recordfg.com
Modernisation, diversifi cation
and succession gather pace...
Record plc Annual Report 2023
Our purpose
To continue to harness trends
and innovate by collaborating
with our clients
Our vision
Diverse partnerships of fi nancial
specialists – creating unique,
opportunistic, sustainable solutions
Our mission
Independent, candid advice derived
from our 40-year legacy – as we
evolve into a global asset
management network
Our value proposition
Transparency and trust, above all.
We listen to clients, truly understand
their needs then collaborate with
like-minded specialist partners from
a wide range of asset classes to
deliver solutions
Financial
statements
Independent
auditor’s report
Financial
statements
Notes to
the fi nancial
statements
96 to 145
Additional
information
146 to 148
Five year summary
146
Information for
shareholders
Defi nitions
147
148
97
106
113
Annual Report 2023
Contents
Strategic report
1 to 54
Governance
55 to 95
Chairman’s
introduction
Board of Directors
Corporate
governance report
Nomination
Committee report
Audit Committee
report
Remuneration
report
Directors’ report
Directors’
responsibilities
statement
57
58
60
67
70
76
92
95
Financial highlights
About us
Chairman’s
statement
Chief Executive
Offi cer’s statement
Business model
Products
and distribution
Products
Strategy
Key performance
indicators
Sustainability
Task Force on
Climate Related
Financial Disclosures
(“TCFD”)
Section 172
Companies Act 2006
– Our stakeholders
Operating review
Financial review
Risk management
Viability statement
1
2
6
8
10
12
14
18
22
26
33
37
40
44
49
54
Record plc
Annual Report 2023
1
Financial highlights
Our year in numbers
Assets Under Management Equivalents1 (“AUME”)
Ordinary dividend per share
$87.7bn
+5.5%
2022: $83.1bn
Earnings per share
5.95p
+31.6%
2022: 4.52p
Revenue
£44.7m
+27.4%
4.50p
+25%
2022: 3.60p
Profi t before tax
£14.6m
+33.9%
2022: £10.9m
Total dividend per share
(including special of 0.68p)
5.18p
+14.6%
2022: £35.1m
2022: 4.52p (including special: 0.92p)
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
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 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 is an alternative performance measure
and further detail on how it is defi ned is provided on page 24.
2
Record plc
Annual Report 2023
About us
Record began with a spark. An idea, Currency Overlay,
which led to the signing of the world’s fi rst Currency
Overlay mandate in 1985. We’ve been harnessing trends
ever since, with curiosity, innovation and integrity.
We were one step ahead then when we began and we aren’t standing still
today – as we invite greater diversity of thought, to deliver specialist
partnerships and new solutions for our clients.
Our approach
Listen
A client-focused approach
Deliver
Unique, innovative and
sustainable solutions
Understand
Using strengths and
experience developed
over 40 years in business
Our values
People fi rst
Integrity
Our clients value our understanding of how achieving
long-term, sustainable investment objectives is a
mindful journey, as much as an economic one. Then
there’s our team – championed for its intellectual
diversity, passion and dynamism. It’s our people that
makes us great.
We’ve always had a legacy of honesty and upfront
client advice during 40 years in existence – and that
will never change. This ethos echoes throughout our
people, our relationships, our products and our fees.
And, as an impartial, independent, premium listed
business, we are guided by the highest levels of best
practice and ethical codes of conduct.
Collaboration
We fi rmly believe in the power of many. Our
expanding network of like-minded specialists
globally means we can call on various strengths and
expertise. This fl exibility allows us to customise
unique solutions for our clients.
Kindness
In many ways, we can be described as empathetic
investment advisers and champions of varied
thought. Listeners fi rst, we get to know our clients
and learn what their needs are – then we create
customised solutions that fi t their specifi c needs.
Curiosity
We are restless minds driven by curiosity, ideas and
innovation. We always question, so we can give our
clients excellence and value. We are not afraid to say
no if it’s not the right investment fi t. Or to dig a bit
deeper – to unearth other opportunities or create
new solutions that don’t yet exist.
Annual Report 2023
3
Record plc
About us
Where we operate
Where we operate
The Group’s main geographical markets, as determined by the location
of clients to whom services are provided, are the UK, North America and
Continental Europe, in particular Switzerland. The Group also has clients
elsewhere, including Australia.
The Group’s Head Offi ce is in Windsor, UK from where the
majority of its operations are performed and controlled.
The Group also has offi ces in London, New York, Zürich,
Frankfurt, Düsseldorf and Amsterdam.
In addition to these main markets, we continue to explore
new geographical markets which we believe may off er
attractive opportunities.
Rest of the world
$3.6bn
4%
United Kingdom
$7.4bn
9%
Continental Europe
$57.9bn
66%
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
North America
$18.8bn
21%
Global AUME and operating locations
Head Offi ce (Windsor)
Other offi ces
Client locations
4
Record plc
Annual Report 2023
About us continued
Group structure – Record Financial Group
The Group’s main trading subsidiaries are shown below with a brief
explanation of the products and services off ered by each
Record PLC
Record Currency
Management
Record Group
Services
Record
Digital
Record Asset
Management
Registered with FCA in UK,
and SEC, CFTC in US. Provides
currency management and
derivative services and
solutions to clients and acts
as UK fund distributor.
Provides shared services
and support across Group
companies.
Invests in early stage
Financial Technology
companies including Digital
Assets.
German MiFID company
– registered with BaFiN,
provides investment
management services and,
through its subsidiary, acts
as distributor for funds
alongside selected partners
in the EU.
For details of full subsidiary
undertakings please see pages 124 to 125
Record plc
Annual Report 2023
5
Our investment case
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
Growth
Strategy focused on accelerated growth through
investment in diversifi cation and modernisation now
delivering increases in revenue and profi ts
Dividend policy
Strong history of paying dividends with policy targeting
ordinary dividend pay-out ratio between 70% - 90% of
annual earnings, plus special dividends.
Three year annual compound growth:
Revenue:
Three year annual compound growth:
Ordinary dividends:
Profi t before tax:
+20.4% p.a.
+23.6% p.a.
Earnings per share:
+25.1% p.a.
+22.2% p.a.
Balance Sheet and cash generation
Robust and liquid Balance Sheet provides solid
platform for continued value creation alongside cash
generative business model and no external debt
As at 31 March 2023:
Net assets:
Assets managed as cash (no external debt):
£28.3m
£14.5m
See fi nancial statements from page 106 for further
information
Partnerships
Partnerships with established and expert partners in
alternative asset classes provide additional skillsets
and strong pipeline of innovative products off ering
unique investment opportunities
See page 12 for further information on our partnerships
Client relationships and AUME
Trusted and longstanding institutional client
relationships built over 40 years in managing currency
and derivatives provides a solid foundation and strong
asset base upon which to grow
Three year annual compound growth:
AUME:
+14.4% p.a.
See page 42 for further AUME information
Geographical reach
Regulated asset management business and growing
team established in the EU improves geographical
reach and provides passporting opportunities for our
partners
Offi ces in UK, USA, Switzerland, Germany and
Netherlands
See page 3 for more information on the locations of our
client base
6
Record plc
Annual Report 2023
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 diff erent
from its founding
conception.
Neil Record
Chairman
Total dividends per share
5.18p
FY-22: 4.52p
Earnings per share
+15%
5.95p +32%
FY-22: 4.52p
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 fi rm 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 effi ciency of delivery and an enhanced
user experience for clients of our core traditional currency
management services, whilst enabling new opportunities
for off ering a more scalable and diversifi ed suite of asset
management products and services to both existing and
potential clients.
In FY-23, we received regulatory approval from the German
fi nancial 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
diversifi cation strand. We are engaged in agreeing
partnerships with a range of high-quality asset and fund
managers, for whom we will off er 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 diff erent 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
fi rm like Record is a cost-eff ective 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 off er much better
fee rates than institutional clients’ mandates. We have not
seen signifi cant fee compression in this sector, and so these
mandates off er 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 fi nancial
crisis, supplanting banks as a signifi cant 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.
Record plc
Annual Report 2023
7
Chairman’s statement
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 on page 44.
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 (FY-22: 4.52 pence) compared to
earnings per share of 5.95 pence (FY-22: 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
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
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
profi ts. We are on target to achieve this, with revenues of
£44.7 million and pre-tax profi ts of 14.6 million reported for
the fi nancial 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 diversifi cation, modernisation and
succession planning.
Diversifi cation
There are some key strands to this – diversifying our product
off ering, 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 effi ciency, 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 signifi cant 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 signifi cant
enhancements to the scope of our trading activities. With
this we can unlock scale, effi ciency and ensure happy clients
going forward. I am thrilled with it.
8
Record plc
Annual Report 2023
Chief Executive Offi cer’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 Offi cer
Revenue
£44.7m +27%
FY-22: £35.1m
Profi t before tax
£14.6m +34%
FY-22: £10.9m
Record plc
Annual Report 2023
9
Chief Executive Offi cer’s statement
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 off ering 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
diversifi cation 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 profi t, 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
infl ationary 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 fi nancial 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 confi dent 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 diversifi cation.
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 diversifi cation 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 Offi cer
29 June 2023
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
10
Record plc
Annual Report 2023
Business model
Our purpose
Our resources
Our strategy
Record was born of an
idea that no one else
in our industry had:
Currency Overlay,
which led to the
signing of the world’s
fi rst Currency Overlay
mandate in 1985.
Four decades later, we
purposefully continue
to harness trends,
ignite ideas and spark
innovation, with
intellectual, inquisitive
and diverse thinking.
And we apply this
never-standing-still
approach to all our
specialist
partnerships and
solutions.
This way, we stay
one step ahead for
our clients.
Client relationships
We forge strong, collaborative and
long-standing client relationships
acting as a trusted adviser,
underpinned by a deep understanding
of each client’s opportunities and
investment objectives.
Expertise and
partnerships
We are experts in FX and derivatives
products and markets and we use this
in collaboration with our expanding
network of like-minded specialist
partners to build unique solutions
for our clients across the asset
management universe.
Technology and
innovation
We continually invest in the
modernisation of our systems and
technology to help us innovate and to
ensure we achieve scalable, robust and
effi cient delivery of our products and
services for our clients.
Financial strength
Record is a highly cash-generative,
asset-light business with a strong
balance sheet and a disciplined
and rigorous approach to capital
management – strengths which
have guided us through various and
challenging market cycles over 40
years in business.
Values and culture
Strong values and a culture built over
40 years underpin the way we work,
guiding our behaviour, operations and
communications in everything we do.
Our strategy is focused
on accelerated growth
supported by the
following three pillars:
Modernisation
Investing in new technology is
essential for ensuring our
business remains competitive
and innovative. It gives greater
fl exibility to adapt to changes in
markets and investor appetite,
whilst providing more effi cient
working practices and scalable
solutions.
Diversifi cation
Our expertise in collaboration
with like-minded partners
combines to provide innovative
solutions that fulfi l specifi c
investor objectives. Successful
diversifi cation spans every
aspect of our business: people,
products, client types and
geographies, specialist skill sets
and alternative markets.
Succession
As our business moves into a
new era, it remains vital for our
future success that key
individuals are retained and
encouraged to become
long-term employees and
equity holders in Record.
See more on
pages 18 to 21
Record plc
Annual Report 2023
11
Business model
Our fi nancial model
Benefi ts to our
stakeholders
The business is highly
cash-generative with a robust
balance sheet and strong capital
position. A rigorous and disciplined
approach to capital management
allows the business to reinvest for
growth and to drive shareholder
value and returns. The Group holds
no external debt.
Cash generation
Our highly cash-generative business model
allows us to remain independent,
self-fi nancing with no external debt. We use
the cash generated to reinvest into the
business in the pursuit of growth in line with
our strategy, to ensure the day-to-day
expenditure requirements of the business are
met, and to return surplus cash to our
shareholders in the form of dividends or
share repurchases.
Net cash infl ow (before tax) from operating activities:
£14.7
FY-22: £12.7m
+16%
Returns to shareholders – total dividends per share:
5.18p
FY-22: 4.52p
+15%
Clients
In all respects, we are a client-led business. We
listen to our clients, understand their investment
objectives and, using our expertise alongside that
of our chosen partners, deliver innovative products
and services and the highest levels of client service.
People
Our people make our business great and are
championed for their intellectual diversity, passion
and dynamism. We are committed to ensuring
that our culture openly refl ects our values and to
creating the best possible working environment
where our people can thrive.
Society
Providing support for local community-led projects
and charitable causes.
Environment
Reduced environmental impact – we have committed
to reduce our own carbon emissions and to develop
impactful and sustainable investment solutions
alongside our clients and partners.
Shareholders
To ensure the long-term success of the Group and to
deliver enhanced shareholder value through growth
in fi nancial performance and progressive and
sustainable capital distributions.
See more on
pages 37 to 39
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
12
Record plc
Annual Report 2023
Products and distribution
We aim to forge long-term partnerships with
clients, acting as their trusted adviser to fully
understand their investment objectives in
order to develop effective solutions.
Strategic approach
Record’s strategic sales objective is to drive accelerated
revenue growth diversified by product, geography and client
type. It aims to achieve this objective with a sharp focus on
the following four areas:
• a broad range of flagship products (which are
“best-in-class” amongst their respective competitors);
• strategic partnerships with our clients, offering the
highest levels of client service, and close strong
relationships with other service providers including
third-party fund managers;
• flexible infrastructure to deliver solutions to clients in
the most efficient manner possible; and
• a regional focus by product.
Flagship products
Record has been a specialist currency manager for 40
years and continues to put tailored currency solutions at
the core of our offering. These are now complemented by
best-in-class asset management offerings, with the range
of yield products expected to grow over time.
The Record EM Sustainable Finance Fund (“EMSF”), which we
successfully launched in June 2021 in collaboration with UBS
Wealth Management, continues to substantially outperform
its peers. Our ability to actively manage the portfolio in
a variety of ways has allowed for outperformance both
through the EM sell-off following the invasion of Ukraine
and during the “risk-on” environment of the recovery in asset
prices in early 2023. The EMSF’s robust portfolio construction
makes it an attractive alternative to conventional EM Debt for
investors across the spectrum.
Dynamic Hedging has been at the heart of Record since
inception and it continues to go from strength to strength,
adding two new North American clients over the year. While
the management of the product has evolved over half a
decade from a pure systematic strategy to a one-stop FX risk
advisory service with systematic asymmetry at its core, its
appeal remains enduring as currency volatility has returned
to markets.
An increased focus on currency risk from investors in
private market assets has been a key part of the drivers
behind the surge in interest in currency risk management
from alternative asset managers. Record’s highly tailored
and differentiated offering in the space combines best-
in-class infrastructure, relationships and operational risk
management with an unparalleled depth of expertise in the
design and ongoing management of hedging programmes
where there is limited liquidity.
A new addition to the line-up in asset management,
GP Stakes, recently launched in April 2023, is unquestionably
a market-leading strategy that is generating significant
interest from existing clients as well as prospects,
particularly in the family office arena. At its core is a strategy
that allows investors to participate in the decade-long trend
of growth in private markets by participating in the high
profit margins generated by alternative asset managers
through management fees, carried interest and enterprise
growth. This is complemented by innovative product design
which mitigates the J-curve and allows for high levels of
vintage diversification, while structuring for liquidity and
rapid deployment of capital, sticking points in traditional
closed-end drawdown vehicles.
Partnership
We have made good progress in developing solutions
in partnership with our clients and selected third-party
managers in order to deliver highly tailored outcomes that
solve a specific investment objective. As before, our role can
encompass any number of initiator and structurer, distributor,
portfolio manager, and currency hedger. These opportunities
arise from the trusted partner status our clients bestow
upon us in recognition of the exceptional client service they
receive and our sales and investment teams’ flexibility and
attention to detail.
The upcoming launch, anticipated in the second quarter of
FY-24, of a Protected Equities product for a multi-family
office client provides a good example of this approach.
The strategy combines a multi-factor active global equity
approach with a tail risk hedging solution to protect against
significant drawdowns. The product was launched under
Record’s newly established Luxembourg Fund Umbrella. The
investment thesis is brought jointly by the client and Record
and relies on Record’s portfolio management expertise for
delivery. This will be complemented by joint distribution with
the family office. Expert sub-investment advice is additionally
provided by two carefully selected third-party managers,
both from the US, who will deliver to a tightly specified
mandate in order to meet the client’s goals.
Record plc
Annual Report 2023
13
Products and distribution
Another example of this partnership approach has been in
digital lending where, in partnership with Fasanara Capital,
the leading specialist in the field, we have been able to win
three mandates, each with their own unique investment
objectives. These have been delivered in either commingled
funds or funds-of-one where Record has played the role of
distributor as well as adviser for the clients. In one case, this
mandate has been delivered in collaboration with a leading
UK Investment Consultant.
A contrasting example of partnership is a regional
partnership with Khalij Group, a Middle East-focused, UK
Sharia finance specialist. In collaboration, we are working
together to deliver our flagship products in Sharia compliant
forms, unlocking an underserved investor base as far as
alternative assets are concerned.
Delivery infrastructure
In line with the corporate focus on modernisation, a key part
of the sales strategy has been ensuring that Record has
cutting-edge infrastructure with which to deliver mandates.
Some of this critical work goes on behind the scenes to
ensure best-in-class operational risk management and
reporting to our clients, but certain projects are more visible.
Key amongst these is the addition this year of our own
Luxembourg SICAV-RAIF Fund Umbrella, overseen by top
tier service providers. This allows us the flexibility to deliver
investment solutions in the most effective way for clients,
whether that is as a commingled fund or a fund-of-one, an
SPV or a note. It also empowers us to bring together the best
of our in-house management capabilities with the expertise
of selected third parties to deliver products in a seamless
client experience. Finally, our clients benefit from world-
class service providers and cost-efficient implementation
due to keenly negotiated rates and effective workstreams.
Another step forward has been the addition of an outbound
sales team, casting the net more widely given the broader
appeal of Record’s new flagship products and aiming to build
the brand better amongst the smaller end of the institutional
investor community including private banks, wealth
managers and family offices.
Regional product focus
Recognising the breadth of Record’s offering across both
currency and asset management and beyond, means
that focus and discipline, as well as flexibility, is critical
for our sales team in order to bring success. Additionally,
understanding the different investment challenges facing our
clients in different regions is key to a tailored sales strategy
that focuses on products most likely to appeal in that market.
In North America, the focus over the coming year is on
active currency products, Dynamic Hedging and Currency
for Return. The former has seen inflows over the past year
of $4.2 billion and is appealing in the current uncertain
investment climate. On the other hand, the uncertainty as
well as secular trends such as deglobalisation have driven
increased currency volatility and therefore opportunity to
add uncorrelated return. This is driving interest in the asset
class higher than we have seen for almost a decade, both
amongst those currently allocated and those interested to
explore the space for the first time.
In the UK and Europe, hedging for asset managers is one
key topic that the team will be focused on. With the number
of local currencies as well as the higher currency literacy
amongst investors, European asset managers are often
interested in understanding how a specialist service can
allow them to add value, decrease risk and free them to focus
their time better. The other area of focus in Europe is the
asset management products including GP Stakes and Digital
Lending. The former is relatively new in Europe and attracting
widespread attention while the latter is more established,
breaking out of the niche and into the mainstream.
Finally, EMSF will be a key sales target in all jurisdictions,
building on the formidable track record and investors’
growing confidence in Emerging Markets further into 2023.
The approach will vary significantly by region in accordance
with cultural norms and investor preferences as we look to
establish the reputation of the product as a market leader.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
14
Record plc
Annual Report 2023
Products
Record provides bespoke solutions and delivers
best-in-class services in order to meet our clients’
needs. Many of these solutions revolve around a
number of core products and services, delivered
both in-house and with select partners in order to
deliver the best results for our clients.
Currency Management
With currency management experience going back four
decades to the founding of the firm, currency management
products and solutions still comprise the largest portion of
Group AUME and a key part of our offering going forward.
Passive Hedging
Passive Hedging mandates have the cost-effective reduction
of currency risk as their sole objective. This is achieved
through symmetrical and unbiased elimination of currency
exposure from clients’ international portfolios. The core
Passive Hedging product delivers execution and operational
expertise to a greater extent than investment judgement.
Clients benefit from best execution, custom benchmarks,
optimised exposure capture, management of cash flows and
a complete reporting suite, including regulatory reporting.
Enhanced Passive Hedging
The Enhanced Passive Hedging product builds on the core
product and recognises the opportunities presented for
adding value by taking advantage of structural inefficiencies
and behavioural changes arising in FX markets. It requires
continuous monitoring, investment judgement and
specialised infrastructure to identify the opportunities and
then to take advantage of them with a structured and risk-
managed approach.
Hedging for Asset Managers
A robust and growing area of business at Record, our Hedging
for Asset Managers product is an extension of our core
Passive Hedging with specific focus on programme design
for liquidity management and performance reporting.
The former delivers value to clients, typically investment
funds, which have limited liquidity on account of the
underlying private investments, enabling them to deliver
risk management solutions to their end investors without
compromising on returns.
Dynamic Hedging
Record’s Dynamic Hedging product is an alternative to
Passive Hedging and has cash flow minimisation as well as
generating value as dual objectives in addition to volatility
reduction. The Dynamic Hedging product seeks to allow
our clients to benefit from foreign currency strength while
protecting them from foreign currency weakness relative to
their own base currency. Value is generated entirely through
the asymmetric reduction of pre-existing currency risk.
Currency for Return
The Currency for Return suite includes strategies such as
Carry, Emerging Markets (both Long/Short and Long-only),
Momentum, Value, Developed Market Classification,
and Short Volatility, either on a standalone basis or in
combination with one another as Currency Multi-Strategy to
meet clients’ objectives. Clients receive a diversified return
stream which performs well under a variety of market
conditions and reduces the correlation of their currency
programme to other asset classes.
Record EM Sustainable Finance Fund (“EMSF”)
The EMSF product can serve as an EM debt replacement
or an enhanced fixed income product for investors looking
for yield, reimagining the exposure to credit, duration and
currency risk normally seen within the asset class. EMSF
invests in emerging and frontier market currencies, and
multi-lateral development bank bonds, engaging with the
intermediary counterparties on ESG.
The EMSF product is categorised as Article 8 under the
European Sustainable Financial Disclosure Regulation for
its promotion of social characteristics. Developing economies
often rely on loans denominated in foreign currencies to
progress; however, currency volatility can act as a major
barrier to the development of domestic capital markets and
the creation of economic wealth. The costs of insuring the
currency risk can be high and subject to large fluctuations,
leaving local businesses and communities unprotected
and vulnerable. The number of affected emerging market
countries is vast, creating a large and diversified target
universe for the fund.
Record plc
Products
Annual Report 2023
15
The Group’s current suite of core products
and services includes: Currency Management,
Asset Management and Other related Products
and Services.
Asset Management
Record’s expansion into broader asset management space
over the past couple of years represents the latest evolution
in our client focus, offering solutions and products to help
our clients address the investment challenges they face
outside the pure FX arena. Here, Record’s approach follows
two pathways, one purely focused on distribution, the other
incorporating investment management as well.
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. The products and
services available going forward have been disclosed below.
Investment Management
General Partner (“GP”) Stakes
The GP Stakes product invests in minority equity stakes in
alternative asset managers, across private asset classes
including private equity, private credit, infrastructure and
real estate. By investing in the GPs directly as opposed to
their funds, our clients participate in their management fee
income, their carried interest, balance sheet investments
in the form of yield, as well as any growth in the enterprise
value of those managers. Due to the diversified nature of the
product, investors benefit from the broader growth trend of
private markets within the investment universe.
Protected Equities
The Protected Equity product uses a well-tested multi-factor
approach to select a broadly diversified portfolio of
international public equities, expected to deliver out
performance in a variety of market conditions. Additionally, the
strategy incorporates tail-risk hedging positions designed to
deliver strong outperformance in extreme market drawdowns,
contributing to enhanced long-term returns.
Distribution
Digital Lending
The Digital Lending product exploits the disintermediation
of the banking sector by technology to deliver stable yields
from the real economy. The product invests in a diversified
portfolio of short-dated loans to corporates and consumers
originated through over 100 specialist fintech platforms.
The portfolio is exceedingly granular with hundreds of
thousands of line items. Credit due diligence is performed by
AI technology overseen by an experienced investment team.
Trade/Receivables Finance
The Receivables Finance product funds the Asian supply
chains of blue chip Western corporations, offering investors
attractive yields for low credit risk. The invoices are
purchased from the manufacturers once goods are delivered
and payment comes directly from the investment grade
obligor. The short duration of invoices allows investors
liquidity on an up to weekly basis.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
16
Record plc
Annual Report 2023
Products continued
Other Products and Services includes more bespoke
mandates tailored to individual client requirements,
plus specialist derivative overlays and other
ancillary services.
Other Products and Services
Multi-product
Multi-product mandates are bespoke and combine two
or more elements which cannot readily be separated for
reporting purposes. Typically, these have been Currency
Management mandates with both risk-reducing and
return-seeking objectives.
Cash and other
Record also provides services including cash and liquidity
management, and collateral management either on a
standalone basis or in support of other mandates.
Information on product investment performance is given in
the Operating review section (pages 40 to 43).
Derivative overlays
Record’s derivative overlays typically take one of two forms:
return-seeking or risk management and replication. Both build
on Record’s long-standing expertise in the derivative space
and well-established trading infrastructure. Return-seeking
derivative overlays are truly discretionary and have focused
on extracting value from alternative risk premia and mispricings
in the interest rates and infl ation markets in order to generate
uncorrelated returns. Risk management and replication
derivative overlays are typically tailored to each client,
addressing a specifi c challenge that the client faces, and
most typically use equity, credit and interest rates derivatives.
Record plc
Annual Report 2023
17
Products continued
The Group has set up Record Digital to
identify future opportunities for growth and
diversifi cation in the digital asset sector.
Record Digital Asset Ventures (“Record Digital”)
Record is focused on growing a diversifi ed and sustainable
business for the long term. The world of digital assets and the
new and enabling technologies will continue to have a major
impact on all fi nancial service sectors, potentially transforming
existing sectors and creating new ones in the future. The
sector is still young but continues to grow, and we believe that
the speed of change and the rate of technological innovation
cannot and should not be ignored by any business serious in its
aim in future to provide modern and innovative products in the
fi nancial services sector.
Record Digital was set up as a separate group entity within the
Record Financial Group to track, learn and identify opportunities
for future diversifi cation and growth in this sector to help
to ensure the sustainability of the business going forward.
The strategy in this respect was to set aside capital to invest
(initially £2 million), used to establish a network of talent,
subject-matter-experts and partners to work with. In doing
so, we are able to co-invest alongside our partners and to take
advantage of their size, scale and due-diligence operations.
