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Record PLC REC Half Yearly Report


Attachment:

  Record PLC (REC) - Half Yearly Report

RNS Number : 2665R
Record PLC
16 November 2012
 



Record plc

PRESS RELEASE

16 November 2012

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012

Record plc, the specialist currency manager, today announces its unaudited
results for the six months ended 30 September 2012.

Financial highlights:

§ AuME¹ $32.5bn up 5% during the six months to 30 September 2012

§ Net client inflows during the six months of $1.2bn (six months to 30
September 2011: net inflow of $1.0bn)

§ Profit before tax was £2.7m (six months to 30 September 2011: £3.7m)

§ Revenue for the six months to 30 September 2012 fell to £8.7m (six months to
30 September 2011: £11.2m)

§ Average management fee rates of 8.9 bps for the six months to
30 September 2012 (six months to 30 September 2011: 11.9 bps) reflecting
changes in product mix

§ Operating costs, before Group Profit Share, reduced by £0.9m to £4.7m (six
months to 30 September 2011: £5.6m)

§ Operating margin 30% (six months to 30 September 2011: 33%)

§ Basic EPS of 0.94 pence (six months to 30 September 2011: 1.26 pence)

§ Subject to business conditions and a satisfactory outlook, the intention is
to recommend a final dividend of 1.50p per share for the current financial
year.  No interim dividend will be paid.

§ Shareholders' equity increased to £26.9m (30 September 2011: £25.9m) with a
cash balance of £25.6m (30 September 2011: £19.7m)

¹  As a currency manager Record manages only the impact of foreign exchange
and not the underlying assets, therefore its 'assets under management' are
notional rather than real.  To distinguish this from the AUM of conventional
asset managers, Record uses the concept of Assets under Management Equivalents
(AuME) and by convention this is quoted in US dollars.

 

Key Points:

§ Passive hedging AuME increased by 11% since 31 March 2012 - including three
new clients

§ Client numbers grew by 2 to 43 (31 March 2012: 41)

§ First Multi-Strategy Currency for Return mandate commenced

Commenting on the results, James Wood-Collins, Chief Executive of Record plc,
said:

"The first six months of the year has seen growing AuME and client numbers,
together with a marked increase in Requests for Proposals for hedging
mandates.

"As a result of the loss of historic mandates already announced, revenue fell
to £8.7m and as a result the operating margin fell to 30%.  The Group had cash
of £25.6m and no debt at 30 September 2012.

"Looking to the remainder of the financial year, we are hopeful that we can
secure further hedging mandates, particularly passive hedging in Switzerland. 
We continue to be encouraged by the progress we have made in the US and are
well positioned to benefit from any formal procurement processes that are
initiated.  The level of demand for currency mandates in the UK has been more
modest and this level of activity is likely to continue for the rest of the
financial year.

"Overall the business environment for our hedging services appears to have
improved and we are working hard to capitalise on the opportunities that are
presented to us, whilst continuing to lay the foundations for future growth in
demand for return-seeking currency products."

Analyst briefing

There will be a presentation for analysts at 9.30am on Friday 16 November 2012
in the Copperfield Room, Holborn Bars, 138-142 Holborn, London, EC1N 2NQ.  A
copy of the presentation will be made available on the Group's website at
www.recordcm.com.

For further information, please contact:

Record plc:                                                                   
+44 1753 852222

Neil Record

Chairman

James Wood-Collins

Chief Executive Officer

Paul Sheriff

Chief Financial Officer / Chief Operating Officer

MHP Communications                                                    +44 20
3128 8100

Nick Denton, John Olsen, Vicky Watkins

 

Chairman's Statement

In the six months to 30 September 2012, we saw growing AuME and client
numbers.  When compared to the same six months of the prior year, however, we
are reporting both lower management fee income and lower profitability due to
the changes in business mix that have occurred over this period.  By contrast,
there has been a noticeable increase in Requests For Proposals (RFPs) over the
period, principally for Passive Hedging, which is encouraging.

Dynamic Hedging continues to be the largest source of income, generating 67%
of revenue for the six months to 30 September 2012.  During this period there
have been no changes to the number of clients for whom we provide this
product.  In the UK we have seen very little new business activity for Dynamic
Hedging in the current financial year.  In the US we continue to market the
product to potential clients and investment consultants and whilst there is a
good level of engagement, the nature and timing of further client additions
remains uncertain.

Passive Hedging grew again during the period, accounting for 22% of revenue
for the six months to 30 September 2012 (year ended 31 March 2012: 15% of
revenue).  The Group continues to see demand for Passive Hedging, particularly
in Switzerland.

Currency for Return now covers a range of investment strategies in currencies,
including Carry, Momentum, Value, Emerging Markets and Multi-Strategy. 
Further progress is being made in enhancing this product offering.  The
external environment remains challenging for asset managers offering Currency
for Return products and a pre-requisite for additional sales is sustained
investment performance from one or more of these strategies.

We continue to focus on marketing and selling our expertise to potential
clients in the UK, North America and continental Europe, in particular
Switzerland.  The UK market remains subdued at the present time with a low
level of formal procurement processes being initiated.  Progress is being made
in the US and the Group is now far better placed with US clients and
consultants who look for currency solutions.  Whilst there is a growing level
of interest in currency solutions in the US and Canada, the timing of
potential opportunities is uncertain.  In Switzerland the growth in Passive
Hedging mandates in the first six months demonstrates the success of the Group
in this market.  The Group is well positioned to gain additional business from
this market.

Assets under Management Equivalents ('AuME') increased to $32.5bn at 30
September 2012, compared to $30.9bn at 31 March 2012.  The largest component
of the growth was net flows, accounting for $1.2bn.  The positive equity
market performance accounted for a $0.9bn increase and movements in exchange
rates accounted for a $0.5bn decrease in AuME.

The financial performance of the Group saw revenue decrease to £8.7m for the
six months to 30 September 2012, a fall of 22% compared to the six months to
30 September 2011.  Profit before tax for the period was £2.7m, being 27%
lower than for the equivalent period in the prior year.

As a result of declining profitability, measures have been taken to reduce
costs where appropriate and overall costs (before the Group Profit Share
'GPS') have fallen to £4.7m for the six months ended 30 September 2012.  This
represents a reduction of £0.9m, being 16% of the cost base, over the same
period in the prior year.  The extent of cost savings that can be implemented
is constrained by our need to maintain an appropriate level of support for
investment processes and client services.

The operating margin, at 30%, was also less than that achieved in the six
months to 30 September 2011 (33%).  In addition to the cost savings indicated
above, the cost of the variable element of remuneration, the GPS which is set
at an average of 30% of pre-GPS operating profit, has fallen in line with
operating profit.

Shareholder funds increased to £26.9m at the period end, versus £25.9m at the
end of the comparable period in the prior year.  The Group has no debt and
cash balances increased to £25.6m, compared with £19.7m at 30 September 2011,
principally due to the consolidation of the cash positions within the seed
capital funds that had previously been categorised as assets held for sale. 
The Group has a regulatory capital surplus and has cash reserves equivalent to
approximately two years' operating costs and no debt.

