Final Results

Record PLC

30 June 2023

PRESS RELEASE

Record plc

30 June 2023

FINAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2023

Strong performance across the Group

Growth in revenue, operating margin, profit and earnings

Continued momentum behind revised strategy

Record plc, the specialist currency and asset manager, today announces its audited results for the year ended 31 March 2023 ("FY-23").

Financial headlines:

· Revenue growth of 27% to £44.7m (FY-22: £35.1m)

· AUME¹ in USD terms up by 6% to $87.7bn (FY-22: $83.1bn)

· Profit before tax increase of 34% to £14.6m (FY-22: £10.9m)

· 36% increase in proposed final ordinary dividend to 2.45p per share (FY-22: 1.80p); 25% increase in total ordinary dividend for the year to 4.50p per share (FY-22: 3.60p)

· Increased operating profit margin of 32% (FY-22: 31%)

· Basic EPS growth of 32% to 5.95 pence (FY-22: 4.52 pence)

· Performance fees increased by £5.3m to £5.8m (FY-22: £0.5m)

· Strong and liquid financial position with shareholders' equity of £28.3m (FY-22: £25.9m) and assets managed as cash of £14.5m (FY-22: £17.3m)

Key developments:

· Strong momentum in AUME growth (+6%) driven by net inflows of $9.1bn to close the year at $87.7bn, the highest ever level of AUME to date.

· Regulatory approval received from the German financial regulator (BaFin) during the year, approving the Group's asset management activity and increasing the Group's geographical reach into the EU.

· Material increase in revenue for FY-23 driven by growth in both management and performances fees linked to core currency management products, with new revenue streams from the launch of asset management products expected for FY-24.

· Continued progress in modernisation, as evidenced by launch of Record-Platform and enhanced reporting suite.

· Collaborative partnerships developed in FY-23 with a range of high-quality, expert partners expected to lead to new product launches and higher-margin revenue streams from FY-24.

· David Morrison announced as an independent Non-executive Director and Chair-elect following Neil Record's stepping down at AGM in July 2023, after 40 years of leadership.

^1. For the majority of its Currency Management and Derivative overlay products, Record manages only the impact of foreign exchange and not the underlying assets, therefore its "assets under management" are notional rather than real. Conversely, for its Asset Management products, Record's role as investment manager includes managing the underlying assets in the more conventional sense of managing AUM. Consequently, when combined, to distinguish this form 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, Leslie Hill, CEO of Record plc, said:

"I am pleased to report a strong set of results for FY-23, reflected by the growth in revenues, pre-tax profit, operating margin and earnings as well as progress in each of our three strategic priorities of modernisation, diversification and succession.

"A year ago we set out ambitious targets of reaching £60m in revenue and an operating margin of c. 40% by FY-25 and we continue to see a clear path to achieving those targets. Our traditional currency revenues remain fundamental to our business and continue to grow, and we expect the effort taken over the last two years in developing our new partnerships and asset management products to start delivering diversified revenue streams in the current financial year (FY-24).

"We remain confident that our current strategy is pointing the business in the right direction, firmly underpinned by our highly cash-generative business model, strong core of currency management business, and increased focus on more diversified and higher revenue-margin products. I look forward to updating our shareholders on progress, not only with the core business but with the new opportunities provided through both Record Asset Management and Record Digital as we grow these business segments."

Analyst presentation

There will be a presentation for analysts at 9.30am on Friday, 30 June 2023 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:

Record plc	+44 (0) 1753 852222
Leslie Hill - Chief Executive Officer
Steve Cullen - Chief Financial Officer

Buchanan	+44 (0) 20 7466 5000
Simon Compton	record@buchanan.uk.com
Henry Wilson
George Beale

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 MARCH 2023

	2023	2022
	£'000	£'000
Revenue	44,689	35,152
Cost of sales	(37)	(219)
Gross profit	44,652	34,933
Administrative expenses	(29,888)	(23,726)
Other expense	(293)	(372)
Operating profit	14,471	10,835
Finance income	182	44
Finance expense	(55)	(23)
Profit before tax	14,598	10,856
Taxation	(3,259)	(2,225)
Profit after tax	11,339	8,631
Total comprehensive income for the year	11,339	8,631
Profit and total comprehensive income for the year attributable to
Owners of the parent	11,339	8,631
Total comprehensive income for the year	11,339	8,631
Earnings per share for profit attributable to the equity holders of the parent during the year
Basic earnings per share (pence per share)	5.95	4.52
Diluted earnings per share (pence per share)	5.81	4.37

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2023	2023	2022
	£'000	£'000
Non‑current assets
Intangible assets	1,390	562
Right‑of‑use assets	1,011	1,421
Property, plant and equipment	377	401
Investments	4,901	3,447
Deferred tax assets	134	253
Total non‑current assets	7,813	6,084
Current assets
Trade and other receivables	14,373	9,883
Derivative financial assets	54	-
Money market instruments with maturities > 3 months	4,549	13,913
Cash and cash equivalents	9,948	3,345
Total current assets	28,924	27,141
Total assets	36,737	33,225
Current liabilities
Trade and other payables	(6,011)	(4,721)
Corporation tax liabilities	(1,329)	(924)
Provisions	-	(75)
Lease liabilities	(285)	(366)
Derivative financial liabilities	(5)	(124)
Total current liabilities	(7,630)	(6,210)
Non-current liabilities
Provisions	(122)	(125)
Lease liabilities	(694)	(960)
Total non-current liabilities	(816)	(1,085)
Total net assets	28,291	25,930
Equity
Issued share capital	50	50
Share premium account	1,809	1,809
Capital redemption reserve	26	26
Retained earnings	26,406	24,045
Total equity	28,291	25,930

CHAIRMAN'S STATEMENT

"This past year ending 31 March 2023 ("FY-23") has been another year of change and growth at Record. The business which I founded 40 years ago is beginning to look fundamentally different from its founding conception."

Neil Record

Chairman

For most of the past four decades, that conception - of our specialising solely in the management of currencies and currency risk - held sway.

In the last three years, the firm has chosen, and is now executing, an enhanced business strategy rooted in our core strengths and values. We are using technology to strengthen and modernise our systems across the whole business, providing efficiency of delivery and an enhanced user experience for clients of our core traditional currency management services, whilst enabling new opportunities for offering a more scalable and diversified suite of asset management products and services to both existing and potential clients.

In FY-23, we received regulatory approval from the German financial regulator, BaFin, for our subsidiary Record Asset Management GmbH ("RAM") as an asset manager, and are now starting to manage funds. We are developing an infrastructure fund business which will be managed by RAM, and which we hope will grow to provide a material diversification strand. We are engaged in agreeing partnerships with a range of high-quality asset and fund managers, for whom we will offer distribution services in Europe and the UK.

Despite our historic experience of low growth in the currency management sector, FY-23 has, somewhat surprisingly, proved to be showing interesting signs of a new type of growth. We have for many years now been providing passive currency hedging services to institutional investors, mainly pension funds. While these mandates can sometimes be large (>$10 billion), we have experienced steady fee compression over the past decade, only now levelling out at very low levels. But a different client type - international asset managers - have begun to recognise that large-scale passive currency hedging is a specialist activity, where scale and technology infrastructure means that outsourcing to a firm like Record is a cost-effective choice.

While we had previously seen a small cadre of our existing asset manager clients continually increase their mandate size as they added funds and expanded their businesses, we are now seeing incoming enquiries from new, large international managers. Asset manager Passive Hedging mandates are often technically challenging, but also offer much better fee rates than institutional clients' mandates. We have not seen significant fee compression in this sector, and so these mandates offer an attractive risk-adjusted return, and a new source of potential growth. Some of these asset managers operate in the private debt sector; this sector is experiencing strong growth in the wake of the 2008/09 global financial crisis, supplanting banks as a significant source of loan capital. Passive Hedging mandates for this sub-sector therefore represent a substitution for one aspect of the old bank treasury function; and one we are well-positioned to take advantage of.

Financial overview

For the second successive year, the Group has delivered an exceptional set of results, reflected by material growth in both revenue and earnings. As stated above, the opportunities for further growth are significant and diversified across both new and traditional products and services, supported by a strong leadership team and a robust succession plan.

I am confident that our strategy of modernisation and diversification is the right direction for the Group, firmly supported by the Group's highly cash-generative business model accompanied by its robust and liquid balance sheet, with total equity of £28.3 million.

Further information on financial results can be found in the Financial review section.

Capital and dividend

The change in the firm's strategy, decided and executed in FY-21, is continuing to flow through to the financial performance of the business.

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 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 2.45 pence per share (FY-22: 1.80 pence) with the full-year ordinary dividend at 4.50 pence per share (FY-22: 3.60 pence), representing a 25% increase in the ordinary dividend and an ordinary payout ratio of 76% of earnings. The interim dividend of 2.05 pence was paid on 30 December 2022, and the final ordinary dividend of 2.45 pence will be paid on 9 August 2023 to shareholders on the register at 14 July 2023, 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 is announcing a special dividend of 0.68 pence per share to be paid simultaneously with the final ordinary dividend. Total proposed dividends per share for the year are 5.18 pence per share (2022: 4.52 pence) compared to earnings per share of 5.95 pence (2022: 4.52 pence).

The Board

On 1 March 2023 I announced that I would be retiring from the Chairmanship and the Board after 40 years at the helm. We announced at the same time the appointment of David Morrison as independent Non-executive Director, and Chair‑elect.

David is very well known to Record. In 1985, his then employer, Abingworth, at the time a venture Investment Trust, acquired 24.5% of Record from a start-up angel investor. Abingworth also became a client at the same time. David sat on the firm's Board until 1992, when Abingworth sold its stake. Then again, in 2009, David re-joined the newly IPO'd firm as an independent Non-executive Director ("NED"), sitting until 2018, when he reached his term limit. In his third term as a NED, and, from July 2023, Record's Chairman, he will preside over a much-changed firm, with multiple developing strands and a new background of growth. I am confident his deep understanding of Record, and his own long experience in asset management, will serve our shareholders well.

