TIDMREC
RNS Number : 2692I
Record PLC
23 November 2018
RECORD plc
PRESS RELEASE
23 November 2018
INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS TO 30 SEPTEMBER
2018
Record plc, the specialist currency manager, today announces its
unaudited results for the six months to 30 September 2018.
Financial headlines:
-- AUME(1) broadly flat in USD terms at $61.8bn (31 March 2018:
$62.2bn)
-- AUME increase of 7% in GBP terms at GBP47.4bn (31 March 2018:
GBP44.3bn)
-- Client numbers increased to 66 (31 March 2018: 60)
-- Performance fees of GBP1.0m (six months to 30 September 2017:
GBPnil)
-- Revenue up 3% to GBP12.6m (six months to 30 September 2017:
GBP12.2m)
-- Operating margin of 32% (six months to 30 September 2017:
31%)
-- Profit before tax increased by 5% to GBP4.0m (six months to
30 September 2017: GBP3.8m)
-- Basic EPS of 1.63 pence (six months to 30 September 2017:
1.55 pence)
-- Strong financial position with shareholders' equity of
GBP26.4m (30 September 2017: GBP25.8m)
-- Interim dividend of 1.15 pence per share will be paid on 28
December 2018 (interim dividend in respect of six months to 30
September 2017: 1.15 pence per share)
Key developments:
-- Encouraging range of new business opportunities across
products and geographies.
-- Continued competition and fee pressure in Passive Hedging in
particular.
-- Further innovation in new and existing products, as
illustrated by the addition of fifth "Range-Trading" strand to
Record's Multi-Strategy product, and the incorporation of ESG
factors into currency management.
Commenting on the results, James Wood-Collins, Chief Executive
Officer of Record plc, said:
"As financial markets and client demands evolve, opportunities
continue to arise for new and enhanced services. We are working
hard alongside our clients to meet such demand.
"Competition and fee pressure in Passive Hedging in particular
continue to put pressure on operating margins. Our approach of
investing in innovative solutions to meet client demand requires
ongoing investment both in systems and people.
"Our diversified product suite and our ability to offer tailored
solutions to clients and potential clients continues to develop.
This is exemplified by the addition of a fifth 'Range Trading'
strand to our Multi-Strategy product, and starting the adoption of
ESG factors into elements of our investment process.
"We were pleased to announce Record's first performance fees
since March 2016, reinforcing progress made in product enhancement
and diversification.
"We are focused on maintaining the highest levels of client
service and innovation with the aim of taking full advantage of the
opportunities arising, and of making further progress in the second
half of the financial year."
(1) As a currency manager, Record manages only the impact of
foreign exchange and not the underlying assets, therefore its
"assets under management" are notional rather than real. To
distinguish this from the AUM of conventional asset managers,
Record uses the concept of assets under management equivalents
"AUME" and by convention this is quoted in US dollars. A full
definition of AUME is provided at the end of this document.
Analyst briefing
There will be a presentation for analysts at 9.30am on Friday 23
November 2018 at Cenkos plc offices: 6-8 Tokenhouse Yard, London,
EC2R 7AS. 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, Ollie Hoare
Chief Executive Officer's statement
The six months to 30 September 2018 saw AUME broadly unchanged
in US dollar terms and increased in sterling terms. Management fees
declined modestly from both halves last year, with performance fees
contributing to an increase in revenues and profits.
Investment performance overview
Enhanced Passive Hedging continued to offer opportunities to add
value for clients, as demonstrated by the representative account
shown in the "Product investment performance" section. For US
Dynamic Hedging clients, performance over the period was broadly
positive as the US dollar generally strengthened.
Performance of Record's Currency for Return strategies was
mixed, with weakness in emerging market currencies contributing to
negative returns in the Emerging Market strategy and to a lesser
extent the Multi-Strategy product.
An overview of the market environment that contributed to this
performance can be found in the "Market overview" section.
Asset flows
AUME declined over the period by 0.6% in US dollar terms to
$61.8 billion, and grew by 7.0% in sterling terms to GBP47.4
billion. Net flows were flat over the period, with net inflows in
Currency for Return and Dynamic Hedging of $0.6 billion and $0.4
billion respectively, offset by net outflows in Passive Hedging of
$1.0 billion. Market and exchange rate movements together
contributed to the modest decline in AUME over the period, as set
out in the "AUME development" section.
Products and product innovation
We continue to focus on consistently enhancing existing
products, as well as developing new products and strategies in
response to client demand and market opportunities. Initiatives
underway during the period include the continued adoption of
enhanced Passive Hedging amongst our clients, with its consequent
requirement for discretionary oversight to target episodic
opportunities.
We have also continued to develop the Multi-Strategy product,
with the introduction of a fifth strand, exploiting the tendency
for certain currency pairs to show Range-Trading characteristics.
This strand is being incorporated into client mandates on a rolling
basis, and represents the most significant evolution of
Multi-Strategy since its launch in 2012.
A further product development underway is to incorporate
environmental, social and governance ("ESG") factors into our
investment practice. We have long had a policy of managing our
business in a socially-responsible fashion, and are now in the lead
in understanding and applying these factors to currency management.
This has led to Record becoming a signatory to the Principles for
Responsible Investment, and agreeing to seed a strategy which tilts
the Multi-Strategy currency portfolio in a pro-ESG manner.
During the period we extended our relationship with WisdomTree,
the New York-headquartered exchange-traded fund and exchange-traded
product sponsor and asset manager. This has taken the form of a
licensing agreement with WisdomTree Asset Management, Inc. to
provide currency signals for use in connection with a new range of
models-based active exchange-traded funds. These signals include
Record's first framework for hedging emerging market currencies. We
are confident that this approach can also be applied in a broad
number of contexts, including for other clients and investors.
Clients and distribution
Client numbers have grown by 10% over the period, from 60 to 66.
Following the period end we were notified of the termination of
Passive Hedging mandates for two commercial relationships
representing up to seven clients, as previously announced. We
continue to target new clients and new categories of clients, as
illustrated by the launch earlier this year of the Record Currency
Multi-Strategy Fund. Although performance since inception of the
Fund has been disappointing, we continue to emphasise the
strategy's longer-term track record to potential investors.
