Record — Underlying growth and pipeline are attractive

Record (LSE: REC)

Last close As at 23/02/2024

GBP0.67

1.30 (1.97%)

Market capitalisation

GBP132m

More on this equity

Research: Financials

Record — Underlying growth and pipeline are attractive

In H124, Record posted steady management fee growth of 3% y-o-y to £19.6m as the company benefited from a higher assets under management equivalent (AUME) base. Total revenues, however, were down 3% as performance fees in H123 outweighed those earned in H124. Profit before tax was down 17% y-o-y to £6.3m as Record incurred costs related to its expansion and modernisation initiatives. In line with its progressive dividend policy, Record increased its dividend by 5% y-o-y to 2.15p per share. After four years as CEO, Leslie Hill announced her retirement and will be succeeded by Dr Jan Witte (CEO of the subsidiary Record Currency Management) at the end of FY24 in March. He has also been appointed to the board as executive director with effect from 1 January 2024. Leslie will maintain her share ownership in Record and will assist senior management in Record’s transition phase.

Written by

Robert Murphy

Managing Director, Financials and Investment Trusts

Record_resized

Financials

Record

Underlying growth and pipeline are attractive

H124 results

Financial services

11 December 2023

Price

70.8p

Market cap

£141m

Net cash and money market instruments (£m) at H124

14.8

Shares in issue

199.1m

Free float

37.3%

Code

REC

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(0.3)

(7.3)

(18.6)

Rel (local)

(2.7)

(8.3)

(19.3)

52-week high/low

98.00p

65.00p

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

Q324 update

January 2024

Q424 update

April 2024

FY24 results

June 2024

Analysts

Rob Murphy

+44 (0)20 3077 5700

Armando Hoxha

+44 (0)20 3077 5700

Record is a research client of Edison Investment Research Limited

In H124, Record posted steady management fee growth of 3% y-o-y to £19.6m as the company benefited from a higher assets under management equivalent (AUME) base. Total revenues, however, were down 3% as performance fees in H123 outweighed those earned in H124. Profit before tax was down 17% y-o-y to £6.3m as Record incurred costs related to its expansion and modernisation initiatives. In line with its progressive dividend policy, Record increased its dividend by 5% y-o-y to 2.15p per share. After four years as CEO, Leslie Hill announced her retirement and will be succeeded by Dr Jan Witte (CEO of the subsidiary Record Currency Management) at the end of FY24 in March. He has also been appointed to the board as executive director with effect from 1 January 2024. Leslie will maintain her share ownership in Record and will assist senior management in Record’s transition phase.

Year end

Revenue (£m)

PBT
(£m)

EPS*
(p)

DPS**
(p)

P/E
(x)

Yield
(%)

03/22

35.2

10.9

4.37

3.60

16.2

5.1

03/23

44.7

14.6

5.81

4.50

12.2

6.4

03/24e

43.4

12.8

4.96

4.55

14.3

6.4

03/25e

47.1

14.1

5.46

4.70

13.0

6.6

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

AUME up 5% y-o-y but down 4% h-o-h

Record reported AUME of US$84.5bn, up 5% y-o-y but down 4% h-o-h. Lower AUME was predominantly attributable to negative movements in scaling and markets of US$2.2bn. Some of the mandates are linked to equity and other assets holdings such as bonds and real estate, meaning AUME is sensitive to movements in those markets.

Delays attributed to legal processes

Record’s underlying business of currency management remains robust and it continues to grow its revenues at a steady pace. However, its diversification strategy is behind schedule. Its Infrastructure Fund, which management estimates will reach c US$1bn at capacity, has been delayed for some time. Delays have been caused by longer-than-expected legal processes and not slowing investor appetite – its clients have already committed to the fund. Positively, Record made good progress in H124, introducing two funds with AUM totalling US$220m. It expects two further funds in H224, one of which is the Infrastructure Fund, and has more initiatives lined up further down the road. Our PBT estimates for FY24 have fallen 4% as we have updated our model for a rising pound sterling/US dollar exchange rate, while our FY25 estimates remain broadly unchanged.

