Record delivered full year results matching expectations with assets under management equivalent (AUME) slightly ahead as positive inflows more than offset the impact of market moves and fee margins were broadly stable. The group also demonstrated its operational resilience and expertise to clients during the onset of COVID-19 and accompanying volatility. Looking ahead, the group has a fresh focus on growth and to support this is investing in a measured way in IT and its staff.
The AUME figure of $58.6bn for end March had already been announced and was up 2.3% versus FY19 (or +7.5% in sterling terms to £47.3bn). Revenue was £25.6m (+2.4%) while administrative expenses rose 6.2% reflecting investment in technology and increased personnel costs. This left pre-tax profit at £7.7m (-3%) and basic EPS, after a reduced tax charge, at 3.26p (3.27p). The ordinary dividend for the year was unchanged at 2.30p while a special dividend of 0.41p (0.69p) is to be paid giving a total dividend of 2.71p (2.99p).The group remains committed to its policy of paying out excess earnings subject to capital and investment requirements.
Looking forward, CEO Leslie Hill, who took up her role in February, seeks to bring a new energy and vigour to the business with a greater focus on growth. The group sees the cornerstones of its strategy as: quality client experience; technology and innovation; and talent development. The group will continue to develop new products but with an emphasis on meeting client needs including areas such as environmental, social and corporate governance (ESG), impact investing and incorporation of frontier markets into products. Investment in technology will be required and has the potential to deliver services more efficiently and generate rapid paybacks. On talent development there will be more staff training and a plan to secure succession within the business by giving earlier responsibility to those with talent.
Our FY21 EPS estimate is increased by 11% largely reflecting the post-March equity market recovery. Otherwise, we exclude potential net new money flows and performance fees, as before. Compared with a group of asset-manager peers (Exhibit 7), Record trades on below average prospective P/E and EV/EBITDA multiples and offers a higher yield.