Record (LSE:REC) — Final Results

0:00 Good morning, and welcome to the RECORD PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to doctor Jan Hendrik Witter, CEO. Good morning, sir. Thank you, Vivek. Thank you. Good morning, everyone. I'm Jan Witter, CEO of RECORD Financial Group, and I'm pleased to be presenting the group's results for the year ended 03/31/2026.

0:46 I'm joined by two colleagues, Sam Dunn, our interim chief financial officer and doctor Ottman Bukrami, the CEO of our group subsidiary, RECORD Currency Management Limited. The 2026 financial year was a year of continued evolution for RECORD. Against the backdrop of volatile currency markets and macroeconomic uncertainty, we delivered a stable result and stayed focused on executing our strategy, purposefully positioning the business for sustainable long term growth. As the business evolves, it is worth revisiting who RECORD is and what we do for our clients.

1:35 We are a specialist asset manager delivering best in class solutions for large institutional investors. We manage an a one of a $140,600,000,000 for our global client base, and we have developed a reputation for exceptional client focus and trusted operational execution over the last forty years. We've built deep knowledge, technical expertise, and a broad set of capabilities in derivative foreign exchange and structuring complex solutions. These characteristics not only allow us to set ourselves apart in our core risk management business, but are readily transferable to other situations and asset classes, particularly in private markets. This allows us to pursue a broader range of opportunities for both existing and new clients targeting long term recurring revenues at higher margins.

2:32 I will start with some financial and operational highlights before handing over to Sam, who will take you through the financials in more detail. Total revenue was down 4% for the year in line with expectations, driven mainly by the 5% decline in management fees. This decrease reflects the full impact following a mandate write down at the end of the last financial year and has been partly offset by new client growth. Disciplined cost management continues to be an area of focus, ending the year with operation costs down 2%, while continuing to fund key investments across the business. AUM grew 14% to $114,600,000,000 driven by consecutive quarters of inflows and coupled with favorable FX movements.

3:25 Largely in line with expectations, EPS has decreased to 3.92p per share. As a result, the total ordinary dividend for the year was 3.6p per share with a dividend payout ratio maintained at 92% of EPS. The 2026 financial year has seen meaningful operational progress. It was a year focused on transitioning to growth as we continue to execute against our vision for long term value guided by our strategic pillars, organic growth, improving quality of earnings and operational excellence. Notably, we completed the first deployment for the RECORD Infrastructure Equity Fund.

4:14 We also secured the next two deployment targets, which are set to be deployed in the coming month. Once completed, this will bring total deployment up to 35% of the total $1,200,000,000 initial commitments, and the fund remains on track to be fully deployed within three years of launch. In addition to the fee growth, it also improves quality of earnings as the fund has a fifteen year lockup period. Solutions for asset managers has grown has grown strongly with AUM up 19% and fees up 39%. This is a very exciting growth area where we apply our risk management capabilities to solve problems for asset managers, generating a new source of revenue and diversifying and broadening the clients across the business.

5:07 As the product has evolved, these clients have increasingly been alternative asset managers with funds invested in private credit and private equity. For that reason, this solutions for asset managers has evolved from our risk management product category into the private markets category. We've also made some impressive advances in automation and AI integration this year, driven by the expertise and commitment of our talented in house teams. In line with operational excellence, we have strengthened our senior executive leadership team with the appointment of doctor Ahmed Bukrami as CEO of our group subsidiary, RECORD Currency Management, and Andreas Dense as Group Chief Investment Officer.

5:58 Overall, as a group, we are pleased with the operational performance in the period. To discuss the financial performance for the year, let me introduce you to our Interim CFO, Sen Dun. Sen joined RECORD in February 2026 and brings a strong track record of financial leadership across asset management, private markets and regulated investment businesses, reinforcing continuity and discipline at this transitional stage for the group. Sam, over to you. Thanks, Jan, and good morning, everyone. I'm pleased to be presenting our financial performance for the 2026 financial year. Despite a challenging and evolving market backdrop, the group has maintained operational consistency, while continuing to invest selectively in key areas that support its strategic objectives.

6:53 I'll begin with the earnings summary, highlighting a few of the key movements in the year. Revenue was down 4%, remaining in line with expectations. This was due to a combination of lower management fees and lower performance fees. Despite this, we protected operating margin from the most of the impact through stringent, disciplined cost management, reducing costs by 2%, while continuing to hire and invest in staff and technology. Profit before tax or a 10% decrease, driven by the decrease in revenues and coupled with increased finance costs. The large decrease in profit after tax is a reflection of the tax rate returning to a more normalized level in FY 2026, following the recognition of a deferred tax asset in the prior period, which lowered the tax rate last year.

