Record plc (REC) Earnings Call Transcript

I've got a few items of housekeeping, I've been asked to go through. There's a lot of wrinkling of brows back in the room. Are we cool? We're good. All right. Okay. So we would very much encourage you all to ask questions as and when they occur to you during the presentations because I know that's appealing for people to have their questions answered immediately. If there are too many, and we feel we're getting side -- derailed, what we might do is hold the questions to the end of a particular section and then have questions. [Operator Instructions] Okay. So the next thing I have to do before we start is give you very brief introductions. So you know who we are, if you don't already. So as is evident from the labels, my name is Leslie, Leslie Hill. I'm the CEO of Record. I have with me this afternoon, 2 of our young talented -- sorry, Steve, there are talented people who are less young, but young talent, we're talking a lot about our succession planning and Dr. Jan Witte and Rebecca Venis. Jan is our Global Head of Sales, and Rebecca is our Chief Technology Officer. And they will each have their own section to talk about the work they're doing to diversify the business. We also have some guests in the audience, including Neil Record, our Founder and Chairman, who is today as a guest here, which is a very odd thing for him. I don't know how he feels about that. But we also have some of our partners, people we're working with, [ Emea Bengasin ], [ Darren Denien ], [ Amen Gashie ], all of whom are part of the audience and also will be part of the networking later, so you'll be able to ask them more questions about the things we're going to tell you we're doing with them. And I just saw [ Phil Bikerton ], too. He's here, you snuck in back at the last moment and Phil Bikerton. So without any more ado, I think we're going to kick off, and I'm going to give you a quick agenda here to give you some idea of what this is all going to be about. So the purpose of this afternoon is to talk about our new initiatives, the things we're doing to diversify our business. Oh, sorry, Nicolas. I know [ Nicolas Thurne ], critical member of the RAM team is also here today. Forgive me, I don't know why I didn't think of you, but another person you should know about in the audience who may well be talking at some point. That's the agenda. If we're going to talk about diversification, that's really where we will spend most of the time. But I have been asked to give a very quick recap of how we got where we are now. It will be relatively short. It's just a couple of slides. You can certainly ask questions. There's a great [indiscernible] more information every time we do a formal financial update, which we do on regular intervals. So let's kick off with where we've been. Record has been around since the '80s. We've been a specialist currency manager for pretty much all of that time. And we've been a listed business for a portion of that time. One of the most important things to know about Record is that for a very long period, our business moves sideways. We didn't tend to grow. We didn't really shrink. We just kept plugging away. And what we were effectively doing is trying to convince whole of the world that specialist currency management was the thing to do and that it was enough to build a big business just doing that. And I think what I came to realize because I have been with Record since 1992, and I spent a good part of my career also trying to convince the rest of the world that specialist currency management was what they wanted. I realized that we had a lot more to offer. We had a lot more skills and talent, and we should diversify. And so the reason for this picture is very simply to show you and illustrate how our assets under management and our revenue didn't grow. But in the last few years, effectively since '21, we started on an upward trajectory, which is as a direct result of diversification and modernization of the business. And if you have to remember 3 things about Record, you really only need to remember, we want to diversify, we need to modernize, and we must have a good succession plan. Those are the 3 pillars on which I have built everything we do. Now it's probably no coincidence that we're having a day today when we have started to really show some of the benefits of what we've been doing. We've given ourselves time to modernize, do some of the difficult reengineering within in-house and also start to build a more diversified income stream, which you're going to hear a lot more about today. Our objective is no longer to be purely a currency and derivatives asset manager but to be a fully-fledged growth-oriented multi-asset manager. That is what we want to do. That is what we're going to do. Isn't it guys?

Yes.

