Record plc

Morning all, thanks very much for joining us this morning to discuss records for your results. Just before I hand over to Jan to kick things off, I could just kindly ask everyone to stay on mute for the duration of the presentation, and then we'll get to Q&A at the end. Without further ado, Jan, over to you.

Good morning, everyone, and welcome to our full year earnings presentation. My name is Jan Witte, Chief Executive at Record. And with me here today is Steve Cullen, Record CFO, and also Richard Heading, who will be taking over from Steve on the 1st of July. I'd like to thank Steve for his tremendous contributions to Record over the last 20 years, and also for his support to me as I've moved into the role of CEO recently. Today, in addition to the financial results for the year to March, 31st, which Steve will present shortly, I'd also like to give an update on the strategic progress and some of the actions we've taken during my first three months as CEO. So we'll start with an overview. So FY24 was another successful year for Echoword. Assets under management reached a new all-time high of 102 billion as at March 31st. Revenue grew by 2%, assisted by another strong year of performance fees. And there was performance fees in both enhanced passive hedging as well as across our FX Alpha products. In assets under management, we launched two new funds under our custom solutions product category, which are protected equities and GP stakes. And By the end of the year, they'd already reached an aggregate NAF of 320 million assets under management, which brings our total AUM on the asset management side to 4.7 billion US dollars. We also continue to make progress towards the launch of our infrastructure equity fund, which is expected to take place this year and which we're very excited about. Following my initial assessment of the business, since taking over as CEO, we've also taken a number of important steps to focus our product portfolio and to align, in particular, our IT strategy to our priority projects. As we've explained in our pre-closed trading updates, following a detailed review of IT investments, we've recognized a £1.9 million write-off on technology costs, And we've also discontinued our digital asset efforts. We'll cover that in more detail shortly. Our underlying profit margin was maintained at a very healthy 32%. And the board has proposed an ordinary dividend of 4.6 pence in line with our dividend policy, which aims to pay a progressive ordinary dividend in the range of 70 to 90% of EPS. and a special dividend of 0.6 pence, bringing our total dividend to 5.2 pence, a small increase on the dividend paid last year. Again, Steve will provide more detail on the financial results shortly. So here, I'd like to start with some context, particularly for anyone who's new to records. So Rekord has a track record built over 40 years of supplying high quality bespoke solutions to a large institutional investors. Our clients are public and corporate pension funds, as well as foundations trusts and other funds. And all of them have both complex currency needs as well as alternative investment needs. Since 2020, We've grown our assets under management by over 70%, and the majority of that growth has come from clients in Europe, but we've also built now a significant presence in the US. Clients value, about record, the combination of our ability to handle large, complex mandates, while also being small and flexible enough to address their unique needs. We do that through relentless focus on on client service backed up by sound processes and a deep expertise, which creates a proposition that works. And that shows particularly here, if we look at client longevity, our bespoke approach and focus on client delivery is what builds enduring client relationships. So more than half our clients have been with us for over six years and just under half of our assets under management are from clients who've been with us for over 10 years. These enduring client relationships are testament to our dedication to client service, which is a key strength of record and which we're proud of. So that's where the business is today. But the question is, what changes are we planning to make? So if you look at this slides, One of the first things I've done as CEO is to take a look at our strategy in terms of our product range. We have narrowed our focus to six distinct product categories encompassing both the currency and the asset management products. And it's all categories where we can offer a unique value proposition and where we can be best in class. One of the first things also you'll notice here is that digital is not on this chart. As I alluded to earlier, following the review of our product range, we have taken the decision to discontinue our digital asset investments. And we no longer believe this offers a commercially viable proposition with a significant upside to record, but we did not incur any material costs in pursuing or exiting these businesses. The products we see here cover a spectrum of needs from risk management to return seeking. First, on the very left-hand side, there's passive hedging, which aims to reduce portfolio volatility by removing currency risk, where we use derivatives to create a symmetric position to the currency risk in client portfolios and thereby remove currency risk from client portfolios. in its entirety. Enhanced passive hedging is an evolution where we add value by exploiting market inefficiencies in addition, but we do that without affecting the consistent protection that clients get in the passive hedging range of products. Hedging for asset managers, shown here as number two, was developed as an extension of our passive hedging expertise, but which has now become a standalone product where we have a dedicated team that focuses on the needs of alternative asset managers, where we offer bespoke passive hedging solution. And there we have a particular focus on liquidity management, which is of particular importance to these types of clients. Active FX hedging, which we sometimes refer to as dynamic hedging, has been at the core of Rekord's products for over four decades. Dynamic hedging aims to do three things. Firstly, reduce currency risk embedded in a portfolio through active management of the hedge ratios. Secondly, minimize cash flows. And thirdly, add value against benchmark. And that's one of the