7:47 So as a result, profit after tax is down 23%. After adding back minority share of losses of RECORD asset management, profits attributable to RECORD shareholders fell to 7,700,000 and earnings per share of 3.92p. The group earns revenue across our three product pillars: risk management, absolute return and private markets. This is through a combination of management fees, performance fees and other services income. Total revenue was down slightly in a challenging market with strong performance in private markets, partially offsetting lower management fees in risk management and absolute return.

8:34 Both risk management and absolute return management fees were down, now reflecting the full impact of changes in the composition of some client mandates at the end of FY 2025. Growth in private markets was driven by solutions for asset managers, which saw an increase in management fees of 39%. As Jan noted in his operational highlights, our solutions for asset managers has grown and evolved, The clients it serves have increasingly been alternative asset managers with funds invested in private credit and private equity. Because of this, we've reallocated solutions for asset managers from risk management to private markets and all prior periods in this presentation are restated accordingly. We've included a reconciliation on Slide 25 in the appendix to illustrate this.

9:24 As a whole, management fees continue to be a highly repeatable revenue source and make up 88% of our total revenue. Performance fees of £2,800,000 are once again an important component of total revenue. Performance fees were recognized for mandates under both the risk management and absolute return pillars. Other income represents a combination of distribution, introducer and deployment fees, and we'll continue to scale with growth in private markets. We flagged the uneven revenue recognition in the early stages of raising and deploying funds. However, we expect other income to partially offset the usual J curve impacts on earnings as funds are deployed. Looking at how all this is reflected in AUM, we see that risk management AUM showed strong growth.

10:14 Passive hedging brought in a combination of net inflows and favorable net exchange rate movements, while dynamic hedging AUM was driven by growth in the value of underlying assets. In absolute return, the net outflows were as a result of client mandate recomposition, slightly offset by favorable FX movements. In Private Markets, solutions for asset managers was the main driver of growth, as it continues to see strong inflows with AUM up 19% for the year. A further increase in private markets AUM was as a result of the first capital deployments for the RECORD Infrastructure Equity Fund during the period. While small relative to group AUM, it commands a higher management fee yield and will be a material contributor to revenue once the fund is fully deployed over the next two years.

11:02 We remain encouraged by the potential in private markets. On to operating costs, which were down 2% in FY 2026. This represents the consistent progress in the restructuring of our cost base and aligning investment to our strategic priorities. Growth in the business saw headcount increase by 4%, reflecting our deliberate investment in private markets capabilities ahead of the revenues those funds will generate. Despite this, overall staff costs fell, reflecting lower variable compensation in line with operating performance. We also continue to see some cost capitalization as our in house development team progresses with our operational infrastructure improvements and automation. Thanks to this internal IT development, we continue to see savings elsewhere with technology costs down by 8%.

11:56 The decrease in occupancy costs reflects the move to Paddington and the cessation of the dual running costs incurred last year, Although we are incurring higher depreciation relating to the new London office and an increase in amortization of the internally developed software that's now in use by the business. And finally, on to our balance sheet and capital review. We continue to be a high cash generative business, maintaining a strong balance sheet with a regulatory capital surplus. This surplus supports both our dividend and ongoing investment for future sustainable growth of the business. As mentioned in the interim results announcement, company performance relative to market expectations is highly dependent on the timing of closing the various projects. As a result of that, and following the uncovered interim dividend of 2.15p per share, the final dividend declared for the FY 2026 financial year is 1.45p per share, bringing total ordinary dividends for the period to 3.6p per share.

12:59 While the total ordinary dividend for the year has decreased in line with EPS, the dividend payout ratio has been maintained at 92% of EPS. RECORD remains committed to an attractive and sustainable dividend, recognizing its importance to our shareholders. At the same time, we are focused on ensuring an appropriate balance between capital allocation to support future growth, maintaining a resilient balance sheet and ensuring liquidity and flexibility. As we progress through key milestones in our asset management business, the Board will therefore be monitoring the dividend policy to ensure it continues to strike the right balance. With that, I'll hand back to Jan to discuss the group's strategy and divisional achievements in FY 2026. Thank you, Sam.

13:50 We're now entering the third year of execution under our three strategic pillars: a commitment to operational excellence, organic growth driven by client needs, and improving our quality of earnings. These pillars reflect our vision for the growth of the business and form the framework of our strategy. Operational excellence is foundational for us. It is critical to how we serve clients, and superior client outcomes are our utmost priority because they underpin the entire evolution of the group. It is this operational excellence that gives RECORD the right to grow both with new and with existing clients and in new and existing markets.

