Coronavirus Update

River and Mercantile Group Plc - Interim Report

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River and Mercantile Group PLC

Interim Financial Report

River and Mercantile Group PLC today publishes its interim results for the six months ended 31 December 2019.

Financial Highlights

  • Statutory net profit after tax was £4.1m, compared to £6.7m for the six months ended 31 December 2018, as a result of lower performance fees partly offset by increased management fees.
  • Statutory basic and diluted earnings per share (EPS) were 4.86 pence per share and 4.85 pence per share respectively, compared to 8.40 pence and 8.08 pence respectively for the six months ended 30 December 2018.
  • Total adjusted profit after tax1 was £6.1m, compared to £8.4m for the six months ended 31 December 2018, as a result of lower net performance fee earnings.
  • Total adjusted basic and diluted EPS2 were 7.31 pence and 7.29 pence per share respectively, compared to 10.49 pence and 10.09 pence per share for the six months ended 31 December 2018.
  • The Board of Directors has declared an interim dividend of 4.39 pence per share, of which 0.5 pence per share is a special dividend in relation to net performance fees. The dividend will be paid on 16 April 2020 to shareholders on the register as at 27 March 2020. The ex-dividend date will be 26 March 2020.

Jonathan Dawson, Chairman said:

Whilst the global outlook remains uncertain with particular challenges arising from the COVID-19 pandemic, I am confident that our diversified business model, with its clear focus on understanding and meeting our clients' needs is well placed to meet the challenges of current markets.

As we noted in last year's Annual Report, in order to accelerate the organic growth of our investment management and distribution capabilities, specifically in Australia and the US, the Board has decided to invest £3.8m, primarily in remuneration in FY2020 and a similar level in FY2021. The Board considers that the growth potential in both of these regions is a critical element in the Group's overall organic growth plan.

James Barham, Group Chief Executive said:

We have seen a steady period of growth for the business over the last six months and strong investment outcomes for our clients, with the exception in the short term of our value dominant strategies where the underlying factors continue to be out of favour. These portfolios now provide very exciting return characteristics not too dissimilar to the environment immediately post the Global Financial Crisis. In spite of this factor headwind, all of our equity strategies have positive absolute returns over the fourth calendar quarter 2019 and the year as a whole.

Our investment performance across our Liquid Alternatives team and the broader Fiduciary Management Investment team remains very strong and this, along with the growing demand for our Derivatives strategies, is leading to new client opportunity pipeline across the business.

This positive demand cycle is a critical reason why we are now investing in distribution, in order to accelerate growth, and scale the business in the next three to five years. We are facing extremely volatile market conditions and whilst I am excited about the development of the business over the balance of our financial year and the next few years, we do recognise the challenges these markets create.  Our investment teams are working to ensure that the impact on our clients' portfolios are minimised and that we are positioned to take advantage of opportunities as they arise. 

Whilst we all face challenges in the current climate especially with the uncertainty associated with COVID-19, the market reaction and the medium-term economic impact, we have confidence in our business' resilience and ability to continue to grow our business and to deliver for our clients.