Right. So does anybody have any questions about this very, very, I accept, simplistic assessment of where we've been. We didn't go all the way back to some deeply depressing years previous to 2015, where we're even still tracking along sideways. But that gives you just the background of what we were and what we are now and what we hope to be. Boldly, very broadly, not long ago, we announced a 3-year plan, which we've never ever done before at Record. And the reason for that, and the reason we did it when we did it was it took us a year or two to get ourselves organized to decide what we wanted to do, how we wanted to do it, what was possible and what we should abandon and do some of the modernization pipe work, let's call it. But once we were ready with that and this 3-year plan, for which we are on target, it's still relatively early days, but we are heading in the right direction, is a much more diversified revenue stream and a bigger amount of revenue, higher operating margins than we have enjoyed in the past and enjoy presently, continuing with a dividend payout with a target dividend payout ratio between 70 and 90 to give us a bit of flexibility to do investments if we want to. And the potential from time to time to earn performance fees through either existing business or new business to give a bit of icing to the cake. Does anyone have any burning questions or concerns about anything that they see up there? It's pretty straightforward, isn't it Ray? There you go. Good. All right. Excellent. So that's many of you will have seen all this before, both the previous slide and this slide, financials. So one of the things we had to work with when we started to think about diversifying our business was our client base. And one of the defining factors about our client base -- I always used to say we weren't very good at getting clients, but we were quite good at keeping clients. And that has been the case, is the case. And the reason we show this picture is to give you a sense that we have quite a nice balance between clients who've been with us for a long time and who continue to be clients and are very interested by virtue of the fact they trust us to hear more about other things we can do. So we can build on this client base, which is stable and of high quality, very high quality, I think, and acquire new clients at the same time. So 10 years plus, really, more than half of our clients for longer than 5 years, is an attractive feature for a business in which one might want to invest. So long as it's not static, so long as it evolves, develops. And you will see some examples in a minute of how we have harnessed existing clients to do new things with them. Whilst at the same time remembering that our key building block is currency and derivatives. We are not abandoning -- it's not like, oh, that was then, this is now. We are doing our very best to keep everything we've got and build on it, renovate the property while still living in it with guests, building more on it, but not to give up on the good stuff because although our business didn't grow very much, it was a good solid business. It just wasn't very exciting. So we're trying to marry stability with a bit of excitement. And if we can do that, then you'll all be smiling even more broadly than you appear to be at the moment, which is very good. So anyone have got any questions about client longevity or we've got other slides on this, but we've kept this extremely broad brushed just to give you a backdrop. Cool, either I'm being really boring or I'm saying everything you need me to say. Thank you. Okay. So how do you -- so this is the bones, let's call it, the bones of where we are going. The parent, obviously, you would recognize Record plc, which we have now renamed ourselves. We call ourselves a Record Financial Group as opposed to Record Currency for obvious reasons. And the bids that you would have seen in the past would be the piece that says Record Currency Management, which was all we had effectively. And everything lived in that blue box on the far left-hand side. All of our operational activities, all of our investments, everything. And what we've done is we've recast it into 4 pieces. And weirdly, the one I'm going to draw your attention to first is actually the one on the right. This is where all the Mr. and Mrs. Sensibles live. So these are the people who provide group services, and it could be anything from compliance, it could be operations, it could be trading, it could be risk management, it could be -- it's all those things that if you're going to be an asset manager, you have to have, and it's got to be really high quality, but it's a sort of hygiene, if you like. And what we're finding is that if we domicile [ REIT ], they can then outsource their services not only to Record Currency, but to Record Asset Management, which is Jan, Record Digital, which is Becky. So -- and potentially, and we're seeing some small signs of this, which you'll see in a little while, Record Group Services can offer services to other asset managers, other entities. If we're good enough, if our tech is -- the tech stack is good enough, the risk management is good enough. It's so much nicer to buy this from someone who's been doing it since 1983 and does a good job at it than trying to reinvent it yourself. Nobody enjoys putting that particular package together, but we have it. So now we have these 4 subsidiaries. 3 on the left are revenue-generating subsidiaries that to provide the architecture and the house in which everything else can exist. It is not and never would be the bureau of business prevention, but it is looking after everyone and keeping everyone safe and providing really modern and effective technology. Tech is now cheap to buy, but you've got to get people to use it. It's not enough just to give them toys. They've got to get people at Record Currency who've done things the same way for 20 years to start using some of the new tools. It's a lesson we all learned that you have to encourage people to start using new methods of delivery. So those are the 4 subsidiaries. I'm not going to go into too much detail about them because I want my colleagues to take the center stage there. I said Record Currency in which everything lived. And now you see Record Group Services, delivering services to us and others and then the other pieces. This is probably not the end of the story, but it's quite enough to be getting on with for the moment, I think. Anybody feeling stressed apart from me? To the second of the 2 -- 4 blue boxes. And I'd like to introduce you to Jan. Jan is the Head of Record Asset Management and Global Head of Sales. And we're going to ask him to describe the journey he's been on since I took over, and he started to work with me, which is part of our diversification story. Cool? Right. Have a little thing. It's that one.