14:41 As we expand our product offering through organic growth, it is reinforced by our expertise, our knowledge base, and our close client relationships. It is this that has allowed us to move more aggressively into private markets with focus on solutions for asset managers, infrastructure equity, EM and frontier strategies and further expansion into the private equity and private credit space. Finally, this organic growth improves our quality of earnings by diversifying revenue by client and by asset class. Intentional growth in private markets will expand fee margins and improve revenue visibility through longer lockup periods and more predictable fee profiles.

15:29 This in turn grows earnings, which then enables us to invest further in advancing our capabilities. So as you can see, these three strategic pillars are not individual and discrete objectives, but each enable the others and ultimately the central overarching plan for RECORD over the medium to long term. Over four decades, we have hold a unique set of capabilities that forms RECORD's DNA and define what we do, which is to deliver best in class solutions to complex problems for large institutional investors. We think about operational excellence in terms of building, maintaining, and improving our core capabilities.

16:20 These capabilities are central to how RECORD PERC clients, and we are constantly maintaining, improving, and adapting the strength and experience developed over forty years in business. We do this through investment in people, technology, governance, and systems. Our capabilities are a key differentiator and enable us to serve and build trust with our clients. While the exact solution tends to differ for every investor, every asset class, and every fund, they share common challenges that RECORD has extensive expertise in solving. Those core capabilities are expertise in derivatives, liquidity and cash flow management, and delivering a fully integrated end to end service, which means not just designing a solution or its implementation, but full execution, governance, reporting, and collateral management.

17:20 This then is supported by our strong structuring capabilities and long standing trusted relationships with a strong reputation for solving complex problems. These skills were developed in risk management, which contributes 66% of our revenue base. But we are now using these core capabilities to solve a much wider range of problems for our clients. As we have evolved, clients have engaged us to expand into absolute return in private markets, applying our expertise to deliver bespoke solutions they could not achieve through conventional products. Leveraging of these capabilities is the future of our growth. We have three complementary product categories, risk management, absolute return, and private markets.

18:19 We have provided institutional risk management products for over forty years, and it had and it remains the largest contributor to revenue, providing a stable, highly cash generative base for the rest of the group. As we expand to solve other problems for clients, our growth is coming from absolute return and private markets, which together contributed around 35% of revenue in FY twenty six. These newer segments carry higher fee yields, so despite accounting for a smaller proportion of AUM, they generate material revenue against the investments we're making. As they grow, this will become more obvious. They also improve the quality of earnings by serving a more diversified client base and as is the case for the infrastructure equity fund, long term visibility of future revenue.

19:13 I'll now hand over to OPMAN. After joining the RECORD PLC board as a non executive director, Ottman has since moved into an executive role as CEO of our group subsidiary, RECORD Currency Management. He brings with him decades of experience as a pioneer in emerging and frontier market currencies. Ottman will now take you through our risk management and absolute return divisions. Thanks, Jan, and good morning, everyone. I'm Ottoman Bukrami, and I became Chief Executive Officer of RECORD Currency Management in the first half of this year. Before that, I served on the RECORD PLC board, where I came to appreciate the unique position RECORD currency management holds in the industry.

20:07 Since making the transition, I have gained an even deeper understanding of the quality of the team and the strength of our client relationships. What stands out most is the commitment across our organization to delivering excellence with integrity and consistency. RECORD is specialist. It is independent. It is full service, and it has a deep pool of experts working to solve problems for clients. Demand for risk management continues to rise with several structural drivers increasing our importance to institutional clients, across border investing, growing FX volumes and rising hedging complexity.

20:57 The financial year 2026 saw several operational highlights. First, we had positive net flows in three or four quarters into risk management, principally driven by passive hedging. The average fees rates per product remained broadly stable across the year. And after the period end, I am pleased to say we launched two new dynamic hedging mandates. Looking to financial year twenty seven, I am excited about the opportunity to enhance our position in G10 currency markets and to expand through product innovation and geographic reach.

21:46 One of the most exciting opportunities is the continued development of our frontier market currency strategies. Prior to joining the group, I spent sixteen years managing EM and frontier currencies, and I came to realize that RECORD is uniquely positioned to source its exposures through our established network of banks and development finance institutions, enabling us to deliver attractive opportunities to private investors. At the same time, we're expanding geographically, and we are launching a new product evolution tailored to the Swiss market, designed for the evolving needs of asset owners in today rapidly changing global environment.

22:37 Our frontier market expertise, combined with our broader currency management capabilities and a state of the art operational platform gives us a significant competitive advantage as we scale these activities further. Absolute return comprises of our FX alpha and custom opportunities products. These products typically have more volatility and shorter term mandates, but have bigger upside potential from performance fees. The financial year 2026 performance in this space demonstrate exactly this.