Valuation: Priced at a premium compared to peers

Record trades at premiums of 17% and 53% to its peers on calendarised price to earnings and EV/EBITDA multiples, respectively. Despite being far smaller than its peers, and still in its growth stage, Record offers a competitive dividend yield.

Record in numbers

In Exhibit 1, we have updated our table of AUME, fee income, clients and asset class exposure. This includes our calculations of estimated average fee rates by strategy and hedging fee exposure by underlying asset class.

We highlight several points:

The diversification strategy into higher margin areas has improved the mix. Since FY19, lower fee earning passive hedging has fallen from 52% to just under 30% of management fees, while dynamic hedging and currency for return have significantly increased their contribution.

Since 2019, AUME has increased from US$57.3bn to US$84.5bn in H124 (a compound annual growth rate of 9%). Over the period, the average fee rate has also risen from 4.9bp to 5.7bp, reflecting the favourable mix shift.

Record has a strong and reliable client base. 79% of AUME is derived from corporate and public pension funds, while 58% of funds have been in place for over six years. However, Record has onboarded a healthy number of new clients as it focuses on growth – 51% of clients have been with the company for three years or less.

Geographically, the US accounts for 37% of revenues, overtaking Switzerland, which now accounts for 19%. Europe is the second highest with 36%.

We estimate 52% of hedging mandate fees relate to underlying equity assets, 17% to fixed income and 31% to other assets.

Exhibit 1: Record profile in numbers (H124 except where indicated)

Analysis by strategy

AUME (%)

Management fees (%)* FY19

H123

Est. average fee rate (bp)**

Dynamic hedging

12.4

20.6

35.7

11.8

Passive hedging

77.0

52.0

29.8

2.4

Currency for return

5.3

8.0

15.8

19.5

Multi-product

5.2

19.4

18.7

17.5

Cash

0.1

N/A

N/A

0

Total

100.0

100.0

100.0

5.7

Value

$84.5bn

£22.3m

£19.6m

Client analysis

Concentration

% AUME

Type

% AUME

Longevity (years)

% Clients

% AUME

Top 10

74

Corporate pension funds

28

0–1

30

15

Next 10

12

Public pension funds

51

1–3

21

18

Balance

14

Foundations & trusts

9

3–6

22

9

Other

12

6–10

12

25

>10

15

33

100

100

100

100

Geographical analysis and AUME progression

By client location

% revenue

By invoice currency (FY23)

% revenue

AUME progression

(US$bn)

Switzerland

19

US dollar

47

2019

57.3

US

37

Swiss franc

32

2020

58.6

Europe (rest)

36

Euro

8

2021

80.1

UK

6

Sterling

9

2022

83.1

Other

2

Other

4

2023

87.7

100

100

H124

84.5

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

Dynamic

Passive

Estimated % of hedging fees

Equity

85

23

52

Fixed income

0

32

17

Other

15

45

31

100

100

100

Source: Record, Edison Investment Research. Note: *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.

H124 results

AUME currently sits at US$84.5bn, up 5% y-o-y but down 4% h-o-h largely due to negative movements in scaling and markets. Within passive and dynamic hedging mandates, and some multi-product mandates, AUME is sensitive to movements in equities and other markets as the mandates are linked to equity holdings and other asset types such as bonds and real estate. Net inflows in H124 were a negative US$1bn – mainly in passive hedging, which is a lower fee earner and hence relatively immaterial – compared to the positive flows in H123 of US$8.6bn. Emphasising the negative movement in AUME were the negative US$2.2bn impacts of scaling and equity and other markets movements. Hence, total change in AUME was negative US$3.2bn.

