TIDMREC
RNS Number : 5488P
Record PLC
21 June 2022
PRESS RELEASE
Record plc
21 June 2022
FINAL RESULTS ANNOUNCEMENT
FOR THE YEARED 31 MARCH 2022
New strategy delivers significant increases in revenue,
operating margin, profit and earnings, with increased final
dividend and special dividend declared
Record plc, the specialist currency and derivatives manager,
today announces its audited results for the year ended 31 March
2022.
Financial headlines:
-- 38% increase in revenue to GBP35.1m (FY-21: GBP25.4m)
-- 76% increase in Profit Before Tax (PBT) to GBP10.9m (FY-21: GBP6.2m)
-- 7% increase in operating profit margin to 31% (FY-21: 24%)
-- 57% increase in proposed final ordinary dividend of 1.80p per
share (FY-21: 1.15p); total ordinary dividend for the year of 3.60p
per share (FY-21: 2.30p)
-- 104% increase in special dividend for the year to 0.92p per share (FY-21: 0.45p)
Key developments:
-- Material growth in management fees diversified across all current product lines.
-- Momentum in AUME growth continues with a 4% increase to
$83.1bn, including net inflows of $2.4bn.
-- Inflows into both new and existing higher revenue-margin
products increases operating margin, following transitional year of
change and investment in FY-21.
-- Collaboration with specialist partners and clients opens new
opportunities for growth and diversification of products and
geographies.
-- Successful launch of new Sustainable Finance product in the
year in collaboration with UBS Global Wealth Management adds to an
increasingly diversified suite of products.
-- Move towards broader asset management expertise with growth
of asset management team.
(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.
Commenting on the results, Neil Record, Chairman of Record plc,
said:
"The year has provided an outstanding set of results, which
underlines the confidence shown by the Board in the new strategy
and the leadership under Leslie Hill and her senior team.
Commenting on the results, Leslie Hill, CEO of Record plc,
said:
"We remain focused on building upon this momentum with further
diversification of products and revenue streams as we move from a
pure currency management specialist to having a broader offering in
the alternative asset management space. Whilst our core skills in
currency and derivatives will continue to provide an important and
robust source of hedging revenue, our focus on innovating and
collaborating on higher revenue-margin products will continue to
increase our profitability, as evidenced this year by the increase
in our operating margin.
"Our approach of partnering with clients and with likeminded
specialists in alternative assets to collaborate on new and
innovative products has already provided results in the form of the
successful launch of the Record EM Sustainable Finance Fund during
the year. We are confident this approach will continue to provide
opportunities for the development of relevant and well-rewarded
products to satisfy specific client demand.
"Notwithstanding a particularly challenging environment over the
last two years brought about by the pandemic and more recently the
war in Ukraine, the Group has not changed its dividend policy, has
continued to pay dividends, to be self-financing, cash-generative
and completely independent with no external debt.
"We remain confident that the strategy will continue to deliver
against its long-term goal of achieving material growth and a
stronger and more diversified business. Against this backdrop, the
Board has recommended payment of an increased final ordinary
dividend and also a special dividend in line with the Group's
capital and dividend policy."
Analyst presentation
There will be a presentation for analysts at 9.30am on Tuesday
21 June 2022 held via a Zoom call. Please contact the team at
Buchanan via record@buchanan.uk.com for further details. 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 (0) 1753 852222
Neil Record - Chairman
Leslie Hill - Chief Executive Officer
Steve Cullen - Chief Financial Officer
Buchanan +44 (0) 20 7466 5163
Giles Stewart
Simon Compton
Henry Wilson
George Beale
Consolidated statement of comprehensive income
Year ended 31 March 2022
2022 2021
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Revenue 35,152 25,412
Cost of sales (219) (399)
-------------------------------------------------- --------- ---------
Gross profit 34,933 25,013
Administrative expenses (23,726) (18,934)
Other income or expense (372) 41
-------------------------------------------------- --------- ---------
Operating profit 10,835 6,120
Finance income 44 71
Finance expense (23) (38)
-------------------------------------------------- --------- ---------
Profit before tax 10,856 6,153
Taxation (2,225) (802)
-------------------------------------------------- --------- ---------
Profit after tax 8,631 5,351
-------------------------------------------------- --------- ---------
Total comprehensive income for the year 8,631 5,351
-------------------------------------------------- --------- ---------
Profit and total comprehensive income for the
year attributable to
Owners of the parent 8,631 5,351
-------------------------------------------------- --------- ---------
Total comprehensive income for the year 8,631 5,351
-------------------------------------------------- --------- ---------
Earnings per share for profit attributable
to the equity holders of the parent during the
year
Basic earnings per share 4.52 2.75
Diluted earnings per share 4.37 2.73
-------------------------------------------------- --------- ---------
Consolidated statement of financial position
As at 31 March 2022
2022 2021
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Non -- current assets
Intangible assets 562 420
Right -- of -- use assets 1,421 684
Property, plant and equipment 401 683
Investments 3,447 3,046
Deferred tax assets 253 212
------------------------------------------------------ -------- --------
Total non -- current assets 6,084 5,045
------------------------------------------------------ -------- --------
Current assets
Trade and other receivables 9,883 8,006
Derivative financial assets - 260
Money market instruments with maturities > 3 months 13,913 12,932
Cash and cash equivalents 3,345 6,847
------------------------------------------------------ -------- --------
Total current assets 27,141 28,045
------------------------------------------------------ -------- --------
Total assets 33,225 33,090
------------------------------------------------------ -------- --------
Current liabilities
Trade and other payables (4,721) (3,426)
Corporation tax liabilities (924) (315)
Provisions (75) -
Lease liabilities (366) (539)
Financial liabilities - (1,696)
Derivative financial liabilities (124) (16)
------------------------------------------------------ -------- --------
Total current liabilities (6,210) (5,992)
------------------------------------------------------ -------- --------
Non-current liabilities
Provisions (125) (200)
Lease liabilities (960) (99)
------------------------------------------------------ -------- --------
Total non-current liabilities (1,085) (299)
------------------------------------------------------ -------- --------
Total net assets 25,930 26,799
------------------------------------------------------ -------- --------
Equity
Issued share capital 50 50
Share premium account 3,238 2,418
Capital redemption reserve 26 26
Retained earnings 22,616 24,305
------------------------------------------------------ -------- --------
Equity attributable to owners of the parent 25,930 26,799
------------------------------------------------------ -------- --------
Total equity 25,930 26,799
------------------------------------------------------ -------- --------
CHAIRMAN'S STATEMENT
"While the general economic, political and security environment
has noticeably worsened in the past year, Record plc has enjoyed
contrasting fortunes with strong rises in its revenues and
profits."
Neil Record
Chairman
The year ending 31 March 2022 ("FY-22") has been one of enormous
change for the business. Revenue is up 38% on the comparative year
and pre-tax profit up 76%. We have successfully launched and
expanded our EM Sustainable Finance Fund; our European subsidiary,
Record Asset Management GmbH, is bringing new ideas, new products
and new clients; and our US hedging business has grown
substantially on the back of large Dynamic Hedging mandates.
I consider FY-22 to be the start of a new chapter in Record's
history. It is clear from the pipeline of projects, clients and
ideas that the firm is no longer going to be a purely currency
management specialist. While we will maintain our currency
speciality, we are widening our offering in the alternative asset
management space.
We plan to diversify into areas where specialist skills are well
rewarded; where investor appetite is high, and where our existing
expertise can be put to use. We have already demonstrated that we
can work closely with large international bank partners to launch
the EM Sustainable Finance Fund (moving us for the first time in
scale into the frontier currency world); and I am pleased to report
that we plan to launch further funds with a variety of different
investor appetites and asset classes.
The invasion of Ukraine and the resulting humanitarian crisis is
like no other experienced in our generation in Europe. Our thoughts
are with the people experiencing untold pain and hardship, and we
hope that negotiations to end the conflict will prevail. I would
like to offer particular thanks to the group of Ukrainian nationals
who have been working to upgrade our IT infrastructure, despite the
incredibly challenging conditions. We are doing everything we can
to offer them our support.
I am very enthusiastic about our company's future. We have in
place an extremely talented and effective CEO, Leslie Hill, who
since her appointment in early 2020 has masterminded many of the
growth orientated changes focused on delivering results that we are
now seeing. I also see a rising generation of talented and
energetic individuals with the skills, background and support to
continue to bring about change and growth. I believe these
individuals will add significant value to the business by taking
responsibility and bringing broader strength in depth to the future
leadership team.
Financial overview
This new chapter for Record has been accompanied by an
exceptional set of results, which not only go to illustrate the
strength of the leadership team, but also underlines the
credibility of the new strategy. Growth in management fees of 37%
has driven the reversal of the short-term reduction in
profitability seen in FY-21, with Record's operating margin
increasing to 31% from 24% last year. Encouragingly, this growth is
linked to a positive change in our revenue weighting towards higher
revenue-margin products from both existing and newly launched
products, supporting the change in strategic direction towards a
more diversified set of products and services. Notwithstanding an
increase in both personnel and non-personnel costs as the business
continues to invest in its people and systems, the Group has
delivered a 64% increase in earnings and continues to be supported
by its robust and liquid Balance Sheet, with total equity of almost
GBP26 million.
Further information on financial results can be found in the
Financial review.
Capital and dividend
The Board is pleased with the progress made from the change in
strategy and remains confident in the future growth prospects of
the business.
Our capital and dividend policies have not changed during the
last two years and we have continued to pay both ordinary and
special dividends over this period, notwithstanding the significant
disruption and uncertainty arising from the pandemic when many
companies were cutting or cancelling their dividends.
Our capital policy aims to ensure retention of capital assessed
as required for regulatory purposes, for working capital purposes
and for investing in new opportunities for the business. Our
dividend policy now targets a level of ordinary dividend within the
range of 70% to 90% of annual earnings, and which allows for
progressive and sustainable dividend growth in line with the trend
in profitability. It is also the Board's intention, subject to
financial performance and market conditions at the time, to return
excess earnings over ordinary dividends for the financial year and
adjusted for changes in capital requirements, to shareholders,
normally in the form of special dividends.
The Board is recommending a final ordinary dividend of 1.80
pence per share (2021: 1.15 pence) with the full-year ordinary
dividend at 3.60 pence per share (2021: 2.30 pence), representing a
57% increase in the ordinary dividend and an ordinary payout ratio
of 80% of earnings. The interim dividend of 1.80 pence was paid on
30 December 2021, and the final ordinary dividend of 1.80 pence
will be paid on 9 August 2022 to shareholders on the register at 1
July 2022, subject to shareholder approval.
Having carefully reviewed the current level of Group capital
against its ongoing requirements for regulatory and investment
purposes and to support its continued growth, the Board considers
the current level of capital to be sufficient and is announcing a
special dividend of 0.92 pence per share to be paid simultaneously
with the final ordinary dividend. Total proposed dividends per
share for the year are 4.52 pence per share (2021: 2.75 pence)
compared to earnings per share of 4.52 pence (2021: 2.75
pence).
The Board
We have welcomed two new Non-executive Directors to the plc
Board in FY-22 - Matt Hotson and Krystyna Nowak. We have said
goodbye to both Rosemary Hilary, who retired from the Board in
September 2021 and, as I reported in my statement last year, to
Jane Tufnell who stood down from the Board at the Company AGM in
July 2021, when Tim Edwards took over the role of Senior
Independent Director.
I would like to thank Rosemary, who ably chaired the Audit and
Risk Committee during her tenure on the Board and brought to that
role a forensic mind and long experience of the management of
financial and business risk.
We have split the Audit and Risk Committee functions, and Matt
Hotson has taken on the Chair of the non-executive Audit Committee,
while we have established a Risk Committee as an executive
function.
Matt comes to us with senior CFO experience, and brings a sharp
intellect and a current executive role elsewhere to our Board
team.
Krystyna Nowak has taken on the Chair of the Nomination
Committee. Krystyna's background is in executive search following a
career in banking. She brings wide experience of managing our most
valuable asset - our people - and we look forward to benefiting
from her expertise.
Outlook
There appears to be a contrast between the outlook for Record
plc on the one hand, and the wider economic environment on the
other.
Taking first Record's prospects. As I have already mentioned, we
are witnessing a fundamental change in the business, which I
believe has the potential to transform for the better Record's
scale and resilience within the next few years. This leaves me
feeling very optimistic for the firm.
By contrast, I am concerned that the current economic, financial
and geopolitical pressures facing Western democracies may well see
a prolonged period of very difficult conditions - high inflation;
low, zero or negative growth; overstretched fiscal positions; and
the likelihood of political instability. One way or another, these
conditions may well impact on Record's growth prospects, but my
current judgement is that our growth will outweigh the headwinds
imposed on us by these global economic problems.
Neil Record
Chairman
20 June 2022
CHIEF EXECUTIVE OFFICER'S STATEMENT
"Two years after taking on the role of CEO, I can now
confidently report that we are making real progress against our
stated objectives to modernise, diversify and build our
business."
Leslie Hill
Chief Executive Officer
The team and I are very pleased with the development of our
strategy, and have great plans for the future. To that end, I am
now detailing our aspirations in more concrete terms than we have
in the past. We can, I believe, achieve revenue of approximately
GBP60 million by this time in 2025 and will continue to improve our
operating margin, inflation willing. This will give our investors a
clearer sense of our trajectory and confidence in the future.
Progress against strategy
Our "house", to continue an analogy I used last year, is now
much more robust in so many ways, as you will see detailed below
and further on in this report. Our new ventures and products are
bearing fruit, and we are expanding our strategic partnerships
around the world, while also developing interesting new
opportunities with our loyal client base. The longevity of our
relationships continues to be a source of great pride to us all,
but we are also finding new major groups and institutions who value
what we have to offer, and want to work with us. I will detail each
of the key pillars of our strategy as follows:
Diversification
In June of 2021 we did indeed launch our EM Sustainable Finance
Fund, and it has gone well. We now run approximately $1.2 billion
in this strategy, which was built for and in partnership with UBS
Global Wealth Management in Switzerland. Despite a turbulent year
in the world of Emerging Markets we have succeeded in outperforming
our benchmark and growing assets while weathering some unusually
volatile geopolitical waters. We continue to invest considerable
resource in this opportunity and it is providing results. We are
working on some new and interesting Impact and Sustainable Finance
initiatives of which I look forward to reporting more in the coming
year. In addition, we set up a Senior Sustainability Office this
year to make sure we observe and are at the forefront of best
practice in this demanding area.
However, we are all about diversification and there are a few
other notable milestones reached this year which are worth
highlighting. We have been informed by BaFin that our application
has been approved, which will enable us to build our asset
management business in Continental Europe, and have created a
strong core team in Zürich, Germany and Amsterdam. Some of our
projects are coming to fruition, with clients added in Holland, and
a new Municipal Bond fund developed for the German market. We
acquired our first ever Japanese hedging client this year, and will
plan to build on this milestone.
In addition, we are building a suite of Luxembourg-based funds
this year which will allow us to further realise our aspirations to
become a fully fledged asset manager, adding to our existing
credentials as an overlay and derivatives manager. Our growth
agenda is on target and we continue to add clients for our currency
and derivatives offerings, particularly in the Asset Management
field, where we acquired four new clients this year, with more to
come.
Modernisation
So much work has been done to bring our infrastructure up to
date and both strengthen and protect our business, and therefore
our clients. We are now established as a company with sophisticated
IT infrastructure, with hybrid cloud and on-premise capabilities to
ensure maximum flexibility, and we have managed to keep all of this
work both on target and on budget.
We are also working hard to continue expanding our software
development team, offering customised and cost -- effective
solutions to our business partners as well as to more and more
clients. Particularly of note is the enthusiasm with which our
Asset Management clients greet our willingness to take the currency
burden off their shoulders so they can concentrate on growing their
own businesses. Doing what others do not want to do may not be
glamorous but we have the experience and the history of reliably
taking on the challenges of our clients and as a team we receive
them with open arms! We now view our technology stack as a journey
of constant evolution, not a single destination, and I think we
will have more interesting announcements in the coming year.
Succession
We continue the progression - enabling young, vibrant members of
our team to become equity owners and take on more responsibility.
This year saw more promotions within our ranks than any other year
in our history, which is a testament to our desire to develop
talent. Our new London office has allowed us to attract this talent
and our continued flexible working arrangements are enhancing
rather than reducing productivity.
However, we do know that you simply cannot replace idea sharing
and training face-to-face, and have found the implementation of a
working schedule that includes core office days essential to
teamwork and collaboration. In addition to all of this, we are
building strong and modern Diversity and Inclusion policies and
working to attract more women and ethnic minorities into our senior
roles; we just this year implemented our first ever Mentoring and
Coaching programme for our mid and senior-level women which we
sourced from a cutting-edge US-based company. We will do more of
this as it was well received by our staff.
Financial performance
In terms of results, rewardingly we have achieved a 38% increase
in revenues year on year and a 76% increase in profits, and an
increase in our operating margins from 24% to 31%, all of which I
think speaks for itself. We are just starting to get into our
stride here and while I want to keep everything steady and calm I
do believe we have a long way to go. In addition we have seen a
return to performance fees earned this year after a hiatus, and
while these earnings are somewhat episodic, our clients' patience
and belief in us has gratifyingly been proved worthwhile, for them
and for us.