As indicated in the Report and Accounts for the year ended 31 March 2012, the
Group will not pay an interim dividend for the six months ended 30 September
2012.  However, subject to business performance, the Board's intention is to
retain the overall dividend payable at 1.50p per share for the current
financial year.

Further and more detailed analysis of the results for the period can be found
in the Interim Management Review.

Investment Performance

Investment performance during the period has continued to reflect fluctuating
bouts of risk appetite and risk aversion, as the 'risk-on risk-off' phenomenon
discussed in previous reports has continued to manifest itself.  One of the
Group's attributes is that its products are not uniformly sensitive to risk
appetite, with hedging products in particular offering alternative risk
sensitivity.

During the period, US-based Dynamic Hedging clients experienced first US
Dollar strength as markets feared a worsening of the Eurozone crisis over the
early part of the summer, followed by US Dollar weakness as markets took
comfort from measures put in place by the European Central Bank, and the
Federal Reserve commenced a further round of quantitative easing.  These
programmes responded as expected by providing partial offsets to both currency
losses in the earlier part of the period and currency gains in the later part,
resulting in modest underperformance over the period.  The lack of longer-term
trends continues to make it challenging to generate consistent outperformance.

UK-based Dynamic Hedging clients experienced relatively high levels of
volatility in Sterling currency pairs over the period, with little clear
directional movement.  Investment performance over the period was broadly
flat, with modest gains in most months being offset by somewhat larger losses
in other months during the period.

Within Currency for Return products, the performance of Forward Rate Bias and
Emerging Market strategies, as risk premia, has tended to reflect falling then
rising risk appetite across the period.  The FTSE Currency FRB10 Index
underperformed in April and May, before recovering strongly through June and
July in particular to generate a positive return over the period.  This is
attributable in part to the equal weighting given to more risk sensitive
currencies such as the Australian Dollar, Canadian Dollar and Norwegian
Krone.  This equal weighting explains much of the underperformance of Record's
established Active Forward Rate Bias product, which has a lower allocation to
these more risk sensitive and less liquid currencies, as well as in-built risk
management costs.

Record's Emerging Market strategy showed similar underperformance in April and
May before somewhat recovering later in the period, although not sufficiently
to generate positive performance over the period.  This strategy reaches the
third anniversary of its 'live' track record in the second half of the
financial year.

The first half of the financial year saw the launch of Record's first
Multi-Strategy currency mandate, which represents an important strategic step
for the Group.  This mandate combines Record's Active FRB, Emerging Market,
Value and Momentum strategies.  The few months of performance since launch are
insufficient to judge, but Record is enthusiastic about this product's
long-term appeal due to its combination of FRB and Emerging Market as risk
premia, with Value and Momentum as risk diversifiers, which together are
expected to offer investors a more diversified and less volatile opportunity
to invest in Currency for Return.

As previously announced, this period also saw the closure of the Euro Stress
Fund, due to Record's recognition that Eurozone stress has been more evident
in markets other than currency, and we believe this may persist.  Record will
continue to explore tactical and non-systematic investment strategies to
complement our longer-standing more systematic approaches.

Group strategy and outlook

With risk aversion continuing to be a theme of financial markets, hedging
products continue to be the most likely source of new revenue for the Group in
the short term.  The Group continues to actively market its hedging products
particularly in North America, the UK and Switzerland.  There has been a
marked increase in the number of formal RFPs, particularly for Passive Hedging
from Switzerland, in the first half of the financial year and it is hoped that
this level of activity will continue.

The product suite of Currency for Return products is now largely complete with
the addition of Value, Momentum and a Multi-Strategy offering.  It is
encouraging to have secured our first Multi-Strategy mandate.  Whilst we
continue to market these products to clients, demand remains subdued as risk
aversion appears to be a prevailing theme.  Those products that are able to
build compelling three-year track records have the greatest chance of success,
with the Emerging Market strategy reaching a three year 'live' history in the
second half of the financial year.

Hedging is likely to provide short-term growth opportunities with medium-term
growth being built on the success of our Currency for Return products.

Neil Record

Chairman

15 November 2012

Interim Management Review

Business overview

The six months ended 30 September 2012 has seen AuME growth, principally in
Passive Hedging.  Dynamic Hedging has remained stable in the period and
Currency for Return has seen a reduction in AuME as a result of the closure of
the Forward Rate Bias Alpha pooled fund.  Both Currency Momentum and Currency
Value strategies began in the period as part of a Multi-Strategy Currency for
Return mandate.

Income for the first half of the financial year has fallen compared to the
preceding six months despite increasing AuME as the product mix has moved from
the higher income Dynamic Hedging and Currency for Return products towards the
lower income Passive Hedging product.  Costs have also fallen compared to the
preceding six months as a result of cost control measures implemented since
November 2011.

In October 2012 the Group completed its key infrastructure development
project, which was the implementation of a new middle and back office system. 
This will improve both Record's capability to deploy new products and
portfolios in a cost effective manner, and improve levels of client service.

The Group generated revenue of £8.7m and pre-tax profit of £2.7m for the six
months ended 30 September 2012.  As indicated in the Annual Report and
Accounts for 31 March 2012, there will be no interim dividend in the current
financial year.  The Board's intention, subject to business conditions,
remains to propose a final dividend of 1.50p per share, unchanged on the
overall dividend paid in respect of the year ended 31 March 2012.

Investment performance

Record's Dynamic Hedging product seeks to allow our clients to benefit from
foreign currency strength while protecting them from foreign currency
weakness.  It performs best when currency movements exhibit trends over
periods of 12 months or longer.

From the US perspective the Dollar strengthened significantly in the first
quarter of the financial year before giving back this appreciation in the
second quarter to finish the half year weaker. Returns from Dynamic Hedging
mirrored this, with the cost of varying hedge ratios in the absence of
pronounced trends preventing outperformance.

From the UK perspective, international equity hedging clients saw overall
strengthening of Sterling with the exception of the month of May when the US
Dollar outperformed Sterling.  The product generated returns which marginally
outperformed a 50% hedged benchmark.

The Currency for Return products had mixed results in the first half of the
financial year.  The core investment process for the Forward Rate Bias Alpha
product is the Trend / Forward Rate Bias (FRB) strategy, which relies on the
tendency of higher interest rate currencies to outperform lower interest rate
currencies over the long term.  Overall performance for the FRB Alpha strategy
during the period was negative, as positive returns achieved in the first
three months were offset by underperformance in the second quarter due to the
costs of the embedded risk control mechanism.

The FTSE FRB10 Index Fund outperformed during the period as the low interest
rate developed-world currencies underperformed, with high commodity prices,
improving sentiment and US quantitative easing, all providing a platform for
positive returns from the strategy.  For the Emerging Market (EM) Currency
Fund investment performance was negative over the period with losses during
the first half of the period and gains made towards the end of the period.