Exhibit 2: AUME progression

AUME

Net flows

US$bn

H122

H222

H123

H223

H124

H122

H222

H123

H223

H124

Dynamic hedging

10.3

10.6

10.0

14.7

14.5

0.6

0.8

1.7

2.5

0.3

Passive hedging

63.0

62.8

62.2

63.8

60.5

0.3

0.8

7.2

(2.3)

(1.3)

Currency for return

5.4

5.0

4.3

3.9

3.9

1.0

(0.6)

(0.3)

(0.3)

(0.2)

Multi-product

5.2

4.5

4.2

5.2

5.3

0.0

(0.5)

0.0

0.6

0.0

Cash and futures

0.2

0.2

0.1

0.1

0.3

0.0

0.0

0.0

0.0

0.2

Total

84.1

83.1

80.8

87.7

84.5

1.9

0.5

8.6

0.5

(1.0)

Other movements

Markets

1.8

(1.5)

(4.8)

1.0

(1.9)

FX and scaling for mandate volatility targeting

0.3

0.0

(6.1)

5.4

(0.3)

Total change

4.0

(1.0)

(2.3)

6.9

(3.2)

Source: Record, Edison Investment Research

Management fees increased 3% y-o-y to £19.6m as Record benefited from a higher AUME base (see Exhibit 3). Fee contributions from each product remain broadly proportionate with H123. Record earned good performance fees of £1.5m in H124 but these were lower than the £2.8m earned in H123. Subsequently, total revenues slid 3% to £21.5m in H124.

Administrative costs rose 3% y-o-y as the company increased its headcount to facilitate its expansion plans, particularly in its Record Asset Management (RAM) business, which forms a key part of the diversification strategy. In April, Record also agreed to pay its employees (below board level) a £2,000 one-off payment to help its staff mitigate cost-of-living pressures. Additionally, as of 1 October, Record gave staff a 3% raise to further help them navigate the inflationary environment as well as to remain a competitive employer. Moreover, IT spend remains elevated as the company continues to drive its modernisation programme in three key areas: software development, infrastructure and data management. This is driving scalability and capability, enabling Record to take on more complex hedging programmes with larger asset managers across multiple funds.

Record reported other costs of £0.26m, which were related to legal and administrative fees associated with opening its investment funds. Record should be able to mitigate these costs once its new funds start generating fees.

As a result, operating income was 19% lower than H123, at £6.1m. Record’s profit before tax (PBT) was marginally softened by net finance income of £0.13m earned by pushing its cash into investments and short-term interest-bearing deposits. PBT was reported at £6.3m, 17% lower than in H123.

Net profit was £4.7m, 24% lower than H123, as Record suffered a higher tax rate of 25% (H123: 18%) that was instituted to all UK corporates on 1 April 2023.

Consequently, Record’s EPS fell 24% to 2.48p per share. However, in line with its progressive dividend policy, Record increased its interim dividend to 2.15p per share (H123: 2.05p/share), reflecting Record’s strong cash generation, management’s commitment to returning capital to shareholders and its faith in the longer-term performance of the company. Record maintains sufficient levels of regulatory capital, underpinned by a healthy cash position on its balance sheet. Its progressive dividend policy should not prove a hinderance to maintaining its regulatory capital requirements (required regulatory capital at FY23 was £7.1m).

Exhibit 3: Profit and loss account

£’000 unless otherwise stated

H122

H222

H123

H223

H124

FY23

h-o-h change

y-o-y change

Dynamic hedging

4,783

5,237

5,780

6,233

6,979

12,013

12.0%

20.7%

Passive hedging

5,802

5,966

6,328

6,584

5,837

12,912

(11.3%)

(7.8%)

Currency for return

2,077

3,436

3,544

3,245

3,097

6,789

(4.6%)

(12.6%)

Multi-product

3,446

3,336

3,308

3,276

3,662

6,584

11.8%

10.7%

Management fees

16,108

17,975

18,960

19,338

19,575

38,298

1.2%

3.2%

Performance fees

0

499

2,833

2,972

1,517

5,805

(49.0%)

(46.5%)

Other investment services income

225

345

266

320

377

586

17.8%

41.7%

Total revenue

16,333

18,819

22,059

22,630

21,469

44,689

(5.1%)

(2.7%)

Cost of sales

(206)

(13)

(3)

(34)

(34)

(37)

0.0%

1033.3%

Gross profit

16,127

18,806

22,056

22,596

21,435

44,652

(5.1%)