Whilst the project is still early-stage, at the end of FY-23
approximately 75% of the capital has been committed into
a mix of small direct investments, and investment funds
investing in start-up and early stage technology and digital
asset companies. More importantly at this stage, the strategy
has allowed us to build a growing network of expert partners
with a deep understanding of the sector. This off ers great
potential for us to work in partnership and take advantage of
existing synergies, leveraging their knowledge, expertise and
connections alongside our own knowledge, regulatory and
operational expertise in the development of future products
and services.
Our focus continues on building our knowledge and
understanding in this sector, and in developing our partnerships;
one example of which is provided below:
Block Scholes aims to be the ‘Bloomberg of Digital Assets’,
delivering institutional-grade analytics, data and a research
platform to clients including regulated digital asset banks.
Apr 21
Introduced
Jan 22
Record Digital invests in Block Scholes
Nov 22
Record becomes a client of data and research
Dec 22
FCA approved Tied Agency with Record
Jan 23
Record Digital supporting with latest investment round
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
18
Record plc
Annual Report 2023
Strategy
Our strategy is focused on accelerated growth
achieved through our three strategic priorities:
Modernisation, Diversifi cation and Succession.
Modernisation
Diversifi cation
Succession
The continued modernisation of
our business is key to our future
security and commercial success.
Investing in new technology
is essential for ensuring our
business remains competitive in
the fundamental areas of product
innovation, client servicing and
productivity. It allows us greater
fl exibility to adapt in response to
changes in markets and investor
appetite, whilst providing more
effi cient working practices and
scalable solutions.
Diversifi cation of our business is
critical to our growth strategy as
we move from a niche currency
and derivatives manager
to becoming an alternative
asset manager. Our expertise
in currency and derivatives,
married with that of our
specialist partners, allows for
the development of innovative
and structured solutions that
fulfi l specifi c investor and
market requirements, including
impactful and sustainable
investment products. The
key to achieving successful
diversifi cation includes achieving
diversity across all aspects of our
business, including our people,
products, client types and
geographies, specialist skill sets
and alternative markets.
We are fundamentally a
people business with a focus
on nurturing and developing
existing members of our team,
whilst attracting future talent
to bring new and diverse skills
and ideas to the business. As
our business moves into a new
era, more opportunities arise
for developing the future talent
and senior management of the
Group and it is vital for our future
success that these individuals
are retained and encouraged to
take more responsibility, add
value and become long-term
employees and equity holders
in Record.
Our strategy recognises the strengths and expertise of
our business built over 40 years, and combines this with
the adoption of modern technology and diff erentiated skill
sets through collaboration with like-minded, specialist
partners. This approach allows us to off er our clients unique,
opportunistic and sustainable solutions to meet their
diff erentiated investment objectives – solutions which are
highly valued and well rewarded.
We use our long-standing and trusted adviser relationships
with current clients as an opportunity to collaborate
and develop new ideas alongside willing participants.
Collaboration with our partners gives further opportunity
to expand our client base and relationships. The ability for
us to connect to modern, third-party systems as opposed to
using in-house systems development has both strengthened
and diversifi ed our business, leading to more robust and
effi cient processes. Technology continues to evolve at pace
and our investment in technology and modernisation will
continue to evolve alongside, ensuring our aim of remaining
a high-quality, innovative, client and technology-led business
continues to adapt accordingly.
Record plc
Strategy
Annual Report 2023
19
Modernisation
We invest in technology
to enhance client
experience, support
scalable, secure and
effi cient solutions,
and to diff erentiate
our business.
Client experience
Record platform (“R-platform”)
R-platform is a client and business-facing portal, initially
focused on the automation of FX trade order execution,
and ultimately aimed at the provision of an automated
passive hedging service and an enhanced client reporting
experience.
Investment in technology and solutions to enhance
scalability and security
Innovation and investment in technology is fundamental
to the continued growth and success of the business.
Technology is an enabler of new ideas, provides scalability
of products and services, and security of data and systems.
Record acknowledges the transformative power of
technology as a driver of business growth, and embraces
technological change. Recent examples of technology
solutions used to enhance the business are given below.
Microsoft Azure
• Scalable & secure data storage
• Cloud computing platform,
enabling scalable build,
deployment and management of
services and applications
• Access to latest services and
technologies
Microsoft Power BI
• Connect and transform
data sources with custom
visualisations
• Enable self-service, and Client’s
access to own data, enhanced
service off ering
• Scalable, cost eff ective solutions
Xceptor
• Data transformation and
automation platform
•
Integration with application and
services to create end-to-end
automated workfl ows
• Enable scale and drive ROI
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
20
Record plc
Annual Report 2023
Strategy continued
Diversifi cation
Product diversifi cation
is one of the three
strategic priorities
for the Group.
Key to the Group’s aim of growing its asset management
products and services is the building of partnerships
with product experts and other specialist providers in the
fi nancial services sector, to collaborate on new products
and services to suit current and future clients’ needs.
The development of the GP Stakes and Protected Equities
products are two recent examples of where Record’s
collaboration with third-party specialist providers has
resulted in new products, and the business is focused
on growing these funds and building new products for
launch in the current fi nancial year (FY-24).
Our Partners
Siegfried
Capital Partners
• AUM: USD 2.4 billion
• Specialisation:
trade fi nance strategies
CAZ
Investments
• AUM: USD 4 billion
• Specialisation:
private equity and
private credit
Fasanara
Capital
• AUM: USD 3.7 billion
• Specialisation: multi-
asset niche products
including alternative
credit digital lending
and digital assets
Avantis
Investors
• AUM: USD 13 billion
• Specialisation:
systematic equity
investing
AGL Credit
Management L.P
• AUM: USD 12 billion
• Specialisation: bank
loan-based investment
off erings
Universa
Investments L.P
• AUM: USD 18 billion
• Specialisation:
options strategies
and risk mitigation
Record plc
Annual Report 2023
21
Strategy continued
Succession
Succession planning
and continuity remain
a key focus for the Group.
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
Succession planning a key strategic priority for the
business. Record has built strong, long-term and trusted
relationships with clients over its forty-year history,
with a reputation for professionalism, innovation and for
caring about its clients and employees. This culture has
been at the core of our success and longevity, which is
why the correct succession plan is fundamental to the
future and to our next forty years in business.
David Morrison
Chair-elect – Record plc
Forty years after founding the business in 1983,
current Chair, Neil Record, announced his retirement in
March 2023, and will step down from the Board at the
AGM in July. Neil’s successor, and current Chair-elect
and Non-executive Director, is David Morrison. David
has previously served on the Record Board, including
as Senior Independent Director, and therefore brings
extensive knowledge of the business alongside his
expertise in leadership and in delivering strategic growth
throughout his career both in venture capital and at Board
level in several private and public companies.
Jan Witte
Group Global Head of Sales and subsidiary CEO
of Record Currency Management Limited
Jan joined Record in 2012, and quickly moved through
the ranks to become Head of Quantitative Research and
Head of Sales for Europe, followed by promotion in 2021
to become Group Global Head of Sales. With his extensive
knowledge and expertise built over 11 years at Record,
Jan was promoted to the role of CEO of Record Currency
Management Limited, with eff ect from 1 May 2023.
Jan takes this responsibility from Leslie Hill, allowing
Leslie’s full focus to be concentrated on delivering the
Group strategy at Record plc Board level.
Rebecca Venis
Group CTO and subsidiary CEO of Record Digital
Becky joined Record in 2016, and as CTO is responsible for
the running and modernisation of Record’s technology
systems and controls. Becky has a natural curiosity and
enthusiasm with respect to the opportunities off ered
through growth in the digital assets sector and the
associated technological innovation. Consequently, Becky
was the perfect choice to take responsibility for running
Record Digital as appointed CEO.
22
Record plc
Annual Report 2023
Key performance indicators
Measuring our performance
against our strategy.
Financial KPIs
Revenue
(£m)
For the fi nancial 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
diversifi cation into asset management
products and services.
Operating profi t margin
(%)
Basic earnings per share
(“EPS”) (pence per share)
Operating profi t margin is an
alternative performance measure,
calculated by dividing operating profi t
by revenue.
The Group aims to create shareholder
value over the long term, delivered
through progressive and sustainable
growth in EPS.
2023
2022
2021
2020
2019
44.7
2023
32
2023
5.95
35.1
25.4
25.6
25.0
2022
2021
2020
2019
31
2022
4.52
24
2021
2.75
30
2020
32
2019
3.26
3.27
Why this is important
Revenue is a key indicator of client
experience, growth and a key driver
of profi tability. 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).
Why this is important
EPS measures the overall
eff ectiveness of the business model
and drives both our dividend policy and
the value generated for shareholders.
Similarly to operating profi t, EPS has
increased this year as the benefi ts
from the implementation of the new
strategy begin to deliver results in
fi nancial terms.
Why this is important
Operating profi t margin is an indicator
of the effi ciency of the business in
turning revenue into profi t. Infl ows
into higher revenue-margin products
in addition to effi ciencies 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 profi t margin over time
through investment in resources and
technology to maintain its premium
products and services, whilst
increasing operating effi ciency and
developing more diversifi ed revenue
streams in higher-margin products.
Link to strategy
Link to strategy
Link to strategy
Diversifi cation
Diversifi cation
Diversifi cation
Modernisation
Modernisation
Modernisation
Succession
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
Record plc
Annual Report 2023
23
Key performance indicators
The Board uses both fi nancial and
non-fi nancial key performance
indicators (“KPIs”) to monitor and
measure the performance of the
Group against its strategic priorities.
Some KPIs link to specifi c strategic
areas as noted below, whilst others
represent higher-level key metrics in
terms of the Group’s business and
fi nancial performance.
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 profi tability.
Ordinary
Special
2023
2022
2021
2020
2019
2.30
2.30
2.30
4.50
2023
0.68
3.60
2022
0.92
2021
0.45
2020
0.41
2019
0.69
Why this is important
Progressive and sustainable dividends illustrate the cash-generative nature of
Record’s business, and its strength in converting profi ts into cash and providing
a suitable return to shareholders. The ordinary dividend per share has increased
by 25%, refl ecting the Board’s confi dence 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
Diversifi cation
Modernisation
Succession
24
Record plc
Annual Report 2023
Key performance indicators continued
Measuring our performance
against our strategy.
Non-fi nancial 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.
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.
Average number
of employees
The average number of employees
through the year includes
Non-executive Directors.
2023
2022
2021
2020
2019
87.7
>10 years:
20%
83.1
6-10 years: 11%
80.1
3-6 years:
58.6
57.3
1-3 years:
0-1 year:
2023
2022
2021
2020
22%
23%
24%
2019
88
82
83
82
85
Why this is important
AUME is an alternative performance
measure and further detail on how it is
defi ned is provided on page 42.
AUME is a key driver of future revenue
and an indicator of business growth.
AUME increased by 5.5% for the year,
including net infl ows of $9.1 billion
diversifi ed across product lines.
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.
Why this is important
Average employee numbers is an
indicator of business growth and
also of how eff ectively the Group is
using technology to make processes
more effi cient. 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 diversifi cation into
new products and technology.
Link to strategy
Link to strategy
Link to strategy
Diversifi cation
Diversifi cation
Diversifi cation
Modernisation
Succession
Modernisation
Succession
Record plc
Annual Report 2023
25
Key performance indicators continued
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
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.
Employees with equity
interest (%)
The percentage of employees who own
shares in Record plc at year end.
2023
2022
2021
2020
2019
90
2023
74
2022
90
2021
81
84
2020
2019
63
61
68
69
70
Why this is important
Planning for generational change is key
to the Group’s strategy. A decrease in
staff retention in the prior year refl ects
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, refl ecting 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 aff ecting
all of our employees’ wellbeing.
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,
refl ecting the importance the Group
places on alignment.
Link to strategy
Link to strategy
Diversifi cation
Succession
Modernisation
Succession
26
Record plc
Annual Report 2023
Sustainability
Sustainability encompasses many aspects of
business operations, including both strategy
and investment as well as business practice,
community engagement and our workforce.
In conducting its business
operations, the Group has a
responsibility to its stakeholders
and the environment.
Sustainability pillars:
Responsible investment
See more
on pages 28 to 29
Our people
See more
on pages 30 to 32
Climate action
See more
on pages 33 to 36
Record plc
Annual Report 2023
27
Sustainability
Responsibility for sustained and meaningful
progress within the area of sustainability lies
with our Sustainability Office.
The Sustainability Committee is a broader committee that
seeks to gather ideas and recommendations from across
seniority and teams within the business, as well as taking
responsibility for implementing sustainability initiatives.
The committee is comprised of officer roles which represent
key areas of sustainability. The officers work closely with
the Sustainability Manager to make progress on defined ESG
objectives and to provide updates on progress in committee
meetings.
The Sustainability Manager is responsible for driving
progress against the sustainability strategy, taking
recommendations and proposals to the SSO and
implementing actions as approved. The Sustainability
Manager acts as conduit between the Sustainability
Committee and the SSO, co-ordinating sustainability efforts
and aligning goals across the Group.
Governance
Responsibility for sustained and meaningful progress
within the area of sustainability lies with our Sustainability
Office. The Office is constructed of the Record plc Board, the
Senior Sustainability Office (“SSO”) and the Sustainability
Committee.
The Record plc Board delegates accountability for the Group
sustainability strategy to the SSO, which is comprised
of key senior leaders who take responsibility for setting
the sustainability strategy and proactively integrating
sustainable practice across the business. The SSO meets
every two months to review and make decisions on key ESG
issues and receives regular updates and points for discussion
from the Sustainability Manager and the Sustainability
Committee. The SSO is in direct communication with the
Record plc Board, ensuring it has complete oversight into key
decisions and is aware of progress towards sustainability
goals and targets. This year we provided a two-part training
programme for our Board members to better equip them to
oversee the adoption of our sustainability strategy.
Sustainability organisational chart
Record plc Board
Oversees
Reports to
Senior Sustainability Office (“SSO”)
Chief Executive Officer
Head of Macroeconomic Research
Chief Investment Officer
Head of Trading
Global Head of Sales
Sustainability Manager
Head of Human Resources
and Company Secretary
Advises
Sustainability Committee
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
28
Record plc
Annual Report 2023
Sustainability continued
Responsible
investment
Record has identified responsible investment
as an essential prerequisite to successful,
resilient and prudent investment management.
Philosophy
Record has identified responsible investment as an
essential prerequisite to successful, resilient and prudent
investment management. Our Responsible Investment
policy communicates our approach and is embedded into
our portfolio management and monitoring processes (see
our Responsible Investment policy for more detail). As part
of our drive to incorporate ESG factors into active currency
products, Record has worked in collaboration with Oxford-
based researchers to extend the boundaries of ESG beyond
its existing base in equities and bonds, to encompass the
currency markets. This manifested in the creation of one of
the first ESG Emerging Market Currency for Return strategies
in 2018, and has continued to evolve since into a focus on
sustainable investment with impact.
Collaboration
Record is actively exploring ways to collaborate with
external parties, including clients who might wish to apply
the methodology to reflect their own specific preferences
and views on various elements of sustainable finance.
Record’s research is ongoing, responding to improvements
in available data, as well as developing and improving on its
own strategies and building and innovating new approaches
to maintain its place at the forefront of research in such a
fast-developing space. We purposefully seek to diversify our
product offering through working with third parties. Our aim
is to develop and identify unique investment opportunities
both within currency and potentially across other asset
classes, as we did in the development of the Record Emerging
Market Sustainable Finance Fund.
Record is proud to have been a signatory since 2018 to
the United Nations Principles for Responsible Investment
(“UN PRI”), the world’s leading proponent of responsible
investment, having been one of the first specialist currency
asset managers to sign up. We have committed to their six
principles for responsible investment, aimed at integrating
ESG into investment decisions and reporting on progress.
Record Emerging Market Sustainable Finance Fund
(“EMSF”)
During 2020, Record continued to pioneer research in this
space, developing an Emerging Market Sustainable Finance
product that combines strategic investment in currencies,
impact bond collateral and counterparty engagement to
nurture and enhance development in the currency universe
countries. This research culminated in the successful launch
of the EMSF in June 2021, in collaboration with one of our
partners, UBS Global Wealth Management in Switzerland.
Currency
The EMSF strategy aims to stabilise currencies, which in
turn can facilitate development and harness the growth
potential in developing countries, in accordance with the
academically supported theory that EM currency stability
is a key prerequisite for equitable and sustainable economic
and social development. More directly, it seeks out bespoke
peer-to-peer (“P2P”) trade opportunities to absorb FX risk
from development institutions or other like-minded impact
market participants.
Record plc
Annual Report 2023
29
Sustainability continued
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
Correctly deployed, currency is an essential tool in
contributing to sustainable development in less-developed
economies and in creating a lasting positive impact. This is
achieved via two channels: the Stabilisation Factor and the
Capital Incentive Factor. The fund also seeks to widen the
universe of currencies, extending to more illiquid currencies
in order to broaden the scope of impact.
Fixed income
In 2019 Record began using its own capital to invest
in Impact Bonds, organised through international and
regional multilateral organisations which align with the UN
Sustainable Development Goals (“SDGs”). Record believed
this would not only aid development and achieve impact, but
also presented an opportunity to gain experience in dealing,
holding and reporting on Impact Bonds which underscored
the fi xed income component of the EMSF.
The fi xed income strategy is a long-term buy-and-hold
investment that targets a universe of multilateral
development banks and other development fi nance
institutions, through themed and sustainable development
bond instruments, where the profi le of underlying projects
aligns with the strategy’s sustainable development
mandate. These entities play a leadership role in supporting
long-term inclusive and sustainable development in low and
middle-income economies by working alongside the public
and the private sectors of their borrowing member countries
to support investments in key development sectors such as
health, agriculture, energy, fi nance, water, and other urban
infrastructure and services.
ESG Counterparty Engagement Strategy (“ESG-CES”)
The investment approach is complemented by a holistic
ESG Counterparty Engagement Strategy which overlays
our investments and seeks to encourage counterparties
to engage in better ESG practices through direct economic
incentives. The strategy standardises and combines ESG data
from leading rating agencies and from each counterparty’s
direct public reporting to create a proprietary ESG score
which is used to pre-screen transactions and constrain
business exposure to counterparties where necessary.
Engagement is central to this strategy; the team is able to
form a constructive feedback loop, highlighting areas across
the ESG verticals where either individual counterparties,
the industry as a whole, or both, ought to improve practices.
Record works collaboratively with counterparties on behalf
of our clients and as signatories of global sustainability trade
codes and standards, helping to steer best practices and
make tangible changes. Engagement with our counterparties
covers a plethora of ESG topics, including climate change,
socio-economic development, controversies and breaches
of international norms to name a few. This year we had
engagement meetings with 83% of counterparty banks that
we traded with.
30
Record plc
Annual Report 2023
Sustainability continued
Our people
We believe that investing in our staff
and developing their potential is key
to the success of the business.
Workplace
Record’s working environment is designed to encourage
bright, dynamic and committed individuals to thrive. We
believe that investing in our staff and developing their
potential is key to the success of the business and our
policies and practices reflect this. We actively listen to our
employees to help us understand their opinions, ideas and
suggestions through ongoing employee engagement surveys.
The Group’s offices both in London and Windsor have been
designed to allow all departments to work together in an
open plan environment. The open plan office allows ease of
communication between departments, as well as enabling
staff to work closely with senior management. We have
continued to support a hybrid working pattern, giving a
balance between flexibility and providing an environment
which fosters teamwork and innovation.
The office environment and culture promote staff
development and training and the Group offers both external
and internal training opportunities. In October 2021 we
partnered with Advancing Women Executives (“AWE”) to offer
an accelerator programme for mid-level women to provide
the relevant training and networking opportunities which
are critical for career advancement. We have continued to
offer this training for all newly promoted women Associate
Directors this year. We partnered with Alpha Development,
a talent development company we have worked with
previously, to run a sales training programme for our
junior sales team to support their progression. An internal
management training programme was also implemented and
included six important modules: Profiles and Personalities,
Personal Development Plans, Team Building, Remuneration
and Recognition, Inclusion and Diversity, and Team
Wellbeing. All employees are encouraged to have a Personal
Development Plan (“PDP”) in place, and all new joiners
receive inductions on the benefits of PDPs for both personal
and career development. The Group provides financial and
study support to employees who wish to pursue relevant
professional qualifications, which many of our employees
include in their PDPs.
In addition, the Group continues to provide a number of
other benefits to employees, including pension, private
medical cover, life insurance, permanent health insurance,
maternity and shared parental benefits, and subsidised gym
membership. Our ultra-low emission vehicle (“ULEV”) car
benefit scheme has allowed us to continue our commitment
to sustainability through employee benefits. All employees
participate in the Group Bonus Scheme and have the
opportunity to acquire shares in Record plc through this
scheme, as well as through the Record plc Share Incentive
Plan. All employees are also offered the Employee Assistance
Programme, which provides 24/7 confidential telephone
support from qualified counsellors as well as online
computerised cognitive behavioural therapy, to support with
mental health issues. This year the Group hired an events
manager to organise team-building and other social events,
enhancing interaction between different departments within
the business and contributing to social inclusion.
The Group has an established internship programme for
students and during the year welcomed interns from the
London School of Economics and Political Science, University
College of London, Balliol College – University of Oxford,
University of Warwick, Exeter University, University of
Cambridge, and the University of Bath.
Staff retention %
FY-23
FY-22
FY-21
74%
90%
90%
Last year’s reduction in staff retention reflects the change in
our business strategy, in particular our succession planning,
which saw higher levels of recruitment adding additional skill
sets and some changes at senior levels within the business
filled through internal promotions wherever possible. As
expected, our staff retention has now normalised back to
prior levels.
Record plc
Annual Report 2023
31
Sustainability continued
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
Human rights
The Group’s policies and procedures are in line with
internationally recognised human rights standards, such as
the guidelines issued by the UN Global Compact, to which
we are a signatory, as well as the International Labour
Organisation’s standards and the Universal Declaration of
Human Rights. The Group therefore complies with human
rights standards across each of the countries we operate in
and works to ensure that there are no instances of modern
slavery, human traffi cking, child labour or any other form of
human rights abuse within our organisation. The Group also
supports the right to a minimum living wage and commits to
exceed the government minimum/living wage and has had no
instances of non-compliance to labour standards.
In April 2022 we published our fi rst Modern Slavery Act
statement in line with the government guidelines under
the 2015 UK Modern Slavery and Human Traffi cking Act. We
recognise our corporate responsibility to ensure modern
slavery is not taking place in our organisation, and our policy
outlines the procedures we have in place to identify and
prevent modern slavery both in our own operations and in
our supply chain.
Inclusion and diversity
The Group’s aims include ensuring that all staff are provided
with equal opportunities and that the workplace is free of
discrimination. It also aims to ensure that all recruitment
processes are fair and are carried out objectively,
systematically and in line with the requirements of
employment law. The Group ensures that all staff are aware
that it is not acceptable to discriminate, harass or victimise
anyone, and also that any such unlawful behaviour is not
tolerated under any circumstance.
The Group believes that valuing what is unique about
individuals and drawing on their diff erent perspectives
and experience will add value to the way the Group does
business. By accessing, recruiting and developing talent
from a diverse pool of candidates, the Group can gain an
insight into diff erent markets and better support client
needs through producing innovative and sustainable
investment products. The Group aims to create a productive
environment, representative of diff erent cultures and groups,
where everyone has an equal chance to succeed.
The Group has made signifi cant progress towards its
Inclusion and Diversity Action Plan, a summary of which
can be viewed in this year’s Sustainability report on pages
32 to 34. Our employee-led Inclusion and Diversity Network
continues to lead initiatives in line with our action plan
and aims to raise awareness of the challenges faced by
underrepresented groups and celebrate diff erences. This
year the Network organised several inclusive events,
celebrating Pride Month, Black History Month, International
Women’s Day, Ramadan and more. The Group also became
a member of the Diversity Project, a cross-company
organisation aiming to support inclusion and diversity in the
UK investment and savings industry.
Read more in our Sustainability report at recordfg.com
32
Record plc
Annual Report 2023
Sustainability continued
Our people continued
Inclusion and diversity continued
The gender diversity within the Group is shown below:
Gender balance
As at 31 March 2023
Board Directors
Senior management
Other staff
All employees
Female
number
2
7
26
35
%
29%
26%
41%
36%
Male
number
5
20
37
62
%
71%
74%
59%
64%
See our separate Sustainability report, on page 36, for our Gender Pay Gap and further diversity data and more information on
our diversity initiatives.
Community
Record recognises its obligations and responsibility to
contribute to the wider community outside of the fi rm. Over
the course of the year, the Group made charitable donations
totalling £18.4k. Our charitable giving is focused on employee
choice, with the Group matching employee donations and
sponsorship. The Group continues to encourage employees
to participate in fundraising activities for charitable causes
and this year employees participated in a variety of events,
including charity lunches and fundraising competitions.
Examples of supported charities and causes included World
Wide Fund for Nature, Islamic Relief, UA Victory, and the
Disaster Emergency Committee. A scheme allowing UK
employees to give to charity through the payroll is also
off ered.
Charitable donations (£’000)
FY-23
FY-22
FY-21
18.4
18.2
19.2
We also provide fi nancial assistance to students studying
at Balliol College, Oxford through a bursary scheme, which
provides grants to students who aim to pursue ambitions
which will benefi t the wider community, for example in
medical or charitable fi elds.
Record plc
Annual Report 2023
33
Sustainability continued
Climate action
We have been certifi ed as CarbonNeutral® in
accordance with the CarbonNeutral® Protocol, the
leading framework for carbon neutrality, since 2007.
Net zero
The Group has always considered the impacts our operations
have on our community and the environment. Each year, we
collect the relevant data and work with a carbon accounting
company to measure, verify and assess our carbon footprint.
We have been certifi ed as CarbonNeutral® in accordance
with the CarbonNeutral® Protocol, the leading framework
for carbon neutrality, since 2007. This means that we have
been purchasing carbon off sets for over 15 years which
deliver immediate emissions reductions through sustainable
development and renewable energy projects around the
world. The projects are independently verifi ed by standards
such as the Gold Standard to ensure environmental integrity
in our work to take climate action.
However, we know that there is a need for further climate
action. Whilst our off setting practices have had a positive
impact in neutralising the carbon we have emitted over the
years, we recognise that being carbon neutral is not enough.
It is now vital that we take additional steps to become
net zero, reducing the greenhouse gas emissions we
produce throughout our operations and value chain. The
Group is therefore committed to the following targets:
• reach net zero greenhouse gas emissions in our
operations and value chain by 2050; and
• reduce Scope 3 emissions intensity by 55% by 2030
against a 2019 baseline.
TCFD
The Group publicly supports the Task Force on Climate-related
Financial Disclosures (“TCFD”). The following table provides a
summary of our response to the TCFD recommendations.