A new Multi-Strategy Currency for Return product was launched at the end of
July. It includes four independent return streams: Forward Rate Bias, Emerging
Markets, and the new Record Value and Momentum strategies. These return
streams have characteristically shown risk diversification, with FRB and
Emerging Markets as risk premia, and Value and Momentum as risk diversifiers.

The Euro Stress Fund, which underperformed over the period, was closed in
September. The ECB's announcement of a "fully effective backstop" through
unlimited bond purchases, supportive verdicts from the German Constitutional
Court and the Dutch electorate, and the resumption of QE 3 by the Federal
Reserve brought about a rally in risk assets and the Euro itself.  While we
continue to share widespread doubts about the ultimate viability of the single
currency, coordinated actions within the Eurozone have arrested immediate
concerns of further decline, and lessened the opportunity to capitalise on
such concerns through currency markets.

Returns of Record Umbrella Currency Funds and comparable indices for the six
months to 30 September 2012

                                     Gearing Half year return Volatility since
                                                                inception p.a.
Fund name                                                    
FTSE FRB10 Index Fund¹                   1.8            1.99%            8.28%
Emerging Market Currency Fund²             1           -1.79%            8.72%
Record Alpha composite³                                -0.71%            2.74%
Indices                                                      
FTSE Currency FRB 5 GBP Excess                          0.13%            5.79%
return
FTSE Currency FRB 10 GBP Excess                         1.06%          4.74%^4
return

¹ FTSE FRB10 Index Fund return data is since inception in December 2010.

² Emerging Market Currency Fund return data is since inception in December
2010.

³ The Record Alpha composite comprises 2 accounts and $0.37bn of assets.

^4 Inception date is 31 December 1987.

Distribution

Sales and marketing activities are organised to ensure that our resources are
being deployed where there is the greatest likelihood of success.  Sales and
marketing are primarily focussed on the UK, North America and Switzerland with
additional activity in continental Europe.  From time to time the Group
receives enquiries outside of these geographical locations and responds to
those enquiries that are commercially attractive.

The UK market has been subdued in the first six months of the current
financial year with very little activity in Passive Hedging, Dynamic Hedging
or Currency for Return.  It is not envisaged that the situation will improve
in the second half of the financial year.

Activity in North America has mainly involved educating potential clients and
the consultant community on the Group's products.  The US sales executive has
now been with the Group for sixteen months, during which time he has met a
large number of potential clients and investment consultants.  This has led to
more detailed engagement with a number of potential clients and consultants,
principally for either Dynamic Hedging or a combination of Dynamic Hedging and
a Multi-Strategy offering.  Whilst it is difficult to predict when, or even
if, individual clients may look to adopt either currency hedging or
return-seeking strategies, we continue to believe that mandates can be secured
over the medium term.  The scale of the US institutional investment market,
and its current low rate of adoption of currency management strategies, makes
this market potentially transformational for Record in the future, although
achievement of this is uncertain at present.

Switzerland continues to be a market where the Group has experienced a good
level of recent sales success.  The Swiss market has a propensity toward
Passive Hedging and the Group is seen as having a good reputation with a
number of 'marquee' clients and is also particularly well regarded for its
Passive Hedging offering.  The Group now has a sales representative based in
Switzerland to build on the success that has been achieved in this market.

Product development

With the launch of Currency Momentum and Currency Value, together with the
Multi-Strategy offering, the suite of Currency for Return products has now
been substantially redeveloped over the last three years.  Demonstrating
investable track records for these products is seen as a pre-cursor to
attracting meaningful assets under management.  Both the Emerging Market
product and the FTSE FRB10 Index Fund reach these milestones later this year
and next year respectively.

In addition to developments in Currency for Return products, we continue to
monitor developments in the currency markets and are constantly looking at
opportunities to enhance our hedging product offerings.

Client development

Client numbers increased to 43 at 30 September 2012 (41 at 31 March 2012).

 

                             30 September 2012 30 September 2011 31 March 2012
Dynamic Hedging                              9                11             9
Passive Hedging                             25                22            22
Currency for Return                         11                17            14
Other Currency Management                    2                 -             1
services
Adjustment for clients with                (4)               (7)           (5)
> 1 product
Total                                       43                43            41

AuME analysis

As previously noted, the Group's AuME was $32.5bn at 30 September 2012, an
increase of $1.6bn during the six month period.

AuME movement in the six months to 30 September 2012

                                 $bn
AuME at 31 March 2012           30.9
Net client inflows               1.2
Equity and other market impact   0.9
Foreign exchange impact        (0.5)
AuME at 30 September 2012       32.5

 

Net client flows

During the six months to 30 September 2012 net client inflows were $1.2bn,
principally due to increases in Passive Hedging offset by reductions in pooled
Currency for Return mandates.

Equity and other market performance

Record's AuME is affected by movements in equity and other market levels
because substantially all the Passive and Dynamic Hedging, and some of the
Currency for Return mandates, are linked to equity and other market levels. 
Market performance increased AuME in the six months to 30 September 2012 by
$0.9bn.

Foreign exchange

The foreign exchange effect of expressing non-US$ AuME in US$ had a small
impact on AuME.  80% of the Group's AuME is non-US$ denominated and expressing
this in US$ decreased AuME for the period by $0.5bn.

Product mix

The factors determining the movements in AuME also impact its composition.  At
30 September 2012 Currency for Return represented 5% of total AuME.  This is
down from 10% at 30 September 2011 and down from 6% at 31 March 2012.  Dynamic
Hedging represented $9.9bn and 30% of total AuME at 30 September 2012, down
from 38% at 30 September 2011 and unchanged AuME from 31 March 2012.  Passive
Hedging represented $21.0bn and 65% of total AuME at 30 September 2012, up
from 51% at 30 September 2011 and 61% at 31 March 2012.

AuME by product expressed in US Dollars ($bn)

              As at 30 September 2012                  As at             As at
                                           30 September 2011     31 March 2012
Dynamic               9.9         30%        11.1        38%      9.9      32%
Hedging
Passive              21.0         65%        14.7        51%     18.9      61%
Hedging
Currency for          1.5          5%         2.8        10%      1.8       6%
Return
Cash and              0.1          0%         0.3         1%      0.3       1%
other
Total                32.5        100%        28.9       100%     30.9     100%

 

AuME by product expressed in Sterling (£bn)

              As at 30 September 2012                  As at             As at
                                           30 September 2011     31 March 2012
Dynamic               6.1         30%         7.2        38%      6.2      32%
Hedging
Passive              13.0         65%         9.4        51%     11.8      61%
Hedging
Currency for          0.9          5%         1.8        10%      1.1       6%
Return
Cash and              0.1          0%         0.2         1%      0.2       1%
other
Total                20.1        100%        18.6       100%     19.3     100%

 

The AuME composition has remained largely unchanged in terms of the underlying
base currencies.  Swiss Franc was the base currency for 49% of total AuME at
30 September 2012 (31 March 2012: 47%), US Dollar was the base currency for
20% of total AuME at 30 September 2012 (31 March 2012: 21%), and Sterling was
the base currency for 26% of total AuME at 30 September 2012 (31 March
2012: 28%).

