Record (LSE:REC) — Interim Results

0:00 Good afternoon, and welcome to the RECORD PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Just 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 will review your questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Leslie Hill, CEO. Good afternoon.

0:30 Thank you very much. Good afternoon, everybody. Yes. This is Leslie, Leslie Hill, and I'm with Steve Cullen, our CFO, whom some of you will probably have seen and heard before. We would propose to do what we've done in the past, which is to work through the presentation in a organized fashion, but we will be happy to take questions as they occur to you. And I will try, as will Steve, to answer them as timely in as timely a fashion as possible rather than saving it all till the end. I do recognize one or two people find that a bit chaotic, but it does seem to me that when someone has a question, it is it is good to try and answer it as quickly and effectively as possible. So I hope you'll bear with us there. Right. So, Steve, we're going to kick off with the first page, which is the financial highlights, which in time honored fashion, I'm going to ask you to highlight any key, points we want to make, and then we'll move on to strategy and other questions.

1:28 Yes. Thank you. Thanks, Leslie. So financial headlines,

1:33 we will kind of just run through quickly. I think rather than just jumping straight in, taking a step back in terms of the half year, I think people would have read that we we have had a couple of fund launches already this year, and we expect to see at least another one fund launch before the end of the financial year or possibly possibly another one as well. There have been delays in the fund launches versus where we initially anticipated the timing. So I think we've seen a bit of slippage in terms of some of the new revenue streams coming on board. And hence, I think maybe the the impact on the half year results has been sort of slightly behind where we expect it to be.

2:22 Notwithstanding that, we do expect and as we've said in the in the interim results announcement, we do expect to be on track in terms of consensus numbers for the final FY '24 year end in in March 24. So just skimming through the financial headlines, still strong assets under management, 84 and a half, slight downward movement since the year end, broadly on our sort of passive hedging suite of products. Again, a 2% shift on the on the passive hedging. It's it's sort of the the general business as usual inflows, outflows, clients rebalancing, etcetera. So you know, but still a very a very strong and significant number. I think in terms of the revenue line, half year on half year down slightly 3% on on first half last year.

3:15 But I think if you drill down further into the detail on the on the revenue, what you can see is that we've actually seen an increase in management fees of 3% half year and half year. And, really, the the decrease in the revenue reflects the decrease in the performance fees versus last year, which were as we previously said, I think the performance fees last year were an exceptional level of performance fees, nearly 6,000,000 in performance fees for the whole year. So the headline numbers maybe don't show the true picture. I think it's we're still very pleased to to report for the report performance fees for the half year, albeit they are down on on this time last year. What's the impact been on on on sort of pre pretax profit? So we've gone from seven and a half down to 6.3, which is a 16% sort of downward move.

4:04 Again, we would link that to some of the delays in in the in the new fund launches and some maybe upfront costs that we're starting that we're seeing in terms of getting these new product launches ready to go to market, not yet being offset by the revenue flows that that we fully expect to come on board in the second half of the year and and and onwards after that. I think the board is still comfortable and and and confident in in the FY '24 numbers as we've said. And then I think that's reflected in the interim dividend that's been announced, which is an increase of 5% on this time last year. So we've gone from two point o five to 2.15 in line with our progressive dividend policy, which we we we haven't changed. We we fully stand fully stand behind that.

4:55 Operating profit margins, similar to the pretax profit, we've we've we've seen sort of a decrease half year on half year. Again, a lot of that is linked to the exceptional performance fees that we saw this time last year. There is a bit of a lag on the operating profit margin in terms of, again, the delays to some of the new product launches that we've seen. We are launching products at higher revenue margins, and we fully expect to see an increase as these fund launch fund launches come online and we start to see some of the revenue flows accordingly. EPS down from 3.27 to 2.48. Again, the same the same story really. We have been it's been slightly exacerbated by the change in the tax rate for the year. It would have been about sort of an 18% decrease without the without the change in tax rate, but still, you know, a decrease half year on half year.

5:50 Again, linked to the the the the same sort of issues that that that we've that I've previously mentioned.