23:25 Despite the reduction in absolute return AUM due to this to due to the discontinuation of some mandates that were driven by clients led internal restructurings, we still continue to generate strong performance fees. The outlook for these products remains positive. We are actively engaged in discussions on new mandates, reflecting continued demand. The strategy is exceptionally well positioned for large institutional investors in the current environment of geopolitical uncertainty and pronounced dislocations between market behavior and underlying fundamentals. Demands continue to be led by our expert judgment in the active management of exposures.

24:17 There are several growth drivers, which you will see here on the slides. In an increasingly volatile environment, investors and pension funds, in particular, are under growing pressure to hit specific return targets while carefully managing liquidity. In that context, specialized unfunded return strategies can be highly complementary source of return enhancements alongside traditional funded investments. For RECORD, they are also a source of performance fees, giving upside beyond the more repeatable management fees that they contribute. For financial year 2027, we anticipate both an increase of FX alpha IUM and revenues due to the institutional demand.

25:16 Thank you, Orkner. And moving on to our third product pillar, private market. This slide intends to shed some light on how private markets opportunities go from an idea to deployment at RECORD. Our move into private markets was purposeful. It has been a considered step shaped by client demand and enabled by the skills and capabilities within the group build up over many, many years. The funds and strategies we are building have not developed in isolation. They have been built in close collaboration with clients tailored to the specific mandates, risk tolerances, and governance requirements.

26:07 This normally begins with a client identifying a problem and engaging with RECORD to help because of the strength of our relationships and our reputation as a problem solver. We listen, we understand, and we then apply our expertise across the core capabilities I described earlier, and we design products around that problem. Thereafter, we secure an anchor commitment from that original client before we launch. So by the time we launch, we already have meaningful committed capital and strong medium term revenue and earnings visibility as the funds are deployed. Where we believe the product has broader application, we designed inclusion and governance framework from day one to accommodate subsequent institutional allocators.

27:02 Critically, our private markets work is bespoke. It's complex structure and not simply a product. This is how we differentiate relative to peers and generalist alternative asset managers. Our private market strategies involve a combination of longer lockup periods, higher margins, more predictable fee profiles, or even a combination of the three, thereby improving earnings visibility over time. These solutions continue to make good momentum and now contribute 28% of our revenue base. This momentum is most evident in our infrastructure equity strategy, which I'm pleased to say, following the completion of the first deployment, we have since had additional inflows and the number of clients has now grown from four cornerstone investors on day one to eight, validating the scalable design.

28:05 Additionally, we have the next two deployments lined up and due for execution in the first half of FY twenty twenty seven. Our emerging markets sustainable finance fund continues to demonstrate strong and consistent performance, and we're excited about having Otman on board, who will be leading the pursuit of identifying additional growth opportunities in the EM and Frontier space, faster capitalism. With that in mind, we're now broadening our reach across geographies and clients in these new asset classes. We're working with our partners based in Hong Kong to support the distribution and delivery of private equity and credit products across Asia. The local team will focus on institutional investors and family offices in the region.

28:56 We continue to make encouraging progress with Sharia compliant mandates. Our focus is on private markets opportunities structured in line with established Sharia principles, combining institutional investment discipline with a robust ethical framework. We're also in conversation with a Swiss asset manager about a partnership through which we would obtain a Swiss FINMA license, strengthening our regulatory standing and operational capabilities and expand our real estate offering in Switzerland. We will communicate further details in due course. Lastly, our strategy that saw the highest gross levels during the period is solutions for asset managers.

29:42 Ottman will walk us through this strategy and its unique capabilities. As Jan mentioned at the outset, solutions for asset managers has been reallocated from risk management to private markets. This reflects the nature of the underlying funds that RECORD's build solution for. Solutions for Asset Managers offers alternative asset managers a full service, derivative, liquidity and FX solution, tailored specifically to the individual asset manager's strategy and structure of their underlying investment. This unique solution deserves to be elevated on its own.

30:31 It is a material part of A1, a significant contributor to fees and growing at an impressive rate. It uses RECORD expert capabilities to find bespoke solutions to the same structuring and flow mismatch problems, which we solve for all our clients. Critically, that growth is supported by structural demand for private market assets and is linked to the AUM flows of our clients. This is being shown by the impressive growth in both AUM and revenue. Of the total growth, this has been predominantly driven by our existing clients with AUM up 14% and revenues up 26% derived entirely from existing clients.

31:25 This highlights the importance of this strategy since AUM revenues tend to increase exponentially over time from existing relationships. Alongside our existing client base, we secured new clients who we expect to contribute to additional AUM and revenue growth in the periods ahead. Looking to financial year 2027, we anticipate the consolidation of our market position underpinned by increased revenues from existing clients and the addition of new names to our clients' roster. RECORD is a business and purposeful evolution.

