TIDMREC
RNS Number : 2272W
Record PLC
16 November 2010
Record plc
PRESS RELEASE
16 November 2010
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2010
Record plc, the specialist currency manager, today announces its unaudited
interim results for the six months ended 30 September 2010.
Financial highlights:
· AuME1 $30.8bn down 9% during the six months to 30 September 2010
· Profit before tax was GBP7.1m (six months to 30 September 2009: GBP8.2m)
· Management fee income for the six months to 30 September 2010 fell to
GBP15.0m (six months to 30 September 2009: GBP16.1m)
· Average management fee rates of 14.7 bps for the six months to 30
September 2010 (six months to 30 September 2009: 14.8 bps)
· Operating margin 46% (six months to 30 September 2009: 49%)
· Basic EPS of 2.26 pence (six months to 30 September 2009: 2.68 pence)
· Interim dividend unchanged at 2.0p per share payable in December 2010
· Subject to business conditions and outlook, intention to keep the total
dividend payable unchanged in the current financial year at 4.59p per share
· Shareholders' equity increased to GBP29.6m (30 September 2009: GBP28.3m)
and included GBP27.1m cash (30 September 2009: GBP27.1m)
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.
Operating highlights:
· Dynamic Hedging continued to perform in line with client expectations
· Alpha composite return of -2.49% for six months to 30 September 2010
(year to 31 March 2010 -0.73%)
· Client numbers fell during the last six months to 57 (93 at 31 March
2010)
· Launch of emerging market currency fund and FTSE FRB10 Index fund before
end of 2010
· Appointment of James Wood-Collins as Chief Executive Officer from 1
October 2010
Commenting on the results Neil Record, Chairman of Record plc, said:
"The financial performance of the business, which delivered reduced pre-tax
profits of GBP7.1m for the half year, reflects the decline in AuME and client
numbers in the Currency for Return product.
During the first six months the satisfactory performance of the Dynamic Hedging
product continued, particularly for our US clients. This gives the business a
good opportunity to generate further sales of this product in the US and
elsewhere.
The investment performance of the Currency for Return product was negative for
the six months with Alpha composite (being ungeared) generating a return of
-2.49% compared to a return of -0.73% for the year to 31 March 2010. For the
Cash Plus fund, being seven times geared, this equated to a return of -18.7%.
This very disappointing result arises principally from the continuing
ultra-loose monetary policy in the major economies, and renewed risk-aversion
precipitated by Greece's financial position and its implications on the Euro and
bank solvency.
The poor performance of the 'carry' based Currency for Return Alpha product has
had a dominant impact on the business over the past two years. However, not
only do we fully stand by this product and the principles that underpin it, but
we have worked hard over this period to develop new products which will provide
a much broader base, with more diversified investment performance, to lay the
foundations for the future growth of the business.
By the end of the calendar year we will launch an emerging markets currency fund
and, together with the launch of a FTSE FRB10 Index fund, we are confident that
we will be able to supply institutional investors with a diversified range of
currency investment products."
Analyst briefing
There will be a presentation for analysts at 9.30am on Tuesday 16 November 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 | | | +44 1753 852222 |
| plc: | | | |
+--------+-------------------------------+----------+----------------------+
| | Neil Record | | |
+--------+-------------------------------+----------+----------------------+
| | Chairman | | |
+--------+-------------------------------+----------+----------------------+
| | | | |
+--------+-------------------------------+----------+----------------------+
| | James Wood-Collins | | |
+--------+-------------------------------+----------+----------------------+
| | Chief Executive Officer | | |
+--------+-------------------------------+----------+----------------------+
| | | | |
+--------+-------------------------------+----------+----------------------+
| | Paul Sheriff | | |
+--------+-------------------------------+----------+----------------------+
| | Chief Operating Officer/Chief | | |
| | Financial Officer | | |
+--------+-------------------------------+----------+----------------------+
| | | | |
+--------+-------------------------------+----------+----------------------+
| MHP | | | +44 207 357 9477 |
+--------+-------------------------------+----------+----------------------+
| | Nick Denton, John Olsen, | | |
| | Vicky Watkins | | |
+--------+-------------------------------+----------+----------------------+
RECORD PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+--------------------------------+------+-----------+-----------+----------+
| | | Unaudited | Unaudited | Audited |
| | | | | |
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | 31 Mar |
| | | 30 Sept | 30 Sept | 10 |
| | | 10 | 09 | |
+--------------------------------+------+-----------+-----------+----------+
| |Note | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+------+-----------+-----------+----------+
| Revenue | 3 | 15,060 | 16,392 | 33,424 |
+--------------------------------+------+-----------+-----------+----------+
| Cost of sales | | - | - | - |
+--------------------------------+------+-----------+-----------+----------+
| Gross profit | | 15,060 | 16,392 | 33,424 |
+--------------------------------+------+-----------+-----------+----------+
| Administrative expenses | | (8,090) | (8,346) | (16,972) |
+--------------------------------+------+-----------+-----------+----------+
| Operating profit | | 6,970 | 8,046 | 16,452 |
+--------------------------------+------+-----------+-----------+----------+
| Finance income | | 92 | 136 | 220 |
+--------------------------------+------+-----------+-----------+----------+
| Profit before tax | | 7,062 | 8,182 | 16,672 |
+--------------------------------+------+-----------+-----------+----------+
| Taxation | | (2,010) | (2,261) | (4,720) |
+--------------------------------+------+-----------+-----------+----------+
| Profit after tax | | 5,052 | 5,921 | 11,952 |
+--------------------------------+------+-----------+-----------+----------+
| Other comprehensive income | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Net losses on held for sale | | (90) | - | (60) |
| financial assets | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Income tax relating to | | 19 | - | 13 |
| components of other | | | | |
| comprehensive income | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Total comprehensive income for | | 4,981 | 5,921 | 11,905 |
| the period | | | | |
+--------------------------------+------+-----------+-----------+----------+
| | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Total comprehensive income for | | | | |
| the year attributable to: | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Owners of the parent | | 4,981 | 5,921 | 11,905 |
+--------------------------------+------+-----------+-----------+----------+
| | | | | |
+--------------------------------+------+-----------+-----------+----------+
| | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Earnings per share for profit | | | | |
| attributable to the equity | | | | |
| holders of the Company during | | | | |
| the period (expressed in pence | | | | |
| per share): | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Basic earnings per share | 4 | 2.26 | 2.68 | 5.39 |
+--------------------------------+------+-----------+-----------+----------+
| Diluted earnings per share | 4 | 2.25 | 2.68 | 5.38 |
+--------------------------------+------+-----------+-----------+----------+
| | | | | |
+--------------------------------+------+-----------+-----------+----------+
| | | | | |
+--------------------------------+------+-----------+-----------+----------+
RECORD PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+-----------------------------+------+-----------+-----------+----------+
| | | Unaudited | Unaudited | Audited |
| | | | | As at 31 |
| | | As at 30 | As at 30 | Mar 10 |
| | | Sep 10 | Sep 09 | |
+-----------------------------+------+-----------+-----------+----------+
| | Note | GBP'000 | GBP'000 | GBP'000 |
+-----------------------------+------+-----------+-----------+----------+
| Non-current assets | | | | |
+-----------------------------+------+-----------+-----------+----------+
| Property, plant and | | 263 | 292 | 205 |
| equipment | | | | |
+-----------------------------+------+-----------+-----------+----------+
| Intangible assets | | 765 | - | 535 |
+-----------------------------+------+-----------+-----------+----------+
| Deferred tax assets | | 62 | 173 | 143 |
+-----------------------------+------+-----------+-----------+----------+
| | | 1,090 | 465 | 883 |
+-----------------------------+------+-----------+-----------+----------+
| Current assets | | | | |
+-----------------------------+------+-----------+-----------+----------+
| Trade and other receivables | | 6,887 | 8,335 | 8,325 |
+-----------------------------+------+-----------+-----------+----------+
| Derivative financial assets | 6 | 62 | - | 98 |
+-----------------------------+------+-----------+-----------+----------+
| Cash and cash equivalents | | 27,111 | 27,120 | 21,861 |
+-----------------------------+------+-----------+-----------+----------+
| | | 34,060 | 35,455 | 30,284 |
+-----------------------------+------+-----------+-----------+----------+
| Current liabilities | | | | |
+-----------------------------+------+-----------+-----------+----------+
| Trade and other payables | | (4,480) | (4,692) | (3,874) |
+-----------------------------+------+-----------+-----------+----------+
| Corporation tax liabilities | | (1,925) | (2,810) | (2,384) |
+-----------------------------+------+-----------+-----------+----------+
| Derivative financial | 6 | - | (82) | (149) |
| liabilities | | | | |
+-----------------------------+------+-----------+-----------+----------+
| | | (6,405) | (7,584) | (6,407) |
+-----------------------------+------+-----------+-----------+----------+
| Net current assets | | 27,655 | 27,871 | 23,877 |
+-----------------------------+------+-----------+-----------+----------+
| | | | | |
+-----------------------------+------+-----------+-----------+----------+
| Non-current assets | 7 | 850 | - | 940 |
| classified as held for sale | | | | |
| (disposal group) | | | | |
+-----------------------------+------+-----------+-----------+----------+
| | | | | |
+-----------------------------+------+-----------+-----------+----------+
| Total net assets | | 29,595 | 28,336 | 25,700 |
+-----------------------------+------+-----------+-----------+----------+
| | | | | |
+-----------------------------+------+-----------+-----------+----------+
| Equity | | | | |
+-----------------------------+------+-----------+-----------+----------+
| Issued share capital | 8 | 55 | 55 | 55 |
+-----------------------------+------+-----------+-----------+----------+
| Share premium account | | 1,809 | 1,809 | 1,809 |
+-----------------------------+------+-----------+-----------+----------+
| Capital redemption reserve | | 20 | 20 | 20 |
+-----------------------------+------+-----------+-----------+----------+
| Retained earnings | | 27,711 | 26,452 | 23,816 |
+-----------------------------+------+-----------+-----------+----------+
| Total equity | | 29,595 | 28,336 | 25,700 |
+-----------------------------+------+-----------+-----------+----------+
Chairman's statement
Introduction
I am pleased to present Record plc's interim report for the six months to 30
September 2010.