Outlook
We have so much yet to do, and so much further to go, as we move
from a niche overlay manager into the world of mainstream asset
management while not losing sight of our core expertise and the
importance of this part of our business. I believe we can combine
the flexibility and agility of a small business - as is shown by
our Tech transformation, with the scale and credibility of a much
larger business, as is demonstrated by our asset base, our growing
global reach and the scalability of our product and service
offering. This will be the secret of success in coming years, and
it is making this company, and indeed my job, most interesting and
rewarding.
Leslie Hill
Chief Executive Officer
20 June 2022
MARKETS
Our market environment and industry trends.
Our market
The currency market represents the biggest and most liquid
financial market available, with exceptionally low transaction
costs and daily FX volumes averaging $6.6 trillion (source: BIS
Triennial Central Bank Survey of Foreign Exchange and OTC
Derivatives Markets 2019). The FX market is essential to global
trade and finance and includes a high proportion of not -- for --
profit or forced participants, resulting in profit -- seeking
financial institutions continuing to represent a minority of FX
market participants. Consequently, the market displays persistent
patterns of behaviour or inefficiencies which we believe can best
be exploited by a combination of systematic and discretionary
processes.
The FX market continues to offer opportunities for investors.
Record's expertise is in identifying and understanding these
opportunities and then working with clients to understand how such
opportunities may be used to their best advantage, taking account
of each client's individual circumstances and attitude to risk.
Industry trends
Increase in demand for sustainable investment products
The last twelve months have seen an acceleration in the
widespread incorporation of sustainability-linked factors in
investment products as investors become ever more focused on
resilience. With broad understanding that "non -- financial" data
(climate, social, governance, etc.) can more completely fortify
portfolios to weather global shocks, asset managers have had to
review the remits of fiduciary duty to take account of these fast
-- evolving investor preferences and broader understanding of
material risk. Pandemic contagion flagged risks that occur
concomitant with an increasingly interconnected world, reliant upon
global supply chains and geared by closely intertwined national
economies. Long-term climate risks and the global consequences of
seemingly idiosyncratic sovereign-level physical risks are
therefore now better comprehended in their magnitude, and the
importance of international co-operation more seriously
acknowledged. Investors have translated macroeconomic risks into
portfolio risks, using frameworks such as that of the
Sustainability Accounting Standards Board ("SASB") and the Task
Force on Climate-Related Financial Disclosures ("TCFD") to
understand what this means for the resilience of their investments,
and it is the responsibility of asset managers to respond with
credible and prudent sustainable solutions.
Global and macro trends
Inflation comeback amidst covid-19 policy overhang and
geopolitical conflicts
As the covid-19 pandemic showed signs of morphing into an
endemic following a successful vaccination campaign and the natural
course of virus mutations, market attention turned towards pandemic
policy overhangs and the implications for global asset classes.
Pent-up demand from precautionary savings, commodity price
increases and supply side disruptions all contributed to an
inflation comeback in the second half of FY-22. This fuelled debate
as to whether the new-found ability of developed economies to
generate price increases was only transitory in nature or now a
permanent fixture of the global economy. Adding to the complexity
of this assessment were further commodity price shocks as Russia
began its invasion of Ukraine; with inflation no longer appearing
transitory, central banks telegraphed their respective responses
and most developed market central banks saw rapid tightening cycles
priced. Although most central banks indicated higher forthcoming
interest rates, these were not always commensurate with the
expected levels of inflation, and stagflationary dynamics began to
weigh on the euro and British pound in particular. The Bank of
Japan was steadfast in its commitment to loose monetary policy,
which saw the currency decline significantly versus the US dollar.
The US dollar on aggregate made an impressive recovery from the
year prior, benefiting from the "USD smile", referring to positive
performance during both risk-off (via safe haven demand), and
risk-on (via US economic exceptionalism and Fed hawkishness)
economic environments.
What this means for our business
Record's Currency for Return strategies are designed to target
persistent market patterns and risk premia. As economic, political
and societal norms change, so must our approach. As such, we
constantly challenge the assumptions underlying our investment
process. During the period we evolved our flagship Emerging Markets
("EM") product to move away from a long-only currency approach and
towards a long-short methodology, which seeks to capture the trend
towards greater heterogeneity of economic outlooks and return
outlooks within the EM universe.
Such an approach is better placed to exploit the various risk
premia available in EM currencies, while benefiting from reduced
sensitivity to broader risk sentiment emanating from external
factors such as financial tightening elsewhere in the world
including the US. The strong performance of the US dollar during
the period emphasised the benefits of active hedging strategies;
Dynamic Hedging performed as expected, protecting US investors
against foreign currency losses with higher hedge ratios when the
US dollar strengthened, whilst limiting associated costs for
strengthening base currencies such as the euro investors via lower
hedge ratios. The rapid repricing of inflation risk and monetary
policy tightening breathed life into short-term interest rates and
the FX basis, which presented opportunities to add value in
enhanced Passive Hedging programmes through the active management
of hedging tenor lengths. In addition, building on the prolonged
effects from the pandemic, various idiosyncratic country crises
affirmed interest in the bespoke management of EM currency
exposures, where we are working with clients to help understand the
risks emanating from EM currency and the various approaches that
can be taken to manage such risks.
Record has also focused on developing sustainable finance
strategies with a defined goal of achieving meaningful positive
impact within the emerging market community. Record and UBS Global
Wealth Management announced a strategic partnership by
collaborating on the launch of the Record Emerging Market
Sustainable Finance Fund ("EMSF"). This unique investment strategy
demonstrates a commitment to innovation and the development of new
sustainable investment products, which Record expects to have broad
and growing appeal. The strategy's impact thesis spans a
multidimensional investment process, remaining active across the
economic cycle in liquid and illiquid EM and Frontier currencies in
pursuit of stabilising local market exchange rates and absorbing
currency risks, whilst simultaneously investing in an underlay of
sustainable development bonds issued by multilateral development
banks with a strong track record of deploying sustainable
development capital in emerging economies. The strategy's ambitions
are reinforced through an active engagement strategy with
counterparty banks, incentivising improvements in counterparties'
performance across the ESG spectrum.
Market review
Review of the year ended 31 March 2022.
The financial year began in a risk-on fashion as a number of
economies emerged from winter lockdowns following heavy vaccination
drives which helped to alleviate stress on healthcare systems. It
was heterogeneity in vaccination rates that initially captured
investors' attention, in particular the developed versus emerging
market divide, with IMF officials warning of disparate recovery
paths given developing countries' dependence on tourism and weaker
public finances. Indeed, the currencies of countries with
favourable inoculation rates received "vaccine dividends" as
markets priced in faster recoveries and faster monetary policy
tightening cycles.
The early summer gave way to the "transitory inflation"
narrative in central bank communique, with Fed officials
attributing temporary pressures to a range of factors including
base effects, pandemic stimuli, ongoing supply chain issues, and
economic re-opening. Similarly elevated inflation prints across the
developed market spectrum saw a hawkish tilt in central bank
forward guidance with the Reserve Bank of New Zealand ("RBNZ") and
Norges Bank signalling rate hikes later in the year, the Bank of
England ("BoE") signalled the tapering of asset purchases in late
2021, whilst the Bank of China ("BoC") reduced asset purchases in
April.
Mid-summer marked a significant convergence in the vaccine race
as Developed Markets ("DMs") and several Emerging Markets ("EMs")
including the likes of the Euro Area, Canada, Turkey, Chile and
Brazil made marked headway in vaccination distribution, closing the
gap with leaders of the US and UK. Though growth prospects looked
rosier, global covid-19 nervousness remained elevated in view of
the highly infectious but seemingly less-deadly Delta variant.
Government responses varied, including pockets of localised
lockdowns linked with small outbreaks (particularly in the
Asia-Pacific region including Australia and New Zealand), delayed
reopening schedules (UK by a month through to July) and upping the
ante with quarantine/travel restrictions (notably seen between UK
and EU countries).
The Fed Jackson Hole Economic Symposium in August passed
uneventfully, with Fed Chair Powell noting higher interest rates
were still "a way away", reiterating the "transitory" nature of
recent inflation prints. Another notable dynamic remained the
increasing hawk-dove division as a few regional Fed presidents,
including Waller and Bullard, vocally advocated for immediate bond
purchase tapering in light of inflation risks and healthier labour
market dynamics. Hawkish moves were initiated by DM policymakers
into the last quarter of the year as committees aimed to balance
inflation targets and expectations against economic growth and
labour market recoveries. The RBNZ and Norges Bank became the first
central banks to embark on their rate hiking cycle, whilst markets
were also surprised by the BoC ending their bond buying programme,
and the Reserve Bank of Australia ("RBA") abandoning Yield Curve
Control on three-year bonds.
The second half of the year saw several idiosyncratic risk
episodes in emerging markets. In China, a heavy regulatory
crackdown on its education and big technology sectors, followed by
rising concerns that China's real estate behemoth Evergrande faced
a major solvency and default crisis, generated market volatility.
The Turkish lira again experienced a crisis episode in Q4,
triggered by consecutive Central Bank of the Republic of Turkey's
interest rate cuts since mid-summer despite headline inflation
reading in excess of 19% year-on-year during this time period.
Global market sentiment then took pause towards calendar year
end with the emergence of the highly infectious Omicron variant,
with multiple countries scrambling to levy stringent travel
restrictions and a degree of local restrictions re-introduced. Yet,
global daily caseloads declined towards the end of the financial
year, supporting risk sentiment, and owing to combined efforts of
local restrictions and viral resistance from boosters/previous
infections which saw a general "living with covid-19" theme emerge.
China remained an outlier as the last major country which keeps up
to its zero-covid-19 policy with the recent rise in infections
seeing multiple cities/provinces placed under stringent
lockdowns.
The last months of the financial year were largely characterised
by the escalation and eventual invasion of Ukraine by Russia.
Western countries enacted a swift and unified economic response,
imposing a moratorium on transactions with the Central Bank of
Russia, freezing Russian assets held in domestic banks and blocking
the Nord Stream 2 pipeline project. Consequently, the risk of a
larger regional war and surging energy and agriculture prices fed
into market concerns and risk-off sentiment. Investors were
particularly concerned about the European growth and inflation
picture given oil and gas dependence on Russia. Rallying commodity
prices as a result of the Russia-Ukraine war markedly benefited
commodity-linked currencies, such as the Norwegian Krona ("NOK"),
Australian Dollar ("AUD") and the Canadian Dollar ("CAD") towards
the end of the year.
Faced with the ongoing uncertainty of inflationary pressures and
persistent inflation overshooting relative to its targets, G10
central banks largely abandoned all notions of transitory inflation
by the end of the fiscal year, escalating their fight against
inflation with more aggressive hiking language and several banks
enacting rate hikes, including the Federal Open Market Committee
("FOMC") (+25bps) and BoE (+50bps). The latest Fed dot plot showed
officials' median projection was for the benchmark rate to reach
around 2.0% towards the end of 2022, then 2.8% in 2023 and 2024.
The Bank of Japan ("BoJ") and Swiss National Bank ("SNB") remained
at the back of the pack with regard to policy tightening, whilst
the European Central Bank ("ECB") sought to balance the risks from
surging inflation, a fragile economy and the potential for
financial market "fragmentation" as emergency bond purchases are
unwound. The prospect of premature policy tightening forced by a
sudden resurgence in inflation remains a key risk in the minds of
investors going into the 2022 financial year. Overall, the US
dollar performed well for most of the year, reflecting a mixture of
risk-off market sentiment, US economic exceptionalism, and relative
insulation to commodity price shocks from the war in Ukraine.
KEY PERFORMANCE INDICATORS
Measuring our performance against our strategy.
The Board uses both financial and non -- financial key
performance indicators ("KPIs") to monitor and measure the
performance of the Group against its strategic priorities. Some
KPIs link to specific strategic areas as noted below, whilst others
represent higher level key metrics in terms of the Group's business
and financial performance.
Financial KPIs
Revenue (GBPm)
Revenue is earned predominantly from the provision of currency
management services in the form of management fees and performance
fees.
Revenue GBP million
FY-22 35.1
FY-21 25.4
FY-20 25.6
FY-19 25.0
FY-18 23.8
------------
Why this is important
Revenue is a key indicator of client experience, growth and a
key driver of profitability. Growth in AUME, especially into
Record's higher revenue-margin products, resulted in a 37% increase
in management fees. Revenue also includes performance fees, which
increased by GBP0.4m to GBP0.5m (2021: GBP0.1m).
Link to strategy
Diversification
Modernisation
Operating profit margin (%)
Operating profit margin is an alternative performance measure,
calculated by dividing operating profit by revenue.
Operating %
profit margin
FY-22 31
FY-21 24
FY-20 30
FY-19 32
FY-18 31
---
Why this is important
Operating profit margin is an indicator of the efficiency of the
business in turning revenue into profit. Inflows into higher
revenue-margin products in addition to efficiencies seen from the
adoption of technology in operational areas both contributed to the
increase in operating margin to 31% for the year.
The Group aims to increase the operating profit margin over time
through investment in resources and technology to maintain its
premium products and services, whilst increasing operating
efficiency and developing more diversified revenue streams in
higher-margin products.
Link to strategy
Diversification
Modernisation
Basic earnings per share ("EPS") (pence per share)
The Group aims to create shareholder value over the long term,
delivered through progressive and sustainable growth in EPS.
EPS pence
FY-22 4.52
FY-21 2.75
FY-20 3.26
FY-19 3.27
FY-18 3.03
------
Why this is important
EPS measures the overall effectiveness of the business model and
drives both our dividend policy and the value generated for
shareholders. Similarly to operating profit, EPS has increased this
year as the benefits from the implementation of the new strategy
begin to deliver results in financial terms.
Link to strategy
Diversification
Modernisation
Succession
Dividends per share ("DPS") (pence per share)
Our dividend policy targets a level of ordinary dividend within
the range of 70% to 90% of annual earnings, and which allows for
progressive and sustainable dividend growth in line with the trend
in profitability.
DPS Ordinary dividend Special dividend
per share pence per share pence
FY-22 3.60 0.92
FY-21 2.30 0.45
FY-20 2.30 0.41
FY-19 2.30 0.69
FY-18 2.30 0.50
------------------ -----------------
Why this is important
Progressive and sustainable dividend payments illustrate the
cash-generative nature of Record's business, and its strength in
converting profits into cash and providing a suitable return to
shareholders. The ordinary dividend per share has increased by 57%,
reflecting the Board's confidence in the ability of the business to
deliver its strategy and to achieve sustainable growth. The special
dividend per share has increased by 0.47 pence, resulting in a 64%
increase in total dividends to 4.52 pence per share (2021: 2.75
pence per share).
Link to strategy
Diversification
Modernisation
Succession
Non-financial KPIs
AUME ($ billion)
As a currency and derivatives manager, Record manages only the
impact of foreign exchange and not the underlying assets of its
clients, therefore its Assets Under Management ("AUM") are
notional. 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.
AUME $ billion
FY-22 83.1
FY-21 80.1
FY-20 58.6
FY-19 57.3
FY-18 62.2
----------
Why this is important
AUME is a key driver of future revenue and an indicator of
business growth. AUME increased by 3.7% for the year, including net
inflows of $2.4 billion diversified across product lines.
Link to strategy
Diversification
Modernisation
Succession
Client longevity (%)
Client longevity measures how long Record has been providing
currency and derivative management services to each client with a
mandate active as at 31 March 2022.
Client %
longevity
0-1 yrs 13
1-3 yrs 27
3-6 yrs 29
6-10 yrs 11
>10 yrs 20
---
Why this is important
Client longevity is both an indicator of recent client growth,
and also of the Group's success in sustaining quality client
relationships through investment cycles. Building long-standing and
trusted adviser relationships with clients provides opportunities
for collaboration and partnerships on new and innovative investment
products.
Link to strategy
Diversification
Average number of employees
The average number of employees through the year includes Non --
executive Directors.
Average
number of
employees
FY-22 82
FY-21 83
FY-20 82
FY-19 85
FY-18 81
---
Why this is important
Average employee numbers is an indicator of business growth and
also of how effectively the Group is using technology to make
processes more efficient. Implementing the new strategy has
required a change in mix of required skill sets of employees, so
whilst the average number of employees has not changed
significantly, a degree of employee turnover has brought additional
knowledge and experience into the Group required to drive
innovation and the diversification into new products and
technology.
Link to strategy
Diversification
Modernisation
Succession
Staff retention (%)
Staff retention is the number of employees who were employed by
Record throughout the period as a percentage of the number of
employees at the beginning of the period.
Staff retention %
FY-22 74
FY-21 90
FY-20 81
FY-19 84
FY-18 93
---
Why this is important
Planning for generational change is key to the Group's strategy.
A decrease in staff retention in the year reflects the focus on
rebalancing the skill sets required by the business to drive the
innovation and growth required to deliver the strategy. The Group
remains cognisant of ensuring the retention and development of key
talent as well as the factors affecting all of our employees'
wellbeing.
Link to strategy
Diversification
Modernisation
Succession
Employees with equity interest (%)
The percentage of employees who own shares in Record plc at year
end.
Employees %
with equity
interest
FY-22 61
FY-21 68
FY-20 69
FY-19 70
FY-18 72
---
Why this is important
The alignment of employee interests with those of our
shareholders is an important factor in ensuring the longer-term
success of our business and is an important tool in managing
generational change. The decrease this year is linked to changes
made under the new strategy resulting in a higher turnover of staff
and consequently a short-term decrease in employees holding shares.
The Group's remuneration structure includes schemes with both
mandatory and voluntary equity participation, reflecting the
importance the Group places on alignment.