I am leaving Record's Board with mixed emotions. Record has been my life for 40 years. I founded the firm when I had just turned 30, and I will leave it when I will have just turned 70. It has been the most rewarding career imaginable, meeting fascinating individuals from all walks of life, building teams of colleagues over multiple years, and most importantly building a business which I believe is capable of becoming multigenerational. I have the highest confidence in the current management under our CEO Leslie Hill and her senior team, and I plan to remain a significant shareholder for many years to come.

Outlook

In contrast with the optimistic tone with which I feel I can talk about Record, I see many serious and deep challenges ahead for the global economy in general, and for the developed West in particular.

Across the board, Western governments have arguably over-extended themselves both in the scope and scale of public expenditure, and in their method of financing this expenditure - namely through debt. Much of this debt is, in practice, monetary financing via "Quantitative Easing". Central banks, and their sponsoring governments, may find this financing becoming increasingly onerous as short rates rise. The same issue has already hit some regional banks in the US, and may hit more. This monetary dislocation is running concurrently with very low or zero productivity growth in much of the global economy. It remains to be seen whether Western democracies can find policies to re-establish low-inflation growth.

Record is not immune from these challenges, but structurally we are positioned to be nimble and adaptable to client demand as it develops and changes. While cost pressures (particularly labour costs) will undoubtedly impact the business, the current pace of growth and change should allow the revenue to grow sufficiently to more than compensate for the cost-base growth.

I leave the business in good health; vibrant, enthusiastic and looking for new opportunities. I couldn't have wished for more.

Neil Record

Chairman

29 June 2023

CHIEF EXECUTIVE OFFICER'S STATEMENT

"I have now been CEO for three years and am happy to report encouraging progress in each of the three pillars of the revitalising strategy I set out for the business when I took on the role."

Leslie Hill

Chief Executive Officer

Most of you will I hope remember the three‑year target I set out last year which aims for revenue of £60 million by this time in 2025, while improving margins and increasing profits. We are on target to achieve this, with revenues of £44.7 million and pre-tax profits of 14.6 million reported for the financial year (FY-23). Let me explain in more detail what we have been doing and what plans we have for this coming year (FY-24).

Our three pillars are diversification, modernisation and succession planning.

Diversification

There are some key strands to this - diversifying our product offering, our client base and our activities. To achieve this we have now created a number of subsidiaries whose leaders report to me as CEO of the parent company, Record plc, but who have their own budgets and aspirations for the future. More details are set out below in our Succession section, but the subsidiaries are Record Currency Management Limited, Record Asset Management GmbH ("RAM"), Record Currency Management (US) Inc., Record Group Services Limited and Record Digital Asset Ventures Ltd ("Record Digital"). This structure is not there simply to complicate things, but to give regulatory support and oversight and create efficiency, while allowing for agency and autonomy for each of the subsidiary CEOs.

Modernisation

After a few years of using a "renovating the house while we are living in it" analogy it now feels the right time to retire that rather tired phrase, as the house is now open for new guests and looking very much more attractive and modern than it did previously. We see IT under the leadership of our CTO as central to our shared services concept and indeed to our whole business, and will continue to develop and invest in this area. It has been a complex journey but I am happy, indeed amazed, to say we managed to stay on budget and on target for deliverables, which is a real tribute to the whole team. This is a significant achievement which has been marked by the recent launch of our new Record platform ("R-Platform") which went live post year-end and the rollout of our new Reporting suite, as well as significant enhancements to the scope of our trading activities. With this we can unlock scale, efficiency and ensure happy clients going forward. I am thrilled with it.

Succession

New subsidiary CEOs - as my focus shifts to working closely with our new Chairman in further building and leading the Record Financial Group from the top, our new subsidiary CEOs, Dr Jan Witte and Rebecca Venis, are already heading up Record Currency Management and Record Digital respectively and our investors will see more of them this year. I'm also excited by the future plans we have for new leadership of our Emerging Market Sustainable Finance family, upon which we hope to give further information in FY-24. These changes are a testament, not only to the talents of these individuals, but also to my commitment with the Board to promoting, training and offering opportunities for leadership and share ownership to more and more of our colleagues as we build this 40-year-old stable and experienced currency manager into a real multi-asset manager for the 21st century.

Financial performance

We continue our focus on growing the business through diversification and modernisation, and it's testament to the hard work of the management team and all of our colleagues that we are reporting impressive growth again this year in both revenue and profit, of 27% and 34% respectively.

The balance between maintaining good cost control and ensuring that the business has the appropriate level of resource to support its growth trajectory has proved even more challenging through this year due to the high inflationary environment and cost pressure seen across the whole of our business. Inevitably we have seen a consequent rise in our cost base for FY-23, which will be carried forward into the current financial year (FY-24), where we can expect to see the full-year impact. Whilst this may have inhibited growth in our operating margin somewhat this year, we remain confident that the current strong pipeline of opportunities in both our currency and higher revenue-margin and more scalable asset management products into FY-24 will serve to counter this impact over the next couple of years.

Outlook

The next phase of our development of Record is to reap some of the rewards of our modernisation and diversification. The soil has been fertilised over the last few years, and the new plants well heeled in. For quite some time they have been putting down roots and like any young tree more has been going on under the surface than on the top. As was clear at our Capital Markets day recently, the next phase should see some new revenue from our diversifying strands at RAM and Record Digital as well as continued work to scale our currency business. This continues our theme of diversification and modernisation, while our recent promotions carries on our theme of succession planning for the long-term future. We will continue to keep a close watch on costs but drive forward with our three‑year plan.

Leslie Hill

Chief Executive Officer

29 June 2023

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)

For the financial years up to and including FY-23, revenue has been earned predominantly from the provision of currency management services in the form of management fees and performance fees. From FY-24 onwards, revenue will include the new revenue streams arising as part of the diversification into asset management products and services.

Revenue	£ million
2023	44.7
2022	35.1
2021	25.4
2020	25.6
2019	25.0

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 12% increase in management fees. Revenue also includes performance fees, which increased by £5.3 million to £5.8 million (2022: £0.5 million).

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	%
2023	32
2022	31
2021	24
2020	30
2019	32

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 32% 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
2023	5.95
2022	4.52
2021	2.75
2020	3.26
2019	3.27

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
2023	4.50	0.68
2022	3.60	0.92
2021	2.30	0.45
2020	2.30	0.41
2019	2.30	0.69

Why this is important

Progressive and sustainable dividends 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 25%, 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 of 0.68 pence, results in a 15% increase in total dividends to 5.18 pence per share (2022: 4.52 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, therefore its "assets under management" are notional rather than real. To distinguish this from the AUM of conventional asset managers, Record uses the concept of Assets Under Management Equivalents ("AUME") and by convention this is quoted in US dollars.

AUME	$ billion
2023	87.7
2022	83.1
2021	80.1
2020	58.6
2019	57.3

Why this is important

AUME is a key driver of future revenue and an indicator of business growth. AUME increased by 5.5% for the year, including net inflows of $9.1 billion diversified across product lines.

Link to strategy

Diversification

Modernisation

Succession

Client longevity (%)

Client longevity measures how long Record has been providing either currency and derivative, or asset management, services to each client with a mandate active as at 31 March 2023.

Client longevity	%
>10 years:	20
6-10 years:	11
3-6 years:	22
1-3 years:	23
0-1 years:	24

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	Number
2023	88
2022	82
2021	83
2020	82
2019	85

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 necessitated new skill sets in the business, which 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 calculated as 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	%
2023	90
2022	74
2021	90
2020	81
2019	84

Why this is important

Planning for generational change is key to the Group's strategy. A decrease in staff retention in the prior year reflects the focus on rebalancing the skill sets required by the business to drive the innovation and growth required to deliver the strategy. FY-23 has seen a return to retention more aligned with historical trends, reflecting the successful restructure as part of the Group's succession plans. 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	%
2023	63
2022	61
2021	68
2020	69
2019	70

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 last year was 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

AUME closed the year at its highest ever level of $87.7 billion, including net inflows of $9.1 billion for the year.

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. 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 in an attempt 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 had positioned client portfolios appropriately to add value from this volatility, achieving positive performance. Additionally, the team's management of the portfolio around key market events such as the collapse of Silicon Valley Bank, and the UK government's "mini-budget", have minimised downside risks versus the fixed-tenor benchmark.

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

year to

31 March 2023

Return

since

inception

Value added by enhanced Passive Hedging programme relative to a fixed‑tenor benchmark

0.18%

0.10% p.a.

Dynamic Hedging

The performance of our Dynamic Hedging product is a function of foreign currency fluctuations relative to the base currency of specific clients. For US-based investors, Dynamic Hedging produced gains in the first half of the period, as the dollar appreciated against all exposure currencies and hedge ratios rose, helping to protect against underlying currency losses. The second half of the period saw some retracement in the US dollar, which coupled with risk management interventions, resulted in a reduction in hedge ratios limiting the product's impact in clients' portfolios. Overall, Dynamic Hedging performance was positive for the year, partially offsetting currency losses on the underlying international exposures of our US clients.

For non-US accounts, i.e. those where US exposures were hedged to other base currencies, the performance of Dynamic Hedging was opposing over the period given broad US dollar strength and reflected the mandates' specific objectives and/or benchmarks.

Return for

year to

31 March 2023

Return

since

inception

Value added by Dynamic Hedging programme for a representative US-based account

3.46%

0.67% p.a.

Currency for Return

Sustainable investing

Record EM Sustainable Finance ("EMSF") Fund

The Record EMSF Fund USD class A returned 4.65% from inception (28 June 2021) to 31 March 2023, outperforming the relevant emerging market local debt benchmark by 17.35%.

The currency portfolio delivered positive returns in the period following improved risk sentiment over the last two quarters as oversold and high-yielding currencies in emerging markets recovered from depreciated levels. Sentiment was supported by the reopening of the Chinese economy, milder weather conditions in Europe and elevated carry in developing economies as central banks continued to deliver rate hikes to curb domestic inflationary pressures. The positive performance of the currency overlay also benefited from gains in the diversified hard currency funding basket. The topping out of rates in developed markets provided further support to local assets in emerging markets and at the same time contributed to improving returns in bond markets. The performance of the US dollar bond underlay in the strategy benefited from its highly rated credit quality as well as duration exposure following lower long-dated yields in the US over Q1 2023 as the FED neared the end of the tightening cycle and recent turmoil in the banking sector sparked global recessionary fears.

