Record Regulatory News (REC)

21 June 2017

This announcement is not for release, publication or distribution in whole or in part, into any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. Neither this announcement, nor the Circular, constitutes an offer to purchase, nor solicitation of an offer to sell, Ordinary Shares in any jurisdiction in which, or to or from any person to or from whom it is unlawful to make such offer or solicitation under applicable securities laws.

RECORD PLC

PROPOSED TENDER OFFER AND NOTICE OF GENERAL MEETING

Further to the change in capital policy announced on 16 June 2017 with the Final Results for the year ended 31 March 2017, Record plc ("Record" or "the Company"), the specialist currency manager, is pleased to announce a Tender Offer to return up to approximately £10 million to Shareholders via the purchase of a maximum of 22,326,475 Ordinary Shares representing a maximum of 10.0851 per cent of the entire issued share capital of the Company.

Under the Tender Offer, each Qualifying Shareholder is entitled to tender up to 10.0851 per cent of his or her shareholding at the Tender Price of £0.44790 per Ordinary Share, with the potential to tender a greater number of Ordinary Shares depending on the number of Ordinary Shares tendered by other Shareholders. The Tender Price represents the closing middle market quotation of an Ordinary Share on 20 June 2017, being the last practicable date prior to the publication of the Circular. The Tender Price has been adjusted for the final dividend and special dividend totalling £0.02085 for the year ended 31 March 2017 announced on 16 June 2017, as the Company's Ordinary Shares will be ex-dividend prior to completion of the Tender Offer. The Tender Offer is being made available to all Qualifying Shareholders who are on the Register as at 5.00 p.m. on 12 July 2017.

The Company requires the authority from Shareholders to purchase Ordinary Shares under the Tender Offer and this is being sought at a General Meeting which is to be held at 10 Snow Hill, London, EC1A 2AL at 3.00 p.m. on 14 July 2017. The Circular which sets out the formal terms and conditions of the Tender Offer and details of how Qualifying Shareholders will be able to participate in the Tender Offer is expected to be posted to Shareholders today. 

The Circular will be submitted to the National Storage Mechanism and will shortly be available for inspection at: www.morningstar.co.uk/uk/NSM. The Circular will also be available on the Company's website at: http://www.recordcm.com.

The Tender Offer is being made by Cenkos Securities plc ("Cenkos"), the Company's corporate broker, as principal, on the basis that all Ordinary Shares that it buys under the Tender Offer will be purchased from it by the Company and subsequently cancelled.

Further details of the Tender Offer are set out below and in the Circular. Capitalised terms used, but not defined in this announcement shall have the same meaning as set out in the Circular.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

Expected timetable of events

For further information, please contact:

Further details of the Tender Offer

1. Background to and reasons for the Tender Offer

Since the financial crisis of 2008 and 2009, the Board's focus has been on building a robust business by continuing to develop its diverse suite of currency-related products and strategies, by investing in the business's people and infrastructure, and by building a strong and liquid balance sheet and regulatory capital buffer.

Over this period, the yardstick for the Group's balance sheet has been broadly to hold excess capital equivalent to two years' worth of overheads. With net assets of £41.6 million at 31 March 2017, own cash (defined as Group assets managed as cash excluding non-controlling interests) of £29.2 million and a surplus over regulatory capital (adjusted for the final and special dividends for the year to 31 March 2017) of £23.1 million at the same date, and overheads of £11.7 million in the year to 31 March 2017, the current capital structure, with a surplus of just under 24 months, reflects this policy.

In the Group's results announced on 16 June 2017, Record reported its highest-ever assets under management equivalents, increased revenues and earnings, and further growth in revenue diversification, with revenues from passive hedging now covering all overheads excluding variable remuneration. Given this, the Board decided that conditions are now right for a change in the capital policy. The new policy will be to ensure retained capital is broadly equivalent to one year's worth of future estimated overheads (excluding variable remuneration), in addition to capital assessed as required for regulatory purposes, for working capital purposes and for investing in new opportunities for the business. This new policy will still ensure a significant capital buffer over regulatory requirements.

The Tender Offer is intended to provide an efficient way for the Board to reduce the Group's retained capital and return excess capital to shareholders. The Board has chosen to implement this return of capital by means of a Tender Offer in order that all Shareholders may elect whether or not to participate, and to do so on the same terms, based on their pro-rata shareholdings. Undertaking a Tender Offer at a fixed price may require authorisation from Shareholders in addition to that sought at the Company's previous Annual General Meeting, hence the Tender Offer Resolution to be put to the General Meeting.

The Company's Chairman, and largest Shareholder, Neil Record has irrevocably undertaken to fully participate in the Tender Offer with respect to his Basic Entitlement and has indicated his intention to tender an additional 8,017,632 Ordinary Shares. As a result Mr. Record's percentage of Ordinary Shares will not exceed its current level of 32.06% and may decline to a minimum of 27.06% following the Tender Offer.

Neil Record established the Company in 1983 and has made very significant contributions to its development since then. Mr. Record served as Chairman and Chief Executive Officer from the Company's admission to trading on the Main Market of the London Stock Exchange in 2007 until the appointment of his successor as Chief Executive Officer from 1 October 2010, from when he remained as Chairman. Mr. Record is a Non-executive Chairman, and holds all his Ordinary Shares directly in his own name.

Given these latter two facts, Mr. Record considers the Tender Offer and the potential to tender Ordinary Shares in addition to his Basic Entitlement represents an appropriate opportunity for him to reduce his overall holding of Ordinary Shares (subject to participation in the Tender Offer by other Qualifying Shareholders) whilst giving the opportunity to other Qualifying Shareholders to participate.