AuME by base currency and product

                         Dynamic Hedging  Passive Hedging  Currency for Return
 
                          30 Sep  31 Mar   30 Sep   31 Mar    30 Sep    31 Mar
Base currency (billions)
                              12      12       12       12        12        12
 
Sterling                 GBP 1.8 GBP 1.7  GBP 3.3  GBP 3.4         -   GBP 0.2
US Dollar                USD 5.8 USD 5.9  USD 0.2        -   USD 0.6   USD 0.7
Swiss Franc              CHF 1.2 CHF 1.2 CHF 13.1 CHF 11.6   CHF 0.6   CHF 0.5
Euro                           -       -  EUR 1.2  EUR 0.6         -         -
Canadian Dollar                -       -        -        -   CAD 0.3   CAD 0.2
Total                    USD 9.9 USD 9.9 USD 21.0 USD 18.9   USD 1.5   USD 1.8

 

AuME by client type ($bn)

                                         As at             As at         As at
                             30 September 2012 30 September 2011 31 March 2012
Government & public funds        21.7      67%     18.4      64%   20.8    67%
Corporate                         7.3      22%      6.9      24%    6.4    21%
Foundations & investment          3.5      11%      3.6      12%    3.7    12%
funds
Total                            32.5     100%     28.9     100%   30.9   100%

 

AuME by client location ($bn)

               As at 30 September 2012                 As at             As at
                                           30 September 2011     31 March 2012
UK                     8.6         26%        8.5        29%      8.7      28%
Europe                18.2         56%       12.9        45%     16.5      54%
(excluding UK)
North America          5.7         18%        7.5        26%      5.7      18%
Total                 32.5        100%       28.9       100%     30.9     100%

 

Revenue

Management fee income for the six months to 30 September 2012 was £8.8m, which
was 22% lower than for the six months to 30 September 2011 (£11.3m).  For the
six months to 30 September 2012, Dynamic Hedging and Currency for Return
products generated lower management fees whilst Passive Hedging generated
higher management fees than over the same period last year.  In the six months
to 30 September 2012 Dynamic Hedging generated 67% of management fee income,
with Currency for Return generating 11%.  The reduction in Dynamic Hedging
management fee income is primarily due to the loss of the second largest
Dynamic Hedging client from November 2011.

 

Revenue by product (£m)

                              Six months ended  Six months ended    Year ended
                             30 September 2012 30 September 2011 31 March 2012
Management                                                                    
fees
Dynamic                                    5.9               7.4          13.5
Hedging
Passive                                    1.9               1.5           3.0
Hedging
Currency for                               1.0               2.4           3.9
Return
Total                                      8.8              11.3          20.4
management
fees
Other income                             (0.1)             (0.1)           0.1
Total revenue                              8.7              11.2          20.5

Other Group activities include consultancy and gains / losses on derivative
financial instruments.

The average fee rate achieved for Dynamic Hedging decreased to 19.0bps (six
months to 30 September 2011: 20.2bps) whilst average fee rates for Passive
Hedging were broadly unchanged at 3.0bps.

 

Average management fee rates by product - (bps)¹

                              Six months ended  Six months ended    Year ended
                             30 September 2012 30 September 2011 31 March 2012
Dynamic                                   19.0              20.2          20.0
Hedging
Passive                                    3.0               3.1           3.1
Hedging
Currency for                              21.4              24.5          23.8
Return
Composite                                  8.9              11.9          11.2
average fee
rate

¹ bps = basis points = 1/100^th of 1 percentage point

Expenditure

Total expenditure in the six months to 30 September 2012 fell by £1.4m to
£6.0m from £7.4m in the six months to 30 September 2011.  The reduction was
mainly attributable to a number of cost reduction initiatives focussed on
personnel and non-personnel costs (reductions of £0.2m and £0.7m respectively)
and also to the falling cost of the Group Profit Share (GPS) scheme which was
30% of pre-GPS operating profit in the period (reduction of £0.4m).

Under the GPS scheme rules, the intention is to purchase shares in the market
following the announcement of interim and full year financial results in order
to meet mandatory and elective share awards.

 

Expenditure analysis (£m)

                              Six months ended  Six months ended    Year ended
                             30 September 2012 30 September 2011 31 March 2012
Personnel costs                            3.0               3.2           6.4
Non-personnel costs                        1.7               2.4           4.2
Administrative expenditure                 4.7               5.6          10.6
excluding Group Profit Share
Group Profit Share (GPS)                   1.2               1.6           2.8
Total administrative                       5.9               7.2          13.4
expenditure
Loss on financial                          0.1               0.2           0.3
instruments held as part of
disposal group
Total expenditure                          6.0               7.4          13.7

Operating margins

The operating profit for the six months to 30 September 2012 of £2.6m (six
months ended 30 September 2011: £3.7m) reflects the lower management fee
income in the period mitigated by both the impact of the Group's cost
reduction programme which has reduced personnel costs by 6% and non-personnel
costs by 29%, and the lower cost of the GPS scheme.  The operating margin of
30% compares with 33% operating margin for the same period in 2011.

Operating cash flow

The Group generated £2.4m of cash flow from operating activities after tax
during the six months ended 30 September 2012 (six months ended 30 September
2011: £0.5m). Taxation paid during the period was £0.9m compared with £1.8m
for the six months to 30 September 2011.  On 1 August 2012 the Group paid a
final dividend of 0.75p per share in respect of the period ended
31 March 2012.  This equated to a distribution to shareholders of £1.6m (six
months ended 30 September 2011: £5.7m).

The Board's objective is to retain sufficient capital within the business to
meet continuing obligations, to sustain future growth and to provide a buffer
against adverse market conditions.  The Group has no debt to repay or to
service. Shareholders' funds were £26.9m at 30 September 2012
(30 September 2011: £25.9m).

Dividends

As indicated in the Annual Report for the year ended 31 March 2012, the Group
does not intend to pay an interim dividend in the current financial year.  The
Board's intention remains to recommend a final dividend of 1.50p per share for
the financial year ending 31 March 2013 subject to satisfactory business
conditions in the second half of the financial year.

Principal risks and uncertainties

The principal risks and uncertainties documented in the Annual Report and
Accounts for the year ended 31 March 2012 are still relevant to Record.

The risk associated with account concentration has remained throughout the six
months to 30 September 2012.  The proportion of revenue generated from the
largest client was 32% at 30 September 2012 (31 March 2012: 29%).  The
proportion of revenue generated from the largest five clients was 66% at 30
September 2012 (31 March 2012: 60%) and for the largest ten clients was 86% at
30 September 2012 (31 March 2012: 81%).

