First Quarter Trading Update

RNS Number : 4348K

Record PLC

15 July 2011

 



RECORD PLC

FIRST QUARTER TRADING UPDATE

Record plc ("Record" or the "Company"), the specialist currency manager, announces today that as at 30^th June 2011 the Group's assets under management equivalents ("AuME") totalled $31.4 billion (31^st March 2011: $31.4 billion).

AuME expressed in Sterling as at 30^th June 2011 totalled £19.5 billion (31^st March 2011: £19.6 billion).

1.         AuME composition

Record saw no change in overall AuME when expressed in US Dollars and a marginal fall when expressed in Sterling during the period between 31^st March 2011 and 30^th June 2011.  The composition of AuME at 30^th June 2011 was as follows:

AuME $ bn
	30th June 2011		31st March 2011
Currency for Return
Segregated (Note 1)	2.2		2.2
Pooled	1.2		1.2
Currency for Return Sub Total		3.4		3.4
Dynamic Hedging		12.1		11.9
Passive Hedging		15.5		15.7
Cash & Futures		0.4		0.4
Total		31.4		31.4

Note 1: This includes $1.1bn of Emerging Market strategies (31^st March 2011 $1.1bn).

2.         AuME MOVEMENT

Net client AuME flows in the three months to 30^th June 2011 by product were as follows:

Net client AuME flows  - $ bn
	3 mths to 30th June 2011		3 mths to 31st March 2011
Currency for Return
Segregated	(0.1)		(0.6)
Pooled	-		(0.1)
Currency for Return Sub Total		(0.1)		(0.7)
Dynamic Hedging		0.2		(0.1)
Passive Hedging		(0.5)		(0.2)
Cash & Futures		-		-
Total		(0.4)		(1.0)

Record had 44 clients at 30^th June 2011, compared to 46 at 31^st March 2011.

The factors other than client flows which impacted AuME during the quarter, totalling $0.4 billion, were:

(i)        Exchange rate movements:                                                           +$1.0bn  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;

(iii)      Pooled fund investment performance:                                              $-bn  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 and for our US clients allowed them to capture most of the overseas currencies' strength at the beginning of the quarter as the US dollar weakened.  This was partially reversed towards the end of the quarter.

For the UK based Dynamic Hedging clients, Sterling depreciated towards the end of the quarter relative to other developed world currencies which resulted in our Dynamic Hedging product capturing a portion of the overseas currencies strength.

Investment performance in Record's established active Forward Rate Bias (FRB) product was negative during the quarter ending 30^th June 2011 and for an un-geared portfolio equated to a negative return of -0.32% over the quarter (12 months to 31^st March 2011: negative return of -3.39%).  This compares to a positive return in the quarter of 0.50% for the FTSE Currency FRB10 index (excess return in Sterling).  The FRB10 index has outperformed the active FRB product principally because of the index's greater exposure to less liquid currencies and absence of risk management costs.

3.         AVERAGE FEE RATES

During the quarter to 30^th June 2011, fee rates for both Passive Hedging and Currency for Return were maintained.  As announced on 17^th March, we have re-negotiated the fees on our largest Dynamic Hedging mandate to a tiered management fee, resulting in a net fee reduction from this client of £2.9 million on an annualised basis.  This reduced the average fee rate on Dynamic Hedging from 1^st April 2011.

4.         CHIEF EXECUTIVE'S COMMENT

Chief Executive James Wood-Collins, commenting on trading, said "The level of AuME has been stable during the first quarter of the financial year across all products.

We continue to market Dynamic Hedging in both the UK and US.  Whilst we are not aware of imminent significant additions, we are hopeful of building on the previously-announced but not yet commenced £0.5 billion UK-based Dynamic Hedging mandate from the second half of the financial year.  In Passive Hedging, we have seen a number of enquiries and RFPs and believe we will secure further mandates in the current financial year.

In June we launched the Euro Stress Fund and seeded this product with a £1 million investment from the Group.  The addition of the Euro Stress Fund means that Record now has four strategies in Currency for Return (active Forward Rate Bias (FRB), passive FRB, Emerging Markets and Euro Stress) to complement the two hedging products (Passive Hedging and Dynamic Hedging)."

Record will announce its second quarter trading update on 14^th October 2011.

For further information, please contact:

Record plc                                                                             Tel: [phone]

James Wood-Collins

Paul Sheriff

MHP                                                                                        Tel: [phone]

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. 

 

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