TIDMREC
RNS Number : 7191G
Record PLC
11 June 2013
PRESS RELEASE
Record plc
11 June 2013
FINAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2013
Record plc, the specialist currency manager, today announces its
audited results for the year ended 31 March 2013.
Financial headlines:
-- AUME(1) $34.8bn at 31 March 2013 (up 13%)
-- AUME GBP22.9bn at 31 March 2013 (up 19%)
-- Revenue of GBP18.6m (down 9%)
-- Pre-tax profit of GBP6.1m (down 9%)
-- Operating profit margin to 31 March 2013 of 32% unchanged on
prior year.
-- Financial position remains strong with net assets of GBP32.3m
at 31 March 2013 (2012: GBP28.6m); net cash of GBP29.0m (2012:
GBP24.6m)
-- Basic EPS of 1.98p per share (2012: 2.23p)
-- Proposed final dividend for the year to 31 March 2013 is
1.50p per share giving a total dividend in respect of the period of
1.50p per share (2012: 1.50p).
Key developments:
-- Client numbers increased to 44 by 31 March 2013 (2012:
41)
-- Product mix stable through year
-- First live multi-strategy currency mandate started during the
year
-- Positive investment performance in the year from active
FRB(2) ,FRB index and Emerging Market currency strategies
(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 tangible. 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.
(2)FRB =Forward Rate Bias is the observed tendency of higher
interest rate currencies' total return to outperform that of lower
interest rate currencies.
Commenting on the results, Neil Record, Chairman of Record plc,
said:
"The year to 31 March 2013 saw encouraging growth in both AUME
and client numbers, as well as stabilisation of the product mix and
operating margin. The decline in revenue to GBP18.6m, whilst
mitigated to some extent by a cost reduction programme, largely
reflects the full-year effect of changes in product mix experienced
in prior years.
"Developments in the currency markets (such as the weakness of
the Japanese Yen in response to aggressive policy measures) created
opportunities for our return-seeking products during the year and
the tentative re-emergence of trending in certain currency pairs
also benefited many of our strategies.
"We have developed our suite of Currency for Return products
further through the year with the start of our first multi-strategy
mandate incorporating the first live currency momentum and currency
value programmes, and our emerging market currency strategy live
track record passed the three year landmark, an important step in
gaining acceptance in the institutional market place.
"Growth in AUME and client numbers, and stabilisation of product
mix and margin, have established a firm foundation from which to
grow further. It is therefore encouraging that since the start of
the current financial year, we have commenced a combined passive
and dynamic hedging programme with AUME of approximately $1.7
billion, and more recently have been selected (subject to contract)
for a significant passive hedging mandate."
Analyst briefing
There will be a presentation for analysts at 9.30am on Tuesday
11 June 2013 in the Copperfield Room, Holborn Bars, 138-142
Holborn, London, EC1N 2NQ. 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
James Wood-Collins - Chief Executive Officer
Steve Cullen - Chief Financial Officer
MHP Communications +44 20 3128 8100
Nick Denton, John Olsen, Vicky Watkins
Consolidated statement of comprehensive income
Year ended 31 March
2013 2012
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Revenue 18,552 20,535
Cost of sales (221) (252)
-------------------------------------------- --------- ---------
Gross profit 18,331 20,283
Administrative expenses (12,343) (13,430)
Loss on financial instruments held
as part of disposal group (68) (299)
-------------------------------------------- --------- ---------
Operating profit 5,920 6,554
Finance income 158 155
Profit before tax 6,078 6,709
Taxation (1,450) (1,803)
-------------------------------------------- --------- ---------
Profit after tax and total comprehensive
income for the year 4,628 4,906
Profit and total comprehensive income
for the year attributable to:
Non-controlling interests 294 (7)
Owners of the parent 4,334 4,913
-------------------------------------------- --------- ---------
Earnings per share for profit attributable
to the equity holders of the Group
during the year (expressed in pence
per share)
Basic earnings per share 1.98p 2.23p
Diluted earnings per share 1.98p 2.23p
-------------------------------------------- --------- ---------
Consolidated statement of financial position
As at 31 March
2013 2012
GBP'000 GBP'000
---------------------------------------- -------- --------
Non-current assets
Property, plant and equipment 140 183
Intangible assets 963 1,140
Deferred tax assets 5 -
---------------------------------------- -------- --------
1,108 1,323
Current assets
Trade and other receivables 5,569 5,070
Derivative financial assets 43 33
Cash and cash equivalents 29,025 24,572
---------------------------------------- -------- --------
34,637 29,675
Current assets held for sale (disposal
group) - 1,075
---------------------------------------- -------- --------
Total current assets 34,637 30,750
---------------------------------------- -------- --------
Total assets 35,745 32,073
---------------------------------------- -------- --------
Current liabilities
Trade and other payables (2,672) (2,494)
Corporation tax liabilities (760) (900)
Derivative financial liabilities (25) (48)
---------------------------------------- -------- --------
(3,457) (3,442)
---------------------------------------- -------- --------
Deferred tax liabilities - (15)
---------------------------------------- -------- --------
Total net assets 32,288 28,616
---------------------------------------- -------- --------
Equity
Issued share capital 55 55
Share premium account 1,838 1,809
Capital redemption reserve 20 20
Retained earnings 26,729 24,469
---------------------------------------- -------- --------
Equity attributable to owners of the
parent 28,642 26,353
Non-controlling interest 3,646 2,263
---------------------------------------- -------- --------
Total equity 32,288 28,616
---------------------------------------- -------- --------
Chairman's statement
Overview
The year to 31 March 2013 has seen growth in two important
measures of the business for the first time in five years: growth
in assets under management equivalents and growth in client
numbers.
Although we have maintained broad stability in our fee rates in
our main product lines, this year has seen the full effect of the
change in the product mix towards currency hedging and away from
currency for return. Within currency hedging, we have also seen
stronger growth in passive products. This has meant that our
blended fee rate has fallen. This evolution of the product mix has
led to the higher-fee currency for return products now representing
just 5% of total AUME compared to 43% of total AUME in the year
ended 31 March 2009. In contrast, hedging AUME has increased from
54% to 95% of total AUME over the same period. As a result of this
change in product mix, the average composite management fee rate
has decreased from 17.1bps to 8.8bps, giving an indication of the
challenges the business has faced over this extended period, and
the pressure exerted on overall profit and revenues as a
result.
During the year the external environment began to show some more
benign features, particularly in the second half. In many ways,
this reflected the more generally benign equity and credit markets
over the period. The marked weakness of the Japanese Yen in the
second half of the financial year, in particular, was positive for
both our hedging and our currency for return products. However, the
firm is cognisant that financial recovery may be temporary or
fragile given the vulnerable state of many developed economies'
public finances, and the extreme tensions within the Eurozone.
The resulting good performance for our currency for return
products; in particular our emerging market currency product (which
has now reached its third anniversary) has piqued interest amongst
institutional and wealth management investors. Record managed to
secure its first multi-strategy currency mandate during the year
from an institutional investor - adding a further product offering
to the investor marketplace.
Financial highlights
Against this backdrop Record's total revenues have fallen by 9%
to GBP18.6 million, achieving an overall profit before tax of
GBP6.1 million, down 9% on the year to 31 March 2012. The business
has mitigated this fall in revenue in part through the success of a
cost reduction programme initiated in November 2011 and the
operating profit margin has remained at 32% for the year. The net
client AUME inflows for the year were positive at +$1.9 billion
(2012: +$0.2 billion) and AUME ended the year at $34.8 billion
(2012: $30.9 billion), an increase of 13%.
Dividend
As indicated in the interim report, the Board is recommending a
final dividend of 1.50p per share, payable on 31 July 2013 to
shareholders on the register at 21 June 2013. The total dividend in
respect of the year ended 31 March 2013 of 1.50p per share is
unchanged on the previous year.
For the current financial year, the Board's intention, subject
to business conditions, is to retain the overall dividend payable
at 1.50p per share, which the Board would expect to be payable
equally in respect of an interim and final dividend, in line with
prior financial periods. In setting the dividend, the Board will be
mindful of achieving a level which it expects to be covered by
earnings.
Group strategy
During the risk-averse response to the financial crisis, we
identified our hedging products as offering the most likely source
of growth in AUME in the short term. Consequently marketing effort
and resource were mainly focussed on maintaining and growing the
assets in these products. This strategy, while facing a continuing
difficult sales environment, succeeded in growing our AUME in both
Dynamic and Passive Hedging during the year. As already mentioned,
we now also have a three-year track record for our Emerging Market
currency product and a live multi-strategy mandate, both of which
we believe fit particular niches of investment demand among larger,
mainly institutional, investors. We are now planning for these two
products to receive a greater proportion of our marketing and sales
effort in the coming year.
The cost reduction programme initiated in November 2011 resulted
in an overall reduction in costs of GBP0.9m and allowed us to
control and maintain our operating margin. Whilst the business will
remain cost-conscious going forward, further significant cost
savings are constrained by the need to maintain an appropriate
level of support for investment processes and client services.
Board and senior management
Following the management reorganisation announced by the
business in November 2012, our joint Chief Financial Officer and
Chief Operating Officer, Paul Sheriff, left the Company on 15 March
2013 after more than four years on the Board. Paul made an
important contribution to the Group over this period, including
leading the implementation of a new middle and back office system,
and developing the Group's corporate governance and risk framework.
On behalf of the Board, I would like to thank Paul for his valuable
contribution to the business during this period.
Steve Cullen, previously the Group's Financial Controller for
almost 10 years, succeeded Paul on the Board as Chief Financial
Officer on 15 March 2013 and Joel Sleigh was appointed Chief
Operating Officer on the same date. Joel has been with Record for
17 years, and has served as a member of the Executive Committee
since 2012. I would like to congratulate Joel on his promotion, and
welcome Steve to the Board.
I would also like to take this opportunity to thank all of the
Group's management and staff for their continued hard work and
commitment throughout the year.
Outlook
As mentioned above, the Group has been through a prolonged
period of change in its product mix, reflecting the outflows of
AUME from its long-standing currency for return product (based
around the Forward Rate Bias) and inflows into the hedging
products. During this period, the business has broadened and
adapted its suite of products, updated its infrastructure and
increased its distribution channels in markets identified as
showing good potential for growth.
As well as standard product offerings, clients are now also
interested in more flexible and bespoke solutions. In a competitive
environment where the importance of differentiating ourselves and
our products is becoming ever more pronounced, we have already
started to see the benefits of such investment through increased
dialogue with clients and consultants, particularly regarding
'added-value' Hedging products and services, and more flexible
multi-strategy solutions and instruments to fulfil individual
client's currency requirements. We are well placed to take
advantage of such opportunities as they arise.
Since the year end, the Group has announced the start of a
combined passive and dynamic hedging programme with AUME of
approximately $1.7 billion, and its selection for a significant
passive hedging mandate (subject to contract), both of which
reflect our ability to offer flexible solutions to suit individual
client requirements.
Neil Record
Chairman
Chief Executive Officer's statement
Having stabilised the Group's product mix and operating margin,
and grown client numbers and AUME over the year, the Group has now
established a firm foundation from which to grow.
Market overview
The market factors that are most relevant to the Group's
performance over the year include continued monetary intervention
across developed markets, in particular the United States, the
United Kingdom and most recently Japan; the on-going pattern of
fluctuating market sentiment and risk appetite; and the tentative
re-emergence of trending, at least in some currency pairs, towards
the end of the year.
Interest rates remained low across developed market currencies,
and central banks continued quantitative easing policies,
throughout the year. In particular, the United States Federal
Reserve launched a new, open-ended quantitative easing programme in
September 2012, and the Bank of Japan launched a series of
aggressive measures in the first quarter of 2013.
The three distinct phases of market sentiment most relevant to
the Group's business revolve around the perception of crisis across
the Eurozone. This ranged from heightened anxiety through until the
end of July 2012, when a pledge from European Central Bank
President Mario Draghi "to do whatever it takes to preserve the
Euro" established a turning point, and a strong rally in "risk
assets". This enthusiasm continued into 2013, until first the
inconclusive outcome of the Italian elections and then the Cyprus
bail-out reminded the market that the decisions taken in 2012 have
yet to be implemented. Risk appetite appears healthy at the start
of the new financial year, despite profound concerns regarding the
fundamental outlook for developed economies.
The latter half of the financial year has also seen the welcome,
although tentative, re-emergence of trending in certain currency
pairs - i.e. continued and pronounced movements in one direction
over a period of time, in contrast to trading within a relatively
narrow range. The Japanese Yen has demonstrated this most clearly,
with a marked depreciation since September 2012 first in
anticipation, then in response to aggressive policy measures from a
new prime minister and Bank of Japan governor.
Investment performance
Investment performance across the Group's products reflects
their respective characteristics in the light of prevailing market
conditions. Dynamic Hedging, which is neither intrinsically "risk
on" nor "risk off", has benefited in the latter part of the
financial year from the re-emergence of trending, as well as
strengthening of base currencies such as the US Dollar and Pound
Sterling against exposure currencies such as the Japanese Yen and
the Euro.
Both the Emerging Market strategy and the FRB Index strategy, as
exemplified by the FTSE Currency FRB10 Index, performed strongly
during the year, in both cases reflecting the divergent interest
rate environment between the "major" G5 developed market currencies
and either emerging market or other developed market currencies
respectively, as well as the bias towards a "risk on" environment
over the year as a whole.
Record's first live multi-strategy mandate, which combines
Active Forward Rate Bias, emerging markets, value, and momentum,
was launched in the second quarter. Whilst the eight months from
inception to 31 March 2013 is too short a period from which to draw
firm conclusions, investment performance to year-end has been
encouraging, with three out of four strategies contributing
positively, and some benefits of diversification evident amongst
these strategies.
Asset flows
AUME increased by 13% through the year to $34.8 billion. This
was due principally to significant new Passive Hedging mandate
wins, only marginally offset by client losses, driving net inflows
of $1.9 billion. External factors (e.g. equity and other market
movements and the impact of exchange rates over the period) also
contributed +$2.0 billion.
Strategic progress
The Group has continued to develop its product offering, its
sales and marketing capability, and its operational
infrastructure.
With respect to product development, the Group has continued to
invest in enhancing its longer-established products, particularly
Hedging, as well as in further developing the new Currency for
Return strategies. Within Passive Hedging in particular, the
increasing level of new business interest seen in the second half
of the financial year has been accompanied by increased
competition, particularly from providers of more basic hedging
services at significantly reduced fees. As a premium provider with
a long history of bringing intellectual capital to solve clients'
problems, the Group's response to this has been to seek to maintain
fee rates through product enhancement.
With respect to Currency for Return strategies, the launch in
the second quarter of the Group's first multi-strategy mandate was
an important milestone. Research and development work continues in
respect of enhancing individual strategies, as well as the
approaches by which they are combined.
The Group's sales and marketing efforts continue to target those
markets which we believe offer the greatest potential for our
products - namely institutional investors in Switzerland, the
United Kingdom, and in North America. In the United States, we have
increased our local presence through the transfer of a member of
our research team to Record's Atlanta office. In all geographies,
we will continue to ensure that the resources focussed on each
market are appropriate for the available opportunities.
The Group also continues to explore new markets which we believe
may offer attractive opportunities, whether in adjacent client
segments, such as the private wealth management market, or in new
client geographies.
Our operational infrastructure also took a significant step
forward during the year, with the completion of a long-term project
to introduce a new, industry-standard, multi-asset class middle and
back office system. This system gives the Group the flexibility to
use a much wider range of fixed income and derivative instruments,
to continue to offer innovative and value-adding currency
management services.
Throughout the financial year we have paid close attention to
costs, balancing our investment in the opportunities we see, with
maintaining adequate profitability for the Group. This has been
reflected in a reduction in the Group's administrative expenses,
enabling us to maintain the Group's operating margin at 32%, in
line with the prior period.
Outlook
The Group's strategic initiatives in recent years have been
focussed both on keeping current client mandates and generating
sales of new mandates, in order to grow revenues and profits.
The most active area for formal new business procurement
processes continues to be Passive Hedging in Switzerland, where we
are seeking to capitalise on our long-established client franchise
and local sales presence, in order to respond to investors'
concerns about hedging implementation.