The level of AuME and fee income is dependent on currency values, performance
of underlying assets (typically international equities) and the clients'
investment strategies.

Cautionary statement

This interim report contains certain forward-looking statements with respect
to the financial condition, results, operations and business of Record.  These
statements involve risk and uncertainty because they relate to events and
depend upon circumstances that will occur in the future.  There are a number
of factors that could cause actual results or developments to differ
materially from those expressed or implied in this interim report.  Nothing in
this interim report should be construed as a profit forecast.

 

Statement of Directors' responsibilities

The Directors of Record plc confirm that, to the best of their knowledge, the
condensed set of financial statements below have been prepared in accordance
with IAS 34 'Interim Financial Reporting', and that the interim management
report above includes a fair review of the information required by DTR 4.2.7
and DTR 4.2.8.

The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website. 
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.

Neil
Record                                                                             
Paul Sheriff

Chairman
                                                                               
Chief Operating Officer /
                                                                                              
Chief Financial Officer

15 November
2012                                                                    15
November 2012

 

 

Independent review report to Record plc (the "Company")

Introduction

We have reviewed the condensed set of financial statements in the half-yearly
financial report of Record plc for the six months ended 30 September 2012
which comprises the consolidated statement of comprehensive income, the
consolidated statement of financial position, the consolidated statement of
cash flows, the consolidated statement of changes in equity and the related
notes. We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
financial statements.

This report is made solely to the Company's members, as a body, in accordance
with International Standard on Review Engagements (UK and Ireland) 2410,
'Review of Interim Financial Information performed by the Independent Auditor
of the Entity'. Our review work has been undertaken so that we might state to
the Company's members those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company and the Company's members as a body, for our review work, for
this report, or for the conclusion we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with International Financial Reporting Standards as
adopted by the European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared in accordance
with International Accounting Standard 34, 'Interim Financial Reporting', as
adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.

Scope of review

We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'. A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2012 is not prepared,
in all material respects, in accordance with International Accounting Standard
34, 'Interim Financial Reporting', as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial Services
Authority.

Grant Thornton UK LLP

Auditor

London

15 November 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                Unaudited  Unaudited   Audited

                                               six months six months      year
                                                    ended      ended
                                                                         ended
                                                30 Sep 12  30 Sep 11
                                                                     31 Mar 12
                                          Note      £'000      £'000     £'000
Revenue                                    3        8,714     11,167    20,535
Cost of sales                                       (136)      (123)     (252)
Gross profit                                        8,578     11,044    20,283
Administrative expenses                           (5,864)    (7,188)  (13,430)
Loss on financial instruments held as      8         (67)      (191)     (299)
part of disposal group
Operating profit                                    2,647      3,665     6,554
Finance income                                         80         84       155
Profit before tax                                   2,727      3,749     6,709
Taxation                                            (725)    (1,043)   (1,803)
Profit after tax and total comprehensive            2,002      2,706     4,906
income for the period
Total comprehensive income for the period
attributable to:
Non-controlling interests                            (69)       (75)       (7)
Owners of the parent                                2,071      2,781     4,913
Earnings per share for profit
attributable to the equity holders of the
Company during the period (expressed in
pence per share)
Basic earnings per share                   4        0.94p      1.26p     2.23p
Diluted earnings per share                 4        0.94p      1.26p     2.23p

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                 Unaudited Unaudited   Audited

                                            Note     as at     as at     as at

                                                 30 Sep 12 30 Sep 11 31 Mar 12
                                                     £'000     £'000     £'000
Non-current assets
Property, plant and equipment                          167       201       183
Intangible assets                                    1,078     1,138     1,140
Deferred tax assets                                      -        62         -
                                                     1,245     1,401     1,323
Current assets
Trade and other receivables                          5,919     6,237     5,070
Derivative financial assets                  7          75         -        33
Cash and cash equivalents                           25,575    19,659    24,572
                                                    31,569    25,896    29,675
Current assets held for sale (disposal       8           -     4,444     1,075
group)
Total current assets                                31,569    30,340    30,750
Total assets                                        32,814    31,741    32,073
Current liabilities
Trade and other payables                           (2,814)   (3,215)   (2,494)
Corporation tax liabilities                          (679)   (1,043)     (900)
Derivative financial liabilities             7           -      (78)      (48)
                                                   (3,493)   (4,336)   (3,442)
Deferred tax liabilities                              (29)         -      (15)
Total net assets                                    29,292    27,405    28,616
Equity
Issued share capital                         9          55        55        55
Share premium account                                1,809     1,809     1,809
Capital redemption reserve                              20        20        20
Retained earnings                                   25,053    24,031    24,469
Equity attributable to owners of the parent         26,937    25,915    26,353
Non-controlling interests                    12      2,355     1,490     2,263
Total equity                                        29,292    27,405    28,616

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 September 2011

                    Called   Share    Capital Retained Non-controlling   Total
                  up share premium redemption earnings       interests  equity
                   capital account    reserve
                     £'000   £'000      £'000    £'000           £'000   £'000
As at 31 March          55   1,809         20   27,262             952  30,098
2011
Dividends paid           -       -          -  (5,726)               - (5,726)
Own shares held          -       -          -    (459)               -   (459)
by EBT
Share-based              -       -          -      173               -     173
payments
Issue of units in
funds to                 -       -          -        -             613     613
non-controlling
interests
Transactions with        -       -          -  (6,012)             613 (5,399)
owners
Profit for the           -       -          -    2,781            (75)   2,706
period
As at 30                55   1,809         20   24,031           1,490  27,405
September 2011

 

Six months ended 31 March 2012

                    Called
                  up share   Share    Capital
                           premium redemption Retained Non-controlling   Total
                   capital account    reserve earnings       interests  equity
                     £'000   £'000      £'000    £'000           £'000   £'000
As at 30                55   1,809         20   24,031           1,490  27,405
September 2011
Dividends paid           -       -          -  (1,645)               - (1,645)
Own shares held          -       -          -     (75)               -    (75)
by EBT
Share-based              -       -          -       26               -      26
payments
Issue of units in
funds to                 -       -          -        -             705     705
non-controlling
interests
Transactions with        -       -          -  (1,694)             705   (989)
owners
Profit for the           -       -          -    2,132              68   2,200
period
As at 31 March          55   1,809         20   24,469           2,263  28,616
2012

Six months ended 30 September 2012

                    Called   Share    Capital Retained Non-controlling   Total
                  up share premium redemption earnings       interests  equity
                   capital account    reserve
                     £'000   £'000      £'000    £'000           £'000   £'000
As at 31 March          55   1,809         20   24,469           2,263  28,616
2012
Dividends paid           -       -          -  (1,645)               - (1,645)
Share-based              -       -          -      134               -     134
payments
Employee share           -       -          -       24               -      24
options
Issue of units in
funds to                 -       -          -        -             161     161
non-controlling
interests
Transactions with        -       -          -  (1,487)             161 (1,326)
owners
Profit for the           -       -          -    2,071            (69)   2,002
period
As at 30                55   1,809         20   25,053           2,355  29,292
September 2012

