Record — Explaining strategy and growth

Record (LSE: REC)

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Research: Financials

Record — Explaining strategy and growth

In its capital markets event in February, Record provided more detail on the progress it is making with its strategy and in particular on its diversification initiatives. This highlighted a range of partnerships to develop new products and, as a result, a promising sales pipeline pointing towards growth and potentially contributing to realisation of the target for FY25 revenue of £60m. Subsequently, signalling a further step in its succession planning, the group has announced that Neil Record, founder of the group in 1983 and currently non-executive chairman, is to retire from his role and the board following the AGM in July. David Morrison has been appointed as chair elect.

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Financials

Record

Explaining strategy and growth

Capital markets event

Financial services

2 March 2023

Price

94.00p

Market cap

£187m

Net cash and money market instruments (£m) at end-September 2022

17.7

Shares in issue

199.1m

Free float

56%

Code

REC

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(2.1)

2.2

36.2

Rel (local)

(3.6)

(2.1)

28.6

52-week high/low

98.00p

61.00p

Business description

Record is a specialist independent asset, currency and derivatives manager. It provides a number of products and services for institutional clients, including passive and dynamic hedging, and a range of currency for return strategies, including funds and customised segregated accounts.

Next events

Q423 trading update

28 April 2023

Analyst

Andrew Mitchell

+44 (0)20 3077 5700

Record is a research client of Edison Investment Research Limited

In its capital markets event in February, Record provided more detail on the progress it is making with its strategy and in particular on its diversification initiatives. This highlighted a range of partnerships to develop new products and, as a result, a promising sales pipeline pointing towards growth and potentially contributing to realisation of the target for FY25 revenue of £60m. Subsequently, signalling a further step in its succession planning, the group has announced that Neil Record, founder of the group in 1983 and currently non-executive chairman, is to retire from his role and the board following the AGM in July. David Morrison has been appointed as chair elect.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS**
(p)

P/E
(x)

Yield
(%)

03/21

25.4

6.2

2.73

2.30

34.5

2.4

03/22

35.2

10.9

4.37

3.60

21.5

3.8

03/23e

45.4

15.5

6.38

4.10

14.7

4.4

03/24e

47.2

16.0

6.10

4.20

15.4

4.5

Note: *EPS is diluted. **DPS excludes special dividends.

Strategy implementation on track

In 2020 Record embarked on a new strategy focused on growth with three components: diversification, modernisation and succession. Good progress has been made on each. Diversification is being increased through new product introductions, in many cases in partnership with clients that can provide expertise and seed funding (an example is the EM Sustainable Finance Fund). Other new products contribute to a sales pipeline with a value of c $2.1bn. Modernisation of IT systems is expected to be a continuing feature, but the initial work to update systems has been done on time and to budget, ensuring that there is good scope to extract operational leverage as the business grows. Steps have also been taken to develop, retain and motivate future leaders, key for the longer-term development of the group.

Estimates increased and FY25 targets maintained

We have adjusted our estimates, taking into account the increase in AUME reported at the time of the Q323 update and also making allowance for the indications given on the sales pipeline in the latest presentation. Our revenue assumptions for FY23 and FY24 are increased by 8% and 9% respectively while EPS increases by 17% in both years. Record has reiterated its financial targets for FY25, which include revenue of over £60m (excluding performance fees), an operating profit margin of 40% and a target ordinary dividend payout ratio of between 70% and 90% of EPS.

Valuation

Record shares trade at P/E and EV/EBITDA multiples above the peer averages. However, there is support for the rating, with growing evidence that progress is being made on the new strategy and towards the medium-term financial targets. Assuming realisation of FY25 revenues of over £60m, we estimate the P/E multiple could fall to c 10x with a yield of c 10% (including special dividends).

Recap and update on strategy and three-year plan

Background: Aiming for growth after a period of flat revenues and profit

Record introduced a new strategy following the appointment of Leslie Hill as CEO in February 2020 and set out specific medium-term financial targets in June 2022. Before giving details of both strategy and targets it is useful to provide some historical context to show how the group had previously adapted to changing market circumstances and opportunities but prior to 2020 had run into a period of stability rather than growth.

Record was established by Chairman Neil Record in 1983 and from then until 2002 the group’s main activity was currency hedging, with the client base shifting from commercial companies to institutional investors during that period. From 2001 Record developed currency for absolute return products, most notably a forward rate bias strategy, and assets under management equivalent2 (AUME) in this segment grew rapidly in the years to FY08, the financial year in which Record was listed on the London Stock Exchange. In FY08 currency for return strategies accounted for 91% of total revenue and performance fees (mainly earned on currency for return mandates) for 33% of the total.

