Record (LSE:REC) — Full Year Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the RECORD PLC Full Year Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Please simply type in your question and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor Meet company dashboard, and we'll notify you by email when they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll and be most grateful if you could give that your kind attention. And I'd now like to hand over to Leslie Hill, CEO, and Steve Cullen, CFO from RECORD PLC. Good afternoon to you both. Good afternoon.

0:50 Good afternoon. The we have a a short presentation which we intend to sort of take everyone through, which gives a bit of background on on RECORD PLC over its sort of thirty eight year history, not all of its history, but it's it's it's it's it's history, and give a little bit of a flavor of of what RECORD PLC does in terms of products and services and then give a gives a flavor of most recent results and and we'll just run through some numbers and then take some, as Mark has already said, take some q and a at the end of the presentation. So I think if we kick off, Leslie, by going to the first sort of slides, which are an intro to RECORD, which Right. Do you want do you want to get run through a brief history of RECORD? Absolutely.

1:44 Yes. So these are some highlights. As you can all see, we are a very long standing currency business and a business that has been very stable over over years and was listed on the London Stock Exchange in 2007. And most recently has been a chain there's been a change in management, an evolution of our management, I like to say, and we are now on a quest for growth through modernization and diversification, which is starting to bear fruit. As you can see in the background, I think some of these most of these things are fairly self explanatory. But if you feel there's anything that you would like us to highlight or to get into more depth on, please post your question, then we'll come to it at the end.

2:33 Been around a long time, been quite stable, went public, have quite a lot of institutional clients, and are now moving into a new phase of our history. Yeah. So in terms of what we do Okay. In terms of the business model? Yeah. So we are an asset manager. The difference between us and other asset managers is whereas other asset managers might manage equities or bonds. We manage currency and derivatives for our clients. When we do transactions for our clients, we act as their agent. In other words, they give us a mandate to look after exposures that they have, and then we try and return improve the returns or reduce the risk or do any of the various tasks that have been given to us by our clients.

3:28 We we can see here from the slides that, typically, the clients might be pension funds, foundations, government authorities, some endowments, and other asset managers as well. And most typically, also, most recently, we've got a new transaction we've just signed with a wealth manager based in Switzerland. So we will use a number of different derivatives instruments. We would use swap. We would use swaps. So all the raft of possible derivative trades. The basic difference between us and a bank is although we have a lot smaller than a bank balance sheet, we only derive our revenue from client fees, which are expressed usually as an invoice.

4:23 So we are very transparent in the way we manage our clients' currency risk because one of the things that is very endemic in the currency markets, it's quite hard for people to judge whether they are getting a fair price or not, and that is because there's no explicit fee for transacting foreign exchange. Even when you go to the airport to buy your currency as we used to do and we'll do again, you get an all in price, and it's difficult for you to know quite how much profit is being made. Whereas a currency manager, such as we are, will never take a hidden spread from a client, but will always express our fees in terms of some kind of an invoice or transaction fee that is very transparent.

5:07 And that's attractive to a lot of asset managers who wish to prove to their clients that they're getting value for money, and that's true for pension funds as well. And I think it's important to note that as a business ourselves, we don't take balance sheet risk No. On any of the transactions. As Leslie's already said, we act as purely as agents for our clients. We take on their operational risk of running fairly significant mandates on on their behalf, but we don't take balance sheet risk. In terms of products and services Actually, it's probably worth saying, Steve, the reason why that matters I mean, clearly, we could put our balance sheet at risk, and that would be okay. The reason why it matters is that to the extent you want to scale a business, if you are required to use your balance

5:55 sheet to scale it, that limits the amount of growth that you can envisage. Whereas if you act as agent, as long as you have an adequate financially robust and stable structure and balance sheet, you are not backing every trade with your own money. And therefore, there is a lot more scalability available to you as an asset manager acting as an agent. And that is relevant to anyone who is a shareholder who wants to see the the business grow. Indeed. So what do we do in terms of sort of a suite of products and services? It's so on the slide, you can see there are sort of different types of of services that we offer. We we can manage currency risk on behalf of our clients through, excuse me, various different hedging products.

