Interim results presentation: six months ended 30 September 2020

Record plc

Interim Results Presentation

Period ended

30 September 2020

24 November 2020

Disclaimer

IMPORTANT INFORMATION

This document does not constitute an offer to sell or an invitation to buy shares in Record plc or any other invitation or inducement to engage in investment activities. Certain statements, beliefs and opinions in this document are forward-looking, which reflect the Company's current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.

Forward-looking statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The value of investments, and the income from them, may go down as well as up, and is not guaranteed. Past performance cannot be relied on as a guide to future performance. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on any forward-looking statements, which speak only as of the date of this document.

2	RECORD PLC

Headlines

AUME up 12% to $65.9bn (31 March 2020: $58.6bn)	Pre-tax profit £2.6m (H1-20: £3.2m)
Revenue £11.8m (H1-20: £11.4m)	Basic EPS 1.10p per share (H1-20: 1.29p per share)
Management fees £11.2m (H1-20: £11.1m)	Interim dividend of 1.15p per share, payable
Performance fees £nil (H1-20: £nil)	31 December 2020
Operating profit margin 22% (H1-20: 27%)	Shareholders' equity £25.7m at 30 September 2020

AUME1

REVENUE

MANAGEMENT FEES

PRE-TAX PROFIT

BASIC EARNINGS PER

($bn at period end)

(£m)

(£m)

(£m)

SHARE (pence)

65.9

14.2

4.5

59.9

58.6

12.0

1.97

11.1

11.2

11.4

11.8

3.2

2.6

1.29

1.10

H1-20

H2-20

H1-21

H1-20

H2-20

H1-20

H1-20

H2-20

H1-20

H1-20

H2-20

H1-20

H1-20

H2-20

H1-21

1 - The definition of AUME is provided on page 26.

3	RECORD PLC

Agenda

Strategy and outlook

Product Performance

Financial performance

4	RECORD PLC

Strategy and outlook

Growth and modernisation - ongoing momentum

Recent wins: $8bn Dynamic Hedging mandate and new Currency Impact Fund Enhanced distribution capabilities - client-led solutions and European office

Investment in technology - already increasing operational efficiency, capability and scalability

Cultural and generational change

Strong capital position supports investment and maintains dividend policy Board's confidence in future growth underpinned by interim dividend payment

5	RECORD PLC

Agenda

Business Strategy

Product Performance

Financial performance

6	RECORD PLC

Active Tenor Management

Reduce cost of hedging through flexibility in implementation, without varying hedge ratio

Two key areas

• Direct costs of maintaining hedge
• Embedded interest rate differential

Episodic nature of opportunities means higher level of discretionary oversight required

Total value added relative to a fixed-tenor benchmark for an enhanced Passive Hedging programme for a representative account

	Return for half-year to 30 September	Return since inception
	2020
Value added by enhanced Passive Hedging programme	0.02%	0.09% p.a.
relative to a fixed tenor benchmark

Source: Record Currency Management. Data from October 2014 to September 2020. Live track record based on a fixed-tenor costed benchmark.

7	RECORD PLC

Performance of a US Dynamic Hedging client

	US Dynamic Hedging Client
25%	April 2009 - September 2020
20%	Protected Currency Return
	Currency Return
15%	Record Hedging Return
10%
5%
0%
(5%)
(10%)
(15%)
(20%)
Apr-09Dec-09Aug-10Apr-11Dec-11Aug-12Apr-13Dec-13Aug-14Apr-15Dec-15Aug-16Apr-17Dec-17Aug-18Apr-19Dec-19Aug-20

As at September 2020	Protected Currency Return	Currency Return	Record Hedging Return
Inception to date (cum.)	(0.38%)	(7.41%)	5.07%
Inception to date (ann.)	(0.03%) p.a.	(0.67%) p.a.	0.43% p.a.