Link to strategy
Succession
OPERATING REVIEW
Growth in AUME has continued during the year, increasing by $3.0
billion to $83.1 billion including net inflows of $2.4 billion.
Product investment performance
Hedging
Our hedging products are predominantly systematic in nature. The
effectiveness of each client mandate 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.
Passive Hedging
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 ratio. While the
strategy is partly systematic, the episodic nature of many
opportunities exploited by the strategy means it requires a higher
level of discretionary oversight than has historically been
associated with Passive Hedging. Global markets have seen
steepening interest rate curves from the end of 2021, which stems
from central banks being forced to engage in more hawkish monetary
policy as they try to keep inflationary pressures under control.
This has had the effect of introducing a high degree of volatility
into short-term interest rate markets, from which FX forward
pricing is determined. The heightened volatility has increased the
opportunity set for our clients' portfolios, and as such we
positioned client portfolios appropriately to add value from this
volatility, achieving positive performance.
The table below shows the total value added relative to a
fixed-tenor benchmark for an enhanced Passive Hedging programme for
a representative account. The base currency used is Swiss
francs.
Return Return
for
year to since
31 March inception
2022
----------------------------------------------------------------------------------------- --------- -----------
Value added by enhanced Passive Hedging programme relative to a fixed -- tenor benchmark 0.13% 0.09% p.a.
----------------------------------------------------------------------------------------- --------- -----------
Dynamic Hedging
The performance of our Dynamic Hedging product depends on how
the foreign currencies change in value relative to the base
currency of our client. During the year, US investors saw losses
from currency on international assets when valuing positions in US
dollars, as the US dollar appreciated against the majority of G10
currencies. Record's Dynamic Hedging product adjusted hedge ratios
in line with US dollar fluctuations, reducing hedging losses when
the US dollar was weaker and helping to protect against currency
losses when the US dollar was episodically stronger - as a result,
Dynamic Hedging performance was positive, partially offsetting
currency losses on the underlying foreign currency exposure.
The performance of the Dynamic Hedging programmes hedging US
dollar exposures into other currencies was opposing and reflective
of the mandates' specific objectives, benchmarks and inception
dates in the reported period.
Return Return
for
year to since
31 March inception
2022
---------------------------------------------------------------------- --------- -----------
Value added by Dynamic Hedging programme for a representative account 0.60% 0.46% p.a.
---------------------------------------------------------------------- --------- -----------
Currency for Return
Sustainable investing
Record EM Sustainable Finance ("EMSF") Fund
The Record EMSF Fund USD class A returned -0.94% from inception
(28 June 2021) to 31 March 2022, outperforming the relevant
emerging market local debt benchmark by 11.13%.
The currency portfolio was a net positive contributor to fund
returns, although performance was mixed as the escalation of the
Russia-Ukraine conflict in calendar Q1-22 drained market sentiment,
reflecting the degree of regional interdependence and highlighting
the fragility of cross-border banking and trade flows. Pockets of
tumult emerged as investors weighed the aftermath and set out to
gauge the extent of spillovers across the global supply chain.
The positive performance of the currency overlay was led by the
notable performance of the diversified hard currency funding basket
(particularly JPY and GBP shorts) and long exposures in Latin
American emerging market currencies, given their geographical
insulation from the conflict, net positive exposure to commodity
prices, and the relatively aggressive tightening cycles embarked on
by regional central banks. Discretionary management proved prudent,
as timely intervention in the period across a number of currency
positions delivered a net contribution to returns, such as in the
fallout of the CBRT's monetary unorthodoxy, and Russia's invasion
of Ukraine where rouble positions had already been closed. Within
the frontier universe, the Ukrainian hryvnia, Egyptian pound,
Ghanaian cedi and Kazakhstan tenge detracted materially from
returns.
Rising U.S. treasury yields, amid stubbornly high inflation
prints and a hawkish Fed backdrop, posed broad-based headwinds for
external emerging market debt investors in the period; the USD bond
portfolio underlay resultantly detracted from fund performance as
market conditions remained challenging for investors. The fund did,
however, benefit from a lower duration positioning versus the
benchmark, cushioning downside sensitivity as yields rallied.
The table below shows the performance of the EMSF Fund USD class
A and the relevant benchmark, being the JP Morgan GBI-EM Global
Diversified. The performance is since inception of the EMSF Fund on
28 June 2021 to 31 March 2022.
Return
since
inception
------------------------------------- ----------
EMSF Fund USD Share Class (0.94%)
----------
JP Morgan GBI-EM Global Diversified (12.07%)
------------------------------------- ----------
Currency Multi-Strategy
Record's Currency Multi-Strategy product combines a number of
diversified return streams, which include:
-- Forward Rate Bias ("FRB", also known as Carry) and Emerging
Market strategies which are founded on market risk premia and as
such perform more strongly in "risk on" environments; and
-- Momentum, Value and Range Trading strategies which are more
behavioural in nature, and as a result are less risk --
sensitive.
Record's Multi-Strategy mandates delivered positive overall
performance over the year which was driven by the outperformance in
FRB and EM strategies given their positive correlation to sentiment
whilst heterogeneity in DM central bank rate normalisation also
provided conducive DM carry opportunities. Positive vaccine news
supported the global growth outlook and the mitigation of negative
tail risk scenarios around a prolonged recession, which enticed
inflows into EM and risk-on DM currencies. Intervention by
portfolio managers in the factor investing process on the back of
major idiosyncratic events including the Russia-Ukraine conflict
offered significant protection to strategy performance. The
long-only EM module within the Currency Multi-Strategy was replaced
with a long-short EM strategy at the end of February, reflecting
the latest in-house thinking on Currency for Return investing in EM
FX.
Return
for
12 months Return since Volatility
to since
31 March inception inception
2022
Returns % % p.a. % p.a.
------------------------------------ ---------- ------------- -----------
Record Multi -- Strategy composite 0.58% 0.83% 3.08%
------------------------------------ ---------- ------------- -----------
Scaling
The Multi-Strategy product allows clients to select the level of
exposure they desire in their currency programmes by selecting the
required level of scaling and/or the volatility target.
It should be emphasised that in this case "scaling" refers to
the multiple of the aggregate notional value of forward contracts
in the currency programme to the mandate size. This is limited by
the willingness of counterparty banks to take exposure to the
client. The AUME of those mandates where scaling or a volatility
target is selected is represented in Record's AUME at the scaled
value of the mandate, as opposed to the mandate size.
AUME development
AUME expressed in US dollar terms finished the year at $83.1
billion, an increase of 4% (2021: $80.1 billion). When expressed in
sterling, AUME increased by 9% to GBP63.1 billion (2021: GBP58.1
billion).
AUME movements ($bn)
AUME at 1 April
2021 80.1
Net flows + 2.4
Markets + 0.3
FX and scaling + 0.3
AUME at 31
March 2022 83.1
Passive Hedging AUME increased by 2% to $62.8 billion (2021:
$61.5 billion) driven by net inflows of $1.1 billion for the year
from new and existing clients. Further positive impacts arose from
market movements ($0.6 billion) which were partially offset by
negative movements in exchange rates ($0.4 billion).
Dynamic Hedging AUME increased by 14%, ending the year at $10.6
billion (2021: $9.3 billion). The majority of the $1.3 billion
increase is attributable to net inflows ($1.4 billion), of which
$0.6 billion were from new clients with the remaining $0.8 billion
from existing clients. Market movements reduced AUME slightly by
$0.1 billion.
Currency for Return AUME increased to $5.0 billion (2021: $3.9
billion) by the end of the year, with the launch of the Record EMSF
Fund during the year contributing $1.2 billion of inflows, offset
by outflows of $0.9 billion from one client exiting the
Multi-Strategy product. There were positive movements both in
exchange rates of $0.5 billion and market movements of $0.3
billion.
Multi-product AUME decreased to $4.5 billion (2021: $5.2
billion). Net outflows of $0.5 billion were driven primarily by the
reversal of $0.4 billion of inflow from a tactical bespoke mandate
announced in QE 31 December 2020 which had been expected to be
temporary in nature. There were negative market movements of $0.2
billion.
Market performance
Record's AUME is affected by movements in market levels because
substantially all the Passive and Dynamic Hedging, and some of the
Multi-product mandates, are linked to equity, fixed income and
other market levels. Market movements increased AUME by $0.3
billion in the year ended 31 March 2022 (2021: increase of $8.4
billion).
Further detail on the composition of assets underlying our
Hedging and Multi-product mandates is provided below in an attempt
to illustrate more clearly the impact of equity and fixed income
market movements on these mandate sizes.
AUME composition by underlying asset class as at 31 March
2022
Fixed
Equity income Other
% % %
----------------- ------- ------- ------
Passive Hedging 26% 32% 42%
Dynamic Hedging 91% -% 9%
Multi-product -% -% 100%
----------------- ------- ------- ------
Forex
Approximately 81% of the Group's AUME is non -- US dollar
denominated. Therefore, foreign exchange movements may have an
impact on AUME when expressing non-US dollar denominated AUME in US
dollars. Foreign exchange movements increased AUME by $0.3 billion
over the year. This movement does not have an equivalent impact on
the sterling value of fee income.
At 31 March 2022, the split of AUME by base currency was 12% in
sterling, 43% in Swiss francs, 19% in US dollars, 15% in euros and
11% in other currencies.
AUME composition by base currency
Base currency 31 March 31 March
2022 2021
------------------
Sterling GBP 7.6bn GBP 6.7bn
US dollar USD 17.6bn USD 16.2bn
Swiss franc CHF 33.1bn CHF 35.2bn
Euro EUR 11.4bn EUR 9.9bn
Australian dollar AUD 2.9bn AUD 2.1bn
Canadian dollar CAD 6.1bn CAD 4.8bn
Swedish krona SEK 0.0bn SEK 0.4bn
------------------ ----------- -----------
Product mix
AUME composition by product
31 March 2022 31 March 2021
US $bn % US $bn %
--------------------- --------- --------- -----
Passive Hedging 62.8 76% 61.5 77%
Dynamic Hedging 10.6 13% 9.3 12%
Currency for Return 5.0 6% 3.9 5%
Multi-product 4.5 5% 5.2 6%
Cash 0.2 -% 0.2 -%
--------- ----- --------- -----
Total 83.1 100% 80.1 100%
--------------------- --------- ----- --------- -----
Notwithstanding the product mix remaining broadly constant year
on year, the growth and inflows into both Dynamic Hedging and the
newly launched Record EMSF Fund both represent higher
revenue-margin AUME which continues to diversify the Group's
revenue streams and to dilute historical concentration on the lower
revenue-margin Passive Hedging product.
FINANCIAL REVIEW
"Two years into the Group's change in strategic direction, the
financial benefits are now starting to be seen, with material
increases in revenue, profits, operating margin and earnings."
Steve Cullen
Chief Financial Officer
Overview
The Group has continued to implement its change in strategy
whilst building on its existing strong core of hedging products.
Further inflows into Dynamic Hedging this year plus diversification
into new and innovative products with higher revenue-margins have
both served to drive the increase in revenue and operating profit.
We continue to invest in the modernisation of our systems and to
provide additional resources required for the running of new
products and services, which has inevitably led to an increase in
our running costs. Whilst we expect to see a continuation of this
increase in the current financial year (FY-23), not least due to
high inflationary pressures, we anticipate seeing growth in our
operating margin as the new products gain further traction
alongside the efficiencies and new opportunities arising from
investing in the modernisation our systems and processes.
The Group remains independent and profitable, supported by its
strong and liquid balance sheet.
Revenues have grown to GBP35.1 million (2021: GBP25.4 million)
supported by a 37% increase in management fees. Operating profit
for the year increased by 77% to GBP10.8 million (2021: GBP6.1
million) and the operating profit margin increased to 31% (2021:
24%) with a 76% increase in profit before tax to GBP10.9 million
(2021: GBP6.2 million). The increase in operating profit reflects
the change in product mix as a result of the inflows into Record's
higher revenue-margin products, and to a lesser extent the
efficiencies starting to emerge from the investments made in the
modernisation of the Group's technology.
Profit and loss (GBPm)
2022 2021
-----------------------------------
Revenue 35.1 25.4
Cost of sales (0.2) (0.4)
------- -------
Gross profit 34.9 25.0
Personnel (excluding GPS) (10.8) (10.3)
Non -- personnel costs (7.2) (5.4)
Other income or expense (0.4) -
------- -------
Total expenditure (excluding GPS) (18.4) (15.7)
GPS (5.7) (3.2)
------- -------
Operating profit 10.8 6.1
------- -------
Operating profit margin 31% 24%
Net interest received 0.1 0.1
------- -------
Profit before tax 10.9 6.2
Tax (2.3) (0.8)
------- -------
Profit after tax 8.6 5.4
----------------------------------- ------- -------
Revenue
Record's revenue derives from the provision of currency and
derivative management services, fees for which can be charged
through management fee only or management plus performance fee
structures, which are available across Record's product range.
Management fee only mandates are charged based upon the AUME of the
product, and management plus performance fee structures include a
lower percentage fee applied to AUME, and a proportional share of
the specific product performance measured over a defined
period.
Management fees are typically charged on a quarterly basis,
although Record may charge fees monthly for some of its larger
clients. Performance fees can be charged on quarterly, six-monthly
or annual performance periods on the basis agreed with the
particular client.
Management fees earned during the year increased by 37% to
GBP34.1 million (2021: GBP24.9 million) driven predominantly by
inflows into higher revenue-margin products, with the launch of the
Record EM Sustainable Finance Fund in June 2021 under Currency for
Return, and the continuation of the growth seen in the latter part
of FY-21 in Dynamic Hedging. Revenues increased in the second half
by 12% from GBP16.3 million to GBP18.3 million (ignoring
performance fees).
Revenue analysis (GBPm)
Year Year
ended ended
31 Mar 31 Mar
2022 2021
-------------------------------- ------- -------
Management fees
Passive Hedging 11.8 11.4
Dynamic Hedging 10.0 5.6
Currency for Return 5.5 2.0
Multi-product 6.8 5.9
------- -------
Total management fees 34.1 24.9
------- -------
Performance fees 0.5 0.1
Other currency services income 0.5 0.4
------- -------
Total revenue 35.1 25.4
-------------------------------- ------- -------
Management fees
Passive Hedging management fees increased by 3% to GBP11.8
million for the year (2021: GBP11.4 million) predominantly linked
to the net inflows of $1.1 billion in the year. Whilst Passive
Hedging commands a significantly lower average fee rate than
Record's other products, it continues to provide a robust and
valuable revenue stream from a long-standing client base which
itself provides potential synergies to the Group in the form of
future partnerships and product innovation.
Dynamic Hedging management fees increased by 78% to GBP10.0
million (2021: GBP5.6 million) as a result of the full-year impact
of the $6.1 billion of inflows seen in the second half of FY-21,
combined with the total net inflows of $1.4 billion in FY-22 from
new and existing clients.
Management fees from Currency for Return mandates increased 175%
to GBP5.5 million (2021: GBP2.0 million). The successful launch of
the Record EM Sustainable Finance Fund in June 2021 added $1.2
billion of AUME, which attracts significantly higher fee rates than
Record's historical Currency for Return products. This new and
innovative product has resulted in a material increase in Currency
for Return revenue, and has more than offset the outflow of $0.9
billion from the Multi-Strategy product in the third quarter of the
year.
Multi-product management fees increased by 15% to GBP6.8 million
(2021: GBP5.9 million) as a result of the full-year impact of $1.0
billion of net inflows seen in the second half of last year.
However, net outflows of $0.5 billion in the second half (including
$0.3 billion from a bespoke tactical mandate of a temporary nature)
are expected to reduce revenues slightly in the current year
(FY-23).
Performance fees
Performance fees are derived from a combination of hedging and
return -- seeking products. Our Currency for Return and enhanced
Passive Hedging products gradually made up lost ground during the
year versus previous high water marks, especially towards the end
of the year which saw opportunities arising from increases to
interest rate differentials as a result of changes to central
banks' monetary policies, and which we anticipate may provide
further opportunities in the current year (FY-23).
Aggregate performance fees of GBP0.5 million were earned during
the year (2021: GBP0.1 million).
Other currency services income
Other currency services income totalled GBP0.5 million (2021:
GBP0.4 million) and consists of fees from ancillary currency
management services including collateral management, signal hedging
and tactical execution services. Fees charged for these ancillary
services are not linked to AUME.
Expenditure
Cost of sales
Cost of sales decreased to GBP0.2 million from GBP0.4 million in
FY-21 and comprises referral fees and costs in relation to the
Record Umbrella Fund, which was closed during the year.
Operating expenditure
The Group operating expenditure (excluding variable remuneration
and other expenses) increased by 15% to GBP18.0 million for the
year (2021: GBP15.7 million).
Average employee numbers for the year remained broadly constant,
notwithstanding the changes made linked to the succession plans of
the business. Consequently, growth in personnel costs of 5% to
GBP10.8 million (2021: GBP10.3 million) reflects salary increases
linked to internal promotions and some costs associated with
restructuring.
Non-personnel costs increased by 33% during the year to GBP7.2
million (2021: GBP5.4 million). The Group has continued to invest
in technology and systems to support the growth and modernisation
required under the change in strategy, including additional
associated running costs, for example significant new data
requirements and office space in London.
The Group remains conscious of the need for good cost control
balanced with ensuring the business is appropriately resourced to
achieve its strategic goals of growth, modernisation and
succession. However, it is anticipated that inflationary pressures
in the current environment will inevitably lead to an increase in
its cost base in the current year (FY-23).