During the period Record engaged New Change FX, an independent
provider of foreign exchange data and transaction cost analysis, to
further enhance our commitment to deliver minimum cost and maximum
transparency for clients.
Cost efficiency and transparency are a fundamental part of
Record's service and this development will strengthen what we can
offer clients.
Brexit
We continue to monitor closely developments with respect to
Brexit. Our plan, should the UK's exit from the European Union
result in the permanent loss of "passporting" permissions, remains
paused as outlined in Record's Annual Report 2018. We have further
developed our contingency plans to address the risk of a "hard"
Brexit with no transition period or other arrangements from March
2019, including communicating these plans to all affected
clients.
Financial highlights
Management fees of GBP11.4 million represented a 5% decline on
the first half of last year, and a 1% decline on the second half,
in part due to switching by some clients to management plus
performance fee structures. Performance fees of GBP1.0 million
(prior period: GBPnil) contributed to growth in revenues to GBP12.6
million, representing growth of 3% against the first half of last
year, and 9% against the second half.
Administrative expenses were broadly maintained at GBP8.3
million, flat against the first half of last year and a 2% increase
against the second half. As a result the operating margin grew
modestly to 32%, with profit before tax of GBP4.0 million, a 5%
rise on the first half of last year, and 14% on the second. Further
details on financial performance in the period can be found in the
"Financial review".
Board changes and dividend
David Morrison resigned from the Board as a non-executive
director with effect from 30 September 2018, having served his full
nine-year term and hence no longer being deemed independent under
the UK Corporate Governance Code. On behalf of all my colleagues, I
would like to thank David for his advice and guidance and to wish
him well for the future.
With effect from 1 October 2018 the Remuneration Committee is
chaired by Tim Edwards. The Nomination Committee continues to be
chaired by Jane Tufnell who is also the Senior Independent
Director, and the Audit and Risk Committee continues to be chaired
by Rosemary Hilary.
In line with Record's dividend policy, an interim dividend of
1.15 pence per share (interim dividend in respect of H1-18: 1.15
pence per share), will be paid on 28 December 2018 to shareholders
on the register at 7 December 2018.
Outlook
Record's future success will depend in large part on our
responsiveness to client demand and market opportunities. The
Group's management and staff are working hard to identify such
opportunities and to convert them into profitable business. On
behalf of the Board, I would like to thank our clients for their
continued support, and our staff for their commitment and hard
work.
James Wood--Collins
Chief Executive Officer
22 November 2018
Interim management review
Market overview
In the absence of any major surprises in the development of
monetary policy, currency movements in the six months to 30
September 2018 were driven largely by mounting political risks for
the global economy.
Trade tensions globally continued to unnerve markets. The US
placed tariffs on China, and the election of an anti-establishment
government in Italy put it on a collision course with European
institutions. Also, the lack of meaningful progress on negotiations
between the UK and EU seemingly increased the odds of a disruptive
Brexit.
The sustained economic outperformance in the US, in combination
with protectionist measures and the uncertain global outlook, made
the most evident currency trend one of US dollar strength, with the
dollar appreciating approximately 5.5% against a basket of major
developed currencies.
Operating review
Product investment performance
Record's enhanced Passive Hedging service aims to reduce the
cost of hedging by introducing flexibility into the implementation
of currency hedges, without changing the hedge ratios.
The table below shows the total value added relative to a
fixed-tenor benchmark for an enhanced Passive Hedging programme for
a representative account.
Value added
in the 6 months Value added
ended 30 September since inception
2018 p.a.
---------------------------------
Value added by enhanced Passive
Hedging programme relative to
a fixed-tenor benchmark(2) 0.03% 0.13%
-------------------- -----------------
(2) Since inception in October 2014.
During the period, US-based Dynamic Hedging clients experienced
a broad based strengthening of the US dollar against developed
market currencies. The Dynamic Hedging programmes responded as
expected; hedge ratios varied systematically in response to
currency movements and hedging returns in the programmes were
positive.
The FTSE Currency FRB10 Index outperformed as gains in April and
May offset losses over the later months, largely attributable to
appreciation in the US dollar on the basis of strong economic
results.
The Emerging Market strategy underperformed over the period,
primarily as a result of depreciation in the Turkish lira linked to
concerns over the independence of the Central Bank of Turkey. More
generally, rising US interest rates pressured emerging market
currency performance.
Investment performance in Record's Multi-Strategy offerings
produced negative returns over the period as positive returns in
the FRB10 strategy were offset by underperformance in the Emerging
Markets, Momentum and Value strategies.
Volatility
Return since since
Half year inception inception
Fund name Gearing return p.a. p.a.
---------------------------------- -------- ---------- ------------- -----------
Record Currency - FTSE
FRB10 Index Fund(3) 1.8 1.55% 1.55% 6.88%
Record Currency - Emerging
Market Currency Fund(4) 1 (3.61%) 0.93% 6.39%
Record - Currency Multi-Strategy
Fund(5) 5 (9.60%) n/a n/a
---------------------------------- -------- ---------- ------------- -----------
Volatility
Return since since
Half year inception inception
Index/composite returns return p.a. p.a.
------------------------------------ ---------- ------------- -----------
FTSE Currency FRB10 GBP excess
return(6) 0.77% 2.21% 4.54%
Record Multi-Strategy Composite(7) (3.67%) 0.97% 2.68%
------------------------------------ ---------- ------------- -----------
(3) Record Currency - FTSE FRB10 Index Fund return data is since
inception in December 2010, GBP base.
(4) Record Currency - Emerging Market Currency Fund return data
is since inception in December 2010, GBP base.
(5) Record - Currency Multi-Strategy Fund return data is since
inception in February 2018, GBP base.
(6) FTSE Currency FRB10 GBP excess return data is since December
1987, GBP base.
(7) Record Multi-Strategy Composite return data is since
inception in July 2012, showing excess returns data gross of fees
in USD base and has been scaled to a 4% target volatility.