We provide supplemental detail in our Climate report in order
to provide a more comprehensive assessment of how the
Group incorporates climate-related risks and opportunities
into our governance, strategy, risk management, and metrics
and targets.
Governance
Recommendations
Current status
Key areas of progress
Page
Describe Board-level oversight
of climate-related risks and
opportunities.
Describe management’s role
in assessing and managing
climate-related risks and
opportunities.
Compliant
• Enhanced the Group’s governance
Compliant
framework to embed oversight of climate
risk at Record plc Board and accountability
at Senior Sustainability Offi ce
• Upskilling Record plc Board through
sustainability and ESG training which
included a focus on climate risk
• Senior Sustainability Offi ce changed to a
Group level committee
See more
on pages 6 to 8
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
Read more in our Climate report
recordfg.com
34
Record plc
Annual Report 2023
Sustainability continued
Climate action continued
TCFD continued
Strategy
Recommendations
Current status
Key areas of progress
Describe the climate-related risks
and opportunities the organisation
has identified over the short,
medium and long term.
Describe the impact of these
climate-related risks and
opportunities on the organisation’s
business, strategy and financial
planning.
Describe the resilience of the
organisation’s strategy, taking into
account different climate-related
scenarios, including a 2ºC or lower
scenario.
Compliant
• Completed the annual strategic
assessment of climate-related risks and
opportunities to help inform strategy
• Completed a sustainability materiality
assessment which included a section
on environmental issues to help inform
strategy
• Completed a qualitative climate-scenario
analysis for the first time
Compliant
Compliant
Additional recommendations
included in the supplemental
guidance for asset managers.
Partially
compliant
Risk management
Recommendations
Current status
Key areas of progress
Compliant
• Approved climate-related risk appetite
within our Group-wide risk management
framework
• Improved climate-related risk disclosures
and better defined our risk management
process
Describe the organisation’s
processes for identifying and
assessing climate-related risks.
Describe the organisation’s
processes for managing climate-
related risks strategy and financial
planning.
Compliant
Describe how processes for
identifying, assessing and managing
climate-related risks are integrated
into the organisation’s overall risk
management.
Compliant
Additional recommendations
included in the supplemental
guidance for asset managers.
Partially
compliant
Page
See more
on pages
10 to 21
Page
See more
on pages
25 to 26
Record plc
Annual Report 2023
35
Sustainability continued
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
Metrics and targets
Recommendations
Current status
Key areas of progress
Disclose the metrics used by the
organisation to assess climate-
related risks and opportunities
in line with its strategy and risk
management process.
Disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse
gas (“GHG”) emissions, and the
related risks.
Describe the targets used by
the organisation to manage
climate-related risks and
opportunities and performance
against targets.
Partially
compliant
• Measured carbon footprint of the
EMSF strategy
• Improved disclosure on climate metrics
• Achieved all but one of our climate-related
targets set out in last year’s report
Compliant
Compliant
Page
See more
on pages
28 to 31
Additional recommendations
included in the supplemental
guidance for asset managers.
Partially
compliant
36
Record plc
Annual Report 2023
Sustainability continued
Climate action continued
Streamlined Energy and Carbon Reporting
Methodology
The method used to calculate GHG emissions is the GHG
Protocol Corporate Accounting and Reporting Standard
(revised edition), together with the latest emission factors from
recognised public sources including, but not limited to, BEIS, the
US Energy Information Administration, the US Environmental
Protection Agency and the Intergovernmental panel on Climate
Change. The reported GHG emissions are for our UK operations
only. Please refer to page 28 in our climate report for Group level
emissions.
Energy effi ciency actions taken
This year saw an increase in our total UK GHG emissions
compared to the previous reporting year. This was foreseen,
as the Company continues to move back to ‘normal’
working practices post-pandemic. The increase in Scope
3 emissions was predominantly driven by two factors.
Firstly, we increased core working days in the offi ce from
two to three days to encourage collaboration and face-time
between teams, which signifi cantly impacted our commuting
emissions. Secondly, we have been growing our teams and
partnerships outside of the UK, which has seen the need
for increased business travel abroad as we build these
relationships. Despite this, we have managed to keep our
Scope 3 emissions below what they were pre-pandemic.
We have maintained 100% renewable energy consumption
across our UK offi ces which has kept our market-based Scope
2 emissions at 0 tCO2e. Further, our decision to down-size
the offi ce space we rent in Windsor has led to reduced
location-based Scope 2 emissions compared to last year. This
reduction was maintained despite the fact we increased the
offi ce space we rent in London.
Energy and GHG emissions annual % change2,3
Whilst we expected our GHG emissions to increase this year,
we are aiming for signifi cant emissions reductions by 2030
and net-zero 2050. In achieving this, we will be aided by both
our emissions reduction principles (outlined on page 12 of
our climate report) as well as government intervention and
technology innovation.
Energy consumption (kWh 000)1,3,4
FY-23
20
174
408
FY-22
222
91
Scope 1
Scope 2
Scope 3
Location-based methodology (tonnes of CO2e)1,3,4
FY-23
4 34
193
FY-22
47
101
Scope 1
Scope 2
Scope 3
Market-based methodology (tonnes of CO2e)1,3,4
FY-23
4
193
FY-22
101
Scope 1
Scope 2
Scope 3
Reporting category
Scope 1
Scope 2
Scope 3
Total
Energy
consumption
UK & off shore
Location-based
methodology
UK & off shore
Market-based
methodology
UK & off shore
—
-22
347%
92%
—
-28
91%
55%
—
0
91%
94%
Scope 1, 2 & 3 CO2e intensity ratio:
tonnes CO2e/FTE
1. Scope 1 covers combustion of gas and combustion of fuel for transport purposes. Scope 2 covers purchased electricity. Scope 3 covers premises waste, transmission and
distribution losses; business travel; outbound deliveries; commuting; other upstream emissions; and homeworking. The total CO2e intensity ratio is calculated as the total
CO2e tonnes divided by total fi rm FTE.
41%
76%
2. Please note annual % change was calculated using only comparable activities from the previous reporting year. There were no Scope 1 energy and GHG emissions in the
previous reporting year, so annual % change has not been included this year.
3. Please note that rounding diff erences may exist.
4. Scope 2 and scope 3 energy and GHG emissions for FY-22 were incorrect in last year’s Annual Report and have been updated to refl ect the correct data and percentage
changes in this report.
UK emissions data relates to the year ended 31 March 2023.
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
Record plc
Annual Report 2023
37
Section 172 Companies Act 2006 – Our stakeholders
Our stakeholders, with whom we maintain
an ongoing dialogue, are detailed below.
The duties of the
Directors – section 172
Under section 172 of the
Companies Act 2006 a director
of a company must act in the
way they consider, in good
faith, would be most likely to
promote the success of the
company for the benefi t of its
members as a whole, and in
doing so have regard (amongst
other matters) to:
• The likely consequences of any decision
in the long term
• The interests of the company’s
employees
• The need to foster the company’s
business relationships with suppliers,
customers and others
• The impact of the company’s operations
on the community and the environment
• The desirability of the company
maintaining a reputation for high
standards of business conduct
• The need to act fairly towards all
members of the Company
We believe that all stakeholders are benefi ciaries of
environmentally friendly business practice and socially
responsible investment. Record is therefore committed to
being a company with a culture which places sustainability,
corporate responsibility and community engagement fi rmly
at the centre of priorities.
Section 172 Companies Act 2006
We set out on pages 38 and 39 our key stakeholder groups,
their material issues and how we engage with them. Each
stakeholder group requires a tailored engagement approach
to foster eff ective and mutually benefi cial relationships.
By understanding our stakeholders, we can factor into
boardroom discussions the potential impact of our decisions
on each stakeholder group and consider their needs and
concerns, in accordance with section 172 of the Companies
Act 2006.
This in turn ensures we deliver solutions our clients want
and need, continue to work eff ectively with our colleagues
and suppliers, comply with regulatory requirements, make
a positive contribution to local communities and achieve
long-term sustainable returns for our investors.
Acting in a fair and responsible manner is a core element of
our business practice, more information on which can be
found in our separate Sustainability report.
During the year, the Board made decisions to deliver against
our strategy, whilst considering the diff erent interests of
our stakeholder groups and the impact of key decisions upon
them. The following provides an overview of some of the key
decisions taken and how integral our stakeholders are in the
Board’s decision-making process:
Interests of clients – decisions
• Closure of the Muni Fund for the reallocation of resources
• Development and ultimate launch of R-Platform for
improved client user experience and effi ciency
Interests of employees – decisions
• Cost of living payment provided to all employees to help
with the consequences of high infl ation
• Moving to a larger offi ce space in London
Interests of shareholders – decisions
• Capital Markets event held to improve investor
understanding of the Group’s investment case and
focus on growth
• The appointment of David Morrison as new independent
Non-executive Director and Chair-elect
• Deployment of capital through establishment of the
new Investment of Record plc Capital Committee
38
Record plc
Annual Report 2023
Section 172 Companies Act 2006 – Our stakeholders continued
Clients
We are a client-led business. Our ethos
is to “Listen” to clients, “Understand”
their investment objectives, and “Deliver”
sustainable solutions.
Shareholders
We rely on the support and engagement of our
shareholders to deliver our strategic objectives
and grow the business.
People
Our people are central to the ongoing success
of the business and we aim to attract, retain,
develop and motivate the right people for
current and future business success.
How we engage
Our operational infrastructure is built around
the specific requirements of our clients,
including systems and controls to reduce
risk and manage each stage of the process as
efficiently as possible.
We build strong and trusted relationships with
clients and collaborate on new developments
and opportunities as they evolve.
Regular review meetings with clients ensure
client requirements are consistently monitored.
Clients receive frequent and regular reports on
market and investment performance.
During the year, we engaged with several
clients to collect feedback for our Sustainability
Materiality Assessment.
How we engage
The Group CEO and CFO presented the full-year
and half-year results to investors, both
institutional and retail.
The primary means of communicating with
shareholders are through the Annual General
Meeting, the Annual Report and Accounts,
half-year results and related presentations.
All of these are available on the Company’s
website www.recordfg.com. The website also
contains information on the business of the
Group, corporate governance, all regulatory
announcements, key dates in the financial
calendar and other important shareholder
information.
How we engage
We engage with our employees through a
variety of channels including a Company
intranet, management briefings, employee
engagement surveys and workforce
engagement sessions, e-mail updates and
Company-wide presentations by the Group
Chief Executive Officer.
We seek to encourage employees in developing
and advancing their careers, offering assistance
in such forms as study support and the
possibility of secondments to overseas offices.
The Group’s remuneration framework includes
schemes aimed at aligning employees’
interests with those of shareholders by offering
the opportunity to share in business growth
through share ownership.
Their material issues
Our clients’ material interests are in the
performance of Record’s products, a robust
risk framework, transparency, value for
money, maintaining the high levels of service
they receive and the provision of innovative
products which meet their investment
objectives.
2023 highlights and future changes
In line with the evolving Sustainable Financial
Disclosure Regulation under which our
Emerging Market Sustainable Finance Fund
is categorised as Article 8 for its promotion
of social characteristics, we filed our Annex 2
disclosures committing to a minimum level of
sustainable investments in the Fund and to the
measures used to determine the sustainability
of those investments.
The year also saw increased interest from our
clients in our ESG Counterparty Engagement
Strategy with some clients poised to adopt this
over the coming year.
Their material issues
Our shareholders want Record to ensure it is a
long-term sustainable business which delivers
attractive returns through share price growth
and regular dividends.
2023 highlights and future changes
The Company held a Capital Markets Teach-In
as an opportunity for analysts and investors
to gain greater insight into Record’s evolving
market positioning and growth drivers. The
event introduced the investment case and
prospects of Record Asset Management GmbH
and Record Digital, Record’s two newest
subsidiaries.
Their material issues
Our people’s material interests relate to
the work balance and physical and cultural
environment provided by Record. They want
to be fairly rewarded for their contribution
and have opportunities for learning, growth
and further development as well as sharing in
business success.
2023 highlights and future changes
Employee engagement pulse survey questions
have been sent out weekly since January,
gathering employee feedback on various topics
including wellbeing, workload, inclusion and
diversity, technology and communication to name
a few. Actions will be taken to address resulting
themes from the survey.
Line manager support is key to helping individuals
progress. The Company ran a manager training
programme which included six important
modules: Profiles and Personalities, Personal
Development Plans, Team Building, Remuneration
and Recognition, Inclusion and Diversity, and
Team Wellbeing.
Record has continued to offer a hybrid working
pattern in order to achieve an appropriate work-
life balance for the longer-term benefit of both
our employees and the business. This year we
increased core working days in the office from 2
to 3 to promote collaboration and team building.
In order to provide a productive work
environment for our growing London-based
headcount we have moved to a larger office
space in London, allowing employees to have
more space, more meeting rooms and an efficient
working environment.
Record plc
Annual Report 2023
39
Section 172 Companies Act 2006 – Our stakeholders continued
Environment
and community
We recognise the responsibility we have
to the environment, local community and
wider society.
External suppliers
We rely on external suppliers and service
providers to supplement the Group’s own
infrastructure, benefiting from the expertise
these suppliers provide.
How we engage
We work to ensure that our key suppliers are
engaged with our business and that a mutual
understanding and close working relationship
is maintained between us.
All material supplier contracts are subject to
due diligence checks and reviews and include
strict service level agreements for all supplies
of business-critical services.
Record has a supplier payment policy which
ensures that all invoices are approved and duly
paid within agreed terms.
How we engage
We are proud to support the communities in
which we operate and we have a long history of
contributing through monetary donations, gift
giving and employee time. Further details can
be found in our Sustainability report.
We champion responsible investment and
corporate social responsibility and lead the way
in the development of strategies integrating
ESG and impact in currency investing. We work
with like-minded partners to increase and
meet the demand for sustainable investment
solutions.
Record has been a signatory to the Principles
for Responsible Investment since June 2018.
We make a positive impact in our community
by addressing societal issues and driving social
progress through our charitable efforts and
volunteering.
Record’s Sustainability Office and Sustainability
Committee ensure a strong focus on
sustainability and ESG factors across all
aspects of our business, including investment
strategy, corporate responsibility and risk
management for the benefit of clients and all of
our stakeholders.
Their material issues
We aim to manage the business in a manner
which minimises our impact on the environment
and helps to benefit society.
Their material issues
Key suppliers wish to develop mutually
beneficial working relationships with growing
and successful businesses over the long term.
2023 highlights and future changes
Employees helped to raise £18.4k for local
and national charities during the year. Record
also held a corporate volunteering day at a
homeless shelter in London where employees
cooked and served breakfast for those in need.
2023 highlights and future changes
Introduced a Supplier Code of Conduct to align
suppliers and service providers with Record’s
own standards on human rights, diversity and
inclusion, environmental policy and ethical
practice.
This year’s Climate report includes
improved disclosure against the TCFD’s
recommendations and outlines Record’s
commitment and action towards the Group’s
net zero and emissions reduction targets.
Further details on our focus and actions on
both sustainability and climate can be found in
our separate Sustainability and Climate reports
on our website: www.recordfg.com
In line with the UK Modern Slavery Act 2015
which Record is now within scope of for the
first time this year, we will be updating our
current modern slavery policy to reflect
policies and practices across the Group as
opposed to entity level.
Regulators
Across the Group there are multiple regulators
that dictate requirements on the relevant Group
entity and, as a global business, we seek to
have transparent and open relationships with
our regulators around the world. Regulators
provide oversight to ensure the subsidiary
businesses are operated within regulatory
parameters, thereby giving valuable assurance
to clients and other stakeholders.
How we engage
The Group uses a combination of the following:
• an experienced Head of Compliance;
• local legal advisers to call upon for new
activities;
• engages directly and through membership
of various industry bodies with regulators
and policymakers across the Group as
appropriate to ensure that our regulated
businesses understand and contribute
to their respective evolving regulatory
requirements; and
• the Record plc Board has set up reporting
criteria from each subsidiary based on its
requirements and this would include risk,
compliance, operational and IT.
We receive advice and updates on regulatory
matters from both our internal and external
auditors and also our legal advisers.
Their material issues
Regulators aim to ensure that our regulated
subsidiaries are run responsibly in the best
interests and safety of our clients and
other stakeholders. They seek to protect
the integrity of the financial systems they
supervise and promote fair competition for
the benefit of clients.
2023 highlights and future changes
The Group established a German subsidiary and
this was approved by BaFiN as a MiFID firm and
is now trading for clients.
A Group subsidiary was appointed as a Tied
Agent of AHP in Germany.
A Group subsidiary launched its first
Luxembourg funds during the period.
A Group subsidiary appointed a Tied Agent
(Block Scholes) during the period.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
40
Record plc
Annual Report 2023
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.
Value added by enhanced Passive Hedging programme relative to a fixed-tenor benchmark
Return for
year to
31 March 2023
Return
since
inception1
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.
Value added by Dynamic Hedging programme for a representative US-based account
Return for
year to
31 March 2023
Return
since
inception2
3.46% 0.67% p.a.
1. Since inception in October 2014.
2. Since inception in April 2009.
Record plc
Annual Report 2023
41
Operating review
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% (see table below).
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.
EMSF Fund USD Share Class A
JP Morgan GBI-EM Global Diversified
Return for
year to
31 March 2023
Return since
inception
5.64%
4.65%
(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; and
• 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.
Record Multi-Strategy composite1
Return for
12 months to
31 March 2023
%
Return since
inception
% p.a.
Volatility since
inception
% p.a.
0.78%
0.82%
3.16%
1. Record Multi-Strategy composite is since inception in July 2012, showing excess returns data gross of fees in USD base, and scaled to a 4% volatility target.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
42
Record plc
Annual Report 2023
Operating review continued
Product investment performance continued
Currency for Return continued
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: $83.1 billion). When expressed in
sterling, AUME increased by 13% to £71.0 billion (2022: £63.1 billion).
AUME development bridge – year to 31 March 2023 ($bn)
95
90
85
80
75
70
83.1
AUME at
1 April
2022
9.1
(3.8)
(0.7)
87.7
Net flows
Equity &
other markets
FX & scaling
adjustment
AUME
at 31 March
2023
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.
Record plc
Annual Report 2023
43
Operating review continued
AUME composition by underlying asset class as at 31 March 2023
Passive Hedging
Dynamic Hedging
Multi-product
Equity
%
23%
84%
0%
Fixed
income
%
31%
0%
0%
Other
%
46%
16%
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
Sterling
US dollar
Swiss franc
Euro
Australian dollar
Canadian dollar
Japanese yen
Product mix
AUME composition by product
Passive Hedging
Dynamic Hedging
Currency for Return
Multi-product
Cash
Total
31 March 2023
31 March 2022
GBP 7.4bn
GBP 7.6bn
USD 20.8bn
USD 17.6bn
CHF 38.3bn
CHF 33.1bn
EUR 11.7bn
EUR 11.4bn
AUD 3.0bn
AUD 2.9bn
CAD 3.3bn
CAD 6.1bn
JPY 27.2bn
JPY 0.0bn
31 March 2023
31 March 2022
US $bn
63.8
14.7
3.9
5.2
0.1
87.7
%
73%
17%
4%
6%
—%
100%
US $bn
62.8
10.6
5.0
4.5
0.2
83.1
%
76%
13%
6%
5%
—%
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.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
Overview
The implementation of the Group’s change in strategy
continues, focused on the diversifi cation 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 diff erence to revenues
in FY-24, the current fi nancial year. Our existing strong core
of hedging products remains fundamental to our growth
plans, underscored by net infl ows 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 infl ationary
pressure seen at both a personnel and non-personnel level.
The Group remains independent, cash generative and
profi table, 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 profi t for the year increased by 34% to
£14.5 million (2022: £10.8 million) and the operating profi t
margin increased to 32% (2022: 31%) with a 34% increase in
profi t before tax to £14.6 million (2022: £10.9 million).
44
Record plc
Annual Report 2023
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
profi t.
Steve Cullen
Chief Financial Offi cer
Revenue
£44.7m +27%
FY-22: £35.1m
Management fees
£38.3m +12%
FY-22: £34.1m
Record plc
Annual Report 2023
45
Financial review
Profit and loss (£m)
Revenue
Cost of sales
Gross profit
Personnel (excluding bonus)
Non-personnel costs
Other income or expense
Total expenditure (excluding bonus)
Group Bonus Scheme
Operating profit
Operating profit margin
Net interest received
Profit before tax
Tax
Profit after tax
2023
44.7
—
44.7
(12.8)
(9.5)
(0.3)
(22.6)
(7.6)
14.5
32%
0.1
14.6
(3.3)
11.3
2022
35.1
(0.2)
34.9
(10.8)
(7.2)
(0.4)
(18.4)
(5.7)
10.8
31%
0.1
10.9
(2.3)
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.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
46
Record plc
Annual Report 2023
Financial review continued
Revenue analysis (£m)
Management fees
Passive Hedging
Dynamic Hedging
Currency for Return
Multi-product
Total management fees
Performance fees
Other income
Total revenue
Year
ended
31 March
2023
Year
ended
31 March
2022
12.9
12.0
6.8
6.6
38.3
5.8
0.6
44.7
11.8
10.0
5.5
6.8
34.1
0.5
0.5
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.
Record plc
Annual Report 2023
47
Financial review continued
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.
Further information on variable remuneration can be found
in the Remuneration report starting on page 76.
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.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
48
Record plc
Annual Report 2023
Financial review continued
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.
Cash flow
The Group consolidated statement of cash flows is shown
on page 109 of 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 on page 7, 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 on page 109 of the
financial statements.
Record plc
Annual Report 2023
49
Risk management
Record adopts a unified approach to risk
management which is fully embedded
across all areas of the business.
The Record plc Board (“the Board”) has ultimate
responsibility for risk and the oversight of the risk
management process within the business. Recognising
that risk is inherent in all of the Group’s business dealings,
and in the markets and instruments in which the Group
operates, places a high priority on ensuring an integrated
approach and a strong risk management culture is embedded
throughout the Group, with accountability at all levels within
the business. Effective risk management and strong internal
controls are integral to the Group’s business model and are
reflected in the risk management framework adopted within
the business.
Risk management framework
Risk appetite
As part of its responsibility for the oversight of the risk
management process, the Board determines its appetite for
all significant risk categories identified across the business.
This defines the level of risk it is willing for the business to
take to support its strategic and business objectives and
encourages an appropriate balance between risk and benefit
in a controlled and regulatory compliant context, taking into
account the interests of clients, our people and shareholders
as well as any capital or other regulatory requirements. The
Group maintains a risk register, which specifies each risk
appetite with independent and ongoing assessment of the
level of risk performed by the Head of Business Risk.
The Board reviews and considers the principal and emerging
risks and corresponding risk appetites on a regular and
ongoing basis in light of its strategic plans, and changes in
both the business and regulatory environment. The Board
currently considers the following significant risk categories in
determining the risk appetite of the Group:
Strategic
Operational
Systems
Investment
People
Each of these are outlined on pages 51 to 53.
Oversight
Oversight of the risk management framework is delegated by
the Board to the Head of Business Risk.
The Board provides oversight and independent challenge in
relation to internal controls, risk management systems and
procedures, and external financial reporting.
The Boards of Record Currency Management Limited (“RCML”)
and Record Asset Management GmbH (“RAM”), being the
regulated entities within the Group, are the delegated
decision-making bodies for the day-to-day operations of
the respective businesses and included the executive Board
members of Record plc and other senior personnel within the
business.
Risk management framework – overview
Record plc Board
RCML Board
RAM Board
Audit Committee
RCML Investment
Committee
The RCML Board has delegated authority to the RCML Investment Committee to approve changes to any of the Group’s
investment processes and to establish and maintain policies for these processes. The RCML Investment Committee’s members
are listed on page 65 and the committee’s formal approval is required prior to implementation of any new or amended
investment process or product.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
50
Record plc
Annual Report 2023
Risk management continued
Lines of defence
The Record culture is one of integrity and accountability;
core values that are embedded into the control environment
surrounding all areas of the business.
The overall risk management framework is underpinned by
three lines of defence and is overseen by the Board.
Within this framework, the first line of defence provides
management assurance and rests with line managers
within their specific departments and with senior managers
responsible for the implementation and maintenance of
higher-level controls to aim to ensure adherence to quality
standards and regulatory requirements.
Functions such as Front Office Risk Management, Compliance,
Business Risk and Legal provide the second line of defence
through the drafting, implementation and monitoring of
policies and procedures to align with best practice, to ensure
compliance and to provide assurance and oversight for the
Board.
The third line of defence is performed by internal audit,
which provides independent assurance on the adequacy
and effectiveness of the Group’s risk management, control
and governance processes, providing recommendations
to improve the control environment. Internal audit is
provided by RSM UK Risk Assurance Services LLP (“RSM”),
an independent third party.
External independent assurance for shareholders is achieved
by the Group commissioning RSM to perform the annual
service auditor’s report in respect of Record Currency
Management Limited under both the International Standard
on Assurance Engagement (“ISAE”) 3402 and the American
Institute of Certified Public Accountants Attestation Standard
AT-C Section 320 (“AT-C 320”). In performing this work, RSM
reports its opinion on the description of internal controls
with respect to the investment management and information
technology activities, and the operating effectiveness of
specific controls for the period 1 April to 31 March, in line with
the Group’s financial year.
The Group considers the strong capital buffer and the
flexibility retained under the capital and dividend policy
provides an effective additional line of defence in terms of
mitigation when considering its risks.
External independent assurance activity
ISAE 3402 and AT-C 320 service auditor’s report on internal controls (RSM)
Embedded culture of integrity and accountability
1st line of defence:
2nd line of defence:
3rd line of defence:
Business operations and support
Control and oversight functions
Internal audit
(independent assurance – RSM)
Ukraine
We have been mindful from an early stage of the risks posed
to the business by the conflict in Ukraine. We continue to
closely monitor the ongoing situation, adapt to the changing
circumstances and to consider the best interests of our
chosen partners based in Ukraine.
We have so far anticipated and successfully mitigated these
risks, which can be summarised as follows:
• the impact on the delivery of IT projects linked the Group’s
external consulting partners being based in Ukraine;
• global recognition of the increased likelihood of
cyber-attacks; and
• our products which include investments in RUB (Russia
rouble) and UAH (Ukraine hryvnia).
Emerging risks
We consider emerging risks in the context of known risks
which could become more likely to materialise, or external
shocks such as natural disasters and pandemics, geopolitics,
disruption to financial markets and business infrastructure
and changes or trends in the competitive landscape. The
Board, management and Head of Business Risk monitor
emerging risks by including these in the ongoing review of
risks performed through the risk management framework.
Top risks to the business
The following section shows the Board’s assessment of
the principal and emerging risks faced by the business. The
trend arrows indicate the perceived increase or decrease in
risk posed to the business following review by the Board and
the Head of Business Risk. These risks fall into a number of
distinct categories and the means to mitigate them are both
diverse and relevant to the nature of the risk concerned.