32:15 We are excited for the future. Our core is unchanged. We deliver best in class solutions to large institutional investors. What is changing is the breadth of problems we solve and the quality of the earnings that follow. Risk management gives us a stable cash generative base. Absolute return in private markets give us higher yielding, longer duration growth. As mentioned in previous results announcements, our approach to capital allocation has always been focused on balance, recognizing the importance of dividends to our shareholders. The board will be monitoring the dividend policy to ensure that it continues to strike the right balance between dividends, capital allocation, balance sheet strength and liquidity.

33:10 We have started the new year with strong momentum. We have some new mandates near completion, which we expect to add an additional GBP 4,000,000 in annualized revenue to the group, setting us up well to meet market expectation for FY '27. Given that we still have more than nine months for the team to conclude other projects and add further revenue, this makes a good start to the year, and we will give further updates in due course. While we are looking to grow all parts of the business, in the short to medium term, we target towards an equal revenue split between risk management on the one hand and absolute return and private markets on the other. With our three pillars guiding us, a strengthened leadership team, growing visibility of the medium term, we are confident in the direction of travel.

34:06 Thank you for listening. Sam, and I, and I'm happy to answer answer the questions that have come in through the chat. Thank you very much. That's great. Thank you very much for your presentation. And if I may just bring back up your camera. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via investor dashboard. As you can see, we have received a number of questions throughout today's presentation. So please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Okay. Let's let's take them from the top.

34:52 If you scroll up, I'll just take them on there. So, yeah, I'll just go through through the questions one by one and try to try to answer all of the questions in the time we've got here. The first question from Xander is what is generally new in your thinking, strategy or opportunity set today compared with a prior cycle that would justify a change in that perception? What's generally new is we have been consistent in in the execution of strategy. And the strategy which which we presented, which which now is quite clearly articulated in the materials on the website in our presentation, was one where a number of years ago, we we looked at the business identifying or trying to identify what was truly unique or what really made the USP that had records that had made records successful up to that point and how we could use that USP going forward to contradict some of the or counter counter some of the the pressures that we've been experiencing, particularly on on the fee side in in the risk management business.

36:09 And so what we now clearly identify as our USP is what is a recurring theme through through the presentation is our ability to service large institutional investors in a way where, as a business, we're we're large enough to do that. So we're large enough to so with trading volumes, again, trading volumes highlight highlight our operational capabilities quite nicely. So we trade north of $1,000,000,000,000 a year in the in the markets. So we we have true institutional scale operational capabilities. But at the same time, as a business, we're still small enough to be relatively agile and attuned to what it is that our clients want. And so so the sweet spot really for USP is service large investors in a way that that allows us to really play that agility combined with that operational strength to our advantage. And that that is that is an area where there isn't a lot of other asset managers that compete because a lot of our competition, they're agile, but they're too small to truly be convincing operationally, past due diligence and onboard mandates that are from day one in the billions, or they're too large, which is of the banks and the really large houses where, of course, they've got the operational capabilities, but they don't have the agility anymore that that that we can demonstrate to our clients. And so in in terms of what is new today

37:40 compared to a number of years ago, that strategy has been consistent, but, we are today now at a point where strategy is starting and has started to deliver. Yeah. So while we we report revenues, which are more or less flat, the replacement of revenue that has really taken place is is noticeable. And and and now, so at this point, really starts to validate strategy. And and in in that sense, the proportion of revenue that's now attributable to higher margin products, higher fee based products is is something that is new that we didn't have a number of years ago. And so so two, three years ago, all of this was a plan and an intention. Today, we're here, and and we're truly active in these new areas. And we're truly truly in a position where for some of what we do, we've sort of repositioned ourselves from the low end of the fee spectrum to the high end of the fee spectrum, which is is what we believe will deliver growth as said in the presentation over the coming years. Yeah. And in that context, I'll also take one of the other questions, which was on the benefit of being listed.

38:40 Again, being a listed business in in in this context is very valuable because it gives further credibility to not just the operational skills that we have to onboard large clients, take on, you know, often complex operational structures with large AUM on their one. But also, it's very evident that we've got the governance and the structure that comes with the list of business that assures clients firm. So so so in that sense, certainly, one of the main one of the main benefits of being a listed business is is there's some completion trends or what we do. There's strong governance in all areas, and we've got the we've got the the operational capabilities of company that trades, you know, 115,000,000,000 in in assets under management and trades more than 1,000,000,000,000 a year. Yeah. But so that's that's on those two two questions.