6:45 The main ones being dynamic hedging and and passive hedging. Passive hedging is pretty much what it says on the tin. It's it's a hedge that's put in place that protects the the value of the underlying portfolio for clients. So it sort of does the opposite of what their underlying assets are doing so that it eliminates it looks to eliminate the bulk of the risk that they have from their overseas exposures. Dynamic hedging is, as it again, as it says, more dynamic. It's it's a product where we look on a daily basis at the positions. If the if the exchange rate is going in the client's favor, we we get out of the way effectively and allow the growth without incurring additional costs. And if the if the movement is going against the client, then we increase the hedge ratios to protect the client further. So it's a much more active active product and and therefore attracts higher margins and higher fees

7:48 than the passive hedging product. Let's see. Actually, you would you like to talk about the return seeking side of the Sure. The product base? Yes. So there's a number of different ways you can use currency for return or attempt to use currency for return. There are pure currency for return programs of which we have a few where there is really no underlying asset. We're just trying to make money out of currency. There are currency for return just like the fund we just agreed with UBS, where there is a sort of an additional motivation. People want to have an an impact or sustainable investment, and they want to use currency to articulate that wish. So there's all sorts of different ways of doing it. We could go into a lot of detail, but I I think in view of the term, I would propose we ask people to ask us questions if they want to know specifics or contact us for that.

8:43 But if you can imagine us hiring doing almost everything you can do in currency for our clients with the exception of since we are not a bank, we are not market makers. We don't make prices to the outside world based on incoming requests, and he's not at present. But everything else, spot execution, forwards, swaps, managing existing risk, helping people structure, upcoming risk private equity managers, for example, making money out of emerging markets, making currency, making money out of developed markets, all of the above. Yeah. So I think if we move on in terms of sort of the size of of of business, we so we report we report sort of the size of our assets on an assets under management equivalent basis, and the equivalents basically means that we don't physically hold our clients' assets. We provide an overlay service on top of our clients' assets. So when you look against the typical asset manager where they do actually hold those assets and have the assets under management, we we differentiate that by calling them asset under management equivalents, but gives us size, it gives an idea of the size of the underlying portfolios that we effectively sort of manage on behalf of our clients by providing these overlays.

10:14 And I think there's a bar chart on the left hand side there that sort of shows the movement in our assets under management over sort of last five or six years. We have seen sort of growth, fairly steady growth. Over the last five years, we've sort of increased our assets under management by 50%. March twenty one year end was a significant year in terms of our assets under management growth. We signed a significant dynamic hedging client, which was reported sort of at 8,000,000,000 at the time, I think back in September. And and and we have been attracting new new clients and and new assets as well. The split of our assets under management by by client type, I think we sort of touched on client type earlier on, but you can see that there's foundations and trusts, corporate pension funds, and government and public pension funds in there are predominantly the the bulk of our sort of assets under management by client type. And by geography, excuse me,

11:16 significant the significant sort of part, 63% Europe excluding The UK, a big part of that 63% will be we've got a large Swiss passive hedging base. So there'll be a large chunk of that will be in Switzerland. But about a quarter of our assets are based in sort of North America. We have so we have got quite a spread, if you like, of of of assets by geographical location. It sort of occurs to me, Steven, in view of the term, we might not go into details on the individual products. I think that was more for for individuals to sort Yeah. Yeah. But but and it's not that we don't want to talk to them about them, but I suspect that anyone who's interested in us from the perspective of an investor is more interested at the moment in what have we been doing and what is our current strategy and how do we think it's going to play out or how do we hope it's going to play out, which kind of starts on page 15.

12:14 Right? Yeah. And there's an awful lot of detail we can get into, which I think at this point may be too much for the sort of top level view. Yeah. So what we are trying to do and what we are starting, I think, to succeed to do is to move from a very focused business, focused on our own investment ideas, our own intellectual capital, if you like,

12:39 and to diversify into a much more client focused and sales led, which I know sounds a bit like a cliche, but in our case, it's genuinely true. Talking to clients and designing solutions for them, and the UBS fund is one such example. Rather than coming up with our own ideas, perhaps in a bit of a vacuum and then going out and looking for someone who feels the way we do about the world, we have actually turned it around and become much more of a sales and technology led business and less of a pure investment strategy business. And that has helped. That is helping, which is good. We are lucky in that we have a very stable client base and quite stick very sticky clients.

