Record Regulatory News (REC)

22 Apr 2008 07:00

Record PLC22 April 2008 22nd April 2008 RECORD PLC FOURTH QUARTER TRADING UPDATE Record plc ("Record" or the "Company"), the specialist currency investmentmanager, announces today that as at 31st March 2008 its assets under managementequivalents ("AuME") totalled $55.7 billion (31st December 2007: $54.8 billion). 1 AuME composition The composition of the AuME at 31st March 2008 was as follows: AuME $ bn 31 March 2008 31 December 2007Absolute ReturnSegregated 14.1 13.3Pooled 14.9 15.4 ------- -------Absolute Return Sub Total 29.0 28.7Active Hedging 5.0 4.3Passive Hedging 18.3 18.5Cash & futures 3.4 3.3Total 55.7 54.8 2 AuME Growth Record continued to grow AuME and client numbers during the period between 31stDecember 2007 and 31st March 2008. Net client inflows in the three months to31st March 2008 by product were as follows: Net AuME Inflows - $ millions 3 mths to 31 March 2008 3 mths to 31 December 2007Absolute ReturnSegregated 875 744Pooled 1,098 1,571 ------- ------- Absolute Return SubTotal 1,973 2,315Active Hedging 434 83Passive Hedging 697 (321)Cash & futures 229 245Total 3,333 2,322 Record had 141 clients as at 31st March 2008, compared to 127 at 31st December2007. The growth in client numbers and the net AuME inflows set out above have beensignificantly offset by other movements in AuME. The offsetting amount is theresult of three factors: (i) Record's AuME is affected by falls in the levels of global stock and other markets, as substantially all the Passive and Active Hedging, and some of the Absolute Return, mandate sizes are linked to stock and other market levels; (ii) investment performance in the Company's pooled funds, which is compounded on a geared basis into the AuME in those funds; and (iii)changes in exchange rates over the period, which affect the conversion of non-US dollar mandate sizes into US dollar AuME. Of these factors, which were broadly equal in absolute terms, (i) and (ii) had anegative impact on the Company's AuME set out above over the period; and (iii)contributed positively. Two new Active Hedging clients were gained during the period. Indications arethat certain groups of potential client may seek to protect existing gains orlimit currency risk on portfolios denominated in currencies other than theirbase currencies by choosing to hedge their currency exposures actively ratherthan passively. If these indications are sustained and translated into newclient business for Record, this is likely to alter the overall mix of AuME inRecord's business by increasing Active Hedging AuME both absolutely and as aproportion of the total. 3 INVESTMENT PERFORMANCE Investment performance in the Company's absolute return product in the threemonths to 31st March 2008 remained weak, as currency markets continued toexhibit the patterns of behaviour of the previous six months, which arechallenging for Record's systematic strategies. However, while this environmenthas now lasted longer than on many previous occasions, it is not unprecedented,and Record's directors continue to have confidence in the investment process.The Company continues to keep its clients and their investment consultantsclosely informed. 4 AVERAGE FEE RATES During the three months to 31st March 2008 a higher proportion than formerly ofthe new client inflows to Absolute Return AuME have had fee structures withperformance fees. Consequently, the average level of management fees on newAbsolute Return mandates is lower than the average level of management fees onexisting Absolute Return mandates. This will benefit the Company whenperformance returns. Management fees: Realised fee rates by product and by fee structure were maintained during thefourth quarter. Fee rates on aggregate AuME reflect the mix of product AuMEcontained in the total. In the quarter ended 31st March 2008, growth in bothActive Hedging AuME and in AuME of Segregated Absolute Return funds has offsetthe combined downward impact of falling AuME of Pooled Absolute Return funds andthe increasing preference for fee structures with performance fees on newAbsolute Return mandates. The net effect of these developments is that overall,average fee rates achieved during the quarter on aggregate AuME were in linewith management expectations and with the rates historically achieved. Performance fees: No significant performance fees were earned during the quarter to 31st March2008. Since clients will not be charged performance fees until fund valuationsexceed the high water mark at which performance fees were last charged, Recorddoes not expect to earn significant performance fees in the year to 31st March2009 from existing clients last charged on the highs of mid year 2007.Performance fees will be charged earlier in the case of more recent and futureclients adopting performance fee structures, as high water marks are set atinception, rather than historic levels. 5 CHAIRMAN'S COMMENTS Chairman and CEO Neil Record, commenting on trading and the Company's prospects,said "We are continuing to develop the business with new clients and additionalAuME, despite the challenging environment and this period of weak performance inour absolute return investment process. We are supported by the strength of ourfive-year absolute return track record, by the high quality relationships wehave developed with investment consultants and with our clients, and by theongoing secular growth of currency management amongst our institutional clientbase." The announcement of Record's preliminary results for the year to 31st March 2008will be made on 3rd June. For further information, please contact: Record plc Tel: +44 (0) 1753 852 222Neil RecordMike Timmins Hogarth Tel: +44 (0)20 7357 9477Nick DentonJulian Walker Notes to Editors Record plc Record plc is a specialist currency investment manager and provider of currencyhedging services for institutional clients. Founded in 1983, Record hasestablished a market leading position as a currency asset manager. Specifically,the Group has a leading position in managing currency for absolute return forinstitutional clients, a new asset class which the Directors expect to continueto increase in popularity with institutional investors, including definedbenefit pension schemes, both in the United Kingdom and overseas. The Group has three principal product lines: - currency for absolute return, in which Record enters into currency contracts for clients with the objective of generating positive returns; - 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 the economic impact of currency movements on elements of clients' investment portfolios that are denominated in foreign currencies. Record (LSE: REC) was listed on the London Stock Exchange on 3rd December 2007. This announcement includes information with respect to Record's financialcondition, its results of operations and business, strategy, plans andobjectives. All statements in this document, other than statements of historicalfact, including words such as "anticipates", "expects", "intends", "plans","believes", "seeks", "estimates", "may", "will", "continue", "project" andsimilar expressions, are forward-looking statements. These forward-looking statements are not guarantees of the Company's futureperformance and are subject to risks, uncertainties and assumptions that couldcause the actual future results, performance or achievements of the Company todiffer materially from those expressed in or implied by such forward-lookingstatements. The forward-looking statements contained in this document are based on numerousassumptions regarding Record's present and future business and strategy andspeak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate anyupdates or revisions to any forward-looking statements contained in thisannouncement 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