Record’s results for the full year to March 2012 showed management fees fell to £20.4 million, a decline of 27% on the previous year. Client numbers fell to 41, down from 46 in 2011 and 93 in 2010. The group says revenues and profitability continued to fall as a result of the changing mix in its business to lower margin hedging products.
The continuation of monetary intervention across the developed world, particularly in the US, eurozone and the UK, had led to a difficult environment, particularly for its forward rate – or carry trade – based strategies, according to Record.
The company adds that market conditions had also been less favourable for dynamic hedging, with certain currency pairs trading within relatively narrow ranges as opposed to following strong trends.
That has seen hedging rise to represent 80% of Record’s revenue, compared with just 18% for the year ending March 2009.
In response to the continuing decline in financial performance of the company, Record announced that each member of its board had taken a voluntary 10% reduction in base salary from December 1.
Neil Record, founder, also offered to take a more substantial cut in salary from July 2012 to a level commensurate with his position as non-executive chairman.
“However, I will continue to devote substantially all my time to Record and its clients through this difficult phase for the business,” he says.
James Wood-Collins, chief executive at Record, noted that the company’s emerging market product will pass a “live” three-year track record in the coming financial year.
“This is a key step to gaining momentum in the institutional market place where the running of live money is beneficial,” he says.
“Whilst sales success will depend on investment performance since inception, it is hoped that progress can be made in this strategy in the coming years.”
Martyn King, head of the financials team at Edison Investment Research, says at first glance there did not seem to be much to cheer about Record’s results, but there were some positive points.
“The balance sheet is strong with plenty of cash, which is important in these unpredictable times,” he says.
“More significantly, the company is developing a new suite of higher margin currency return products. Once these build a track record and momentum, there should be more to sing about.”