AUME development
In US dollar terms AUME decreased marginally over the period by
0.6% to $61.8 billion, increasing in sterling terms by 7.0% to
GBP47.4 billion. The AUME movement over the six month period is
analysed as follows:
AUME movement analysis in the six months to 30 September
2018
$ billion
-------------------------------------------------------- ----------
AUME at 1 April 2018 62.2
Net client flows +0.0
Equity and other market impact +1.3
Foreign exchange impact and mandate volatility scaling -1.7
AUME at 30 September 2018 61.8
-------------------------------------------------------- ----------
Net client flows by product in the six months to 30 September
2018
$ billion
--------------------- ----------
Dynamic Hedging +0.4
Passive Hedging -1.0
Currency for Return +0.6
Multi-product +0.0
--------------------- ----------
Total flows +0.0
--------------------- ----------
The net inflow into Currency for Return of +$0.6 billion
represents a new Multi-Strategy client win during the period
charged on a management plus performance fee basis. Normal course
adjustments to the size of current Dynamic Hedging mandates
resulted in net inflows of +$0.4 billion. Passive Hedging net flows
of -$1.0 billion represent one new Passive Hedging client (+$1.9
billion) offset by the outflow of -$1.7 billion relating to a
terminated mandate at the beginning of the period plus normal
course adjustments to current mandates for other Passive Hedging
clients of -$1.2 billion.
Client numbers were 66 at the end of the period (H1-18: 59).
Equity and other market performance
Record's AUME is affected by movements in equity and other
market levels because substantially all the Passive and Dynamic
Hedging, and some of the Multi-product mandates, are linked to
equity and other market levels.
Additional detail on the composition of assets underlying
Hedging and Multi-product mandates is provided below to help
illustrate more clearly the impact of equity and fixed income
market movements on these mandate sizes.
Class of assets underlying mandates by product as at 30
September 2018
Fixed
Equity income Other
% % %
----------------- ------- -------- ------
Dynamic Hedging 95 - 5
Passive Hedging 27 41 32
Multi-product - - 100
----------------- ------- -------- ------
Forex
As 88% of the Group's AUME is non--US dollar denominated,
foreign exchange movements may have an impact on AUME when
expressing non--US dollar AUME in US Dollars, although this
movement does not have an equivalent impact on the sterling value
of fee income.
Product mix
The product mix has remained broadly constant during the period,
as shown in the table below.
AUME composition by product
30 Sep 18 30 Sep 17 31 Mar 18
------------ ------------ ------------
$bn % $bn % $bn %
--------------------- ------ ---- ------ ---- ------ ----
Dynamic Hedging 4.4 7 4.5 7 4.3 7
Passive Hedging 51.7 84 51.7 85 53.0 85
Currency for Return 2.4 4 1.7 3 1.6 3
Multi-product 3.0 5 3.0 5 3.0 5
Cash and other 0.3 - 0.3 - 0.3 -
--------------------- ------ ---- ------ ---- ------ ----
Total 61.8 100 61.2 100 62.2 100
--------------------- ------ ---- ------ ---- ------ ----
Financial review
Revenue
Record's revenue derives from the provision of currency
management services, which can be charged through management fee
only or management plus performance fee structures. More recently,
the enhancements made by Record to the Passive Hedging product in
response to changes in FX market structure have resulted in some
clients moving from a management fee only to a lower management fee
with a performance-related fee.
Aggregate management fee income reduced by 5% to GBP11.4 million
for the six month period ended 30 September 2018 (H1-18: GBP12.0
million). Performance fees of GBP1.0 million were earned during the
period (H1-18: GBPnil), relating to performance over the six month
period ended 30 June 2018.
Dynamic Hedging management fees of GBP2.3 million remained
broadly consistent with the second half of last year, and down 18%
versus the equivalent period last year predominantly due to
UK-based Dynamic Hedging clients either converting to Passive
Hedging or terminating in the second quarter of that year.
Passive Hedging management fees decreased by 6% over the
equivalent period last year as some clients moved from a management
fee only to a lower management fee with a performance-related fee.
Passive Hedging management fees remained at 53% of total management
fees, in line with prior periods.
Multi-Strategy Currency for Return management fees remained
broadly consistent with prior periods notwithstanding net inflows
of $0.6 billion in the period. This is due to one new client
mandate starting during the period on a management plus performance
fee basis, and one existing client mandate moving to a bespoke
service on a different and lower fee rate.
Revenue from the Multi-product category has remained broadly
constant, and generated management fees of GBP2.2 million in the
period.
Revenue analysis (GBPm)
Six months Six months Year
ended ended ended
30 Sep 18 30 Sep 17 31 Mar 18
-------------------------------- ----------- ----------- ----------
Management fees
Dynamic Hedging 2.3 2.8 5.1
Passive Hedging 6.0 6.4 12.6
Currency for Return 0.9 0.8 1.8
Multi-product 2.2 2.0 4.0
-------------------------------- ----------- ----------- ----------
Total management fees 11.4 12.0 23.5
Performance fees 1.0 - -
Other currency services income 0.2 0.2 0.3
-------------------------------- ----------- ----------- ----------
Total revenue 12.6 12.2 23.8
-------------------------------- ----------- ----------- ----------
Other currency services income consists of fees from ancillary
currency management services, including gains or losses made on
derivative financial instruments employed by the Group's seed funds
or as a result of hedging activities, and other FX adjustments.
Average management fee rates by product (bps p.a.)
Six months Six months
ended ended Year ended
Product 30 Sep 18 30 Sep 17 31 Mar 18
--------------------- ----------- ----------- -----------
Dynamic Hedging 14 14 14
Passive Hedging 3 3 3
Currency for Return 11 17 16
Multi-product 19 18 18
--------------------- ----------- ----------- -----------
The average management fee rates for most product lines have
remained broadly constant over the six months ended 30 September
2018. The average management fee rate for Currency for Return has
fallen as the combined result of one new client mandate starting
during the period on a management plus performance fee basis and
one existing client mandate moving to a bespoke service on a
different and lower fee rate, plus the impact of increased scaling
of portfolio sizes for mandates with defined volatility targets,
where the fee rate is linked to the target volatility.