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 2023.

Return for

year to

31 March 2023

Return since

inception

EMSF Fund USD Share Class A

5.64%

4.65%

JP Morgan GBI-EM Global Diversified

(0.72%)

(12.70%)

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.

· Momentum, Value, Range Trading and Developed Market Classification ("DMC") 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 Value, Momentum, Range Trading and EM strategies. Value benefited from a significant reduction in euro area risk premia. Momentum performed positively on the back of the US dollar cycle and desynchronised rate expectations. Range Trading accrued gains mostly in commodity currency pairs due to the absence of major trends in these pairs. Positive news surrounding China's reopening, a compression in Russia-Ukraine geopolitical risk premia, and topping out of US rate expectations, which enticed flows back into Emerging Market currencies, led to outperformance in the Emerging Markets strand. For Carry, underperformance was mainly driven by short positions in low-yielding Developed Market currencies, which appreciated due to the perceived narrowing of interest rate differentials. During the reporting period, DMC was introduced to some mandates, and underperformed during the period due to a long position in the US dollar.

Return for

12 months to

31 March 2023

Return since

inception

% p.a.

Volatility since

inception

% p.a.

Record Multi‑Strategy composite

0.78%

0.82%

3.16%

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 $87.7 billion, an increase of 6% (2022: $83.1 billion). When expressed in sterling, AUME increased by 13% to £71.0 billion (2022: £63.1 billion).

AUME movements

Passive Hedging AUME increased by 2% to $63.8 billion (2022: $62.8 billion) driven by net inflows of $4.9 billion for the year from new and existing clients. The impact from both market movements and exchange rates was negative, at $3.3 billion and $0.6 billion respectively.

Dynamic Hedging AUME increased by 39%, ending the year at $14.7 billion (2022: $10.6 billion). The majority of the $4.1 billion increase is attributable to net inflows ($4.2 billion), offset slightly by negative market movements of $0.1 billion.

Currency for Return AUME decreased to $3.9 billion (2022: $5.0 billion) by the end of the year, represented by net outflows of $0.6 billion and negative market movements and exchange rates of $0.4 billion and $0.1 billion respectively.

Multi-product AUME increased to $5.2 billion (2022: $4.5 billion). Net inflows of $0.6 billion accounted for the majority of the movement in addition to positive market movements ($0.1 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 decreased AUME by $3.8 billion in the year ended 31 March 2023 (2022: increase of $0.3 billion).

Further detail on the composition of assets underlying our Hedging and Multi-product mandates is provided in the following table 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 2023

	Equity %	Fixed income %	Other %
Passive Hedging	23%	31%	46%
Dynamic Hedging	84%	0%	16%
Multi-product	0%	0%	100%

Forex

Approximately 76% 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 decreased AUME by $0.7 billion over the year. This movement does not have an equivalent impact on the sterling value of fee income.

At 31 March 2023, the split of AUME by base currency was 10% in sterling, 47% in Swiss francs, 24% in US dollars, 14% in euros and 5% in other currencies.

AUME composition by base currency

Base currency	31 March 2023	31 March 2022
Sterling	GBP 7.4bn	GBP 7.6bn
US dollar	USD 20.8bn	USD 17.6bn
Swiss franc	CHF 38.3bn	CHF 33.1bn
Euro	EUR 11.7bn	EUR 11.4bn
Australian dollar	AUD 3.0bn	AUD 2.9bn
Canadian dollar	CAD 3.3bn	CAD 6.1bn
Japanese yen	JPY 27.2bn	JPY 0.0bn

Product mix

AUME composition by product

	31 March 2023		31 March 2022
	US $bn	%	US $bn	%
Passive Hedging	63.8	73%	62.8	76%
Dynamic Hedging	14.7	17%	10.6	13%
Currency for Return	3.9	4%	5.0	6%
Multi-product	5.2	6%	4.5	5%
Cash	0.1	-%	0.2	-%
Total	87.7	100%	83.1	100%

Notwithstanding hedging AUME continuing to represent approximately 90% of the total AUME, the product mix within this figure has shifted towards the higher revenue-margin Dynamic Hedging product due primarily to net inflows of $4.2 billion during the year. This has diversified the Group's hedging revenue streams and further diluted the historical concentration on the lower revenue-margin Passive Hedging product.

FINANCIAL REVIEW

"Our second successive year of material revenue growth since our change in strategy has been driven by increases in both management and performance fees, resulting in a 34% increase to operating profit."

Steve Cullen

Chief Financial Officer

Overview

The implementation of the Group's change in strategy continues, focused on the diversification of its products and services and the modernisation of its systems and processes. The pipeline of new product launches and new revenue streams in asset management remains strong, and we expect to see the culmination of our work over the last three years to start making a material difference to revenues in FY-24, the current financial year. Our existing strong core of hedging products remains fundamental to our growth plans, underscored by net inflows of $9.1 billion for the year in addition to the $2.4 billion in FY-22. As expected, and somewhat inevitably, our cost base has risen over the year, linked both to our continued investment in the modernisation of our business, and to the exceptional levels of inflationary pressure seen at both a personnel and non-personnel level.

The Group remains independent, cash generative and profitable, supported by its strong and liquid balance sheet.

Revenues grew 27% to £44.7 million (2022: £35.1 million) supported by a 12% increase in management fees and an increase in performance fees of £5.3 million (2022: £0.5 million). Operating profit for the year increased by 34% to £14.5 million (2022: £10.8 million) and the operating profit margin increased to 32% (2022: 31%) with a 34% increase in profit before tax to £14.6 million (2022: £10.9 million).

Profit and loss (£m)

	2023	2022
Revenue	44.7	35.1
Cost of sales	-	(0.2)
Gross profit	44.7	34.9
Personnel (excluding bonus)	(12.8)	(10.8)
Non‑personnel costs	(9.5)	(7.2)
Other income or expense	(0.3)	(0.4)
Total expenditure (excluding bonus)	(22.6)	(18.4)
Group Bonus Scheme	(7.6)	(5.7)
Operating profit	14.5	10.8
Operating profit margin	32%	31%
Net interest received	0.1	0.1
Profit before tax	14.6	10.9
Tax	(3.3)	(2.3)
Profit after tax	11.3	8.6

Revenue - Currency Management

Record's traditional core currency management 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.

Revenue - Asset Management

Asset management did not generate any material revenue reportable for FY-23. Material new revenue streams derived from Record's diversification into asset management products and services will be reported separately from the current financial year (FY-24) onwards.

Revenue - FY-23

Management fees earned during the year increased by 12% to £38.3 million (2022: £34.1 million) driven by net inflows of $9.1 billion into Record's core currency hedging products, and the full-year revenue impact on Currency for Return from the Record EM Sustainable Finance Fund, launched in June 2021. Performance fees increased by £5.3 million to £5.8 million for the year (2022: £0.5 million), linked to positive performance from certain Enhanced Passive Hedging mandates.

Revenue analysis (£m)

	Year ended 31 March 2023	Year ended 31 March 2022
Management fees
Passive Hedging	12.9	11.8
Dynamic Hedging	12.0	10.0
Currency for Return	6.8	5.5
Multi-product	6.6	6.8
Total management fees	38.3	34.1
Performance fees	5.8	0.5
Other income	0.6	0.5
Total revenue	44.7	35.1

Management fees

Passive Hedging management fees increased by 9% to £12.9 million (2022: £11.8 million) predominantly driven by the net inflows of $4.9 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, institutional client base, which itself provides potential synergies to the Group in the form of future partnerships and product innovation. More recently, the extension of our core Passive Hedging product for Asset Managers, which provides programmes designed to fit specific liquidity and reporting requirements, has seen growth which we expect to continue in the current financial year (FY-24).

Dynamic Hedging management fees increased by 20% to £12.0 million (2022: £10.0 million) as a result of the full‑year impact of the $0.8 billion of net inflows seen in the second half of FY-22, combined with the total net inflows of $4.2 billion in FY-23 from new and existing clients.

Management fees from Currency for Return mandates increased 24% to £6.8 million (2022: £5.5 million). The increase has been driven predominantly by the full-year impact of revenue from the Record EM Sustainable Finance Fund, launched in June 2021. The net outflow of $0.6 billion announced in the final quarter of the financial year will partially offset this increase in the current financial year (FY‑24).

Multi-product management fees decreased marginally by 3% to £6.6 million (2022: £6.8 million). However, net inflows of $0.6 billion in the second half of FY-23 are expected to increase revenues in the current financial year (FY-24).

Performance fees

Performance fees can be derived from a combination of hedging and return‑seeking products. Our enhanced Passive Hedging products continued the rebound seen towards the end of FY-22 in making up lost ground versus previous high water marks. This was accelerated during the year by the opportunities arising to add value linked to increases in interest rate differentials, which helped to deliver an exceptional level of performance fees of £5.8 million (2022: £0.5 million). Such opportunities for added value on this product are, to a certain extent, market dependent and can therefore be episodic in nature. Consequently, the occurrence and scale of future performance fees is dependent on market developments through the current financial year (FY-24).

Other income

Other income totalled £0.6 million (2022: £0.5million) and consists predominantly 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 previously comprised of referral fees and costs in relation to the Record Umbrella Fund, which was closed during the previous financial year (2022: £0.2 million).

Operating expenditure

The Group operating expenditure (excluding variable remuneration and other expenses) increased by 24% to £22.3 million for the year (2022: £18.0 million).

As expected, the Group has seen increases in personnel costs (excluding bonuses) for the year of approximately 19%. Average headcount increased by 7%, and the exceptional inflationary environment over the year continued to erode the purchasing power of our employees' pay, adding pressure for the business to provide support against the resultant increase to the general cost of living. Consequently, in order to avoid adding to recurring fixed costs in future, it was decided to award one-off cost-of-living allowances of £3,000 per employee (excluding Executive Directors and Board members), amounting to a total cost of approximately £0.3 million. The Group continues to monitor the situation closely and to provide support to ensure the continued wellbeing of employees, and in April 2023 it was decided to make a further cost-of-living payment to employees of £2,000 per employee during FY-24.

