TIDMREC
RNS Number : 3642W
Record PLC
23 April 2021
23 April 2021
RECORD PLC
('Record' or the 'Company')
FOURTH QUARTER TRADING UPDATE
Growth in AUME of 37% for the year, including net inflows of
US$9.7 billion
Record plc, the specialist currency and derivatives manager,
today announces a trading update for the three months ended 31
March 2021 ('Q4-2021' or the 'period').
FY-2021 Operational Highlights
-- Assets under management equivalents ('AUME') grew by 37% for
the 12 months to 31 March 2021 ('FY-2021') to US$80.1 billion.
-- Client numbers grew by +17 (24%) to 89 in FY-2021.
-- Diversified AUME net inflows in the year of US$2.1 billion
into Passive Hedging, and across our higher-margin Dynamic Hedging
(US$6.6 billion) and Multi-Product (US$1.0 billion) strategies.
-- New EM Sustainable Finance fund in the final stages of
development and expected to launch in the current quarter, further
diversifying Record's product offering and revenue streams.
Q4-2021 Operational Highlights
-- AUME grew by 7% over the quarter to US$80.1 billion as at 31 March 2021.
-- Net AUME inflows of US$4.9 billion in the quarter.
-- Client numbers increased by +10 over the quarter to 89.
-- Performance fees of GBP0.1 million were earned in the quarter.
Leslie Hill, Chief Executive of Record plc, commented :
"Our business has continued to grow and evolve in line with our
strategy of accelerated growth, planning for generational change
and adding value for our stakeholders.
"I am pleased to report Record's highest ever AUME, which ended
the year 37% higher than last year at US$80.1 billion, including
12-month net inflows of US$9.7 billion assisted by positive
movements in both markets and exchange rates of US$8.4 billion and
US$3.4 billion respectively. Whilst the growth to date has broadly
been across our core suite of currency products and services,
inflows into our higher-margin products including Dynamic Hedging
and Multi-Product have changed the revenue mix, reducing the
dominance of our lower-margin Passive Hedging products over which
we expect to see continued fee pressure in the future.
Rationalisation of our products continues where we see little or no
prospect of client demand, and consequently both our Dynamic Macro
Currency strategy and our Global Macro strategy were closed in the
quarter to focus those resources in areas where we anticipate
greater opportunities for future growth.
"Good progress has been made on developing the new EM
Sustainable Finance fund, which we now expect to launch in the
current quarter, slightly later than originally planned, with an
initial size anticipated to be between USD 200 million and USD 500
million. This product has been developed in collaboration with one
of the largest wealth managers in Switzerland, and offers higher
margins, product diversification benefits and underscores our
capabilities in the fast-growing sector of ESG and sustainable
investment, an area of our business that we aim to grow and develop
going forward.
"Our talented team of employees also continues to evolve. We
have made progress in our plans for succession during the quarter
with the recent appointment of our new CIO, Dmitri Tikhonov, as
well as with changes to bolster our client-facing and technology
teams during the year. We will continue our focus on ensuring the
well-being of our greatest asset, our employees, as well as on our
continued operational resilience as proven over the last 12
months.
"Our business continues its transition in terms of its
modernisation and growth. Looking ahead, we believe digital
technology is transforming our industry and will provide
opportunities for business growth and diversification, and we are
committed to ensuring this opportunity is grasped with both hands.
We are well positioned with a robust balance sheet, long-standing
and strong client relationships, and an excellent team. Both our
core and new product offerings give a strong platform for revenue
growth, and combined with our innovation and the expected
scalability, efficiencies and opportunities afforded through our
adoption of new technology we expect to see the financial benefits
of these more fully in the current financial year."
Further Trading Analysis
1. AUME composition
The Group's AUME as at 31 March 2021 totalled US$80.1 billion
(31 December 2020: US$74.6 billion), and expressed in sterling
totalled GBP58.1 billion (31 December 2020: GBP54.6 billion). AUME
increased by 7% between 31 December 2020 and 31 March 2021 and by
6% when expressed in sterling. The composition of AUME by product
was as follows:
AUME US$ billion
31 March 2021 31 December 2020
-------------- -----------------
Dynamic Hedging 9.3 8.0
Passive Hedging 61.5 57.9
Currency for Return 3.9 3.6
Multi-Product 5.2 4.9
-------------- -----------------
Cash & Futures 0.2 0.2
-------------- -----------------
Total 80.1 74.6
-------------- -----------------
2. AUME Movement
Net client AUME flows in the three months to 31 March 2021 by
product were as follows:
Net client AUME flows - US$ billion
3 months to 3 months to
31 March 2021 31 December 2020
--------------- ------------------
Dynamic Hedging 1.4 4.7
Passive Hedging 3.7 (0.8)
Currency for Return 0.0 0.0
Multi-Product (0.2) 1.2
--------------- ------------------
Cash & Futures 0.0 0.0
--------------- ------------------
Total 4.9 5.1
--------------- ------------------
Record had 89 clients at 31 March 2021 (31 December 2020: 79
clients).