  AUME is defined as follows: for passive hedging, the aggregate nominal amount of passive hedges outstanding for each client; for dynamic hedging, the total amount of client investment portfolios in liquid foreign currencies capable of being hedged under each mandate; for currency for return, the maximum nominal amount of outstanding forward contracts; for multi-product, the chargeable mandate size; and for cash, the amount set aside by clients and managed or equitised using futures by Record.

Market volatility and unprecedented central bank responses to the global financial crisis from 2007 adversely affected the performance of the currency for return strategies and the accompanying fund outflows meant that between FY08 and FY12 AUME in the segment fell from $29.0bn to $1.8bn. In this challenging period, AUME for passive hedging was broadly stable while dynamic hedging AUME rose, but the reduction in the higher fee-rate currency for return segment and absence of performance fees meant that revenues fell sharply (from £66.2m in FY08 to £20.5m in FY12).

Exhibit 1: Average AUME and management fee rate

Exhibit 2: Revenue, pre-tax profit and margin

Source: Record, Edison Investment Research (financial years)

Source: Record, Edison Investment Research (financial years)

Exhibit 1: Average AUME and management fee rate

Source: Record, Edison Investment Research (financial years)

Exhibit 2: Revenue, pre-tax profit and margin

Source: Record, Edison Investment Research (financial years)

Exhibit 1 shows that, reflecting the group’s expertise, the stickiness of long-term institutional clients and refocused marketing, Record succeeded in building AUME again between FY12 and FY17, primarily in passive hedging. The average fee margin continued to trend down, reflecting the changing product mix and a competitive environment. Then, between FY17 and FY20 there was a period of stability, with limited net change in AUME and average fee rate and range-bound revenue and profit (see Exhibits 1 and 2). This was the background to the board’s decision to adopt a new strategy with an emphasis on growth in early 2020.

The three-pronged strategy launched in 2020 is on track

The group’s strategy has three elements: diversification, modernisation and succession.

Diversification

To further diversification, the group is developing new products in partnership with clients, including products outside Record’s traditional currency services remit. By virtue of its established products Record has a track record as a derivatives manager, existing administrative and technology infrastructure and a client base that can attract partners that bring their own expertise and an interest in launching a product to meet their own clients’ needs.

The group structure, previously focused on Record Currency Management (which will remain as the core currency services activity), has been developed to support diversification and growth. Record Asset Management (RAM) was founded in Frankfurt (2020) and received its BaFin licence in August 2022 facilitating sales in the EU and enabling it to operate as an asset manager in its own right. The seven-strong team at RAM has extensive experience in sales, structuring of private and illiquid investments, infrastructure investing and traditional capital-markets solutions. Record Digital was established (in April 2021) as a home for Record’s digital initiatives, with £2m ring-fenced for investment in early-stage funds and direct investments. Finally, a group services company, Record Group Services, provides administrative, technology and other support services to the other subsidiaries, avoiding duplication of spending and accelerating the launch of products and services by applying experience from across the group.

New products already successfully launched include the Record EM Sustainable Finance Fund, developed in partnership with UBS Global Wealth Management, which has a current NAV of c $1bn. There is a range of further products in development. These include products involving supply chain finance, Sharia finance, infrastructure and digital assets. All reflect expressed client interest and are being developed with partners that have expertise in each area. In the capital markets event presentation, further detail was given on these initiatives, with the sales pipeline for RAM showing the potential near-term scale and timing of product launches (Exhibit 3). Notable here is how RAM’s role spans distribution, structuring and asset management with a commensurate increase in share of fees depending on its contribution. Fee rates are likely to extend from the upper end of the range charged for currency services (c 20bp) to c 65bp and a number of these products would be capable of earning performance fees. As an illustration, factoring in an average fee of 30bp would point to additional revenue of c £5m per annum from additional AUM of $2.1bn.

Exhibit 3: Record Asset Management sales pipeline (February 2023)

Type of AUM

Client type

Status

AUM ($m)

RAM role

Digital lending

Insurance company

Live

75

Distributor

Digital lending

Pension fund

Live

5

Distributor

Digital lending

Pension fund

Live

150

Distributor

Private credit

Sharia compliant structure

Q123

40

Distributor and structurer

Private credit

Family office

Q123

35

Distributor and structurer

Private equity

Family office

Q123

260

Own AUM

Private credit

Family office

Q123

70

Own AUM

Infrastructure equity

Pension fund

Q223

>1,000

Own AUM

Trade finance

Asset manager

Q323

>500

Distributor

Total

>2,135

Source: Record. Note: Expected timing in calendar year quarters in status column.