Record plc
Annual Report 2023
51
Risk management continued
Strategic risks
Our top two strategic risks are concentration and competitive
threats. We consider both of these to be “high” risk and, while
we accept these as a fact of doing business, a key pillar of the
CEO’s strategy is to mitigate these through diversification.
Other notable strategic risks are delivery of strategy,
regulatory trends, product innovation, third-party products
and exogenous.
Risk
Link to strategy
Trend
Description
Concentration
Diversification
Competitive threats
Delivery of strategy
Regulatory trends
Product innovation
Third-party products
Exogenous
Diversification
Modernisation
Diversification
Modernisation
Succession
Diversification
Diversification
Modernisation
Diversification
Diversification
Modernisation
Our clearest concentration risk comes through our historical reliance
on our core currency hedging product (both passive and dynamic).
Despite its acceptance as part of risk appetite, this risk has reduced
during the year and will continue to do so in FY-24 with the change in
product mix through the successful development and marketing of
new products and strategies.
Asset management and currency are competitive industries, and our
business is exposed to competitive threats arising from disruptive
innovators and entrants, and consistent pressure on fees, especially
Passive Hedging fees. Notwithstanding the high barriers to entry
in our industry, our continued focus on the highest levels of client
service alongside our ability to tailor our service offerings to fit
specific client demands and our investment in technology and
innovation have served us well over 40 years and will continue
to do so.
We continue to successfully execute the CEO’s strategy – we are
increasing revenue through both traditional and new products, and
made strides in introducing technology to streamline a number
of operational processes and have put into action a plan for
generational change.
We are susceptible to adverse regulatory trends in our core markets.
While we cannot control the likelihood, we have a strong track record
of working closely with our clients and local advisers during periods
of regulatory transition (e.g. EMIR, Brexit, IFPR, BaFin).
Separate to concentration and competitive threats, as with any
business we are exposed to the risks that our products no longer
fill a market need. We are client led, and our approach of “Listen,
Understand, Deliver” and our strong client relationships and product
diversification help to mitigate this risk.
We continue to develop relationships to combine our expertise with
that of our preferred partners and third-party strategies. Along with
the opportunity, we embrace some risk that such strategies could
underperform and cause reputational damage. We mitigate this risk
through a thorough and robust due diligence process and a strong
onboarding process. Now that we are successfully distributing
third-party strategies such as the Diversified GP Stakes strategy,
we recognise this risk has increased, and as part of the due diligence
process we have partnered with an external research agency to
conduct exhaustive fraud and reputation checks on all managers we
partner with in this way.
We are mindful of the risks to the business from an inflationary
backdrop, for example through increased operating costs and
interest rates, as well as the risk to asset prices that would directly
impact revenues, although this has ultimately proved to be negligible
through and following the impact of the pandemic.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
52
Record plc
Annual Report 2023
Risk management continued
Operational risks
Our clients pay us fees to undertake high operational risk on
their behalf given the trading sizes and volumes we execute,
particularly linked to our hedging products. We embrace this
risk, recognising it as a principal risk to the business reflected
in our bespoke business model and risk framework, which
is designed to mitigate this risk to an acceptable level. We
operate within our risk appetites given our robust control
framework and long-standing and experienced operational
teams. In line with the strategy to plan for generational
change, several new heads of department have been
appointed using internal promotions, thereby ensuring the
knowledge and familiarity required to run bespoke mandates
remains in the business and these operational risks continue
to run within an acceptable tolerance level aligned with the
Board’s risk appetite.
Our biggest operational risks are trade configuration, the
responsibility of the Portfolio Implementation team, and
trade execution, undertaken by our Trading team. Other
notable risks include accuracy of market and portfolio data
(on which we trade), settlement risk (while we do not trade
on our own account, risk that we make a mistake with a
payment instruction), and reporting errors.
Risk
Link to strategy
Trend
Description
Trade configuration
and execution
Modernisation
RAM operational
errors
Modernisation
New
risk
Configuring a trade with the wrong currency or in the wrong direction
would expose us to market risk, as we make good any trade errors
that would result in a cost to the client. To mitigate this risk, trades
are configured independently and then cross-checked while our
Front Office Risk team conduct pre and post-trade checks. We
continue to introduce technological solutions to increase efficiency
and reduce risk as we continue to broaden our products and services.
With the start of RAM operations, while operations are initially
simple, we expect this risk to emerge as the business grows. Unlike
with our currency business, where errors can be traded out of in the
most liquid market, many RAM investments are in illiquid assets or
funds, which could take an extended amount of time to trade out of.
System risks
Along with all businesses in our sector, we are reliant on a
range of in-house and third-party systems to deliver our
services, and all of these are susceptible to the risk of having
downtime, bugs, redundancy, integration issues and, of
course, cyber attacks.
Notwithstanding our robust systems and mitigating controls,
we nonetheless maintain a business continuity plan and
disaster recovery site in order to continue to run the business
should material disruption occur. These contingencies are
regularly tested.
Risk
Link to strategy
Trend
Description
Cyber and
data security
Modernisation
Cyber risk represents the risk of loss from cybercrime or the
malicious disruption to networks through theft of data or
corruption of information. The Group has established cyber security
programmes which are continuously reviewed and adjusted to keep
pace with regulatory, legislative and cyber threat landscapes, the
latter heightened from the Group now operating across various
locations and more recently as a result of the war in Ukraine. Record
Group did not experience any material client or operational impact
nor any data breaches in the year.
Record plc
Annual Report 2023
53
Risk management continued
Investment risks
Any asset manager must embrace the risk of product
underperformance, whether against their benchmarks or
indeed in absolute terms; we are no different. This is our key
investment risk.
Investment risks also cover the research process and any
potential impact on product development, which we see as
low risk given our highly qualified and experienced research
colleagues and, a rigorous review process and strict scrutiny
by the RCML Investment Committee for all related product
developments.
Risk
Link to strategy
Trend
Description
Product
underperformance
Diversification
Market liquidity
Modernisation
We are increasingly exposed to emerging markets and their inherent
risks, given the geopolitical environment as well as our activity in
this space. We expect this risk to increase as we grow this part of
the business.
Market liquidity is another risk of doing business and one that asset
managers must embrace. That said, we mitigate this risk through
extensive access to, and long-standing relationships with, liquidity
sources, and have successfully navigated historic liquidity events
such as covid-19, Brexit and the SNB decision to stop supporting
the Euro-Swiss franc floor, which we see as a core competitive
advantage. More recently, through adherence to our approved
counterparty list, we maintained minimal exposure to Credit Suisse,
while our Credit Committee continuously monitored developments as
the situation unfolded.
People risks
People are our biggest asset and, as such, present various
risks. We have worked hard to mitigate both key person and
succession risks over the previous twelve months; indeed,
succession planning is a key focus of the Board.
Risk
Link to strategy
Trend
Description
Key person
and succession
Succession
Talent acquisition
and retention
Succession
The Group has been in business for 40 years and was previously
vulnerable to key person risk in the executive, operational and
investment teams. As we continue to execute the CEO’s strategy by
planning for generational change and promoting from within, this key
person and succession risk posed to the business becomes further
diluted, as evidenced by the recent announcement of Dr Jan Witte as
RCML CEO and the change of Chairman announced for the AGM in July.
The inflationary environment has forced many firms, including ours,
to consider risks to talent acquisition and retention. While there
has been some turnover and internal promotions to key operational
roles, we continue to successfully attract talent into all areas of
the business.
We also monitor risks such as conduct and conflicts of interest, as well as staff engagement and wellbeing.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
54
Record plc
Annual Report 2023
Viability statement
In accordance with the UK Corporate Governance Code,
the Directors have performed a robust assessment of the
viability of the Group considering the business model, the
Group’s expected financial position, Board strategy and risk
appetite, the Group’s solvency and liquidity and its principal
risks. Based on this assessment, the Directors have a current
and reasonable expectation that the Group will continue to
operate and meet its liabilities as they fall due for the next
three years to 31 March 2026.
The Directors review the financial forecasts and position
of the Group on an ongoing basis. The capital and dividend
policies reflect the stated objectives of maintaining a
strong balance sheet whilst allowing the Group flexibility
to adapt its products and services to market conditions, to
take advantage of emerging business opportunities, and to
make progressive and sustainable returns to shareholders.
The Group’s strategy and principal risks are assessed and
reviewed regularly at Board and Executive level, and by
operational subsidiaries within the Group. Further detail
on the Group’s strategy and principal risks is given in the
Strategic report on pages 18 to 21 and 51 to 53 respectively.
In assessing the viability of the Group, the Directors have
considered the principal risks affecting the Group, which
underpin the basis for the stress testing of the business plan
conducted under the Investment Firm Prudential Regime
(“IFPR”). This uses severe but plausible stress scenarios
assuming the crystallising of a number of these principal
risks to assess the options for mitigating the impact on the
Group, and for ensuring that the ongoing viability of the
Group is sustained.
The scenarios assume mitigating actions including the
potential for non-critical cost reductions and reassessing the
dividend policy, although any mitigating actions would need
to be reassessed depending on the specific circumstances
and expected duration of the factors affecting the business
model at the time. The possibility that the impact and timing
of factors potentially affecting the viability of the Group
could be more severe than assumed plausible for the above
testing should also be noted.
Changes in our industry such as the increase in demand for
sustainable investment products and advances in technology
provide both challenge but also opportunity to the Group,
whilst economic uncertainty continues linked to the war in
Ukraine and a higher inflationary environment. Through its
change in strategy and increased focus on growth, combined
with the continued enhancement of its products and services
and in maintaining its approach to innovation and the use of
technology, the Directors believe the Company to be capable
of meeting such challenges, as evidenced by the growth in
revenue and profits and the diversification of AUME seen
over the last two years. The Directors consider a three-year
horizon over which to assess the viability of the Group to
be appropriate under such circumstances, since it provides
a sharper focus and any further planning horizon provides
a greater level of uncertainty to planning and financial
projections.
The Strategic report is set out on pages 1 to 54 of the Annual
report and outlines our strategic objectives, performance
and financial position, as well as our outlook for the future.
The Strategic report was approved by the Board on
29 June 2023 and signed on its behalf by:
Leslie Hill
Chief executive Officer
Record plc
Annual Report 2023
55
Governance
Governance
Chairman’s introduction
Board of Directors
Corporate governance report
Corporate governance overview
Board structure
Board activity
Board eff ectiveness
Corporate governance framework
Internal control and risk management
Nomination Committee report
Audit Committee report
Remuneration report
Chair of the Remuneration Committee’s statement
Remuneration Policy
Annual report on remuneration
Directors’ report
Directors’ responsibilities statement
57
58
60
60
61
62
64
65
66
67
70
76
77
79
84
92
95
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
56
Record plc
Annual Report 2023
Meet the Chair-elect
Q&A
with David Morrison,
Chair-elect
1. What made you want to join Record?
As Neil notes in his statement on page 7, I have some
history with Record having initially been a client in the
1980s and subsequently sat on the Board, fi rstly, when
the Company was private and, secondly, subsequent to
its listing. In that context, I have followed its fortunes
for close to forty years. I was both delighted and
surprised to be considered to succeed Neil as Chairman
of the Company and my reasons for being enthusiastic
to take the role stem in no small measure from the
regard that I have for Neil personally, as well as for
the business he, supported over the years by some
outstanding colleagues, has created.
Some of the defi ning characteristics of the Company
since inception have been intellectual rigour, an
overwhelming focus on the importance of client
relationships, which is evident from the longevity of
several of those clients, and a strong corporate culture
and values which have been a guidewire since the early
days and which remain as powerful now as they were in
the past.
It is a testament to the strength of the business that
many of the Company’s products, whilst evolving, have
continued to generate revenues over a long period.
However, one of the exciting aspects of re-engaging
at this point are the new areas of business that have
come to the fore since the appointment of Leslie Hill
as CEO in 2020. Record continues to be one of the
leading independent foreign exchange managers, but
the potential of new products to broaden the business,
to deliver growth and to add diverse and uncorrelated
income streams gives me cause to be excited about
the next few years. I believe that Record has both
the benefi t of forty years of experience on which to
draw and the ambition and potential of an early-stage
company.
2. Where do you see the Group in fi ve years?
For the reasons outlined above, I see much about the
Group being similar in fi ve years’ time to what it is now.
The quality of the people, the culture of the business, the
attention to rigorous analysis and the respect for and
desire to do the best possible for our clients must remain
in place. I also believe that currency management will
continue to be central. However, looking at the initiatives
and ideas that are in train, ranging from infrastructure
funds to cryptocurrencies, we have an opportunity to
build a diversifi ed, alternative asset manager with a range
of income streams and able to off er clients investment
products that are not-yet part of the mainstream.
As part of re-engaging with the business, I have spent time
with several members of the team, some of whom I knew
in the past, several of whom are recently arrived and their
calibre, commitment and desire to see the Company grow
gives me great confi dence, whilst recognising that not all
of the “frontier” activities currently being explored will
succeed. I believe strongly that the next few years will be
a period of growth for the Company, but, to achieve that
growth, we must be prepared to risk failure at times.
3. What are your priorities for the Board?
To pick up on my comment above, to grow we must be
willing to take risks. However, those risks must be taken in
a well-controlled environment. It is the responsibility of the
Board to ensure that the Company maintains the highest
governance and ethical standards, whilst also ensuring that
there is no corporate straitjacket that crushes initiative and
constrains development. In practice, that means that there
must always be full transparency and clear accountability
across all the Company’s activities and jurisdictions. Whilst
I would not wish to put words into their mouths, I feel that
my colleagues on the Board and I are aligned with regard
to our role and responsibilities and I much look forward
to working with them in the next few years. Record has
gained a reputation as a trusted, reliable and high-quality
organisation; it is the responsibility of the Board to ensure
that that mantle does not slip.
Record plc
Annual Report 2023
57
Chairman’s introduction
As we celebrate Record’s
fortieth year I am proud
of our history of strong
corporate governance,
which has always been
at the centre of the
business, underpinning
its purpose, values
and decision-making.
Neil Record
Chairman
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
In this section of the Annual Report we explain our corporate
governance arrangements and describe the operation of the
Record Group, the Board and its Committees during the year.
I have been involved with Record since its inception in
1983, initially as the founder and CEO and later as the
Non-executive Chairman. As I introduced in my statement,
my plan is to retire following the 2023 AGM, and I am happy
to announce that David Morrison will take over as the new
Chair of the Board. David is highly qualifi ed for the role, and
shares my belief that Record will continue to succeed by
having strong corporate governance arrangements. When I
step down, I will leave behind a well-established and united
Board that is successfully managing the implementation of
our new strategy.
Our enhanced business strategy of diversifi cation,
modernisation and succession is routed in our core strengths
and values, and our corporate governance structure is
very much part of this. The expansion of the Group into
new products and regions has been successful, and we are
committed to utilising our knowledge and expertise to create
value for our shareholders.
I can confi rm that the corporate governance arrangements
formally established in all Group companies operate
eff ectively and effi ciently supported by the senior
management and all Group employees. Although we believe
that our governance approach is eff ective, the Board
remains dedicated to enhancing governance structures that
will enable the Group to fl ourish and navigate any future
challenges.
Neil Record
Chairman
29 June 2023
58
Record plc
Annual Report 2023
Board of Directors
Neil Record
Chairman
Leslie Hill
Chief Executive Offi cer
Steve Cullen
Chief Financial Offi cer
Appointed:
Neil founded Record in 1983 and
has been its principal shareholder
and Chairman since then. Neil
also served as Record’s CEO until
October 2010. He will retire at
the 2023 AGM after a long and
successful career.
Appointed:
Leslie joined Record in 1992. She
was appointed Head of Sales
and Marketing in 1999, and Chief
Executive Offi cer in February 2020.
Appointed:
Steve was appointed to the Board
and made Chief Financial Offi cer in
March 2013.
Previous appointments:
Prior to founding Record, Neil
was an economist at the Bank
of England and worked in the
commodity and currency trading
department at Mars Inc’s UK
subsidiary.
Previous appointments:
Leslie’s extensive prior experience
includes working at Lloyds
Bank and Merrill Lynch where
she was Director and Head of
Corporate Foreign Exchange Sales
worldwide.
Previous appointments:
Steve qualifi ed as a Chartered
Accountant in 1994 and gained 15
years of audit experience within
public practice before joining
Record.
Current external
appointments:
Neil is Chairman of the Board
of The Institute of Economic
Aff airs and a director of IEA
Forum Limited, Chairman of The
Global Warming Policy Forum
and a director of Aims of Industry
Limited, Oxford Festival of the
Arts, Circular Wave Limited,
Restore Trust Ltd and The Pharos
Foundation.
Skills and experience:
With almost 40 years of
experience in fi nancial services,
Neil remains integral to the
development of the business
strategy. As Chairman he is a
strong fi gurehead, well-known
and well-respected within the
fi eld of currency management and
as such is an asset to the Board.
Neil is the author of numerous
books and articles on currency
and other risk management topics.
Current external
appointments:
Leslie is a director of Trade
Record Ltd and a Trustee of
FINHUMF Charity.
Current external
appointments:
Steve has no other appointments
outside of the Record Group.
Skills and experience:
Having worked at Record for
30 years, Leslie has a deep
understanding of Record’s
products and the needs of clients.
As Head of the Client Team she
was instrumental in driving the
client-focused culture of the
business and helped to maintain
existing and develop new client
relationships. Leslie is therefore
very well placed to provide a
client perspective during Board
discussions.
This extensive experience means
that, as CEO, Leslie is ideally
suited to leading Record and
in driving the delivery of the
Board’s strategy.
Skills and experience:
Steve joined Record in October
2003 and led Record’s Finance
team for over nine years, reporting
directly to the Chief Financial
Offi cer. He was part of the internal
management team at Record
involved in the preparation
for admission to trading on
the London Stock Exchange in
December 2007.
With his ICAEW FCA qualifi cation
and over 30 years’ experience,
including almost 20 years within
fi nancial services, Steve brings
considerable accounting, fi nancial
and risk management expertise to
the Board.
David Morrison
Independent Non-executive
Director and Chair-elect
Appointed:
David was appointed as
Non-executive Director
and Chair-elect of Record in
March 2023.
Previous appointments:
Previously, David served on the
boards of several private and
public companies, including
PayPoint plc and Venture
Production plc. More recently,
he was Chairman of Be Heard plc.
He also served as a Non-executive
Director of Record in the period
from 2009 to 2018, including as
Senior Independent Director from
2016 until 2018.
Current external
appointments:
David is currently Chairman of
CPP Group plc and eConsult Health
Ltd and Trustee and Member of
the Council of Management of the
Ditchley Foundation.
Skills and experience:
Having spent his career in venture
capital, David was founder (1998)
and Chief Executive of Prospect
Investment Management,
providing venture capital
investment services to various
institutional and family offi ce
clients. With a deep understanding
of the business from his previous
non-executive experience and
his extensive fi nancial expertise,
David is ideally positioned for the
role.
N
N R
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
Record plc
Annual Report 2023
59
Board of Directors
Tim Edwards
Senior Independent Director
Matt Hotson
Independent Non-executive
Director
Krystyna Nowak
Independent Non-executive
Director
Appointed:
Tim was appointed as a
Non-executive Director of Record
in March 2018 and as Senior
Independent Director in July 2021.
Appointed:
Matt was appointed as an
independent Non-executive
Director of Record in July 2021.
Appointed:
Krystyna was appointed as an
independent Non-executive
Director in September 2021.
A Audit Committee
N Nomination Committee
R Remuneration
Committee
Chair
Previous appointments:
Previously, Tim was a member of
the governing Board of Innovate
UK, the UK’s innovation agency,
Chair of the UK Cell and Gene
Therapy Catapult and Chair of the
UK BioIndustry Association.
Previous appointments:
Matt’s experience spans core
fi nance, strategy, investor
relations and business leadership
gained from Arrow Global Finance
plc, RSA Insurance Group plc,
Cable and Wireless plc and Legal
and General Group plc.
Previous appointments:
Previously, Krystyna was a
Managing Director of Norman
Broadbent and prior to this
worked at Citigroup in a variety
of senior roles across shipping
fi nance, oil project fi nance and risk
management, in Europe and Asia.
Current external
appointments:
Matt is Group CFO of Mishcon de
Reya LLP.
Current external
appointments:
Krystyna is Senior Managing
Director of the Teneo People
Advisory Board Practice and is
Senior Independent Director of
abrdn Asian Income Fund Ltd.
Current external
appointments:
Tim is a biotech entrepreneur, who
is currently Chair of Schroders
Capital Global Innovation Trust
plc EndLyz UK Limited, Karus
Therapeutics Limited and Storm
Therapeutics Limited, and a
Non-executive Director of
AstronauTX Limited. Tim is also
Chair of the Institute for Research
in Schools Ltd.
Skills and experience:
Tim is a Chartered Accountant
(FCA) with a background in
corporate fi nance and venture
investing, and he has extensive
corporate development and
people management experience.
Tim adds insight to Board
discussions ensuring that the
Board continues to focus on mid to
long-term value development.
Skills and experience:
Matt is a highly experienced
fi nance professional, having
worked for more than 25 years
at leading FTSE 100 companies.
He has a proven track record in
leading fi nance strategy, business
improvement, and fi nancial
control for large listed companies.
He is currently studying for a PhD
in Digital Economics.
Skills and experience:
Krystyna has a wealth of City
experience, both in banking
and in executive search. She
has an expertise in succession
planning and Board composition
having worked as a director for
a specialist board-level search
boutique. Krystyna is a graduate
from Oxford University where she
studied Physics and gained a Law
Degree in 2003.
A
N R
A
N R
A N
R
60
Record plc
Annual Report 2023
Corporate governance report
Company purpose
Our purpose is to continue to harness trends and innovate
by collaborating with our clients, with the aim of achieving
diverse partnerships of financial specialists – creating
unique, opportunistic, sustainable solutions.
Corporate culture
Since its inception in 1983, the Group has consistently placed
the interests and needs of its clients at the forefront of
everything that it does, and this culture is deeply embedded
throughout the business. The Board has worked tirelessly
to ensure that the significance of client focus, diligence,
transparency, accountability and probity is communicated to
all employees, contractors and consultants across the Group.
The wellbeing of employees has also been a key area of
focus, with ongoing efforts to support colleagues. This year,
the Company expanded its office spaces to create a more
collaborative and inclusive environment for employees and
instigated core office working days. The Board of Directors
understands the importance of maintaining a strong
corporate culture within the business, and is committed
to ensuring that this value is instilled at every level of the
organisation.
Board and corporate governance changes
This year saw important changes to the composition of the
Board. Neil Record, our long-serving Chairman and founder
of the Company, decided to retire from the Board. We are
delighted that David Morrison will succeed Neil; David being
a former Non-executive Director who served on the Record
Board from 2009 until 2018. His deep knowledge of the
business and strong leadership skills make him the ideal
candidate for the role of the Chair of the Board.
There have also been minor changes in the corporate
governance structure with the establishment of the
Investment of Record plc Capital Committee (“ICC”),
which is responsible for assessing and approving proposed
investments of plc capital, taking into account the
objectives of product diversification and the development
of investment talent.
The Board is committed to ensuring the long-term
sustainability of the business, not only from an investment
perspective but also from the perspective of the entire
organisation. While a Senior Sustainability Office has already
been formally approved as a committee of the regulated
subsidiary Record Currency Management Limited (“RCML”),
sustainability has been a recurring item on the agenda
at Record plc Board meetings, with regular reports from
the Sustainability Manager on the committee’s activities.
To reflect the need for strategic oversight of high-level
sustainability activities that require management at the
Group level, a proposal to make the Senior Sustainability
Office a Group Executive Committee was approved at the
April Board meeting. Additionally, the HR Committee will
become a Group committee due to the Group’s expansion
and increasing number of employees worldwide.
Record Asset Management GmbH (“RAM”), a subsidiary of
Record Group based in Germany, was awarded a BaFin licence
in August 2022, leading to the implementation of a set of
formal corporate governance arrangements, including the
establishment of a Board of Directors. The Board held its
inaugural meeting in March 2023, during which it approved all
policies, procedures and functions necessary to ensure the
business operates smoothly, effectively and efficiently while
complying with all relevant laws and regulations.
Further information on the corporate governance framework
is provided on pages 65 and 66.
Compliance with the 2018 UK Corporate Governance Code
Throughout the year, the Company has applied the main
principles and provisions of the Code as deemed appropriate
to the Group.
Section 172 disclosure
Section 172 of the Companies Act 2006 requires Directors
to promote the success of the Company for the benefit of
the members as a whole and in doing so to have regard to
the interests of stakeholders, including clients, employees,
suppliers, regulators and the wider society in which it
operates. Details of how the Board engaged with Record’s
various stakeholders are shown on pages 37 to 39.
Corporate governance overview
Compliance with the UK Corporate Governance Code
(the “Code”)
The Board is supportive of the principles of the Code and has
been since its Admission to the Official List of the UK Listing
Authority in December 2007, with the Board complying as it
deems appropriate given the nature and size of the business.
The latest version of the Code was published in July 2018
and is applicable to accounting periods beginning on or after
1 January 2019.
Copies of the Code can be obtained from the FRC’s website at
www.frc.org.uk.
Listed companies are required under the Financial Conduct
Authority Listing Rules either to comply with the provisions
of the Code or explain to investors in their next Annual Report
why they have not done so.
The Board has reviewed the appropriateness of the
provisions to determine whether they should be applied
or if departure is justified. All provisions of the Code have
been applied as necessary as part of Record’s corporate
governance framework except for the following:
Provision 9 of the Code recommends that the chair should
be independent on appointment. Neil Record was deemed
to be a controlling shareholder until March 2023 and so was
not independent on appointment. However, the Board is of
the opinion that the potential issue of non-independence
is outweighed by the attributes of leadership and guidance
that Neil brings to the role and as Neil has announced his
retirement from the Board at the upcoming AGM in 2023,
there is no longer an issue.
Record plc
Annual Report 2023
61
Corporate governance report
Provision 19 of the Code recommends that the chair should
not remain in post beyond nine years from the date of
first appointment to the Board. Neil Record founded the
Record Group in 1983 and led the business until its IPO in
December 2007. At the time of the IPO it was agreed Neil
was best placed to continue to chair the business, a role
he has undertaken ever since. Neil is well-known and well
respected within the field of currency management and
his long-established involvement with the business, his
ideas and character have built the business to what it is
today. This is no longer an issue with Neil’s retirement and
the imminent appointment of a new Chair. The Board will
therefore be fully compliant with both Provisions 9 and 19.
