Record (REC) H2 2024 earnings summary

Executive summary

• Assets under management (AUM) reached a record $102.2 billion as of March 31, up 17% year-over-year, driven by net inflows and positive asset value increases.

• Revenue grew 2% year-over-year to £45.4 million, supported by strong performance fees in enhanced passive hedging and FX Alpha products.

• Underlying operating margin remained robust at 32%, with underlying profit before tax up 1.4% to £14.8 million, but statutory profit before tax fell 12% to £12.9 million due to a £1.9 million IT impairment.

• Strategic focus narrowed to six core product categories, discontinuing digital asset efforts and incurring a £1.9 million IT impairment.

• Leadership transition underway, with new CEO Jan Witte, new CFO Richard Heading, and expanded teams in the US and Europe.

Financial highlights

• AUM increased by £14.5 billion (17%) to £102.2 billion, with £6.8 billion net inflows and £6.9 billion from positive market valuations.

• Revenue up 2% year-over-year; management fees grew 1% to £38.7 million despite a £0.8 million reduction from a client shifting to a lower-margin strategy.

• Performance fees remained strong at £2.9 million each from Enhanced Passive Hedging and FX Alpha products, totaling £5.8 million.

• Underlying profit before tax rose 1.4% to £14.8 million; statutory profit before tax fell 12% to £12.9 million due to the IT impairment.

• Cash balance increased 21% to £17.5 million, reflecting strong cash generation.

• Ordinary dividend increased to 2.45p, with a special dividend of 0.60p, totaling 5.20p per share.

Outlook and guidance

• Management fees expected to be broadly flat in the coming year, as the full-year impact of a major client’s strategy change offsets new business growth.

• Costs to be managed in line with management fees and expected to remain broadly flat year-over-year.

• No further material impairment charges anticipated following the recent IT write-off.

• Strategic review ongoing, with further updates on medium-term growth plans expected later in the year.

• Focus remains on six core product categories for future growth.