Expenditure
Expenditure analysis (GBPm)
Six months Six months Year
ended ended ended
30 Sep
18 30 Sep 17 31 Mar 18
---------------------------------- ----------- ----------- ----------
Personnel costs 4.1 4.0 7.9
Non-personnel costs 2.5 2.7 5.4
---------------------------------- ----------- ----------- ----------
Administrative expenditure
excluding Group Profit Share 6.6 6.7 13.3
Group Profit Share 1.7 1.6 3.1
---------------------------------- ----------- ----------- ----------
Total administrative expenditure 8.3 8.3 16.4
---------------------------------- ----------- ----------- ----------
Other income and expenditure 0.1 - (0.2)
Total expenditure 8.4 8.3 16.2
---------------------------------- ----------- ----------- ----------
The total administrative expenditure for the period was GBP8.3
million, unchanged on the six months ended 30 September 2017.
Personnel costs excluding Group Profit Share ("GPS") increased
by 3% compared to the equivalent period last year, broadly as a
result of inflationary increases.
Non-personnel costs for the period are in-line with the six
months ended 30 September 2017 after adjusting for the one-off
costs of GBP0.2 million relating to the Tender Offer in July
2017.
Group Profit Share ("GPS") Scheme
The cost of the GPS scheme is GBP1.7 million for the period. The
movements are in line with operating profit and the GPS continues
to be calculated at 30% of pre-GPS operating profit in the relevant
period.
Operating profit and margins
Operating profit for the period was GBP4.0 million, up GBP0.2
million on the equivalent period last year. The performance fee of
GBP1.0 million has contributed to an increase in operating profit
margin to 32% (H1-18: 31%) for the period.
Cash flow
The Group generated GBP3.5 million of cash from operating
activities after tax during the period (H1--18: GBP3.9 million).
Taxation paid during the period reduced to GBP0.4 million compared
to GBP0.7 million for the same period last year.
The Group paid dividends totalling GBP3.3 million in the period,
more information for which is given in note 5 to the financial
statements.
Dividends and Capital
In line with the Board's capital and dividend policy, the Group
will pay an interim dividend of 1.15 pence per share in respect of
the six month period equating to a distribution of GBP2.3 million,
following which the business will retain cash and money market
instruments on the balance sheet which are significantly in excess
of financial resource requirements required for regulatory
purposes.
The Group has no debt and shareholders' funds were GBP26.4
million at 30 September 2018 (H1-18: GBP25.8 million).
Principal risks and uncertainties
The principal risks currently facing the Group and those that we
anticipate that the Group will be exposed to in the short term
remain the same as those outlined in the Annual Report 2018.
These risks are: Brexit; margin compression; concentration risk;
people and employment risk; market liquidity risk; treasury risk;
credit risk; technology and information security risk; operational
control failure; product underperformance.
An update on Record's preparation for the UK exiting the EU is
given in the Chief Executive's statement.
Statement of Directors' responsibilities
The interim financial report is the responsibility of the
Directors who confirm that to the best of their knowledge:
-- the condensed set of consolidated financial statements has
been prepared in accordance with IAS 34 "Interim Financial
Reporting" as endorsed and adopted by the EU;
-- the interim management review includes a fair review of the information required by:
o DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of consolidated financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
o DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the Annual Report 2018 that could do so.
The Directors of Record plc are listed on the Record plc website
at ir.recordcm.com/board-of-directors.
Neil Record Steve Cullen
Chairman Chief Financial Officer
22 November 2018
Independent review report to Record plc
Report on the interim financial statements
Our conclusion
We have reviewed Record plc's interim financial statements (the
"interim financial statements") in the Interim Report 2018 of
Record plc for the 6 month period ended 30 September 2018. Based on
our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in
all material respects, in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Consolidated statement of financial position as at 30 September 2018;
-- the Consolidated statement of comprehensive income for the period then ended;
-- the Consolidated statement of cash flows for the period then ended;
-- the Consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim Report
2018 have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Interim Report 2018, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the Interim
Report 2018 in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Interim Report 2018 based on our
review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with the International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim
Report 2018 and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Reading
22 November 2018
Financial statements
Consolidated statement of comprehensive income
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Sep 18 30 Sep 17 31 Mar 18
Note GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ ----- ----------- ----------- ----------
Revenue 3 12,624 12,203 23,834
Cost of sales (194) (165) (311)
------------------------------------------------------------------ ----- ----------- ----------- ----------
Gross profit 12,430 12,038 23,523
Administrative expenses (8,295) (8,330) (16,424)
Other income or expense (138) 49 173
Operating profit 3,997 3,757 7,272
Finance income 52 36 66
Finance expense (11) - (10)
------------------------------------------------------------------ ----- ----------- ----------- ----------
Profit before tax 4,038 3,793 7,328
Taxation (822) (553) (1,182)
------------------------------------------------------------------ ----- ----------- ----------- ----------
Profit after tax and total comprehensive income for the period 3,216 3,240 6,146
Earnings per share for the period (expressed in pence per share)
Basic earnings per share 4 1.63p 1.55p 3.03p
Diluted earnings per share 4 1.61p 1.52p 2.98p
------------------------------------------------------------------ ----- ----------- ----------- ----------
Consolidated statement of financial position
Unaudited Unaudited Audited
As at As at As at
30 Sep 18 30 Sep 17 31 Mar 18
Note GBP'000 GBP'000 GBP'000
--------------------------------------------------- ----- ---------- ---------- ----------
Non-current assets
Property, plant and equipment 816 840 910
Intangible assets 321 170 228
Investments 6 1,075 - 1,115
Deferred tax assets 34 256 86
--------------------------------------------------- ----- ---------- ---------- ----------
Total non-current assets 2,246 1,266 2,339
--------------------------------------------------- ----- ---------- ---------- ----------
Current assets
Trade and other receivables 8,425 6,956 6,775
Derivative financial assets 10 178 529 266
Money market instruments with maturity > 3 months 7 9,804 13,304 10,198
Cash and cash equivalents 7 12,962 13,023 12,498
