River & Mercantile (RIV) delivered a solid performance for the six months to December 2018 against a background of continued political and economic headwinds.
It was still some way off its strategic target to grow organically by at least 12 per cent a year, though, and while assets under management grew by 3.3 per cent in the first quarter, a negative investment performance in the second quarter meant that assets under management for the six months increased by just 1 per cent to £34.2bn.
There were a couple of strong returns, notably in Fiduciary Management and UK Micro Cap, which helped to generate over £6m in performance fees. Demand from institutional equity clients resulted in net sales of £1.2bn.
Adjusted pre-tax profits fell from £9.6m a year earlier to £8.4m, reflecting the cost of new investment strategies and external research. The group is also looking to grow faster by making acquisitions, and while no acquisitions were made, investment was stepped up within the existing business to facilitate further growth, although this meant that underlying margins slipped from 27 per cent to 24 per cent. However, removing the effect of investments meant that, at 29 per cent, margins were close to the 30 per cent target.
Analysts at Numis are forecasting pre-tax profits of £20.3m for the year ending June 2019 and EPS of 18.9p, from £21.8m and 21p a year earlier.
| RIVER & MERCANTILE (RIV) | ||||
| ORD PRICE: | 244p | MARKET VALUE: | £200m | |
| TOUCH: | 240-248p | 12-MONTH HIGH: | 350p | LOW: 212p |
| DIVIDEND YIELD: | 7.1% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 78p* | NET CASH: | £14m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)** |
| 2017 | 39.0 | 11.0 | 11.3 | 7.6 |
| 2018 | 39.1 | 9.0 | 8.4 | 6.3 |
| % change | – | -18 | -26 | -17 |
| Ex-div: | 21 Mar | |||
| Payment: | 12 Apr | |||
*Includes intangible assets of £33m, or 40p a share **Includes special dividends of 2p in 2018 and 2.2p in 2017 | ||||