Does a sound work? Important question before I start talking. Yes, Record Asset Management. So as part of the diversification in the product range that Leslie alluded to, we looked, of course, at the product on the currency side. And rearrange the product range there to focus on the products that we thought would, in the future, allow the business to reap higher revenues in what was our area of specialization. But at the same time, there was a desire to expand the product range further and maybe add products that wouldn't align completely with the culture or the current servicing that we delivered to clients on the currency side. And it coincided in timing with Brexit. So Brexit happened and through Brexit, we lost regulatory access to the EU, which, in reality, was less of a problem than okay, in the U.S. And we've got some business in the EU, but losing regulatory access was nonetheless a helpful trigger to ask the question, what do we want to do in the EU. So that was one of the things that got us thinking together with the question, how can we expand our product range further accessing that large network of clients and prospective clients, which we have through the existing currency business, but at the same time, remain experts and not confuse what we do, deliver the same high-quality service that we delivered on the currency side for decades now. And yes, collaborate across the group. And the decision we made was, as was shown on the previous chart, to have a sister company to the currency management business, which we then turned Record Asset Management, certain logic in that naming. But we decided that, that sister company to the currency management business would be based in the EU and should be fully licensed as an asset manager there. And thereby allow us to tick these 2 boxes to reopen the EU to us as an area to do business in. But at the same time, give us a second pillar across which to offer products to our clients that are different products than what we'd offered traditionally. And that's what we've done. There was a question whether the business would be based in Germany or the Netherlands, and we decided to have it based in Germany, simply because through Switzerland, we're very comfortable in the German-speaking part of the world, but it had to be somewhere in the EU. And then what we did in September 2020, registered Record Asset Management GmbH in Germany as a business and decided to now work on that expansion of the product range, where the -- I think the overall objective was to offer a product range that in terms of the fees that we -- yes, the fees that we would be able to charge would sort of loosely start where the upper range of fees on the currency side of the business ends, so really to allow us to extend the fee range that we could offer globally as a group. And for this to be neatly set above the fee range that we were familiar with. Now -- so business was registered in Germany in 2020 as a subsidiary to Record plc, thereby assist the entity to Record Currency Management GmbH -- Record Currency Management Ltd. But then, of course, initially, we didn't have the license that we wanted to have in the EU. So we started to apply for the license. We got ready to put all the things in place that we needed to be licensed. But we were faced with a period that turned out much longer actually. So we accounted for a lot of extra time in dealing with German bureaucracy, but we were nonetheless surprised how long it took. So it wasn't so much that there was stumbling blocks. It just took longer than we thought it would in receiving responses from the government. So we operated under a sales license for a period of time. And now -- recently in August last year, received our full asset management license and are now a full asset manager. So the -- I've got another chart which shows the team, and then I've got another chart listing the type of business we've done. And the chart will show that we started out with what was initially distribution activity, which we were allowed to do under the sales license, a lot of structuring activity and now asset management mandates that allow us to have our own assets under management. So the -- it just went white.

Try and hit it again and see if maybe it's...

Our Chief Technology Officer. But I swear I just pressed the button there.

