Record (LSE:REC) — Preliminary Results

0:01 Good afternoon, and welcome to the RECORD PLC investor presentation. Throughout this quarter presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time by the Q and A tab situated in the right 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 received during the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to make the following poll. And I'd now like to hand you over to Yan. Good afternoon to you, sir.

0:30 Good afternoon, everyone, and thank you for joining the call. I'm Jan Witte, CEO of RECORD, and with me is Richard Heading, our CFO. This financial year was my first full year since taking over as CEO of the group in April 2024. I have been at RECORD for nearly thirteen years now and having previously had responsibility for the client and investment teams, this year has brought a new set of challenges. I'm very proud of the progress we have made this year. As we will cover in this presentation, we continue to expand RECORD's offering by building on our core strengths and we are well positioned for the future.

1:19 For those of you who are new to RECORD, we are a specialist currency and asset management business, and we deliver best in class solutions for large institutional investors. We were founded in 1983 by Neil RECORD, and Neil remains our largest shareholder, and we've been publicly listed since 2007.

1:43 We have over 100,000,000,000 in assets under management for clients based around the world with a particular strength in Switzerland and The United States and we employ just over 100 people in primarily our head new head office in Peddington, but also in Windsor where the company was originally founded, and we have also offices in Frankfurt, Zurich, Amsterdam, and New York. In the following slides, I'll cover in some more detail what exactly we do for clients as well as the progress we've made this year and Richard will of course cover the financials. FY '25 has been a busy year for RECORD. I took over the role of CEO in April last year and in June Richard joined as our new CFO.

2:32 We also added Kevin Ailes, our chief of staff to the board in July. Otman Bukrami joined us in July in a nonexecutive role, bringing a wealth of valuable FX experience. And in March, we announced the appointment of Andreas Denze, our new chief investment officer. Andreas was most recently the chief investment officer for the Credit Suisse Pension Fund. We already know each other well, and he'll be a tremendous addition when he joins next week.

3:04 We began the year having taken the difficult decision to write off a significant technology project and having recently onboarded a new technology leadership team. The team has made great progress in resetting our tech strategy and aligning our tech development portfolio with client and operational priorities. Not only is this delivering good results as you saw from the financial highlights, it is also a far more cost effective approach. And, of course, this year we opened our new head office in Paddington in London from where we are talking to you today. The new office brings all of our UK staff together in a single modern workspace, and we are already seeing the benefits of renewed engagement and collaboration.

3:53 RECORD's proposition remains unchanged. We deliver best in class solutions to large institutional investors. During the year, we have we have restructured our client facing activities to operate the business through three pillars, risk management, absolute return, and private markets, each of which I'll discuss in more detail shortly. In November, we announced the launch of our infrastructure equity fund with €1,100,000,000 of commitments. We are well progressed with the due diligence on the first series of investments and expect the first capital call in the coming weeks. In December, we also announced our plans to launch the world's first Sharia compliant deep tier supply chain finance strategy on which we hope to be able to provide more details soon.

4:48 And just last week, we announced that we have entered into nonbinding terms to provide $2,200,000,000 of funding to the Kola potash plant. This deal is at an early stage, but another great example of how our unique ability to structure large scale bespoke solutions is generating a strong pipeline of new opportunities for the business.

5:15 Turning to look in more depth at our products and starting with the risk management product pillar, which includes our long established traditional hedging products and where we still generate the majority of our revenue. Passive hedging includes two offerings. Pure passive hedging is a highly cost effective way to eliminate currency exposure from clients' portfolios. Enhanced passive hedging, which is sometimes also referred to as tenant management, adds value by taking advantage of structural inefficiencies and behavioral changes in FX markets in a structured and risk managed way. It is an enhanced passive hedging where we are able to consistently earn performance fees by outperforming agreed benchmarks.

6:03 This year, we earned GBP 3,200,000 of performance fees compared to £2,900,000 last year. Those performance fees and the switch of a large client last year from an active to a passive strategy resulted in strong revenue growth for this product.

6:22 Dynamic hedging is an attractive alternative to passive, which seeks to reduce currency risk while generating value by benefiting from foreign currency strength and protecting against currency weakness. Towards the end of the year, we saw some clients reduce their hedge ratios in response to U. S. Dollar weakness. But in general, AUM and revenue in dynamic hedging were very stable.