Provision 21 of the Code recommends that the chair should
consider having a regular externally facilitated board
evaluation. In FTSE 350 companies this should happen at
least every three years. As a non-FTSE 350 company the
triennial requirement for an external assessment does
not apply to Record plc, although an externally facilitated
workshop was carried out in 2021. Details of the evaluation
process previously conducted were provided in the Annual
Report and Accounts 2021.
Board structure
Board composition
The Record plc Board consists of seven members and
is headed by Neil Record (Chairman), with the Executive
Directors Leslie Hill (Chief Executive Officer) and Steve
Cullen (Chief Financial Officer). There are currently four
Non-executive Directors: Tim Edwards, being the Senior
Independent Director, Krystyna Nowak, Matt Hotson and
David Morrison. The biographical details of the Board
members are set out on pages 58 and 59.
In July 2023 Neil Record will retire from the Board and he will
be succeeded by David Morrison who was appointed as a
Non-executive Director and Chair-elect in March 2023.
Code provision
The Code recommends that at least half the Board, excluding
the chair, should be non-executive directors whom the
Board considers to be independent and the Board’s structure
complies with this provision. The Board considers that
the current composition is appropriate given the size and
structure of the business.
The division of responsibilities between the Chairman and
the Chief Executive Officer is clearly established, set out in
writing and agreed by the Board.
Board responsibilities
The Board has a schedule of matters specifically
reserved for its decision and approval, which
includes, but is not limited to:
• determining the Group’s long-term strategy
and objectives;
• authorising significant capital expenditure;
• approving the Group’s annual and interim
reports and preliminary announcements;
• the setting of interim and special dividends and
recommendation of final dividend payments;
• ensuring the effectiveness of internal controls
and the risk management framework;
• the authorisation of Directors’ conflicts or
possible conflicts of interest;
• communication with shareholders and the
stock market; and
• overseeing the Group Company policies, such as
Code of Ethics, Anti-bribery and Corruption, Anti-
Money Laundering, Conflicts of Interest, Supplier
Code of Conduct, Inclusion and Diversity (both
for the Board and Group-wide), Remuneration
policy, Whistleblowing and others.
Chairman
The Chairman is responsible for leadership of the Board. He is also
responsible for overseeing the activities of the Chief Executive Officer
and providing advice, guidance and support to the executive team.
He works with the Board to develop Group strategy and support its
implementation. The Chairman is a principal ambassador of Record
and a guardian of the Group’s ethos and values.
Chief Executive Officer
The Chief Executive Officer is responsible for the executive
management of the Group with focus on profitable business
growth while acting in the interests of all stakeholders – clients,
shareholders, employees and industry regulators – and upholding
the core values of Record. Her statement on FY-23 and the outlook
for the Group can be found on pages 8 and 9.
Chief Financial Officer
The Chief Financial Officer is responsible for the finance function, the
financial management and control of the business, and for developing
and delivering appropriate internal and external financial reporting.
His financial review for FY-23 can be found on pages 44 to 48.
Senior Independent Director
The Senior Independent Director’s role is to act as a sounding board for the Chairman, oversee the evaluation of the
Chairman’s performance (see page 64) and serve as an intermediary for the other Directors if necessary. He is also
available as an additional point of contact for shareholders and other stakeholders should they wish to raise matters
with him rather than the Chairman or the Chief Executive Officer.
Non-executive Directors
The Non-executive Directors are responsible for upholding high standards of integrity and probity, providing constructive
challenge and helping to develop proposals on strategy.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
62
Record plc
Annual Report 2023
Corporate governance report continued
Board structure continued
Independence of the Non-executive Directors
In determining the independence of Non-executive Directors,
the Board has taken into consideration the guidance provided
by the Code. The Board considers Matt Hotson, Krystyna
Nowak, Tim Edwards and David Morrison to be independent
at the current time. Neil Record is a Non-executive Chairman,
although he is not considered to be independent.
Director appointments and time commitment
The rules providing for the appointment, election, re-election
and the removal of Directors are contained in the Company’s
Articles of Association.
The Company’s Articles of Association were revised in
2020 to align with the UK Corporate Governance Code
July 2018, current legislation and market practice and were
subsequently approved by shareholders at the 2020 AGM.
Under the Articles, all Directors are subject to annual election
or re-election by shareholders and all of the Directors will
stand for election or re-election at the 2023 AGM, with the
exception of Neil Record.
The Board has agreed that all Directors standing for election
or re-election continue to make a valuable contribution to
the Board’s deliberations and recommends their election
or re-election. As required by the UK Listing Rules, the
appointment of independent directors must be approved by a
simple majority of all shareholders and by a simple majority
of the independent shareholders. Further details are set out
in the 2023 Notice of AGM.
Non-executive Directors’ letters of appointment stipulate
that they are expected to commit sufficient time to discharge
their duties. Non-executive Directors are required to notify
the Chairman before taking on any additional appointments.
David Morrison, upon joining the Board, disclosed his
additional responsibilities and the Board was satisfied that
he can effectively fulfil his duties as Chairman. Details of
other roles held by the Non-executive Directors are set out in
their biographies on pages 58 and 59. The Board is satisfied
that all Directors continue to be effective and demonstrate
commitment to their respective roles.
The Executive Directors work full time exclusively for the
Record Group and have no other significant commitments
outside the Company. Neil Record, the Non-executive
Chairman, works part time.
Details of Executive Directors’ service contracts, termination
arrangements and Non-executive Directors’ letters of
appointment are included in the Remuneration report on
page 81.
Board member diversity
The Board has approved a policy for ensuring Board member
inclusion and diversity and has delegated the responsibility
for addressing Board diversity to the Nomination Committee.
The Nomination Committee reviews Board composition in the
context of diversity and reports its recommendations to the
Board to ensure diversity is achieved.
The Board recognises that diversity in its broadest sense
is crucial for driving effectiveness and includes different
perspectives, experiences, backgrounds, psychological types
and personal attributes. Gender diversity is considered a
significant aspect of diversity, and the Board acknowledges
that women with the right skills and experience can bring
a unique perspective to the boardroom. The Group’s Board
Inclusion and Diversity Policy aims to ensure that women
represent at least one-third of the Board. Although the
representation of women fell to 28% with the appointment of
David Morrison, this will be rectified when Neil Record retires
from the Board at the 2023 AGM.
The Board’s opinion is that the current composition of
members comprises a good mixture of skills, experience,
knowledge and backgrounds and is therefore appropriate for
the business at the present time. Future Director succession
planning will take into account the benefits of diversity,
including gender diversity, as set out in the Group’s Board
Inclusion and Diversity Policy. Diversity in the workplace is
described on page 31.
Board activity
Board focus and decision-making
The regular scheduled Board meetings have a set,
strategically focused agenda and Board members are invited
in advance of each meeting to add any additional issues they
wish to be addressed.
Material circulated in advance of the meetings has included:
• minutes of the previous Board meetings;
• CEO report;
• subsidiary company reports;
• management information pack;
• KPI data pack;
• investment performance report;
• IT strategy and systems report;
• compliance report;
• risk management report;
• HR report;
• sustainability report; and
• governance report.
Updates from the respective Chairs of the Nomination
Committee, Remuneration Committee and Audit Committee
are provided at each meeting.
The Board discussed progress against strategy, focusing
on product diversification, technology modernisation and
succession planning on an ongoing basis. In addition, the
Board also discussed global regulatory developments and
the conflict between Russia and Ukraine.
Record plc
Annual Report 2023
63
Corporate governance report continued
During the year, the Board focused on the key matters detailed below:
Key matters considered by the Board in the year ended 31 March 2023
June 2022
July 2022
September 2022
November 2022
February 2023
• Annual Report and Accounts, including going concern and viability statement
• Dividend review and approval
• Risk and compliance
• Geopolitical situation
• Climate and sustainability
• Strategy
• Culture
• Focus on Record Digital Asset Ventures
• Managing continuous change
• Investment of Record’s capital
• Sustainability Board training
• Interim Report and Accounts, including going concern review
• Dividend review and approval
• Recent investment performance
• Talent and organisational development
• Shareholder value
• Company finances
• Strategy
• Risk and compliance, including Group Financial Crime review
• Approval of new PDMRs and Insider lists
• Third-party products framework
• New subsidiary approval
• Capital Markets event
The meeting scheduled for March 2023 was postponed until April 2023.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
64
Record plc
Annual Report 2023
Corporate governance report continued
Board activity continued
Meeting frequency and attendance
The Board met fi ve times between 1 April 2022 and
31 March 2023 (the scheduled meeting in March 2023 was
postponed to April 2023) to review fi nancial performance and
to follow the schedule of matters reserved for its decision
and approval. Comprehensive Board papers, comprising
an agenda and formal reports and briefi ng documents, are
sent to Directors in advance of each meeting. Directors
are regularly informed by senior executives and external
advisers on the Group’s aff airs, including commercial,
regulatory, legal, corporate governance and other relevant
matters.
Appropriate and timely notice is given of all Board meetings
and all Directors receive information in advance so that if
they are unable to attend, their input can be tabled and taken
into consideration. The Board has regular off site strategy
meetings and additional meetings as required to address
specifi c issues.
Board eff ectiveness
Board induction and training
New Directors appointed to the Board receive advice as
to the legal obligations arising from the role of a director
of a UK-listed company as part of a tailored induction
programme. Following the appointment of David Morrison in
March, a comprehensive and tailored induction programme
was provided and is ongoing. This induction includes
briefi ngs with the Chairman, Executive Directors and senior
management to help him familiarise himself with his duties
and the Group’s culture and values, strategy, business model,
operations, risk and governance arrangements.
The Company Secretary, under the direction of the Chairman,
is responsible for maintaining an adequate continuing
education programme, reminding the Directors of their duties
and obligations on a regular basis, ensuring good information
fl ow between the Board, its Committees and management
and assisting with Directors’ continuing professional
development needs.
Any concerns raised by Directors which are not resolved are
recorded in the Board minutes. No such matters were noted
during the year ended 31 March 2023.
All Directors have access to independent professional advice,
when required, at the Company’s expense as well as to the
advice and services of the Company Secretary.
Directors are expected to attend all meetings of the Board.
Details of Board meeting attendance are included in the
table below:
Meetings in the year: 5
Neil Record
Leslie Hill
Steve Cullen
Tim Edwards
Matt Hotson
Krystyna Nowak
David Morrison
5/5
5/5
5/5
5/5
5/5
5/5
0
David Morrison did not attend any meetings due to his
appointment in March 2023.
The Non-executive Directors met without the Executive
Directors on several occasions throughout the year, prior to
scheduled meetings.
Board performance evaluation
The Board is required by the Code to undertake an annual
evaluation of its performance. The Code states that “There
should be a formal and rigorous annual evaluation of the
performance of the Board, its Committees, the Chair and
individual Directors”.
The Code recommends that evaluation of the Board of FTSE
350 companies should be externally facilitated at least every
three years.
The last externally facilitated Board eff ectiveness workshop
was conducted in March 2021 and further details were
provided in the Nomination Committee report of the Annual
Report and Accounts 2021. This year Record decided to
undertake an internal Board and Committee evaluation by
using a questionnaire tailored to the specifi cs of the Company
and its business. The main topics explored in the Board
evaluation were the following: Board Structure, Information,
Objectives, Strategy and Remit, Board Committees, Board
Dynamics.
Individual appraisal of each Director’s performance is
undertaken by the Chief Executive Offi cer and the Chairman.
The Senior Independent Director conducts an annual
appraisal of the performance of the Chairman with input
from the other Board members. The outcome of these
appraisals in 2023 was positive and all roles were considered
to be undertaken eff ectively.
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
Record plc
Annual Report 2023
65
Corporate governance report continued
Corporate governance framework
The Board has established a framework of committees and sub-committees to ensure robust corporate governance practices
throughout the business. The Board is confi dent that this structure is appropriate and that the delegation of responsibilities
allows the business to operate in a structured manner and to respond rapidly when issues arise.
The diagram below gives an overview of the Group’s core governance framework.
Record plc Board
Record Currency Management Limited Board
Board Committees
Operational Committees
Nomination
Remuneration
Audit
Investment
Portfolio Management Group
HR
Sustainability
Record plc – Board Committees
The Board has established three Board Committees and
delegated authority to each Committee to enable it to
execute its duties appropriately. The annual reports of the
three Committees provide a statement of each Committee’s
activities in the year with a separate report from:
• Nomination Committee – report set out on pages 67 to 69;
• Audit Committee – report set out on pages 70 to 75; and
• Remuneration Committee – report set out on pages 76
to 91.
The Record plc Board Committees operate on written terms
of reference, which are reviewed annually and which are
available on the Group’s website or on request from the
Company Secretary at the registered offi ce address. The
Chair of each Committee reports regularly to the Board.
The work undertaken by the Nomination, Audit and
Remuneration Committees was reviewed by the respective
Committee Chair to assess each Committee’s eff ectiveness
during the year. The reviews concluded that the Committees
were operating in an eff ective manner and no concerns were
raised and these conclusions were reported to the Board
accordingly.
Record Currency Management Limited –
Operational Committees
The subsidiary Board has fi ve Committees responsible for
operational oversight and decision-making as follows:
Investment Committee
Role: The Board has delegated the responsibility for
authorising changes to existing investment processes and
for approving new investment strategies to the Investment
Committee. The Committee delegated its responsibilities
for oversight and management of all aspects of client
counterparty credit risk and associated policies to the Credit
Risk Committee and day-to-day investment decision-making
to the Investment Management Groups.
Members: The Committee consists of the Chief Investment
Offi cer, the Chief Executive Offi cer, the Group Chairman,
the Head of FX Risk Management Solutions, the Director of
Enhanced Passive and Rates and the Head of Macro Research.
Meetings: The Committee meets as necessary, responding
both to internal developments and external events.
Reporting: Reports on the activities of the Committee
are presented at each formal Record plc and RCML Board
meeting for review and comment.
Portfolio Management Group
Role: The Group is responsible for client take-on, new and
amended products/service operational approval, business as
usual operational activities and operational incidents, errors
and breaches.
Members: The Chief Operations Offi cer, the Head of Client
Onboarding, the Head of FX Risk Management Solutions, the
Head of Portfolio Implementation, the Head of Reporting,
the Head of Front Offi ce Risk Management and the Head of
Trading.
Meetings: The Group meets at least once a week and as
necessary in response to individual or specifi c events
requiring review.
Reporting: Reports on the activities of the Group are
presented to the RCML Board meeting for review and
comment.
66
Record plc
Annual Report 2023
Corporate governance report continued
Corporate governance framework continued
Record Currency Management Limited –
Operational Committees continued
HR Committee
Role: The Committee is responsible for the development
and review of the Group Human Resources strategy,
approach to the systems for performance management,
staff remuneration and benefits, training and development
and ensures rigorous and transparent employment policies,
procedures and systems are in place and kept under review.
Members: The Chief Executive Officer, the Head of HR, the HR
Director and the Global Head of Sales.
Meetings: The Committee meets at least once a month and
as necessary in response to individual or specific events
requiring review.
Reporting: Reports on the activities of the Committee
are presented to the RCML Board meeting for review and
comment and to the Record plc Board meeting.
Senior Sustainability Office (“SSO”)
Role: The SSO is responsible for delivering on Record’s
commitment to be a sustainability leader and in ensuring
Group efforts are strategically aligned with the principles of
sustainability and that environmental, social and governance
principles are embedded in Group decision-making
processes.
Members: The Chief Executive Officer, the Chief Investment
Officer, the Global Head of Sales, the Head of Trading,
the Head of Macro Research, the Head of HR and the
Sustainability Manager.
Meetings: The Office meets bi-monthly and as necessary in
response to individual or specific events requiring review.
Reporting: Reports on the activities of the SSO are presented
to the RCML Board meeting for review and comment and to
the Record plc Board meeting.
Internal control and risk management
The Board has overall responsibility for the Group’s systems
of internal control and the management of significant risks.
The Board sets appropriate policies on internal control, which
are reviewed annually. The authority for the operational risk
management is delegated to the RCML Board.
The Board seeks ongoing assurance from the RCML Board,
the Head of Business Risk, the Head of Compliance and
senior management about the effectiveness of the internal
controls, which include operational and compliance controls,
risk management and the Group’s high-level internal control
arrangements. Such a system of internal controls is designed
to manage, rather than eliminate, risk of failure to meet
business objectives and can only provide reasonable and not
absolute assurance against material misstatements or loss.
Further information on the Group’s risk management
framework is provided on pages 49 to 53 of the Strategic
report.
The Record plc Board has undertaken a review of the
effectiveness of internal controls for the year ended
31 March 2023 and is satisfied that the internal control
environment is appropriate (see “Internal controls and risk
management” on page 74).
Approved by the Board and signed on its behalf by:
Kevin Ayles
Company Secretary
29 June 2023
Record plc
Annual Report 2023
67
Nomination Committee report
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
During this year, the
Nomination Committee’s
primary focus was to
implement a succession
plan for the Chair of the
Board, in light of Neil
Record’s retirement
decision at the 2023
AGM. I am confi dent that
in David Morrison we
have selected the best
candidate for the role.
Krystyna Nowak
Chair of the Nomination Committee
Role of the Committee
The Nomination Committee is responsible for
ensuring that the Board and senior management
possess the appropriate skills and expertise
necessary to facilitate the Company’s growth,
sustain competition in its markets, and manage
risks eff ectively and effi ciently.
The Committee serves both Record plc and the
Group’s FCA regulated entity, Record Currency
Management Limited.
Committee meeting attendance
Krystyna Nowak
Matt Hotson
Tim Edwards
Neil Record
David Morrison
7/7
7/7
7/7
7/7
0
David Morrison did not attend any Committee
meetings due to his appointment being in
March 2023.
68
Record plc
Annual Report 2023
Nomination Committee report continued
I am pleased to present the Nomination Committee report for
the year ended 31 March 2023. This will be my second report
as Chair of the Nomination Committee since I joined the
Record plc Board in September 2021.
Key responsibilities
The key responsibilities of the Committee are to:
• review the structure, size and composition of the Board
and Committees including the diversity and balance of
skills and experience;
• consider succession planning for Directors and other
senior management;
• identify and nominate for the approval of the Board
candidates to fill Board vacancies; and
• review annually the time commitment required of
Non-executive Directors.
Membership of the Committee
I chair the Committee and am supported by the other
independent Directors, Matt Hotson, Tim Edwards, newly
appointed David Morrison and the Group Chairman, Neil
Record, until his retirement at the AGM 2023.
Committee meetings
The Committee met on seven occasions during the year
ended 31 March 2023 and invited the Chief Executive Officer
and the Head of Human Resources and Company Secretary to
join the meetings as the Committee considered appropriate.
Committee member meeting attendance is detailed above.
The Chair of the Nomination Committee reported regularly to
the Board on the Committee’s activities, identifying matters
where any action was deemed to be required and making
recommendations as considered appropriate.
Key areas of focus
Chair succession planning
With the forthcoming retirement of the Company’s founder,
Neil Record, as Chairman, the Committee has worked with the
Board to select a successor and we are pleased that David
Morrison has joined us as Chair-elect, to assume the role of
independent non-executive Chairman from the AGM in July.
The Committee selected a pool of potential candidates as
part of the recruitment process and each candidate was
evaluated based on their skills and experience of leading a
successful business and a diverse team.
Gender
Men
Women
Ethnic group
David was the standout candidate, with extensive experience
and a proven track record of leading companies through
periods of growth and change. David previously served as
an independent Non-executive Director at Record, which has
given him a background understanding of the Company which
is very additive.
Board composition and succession plans
The Committee is committed to ensuring that the Board
has the necessary skills and expertise to facilitate the
Group’s growth plans, which involve diversifying products,
investing in technology, and implementing robust succession
plans. Leslie Hill, Group CEO, is focused on the delivery of
the Group’s three-year plan. The opportunity to lead the
subsidiary company, Record Currency Management, has
arisen, allowing Jan Witte to assume the role of CEO. This
appointment will enable him to effectively manage and
expand the subsidiary business.
Board diversity and newly introduced Listing Rules
The Group’s Board Inclusion and Diversity Policy was last
reviewed by the Committee in April 2022 and was updated
to ensure that the Board was championing inclusion and
diversity through a clear tone from the top and that it
aligns with the many inclusion and diversity initiatives for
the broader staff group. The policy outlines the Board’s
commitment to strive towards having a minimum of
one-third of women on the Board, a goal that has been
upheld for several years.
The new Listing Rule requirements detail three targets for
the Board: that 40% of the individuals on the Board are
women; that at least one senior Board position is held by a
woman; and that at least one individual on the Board is from
a minority ethnic background.
As of 31 March 2023, 29% of our Board are women, which will
increase to 33% on Neil Record’s retirement in July. This fulfils
the targets established in the Group’s Board Inclusion and
Diversity Policy. We have a female CEO, Leslie Hill. None of
our Board members are from a minority ethnic background.
The approaches to the data collection for the purpose of this
disclosure were the following:
• Self-identification: the Board Directors were given the
opportunity to self-identify their gender and ethnic
diversity through a diversity questionnaire.
• HR records: the data on gender was collected through
HR records.
Number of
Board members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage
of executive
management
5
2
7
—
71.4
28.6
100
—
3
1
4
—
4
2
6
—
66.7
33.3
100
—
White British or other White (including minority-white groups)
Mixed/Multiple ethnic groups
Note – Executive management includes the Record Currency Management Limited Board members.
Record plc
Annual Report 2023
69
Nomination Committee report continued
Board gender
Board tenure
As at year end
Female
28.6%
Male
71.4%
>6 years
42.9%
0-6 years
57.1%
The Board believes that an inclusive culture and one that
supports diversity is essential to the long-term success
of the business. We are fully committed to a diverse Board
which benefits from different skills, experience, background,
gender and ethnicity. We believe that the current Board
has the skills and diversity to discharge its duties and
responsibilities effectively.
Being a company with a well-established corporate
governance structure and small size, we do not believe that
we will gain any benefit from appointing additional Directors.
The Committee has committed to regularly reviewing the
Board’s composition and the Board will make efforts to
achieve the necessary diversity objectives at the earliest
possible opportunity.
The Committee is working on succession plans, covering
different time frames, including contingency planning,
medium-term planning for the orderly replacement
of current Board members and senior executives, and
long-term planning that aligns with the Company’s
strategy and objectives.
The Board is satisfied that the Group’s Board Inclusion and
Diversity Policy is applied to its Remuneration, Audit and
Nomination Committees and it covers aspects such as
ethnicity, sexual orientation, disability and socio-economic
background (in addition to the aspects of age, gender or
educational and professional backgrounds).
Tenure and effectiveness of the Chairman
According to the UK Corporate Governance Code, it is
recommended that the Chair of a company’s Board should
step down from their position after serving for a maximum
of nine years since their appointment. The Committee is
aware that Neil Record has held this position since Record’s
IPO in 2007, but as Neil has announced his retirement from
the Board at the upcoming AGM in 2023, there is no longer a
non-compliance issue.
Performance of the Directors and the Board
As per the UK Corporate Governance Code, it is required for
the Board to conduct a yearly evaluation to assess their
performance. Additionally, FTSE 350 companies are advised
to undertake an external evaluation once every three years.
Although Record is not a part of this index, an external
evaluation workshop was conducted in 2021. In 2023, the
Committee opted for a self-assessment questionnaire
to evaluate the Board’s performance. The questionnaire
covered various topics such as Board structure, information,
objectives, strategy, remit, Board Committees and Board
dynamics. The Committee was content with the results of the
evaluation and also identified certain areas for improvement.
Looking forward
The Committee’s primary concern is to continue to plan
for the future leadership of the Company and to ensure
that there is strong talent for senior positions. Leslie Hill
continues to lead the Group’s strategy, and during this
time, the Committee will concentrate on planning for a
smooth and seamless handover of the CEO position at the
appropriate time.
Approved by the Committee and signed on its behalf by:
Krystyna Nowak
Chair of the Nomination Committee
29 June 2023
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
70
Record plc
Annual Report 2023
Audit Committee report
I am pleased to confi rm
the Committee has
continued to be central
to the oversight of
the Group’s fi nancial
reporting, control and
assurance processes
and internal and
external audit.
Matt Hotson
Chair of the Audit Committee
Role of the Committee
The role of the Audit Committee is to encourage
and safeguard a high standard of integrity in
fi nancial reporting having regard to laws and
regulations applicable to the Group and the
provisions of the UK Corporate Governance Code.
The Committee serves both Record plc and the
Group’s FCA regulated entity, Record Currency
Management Limited (“RCML”).
Committee meeting attendance
Tim Edwards
Matt Hotson
Krystyna Nowak
6/6
6/6
5/6
Krystyna Nowak was unable to attend the
November meeting due to a prior commitment.
Record plc
Annual Report 2023
71
Internal audit:
• reviewing and approving the role, mandate and annual
internal audit plan of the internal audit function, ensuring
that the function has the necessary resources and access
to information to enable it to fulfil its mandate;
• monitoring and reviewing the effectiveness of the Group’s
internal audit function; and
• reviewing and monitoring management’s responsiveness
to the internal auditor’s findings and recommendations.
Financial reporting:
• monitoring the integrity of the Group’s financial
statements, including the review of this Annual Report and
any other formal announcements relating to the Group’s
performance;
• reviewing any significant financial reporting judgements;
• reviewing the assumptions and any qualifications made
in support of the going concern statement and the
longer-term viability statement; and
• reviewing the application and consistency of accounting
policies and accounting standards.
The full terms of reference of the Committee were last
updated and approved by the Board in April 2023. They
comply with the UK Corporate Governance Code (the
“Code”) and are available on the Group’s website or from the
Company Secretary at the registered office address.
The Chair of the Committee provides regular reports to
the Board detailing how the Committee has discharged its
responsibilities as set out in its terms of reference.
Audit Committee report
I am pleased to present the Audit Committee report for the
year ended 31 March 2023 (“FY-23”). This will be my second
report since I joined Record in 2021 and I am happy to confirm
that the Audit Committee proved to be efficient in delivering
its main purpose to the Board – the oversight of the financial
reporting process of the Group’s financial performance –
while remaining focused on continuing improvement of the
internal control environment.
Committee duties
In early 2022, the responsibility for supervising both the
main and developing risks was given to the Board of Record
plc. This move was beneficial for the Audit Committee as it
allowed the Committee members to concentrate on crucial
matters related to financial reporting and internal control
efficiency during a time when the Group was expanding into
new business areas.
Under its terms of reference, the Committee is tasked with
the following:
Internal controls and operational conflicts of interest:
• monitoring and reviewing the Group’s internal controls;
and
• reviewing the Group’s annual statement on its systems
of internal financial controls prior to endorsement by
the Board.
Whistleblowing and fraud:
• overseeing whistleblowing arrangements by which
staff may raise concerns about possible improprieties in
financial reporting or other matters; and
• reviewing the Group’s procedures for detecting fraud
and investigating and handling allegations from
whistleblowers and ensuring that arrangements are
in place by which Group employees may in confidence
raise concerns about possible improprieties in financial
reporting and financial controls.
