Final Results

RNS Number : 5488P

Record PLC

21 June 2022

PRESS RELEASE

Record plc

21 June 2022

FINAL RESULTS ANNOUNCEMENT

FOR THE YEAR ENDED 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 £35.1m (FY-21: £25.4m)

§ 76% increase in Profit Before Tax (PBT) to £10.9m (FY-21: £6.2m)

§ 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
	£'000	£'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
	£'000	£'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 £26 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 £60 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 (£m)

Revenue is earned predominantly from the provision of currency management services in the form of management fees and performance fees.

Revenue	£ 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 £0.4m to £0.5m (2021: £0.1m).

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 per share pence	Special dividend 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 for	Return
	year to	since
	31 March 2022	inception
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 for	Return
	year to	since
	31 March 2022	inception
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 to	Return since	Volatility since
	31 March 2022	inception	inception
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 £63.1 billion (2021: £58.1 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 2022	31 March 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 £35.1 million (2021: £25.4 million) supported by a 37% increase in management fees. Operating profit for the year increased by 77% to £10.8 million (2021: £6.1 million) and the operating profit margin increased to 31% (2021: 24%) with a 76% increase in profit before tax to £10.9 million (2021: £6.2 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 (£m)

	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 £34.1 million (2021: £24.9 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 £16.3 million to £18.3 million (ignoring performance fees).

Revenue analysis (£m)

	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 £11.8 million for the year (2021: £11.4 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 £10.0 million (2021: £5.6 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 £5.5 million (2021: £2.0 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 £6.8 million (2021: £5.9 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 £0.5 million were earned during the year (2021: £0.1 million).

Other currency services income

Other currency services income totalled £0.5 million (2021: 0.4 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 £0.2 million from £0.4 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 £18.0 million for the year (2021: £15.7 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 £10.8 million (2021: £10.3 million) reflects salary increases linked to internal promotions and some costs associated with restructuring.

Non-personnel costs increased by 33% during the year to £7.2 million (2021: £5.4 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 £0.4 million for the year (2021: income of £41k) 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 £5.7 million (2021: £3.2 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 £10.8 million (2021: £6.1 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 £3.3 million (2021: £6.8 million) and the total assets managed as cash were £17.3 million (2021: £19.8 million). The cash generated from operating activities before tax increased by 55% to £12.7 million (2021: £8.2 million). During the year, taxation of £1.4 million was paid (2021: £1.4 million) and £6.5 million was paid in dividends (2021: £5.3 million). The Group spent £4.5 million (2021: £1.8 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 £13.9 million (2021: £12.9 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 £3.4 million.

As disclosed in the Chairman's statement, the Board is recommending a final ordinary dividend of 1.80 pence per share, equivalent to £3.4 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 £1.8 million, making the total dividend in respect of the year ending 31 March 2022 of £8.6 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 £5.3 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 £25.9 million at the end of the year, including current assets managed as cash totalling £17.3 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 £11.4 million for the year (2021: £6.8 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 (£m)

	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	£'000	£'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	£'000	£'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 ‑ up	Share	Capital		holders	Non-
		share	premium	redemption	Retained	of the	controlling	Total
		capital	account	reserve	earnings	parent	interests	equity
	Note	£'000	£'000	£'000	£'000	£'000	'000	£'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 ‑ up	Share premium	redemption	Retained	equity holders	Non-controlling	Total
		share capital	account	reserve	earnings	of the parent	interests	equity
	Note	£'000	£'000	£'000	£'000	£'000	'000	£'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	£'000	£'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	£'000	£'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 £4,558,705 (2021: 5,133,381).

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 ‑ up	Share	Capital		Total
		share	premium	redemption	Retained	shareholders'
		capital	account	reserve	earnings	equity
	Note	£'000	£'000	£'000	£'000	£'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 ‑ up	Share	Capital		Total
		share	premium	redemption	Retained	shareholders'
		capital	account	reserve	earnings	equity
	Note	£'000	£'000	£'000	£'000	£'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	£'000	£'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 £4,558,705 attributable to the Company (2021: £5,133,381). 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 (£), 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	£'000	£'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	£'000	£'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 £4.9 million and £4.8 million in the year (2021: two largest clients generated revenues of £4.1 million and £2.7 million in the year).

5. Operating profit

Operating profit for the year is stated after charging/(crediting):

	2022	2021
	£'000	£'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
	£'000	£'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
	£'000	£'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
	£'000	£'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 £251k (2021: income of £298k).