5:59 Shareholders' equity, 28.5. So a slight increase on on this time last year of '28. You know, it is our policy, I think, as as people know, to retain a a strong and robust balance sheet to support the business in terms of the the future investment, and it stands us in good stead with with clients and potential clients, etcetera. And so that's not that that that's that's that's not something that we would look to to change significantly. Certainly not on the certainly not at this point in time. So on a on a financial headlines basis, potentially comes across a little bit disappointing possibly to to investors. But what what we've done the line, I think, is that, absolutely, the new fund launches, the new product launches are remain on track in terms of we have commitments from investors.

6:53 The this is in no way impacted by the investors. They are still committed to investing with us. It has it has literally been down to getting all the ducks in line in terms of new new product launches from a legal perspective, regulatory perspective, and it's just taken a lot longer than I think we initially anticipated. But, you know, as I said, the commitments are there, and we we we don't see any sort of change of of of change of mind or anything like that from some of the from many of the clients. They're they're fully committed to the new the new the new products. So I think that's kind of so it sums up. It's I I don't want the financial headlines to come across overly down.

7:38 I think it's I think it's positive in terms of management fees. I think we have been slightly impacted by the exceptional performance fees we saw this year, although it's still pleasing to report a million and a half for the for the half year anyway. I think I'd reiterate the message that in terms of on a full year basis, we do still believe that we can, excuse me, that we're on track to deliver the full year numbers as as currently in the market. I'm sure there'll be questions, but I think that's a a quick zip across the the the sort of headline numbers, if you like. Leslie, should we should progress on the Yes. Yes. I think if anybody has questions, they ask anyway, so I probably don't need to ask if anyone has questions. But we'll progress, I guess, to slide five now where we're talking about the growth strategy, the modernization, diversification, and succession mantra, which some of you would have heard before or many of you might have heard before.

8:32 So there are three, four pieces to this

8:38 slide. One is we continue to diversify, which all of you, I think, understand. We have two new flagship funds. One is the infrastructure fund. The other is our cryptocurrency fund, are both in launch phase. They are ready to roll. One of them is effectively launched, but we're waiting for the, accountants to sign off on their role within it, which we can get more into in a minute. Modernization is a constant state of mind and state of being for RECORD now, so that's continuing. We've done a lot more for asset management clients with our reporting suite and continue to do that. A very important piece of it is succession with the announcement that next year I will retire. And, unfortunately, I will still come back to help, I say unfortunately, because, I recognize that, with my history, I can help the new team, but that the new team are ready. And the reason why I think it's important to do this now or next year is because my job was really two things. The first was I was asked four years ago to build a diversified product and service

9:48 range, a strategy of diversification away from pure currency, which we've done. We've gone from three products. We now have eight either launched or ready to launch, or nearly ready to launch. So they are really going to be a very diversified suite. So I think I've done a decent job on that. The second piece is plan for genuine succession as opposed to talking about succession and not doing it, which was what we did for some years and what I know other companies do too. We really have got a genuinely exciting team, and there are more of them coming on stream. So what I feel is the next job is monetize and implement the strategy, monetize all the work we've done, move the senior the young the new senior people up, give them more responsibility whilst at the same time since I'm still got life in me, and enthusiasm, having me in the background on the in the wings ready to help if needed in any way.

10:45 I will continue to be a very significant shareholder, So I will probably be even more interested than all of you in how well RECORD continues to do and that it continues on this growth and diversification and modernization trajectory. So we're going to go for it, and I feel comfortable and confident that these guys can do this. They really can do this. They just need mom to be, you know, in the vicinity occasionally, but not leaning over them. You know?

11:15 And that's why I decided it would be good. It took a while to think it through and to talk about it with everyone within the company, but I think it's a good thing to do for both the business, the share price, and probably for me and my colleagues. Hello. It's Malcolm. I'm going to read this question, Steve, and then you can have a look. Can you give examples of how q two will make up for h one sorry, half year two make up for half year one to meet the same full year expectations.

11:46 Steve, do you want to address some of the sort of things we have obviously carefully put in our calculations to give everyone a sense for where some of this activity might come from? Sure. Well, as it says in the statement, you know, we we do now have two live funds launched in in the first half. So the expectation will be that we will start to see certainly some revenue flows or or more revenue flows and and growth of from those funds in in the second in the second half. We do have the infrastructure fund that Leslie has already alluded to, which has taken quite a while to get together to to put together, but it's it's certainly coming very close to fruition, hopefully, before the end of the calendar year.