39:34 From Peter, private markets now account for 28% of revenue. What is the percentage what percentage do management expect in three and five years time? As we said, we expect we'll be subset in the in the in in medium term, but we expect absolute return in private markets, those two pillars, to relatively quickly now reach a point where they contribute half the revenue of the group. And so that's a meaningful development compared to where we were a number of years ago, where almost the entirety of the business was focused on risk management. Let me just read through. Okay. The company here's from Peter. The company has stated that 35% of the infrastructure equity fund fund's initial commitment has now been pledged. What is the timetable for deploying the remaining 65%?

40:28 So when we launched the fund in late two thousand and twenty four, the deployment period that we committed to was three years. And so we expect the the the the entire initial commitments of the fund to to to be deployed in in that period of time. So we're on track for that. And then to answer that question, we we expect that, you know, the remaining 65% to be deployed then by the end of next year. Yeah. And so that that deployment doesn't stop there because as we said, we've now had further inflows and we expect another closing basis of more inflows later this year. And again, it's we we it's it's hard to to overstate the importance of that because we we've been talking about the infrastructure equity fund for a long time before we launched it because it did take a while to to get it right and and get an initial commitment from the first four pension funds that seeded the fund with 1,100,000,000.

41:35 But it was the necessary of in marketing the fund to other to other to other investors to join the fund, For these investors to see that we truly do have the ability to deploy, that we can deploy at speed, but also to highlight, and a lot of that information is in the public domain, but also to highlight the types of assets that we're able to buy. And and now that we've started to deploy and and publicize, you know, some of the investments we've participated in, which are very, very large and high profile assets that are otherwise not easily accessible even for for for large investors, we start to see real traction on the fund. And and so in that sense, that has led to an additional four pension funds investing earlier this year, and we expect another another four investors late in this year, which then by the end of this year should take the ARAM to close to €1,500,000,000 Yeah. So here, a longer question. I'll I'll quickly read through it. Yeah. Share price reaction and broker downgrade suggest investors are questioning whether RECORD can successfully transition from a currency management business into higher growth private markets manager. What evidence will you provide during FY twenty seven that demonstrates this transition is already generating shareholder value rather than simply

43:07 consuming capital? What concrete milestones should shareholder expect over the next six to twelve months? So, you know, we have now completed a lot of the transition that we've talked about over the last couple of years. And so we we now do have all of the teams in place that we need to deliver in, you know, these new asset classes, which we have added to the business. Yeah. So we do have a fixed income team. We do have a credit team now. We do have, you know, an infrastructure team. And all of that all of that integration and has has has taken place, but also all of the cost has now been born. So so we we at this point, as I said earlier, we we've seen a lot of replacement of existing or traditional revenue from from these new asset classes. In a perfect world, we'd already now have had a large increase in revenue and and thereby profits. So so we were not quite at that point, but we do feel like we're at the at the at the at the at the bingo of that point where now the investments have been made, the the, you know, mandates and and sort of new new asset classes have been have been onboarded, so making it clear internally and externally that we can do this.

44:25 But, yeah, so at this point at this point, we haven't been able to demonstrate that increase in revenue. And and so there is a little bit of now skepticism in in the market where a lot of the original shareholders, you know, would have still, you know, know us as a currency manager, which still, you know, makes up 66% of what we do, but we have now edits of material ability to to grow from here. And it's it's it's now it's now a task over the over the coming months to to tell that story. As as we said in the presentation, we have started to now add mandates that will lift revenue from from where we are today. So they those those new mandates, they they now came in slightly after the the year end. Yeah. So so that's not part of what we report now. But we do expect in that sense a very positive FY '27, which then also will validate the numbers and what we've talked about today in terms of strategic evolution.

45:41 Okay. So something on the CEO report. So so for Roger, in his report, the CEO said that the core risk management business provided capital light revenues. Can I infer from this statement that the newer non core businesses are more capital intensive, and thus we should brace ourselves for lower dividend payout ratios on a permanent basis? The one of the big differences between what we now have classified as as private markets work, and and and we we did we did try to to explain that in the in the presentation, is that this is transferring the skill set. This is transferring what RECORD has done well historically and continues to do well when we look at derivatives and risk management and just expanding those skills to to be active in asset classes where where where where fees tend to be higher and where where fee structures tend to tend to provide more long term lockup periods.

46:48 And so one of the one of the features that come with that is is certainly less regular less regular, you know, sort of payments on some of these fees. And and, I mean, that's the that's a trade off that comes with sort of the the fees being higher and and also the margins being higher. It doesn't quite have the same regularity in in fee payments. But with regards to to the to the to to our core business being capital light, I don't think that's exactly right. And I don't think that's the the the word I would have used in the the CEO report. I mean, the the the core of RECORD's business still continues to be the trading activity that we conduct and the operational backbone.