Against this backdrop, salaries and related on-costs (including pensions) increased by 14%, whilst other employment-related costs associated with the Group's share schemes, including the new LTIP scheme launched in the year, increased by just over 60%. Commission paid under the scheme aimed at generating new business rose by approximately 35%, linked to the increase in revenue.

Similarly, and also as expected, non-personnel costs include rises linked to inflation as well as those associated with continued investment by the Group into IT resources in the key strategic area of modernisation, and those costs linked with increases in both growth, and ultimately complexity, of the Group structure and of its products and services.

Consequently, non-personnel costs increased by 32% during the year to £9.5 million (2022: £7.2 million). Increases in professional fees of one third, including both legal and audit fees, reflect the set-up costs and growing footprint of the Group abroad, including expansion and regulatory approval in Germany. As the Group's growth plans and diversification progress, so does the requirement for additional market data consumed via platforms and other data sources, plus additional software and IT-consultant resource, leading to an increase in related costs of approximately 40% for the year.

The new office location in London was expanded halfway through the year to accommodate growth in employee numbers and to enable the Group to maintain its strong culture and focus on collaborative working, regarded as key for future growth and employee retention and wellbeing. Whilst the increase in cost was slightly offset by downsizing of the Windsor-based office, occupancy costs increased by approximately 20% in the year. Alongside the increase in new business, costs associated with travel and accommodation doubled, linked to the resumption of more client meetings in person as opposed to virtually.

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 diversification, modernisation and succession. However, it is anticipated that the continuation of inflationary pressures in the current environment, as well as the full-year impact of associated rises seen in the year, will inevitably lead to an increase in its cost base in the current year (FY-24), albeit at more muted levels versus FY-23.

Other expenses were £0.3 million for the year (2022: £0.4 million) and represent net losses/gains made on derivative financial instruments employed by the Group's hedging activities and other FX adjustments or revaluations.

Group Bonus Scheme

The bonus pool has increased by 33% to £7.6 million (2022: £5.7 million), broadly in line with, and reflecting, the 34% increase in operating profit for the year, and has been calculated at 34.8% of pre‑bonus operating profit.

Operating profit and margin

Group operating profit increased by 34% to £14.5 million (2022: £10.8 million) with the Group operating margin increasing marginally to 32% (2022: 31%). The Group continues its programme of investment to modernise systems and processes and has seen increases in costs as described further above. Alongside minor delays in the launch of new, higher revenue-margin products this has impacted the Group's operating margin for the year. The Group remains confident that new product launches in the current financial year (FY-24), alongside careful cost control, albeit still challenging in a high inflationary environment, will deliver increases in the operating margin over the medium term.

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 £9.9 million (2022: £3.3 million) and the total assets managed as cash were £14.5 million (2022: £17.3 million). The cash generated from operating activities before tax increased by 16% to £14.7 million (2022: £12.7 million). During the year, taxation of £2.4 million was paid (2022: £1.4 million) and £9.1 million was paid in dividends (2022: £6.5 million). The Group spent £3.6 million (2022: £4.5 million) on the purchase of its own shares for the EBT to set against the future vesting of share options, and spent £3.6 million on investments (2022: £1.8 million).

At the year end, the Group held money market instruments with maturities between three and twelve months worth £4.5 million (2022: £13.9 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 2.05 pence per share (2022: 1.80 pence) was paid to shareholders on 30 December 2022, equivalent to £3.9 million.

As disclosed in the Chairman's statement, the Board is recommending a final ordinary dividend of 2.45 pence per share, equivalent to approximately £4.7 million, taking the overall ordinary dividend for the financial year to 4.50 pence per share. Simultaneously, the Board is also paying a special dividend of 0.68 pence equivalent to approximately £1.3 million, making the total dividend in respect of the year ended 31 March 2023 of £9.9 million equivalent to 87% of total earnings.

The total ordinary and special dividends paid per share in respect of the prior year ended 31 March 2022 were 3.60 pence and 0.92 pence respectively, equivalent to total dividends of £8.6 million and representing 100% of total earnings per share of 4.52 pence.

Financial stability and capital management

The Group's balance sheet is strong and liquid with total net assets of £28.3 million (2022: £25.9 million) at the end of the financial year, including current assets managed as cash totalling £14.5 million (2022: £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 £12.3 million for the year (2022: £11.4 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 each financial year, thereby ensuring distributions do not erode 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 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. Record Asset Management GmbH ("RAM") is authorised and regulated in Germany by BaFin. RCML, RAM and the Group submit regular capital adequacy returns to the respective regulators, and held significant surplus capital resources relative to the regulatory financial resource requirements 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.

Steve Cullen

Chief Financial Officer

29 June 2023

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:

· the financial statements have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group and Company; and

· the Annual Report includes a fair review of the development and performance of the business and the financial position of the Group and Company, together with a description of the principal risks and uncertainties that they face.

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 March 2023

	Note	2023	2022
		£'000	£'000
Revenue	4	44,689	35,152
Cost of sales		(37)	(219)
Gross profit		44,652	34,933
Administrative expenses	5	(29,888)	(23,726)
Other expense	5	(293)	(372)
Operating profit	5	14,471	10,835
Finance income		182	44
Finance expense		(55)	(23)
Profit before tax		14,598	10,856
Taxation	7	(3,259)	(2,225)
Profit after tax		11,339	8,631
Total comprehensive income for the year		11,339	8,631
Profit and total comprehensive income for the year attributable to
Owners of the parent		11,339	8,631
Total comprehensive income for the year		11,339	8,631
Earnings per share for profit attributable to the equity holders of the parent during the year
Basic earnings per share (pence per share)	8	5.95	4.52
Diluted earnings per share (pence per share)	8	5.81	4.37

The notes below are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2023

			Restated¹
		2023	2022
	Note	£'000	£'000
Non‑current assets
Intangible assets	11	1,390	562
Right‑of‑use assets	12	1,011	1,421
Property, plant and equipment	13	377	401
Investments	14	4,901	3,447
Deferred tax assets	15	134	253
Total non‑current assets		7,813	6,084
Current assets
Trade and other receivables	16	14,373	9,883
Derivative financial assets	17	54	-
Money market instruments with maturities > 3 months	18	4,549	13,913
Cash and cash equivalents	18	9,948	3,345
Total current assets		28,924	27,141
Total assets		36,737	33,225
Current liabilities
Trade and other payables	19	(6,011)	(4,721)
Corporation tax liabilities	19	(1,329)	(924)
Provisions		-	(75)
Lease liabilities	12	(285)	(366)
Derivative financial liabilities	17	(5)	(124)
Total current liabilities		(7,630)	(6,210)
Non-current liabilities
Provisions	20	(122)	(125)
Lease liabilities	12	(694)	(960)
Total non-current liabilities		(816)	(1,085)
Total net assets		28,291	25,930
Equity
Issued share capital	21	50	50
Share premium account		1,809	1,809
Capital redemption reserve		26	26
Retained earnings		26,406	24,045
Total equity		28,291	25,930

1. See note 30 for details of the reclassification resulting in the restatement of prior year.

Approved by the Board on 29 June 2023. 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 2023

							Equity
				Share	Capital		attributable to
			Called‑up	premium	redemption	Retained	equity holders	Total
			share capital	account	reserve	earnings	of the parent	equity
	Note		£'000	£'000	£'000	£'000	£'000	£'000
As at 1 April 2022			50	1,809	26	24,045	25,930	25,930
Profit and total comprehensive income for the year			-	-	-	11,339	11,339	11,339
Dividends paid		9	-	-	-	(9,095)	(9,095)	(9,095)
Own shares acquired by EBT			-	-	-	(3,572)	(3,572)	(3,572)
Release of shares held by EBT			-	-	-	2,268	2,268	2,268
Tax on share-based payments			-	-	-	300	300	300
Share-based payment reserve movement			-	-	-	1,121	1,121	1,121
Transactions with shareholders			-	-	-	(8,978)	(8,978)	(8,978)
As at 31 March 2023			50	1,809	26	26,406	28,291	28,291

Year ended 31 March 2022

							Equity
				Share	Capital		attributable to
			Called‑up	premium	redemption	Retained	equity holders	Total
			share capital	account	reserve	earnings	of the parent	equity
	Note		£'000	£'000	£'000	£'000	£'000	£'000
As at 1 April 2021			50	2,418	26	24,305	26,799	26,799
Restatement of release of shares held by EBT		30	-	(609)	-	609	-	-
Restated balance as at 1 April 2021			50	1,809	26	24,914	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)
Restatement of release of shares held by EBT		30	-	-	-	1,838	1,838	1,838
Restatement of share-based payment reserve movement		30	-	-	-	981	981	981
Transactions with shareholders			-	-	-	(9,500)	(9,500)	(9,500)
Restated balance as at 31 March 2022			50	1,809	26	24,045	25,930	25,930

The notes below are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 March 2023

	Note	2023	2022
		£'000	£'000
Profit after tax		11,339	8,631
Adjustments for:
Depreciation of right‑of‑use assets	12	375	489
Depreciation of property, plant and equipment	13	285	357
Amortisation of intangible assets	11	135	192
Loss on asset disposals		11	-
Share-based payments		916	559
Decrease in other non-cash items¹		1,780	877
Finance income		(181)	(44)
Finance expense		55	23
Tax expense	7	3,259	2,225
Changes in working capital
(Increase) in receivables		(4,490)	(1,877)
Increase in payables		1,290	1,296
(Decrease) in provisions		(78)	-
Cash inflow from operating activities		14,696	12,728
Corporation tax paid		(2,433)	(1,373)
Net cash inflow from operating activities		12,263	11,355
Purchase of intangible assets	11	(964)	(334)
Purchase of property, plant and equipment	13	(272)	(75)
Purchase of investments		(3,570)	(1,773)
Payment to seed fund holders		-	(1,808)
Redemption of bonds		1,607	1,462
Redemption of investments		881	-
Purchase/(disposal) of money market instruments with maturity > 3 months		9,363	(983)
Interest received		181	44
Net cash inflow/(outflow) from investing activities		7,226	(3,467)
Cash flow from financing activities
Lease principal payments	12	(315)	(540)
Lease interest payments	12	(55)	(17)
Purchase of own shares		(3,572)	(4,462)
Dividends paid to equity shareholders	9	(9,095)	(6,512)
Net cash outflow from financing activities		(13,037)	(11,531)
Net increase/(decrease) in cash and cash equivalents in the year		6,452	(3,643)
Exchange gains		151	141
Cash and cash equivalents at the beginning of the year		3,345	6,847
Cash and cash equivalents at the end of the year		9,948	3,345
Closing cash and cash equivalents consist of:
Cash		6,405	3,345
Cash equivalents		3,543	-
Cash and cash equivalents	18	9,948	3,345

1. Other non-cash items include £2,473k release of shares held by Employee Benefit Trust and other share movements (2022: £624k), £175k unrealised gains in derivatives (2022: £340k loss), £147k foreign exchange gains (2022: £137k gain) and £371k unrealised gains in investments (2022: £50k loss).