12:36 Although the revenue flows from that will be based on the the projects that are when the capital is cooled down. So the timing of those potentially uncertain, but we would hope to see at least one deal done in that fund before the end of the financial year. I think in terms of, again, steady growth in management fee that we have just reported 3% on on the half year. So our underlying management fees continue to grow as does our asset base. I think we've got sort of visibility, if you like, on on some further asset flows on the on the on the hedging side of the business as well. So we can see we can see sort of growth not just in one product, but sort of fairly broad growth across the product range.

13:26 And not forgetting performance fees, I think the the current market environment is is particularly helping in terms of potential performance fees. That's they can be very episodic and and, you know, could can drop away any minute, but I think that there is certainly opportunity for us in that respect on on things like the enhanced passive hedging and and some of the other products as well. So hopefully, that answers the question. We you know, the strong underlying fundamental run rate, if you like, on on the management fee side plus some of the new product launches coming on board for for the second half.

14:10 So I think I've covered most of the material that's in this particular slide. And if there are no other questions I would propose, Steve, what would we like to go to next? Well, the next slide might not be oh, hang on. There's another one. I will be sorry to oh, I'll be sorry to see you go, he says. I think he's talking about me. We will talk we talk about diversification. My reading of the board of directors is that they are first class boys and girls, but not clear to me that any of them had experience with another company in doing

14:40 such diversification. I fret about this. More a question for the chairman, and I'm sure he's asked about this. What does he say? Ah. So he is a relatively new chairman, as you know. And what he tends to say his background, in fact, is in venture capital. That is where he made his life, his work, his money, and he has actually been at RECORD as a nonexec once before. He was always very frustrated that RECORD was not adopting a much more of a growth agenda and perhaps, let's say, being slightly more aggressive with ourselves about

15:11 realizing our potential. So he only came back because I convinced him that we were serious this time about doing it. So he is the champion of evolving a business, growing a business, changing a business because that is the world of venture capital. And he is, you know, driving from the front to encourage this. Our re record digital asset ventures piece, which is run by our CTO, has got his wholehearted backing, and he's spending quite a bit of time getting to know that. So I think that does help a lot.

15:43 But I I absolutely recognize what you're saying. It is important for us to have people who are who are not who who who understand what a growth business is all about and that with it comes a heightened level of activity, heightened level of complexity. David is a tremendous help in that regard. And Jan, who will be the CEO, has been absolutely at the forefront of much of this as indeed has Becky. So I know what you're saying, Roger, and I and and, of course, I've thought a lot about this in the last six months. And and as I was thinking about whether this was a good idea,

16:18 it is a bit of a risk, of course, but I do believe that the risks are outweighed by the potential benefit of having David and Becky and Jan there and and really committed to this. So my shareholding will remain, and I, just like you, will be going, gosh, you know, come on guys. You know, let's and I will be talking to them and encouraging them all to work towards this. They all have shares, and David is acquiring shares. So all of that is helpful, I think. It's probably I would add as well, Leslie. I think that both Yan and Becky have have come through looking at those two individuals specifically. They both come through the business from sort of an intern stage, if you like. And Jan, especially as the CEO, has worked across the business in terms of the research teams, the sales teams, etcetera. He knows he knows the business very, very well.

17:14 He's been instrumental in setting up the sort of asset management side of the business. And I think, Leslie, you've previously said your your your job was to sort of implement change in terms of getting the strategy up and running. And now the next stage, if you like, is is is the implementation in terms of the the funds, which, you know, the guy this is what the guys have been doing. So it's it's not that, you know, the person that's been sort of running everything is is is is leaving. It's the person that's been sort of pushing through the change in strategy is is is retiring, but, you know, the the building blocks are already there, and these guys are are now gonna go on and implement those those those funds, etcetera, new products. Exactly. There's a question from James here, James b.

17:59 Perhaps you're coming to it, but can you elaborate on the reasons for launch timing being worse than you expected? Yes. We can do that now if you would like to.