6:48 While our passive and dynamic clients are typically institutional investment funds, such as public pension funds or endowments, hedging for asset managers has been developed to meet the specific needs of asset managers in private and private in private equity and private credit, which typically have lower liquidity and require a more bespoke hedging solution. We have seen strong growth this year from both new clients and existing clients growing the asset base. These risk management products remain the core of our business and all have performed well this year. We expect continued growth in these products with the majority of the growth coming from hedging for asset manager products.

7:35 Moving on to look at absolute return. Absolute return products aim to provide clients with attractive returns while maintaining low correlation with traditional asset classes. This is our smallest pillar by revenue and can be more volatile than others being more discretionary from a client perspective and where clients change asset allocations more frequently. FX Alpha grew revenue during the year, but a reduction in AUM at the end of the period will weigh on revenue next year. Custom opportunities comprises a range of bespoke strategies. We saw a large reduction in AUM and revenue during the year as two of these mandates were terminated.

8:23 Private markets are our newest offerings and where we see the most potential for rapid growth. These most clearly demonstrate our ability to develop bespoke solutions at large scale, including beyond our core currency competency. In FY 2022, we launched the emerging market sustainable finance fund, offering investors higher yield carry and return opportunities relative to traditional EM debts. In addition to financial returns, the fund also seeks to have a positive impact by mobilizing capital for the development of emerging market economies. As previously mentioned, earlier this year we announced the launch of our infrastructure equity fund with €1,100,000,000 in commitments.

9:12 This particular fund has been tailored specifically to the needs of our Swiss pension fund clients, again demonstrating our ability to develop complex solutions to meet a broad range of client needs. We are very far advanced with the first capital deployment, which we expect to announce very soon.

9:32 And in the private credit and private equity space, we have two very exciting developments. Last December, we announced that we are working to launch the world's first Sharia compliant deep tier supply chain finance fund with a target of $1,000,000,000 of initial funding. Deep tier supply chain finance specifically targets the needs of SMEs within the lower tiers of the supply chain. We are well advanced with the structuring of the fund and sourcing of portfolios and expect to announce the launch of this fund in the second half of this year. And last week, we announced that through a joint venture owned by our German subsidiary, we have signed nonbinding term sheets on a US2.2 billion dollars financing transaction supporting core potash.

10:21 We expect that deal to close in six to nine months time from today. Overall, I'm very excited about the progress we are making in the private market space where we have the opportunity to deliver impressive growth and profitability. At the start of the year, we laid out three strategic objectives and we have continued to make good progress on each of those. As I've discussed on the previous slides, we are building a strong platform for organic growth in our traditional currency products, but in particular through a broader offering which leverages our unique strengths. Our growth plans will simultaneously improve quality of earnings, which we define as earnings that are consistent and recurring over time and less sensitive to market conditions or to individual client or market dynamics.

11:18 Our core risk management products create a high quality profitable revenue base, including a reliable component of performance fees. Private markets will will deliver locked in long term revenue. For example, the infrastructure equity fund will lock in revenues for fifteen years. Our success and reputation is built on exceptional client delivery, which requires excellence in everything we do, including the operational platform on which we build our business. During the year, we have reinvigorated the concept of operational excellence through our new technology team aligned to our operations and our new office, which will facilitate better engagement and collaboration.

12:07 The appointment of Andreas Denze as Chief Investment Officer will bring valuable new experience. And with that, I'll hand over to Richard for a more detailed review of the financials. Thank you, Jan. Good afternoon, everyone, and thanks for joining the call. FY 2025 was a year of major management transition and rebuilding, during which we nevertheless delivered a solid financial performance. Assets under management passed $100,000,000,000 at the end of last year and have remained above that figure throughout the year. We've seen a couple of large clients terminate absolute return mandates, which has impacted revenue in the year and impacted AUM. And management fees ended the year down 4%, which combined with lower performance fees after two exceptional years in FY 'twenty two and 'twenty three and 'twenty four resulted in total revenue down 8%.

