River and Mercantile : Trading Statement

06 July 2018

LEI: 2138005C7REHURGWHW31

River and Mercantile Group PLC

FCA Competition Matter and Trading update

River and Mercantile Group PLC ('the Group'), today provides an update on the FCA competition matter previously disclosed and on trading to 31 May 2018.

FCA competition matter

The Group has reduced the amounts recognised in respect of the FCA competition matter to a provision of £109,000, from a provision of £1 million¹.

The Group received guidance from the FCA on the likely quantum of penalty should one be imposed. The provision has been adjusted to reflect this guidance.

Mike Faulkner, CEO of River and Mercantile, said:

'The Group continues to co-operate fully with the FCA in this complex matter and we will provide further updates when the FCA reaches its final decision in due course.'

Update on trading

Highlights for the two months ended 31 May 2018:

· Fee earning AUM/NUM increased by 2% to £33.8bn.

· Sales for the period were £0.8bn.

· Redemptions in the period were £0.4bn, including £0.1bn of maturing structured equity transactions, and £127m and £82m from the UK Smaller Companies Fund and the UK Dynamic Fund, respectively.

· Investment performance added £0.4bn and was positive across all divisions.

Highlights for the 11 months ended 31 May 2018:

· Fee earning AUM/NUM increased by 9% to £33.8bn.

· Sales for the period were £5.4bn, including £1.2bn from Equity Solutions and £3.7bn from Derivative Solutions.

· Redemptions in the period were £4.5bn, including £1.5bn of maturing structured equity transactions from a single client which had met its objectives.

· Net inflows for the 11 months were £2.0bn, equivalent to 6% of opening AUM/NUM.

· Investment performance generated £0.7bn and was positive across all divisions.

The Group's 12 month trading update will be published on 30 July 2018.

Mike Faulkner, CEO of River and Mercantile, said:

'The business continues to perform well. Flows and our forward pipeline - in particular in Equities, Derivatives and new investment strategy development - remain strong.

Fiduciary Management and Advisory growth has been slower, however this is in line with the expectations and guidance that we have historically provided to the market given the stage of the cycle and the strong equity market rallies that we have seen over the last 12 months.

The long term investment performance of our funds and mandates² remains above benchmark.

As outlined in my CEO Statement in last year's Annual Report, our business has a range of complementary strategies, from advisory, asset allocation, equities and derivative strategies which allows us to be relevant to our clients through providing investment solutions across all phases of the market.

We currently consider that we are in a downturn phase of risk markets and therefore have been advising clients to adopt more defensive positions. As a result we expect to see continued interest in structured equity strategies, along with our absolute return strategies, which include Global Macro.

We recently publicised the expansion of our distribution and client management capabilities through hiring senior individuals and the opening of new offices in both New York and Australia. Our New York office will complement our existing and growing presence in the market with offices in Boston, Chicago and Denver.

We will continue to build our global presence in markets where we see client need for our proven approach in engaging with sophisticated investors and our ability to design investment solutions to meet their specific needs.

We are excited by the outlook and the opportunities that exist. We continue to be well positioned to grow the business in line with the guidance given to the market.'

Notes:

1. The Group recognised a provision of £1m in the December 2017 Interim Report, net of a reduction in remuneration of £0.5m. The provision will be reduced to £109,000 and the reduction in remuneration removed.

2. Investment performance is measured for those funds and mandates where investment outperformance is the relevant outcome for clients. Investment performance is measured gross of management fees.

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

AUM/NUM for the two months ended 31 May 2018.

					Equity Solutions
£'m	Fiduciary Management		Derivative Solutions		Wholesale		Institutional		Total		Total AUM/NUM
	(AUM)		(NUM)		(AUM)		(AUM)		(AUM)
Opening Fee Earning AUM/NUM	10,686		17,828		1,933		2,504		4,437		32,951
Sales	23		651		72		31		103		777
Redemptions	(49)		(101)		(236)		(29)		(265)		(415)
	(26)		550		(164)		2		(162)		362
Net rebalance and transfers	(76)		146		-		-		-		70
Net Flow	(102)		696		(164)		2		(162)		432
Investment Performance	101		-		129		154		283		384
Fee Earning AUM/NUM	10,685		18,524		1,898		2,660		4,558		33,767
Increase/(decrease) in Fee Earning Assets	(0%)		4%		(2%)		6%		3%		2%

At 31 May 2018, AUM was £0.6bn for the UK Smaller Companies Fund and £0.2bn for the UK Dynamic Fund.

AUM/NUM for the 11 months ended 31 May 2018.

					Equity Solutions
£'m	Fiduciary Management		Derivative Solutions		Wholesale		Institutional		Total		Total AUM/NUM
	(AUM)		(NUM)		(AUM)		(AUM)		(AUM)
Opening fee earning AUM/NUM	10,528		16,888		1,821		1,812		3,633		31,049
Sales	478		3,719		700		496		1,196		5,393
Redemptions	(376)		(3,094)		(808)		(178)		(986)		(4,456)
	102		625		(108)		318		210		937
Net rebalance and transfers	(258)		1,011		-		280		280		1,033
Net flow	(156)		1,636		(108)		598		490		1,970
Investment performance	313		-		185		250		435		748
Fee earning AUM/NUM	10,685		18,524		1,898		2,660		4,558		33,767
Increase/(decrease) in Fee Earning Assets	1%		10%		4%		47%		25%		9%

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 and operates through four divisions: Investment Solutions encompassing both advisory and fiduciary management, Derivatives Solutions providing structured equity and Liability Driven Investing (LDI), Equity Solutions providing UK and global equity strategies and Multi Asset Solutions, providing dynamic asset allocation and other multi asset based solutions.

For further information please contact:

MHP Communications [phone] / [phone]

Tim Rowntree

Luke Briggs

River & Mercantile Group PLC [phone]

Chris Rutt, Deputy Chief Financial Officer and Investor Relations

The information communicated in this RNS is inside information.

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.

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 transfersrepresents 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. The acquisition of AUM as part of the Credit Suisse ILC Co-operation agreement has also been recognised on this line.

Fee earning AUM/NUM represents amounts on which management fees and performance fees are charged.