18:07 So I'm gonna give two examples. One is our infrastructure fund and the other is our cryptocurrency fund. On the infrastructure side, so this is a fund where RECORD acts as the GP in the center. We're obviously not infrastructure originators. We are running the fund with the asset manager. We are monitoring, managing, and as I say, being the GP there. Our clients are in the first instance, five Swiss pension funds, and the other part of the equation is the originator, which is a very large Dutch pension fund that's also very large in the world of infrastructure. So the five

18:44 Swiss clients have a lot of lawyers as do the Dutch. So there's a lot of bureaucracy associated with putting together a fund, a lot of work because these the infrastructure fund will last for, you know, over twelve years, which is attractive for us. The fees are higher than we get from currency, but at the same at the same time, they are they have more longevity. They are locked in once the funds start to be drawn down. But with that comes because of the commitment that the Swiss are making and indeed the Dutch, There's a high level of scrutiny and a lot of agony about trying to have your cake and eat it, is never easy. And we've had to nurse that process as the the the glue that holds it all together. So on the one hand, it's been bureaucracy and a group trying to agree how they wanted to do it and how it would work. That's one side, and that has been slower, longer.

19:37 In the middle of it all, we had the UBS Credit Suisse merger, which slowed us down a little bit because then they were saying, well, will we both go in or only one of us go in or both, but in a smaller amount, you can imagine. On the other side, jame Jamie s and Joseph d, I've seen you. Just let me finish my answer here. On the other side in the world of cryptocurrency, we have a partner, Darren Deneen from DARE Capital, who has been very successful in the world of cryptocurrency for a number of years, over seven year longer than seven years, has his own following, has made has been very successful himself. He partners with us to help. We help him launch a fund in Luxembourg that enables him to institutionalize his offering, which is what he would like to do. We participate in performance fees as well as management fees, which is great. We get a higher share if we bring the assets, smaller share if we are simply managing the fund with him or for him.

20:34 However, it's new, getting regulated in Luxembourg. We will launch before we're regulated, but we are mirroring in the fund exactly what a regulated fund would look like so as to encourage the regulator to sign off on this. That means we can only raise a certain amount of money unregulated. The total is 600,000,000, but after that, we can raise more. The fees are far more akin to the sort of thing you are used to seeing from extremely active managers or hedge fund managers, so it's attractive for us. But we are breaking to some degree new ground, finding a specialist custodian, people who can value the instruments in a way that keeps everyone happy. And that is that is not easy work. It we're early. We're we're one of the first, and it's time consuming. But I'm confident we're getting there. We're nearly there. We're actually launching launched, but now we need the accountants to sign off on everything, new accountants, etcetera. Hopefully, James, it gives you a flavor for the kinds of things that happen. What I would stress is it's not about the clients.

21:37 It's entirely about getting all all our ducks lined up, as Steve said. Unless you have any more questions on that, I'm gonna move to Jamie s.

21:47 Can you give any guidance on the outlook for operating margins going forward as you diversify? Do you expect the new areas and funds to be higher or lower margin in the existing book of business? It's a question I love this one because we have deliberately not added anything that was not at at better fees than we're used to seeing for passive hedging and dynamic hedging and currency for return. So the passive end of the spectrum, as you all know, we're talking very much single basis points, but large mandates.

22:16 In the middle, when we look at some of the work that RECORD Asset Management is doing with the fund launches, we're talking about double digits, but sort of lower double digits. Our emerging market sustainable finance fund, launched with a billion with UBS nearly three years ago, and it reaches its three year anniversary in June, which is very important. It's around the 50 basis point mark, perhaps a little higher. And then we move to the top end of infrastructure with locked in fees, a sort of double digits, but on the lower end of that spectrum. Cryptocurrency is more hedge fund fees, and we have a very attractive share of that. So if you're asking whether our margins are going to go up as these new products represent a larger and largest part of our pie, I think the answer must obviously be yes, and that's why we did it, if that answers your question. Higher margin, whilst we don't want to remove the lower margin business because it's good for our brand, it's very solid business, we really like the clients. The infrastructure deal we did with the Swiss clients was done with clients who use us for passive hedging, so we're able to cross sell on occasion, and that's good too. But, yes, we're after better margins, obviously, as you can imagine.

