Second Quarter Trading Update

RNS Number : 1611Q

Record PLC

14 October 2011

 



RECORD PLC

SECOND QUARTER TRADING UPDATE

Record plc ("Record" or the "Company"), the specialist currency manager, announces today that as at 30^th September 2011 the Group's assets under management equivalents ("AuME") totalled $29.2 billion (30^th June 2011: $31.4 billion).

AuME expressed in Sterling as at 30^th September 2011 totalled £18.8 billion (30^th June 2011: £19.5 billion).

1.         AuME composition

Record saw an overall decrease in AuME when expressed in both US Dollars and Sterling during the period between 30^th June 2011 and 30^th September 2011, largely due to the fall in global stock markets.  The composition of AuME at 30^th September 2011 was as follows:

AuME $ bn
	30th September 2011		30th June 2011
Currency for Return
Segregated (Note 1)	2.3		2.2
Pooled	0.8		1.2
Currency for Return Sub Total		3.1		3.4
Dynamic Hedging		11.1		12.1
Passive Hedging		14.7		15.5
Cash & Futures		0.3		0.4
Total		29.2		31.4

Note 1: This includes $1.1bn of Emerging Market strategies (30^th June 2011 $1.1bn).

2.         AuME MOVEMENT

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

Net client AuME flows  - $ bn
	3 months to 30th September 2011		3 months to 30th June 2011
Currency for Return
Segregated	-		(0.1)
Pooled	(0.2)		-
Currency for Return Sub Total		(0.2)		(0.1)
Dynamic Hedging		1.4		0.2
Passive Hedging		0.3		(0.5)
Cash & Futures		(0.1)		-
Total		1.4		(0.4)

Record had 43 clients at 30^th September 2011, compared to 44 at 30^th June 2011.

The factors other than client flows which impacted AuME during the quarter, totalling -$3.6 billion, were:

(i)         Movements in global stock and other markets:                          -$2.3bn     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;

(ii)        Exchange rate movements:                                                           -$1.2bn     Exchange rate movements during the period affect the conversion of non-US Dollar mandate sizes into US Dollar AuME;

(iii)       Pooled fund investment performance:                                         -$0.1bn     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 for our US clients.  During the month of July the US dollar weakened against a basket of currencies and the hedging product captured a large portion of this price movement by keeping the hedge ratios at relatively low levels.  The dollar started strengthening in August and appreciated sharply in September and, as a result, the desired protection was delivered through the higher hedge ratios especially for the Euro and Pound Sterling exposures.

For the UK based Dynamic Hedging clients, Sterling declined in value towards the quarter end when measured against a basket of currencies.  Hedge ratios for US dollar and Japanese yen positions declined substantially towards the end of September capturing the majority of these currency gains for clients.

Investment performance in Record's established active Forward Rate Bias (FRB) product was positive during the quarter ending 30^th September 2011 and for an un-geared portfolio equated to a positive return of 0.34% over the quarter (3 months to 30^th June 2011: negative return of -0.32%).  This compares to a negative return in the quarter of -3.38% for the FTSE Currency FRB10 index (excess return in Sterling).

3.         AVERAGE FEE RATES

During the quarter to 30^th September 2011, fee rates for all products remained broadly unchanged from the first quarter.

4.         CHIEF EXECUTIVE'S COMMENT

Chief Executive James Wood-Collins, commenting on trading, said "The decline in AuME over the quarter is largely due to the fall in global stock markets that has impacted the size of both our passive and dynamic hedging mandates.

"The UK Dynamic Hedging mandate we referred to in the first quarter trading update has now commenced and this mandate is included in AuME figures at $0.7bn, which represents approximately three-quarters of the ultimate mandate size.  Additionally, for our largest Dynamic Hedging client we have commenced the expanded range of currencies and asset classes referred to in the announcement of 17^th March 2011.  We have seen a number of enquiries and RFPs and believe we will secure further hedging mandates in the current financial year.  During the quarter, a US based sales executive joined Record and as a result we are having an increasing number of constructive discussions with US investment consultants and prospective clients.  Whilst this is unlikely to lead to meaningful new revenue in the current financial year from this market, we are hopeful that mandates can be secured from the next financial year onwards.

"During the current financial year, Record's product range is set to add currency value and currency momentum products, giving us the ability to offer currency multi-strategy products.  With the final steps in product diversification confirmed, the firm's focus is clearly on achieving new sales from the broadened range of currency products and services."

Record will announce its half year results for the six months to 30^th September 2011 on 18^th November 2011 and its third quarter trading update on 17^th January 2012.

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. 

 

END

 

 

TSTEASEDFLSFFFF