Conditions should be perfect for Record (REC). Market volatility and expectations of monetary policy divergence - bread and butter for a currency manager - have been two of this year's biggest themes. What's more, chief executive James Wood-Collins says another feature of capital markets in 2015, the strengthening dollar, is "the best recruiting sergeant for new mandates". But while Record's various hedging strategies continue to generate interest from large US investors, the company has been slow to attract new mandates.
In fact, client numbers fell from 55 to 54 in the six months to September, meaning notional assets under management slipped from $55.4bn (£37.3bn) to $53.3bn. But the strategies' performance was of greater concern. Two of Record's four currency-for-return products underperformed, subsequently wiping out the gains made by the value and momentum products in the multi-strategy index.
Losses from seed capital investments in these funds - listed as non-controlling interests in the results - pared back net profit by £0.4m. Meanwhile, a £0.5m above-the-line increase in staff salaries helped to boost total costs by 9 per cent.
Broker Cenkos is forecasting adjusted full-year pre-tax profits of £6.4m, giving EPS of 2.3p, compared with £7.7m and 2.6p in FY 2015.
RECORD (REC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 29p | MARKET VALUE: | £64.8m | |
| TOUCH: | 28.8-30p | 12-MONTH HIGH: | 41p | LOW: 28p |
| DIVIDEND YIELD: | 5.9% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 15p | NET CASH: | £33.4m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 10.1 | 3.6 | 1.23 | 0.75 |
| 2015 | 10.4 | 3.3 | 1.36 | 0.83 |
| % change | +3 | -8 | +11 | +10 |
Ex-div: 3 Dec Payment: 23 Dec *Includes £14.2m in money market funds with maturity of more than three months | ||||