13:01 We're very pleased with the progress we made to control costs. Costs were down 6% year on year. And even excluding the large IT write off taken last year, costs were flat. The net result is that EPS increased by 4% to 5.03p per share. Our balance sheet remains strong, and therefore, we've increased the ordinary dividend to 4.65p per share. Looking at the income statement in a bit more detail. Total revenue decreased 8% during the year, as I said, and the detail of which I'll cover shortly. We also recorded higher cost of sales in the year, which represents some fund administration expenses incurred ahead of revenue that will be recognized in the current financial year.

13:49 We made good progress controlling operating costs even as we continue to make important investments for the future. As I said, overall operating costs were down 6% during the year. And as a reminder, last year, we recognized a GBP 1,900,000 write off of capitalized IT development costs and brought in a new leadership a new IT leadership team and a new IT strategy. Excluding the impact of that write off, costs were flat. And within that flat cost envelope, we've continued to invest in our private markets business, in particular, through our German subsidiary. We earned a small amount of income on the small portfolio of investments that we hold on our balance sheet. Operating margin was down from 27.8% to 25.6%, driven by lower performance fees, resulting in an operating profit for the year down 15%.

14:43 Net finance income was once again positive as we earned interest on our surplus cash balances. Surplus cash, which we hold to meet regulatory capital and liquidity requirements, is managed by our investment team and held primarily in money market funds. Our tax rate this year was low because we recognized a tax credit in respect of the inception to date losses in our German subsidiary. This reflects our confidence that that entity will generate taxable profits to offset those startup losses. Profit after tax of £9,100,000 was therefore only slightly down on the prior year. And after adding back the share of losses attributable to noncontrolling shareholders, profit after tax attributable to RECORD shareholders is up 5% to £9,700,000 Earnings per share is 5.03, up 4% against the prior year figure of 4.84p.

15:44 As I said previously, assets under management remained above $100,000,000,000 throughout this year. We did see some net outflows during the year. As we reported at the half year, a discontinuation of a tactical interest rate swap portfolio reduced AUM by $2,300,000,000 We also saw the wind down of an FX alpha mandate towards the end of the period. Nevertheless, inflows in hedging for asset manager products in particular have partially offset those outflows. Underlying movements in existing exposures were very small, while the impact of foreign exchange was positive. We present our assets under management in U. S. Dollars. However, assets are denominated in multiple underlying currencies, and we earn management fees in the underlying currency.

16:30 As shown in the breakdown on this slide of assets under management by underlying currency, the majority of assets are denominated in Swiss francs and U. S. Dollars. The foreign exchange movements were driven by a strengthening of the Swiss franc against the U. S. Dollar, and the impact on our GBP revenues is limited because the exchange rate between the Swiss franc and sterling has remained relatively stable. Looking at revenue by product, I've presented our product revenues by the three pillars that Jan described earlier. A reconciliation between the new and old presentation has been provided in the appendix to this pack.

17:10 Revenue increased in all products except customer opportunities, whereas previously described, we experienced some one off outflows last year and in the first half of this year. Management fees in risk management increased across all products and by 9% overall. The 18% increase in management fees from passive hedging reflected primarily the switch of a large client mandate from an active custom opportunities strategy, while dynamic hedging management fees were flat year on year. Hedging for asset managers made good new business wins during the year, growing management fees by 24% as a result. Revenue of £3,500,000 from absolute return products was down just over 50% due to the impact of lost and restructured mandates in customer opportunities.

17:58 FX Alpha, however, continued to grow.

18:02 The EMSF fund delivered management fees of £5,000,000 slightly up from the prior year. As Jan described, we expect the first deployment of capital into the Infrastructure Equity Fund very soon. We'll earn a closing fee on each deployment and an ongoing management fee on deployed capital. We also earned exceptional performance fees last year, but that was not repeated this year due to more challenging trading conditions. However, performance fees on enhanced passive hedging products increased to £3,200,000 from £2,900,000 last year. This is important to note because while some performance fees are impacted by market conditions, on passive hedging mandates, we're able to more systematically and consistently outperform benchmarks, creating a more stable revenue stream.

18:56 Moving on to operating costs. Overall operating costs were down 6% to £30,800,000 Average headcount during the year was up very slightly from 96 to 99. However, overall staff costs were down 5% to 15,900,000 We've eliminated some expensive resources, particularly in technology, and have also reduced one off staff settlement costs. Although we're capitalizing some internally developed software produced by the new IT team, we're doing so prudently and capitalization is not a significant driver of lower costs. Technology cost represents the cost of third party systems, consultants and market data, and included in the prior year figure is the £1,900,000 IT write off.