13:25 And I have said, I think, in our current annual report, which I I think is very true, we're better at keeping clients than we've been at getting them. Currency is a bit of an optional extra for people, so it's not always easy to find a client. And, nonetheless, once we've got them, we tend to do quite well, and we tend to be able to do more things with them. So focusing on the client led products, they come to us with what they want. They come to us with questions about impact investment, about cryptocurrency, about emerging markets, about risk management, and we try and help them. In addition, we needed to modernize. We do still need and are modernizing the business because we had fallen behind in technology terms, and it's moving fast. So it's easy to fall behind, but we have, which meant that as fee compression bites into the asset management world and across the whole of the asset management world, we need to be able to deliver what we deliver to clients more efficiently, more scalably, more effectively, and that's what we've been doing. And then the other thing we've been doing is I have been planning for succession planning because it's quite hard as an asset manager to survive beyond the first generation.

14:39 But I believe in our case, we can do it, and we are doing it. We're seeing some management changes as a result. I moved up from sales to CEO, but also other people have moved on, and we've moved people into new positions. And I see my role as creating an environment where the business can be strong and successful and a growth business going into the future, not so much with the old generation that we had, although they can help, but with the new generation of employees that we have now.

15:15 And our clients, but also allows us to have a fund for future potential strategic partnerships and investments, and also enables us to maintain our dividend policy. And just to give an idea of how that was reflected in the sort of financial performance of the business over the last five to six years, we have seen we've seen steady growth in revenue, albeit fairly slow or not very high growth in revenue. However, that growth was supported by manual processes and additional headcount. So we were seeing increases in our revenue, but also increases in our cost base. The the strategy is now, you know, a pivot away from that and and to adopt new technology and third party systems to make, as Leslie has just alluded to, to make the systems more scalable and more efficient and to reduce the sort of manual processes that we have going forward. And that will allow us to develop new products and and make them as efficient and scalable as possible.

16:16 And one of those, a good example of that is is the recent fund launch with with UPS that we we announced yesterday. I think the message that we get from clients is we like RECORD. We like the fact that you are reliable and have a good track record of servicing clients. We like the fact you have a strong balance sheet. We want more from you. We want you to evolve. We want you to think of new ideas. We want you to evolve your tech. We want you to keep up. We don't want you to be a stable but slightly dull business. We would like you to take all the stuff that you know or your experience and put it to work in the twenty first century context, which I think is a very sensible way to go and hasn't been easy for us to get to grips with. I actually think COVID's been a tremendous help for us because it meant I wanted to make quite a lot of changes that would have been perceived by the incumbents as quite odd or scary or unusual or different. And in in essence, we went home one Friday and didn't come back.

17:23 And once we had proved to ourselves that we could all work from home, which was what all 89 had to do, it was much easier for me to say, well, look. If you guys can do that, then surely you can do this, whatever it is. Do have a piece of software that enable us to collect and transform all data? Because in a way, we're a data company without doing it manually. You know? And that has made it easier for people to imagine a different business than it would have been if I had just walked in on Friday and said, right. We're not coming back on Monday. They would probably have got the man with the white coats at that point and said, who is this woman, and why is she saying this? Most of them would know me a long time. They wouldn't say who is this woman, but they would certainly think I've gone mad. So we were able to do a lot of changes, make a lot of changes, and have people think outside the box because we were obliged to, really. That helped a lot.