Any idea Simon?

[indiscernible]

Yes, I can carry on. I mean the...

But piece that Jan is going to talk about is about Nicolas and his team. Without Nicolas and the team, we probably would not have had this idea necessarily of doing this the way we have. So they kind of drove us. They came barreling through the door and said, where are entrepreneurs, and we want to be with you, Record, and we want you to help us build this business. And so we look to them a thought, yes, we like the look of them. And so we -- and then what happened Jan?

Yes. So what we did and the slide that we'll show in a short moment for anyone who hasn't seen, it shows the 3 people who joined us to form Record Asset Management, which is Nicolas who sat over there and Oldrik Verloop from the Netherlands and then Vanessa Vantol, who's worked with Nicolas previously for, I think, decades at Citigroup. And in having a new team join us with a completely new skill set and that skill set being very much in the area of structuring, but also very much in the area of alternative assets. We -- I'll say, so we were then able to create a group that is now able to deliver unique value to clients out of the new entity and is supported by a lot of things that we can offer as a group. So as Leslie said, the group services, the technology, the finance department, the fact that we have a client team that can support sales activities with materials. There's a lot of things that we can offer as a group that were things that previously were offered to only the current management business that we've now made available to the new business, but it was -- in setting the business up, it was essential to have a new set of people join and conduct this new activity was a completely new outlook and skill set than was available in the currency management business. And then again, there's a lot of day-to-day collaboration, but it was that new team that allowed us to do that. So I'll briefly run through the CV. So Nicolas, I think, has 20 years of experience in -- well, there were are, they we are, that's fantastic, yes, yes -- in banking and is a structuring expert and he's already previously worked with Vanessa in those jobs. So the 2 of them were a closely knit team. And I think Oldrik also have been working with Nicolas and Vanessa in different roles previously. So they were familiar with each other and really had only to get to know us in creating a successful joint venture. Oldrik's particular expertise is infrastructure. So he added something else to the mix as well. And yes, so that was the team with which we set out to build this business as supported by Leslie and Record as a financial group now under the new branding. What we did then initially, so the question then is, with that intention, with a new team with a lot of expertise in structuring and a large network of, I think it's quite important to state that we have a large network of prospective clients because trying to win currency business for decades means and the currency business is funny in that people only buy currency products, that they only appoint people to currency mandates every 10 years or so. So you keep talking to people that at that point in time are not in the need of a currency solution, but you develop very, very friendly and intimate global relationships. So the question then being, how can we use the new skill set, the global network and combine that with the ambition of offering something new that sits at the upper end of our fee scale. And what we did is we sold out globally then other asset managers and initially, especially because for the first 2 years we only had the distribution license and weren't yet able to create our own product. So I mean this is an overview of the companies we've been working with for quite a while now. But they're all in their own way leading in -- but what stands out is I think that AGL, over to the right-hand side, which is a New York-based private credit manager and [ CATS ], which is a Houston-based family office and asset manager. And then Avantis and [ Universa ] are U.S.-based. There was synergies in working with us was that at that point, where we had now decided to access the EU and become regulated. Through the currency management business, which is regulated in the U.K., we were, of course, regulated in the U.K., and of course, where we're active in Switzerland already. So with the licenses that we had started in -- to put through -- to offer really European coverage, but also to, in great detail, explain the subtleties that EU present to upset to a foreigner, but to some non-European with different cultures, languages and jurisdictions. So 2 of the U.S. managers, a European partner who can address all of these things is attractive. And the 2 managers on the top left is [ Secret ] Capital Partners based out of Taiwan, who are a leading trade finance manager. Next to that Fasanara Capital who are based here in London and with whom we are at this point, very frankly, in a close collaboration, also raising capital for them. And then the one entity that stands out slightly Khalij Group on the top -- on the bottom right-hand side corner, who are also based in London, and they are a leading Sharia advisers. So their bread and butter is the creation of Sharia-compliant investments and turning conventional investments into investments that are being made accessible to investors who rely on to Sharia compliance structures. So that's how we started out working our way from distribution through structuring to what is now becoming asset management. Yes, Chris.