In the United States, we continue to focus on helping pension
plans and investment consultants understand their currency risk,
which in many cases has not been managed historically, and
understand the range of strategies available to manage and exploit
currency risk and opportunities. In a market with less-established
currency management activity, the pace of progress is necessarily
less certain, but the opportunities afforded by the world's largest
savings market merit the resources the Group devotes to it.
The United Kingdom continues to be a key market for the Group,
albeit one that attracts significant competition for the relatively
few mandates available.
Across each of our markets, two forces are making themselves
felt. Decision-making processes are typically extended beyond that
which has historically prevailed, resulting in a slower rate of new
client acquisition. This can likely be attributed to increased due
diligence requirements, and a prevailing sense of caution.
Competitive pressures are also being felt across our markets. In
some products, such as Passive Hedging, the Group's response has
been to seek to maintain fee rates through product enhancement,
such as offering a higher level of client service and more bespoke
client features. This requires more input from our skilled and
committed colleagues, which in turn makes this business less
scalable, with lower operating leverage.
In summary, we continue to be confident in the range of
opportunities open to the Group, and in the work we have undertaken
to best position ourselves to take advantage of these. Our
environment will continue to evolve and change, and I am confident
that the range of skills and capabilities we have built up will
prove adept at responding to these changes.
James Wood-Collins
Chief Executive Officer
Key performance indicators
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 2013 2012 2011
------------------------- ----------- ----------- -----------
AUME at 31 March - $34.8bn $30.9bn $31.4bn
US Dollars
AUME at 31 March - GBP22.9bn GBP19.3bn GBP19.6bn
Sterling
Average AUME - US $32.2bn $29.2bn $31.3bn
Dollars
Client numbers at
31 March 44 41 46
Average management
fee rates achieved 8.8 11.2 14.0
Operating profit margin 32% 32% 44%
Basic EPS 1.98 pence 2.23 pence 4.03 pence
------------------------- ----------- ----------- -----------
Summary of highlights
-- AUME increased by $3.9bn (+13%) during the year, standing at
$34.8bn at the year end.
-- When presented in Sterling, AUME increased by 19% to
GBP22.9bn.
-- Passive and Dynamic Hedging AUME grew by 17% and 11%
respectively. Currency for Return AUME reduced by 11%.
-- Average AUME increased by 10% to $32.2bn during the year.
-- 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 2013 was 44, a net
increase of 3 over the year.
-- The blended average management fee rate fell from 11.2 bps to
8.8 bps due mainly to the change in product mix due to both growth
of the Passive Hedging product (which has a lower average
management fee rate) and the further decline in Currency for
Return.
-- Record's successful cost reduction programme offset fall in
revenue, so the operating profit margin is maintained at last
year's level of 32%.
-- The Group's earnings per share fell to 1.98 pence per
share.
Business model
The Group was founded in 1983 and this year celebrates 30 years
of providing currency management services to institutional
investors. The Group has established itself as a respected
specialist in this sector both in the eyes of clients and their
investment consultants.
The Group's one operating segment is that of Currency Management
services. The Group employs over 60 employees and its operations
are performed and controlled centrally from its Head Office based
in Windsor, UK.
Products
The Group's suite of products is split into two main categories:
Currency Hedging and Currency for Return products.
Currency Hedging comprises Passive Hedging and Dynamic
Hedging.
Currency for Return includes a range of five Currency for Return
strategies being Active FRB, FRB Index, Emerging Market, Value and
Momentum and these strategies can be offered in either a segregated
or pooled fund structure. Additionally Record is able to offer
combinations of these strategies under a multi-strategy approach
that seeks to vary the allocation to these strategies either on a
fixed basis or according to market conditions.
Currency Hedging: AUME -- $33.1 billion
Our hedging products are predominantly systematic in nature. The
effectiveness of each of the client mandates is assessed regularly
and adjustments are made when necessary in order to respond to
changing market conditions. Record has the expertise to deliver
tailored hedging programmes to suit the currency needs of our
clients. In a competitive market place, this is seen as becoming
increasingly important and our work continues in differentiating
our hedging products through enhancements to the product
offerings.
Passive Hedging: AUME -- $22.1 billion
These mandates have the reduction of exposure to currency risk
as their sole objective. They require execution expertise rather
than investment judgement or skill. In addition to this execution
expertise, clients have been attracted to Record's Passive product
offering for our experience and expertise in managing bank
counterparty exposure on their behalf, our ability to offer
independent trading relationships and our continued innovation with
respect to instruments and strategies.
Dynamic Hedging: AUME -- $11.0 billion
Record's Dynamic Hedging programme is an attractive alternative
to Passive Hedging since these mandates have the reduction of
exposure to currency risk as their principal objective and
generating value as a secondary objective. The Dynamic Hedging
product seeks to allow our clients to benefit from foreign currency
strength while protecting them from foreign currency weakness
relative to their own base currency. Value is generated entirely
through the asymmetric reduction of pre-existing currency risk.
Dynamic Hedging's ability to outperform Passive Hedging is
dependent on trending in currency markets, rather than any measure
of risk appetite.
Currency for Return: AUME -- $1.6 billion
Our Currency for Return strategies have the generation of
investment return as their principal objective.
Record's longer-established return-seeking strategies, the
forward rate bias (FRB) and emerging market currency strategies,
are founded on market risk premia and as such perform more strongly
in 'risk on' environments. By contrast, value and momentum
strategies are founded on market inefficiencies which are more
behavioural in nature. As such they are less risk-sensitive, with
value strategy returns relatively insensitive to risk sentiment and
momentum strategy returns potentially inversely correlated to risk
sentiment. It is this diversification of response to risk sentiment
that makes the multi-strategy approach an attractive alternative
for generating a return from currency for potential clients.
Furthermore, the multi-strategy approach can be used as a flexible
'overlay' to help clients achieve a variety of investment
objectives.
Active FRB -- FY13 performance +1.50%
The core investment process, the Trend/FRB strategy aims to
generate return by buying selected developed market higher interest
rate currencies and selling selected lower interest rate currencies
and managing these positions with a view to controlling downside
risk.
FRB Index -- FY13 performance +8.20% (fund)
One of Record's medium to long-term aims is to develop currency
as an asset class in its own right. The 'asset class project',
which started in 2009, saw the launch of a second currency index,
the FTSE Currency FRB10 Index, in December 2010. Record launched a
pooled fund, the Record Currency FTSE FRB10 Index Fund, to track
this FTSE index and invested GBP1m in December 2010. It is
envisaged that a return to more normal monetary policy conditions
and a sustained period of positive performance are the precursors
to material client demand for this product.
Emerging Market Currency --FY13 performance +6.01% (fund)
Record recognises that emerging market currencies offer
investors an opportunity to either seek to make a return from such
currencies or seek to separate the currency effect from the
underlying overseas domestic asset performance (typically equities
or bonds). Record believes that as a result of convergence in the
levels of economic output between emerging and developed markets,
emerging market currencies appreciate over time. This currency
appreciation has historically been a significant contributor of
returns to (developed market) holders of emerging market assets
including equities and bonds. Consequently we regard emerging
market currency strategies as an attractive route through which to
implement emerging market local currency debt strategies, offering
substantially the same elements of return, with significant
implementation benefits including cost, flexibility and
security.
This convergence-driven return opportunity combined with the
Forward Rate Bias from selection based on interest rate
differentials and discretionary risk management, is expected to
result in long-term positive performance of the strategy.
During the year, the Emerging Market currency strategy passed
the three year milestone since 'live' money was invested, with a
positive performance of 11.58% since inception. The three year
positive track-record is seen as important by investment
consultants in gaining acceptance of a new product.
Currency Value --FY13 performance -0.39% (since August 2012)
Research suggests that purchasing power parity (PPP) valuation
models have been relatively good predictors of the long-term
direction of spot movements. For example, if a currency deviates
too much from its equilibrium value (as indicated by PPP), then
this deviation will be corrected. The more significant the
deviation, the more pressure on the exchange rate to revert to
equilibrium value and, consequently, the more rapid the reversion.
Currency value strategies exploit this insight, buying currencies
that are undervalued relative to PPP and selling currencies that
appear overvalued.
Currency Momentum --FY13 performance +2.45% (since August
2012)
This strategy exploits the tendency of the spot rate to
appreciate after a prior appreciation, and to depreciate after a
previous depreciation. This market inefficiency has persisted
across different currencies and it is present in other asset
classes, such as equities. Currency is commonly thought of as
trending and the momentum strategy seeks to make a return from this
phenomenon.
Multi-strategy --FY13 performance +3.54% (since August 2012)
The multi-strategy approach can be applied as an 'overlay' to
help clients achieve a variety of investment objectives. Record has
the ability to combine four currency return streams (carry,
momentum, value and emerging markets) in different weightings that
appeal to particular market segments. Record's first multi-strategy
currency mandate was launched during the year and marks an
important strategic step for the Group.
Further information on product investment performance is given
in the Operating Review section.
Distribution and clients
The Group's sales and marketing activities are organised to
ensure that our resources are deployed where opportunities have
been identified as giving the most likelihood of future success. To
this end, sales and marketing are primarily focussed on the UK,
North America and Switzerland with additional activity in
continental Europe.
In addition to a full-time sales and marketing team based in the
UK headquarters, the Group also has a sales representative based in
Switzerland and a sales executive based in the US.
We distribute through both direct sales to institutional and
private wealth clients, and through local and global investment
consultants. By working closely with the investment consultants we
can promote currency as an asset class and identify new
opportunities as the currency landscape changes.
Our products are delivered both through segregated mandates and
also pooled fund structures to suit individual client
requirements.
Infrastructure
The Group's investment function, comprising portfolio
implementation, trading and research, is almost entirely based at
the Head Office in Windsor, UK.
All of the Group's operational and support functions are based
at the headquarters in Windsor and include information technology,
operations, risk management, compliance, finance, legal and human
resources.
The Group has a US sales executive who is based in Atlanta with
one member of the research team.
During the year the Group completed its key infrastructure
development project, which was the implementation of a new middle
and back office system at its headquarters in Windsor. The new
system has already increased the Group's capability to both manage
a wider variety of instruments and to deploy new products and
portfolios cost effectively and will help deliver an improved level
of client service in the long term.
Effective risk management and strong internal controls are key
aspects of the Group's business model. The Group recognises the
inherent risk associated in its business dealings, including the
markets and instruments in which it operates. Effective risk
management is central to being able to operate effectively and is
reflected in the strong internal control culture embedded within
the organisation.
Business review
Market review
The market factors that are most relevant to the Group's
performance over the twelve months to 31 March 2013 include
continued monetary intervention across developed markets, in
particular the United States, the United Kingdom and most recently
Japan; the on-going pattern of alternating periods of risk aversion
and risk appetite across markets; and the tentative re-emergence of
trending, at least in some currency pairs, towards the end of the
year.
Monetary intervention
Interest rates remained low across developed market currencies,
and central banks continued quantitative easing policies,
throughout the year. In particular, the United States Federal
Reserve launched a new, open-ended quantitative easing programme in
September 2012, under which it committed to purchase an additional
$40 billion of mortgage-backed securities each month, as well as
signalling its expectation that the federal funds interest rate
would be maintained at "exceptionally low levels" at least through
to mid 2015. The Bank of England similarly continued its asset
purchase programme, authorising purchases of a further GBP50
billion of assets in July 2012, to bring the total purchased to
GBP375 billion.
The European Central Bank also purchased assets, principally
government bonds, from Eurozone banks, albeit with the stated
objective of supporting the banks and indirectly the sovereign
borrowers, rather than expanding the monetary base. Most recently,
the Bank of Japan launched a series of new, aggressive measures in
the first quarter of 2013, including explicit targets to double the
monetary base, achieve a 2% inflation target within two years, and
increased asset purchases and flexibility.
The effect of such measures on broad economic conditions
including growth, employment and inflation continues to be
uncertain and widely debated. Their impact on currency markets is
more evident - although the suppression of interest rates and hence
interest rate differentials between major developed market
currencies has continued, forward rate bias, or "carry" returns
were positive. This was because market participants priced in
real-term effects of changes in macroeconomic policies (most
notably in Japan) and took advantage of the higher rates prevailing
amongst other developed market currencies such as the Australian
and New Zealand Dollars.
More broadly, such policies are perceived to present a
depreciation threat to currencies, by the very expansion of the
monetary base. This depreciation risk has raised fears of "currency
wars", by which economies would compete to devalue their currencies
and thereby gain a export-oriented competitive advantage over their
trading partners. To date, such monetary expansion has been
justified as representing "domestic stimulus" rather than "currency
warfare" - it remains to be seen if this can be maintained.
In an environment where such policies are widely pursued amongst
major currencies, allied with other central bank actions such as
the Swiss National Bank's direct intervention to cap the value of
the Swiss Franc, it is impossible for all developed market
currencies simultaneously to depreciate against each other. Instead
exchange rate movements reflect, amongst other things, the market's
assessment from time to time of each central bank's commitment to
further quantitative easing, relative to that of other monetary
authorities. As at the start of the new financial year, the Bank of
Japan seems to be regarded as the most resolute, with the Federal
Reserve potentially the first to suspend or rein in monetary
expansion.
Sentiment and risk appetite
The three distinct phases of market sentiment most relevant to
the Group's business revolve around the perception of crisis across
the Eurozone. The financial year began in April 2012 with a
heightened sense of crisis, most evidently focussed on the
possibility of one or more peripheral countries leaving the
Eurozone. In this environment, Neil Record being named as one of
five finalists for the Wolfson Economics Prize, which challenged
the world's brightest economists to prepare a contingency plan for
a break-up of the Eurozone, brought welcome attention to the
Group's understanding of the issues.
This "risk off" sentiment broadly persisted until the end of
July 2012, with a speech in which European Central Bank President
Mario Draghi pledged "to do whatever it takes to preserve the Euro"
being seen as the turning point. Subsequent to this, the market's
confidence in the Eurozone authorities' ability and willingness to
act, allied with continued liquidity inflows from quantitative
easing worldwide, resulted in a strong rally in "risk assets".
This enthusiasm continued into 2013, until first the
inconclusive outcome of the Italian elections in February, followed
by the Cyprus bail-out in March, reminded the market that the
decisions taken in 2012 have yet to be implemented.
The impact of fluctuating sentiment and risk appetite has been
amplified by the continuation throughout much of the year of the
"risk on, risk off" phenomenon. In brief, this phenomenon has seen
increased correlations amongst assets and instruments, with those
offering expected long-term positive returns in exchange for the
assumption of risk performing well in "risk on" environments, and
those perceived as offering "safe haven" characteristics performing
well in "risk off" environments.
Amongst the Group's return-seeking strategies, forward rate bias
and emerging market strategies characteristically perform more
strongly in "risk on" environments, whilst value and momentum
strategies are less risk-sensitive, illustrating the benefits of
the multi-strategy approach.
Whilst hedging as such is neither "risk on" nor "risk off", this
is not necessarily true of investors' base currencies. In
particular, since the financial crisis, the US Dollar and Japanese
Yen have re-asserted their "safe haven" status, typically
performing well in "risk off" environments (when equities for
example underperform), whilst the Euro and to a lesser extent Pound
Sterling have performed better in "risk on" environments. Whilst
this heightened correlation - whether positive or negative -
between equity and currency movements persists, it will subtly
alter arguments around currency hedging, such that the rationale
for a US Dollar investor to hedge the (correlated) currency risk
overlaid on international equities has strengthened, whilst that
for a Euro investor has weakened.
As at the start of the new financial year, risk appetite appears
healthy, despite profound concerns regarding the fundamental
outlook for developed economies. There has also been debate as to
whether the "risk on, risk off" phenomenon itself has run its
course. Divergent economic performance among the major developed
economies has resulted in correlations weakening, but in the
Group's view it is too soon to call an end to this phenomenon.
Trending
The latter half of the financial year has also seen the welcome,
although tentative, re-emergence of trending in certain currency
pairs - i.e. continued and pronounced movements in one direction
over a period of time. This behaviour seemed to have been
suppressed, or at least altered, in the range-trading environment
that prevailed through much of 2011 and the first half of 2012.