19:42 Our new tech leadership team has made a good start on rationalizing and reducing those costs. And excluding the impact of the IT write off, these costs are down 9%. We've increased spending on professional fees, which includes legal fees, primarily in relation to the setup and launch of new private market products that we expect to launch soon. Occupancy costs are higher due to the temporary double running of office space during the transition to our new office. And going forward, our overall occupancy costs will be lower. Bonus costs, the cost of the group bonus scheme increased slightly from prior year. And then turning to the balance sheet. RECORD is a highly cash generative and capital light business, and maintaining a strong balance sheet is an important priority for us, one which our clients value and which we believe should also be valued by investors.

20:37 Our first priority is to ensure that our regulatory capital and liquidity requirements are met. During the year, our surplus of net assets over our minimum regulatory capital requirement was largely unchanged.

20:49 Cash and cash equivalents remain high and together make up just under half of our net assets. During the year, cash decreased due to lower profits and increase in fixed asset purchases, primarily the fit out of the new office and the timing of tax payments. Our healthy surplus overall regulatory capital requirement and strong cash position allows us to continue to pay an attractive ordinary dividend, which this year has increased from 4.6p to 4.65p. This equates to 92% of EPS.

21:24 As Jan described in his remarks, we've started FY 2026 with a well positioned pipeline. And over the medium term, we expect the deployment of new funds in the private market space, in particular, to drive revenue and EPS growth. The outlook for the current year is highly dependent on the timing of closing the large and complex deals in the pipeline, where we are anticipating low single digit revenue growth. And with the effective tax rate reverting to a normal rate, flat EPS year on year. Recognizing the importance of the dividend to investors and the uncertainty and timing of new revenue growth, we remain committed to paying a healthy ordinary dividend, while always balancing that with the aim of maintaining a strong balance sheet, which is valued by investors and clients alike. And with that, I'll hand back to Jan to wrap up.

22:14 Thank you, Richard. As I said in my opening remarks, our unique selling point remains the same. We deliver best in class solutions for large institutional investors. We have been doing that for many years in our risk management products, which continue to be the core of our business and we are growing and expanding absolute return and private market offering.

22:45 And we are starting to see meaningful synergies across our product lines as more of our risk management clients turn to us for complementary offerings such as infrastructure and credit. We are well positioned and remain optimistic about the future both near and long term. And now we would welcome any questions. Perfect. That's great. Jan, Richard, thank you very much for your presentation. Just bring your cameras back up to the Q and A. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the top right hand corner of your screen. But just while the company take a few moments to review the questions that have been submitted today, I'd like to remind you the recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboards. As you can see, we have received a number of questions throughout today's presentation, both pre submitted and throughout the live presentation.

23:36 What I'll do is I'll hand back to yourselves just to run through the questions, and I'll pick up from you both at the end. Thanks, Alexander. I think probably, Keene, well, there's a couple of pre submitted questions along the same lines around around buybacks, which I guess is a question that comes up from time to time. As I said in my remarks, we've got a good surplus over our RECAP requirements, and we've got a good cash balance. Buybacks is I guess, we keep our capital allocation under review, and buybacks is something we've we've not considered a great length. The the surplus that we have on our balance sheet, we think, is is at the at the appropriate level. It's something that clients value very much.

24:23 It's what allows us to continue to pay that very good dividend, which is important to our shareholders. But as we go forward, as we've talked about some of the things that are in the pipeline that will be very we hope will be very accretive to profit, and we'd expect us, therefore, start to see our surplus continue to grow. Obviously, we'll continue to review our capital allocation approach. The so we've got a range of questions here. I think there's a few around

25:02 perhaps this perhaps this one might be this is a question we have quite a lot. There's a question here that says, Leslie, always say she really liked volatility. On that basis, will you be having a cracker of a half year? I'm gonna talk about that later. Yeah. I mean, it is true. It is true that

25:18 as a a business with a focus on risk management as strong as ours, volatility is is helpful simply in the sense that on the one hand, it reminds existing clients why why they have us, and and and it also always presents an opportunity to demonstrate that our products and services on the risk management side perform as as intended. So so in that sense, that's that's of reason number one why why Leslie would have would have rightly said that, yes, we do like volatility. Secondly,

25:59 volatility and in particular currency volatility, the the the way we've seen it this year or discussions like the the ones we've seen this year around, you know, what what might be the the the future strength, the weakness of the US dollar or what might be the world's future reserve currency. Any such question or discussion is helpful in that it makes it easier for us to engage with clients in conversations around how they might be risk managing their their currency positions today and what they might want to do in the future. In terms of the second half of the question, does that mean we'll we'll have a cracker second half of the year?