RAM’s partnerships bring a range of expertise, as demonstrated in the pipeline above and the next table, which also demonstrates that it has significant existing assets under management.

Exhibit 4: Record Asset Management partnerships

Partner

AUM ($bn)

Specialisation

Siegfried Capital Partners

2.4

Trade finance strategies

Fasanara Capital

3.7

Multi-asset niche products including alternative credit, digital lending and digital assets

AGL Credit Management

12.0

Bank loan-based investment offerings

CAZ Investments

4.0

Private equity and private credit

Avantis Investors

13.0

Systematic equity investing

Universa Investments

18.0

Options strategies and risk mitigation

Khalij Group

1.0

Sharia advisory

Source: Record

Record gave further insights on its digital initiative. The impetus for exploring this area came from enquiries from long-standing clients and investment consultants. Record Digital is headed by Rebecca Venis (chief technology officer at Record) and the decision taken was that the best way of understanding and developing opportunities in this area was through a controlled investment of Record’s own funds. To gain access to opportunities to invest, Record Digital has developed a network of people with experience in this area including Phil Bickerton, CIO of the Denlow Family Office, and Chris Tyrer, head of Fidelity Digital Assets Europe. It has also established partnerships with Darren Dineen, CIO of Dair Capital, and Amir Ben-Gacem, an early-stage venture capital investor with extensive experience in emerging market infrastructure investing.

Record Digital has focused on areas where Record is a potential client or its client base can benefit directly and where there is potential for new business opportunities. Two examples of investments made are Block Scholes which seeks to be the ‘Bloomberg of digital assets’, and Fasanara, where Record has invested in a venture capital fund. Out of the £2m ring-fenced for investment, £1.75m has been allocated and £1.25m has been drawn down. In discussion Record noted that it has assumed that Record Digital makes only a limited contribution to its target for revenue in FY25, so significant positive developments here could be incremental to the target or revenues in subsequent years. The modest scale of investment made by the group also means the exposure to the risks typical of early stage investment are contained.

Modernisation

Since 2020 the group has been undertaking a range of IT update projects to increase efficiency and facilitate the extensive data handling it undertakes; fortunately, cost-effective software is available to meet the group’s requirements and the incremental nature of the projects has reduced the risks involved in such changes and the projects have run on time and to budget. The group now has a sophisticated IT infrastructure using a hybrid cloud and on-premises approach. It employs Microsoft Azure (a scalable cloud computing platform), Microsoft BI (a business intelligence platform enabling connection with data sources and visualisation of data) and Xceptor (a data automation platform facilitating data transformation and complex process automation). While individual projects are of a one-off nature and IT spending levels may vary over time, management regards such investment as a continuing requirement. Given the increase in scalability and scope to offer products that might not otherwise be profitable, the potential for attractive returns appears good.

On talent development, key staff members have become meaningful equity owners and the plan is to roll-out the ownership and option programme further, underpinning the cultural change that is underway to ensure that a relatively mature business is able to adapt to market changes and opportunities.

Succession

Confidence in succession planning has built since the adoption of the new strategy in 2020, with changes in executive management over that period including chief investment officer (Dmitri Tikhonov), chief technology officer (Rebecca Venis), global head of sales (Dr Jan Hendrik Witte) and other promotions through the organisation to unlock talent and position the group for longer-term progress. Chief Executive Leslie Hill has indicated that she would wish to stay in position to ‘a little beyond’ the end of the group’s three-year plan to FY25. This points to continuity of management over an important phase of the group’s development.

In March the group announced that, non-executive chairman and founder, Neil Record, is to retire from his role and the board at the end of the AGM in July. He indicates that he intends to remain a major shareholder (holding June 2022 just over 28%). David Morrison has been appointed as chair elect, joining the board as a non-executive director 1 March 2023 and taking the chair following Neil Record’s retirement. Currently chairman of CCP (AIM-listed technology-driven assistance group), David has spent the majority of his career in private equity and has had roles as director or chairman at several private and public companies. Between 2009 and 2018 he served as a non-executive director at Record (including as senior independent director 2016–18) so will bring knowledge of the group in addition to his experience in providing board leadership at other companies.

