TIDMRIV
RNS Number : 9370N
River and Mercantile Group PLC
24 January 2019
24 January 2019
LEI: 2138005C7REHURGWHW31
River and Mercantile Group PLC
Second Quarter Trading Update
31 December 2018
River and Mercantile Group PLC (R&M), the investment
management and solutions business, today provides a trading update
for the three and six months ended 31 December 2018.
Highlights for the six months ended 31 December 2018:
-- Gross sales for the period were GBP2.8bn.
-- Net sales for the period were GBP1.3bn, equivalent to 4% of
opening AUM/NUM. This included GBP0.8bn from Equity Solutions and
GBP0.7bn from Fiduciary Management.
-- Despite equity market falls, overall investment performance
for the period was only negative GBP1.0bn (occurring in the second
quarter), equivalent to 3% of opening AUM/NUM.
-- As a result, fee earning AUM/NUM increased by 1.0% to GBP34.2bn.
-- Performance fees earned in the six months ended 31 December
2018 are estimated to be GBP6.5m, of which GBP2.0m is from Equity
Solutions and GBP4.5m from Fiduciary Management.
-- Advisory fees earned in the six months are estimated to be GBP4.7m.
Highlights for the three months ended 31 December 2018:
-- Gross sales for the period were GBP1.6bn.
-- Net sales for the period were GBP0.7bn, equivalent to 2% of
opening AUM/NUM. This included GBP0.4bn from Equity Solutions and
GBP0.4bn from Fiduciary Management.
-- Despite equity market falls, overall investment performance
for the period was only negative GBP1.0bn, equivalent to 3% of
opening AUM/NUM.
-- Net rebalance and transfers was negative GBP0.5bn (1.5% of opening AUM/NUM).
-- As a result, fee earning AUM/NUM decreased by 2.3% to GBP34.2bn.
-- Performance fees earned in the three months ended 31 December
2018 are estimated to be GBP3.1m from Fiduciary Management.
Mike Faulkner, CEO of River and Mercantile, commented:
I am pleased with the results of this quarter, where the Group
has performed as we predicted in more challenging market
conditions.
Our diversified business model is underscored by our investment
performance across the Group during the quarter. Whilst Equity
Solutions investment returns were in line with our expectations
given market conditions, our other divisions were much less
affected by market falls, or not affected at all.
As a result, the negative impact of markets during the quarter
on overall opening AUM/NUM was only 3%, ultimately reflecting the
diversified nature of our business and revenue streams which are
much less exposed to equity market beta than traditional investment
businesses.
Our strong distribution capability generated gross sales in the
quarter equal to 5% of opening AUM/NUM, with a particularly
positive contribution from our Institutional Equities and Fiduciary
Management divisions. Our pipeline across the broader business
remains strong, with our investment in our US and Australian
presence generating a number of interesting and exciting
opportunities. Our Fiduciary Management division has seen an
increase in new business activity following the conclusion of the
CMA review.
I noted in our trading statement following the last quarter,
that we believed we were moving into a downturn which would impact
absolute returns and we positioned our clients accordingly in
preparation for these more difficult market conditions. It is clear
that this was the correct decision and these proactive moves
insulated client returns from the worst of the market falls.
Looking forward, our investment views are more positive and many
of the macro economic signals that concerned us through the
majority of the last period have played out in a manner that
suggests that risk assets in many markets are likely to provide
some positive returns - and in certain areas this may be
significant. We are beginning to position our clients accordingly
to take advantage of this. Whilst there are still prevalent risks
we remain alive to the opportunities and have continued to advance
our investment research ideas in order to deliver enhanced outcomes
to clients including in emerging market strategies.
We are therefore confident that we are well placed to capitalise
on opportunities to deliver positive outcomes to both existing and
new clients in the second half of our financial year.
Interim Statements:
The Group will release its interim results for the six month
period to 31 December 2018, on 11 March 2019.
Assets Under Management (AUM) and Notional Under Management
(NUM)
AUM/NUM for the three months ended 31 December 2018.
