FOURTH QUARTER TRADING UPDATE
21 April 2009 - 8:00AM
UK Regulatory
TIDMREC
RNS Number : 8669Q
Record PLC
21 April 2009
21 April 2009
RECORD PLC
FOURTH QUARTER TRADING UPDATE
Record plc ("Record" or the "Company"), the specialist currency investment
manager, announces today that as at 31st March 2009 the Group's assets under
management equivalents ("AuME") totalled $31.5 billion (31st December 2008:
$35.6 billion). In addition, as referred to in the Trading Update of 20th
January 2009 and not included in the above figures, Record has signed a US
active hedging mandate that it anticipates will grow to $4 billion over the next
twelve months and anticipates commencing the programme in May. For the
additional US active hedging mandate referred to in the 20th January 2009
statement, contract discussions are expected to conclude positively in the near
future.
The Board anticipates that pre tax profits will be in line with market
expectations for the financial year ended 31st March 2009.
AuME expressed in Sterling as at 31st March 2009 totalled GBP21.7
billion (31st December 2008: GBP24.7 billion).
1. AuME composition
Record saw a decline in AuME and client numbers during the period between 31st
December 2008 and 31st March 2009. The composition of AuME at 31st March 2009
was as follows:
+----------------------------+---------+----------+-----------+-----------+
| AuME $ bn |
+-------------------------------------------------------------------------+
| | 31st March 2009 | 31st December 2008 |
+----------------------------+--------------------+-----------------------+
| Absolute Return | | | | |
+----------------------------+---------+----------+-----------+-----------+
| Segregated | 8.3 | | 8.7 | |
+----------------------------+---------+----------+-----------+-----------+
| Pooled | 5.1 | | 6.5 | |
+----------------------------+---------+----------+-----------+-----------+
| Absolute Return Sub Total | | 13.4 | | 15.2 |
+----------------------------+---------+----------+-----------+-----------+
| Active Hedging | | 4.0 | | 4.8 |
+----------------------------+---------+----------+-----------+-----------+
| Passive Hedging | | 13.0 | | 13.9 |
+----------------------------+---------+----------+-----------+-----------+
| Cash & Futures | | 1.1 | | 1.7 |
+----------------------------+---------+----------+-----------+-----------+
| Total | | 31.5 | | 35.6 |
+----------------------------+---------+----------+-----------+-----------+
2. AuME MOVEMENT
Net client AuME flows in the three months to 31st March 2009 by product were as
follows:
+----------------------------+----------+----------+------------+----------+
| Net client AuME flows - $ bn |
+--------------------------------------------------------------------------+
| | 3 mths to 31st | 3 mths to 31st |
| | March 2009 | December 2008 |
+----------------------------+---------------------+-----------------------+
| Absolute Return | | | | |
+----------------------------+----------+----------+------------+----------+
| Segregated | 0.2 | | (1.7) | |
+----------------------------+----------+----------+------------+----------+
| Pooled | (1.0) | | (1.3) | |
+----------------------------+----------+----------+------------+----------+
| Absolute Return Sub Total | | (0.8) | | (3.0) |
+----------------------------+----------+----------+------------+----------+
| Active Hedging | | (0.1) | | (0.1) |
+----------------------------+----------+----------+------------+----------+
| Passive Hedging | | (0.2) | | 1.0 |
+----------------------------+----------+----------+------------+----------+
| Cash & Futures | | (0.5) | | (0.5) |
+----------------------------+----------+----------+------------+----------+
| Total | | (1.6) | | (2.6) |
+----------------------------+----------+----------+------------+----------+
Record had 121 clients at 31st March 2009, compared to 137 at 31st December
2008.
The factors other than client flows which impacted AuME during the quarter,
totalling -$2.5 billion, were:
+---------------------------------------------------------+--------------+
| (i) Exchange rate movements: | -$0.9bn |
+---------------------------------------------------------+--------------+
Exchange rate movements during the period affect the conversion of non-US dollar
mandate sizes into US Dollar AuME;
+---------------------------------------------------------+--------------+
| (ii) Movements in global stock and other markets: | -$1.1bn |
+---------------------------------------------------------+--------------+
Substantially all the Passive and Active Hedging, and some of the Absolute
Return mandates are linked to stock and other market levels. Consequently AuME
is affected by movements in these markets which had a negative impact in the
quarter;
+---------------------------------------------------------+--------------+
| (iii) Pooled fund investment performance: | -$0.7bn |
+---------------------------------------------------------+--------------+
Investment returns are compounded on a geared basis into the AuME of the pooled
funds and so impact AuME;
+---------------------------------------------------------+--------------+
| (iv) Gearing of pooled funds: | +$0.2bn |
+---------------------------------------------------------+--------------+
Due to changes in market conditions it had been previously necessary to de-gear
the currency positions within certain equity based funds. This was reversed
during the quarter resulting in a rise in AuME.
Investment performance in Record's Absolute Return product was negative during
the quarter ending 31st March 2009 and for an un-geared portfolio equated to -44
bps over the quarter as a whole (quarter to 31st December 2008: decline of 150
bps). Record's Directors are confident that the long-term investment strategy
remains robust and are encouraged by the recent positive performance towards the
end of the quarter.
3. AVERAGE FEE RATES
During the quarter to 31st March 2009, average management fee rates were
maintained across all product categories.
Absolute Return pooled accounts have the option to pay management fees only or a
lower management fee plus performance fees. Those clients that have chosen to
pay only management fees have been offered, from April 2009, the option to move
to management plus performance fees comprising a management fee approximately
45% lower than the existing arrangement together with a high water mark at
inception. It is anticipated that all pooled clients who currently pay
management fees only will take up this offer.
Chairman and CEO, Neil Record, commenting on trading, said 'Interest in active
hedging both in the US and UK continues to increase. We have now signed the
active hedging contract for the first of the two large state pension funds that
we were selected for during the third quarter. We have continued to support the
Absolute Return clients and have offered favourable terms to pooled clients to
remain with Record.Performance in March and the first few weeks of April has
been positive and we remain confident in and committed to our long-term
investment strategy.'
Record will announce its financial results for the year ended 31st March 2009 on
16th June 2009.
For further information, please contact:
+-----------------------------------+------------------------------------+
| Record plc | Tel: +44 (0) 1753 852 222 |
+-----------------------------------+------------------------------------+
Neil Record
Paul Sheriff
+-----------------------------------+------------------------------------+
| Hogarth | Tel: +44 (0)20 7357 9477 |
+-----------------------------------+------------------------------------+
Nick Denton
Julian Walker
Notes to Editors
Record plc
Record is a specialist currency investment manager and provider of currency
hedging services for institutional clients. Founded in 1983, Record has
established a market leading position as a currency asset manager. Specifically,
the Group has a leading position in managing currency for Absolute Return for
institutional clients.
The Group has three principal product lines:
* currency for Absolute Return, in which Record enters into currency contracts for
clients with the objective of generating positive returns;
* active 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; and
* passive hedging, where Record seeks to eliminate fully the economic impact of
currency movements on elements of clients' investment portfolios that are
denominated in foreign currencies.
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 company news service from the London Stock Exchange
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