Medium-term financial targets maintained

To make clear the board’s confidence in the outlook for the group and the growth potential it sees, a medium-term plan with a revenue target of over £60m in FY25 was set out. The capital markets event gave additional detail on the pipeline of new products and partnerships that are expected to contribute to meeting this goal. The target was set following a bottom-up assessment of potential for growth in each product area with the promising development of new, higher fee-margin products a key element of the expected growth. Performance fees are not included in the target. The group has seen growth in its existing AUME since 2020, including the addition of a c $8bn dynamic hedging mandate in September 2020, and further mandate wins are targeted with marketing in the EU, for example, facilitated by the licencing of the Frankfurt office. In addition to the revenue target, Record sees an operating margin of 40% as being achievable in FY25 (subject to the effects of inflation) as higher AUME brings into play the scalability of the modernised systems now in place. Reflecting the cash-generative nature of the business and strength of the balance sheet, the policy is to pay out ordinary dividends of between 70% and 90% of earnings per share with excess earnings available for special dividends subject to capital requirements.

Estimate changes and a potential route to FY25 targets

Exhibit 5 sets out headline changes in our estimates. These reflect the Q323 update including new AUME figures (6.4% increase to $86bn), the crystallisation of £3m in performance fees in the quarter and currency movements. We include performance fees earned in 9M23 (£5.8m) for FY23 and £1.5m for FY24, reflecting the more favourable environment for the enhanced passive hedging service but assuming that the exceptional level of performance seen in the current year is not repeated.

Exhibit 5: Estimate changes

 

Revenue (£m)

PBT (£m)

EPS (p)

DPS* (p)

 

Old

New

Change (%)

Old

New

Change (%)

Old

New

Change (%)

Old

New

Change (%)

03/23e

42.0

45.4

8%

13.2

15.5

17%

5.45

6.38

17%

4.10

4.10

0%

03/24e

43.5

47.2

9%

13.7

16.0

17%

5.22

6.10

17%

4.20

4.20

0%

Source: Edison Investment Research. Notes: *Dividend excludes any special payment.

The dividend estimates shown exclude special dividends. Based on our FY23 and FY24 basic earnings estimates and assuming a near 100% payout, we pencil in special payments of 2.50p and 2.10p, respectively, giving total dividends of 6.60p and 6.30p. The reduction in FY24 reflects a lower performance fee assumption following the exceptional level seen in FY23 and the increase in the UK corporation tax rate from 19% to 25% resulting in lower earnings.

Finally, while we have yet to include a forecast for FY25, as in previous notes, it is interesting to consider a scenario that could generate the over £60m revenue and 40% operating margin the group aims to achieve. For this illustration we have excluded any contribution from performance fees, in line with the target set by the group. Starting with AUME/AUM, we envisage most of the growth required falling within the currency for return category but also allow for additional inflows in multi-product and dynamic hedging. Our scenario assumes average AUME of c $95bn compared with estimates of $82.5bn and $89.6bn for FY23 and FY24, respectively. We allow for an increase in the currency for return and multi-product fee rates at 29bp and 20bp respectively (compared with 21.7bp and 18.4bp assumed for FY24, for example) both reflecting an increased contribution from new higher-margin products. As a result the overall group average fee rate in the scenario rises to 7.5bp (compared with 5.7bp and 6.1bp respectively in our FY23 and FY24 estimates). This gives revenue just above £60m. On costs we allow for a 14% increase in total operating expenses compared with our FY24 estimate, reflecting mainly an increase in group profit share but still generating considerable operating leverage and matching the target 40% operating margin. This would give pre-tax profit of c £24.3m and diluted EPS of 9.3p.

Valuation

Exhibit 6 shows an updated version of our comparative valuation table, with a selection of quoted UK fund managers. Record trades at a premium to the average calendarised P/E (2023) and EV/EBITDA (2022) multiples for the comparators, although within the range of multiples. Delivery of growth in line with the group’s three-year plan would bring the final year multiple down to c 10x. On our estimates, Record’s prospective yields (including special dividend) would be 7.0% and 6.7% for FY23 and FY24 and, on our FY25 scenario, c 10%.