--------------------------------------------------- ----- ---------- ---------- ----------
Total current assets 31,369 33,812 29,737
--------------------------------------------------- ----- ---------- ---------- ----------
Total assets 33,615 35,078 32,076
--------------------------------------------------- ----- ---------- ---------- ----------
Current liabilities
Trade and other payables (3,930) (3,304) (2,630)
Corporation tax liabilities (772) (790) (399)
Financial liabilities 6 (2,361) (4,761) (2,467)
Derivative financial liabilities 10 (153) (410) (29)
--------------------------------------------------- ----- ---------- ---------- ----------
Total current liabilities (7,216) (9,265) (5,525)
--------------------------------------------------- ----- ---------- ---------- ----------
Total net assets 26,399 25,813 26,551
--------------------------------------------------- ----- ---------- ---------- ----------
Equity
Issued share capital 9 50 50 50
Share premium account 2,243 2,035 2,237
Capital redemption reserve 26 26 26
Retained earnings 24,080 23,702 24,238
--------------------------------------------------- ----- ---------- ---------- ----------
Total equity 26,399 25,813 26,551
--------------------------------------------------- ----- ---------- ---------- ----------
Approved by the Board on 22 November 2018 and signed on its
behalf by:
Neil Record Steve Cullen
Chairman Chief Financial Officer
Consolidated statement of changes in equity
Called Capital
up share Share premium redemption Retained
capital account reserve earnings Total equity
Unaudited Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ---- ----------- --------------- ------------- ----------- --------------
As at 1 April 2017 55 1,971 20 34,785 36,831
Profit and total
comprehensive income
for the period - - - 3,240 3,240
Dividends paid 5 - - - (4,550) (4,550)
Share buy-back and
cancellation (5) - 6 (10,000) (9,999)
Own shares acquired
by EBT - - - (159) (159)
Release of shares
held by EBT - 64 - 301 365
Share-based payments - - - 85 85
------------------------- ---- ----------- --------------- ------------- ----------- --------------
Transactions with
shareholders (5) 64 6 (14,323) (14,258)
------------------------- ---- ----------- --------------- ------------- ----------- --------------
As at 30 September
2017 50 2,035 26 23,702 25,813
------------------------- ---- ----------- --------------- ------------- ----------- --------------
Profit and total
comprehensive income
for the period - - - 2,906 2,906
Dividends paid 5 - - - (2,260) (2,260)
Own shares acquired
by EBT - - - (793) (793)
Release of shares
held by EBT - 202 - 940 1,142
Share-based payments - - - (257) (257)
------------------------- ---- ----------- --------------- ------------- ----------- --------------
Transactions with
shareholders - 202 - (2,370) (2,168)
------------------------- ---- ----------- --------------- ------------- ----------- --------------
As at 31 March 2018 50 2,237 26 24,238 26,551
------------------------- ---- ----------- --------------- ------------- ----------- --------------
Unaudited
Profit and total
comprehensive income
for the period - - - 3,216 3,216
Dividends paid 5 - - - (3,252) (3,252)
Own shares acquired
by EBT - - - (620) (620)
Release of shares
held by EBT - 6 - 463 469
Share-based payments - - - 35 35
Transactions with
shareholders - 6 - (3,374) (3,368)
------------------------- ----------- --------------- ------------- --------------
As at 30 September
2018 50 2,243 26 24,080 26,399
------------------------- ---- ----------- --------------- ------------- ----------- --------------
Consolidated statement of cash flows
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Sep 18 30 Sep 17 31 Mar 18
Note GBP'000 GBP'000 GBP'000
----------------------------------------------------------- ----- ----------- ----------- ----------
Net cash inflow from operating activities after tax 8 3,526 3,930 2,746
Cash flow from investing activities
Purchase of intangible software (124) - (82)
Purchase of property, plant and equipment (16) (58) (236)
Sale of money market instruments with maturity > 3 months 394 4,798 7,904
Interest received 42 46 77
----------------------------------------------------------- ----- ----------- ----------- ----------
Net cash inflow/(outflow) from investing activities 296 4,786 7,663
Cash flow from financing activities
Purchase of own shares (380) (10,236) (10,367)
Dividends paid to equity shareholders 5 (3,252) (4,550) (6,810)
----------------------------------------------------------- ----- ----------- ----------- ----------
Cash outflow from financing activities (3,632) (14,786) (17,177)
----------------------------------------------------------- ----- ----------- ----------- ----------
Net decrease in cash and cash equivalents in the period 190 (6,070) (6,768)
----------------------------------------------------------- ----- ----------- ----------- ----------
Effect of exchange rate changes 274 (27) 146
Cash and cash equivalents at the beginning of the period 12,498 19,120 19,120
----------------------------------------------------------- ----- ----------- ----------- ----------
Cash and cash equivalents at the end of the period 12,962 13,023 12,498
----------------------------------------------------------- ----- ----------- ----------- ----------
Closing cash and cash equivalents consists of:
Cash 7 2,042 3,016 4,411
Cash equivalents 7 10,920 10,007 8,087
----------------------------------------------------------- ----- ----------- ----------- ----------
Cash and cash equivalents 12,962 13,023 12,498
----------------------------------------------------------- ----- ----------- ----------- ----------
Notes to the consolidated financial statements
These consolidated financial statements exclude disclosures that
are immaterial and judged to be unnecessary to understand our
results and financial position.
1 Basis of preparation
The condensed set of consolidated financial statements included
in this interim financial report has been prepared in accordance
with International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union. The financial
information set out in this interim report does not constitute
statutory accounts as defined in Section 434 of the Companies Act
2006. The Group's statutory financial statements for the year ended
31 March 2018 (which were prepared in accordance with IFRSs as
adopted by the European Union) have been delivered to the Registrar
of Companies. The auditor's report on those financial statements
was unqualified and did not contain statements under Section 498(2)
or Section 498(3) of the Companies Act 2006.
The accounting policies for recognition, measurement,
consolidation and presentation as set out in the Group's Annual
report and accounts for the year ended 31 March 2018 have been
applied in the preparation of the IFRS condensed consolidated half
year financial information except as noted below.
Application of new standards
i) IFRS 9 "Financial Instruments" (IFRS 9)
IFRS 9 replaces the classification and measurement models
previously contained in IAS 39 "Financial Instruments: Recognition
and Measurement" (IAS 39). On adoption of IFRS 9 the classification
of both the Group's financial assets and financial liabilities were
reviewed. There was no re-classification as a result of the
application of IFRS 9.