Source: Record Currency Management and WM/Reuters. Protected currency return is calculated as the weighted average currency return plus the contribution from hedging. Performance has been re-scaled to a 0%-100% dynamic range. Data is cumulative from 30 April 2009 to 30 September 2020.

8	RECORD PLC

Multi-Strategy performance

Record Multi-Strategy approach

July 2012 - September 2020

14%

12%

10%

8%

6%

4%

2%

0%

(2%)

Jul-12

Jan-13

Jul-13

Jan-14

Jul-14

Jan-15

Jul-15

Jan-16

Jul-16

Jan-17

Jul-17

Jan-18

Jul-18

Jan-19

Jul-19

Jan-20

Jul-20

Multi-Strategy

As at September 2020	Multi-Strategy
Returns (cum.)	2.74%
Returns (ann.)	0.33% p.a.
Volatility	3.12% p.a.

Source: Record Currency Management and Bloomberg. The performance of the multi-strategy is based on a combination of live and third party index returns for the individual strands from 31 Jul 2012 to 30 Sep 2016. Thereafter, performance is based on live composite returns. Performance has been scaled to a 4% target volatility and is presented in USD.

9	RECORD PLC

Dynamic Macro Currency Strategy Performance

	Dynamic Macro Currency Strategy
120%	January 2004 - September 2020
	Floyd Currency Strategy (excess return, gross of fees)
100%	Dynamic Macro Currency Strategy (excess return, gross of fees)
80%
60%
40%
20%
0%

(20%)

Jan-04Jan-05Jan-06Jan-07Jan-08Jan-09Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18Jan-19Jan-20

	As at September 2020	Dynamic Macro Currency Strategy
	Returns (cum.)	88.73%
	Returns (ann.)	3.88% p.a.
	Volatility	9.20% p.a.
	Information ratio	0.46

Source: Record Currency Management. Returns are excess returns, gross of fees. The information ratio has been calculated using an arithmetically linked annualised return.

10	RECORD PLC

Agenda

Business Strategy

Product Performance

Financial performance

11	RECORD PLC

Financial KPIs

Client numbers		AUME ($bn)

Operating margin

EPS (pence)

80	72	74	70
70
70			60
60			50
50			40
40
30			30
20			20
10			10
0			0
H1-20	H2-20	H1-21

		65.9
59.9	58.6
H1-20	H2-20	H1-21

35%		32%
30%	27%
25%			22%
20%
15%
10%
5%
0%
	H1-20	H2-20	H1-21

2.50
2.00		1.97
1.50	1.29
			1.10
1.00
0.50
0.00
	H1-20	H2-20	H1-21

Revenue (£m)

Management fees (£m)

Profit before tax (£m)

Dividend per share (pence)

16		14.2
14
11.4	11.8
12

14
12	11.1	12.0	11.2

5

4

4.5

2				Ordinary
				Special

10
8
6
4
2
0
H1-20	H2-20	H1-21

10
8
6
4
2
0
H1-20	H2-20	H1-21

3.2

3	2.6

2

1

0

H1-20H2-20H1-21

				0.41
1
		1.15		1.15		1.15
0
	H1-20		H2-20		H1-21

12	RECORD PLC

Confident dividend policy

• Interim dividend for H1-21 of 1.15p per share to be paid in December 2020
• Total ordinary dividend for FY-20: 2.30 pence per share
• Special dividend for FY-20 of 0.41 pence per share
• Net increase in capital requirements in FY-20 equivalent to 0.55 pence per share
• Dividend policy
• • Progressive ordinary dividend policy
  • Continue considering returning any excess of annual earnings over sum of ordinary dividends and increased capital requirements, normally as special dividends
  • Continue to consider ordinary dividends and other distributions on a "total distributions" basis