26:42 Most of our clients, so our client retention periods are very long and most of our clients make strategic decisions when they appoint us. And that has a lot of advantages in that if we if we get an offering right and and, you know, we get to a point where, you know, the offering we have designed matches exactly the client's requirements, then that's a fantastic basis typically for long term client relationship. But it also means that we we don't win clients quite as quickly as the question suggests. So in that sense, we would expect a long term, or medium term even benefit from from volatility and the discussions ensuing from that. But, the size of of clients that we onboard don't translate quite as quickly as the question suggests in in that, you know, we we can't see the benefits and don't expect the benefits of that, in the second half of this year immediately.

27:38 Another question here that I think we can another question here about FX impact. So as a Sterling based shareholder, I want to make sure I understand the effects of FX rates on your accounts in terms of revenue. What's the relative importance of franc and dollar relative to sterling in terms of expenses or what's the percentage of sterling expenses?

27:56 So as I alluded to in the remarks that we made, our assets under management, we present them in US dollars. The biggest underlying currency is Swiss francs and we earn our management fees on the underlying currency. So Swiss franc to some extent from a revenue perspective, Swiss franc is probably the most important exchange rate because that's where we earn a good chunk of revenue. US dollar is also important because we have a good chunk of assets under management in US dollars and actually some of that's in slightly higher margin products. Expenses are primarily in sterling. We do also have some expenses in euro and some in Swiss franc.

28:43 So that's the makeup of the business. You won't be surprised to hear that we hedge our receivables and we work with the investment team around the appropriate hedge ratio to apply that. But overall, I think it's FX doesn't have a huge impact on our underlying accounts. It clearly is the business that we do. But from an accounting perspective and how we present the financials, I think the key point to bear in mind is that our AUM is in a range of underlying currencies. A couple short questions here. One, is the infrastructure equity fund a separate entity to the Sharia Fund? Yes. Those are separate vehicles with different clients and have no relationship with each other. Another question is our EM business just local currency?

29:44 Yes. So so we've been trading EM and frontier currencies since 2008. So as a business, we were large in that space. We're one of the the the largest global participants in a lot of less liquid or illiquid EM and frontier markets. And our EM local debt fund is a fixed income fund that one might compare, for example, to the the GBI, the JPMorgan GBI EM local currency EM fund as a as a comparable benchmark. And and so so in that sense, yes, currently, our our EM business is is just local currency in part because it plays to our strength. Yeah. So with the with the teams we have and and, you know, the operational setup we have, it'd be easy for us at this point to trade hard currency EM debt, but it is not a product we we we offer today.

30:55 The question here, I was bracing myself for an increase in staff costs as you go into new businesses, which presumably means you take on new staff who are not immediately productive. And it's even after the increased bonus, staff costs have decreased. Should I be surprised? I guess, pleasantly surprised, hopefully. As I said, I think we've done a lot of work this year on managing the costs, and so there's been some change in mix in the type of the staff that we have within the organization and the relative cost of those. Those new businesses that we're going into, and you're right, that within the cost base, there is now the cost of an infrastructure team and a credit team. Some of those have been brought on this year. Some of them have been there for for for a bit longer, something like the infrastructure fund, has taken quite a long time because of the complexity to get set up and get off the ground, and we've effectively been been paying for some of that ahead of launch. So as as I said, I we've we've we've we've done quite a lot of work on the cost base this year. A lot of the costs of the new products and new projects that we've got is effectively already in there.

32:01 So I think we're well positioned for the coming years. The short question here is the DTSCF only being provided by the Sharia Fund or are there other provisions of DTSCF in pipeline? So generally, we have a growing credit business, not all of which is Sharia compliant. The particular announcement we made about that particular structure is a Sharia compliant offering, which we would also be able to offer in a non Sharia compliant way if it was a client requirement. However, in the specific form in which we will launch the fund, Sharia compliance is a is a requirement.

