Asset manager and advisory firm River & Mercantile (RIV) delivered a robust performance for the six months to December 2016, with fee earning assets under management up by 13 per cent to £28.7bn, and positive inflows in all divisions contributing £2bn.
Net management fees rose by 20 per cent to £21.4m as a result of the increase in assets managed, while advisory fees grew by 22 per cent to £5.2m. A strong investment performance also meant that performance fees grew from £1.2m a year earlier to £4.7m, helping to lift adjusted underlying pre-tax margins from 24 per cent to 27 per cent. Shareholders have been rewarded with a dividend hike that includes a special dividend as a result of the rise in performance fees.
The increase in advisory fees was a predictable consequence of recent market volatility, which encouraged clients to seek additional advice. For while equity markets performed well during the period and interest rates ticked higher, markets are still considered to be high risk and highly volatile, two factors ideally suited to R&M's business model. Bright spots included the Global High Alpha fund, which delivered an absolute return of 20.2 per cent, and the UK Equity Micro Cap fund, which grew by 22.9 per cent.
Analysts at Numis are forecasting EPS for the year to June 2017 of 16.8p (up from 11.6p in 2016).
| RIVER & MERCANTILE (RIV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 283p | MARKET VALUE: | £232m | |
| TOUCH: | 281-286p | 12-MONTH HIGH: | 288p | LOW: 176p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 80p** | NET CASH: | £20.2m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
|---|---|---|---|---|
| 2015 | 17.9 | 3.3 | 3.3 | 3.25 |
| 2016 | 21.4 | 7.0 | 7.4 | 4.2 |
| % change | +20 | +112 | +128 | +29 |
Ex-div: 9 Mar Payment: 31 Mar *Not including special dividend of 0.35p a share in 2015 and 1.4p in 2016 **Includes intangible assets of £39.6m, or 48p a share | ||||