(2.8%)

Administrative expenses

(10,713)

(13,013)

(14,561)

(15,327)

(15,048)

(29,888)

(1.8%)

3.3%

Other income/expense

(264)

(108)

21

(314)

(260)

(293)

(17.2%)

(1338.1%)

Operating profit

5,150

5,685

7,516

6,955

6,127

14,471

(11.9%)

(18.5%)

Net finance income

4

17

28

99

134

127

35.4%

378.6%

Profit before tax

5,154

5,702

7,544

7,054

6,261

14,598

(11.2%)

(17.0%)

Taxation

(1,156)

(1,069)

(1,334)

(1,925)

(1,535)

(3,259)

(20.3%)

15.1%

Profit after tax

3,998

4,633

6,210

5,129

4,726

11,339

(7.9%)

(23.9%)

Minority interests

0

0

0

0

0

0

N/A

N/A

Attributable net profit

3,998

4,633

6,210

5,129

4,726

11,339

(7.9%)

(23.9%)

Basic EPS (p)

2.08

2.42

3.27

2.68

2.48

5.95

(7.7%)

(24.3%)

Diluted EPS (p)

2.01

2.33

3.16

2.64

2.44

5.81

(7.6%)

(22.8%)

DPS (p)

1.80

2.72

2.05

3.13

2.15

5.18

(31.3%)

4.9%

Tax rate

22%

19%

18%

27%

25%

22%

Source: Record, Edison Investment Research

Outlook and estimate changes

Update on diversification strategy

Record continues to display good performance in its currency management business. We highlight the strong performance in its Emerging Markets Sustainable Fund (EMSF), the fund produced in partnership with UBS Wealth Management, which has earned solid returns over the period and is outperforming its benchmark. The fund is seeing growing investor interest with new pension funds and asset managers being onboarded. Additionally, in H124, Record delivered two new funds in its RAM business: GP Stakes (AUM of US$5m) and Protected Equities (AUM of US$215m). GP Stakes specialises in taking minority equity stakes in alternative asset managers while Protected Equities combines an international equity portfolio with downside tail-risk protection. Record anticipates two further fund launches within RAM and Record Digital Asset Ventures (RDAV) before the end of the financial year.

In RDAV, Record has partnered with Dair Capital, a global asset manager, to launch a digital asset fund in Luxembourg. Record will participate in both management and performance fees and will earn a higher fee if it originates the assets. It plans to launch three funds created by Darren Dineen (CEO of Dair Capital) and Record plans to make his Five Seasons fund one of the first regulated crypto-currency fund in Luxembourg. Record aims to work with the ultra-high-net-worth individuals Darren has worked with in the past alongside new institutional investors. The fund will launch before being regulated, meaning it is limited to raising €600m. Once the fund becomes regulated, it will be permitted to raise more capital. Regarding the fee structure, management signalled that fees would be akin to typical active manager fees.

Additionally, RAM has been working with a number of large pension funds to deliver an Infrastructure Fund that, at capacity, is expected to have c US$1bn in AUM. Although its launch has been delayed (now expected in H224), management emphasises that the cause is not faltering investor appetite, but the legal and regulatory process. The fund involves five Swiss pension funds and one Dutch pension fund – the originator – with Record acting as general partner. The fund lifecycle will be 12 to 15 years and will provide Record with a long-term revenue source, earning higher fee rates than currency management. We note that fees will be earned gradually – only when capital is drawn down in the fund, which is likely to be done in US$150–200m tranches. Management highlighted that the fund has gauged interest from other investors who are interested in a second tranche. Record is also engaged with another client in setting up a Sharia compliant fund, which could help Record unlock a new market.

Slight estimate changes

The long-term outlook for Record remains positive. New funds with higher fees than the currency products, growing investor demand and improving operational efficiency will allow Record to continually grow its revenues and improve its operating margins over time.