Highlights of the period
The six months to 30 September 2010 have continued to be challenging for Record,
and in particular for our Currency for Return product. Dynamic Hedging has
grown to represent close to 60% of our revenue for the six months to 30
September 2010 and has performed in line with client expectations, allowing US
clients to benefit from foreign currency strength and protecting UK clients from
foreign currency weakness. Investment performance of our Currency for Return
product has been negative during this period leading to significant net
outflows.
We are planning to bring a number of new products to market and have begun
marketing index products and emerging market currency products to existing and
new clients. Emerging market currencies are of particular interest to clients
and a range of products have been developed which will be launched in the second
half of the financial year. Interest has been expressed in the new
index-tracking products and if adopted by investment consultants these could be
a substantial income stream over the long term.
Assets under Management Equivalents ('AuME') fell to $30.8bn at 30 September
2010, compared to $34.0bn at 31 March 2010. The largest component of the
decrease was the net outflow from Currency for Return of $3.0bn. Performance in
Currency for Return contributed to a $0.6bn reduction over the six month period.
Foreign exchange movements accounted for a $1.1bn increase and equity market
performance accounted for a $1.0bn decrease in mandate sizes. The number of
clients fell in the six months to 57 (93 at 31 March 2010), predominantly due to
the redemptions by pooled Currency for Return clients.
Management fees decreased to GBP15.0m for the six months to 30 September 2010, a
decrease of 7% compared to the six months to 30 September 2009. Given prior
valuation levels (or 'high water marks') achieved there were no performance fees
earned in the period. Profit before tax for the period of GBP7.1m was 14% lower
than for the equivalent period in the prior year.
The operating margin, at 46%, was also less than that achieved in the six months
to 30 September 2009 (49%) 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 a
long term average 30% of pre-GPS operating profit.
An interim dividend of 2.0p per share will be paid on 21 December 2010. The
Board's intention, subject to satisfactory business performance and outlook, is
to seek to maintain the dividend in the current financial year at 4.59p per
share. The Board will review the dividend policy ahead of the year ending 31
March 2011 financial results in June 2011 to determine an appropriate dividend
policy based on the prevailing business environment at that time.
As I announced in September, I have relinquished the role of Chief Executive to
James Wood-Collins. I remain as Chairman, in an executive position to which I
will commit four days a week, playing an active role with clients, investment
consultants and other external parties, as well as maintaining involvement in
Record's products and product development. The splitting of the Chairman and
Chief Executive role is consistent with good corporate governance and represents
a significant step in handing over day to day responsibility to a second
generation of management.
Further and more detailed analysis of the results for the period can be found in
the Interim Management Review.
Investment performance
Investment performance of our Currency for Return products was negative for the
six month period, particularly in May and August.
May's underperformance came after a positive April, but was followed by negative
performance in June, rounding off a disappointing first quarter (April - June
2010) for the product. As the credibility of Greek austerity plans was brought
into question, global equities and the Euro retreated. Risk aversion and
concerns surrounding global growth hit high interest rate 'commodity'
currencies, leading to poor performance from forward rate bias (FRB) strategy.
Volatility spiked in May resulting in elevated risk management costs as our
Alpha composite delivered an ungeared return of -2.2% over the quarter.
The second quarter (July - September 2010) was the subject of mixed fortunes,
with positive performance in July and September more than offset by negative
performance in August. This period saw risk aversion come and go, and while
equities recovered some of their losses from the previous quarter, FRB
strategies focused on major 'G5' currencies (i.e. US Dollar, Euro, Japanese Yen,
Pound Sterling and Swiss Franc) such as Record's generated negative performance.
Though the core strategy suffered, the product was able to benefit modestly
from the range trading nature of certain currency pairs. Our ungeared Alpha
composite delivered a modest negative return of -0.3%.
In summary, investment performance over the six months has been negative, with
directionless markets creating little opportunity for our Currency for Return
product to profit, while high currency market volatility increased the cost of
risk-managing our exposures. Having considered very carefully the design of our
underperforming Currency for Return process, and the assumptions and investment
beliefs that underpin it, we have come to the view that we will not be making
any fundamental changes to our investment process. Based on our understanding
of the currency markets and our twenty five years of experience, we are
confident that our investment returns in the long term will match our own
expectations and those of our clients.
Strategy, growth plans and outlook
The movements in exchange rates over the last three years have caused investors
to re-examine their strategy for managing exchange rate exposure. In addition,
the trend of US investors moving towards Global Equity benchmarks typically
increases international equity exposure, and the attention given to currency
risk. Whilst Record faces challenges in gaining acceptance for the Dynamic
Hedging product with consultants and clients there remains a good opportunity to
build on the track record to date.
Conversely, the negative investment performance for Currency for Return clients
is expected to result in further outflows in the coming months. It is likely
that a sustained period of positive performance will be a prerequisite for
future inflows to this product.
We continue to pursue opportunities in emerging market currencies and anticipate
a range of products being launched in the second half of the financial year.
The first product has been run internally for twelve months and variations on
this product are being discussed with new and existing clients.
In the medium to long term, the 'asset class project' has continued with the
launch, in conjunction with FTSE, of the second currency index with ten
developed market currencies, the FTSE Currency FRB10 index. This index's greater
allocation to less liquid developed market currencies and absence of risk
controls has given it a better performance profile than our established Alpha
composite programme over the last 18 months. We intend to launch a pooled fund
to track this index from December 2010. The successful trial of our internal
fund, combined with the launch of the FRB10 index-tracking product, has
generated positive interest from investment consultants.
Our sales activities are focused on those products above, whose recent track
records are encouraging, as well as engaging with clients to create specific
solutions to their currency needs. Where possible, these specific solutions are
created with a view to their subsequent scalable extension to other clients.
In order to position Record to benefit from developments in the currency market,
the Group has continued to recruit talented individuals, to enhance its
processes and to invest in systems infrastructure. In particular, the Group
anticipates its new back office system will be implemented in the second half of
the financial year.
We continue to believe that Record is well regarded for its currency expertise
and in the short term is well placed to win business where clients are seeking
to reduce risk from existing currency exposure, and where recent product
performance is positive.
Neil Record
Chairman
15 November 2010
Interim Management Review
Business overview
Whilst the first half of the financial year has seen AuME and client numbers
decrease when compared to the preceding six months, the Group delivered pre tax
profit of GBP7.1m and maintained the interim dividend at 2.0p per share. The
Group's hedging business has remained broadly stable over the first six months
which contrasts with the continuation of the reduction in Currency for Return
mandates, most notably for pooled accounts. The Group is committed to broadening
its product offering and intends to launch an emerging markets currency pooled
fund and a pooled fund to track the FTSE Currency FRB10 Index before the end of
the year. The Group's core distribution strategy is to continue to focus on its
relationships with investment consultants, supplemented by direct marketing by
the in-house client team.
Investment performance
The processes that underpin our Dynamic Hedging and Currency for Return products
are fundamentally different. Dynamic Hedging seeks to allow our clients to
benefit from foreign currency strength while protecting them from foreign
currency weakness. The core investment process for the Currency for Return
products is the Trend/Forward Rate Bias (FRB) strategy, which relies on the
tendency of higher interest rate currencies to outperform lower interest rate
currencies over the long term. In addition to the FRB strategy, the Currency
for Return product has a Range Trading strategy which relies on certain currency
pairs trading in a narrow range to each other, and has the advantage of being
generally uncorrelated to the return from the Trend/FRB strategy.
