4 Nov 2019 07:00
4 November 2019
LEI: 2138005C7REHURGWHW31
River and Mercantile Group PLC
First Quarter Trading Update
30 September 2019
River and Mercantile Group PLC (R&M), the asset management and investment solutions business, today provides a trading update for the three months ended 30 September 2019.
Summary of the three months ended 30 September 2019:
·; Fee earning AUM/NUM increased in the quarter by 5% to £41.7bn;
·; In the quarter:
- Gross Sales were £1.2bn;
- Net flows were £1.0bn;
- Net Sales Ratio was 3% of opening AUM/NUM; and
- Investment performance was positive across all Divisions, adding £0.9bn or 2% of opening AUM/NUM.
James Barham, Group Chief Executive, commented:
This quarter has seen strong growth in AUM/NUM across all the Divisions. The net sales ratio, which measures all client flows, was 3% of opening AUM/NUM and the investment return ratio added a further 2% of opening AUM/NUM. The combination of net sales and investment performance has generated growth in AUM/NUM of 5% in the quarter. This is a strong start to our total growth rate target of 12%.
As an indication of continued strong support from our clients, gross sales included £924m (78%) from existing clients demonstrating the strong client outcomes we have generated. We have seen strong client engagement across the business, with increased activity levels in Fiduciary Management, and strong pipeline across the Derivatives and Equities businesses.
The Group continues to have a positive outlook in the medium term on markets, which we believe are currently supported by a stable economic environment. Globally, valuations look slightly expensive (particularly in certain sectors in the US), credit conditions remain positive with the cost of borrowing falling, and overall economic conditions remaining good in our view. Despite some challenging media headlines, we expect economic conditions to improve over the next 18 months.
Our progress during the first three months, together with the recent senior management restructure, means we start our financial year well positioned to continue our growth in line with our strategic objectives.
Assets Under Management (AUM) and Notional Under Management (NUM)
AUM/NUM for the three months ended 30 September 2019.
|
|
|
|
| Equity Solutions |
|
| ||||
£'m | Fiduciary Management |
| Derivative Solutions |
| Wholesale |
| Institutional |
| Total |
| Total AUM/NUM |
| (AUM) |
| (NUM) |
| (AUM) |
| (AUM) |
| (AUM) |
|
|
Opening fee earning AUM/NUM | 12,864 |
| 21,683 |
| 1,482 |
| 3,785 |
| 5,267 |
| 39,814 |
Sales | 159 |
| 915 |
| 37 |
| 76 |
| 113 |
| 1,187 |
Redemptions | (244) |
| (774) |
| (125) |
| (88) |
| (213) |
| (1,231) |
Net rebalance and transfers | 132 |
| 930 |
| - |
| - |
| - |
| 1,062 |
|
|
|
|
|
|
|
|
|
|
|
|
Net flow | 47 |
| 1,071 |
| (88) |
| (12) |
| (100) |
| 1,018 |
|
|
|
|
|
|
|
|
|
|
|
|
Investment performance | 833 |
| - |
| 9 |
| 22 |
| 31 |
| 864 |
Fee earning AUM/NUM | 13,744 |
| 22,754 |
| 1,403 |
| 3,795 |
| 5,198 |
| 41,696 |
|
|
|
|
|
|
|
|
|
|
|
|
Mandates in transition (30 September 2019) | 38 |
| 650 |
| - |
| - |
| - |
| 688 |
Redemptions in transition (30 September 2019)* | - |
| (263) |
| - |
| - |
| - |
| (263) |
Mandated AUM/NUM | 13,782 |
| 23,141 |
| 1,403 |
| 3,795 |
| 5,198 |
| 42,121 |
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(decrease) in fee earning assets | 6.8% |
| 4.9% |
| (5.3%) |
| 0.3% |
| (1.3%) |
| 4.7% |
Increase/(decrease) in mandated assets | 7.1% |
| 10.1% |
| (5.3%) |
| 0.3% |
| (1.3%) |
| 7.6% |
*Redemptions in transition include £0.3bn of structured equity mandates, which will reach their contractual maturity date in the next 3 months.
Performance and advisory fees
For the three months ended 30 September 2019, performance fee revenues are estimated to be £0.5m, all from Fiduciary Management. Advisory fee revenues for the quarter are estimated to be £2.5m.
Notes to editors:
R&M is an asset management and 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.
River FOURcast is a proprietary economic model developed by R&M which is used to indicate our future views of the financial markets. The model uses a number of economic and sentiment indicators to determine the potential future direction of financial markets as being: "STABLE", "UPWARD RERATING", "APPREHENSION" or "DOWNTURN".
For further information, please contact:
River and Mercantile Group PLC
Kevin Hayes
Chief Financial Officer
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 R&M. 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. R&M'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.
Net Sales Ratio represents gross sales, redemptions, net rebalance and transfers divided by opening AUM/NUM.
Investment Return Ratio represents investment performance divided by opening AUM/NUM.