TIDMREC
RNS Number : 1365U
Record PLC
20 October 2017
RECORD PLC
SECOND 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) September 2017 totalled $61.2
billion (30(th) June 2017: $59.9 billion).
AUME expressed in sterling as at 30(th) September 2017 totalled
GBP45.6 billion (30(th) June 2017: GBP46.1 billion).
1. AUME composition
AUME expressed in US dollars increased by 2.2% between 30(th)
June 2017 and 30(th) September 2017 and decreased by 1.1% when
expressed in sterling. The composition of AUME by product was as
follows:
AUME $ billion
------------------------------------------------------
30(th) September 30(th) June
2017 2017
--------------------- ----------------- ------------
Dynamic Hedging 4.5 5.0
Passive Hedging 51.7 50.3
Currency for Return 1.7 1.6
Multi-Product 3.0 2.8
--------------------- ----------------- ------------
Cash & Futures 0.3 0.2
--------------------- ----------------- ------------
Total 61.2 59.9
--------------------- ----------------- ------------
2. AUME Movement
Net client AUME flows in the three months to 30(th) September
2017 by product were as follows:
Net client AUME flows - $ billion
--------------------------------------------------------
3 months to 3 months to
30(th) September 30(th) June
2017 2017
--------------------- ------------------ -------------
Dynamic Hedging (0.6) (1.1)
Passive Hedging (0.5) 0.2
Currency for Return - 0.6
Multi-Product - 0.3
--------------------- ------------------ -------------
Cash & Futures 0.1 -
--------------------- ------------------ -------------
Total (1.0) -
--------------------- ------------------ -------------
Record had 59 clients at 30(th) September 2017 (30(th) June
2017: 58 clients).
For UK-based clients, Dynamic Hedging achieved cost-effective
protection of currency gains from sterling's depreciation in the
six months following the EU referendum. However, persistent
weakness in sterling meant negative returns and cash flows were
unavoidable. As a result Record's remaining UK-based Dynamic
Hedging clients converted their mandates to Passive Hedging or
terminated during the period.
Other than client flows, the factors which have had an aggregate
impact on AUME during the quarter of +$2.3 billion were as
follows:
(i) Movements in global stock and other markets: +$2.0bn
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: +$0.2bn
Exchange rate movements during the period affect the conversion
of non-US dollar mandate sizes into US dollar AUME.
During the quarter certain Currency for Return mandates
targeting a specific volatility target were scaled up, which
resulted in an increase to AUME of +$0.1 billion.
3. Investment performance
For US Dynamic Hedging clients during the quarter, hedging
returns in the programmes were negative, as the US dollar weakened
against the weighted basket of hedged currencies. Losses came
primarily from hedging the euro and sterling. The Dynamic Hedging
programmes performed as intended, and hedge ratios fluctuated in
line with US dollar movements, generally allowing US investors to
keep currency gains in the underlying overseas exposures.
For UK-based Dynamic Hedging clients the programmes performed as
expected, controlling hedging losses in response to sterling
weakness against the weighted basket of currencies with the losses
limited as hedge ratios fell systematically over the first two
months of the quarter. In September, hedge ratios rose in response
to sterling strength, thus helping to protect against foreign
currency weakness. As the quarter drew closer to its end the
UK-based Dynamic Hedging programmes were either transitioned to
Passive Hedging or terminated at the clients' requests.
Investment performance of the FTSE Currency FRB10 index (excess
return in sterling) during the three months to 30(th) September
2017 was +0.06% (three months to 30(th) June 2017: return of
-0.79%). 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
positive during the quarter and for an un-geared portfolio equated
to a quarterly return of +0.60% (three months to 30(th) June 2017:
return of -0.13%). Annualised performance since inception (30(th)
November 2009) for an un-geared portfolio was +2.14% p.a.
Investment performance in the Multi-Strategy product that
comprises the FTSE Currency FRB10, Emerging Market, Value and
Momentum strategies was positive during the quarter as positive
returns from Value, FRB10 and Emerging Markets offset losses in
Momentum. For an un-geared portfolio, the return was +0.08% over
the quarter (three months to 30(th) June 2017: return of -0.70%).
Annualised performance since inception (31(st) July 2012) for
Record's longest-standing Multi-Strategy mandate on un-geared
portfolio basis is +1.52% p.a.
4. AVERAGE FEE RATES AND PERFORMANCE FEES
During the quarter to 30(th) September 2017, fee rates for all
products remained broadly unchanged from the previous quarter. No
performance fees were earned in the quarter.
5. CHIEF EXECUTIVE'S COMMENT
Chief Executive James Wood-Collins, commenting on business
development, said:
"Growth in AUME over the quarter in US dollar terms has resulted
in Record's highest ever level of $61.2 billion. We were pleased to
open our office in Zürich, which will enable us to enhance our
relationships with Swiss clients and to heighten our presence in
the Swiss local market.
"We have continued to innovate and enhance our products to meet
clients' developing needs. This focus on service enhancement has
contributed to growth in employee numbers and hence costs over the
first half of the financial year.
"We will continue to dedicate significant resources between now
and the end of the year to implementing regulatory changes. With
respect to EMIR, we have made good progress in introducing daily
variation margin for our affected clients, although there remains a
risk that this will prove too onerous for some of our smaller
Passive Hedging clients. This may lead to some mandate losses,
although these are not expected to be material. With respect to
MiFID II, there may be additional costs associated with the
provision of research. We have decided that any such costs will be
absorbed by Record, although these too are not expected to be
material.
"The theme of volatility in currency markets linked to political
and economic uncertainty continues, and the consequent uncertainty
provides opportunities for engagement with both existing and
potential clients. We remain confident of making further progress
in the second half of the financial year."
Record will announce its half year results on 17(th) November
2017 and its third quarter trading update on 19(th) January
2018.
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
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 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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