-Full year earnings ahead of expectations
-New product offerings driving growth
-Revenue guidance of £60 million for 2025 prompts upgrades
Shares in currency and derivatives manager Record (REC) jumped 8% to 72p following the announcement of full year results that were ahead of expectations. The group is paying a special dividend of 0.92p per share in addition to the final dividend.
For the year ended 31 March 2022 assets under management increased by 4% from $80.1 billion to $83.1 billion. Revenues increased by 38% from £25.4 million to £35.1 million.
Pre-tax profit rose by 76% to £10.9 million and earnings per share increased by 64% from 2.75p to 4.52p. The final dividend of 1.80p has moved ahead by 57%.
Windsor-based Record offers a range of strategies designed to protect its clients from violent moves in currency markets.
Its passive hedging strategy, which makes up the largest part of the business, seeks to eliminate the impact of currency movements in its clients’ portfolios when denominated in foreign currencies.
NEW PRODUCTS TO DRIVE GROWTH
Moving forward management believe growth will be sustained by new product offerings and partnerships.
The Record EM Sustainable Finance Fund (in partnership with UBS Global Wealth Management) was the first of the new products to be launched in June 2021 and has since increased its AUM from $750 million to $1.2 billion.
Record expects to launch another product, a municipal loan fund focused for the German institutional market.
This will be in partnership with Universal-Investment and will include a yield-enhancing component provided by one of Record’s existing currency management clients.
These products illustrate a move beyond Record being purely a currency manager and deploying its expertise to manage other assets and, in the process, earn higher fees.
Management believe the company can achieve ‘revenue of approximately £60 million by this time in 2025’. This compares with consensus forecasts of £44 million.
EXPERT VIEW
House broker Panmure Gordon commented: ‘If for the year to March 2025 the company can deliver £60 million of revenues, profit before tax of £21 million and earnings per share of 9p, the prospective price earnings ratio is just 7x.'
'Assuming the same dividend policy applies?.the prospective yield for 2025 could be over 14%’.