The notes below are an integral part of these consolidated financial statements.

COMPANY STATEMENT OF FINANCIAL POSITION

As at 31 March 2023

		2023	2022
	Note	£'000	£'000
Non‑current assets
Right‑of‑use assets	12	871	1,232
Property, plant and equipment		99	-
Investments	14	9,062	5,029
Deferred tax		-	1
Total non‑current assets		10,032	6,262
Current assets
Corporation tax		16	3
Trade and other receivables	16	2,428	3,522
Cash and cash equivalents	18	213	43
Total current assets		2,657	3,568
Total assets		12,689	9,830
Current liabilities
Trade and other payables	19	(4,955)	(4,161)
Lease liabilities	12	(251)	(326)
Provisions		-	(75)
Total current liabilities		(5,206)	(4,562)
Non-current liabilities
Lease liabilities	12	(583)	(812)
Deferred tax liabilities		(11)	-
Provisions	20	(122)	(125)
Total non-current liabilities		(716)	(937)
Total net assets		6,767	4,331
Equity
Issued share capital	21	50	50
Share premium account		1,809	1,809
Capital redemption reserve		26	26
Retained earnings		4,882	2,446
Total equity		6,767	4,331

The Company's total comprehensive income for the year (which is principally derived from intra-group dividends) was £10,614,915 (2022: £4,558,705).

Approved by the Board on 29 June 2023. 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 2023

			Share	Capital		Total
		Called‑up	premium	redemption	Retained	shareholders'
		Share capital	account	reserve	earnings	equity
	Note	£'000	£'000	£'000	£'000	£'000
As at 1 April 2022		50	1,809	26	2,446	4,331
Profit and total comprehensive income for the year		-	-	-	10,615	10,615
Dividends paid	9	-	-	-	(9,095)	(9,095)
Share option reserve movement		-	-	-	916	916
Transactions with shareholders		-	-	-	(8,179)	(8,179)
As at 31 March 2023		50	1,809	26	4,882	6,767

Year ended 31 March 2022

			Share	Capital		Total
		Called‑up	premium	redemption	Retained	shareholders'
		Share 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		-	-	-	(5,956)	(5,956)
As at 31 March 2022		50	1,809	26	2,446	4,331

The notes below are an integral part of these consolidated financial statements.

COMPANY STATEMENT OF CASH FLOWS

Year ended 31 March 2023

			Restated¹
		2023	2022
	Note	£'000	£'000
Profit after tax		10,615	4,559
Adjustments for:
Depreciation of right‑of‑use assets	12	338	453
Depreciation of property, plant and equipment		17	-
Decrease/(Increase) in other non-cash items²		(155)	45
Finance income		(1)	-
Finance expense		43	16
Tax expense/(income)		5	(19)
Dividends received from subsidiaries		(10,500)	(4,600)
Changes in working capital
Decrease/(Increase) in receivables		1,094	(2,134)
Increase in payables		794	2,470
(Decrease) in provisions		(78)	-
Cash inflow from operating activities		2,172	790
Corporation taxes (paid)/received		(6)	37
Net cash inflow from operating activities		2,166	827
Cash flow from investing activities
Dividends received		10,500	4,600
Purchase of property, plant and equipment		(116)	-
Investment in subsidiaries		-	(325)
Investment in equity reserve of subsidiary		(1,095)	-
Purchase of investments		(1,869)	-
Payments to seed fund holders		-	1,798
Interest received		1	-
Net cash inflow from investing activities		7,421	6,073
Net cash flow from financing activities
Lease principal payments	12	(280)	(502)
Lease interest payments	12	(43)	(16)
Dividends paid to equity shareholders		(9,095)	(6,512)
Net cash outflow from financing activities		(9,418)	(7,030)
Net increase/(decrease) in cash and cash equivalents in the year		170	(130)
FX revaluation		-	-
Cash and cash equivalents at the beginning of the year		43	173
Cash and cash equivalents at the end of the year		213	43
Closing cash and cash equivalents consist of:
Cash		213	43
Cash and cash equivalents	18	213	43

1. See note 31 for details of the presentational adjustment resulting in the restatement of prior year.

2. Other non-cash items include unrealised movements in investments and other foreign exchange movements.

The notes below are an integral part of these consolidated financial statements.

Notes to the financial statements for the year ended 31 March 2023

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

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 various assessments including both the impact of the war in Ukraine, and that of the current high inflationary environment on the Group, the market it operates in and its stakeholders. These assessments show that the Group should be able to operate at adequate levels of both liquidity and capital for at least 12 months from the date of signing this report.

Consequently, the Directors have reasonable expectation that the Group has adequate financial resources to continue operations for at least 12 months from the date of signing the report, and therefore have continued to adopt the going concern basis in preparing the financial statements.

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.

Changes to international accounting policies

There were no new interpretations or standards which became applicable during the year that were adopted by the Group.

Additionally, the Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective at the year-end date.

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 2023. 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 2022.

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.

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".

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 £10,614,915 attributable to the Company (2022: £4,558,705). 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.

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 22) 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 monthly at market value as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation are, as disclosed in note 24. 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 for FY-23 and prior years 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.

Looking ahead to the current financial year (FY-24), the Group expects its diversification into asset management will result in an alternative revenue stream (i.e. Asset Management as opposed to Currency Management). This will represent a different operating segment and will be reported separately from FY-24.

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.

	2023	2022
Revenue by product type	£'000	£'000
Management fees
Passive Hedging	12,912	11,768
Dynamic Hedging	12,013	10,020
Currency for Return	6,789	5,513
Multi-product	6,584	6,782
Total management fee income	38,298	34,083
Performance fee income	5,805	499
Other services income	586	570
Total revenue from contracts with customers	44,689	35,152

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 revenue originated in the UK. Other relates to a number of regions that are individually immaterial.

	2023	2022
Revenue by geographical region	£'000	£'000
Management and performance fee income
UK	2,545	2,775
US	14,179	13,049
Switzerland	16,985	10,877
Europe (excluding UK and Switzerland)	9,339	6,926
Other	1,641	1,525
Total revenue	44,689	35,152

c. Major clients

During the year ended 31 March 2023, four clients individually accounted for more than 10% of the Group's revenue. The four largest clients generated revenues of £6.6 million, £6.3 million, £5.2 million and £4.9million in the year (2022: two clients generated revenues of more than 10% totalling £4.9 million and £4.8 million in the year).

5. Operating profit

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

	2023	2022
	£'000	£'000
Staff costs	20,412	16,479
Other staff-related costs	1,545	1,352
IT and technology	3,582	2,380
Professional fees	1,775	1,139
Occupancy	1,111	668
Depreciation of property, plant and equipment	285	357
Depreciation of leased property	375	489
Amortisation of intangibles	135	192
Auditor fees:
Fees payable to the Group's auditor for the audit of the Company's annual accounts	134	72
Fees payable to the Group's auditor for the audit of subsidiary undertakings	191	103
Auditor fees total	325	175
Fees payable to the Group's auditor and its associates for other services:
Audit-related assurance services required by law or regulation	6	5
Other non-audit services	15	12
Loss on forward FX contracts held to hedge cash flow	800	467
Loss on derivative financial instruments held by seed funds	-	42
Other exchange losses/(gains)	(289)	(141)
Investment losses/(gains)	(218)	4

6. Staff costs

The average number of employees, including Directors, employed by the Group during the year was:

	2023	2022
Corporate	6	6
Client relationships	13	14
Investment research	18	16
Operations	31	24
Risk management	5	5
Support	15	17
Annual average	88	82

The aggregate costs of the above employees, including Directors, were as follows:

	2023	2022
	£'000	£'000
Wages and salaries	14,540	11,931
Social security costs	2,295	1,758
Pension costs	686	635
Other employment benefit costs	2,891	2,155
Aggregate staff costs	20,412	16,479

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.

	2023	2022
	£'000	£'000
UK current year charge	2,961	2,006
Overseas taxes	64	56
Prior year adjustments	175	(88)
Current tax charge	3,200	1,974
Origination and reversal of temporary differences	76	(12)
Prior year adjustment	(17)	240
Impact of change in tax rate for deferred tax	-	23
Total deferred tax	59	251
Tax on profit on ordinary activities	3,259	2,225

The total charge for the year can be reconciled to the accounting profit as follows:

	2023	2022
	£'000	£'000
Profit before taxation	14,598	10,856
Taxation at the standard rate of tax in the UK of 19% (2022: 19%)	2,774	2,062
Tax effects of:
Other disallowable expenses and non‑taxable income	164	(37)
Deferred tax asset not recognised on start-up entities	146	-
Higher tax rates on subsidiary undertakings	15	15
Prior year adjustment	160	162
Change in tax rates	-	23
Total tax expense	3,259	2,225
The tax expense comprises:
Current tax expense	3,200	1,974
Deferred tax expense	59	251
Total tax expense	3,259	2,225

The standard rate of UK corporation tax for the year is 19% (2022: 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 increased to 25% from 1 April 2023.

The tax charge for the year ended 31 March 2023 was 22% of profit before tax (2022: 20%). Other temporary differences for the year ended 31 March 2023 include the impact of deferred tax expense of £59k (2022: expense of £251k).

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.