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
	£'000	£'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 £6,511,887 (3.40 pence per share) which comprised a final dividend in respect of the year ended 31 March 2021 of £2,220,404 (1.15 pence per share), a special dividend in respect of the year ended 31 March 2021 of £868,854 (0.45 pence per share) and an interim dividend for the year ended 31 March 2022 of £3,422,629 (1.80 pence per share).

The dividends paid by the Group during the year ended 31 March 2021 totalled £5,290,324 (2.71 pence per share) which comprised a final dividend in respect of the year ended 31 March 2020 of £2,261,779 (1.15 pence per share), a special dividend in respect of the year ended 31 March 2020 of £806,374 (0.41 pence per share) and an interim dividend for the year ended 31 March 2021 of £2,222,171 (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 £3.4 million and £1.8 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	£'000	£'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	£'000	£'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 £396,710 (2021: £221,004). 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 £507,603, 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 £267,900, 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	£'000	£'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	£'000	£'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
	£'000	£'000
Current	366	326
Non-current	960	812
Total lease liabilities	1,326	1,138

	Group	Company
	£'000	£'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
	£'000	£'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	£'000	£'000	£'000	£'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	£'000	£'000	£'000	£'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
	£'000	£'000	£'000	£'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 £2,000,000 in digital assets for the purpose of researching the market.

During the year, the Group signed commitments totalling $550,000 (£417,727) relating to third-party funds investing in the digital assets sector. As at the year end, a total of $166,900 (£122,208) has been called up, leaving a balance of $383,100 (£295,519) 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
	£'000	£'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) Inc.	US advisory and service company (SEC and CFTC registered)
Record Currency Management (Switzerland) GmbH	Swiss advisory and service company
Record Digital Asset Ventures Limited	UK company investing in opportunities 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
	£'000	£'000	£'000	£'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 £2,287,241 in impact bonds; which are measured at fair value through profit or loss. The fair value at the year end was £2,177,372 (2021: £2,198,886).

Investment in Funds

The Group has invested £1,211,242 in investment funds, which are measured at fair value through profit or loss. The fair value at the year end was £1,069,701 (2021: £847,081).

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
	£'000	£'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
	£'000	£'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 £4,287,634 (2021: £3,755,976). 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
	£'000	£'000	£'000	£'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: £nil).

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	£'000	£'000
Forward foreign exchange contracts held for trading	-	215
Foreign exchange options held for trading	-	45
Total	-	260

	2022	2021
Derivative financial liabilities	£'000	£'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 £9,085,804 (31 March 2021: £9,076,940) 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	£'000	£'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 £nil (31 March 2021: £10,383,964).

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	£'000	£'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	£'000	£'000	£'000	£'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	£'000	£'000	£'000	£'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 £nil as the funds terminated in June 2021 (31 March 2021: £3,159,533) and the money market instruments with maturities > 3 months held by these funds were £nil (31 March 2021: £427,957).

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	£'000	£'000	£'000	£'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 £2,506,656 for the Group Profit Share Scheme (31 March 2021: £1,644,761). 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	£'000	£'000	£'000	£'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
	£'000	£'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
	£'000	£'000	£'000	£'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
	£'000	Number	£'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 £1,463,802 (2021: £765,606). 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 £30,000 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 £530,779 for the year ended 31 March 2022 (2021: £181,095).