Performance for US Dollar based Dynamic Hedging, for the period from April to
September 2010, was distinct between the two quarters. US Dollar strength in the
first quarter, which provided a favourable hedging environment, was contrasted
by US Dollar weakness in the second quarter, which proved unfavourable for
hedging. Despite delivering a negative return, the Dynamic Hedging programme was
able to limit losses as the US Dollar weakened, allowing clients to benefit
overall from the strength of foreign currencies in their underlying portfolios.
From the UK perspective, hedging clients saw a slight strengthening of Sterling.
Despite weakness versus the Japanese Yen, the Pound showed strength relative to
the US Dollar and Euro - the largest weights in many international programmes -
as investors generally saw small currency losses on foreign exposures. The cost
of risk-managing these currency exposures was relatively high as a result of
Sterling weakness in both August and May, preventing our Dynamic Hedging from
generating outperformance over the period.
For Currency for Return, the period from April to September 2010 was a period of
mixed performance with three positive and three negative months. Overall
performance during the period was negative (2.5%) for the ungeared Alpha
composite. The underperformance was driven by fluctuating risk aversion and the
lack of positive performance from the high interest rate currencies in the major
'G5' universe. Performance of the Range Trading strategy was marginally negative
over the period.
+------------------+---------+-------------+------------------------+
| Returns of Record Umbrella Currency Funds; six months to 30 |
| September 2010 |
+-------------------------------------------------------------------+
| Fund Name | Gearing | Half year | Volatility since |
| | | Return % | inception % p.a. |
+------------------+---------+-------------+------------------------+
| Alpha composite | 1 | (2.5%) | 2.9% |
+------------------+---------+-------------+------------------------+
| FTSE Currency | 1 | (3.4%) | 5.9% |
| FRB 5 GBP Excess | | | |
| return1,2 | | | |
+------------------+---------+-------------+------------------------+
| Carry 250 | 2.5 | (8.6%) | 13.0% |
+------------------+---------+-------------+------------------------+
| Cash Plus | 7 | (18.7%) | 20.4% |
+------------------+---------+-------------+------------------------+
| Equity Plus | 6 | (19.4%) | 31.5% |
+------------------+---------+-------------+------------------------+
| US Cash Plus | 7 | (20.1%) | 20.9% |
+------------------+---------+-------------+------------------------+
| US Equity Plus | 6 | (22.9%) | 26.0% |
+------------------+---------+-------------+------------------------+
| Sterling 10 | 2.5 | (6.2%) | 6.6% |
+------------------+---------+-------------+------------------------+
| Sterling 20 | 5 | (11.5%) | 11.6% |
+------------------+---------+-------------+------------------------+
| Emerging market | 2 | (2.5%) | 16.1% |
| currency seed | | | |
| product | | | |
+------------------+---------+-------------+------------------------+
| Global Equities2 | N/A | (2.4%) | N/A |
| (S&P 500) | | | |
+------------------+---------+-------------+------------------------+
1 Source : FTSE
2 Included for comparison
Client development
Client numbers decreased to 57 at 30 September 2010 (93 at 31 March 2010).
+---------------------+--------------+-------------+-------------+
| Client numbers |
+----------------------------------------------------------------+
| Product | As at 30 Sep | As at 30 | As at 31 |
| | 10 | Sep 09 | Mar 10 |
+---------------------+--------------+-------------+-------------+
| Currency for Return | 9 | 16 | 14 |
| - segregated | | | |
+---------------------+--------------+-------------+-------------+
| Currency for Return | 25 | 84 | 61 |
| - pooled | | | |
+---------------------+--------------+-------------+-------------+
| Currency for | 34 | 100 | 75 |
| Return - combined | | | |
+---------------------+--------------+-------------+-------------+
| Dynamic Hedging | 10 | 10 | 10 |
+---------------------+--------------+-------------+-------------+
| Passive Hedging | 21 | 23 | 22 |
+---------------------+--------------+-------------+-------------+
| Less clients with | (8) | (15) | (14) |
| >1 product | | | |
+---------------------+--------------+-------------+-------------+
| Total clients | 57 | 118 | 93 |
+---------------------+--------------+-------------+-------------+
AuME analysis
As previously noted, the Group's Assets under Management Equivalents ('AuME')
was $30.8bn at 30 September 2010, a decrease of $3.2bn during the six month
period.
+------------------------------------------------+----------------+
| AuME movement in the six months to 30 September 2010 |
+-----------------------------------------------------------------+
| | $ billions |
+------------------------------------------------+----------------+
| AuME at 31 March 2010 | 34.0 |
+------------------------------------------------+----------------+
| Net client outflows | (2.7) |
+------------------------------------------------+----------------+
| Investment performance impact | (0.6) |
+------------------------------------------------+----------------+
| Equity market impact | (1.0) |
+------------------------------------------------+----------------+
| Foreign exchange impact | 1.1 |
+------------------------------------------------+----------------+
| AuME at 30 September 2010 | 30.8 |
+------------------------------------------------+----------------+
Net client flows
During the six months to 30 September 2010 net client outflows were $2.7bn,
principally due to reductions in pooled and segregated Currency for Return
mandates of $3.0bn offset by a small increase for Passive Hedging.
Investment performance
Negative investment performance during the period contributed a $0.6bn decline
in AuME since investment returns are compounded on a geared basis into the AuME
of the pooled funds managed by Record.
Stock and other market performance
Record's AuME is also affected by movements in stock and other market levels
because substantially all the Passive and Dynamic Hedging, and some of the
Currency for Return mandates, are linked to stock and other market levels.
Market performance had a negative impact, decreasing AuME in the six months to
30 September 2010 by $1.0bn.
Forex
The foreign exchange impact of expressing non-US$ AuME in US$ was the second
largest factor. 69% of the Group's AuME is non-US$ denominated and expressing
this in US$ increased AuME for the period by $1.1bn.
Product mix
The factors determining the movements in AuME also impact its composition. At
30 September 2010 Currency for Return represented 13% of total AuME, which was
split between segregated (7% of total AuME) and pooled mandates (6% of total
AuME). This is down from 28% at 30 September 2009 and 23% at 31 March 2010.
Dynamic Hedging represents $11.5bn and 37% of total AuME at 30 September 2010,
up from 31% at 30 September 2009 and 35% at 31 March 2010.
+-----------------+------+------+------+------+------+------+
| AuME by product expressed in US Dollars |
+-----------------------------------------------------------+
| AuME $ billions | As at 30 | As at 30 | As at 31 |
| | Sep 10 | Sep 09 | Mar 10 |
+-----------------+-------------+-------------+-------------+
| Currency for | 2.1 | 7% | 4.2 | 12% | 3.6 | 11% |
| Return - | | | | | | |
| segregated | | | | | | |
+-----------------+------+------+------+------+------+------+
| Currency for | 1.9 | 6% | 6.0 | 16% | 4.1 | 12% |
| Return - pooled | | | | | | |
+-----------------+------+------+------+------+------+------+
| Currency for | 4.0 | 13% | 10.2 | 28% | 7.7 | 23% |
| Return - | | | | | | |
| combined | | | | | | |
+-----------------+------+------+------+------+------+------+
| Dynamic | 11.5 | 37% | 11.1 | 31% | 12.0 | 35% |
| Hedging | | | | | | |
+-----------------+------+------+------+------+------+------+
| Passive | 14.8 | 48% | 13.4 | 37% | 13.4 | 39% |
| Hedging | | | | | | |
+-----------------+------+------+------+------+------+------+
| Cash | 0.5 | 2% | 1.3 | 4% | 0.9 | 3% |
+-----------------+------+------+------+------+------+------+
| Total | 30.8 | 100% | 36.0 | 100% | 34.0 | 100% |
+-----------------+------+------+------+------+------+------+
+-----------------+------+------+------+------+------+------+
| AuME by product expressed in Sterling |
+-----------------------------------------------------------+
| AuME GBP | As at 30 | As at 30 | As at 31 |
| billions | Sep 10 | Sep 09 | Mar 10 |
+-----------------+-------------+-------------+-------------+
| Currency for | 1.4 | 7% | 2.6 | 12% | 2.4 | 11% |
| Return - | | | | | | |
| segregated | | | | | | |
+-----------------+------+------+------+------+------+------+
| Currency for | 1.2 | 6% | 3.8 | 16% | 2.7 | 12% |
| Return - pooled | | | | | | |
+-----------------+------+------+------+------+------+------+
| Currency for | 2.6 | 13% | 6.4 | 28% | 5.1 | 23% |
| Return - | | | | | | |
| combined | | | | | | |
+-----------------+------+------+------+------+------+------+
| Dynamic | 7.2 | 37% | 6.9 | 31% | 7.9 | 35% |
| Hedging | | | | | | |
+-----------------+------+------+------+------+------+------+
| Passive | 9.4 | 48% | 8.4 | 37% | 8.8 | 39% |
| Hedging | | | | | | |
+-----------------+------+------+------+------+------+------+
| Cash | 0.3 | 2% | 0.8 | 4% | 0.6 | 3% |
+-----------------+------+------+------+------+------+------+
| Total | 19.5 | 100% | 22.5 | 100% | 22.4 | 100% |
+-----------------+------+------+------+------+------+------+
The AuME composition has also changed marginally in terms of the underlying base
currencies due to the loss of Sterling-denominated mandates. Swiss Franc is the
base currency for 33.3% of total AuME at 30 September 2010 (31 March 2010:
27.5%), Sterling is the base currency for 32.0% of total AuME at 30 September
2010 (31 March 2010: 37.0%), and US$ is the base currency for 30.9% of total
AuME at 30 September 2010 (31 March 2010: 30.3%).