18:15 Where are we? Okay. So So we've talked about current environment. I can start talking about some I think probably put some numbers on it so that people have some kind of sense of what this is all doing here. Yes. Of course. Yeah. So if we flip over a couple of slides to the sort of first slide here

18:38 yeah. Just on my headline level in terms of our sort of key performance indicators, we we have grown and continue to grow our client numbers, which is sort of a general indicator of direction of travel. As Leslie said, we have got some very long standing and very sticky clients, but we are still adding new clients as well. So there's a very good balance there. I've already talked about the increase in our assets under management for the year, which we increased our assets by 37% this year, 9,700,000,000 worth of inflows and about $8,500,000,000 worth of market movements have have helped us to increase assets under management size in the year. This is this has been a year of transition for us. All of the developments that that that we previously touched on in terms of investing in new technology and in terms of restructuring, which brings its own sort of one off type costs in terms of personnel have sort of impacted on our financial performance on a on a temporary basis this year and knocked our operating margin down from 30% down to 24%.

19:48 The year was actually one of almost two halves, if you like. Our operating margin in the first half was 22%, and our operating margin in the second half was 26%, broadly as a result of signing a new dynamic hedging client halfway through the year. And obviously, we will see the full impact of that in this year's results in FY 'twenty two. So the expectation is that that bounce will continue in the current financial year and our operating margins will increase, I think, which is reflected in the sort of consensus numbers for the current financial year. Similarly, obviously, that flows through to our earnings per share number, which decreased by 16% for for this year. On a revenue and management fee basis, so the the bottom left two bar charts, whilst our revenue decreased very slightly by sort of 200,000, Our management fees actually increased by 8%. So and the reason for that is that we reported 1,800,000 of performance fees in the prior financial year and only 100,000 of performance fees in in in this in the FY twenty one year.

20:59 And that difference, if you like, has been offset by management fees, which are much more certain and and more valuable revenue streams for us. So although revenue was broadly flat, management fees did increase by 8%. I've talked about the increase in sort of the cost base. Obviously, that had an impact in our PBT number, which went down from 7.7% to 6.2%. But then coming again, coming back to the new dynamic hedging client, which we we expect to see the full impact of that revenue stream in in the current financial year. So the expectation is we'll see similarly a bounce in our PBT number. Dividend per share, we paid out in full the EPS of 2.75, so that's 2.3p per share on an ordinary dividend basis and 0.45p on a special dividend basis this year. The decision was made based on us not needing any more capital on our balance sheet.

22:01 We've got plenty to finance this sort of investment that we've been talking about. And with future sort of revenue streams, we felt confident in being able to pay out the full earnings this year as dividends. So on that basis, I think if we continue just delve a little bit more into sort of the dividend policy for people just so they understand broadly how it works. The the dividend policy states that we will we will look at dividends based on earnings per share after taking into account any increase in either regulatory capital requirements or capital requirements for any other projects or or investment purposes that we deem necessary.

22:57 And then we will pay out on an ordinary dividend basis and any surplus over that, we'll go we will pay out on a on a special dividend basis. We changed the policy, I think, maybe four possibly five years ago, and we've paid out special dividends every year since. We feel that the balance sheet is over at a level now where it's it's not it it doesn't require any further sort of reinforcement at this stage. And dividend and the capital and dividend policy

23:27 hasn't changed throughout COVID. It hasn't been impacted at all. We've stuck very rigidly to it. And like I said, we've made special dividends out for the last sort of five or four or five years. We can have a quick look at movements in assets under management. This mouse is playing. Sorry. Bear with me. The mouse the mouse is playing up, and I can't change this. Can you do it? Okay. I can do it with buttons. Yeah. Me. So, yeah, just the assets under management bridge, which comes back to the sort of thing I was the the subject I was talking about earlier. So we saw healthy net inflows of 9,700,000,000 in the year, further reinforced by sort of equity and market movements, which sort of underpin our clients' portfolios by a further 8,400,000,000 and some FX movements of 3.4. So went from 58.6 to 80.1 in the year, which was a 37% increase in our in our assets.

24:34 Just to give a a feel of of the the the sort of split of our assets under management by sort of product, We've got a very strong and large passive hedging base of clients. As you can see, 61.5% $61,500,000,000 the $80,100,000,000 at the end of the year was down was due to our passive hedging clients. We saw flows of 2.1 in the year and market movements of 6.4.