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 of	At 1 April			Lapsed/	At 31 March	Earliest vesting	Latest vesting	Exercise
grant	2021	Granted	Exercised	forfeited	2022	date	date¹	price
30/11/16	90,000	-	(90,000)	-	-	30/11/20	30/11/20	£0.34072
30/11/16	62,500	-	(62,500)	-	-	30/11/19	30/11/20	£0.34072
30/11/16	733,336	-	-	(733,336)	-	30/11/20	30/11/21	£0.34072
26/01/18	1,267,500	-	(1,078,000)	(34,500)	155,000	26/01/22	26/01/22	£0.4350
26/01/18	127,750	-	(122,625)	-	5,125	26/01/20	26/01/22	£0.4350
26/01/18	34,667	-	-	(17,333)	17,334	26/01/21	26/01/23	£0.4350
26/01/18	1,288,668	-	-	(644,332)	644,336	26/01/21	26/01/23	£0.4350
29/03/19	460,000	-	-	-	460,000	29/03/23	29/03/23	£0.2830
29/03/19	277,500	-	(92,500)	-	185,000	29/03/20	29/03/23	£0.2830
21/08/19	1,985,000	-	-	-	1,985,000	21/08/22	21/08/24	£0.3110
18/03/20	1,667,500	-	(405,000)	(25,000)	1,237,500	18/03/21	18/03/24	£0.28902
21/09/20	3,425,000	-	(606,250)	-	2,818,750	21/09/21	21/09/24	£0.3730
25/01/21	300,000	-	(75,000)	-	225,000	25/01/22	25/01/25	£0.49425
09/03/21	125,000	-	-	-	125,000	09/03/22	09/03/25	£0.63986
13/08/21	-	195,000	-	-	195,000	13/08/25	13/08/25	£0.85713
13/08/21	-	2,600,000	-	-	2,600,000	13/08/22	13/08/25	£0.4000
13/08/21	-	952,500	-	-	952,500	13/08/22	13/08/25	£0.85713
Total options	11,844,421	3,747,500	(2,531,875)	(1,454,501)	11,605,545
Weighted average exercise price of options	£0.36	£0.54	£0.39	£0.38	£0.41

During the year 2,531,875 options were exercised. The weighted average share price at date of exercise was £0.77. 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 £0.35 (2021: £0.31) 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 TSR performance of the index	which vest
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 £18,310 in the year ended 31 March 2022 (2021: £11,797).

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 April			Lapsed/	At 31 March	Earliest vesting	Latest 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	£0.37300
09/03/21	125,000	-	(31,250)	-	93,750	09/03/21	09/03/25	£0.63986
13/08/21	-	32,500	-	-	32,500	13/08/22	13/08/25	£0.85713
Total JSOP awards	2,500,000	32,500	(625,000)	-	1,907,500
Weighted average exercise price of options	£0.3863	£0.6399	£0.3863	-	£0.3944

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 £0.82.

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	£'000	£'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 nor	0-3 months	3 months
	amount	past due	past due	past due
At 31 March 2022	£'000	£'000	£'000	£'000
Trade receivables	8,231	8,231	-	-
Accrued income	25	25	-	-
Total	8,256	8,256	-	-
		100%	0%	0%

		Neither		More than
	Carrying	impaired nor	0-3 months	3 months
	amount	past due	past due	past due
At 31 March 2021	£'000	£'000	£'000	£'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 than	1 and	3 months
	amount	1 month	3 months	and 1 year
At 31 March 2022	£'000	£'000	£'000	£'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 than	1 and	3 months
	amount	1 month	3 months	and 1 year
At 31 March 2021	£'000	£'000	£'000	£'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 rate	Floating rate	interest rate	Total
At 31 March 2022	£'000	£'000	£'000	£'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 rate	Floating rate	interest rate	Total
At 31 March 2021	£'000	£'000	£'000	£'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 in	Local	Value in
	currency	reporting	currency	reporting
	value	currency	value	currency
	£'000	£'000	£'000	£'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 £32.8 million (31 March 2021: £24.7 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 after tax for the year ended 31 March		Impact on total equity as at 31 March
	2022	2021	2022	2021
	£'000	£'000	£'000	£'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 £1 = $1.35 this would result in sterling weakening to £1 = $1.23 and sterling strengthening to 1 = $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 £1 = CHF 1.24 this would result in sterling weakening to £1 = CHF 1.13 and sterling strengthening to £1 = 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 the year ended 31 March		Impact on total equity as at 31 March
	2022	2021	2022	2021
	£'000	£'000	£'000	£'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 1	Level 2	Level 3
	£'000	£'000	£'000	£'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 1	Level 2	Level 3
	£'000	£'000	£'000	£'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

		Assets at amortised cost	Financial liabilities measured at amortised cost	Assets at fair value through profit or loss	Liabilities at fair value through profit or loss



At 31 March 2022	Note	£'000	£'000	£'000	£'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 at amortised cost	Financial liabilities measured at amortised cost	Assets at fair value through profit or loss	Liabilities at fair value through profit or loss



At 31 March 2021	Note	£'000	£'000	£'000	£'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
	£'000	£'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: £nil). 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
	£'000	£'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 £3,056,662 (2021: £3,028,563).

Directors' remuneration

	2022	2021
	£'000	£'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 £605,217 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 £558,600. £352,800 is payable within 12 months and £205,800 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
	£m	£m
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 London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

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Record (REC)

Thursday, 21st November 2024

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