+----------+-----+------+------+-------+------+------+------+-------+
| AuME by base currency and product |
+-------------------------------------------------------------------+
| | Currency |Currency for | Dynamic | Passive |
| |for Return | Return | Hedging | Hedging |
| |Segregated | Pooled | | |
+----------+------------+--------------+-------------+--------------+
| Base | 30 | 31 | 30 | 31 | 30 | 31 | 30 | 31 |
| currency | Sep | Mar | Sep | Mar | Sep | Mar | Sep | Mar |
| billions | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 |
+----------+-----+------+------+-------+------+------+------+-------+
| Sterling | GBP | GBP | GBP | GBP | GBP | GBP | GBP | GBP |
| | 0.5 | 1.3 | 1.2 | 2.4 | 1.0 | 1.1 | 3.2 | 3.0 |
+----------+-----+------+------+-------+------+------+------+-------+
| US | USD | USD | - | - | USD | USD | - | - |
| Dollar | 0.6 | 0.8 | | | 8.9 | 9.4 | | |
+----------+-----+------+------+-------+------+------+------+-------+
| Swiss | CHF | CHF | - | - | CHF | CHF | CHF | CHF |
| Franc | 0.7 | 0.7 | | | 0.8 | 0.9 | 8.5 | 8.2 |
+----------+-----+------+------+-------+------+------+------+-------+
| Euro | - | - | - | EUR | - | - | EUR | EUR |
| | | | | 0.3 | | | 0.8 | 0.8 |
+----------+-----+------+------+-------+------+------+------+-------+
| Canadian | CAD | CAD | - | - | - | - | - | - |
| Dollar | 0.2 | 0.2 | | | | | | |
+----------+-----+------+------+-------+------+------+------+-------+
| Total | USD | USD | USD | USD | USD | USD | USD | USD |
| | 2.1 | 3.6 | 1.9 | 4.1 | 11.5 | 12.0 | 14.8 | 13.4 |
+----------+-----+------+------+-------+------+------+------+-------+
+----------------------+------+------+------+------+------+------+
| AuME by client type |
+----------------------------------------------------------------+
| AuME $ billions | As at 30 | As at 30 | As at 31 |
| | Sep 10 | Sep 09 | Mar 10 |
+----------------------+-------------+-------------+-------------+
| Government and | 18.7 | 61% | 20.6 | 57% | 20.2 | 59% |
| public funds | | | | | | |
+----------------------+------+------+------+------+------+------+
| Corporate | 8.2 | 27% | 10.9 | 30% | 9.5 | 28% |
+----------------------+------+------+------+------+------+------+
| Foundations and | 3.9 | 12% | 4.5 | 13% | 4.3 | 13% |
| investment funds | | | | | | |
+----------------------+------+------+------+------+------+------+
| Total | 30.8 | 100% | 36.0 | 100% | 34.0 | 100% |
+----------------------+------+------+------+------+------+------+
+----------------------+------+------+------+------+------+------+
| AuME by client location |
+----------------------------------------------------------------+
| AuME $ billions | As at 30 | As at 30 | As at 31 |
| | Sep 10 | Sep 09 | Mar 10 |
+----------------------+-------------+-------------+-------------+
| UK | 9.8 | 32% | 14.9 | 41% | 12.5 | 37% |
+----------------------+------+------+------+------+------+------+
| Europe (excluding | 12.2 | 40% | 11.9 | 33% | 12.0 | 35% |
| UK) | | | | | | |
+----------------------+------+------+------+------+------+------+
| North America | 8.8 | 28% | 9.2 | 26% | 9.5 | 28% |
+----------------------+------+------+------+------+------+------+
| Total | 30.8 | 100% | 36.0 | 100% | 34.0 | 100% |
+----------------------+------+------+------+------+------+------+
Product development
As highlighted in the Chairman's statement, Record continues to focus on
bringing new products to market. An index product, Carry 250, that tracks the
FTSE Currency FRB5 Index has been run for over twelve months and has
demonstrated successfully that the index can be replicated and tracked closely.
The FTSE Currency FRB10 Index, with ten developed market currencies, has been
launched and an FRB10 Index tracking fund will be launched in December 2010.
The seed investment in Carry 250 will be rolled over into this new index
product.
The first emerging market currency product has also been run successfully for
twelve months with a seed investment of GBP1m from the Group. A series of
emerging market currency strategies are being discussed with new and existing
clients. An emerging market currency pooled fund is currently being developed.
It is hoped that there will be client additions for emerging market currency
products in the next twelve months.
Further currency strategies are being explored by the client and research teams
and it is anticipated that further products and strategies will be launched in
the coming twelve months.
Revenue
Management fee income for the six months to 30 September 2010 was GBP15.0m,
which was 6.9% lower than for the six months to 30 September 2009 (GBP16.1m).
Currency for Return products generated lower management fees and both Dynamic
Hedging and Passive Hedging generated higher management fees during the six
months to 30 September 2010. In the six months to 30 September 2010 Dynamic
Hedging generated 58.7% of the management fee income, with Currency for Return
generating 32.7%.
+----------------------+-------------+--------------+----------+
| Management fees by product (GBPm) |
+--------------------------------------------------------------+
| Product | Six months | Six months | Year |
| | ended | ended | ended 31 |
| | 30 Sep 10 | 30 Sep 09 | Mar 10 |
+----------------------+-------------+--------------+----------+
| Currency for Return | 2.7 | 4.6 | 8.0 |
| - segregated | | | |
+----------------------+-------------+--------------+----------+
| Currency for Return | 2.2 | 4.6 | 8.6 |
| - pooled | | | |
+----------------------+-------------+--------------+----------+
| Currency for Return | 4.9 | 9.2 | 16.6 |
| - combined | | | |
+----------------------+-------------+--------------+----------+
| Dynamic Hedging | 8.8 | 5.9 | 14.4 |
+----------------------+-------------+--------------+----------+
| Passive Hedging | 1.3 | 1.0 | 2.2 |
+----------------------+-------------+--------------+----------+
| Total management fee | 15.0 | 16.1 | 33.2 |
| income | | | |
+----------------------+-------------+--------------+----------+
The average fee rate achieved for segregated Currency for Return mandates
increased to 29.9bps whilst the pooled fee rate declined marginally to 24.2bps
(25.7bps and 24.4bps respectively for the six months to 30 September 2009). The
average Dynamic Hedging management fee rate increased to 24.0bps (six months to
30 September 2009: 23.1bps).
Record typically offers all Currency for 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.
+----------------------+-------------+--------------+----------+
| Average management fee rates by product (bps*) |
+--------------------------------------------------------------+
| Product | Six months | Six months | Year |
| | ended | ended | ended 31 |
| | 30 Sep 10 | 30 Sep 09 | Mar 10 |
+----------------------+-------------+--------------+----------+
| Currency for Return | 29.9 | 25.7 | 26.6 |
| - segregated | | | |
+----------------------+-------------+--------------+----------+
| Currency for Return | 24.2 | 24.4 | 24.4 |
| - pooled | | | |
+----------------------+-------------+--------------+----------+
| Currency for Return | 27.1 | 25.0 | 25.4 |
| - combined | | | |
+----------------------+-------------+--------------+----------+
| Dynamic Hedging | 24.0 | 23.1 | 23.7 |
+----------------------+-------------+--------------+----------+
| Passive Hedging | 2.9 | 2.4 | 2.6 |
+----------------------+-------------+--------------+----------+
| Composite average | 14.7 | 14.8 | 15.2 |
| fee rate | | | |
+----------------------+-------------+--------------+----------+
*bps = basis points = 1/100th of 1 percentage point
There were no performance fees earned during the six months to 30 September 2010
compared with GBP0.2m during the same period to 30 September 2009. A fuller
explanation of market conditions and the implications for investment performance
of our Currency for Return product is given in the Chairman's statement. A
further factor in explaining performance fees is that our performance fee
structures 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.