23:29 I hope that answers your question, Jamie. Joseph Joseph d, can you give us a sense for the rough scale of the infrastructure fund once it reaches maturity? Absolutely. So it is it is a big commitment in the sense that there are five individual funds going in. It'll be close to 1,000,000,000 when when it's running, fully running, and it's not the only one we believe we can do. We didn't do this as a one off,

23:54 but we would like to continue to partner with the Dutch and show this idea to other Swiss clients. We already know that there are others who are interested in a second tier or a second tranche, if you like. So I think it could be really good size, lower fees than EMSF, but a similar quantum. So that's good. A very little operational risk for us as GP, although we are the manager, so we've got to manage the assets if you like. It isn't the same as trading large volumes of FX, so that's good. Oh, Joseph's got another one. Hang on. Sorry. Yeah. Leslie, can we just add to I just wanna reiterate on the infrastructure fund. Although we're talking in terms of, you know, one full scale of a billion, the the revenue streams for that are not fully on the full amount from day one.

24:41 They're they're as the projects draw down on that billion. So maybe in tranches of, I don't know, $15,200,000,000 each time. But I I just wanna make sure that's that's clear because, obviously, it makes a lot of difference in terms of revenue. Thank you, professor Cullum. You're absolutely right. Yes. Good point. We've got Joseph asking another question, which I'm going to attempt to answer. You mentioned adding more resource to RCML to onboard new assets and new pension and asset management clients. How material could these wins be?

25:13 Okay. So let's see. I want to make sure I don't get ahead of myself here, Steve. So do you want to think about how you would like to answer that one?

25:25 More more resource in terms of increasing in terms of the I IT efficiency, in terms of skill sets, in terms of not not adding headcount for the purposes of adding headcount, but adding headcount where we we see gaps in terms of levels of capability or experience or or or knowledge.

25:56 I don't think I think we've been looking very closely at making the processes on the on the sort of hedging side, RCML side of the business more efficient, and that's that's linked to the increase in costs on the technology side of things. But that was part of the reason for doing it because in terms of scaling up the business on the hedging side, the old way of doing that was to add headcount, and that's that's a very expensive way of of of doing it. How material could these wins be? I think I know we're comfortable in saying that we that the the the the the inflows on the hedging side of the business as as as people might know, it can be very lumpy. We could wait six, twelve months historically and then add a significant new client in terms of, you know, billions of of of US dollars.

26:44 Joseph's talking about revenue. If you look at the bottom there, Steve, do you see he came back again? Sorry. How big could these new assets be in revenue terms, he meant? So as you said, big and lumpy, they tend to come in. We had our biggest trading day ever last week, in fact. In a day, we traded just over 10,000,000,000. So they are big, and they do have an impact on revenue. But the revenue, obviously, are relatively low, so it's a slow and steady rather than a big surprise, if you like. Yeah. Apologies. I I I missed the last bit of the the question. Lizzie, isn't it do we take another question? Yeah. James has said he's sorry to see me go, but he would like to have seen and heard from the CEO elect on this call, and I totally get that. He isn't he is just elected, if you like.

27:33 So we only really announced this morning, which is not to say we haven't been talking and preparing. And I do get that we did debate that. And and do not worry. There will be plenty of airtime with him. We will find ways to for him to be much more visible to the outside world to investors, and you will not be short of interactions with him. But I do take that as a quite justified. It was an option we could have taken, which we didn't take. He is very engaged as finishing up on one particular one of these funds, and I said, don't worry. I'll do it. So I was like, mom again, doesn't it? Mom should have probably said, no. You do it. But, anyway, we will don't worry. We're not going to we're not going to keep you away from him. We will give you plenty of opportunity. Anthony, if you have Anthony, I wonder if that's Anthony Boone. Anyway, if you have further delays, can you cut costs? What is fixed and what is variable? Okay.

28:28 Well, clearly, biggest cost is salaries, and also there's a fair amount. There's also the bonus, which we can vary between we try and keep it between 2535%. Variable costs, well, they've been going up. Steve, do you want to address a little bit about the impacts? I mean, we've we've we've over the past sort of year and a half, we have done our utmost to try and maintain, if you like, the level of of fixed cost in terms of personnel. Instead of instead of awarding salary increases, we've been paying sort of one off cost of living bonuses with the with the idea that they would link to drop inflation going forward, then come back down to sort of the the previous level.