Exhibit 6: Comparing valuation with UK fund managers

Price
(p)

Market cap

(£m)

P/E

2023e (x)

EV/EBITDA 2022e (x)

Dividend yield (%)

Ashmore

270

1,922

17.6

10.0

6.3

City of London Investment Group

458

232

N/A

N/A

7.2

Impax Asset Management

800

1,061

17.7

13.9

3.5

Jupiter

146

798

11.7

4.5

5.7

Liontrust

1,194

775

11.3

7.4

6.0

Man Group

266

3,971

9.5

7.7

4.7

Polar Capital

530

534

12.5

7.3

8.7

Schroders

497

8,018

13.3

11.5

4.2

Average

13.4

8.9

5.8

Record

94

187

15.2

10.9

3.8

Source: Refinitiv, Edison Investment Research. Note: P/E and EV/EBITDA on a calendar-year basis. Record’s (FY22) dividend yield excludes the special dividend. Priced at 28 February 2023.

Record in numbers

For reference we include our compilation of information provided by Record on AUME, fee income, clients and asset class exposure (Exhibit 7). This includes our calculations of estimated average fee rates by strategy and hedging fee exposure by underlying asset class. Apart from updating the AUME figures for Q323, in most cases the most recent figures are for H123 (to end September 2022). We highlight several points:

Hedging services3 in total account for 89% of AUME and 64% of management fees, reflecting the lower fee rates that apply to passive hedging. The growth in dynamic hedging and currency for return since FY19 has reduced the proportion of management fees accounted for by passive hedging from 52% to 33% in H123.

  In hedging, client currency risk exposures are predominantly managed through currency forward contracts, which Record is not a party to or exposed to related risk. Passive hedging is systematically implemented and aims for cost-effective reduction of currency risk. Enhanced passive hedging additionally seeks to exploit episodic market inefficiencies through tenor management. Dynamic hedging aims to add value by allowing clients to benefit from currency strength by adjusting the level of hedging over time; the strategy depends on trending in currency markets.

Since 2018 AUME has increased from $62.2bn to $86.0bn in Q323 (compound annual growth of 7%).

Within the client base, 75% of AUME is accounted for by corporate and public pension funds. Measured by AUME, 51% have been in place for over six years. However, with the renewed focus on growth over the past two years there is a healthy inflow of new clients, which often start with a relatively low AUME level; by number, 46% of clients have joined Record within three years.

Geographically, Switzerland accounts for 37% of revenue followed by the United States (32%).

We estimate 54% of hedging mandate fees relate to underlying equity assets, 15% to fixed income and 31% to other assets.

Exhibit 7: Record profile in numbers (H123 except where indicated)

Analysis by strategy

Q323 AUME (%)

Management fees (%)* FY19

H123

Estimated average fee rate (bp)**

Dynamic hedging

15.6

20.6

30.5

13.5

Passive hedging

73.7

52.0

33.4

2.6

Currency for return

5.5

8.0

18.7

18.8

Multi-product

5.0

19.4

17.4

18.4

Cash

0.2

N/A

N/A

0

Total

100.0

100.0

100.0

5.8

Value

$86.0bn

£22.3m

£19.0m

Client analysis

Concentration

% Fees*

Type

% AUME

Longevity (years)

% Clients

% AUME

Top 10

77

Corporate pension funds

41

0-1

16

13

Next 10

17

Public pension funds

34

1–3

30

21

Balance

6

Foundations & trusts

8

3–6

29

15

Other

17

6–10

12

29

>10

13

22

100

100

100

100

Geographical analysis and AUME progression

By client location

% revenue

By invoice currency (FY22)

% revenue

AUME progression

($bn)

Switzerland

37

US dollar

50

2018

62.2

US

32

Swiss franc

28

2019

57.3

Europe (rest)

22

Euro

10

2020

58.6

UK

6

Sterling

7

2021

80.1

Other

4

Other

4

2022

83.1

100

100

Q323

86.0

Underlying asset class exposure of dynamic and passive hedging AUME (%)

Dynamic

Passive

Estimated % of hedging fees

Equity

90

21

54

Fixed income

0

29

15

Other

10

50

31

100

100

100

Source: Record, Edison Investment Research. Notes: *Management fee excluding performance fees. **Fee rate is our own calculation and within each strategy there will be a range of mandate types and fee structures/levels. Rounding may mean some columns do not sum.

Exhibit 8: Financial summary

Year end 31 March

£'000s 

 

2019

2020

2021

2022

2023e

2024e

PROFIT & LOSS

 

 

 

 

 

 

 

 

Revenue

 

 

24,973

25,563

25,412

35,152

45,418

47,249

Operating expenses

 

 

(17,089)

(17,996)

(19,333)

(23,945)

(30,028)

(31,603)

Other income/(expense)

 

 

(8)

82

41

(372)

(40)

(40)

Operating profit (before amort. and except.)