Expenditure
Expenditure in the six months to 30 September 2010 fell GBP0.2m to GBP8.1m from
GBP8.3m in the six months to 30 September 2009. The reduction was primarily in
the Group Profit Share (GPS) scheme which was 30% of pre-GPS operating profit in
the period, partially offset by an increase to non-personnel costs.
+------------------------------+-----------+-----------+--------+
| Expenditure analysis |
+---------------------------------------------------------------+
| | Six | Six | Year |
| | months | months | ended |
| | ended 30 | ended 30 | 31 Mar |
| | Sep 10 | Sep 09 | 10 |
+------------------------------+-----------+-----------+--------+
| Personnel costs | 3.0 | 3.1 | 6.1 |
+------------------------------+-----------+-----------+--------+
| Non-personnel costs | 2.1 | 1.7 | 3.8 |
+------------------------------+-----------+-----------+--------+
| Expenditure excluding Group | 5.1 | 4.8 | 9.9 |
| Profit Share | | | |
+------------------------------+-----------+-----------+--------+
| Group Profit Share | 3.0 | 3.5 | 7.1 |
+------------------------------+-----------+-----------+--------+
| Total expenditure | 8.1 | 8.3 | 17.0 |
+------------------------------+-----------+-----------+--------+
The Group is currently in the process of replacing its back office systems and
going forward it is anticipated that this will result in a small increase in
system costs. The new system will support the Group in its desire to expand its
range of products and instruments in the future.
Operating margins
The operating profit for the six months to 30 September 2010 of GBP7.0m (46.3%
operating margin) reflects the lower management fee income and lack of
performance fees in the period and compares with the operating profit of GBP8.0m
(49.1% operating margin) for the same period in 2009. The reduction in
management fees of GBP1.1m compares with the reduction of GBP1.0m in operating
profit.
Operating cash flow
The Group generated GBP9.2m of net cash flow from operating activities during
the six months ended 30 September 2010 (six months ended 30 September 2009:
GBP5.8m). Taxation paid during the period was GBP2.4m compared with GBP3.8m for
the six months to 30 September 2009. On 4 August 2010 the Group paid a final
dividend of 0.59p per share in respect of the six month period ended 31 March
2010. This equated to a distribution to shareholders of GBP1.3m.
The Board's objective is to retain sufficient capital within the business to
meet continuing obligations, to sustain future growth and to provide a buffer
against adverse market conditions.The Group has no debt to repay or to service.
Shareholders' funds were GBP29.6m at 30 September 2010 (30 September 2009:
GBP28.3m).
Dividends
The Group will pay an interim dividend of 2.0p per share in respect of the six
months ended 30 September 2010. The dividend will be paid on 21 December 2010
to shareholders on the register on 26 November 2010. The dividend payment will
equate to a distribution of GBP4.4m in total and will leave approximately
GBP22.3m of cash on the balance sheet which is significantly higher than
necessary to satisfy the financial resources and liquidity requirements of the
FSA and represents over two years of current overhead cover.
Subject to business conditions in the second half of the financial year and
outlook, the Group currently intends to maintain the dividend at 4.59p for the
financial year ending 31 March 2011. The dividend policy will be further
reviewed at the year end.
Principal risks and uncertainties
The principal risks and uncertainties documented in the Annual Report and
Accounts for the year ended 31 March 2010 are still relevant to Record.
The six months to 30 September 2010 has seen the risk associated with account
concentration increase. The proportion of management fee income generated from
the largest client has increased from 23% at 31 March 2010 to 32% at 30
September 2010. Similarly the proportion of management fee income generated
from the largest five clients has increased from 40% at 31 March 2010 to 57% at
30 September 2010 and for the largest ten clients from 55% at 31 March 2010 to
74% at 30 September 2010.
The proportion of revenue earned in foreign currency has also increased in the
period from 56% for the year ended 31 March 2010 to 67% for the six months ended
30 September 2010. The Group hedges the accrued foreign currency income
transaction risk using forward currency contracts.
The level of AuME and fee income is dependent on currency values, performance of
underlying assets (typically international equities) and the clients' investment
strategies.
Cautionary statement
This interim 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 interim report. Nothing in this interim report
should be construed as a profit forecast.
Statement of Directors' responsibilities
The Directors of Record plc confirm that, to the best of their knowledge, the
condensed set of financial statements below have been prepared in accordance
with IAS 34 'Interim Financial Reporting', and that the interim management
report above includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8.
The Directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website. Legislation in the
United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Neil Record Paul Sheriff
Chairman Chief Operating
Officer/Chief Financial Officer
15 November 2010 15 November 2010
Independent review report to Record plc
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2010 which comprises the consolidated statement of comprehensive
income, consolidated statement of financial position, consolidated statement of
cash flows, consolidated statement of changes in equity and the related notes.
We have read the other information contained in the half yearly financial report
which comprises only the headlines, Chairman's Statement, interim management
review and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the company in accordance with guidance contained
in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information
performed by the Independent Auditor of the Entity'. Our review work has been
undertaken so that we might state to the company those matters we are required
to state to them in a review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company, for our review work, for this report, or for the
conclusion we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in Note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, 'Interim Financial Reporting,' as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 September 2010 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
GRANT THORNTON UK LLP
REGISTERED AUDITOR
CHARTERED ACCOUNTANTS
London
15 November 2010
RECORD PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+--------------------------------+------+-----------+-----------+----------+
| | | Unaudited | Unaudited | Audited |
| | | | | |
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | 31 Mar |
| | | 30 Sep 10 | 30 Sep 09 | 10 |
| | | | | |
+--------------------------------+------+-----------+-----------+----------+
| |Note | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+------+-----------+-----------+----------+
| Revenue | 3 | 15,060 | 16,392 | 33,424 |
+--------------------------------+------+-----------+-----------+----------+
| Cost of sales | | - | - | - |
+--------------------------------+------+-----------+-----------+----------+
| Gross profit | | 15,060 | 16,392 | 33,424 |
+--------------------------------+------+-----------+-----------+----------+
| Administrative expenses | | (8,090) | (8,346) | (16,972) |
+--------------------------------+------+-----------+-----------+----------+
| Operating profit | | 6,970 | 8,046 | 16,452 |
+--------------------------------+------+-----------+-----------+----------+
| Finance income | | 92 | 136 | 220 |
+--------------------------------+------+-----------+-----------+----------+
| Profit before tax | | 7,062 | 8,182 | 16,672 |
+--------------------------------+------+-----------+-----------+----------+
| Taxation | | (2,010) | (2,261) | (4,720) |
+--------------------------------+------+-----------+-----------+----------+
| Profit after tax | | 5,052 | 5,921 | 11,952 |
+--------------------------------+------+-----------+-----------+----------+
| Other comprehensive income | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Net losses on held for sale | | (90) | - | (60) |
| financial assets | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Income tax relating to | | 19 | - | 13 |
| components of other | | | | |
| comprehensive income | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Total comprehensive income for | | 4,981 | 5,921 | 11,905 |
| the period | | | | |
+--------------------------------+------+-----------+-----------+----------+
| | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Total comprehensive income for | | | | |
| the year attributable to: | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Owners of the parent | | 4,981 | 5,921 | 11,905 |
+--------------------------------+------+-----------+-----------+----------+
| | | | | |
+--------------------------------+------+-----------+-----------+----------+
| | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Earnings per share for profit | | | | |
| attributable to the equity | | | | |
| holders of the Company during | | | | |
| the period (expressed in pence | | | | |
| per share): | | | | |
+--------------------------------+------+-----------+-----------+----------+
| Basic earnings per share | 4 | 2.26 | 2.68 | 5.39 |
+--------------------------------+------+-----------+-----------+----------+
| Diluted earnings per share | 4 | 2.25 | 2.68 | 5.38 |
+--------------------------------+------+-----------+-----------+----------+
| | | | | |
+--------------------------------+------+-----------+-----------+----------+
| | | | | |
+--------------------------------+------+-----------+-----------+----------+
RECORD PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+--------------------------------+------+-----------+-----------+---------+
| | | Unaudited | Unaudited | Audited |
| | | As at | As at | |
| | | 30 Sep 10 | 30 Sep 09 | As at |
| | | | | 31 Mar |
| | | | | 10 |
+--------------------------------+------+-----------+-----------+---------+
| |Note | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+------+-----------+-----------+---------+
| Non-current assets | | | | |
+--------------------------------+------+-----------+-----------+---------+
| Property, plant and equipment | | 263 | 292 | 205 |
+--------------------------------+------+-----------+-----------+---------+
| Intangible assets | | 765 | - | 535 |
+--------------------------------+------+-----------+-----------+---------+
| Deferred tax assets | | 62 | 173 | 143 |
+--------------------------------+------+-----------+-----------+---------+
| | | 1,090 | 465 | 883 |
+--------------------------------+------+-----------+-----------+---------+
| Current assets | | | | |
+--------------------------------+------+-----------+-----------+---------+
| Trade and other receivables | | 6,887 | 8,335 | 8,325 |
+--------------------------------+------+-----------+-----------+---------+
| Derivative financial assets | 6 | 62 | - | 98 |
+--------------------------------+------+-----------+-----------+---------+