The Japanese Yen has demonstrated the re-emergence of trending
most clearly. Since the September 2012 election of Shinzo Abe as
the Prime Minister of Japan, and accelerating with the first
meeting of the Bank of Japan's monetary policy committee under new
Governor Haruhiko Kuroda shortly after the end of the Group's
financial year, the Japanese Yen has been on a firm downwards
trend, weakening more than 20% against the US Dollar. Since the
Group's (non-Japanese) hedging clients will be short Yen in their
hedging programmes, and each of the forward rate bias, emerging
markets and momentum strategies are short Yen, on its own this has
been a rewarding move for the Group's clients.
More broadly the re-emergence, at least on a qualified basis, of
trending is welcome as trending is the source of Dynamic Hedging's
long-term outperformance over Passive Hedging. Trending is also the
pattern of behaviour exploited in Record's momentum strategies.
Operating review
Product investment performance
Our hedging products are predominantly systematic in nature. The
effectiveness of each of the client mandates is assessed regularly
and adjustments are made when necessary in order to respond to
changing market conditions or to bring the risk profile of the
hedging mandate in line with the client's risk tolerance.
The performance of our Dynamic Hedging product depends on how
the foreign currencies change in value relative to the base
currency of a client. During the last year, mandates for our US and
UK-based Dynamic Hedging clients performed as expected in terms of
allowing clients to benefit from periods of strengthening foreign
currencies, whilst being protected against periods of weakening
foreign currencies.
UK investors saw gains from currency over the year as Sterling
weakened, leading to higher base valuations for foreign currency
investments. UK-based Dynamic Hedging programmes progressively
lowered hedge ratios over the year in response to Sterling
weakness; this resulted in hedging delivering only a modest
negative return, allowing the majority of the gains from foreign
currency exposure to be preserved.
Conversely, US investors saw losses from currency on
international exposures when valuing positions in US Dollars, as
foreign currencies weakened. Record's Dynamic Hedging product
generated high hedge ratios to capture US Dollar strength, leading
to positive returns from hedging, in turn helping to offset losses
from international currency exposure.
Record had five 'live' Currency for Return strategies in the
year. The Active Forward Rate Bias (FRB), and Emerging Market
strategies are both active and return-seeking in nature, although
they exploit different market phenomena. The third, fourth and
fifth return-seeking strategies are more passive in nature: the
Record FTSE FRB10 Index Fund, a strategy that tracks the FTSE
Currency FRB10 index, and the value and momentum strategies. Any
combination of these Currency for Return strategies may be combined
within a multi-strategy mandate.
For the Active FRB strategy, the core investment process - the
Trend/Forward Rate Bias strategy - aims to buy selected developed
market higher interest rate currencies and sell selected lower
interest rate currencies and to manage these positions with a view
to controlling downside risk. 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 year
saw positive returns as relatively low interest rate currencies,
particularly the Japanese Yen, weakened. A complementary investment
process - the Range Trading strategy - generated a negative return
as selected currency pairs failed to mean revert, partially
offsetting the positive performance of the Trend/Forward Rate Bias
strategy.
Similarly, the Forward Rate Bias Index strategy added value as
high interest rate currencies appreciated. Record remains committed
to the belief that over time currency and in particular the FRB can
be a persistent and uncorrelated source of returns for investors,
and that the FRB will continue to generate long-term returns.
Record's Emerging Market Currency Fund generated positive
returns over the period as emerging market currencies appreciated
against a basket of developed market currencies. A perceived
reduction in the risk of outright crises in the Eurozone area and
signs of growth emerging from the US combined to provide a platform
for emerging market currency appreciation. This was compounded by
actions in Japan to weaken the Yen, further boosting programme
returns.
Record's only live multi-strategy mandate outperformed over the
period. Gains were led by returns in the emerging market strand,
with positive contributions from the FRB and momentum strategies.
Modest negative returns from the value strand had a small
offsetting impact on performance.
Record's Euro Stress Fund was terminated during the year. The
decision to close the Fund came about following the ECB's
announcement of a "fully effective backstop" through unlimited bond
purchases, supportive verdicts from the German Constitutional Court
and the Dutch electorate, and the resumption of QE 3 by the Federal
Reserve which brought about a rally in risk assets and the Euro
itself. While we continue to share widespread doubts about the
ultimate viability of the single currency, coordinated actions
within the Eurozone have arrested immediate concerns of further
decline, and lessened the opportunity to capitalise on such
concerns through currency markets.
Annual returns of Currency for Return products; year to 31 March
2013
Fund Name Gearing Annual Return Volatility
% since inception
% p.a.(1)
-------------------------- -------- -------------- -----------------
FTSE FRB 10 Index Fund
(2) 1.8 8.20% 7.50%
Emerging Market Currency
(3) 1 6.01% 8.04%
Index /composite returns Annual Return Volatility
% since inception
% p.a.
-------------------------- -------- -------------- -----------------
Alpha composite (4) 1.50% 2.70%
FTSE Currency FRB10 GBP
Excess return 4.38% 4.70%
Record multi-strategy 3.54% N/A
(since Aug-2012)
-------------------------- -------- -------------- -----------------
(1)No volatility data is provided for products with less than 12
months historic data
(2)FTSE FRB10 Index Fund return data is since inception in
December 2010.
(3)Emerging Market Currency Fund return data is since inception
in December 2010.
(4) An investment return track record generated by the
aggregation of all standard segregated track records for Record's
active forward rate bias Currency for Return product. The Currency
Alpha composite is asset weighted, based on AUME for each
account
Gearing
The Currency for Return product group allows clients to pick the
level of exposure they desire in their currency programmes. The
pooled funds have historically offered clients a range of gearing
and target volatility levels. 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.
AUME development
The Group has seen an aggregate increase in AUME of $3.9bn
(+13%) to finish the year at AUME of $34.8bn compared with $30.9bn
at the end of the previous year.
AUME development ($bn)
Opening AuME Net client Markets FX effect Closing AuME
at 1 April flows at 31 March
2012 2013
------------- ----------- -------- ---------- -------------
30.9 +1.9 +3.2 -1.2 34.8
------------- ----------- -------- ---------- -------------
AUME movements result both from factors within Record's control
and external factors outside its control. External factors include
exchange rates and the underlying asset value (usually equities) on
which many segregated mandates are based. External factors
accounted for a net increase of $2.0bn in AUME during the year,
made up of:
(i) an increase of $3.2bn related to movements in global stock
and other markets as many mandate sizes are linked to such
markets;
(ii) a fall of $1.2bn due to changes in exchange rates over the
period, which affects the conversion of non-US Dollar mandate sizes
into US Dollar AUME. This movement does not have an equivalent
impact on the Sterling value of fee income.
The Group has seen net inflows of $1.9bn from clients. Inflows
from both new and existing clients totalled $5.1bn, and were offset
by outflows of $3.2bn.
When expressed in Sterling, AUME increased by GBP3.6bn (+19%) to
finish the year at GBP22.9bn (2012: GBP19.3bn). The split of AUME
at the year end by base currency was 25% in Sterling, 49% in Swiss
Francs, 20% in US Dollars, 5% in Euros and 1% in Canadian
Dollars.
Dynamic Hedging AUME increased by 11% to $11.0bn (2012: $9.9bn),
which was mainly the result of growth in value of the underlying
assets.
Since the year end, the Group has announced the start of a new
combined passive and dynamic hedging programme for a UK-based
client with AUME totalling approximately $1.7 billion, including a
performance fee element.
As in 2012, Passive Hedging AUME increased by $3.2bn, a 17%
increase in the year (2012: 20%). This increase was principally due
to the combination of two factors: net inflows of $2.0bn, and a
growth of $2.1bn in value of the underlying assets, typically
international equities and bonds, offset by movements in exchange
rates of $0.9bn.
Record's Currency for Return AUME fell to $1.6bn (2012: $1.8bn)
due principally to the net outflows which totalled $0.3bn. Included
in the Currency for Return mandates are a small number of mandates
for emerging market currencies totalling $0.8bn (2012: $0.8bn) and
a single multi-strategy mandate of $0.3bn, which started in the
year.
Product mix
The Group's product mix has shown a period of stability
following a prolonged period of change. Over the last four years,
Currency for Return AUME as a proportion of total AUME has
decreased from 43% to 5%, as a result of the challenging
environment for the Active FRB product, and consequent outflows.
Conversely both Passive and Dynamic Hedging have seen increases in
AUME over the same period of 70% and 175% respectively.
During the year, Hedging grew to 95% of AUME (2012: 93%), as a
result of the growth of the Passive Hedging product, which
accounted for 63% of AUME (2012: 61%), and the stability of the
Dynamic Hedging product which accounted for 32% of AUME (2012:
32%). Together Currency for Return and Dynamic Hedging represented
37% of AUME (2012: 38%) being higher margin products compared to
Passive Hedging. Currency for Return AUME represented 5% of AUME
(2012: 6%) at the end of the year for the reasons stated above.
At 31 March 2013 Record had 44 clients, a net gain of 3 clients
over the year.
AUME composition by 31 Mar 13 31 Mar 12
product (US Dollars)
-------------- --------------
US $bn % US $bn %
----------------------- ------- ----- ------- -----
Dynamic Hedging 11.0 32% 9.9 32%
Passive Hedging 22.1 63% 18.9 61%
Currency for Return 1.6 5% 1.8 6%
Cash 0.1 -% 0.3 1%
----------------------- ------- ----- ------- -----
Total 34.8 100% 30.9 100%
----------------------- ------- ----- ------- -----
AUME composition by 31 Mar 13 31 Mar 12
product (Sterling)
------------- -------------
GBPbn % GBPbn %
---------------------
Dynamic Hedging 7.3 32% 6.2 32%
Passive Hedging 14.6 63% 11.8 61%
Currency for Return 1.0 5% 1.1 6%
Cash - -% 0.2 1%
--------------------- ------ ----- ------ -----
Total 22.9 100% 19.3 100%
--------------------- ------ ----- ------ -----
AUME composition by product and base currency
Dynamic Hedging Passive Hedging Currency for Return
------------------- --------------------- ---------------------- ---------------------
Base Currency 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar
13 12 13 12 13 12
------------------- ---------- --------- ---------- ---------- ---------- ---------
Sterling GBP 1.8bn - GBP 3.6bn GBP 3.4bn - GBP 0.2bn
US Dollar USD 6.5bn USD 0.6bn USD 0.1bn - USD 0.6bn USD 0.7bn
Swiss Franc CHF 1.4bn CHF 0.6bn CHF 14.1bn CHF 11.6bn CHF 0.6bn CHF 0.5bn
Euro - - EUR 1.4bn EUR 0.6bn - -
Canadian Dollar - CAD 0.3bn - - CAD 0.3bn CAD 0.2bn
Total AUME (US USD 11.0bn USD 1.6bn USD 22.1bn USD 18.9bn USD 1.6bn USD 1.8bn
Dollars)
------------------- ---------- --------- ---------- ---------- ---------- ---------
AUME by Client type 31 Mar 13 31 Mar 12
-------------- --------------
US $bn % US $bn %
--------------------------
Government & Public
funds 23.2 67% 20.8 67%
Corporate funds 7.2 21% 6.4 21%
Foundations & Investment
funds 4.4 12% 3.7 12%
-------------------------- ------- ----- ------- -----
Total 34.8 100% 30.9 100%
-------------------------- ------- ----- ------- -----
AUME by client location 31 Mar 13 31 Mar 12
------------------------- -------------- --------------
US $bn % US $bn
UK 8.6 25% 8.7 28%
Europe (excluding UK) 20.4 58% 16.5 54%
North America 5.8 17% 5.7 18%
Total 34.8 100% 30.9 100%
------------------------- ------- ----- ----- -------
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 very selectively throughout
the year in order to maintain a flexible, scalable platform for
future growth. The number of employees in the Group remained
broadly stable, and headcount at 31 March 2013 was 64 (2012:
65).
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 Share Scheme, the Group Profit Share Scheme and
the Group Share Incentive Plan (SIP) promote the acquisition of
equity in the Company by staff, improving motivation and retention,
as well as aligning employees' interests with those of our clients
and shareholders.
Board and management succession
Following the announcement on 16 November 2012 of the management
reorganisation replacing the combined role of Chief Financial
Officer and Chief Operating Officer, Paul Sheriff resigned from
this role on 15 March 2013. Steve Cullen was appointed to the Board
as Chief Financial Officer, having previously held the position of
Group Financial Controller for over nine years. Joel Sleigh was
appointed Chief Operating Officer having held senior management
positions within the Group since 1999, and he has been a member of
the Executive Committee since 2012. Both appointments were with
effect from 15 March 2013.
Infrastructure development
During the year the Group completed its key infrastructure
development project, which was the implementation of a new middle
and back office system. The new system has already increased the
Group's capability both to manage a wider variety of instruments
and to deploy new products and portfolios cost effectively and it
will help deliver an improved level of client service.
Financial review
Total revenue for the financial year decreased by 9% to
GBP18.6m, principally due to the reduction in management fees. This
fall is despite the increase in average AUME during the year of
10%, and is broadly a consequence of the full year effect of
changes in our client base reported in 2012 i.e. the loss of our
second largest client in November 2011, and the closure of the
remaining Active FRB pooled fund in April 2012. These year-on-year
reductions in revenue were partially offset by the continued growth
in Passive Hedging revenue of 37% since last year.
Total expenditure decreased by 9% to GBP12.4m as a result of a
programme of cost control measures, and a fall in the Group Profit
Share cost which is determined by operating profit.
Profit before tax decreased by 9% to GBP6.1m.
Profit and loss (GBPm) - Year ended 2013 2012
31 March
--------------------------------------- ------- -------
Revenue 18.6 20.5
--------------------------------------- ------- -------
Cost of sales (0.3) (0.2)
--------------------------------------- ------- -------
Gross profit 18.3 20.3
--------------------------------------- ------- -------
Personnel (excluding Group Profit
Share Scheme) (6.0) (6.4)
Non-personnel cost (3.9) (4.2)
Loss on financial instruments held
as part of disposal group (0.1) (0.3)
--------------------------------------- ------- -------
Total expenditure (excl. Group Profit
Share Scheme) (10.0) (10.9)
--------------------------------------- ------- -------
Group Profit Share Scheme (2.4) (2.8)
--------------------------------------- ------- -------
Operating profit 5.9 6.6
% 32% 32%
--------------------------------------- ------- -------
Net interest received 0.2 0.1
--------------------------------------- ------- -------
Profit before tax 6.1 6.7
--------------------------------------- ------- -------
Tax (1.5) (1.8)
--------------------------------------- ------- -------
Profit after tax 4.6 4.9
--------------------------------------- ------- -------
Revenue
Management fees continued to make up the majority (97%) of the
Group's revenue. Management fees for the year ended 31 March 2013
fell by 11% to GBP18.1m.
Revenue analysis (GBPm) 2013 2012
------------------------- ----- -----
Management fees 18.1 20.4
Performance fees - -
Other 0.5 0.1
------------------------- ----- -----
Total 18.6 20.5
------------------------- ----- -----
Record charges fees to its clients based upon the AUME of the
product provided. Both Passive and Dynamic Hedging typically have
management fee only arrangements, although the Group has recently
commenced a combined passive and dynamic hedging programme with a
performance fee element. Record has historically offered both
management fee only, and management fee plus performance fee
structures on Currency for Return mandates. Higher performance fee
rates usually accompany lower management fee rates and vice
versa.
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.
Management fees
Aggregate management fee income during the year was GBP18.1m
(2012: GBP20.4m). The fall in Currency for Return fees of GBP1.8m
(46%) was due to the continued decline of our Active FRB pooled
fund product, whilst the decrease in Dynamic Hedging fees of
GBP1.6m (12%) was mostly due to a full year's impact of the loss of
a significant client in the previous financial year. The Passive
Hedging product continued to grow strongly to GBP4.1m, up 37% in
the period.
