TIDMREC
RNS Number : 4463C
Record PLC
16 October 2015
16 OCTOBER 2015
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 2015 totalled $53.3
billion (30(th) June 2015: $56.6 billion).
AUME expressed in Sterling as at 30(th) September 2015 totalled
GBP35.2 billion (30(th) June 2015: GBP36.0 billion).
1. AUME composition
AUME expressed in US Dollars decreased by 6% between 30(th) June
2015 and 30(th) September 2015 and decreased by 2% when expressed
in Sterling. The composition of AUME by product was as follows:
AUME $ billion
------------------------------------------------------
30(th) September 30(th) June
2015 2015
--------------------- ----------------- ------------
Dynamic Hedging 8.7 9.3
Passive Hedging 42.1 42.1
Currency for Return 2.3 4.9
--------------------- ----------------- ------------
Cash & Futures 0.2 0.3
--------------------- ----------------- ------------
Total 53.3 56.6
--------------------- ----------------- ------------
2. AUME Movement
Net client AUME flows in the three months to 30(th) September
2015 by product were as follows:
Net client AUME flows - $ billion
--------------------------------------------------------
3 months to 3 months to
30(th) September 30(th) June
2015 2015
--------------------- ------------------ -------------
Dynamic Hedging 0.1 -
Passive Hedging 1.3 0.5
Currency for Return (2.5) 0.1
--------------------- ------------------ -------------
Cash & Futures (0.1) -
--------------------- ------------------ -------------
Total (1.2) 0.6
--------------------- ------------------ -------------
Record had 54 clients at 30(th) September 2015 (30(th) June
2015: 53 clients), which includes three of the six clients whose
mandate was signed in the previous quarter, with the remaining
three clients expected to fund in the current quarter.
The factors other than client flows, which have had an aggregate
impact on AUME during the quarter of -$2.1 billion, were as
follows:
(i) Exchange rate movements: -$2.1bn 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: $0.0bn
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 may be affected by movements in these
markets.
3. Investment performance
Our Dynamic Hedging programmes performed as expected for US
clients during the quarter, generating positive returns as the
Dollar strengthened against the weighted basket of currencies in
the programmes. The largest gains came from hedges on the Canadian
and Australian Dollars, as hedge ratios for these currencies
remained high throughout the period. There were some partially
offsetting negative returns from hedging the Euro and Japanese Yen;
however, losses were contained as hedge ratios remained low over
the quarter.
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. Negative returns came from hedging the Euro, US Dollar
and Japanese Yen; however, hedge ratios for all three currencies
fell over the quarter, thus limiting losses.
Investment performance in Record's Active Forward Rate Bias
(FRB) product was negative during the three months to 30(th)
September 2015, and for an ungeared portfolio equated to a return
of -0.46% (three months to 30(th) June 2015: return of
-0.46%). This compares to a -2.80% return in the quarter for the
FTSE Currency FRB10 index (excess return in Sterling). This
variance was mainly the result of differences in the allocations of
these two strategies to some of the weaker performing currencies in
the quarter (mostly Australian Dollar). 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
negative during the quarter and for an un-geared portfolio equated
to a quarterly return of -6.53% (three months to 30(th) June 2015:
return of -0.70%). This negative performance was mainly
attributable to losses from the Brazilian Real, South African Rand
and Turkish Lira. Annualised performance since inception (30(th)
November 2009) for an un-geared portfolio was +0.26% p.a.
Investment performance in the Multi-Strategy product that uses
the Active FRB strategy was negative during the quarter as gains
from the Value and Momentum strategies were overcome by negative
returns from the Active FRB and Emerging Market components. For an
un-geared portfolio, the return was -0.87% over the quarter (three
months to 30(th) June 2015: return of -0.81%). Annualised
performance since inception (31(st) July 2012) for an un-geared
portfolio is +1.00% p.a.
A version of the Multi-Strategy product which started earlier
this year and uses the FTSE Currency FRB10 index strategy instead
of the Active FRB product, produced negative returns of -0.95% for
an ungeared portfolio during the three months to 30(th) September
2015 (three months to 30(th) June 2015: return of -1.14%).
4. AVERAGE FEE RATES AND PERFORMANCE FEES
During the quarter to 30(th) September 2015, 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:
"This quarter continued to demonstrate heightened currency
market volatility, and ongoing debate on the prospects for
divergent monetary policy. These factors have served to maintain
the current high levels of interest shown in currency hedging and
return-seeking products by prospective clients, and to reinforce
the strength in diversity of our products.
"The outflow of $2.8 billion announced on 25(th) August from a
standalone tactical bespoke mandate was a consequence of currency
market movements. Whilst it will detract from revenue, our core
return-seeking strategies' performance and our ability to continue
to build the hedging business remain unaffected.
"It was pleasing to announce, on 29(th) September, Record's
selection for a dynamic hedging mandate, which has now commenced
since quarter-end. As already announced on 1(st) October, just post
quarter end, we were notified by a UK dynamic hedging client of its
intention to terminate the mandate, likely by the end of the
current financial year.
"We continue to make progress in engaging with current and
potential clients across a broad range of currency issues and
geographies and we are hopeful that further progress can be made in
the current financial year."
Record will announce its half year results on 24(th) November
2015 and its third quarter trading update on 22(nd) January
2016.
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
Jennifer Iveson
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 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 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.
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