities | at | used for | for sale |
| | | receivables | measured at | fair | hedging | |
| | | | amortised | value | | |
| | | | cost | through | | |
| | | | | profit | | |
| | | | | or loss | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| At 31 March 2008 | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Trade and other | 16 | 7,811 | - | - | - | - |
| receivables | | | | | | |
| (excludes | | | | | | |
| prepayments) | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Cash and cash | 18 | 22,545 | - | - | - | - |
| equivalents | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Other financial |17, 19 | - | - | - | (23) | - |
| instruments at | | | | | | |
| fair value through | | | | | | |
| profit or loss | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| Current trade and | 19 | - | (13,547) | - | - | - |
| other payables | | | | | | |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
| | | 30,356 | (13,547) | - | (23) | - |
+--------------------+--------+-------------+-------------+---------+-------------+-----------+
26 Contingent liabilities
The Company, together with its subsidiary undertakings, had given a cross
guarantee in respect of certain indebtedness of the Group. The amount of such
indebtedness at 31 March 2010 was GBPnil (2009: GBPnil). The cross guarantee was
released on 30 March 2010
27 Operating lease commitments
On 25 January 2006, the Group signed a lease on new premises at Morgan House,
Madeira Walk, Windsor, Berkshire. This lease expires on 19 June 2016. The annual
commitment under this lease is GBP229,710 (2009: GBP229,710). The Group has
retained its lease on the premises at 32 Peascod Street, Windsor, Berkshire
which has a commitment of GBP86,000 per annum (2009: GBP86,000). Those premises
have been sublet at the same rate from May 2006 and the lease expires in
December 2011.
At 31 March 2010 the Group had commitments under non-cancellable operating
leases relating to land and buildings as set out below:
+-------------------------+------------+------------+------------+
| | 2010 | 2009 | 2008 |
+-------------------------+------------+------------+------------+
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+------------+------------+------------+
| Not later than one year | 277 | 316 | 316 |
+-------------------------+------------+------------+------------+
| Later than one year and | 926 | 342 | 657 |
| not later than five | | | |
| years | | | |
+-------------------------+------------+------------+------------+
| Later than five years | 287 | - | - |
+-------------------------+------------+------------+------------+
| | 1,490 | 658 | 973 |
+-------------------------+------------+------------+------------+
The total of future minimum sublease payments expected to be received under
non-cancellable subleases at the reporting dates:
+-------------------------+------------+------------+------------+
| | 2010 | 2009 | 2008 |
+-------------------------+------------+------------+------------+
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+------------+------------+------------+
| Not later than one year | 86 | 86 | 86 |
+-------------------------+------------+------------+------------+
| Later than one year and | 65 | 151 | 237 |
| not later than five | | | |
| years | | | |
+-------------------------+------------+------------+------------+
| | 151 | 237 | 323 |
+-------------------------+------------+------------+------------+
28 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.
+-------------------------+------------+------------+
| | 2010 | 2009 |
+-------------------------+------------+------------+
| | GBP'000 | GBP'000 |
+-------------------------+------------+------------+
| Amounts due to | 47 | 28 |
| subsidiaries | | |
+-------------------------+------------+------------+
| Amounts settled by | 110 | 125 |
| subsidiaries on | | |
| parent's behalf | | |
+-------------------------+------------+------------+
| Net dividends received | 13,615 | 9,930 |
| from subsidiaries | | |
+-------------------------+------------+------------+
Transactions with Record Currency Fund - Carry 250
Record plc, together with Mr N. P. Record (who is a Director of Record plc and
is therefore a related party) hold all the issued units in the Record Currency
Fund - Carry 250. Consequently Record plc exerts a controlling interest over
the Record Currency Fund - Carry 250 and it is therefore considered to be a
related party to Record plc and its subsidiaries. Record plc's initial
investment was GBP1,000,000, the fair value of this investment as at 31 March
2010 was GBP940,337. Details of transactions between the Company and Record
Currency Fund - Carry 250 are shown below:
+----------------------------+------------+------------+
| | 2010 | 2009 |
+----------------------------+------------+------------+
| | GBP'000 | GBP'000 |
+----------------------------+------------+------------+
| Investment in Record | 1,000 | - |
| Currency Fund - Carry 250 | | |
| at cost | | |
+----------------------------+------------+------------+
Amounts owed to and by related parties are unsecured, interest-free and have no
fixed terms of repayment. The balances will be settled in cash. No guarantees
have been given or received. No provisions for doubtful debts have been raised
against amounts outstanding, and no expense has been recognised during the
period in respect of bad or doubtful debts 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.