	2023	2022
	£'000	£'000
Weighted average number of shares used in calculation of basic earnings per share	190,483,365	191,068,307
Effect of potential dilutive ordinary shares - share options	4,830,186	6,230,794
Weighted average number of shares used in calculation of diluted earnings per share	195,313,551	197,299,101

	pence	pence
Basic earnings per share	5.95	4.52
Diluted earnings per share	5.81	4.37

The potential dilutive shares relate to the share options, JSOP and LTIP awards granted in respect of the Group's Share Scheme (see note 22). There were share options and JSOP awards in place at the beginning of the year over 13,513,045 shares. During the year 3,607,836 share options were exercised, 633,125 JSOP awards vested and a further 1,247,502 options lapsed or were forfeited. The Group granted 3,810,000 share options and LTIP awards over 2,890,000 shares with a potentially dilutive effect during the year. Of the 14,724,582 share options, JSOP and LTIP awards in place at the end of the period, 11,878,815 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 2023 totalled £9,095,232 (4.77 pence per share), which comprised a final dividend in respect of the year ended 31 March 2022 of £3,420,850 (1.8 pence per share), a special dividend in respect of the year ended 31 March 2022 of £1,748,435 (0.92 pence per share) and an interim dividend for the year ended 31 March 2023 of £3,925,947 (2.05 pence per share).

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).

For the year ended 31 March 2023, a final ordinary dividend of 2.45 pence per share has been proposed and a special dividend of 0.68 pence per share has been declared, totalling approximately £4.7 million and £1.3 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
2023	£'000	£'000
Cost
At 1 April 2022	1,475	1,475
Additions	964	964
Disposals	(119)	(119)
At 31 March 2023	2,320	2,320
Amortisation
At 1 April 2022	913	913
Charge for the year	135	135
Disposals	(118)	(118)
At 31 March 2023	930	930
Net book amounts
At 31 March 2023	1,390	1,390
At 1 April 2022	562	562

	Software	Total
2022	£'000	£'000
Cost
At 1 April 2021	1,141	1,141
Additions	334	334
At 31 March 2022	1,475	1,475
Amortisation
At 1 April 2021	721	721
Charge for the year	192	192
At 31 March 2022	913	913
Net book amounts
At 31 March 2022	562	562
At 1 April 2021	420	420

The annual contractual commitment for the maintenance and support of the above software is £207,253 (2022: £396,710). 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 between 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 2023, 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 2023	£'000	£'000
Net book value on transition at 1 April 2022	1,421	1,232
Valuation adjustment on lease modification	(35)	(23)
Depreciation	(375)	(338)
Net book value at 31 March 2023	1,011	871

	Group	Company
Year ended 31 March 2022	£'000	£'000
Net book value 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

Lease liabilities

	Group	Company
Year ended 31 March 2023	£'000	£'000
Current	285	251
Non-current	694	583
Total lease liabilities	979	834

	Group	Company
	£'000	£'000
At 1 April 2022	1,326	1,138
Additions	-	-
Interest expense	55	41
Lease - principal payments	(315)	(280)
Lease - interest payments	(55)	(43)
Valuation adjustment on lease modification	(35)	(22)
Foreign exchange movements	3	-
At 31 March 2023	979	834

	Group	Company
Year ended 31 March 2022	£'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 2023, the undiscounted operating lease payments on an annual basis are as follows:

Maturity of lease liability at 31 March 2023

	Group	Company
	£'000	£'000
Within 1 year	320	280
1-2 years	320	280
2-3 years	320	280
After 3 years	85	47
Total lease liability before discounting	1,045	887

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; and

· 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
2023	£'000	£'000	£'000	£'000
Cost
At 1 April 2022	693	1,056	293	2,042
Additions	116	148	8	272
Disposals	(33)	(181)	(70)	(284)
At 31 March 2023	776	1,023	231	2,030
Depreciation
At 1 April 2022	642	718	281	1,641
Charge for the year	68	204	13	285
Disposals	(33)	(170)	(70)	(273)
At 31 March 2023	677	752	224	1,653
Net book amounts
At 31 March 2023	99	271	7	377
At 1 April 2022	51	338	12	401

	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

The Group's tangible non-current assets are located predominantly in the UK.

14. Investments

	Group		Company
	2023	2202	2023	2022
	£'000	£'000	£'000	£'000
Investment in subsidiaries at cost	-	-	2,069	2,069
Capitalised investment in respect of share-based payments	-	-	2,932	2,018
Investment in equity reserve of subsidiary	-	-	1,095	-
Investment in funds	2,530	1,070	1,965	942
Investment in impact bonds	770	2,177	-	-
Other investments	1,601	200	1,001	-
Total direct investments	4,901	3,447	9,062	5,029

Other investments includes £600k invested directly in the share capital of start-up companies in the digital asset sector (2022: £200k) through Record Digital. Also included is £1 million invested into a separate investment strategy to test the viability of a potential new product offering in a diverse set of alternative assets.

During the year, the Group signed commitments totalling $823,507 (£804,384), which were fully called up in the year. At the beginning of the year, the Group had existing commitments of $383,100 (£309,839) of which $78,100 (£63,165) was called up in the year, leaving a balance of $305,000 (£246,674) which may or may not be called up in future (see note 26: 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.

	2023	2022
	£'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	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	2,069
Capitalised investment in respect of share‑based payments
Record Group Services Limited	2,530	1,801
Record Currency Management (US) Inc.	89	89
Record Currency Management (Switzerland) GmbH	316	129
Total capitalised investment in respect of share‑based payments	2,935	2,019
Total investment in subsidiaries	5,004	4,088

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 in Germany (registered office: Königsallee 92a, 40212 Düsseldorf). All other subsidiaries are incorporated in the UK and have the registered office at Morgan House , Madeira Walk, Windsor, Berkshire, SL4 1EP. All investments in subsidiaries are directly held with the exception of RAM Strategies which is held 100% indirectly through the Company's 100% holding in Record Asset Management GmbH.

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 22.

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.

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.

	2023	2022
	£'000	£'000
Opening balance deferred tax asset/(liability)	253	212
Current year movement	(72)	(251)
Prior year adjustment	14
Deferred tax in Equity	(61)	292
Closing balance deferred tax asset/(liability)	134	253

The deferred tax asset consists of the tax effect of temporary differences in respect of:

	2023	2022
	£'000	£'000
Deferred tax allowance on unvested share options and LTIP awards	366	393
Excess of taxation allowances over depreciation on fixed assets	(232)	(140)
Total	134	253

At the year end there were share options and LTIP awards not exercised with an intrinsic value for tax purposes of £1,937,599 (2022: £4,287,634). 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. The Group has losses in relation to overseas entities totalling £766k (2022: £438k) which are available to carry forward against future profits. No deferred tax asset has been recognised in respect of these in the current or prior year as there is uncertainty as to when these losses will be reversed. Deferred tax has been calculated based on the future tax rate of 25% for differences 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.

An analysis of receivables is provided below:

	Group		Company
	2023	2022	2023	2022
	£'000	£'000	£'000	£'000
Trade receivables	10,185	8,231	1,538	3,441
Accrued income	1,743	25	-	-
Other receivables	685	497	26	38
Prepayments	1,760	1,130	864	43
Total	14,373	9,883	2,428	3,522

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 2023. 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, adjusted to incorporate any relevant forward looking information. 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 (2022: £nil).

Accrued income relates to accrued management and performance fees earned but not yet invoiced.

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.

	2023	2022
Derivative financial assets	£'000	£'000
Forward foreign exchange contracts held to hedge non-sterling-based assets	31	-
Forward foreign exchange contracts held for trading	23	-
Total	54	-

	2023	2022
Derivative financial liabilities	£'000	£'000
Forward foreign exchange contracts held to hedge non-sterling-based assets	(5)	(15)
Forward foreign exchange contracts held for trading	-	(109)
Total	(5)	(124)

Derivative financial instruments held to hedge non-sterling-based assets

At 31 March 2023 there were outstanding contracts with a principal value of £8,647,055 (31 March 2022: £9,085,804) 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 2023. 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:

	2023	2022
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	800	467

Derivative financial instruments held for trading

The Record - Currency Multi‑Strategy 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 were classified as held for trading until termination in June 2021.

At 31 March 2023 there were outstanding contracts with a principal value of £nil (31 March 2022: £nil).

The net gain or loss on derivative financial instruments held for trading for the year was as follows:

	2023	2022
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

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
	2023	2022	2023	2022
Assets managed as cash	£'000	£'000	£'000	£'000
Bank deposits with maturities > 3 months	4,549	13,913	-	-
Money market instruments with maturities > 3 months	4,549	13,913	-	-
Cash	6,405	3,345	213	43
Cash equivalents	3,543	-	-	-
Cash and cash equivalents	9,948	3,345	213	43
Total assets managed as cash	14,497	17,258	213	43

	Group		Company
	2023	2022	2023	2022
Cash and cash equivalents	£'000	£'000	£'000	£'000
Cash and cash equivalents - sterling	6,632	1,169	212	43
Cash and cash equivalents - USD	821	450	1	-
Cash and cash equivalents - CHF	748	318	-	-
Cash and cash equivalents - other currencies	1,747	1,408	-	-
Total cash and cash equivalents	9,948	3,345	213	43

Details of how the Group manages credit risk are provided in note 23.

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
	2023	2022	2023	2022
Trade and other payables	£'000	£'000	£'000	£'000
Trade payables	221	478	-	-
Amounts owed to Group undertakings	-	-	4,953	4,155
Other payables	-	16	-	-
Other tax and social security	716	619	-	-
Accruals	5,074	3,608	2	6
Total	6,011	4,721	4,955	4,161

Accruals include £3,637,640 for the Group Bonus Scheme (31 March 2022: £2,506,656). The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

	Group		Company
	2023	2022	2023	2022
Current tax liabilities	£'000	£'000	£'000	£'000
Corporation tax	1,329	924	-	-

20. Provisions

The Group has provisions reflecting its contractual obligations connected to reaching the end of its contractual lease terms.

	Group		Company
	2023	2022	2023	2022
	£'000	£'000	£'000	£'000
Provisions	122	200	122	200

The provision relates to an obligation to pay for dilapidations in connection with the Group's office lease on the second floor of Morgan House, Windsor, further information for which is included in note 12.

21. 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.

	2023		2022
	£'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 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
Adjustment for net purchases by EBT	(897,029)
Record plc shares held by EBT as at 31 March 2023	8,735,002

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 22.