[indiscernible] You -- as you highlight, you've got the brand, the brand recognition, the relationships. Do you go as Record? Or do you go as an AGL or Khalij Group? So how do those -- to find a customer, what brands do I see?

We're very transparent. So we are very transparent in whom we are representing in that space. And it becomes an interesting challenge in the sales process because the question is where do you add value in the sales process and where are you positioned to not just be a placement agent, which is a very big business in the U.S., but much, much less so in Europe. And then certainly for our existing...

I think the next slide is very useful to illustrate that because it gives you kind of what you're asking, which is where does retrofit in orders, the trajectory from where we started to what we're becoming.

It's my last slide also. So we have to address all content there is based on this slide. But I think -- so we -- with the team, broader, really the sole focus on distribution wasn't what we wanted to do. But there was the intention to add value at different points along the way. And one area is then structuring of bespoke solutions, which is one step beyond -- first step is sort of us in the EU, but the next step really is to have a client in the EU with a bespoke need that can be addressed by the U.S. manager if you have a specific vehicle that can deliver that. And so if you look at the right-hand side list, which is chronological in -- the life ones, the life what is their say life. But the other ones are anonymized pipeline. But you see that there is a chronologic order in that it says Record Asset Management as a distributor and then as a distributor and structurer. So it almost shows the evolution from -- to the -- even though it's in a completely different field with different products. it's very, very close to the DNA of us as a business on the currency side, where really, if you look at the client numbers, these are all very large clients. And we've got relatively few clients given the GBP 90 billion of assets under management we have. So the ability to create bespoke products has always on the currency side allowed us to win clients because it was exactly what they wanted. And we've now gone a very similar path on the asset management side, relying on the expertise of that team in then creating bespoke structures. And then now more recently, being awarded mandates where we also act as an asset manager, which is ultimately, of course, where we want to be. We want to manage these assets. We want to be -- we want to -- yes -- I mean it says own AUM. I meant to say that RAM's own AUM, but [indiscernible] we want to own that AUM because we want these assets under management to be within Record Asset Management.

We would never propose to replace a specialist manager ourselves. What we actually act as is the portfolio manager for the package.

Absolutely. Yes. Yes. So wherever here it says where it shows us as managing the investments. These are solutions that...

With Khalij, for example, that would be a good example, right?

I can run through the list. I mean -- I think that shows...

We have time for a very quick run through, I think.

I mean, I can skip the life ones because that was outright distribution activity. But for example, the fourth one from the top where it says private credit, which we expect to now go live this quarter is a GBP 40 million investment where we collaborated with Khalij in creating an investment structure that would allow an investment into AGL in a way that is completely compliant and signed off as such. I mean it's quite an important point in that part of the world that it's been certified as Sharia compliant. But yes, we added to the structure. So the private credit investment itself continues to be managed by AGL, but we added a structure to it following the guidance of Khalij that will then make it a Sharia compliant investment. And then the fifth one where Q1 with GBP 260 million is a combination of the Avantis and [ Universa ]. So that's an equity strategy combined with a tail hedge in a fund that is then made available to a family office for their clients. And in that combination, again, wasn't available to them. But means that the equity management and the tail hedge management continues to be done by our partners, but the vehicle that is offered and the combination that is unique that is created is created by us. And then, yes, I think the last one to mention before I pass the microphone to Becky is then the infrastructure equity again, is unique in that our role there was the bundling of a number of European pension funds who individually couldn't make an investment for reasons of size and infrastructure. But when appearing as a unit, bundling, I'll call it bundling, for them and allow them to pay as one. So those investments then together would then in where we're trying to go now this year, would conclude the path that had started with somewhat small, to be honest, distribution activity, then to much [indiscernible] path with being an asset manager with assets under management.