In addition, IFRS 9 introduces an expected loss model for the
assessment of impairment of financial assets. Under the expected
loss model, impairment losses are recorded if there is an
expectation of credit losses, even in the absence of a default
event. This model is not applicable for investments held at fair
value through profit or loss. The assets on the Group's balance
sheet to which the expected loss model applies are receivables,
which do not have a history of credit losses or expected future
recoverability issues. Therefore, there was no change to the
carrying values of the Group's assets as a result of applying the
new standard.
ii) IFRS 15 "Revenue from Contracts with Customers" (IFRS 15)
IFRS 15 supersedes IAS 11 "Construction Contracts", IAS 18
"Revenue" and related interpretations. It applies to all revenue
arising from contracts with customers, unless those contracts are
within the scope of other standards. The Standard introduces a five
step model for recognising revenue, which consists of identifying
the contract with the customer; identifying the relevant
performance obligations; determining the amount of consideration to
be received under the contract; allocating the consideration to
each performance obligation; and earning the revenue as the
performance obligations are satisfied.
The Group has undertaken a comprehensive review of its contracts
with customers and concluded that there is no material impact on
the way in which the Group recognises its revenues. The Group has
applied IFRS 15 retrospectively although no restatements were
required. The Group did not apply any of the practical expedients
available under the full retrospective method.
Going concern
The Directors are satisfied that the Group has adequate
resources with which to continue to operate for the foreseeable
future, and therefore these financial statements have been prepared
on a going concern basis.
Consolidation
The accounting policies adopted in these interim financial
statements are identical to those adopted in the Group's most
recent annual financial statements for the year ended 31 March
2018.
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 30 September 2018. 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 Company controls an entity, but does not own all the
share capital of that entity, the interests of the other
shareholders are stated within equity as non-controlling interests
or within current liabilities as financial liabilities depending on
the characteristic of the investment, being the proportionate share
of the fair value of identifiable net assets on date of acquisition
plus the share of changes in equity since the date of
consolidation.
An Employee Benefit Trust ("EBT") has been established for the
purposes of satisfying certain share-based awards. The Group has
'de facto' control over this entity. This trust is fully
consolidated within the financial statements (see note 9 for
further details).
Throughout the period, the Group had investments in four funds,
three of which it was in a position to control. These fund
investments are held by Record plc and represent seed capital
investments by the Group. The funds controlled by the Group have
been consolidated on a line-by-line basis from the time that the
Group gained control over the fund.
2 Critical accounting estimates and judgements
The accounting policies, presentation and methods of computation
applied in the interim financial statements are consistent with
those applied in the financial statements for the year ended 31
March 2018.
3 Revenue
Segmental analysis
The Executive Committee (comprising the Executive Directors
together with three senior managers) which is the entity's Chief
Operating Decision Maker, considers 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 management 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 currency services income includes income from data licensing
and ancillary services.
Six months Six months Year
ended ended ended
30 Sep 18 30 Sep 17 31 Mar 18
Revenue by product type GBP'000 GBP'000 GBP'000
----------------------------- ----------- ----------- ----------
Management fees
Dynamic Hedging 2,351 2,801 5,111
Passive Hedging 5,999 6,400 12,569
Currency for Return 899 826 1,803
Multi-product 2,172 1,927 4,014
----------------------------- ----------- ----------- ----------
Total management fee income 11,421 11,954 23,497
Performance fee income 1,048 - -
Other currency services
income 155 249 337
----------------------------- ----------- ----------- ----------
Total revenue 12,624 12,203 23,834
----------------------------- ----------- ----------- ----------
b) Geographical analysis
The geographical analysis of revenue is based on the location of
the client to whom the services are provided. All revenue
originated in the UK.
Six months Six months Year
ended ended ended
30 Sep 18 30 Sep 17 31 Mar 18
Revenue by geographical region GBP'000 GBP'000 GBP'000
---------------------------------- ----------- ----------- ----------
Currency management income
UK 1,013 1,631 2,834
US 3,186 3,203 6,478
Switzerland 5,720 5,443 10,404
Other 2,550 1,677 3,781
---------------------------------- ----------- ----------- ----------
Total currency management income 12,469 11,954 23,497
Other currency services income 155 249 337
---------------------------------- ----------- ----------- ----------
Total revenue 12,624 12,203 23,834
---------------------------------- ----------- ----------- ----------
Other currency services income is not analysed by geographical
region.
4 Earnings per share
Basic earnings per share is calculated by dividing the profit
for the financial period by the weighted average number of ordinary
shares in issue during the period.
Diluted earnings per share are 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
period used in the basic and diluted earnings per share
calculations.
Six months Six months Year
ended ended ended
30 Sep 18 30 Sep 17 31 Mar 18
---------------------------------------------------------------------------- ------------ ------------ ------------
Weighted average number of shares used in calculation of basic earnings per
share 196,859,947 208,687,194 202,613,441
Effect of potential dilutive ordinary shares - share options 2,780,948 3,945,594 3,855,924
---------------------------------------------------------------------------- ------------ ------------ ------------
Weighted average number of shares used in calculation of diluted earnings
per share 199,640,895 212,632,788 206,469,365
---------------------------------------------------------------------------- ------------ ------------ ------------
Basic earnings per share 1.63p 1.55p 3.03p
Diluted earnings per share 1.61p 1.52p 2.98p
---------------------------------------------------------------------------- ------------ ------------ ------------
The potential dilutive shares relate to the share options
granted in respect of the Group's Share Scheme. At the beginning of
the period, there were share options in place over 14,343,147
shares. During the six months ended 30 September 2018, options over
678,500 shares were exercised and options over 25,000 shares were
forfeited. As at 30 September 2018, there were share options in
place over 13,639,647 shares.