Our estimates for FY24 have slightly changed, accounting for decreased fee assumptions on dynamic hedging. While we have broadly kept our AUME estimates the same, rising pound sterling/US dollar rates have slightly lowered our management fee forecasts (since AUME is reported in US dollars but income is reported in pounds sterling). Our performance fee expectations remain broadly unchanged. As a result, we have lowered our revenue estimate by 2%. Our cost assumptions remain broadly the same for both FY24 and FY25 as we expect Record to continue implementing its modernisation programme, which includes further spend in IT, and hire more staff in line with its expansion plan. Lower revenues alongside lower net finance income estimates have led to a 4% drop in our PBT assumption.

We expect Record to continue its progressive dividend policy, increasing our FY24 DPS assumption by 3% to 4.55p per share, representing a 90% ordinary payout ratio on FY24 net income. In FY25, we have not forecasted any material changes. Similar to FY24, we expect a small increase of 2% in the DPS.

Exhibit 4: Estimate changes

FY24e

FY25e

Old

New

Change

Old

New

Change

Revenue (£m)

44.1

43.4

(2%)

47.0

47.1

0%

PBT (£m)

13.3

12.8

(4%)

14.1

14.1

0%

EPS* (p)

5.14

4.96

(4%)

5.44

5.46

0%

DPS** (p)

4.40

4.55

3%

4.60

4.70

2%

Source: Edison Investment Research. Note: *EPS is diluted. **Dividend excludes any special payment.


Valuation

In Exhibit 5, we illustrate a peer comparison table of UK-listed fund managers. Record trades at premiums of 17% and 53% to its peers on calendarised price to earnings and EV/EBITDA multiples, respectively. We highlight that Record is noticeably smaller than its peers and is still in a period of high growth. Additionally, Record offers a competitive dividend yield compared to its more mature peers.

Exhibit 5: UK fund managers peer comparison

Price
(p)

Market cap (£m)

P/E 2023e
(x)

EV/EBITDA 2023e (x)

Dividend yield (%)

Ashmore

197

1,401

15.8

6.9

8.6

City of London Investment Group

315

160

N/A

N/A

10.5

Impax Asset Management

504

668

14.7

9.9

5.5

Jupiter

84

457

6.9

1.1

10.0

Liontrust Asset Management

535

347

6.3

3.1

13.5

Man Group

219

3,299

12.5

8.9

5.6

Polar Capital

444

449

12.7

3.4

10.4

Schroders

421

6,793

13.2

10.3

5.1

Average

1,697

11.7

6.2

8.6

Record

70.8

141

13.7

9.5

6.4

Source: Refinitiv, Edison Investment Research. Note: P/E and EV/EBITDA on a calendar-year basis. Record’s (FY23) dividend yield excludes the special dividend. Priced at 11 December 2023.

Exhibit 6: Financial summary

Year end 31 March, £'000s

 

 

2019

2020

2021

2022

2023

2024e

2025e

PROFIT & LOSS

 

 

 

 

 

 

 

 

 

Revenue

 

 

24,973

25,563

25,412

35,152

44,689

43,404

47,144

Operating expenses

 

 

(17,089)

(17,996)

(19,333)

(23,945)

(29,925)

(30,750)

(33,504)

Other income/(expense)

 

 

(8)

82

41

(372)

(293)

(150)

0

Operating profit (before amort. and except.)

 

 

7,876

7,649

6,120

10,835

14,471

12,504

13,640

Finance income

 

 

113

88

33

21

127

300

450

Profit before tax

 

 

7,989

7,737

6,153

10,856

14,598

12,804

14,090

Taxation

(1,559)

(1,365)

(802)

(2,225)

(3,259)

(3,201)

(3,522)

Minority interests

 

 

0

48

0

0

0

0

0

Attributable profit

 

 

6,430

6,420

5,351

8,631

11,339

9,603

10,567

Revenue/AUME (excluding perf fees) bp

 

 

4.9

4.9

4.8

5.6

5.6

5.8

6.1

Operating margin (%)

 

 

31.5

29.9

24.1

30.8

32.4

28.8

28.9

Average number of shares outstanding (m)

 

 

198.1

197.1

196.2

197.3

195.3

193.6

193.6

Basic EPS (p)