 

CONSOLIDATED STATEMENT OF CASH FLOWS

                                                           Unaudited   Audited
                                          Unaudited
                                                    six months ended      year
                                   six months ended
                                                           30 Sep 11     ended
                                          30 Sep 12
                                                                     31 Mar 12
                                              £'000            £'000     £'000
Profit after tax                              2,002            2,706     4,906
Adjustments for:
Corporation tax                                 725            1,043     1,803
Finance income                                 (80)             (84)     (155)
Depreciation of property, plant                  50               41        96
and equipment
Amortisation of intangible assets                62                -        10
Share-based payments expense                    158              173       199
                                              2,917            3,879     6,859
Changes in working capital
(Increase) / Decrease in                      (851)              651     1,831
receivables
Increase / (Decrease) in payables               320            (874)   (1,594)
Decrease / (Increase) in other                1,033          (1,422)   (2,082)
financial assets
(Decrease) / Increase in other                 (48)               66        35
financial liabilities
CASH INFLOW FROM OPERATING                    3,371            2,300     5,049
ACTIVITIES
Corporation taxes paid                        (932)          (1,829)   (2,656)
NET CASH INFLOW FROM OPERATING                2,439              471     2,393
ACTIVITIES
INVESTING ACTIVITIES
Purchase of property, plant and                (34)             (15)      (52)
equipment
Purchase of intangible assets                     -             (53)      (65)
Interest received                                82              100       158
NET CASH INFLOW FROM INVESTING                   48               32        41
ACTIVITIES
FINANCING ACTIVITIES
Cash inflow from issue of units in              161              613     1,318
funds
Purchase of treasury shares                       -            (459)     (534)
Dividends paid to equity                    (1,645)          (5,726)   (7,371)
shareholders
NET CASH OUTFLOW FROM FINANCING             (1,484)          (5,572)   (6,587)
ACTIVITIES
NET INCREASE / (DECREASE) IN CASH
AND CASH EQUIVALENTS IN THE PERIOD
(prior to increase in cash due to             1,003          (5,069)   (4,153)
accounting treatment of assets
previously presented as disposal
group)
Increase in cash due to accounting
treatment of assets previously                    -                -     3,997
presented as disposal group
NET INCREASE / (DECREASE) IN CASH             1,003          (5,069)     (156)
AND CASH EQUIVALENTS IN THE PERIOD
Cash and cash equivalents at the             24,572           24,728    24,728
beginning of the period
CASH AND CASH EQUIVALENTS AT THE             25,575           19,659    24,572
END OF THE PERIOD

 

Closing cash and cash equivalents consists of:
Cash                                            5,075  2,256  4,669
Cash equivalents                               20,500 17,403 19,903

Notes to the accounts

1.      Basis of preparation

The condensed set of financial statements included in this half-yearly
financial report have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted by the
European Union.  The financial information set out in this interim report does
not constitute statutory accounts as defined in Section 434 of the Companies
Act 2006.  The Group's statutory financial statements for the year ended 31
March 2012 (which were prepared in accordance with IFRSs as adopted by the
European Union) have been delivered to the Registrar of Companies.  The
auditor's report on those financial statements was unqualified and did not
contain statements under Section 498(2) or Section 498(3) of the Companies Act
2006.

2.      Significant accounting policies

The condensed financial statements have been prepared under the historical
cost convention modified to include fair valuation of derivative financial
instruments.

The accounting policies, presentation and methods of computation applied in
the interim financial statements are consistent with those applied in the
financial statements for the year ended 31 March 2012.

3.      Segmental analysis

The Directors, who together are the entity's Chief Operating Decision Maker,
consider that its services comprise one operating segment (being the provision
of currency management services) and that it operates in a market that is not
bound by geographical constraints.  The Directors receive revenue analysis
disaggregated by product, whilst operating costs are presented on an
aggregated basis because this reflects the unified basis in which the products
are marketed, delivered and supported.

(a)     Product revenues

The Group has split its currency management revenues by product.  Other Group
activities include consultancy and gains / losses on derivative financial
instruments.

Revenue by product type

                            Six months ended Six months ended Year ended

                                   30 Sep 12        30 Sep 11  31 Mar 12
                                       £'000            £'000      £'000
Management fees
Dynamic Hedging                        5,855            7,373     13,536
Passive Hedging                        1,888            1,454      2,989
Currency for Return                    1,010            2,452      3,911
Total management fee income            8,753           11,279     20,436
Other Group activities                  (39)            (112)         99
Total revenue                          8,714           11,167     20,535

 

(b)     Geographical analysis

The geographical analysis of revenue is based on the destination i.e. the
location of the client to whom the services are provided.  All turnover
originated in the UK.

Revenue by geographical region

                            Six months ended Six months ended Year ended

                                   30 Sep 12        30 Sep 11  31 Mar 12
                                       £'000            £'000      £'000
UK                                     2,334            3,061      5,627
US                                     3,280            5,206      8,886
Switzerland                            2,670            2,710      5,288
Other                                    469              302        635
Total management fee income            8,753           11,279     20,436
Other Group activities                  (39)            (112)         99
Total revenue                          8,714           11,167     20,535

Other Group activities form less than 1% of the total revenue.  This is not
considered significant and they are not analysed by geographical region.

(c)     Major clients

During the six months ended 30 September 2012, two clients each contributed
more than 10% of the Group's revenue for the six month period, being £2.8m
(32%) and £0.9m (11%) respectively.

4.      Earnings per share

Basic earnings per share is calculated by dividing the profit for the
financial period attributable to equity holders of the parent by the weighted
average number of ordinary shares in issue during the period.

Diluted earnings per share is calculated as for the basic earnings per share
with a further adjustment to the weighted average number of ordinary shares to
reflect the effects of all potential dilution.

There is no difference between the profit for the financial period
attributable to equity holders of the parent used in the basic and diluted
earnings per share calculations.

 

                                 Six months ended Six months ended  Year ended

                                        30 Sep 12        30 Sep 11   31 Mar 12
Weighted average number of
shares used in calculation of         219,382,105      220,683,191 220,100,209
basic earnings per share
Effect of dilutive potential              158,695          113,523     240,779
ordinary shares - share options
Weighted average number of
shares used in calculation of         219,540,800      220,796,714 220,340,988
diluted earnings per share
                                            pence            pence       pence
Basic earnings per share                     0.94             1.26        2.23
Diluted earnings per share                   0.94             1.26        2.23

 

The potential dilutive shares relate to the share options granted in respect
of the Group's Share Schemes.  There were share options and deferred share
awards in place at the beginning of the period over 2,028,432 shares.  During
the period options were exercised, or share awards vested, over 128,432
shares.  The Group did not grant any new share options with a potentially
dilutive effect during the period.