External audit:
• making recommendations relating to the appointment,
re-appointment and removal of the external auditor and
overseeing any tender of external audit services;
• approving the remuneration and terms of engagement of
the external auditor;
• reviewing and monitoring the independence and
objectivity of the external auditor, and reviewing
the effectiveness of the audit process, taking into
consideration relevant UK professional and regulatory
requirements; and
• overseeing the provision of any non-audit services by the
external auditor.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
72
Record plc
Annual Report 2023
Audit Committee report continued
Key areas of focus
Change of the internal audit provider
Since 2010, Deloitte has been our partner in supplying
internal audit services. However, there was a growing sense
at all levels of the organisation that a new perspective on
the internal audit process was needed. The Head of Risk
presented the Committee with various proposals for how
to approach the third line of defence in managing risks, and
after considering these proposals, the decision was made to
appoint RSM UK Risk Assurance Services LLP (“RSM”) as the
new internal auditor. The Committee selected RSM because
of their proven diligence and expertise in conducting internal
controls testing for Record and the strength of their skills
and expertise to conduct the proposed internal audit plan.
The Committee is content that the internal audit function has
sufficient independence to perform its duties effectively and
efficiently.
Review of the regulatory landscape
Throughout the year, the Committee was updated on new
developments in the regulatory landscape, including two
significant changes in IFPR: regulatory risk capital and
Internal Capital Adequacy and Risk Assessment (“ICARA”).
The Committee reviewed and successfully complied with
both regulatory requirements, with reports being produced
and assessed by the Committee before being presented to
the Board for approval.
Third-party assurance services
RSM was appointed in January 2020 to conduct the Reporting
Accountant and Independent Service Auditor (ISAE 3402/
AT-C 320) reports on internal controls on an annual basis.
Their report for 2023 is scheduled to be completed on 30 June
2023 and reviewed by the Committee at the earliest meeting
scheduled for July 2023.
Option valuations
One key finding during the audit was a discrepancy arising in
the option valuations for the new LTIP scheme linked to the
use of slightly different methodologies between valuation
models. Although the valuation difference was not material
for FY-23, the Committee recognised the importance of
further aligning the two methodologies to prevent the
divergence in the accumulated valuation difference over
time. The valuation methodology was changed to include
additional measurement points and an amended holding
period to reflect the recommendations made by the auditor
and to align the input assumptions with the aim of minimising
the potential for material findings in the future. Consequently,
no adjustments to the financial statements were deemed
necessary.
Software development cycle and capitalisation
of the expenses
As part of our modernisation strategy, Record carried
out several major projects, including the creation and
implementation of the new Record Platform and other
significant business infrastructure and development
initiatives. To maintain appropriate control and financial
reporting standards, both the internal and external audit
functions focused on various aspects of the software
development cycle and associated internal controls. The
Committee oversaw and reviewed both audits to ensure
that they complemented each other and added value to
the projects. The internal audit report showed that Record
had adequate controls, processes and resources in place to
manage software development projects, but noted that the
documentation of project roles and responsibilities could be
improved. The external audit reviewed the capitalisation of
expenses related to the Record Platform development and
was satisfied with the results.
Membership of the Committee
The Committee is composed solely of independent
Non-executive Directors. Matt Hotson was appointed as
Chair of the Committee in July 2021 and he is supported
by the other independent Directors: Krystyna Nowak and
Tim Edwards.
Matt has been deemed by the Board as the most suitable
independent Director to serve as the Chair of the Audit
Committee, given his experience in financial services as a
CFO of different listed companies. The other members of
the Committee share this view. Tim Edwards is a Chartered
Accountant (FCA) with a background in corporate finance and
venture investing and Krystyna Nowak has a wealth of City
experience in banking. The Board is content that, through
their experience in other organisations, the Committee
members have the relevant skills and financial expertise
needed for the sector in which the Group operates. The
biographical information of the Committee members is
available on pages 58 and 59.
The composition of the Committee complies with the Code
provision for smaller companies requiring at least two
independent Non-executive Directors throughout the year.
Record plc
Annual Report 2023
73
Audit Committee report continued
Committee meetings
The Committee met six times during the year ended
31 March 2023. The meetings were attended by the Chief
Executive Officer, the Head of Compliance, the Head of
Business Risk and the Chief Financial Officer.
Representatives from BDO LLP attended four meetings
as the incumbent external auditor. The Deloitte internal
audit partner attended two meetings and the subsequently
appointed RSM internal audit partner attended one meeting.
Minutes of the meetings were documented by the Company
Secretary and retained on file.
Committee member meeting attendance for the year ended
31 March 2023 is detailed on page 64.
The Committee also separately met the Group’s external
auditor on one occasion and the internal auditor on one
occasion, providing an opportunity for them, privately and
in confidence, to raise matters of concern.
The Chair of the Committee reported regularly to the Board
on the Committee’s activities, identifying any matters on
which the Committee considered that action was required,
and made recommendations on the steps to be taken.
Committee Chair meetings
During the year the Chair of the Committee has had
separate discussions with the key people involved in the
Company’s governance, including the Board Chairman, the
Chief Executive Officer, the Chief Financial Officer, the Head
of Compliance, the Head of Business Risk, the Company
Secretary and also the external audit partner and the internal
audit partner to obtain updates and insights into business
activities.
Committee evaluation
An internal review of Committee effectiveness was overseen
as part of the Board evaluation process in March 2023. The
conclusion was that the Committee was effective in carrying
out its duties.
Committee activities
The Committee has discharged its responsibilities under
its terms of reference for the period under review by the
following actions:
• reviewing the form, content and integrity of financial
information prior to release, including the Annual and
Interim Reports;
• reviewing the content of each of the Interim Management
Statements for subsequent Board approval;
• considering the Pillar 3 disclosures prior to their
recommendation for acceptance by the Board;
• reviewing the ISAE 3402 internal controls year-end testing
results;
• discussion of the regulatory risk capital and Internal
Capital Adequacy and Risk Assessment (“ICARA”) prior
to their recommendation for acceptance by the Board;
• receiving and reviewing internal audit updates and
reports;
• evaluating the performance and independence of the
internal auditor during the engagement period;
• reviewing the independence of the Group’s external
auditor and the nature of non-audit services supplied by
the auditor;
• reviewing the external auditor’s audit strategy for the
interim review and the final audit;
• assessing the external auditor’s concluding report for the
interim review and the year-end financial statements;
• evaluating the performance of the external auditor over
the period; and
• reviewing and approving the Group whistleblowing policy,
its appropriateness and whether the relevant procedures
are efficient.
Financial reporting
The Committee has thoroughly reviewed the half-year and
annual results and the Annual Report, before recommending
them to the Board for approval.
During the year, the Committee also considered the
significant financial and regulatory reporting issues and
judgements made in connection with the financial statements
and the appropriateness of accounting policies. In particular,
the Committee considered management reports providing
assessments of the internal controls environment, future
cash flows, going concern and ongoing viability, capitalisation
of the software expenses and option valuations.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
74
Record plc
Annual Report 2023
Audit Committee report continued
Financial reporting continued
The Committee was satisfied that all judgements made by
management which affect financial reporting have been
made in accordance with the Group’s accounting policies and
made a recommendation to the Board that it was appropriate
for the Group to adopt the going concern basis of accounting
in preparing the half-year and annual financial statements
for the year ended 31 March 2023.
The Committee further considered reports from the external
auditor, in particular its independent assessment of financial
reporting and key controls, the audit opinion on the Annual
Report and the independent review report on the half-year
results.
The Committee is satisfied that the financial reporting control
framework operated effectively after considering reports
from both management and the external auditor.
The Committee has reviewed the narrative statements in
the Annual Report to ensure they are fair, balanced and
understandable and consistent with the reported results, and
also reviewed the auditor’s findings report which identified
no significant issues.
The Committee was satisfied with the content of the
Annual Report, confirmed there were no significant issues
or concerns to be addressed and recommended that it be
approved by the Board.
Internal controls and risk management
The Committee provides an oversight and independent
challenge to the internal controls of the Group.
In July 2022 the Committee undertook a detailed review of the
Group’s Controls Assurance report which had been prepared
in accordance with ISAE 3402. The Committee members
agreed they were satisfied with the internal controls testing
conducted and observations and disclosures made in the
document.
The Committee has reviewed and evaluated the system of
internal controls and risk management operated within the
Group, and is satisfied that the internal control environment
is appropriate. More information on the Group’s risk
management framework is given in the Strategic report on
pages 49 and 50.
Internal audit
The internal audit function undertakes a programme of
reviews as approved by the Committee, reporting the
results together with its advice and recommendations to
the Committee. The function was provided by Deloitte LLP
(“Deloitte”) under an outsourcing contract which commenced
in May 2010 and terminated in July 2022, being replaced by
RSM. The objectives and responsibilities of internal audit
are set out in a charter reviewed and approved on an annual
basis. The charter was last reviewed and approved by the
Committee in October 2022. RSM reports directly to the
Committee and the relationship is subject to periodic review.
Jed Turnbull was appointed as the RSM internal audit partner,
succeeding Russell Davis from Deloitte.
The Committee and the internal auditor have developed a
planning process to ensure that the audit work performed
focuses on significant risks. The plans include deep-dive
thematic and risk-based audits and also high level in-flight
reviews of specific projects as agreed by the Committee,
RSM and management. Each review is scoped at the start of
the audit to ensure an appropriate focus reflecting business
activities, the market environment and regulatory matters.
The plans are periodically reviewed to ensure they are
adapted as necessary to capture changes in the Group’s
risk profile.
The Committee has received regular reports on the
programme of reviews and internal audit findings at each of
its meetings during the course of the year. The Committee
has reviewed the findings and recommendations made by
the internal auditor and has aimed to ensure that any issues
arising are suitably addressed by management in an effective
and timely manner.
The Committee has reviewed RSM’s work and discussed the
delivery of internal audit with management and is satisfied
with the internal audit work conducted and the coverage
and standard of the reports produced. The Committee has
monitored whether sufficient and appropriate resources are
dedicated to the internal audit function and this has been
reported to and noted by the Board.
Record plc
Annual Report 2023
75
Audit Committee report continued
External audit
A tender process was last conducted in 2020, when BDO LLP
(“BDO”) was approved by shareholders at the AGM as the
Company’s external auditor. Orla Reilly, who had previously
worked on the external audit, was appointed as statutory
auditor in January 2022, succeeding Neil Fung-On. The
Committee approved BDO’s fees and the terms of the audit
engagement letter for the year ended 31 March 2023 in
January 2023.
Non-audit services undertaken by the external auditor
The following permitted non-audit services, pre-approved by
the Committee and within a pre-determined cost limit, have
been undertaken by BDO in the year under review:
• independent auditor report to the FCA on compliance with
client asset rules; and
• the interim review work performed on the half-year
accounts.
Details of the total fees paid to BDO are set out in note 5
to the accounts. Non-audit fees, excluding audit-related
assurance services required under law or regulation,
were equivalent to 4.5% (2022: 7%) of audit fees and were
therefore within the permitted cap of 70%.
Assessment of external auditor independence
The Committee was satisfied that the quantity and nature
of non-audit work undertaken during the year did not impair
BDO’s independence or objectivity and that its appointment
for these assignments was in the best interests of the Group
and its shareholders.
The Committee is satisfied that the external auditor has
maintained its independence and objectivity over the period
of its engagement. The Company is committed to the regular
rotation of the external auditor and external audit partners
and the last tender process was conducted in 2020.
Approved by the Committee and signed on its behalf by:
Matt Hotson
Chair of the Audit Committee
29 June 2023
The Committee has reviewed reports from the external
auditor on the audit plan (including the proposed materiality
level for the performance of the annual audit), the status of
its audit work and issues arising. The Committee discussed
the findings with the auditor and was satisfied with the
conclusion reached by the auditor that there was no evidence
of material misstatements. The Committee has confirmed
that no material items remained unadjusted in the financial
statements.
An assessment of the quality and effectiveness of BDO as
the Group’s external auditor was considered by way of a
review completed by the Committee with the assistance of
senior members of the Finance team and with reference to
the FRC’s practice aid on assessing audit quality, published in
December 2019. The Committee evaluated the judgements;
mindset and culture; skills, character, and knowledge; and
quality control demonstrated by BDO throughout the audit
process and concluded that BDO had provided a quality
external audit service which was appropriate for the Group
given its size and structure.
External auditor independence
Policy on provision of non-audit services by the
external auditor
During the year the Committee operated a policy covering
the provision of non-audit services by the external auditor to
ensure that the ongoing independence and objectivity of the
external auditor was not compromised. The policy adheres
to the Financial Reporting Council’s revised Ethical Standard
issued in December 2019. Under the Ethical Standard the
aggregate of fees for all non-audit services, excluding
audit-related assurance services required under regulation,
may not exceed 70% of the average of the audit fees for the
preceding three-year period. The Committee considers it
best practice to adhere to the fee cap on an annual basis and
monitors fees accordingly.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
76
Record plc
Annual Report 2023
Remuneration report
Our remuneration
policy is designed to
align the interests of
our employees and
executives with those
of our key stakeholders,
including our clients,
shareholders and
regulators.
Tim Edwards
Chair of the Remuneration Committee
Role of the Committee
The role of the Remuneration Committee is to
review and approve the remuneration strategies
of the Group, encompassing the Chair, the
Executive Directors, and the staff as a whole.
The Remuneration Committee also reviews and
advises on the remuneration policy, ensuring
that it complies with regulatory requirements,
it promotes good conduct consistent with sound
and eff ective risk management, and is properly
disclosed to stakeholders.
Committee meeting attendance
Tim Edwards
Matt Hotson
Krystyna Nowak
6/6
6/6
6/6
Record plc
Annual Report 2023
77
Remuneration report
Chair of the Remuneration Committee’s
statement
Introduction
I am pleased to present our Remuneration report for
the year ended 31 March 2023. We believe that our
Remuneration Policy, as approved by shareholders at our
2022 AGM, remains appropriate and we are focusing on
the implementation of our policy with no further changes.
Our report is split into three sections:
• the Remuneration Policy tables;
• the annual report on remuneration for 2022-23; and
• the role and activity of the Remuneration Committee.
We have not reproduced the full Remuneration Policy in
this report but have provided a summary in the tables
produced on pages 79 to 81. A copy of our full Directors’
Remuneration Policy, as approved by shareholders in
July 2022, is available in the Remuneration section of the
2022 Annual Report and Accounts, which is available on our
website www.recordfg.com.
Remuneration principles
Our approach to remuneration remains unchanged and is
driven by long-term thinking to promote the sustainable
growth of the Group. Identifying, developing and
appropriately compensating our high performers, at all levels
of the business, is critical to long-term business success and
is aligned to both clients’ and shareholders’ interests.
Our key remuneration principles are:
• a consistent remuneration structure for all employees, not
just Directors, which is transparent and straightforward;
• our employees should be rewarded and incentivised to
deliver profitable business growth;
• remuneration should comprise i) fixed salary, pension and
benefits; ii) variable remuneration based on individual and
Group performance; and iii) longer-term incentives based
primarily on Group performance; and
• Executive Directors’ remuneration should include a
deferred element, which is satisfied by paying it in the
form of equity.
Implementation of our Remuneration Policy
In last year’s Remuneration Policy we outlined a number of
priorities that the Remuneration Committee was focusing on
and I would like to summarise progress in these areas:
• motivate and retain our CEO to deliver our three-year
strategy:
The remuneration structure that we put in place for our
CEO was designed to ensure that Leslie Hill is motivated
and incentivised to drive our 2022-25 three-year strategy,
while acknowledging that she is a significant shareholder
and therefore fully aligned with shareholders over the
long term. The business has outperformed the first year
of our three-year strategy, delivering higher revenue
and operating profit than was targeted. Leslie will
therefore receive her salary and full bonus in recognition
of both these excellent financial results as well as the
progress made in each of our three strategic priorities of
diversification, modernisation and succession.
• create a remuneration structure that aligns with and
supports our succession plans:
The implementation of our LTIP scheme in line with our
Remuneration Policy has created alignment, incentive
and retention of key Executive Directors and members
of senior management to support our succession plans.
Participants in the LTIP scheme forfeited part of their
bonus to participate in the scheme, and any vesting of
awards will be in shares, subject to the satisfaction of
three-year targets and continued employment.
• use robust performance metrics to ensure payment
for success:
Our Executive Directors’ Bonus Scheme has been
implemented, based on paying for performance.
The Remuneration Committee believes there is a balance
between a formulaic and a discretionary approach, and
has ensured that the measures and targets used to
determine variable pay for Executive Directors are aligned
with our three-year strategy, being based both on the
delivery of annual profits and the progress in key strategic
areas. In addition, our LTIP scheme includes both EPS and
TSR performance conditions and our Staff Bonus Scheme
recognises Company, department and individual levels of
performance.
• align the interests of our Executive Directors with those of
our shareholders:
The alignment of our three-year strategy to deliver
long-term sustainable business growth with the design
of our remuneration schemes means that remuneration
outcomes will be delivered fully in shares through the
LTIP and partly in shares in our bonus scheme. All awards
in shares have further holding periods, aligning interests
with shareholders.
Total remuneration spend
Over the medium term, the Board has set a target ratio of
total remuneration costs to be up to 50% of revenue. This
includes all remuneration costs for Directors and staff. For
this financial year, total remuneration costs represented 46%
of revenue and were managed well within the target ratio.
In total, the Executive Director Bonus Scheme and Staff
Bonus Scheme are capped at 35% of operating profit
pre-bonuses and this year variable remuneration totalled
34.7% of operating profit.
Group performance for 2022-23
The year to 31 March 2023 has seen revenues increase by
27.4% compared with last year, an increase in operating profit
of 33.6% and our AUME reached $87.7 billion. Our bonus pool
was 34.8% of pre-bonus underlying operating profit, which
represented £7.6 million, directly linking the Group’s financial
performance to the size of the variable remuneration pool.
The payments made under the bonus scheme increased by
33.2% compared to the previous period.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
78
Record plc
Annual Report 2023
Remuneration report continued
Chair of the Remuneration Committee’s
statement continued
Executive Director remuneration outcomes 2022-23
A cost-of-living allowance of £3,000 was paid to all staff
during the year. This was not paid to Executive Directors or
Board members. In addition, a discretionary salary review
was undertaken to recognise promotions and increases to
roles and responsibilities.
No changes were made to Leslie Hill’s salary. Leslie’s variable
remuneration was determined by the criteria outlined in the
Executive Directors’ Bonus Scheme. Leslie’s bonus was paid
in full, with 75% of her bonus relating to the outperformance
of annual profit targets and 25% of her bonus relating to
strong strategic progress made in the areas of diversification,
modernisation and succession. Further details are provided
on page 85.
To reflect the increasing breadth of Steve Cullen’s role with
the expansion of the Record Group, his salary was increased
to £160,000 from 1 April 2023. Steve’s bonus was paid in full,
with 75% of his bonus relating to the outperformance of
annual profit targets and 25% of his bonus relating to strong
strategic progress made in the areas of diversification,
modernisation and succession. Further details are provided
on page 85.
The Remuneration Committee also received input from the
Head of Compliance, who reports any legal or compliance
issues that relate to Executive Directors who are due to
receive bonus payments. Payments were made in accordance
with the Executive Directors’ Bonus Scheme rules and were
approved by the Committee.
No option or LTIP awards were made to Leslie Hill during the
year, in line with the CEO remuneration structure outlined
in the Remuneration Policy. Steve Cullen received an LTIP
award of 150% of his base salary, granted in line with the LTIP
scheme rules.
Alignment with shareholders
As at 31 March 2023, 39% of the Group’s shares were held
by the Chairman and the Directors, and each of the current
Executive Directors has a shareholding significantly greater
than 150% of their base salary. In addition, 63% of the Group’s
employees are shareholders.
Engaging with employees
The Remuneration Committee takes an active involvement in
remuneration for the whole Group. Record staff participate
in all of the remuneration arrangements, including the
Staff Bonus Scheme, LTIP, JSOP and share schemes. The
Remuneration Committee reviews all bonus, LTIP and option
awards. A significant proportion of our colleagues are
shareholders, so are able to express their views in the same
way as other shareholders.
When determining Executive Director remuneration
arrangements, the Remuneration Committee takes into
account pay conditions throughout the Group to ensure
that the structure and quantum of Executive Directors’ pay
remains appropriate in the circumstances.
In my role as Employee Engagement Director, leading our
workforce engagement initiatives, I have been working
closely with Kevin Ayles, Head of HR and Company Secretary.
We have been able to seek the views of the wider workforce
on a range of topics including strategy, remuneration and
working arrangements, through our employee engagement
pulse surveys and conversations with staff.
Shareholder consultation
It remains our policy to discuss any substantive proposed
changes to the Group’s remuneration structures with key
external shareholders in advance of any implementation.
The Remuneration Committee takes into account shareholder
views received in relation to resolutions to be considered at
the AGM each year, and values shareholder feedback when
forming remuneration policy.
Tim Edwards
Chair of the Remuneration Committee
29 June 2023
Record plc
Annual Report 2023
79
Remuneration report continued
Remuneration Policy
Remuneration Policy summary tables
This section of the Remuneration report starts with a table illustrating the remuneration structures that we have in place for
Executive Directors and then provides an overview of the key remuneration elements in place for all staff, including Executive
Directors, the Chairman and Non-executive Directors.
We have not made any changes to our Remuneration Policy for Directors and the tables summarise the policy approved by
shareholders at the 2022 AGM.
Summary remuneration structure
The table below illustrates the remuneration structures that we have in place for Executive Directors.
Salary
Cash
Pension and
benefits
Cash
Bonus Scheme
Cash
Bonus Scheme
Shares
1/3 shares
released from
lock up
1/3 shares
released from
lock up
1/3 shares
released from
lock up
LTIP
EPS and TSR performance conditions
Vesting
Held until year 5
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Note: Executive Directors are required to take one-third of their bonus payment in shares, which are locked up and released over three years. Executive Directors can elect to
take a further third of their bonus payment in shares, and these have no lock up.
Directors’ Remuneration Policy table
The following table summarises the key features of each element of the Policy, their purpose and link to strategy.
Element, purpose and
link to strategy
Operation
Base salary
Fixed remuneration that reflects
the role, responsibilities,
experience and knowledge of
the individual.
The Remuneration Committee reviews salaries for
Executive Directors on an annual basis.
Any review will take into account market rates,
business performance and individual contribution.
There is no prescribed maximum salary. However,
increases are normally expected to be in line with
the typical level of increase awarded across the
Group.
Performance metrics
Not applicable, though individual
performance will be considered
when reviewing base salary levels.
Benefits
To provide a benefits package
that provides for the wellbeing
of our colleagues.
Benefits include, but are not limited to, private
medical insurance, dental insurance, permanent
health insurance, life assurance and annual holiday.
Not applicable
Executive Directors receive benefits on the same
basis as all other employees, at the prevailing rates.
Pension
To provide an appropriate
retirement income, to aid
attraction and retention of
high-calibre executives.
Not applicable
Executive Directors receive an employer pension
contribution of 11% of salary which can be paid into
the Group Personal Pension Scheme or delivered as
a cash allowance.
The pension contribution for Executive Directors is
fully in line with pension contributions paid to all
staff (which also comprise an employer pension
contribution of 11% of salary).
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
80
Record plc
Annual Report 2023
Remuneration report continued
Remuneration Policy continued
Directors’ Remuneration Policy table continued
Element, purpose and
link to strategy
Operation
Bonus Scheme
To motivate Executive Directors
to achieve sustainable financial
performance and strategic
objectives aligned with the
Group strategy.
Long-Term Incentive Plan
(“LTIP”)
A performance share plan to
incentivise delivery of long-term
performance and strategy
delivery, aligning interests with
shareholders.
Bonus payments are based on performance
measured over the financial year.
Executive Directors are required to take one-third
of their bonus payment in shares subject to lock-up
conditions of one to three years and in addition are
offered the opportunity for up to a further third
of the bonus to be paid in shares. The remaining
amount is paid in cash.
Up to 35% of operating profits (pre-bonus) are
allocated in total to the Executive Directors’ Bonus
Scheme and the Staff Bonus Scheme.
Malus and clawback provisions apply to all awards.
Further details are set out below.
Awards under the LTIP may be granted as nil or
nominal cost options, market value options or
conditional share awards.
The maximum opportunity for Executive Directors
is an award of up to 150% of base salary.
Any awards will be delivered in Company shares.
Awards vest at the end of a three-year performance
period, after which any shares must be held for a
two-year post-vesting holding period.
Malus and clawback provisions apply to all awards.
Further details are set out below.
The Committee has discretion in the treatment
of leavers as set out below and in respect of the
assessment of performance and vesting levels
(including to amend performance conditions and
measures).
Performance metrics
Bonus will be based on the
achievement of Group financial
operating profit targets (75%) and
delivery of strategic objectives
(25%).
Individual awards are based on role,
responsibilities and delivery and
determined by the Remuneration
Committee.
Vesting is based two-thirds on EPS
growth and one-third on relative
TSR compared with the FTSE Small
Cap index.
The Remuneration Committee has
discretion to set other performance
conditions for the future operation
of the LTIP.
Share Incentive Plan
A share saving plan to
encourage long-term equity
ownership.
The Group has an approved Share Incentive Plan
(“SIP”). All staff are able to buy shares from pre-tax
salary up to an HMRC-approved limit (£1,800 for
the financial year ended 31 March 2023), which is
matched at a rate of 50%.
Not applicable
Record plc
Annual Report 2023
81
Remuneration report continued
Remuneration Policy table for the Chairman and the Non-executive Directors
The table below sets out the Remuneration Policy for the Chairman and the Non-executive Directors.
Element, purpose and
link to strategy
Current operation for Chairman and
Non-executive Directors
Further information
Fees
Fixed remuneration that reflects
the role, skills and experience
The Chairman’s fees are determined by the
Remuneration Committee.
The Non-executive Directors’ fees are approved by
the Board.
Increases are normally expected to be in line with
the typical level of salary increase awarded across
the Group.
Fees are reviewed annually.
Any review will take into account
market rates, business performance
and individual contribution.
Pension and benefits
To enable the Chairman and
Non-executive Directors to
carry out their roles.
The current Chairman receives benefits on the same
basis as the Executive Directors, including pension,
private medical insurance, dental insurance,
permanent health insurance and life assurance.
The Non-executive Directors
receive expenses but do not receive
any additional benefits.
When David Morrison assumes the role of Chairman
he will not receive any additional benefits.
