Record PLC First Quarter Trading Update (2281V)

TIDMREC

RNS Number : 2281V

Record PLC

20 July 2018

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 2018 totalled $61.9 billion (31(st) March 2018: $62.2 billion).

AUME expressed in sterling as at 30(th) June 2018 totalled GBP46.9 billion (31(st) March 2018: GBP44.3 billion).

   1.         AUME composition 

AUME expressed in US dollars decreased by 0.5% between 31(st) March 2018 and 30(th) June 2018 and increased by 5.9% when expressed in sterling. The composition of AUME by product was as follows:

 
                       AUME $ billion 
                        30(th) June 2018   31(st) March 2018 
                       -----------------  ------------------ 
 Dynamic Hedging                     4.3                 4.3 
 Passive Hedging                    52.0                53.0 
 Currency for Return                 2.3                 1.6 
 Multi-Product                       3.0                 3.0 
                       -----------------  ------------------ 
 Cash & Futures                      0.3                 0.3 
                       -----------------  ------------------ 
 Total                              61.9                62.2 
                       -----------------  ------------------ 
 
   2.         AUME Movement 

Net client AUME flows in the three months to 30(th) June 2018 by product were as follows:

 
               Net client AUME flows - $ billion 
                        3 months to 30(th)   3 months to 31(st) 
                             June 2018           March 2018 
                       -------------------  ------------------- 
 Dynamic Hedging                       0.4                (0.1) 
 Passive Hedging                     (0.4)                (1.5) 
 Currency for Return                   0.6                    - 
 Multi-Product                           -                    - 
                       -------------------  ------------------- 
 Cash & Futures                          -                    - 
                       -------------------  ------------------- 
 Total                                 0.6                (1.6) 
                       -------------------  ------------------- 
 

Record had 64 clients at 30(th) June 2018 (31(st) March 2018: 60 clients).

The inflow of $0.6 billion in Currency for Return represents the previously-announced new mandate of $0.3 billion scaled in accordance with its volatility target. Fees for this mandate will be charged on a management plus performance fee basis.

Other than client flows, the factors which have had an aggregate impact on AUME during the quarter of -$0.9 billion were as follows:

   (i)         Movements in global stock and other markets:                         +$1.2bn 

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 and mandate volatility targeting:   -$2.1bn 

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.

   3.         Investment performance 

For US Dynamic Hedging clients during the quarter, hedging returns in the programmes were positive, where initially low hedge ratios rose in line with US dollar strength, helping to protect against currency losses in the underlying assets.

Investment performance of the FTSE Currency FRB10 index (excess return in sterling) during the three months to 30(th) June 2018 was 1.18% (three months to 31(st) March 2018 was -0.65%). 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 -2.41% (three months to 31st March 2018: return of -0.73%). Annualised performance since inception (30th November 2009) for an un-geared portfolio was +1.73% 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. For an un-geared portfolio, the return was -1.09% over the quarter (three months to 31(st) March 2018: return of -0.68%). Annualised performance since inception (31(st) July 2012) for Record's longest-standing Multi-Strategy mandate on an un-geared portfolio basis is +1.06% p.a.

   4.         AVERAGE FEE RATES AND PERFORMANCE FEES 

During the quarter to 30(th) June 2018, fee rates for most products remained broadly unchanged from the previous quarter, taking into account the changes to management plus performance fees already disclosed in respect of some products. Record earned performance fees of GBP1.0 million during the quarter, all of which related to performance over the six month period ended 30(th) June 2018.

   5.         CHIEF EXECUTIVE'S COMMENT 

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

"The Group continues to focus on enhancing its products and on building a more diverse portfolio both in terms of clients and in the mix of revenue streams.

"The announcement of Record's first performance fees since March 2016 reinforces the progress made in product enhancement and diversification, and upon which we hope to build going forward.

"With our diversified product suite and our ability to offer tailored solutions to clients and potential clients, we are confident that further progress can be made in the current financial year."

Record will announce its second quarter trading update on 19(th) October 2018.

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 3rd 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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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July 20, 2018 02:00 ET (06:00 GMT)