Management fees by product (GBPm) 2013 2012
----------------------------------- ----- -----
Dynamic Hedging 11.9 13.5
Passive Hedging 4.1 3.0
Currency for Return 2.1 3.9
----------------------------------- ----- -----
Total 18.1 20.4
----------------------------------- ----- -----
The blended average management fee rate fell to 8.8bps (2012:
11.2bps). Despite the product mix stabilising year on year, the
decrease in the blended average management fee rate was due mainly
to the increase in the average AUME attributable to the lower
margin Passive Hedging product which accounted for 23% of
management fees in the period (2012:15%). Slight declines in the
management fee rates achieved on the higher margin products (i.e.
Dynamic Hedging and Currency for Return) also contributed to the
fall in the blended average management fee rate.
Average management fee rates by product 2013 2012
- (bps)
----------------------------------------- ----- -----
Dynamic Hedging 18.5 20.0
Passive Hedging 3.1 3.1
Currency for Return 22.1 23.8
----------------------------------------- ----- -----
Weighted average 8.8 11.2
----------------------------------------- ----- -----
Performance fees
There was no performance fee earned in the year (2012: GBPnil).
Performance fees have historically been earned from some Currency
for Return and Dynamic Hedging mandates. Since the closure of the
Cash Plus Fund in April 2012, there are only two active mandates
that incorporate a performance fee component which are both Dynamic
Hedging mandates.
Other income
Other income is principally from gains made on forward foreign
exchange contracts employed by the funds seeded by the Group. It
also includes gains/losses on hedging revenues denominated in
currencies other than Sterling, and other foreign exchange
gains/losses.
Expenditure
Operating Expenditure
The total operating expenditure of the Group decreased by
GBP1.3m (9%) to GBP12.4m during the year ended 31 March 2013.
Personnel costs fell by GBP0.4m including a full year impact of the
10% reduction in Board members' salaries made from 1 December 2011
and non-personnel costs fell by GBP0.3m. Losses on financial
instruments held as a disposal group fell to GBP0.1m in the year
(2012: GBP0.3m).
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 (GPS) is made available to be awarded to employees. The
Remuneration Committee has agreed that for the year ended 31 March
2013, the Group Profit Share Scheme is 30% of pre-GPS operating
profit. This represents GBP2.4m, a reduction of GBP0.4m from the
previous financial year. Directors and senior management in Record
are required to take a proportion of this remuneration in the form
of shares subject to lock-up arrangements. Under the scheme rules,
the intention is to purchase these shares in the market following
the announcement of interim and full year financial results.
Operating margin
The operating profit for the year ended 31 March 2013 of GBP5.9m
was 11% lower than the operating profit for the previous financial
year (2012: GBP6.6m). Despite this, the Group maintained an
operating profit margin of 32% for the year ended 31 March 2013
(32% in 2012), as the result of the cost reduction measures
initiated in the previous financial year continuing into this
financial year and partially offsetting the fall in revenue.
Cash flow
The Group's year end cash position was GBP29.0m (2012:
GBP24.6m). Cash generated from operating activities before tax was
GBP7.2m (2012: GBP5.0), with GBP1.6m paid in taxation and GBP1.6m
paid in dividends.
Dividends
During the year, the decision was taken to defer the interim
dividend payment with the intention to retain the overall dividend
payable at 1.50p per share, subject to business conditions.
The Board recommends paying a final dividend of 1.50p per share
(dividend paid in respect of year ended 31 March 2012: 1.50p per
share), equivalent to GBP3.3m. This represents a 76% payment of
profits after tax attributable to owners of the parent for the year
ended 31 March 2013.
Subject to shareholder approval, the dividend will be paid on 31
July 2013 to shareholders on the register on 21 June 2013, the
ex-dividend date being 19 June 2013. The dividend cover in the year
was 1.3 times (2012: 1.5).
Capital management
The Board's policy is to retain capital (being equivalent to
shareholders' funds) within the business sufficient to meet
continuing obligations, sustain future growth and to provide a
buffer against adverse market conditions. To this end the Group
maintains a financial model to assist it in forecasting future
capital requirements over a four-year time horizon under various
scenarios. Shareholders' funds were GBP28.6m at 31 March 2013
(2012: GBP26.4m). The Group has no debt.
Risk management and regulation
Regulatory environment and regulatory capital
Record Currency Management Limited (RCML) is authorised and
regulated in the UK by the Financial Conduct Authority (FSA prior
to 1 April 2013). In the United States, RCML is registered as an
Investment Adviser with the Securities and Exchange Commission and
as a Commodity Trading Adviser (swaps only) with the Commodity
Futures Trading Commission. RCML is an Exempt International Adviser
with the Ontario Securities Commission in the State of Ontario,
Canada and is registered as exempt with the Australian Securities
& Investment Commission. RCML is approved by the Irish Central
Bank to act as promoter and investment manager to Irish authorised
collective investment schemes. The Group has a Jersey-based
management company, Record Currency Management (Jersey) Limited,
authorised by the Jersey Financial Services Commission to manage
Expert Funds.
The Group has one UK regulated entity, RCML, on behalf of which
half-yearly 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 2013,
Record had Tier 1 capital of GBP27.7m. 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.
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 embedded throughout
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 and Risk Committee provides oversight and independent
challenge in relation to internal control and risk management
systems and procedures. The Head of Compliance and Risk is
responsible for ensuring compliance with appropriate legal and
other regulatory standards, and for internal risk review of
operational processes. Additionally, Deloitte 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 Operating Officer and has the Chief Financial
Officer, the Head of Operations, the Head of Trading, the Head of
Portfolio Management, the Head of Portfolio Implementation and the
Head of Compliance and Risk as members. The Committee reviews
existing and new risks, and the nature of any operational incidents
with the objective of ensuring that adequate systems and controls
are in place to minimise and preferably eliminate such incidents
and their impact on both the Group and its clients.
The Group appointed Grant Thornton UK LLP as the reporting
accountant for its Audit and Assurance (AAF 01/06 and SSAE 16)
reports. There are two types of assurance engagements associated
with the AAF 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 mitigating activities are set out below
Risk type/owner Description of risk Mitigation
--------------------------- -------------------------------------------- -------------------------------------------
Strategic and business These include: These include:
risks
The risk that the
medium and long-term
profitability of
the Group could be
adversely impacted
by the failure to
identify and implement
the correct strategy.
Delegated to:
Record plc Board
and Executive Committee
--------------------------- -------------------------------------------- -------------------------------------------
Any impairment to Record's standing The Board's lengthy investment management
in the currency management markets experience.
with investors and investment consultants
may result in the loss of AUME and/or
fee income.
--------------------------- -------------------------------------------- -------------------------------------------
Record's risk appetite does not extend
to taking either regulatory or
reputational
risks within the decision making process.
Sufficient allocation of resources
is provided to enhance prevention of
any systemic failures of day to day
product implementation that could affect
the firm's reputation.
-------------------------------------------- -------------------------------------------
Loss of key personnel could impact The Group's investment process is steered
on the management of the Group and/or by an Investment Committee of six,
lead to a loss of AUME. and all products are managed on a
predominantly
systematic process which is not reliant
on any individual employee.
-------------------------------------------- -------------------------------------------
All clients have two points of contact
to ensure continuity in the client
relationship if any one person left.
-------------------------------------------- -------------------------------------------
The Group considers that its remuneration
policy and in particular the operation
of the Group Profit Share Scheme promotes
key personnel retention and effective
risk management.
-------------------------------------------- -------------------------------------------
Concentration risk on single product Diversification of investment capabilities
type; Record's products are all currency across risk-reducing and risk-taking
management based hence it would be products to reduce single event/product
adversely affected by a move away from exposure.
currency, in particular Dynamic Hedging,
by its core client base.
-------------------------------------------- -------------------------------------------
Account concentration; Record has a Record's commitment to client services
relatively small number of high value excellence, the transparency of the
clients. Its largest client generated investment process and the regular
30% of revenue in the year ended 31 reporting and face to face contact
March 2013. The largest five clients with clients is integral to retention.
generated 66% of revenue and the largest
ten clients generated 84% of revenue
in the year ended 31 March 2013.
-------------------------------------------- -------------------------------------------
Reliance on investment consultants; The Group devotes considerable senior
if a consultant no longer believes management time and effort to its
that Currency for Return or Dynamic relationships
Hedging is suitable for clients and/or with the investment consultancy firms
a consultant no longer believes that to ensure that developments within
Record is a recommended investment the Group and its investment research
manager, then this could result in and processes are understood by these
a loss of AUME. firms.
-------------------------------------------- -------------------------------------------
Changes in the regulatory environment Diversification of investment capabilities
or tax regime making investment in across risk-reducing and risk-taking
currency less attractive to investors. products to reduce single event/product
exposure.
--------------------------- -------------------------------------------- -------------------------------------------
Market dislocation Intervention by government, government Diversified product range underpinned
risk agency or regulatory body such as exchange by a number of different strategies
Delegated to: controls, financial transaction tax, that may not all be impacted by the
Executive Committee etc. that renders some or all of the intervention. Depending on the nature
Group's products ineffective. of the intervention, certain product
strategies may perform well.
--------------------------- -------------------------------------------- -------------------------------------------
Experienced management team that are
able to respond in a timely manner
to adapt the business.
--------------------------- -------------------------------------------- -------------------------------------------
Investment risks These include: These include:
The risk that long-term
investment performance
is not delivered,
damaging prospects
for winning and retaining
clients, and putting
average management
fee margins under
pressure.
Delegated to:
Investment Committee
--------------------------- -------------------------------------------- -------------------------------------------
The Group's Dynamic Hedging products Experienced Investment Committee meets
seek to vary the hedge ratio of a client's regularly ensuring consistent core
portfolio such that a client benefits investment processes are applied.
from the hedging programme in periods
of base currency appreciation and limits
the costs in periods of base currency
weakness. Prolonged periods of base
currency weakness or of range-trading
in currency pairs may lead clients
to re-assess the benefits of the product.
--------------------------- -------------------------------------------- -------------------------------------------
Dedicated currency management research
and investment focus.
-------------------------------------------- -------------------------------------------
The Group is paid by its Currency for Experienced Investment Committee meets
Return clients to generate positive regularly ensuring consistent core
investment performance over the medium investment processes are applied.
and long term by taking investment
risk on their behalf. Any sustained
period of poor investment performance
reduces the value of AUME in the Group's
pooled funds and segregated mandates
that could lead to mandate terminations
by clients, to loss of confidence in
the Group's investment model by clients,
potential clients and the investment
consultants who advise them.
-------------------------------------------- -------------------------------------------
Dedicated currency management research
and investment focus.
-------------------------------------------- -------------------------------------------
Remuneration policy links senior
management's
remuneration to long-term performance
of the Group.
--------------------------- -------------------------------------------- -------------------------------------------
Operational risks These include: These include:
Risks in this category
are broad in nature
and inherent in all
businesses.
They include the
risk that operational
flaws result in business
losses - through
error or fraud, the
inability to capitalise
on market opportunities,
or weaknesses in
systems and controls.
Delegated to:
Risk Management Committee
--------------------------- -------------------------------------------- -------------------------------------------
The Group is exposed to the risk of The Group has developed comprehensive
failure of its proprietary IT system disaster recovery and business contingency
(ROMP, or Record Overlay Management plans. These cover scenarios from server
Programme), Calypso (back office system) failure to destruction of the Group's
and other IT systems, which might prevent offices. Alternative office facilities
the Group's ability to operate. and equipment are available at a disaster
recovery provider should the premises
be compromised. Disaster recovery
procedures
are tested on a regular basis at the
site of the disaster recovery provider.
--------------------------- -------------------------------------------- -------------------------------------------
Engagement letters or service level
agreements are in place with all
significant
service providers.
-------------------------------------------- -------------------------------------------
Execution and process management; dealing, Record prepares an annual AAF 01/06
portfolio, settlement and reporting report and SSAE 16 report. The contents
errors. of these reports, which have been
independently
reviewed and tested by Grant Thornton
UK LLP, provide assurances of the Group's
procedures and controls to mitigate
operating risk.
-------------------------------------------- -------------------------------------------
Record has an outsourced Internal Audit
function that reports independently
to the Audit and Risk Committee.
-------------------------------------------- -------------------------------------------
The Group's investment processes for
all products are predominantly 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
oversees the investment process and
provides post-trade compliance assurances,
including changes to any static data
which may impact the behaviour of the
systematic processes.
-------------------------------------------
Each department has established procedures
manuals that are available to all members
of staff. The adherence to these
procedures
is checked through the compliance
monitoring
programme, AAF and SSAE 16 reviews
and the internal audit programme.
-------------------------------------------- -------------------------------------------
Non-compliance, including monitoring Each department has established procedures
of investment breaches. manuals that are available to all members
of staff. The adherence to these
procedures
is checked through the compliance
monitoring
programme, AAF and SSAE 16 reviews
and the internal audit programme.
-------------------------------------------- -------------------------------------------
Automated post-trade compliance tests
/ reports monitor whether programs
are running in line with expectations,
and identify any potential issues that
may need to be resolved.
-------------------------------------------- -------------------------------------------
Record's investment process involves The Group trades on behalf of clients
high trading turnover of client positions in currency and other products with
in both size and volume, therefore a large panel of banking counterparties.
it can be said to be reliant on market Currency is a particularly liquid market
liquidity. that has continued to provide sufficient
daily liquidity.
-------------------------------------------- -------------------------------------------
Record executes derivative transactions On a daily basis Record monitors the
with large banks as the counterparty credit ratings (and other indicators
on behalf of clients. As an over the of creditworthiness) of the counterparties
counter (OTC) product, these contracts Record has dealings with. Changes are
inherently contain a degree of counterparty noted against a comprehensive Credit
risk with the counterparty bank. Default Risk Policy that is overseen by an
by any of these counterparties could established Risk Management Committee
indirectly lead to impairment of Record's that meets at least on a monthly basis.
standing in the currency management Reallocations of exposures to certain
markets with investors and investment counterparties may follow the daily
consultants and thus may result in review in order to ensure a prudent
the loss of AUME and/or fee income. spread of counterparty credit risk.
--------------------------- -------------------------------------------- -------------------------------------------
Treasury risks These include: These include:
The risks that management
does not appropriately
mitigate balance
sheet risks or exposures
potentially resulting
in an adverse impact
on the financial
performance or position
of the Group.
Delegated to:
Chief Financial Officer
--------------------------- -------------------------------------------- -------------------------------------------
More than 70% of Group revenues are The Group hedges its non-Sterling income
denominated in a currency other than on a monthly basis from the date that
Sterling, the Group's functional and income is accrued until the anticipated
reporting currency, yet the Group's date of receipt by using forward fixed
cost base is predominantly Sterling rate currency sales contracts.
based.
--------------------------- -------------------------------------------- -------------------------------------------
The Group invests a limited amount Monthly reporting of all balance sheet
of its resources in its own funds (seed exposures to the Executive Committee
capital), exposing it to price risk, and Board.
credit risk, and foreign exchange risk.
-------------------------------------------- -------------------------------------------
Liquidity management - the Group is The Group has adopted a credit risk
exposed to credit risk and interest policy to manage its credit risks,
rate risk in respect of its cash balances. under which it follows clear counterparty
diversification and minimum credit
rating criteria.
-------------------------------------------- -------------------------------------------
Monthly reporting of all balance sheet
exposures to the Executive Committee
and Board.