Other expenses were GBP0.4 million for the year (2021: income of
GBP41k) and represent net losses/gains made on derivative financial
instruments employed by the Group's seed funds, hedging activities
and other FX adjustments or revaluations.
Group Profit Share ("GPS") Scheme
The GPS pool has increased by 78% to GBP5.7 million (2021:
GBP3.2 million) in line with the 77% increase in operating profit
for the year. The GPS pool has been calculated at 34% of pre -- GPS
operating profit.
Operating profit and margin
Group operating profit increased by 77% to GBP10.8 million
(2021: GBP6.1 million) and the Group operating margin increased to
31% (2021: 24%). As expected, the decrease in the Group's operating
margin to 24% last year proved temporary during its transitional
year and has since rebounded as the inflows into new and existing
products has changed the revenue mix towards higher revenue-margin
products in line with the strategic priority of
diversification.
Cash flow
The Group consolidated statement of cash flows is shown in the
financial statements.
The Group's year -- end cash and cash equivalents stood at
GBP3.3 million (2021: GBP6.8 million) and the total assets managed
as cash were GBP17.3 million (2021: GBP19.8 million). The cash
generated from operating activities before tax increased by 55% to
GBP12.7 million (2021: GBP8.2 million). During the year, taxation
of GBP1.4 million was paid (2021: GBP1.4 million) and GBP6.5
million was paid in dividends (2021: GBP5.3 million). The Group
spent GBP4.5 million (2021: GBP1.8 million) on the purchase of its
own shares for the EBT to set against the future vesting of share
options.
At the year end, the Group held money market instruments with
maturities between three and twelve months worth GBP13.9 million
(2021: GBP12.9 million). These instruments are managed as cash by
the Group but are not classified as cash under IFRS rules (see note
18 of the financial statements for more details).
Dividends
An interim ordinary dividend of 1.80 pence per share (2021: 1.15
pence) was paid to shareholders on 30 December 2021, equivalent to
GBP3.4 million.
As disclosed in the Chairman's statement, the Board is
recommending a final ordinary dividend of 1.80 pence per share,
equivalent to GBP3.4 million, taking the overall ordinary dividend
for the financial year to 3.60 pence per share. Simultaneously, the
Board is also paying a special dividend of 0.92 pence equivalent to
GBP1.8 million, making the total dividend in respect of the year
ending 31 March 2022 of GBP8.6 million equivalent to 100% of total
earnings.
The total ordinary and special dividends paid per share in
respect of the prior year ended 31 March 2021 were 2.30 pence and
0.45 pence respectively, equivalent to total dividends of GBP5.3
million and representing 100% of total earnings per share of 2.75
pence.
Financial stability and capital management
The Group's balance sheet is strong and liquid with total net
assets of GBP25.9 million at the end of the year, including current
assets managed as cash totalling GBP17.3 million. The cash
generated by the business has increased in line with the rise in
profitability, with net cash inflows from operating activities
after tax of GBP11.4 million for the year (2021: GBP6.8 million).
For further information on cash flows, see the consolidated
statement of cash flows in the financial statements.
Under the Board's capital and dividend policies, the Group can
pay up to a maximum of 100% of earnings for that financial year,
thereby ensuring the continued strength of its balance sheet.
To this end, the Group maintains a financial model to assist it
in forecasting future capital requirements over a three-year cycle
under various scenarios and monitors the capital and liquidity
positions of the Group on an ongoing and frequent basis. The Group
has no debt.
Record Currency Management Limited ("RCML") is a UK MiFID
investment firm authorised and regulated by the Financial Conduct
Authority ("FCA") registered as an Investment Adviser with the SEC
and as a Commodity Trading Adviser with the CFTC, and is a wholly
owned subsidiary of Record plc. Both RCML and the Group submit
regular capital adequacy returns to the FCA, and held significant
surplus capital resources relative to the regulatory financial
resource requirement throughout the year.
The Board has concluded that the Group is adequately capitalised
both to continue its operations effectively and to meet regulatory
requirements, due to the size and liquidity of balance sheet
resources maintained by the Group.
The Group held regulatory capital resources based on the audited
financial statements as at 31 March as follows:
Regulatory capital resources (GBPm)
2022 2021
-------------------------------
Core Tier 1 capital 25.9 26.8
Deductions: intangible assets (0.6) (0.4)
Regulatory capital resources 25.3 26.4
------------------------------- ------ ------
Cautionary statement
This Annual Report contains certain forward -- looking
statements with respect to the financial condition, results,
operations and business of Record. These statements involve risk
and uncertainty because they relate to events and depend upon
circumstances that will occur in the future. There are a number of
factors that could cause actual results or developments to differ
materially from those expressed or implied in this Annual Report.
Nothing in this Annual Report should be construed as a profit
forecast.
Directors' responsibility statement pursuant to DTR4
The Directors confirm to the best of their knowledge that:
-- the financial statements have been prepared in accordance
with international financial reporting standards adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in the European Union
and give a true and fair view of the assets, liabilities, financial
position and profit and loss of the Group; and
the annual report includes a fair review of the development and
performance of the business and the financial position of the
Group, together with a description of the principal risks and
uncertainties that they face.
FINANCIAL STATEMENTS
Consolidated statement of comprehensive income
Year ended 31 March 2022
2022 2021
Note GBP'000 GBP'000
--------------------------------------------- ----- --------- ---------
Revenue 4 35,152 25,412
Cost of sales (219) (399)
----- --------- ---------
Gross profit 34,933 25,013
Administrative expenses (23,726) (18,934)
Other income or expense 5 (372) 41
----- --------- ---------
Operating profit 5 10,835 6,120
Finance income 44 71
Finance expense (23) (38)
----- --------- ---------
Profit before tax 10,856 6,153
Taxation 7 (2,225) (802)
----- --------- ---------
Profit after tax 8,631 5,351
----- --------- ---------
Total comprehensive income for the year 8,631 5,351
----- --------- ---------
Profit and total comprehensive income for
the year attributable to
Owners of the parent 8,631 5,351
----- --------- ---------
Total comprehensive income for the year 8,631 5,351
----- --------- ---------
Earnings per share for profit attributable
to the equity holders of the parent during
the year
Basic earnings per share 8 4.52 2.75
Diluted earnings per share 8 4.37 2.73
--------------------------------------------- ----- --------- ---------
The notes below are an integral part of these consolidated
financial statements.
Consolidated statement of financial position
As at 31 March 2022
2022 2021
Note GBP'000 GBP'000
----------------------------------------------------- ----- -------- --------
Non -- current assets
Intangible assets 11 562 420
Right -- of -- use assets 12 1,421 684
Property, plant and equipment 13 401 683
Investments 14 3,447 3,046
Deferred tax assets 15 253 212
----- -------- --------
Total non -- current assets 6,084 5,045
----- -------- --------
Current assets
Trade and other receivables 16 9,883 8,006
Derivative financial assets 17 - 260
Money market instruments with maturities > 3 months 18 13,913 12,932
Cash and cash equivalents 18 3,345 6,847
----- -------- --------
Total current assets 27,141 28,045
----- -------- --------
Total assets 33,225 33,090
----- -------- --------
Current liabilities
Trade and other payables 19 (4,721) (3,426)
Corporation tax liabilities 19 (924) (315)
Provisions (75) -
Lease liabilities 12 (366) (539)
Financial liabilities 20 - (1,696)
Derivative financial liabilities 17 (124) (16)
----- -------- --------
Total current liabilities (6,210) (5,992)
----- -------- --------
Non-current liabilities
Provisions 21 (125) (200)
Lease liabilities 12 (960) (99)
----- -------- --------
Total non-current liabilities (1,085) (299)
----- -------- --------
Total net assets 25,930 26,799
----- -------- --------
Equity
Issued share capital 22 50 50
Share premium account 3,238 2,418
Capital redemption reserve 26 26
Retained earnings 22,616 24,305
----- -------- --------
Equity attributable to owners of the parent 25,930 26,799
----- -------- --------
Total equity 25,930 26,799
----------------------------------------------------- ----- -------- --------
Approved by the Board on 20 June 2022. Company registered
number: 1927640
The notes below are an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 March 2022
Equity
attributable
to
equity
Called Share Capital holders Non-
-- up
share premium redemption Retained of the controlling Total
capital account reserve earnings parent interests equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ----- -------- --------- ----------- --------- ------------- ------------ --------
As at 1 April 2021 50 2,418 26 24,305 26,799 - 26,799
Profit and total
comprehensive income for
the year - - - 8,631 8,631 - 8,631
Dividends paid 9 - - - (6,512) (6,512) - (6,512)
Own shares acquired by EBT - - - (5,807) (5,807) - (5,807)
Release of shares held by
EBT - 820 - 2,258 3,078 - 3,078
Share-based payment
reserve movement - - - (259) (259) - (259)
----- -------- --------- ----------- --------- ------------- ------------ --------
Transactions with
shareholders - 820 - (10,320) (9,500) - (9,500)
----- -------- --------- ----------- --------- ------------- ------------ --------
As at 31 March 2022 50 3,238 26 22,616 25,930 - 25,930
--------------------------- ----- -------- --------- ----------- --------- ------------- ------------ --------
Year ended 31 March 2021
Equity
Capital attributable
to
Called Share redemption Retained equity Non-controlling Total
-- up premium holders
share account reserve earnings of the interests equity
capital parent
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ----- --------- --------- ----------- --------- ------------- ---------------- --------
As at 1 April 2020 50 2,259 26 25,694 28,029 132 28,161
Profit and total
comprehensive income
for the year - - - 5,351 5,351 - 5,351
Trade Record sale - - - 32 32 (132) (100)
Dividends paid 9 - - - (5,290) (5,290) - (5,290)
Own shares acquired
by EBT - - - (2,338) (2,338) - (2,338)
Release of shares
held by EBT - 159 - 994 1,153 - 1,153
Share-based payment
reserve movement - - - (138) (138) - (138)
----- --------- --------- ----------- --------- ------------- ---------------- --------
Transactions with
shareholders - 159 - (6,772) (6,613) - (6,613)
----- --------- --------- ----------- --------- ------------- ---------------- --------
As at 31 March 2021 50 2,418 26 24,305 26,799 - 26,799
---------------------- ----- --------- --------- ----------- --------- ------------- ---------------- --------
The notes below are an integral part of these consolidated
financial statements.
Consolidated statement of cash flows
Year ended 31 March 2022
2022 2021
Note GBP'000 GBP'000
--------------------------------------------------------------- ----- --------- --------
Profit after tax 8,631 5,351
Adjustments for non-cash movements
Depreciation of right -- of -- use assets 12 489 490
Depreciation of property, plant and equipment 13 357 298
Amortisation of intangible assets 11 192 168
Share-based payments 559 486
Decrease/(increase) in other non-cash items 877 (492)
Finance income (44) (71)
Finance expense 23 38
Tax expense 7 2,225 802
Changes in working capital
(Increase)/decrease in receivables (1,877) 696
Increase in payables 1,296 417
----- --------- --------
Cash inflow from operating activities 12,728 8,183
Corporation tax paid (1,373) (1,385)
----- --------- --------
Net cash inflow from operating activities 11,355 6,798
Purchase of intangible assets 11 (334) (189)
Purchase of property, plant and equipment 13 (75) (230)
Purchase of investments (1,773) (881)
Payment to seed fund holders (1,808) (335)
Redemption of bonds 1,462 -
Investment in subsidiaries - (23)
Purchase of money market instruments with maturity > 3 months (983) (4,973)
Sale of Trade Record shares - 120
Interest received 44 71
----- --------- --------
Net cash outflow from investing activities (3,467) (6,440)
Cash flow from financing activities
Lease repayments 12 (557) (560)
Purchase of own shares (4,462) (1,808)
Dividends paid to equity shareholders 9 (6,512) (5,290)
----- --------- --------
Net cash outflow from financing activities (11,531) (7,658)
----- --------- --------
Net decrease in cash and cash equivalents in the year (3,643) (7,300)
Exchange gains/(losses) 141 (147)
----- --------- --------
Cash and cash equivalents at the beginning of the year 6,847 14,294
----- --------- --------
Cash and cash equivalents at the end of the year 3,345 6,847
----- --------- --------
Closing cash and cash equivalents consist of:
Cash 3,345 2,372
Cash equivalents - 4,475
----- --------- --------
Cash and cash equivalents 18 3,345 6,847
--------------------------------------------------------------- ----- --------- --------
The notes below are an integral part of these consolidated
financial statements.
Company statement of financial position
As at 31 March 2022
2022 2021
Note GBP'000 GBP'000
------------------------------- ----- -------- --------
Non -- current assets
Right -- of -- use assets 12 1,232 642
Investments 14 5,029 4,315
Deferred tax 1 7
----- -------- --------
Total non -- current assets 6,262 4,964
----- -------- --------
Current assets
Corporation tax 3 17
Trade and other receivables 16 3,522 1,387
Cash and cash equivalents 18 43 173
----- -------- --------
Total current assets 3,568 1,577
----- -------- --------
Total assets 9,830 6,541
----- -------- --------
Current liabilities
Trade and other payables 19 (4,161) (16)
Lease liabilities 12 (326) (501)
Provisions 75 -
----- -------- --------
Total current liabilities (4,562) (517)
----- -------- --------
Non-current liabilities
Lease liabilities 12 (812) (96)
Provisions 21 (125) (200)
----- -------- --------
Total non-current liabilities (937) (296)
----- -------- --------
Total net assets 4,331 5,728
----- -------- --------
Equity
Issued share capital 22 50 50
Share premium account 1,809 1,809
Capital redemption reserve 26 26
Retained earnings 2,446 3,843
----- -------- --------
Total equity 4,331 5,728
------------------------------- ----- -------- --------
The Company's total comprehensive income for the year (which is
principally derived from intra-group dividends) was GBP4,558,705
(2021: GBP5,133,381).
Approved by the Board on 20 June 2022. Company registered
number: 1927640
The notes below are an integral part of these consolidated
financial statements.
Company statement of changes in equity
Year ended 31 March 2022
Called Share Capital Total
-- up
share premium redemption Retained shareholders'
capital account reserve earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- ----- -------- -------- ----------- --------- --------------
As at 1 April 2021 50 1,809 26 3,843 5,728
Profit and total comprehensive income for the year - - - 4,559 4,559
Dividends paid 9 - - - (6,512) (6,512)
Share option reserve movement - - - 556 556
----- -------- -------- ----------- --------- --------------
Transactions with shareholders - - - (1,356) (1,356)
----- -------- -------- ----------- --------- --------------
As at 31 March 2022 50 1,809 26 2,446 4,331
--------------------------------------------------- ----- -------- -------- ----------- --------- --------------
Year ended 31 March 2021
Called Share Capital Total
-- up
share premium redemption Retained shareholders'
capital account reserve earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ----- -------- -------- ----------- --------- --------------
As at 1
April 2020 50 1,809 26 3,819 5,704
Profit and
total comprehensive
income for
the year - - - 5,133 5,133
Dividends
paid 9 - - - (5,290) (5,290)
Share option
reserve movement - - - 181 181
----- -------- -------- ----------- --------- --------------
Transactions
with shareholders - - - (5,109) (5,109)
----- -------- -------- ----------- --------- --------------
As at 31
March 2021 50 1,809 26 3,843 5,728
---------------------- ----- -------- -------- ----------- --------- --------------
The notes below are an integral part of these consolidated
financial statements.
Company statement of cash flows
Year ended 31 March 2022
2022 2021
Note GBP'000 GBP'000
-------------------------------------------------------- ----- -------- --------
Loss after tax (41) (137)
Adjustments for non-cash movements
Depreciation of right -- of -- use assets 453 453
Loss on investments - 167
Decrease in other non-cash items 45 -
Finance expense 16 35
Tax expense (19) (30)
Changes in working capital
Increase in receivables (2,134) (1,245)
Increase in payables 2,470 6
Cash inflow/(outflow) from operating activities 790 (751)
Corporation taxes received 37 4
----- -------- --------
Net cash inflow/(outflow) from operating activities 827 (747)
Cash flow from investing activities
Dividends received 4,600 5,270
Investment in subsidiaries (325) (23)
Purchase of investments - (881)
Payments to seed fund holders 1,798 -
Disposal of subsidiary - 120
----- -------- --------
Net cash inflow from investing activities 6,073 4,486
Net cash flow from financing activities
Lease repayments (518) (517)
Dividends paid to equity shareholders (6,512) (5,290)
----- -------- --------
Net cash outflow from financing activities (7,030) (5,807)
----- -------- --------
Net decrease in cash and cash equivalents in the year (130) (2,068)
----- -------- --------
FX revaluation - -
Cash and cash equivalents at the beginning of the year 173 2,241
----- -------- --------
Cash and cash equivalents at the end of the year 43 173
----- -------- --------
Closing cash and cash equivalents consist of:
Cash 43 173
Cash equivalents - -
----- -------- --------
Cash and cash equivalents 18 43 173
-------------------------------------------------------- ----- -------- --------
The notes below are an integral part of these consolidated
financial statements.
Notes to the financial statements
for the year ended 31 March 2022
These financial statements exclude disclosures that are both
immaterial and judged to be unnecessary to understand our results
and financial position.
1. Accounting policies
In order to provide more clarity to the notes to the financial
statements, accounting policy descriptions appear at the beginning
of the note to which they relate.