33:13 A question about how the new IT system is progressing. Is it all designed and operated in house? The the change that we made during the year or the beginning of the year was was bringing the IT team in house. So we had quite a lot of our IT development was effectively outsourced outsourced outside of the company and in some cases overseas. We have now got the IT development team in house here in the building. And with it's a much more it's much more cost effective solution, but also just a much a much more effective solution overall because we now have an IT team that works very closely with our operations teams. Their development portfolio and development plans are responding to requests for immediate requirements as well as longer term future requirements.

34:04 So we're very pleased with how that's working across the company. We're now seeing new pieces of development go live and that is obviously great for everyone to see and proving very effective in terms of how it enables us to deliver services to clients. So we were very pleased with how that's going. And yes, to answer the question that's now all effectively in house, which really works from a point of view of better alignment. Two questions here from Vivek. One, what impact would capital controls have on our ability to offer our core hedging products and services?

34:50 And then second question, a lot of asset management a lot of asset managers claim that they have a capital light business. The majority of capital is quite expensive human capital and are required to maintain, you know, capital surplus for ordinary business activities. Do you think it is accurate to describe asset managers as capital light businesses, parenthesis, capital not being on the balance sheet notwithstanding? So on the first question, so do capital controls could could capital controls have have an effect on our ability to to offer our core hedging product and services? The way the way we we service our clients, you know, be the pension funds or foundations or other institutional clients, is that these clients will trade the necessary derivatives, and in in many cases, are OTC derivatives, with a number of counterparties.

35:54 And a lot of these counterparties are banks, so the clients will trade with a lot of banks. And, you know, we will do that trading for them in their name with these banks. And so, typically, there is a desire in addition to having a choice of counterparties. So so there's different criteria in choosing the choice of counterparties. One one criteria is obviously the pricing. So one would want a number of counterparties to choose from where whichever currencies I may want to trade amongst these counterparties, there's a degree of competition between the counterparties when it comes to pricing. But other factors that influence this choice are counterparty risk because I might have a certain derivative exposure towards these counterparties.

36:41 So I might want balance sheet strong counterparties, but there's also political and regulatory risk. So in creating a a counterparty panel for a client, one of the criteria that that that features in creating such a such a such a panel or such a counterparty panel is also geographic and political diversity, typically to guard against sudden changes in in regulation or rules that might affect a a bank's competitiveness in in providing certain prices. Capital controls are hard to imagine being affected because, you know, at the end of the day a client could could also trade with with only counterparties in their home jurisdiction.

37:30 But then, you know, typically the the the counterparties we would advise clients to work with are in in jurisdictions where capital controls are not a concern. What can happen is is is that rules change input as happened happened a few years ago in The US. There'll be subtle changes to the rules, which means that some of the banks, depending where the headquarters are based, all of a sudden, have balance sheet requirements that that change their their ability to participate. So so those are the things which which, as part of the day to day business, we're used to managing and which indirectly would would would also take care of any capital controls if there ever were to be a problem. But as I said, we we we don't foresee that really as as as an issue on this on this list.

38:20 And just I mean, with a with a point on, you know, capital light or, you know, capital intensive business, just relating that to to what we view as our unique selling point or particular strength where we say where we are positioned with the size we have today and and the ability to create what we call best in class solutions or customized large solutions for for institutional clients. We're heavily relying on the expertise of our workforce and and, you know, the strength and experience of our teams. And, I mean, in no way do we want to to sort of diminish that by by by not sort of highlighting that as as part of, you know, what makes a strength of a business and a part of the things that makes us unique.

39:11 But I think in in sort of the the the normal use of language, capital light here refers to sort of cash cash capital. And in that sense, I think we we are capital light business, but then absolutely reliant on on, you know, a very very strong expertise and strong workforce. What does gold what what role does gold play in the risk management product, if any? Has its role increased, assuming it had a role in the first place? It doesn't feature much is the is the honest answer. I mean, we've seen a number of clients increase their investments in gold or sort of you know approach us about helping them run portfolios of you know gold derivatives also you know finding a way of you know, having exposure to to gold or going long gold using using derivatives.