--------------------------- -------------------------------------------- -------------------------------------------
Consolidated statement of comprehensive income
Year ended 31 March
2013 2012
Note GBP'000 GBP'000
-------------------------------------------- ----- --------- ---------
Revenue 3 18,552 20,535
Cost of sales (221) (252)
-------------------------------------------- ----- --------- ---------
Gross profit 18,331 20,283
Administrative expenses (12,343) (13,430)
Loss on financial instruments held
as part of disposal group 18 (68) (299)
-------------------------------------------- ----- --------- ---------
Operating profit 4 5,920 6,554
Finance income 6 158 155
Profit before tax 6,078 6,709
Taxation 7 (1,450) (1,803)
-------------------------------------------- ----- --------- ---------
Profit after tax and total comprehensive
income for the year 4,628 4,906
Profit and total comprehensive income
for the year attributable to:
Non-controlling interests 294 (7)
Owners of the parent 4,334 4,913
-------------------------------------------- ----- --------- ---------
Earnings per share for profit attributable
to the equity holders of the Group
during the year (expressed in pence
per share)
Basic earnings per share 8 1.98p 2.23p
Diluted earnings per share 8 1.98p 2.23p
-------------------------------------------- ----- --------- ---------
Consolidated statement of financial position
As at 31 March
Note 2013 2012
GBP'000 GBP'000
---------------------------------------- ----- -------- --------
Non-current assets
Property, plant and equipment 11 140 183
Intangible assets 12 963 1,140
Deferred tax assets 14 5 -
---------------------------------------- ----- -------- --------
1,108 1,323
Current assets
Trade and other receivables 15 5,569 5,070
Derivative financial assets 16 43 33
Cash and cash equivalents 0 29,025 24,572
---------------------------------------- ----- -------- --------
34,637 29,675
Current assets held for sale (disposal
group) 18 - 1,075
---------------------------------------- ----- -------- --------
Total current assets 34,637 30,750
---------------------------------------- ----- -------- --------
Total assets 35,745 32,073
---------------------------------------- ----- -------- --------
Current liabilities
Trade and other payables 19 (2,672) (2,494)
Corporation tax liabilities 19 (760) (900)
Derivative financial liabilities 16 (25) (48)
---------------------------------------- ----- -------- --------
(3,457) (3,442)
---------------------------------------- ----- -------- --------
Deferred tax liabilities 14 - (15)
---------------------------------------- ----- -------- --------
Total net assets 32,288 28,616
---------------------------------------- ----- -------- --------
Equity
Issued share capital 20 55 55
Share premium account 1,838 1,809
Capital redemption reserve 20 20
Retained earnings 26,729 24,469
---------------------------------------- ----- -------- --------
Equity attributable to owners of
the parent 28,642 26,353
Non-controlling interest 22 3,646 2,263
---------------------------------------- ----- -------- --------
Total equity 32,288 28,616
---------------------------------------- ----- -------- --------
Consolidated statement of changes in equity
Year ended 31 March 2013
Called Share premium Capital Retained Non-controlling Total
up share account redemption earnings interest equity
capital reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- -------------- ------------ ---------- ---------------- --------
As at 1 April
2012 55 1,809 20 24,469 2,263 28,616
Dividends paid - - - (1,645) - (1,645)
Own shares purchased
by EBT - - - (686) - (686)
Share awards vesting - - - 135 135
Release of shares
held by EBT - 29 - 62 - 91
Issue of units
in funds to non-controlling
interests - - - - 1,089 1,089
Transactions with
owners - 29 - (2,134) 1,089 (1,016)
Profit and total
comprehensive
income for the
year - - - 4,334 294 4,628
Share option reserve
movement - - - 60 - 60
As at 31 March
2013 55 1,838 20 26,729 3,646 32,288
------------------------------ ---------- -------------- ------------ ---------- ---------------- --------
Year ended 31 March 2012
Called Share premium Capital Retained Non-controlling Total
up share account redemption earnings interest equity
capital reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- -------------- ------------ ---------- ---------------- --------
As at 1 April
2011 55 1,809 20 27,262 952 30,098
Dividends paid - - - (7,371) - (7,371)
Own shares purchased
by EBT - - - (534) - (534)
Share awards vesting - - - 165 - 165
Issue of units
in funds to non-controlling
interests - - - - 1,318 1,318
Transactions with
owners - - - (7,740) 1,318 (6,422)
Profit and total
comprehensive
income for the
year - - - 4,913 (7) 4,906
Share option reserve
movement - - - 34 - 34
As at 31 March
2012 55 1,809 20 24,469 2,263 28,616
------------------------------ ---------- -------------- ------------ ---------- ---------------- --------
Consolidated statement of cash flows
Year ended 31 March
Note 2013 2012
GBP'000 GBP'000
-------------------------------------------- ----- -------- --------
Operating profit 5,920 6,554
Adjustments for:
Depreciation of property, plant
and equipment 11 106 96
Amortisation of intangible assets 12 177 10
Share option expense 60 34
Release of shares previously held
by EBT 226 165
-------------------------------------------- ----- -------- --------
6,489 6,859
Changes in working capital
(Increase) / Decrease in receivables (485) 1,831
Increase / (Decrease) in payables 173 (1,594)
Decrease / (Increase) in other financial
assets 1,065 (2,082)
(Decrease) / Increase in other financial
liabilities (23) 35
-------------------------------------------- ----- -------- --------
CASH INFLOW FROM OPERATING ACTIVITIES 7,219 5,049
Corporation taxes paid (1,610) (2,656)
-------------------------------------------- ----- -------- --------
NET CASH INFLOW FROM OPERATING ACTIVITIES 5,609 2,393
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant and
equipment (63) (52)
Purchase of intangible assets - (65)
Interest received 149 158
-------------------------------------------- ----- -------- --------
NET CASH INFLOW / (OUTFLOW) FROM
INVESTING ACTIVITIES 86 41
CASH FLOW FROM FINANCING ACTIVITIES
Cash inflow from issue of units
in funds 1,089 1,318
Purchase of own shares (686) (534)
Dividends paid to equity shareholders (1,645) (7,371)
-------------------------------------------- ----- -------- --------
CASH OUTFLOW FROM FINANCING ACTIVITIES (1,242) (6,587)
-------------------------------------------- ----- -------- --------
NET INCREASE / (DECREASE) IN CASH
AND CASH EQUIVALENTS IN THE YEAR
(prior to increase in cash due to
accounting treatment of assets previously
presented as disposal group) 4,453 (4,153)
Increase in cash due to accounting
treatment of assets previously presented
as disposal group 0 - 3,997
-------------------------------------------- ----- -------- --------
NET INCREASE / (DECREASE) IN CASH
AND CASH EQUIVALENTS IN THE YEAR 4,453 (156)
-------------------------------------------- ----- -------- --------
Cash and cash equivalents at the
beginning of the year 24,572 24,728
CASH AND CASH EQUIVALENTS AT THE
END OF THE YEAR 29,025 24,572
----- --------
Closing cash and cash equivalents consists
of:
Cash 1,863 4,669
Cash equivalents 27,162 19,903
--------------------------------------------------- -------- --------
Cash and cash equivalents 29,025 24,572
--------------------------------------------------- -------- --------
Company statement of financial position
As at 31 March
Note 2013 2012
GBP'000 GBP'000
---------------------------------------- ----- -------- --------
Non-current assets
Investments 13 2,364 2,156
---------------------------------------- ----- -------- --------
2,364 2,156
Current assets
Trade and other receivables 15 1,663 1,192
Cash and cash equivalents 0 1,001 16
---------------------------------------- ----- -------- --------
2,664 1,208
Current assets held for sale (disposal
group) 18 - 911
---------------------------------------- ----- -------- --------
Total current assets 2,664 2,119
---------------------------------------- ----- -------- --------
Total assets 5,028 4,275
---------------------------------------- ----- -------- --------
Current liabilities
Trade and other payables 19 (1,717) (948)
Corporation tax liabilities 19 (25) -
---------------------------------------- ----- -------- --------
(1,742) (948)
---------------------------------------- ----- -------- --------
Total net assets 3,286 3,327
---------------------------------------- ----- -------- --------
Equity
Issued share capital 20 55 55
Share premium account 1,809 1,809
Capital redemption reserve 20 20
Retained earnings 1,402 1,443
---------------------------------------- ----- -------- --------
Total equity 3,286 3,327
---------------------------------------- ----- -------- --------
Company statement of changes in equity
Year ended 31 March 2013
Called Share premium Capital Retained Total shareholders'
up share account redemption earnings equity
capital reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ---------- -------------- ------------ ---------- --------------------
As at 1 April
2012 55 1,809 20 1,443 3,327
Dividends paid - - - (1,645) (1,645)
Employee share
options - - - 60 60
------------------- ---------- -------------- ------------ ---------- --------------------
Transactions with
owners - - - (1,585) (1,585)
Profit and total
comprehensive
income for the
year - - - 1,544 1,544
As at 31 March
2013 55 1,809 20 1,402 3,286
------------------- ---------- -------------- ------------ ---------- --------------------
Year ended 31 March 2012
Called Share premium Capital Retained Total shareholders'
up share account redemption earnings equity
capital reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ---------- -------------- ------------ ---------- --------------------
As at 1 April
2011 55 1,809 20 256 2,140
Dividends paid - - - (7,371) (7,371)
Employee share
options - - - 34 34
------------------- ---------- -------------- ------------ ---------- --------------------
Transactions with
owners - - - (7,337) (7,337)
Profit and total
comprehensive
income for the
year - - - 8,524 8,524
As at 31 March
2012 55 1,809 20 1,443 3,327
------------------- ---------- -------------- ------------ ---------- --------------------
Company statement of cash flows
Year ended 31 March
2013 2012
GBP'000 GBP'000
-------------------------------------------- -------- --------
Operating profit / (loss) 90 (91)
Changes in working capital
Increase in receivables (468) (1,192)
Increase in payables 769 938
Decrease / (Increase) in other financial
assets 763 (933)
-------------------------------------------- -------- --------
CASH INFLOW / (OUTFLOW) FROM OPERATING
ACTIVITIES 1,154 (1,278)
Corporation taxes paid - -
-------------------------------------------- -------- --------
NET CASH INFLOW / (OUTFLOW) FROM OPERATING
ACTIVITIES 1,154 (1,278)
CASH FLOW FROM INVESTING ACTIVITIES
Dividends received 1,465 8,610
Interest received 11 5
-------------------------------------------- -------- --------
NET CASH INFLOW FROM INVESTING ACTIVITIES 1,476 8,615
CASH FLOW FROM FINANCING ACTIVITIES
Dividends paid to equity shareholders (1,645) (7,371)
-------------------------------------------- -------- --------
CASH OUTFLOW FROM FINANCING ACTIVITIES (1,645) (7,371)
-------------------------------------------- -------- --------
NET INCREASE / (DECREASE) IN CASH AND
CASH EQUIVALENTS IN THE YEAR 985 (34)
Cash and cash equivalents at the beginning
of the year 16 50
-------------------------------------------- -------- --------
CASH AND CASH EQUIVALENTS AT THE END
OF THE YEAR 1,001 16
-------------------------------------------- -------- --------
Closing cash and cash equivalents consists
of:
Cash 1 16
Cash equivalents 1,000 -
-------------------------------------------- ------ ---
Cash and cash equivalents 1,001 16
-------------------------------------------- ------ ---
Notes to the financial statements for the year ended 31 March
2013
These financial statements exclude disclosures that are
immaterial and judged to be unnecessary to understand our results
and financial position.
1. Accounting policies
In order to increase the clarity of the notes to the financial
statements, we have moved accounting policy descriptions to the
beginning of the relevant note where appropriate, and they are
shown in italics.
The principal accounting policies adopted in the preparation of
these consolidated financial statements are set out in the notes
below. These policies have been consistently applied to all 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 2013. The financial statements have been prepared on
a 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.
Impact of new accounting standards
A number of amendments to existing standards and interpretations
have been issued, some of which were mandatory for periods
beginning 1 April 2012, with the remaining becoming effective in
future periods. The new standards and amendments to existing
standards effective for the year to 31 March 2013 have not had a
material impact on the financial statements of Record plc.
New standards and interpretations
New or revised standards and interpretations issued but not yet
effective include those listed below:
-- IFRS 7 (Amendment) - 'Disclosures - Offsetting Financial
Assets and Financial Liabilities'
-- IFRS 10 - 'Consolidated financial statements'
-- IFRS 12 - 'Disclosure of Interests in Other Entities'
-- IFRS 13 - 'Fair value measurement'
The impact of these new and revised standards is expected to be
limited to further disclosure enhancements in the financial
statements of Record plc.
(b) Basis of consolidation
The consolidated financial information contained within the
financial statements incorporates financial statements of the
Company and entities controlled by the Company (its subsidiaries)
drawn up to 31 March 2013. Control is achieved where the Company
has the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. Where the
Group controls an entity, but does not own all the share capital of
that entity, the interest of the other shareholders'
non-controlling interests is stated within equity at the
non-controlling interests' proportion of the fair value of the
recognised assets and liabilities.
An Employee Benefit Trust has been established for the purposes
of satisfying certain share-based awards. The Group has 'de facto'
control over this special purpose entity. This trust is fully
consolidated within the accounts.
The Group has investments in a number of funds where it is
currently in a position to be able to control those funds. These
funds are held by Record plc and represent seed capital investments
by the Group. The funds are consolidated either on a line by line
basis, or if they meet the definition of a disposal group held for
sale they are classified and accounted for on that basis.
The accounts of subsidiary undertakings, which are prepared
using uniform accounting policies, are coterminous with those of
the Company apart from those of the seeded funds which have
accounting reference dates of 30 September. The consolidated
accounts incorporate the financial performance of the seeded funds
in the year ended 31 March 2013 and the financial position of the
seeded funds as at 31 March 2013.
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 total comprehensive income for the
year includes a profit of GBP1,543,196 attributable to the Company
(2012: GBP8,523,904).
All intra-Group transactions, balances, income, expenses and
dividends are eliminated on consolidation.
(c) Foreign currencies
The financial statements are presented in Sterling (GBP), which
is 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 profit or loss.
(d) 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.
(e) Impairment of assets
The Group assesses whether there is any indication that any of
its assets have been impaired at least annually. If such an
indication exists, the asset's recoverable amount is estimated and
compared to its carrying value.
An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. Impairment
losses are recognised in profit or loss.
In the case of the Group's current assets held for sale
(disposal group), which are seed investments in funds and
derivative financial instruments, the Group assesses whether the
assets have been impaired on a monthly basis by performing a mark
to market exercise.
(f) 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.
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 on-going 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 18 describes the
assumptions made in classifying the Group'sseed investment in new
funds as assets held for sale. Note 21 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 25.
3. Revenue
Revenue recognition
Revenue is recognised in profit or loss 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 equivalents (AUME). The Group is entitled
to earn performance fees from some clients where the performance of
the clients' mandates exceeds defined benchmarks by an agreed level
of outperformance over a set time period. Performance fees are
recognised at the end of each contractual performance period as
this is the first point at which the fee amount can be estimated
reliably and it is probable that the fee will be received.
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. The Group provides Directors with revenue information
disaggregated by product, whilst operating costs, assets and
liabilities are presented on an aggregated basis. This reflects the
unified basis on which the products are marketed, delivered and
supported.
(a) Product revenues
The Group has split its currency management revenues by product.
Other Group activities include consultancy and gains / losses on
derivative financial instruments. There were no performance fees
earned in either of the reported periods.
Revenue by product type 2013 2012
GBP'000 GBP'000
----------------------------- -------- --------
Management fees
Dynamic Hedging 11,834 13,536
Passive Hedging 4,093 2,989
Currency for Return 2,134 3,911
Total management fee income 18,061 20,436
Other Group activities 491 99
----------------------------- -------- --------
Total revenue 18,552 20,535
----------------------------- -------- --------
(b) Geographical analysis
The geographical analysis of revenue is based on the destination
i.e. the location of the client to whom the services are provided.
All turnover originated in the UK.
Revenue by geographical region 2013 2012
GBP'000 GBP'000
-------------------------------- -------- --------
Management fee income
UK 4,628 5,627
US 6,631 8,886
Switzerland 5,688 5,288
Other 1,114 635
-------------------------------- -------- --------
Total management fee income 18,061 20,436
Other Group activities 491 99
-------------------------------- -------- --------
Total revenue 18,552 20,535
-------------------------------- -------- --------
Other Group activities are not analysed by geographical
region.
(c) Major clients
During the year ended 31 March 2013, two clients individually
accounted for more than 10% of the Group's revenue during the year.
The two largest clients generated revenues of GBP5.6m and GBP2.0m
in the period (2012: one client accounted for GBP6.0m).