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 periods
presented unless otherwise stated.
a. Accounting convention
Basis of preparation
This is an announcement of the Annual Financial Report of Record
plc as required to be published under DTR 4 of the UKLA Listing
Rules.
The financial information set out in this Annual Financial
Report does not constitute the Company's statutory accounts for
2021 or 2022. Statutory accounts for the years ended 31 March 2021
and 31 March 2022 have been reported on by the Independent Auditor.
The Independent Auditor's Reports on the Annual Report and
Financial Statements for 2021 and 2022 were unqualified, did not
draw attention to any matters by way of emphasis and did not
contain a statement under 498(2) or 498(3) of the Companies Act
2006.
Statutory accounts for the year ended 31 March 2021 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 March 2022 will be delivered to the Registrar in
due course.
The financial information in this Annual Financial Report has
been prepared using the recognition and measurement principles of
UK adopted international accounting standards. The accounting
policies adopted in this Annual Financial Report have been
consistently applied to all the years presented and are consistent
with the policies used in the preparation of the statutory accounts
for the year ended 31 March 2022. The principal accounting policies
adopted are unchanged from those used in the preparation of the
statutory accounts for the year ended 31 March 2021.
The Group financial statements have been prepared in accordance
with UK adopted international accounting standards and the Company
and other Group entities financial statements have also been
prepared in accordance with UK adopted international accounting
standards. The financial statements have been prepared on a
historical cost basis, modified to include fair valuation of
derivative financial instruments. Investments are measured at fair
value through profit or loss.
The Directors are satisfied that the Company and the Group have
adequate resources with which to continue to operate for the
foreseeable future. In arriving at this conclusion, the Directors
have considered in detail the impact of the covid -- 19 pandemic on
the Group, the market it operates in and its stakeholders. For this
reason, the financial statements have been prepared on a going
concern basis. Please refer to the Directors' report for more
detail on going concern, and also see management's detailed review
of the impact of covid-19 and the Russia/Ukraine crisis.
The preparation of financial statements in accordance with the
recognition and measurement principles set out in 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.
Future accounting developments
The Group did not implement the requirements of any other
standards or interpretations that were in issue but were not
required to be adopted by the Group at the year end date. No other
standards or interpretations have been issued that are expected to
have a material impact on the Group's financial statements.
b. Basis of consolidation
The consolidated financial information contained within the
financial statements incorporates financial statements of the
Company and its subsidiaries drawn up to 31 March 2022.
Subsidiaries are entities controlled by the Company and are
included from the date that control commences until the date that
control ceases. Control is achieved where the Company is exposed to
or has rights over variable returns from its involvement with the
entity and it has the power to affect returns. The Group has
applied UK adopted IFRSs for periods commencing on or after January
2021.
An Employee Benefit Trust has been established for the purposes
of satisfying certain share-based awards. As the Group has "de
facto" control over this special purpose entity, the trust is fully
consolidated within the financial statements.
Significant judgement
The Group uses judgement to determine whether investments in its
seed funds constitute controlling interests in accordance with IFRS
10 - "Consolidated Financial Statements". The Group considers all
relevant facts and circumstances in assessing whether it has
control over specific funds or other entities. This includes
consideration of the extent of the Group's exposure to variability
of returns as an investor and the Group's ability to direct the
relevant activities, through exercising its voting rights as an
investor, or as investment manager. We consider that the Group
exerts such control in cases where (either in isolation or together
with its related parties) it holds a majority of units in the
fund.
If the Group is in a position to be able to control a fund, then
the fund is consolidated within the Group financial statements.
Such funds are consolidated either on a line-by-line basis, or if
the fund meets the definition of a disposal group held for sale it
is classified and accounted for on that basis. In the case that the
Group does not control a fund for the complete reporting period,
then the fund is consolidated only for the part of the reporting
period for which the Group has control over the entity.
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. In the case of the funds
controlled by the Group, the interests of any external investors in
such funds are recognised as a financial liability as investments
in the fund are not considered to be equity instruments.
The financial statements of subsidiary undertakings, which are
prepared using uniform accounting policies, are coterminous with
those of Record plc, referred to as the "Company", apart from those
of the seed funds which have accounting reference dates of 30
September. The consolidated financial statements incorporate the
financial performance and the financial position of the seed funds
in the year ended 31 March 2021. The seed funds were closed in June
2021.
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 Company and its subsidiaries are
collectively referred to as the Group; the Group's total
comprehensive income for the year includes a profit of GBP4,558,705
attributable to the Company (2021: GBP5,133,381). The Company's
principal activity is that of a holding company.
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 the functional currency of the parent company. Foreign currency
transactions are translated into the functional currency of the
parent company using prevailing exchange rates which are updated on
a monthly basis. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the remeasurement of
monetary items at year -- end exchange rates are recognised in the
statement of comprehensive income under "other income or
expense".
d. Administrative expenses
Administrative expense includes staff costs, marketing and IT
costs, which are recognised on an accruals basis as services are
provided to the Group.
e. 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.
f. 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.
g. 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.
h. Equity
Share capital represents the nominal (par) value of shares that
have been issued. Share premium includes any premium received on
issue of share capital. From time to time, the Group has bought in
ordinary shares for cancellation. The cost of the buy-ins was taken
directly to retained earnings. The nominal value of the shares was
taken to a capital redemption reserve. Retained earnings includes
all current and prior period retained profits and share-based
employee remuneration. All transactions with owners of the parent
are recorded separately within equity.
2. Critical accounting estimates and judgements
In order to prepare the financial statements in accordance with
IFRS, management make certain critical accounting estimates.
Management are also required to exercise judgement in the process
of applying the Group's accounting policies and in determining the
reported amount of certain assets and liabilities.
The estimates and associated assumptions are based on historical
experience and various other factors including expectations of
future events 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. As a consequence, actual
results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision
affects both current and future periods.
Areas of significant judgement - consolidation of seed funds
Note 1b describes the basis which the Group uses to determine
whether it controls seed funds; further detail on consolidation of
seed funds is provided in note 14.
Sources of estimation uncertainty
Management recognise that the use of estimates is important in
calculating both the fair value of share options offered by the
Group to its employees (see note 23) and deferred tax (see note
15), however the sources of estimation uncertainty do not present a
significant risk of material adjustment to the carrying amounts of
assets or liabilities within the next financial year in either
case.
Calculation of leased assets and liabilities requires the use of
both estimation and judgement. The identification of an appropriate
discount rate to use in the calculation of the lease liability
involves both estimation and judgement. Where the lease's implicit
rate is not readily determinable, an incremental borrowing rate
must be calculated by the Group. The discount rate used has a
direct effect on the size of the lease liability capitalised and
although this has been included as an area where the use of
estimation and judgement in note 12 is important, it is unlikely to
materially impact the Group. Intangible assets are written down in
accordance with the Group's amortisation policy. The assets are
reviewed by management to ensure the amortisation period is
appropriate. Investments are revalued at market value monthly and
any potential impairments would be written down as and when the
Group is notified.
3. Segmental analysis
The Directors, who together are the entity's Chief Operating
Decision Maker, consider that its services comprise one operating
segment (being the provision of currency and derivatives 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. Revenue analysed by product is provided in
note 4.
4. Revenue
Revenue recognition
Revenue comprises the fair value of the consideration received
or receivable for the provision of currency management services.
Our revenues typically arise from charging management fees,
performance fees and other currency services income and are
accounted for in accordance with IFRS 15 - "Revenue from contracts
with customers".
Management fees and other currency services income are recorded
on a monthly basis as the service occurs; there are no other
performance obligations (excluding standard duty of care
requirements). Management fees are calculated as an agreed
percentage of the Assets Under Management Equivalents ("AUME")
denominated in the client's chosen base currency. The percentage
varies depending on the nature of services and the level of AUME.
Management fees are typically invoiced to the customer quarterly
with receivables recognised for unpaid invoices. Fees are
recognised on a monthly based on the agreed fee rate and AUME over
the period.
The Group is entitled to earn performance fees from some clients
where the performance of the clients' mandates exceeds defined
benchmarks over a set time period, and are recognised when the fee
amount can be estimated reliably and it is highly probable that it
will not be subject to significant reversal.
Performance fee revenues are not considered to be highly
probable until the end of a contractual performance period and
therefore are not recognised until they crystallise, at which time
they are payable by the client and cannot be clawed back. There are
no other performance obligations or services provided which suggest
these have been earned either before or after crystallisation
date.
a. Revenue from contracts with customers
The following table provides a breakdown of revenue from
contracts with customers, with management fees analysed by product.
Other currency services income includes fees from signal hedging
and fiduciary execution.
2022 2021
Revenue by product type GBP'000 GBP'000
--------------------------------------------- -------- --------
Management fees
Passive Hedging 11,768 11,377
Dynamic Hedging 10,020 5,623
Currency for Return 5,513 2,005
Multi-product 6,782 5,873
-------- --------
Total management fee income 34,083 24,878
-------- --------
Performance fee income 499 81
Other currency services income 570 453
-------- --------
Total revenue from contracts with customers 35,152 25,412
--------------------------------------------- -------- --------
Management fees are recognised at a point in time and are
invoiced typically on a quarterly basis, although Record may
invoice fees monthly for some of its larger clients. Performance
fees are recognised at a point in time and can be invoiced on a
quarterly, six-monthly or annual basis, as agreed with our
clients.
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. Other relates to a number of
regions that are individually immaterial.
2022 2021
Revenue by geographical region GBP'000 GBP'000
--------------------------------------- -------- --------
Management and performance fee income
UK 2,775 2,322
US 13,049 8,619
Switzerland 10,877 9,097
Europe (excluding UK and Switzerland) 6,926 3,223
Other 1,525 2,151
-------- --------
Total revenue 35,152 25,412
--------------------------------------- -------- --------
c. Major clients
During the year ended 31 March 2022, two clients individually
accounted for more than 10% of the Group's revenue. The two largest
clients generated revenues of GBP4.9 million and GBP4.8 million in
the year (2021: two largest clients generated revenues of GBP4.1
million and GBP2.7 million in the year).
5. Operating profit
Operating profit for the year is stated after
charging/(crediting):
2022 2021
GBP'000 GBP'000
-------------------------------------------------------------------------------------------- -------------- --------
Staff costs 16,479 13,470
Other staff-related costs 1,352 864
IT and technology 2,380 1,231
Professional fees 1,139 1,043
Occupancy 668 540
Depreciation of property, plant and equipment 357 299
Depreciation of leased property 489 490
Amortisation of intangibles 192 168
Auditor fees:
Fees payable to the Group's auditor for the audit of the Company's annual
accounts 72 70
Fees payable to the Group's auditor for the audit of subsidiary undertakings 103 80
-------------- --------
Auditor fees total 175 150
Fees payable to the Group's auditor and its associates for other services:
Audit-related assurance services required by law or regulation 5 5
Other non-audit services 12 12
Loss/(gain) on forward FX contracts held to hedge cash flow 467 (673)
Loss on derivative financial instruments held by seed funds 42 53
Exchange losses/(gains) on revaluation of external holding in seed funds - 97
Other exchange (gains)/ losses (141) 652
Investment losses/(gains) 4 (170)
-------------------------------------------------------------------------------------------- -------------- --------
6. Staff costs
The average number of employees, including Directors, employed
by the Group during the year was:
2022 2021
----------------------
Corporate 6 7
Client relationships 14 17
Investment research 16 16
Operations 24 23
Risk management 5 5
Support 17 15
----- -----
Annual average 82 83
----- -----
The aggregate costs of the above employees, including Directors,
were as follows:
2022 2021
GBP'000 GBP'000
-------------------------------- -------- --------
Wages and salaries 11,931 10,542
Social security costs 1,758 1,349
Pension costs 635 574
Other employment benefit costs 2,155 1,005
-------- --------
Aggregate staff costs 16,479 13,470
-------------------------------- -------- --------
Other employment benefit costs include share -- based payments,
share option costs, and costs relating to the Record plc Share
Incentive Plan.
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.
2022 2021
GBP'000 GBP'000
--------------------------------------------------- -------- --------
UK current year charge 2,006 1,144
Overseas taxes 56 64
Prior year adjustments (88) (108)
-------- --------
Current tax charge 1,974 1,100
Origination and reversal of temporary differences (12) (298)
Prior year adjustment 240 -
Impact of change in tax rate for deferred tax 23 -
-------- --------
Total deferred tax 251 (298)
-------- --------
Tax on profit on ordinary activities 2,225 802
-------- --------
The total charge for the year can be reconciled to the
accounting profit as follows:
2022 2021
GBP'000 GBP'000
-------------------------------------------------------------------------------- -------- --------
Profit before taxation 10,856 6,153
Taxation at the standard rate of tax in the UK of 19% (2021: 19%) 2,062 1,169
Tax effects of:
Other disallowable expenses and non -- taxable income (37) (278)
Higher tax rates on subsidiary undertakings 15 19
Adjustments recognised in current year in relation to Research and Development
claims in respect of prior years (78) (108)
Prior year adjustment 240 -
Change in tax rates 23 -
Total tax expense 2,225 802
The tax expense comprises:
Current tax expense 1,974 1,100
Deferred tax expense/(income) 251 (298)
-------- --------
Total tax expense 2,225 802
-------------------------------------------------------------------------------- -------- --------
The standard rate of UK corporation tax for the year is 19%
(2021: 19%). 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 rate is due to
increase to 25% from 1 April 2023.
The tax charge for the year ended 31 March 2022 was 20% of
profit before tax (2021: 13%). Other temporary differences for the
year ended 31 March 2022 include the impact of deferred tax expense
of GBP251k (2021: income of GBP298k).
8. Earnings per share
Basic earnings per share is calculated by dividing the profit
after tax 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.
2022 2021
GBP'000 GBP'000
------------------------------------------------------------------------------------- ------------ ------------
Weighted average number of shares used in calculation of basic earnings per share 191,068,307 194,461,787
Effect of potential dilutive ordinary shares - share options 6,230,794 1,705,089
Weighted average number of shares used in calculation of diluted earnings per share 197,299,101 196,166,876
------------------------------------------------------------------------------------- ------------ ------------
pence pence
----------------------------
Basic earnings per share 4.52 2.75
Diluted earnings per share 4.37 2.73
---------------------------- ------ ------
The potential dilutive shares relate to the share options and
JSOP awards granted in respect of the Group's Share Scheme (see
note 23). There were share options and JSOP awards in place at the
beginning of the year over 14,344,421 shares. During the year
2,531,875 share options were exercised, 625,000 JSOP awards vested
and a further 1,454,501 options lapsed or were forfeited. The Group
granted 3,780,000 share options and JSOP awards with a potentially
dilutive effect during the year. Of the 13,513,045 share options
and JSOP awards in place at the end of the period, 11,362,625 have
a dilutive impact at the year end.
9. Dividends
Ordinary, special and interim dividends are recognised in the
financial statements when paid. Final ordinary dividends are
required to be approved by shareholders.
The dividends paid by the Group during the year ended 31 March
2022 totalled GBP6,511,887 (3.40 pence per share) which comprised a
final dividend in respect of the year ended 31 March 2021 of
GBP2,220,404 (1.15 pence per share), a special dividend in respect
of the year ended 31 March 2021 of GBP868,854 (0.45 pence per
share) and an interim dividend for the year ended 31 March 2022 of
GBP3,422,629 (1.80 pence per share).
The dividends paid by the Group during the year ended 31 March
2021 totalled GBP5,290,324 (2.71 pence per share) which comprised a
final dividend in respect of the year ended 31 March 2020 of
GBP2,261,779 (1.15 pence per share), a special dividend in respect
of the year ended 31 March 2020 of GBP806,374 (0.41 pence per
share) and an interim dividend for the year ended 31 March 2021 of
GBP2,222,171 (1.15 pence per share).
For the year ended 31 March 2022, a final ordinary dividend of
1.80 pence per share has been proposed and a special dividend of
0.92 pence per share has been declared, totalling GBP3.4 million
and GBP1.8 million respectively.
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 is not exposed to the particular risks associated with
the operation of defined benefit plans and has no legal or
constructive obligation to make any further payments to the plans
other than the contributions due. The pension cost charge disclosed
in note 6 to the accounts represents contributions payable by the
Group to the funds.
11. 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
measured from the date they are available for use. Useful lives are
as follows:
-- Software - 2 to 5 years
Amortisation periods and methods are reviewed annually and
adjusted if appropriate. The Group's intangible assets comprise
both purchased software and the capitalised cost of software
deployment. No internal costs of software development are
capitalised. Internal software costs, which would represent
attributable employee costs, would be capitalised if they meet the
IAS 38 criteria. The carrying amounts can be analysed as
follows:
Software Total
2022 GBP'000 GBP'000
--------------------- --------- --------
Cost
At 1 April 2021 1,141 1,141
Additions 334 334
Disposals - -
--------- --------
At 31 March 2022 1,475 1,475
--------- --------
Amortisation
At 1 April 2021 721 721
Charge for the year 192 192
Disposals - -
--------- --------
At 31 March 2022 913 913
--------- --------
Net book amounts
At 31 March 2022 562 562
--------------------- --------- --------
At 1 April 2021 420 420
--------- --------
Software Total
2021 GBP'000 GBP'000
--------------------- --------- --------
Cost
At 1 April 2020 1,903 1,903
Additions 189 189
Disposals (951) (951)
--------- --------
At 31 March 2021 1,141 1,141
--------------------- --------- --------
Amortisation
At 1 April 2020 1,433 1,433
Charge for the year 168 168
Disposals (880) (880)
--------- --------
At 31 March 2021 721 721
--------------------- --------- --------
Net book amounts
At 31 March 2021 420 420
--------- --------
At 1 April 2020 470 470
--------------------- --------- --------
The annual contractual commitment for the maintenance and
support of the above software is GBP396,710 (2021: GBP221,004). All
amortisation charges are included within administrative
expenses.