13	RECORD PLC

Pence per share

4

3

2

1

0

0.55

0.41

3.26 1.15

1.15 1.10 1.15

EPS DPS EPS DPS

FY-20H1-21

Increase in capital

Special dividend

Final ordinary dividend

Interim ordinary dividend Earnings

Financials - AUME movement

AUME bridge for the period ended 30 September 2020 ($bn)

65.9

14	RECORD PLC

AUME by product at period end

Passive Hedging ($bn)	Dynamic Hedging ($bn)
	(rescaled)
60			10
		55.6
			9
50.4	50.3
50			8
			7
40
			6
30			5
			4
20			3.2		3.2
		3
			2.5
			2
10
			1
0			0
H1-20	H2-20	H1-21	H1-20	H2-20	H1-21

Currency for Return ($bn)

10

9

8

7

6

5

4
			3.4
3	2.9
	2.6
2
1
0
	H1-20	H2-20	H1-21

Multi-product ($bn)

10

9

8

7

6

5

4		3.5
3.1	3.0
3
2
1
0
H1-20	H2-20	H1-21

15	RECORD PLC

Financials - management fee analysis

Management Fees by product mix (%)

100%
90%	21%	23%	21%
80%
8%			8%
70%	9%
18%			17%
60%	17%
50%
40%

Management Fees by product (£m)

7.0

5.9 6.1 6.0

4.0

3.0	2.8

30%		54%
53%	51%

2.0

2.3 2.3

2.0 2.0 1.9

20%

10%

1.0

1.1

0.9 0.9

0%
	H1-20	H2-20	H1-21
		Passive Hedging	Dynamic Hedging
		Currency for Return Multi-Product

0.0

Passive Hedging Dynamic Hedging Currency for	Multi-Product
Return

H1-20H2-20H1-21

16	RECORD PLC

Financials - client longevity

Client longevity as at 30 September 2020

(numbers)

14%	22%
		>10 years
			6-10 years

28%	14%
		3-6 years
22%			1-3 years
			0-1 years

Client longevity as at 30 September 2020 (AUME)

10% 5%

9%	36%		>10 years
			6-10 years
			3-6 years
	40%		1-3 years
			0-1 years

Source: Record Currency Management. Client longevity is the length of continuous service as at 30 September 2020.

17	RECORD PLC

Financials - cost analysis

	H1-20	H2-20	H1-21
	£m	£m	£m
Personnel (excluding Group Profit Share)	4.2	4.4	5.0
Non-personnel cost	2.6	3.1	2.7
Administrative expenditure excluding Group Profit Share	6.8	7.5	7.7
Group Profit Share	1.4	2.1	1.3
Total administrative expenditure	8.2	9.6	9.0
Other income and expenditure	-	(0.1)	-
Total expenditure	8.4	9.5	9.0

18	RECORD PLC

Group Profit Share (GPS) and Share Scheme

Group Profit Share Scheme

Changes made from 1 April 2019 more closely link GPS to individual performance objectives

GPS Scheme used a Profit Share Pool calculated at 33.1% of pre-GPS Operating Profit

Remuneration Committee retains discretion to vary the GPS pool between 25% to 35%

GPS Scheme is shared amongst all staff based on "profit share units"

For all senior employees including Executive Board Directors:

• 1/3rd 'Mandatory' Shares (subject to "lock up" for up to 3 years)
• 1/3rd Cash
• 1/3rd Cash or Shares

GPS Scheme rules include claw back provisions

Share Scheme

Share Scheme rules include performance hurdles and claw back provisions for options issued to Executive Directors