4. Operating profit
Operating profit for the year is stated after
charging/(crediting):
2013 2012
GBP'000 GBP'000
------------------------------------------------ -------- --------
Staff costs 8,311 9,247
Depreciation of property, plant and
equipment 106 96
Amortisation of intangibles 177 10
Auditor fees
Fees payable to the Group's auditor
for the audit of the Company's annual
accounts 34 34
The audit of the Group's subsidiaries,
pursuant to legislation 42 38
Other services pursuant to legislation 58 48
Other services relating to taxation 10 6
Operating lease rentals: Land and buildings 227 214
Exchange losses / (gains) on hedging
activities 82 (68)
Other exchange (gains) / losses (102) 191
------------------------------------------------ -------- --------
5. Staff costs
The average number of employees, including Directors, employed
by the Group during the year was:
2013 2012
------------------------------------ ----- -----
Client Team 8 10
Research 9 6
Portfolio Management 8 12
Trading 5 5
Operations 4 6
Reporting Services 8 6
Systems 4 4
Finance, Human Resources and Legal 7 7
Administration 1 1
Compliance 1 2
Corporate 9 9
------------------------------------ ----- -----
Annual Average 64 68
------------------------------------ ----- -----
The aggregate costs of the above employees, including Directors,
were as follows:
2013 2012
GBP'000 GBP'000
-------------------------------- -------- --------
Wages and salaries 5,987 6,499
Social security costs 815 953
Pension costs 450 508
Other employment benefit costs 1,059 1,287
-------------------------------- -------- --------
Aggregate staff costs 8,311 9,247
-------------------------------- -------- --------
Other employment benefit costs include share-based payments,
share option costs, and costs relating to the Record plc Share
Incentive Plan.
6. Finance income
2013 2012
GBP'000 GBP'000
--------------------------------- -------- --------
Interest on short-term deposits 158 155
--------------------------------- -------- --------
7. Taxation - Group
Current tax is the tax currently payable based on taxable profit
for the year. Current income tax assets and/or liabilities comprise
those obligations to, or claims from, fiscal authorities relating
to the current or prior reporting periods, that are unpaid at the
reporting date. Current tax is payable on taxable profit, which
differs from profit or loss in the financial statements.
Calculation of current tax is based on tax rates and tax laws that
have been enacted or substantively enacted by the end of the
reporting period.
The total charge for the year can be reconciled to the
accounting profit as follows:
2013 2012
GBP'000 GBP'000
----------------------------------------------- -------- --------
Profit before taxation 6,078 6,709
----------------------------------------------- -------- --------
Taxation at the standard rate of tax
in the UK of 24% (2012: 26%) 1,459 1,744
Tax effects of:
Other disallowable expenses and non-taxable
income 17 23
Capital allowances for the period (higher)
/ lower than depreciation 6 (76)
Lower tax rates on UK subsidiary undertakings 24 34
Adjustments recognised in current year
in relation to the current tax of prior
years 24 (9)
Other temporary differences (80) 87
----------------------------------------------- -------- --------
Total tax expense 1,450 1,803
----------------------------------------------- -------- --------
The standard rate of corporation tax in the UK is 24% (2012:
26%). 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 2013 was GBP1,450,457
(2012: GBP1,803,237) which was 23.9% of profit before tax (2012:
26.9%).
8. 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.
2013 2012
---------------------------------------- ------------ ------------
Weighted average number of shares used
in calculation of basic earnings per
share 218,867,407 220,100,209
Effect of dilutive potential ordinary
shares - share options 273,830 240,779
---------------------------------------- ------------ ------------
Weighted average number of shares used
in calculation of diluted earnings
per share 219,141,237 220,340,988
---------------------------------------- ------------ ------------
pence pence
---------------------------------------- ------------ ------------
Basic earnings per share 1.98 2.23
Diluted earnings per share 1.98 2.23
---------------------------------------- ------------ ------------
The potential dilutive shares relate to the share options
granted in respect of the Group's Share Scheme (see note 21). There
were share options and deferred share awards in place at the
beginning of the period over 2,028,432 shares. During the year
options were exercised, or share awards vested, over 128,432
shares. The Group granted 2,220,000 share options with a
potentially dilutive effect during the year.
9. Dividends
Interim and special dividends are recognised when paid and final
dividends when approved by shareholders.
The dividend paid by the Group during the year ended 31 March
2013 totalled GBP1,645,143 (0.75p per share) which was the final
dividend paid in respect of the year ended 31 March 2012. The
dividends paid during the year ended 31 March 2012 totalled
GBP7,371,007 (3.34p per share), of which GBP1,645,143 (0.75p per
share) was the interim dividend paid in respect of the year ended
31 March 2012 and GBP5,725,864 (2.59p per share) was the final
dividend paid in respect of the year ended 31 March 2011.
The final dividend proposed in respect of the year ended 31
March 2013 is 1.50p per share.
Between 1 July 2008 and 31 August 2012, the Company paid
dividends amounting to GBP38.5m. Although the Company had
sufficient distributable reserves to make each dividend payment,
the relevant interim accounts reflecting these profits were not
prepared and filed at the appropriate time with the Registrar of
Companies as required by the Companies Acts 1985 and 2006.
Consequently payment of these dividends, including GBP1.645m paid
in the year to 31 March 2013, did not comply with the technical
requirements of the Companies Acts 1985 and 2006. The Company will
put a resolution to the shareholders at the forthcoming AGM for
their approval to take steps to address this situation. These
accounts have been drawn up on the basis that the infringements
referred to above will, from an accounting perspective, be
regularised by the actions to be proposed to the shareholders at
the forthcoming AGM. The proposals do not affect the results of the
Group for the year to 31 March 2013, its net assets at 31 March
2013, nor its ability to pay future dividends. Going forward, as a
matter of good governance and to reflect the adequacy of
distributable reserves, interim accounts will be filed with the
Registrar of Companies before dividend payments are made.
10. Retirement benefit obligations
The Group operates defined contribution pension plans for the
benefit of employees. The Group makes contributions to
independently administered plans, such contributions being
recognised as an expense when they fall due The assets of the
schemes are held separately from those of the Group in
independently administered funds. The Group has no legal or
constructive obligation to make any further payments to the plans
other than the contributions due.
The pension cost charge represents contributions payable by the
Group to the funds and amounted to GBP449,915 (2012:
GBP507,940).
11. Property, plant and equipment - Group
All property, plant and equipment assets are stated at cost less
accumulated depreciation. Depreciation of property, plant and
equipment is provided to write off the cost, less residual value,
on a straight line basis over the estimated useful life.
-- Leasehold improvements - period from acquisition to next rent
review
-- Computer equipment - 2-5 years
-- Fixtures and fittings - 4 years
Residual values, remaining useful economic lives and
depreciation methods are reviewed annually and adjusted if
appropriate. Gains or losses on disposal are included in profit or
loss.
The Group's property, plant and equipment comprise leasehold
improvements, computer equipment, and fixtures and fittings. The
carrying amount can be analysed as follows:
Leasehold Computer Fixtures Total
improvements equipment and fittings
2013 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------------- ----------- -------------- --------
Cost
At 1 April 2012 534 716 269 1,519
Additions - 62 1 63
Disposals - (57) - (57)
At 31 March 2013 534 721 270 1,525
------------------ -------------- ----------- -------------- --------
Depreciation
At 1 April 2012 534 537 265 1,336
Charge for the
year - 102 4 106
Disposals - (57) - (57)
------------------ -------------- ----------- -------------- --------
At 31 March 2013 534 582 269 1,385
------------------ -------------- ----------- -------------- --------
Net book amounts
At 31 March 2013 - 139 1 140
------------------ -------------- ----------- -------------- --------
At 1 April 2012 - 179 4 183
------------------ -------------- ----------- -------------- --------
Leasehold Computer Fixtures Total
improvements equipment and fittings
2012 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------------- ----------- -------------- --------
Cost
At 1 April 2011 534 887 279 1,700
Additions - 51 1 52
Disposals - (222) (11) (233)
At 31 March 2012 534 716 269 1,519
------------------ -------------- ----------- -------------- --------
Depreciation
At 1 April 2011 534 676 263 1,473
Charge for the
year - 83 13 96
Disposals - (222) (11) (233)
------------------ -------------- ----------- -------------- --------
At 31 March 2012 534 537 265 1,336
------------------ -------------- ----------- -------------- --------
Net book amounts
At 31 March 2012 - 179 4 183
------------------ -------------- ----------- -------------- --------
At 1 April 2011 - 211 16 227
------------------ -------------- ----------- -------------- --------
12. Intangible assets
Intangible assets are shown at historical cost less accumulated
amortisation and impairment losses. Amortisation is charged to
profit or loss on a straight-line basis over the estimated useful
lives of the intangible assets unless such lives are indefinite.
Amortisation is included within operating expenses in the statement
of comprehensive income. Intangible assets are 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.
The Group's intangible assets comprise the capitalised cost of
software development only. The carrying amounts can be analysed as
follows:
Software Total
2013 GBP'000 GBP'000
--------------------- --------- --------
Cost
At 1 April 2012 1,150 1,150
Additions - -
Disposals - -
At 31 March 2013 1,150 1,150
--------------------- --------- --------
Amortisation
At 1 April 2012 10 10
Charge for the year 177 177
Disposals - -
--------------------- --------- --------
At 31 March 2013 187 187
--------------------- --------- --------
Net book amounts
At 31 March 2013 963 963
--------------------- --------- --------
At 1 April 2012 1,140 1,140
--------------------- --------- --------
Software Total
2012 GBP'000 GBP'000
--------------------- --------- --------
Cost
At 1 April 2011 1,085 1,085
Additions 65 65
Disposals - -
At 31 March 2012 1,150 1,150
--------------------- --------- --------
Amortisation
At 1 April 2011 - -
Charge for the year 10 10
Disposals - -
--------------------- --------- --------
At 31 March 2012 10 10
--------------------- --------- --------
Net book amounts
At 31 March 2012 1,140 1,140
--------------------- --------- --------
At 1 April 2011 1,085 1,085
--------------------- --------- --------
During the period, the Group completed the implementation of its
new back office software. Amortisation of the capitalised
development costs commenced from July 2012. The estimated useful
economic life of the completed software is five years. The annual
contractual commitment for the maintenance and support of software
is GBP132,494 (2012: GBP129,262). All amortisation charges are
included within administrative expenses.
13. Investments
Investments in subsidiaries are shown at cost less impairment
losses. The capitalised investment in respect of share-based
payments offered by subsidiaries is equal to the cumulative fair
value of the amounts payable to employees recognised as an expense
by the subsidiary. Investment in funds are recognised at net assets
plus movement in value.
Company 2013 2012
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Investment in subsidiaries (at cost)
Record Currency Management Limited 10 10
Record Group Services Limited 10 10
Record Portfolio Management Limited 10 10
Record Currency Management (US) Inc - -
Record Currency Management (Jersey) Limited 25 25
Record Fund Management Limited - -
N P Record Trustees Limited - -
-------------------------------------------------- -------- --------
Total investment in subsidiaries (at cost) 55 55
-------------------------------------------------- -------- --------
Capitalised investment in respect of share-based
payments
Record Currency Management (US) Inc 49 24
Record Group Services Limited 46 10
-------------------------------------------------- -------- --------
Total capitalised investment in respect of
share-based payments 95 34
-------------------------------------------------- -------- --------
Total investment in subsidiaries 150 89
-------------------------------------------------- -------- --------
Particulars of subsidiary undertakings
Name Nature of Business
------------------------------- -----------------------------------
Record Currency Management Currency management services
Limited
------------------------------- -----------------------------------
Record Group Services Limited Management services to other Group
undertakings
------------------------------- -----------------------------------
Record Portfolio Management Dormant
Limited
------------------------------- -----------------------------------
Record Currency Management US service company
(US) Inc
------------------------------- -----------------------------------
Record Currency Management Jersey-based management company
(Jersey) Limited
------------------------------- -----------------------------------
Record Fund Management Limited Dormant
------------------------------- -----------------------------------
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.
Record Currency Management (US) Inc is incorporated in the USA,
Record Currency Management (Jersey) Limited is incorporated in
Jersey, and all other subsidiaries are registered in England and
Wales.
Investment in funds
In December 2010, the Company invested in the Record Currency
FTSE FRB10 Index Fund and the Record Currency Emerging Market
Currency Fund. Initially, these were both accounted for as a
disposal group held for sale in accordance with its accounting
policy defined in note 18. In both cases, the Group still retained
control over each of the funds twelve months after making the
original investment. Consequently both funds ceased to be
classified as held for sale and are now consolidated in full, on a
line by line basis, and are presented in investments in the Company
statement of financial position.
Investment in funds 2013 2012
GBP'000 GBP'000
------------------------------------------ -------- --------
Record Currency FTSE FRB10 Index
Fund 1,166 1,078
Record Currency Emerging Market Currency
Fund 1,048 989
------------------------------------------ -------- --------
2,214 2,067
------------------------------------------ -------- --------
14. Deferred taxation - Group
Deferred tax is the future tax consequences of temporary
differences between the carrying amounts and tax bases of assets
and liabilities shown on the statement of financial position. The
amount of deferred tax provided is based on the expected manner of
recovery or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the statement of financial position date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. The carrying 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.
A deferred tax liability is generally recognised for all taxable
temporary differences.
Deferred tax assets or liabilities arising on goodwill are not
recognised but are however recognised on separately identifiable
intangible assets. Deferred tax arising on the initial recognition
of an asset or liability, other than a business combination, that
at the time of the transaction affects neither the accounting nor
taxable profit or loss, is not recognised.
2013 2012
GBP'000 GBP'000
------------------------------------- -------- --------
Profit and loss account movement
arising during the year 20 (85)
------------------------------------- -------- --------
(Liability) / Asset brought forward (15) 70
------------------------------------- -------- --------
Asset / (Liability) carried forward 5 (15)
------------------------------------- -------- --------
The provision for deferred taxation consists of the tax effect
of temporary differences in respect of:
2013 2012
GBP'000 GBP'000
------------------------------------ -------- --------
Deferred tax allowance on unvested
share options 30 4
Excess of taxation allowances over
depreciation on fixed assets (25) (19)
------------------------------------ -------- --------
5 (15)
------------------------------------ -------- --------
At the year end the Group had deferred tax assets of GBP5,316
(2012: deferred tax liabilities of GBP15,438). At the year end
there were share options not exercised with an intrinsic value for
tax purposes of GBP143,094 (2012: GBP14,128). 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.
15. 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. 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'.
Group Company
------------------------------------ ------------------ ------------------
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- -------- -------- --------
Trade receivables 4,825 4,268 - -
Amounts due from Group undertaking - - 1,661 1,188
Other receivables 40 216 2 -
Prepayments 704 586 - 4
------------------------------------ -------- -------- -------- --------
5,569 5,070 1,663 1,192
------------------------------------ -------- -------- -------- --------
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 (2012: GBPnil).
16. Derivative financial assets and liabilities
Financial assets held at fair value through profit or loss
Financial assets held at fair value through profit or loss
include financial assets that meet certain conditions and are held
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.
Derivative financial liabilities
Derivatives are initially recognised at cost on the date on
which the contract is first entered into unless the fair value at
acquisition is different to cost, in which case fair value is
recognised. Subsequently they are measured at fair value with gains
and losses recognised in profit or loss. Transaction costs are
immediately recognised in profit or loss.
The Group holds derivative financial instruments for two
purposes. The Group uses forward exchange contracts to reduce the
risk associated with sales denominated in foreign currencies, and
also in order to achieve a return within its seeded investment
funds. The instruments are recognised at fair value. The fair value
of the contracts is calculated using the market forward contract
rates prevailing at the period end date. The net gain or loss on
forward foreign exchange contracts at fair value is included within
revenue from other group activities.
Derivative financial assets 2013 2012
GBP'000 GBP'000
------------------------------------ -------- --------
Forward foreign exchange contracts
held to hedge cash flow - 33
Forward foreign exchange contracts 43 -
held for trading
------------------------------------ -------- --------
Total derivative financial assets 43 33
------------------------------------ -------- --------
Derivative financial liabilities 2013 2012
GBP'000 GBP'000
---------------------------------------- -------- --------
Forward foreign exchange contracts (25) -
held to hedge cash flow
Forward foreign exchange contracts
held for trading - (48)
---------------------------------------- -------- --------
Total derivative financial liabilities (25) (48)
---------------------------------------- -------- --------
Derivative financial instruments held to hedge cash flow
At 31 March 2013 there were outstanding contracts with a
principal value of GBP2,875,764 (31 March 2012: GBP2,685,811) 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 2013.