Mr. Record intends to continue as the Company's Chairman and to play an active role in supporting its management and overseeing the continued development of its business for the foreseeable future. No material changes to Mr. Record's involvement in the Group are anticipated as a result of the Tender Offer.

2. Details of the proposed Tender Offer

Subject to certain conditions (including the Tender Offer Resolution being passed at the General Meeting), the Tender Offer will be implemented by Cenkos, acting as principal, and through a subsequent Repurchase of the tendered Ordinary Shares from Cenkos by the Company, in both cases at the Tender Price. It is expected that Qualifying Shareholders who successfully tender their shares will receive payment for such shares on or about 24 July 2017.

To give effect to these arrangements, Cenkos has entered into a Purchase Agreement with the Company. The Company intends to cancel any Ordinary Shares repurchased in connection with the Tender Offer.

The Tender Offer will be open to all Shareholders on the Register on the Record Date, save for those who are Shareholders subject to the securities laws of a Restricted Jurisdiction (i.e., Qualifying Shareholders).

Qualifying Shareholders may participate in the Tender Offer by tendering either all or a proportion of their registered holdings of Ordinary Shares. Each Qualifying Shareholder will be entitled to sell their Basic Entitlement under the Tender Offer. The Tender Offer will also present tendering Qualifying Shareholders with an opportunity to sell an Individual Excess Tender to the extent that other Shareholders tender less than their pro rata entitlement.

The Tender Offer is subject to, amongst other things, the passing of the Tender Offer Resolution.

To the extent that any Shareholders have tendered less than their pro rata entitlement under the Tender Offer, Individual Excess Tenders will be accepted in proportion to the Total Excess Tenders so that the total number of Ordinary Shares purchased pursuant to the Tender Offer does not exceed 22,326,475. The process by which Individual Excess Tenders will be scaled back, if necessary, is described further in paragraph 2.18 of Part II of the Circular.

The Tender Offer will close at 1.00 p.m. on 12 July 2017 and tenders received after that time will not be accepted unless otherwise approved by Cenkos (with the consent of the Company).

The Tender Price for Ordinary Shares tendered by Qualifying Shareholders under the Tender Offer is £0.44790. This is equal to the Closing Price on 20 June (being £0.46875), adjusted for the final dividend and special dividend totalling £0.02085 per share payable to Shareholders on the register on 30 June 2017.

The Tender Offer will not affect the satisfaction or otherwise of the earnings per share related performance conditions to which all share options awarded to the Company's executive Directors under the Record plc Share Scheme are subject, since the terms of such options provide for earnings per share to be adjusted to take account of any capital reorganisation.

Further information relating to the Tender Offer is set out in Part II of the Circular.

3. Overseas Shareholders

The attention of Shareholders who are citizens, residents or nationals of countries outside the UK wishing to participate in the Tender Offer is drawn to paragraph 6 of Part II of the Circular.

4. Taxation

A summary of the tax consequences of the Tender Offer for UK resident Shareholders is set out in Part III of the Circular.

It should be noted that this refers to the current system of taxation. Shareholders are strongly advised to obtain independent tax advice regarding their own tax position.

5. The General Meeting

Notice of a General Meeting of the Company to be held at 10 Snow Hill, London, EC1A 2AL on 14 July 2017 at 3.00 p.m. is set out at the end of the Circular, together with a form of proxy for use at the meeting.

Whilst the Company has existing authority to purchase its own shares, pursuant to the Annual General Meeting held on 28 July 2016, the Company wishes to obtain fresh authority from Shareholders in connection with the proposed Tender Offer and Repurchase. The Tender Offer Resolution is subject to different parameters than the authority previously granted by Shareholders, including with respect to the aggregate number of Ordinary Shares that may be purchased and the price at which such Ordinary Shares may be acquired.

Each Shareholder registered on the Register at 5.00 p.m. on 12 July 2017 is entitled to vote on the resolution contained in the Notice of General Meeting (the "Tender Offer Resolution"). The Tender Offer Resolution is proposed as a special resolution. This means that, for the resolution to be passed, at least three‑quarters of the votes cast must be in favour.

6. Further information

On 20 June 2017 (being the last practicable date prior to the publication of the Circular) the issued share capital of the Company was 221,380,800 Ordinary Shares. The Company holds no treasury shares.

The Directors have entered into irrevocable undertakings, in respect of an aggregate number of 101,271,657 Ordinary Shares, to vote in favour of the Tender Offer Resolution at the General Meeting.

Shareholders' attention is drawn to the Terms and Conditions of the Tender Offer as set out in Part II of the Circular.

7. Recommendation

The Directors consider that the Tender Offer and the Tender Offer Resolution to be put to the General Meeting are in the best interests of the Company and its Shareholders as a whole. The Directors intend to vote in favour of the Tender Offer Resolution and unanimously recommend that Shareholders do as well.

The Directors are making no recommendation in relation to participation in the Tender Offer itself. Whether or not Qualifying Shareholders decide to tender their Ordinary Shares will depend, amongst other things, on their view of the Company's prospects and their own individual circumstances (including their own tax position).

Cenkos, which is authorised and regulated by the Financial Conduct Authority, is acting for the Company and for no one else in connection with the Tender Offer and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Cenkos or for affording advice in relation to the Tender Offer, the contents of this announcement or any transaction, arrangement or other matter referred to in the Circular.

Certain statements in this announcement may be forward-looking. Although the Company believes that the expectations reflected in these forward looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward looking statements.