| Cash and cash equivalents | | 27,111 | 27,120 | 21,861 |
+--------------------------------+------+-----------+-----------+---------+
| | | 34,060 | 35,455 | 30,284 |
+--------------------------------+------+-----------+-----------+---------+
| Current liabilities | | | | |
+--------------------------------+------+-----------+-----------+---------+
| Trade and other payables | | (4,480) | (4,692) | (3,874) |
+--------------------------------+------+-----------+-----------+---------+
| Corporation tax liabilities | | (1,925) | (2,810) | (2,384) |
+--------------------------------+------+-----------+-----------+---------+
| Derivative financial | 6 | - | (82) | (149) |
| liabilities | | | | |
+--------------------------------+------+-----------+-----------+---------+
| | | (6,405) | (7,584) | (6,407) |
+--------------------------------+------+-----------+-----------+---------+
| Net current assets | | 27,655 | 27,871 | 23,877 |
+--------------------------------+------+-----------+-----------+---------+
| | | | | |
+--------------------------------+------+-----------+-----------+---------+
| Non-current assets classified | 7 | 850 | - | 940 |
| as held for sale (disposal | | | | |
| group) | | | | |
+--------------------------------+------+-----------+-----------+---------+
| | | | | |
+--------------------------------+------+-----------+-----------+---------+
| Total net assets | | 29,595 | 28,336 | 25,700 |
+--------------------------------+------+-----------+-----------+---------+
| | | | | |
+--------------------------------+------+-----------+-----------+---------+
| Equity | | | | |
+--------------------------------+------+-----------+-----------+---------+
| Issued share capital | 8 | 55 | 55 | 55 |
+--------------------------------+------+-----------+-----------+---------+
| Share premium account | | 1,809 | 1,809 | 1,809 |
+--------------------------------+------+-----------+-----------+---------+
| Capital redemption reserve | | 20 | 20 | 20 |
+--------------------------------+------+-----------+-----------+---------+
| Retained earnings | | 27,711 | 26,452 | 23,816 |
+--------------------------------+------+-----------+-----------+---------+
| Total equity | | 29,595 | 28,336 | 25,700 |
+--------------------------------+------+-----------+-----------+---------+
RECORD PLC
CONSOLIDATED STATEMENT OF CASH FLOW
+----------------------------+--------------+---------------+-----------+
| | Unaudited | Unaudited | Audited |
| | Six months | Six months | Year |
| | ended 30 Sep | ended | ended |
| | 10 | 30 Sep 09 | 31 Mar 10 |
| | | | |
+----------------------------+--------------+---------------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------+--------------+---------------+-----------+
| | | | |
+----------------------------+--------------+---------------+-----------+
| Profit after tax | 5,052 | 5,921 | 11,952 |
+----------------------------+--------------+---------------+-----------+
| Adjustments for: | | | |
+----------------------------+--------------+---------------+-----------+
| Corporation tax | 2,010 | 2,261 | 4,720 |
+----------------------------+--------------+---------------+-----------+
| Finance income | (92) | (136) | (220) |
+----------------------------+--------------+---------------+-----------+
| Depreciation of property, | 106 | 128 | 250 |
| plant and equipment | | | |
+----------------------------+--------------+---------------+-----------+
| Share-based payments | 217 | 43 | 251 |
| expense | | | |
+----------------------------+--------------+---------------+-----------+
| | 7,293 | 8,217 | 16,953 |
+----------------------------+--------------+---------------+-----------+
| Changes in working capital | | | |
+----------------------------+--------------+---------------+-----------+
| Decrease/(Increase) in | 1,441 | (600) | (651) |
| receivables | | | |
+----------------------------+--------------+---------------+-----------+
| Increase/(Decrease) in | 606 | (1,849) | (3,202) |
| payables | | | |
+----------------------------+--------------+---------------+-----------+
| Decrease in other | 36 | - | - |
| financial assets | | | |
+----------------------------+--------------+---------------+-----------+
| (Decrease)/Increase in | (149) | 69 | (902) |
| other financial | | | |
| liabilities | | | |
+----------------------------+--------------+---------------+-----------+
| CASH INFLOW FROM OPERATING | 9,227 | 5,837 | 12,198 |
| ACTIVITIES | | | |
+----------------------------+--------------+---------------+-----------+
| Corporation taxes paid | (2,367) | (3,788) | (6,094) |
+----------------------------+--------------+---------------+-----------+
| NET CASH INFLOW FROM | 6,860 | 2,049 | 6,104 |
| OPERATING ACTIVITIES | | | |
+----------------------------+--------------+---------------+-----------+
| CASH FLOW FROM INVESTING | | | |
| ACTIVITIES | | | |
+----------------------------+--------------+---------------+-----------+
| Purchase of property, | (166) | (52) | (87) |
| plant and equipment | | | |
+----------------------------+--------------+---------------+-----------+
| Purchase of intangible | (230) | - | (535) |
| assets | | | |
+----------------------------+--------------+---------------+-----------+
| Interest received | 89 | 144 | 229 |
+----------------------------+--------------+---------------+-----------+
| NET CASH (OUTFLOW)/INFLOW | (307) | 92 | (393) |
| FROM INVESTING ACTIVITIES | | | |
+----------------------------+--------------+---------------+-----------+
| CASH FLOW FROM FINANCING | | | |
| ACTIVITIES | | | |
+----------------------------+--------------+---------------+-----------+
| Purchase of treasury | - | (52) | (52) |
| shares | | | |
+----------------------------+--------------+---------------+-----------+
| Dividends paid to equity | (1,303) | (4,767) | (13,596) |
| shareholders | | | |
+----------------------------+--------------+---------------+-----------+
| CASH OUTFLOW FROM | (1,303) | (4,819) | (13,648) |
| FINANCING ACTIVITIES | | | |
+----------------------------+--------------+---------------+-----------+
| NET (DECREASE)/INCREASE IN | 5,250 | (2,678) | (7,937) |
| CASH AND CASH EQUIVALENTS | | | |
| IN THE PERIOD | | | |
+----------------------------+--------------+---------------+-----------+
| Cash and cash equivalents | 21,861 | 29,798 | 29,798 |
| at the beginning of the | | | |
| period | | | |
+----------------------------+--------------+---------------+-----------+
| CASH AND CASH EQUIVALENTS | 27,111 | 27,120 | 21,861 |
| AT THE END OF THE PERIOD | | | |
+----------------------------+--------------+---------------+-----------+
| | | | |
+----------------------------+--------------+---------------+-----------+
| CLOSING CASH AND CASH | | | |
| EQUIVALENTS CONSISTS OF: | | | |
+----------------------------+--------------+---------------+-----------+
| Cash at bank and in hand | 27,111 | 27,120 | 21,861 |
+----------------------------+--------------+---------------+-----------+
| | 27,111 | 27,120 | 21,861 |
+----------------------------+--------------+---------------+-----------+
RECORD PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+---------------------+---------+---------+------------+----------+---------------+
| Unaudited | 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 2009 | 55 | 1,809 | 20 | 25,307 | 27,191 |
+---------------------+---------+---------+------------+----------+---------------+
| Dividends paid | - | - | - | (4,767) | (4,767) |
+---------------------+---------+---------+------------+----------+---------------+
| Own shares held by | - | - | - | (52) | (52) |
| EBT | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Employee share | - | - | - | 43 | 43 |
| options | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Transactions with | - | - | - | (4,776) | (4,776) |
| owners | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Profit and total | - | - | - | 5,921 | 5,921 |
| comprehensive | | | | | |
| income for the | | | | | |
| period | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| As at 30 September | 55 | 1,809 | 20 | 26,452 | 28,336 |
| 2009 | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Dividends paid | - | - | - | (8,829) | (8,829) |
+---------------------+---------+---------+------------+----------+---------------+
| Own shares held by | - | - | - | 1 | 1 |
| EBT | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Employee share | - | - | - | 208 | 208 |
| options | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Transactions with | - | - | - | (8,620) | (8,620) |
| owners | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Profit for the | - | - | - | 6,031 | 6,031 |
| period | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Other comprehensive | | | | | |
| income | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Loss on non-current | - | - | - | (60) | (60) |
| assets held for | | | | | |
| sale | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Income tax relating | - | - | - | 13 | 13 |
| to components of | | | | | |
| other comprehensive | | | | | |
| income | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Total comprehensive | - | - | - | 5,984 | 5,984 |
| income for the | | | | | |
| period | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| As at 31 March 2010 | 55 | 1,809 | 20 | 23,816 | 25,700 |
+---------------------+---------+---------+------------+----------+---------------+
| Dividends paid | - | - | - | (1,303) | (1,303) |
+---------------------+---------+---------+------------+----------+---------------+
| Employee share | - | - | - | 217 | 217 |
| options | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Transactions with | - | - | - | (1,086) | (1,086) |
| owners | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Profit for the | - | - | - | 5,052 | 5,052 |
| period | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Other comprehensive | | | | | |
| income | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Loss on non-current | - | - | - | (90) | (90) |
| assets held for | | | | | |
| sale | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Income tax relating | - | - | - | 19 | 19 |
| to components of | | | | | |
| other comprehensive | | | | | |
| income | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| Total comprehensive | - | - | - | 4,981 | 4,981 |
| income for the | | | | | |
| period | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
| As at 30 September | 55 | 1,809 | 20 | 27,711 | 29,595 |
| 2010 | | | | | |
+---------------------+---------+---------+------------+----------+---------------+
Notes to the accounts
For the six months ended 30 September 2010
1 Basis of preparation
The condensed set of financial statements included in this interim financial
report have been prepared in accordance with International Accounting Standard
34, Interim Financial Reporting, as adopted by the European Union. The
financial information set out in this interim report does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006. The
Group's statutory financial statements for the year ended 31 March 2010 (which
were prepared in accordance with IFRSs as adopted by the European Union) have
been delivered to the Registrar of Companies. The auditor's report on those
financial statements was unqualified and did not contain statements under
Section 498(2) or Section 498(3) of the Companies Act 2006.