29:17 What we haven't done in we haven't awarded pay increases for the last eighteen months, two years. So I think there is also the the challenge for us to maintain pay levels, you know, on at market levels, and we do lots of benchmarking on that side. So we have just announced a 3% salary increase for the across the business from effective October 1. And, again, as I said, that's to sort of bring us up with with with market sort of levels of of pay. The variable pay, as Leslie has already alluded to, you know, we do have a lever to use on that, and we can the rem remuneration committee have got sort of the authorization to go from '25 to 35%. And actually, that's what they've they've done this half year is in in to to reflect sort of the the delays and the and the and the slightly lower than expected performance for the first half year. We they've they've used that lever, and we've we've actually moved down from 30 just under 35% to 30% for the half year, which has brought sort of admin expenses sort of back into line, if you like, or or slightly lower than the second half of of the last year. So we are very mindful. Of course, we we have been expanding. We've got an office in Germany. We've got headcount in Germany to run the asset management business over there. So we, you know, we we are seeing upfront costs if you like, but what we hope to see is the offset now once the once the funds launch and the revenue streams

30:48 start start to come in. So we are very mindful of of the of the of costs, and, obviously, the inflationary pressure has been pretty pretty substantial over the last twelve, eighteen months. But we are, you know, we are very mindful of that, and we're controlling those costs as as as best we can while maintaining, you know, pay levels to retain and attract people where we see that we need them. Let's see. Steve, do you want to see what what's next here that we might want to address? Leslie, just on that slide, I I think we've talked about the sort of two new funds launched in the period, but and we've also talked about infrastructure. There was just one more line in there. We've we're making progress on the Sharia side of things as well.

31:34 Excellent point. Might be worth sort of just under just talking about This has been a quite a long slow trajectory where we engaged with Sharia experts looking at some of our new products to see if they could be made Sharia compliant, and indeed they can and are being made. So and then finding people who'd be interested in it. And we're now at the stage we're in the final stages with our first one of these clients. It's taken sounds a bit like a mantra, doesn't it? Taking longer than we thought. And that would open a very interesting door for us if we could combine the expertise in Sharia, which we get from our partner with our clients, new clients, of course, a whole new client sector, whole new client type, and using some of the funds and partners that we've already, developed.

32:25 So that is a good one, Steve, and I should have mentioned it, but thank you. Have we got here? It is Anthony Boone. Anthony Boone's asking another question, or maybe he's not. Well, Anthony, we're very flattered you've joined us this afternoon. Okay. Now, Alar? Just on now just on the outlook. I think it's worth reiterating some of what we've already said. Apologies if people are getting a bit fed up with hearing it, but we do believe, you know, the strong pipeline is is absolutely there. It it it it it hasn't gone away. We've got very firm commitments from clients. We see, you know, the the this bump in the road as as being a short term issue related to timing of of of new fund launches or new product launches rather.

33:13 We maintain a strong capital position. You know, we are confident, and I think that's reflected in the in the increase in dividend, which I sort of alluded to previously. So, you know, I think with any with any company that's or business that's trying to grow and diversify, you know, and and and grow revenue streams, we've added 10,000,000 a year for the last two years onto the top line revenue. These things are never straight line. They're they're they're, you know, they're they're not linear. We we should expect the odd bump in the road. But, ultimately, do we still believe that we can hit FY 24 numbers? Yes. Absolutely. And do we still believe in the trajectory and and and the the growth of the business? Yes. Absolutely. So I think that's that's kind of the message I think that I've certainly wanted to get across in terms of, you know, short term bumps versus actually we can still can absolutely see the long term path of of of the business despite a few sort of hiccups occasionally.

34:09 So, Leslie, is there anything you wanna add to to anything on that on that side? Covered everything that we might reasonably be want oh, hang on. Hang on. I have get my glasses on here. Jamie. Jamie says, given that your forecast dividend cover is getting close to one and times and your progressive dividend policy enables you to pay up to 100% of the earnings, is there any risk you might need to retain more capital for regulatory reasons? No. But sorry, Steve, do you want to just address the amount of regulatory capital we need with with RAM and that we obviously need with RCML? Yes. I mean, it's a good question. And because we have now got two regulated businesses rather than just the one, we have seen an increase in our regulatory requirements.