Equity Solutions
-----------------------------------
Fiduciary Derivative
GBP'm Management Solutions Wholesale Institutional Total Total AUM/NUM
--------------- --------------- ---------- -------------- ------- --------------
(AUM) (NUM) (AUM) (AUM) (AUM)
Opening fee earning
AUM/NUM 10,919 19,050 1,817 3,179 4,996 34,965
Sales 584 305 52 700 752 1,641
Redemptions (158) (346) (155) (239) (394) (898)
--------------
426 (41) (103) 461 358 743
Net rebalance and
transfers (348) (192) - - - (540)
Net flow 78 (233) (103) 461 358 203
Investment
performance (237) - (276) (486) (762) (999)
--------------- --------------- ---------- -------------- ------- --------------
Fee earning AUM/NUM 10,760 18,817 1,438 3,154 4,592 34,169
Mandates in
transition (31
December 2018) - - - - - -
Redemptions in
transition (31
December 2018) - - - - - -
Mandated AUM/NUM 10,760 18,817 1,438 3,154 4,592 34,169
=============== =============== ========== ============== ======= ==============
Increase/(decrease)
in fee earning
assets (1.5%) (1.2%) (20.9%) (0.8%) (8.1%) (2.3%)
Increase/(decrease)
in mandated assets (4.1%) (1.8%) (20.9%) (0.8%) (8.1%) (3.4%)
--------------- ---------- -------------- ------- --------------
AUM/NUM for the six months ended 31 December 2018
Equity Solutions
-----------------------------------
Fiduciary Derivative
GBP'm Management Solutions Wholesale Institutional Total Total AUM/NUM
--------------- --------------- ---------- -------------- ------- --------------
(AUM) (NUM) (AUM) (AUM) (AUM)
Opening fee earning
AUM/NUM 10,642 18,622 1,887 2,692 4,579 33,843
Sales 1,039 452 131 1,194 1,325 2,816
Redemptions (339) (645) (285) (267) (552) (1,536)
--------------
700 (193) (154) 927 773 1,280
Net rebalance and
transfers (353) 388 - - - 35
Net flow 347 195 (154) 927 773 1,315
Investment
performance (229) - (295) (465) (760) (989)
--------------- --------------- ---------- -------------- ------- --------------
Fee earning AUM/NUM 10,760 18,817 1,438 3,154 4,592 34,169
Mandates in
transition (31
December 2018) - - - - - -
Redemptions in
transition (31
December 2018) - - - - - -
Mandated AUM/NUM 10,760 18,817 1,438 3,154 4,592 34,169
=============== =============== ========== ============== ======= ==============
Increase/(decrease)
in fee earning
assets 1.1% 1.0% (23.8%) 17.2% 0.3% 1.0%
Increase/(decrease)
in mandated assets 1.5% 1.1% (23.8%) 9.5% (3.7%) 0.5%
--------------- ---------- -------------- ------- --------------
Performance fees
Performance fees earned in the three months ended 31 December
2018 are estimated to be GBP3.1m from Fiduciary Management.
Performance fees earned in the six months ended 31 December 2018
are estimated to be GBP6.5m, which includes the previously
announced performance fee from the River and Mercantile UK Micro
Cap Investment Company Limited of approximately GBP2.0m and
approximately GBP4.5m relating to Fiduciary Management. Advisory
fees earned in the six months are estimated to be GBP4.7m.
Notes to editors:
River and Mercantile Group PLC (R&M) is an investment
solutions business with a broad range of services, from consulting
and advisory, to fully delegated fiduciary management and asset
management.
R&M is focussed on creating investment solutions for
institutional pension schemes, insurance and financial
intermediaries.
For further information, please contact:
River & Mercantile Group PLC
Chris Rutt
Deputy Chief Financial Officer and Investor Relations
Email: chris.rutt@riverandmercantile.com
Tel: +44 (0)20 3327 5100
Forward-looking statements
This announcement contains forward-looking statements with
respect to the financial conditions, results and business of the
Group. By their nature, forward looking statements involve risk and
uncertainty because they relate to events, and depend on
circumstances that will occur in the future. River and Mercantile
Group's actual results may differ materially from the results
expressed or implied in these forward looking statements. Nothing
in this announcement should be construed as a profit forecast.
Notes:
Assets Under Management (AUM) represents the assets over which
we act either as a discretionary investment manager on a partial or
fully delegated basis in accordance with an investment management
agreement.
Fee earning AUM/NUM represents amounts on which management fees
and performance fees are charged.
Notional Under Management (NUM) represents the aggregate billing
notional of derivative contracts and is the basis on which
management fees are charged.
Net rebalance and transfers represents the net change in billing
notional values of Derivatives (including Gilts) from existing
client mandates and can increase or decrease based on changes in
the underlying hedging strategies.
The category also represents transfers of client assets between
divisions. The different billing structures between divisions,
including the use of AUM or NUM, means that transfers will not net
to zero.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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