TIDMREC
RNS Number : 8789X
Record PLC
17 January 2014
RECORD PLC
THIRD QUARTER TRADING UPDATE
Record plc ("Record" or the "Company"), the specialist currency
manager, announces today that as at 31(st) December 2013 the
Group's assets under management equivalents ("AUME") totalled $51.1
billion (30(th) September 2013: $37.7 billion).
AUME expressed in Sterling as at 31(st) December 2013 totalled
GBP30.8 billion (30(th) September 2013: GBP23.3 billion).
1. AUME composition
Record saw an overall increase in AUME during the period between
30(th) September 2013 and 31(st) December 2013. The composition of
AUME at 31(st) December 2013 was as follows:
AUME $ billion
-----------------------------------------------------------------
31(st) December 30(th) September
2013 2013
---------------------------- ---------------- -----------------
Dynamic Hedging (Note
1) 12.1 12.0
Passive Hedging 36.1 22.9
Currency for Return (Notes
1 & 2) 2.5 2.6
---------------------------- ---------------- -----------------
Cash & Futures 0.4 0.2
---------------------------- ---------------- -----------------
Total 51.1 37.7
---------------------------- ---------------- -----------------
Note 1: Figures for the period ended 30(th) September 2013
reflect the reclassification of a bespoke hybrid hedging and
return-seeking mandate as described in the interim report for the
six months then ended, the result of which was a reclassification
of $1 billion of AUME from Dynamic Hedging to Currency for
Return.
Note 2: This includes $0.8 billion of Emerging Market strategies
(30(th) September 2013: $0.8 billion).
2. AUME Movement
Net client AUME flows in the three months to 31(st) December
2013 by product were as follows:
Net client AUME flows - $ billion
---------------------------------------------------------------
3 months to 31(st) 3 months to 30(th)
December 2013 September 2013
--------------------- ------------------- -------------------
Dynamic Hedging (0.3) 0.1
Passive Hedging 12.2 -
Currency for Return - (0.1)
--------------------- ------------------- -------------------
Cash & Futures 0.1 0.1
--------------------- ------------------- -------------------
Total 12.0 0.1
--------------------- ------------------- -------------------
Record had 46 clients at 31(st) December 2013 (30(th) September
2013: 46 clients).
The factors other than client flows which have impacted AUME
during the quarter, had an aggregate impact of +$1.4 billion,
being:
(i) Exchange rate movements: +$0.8bn 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: +$0.6bn
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.
Our Dynamic Hedging programmes performed as expected for US
clients during the quarter. The US Dollar strengthened against
exposure currencies overall, and as a result the returns of our
hedging programmes were positive. Losses in hedges on Sterling and
Euro, which both rose against the Dollar, were outweighed by
positive returns in hedges on the Japanese Yen, which weakened
substantially. The systematic raising of Yen hedge ratios helped to
capture more of this trend.
For UK-based Dynamic Hedging clients the programmes also
performed as expected. Sterling strengthened over the quarter, and
as a result the programmes generated outperformance. Similarly to
the US Dollar programmes, the sustained weakening trend of the Yen
generated positive hedging returns as the programmes benefited from
maintaining high hedge ratios in this currency.
Investment performance in Record's established Active Forward
Rate Bias (FRB) product was positive during the quarter ending
31(st) December 2013 and for an ungeared portfolio equated to a
positive return of 1.41% over the quarter (3 months to 30(th)
September 2013: negative return of 0.59%). This compares to a
negative return in the quarter of 0.39% for the FTSE Currency FRB10
index (excess return in Sterling). This variance is the result of
differences in the allocations in these two strategies to the
currencies that moved the most in the quarter (Australian Dollar,
New Zealand Dollar and Japanese Yen).
Investment performance in Record's Emerging Market product was
positive during the quarter ending 31(st) December 2013 and for an
un-geared portfolio equated to a positive return of 0.60% over the
quarter (3 months to 30(th) September 2013: negative return of
1.86%).
Investment performance in Record's Multi-Strategy product was
positive during the quarter ending 31(st) December 2013 and for an
un-geared portfolio equated to a positive return of 1.39% over the
quarter (3 months to 30(th) September 2013: negative return of
0.47%). Cumulative performance since inception (31(st) July 2012)
has been 4.33% for the seventeen months to 31(st) December 2013,
equating to annualised performance of 3.04% p.a.
3. AVERAGE FEE RATES
As announced on 7(th) November 2013, Record has amended the fee
scales applied to its existing Dynamic Hedging mandates to align
existing clients' fees with those being proposed to potential new
clients. The impact of these amendments alone, excluding the impact
of any potential new business, is estimated to be a reduction in
future annualised management fees of approximately GBP2.6 million,
with an on-going annualised impact on pre-tax profits of
approximately GBP1.8 million. Fee rates for all other products
remained broadly unchanged from the previous quarter.
4. CHIEF EXECUTIVE'S COMMENT
Chief Executive James Wood-Collins, commenting on trading, said
"During a busy quarter, there have been developments in both
Dynamic and Passive Hedging, which on balance give grounds for
optimism.
"Having observed increased competitive activity following the
higher level of new business enquiries and procurement processes in
recent months, we decided to recognise this in fee arrangements
with existing and long-standing clients, as well as with potential
new clients. In doing so we are pursuing growth in volume that
would more than compensate for reduced revenue margins, and in this
respect we were pleased to announce the award (subject to contract)
of a new Dynamic Hedging mandate for AUME of initially
approximately $600 million on 14(th) January 2014.
"The Passive Hedging mandate announced on 3(rd) June 2013
commenced during the quarter, and in total Passive Hedging mandates
of approximately $12 billion in AUME have started since 30(th)
September 2013. These mandates are expected to generate
approximately GBP2.3 million in annualised management fees, with an
on-going annualised impact on pre-tax profits of approximately
GBP1.6 million.
"As a consequence of the start of these new mandates Record's
total AUME has now exceeded $50 billion for the first time in over
five years.
"Engagement with prospective clients and investment consultants
in North America, UK and Switzerland continues, with interest
received across our product range. Whilst formal procurement
processes are by nature competitive, and their timing uncertain, we
are hopeful that further progress can be made in 2014."
Record will announce its fourth quarter trading update on 23(rd)
April 2014.
For further information, please contact:
Record plc Tel: +44 (0) 1753 852 222
James Wood-Collins, Chief Executive Officer
Steve Cullen, Chief Finance Officer
MHP Tel: +44 (0) 20 3128 8100
Nick Denton record@mhpc.com
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:
- 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; and
- Currency for Return, in which Record enters into currency
contracts for clients with the objective of generating positive
returns.
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
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