River and Mercantile Group PLC Third Quarter Trading Update (2824X)

TIDMRIV

RNS Number : 2824X

River and Mercantile Group PLC

29 April 2019

29 April 2019

LEI: 2138005C7REHURGWHW31

River and Mercantile Group PLC

Third Quarter Trading Update

31 March 2019

River and Mercantile Group PLC (R&M), the investment management and solutions business, today provides a trading update for the three and nine months ended 31 March 2019.

Summary of the three months ended 31 March 2019:

   --      Fee earning AUM/NUM increased by 6% to GBP36.3bn. 
   --      Gross sales for the period were GBP1.2bn. 

-- Net sales for the period were GBP0.5bn, equivalent to 1% of opening AUM/NUM. We have continued to see demand for Institutional Equity Solutions and there has been increased pipeline activity in Fiduciary Management.

   --      Investment performance generated GBP1.1bn and was positive across all divisions. 
   --      Net rebalance and transfers added GBP0.6bn. 

-- Performance fees earned in the three months ended 31 March 2019 are estimated to be GBP0.5m from Fiduciary Management.

Summary of the nine months ended 31 March 2019:

   --      Fee earning AUM/NUM increased by 7% to GBP36.3bn. 
   --      Gross sales for the period were GBP4.1bn. 

-- Net sales for the period were GBP1.7bn, equivalent to more than 5% of opening AUM/NUM. This included GBP1.2bn from Fiduciary Management and GBP1.0bn from Institutional Equity Solutions.

-- The strong investment result during the quarter returns investment performance to positive territory for the year to date.

-- Performance fees are estimated to be GBP6.9m, of which GBP2.0m is from Equity Solutions and GBP4.9m is from Fiduciary Management.

   --      Advisory fees are estimated to be GBP7.5m. 

Mike Faulkner, CEO of River and Mercantile, commented:

Having positioned our clients cautiously in previous periods, I stated in the last trading statement that our macroeconomic signals indicated that risk assets were likely to provide positive returns. We therefore adapted our client portfolios accordingly and were able to capture the market returns for them. This ability to respond quickly to asset allocation opportunities is one of our key differentiating capabilities.

This quarter has seen an increase of more than 6% in AUM/NUM. This is a strong period of growth for the group following the more challenging conditions in the second quarter. It has been very encouraging to see the contribution to growth from both investment performance and net rebalancing.

Investment performance for the period was positive across all divisions, with Fiduciary Management and Equity Solutions adding GBP0.6bn and GBP0.4bn respectively. Additionally, we saw positive flows in Fiduciary Management and a GBP350m inflow into the Group's Dynamic Asset Allocation fund which now has half a billion of AUM and a four and a half year track record.

We continue to have a positive outlook for equity markets from here and the results this period position us well for the final quarter of our financial year.

Assets Under Management (AUM) and Notional Under Management (NUM)

AUM/NUM for the three months ended 31 March 2019.

 
 
                                                                   Equity Solutions 
                                                          ---------------------------------- 
                             Fiduciary        Derivative 
 GBP'm                      Management         Solutions   Wholesale   Institutional   Total   Total AUM/NUM 
                       ---------------  ----------------  ----------  --------------  ------  -------------- 
                                 (AUM)             (NUM)       (AUM)           (AUM)   (AUM) 
 Opening fee earning 
  AUM/NUM                       10,760            18,817       1,438           3,154   4,592          34,169 
 Sales                             640               477          41              86     127           1,244 
 Redemptions                     (133)             (495)       (108)            (39)   (147)           (775) 
                                                                                              -------------- 
                                   507              (18)        (67)              47    (20)             469 
 Net rebalance and 
  transfers                         93               483           -               -       -             576 
 
 Net flow                          600               465        (67)              47    (20)           1,045 
 
 Investment 
  performance                      624                 -         126             309     435           1,059 
                       ---------------  ----------------  ----------  --------------  ------  -------------- 
 Fee earning AUM/NUM            11,984            19,282       1,497           3,510   5,007          36,273 
                       ===============  ================  ==========  ==============  ======  ============== 
 
 Mandates in 
  transition (31 
  March 2019)                        -                20           -               -       -              20 
 Redemptions in 
 transition (31 March 
 2019)                               -                 -           -               -       -               - 
 Mandated AUM/NUM               11,984            19,302       1,497           3,510   5,007          36,293 
                       ===============  ================  ==========  ==============  ======  ============== 
 
 Increase/(decrease) 
  in fee earning 
  assets                         11.4%              2.5%        4.1%           11.3%    9.0%            6.2% 
 Increase/(decrease) 
  in mandated assets             11.8%              2.6%        4.1%            5.0%    4.7%            5.8% 
                                        ----------------  ----------  --------------  ------  -------------- 
 

AUM/NUM for the nine months ended 31 March 2019.

 
 
                                                                   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                           1,680               928         172           1,280   1,452           4,060 
 Redemptions                     (472)           (1,140)       (393)           (306)   (699)         (2,311) 
                                                                                              -------------- 
                                 1,208             (212)       (221)             974     753           1,749 
 Net rebalance, 
  acquisitions and 
  transfers                      (260)               872           -               -       -             612 
 
 Net flow                          948               660       (221)             974     753           2,361 
 
 Investment 
  performance                      394                 -       (169)           (156)   (325)              69 
                       ---------------  ----------------  ----------  --------------  ------  -------------- 
 Fee earning AUM/NUM            11,984            19,282       1,497           3,510   5,007          36,273 
                       ===============  ================  ==========  ==============  ======  ============== 
 
 Mandates in 
  transition (31 
  March 2019)                        -                20           -               -       -              20 
 Redemptions in                      -                 -           -               -       -               - 
 transition (31 March 
 2019) 
                       --------------- 
 Mandated AUM/NUM               11,984            19,302       1,497           3,510   5,007          36,293 
                       ===============  ================  ==========  ==============  ======  ============== 
 Opening mandated 
  AUM/NUM                       10,605            18,616       1,887           2,880   4,767          33,988 
 
 Increase/(decrease) 
  in fee earning 
  assets                         12.6%              3.5%     (20.7%)           30.4%    9.3%            7.2% 
 Increase/(decrease) 
  in mandated assets             13.0%              3.7%     (20.7%)           21.9%    5.0%            6.8% 
                                                          ----------  --------------  ------  -------------- 
 

Performance and advisory fees

Performance fees earned in the three months ended 31 March 2019 are estimated to be GBP0.5m, all from Fiduciary Management. Performance fees earned in the nine months ended 31 March 2019 are estimated to be GBP6.9m. This includes the previously announced performance fee from the River and Mercantile UK Micro Cap Investment Company Limited of approximately GBP2.0m; and approximately GBP4.9m from Fiduciary Management. Advisory fees earned in the nine months are estimated to be GBP7.5m.

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

Kevin Hayes

Chief Financial Officer

Tel: [phone]

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 [e-mail] or visit www.rns.com.

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April 29, 2019 02:00 ET (06:00 GMT)