The net gain or loss on forward foreign exchange contracts held
to hedge cash flow is as follows:
Derivative financial instruments 2013 2012
held to hedge cash flow
GBP'000 GBP'000
-------------------------------------- -------- --------
Net (loss) / gain on forward foreign
exchange contracts at fair value
through profit or loss (82) 68
-------------------------------------- -------- --------
Derivative financial instruments held for trading
Two of the funds seeded by Record (the Record Currency FTSE
FRB10 Index Fund and the Record Currency Emerging Market Currency
Fund), use forward foreign exchange contracts in order to achieve a
return. The Record Currency - Euro Stress Fund used a variety of
instruments including forward foreign exchange contracts in order
to achieve a return. The forward foreign exchange contracts held by
the Record Currency FTSE FRB10 Index Fund and the Record Currency
Emerging Market Currency Fund are classified as financial assets
held for trading. At 31 March 2013 there were outstanding contracts
with a principal value of GBP13,893,809 (31 March 2012:
GBP9,112,251). The instruments held by the Record Currency - Euro
Stress Fund were presented within Current assets held for sale (see
note 18).
The net gain on forward foreign exchange contracts held for
trading is as follows:
Derivative financial instruments 2013 2012
held for trading
GBP'000 GBP'000
----------------------------------------- -------- --------
Net gain on forward foreign exchange
contracts at fair value through profit
or loss 454 197
----------------------------------------- -------- --------
17. 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.
Group Company
--------------------------- ------------------ ------------------
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- --------
Cash and cash equivalents
- Sterling 28,529 24,459 1,001 16
Cash and cash equivalents
- other currencies 496 113 - -
29,025 24,572 1,001 16
--------------------------- -------- -------- -------- --------
The Group holds short-term deposits that are made for varying
periods, depending on the cash requirements of the Group. 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.
Since 31 December 2011, the Group cash and cash equivalents
balance has incorporated the cash held by the Record Currency FTSE
FRB10 Index Fund and the Record Currency Emerging Market Currency
Fund (refer to note 18 for explanation of accounting treatment). As
at 31 March 2013, the cash held by these two funds totalled
GBP5,863,175 (31 March 2012: GBP4,241,817). The increase in cash
arising from consolidating these two funds on a line by line basis
with effect from 31 December 2011 was GBP3,996,678.
18. Current assets held for sale (disposal group)
When the Group intends to sell a disposal group, and if sale
within twelve months is highly probable, the disposal group is
classified as 'held for sale' and presented separately in the
statement of financial position.
A disposal group classified as 'held for sale' is measured at
the lower of its carrying amount immediately prior to the
classification as 'held for sale' and its fair value less costs to
sell. Gains and losses are recognised through profit or loss.
From time to time, the Group injects capital into funds operated
by the Group to trial new products (seed capital). If the Group is
able to exercise control over such a seeded fund by holding a
majority interest (whether the majority interest is held by Record
plc alone, or by combining the interests of Record plc and its
Directors), then such funds are considered to be under control of
the Group and as such the fund becomes a subsidiary of the Group in
accordance with SIC-12 and IAS 27.
The Group consolidates the assets of its subsidiaries on a line
by line basis, but where the Group is actively seeking to reduce
its holding in the fore-mentioned seeded funds within twelve months
through the sale of further units in these funds to external
investors, and the subsequent redemption of Record's own
investment, the investments in the funds are classified as being a
disposal group held for sale as it is considered highly probable
that the funds 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 funds after this time,
the Group considers whether an extension of the one year period is
applicable. If no extension to the period is applicable, then the
funds will cease to be classified as held for sale and will be
consolidated in full.
In December 2010, the Group invested GBP1,000,000 in the Record
Currency FTSE FRB10 Index Fund and a further GBP1,000,000 in the
Record Currency Emerging Market Currency Fund, and these were
accounted for as a disposal group held for sale on the basis
described above. In both cases, the Group still retained control
over each of the funds twelve months after the original investment.
Consequently, from 31 December 2011, both funds ceased to be
classified as held for sale and are now consolidated in full, on a
line by line basis.
In May 2011, the Group invested GBP1,000,000 in the Record
Currency - Euro Stress Fund, the only other investor in the fund
was Neil Record, a Director of Record plc. The Group retained
control over this fund from its inception, through to its
liquidation in September 2012. The investment in the fund was
classified as being a disposal group held for sale.
Group Company
---------------------------- ------------------- ------------------
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- -------- -------- --------
Seed capital classified
as being a disposal group
held for sale - 1,075 - 911
---------------------------- --------- -------- -------- --------
The underlying assets of the funds are cash deposits and forward
exchange contracts with tenors of three months or less which are
accounted for as derivatives measured at fair value through profit
or loss under IAS 39.
The net loss on financial instruments held as part of a disposal
group is as follows:
Group Company
--------------------------- ------------------ ------------------
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- --------
Net loss on financial
instruments held as part
of disposal group 68 299 57 91
--------------------------- -------- -------- -------- --------
19. Current liabilities
Trade and other payables are stated at their original invoice
value, as the interest that would be recognised from discounting
future cash payments over the short payment period is not
considered to be material.
Amounts falling due within one year
Group Company
------------------------------- ------------------ ------------------
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- -------- --------
Trade payables 277 196 - -
Amounts owed to Group
undertaking - - 1,717 948
Other payables 1 135 - -
Other tax and social security 285 319 - -
Accruals and deferred
income 2,109 1,844 - -
2,672 2,494 1,717 948
------------------------------- -------- -------- -------- --------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
Current tax liabilities
Group Company
----------------- ------------------ ------------------
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- -------- -------- --------
Corporation tax 760 900 25 -
----------------- -------- -------- -------- --------
20. 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.
2013 2012
--------------------------- ---------------------- ----------------------
GBP'000 Number GBP'000 Number
--------------------------- -------- ------------ -------- ------------
Authorised
Ordinary shares of 0.025p
each 100 400,000,000 100 400,000,000
--------------------------- -------- ------------ -------- ------------
Called up, allotted and
fully paid
Ordinary shares of 0.025p
each 55 221,380,800 55 221,380,800
--------------------------- -------- ------------ -------- ------------
Changes to the issued share capital
GBP'000 Number
---------------------------------------- -------- ------------
Ordinary shares of 0.025p each 55 221,380,800
Adjustment for net purchases and sales
held by EBT - (304,964)
As at 31 March 2011 55 221,075,836
Adjustment for net purchases and sales
held by EBT - (1,723,468)
As at 31 March 2012 55 219,352,368
Adjustment for net purchases and sales
held by EBT - (1,777,376)
As at 31 March 2013 55 217,574,992
---------------------------------------- -------- ------------
The Record plc Employee Benefit Trust (EBT) was formed to hold
shares acquired under the Record plc share-based compensation
plans. A total of 3,805,808 (2012: 2,028,432) 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. Under IFRS the EBT is considered
to be under de facto control of the Group, and has therefore been
consolidated into the Group financial statements.
Neither the purchase nor sale of own shares leads to a gain or
loss being recognised in the Group statement of comprehensive
income. Further information regarding the Record plc share-based
compensation plans and relevant transactions made during the year
are included in note 21.
21. Share-based payments
During the year ended 31 March 2013 the Group has managed the
following share-based compensation plans:
a) The Group Profit Share Scheme : deferred share awards issued
under the Group Profit Share Scheme are classified as share-based
payments with cash alternatives under IFRS 2.
b) The Record plc Share Scheme: share options issued under the
Record plc Share Scheme are classified as equity-settled
share-based payments under IFRS 2.
a) Group Profit Share Scheme
Share-based payments with cash alternatives
These transactions are compound financial instruments, which
include a debt element and a cash element. The fair value of the
debt component of the amounts payable to the employee is calculated
as the cash amount 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 award at
grant date less the cash forfeited in order to receive the share
award. The debt component is charged to profit or loss over the
period in which the award is earned and remeasured at fair value at
each reporting date, the equity component is charged to profit or
loss over the vesting period of the award.
The Group Profit Share Scheme allocates a proportion of
operating profits to a profit share pool to be distributed between
all employees of the Group. The Remuneration Committee has the
discretion to vary the proportion awarded to the profit share pool
between 25% and 35% of operating profits, with the intention of
maintaining an average level of 30% of operating profits over the
medium term. 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 using a
multiple decided by the Remuneration Committee. The multiple is
dependent on the level of seniority of the employee. 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 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.
Shares awarded under the Profit Share Scheme do not include any
vesting restrictions but rather restrictions over subsequent sale
and transfer, as described above. The full amount of cash and
shares awarded under the scheme are charged to the profit or loss
over the period in which the awards are earned.
b) The Record plc Share Scheme
Equity-settled share-based payments
The fair value of the amounts payable to employees under these
awards is recognised as an expense over the vesting period of the
award, with a corresponding increase in equity. All such awards
made by the Group involve the parent company granting rights to its
equity instruments to employees of its subsidiary. Consequently the
subsidiary measures the services received from its employees in
accordance with the above classification under IFRS2 and recognises
a corresponding increase in equity as a contribution from the
parent. The parent has the obligation to settle the transaction
with the subsidiary's employees and therefore recognises an
increase in its investment in the subsidiary and a corresponding
increase in equity.
The fair value of options granted is measured at grant date
using an appropriate valuation model. All awards are valued using
an appropriate valuation model, 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.
The Record plc Share Scheme (the "Share Scheme") was adopted by
the Company on 1 August 2008 and was initially created to allow
deferred share awards to be granted to new senior employees. During
the year ended 31 March 2009, awards in the form of tax-unapproved
options ("Unapproved Options") over shares with an aggregate value
at grant of GBP400,000 were granted to two senior employees under
the Share Scheme. The options became exercisable for nil
consideration in three equal tranches on the second, third and
fourth anniversary of the date of grant. The options became fully
vested this year.
During 2011, the Share Scheme was amended to include the ability
to grant HMRC--approved options ("Approved Options") to employees
of Record plc or its subsidiaries under a new Part 2 of the Share
Scheme. Unapproved Options may still be granted under the existing
unapproved part of the Share Scheme. The exercise price per share
of Approved Options must be no lower than the market value of a
share on the dealing day immediately preceding the date of grant.
Each participant may be granted Approved Options over shares with a
total market value of up to GBP30,000 on the date of grant. There
is no such limit on the value of Unapproved Options. Unapproved
Options may be granted with any exercise price (including nil), but
have recently been granted with a market-value exercise price in
the same way as the Approved Options.
Options over an aggregate of 2,220,000 shares were granted under
the Share Scheme during the year, of which 410,000 shares were made
subject to Unapproved Options and 1,810,000 to Approved Options.
All options were granted with an exercise price per share equal to
the share price prevailing at the time of grant. The Approved
Options become exercisable on the fourth anniversary of grant,
subject to the employee remaining in employment with the Group and
to the extent a performance condition based on the Company's total
shareholder return in comparison with a relevant peer group has
been met. The Unapproved Options each become exercisable in four
equal tranches on the first, second, third and fourth anniversary
of the date of grant, subject to the employee being in employment
with the Group at the relevant vesting date and to the extent
personal performance conditions have been satisfied.
Outstanding share options
At 31 March 2013, the total number of ordinary shares of 0.025p
outstanding under Record plc share compensation schemes was
4,120,000 (2012: 2,028,432). These deferred share awards and
options are over issued shares held in an Employee Benefit Trust.
Details of outstanding share options and deferred shares awarded to
employees are set out below:
Date of At 1 Granted Exercised At 31 Exercise Exercise Exercise
grant April March / vesting / vesting price
2012 2013 date: date:
From To
------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------
4/08/08 56,748 - (56,748) - 4/08/10 4/08/12 GBP0.00
1/09/08 71,684 - (71,684) - 1/09/10 1/09/12 GBP0.00
------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------
8/08/11 1,000,000 - - 1,000,000 8/08/12 8/08/15 GBP0.3180
------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------
8/08/11 300,000 - - 300,000 8/08/12 8/08/15 GBP0.3225
------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------
2/12/11 600,000 - - 600,000 2/12/15 2/12/15 GBP0.1440
------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------
18/12/12 - 1,810,000 - 1,810,000 18/12/13 18/12/16 GBP0.3098
------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------
18/12/12 - 410,000 - 410,000 18/12/16 18/12/16 GBP0.3098
------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------
Total
options 2,028,432 2,220,000 (128,432) 4,120,000
------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------
Weighted GBP0.25 GBP0.31 GBPnil GBP0.29
average
exercise
price
of options
------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------
During the year, shares vested on 4 August 2012 and 1 September
2012; the fourth anniversary of the respective schemes above. The
share price at each vesting date was GBP0.16 and GBP0.17 per share
respectively.
The Directors' interests in the combined share schemes are as
follows:
Ordinary shares held as at
31 March 2013 31 March 2012
----------------------------------- -------------- --------------
Record plc Group Profit Share
Scheme (interest in restricted
share awards)
James Wood-Collins 1,180,824 1,229,680
Leslie Hill 253,078 156,697
Bob Noyen 253,078 156,697
Steve Cullen* 58,026 50,097
Paul Sheriff ** - 776,910
----------------------------------- -------------- --------------
Record plc Share Scheme (interest
in unvested share options)
James Wood-Collins - 56,748
----------------------------------- -------------- --------------
* Steve Cullen was appointed Chief Financial Officer on 15 March
2013.
** As permitted by the scheme rules, these shares are held in
the name of the Director's spouse.
Performance measures
The Approved Option Scheme includes certain performance
criteria. At vesting date, a percentage of the total options
granted will vest according to the median Total Shareholder Return
(TSR) as measured against the FTSE 350 General Financial - Price
Index. The performance target table is given below:
Percentage by which Record's TSR is Percentage of option
below the median TSR performance of which vests
the Index
---------------------------------------------- ---------------------
Equal to or above the median TSR performance 100%
---------------------------------------------- ---------------------
Equal to or above 75% of the median
TSR performance 75%
---------------------------------------------- ---------------------
Equal to or above 50% of the median
TSR performance 50%
---------------------------------------------- ---------------------
Below 50% of the median TSR performance 0%
---------------------------------------------- ---------------------
The Record plc Share Incentive Plan
During the year, the Group started the Record plc Share
Incentive Plan (SIP), to encourage more widespread ownership of
Record plc shares by employees. The scheme is a tax-approved scheme
offering attractive tax savings for employees retaining their
shares in the scheme over the medium to long term.
As an incentive to employees, the Group matches every two shares
bought by employees with a free matching share. During the year,
the Group awarded 24,935 free shares to employees.
22. Non-controlling interest
Record plc has made investments in a number of funds where it is
in a position to be able to control those funds by virtue of the
size of its holding. Non-controlling interests occur when Record
plc is not the only investor in the fund. The non-controlling
interest is measured at cost plus movement in value of the third
party investment in the fund.
Three Directors of Record plc and four external investors have
purchased units in the two funds currently seeded by Record plc,
i.e. the Record Currency - FTSE FRB10 Index Fund, the Record
Currency - Emerging Market Currency Fund, and previously, also the
Record Currency - Euro Stress Fund. The mark to market value of
these units represents the only non-controlling interests in the
Group.
The two existing funds are considered to be under control of the
Group through majority interests. The Record Currency - Euro Stress
Fund was considered to be under control of the Group throughout its
existence.
Mark to market value of external holding in seeded funds
consolidated into the accounts of the Record Group
2013 2012
GBP'000 GBP'000
------------------------------------ -------- --------
Record Currency - FTSE FRB10 Index
Fund 871 528
Record Currency - Emerging Market
Currency Fund 2,775 1,572
Record Currency - Euro Stress Fund - 163
Total 3,646 2,263
------------------------------------ -------- --------
23. Financial risk management
The Group's current activities result in the following financial
risks and management responses to those risks in order to minimise
any resulting adverse effects on the Group's financial
performance.
Objectives, policies and processes for managing risk and the
methods used to measure the risk
Financial assets principally comprise trade receivables, cash
and cash equivalents and derivative financial assets. 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. 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 and Risk Committee.
The Company's material financial instruments are investments in
the seeded funds, and balances due to/from Group undertakings. The
Company's financial risk is managed as part of the Group financial
risk management process and therefore separate disclosures for the
Company have not been provided.