Service contracts and loss of office payment policy
All Executive Directors have service agreements with the
Company. None of the service agreements are for a fixed
term and all include provisions for termination on six months’
notice by either party. Service agreements do not contain any
contractual entitlement to receive bonuses, nor to participate
in the LTIP, nor to receive any fixed provision for termination
compensation.
Non-executive Directors are appointed for an initial
three-year period and are required to provide at least six
months’ notice of their intention to resign. Their continued
engagement is subject to annual re-election by shareholders
at the Group’s AGM.
The terms and conditions of appointment of the Executive
Directors and Non-executive Directors are available for
inspection at the Company’s registered office.
When an Executive Director leaves the Group, the
Remuneration Committee will review the circumstances and
apply the appropriate treatment to their final remuneration.
Any payments and vesting of share awards under the
Executive Directors’ Bonus Scheme and the LTIP will be in
accordance with the relevant scheme rules and discretion
as set out in those plans at the time the Executive Director
leaves. All payments will be in line with contractual
entitlements and statutory requirements. No Executive
Director will be rewarded for failure.
Salary and benefits will continue to be paid throughout the
notice period although the Remuneration Committee has the
discretion to make a payment in lieu of notice.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
82
Record plc
Annual Report 2023
Remuneration report continued
Remuneration Policy continued
Other matters
Engaging with employees and shareholders,
decision-making processes and general employee pay
and conditions
The Group’s approach to engaging with employees and
shareholders is detailed in the Chair of the Remuneration
Committee’s statement. The Group’s remuneration
decision-making processes are also summarised in that
statement and detailed further above in the Remuneration
Policy tables, as well as the general approach to employee
pay and conditions.
Malus and clawback
Malus and clawback provisions under all of the Company’s
incentive schemes (including the Executive Director and Staff
Bonus Scheme, LTIP, Share Scheme, Commission Scheme
and JSOP) are in line with regulatory requirements. Under
the relevant rules, the Remuneration Committee may apply
malus and/or clawback where:
• the relevant individual participated in, or was responsible
for, conduct which resulted in significant losses to the
Company or relevant business unit;
• the relevant individual failed to meet appropriate
standards of fitness and propriety;
• there is reasonable evidence of misbehaviour or material
error by the individual;
• the Group, or business unit for which the relevant
individual is responsible, suffers a material downturn in its
financial performance; and/or
• the Group, or business unit in which the relevant individual
works, suffers a material failure of risk management.
Source and funding of shares
Share awards under the Executive Directors’ Bonus Scheme
and Staff Bonus Scheme are covered wherever possible
through market purchases by the Company’s Employee
Benefit Trust (“EBT”) rather than through the issue of new
shares, and this has been the case since the inception of
the previous Group Profit Share Scheme in 2007. It remains
our intention to continue to operate in this manner in order
to minimise potential dilution of shareholders’ interests.
Similarly, grants under the LTIP and the Share Scheme are
not normally satisfied by the issue of new shares, in order to
minimise potential dilution. The JSOP uses market purchase
shares only. The Company provides funds to the EBT to allow
it to purchase shares in the market with which to satisfy the
exercise of options. The number of shares purchased by the
Group to hedge the satisfaction of options is based on an
appropriate hedge ratio at each grant date, as calculated by
management and approved by the Remuneration Committee.
Implementation of Remuneration Policy
The Group has implemented the Remuneration Policy, as
approved by shareholders previously. The Remuneration
Committee has approved variable remuneration payments
for the CEO and CFO based on the Executive Directors’ Bonus
Scheme and the CFO is a participant in the LTIP scheme.
Approach to remuneration for new Executive Directors
On the recruitment of a new Executive Director, the level of
fixed remuneration will be appropriate to the candidate’s
skills and experience and the responsibility that they will
be undertaking. New Executive Directors would be eligible
to join the Executive Directors’ Bonus Scheme and would
be eligible to be considered for participation in the LTIP as
deemed appropriate by the Remuneration Committee, subject
to the applicable policy at the time.
The Remuneration Committee recognises that a new
Executive Director may forfeit remuneration as a result of
leaving a previous employer and the Committee will consider
mitigating that loss or part of that loss by making a buyout
award in addition to the remuneration outlined above. The
Committee will consider any relevant factors including any
performance conditions attached to any previous incentive
arrangements and the likelihood of these conditions being
met and will take reasonable steps to ensure that any
payment is at an appropriate level.
When recruiting a new Non-executive Director, fees will be
in line with the prevailing fee schedule paid to other Board
members and Non-executive Directors at that time.
Executive shareholding policy
Any new Executive Director will be encouraged to build a
shareholding with a value of at least 150% of base salary,
for example through the use of the Executive Directors’
Bonus Scheme and LTIP scheme, within a reasonable time
of being appointed.
At the end of the appointment, an Executive Director would
need to retain a shareholding with a value of at least 150%
of base salary previously built up through awards under the
Group’s remuneration schemes (but excluding any shares
bought for cash). Half of this shareholding must be held for
a period of one year and the other half held for a period of
two years.
Regulation
We continue to review our Remuneration Policy in line
with regulatory changes and good practice and to ensure
compliance with the principles of the Remuneration Code of
the UK financial services regulator, as applicable to the Group.
In particular, we have reviewed our Remuneration Policy in
line with the Investment Firms Prudential Regulation and
as a non-SNI firm have implemented the basic and standard
remuneration requirements.
Record plc
Annual Report 2023
83
Remuneration report continued
Remuneration Policy – illustrations
The charts below show the lowest, highest and average remuneration for the CEO and CFO over the past three years. Fixed
remuneration is comprised of salary, pension contributions, other benefits and any cash alternative. Variable remuneration
comprises bonus, including cash and share payments, as well as any gains on share options.
As variable remuneration is not capped at the individual level, we have used the three-year average, highest and lowest
remuneration as an indication of the Executive Director’s earnings potential. Future remuneration will be determined based
on profitability and performance as described in the Remuneration Policy.
Leslie Hill (as CEO)
Minimum
100%
£760,924
3-year
low
3-year
high
3-year
average
41%
59%
£1,270,178
25%
30%
75%
£3,001,957
70%
£2,222,439
£
0
500k
1,000k
1,500k
2,000k
2,500k
3,000k
3,500k
Steve Cullen (as CFO)
Minimum
100%
£179,124
3-year
low
3-year
high
3-year
average
70%
30%
£214,527
41%
53%
59%
£407,528
Key:
47%
£293,405
Fixed
Variable
£
0
50k
100k
150k
200k
250k
300k
350k
400k
450k
The above charts exclude the value
of options granted to Directors.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
84
Record plc
Annual Report 2023
Remuneration report continued
Annual report on remuneration
This part of the report has been prepared in accordance with Schedule 8 of the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (as amended), and relevant sections of the Listing Rules. The information on pages
84 to 90 has been audited, where required, under the regulations and is indicated as audited information where applicable.
Directors’ remuneration as a single figure (audited information)
The remuneration of the Directors for the year ended 31 March 2023 is detailed below together with their remuneration for the
previous year.
Executive Directors
Salaries and fees
Benefits1
Pensions2
Total fixed pay
Short-term incentive (Bonus – cash)
Short-term incentive (Bonus – shares)3
Share option gains
Total variable pay
Total
Leslie Hill
2023
£
2022
£
Steve Cullen
2023
£
2022
£
682,500
650,000
150,147
136,496
3,349
75,075
2,974
71,500
1,524
16,516
1,397
15,015
760,924
724,474
168,187
152,908
1,469,174
1,113,806
148,325
734,586
556,903
37,273
—
2,241,033
1,670,709
3,001,957
2,395,183
74,162
16,854
239,341
407,528
70,167
35,084
—
105,251
258,159
Neil Record
David Morrison
(appointed
1 March 2023)
Tim Edwards
Matt Hotson
(appointed
30 July 2021)
Krystyna Nowak
(appointed
16 September 2021)
Non-executive Directors
2023
£
2022
£
2023
£
2022
£
2023
£
2022
£
2023
£
2022
£
2023
£
2022
£
Salaries and fees
85,357
81,293
10,000
Benefits1
Pensions2
Total
3,876
3,453
9,389
8,942
—
—
98,622
93,688
10,000
—
—
—
—
57,750
53,287
52,500
33,526
52,500
27,115
—
—
59
—
—
—
—
—
—
—
—
—
57,750
53,346
52,500
33,526
52,500
27,115
1. This value includes, medical benefits, payments made in lieu of medical benefits, overtime payments and reimbursement of taxable travel expenses.
2. This includes payments made in lieu of pension contributions.
3. Short-term incentive payments are subject to individual performance conditions summarised in the objectives table. The shares vest immediately but are subject to lock-up
restrictions and are calculated based on the overall profitability of the Group.
Payments for loss of office and payments made to former Directors
Bob Noyen left the Board of Directors on 4 February 2021 and left employment on 31 March 2021. To assist with the transition
and maintenance of client relationships, Bob agreed to provide consultancy support to the Group. Payments in respect of this
consultancy support totalled £46,738 in the year to 31 March 2023 (31 March 2022: £357,044).
Pensions (audited information)
Executive Directors are entitled to join the Group Personal Pension Scheme. This is a defined contribution plan and for the
financial year ended 31 March 2023, the Group made contributions of 11% of each Director’s salary, which could either be paid
into the Group Personal Pension Scheme, taken as cash or a combination of the two.
All Directors who make personal contributions into the Company pension scheme via salary sacrifice receive an amount
equivalent to the employer’s national insurance saved by the Company into their pension as an additional contribution.
The employer pension contributions for the financial years ended 31 March 2022 and 31 March 2023 are detailed in the tables
on page 117.
Executive Directors’ Bonus Scheme payments
The Executive Directors’ Bonus Scheme is the annual short-term variable remuneration structure that the CEO and CFO
participate in. The Executive Directors’ bonus pool is determined as follows:
• Financial (75%). The Remuneration Committee will consider the firm’s financial performance and, specifically, delivery of
operating profit targets for the year under the Group’s three-year plan.
• Non-financial (25%). The Remuneration Committee will assess strategic progress made during the year and will focus
specifically on progress in product diversification, technology modernisation and succession planning.
The overall performance against these criteria for the year is summarised in tables for Leslie Hill and Steve Cullen below.
The Remuneration Committee also receives reports from the Head of Compliance regarding any legal or compliance issues
relevant to the award.
Record plc
Annual Report 2023
85
Remuneration report continued
Leslie Hill
Objectives
Financial
Operating profit
Deliver operating profit, pre-bonuses, of £21.5 million.
Outcomes
Operating profit, pre-bonuses, was £22.1 million.
Non-financial
Product diversification
Diversify the Group’s products from reliance on
Passive and Dynamic Hedging to a broader set of
non-correlated investment products.
As well as growing the currency hedging side of the business, this
year has seen significant progress with Record Asset Management.
We have gained our BaFin licence and have launched our Luxembourg
fund structure, partnering with specialist asset managers to provide
multi-asset funds for clients.
Modernisation
Continue to improve our infrastructure and have the
technology tools to support the growth in business,
while producing more secure and efficient systems.
Progress is being made with Record Digital and partnerships are
being built to deliver diversifying strategies to our clients. In addition,
we have invested in some early-stage ventures.
Our Emerging Market Sustainable Finance Fund has ambitious
growth plans and a dedicated team.
The Group infrastructure has been improved, with a move to
hybrid cloud and on-premises infrastructure and improved
security and control.
Microsoft Azure, Power BI and Xceptor have all been implemented
to improve our processes and efficiency.
The R-Platform has been developed and launched shortly following
the year end.
Our new Reporting suite has been designed and is being rolled out.
Succession
Put in place robust succession plans for plc Board
level roles.
Neil Record is stepping down at the 2023 AGM and his successor,
David Morrison, has been appointed. David has joined the Board as
Chair-elect and will assume Chair responsibilities in August 2023.
Leslie Hill has been succeeded by Jan Witte as CEO of the UK
regulated subsidiary, Record Currency Management Limited,
effective from 1 May 2023.
New partnerships are being developed with potential future
business leaders.
Outcomes
Operating profit, pre-bonuses, was £22.1 million
Growth of the currency business alongside significant progress with
Record Asset Management, Record Digital Asset Ventures and the
Emerging Markets Sustainable Finance Fund
Steve Cullen
Objectives
Financial
Operating profit
Deliver operating profit, pre-bonuses, of £21.5 million
Non-financial
Product diversification
Diversify the Group’s products from reliance on
Passive and Dynamic Hedging to a broader set of
non-correlated investment products
Modernisation
Modernise accounting systems to support business
growth
Developed accounting systems for the wider group, designed
processes for the re-charging of central costs
Succession
Strengthen the finance team
Grown a robust team culture, hired talent into team and increased
responsibilities of team members
Award:
The full Executive Directors’ bonus pool was agreed by the Remuneration Committee for the delivery of both financial and
non-financial metrics. The pool was distributed to Leslie Hill and Steve Cullen based on their contribution.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
86
Record plc
Annual Report 2023
Remuneration report continued
Annual report on remuneration continued
Directors’ share options and share awards (audited information)
During the financial year ended 31 March 2023 no option awards were made to the Executive Directors.
All of the Executive Directors have previously been awarded share options and the table below sets out details of Executive
Directors’ outstanding share option awards, which may vest on an annual basis over three, four and five years subject to
continued service and performance conditions. The table also sets out any options that have lapsed or been exercised.
Name
Date of grant
Total
options at
1 April
2022
Options
granted
in period
Leslie Hill
26/01/18
93,334
21/08/19
575,000
Steve Cullen
26/01/18
41,668
21/08/19
260,000
—
—
—
—
Options
lapsed
in period
(93,334)
Options
exercised
in period
—
Total
options at
31 March
2023
Exercise
price
Earliest
exercise
Latest
exercise
—
43.5p 26/01/2022 25/01/2023
(95,833)
(95,834)
383,333
31.1p 21/08/2022 20/08/2025
(41,668)
—
—
43.5p 26/01/2022 25/01/2023
(43,333)
(43,334)
173,333
31.1p 21/08/2022 20/08/2025
The outstanding share options above vest subject to performance conditions, which are detailed on page 133.
Leslie Hill had a gain on share options of £37,273 and Steve Cullen had a gain on share options of £16,854 in the year ended
31 March 2023.
Options granted to Executive Directors vest on an annual basis (in years three, four and five) and vesting is subject to
Record’s average annualised EPS growth over the relevant period since grant as follows:
Record’s annualised EPS growth over the period from grant to vesting
>RPI growth + 13%
>RPI growth + 10%, =RPI growth + 7%, =RPI growth + 4%, = 3 months
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Corporation tax liabilities
Provisions
Lease liabilities
Derivative financial liabilities
Total current liabilities
Non‑current liabilities
Provisions
Lease liabilities
Total non‑current liabilities
Total net assets
Equity
Issued share capital
Share premium account
Capital redemption reserve
Retained earnings
Total equity
1. See note 30 for details of the reclassification resulting in the restatement of prior year.
Approved by the Board on 29 June 2023 and signed on its behalf by:
Neil Record
Chairman
Steve Cullen
Chief Financial Officer
Company registered number: 1927640
The notes on pages 113 to 145 are an integral part of these consolidated financial statements.
Note
11
12
13
14
15
16
17
18
18
19
19
12
17
20
12
21
2023
£’000
1,390
1,011
377
4,901
134
7,813
14,373
54
4,549
9,948
28,924
36,737
(6,011)
(1,329)
—
(285)
(5)
Restated1
2022
£’000
562
1,421
401
3,447
253
6,084
9,883
—
13,913
3,345
27,141
33,225
(4,721)
(924)
(75)
(366)
(124)
(7,630)
(6,210)
(122)
(694)
(816)
(125)
(960)
(1,085)
28,291
25,930
50
1,809
26
26,406
28,291
50
1,809
26
24,045
25,930
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
108
Record plc
Annual Report 2023
Consolidated statement of changes in equity
Year ended 31 March 2023
Called‑up
share capital
£’000
Note
As at 1 April 2022
Profit and total comprehensive
income for the year
Dividends paid
9
Own shares acquired by EBT
Release of shares held by EBT
Tax on share-based payments
Share-based payment reserve
movement
Transactions with shareholders
As at 31 March 2023
Year ended 31 March 2022
50
—
—
—
—
—
—
—
50
Called‑up
share capital
£’000
Note
As at 1 April 2021
Restatement of release of shares
held by EBT
Restated balance as at 1 April 2021
Profit and total comprehensive
income for the year
Dividends paid
Own shares acquired by EBT
Restatement of release of shares
held by EBT
Restatement of share-based
payment reserve movement
Transactions with shareholders
Restated balance as at 31 March 2022
30
9
30
30
50
—
50
—
—
—
—
—
—
50
Share
premium
account
£’000
1,809
Capital
redemption
reserve
£’000
Equity
attributable to
equity holders
of the parent
£’000
Retained
earnings
£’000
Total
equity
£’000
26
24,045
25,930
25,930
—
—
—
—
—
—
—
1,809
Share
premium
account
£’000
2,418
(609)
1,809
—
—
—
—
—
—
1,809
—
—
—
—
—
—
—
26
11,339
(9,095)
(3,572)
2,268
300
11,339
(9,095)
(3,572)
2,268
300
11,339
(9,095)
(3,572)
2,268
300
1,121
1,121
1,121
(8,978)
(8,978)
(8,978)
26,406
28,291
28,291
Capital
redemption
reserve
£’000
26
—
26
—
—
—
—
—
—
26
Equity
attributable to
equity holders
of the parent
£’000
Total
equity
£’000
26,799
26,799
Retained
earnings
£’000
24,305
609
—
—
24,914
26,799
26,799
8,631
(6,512)
8,631
(6,512)
8,631
(6,512)
(5,807)
(5,807)
(5,807)
1,838
1,838
1,838
981
981
981
(9,500)
(9,500)
(9,500)
24,045
25,930
25,930
The notes on pages 113 to 145 are an integral part of these consolidated financial statements.
Record plc
Annual Report 2023
109
Consolidated statement of cash flows
Year ended 31 March 2023
Profit after tax
Adjustments for:
Depreciation of right-of-use assets
Depreciation of property, plant and equipment
Amortisation of intangible assets
Loss on asset disposals
Share-based payments
Decrease in other non-cash items1
Finance income
Finance expense
Tax expense
Changes in working capital
(Increase) in receivables
Increase in payables
(Decrease) in provisions
Cash inflow from operating activities
Corporation tax paid
Net cash inflow from operating activities
Purchase of intangible assets
Purchase of property, plant and equipment
Purchase of investments
Payment to seed fund holders
Redemption of bonds
Redemption of investments
Purchase/(disposal) of money market instruments with maturity > 3 months
Interest received
Net cash inflow/(outflow) from investing activities
Cash flow from financing activities
Lease principal payments
Lease interest payments
Purchase of own shares
Dividends paid to equity shareholders
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents in the year
Exchange gains
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Closing cash and cash equivalents consist of:
Cash
Cash equivalents
Cash and cash equivalents
Note
12
13
11
2023
£’000
11,339
2022
£’000
8,631
375
285
135
11
916
1,780
(181)
55
489
357
192
—
559
877
(44)
23
7
3,259
2,225
(4,490)
1,290
(78)
14,696
(2,433)
12,263
(964)
(272)
(3,570)
—
1,607
881
9,363
181
7,226
(315)
(55)
(3,572)
(9,095)
(13,037)
6,452
151
3,345
9,948
6,405
3,543
9,948
(1,877)
1,296
—
12,728
(1,373)
11,355
(334)
(75)
(1,773)
(1,808)
1,462
—
(983)
44
(3,467)
(540)
(17)
(4,462)
(6,512)
(11,531)
(3,643)
141
6,847
3,345
3,345
—
3,345
11
13
12
12
9
18
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 on pages 113 to 145 are an integral part of these consolidated financial statements.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
110
Record plc
Annual Report 2023
Company statement of financial position
As at 31 March 2023
Non‑current assets
Right-of-use assets
Property, plant and equipment
Investments
Deferred tax
Total non‑current assets
Current assets
Corporation tax
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Total current liabilities
Non‑current liabilities
Lease liabilities
Deferred tax liabilities
Provisions
Total non‑current liabilities
Total net assets
Equity
Issued share capital
Share premium account
Capital redemption reserve
Retained earnings
Total equity
Note
12
14
16
18
19
12
12
20
21
2023
£’000
871
99
9,062
—
2022
£’000
1,232
—
5,029
1
10,032
6,262
16
2,428
213
2,657
12,689
(4,955)
(251)
—
3
3,522
43
3,568
9,830
(4,161)
(326)
(75)
(5,206)
(4,562)
(583)
(11)
(122)
(716)
(812)
—
(125)
(937)
6,767
4,331
50
1,809
26
4,882
6,767
50
1,809
26
2,446
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 and signed on its behalf by:
Neil Record
Chairman
Steve Cullen
Chief Financial Officer
Company registered number: 1927640
The notes on pages 113 to 145 are an integral part of these consolidated financial statements.
Record plc
Annual Report 2023
111
Company statement of changes in equity
Year ended 31 March 2023
As at 1 April 2022
Profit and total comprehensive income for the year
Dividends paid
Share option reserve movement
Transactions with shareholders
As at 31 March 2023
Year ended 31 March 2022
As at 1 April 2021
Profit and total comprehensive income for the year
Dividends paid
Share option reserve movement
Transactions with shareholders
As at 31 March 2022
Called‑up
share capital
£’000
Note
9
50
—
—
—
—
50
Called‑up
share capital
£’000
Note
9
50
—
—
—
—
50
Share
premium
account
£’000
1,809
—
—
—
—
1,809
Share
premium
account
£’000
1,809
—
—
—
—
1,809
Capital
redemption
reserve
£’000
26
—
—
—
—
26
Capital
redemption
reserve
£’000
26
—
—
—
—
26
Retained
earnings
£’000
2,446
10,615
Total
shareholders’
equity
£’000
4,331
10,615
(9,095)
(9,095)
916
(8,179)
4,882
916
(8,179)
6,767
Retained
earnings
£’000
3,843
4,559
Total
shareholders’
equity
£’000
5,728
4,559
(6,512)
(6,512)
556
(5,956)
2,446
556
(5,956)
4,331
The notes on pages 113 to 145 are an integral part of these consolidated financial statements.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
112
Record plc
Annual Report 2023
Company statement of cash flows
Year ended 31 March 2023
Profit after tax
Adjustments for:
Depreciation of right-of-use assets
Depreciation of property, plant and equipment
Decrease/(Increase) in other non-cash items2
Finance income
Finance expense
Tax expense/(income)
Dividends received from subsidiaries
Changes in working capital
Decrease/(Increase) in receivables
Increase in payables
(Decrease) in provisions
Cash inflow from operating activities
Corporation taxes (paid)/received
Net cash inflow from operating activities
Cash flow from investing activities
Dividends received
Purchase of property, plant and equipment
Investment in subsidiaries
Investment in equity reserve of subsidiary
Purchase of investments
Payments to seed fund holders
Interest received
Net cash inflow from investing activities
Net cash flow from financing activities
Lease principal payments
Lease interest payments
Dividends paid to equity shareholders
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents in the year
FX revaluation
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Closing cash and cash equivalents consist of:
Cash
Cash and cash equivalents
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 on pages 113 to 145 are an integral part of these consolidated financial statements.
2023
£’000
10,615
Restated1
2022
£’000
4,559
338
17
(155)
(1)
43
5
453
—
45
—
16
(19)
(10,500)
(4,600)
1,094
794
(78)
2,172
(6)
2,166
(2,134)
2,470
—
790
37
827
10,500
4,600
(116)
—
(1,095)
(1,869)
—
1
7,421
(280)
(43)
(9,095)
(9,418)
170
—
43
213
213
213
—
(325)
—
—
1,798
—
6,073
(502)
(16)
(6,512)
(7,030)
(130)
—
173
43
43
43
Note
12
12
12
18
Record plc
Annual Report 2023
113
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.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
114
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
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.
1. Accounting policies continued
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.
Record plc
Annual Report 2023
115
Notes to the financial statements for the year ended 31 March 2023 continued
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 on page 119. 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. Further information
on the Group’s operations and principal activities is provided
in the Business model section from page 10. 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.
Revenue by product type
Management fees
Passive Hedging
Dynamic Hedging
Currency for Return
Multi-product
Total management fee income
Performance fee income
Other services income
Total revenue from contracts with customers
2023
£’000
2022
£’000
12,912
12,013
6,789
6,584
11,768
10,020
5,513
6,782
38,298
34,083
5,805
586
499
570
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.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
116
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
4. Revenue continued
Revenue recognition continued
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.
Revenue by geographical region
Management and performance fee income
UK
US
Switzerland
Europe (excluding UK and Switzerland)
Other
Total revenue
2023
£’000
2022
£’000
2,545
14,179
16,985
9,339
1,641
44,689
2,775
13,049
10,877
6,926
1,525
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):
Staff costs
Other staff-related costs
IT and technology
Professional fees
Occupancy
Depreciation of property, plant and equipment
Depreciation of leased property
Amortisation of intangibles
Auditor fees:
Fees payable to the Group’s auditor for the audit of the Company’s annual accounts
Fees payable to the Group’s auditor for the audit of subsidiary undertakings
Auditor fees total
Fees payable to the Group’s auditor and its associates for other services:
Audit-related assurance services required by law or regulation
Other non-audit services
Loss on forward FX contracts held to hedge cash flow
Loss on derivative financial instruments held by seed funds
Other exchange losses/(gains)
Investment losses/(gains)
2023
£’000
20,412
1,545
3,582
1,775
1,111
285
375
135
134
191
325
6
15
800
—
(289)
(218)
2022
£’000
16,479
1,352
2,380
1,139
668
357
489
192
72
103
175
5
12
467
42
(141)
4
Record plc
Annual Report 2023
117
Notes to the financial statements for the year ended 31 March 2023 continued
6. Staff costs
The average number of employees, including Directors, employed by the Group during the year was:
Corporate
Client relationships
Investment research
Operations
Risk management
Support
Annual average
The aggregate costs of the above employees, including Directors, were as follows:
Wages and salaries
Social security costs
Pension costs
Other employment benefit costs
Aggregate staff costs
2023
2022
6
13
18
31
5
15
88
2023
£’000
14,540
2,295
686
2,891
6
14
16
24
5
17
82
2022
£’000
11,931
1,758
635
2,155
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.
UK current year charge
Overseas taxes
Prior year adjustments
Current tax charge
Origination and reversal of temporary differences
Prior year adjustment
Impact of change in tax rate for deferred tax
Total deferred tax
Tax on profit on ordinary activities
2023
£’000
2,961
64
175
3,200
76
(17)
—
59
2022
£’000
2,006
56
(88)
1,974
(12)
240
23
251
3,259
2,225
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
118
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
7. Taxation – Group continued
The total charge for the year can be reconciled to the accounting profit as follows:
Profit before taxation
Taxation at the standard rate of tax in the UK of 19% (2022: 19%)
Tax effects of:
Other disallowable expenses and non-taxable income
Deferred tax asset not recognised on start-up entities
Higher tax rates on subsidiary undertakings
Prior year adjustment
Change in tax rates
Total tax expense
The tax expense comprises:
Current tax expense
Deferred tax expense
Total tax expense
2023
£’000
14,598
2,774
2022
£’000
10,856
2,062
164
146
15
160
—
(37)
—
15
162
23
3,259
2,225
3,200
59
3,259
1,974
251
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.