12. Leases
The Group's lease arrangements consist of business premises
property leases. Rental contracts are typically made for fixed
periods of three to six years but they may have extension and/or
modification options. Lease terms are negotiated on an individual
basis and contain a wide range of different terms and conditions.
The lease agreements do not impose any covenants, but leased assets
cannot be used as security for borrowing purposes.
New and modified leases have been recognised as a right-of-use
asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease payment is
allocated between the liability and finance cost. The finance cost
is charged to profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Right-of-use assets include the
net present value of the lease payments less any lease incentives
receivable.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
Group's incremental borrowing rate is used, being the rate that the
Group would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic environment with
similar terms and conditions. As the Group has no borrowings it has
estimated the incremental borrowing rate based on interest rate
data available in the market, adjusted to reflect Record's
creditworthiness, the leased asset in question and the terms and
conditions of the lease. For those leases which existed prior to
the IFRS 16 transition date on 1 April 2019, a discount rate of 4%
was used in calculating the lease liability on transition.
The leases relevant to the twelve months ended 31 March 2022,
and the comparative period, are as described below:
On 7 September 2016, the Group signed a new lease on premises at
Second and Third Floors, Morgan House, Madeira Walk, Windsor, at an
annual commitment of GBP507,603, expiring on 1 September 2022. On
11 February 2022, the Group signed a lease on premises at Second
Floor, Morgan House, Madeira Walk, Windsor, at an annual commitment
of GBP267,900, expiring on 1 September 2026. The 1 September 2022
lease modification has been capitalised and discounted at a rate of
3.95%.
On 1 June 2017, the Group signed a five-year lease on premises
in Zürich, at an annual commitment of CHF 49,680. On 12 August
2021, the Group extended the lease to 1 June 2027, at an annual
commitment of CHF 49,680.
Record assesses whether a contract, is or contains, a lease at
the inception of the contract.
Right -- of -- use ("ROU") assets
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability;
-- any lease payments made at or before the commencement date,
less any lease incentives received;
-- any initial direct costs; and
-- an estimate of costs to be incurred to restore the assets to
the condition required by the terms and conditions of the
lease.
Depreciation is calculated on a straight-line basis over the
lease term and included within administration costs (note 5).
Net book value of right -- of -- use assets
Group Company
Year ended 31 March 2022 GBP'000 GBP'000
---------------------------------------------- -------- --------
Net book value on transition at 1 April 2021 684 642
Addition 1,226 1,043
Depreciation (489) (453)
-------- --------
Net book value at 31 March 2022 1,421 1,232
---------------------------------------------- -------- --------
Group Company
Year ended 31 March 2021 GBP'000 GBP'000
--------------------------------- -------- --------
Net book value at 1 April 2020 1,175 1,096
Addition - -
Depreciation (490) (454)
FX revaluation (1) -
-------- --------
Net book value at 31 March 2021 684 642
--------------------------------- -------- --------
Lease liabilities
Group Company
GBP'000 GBP'000
------------------------- -------- --------
Current 366 326
Non-current 960 812
-------- --------
Total lease liabilities 1,326 1,138
------------------------- -------- --------
Group Company
GBP'000 GBP'000
---------------------------- -------- --------
At 1 April 2021 638 597
Additions 1,226 1,042
Interest expense 17 16
Lease payments (540) (501)
Lease interest payments (17) (16)
Foreign exchange movements 2 -
-------- --------
At 31 March 2022 1,326 1,138
---------------------------- -------- --------
Lease payments
At 31 March 2022, the undiscounted operating lease payments on
an annual basis are as follows:
Maturity of lease liability at 31 March 2022
Group Company
GBP'000 GBP'000
------------------------------------------ -------- --------
Within 1 year 357 330
1-2 years 321 280
2-3 years 321 280
After 3 years 375 327
-------- --------
Total lease liability before discounting 1,374 1,217
------------------------------------------ -------- --------
The remainder of the movement in the lease liability relates to
non-cash movements. The lease term is determined as the
non-cancellable period of a lease, together with periods covered by
an option to extend the lease if the Group considers that exercise
of the option is reasonably certain.
13. 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 as
follows:
-- Leasehold improvements - period from lease commencement to
the earlier of the lease termination date and the next rent review
date
-- Computer equipment - 2 to 5 years
-- Fixtures and fittings - 4 to 6 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
improvements equipment and fittings Total
2022 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------- ---------- ------------- --------
Cost
At 1 April 2021 693 983 305 1,981
Additions - 73 2 75
Disposals - - (14) (14)
------------- ---------- ------------- --------
At 31 March 2022 693 1,056 293 2,042
--------------------- ------------- ---------- ------------- --------
Depreciation
At 1 April 2021 520 515 263 1,298
Charge for the year 122 203 32 357
Disposals - - (14) (14)
------------- ---------- ------------- --------
At 31 March 2022 642 718 281 1,641
--------------------- ------------- ---------- ------------- --------
Net book amounts
At 31 March 2022 51 338 12 401
--------------------- ------------- ---------- ------------- --------
At 1 April 2021 173 468 42 683
------------- ---------- ------------- --------
Leasehold Computer Fixtures
improvements equipment and fittings Total
2021 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------- ---------- ------------- --------
Cost
At 1 April 2020 692 952 327 1,971
Additions 1 228 2 231
Disposals - (197) (24) (221)
------------- ---------- ------------- --------
At 31 March 2021 693 983 305 1,981
--------------------- ------------- ---------- ------------- --------
Depreciation
At 1 April 2020 397 573 250 1,220
Charge for the year 123 139 37 299
Disposals - (197) (24) (221)
------------- ---------- ------------- --------
At 31 March 2021 520 515 263 1,298
--------------------- ------------- ---------- ------------- --------
Net book amounts
At 31 March 2021 173 468 42 683
--------------------- ------------- ---------- ------------- --------
At 1 April 2020 295 379 77 751
------------- ---------- ------------- --------
The Group's tangible non-current assets are located
predominantly in the UK.
14. Investments
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------------- -------- -------- -------- --------
Investment in subsidiaries at cost - - 2,069 69
Capitalised investment in respect of share-based payments - - 2,019 1,460
Investment in funds 1,070 847 943 2,786
Investment in impact bonds 2,177 2,199 - -
Other Investments 200 - - -
-------- -------- -------- --------
Total investments 3,447 3,046 5,029 4,315
----------------------------------------------------------- -------- -------- -------- --------
During the year, the Group has embarked on a strategy to invest
up to GBP2,000,000 in digital assets for the purpose of researching
the market.
During the year, the Group signed commitments totalling $550,000
(GBP417,727) relating to third-party funds investing in the digital
assets sector. As at the year end, a total of $166,900 (GBP122,208)
has been called up, leaving a balance of $383,100 (GBP295,519)
which may or may not be called up in future (see note 27:
contingent liabilities for further information).
Company
Investments in subsidiaries
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.
2022 2021
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 (Switzerland) GmbH 16 16
Record Digital Asset Ventures Limited 2,000 -
Record Asset Management GmbH 23 23
Record Fund Management Limited - -
N P Record Trustees Limited - -
-------- --------
Total investment in subsidiaries (at cost) 2,069 69
-------- --------
Capitalised investment in respect of share -- based payments
Record Group Services Limited 1,801 1,341
Record Currency Management (US) Inc. 89 89
Record Currency Management (Switzerland) GmbH 129 30
-------- --------
Total capitalised investment in respect of share -- based payments 2,019 1,460
-------- --------
Total investment in subsidiaries 4,088 1,529
-------------------------------------------------------------------- -------- --------
Particulars of subsidiary undertakings
Name Nature of business
----------------------------------------- --------------------------------------
Record Currency Management Limited Currency management services (FCA,
SEC and CFTC registered)
Record Group Services Limited Management services to other Group
undertakings
Record Currency Management (US) US advisory and service company
Inc. (SEC and CFTC registered)
Record Currency Management (Switzerland) Swiss advisory and service company
GmbH
Record Digital Asset Ventures UK company investing in opportunities
Limited linked to innovation and research
surrounding digital assets
Record Asset Management GmbH German advisory and service company
RAM Strategies GmbH German consultant and distribution
agent
Record Portfolio Management Limited Dormant
Record Fund Management Limited Dormant
N P Record Trustees Limited Dormant 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 Delaware
(registered office: Corporation Service Company, 251 Little Falls
Drive, Wilmington, DE 19808), Record Currency Management
(Switzerland) GmbH is incorporated in Zürich (registered office:
Münsterhof 14, 8001 Zürich) and Record Asset Management GmbH and
RAM Strategies GmbH are incorporated Germany (registered office:
Königsallee 92a, 40212 Düsseldorf).
Capitalised investment in respect of share-based payments
The accounting treatment of capitalised investment in respect of
share-based payments can be found in note 23.
Investment in seed funds
In addition to the subsidiaries listed above, the Company
previously held investments in seed funds. These funds were seed
investments, with 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.
The seed fund investments were presented within investments in
the Company statement of financial position, and all seed fund
entities were sub-funds of the Record Umbrella Fund, an open-ended
umbrella unit trust authorised in Ireland. The two seed funds
previously invested in by the Company are shown in the table
below.
Group
Entities are consolidated on a line-by-line basis where the
Group has determined that a controlling interest exists through an
investment holding in the entity, in accordance with IFRS 10 -
"Consolidated Financial Statements". Otherwise, investments in
entities are measured at fair value through profit or loss.
Investment in seed funds
The Group controlled the Record Currency - Strategy Development
Fund and Record - Currency Multi-Strategy Fund until the
termination of the funds in June 2021. Both funds were consolidated
in full, on a line-by-line basis in the Group's financial
statements until the termination date.
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- -------- -------- -------- --------
Investment in seed funds
Record Currency - Strategy Development Fund - - - 1,077
Record - Currency Multi-Strategy Fund - - - 862
-------- -------- -------- --------
Total investment in seed funds - - - 1,939
--------------------------------------------- -------- -------- -------- --------
Investment in impact bonds
In January 2020, the Group invested GBP2,287,241 in impact
bonds; which are measured at fair value through profit or loss. The
fair value at the year end was GBP2,177,372 (2021:
GBP2,198,886).
Investment in Funds
The Group has invested GBP1,211,242 in investment funds, which
are measured at fair value through profit or loss. The fair value
at the year end was GBP1,069,701 (2021: GBP847,081).
15. 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 amounts 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
profit or loss nor the taxable profit or loss, is not
recognised.
2022 2021
GBP'000 GBP'000
------------------------------------ -------- --------
Credit to income statement in year 41 298
Asset/(liability) brought forward 212 (86)
-------- --------
Asset/(liability) carried forward 253 212
------------------------------------ -------- --------
The deferred tax asset/(liability) consists of the tax effect of
temporary differences in respect of:
2022 2021
GBP'000 GBP'000
----------------------------------------------------------------- -------- --------
Deferred tax allowance on unvested share options 393 320
Excess of taxation allowances over depreciation on fixed assets (140) (108)
-------- --------
Total 253 212
----------------------------------------------------------------- -------- --------
At the year end there were share options not exercised with an
intrinsic value for tax purposes of GBP4,287,634 (2021:
GBP3,755,976). 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 unprovided
deferred taxation. Deferred tax has been calculated based on the
current tax rate of 19% for differences until 31 March 2023;
thereafter, deferred tax has been calculated on a tax rate of 25%,
being the tax rate from 1 April 2023. It is subject to change if
tax rates change in future years.
16. Trade and other receivables
Trade and other receivables are recognised initially at fair
value and subsequently measured at amortised cost using the
effective interest method, less loss allowances. The amortised cost
of trade and other receivables is stated at 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.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses ("ECLs") for trade receivables at an amount
equal to lifetime ECLs. The ECLs on trade receivables are
calculated based on actual historic credit loss experience over the
preceding 25 years on the total balance of non-credit impaired
trade receivables. Accrued income relates to accrued management and
performance fees earned but not yet invoiced.
An analysis of receivables is provided below:
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- -------- --------
Trade receivables 8,231 6,519 3,441 1,345
Accrued income 25 37 - -
Other receivables 497 470 38 -
Prepayments 1,130 980 43 42
-------- -------- -------- --------
Total 9,883 8,006 3,522 1,387
------------------- -------- -------- -------- --------
All amounts are short -- term. The Directors consider that the
carrying amount of trade and other receivables approximates to
their fair value. The Group has not renegotiated the terms of any
receivables in the year ended 31 March 2022. The Group's trade
receivables are generally short-term and do not contain significant
financing components.
The Group applies the IFRS 9 simplified approach to measuring
ECLs for trade receivables at an amount equal to lifetime ECLs. The
ECLs on trade receivables are calculated based on actual historic
credit loss experience over the preceding 25 years on the total
balance of non-credit impaired trade receivables. The Group has
therefore concluded that the ECLs for trade receivables are
reasonable. The Group does not expect to incur any credit losses
and has not recognised any ECLs in the current year (2021:
GBPnil).
17. Derivative financial assets and liabilities
Derivative financial instruments 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
fair values of derivative financial instruments are determined by
reference to active market transactions.
The Group holds derivative financial instruments for two
purposes. The Group uses forward foreign exchange contracts to
reduce the risk associated with assets denominated in foreign
currencies, and additionally uses both foreign exchange options and
forward foreign exchange contracts in order to achieve a return
within the seed funds. The instruments are recognised at fair
value. The fair value of the contracts is calculated using the
market rates prevailing at the period end date. The net gain or
loss on instruments is included within other income or expense.
2022 2021
Derivative financial assets GBP'000 GBP'000
----------------------------------------------------- --------- --------
Forward foreign exchange contracts held for trading - 215
Foreign exchange options held for trading - 45
--------- --------
Total - 260
----------------------------------------------------- --------- --------
2022 2021
Derivative financial liabilities GBP'000 GBP'000
---------------------------------------------------------------------------- -------- --------
Forward foreign exchange contracts held to hedge non-sterling-based assets (15) -
Forward foreign exchange contracts held for trading (109) (16)
-------- --------
Total (124) (16)
---------------------------------------------------------------------------- -------- --------
Derivative financial instruments held to hedge
non-sterling-based assets
At 31 March 2022 there were outstanding contracts with a
principal value of GBP9,085,804 (31 March 2021: GBP9,076,940) 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 2022. The Group does
not apply hedge accounting.
The net gain or loss on forward foreign exchange contracts held
to hedge non-sterling-based assets is as follows:
2022 2021
Derivative financial instruments held to hedge non-sterling-based assets GBP'000 GBP'000
------------------------------------------------------------------------------------- -------- --------
Net loss on forward foreign exchange contracts at fair value through profit or loss 467 673
------------------------------------------------------------------------------------- -------- --------
Derivative financial instruments held for trading
The Record - Currency Multi -- Strategy Fund and the Record
Currency - Strategy Development Fund may use a variety of
instruments including forward foreign exchange contracts, options
and futures in order to achieve a return.
All derivative financial instruments held by the Record -
Currency Multi-Strategy Fund and the Record Currency - Strategy
Development Fund were classified as held for trading until
termination in June 2021.
At 31 March 2022 there were outstanding contracts with a
principal value of GBPnil (31 March 2021: GBP10,383,964).
The net gain or loss on derivative financial instruments held
for trading for the year was as follows:
2022 2021
Derivative financial instruments held to hedge non-sterling-based assets GBP'000 GBP'000
------------------------------------------------------------------------------------------- -------- --------
Net loss on forward foreign exchange contracts and foreign exchange options at fair value
through profit or loss 42 53
------------------------------------------------------------------------------------------- -------- --------
18. Cash management
The Group's cash management strategy employs a variety of
treasury management instruments including cash, money market
deposits and treasury bills. Whilst the Group manages and considers
all of these instruments as cash, which are subject to its own
internal cash management process, 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 >3 months
from origination.
Group Company
2022 2021 2022 2021
Assets managed as cash GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------- -------- -------- -------- --------
Bank deposits with maturities > 3 months 13,913 12,932 - -
-------- -------- -------- --------
Money market instruments with maturities > 3 months 13,913 12,932 - -
-------- -------- -------- --------
Cash 3,345 2,372 43 173
Bank deposits with maturities <= 3 months - 4,475 - -
-------- -------- -------- --------
Cash and cash equivalents 3,345 6,847 43 173
-------- -------- -------- --------
Total assets managed as cash 17,258 19,779 43 173
----------------------------------------------------- -------- -------- -------- --------
Group Company
2022 2021 2022 2021
Cash and cash equivalents GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- -------- -------- -------- --------
Cash and cash equivalents - sterling 1,169 3,108 43 173
Cash and cash equivalents - USD 450 2,692 - -
Cash and cash equivalents - CHF 318 183 - -
Cash and cash equivalents - other currencies 1,408 864 - -
-------- -------- -------- --------
Total cash and cash equivalents 3,345 6,847 43 173
---------------------------------------------- -------- -------- -------- --------
The Group's cash and cash equivalents balance incorporates the
cash and cash equivalents held by any fund deemed to be under
control of Record plc (refer to notes 1 and 4 for explanation of
accounting treatment). As at 31 March 2022, the cash and cash
equivalents held by the seed funds were GBPnil as the funds
terminated in June 2021 (31 March 2021: GBP3,159,533) and the money
market instruments with maturities > 3 months held by these
funds were GBPnil (31 March 2021: GBP427,957).
