River & Mercantile (RIV) faced several headwinds in the year to June 2018, but still managed to increase assets under management by £2.1bn to £34bn – and £700m of the rise reflected an improved investment performance.
Trading was hit by continued macroeconomic uncertainty, which influenced clients’ investment decisions, while some funds were withdrawn after the dismissal of one of its portfolio managers. Regulatory changes and investment in infrastructure reduced margins, and adjusted underlying pre-tax profit was down by 2 per cent.
Net management and advisory fee income rose by 15 per cent to £64.2m, although performance fees were down from £12.5m to £10.6m, thus reducing the performance-related special dividend payments. Much of the decline reflected £532m of redemptions from funds previously managed by the dismissed portfolio manager. There were also two investigations by the Financial Conduct Authority and the Competition and Markets Authority (CMA), although these clouds have now passed over.
Fiduciary management, which is where it manages client funds, saw management fees up by just 4 per cent, due to the lower volume of new mandates because of the CMA investigation
Analysts at Numis are forecasting adjusted pre-tax profit for the year to June 2019 of £20.5m and EPS of 19.5p.
| RIVER & MERCANTILE (RIV) | ||||
| ORD PRICE: | 318p | MARKET VALUE: | £261m | |
| TOUCH: | 318-324p | 12-MONTH HIGH: | 392p | LOW: 250p |
| DIVIDEND YIELD: | 5.8% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 80p* | NET CASH: | £10.9m | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)** |
| 2014*** | 12.3 | -0.1 | -2.2 | 2.3 |
| 2015 | 34.6 | 10.5 | 10.2 | 13 |
| 2016 | 36.8 | 7.2 | 7.2 | 9.5 |
| 2017 | 45.4 | 16.4 | 16.5 | 19.7 |
| 2018 | 54.0 | 18.5 | 18.8 | 18.6 |
| % change | +19 | +13 | +14 | -6 |
| Ex-div: | 22 Nov | |||
| Payment: | 14 Dec | |||
| ***Six months to June 2014. Company floated in June 2014 *Includes intangible assets of £35m, or 43p a share **Includes special dividends of 1p in 2015, 0.45p in 2016, 5.6p in 2017 and 3.6p in 2018 | ||||