big differentiators here compared to the passive range of products. And then finally, there's Rekord's FX Alpha range of products, Where in particular in our multi-strategy product, we have all of the FX4 return drivers combined in a single balanced portfolio, which targets consistent returns in all market conditions. On the asset management side, our flagship product is the EM Sustainable Finance Fund with over 1 billion in assets. And this fund is a trailblazing FX-centric sustainability-led approach to EM local debt investing. In addition, we have a number of custom solutions, which includes our GP Stakes Fund and our Protected Equities Fund. But as mentioned before, we're also working towards a large launch in infrastructure equity and private credit, and we'll communicate these when they're ready to launch. When looking at this product range, it's also interesting to look at the trends in addressable markets, which we observe, which supports our efforts in these products. And then firstly, on the left-hand side here, we do observe a continued growth in pension fund assets under management, which is a result of aging populations, longer life expectancies, and also consolidation across the pension fund industry. But it means that large pension funds with international assets will continue to need what we do, and they'll continue to need protection against inflation. valuation fluctuations to meet their pension requirements. And then secondly, on the right hand side, we see that over the past decade, there's been a significant growth in asset allocations into private markets. And again, that trend is expected to continue. Our hedging for asset managers product addresses the specialist needs of these private asset managers, and they're often more complex currency hedging needs. And then also, again, as described on the previous slide, our asset management product range and our positions products where we benefit from this trend, not only as a service provider to the needs of alternative asset managers, but also where we become a product provider of our own. And that includes the emerging markets sustainable finance fund, which supports private investment into EM and frontier countries through de-risking specific investments on the currency side. But it also includes the earlier mentioned anticipated launches in infrastructure equity and private credit that again sit on this spectrum. If we now look forwards, then our next step will focus on delivering on three critical strategic objectives. First, we aim to deliver organic growth. And the steps we've taken, for example, this year, we've expanded the US team and in Europe, Andreas Kuster has joined us as CEO of EMF Frontier Investments. which is a role that also includes leading the Emerging Markets Sustainable Finance Fund, which, by the way, also now reaches its 30th anniversary. And again, that means that it now becomes eligible as an investment to a lot of people and becomes accessible through databases and searches where previously the track record wasn't. wasn't yet long enough. And Andreas was also instrumental in developing the founded partnership with us originally. And so in that sense, he's, he's exactly the right person for, for this job. And we're delighted to have him on the team. Secondly, we, we were focused on improving our quality of earnings. So as I've mentioned, we've reorganized our business around three, around six product categories, and we've seen some alternatives altogether. And, I'm confident that with this clearly defined responsibilities and accountability backed by targeted investments in people, systems, and brand, we will see an improved quality of earnings from this portfolio of products. And we also expect to see improved operational efficiency and client retention as a result of that. And I also want us to see, I want us to attract new clients in these product categories. Lastly, there's operational excellence. So Rekord has a proven proprietary operational framework. However, we do need to take steps to optimize that platform for our core products and in particular also to align our IT investments with our strategic objectives. And then, yeah, following the review of IT, we've appointed new IT leadership and expanded our in-house development capabilities. This will help us build an even more stable and scalable platform to support our core products. So as you see, we focused on six distinct product categories supported by two market trends, and we've set ourselves three strategic objectives. It is early days in my time as CEO, and my review of our product range and operational platform is ongoing. It will take a little time to finish this work, but I anticipate giving a more detailed update later this year, and our progress and future outlook on the business will be covered again then. Before I hand over to Steve to take you through the financial results, let me first hand over to Richard to give a few words of introduction.

Thanks, Jan, and good morning, everyone. I'm delighted to be here. I've been here for just under a month. So I've had a few weeks to get to know the company, meet a lot of the people here. I think, you know, as I've been meeting people here, the one thing that absolutely stands out is this level of focus on client delivery. Everyone here is all about high quality solutions for clients. So once you spend a bit of time there, it's no wonder that Record has the reputation that it has and these longstanding valuable client relationships. It's also a really exciting time to be joining as Jan has just been outlining as we're building a plan to build on those core strengths to compete and win both in our existing and new product lines. There's a lot of, I think, exciting things to come. So really, really pleased to be here. Just a couple of words of thank you to Steve for helping me get up to speed. The other thing that becomes clear as you speak to people here is the contribution that Steve's made to the company over 20 years, I guess. I think it's around about that. And so, you know, very best wishes for your retirement. I think I've spoken to a few of you on the call. Those of you I haven't, I look forward to speaking to you in the future. Jan and I also have a good lineup of investor meetings next week, which I'm also really looking forward to hearing from them. But with that, I'll hand over to Steve to take you through the results.