Is it worth adding to that as well that the clients in that infrastructure fund are obviously long-standing clients and the cross-selling [indiscernible] so that's a good example of where the cross selling opportunity comes together.

He is actually not blowing his trumpet quite loud enough here.

[indiscernible] in the room and plenty of shareholders who -- we can look at those kind of numbers. The question is, how does that then translate into revenues and revenue margins? How do we think about what that actually means for the shape of the P&L over the next couple of years?

Well, it [indiscernible], as Jan alluded to slightly earlier, the sort of the start of the sort of fee rates, if you like, on any of the we've currently got is around sort of 50, 65 basis points. And I think on occasion, yes, some of these funds are actually going to be earning higher revenues fee rate than that.

So it's -- I would just add [indiscernible]

It's -- without giving any sort of new financial -- we set ourselves a year ago of going from sort of GBP 35 million revenue up to about GBP 60 million in 3 years. And I think if you look at consensus for the first year, which is almost up at the end of March, consensus numbers around sort of early GBP 40million, GBP 45 million. We're starting to get traction. We've got a very helpful and useful and solid pipeline of opportunities, opportunities that are going to increase our operating margin as well. Going back to the targets, obviously, the operating margin of 40% is something that we think is achievable based more or less on the new business. But it is worth adding as well that over the last couple of years, we've been adding assets to our traditional business as well. So we've got a very strong, good fundamental base layer of long-standing clients with good recurring business revenue streams. And we're putting an extra layer on top of that using cross-selling opportunities on new products at higher revenue fee rates.

But these are still at the lower on the value of the assets, which are raised. So these are committed sums from partners that you are quite comfortable of already.

[indiscernible]. I mean...

There's 2 things you should say, I think, which you haven't said yet, [indiscernible] the first is that as is fairly obvious, I think, if you look at an infrastructure deal or indeed the Sharia deal, these -- the point of these is not just higher fees, but hugely scalable. Nobody wants to do GBP 40 million of Sharia investment. There are huge amount [indiscernible] into infrastructure, they're clients of ours, but it's the first time they've done infrastructure. There's a tremendous amount of scalability about this, which we loved about currency, and we love about this. That's the first thing. Second thing you need to know is Record has never had a piece of business where the fees were locked up for any length of time. You could fire a -- Record could be fired on a Wednesday, and nobody committed long term. An infrastructure deal by its nature is not like that. So if we are successful with scaling this on when we bring this in, it's long-term fees, management fees, which is an extremely attractive addition to the kit of the various kinds of fees we earn.

Which is true for all of these products in the longevity.

Fees that we already have and performance fees. It's a really nice combination of earning streams, should we say, for you guys to look at. So you should be smacked on the back for that one. It's amazing and Nicolas and the team who really have done a phenomenal job on this.

At which point, I'll take questions. And after that pass on to Becky.

[indiscernible] the same kind of thing. And there will be no restrictions on being able to do so. I mean, I'm thinking, obviously, in terms of the Emerging Market Sustainable Fund, which we launched with UBS, which -- presumably -- the relationship lockup comes off quite soon. And then you can take a similar style of fund to other people who'd want to do the same.

Yes. I mean the question -- I mean, I think it's probably true for any business, but if you look at then the Record Asset Management specifically, if we say we have this very strong core with a unique expertise. And then we ask the question, how do we intend to now grow, then I think we have to either say, okay, there's now product that we have created, which in expanding and it's the latter really where we're currently active. A lot of these are products which our client in this case, or our investor has the intention of distributing. So which is part of the reason that -- I mean, the question is why does someone come to us with the desire to have a unique product. It's frequently the case that they have investors. They have a network, and they want to be able to offer something which isn't readily available off the shelf. So even though we are, of course, going to grow the team and become stronger on the distribution side, really here, for a lot of these opportunities, there will be growth just by virtue of the fact that we hope to have addressed -- there won't be [indiscernible] in all cases, but we hope to have addressed the need that, that particular client of ours was hoping to address to their clients. And that -- then these really are the starting points for intrinsic growth on these mandates, which again makes sense because we structured it for that purpose, yes.