19	RECORD PLC

		Financials - income statement
					H1-20	H2-20		H1-21
					£m	£m		£m
			Management fees		11.1	12.0		11.2
			Performance fees		-	1.8		-
			Other currency services income		0.3	0.4		0.6
			Total revenue		11.4	14.2		11.8
			Cost of sales		(0.1)	(0.2)		(0.2)
			Gross profit		11.3	14.0		11.6
			Operating costs (excl. variable remuneration)		(6.8)	(7.5)		(7.7)
			Variable remuneration		(1.4)	(2.1)		(1.3)
			Other income and expenditure		-	0.1		-
			Total expenditure		(8.2)	(9.5)		(9.0)
			Operating profit		3.1	4.5		2.6
			Operating profit margin		27%	32%		22%
			Net finance income		0.1	-		-
			Profit before tax		3.2	4.5		2.6
			Taxation		(0.7)	(0.6)		(0.5)
			Profit after tax		2.5	3.9		2.1
20	RECORD PLC

Financials - earnings

		H1-20		H2-20		H1-21
		£m		£m		£m
	Profit before tax	3.2		4.5		2.6
	Tax	(0.7)		(0.6)		(0.5)
	Profit after tax	2.5		3.9		2.1
		H1-20		H2-20		H1-21
	eps - basic	1.29p		1.97p		1.10p
	eps - diluted	1.29p		1.97p		1.10p
	Total ordinary dividend per share	1.15p		1.15p		1.15p
	Special dividend per share	-		0.41p		-
	Dividend cover (ordinary and special)	1.1x		1.2x		0.96x

21	RECORD PLC

Financials - balance sheet

		H1-20	H2-20	H1-21
		£m	£m	£m
	Property, plant and equipment	1.1	1.2	1.1
	Right-of-use assets	1.4	1.2	0.9
	Investments	1.2	2.5	2.8
	Non-current assets	3.7	4.9	4.8
	Trade and other receivables	6.7	8.7	7.3
	Derivative financial assets	0.1	0.2	0.1
	Money market instruments > 3 months	13.9	8.0	12.5
	Cash and cash equivalents	9.6	14.2	6.9
	Total assets	34.0	31.1	31.6
	Current liabilities	(6.0)	(6.9)	(5.1)
	Non-current liabilities	(1.5)	(0.9)	(0.6)
	Net assets	26.5	28.2	25.9
	Shareholders' equity	26.4	28.1	25.8
	Non-controlling interest	0.1	0.1	0.1
	Total equity	26.5	28.2	25.9

22	RECORD PLC

Financials - cash

CASH BRIDGE FOR THE PERIOD ENDED 30 September 2020 (£m)

19.4

• The Group's cash management strategy employs a variety of treasury management instruments including cash, money market deposits and treasury bills with maturities of up to 1 year. Whilst the Group manages and considers all of these instruments as cash, which are subject to its own internal cash management process, not all of these instruments are classified as cash or cash equivalents under IFRS.
• Group cash at 30 September 2020 includes £3.8 million held by the seed funds (31 March 2020: £4.3 million).

23	RECORD PLC

Appendices

Management and Board

Executive management

	Name	Position	Experience
	Leslie Hill	Chief Executive Officer		Joined Record in 1992 and was appointed Head of Sales and Marketing in 1999. In February 2020 Leslie was promoted
				to Chief Executive Officer of Record PLC
				Previous experience includes working at Lloyds Bank and Merrill Lynch, where she was Director and Head of Corporate
				Foreign Exchange Sales worldwide
	Bob Noyen	Chief Investment Officer		Joined Record in 1999 with responsibility for Investment & Research and has been Chief Investment Officer since 2000
				Previously worked as Assistant Treasurer for Minorco (now part of Anglo American plc)
	Steve Cullen	Chief Financial Officer		Qualified as a Chartered Accountant in 1994 and joined Record in 2003 as Financial Controller, Steve was promoted to .
				Chief Financial Officer and appointed to the Board in March 2013
				Previous experience: 15 years of audit experience gained in public practice
	Non-executive Directors
	Name	Position	Experience
	Neil Record	Chairman		Founded Record in 1983, principal shareholder and Chairman ever since
				Acknowledged as one of the leading figures in the currency investment management industry
	Jane Tufnell	Non-Executive Director		Co-founded the investment management firm Ruffer in 1994
		(independent)		Chairman of Odyssean Investment Trust plc and is an independent non-executive director of Schroders UK Public
				Private Trust plc and ICG Enterprise Trust
	Rosemary Hilary	Non-Executive Director		Appointed 1 June 2016. Non-executive Director of Willis Ltd, St James's Place plc, St James's Place UK plc, Vitality
		(independent)		Health and Vitality Life
				Formerly Chief Audit Officer at TSB and the FCA/FSA; a senior regulator at the FSA and Bank of England
	Tim Edwards	Non-Executive Director		Appointed as a Non-executive Director on 21 March 2018
		(independent)		Chairman of Karus Therapeutics and Storm Therapeutic Limited and a director of Oxagen Limited and AstronauTX
				Limited