The compensation given to key management personnel is as follows:
+----------------------------+------------+------------+
| | 2010 | 2009 |
+----------------------------+------------+------------+
| | GBP'000 | GBP'000 |
+----------------------------+------------+------------+
| Short-term employee | 5,866 | 10,947 |
| benefits | | |
+----------------------------+------------+------------+
| Post-employment benefits | 325 | 319 |
+----------------------------+------------+------------+
| Share-based payments | 2,171 | 149 |
+----------------------------+------------+------------+
| Dividends | 7,669 | 5,767 |
+----------------------------+------------+------------+
| | 16,031 | 17,182 |
+----------------------------+------------+------------+
Directors' remuneration
+----------------------------+------------+------------+
| | 2010 | 2009 |
+----------------------------+------------+------------+
| | GBP'000 | GBP'000 |
+----------------------------+------------+------------+
| Aggregate emoluments of | | |
| the Directors | | |
+----------------------------+------------+------------+
| Emoluments (excluding | 3,754 | 6,402 |
| pension contribution) | | |
+----------------------------+------------+------------+
| Pension contribution | 150 | 198 |
+----------------------------+------------+------------+
During the year, five Directors of the Company (2009: six) participated in the
Company's Group Personal Pension Plan, a defined contribution scheme.
As at 31 March 2010 there was an outstanding balance due from L F Hill in
respect of personal expenses paid by the Company. The balance was settled in
full in April 2010.
+-------------------------+-------------+-------------+------------+
| | Outstanding | Outstanding | Maximum |
| | at 1 April | at 31 March | liability |
| | 2009 | 2010 | in period |
+-------------------------+-------------+-------------+------------+
| Name | GBP | GBP | GBP |
+-------------------------+-------------+-------------+------------+
| L F Hill | 4,524 | 700 | 5,201 |
+-------------------------+-------------+-------------+------------+
29 Ultimate controlling party
As at 31 March 2010 the Company had no ultimate controlling party, nor at 31
March 2009.
30 Capital management
The Company's objectives when managing capital are (i) to safeguard the
Company's ability to continue as a going concern, and (ii) to provide an
adequate return to its shareholders.
The Company sets the amount of capital in proportion to risk. The Company
manages the capital structure and makes adjustments to it in light of changes in
economic conditions and the risk characteristics of the underlying assets. In
order to maintain or adjust the capital structure, the Company may adjust the
amount of dividends paid to shareholders, return capital to shareholders, or
issue new shares. The Company had no debt in the current or prior financial year
and consequently does not calculate a debt-to-adjusted capital ratio.
31 Post reporting date events
No adjusting or significant non-adjusting events have occurred between the
reporting date and the date of authorisation.
32 Statutory Accounts
This statement was approved by the Board on 14 June 2010. The financial
information set out above does not constitute the company's statutory accounts.
The statutory accounts for the financial year ended 31 March 2009 have been
delivered to the Registrar of Companies and received an audit report which was
unqualified, did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying the report, and did not
contain statements under section 237(2) and (3) of the Companies Act 1985. The
statutory accounts for the financial year ended 31 March 2010 received an audit
report which was unqualified, did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying the
report, and did not contain statements under section 498(2) or 498(3) of the
Companies Act 2006, and will be delivered to the Registrar of Companies.
Notes to Editors
This announcement includes information with respect to Record's financial
condition, its results of operations and business, strategy, plans and
objectives. All statements in this document, other than statements of historical
fact, including words such as "anticipates", "expects", "intends", "plans",
"believes", "seeks", "estimates", "may", "will", "continue", "project" and
similar expressions, are forward-looking statements.
These forward-looking statements are not guarantees of the Company's future
performance and are subject to risks, uncertainties and assumptions that could
cause the actual future results, performance or achievements of the Company to
differ materially from those expressed in or implied by such forward-looking
statements.
The forward-looking statements contained in this document are based on numerous
assumptions regarding Record's present and future business and strategy and
speak only as at the date of this announcement.
The Company expressly disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statements contained in this
announcement whether as a result of new information, future events or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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