5 Dividends
The dividends paid during the six months ended 30 September 2018
totalled GBP3,251,761 (1.65 pence per share) being a final ordinary
dividend in respect of the year ended 31 March 2018 of 1.15 pence
per share, and a special dividend of 0.50 pence per share. An
interim dividend of GBP2,260,483 (1.15 pence per share) was paid in
the six months ended 31 March 2018, thus the full ordinary dividend
in respect of the year ended 31 March 2018 was 2.30 pence per
share. The dividend paid by the Group during the six months ended
30 September 2017 totalled GBP4,549,878 (2.085 pence per share),
being a final ordinary dividend in respect of the year ended 31
March 2017 of 1.175 pence per share, and a special dividend of 0.91
pence per share.
The interim dividend proposed in respect of the six months ended
30 September 2018 is 1.15 pence per share.
6 Accounting for investment in seed funds
Record plc holds investments in several funds. These funds are
seed investments, which have various investment objectives and
policies and are subject to the terms and conditions of their
offering documentation. The principal activity of each is to invest
capital from investors in a portfolio of assets in order to provide
a return for those investors.
Funds are consolidated on a line-by-line basis where the Group
has determined that a controlling interest exists through an
investment holding in the fund, in accordance with IFRS 10
"Consolidated Financial Statements". Otherwise, investments in
funds are measured at fair value through profit or loss.
Record has seeded four funds which have been active during the
half year ended 30 September 2018. The Group has controlled both
the Record Currency - FTSE FRB10 Index Fund and the Record Currency
- Strategy Development Fund throughout the half year ended 30
September 2018 and the comparative periods, and both were
consolidated in full, on a line-by-line basis in the Group's
financial statements throughout these periods.
In February 2018, the Company invested in the Record - Currency
Multi-Strategy Fund. The Group has controlled this fund since
inception and the fund is consolidated in full on a line-by-line
basis.
The Group was in control of the Record Currency - Emerging
Market Currency Fund until 21 March 2018, at which point the Group
no longer consolidated the fund on a line-by-line basis, but the
Group did consolidate the fund in full on a line-by-line basis
until that date. Since 21 March 2018, the fund has been classified
as an investment and measured at fair value through profit or
loss.
Investments
As at As at As at
30 Sep 30 Sep 31 Mar
18 17 18
----------------------------------- -------- -------- --------
GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- --------
Record Currency - Emerging Market
Currency Fund 1,075 - 1,115
1,075 - 1,115
----------------------------------- -------- -------- --------
Financial liabilities
Where a fund is consolidated on a line-by-line basis and Record
plc is not the only investor, and the external investment
instrument does not meet the definition of an equity instrument
under IAS 32, then the instrument is classified as a financial
liability. These financial liabilities are held at fair value,
which represents the mark to market value of units held by
investors other than Record in these funds, in accordance with
IFRS.
Mark to market value of external holding in seeded funds
consolidated into the accounts of the Record Group
As at As at As at
30 Sep 30 Sep 31 Mar
18 17 18
------------------------------------ -------- -------- --------
GBP'000 GBP'000 GBP'000
------------------------------------ -------- -------- --------
Record Currency - FTSE FRB10 Index
Fund 466 465 459
Record Currency - Emerging Market - 4,296 -
Currency Fund
Record - Currency Multi-Strategy
Fund 1,895 - 2,008
------------------------------------ -------- -------- --------
Financial liabilities 2,361 4,761 2,467
------------------------------------ -------- -------- --------
There is no external investment in the Record Currency -
Strategy Development Fund.
The financial liabilities relate only to the fair value of the
external investors' holding in the seed funds, and should not be
construed as debt.
7 Cash management
The Group's cash management strategy employs a variety of
treasury management instruments including cash, money market
deposits and treasury bills with maturities of up to one year. We
note that not all of these instruments are classified as cash or
cash equivalents under IFRS.
IFRS defines cash and cash equivalents as cash in hand, on
demand and collateral deposits held with banks, and other
short-term highly liquid investments that are readily convertible
to a known amount of cash and are subject to an insignificant risk
of changes in value. Moreover, instruments can only generally be
classified as cash and cash equivalents where they are held for the
purpose of meeting short-term cash commitments rather than for
investment or other purposes.
In the Group's judgement, bank deposits and treasury bills with
maturities in excess of three months do not meet the definition of
short-term or highly liquid and are held for purposes other than
meeting short-term commitments. In accordance with IFRS, these
instruments are not categorised as cash or cash equivalents and are
disclosed as money market instruments with maturities greater than
three months.
The table below summarises the instruments managed by the Group
as cash, and their IFRS classification:
As at As at As at
30 Sep 18 30 Sep 17 31 Mar 18
GBP'000 GBP'000 GBP'000
----------------------------------------------------- ---------- ---------- ----------
Bank deposits with maturities > 3 months 9,804 10,305 9,698
Treasury bills with maturities > 3 months - 2,999 500
----------------------------------------------------- ---------- ---------- ----------
Money market instruments with maturities > 3 months 9,804 13,304 10,198
----------------------------------------------------- ---------- ---------- ----------
Cash 2,042 3,016 4,411
Bank deposits with maturities <= 3 months 9,020 10,007 8,087
Treasury bills with maturities <= 3 months 1,900 - -
----------------------------------------------------- ---------- ---------- ----------
Cash and cash equivalents 12,962 13,023 12,498
----------------------------------------------------- ---------- ---------- ----------
Total assets managed as cash by the Group 22,766 26,327 22,696
----------------------------------------------------- ---------- ---------- ----------
8 Cash flow from operating activities
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended Ended
30 Sep 18 30 Sep 17 31 Mar 18
GBP'000 GBP'000 GBP'000
-------------------------------------------------------------------------------- ----------- ----------- ----------
Operating profit 3,997 3,757 7,272
Adjustments for non-cash movements:
Profit on disposal of property, plant and equipment - - 1
Depreciation of property, plant and equipment 110 99 206
Amortisation of intangible assets 31 75 99
Share-based payments 35 162 (93)
Net release of shares previously held by EBT 228 365 845
Decrease in cash on deconsolidation of Record Currency - Emerging Market
Currency Fund - - (4,062)
Other non-cash movements (202) 22 (270)
-------------------------------------------------------------------------------- ----------- ----------- ----------
4,199 4,480 3,998
Changes in working capital
(Increase)/decrease in receivables (1,671) 16 172
Increase/(decrease) in payables 1,300 284 (371)
Decrease/(increase) in other financial assets 87 (475) (204)
Increase in other financial liabilities 18 343 734
Cash inflow from operating activities 3,933 4,648 4,329
Interest paid (11) - (10)
Corporation taxes paid (396) (718) (1,573)
-------------------------------------------------------------------------------- ----------- ----------- ----------
Net cash inflow from operating activities after tax 3,526 3,930 2,746
-------------------------------------------------------------------------------- ----------- ----------- ----------
9 Called up share capital
The share capital of Record plc consists only of fully paid
ordinary shares with a par value of 0.025 pence. All shares are
equally eligible to receive dividends and the repayment of capital
and represent one vote at the shareholders' meeting.