5.      Dividends

The dividends paid by the Group during the six months ended 30 September 2012
in respect of the year ended 31 March 2012 totalled £1,645,143 (0.75p per
share).  The dividends paid during the year ended 31 March 2012 totalled
£7,371,007 (3.34p per share) of which £1,645,143 (0.75p per share) was the
interim dividend paid in respect of the year ended 31 March 2012 and
£5,725,864 (2.59p per share) was the final dividend paid in respect of the
year ended 31 March 2011.  The dividends paid by the Group during the six
months ended 30 September 2011 totalled £5,725,864 (2.59p per share) in
respect of the year ended 31 March 2011.

6.      Investments

Record plc is the ultimate parent company of the Record Group and has seven
subsidiary undertakings that are listed below. 

Particulars of subsidiary undertakings:

Name                                 Nature of Business
Record Currency Management Limited   Currency management services
Record Group Services Limited        Management services to other Group
                                     undertakings
Record Currency Management (Jersey)  Fund management company
Limited
Record Currency Management (US) Inc. Service company
Record Portfolio Management Limited  Dormant
Record Fund Management Limited       Dormant
N P Record Trustees Limited          Trust company

Record plc'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, USA and Record Currency Management (Jersey)
Limited is incorporated in Jersey.  All other subsidiaries are incorporated in
England and Wales.

The consolidated financial statements include all the subsidiaries listed
above, the Record plc Employee Benefit Trust (EBT) which is a special purpose
entity consolidated in accordance with SIC 12, and three seeded funds (see
note 8).

7.      Derivative financial assets and liabilities

The Group holds derivative financial instruments for two purposes.  The Group
uses forward exchange contracts to reduce the risk associated with sales
denominated in foreign currencies, and also in order to achieve a return
within its seeded investment funds.  The instruments are recognised at fair
value.  The fair value of the contracts was calculated using the market
forward contract rates prevailing at the period end date.  The net gain or
loss on forward foreign exchange contracts at fair value is included in other
income.

                                                     As at     As at     As at
Derivative financial assets
                                                 30 Sep 12 30 Sep 11 31 Mar 12
                                                     £'000     £'000     £'000
Forward foreign exchange contracts held to hedge        33         -        33
cash flow
Forward foreign exchange contracts held for             42         -         -
trading
Total derivative financial assets                       75         -        33

 

                                                     As at     As at     As at
Derivative financial liabilities
                                                 30 Sep 12 30 Sep 11 31 Mar 12
                                                     £'000     £'000     £'000
Forward foreign exchange contracts held to hedge         -      (78)         -
cash flow
Forward foreign exchange contracts held for              -         -      (48)
trading
Total derivative financial liabilities                   -      (78)      (48)

 

Derivative financial instruments held to hedge cash flow

At 30 September 2012 there were outstanding contracts with a principal value
of £2,940,315 (31 March 2012: £2,685,811; 30 September 2011: £3,627,750) for
the sale of foreign currencies in the normal course of business.

The net gain or loss on forward foreign exchange contracts held to hedge cash
flow is as follows:

 

                                               Six months Six months      Year
Derivative financial instruments held to hedge      ended      ended
cash flow                                                                ended
                                                30 Sep 12  30 Sep 11
                                                                     31 Mar 12
                                                    £'000      £'000     £'000
Net gain / (loss) on forward foreign exchange          49       (19)        68
contracts at fair value through profit or loss

Derivative financial instruments held for trading

Two of the funds seeded by Record (the Record Currency FTSE FRB10 Index Fund
and the Record Currency Emerging Market Currency Fund), use forward exchange
contracts in order to achieve a return.  The Record Currency - Euro Stress
Fund used a variety of instruments including forward foreign exchange
contracts in order to achieve a return.  The forward foreign exchange
contracts held by the Record Currency FTSE FRB10 Index Fund and the Record
Currency Emerging Market Currency Fund are classified as financial assets held
for trading.  At 30 September 2012 there were outstanding contracts with a
principal value of £9,253,711 (31 March 2012: £9,112,251; 30 September 2011
all outstanding contracts held by the Record Currency FTSE FRB10 Index Fund
and the Record Currency Emerging Market Currency Fund were presented within
Current assets held for sale).  The instruments held by the Record Currency -
Euro Stress Fund have been presented within Current assets held for sale (see
note 8).

The net gain or loss on forward foreign exchange contracts held for trading is
as follows:

                                               Six months Six months      Year
Derivative financial instruments held for           ended      ended
trading                                                                  ended
                                                30 Sep 12  30 Sep 11
                                                                     31 Mar 12
                                                    £'000      £'000     £'000
Net (loss) or gain on forward foreign exchange       (61)          -       197
contracts at fair value through profit or loss

 

8.      Current assets held for sale (disposal group)

From time to time, the Group injects capital into funds operated by the Group
to trial new products (seed capital).  If the Group is able to exercise
control over such a seeded fund by holding a majority interest (whether the
majority interest is held by Record plc alone, or by combining the interests
of Record plc and its Directors), then such funds are considered to be under
control of the Group and as such the fund is accounted for as a subsidiary of
the Group in accordance with SIC-12 and IAS 27.

The Group consolidates the assets of its subsidiaries on a line by line basis,
but where the Group is actively seeking to reduce its holding in the seeded
funds within twelve months of its initial investment in the fund, through the
sale of further units in these funds to external investors and the subsequent
redemption of Record's own investment, the investments in the funds are
classified as being a disposal group held for sale as it is considered highly
probable that the funds will not remain under the control of the Group one
year after the original investment was made.

If the Group still retains control of the funds after this time, the Group
considers whether an extension of the one year period is applicable.  If no
extension to the period is applicable, then the funds will cease to be
classified as held for sale and will be consolidated in full, on a line by
line basis.

In December 2010, the Group invested £1,000,000 in the Record Currency FTSE
FRB10 Index Fund and a further £1,000,000 in the Record Currency Emerging
Market Currency Fund, and these were accounted for as a disposal group held
for sale on the above basis.  In both cases, the Group still retained control
over each of the funds twelve months after the original investment. 
Consequently, from 31 December 2011, both funds ceased to be classified as
held for sale and are now consolidated in full, on a line by line basis.

In May 2011, the Group invested £1,000,000 in the Record Currency - Euro
Stress Fund, the only other investor in the fund was Neil Record, a Director
of Record plc.  During the six months ended 30 September 2012 the Group
decided to liquidate the fund.  The Group classified its investment in the
fund as a disposal group held for sale from its inception through to its
liquidation.

 

                                                     As at     As at     As at

                                                 30 Sep 12 30 Sep 11 31 Mar 12
                                                     £'000     £'000     £'000
Seed capital classified as being  a disposal             -     4,444     1,075
group held for sale

The underlying assets of the funds are cash deposits, and forward foreign
exchange contracts with tenors of three months or shorter which are accounted
for as derivatives measured at fair value through profit or loss under IAS 39.