22. Share-based payments

During the year ended 31 March 2023 the Group has managed the following share‑based compensation plans:

· the Record plc Bonus Scheme (previously the Group Profit Share Scheme): share awards issued under the Bonus Scheme are classified as share‑based payments with cash alternatives under IFRS 2;

· 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;

· 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;

· 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; and

· the Record Long-Term Incentive Plan: participants' interests awarded under the Long-Term Incentive Plan ("LTIP") are classified as equity-settled share-based payments under IFRS 2.

All obligations arising from the five schemes have been fulfilled through purchasing shares in the market.

a. Bonus 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 amount 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 Bonus 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 Bonus pool between 25% and 35% of operating profits. Directors and senior employees receive one-third of their Bonus 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 £2,047,328 (2022: £1,463,802). 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 Bonus 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 Bonus Scheme rules contain clawback provisions allowing for the repayment of Bonus 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 3,810,000 shares were granted under the Share Scheme during the year (2022: 3,747,500), of which options over 814,000 shares were granted as Approved options and options over 2,996,000 shares were granted as Unapproved options (2022: 195,000 granted as Approved options and 3,552,500 granted as Unapproved options). All Approved and Unapproved options were granted with an exercise price per share equal to the share price prevailing at the time of grant.

The 588,000 Approved options issued to employees on 13 May 2022 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 2,052,000 Unapproved options issued to employees on 13 May 2022 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 26,000 Approved options issued to employees on 29 June 2022 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 199,000 Unapproved options issued to employees on 29 June 2022 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 50,000 Approved options issued to employees on 2 August 2022 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 70,000 Unapproved options issued to employees on 3 August 2022 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 150,000 Approved options issued to employees on 27 January 2023 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 675,000 Unapproved options issued to employees on 27 January 2023 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 2023, 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	76.0p
Dividend yield	7.21%
Exercise price	76.0p
Expected volatility	48%
Option life	3 years
Risk-free interest rate (%)	2.7%

Expected volatility is based on historical volatility.

The Group share‑based payment expense in respect of the Share Scheme was £569,136 for the year ended 31 March 2023 (2022: £530,779).

Outstanding share options

At 31 March 2023, the total number of ordinary shares of 0.025p outstanding under Record plc share compensation schemes was 10,560,207 (2022: 11,605,545). 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:

							Earliest	Latest
	At 1 April				Lapsed/	At 31 March	vesting	vesting	Exercise
Date of grant		2022	Granted	Exercised	forfeited	2023	date	date¹	price
26/01/18		155,000	-	(155,000)	-	-	26/01/22	26/01/22	£0.4350
26/01/18		5,125	-	(5,125)	-	-	26/01/20	26/01/22	£0.4350
26/01/18		17,334	-	-	(17,334)	-	26/01/21	26/01/23	£0.4350
26/01/18		644,336	-	-	(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		185,000	-	(92,500)	-	92,500	29/03/20	29/03/23	£0.2830
21/08/19		1,985,000	-	(330,836)	(330,832)	1,323,332	21/08/22	21/08/24	£0.3110
18/03/20		1,237,500	-	(475,000)	-	762,500	18/03/21	18/03/24	£0.28902
21/09/20		2,818,750	-	(1,106,250)	-	1,712,500	21/09/21	21/09/24	£0.3730
25/01/21		225,000	-	(75,000)	-	150,000	25/01/22	25/01/25	£0.49425
09/03/21		125,000	-	(31,250)	-	93,750	09/03/22	09/03/25	£0.63986
13/08/21		195,000	-	-	(35,000)	160,000	13/08/25	13/08/25	£0.85713
13/08/21		2,600,000	-	(650,000)	-	1,950,000	13/08/22	13/08/25	£0.4000
13/08/21		952,500	-	(226,875)	(45,000)	680,625	13/08/22	13/08/25	£0.85713
13/05/22		-	588,000	-	-	588,000	13/05/26	13/05/26	£0.698708
13/05/22		-	2,052,000	-	(75,000)	1,977,000	13/05/23	13/05/26	£0.698708
29/06/22		-	26,000	-	-	26,000	29/06/26	29/06/26	£0.729609
29/06/22		-	199,000	-	-	199,000	29/06/23	29/06/26	£0.729609
02/08/22		-	50,000	-	(50,000)	-	02/08/26	02/08/26	£0.717197
03/08/22		-	70,000	-	(50,000)	20,000	03/08/23	03/08/26	£0.717197
27/01/23		-	150,000	-	-	150,000	27/01/27	27/01/27	£0.972835
27/01/23		-	675,000	-	-	675,000	27/01/24	27/01/27	£0.972835
Total options		11,605,545	3,810,000	(3,607,836)	(1,247,502)	10,560,207
Weighted average exercise price of options		£0.41	£0.76	£0.39	£0.47	£0.54

1. Under the terms of the deeds of grants, options are exercisable for twelve months following the vesting date.

During the year 3,607,836 options were exercised. The weighted average share price at date of exercise was £0.81. At 31 March 2023, a total of 473,750 options had vested and were exercisable (2022: 946,375). At 31 March 2023, the weighted average exercise price of the options vested and exercisable was £0.31 (2022: £0.35) and the weighted average contractual life was three years (2022: two years).

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 and Unapproved options issued to all other staff are not subject to a Group performance measure.

Approved options issued to all other staff vest in full on the fourth anniversary 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.

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 Bonus 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 31,039 matching shares (2022: 23,309 matching shares) to employees. The expense charged in respect of the SIP was £24,950 in the year ended 31 March 2023 (2022: £18,310).

There are no restrictions over shares issued under the Record plc 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 allows a set number of ordinary shares to be 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.

No JSOP agreements were entered into during the year.

The Group share‑based payment expense in respect of the JSOP scheme was £2,384 for the year ended 31 March 2023 (2022: £28,438).

At 31 March 2023, the total number of ordinary shares of 0.025p outstanding under the Record plc JSOP was 1,274,375. 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.

						Earliest	Latest
	At 1 April			Lapsed/	At 31 March	vesting	vesting
Date of grant	2022	Granted	Vested	forfeited	2023	date	date	Hurdle
21/09/20	1,781,250	-	(593,750)	-	1,187,500	21/09/21	21/09/24	£0.37300
09/03/21	93,750	-	(31,250)	-	62,500	09/03/21	09/03/25	£0.63986
13/08/21	32,500	-	(8,125)	-	24,375	13/08/22	13/08/25	£0.85713
Total JSOP awards	1,907,500	-	(633,125)	-	1,274,375
Weighted average exercise price of options	£0.39	-	£0.39	-	£0.40

There are no Directors' interests in the JSOP scheme. No performance measures are attached to the JSOP.

During the year 633,125 shares over which a JSOP agreement had been granted vested. The weighted average share price at the vesting date was £0.75.

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.

e. The Record plc Long-Term Incentive Plan ("LTIP")

Equity-settled share-based payments

The fair value of LTIP awards 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 LTIP scheme started in April 2022, and allows nil-cost options to be granted to employees and Directors in the Record Group.

LTIP awards over an aggregate of 2,890,000 shares were granted under the LTIP scheme during the year (2022: nil). All will vest on 31 March 2025, 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 LTIP awards granted in the year ended 31 March 2023, 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	68.7p
Dividend yield	6.58%
Expected volatility	42.7%
LTIP award life	3 years
Risk-free interest rate (%)	3%

Expected volatility is based on historical volatility.

The Group share‑based payment expense in respect of the LTIP scheme was £344,231 for the year ended 31 March 2023 (2022: £nil).

Outstanding LTIP awards

At 31 March 2023, the total number of LTIP awards outstanding under Record plc share compensation schemes was 2,890,000 (2022: nil). These LTIP awards are over issued shares, a proportion of which are hedged by shares held in an EBT. Details of outstanding LTIP awards to employees are set out below:

						Earliest	Latest
	At 1 April			Lapsed/	At 31 March	vesting	vesting
Date of grant	2022	Granted	Vested	forfeited	2023	date	date
08/09/22	-	2,890,000	-	-	2,890,000	31/03/25	31/03/25
Total LTIP awards	-	2,890,000	-	-	2,890,000

Performance measures

Performance conditions attached to all LTIP awards granted to Board Directors are the same as to those granted for all other staff. LTIP awards granted to Executive Directors and all other staff vest after three years and vesting is subject to Record's average annualised EPS growth and Total Shareholder Return ("TSR") over the relevant period since grant as follows:

Two-thirds of the vesting for LTIP awards granted in September 2022 is subject to a three-year cumulative EPS threshold target of 15 pence, resulting in the EPS portion vesting at 25%, rising on a straight-line basis to 100% vesting for a three-year cumulative EPS of 18 pence at the end of the performance period.

One-third of the vesting for LTIP awards granted in September 2022 is subject to a relative TSR using a benchmark of the FTSE Small Cap index. The threshold target for the TSR portion is a TSR outcome in the 25th percentile of the index at which 25% of the TSR portion will vest, rising on a straight-line basis to 100% of the TSR portion at a TSR outcome in the 75% percentile of the index.

A principal strategic objective of the business is to create shareholder value for our investors over the long term. The Board considers this to be delivered by consistent growth in earnings of the business, and the chosen performance conditions and the EPS and TSR outcome which determine the number of LTIP awards that ultimately vest under the scheme rules reflect this.

The Directors' interests in the combined share schemes are as follows:

	Ordinary shares held as at
	31 March	31 March
	2023	2022
Record plc Group Bonus Scheme (interest in restricted share awards)
Leslie Hill	591,284	467,296
Steve Cullen	44,896	57,422
Record plc Share Scheme (interest in unvested share options)
Leslie Hill	383,333	668,334
Steve Cullen	173,333	301,668
Record plc LTIP Scheme (interest in unvested LTIP awards)
Steve Cullen	325,000	-

Clawback provisions

In addition to the performance measures above, LTIP awards 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 Bonus Scheme or payment of sales proceeds back to the Group.

23. Financial risk management

The Group's current activities result in the following financial risks and management responses to those risks in order to minimise any resulting adverse effects on the Group's financial performance.