40:09 So it's picked up a little bit as a converse conversation and as, you know, something that we we we might offer here here here or there. But broadly speaking, in terms of the role of gold in in our clients' portfolios, it is very small. And so even even an increase in gold in gold positions that we would see our clients have, it will have and is not having a noticeable effect for us on the portfolios we manage. We also got a question here. Your predecessors seem quite bullish on the role of digital assets will play in the universe of financial assets. Do you share that view? I haven't mentioned it in the presentation. I think one of the that's correct. RECORD had some investment source in digital assets products, I guess, towards over the last couple of years.

41:02 One of the changes really when, I guess, when Yan took over as as CEO was was discontinuing that activity. What we laid out today, then three product pillars is that the products we're focused on where we think we can deliver most value that respond to client demands and play to our skill set and and digital assets while it may become an important part in the overall universe of financial assets at some at some point isn't something that that we're heavily involved in or or see have an expectation of being involved in in the certainly in the in the medium term. Sunday, it's saying, could we provide some comments on the the threat or or benefits of AI on the business?

41:51 So I I think I think there are a lot of potential benefits of AI to the business and also the use of technology for us is increasing steadily. So if one if one imagines the typical work stream that we that we operate in, you know, oftentimes starting with an extensive data collection process where a lot of data points regularly, once a month or multiple times a month, need to be obtained from a client's custodian, their other asset managers, their funds. And that data then needs to be structured and sent through our operational machine, which which really means this. You know?

42:39 So taking that data, calculating what that means in the light of the client's strategy, turning it into trading instructions, and then ultimately passing it to to the trading team. There's of two two elements which which are evolving fast with the with the with the use of technology. One, of course, the the whole process these days has fewer and fewer human human touch points in that to the point that, you know, clients can connect now by API to to our systems and really send the data directly if their technology allows it. But also the the other the other component is is is that for us because the the volumes we trade are so high. So if we look at the the total trading volume of the business this year probably reaching $10,000,000,000,001,000,000,000,000 dollars for the for the year. We're heavily reliant on an excellent risk management process where, you know, the the the sequence of pre trade and post trade checks is is extensive. And a lot of these checks are there's direct checks. There's also indirect and plausibility checks, which in addition to comparing of the data we've received, the decisions we've made, and was traded.

43:58 In addition to comparing that directly to what the system expects, we run we run a number of indirect checks that check for possibility. Does this make sense from what we would expect the client to do today? You know, does this make sense from the point of view of what the markets have done today? And and, you know, those are tasks where AI can be very powerful in, know, adding adding to these possibility checks and and making our systems not just faster, but also safer. And then a couple of other questions. A question that how much, if any, of the money being invested in the core project is provided from RECORD, own capital and or other real rams? That project, the same as the Deep Jet Supply Chain Finance infrastructure funding. Our investment is to the extent we have an investment is in the creation of the fund structures and in case of supply chain finance and the distribution of those funds into underlying portfolios, not an investment in the underlying assets that those investments would ultimately go into. So as I described, we're making an investment in the sense of the teams that we brought on board that will deliver these, but not putting our own money into those projects themselves.

45:19 Also a question around client concentration and the concentration of revenue, which I guess is also a question that comes up quite a lot like this last year three clients produced US16 million dollars of revenue. Previous year two clients produced US11 million dollars Does this concentration make you feel comfortable or uncomfortable? I think the thing that to weigh against that is the client tenure. We have as Jan described, we have we have large clients who who put large mandates with us, you know, long long term strategic allocations. And we have, you know, many clients who stay with us seven, ten years and beyond. So it's true that we have some very large clients that contribute important components of our revenue.

46:07 But we also have a track record of very good client service and long term client relationships and something we spend a lot of time focusing on. I'll hear from Matt. How is RECORD adapting its currency hedging strategy to addressing rising geopolitical risk and potential shifts in global currency regimes. I mean, biggest the biggest the biggest shift that's I I I think this relates back to what we discussed earlier about, you know, the role of the dollar, currency market volatility and and, you know, the the the the perceived outlook in which currencies will be strong, which currency will matter most in the future. In in the you know, this is predominantly these are very useful conversations for us, and and it's predominantly a good thing for us as a business. It puts currency in the focus. So in terms of shifts in global currency regimes that would affect the the business, I mean, I think what we're seeing is is of a gradual rediscovery of the euro. That's that's that's probably the currency that's the strongest competitor really to the to the US dollar in terms of the the capacity it has. There's been a lot of strength in the Swiss franc, but the the Swiss franc is is, you know, not not not not not quite as not quite cannot cannot absorb the the the same number of volume the the the Europeans of anything.

