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Finals due this Thursday (17 June).
yes, but around £60k of buys just showing, something going on today ?
someone is offloading ...
Yes all good, nice stock to hold! Very happy with it!
There must be a large opportunity in the ESG space, so there could be more growth down the tracks.
Decent balance sheet, growth potential and catching market sentiment. What's not to like.
It will be interesting to see the end of day comparison with market expectations. I'm over-weight REC, so I wont be adding more, but I certainly wont be selling. Good long term hold.
Assets under Management (Equivalence) up 37% on year.
Inflow of $9.7bn.
Performance fees earned (which is unusual in itself) of £0.1m.
Exceptional results.
Brainer
Me too. This is a no brained, wish I'd bought more in the past!
Even having doubled from my buy in price I'm in no hurry to sell. This is a unique business and I'm happy to keep pulling in the divis
v. quiet BB here!
SP has roughly doubled since we last agreed we were happy investors. And P/G and %divi remain perfectly reasonable. Wish my whole p/f was like this!
Anyone know why steep rise in share price last week. Went from 39ish to 47.
New $8bn mandate.
From the most recent Edison report, the average management fee for dynamic hedging is 0.16% p.a. If we reduce the management fee to 0.125% to reflect reducing fees for higher sizes of mandate we get to a total management fee of $10m or £7.8m p.a when fully invested. This amount will largely fall straight down to the bottom line.
The year end 2021 and 2022 profit forecast (by Edison) are £5.7m and £5.6m respectively. So this new mandate has the potential to more that double the companies profit by 2022. The shares rose by around 25% yesterday but in my view there is still more to come. AIMO
Agreed, held them for years. Good company, good balance sheet. And to some extent they provide an opportunity when markets race ahead.
Decent bit of news this morning and decent little rally to go with it.
I've always thought so, I've been holding the shares for a long time, 5+ years, I was planning to top-up in October. After todays news, and subsequent rally, it's looking good for the near future.
Agree, their outlook for the future of the business looks encouraging. I bought in early this morning. Divi is welcome in these times !
happy with these results given current situation. Healthy dividend yield.
for some decent figures next month. These volatile times should be fertile territory for currency management. This is a conservatively run business and I'm looking for a maintained dividend (hopefully)
Exactly what i`m thinking
that keeps on delivering. One to buy and hold long term for the dividend.
Cenkos - great summary - very informative.
A sound recovery with more to come
Record has delivered interim results in-line with forecasts, despite not recognising high margin performance fees. The business has recovered AUME through client extensions following the outflows of H2/19A, driving management fees upward. By investing in new products, IT and client service, AUME growth should continue overcoming any long-term
fee pressures. With a healthy pipeline, momentum is building.
H1/20A results - in-line despite no performance fees: Record achieved H1/20A revenues of £11.4m, in-line with forecasts, despite not recognising performance fees per our FY20E forecast. Revenues were 10% lower YoY as H1/19A comp
included £1.0m of performance fee and the results of mandates which ceased during H2/19A. Underlying management fees are now moving upward, with a +2% rise on H2/19A as AUME levels have recovered, also aided by weaker sterling. Interim profits were similarly in-line with forecasts, with adj EBIT of £3.1m, despite not recognising high margin performance fees, as cost control was exercised and should continue.
Performance fees – high margin, but low visibility: Record offers clients a reduction in management fees in order to share in the spoils of its investment success via performance fees. While no such fees were recognised in H1/20A, the accrual of
positive investment performance may be ongoing, awaiting recognition once the agreed timescale lapses. Upon recognition, the fees incur no incremental costs save for GPS charges (25-35% EBIT), thus achieving high EBIT margins of 65%+. Should any crystallise in H2/20E beyond our £1.3m FY20E forecast, we would expect them to have a notable impact on profits and a potential upward revision to forecasts.
AUME: As per the recent Q2/20A update, AUME currently stands at $59.9bn. This includes recently announced new extensions to existing client mandates, which are yet to be fully reflected as annualised management fees. Thus, we see positive revenue momentum ahead when combined alongside the current healthy pipeline.
EPS forecasts unchanged: In our view, today’s update represents in-line trading. We update FY20E and FY21E forecasts predominantly for the effect of IFRS16, adopted for the first time this period. Our adj EPS forecasts remain unchanged.
Valuation multiples now reflect defensive attributes: With a long-established track record, longstanding customer relationships (40% of clients engaged for 6+ years) and operating in a specialist niche of a global market, Record can be seen as a longterm defensive play. An FY20E ex-cash P/E of 15.0x, or 12.1x excl money market deposits, is yet to fully reflect this despite the shares recent impressive rise.
STRONG QUARTER OF INFLOWS BODES WELL
The notable highlight of Record’s Q2/20A update is the +$1.7bn net client inflow, which builds on Q1/20A’s inflow of +$0.3bn. This takes AUME to $59.9bn, ahead of our year-end expectations. When combined with broadly unchanged fee rates over the quarter, we see upgrade potential should this level of AUME be maintained. We prudently keep forecasts
unchanged today, noting materially stronger GBP this month, which would counter some of this upside to forecasts should it be sustained.
- AUME rises 3% to $59.9bn: AUME now stands at $59.9bn, rising +2.7% on Q1/20A’s $58.3m. Given management fees are charged on AUME levels, this bodes well for the future. The +$1.6bn overall uplift can be attributed to +$1.7bn client inflows (see below), +$1.3bn of favourable market movements (equity, fixed income et al), offset by $(1.4)bn of exchange rate movements on non-USD AUME. The latter reflects that only c11% of AUME is USD denominated, hence FX gains/losses are recognised upon converting the various mandates’ currencies. This includes 57% of AUME which is CHF denominated, with CHF depreciating slightly versus USD over Q2/20A.
- Net client inflows of +$1.7bn, driven by Passive hedging: Record achieved net client inflows of $1.7bn over Q2/20A, the second consecutive quarter of inflows following Q1/20A’s +$0.3bn. The increased momentum arose predominantly from existing client mandates, with Record’s continued efforts to deliver a premium, specialist service rewarded with new commitments. Underpinning the inflow was a significant +$1.5bn rise in the core (84% AUME) Passive Hedging product, as larger clients increased mandate sizes, while Currency for Return also delivered a +$0.3bn inflow.
- New clients added with pipeline of more to come: Two new clients (Q1/20A: +3) were added over Q2/20A, which in themselves can hold multiple mandates. We note the new business pipeline includes a diversity of new names, we believe, of all sizes.
- Performance fees yet to come: Performance fees are recognised as and when a client’s agreed accrual periods ends and a performance uplift has been delivered. As yet, no such fees have been recognised in FY20E, but our £1.3m FY20E forecast
reflects a H2/20E delivery broadly equivalent to half of FY19A’s £2.3m annual result.
- Forecasts unchanged, but risk to upside: Q2/20A AUME is already ahead of our FY20E forecast of $58.5bn, with fee rates broadly unchanged. We consider this gives potential for upgrades should it be maintained. We note however GBP’s recent
strength this month provides future translation headwinds, hence we prudently maintain forecasts, awaiting further clarity in the upcoming interims. A FY20E P/E of 14.3x does not fully reflect Record’s longstanding client base and recurring income.
Correction, not sure where I got 11% from but meant to say about 9.5%. Still pretty good.
Depends what price you bought at. My buy wasn't low at 33p and that gives me 11% dividend yield for the year based on 2.99p dividend. I keep over looking this share but I intend to add on any drop by a penny or so as it has broken out of it's previous trading range and looks to go higher soon. Not a lot, but should see another 10%.
a 7%+ yield is just too boring for most speculators