47:34 And we have over the years invested in that. We continue to invest in that because at the end of the day, on the trading volumes that we have, which vary between, you know, lower single digit billions a day to to at times $1,012,000,000,000 in a day, we do take operational risk. And part of the service we offer to clients is we take that operational risk away from the client and transition that to what we do. And and so having a a state of the art operational infrastructure is important and is part of what we do. And and so we we are in in the position where for the traditional parts of the business, because that has been built over many years, we we can now evolve in a way that is slightly less capital intensive than some of the new areas. But at the same time, as I said earlier, we have now made a lot of the investments in infrastructure credits and solutions for for asset managers.

48:27 So we we don't expect, you know, big big costs coming our way from here forward, but we we we do think we're now at a point where we are ready to, you know, benefit benefit from the upside. Yeah. Yeah. There were a couple of So I was gonna I was gonna add a bit more detail on the dividend, actually. So we said in our RNS on Friday morning that we will be monitoring our dividend policy over the next couple of months, but that doesn't necessarily mean that a cut to the payout ratio or the absolute amount is confirmed. And we recognize the importance of the dividend to our shareholders, but at the same time, we're keen to make sure that we strike the right balance between dividends, capital allocation, balance sheet strength and liquidity. And I think Jan spoke earlier as well about how our asset management business is going to hit some key milestones over the rest of this year. And as that happens, we will see the relationship between revenue and earnings per share change in the business. This is because the revenue from asset management activities is consolidated in the top line, but then the share of profits payable to minority shareholders is deducted before we get to earnings per share at the bottom.

49:30 So I wouldn't necessarily say that we are looking at reducing the payout ratio. It's more we just want to pave the way for a review of the policy and change going forward as the way in which the business brings in its revenues changes to match. Yeah. And there were a couple of questions related to the currency business. One was about the the management fees in our risk management, especially the passive mandates that we have. Do we face pressure? Well, the reality is that this is a continued discussion, but the adjustment was already made over the past few years as we see the AUM going up, especially for passive mandates and the client retention. This is a continued discussion, but I don't see it as a source of concern going forward. And then related to the performance fees, we had two source of performance fees in risk management.

50:24 One was the enhanced passive, the tenant management mandates, and the second one is the FX alpha. So both basically contribute to the performance fees of of the group. And we see, as Jan mentioned in the earlier communication, we see actually quite a strong pipeline coming our way going forward, especially in absolute return strategies where we are finalizing a number of mandates, which will contribute even more to the performance fees going forward. And I mean, just to add to that, Ottman just commented, we are in addition to deploying the the core skill sets of the group in, you know, across a wider range of asset classes, we we now do have a very strong focus on emerging and frontier currencies.

51:23 And, I mean, that that is that is a a logical continuation from the success of the EMLocore debt fund that we launched in 2021, which has now come out of, you know, the importance of three year period where, typically, investors will will watch performance for a period time, but we're now well past that point. The performance is very strong. So so so performance against benchmark is is convincing and highlights our our abilities in in that space. But we are very excited to have Ottman on board with with his, you know, unique background in in particular in frontier currencies where again, I mean, we we had a couple of sentences on that in the presentation, but he is one of the one of the world's pioneers in in that space. And and so so that allows us to now, in addition to, you know, we already have done to really move with a lot of with a lot of purpose in into into that direction. And to to just just to give some context there in in terms of the what the what the lack of liquidity means. I mean, Chris, you talk to to what are the the differences in spreads. I just I think it's helpful to to put that into context. When we're when we're when we're trading g 10 currencies, which is developed market currencies, which we do for a lot of our, you know, developed market clients, we're looking at fractions of basis points typically in trading costs, which we help the clients minimize. But, of course, there's a relationship between what we can charge for our services relative

52:53 to the savings we achieve. But but helpful, I think, to comment on on spreads in frontier in frontier markets just in that context. No. That's a very fair point. If you look at frontier currencies, the bid ask spreads is about 250 to to 300 basis points for nondeliverable forwards and nondeliverable swaps, which means that if if you are a price maker or price taker makes a huge difference in terms of trying to capturing the spread and offering access to these markets to private investors, which we have the the network, the operational platform, and the cap and the technical capabilities, thanks to our five years experience in the MSF, would allow us to to capture a large part of this spread without necessarily deploying much much capital.