25:07 It's it's very good, long standing sticky business for us, the passive hedging, but it's it's very low margin. And so, you know, that links into the reasons part partly the reasons that we talked about in terms of looking to diversify the product and the revenue streams across the business. Going across to the dynamic hedging, there was a significant increase in the year in our dynamic hedging, just specifically one client that we signed back in September of last year. That's much more high margin business for us. Again, they tend to be fairly sticky and long standing clients for us as well. So that that was that was diversification of sorts, but diversification into sort of existing product ranges, if you like, but still very welcome diversification.

25:55 And again, currency for return and multi products, we saw similarly, we saw inflows into both of those during the year. So we saw positive movements across the board in the year in terms of assets under management. What does that look like in terms of our sort of mix of management fees?

26:18 And you can see moving on on the left hand bar chart, moving from f one nineteen to f y twenty one, we are starting to dilute the the sort of concentration to to the historical passive hedging business that we've we've had over the over a number of years now going from sort of the the management fee percentage going from 54% down to 46% in in in the FY '21. And we will look to we expect to dilute that further in the current financial year to below to below or around 40% of our management fee base, which means that we'll be seeing an increase or we expect to see an increase in our dynamic hedging fee percentage to sort of around or just under 30%, which again is that diversification point that we've been talking about.

27:10 I think the client longevity point is an interesting one. We we do have some very long standing and some and and some very sticky clients. So in in the bar chart on the left hand side, in terms of client numbers, we've had sort of 36% of our clients for over six years, which I think is is is is a good indicator that, you know, we we we win when we win clients, we tend to keep them. But also, it it shows a healthy inflow of new clients as well. So, you know, one to three years, 25%, and not one years, 21%. We are we are still we are still winning new clients and feeding them into into the client base. The new clients have tended to be what we've seen is new clients have tended to be of a of a slightly smaller scale, and they grow over time. And certainly, we've seen that with one of our clients who started off fairly small one and now in our sort of top top five clients in terms of assets.

28:08 But in terms of assets, we've we've actually had 68% of our assets for over six years. So that sort of you that sort of lends lends itself to what I've just said about the the newer clients tend to be tend to be lower assets under management, but with a view to growing over over time. But that gives a feel for how how the the client longevity in terms of client numbers and client assets looks. Excuse me. We talked earlier about the sort of in the the the the year being a transitional one for us in terms of investment in new technology, but also in in in terms of restructuring. So we've seen a we've seen a 20% increase in our personnel costs broadly as a result of some there are some ad hoc or one off type costs in there in terms of restructuring costs that I think you would expect to see in those sort of processes.

29:07 We've also we've also promoted internally, and this comes back to the generational point that Leslie spoke about earlier. We've we've we've got some very good young people coming through the business that joined us at an early stage of their career, and we are very keen to retain them and promote them where they're capable of doing the job. So we've seen some ad hoc one off costs and some promotional increases in there this year. That type of increase in personnel costs, we wouldn't expect to see on an ongoing basis, slightly offset by a 5% decrease in our non personnel costs. And that's broadly as a result of the pandemic. We haven't spent as much on travel and accommodation and conferences for our sales team as we have done in the past.

29:57 Our group profit share operated is quite a mechanical process. It's a percentage, anything between 2535% of our pre group profit share operating profit. And that varies based on both business performance, but also individual performance towards individual objectives that are set on a twice a year basis, on a six monthly basis. We paid out 31.4% in FY 'twenty as GPS, and we paid out 34.3% in FY 'twenty one as GPS. Just moving on briefly to the income statement. Excuse me.

30:43 So management fees, we can see 23.1% to 24.9%. So that was that 8% increase in management fees, offsetting the decrease in performance fees of £1,700,000 and most of these in terms of the operating costs and also the impact on our operating margin, which decreased from 30% to 24%. But again, the expectation is that we will see the continue to see the continuation of the bounce that we saw in the second half of the FY21 financial year as we get the full impact of the new dynamic hedging client and also the revenue streaming from the new fund launch as well that was announced yesterday. If we flick briefly through to the balance sheet, and again, returning to what we said earlier on about in terms of maintaining a healthy and robust and strong and liquid balance sheet, which allows us to sort of, you know, be able to invest in any new projects or technology that that we deem appropriate.