Objectives, policies and processes for managing risk and the methods used to measure the risk

Financial assets principally comprise trade receivables, 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:

	2023	2022
Financial assets at 31 March	£'000	£'000
Trade receivables	10,185	8,231
Accrued income	1,743	25
Other receivables	685	497
Derivative financial assets	54	-
Money market instruments with maturities > 3 months	4,549	13,913
Cash and cash equivalents	9,948	3,345
Total financial assets	27,164	26,011

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 2023	£'000	£'000	£'000	£'000
Trade receivables	10,185	9,775	309	101
Accrued income	1,743	1,743	-	-
Total	11,928	11,518	309	101
		97%	2%	1%

		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%

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, adjusting to incorporate any relevant forward looking information. 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 113 debtors' balances (2022: 91). The largest individual debtor corresponds to 16% of the total balance (2022: 16%). Debtor days, based on the generally accepted calculation of debtor days, is 83 days (2022: 85 days). This reflects the quarterly billing cycle used by the Group for the vast majority of its fees. As at 31 March 2023, 3% of debt was overdue (2022: 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 9 days (2022: 28 days).

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 2023	£'000	£'000	£'000	£'000
Trade payables	221	221	-	-
Accruals	5,074	486	2,001	2,587
Derivative financial liabilities	5	-	5	-
Total	5,300	707	2,006	2,587

		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

Lease liabilities are not included within the table below, please see note 12 for further details.

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	interest rate	Total
At 31 March 2023	£'000	£'000	£'000
Financial assets
Trade receivables	-	10,185	10,185
Accrued income	-	1,743	1,743
Other receivables	-	685	685
Derivative financial assets at fair value through profit or loss	-	54	54
Money market instruments with maturities > 3 months	4,549	-	4,549
Cash and cash equivalents	9,948	-	9,948
Total financial assets	14,497	12,667	27,164
Financial liabilities
Trade payables	-	(221)	(221)
Accruals	-	(5,074)	(5,074)
Lease liability	-	(979)	(979)
Derivative financial liabilities at fair value through profit or loss	-	(5)	(5)
Total financial liabilities	-	(6,279)	(6,279)

		No
	Fixed rate	interest rate	Total
At 31 March 2022	£'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)

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 2023, the Group invoiced the following amounts in currencies other than sterling:

	2023		2022
	Local	Value in	Local	Value in
	currency	reporting	currency	reporting
	value	currency	value	currency
	£'000	£'000	£'000	£'000
US dollar (USD)	24,978	20,869	23,949	17,742
Swiss franc (CHF)	16,138	14,223	12,460	10,010
Euro (EUR)	4,293	3,748	4,135	3,498
Canadian dollar (CAD)	1,618	1,014	1,626	960
Australian dollar (AUD)	1,089	612	1,029	563
Japanese yen (JPY)	8,795	54	4,824	31
Swedish krona (SEK)	-	-	36	3
Singapore dollar (SGD)	-	-	4	2

The value of revenues for the year ended 31 March 2023 that were denominated in currencies other than sterling was £40.2 million (31 March 2022: £32.8 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
	2023	2022	2023	2022
	£'000	£'000	£'000	£'000
Sterling weakening by 10% against the dollar	1,000	871	1,000	871
Sterling strengthening by 10% against the dollar	(1,000)	(871)	(1,000)	(871)
Sterling weakening by 10% against the Swiss franc	755	445	755	445
Sterling strengthening by 10% against the Swiss franc	(755)	(445)	(755)	(445)

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 = $1.20 this would result in sterling weakening to £1 = $1.09 and sterling strengthening to £1 = $1.33.

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 1.13 this would result in sterling weakening to £1 = CHF 1.03 and sterling strengthening to £1 = CHF 1.26.

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. Mitigating activities are detailed in the Risk management section.

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
	2023	2022	2023	2022
	£'000	£'000	£'000	£'000
Loss of largest client	3,486	2,594	3,486	2,594

24. 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:

	2023	Level 1	Level 2	Level 3
	£'000	£'000	£'000	£'000
Financial assets at fair value through profit or loss
Impact bonds	770	770	-	-
Investment in funds	2,530	1,077	-	1,453
Other investments	1,601	1,001	-	600
Forward foreign exchange contracts held to hedge non-sterling assets	54	-	54	-
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts held to hedge non-sterling assets	(5)	-	(5)	-
Total	4,950	2,848	49	2,053

	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 used by seed funds	(15)	-	(15)	-
Other investments	(110)	-	(110)	-
Total	3,322	3,121	(125)	326

There have been no transfers between levels in the reporting period (2022: none).

Basis for classification of financial instruments classified as level 1 within the fair value hierarchy

Impact bonds, listed funds and other listed investments are classified as level 1. These investments are valued using market prices and coupon rates as applicable.

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.

Basis for classification of financial instruments classified as level 3 within the fair value hierarchy

Direct investments in private funds and share capital of start-up companies in the digital sector have been classified as level 3. There is no observable market for these investments, therefore fair value measurements have been derived from valuation techniques that include inputs that are not based on observable market data. The private funds are valued at net asset value in accordance with independent professional valuation reports or International Private Equity and Venture Capital Valuation Guidelines where relevant. The direct investments in capital of the start-up companies are valued at cost.

Classes and fair value of financial instruments

It is the Directors' opinion that the carrying value of all financial instruments approximates to their fair value.

Categories of financial instrument

			Financial	Assets at	Liabilities at
		Assets at	liabilities	fair value	fair value
		amortised	measured at	through	through profit
		cost	amortised cost	profit or loss	or loss
At 31 March 2023	Note	£'000	liabilities	£'000	£'000
Impact bonds	14	-	-	770	-
Investment in funds	14	-	-	2,530	-
Other investments	14	-	-	1,601	-
Trade and other receivables (excludes prepayments)	16	12,613	-	-	-
Money market instruments with maturities > 3 months	18	4,549	-	-	-
Cash and cash equivalents	18	10,757	-	-	-
Derivative financial assets at fair value through profit or loss	17	-	-	54	-
Trade payables	19	-	(221)	-	-
Accruals	19	-	(5,074)	-	-
Derivative financial liabilities at fair value through profit or loss	17	-	-	-	(5)
Total		27,919	(5,295)	4,955	(5)

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

25. 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.

	2023	2022
	£'000	£'000
Amounts due to subsidiaries	(3,415)	(714)
Dividends received from subsidiaries	10,500	4,600

Amounts due to subsidiaries consist of funds lent by the subsidiaries to the Company to facilitate the Company's investing activities. Amounts due to subsidiaries are disclosed as a net amount, and consist of amounts owed to Group undertakings in note 19 and trade receivables in note 16. All 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 (2022: £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

	2023	2022
	£'000	£'000
Short‑term employee benefits	10,311	8,457
Post‑employment benefits	327	330
Share‑based payments	3,539	2,467
Total	14,177	11,254

Key management personnel dividends

The dividends paid to key management personnel in the year ended 31 March 2023 totalled £4,073,511 (2022: £3,056,662).

Directors' remuneration

	2023	2022
	£'000	£'000
Emoluments (excluding pension contribution)	3,580	2,809
Pension contribution (including payments made in lieu of pension contributions)	101	96
Total	3,681	2,905

During the year, no Directors of the Company (2022: none) participated in the Group Personal Pension Plan, a defined contribution scheme. Further detail on Directors' remuneration is provided in the Remuneration report.

26. Contingent liabilities and commitments

The Group has committed to subscriptions to equity capital of $1,791,870, of which $1,486,870 has been called.

On 20 January 2023, the Group committed to a licence to use an office in London. The commitment is to 28 February 2025 and the outstanding amount to be paid at 31 March 2023 was £1,628,225. £836,060 is payable within twelve months and £864,180 within the following twelve months.

A previous commitment on an office in London had been made on 1 October 2021, with the commitment being to 31 October 2023 and the original outstanding amount to be paid between 1 April 2023 and 31 October 2023 being £352,800. However, this commitment ended on 28 February 2023, when it was replaced and superseded by the commitment made on 20 January 2023.

27. Capital management

The Group's objectives when managing capital are (i) to safeguard the Group's ability to continue as a going concern; (ii) to provide an adequate return to shareholders; and (iii) to meet regulatory capital requirements under the relevant jurisdictions (FCA and BaFin).

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, while also continuing to ensure that the minimum required regulatory capital is maintained. 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 total capital is equal to the net assets of the Group, and is managed within the categories set out below:

	2023	2022
	£m	£m
Required regulatory capital	7.1	5.4
Other operating capital	21.2	20.5
Total capital	28.3	25.9

Total capital covers the Group's 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.

28. Ultimate controlling party

As at 31 March 2023 the Company had no ultimate controlling party, nor at 31 March 2022.

29. Post-reporting date events

No adjusting or significant non‑adjusting events have occurred between the reporting date and the date of authorisation.

30. Restatement of the share premium account and retained earnings

Gains prior to 31 March 2022 on the release of shares from the Employee Benefit Trust have been reclassified from share premium to retained earnings as there was no issue of new shares. The prior cumulative movements to 31 March 2021 and for the year ended 31 March 2022 of £609,000 and £820,000 respectively, resulting in a total reclassification of £1,429,000 to the retained earnings balance as at 31 March 2022.

In addition to this, a reclassified of £1,240,000 between the release of shares held by EBT and share based payment reserve movement in the statement of changes in equity was made to correct the classification of consolidation adjustments necessary to remove internal gains and losses arising when shares are transferred within the Group, and recognise it separately from the IFRS 2 charges.

The restatement does not impact the current or previous years' profit or loss.

31. Restatement of profit after tax in the Company statement of cash flows

For the prior year ended 31 March 2022, the Company statement of cash flows previously showed the loss after tax of £41,000 excluding dividends received of £4,600,000. In order for the profit after tax figure to reconcile to the Company statement of changes in equity, this figure has now been updated in the FY-22 comparative figure to a profit after tax of £4,599,000 including dividends. A corresponding line to remove the dividends received from subsidiaries from cash flows from operating activities was also added, as this is recognised in investing activities in line with the company policy. Since this represents a presentational adjustment only, the restatement does not impact the totals reported for cash inflow from operating activities nor the net decrease in, or closing balance for, cash and cash equivalents for the year.

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.

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