Details of how the Group manages credit risk are provided in
note 24.
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.
Group Company
2022 2021 2022 2021
Trade and other payables GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
Trade payables 478 384 - -
Amounts owed to Group undertaking - - 4,155 10
Other payables 16 16 - -
Other tax and social security 619 486 - -
Accruals 3,608 2,540 6 6
-------- -------- -------- --------
Total 4,721 3,426 4,161 16
----------------------------------- -------- -------- -------- --------
Accruals include GBP2,506,656 for the Group Profit Share Scheme
(31 March 2021: GBP1,644,761). The Directors consider that the
carrying amount of trade and other payables approximates to their
fair value.
Company Company
2022 2021 2022 2021
Current tax liabilities GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- -------- --------
Corporation tax 924 315 - -
------------------------- -------- -------- -------- --------
20. Financial liabilities
Record plc had made investments in a number of seed funds where
it was in a position to be able to control those funds by virtue of
the size of its holding. When Record plc is not the only investor
in such funds 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. The financial
liabilities are measured at cost plus movement in value of the
third -- party investment in the fund.
The Record - Currency Multi-Strategy Fund and the Record
Currency - Strategy Development Fund were considered to be under
the control of the Group as the combined holding of Record plc and
its Directors constituted a majority interest throughout the prior
year and through to termination of the funds in June 2021.
The mark -- to -- market value of units held by investors in
these funds other than Record plc are shown as financial
liabilities in the Group financial statements, in accordance with
IFRS.
Mark -- to -- market value of external holding in seed funds
consolidated into the accounts of the Record Group
2022 2021
GBP'000 GBP'000
--------------------------------------- --------- --------
Record - Currency Multi-Strategy Fund - 1,696
--------- --------
Total financial liabilities - 1,696
--------------------------------------- --------- --------
The financial liabilities relate only to the fair value of the
external investors' holding in the seed funds, and are in no sense
debt.
21. Provisions
The Group has provisions reflecting its contractual obligations
connected to reaching the end of its contractual lease terms.
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------ -------- -------- -------- --------
Provisions 200 200 200 200
------------ -------- -------- -------- --------
22. Issued share capital
The share capital of Record plc consists only of fully paid
ordinary shares with a par value of 0.025p each. All shares are
equally eligible to receive dividends and the repayment of capital
and represent one vote at the shareholders' meeting.
2022 2020
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 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.
Number
--------------------------------- ----------
Record plc shares held by EBT
as at 31 March 2020 3,219,387
Adjustment for net purchases by
EBT 3,077,270
--------------------------------- ----------
Record plc shares held by EBT
as at 31 March 2021 6,296,657
Adjustment for net purchases by
EBT 3,335,374
--------------------------------- ----------
Record plc shares held by EBT
as at 31 March 2022 9,632,031
--------------------------------- ----------
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.
Further information regarding the Record plc share -- based
compensation plans and relevant transactions made during the year
is included in note 23.
23. Share-based payments
During the year ended 31 March 2022 the Group has managed the
following share -- based compensation plans:
a) the Group Profit Share Scheme: 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;
c) the Record plc Share Incentive Plan: the Group operates the
Record plc Share Incentive Plan ("SIP") to encourage more
widespread ownership of Record plc shares by employees. The SIP is
a tax -- approved scheme offering attractive tax savings for
employees retaining their shares in the scheme over the medium to
long term; and
d) the Record plc Jointly Owned Share Plan: participants'
interests awarded under the Jointly Owned Share Plan ("JSOP") are
classified as equity-settled share-based payments under IFRS 2.
All obligations arising from the four schemes have been
fulfilled through purchasing shares in the market.
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 alternative 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 period in which the award is earned.
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 allocated to the profit share
pool between 25% and 35% of operating profits. 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. The charge to profit or loss
in respect of Earned Shares in the period was GBP1,463,802 (2021:
GBP765,606). 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.
All shares which are the subject of share awards vest
immediately and are transferred to a nominee, allowing the
employee, as beneficial owner, to retain full rights in respect of
the shares purchased. Shares awarded under the Group Profit Share
Scheme are subject to restrictions over subsequent sale and
transfer and these restrictions are automatically lifted over
one-third on each anniversary of the profit share payment date for
the next three years. In the meantime, these shares cannot be sold,
transferred or otherwise disposed of without the consent of the
Remuneration Committee.
The Group Profit Share Scheme rules contain clawback provisions
allowing for the repayment of profit share payments under certain
circumstances, including a material breach of contract, an error in
performance of duties or a restatement of accounts which leads to a
change in any prior award under the scheme.
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 IFRS 2 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, taking into account the terms
and conditions upon which the instruments were granted including
any market or performance conditions, and using quoted share
prices.
The Record plc Share Scheme allows deferred share awards to be
granted to employees and Directors in the Record Group. Part 1 of
the scheme allows the grant of tax-unapproved ("Unapproved")
options to employees and Directors and Part 2 allows the grant of
HMRC tax-approved ("Approved") options to employees and Directors.
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 grant for Unapproved options,
which have historically been granted with a market value exercise
price in the same way as for the Approved options.
Options over an aggregate of 3,747,500 shares were granted under
the Share Scheme during the year (2021: 3,850,000), of which
options over 195,000 shares were granted as Approved options and
options over 3,552,500 shares were granted as Unapproved options
(2021: all granted as Unapproved options). All Approved options and
952,500 Unapproved options were granted with an exercise price per
share equal to the share price prevailing at the time of grant, the
remaining 2,600,000 Unapproved options were granted with an
exercise price below the share price prevailing at the time of
grant.
The 195,000 Approved options issued to employees on 13 August
2021 all become exercisable on the 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 performance
conditions have been satisfied.
The 3,552,500 Unapproved options issued to employees on 13
August 2021 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 performance conditions have
been satisfied.
The fair value of the services provided by employees has been
calculated indirectly by reference to the fair value of the equity
instruments granted. Fair value amounts for the options granted in
the year ended 31 March 2022, and for which a charge to profit or
loss was made in the year, were determined using a Black-Scholes
option-pricing method and the following assumptions:
Weighted
Model input average value
----------------------------- --------------
Share price 85.7p
Dividend yield 2.89%
Exercise price 54.0p
Expected volatility 40%
Option life 2.6 years
Risk-free interest rate (%) 52%
----------------------------- --------------
Expected volatility is based on historical volatility.
The Group share -- based payment expense in respect of the Share
Scheme was GBP530,779 for the year ended 31 March 2022 (2021:
GBP181,095).
Outstanding share options
At 31 March 2022, the total number of ordinary shares of 0.025p
outstanding under Record plc share compensation schemes was
11,605,545 (2021: 11,844,421). These deferred share awards and
options are over issued shares, a proportion of which are hedged by
shares held in an EBT. Details of outstanding share options awarded
to employees are set out below:
Date At 1 At 31 Earliest Latest
of April Lapsed/ March vesting vesting Exercise
grant 2021 Granted Exercised forfeited 2022 date date(1) price
----------- ---------- ------------ ------------ ----------- --------- --------- -----------
30/11/16 90,000 - (90,000) - - 30/11/20 30/11/20 GBP0.34072
30/11/16 62,500 - (62,500) - - 30/11/19 30/11/20 GBP0.34072
30/11/16 733,336 - - (733,336) - 30/11/20 30/11/21 GBP0.34072
26/01/18 1,267,500 - (1,078,000) (34,500) 155,000 26/01/22 26/01/22 GBP0.4350
26/01/18 127,750 - (122,625) - 5,125 26/01/20 26/01/22 GBP0.4350
26/01/18 34,667 - - (17,333) 17,334 26/01/21 26/01/23 GBP0.4350
26/01/18 1,288,668 - - (644,332) 644,336 26/01/21 26/01/23 GBP0.4350
29/03/19 460,000 - - - 460,000 29/03/23 29/03/23 GBP0.2830
29/03/19 277,500 - (92,500) - 185,000 29/03/20 29/03/23 GBP0.2830
21/08/19 1,985,000 - - - 1,985,000 21/08/22 21/08/24 GBP0.3110
18/03/20 1,667,500 - (405,000) (25,000) 1,237,500 18/03/21 18/03/24 GBP0.28902
21/09/20 3,425,000 - (606,250) - 2,818,750 21/09/21 21/09/24 GBP0.3730
25/01/21 300,000 - (75,000) - 225,000 25/01/22 25/01/25 GBP0.49425
09/03/21 125,000 - - - 125,000 09/03/22 09/03/25 GBP0.63986
13/08/21 - 195,000 - - 195,000 13/08/25 13/08/25 GBP0.85713
13/08/21 - 2,600,000 - - 2,600,000 13/08/22 13/08/25 GBP0.4000
13/08/21 - 952,500 - - 952,500 13/08/22 13/08/25 GBP0.85713
------------- ----------- ---------- ------------ ------------ ----------- --------- --------- -----------
Total
options 11,844,421 3,747,500 (2,531,875) (1,454,501) 11,605,545
----------- ---------- ------------ ------------ -----------
Weighted
average
exercise
price
of options GBP0.36 GBP0.54 GBP0.39 GBP0.38 GBP0.41
------------- ----------- ---------- ------------ ------------ ----------- --------- --------- -----------
During the year 2,531,875 options were exercised. The weighted
average share price at date of exercise was GBP0.77. At 31 March
2022, a total of 946,375 options had vested and were exercisable
(2021: 701,375). At 31 March 2022, the weighted average exercise
price of the options vested and exercisable was GBP0.35 (2021:
GBP0.31) and the weighted average contractual life was two years
(2021: two years).
The Directors' interests in the combined share schemes are as
follows:
Ordinary shares
held as at
31 March 31 March
2022 2021
---------------------------------------------------------------------------- ---------- ---------
Record plc Group Profit Share Scheme (interest in restricted share awards)
Leslie Hill 467,296 379,841
Steve Cullen 57,422 75,849
---------------------------------------------------------------------------- ---------- ---------
Record plc Share Scheme (interest in unvested share options)
Leslie Hill 668,334 945,001
Steve Cullen 301,668 526,668
---------------------------------------------------------------------------- ---------- ---------
Performance measures
Performance conditions attached to all options granted to Board
Directors differ to those granted for all other staff. All
Executive Director option awards are subject to a performance
condition and vest on each of the third, fourth and fifth
anniversaries of the date of grant subject to an earnings per share
("EPS") hurdle linked to the annualised EPS growth for the
respective three, four and five-year periods from grant. Vesting is
on a stepped basis, with 25% of each tranche vesting if EPS growth
over the relevant period is at least RPI plus 4% per annum,
increasing through 50%, 75% and with 100% vesting if EPS growth
exceeds RPI plus 13%, as shown in the table below. Options awarded
subject to EPS performance conditions are valued using a
Black-Scholes model, adjusted for the impact of the performance
conditions.
Percentage of
shares subject
to the award
Record's average EPS growth which vest
--------------------------------- ---------------
>RPI growth + 13% 100%
>RPI growth + 10%, =<RPI growth
+ 13% 75%
>RPI growth + 7%, =<RPI growth
+ 10% 50%
>RPI growth + 4%, =<RPI growth
+ 7% 25%
=<RPI growth + 4% 0%
--------------------------------- ---------------
Approved options issued to all other staff during the year and
the prior year were not subject to a Group performance measure.
Approved options issued to all other staff prior to 1 April 2017
were subject to performance measures linked to the Group's Total
Shareholder Return ("TSR") and vested on the fourth anniversary of
the date of grant, subject to these measures. At vesting date, a
percentage of the total options granted could vest based upon
Record's TSR performance versus the median TSR performance as
measured against the FTSE 350 - General Financial Index. Options
awarded subject to TSR performance conditions were valued using a
Black -- Scholes model. The performance target table is given
below:
Percentage of
shares subject
to the award
------------------------------------------------------ ---------------
Percentage by which Record's TSR is below the median which vest
TSR performance of 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%
------------------------------------------------------ ---------------
Unapproved options issued to all other staff vest in four equal
tranches on the first, second, third and fourth anniversaries of
the date of grant, subject to the employee being employed with the
Group at the relevant vesting date and to the extent personal
performance conditions have been satisfied.
Clawback provisions
In addition to the performance measures above, both Approved and
Unapproved options granted to Executive Directors under the Share
Scheme are subject to clawback provisions. These provisions allow
the Remuneration Committee to adjust the number of shares that may
be, or were, acquired to be decreased if the Committee considers
that either a material breach of contract has arisen or in respect
of retrospective amendments required to calculations of the Group's
performance upon which vesting calculations were originally based.
The clawback provisions allow the Group to take various steps until
the clawback obligation is satisfied, including reduction of future
share option awards, transfer of shares back to the Group for nil
consideration, reduction of future payments under the Group Profit
Share Scheme or payment of sales proceeds back to the Group.
c. The Record plc Share Incentive Plan
The Group operates the Record plc Share Incentive Plan ("SIP"),
to encourage more widespread ownership of Record plc shares by
employees. The SIP 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 23,309 matching shares (2021: 33,971 matching
shares) to employees. The expense charged in respect of the SIP was
GBP18,310 in the year ended 31 March 2022 (2021: GBP11,797).
There are no restrictions over shares issued under the Record
Share Incentive Plan.
d. The Record plc Jointly Owned Share Plan ("JSOP")
Equity-settled share-based payments
At inception the employee is required to pay the Employee
Benefit Trust ("EBT") for the market value of the participation
interest, and the employing subsidiary has agreed to bear the
expense of 50% of the amount due. The participation interest paid
over at inception is non-refundable, regardless of whether the
hurdle is reached. Therefore the amount paid by the employing
subsidiary is expensed at inception.
The fair value of the amounts payable to employees under JSOP
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 IFRS 2 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 JSOP scheme started in 2021, under which a set number of
ordinary shares are held jointly by the participant and the EBT.
Under the terms of the JSOP agreement, the participant holds the
beneficial interest in the future growth of the shares above the
hurdle, whilst the trustee is entitled to the value up to the
hurdle; the hurdle being the market price upon grant date. Upon
vesting, the participant is entitled to receive the growth in value
of the shares above the hurdle, which is settled in shares priced
at market value on the vesting date.
The fair value of the JSOP award is measured at grant date using
an appropriate valuation model, taking into account the terms and
conditions upon which the instruments were granted including any
performance conditions, and using quoted share prices.
The 32,500 shares over which a JSOP agreement was entered into
on 13 August 2021 will each vest in four equal tranches on the
first, second, third and fourth anniversary of the date of award,
subject to the employee being in employment with the Group at the
relevant vesting date.
The fair value of the services provided by employees has been
calculated indirectly by reference to the fair value of the equity
instruments granted. Fair value amounts for the JSOP awards granted
in the year ended 31 March 2022, and for which a charge to profit
or loss was made in the year, were determined using a Black-Scholes
option-pricing model and the following assumptions:
Weighted
Model input average value
----------------------- --------------
Share price 85.7p
Dividend yield 2.89%
Exercise price 85.7p
Expected life (years) 2.5 years
Volatility 40.5%
Risk-free rate 0.51%
----------------------- --------------
Expected volatility is based on historical volatility.
At 31 March 2022, the total number of ordinary shares of 0.025p
outstanding under the Record plc JSOP was 1,907,500. These shares
are jointly owned and are ring-fenced within the EBT. The JSOP
award vests immediately on the vesting date, and the participant is
entitled to any value over the hurdle; the trustee is then entitled
to the value up to the hurdle.
At 1 At 31 Earliest Latest
April Lapsed/ March vesting vesting
Date of grant 2021 Granted Vested forfeited 2022 date date Hurdle
---------- ---------- ---------- ---------- ---------- --------- --------- -----------
21/09/20 2,375,000 - (593,750) - 1,781,250 21/09/21 21/09/24 GBP0.37300
09/03/21 125,000 - (31,250) - 93,750 09/03/21 09/03/25 GBP0.63986
13/08/21 - 32,500 - - 32,500 13/08/22 13/08/25 GBP0.85713
----------------------- ---------- ---------- ---------- ---------- ---------- --------- --------- -----------
Total JSOP awards 2,500,000 32,500 (625,000) - 1,907,500
---------- ---------- ---------- ---------- ----------
Weighted average
exercise price of
options GBP0.3863 GBP0.6399 GBP0.3863 - GBP0.3944
----------------------- ---------- ---------- ---------- ---------- ----------
There are no Directors' interests in the JSOP scheme. No
performance measures are attached to the JSOP.
During the year 625,000 shares over which a JSOP agreement had
been granted vested. The weighted average share price at the
vesting date was GBP0.82.
The JSOP scheme rules contain clawback provisions allowing
re-transfer of the participant's interest and/or any vested shares
for nil consideration under certain circumstances including a
material breach of contract or an error in performance of
duties.
24. Financial risk management
The Group's current activities result in the following financial
risks and management responses to those risks in order to minimise
any resulting adverse effects on the Group's financial
performance.
Objectives, policies and processes for managing risk and the
methods used to measure the risk
Financial assets principally comprise trade receivables, accrued
income, other receivables, money market instruments, cash and cash
equivalents and derivative financial assets. Financial liabilities
comprise trade and other payables, financial liabilities relating
to investment in seed funds, lease liabilities and derivative
financial liabilities. The main risks arising from financial
instruments are credit risk, liquidity risk, foreign currency risk,
interest rate risk and concentration 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 controlled and
reviewed by the Head of Business Risk.