2 Significant accounting policies
The condensed financial statements have been prepared under the historical cost
convention modified to include fair valuation of derivative financial
instruments.
The accounting policies, presentation and methods of computation applied in the
interim financial statements are consistent with those applied in the financial
statements for the year ended 31 March 2010.
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 Currency for 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 |
+--------------------------------------------------------------------+
| Currency management | Six months | Six months | Year ended |
| income by product and | ended 30 | ended 30 | 31 Mar 10 |
| fee type | Sep 10 | Sep 09 | |
+-------------------------+-------------+-------------+--------------+
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+-------------+-------------+--------------+
| Dynamic Hedging | | | |
+-------------------------+-------------+-------------+--------------+
| Management fees | 8,813 | 5,921 | 14,432 |
+-------------------------+-------------+-------------+--------------+
| Passive Hedging | | | |
+-------------------------+-------------+-------------+--------------+
| Management fees | 1,278 | 1,026 | 2,211 |
+-------------------------+-------------+-------------+--------------+
| Currency for Return - | | | |
| segregated | | | |
+-------------------------+-------------+-------------+--------------+
| Management fees | 2,735 | 4,577 | 8,038 |
+-------------------------+-------------+-------------+--------------+
| Currency for Return - | | | |
| pooled | | | |
+-------------------------+-------------+-------------+--------------+
| Management fees | 2,177 | 4,598 | 8,563 |
+-------------------------+-------------+-------------+--------------+
| Performance fees | - | 220 | 224 |
+-------------------------+-------------+-------------+--------------+
| | 15,003 | 16,342 | 33,468 |
+-------------------------+-------------+-------------+--------------+
| Other revenues | 57 | 50 | (44) |
+-------------------------+-------------+-------------+--------------+
| Total | 15,060 | 16,392 | 33,424 |
+-------------------------+-------------+-------------+--------------+
(b) Countries served
The geographical analysis of revenue is based on the destination (i.e. the
location of the client to whom the services are provided). All turnover
originated in the UK. All assets of the Group are located in the UK.
Other group activities contribute less than 1% of the total Group income. They
are not considered significant and they are not analysed by geographical region.
+--------------------------+-------------+------------+-------------+
| Currency management income by country |
+-------------------------------------------------------------------+
| | Six months | Six months | Year ended |
| | ended | ended | 31 Mar 10 |
| | 30 Sep 10 | 30 Sep 09 | |
+--------------------------+-------------+------------+-------------+
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------+-------------+------------+-------------+
| UK | 5,070 | 7,766 | 14,885 |
+--------------------------+-------------+------------+-------------+
| US | 6,926 | 3,992 | 10,921 |
+--------------------------+-------------+------------+-------------+
| Switzerland | 2,545 | 2,192 | 4,568 |
+--------------------------+-------------+------------+-------------+
| UAE | - | 721 | 720 |
+--------------------------+-------------+------------+-------------+
| Other | 462 | 1,671 | 2,374 |
+--------------------------+-------------+------------+-------------+
| | 15,003 | 16,342 | 33,468 |
+--------------------------+-------------+------------+-------------+
| Other Group activities | 57 | 50 | (44) |
+--------------------------+-------------+------------+-------------+
| Total | 15,060 | 16,392 | 33,424 |
+--------------------------+-------------+------------+-------------+
During the six months ended 30 September 2010, GBP4.8m or 31.9% 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 period.
4 Earnings per share
Basic earnings per share is calculated by dividing the profit for the financial
period attributable to equity holders of the parent by the weighted average
number of ordinary shares in issue during the period.
Diluted earnings per share is calculated as for the basic earnings per share
with a further adjustment to the weighted average number of ordinary shares to
reflect the effects of all potential dilution.
There is no difference between the profit for the financial year attributable to
equity holders of the parent used in the basic and diluted earnings per share
calculations.
+-------------------------------+-------------+-------------+-------------+
| | Six months | Six months | Year |
| | ended | ended | ended |
| | 30 Sep 10 | 30 Sep 09 | 31 Mar |
| | | | 10 |
+-------------------------------+-------------+-------------+-------------+
| Weighted average number of | 220,874,485 | 220,668,098 | 220,699,697 |
| shares used in calculation of | | | |
| basic earnings per share | | | |
+-------------------------------+-------------+-------------+-------------+
| Effect of dilutive potential | 355,560 | 416,830 | 418,793 |
| ordinary shares - share | | | |
| options | | | |
+-------------------------------+-------------+-------------+-------------+
| Weighted average number of | 221,230,045 | 221,084,928 | 221,118,490 |
| shares used in calculation of | | | |
| diluted earnings per share | | | |
+-------------------------------+-------------+-------------+-------------+
| | | | |
+-------------------------------+-------------+-------------+-------------+
| | pence | pence | pence |
+-------------------------------+-------------+-------------+-------------+
| Basic earnings per share | 2.26 | 2.68 | 5.39 |
+-------------------------------+-------------+-------------+-------------+
| Diluted earnings per share | 2.25 | 2.68 | 5.38 |
+-------------------------------+-------------+-------------+-------------+
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 period
over 586,068 shares. During the period options were exercised, or share awards
vested, over 220,632 shares.
Share awards made under the aforementioned schemes are delivered wherever
possible through market purchases, not through the issue of new shares, and this
remains the intention for the future in order to avoid dilution.
5 Dividends
The dividends paid by the Group during the six months ended 30 September 2010 in
respect of the year ended 31 March 2010 totalled GBP1,302,689 (0.59p per share).
The dividends paid during the year ended 31 March 2010 totalled GBP13,595,519
(6.16p per share, which included the accelerated dividend of 2.00p per share in
March 2010). The dividends paid during the six months ended 30 September 2009
totalled GBP4,766,771 (2.16p per share).
6 Derivative financial assets and liabilities
The Group has committed seed capital to a new product, being a GBP1,000,000
investment in an emerging market currency segregated mandate. This is a geared
investment that invests in long emerging market currencies and short developed
market currencies. These contracts are classified as financial assets held for
trading. At 30 September 2010 there were outstanding contracts with a principal
value of GBP3,363,728 (31 March 2010: GBP3,195,836; 30 September 2009: 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 30 September 2010.
+--------------------------------------+---------+---------+---------+
| | As at | As at | As at |
| | 30 Sep | 30 Sep | 31 Mar |
| | 10 | 09 | 10 |
+--------------------------------------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------+---------+---------+---------+
| Derivative financial assets - | 28 | - | 98 |
| forward foreign exchange contracts | | | |
| held for trading | | | |
+--------------------------------------+---------+---------+---------+
The net gain or (loss) on forward exchange contracts at fair value is included
in other income. The net gain or (loss) on financial assets is as follows:
+------------------------------------+---------+---------+---------+
| | Six | Six | Year |
| | months | months | ended |
| | ended | ended | 31 Mar |
| | 30 Sep | 30 Sep | 10 |
| | 10 | 09 | |
+------------------------------------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+------------------------------------+---------+---------+---------+
| Net (loss) or gain on forward | (30) | - | 119 |
| exchange contracts at fair value | | | |
| through profit or loss | | | |
+------------------------------------+---------+---------+---------+
The Group uses forward exchange contracts to reduce the risk associated with
sales denominated in foreign currencies. At 30 September 2010 there were
outstanding contracts with a principal value of GBP4,171,559 (31 March 2010:
GBP4,710,619; 30 September 2009: GBP3,662,048) 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 30 September
2010.