25	RECORD PLC

AUME definition

Passive Hedging mandates:

• the aggregate nominal amount of passive hedges actually outstanding in respect of each client;

Dynamic Hedging mandates:

• total amount of clients' investment portfolios denominated in liquid foreign currencies, and hence capable (under the terms of the relevant mandate) of being hedged;

Currency for Return mandates:

• the maximum aggregate nominal amount of outstanding forward contracts for each client;

Multi-product mandates:

• the chargeable mandate size for each client;

Cash:

• the total set aside by clients and managed and/or "equitised" using futures by Record.

26	RECORD PLC

Financials - client numbers

		30 Sep 19		31 Mar 20		30 Sep 20
Passive Hedging	52	58	60
Dynamic Hedging	3	3	3
Hedging		55		61		63
Currency for Return	13	9	9
Multi-product	2	2	2
Other	2	7	7
Less clients with >1 product	( 2)	( 7)	( 7)
Total	70	72	74

Notes: (i) total of client numbers by product type is greater than total client numbers due to some clients having more than one account;

(ii) for pooled funds, client numbers look through pooled funds to individual investor level.

27	RECORD PLC

Financials - concentration

Largest clients by H1-21 management fees

	AUME	Management fees
	$bn	£m		%
Clients 1-10	43.1	7.6		67%
Clients 11-20	14.4	2.2		20%
Other clients	8.4	1.4		13%
Total	65.9	11.2		100%

28	RECORD PLC

Hedging mandates - underlying assets

Class of assets underlying hedging mandates as at 30 September 2020

	Equity	Fixed income	Other
Passive Hedging	30%	39%	31%
Dynamic Hedging	92%	-%	8%
Multi-product	-%	-%	100%

29	RECORD PLC

Bespoke solutions for our clients

Bespoke solutions for our clients

Currency Risk Management	Return-Seeking Currency Strategies	Return-Seeking Strategies
Offering bespoke hedging	Offering factor-based and absolute return strategies	Offering diversified return strategies
solutions to clients

Dynamic	Passive	Alternative risk premia	Alpha investing
Hedging	Hedging	Currency Multi-Strategy		Enhanced Liquidity Management
			Since 2017
		Since 2012
Since 1983	Since 1999
		Dynamic Macro Multi-Asset
		Carry
		Since 2003	Dynamic Macro	Since 2020
Enhanced	Signal
Momentum	Currency	Supply Chain Finance Strategy
Passive	Hedging	Since 2012	Since 2019
Since 2020
Hedging
	Value	(live since 2004*)
Since 2014	Since 2016	Since 2012		Local Currency EM Debt
		Range-Trading		Since 2019
Emerging	Audit and	Since 2018		UK Real Rates Strategy
Market	Fiduciary	Emerging Market Growth		Since 2019
Hedging	Execution	Since 2009		Impact Strategy
Since 2018	Since 2003	ESG and Impact Investing		Expected 2021

Counterparty ESG selection

*In 2019, John Floyd of Floyd Capital Management joined Record Currency Management. During this process, Mr. Floyd's Dynamic Macro Currency Strategy was incorporated into Record's suite of products.

30	RECORD PLC