47:39 If it is true that, you know, current current use of political direction will reduce the the role of the US dollar as a as a reserve currency. It will it will likely benefit the euro and indirectly Swiss franc sterling. And that for us as a as a manager is a good thing. That that that means there's more complexity and more diversity in the portfolios that we'll have to manage because there'll be there'll be more currencies in the portfolios where clients are invested in if clients then invest in these jurisdictions in line in line with the renewed strength of these currencies. Openly speaking, the one thing the one thing that that that would be challenging if if the new world reserve currency was going to be the renminbi because, you know, obviously, that's that's not a jurisdiction where we're particularly strong in our positioning today. Well, we can trade it.

48:30 You know, we we don't have teams on the ground or offices in the country. But I think we're we're probably a long time away from from from that becoming a realistic issue. Yeah. So so I think broadly, all of all of the conversations that we see ongoing in the in the world are positive from our point of view, and and the renminbi is largely held back by by ongoing strong capital controls. And there's no other questions in the chat currently. Well, Jan, Richard, I'd just like to thank you very much for answering those questions from investors. Of course, the company can view all the questions that have been submitted today. We will publish the response out on the investor meet company platform. Just before redirecting investors to provide you their feedback, it's particularly important to the company. Jan, could I just ask you for a few closing comments?

49:18 Well, I think yeah. Thanks, everyone, for the questions, and we're excited about the potential of the business going forward. I think now we've got one more question coming in. There a risk that more clients will shift from absolute return and will that result in fee pressure? I think the I'll briefly take that question and I'll also use it also as a way then to to go back to to closing comments. I think the way we've now positioned the business with, you know, strong risk management pillar, a strong private market pillar, and an absolute return pillar highlights quite nicely what the products are that we offer and also what they do for us as a business and by extension for our shareholders.

50:05 And and so the the risk management pillar of the business, I mean, as Richard says, these are long term client relationships. They're they're very reliant on our operational abilities, operational systems, and our ability to deliver an excellent service. And and in that sense, yes, you know, we we we we we put a great great emphasis on on, you know, ensuring that all of these client mandates are are managed to to the best of our ability. But largely that that that product positioning, the risk management side of the business forms a a very stable basis of the business for us to do other things. So private market pillar of the business, which, you know, we we we now put out sort of more clearly this year, which we've been working on for many years. It's been happening in the background, but where we now feel where so we've we've demonstrated through through a number of large examples that we can do this, that this is something that we are doing, which now forms a firm part of of RECORD as a business.

51:12 Has a lot of the similar features in terms of, you know, long term relationships, long term investments, but but offers fee scales that are higher than than than on the risk management side. And and so so so in that sense, for us as a business, what we classify as private markets even though these are, in essence, still customized solutions for large investors, is is is very attractive for us as a business compared to compared to compared to the traditional business. And therefore, so we're very excited and think that gives a great and exciting upside to the business over the years. The absolute return part of the business is, you know, the part of the business that's most similar to to to a lot of other companies out there in the market where that's absolute return products, where we have a number of products which we are proud of, but where these products, like with other asset managers, depend more strongly in in their performance on sort of the market environment, on the on the performance of our portfolio managers, or on a client's requirements, on a client's outlook even in terms of what the client believes, you know, might might be the right positioning in the future.

52:26 So so we are used to to sort of a high degree of of volatility in in that in that part of the business, the absolute return products. But at this point, not particularly concerned about anything in in particular there. But in general, we think that the combination of these three pillars with, you know, a strong foundation, you know, a big and growing private market pillar and an ongoing and healthy absolute return business positions us very well for the future. And I think with that, we'll we'll end the session here. Thanks, everyone. Thanks very much, everyone. That's great. Yeah. And Richard, thank you once again for updating investors today. Could I please ask investors not to close this session? I shall now be redirected to provide your feedback, and all the management team can better understand your views and expectations. This is gonna take a few minutes to complete, but some should be greatly valued by the company. On behalf of management of RECORD PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.