The Company's material financial instruments are investments in
the seed funds, cash and cash equivalents, and balances due to/from
Group undertakings. Intercompany balances are classified as loans
and receivables and are repayable on demand. No interest is charged
on these balances. The Group has sufficient cash resources and
hence management does not believe that the Company has a material
exposure to credit risk. 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. Market
risk is not considered to have a material impact on financial
instruments, neither is it one of the Group's principal risks.
Credit risk
The Group has established a cash management team to manage Group
cash in accordance with an approved cash management policy. The
policy stipulates exposure limits by instruments, counterparty,
tenor and duration. Counterparty exposures are measured against
ratings published by credit -- rating agencies and are monitored
daily. The maximum single exposure to any counterparty under the
policy is 20% of total assets managed as cash.
The primary objective of the cash management team is to
diversify and manage counterparty risk within the risk appetite of
the Group and the limits set by the policy. The secondary objective
is to maintain yield given the constraints under the policy whilst
ensuring sufficient liquidity to meet future cash flow commitments
as instructed by the Finance team.
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 quality of our clients and banking counterparties is
reflected in the business having not suffered from any credit
default for over 20 years through various market crises and cycles,
and we do not anticipate this changing under the current
circumstances.
The Group's maximum exposure to credit risk is as follows:
2022 2021
Financial assets at 31 March GBP'000 GBP'000
----------------------------------------------------- -------- --------
Trade receivables 8,231 6,519
Accrued income 25 37
Other receivables 497 470
Derivative financial assets - 260
Money market instruments with maturities > 3 months 13,913 13,613
Cash and cash equivalents 3,345 6,166
-------- --------
Total financial assets 26,011 27,065
----------------------------------------------------- -------- --------
The debtors' age analysis is also evaluated on a regular basis
for expected credit losses. It is management's opinion that there
is no requirement to provide for any expected credit losses. The
table below is an analysis of trade receivables and accrued income
by due date:
Neither More than
Carrying impaired 0-3 months 3 months
nor
amount past due past due past due
At 31 March 2022 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- --------- ----------- ----------
Trade receivables 8,231 8,231 - -
Accrued income 25 25 - -
--------- --------- ----------- ----------
Total 8,256 8,256 - -
--------- --------- ----------- ----------
100% 0% 0%
------------------- --------- --------- ----------- ----------
Neither More than
Carrying impaired 0-3 months 3 months
nor
amount past due past due past due
At 31 March 2021 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- --------- ----------- ----------
Trade receivables 6,519 6,519 - -
Accrued income 37 37 - -
--------- --------- ----------- ----------
Total 6,556 6,556 - -
--------- --------- ----------- ----------
100% 0% 0%
------------------- --------- --------- ----------- ----------
The Group offers standard credit terms of 30 days from invoice
date. It is the Group's policy to assess debtors for expected loss
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 to the reporting date.
The application of this policy generally results in debts that are
past due not being provided for unless individual circumstances
indicate that a debt is impaired.
Trade receivables are made up of 91 debtors' balances (2021:
82). The largest individual debtor corresponds to 16% of the total
balance (2021: 15%). Debtor days, based on the generally accepted
calculation of debtor days, is 85 days (2021: 94 days). This
reflects the quarterly billing cycle used by the Group for the vast
majority of its fees. As at 31 March 2022, 0% of debt was overdue
(2021: 0%). 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 28 days (2021: 29 days).
The impact of covid-19 and the Russia/Ukraine crisis has been
considered, and management believe that the Group's ability to meet
its obligations is unaffected.
Contractual maturity analysis for financial liabilities
Due or due Due between Due between
Carrying in less 1 and 3 months
than
amount 1 month 3 months and 1 year
At 31 March 2022 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- ----------- ------------ ------------
Trade payables 478 318 29 131
Accruals 3,608 302 1,503 1,803
Derivative financial liabilities 124 7 117 -
--------- ----------- ------------ ------------
Total 4,210 627 1,649 1,934
---------------------------------- --------- ----------- ------------ ------------
Due or due Due between Due between
Carrying in less 1 and 3 months
than
amount 1 month 3 months and 1 year
At 31 March 2021 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- ----------- ------------ ------------
Trade payables 384 191 30 163
Accruals 2,538 420 809 1,309
Derivative financial liabilities 16 6 10 -
--------- ----------- ------------ ------------
Total 2,938 617 849 1,472
---------------------------------- --------- ----------- ------------ ------------
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
held by the Group. Interest-bearing assets comprise money market
instruments 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.
A sensitivity analysis has not been disclosed for the impact of
interest rate changes as any reasonable range of change in interest
rate would not directly have a material impact on profit or
equity.
Interest rate profiles
No
Fixed Floating interest Total
rate rate rate
At 31 March 2022 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
----------------------------------------------------------------------- -------- --------- --------- --------
Trade receivables - - 8,231 8,231
Accrued income - - 25 25
Other receivables - - 497 497
Money market instruments with maturities > 3 months 13,913 - - 13,913
Cash and cash equivalents 3,345 - - 3,345
-------- --------- --------- --------
Total financial assets 17,258 - 8,753 26,011
----------------------------------------------------------------------- -------- --------- --------- --------
Financial liabilities
----------------------------------------------------------------------- -------- --------- --------- --------
Trade payables - - (478) (478)
Accruals - - (3,608) (3,608)
Lease liability - - (1,326) (1,326)
Derivative financial liabilities at fair value through profit or loss - - (124) (124)
-------- --------- --------- --------
Total financial liabilities - - (5,536) (5,536)
----------------------------------------------------------------------- -------- --------- --------- --------
No
Fixed Floating interest Total
rate rate rate
At 31 March 2021 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
----------------------------------------------------------------------- -------- --------- --------- --------
Trade receivables - - 6,519 6,519
Accrued income - - 37 37
Other receivables - - 470 470
Derivative financial assets at fair value through profit or loss - - 260 260
Money market instruments with maturities > 3 months 12,932 - - 12,932
Cash and cash equivalents 682 6,165 - 6,847
-------- --------- --------- --------
Total financial assets 13,614 6,165 7,286 27,065
----------------------------------------------------------------------- -------- --------- --------- --------
Financial liabilities
----------------------------------------------------------------------- -------- --------- --------- --------
Trade payables - - (384) (384)
Accruals - - (2,538) (2,538)
Lease liability - - (539) (539)
Derivative financial liabilities at fair value through profit or loss - - (16) (16)
Financial liabilities - - (1,696) (1,696)
-------- --------- --------- --------
Total financial liabilities - - (5,173) (5,173)
----------------------------------------------------------------------- -------- --------- --------- --------
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 foreign exchange contracts to manage the risk
relating to future transactions in accordance with the Group's risk
management policy.
The Group is exposed to foreign currency risk on revenue
invoices and cash holdings that are denominated in a currency other
than sterling, and also on assets and liabilities held by the
Record Currency - Strategy Development Fund. The principal
currencies giving rise to this risk are the US dollar, the Swiss
franc, the euro and the Canadian dollar.
During the year ended 31 March 2022, the Group invoiced the
following amounts in currencies other than sterling:
2022 2021
Local Value Local Value
in in
currency reporting currency reporting
value currency value currency
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- ---------- --------- ----------
US dollar (USD) 23,949 17,742 13,185 9,912
Swiss franc (CHF) 12,460 10,010 13,375 11,072
Euro (EUR) 4,135 3,498 3,185 3,828
Canadian dollar (CAD) 1,626 960 1,238 719
Australian dollar (AUD) 1,029 563 838 467
Japanese yen (JPY) 4,824 31 - -
Swedish krona (SEK) 36 3 672 49
Singapore dollar (SGD) 4 2 14 8
------------------------- --------- ---------- --------- ----------
The value of revenues for the year ended 31 March 2022 that were
denominated in currencies other than sterling was GBP32.8 million
(31 March 2021: GBP24.7 million).
Record's policy is to reduce the risk associated with the
Group's revenues denominated in foreign currencies by using forward
fixed rate currency sales contracts, taking into account any
forecast foreign currency cash flows.
The settlement of these forward foreign exchange contracts is
expected to occur within the following three months. Changes in the
fair values of forward foreign exchange contracts are recognised
directly in profit or loss.
The cash denominated in currencies other than sterling (refer to
note 18) is covered by the Group's hedging process, therefore the
Directors consider that the foreign currency risk on cash balances
is not material.
Foreign currency risk - sensitivity analysis
The Group has considered the sensitivity to exchange rate
movements by considering the impact on those revenues, costs,
assets and liabilities denominated in foreign currencies as
experienced in the given period.
Impact on profit Impact on total
after tax for equity as at
the year ended 31 March
31 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------- --------- -------- -------- --------
Sterling weakening by 10% against the dollar 871 489 871 489
Sterling strengthening by 10% against the dollar (871) (489) (871) (489)
Sterling weakening by 10% against the Swiss franc 445 551 445 551
Sterling strengthening by 10% against the Swiss franc (445) (551) (445) (551)
------------------------------------------------------- --------- -------- -------- --------
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 on a historical basis and market
expectations for future movement. When applied to the average
sterling/USD exchange rate of GBP1 = $1.35 this would result in
sterling weakening to GBP1 = $1.23 and sterling strengthening to
GBP1 = $1.50.
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 on a historical basis and market
expectations for future movement. When applied to the average
sterling/CHF exchange rate of GBP1 = CHF 1.24 this would result in
sterling weakening to GBP1 = CHF 1.13 and sterling strengthening to
GBP1 = CHF 1.38.
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.
Concentration risk
The Group is exposed to concentration risk in respect of
product, client type and geographical location, which could lead to
over-reliance on any one category of revenue. Note 4 provides
detail on clients contributing greater than 10% of revenue.
Concentration risk - sensitivity analysis
The Group has considered the impact of losing the Group's
largest client, assuming that only variable remuneration costs can
be reduced in the short term.
Impact on profit
after tax for Impact on total
the year ended equity as at
31 March 31 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --------- -------- -------- --------
Loss of largest client 2,594 2,352 2,594 2,352
------------------------ --------- -------- -------- --------
25. Fair value measurement
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 financial assets or liabilities;
-- Level 2: inputs other than quoted prices included within
level 1 that are observable for the financial asset or liability,
indirectly (i.e. derived from prices); and
-- Level 3: inputs for the financial 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:
2022 Level Level Level
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------------------------- -------- -------- -------- --------
Financial assets at fair value through profit or loss
Impact bonds 2,177 2,177 - -
Investment in funds 1,070 944 - 126
Other investments 200 - - 200
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts held to hedge non-sterling assets (15) - (15) -
Other investments (110) - (110) -
-------- -------- -------- --------
Total 3,322 3,121 (125) 326
---------------------------------------------------------------------- -------- -------- -------- --------
2021 Level Level Level
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------ -------- -------- -------- --------
Financial assets at fair value through profit or loss
Impact bonds 2,199 2,199 - -
Forward foreign exchange contracts used by seed funds 215 - 215 -
Foreign exchange options used by seed funds 45 - 45 -
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts used by seed funds (16) - (16) -
-------- -------- -------- --------
Total 2,443 2,199 244 -
------------------------------------------------------------ -------- -------- -------- --------
There have been no transfers between levels in the reporting
period (2021: none).
Basis for classification of financial instruments classified as
level 1 within the fair value hierarchy
Impact bonds are classified as level 1. These bonds are valued
using the market price and coupon rate.
Basis for classification of financial instruments classified as
level 2 within the fair value hierarchy
Forward foreign exchange contracts and options are both
classified as level 2. Both of these instruments are traded on an
active market. Options are valued using an industry standard model
with inputs based on observable market data whilst the fair value
of forward foreign exchange contracts may be established using
interpolation of observable market data rather than from a quoted
price.
Classes and fair value of financial instruments
It is the Directors' opinion that the carrying value of all
financial instruments approximates to their fair value.
Categories of financial instrument
Financial Assets Liabilities
liabilities at at
Assets measured fair value fair value
at at through through
amortised amortised profit profit
cost cost or loss or loss
At 31 March 2022 Note GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----- ----------- ------------- ------------ ------------
Impact bonds 14 - - 2,177 -
Investment in funds 14 - - 1,070 -
Other investments 14 - - 200 -
Trade and other receivables (excludes
prepayments) 16 8,753 - - -
Money market instruments with
maturities > 3 months 18 13,913 - - -
Cash and cash equivalents 18 3,345 - - -
Trade payables 19 - (478) - -
Accruals 19 - (3,608) - -
Derivative financial liabilities
at fair value through profit or
loss 17 - - - (124)
----- ----------- ------------- ------------ ------------
Total 26,011 4,086 3,447 (124)
--------------------------------------- ----- ----------- ------------- ------------ ------------
Assets Liabilities
Financial at at
liabilities fair fair
Assets measured value value
at at through through
amortised amortised profit profit
cost cost or loss or loss
At 31 March 2021 Note GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ----- ----------- ------------- --------- ------------
Impact bonds 14 - - 2,199 -
Trade and other receivables
(excludes prepayments) 16 7,027 - - -
Money market instruments with
maturities > 3 months 18 12,932 - - -
Cash and cash equivalents 18 6,847 - - -
Derivative financial assets
at fair value through profit
or loss 17 - - 260 -
Trade payables 19 - (384) - -
Accruals 19 - (2,540) - -
Derivative financial liabilities
at fair value through profit
or loss 17 - - - (16)
----- ----------- ------------- --------- ------------
Total 26,806 (2,924) 2,459 (16)
---------------------------------- ----- ----------- ------------- --------- ------------
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 14,
which includes a description of the nature of their business.
2022 2021
GBP'000 GBP'000
------------------------------------------ -------- --------
Amounts due (to)/from subsidiaries (714) 1,265
Net dividends received from subsidiaries 4,600 5,270
------------------------------------------ -------- --------
Amounts owed to and by related parties will be settled in cash.
No guarantees have been given or received. No provisions for
expected credit losses have been raised against amounts outstanding
(2021: GBPnil). No expense has been recognised during the year in
respect of expected credit losses due from related parties.
Group
Transactions or balances between Group entities have been
eliminated on consolidation, and in accordance with IAS 24, are not
disclosed in this note.
Key management personnel compensation
2022 2021
GBP'000 GBP'000
--------------------------------- -------- --------
Short -- term employee benefits 8,457 6,214
Post -- employment benefits 330 309
Share -- based payments 2,467 949
-------- --------
Total 11,254 7,472
--------------------------------- -------- --------
Key management personnel dividends
The dividends paid to key management personnel in the year ended
31 March 2022 totalled GBP3,056,662 (2021: GBP3,028,563).
Directors' remuneration
2022 2021
GBP'000 GBP'000
--------------------------------------------------------------------------------- -------- --------
Emoluments (excluding pension contribution) 2,809 2,015
Pension contribution (including payments made in lieu of pension contributions) 96 125
-------- --------
Total 2,905 2,140
--------------------------------------------------------------------------------- -------- --------
During the year, no Directors of the Company (2021: one)
participated in the Group Personal Pension Plan, a defined
contribution scheme.
Transactions with seed 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 seed 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 - Strategy Development Fund and Record -
Currency Multi-Strategy Fund were related parties on this basis
until June 2021, when the funds were closed.
During the year, Record plc Director Leslie Hill redeemed
GBP605,217 from the Record - Currency Multi -- Strategy Fund.
27. Contingent liabilities and commitments
The Group has committed to subscriptions to equity capital of
$550,000, of which $166,900 has been called.
On 1 October 2021, the Group committed to a licence to use an
office in London. The commitment is to 31 October 2023 and the
outstanding amount to be paid at 31 March 2022 was GBP558,600.
GBP352,800 is payable within 12 months and GBP205,800 the following
12 months.
28. 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 shareholders; and (iii) to meet
regulatory capital requirements set by the UK Financial Conduct
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.
The Group's capital is managed within the categories set out
below:
2022 2021
GBPm GBPm
----------------------------- ----- -----
Required regulatory capital 5.4 9.4
Other operating capital 20.5 17.4
----- -----
Total capital 25.9 26.8
----------------------------- ----- -----
Total capital covers the Groups regulatory capital requirements
plus capital required for day -- to -- day operational purposes and
other investment purposes. The Directors consider that the other
operating capital significantly exceeds the actual day-to-day
operational requirements.
29. Ultimate controlling party
As at 31 March 2022 the Company had no ultimate controlling
party, nor at 31 March 2021.
30. Post-reporting date events
No adjusting or significant non -- adjusting events have
occurred between the reporting date and the date of
authorisation.
Notes to Editors
This announcement includes information with respect to Record's
financial condition, its results of operations and business,
strategy, plans and objectives. All statements in this document,
other than statements of historical fact, including words such as
"anticipates", "expects", "intends", "plans", "believes", "seeks",
"estimates", "may", "will", "continue", "project" and similar
expressions, are forward- looking statements.
These forward-looking statements are not guarantees of the
Company's future performance and are subject to risks,
uncertainties and assumptions that could cause the actual future
results, performance or achievements of the Company to differ
materially from those expressed in or implied by such
forward-looking statements.
The forward-looking statements contained in this document are
based on numerous assumptions regarding Record's present and future
business and strategy and speak only as at the date of this
announcement.
The Company expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking
statements contained in this announcement whether as a result of
new information, future events or otherwise.
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
This information is provided by RNS, the news service of the
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END
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