+-------------------------------------+---------+---------+---------+
| | As at | As at | As at |
| | 30 Sep | 30 Sep | 31 Mar |
| | 10 | 09 | 10 |
+-------------------------------------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------+---------+---------+---------+
| Derivative financial | 34 | (82) | (149) |
| assets/(liabilities) - forward | | | |
| foreign exchange contracts held to | | | |
| hedge cash flow | | | |
+-------------------------------------+---------+---------+---------+
The net gain on forward foreign exchange contracts held to hedge cash flow is as
follows:
+-------------------------------------+---------+---------+---------+
| | Six | Six | Year |
| | months | months | ended |
| | ended | ended | 31 Mar |
| | 30 Sep | 30 Sep | 10 |
| | 10 | 09 | |
+-------------------------------------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------+---------+---------+---------+
| Net gain on fair value through | 209 | 250 | 259 |
| profit or loss | | | |
+-------------------------------------+---------+---------+---------+
7 Non-current assets classified as held for sale (disposal group)
From time to time, the Group injects capital into funds operated by the Group to
trial new products (seed capital). On 1 October 2009 the Group placed
GBP1,000,000 in the Record Currency Fund Carry 250. The only other investor in
this fund is Neil Record, Chairman 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 becomes a
subsidiary of the Group. As the Group expected to reduce its holding within
twelve months, the investment was considered to be a disposal group classified
as being held for sale as it was considered highly probable that the fund would
not remain under the control of the Group one year after the original investment
was made.
At 30 September 2010 the Group had not redeemed its seed capital in this fund.
As noted in paragraph 9 of IFRS 5, an extension of the period required to
complete a sale does not preclude an asset (or disposal group) from being
classified as held for sale if the delay is caused by events or circumstances
beyond the entity's control and there is sufficient evidence that the entity
remains committed to its plan to sell the asset (or disposal group). During the
initial one-year period, the market conditions that existed at the date the
asset was classified initially as held for sale deteriorated, largely as a
result of the negative performance of the fund, precluding the launch of the
fund to external investors and consequently the redemption of the Group's seed
capital.
The Board has set a date of 1 December 2010 for the redemption of its unit
holding in the Carry 250 fund, the proceeds of which will be used to seed an
alternative index tracking product based on the FTSE FRB10 Index. As such, the
conditions in IFRS 5 paragraph B1(c) for an exception to the one-year
requirement in paragraph 8 are met. At the end of the initial one-year period,
the asset continues to be classified as held for sale.
+-----------------------------------+---------+---------+----------+
| | As at | As at | As at |
| | 30 Sep | 30 Sep | 31 Mar |
| | 10 | 09 | 10 |
+-----------------------------------+---------+---------+----------+
| | GBP'000 | GBP'000 | GBP'000 |
+-----------------------------------+---------+---------+----------+
| Seed capital classified as being | 850 | - | 940 |
| held for sale (disposal group) | | | |
+-----------------------------------+---------+---------+----------+
The underlying assets that comprise the disposal group classified as held for
sale under IFRS 5 are themselves available for sale financial assets, and
therefore are measured in accordance with IAS 39.
8 Called up share capital
The share capital of Record plc consists only of fully paid ordinary shares with
a par value of 0.025p. All shares are equally eligible to receive dividends and
the repayment of capital and represent one vote at the shareholders' meeting.
+-------------------+---------+-------------+---------+-------------+---------+-------------+
| | As at 30 | As at 30 | As at 31 |
| | Sep 10 | Sep 09 | Mar 10 |
+-------------------+-----------------------+-----------------------+-----------------------+
| | GBP'000 | Number | GBP'000 | Number | GBP'000 | Number |
+-------------------+---------+-------------+---------+-------------+---------+-------------+
| Authorised | | | | | | |
+-------------------+---------+-------------+---------+-------------+---------+-------------+
| Ordinary shares | 100 | 400,000,000 | 100 | 400,000,000 | 100 | 400,000,000 |
| of 0.025p each | | | | | | |
+-------------------+---------+-------------+---------+-------------+---------+-------------+
| Called up, | | | | | | |
| allotted and | | | | | | |
| fully paid | | | | | | |
+-------------------+---------+-------------+---------+-------------+---------+-------------+
| Ordinary shares | 55 | 221,380,800 | 55 | 221,380,800 | 55 | 221,380,800 |
| of 0.025p each | | | | | | |
+-------------------+---------+-------------+---------+-------------+---------+-------------+
Changes to the issued share capital
+------------------------------------------+----------+-------------+
| As at 1 April 2009 | 55 | 220,683,828 |
+------------------------------------------+----------+-------------+
| | | |
+------------------------------------------+----------+-------------+
| Adjustment for own shares held by EBT | - | (41,140) |
+------------------------------------------+----------+-------------+
| | | |
+------------------------------------------+----------+-------------+
| As at 30 September 2009 | 55 | 220,642,688 |
+------------------------------------------+----------+-------------+
| | | |
+------------------------------------------+----------+-------------+
| Adjustment for own shares held by EBT | - | 152,044 |
+------------------------------------------+----------+-------------+
| | | |
+------------------------------------------+----------+-------------+
| As at 31 March 2010 | 55 | 220,794,732 |
+------------------------------------------+----------+-------------+
| | | |
+------------------------------------------+----------+-------------+
| Adjustment for own shares held by EBT | - | 220,632 |
+------------------------------------------+----------+-------------+
| | | |
+------------------------------------------+----------+-------------+
| As at 30 September 2010 | 55 | 221,015,364 |
+------------------------------------------+----------+-------------+
9 Share-based payments
The Group issues share awards to employees. Share options issued under the Group
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 at grant date
less the cash forfeited in order to receive the share options. The debt
component is charged to the statement of comprehensive income over the period in
which the bonus is earned, the equity component is charged to the statement of
comprehensive income over the vesting period of the option.
The Group has also issued nil cost options over a total of GBP400,000 worth of
issued shares to two senior employees. The fair value of these options is
charged to the income statement over the vesting period of the options. The
first vesting of shares under this scheme occurred in the period, with 128,434
shares vesting.
The fair value of options granted are 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 were determined using quoted share
prices.
10 Own shares
The Record plc Employee Benefit Trust (EBT) was formed to hold shares acquired
to meet obligations for share awards made to employees. A total of 168,287
ordinary shares were acquired on 21 December 2007 under the Record plc Flotation
Bonus Scheme by the Trust, a further 282,926 shares have been purchased under
the Record plc Group Bonus Scheme and 383,531 shares were purchased in respect
of nil cost options awarded to two senior employees. A total of 469,308 shares
have vested. The EBT continues to hold 365,436 shares at 30 September 2010 (31
March 2010: 586,068; 30 September 2009: 738,112). 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 statement of comprehensive income.
11 Related parties transactions
The related parties transactions during the period are consistent with the
categories disclosed in the Annual Report for the year ended 31 March 2010.
The compensation and dividends paid to key management personnel is as follows:
+----------------------------+-----------+-----------+-----------+
| | Six | Six | Year |
| | months | months | ended |
| | ended | ended | 31 Mar 10 |
| | 30 Sep 10 | 30 Sep 09 | |
+----------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------+-----------+-----------+-----------+
| Short-term employee | 2,583 | 3,925 | 5,866 |
| benefits | | | |
+----------------------------+-----------+-----------+-----------+
| Post-employment benefits | 144 | 175 | 325 |
+----------------------------+-----------+-----------+-----------+
| Share-based payments | 883 | 82 | 2,171 |
+----------------------------+-----------+-----------+-----------+
| Dividends | 657 | 3,070 | 7,669 |
+----------------------------+-----------+-----------+-----------+
| | 4,267 | 7,252 | 16,031 |
+----------------------------+-----------+-----------+-----------+
All transactions with related parties were on an arm's length basis.
12 Post reporting date events
No adjusting or significant non-adjusting events have occurred between the
reporting date and the date of authorisation.
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.
Information for shareholders
Record plc
Registered in England and Wales
Company No. 1927640
Registered office
Morgan House
Madeira Walk
Windsor
Berkshire
SL4 1EP
United Kingdom
Tel: +44 (0)1753 852 222
Fax: +44 (0)1753 852 224
Principal UK trading subsidiaries
Record Currency Management Limited
Registered in England and Wales
Company No. 1710736
Record Group Services Limited
Registered in England and Wales
Company No. 1927639
Further information on Record plc can be found on the Group's website:
www.recordcm.com
Registrar
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Further information about the Registrar is available on their website
www.capitaregistrars.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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