31:53 But it also because of because of the the the the high operational risk that we take on behalf of our clients, I think, you know, what they look for from us is a significant and robust balance sheet should anything go wrong in terms of operate in terms of that operational risk. We we've actually decreased the size of our balance sheet in the last sort of few years. We used to hold two years worth of operating overheads in the back on the balance sheet. We had a tender offer back in 2017 and returned £10,000,000 to shareholders. The policy currently states that we hold our regulatory capital plus broadly one year's worth of operating expenses excluding GPS on our balance sheet, which broadly sort of equates to we have regulatory capital of 9,400,000 and overheads excluding GPS of between 14,000,000 and £15,000,000 So it comes out to around sort of 23,000,024 million pounds So the capital and dividend policy is there to ensure the robustness of our balance sheet continues and doesn't get diluted at all because it's an important aspect for us.

33:08 Summary, and now that on the final page, Leslie, on '28, do you want to Yes. I I won't won't label this too much because it's restating what we've already said. So the whole notion we have here is to diversify the business, new products, new services, new strategic partnerships, modernize the business, which is about improving our tech stack and effectively becoming much more twenty first century and in the forefront because there get to be lots of opportunities for us using that, if you like, using the technological innovations. Thinking very hard about what our clients want and supplying it sounds simple. Not not always simple, but certainly that is our quest.

33:57 Focusing very much on succession planning, on the ownership of shares by staff, significant staff in the business, maintaining a strong capital position, but also thinking about how we might want to invest some of that in the future and maintaining a dividend policy and trying to create what somebody once called to me, what they call, apparently, a stock, which sounds very glamorous. But I believe what that means is a stable business, which is growing as well and pays a good dividend. The end. Yes. There were there were some indices there now, but we're not we're not going to. No problem. Steve, Leslie, thank you very much indeed for for updating investors. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. I just want the company to take a few moments to review the questions submitted already. I'd like to remind you that the recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your Investor Meet company dashboard.

34:56 I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected to the opportunity to provide feedback in order that the company can better understand your views and expectations. Steve, I just want to check if you can if you can scroll on the q and a tab. If you can't, would you like me to read the questions out, and I can I can I think well, there's been some scrolling going on? Yeah. It's it's it's just started working again. How about a bit? Well, that well, that's good to hear. First question, which is from somebody called can you go back and see the name again? Was it Patrick? Patrick l. Absolutely, Patrick. We had too much passive business. Should we should we read the question out? Oh, yes. So we because well, there are other people who can't see it. Yeah. Right. Patrick is asking, do you have medium term aspirations for the balance between passive and more dynamic mandates?

35:47 And that is within our funds under management. And the answer is yes. In fact, we have even short term aspirations for that, and in fact, it's already happening. I think perhaps a better a better answer to that question is we have medium term aspirations for a better balance between a number of things, not just passive and dynamic, but other things that we can do, frontier currencies, maybe one day cryptocurrencies. So a more diversified business that protects us against the fee compression that we've seen in the passive end of our business as will technology. I hope that answers your question. Simon is asking, Simon c. Could you please explain a little about the competitive landscape, main competitors, etcetera, and what makes you different? Okay.

36:33 So there are two or three types of competitors. In history, competition has come from banks who would set up asset currency management units often within a dealing room, and they were variously successful for a bit, maybe not for long, maybe for a while. We also have some standalone currency managers. Millennium is one. Adrian Lee is another. They also are long standing. Many of our competitors have not lasted. Currency is difficult to be successful in. A third type of competition comes from the large asset managers who do currency as a bit of a sideline. I call it a sideline. Someone like legal in general who might offer it for free or very cheap because it's really a way for them to cross sell. So all of those make competition difficult. Banks can hide their fees and the spread.