Other than client flows, the factors which have had an aggregate
positive impact on AUME during the quarter of +$0.6 billion were as
follows:
(i) Exchange rate movements and mandate volatility targeting:
-$2.5 bn
Exchange rate movements during the period affect the conversion
of non-US dollar mandate sizes into US dollar AUME. In addition,
certain Currency for Return mandates targeting a specific
volatility target may be scaled up or down.
(ii) Movements in global stock and other markets: +$3.1bn
Substantially all the Passive and Dynamic Hedging, and some of
the Multi-Product mandates, are linked to stock and other market
levels. Consequently AUME may be affected by movements in these
markets.
3. Investment performance
For US Dynamic Hedging clients during the quarter, hedging
returns in the programmes were positive as the US dollar
appreciated versus the weighted basket of hedged currencies, driven
by a positive US vaccine outlook and expectations of fiscal
stimulus which supported treasury yields and the US dollar. The
value added in the quarter for a representative account was 1.06%
(31 December 2020: -0.64%), with annualised performance since
inception (April 2009) of 0.45%.
For Tenor Managed Passive Hedging clients returns were positive
during the quarter, owing to optimised FX hedge tenor selections
relative to client benchmarks. Hedging structures were actively
managed, such that clients benefitted from these preferred duration
profiles. The FX forward market has been relatively stable in terms
of pricing over the quarter, given a high level of intervention
from central banks globally. The value added in the quarter
relative to a fixed tenor benchmark for a Tenor Managed Passive
Hedging programme for a representative account was 0.004% (31
December 2020: 0.03%), with annualised performance since inception
(October 2014) of 0.08% p.a.
Investment performance in the Multi-Strategy product that
comprises the FTSE Currency FRB10, Emerging Market, Value, Momentum
and Range Trading strategies was positive during the quarter. The
performance of Record's Multi-Strategy composite targeting 4%
volatility equated to a quarterly return of 1.12% (31 December
2020: 3.64%). Annualised performance since inception (31 July 2012)
for the portfolio was 0.86% p.a.
4. AVERAGE FEE RATES AND PERFORMANCE FEES
During Q4-2021, fee rates remained broadly unchanged from the
previous quarter. Performance fees of GBP0.1 million were earned in
the quarter.
Record will announce its FY-2021 results on 17 June 2021 and its
Q1-2022 trading update on 23 July 2021.
-Ends -
For further information, please contact:
Record plc Tel: +44 (0) 1753 852 222
Leslie Hill, Chief Executive Officer
Steve Cullen, Chief Finance Officer
Buchanan Tel: +44 (0) 20 7466 5000
Giles Stewart
record@buchanan.uk.com
Victoria Hayns
Henry Wilson
George Beale
Notes to Editors
Record plc
Founded in 1983, Record is an independent, specialist currency
and derivatives manager and has established a market leading
position in managing Currency Hedging and Currency for Return for
institutional clients.
The Group has four principal reporting lines:
- Dynamic Hedging, where Record seeks to eliminate the impact of
currency movements on elements of clients' investment portfolios
that are denominated in foreign currencies when these movements are
expected to result in an economic loss to the client, but not to do
so when they are expected to result in an economic gain;
- Passive Hedging, where Record seeks to eliminate fully or
partially the economic impact of currency movements on elements of
clients' investment portfolios that are denominated in foreign
currencies;
- Currency for Return, in which Record enters into currency
contracts for clients with the objective of generating positive
returns; and
- Multi-Product, where the client mandate includes combined
hedging and return-seeking objectives.
Record (LSE: REC) was admitted to trading on the London Stock
Exchange on 3 December 2007.
This announcement includes information with respect to Record's
financial condition, its results of operations and business,
strategy, plans and objectives. All statements in this document,
other than statements of historical fact, including words such as
"anticipates", "expects", "intends", "plans", "believes", "seeks",
"estimates", "may", "will", "continue", "project" and similar
expressions, are forward-looking statements.
These forward-looking statements are not guarantees of the
Company's future performance and are subject to risks,
uncertainties and assumptions that could cause the actual future
results, performance or achievements of the Company to differ
materially from those expressed in or implied by such
forward-looking statements.
The forward-looking statements contained in this document are
based on numerous assumptions regarding Record's present and future
business and strategy and speak only as at the date of this
announcement.
The Company expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking
statements contained in this announcement whether as a result of
new information, future events or otherwise.
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END
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