Unaudited as Unaudited as
at at Audited as at
30 Sep 18 30 Sep 17 31 Mar 18
---------------------- ---------------------- ----------------------
GBP'000 Number GBP'000 Number GBP'000 Number
--------------------- -------- ------------ -------- ------------ -------- ------------
Authorised
Ordinary shares of
0.025 pence each 100 400,000,000 100 400,000,000 100 400,000,000
Called up, allotted
and fully paid
Ordinary shares of
0.025 pence each 50 199,054,325 50 199,054,325 50 199,054,325
--------------------- -------- ------------ -------- ------------ -------- ------------
Movement in Record plc shares held by the Record plc Employee
Benefit Trust ("EBT")
The EBT was formed to hold shares acquired under the Record plc
share-based compensation plans. Under IFRS the EBT is considered to
be under de facto control of the Group, and has therefore been
consolidated into the Group financial statements.
Neither the purchase nor sale of own shares leads to a gain or
loss being recognised in the Group statement of comprehensive
income. Any such gains or losses are recognised directly in
equity.
Number
-------------------------------------------------- -----------
Record plc shares held by EBT as at 31 March
2017 3,618,995
Net change in holding of own shares by EBT in
period (457,759)
-------------------------------------------------- -----------
Record plc shares held by EBT as at 30 September
2017 3,161,236
Net change in holding of own shares by EBT in
period (767,804)
-------------------------------------------------- -----------
Record plc shares held by EBT as at 31 March
2018 2,393,432
Net change in holding of own shares by EBT in
period 382,645
-------------------------------------------------- -----------
Record plc shares held by EBT as at 30 September
2018 2,776,077
-------------------------------------------------- -----------
The EBT holds shares in Record plc which are used to meet the
Group's obligations to employees under the Group Profit Share
Scheme and the Record plc Share Scheme. Own shares are recorded at
cost and are deducted from retained earnings.
10 Fair value measurement for derivative financial instruments
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 based on the
significance of inputs used in measuring their fair value. The
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 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:
Total Level 1 Level 2 Level 3
As at 30 September 2018 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------ -------- -------- -------- --------
Financial assets at fair value through profit or loss
Forward foreign exchange contracts used for seed funds 154 - 154 -
Futures contracts used for seed funds - - - -
Forward foreign exchange contracts used for hedging 24 - 24 -
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts used for seed funds (78) - (78) -
Futures contracts used for seed funds - - - -
Forward foreign exchange contracts used for hedging (75) - (75) -
------------------------------------------------------------ -------- -------- -------- --------
25 - 25 -
------------------------------------------------------------ -------- -------- -------- --------
Total Level 1 Level 2 Level 3
As at 31 March 2018 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------ -------- -------- -------- --------
Financial assets at fair value through profit or loss
Forward foreign exchange contracts used for hedging 199 - 199 -
Forward foreign exchange contracts used for seed funds 67 - 67 -
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts used for hedging (29) - (29) -
237 - 237 -
------------------------------------------------------------ -------- -------- -------- --------
Total Level 1 Level 2 Level 3
As at 30 September 2017 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------ -------- -------- -------- --------
Financial assets at fair value through profit or loss
Forward foreign exchange contracts used for seed funds 22 - 22 -
Futures contracts used for seed funds 2 - 2 -
Forward foreign exchange contracts used for hedging 505 - 505 -
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts used for seed funds (57) - (57) -
Futures contracts used for seed funds (5) - (5) -
Forward foreign exchange contracts used for hedging (348) - (348) -
------------------------------------------------------------ -------- -------- -------- --------
119 - 119 -
------------------------------------------------------------ -------- -------- -------- --------
There have been no transfers between levels in any of the
reported periods.
Basis for classification of financial instruments classified as
Level 2 within the fair value hierarchy
Both forward foreign exchange contracts and futures are
classified as Level 2. 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 a quoted price.
11 Related parties
Related parties of the Group include key management personnel,
close family members of key management personnel, subsidiaries, the
EBT and the seed funds.
Key management personnel
The compensation given to key management personnel is as
follows:
Six months Six months Year
ended ended ended
30 Sep 18 30 Sep 17 31 Mar 18
GBP'000 GBP'000 GBP'000
------------------------------ ----------- ----------- ----------
Short-term employee benefits 2,715 2,480 4,965
Post-employment benefits 106 110 185
Share-based payments 482 568 1,172
3,303 3,158 6,322
------------------------------ ----------- ----------- ----------
The dividends paid to key management personnel in the six months
ended 30 September 2018 totalled GBP1,754,262 (year ended 31 March
2018: GBP3,651,092; six months ended 30 September 2017:
GBP2,442,980).
12 Post reporting date events
No adjusting or significant non-adjusting events have occurred
between the reporting date and the date of approval.
AUME definition
The basis for measuring AUME differs for each product and is
detailed below:
-- Dynamic Hedging mandates: - total amount of clients'
investment portfolios denominated in liquid foreign currencies, and
hence capable (under the terms of the relevant mandate) of being
hedged;
-- Passive Hedging mandates: - the aggregate nominal amount of
passive hedges actually outstanding in respect of each client;
-- Currency for Return mandates: - the maximum aggregate nominal
amount of outstanding forward contracts for each client;
-- Multi-product mandates: - the chargeable mandate size for each client;
-- Cash: - the total set aside by clients and managed and/or
"equitised" using futures by Record.
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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BRBDBBBDBGID
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