34:54 So we're at or around 8,000,000 now versus, I think, was about 6,000,000 previously. In terms of linking to the sort of dividend policy, again, with the with the trajectory of the business, we don't we don't see that causing an issue. We do retain sort of the the right to to dial up and down in terms of the 70 to 90% range that we've previously spoken about, which leaves us a sufficient buffer if needed for, well, for regulatory purposes, if if that's required, but I don't think it will be. But certainly for investment purposes, if if, you know, if and when we see any opportunities that come along that we might we might be interested in. So the regulatory capital has gone up, but I don't we I don't see a problem. It doesn't cause us a problem in terms of the dividend policy.

35:46 Thank you, Steve. Now I don't know that there's any other summary material we would cover, but, of course, if anyone has any questions about any of the details in the finances or any changes that you've observed and if you've looked at it, we're very happy to answer. Otherwise, we've told you what we would like to tell you, and we will obviously make sure that the new CEO, the CEO elect Jan, will be very visible and available. And you must all believe in us. We believe in ourselves, and we can do this, and they can do it. More importantly, I don't I'm one person. There are lots of them. Oh, Roger. Sorry. One more question from Roger.

36:31 You talk about delays in getting funds started on impact on earnings, but say that infrastructure fund will take time to get the funds in and hence earnings. Do I assume that the new funds will kick in straight away? So the infrastructure fund, we start to earn when the funds are deployed. Having said that, both the investors and the the Dutch team who are the organizers, if you like, they they are ready to roll with projects, which come in a lot all the time. So that shouldn't take too long to get started. In terms of the other funds, they they are much they are quicker. It's the the infrastructure inevitably builds up slowly and lasts a long time. And so I don't think it will be really slow trajectory, but, of course, infrastructure is the slowest of all of them.

37:25 It it's worth adding to that. Sorry, Leslie. It's worth adding to that. So outside the infrastructure funds, so the other funds, as as we said, have been sort of seeded with or not seeded by us, but seeded with but from investors with just over $200,000,000. And I think it's normal course that, you know, in in order to attract those initial investors, they come in at a slightly discounted rate, but our expectation for that is still from day one that they are paying fees, and we would expect that well, we we will expect that rate to increase as as the sort of second tranches, if you can if you like, of investors come in come in come into those funds. Your balance sheet, Alastair asks, our balance sheet shows investments of 4,400,000 compared comprising investments in funds and other investments. Could you highlight these? So one of the things we did when we started RDAP was we ring fenced 2,000,000, which the board approved for us to invest in different ventures to principally to get a seat at the table to learn, to engage with people. It was how we met Darren Denim from Dare Capital and and another company in which we've invested, who we've now done two rounds of investment. They're doing extremely well. So there are what I would call RDOV investments, which we've made, which some of them are long term, some of them are locked up, some of them are more liquid like the DARE Capital Fund. We invested 1,000,000 with Darren early on so that we get to know him, which grew to 1,200,000, and we took a little bit of that out in order to reinvest in another digital

38:57 entity, Block Shoals. There's also what other investments we've I should be able to roll this off the tip of my tongue. Steve, I know you can. What else have we got in there? We've got we've got again, we we we tend to put our own sort of skin in the game in in when we come across new prospective products. So we we we've invested just over 1,000,000 in in some secret funds, which are trade receivable funds. Yeah. And these are funds third party funds that we are also distributing. So we we we expect to get some distribution income from those running going forward. Leslie's already talked about the debt fund again. That's skin in the game. That was a million pounds that we put in for of our own of our own money.

39:44 We've got another strategy called the sector rotation strategy, which we're sort of currently Experimenting. Sorry, Lizzie? I said experimenting with and trying to see if it works. It it sort of yeah. Some of it's experimental capital. Other other of it is, as I said, skin in the game. We we we you know, in in terms of discussing with clients, the fact that we have our own money invested in some of these products is a strong argument in terms of getting them getting interest in in in these in these funds. So it's kind of a mix of experimental and having having sort of our own capital at risk, if that's the right term, from a from a selling being able to sell products perspective.