Thank you, Jan. If we have more questions -- if there are no more questions for Jan. Oh, I apologize.

Hiding behind a few people. So it's Rahim Karim from Investec. There was talk earlier about the aim to build in performance fees into the business. Does this lend itself quite neatly to that? And kind of building on raised question around the revenue model.

The majorities of these asset classes have some kind of performance fee in the structure, not all of them, but the majority in that domain do.

So it would be fair to assume that over time, this would be a natural progression for you guys to build on the [indiscernible] plus.

Yes. And that's also consistent with the path we've gone on the currency management side, right, where we're now offering mandates with performance fees quite routinely.

So, so far, we've talked about currency, and we've talked about traditional assets, fixed income, syndicated lending, trade finance and turning Record into Record Asset Management. I would like us now with the introduction of Rebecca Venis to look at a new part [indiscernible] -- so when Becky joined us quite a long time ago, how long did you join us out of the world? This is the emerging world of digital assets, which we get asked a lot about a Record, the dreaded cryptocurrency and everything that goes with it.

6.5 years.

6.5 years. Gosh, you crowned the line, haven't you? Becky became Chief Technology Officer some 3 years ago, and we gave her 2 jobs. The first job was a horrible job and the other job was a fun job. The horrible job was the modernization of our tech stack, which if any of you have been involved in it for your own businesses or know of other businesses have, it's a hard job. Renovating the house with clients living in it and paying fees and change in people's mindsets, getting them to use new technology and spending money wisely. And as a reward for doing that job, I said, and you can also explore the world of digital assets with whomever you find who you think would be a good partner for us. And you can look anywhere and do anything we can reasonably do. And you can never sleep. That was the only other thing I said too. So with that, I'm going to hand over to Becky and she is first going to talk about the new world of digital assets, and then she's going to touch base on how we're getting on with our modernization because obviously, that's critical to the success of the whole venture. Madam, go for it.

Thank you. And that's why it looks like I've been more than 6.5 years at Record. But you're not allowed to say anything about that. So okay. It's a continuation of the diversification topic at Record. And Record Digital, yes, is quite a wide remit for us, but I really want to start with the questions that we were getting from that client base that Jan is talking about, not only them, but also their investment consultants. These questions included things like how are you using artificial intelligence in your investment strategies? What is blockchain? And how is that going to change my trading in my operations? How are you using my data as a client and your financial data as an asset manager and extracting the greatest value from that data. What are digital assets? Do they need to be in my portfolio, am I missing out on anything? And what happens if a central bank digital currency is issued, right? So the list continues. But this, combined with the emerging digital landscape for us, kicked off Record Digital. This was launched in April '21. And in order to answer those questions, but also to be able to do something about those questions, we had to learn, and we have to be involved. And the best way to learn and to be involved, we believe, is to invest. We had to have skin in the game in order to understand. And this is where we focused on bringing in new capabilities into the business, new products and services and new clients to the business by ring-fencing GBP 2 million in capital and investing that in early-stage companies through funds or direct investments. Now that's fantastic, right? New capability sounds great. New products and services sounds great. New clients sounds fantastic. So how do we get access to those early-stage companies? Luckily for Record, we're 40 years old, and I won't be saying that when I go through modernization. But that means that we've got a really broad and rich network, okay? This means directors, nonexecutive directors, clients, people who've invested in the business before we listed, have been living and breathing this space for ages. So we don't have to go out and build our own network over 3 to 5 years organically. We can go to our friends. And one of those friends is here today, Phil Bickerton, who's sitting at the back. He is the CIO of the Denlow Family Office, who is a family office that has known the record business since its beginning. And he very, very generously agreed to help us with this initiative because the family office has an extensive venture portfolio themselves, which means they already have this kind of network. They already have access to the entrepreneurs and immediately Record could tap into that kind of deal flow quite quickly with what is quite a modest amount of money. We also managed to strong arm, the lovely [ Chris Tyrer ] into helping us as well, who, until very recently was the Head of Fidelity Digital Assets, which grew rapidly over the last few years. And for those of you that know, Fidelity has a really robust venture platform where they do everything from seed, early stage, Series A all the way through to quite mature businesses. And this core team, which included myself, work together because Record wanted to make sure that this capital was deployed effectively and efficiently with the appropriate due diligence but also to make sure that, that actually achieved our objective of bringing in those new capabilities, giving us the ability to launch new products and bringing in new clients. So what I'm going to do is I'm going to focus on a couple of examples of how the investments that we've made are impacting our business today. And I'm going to give some examples of how the network that we have built and we've been brought into has created partnerships. And if you take one thing away from my message about Record Digital today, that is it for me, is the value of this activity is greater than that GBP 2 million that we've invested. It is in the network and the partnerships and the people and the talent that we have established. Now luckily for me, some of that talent is here today, so you can prove that for yourselves. Okay. So the first 2 examples, investments. So the first one I'm going to focus on is a company called Block Scholes. This is a company that was launched in 2021, and they are looking to be the Bloomberg of digital assets. The CEO and Founder, Eamonn Gashier, is actually here today. Thank you, Eamonn. And I've also been appointed a Nonexecutive Director on the Board of Block Scholes. They have been growing the business since launching. They're now 16 people. They launched their platform and services in December last year. They now have an institutional clients that tap into their data, which includes us. So there's fantastic signs there coming from the capital that's allocated. But the real value that we get from our partnership is greater than that. So what we get...