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 operates a policy of restricting its exposure to any
single bank to a maximum of GBP10m. All banking counterparties used
to hold Group cash have a credit rating EQUIVALENT TO a3 (Moody's)
or better.
The Group's maximum exposure to credit risk is as follows:
2013 2012
Financial assets at 31 March GBP'000 GBP'000
------------------------------------------ -------- --------
Trade receivables 4,825 4,268
Other receivables 40 216
Held for sale financial assets (disposal
group) - 1,075
Other financial assets at fair value
through profit or loss 43 33
Cash and cash equivalents 29,025 24,572
------------------------------------------ -------- --------
33,933 30,164
------------------------------------------ -------- --------
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 months More than
amount impaired past due 3 months
nor past past due
due
At 31 March 2013 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- ---------- ----------- ----------
Trade receivables 4,825 4,751 74 -
98% 2% 0%
------------------- --------- ---------- ----------- ----------
Carrying Neither 0-3 months More than
amount impaired past due 3 months
nor past past due
due
At 31 March 2012 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- ---------- ----------- ----------
Trade receivables 4,268 4,182 86 -
98% 2% 0%
------------------- --------- ---------- ----------- ----------
The Group offers standard credit terms of 30 days from 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 36 debtors' balances (2012:
37). The largest individual debtor corresponds to 31% of the total
balance (2012: 33%). Debtor days, based on the generally accepted
calculation of debtor days, is 95 days (2012: 76) This reflects the
quarterly billing cycle used by the Group for the vast majority of
its fees. As at 31 March 2013 only 2% of debt was overdue (2012:
2%) and the Directors consider this to be fully recoverable. No
debtors' balances have been renegotiated during the year or in the
prior year.
Liquidity risk
The Group is exposed to liquidity risk, namely that it may be
unable to meet its payment obligations as they fall due. The Group
maintains sufficient cash and marketable securities to be able to
meet all such obligations. Management review cash flow forecasts on
a regular basis to determine whether the Group has sufficient cash
reserves to meet the future working capital requirements and to
take advantage of business opportunities. The average creditor
payment period is 21 days (2012: 16 days).
Contractual maturity analysis for financial liabilities:
Carrying Due or due Due between Due between
amount in less 1 and 3 3 months
than 1 month months and 1 year
At 31 March 2013 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- -------------- ------------ ------------
Trade and other payables 278 278 - -
-------------------------- --------- -------------- ------------ ------------
Accruals 2,109 449 810 850
-------------------------- --------- -------------- ------------ ------------
Derivative financial
liabilities 25 - 25 -
-------------------------- --------- -------------- ------------ ------------
Carrying Due or due Due between Due between
amount in less 1 and 3 3 months
than 1 month months and 1 year
At 31 March 2012 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- -------------- ------------ ------------
Trade and other payables 331 331 - -
-------------------------- --------- -------------- ------------ ------------
Accruals 1,844 685 1,123 36
-------------------------- --------- -------------- ------------ ------------
Derivative financial
liabilities 48 26 22 -
-------------------------- --------- -------------- ------------ ------------
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.
Interest rate exposure
Fixed rate Floating Not directly Total
rate exposed
to interest
rate risk
At 31 March 2013 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------- --------- ------------- --------
Financial assets
Trade and other receivables - - 4,865 4,865
Financial assets at
fair value - - 43 43
Cash and cash equivalents 27,162 1,863 - 29,025
----------------------------- ----------- --------- ------------- --------
Total financial assets 27,162 1,863 4,908 33,933
----------------------------- ----------- --------- ------------- --------
Financial liabilities
Financial liabilities
at fair value through
profit or loss - - (25) (25)
Trade and other payables - - (278) (278)
Accruals - - (2,109) (2,109)
----------------------------- ----------- --------- ------------- --------
Total financial liabilities - - (2,412) (2,412)
----------------------------- ----------- --------- ------------- --------
Fixed rate Floating Not directly Total
rate exposed
to interest
rate risk
At 31 March 2012 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----------- --------- ------------- --------
Financial assets
Trade and other receivables - - 4,484 4,484
Financial assets at
fair value - - 1,108 1,108
Cash and cash equivalents 21,232 3,340 - 24,572
----------------------------- ----------- --------- ------------- --------
Total financial assets 21,232 3,340 5,592 30,164
----------------------------- ----------- --------- ------------- --------
Financial liabilities
Financial liabilities
at fair value through
profit or loss - - (48) (48)
Trade and other payables - - (331) (331)
Accruals - - (1,844) (1,844)
----------------------------- ----------- --------- ------------- --------
Total financial liabilities - - (2,223) (2,223)
----------------------------- ----------- --------- ------------- --------
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 at 31 March 2013
was a liability of GBP24,610 (2012: asset of GBP33,175). Losses on
the forward exchange contracts were GBP82,288 in the year (2012:
gain of GBP68,023). The future transactions related to the forward
exchange contracts are expected to occur within the next three
months. Changes in the fair values of forward exchange contracts
are recognised directly in profit or loss.
The Group 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 2013, the Group invoiced the
following amounts in currencies other than Sterling:
Local currency Value in
value reporting
currency
'000 GBP'000
------------------------- --------------- -----------
US Dollar (USD) 12,849 8,134
Swiss Franc (CHF) 6,917 4,671
Canadian Dollar (CAD) 648 409
Euro (EUR) 310 256
Australian Dollar (AUD) 17 11
------------------------- --------------- -----------
Total 13,481
------------------------- --------------- -----------
The value of revenues for the year ended 31 March 2013 that were
denominated in currencies other than Sterling was GBP13.5 million
(73% of total revenues). For the year ended 31 March 2012: GBP14.8
million (72% 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
Impact on Profit Impact on Total
After Tax for the Equity as at
year ended 31 March 31 March
-------------------------- ----------------------- ------------------
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ----------- ---------- -------- --------
10% weakening in the
GBP/$ exchange rate 618 778 618 778
10% strengthening in
the GBP/$ exchange rate (618) (778) (618) (778)
-------------------------- ----------- ---------- -------- --------
10% weakening in the
GBP/CHF exchange rate 355 276 355 276
10% strengthening in
the GBP/CHF exchange
rate (355) (276) (355) (276)
-------------------------- ----------- ---------- -------- --------
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 a historical basis and market
expectations for future movement. When applied to the average
Sterling/USD exchange rate of $1.58/GBP this would result in a
weakened exchange rate of $1.44/GBP and a strengthened exchange
rate of $1.75/GBP.
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 a historical basis and market
expectations for future movement. When applied to the average
Sterling/CHF exchange rate of CHF1.48/GBP this would result in a
weakened exchange rate of CHF1.34/GBP and a strengthened exchange
rate of CHF1.65/GBP.
Sensitivity analyses have not been disclosed for other
currencies as any reasonable range of change in exchange rate would
not have a material impact on profit or equity.
FTSE FRB10 Index Fund
The Group seeded a product in December 2010, which is a fund
that tracks the FTSE Currency FRB10 Index by holding a portfolio of
developed market currency deliverable forward exchange contracts.
As Record plc exerts significant control over the fund, it has been
consolidated into the Group's primary statements. The net assets of
the fund at 31 March 2013 were GBP2,037,488 (2012: GBP1,605,646).
The Group has provided the following data in respect of sensitivity
to this product.
Impact on Profit After Impact on Total Equity
Tax as at
for the year ended
----------------------- ---------------------------- ------------------------
31 March 2013 31 March 2012 31 March 2013 31 March
2012
----------------------- ------------- ------------- ------------- ---------
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------------- ------------- ------------- ---------
10% depreciation
in the FTSE Currency
FRB10 Index (124) (119) (124) (119)
----------------------- ------------- ------------- ------------- ---------
10% appreciation
in the FTSE Currency
FRB10 Index 124 119 124 119
----------------------- ------------- ------------- ------------- ---------
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 Market Currency Fund
The Group seeded a product in December 2010 called the Emerging
Market Currency Fund, which manages 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. As Record plc exerts significant control over the
fund, it has been consolidated into the Group's primary statements.
The net assets of the fund at 31 March 2013 were GBP3,823,603
(2012: GBP2,561,091). The Group has provided the following data in
respect of sensitivity to this product.
Impact on Profit After Impact on Total Equity
Tax as at
for the year ended
------------------------- ---------------------------- ------------------------
31 March 2013 31 March 2012 31 March 2013 31 March
2012
------------------------- ------------- ------------- ------------- ---------
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------- ------------- ------------- ---------
20% depreciation
in the Emerging Market
portfolio (514) (379) (514) (379)
------------------------- ------------- ------------- ------------- ---------
20% appreciation
in the Emerging Market
portfolio 514 379 514 379
------------------------- ------------- ------------- ------------- ---------
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.
24. Additional financial instruments disclosures
Financial instruments measured at fair value
IFRS 7 (Improving Disclosures about Financial Instruments)
requires the Group to present certain information about financial
instruments measured at fair value in the statement of financial
position.
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:
2013 Level Level Level
1 2 3
-------------------------- -------- -------- -------- --------
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- --------
Financial instruments
at fair value through
profit or loss
Forward foreign exchange
contracts used for
seeded funds 43 - 43 -
Forward foreign exchange
contracts used for
hedging (25) - (25) -
18 - 18 -
-------------------------- -------- -------- -------- --------
2012 Level Level 2 Level
1 3
-------------------------- -------- -------- -------- --------
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- --------
Financial instruments
at fair value through
profit or loss
Forward foreign exchange
contracts used for
seeded funds (48) - (48) -
Forward foreign exchange
contracts used for
hedging 33 - 33 -
(15) - (15) -
-------------------------- -------- -------- -------- --------
There have been no transfers between levels in the reporting
period (2012: none).
Basis for classification of financial instruments within the
fair value hierarchy
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.
Classes and fair value of financial instruments
Financial assets
At 31 March 2013 At 31 March 2012
---------------------------------- ------------------- -------------------
Carrying Fair Carrying Fair
value value value value
---------------------------------- --------- -------- --------- --------
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- -------- --------- --------
Derivative financial instruments
at fair value through profit
or loss 43 43 33 33
---------------------------------- --------- -------- --------- --------
Cash and cash equivalents 29,025 29,025 24,572 24,572
---------------------------------- --------- -------- --------- --------
Financial liabilities
At 31 March 2013 At 31 March 2012
---------------------------------- ------------------- -------------------
Carrying Fair Carrying Fair
value value value value
---------------------------------- --------- -------- --------- --------
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- -------- --------- --------
Derivative financial instruments
at fair value through profit
or loss 25 25 48 48
---------------------------------- --------- -------- --------- --------
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 and Financial Assets Liabilities
Receivables liabilities at fair at fair
measured value value through
at amortised through profit
cost profit or loss
or loss
------------------------ ----- ------------- -------------- --------- ---------------
At 31 March 2013 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----- ------------- -------------- --------- ---------------
Trade and other
receivables (excludes
prepayments) 15 4,865 - - -
Cash and cash
equivalents 0 29,025 - - -
Other financial
instruments at
fair value through 16,
profit or loss 18 - - 43 (25)
Current trade
and other payables 19 - (278) - -
Accruals 19 - (2,109) - -
------------------------ ----- ------------- -------------- --------- ---------------
33,890 (2,387) 43 (25)
------------------------ ----- ------------- -------------- --------- ---------------
Note Loans and Financial Assets Liabilities
Receivables liabilities at fair at fair
measured value value through
at amortised through profit
cost profit or loss
or loss
------------------------ ----- ------------- -------------- --------- ---------------
At 31 March 2012 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----- ------------- -------------- --------- ---------------
Trade and other
receivables (excludes
prepayments) 15 4,484 - - -
Cash and cash
equivalents 0 24,572 - - -
Other financial
instruments at
fair value through 16,
profit or loss 18 - - 33 (48)
Current trade
and other payables 19 - (331) - -
Accruals 19 - (1,844) - -
------------------------ ----- ------------- -------------- --------- ---------------
29,056 (2,175) 33 (48)
------------------------ ----- ------------- -------------- --------- ---------------
The Company does not hold financial instruments that require
further disclosure under IFRS 7.
25. Operating lease commitments
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.
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 (2012: GBP229,710).
The Group has considered the risks and rewards of ownership of
the leased property, and considers that they remain with the
lessor, consequently, this lease is recognised as an operating
lease.
At 31 March 2013 the Group had commitments under non-cancellable
operating leases relating to land and buildings as set out
below:
2013 2012
GBP'000 GBP'000
----------------------------------- -------- --------
Not later than one year 230 230
Later than one year and not later
than five years 517 747
747 977
----------------------------------- -------- --------
26. 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 13,
which includes a description of the nature of their business.
2013 2012
GBP'000 GBP'000
------------------------------------------ -------- --------
Amounts due from subsidiaries 1,661 1,188
Amounts due to subsidiaries (1,717) (948)
Interest received from subsidiaries
on intercompany loan balances 9 5
Net dividends received from subsidiaries 1,465 8,610
------------------------------------------ -------- --------
Amounts owed to and by related parties will be settled in cash.
No guarantees have been given or received. No provisions for
doubtful debts have been raised against amounts outstanding (2012:
nil), and no expense has been recognised during the period in
respect of bad or doubtful debts due from related parties (2012:
nil).
Transactions with seeded funds
From time to time, the Group injects capital into funds operated
by the Group to trial new products (seed capital). If the Group is
able to exercise control over such a seeded fund by holding a
majority interest (whether the majority interest is held by Record
plc alone, or by combining the interests of Record plc and its
Directors), then the fund is considered to be a related party.
Record Currency - FTSE FRB10 Index Fund and Record Currency -
Emerging Market Currency Fund are both related parties on this
basis, but there were no transactions between the Company and these
funds during the year. Similarly, the Record Currency Fund - Euro
Stress was a related party until its liquidation in September 2012.
Record plc received GBP854,213 on liquidation of its holding in the
fund.
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:
2013 2012
GBP'000 GBP'000
------------------------------ -------- --------
Short-term employee benefits 3,435 4,007
Post-employment benefits 289 342
Share-based payments 901 1,057
Dividends 873 3,792
------------------------------ -------- --------
5,498 9,198
------------------------------ -------- --------
Directors' remuneration
2013 2012
GBP'000 GBP'000
--------------------------------------- -------- --------
Aggregate emoluments of the Directors
Emoluments (excluding pension
contribution) 2,423 2,618
Gains made on exercise of share
options 9 18
Pension contribution 121 146
--------------------------------------- -------- --------
During the year, five Directors of the Company (2012: four)
participated in the Group Personal Pension Plan, a defined
contribution scheme.
27. Capital management
The Group's objectives when managing capital are (i) to
safeguard the Group's ability to continue as a going concern, (ii)
to provide an adequate return to its shareholders, and (iii) to
meet regulatory capital requirements set by the UK Financial
Conduct Authority (previously the Financial Services
Authority).
The Group sets the amount of capital in proportion to risk. The
Group manages the capital structure and makes adjustments to it in
light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or
adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders, or
issue new shares. The Group had no debt in the current or prior
financial year and consequently does not calculate a
debt-to-adjusted capital ratio.
For regulatory capital purposes Record plc is subject to
consolidated financial supervision by the Financial Conduct
Authority (FCA). Our regulatory capital requirements are in
accordance with FCA rules consistent with the Capital Requirements
Directive. Our financial resources have exceeded our financial
resource requirements (regulatory capital requirements) at all
times during the year. Further information is provided in the
Business Review.
28. Ultimate controlling party
As at 31 March 2013 the Company had no ultimate controlling
party, nor at 31 March 2012.
29. Post reporting date events
No adjusting or significant non-adjusting events have occurred
between the reporting date and the date of authorisation.
30. Statutory Accounts
This statement was approved by the Board on 10 June 2013. The
financial information set out above does not constitute the
Company's statutory accounts.
The statutory accounts for the financial year ended 31 March
2012 have been delivered to the Registrar of Companies, and those
for the year ended in 31 March 2013 will be delivered in due
course. The auditor has reported on those accounts; the reports
were unqualified, did not include a reference to any matters to
which the auditor 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 in respect of either set
of accounts.
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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