37:24 Other asset managers can sell things that we don't have and therefore sell currency very cheaply. Stand alone managers have found it hard to make a living. What makes us different? I think well, first of we've survived, which is a good thing, and that's a we call it an essential element. But, also, we have diversified across the whole gamut of things you can do in currency. So some of our competition are very much focused on currency for return, but if that didn't work, they didn't have a full. Some others are focused very much on passive, but then there's been fee compression, and that's caused an issue. So you wanted to be as diversified in currencies as you could be, which we have been, that we were helped by not dividending out all the profits, which some of our competitors perhaps have done, which meant we had a fighting fund to enable us after the financial crisis to rebuild.

38:19 I would say what will make us different going forward is keep all the good stuff, like the good clients and the traditional products, and use our position of strength and integrity and history to become a much more modern business. So, like, imagine us renovating the house whilst we're living in it and making a much better house and maybe also making it a hotel and a restaurant. That's something that Yeah. No. I think it's true to say as well on on the hedging side of things, what what we do offer clients is a complete sort of tailored offering. If they certain clients have certain requirements that the likes of, you know, the big banks, etcetera, just can't facilitate. And and that's where we can offer real value to clients in terms of what we're running across the board reporting, etcetera.

39:04 As long as we have the technology to support it, we can do some really cool stuff. Yes. Indeed. There's another question there. They're sort of scrolling. I I don't know whether are we doing this right? I've had Patrick and Simon. Now I've got Patrick again. Is there some You're no. You're doing it brilliantly. Every question will come in time order, so Patrick's current questions. Oh, I see. Okay. So shall I answer Patrick or Andy next? As many and in what order you feel free. Patrick, thank you very much. Yes. So the fees for this fund are higher than fees we earn in any other product. Should we do the re sorry. Yeah. Patrick says, congratulations on the launch of your fund. Can you give some color on the fees and basis points of fund reduce for record in comparison to dynamic mandates if you are able to be that specific. Okay. So our passive mandate is very much single digit fees.

39:56 A dynamic mandate is low double digit fees, and this new fund is looks much more like active management fees, so sort of mid double digits, and I like an emerging market debt manager or something like that in order not to be entirely specific, but I think it gives you an idea in order of magnitude. It is a great deal more profitable than what we have been doing with our passive mandates in the past. Now there was someone else. I think it was Andy. I've sort of lost him there. Oh, Patrick again. Yes. Patrick. Yes. Patrick. Golly, Patrick. Okay. Patrick asks that he's ready for research from Edison. Are you covered by further progress and research houses? Yes. We have Henry or Gordon as our broker. Yeah. We've got Panmure, Patrick, but, obviously, I think you have to be a client of Panmure to be able to receive their to receive their coverage. So in terms of any other publicly available, no. There's it's it's purely Edison at this point in time.

40:59 Alastair l is asking, would our GPS work better if it was applied to a fixed percentage, say 30%, rather than a range 25 to 35%. The use of fixed percentage will create a clearer collective incentive to maximize group profits, whereas the use of a range enables relative payouts to rise as profit falls. Yes. Exactly. So you've been sitting you've been sitting in our board meeting, Alastair, or our past board meetings. And what we have agreed I I I see exactly what you're saying. What we have is a kind of an unusual situation in in there's a lot of our senior staff already shareholders. Some of them a lot of them even from the public listing because most of us didn't sell very much of what we owned. So we already have a very strong aligned incentive with our shareholders because we all are shareholders, not all of us, but most of us.

41:50 And in fact, some of the GPS has to go into shares anyway as part of the, if you like, the structure and the agreement that that we have. So what I like about the range and why sort of fought for the range and want to keep it is that I already think we have a good collective incentive to maximize profits. I don't think there's much labor against capital as much as you might have in another environment where all the shareholders are on one side and all the staff are on the other. But the the range gives me the opportunity to really flex our bonuses in response to tremendous contributions. We used to be hugely democratic where if you were a director of RECORD, you got roughly the same bonus. But, clearly, I want to give doctor Vitter, who is the head of our European sales, and brought in the UBS deal money, good money.

