A China slowdown and concerns about the strength of the US-led economic recovery after last year's interest rate rise have cowed investors and choked capital markets. Those pressures hit advisory and performance fees at River & Mercantile (RIV) in the reported period, driving the asset manager's adjusted post-tax profits down 22 per cent to £4.9m.
On the bright side, net inflows rose across the business to £1.5bn, fuelling a 5 per cent rise in mandated or 'notionally' managed assets to £22.5bn, driving net management fees higher. But lower project-based payments and the tepid industry backdrop pushed advisory income down 28 per cent to £4.3m, while performance fees fell to £1.2m from £3.1m in the same period last year.
Bright spots included the derivative solutions segment, which landed a £1bn mandate for a FTSE 100 pension scheme client. The retail business also grew strongly as it raised a further £20m for its UK micro-cap investment arm and relaunched a fund that counts ITV, Micro Focus and Vodafone among its largest holdings. And management recently exited Palisades, the specialist pensions advisory in the US that was central to the decline in project revenues.
Planned investment and tepid top-line growth prompted Numis to slash its EPS forecast to 11.7p for the year to June, compared with 15.5p in FY2015.
| RIVER & MERCANTILE (RIV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 220p | MARKET VALUE: | £181m | |
| TOUCH: | 219-222p | 12-MONTH HIGH: | 280p | LOW: 191p |
| DIVIDEND YIELD: | 5.5% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 79p* | NET CASH: | £14.8m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)** |
|---|---|---|---|---|
| 2014 | 26.4 | 5.3 | 5.1 | 4.6 |
| 2015 | 23.4 | 3.3 | 3.3 | 3.6 |
| % change | -11 | -37 | -36 | -22 |
Ex-div: 10 Mar Payment: 1 Apr *Includes intangible assets of £43.6m, or 53p a share **Includes special dividends of 1p in 2014 and 0.35p in 2015 | ||||
