TIDMREC
RNS Number : 1611Q
Record PLC
14 October 2011
RECORD PLC
SECOND QUARTER TRADING UPDATE
Record plc ("Record" or the "Company"), the specialist currency
manager, announces today that as at 30(th) September 2011 the
Group's assets under management equivalents ("AuME") totalled $29.2
billion (30(th) June 2011: $31.4 billion).
AuME expressed in Sterling as at 30(th) September 2011 totalled
GBP18.8 billion (30(th) June 2011: GBP19.5 billion).
1. AuME composition
Record saw an overall decrease in AuME when expressed in both US
Dollars and Sterling during the period between 30(th) June 2011 and
30(th) September 2011, largely due to the fall in global stock
markets. The composition of AuME at 30(th) September 2011 was as
follows:
AuME $ bn
---------------------------------------------------------------
30(th) September
2011 30(th) June 2011
--------------------- ------------------- -------------------
Currency for Return
Segregated (Note 1) 2.3 2.2
Pooled 0.8 1.2
-------- --------
Currency for Return
Sub Total 3.1 3.4
Dynamic Hedging 11.1 12.1
Passive Hedging 14.7 15.5
Cash & Futures 0.3 0.4
--------------------- -------- --------- -------- ---------
Total 29.2 31.4
--------------------- -------- --------- -------- ---------
Note 1: This includes $1.1bn of Emerging Market strategies
(30(th) June 2011 $1.1bn).
2. AuME MOVEMENT
Net client AuME flows in the three months to 30(th) September
2011 by product were as follows:
Net client AuME flows - $ bn
------------------------------------------------------------------
3 months to
30(th) September 3 months to
2011 30(th) June 2011
--------------------- --------------------- --------------------
Currency for Return
Segregated - (0.1)
Pooled (0.2) -
---------- ---------
Currency for Return
Sub Total (0.2) (0.1)
Dynamic Hedging 1.4 0.2
Passive Hedging 0.3 (0.5)
Cash & Futures (0.1) -
--------------------- ---------- --------- --------- ---------
Total 1.4 (0.4)
--------------------------------- --------- --------- ---------
Record had 43 clients at 30(th) September 2011, compared to 44
at 30(th) June 2011.
The factors other than client flows which impacted AuME during
the quarter, totalling -$3.6 billion, were:
(i) Movements in global stock and other markets: -$2.3bn
Substantially all the Passive and Dynamic Hedging, and some of the
Currency for Return mandates are linked to stock and other market
levels. Consequently AuME is affected by movements in these
markets;
(ii) Exchange rate movements: -$1.2bn Exchange rate movements
during the period affect the conversion of non-US Dollar mandate
sizes into US Dollar AuME;
(iii) Pooled fund investment performance: -$0.1bn Investment
returns are compounded on a geared basis into the AuME of the
pooled funds and so impact AuME.
Our Dynamic Hedging product performed as expected during the
quarter for our US clients. During the month of July the US dollar
weakened against a basket of currencies and the hedging product
captured a large portion of this price movement by keeping the
hedge ratios at relatively low levels. The dollar started
strengthening in August and appreciated sharply in September and,
as a result, the desired protection was delivered through the
higher hedge ratios especially for the Euro and Pound Sterling
exposures.
For the UK based Dynamic Hedging clients, Sterling declined in
value towards the quarter end when measured against a basket of
currencies. Hedge ratios for US dollar and Japanese yen positions
declined substantially towards the end of September capturing the
majority of these currency gains for clients.
Investment performance in Record's established active Forward
Rate Bias (FRB) product was positive during the quarter ending
30(th) September 2011 and for an un-geared portfolio equated to a
positive return of 0.34% over the quarter (3 months to 30(th) June
2011: negative return of -0.32%). This compares to a negative
return in the quarter of -3.38% for the FTSE Currency FRB10 index
(excess return in Sterling).
3. AVERAGE FEE RATES
During the quarter to 30(th) September 2011, fee rates for all
products remained broadly unchanged from the first quarter.
4. CHIEF EXECUTIVE'S COMMENT
Chief Executive James Wood-Collins, commenting on trading, said
"The decline in AuME over the quarter is largely due to the fall in
global stock markets that has impacted the size of both our passive
and dynamic hedging mandates.
"The UK Dynamic Hedging mandate we referred to in the first
quarter trading update has now commenced and this mandate is
included in AuME figures at $0.7bn, which represents approximately
three-quarters of the ultimate mandate size. Additionally, for our
largest Dynamic Hedging client we have commenced the expanded range
of currencies and asset classes referred to in the announcement of
17(th) March 2011. We have seen a number of enquiries and RFPs and
believe we will secure further hedging mandates in the current
financial year. During the quarter, a US based sales executive
joined Record and as a result we are having an increasing number of
constructive discussions with US investment consultants and
prospective clients. Whilst this is unlikely to lead to meaningful
new revenue in the current financial year from this market, we are
hopeful that mandates can be secured from the next financial year
onwards.
"During the current financial year, Record's product range is
set to add currency value and currency momentum products, giving us
the ability to offer currency multi-strategy products. With the
final steps in product diversification confirmed, the firm's focus
is clearly on achieving new sales from the broadened range of
currency products and services."
Record will announce its half year results for the six months to
30(th) September 2011 on 18(th) November 2011 and its third quarter
trading update on 17(th) January 2012.
For further information, please contact:
Record plc Tel: +44 (0) 1753 852 222
James Wood-Collins
Paul Sheriff
MHP Tel: +44 (0) 20 3128 8100
Nick Denton
John Olsen
Vicky Watkins
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 Dynamic
Hedging and Currency for Return for institutional clients.
The Group has three principal product lines:
- Currency for Return, formerly known as Absolute Return, in
which Record enters into currency contracts for clients with the
objective of generating positive returns;
- Dynamic Hedging, formerly known as 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 or
partially 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 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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