Weighted average number of shares used in calculation of basic earnings per share
Effect of potential dilutive ordinary shares – share options
Weighted average number of shares used in calculation of diluted earnings per share
Basic earnings per share
Diluted earnings per share
2023
£’000
2022
£’000
190,483,365 191,068,307
4,830,186
6,230,794
195,313,551
197,299,101
pence
5.95
5.81
pence
4.52
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.
Record plc
Annual Report 2023
119
Notes to the financial statements for the year ended 31 March 2023 continued
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:
2023
Cost
At 1 April 2022
Additions
Disposals
At 31 March 2023
Amortisation
At 1 April 2022
Charge for the year
Disposals
At 31 March 2023
Net book amounts
At 31 March 2023
At 1 April 2022
Software
£’000
Total
£’000
1,475
964
(119)
1,475
964
(119)
2,320
2,320
913
135
(118)
930
913
135
(118)
930
1,390
562
1,390
562
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
120
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
11. Intangible assets continued
2022
Cost
At 1 April 2021
Additions
At 31 March 2022
Amortisation
At 1 April 2021
Charge for the year
At 31 March 2022
Net book amounts
At 31 March 2022
At 1 April 2021
Software
£’000
1,141
334
1,475
721
192
913
562
420
Total
£’000
1,141
334
1,475
721
192
913
562
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.
Record plc
Annual Report 2023
121
Notes to the financial statements for the year ended 31 March 2023 continued
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
Year ended 31 March 2023
Net book value on transition at 1 April 2022
Valuation adjustment on lease modification
Depreciation
Net book value at 31 March 2023
Year ended 31 March 2022
Net book value at 1 April 2021
Addition
Depreciation
Net book value at 31 March 2022
Lease liabilities
Year ended 31 March 2023
Current
Non-current
Total lease liabilities
At 1 April 2022
Additions
Interest expense
Lease - principal payments
Lease - interest payments
Valuation adjustment on lease modification
Foreign exchange movements
At 31 March 2023
Year ended 31 March 2022
Current
Non-current
Total lease liabilities
At 1 April 2021
Additions
Interest expense
Lease payments
Lease interest payments
Foreign exchange movements
At 31 March 2022
Group
£’000
1,421
(35)
(375)
1,011
Group
£’000
684
1,226
(489)
1,421
Group
£’000
285
694
979
Group
£’000
1,326
—
55
(315)
(55)
(35)
3
979
Group
£’000
366
960
1,326
Group
£’000
638
1,226
17
(540)
(17)
2
Company
£’000
1,232
(23)
(338)
871
Company
£’000
642
1,043
(453)
1,232
Company
£’000
251
583
834
Company
£’000
1,138
—
41
(280)
(43)
(22)
—
834
Company
£’000
326
812
1,138
Company
£’000
597
1,042
16
(501)
(16)
—
1,326
1,138
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
122
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
12. Leases continued
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
Within 1 year
1-2 years
2-3 years
After 3 years
Total lease liability before discounting
Group
£’000
320
320
320
85
1,045
Company
£’000
280
280
280
47
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:
2023
Cost
At 1 April 2022
Additions
Disposals
At 31 March 2023
Depreciation
At 1 April 2022
Charge for the year
Disposals
At 31 March 2023
Net book amounts
At 31 March 2023
At 1 April 2022
Leasehold
improvements
£’000
Computer
equipment
£’000
Fixtures
and fittings
£’000
693
116
(33)
776
642
68
(33)
677
99
51
1,056
148
(181)
1,023
718
204
(170)
752
271
338
293
8
(70)
231
281
13
(70)
224
7
12
Total
£’000
2,042
272
(284)
2,030
1,641
285
(273)
1,653
377
401
Record plc
Annual Report 2023
123
Notes to the financial statements for the year ended 31 March 2023 continued
2022
Cost
At 1 April 2021
Additions
Disposals
At 31 March 2022
Depreciation
At 1 April 2021
Charge for the year
Disposals
At 31 March 2022
Net book amounts
At 31 March 2022
At 1 April 2021
Leasehold
improvements
£’000
Computer
equipment
£’000
Fixtures
and fittings
£’000
693
—
—
693
520
122
—
642
51
173
983
73
—
1,056
515
203
—
718
338
468
305
2
(14)
293
263
32
(14)
281
12
42
The Group’s tangible non-current assets are located predominantly in the UK.
14. Investments
Investment in subsidiaries at cost
Capitalised investment in respect of share-based payments
Investment in equity reserve of subsidiary
Investment in funds
Investment in impact bonds
Other investments
Total direct investments
Group
2023
£’000
—
—
—
2,530
770
1,601
4,901
2022
£’000
—
—
—
1,070
2,177
200
3,447
Company
2023
£’000
2,069
2,932
1,095
1,965
—
1,001
9,062
Total
£’000
1,981
75
(14)
2,042
1,298
357
(14)
1,641
401
683
2022
£’000
2,069
2,018
—
942
—
—
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).
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
124
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
14. Investments continued
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.
Investment in subsidiaries (at cost)
Record Currency Management Limited
Record Group Services Limited
Record Portfolio Management Limited
Record Currency Management (US) Inc.
Record Currency Management (Switzerland) GmbH
Record Digital Asset Ventures Limited
Record Asset Management GmbH
Record Fund Management Limited
N P Record Trustees Limited
Total investment in subsidiaries (at cost)
Capitalised investment in respect of share‑based payments
Record Group Services Limited
Record Currency Management (US) Inc.
Record Currency Management (Switzerland) GmbH
Total capitalised investment in respect of share‑based payments
Total investment in subsidiaries
Particulars of subsidiary undertakings
2023
£’000
2022
£’000
10
10
10
—
16
10
10
10
—
16
2,000
2,000
23
—
—
23
—
—
2,069
2,069
2,530
89
316
2,935
5,004
1,801
89
129
2,019
4,088
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
Record Fund Management Limited
N P Record Trustees Limited
Dormant
Dormant
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.
Record plc
Annual Report 2023
125
Notes to the financial statements for the year ended 31 March 2023 continued
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.
Opening balance deferred tax asset/(liability)
Current year movement
Prior year adjustment
Deferred tax in Equity
Closing balance deferred tax asset/(liability)
The deferred tax asset consists of the tax effect of temporary differences in respect of:
Deferred tax allowance on unvested share options and LTIP awards
Excess of taxation allowances over depreciation on fixed assets
Total
2023
£’000
253
(72)
14
(61)
134
2023
£’000
366
(232)
134
2022
£’000
212
(251)
292
253
2022
£’000
393
(140)
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.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
126
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
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:
Trade receivables
Accrued income
Other receivables
Prepayments
Total
Group
Company
2023
£’000
10,185
1,743
685
1,760
14,373
2022
£’000
8,231
25
497
1,130
9,883
2023
£’000
1,538
—
26
864
2,428
2022
£’000
3,441
—
38
43
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.
Derivative financial assets
Forward foreign exchange contracts held to hedge non-sterling-based assets
Forward foreign exchange contracts held for trading
Total
Derivative financial liabilities
Forward foreign exchange contracts held to hedge non-sterling-based assets
Forward foreign exchange contracts held for trading
Total
2023
£’000
31
23
54
2023
£’000
(5)
—
(5)
2022
£’000
—
—
—
2022
£’000
(15)
(109)
(124)
Record plc
Annual Report 2023
127
Notes to the financial statements for the year ended 31 March 2023 continued
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:
Derivative financial instruments held to hedge non‑sterling‑based assets
Net loss on forward foreign exchange contracts at fair value through profit or loss
2023
£’000
800
2022
£’000
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:
Derivative financial instruments held to hedge non‑sterling‑based assets
Net loss on forward foreign exchange contracts and foreign exchange options at fair value
through profit or loss
2023
£’000
—
2022
£’000
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.
Assets managed as cash
Bank deposits with maturities > 3 months
Money market instruments with maturities > 3 months
Cash
Cash equivalents
Cash and cash equivalents
Total assets managed as cash
Group
Company
2023
£’000
4,549
4,549
6,405
3,543
9,948
14,497
2022
£’000
13,913
13,913
3,345
—
3,345
17,258
2023
£’000
—
—
213
—
213
213
2022
£’000
—
—
43
—
43
43
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
128
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
18. Cash management continued
Cash and cash equivalents
Cash and cash equivalents – sterling
Cash and cash equivalents – USD
Cash and cash equivalents – CHF
Cash and cash equivalents – other currencies
Total cash and cash equivalents
Group
Company
2023
£’000
6,632
821
748
1,747
9,948
2022
£’000
1,169
450
318
1,408
3,345
2023
£’000
212
1
—
—
213
2022
£’000
43
—
—
—
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.
Trade and other payables
Trade payables
Amounts owed to Group undertakings
Other payables
Other tax and social security
Accruals
Total
Group
Company
2023
£’000
221
—
—
716
5,074
6,011
2022
£’000
478
—
16
619
3,608
4,721
2023
£’000
—
4,953
—
—
2
2022
£’000
—
4,155
—
—
6
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.
Current tax liabilities
Corporation tax
Group
Company
2023
£’000
1,329
2022
£’000
924
2023
£’000
—
2022
£’000
—
20. Provisions
The Group has provisions reflecting its contractual obligations connected to reaching the end of its contractual lease terms.
Provisions
Group
Company
2023
£’000
122
2022
£’000
200
2023
£’000
122
2022
£’000
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.
Record plc
Annual Report 2023
129
Notes to the financial statements for the year ended 31 March 2023 continued
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.
Authorised
Ordinary shares of 0.025p each
Called‑up, allotted and fully paid
Ordinary shares of 0.025p each
2023
2022
£’000
Number
£’000
Number
100 400,000,000
100 400,000,000
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.
Record plc shares held by EBT as at 31 March 2021
Adjustment for net purchases by EBT
Record plc shares held by EBT as at 31 March 2022
Adjustment for net purchases by EBT
Record plc shares held by EBT as at 31 March 2023
Number
6,296,657
3,335,374
9,632,031
(897,029)
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.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
130
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
22. Share-based payments continued
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.
Record plc
Annual Report 2023
131
Notes to the financial statements for the year ended 31 March 2023 continued
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:
Model input
Share price
Dividend yield
Exercise price
Expected volatility
Option life
Risk-free interest rate (%)
Weighted
average value
76.0p
7.21%
76.0p
48%
3 years
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).
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
132
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
22. Share-based payments continued
b. The Record plc Share Scheme continued
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:
Date of grant
26/01/18
26/01/18
26/01/18
26/01/18
29/03/19
29/03/19
21/08/19
18/03/20
21/09/20
25/01/21
09/03/21
13/08/21
13/08/21
13/08/21
13/05/22
13/05/22
29/06/22
29/06/22
02/08/22
03/08/22
27/01/23
27/01/23
At 1 April
2022
155,000
5,125
17,334
644,336
460,000
185,000
1,985,000
1,237,500
2,818,750
225,000
125,000
195,000
2,600,000
952,500
Granted
Exercised
Lapsed/
forfeited
At 31 March
2023
Earliest vesting
date
Latest vesting
date1
Exercise
price
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(155,000)
(5,125)
—
—
—
—
(17,334)
(644,336)
(460,000)
(92,500)
—
—
—
—
—
—
—
26/01/22
26/01/22
£0.4350
26/01/20
26/01/22
£0.4350
26/01/21
26/01/23
£0.4350
26/01/21
26/01/23
£0.4350
29/03/23
29/03/23
£0.2830
92,500
29/03/20
29/03/23
£0.2830
(330,836)
(330,832)
1,323,332
21/08/22
21/08/24
£0.3110
(475,000)
(1,106,250)
(75,000)
(31,250)
—
—
—
—
762,500
18/03/21
18/03/24
£0.28902
1,712,500
21/09/21
21/09/24
£0.3730
150,000
25/01/22
25/01/25
£0.49425
93,750
09/03/22
09/03/25
£0.63986
—
(35,000)
160,000
13/08/25
13/08/25
£0.85713
(650,000)
— 1,950,000
13/08/22
13/08/25
£0.4000
(226,875)
(45,000)
680,625
13/08/22
13/08/25
£0.85713
—
588,000
— 2,052,000
—
—
—
—
—
—
26,000
199,000
50,000
70,000
150,000
675,000
—
—
—
—
—
—
—
—
—
588,000
13/05/26
13/05/26
£0.698708
(75,000)
1,977,000
13/05/23
13/05/26
£0.698708
—
—
26,000
29/06/26
29/06/26
£0.729609
199,000
29/06/23
29/06/26
£0.729609
(50,000)
—
02/08/26
02/08/26
£0.717197
(50,000)
20,000
03/08/23
03/08/26
£0.717197
—
—
150,000
27/01/27
27/01/27
£0.972835
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).
Record plc
Annual Report 2023
133
Notes to the financial statements for the year ended 31 March 2023 continued
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.
Record’s average EPS growth
>RPI growth + 13%
>RPI growth + 10%, =RPI growth + 7%, =RPI growth + 4%, = 3 months
Cash and cash equivalents
Total financial assets
2023
£’000
10,185
1,743
685
54
4,549
9,948
27,164
2022
£’000
8,231
25
497
—
13,913
3,345
26,011
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
138
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
23. Financial risk management continued
Credit risk continued
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:
At 31 March 2023
Trade receivables
Accrued income
Total
At 31 March 2022
Trade receivables
Accrued income
Total
Carrying
amount
£’000
10,185
1,743
11,928
Carrying
amount
£’000
8,231
25
8,256
Neither
impaired nor
past due
£’000
0‑3 months
past due
£’000
More than
3 months
past due
£’000
9,775
1,743
11,518
97%
309
—
309
2%
101
—
101
1%
Neither
impaired nor
past due
£’000
0‑3 months
past due
£’000
More than
3 months
past due
£’000
8,231
25
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).
Record plc
Annual Report 2023
139
Notes to the financial statements for the year ended 31 March 2023 continued
Contractual maturity analysis for financial liabilities
At 31 March 2023
Trade payables
Accruals
Derivative financial liabilities
Total
At 31 March 2022
Trade payables
Accruals
Derivative financial liabilities
Total
Carrying
amount
£’000
221
5,074
5
5,300
Carrying
amount
£’000
478
3,608
124
4,210
Due or due
in less than
1 month
£’000
Due between
1 and
3 months
£’000
Due between
3 months
and 1 year
£’000
221
486
—
707
—
2,001
5
2,006
—
2,587
—
2,587
Due or due
in less than
1 month
£’000
Due between
1 and
3 months
£’000
Due between
3 months
and 1 year
£’000
318
302
7
627
29
1,503
117
1,649
131
1,803
—
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
At 31 March 2023
Financial assets
Trade receivables
Accrued income
Other receivables
Derivative financial assets at fair value through profit or loss
Money market instruments with maturities > 3 months
Cash and cash equivalents
Total financial assets
Financial liabilities
Trade payables
Accruals
Lease liability
Derivative financial liabilities at fair value through profit or loss
Total financial liabilities
Fixed rate
£’000
No
interest rate
£’000
—
—
—
—
4,549
9,948
10,185
1,743
685
54
—
—
Total
£’000
10,185
1,743
685
54
4,549
9,948
14,497
12,667
27,164
—
—
—
—
—
(221)
(221)
(5,074)
(5,074)
(979)
(5)
(979)
(5)
(6,279)
(6,279)
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
140
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
23. Financial risk management continued
Interest rate profiles continued
At 31 March 2022
Financial assets
Trade receivables
Accrued income
Other receivables
Money market instruments with maturities > 3 months
Cash and cash equivalents
Total financial assets
Financial liabilities
Trade payables
Accruals
Lease liability
Derivative financial liabilities at fair value through profit or loss
Total financial liabilities
Fixed rate
£’000
No
interest rate
£’000
Total
£’000
—
—
—
13,913
3,345
17,258
—
—
—
—
—
8,231
8,231
25
497
—
—
8,753
(478)
(3,608)
(1,326)
(124)
25
497
13,913
3,345
26,011
(478)
(3,608)
(1,326)
(124)
(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:
US dollar (USD)
Swiss franc (CHF)
Euro (EUR)
Canadian dollar (CAD)
Australian dollar (AUD)
Japanese yen (JPY)
Swedish krona (SEK)
Singapore dollar (SGD)
2023
2022
Local
currency
value
£’000
24,978
16,138
4,293
1,618
1,089
8,795
—
—
Value in
reporting
currency
£’000
20,869
14,223
3,748
1,014
612
54
—
—
Local
currency
value
£’000
23,949
12,460
4,135
1,626
1,029
4,824
36
4
Value in
reporting
currency
£’000
17,742
10,010
3,498
960
563
31
3
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.
Record plc
Annual Report 2023
141
Notes to the financial statements for the year ended 31 March 2023 continued
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.
Sterling weakening by 10% against the dollar
Sterling strengthening by 10% against the dollar
Sterling weakening by 10% against the Swiss franc
Sterling strengthening by 10% against the Swiss franc
Impact on profit after tax
for the year ended 31 March
Impact on total equity
as at 31 March
2023
£’000
1,000
(1,000)
755
(755)
2022
£’000
871
(871)
445
(445)
2023
£’000
1,000
(1,000)
755
(755)
2022
£’000
871
(871)
445
(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 on page 51.
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.
Loss of largest client
Impact on profit after tax
for the year ended 31 March
Impact on total equity
as at 31 March
2023
£’000
3,486
2022
£’000
2,594
2023
£’000
3,486
2022
£’000
2,594
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
142
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
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:
Financial assets at fair value through profit or loss
Impact bonds
Investment in funds
Other investments
Forward foreign exchange contracts held to hedge non-sterling assets
Financial liabilities at fair value through profit or loss
2023
£’000
770
2,530
1,601
54
Forward foreign exchange contracts held to hedge non-sterling assets
(5)
Level 1
£’000
770
1,077
1,001
—
—
Total
4,950
2,848
Financial assets at fair value through profit or loss
Impact bonds
Investment in funds
Other investments
Financial liabilities at fair value through profit or loss
Forward foreign exchange contracts used by seed funds
Other investments
Total
2022
£’000
2,177
1,070
200
(15)
(110)
Level 1
£’000
2,177
944
—
—
—
3,322
3,121
Level 2
£’000
Level 3
£’000
—
—
—
54
(5)
49
—
1,453
600
—
—
2,053
Level 2
£’000
Level 3
£’000
—
—
—
(15)
(110)
(125)
—
126
200
—
—
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.
Record plc
Annual Report 2023
143
Notes to the financial statements for the year ended 31 March 2023 continued
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
At 31 March 2023
Impact bonds
Investment in funds
Other investments
Trade and other receivables (excludes prepayments)
Money market instruments with maturities > 3 months
Cash and cash equivalents
Derivative financial assets at fair value through profit or loss
Trade payables
Accruals
Derivative financial liabilities at fair value through profit or loss
Total
At 31 March 2022
Impact bonds
Investment in funds
Other investments
Trade and other receivables (excludes prepayments)
Money market instruments with maturities > 3 months
Cash and cash equivalents
Trade payables
Accruals
Derivative financial liabilities at fair value through profit or loss
Note
14
14
14
16
18
18
17
19
19
17
Note
14
14
14
16
18
18
19
19
17
Assets at
amortised
cost
£’000
Financial
liabilities
measured at
amortised cost
£’000
Assets at
fair value
through
profit or loss
£’000
Liabilities at
fair value
through profit
or loss
£’000
—
—
—
12,613
4,549
10,757
—
—
—
—
—
—
—
—
—
—
—
(221)
(5,074)
—
770
2,530
1,601
—
—
—
54
—
—
—
27,919
(5,295)
4,955
—
—
—
—
—
—
—
—
—
(5)
(5)
Assets at
amortised
cost
£’000
Financial
liabilities
measured at
amortised cost
£’000
Assets at
fair value
through
profit or loss
£’000
Liabilities at
fair value
through profit
or loss
£’000
—
—
—
8,753
13,913
3,345
—
—
—
—
—
—
—
—
—
(478)
(3,608)
—
2,177
1,070
200
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(124)
(124)
Total
26,011
(4,086)
3,447
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
144
Record plc
Annual Report 2023
Notes to the financial statements for the year ended 31 March 2023 continued
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.
Amounts due to subsidiaries
Dividends received from subsidiaries
2023
£’000
(3,415)
10,500
2022
£’000
(714)
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
Short-term employee benefits
Post-employment benefits
Share-based payments
Total
2023
£’000
10,311
327
3,539
14,177
2022
£’000
8,457
330
2,467
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
Emoluments (excluding pension contribution)
Pension contribution (including payments made in lieu of pension contributions)
Total
2023
£’000
3,580
101
3,681
2022
£’000
2,809
96
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 on page 79.
Record plc
Annual Report 2023
145
Notes to the financial statements for the year ended 31 March 2023 continued
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:
Required regulatory capital
Other operating capital
Total capital
2023
£m
7.1
21.2
28.3
2022
£m
5.4
20.5
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 inline 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.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
146
Record plc
Annual Report 2023
Five year summary
Year ended 31 March
Management fees
Performance fees
Other revenue
Revenue
Cost of sales
Gross profit
Operating expenses
Other income/(expenditure)
Operating profit
Net interest
Profit before taxation
Taxation
Profit after taxation
Basic EPS (pence)
Ordinary dividend (pence)
Special dividend (pence)
Audited
2019
£’000
2020
£’000
2021
£’000
2022
£’000
2023
£’000
22,308
23,133
24,878
34,083
38,298
2,333
332
1,819
611
81
453
499
570
5,805
586
24,973
25,563
25,412
35,152
44,689
(385)
(255)
(399)
(219)
(37)
24,588
25,308
25,013
34,933
44,652
(16,704)
(17,741)
(18,934)
(23,726)
(29,888)
(8)
7,876
113
7,989
(1,559)
6,430
3.27
2.30
0.69
82
7,649
88
7,737
(1,365)
6,372
3.26
2.30
0.41
41
6,120
33
6,153
(802)
5,351
2.75
2.30
0.45
(372)
(293)
10,835
14,471
21
10,856
(2,225)
8,631
4.52
3.60
0.92
127
14,598
(3,259)
11,339
5.95
4.50
0.68
Record plc
Annual Report 2023
147
Information for shareholders
Record plc
Record plc is a public limited company incorporated in the UK.
Registered in England and Wales
Company No. 1927640
Dates for 2023 dividend
Ex-dividend date
Record date
Annual General Meeting
13 July 2023
14 July 2023
29 July 2023
Final dividend payment date
9 August 2023
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Further information about the Registrar is available on their
website www.linkgroup.eu
Registered office
Morgan House
Madeira Walk
Windsor
Berkshire
SL4 1EP
United Kingdom
Tel: +44 (0)1753 852 222
Fax: +44 (0)1753 852 224
Principal UK trading subsidiaries
Record Currency Management Limited
Registered in England and Wales
Company No. 1710736
Record Group Services Limited
Registered in England and Wales
Company No. 1927639
Both principal UK trading subsidiaries are based in Windsor.
Further information on Record plc can be found on the
Group’s website: www.recordfg.com
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
148
Record plc
Annual Report 2023
Definitions
“AIFMD”
“Articles”
“AUME”
“Board”
“bps”
“Companies Act”
“Company”
“$” or “dollars”
“EBT”
“EM”
“EPS”
“ESG”
“ETF”
“EU”
“FRB”
Alternative Investment Fund Managers Directive
The Articles of Association of the Company
Assets Under Management Equivalents
Company’s Board of Directors
Basis point = 100th of a per cent
Every statute (including any orders, regulations or other subordinate legislation made under it)
from time to time in force concerning companies in so far as it applies to the Company
Record plc
All references to dollars or $ symbol are to the currency of the US unless stated otherwise
Employee Benefit Trust
Emerging Markets
Earnings per share
Environmental, social and governance
Exchange traded fund
European Union
Forward Rate Bias
“Group” or “Record”
The Company and/or any one of its subsidiary undertakings
“IAS”
International Accounting Standards
“IFRS” or “IFRSs”
International Financial Reporting Standards
“IPO”
“KPI”
“KRI”
“LGPS”
Initial Public Offering
Key Performance Indicator
Key Risk Indicator
Local Government Pension Schemes
“London Stock Exchange”
London Stock Exchange plc
“MiFID”
“Official List”
“TIPS”
“US”
Markets in Financial Instruments Directive
The official list of the Financial Conduct Authority
US government treasury inflation protected securities
United States of America
AUME definition
The basis for measuring AUME differs for each product and is detailed below:
• Dynamic Hedging mandates – total amount of clients’ investment portfolios denominated in liquid foreign currencies,
and hence capable (under the terms of the relevant mandate) of being hedged.
• Passive Hedging mandates – the aggregate nominal amount of passive hedges actually outstanding in respect of
each client.
• Currency for Return mandates – the maximum aggregate nominal amount of outstanding forward contracts for each client.
• Multi-product mandates – the chargeable mandate size for each client.
• Cash – the total set aside by clients and managed and/or “equitised” using futures by Record.
The Group’s commitment to the environment is refl ected in this report, which has been printed on
Munken Polar Smooth, an FSC® certifi ed material. It also has EU Ecolabel, EMAS, ISO-14001 and PEFCTM
(PEFC/05-33-99) certifi cation. Arctic Paper Munkedals AB is one of the most environmentally-friendly
paper mills in the world and meets the requirements for FSC® Chain-of-Custody (“CoC”) certifi cation.
FSC® CoC certifi cation assures that products sold with an FSC® claim originate from well-managed
forests, controlled sources, and/or reclaimed materials in their supply chain. It confi rms that
throughout the production process there is: respect for human rights, adherence to all local applicable
timber legislation and no involvement in the destruction of high conservation areas. Arctic Paper
Munkedals’ Munkedal mill is committed to reducing its long-term environmental impact and has the
lowest water consumption per kilogram of paper in the entire industry, whilst the company’s energy
usage is within or below the EU’s Best Available Techniques.
This document was printed by Pureprint Group using its environmental print technology, with 100% of
dry waste diverted from landfi ll, minimising the impact of printing on the environment. The printer is a
CarbonNeutral® company and ISO 14001 registered.
Designed and produced by
www.lyonsbennett.com
Record plc
Morgan House
Madeira Walk
Windsor
Berkshire SL4 1EP
T: +44 (0)1753 852 222
marketing@recordfg.com
www.recordfg.com