42:44 And that's one way to do it. So I totally get it. If you were in the board meeting, you'd probably be arguing, you know, I agree we want aligned incentives, and I think we can achieve that by by getting share options to people by encouraging them to own shares, which we've been doing. I think it's fair to say, Lucy, the GPS previously wasn't particularly aligned with individual performance objectives, but it's much, much more closely aligned now, which, again, should be an important incentive for everyone to to to try and act as as as as positively as possible in terms of operating tricky because if you want democracy and everyone gets the same, it's really nice because you don't have fights. That's good. So it's not like an investment bank. On the other hand, it means you slightly overcompensate people who aren't trying so hard, and you probably undercompensate people who are trying very and succeeding. And and if you said to the normal human, would you rather get overpaid for not working as hard or underpaid for working really hard?

43:42 Every human says, well, I think I'd rather be overpaid. And so what you gradually get is a drift where too much money is going to people who aren't helping as much, and not enough is going to the ones who are doing the heavy lifting. So we're trying to flex that, which is not easy. But, hopefully, that answers your question in a satisfactory way. How significant, says James, could the UBS product become? Well, UBS is a very big wealth manager. This is a generational change product for them. They have told us the reason they did it is they were worried about losing clients as their elderly parents pass the money to their kids and grandkids because the new generation, as we all know, is much more sensitive to investing in impact and ESG sustainable funds. So this is part of a suite of products UBS is developing have developed.

44:31 And the other managers who have launched products for them, we are the fourth in this particular portfolio, have seen significant growth. So it would not be unreasonable to assume that this could become significant, but I would also like to maintain diversification very much because we were caught out in the financial crisis where we had one big product, which was successful, but it meant we had to redesign the business when that one stopped working. We don't wanna do that again. Martin f says, can you talk about the client mix and how it's changed and why you see client going? Yes. So or not to go back too far. We used to have mostly pension fund clients, I would have said twenty years ago, and some corporate clients. It's morphed over the years into pension fund clients, asset managers as clients, foundations and endowments and as clients, government entities as clients.

45:26 Where do I think it's going? If we can get the tech right, Martin, we're gonna get a lot more asset management clients who would like to wean themselves off their dependence on their banks or their custodians custodian banks for currency effects, execution, and hedging. We've already seen that happen. We've seen people like Pemberton, who is a big and fast growing private debt manager come to us just to sort out all their currency problems, and we can do a lot more of that. I think the impact business might mean that we would get more clients of the foundation endowment type who are very interested in this area, possibly more third party wealth management type plans like UBS, which would be new for us. We've not really had those before.

46:12 If we ever move into the world of digital assets, then we might find we have more clients who are family offices or even potentially high net worth. So the thing about currency is it touches everyone, and it's also possible to conveniently ignore it for a lot of people. And so we have to pick and choose our geographies and our battle. Now with our tech, we need to make it so genuinely scalable for us and then keep our eyes and ears open to what clients want us to do and try and do it for them. Golly, are they gone? Is it all done? Think I mean Leslie, you Leslie Leslie, Steve, you've you've been very generous, and and I think you've addressed every question almost that has come in from investors. So thank you to those investors that submitted those questions. And, of course, if we have missed any or scroll past, I can obviously make those available to you after. And if anybody has if anybody has other questions, we are certainly happy to entertain an email funneled through you to to answer other questions. We're not we're not trying to shut the conversation down, and we're happy to to to take other questions at other times.

47:23 Our door is open for questions. I guess that's what I'm saying. If we can answer them, we will. Absolutely. And thank you very much indeed to you, Leslie, and to Steve, for updating investors this afternoon. And perfect timing as we come up to the hour. So thank you once again. Well, you for your interest. Well, Leslie, thank you very much indeed. Course, I know investor feedback is important to you. So I what I proposed is just wrap up the session now, divert investors to give you feedback and, of course, session. So That will be good. We'll see you here with trepidation. Yeah. Thank you once again. Thank you once again. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide feedback in order the company can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by Leslie and the team. On behalf of the management team of RECORD PLC, we'd like to thank you very much indeed for attending this evening's, or this afternoon's presentation.

48:20 Good afternoon to you all.