The net loss on financial instruments held as part of a disposal group is as
follows:

                                                    Six months ended      Year
                                   Six months ended
                                                           30 Sep 11     ended
                                          30 Sep 12
                                                                     31 Mar 12
                                              £'000            £'000     £'000
Net loss on financial instruments                67              191       299
held as part of disposal group

The net loss on financial instruments held as part of disposal group includes
a loss of £10,236 attributable to non-controlling interests (six months ended
30 September 2011: loss of £74,720; 31 March 2012: loss of £7,406).

9.      Called up share capital

The share capital of Record plc consists only of fully paid ordinary shares
with a par value of 0.025p.  All shares are equally eligible to receive
dividends and the repayment of capital and represent one vote at the
shareholders' meeting.

 

                          As at 30 Sep 12   As at 30 Sep 11   As at 31 Mar 12
                         £'000      Number £'000      Number £'000      Number
Authorised
Ordinary shares of         100 400,000,000   100 400,000,000   100 400,000,000
0.025p each
Called up, allotted and
fully paid
Ordinary shares of          55 221,380,800    55 221,380,800    55 221,380,800
0.025p each

Changes to the issued share capital

                                      £'000      Number
                                                       
As at 31 March 2011                      55 221,075,836
                                                       
Adjustment for own shares held by EBT     - (1,223,468)
                                                       
As at 30 September 2011                  55 219,852,368
                                                       
Adjustment for own shares held by EBT     -   (500,000)
                                                       
As at 31 March 2012                      55 219,352,368
                                                       
Adjustment for own shares held by EBT     -     128,432
                                                       
As at 30 September 2012                  55 219,480,800

10.    Share-based payments

During the six months ended 30 September 2012 the Group has managed the
following share-based compensation plans:

The Record plc Group Profit Share Scheme

Under the terms of the scheme rules, employees and Directors of the Company
may elect to receive a proportion of their profit share in the form of a share
award.  Directors and senior employees receive one third of their profit share
in cash, one third in shares ('Earned shares') and may elect to receive the
final third as cash only or to allocate some, or all, of the amount for the
purchase of Additional shares.  Other employees receive two thirds of their
profit share in cash and may elect to receive the final third as cash only or
to allocate some, or all, of the amount for the purchase of Additional
shares.  All employees electing to allocate a portion of their profit share
for the purchase of Additional shares receive a Matching share value using a
multiple decided by the Remuneration Committee.

All shares the subject of share awards are transferred immediately to a
nominee and are subject to certain lock up arrangements.  None of these shares
are subject to any vesting or forfeiture provisions and the individual is
entitled to full rights in respect of the shares purchased.  No such shares
still under lock up can be sold, transferred or otherwise disposed of without
the consent of the Remuneration Committee.

The Record plc Share Scheme

The Record plc Share Scheme was created for the granting of share awards to
senior employees. During the year ended 31 March 2009 two such employees were
granted deferred share awards upon appointment to the Group.  These shares
were available to the employee after the vesting period for nil consideration
upon exercise.  The shares vested equally on the second, third and fourth
anniversary of appointment.  The vesting of the shares was subject to certain
good leaver provisions.  The rights to acquire the shares were issued under
nil cost option agreements.  The final vesting of shares granted under this
scheme occurred in the period, with 128,432 shares vesting.

The Record plc Share Scheme was amended in the prior period to facilitate the
grant of share options to certain individuals below Board level selected by
the Executive Committee as having the skills and potential to contribute
significantly to the business in the future.  The revised scheme rules allow
the grant of tax-approved options (subject to limits) as well as unapproved
options.  During the previous financial year, options were issued to 5 such
individuals over a total of 2,000,000 shares using both schemes, 100,000 of
which had lapsed prior to the end of that year.  These options were granted at
market price and will vest over 4 years, subject to employment and performance
conditions.  Of the remaining 1,900,000 options still held, 325,000 had vested
but were not exercised during the period.  No further grants of options were
made during the period.

Share-based payment transactions with cash alternatives

Deferred share awards granted under the Record plc Group Profit Share Scheme
are accounted for under IFRS 2 as share-based payment transactions with cash
alternatives.

Equity-settled share-based payments

Deferred share awards and options granted under the Record plc Share Scheme
are accounted for under IFRS 2 as equity-settled share-based payment
transactions.

The fair value of options granted is measured at grant date using the
Black-Scholes formula, which takes into account the terms and conditions under
which the instruments were granted.

The fair value amounts for all options issued since Admission were determined
using quoted share prices.

11.    Employee Benefit Trust

The Record plc Employee Benefit Trust (EBT) was created to hold shares
acquired to meet obligations for share awards made to employees under the
Record plc share-based compensation plans.  During the period nil cost options
were exercised over a total of 128,432 shares.  The EBT continues to hold
1,900,000 shares at 30 September 2012 (31 March 2012: 2,028,432; 30 September
2011: 1,528,432).  The holding of the EBT comprises own shares that have not
vested unconditionally to employees of the Group or shares that have vested
but have not yet been exercised.  Own shares are recorded at cost and are
deducted from retained earnings.  The EBT is consolidated in the Group
financial statements.

Neither the purchase nor sale of own shares leads to a gain or loss being
recognised in the Group statement of comprehensive income.

12.    Non-controlling interests

Three Directors of Record plc and three external investors have purchased
units in the two funds currently seeded by Record plc, i.e. the Record
Currency FTSE FRB10 Index Fund, the Record Currency Emerging Market Currency
Fund, and previously, also the Record Currency - Euro Stress Fund.  The mark
to market value of these units represents the only non-controlling interests
in the Group.

The two existing funds are considered to be under control of the Group through
majority interests. The Record Currency - Euro Stress Fund was considered to
be under control of the Group throughout its existence.

Mark to market value of external holding in seeded funds consolidated into the
accounts of the Record Group

                               As at 30 Sep 12 As at 30 Sep 11 As at 31 Mar 12
                                         £'000           £'000           £'000
Record Currency FTSE FRB10                 821             485             528
Index Fund
Record Currency Emerging                 1,534             821           1,572
Market Currency Fund
Record Currency Euro Stress                  -             184             163
Fund
Total                                    2,355           1,490           2,263

 

13.    Related party transactions

The related party transactions during the period are consistent with the
categories disclosed in the Annual Report for the year ended 31 March 2012.

The compensation given to key management personnel is as follows:

                             Six months Six months ended      Year
                                  ended
                                               30 Sep 11     ended
                              30 Sep 12
                                                         31 Mar 12
                                  £'000            £'000     £'000
Short-term employee benefits      1,757            1,960     4,007
Post-employment benefits            147              170       342
Share-based payments                424              670     1,057
Dividends                           863            2,924     3,792
                                  3,191            5,724     9,198

14.    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.

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
END
 
 
IR GGGMGGUPPGQA -0- Nov/16/2012 07:00 GMT
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