15th Oct 2019 12:33
(Alliance News) - River & Mercantile Group PLC on Tuesday posted a decline in profit for its financial year, which the firm put down to phasing of asset growth toward the end of its financial year, as well as investment made in its business.
Shares in River & Mercantile were down 2.0% at 245.00 pence in London in midday trading.
The advisory and investment solutions firm posted a GBP16.8 million pretax profit for its year ended June 30, down 9.2% from GBP18.5 million the year before.
Total revenue rose 4.4% to GBP78.1 million from GBP74.8 million. This included an 18% rise in performance fees to GBP12.5 million from GBP10.6 million, 2.0% decrease in advisory fees to GBP10.0 million from GBP10.2 million, and net management fee increase of 2.8% to GBP55.5 million from GBP54.0 million.
However, total expenses rose by 7.9% to GBP62.5 million from GBP57.9 million, which dragged down profit.
"Growth was delivered substantively in the second half of our financial year and this phasing of asset flows impacted our financial results in the short term. This does however, mean that the group is well positioned for the new financial year, with strong embedded revenue growth," said River & Mercantile.
The profit reduction was also put down to "underlying investments and initiatives" made "to drive future growth", according to Chief Executive James Barham.
River & Mercantile declared a second 5.1 pence per share interim dividend, 1.6p of which was a special dividend relating to performance fees. A final 5.0p per share dividend has been proposed, with 2.4p of this being a special dividend - again based on net performance fees.
This would take the total paid and declared dividend for the company's financial 2019 year to 16.4p per share. This represents a 12% decline from the 18.6p per share of total dividends paid for financial 2018.
Chair Jonathan Dawson said: "Despite the external challenges, at River and Mercantile we have remained steadfast in our focus on putting our clients' interests at the heart of everything that we do. Our investment performance has been strong over the longer term with all of our funds ahead of their respective benchmarks since inception, although long equity funds have had a more challenging period, as value driven investment has been less favoured by the market.
"At the same time, we have been careful to communicate our economic and market thinking clearly with our clients. In our Solutions and Macro businesses, our focus on the River FOURcast (our proprietary approach to investment thinking) model of investment behaviours has given clients, particularly in Fiduciary Management, direct insight into our thinking and processes by which we seek to achieve their investment objectives.
"River and Mercantile is at an exciting point in its growth and we think that there are significant opportunities for us across our business lines in our key markets of the UK, USA, and Australia."
By Anna Farley; [email protected]
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