40:34 Jamie has asked, any color on the outlook for performance fees in h two, Steve? I think I can probably I I think I might have mentioned it earlier, but I think the the current market is fairly positive, I think, at the moment in terms of opportunities for us to eke out some performance fees on the enhanced passive hedging side. So there are no guarantees, and and and these fees can be very episodic, and they can fall away as as well. But I think the current the current situation is is positive for us. So I'm I would be hopeful that we can we can we can certainly deliver something in terms of performance fees for the second half. And I think our currency for return for the first time in a while is showing the potential for performance fees as well.

41:28 That that's right. And these these products or these mandates have got different performance windows. So some of them have got twelve month performance windows, others are quarterly, some are six monthly. So that's kind of diversifies the opportunity for us as well. So, yeah, I mean, I I would like to say yes, but, obviously, it's all subject to sort of market conditions as you would expect. But these the wind is set fair, shall we say? Exactly. Yes. Now then, has anybody else got more questions? You usually have lots, and you're doing quite well actually because there's been a good flow, but not overwhelming ones. Now if you haven't got anything else for us, I think we're done with what we wanted to say to you today, but we still have a few minutes. So please feel free if you or alternatively, if you wish to come to RECORD with questions, we're happy to take them at another time. If you something occurs to you later, please do reach out to us.

42:26 Anymore for anymore, I think is the phrase that one is supposed to use in this context. If not, I very much enjoyed these. I must say I'm going to miss this bit. I quite like it. But I will still be around at RECORD not doing this bit, but doing other things. And I will be keeping an eye on things, guys, because oh, hang on. We've got more. Because I, as I said, have I'm a shareholder as well. If you were to reset your targets, which year would you imagine hitting? Oh, the 60,000,000 target. Okay. Which year would you so we've said '25 for 60,000,000. That was our target and still would be ideally our target. I could see another year potentially, maybe less than that. It does depend to some degree on how, for example, the cryptocurrency fund grows and some of the other funds we've already launched. But I I definitely see this 60,000,000 as a step on the way and so do all of my younger colleagues.

43:25 And I think, Steve, am I being too conservative or not conservative enough when I say that? What do you think? I I I I don't I don't I don't disagree that the 60,000,000 target is absolutely achievable. What it comes down to is back in FY twenty two when we initially set those targets, there was a it was a there was a different environment at the time. You know, since then, we've seen with hindsight things taking longer than initially anticipated to sort of get set up and get and and and and start to get some traction. And we've also obviously had higher than normal inflationary environment for a good part of that time as well. So I don't I don't foresee that we won't hit 60,000,000.

44:15 I I certainly, the original target date was FY '25. Unless something really exceptional happens, I wouldn't expect it to be FY '25, but but 2627, depending on timings and and, you know, size of of of of of of of inflows, if you like, that we can attract, then I would say, yeah, '26, '27 would would would be a reasonable assumption, hopefully quicker, but we we will get we will certainly hit that target, I think, with the the new products and services that we've got coming on board. And and the growth in the and in the on the hedging side of the business and the certainly, the MSF fund, which as, you know, as as as we can see some real progress on the MSF fund from its third anniversary in June, and we are putting some resource to work additional resource to work on that with a specific sort of aim of growing that fund as well, which is currently standing at about a billion dollars.

45:18 So, again, timing dependent, etcetera, then, yes, we I think the 60,000,000 is absolutely achievable when is subject to everything I've just described. So that's the more conservative view, Leslie, if that's okay. Yeah. No. I know. That's your job. And my job is just be wrapped on the knuckles for being too enthusiastic. So you're quite right. Okay. So I think we might be done unless anybody is sort of trembling on the brink of another observational question. And as I said, we're very happy to to take questions out of sync. If somebody comes up with something, we're very happy to do that. So please feel free. And we really enjoy these, and we really, really are grateful for your interest in our business, which I believe has a long way further to go.

46:07 Perfect. Leslie, Steve, thank you for updating us today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This then take a few minutes to complete, but I'm sure it'll be greatly valued by the company. It will. On behalf of the management team of RECORD PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.