53:41 So going forward, given our core skills in the company and our network, we will certainly continue our evolution towards this market since we have gained experience. We have the platform in place, and we will be trying to increase our profitability and the spreads going forward by expanding our product range to more frontier markets. We've got another question here from from Zander. What are we trying to to do to convince long term investors of RECORD's ability to generate sustainable, high quality growth from here? And what evidence should should our investors be looking for over the next twelve to twenty four months to validate that that view?

54:34 So as as when we when we started out with with a question, what would be RECORD strategy for the future? And that precedes, as of my time, that that goes back all the all the way to two thousand twenty, twenty one when we when we sort of started to set direction on the strategies we're now executing. The the concern was always on on the timing between, you know, sort of existing existing or sort of traditional parts of the business and for the new parts of the business and what we manage to to grow in in an ideal case in in what's almost a straight line up. We we, in terms of revenues, experience a bit of a a bit of a wobble or or we we we have to go through sort of a more more defined j curve in in transitioning or broadening what the what the group does. And so with with sort of looking at revenue this year compared to sort of revenue the year before, and and so we're you know, as revenues were slightly higher before that. The the the decrease in revenue that we've experienced over the last two, three years is is purely down to one or two sort of large active mandates.

55:54 You know, in one case, this was a client who a where pension fund got sold. And in the other case, a client we retained the client, but the client switched from active to passive. And and that had an effect on on our revenues, but it did highlight as an experience, you know, some of the some of the risks in, you know, sort of the the the traditional parts of the business, which are very sticky and and and long term relationships, but they do show when when these events happen. And so so where we where we stand today, the quality of earnings in the group that we have today is materially better than the quality of earnings we had a year ago. Because as I said before, because there's been a lot of replacement of larger clients through smaller clients and of, you know, sort of short term short term contractually insured revenues to to longer to longer contractually insured revenues. So so in that sense, it hasn't shown in the revenue top line yet. But in reality, a lot of the evidence of of strategy now working is is there, which is why we've now taken the step to to to be much more, you know, clear in terms of external materials on the website and how we present the business now in terms of how we see the business evolve over the coming years. And so what we then expect is to to to answer the question for for FY '27, we expect revenue now to increase in FY

57:27 '27. And then so with hindsight, you know, we wouldn't have been able then in sort of evolution or execution of strategy to to deliver that ideal straight line up, but we we do believe it it'll be it'll be sort of a fair amount sort of j curve in in revenue. And so the FY '27 does look very encouraging as as of said in the the the presentation in that we're now onboarding some new clients to to to launch in sort of two to three weeks, which will give us a a very strong start to to FY '27, and that doesn't take into account what what is a strong pipeline for the year. Yeah. And I think the strategy that we have initiated several years ago is not is not a strategy anymore, but a reality.

58:15 If you look at our expansion into the asset management space and the large success that we have had with the 1,000,000,000 emerging market sustainable funds that we created in 2021 and the infrastructure funds that we have launched a couple of years ago. These are pure asset management solutions where we have been largely successful in the industry. We have a number of other initiatives that we are carrying, but the track record the positive track record is already being built. It's not it's not a strategy anymore, but more reality is there. One more here on from Peter. Lots of questions from Peter. Thank you. I I think I thought lots good questions. But, yeah, risk management still contributes approximately two thirds of revenues. How much pricing pressure is the company seeing in its core hedging product? As I said earlier, I'll be quick on the questions. As we we we we do expect over the over the over the sort of, let's say, of short to medium term to to to see parity between risk management revenue and absolute trend private markets revenue. We we are on track for that.

59:22 The the the the pricing pressure on the risk management side has stabilized. Yeah. So it it there there there was a lot of industry wide that wasn't record specific. There was a lot of pressure on fees generally in the years 2015 to 2020, which which marked a material change for for for us as a business and for a lot of other businesses in other asset classes. I mean, liquid markets went through the same thing, which I believe was a combination of technological advancement and and and also, you know, sort of a shift to to passive and consultants and the whole industry becoming very fee conscious in certain parts of the business of of the of the industry and and sort of, you know, at the same time, obviously, the the nonlisted and private market parts of the industry have nonetheless continued to to grow. But so in in in terms of our our services there, the the fees have stabilized. Yeah. So so it it it hasn't continued to to to be to be you know, and and and have a decreasing experience, but but they sort of stabilized around the current level in in 2021 and that have stayed there more or less since then.

1:00:30 That's great. Think we're off line. We're good. Thank you for answering those questions you can from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Jan, could I please just ask you for a few closing comments? Thank you very much. I think we've covered all the things that were important for us to cover. But thanks, everyone, for and thanks to to for helping me go through the presentation and and and and hopefully address everyone's questions with with clarity. Thank you very much. That's great. Thank you for updating investors today. Please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations.

1:01:21 This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good morning to you all.