So do you want to actually work through the time line because I think it's the logical sort of steps we took. It's quite illustrative of the way have been thinking. Well, I'm glad because exactly why it's up there. yes. So we were introduced in April '21, and this was a direct introduction from Phil, which I'm always grateful for. And after getting to know the broader team, watching how Block Scholes establish themselves and are rapidly growing. We then became a shareholder. And very recently, after that, actually, I was then appointed a NED, which I've not included there, I should have. And then in November, we actually became a client. Now it became a client because not only did we need their insights and their research will be also needed their data. And I'm actually going to give you an example of how we've used that insight and that data to our advantage in a little bit. Because really what Block Scholes has enabled record to do is better analyze and better due diligence, not only other investments, but also other asset managers, emerging managers, strategies, intellectual property, all that comes off. And then we extended the record currency management tied agency to Block Scholes. And what does this mean? It means we have extended our regulatory cover over Block Scholes for marketing. And that then enables Block Scholes to take those research, that insights and work alongside other asset managers and provide things like trade recommendations and insights, which record benefits from because we have a revenue share for that activity, which is great. And the last of those is we're actually supporting with their investment round. And by that, I mean, I've asked Eamonn and the team so many questions, I'm basically their walking due diligence path. So very often, I get on to the phone with new potential investors. But maybe I can give some real tangible examples of how we're also helping Block Scholes. So in the institutional client base that Block Scholes has is 1 of the 2 fully regulated digital asset banks, [ Sygma Bank ]. I don't know if you're aware of these, [ Sygma Bank and Sygnum ] are the 2.

They are in Switzerland.

Exactly, yes. And records had a relationship with those banks since they were fully regulated in 2018. And Eamonn and I have been to see Sygnum together, and we've hopefully helped and facilitated that relationship and Sygnum has since become a client of Block Scholes. So that's quite nice evidence, hopefully, of how -- what they're able to offer. Their insights helps us, helps us not only with revenue, but new products as well as us helping them. So it's sort of greater than the sum of its parts of partnership there. So Leslie, that's sort of the time line as it stands today. And does anyone have any questions actually yes, please.

Can I ask -- how you feel about investing in companies like in this -- versus investing in people and expertise. Obviously, in this instance and most instances, you're doing both, you are acquiring intellectual property or acquiring expertise, would you look at just sort of hiring teams that bring expertise that you don't have? Or does it always need to be an investment with the opportunity for sort of things you talked about it?