 

7,876

7,649

6,120

10,835

15,350

15,350

Finance income

 

 

113

88

33

21

128

362

Profit before tax

 

 

7,989

7,737

6,153

10,856

15,478

15,968

Taxation

(1,559)

(1,365)

(802)

(2,225)

(2,941)

(3,992)

Minority interests

 

 

0

48

0

0

0

0

Attributable profit

 

 

6,430

6,420

5,351

8,631

12,537

11,976

Revenue/AuME (excl. perf fees) bps

 

 

4.9

4.9

4.8

5.6

5.7

6.1

Operating margin (%)

 

 

31.5

29.9

24.1

30.8

33.8

33.0

Average number of shares outstanding (m)

 

 

198.1

197.1

196.2

197.3

196.4

196.4

Basic EPS (p)

 

 

3.27

3.26

2.75

4.52

6.61

6.31

EPS - diluted (p)

 

 

3.25

3.26

2.73

4.37

6.38

6.10

Dividend per share (p)

 

 

2.30

2.30

2.30

3.60

4.10

4.20

Special dividend per share (p)

 

 

0.69

0.41

0.45

0.92

2.50

2.10

Total dividend (p)

 

 

2.99

2.71

2.75

4.52

6.60

6.30

BALANCE SHEET

 

 

 

 

 

 

Non-current assets

 

 

2,161

4,868

5,153

6,084

6,318

6,028

Intangible Assets

 

 

288

470

420

562

1,211

1,561

Tangible Assets

 

 

761

751

683

401

345

165

Investments

 

 

1,112

2,472

3,046

3,447

3,606

3,606

Other

 

 

0

1,175

1,004

1,674

1,156

696

Current assets

 

 

31,427

31,149

28,045

27,141

32,114

30,486

Debtors

 

 

7,562

8,704

8,006

9,883

12,926

13,598

Cash

 

 

12,966

14,294

6,847

3,345

19,176

16,877

Money market instruments

 

 

10,735

7,958

12,932

13,913

0

0

Other

 

 

164

193

260

0

11

11

Current liabilities

 

 

(6,158)

(6,955)

(5,992)

(6,210)

(7,519)

(7,362)

Creditors

 

 

(2,736)

(3,009)

(3,426)

(4,721)

(5,837)

(6,140)

Financial liabilities

 

 

(2,621)

(2,191)

(1,696)

0

0

0

Other

 

 

(801)

(1,755)

(870)

(1,489)

(1,682)

(1,222)

Non-current liabilities

 

 

(29)

(901)

(407)

(1,085)

(960)

(960)

Net assets

 

 

27,401

28,161

26,799

25,930

29,953

28,192

Minority interests

 

 

60

132

0

0

0

0

Net assets attributable to ordinary shareholders

 

27,341

28,029

26,799

25,930

29,953

28,192

No of shares at year end

 

 

199.1

199.1

199.1

199.1

199.1

199.1

NAV per share p

 

 

13.7

14.1

13.5

13.0

15.0

14.2

CASH FLOW

 

 

 

 

 

 

Operating cash flow

 

 

7,026

6,543

6,798

11,355

12,140

12,206

Capex

 

 

(72)

(243)

(230)

(75)

(300)

(170)

Cash flow from other investing activities

 

 

(561)

1,513

(6,210)

(3,392)

13,739

(138)

Dividends

 

 

(5,517)

(5,888)

(5,290)

(6,512)

(9,250)

(13,237)

Other financing activities

 

 

(613)

(943)

(2,368)

(5,019)

(688)

(960)

Other

 

 

205

346

(147)

141

190

0

Net cash flow

 

 

468

1,328

(7,447)

(3,502)

15,831

(2,299)

Opening cash/(net debt)

 

 

12,498

12,966

14,294

6,847

3,345

19,176

Closing net (debt)/cash

 

 

12,966

14,294

6,847

3,345

19,176

16,877

Closing net (debt)/cash inc money market instruments

23,701

22,252

19,779

17,258

19,176

16,877

AUME ($bn)

 

 

 

 

 

 

Opening

 

 

62.2

57.3

58.6

80.1

83.1

87.3

Net new money flows

 

 

(4.5)

4.6

9.7

2.4

10.3

3.9

Market/other

 

 

(0.4)

(3.3)

11.8

0.6

(6.1)

0.9

Closing

 

 

57.3

58.6

80.1

83.1

87.3

92.2

Source: Record accounts, Edison Investment Research


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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Record and prepared and issued by Edison, in consideration of a fee payable by Record. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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