 

 

3.27

3.26

2.75

4.52

5.95

5.03

5.54

EPS - diluted (p)

 

 

3.25

3.26

2.73

4.37

5.81

4.96

5.46

Dividend per share (p)

 

 

2.30

2.30

2.30

3.60

4.50

4.55

4.70

Special dividend per share (p)

 

 

0.69

0.41

0.45

0.92

0.68

0.20

0.50

Total dividend (p)

 

 

2.99

2.71

2.75

4.52

5.18

4.75

5.20

BALANCE SHEET

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

2,161

4,868

5,153

6,084

7,813

7,529

7,819

Intangible Assets

 

 

288

470

420

562

1,390

1,940

2,540

Tangible Assets

 

 

761

751

683

401

377

247

247

Investments

 

 

1,112

2,472

3,046

3,447

4,901

4,448

4,448

Other

 

 

0

1,175

1,004

1,674

1,145

894

584

Current assets

 

 

31,427

31,149

28,045

27,141

28,924

28,424

29,429

Debtors

 

 

7,562

8,704

8,006

9,883

14,373

13,381

14,775

Cash

 

 

12,966

14,294

6,847

3,345

9,948

15,043

14,654

Money market instruments

 

 

10,735

7,958

12,932

13,913

4,549

0

0

Other

 

 

164

193

260

0

54

0

0

Current liabilities

 

 

(6,158)

(6,955)

(5,992)

(6,210)

(7,630)

(6,173)

(6,356)

Creditors

 

 

(2,736)

(3,009)

(3,426)

(4,721)

(6,011)

(4,728)

(5,221)

Financial liabilities

 

 

(2,621)

(2,191)

(1,696)

0

0

0

0

Other

 

 

(801)

(1,755)

(870)

(1,489)

(1,619)

(1,445)

(1,135)

Non-current liabilities

 

 

(29)

(901)

(407)

(1,085)

(816)

(673)

(673)

Net assets

 

 

27,401

28,161

26,799

25,930

28,291

29,107

30,219

Minority interests

 

 

60

132

0

0

0

0

0

Net assets attributable to ordinary shareholders

 

27,341

28,029

26,799

25,930

28,291

29,107

29,107

No of shares at year end

 

 

199.1

199.1

199.1

199.1

199.1

199.1

199.1

NAV per share p

 

 

13.7

14.1

13.5

13.0

14.2

14.6

15.2

CASH FLOW

 

 

 

 

 

 

 

 

 

Operating cash flow

 

 

7,026

6,543

6,798

11,355

12,263

11,214

10,576

Capex

 

 

(72)

(243)

(230)

(75)

(272)

(120)

(250)

Cash flow from other investing activities

 

 

(561)

1,513

(6,210)

(3,392)

7,498

4,818

(350)

Dividends

 

 

(5,517)

(5,888)

(5,290)

(6,512)

(9,095)

(10,258)

(9,555)

Other financing activities

 

 

(613)

(943)

(2,368)

(5,019)

(3,942)

(558)

(810)

Other

 

 

205

346

(147)

141

151

(2)

0

Net cash flow

 

 

468

1,328

(7,447)

(3,502)

6,603

5,095

(389)

Opening cash/(net debt)

 

 

12,498

12,966

14,294

6,847

3,345

9,948

15,043

Closing net (debt)/cash

 

 

12,966

14,294

6,847

3,345

9,948

15,043

14,654

Closing net (debt)/cash incl. money market instruments

23,701

22,252

19,779

17,258

14,497

15,043

14,654

AUME ($bn)

 

 

 

 

 

 

 

 

 

Opening

 

 

62.2

57.3

58.6

80.1

83.1

87.7

87.5

Net new money flows

 

 

(4.5)

4.6

9.7

2.4

9.1

1.6

5.3

Market/other

 

 

(0.4)

(3.3)

11.8

0.6

(4.5)

(1.8)

0.9

Closing

 

 

57.3

58.6

80.1

83.1

87.7

87.5

93.8

Source: Record accounts, Edison Investment Research

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

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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