TIDMREC
RNS Number : 3192C
Record PLC
16 January 2015
RECORD PLC
THIRD 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 31(st) December 2014 totalled $52.7
billion (30(th) September 2014: $52.6 billion).
AUME expressed in Sterling as at 31(st) December 2014 totalled
GBP33.8 billion (30(th) September 2014: GBP32.4 billion).
1. AUME composition
Record saw a small increase in AUME between 30(th) September
2014 and 31(st) December 2014 when expressed in US Dollars and a
larger increase when expressed in Sterling. The composition of AUME
by product was as follows:
AUME $ billion
----------------------------------------------------------------
31(st) December 30(th) September
2014 2014
--------------------------- ---------------- -----------------
Dynamic Hedging 9.7 10.6
Passive Hedging 40.0 39.1
Currency for Return (Note
1) 2.8 2.6
--------------------------- ---------------- -----------------
Cash & Futures 0.2 0.3
--------------------------- ---------------- -----------------
Total 52.7 52.6
--------------------------- ---------------- -----------------
Note 1: This includes $0.3 billion of Emerging Market strategies
(30(th) September 2014: $0.4 billion).
2. AUME Movement
Net client AUME flows in the three months to 31(st) December
2014 by product were as follows:
Net client AUME flows - $ billion
---------------------------------------------------------------
3 months to 31(st) 3 months to 30(th)
December 2014 September 2014
--------------------- ------------------- -------------------
Dynamic Hedging (0.6) (0.1)
Passive Hedging 0.5 (0.2)
Currency for Return 0.3 0.1
--------------------- ------------------- -------------------
Cash & Futures (0.1) -
--------------------- ------------------- -------------------
Total 0.1 (0.2)
--------------------- ------------------- -------------------
Net client AUME flows in Hedging and Currency for Return
products principally reflect amendments to mandate sizes for
existing clients.
Record had 51 clients at 31(st) December 2014 (30(th) September
2014: 49 clients).
The factors other than client flows, which have had no aggregate
impact on AUME during the quarter, were as follows:
(i) Exchange rate movements: -$1.8bn 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: +$1.8bn
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.
Record has been notified of various mandate changes which,
whilst not reflected in AUME as at 31(st) December 2014, will
affect AUME in the three months ending 31(st) March 2015. These
include outflows from Dynamic Hedging of approximately $1.4 billion
and inflows into Dynamic Hedging of approximately $0.8 billion to
be charged on a management plus performance fee basis, both of
which have been implemented. Furthermore net inflows into Passive
Hedging from new and existing clients of approximately $2.3 billion
are expected by the end of the current quarter.
In addition, a new client has signed a Multi-Strategy mandate,
Record's second, which we expect to consist of AUME of
approximately $300 million, also by the end of the current quarter.
All AUME is quoted by convention in US Dollars, and fee rates for
each mandate are consistent with previously published average fees
rates for each product.
Record expects the net effect of these mandate changes to
increase total AUME by approximately $2.0 billion, and to be
modestly accretive to revenues and earnings on an annualised
basis.
With respect to investment performance during the quarter, our
Dynamic Hedging programmes performed as expected for US clients.
The US Dollar strengthened against most G10 currencies, and as a
result the returns of the hedging programmes were positive over the
quarter. The largest gains came from hedges on the Euro, Japanese
Yen and Swiss Franc, as hedge ratios, for these currencies,
remained high throughout the period.
For UK-based Dynamic Hedging clients the programmes also
performed as expected, controlling hedging losses in response to
Sterling weakening against the weighted basket of currencies in the
programmes. Hedge ratios in the US Dollar remained low as the US
Dollar continued to strengthen against Sterling, with costs offset
by returns from hedging the Japanese Yen in particular.
Investment performance in Record's Active Forward Rate Bias
(FRB) product was positive during the quarter ending 31(st)
December 2014 and for an ungeared portfolio equated to a return of
+1.22% over the quarter (3 months to 30(th) September 2014: return
of +1.36%). This compares to a +0.34% return in the quarter for the
FTSE Currency FRB10 index (excess return in Sterling). This
variance is the result of differences in the allocations of these
two strategies to some of the weaker-performing currencies in the
quarter. The FTSE FRB10 Index Fund continues to track the index
closely, on a 1.8x-geared basis.
Record's Emerging Market product investment performance was
negative during the quarter ending 31(st) December 2014 and for an
un-geared portfolio equated to a quarterly return of -1.53% (3
months to 30(th) September 2014: return of +0.28%). This negative
performance was mainly attributable to losses from the Russian
Rouble. Annualised performance since inception (30(th) November
2009) for an un-geared portfolio is +1.54% p.a.
Investment performance in Record's live Multi-Strategy product
was positive during the quarter ending 31(st) December 2014 as the
Emerging Market losses were overcome by positive returns from the
other three strategies (FRB10, Momentum and Value) with the Value
strategy contributing the most. For an un-geared portfolio, the
return was +1.00% over the quarter ending 31(st) December 2014 (3
months to 30(th) September 2014: return of +0.66%). Annualised
performance since inception (31(st) July 2012) for an un-geared
portfolio is +2.51% p.a.
3. AVERAGE FEE RATES
During the quarter to 31(st) December 2014, fee rates for all
products remained broadly unchanged from the previous quarter.
4. CHIEF EXECUTIVE'S COMMENT
Chief Executive James Wood-Collins, commenting on business
development, said:
"We continue to see the return to a more divergent monetary
policy environment and hence a more 'normal' currency market
environment including the expectation of wider interest rate
differentials, and stronger trends - a development that has
continued since our last trading update and the subsequent
announcement of our interim results.
"In particular, appreciation of the US Dollar over this period
has resulted in strong performance for our US hedging clients. This
may create a more supportive environment for growing our hedging
business further in the US, although any procurement processes are
still expected to be competitive and lengthy, with the outcome
necessarily uncertain.
"As reported above, we are anticipating various mandate changes
in the current quarter across all product lines, representing
continued growth in Passive Hedging, some net reduction in existing
Dynamic Hedging mandates, as well as our second Multi-Strategy
mandate; the last of these is particularly welcome. Whilst the net
impact of these changes on revenues and earnings is only modestly
positive, the diversification across clients and product types
continues."
Record will announce its fourth quarter trading update on 24(th)
April 2015.
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
Vicky Watkins
James Moncrieff
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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