Institutional investors attending this year's FT annual summit groaned as CCLA chief investment officer James Bevan told them to expect a "prolonged period of ultra-low bond yields". But this low-yield environment is fine for River & Mercantile (RIV), which offers fiduciary management services that hedge pension funds against falling yields. Combined with 17 new mandate wins and extra contributions from current clients, that boosted fiduciary management income to £13m, from a pro-forma £10.5m for the year to June 2014.
Mandated or 'notionally' managed assets - the latter describing the volume of funds being hedged - were £21.3bn at the end of June, up 18 per cent on a year earlier. Alongside the increase in fiduciary management came an increase in liability-driven investment and structured equity services, which saw a net inflow of £2.7bn over the period. This included a £700m structured equity mandate for the Royal Mail Pension Plan.
Despite the hit to the advisory division as clients switched to fiduciary, total advisory fees were up 10 per cent at £12m. The weak spot was the closure of the thematic global equity strategy, which prompted closure costs and £0.8bn in lost assets.
Analysts at Canaccord Genuity expect adjusted EPS of 16.5p for the year to June 2016, compared with 15.5p in FY 2015.
| RIVER & MERCANTILE (RIV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 234p | MARKET VALUE: | £192m | |
| TOUCH: | 230-238p | 12-MONTH HIGH: | 234p | LOW: 192p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 83p* | NET DEBT: | £20.2m | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014† | 12.3 | -0.07 | -2.22 | 2.3 |
| 2015 | 34.6 | 10.5 | 10.2 | 13** |
| % change | - | - | - | - |
Ex-div: 8 Oct Payment: 30 Oct *Includes intangible assets of £45.9m or 56p a share. **Includes a 1p special dividend †Six months to 30 June 2014. Company floated in June 2014 | ||||
