Record PLC First Quarter Trading Update (6903L)

TIDMREC

RNS Number : 6903L

Record PLC

21 July 2017

RECORD PLC

FIRST QUARTER TRADING UPDATE

Record plc ("Record" or "the Company"), the specialist currency manager, announces today that the Group's assets under management equivalents ("AUME") as at 30(th) June 2017 totalled $59.9 billion (31(st) March 2017: $58.2 billion).

AUME expressed in sterling as at 30(th) June 2017 totalled GBP46.1 billion (31(st) March 2017: GBP46.6 billion).

   1.         AUME composition 

AUME expressed in US dollars increased by 2.9% between 31(st) March 2017 and 30(th) June 2017 and decreased by 1.0% when expressed in sterling. The composition of AUME by product was as follows:

 
                       AUME $ billion 
------------------------------------------------------------ 
                        30(th) June 2017   31(st) March 2017 
---------------------  -----------------  ------------------ 
 Dynamic Hedging                     5.0                 6.3 
 Passive Hedging                    50.3                48.2 
 Currency for Return                 1.6                 1.0 
 Multi-Product                       2.8                 2.5 
---------------------  -----------------  ------------------ 
 Cash & Futures                      0.2                 0.2 
---------------------  -----------------  ------------------ 
 Total                              59.9                58.2 
---------------------  -----------------  ------------------ 
 
   2.         AUME Movement 

Net client AUME flows in the three months to 30(th) June 2017 by product were as follows:

 
               Net client AUME flows - $ billion 
--------------------------------------------------------------- 
                        3 months to 30(th)   3 months to 31(st) 
                             June 2017           March 2017 
---------------------  -------------------  ------------------- 
 Dynamic Hedging                     (1.1)                  0.1 
 Passive Hedging                       0.2                  0.3 
 Currency for Return                   0.6                    - 
 Multi-Product                         0.3                (0.9) 
---------------------  -------------------  ------------------- 
 Cash & Futures                          -                    - 
---------------------  -------------------  ------------------- 
 Total                                   -                (0.5) 
---------------------  -------------------  ------------------- 
 

Record had 58 clients at 30(th) June 2017 (31(st) March 2017: 59 clients).

Other than client flows, the factors which have had an aggregate impact on AUME during the quarter of +$1.7 billion, were as follows:

   (i)         Movements in global stock and other markets:                          -$0.7bn 

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.

(ii) Exchange rate movements: +$2.4bn

Exchange rate movements during the period affect the conversion of non-US dollar mandate sizes into US dollar AUME.

   3.         Investment performance 

For US Dynamic Hedging clients hedging returns in the programmes were negative during the quarter, as the US dollar weakened against the weighted basket of hedged currencies. Losses came primarily from hedging the Japanese yen, euro, and sterling. The Dynamic Hedging programmes performed as intended, and hedge ratios fell through the period in line with US dollar weakness, allowing US investors to keep currency gains in the underlying overseas exposures.

For UK-based Dynamic Hedging clients the programmes also performed as expected although generated mixed results in line with the differences in hedgeable weights as sterling strengthened versus the US dollar but weakened versus the euro. Hedging gains came primarily from hedging the US dollar, while the euro losses were contained as hedge ratios were reduced over the quarter in response to sterling movements.

Investment performance of the FTSE Currency FRB10 index (excess return in sterling) during the three months to 30(th) June 2017 was -0.79% (three months to 31(st) March 2017: return of +0.27%). The FTSE FRB10 Index Fund continued to track the index closely, on a 1.8x geared basis.

Record's Emerging Market product investment performance was negative during the quarter and for an un-geared portfolio equated to a quarterly return of -0.13% (three months to 31(st) March 2017: return of +2.85%). Annualised performance since inception (30(th) November 2009) for an un-geared portfolio was +2.13% p.a.

Investment performance in the Multi-Strategy product that comprises the FTSE Currency FRB10, Emerging Market, Value and Momentum strategies was negative during the quarter as positive returns from Value strategy were more than offset by losses in the FRB10, Emerging Markets and Momentum components. For an un-geared portfolio, the return was -0.70% over the quarter (three months to 31(st) March 2017: return of +0.64%). Annualised performance since inception (31(st) July 2012) for Record's longest-standing Multi-Strategy mandate on an un-geared portfolio basis is +1.59% p.a.

   4.         AVERAGE FEE RATES AND PERFORMANCE FEES 

During the quarter to 30(th) June 2017, fee rates for all products remained broadly unchanged from the previous quarter. No performance fees were earned in the quarter.

   5.         CHIEF EXECUTIVE'S COMMENT 

Chief Executive James Wood-Collins, commenting on business development, said:

"It's pleasing to report continued growth in aggregate AUME in the quarter and to note the diversity of inflows from existing clients across both hedging and return-seeking products, sufficient to offset the previously announced termination of a $1.2 billion Passive Hedging mandate. During the quarter, a Dynamic Hedging client on a management plus performance fee basis notified its intention to switch to Passive Hedging, at fees consistent with Record's standard management fee scales.

"Record's Multi-Strategy product reached the fifth anniversary of its live track record this month and saw inflows of $0.6 billion from existing clients during the quarter.

"Uncertainty continues to have an impact on currency markets, with no evident end to the current political instability in the UK and the US, and heightened geopolitical uncertainty arising from the Middle East and South East Asia.

"We continue to engage with both existing and prospective clients as to their preferences in managing currency risk and opportunity, and in achieving their investment objectives. With our diversified product suite and our ability to tailor solutions to fit individual client objectives, we are confident that further progress can be made in the current financial year."

Record will announce its second quarter trading update on 20(th) October 2017.

For further information, please contact:

Record plc Tel: [phone]

James Wood-Collins, Chief Executive Officer

Steve Cullen, Chief Finance Officer

MHP Tel: [phone]

Nick Denton [e-mail]

Ollie Hoare

Notes to Editors

Record plc

Record is a specialist currency manager and provider of currency hedging services for institutional clients. Founded in 1983, Record has established a market leading position as a currency manager. Specifically, the Group has a 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(rd) 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.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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July 21, 2017 02:00 ET (06:00 GMT)